April 30, 2025 • 48 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Beth Fouhy, Partner at FGS Global, and Hadriana Lowenkron, Bloomberg News National Politics Reporter, recap what we've seen from President Donald Trump's First 100 Days this week. Kunjan Sobhani, Bloomberg Intelligence Senior Semiconductor Analyst, discusses the broader semiconductor space, comments from Nvidia's Jensen Huang, and Qualcomm. Jennifer Welch, Bloomberg Chief Geo-economics Analyst, explains new China-US rhetoric as Nationalist support for Xi grows. We break down the market moves of the week with Gina Martin Adams, Chief Equity Strategist at Bloomberg Intelligence. And we Drive to the Close with Brooke May, Managing Partner at Evans May Wealth.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:08):
This is Bloomberg Business Week Daily 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 as it happens. The Bloomberg Business Weekdaily
Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 3 (00:32):
Well, the President, you know this right, We've all been
talking about it this week, marking one hundred days in office.
It's a period that has included an avalanche of executive
orders that started back on inauguration day, his inauguration day,
letting go of federal workers, hiring some back, scaling back departments,
bringing some stuff back, introducing tariffs, then dropping back on some,
(00:52):
and just generally taking actions that are potentially reshaping the
US government longer term and really how the United States
is viewed around the world.
Speaker 4 (01:01):
All of it.
Speaker 5 (01:02):
Talked about it today's marathon Cabinet meeting, I think we
could call it at the White House, including what felt
like maybe Elon's farewell.
Speaker 6 (01:10):
So, you know, the American people voted for secure borders,
safe cities, and sensible spending and that's what they've gotten.
A tremendous amount has been accomplished in the first one
hundred days, as everyone has said, It's more than has
been accomplished in any administration before ever period. So this,
(01:35):
this pretends very well for what happened for the rest
of the administration. I think this could be the greatest
administrations in the.
Speaker 7 (01:42):
Audio country, all right.
Speaker 3 (01:45):
That, of course, was Elon Musk earlier at the Cabinet
meeting today in the White House. President Trump after that
then thanked Elon Musk for his work and said, Elon
quoite wants to get back home to his cars.
Speaker 7 (01:56):
So let's get into it.
Speaker 3 (01:58):
Breakdown President Trump in his second term so far, those
first hundred days. Bloomberg News National politics reporter Hadrianna Loenkron
is in our Washington, DC News bureau also with US
as Beth Fuoey. She's partnered FGS Global in the company
Strategic Communications division. She advises clients on messaging in media strategy,
which I'm guessing they have a lot of questions at
(02:18):
this point.
Speaker 7 (02:19):
She's here in New York. Hello to both of you.
Speaker 3 (02:22):
Nice to have you here with Tim and myself. I
want to start with you Hadriana is Elon Dunn.
Speaker 7 (02:27):
What do we know about that? It felt a little jarring.
Speaker 8 (02:31):
Well, yes, we had known all along that there was
going to be some type of deadline one hundred and
thirty days, and that was something that we had reporting
about from the jump. You know, the President has said
we would like to keep them for as long as
we can, but we do know that there are some
restrictions that do come with being a special government employee,
and of course he does have several other businesses. But
we are told that his work and his I guess
(02:54):
you could say legacy, the impact will continue beyond tim
in the sense that he has a team and that
he has been working with different people within the cabinet
and they are hoping to continue with a lot of
that cost cutting work.
Speaker 5 (03:07):
Yeah, Beth, come on in here, because we did learn
last week and Tesla shareholders certainly cheered this news that
Elon would be spending more time away from Washington, d C.
But as Hadriana just said, the wheels are in motion
when it comes to DOGE. How should Americans think about
the impact and potential impact moving forward of cutting at
the behest of DOGE.
Speaker 9 (03:29):
Well, I think what you just said, is really important
that he is going back to his Tesla world, because
shares and Tesla have cratered since Elon Musk has been.
Speaker 10 (03:38):
Part of DOGE.
Speaker 9 (03:39):
I think he really has to wonder whether this was
worth it for him and frankly worth it for the
president and for the American people. Certainly there were cuts
that were made. I don't disagree that the US government
is being remade in a way that probably will never
be the same as a result of President Trump's first
hundred days, and certainly Elon Musk's efforts at DOGE. But
the efforts were very scaut. They were really sort of
(04:02):
throwing a grenade into the government rather than surgically cutting
and finding the actual evidence of waste and attacking that specifically.
He just sort of went after different departments, different agencies,
willy nilly. A lot of lawsuits have resulted, a lot
of lawsuits that will and have been successful against some
of these cuts. We may even find that those is
(04:23):
saving no money because there is so much cost to
reappointing employees who unfairly lost their jobs and that the
courts have allowed to come back. So it's very unclear
that what Elon Musk set out to do, and what
President Trump asked him to do is actually going to
bear the kind of economic windfall that had been predicted. Meanwhile,
(04:44):
Elon Musk's own businesses have been really tanking, and he
is essentially going back to save them.
Speaker 3 (04:50):
You know, Beth, I wonder what's more important determining whether
or not he has had the president That is, successes
are failures in the first one hundred days are whether
or not we look at the first one hundred days
as an indicator of what's to come in the next
three and a half or more than three and a
half years of what's left in the Trump White House.
Speaker 9 (05:09):
Well, look, most of the success of a presidential administration
really is in the early part of the administration, when
the president typically has the highest job approval. Congress is
more than willing, especially in Congress like this, a fully
republican the president's own party, willing to let the president's
agenda take precedence. It typically slows down after the early
(05:31):
days of the first part of the administration. President Trump,
as we've all discussed, has done more than probably any
other president in one hundred days to make his mark.
The question is how long is that going to last.
Much of it's being challenged in court. We've seen poll
after poll after poll showing President Trump is losing popularity quickly,
that many of the things that he has undertaken in
(05:53):
this first hundred days have been met by skepticism and
frankly fear by a lot of Americans. It's unclear whether
he's going to be able to keep this up for
much longer.
Speaker 5 (06:02):
That's a really good point. We talked a little bit
about political capital earlier this week with Jordan Fabian about
what the president has and he can spend when it
comes to Congress. Heydrian to come back in here and
just give us, as we do reflect on these first
one hundred days, give us what you see as some
of the successes, some of the wins, but also areas
where the president really has not succeeded some of those
(06:23):
losses in the first one hundred days.
Speaker 8 (06:26):
Absolutely, and as someone, I mean, I covered him very
closely on the campaign trail, and I think that there
are some things that he said he would do that
he has headed in that direction of the border is
the first thing that comes to mind, and that was
something where Moon when I was talking to people and
voters it was often ranked above the economy for them,
whether they were in Iowa or they were in Phoenix,
(06:47):
and so this was something where we can see the
border crossings have gone down. On the deportation front, those
numbers appeared to have also gone down. And so, you know,
has he hit the millions and millions of numbers that
he's touted That has not yet happened, but his administration
has pointed to the border crossings as an area of success.
(07:08):
And then, as we all know, the tariffs, tariffs or
something that he has said he would do on the
campaign trail, and he has done them in a sense
that you know, he has put in some of those
terraffs and he's flip flopped and taken some back. He's
offered pauses for some exemptions, and really that's offered a
lot of confusion for the markets, as we all know.
(07:29):
And more importantly then the question is what does that
mean going forward? Does that suggest to other industries that
they can come in and you know, have meetings and
then they can get some of the same reductions that
people just recently in the auto industry received and that
was announced yesterday. So we're still navigating exactly what that
(07:50):
tariff policy will look like. And that's something whereas we
saw in the latest economic data, that has not worked
out well for him, and he has now claimed that
to be Biden's fault, as was his own. And we
had actually done reporting from the jump on the different
economic messaging coming from the Admin. At what point can
he say that that the economy was truly his versus
(08:11):
his predecessor, And it has seemed that when the data
is good, he says it's his. When it's bad, he
blames his predecessor.
Speaker 3 (08:17):
It's something we just talked about about with our own
Mike McKee and companies, you know, ordering ahead of expected
tariffs that, as Mike said, you know that ultimately is
President Trump's economy, that buying ahead in anticipation of higher costs, Beth.
When you advise your firm's clients on policy and messaging
around White House moves and actions, I am curious what's
(08:38):
top of mind and is there an expectations that things
will settle down in a bit or not necessarily?
Speaker 9 (08:46):
Sure, well, we advise a lot of different types of clients,
and of course many of them are concerned about the
impact of tariffs on their consumers. And their customers. The
issue of DEI, of course, is a is a major
factor for a lot of companies in the United States.
There was an effort to really push DEI and and
and and embrace the ethos of diversity, equity and inclusion.
Speaker 11 (09:09):
UH.
Speaker 9 (09:09):
Just in the last few years, that of course, has
has changed on the Trump administration, and many companies are
trying to figure out how to embrace the value that
they place on on diversity while not sort of advertising
that this is something that's important to them as a
company for fear of retribution from the administration. There's a
lot of fear out there. Generally, I would say it's
it's a it's a it's a very different atmosphere than
(09:31):
we've seen under other presidencies where you might like the
president or not, or approve of his policies or not.
The sense of fear of not knowing what's coming and
and trying to prepare but not ever one hundred percent
sure of what you're preparing for leaves a lot of
a lot of consumers, a lot of companies off balance.
Speaker 5 (09:51):
Hedriana on that. Just just advise us a little bit
about what you're what you've been reporting on at the
White House, to Best's point about the and I think
a lot of people would say we kind of see
that on display when it comes to cabinet meetings when
we see really the way that these cabinet officials talk
so much about the serving at the pleasure of the president.
Speaker 8 (10:14):
I mean it was very complimentary, I would say, just
listening to the past marathon of a cabinet meeting, and
they definitely are seeking his approval, and you know, he
has been complimentary toward them as well, shouting out a
couple of people, and you know, even someone who not
in the room, Tom Homan, the kind of appointed borders
(10:38):
are with someone who you know, the President has has
given praise sword and so yes, we we are seeing that.
And you know a lot of the reporting that I've
done has also looked at the different people in industry
and those who have been you know, the you know,
victims of some of these that has been done, and
(10:58):
you can see that as well.
Speaker 3 (10:59):
Forgive, we would love to have more time. Hey, Drianna,
thank you so much. And of course, Beth Fuey at
FGS Global.
Speaker 2 (11:06):
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Speaker 3 (11:21):
Just a few things we want to get into the
tech space. We see super micro shares are plunging. They
gave preliminary results of fel well short of analyst estimates.
You've got Taiwan's Semiconductor beginning construction on a third chip
plan in Arizona.
Speaker 7 (11:33):
And then there's Nvidia, the chip company we all focus on.
Speaker 3 (11:36):
CEO Jenson Wang expects to compete with China for a
long time, doesn't think they are far behind the US
when it comes to AI. He spoke to Bloomberg's Andri
Hordern and other reporters on the sidelines of an event
in DC today.
Speaker 12 (11:49):
In order to produce five hundred billion dollars worth of
AI infrastructure requires enormous amounts of investment from a lot
of different partners, and so we've we've brought on shore
many partners to help us do that, and we're going
to have to build our own factories in.
Speaker 13 (12:03):
Order to do that.
Speaker 14 (12:04):
What's your message and conversation can be like today with
the President when it comes to teriffs.
Speaker 12 (12:09):
Or our foot I'm going to count on the fact
that the administration has a good plan and from our perspective,
we would like to have policies that support and help
accelerate the development of artificial intelligence in this new industry.
Speaker 5 (12:24):
Do you think they're going to have an edit of
the diffusion rule that was under the buy An administration,
basically placing all these different countries in different buckets.
Speaker 12 (12:32):
Well, I'm not sure what the new diffusion rule is
going to be, but whatever happens to be, it becomes.
It really has to recognize that the world has changed
fundamentally since the previous diffusion rule was released. We need
to accelerate the diffusion of American AI technology around the world,
(12:53):
and so the policies and the encouragement from the administration
it really needs to be behind that.
Speaker 3 (13:00):
Horses at Video CEO Jensen Wog and Vidia shares. By
the way, they're down about twenty percent year to date.
They report on May twenty eighth. They are a top
supplier to super micro. We mentioned that at the top
semi the space as a whole down about sixteen percent
year to date. And don't forget that we're going to
get a check on this space when Qualcom reports after
the closing bell that stock is down tim about four
percent year today.
Speaker 5 (13:20):
Hey with that roundup is Bloomberg Intelligence Senior semiconductor analyst
Kunjohn Sabani from the Bloomberg News Bureau in San Francisco Couonjohon.
First off, we just want to start with Nvidia. I
know super Micro is the big stock moving right now,
but Jensen Wong's comments on infrastructure investments in the US,
what is the reality of in Nvidia supply chain today
and its efforts to do more in the US.
Speaker 4 (13:41):
Well, in Vidia is similar to a lot of Fitzpiers
and fablust companies are heavily reliant on supply chain outside
of the US right, and most of their chips are
fabricated or fab in TSMC in Taiwan. They are. TSMC
is moving into the US and Media we expect is
going to be one of the key customers using TSMC's
US manufacturing, so a lot of that will come back.
(14:04):
But it's not just the chips, right, a lot of
the servers, the systems. That's how in Media cells has
GPU today is the supply chain is still heavily concentrated
outside of the US. There's a significant portion in Mexico,
which is I guess good because it's close by, but
significantly concentrated in Asia, So it will take a long
time to move all of the supply chain back to
(14:25):
the US.
Speaker 3 (14:26):
Do you envision a day, kun, John, this is one
white house. We know things can swing every four years potentially.
Are your expectations whether it's in five years, I don't
know how long a build out like this would take,
or seven years that you will see a lot of
semiconductor activity, manufacturing start to finish happening in the United States.
Speaker 4 (14:47):
Well, definitely, even before this administration came in, just over
the last two years, given what happened in the COVID
pandemic and given the risen uncertainty around geopolitics in general,
even with the prior administration's focused on China, we have
already seen green shoots and starts of manufacturing brought back
to the US. The new deals from DSMC accelerates that.
(15:11):
We have seen some slowdown from Intel because of the
company specific issues. But if you give me five to
seven years, I would definitely say we would have more
manufacturing than we have today.
Speaker 3 (15:21):
What about when it comes to AI because Jensen Wong
also SAIDI like the Trump administration to change regulations for
exporting AI tech from the US to the rest of
the world so American businesses can better capitalize on the
opportunities in the future.
Speaker 7 (15:34):
So what does that mean more chip restrictions.
Speaker 3 (15:36):
How does that play out in your mind?
Speaker 4 (15:39):
Yeah, so I think the article there was focusing on
specific on the diffusion rule and as it stands right
now from what the previous administration had laid out, and
if we assume no changes, right for Nvidia, about sixty
to seventy percent of its revenue is sort of safe
because it's in the regions which are unrestricted, China which
was which is about fifteen percent, and I we think
(16:00):
about ten to eleven percent of data center right now
is already from the sanctions that were placed on the
Age twenty and the sanctions that in media has been
placed specifically, it's already sort of cut off, right. So
the only concern now is that middle tier, which is
the regions where you can still shift where you can
bring up data center, but you need licenses and certification.
(16:21):
So that's where the concern is. That's where sort of
the pie which is about fifteen to twenty percent for
Invidia is at risk if these rules don't get changed.
So I think that's what they might be pushing more for. Remember,
you know, in the US we are running, we are
capped by regions where we have enough power. So there
are a lot of other power beneficiary regions outside of
(16:42):
the US where we could move our data centers and operate.
Speaker 5 (16:45):
From Hey kon John, as Carol mentioned in video, the
biggest customer for super micro computer shares. We're down as
much as twenty percent earlier in the session, down about
fourteen percent right now. This after the company reported preliminary
third quarter results missed expectations. Interestingly enough, JP Morgan came
out and said that they don't think that the magnitude
(17:06):
of the revenue miss is representative any industry wide demands
slow down. How did you look at this result specifically
in the context of the industry. Is it something that
the industry needs to be concerned about.
Speaker 4 (17:17):
I don't think so. I would generally agree with that point.
This seems more of a company specific issue for them. Again,
we only have very limited information, but this suggests more
of a timing shift. Basically, what they've said is customers
wanting the more latest Nvidia products. But I don't think
this should be a signal that there is any kind
(17:38):
of demand slow down from the overall industry or any
kind of a weakness in the AI infrastructure capex spending.
Speaker 7 (17:44):
Hey, one last.
Speaker 3 (17:45):
Question before you go, before we go, hope Qualcom reporting
after the closing bell? Is it all about smartphones? What's
the key metric one or two that we need to
watch out for.
Speaker 4 (17:57):
Definitely will be mostly about smartphones. We think the numbers
might be safe right now from what we have heard
so far from the other companies, especially the first Q
China Android numbers. Phone sale numbers came in better than feared,
so that should help them because that's a big where.
This is where Qualcom is really dominant. Some Apple pull
in also could help them. But the story is all
(18:19):
going to be about Apple share laws this year, right
we saw the spring launch for the iPhone, see Apple
already started moving it to its internal modem. They'll launch
their next fall flagship product where their trend is expected
to continue. We don't know how much volume spirit will be,
so that's going to be the key focus, especially when
I rank all the different AI Semis, Analog SEMIS and
(18:41):
smartphone SEMIS. Current uncertainty around her if again, the smartphone
market much more susceptible to price increases. They're a very
consumer focused market. This is the peer group where I
think investors are going to play it really cautiously until
they get clear signals that there might be no demand destruction.
Speaker 3 (18:58):
All right, Kennley with they're great stuff, Coon, John, thank
you so much. I know it's another busy day for you,
so thanks for carving some time out.
Speaker 7 (19:04):
First question.
Speaker 2 (19:06):
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Speaker 5 (19:24):
Telp Nice make sense of this. In the market moves,
we got Gena marn Adams. She's chief equity strategist at
Bloomberg Etaligence. She joins us here in the Bloomberg Interactive
Brokers studio. This morning we got this note. I don't
know if you get these, Gena, but Dan curtis out
in London. Sends these notes to the TV and radio
teams with some stats. The S and P five hundred
as of yesterday climb for the six day it's up
seven point eight percent. It's the biggest six day climb
(19:46):
since March of twenty twenty three to March of twenty
twenty two. If the S and P five hundred had
closed and look, we don't know what's going to happen,
but it looks like it won't hit this at fifty
six eleven eighty five or above, it would be the
biggest monthly drop erased ever in that period of time.
So my question for you is today, notwithstanding the buying
(20:06):
that we've seen in the last six sessions, what explains it.
Speaker 10 (20:10):
Oh, it's a good question.
Speaker 11 (20:12):
I mean, I think that some of it is just
a natural recovery after extreme oversold levels that we reached
in early April. Some of it is investors sigh of
relief after some risk off period reflecting some concerns about
whether or not President Trump was going to approach firing
the FED chair. Right, we got a little bit of
relief out rally after that. Some of it is earnings
(20:34):
in the first quarter at least appeared to not have
been as bad as some had anticipated, at least in
the market. You've gotten much better than expected first quarter earnings,
but not a lot of visibility on the second quarter.
And then I'd say some of it is also investors
just hopeful that we're going to get some trade resolution.
I mean, the natural proclivity of the equity market is
to rise. That's something to keep in mind. So the
(20:57):
default pace is to go up until it's very obvious
that something is wrong, and then it crashes down. It
sort of climbs the stairs and goes down on the
elevator basically.
Speaker 10 (21:08):
So I think that there's a lot of reasons. Definitely.
Speaker 11 (21:12):
The thing that concerns me the most about this rise
is March twenty twenty two was not a great time unfortunately, Right, Yeah,
And this goes back to something that we've talked about
a lot. When stocks are rising very quickly, that's usually
a bad sign. Broadly, that only happens during periods of
extreme distress. The slow gains of the last six days
(21:33):
look okay, but the fact that we've accumulated that much
strength in such a short period of time is more
evidence that we're really still trying to figure out if
we're in a bare trend, if we're going to be
able to shake off the bear market, if we're going
to fall into recession or not. There's just a tremendous
amount of uncertainty out there. And March twenty twenty two,
of course, I don't need to remind everyone, was the
(21:55):
beginning of a pretty awful, awful year. So hopefully that's
not what we have in store. But nonetheless, there's a
tremendous amount of uncertainty out there. So buffalo up.
Speaker 7 (22:04):
So time to can keep investing overseas?
Speaker 3 (22:07):
Yeah, yeah, lighting overseas, everything overseas.
Speaker 11 (22:10):
Yeah, I'll take that queue and run with it. Because
we did do some more some more work on valuations
again overnight and published this morning, some work on global
valuations where you do still see discounted equities in rest
of world. Right. The US, unfortunately, is in this very
awkward position where we're still coming off of enormously high
(22:32):
valuation multiples, even though rates are higher. Those valuation multiples
are built upon a foundation of very robust expectations for
continuous US growth, and here we are faced with and
maybe we're not going to get that very strong growth
going forward. Whereas the rest of the world equity markets
were somewhat depressed in comparison to the US. Coming into
(22:53):
this year, we've started to see some rotation. Even with
that rotation, yeah, the only equity markets of the world
that seem expended or really the US, India and maybe Australia.
Speaker 3 (23:02):
Can I ask you something, though, if we if the
United States falls into recession or something bad, I mean
slow and growth, We've already seen that. I mean, we
buy so much stuff from everyone. Is it just the
fair assumption that ultimately what these valuations that maybe look
attractive overseas will not look so attractive because their businesses
(23:25):
and their economies will also fall off.
Speaker 10 (23:27):
They will definitely struggle.
Speaker 11 (23:28):
But I think it's important to keep in mind that
over the course of the last ten years, the US
already has been pulling back as the buyer of last
resort for the global product right. This really started with
the first Trump administration. For instance, Chinese exports to the
United States are half as great as their total export
base as they were ten years ago. So even the
(23:51):
Chinese economy is less exposed to the US than it
has been in the past. That is the case for
a lot of economies around the world. As much as
we still import a lot more than we export, there's
been this diversification effort underway on account of the first
Trump administration and then especially on account of the pandemic,
(24:11):
where global supply chains were diversified somewhat. There's a lot
more regionalization happening in global economies where the production is
closer to home. It might not be at home, but
it's at least closer to home, and that is getting
reflected in trades. So there is still definitely exposure, but
(24:32):
how much exposure was priced in the equity market is
really important to consider, and then also how that exposure
has changed over time is important to consider. The other
thing that I would say is coming into a period
of economic weakness in the US, you always want to
focus on beta inside your portfolio, and the US market
was the highest beta market coming into twenty twenty five.
(24:53):
It's still very high beta, so you've got to worry
about the risk that you take on in the US,
which is really unlike free pandemic crisis periods where the
US was generally lower beta market. Interesting when stocks were rising,
it wasn't always the US just dominating the story. That's
the kind of environment that we're coming off of, So
(25:13):
an environment where the US is declining, it actually hurts
the US most relative to other global equity markets.
Speaker 10 (25:21):
In this small point in time.
Speaker 5 (25:24):
You told us that we have to watch earnings. You've
been saying that for the last couple of weeks. Fifty
s and P five hundred companies are reporting today, sixty
two are reporting tomorrow. Six point two trillion dollars in
market KAP of earnings today, nine point three trillion tomorrow.
Up to now, what's the message that we've gotten.
Speaker 11 (25:40):
The message is very mixed. I don't know if I
could paint it in a short brush.
Speaker 15 (25:45):
Yeah.
Speaker 5 (25:47):
Uncertainty, yeah, which is what I know.
Speaker 11 (25:49):
It's so not fair, but that is the word of
the day for earnings.
Speaker 3 (25:53):
And then like throwing something like Google or I don't know,
some other names.
Speaker 7 (25:56):
It's a different I don't know.
Speaker 10 (25:57):
Yeah.
Speaker 11 (25:59):
First quarter better than expected, at least so far. Most
of that better than expected is coming on account of healthcare.
That's an underreported issue. Healthcare was actually much worse than
twenty twenty four because of some accounting changes. Growth rates
are looking pretty good in twenty twenty five. That'll probably
continue alphabet last week also added the rest of the
(26:19):
beat to the index top line, and then we'll see
what happens with tech this week. I think it'll be fascinating.
The guidance, though, is overwhelming me the big story of
this quarter in my opinion. We've got record level negative
guidance and record level few companies giving us positive guidance,
even going back pre pandemic. So this is worse in
(26:40):
terms of guidance, worse than the GM is twenty twenty.
We don't go that far back in our guidance data,
so I can't tell you that much. But it's just
extraordinary uncertainty on top of expectations were so high coming
into this year that it's just really difficult for companies
to satisfy those.
Speaker 3 (27:00):
I think it's fascinating what you said about how much
like the US has been pulling back and not being
kind of the consumer of the world.
Speaker 7 (27:07):
And it's changed a lot in the last decade. So
what's the economy that replaces it?
Speaker 3 (27:11):
Like if it's the Chinese economy, But should we assume
that the Chinese market then comes along with it, because
I think most investors would say not so fast, right, So, like,
do we can we think about that like who is
the economy and market that.
Speaker 11 (27:24):
Yeah takes over for well, I think we should be
thinking about a world that's much less globalized and much
more regionalized.
Speaker 7 (27:31):
Frankly, the same thing for investing.
Speaker 11 (27:32):
And I from an investment standpoint, that creates a lot
of complications for the global most multinational countries of the
world companies of the world. But from a just a
trade dynamics story, I think what's the big story for
me over the last ten years has been the regionalization
of trade, where especially in Asia, you've got what used
(27:54):
to be the TPP now operating functionally as a very
viable trade sort of regional trade coalition, if you will,
creating economic conditions and changing economic progress in that region,
specifically creating a lot of mingling of those economies and
codependencies and those economies specifically Europe has its own, and
(28:17):
then we have the US, Mexico and Canesta, which is
a different story.
Speaker 7 (28:20):
We're gonna leave it on that note, Gina, Thank you, Gina.
Martin Adams, this is Bloomberg.
Speaker 2 (28:26):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Applecar Play
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 played Bloomberg eleven thirty.
Speaker 5 (28:44):
President Hiji Things diplomats are fanning out across the world
with a clear message for countries cutting deals with Donald Trump.
The US is a bully that can't be trusted. Johnny's
officials are racing to turn foreign governments against the US
inside a ninety day window. His granted all nations except
China to strike trade deals during a tariff reprieve on tariffs.
(29:06):
Here's what President Trump said in an interview that aired
last night on ABC.
Speaker 15 (29:11):
China probably will eat those tariffs. But at one hundred
and forty five, they basically can't do much business with
the United States, and they were making from US a
trillion dollars a year. They were ripping us off like
nobody's ever ripped us off.
Speaker 5 (29:24):
Real they have a President Trump. Last night, in an
interview that I should say aired last night on ABC
Back with us as Jennifer Welch. She's chief geoeconomics analyst
for Bloomberg Economics. She joins us from our Washington DC Bureau.
Once those packs are in place, Treasure Secretary Scott best
inessaid he wants US allies to quote approach China as
a group, giving his side more leverage in negotiations. We
(29:46):
did speak to you yesterday about who has leverage in
those negotiations. How do you look at the reporting from
our team that says that Chinese officials are looking to
turn foreign governments against the US inside this ninety day win.
Speaker 13 (30:00):
Though, Jennifer, Well, good to be back with you.
Speaker 14 (30:03):
Yes, Beijing launched this effort pretty much right after Liberation
Day to take advantage of that moment to try and
curry favor with other countries that we're facing reciprocal terrafts
from the US and begin to fill their own coalition
against DC. The challenges they're now facing is that most
of those reciprocal terrafts have been put on hold, and
many countries are far more focused on negotiating deals with
(30:24):
the US and see talking to Beijing is sort of
an unnecessary risk that could throw a monkey wrench in
those talks with Washington, and so I think we're likely
to continue to see Beijing rolling out this term offensive.
But I also think they're unlikely to get a lot
of traction at least as long as countries are focused
on those trade talks in this ninety day period.
Speaker 3 (30:43):
Well, and it's interesting because I I what about you know,
there are those countries Jennifer right, that rely on Beijing
and China for raw materials or critical minerals.
Speaker 7 (30:54):
So it's a little bit complicated at least.
Speaker 14 (30:56):
For some absolutely, and there are numbers of key US
trade partners, particularly Latin America, Southeast Asia, the Middle East,
that trade far more with China than they do with
the US. And I think that's where the sticking point
in these conversations that Washington says that they're having with
trade partners is going to be how far does the
US want these other countries to go in restricting trade
(31:18):
with China. If it's focused on key strategic sectors or
sectors that those countries are also worried about protecting from
Chinese over capacity, they might be able to make some traction.
But Beijing is threatening retaliation against any economies that work
with Washington. So it's a term offensive, but there's a
pretty heavy stick that Beijing's wielding as well.
Speaker 5 (31:38):
We got some news during the two o'clock hour that
the US has been proactively reaching out to China through
various channels seeking to negotiate on tariff issues. This came
from a post by a Webo account that's affiliated with
state run China Central Television. How do you, as an
expert on the region, as an expert on the country,
how do you look at information like that?
Speaker 2 (31:58):
Like?
Speaker 5 (31:58):
How should we take in info like that?
Speaker 14 (32:01):
Well, this is very intentionally an effort by Beijing to
promote this information, right, that didn't just come out kind
of happenstance. They're trying to put out this post to
sort of contradict the US narrative that we've heard from
the administration over the last few days, which is that
President Trump says the two sides are talking, and Beijing
has been consistently saying, no, we're not. And I think
(32:21):
Beijing's trying to project this are of strength, that they
aren't running to the US asking for a deal, But
it's the reverse. I think the reality is more complex.
These two countries are continuing to have daily diplomatic negotiations
and conversations. That's just part of being major players that
have to talk to each other on a pretty frequent basis.
(32:42):
But whether or not they're actually having what we would
consider to be serious trade negotiations that are moving us
towards a deal. I think that is less likely at
this moment in time, just given how far apart the
two sides are and the fact that they can't even
seem to agree on whether they're having a conversation.
Speaker 3 (32:57):
How much though Jennifer is all untimately saving face maybe
on both sides for both President g and President Trump,
And I just wonder how much of this dance is
to be expected, but that when all a said and done,
they're going to come together or is that a bad
assumption that they will work out something that isn't so
onerous now?
Speaker 14 (33:19):
I think you're right, saving face is a really key
driver and factor at the moment in time. Neither side
wants to look weak, Neither side wants to look like
they're going to blink. That's why both of them are
saying the other is definitely going to be the one
to call me.
Speaker 13 (33:31):
We're in the strong.
Speaker 14 (33:32):
Position, and I think the challenge is how long are
they going to be able to hold that position before
the economic pain of these terrafts really starts to bide
in and someone has to be the first to kind
of make the first move to pick up the phone.
Speaker 13 (33:45):
Realistically, I think.
Speaker 14 (33:45):
What's going to happen is that meetings are going to
start at a lower level, at more of a working level,
and move their way up to a leader level conversation,
which is not how President Trump likes to do business.
Speaker 13 (33:55):
He wants to deal directly with his counterparts.
Speaker 14 (33:58):
That also tends to be a little bit of a
faster way of kind of shortcutting the bureaucratic process and
getting to an outcome.
Speaker 13 (34:04):
So I think you combined all these.
Speaker 14 (34:06):
Factors, and what that suggests is that this is likely
to be a prolonged process, in part because it probably
will have to start at the bottom and work its
way up.
Speaker 5 (34:14):
I want to talk I want to home in on
that pain point a little bit, because we talked a
little bit about this yesterday with you, But in terms
of the pain that these different economies could feel, it
does seem like the Chinese economy is better positioned, at
least from a consumer perspective, to experience slash withstand pain
than perhaps the US economy. The US consumer is that fair?
Speaker 14 (34:38):
I think certainly politically they have a better sort of
hand of cards to deal with. Right, Beijing has far
superior ability to shape public opinion and public sentiment, or
at least the voicing of that, than the United States does.
They're also not going to be as responsive or sensitive
to the sort of feedback of the ballot box that
at least many of President Trump's allies in Congress will
(34:59):
be year with the midterms.
Speaker 13 (35:01):
But I do think that this.
Speaker 14 (35:02):
Is likely to deal quite a bit of economic pain
to China, and already from the factory data that we
see from April is indicating reduced factory activity that these
terrorists are starting to have a bite. And that's before
really we expect the full impact of the terrorists has
come into play. That's probably at least in a month
or two out as stockpiles and as all kind of
the forward training that a lot of companies were doing
(35:23):
in advance of terrafts begins to really hit. And that
I think really underscores Beijing's interests in this foreign charm offensive.
It is existential for them to prevent other countries from
blocking off their markets to Chinese goods, because the loss
of the US market is going to be significant pain.
But it needs those other markets even more to deal
with that pain.
Speaker 5 (35:44):
What about potential pain on the US front and pain
in the in terms of perhaps empty shelves or people
not being able to order or get what they want
when they're used to it.
Speaker 13 (35:54):
No, I think you're exactly right.
Speaker 14 (35:55):
I think first, the line from the administration that these
terfts aren't going to be passed through to US consumers
looks extremely unlikely, and some of the initial data suggesting
that's not true. I mean, you look at, for example,
Chinese e commerce giants, and they're quite clearly marking up
their prices.
Speaker 13 (36:09):
That US customers would have to face for those goods.
Speaker 14 (36:12):
And I think, second to your point, there are a
lot of goods where the profit merchants are so thin
that with higher prices coming out of their inputs from China,
they're just not going to be able to manufacture them anymore.
Speaker 13 (36:21):
So good news bad news story.
Speaker 14 (36:23):
That maybe that won't have as much of an inflationary
impact if you're not paying higher prices because they're just
not able to buy anything, but obviously for customers and
for manufacturers that rely on those inputs, that is very
much a bad news story, I.
Speaker 7 (36:35):
Guess, Jennifer.
Speaker 3 (36:36):
One of the things that I think about a lot
is that in the last thirty years it's been all
about US multinationals, just all multinationals, global multinationals around the
world looking to be involved in the Chinese market.
Speaker 7 (36:49):
So it's interesting to kind.
Speaker 3 (36:50):
Of see where we are in a relatively short timeframe
of such a contentious relationship between US and China. Having
said that, I also think about everybody has a price right,
and I wonder these nations that China might be reaching.
Speaker 7 (37:05):
Out to the reporting that we are doing.
Speaker 3 (37:09):
To the surprise of Indian officials, China showed a market
change and approach to a contentious border issue during a
meeting last month. According to people familiar other signs of
a thought between China and India, Prime Minister Modi plans
to go to Beijing this year for the Shanghai Cooperation
Organization Conference. China offered to buy more from India to
help New Delhi reduce the trade deficit. Like I do,
(37:30):
wonder are there things that China can do that really
move the needle when it comes to relationships that exist
now and maybe bring China closer to other parts of
the world besides the United States.
Speaker 14 (37:46):
I think for many countries they're going to be looking
at extracting as much as they can from the US
and China and simultaneously shielding themselves as much as they
can from retaliation. I think in India's case, for example,
after last week's terrorist attack, rising tensions Pakistan, which is
a close ally of Beijing. Now, if I'm New Delhi,
I'm looking to Beijing to say, Okay, what are you
going to do to reign in your friend over here?
(38:08):
And that might be a real test of how far
China is willing to go to secure some of these
additional friends beyond the United States.
Speaker 3 (38:15):
What do you tell folks who say, all right, where
are we in a year in two years? When it
comes to global trade and in particular the relationship between
US and.
Speaker 14 (38:25):
China, I think the US China relationship is still likely
to be extremely contentious, whether you're looking a year or
two from now or whether you're looking five years from now.
At this point, we're in a structural rivalry, and whether
it's President Trump or someone else in the White House,
we're likely to see a continuation of these US policies
that are taking China on as a strategic rival. And
(38:46):
indeed we saw that continuity from the first President Trump term,
through the Biden administration, and now onto the second Trump administration.
I think though, in terms of the trade relationship, there
is a possibility that they'll reach a deal at least
within the next few years. But I think that's going
to be a very much a long process to get there,
and the scope of the deal is really unclear at
this point. Is it going to be a Phase one redux?
(39:08):
Is it going to be a larger structural deal along
the lines of what Secretary besn't and that Phase two
negotiation that never happened was supposed to achieve. I think
the latter is a lot less likely, but maybe something
on the former.
Speaker 3 (39:19):
Hey, just about ten to fifteen seconds, you said it'll
be contentious, but will it also be connected US and China?
Speaker 7 (39:25):
Still?
Speaker 14 (39:27):
I think these two economies are so interconnected it's going
to be hard to sever all of those links, at
least in the short to medium term. But that means
that there's a lot more attention that could happen between
now and then as both economies try and work towards
that de risking.
Speaker 3 (39:39):
All right, great to do a deep dive with you
on this. The US China relationship Jennifer Well, she's chief
geoeconomics analyst for Bloomberg Economics, joining us from our Washington
DC bureau.
Speaker 16 (39:52):
I'll bet you let me drive.
Speaker 2 (39:53):
Oh no, no, no no, this is not a toy, honey, Please,
I'll do the driving.
Speaker 3 (40:01):
Wait, I don't want to drive.
Speaker 5 (40:04):
It's a good question time.
Speaker 1 (40:09):
This is the drive to the clothes Punk's amusing well
Dry runs on Bloomberg Radio.
Speaker 3 (40:15):
All right, TikTok, everybody, just about eighteen minutes to go
until we wrap up the trade on this Wednesday.
Speaker 7 (40:21):
We've got some big earnings coming your way.
Speaker 3 (40:22):
Meta, Microsoft, Qualcomm, there's a whole big drop eBay, MetLife, KLA, Corpse, Sorr.
Speaker 7 (40:31):
I had a little Robin hood I still haven't said it.
Speaker 3 (40:34):
Jeezcake Factory, Yeah, four fifteen and that's coming your way.
But really it's some of the megacap tech names that
we'll be looking for. Charlie just breaking down the numbers.
So we're definitely a lot more bullish than we were
at the beginning, but we're still down across the board
when it comes to the major equity average.
Speaker 5 (40:50):
Between Tuesday, Wednesday today and Thursday, we are hearing from
nearly one third of companies in the S and P
five hundred. That would be one hundred and fifty six
companies today point two trillion dollars.
Speaker 3 (41:02):
It has just been the strangest I feel like earning season.
I know, we just talked about earnings with Gina Martin Adams,
but I feel like we're usually so laser focused. We are,
we break them down, but it just feels like everything
coming out of Washington in terms of US China trade,
like this will determine, you know, so much in terms
of the global economy, so much in terms of the
US economy and earnings going forward. So I feel like
(41:22):
that to some extent is really overshadowing the earnings.
Speaker 5 (41:27):
Yeah, Gina reminding us that guidance is the big story.
A record level of negative guidance and a record few
companies giving a positive guidance. Let's see what Brooke may
has to say about it. She's managing partner at Evans
may Well. They've got about one point three billion dollars
in assets under management. She joins us once again from Indiana.
She's back with us, Brooke. I do you want to
start with the earnings view from you? Again? Gina reminding
(41:48):
us that.
Speaker 16 (41:48):
Is what to watch.
Speaker 5 (41:49):
It's been mixed, to say the least. There's a lot
of nuance there. How would you characterize or generalize what
we've heard from companies thus far?
Speaker 17 (41:57):
Mixed, that's probably the best way to describe it.
Speaker 16 (42:00):
We've seen a broad array of earnings, and to your
earlier point, guidance.
Speaker 17 (42:04):
Guidance is what's moving the market.
Speaker 16 (42:07):
Look at Snap for example, today, they're getting penalized because
they really weren't able to give guidance. So you know,
as you mentioned, you know, the big the Mac seven
make up a significant amount of the market cap. And
I'm eager to see what Microsoft and Meta have to
say today earnings expectations. We think Microsoft will be up
about ten percent, Meta's earnings up about eleven percent.
Speaker 17 (42:30):
But again, that guidance is going to be very important.
Speaker 3 (42:32):
How many portfolio options are you giving your clients at
this point and saying, hey, if the economy goes this way,
this is probably how you want to invest, and if
we fall into a recession or stagflation, this is how
I'm just curious how you are gaming that out different scenarios.
I know you do probably anyway in terms of risk tolerance,
but in this moment in time.
Speaker 7 (42:54):
How does that kind of factor in.
Speaker 17 (42:58):
We're staying mostly invested.
Speaker 16 (43:00):
We have raised our cash levels somewhat, and we've also
made a rotation a few months back into gold as
kind of a hedge against more volatility.
Speaker 17 (43:10):
So we're staying invested, but we're taking more of a
cautious approach.
Speaker 16 (43:14):
We've sold off a few of our names that have
higher pees and are going to be more sensitive to
the volatility of a struggling economy, and we've moved into
some more defensive names, and so we've been proactive and
taking these steps, but really we're trying to err on
the side of.
Speaker 17 (43:30):
Caution right now.
Speaker 5 (43:31):
What are clients asking you when your phone rings, when
you look at your inbox? What do they want to know?
And I would imagine that this week and last week
is less busy than it was at the beginning of
the month.
Speaker 16 (43:44):
Absolutely they want to know where are we going next?
And you know, as we all know, the word of
the day is uncertainty. And it's very difficult, very difficult
right now to project where the market might end because
we don't know what earnings are and you know, past
where we think the market's going. We look at earnings
and we apply a multiple to it and there we go.
(44:05):
We get our ear in price target. So right now
it's it's difficult. We've pulled our year in price target
because there is so much variation in what can happen next,
and so we're telling clients we're setting the expectation expect
volatility at least for the foreseeable future, the next few months.
It takes about two to three months once tariffs are
imposed to actually see them feed through to the economy,
(44:28):
and so we don't know what that's going to look like.
You know, whether it's going to be inflationary. If so,
how bad is it going to get? And so right
now we're just setting the expectation expect volatility. We're going
to stay mostly invested, and if you know right now
that you're going to need money in the upcoming year,
tell us we'll raise the cash.
Speaker 17 (44:46):
Set it aside.
Speaker 16 (44:47):
You know, the market's only about six percent off here
to date, so it's not a bad time to play
it safe.
Speaker 5 (44:52):
Oh, that's interesting to hear. The reason I ask is
because about a week ago, no, it was it was
last Friday, Adriana Machi joined us from San Francisco over
at Strategic Wealth Capital. And I know this kind of
blew you away, Carol, she said, she told you, she
told us that she actually had clients that were talking
about getting out of US assets and they were really
(45:13):
freaked out.
Speaker 3 (45:14):
Yeah, she also mentioned somebody who was like looking to
move as well. But it was it was something we
really hadn't heard. And I think it's safe to say, Brook,
I get it. We've all been doing this a long time.
And you hear, you know, long term perspective, keep your
eye on the ball. What are your long different objectives?
Speaker 7 (45:28):
But if things are dramatically.
Speaker 3 (45:30):
Changing in terms of you know, geopolitics, trade like things
could potentially impact US companies in a big way. And
that is where a lot of investors have been placing
bets because it paid off the last few years, right
or for a long time. So I just do wonder
(45:51):
how you start to think about that potentially.
Speaker 17 (45:55):
You know, there's a risk to.
Speaker 16 (45:56):
Being out of the market, like we saw a few
weeks back. The market can turn on a dime and
it can rally based on a few bits of good news,
and you missed that opportunity if you're sitting in cash,
and when you look back over the last few years,
there's been a lot of a lot of potential factors
in the market and in the economy that very well
(46:16):
could have led to a recession. In fact, there was
a lot of banter about the R word and recession
coming that never that never really came to fruition. So
we think it's more appropriate to take a defensive stance
than it is to reduce our equity exposure in favor
of cash or other asset classes, because it can move quickly.
Speaker 17 (46:37):
You know, look at the pandemic.
Speaker 16 (46:38):
You know, the market cratered and in really just a
few weeks time and then rallied and we've made back
what was lost in a relatively short period of time.
The good thing is us businesses figure out how to
make money in all environments. And while it take might
take a recalibration, you know, a slong economy and inflation
(46:59):
and you know, TIFFs, it's definitely going to have an impact,
but you don't know at what point things are going
to get better, so you do have to stay invested.
Speaker 5 (47:06):
Well, okay, so to the opposite of that Brook, If
you raise cash for clients if they needed in the
next year, where do you keep that cash so it
does earn something. And how much do you have on
the sidelines right now? Just in thirty seconds.
Speaker 16 (47:20):
Money market right now, A lot of the a lot
of the discount brokers, you can get four and a
quarter on the money market, So you're earning something. It's
not like it's just sitting in cash. And and really
in our portfolios right now, we've got about five percent
allocation to cash. So there are some but it's not
double digits.
Speaker 5 (47:40):
Four four and a quarter percent Carol on the year, Yeah,
for the year. You know that's annualized.
Speaker 7 (47:45):
Of course I would taken that.
Speaker 5 (47:46):
Yeah, beats you know, beats the year to date. I
guess down five point seven three percent for the S
five hundred.
Speaker 7 (47:52):
Still though, if we go take the two year, you know.
Speaker 5 (47:55):
When in down, zoom out, that's what Carol Masser does, right, That's.
Speaker 16 (47:58):
What you do.
Speaker 7 (47:59):
Yeah, like you But we shall see, we shall see.
Speaker 5 (48:02):
You're reminding us upward bias for the equity market.
Speaker 1 (48:05):
You know, my husband and I.
Speaker 3 (48:06):
Talk about this. It's like, go back ten years, where
was the market? Yeah, go back five years, where was
the market? We got to run Brook Bay Pee Wealth,
managing partner at Evans Maywealth about one point three billion
in assets under management.
Speaker 1 (48:17):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday.
Speaker 13 (48:27):
Afternoons from two to five pm.
Speaker 1 (48:29):
Eastern on Bloomberg dot Com, the iHeartRadio app, tune In,
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Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:08):
This is Bloomberg Business Week Daily 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 as it happens. The Bloomberg Business Weekdaily
Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 3 (00:32):
Well, the President, you know this right, We've all been
talking about it this week, marking one hundred days in office.
It's a period that has included an avalanche of executive
orders that started back on inauguration day, his inauguration day,
letting go of federal workers, hiring some back, scaling back departments,
bringing some stuff back, introducing tariffs, then dropping back on some,
(00:52):
and just generally taking actions that are potentially reshaping the
US government longer term and really how the United States
is viewed around the world.
Speaker 4 (01:01):
All of it.
Speaker 5 (01:02):
Talked about it today's marathon Cabinet meeting, I think we
could call it at the White House, including what felt
like maybe Elon's farewell.
Speaker 6 (01:10):
So, you know, the American people voted for secure borders,
safe cities, and sensible spending and that's what they've gotten.
A tremendous amount has been accomplished in the first one
hundred days, as everyone has said, It's more than has
been accomplished in any administration before ever period. So this,
(01:35):
this pretends very well for what happened for the rest
of the administration. I think this could be the greatest
administrations in the.
Speaker 7 (01:42):
Audio country, all right.
Speaker 3 (01:45):
That, of course, was Elon Musk earlier at the Cabinet
meeting today in the White House. President Trump after that
then thanked Elon Musk for his work and said, Elon
quoite wants to get back home to his cars.
Speaker 7 (01:56):
So let's get into it.
Speaker 3 (01:58):
Breakdown President Trump in his second term so far, those
first hundred days. Bloomberg News National politics reporter Hadrianna Loenkron
is in our Washington, DC News bureau also with US
as Beth Fuoey. She's partnered FGS Global in the company
Strategic Communications division. She advises clients on messaging in media strategy,
which I'm guessing they have a lot of questions at
(02:18):
this point.
Speaker 7 (02:19):
She's here in New York. Hello to both of you.
Speaker 3 (02:22):
Nice to have you here with Tim and myself. I
want to start with you Hadriana is Elon Dunn.
Speaker 7 (02:27):
What do we know about that? It felt a little jarring.
Speaker 8 (02:31):
Well, yes, we had known all along that there was
going to be some type of deadline one hundred and
thirty days, and that was something that we had reporting
about from the jump. You know, the President has said
we would like to keep them for as long as
we can, but we do know that there are some
restrictions that do come with being a special government employee,
and of course he does have several other businesses. But
we are told that his work and his I guess
(02:54):
you could say legacy, the impact will continue beyond tim
in the sense that he has a team and that
he has been working with different people within the cabinet
and they are hoping to continue with a lot of
that cost cutting work.
Speaker 5 (03:07):
Yeah, Beth, come on in here, because we did learn
last week and Tesla shareholders certainly cheered this news that
Elon would be spending more time away from Washington, d C.
But as Hadriana just said, the wheels are in motion
when it comes to DOGE. How should Americans think about
the impact and potential impact moving forward of cutting at
the behest of DOGE.
Speaker 9 (03:29):
Well, I think what you just said, is really important
that he is going back to his Tesla world, because
shares and Tesla have cratered since Elon Musk has been.
Speaker 10 (03:38):
Part of DOGE.
Speaker 9 (03:39):
I think he really has to wonder whether this was
worth it for him and frankly worth it for the
president and for the American people. Certainly there were cuts
that were made. I don't disagree that the US government
is being remade in a way that probably will never
be the same as a result of President Trump's first
hundred days, and certainly Elon Musk's efforts at DOGE. But
the efforts were very scaut. They were really sort of
(04:02):
throwing a grenade into the government rather than surgically cutting
and finding the actual evidence of waste and attacking that specifically.
He just sort of went after different departments, different agencies,
willy nilly. A lot of lawsuits have resulted, a lot
of lawsuits that will and have been successful against some
of these cuts. We may even find that those is
(04:23):
saving no money because there is so much cost to
reappointing employees who unfairly lost their jobs and that the
courts have allowed to come back. So it's very unclear
that what Elon Musk set out to do, and what
President Trump asked him to do is actually going to
bear the kind of economic windfall that had been predicted. Meanwhile,
(04:44):
Elon Musk's own businesses have been really tanking, and he
is essentially going back to save them.
Speaker 3 (04:50):
You know, Beth, I wonder what's more important determining whether
or not he has had the president That is, successes
are failures in the first one hundred days are whether
or not we look at the first one hundred days
as an indicator of what's to come in the next
three and a half or more than three and a
half years of what's left in the Trump White House.
Speaker 9 (05:09):
Well, look, most of the success of a presidential administration
really is in the early part of the administration, when
the president typically has the highest job approval. Congress is
more than willing, especially in Congress like this, a fully
republican the president's own party, willing to let the president's
agenda take precedence. It typically slows down after the early
(05:31):
days of the first part of the administration. President Trump,
as we've all discussed, has done more than probably any
other president in one hundred days to make his mark.
The question is how long is that going to last.
Much of it's being challenged in court. We've seen poll
after poll after poll showing President Trump is losing popularity quickly,
that many of the things that he has undertaken in
(05:53):
this first hundred days have been met by skepticism and
frankly fear by a lot of Americans. It's unclear whether
he's going to be able to keep this up for
much longer.
Speaker 5 (06:02):
That's a really good point. We talked a little bit
about political capital earlier this week with Jordan Fabian about
what the president has and he can spend when it
comes to Congress. Heydrian to come back in here and
just give us, as we do reflect on these first
one hundred days, give us what you see as some
of the successes, some of the wins, but also areas
where the president really has not succeeded some of those
(06:23):
losses in the first one hundred days.
Speaker 8 (06:26):
Absolutely, and as someone, I mean, I covered him very
closely on the campaign trail, and I think that there
are some things that he said he would do that
he has headed in that direction of the border is
the first thing that comes to mind, and that was
something where Moon when I was talking to people and
voters it was often ranked above the economy for them,
whether they were in Iowa or they were in Phoenix,
(06:47):
and so this was something where we can see the
border crossings have gone down. On the deportation front, those
numbers appeared to have also gone down. And so, you know,
has he hit the millions and millions of numbers that
he's touted That has not yet happened, but his administration
has pointed to the border crossings as an area of success.
(07:08):
And then, as we all know, the tariffs, tariffs or
something that he has said he would do on the
campaign trail, and he has done them in a sense
that you know, he has put in some of those
terraffs and he's flip flopped and taken some back. He's
offered pauses for some exemptions, and really that's offered a
lot of confusion for the markets, as we all know.
(07:29):
And more importantly then the question is what does that
mean going forward? Does that suggest to other industries that
they can come in and you know, have meetings and
then they can get some of the same reductions that
people just recently in the auto industry received and that
was announced yesterday. So we're still navigating exactly what that
(07:50):
tariff policy will look like. And that's something whereas we
saw in the latest economic data, that has not worked
out well for him, and he has now claimed that
to be Biden's fault, as was his own. And we
had actually done reporting from the jump on the different
economic messaging coming from the Admin. At what point can
he say that that the economy was truly his versus
(08:11):
his predecessor, And it has seemed that when the data
is good, he says it's his. When it's bad, he
blames his predecessor.
Speaker 3 (08:17):
It's something we just talked about about with our own
Mike McKee and companies, you know, ordering ahead of expected
tariffs that, as Mike said, you know that ultimately is
President Trump's economy, that buying ahead in anticipation of higher costs, Beth.
When you advise your firm's clients on policy and messaging
around White House moves and actions, I am curious what's
(08:38):
top of mind and is there an expectations that things
will settle down in a bit or not necessarily?
Speaker 9 (08:46):
Sure, well, we advise a lot of different types of clients,
and of course many of them are concerned about the
impact of tariffs on their consumers. And their customers. The
issue of DEI, of course, is a is a major
factor for a lot of companies in the United States.
There was an effort to really push DEI and and
and and embrace the ethos of diversity, equity and inclusion.
Speaker 11 (09:09):
UH.
Speaker 9 (09:09):
Just in the last few years, that of course, has
has changed on the Trump administration, and many companies are
trying to figure out how to embrace the value that
they place on on diversity while not sort of advertising
that this is something that's important to them as a
company for fear of retribution from the administration. There's a
lot of fear out there. Generally, I would say it's
it's a it's a it's a very different atmosphere than
(09:31):
we've seen under other presidencies where you might like the
president or not, or approve of his policies or not.
The sense of fear of not knowing what's coming and
and trying to prepare but not ever one hundred percent
sure of what you're preparing for leaves a lot of
a lot of consumers, a lot of companies off balance.
Speaker 5 (09:51):
Hedriana on that. Just just advise us a little bit
about what you're what you've been reporting on at the
White House, to Best's point about the and I think
a lot of people would say we kind of see
that on display when it comes to cabinet meetings when
we see really the way that these cabinet officials talk
so much about the serving at the pleasure of the president.
Speaker 8 (10:14):
I mean it was very complimentary, I would say, just
listening to the past marathon of a cabinet meeting, and
they definitely are seeking his approval, and you know, he
has been complimentary toward them as well, shouting out a
couple of people, and you know, even someone who not
in the room, Tom Homan, the kind of appointed borders
(10:38):
are with someone who you know, the President has has
given praise sword and so yes, we we are seeing that.
And you know a lot of the reporting that I've
done has also looked at the different people in industry
and those who have been you know, the you know,
victims of some of these that has been done, and
(10:58):
you can see that as well.
Speaker 3 (10:59):
Forgive, we would love to have more time. Hey, Drianna,
thank you so much. And of course, Beth Fuey at
FGS Global.
Speaker 2 (11:06):
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Speaker 3 (11:21):
Just a few things we want to get into the
tech space. We see super micro shares are plunging. They
gave preliminary results of fel well short of analyst estimates.
You've got Taiwan's Semiconductor beginning construction on a third chip
plan in Arizona.
Speaker 7 (11:33):
And then there's Nvidia, the chip company we all focus on.
Speaker 3 (11:36):
CEO Jenson Wang expects to compete with China for a
long time, doesn't think they are far behind the US
when it comes to AI. He spoke to Bloomberg's Andri
Hordern and other reporters on the sidelines of an event
in DC today.
Speaker 12 (11:49):
In order to produce five hundred billion dollars worth of
AI infrastructure requires enormous amounts of investment from a lot
of different partners, and so we've we've brought on shore
many partners to help us do that, and we're going
to have to build our own factories in.
Speaker 13 (12:03):
Order to do that.
Speaker 14 (12:04):
What's your message and conversation can be like today with
the President when it comes to teriffs.
Speaker 12 (12:09):
Or our foot I'm going to count on the fact
that the administration has a good plan and from our perspective,
we would like to have policies that support and help
accelerate the development of artificial intelligence in this new industry.
Speaker 5 (12:24):
Do you think they're going to have an edit of
the diffusion rule that was under the buy An administration,
basically placing all these different countries in different buckets.
Speaker 12 (12:32):
Well, I'm not sure what the new diffusion rule is
going to be, but whatever happens to be, it becomes.
It really has to recognize that the world has changed
fundamentally since the previous diffusion rule was released. We need
to accelerate the diffusion of American AI technology around the world,
(12:53):
and so the policies and the encouragement from the administration
it really needs to be behind that.
Speaker 3 (13:00):
Horses at Video CEO Jensen Wog and Vidia shares. By
the way, they're down about twenty percent year to date.
They report on May twenty eighth. They are a top
supplier to super micro. We mentioned that at the top
semi the space as a whole down about sixteen percent
year to date. And don't forget that we're going to
get a check on this space when Qualcom reports after
the closing bell that stock is down tim about four
percent year today.
Speaker 5 (13:20):
Hey with that roundup is Bloomberg Intelligence Senior semiconductor analyst
Kunjohn Sabani from the Bloomberg News Bureau in San Francisco Couonjohon.
First off, we just want to start with Nvidia. I
know super Micro is the big stock moving right now,
but Jensen Wong's comments on infrastructure investments in the US,
what is the reality of in Nvidia supply chain today
and its efforts to do more in the US.
Speaker 4 (13:41):
Well, in Vidia is similar to a lot of Fitzpiers
and fablust companies are heavily reliant on supply chain outside
of the US right, and most of their chips are
fabricated or fab in TSMC in Taiwan. They are. TSMC
is moving into the US and Media we expect is
going to be one of the key customers using TSMC's
US manufacturing, so a lot of that will come back.
(14:04):
But it's not just the chips, right, a lot of
the servers, the systems. That's how in Media cells has
GPU today is the supply chain is still heavily concentrated
outside of the US. There's a significant portion in Mexico,
which is I guess good because it's close by, but
significantly concentrated in Asia, So it will take a long
time to move all of the supply chain back to
(14:25):
the US.
Speaker 3 (14:26):
Do you envision a day, kun, John, this is one
white house. We know things can swing every four years potentially.
Are your expectations whether it's in five years, I don't
know how long a build out like this would take,
or seven years that you will see a lot of
semiconductor activity, manufacturing start to finish happening in the United States.
Speaker 4 (14:47):
Well, definitely, even before this administration came in, just over
the last two years, given what happened in the COVID
pandemic and given the risen uncertainty around geopolitics in general,
even with the prior administration's focused on China, we have
already seen green shoots and starts of manufacturing brought back
to the US. The new deals from DSMC accelerates that.
(15:11):
We have seen some slowdown from Intel because of the
company specific issues. But if you give me five to
seven years, I would definitely say we would have more
manufacturing than we have today.
Speaker 3 (15:21):
What about when it comes to AI because Jensen Wong
also SAIDI like the Trump administration to change regulations for
exporting AI tech from the US to the rest of
the world so American businesses can better capitalize on the
opportunities in the future.
Speaker 7 (15:34):
So what does that mean more chip restrictions.
Speaker 3 (15:36):
How does that play out in your mind?
Speaker 4 (15:39):
Yeah, so I think the article there was focusing on
specific on the diffusion rule and as it stands right
now from what the previous administration had laid out, and
if we assume no changes, right for Nvidia, about sixty
to seventy percent of its revenue is sort of safe
because it's in the regions which are unrestricted, China which
was which is about fifteen percent, and I we think
(16:00):
about ten to eleven percent of data center right now
is already from the sanctions that were placed on the
Age twenty and the sanctions that in media has been
placed specifically, it's already sort of cut off, right. So
the only concern now is that middle tier, which is
the regions where you can still shift where you can
bring up data center, but you need licenses and certification.
(16:21):
So that's where the concern is. That's where sort of
the pie which is about fifteen to twenty percent for
Invidia is at risk if these rules don't get changed.
So I think that's what they might be pushing more for. Remember,
you know, in the US we are running, we are
capped by regions where we have enough power. So there
are a lot of other power beneficiary regions outside of
(16:42):
the US where we could move our data centers and operate.
Speaker 5 (16:45):
From Hey kon John, as Carol mentioned in video, the
biggest customer for super micro computer shares. We're down as
much as twenty percent earlier in the session, down about
fourteen percent right now. This after the company reported preliminary
third quarter results missed expectations. Interestingly enough, JP Morgan came
out and said that they don't think that the magnitude
(17:06):
of the revenue miss is representative any industry wide demands
slow down. How did you look at this result specifically
in the context of the industry. Is it something that
the industry needs to be concerned about.
Speaker 4 (17:17):
I don't think so. I would generally agree with that point.
This seems more of a company specific issue for them. Again,
we only have very limited information, but this suggests more
of a timing shift. Basically, what they've said is customers
wanting the more latest Nvidia products. But I don't think
this should be a signal that there is any kind
(17:38):
of demand slow down from the overall industry or any
kind of a weakness in the AI infrastructure capex spending.
Speaker 7 (17:44):
Hey, one last.
Speaker 3 (17:45):
Question before you go, before we go, hope Qualcom reporting
after the closing bell? Is it all about smartphones? What's
the key metric one or two that we need to
watch out for.
Speaker 4 (17:57):
Definitely will be mostly about smartphones. We think the numbers
might be safe right now from what we have heard
so far from the other companies, especially the first Q
China Android numbers. Phone sale numbers came in better than feared,
so that should help them because that's a big where.
This is where Qualcom is really dominant. Some Apple pull
in also could help them. But the story is all
(18:19):
going to be about Apple share laws this year, right
we saw the spring launch for the iPhone, see Apple
already started moving it to its internal modem. They'll launch
their next fall flagship product where their trend is expected
to continue. We don't know how much volume spirit will be,
so that's going to be the key focus, especially when
I rank all the different AI Semis, Analog SEMIS and
(18:41):
smartphone SEMIS. Current uncertainty around her if again, the smartphone
market much more susceptible to price increases. They're a very
consumer focused market. This is the peer group where I
think investors are going to play it really cautiously until
they get clear signals that there might be no demand destruction.
Speaker 3 (18:58):
All right, Kennley with they're great stuff, Coon, John, thank
you so much. I know it's another busy day for you,
so thanks for carving some time out.
Speaker 7 (19:04):
First question.
Speaker 2 (19:06):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Apple car
Play and the Android Auto with the Bloomberg Business app.
You can also listen live on Amazon Alexa from our
flagship New York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 5 (19:24):
Telp Nice make sense of this. In the market moves,
we got Gena marn Adams. She's chief equity strategist at
Bloomberg Etaligence. She joins us here in the Bloomberg Interactive
Brokers studio. This morning we got this note. I don't
know if you get these, Gena, but Dan curtis out
in London. Sends these notes to the TV and radio
teams with some stats. The S and P five hundred
as of yesterday climb for the six day it's up
seven point eight percent. It's the biggest six day climb
(19:46):
since March of twenty twenty three to March of twenty
twenty two. If the S and P five hundred had
closed and look, we don't know what's going to happen,
but it looks like it won't hit this at fifty
six eleven eighty five or above, it would be the
biggest monthly drop erased ever in that period of time.
So my question for you is today, notwithstanding the buying
(20:06):
that we've seen in the last six sessions, what explains it.
Speaker 10 (20:10):
Oh, it's a good question.
Speaker 11 (20:12):
I mean, I think that some of it is just
a natural recovery after extreme oversold levels that we reached
in early April. Some of it is investors sigh of
relief after some risk off period reflecting some concerns about
whether or not President Trump was going to approach firing
the FED chair. Right, we got a little bit of
relief out rally after that. Some of it is earnings
(20:34):
in the first quarter at least appeared to not have
been as bad as some had anticipated, at least in
the market. You've gotten much better than expected first quarter earnings,
but not a lot of visibility on the second quarter.
And then I'd say some of it is also investors
just hopeful that we're going to get some trade resolution.
I mean, the natural proclivity of the equity market is
to rise. That's something to keep in mind. So the
(20:57):
default pace is to go up until it's very obvious
that something is wrong, and then it crashes down. It
sort of climbs the stairs and goes down on the
elevator basically.
Speaker 10 (21:08):
So I think that there's a lot of reasons. Definitely.
Speaker 11 (21:12):
The thing that concerns me the most about this rise
is March twenty twenty two was not a great time unfortunately, Right, Yeah,
And this goes back to something that we've talked about
a lot. When stocks are rising very quickly, that's usually
a bad sign. Broadly, that only happens during periods of
extreme distress. The slow gains of the last six days
(21:33):
look okay, but the fact that we've accumulated that much
strength in such a short period of time is more
evidence that we're really still trying to figure out if
we're in a bare trend, if we're going to be
able to shake off the bear market, if we're going
to fall into recession or not. There's just a tremendous
amount of uncertainty out there. And March twenty twenty two,
of course, I don't need to remind everyone, was the
(21:55):
beginning of a pretty awful, awful year. So hopefully that's
not what we have in store. But nonetheless, there's a
tremendous amount of uncertainty out there. So buffalo up.
Speaker 7 (22:04):
So time to can keep investing overseas?
Speaker 3 (22:07):
Yeah, yeah, lighting overseas, everything overseas.
Speaker 11 (22:10):
Yeah, I'll take that queue and run with it. Because
we did do some more some more work on valuations
again overnight and published this morning, some work on global
valuations where you do still see discounted equities in rest
of world. Right. The US, unfortunately, is in this very
awkward position where we're still coming off of enormously high
(22:32):
valuation multiples, even though rates are higher. Those valuation multiples
are built upon a foundation of very robust expectations for
continuous US growth, and here we are faced with and
maybe we're not going to get that very strong growth
going forward. Whereas the rest of the world equity markets
were somewhat depressed in comparison to the US. Coming into
(22:53):
this year, we've started to see some rotation. Even with
that rotation, yeah, the only equity markets of the world
that seem expended or really the US, India and maybe Australia.
Speaker 3 (23:02):
Can I ask you something, though, if we if the
United States falls into recession or something bad, I mean
slow and growth, We've already seen that. I mean, we
buy so much stuff from everyone. Is it just the
fair assumption that ultimately what these valuations that maybe look
attractive overseas will not look so attractive because their businesses
(23:25):
and their economies will also fall off.
Speaker 10 (23:27):
They will definitely struggle.
Speaker 11 (23:28):
But I think it's important to keep in mind that
over the course of the last ten years, the US
already has been pulling back as the buyer of last
resort for the global product right. This really started with
the first Trump administration. For instance, Chinese exports to the
United States are half as great as their total export
base as they were ten years ago. So even the
(23:51):
Chinese economy is less exposed to the US than it
has been in the past. That is the case for
a lot of economies around the world. As much as
we still import a lot more than we export, there's
been this diversification effort underway on account of the first
Trump administration and then especially on account of the pandemic,
(24:11):
where global supply chains were diversified somewhat. There's a lot
more regionalization happening in global economies where the production is
closer to home. It might not be at home, but
it's at least closer to home, and that is getting
reflected in trades. So there is still definitely exposure, but
(24:32):
how much exposure was priced in the equity market is
really important to consider, and then also how that exposure
has changed over time is important to consider. The other
thing that I would say is coming into a period
of economic weakness in the US, you always want to
focus on beta inside your portfolio, and the US market
was the highest beta market coming into twenty twenty five.
(24:53):
It's still very high beta, so you've got to worry
about the risk that you take on in the US,
which is really unlike free pandemic crisis periods where the
US was generally lower beta market. Interesting when stocks were rising,
it wasn't always the US just dominating the story. That's
the kind of environment that we're coming off of, So
(25:13):
an environment where the US is declining, it actually hurts
the US most relative to other global equity markets.
Speaker 10 (25:21):
In this small point in time.
Speaker 5 (25:24):
You told us that we have to watch earnings. You've
been saying that for the last couple of weeks. Fifty
s and P five hundred companies are reporting today, sixty
two are reporting tomorrow. Six point two trillion dollars in
market KAP of earnings today, nine point three trillion tomorrow.
Up to now, what's the message that we've gotten.
Speaker 11 (25:40):
The message is very mixed. I don't know if I
could paint it in a short brush.
Speaker 15 (25:45):
Yeah.
Speaker 5 (25:47):
Uncertainty, yeah, which is what I know.
Speaker 11 (25:49):
It's so not fair, but that is the word of
the day for earnings.
Speaker 3 (25:53):
And then like throwing something like Google or I don't know,
some other names.
Speaker 7 (25:56):
It's a different I don't know.
Speaker 10 (25:57):
Yeah.
Speaker 11 (25:59):
First quarter better than expected, at least so far. Most
of that better than expected is coming on account of healthcare.
That's an underreported issue. Healthcare was actually much worse than
twenty twenty four because of some accounting changes. Growth rates
are looking pretty good in twenty twenty five. That'll probably
continue alphabet last week also added the rest of the
(26:19):
beat to the index top line, and then we'll see
what happens with tech this week. I think it'll be fascinating.
The guidance, though, is overwhelming me the big story of
this quarter in my opinion. We've got record level negative
guidance and record level few companies giving us positive guidance,
even going back pre pandemic. So this is worse in
(26:40):
terms of guidance, worse than the GM is twenty twenty.
We don't go that far back in our guidance data,
so I can't tell you that much. But it's just
extraordinary uncertainty on top of expectations were so high coming
into this year that it's just really difficult for companies
to satisfy those.
Speaker 3 (27:00):
I think it's fascinating what you said about how much
like the US has been pulling back and not being
kind of the consumer of the world.
Speaker 7 (27:07):
And it's changed a lot in the last decade. So
what's the economy that replaces it?
Speaker 3 (27:11):
Like if it's the Chinese economy, But should we assume
that the Chinese market then comes along with it, because
I think most investors would say not so fast, right, So, like,
do we can we think about that like who is
the economy and market that.
Speaker 11 (27:24):
Yeah takes over for well, I think we should be
thinking about a world that's much less globalized and much
more regionalized.
Speaker 7 (27:31):
Frankly, the same thing for investing.
Speaker 11 (27:32):
And I from an investment standpoint, that creates a lot
of complications for the global most multinational countries of the
world companies of the world. But from a just a
trade dynamics story, I think what's the big story for
me over the last ten years has been the regionalization
of trade, where especially in Asia, you've got what used
(27:54):
to be the TPP now operating functionally as a very
viable trade sort of regional trade coalition, if you will,
creating economic conditions and changing economic progress in that region,
specifically creating a lot of mingling of those economies and
codependencies and those economies specifically Europe has its own, and
(28:17):
then we have the US, Mexico and Canesta, which is
a different story.
Speaker 7 (28:20):
We're gonna leave it on that note, Gina, Thank you, Gina.
Martin Adams, this is Bloomberg.
Speaker 2 (28:26):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Applecar Play
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 played Bloomberg eleven thirty.
Speaker 5 (28:44):
President Hiji Things diplomats are fanning out across the world
with a clear message for countries cutting deals with Donald Trump.
The US is a bully that can't be trusted. Johnny's
officials are racing to turn foreign governments against the US
inside a ninety day window. His granted all nations except
China to strike trade deals during a tariff reprieve on tariffs.
(29:06):
Here's what President Trump said in an interview that aired
last night on ABC.
Speaker 15 (29:11):
China probably will eat those tariffs. But at one hundred
and forty five, they basically can't do much business with
the United States, and they were making from US a
trillion dollars a year. They were ripping us off like
nobody's ever ripped us off.
Speaker 5 (29:24):
Real they have a President Trump. Last night, in an
interview that I should say aired last night on ABC
Back with us as Jennifer Welch. She's chief geoeconomics analyst
for Bloomberg Economics. She joins us from our Washington DC Bureau.
Once those packs are in place, Treasure Secretary Scott best
inessaid he wants US allies to quote approach China as
a group, giving his side more leverage in negotiations. We
(29:46):
did speak to you yesterday about who has leverage in
those negotiations. How do you look at the reporting from
our team that says that Chinese officials are looking to
turn foreign governments against the US inside this ninety day win.
Speaker 13 (30:00):
Though, Jennifer, Well, good to be back with you.
Speaker 14 (30:03):
Yes, Beijing launched this effort pretty much right after Liberation
Day to take advantage of that moment to try and
curry favor with other countries that we're facing reciprocal terrafts
from the US and begin to fill their own coalition
against DC. The challenges they're now facing is that most
of those reciprocal terrafts have been put on hold, and
many countries are far more focused on negotiating deals with
(30:24):
the US and see talking to Beijing is sort of
an unnecessary risk that could throw a monkey wrench in
those talks with Washington, and so I think we're likely
to continue to see Beijing rolling out this term offensive.
But I also think they're unlikely to get a lot
of traction at least as long as countries are focused
on those trade talks in this ninety day period.
Speaker 3 (30:43):
Well, and it's interesting because I I what about you know,
there are those countries Jennifer right, that rely on Beijing
and China for raw materials or critical minerals.
Speaker 7 (30:54):
So it's a little bit complicated at least.
Speaker 14 (30:56):
For some absolutely, and there are numbers of key US
trade partners, particularly Latin America, Southeast Asia, the Middle East,
that trade far more with China than they do with
the US. And I think that's where the sticking point
in these conversations that Washington says that they're having with
trade partners is going to be how far does the
US want these other countries to go in restricting trade
(31:18):
with China. If it's focused on key strategic sectors or
sectors that those countries are also worried about protecting from
Chinese over capacity, they might be able to make some traction.
But Beijing is threatening retaliation against any economies that work
with Washington. So it's a term offensive, but there's a
pretty heavy stick that Beijing's wielding as well.
Speaker 5 (31:38):
We got some news during the two o'clock hour that
the US has been proactively reaching out to China through
various channels seeking to negotiate on tariff issues. This came
from a post by a Webo account that's affiliated with
state run China Central Television. How do you, as an
expert on the region, as an expert on the country,
how do you look at information like that?
Speaker 2 (31:58):
Like?
Speaker 5 (31:58):
How should we take in info like that?
Speaker 14 (32:01):
Well, this is very intentionally an effort by Beijing to
promote this information, right, that didn't just come out kind
of happenstance. They're trying to put out this post to
sort of contradict the US narrative that we've heard from
the administration over the last few days, which is that
President Trump says the two sides are talking, and Beijing
has been consistently saying, no, we're not. And I think
(32:21):
Beijing's trying to project this are of strength, that they
aren't running to the US asking for a deal, But
it's the reverse. I think the reality is more complex.
These two countries are continuing to have daily diplomatic negotiations
and conversations. That's just part of being major players that
have to talk to each other on a pretty frequent basis.
(32:42):
But whether or not they're actually having what we would
consider to be serious trade negotiations that are moving us
towards a deal. I think that is less likely at
this moment in time, just given how far apart the
two sides are and the fact that they can't even
seem to agree on whether they're having a conversation.
Speaker 3 (32:57):
How much though Jennifer is all untimately saving face maybe
on both sides for both President g and President Trump,
And I just wonder how much of this dance is
to be expected, but that when all a said and done,
they're going to come together or is that a bad
assumption that they will work out something that isn't so
onerous now?
Speaker 14 (33:19):
I think you're right, saving face is a really key
driver and factor at the moment in time. Neither side
wants to look weak, Neither side wants to look like
they're going to blink. That's why both of them are
saying the other is definitely going to be the one
to call me.
Speaker 13 (33:31):
We're in the strong.
Speaker 14 (33:32):
Position, and I think the challenge is how long are
they going to be able to hold that position before
the economic pain of these terrafts really starts to bide
in and someone has to be the first to kind
of make the first move to pick up the phone.
Speaker 13 (33:45):
Realistically, I think.
Speaker 14 (33:45):
What's going to happen is that meetings are going to
start at a lower level, at more of a working level,
and move their way up to a leader level conversation,
which is not how President Trump likes to do business.
Speaker 13 (33:55):
He wants to deal directly with his counterparts.
Speaker 14 (33:58):
That also tends to be a little bit of a
faster way of kind of shortcutting the bureaucratic process and
getting to an outcome.
Speaker 13 (34:04):
So I think you combined all these.
Speaker 14 (34:06):
Factors, and what that suggests is that this is likely
to be a prolonged process, in part because it probably
will have to start at the bottom and work its
way up.
Speaker 5 (34:14):
I want to talk I want to home in on
that pain point a little bit, because we talked a
little bit about this yesterday with you, But in terms
of the pain that these different economies could feel, it
does seem like the Chinese economy is better positioned, at
least from a consumer perspective, to experience slash withstand pain
than perhaps the US economy. The US consumer is that fair?
Speaker 14 (34:38):
I think certainly politically they have a better sort of
hand of cards to deal with. Right, Beijing has far
superior ability to shape public opinion and public sentiment, or
at least the voicing of that, than the United States does.
They're also not going to be as responsive or sensitive
to the sort of feedback of the ballot box that
at least many of President Trump's allies in Congress will
(34:59):
be year with the midterms.
Speaker 13 (35:01):
But I do think that this.
Speaker 14 (35:02):
Is likely to deal quite a bit of economic pain
to China, and already from the factory data that we
see from April is indicating reduced factory activity that these
terrorists are starting to have a bite. And that's before
really we expect the full impact of the terrorists has
come into play. That's probably at least in a month
or two out as stockpiles and as all kind of
the forward training that a lot of companies were doing
(35:23):
in advance of terrafts begins to really hit. And that
I think really underscores Beijing's interests in this foreign charm offensive.
It is existential for them to prevent other countries from
blocking off their markets to Chinese goods, because the loss
of the US market is going to be significant pain.
But it needs those other markets even more to deal
with that pain.
Speaker 5 (35:44):
What about potential pain on the US front and pain
in the in terms of perhaps empty shelves or people
not being able to order or get what they want
when they're used to it.
Speaker 13 (35:54):
No, I think you're exactly right.
Speaker 14 (35:55):
I think first, the line from the administration that these
terfts aren't going to be passed through to US consumers
looks extremely unlikely, and some of the initial data suggesting
that's not true. I mean, you look at, for example,
Chinese e commerce giants, and they're quite clearly marking up
their prices.
Speaker 13 (36:09):
That US customers would have to face for those goods.
Speaker 14 (36:12):
And I think, second to your point, there are a
lot of goods where the profit merchants are so thin
that with higher prices coming out of their inputs from China,
they're just not going to be able to manufacture them anymore.
Speaker 13 (36:21):
So good news bad news story.
Speaker 14 (36:23):
That maybe that won't have as much of an inflationary
impact if you're not paying higher prices because they're just
not able to buy anything, but obviously for customers and
for manufacturers that rely on those inputs, that is very
much a bad news story, I.
Speaker 7 (36:35):
Guess, Jennifer.
Speaker 3 (36:36):
One of the things that I think about a lot
is that in the last thirty years it's been all
about US multinationals, just all multinationals, global multinationals around the
world looking to be involved in the Chinese market.
Speaker 7 (36:49):
So it's interesting to kind.
Speaker 3 (36:50):
Of see where we are in a relatively short timeframe
of such a contentious relationship between US and China. Having
said that, I also think about everybody has a price right,
and I wonder these nations that China might be reaching.
Speaker 7 (37:05):
Out to the reporting that we are doing.
Speaker 3 (37:09):
To the surprise of Indian officials, China showed a market
change and approach to a contentious border issue during a
meeting last month. According to people familiar other signs of
a thought between China and India, Prime Minister Modi plans
to go to Beijing this year for the Shanghai Cooperation
Organization Conference. China offered to buy more from India to
help New Delhi reduce the trade deficit. Like I do,
(37:30):
wonder are there things that China can do that really
move the needle when it comes to relationships that exist
now and maybe bring China closer to other parts of
the world besides the United States.
Speaker 14 (37:46):
I think for many countries they're going to be looking
at extracting as much as they can from the US
and China and simultaneously shielding themselves as much as they
can from retaliation. I think in India's case, for example,
after last week's terrorist attack, rising tensions Pakistan, which is
a close ally of Beijing. Now, if I'm New Delhi,
I'm looking to Beijing to say, Okay, what are you
going to do to reign in your friend over here?
(38:08):
And that might be a real test of how far
China is willing to go to secure some of these
additional friends beyond the United States.
Speaker 3 (38:15):
What do you tell folks who say, all right, where
are we in a year in two years? When it
comes to global trade and in particular the relationship between
US and.
Speaker 14 (38:25):
China, I think the US China relationship is still likely
to be extremely contentious, whether you're looking a year or
two from now or whether you're looking five years from now.
At this point, we're in a structural rivalry, and whether
it's President Trump or someone else in the White House,
we're likely to see a continuation of these US policies
that are taking China on as a strategic rival. And
(38:46):
indeed we saw that continuity from the first President Trump term,
through the Biden administration, and now onto the second Trump administration.
I think though, in terms of the trade relationship, there
is a possibility that they'll reach a deal at least
within the next few years. But I think that's going
to be a very much a long process to get there,
and the scope of the deal is really unclear at
this point. Is it going to be a Phase one redux?
(39:08):
Is it going to be a larger structural deal along
the lines of what Secretary besn't and that Phase two
negotiation that never happened was supposed to achieve. I think
the latter is a lot less likely, but maybe something
on the former.
Speaker 3 (39:19):
Hey, just about ten to fifteen seconds, you said it'll
be contentious, but will it also be connected US and China?
Speaker 7 (39:25):
Still?
Speaker 14 (39:27):
I think these two economies are so interconnected it's going
to be hard to sever all of those links, at
least in the short to medium term. But that means
that there's a lot more attention that could happen between
now and then as both economies try and work towards
that de risking.
Speaker 3 (39:39):
All right, great to do a deep dive with you
on this. The US China relationship Jennifer Well, she's chief
geoeconomics analyst for Bloomberg Economics, joining us from our Washington
DC bureau.
Speaker 16 (39:52):
I'll bet you let me drive.
Speaker 2 (39:53):
Oh no, no, no no, this is not a toy, honey, Please,
I'll do the driving.
Speaker 3 (40:01):
Wait, I don't want to drive.
Speaker 5 (40:04):
It's a good question time.
Speaker 1 (40:09):
This is the drive to the clothes Punk's amusing well
Dry runs on Bloomberg Radio.
Speaker 3 (40:15):
All right, TikTok, everybody, just about eighteen minutes to go
until we wrap up the trade on this Wednesday.
Speaker 7 (40:21):
We've got some big earnings coming your way.
Speaker 3 (40:22):
Meta, Microsoft, Qualcomm, there's a whole big drop eBay, MetLife, KLA, Corpse, Sorr.
Speaker 7 (40:31):
I had a little Robin hood I still haven't said it.
Speaker 3 (40:34):
Jeezcake Factory, Yeah, four fifteen and that's coming your way.
But really it's some of the megacap tech names that
we'll be looking for. Charlie just breaking down the numbers.
So we're definitely a lot more bullish than we were
at the beginning, but we're still down across the board
when it comes to the major equity average.
Speaker 5 (40:50):
Between Tuesday, Wednesday today and Thursday, we are hearing from
nearly one third of companies in the S and P
five hundred. That would be one hundred and fifty six
companies today point two trillion dollars.
Speaker 3 (41:02):
It has just been the strangest I feel like earning season.
I know, we just talked about earnings with Gina Martin Adams,
but I feel like we're usually so laser focused. We are,
we break them down, but it just feels like everything
coming out of Washington in terms of US China trade,
like this will determine, you know, so much in terms
of the global economy, so much in terms of the
US economy and earnings going forward. So I feel like
(41:22):
that to some extent is really overshadowing the earnings.
Speaker 5 (41:27):
Yeah, Gina reminding us that guidance is the big story.
A record level of negative guidance and a record few
companies giving a positive guidance. Let's see what Brooke may
has to say about it. She's managing partner at Evans
may Well. They've got about one point three billion dollars
in assets under management. She joins us once again from Indiana.
She's back with us, Brooke. I do you want to
start with the earnings view from you? Again? Gina reminding
(41:48):
us that.
Speaker 16 (41:48):
Is what to watch.
Speaker 5 (41:49):
It's been mixed, to say the least. There's a lot
of nuance there. How would you characterize or generalize what
we've heard from companies thus far?
Speaker 17 (41:57):
Mixed, that's probably the best way to describe it.
Speaker 16 (42:00):
We've seen a broad array of earnings, and to your
earlier point, guidance.
Speaker 17 (42:04):
Guidance is what's moving the market.
Speaker 16 (42:07):
Look at Snap for example, today, they're getting penalized because
they really weren't able to give guidance. So you know,
as you mentioned, you know, the big the Mac seven
make up a significant amount of the market cap. And
I'm eager to see what Microsoft and Meta have to
say today earnings expectations. We think Microsoft will be up
about ten percent, Meta's earnings up about eleven percent.
Speaker 17 (42:30):
But again, that guidance is going to be very important.
Speaker 3 (42:32):
How many portfolio options are you giving your clients at
this point and saying, hey, if the economy goes this way,
this is probably how you want to invest, and if
we fall into a recession or stagflation, this is how
I'm just curious how you are gaming that out different scenarios.
I know you do probably anyway in terms of risk tolerance,
but in this moment in time.
Speaker 7 (42:54):
How does that kind of factor in.
Speaker 17 (42:58):
We're staying mostly invested.
Speaker 16 (43:00):
We have raised our cash levels somewhat, and we've also
made a rotation a few months back into gold as
kind of a hedge against more volatility.
Speaker 17 (43:10):
So we're staying invested, but we're taking more of a
cautious approach.
Speaker 16 (43:14):
We've sold off a few of our names that have
higher pees and are going to be more sensitive to
the volatility of a struggling economy, and we've moved into
some more defensive names, and so we've been proactive and
taking these steps, but really we're trying to err on
the side of.
Speaker 17 (43:30):
Caution right now.
Speaker 5 (43:31):
What are clients asking you when your phone rings, when
you look at your inbox? What do they want to know?
And I would imagine that this week and last week
is less busy than it was at the beginning of
the month.
Speaker 16 (43:44):
Absolutely they want to know where are we going next?
And you know, as we all know, the word of
the day is uncertainty. And it's very difficult, very difficult
right now to project where the market might end because
we don't know what earnings are and you know, past
where we think the market's going. We look at earnings
and we apply a multiple to it and there we go.
(44:05):
We get our ear in price target. So right now
it's it's difficult. We've pulled our year in price target
because there is so much variation in what can happen next,
and so we're telling clients we're setting the expectation expect
volatility at least for the foreseeable future, the next few months.
It takes about two to three months once tariffs are
imposed to actually see them feed through to the economy,
(44:28):
and so we don't know what that's going to look like.
You know, whether it's going to be inflationary. If so,
how bad is it going to get? And so right
now we're just setting the expectation expect volatility. We're going
to stay mostly invested, and if you know right now
that you're going to need money in the upcoming year,
tell us we'll raise the cash.
Speaker 17 (44:46):
Set it aside.
Speaker 16 (44:47):
You know, the market's only about six percent off here
to date, so it's not a bad time to play
it safe.
Speaker 5 (44:52):
Oh, that's interesting to hear. The reason I ask is
because about a week ago, no, it was it was
last Friday, Adriana Machi joined us from San Francisco over
at Strategic Wealth Capital. And I know this kind of
blew you away, Carol, she said, she told you, she
told us that she actually had clients that were talking
about getting out of US assets and they were really
(45:13):
freaked out.
Speaker 3 (45:14):
Yeah, she also mentioned somebody who was like looking to
move as well. But it was it was something we
really hadn't heard. And I think it's safe to say, Brook,
I get it. We've all been doing this a long time.
And you hear, you know, long term perspective, keep your
eye on the ball. What are your long different objectives?
Speaker 7 (45:28):
But if things are dramatically.
Speaker 3 (45:30):
Changing in terms of you know, geopolitics, trade like things
could potentially impact US companies in a big way. And
that is where a lot of investors have been placing
bets because it paid off the last few years, right
or for a long time. So I just do wonder
(45:51):
how you start to think about that potentially.
Speaker 17 (45:55):
You know, there's a risk to.
Speaker 16 (45:56):
Being out of the market, like we saw a few
weeks back. The market can turn on a dime and
it can rally based on a few bits of good news,
and you missed that opportunity if you're sitting in cash,
and when you look back over the last few years,
there's been a lot of a lot of potential factors
in the market and in the economy that very well
(46:16):
could have led to a recession. In fact, there was
a lot of banter about the R word and recession
coming that never that never really came to fruition. So
we think it's more appropriate to take a defensive stance
than it is to reduce our equity exposure in favor
of cash or other asset classes, because it can move quickly.
Speaker 17 (46:37):
You know, look at the pandemic.
Speaker 16 (46:38):
You know, the market cratered and in really just a
few weeks time and then rallied and we've made back
what was lost in a relatively short period of time.
The good thing is us businesses figure out how to
make money in all environments. And while it take might
take a recalibration, you know, a slong economy and inflation
(46:59):
and you know, TIFFs, it's definitely going to have an impact,
but you don't know at what point things are going
to get better, so you do have to stay invested.
Speaker 5 (47:06):
Well, okay, so to the opposite of that Brook, If
you raise cash for clients if they needed in the
next year, where do you keep that cash so it
does earn something. And how much do you have on
the sidelines right now? Just in thirty seconds.
Speaker 16 (47:20):
Money market right now, A lot of the a lot
of the discount brokers, you can get four and a
quarter on the money market, So you're earning something. It's
not like it's just sitting in cash. And and really
in our portfolios right now, we've got about five percent
allocation to cash. So there are some but it's not
double digits.
Speaker 5 (47:40):
Four four and a quarter percent Carol on the year, Yeah,
for the year. You know that's annualized.
Speaker 7 (47:45):
Of course I would taken that.
Speaker 5 (47:46):
Yeah, beats you know, beats the year to date. I
guess down five point seven three percent for the S
five hundred.
Speaker 7 (47:52):
Still though, if we go take the two year, you know.
Speaker 5 (47:55):
When in down, zoom out, that's what Carol Masser does, right, That's.
Speaker 16 (47:58):
What you do.
Speaker 7 (47:59):
Yeah, like you But we shall see, we shall see.
Speaker 5 (48:02):
You're reminding us upward bias for the equity market.
Speaker 1 (48:05):
You know, my husband and I.
Speaker 3 (48:06):
Talk about this. It's like, go back ten years, where
was the market? Yeah, go back five years, where was
the market? We got to run Brook Bay Pee Wealth,
managing partner at Evans Maywealth about one point three billion
in assets under management.
Speaker 1 (48:17):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
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Speaker 13 (48:27):
Afternoons from two to five pm.
Speaker 1 (48:29):
Eastern on Bloomberg dot Com, the iHeartRadio app, tune In,
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