WEBVTT - Trump Says He Will Delay Mexico Tariffs on Goods Under USMCA 0:00:02.520 --> 0:00:07.000 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.640 --> 0:00:12.680 This is Bloomberg Business Week Insight from the reporters and 0:00:12.800 --> 0:00:16.800 editors that bring you America's most trusted business magazine, plus 0:00:17.000 --> 0:00:20.799 global business, finance and tech news. The Bloomberg Business Week 0:00:20.840 --> 0:00:25.760 Podcast with Carol Masser and Tim Stenovek on Bloomberg Radio. 0:00:26.680 --> 0:00:29.760 Hard to keep track, you know it. We have watched 0:00:29.760 --> 0:00:32.199 the headlines come fast and furious. We are trying to 0:00:32.200 --> 0:00:34.760 know when it comes to the US administration's policy on 0:00:34.920 --> 0:00:37.600 US tariffs. What we do know at this hour. President 0:00:37.640 --> 0:00:40.040 Trump said he will exempt Mexico from his new twenty 0:00:40.120 --> 0:00:42.640 five percent tariffs on any goods and services that fall 0:00:43.000 --> 0:00:47.199 under the North American trade agreement that he actually renegotiating 0:00:47.280 --> 0:00:50.400 during renegotiated, i should say, during his first administration. So 0:00:50.560 --> 0:00:55.120 this does offer reprieve for a major, major US trading partner. 0:00:54.800 --> 0:00:57.920 A reprieve, but perhaps just until April second. Back to 0:00:57.960 --> 0:01:00.600 our DC News Bureau and Bloomberg Intelligence Senior pol analyst 0:01:00.920 --> 0:01:03.080 Nathan deeed, it's hard for us, Nathan, to keep track 0:01:03.120 --> 0:01:07.119 of it. What are you telling Bloomberg clients about what 0:01:07.160 --> 0:01:09.560 they need to know in terms of timing and how 0:01:09.640 --> 0:01:11.880 much these tariffs are going to affect them. 0:01:12.240 --> 0:01:14.160 Yeah, So what we're coining this is we're coining this 0:01:14.200 --> 0:01:16.640 as shock and awe strategy for tariffs, where President Trump 0:01:16.680 --> 0:01:18.560 comes out here and says, look, this is what I'm 0:01:18.560 --> 0:01:19.880 going to do. It's going to happen. I'm not going 0:01:19.920 --> 0:01:23.400 to negotiate. And we saw this with Canada. Mexico tariffs 0:01:23.400 --> 0:01:26.160 are on thirty day extension, tariffs are on. Now we're 0:01:26.200 --> 0:01:29.160 seeing the exemption for Mexico. So come April second, which 0:01:29.160 --> 0:01:33.240 is the next major catalyst. Obviously there's potentially some negotiations 0:01:33.240 --> 0:01:35.800 with Canada to go between then, but with April second, 0:01:36.080 --> 0:01:39.080 clients need to prepare for this idea that these reciprocal 0:01:39.120 --> 0:01:41.080 tariffs are going to come. But they also have to 0:01:41.080 --> 0:01:43.440 prepare for the idea that there are going to be exemptions. 0:01:43.640 --> 0:01:45.400 The one thing that President Trump does not want to 0:01:45.440 --> 0:01:48.200 see is sticker shock amongst the consumer base. So if 0:01:48.240 --> 0:01:50.080 you're talking about any types of goods, you know, we 0:01:50.080 --> 0:01:52.880 saw the big three automobile makers in there. They got 0:01:52.920 --> 0:01:55.560 their exemption. So I do think that President Trump will 0:01:55.560 --> 0:01:59.640 be amicable to some exemptions when it comes to April second. 0:02:00.000 --> 0:02:02.160 He just may be in the days after April second, 0:02:02.360 --> 0:02:04.120 not the lead up to it. So you have to 0:02:04.280 --> 0:02:06.480 certainly pay attention to it because it's going to be 0:02:06.520 --> 0:02:08.480 really interesting to see what happens. 0:02:08.880 --> 0:02:10.800 Can I just say to anybody, see the trade deficit 0:02:10.840 --> 0:02:14.280 today winding to a record ahead of these tariffs. I mean, 0:02:14.280 --> 0:02:16.320 I know people might be bringing stuff in to get 0:02:16.320 --> 0:02:18.520 ahead of them, but I mean we import a ton 0:02:18.560 --> 0:02:22.080 of stuff. So are we talking, ultimately, Nathan about a 0:02:22.080 --> 0:02:23.360 lot of exemptions to come. 0:02:24.480 --> 0:02:27.040 Well, you know that's the challenge here is because you know, 0:02:27.320 --> 0:02:29.280 every industry is going to want their own exemption. The 0:02:29.280 --> 0:02:32.040 big three automobile makers were in there, Tim Cook from 0:02:32.040 --> 0:02:34.360 Apple could be in there next time talking about an 0:02:34.360 --> 0:02:37.000 exemption for the technic industry. So you know what I 0:02:37.000 --> 0:02:39.040 think he needs to happen here is, you know, we 0:02:39.120 --> 0:02:41.400 prepare for the worst case scenario, and the worst case 0:02:41.400 --> 0:02:45.400 scenario is reciprocal tariffs across the board. But then also 0:02:45.600 --> 0:02:47.960 you just have to remember that what are the industries 0:02:48.000 --> 0:02:52.080 and what are the consumer facing goods that American people 0:02:52.240 --> 0:02:54.320 want President Trump to bring the price down? 0:02:54.560 --> 0:02:54.840 Food? 0:02:54.880 --> 0:02:57.120 In particular, this is something that drove a lot of 0:02:57.200 --> 0:02:58.840 voters to him at the end of twenty two in 0:02:58.919 --> 0:03:01.200 the elections. So I think what the White House will 0:03:01.200 --> 0:03:03.600 do is to look and see, Okay, what industries in 0:03:03.639 --> 0:03:05.840 which sectors do we think are going to hurt the 0:03:05.919 --> 0:03:10.120 American consumer more than others? And look, automobiles technology, that's 0:03:10.120 --> 0:03:12.680 something that Americans buy quite a lot of. So I 0:03:12.720 --> 0:03:15.359 wasn't surprised to see the exemption for the automobile makers there. 0:03:15.440 --> 0:03:17.639 So it's really hard to tell, though, because there's only 0:03:17.680 --> 0:03:20.359 one person that decides whether these tariffs are on or off, 0:03:20.400 --> 0:03:22.240 and it's President Trump, and so we just have to 0:03:22.280 --> 0:03:24.519 like prepare for one scenario and prepare for the other. 0:03:24.639 --> 0:03:27.040 Nathan, I know this is fast moving, and I know 0:03:27.080 --> 0:03:29.359 that we are only getting details sort of as they 0:03:29.400 --> 0:03:31.600 come out day by day and even hour by hour. 0:03:31.680 --> 0:03:34.519 But have we been able to has Bloomberg been able 0:03:34.520 --> 0:03:39.600 to quantify now, given the thirty day reprieve from the 0:03:39.600 --> 0:03:43.120 tariffs on Mexico, what actually is tariff in terms of 0:03:43.160 --> 0:03:43.920 amount of goods? 0:03:44.800 --> 0:03:47.320 Yeah, so we were looking at this morning, and obviously 0:03:47.320 --> 0:03:49.520 the exemption is for all goods that found her within 0:03:49.560 --> 0:03:52.960 the US MCA. We think that's probably close to one 0:03:53.000 --> 0:03:55.520 hundred percent, not exactly, but even the President of Mexico 0:03:55.720 --> 0:03:58.520 this morning, you know, the President of Mexico said in 0:03:58.560 --> 0:04:01.520 her briefing that's pretty much everything. So, you know, I 0:04:02.120 --> 0:04:04.280 want to say that, you know, obviously these you know, 0:04:04.320 --> 0:04:06.560 the headlines are there and so forth, but you know, 0:04:06.640 --> 0:04:09.360 we think it's effectively a push off of the tariff 0:04:09.400 --> 0:04:12.200 until April second. The situation obviously is a little bit 0:04:12.200 --> 0:04:14.680 different in Canada. You know, Prime Minister Justin Trudeau and 0:04:14.680 --> 0:04:17.280 President Trump have been feuding a little bit on social media, 0:04:17.680 --> 0:04:20.760 and I think that's probably going to continue because what 0:04:20.800 --> 0:04:23.080 we you know, we discussed this yesterday in the program. 0:04:23.200 --> 0:04:25.720 The negotiation stance that we saw coming from Mexico was 0:04:25.800 --> 0:04:27.400 different than the take that we saw it was coming 0:04:27.400 --> 0:04:30.000 from Canada, and it looks like it got different results. 0:04:30.360 --> 0:04:34.159 So unless that relationship between Ottawa and Washington changes, the 0:04:34.200 --> 0:04:37.080 Canadian tariffs may be here until April second, if not longer. 0:04:37.160 --> 0:04:40.200 Nathan, I mean, we can't get in this mind. We 0:04:40.240 --> 0:04:42.520 don't know what he's ultimately thinking. But what does President 0:04:42.520 --> 0:04:46.000 Trump ultimately want? Is it tariffs and pushback? Is it 0:04:46.080 --> 0:04:48.520 something else that he wants from these countries, from our allies, 0:04:48.520 --> 0:04:51.080 from our major trading partners. Do we know what it is? 0:04:52.240 --> 0:04:54.480 I think what it is is he wants a fundamental 0:04:54.560 --> 0:04:56.920 shift in terms of the American economy. If you listen 0:04:56.960 --> 0:04:59.679 to Scott best Into, the Treasury Secretary in his speech 0:04:59.720 --> 0:05:03.360 this he was talking about how, you know, manufacturing can 0:05:03.400 --> 0:05:06.000 come back to the United States. The challenge with that 0:05:06.279 --> 0:05:08.200 is is that in order to build a plant, or 0:05:08.200 --> 0:05:10.640 buy a plant, or shift the supply chain, you're talking 0:05:10.640 --> 0:05:13.560 about a three four five year you know time frame 0:05:13.920 --> 0:05:15.919 and you know tariffs, on the other hand, are going 0:05:16.000 --> 0:05:18.000 to have an immediate time frame in terms of price 0:05:18.400 --> 0:05:21.080 and consumer impact. So that's I think the challenge for 0:05:21.120 --> 0:05:22.839 the White House here is you have a long term 0:05:22.880 --> 0:05:25.160 strategy and a long term goal, but you're going to 0:05:25.200 --> 0:05:27.039 have to deal with short term pain in the interim. 0:05:27.320 --> 0:05:30.120 The question is will the White House stomach that short 0:05:30.200 --> 0:05:33.360 term gain or short term pain and the economic hit 0:05:33.640 --> 0:05:35.800 in order to achieve their long term goals. I'm not 0:05:35.880 --> 0:05:36.280 so sure. 0:05:36.360 --> 0:05:38.400 Well, it's interesting when you talk about supply chains. We've 0:05:38.400 --> 0:05:41.400 talked with our Markerman about the apple supply chain, as 0:05:41.600 --> 0:05:45.200 massive as it is, and how that would take a 0:05:45.320 --> 0:05:47.919 long long time to shift in terms of you know, 0:05:47.960 --> 0:05:49.360 so much over in China, how. 0:05:49.800 --> 0:05:51.080 Much time they spend building it up. 0:05:51.160 --> 0:05:54.560 Yeah, in China, several decades, right and so, and ultimately 0:05:54.600 --> 0:05:58.560 that assembly to try and replicate that, create that somewhere else. 0:05:58.880 --> 0:06:02.400 That is something that would take many, many years to do. Nathan, 0:06:02.520 --> 0:06:04.800 as always, thank you. Nathan Dean, senior policy analyst at 0:06:04.800 --> 0:06:07.800 Bloomberg Intelligence, joining us from our Washington, DC bureau. 0:06:08.120 --> 0:06:10.080 Okay, so you're up to date on US tariffs for now, 0:06:10.440 --> 0:06:13.000 but no promises for what happens over the next day, ten, 0:06:13.040 --> 0:06:14.960 twenty four or forty eight hours. We're going to stay 0:06:14.960 --> 0:06:17.760 in DC with our focus now on the US labor market. 0:06:17.800 --> 0:06:20.080 We're gonna get the closely watched monthly jobs report coming 0:06:20.080 --> 0:06:23.320 from the US government tomorrow. Lots of conversations though being 0:06:23.320 --> 0:06:25.480 had right now about how the cuts to the federal 0:06:25.480 --> 0:06:28.159 workforce will impact the US labor picture. 0:06:28.160 --> 0:06:30.680 All right, with more on that, we head back to Washington, 0:06:30.760 --> 0:06:33.880 DC into Bloomberg News Real Economy Team reporter Mark Naquette. Mark, 0:06:33.920 --> 0:06:35.680 a couple of things I want to get to, including 0:06:35.680 --> 0:06:39.080 the story that you guys have put out investors. Obviously 0:06:39.120 --> 0:06:43.120 focusing on jobs. We did get the outplacement firm report, 0:06:44.000 --> 0:06:47.159 Challenger Gray and Christmas their report talking about employers in 0:06:47.160 --> 0:06:50.360 February announcing plans to reduce headcount at the fastest pay 0:06:50.360 --> 0:06:53.080 since early in the pandemic, led by cuts in the 0:06:53.120 --> 0:06:55.719 government sector as the Trump administration moved to shrink the 0:06:55.720 --> 0:06:58.640 federal workforce. How bad is that? How does that tell 0:06:58.720 --> 0:06:59.880 us about what's to come? 0:07:01.640 --> 0:07:05.080 Unfortunately, we have a jobs report coming out Friday that 0:07:05.480 --> 0:07:10.560 will not necessarily reflect the impact of the DOGE cuts. 0:07:11.240 --> 0:07:14.960 The survey period for the jobs report coming out Friday 0:07:15.280 --> 0:07:18.080 was a second week in February, kind of afford the 0:07:18.160 --> 0:07:22.960 you know, the cuts really began. But it's gonna expected 0:07:23.000 --> 0:07:26.160 to show sort of the first indications of, you know, 0:07:26.280 --> 0:07:29.560 the the impact of these federal firings. And it's it's 0:07:29.600 --> 0:07:32.920 not just the federal employees who are being let go, 0:07:33.040 --> 0:07:38.640 but it's the contractors and folks who work for entities 0:07:38.680 --> 0:07:40.960 that do business with the government who are getting terminated 0:07:41.000 --> 0:07:45.720 as well as a result of the broader cost cutting 0:07:45.760 --> 0:07:50.600 and reductions that the DOGE and the Trump administration is making. 0:07:51.760 --> 0:07:56.040 So we expect to see in the upcoming job reports 0:07:56.080 --> 0:08:00.800 for March and April, you know, some more soificant impact 0:08:00.800 --> 0:08:03.600 of these cuts. But I think you're already starting to see, 0:08:03.600 --> 0:08:06.000 like you's mentioned in the Challenger report, you know, the 0:08:06.040 --> 0:08:10.000 sort of the knock on effects of the streamlining that's 0:08:10.040 --> 0:08:12.280 happening right now at the federal government, you know, with 0:08:12.360 --> 0:08:15.400 these contractors and other folks who are being affected. 0:08:15.640 --> 0:08:19.239 Does it have a real possibility, because the federal government 0:08:19.320 --> 0:08:23.360 is such a big employer in the United States, to 0:08:23.520 --> 0:08:28.040 have a significant effect on the unemployment rate in the US? 0:08:29.440 --> 0:08:34.920 It can? I mean, it's it's it's projected that the 0:08:35.520 --> 0:08:40.720 total impact on the private sector job market could be 0:08:40.760 --> 0:08:43.000 ash as a half a million if you add all 0:08:43.040 --> 0:08:49.280 the direct and indirect reductions. It won't move the needle tremendously, 0:08:49.440 --> 0:08:52.280 but it would certainly have an impact on, you know, 0:08:52.320 --> 0:08:54.560 the unemployment rate going forward. 0:08:55.040 --> 0:08:59.680 So to the story that you and the team Augustus, 0:08:59.679 --> 0:09:04.480 Sarah and Gerald Dillard had put out, you guys note 0:09:04.520 --> 0:09:09.040 specifically that economists are seriously, you know, looking at all 0:09:09.080 --> 0:09:12.080 of what's happening in the federal government and maybe rethinking 0:09:12.120 --> 0:09:16.040 their forecast for labor market expansion this year. What are 0:09:16.080 --> 0:09:19.200 you hearing either anecdotally or are they putting or starting 0:09:19.200 --> 0:09:20.280 to put some numbers to it. 0:09:21.440 --> 0:09:23.720 Now they're starting to put some numbers to it, you know, 0:09:25.840 --> 0:09:28.040 hit as much as one hundred and twenty five thousand, 0:09:28.320 --> 0:09:30.640 you know, over the course of several months on individual 0:09:30.720 --> 0:09:35.160 job reports. Because of this impact we're seeing of the 0:09:35.160 --> 0:09:38.160 reductions at the federal level, but we're also seeing some 0:09:38.240 --> 0:09:43.199 kind of interesting sort of ancillary effects, and we've put 0:09:43.200 --> 0:09:46.760 it in our story today, states like New York and 0:09:47.240 --> 0:09:52.240 Maryland actively recruiting fire federal workers to join the state 0:09:52.280 --> 0:09:55.719 workforce in a case where they have, you know, an 0:09:55.720 --> 0:10:01.920 opening and their state workforce, particularly for us specialized the expertise, 0:10:02.000 --> 0:10:05.040 you know, like some of these scientists and researchers who 0:10:05.240 --> 0:10:08.280 are losing their jobs at the federal level come find, 0:10:08.440 --> 0:10:10.319 you know, the state workforce and work for the state. 0:10:11.240 --> 0:10:15.240 So there could actually be some opportunities for folks who 0:10:15.240 --> 0:10:17.840 are losing their jobs at the federal level to still 0:10:17.840 --> 0:10:20.360 get a job in their field just at the state level. 0:10:20.600 --> 0:10:24.680 Is there any concern from you or economists that we 0:10:24.800 --> 0:10:26.920 might not get as a good of insight from the 0:10:26.960 --> 0:10:30.079 federal government in terms of the data that they track, 0:10:30.200 --> 0:10:32.800 that that we use, that we look to, that investors 0:10:33.320 --> 0:10:36.360 look to as a result of cuts at the federal level. 0:10:38.320 --> 0:10:41.880 Yeah, and it's hard to even track, you know, the 0:10:41.920 --> 0:10:45.000 impact of the federal firings. You know, for example, you know, 0:10:45.040 --> 0:10:49.000 we look at initial jobless claims to try and see, 0:10:49.160 --> 0:10:52.960 you know, what kind of impact the federal reductions are having. 0:10:53.440 --> 0:10:59.480 And one the unemployment claims are filed under a separate 0:10:59.480 --> 0:11:03.480 program for federal workers, and there's a leg in reporting 0:11:03.480 --> 0:11:10.199 that number, and some of the claims are not reflected, right, 0:11:10.440 --> 0:11:13.840 folks who had put on administrative lead and they have 0:11:13.920 --> 0:11:18.040 not yet filed for unemployment for example. So bottom line, 0:11:18.120 --> 0:11:20.880 I don't think we will see the entire impact of 0:11:21.000 --> 0:11:23.800 the reductions that are happening at the federal level in 0:11:23.880 --> 0:11:25.160 the various jobs reports. 0:11:25.200 --> 0:11:27.280 All right, super important as we go through the numbers, 0:11:27.280 --> 0:11:29.680 and maybe need to be patient to wait to see 0:11:30.320 --> 0:11:32.439 what the ultimate impact will be. Mark Kat, thank you 0:11:32.559 --> 0:11:35.120 so much, Real Economy team, reporter at Bloomberg News there 0:11:35.120 --> 0:11:35.640 in DC. 0:11:36.880 --> 0:11:40.440 You're listening to the Bloomberg Business Week podcast. Catch us 0:11:40.480 --> 0:11:43.959 live weekday afternoons from two to five pm Eastern. Listen 0:11:43.960 --> 0:11:47.520 on Apple CarPlay and Android Auto with the Bloomberg Business app, 0:11:47.679 --> 0:11:50.319 or watch us live on YouTube. 0:11:50.920 --> 0:11:52.640 We're going to get another take on kind of what's 0:11:52.679 --> 0:11:54.679 been going on in the markets with someone who's actually 0:11:54.679 --> 0:11:57.240 been watching the rates US rates market pretty closely. 0:11:57.320 --> 0:11:58.920 Yeah, I want to bring in Thomas Carroll founder and 0:11:58.960 --> 0:12:01.920 CEO at the registered investment advisor at ballast Rock Asset 0:12:02.040 --> 0:12:05.120 Management and invest in multi family real estate properties and 0:12:05.200 --> 0:12:07.760 also in a venture capital. The firm has about two 0:12:07.840 --> 0:12:10.520 hundred and forty million dollars in assets under management. Thomas 0:12:10.600 --> 0:12:13.560 joining us from a Boca Raton, Florida. Thomas, good to 0:12:13.600 --> 0:12:15.360 have you here. Look, I just want to start on 0:12:15.480 --> 0:12:20.360 daylight today, where you see the markets really volidile, Grateful 0:12:20.360 --> 0:12:23.560 to be in a an asset class that doesn't buy 0:12:23.600 --> 0:12:25.560 and sell at the whim or click of a button. 0:12:26.960 --> 0:12:30.800 Absolutely, and in fact it's fascinating. Over the last two months, 0:12:30.840 --> 0:12:34.680 we've seen a real uptick in investor demand for our 0:12:34.800 --> 0:12:38.480 asset class for interest in investing simply, I think a 0:12:38.559 --> 0:12:42.840 large part because they are nervous about the forward for 0:12:43.040 --> 0:12:45.960 equities and for public markets, and they don't want to 0:12:46.000 --> 0:12:48.800 be in an asset class that gy rates as much 0:12:49.080 --> 0:12:52.840 as we've seen in equities. So after twenty twenty four, 0:12:52.880 --> 0:12:58.560 which frankly was a ballmarket year in general, we on 0:12:58.600 --> 0:13:02.160 the private markets invest side found it quite challenging to 0:13:02.240 --> 0:13:05.680 raise capital in twenty four. However, twenty five has started 0:13:05.760 --> 0:13:08.680 totally differently, and I think it is driven by people 0:13:08.679 --> 0:13:12.640 seeing significant volatility if their public markets is social. 0:13:12.679 --> 0:13:14.560 So essentially what they're saying is, we don't want to 0:13:14.559 --> 0:13:17.440 be in public markets because it's too volatile. We'll pull 0:13:17.480 --> 0:13:20.400 the money from public equities and instead we'll invest it 0:13:20.440 --> 0:13:22.720 in alternatives. And one of those alternatives is with you. 0:13:22.880 --> 0:13:24.240 And can I just say that that's what we heard 0:13:24.240 --> 0:13:27.000 from Raj Danda of Arias Wealth. 0:13:26.760 --> 0:13:28.720 Management, who was a huge some privates. 0:13:28.800 --> 0:13:29.600 Yeah, so that the. 0:13:29.640 --> 0:13:31.760 Volatility of the public markets is freaking people out. But 0:13:31.800 --> 0:13:32.480 forgive me go ahead. 0:13:32.600 --> 0:13:33.440 Is that what it is? Thomas? 0:13:34.360 --> 0:13:37.840 Absolutely, And it's not necessarily as directors pull out and 0:13:37.880 --> 0:13:40.920 put in, because of course placing capital into private markets 0:13:41.040 --> 0:13:49.000 is a slower, more stable process. But certainly reallocation proportionally 0:13:49.040 --> 0:13:52.760 adjusting portfolios. We believe that we are seeing that, and 0:13:52.800 --> 0:13:55.680 we're certainly seeing it here at the coal face raising 0:13:55.720 --> 0:13:59.360 capital or private market deals with pross venture capital and 0:13:59.480 --> 0:14:00.000 real estate. 0:14:00.360 --> 0:14:03.880 So, Thomas, you know, we live on these headlines that 0:14:03.920 --> 0:14:06.160 are coming out of DC, and rightfully so, because they 0:14:06.200 --> 0:14:08.400 do move the financial markets, some of them do, not 0:14:08.480 --> 0:14:12.680 all of them do. How do you take in US 0:14:12.720 --> 0:14:15.880 policy out of the White House, How does that ultimately 0:14:16.440 --> 0:14:20.240 impact your world? Rates are important. If rates go up, 0:14:20.240 --> 0:14:22.480 that's going to be more problematic. I would assume if 0:14:22.560 --> 0:14:24.760 rates go down that could be better as long as 0:14:24.760 --> 0:14:28.800 we're not maybe in a recession. But tell us how 0:14:28.840 --> 0:14:29.360 you see it. 0:14:30.360 --> 0:14:33.080 Well, we certainly have to manage to a long term view. 0:14:33.120 --> 0:14:35.720 We cannot be driven by short term decisions in the 0:14:35.760 --> 0:14:38.440 same way that a hedge fund trader or market maker 0:14:39.120 --> 0:14:42.120 can be in public markets. So we view our job 0:14:42.200 --> 0:14:46.200 more like i'd say, driving an oil tanker and having 0:14:46.240 --> 0:14:48.680 to make decisions two miles out if we want to 0:14:48.720 --> 0:14:52.440 turn course in the way that we build portfolios and 0:14:52.560 --> 0:14:56.880 execute acquisitions and dispositions and value add strategies. So we're 0:14:56.920 --> 0:15:00.560 certainly taking a long view. These short term decisions, though, 0:15:01.080 --> 0:15:05.840 and their driver on interest rates do impact us, both 0:15:05.920 --> 0:15:09.680 for the positive and for the negative. The positive in 0:15:09.720 --> 0:15:14.080 that actually rate volatility and in particular what we perceive 0:15:14.120 --> 0:15:20.560 as a likely rates higher for longer as inflationary pressures 0:15:20.600 --> 0:15:24.480 like tariffs and DEGO globalization and near shoring, those are 0:15:24.520 --> 0:15:30.080 all inflationary pressures that will that will really require the 0:15:30.120 --> 0:15:36.160 FED to keep rates higher for longer. That pressure a 0:15:36.200 --> 0:15:38.120 lot of sponsors out there, a lot of real estate 0:15:38.160 --> 0:15:40.880 owners out there who acquired assets at the peak in 0:15:40.920 --> 0:15:43.640 twenty twenty or twenty twenty one and even twenty twenty 0:15:43.640 --> 0:15:49.680 two have been clinging on for dear life, waiting for 0:15:49.840 --> 0:15:53.800 rates to drop, and especially those that are acquired assets 0:15:53.840 --> 0:15:57.680 at the peak using floating rate short term bridge financing, 0:15:58.440 --> 0:16:01.200 have been desperately waiting for that drop, and if it's 0:16:01.240 --> 0:16:04.720 not going to come, they will have to concede and 0:16:05.240 --> 0:16:08.200 likely take a loss, but that will certainly get the 0:16:08.240 --> 0:16:11.560 acquisition market started again, a market that's stalled through twenty 0:16:11.600 --> 0:16:15.600 twenty three and four. So that opportunity for those of 0:16:15.640 --> 0:16:18.920 us that are well capitalized is really exciting. We see 0:16:18.920 --> 0:16:22.160 the next two years with a lot of sellers just 0:16:22.240 --> 0:16:26.040 conceding and capitulating. We see that as a great opportunity 0:16:26.040 --> 0:16:28.120 to acquire if you're well capitalized. 0:16:28.480 --> 0:16:30.120 All right, we're going to leave it on that note, Thomas, 0:16:30.240 --> 0:16:32.640 So good that we could get to you on this 0:16:32.720 --> 0:16:34.200 day when there's a lot going on in the markets 0:16:34.240 --> 0:16:37.360 and get your perspective an important one. Thomas Carrol, founder 0:16:37.360 --> 0:16:41.080 and CEO at the registered investment advisor ballast Rock Asset Management. 0:16:41.280 --> 0:16:43.080 They've got about two hundred and forty million dollars in 0:16:43.120 --> 0:16:46.680 asseids under management, joining us there from Florida. 0:16:47.240 --> 0:16:51.000 This is the Bloomberg Business Week Podcast. Listen live each 0:16:51.040 --> 0:16:54.000 weekday starting a two pm Eastern on Apple car Play 0:16:54.120 --> 0:16:56.760 and the Android Auto with the Bloomberg Business App. You 0:16:56.800 --> 0:17:00.000 can also listen live on Amazon Alexa from our flagship 0:17:00.080 --> 0:17:03.800 New York station Just Say Alexa played Bloomberg eleven thirty. 0:17:04.840 --> 0:17:07.360 Well, let's talk about Alibaba. As we noted, they introduced 0:17:07.400 --> 0:17:10.080 its Quinn platform. It's a model that it claims performs 0:17:10.080 --> 0:17:12.760 as well as Chinese startup Deep Sequel with a fraction 0:17:13.000 --> 0:17:16.080 of the data, with US as Bear Technology Strategies. Ted 0:17:16.200 --> 0:17:19.159 Mortenson with US from Tampa, Florida. Ted, I think this 0:17:19.280 --> 0:17:21.360 coming as a surprise to people, especially just a few 0:17:21.359 --> 0:17:23.639 weeks after we got the Deep Seek news. 0:17:23.880 --> 0:17:25.520 What do we need to know about this announcement from 0:17:25.560 --> 0:17:27.480 Ali Baba. 0:17:27.600 --> 0:17:31.040 Well, there's two things. Number One, I would consider this 0:17:31.160 --> 0:17:35.480 almost as a war between the US and China for 0:17:35.960 --> 0:17:40.480 Jenai leadership. This is a major advance, and I think 0:17:40.560 --> 0:17:44.920 if you look at Ali Baba's last report when they 0:17:44.960 --> 0:17:49.080 focused on their Cloud Intelligence group, they let the street 0:17:49.200 --> 0:17:51.840 know for the first time that they're going to spend 0:17:51.920 --> 0:17:55.880 roughly fifty three billion over three years that's more than 0:17:55.880 --> 0:18:00.240 that they spent in the last decade. They also indicated 0:18:00.320 --> 0:18:03.280 that when they get to what's called AGI, and that's 0:18:03.320 --> 0:18:08.600 eighty percent of kind of human capability, the States are 0:18:08.720 --> 0:18:12.440 very very high. You're talking about fifty percent of GDP. 0:18:13.640 --> 0:18:18.679 So this is going full bore between two nations that 0:18:19.280 --> 0:18:23.000 can afford not to be in a lagging stance, and 0:18:23.080 --> 0:18:26.080 I would not be surprised if President Trump makes some 0:18:26.200 --> 0:18:28.200 moves in this area over the coming weeks. 0:18:28.280 --> 0:18:31.440 When you say AGI, you mean artificial general intelligence, which, yeah, 0:18:31.480 --> 0:18:34.560 I googled it. You're talking about basically, when you've got 0:18:34.640 --> 0:18:37.959 a machine that can do anything that Tim and I 0:18:38.000 --> 0:18:39.040 can do a human can do. 0:18:39.119 --> 0:18:41.280 Correct you trust that because that's Gemini showing you that 0:18:41.359 --> 0:18:42.960 search result. I can tell you that I'm looking at 0:18:43.000 --> 0:18:43.399 your screen. 0:18:43.480 --> 0:18:45.000 But that's what you're talking about, right. 0:18:45.800 --> 0:18:48.560 That's That's exactly what I'm talking about. We're a couple 0:18:48.600 --> 0:18:51.360 of years off from that, but we're going to get there. 0:18:51.560 --> 0:18:55.520 And the implications on how this is going to change 0:18:55.640 --> 0:19:01.240 every industry and how we look at you know, SMP 0:19:01.440 --> 0:19:05.240 earnings and GDP, you have to have a very open 0:19:05.320 --> 0:19:07.920 mind because it is changing extremely rapidly. 0:19:08.560 --> 0:19:09.240 How rapidly. 0:19:09.280 --> 0:19:12.880 I spoke to Bin Ran of Sigtec earlier this week 0:19:12.920 --> 0:19:16.160 at Bloomberg invest He's the founder and CEO of this 0:19:16.440 --> 0:19:19.040 firm that spun off of Brevin Howard back in twenty nineteen, 0:19:19.040 --> 0:19:23.560 and they've created these agents to essentially do the job 0:19:23.600 --> 0:19:25.280 of analysts and quants on Wall Street. 0:19:25.320 --> 0:19:26.399 It's pretty remarkable stuff. 0:19:26.440 --> 0:19:28.840 He gave us a demonstration, But he said, by the 0:19:28.920 --> 0:19:32.080 end of this year, half of the workforce is going 0:19:32.119 --> 0:19:34.360 to be made up of AI agents. Is that too 0:19:34.359 --> 0:19:35.840 bold a proclamation. 0:19:36.520 --> 0:19:39.160 That maybe a little bit aggressive? I mean, Mango dB 0:19:39.359 --> 0:19:43.560 last night basically said for them, and they're they're kind 0:19:43.600 --> 0:19:47.720 of the database layer for JENNYI applications. Whether it be 0:19:47.800 --> 0:19:50.040 right or wrong. They said fiscal twenty six was going 0:19:50.119 --> 0:19:55.000 to be a transition year, So there's different opinions it's 0:19:55.040 --> 0:19:58.920 going to happen to degree of how quick it happens, 0:19:59.040 --> 0:20:03.440 is how the next generation jenn Ai Silkan stacks mature 0:20:03.840 --> 0:20:07.680 number one and number two. We have some major major 0:20:08.560 --> 0:20:14.480 Silkin advances happening going forward into next year with Navidia's 0:20:14.520 --> 0:20:19.600 release of Reuben, for example. This is a technology innovation 0:20:19.720 --> 0:20:22.159 we've really never seen, at least I haven't seen in 0:20:22.320 --> 0:20:23.479 thirty years of doing this. 0:20:24.240 --> 0:20:27.000 So what's the role of Nvidia at this point? I mean, 0:20:27.040 --> 0:20:29.480 they're down about sixteen percent seventeen percent this year. We 0:20:29.520 --> 0:20:31.840 know that they've really taken a hit, you know, following 0:20:31.840 --> 0:20:34.440 the deep seak news that we got back in January. 0:20:34.520 --> 0:20:37.280 But I mean, is it silly for investors to count 0:20:37.359 --> 0:20:40.119 Nvidia out? I mean, how are you thinking about the 0:20:40.200 --> 0:20:43.520 companies that investors should be watching when it comes to 0:20:43.560 --> 0:20:44.560 the AI trade. 0:20:46.160 --> 0:20:49.719 So the chart doesn't look great, and that's just feeding 0:20:49.760 --> 0:20:52.359 on itself. But if you look at the if you 0:20:52.400 --> 0:20:56.720 look at what Jensen's doing, the man's brilliant. He's he's 0:20:56.800 --> 0:20:59.840 one of I would say the greatest tech innovators of 0:20:59.840 --> 0:21:05.280 our time. He invested billions of dollars into this area 0:21:05.440 --> 0:21:09.679 before it even became a market. So Navidia has a 0:21:09.760 --> 0:21:12.320 four to five year lead. I think where the street 0:21:12.840 --> 0:21:20.399