September 2, 2025 • 38 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Alphabet Inc.’s Google doesn’t have to sell its popular Chrome web browser, a federal judge ruled Tuesday in the Justice Department’s landmark antitrust case against the search engine.
The ruling allows Google to avoid one of the most severe remedy requests from the US government after the court found the company found the company had an illegal monopoly in the search market. Judge Amit Mehta did bar Google from entering into exclusive contracts for internet search.
The finding follows Mehta’s ruling last year that Google illegally monopolized the markets for online search and search advertisements. Mehta held a three-week hearing in April to determine a fix.
The order is one of the most monumental court decisions affecting the tech sector in more than a quarter century, and could offer a blueprint for other judges who may end up weighing similar choices in cases against Meta Platforms Inc., Amazon.com Inc. and Apple Inc.
In another win for Google, the judge didn’t bar the company from making payments to third parties for default browser placement.
Today's show features:
- Bloomberg Intelligence Global Head of Technology Research Mandeep Singh and Bloomberg News Senior Executive Editor for Global Tech Tom Giles
- Peter Atwater, President of Financial Insyghts and Adjunct Lecturer of Economics at the College of William and Mary, on US trade policy and the economic outlook
- Wendy Cutler, Vice President at the Asia Society Policy Institute, on India and China shoring up ties with Russia amid the US-driven trade war and geopolitical unrest
- Bloomberg Senior Editor, Equities Americas Eric Weiner, discussing the Tuesday trade
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business
Weekdaily reporting from the magazine that helps global leaders stay
ahead with insight on the people, companies, and trends shaping
today's complex economy. Plus global business finance and tech news
(00:23):
as it happens. The Bloomberg Business Weekdaily Podcast with Carol
Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
Hey, I want to take a look at what's going
on with Google shares in the after hours Right now,
we were talking about the surge hire as a result
of this ruling that emerged shares still up five point
six percent.
Speaker 3 (00:44):
Feel like we woke up like something was happening.
Speaker 2 (00:47):
Oh well, absolutely, Google doesn't have to sell its popular
Chrome web browser, a federal judge ruled tuesday in the
Justice departments landmark anti trust case against the search engine.
The ruling allows Google to avoid one of the most
severe remedy requests from the US government after the court
found that the company had an illegal monopoly in the
search market. The judge did bar Google from entering into
(01:09):
exclusive contracts for Internet search.
Speaker 4 (01:11):
All right, we knew we wanted to talk with our
man deep seeing of our Bloomberg intelligence teams here in studio.
Speaker 3 (01:17):
Google shares are up. I mean, was this expected? First
of all?
Speaker 5 (01:20):
No, I think that's why you see such an instance
stock reaction because the judge was quite vocal about how
Google had created a monopoly because of all the assets,
and Chrome was one of the most prominent assets that
they the judge focused on so clearly in this case,
the fact that the ruling says that they don't have
(01:44):
to divest Chrome, it's positive news. And look all the
exclusive arrangements with Apple and for their operating system, I
think that was expected remedy really, I mean, it kind
of allows Apple to pick the.
Speaker 6 (01:59):
Partartner they want.
Speaker 5 (02:01):
There won't be an exclusive arrangement, but look, from an
Apple perspective, they can still say Google has the best
LLLM and you know they want to do business. So
from that perspective, that's why Apple is up too. So
you know, this sort of clears all the uncertainty for
both the companies.
Speaker 2 (02:20):
Look, I'm going to ask a crazy question here. Do
we care about search the way that we used to
care about search in the sense of typing something into Google,
or increasingly, do we care more about which LLM people choose?
Speaker 5 (02:32):
Well? So the search market has definitely expanded because of
generative AI. So think of how Google had a ninety
percent plus share. I'm sure if this lawsuit came to
the scene and the hearing was happening now, the jet
would say Google doesn't have ninety percent plus share because
chatchbt has got one billion monthly active users. It's got
(02:56):
the query volume not comparable to Google, but almost you know,
one third of Google, And so that search market is
not the same as it was, you know, probably three
years back before the launch of CHATJPT. And from that perspective,
I mean, look, the search pile has grown. The fact
that Google owns Chrome is a big advantage. So when
(03:17):
I look at generative AI deployments, browser is a critical
aspect of how.
Speaker 6 (03:22):
AI agents will be deployed.
Speaker 5 (03:24):
That's why you're seeing such a stock reaction because everyone
knows if you take out Chrome from Google, even if
Google has their own chips and they have got their
you know ow LLLM, without a browser, the advantage just
goes away. So divesting Chrome would have been a big,
big blow. And you know, that's why the combined entity
(03:45):
owning Chrome and owning all the other assets that Google has.
Speaker 6 (03:48):
Is such a big advantage when it comes to generatively.
Speaker 3 (03:50):
Why are we getting through this ruling?
Speaker 4 (03:52):
And I guess I'm just bringing up in a world
where we have a White House that I think it's
fair to say it's transactional, and we have seen various
tech executives make their way to the White House. Is
there something that was going on behind the scenes of
I don't know that caught the attention. I don't know
what are you hearing?
Speaker 5 (04:08):
And I mean, there are obviously lobbies for these companies.
Speaker 6 (04:12):
It's not a surprise regardless of the administration.
Speaker 5 (04:15):
But look in this case, clearly, as you said, the
administration is transactional and this was the best outcome for Alphabet,
you know, not having to divest anything. There is another
pending lawsuit, the ad Tech lawsuit, but even if they
have to divest something there, it's not that big of
a DLS.
Speaker 6 (04:32):
Chrome.
Speaker 5 (04:33):
Chrome is like the priced asset when it comes to Alphabet.
When you think about YouTube and you know all the
other things, Chrome is right up there. Without a browser,
generative AI deployments get hard, and that's where owning the
distribution through Chrome is paramount.
Speaker 6 (04:49):
For a company like Alphabet, we just.
Speaker 4 (04:50):
Want to point out shares of Alphabet are up more
than six percent here in the aftermarket, and men Deep
mentioned that Apple shares are also higher, and Tim they're
up about four percent here.
Speaker 2 (05:00):
I want to bring in Tom Giles. He's senior executive
editor for Global Technology. He joins us from our San
Francisco bureau. Tom, this ruling obviously coming as a surprise
to investors. Look no further than shares of Alphabet higher
by six point four percent in the after hours. Why
do you think that we got this ruling today?
Speaker 7 (05:20):
I mean, this is a huge sigh of relief, right.
This is, as men Deep said, they avoided the most
harsh penalty here, which would have been selling Chrome, which
Google has woven into its products and is really an
integral part of their value proposition to many customers. So
major side of relief there. They're really allowed to continue
(05:44):
to do a lot of the things that they have
been doing. They're going to have to change certain certain terms.
But something else that they are can they will continue
to be allowed to do is paying for browser places.
They can still make these big cash payments that give
their browser, you know, a special h placement on a
(06:08):
on a smartphone for example, they just need to change.
They can't have the kinds of exclusivity that they have
used in the past. That's really what it came down to.
And as you know, we're still parsing the decision, so
let me be clear about that. But what they what
they said was that if we if we go too
(06:29):
far and for example, say no to these payments, that
would be onerous to the larger ecosystem. That would hurt
some of the small players, some of the manufacturers, some
of the other players in here. And I don't think
that the DJ clearly does not want to do that
at this stage. Remember that some of these decisions are
(06:49):
going to be revisited. This is a six year decision.
We just had some headlines on that, so you know,
Google's going to have to continue to mind its p's
and q's in the coming years to ensure that it
doesn't run a foul of this ruling. But on its face,
the headline here is this is great news for Google,
this is great news for Apple, and you're seeing it
(07:11):
in those shares rallying as we speak.
Speaker 4 (07:14):
Yeah, as you said, we've got Alphabet up six quarter percent,
Tom and then you've got Apple shares up three point
six percent to Mandy Pooh beyond. Apple and Alphabet are
kind of watching this decision and maybe a little upset
about it.
Speaker 5 (07:28):
I mean, remember the news when Perplexity wanted to buy
Chrome and they put a value I think it's thirty
four billion.
Speaker 2 (07:34):
Yeah, talking about this earlier, Yeah, put Perplexity on the map.
Everyone was like, wait, you don't even have that cash.
Speaker 5 (07:41):
Even if Google had to divest Chrome. Thirty four billion
is too low for price tag for an asset you
know that has got over three billion monthly active users.
That is at the core of deploying generative AI. I
mean that's why you know, when you look at individual
assets for Google, everyone looks at how much money does
this make. Chrome doesn't make any money on a standalone basis,
(08:04):
But when it comes to the value of Chrome, we're
talking fifty billion plus even higher. I mean, I wouldn't
be surprised if it's close to one hundred billion as
just a standalone product, given how important it is.
Speaker 6 (08:18):
When it comes to deploying AI.
Speaker 3 (08:19):
So Tom Giles, come on back in here.
Speaker 4 (08:21):
So if you were sitting down or I don't know
if Alphabet's going to do any kind of call or
what have you?
Speaker 3 (08:26):
What would you want to be asking them right now?
Speaker 7 (08:29):
Well, first of all, is there a plan to appeal?
And what does that look like? What are the grounds?
I hate to put it this bluntly, but you guys
got off really easy here. You avoided the worst possible scenarios.
As we've said, as man Deep and I have been
talking about, are you going to appeal? What are the
grounds for that they may see something in here that
(08:52):
is owners to them that they feel is going to
tie their hands in the future. Again, it's a six
year decision. DJ is giving itself leeway to kind of
revisit at least part of this. And so is are
there are there clauses? Are the things that they want
to change? And do they you know, do they do
they want to send the signal that we don't think
we're monopol is here, which is of course what they've
(09:14):
been saying all along. Do you want to hit that
home with with with sending this into an appeals process?
Speaker 3 (09:21):
Same question to you, man Deep.
Speaker 4 (09:22):
So you're sitting down with these execs ever at Alphabet
and what you what you would want to know?
Speaker 5 (09:27):
I mean, it sounds like they don't want Google to
be making any exclusive payments to Apple, like the twenty
billion dollar attack payment going forward, which again I view
it as a positive because on the one hand, it
opens up you know, other search companies to bid for Apple.
Speaker 6 (09:47):
But Apple has no choice but to go with Google.
Speaker 5 (09:50):
I mean, their users are used to, you know, the
Google experience, and so it sort of saves the twenty
billion dollars that Google is haying Apple, and that helps
their growth Martin. So I don't think there's anything bad
here in terms of, you know, the judge restricting Google
from having an exclusive arrangement with Apple.
Speaker 4 (10:11):
Is there anything tom that if we worried though about
the EU and their view on this.
Speaker 7 (10:17):
We always need to worry if you're Google, if you're
one of the major US tech platforms, you always need
to worry about what the EU is doing, what they're thinking,
where they might land on some of these decisions. I
do think it's a slightly different paradigm across the pond,
as it were. But I do want to come back
(10:38):
to and I'm curious I want to hear from man
Deep too about you know, does the removal of the
exclusive agreements, what kind of opening does that give to
the other platforms how might they try to gain an
advantage here. It does make a huge difference when you
buy your new iPhone or you buy a new smartphone.
(11:00):
It makes a huge difference that that there's going to
be some kind of institutional or you know, existing support
for Google to be the default if you cannot. If
you yes, it's okay to make these payments. But if
you can't have exclusive agreements? What about what about claude?
What about chat gpt? Can some of these other tools
(11:22):
start to present themselves as alternatives and do it more readily? Mendie,
please tell me if i'm you.
Speaker 6 (11:30):
Know, yeah, no, You're all right.
Speaker 5 (11:32):
So I mean Google search ninety percent plus share is
driven by these exclusive arrangements, So you're right.
Speaker 6 (11:38):
But I look at it this way.
Speaker 5 (11:40):
I mean, some of the ruling says Google may have
to share their search index with you know, other providers.
I have to read the fine print. But that again
could make chat GPT better in terms of solving for
all the use cases that we use Google for. So
from that perspective, it is a risk. At the same time,
(12:01):
I mean, on Android, they own the operating system, so
I don't think anything will change from a search experience perspective,
and for Apple, again, they want their users to get
the best experience. So I don't think they're going to
take a chance by completely overhauling the search experience and
you know, bring in a clot or a chat GPT
(12:22):
for the native browser search.
Speaker 6 (12:24):
I would be very surprised if they did that.
Speaker 5 (12:26):
But I guess the finer point here is if Google
were forced to share some of their search index, then
that could draw in more competition, and that is a risk.
Speaker 4 (12:35):
I just want to point out that our Josh Cisco,
who's got the right through on the Bloomberg terminal, says
the order is one of the most monumental court decisions
affecting the tech sector in more than a quarter century,
and could offer a blueprint for other judges who may
end up weighing similar choices in cases against Meta, Amazon,
and Apple. So I mean, Mandy, first to you, what
are those like, what do we need to know about
(12:56):
those cases and what that could mean for those companies.
Speaker 5 (12:59):
I mean, there is nothing as serious as there is,
you know when it comes to Alphabet losing one of
their core assets. I think for others, even in the
case of Meta, I would have expected more fines than
you know, a divestiture. I don't think anybody is forcing
Meta to divest in Instagram or you know, Whatsappa. It's
(13:21):
not the same. In the case of Google, the monopoly
lawsuits said they had ninety percent plus share. That was
the basis for the lawsuits. So the fact that the
judge is not saying, you know, they have to divest
Chrome and it is a testament to where the market
is right now. The search market has changed completely over
(13:42):
the course of the last three years. Correctly, yes, right,
and so that's why I do think it's a fair
ruling from that perspective.
Speaker 3 (13:49):
Tom Giles saving forty five seconds. Final thoughts.
Speaker 7 (13:53):
I am curious about what kind of precedent this does set.
There had been a lot of fear about a breakup
of Meta. If you're telling Google that it doesn't have
to sell Chrome, and look, as Matt Deep said, Google's
a very different animal from the Meta situation. Google is
making these huge there's these huge payments that are being
made right in favor of you know, getting that browser on.
(14:18):
You're not seeing those kinds of same payments as big
multi billion dollar payments heading to or from Meta. So
that's another reason why to think that you're not. You
don't you even have less reason to worry about a
judge coming in or one of these regulators coming in
and saying Meta, you need to divest WhatsApp, or you
need to divest Instagram.
Speaker 4 (14:38):
Well, certainly caught our attention some big news and get
some stocks moving.
Speaker 3 (14:41):
Hey, guys, thank you so much.
Speaker 4 (14:42):
Bloomberg Intelligence, Global head of Technology research Man Deep Seeing
in our New York studio, and senior executive editor for
Global Technology out there on the West Coast, Tom Giles,
Thanks so much to both of you. Again the story
Alphabet Google does not have to sell its popular Chrome
web browser, a federal judge ruling that just moments ago
in the Justice Department's landmark anti trust case against the
(15:03):
search engine. Shares of Alphabet they are up three percent,
and you've got actually forgive me up six point eight percent,
so up almost seven percent, and then shares of Apple
are up more than three percent.
Speaker 2 (15:15):
Stay with us more from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (15:22):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five e's during
listen on Applecarplay and Android Auto with the Bloomberg Business
app or watch us live on YouTube.
Speaker 3 (15:36):
Just some of the issues tim coming at investors this month.
Speaker 2 (15:39):
Yeah, we're gonna stay on that and how that may be,
should be, could be impacting those and how investors sum
up the environment and make decisions or put off those decisions.
Speaker 8 (15:49):
Carol.
Speaker 2 (15:50):
He's the author of the Confidence Map, Charting a Path
from Cast to Clarity, a book that digs deep when
it comes to decision making.
Speaker 3 (15:56):
So delight to have back with us.
Speaker 4 (15:57):
A friend of the program, Peter Atwater, President of Financial
Insights and adjunct lecturer of Economics at the College of
William and Mary, joining us from just outside Philadelphia. Peter,
great to have you back on the first trading day
of September. A lot coming at US summer's over September's here,
we always feel kind of a mood shift. Any reason
to think that this month will also potentially be problematic
(16:19):
for investors?
Speaker 3 (16:20):
Is it maybe a different September this time around?
Speaker 8 (16:23):
Carol, Thanks for letting me be here today. Yes, I
do think it's going to be a very challenging September.
Several things on my radar screen. I'm watching European sovereign
yields and already today we've seen a clear linkage between
higher yields and lower equity markets. And if that narrative continues,
(16:48):
that could be quite quite a moment for the stock market.
Because politically France, Germany, England is a is a real
melting pot today of populism. So that's very much front
and center in my mind.
Speaker 4 (17:08):
How bad or how problematic might it get then for investors, Like,
how do you see it potentially playing out? And do
you also anticipate you know, we mentioned your book the
confidence Map going into this, and we do think about
what's on top of mind for investors right now when
it comes to making decisions whether or not to deploy assets,
to pull back, like what.
Speaker 3 (17:26):
To do in this environment once again.
Speaker 4 (17:28):
And then you know, we just talked about the trade,
you know, ruling on trade. You know, whether or not
all of that we've been living the last what five
or six months, you know comes undone.
Speaker 8 (17:38):
Yeah, when I look at the population today, particularly on
the investment side, there is a sense of and vulnerability
like I've not seen. Certainly makes what we saw in
twenty twenty one look timid. You know, investors, particularly retail investors,
believe this market is unsinkable. I saw somebody analogize it
(18:01):
to resputant. You know, this is an unkillable market. Both
of those really trouble me because they suggest that investors
think that they can continue to ignore the geopolitics around them,
and I don't think that will ultimately prove to be
the case. At the same time, though, I see despondents,
(18:24):
particularly among the low end consumer. And I used to
talk about the arms and legs of the case shaped economy.
Now I have to talk about fingers and toes because
the clustering has become so extreme at the very top
end at the very bottom, and that gap now appears
(18:46):
to be uncrossable. And as we see over and over
in history, you know, share powerlessness is something that unites
those at the bottom, and so I think policymakers on
both sides of the aisle to be attuned to that.
Speaker 2 (19:01):
Hey, Peter, we're getting some headlines from President Trump right now.
He's speaking on the Scott Jennings radio show. He says
he's going to appeal the tariff ruling. He said that
he repeats, he repeats that global tariffs are an economic emergency,
and he said we'll see a reverberation. If we don't
win on tariffs, How, in your view should investors be
(19:23):
thinking about this? Because you talk a lot about chaos
and clarity, and I think there's more chaos than clarity.
I think it's fair to say right now when it
comes to at least the policy as a result of
legal battles, as a result of you know, the back
and forth with these lawyers, with these rulings, it's not
necessarily clear what is happening.
Speaker 8 (19:46):
No, it's it's not clear. But this is a continuation
of very me here now decision making that we see
on the part of the new administration. And I think
that for inves, they've presumed that when markets decline, the
administration will step back and move pivot in their favor,
(20:11):
you know, the taco trade. And I think what's becoming
reality is that those who are running businesses, and we
saw this in the manufacturing reports earlier today, that you know,
they're really struggling with the uncertainty and powerlessness that they feel.
And the result is in those situations, as you would expect,
(20:32):
they're pulling back on orders, they're making more deliberate employment decisions,
and so the real economy I think is decoupling from
the markets, and the markets believe that they ultimately prevail,
and I think the real economy is about to show
them that's not the case.
Speaker 4 (20:52):
What's your take on the president in terms of watching
the financial markets and his willingness or unwillingness to back
off policies that upset things, because we did see kind
of a one to eighty when it came to tariff's
way back when or earlier this year. But how do
you see that now or how do you factor that
in now?
Speaker 3 (21:10):
Peter?
Speaker 8 (21:11):
What I see since then is a growing sense of
in vulnerability, and I see that politically, financially economically, that
the administration sees itself and sees its decision making as
just irrepressible, unopposable, And those suggest to me a level
(21:40):
of insolarty isolationists that is increasingly decoupled from what we're
seeing on main Street. You know, it's very interesting to
me that we haven't seen the President out doing rallies
in this new administration the way he did before, and
(22:01):
instead he's very isolated in the White House and mar
Lago and places where.
Speaker 2 (22:07):
Why do you think that is because the energy of
the rallies was something that a year ago we talked
a lot about and even up to the election, and
we know he likes to even go on tour to
celebrate what he views as wins. Why do you think
he's been quiet about this?
Speaker 8 (22:25):
I my own view would be that he doesn't see
it as necessary at this point. He's he's won, and
so there is a sense that, you know, that support
is no longer needed for him to be effective in
his role. And I think that's a that's a challenge
(22:46):
will become a challenge because it's one thing to unify
a crowd against a common enemy, in this case former
President Biden. The challenge is then maintaining that momentum and
cohesion post victory. And so it surprises me too, Tim
that we haven't seen him out there trying to sustain
(23:08):
the crowd.
Speaker 3 (23:09):
So, Peter, you know, in our next segment, we're going
to talk a lot.
Speaker 4 (23:12):
About what seems to be kind of the new access
of power China, India, Russia, And I do wonder as
we talk about the US seemingly or accurately or actually.
Speaker 3 (23:26):
Turning more inward and the rest.
Speaker 4 (23:28):
Of the world kind of moving on in new alliances,
what does that mean for the US financial markets.
Speaker 3 (23:35):
What does that mean for US investors?
Speaker 8 (23:40):
I think you're seeing not only the United States turn inward,
but Europe turn inward. Right, it too is pulling back,
and not only globally but among itself. And so it's
very interesting to me that we have a Western world
that is increasingly isolatedationists at a time that the Eastern
(24:02):
world appears to be coming together. Now having said that,
we're talking about three very dominant independent nationalist leaders who
today is very convenient for them to create what looks
to be cohesion against the West. But I wouldn't underestimate
(24:24):
that if confidence drops in those geographies, they too will
become very inwardly focused.
Speaker 4 (24:32):
We're talking with Peter Atwater, president Financial Insights, A Jacktal,
lecturer of economics at the College of William and Mary,
and of course the author of the Confidence Map.
Speaker 3 (24:39):
Do you not.
Speaker 4 (24:40):
Buy the images what we're seeing in all the footage,
the handshaking, the laughing between President Putin, President jimping, and
of course Prime Minister Mody. Do not buy it?
Speaker 3 (24:55):
Is it just for the cameras?
Speaker 5 (24:58):
No?
Speaker 8 (24:58):
I do buy it. I buy it particularly symbolically that
it behooves them to demonstrate that they are cohesive against
the new administration. But it's one of those cases where
you know, my enemy's enemy is my friend, and that
(25:20):
is only effective so long as the three of them
continue to see the Trump administration as their joint adversary.
Speaker 2 (25:30):
Peter, before we let you go, just an update from
you about a question that we first discussed back in
March when you were on the program, when we asked
if you believe the US would be uninvestable. This was
pre so called Liberation Day. I'm curious if you think
the US is more or less uninvestible at this point
now than it was back in the spring.
Speaker 3 (25:50):
No pressure, but that response kind of went a little viral.
I'm just going to tell you that.
Speaker 8 (25:56):
Yeah, so I do believe that it is more uninvestable
today than it was before in March, and my reason
has to do with the substantial diminution of shareholder primacy
that we've seen. The new administration has been very aggressive
(26:16):
in pursuing nationalist economic policies, and I think that that
makes the United States, particularly get these valuations far less
attractive than it had been.
Speaker 4 (26:30):
All Right, we need to run, Peter, as always, Thank
you so much. While Peter Atwater, President Financial Insights, egeic
Lcturer of Economics over at the College of William and
Mary And as we mentioned, his book something we've talked
about on air with him, The Confidence Map, Charting a
path from Chaos to Clarity.
Speaker 2 (26:47):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (26:56):
This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 4 (27:15):
So you know, we say this a lot, but we're
definitely living in some very interesting times.
Speaker 3 (27:20):
Take what happened yesterday.
Speaker 4 (27:21):
Cameras capturing Chinese President Xijiping in a rare, unscripted huddle
with Russian President Vladimir Putin and Indian Prime Minister Narendramota.
Speaker 2 (27:30):
Timmy, Yeah, the point President, she's most powerful partners in
resisting America on the world stage. Happened at a summit
in the Chinese sport city of Tenjin. At one point,
President she held the hand of his Indian counterpart as
the three men laughed casually. It was a striking scene
given just months earlier, New Delhi and Beijing were seen
as rivals. Here's Leland Miller, co founder and CEO of
(27:50):
China beij book taking note of the deepening relationship between
India and China earlier on Bloomberg Surveillance.
Speaker 9 (27:57):
If you look what's happening with India right now. India
doesn't want to be looking around the room and see
China on the left and Pakistan on the right and
Belarus across the room. I mean, it would rather be
in a group of countries in the United States and
others and strengthening trade relations there. But it will push
back if it thinks it's being pushed into a corner.
And so we're seeing a situation where China is getting
(28:20):
is becoming an attractive option because it's not the United
States right now.
Speaker 3 (28:23):
All right?
Speaker 4 (28:24):
That is the Leland Miller, co founder and CEO of
China base book earlier on Bloomberg Surveillance on Bloomberg Television.
Speaker 3 (28:29):
Let's get to it.
Speaker 4 (28:30):
And explain or get a little bit more detail on
how she sees what The camera is captured at the
meeting of leaders of China, India and Russia and what's
really going on behind the scenes back with us as
Wendy Cutler, she's VP Vice president of Asia Society Policy Institute.
She joins us from the nation's capital. Wendy, good to
have you back on with Tim and myself. So let's
go there. You spent three decades as a diplomat negotiator
(28:54):
in the office of the US Trade Representative. The significance
of what was captured on cameras of those three leaders,
Let's start there and then what you think might be
going on behind the scenes.
Speaker 10 (29:06):
Quite a big, important week on the other side of
the world, where three of the most powerful leaders in
the world really showed an affection and agreed on an
agenda going forward. And frankly, for me, seeing mody In
as one of those three leaders comes as a surprise
(29:26):
given where we were just three months ago with India,
where we were on the verge of concluding one of
the earliest trade agreements with Delhi, and so boy, things
have changed quickly. I'm not saying that Mody is all
in with Shijinping and Putin, but he sure looked comfortable
this past week and with his fellow leaders.
Speaker 2 (29:48):
Is there a way in your view for the US
to bring India closer or back to the point where
it was, as you say, three months ago. Obviously last
week with those fifty percent tariffs that went into effect
was a big deal between the relationship between these two countries.
But is there a way to go back to what
it was.
Speaker 10 (30:06):
I think it's going to be really hard to get
back to where we were three months ago, but I
do think that we can move in that direction, and
the best step forward would be to find a way
to agree on a trade agreement with India.
Speaker 3 (30:22):
We got very close.
Speaker 10 (30:23):
There were very few issues left, including you know, the
extent we could open up India's dairy market, and given
the importance of this geostrategic relationship, I would hope that
we could find a way forward on the trade front,
allow for the relaxation of the tariffs, and move in
the direction of getting this relationship back on track. But
(30:46):
I think some permanent damage has been done, no doubt
about it.
Speaker 4 (30:50):
You know, Wendy, when I see these pictures, I mean,
these are very important leaders, and you know it's not
mean girls and they're like, don't like a girl, and
you know, they're just like, let's get together to like
tick somebody off.
Speaker 3 (31:02):
I mean, these are leaders of very important countries. Do
you politically, economically what they do matter? So I just
it's not just something you do casually.
Speaker 4 (31:12):
Right, So, as you say, this is pretty significant, and
this is going to have a lasting impact beyond President
Trump being in the White House.
Speaker 10 (31:21):
Absolutely, it took us twenty years through a number of
administrations to warm relations with India to the point we
were three months ago. And it's always easier to build,
you know, to destroy relationships or to hurt them, versus
to build them.
Speaker 3 (31:35):
So this is a big setback.
Speaker 10 (31:38):
That said, I think we should also keep in mind
that India and China, you know, there's a lot going
on between those two countries and why while relations may
warm up, they have some serious challenges that have plagued
their relationship, including a border dispute including a large and
growing Indian Indian trade deficit with China, and the fact
(32:01):
that China's flooding India, like other countries in the region,
with a lot of exports that are displacing its local production.
So again, I think we just need to kind of
keep this all, you know, in mind as we sign
off the United States and say China and India are
best friends.
Speaker 3 (32:19):
I think each of those leaders knew what they were doing.
Speaker 10 (32:21):
They wanted to show the world that, you know, they're
they're a group and they're working together. But they're also
very skilled politicians, and I think there was a reason
why each of them wanted to send that message to Washington,
in particular this weekend on.
Speaker 2 (32:37):
China and Russia specifically, we're getting comments from President Trump
right now. The Scott Jennings Show is playing a recording
of an interview that was done by the President recently.
The President says, quote, we'll be doing he says, quote
they'd never use their military on us talking about Russia
and China, and he's not concerned about ch and Russian ties.
(33:01):
Should the president be concerned about China and Russian ties?
Speaker 10 (33:05):
Yeah, I think every president, every administration should be concerned.
That said, these ties have been strong for many years,
and Chijin Ping and Putin have met, you know, over
like close to fifty times since both of them have
been in office, So those ties are going to continue
to be close. But to say we don't care or
that it's not a big deal, I don't really agree
(33:26):
with that. I also think that for this administration, they're
looking to improve their relations not only with Russia, but
with China as well, and so in some ways it's
in their interests not to look like they're working against
those two countries working together, but more trying to be
more nonchalant about it.
Speaker 4 (33:47):
Wendy Cythia, I want to ask you, and also the
President speaking as to mention on Scott Jennings radio show.
Another headline is the President repeating that the global tariff
situation or global tariff is.
Speaker 3 (33:58):
An economic emergency.
Speaker 4 (34:00):
There are some that would argue that the US needed
to step up its efforts to protect its markets, and
it wasn't just a Republican thing, it was a democratic
thing as well. If you think about the pushback specifically
against China, the pandemic revealed how much of our supply
chains were overseen by China. So on of what the
(34:23):
President is doing and his team are doing does make
sense to you?
Speaker 3 (34:27):
What does it? Well, here's the deal.
Speaker 10 (34:30):
Their whole number of trade laws that the President could
use to pursue our trade agenda against China. He used
section three oh one of our trade law during Trump
one point zero No One challenged his legal authority to
use that statute. So this is coming down to his
(34:51):
use of a statute IEPA, which basically is premised upon
a national emergency and then gives the president limited power.
And that's where the courts are pushing back. But from
my point of view, there are other statutes that frankly
could be used and are more fit for purpose than
(35:11):
i EPA in the in the current situation.
Speaker 4 (35:14):
Hey, well, one of the things I do want to
ask you, since we just did a big conversation and
deep dive into that ruling we got, was it Friday
night where President Trump's Federal Appeals court did rule that
President Trump's global tiriffs were issued illegally under an emergency law.
So upholding that may ruling by the Court of International Trade,
(35:35):
it sounds like there's going to be back and forth
before we finally get a resolution. But how how do
you think that might ultimately end up? Will they be
overturned or not likely?
Speaker 3 (35:47):
I don't know. Do you have a good, good thought
on that?
Speaker 10 (35:50):
I don't, And anyone who says they do, I don't
believe them. I think this will probably end up going
to the Supreme Court, and none of us can predict
what could happen. But the point I would make that
even if the president loses and the Supreme Court votes
against him again, there are other trade laws that he
can use to advance his trade agenda. So yes, it
(36:11):
would be a setback, but I don't think it would
mean that he's going to give up on tariffs. I
think we're living in a tariff world under Donald Trump
for the next three and a half years, whether we
like it or not.
Speaker 2 (36:23):
Do you think that it will just be for the
next three and a half years and the next president,
even if it's a Democrat, would actually remove these tariffs
because this is a significant source of revenue for a
government that likes to spend money, whether you're a Republican
or a Democrat. That's what we've seen take place in
(36:44):
the White House, and one that has now thanks to
the new tax bill, has lost some serious sources of revenue.
Speaker 10 (36:53):
And the other point I would add is that Biden
kept many of the Trump tariffs in place as well.
So I think you make an excellent point that said
the next president may have, you know, a different agenda
in putting a lot of emphasis on trying to work
more closely with our allies and partners. One of the
(37:14):
first things they're going to ask for is a relaxation
of tariffs. So I'm not sure that all of the
terroifts would remain in place as is, or there could
be you know, other options and other agreements reached or
other steps taken which could allay some of these concerns.
Speaker 4 (37:33):
But it makes a tricky then for investors or just
the world at larger or CEOs to make decisions when
it could switch again in three four years or so on.
Speaker 3 (37:41):
Hey, Wendy, thank you so much.
Speaker 4 (37:43):
Wendy Cutler, VP of Asia Society Policy Institute, joining us
from the nation's capital.
Speaker 1 (37:48):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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(38:09):
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(00:23):
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Speaker 2 (00:32):
Hey, I want to take a look at what's going
on with Google shares in the after hours Right now,
we were talking about the surge hire as a result
of this ruling that emerged shares still up five point
six percent.
Speaker 3 (00:44):
Feel like we woke up like something was happening.
Speaker 2 (00:47):
Oh well, absolutely, Google doesn't have to sell its popular
Chrome web browser, a federal judge ruled tuesday in the
Justice departments landmark anti trust case against the search engine.
The ruling allows Google to avoid one of the most
severe remedy requests from the US government after the court
found that the company had an illegal monopoly in the
search market. The judge did bar Google from entering into
(01:09):
exclusive contracts for Internet search.
Speaker 4 (01:11):
All right, we knew we wanted to talk with our
man deep seeing of our Bloomberg intelligence teams here in studio.
Speaker 3 (01:17):
Google shares are up. I mean, was this expected? First
of all?
Speaker 5 (01:20):
No, I think that's why you see such an instance
stock reaction because the judge was quite vocal about how
Google had created a monopoly because of all the assets,
and Chrome was one of the most prominent assets that
they the judge focused on so clearly in this case,
the fact that the ruling says that they don't have
(01:44):
to divest Chrome, it's positive news. And look all the
exclusive arrangements with Apple and for their operating system, I
think that was expected remedy really, I mean, it kind
of allows Apple to pick the.
Speaker 6 (01:59):
Partartner they want.
Speaker 5 (02:01):
There won't be an exclusive arrangement, but look, from an
Apple perspective, they can still say Google has the best
LLLM and you know they want to do business. So
from that perspective, that's why Apple is up too. So
you know, this sort of clears all the uncertainty for
both the companies.
Speaker 2 (02:20):
Look, I'm going to ask a crazy question here. Do
we care about search the way that we used to
care about search in the sense of typing something into Google,
or increasingly, do we care more about which LLM people choose?
Speaker 5 (02:32):
Well? So the search market has definitely expanded because of
generative AI. So think of how Google had a ninety
percent plus share. I'm sure if this lawsuit came to
the scene and the hearing was happening now, the jet
would say Google doesn't have ninety percent plus share because
chatchbt has got one billion monthly active users. It's got
(02:56):
the query volume not comparable to Google, but almost you know,
one third of Google, And so that search market is
not the same as it was, you know, probably three
years back before the launch of CHATJPT. And from that perspective,
I mean, look, the search pile has grown. The fact
that Google owns Chrome is a big advantage. So when
(03:17):
I look at generative AI deployments, browser is a critical
aspect of how.
Speaker 6 (03:22):
AI agents will be deployed.
Speaker 5 (03:24):
That's why you're seeing such a stock reaction because everyone
knows if you take out Chrome from Google, even if
Google has their own chips and they have got their
you know ow LLLM, without a browser, the advantage just
goes away. So divesting Chrome would have been a big,
big blow. And you know, that's why the combined entity
(03:45):
owning Chrome and owning all the other assets that Google has.
Speaker 6 (03:48):
Is such a big advantage when it comes to generatively.
Speaker 3 (03:50):
Why are we getting through this ruling?
Speaker 4 (03:52):
And I guess I'm just bringing up in a world
where we have a White House that I think it's
fair to say it's transactional, and we have seen various
tech executives make their way to the White House. Is
there something that was going on behind the scenes of
I don't know that caught the attention. I don't know
what are you hearing?
Speaker 5 (04:08):
And I mean, there are obviously lobbies for these companies.
Speaker 6 (04:12):
It's not a surprise regardless of the administration.
Speaker 5 (04:15):
But look in this case, clearly, as you said, the
administration is transactional and this was the best outcome for Alphabet,
you know, not having to divest anything. There is another
pending lawsuit, the ad Tech lawsuit, but even if they
have to divest something there, it's not that big of
a DLS.
Speaker 6 (04:32):
Chrome.
Speaker 5 (04:33):
Chrome is like the priced asset when it comes to Alphabet.
When you think about YouTube and you know all the
other things, Chrome is right up there. Without a browser,
generative AI deployments get hard, and that's where owning the
distribution through Chrome is paramount.
Speaker 6 (04:49):
For a company like Alphabet, we just.
Speaker 4 (04:50):
Want to point out shares of Alphabet are up more
than six percent here in the aftermarket, and men Deep
mentioned that Apple shares are also higher, and Tim they're
up about four percent here.
Speaker 2 (05:00):
I want to bring in Tom Giles. He's senior executive
editor for Global Technology. He joins us from our San
Francisco bureau. Tom, this ruling obviously coming as a surprise
to investors. Look no further than shares of Alphabet higher
by six point four percent in the after hours. Why
do you think that we got this ruling today?
Speaker 7 (05:20):
I mean, this is a huge sigh of relief, right.
This is, as men Deep said, they avoided the most
harsh penalty here, which would have been selling Chrome, which
Google has woven into its products and is really an
integral part of their value proposition to many customers. So
major side of relief there. They're really allowed to continue
(05:44):
to do a lot of the things that they have
been doing. They're going to have to change certain certain terms.
But something else that they are can they will continue
to be allowed to do is paying for browser places.
They can still make these big cash payments that give
their browser, you know, a special h placement on a
(06:08):
on a smartphone for example, they just need to change.
They can't have the kinds of exclusivity that they have
used in the past. That's really what it came down to.
And as you know, we're still parsing the decision, so
let me be clear about that. But what they what
they said was that if we if we go too
(06:29):
far and for example, say no to these payments, that
would be onerous to the larger ecosystem. That would hurt
some of the small players, some of the manufacturers, some
of the other players in here. And I don't think
that the DJ clearly does not want to do that
at this stage. Remember that some of these decisions are
(06:49):
going to be revisited. This is a six year decision.
We just had some headlines on that, so you know,
Google's going to have to continue to mind its p's
and q's in the coming years to ensure that it
doesn't run a foul of this ruling. But on its face,
the headline here is this is great news for Google,
this is great news for Apple, and you're seeing it
(07:11):
in those shares rallying as we speak.
Speaker 4 (07:14):
Yeah, as you said, we've got Alphabet up six quarter percent,
Tom and then you've got Apple shares up three point
six percent to Mandy Pooh beyond. Apple and Alphabet are
kind of watching this decision and maybe a little upset
about it.
Speaker 5 (07:28):
I mean, remember the news when Perplexity wanted to buy
Chrome and they put a value I think it's thirty
four billion.
Speaker 2 (07:34):
Yeah, talking about this earlier, Yeah, put Perplexity on the map.
Everyone was like, wait, you don't even have that cash.
Speaker 5 (07:41):
Even if Google had to divest Chrome. Thirty four billion
is too low for price tag for an asset you
know that has got over three billion monthly active users.
That is at the core of deploying generative AI. I
mean that's why you know, when you look at individual
assets for Google, everyone looks at how much money does
this make. Chrome doesn't make any money on a standalone basis,
(08:04):
But when it comes to the value of Chrome, we're
talking fifty billion plus even higher. I mean, I wouldn't
be surprised if it's close to one hundred billion as
just a standalone product, given how important it is.
Speaker 6 (08:18):
When it comes to deploying AI.
Speaker 3 (08:19):
So Tom Giles, come on back in here.
Speaker 4 (08:21):
So if you were sitting down or I don't know
if Alphabet's going to do any kind of call or
what have you?
Speaker 3 (08:26):
What would you want to be asking them right now?
Speaker 7 (08:29):
Well, first of all, is there a plan to appeal?
And what does that look like? What are the grounds?
I hate to put it this bluntly, but you guys
got off really easy here. You avoided the worst possible scenarios.
As we've said, as man Deep and I have been
talking about, are you going to appeal? What are the
grounds for that they may see something in here that
(08:52):
is owners to them that they feel is going to
tie their hands in the future. Again, it's a six
year decision. DJ is giving itself leeway to kind of
revisit at least part of this. And so is are
there are there clauses? Are the things that they want
to change? And do they you know, do they do
they want to send the signal that we don't think
we're monopol is here, which is of course what they've
(09:14):
been saying all along. Do you want to hit that
home with with with sending this into an appeals process?
Speaker 3 (09:21):
Same question to you, man Deep.
Speaker 4 (09:22):
So you're sitting down with these execs ever at Alphabet
and what you what you would want to know?
Speaker 5 (09:27):
I mean, it sounds like they don't want Google to
be making any exclusive payments to Apple, like the twenty
billion dollar attack payment going forward, which again I view
it as a positive because on the one hand, it
opens up you know, other search companies to bid for Apple.
Speaker 6 (09:47):
But Apple has no choice but to go with Google.
Speaker 5 (09:50):
I mean, their users are used to, you know, the
Google experience, and so it sort of saves the twenty
billion dollars that Google is haying Apple, and that helps
their growth Martin. So I don't think there's anything bad
here in terms of, you know, the judge restricting Google
from having an exclusive arrangement with Apple.
Speaker 4 (10:11):
Is there anything tom that if we worried though about
the EU and their view on this.
Speaker 7 (10:17):
We always need to worry if you're Google, if you're
one of the major US tech platforms, you always need
to worry about what the EU is doing, what they're thinking,
where they might land on some of these decisions. I
do think it's a slightly different paradigm across the pond,
as it were. But I do want to come back
(10:38):
to and I'm curious I want to hear from man
Deep too about you know, does the removal of the
exclusive agreements, what kind of opening does that give to
the other platforms how might they try to gain an
advantage here. It does make a huge difference when you
buy your new iPhone or you buy a new smartphone.
(11:00):
It makes a huge difference that that there's going to
be some kind of institutional or you know, existing support
for Google to be the default if you cannot. If
you yes, it's okay to make these payments. But if
you can't have exclusive agreements? What about what about claude?
What about chat gpt? Can some of these other tools
(11:22):
start to present themselves as alternatives and do it more readily? Mendie,
please tell me if i'm you.
Speaker 6 (11:30):
Know, yeah, no, You're all right.
Speaker 5 (11:32):
So I mean Google search ninety percent plus share is
driven by these exclusive arrangements, So you're right.
Speaker 6 (11:38):
But I look at it this way.
Speaker 5 (11:40):
I mean, some of the ruling says Google may have
to share their search index with you know, other providers.
I have to read the fine print. But that again
could make chat GPT better in terms of solving for
all the use cases that we use Google for. So
from that perspective, it is a risk. At the same time,
(12:01):
I mean, on Android, they own the operating system, so
I don't think anything will change from a search experience perspective,
and for Apple, again, they want their users to get
the best experience. So I don't think they're going to
take a chance by completely overhauling the search experience and
you know, bring in a clot or a chat GPT
(12:22):
for the native browser search.
Speaker 6 (12:24):
I would be very surprised if they did that.
Speaker 5 (12:26):
But I guess the finer point here is if Google
were forced to share some of their search index, then
that could draw in more competition, and that is a risk.
Speaker 4 (12:35):
I just want to point out that our Josh Cisco,
who's got the right through on the Bloomberg terminal, says
the order is one of the most monumental court decisions
affecting the tech sector in more than a quarter century,
and could offer a blueprint for other judges who may
end up weighing similar choices in cases against Meta, Amazon,
and Apple. So I mean, Mandy, first to you, what
are those like, what do we need to know about
(12:56):
those cases and what that could mean for those companies.
Speaker 5 (12:59):
I mean, there is nothing as serious as there is,
you know when it comes to Alphabet losing one of
their core assets. I think for others, even in the
case of Meta, I would have expected more fines than
you know, a divestiture. I don't think anybody is forcing
Meta to divest in Instagram or you know, Whatsappa. It's
(13:21):
not the same. In the case of Google, the monopoly
lawsuits said they had ninety percent plus share. That was
the basis for the lawsuits. So the fact that the
judge is not saying, you know, they have to divest
Chrome and it is a testament to where the market
is right now. The search market has changed completely over
(13:42):
the course of the last three years. Correctly, yes, right,
and so that's why I do think it's a fair
ruling from that perspective.
Speaker 3 (13:49):
Tom Giles saving forty five seconds. Final thoughts.
Speaker 7 (13:53):
I am curious about what kind of precedent this does set.
There had been a lot of fear about a breakup
of Meta. If you're telling Google that it doesn't have
to sell Chrome, and look, as Matt Deep said, Google's
a very different animal from the Meta situation. Google is
making these huge there's these huge payments that are being
made right in favor of you know, getting that browser on.
(14:18):
You're not seeing those kinds of same payments as big
multi billion dollar payments heading to or from Meta. So
that's another reason why to think that you're not. You
don't you even have less reason to worry about a
judge coming in or one of these regulators coming in
and saying Meta, you need to divest WhatsApp, or you
need to divest Instagram.
Speaker 4 (14:38):
Well, certainly caught our attention some big news and get
some stocks moving.
Speaker 3 (14:41):
Hey, guys, thank you so much.
Speaker 4 (14:42):
Bloomberg Intelligence, Global head of Technology research Man Deep Seeing
in our New York studio, and senior executive editor for
Global Technology out there on the West Coast, Tom Giles,
Thanks so much to both of you. Again the story
Alphabet Google does not have to sell its popular Chrome
web browser, a federal judge ruling that just moments ago
in the Justice Department's landmark anti trust case against the
(15:03):
search engine. Shares of Alphabet they are up three percent,
and you've got actually forgive me up six point eight percent,
so up almost seven percent, and then shares of Apple
are up more than three percent.
Speaker 2 (15:15):
Stay with us more from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (15:22):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five e's during
listen on Applecarplay and Android Auto with the Bloomberg Business
app or watch us live on YouTube.
Speaker 3 (15:36):
Just some of the issues tim coming at investors this month.
Speaker 2 (15:39):
Yeah, we're gonna stay on that and how that may be,
should be, could be impacting those and how investors sum
up the environment and make decisions or put off those decisions.
Speaker 8 (15:49):
Carol.
Speaker 2 (15:50):
He's the author of the Confidence Map, Charting a Path
from Cast to Clarity, a book that digs deep when
it comes to decision making.
Speaker 3 (15:56):
So delight to have back with us.
Speaker 4 (15:57):
A friend of the program, Peter Atwater, President of Financial
Insights and adjunct lecturer of Economics at the College of
William and Mary, joining us from just outside Philadelphia. Peter,
great to have you back on the first trading day
of September. A lot coming at US summer's over September's here,
we always feel kind of a mood shift. Any reason
to think that this month will also potentially be problematic
(16:19):
for investors?
Speaker 3 (16:20):
Is it maybe a different September this time around?
Speaker 8 (16:23):
Carol, Thanks for letting me be here today. Yes, I
do think it's going to be a very challenging September.
Several things on my radar screen. I'm watching European sovereign
yields and already today we've seen a clear linkage between
higher yields and lower equity markets. And if that narrative continues,
(16:48):
that could be quite quite a moment for the stock market.
Because politically France, Germany, England is a is a real
melting pot today of populism. So that's very much front
and center in my mind.
Speaker 4 (17:08):
How bad or how problematic might it get then for investors, Like,
how do you see it potentially playing out? And do
you also anticipate you know, we mentioned your book the
confidence Map going into this, and we do think about
what's on top of mind for investors right now when
it comes to making decisions whether or not to deploy assets,
to pull back, like what.
Speaker 3 (17:26):
To do in this environment once again.
Speaker 4 (17:28):
And then you know, we just talked about the trade,
you know, ruling on trade. You know, whether or not
all of that we've been living the last what five
or six months, you know comes undone.
Speaker 8 (17:38):
Yeah, when I look at the population today, particularly on
the investment side, there is a sense of and vulnerability
like I've not seen. Certainly makes what we saw in
twenty twenty one look timid. You know, investors, particularly retail investors,
believe this market is unsinkable. I saw somebody analogize it
(18:01):
to resputant. You know, this is an unkillable market. Both
of those really trouble me because they suggest that investors
think that they can continue to ignore the geopolitics around them,
and I don't think that will ultimately prove to be
the case. At the same time, though, I see despondents,
(18:24):
particularly among the low end consumer. And I used to
talk about the arms and legs of the case shaped economy.
Now I have to talk about fingers and toes because
the clustering has become so extreme at the very top
end at the very bottom, and that gap now appears
(18:46):
to be uncrossable. And as we see over and over
in history, you know, share powerlessness is something that unites
those at the bottom, and so I think policymakers on
both sides of the aisle to be attuned to that.
Speaker 2 (19:01):
Hey, Peter, we're getting some headlines from President Trump right now.
He's speaking on the Scott Jennings radio show. He says
he's going to appeal the tariff ruling. He said that
he repeats, he repeats that global tariffs are an economic emergency,
and he said we'll see a reverberation. If we don't
win on tariffs, How, in your view should investors be
(19:23):
thinking about this? Because you talk a lot about chaos
and clarity, and I think there's more chaos than clarity.
I think it's fair to say right now when it
comes to at least the policy as a result of
legal battles, as a result of you know, the back
and forth with these lawyers, with these rulings, it's not
necessarily clear what is happening.
Speaker 8 (19:46):
No, it's it's not clear. But this is a continuation
of very me here now decision making that we see
on the part of the new administration. And I think
that for inves, they've presumed that when markets decline, the
administration will step back and move pivot in their favor,
(20:11):
you know, the taco trade. And I think what's becoming
reality is that those who are running businesses, and we
saw this in the manufacturing reports earlier today, that you know,
they're really struggling with the uncertainty and powerlessness that they feel.
And the result is in those situations, as you would expect,
(20:32):
they're pulling back on orders, they're making more deliberate employment decisions,
and so the real economy I think is decoupling from
the markets, and the markets believe that they ultimately prevail,
and I think the real economy is about to show
them that's not the case.
Speaker 4 (20:52):
What's your take on the president in terms of watching
the financial markets and his willingness or unwillingness to back
off policies that upset things, because we did see kind
of a one to eighty when it came to tariff's
way back when or earlier this year. But how do
you see that now or how do you factor that
in now?
Speaker 3 (21:10):
Peter?
Speaker 8 (21:11):
What I see since then is a growing sense of
in vulnerability, and I see that politically, financially economically, that
the administration sees itself and sees its decision making as
just irrepressible, unopposable, And those suggest to me a level
(21:40):
of insolarty isolationists that is increasingly decoupled from what we're
seeing on main Street. You know, it's very interesting to
me that we haven't seen the President out doing rallies
in this new administration the way he did before, and
(22:01):
instead he's very isolated in the White House and mar
Lago and places where.
Speaker 2 (22:07):
Why do you think that is because the energy of
the rallies was something that a year ago we talked
a lot about and even up to the election, and
we know he likes to even go on tour to
celebrate what he views as wins. Why do you think
he's been quiet about this?
Speaker 8 (22:25):
I my own view would be that he doesn't see
it as necessary at this point. He's he's won, and
so there is a sense that, you know, that support
is no longer needed for him to be effective in
his role. And I think that's a that's a challenge
(22:46):
will become a challenge because it's one thing to unify
a crowd against a common enemy, in this case former
President Biden. The challenge is then maintaining that momentum and
cohesion post victory. And so it surprises me too, Tim
that we haven't seen him out there trying to sustain
(23:08):
the crowd.
Speaker 3 (23:09):
So, Peter, you know, in our next segment, we're going
to talk a lot.
Speaker 4 (23:12):
About what seems to be kind of the new access
of power China, India, Russia, And I do wonder as
we talk about the US seemingly or accurately or actually.
Speaker 3 (23:26):
Turning more inward and the rest.
Speaker 4 (23:28):
Of the world kind of moving on in new alliances,
what does that mean for the US financial markets.
Speaker 3 (23:35):
What does that mean for US investors?
Speaker 8 (23:40):
I think you're seeing not only the United States turn inward,
but Europe turn inward. Right, it too is pulling back,
and not only globally but among itself. And so it's
very interesting to me that we have a Western world
that is increasingly isolatedationists at a time that the Eastern
(24:02):
world appears to be coming together. Now having said that,
we're talking about three very dominant independent nationalist leaders who
today is very convenient for them to create what looks
to be cohesion against the West. But I wouldn't underestimate
(24:24):
that if confidence drops in those geographies, they too will
become very inwardly focused.
Speaker 4 (24:32):
We're talking with Peter Atwater, president Financial Insights, A Jacktal,
lecturer of economics at the College of William and Mary,
and of course the author of the Confidence Map.
Speaker 3 (24:39):
Do you not.
Speaker 4 (24:40):
Buy the images what we're seeing in all the footage,
the handshaking, the laughing between President Putin, President jimping, and
of course Prime Minister Mody. Do not buy it?
Speaker 3 (24:55):
Is it just for the cameras?
Speaker 5 (24:58):
No?
Speaker 8 (24:58):
I do buy it. I buy it particularly symbolically that
it behooves them to demonstrate that they are cohesive against
the new administration. But it's one of those cases where
you know, my enemy's enemy is my friend, and that
(25:20):
is only effective so long as the three of them
continue to see the Trump administration as their joint adversary.
Speaker 2 (25:30):
Peter, before we let you go, just an update from
you about a question that we first discussed back in
March when you were on the program, when we asked
if you believe the US would be uninvestable. This was
pre so called Liberation Day. I'm curious if you think
the US is more or less uninvestible at this point
now than it was back in the spring.
Speaker 3 (25:50):
No pressure, but that response kind of went a little viral.
I'm just going to tell you that.
Speaker 8 (25:56):
Yeah, so I do believe that it is more uninvestable
today than it was before in March, and my reason
has to do with the substantial diminution of shareholder primacy
that we've seen. The new administration has been very aggressive
(26:16):
in pursuing nationalist economic policies, and I think that that
makes the United States, particularly get these valuations far less
attractive than it had been.
Speaker 4 (26:30):
All Right, we need to run, Peter, as always, Thank
you so much. While Peter Atwater, President Financial Insights, egeic
Lcturer of Economics over at the College of William and
Mary And as we mentioned, his book something we've talked
about on air with him, The Confidence Map, Charting a
path from Chaos to Clarity.
Speaker 2 (26:47):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (26:56):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Applecarflay and
Android Auto with the Bloomberg Business App. You can also
listen live on Amazon Alexa from our flagship New York station,
Just say Alexa play Bloomberg eleven thirty.
Speaker 4 (27:15):
So you know, we say this a lot, but we're
definitely living in some very interesting times.
Speaker 3 (27:20):
Take what happened yesterday.
Speaker 4 (27:21):
Cameras capturing Chinese President Xijiping in a rare, unscripted huddle
with Russian President Vladimir Putin and Indian Prime Minister Narendramota.
Speaker 2 (27:30):
Timmy, Yeah, the point President, she's most powerful partners in
resisting America on the world stage. Happened at a summit
in the Chinese sport city of Tenjin. At one point,
President she held the hand of his Indian counterpart as
the three men laughed casually. It was a striking scene
given just months earlier, New Delhi and Beijing were seen
as rivals. Here's Leland Miller, co founder and CEO of
(27:50):
China beij book taking note of the deepening relationship between
India and China earlier on Bloomberg Surveillance.
Speaker 9 (27:57):
If you look what's happening with India right now. India
doesn't want to be looking around the room and see
China on the left and Pakistan on the right and
Belarus across the room. I mean, it would rather be
in a group of countries in the United States and
others and strengthening trade relations there. But it will push
back if it thinks it's being pushed into a corner.
And so we're seeing a situation where China is getting
(28:20):
is becoming an attractive option because it's not the United
States right now.
Speaker 3 (28:23):
All right?
Speaker 4 (28:24):
That is the Leland Miller, co founder and CEO of
China base book earlier on Bloomberg Surveillance on Bloomberg Television.
Speaker 3 (28:29):
Let's get to it.
Speaker 4 (28:30):
And explain or get a little bit more detail on
how she sees what The camera is captured at the
meeting of leaders of China, India and Russia and what's
really going on behind the scenes back with us as
Wendy Cutler, she's VP Vice president of Asia Society Policy Institute.
She joins us from the nation's capital. Wendy, good to
have you back on with Tim and myself. So let's
go there. You spent three decades as a diplomat negotiator
(28:54):
in the office of the US Trade Representative. The significance
of what was captured on cameras of those three leaders,
Let's start there and then what you think might be
going on behind the scenes.
Speaker 10 (29:06):
Quite a big, important week on the other side of
the world, where three of the most powerful leaders in
the world really showed an affection and agreed on an
agenda going forward. And frankly, for me, seeing mody In
as one of those three leaders comes as a surprise
(29:26):
given where we were just three months ago with India,
where we were on the verge of concluding one of
the earliest trade agreements with Delhi, and so boy, things
have changed quickly. I'm not saying that Mody is all
in with Shijinping and Putin, but he sure looked comfortable
this past week and with his fellow leaders.
Speaker 2 (29:48):
Is there a way in your view for the US
to bring India closer or back to the point where
it was, as you say, three months ago. Obviously last
week with those fifty percent tariffs that went into effect
was a big deal between the relationship between these two countries.
But is there a way to go back to what
it was.
Speaker 10 (30:06):
I think it's going to be really hard to get
back to where we were three months ago, but I
do think that we can move in that direction, and
the best step forward would be to find a way
to agree on a trade agreement with India.
Speaker 3 (30:22):
We got very close.
Speaker 10 (30:23):
There were very few issues left, including you know, the
extent we could open up India's dairy market, and given
the importance of this geostrategic relationship, I would hope that
we could find a way forward on the trade front,
allow for the relaxation of the tariffs, and move in
the direction of getting this relationship back on track. But
(30:46):
I think some permanent damage has been done, no doubt
about it.
Speaker 4 (30:50):
You know, Wendy, when I see these pictures, I mean,
these are very important leaders, and you know it's not
mean girls and they're like, don't like a girl, and
you know, they're just like, let's get together to like
tick somebody off.
Speaker 3 (31:02):
I mean, these are leaders of very important countries. Do
you politically, economically what they do matter? So I just
it's not just something you do casually.
Speaker 4 (31:12):
Right, So, as you say, this is pretty significant, and
this is going to have a lasting impact beyond President
Trump being in the White House.
Speaker 10 (31:21):
Absolutely, it took us twenty years through a number of
administrations to warm relations with India to the point we
were three months ago. And it's always easier to build,
you know, to destroy relationships or to hurt them, versus
to build them.
Speaker 3 (31:35):
So this is a big setback.
Speaker 10 (31:38):
That said, I think we should also keep in mind
that India and China, you know, there's a lot going
on between those two countries and why while relations may
warm up, they have some serious challenges that have plagued
their relationship, including a border dispute including a large and
growing Indian Indian trade deficit with China, and the fact
(32:01):
that China's flooding India, like other countries in the region,
with a lot of exports that are displacing its local production.
So again, I think we just need to kind of
keep this all, you know, in mind as we sign
off the United States and say China and India are
best friends.
Speaker 3 (32:19):
I think each of those leaders knew what they were doing.
Speaker 10 (32:21):
They wanted to show the world that, you know, they're
they're a group and they're working together. But they're also
very skilled politicians, and I think there was a reason
why each of them wanted to send that message to Washington,
in particular this weekend on.
Speaker 2 (32:37):
China and Russia specifically, we're getting comments from President Trump
right now. The Scott Jennings Show is playing a recording
of an interview that was done by the President recently.
The President says, quote, we'll be doing he says, quote
they'd never use their military on us talking about Russia
and China, and he's not concerned about ch and Russian ties.
(33:01):
Should the president be concerned about China and Russian ties?
Speaker 10 (33:05):
Yeah, I think every president, every administration should be concerned.
That said, these ties have been strong for many years,
and Chijin Ping and Putin have met, you know, over
like close to fifty times since both of them have
been in office, So those ties are going to continue
to be close. But to say we don't care or
that it's not a big deal, I don't really agree
(33:26):
with that. I also think that for this administration, they're
looking to improve their relations not only with Russia, but
with China as well, and so in some ways it's
in their interests not to look like they're working against
those two countries working together, but more trying to be
more nonchalant about it.
Speaker 4 (33:47):
Wendy Cythia, I want to ask you, and also the
President speaking as to mention on Scott Jennings radio show.
Another headline is the President repeating that the global tariff
situation or global tariff is.
Speaker 3 (33:58):
An economic emergency.
Speaker 4 (34:00):
There are some that would argue that the US needed
to step up its efforts to protect its markets, and
it wasn't just a Republican thing, it was a democratic
thing as well. If you think about the pushback specifically
against China, the pandemic revealed how much of our supply
chains were overseen by China. So on of what the
(34:23):
President is doing and his team are doing does make
sense to you?
Speaker 3 (34:27):
What does it? Well, here's the deal.
Speaker 10 (34:30):
Their whole number of trade laws that the President could
use to pursue our trade agenda against China. He used
section three oh one of our trade law during Trump
one point zero No One challenged his legal authority to
use that statute. So this is coming down to his
(34:51):
use of a statute IEPA, which basically is premised upon
a national emergency and then gives the president limited power.
And that's where the courts are pushing back. But from
my point of view, there are other statutes that frankly
could be used and are more fit for purpose than
(35:11):
i EPA in the in the current situation.
Speaker 4 (35:14):
Hey, well, one of the things I do want to
ask you, since we just did a big conversation and
deep dive into that ruling we got, was it Friday
night where President Trump's Federal Appeals court did rule that
President Trump's global tiriffs were issued illegally under an emergency law.
So upholding that may ruling by the Court of International Trade,
(35:35):
it sounds like there's going to be back and forth
before we finally get a resolution. But how how do
you think that might ultimately end up? Will they be
overturned or not likely?
Speaker 3 (35:47):
I don't know. Do you have a good, good thought
on that?
Speaker 10 (35:50):
I don't, And anyone who says they do, I don't
believe them. I think this will probably end up going
to the Supreme Court, and none of us can predict
what could happen. But the point I would make that
even if the president loses and the Supreme Court votes
against him again, there are other trade laws that he
can use to advance his trade agenda. So yes, it
(36:11):
would be a setback, but I don't think it would
mean that he's going to give up on tariffs. I
think we're living in a tariff world under Donald Trump
for the next three and a half years, whether we
like it or not.
Speaker 2 (36:23):
Do you think that it will just be for the
next three and a half years and the next president,
even if it's a Democrat, would actually remove these tariffs
because this is a significant source of revenue for a
government that likes to spend money, whether you're a Republican
or a Democrat. That's what we've seen take place in
(36:44):
the White House, and one that has now thanks to
the new tax bill, has lost some serious sources of revenue.
Speaker 10 (36:53):
And the other point I would add is that Biden
kept many of the Trump tariffs in place as well.
So I think you make an excellent point that said
the next president may have, you know, a different agenda
in putting a lot of emphasis on trying to work
more closely with our allies and partners. One of the
(37:14):
first things they're going to ask for is a relaxation
of tariffs. So I'm not sure that all of the
terroifts would remain in place as is, or there could
be you know, other options and other agreements reached or
other steps taken which could allay some of these concerns.
Speaker 4 (37:33):
But it makes a tricky then for investors or just
the world at larger or CEOs to make decisions when
it could switch again in three four years or so on.
Speaker 3 (37:41):
Hey, Wendy, thank you so much.
Speaker 4 (37:43):
Wendy Cutler, VP of Asia Society Policy Institute, joining us
from the nation's capital.
Speaker 1 (37:48):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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(38:09):
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