1 00:00:00,280 --> 00:00:07,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:10,320 --> 00:00:12,600 Speaker 2: This is Bloomberg day Break Weekend, our global look at 3 00:00:12,640 --> 00:00:14,880 Speaker 2: the top stories in the coming week from our Daybreak 4 00:00:14,880 --> 00:00:17,520 Speaker 2: anchors all around the world. Straight Ahead, on the program, 5 00:00:17,560 --> 00:00:20,599 Speaker 2: we look at corporate earnings from eb maker Tesla. I'm 6 00:00:20,600 --> 00:00:21,880 Speaker 2: Tom Busby in New York. 7 00:00:21,960 --> 00:00:24,560 Speaker 3: I'm Carolyn Hepge here in London, where we're asking what's 8 00:00:24,640 --> 00:00:27,800 Speaker 3: next for European equities as some of the continent's biggest 9 00:00:27,880 --> 00:00:30,280 Speaker 3: names prepared to deliver their results. 10 00:00:30,600 --> 00:00:33,920 Speaker 4: I'm Greg Krissner with a new way Chinese retail suppliers 11 00:00:34,080 --> 00:00:36,760 Speaker 4: are looking to circumvent US tariffs. 12 00:00:38,200 --> 00:00:42,240 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 13 00:00:42,280 --> 00:00:45,960 Speaker 1: eleven three zero, New York, Bloomberg ninety nine to one, Washington, DC, 14 00:00:46,479 --> 00:00:50,720 Speaker 1: Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, 15 00:00:51,159 --> 00:00:54,320 Speaker 1: Sirias XM one twenty one, and around the world on 16 00:00:54,440 --> 00:00:57,560 Speaker 1: Bloomberg Radio, dot Com and the Bloomberg Business app. 17 00:01:02,520 --> 00:01:04,320 Speaker 2: Good day to you. We begin today's program with a 18 00:01:04,360 --> 00:01:07,160 Speaker 2: look at the US housing market and what could happen 19 00:01:07,240 --> 00:01:11,840 Speaker 2: if the President's tariff policies drive inflation and mortgage rates higher. 20 00:01:12,120 --> 00:01:14,400 Speaker 2: Home sales data for March out this week could give 21 00:01:14,480 --> 00:01:16,480 Speaker 2: us an early look at the impact of those tariffs 22 00:01:16,480 --> 00:01:19,280 Speaker 2: on mortgage rates and home sales during this critical time 23 00:01:19,319 --> 00:01:22,640 Speaker 2: for the industry. For more, we're joined by Erica Adelberg, 24 00:01:22,880 --> 00:01:27,640 Speaker 2: Bloomberg Intelligence, Chief Mortgage backed Securities Strategists. Well, Erica, thank 25 00:01:27,680 --> 00:01:28,279 Speaker 2: you so much. 26 00:01:28,120 --> 00:01:29,760 Speaker 5: For being here, Thank you for having me. 27 00:01:30,120 --> 00:01:32,759 Speaker 2: We are in the heart of the spring home buying season. 28 00:01:33,200 --> 00:01:35,800 Speaker 2: Just last week, average long term mortgage rates, though rose, 29 00:01:35,840 --> 00:01:38,440 Speaker 2: first time we've seen that in six weeks, six point 30 00:01:38,480 --> 00:01:41,720 Speaker 2: eight one percent, according to the Mortgage Bankers Association. How 31 00:01:41,720 --> 00:01:44,839 Speaker 2: big a factor are mortgage rates in housing right now? 32 00:01:45,080 --> 00:01:48,320 Speaker 5: Hi, Yeah, it's interesting. We actually wrote a note just 33 00:01:48,360 --> 00:01:52,440 Speaker 5: this week that talked about the different factors that enter 34 00:01:52,520 --> 00:01:56,120 Speaker 5: into a home buyer's decision, and we started with everything 35 00:01:56,160 --> 00:01:58,400 Speaker 5: you know, the equity market was taking. That's actually what 36 00:01:58,520 --> 00:02:01,520 Speaker 5: drove our inquiry. We're like, hey, is the wealth effect gonna, 37 00:02:01,560 --> 00:02:03,840 Speaker 5: you know, make people shy away from the housing market. 38 00:02:04,160 --> 00:02:07,280 Speaker 5: The number one important thing for people's home buying decisions 39 00:02:07,360 --> 00:02:11,400 Speaker 5: right now, historically and currently is mortgage rates. 40 00:02:11,360 --> 00:02:13,600 Speaker 2: Even more so than the sticker price on that. 41 00:02:13,639 --> 00:02:16,160 Speaker 5: Home, even more so than the sticker price on their home. 42 00:02:16,240 --> 00:02:19,639 Speaker 5: Because of the leverage involved in mortgage rates, that even 43 00:02:19,680 --> 00:02:21,600 Speaker 5: a small shift in mortgage rates is going to shift 44 00:02:21,639 --> 00:02:24,880 Speaker 5: your monthly payment a lot more than you know, ten 45 00:02:24,919 --> 00:02:26,240 Speaker 5: thousand dollars more for a home. 46 00:02:27,400 --> 00:02:30,000 Speaker 2: And there are a lot of factors, I know, yes, 47 00:02:30,040 --> 00:02:31,080 Speaker 2: but if that's number. 48 00:02:30,840 --> 00:02:33,600 Speaker 5: One, and affordability does matter, don't get me wrong. And 49 00:02:33,639 --> 00:02:35,560 Speaker 5: so home price is factor into that. And I think 50 00:02:35,560 --> 00:02:37,800 Speaker 5: in this era where people are stretching as far as 51 00:02:37,840 --> 00:02:40,400 Speaker 5: they can get to buy something, you know, with debt 52 00:02:40,480 --> 00:02:43,280 Speaker 5: to incomes for new homes, you know, above forty percent 53 00:02:43,360 --> 00:02:47,160 Speaker 5: for most borrowers, that's one of the reasons that mortgage 54 00:02:47,200 --> 00:02:49,280 Speaker 5: rates matters so much. But as I say that, it's 55 00:02:49,360 --> 00:02:52,200 Speaker 5: just it's it's math, you know, just a small tweak 56 00:02:52,320 --> 00:02:54,400 Speaker 5: up in mortgage rates and all of a sudden, you know, 57 00:02:54,440 --> 00:02:56,440 Speaker 5: the mortgage payment goes up a lot, and. 58 00:02:56,400 --> 00:02:59,040 Speaker 2: Wait till they learn about property taxes. 59 00:02:58,680 --> 00:03:00,520 Speaker 6: And insurance right right. 60 00:03:00,919 --> 00:03:03,880 Speaker 2: Well. In the latest University of Michigan Consumer Sentiments Survey, 61 00:03:04,000 --> 00:03:08,160 Speaker 2: expectations for inflation where the highest since Ronald Reagan was president. 62 00:03:09,080 --> 00:03:12,519 Speaker 2: How could tariff driven inflation even if it's three or 63 00:03:12,520 --> 00:03:15,240 Speaker 2: four percent, not six percent, like people are afraid of, 64 00:03:15,280 --> 00:03:16,880 Speaker 2: affect mortgage rates in housing. 65 00:03:17,639 --> 00:03:21,440 Speaker 5: Our concern in terms of mortgage driven inflation, of tariff 66 00:03:21,520 --> 00:03:26,040 Speaker 5: driven inflation is that it will paralyze the FED. And 67 00:03:26,160 --> 00:03:30,600 Speaker 5: while the FED doesn't control mortgage rates, you know, it 68 00:03:30,720 --> 00:03:33,160 Speaker 5: might keep the FED on hold for longer. And even 69 00:03:33,280 --> 00:03:36,280 Speaker 5: if the Fed does find room to ease a little bit, 70 00:03:36,960 --> 00:03:40,760 Speaker 5: long term inflation expectations are likely to keep the longer 71 00:03:40,880 --> 00:03:44,280 Speaker 5: end of the treasury rate curve and therefore mortgage rates higher, 72 00:03:44,880 --> 00:03:48,720 Speaker 5: So the mortgage borrowers are looking for, you know, some 73 00:03:48,960 --> 00:03:51,880 Speaker 5: relief from Fed easing if you know, if rates are 74 00:03:51,960 --> 00:03:53,320 Speaker 5: able to come down a little bit and short and 75 00:03:53,680 --> 00:03:55,480 Speaker 5: may not see that at all in the longer end 76 00:03:55,480 --> 00:03:57,280 Speaker 5: of the treasury curve and therefore may not see it 77 00:03:57,360 --> 00:03:58,680 Speaker 5: at all in their mortgage rates. 78 00:03:58,760 --> 00:04:01,600 Speaker 2: And the FED have made no indication that they're willing 79 00:04:01,640 --> 00:04:03,960 Speaker 2: to step in before their next meeting, which is only 80 00:04:04,720 --> 00:04:07,640 Speaker 2: two weeks away, but they still waiting to see what happens. Well. 81 00:04:07,680 --> 00:04:10,320 Speaker 5: The other interesting element to this is, you know, in 82 00:04:10,920 --> 00:04:14,120 Speaker 5: after the two thousand and eight crisis and even in 83 00:04:14,160 --> 00:04:17,520 Speaker 5: the twenty twenty pandemic crisis, the FED stepped in and 84 00:04:17,560 --> 00:04:21,360 Speaker 5: bought mortgages themselves, so they actually did have a direct 85 00:04:21,480 --> 00:04:24,760 Speaker 5: lever to affect mortgage rates to some degree. They have 86 00:04:24,800 --> 00:04:27,919 Speaker 5: shown no indication they're interested in doing that again. I 87 00:04:27,960 --> 00:04:30,000 Speaker 5: can't tell you how many times they've said they want 88 00:04:30,080 --> 00:04:31,839 Speaker 5: the portfolio to run off, to be more of a 89 00:04:31,880 --> 00:04:35,640 Speaker 5: treasury only holding that they're holding. So, you know, can 90 00:04:35,680 --> 00:04:36,680 Speaker 5: it never happen again? 91 00:04:37,000 --> 00:04:37,279 Speaker 6: Could? 92 00:04:37,800 --> 00:04:40,720 Speaker 5: Is it likely to happen? They will try very hard 93 00:04:40,760 --> 00:04:42,840 Speaker 5: I think, not to add mortgages to their to buy 94 00:04:42,920 --> 00:04:44,080 Speaker 5: mortgages outright again. 95 00:04:44,200 --> 00:04:47,360 Speaker 2: Wow, well, it already looks like there's some fear that 96 00:04:47,400 --> 00:04:51,360 Speaker 2: may have hit sales in March. We have expectations for 97 00:04:52,560 --> 00:04:55,040 Speaker 2: home sales and newly built homes one third what they 98 00:04:55,040 --> 00:04:58,120 Speaker 2: were in February, and existing home sales rose more than 99 00:04:58,120 --> 00:05:02,039 Speaker 2: four percent in February, forecasted decline three percent in March. 100 00:05:02,400 --> 00:05:05,240 Speaker 2: I mean, is this tied back to mortgage rates and 101 00:05:05,320 --> 00:05:07,760 Speaker 2: the fear of inflation going even higher? 102 00:05:08,440 --> 00:05:10,720 Speaker 5: I think this is tied back to mortgage rates. 103 00:05:11,560 --> 00:05:11,760 Speaker 1: You know. 104 00:05:11,800 --> 00:05:15,920 Speaker 5: On the positive side, we have seen the NBA Purchase Index, 105 00:05:15,960 --> 00:05:18,799 Speaker 5: which is a good indication of people who are looking 106 00:05:18,839 --> 00:05:22,480 Speaker 5: to take out loans to buy homes, has actually gone 107 00:05:22,560 --> 00:05:25,640 Speaker 5: now up above twenty twenty three levels for the first time. 108 00:05:26,640 --> 00:05:28,919 Speaker 5: It had already broken above twenty twenty four, about a 109 00:05:28,920 --> 00:05:32,320 Speaker 5: month ago. But yeah, we are seeing signs that and 110 00:05:32,360 --> 00:05:34,839 Speaker 5: I think you know, existing home sales had begun to improve. 111 00:05:34,839 --> 00:05:37,000 Speaker 5: It was finally improving on a year over year basis, 112 00:05:38,040 --> 00:05:40,960 Speaker 5: you know, until I think last month, just because there 113 00:05:40,960 --> 00:05:43,360 Speaker 5: were more homes that are coming on the market, availability 114 00:05:43,640 --> 00:05:45,360 Speaker 5: a lot of people were sitting on these very low 115 00:05:45,400 --> 00:05:48,040 Speaker 5: coupon mortgages and didn't want to sell their homes, which 116 00:05:48,120 --> 00:05:52,839 Speaker 5: really tanked existing home sales even as new home sales 117 00:05:52,880 --> 00:05:57,200 Speaker 5: were growing, that is home sales of new construction. 118 00:05:57,880 --> 00:05:58,760 Speaker 6: But you know, at the. 119 00:05:58,760 --> 00:06:02,799 Speaker 5: Same time, what we've found is that inventory is rising 120 00:06:03,240 --> 00:06:07,359 Speaker 5: may have limits because pending home sales were down seven 121 00:06:07,360 --> 00:06:10,040 Speaker 5: percent year every year in March and could continue down 122 00:06:10,240 --> 00:06:11,480 Speaker 5: as mortgage rates go up. 123 00:06:12,000 --> 00:06:14,560 Speaker 2: Now, speaking of new homes, home builder sentiment we got 124 00:06:14,600 --> 00:06:18,159 Speaker 2: just last week was that expected to go a little higher. 125 00:06:18,279 --> 00:06:19,039 Speaker 2: Kind of surprised me. 126 00:06:20,040 --> 00:06:23,640 Speaker 5: It's still well below fifty, which is where there's more 127 00:06:23,720 --> 00:06:27,039 Speaker 5: pessimists than optimists. That's a diffusion index, and fifty means 128 00:06:27,080 --> 00:06:29,960 Speaker 5: there as many pessimists as optimists. But it was expected 129 00:06:30,000 --> 00:06:33,279 Speaker 5: to tick down slightly, and it's that it ticked up slightly, 130 00:06:33,400 --> 00:06:36,080 Speaker 5: expected to kind of go to a long term low 131 00:06:36,120 --> 00:06:38,040 Speaker 5: of thirty eight, and it went up to forty s. 132 00:06:38,200 --> 00:06:39,680 Speaker 2: I think, what do you think they see? 133 00:06:40,480 --> 00:06:42,279 Speaker 5: What it seems like they're seeing, you know, from what 134 00:06:42,320 --> 00:06:45,279 Speaker 5: I've read, having not talked to them directly, is it 135 00:06:45,320 --> 00:06:48,880 Speaker 5: seems like they're seeing an increased in current traffic and 136 00:06:48,920 --> 00:06:51,920 Speaker 5: again that that might be as much of a reflection 137 00:06:52,080 --> 00:06:54,200 Speaker 5: of rates having dipped down a little bit at the 138 00:06:54,279 --> 00:06:58,600 Speaker 5: end of March and in March, but forward looking, they're 139 00:06:58,720 --> 00:07:02,159 Speaker 5: very concerned about tear increasing their prices. I think the 140 00:07:02,279 --> 00:07:04,279 Speaker 5: estimate is they think on a per home basis, they 141 00:07:04,320 --> 00:07:06,360 Speaker 5: think tariffs are going to increase the price of their 142 00:07:06,400 --> 00:07:09,120 Speaker 5: new construction by an average of eleven thousand. 143 00:07:09,560 --> 00:07:12,200 Speaker 2: New home sales for March out on Wednesday, existing home 144 00:07:12,240 --> 00:07:15,119 Speaker 2: sales for that same month out on Thursday. Our thanks 145 00:07:15,120 --> 00:07:19,640 Speaker 2: to Erica Adelberg, Bloomberg Intelligence Chief mortgage backed security Strategists, 146 00:07:20,120 --> 00:07:22,240 Speaker 2: we move next to earnings and one of the most 147 00:07:22,320 --> 00:07:26,720 Speaker 2: highly anticipated first quarter releases from the ev giant Tesla 148 00:07:26,760 --> 00:07:29,920 Speaker 2: that's out on Tuesday. How did the thread of tariffs 149 00:07:29,960 --> 00:07:33,200 Speaker 2: and the backlash against CEO Elon Musk for its DOGE 150 00:07:33,280 --> 00:07:36,720 Speaker 2: task force and politicking in Europe impact sales well? For 151 00:07:36,800 --> 00:07:42,920 Speaker 2: more we're joined by Craig Trudell, Bloomberg Global Autos Editor. Well, Craig, 152 00:07:42,960 --> 00:07:45,480 Speaker 2: thank you for joining us. Now, so far, we know 153 00:07:45,560 --> 00:07:47,360 Speaker 2: that the first three months of this year have been 154 00:07:47,400 --> 00:07:50,800 Speaker 2: tough for Tesla, delivering three hundred and thirty seven thousand autos. 155 00:07:50,840 --> 00:07:53,600 Speaker 2: That's thirteen percent fewer than a year ago and a 156 00:07:53,640 --> 00:07:56,360 Speaker 2: lot fewer than Wall Street was hoping to see. Shares 157 00:07:56,840 --> 00:08:00,520 Speaker 2: down forty percent so far this year. About now, what 158 00:08:00,600 --> 00:08:01,800 Speaker 2: are the factors behind that? 159 00:08:03,400 --> 00:08:05,200 Speaker 7: Well, so you mentioned off the top, I mean the 160 00:08:06,240 --> 00:08:09,360 Speaker 7: decline in vehicle deliveries in the first quarter. I think 161 00:08:09,400 --> 00:08:13,080 Speaker 7: everybody was braced for that number to be weak, and 162 00:08:13,240 --> 00:08:16,520 Speaker 7: yet it was much weaker even than I think expectations 163 00:08:17,240 --> 00:08:20,480 Speaker 7: were going into the company reporting that at the beginning 164 00:08:20,520 --> 00:08:24,080 Speaker 7: of the month. And I think, you know, what's really 165 00:08:24,120 --> 00:08:27,840 Speaker 7: remarkable is just how much the expectations for these earnings 166 00:08:27,840 --> 00:08:29,800 Speaker 7: have declined over the last you know, say, just a 167 00:08:29,880 --> 00:08:35,679 Speaker 7: couple of years. In the beginning of twenty twenty three, analysts, 168 00:08:35,720 --> 00:08:38,360 Speaker 7: on average, we're expecting this company to earn about two 169 00:08:38,400 --> 00:08:43,080 Speaker 7: dollars per share. The average espent now is below fifty cents. 170 00:08:43,160 --> 00:08:46,000 Speaker 7: And it's a similar story when you look at revenue 171 00:08:46,040 --> 00:08:48,720 Speaker 7: at the top line. So the expectation back then was 172 00:08:48,760 --> 00:08:52,400 Speaker 7: more than forty billion dollars that's now fallen to below 173 00:08:52,480 --> 00:08:55,840 Speaker 7: twenty two billion. So what we have here is a 174 00:08:55,840 --> 00:08:59,240 Speaker 7: company that for a long time was viewed as a 175 00:08:59,600 --> 00:09:03,520 Speaker 7: growth stock that is no longer growing and that's really 176 00:09:03,600 --> 00:09:08,000 Speaker 7: spelled trouble for a stock that is, you know, it 177 00:09:08,240 --> 00:09:09,880 Speaker 7: is priced for that growth. 178 00:09:10,480 --> 00:09:13,640 Speaker 2: Now, how much of a factor is Elon Musk himself 179 00:09:13,720 --> 00:09:16,280 Speaker 2: and there we could go on and on talking about 180 00:09:16,280 --> 00:09:20,040 Speaker 2: the fourteen children and the doge, but how much of 181 00:09:20,080 --> 00:09:22,200 Speaker 2: that is him? 182 00:09:22,320 --> 00:09:25,200 Speaker 7: Yeah, I mean I think, you know, there's obviously a 183 00:09:25,240 --> 00:09:28,360 Speaker 7: lot of attention on what he's doing in Washington, and 184 00:09:28,400 --> 00:09:30,680 Speaker 7: there's been a lot of blowback over that, and that 185 00:09:30,800 --> 00:09:33,480 Speaker 7: was absolutely something that came into play in the first quarter. 186 00:09:33,800 --> 00:09:36,640 Speaker 7: But I think this is also you know about Musk 187 00:09:36,760 --> 00:09:39,800 Speaker 7: in the sense that you know, he was he was 188 00:09:39,840 --> 00:09:44,080 Speaker 7: sort of making decisions making changes to Tesla's plans long 189 00:09:44,160 --> 00:09:48,720 Speaker 7: before he was you know, becoming you know, part of Maga, 190 00:09:48,760 --> 00:09:52,559 Speaker 7: if you will. Tesla you know, was going to bring 191 00:09:52,720 --> 00:09:55,720 Speaker 7: to market a much cheaper electric vehicle that would be 192 00:09:55,760 --> 00:09:59,840 Speaker 7: priced below the Model three, and in early twenty twenty three, 193 00:10:00,480 --> 00:10:03,560 Speaker 7: the company decided that it wasn't going to do that anymore. 194 00:10:03,840 --> 00:10:06,000 Speaker 7: This has been a company that's priced for growth, and 195 00:10:06,360 --> 00:10:10,160 Speaker 7: Musk made a fateful decision early last year where the 196 00:10:10,200 --> 00:10:13,520 Speaker 7: company was going to bring this cheaper electric vehicle to market. 197 00:10:13,559 --> 00:10:16,240 Speaker 7: It was going to be priced below the Model three, 198 00:10:16,280 --> 00:10:18,840 Speaker 7: which is the most affordable car you can buy from Tesla. 199 00:10:19,280 --> 00:10:22,160 Speaker 7: He made the decision to scrap that car because, in 200 00:10:22,200 --> 00:10:24,880 Speaker 7: his eyes, Tesla was on the verge of being able 201 00:10:24,920 --> 00:10:28,559 Speaker 7: to deliver fully autonomous vehicles. That's something that he's been 202 00:10:28,600 --> 00:10:32,360 Speaker 7: promising for many years but not actually been able to deliver. 203 00:10:32,880 --> 00:10:34,640 Speaker 7: And that was a really big risk and it's a 204 00:10:34,720 --> 00:10:37,520 Speaker 7: risk that Tesla is now paying for because the plan 205 00:10:37,720 --> 00:10:41,360 Speaker 7: was to bring that to market roughly around this time, 206 00:10:41,720 --> 00:10:45,600 Speaker 7: and without that, Tesla doesn't have, you know, the cheaper 207 00:10:45,679 --> 00:10:48,839 Speaker 7: car that more consumers can afford. That would have given 208 00:10:49,000 --> 00:10:50,720 Speaker 7: you know, the company a shot at sort of a 209 00:10:50,800 --> 00:10:51,840 Speaker 7: next leg of growth. 210 00:10:52,120 --> 00:10:55,120 Speaker 2: I want to talk to you about tariffs. Now. Every Tesla, 211 00:10:55,240 --> 00:10:58,800 Speaker 2: including the cyber trug sold here in the US, is 212 00:10:59,200 --> 00:11:01,840 Speaker 2: mostly from parts in the US. A couple of chips, 213 00:11:01,840 --> 00:11:04,600 Speaker 2: maybe a couple of electronics, right, So, how do you 214 00:11:04,640 --> 00:11:07,720 Speaker 2: think and we know that these Trump tariffs can change 215 00:11:07,720 --> 00:11:10,280 Speaker 2: and do change day to day, hour to hour, it seems. 216 00:11:10,320 --> 00:11:14,000 Speaker 2: But how do you think tariffs are impacting the company? 217 00:11:14,280 --> 00:11:17,040 Speaker 7: Yeah, I think, you know, in general, there's been a 218 00:11:17,120 --> 00:11:20,199 Speaker 7: view that because Tesla, it has its final assembly of 219 00:11:20,559 --> 00:11:23,120 Speaker 7: the vehicles that it sells in the US, you know, 220 00:11:23,200 --> 00:11:26,040 Speaker 7: carried out in the US, that they would be relatively insulated. 221 00:11:26,080 --> 00:11:28,880 Speaker 7: But I think what we've learned is also that there's 222 00:11:28,920 --> 00:11:32,760 Speaker 7: not going to be a winner in these trade wars 223 00:11:32,800 --> 00:11:35,880 Speaker 7: that that Trump is waging. There's going to be sort 224 00:11:35,920 --> 00:11:39,880 Speaker 7: of relative losers. And even Tesla, while it has a 225 00:11:39,920 --> 00:11:44,720 Speaker 7: supply chain close to where it assembles, even Tesla relies 226 00:11:44,760 --> 00:11:46,719 Speaker 7: on suppliers for an awful lot of parts, and a 227 00:11:46,720 --> 00:11:49,440 Speaker 7: lot of those parts come from places like Canada and Mexico. 228 00:11:49,520 --> 00:11:53,560 Speaker 7: Even you know, in the past, the industry reviewed the 229 00:11:53,679 --> 00:11:58,280 Speaker 7: US's neighbors as you know local and that is changing 230 00:11:58,320 --> 00:12:01,560 Speaker 7: in really dramatic fashion really this year. And so even 231 00:12:01,640 --> 00:12:04,840 Speaker 7: Tesla is at risk here. And Musk himself has acknowledged 232 00:12:04,880 --> 00:12:07,880 Speaker 7: that where you know, he's talked on on X formerly 233 00:12:08,000 --> 00:12:10,680 Speaker 7: Twitter about the fact that they too will will feel 234 00:12:10,720 --> 00:12:13,720 Speaker 7: the pain. And also you know, some some real concern 235 00:12:13,760 --> 00:12:16,400 Speaker 7: about you know, how much sort of low cost components 236 00:12:16,440 --> 00:12:19,840 Speaker 7: maybe would be coming over from China. We know that 237 00:12:20,000 --> 00:12:24,240 Speaker 7: the amount of uh, you know, tariff, the level of 238 00:12:24,679 --> 00:12:28,200 Speaker 7: tariff that Trump is putting on China is really dramatic. 239 00:12:28,280 --> 00:12:30,800 Speaker 7: And we know that the you know, ev battery supply 240 00:12:30,960 --> 00:12:34,079 Speaker 7: chain is so relyant on China. So that is absolutely 241 00:12:34,080 --> 00:12:36,240 Speaker 7: going to be something that analysts are going to be 242 00:12:36,400 --> 00:12:40,959 Speaker 7: listening for closely. When Musk talks on the earnings call, oh. 243 00:12:40,840 --> 00:12:43,000 Speaker 2: Well, a lot to look forward to, teslak you one 244 00:12:43,040 --> 00:12:46,440 Speaker 2: earnings out this Tuesday after Wall Street's closing. Bell our 245 00:12:46,520 --> 00:12:50,520 Speaker 2: thanks to Craig Trudell, Bloomberg Global Autos Editor. Coming up 246 00:12:50,559 --> 00:12:53,880 Speaker 2: on Bloomberg day Break weekend, what's next for European equities 247 00:12:53,920 --> 00:12:56,600 Speaker 2: as some of the continent's biggest names prepare to post 248 00:12:56,760 --> 00:13:01,000 Speaker 2: their latest earnings results. I'm Tom Busby and this is Bloomberg. 249 00:13:12,000 --> 00:13:14,360 Speaker 2: This is Bloomberg day Break Weekend, our global look ahead 250 00:13:14,400 --> 00:13:16,560 Speaker 2: at the top stories for investors in the coming week. 251 00:13:16,840 --> 00:13:20,040 Speaker 2: I'm Tom Busby in New York. Up later in our program, 252 00:13:20,080 --> 00:13:22,319 Speaker 2: we'll look at how some Chinese companies are trying to 253 00:13:22,400 --> 00:13:26,440 Speaker 2: navigate President Donald Trump's tariffs. But first, as investors around 254 00:13:26,480 --> 00:13:29,160 Speaker 2: the world try to make sense of the always involving tariffs. 255 00:13:29,440 --> 00:13:32,320 Speaker 2: Companies across Europe and beyond are preparing to share their 256 00:13:32,400 --> 00:13:36,040 Speaker 2: latest financial performances with the market. How will equities fare 257 00:13:36,080 --> 00:13:39,000 Speaker 2: against a backdrop with such uncertainty and how will the 258 00:13:39,040 --> 00:13:43,120 Speaker 2: prospect of a global trade war affect twenty twenty five's outlook. 259 00:13:43,520 --> 00:13:45,440 Speaker 2: Let's go to London and bring in Bloomberg day Break 260 00:13:45,480 --> 00:13:47,520 Speaker 2: Europe anchor Caroline hepgar. 261 00:13:47,800 --> 00:13:51,960 Speaker 3: Tom European stocks have seen a hugely tumultuous period as 262 00:13:52,000 --> 00:13:56,000 Speaker 3: a trade war sparked by President Trump's tariffs has threatened 263 00:13:56,040 --> 00:13:59,320 Speaker 3: to up end global trade and supply chains well. In 264 00:13:59,360 --> 00:14:03,280 Speaker 3: the coming day, companies will report first quarter earnings, and 265 00:14:03,360 --> 00:14:07,160 Speaker 3: attention will focus on what they reveal about the impact 266 00:14:07,240 --> 00:14:12,600 Speaker 3: of tariffs on businesses, decision making, demand and logistics. Now, 267 00:14:12,640 --> 00:14:15,360 Speaker 3: those first out of the gates to report earnings have 268 00:14:15,520 --> 00:14:20,400 Speaker 3: faced mixed fortunes, namely LVMH, which faced a steep share 269 00:14:20,440 --> 00:14:23,400 Speaker 3: price drop on the news of slowing demand both in 270 00:14:23,520 --> 00:14:27,320 Speaker 3: China and in the United States amid the threat of 271 00:14:27,400 --> 00:14:31,480 Speaker 3: an escalating trade wark. Will the other European names due 272 00:14:31,480 --> 00:14:34,280 Speaker 3: to share their latest balance sheets in the days ahead 273 00:14:34,600 --> 00:14:38,840 Speaker 3: face a similar fortune? While Canadian Imperial Bank of Commerce 274 00:14:39,120 --> 00:14:44,400 Speaker 3: Chief International Strategists Jeremy Stretch doesn't think so, hit Ol Bloomberg, 275 00:14:44,480 --> 00:14:48,200 Speaker 3: the continents prospects are on the rise again with the 276 00:14:48,240 --> 00:14:50,520 Speaker 3: backdrop of US uncertainty. 277 00:14:50,960 --> 00:14:52,600 Speaker 8: Well, I think if we scroll back to the first 278 00:14:52,680 --> 00:14:55,520 Speaker 8: quarter meeting, but go back to pre Liberation Day on 279 00:14:55,600 --> 00:14:57,480 Speaker 8: April two, and we looked at what we've seen in 280 00:14:57,520 --> 00:14:59,440 Speaker 8: the equity space during the first quarter of the year, 281 00:15:00,120 --> 00:15:03,240 Speaker 8: a massive rotation out of the US and into the Eurozone. 282 00:15:03,360 --> 00:15:06,120 Speaker 8: And I think that's a recognition that the US economic exceptionalism, 283 00:15:06,160 --> 00:15:09,360 Speaker 8: which of course has been the driving factor of US 284 00:15:09,400 --> 00:15:11,000 Speaker 8: asset performance over the course of the last three or 285 00:15:11,000 --> 00:15:14,000 Speaker 8: four years, is no longer was no longer quite so irrelevant. 286 00:15:14,160 --> 00:15:16,680 Speaker 8: And of course then we're overlaying that with the uncertainty 287 00:15:16,720 --> 00:15:20,200 Speaker 8: that is now being written large by the tariff narrative, 288 00:15:20,480 --> 00:15:22,840 Speaker 8: And so we're getting investors saying, well, if the US 289 00:15:22,920 --> 00:15:25,440 Speaker 8: is no longer quite the reliable trade partner or no 290 00:15:25,520 --> 00:15:28,120 Speaker 8: longer the reliable defense partner, obviously, in the context of 291 00:15:28,120 --> 00:15:31,560 Speaker 8: the NATI considerations as well, it makes sense to gradually 292 00:15:31,680 --> 00:15:35,240 Speaker 8: or progressively consider those asset flows to the same sort 293 00:15:35,280 --> 00:15:37,040 Speaker 8: of magnetude going into US asset, So do. 294 00:15:37,000 --> 00:15:38,920 Speaker 3: You see more dollar weakness ahead? 295 00:15:39,120 --> 00:15:41,800 Speaker 8: I think what we've seen we've seen a substantive move 296 00:15:41,840 --> 00:15:43,320 Speaker 8: in a very short space of time. So I think 297 00:15:43,320 --> 00:15:46,720 Speaker 8: what we've seen is a significant positioning digression over the 298 00:15:46,720 --> 00:15:48,880 Speaker 8: course of the last few sessions, in fact, even the 299 00:15:48,920 --> 00:15:51,160 Speaker 8: last few weeks in a sense, so obviously we've seen 300 00:15:51,200 --> 00:15:54,560 Speaker 8: euro long positions moving up quite significantly. So I think 301 00:15:54,560 --> 00:15:56,080 Speaker 8: it may be the case if we get a slight 302 00:15:56,240 --> 00:15:59,320 Speaker 8: dialing down or at least less tariff negativity, at least 303 00:15:59,320 --> 00:16:01,600 Speaker 8: for a few sessions. Now, of course, in the context 304 00:16:01,600 --> 00:16:02,880 Speaker 8: of what we've seen over the course of the last 305 00:16:02,880 --> 00:16:05,000 Speaker 8: week or two, a few sessions seems like an awfully 306 00:16:05,000 --> 00:16:07,000 Speaker 8: long time. But if we can actually get through the 307 00:16:07,120 --> 00:16:11,240 Speaker 8: Sterpia without a further acceleration in tariff negativity, then we 308 00:16:11,320 --> 00:16:13,040 Speaker 8: might just see a little bit of a consolidation of 309 00:16:13,080 --> 00:16:14,720 Speaker 8: the dollar. We might just find the dollar finding a 310 00:16:14,760 --> 00:16:17,080 Speaker 8: little bit of residual value. But I think there is 311 00:16:17,120 --> 00:16:22,880 Speaker 8: a solid appetite to try and buy by the sort 312 00:16:22,880 --> 00:16:25,560 Speaker 8: of extreme. So if we do see the dollar rallying, 313 00:16:25,560 --> 00:16:27,280 Speaker 8: then I think we will find all the euro dollar 314 00:16:27,600 --> 00:16:29,520 Speaker 8: dipping down sort of maybe one twelve and a half. 315 00:16:29,720 --> 00:16:31,800 Speaker 8: There will be appetite to try and buy that dip, 316 00:16:31,840 --> 00:16:34,080 Speaker 8: So I think that's the sort of mentality it is. 317 00:16:34,400 --> 00:16:36,960 Speaker 8: Selling dollar rallies or buying eurodips. I think is probably 318 00:16:36,960 --> 00:16:39,160 Speaker 8: going to be the mentality that's going to prevail in. 319 00:16:39,120 --> 00:16:41,880 Speaker 9: The uncertainty that you mentioned. I wonder how do you 320 00:16:42,200 --> 00:16:46,680 Speaker 9: see the market perception of what uncertainty is now versus 321 00:16:46,760 --> 00:16:48,520 Speaker 9: I mean only a couple of weeks ago, where, of 322 00:16:48,520 --> 00:16:50,680 Speaker 9: course the world was a very different place. I mean, 323 00:16:51,160 --> 00:16:53,800 Speaker 9: is the volatility now just going to be part of 324 00:16:54,400 --> 00:16:57,080 Speaker 9: our sort of immediate and perhaps medium term future. 325 00:16:57,720 --> 00:17:00,880 Speaker 8: Well, I think quite clearly the world has somewhat changed. 326 00:17:00,880 --> 00:17:03,280 Speaker 8: So in a sense, if we went back to the 327 00:17:03,320 --> 00:17:05,720 Speaker 8: middle of March and said, well, the world, the global 328 00:17:05,800 --> 00:17:07,439 Speaker 8: environment is going to see at minimum of a ten 329 00:17:07,480 --> 00:17:09,639 Speaker 8: percent tariff, most people have said that would have been 330 00:17:09,720 --> 00:17:12,440 Speaker 8: hugely detrimental to the global growth rejectory, and we would 331 00:17:12,440 --> 00:17:15,240 Speaker 8: have seen risk being priced accordingly. Now we're in a 332 00:17:15,240 --> 00:17:19,080 Speaker 8: scenario where we've seen a much worse set of parameters 333 00:17:19,119 --> 00:17:22,480 Speaker 8: potentially being laid out, and then theoretically ten percent or 334 00:17:22,720 --> 00:17:24,800 Speaker 8: some degree of derivation of that if there can be 335 00:17:25,280 --> 00:17:28,080 Speaker 8: further trade negotiations are seen as a better case. Scenario. 336 00:17:28,119 --> 00:17:31,560 Speaker 8: So I think we've certainly moved the parameters. The goalposts 337 00:17:31,600 --> 00:17:34,400 Speaker 8: have shifted quite significantly as to what is the base 338 00:17:34,480 --> 00:17:37,240 Speaker 8: case and what is the extreme risk off for risk 339 00:17:37,520 --> 00:17:40,840 Speaker 8: dynamic scenario. So I think that's the reality that investors 340 00:17:40,840 --> 00:17:42,680 Speaker 8: are going to have to shift in this new global 341 00:17:42,720 --> 00:17:46,960 Speaker 8: world order, and that is this fundamental factor that is 342 00:17:47,520 --> 00:17:48,639 Speaker 8: driving investor sentiment. 343 00:17:48,960 --> 00:17:52,960 Speaker 3: That was Jeremy Stretch from Canadian Imperial Bank of Commerce 344 00:17:52,960 --> 00:17:57,000 Speaker 3: there speaking to Billiomberg, Stephen Carroll, and Valerie Titel. So 345 00:17:57,119 --> 00:18:01,840 Speaker 3: what is in store as biggest corporates to update the market? 346 00:18:02,160 --> 00:18:05,280 Speaker 3: I asked Bloomberg's earning specialist Chloe Malay. 347 00:18:05,720 --> 00:18:08,800 Speaker 10: We had some big names reporting so far that I've 348 00:18:08,880 --> 00:18:11,200 Speaker 10: kind of given us a flavor of what to expect 349 00:18:11,280 --> 00:18:15,160 Speaker 10: for this arning season. Let's start with maybe the less impressive, 350 00:18:15,200 --> 00:18:19,080 Speaker 10: the more disappointing reports. We had lvmtrix sales coming in 351 00:18:19,119 --> 00:18:22,280 Speaker 10: weaker than expected, which is not the best start to 352 00:18:22,400 --> 00:18:26,200 Speaker 10: the luxury reporting season and really signals a weakening of 353 00:18:26,600 --> 00:18:29,040 Speaker 10: demand that is concerning for the rest of the year 354 00:18:29,080 --> 00:18:31,360 Speaker 10: for avment, but also for the rest of the sector. 355 00:18:31,880 --> 00:18:35,119 Speaker 10: We also had ASML with also lower than expected orders, 356 00:18:35,160 --> 00:18:37,640 Speaker 10: and that comes amid kind of the context of over 357 00:18:37,800 --> 00:18:39,360 Speaker 10: slow down in AI demand. 358 00:18:40,320 --> 00:18:41,160 Speaker 6: For one kind of. 359 00:18:41,119 --> 00:18:44,520 Speaker 10: Positive update we had ericson with the first quarter beat. 360 00:18:45,320 --> 00:18:48,040 Speaker 10: Quite good print because operators are really kind of ramping 361 00:18:48,119 --> 00:18:51,640 Speaker 10: up spending on five D equipment, so that could be 362 00:18:51,800 --> 00:18:53,600 Speaker 10: that could kind of bird well for the rest of 363 00:18:53,640 --> 00:18:57,200 Speaker 10: the telecom sector for this earning season. But of course 364 00:18:57,240 --> 00:18:59,240 Speaker 10: the key theme across all of this was, of course, 365 00:18:59,240 --> 00:19:02,200 Speaker 10: the impact of trade uncertainty are on the outlook for 366 00:19:02,520 --> 00:19:03,480 Speaker 10: all of those companies. 367 00:19:03,760 --> 00:19:07,960 Speaker 3: Yeah, the results won't take into account the tariffs on 368 00:19:08,000 --> 00:19:11,280 Speaker 3: the second announced on the second of April. How much 369 00:19:11,560 --> 00:19:16,399 Speaker 3: underperformance can you put down to pre tariff anxiety weighing 370 00:19:16,400 --> 00:19:17,320 Speaker 3: on these businesses. 371 00:19:17,480 --> 00:19:20,360 Speaker 10: Yes, so of course tariff announcements came at the very 372 00:19:20,400 --> 00:19:23,320 Speaker 10: beginning of the second quarter, but the chatter around tariffs 373 00:19:23,320 --> 00:19:27,120 Speaker 10: and the uncertainty that it brought really started much earlier, 374 00:19:27,200 --> 00:19:29,760 Speaker 10: So there's no way really to quantify how much those 375 00:19:29,760 --> 00:19:31,200 Speaker 10: pre teriftag just mattered. 376 00:19:31,280 --> 00:19:33,679 Speaker 6: But of course there may have been a contributing factor. 377 00:19:33,760 --> 00:19:36,520 Speaker 10: You know, if we look at ALVMH for instance, there 378 00:19:36,560 --> 00:19:39,480 Speaker 10: was continued weakness in China, but also new weakness in 379 00:19:39,520 --> 00:19:42,720 Speaker 10: the US with shopers really raining in spending on things 380 00:19:42,720 --> 00:19:45,640 Speaker 10: like Konyak beauty products, etc. Which is something that would 381 00:19:45,640 --> 00:19:48,440 Speaker 10: occur within the period of kind of economic uncertainty. 382 00:19:49,119 --> 00:19:52,280 Speaker 3: Talk us through other major headwinds then that firms faced 383 00:19:52,359 --> 00:19:54,240 Speaker 3: in the first three months of the year. 384 00:19:54,359 --> 00:19:56,320 Speaker 10: If we look at the kind of biggest EPs and 385 00:19:56,359 --> 00:19:58,960 Speaker 10: expishare decline that we're expecting for the first quarter, we 386 00:19:59,040 --> 00:20:02,000 Speaker 10: have three main sectors that are going to be leading 387 00:20:02,040 --> 00:20:06,879 Speaker 10: that decline, so materials, car makers, and energy. So for materials, 388 00:20:06,920 --> 00:20:09,159 Speaker 10: they were already weak at the previous earning season, but 389 00:20:09,240 --> 00:20:11,720 Speaker 10: what affected them throughout the first three months were really 390 00:20:11,760 --> 00:20:16,119 Speaker 10: weak end markets and including very soft construction activity in China. 391 00:20:16,400 --> 00:20:19,160 Speaker 10: They also faced supply chain issues and they faced high 392 00:20:19,280 --> 00:20:22,520 Speaker 10: energy costs. If we look at the autoind car making sector, 393 00:20:22,600 --> 00:20:25,160 Speaker 10: they've been struggling with weak demand in China as well 394 00:20:25,200 --> 00:20:29,439 Speaker 10: because consumers are opting for local brands instead. So we 395 00:20:29,480 --> 00:20:32,240 Speaker 10: had Porsche, for example, cutting estimates in March due to 396 00:20:32,400 --> 00:20:35,840 Speaker 10: slump in cells in the country, and that was all 397 00:20:35,880 --> 00:20:38,480 Speaker 10: of that as likely kind of been happening over the 398 00:20:38,480 --> 00:20:41,760 Speaker 10: first quarter, and we'll hear about that over the coming weeks. 399 00:20:42,520 --> 00:20:46,240 Speaker 10: The weakness in the car making sector, of course, also 400 00:20:46,240 --> 00:20:50,679 Speaker 10: impacts other sectors. Semiconductor companies, for example, that specialize in 401 00:20:50,720 --> 00:20:53,840 Speaker 10: that end market as well. For the energy sector, the 402 00:20:53,880 --> 00:20:56,600 Speaker 10: oil prices fell over the course of the first quarter, 403 00:20:56,600 --> 00:20:58,679 Speaker 10: which would have also pressured earning. 404 00:20:58,800 --> 00:21:01,280 Speaker 6: So those are the kind of key edwins for those sectors. 405 00:21:01,920 --> 00:21:04,640 Speaker 3: How big a factor, then, do you think geopolitics has been? 406 00:21:05,280 --> 00:21:06,360 Speaker 6: What kind of tariffs? 407 00:21:06,359 --> 00:21:08,320 Speaker 10: And obviously the shape and the extent and the scope 408 00:21:08,359 --> 00:21:11,240 Speaker 10: of them really dominated the conversation from the very beginning 409 00:21:11,240 --> 00:21:13,080 Speaker 10: of the year, so that that was and there will 410 00:21:13,080 --> 00:21:15,080 Speaker 10: continue to be the main talking point. 411 00:21:15,119 --> 00:21:17,800 Speaker 3: Really, what do you expect to hear from companies in 412 00:21:17,880 --> 00:21:21,760 Speaker 3: the outlook of the results that they're going to present 413 00:21:23,080 --> 00:21:25,760 Speaker 3: more kind of expect the unexpected. Do you think there'll 414 00:21:25,800 --> 00:21:30,200 Speaker 3: be lots of euphemisms for tariffs, lots of cost cutting exercises. 415 00:21:30,520 --> 00:21:33,159 Speaker 10: Yeah, so we're expecting a fair amount of warning, some 416 00:21:33,240 --> 00:21:36,320 Speaker 10: of them kind of explicitly addressing addressing tariffs, of them 417 00:21:36,359 --> 00:21:40,200 Speaker 10: addressing euphemisms, you know, like macroeconomic and certainty, et cetera. 418 00:21:40,240 --> 00:21:43,280 Speaker 10: But obviously that refers to the same thing we're expecting. 419 00:21:43,280 --> 00:21:46,600 Speaker 10: Guidance being cut, guidance being pulled. We've already seen that 420 00:21:46,680 --> 00:21:49,200 Speaker 10: with a couple of companies. We had Page Group in 421 00:21:49,240 --> 00:21:52,440 Speaker 10: the UKA, Carmacks in the US. The global uncertainty is 422 00:21:52,480 --> 00:21:55,280 Speaker 10: making it kind of very difficult for companies to see 423 00:21:55,320 --> 00:21:57,520 Speaker 10: into the future and to make predictions about what's going 424 00:21:57,560 --> 00:22:00,760 Speaker 10: to happen for their for their business. Were also maybe 425 00:22:00,800 --> 00:22:04,040 Speaker 10: expecting some companies to cancel capital expenditure plans, to hold 426 00:22:04,040 --> 00:22:06,400 Speaker 10: off on hiring plans. Perhaps if you kind of look 427 00:22:06,400 --> 00:22:09,120 Speaker 10: at what recruitment companies have been saying. They have mentioned 428 00:22:09,119 --> 00:22:11,879 Speaker 10: that all of this uncertainty is making people kind of 429 00:22:11,880 --> 00:22:14,720 Speaker 10: hold back on on more hiring. We might also see 430 00:22:14,720 --> 00:22:17,120 Speaker 10: a pause in buybacks. So we saw that with Bunzl, 431 00:22:17,200 --> 00:22:19,440 Speaker 10: and though that was not directly related to Tariff's there 432 00:22:19,440 --> 00:22:21,440 Speaker 10: may be something else that we see, which, of course 433 00:22:21,440 --> 00:22:24,520 Speaker 10: investors would not really react very kindly to. On the 434 00:22:24,520 --> 00:22:27,200 Speaker 10: other hand, some companies might also decide not to speak 435 00:22:27,240 --> 00:22:29,639 Speaker 10: about tariffs at all. You know, JD Sports did it 436 00:22:29,720 --> 00:22:31,600 Speaker 10: on the recent call, and then they might do that 437 00:22:31,680 --> 00:22:33,280 Speaker 10: until it all becomes clearer. 438 00:22:33,640 --> 00:22:36,920 Speaker 3: In terms of clarity, let's dive into one sector in particular. 439 00:22:37,000 --> 00:22:41,320 Speaker 3: You mentioned LVMH their difficulties carring group reports in the 440 00:22:41,400 --> 00:22:41,960 Speaker 3: days ahead. 441 00:22:42,000 --> 00:22:45,639 Speaker 10: What are we expecting so caring already started from a 442 00:22:45,680 --> 00:22:48,760 Speaker 10: weaker position, really than what LVMAGE started with. You know, 443 00:22:48,800 --> 00:22:52,040 Speaker 10: they had a tough twenty twenty four overall because the 444 00:22:52,320 --> 00:22:55,640 Speaker 10: flagship brand Gucci is kind of undergoing this whole turnaround, 445 00:22:55,680 --> 00:22:57,080 Speaker 10: which makes it quite difficult. 446 00:22:58,119 --> 00:23:00,240 Speaker 6: The report from the IRVMAGE doesn't bode. 447 00:23:00,119 --> 00:23:05,000 Speaker 10: Well for Caring because it really highlighted that aspirational fashion 448 00:23:05,240 --> 00:23:09,440 Speaker 10: isn't really doing well in a period of economic uncertainty. Obviously, 449 00:23:09,520 --> 00:23:11,639 Speaker 10: you know, kind of more high in luxury like AMS 450 00:23:11,720 --> 00:23:14,840 Speaker 10: is more resilient because consumers at that level are less 451 00:23:14,880 --> 00:23:17,680 Speaker 10: price sensitive. But the problem for Caring is that it's 452 00:23:17,760 --> 00:23:21,639 Speaker 10: much more kind of entry level aspirational fashion than LVMTRO 453 00:23:21,680 --> 00:23:24,199 Speaker 10: on the whole, which means it's much more exposed to 454 00:23:24,200 --> 00:23:27,919 Speaker 10: this pullback in discretionary spending. If we look at esthimas 455 00:23:27,920 --> 00:23:29,879 Speaker 10: for Caring, you know, we were looking for an organic 456 00:23:29,960 --> 00:23:32,919 Speaker 10: revenue decline of about twelve percent, which would be on 457 00:23:32,960 --> 00:23:35,760 Speaker 10: a similar level as the fourth quarter and doesn't indicate 458 00:23:35,800 --> 00:23:36,960 Speaker 10: any kind of recovery. 459 00:23:37,040 --> 00:23:40,960 Speaker 3: And yet there's been such renewed interest in European assets 460 00:23:41,000 --> 00:23:45,560 Speaker 3: from the euro to individual stocks and bonds, which equity 461 00:23:45,640 --> 00:23:49,120 Speaker 3: sectors to expect to actually perform strongly. I mean, you've 462 00:23:49,119 --> 00:23:51,200 Speaker 3: got to think about defense surely yes. 463 00:23:51,280 --> 00:23:53,679 Speaker 10: So defense should definitely still kind of be riding that 464 00:23:53,840 --> 00:23:57,200 Speaker 10: high of all the defense spending you know, announced in Europe, 465 00:23:57,440 --> 00:24:00,680 Speaker 10: though that may not have fully materialized into earnings yet, 466 00:24:00,720 --> 00:24:03,040 Speaker 10: so we'll have to see that in the coming weeks. 467 00:24:03,560 --> 00:24:06,720 Speaker 10: Banks as well should have a fairly resilient quarter, even 468 00:24:06,760 --> 00:24:08,760 Speaker 10: though the one major drag will be kind of on 469 00:24:08,800 --> 00:24:12,560 Speaker 10: the outlook for higher provisions, perhaps for lown losses because 470 00:24:12,600 --> 00:24:16,639 Speaker 10: of the economic environment deteriorating, and of course net interest 471 00:24:16,720 --> 00:24:19,359 Speaker 10: income also kind of falling as rates are cut further 472 00:24:19,400 --> 00:24:22,120 Speaker 10: and further, but they should be overall doing quite well 473 00:24:22,160 --> 00:24:26,360 Speaker 10: for the first quarter. Within the tech sector, even though 474 00:24:26,400 --> 00:24:30,520 Speaker 10: we had ASML semiconductors and kind of software and services 475 00:24:30,560 --> 00:24:34,359 Speaker 10: sectors are expected expected to have an earnings pushare rise 476 00:24:34,400 --> 00:24:37,720 Speaker 10: as well compared to flat growth in the fourth quarter. 477 00:24:38,600 --> 00:24:42,040 Speaker 10: And also communication services, so things like telecoms, as I 478 00:24:42,080 --> 00:24:45,080 Speaker 10: mentioned with Ericson, should be relatively resilient as well. 479 00:24:45,119 --> 00:24:47,359 Speaker 6: So there are some pockets of optimism. 480 00:24:47,920 --> 00:24:50,920 Speaker 3: Kloe. The next a few days and weeks, they're really 481 00:24:50,920 --> 00:24:54,240 Speaker 3: going to test your metal, your analytical skills, your speed 482 00:24:54,320 --> 00:24:57,520 Speaker 3: of writing. Just tell us what other big European names 483 00:24:57,560 --> 00:24:58,880 Speaker 3: you're going to be watching out. 484 00:24:58,720 --> 00:25:01,320 Speaker 10: For so in the coming day we have some major 485 00:25:01,359 --> 00:25:03,800 Speaker 10: companies of NAX season is really ramping up. We have 486 00:25:04,080 --> 00:25:07,520 Speaker 10: a few consumer names like Nesler, unilevera Dan on the 487 00:25:07,560 --> 00:25:10,600 Speaker 10: focus there will be really on the on their ability 488 00:25:10,640 --> 00:25:14,880 Speaker 10: to boost volumes while trying to keep prices affordable. We've 489 00:25:14,920 --> 00:25:18,440 Speaker 10: got BNP also opening the ball for the European banks 490 00:25:19,000 --> 00:25:21,920 Speaker 10: and there the focus will be on you know, deal activity, 491 00:25:22,440 --> 00:25:25,040 Speaker 10: on on on a net interest income and also on 492 00:25:25,080 --> 00:25:28,640 Speaker 10: loan loss provisions. And then we also have some key 493 00:25:28,680 --> 00:25:31,040 Speaker 10: names and sectors that might be involved in the tier 494 00:25:31,080 --> 00:25:33,800 Speaker 10: of conversation as well, which you know we have Farmer 495 00:25:33,920 --> 00:25:37,360 Speaker 10: with Sanafie and Roche and also Involver and Reno on 496 00:25:37,400 --> 00:25:39,720 Speaker 10: the kind of vehicle carmaking side. 497 00:25:40,160 --> 00:25:41,800 Speaker 6: So loads of things to look out for. 498 00:25:42,200 --> 00:25:45,359 Speaker 3: My thanks to Chloe Malay, will be right across all 499 00:25:45,359 --> 00:25:48,200 Speaker 3: the biggest corporate stories for you in the coming days. 500 00:25:48,440 --> 00:25:51,399 Speaker 3: Right here on Bloomberg. I'm Caroline Hedge in London. You 501 00:25:51,400 --> 00:25:53,960 Speaker 3: can catch us every weekday morning for BLUEMBERG Daybreak you 502 00:25:54,040 --> 00:25:56,800 Speaker 3: at beginning at six am in London. That's one am 503 00:25:56,840 --> 00:25:57,560 Speaker 3: on Wall Street. 504 00:25:57,680 --> 00:25:58,160 Speaker 6: Tom. 505 00:25:58,600 --> 00:26:01,680 Speaker 2: Thanks Caroline and come up on Bloomberg day Break weekend 506 00:26:01,920 --> 00:26:04,399 Speaker 2: we'll look at how some Chinese companies are dealing with 507 00:26:04,520 --> 00:26:08,320 Speaker 2: President Trump's tariffs. I'm Tom Busby, and this is Bloomberg. 508 00:26:19,440 --> 00:26:21,760 Speaker 2: This is Bloomberg day Break weekend, our global look ahead 509 00:26:21,760 --> 00:26:23,800 Speaker 2: at the top stories for investors in the coming week. 510 00:26:24,040 --> 00:26:27,120 Speaker 2: I'm Tom Busby in New York. With President Trump's ever 511 00:26:27,240 --> 00:26:30,720 Speaker 2: increasing tariffs on imports from China, some Chinese companies are 512 00:26:30,720 --> 00:26:34,080 Speaker 2: looking to creatively skirt those tariffs. For a look at 513 00:26:34,080 --> 00:26:35,960 Speaker 2: how that could happen, let's get to the host of 514 00:26:35,960 --> 00:26:38,400 Speaker 2: the Daybreak Asia podcast, Doug Krisner. 515 00:26:38,800 --> 00:26:41,160 Speaker 4: Tom, not a day goes by when we're not talking 516 00:26:41,240 --> 00:26:44,280 Speaker 4: about the US China trade war and the fallout from 517 00:26:44,280 --> 00:26:47,960 Speaker 4: those higher tariffs. So, if you're a Chinese manufacturer facing 518 00:26:48,000 --> 00:26:50,679 Speaker 4: these new levies, what are you feeling right now? Is 519 00:26:50,720 --> 00:26:53,520 Speaker 4: there a way for you to react, some way to 520 00:26:53,520 --> 00:26:57,439 Speaker 4: circumvent these tariffs and move products to US consumers without 521 00:26:57,480 --> 00:27:02,159 Speaker 4: that additional cost. Well, TikTok influencers in China apparently have 522 00:27:02,240 --> 00:27:05,240 Speaker 4: found a way. They are showing videos to users in 523 00:27:05,240 --> 00:27:08,960 Speaker 4: the US encouraging them to buy directly from Chinese factories 524 00:27:09,240 --> 00:27:12,800 Speaker 4: bypassing not just the tariffs, but US brands as well. 525 00:27:13,160 --> 00:27:15,520 Speaker 11: Who are the suppliers to Hi Lulu Lama. Some of 526 00:27:15,560 --> 00:27:18,280 Speaker 11: their Hugo wears are actually from Young Lung Clothing and 527 00:27:18,359 --> 00:27:22,280 Speaker 11: Haunti Shop Clothing. And guess what full factories locating eu here. 528 00:27:22,359 --> 00:27:26,040 Speaker 11: And these two factories also supplight clothing for Fila and 529 00:27:26,160 --> 00:27:28,160 Speaker 11: an Arma. I guess most of you know the price 530 00:27:28,200 --> 00:27:30,919 Speaker 11: of Lulu Lamas or other big brands. They sell you 531 00:27:31,000 --> 00:27:34,000 Speaker 11: a lagging pans for one hundred dollars and guess what 532 00:27:34,520 --> 00:27:36,800 Speaker 11: here in these two factories you can get them for 533 00:27:37,080 --> 00:27:39,400 Speaker 11: around five to six bus. 534 00:27:39,400 --> 00:27:41,679 Speaker 4: For more on the story, I'm joined by Colin Murphy, 535 00:27:41,760 --> 00:27:45,040 Speaker 4: China Eco GUV reporter for Bloomberg News. Column joins us 536 00:27:45,080 --> 00:27:47,479 Speaker 4: from our studios in Beijing. Thank you so much for 537 00:27:47,480 --> 00:27:49,880 Speaker 4: making the time to chat with us. Can we begin 538 00:27:50,000 --> 00:27:52,920 Speaker 4: column by having you break down the process? How is 539 00:27:53,000 --> 00:27:54,160 Speaker 4: this actually happening? 540 00:27:54,480 --> 00:27:54,840 Speaker 6: Okay? 541 00:27:54,920 --> 00:27:58,280 Speaker 12: So basically, the first thing is that TikTok itself is 542 00:27:58,320 --> 00:28:03,399 Speaker 12: not available in China. Domestic app here called doing so 543 00:28:04,280 --> 00:28:09,520 Speaker 12: in order for the Chinese influencers to get their messages 544 00:28:09,560 --> 00:28:13,720 Speaker 12: on TikTok, which is already quite surprising. We are suspecting 545 00:28:13,720 --> 00:28:16,760 Speaker 12: that there's some element of collaboration here, some sort of 546 00:28:17,080 --> 00:28:21,119 Speaker 12: planning so basically what they're doing is they are making, 547 00:28:21,840 --> 00:28:25,920 Speaker 12: you know, short videos to describe some of the reasons 548 00:28:25,960 --> 00:28:30,760 Speaker 12: why the US customer and the US buyer has to 549 00:28:30,800 --> 00:28:34,080 Speaker 12: pay so much money for products that are available in 550 00:28:34,200 --> 00:28:41,000 Speaker 12: China at knockdown prices. And these messages are basically trying 551 00:28:41,040 --> 00:28:46,880 Speaker 12: to suggest or encourage not necessarily ways to avoid the tariffs, 552 00:28:46,880 --> 00:28:50,120 Speaker 12: but to let's say, minimize the impact of the tariff. 553 00:28:51,040 --> 00:28:54,760 Speaker 12: But the deeper meaning I think is to show and 554 00:28:54,800 --> 00:28:59,520 Speaker 12: to illustrate that China is pushing back against these tariffs, 555 00:28:59,520 --> 00:29:03,600 Speaker 12: to show that you know, this is kind of mocking 556 00:29:03,680 --> 00:29:07,960 Speaker 12: in a way, and to undermine the Trump tariffs and saying, hey, look, 557 00:29:08,720 --> 00:29:12,760 Speaker 12: we have come up with these innovative ways to showcase 558 00:29:13,280 --> 00:29:16,320 Speaker 12: and to tell you about our products, and we're going 559 00:29:16,360 --> 00:29:19,040 Speaker 12: to swamp TikTok in order to do that. 560 00:29:19,760 --> 00:29:22,360 Speaker 4: So it seems maybe to be less about selling goods 561 00:29:22,360 --> 00:29:25,160 Speaker 4: to you as consumers and more about creating outrage among 562 00:29:25,200 --> 00:29:29,080 Speaker 4: the American consumer right, and how tariffs are impacting the 563 00:29:29,160 --> 00:29:32,720 Speaker 4: prices of the Chinese made products that they are accustomed to. 564 00:29:33,200 --> 00:29:35,720 Speaker 12: Definitely, I think, you know there is this, as I say, 565 00:29:35,760 --> 00:29:41,000 Speaker 12: broader push by this campaign, which you know has picked 566 00:29:41,120 --> 00:29:46,880 Speaker 12: up strength and exploded. Basically over the weekend, we've had 567 00:29:46,880 --> 00:29:50,400 Speaker 12: these types of videos from merchants in China saying, you know, 568 00:29:50,440 --> 00:29:53,080 Speaker 12: we produce this product and you should buy from us. 569 00:29:53,440 --> 00:29:55,280 Speaker 12: I mean, they've been around for a while, but what 570 00:29:55,320 --> 00:29:59,520 Speaker 12: we're talking about in this particular instance is, first of all, 571 00:29:59,720 --> 00:30:04,040 Speaker 12: the volume of such sort of videos and messaging has 572 00:30:04,200 --> 00:30:07,320 Speaker 12: has gone through the roof. A lot of them display 573 00:30:07,720 --> 00:30:12,280 Speaker 12: very similar characteristics. They're very polished, most are speaking in 574 00:30:13,000 --> 00:30:17,080 Speaker 12: very sort of sophisticated use of language, and in English, 575 00:30:17,080 --> 00:30:20,719 Speaker 12: of course, and it's all happening over this short period 576 00:30:20,720 --> 00:30:24,640 Speaker 12: of time. So it's hard not to conclude that this 577 00:30:24,760 --> 00:30:29,440 Speaker 12: is definitely an effort to, if not at the very least, 578 00:30:29,680 --> 00:30:33,360 Speaker 12: sort of mock the US efforts on tariffs, but probably 579 00:30:33,480 --> 00:30:37,400 Speaker 12: to you know, undermine in a way the Trump tariff 580 00:30:37,440 --> 00:30:42,520 Speaker 12: regime and call the attention of the ordinary American citizen 581 00:30:43,160 --> 00:30:46,840 Speaker 12: to like how the tariffs will and can impact their 582 00:30:47,160 --> 00:30:47,920 Speaker 12: bottom line. 583 00:30:48,000 --> 00:30:51,240 Speaker 4: And it's a little ironic in the platform right during 584 00:30:51,280 --> 00:30:53,800 Speaker 4: his first term, Trump wanted a band TikTok in the 585 00:30:53,920 --> 00:30:56,959 Speaker 4: US or force some type of change in ownership. That 586 00:30:57,000 --> 00:31:00,640 Speaker 4: position later became reflected in US law, but I believe 587 00:31:00,640 --> 00:31:04,000 Speaker 4: it was March twenty twenty four, when President Trump reversed 588 00:31:04,000 --> 00:31:08,400 Speaker 4: his position and began advocating against banning the app on 589 00:31:08,480 --> 00:31:10,760 Speaker 4: the grounds that, okay, we needed it. 590 00:31:11,080 --> 00:31:11,920 Speaker 2: But this seems to. 591 00:31:11,880 --> 00:31:15,160 Speaker 4: Be to the point of maybe there's a national security 592 00:31:15,160 --> 00:31:17,440 Speaker 4: issue involved here. Is that saying too much? 593 00:31:17,840 --> 00:31:21,000 Speaker 12: Well, I would just say it does show that there 594 00:31:21,040 --> 00:31:25,040 Speaker 12: has been a marked increase in the ability of the 595 00:31:25,160 --> 00:31:30,120 Speaker 12: Chinese message to get to ordinary citizens in the US 596 00:31:30,200 --> 00:31:33,600 Speaker 12: and on the whole, these messages have been pro China. So, 597 00:31:33,760 --> 00:31:36,440 Speaker 12: for example, we have this latest incident, which it is 598 00:31:36,480 --> 00:31:41,080 Speaker 12: ironic because right now TikTok is still under close scrutiny 599 00:31:41,440 --> 00:31:44,560 Speaker 12: with the talk of a ban or sale. So for 600 00:31:44,600 --> 00:31:46,800 Speaker 12: this to be happening on this platform right now is 601 00:31:48,280 --> 00:31:52,760 Speaker 12: somewhat curious. But you know, it does also remind us 602 00:31:52,880 --> 00:31:55,400 Speaker 12: of something that happened a couple of months ago, which 603 00:31:55,440 --> 00:31:59,719 Speaker 12: was when the Chinese app Shao Hongshu or Red Note 604 00:32:00,160 --> 00:32:05,280 Speaker 12: suddenly became hugely popular when the so called TikTok refugees 605 00:32:05,320 --> 00:32:10,160 Speaker 12: were fleeing to that app when the threat of the 606 00:32:10,200 --> 00:32:13,720 Speaker 12: ban was imminent. And so this was also the first 607 00:32:13,760 --> 00:32:16,840 Speaker 12: time when we saw a real sort of outpouring and 608 00:32:16,920 --> 00:32:21,960 Speaker 12: outreach from Chinese citizens to their American counterparts, exchanging information. 609 00:32:22,040 --> 00:32:25,640 Speaker 12: We saw lots of Americans saying, as a result, oh, 610 00:32:25,680 --> 00:32:28,240 Speaker 12: what they've been telling us about China is wrong all along. 611 00:32:29,320 --> 00:32:32,120 Speaker 12: It's very developed, it's very sophisticated, and so on and 612 00:32:32,160 --> 00:32:35,920 Speaker 12: so forth. So you did have some element of influence 613 00:32:35,960 --> 00:32:42,240 Speaker 12: and changing of perceptions. And this again, this particular campaign, 614 00:32:42,320 --> 00:32:45,880 Speaker 12: shall we say, looks like hitting similar points, and that 615 00:32:45,960 --> 00:32:48,840 Speaker 12: we do have reaction from Americans on the ground who 616 00:32:49,040 --> 00:32:52,000 Speaker 12: are saying, I never realized that this was the reality. 617 00:32:52,080 --> 00:32:56,000 Speaker 12: And maybe it's not anger, but it's definitely, you know, 618 00:32:56,840 --> 00:33:02,120 Speaker 12: increasing awareness and in some cases for stration at some 619 00:33:02,160 --> 00:33:05,880 Speaker 12: of the narratives that they seem to sort of feel 620 00:33:05,920 --> 00:33:09,120 Speaker 12: have have been thrown on them by their own government 621 00:33:09,520 --> 00:33:09,960 Speaker 12: in DC. 622 00:33:10,400 --> 00:33:14,120 Speaker 4: So the packages with merchandise shipped from China with a 623 00:33:14,200 --> 00:33:16,880 Speaker 4: value at less than eight hundred dollars have enjoyed the 624 00:33:17,320 --> 00:33:21,280 Speaker 4: deminimous exemption from these added duties, and we have seen 625 00:33:21,320 --> 00:33:25,360 Speaker 4: the impact that has had on online Chinese retailers like 626 00:33:25,760 --> 00:33:30,560 Speaker 4: Timu and Chien to sell super cheap items to American consumers. Now, 627 00:33:30,600 --> 00:33:34,800 Speaker 4: the President has kind of taken executive action here to 628 00:33:34,920 --> 00:33:37,840 Speaker 4: end that loophole, and I think that begins on May 629 00:33:37,880 --> 00:33:40,440 Speaker 4: the second. So I'm wondering, just on the commerce side, 630 00:33:40,480 --> 00:33:43,880 Speaker 4: whether this let's call it a workaround, is facing extinction. 631 00:33:44,920 --> 00:33:47,280 Speaker 12: Yes, I think, you know, I mean, whether this would 632 00:33:47,280 --> 00:33:52,040 Speaker 12: actually yield to a spike in sales for the Chinese merchants. 633 00:33:52,400 --> 00:33:55,200 Speaker 12: I would doubt that at this point for various reasons, 634 00:33:55,920 --> 00:33:58,800 Speaker 12: including that, you know, a lot of these are not 635 00:33:58,960 --> 00:34:01,240 Speaker 12: the equivalent in terms, so they don't come with the 636 00:34:01,680 --> 00:34:04,400 Speaker 12: brand that they have, So you know, I mean, how 637 00:34:04,400 --> 00:34:07,560 Speaker 12: many people are going to turn around and start buying 638 00:34:07,600 --> 00:34:09,919 Speaker 12: more because of this campaign. It's a big question mark. 639 00:34:09,920 --> 00:34:13,120 Speaker 12: And also, as you mentioned, the Deminimus rule needs to 640 00:34:13,160 --> 00:34:16,839 Speaker 12: be clarified and whether that's going to stay or not. 641 00:34:17,120 --> 00:34:19,320 Speaker 12: But I do think another point here is like, yes, 642 00:34:19,480 --> 00:34:21,400 Speaker 12: this is mocking of the US system. But at the 643 00:34:21,400 --> 00:34:24,000 Speaker 12: same time, there's also something that we need to reflect 644 00:34:24,040 --> 00:34:26,440 Speaker 12: from the China side, and that is there are a 645 00:34:26,440 --> 00:34:29,760 Speaker 12: lot of people here who are dependent on exports, dependent 646 00:34:29,840 --> 00:34:33,440 Speaker 12: on selling goods to the US, and you know, in 647 00:34:33,480 --> 00:34:37,120 Speaker 12: another way, we could interpret this as being a sign 648 00:34:37,200 --> 00:34:40,759 Speaker 12: of desperation. Also on the Chinese side, we have these 649 00:34:40,840 --> 00:34:45,719 Speaker 12: vendors who are looking at possible bankruptcy or possible you know, 650 00:34:46,280 --> 00:34:50,520 Speaker 12: difficulties commercially, and this could also be interpreted as an 651 00:34:50,520 --> 00:34:54,120 Speaker 12: effort by them to try to change their situation. So 652 00:34:54,800 --> 00:34:57,319 Speaker 12: while on the one hand, it is definitely you know, 653 00:34:57,880 --> 00:35:00,680 Speaker 12: poking fun and mocking a little bit the US and 654 00:35:00,760 --> 00:35:05,000 Speaker 12: the tariffs that have been introduced and stopped and paused 655 00:35:05,000 --> 00:35:08,160 Speaker 12: and reintroduced by Trump, but there's also a message for 656 00:35:08,200 --> 00:35:13,439 Speaker 12: the Chinese as well. Probably not intentionally, but it does 657 00:35:13,480 --> 00:35:16,799 Speaker 12: remind us that there's a lot of people here who 658 00:35:17,040 --> 00:35:20,920 Speaker 12: do stand to suffer if the tariff regime goes into 659 00:35:21,000 --> 00:35:24,680 Speaker 12: full effect and remain so for an extended period of time. 660 00:35:25,200 --> 00:35:27,200 Speaker 4: Is it too much to say that the government may 661 00:35:27,239 --> 00:35:29,880 Speaker 4: be involved in this? Is there any evidence that that 662 00:35:29,920 --> 00:35:30,720 Speaker 4: may be happening. 663 00:35:31,000 --> 00:35:35,719 Speaker 12: Well, that's always super difficult to pinpoint right, nobody's going 664 00:35:35,760 --> 00:35:38,520 Speaker 12: to come out and say we are allowing this to happen. 665 00:35:38,840 --> 00:35:42,000 Speaker 12: But you know, I mean, there is the element that 666 00:35:42,719 --> 00:35:47,239 Speaker 12: typically in China, like if there's something online that the 667 00:35:47,280 --> 00:35:50,040 Speaker 12: government doesn't like, it will get shut down pretty quickly. 668 00:35:50,040 --> 00:35:51,719 Speaker 12: And then of course there are some sort of legal 669 00:35:51,760 --> 00:35:55,160 Speaker 12: implications here. For example, many of these brands that are 670 00:35:55,200 --> 00:35:58,839 Speaker 12: being exposed would have non disclosure agreements in place with 671 00:35:58,920 --> 00:36:04,120 Speaker 12: their supplyers, and also obviously trading and counterfeit goods is 672 00:36:04,160 --> 00:36:08,399 Speaker 12: not a legal activity. So the fact that these sort 673 00:36:08,400 --> 00:36:11,200 Speaker 12: of videos are allowed to stay online, even if it's 674 00:36:11,239 --> 00:36:13,960 Speaker 12: just for a short period of time, does sort of 675 00:36:14,120 --> 00:36:19,120 Speaker 12: suggest some sort of tacit approval at least, or perhaps, 676 00:36:19,280 --> 00:36:20,960 Speaker 12: you know, if we want to be generous, maybe it 677 00:36:20,960 --> 00:36:23,799 Speaker 12: hasn't filtered to the right authorities yet and there will 678 00:36:23,840 --> 00:36:28,160 Speaker 12: be a crackdown. It is very early to say definitively 679 00:36:28,600 --> 00:36:31,319 Speaker 12: what are the factors at play. We don't have a 680 00:36:31,360 --> 00:36:35,640 Speaker 12: comment as of now from the company from TikTok explaining 681 00:36:35,680 --> 00:36:38,480 Speaker 12: what's happening, So in the absence of all that, I 682 00:36:38,520 --> 00:36:41,160 Speaker 12: think we have to hold back judgment for a little while. 683 00:36:41,520 --> 00:36:45,200 Speaker 12: But coming at this time and in the volume and 684 00:36:45,280 --> 00:36:48,000 Speaker 12: the quality of the videos, I can help but be 685 00:36:49,160 --> 00:36:54,480 Speaker 12: quite suspicious that this is some sort of collaboration or 686 00:36:54,520 --> 00:36:57,320 Speaker 12: concerted effort to send a message. 687 00:36:57,400 --> 00:37:00,600 Speaker 4: So we know that the Trump administration was working towards 688 00:37:00,840 --> 00:37:05,480 Speaker 4: negotiating some type of sale of the US operations of 689 00:37:05,560 --> 00:37:09,840 Speaker 4: TikTok to a group of private investors. When the terrafor began, 690 00:37:10,360 --> 00:37:13,640 Speaker 4: those talks seemed to be scuttled. I can only imagine 691 00:37:13,880 --> 00:37:18,600 Speaker 4: that This illustrates some of the downside that may exist 692 00:37:18,719 --> 00:37:23,000 Speaker 4: if you're in the administration wondering about what co ownership 693 00:37:23,200 --> 00:37:25,520 Speaker 4: may look like. Let's say, if Beijing were to have 694 00:37:25,560 --> 00:37:29,200 Speaker 4: a fifty percent stake in TikTok still even after the 695 00:37:29,320 --> 00:37:32,919 Speaker 4: US divestiture, what type of problems may exist down the road. 696 00:37:33,080 --> 00:37:34,960 Speaker 4: This could be a prime example. 697 00:37:34,560 --> 00:37:35,960 Speaker 2: Of that, right right. 698 00:37:36,080 --> 00:37:40,160 Speaker 12: And you know, some experts on disinformation that I spoke 699 00:37:40,239 --> 00:37:43,920 Speaker 12: to do say that this underscores the importance of a 700 00:37:44,000 --> 00:37:47,480 Speaker 12: ban or a sale. That of course would be their 701 00:37:47,520 --> 00:37:50,759 Speaker 12: point of view at this point, because that's what they're supporting. 702 00:37:51,480 --> 00:37:52,560 Speaker 6: It does raise the question. 703 00:37:53,600 --> 00:37:54,640 Speaker 2: It also, you. 704 00:37:54,520 --> 00:37:58,160 Speaker 12: Know, brings up the point whether a deal will happen 705 00:37:58,800 --> 00:38:01,160 Speaker 12: at all, because you know, the Chinese have now, as 706 00:38:01,160 --> 00:38:07,040 Speaker 12: you said, made quite clear that the TikTok issue is 707 00:38:07,520 --> 00:38:13,000 Speaker 12: dependent on clearing the tireff issue first, and you know, 708 00:38:13,200 --> 00:38:15,640 Speaker 12: it's sort of a grand bargain where everything is thrown 709 00:38:15,719 --> 00:38:21,200 Speaker 12: into one bag and includes TikTok, includes tariffs. We've seen 710 00:38:21,239 --> 00:38:23,640 Speaker 12: in recent days that the chances of that happening are 711 00:38:24,520 --> 00:38:28,719 Speaker 12: declining constantly, so I wouldn't hold out too much hope 712 00:38:28,719 --> 00:38:32,919 Speaker 12: for that in the immediate term. But yes, it does 713 00:38:33,000 --> 00:38:37,359 Speaker 12: illustrate some of the concerns that were raised by lawmakers 714 00:38:37,400 --> 00:38:40,760 Speaker 12: and other advocates calling for a ban or a sale 715 00:38:40,800 --> 00:38:45,560 Speaker 12: of TikTok, and it's curious that this would be allowed 716 00:38:45,600 --> 00:38:47,359 Speaker 12: to happen at this very sensitive time. 717 00:38:47,680 --> 00:38:50,840 Speaker 4: Column. Thank you so much. That is Colin Murphy, China 718 00:38:50,880 --> 00:38:54,160 Speaker 4: Eco GUV reporter for Bloomberg News, joining us from Beijing, 719 00:38:54,480 --> 00:38:56,839 Speaker 4: and I'm Doug Krisner. You can catch us weekdays here 720 00:38:56,880 --> 00:39:00,480 Speaker 4: for the Daybreak Asia podcast. It's available where you get 721 00:39:00,520 --> 00:39:01,239 Speaker 4: your podcast. 722 00:39:01,560 --> 00:39:04,360 Speaker 2: Tom. Thank you Doug. And that does it for this 723 00:39:04,520 --> 00:39:07,280 Speaker 2: edition of Bloomberg day Break Weekend. Join us again Monday 724 00:39:07,280 --> 00:39:09,360 Speaker 2: morning at five am Wall Street Time for the latest 725 00:39:09,400 --> 00:39:11,799 Speaker 2: on markets overseas and the news you need to start 726 00:39:11,840 --> 00:39:15,240 Speaker 2: your day. I'm Tom Buzzby. Stay with us. Top stories 727 00:39:15,239 --> 00:39:17,760 Speaker 2: and global business headlines are coming up right now.