WEBVTT - Stocks Fall Before Nvidia’s High-Stakes AI Results 0:00:02.520 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business 0:00:10.520 --> 0:00:14.680 Weekdaily reporting from the magazine that helps global leaders stay 0:00:14.680 --> 0:00:18.759 ahead with insight on the people, companies, and trends shaping 0:00:18.800 --> 0:00:23.720 today's complex economy, plus global business finance and tech news 0:00:23.760 --> 0:00:27.720 as it happens. The Bloomberg Business Week Daily Podcast with 0:00:27.920 --> 0:00:31.720 Carol Masser and Tim Stenebek on Bloomberg Radio. 0:00:32.040 --> 0:00:35.000 We did, though, also kick off today with something that 0:00:35.120 --> 0:00:37.320 just kind of is staying with us, a warning from 0:00:37.360 --> 0:00:40.919 JP Morgan Chase Vice chairman Daniel Pinto. He said and 0:00:41.159 --> 0:00:43.760 kind of gave us all our heads up that valuations 0:00:43.800 --> 0:00:46.559 in the AI industry are due for a reassessment. It's 0:00:46.560 --> 0:00:48.440 something Tim and I've been trying to get into today 0:00:48.640 --> 0:00:51.120 which could reverberate across the stock market. 0:00:51.159 --> 0:00:51.840 Here's what he said. 0:00:52.120 --> 0:00:57.080 It is possible there is probably a correction there, and 0:00:57.200 --> 0:01:00.920 that correction will also create a correct in the rest 0:01:00.960 --> 0:01:05.280 of the segments in the SMPN in the industry, because 0:01:05.800 --> 0:01:09.520 you are probably in order to justify these valuations, you 0:01:09.600 --> 0:01:14.119 are considering a level of productivity that it will happen, 0:01:14.160 --> 0:01:17.160 but it not. It may not happen as fast as 0:01:17.240 --> 0:01:18.679 the market is pricing. 0:01:19.360 --> 0:01:21.440 Y A a JP Morgan Chase's vice chair Daniel Pento 0:01:21.520 --> 0:01:24.240 earlier today, that was at the Bloomberg Africa Business Summit 0:01:24.600 --> 0:01:28.680 in Johannesburg. Curious what buyer sells signals. Our next guest 0:01:28.760 --> 0:01:30.920 is seeing great to have back with us Vince Howard, 0:01:31.000 --> 0:01:34.680 CEO and portfolio manager at Howard Capital Management, about six 0:01:34.720 --> 0:01:37.039 billion dollars in assets under management. He joins us here 0:01:37.040 --> 0:01:40.319 in the Bloomberg Interactive Brokers studio. This is the question 0:01:40.360 --> 0:01:43.000 we've been wanting to ask you since, you know, last 0:01:43.000 --> 0:01:46.320 time we spoke to you. Is the HCM byline model 0:01:46.360 --> 0:01:48.760 telling telling you to buy or sell? Right now? 0:01:48.800 --> 0:01:51.280 It's telling us to buy? The HTM byline's positive. Any 0:01:51.280 --> 0:01:54.640 pullbacks bible till it changes trend and you know, sort 0:01:54.640 --> 0:01:57.160 of discard the noise and just about what's actually happening. 0:01:57.200 --> 0:01:59.600 The market's very very healthy. That six great months, I 0:01:59.640 --> 0:02:01.360 mean not get it. Hey, do you not have a 0:02:01.360 --> 0:02:02.520 pullback after six months? 0:02:02.600 --> 0:02:05.280 Just one step back? Explain the HCM byline model and 0:02:05.560 --> 0:02:07.760 it's a data it takes into account and then what 0:02:07.800 --> 0:02:08.520 it tells you to do. 0:02:08.919 --> 0:02:11.600 It's a non emotional, mechanical, repeatable process. Because I want 0:02:11.600 --> 0:02:13.520 to take as much emotion out of as I possibly can, 0:02:13.560 --> 0:02:16.000 which is incredibly challenging with the amount of things that 0:02:16.040 --> 0:02:17.920 are throwing it at each and every one of us 0:02:17.960 --> 0:02:20.359 every day. But it's a math based tool, and it's 0:02:20.400 --> 0:02:22.640 just a trend indicator, and we think it's a very 0:02:22.680 --> 0:02:25.000 good trend indicator. It's been very well for us. Perfect No, 0:02:25.120 --> 0:02:25.880 but good. Yes. 0:02:26.200 --> 0:02:29.760 Does momentum though the momentum trade mess it up at all? No, 0:02:29.919 --> 0:02:30.359 not at all. 0:02:30.520 --> 0:02:32.600 But I love the momentum trade because I love to 0:02:32.639 --> 0:02:34.359 be in those stocks. I love to be in those sectors. 0:02:34.400 --> 0:02:36.400 You got to trade momentum. You can't sit in dead money. 0:02:36.440 --> 0:02:38.000 Ye, Well what is momentum? Fomo? 0:02:38.240 --> 0:02:41.480 Like you're like just tracing something without really fundamentally thinking 0:02:41.480 --> 0:02:41.880 about it. 0:02:41.919 --> 0:02:43.639 Well, as long as it's a big computer game, it 0:02:43.639 --> 0:02:45.560 doesn't matter. Well it's a big computer. Yeah, it doesn't 0:02:45.560 --> 0:02:47.280 matter anymore. It's a big computer game. I mean, you're 0:02:47.280 --> 0:02:49.639 trading it gets algorithms anymore. It's eighty five percent of 0:02:49.680 --> 0:02:50.200 all the volumes. 0:02:50.240 --> 0:02:51.320 Don't fundamentals matter? 0:02:51.680 --> 0:02:54.240 Well, they're always going to end up mattering in the end. 0:02:54.280 --> 0:02:56.640 But look at what's happening, Carol. When you look at 0:02:56.680 --> 0:02:58.720 what's happening with a look at what's happening with with 0:02:58.840 --> 0:03:01.320 Tesla and that robot there coming out with Optimus. How 0:03:01.400 --> 0:03:02.920 much is that going to make an impact on so 0:03:02.960 --> 0:03:06.000 many companies profitabilities and earnings per shuit'. 0:03:06.840 --> 0:03:07.280 They come out with. 0:03:07.639 --> 0:03:09.760 Indeed, do what that's if they do come out with 0:03:09.800 --> 0:03:11.840 the right I think twenty twenty six, he's going to. 0:03:11.840 --> 0:03:13.120 You think, so, oh, yeah, he's not. 0:03:13.320 --> 0:03:14.440 He doesn't always meet deadlines. 0:03:14.880 --> 0:03:16.960 Well, but when he does, it's usually a big show. 0:03:17.000 --> 0:03:19.120 They've got one of those things walking around Austin, Texas 0:03:19.200 --> 0:03:20.440 right now, the cowboy hat. 0:03:20.320 --> 0:03:22.520 On literally walking down person inside it. 0:03:23.160 --> 0:03:25.160 He stops at every red light, he stops at every 0:03:25.160 --> 0:03:27.399 stop sidne he gets out of people's way. This thing 0:03:27.520 --> 0:03:28.200 is amazing. 0:03:28.840 --> 0:03:30.320 Wait, what do you think it's going to do? 0:03:30.360 --> 0:03:30.520 Though? 0:03:30.560 --> 0:03:32.160 How do you think it's going to impact our life? 0:03:32.240 --> 0:03:32.840 Are you really? 0:03:32.919 --> 0:03:33.160 Come on? 0:03:33.280 --> 0:03:36.520 We like, yeah, here's the thing, here's how it's going 0:03:36.520 --> 0:03:37.920 to impact your life. Let's take a bit and I 0:03:38.000 --> 0:03:39.800 thought about this a lot with our trading team. Let's 0:03:39.800 --> 0:03:41.600 just take Starbucks for instance. What if you got one 0:03:41.640 --> 0:03:43.560 person worse in the cast rest and five people that 0:03:43.600 --> 0:03:46.040 are that are robots that are serving the coffee. This 0:03:46.080 --> 0:03:49.200 only costs fifteen to twenty grand for optimists. The robot 0:03:49.320 --> 0:03:51.360 to make a cup of coffee, you've eliminated four or 0:03:51.400 --> 0:03:53.640 five jobs right there. You don't have to worry about 0:03:53.840 --> 0:03:56.640 somebody complaining, coming in for work, getting sick at. 0:03:56.600 --> 0:04:00.200 The bots go out and buy high heels. Probably not so, 0:04:00.280 --> 0:04:01.200 Like I. 0:04:01.200 --> 0:04:03.000 Do think it's a really good point. 0:04:03.240 --> 0:04:06.120 Do you think about what robots are not going to 0:04:06.120 --> 0:04:08.440 be spending in the economy and what that means. 0:04:08.000 --> 0:04:09.760 Longer Exactually right, I think you're going to see I 0:04:09.800 --> 0:04:13.080 think you're going to see unemployment organically move higher, but 0:04:13.160 --> 0:04:14.720 I think you're going to see corporate profits and a 0:04:14.720 --> 0:04:16.880 lot of these companies move higher. Also, look at what 0:04:16.880 --> 0:04:19.480 happened with Walmart. Walmart's a boring company in my opinion. 0:04:19.560 --> 0:04:21.520 But what happens if there isn't a lot of consumer 0:04:21.600 --> 0:04:24.039 spending going on, which is so much the backbone of 0:04:24.040 --> 0:04:24.600 the economy. 0:04:24.680 --> 0:04:25.760 Doesn't that filter through? 0:04:25.800 --> 0:04:29.320 And do we have lower economic growth? And are people 0:04:29.360 --> 0:04:31.120 out of work? That's not a good thing. 0:04:31.520 --> 0:04:33.760 That's not a good thing. It's a terrible thing. But look, 0:04:33.800 --> 0:04:35.480 I can't change it, and I can't stop it. Neither 0:04:35.560 --> 0:04:37.000 can the three of us in the side of this room. 0:04:37.120 --> 0:04:39.160 But what we do have is the HCM bylines with 0:04:39.200 --> 0:04:40.160 stocks want to sell off. 0:04:40.160 --> 0:04:40.480 We got it. 0:04:40.560 --> 0:04:42.360 We got a mechanical system to say we need to 0:04:43.000 --> 0:04:44.080 unwind some positions. 0:04:44.640 --> 0:04:46.880 Okay, so the last when was the last time I 0:04:46.960 --> 0:04:47.679 told you to sell? 0:04:48.040 --> 0:04:49.960 We had a sell signal in April when we had 0:04:49.960 --> 0:04:52.360 the tariff tantrum and DEVI and then we came back 0:04:52.400 --> 0:04:54.159 in and it was it was a pretty It was 0:04:54.240 --> 0:04:56.360 not a great trade for us because it was so violent, 0:04:56.440 --> 0:04:59.160 so volatile, because it is a trend indicator, and when 0:04:59.200 --> 0:05:01.200 the trend changes all in like forty eight hours, that's 0:05:01.240 --> 0:05:03.280 tough to trade. So okay, so you'll remember before we 0:05:03.360 --> 0:05:05.880 jump onto that. We remember the nasback was down twenty 0:05:05.880 --> 0:05:07.120 eight percent in a member of days. 0:05:07.240 --> 0:05:08.360 Yeah, that's tough trade. 0:05:08.400 --> 0:05:10.440 The S and P five hundred low for the year 0:05:10.920 --> 0:05:14.800 was back on April eighth. Did you what day did 0:05:14.800 --> 0:05:16.039 you sell? And what did did you get back in? 0:05:16.080 --> 0:05:17.279 Do you remember to be quite Canada? 0:05:17.279 --> 0:05:17.839 I don't remember. 0:05:17.839 --> 0:05:19.599 But did you miss did you miss some of the upside? 0:05:19.839 --> 0:05:22.320 We missed some of the upside we did painfully for us. 0:05:22.800 --> 0:05:23.560 But you know when you trade. 0:05:23.600 --> 0:05:25.520 We found some of the downside we did, and. 0:05:25.960 --> 0:05:27.840 We did and it was a painful trade for us. 0:05:27.839 --> 0:05:29.560 I'm going to admit it. It wasn't a great trade for us. 0:05:29.600 --> 0:05:32.800 Remember the biolize everybody. It feels like it's a seventy 0:05:32.839 --> 0:05:34.640 thirty thirty percent of the time. It's not going to work. 0:05:34.920 --> 0:05:36.279 So we're going to get whips and. 0:05:36.279 --> 0:05:37.040 Do you do you go? 0:05:37.320 --> 0:05:38.720 Do you go all in and all out? 0:05:38.720 --> 0:05:39.159 At times? 0:05:39.200 --> 0:05:42.160 No, we scale, you scale, So because we were I mean, 0:05:42.480 --> 0:05:45.919 we were talking with somebody just last week, a manager 0:05:46.279 --> 0:05:49.320 who says that you know, he this was a really 0:05:49.360 --> 0:05:54.400 interesting conversation. He basically said, I'm so tactical that I'm 0:05:54.400 --> 0:05:57.360 willing to go to one hundred percent cash for all 0:05:57.400 --> 0:05:59.680 of my clients at any given moment. Do you ever 0:05:59.720 --> 0:05:59.960 do that? 0:06:00.360 --> 0:06:02.520 We have before in two thousand and eight, we're one hundred percent. 0:06:02.640 --> 0:06:04.279 The only the only way that we'll go one hundred 0:06:04.279 --> 0:06:06.520 percent to cash is if the banks are imploding, and 0:06:06.520 --> 0:06:08.159 that's what was happening in two thousand and eight. So 0:06:08.200 --> 0:06:10.320 if we're thirty percent out or sixty percent out but 0:06:10.560 --> 0:06:12.400 all are none. Game is a tough game to trade, 0:06:12.640 --> 0:06:13.000 it is. 0:06:13.040 --> 0:06:15.320 I mean, the tax implications of that are huge. 0:06:15.080 --> 0:06:17.560 Well, taxing maclations, but catching both sides of the trade 0:06:17.560 --> 0:06:18.880 perfect are really tough. 0:06:19.080 --> 0:06:21.520 So he said, I would rather pay twenty percent taxes 0:06:21.560 --> 0:06:24.000 than have thirty percent declines. 0:06:24.080 --> 0:06:25.039 I forget what that was. 0:06:25.080 --> 0:06:25.800 You're right like that. 0:06:25.880 --> 0:06:30.839 I can't remember us. I did well my the private 0:06:31.000 --> 0:06:35.400 credit market. Oh you're ready to create something? Oh thank you, 0:06:35.839 --> 0:06:38.760 akin to the Great Financial Crisis, because it does feel 0:06:38.800 --> 0:06:41.720 like increasingly we're seeing things every day people are worried. 0:06:41.920 --> 0:06:43.760 Yeah, and I think that what's going to what should 0:06:43.760 --> 0:06:45.440 worry people as our national debt. I think that's a 0:06:45.480 --> 0:06:47.160 tipping point. If that cracks, I think we've got a 0:06:47.160 --> 0:06:48.560 real problem. 0:06:48.440 --> 0:06:50.240 Like real, like the Great Financial criss. 0:06:50.240 --> 0:06:52.040 I think, like a great financial crisis. I think you're 0:06:52.040 --> 0:06:54.080 going to make Yeah, it's to tip. Yeah, it's gona 0:06:54.080 --> 0:06:55.960 affect everything. I mean the banks are going to lock up. 0:06:56.000 --> 0:06:57.520 Credit is going to lock up. People are going to 0:06:57.520 --> 0:06:58.760 be short or long term loans. 0:06:59.480 --> 0:07:01.120 When you say banks, I mean the big banks too. 0:07:01.160 --> 0:07:02.760 I think the big banks, of course. And I think 0:07:02.760 --> 0:07:04.400 it's gonna affect everybody. I mean, what do you got 0:07:04.640 --> 0:07:05.880 X amount of tree? And is the death that we 0:07:05.920 --> 0:07:07.760 currently have And every day it's getting larger and larger 0:07:07.760 --> 0:07:11.080 and larger. It's unsustainable. And if they keep printing money, Carol, 0:07:11.760 --> 0:07:13.760 your dollar, my dollar, all of a sudden's is not 0:07:13.800 --> 0:07:16.120 worth a dollars for a nickel. And so you got it. 0:07:16.160 --> 0:07:18.080 That's the printing of money is going to have to 0:07:18.080 --> 0:07:18.560 stop too. 0:07:18.920 --> 0:07:21.520 What about the AI bubble? I shouldn't called bubble because 0:07:21.520 --> 0:07:22.760 we don't know if it's a bubble. We just know 0:07:22.800 --> 0:07:24.600 it's a big spend right now, which bubble? 0:07:24.640 --> 0:07:27.200 The AI? Yeah, it's not a big spin. This is 0:07:27.200 --> 0:07:29.320 different when we looked at you remember in nineteen ninety 0:07:29.400 --> 0:07:30.920 nine and we had the three year bear market. They 0:07:30.920 --> 0:07:32.920 had all these tech stocks that blew up. They weren't 0:07:32.960 --> 0:07:36.040 making any money. They were not making any money. Were 0:07:36.120 --> 0:07:38.520 going on. They're making money hand over fist. They're making 0:07:38.520 --> 0:07:40.640 money so fast they can't spend it. What happens if 0:07:40.680 --> 0:07:43.440 in five to seven years to ten years, Microsoft is 0:07:43.480 --> 0:07:45.280 so profitable they're paying an eight or ten or twelve 0:07:45.280 --> 0:07:46.000 percent dividend. 0:07:46.240 --> 0:07:48.920 So ten seconds, you're still owning the big mag seven, 0:07:48.960 --> 0:07:50.360 the big tech, the hyperscalers. 0:07:50.440 --> 0:07:51.360 I am here, you're buying them. 0:07:51.920 --> 0:07:53.920 I am hoping that the Vidio comes out with something 0:07:53.920 --> 0:07:55.840 that shocks the market. They drop down so I can 0:07:55.840 --> 0:07:57.720 buy more, because five years from now, in the video 0:07:57.800 --> 0:07:59.440 is going to be a lot higher and is today. 0:08:00.000 --> 0:08:01.000 Shame you're not more bullish. 0:08:02.080 --> 0:08:02.720 I'm just kidding. 0:08:03.160 --> 0:08:06.520 Vance Howard, chief executive officer portfolio manager at Howard Capital Market, 0:08:06.560 --> 0:08:07.120 Thanks so much. 0:08:07.360 --> 0:08:10.120 Stay with us. More from Bloomberg Business Week Daily coming 0:08:10.200 --> 0:08:11.120 up after this. 0:08:15.040 --> 0:08:18.920 You're listening to the Bloomberg Business Week Daily Podcast. Catch 0:08:19.000 --> 0:08:21.720 us live weekday afternoons from two to five ees. During that, 0:08:21.920 --> 0:08:25.120 listen on Apple, Karplay and Android Otto with the Bloomberg 0:08:25.160 --> 0:08:28.280 Business app or watch us live on YouTube. 0:08:28.880 --> 0:08:31.520 All right, Saudi Crown Prince Mohammed Ben Salmon at the 0:08:31.560 --> 0:08:35.120 White House with President Trump earlier today this evening. By 0:08:35.120 --> 0:08:37.679 the way, there's a black tie dinner, not an official 0:08:37.760 --> 0:08:40.640 state dinner, although at that dinner we did here, Elon 0:08:40.720 --> 0:08:41.360 Musk would be there. 0:08:41.559 --> 0:08:43.439 Tiger Woods reportedly will be there as well. 0:08:43.559 --> 0:08:44.560 Yeah, a lot of officials. 0:08:44.600 --> 0:08:44.760 Right. 0:08:45.679 --> 0:08:48.440 There's also an investment conference plan for tomorrow that executives 0:08:48.480 --> 0:08:52.000 from companies including Chevron Pfizer, they will be attending. So 0:08:52.360 --> 0:08:55.280 we wanted to kind of put this in perspective because 0:08:55.320 --> 0:08:57.680 typically you would see these two kinds of leaders meet 0:08:57.720 --> 0:08:59.440 and you think energy policy would come up. 0:08:59.760 --> 0:09:02.760 Really didn't. Let's get to it with doctor Allen Wall. 0:09:02.840 --> 0:09:06.000 She's president of Transversal Consulting, Senior Fellow at the Atlanta Council, 0:09:06.320 --> 0:09:10.520 author of Saudi Inc. Joining US from Boca Raton, Florida. Ellen, 0:09:10.760 --> 0:09:13.880 so good to have you back here. Feels like Saudi Inc. 0:09:13.920 --> 0:09:16.839 And US Inc. Are kind of merging. Tell me about 0:09:16.840 --> 0:09:19.240 this meeting because it was kind of fascinating. It really 0:09:19.320 --> 0:09:22.640 wasn't about conversations around oil or the energy markets. 0:09:23.760 --> 0:09:27.720 It was absolutely fascinating, especially if you had an opportunity 0:09:27.760 --> 0:09:30.840 to watch the press conference live. I think everything from 0:09:31.160 --> 0:09:34.400 the marble fulloers to the White House, to whether or 0:09:34.480 --> 0:09:37.120 not Sadi Ava is going to join the Abraham Accords 0:09:37.160 --> 0:09:41.800 was covered. What's interesting is the amount of money that 0:09:42.280 --> 0:09:46.520 Mohammed ben Salmon is talking about potentially investing in the 0:09:46.640 --> 0:09:48.840 United States. And I think the big question on everyone's 0:09:48.880 --> 0:09:51.520 mind is where are they getting this money from, given 0:09:51.559 --> 0:09:54.200 that oil prices are pretty low. And I think the 0:09:54.280 --> 0:09:57.680 answer really is you have to look at the Saudi 0:09:58.120 --> 0:10:02.040 Investment Fund, the PIF, because that's really where they have 0:10:02.120 --> 0:10:06.080 a lot of their investment dollars and ready to deploy, 0:10:06.880 --> 0:10:10.760 and that fund is really independent of the price of 0:10:10.760 --> 0:10:13.600 a barrel of oil. So I think the question of 0:10:13.640 --> 0:10:18.160 whether Saudi can deliver this money, the answer is yes, 0:10:18.679 --> 0:10:23.440 But whether they actually will deliver on this is another question. 0:10:23.520 --> 0:10:25.319 And I do think that a lot of that money 0:10:25.360 --> 0:10:29.040 is probably earmarked for defense purchases, and that really depends 0:10:29.040 --> 0:10:32.000 on whether they do go through with this agreement to 0:10:32.120 --> 0:10:36.200 sell Saudi Arabia F thirty five and other defense equipment 0:10:36.240 --> 0:10:40.120 that is somewhat controversial and hasn't necessarily been sold to 0:10:40.120 --> 0:10:40.760 Saudi Arabia. 0:10:40.800 --> 0:10:44.160 Previously, Cherl mentioned that you're the author of saudiank The 0:10:44.200 --> 0:10:47.520 History of Saudi Arabia and a Ramco, and I wonder 0:10:47.559 --> 0:10:52.440 now how successful the Saudi Arabian government has been the 0:10:52.520 --> 0:10:56.800 Kingdom of Saudi Arabia of diversifying its economy away from oil. 0:10:57.240 --> 0:10:58.280 Has it been successful? 0:10:59.320 --> 0:11:01.680 That is a really great question, and I think the 0:11:01.720 --> 0:11:04.960 answer is if you're looking at and you're trying to say, 0:11:05.320 --> 0:11:07.960 have they achieved the goals that they set out to 0:11:08.040 --> 0:11:11.320 achieve when they announced their big plan to diversify, well, 0:11:11.400 --> 0:11:14.640 the answer is no, they have not really achieved those goals. 0:11:14.880 --> 0:11:17.360 I think really a lot of those goals were not 0:11:17.760 --> 0:11:20.800 achievable goals. What they have done is they have introduced 0:11:20.800 --> 0:11:24.600 some very important changes that I think can certainly help 0:11:24.720 --> 0:11:28.520 make the Saudi economy more robust over time. We're talking 0:11:28.600 --> 0:11:31.880 about making it easier for foreigners to visit the country, 0:11:32.240 --> 0:11:35.000 both for tourism but also to work, opening up the 0:11:35.040 --> 0:11:39.240 workspace for women, and important societal changes like that. I 0:11:39.280 --> 0:11:42.239 think in the long run will help diversify their economy. 0:11:42.520 --> 0:11:46.240 But if you're asking whether their economy is still very 0:11:46.320 --> 0:11:49.880 much dependent on the energy industry, the answer is yes. 0:11:50.040 --> 0:11:53.040 A Ramco, on the other hand, has over the past 0:11:54.360 --> 0:11:58.600 fifty years, I would say, significantly diversified itself from simply 0:11:58.960 --> 0:12:01.959 an upstream come that sold a lot of crude oil 0:12:02.080 --> 0:12:07.160 to a very diverse energy company that has multiple revenue streams. 0:12:07.200 --> 0:12:09.400 So they're not just dependent on what the price of 0:12:09.400 --> 0:12:11.320 a barrel of oil is. They make a lot of 0:12:11.320 --> 0:12:14.600 oil products, they're getting into natural gas, they make money 0:12:14.679 --> 0:12:18.040 off of trading oil in the financial sense, and so 0:12:18.840 --> 0:12:21.720 they're making a lot of money that is not dependent 0:12:21.840 --> 0:12:24.160 on whether the price of a barrel of oil is 0:12:24.200 --> 0:12:26.199 sixty dollars or eighty dollars. 0:12:27.200 --> 0:12:28.160 So I guess what. 0:12:29.720 --> 0:12:32.600 This relationship that we are seeing between the United States 0:12:32.600 --> 0:12:35.840 and Saudi Arabia. I feel like it's always been a 0:12:35.840 --> 0:12:39.120 bit of a frenemy kind of relationship between the two nations. 0:12:39.160 --> 0:12:41.240 Having said that, there's been times where it's been stronger 0:12:41.240 --> 0:12:42.320 at times when it has not. 0:12:44.400 --> 0:12:47.480 Is this the relationship going forward in your view? 0:12:48.880 --> 0:12:51.760 What's so interesting about the relationship between the US and 0:12:51.880 --> 0:12:55.200 Saudi Arabia is that Saudi Arabia has a very different 0:12:55.280 --> 0:12:58.040 view of the relationship than the United States does. In 0:12:58.480 --> 0:13:02.120 the Saudi mind, the US is a best friend that 0:13:02.120 --> 0:13:04.640 they've They've always been so close, and they've cultivated an 0:13:04.800 --> 0:13:09.400 entire kind of aura, an idea about this friendship. They 0:13:09.400 --> 0:13:11.959 think the US is a huge ally. If you look 0:13:11.960 --> 0:13:14.920 at it from the US perspective, satur Arabia is at 0:13:15.040 --> 0:13:18.080 least it can be a strategic partner. But satur Arabia 0:13:18.160 --> 0:13:20.679 would not be considered an ally to the United States 0:13:20.720 --> 0:13:23.800 the same way Great Britain or Canada. 0:13:23.840 --> 0:13:25.080 Might be considered an ally. 0:13:25.200 --> 0:13:27.600 And so I think that that leads to very different 0:13:27.640 --> 0:13:30.800 opinions about what exactly is going to go on. So 0:13:31.480 --> 0:13:34.320 you know whether or not you know Sadi Arabi has 0:13:34.360 --> 0:13:38.079 a defense agreement, Yes, traditionally we have had defense agreements, 0:13:38.400 --> 0:13:41.680 but from the US perspective that's not always so guaranteed. 0:13:41.720 --> 0:13:44.920 If it's beneficial to the US, then it will happen. 0:13:45.600 --> 0:13:48.760 But you know, it's not necessarily a guarantee. It's not 0:13:48.840 --> 0:13:52.840 necessarily this ally ship that the Saudis often perceived the 0:13:52.880 --> 0:13:53.720 relationship to be. 0:13:53.920 --> 0:13:55.720 Well, it's interesting when you say Canada and the UK, 0:13:55.760 --> 0:13:58.400 and in particular Canada, I feel like, you know, it 0:13:58.440 --> 0:14:01.640 looks almost a friendly relationship between the US and Saudi 0:14:01.640 --> 0:14:03.840 Arabia than it certainly does between US and Canada. 0:14:03.920 --> 0:14:04.280 Right now. 0:14:04.440 --> 0:14:07.400 I guess my question really, you know, Ellen, is are 0:14:07.440 --> 0:14:09.640 we laying the ground for whoever is in the White 0:14:09.679 --> 0:14:13.160 House next, be it Democrat or Republican, that this is 0:14:13.200 --> 0:14:17.040 the relationship or could it change and get different depending again, 0:14:17.080 --> 0:14:18.120 who is in the White House. 0:14:19.240 --> 0:14:21.360 I think that there's always kind of a baseline, and 0:14:21.400 --> 0:14:24.160 you could see that when Trump was kind of fishing 0:14:24.200 --> 0:14:26.520 for a compliment from NBS as you know, oh, well, 0:14:26.560 --> 0:14:28.880 he's the best president. You know, they've had the best 0:14:28.920 --> 0:14:31.800 relationship with Trump, and NBS kind of answered that with, well, 0:14:31.800 --> 0:14:34.480 we've always had, you know, Democrat or Republican, we've always 0:14:34.520 --> 0:14:37.120 had good relations with president of the United States, and 0:14:37.120 --> 0:14:40.320 then he mentions Reagan as a particularly good one. So 0:14:40.400 --> 0:14:42.960 I think that NBS is certainly looking at this as 0:14:43.160 --> 0:14:46.080 he's got to lay the groundwork for his good relationships 0:14:46.400 --> 0:14:49.200 with presidents that are going to come after Trump, whereas 0:14:49.320 --> 0:14:50.800 Trump is seeing it as the hero and. 0:14:50.800 --> 0:14:54.040 Now the military balance of power in the Middle East, 0:14:54.080 --> 0:14:57.920 the potential F thirty fives that Saudi Arabia could get 0:14:57.960 --> 0:15:00.600 as a result of making a deal with the UNI States. 0:15:00.640 --> 0:15:02.920 President Trump said he would approve selling the F thirty 0:15:02.920 --> 0:15:06.760 five fighter jet to Saudi Arabia. I'm just wondering how 0:15:06.760 --> 0:15:09.480 that changes the balance of power when it comes to 0:15:09.520 --> 0:15:13.120 the militaries in the region, especially with regard to Israel, 0:15:13.400 --> 0:15:16.520 which for years has been a US ally, And also 0:15:16.560 --> 0:15:19.560 what US interest the US would have an interest in 0:15:19.600 --> 0:15:22.360 selling F thirty five's apart from getting the revenue to 0:15:22.440 --> 0:15:23.640 a US company. 0:15:25.000 --> 0:15:25.440 Exactly. 0:15:25.440 --> 0:15:28.040 I do think from Trump's perspective, he thinks that the 0:15:28.160 --> 0:15:31.480 F thirty fives are the greatest airplane ever to be made, 0:15:31.560 --> 0:15:34.080 and so he loves that everybody wants them, and so 0:15:34.120 --> 0:15:36.960 it's more of an economic issue. I think from the 0:15:36.960 --> 0:15:39.320 Pentagon's perspective, they're looking at it as more of a 0:15:39.320 --> 0:15:44.280 strategic issue. Now. The UAE apparently got assurances they would 0:15:44.280 --> 0:15:47.480 be able to purchase these when they signed the Abraham Accords, 0:15:47.520 --> 0:15:49.640 and it was believed that this would also be a 0:15:49.680 --> 0:15:52.520 condition for Saudi Arabia. I think it's very very clear 0:15:52.560 --> 0:15:54.360 now that Saudi Arabia is not going to join the 0:15:54.400 --> 0:15:59.120 Abraham Accords. They're not recognizing Israel unless they get unless 0:15:59.160 --> 0:16:02.200 there's an absolutely there's an assured pathword to Palestinian state. 0:16:02.800 --> 0:16:05.960 I don't see that happening anytime in the near future. 0:16:06.000 --> 0:16:07.520 So I think we're kind of going to be at 0:16:07.560 --> 0:16:12.479 a standstill here, and if the Pentagon has severe concerns 0:16:12.480 --> 0:16:15.480 about it, I think it may not actually go through 0:16:15.720 --> 0:16:17.720 as much as Trump wants it to go through. 0:16:18.000 --> 0:16:20.160 Is that more tricky or is it the AI chips 0:16:20.200 --> 0:16:24.240 that are more tricky and Saudi Arabia need both. 0:16:25.360 --> 0:16:27.720 The AI chips are very tricky. I do think. 0:16:27.640 --> 0:16:31.040 That that's really what's going to be the focus of 0:16:31.120 --> 0:16:35.440 this investment meeting and this dinner, is that the PIF 0:16:35.520 --> 0:16:38.320 wants to make these investments in these firms because that's 0:16:38.440 --> 0:16:42.600 their way of kind of getting their hands on this technology. 0:16:42.880 --> 0:16:45.760 I think from the US national security perspective, they don't 0:16:45.800 --> 0:16:50.000 want their chips to be in any connection with Chinese 0:16:50.520 --> 0:16:54.840 technology equipment. And so there are serious concerns cybersecurity concerns 0:16:54.880 --> 0:16:57.240 there that are going to have to be dealt with. 0:16:57.760 --> 0:17:01.240 But I do see the PIF potentially make investments in 0:17:01.520 --> 0:17:06.520 these firms. I don't see necessarily US producing semiconductors and 0:17:06.600 --> 0:17:09.760 chips in Saudi Arabia, but I do think the Saudis 0:17:09.800 --> 0:17:12.919 can make a case to try to get data centers 0:17:12.920 --> 0:17:16.080 in the kingdom, particularly if they can assure the security 0:17:16.080 --> 0:17:19.359 the equipment in their country, and also if they offer 0:17:19.480 --> 0:17:22.760 you know, basically free land and free energy. I could 0:17:22.840 --> 0:17:25.400 see I could see that being a very powerful draw. 0:17:25.520 --> 0:17:28.160 All right, great stuff, Ellen, Thank you so much, doctor 0:17:28.200 --> 0:17:30.920 Ellen Wall, President of Transversal Consulting, Senior Fellow at the 0:17:30.960 --> 0:17:31.840 Atlantic Council. 0:17:32.040 --> 0:17:34.760 Stay with us. More from Bloomberg Business Week Daily coming 0:17:34.880 --> 0:17:40.640 up after this. 0:17:40.640 --> 0:17:44.480 This is the Bloomberg Business Week Daily Podcast. 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