July 8, 2025 • 35 mins
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President Donald Trump vowed to push forward with his aggressive tariff regime in the coming days, stressing he would not offer additional extensions on country-specific levies set to now hit in early August while indicating he could announce substantial new rates on imports of copper and pharmaceuticals.
The posturing on social media and at a Cabinet meeting on Tuesday came after traders initially shrugged off a series of letters and executive actions Trump issued Monday, pushing back the deadline for his so-called “reciprocal” tariffs while announcing the latest rates he planned for more than a dozen countries that had not succeeded in brokering quick trade agreements.
That changed Tuesday as Trump signaled a renewed determination to push ahead with his plans to heavily tax foreign imports. Trump said he would offer no additional delays on the country-specific tariffs, despite the previous night allowing he was “not 100% firm” on his August 1 deadline.
He said he would impose a 50% rate on copper products being sent into the US, surging futures of the commodity to their largest intraday gain in data going back to at least 1988.
Today's show features:
- Bloomberg News Economic Statecraft Reporter Joe Deaux on President Donald Trump's latest tariff announcements
- Libby Cantrill, Managing Director and the head of public policy for PIMCO on corporate positioning based on changes to White House trade policy and tariffs
- Ellen Wald, President of Transversal Consulting and Senior Fellow at the Atlantic Council on the global energy market and this week’s OPEC+ meeting
- Bloomberg News Managing Editor for Global Consumer Tech Mark Gurman on Apple’s problems in the AI arms race
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Transcript
Episode Transcript
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Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Business
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(00:23):
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Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:32):
Well, President Trump said he planned to implement a fifty
percent duty on copper imports as part of a set
of looming sectoral tariffs, while also indicating he could offer
pharmaceutical manufacturers at least a year before applying a crippling
two hundred percent tariff on their foreign made products. We've
got Jode with US Economic Statecraft reporter for Bloomberg News.
(00:53):
He joins us here in the Bloomberg Interactive Brokers studio.
Before you covered economic statecraft, you covered metals and mina
And that's where I want to start with you because
we have these global Correct me if I'm wrong, But
global minerals companies are copper producers. Report Macmaran, for example,
among the best performers in the going the best performing
(01:15):
stocks today, I should say, but These are global companies
and they have mines all over, right, So if you
put a fifty percent tariff on copper, then copper you
import will be more expensive. So it could affect companies
that even if they're American companies, if they import it. Right,
What am I missing here now?
Speaker 3 (01:32):
I mean, this is the debate in the industry. Right.
So many months ago Trump said We're going to do
copper tariffs, and it was just like one of thirty
things he said in an Oval Office conversation, right, and
copper came out of nowhere. That was a big deal
because steel on aluminum we did eight years ago. Copper
never hit like that roster. So for it to hit suddenly,
(01:53):
that was a big deal in the metals of mining industry.
Because the United States consumes about one point six million
tons of copper, eight hundred and fifty thousand tons of
that is domestically produced, so you're still talking about half
of your consumption coming from abroad. That's a big question
mark for consumers, right. Think about it, like, copper goes
into literally everything, I mean almost literally everything. It is
(02:16):
ubiquitous in the United States, it's ubiquitous everywhere in the world.
We rely on a major ally for those imports Chile.
Thirty eight percent of our imports of our come from Chile.
That's a that's a big deal. But they're a great
trade partner, right, I mean, maybe the best trade partner
in South America. The idea that you're suddenly going to
(02:37):
be putting a fifty percent tariff on those imports is
significant because ultimately the consumers are not just you and I.
It are the It is the fabricators, right, the people
who make copper pipes, copper wiring. They have questions too,
And those copper wire producers, for example, might have something
to say saying, well, hold on, we produce in the
United States. We are major to or majorly important in
(03:00):
terms of actual revenue, in terms of actual profit because
it's more downstream. That's the ballgame. So I don't know
how this ultimately plays out. The President said it's a
fifty percent tariff, but what does it actually look like
on paper? Do we get fifty percent across the board?
Do we get something that says, well, it's a fifty
percent tariff on raw copper imports, and it's a lower
(03:23):
percent tariff or a higher percent tariff on copper products
are there some sort of export controls?
Speaker 4 (03:28):
These are the.
Speaker 3 (03:29):
Questions that the market actually cares about. And I think
for your listeners who are saying, Joe's all over the place,
so this I can't keep up with it. I think
what I'm trying to say to you guys, and to
anybody who's listening who's a smart person on Wall Street,
it is complex. And to come out and just say
across the board fifty percent tariff on copper doesn't say
a whole lot to the people who trade this thing.
(03:49):
They still need more detail.
Speaker 5 (03:52):
I think this is very helpful to smart people on
Wall Street.
Speaker 4 (03:55):
I don't think you're all over the place.
Speaker 5 (03:57):
I think you're hitting the nail right on the head.
But I mean when it comes to the companies like
the US copper companies, this is good for those stocks
or not necessarily.
Speaker 3 (04:12):
To be determined. Right back to the point, these copper
companies are global. So Freeport mcmaran's biggest mine is not
in the United States. They do mine here in the
United States, but the biggest mine is not here. So yes,
on one end, it's a benefit for them, but on
the other end, it is potentially harmful. And so you
(04:34):
ask yourself. What are the conversations happening inside the c
suite of a place like Freeport Macmaran or Rio Tinto,
where they're saying, okay, great, so this helps our operations
in the United States, but we have all of this
other production outside. We had many customers inside the United States,
and we're trying to figure out how to square away
that issue.
Speaker 5 (04:54):
How does the supply chain work? Obviously there's still a
lot of uncertainties. But is this a scenario where the
tariff ultimately would be likely to get passed down to
the consumer if this is a material that is as
you've said, in like literally everything, phones, bars, et cetera.
Speaker 3 (05:13):
I guess we'll have to see. I think this has
always been the issue with even steel on aluminum less.
How much did the end consumer actually end up paying
more for various products? Like we heard way back in
the day, you know, in twenty eighteen, twenty nineteen, people
who were buying new windows for the houses you know
have the window frames are all aluminum. They were paying
(05:34):
more for their window frames. But it's not as clear if,
like you say, buy an iPhone, right, like, how much
coppers in the actual iPhone. I don't have the number
off the top of my head. But I think we're
gonna have listen, We're gonna have to get the actual
details of what actually gets put into the section two
thirty two decision, and then we're gonna if, if it
whatever goes into place, we're gonna have to see how
(05:55):
it actually impacts these downstream consumer products, all the way
down to wiring in your house.
Speaker 2 (06:00):
I want to talk about economic statecraft, and there's a
paper from the Hoover Institution about this from hr McMaster
who served in the Trump administration, Andrew Grotto as well,
and they write that when a country uses an instrument
of economic statecraft, it aims to produce an economic effect
within its domestic market or in global markets to achieve
(06:21):
a geopolitical objective. Economic statecraft, in the context of your beat,
I imagine, has a lot to do with the United
States and what the United States is doing to achieve
certain outcomes. Yeah, how's it going right now?
Speaker 3 (06:37):
It's a tough call, right, I mean, listen, I think
it is easy. We've all known Donald Trump for a
very long time, and we know the bluster that he
puts out into the market and the different things he
says there are things he says that there are a
lot of smart people who say, you know, he's actually right,
it's just the way he said it maybe is not
(06:58):
the way to communicate it, right. But at the same time,
there are things that you do that aren't actually good, right,
like these reciprocal tariffs obviously were received very terribly by
the United States markets and global markets, and I think
we've seen that play out over the past three months
in the markets. On the other hand, if you look
at something like rare earth critical minerals, what we saw
(07:19):
between the United States and China was the negotiation for
the trade agreement between the United States and China actually
became about rare earth magnets, these permanent magnets that are
needed in all sorts of the electrification and ev vehicles
and everything else that is important. And there is a
concern among automakers for it. Has come out and said
it very publicly. We reported a few weeks ago that
(07:40):
quietly many aerospace related companies are coming out and saying
there's concern around this. When they say there's a concern,
they're saying, we do realize maybe we need more domestic
production of these things. Of these rare earths and these
rare earth magnets, and so in that regard, that's just
an example of where maybe Trump is right. Maybe you
do need to build up some sort of domestic industry.
(08:01):
I'm not saying you just build the industry you take
it all away from China. But like an executive once
told me years ago, five years ago, you know, Joe,
the point isn't you take fifty percent. You know, China
has eighty percent market share in the world. It's not
that next year or five years from now you take
fifty percent of that market share. It's you take one
to two percent market share each and every year.
Speaker 2 (08:22):
By Little Jodoe, Economic stake craft, reporter for Bloomberg News,
Joining us in the Bloomberg Interactive Brokers Studio. Check out
his work and more on the Bloomberg Terminal and at
Bloomberg dot Com.
Speaker 1 (08:33):
You're listening to the Bloomberg Business Week Daily podcast. Catch
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Speaker 2 (08:48):
Prow Investors are trying to weather this and figure it out.
Let's bring in Libby Cantrill, managing director and head of
public Policy at HIMCO. She joins us here in the
Bloomberg Business Week Studio Libby, I want to start with
trade police seeing tariffs, and then we'll get to the
president's domestic policy.
Speaker 6 (09:02):
Win.
Speaker 2 (09:03):
I'm going to ask you the same question that I
just asked Adam for investors, though, Is this a moment
of clarity?
Speaker 7 (09:10):
I'm not sure if it's a moment of clarity. I
mean think in some ways it reinforces the president's conviction
around tariffs. I could wholeheartedly agree with what Adam was saying.
I mean, I think that there's sort of this view
in the marketplace that Trump doesn't really mean this. There's
sort of this whole taco meme, right, that Trump always
chickens out. I think on trade in particular, that has
not been the case. If you just look at where
(09:31):
the effective tariff rate is right now on all US imports,
the average effective tariff rate is around fourteen.
Speaker 2 (09:36):
Percent, So that's up from what three percent or.
Speaker 7 (09:40):
So as of January. So regardless of what happens on
August first, and we do think that there will be
some sort of sacrificial lambs, if you will, but I
think the sort of the signal from the noise here
is that tariffs are already high and they are likely
to go higher.
Speaker 2 (09:55):
So you don't think the extension to August first, that
we learned yesterday and even got more information on today,
you don't think that's some people are saying that's tacore.
Speaker 7 (10:06):
Is it more of a windows for further negotiation. Sure,
but I do think that maybe even with some of
our negotiating partners, they weren't taking Trump very seriously. And
I think this is in many ways he's trying to
reinforce that is, this is not just a threat. And again,
I guess we from from an investor perspective, the reason
why you care about tariffs is you care about what's
(10:27):
going to happen with the economy, the macroeconomy, with companies,
with inflation, and in the case of bonds in particular.
And I think that the bottom line here is that
tariffs are already high. So regardless of what happens on
August first, we will start We do think we'll start
seeing some fragility from an economic perspective. One thing that
has not been mentioned that I do think is worth
(10:48):
maybe reinforcing for investors is that this is getting a
little wonky. But the statute that the President is using
to impose these tariffs something called AIPA, the International Economic
Emergency's Powers Act, that has already been found in court
to be unlawful to impose tariffs. We do think that
the Supreme Court will likely hear this, and they could
(11:08):
also decide that this is unlawful, meaning that come December,
whenever the Supreme Court were to rule on this, if
they were to overturn this, all of these tariffs, the
reciprocal tariffs, the ten percent baseline tariff, all of those
would would go away. So I think this is something
that's also important is that while we think that the
President should be taken bost seriously and literally in terms
(11:31):
of his tariff threats, we think he really believes this.
He really does have conviction and commitment to sort of
reshaping the global trading order. There is a possibility and
probably a high possibility that come December or January, whenever
the Supreme Court does hear this, is that they could
overturn this, and that could obviously cause does another inflection point. Now,
the last thing I'll to say on this again kind
of wonky is that the president has other tools, other
(11:53):
legal tools that he can use to impost tariffs. One
is what's called Section two thirty two, and that is
going to be the tool that he's going to impose
things like the copper tariffs. He's already imposed aluminum and
auto tariffs, not using that tool.
Speaker 5 (12:06):
Do you think that's why the market has been relatively
calm in the face of all of these headlines back
and forth about the different teraror frates, that that investors
are maybe holding out hope that we won't have that
much of teriff policy change coming the end of the year.
Speaker 7 (12:21):
The equity market, right, I mean, of course we're a
bond house, and so we look at the equity market,
but I think bonds are probably taking the president a
little bit more seriously. I think the equity market, you know,
as trying, is wanting to believe what it wants to believe,
and I do think there is this assumption that President
Trump doesn't necessarily mean that. And of course, I mean
to the credit of the equity market, we haven't necessarily
(12:44):
seen the pass through from tariffs to either consumer prices
or you know, hurting sentiment necessarily, so you know, there
has been reason to be bullish, and of course we
just got the one big, beautiful bill done. There wasn't
much time for celebration of that in Washington or in
the markets for that matter. I think it's a little
(13:05):
surprising that President Trump isn't spiking the football on that
one a little bit more, because that is a huge accomplishment, honestly,
REGARDSS what you feel about the bill, to get something
that big over the goal line with such a small
majority is a real accomplishment.
Speaker 2 (13:18):
Well, we only have a minute left with you. Let's
start talk. Let's talk a little bit about that and
the idea of widening deficits. And I'm curious, given the
fact that Pimco's a bond shop, why do you think
that we're not seeing bonds react to the idea of
this wide Well, you have, and I.
Speaker 7 (13:32):
Think you have seen over the last six months. You've
seen a steepening of the Yeel curve. You've seen obviously
that you know, April and ninth sort of temper tantrum,
if you will, and the long bond selling off by
a very significant amount.
Speaker 2 (13:45):
So I think there's goes to tearra over tariffs.
Speaker 7 (13:47):
Wasn't it that was over tariffs, but it was I mean,
I think I had to do with the fact that
there was already questions about about deficits, about fiscal profligacy,
about the institutions at all of those things. You know,
I think you have of I think that there are
a couple of things. One is that the US dollar
continues to be the reserve currency, that treasuries continue to
be the reserve asset of the world, and that real
(14:10):
yields also look pretty good. I think our view is
that there's probably more value and the kind of the
belly of the curve, the shorter durations of the maturities
of the curve versus long out. But you have seen again,
it depends on where on the youal curve you're talking about.
You have seen the long end. I think digest some
of these, you know, some of these episodes.
Speaker 2 (14:26):
Libby Cantrell, Great to see you, Thanks so much for
joining us. Libby Cantrell's managing director and head of Public
Policy at PIMCO, joining us in the Bloomberg a Business
Week Studio.
Speaker 1 (14:37):
This is the Bloomberg Business Week Daily podcast. Listen live
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Speaker 2 (14:55):
I want to talk oil and energy. The oil fluctuated
as traders wade President Trump's latest wave of tariff threats
against French tensions in the Middle East, West Texas Intermediate
crewed flip between gains and losses, hovering around sixty eight
dollars a barrel. This is a key psychological level that
prices have only briefly breached in recent weeks. Meanwhile, another
ship in the Red Sea came under attack. Also, traders
(15:19):
have to understand exactly what's happening with tariffs to get
an idea for demand. Watching all of this is doctor
Ellen Wald, president of Transversal Consulting, also Senior Fellow at
the Atlantic Council. She's also the author of Saudi Inc.
She joins us from Boca Ratona, Florida. Doctor Wald, always
good to check in with you, especially on a day
such as today. I want to start with tariffs and
(15:40):
really the way that traders are trying to understand oil
demand for countries that have been had tariffs implemented on them.
Speaker 4 (15:48):
How does this.
Speaker 2 (15:49):
Change the view of oil demand in the coming weeks, months.
Speaker 6 (15:52):
And years. It's kind of a contrary to what you
might think it would be. Essentially, the idea is that
if tariffs are going to go up, then that will
mean lower economic activity in terms of trade. So if
a product you're trying to buy from another country has
a very large teriff on it, you're less likely to
buy that product. That means there will be lower shipping,
(16:16):
you know, less fewer products being shipped, for example, and
therefore lower demand for the energy needed to ship those products.
So the idea is that then if demand is going down,
then then oil prices will go down. But if you know,
terifs are lower and lots of people are buying lots
of stuff from all over the world, then demand will
(16:36):
be higher and therefore oil prices will rise. So it's
a little bit of the opposite of what you would
think it would be, but that's generally how we con
sceptualize the way that teriffs impact oil prices.
Speaker 5 (16:50):
I want to talk about OPEC as well, because they're
increasing oil output, increasing supply, just to help us understand
in context, how investors are supposed to understand what that's
going to mean for worldwide supply and prices.
Speaker 6 (17:05):
Yeah, it's a very interesting situation we're in right now
because we're coming off of this Iran Israel war where
prices kind of shot up and then went down, and
then we had this kind of resolution sort of which
led to essentially eliminating the war premium that had been
on prices, so prices were down. Now we're coming off.
(17:26):
Then we head right immediately into this OPEC meeting where
OPEK decides to increase more than probably was expected in
most analysts. I think the market expected that OPEK was
going to increase maybe by another four hundred thousand barrels.
Today they increased that. It's now almost five. It's closer
(17:48):
to almost six one hundred thousand barrels a day starting
in August, and then there are some pretty sure signs
that they're going to increase again in September, so that
means we're going to see more supply on the market.
I think they have some pretty pretty good ideas that,
at least in Ope's mind, that demand is going to
be getting going higher, and so that's why they're looking
(18:11):
to increase but they've also it shouldn't come as a
huge shock because they've made no secret of the fact
that they've wanted to unwind these voluntary cuts for a
long time, and so this is essentially their plan. I
don't think we'll see any deviations from it. And it's
supposed to send oil prices lower, but then you have
you know, it didn't actually send them as low as
(18:33):
we might have expected. But again, I think we're going
to see another increase from them next month.
Speaker 4 (18:40):
So you've got that on.
Speaker 6 (18:41):
One hand about this tariffs. On the other, I think
that the pressure is really on to get deals done,
and if they can get deals done, then that indicates
the demand is going to go up. And so there's
really a lot of pressure now to see if we
can get these deals done. Can they get done in
less than a month? Not so sure if that's even
really feasible at this point.
Speaker 2 (19:01):
But doctor Wald, even if deals get done, if high tariffs,
say you know, twenty to twenty five percent, thirty percent
in some cases, if those remain in effect on these
countries even after a deal, that's bad for demand, right, It's.
Speaker 6 (19:16):
Yes, it's not good for demand. I think the idea
is that if we see trade deals being done and
the tariffs are going to the tariffs will go away essentially.
And I think that in a lot of cases, we've
seen these terriffs get implemented and then say, you know,
five days later, or less than five days later, they
they get you know, taken back down. I think what's interesting, though,
is you have to remember that people might be putting
(19:37):
in orders now for things that would come in a
month or two months or three months, so they're having
to plan ahead, and all of this uncertainty basically screws
up everyone who's trying to buy something or sell something
from overseas. So anyone you know, who's who's dealing in
global trade, which is essentially almost any business, is facing
a massive amount of uncertainty right now. And you know,
(19:58):
demand does not like uncertain and so I wouldn't be
surprised if we see prices start to decline in the
short term, particularly because of all of this uncertainty general
economic uncertainty surrounding the tariffs and tariff issues and trade negotiations.
Speaker 5 (20:14):
Doctor World, what are your current views on the state
of geopolitical tensions. I know you had written previously about
potentially the Strait of Horror moves closing and how that
would affect the global economy and oil output. Should investors
still be concerned that there are more geopolitical tensions to
come that would affect the oil market in the near
(20:35):
term or is that risk not really present anymore.
Speaker 6 (20:39):
I think there's always a risk of geopolitical tensions, especially
when you're talking about countries like Iran and Israel and
other countries in the Middle East. You're talking about China,
for example, the risk is always there. I do think
that the risk that the Strait of horm moves could
be closed, which is not something I think is really
a feasible thing to do at the moment, but it
(21:00):
could be the safety of shipping through the straight uform
wars could be threatened at some point. I think that
that likelihood is way far down now. As long as
iron Is, you know, is exporting oil, they really don't
have any cause to threaten any other shipping. And President
Trump has made it pretty clear that yeah, he gets it.
(21:21):
China's going to keep buying this oil. Iran's going to
keep shipping it to them. They're doing what they can
to try to thwart it. According to sanctions, but at
some level they're not gonna be able to stop it.
I think he wasn't saying he's going to relax sanctions,
but it's going to happen. He knows it's happening, and
in some respect it does keep Iran from kind of
having nothing to lose as long as Roan can sell
(21:43):
to China. In some respect they have skin in the game.
They're not going to really try to hurt anyone else
going through the straight up form moves. I do think
that the Red Sea is an ongoing, serious issue that
really demands a lot more attention than has been given.
And the fact that this is a really important waterway. Yeah,
it's not the only way to ship oil across the world.
Speaker 4 (22:04):
It's a lot you can go around, you mean.
Speaker 6 (22:07):
Go round Africa, but it's a lot easier to go
through the Suez Canal. And the fact that this is
still an ongoing issue with ships being attacked there. I
think that's a real threat to all of the global shipping,
not just to the oil market, and that it really
does it really is a much more serious issue than
perhaps the market is taking into account.
Speaker 2 (22:29):
So that's the international view. I'm wondering about the domestic view,
and certainly these are all tied together when it comes
to the global energy market. But when we think about
the United States and the president's stated goal of more
energy production and more drilling here in the United States.
In fact, we did hear from the Energy Secretary during
the cabinet meeting talking briefly about this and about oil
and gas.
Speaker 4 (22:49):
Is sixty eight.
Speaker 2 (22:49):
Dollars a barrel, especially just a few weeks after oil
was fifty eight dollars a barrel here in the US.
Is that a high enough price for companies in the
USA US to start exploring more, to start drilling more,
to start increasing production, especially given that we saw that
increase in output from OPEC plus over the weekend.
Speaker 6 (23:09):
Yeah, I think that's a really good question. I think
that for some companies it's enough, and for others it's not.
And I do think that the real question here is
if the price of oil is going to be remaining
around that sixty eight dollars barrel mark, what else can
the government do to encourage drilling that isn't necessarily related
to the price of a barrel of oil? What can
(23:32):
they do to make it easier for these companies to
deal with regulations, what can they do to decrease the
length at the time and the significance of lawsuits for example.
These are all things that companies spend a lot of
money and time dealing with in order to just get
to the place where they can even drill. And so
what the government can do is the government cannot change
(23:52):
the price of oil all that much. They can't you say, oh,
we want it to be high enough, this high so
that everybody feels comfort, you know, drilling more. But they
can't change that. I mean, I guess technically they could
set you know, they could try to price control, but
that's a bad idea.
Speaker 4 (24:08):
And we're not going to do that anymore.
Speaker 6 (24:10):
But what they could do is they could help in
the regulatory aspects. And if they can decrease red tape
help things move more smoothly, then companies will be much
more inclined to go out there and do exploration and
do drilling and things like that because they don't just
spend as much time and money dealing with all the
red tape. So that's one way they can make that
(24:31):
sixty eight dollars an hour more valuable to companies.
Speaker 5 (24:35):
Do we know if the government has plans to do
any of that anytime soon.
Speaker 6 (24:39):
Well, they say they want to. I mean I've heard
that they want to get rid of niper reviews entirely.
That's this environmental review that often can take years and
years to complete before they said, oh we want to
have them done in you know, three months. Now they're saying, oh,
we want to get rid of them entirely. But we
need to see some actual concrete steps taken to do this,
(25:00):
because companies can't just you know, they can't make decisions
about whether to allocate, you know, massive capital expenditures based
on something that the government says that it might do
or that it wants to do. They're going to need
to see, yeah, we're doing this. You know, if you
apply for a permit to do X, you can expect
that it will be approved within you know, the amount
(25:21):
of time and have that actually occur. And I think
that if we saw something like that happen, you'd see
companies much more willing to go out there and to
you know, to drill more, to explore more, because they
wouldn't be so afraid of all of the expenditures and
the time that goes into that.
Speaker 2 (25:39):
Do we only have thirty seconds left, Doctor Wald, how
would you say demand is looking here in the United States,
because we like to look at that as a measure
of how consumers are doing, how they're feeling, and what
they're buying.
Speaker 4 (25:49):
I do think.
Speaker 6 (25:50):
Demand is fairly strong. We have seen price forecast decreased slightly,
but I think that's more an indication of supply than
it is demand. I'd say demand is looking pretty strong
and pretty good at least for the rest of the year.
Speaker 2 (26:04):
Doctor ellen Wald always good to check in with you.
She's President of Transversal Consulting, also Senior Fellow at the
Atlantic Council. Her book come out a few years ago,
Saudi Inc. Check it out. Joining us from Florida this afternoon.
Speaker 1 (26:17):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eastering. Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (26:30):
Well, Apple's top executive in charge of AI models is
leaving for meta platforms. It's another setback in Apple's struggling
AI efforts. Mark Berman is Bloomberg News Managing editor for
Global Consumer Tech. He broke the news that Apple's losing
its top AI models executive. Mark joins us from the
Los Angeles Bureau. Mark, how big of a deal is
(26:53):
it that its top AI's models executive is leaving for
Meta Platforms.
Speaker 4 (27:01):
I mean, I think it's a huge deal. Right. This
is Roaming Pang, the most respected AI researcher and AI
executive at Apple. He's basically holding everything together there. It's
an upward battle where they're developing these models, but they're
struggling because they don't have enough GPUs to train the models.
Speaker 6 (27:19):
Right.
Speaker 4 (27:19):
They have pushback from the software engineering department. They also
have this privacy stance, which means their models can't be
as effective as the models that you're seeing from Chad GPT,
you're seeing from Anthropic with Claude, you're seeing from Google Gemini.
Now at Meta, right, the gloves are off. He's going
to be able to develop models and train them to
the extent that he wants to, to be able to
(27:41):
mitigate the privacy concerns to the extent that he wants to.
Along with everyone else they're hiring for Meta for superintelligence,
and so this is a big setback for Apple. Internally.
They claim they have a deep bench behind Pang in
order to fill that gap. But the reality is they
really don't. And the other reality is, I'm told a
(28:02):
bunch of these people are probably going to follow him
out the door to Meta Open Aianthropic and others. Apple
pays measly amounts compared to the competition. I would guess
that Paying was making around five to seven million dollars
a year at Apple in his position running the foundation
(28:22):
models team at Meta probably making well north of twenty
five to fifty million dollars per year. I'm told his
pay package is probably somewhere north of two hundred million
dollars over four to five year contract. And so Apple
not in a great space right now when it comes
to AI research.
Speaker 2 (28:41):
Wow, Okay, so I was going to ask you about compensation,
but you answered the question. You should see the Emily's
face in my face when you said measly five to
seven million dollars a year, because I think for a
lot of people that sounds like quite a bit of money.
But we're talking about an AI arms race where we've
seen reporting mark that shows that Meta Platforms is offering
one hundred million dollar are signing bonuses plus annual compensation.
(29:03):
Annual compensation of one hundred million dollars. This is unprecedented.
Speaker 4 (29:08):
When I said me easily about the five to seven
million dollars, I was referring to to your point, in
comparison to what you're seeing in terms of those offers.
I don't think that. I don't know how.
Speaker 2 (29:18):
Things work out in Los Angeles. Mark, Okay, yeah, I
was comparing to them.
Speaker 4 (29:23):
Okay, good, go ahead.
Speaker 5 (29:24):
I well, Mark, So you reported last week that Apple
is considering using AI from potentially anthropic or open AI
to power Siri. So how much of that is going
on in this executive departure. Is it essentially Apple just
saying they're kind of seating in this AI arms race?
Speaker 4 (29:46):
I mean, do they.
Speaker 5 (29:47):
Really need the top talent if they're going to make
all these plans to outsource a lot of their AI operations.
Speaker 4 (29:53):
It's no coincidence that Paying is leaving a week after
I broke the news about this change. Runs the team
that Apple is seriously considering demoting or replacing. He runs
the team that Apple's top executives have essentially blamed for
the mediocre performance of Siri, and the LLM technology is
(30:16):
part of Apple Intelligence. Obviously, one team believes this, another
team believes that the truth probably lies somewhere in the middle,
and he's running that team. He gets an offer worth
I don't know, ten x when he gets paid at Apple, right,
his team's being blamed and he's being offered ten x
more money. How could you stay in that situation? You know?
(30:37):
What Mark Zuckerberg is doing is making job offers to
people that even if you don't want to work at Meta,
you would be foolish not to take the money, right.
I mean, they're offering generational wealth for your entire family
tree for the next three hundred years potentially. You can't
really say no to that, even if you don't want
(30:57):
to work there. So he's putting people in those types
of position.
Speaker 2 (31:00):
What is Meta going to do? Like, what are they
trying to build here that is worth all this money?
Speaker 4 (31:06):
Well, they're trying to get to AGI, right, They're trying
to get to a point where the AI tools are
even smarter than a human right, And with this amount
of money that they're throwing at the problem, they're probably
going to end up being a big winner here. Right.
I think that on one hand, it's a completely ineffective
solution from a cultural standpoint of building a team where
(31:27):
you're getting people solely because of how much you're paying them,
rather than people who genuinely want to be there and
work together. Right. On the other hand, if you get
the right people and you actually get them to work
together effectively, you're probably going to end up with a
winner here if you bring all the best minds together.
So I definitely think that Open AI and Google and Apples,
not even in the AI conversation at this point, as
(31:49):
far as I'm concerned, really should have some concerns regarding
Meta's standpoint right now.
Speaker 2 (31:55):
I think people don't necessarily understand the opportunity AGI present.
You know, they know that Meta Platforms is a company
that still makes the vast majority, I mean close to
you know, in the ninety percent we're talking about here,
of the money that it makes. It makes from selling
ads targeted ads to us on on Instagram and on
Facebook and whatsappen and increasingly what's up at this point?
(32:18):
What is the what is the market opportunity for Meta
Platforms to achieve AGI like, how is that going to
make this company even more trillions of dollars?
Speaker 4 (32:29):
I mean this could add if they get to AGI first,
and you think of everything they can do with that.
I mean, this could add five to ten trillion dollars
to their market cap easily. It can become the most
valuable company in the world. The advantage of Mark Zuckerberg
and the voting and share control he has over Meta
as one of the co founders and being the CEO
and basically owning the board there is he can do
(32:50):
whatever he wants. Shareholders are not necessarily going to push back.
And it's not a shareholder owned company like you see
like an Apple, like a Google. Right, this is a
company where he can make the decisions. And if he
wants to throw tens and hundreds of billions of dollars
at this problem, he wants to throw one hundred and
two hundred million dollar pay packages to bring in whoever
(33:11):
he wants, he can do that. So he does have
that inherent advantage to do whatever he so chooses. Mark,
who are.
Speaker 5 (33:19):
The names that we watch next now? With paying out
who is in charge? And can you maybe share with
us who you're potentially watching next to be leaving Apple?
Speaker 4 (33:31):
I mean for Apple, the AI work has now been
spread amongst the company. They had an AI chief named
John jin Andrea. He ran AI at Google till twenty
eighteen when Apple brought him over, and he's been extensively
demoted over the last several months. They removed Siri from
his command, they removed robotics from his command, a series
of AI related frameworks called Coramel and app Intense, and
(33:53):
a bunch of other AI related things. He essentially runs
research for AI at Apple and some annotation and analytic
and testing teams related to Siri and artificial intelligence. At
some point he's no longer going to be there. That's
the name that a lot of AI industry people have
been watching, and obviously a lot of the other researchers
who report it to paying clearly probably on the way
(34:14):
out as well.
Speaker 2 (34:16):
Mark, this is these are wild times. I mean, you know,
I think it's fair to say unprecedented in terms of compensation.
I think a lot of people are saying, is this money,
you know, going to amount to something? And we'll certainly
have to wait and see in the meantime. Thank you
as always for joining us. Mark German he is Bloomberg
News a managing editor for Global Consumer Technology. Once again,
(34:36):
he broke the news that Apple's losing its top AI
models executive as companies battle it out for dominance in AI.
Check out Mark's reporting and more on the Bloomberg Terminal
and give Mark a follow on the social media platforms
he's on them all. You should also subscribe to his
newsletter comes every weekend Power On with Mark German.
Speaker 1 (34:58):
This is the bloom Businessweekdaily podcast, available on Apple, Spotify,
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(35:20):
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Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Business
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ahead with insight on the people, companies, and trends shaping
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(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:32):
Well, President Trump said he planned to implement a fifty
percent duty on copper imports as part of a set
of looming sectoral tariffs, while also indicating he could offer
pharmaceutical manufacturers at least a year before applying a crippling
two hundred percent tariff on their foreign made products. We've
got Jode with US Economic Statecraft reporter for Bloomberg News.
(00:53):
He joins us here in the Bloomberg Interactive Brokers studio.
Before you covered economic statecraft, you covered metals and mina
And that's where I want to start with you because
we have these global Correct me if I'm wrong, But
global minerals companies are copper producers. Report Macmaran, for example,
among the best performers in the going the best performing
(01:15):
stocks today, I should say, but These are global companies
and they have mines all over, right, So if you
put a fifty percent tariff on copper, then copper you
import will be more expensive. So it could affect companies
that even if they're American companies, if they import it. Right,
What am I missing here now?
Speaker 3 (01:32):
I mean, this is the debate in the industry. Right.
So many months ago Trump said We're going to do
copper tariffs, and it was just like one of thirty
things he said in an Oval Office conversation, right, and
copper came out of nowhere. That was a big deal
because steel on aluminum we did eight years ago. Copper
never hit like that roster. So for it to hit suddenly,
(01:53):
that was a big deal in the metals of mining industry.
Because the United States consumes about one point six million
tons of copper, eight hundred and fifty thousand tons of
that is domestically produced, so you're still talking about half
of your consumption coming from abroad. That's a big question
mark for consumers, right. Think about it, like, copper goes
into literally everything, I mean almost literally everything. It is
(02:16):
ubiquitous in the United States, it's ubiquitous everywhere in the world.
We rely on a major ally for those imports Chile.
Thirty eight percent of our imports of our come from Chile.
That's a that's a big deal. But they're a great
trade partner, right, I mean, maybe the best trade partner
in South America. The idea that you're suddenly going to
(02:37):
be putting a fifty percent tariff on those imports is
significant because ultimately the consumers are not just you and I.
It are the It is the fabricators, right, the people
who make copper pipes, copper wiring. They have questions too,
And those copper wire producers, for example, might have something
to say saying, well, hold on, we produce in the
United States. We are major to or majorly important in
(03:00):
terms of actual revenue, in terms of actual profit because
it's more downstream. That's the ballgame. So I don't know
how this ultimately plays out. The President said it's a
fifty percent tariff, but what does it actually look like
on paper? Do we get fifty percent across the board?
Do we get something that says, well, it's a fifty
percent tariff on raw copper imports, and it's a lower
(03:23):
percent tariff or a higher percent tariff on copper products
are there some sort of export controls?
Speaker 4 (03:28):
These are the.
Speaker 3 (03:29):
Questions that the market actually cares about. And I think
for your listeners who are saying, Joe's all over the place,
so this I can't keep up with it. I think
what I'm trying to say to you guys, and to
anybody who's listening who's a smart person on Wall Street,
it is complex. And to come out and just say
across the board fifty percent tariff on copper doesn't say
a whole lot to the people who trade this thing.
(03:49):
They still need more detail.
Speaker 5 (03:52):
I think this is very helpful to smart people on
Wall Street.
Speaker 4 (03:55):
I don't think you're all over the place.
Speaker 5 (03:57):
I think you're hitting the nail right on the head.
But I mean when it comes to the companies like
the US copper companies, this is good for those stocks
or not necessarily.
Speaker 3 (04:12):
To be determined. Right back to the point, these copper
companies are global. So Freeport mcmaran's biggest mine is not
in the United States. They do mine here in the
United States, but the biggest mine is not here. So yes,
on one end, it's a benefit for them, but on
the other end, it is potentially harmful. And so you
(04:34):
ask yourself. What are the conversations happening inside the c
suite of a place like Freeport Macmaran or Rio Tinto,
where they're saying, okay, great, so this helps our operations
in the United States, but we have all of this
other production outside. We had many customers inside the United States,
and we're trying to figure out how to square away
that issue.
Speaker 5 (04:54):
How does the supply chain work? Obviously there's still a
lot of uncertainties. But is this a scenario where the
tariff ultimately would be likely to get passed down to
the consumer if this is a material that is as
you've said, in like literally everything, phones, bars, et cetera.
Speaker 3 (05:13):
I guess we'll have to see. I think this has
always been the issue with even steel on aluminum less.
How much did the end consumer actually end up paying
more for various products? Like we heard way back in
the day, you know, in twenty eighteen, twenty nineteen, people
who were buying new windows for the houses you know
have the window frames are all aluminum. They were paying
(05:34):
more for their window frames. But it's not as clear if,
like you say, buy an iPhone, right, like, how much
coppers in the actual iPhone. I don't have the number
off the top of my head. But I think we're
gonna have listen, We're gonna have to get the actual
details of what actually gets put into the section two
thirty two decision, and then we're gonna if, if it
whatever goes into place, we're gonna have to see how
(05:55):
it actually impacts these downstream consumer products, all the way
down to wiring in your house.
Speaker 2 (06:00):
I want to talk about economic statecraft, and there's a
paper from the Hoover Institution about this from hr McMaster
who served in the Trump administration, Andrew Grotto as well,
and they write that when a country uses an instrument
of economic statecraft, it aims to produce an economic effect
within its domestic market or in global markets to achieve
(06:21):
a geopolitical objective. Economic statecraft, in the context of your beat,
I imagine, has a lot to do with the United
States and what the United States is doing to achieve
certain outcomes. Yeah, how's it going right now?
Speaker 3 (06:37):
It's a tough call, right, I mean, listen, I think
it is easy. We've all known Donald Trump for a
very long time, and we know the bluster that he
puts out into the market and the different things he
says there are things he says that there are a
lot of smart people who say, you know, he's actually right,
it's just the way he said it maybe is not
(06:58):
the way to communicate it, right. But at the same time,
there are things that you do that aren't actually good, right,
like these reciprocal tariffs obviously were received very terribly by
the United States markets and global markets, and I think
we've seen that play out over the past three months
in the markets. On the other hand, if you look
at something like rare earth critical minerals, what we saw
(07:19):
between the United States and China was the negotiation for
the trade agreement between the United States and China actually
became about rare earth magnets, these permanent magnets that are
needed in all sorts of the electrification and ev vehicles
and everything else that is important. And there is a
concern among automakers for it. Has come out and said
it very publicly. We reported a few weeks ago that
(07:40):
quietly many aerospace related companies are coming out and saying
there's concern around this. When they say there's a concern,
they're saying, we do realize maybe we need more domestic
production of these things. Of these rare earths and these
rare earth magnets, and so in that regard, that's just
an example of where maybe Trump is right. Maybe you
do need to build up some sort of domestic industry.
(08:01):
I'm not saying you just build the industry you take
it all away from China. But like an executive once
told me years ago, five years ago, you know, Joe,
the point isn't you take fifty percent. You know, China
has eighty percent market share in the world. It's not
that next year or five years from now you take
fifty percent of that market share. It's you take one
to two percent market share each and every year.
Speaker 2 (08:22):
By Little Jodoe, Economic stake craft, reporter for Bloomberg News,
Joining us in the Bloomberg Interactive Brokers Studio. Check out
his work and more on the Bloomberg Terminal and at
Bloomberg dot Com.
Speaker 1 (08:33):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (08:48):
Prow Investors are trying to weather this and figure it out.
Let's bring in Libby Cantrill, managing director and head of
public Policy at HIMCO. She joins us here in the
Bloomberg Business Week Studio Libby, I want to start with
trade police seeing tariffs, and then we'll get to the
president's domestic policy.
Speaker 6 (09:02):
Win.
Speaker 2 (09:03):
I'm going to ask you the same question that I
just asked Adam for investors, though, Is this a moment
of clarity?
Speaker 7 (09:10):
I'm not sure if it's a moment of clarity. I
mean think in some ways it reinforces the president's conviction
around tariffs. I could wholeheartedly agree with what Adam was saying.
I mean, I think that there's sort of this view
in the marketplace that Trump doesn't really mean this. There's
sort of this whole taco meme, right, that Trump always
chickens out. I think on trade in particular, that has
not been the case. If you just look at where
(09:31):
the effective tariff rate is right now on all US imports,
the average effective tariff rate is around fourteen.
Speaker 2 (09:36):
Percent, So that's up from what three percent or.
Speaker 7 (09:40):
So as of January. So regardless of what happens on
August first, and we do think that there will be
some sort of sacrificial lambs, if you will, but I
think the sort of the signal from the noise here
is that tariffs are already high and they are likely
to go higher.
Speaker 2 (09:55):
So you don't think the extension to August first, that
we learned yesterday and even got more information on today,
you don't think that's some people are saying that's tacore.
Speaker 7 (10:06):
Is it more of a windows for further negotiation. Sure,
but I do think that maybe even with some of
our negotiating partners, they weren't taking Trump very seriously. And
I think this is in many ways he's trying to
reinforce that is, this is not just a threat. And again,
I guess we from from an investor perspective, the reason
why you care about tariffs is you care about what's
(10:27):
going to happen with the economy, the macroeconomy, with companies,
with inflation, and in the case of bonds in particular.
And I think that the bottom line here is that
tariffs are already high. So regardless of what happens on
August first, we will start We do think we'll start
seeing some fragility from an economic perspective. One thing that
has not been mentioned that I do think is worth
(10:48):
maybe reinforcing for investors is that this is getting a
little wonky. But the statute that the President is using
to impose these tariffs something called AIPA, the International Economic
Emergency's Powers Act, that has already been found in court
to be unlawful to impose tariffs. We do think that
the Supreme Court will likely hear this, and they could
(11:08):
also decide that this is unlawful, meaning that come December,
whenever the Supreme Court were to rule on this, if
they were to overturn this, all of these tariffs, the
reciprocal tariffs, the ten percent baseline tariff, all of those
would would go away. So I think this is something
that's also important is that while we think that the
President should be taken bost seriously and literally in terms
(11:31):
of his tariff threats, we think he really believes this.
He really does have conviction and commitment to sort of
reshaping the global trading order. There is a possibility and
probably a high possibility that come December or January, whenever
the Supreme Court does hear this, is that they could
overturn this, and that could obviously cause does another inflection point. Now,
the last thing I'll to say on this again kind
of wonky is that the president has other tools, other
(11:53):
legal tools that he can use to impost tariffs. One
is what's called Section two thirty two, and that is
going to be the tool that he's going to impose
things like the copper tariffs. He's already imposed aluminum and
auto tariffs, not using that tool.
Speaker 5 (12:06):
Do you think that's why the market has been relatively
calm in the face of all of these headlines back
and forth about the different teraror frates, that that investors
are maybe holding out hope that we won't have that
much of teriff policy change coming the end of the year.
Speaker 7 (12:21):
The equity market, right, I mean, of course we're a
bond house, and so we look at the equity market,
but I think bonds are probably taking the president a
little bit more seriously. I think the equity market, you know,
as trying, is wanting to believe what it wants to believe,
and I do think there is this assumption that President
Trump doesn't necessarily mean that. And of course, I mean
to the credit of the equity market, we haven't necessarily
(12:44):
seen the pass through from tariffs to either consumer prices
or you know, hurting sentiment necessarily, so you know, there
has been reason to be bullish, and of course we
just got the one big, beautiful bill done. There wasn't
much time for celebration of that in Washington or in
the markets for that matter. I think it's a little
(13:05):
surprising that President Trump isn't spiking the football on that
one a little bit more, because that is a huge accomplishment, honestly,
REGARDSS what you feel about the bill, to get something
that big over the goal line with such a small
majority is a real accomplishment.
Speaker 2 (13:18):
Well, we only have a minute left with you. Let's
start talk. Let's talk a little bit about that and
the idea of widening deficits. And I'm curious, given the
fact that Pimco's a bond shop, why do you think
that we're not seeing bonds react to the idea of
this wide Well, you have, and I.
Speaker 7 (13:32):
Think you have seen over the last six months. You've
seen a steepening of the Yeel curve. You've seen obviously
that you know, April and ninth sort of temper tantrum,
if you will, and the long bond selling off by
a very significant amount.
Speaker 2 (13:45):
So I think there's goes to tearra over tariffs.
Speaker 7 (13:47):
Wasn't it that was over tariffs, but it was I mean,
I think I had to do with the fact that
there was already questions about about deficits, about fiscal profligacy,
about the institutions at all of those things. You know,
I think you have of I think that there are
a couple of things. One is that the US dollar
continues to be the reserve currency, that treasuries continue to
be the reserve asset of the world, and that real
(14:10):
yields also look pretty good. I think our view is
that there's probably more value and the kind of the
belly of the curve, the shorter durations of the maturities
of the curve versus long out. But you have seen again,
it depends on where on the youal curve you're talking about.
You have seen the long end. I think digest some
of these, you know, some of these episodes.
Speaker 2 (14:26):
Libby Cantrell, Great to see you, Thanks so much for
joining us. Libby Cantrell's managing director and head of Public
Policy at PIMCO, joining us in the Bloomberg a Business
Week Studio.
Speaker 1 (14:37):
This is the Bloomberg Business Week Daily podcast. Listen live
each weekday starting at two pm Eastern on Apple Corplay
and Android Auto with the Bloomberg Business Up. You can
also listen live on Amazon Alexa from our flagship New
York station, Just say Alexa Play Bloomberg eleven thirty.
Speaker 2 (14:55):
I want to talk oil and energy. The oil fluctuated
as traders wade President Trump's latest wave of tariff threats
against French tensions in the Middle East, West Texas Intermediate
crewed flip between gains and losses, hovering around sixty eight
dollars a barrel. This is a key psychological level that
prices have only briefly breached in recent weeks. Meanwhile, another
ship in the Red Sea came under attack. Also, traders
(15:19):
have to understand exactly what's happening with tariffs to get
an idea for demand. Watching all of this is doctor
Ellen Wald, president of Transversal Consulting, also Senior Fellow at
the Atlantic Council. She's also the author of Saudi Inc.
She joins us from Boca Ratona, Florida. Doctor Wald, always
good to check in with you, especially on a day
such as today. I want to start with tariffs and
(15:40):
really the way that traders are trying to understand oil
demand for countries that have been had tariffs implemented on them.
Speaker 4 (15:48):
How does this.
Speaker 2 (15:49):
Change the view of oil demand in the coming weeks, months.
Speaker 6 (15:52):
And years. It's kind of a contrary to what you
might think it would be. Essentially, the idea is that
if tariffs are going to go up, then that will
mean lower economic activity in terms of trade. So if
a product you're trying to buy from another country has
a very large teriff on it, you're less likely to
buy that product. That means there will be lower shipping,
(16:16):
you know, less fewer products being shipped, for example, and
therefore lower demand for the energy needed to ship those products.
So the idea is that then if demand is going down,
then then oil prices will go down. But if you know,
terifs are lower and lots of people are buying lots
of stuff from all over the world, then demand will
(16:36):
be higher and therefore oil prices will rise. So it's
a little bit of the opposite of what you would
think it would be, but that's generally how we con
sceptualize the way that teriffs impact oil prices.
Speaker 5 (16:50):
I want to talk about OPEC as well, because they're
increasing oil output, increasing supply, just to help us understand
in context, how investors are supposed to understand what that's
going to mean for worldwide supply and prices.
Speaker 6 (17:05):
Yeah, it's a very interesting situation we're in right now
because we're coming off of this Iran Israel war where
prices kind of shot up and then went down, and
then we had this kind of resolution sort of which
led to essentially eliminating the war premium that had been
on prices, so prices were down. Now we're coming off.
(17:26):
Then we head right immediately into this OPEC meeting where
OPEK decides to increase more than probably was expected in
most analysts. I think the market expected that OPEK was
going to increase maybe by another four hundred thousand barrels.
Today they increased that. It's now almost five. It's closer
(17:48):
to almost six one hundred thousand barrels a day starting
in August, and then there are some pretty sure signs
that they're going to increase again in September, so that
means we're going to see more supply on the market.
I think they have some pretty pretty good ideas that,
at least in Ope's mind, that demand is going to
be getting going higher, and so that's why they're looking
(18:11):
to increase but they've also it shouldn't come as a
huge shock because they've made no secret of the fact
that they've wanted to unwind these voluntary cuts for a
long time, and so this is essentially their plan. I
don't think we'll see any deviations from it. And it's
supposed to send oil prices lower, but then you have
you know, it didn't actually send them as low as
(18:33):
we might have expected. But again, I think we're going
to see another increase from them next month.
Speaker 4 (18:40):
So you've got that on.
Speaker 6 (18:41):
One hand about this tariffs. On the other, I think
that the pressure is really on to get deals done,
and if they can get deals done, then that indicates
the demand is going to go up. And so there's
really a lot of pressure now to see if we
can get these deals done. Can they get done in
less than a month? Not so sure if that's even
really feasible at this point.
Speaker 2 (19:01):
But doctor Wald, even if deals get done, if high tariffs,
say you know, twenty to twenty five percent, thirty percent
in some cases, if those remain in effect on these
countries even after a deal, that's bad for demand, right, It's.
Speaker 6 (19:16):
Yes, it's not good for demand. I think the idea
is that if we see trade deals being done and
the tariffs are going to the tariffs will go away essentially.
And I think that in a lot of cases, we've
seen these terriffs get implemented and then say, you know,
five days later, or less than five days later, they
they get you know, taken back down. I think what's interesting, though,
is you have to remember that people might be putting
(19:37):
in orders now for things that would come in a
month or two months or three months, so they're having
to plan ahead, and all of this uncertainty basically screws
up everyone who's trying to buy something or sell something
from overseas. So anyone you know, who's who's dealing in
global trade, which is essentially almost any business, is facing
a massive amount of uncertainty right now. And you know,
(19:58):
demand does not like uncertain and so I wouldn't be
surprised if we see prices start to decline in the
short term, particularly because of all of this uncertainty general
economic uncertainty surrounding the tariffs and tariff issues and trade negotiations.
Speaker 5 (20:14):
Doctor World, what are your current views on the state
of geopolitical tensions. I know you had written previously about
potentially the Strait of Horror moves closing and how that
would affect the global economy and oil output. Should investors
still be concerned that there are more geopolitical tensions to
come that would affect the oil market in the near
(20:35):
term or is that risk not really present anymore.
Speaker 6 (20:39):
I think there's always a risk of geopolitical tensions, especially
when you're talking about countries like Iran and Israel and
other countries in the Middle East. You're talking about China,
for example, the risk is always there. I do think
that the risk that the Strait of horm moves could
be closed, which is not something I think is really
a feasible thing to do at the moment, but it
(21:00):
could be the safety of shipping through the straight uform
wars could be threatened at some point. I think that
that likelihood is way far down now. As long as
iron Is, you know, is exporting oil, they really don't
have any cause to threaten any other shipping. And President
Trump has made it pretty clear that yeah, he gets it.
(21:21):
China's going to keep buying this oil. Iran's going to
keep shipping it to them. They're doing what they can
to try to thwart it. According to sanctions, but at
some level they're not gonna be able to stop it.
I think he wasn't saying he's going to relax sanctions,
but it's going to happen. He knows it's happening, and
in some respect it does keep Iran from kind of
having nothing to lose as long as Roan can sell
(21:43):
to China. In some respect they have skin in the game.
They're not going to really try to hurt anyone else
going through the straight up form moves. I do think
that the Red Sea is an ongoing, serious issue that
really demands a lot more attention than has been given.
And the fact that this is a really important waterway. Yeah,
it's not the only way to ship oil across the world.
Speaker 4 (22:04):
It's a lot you can go around, you mean.
Speaker 6 (22:07):
Go round Africa, but it's a lot easier to go
through the Suez Canal. And the fact that this is
still an ongoing issue with ships being attacked there. I
think that's a real threat to all of the global shipping,
not just to the oil market, and that it really
does it really is a much more serious issue than
perhaps the market is taking into account.
Speaker 2 (22:29):
So that's the international view. I'm wondering about the domestic view,
and certainly these are all tied together when it comes
to the global energy market. But when we think about
the United States and the president's stated goal of more
energy production and more drilling here in the United States.
In fact, we did hear from the Energy Secretary during
the cabinet meeting talking briefly about this and about oil
and gas.
Speaker 4 (22:49):
Is sixty eight.
Speaker 2 (22:49):
Dollars a barrel, especially just a few weeks after oil
was fifty eight dollars a barrel here in the US.
Is that a high enough price for companies in the
USA US to start exploring more, to start drilling more,
to start increasing production, especially given that we saw that
increase in output from OPEC plus over the weekend.
Speaker 6 (23:09):
Yeah, I think that's a really good question. I think
that for some companies it's enough, and for others it's not.
And I do think that the real question here is
if the price of oil is going to be remaining
around that sixty eight dollars barrel mark, what else can
the government do to encourage drilling that isn't necessarily related
to the price of a barrel of oil? What can
(23:32):
they do to make it easier for these companies to
deal with regulations, what can they do to decrease the
length at the time and the significance of lawsuits for example.
These are all things that companies spend a lot of
money and time dealing with in order to just get
to the place where they can even drill. And so
what the government can do is the government cannot change
(23:52):
the price of oil all that much. They can't you say, oh,
we want it to be high enough, this high so
that everybody feels comfort, you know, drilling more. But they
can't change that. I mean, I guess technically they could
set you know, they could try to price control, but
that's a bad idea.
Speaker 4 (24:08):
And we're not going to do that anymore.
Speaker 6 (24:10):
But what they could do is they could help in
the regulatory aspects. And if they can decrease red tape
help things move more smoothly, then companies will be much
more inclined to go out there and do exploration and
do drilling and things like that because they don't just
spend as much time and money dealing with all the
red tape. So that's one way they can make that
(24:31):
sixty eight dollars an hour more valuable to companies.
Speaker 5 (24:35):
Do we know if the government has plans to do
any of that anytime soon.
Speaker 6 (24:39):
Well, they say they want to. I mean I've heard
that they want to get rid of niper reviews entirely.
That's this environmental review that often can take years and
years to complete before they said, oh we want to
have them done in you know, three months. Now they're saying, oh,
we want to get rid of them entirely. But we
need to see some actual concrete steps taken to do this,
(25:00):
because companies can't just you know, they can't make decisions
about whether to allocate, you know, massive capital expenditures based
on something that the government says that it might do
or that it wants to do. They're going to need
to see, yeah, we're doing this. You know, if you
apply for a permit to do X, you can expect
that it will be approved within you know, the amount
(25:21):
of time and have that actually occur. And I think
that if we saw something like that happen, you'd see
companies much more willing to go out there and to
you know, to drill more, to explore more, because they
wouldn't be so afraid of all of the expenditures and
the time that goes into that.
Speaker 2 (25:39):
Do we only have thirty seconds left, Doctor Wald, how
would you say demand is looking here in the United States,
because we like to look at that as a measure
of how consumers are doing, how they're feeling, and what
they're buying.
Speaker 4 (25:49):
I do think.
Speaker 6 (25:50):
Demand is fairly strong. We have seen price forecast decreased slightly,
but I think that's more an indication of supply than
it is demand. I'd say demand is looking pretty strong
and pretty good at least for the rest of the year.
Speaker 2 (26:04):
Doctor ellen Wald always good to check in with you.
She's President of Transversal Consulting, also Senior Fellow at the
Atlantic Council. Her book come out a few years ago,
Saudi Inc. Check it out. Joining us from Florida this afternoon.
Speaker 1 (26:17):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eastering. Listen
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or watch us live on YouTube.
Speaker 2 (26:30):
Well, Apple's top executive in charge of AI models is
leaving for meta platforms. It's another setback in Apple's struggling
AI efforts. Mark Berman is Bloomberg News Managing editor for
Global Consumer Tech. He broke the news that Apple's losing
its top AI models executive. Mark joins us from the
Los Angeles Bureau. Mark, how big of a deal is
(26:53):
it that its top AI's models executive is leaving for
Meta Platforms.
Speaker 4 (27:01):
I mean, I think it's a huge deal. Right. This
is Roaming Pang, the most respected AI researcher and AI
executive at Apple. He's basically holding everything together there. It's
an upward battle where they're developing these models, but they're
struggling because they don't have enough GPUs to train the models.
Speaker 6 (27:19):
Right.
Speaker 4 (27:19):
They have pushback from the software engineering department. They also
have this privacy stance, which means their models can't be
as effective as the models that you're seeing from Chad GPT,
you're seeing from Anthropic with Claude, you're seeing from Google Gemini.
Now at Meta, right, the gloves are off. He's going
to be able to develop models and train them to
the extent that he wants to, to be able to
(27:41):
mitigate the privacy concerns to the extent that he wants to.
Along with everyone else they're hiring for Meta for superintelligence,
and so this is a big setback for Apple. Internally.
They claim they have a deep bench behind Pang in
order to fill that gap. But the reality is they
really don't. And the other reality is, I'm told a
(28:02):
bunch of these people are probably going to follow him
out the door to Meta Open Aianthropic and others. Apple
pays measly amounts compared to the competition. I would guess
that Paying was making around five to seven million dollars
a year at Apple in his position running the foundation
(28:22):
models team at Meta probably making well north of twenty
five to fifty million dollars per year. I'm told his
pay package is probably somewhere north of two hundred million
dollars over four to five year contract. And so Apple
not in a great space right now when it comes
to AI research.
Speaker 2 (28:41):
Wow, Okay, so I was going to ask you about compensation,
but you answered the question. You should see the Emily's
face in my face when you said measly five to
seven million dollars a year, because I think for a
lot of people that sounds like quite a bit of money.
But we're talking about an AI arms race where we've
seen reporting mark that shows that Meta Platforms is offering
one hundred million dollar are signing bonuses plus annual compensation.
(29:03):
Annual compensation of one hundred million dollars. This is unprecedented.
Speaker 4 (29:08):
When I said me easily about the five to seven
million dollars, I was referring to to your point, in
comparison to what you're seeing in terms of those offers.
I don't think that. I don't know how.
Speaker 2 (29:18):
Things work out in Los Angeles. Mark, Okay, yeah, I
was comparing to them.
Speaker 4 (29:23):
Okay, good, go ahead.
Speaker 5 (29:24):
I well, Mark, So you reported last week that Apple
is considering using AI from potentially anthropic or open AI
to power Siri. So how much of that is going
on in this executive departure. Is it essentially Apple just
saying they're kind of seating in this AI arms race?
Speaker 4 (29:46):
I mean, do they.
Speaker 5 (29:47):
Really need the top talent if they're going to make
all these plans to outsource a lot of their AI operations.
Speaker 4 (29:53):
It's no coincidence that Paying is leaving a week after
I broke the news about this change. Runs the team
that Apple is seriously considering demoting or replacing. He runs
the team that Apple's top executives have essentially blamed for
the mediocre performance of Siri, and the LLM technology is
(30:16):
part of Apple Intelligence. Obviously, one team believes this, another
team believes that the truth probably lies somewhere in the middle,
and he's running that team. He gets an offer worth
I don't know, ten x when he gets paid at Apple, right,
his team's being blamed and he's being offered ten x
more money. How could you stay in that situation? You know?
(30:37):
What Mark Zuckerberg is doing is making job offers to
people that even if you don't want to work at Meta,
you would be foolish not to take the money, right.
I mean, they're offering generational wealth for your entire family
tree for the next three hundred years potentially. You can't
really say no to that, even if you don't want
(30:57):
to work there. So he's putting people in those types
of position.
Speaker 2 (31:00):
What is Meta going to do? Like, what are they
trying to build here that is worth all this money?
Speaker 4 (31:06):
Well, they're trying to get to AGI, right, They're trying
to get to a point where the AI tools are
even smarter than a human right, And with this amount
of money that they're throwing at the problem, they're probably
going to end up being a big winner here. Right.
I think that on one hand, it's a completely ineffective
solution from a cultural standpoint of building a team where
(31:27):
you're getting people solely because of how much you're paying them,
rather than people who genuinely want to be there and
work together. Right. On the other hand, if you get
the right people and you actually get them to work
together effectively, you're probably going to end up with a
winner here if you bring all the best minds together.
So I definitely think that Open AI and Google and Apples,
not even in the AI conversation at this point, as
(31:49):
far as I'm concerned, really should have some concerns regarding
Meta's standpoint right now.
Speaker 2 (31:55):
I think people don't necessarily understand the opportunity AGI present.
You know, they know that Meta Platforms is a company
that still makes the vast majority, I mean close to
you know, in the ninety percent we're talking about here,
of the money that it makes. It makes from selling
ads targeted ads to us on on Instagram and on
Facebook and whatsappen and increasingly what's up at this point?
(32:18):
What is the what is the market opportunity for Meta
Platforms to achieve AGI like, how is that going to
make this company even more trillions of dollars?
Speaker 4 (32:29):
I mean this could add if they get to AGI first,
and you think of everything they can do with that.
I mean, this could add five to ten trillion dollars
to their market cap easily. It can become the most
valuable company in the world. The advantage of Mark Zuckerberg
and the voting and share control he has over Meta
as one of the co founders and being the CEO
and basically owning the board there is he can do
(32:50):
whatever he wants. Shareholders are not necessarily going to push back.
And it's not a shareholder owned company like you see
like an Apple, like a Google. Right, this is a
company where he can make the decisions. And if he
wants to throw tens and hundreds of billions of dollars
at this problem, he wants to throw one hundred and
two hundred million dollar pay packages to bring in whoever
(33:11):
he wants, he can do that. So he does have
that inherent advantage to do whatever he so chooses. Mark,
who are.
Speaker 5 (33:19):
The names that we watch next now? With paying out
who is in charge? And can you maybe share with
us who you're potentially watching next to be leaving Apple?
Speaker 4 (33:31):
I mean for Apple, the AI work has now been
spread amongst the company. They had an AI chief named
John jin Andrea. He ran AI at Google till twenty
eighteen when Apple brought him over, and he's been extensively
demoted over the last several months. They removed Siri from
his command, they removed robotics from his command, a series
of AI related frameworks called Coramel and app Intense, and
(33:53):
a bunch of other AI related things. He essentially runs
research for AI at Apple and some annotation and analytic
and testing teams related to Siri and artificial intelligence. At
some point he's no longer going to be there. That's
the name that a lot of AI industry people have
been watching, and obviously a lot of the other researchers
who report it to paying clearly probably on the way
(34:14):
out as well.
Speaker 2 (34:16):
Mark, this is these are wild times. I mean, you know,
I think it's fair to say unprecedented in terms of compensation.
I think a lot of people are saying, is this money,
you know, going to amount to something? And we'll certainly
have to wait and see in the meantime. Thank you
as always for joining us. Mark German he is Bloomberg
News a managing editor for Global Consumer Technology. Once again,
(34:36):
he broke the news that Apple's losing its top AI
models executive as companies battle it out for dominance in AI.
Check out Mark's reporting and more on the Bloomberg Terminal
and give Mark a follow on the social media platforms
he's on them all. You should also subscribe to his
newsletter comes every weekend Power On with Mark German.
Speaker 1 (34:58):
This is the bloom Businessweekdaily podcast, available on Apple, Spotify,
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afternoons from two to five pm Eastern on Bloomberg dot Com,
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(35:20):
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