April 16, 2025 • 45 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
The Trump administration is preparing to pressure nations to curb trade with China in negotiations over US tariffs, according to people familiar with the matter.
Dozens of nations are seeking reductions or exemptions from President Donald Trump’s historic import taxes. In exchange for doing so, the US is set to ask them to take steps limiting China’s manufacturing might, a bid to ensure Beijing doesn’t find avenues around Trump’s tariffs.
Trump’s top economic advisers are discussing asking representatives from other nations to impose so-called secondary tariffs, essentially a monetary sanction, on imports from certain countries with close China ties, according to a person familiar with the process. The US also wants trading partners to refrain from absorbing excess goods from China, other people said. Other concessions on China may also be put on the table.
Mexican officials are expecting the US to ask their country to increase tariffs on electric vehicle imports from China, according to a person familiar with the government’s thinking. Mexico’s economy ministry declined to comment.
Today's show features:
- Caroline Freund, Dean of the School of Global Policy and Strategy at UC San Diego on US/China relations
- Bloomberg Intelligence Senior Semiconductor Analyst Kunjan Sobhani & Bloomberg Technology co-host Ed Ludlow on latest Nvidia & AMD news
- Silvio Tavares, CEO at VantageScore on bank consumer sentiment and retail tariffs affecting credit scores
- and we Drive to the Close with David Harden, CIO of Summit Global Investments
Hosts: Carol Massar and Tim Stenovec Producer: Sebastian Escobar
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
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 Week
Daily Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 3 (00:33):
Well, as I mentioned, we really want to spend the
next few minutes going all in on China and everything
that's happening when it comes to US China relations. On
that China wants to see a number of steps from
President Trump's administration before it will agree to trade talks,
including showing more respect by reigning and disparaging remarks by
members of his cabinet. That's Carol, according to a person
familiar with the Chinese governments, thinking, that's.
Speaker 4 (00:54):
Right in other conditions, including more consistent US position and
a willingness to address China's concerns around American sanctions in Taiwan.
According to the person who asked not to be identified
to discuss internal thinking, we are all trying to gauge
what is the conversation if there is one going back
and forth, and whether or not there can be some
kind of resolution that doesn't impair both of these economies
(01:17):
so important really to global growth.
Speaker 3 (01:18):
Well, that's why we wanted to speak with Caroline Freud.
She's dean of the UC San Diego School of Global
Policy and Strategy. She was also a Senior Fellow at
the Peterson Institute for International Economics, a Global Director of Trade,
Investment and Competitiveness at the World Bank, and earlier did
time at the FED and the IMF. She's also the
author of the book Rich People, Poor Countries. The Rise
(01:39):
of Emerging market Tycoons and their Mega firm. She joins
us from La Joya, California. Caroline, it's good to have
you on the program. I want to start with this
idea of respect and really what it means in the
way that China is using it in your view in
regards to tariffs and the tit for tat when it
comes to this trade war.
Speaker 5 (02:00):
Yeah, I think you have to take into account that
China is a country that prides itself on having five
thousand years of civilization, so a five thousand year history,
and they do things gradually. They've had the time to
learn to do things gradually, and Trump is doing things
(02:21):
very chaotically, and that's not something they're used to dealing with.
There have been comments by Jadie Vance and others talking
about peasants lending money to buy things made by peasants
lending money to the US. So this isn't the way
to work with China. They expect to have a deal
(02:43):
worked out by the technical folks and then the leaders
to only meet once that deal is worked out. So
bottom up and gradual, not the top down and chaotic
that Trump is initiating.
Speaker 4 (03:01):
Is this just jocking? I keep wondering these two economies
still kind of need each other or do they not?
Like is there something we're missing in terms of what's
going in internally in China? And Tim and I have talked,
We've listened to some podcasts who said, you know, COVID
changed a lot of things and a lot of American
businesses pulled back or executives and eyes on the ground.
(03:23):
Maybe not so much in China, and there's a lot
more sophistication in terms of what they are producing and
how they are doing it that maybe is going unawares
by the world at large. But help us understand what
is China today? It's not just a manufacturer of sneakers
and T shirts.
Speaker 5 (03:43):
No, China is a very advanced country with some of
the frontier technologies on things like electric vehicles, autonomous driving,
and even in AI. They've made substanti progress, though they're
still behind the US. But there is a symbiotic relationship.
(04:06):
So China is worried about deflation, we're worried about inflation.
And these are exactly two sides of the same coin.
They have over capacity, We don't really have the capacity
or know how to do manufacturing anymore. And while there
have been problems with the relationship, we do need each other.
Speaker 4 (04:29):
And why do we still need each other? Why do
we still need each other? Because I think there are
some who say China maybe doesn't I don't know, or
maybe the US doesn't.
Speaker 5 (04:39):
Well, there are a lot of things we get from
China that we need to keep our economy going. So
we live in a world of global supply chains where
parts and components are coming from China as well as
other countries. So trying to manufacture in isolation is just
frankly a non starter. Won't be competitive in a global market.
(05:00):
China is also sitting on seven hundred billion in US
dollar assets. So that's another area where China has a
pretty big trump card to play. I don't think they will.
It's a country that wants stability. It's a careful in
any policy move it takes. But we very much need
(05:21):
each other. We need each the goods each other produces,
and we need to work together and work through this.
It's not perfect. Some decoupling is probably good, but sudden
and sharp is going to be painful. And that's why
we see it. With what's been happening with the stock
market now, I think we're not only having an own goal,
(05:43):
we're on our way to an own hat trick.
Speaker 3 (05:45):
The White House Press Secretary Caroline Levitch said this week
that China needs what the US has, which is consumers
who spend money. Is that accurate in your view?
Speaker 6 (05:56):
Yeah, it is.
Speaker 5 (05:57):
That's why they're suffering deflation, That's why have excess capacity.
They need what we have, but we need what they
have too. We have a population that's used to buying
things and buying things cheaply. The growth of the Chinese
economy has been part of what kept inflation so low
(06:17):
for so long and supported global growth so yes, they
need us, but I wouldn't say that doesn't mean we
don't need them. This is going to hurt us both.
It may be a question of who it hurts more,
but there could be a way to make it a
little softer for both of us.
Speaker 3 (06:37):
You know, one question that I keep asking anyone who
will speak to me about this is who has the
leverage in this negotiation between the US and China. You
said the relationship is symbiotic. These two countries need each other.
But is there one trading partner that is more powerful
than the other and why? Well?
Speaker 5 (06:55):
I think initially it looked like the US because China's
economy is already in a slowdown because of demographics, because
of their own property issues property crisis there, So it
looked like we had more power. They really really need
our consumer. But there's one thing they have that we
(07:18):
don't have, which is a population that they can control
and that is more willing to tolerate pain than the
US consumer. So at this point, I think it's kind
of a toss up.
Speaker 4 (07:33):
So does that just mean President g is willing to
inflict a little bit more pain maybe on his people
and means he can kind of fight this fight a
little bit longer than maybe the US can.
Speaker 5 (07:44):
Yeah, and he has more authorities, so he has complete
control of the media. So my understanding from Chinese colleagues
is that in the Chinese press now a lot of
people have access to VPNs, but in the Chinese press,
the average person doesn't know that tariffs are over one
hundred percent now, So the numbers aren't out there, the
information isn't out there. There's a calm there, and there's
(08:09):
an ability to control the economy, stimulate the economy, support
people that we just frankly don't have, as well as
the consumer here, who's going to be upset. You saw
what happen over price of eggs. Imagine when that's everything
you go to the store for.
Speaker 3 (08:27):
That's a really good point. That is a very good point.
Speaker 7 (08:29):
Hey.
Speaker 3 (08:30):
One of the reasons we wanted to speak to you
is you have done so much when it comes to trade.
A reminder, you were a senior fellow at the Peterson
Institute for International Economics, Global Director of Trade, Investment and
Competitiveness at the World Bank. How does this trade war end?
Speaker 5 (08:47):
That is the million dollar question. Hopefully it ends with negotiation.
So there does seem now to be negotiation with other countries.
Trump has made it clear that if she him up,
he'll take the call, so I think we can get there.
(09:08):
But right now we have two big trucks driving at
each other and it looks more like a game of chicken. So, uh,
it's time will tell I guess.
Speaker 4 (09:17):
Yeah, someone likened it too. What's that crazy like wrestling
stuff that goes on.
Speaker 3 (09:23):
I have no idea what you're talking about.
Speaker 4 (09:25):
Somebody did on surveillance this from my tweet, but it
was like, basically, that's what it looks like. I don't know.
I don't watch these wrestling things. Oh, UFC battle between
China and the United States, that's what it feels like.
That was on surveillance, overhead, on surveillance overheard, that's our
morning show.
Speaker 3 (09:39):
Hey, you're going to get a lot of pushback for
calling UFC wrestling. I'm just going to throw that out there.
Speaker 4 (09:45):
I'm so sorry. I'm so sorry. If the United States
aim Caroline is to contain the rise of China, if
that is the ultimate goal, then what.
Speaker 5 (09:58):
I think that's a really hard thing to do. China
is a big country, so I think it can slow it.
I think probably it already has with some of the
restrictions on technology. That the other side of that is
it's encouraging innovation in and of itself. So the fact
that we held back on AI chips probably made something
(10:20):
like deep Seek more likely. So I don't think there's
a holding back of a country the size of China.
So what we need to work towards is managing in
a world with China and working more closely with our allies.
(10:41):
So this could have been handled, in my view, much
better by working with countries in Europe, countries like Japan
and Australia, and sort of isolating China that way, encouraging
China to play by the rules that we want to
set as a globe. The US is less than fifteen
(11:02):
percent of global trade right now, so there's eighty five
percent of economic might out there without us. We really
can't engage in this fight alone, do our allies?
Speaker 3 (11:14):
And I use that term loosely right now, because I
think a lot of folks would say we're fighting with
allies right now, at least when it comes to trade.
Do they feel the same way about China? Just in
the last forty five seconds we had with you, I.
Speaker 5 (11:30):
Think they're beginning too and I think one thing this
will do is China now needs to sell all the
goods it's not selling to us somewhere else, and other
countries are very very worried about that. So in that sense,
we may pull them along with us. But Trump's vitriol
has certainly pushed them away. So I think we're going
(11:52):
to have to see. But I do think there's room
for that if we behave a little more nicely.
Speaker 4 (12:00):
Ah See, the world would be better if we all
just were a little bit nicer. It's really kind of
something that is looking at me said you're super nice. No,
I'm not looking at you, but I just Caroline, thank
you so much. We were really looking to do kind
of this deep dive because we feel like it certainly
is that relationship between the US and China so important
(12:20):
to kind of what happens next globally. She's Diana at
the UC San Diego School of Global Policy and Strategy,
joining us from La Joya, California.
Speaker 2 (12:30):
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Speaker 4 (12:45):
All right, folks, one of our big business and market
stories today hit pretty early. Semi coonductor shares are selling off.
I'm looking at the socks down about six percent as
we speak, and I'm looking at all thirty names in
the Philadelphia Semiconductor Index lower in today's session, and Nvidia
the biggest, almost down about ten percent. AMD down about
(13:06):
nine percent. This has new US government restrictions on the
export of Nvidia chips to China and a disappointing report
from ASML holding really dimming the outlook for the semiconductor sector,
wiping out a lot of money, billions and billions of dollars.
AMD also saying that it expects to take a charge
of as much as eight hundred million on the Trump
Administration's new restriction. So let's get into it. We've got
(13:28):
a great roundtable. Bloomberg Intelligence Senior Semiconductor alis Kunjohn Sabani
is with us out there on the West Coast in
San Francisco. Also in our San Francisco bureau, Bloomberg Technology
co host ed Ludlow. Where to begin? Where to begin?
Kunjoh Let me just start with you, because we have
seen bands on the semi sector over the last few years.
(13:49):
What's the new news and the impact of such.
Speaker 8 (13:54):
You know, first of all, this does not a ban
as a license requirement, which in theory you could get approved.
But this was the event that this happened, was not surprising.
Maybe the timing was and the magnitude this time around
was much larger. And Nvidia has gone through multiple of
such sanctions to China and every time, you know, they
have to take take some revenue head because they could
(14:15):
not ship some products this time around. Over the last
few quarters, China has been creeping up as a percentage
of data center, getting close to sort of ten percent
in our estimate as of last quarter.
Speaker 7 (14:26):
So this the.
Speaker 8 (14:26):
Magnitude now continues to increase. And I think this the charge,
the five and a half billion charge, which we think
implies to about forteen to eighteen billion dollars of revenue
that they could have shipped, implies there was some definite
demand pull in in anticipation of such restrictions.
Speaker 4 (14:43):
So wait, let me just fine tune. So not a
bad forgive me so licensing, So what does that just
mean another document or something like, what's the distinction? Because
you obviously made it because it's an important one. What
is that distinction?
Speaker 8 (14:55):
Yeah, the prior restrictions on the Hopper family have come
as sanctions where the US government comes and just say
you cannot ship this product to China, period, and you
have to develop a new product that satisfied those conditions.
This time around, it's licensing where they can still ship
H twenty in theory if they get a license for
each respective customer to ship to China.
Speaker 3 (15:15):
Okay, important distinction. Thanks for explaining that. I want to
bring in Ed Ludlow, who follows, of course the space
closely and specifically asked about this H twenty technology. Ad
What is the technology that is being restricted at this
point and where could Chinese companies and where do Chinese
companies want to use this tech?
Speaker 9 (15:35):
Yeah, it's a so called AI accelerator or high performance
GPU and other components that go into a system that
largely are involved in the process of either training a
large language model or more relevant to H twenty and
the anxiety of this US administration inference, the H twenty
is a lower performance chip relative to the cutting edge
(15:59):
of what Nvidia does. It's the Blackwell, right, It's just
a variant. Right, It's a prior generation to Blackwell. It's
but on a slightly different architecture black Well. We can
go into the specifics of why it's different, but all
that you need to understand from a sort of markets
perspective and also like the political equation here is that
it doesn't do as much as the cutting edge accelerators
(16:22):
that in Video makes. But there's still anxiety from this
administration that China could use it in the context of
an AI supercomputer and that they will try and argue
presents a national security risk. And Kunjan's analysis is absolutely fundamental.
You guys ask the right question, what's the distinction on
a license and why a five point five billion dollar
(16:42):
write down? A five point five billion dollar write down
because in Video probably knows it ain't going to get
a license. Why else would you do the write down
and just clear that inventory off your desk. They kind
of seem to have a sense of where this is headed.
Speaker 4 (16:56):
So Coon John, I mean and love what you know
you said where the this is headed? Ad because I
do feel like the devil's in the details and it
keep seeing different things in terms of I feel like
the semi conductor world, but it does feel like this
administration bottom line, is going to continue to put some
kind of restrictions in different ways. Is that a fair assumption?
(17:16):
Is that a bad assumption?
Speaker 8 (17:19):
And that is definitely a fair assumption. And look, the
writing has been on the wild even before this administrative
steps in right that for the AI, the high end
AI semi makers, the China market TAM is just continuing
to shrink, and it will continue to shrink as we think,
even prior and this administration continue to sort of block
or limit the amount of highest, highest end performing chips
(17:42):
that China can get access to.
Speaker 3 (17:44):
Does it matter ed in the long run for China's
AI ambitions? Does this just slow China down? Or does
this actually hamper what they're trying to do? I mean,
look what happened with DEEPSEK.
Speaker 9 (17:56):
Yeah, it's super interesting. I mean, you know, even though
the write down on that even of H twenties is
indicative that Nvidia knows the doors closing in that market,
they could always come back with an even lower spec
chip that is within the parameters of the restrictions as
they understand them. One really interesting paradox here is the
(18:16):
side effect of the White House's policy, which is that
China does have some options right. The context is that
in the world of AI, fifty percent of the research
is being done out of China. Literally, fifty percent of
all AI researchers are Chinese or Chinese citizens working somewhere
around the world, but they have access to other technology.
(18:37):
Huawei is increasingly becoming the national champion of China. It
does not have a Blackwell, the highest performance chip that
Nvidia produces, but it does have something akin to the
AH twenty. And so now China has the ammunition and
poor word, the motivation to champion its own domestic player
and say, you know, you know what, have a leg up,
(18:59):
Let's use your AGE twenty equivalent instead.
Speaker 3 (19:01):
So interesting was the exact conversation I was having with
a colleague a little earlier, ed, Kunjon, I want to
bring you back in here, because you're also watching AMD
shares down nine point two percent nine point three percent
as we speak. The company said it expects to take
a charge of as much as eight hundred million dollars
after the Trump administration putting new restrictions on semiconductor exports
to China. What is the AMD product that we're talking
(19:21):
about here.
Speaker 8 (19:23):
Well, AMD also has a similar water down version that
it was going to ship to China. It's called the
three eight versus the three hundred series that it's shipping
everywhere else. You know, the impact on AMD. The number
for AMD were surprising to us in terms of the
exposure that we didn't think it happed to China. I
think when you look at apples to apples, the AMD
(19:45):
will be impacted a lot more than in media here
because sort of when you think about the lower tier
or the pre Blackwell version of GPUs, this is where
AMD competes with Nvidia, and we thought, you know, given
the price competitiveness in China, this is where AMD could
gain a little bit higher share than in the US.
So blocking this off for AMD to China will impact
(20:06):
it worse. Again, the scale is pretty different when you
compared to Nvidia ANDAMD.
Speaker 4 (20:11):
So what I want to ask you guys, and let
me go to you first, to ED, I mean, I
just feel like the news out of the chip sector,
I'm looking at the socks. It's just getting hammered. All
the names are down. I talked about Nvidia, AMD both
down about nine percent here in today's session, and we're
looking at an index that is down about six percent.
And we're down what thirty four to thirty five percent
(20:31):
from pink to trough. I mean, is there is it
just a normal semiconductor cycle that has as you know
that Ian King talks about, it's highs and lows, or
is it a really major rethink of AI or is
it just overall kind of market malaise and uncertainty.
Speaker 9 (20:49):
It's probably a rethink of supply chain. And it's really
been good to learn about how the semiconductor industry works.
Speaker 5 (20:55):
Right.
Speaker 9 (20:55):
This is where we tie in ASML. ASML was not
under pressure because of technology export restrictions. That was a
tariff story. But essentially the thing that they have in
common is that America wants the absolute cutting or leading
edge innovation to be kept to America. It doesn't want
China to have access. ASML does not make chips, It
(21:17):
makes the equipment that makes the chips, but their specific
equipment extreme ultra violet lithography machines are three hundred million
dollars apiece and they are crucial to making those cutting
edge chips. What the company told us this morning is
we don't know what's going to happen. We cannot quantify
it because it's more expensive doing business in America, asml
(21:38):
alreadly does quite a lot here, but it assembles its
final product in the Netherlands and it has some Asia
supply chain. So if you're a CEO, whether you're a
chip maker, a chip equipment maker, or a designer, you
now face a very simple calculus. It's going to be
more expensive for you to do business in America twenty
five to thirty five percent. That's just the cost of
doing things here, or you face doing things in a
(21:58):
jurisdiction in Asia, which we don't know the tariffon yet
because of the temporary White House reprieve. That's different to
market anxiety. Market fluctuations don't reflect the fluctuations that are
happening within these companies right now as they try to
assess how they're going to change their business models.
Speaker 4 (22:13):
Kon John Finally, final thirty seconds here in terms of
your thoughts here as we look at what's going on
in the overall semispace.
Speaker 8 (22:21):
Well, look, I've been in this space for twenty years,
and at every beginning of every cycle we say this
is a different cycle, and the exit of it we said, no,
the outcome was still the same, no matter what the
drivers there is definitely something different here where a lot
of global geopolitics is get involved. Put in context that
last year we were sort of peak of valuations. The
(22:41):
growth in AI was just increasing tremendously, which we know
cannot be sustainable. So yes, the drivers this time look
different for the cycle, but maybe the outcome might be
still similar to what we have seen.
Speaker 4 (22:52):
Okay, so not different this time around, right, not yet?
Speaker 1 (22:55):
Not yet?
Speaker 4 (22:56):
Okay, great stuff, guys, Thank you so much. Such an
important store today and certainly has does one that's really
got investor's attentions. Bloomberg Intelligence seamer semiconductor analyst kun John
Saboni out there in San Francisco. Also in San Francisco
at our bureau, Bloomberg Technology co host at Ladlocal.
Speaker 2 (23:14):
This is the Bloomberg Business Week Podcast. Listen live each
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Speaker 3 (23:35):
Okay. J Powell covered check did that. We're need to
do more a little later with Michael McKee. Semis covered
for now. Did that? Now to the all important really
read on the US consumer. US retail sales rote substantially
in March on a jump in car purchases and other
goods such as electronics, suggesting consumers were scrambling to get
ahead of tariffs. Maybe you buy a car, You buy
(23:58):
a car, You buy a car before those is going
to buy an iPhone?
Speaker 4 (24:01):
You buy an iPhone.
Speaker 7 (24:01):
Baby.
Speaker 3 (24:02):
Celia Tavarius is a president and CEO at the Credit
Data and Credit Risk Analytics for Advantage Score. He's back
with us here in the Bloomberg BusinessWeek Studio. It's a
joint venture of Experience, Equifax and TransUnion. Good to see you,
good this afternoon. Just an easy question for you, how
is the consumer doing?
Speaker 6 (24:17):
Consumers healthy? You know, we look at consumer health from
a credit score perspective. A perfect vantage score is eight fifty,
a really bad vantage core is three hundred. Through the
end of March, vantage score average was seven oh two.
Speaker 3 (24:33):
And how does that relate to other times in the
last four years.
Speaker 6 (24:36):
Let's say, well, that is high, and in fact it's
one point higher than last month, so it actually increased,
which was a big surprise you would have expected with
all the headlines that you've been covering that actually the
consumer would not be credit healthy. We actually saw the opposite,
very positive.
Speaker 4 (24:54):
Well, you know it's interesting too, And I guess what
I want to ask you. I know you've been there
for a couple of years. I'm thinking I think fandage
score goes all the way back to two thousand and six,
and there's just been a few things that have happened
in that time. We've had the Great Financial Crisis, We've
had the COVID shutdown, and here we are today. So
I am curious when you throw these numbers out, how
does it compare two other moments of crises.
Speaker 6 (25:16):
Yes, so the real insight here is that the consumer
does not feel crisis. This is a main Street versus
Wall Street dynamic that we're seeing through the end of March.
Main Street consumers feel credit healthy. They actually have a
higher credit score. We saw actually consumer payments, so the
late payments, credit delinquencies across every credit product, auto loans,
(25:41):
credit cards, mortgages, all of those delinquency rates improved compared
to February.
Speaker 3 (25:46):
I got to push back on this Wall Street versus
Main Street part of this because we kind of saw
proof with the Umish survey that we got, the results
that we got on Friday, that this is bleeding into
main street. Just to go over these numbers, your head
expected inflation at six point seven percent, that's the highest
going back to nineteen eighty one. Preliminary April consumer sentiment
falling to fifty point eight, the estimates for fifty three
(26:06):
point eight. Our team called it ugly in terms of
results that seems to be hitting consumers.
Speaker 6 (26:12):
This is where the difference in data makes a big difference.
Consumers what they say on a survey like the one
you just mentioned, and how they actually behave, which is
the data we collect on their actual credit cards and
other payments. There's a big difference. And what you see
through the end of March, and this is the early
view on the data that we're providing exclusively to Bloomberg,
is that consumers feel confidently cautious, right, so they're paying
(26:36):
down their credit balances. Credit utilization actually declined, they're actually
working hard to keep up on payments. Credit delinquencies across
all products actually declined on a month over a month basis,
So consumers are cautiously confident. What happens next, of course,
is the big question. But what we can see is
through the end of March, banks actually reduced their new
(26:59):
lend So banks are concerned, no question about it. Consumers
are not as much.
Speaker 4 (27:04):
So, Sylvia, are consumers paying more on balances, Like, there's
the activity picking up, and I'm just wondering if it's
anticipation of like things could get a little rough. Let's
pair down our you know, let's cut down on our balances.
Speaker 6 (27:17):
Yes, that's exactly what's happening. Consumers are actually paying more
on balances, which is.
Speaker 4 (27:22):
Plays into what Tim was talking about sentiment. If you're
worried about the future, you might work on your balances,
your credit balances.
Speaker 6 (27:28):
Yes, And just to be clear, you'd have to be
living under a rock not to perceive higher risk. But
the reality is consumers do feel confident about where they are.
They're credit healthy.
Speaker 1 (27:37):
Now.
Speaker 6 (27:38):
An alternative, Carol, you talked about what's happened in the past.
If you look back at the two thousand and eight crisis,
which you saw, there is a different behavior credit balances
spiking significantly and at the same time delinquency spiking. We're
not seeing that right now. In fact, it's the opposite.
Balances are being managed well and delinquencies are actually improving
(27:59):
rather than getting worse.
Speaker 3 (28:00):
How real time is your data? You're sharing data with
us from March, but the so called liberation Day was
April second, and that was the data caught everybody off guard.
We can just look to the market reaction for proof
of that. Do you have access to the April data? Yet?
Speaker 6 (28:14):
We look at the data on a very regular basis,
and the data we have the most comprehensive and most
frequent data Vantage Coore credit gage is published every single month.
We're the most definitive source out there because we score
all consumers.
Speaker 4 (28:27):
All right, to cut to the chase, we have a
minute laugh, what's the data showing you in real time?
Speaker 6 (28:30):
Well, the data showing us that this continued healthy credit
behavior is continuing through the early part of April. But look,
the reality is, as you heard in Chairman Powell's statements,
there's more risk than there has been before, in part
due to tariffs. Consumers see that as well, and they
want to be well prepared for any new risks that
can come.
Speaker 4 (28:50):
So delinquencies aren't going up or any of the activity
that you saw in March. It's kind of the same
thing you're seeing.
Speaker 6 (28:55):
That's exactly exactly right, and we're going to continue to
monitor that. Then I'm sure you'll have be back next
month to talk more.
Speaker 3 (29:01):
Silvio says, everything's awesome.
Speaker 4 (29:03):
Well, he's a cautiously optimistic.
Speaker 3 (29:05):
Exactly cautiously awesome, exactly rightious awesome.
Speaker 4 (29:08):
I like that. Listen, Thank you so much. I love
looking at data and getting an idea of what the
consumer is doing so important to the economy. Sylvia toavours.
He's president CEO at Vantage Score of course, the credit
data and credit risk analytics firm, joining us right here
in studio.
Speaker 7 (29:22):
Sylvia.
Speaker 4 (29:23):
Thank you.
Speaker 2 (29:24):
You're listening to the Bloomberg Business Week Podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and the Android Auto with the Bloomberg
Business app.
Speaker 7 (29:34):
Or watch us live on YouTube.
Speaker 4 (29:40):
Macle how about you let me drive?
Speaker 2 (29:42):
Oh no, no, no, no, this is not a toy an right, please,
I'll do.
Speaker 1 (29:50):
I want to drive.
Speaker 4 (29:51):
It's a good question.
Speaker 7 (29:55):
Good, this is the drive the clothes.
Speaker 1 (30:00):
That song's communicic well, Briar Jovin.
Speaker 7 (30:03):
Don on Bloomberg Radio.
Speaker 4 (30:05):
All right, TikTok, everybody, we've got just about eighteen minutes
to go until we wrap up the trade on this Wednesday,
April sixteenth. Remember it's today and tomorrow, and then we
are closed Friday for the Good Friday holidays. So we're
seeing we just see some selling off of J. Powell's
comments on no FED put and some other concerns. But
we are kind of rounding off our worst levels of
the session. So what is it.
Speaker 3 (30:26):
We'll only down two point eight percent on.
Speaker 4 (30:27):
The spive hundred, but it was worse. And it's interesting
with only about eighteen minutes, seventeen minutes to go that
we aren't seeing maybe another leg down. So I don't
know what that says.
Speaker 3 (30:36):
I don't know, but I love the optimism that you have.
Speaker 4 (30:39):
I know, I know, but you know me, I always
like to look and see what happens into the clothes.
Speaker 3 (30:42):
Let's see what David Harden has to say about this.
He's found in CIO of Summit Global Investments. They've got
about two billion dollars in assets under management, usually based
out in Utah. He's here in the Bloomberg Interactive Brokers studio.
How are you watching this environment?
Speaker 1 (30:56):
Well, both eyes right, like you can't take your your
ears eyes off the market. It's constantly keeping your attention.
Speaker 3 (31:04):
It's like having a toddler running around the house. I know,
you can't take your eyes off.
Speaker 1 (31:08):
That Rico rabbit, right, Yeah, they're going to break something
in your house. Yeah, so you have to pay attention.
You know, almost was forced out a little bit. We
had this really good retail sales this morning. You're thinking, Okay,
we like that. Mark didn't move much, but okay, And
I think that gave a little bit more freedom to
pal to say, Okay, well maybe I can be a
little bit more leanient on being negative. And I don't
(31:31):
mean negative, like he's not a negative person. I'm not
putting him down, but the news was received negatively. And
people don't want to hear persistent inflation, right, they don't
want to hear that. But the reality is is we
don't know, and that's what he said.
Speaker 4 (31:43):
So what do you do in terms of investing right now?
What have you been doing through the last couple of
weeks here with all this volatility and people saying, okay,
you don't sell at the bottom, got it? Tim and
I were kind of joking off air, Yeah, okay, I
get it. But if you've already lost potentially ten twenty percent.
Speaker 3 (31:58):
Yeah, we're twenty one week off off the s and
P five hund highs. We didn't close there, but we're
twenty percent.
Speaker 4 (32:03):
Off, right, But you could go down another twenty percent,
Well it could.
Speaker 1 (32:07):
You gotta be real if you're going.
Speaker 4 (32:09):
To I'm not saying they are. I'm just saying that,
you know, doesn't make sense to be really cautious and say,
all right, I don't want another twenty percent of f
lie potentially.
Speaker 1 (32:16):
So that's a difficult thing. If you're going to in
the middle of a hurricane, try to put up plywood.
Not a good idea. Preparing for the hurricane good idea.
So one of the things that I hope this drives home.
Speaker 4 (32:28):
But if you're in the middle of a hurricane and
you haven't put up the plywood, you go run, You
go find some safe haven.
Speaker 1 (32:33):
You get some protection for sure. And so there's two
aspects here. One is that I hope that people take
this away and say, hey, I need to have managed
risk in my portfolio as a safe haven. I need
to have some protection or downside protection all the time.
It's not something I go to when I need it.
It's something that the plywood takes up space in your garage.
It's just going to have to do that. People not
(32:54):
doing this, No, I don't think so. I don't think
people were managing risk. It was all how much exposure
at max seven do I have?
Speaker 3 (33:00):
That's imagining how do you think people should manage risk?
Obviously it changes depending on the person where they are
sure in their life and what they're tolerance for risk is.
But when you say downside protection, are you talking fixed income?
Are you talking crypto? What are you talking about?
Speaker 1 (33:13):
Well, like you said, it is you know, client dependent, right,
So for the large institutions that we manage money for,
it can be like how you're actually buying the securities?
When do you get in a different securities? What makes good?
For example, right now, the video down so heavily today,
right because of that China exposure and that big five
point five billion dollars right and AMD eight hundred million dollars.
(33:34):
So if I was looking at tech and I was
a big institution, maybe you look at something like even
though Google has AD revenue and people are going to
pull it right, they're going to slow down. It's going
to have a hit. Put twenty five billion in cash
flow in one quarter eighteen percent, you know, year over
year type of growth. It's a pe right now is
around sixteen. This is getting attractive. And it's a different
(33:56):
revenue source and non tariff specific revenue source that if
I was having to stay in tech, yeah and move
that that's a transition that you could make right now
in the storm?
Speaker 4 (34:05):
What you read when the United Airlines CEO comes out
and gives you two different scenarios and says, okay, you know,
IF's the recession, here's what you know our results are
going to look like. And if not, okay, you know
we're kind of going to be, you know, business as usual.
What do you how do you read that?
Speaker 1 (34:19):
Well, a couple of things. Number One, leadership. You have
to have leadership in a market like this. And here's
a person that came prepared right with two different scenarios
and showed a ton of leadership. This takes time to prepare,
It takes a team to prepare. It tells you a
lot about the scenarios, right, Yeah, that tells you a
lot about his team. And not that there isn't good
teams across the street, but he did a good job.
(34:40):
And I think that's a pattern that other leadership teams
in other you know, big companies need to follow. So
one very impressive from a leadership standpoint. Secondly, he called
it I don't know. I don't know what's going to
happen other companies.
Speaker 3 (34:52):
Other companies say I don't know and they pull their
guide in like Delta Airlines did last week. Right, is
this the same thing as guidance? You're just providing best
case scenario in worst case scenario.
Speaker 1 (35:04):
Well, in some respects you are. But I think that
you know, hey, marketing is there for a reason. Yeah,
and in some respects, I think that how you couch
that message and how you share that message matters, right,
message really does matter.
Speaker 3 (35:17):
And look, they still said that we're cutting capacity United Airlines,
that is cutting capacity in the third quarter of the year,
and we're making changes to adjust for people not flying
at the same rate that we thought they would.
Speaker 4 (35:28):
I just got to mention because we're just saying, hurt
shares quickly jump up to session highs.
Speaker 3 (35:32):
This is a good gainer for you.
Speaker 4 (35:33):
Yes, And you actually pointed it out to me earlier
in the day, so it is one of my gainers.
But it's up about twenty eight percent we've seen it up.
I think more than we just look session highs. Here,
we were up I think even closer to thirty percent.
Speaker 5 (35:45):
Here.
Speaker 4 (35:46):
We know that Pershing Square Capital Management has come out
revealing a large stake in Hurt, specifically buying about twelve
point seven million shares. That was a filing that came
out today. The stock's been up as much as thirty
two percent, So I just wanted to all that to
everybody's attention, since I don't know. When you see a
move like that, you kind of wonder if we might
get something.
Speaker 3 (36:06):
You made David pull out his phone. I wonder if
he's buying.
Speaker 1 (36:09):
Well, I had to check and make sure I didn't
miss anything.
Speaker 6 (36:13):
Here.
Speaker 1 (36:13):
Yeah, but you know, the market's still off, so it's been.
Speaker 4 (36:16):
Higher all day, but it just took a big move
to the upside market.
Speaker 3 (36:20):
The company that's been beaten up and it went through
bankruptcy process Tesla issue, which is actually a perfect segue
to talk to you a little bit about Tesla shares.
A Tesla off the worst levels of the day, down
only about seven percent right now, but it was down
more than seven percent. So bouncing off the lows, you're
you're steering clear of Tesla.
Speaker 1 (36:38):
Well, I think that I think you have to writ
I mean Number one talked about leadership earlier. There's a
lot of volatility there, right, and we all we all
love what Elon Musk has done, there's no doubt about it.
But you're managing risk is somewhat about managing your volatility, right,
It's not necessarily about our performance. Yeah, and so I
think Elon Musk, from a personality standpoint, will let us
(36:59):
know when it's time to buy Tesla. He hasn't done that.
Speaker 3 (37:02):
What do you mean like meaning he'll leave the government
and go back to Well, I think he's just on
his companies.
Speaker 1 (37:07):
Yeah, I think he's now spoken leader. I think he
lets you know. I mean he's not the now is
a great time to buy stocks signal that we got
on Wednesday of last year. Yes, right in the morning.
Speaker 3 (37:17):
The president's post to social media.
Speaker 1 (37:19):
Right right, and it wasn't even tweet right on his
social media.
Speaker 4 (37:21):
Like the business or you just don't like the stock
right now?
Speaker 1 (37:23):
No, I think the business is hurting you see California. Yeah,
registrations are down fifteen percent, that was announced. It's negative
earning surprise. So I think it has had some negative business,
but I think and don't get me wrong, Hey, I've
driven a Tesla. You guys have all driven different cars.
You love different cars. There's definitely a loyal following following.
I was driving behind the Tesla the other day and
a little bumper sticker said, I bought this pre crazy.
Speaker 4 (37:45):
We've talked about this on it, so yeah.
Speaker 1 (37:48):
I think that's out there. But having said that, from
a purchase perspective, I think there'll be better entry points
in the future. And I think Elon Musk will let
us know by a nownouncements by you know, he's of
his product. Guy, what's the next product? When he lets
you know about that, well, that's probably your time.
Speaker 3 (38:08):
You know. I got to tell you both, Carol and
I are obsessed with what's happening in China when it
comes to vehicles, and just the more I learn about
the evs that they have in China from companies like
Shao Mei huaweih BYD, the more I think we are
so far behind here in the US.
Speaker 1 (38:23):
Part of that's messaging, for sure, you're getting the good
message and that's how it should be, but part of
its reality we are behind. I mean, take a look
at some of our US based if you want to
say that US based manufacturing and products and our vehicles
are not what they could be and we need a
swift kick in the pants and get better.
Speaker 3 (38:43):
Just to remind everyone, and I bring this up all
the time. In the fall, we talked about the Ford CEO,
Jim Farley. He had been driving this Shaomi SU seven
ev you remember this, I do, and he didn't want
to give it up, which is pretty wide.
Speaker 4 (38:57):
That's wild, right exactly if you think about it. But
the history of an automaker like Ford, right, And then
thinking about that, so are there longer term implications from
this political and economic environment potentially an environment that lands
where we have a higher tariff. Maybe maybe it's on China,
(39:19):
maybe it's across the globe.
Speaker 1 (39:21):
I think. So it's like you tell your kids, Carol
in the sense but getting.
Speaker 4 (39:24):
Bet on that there's already going to be longer term
implications of this environment.
Speaker 1 (39:28):
You can only make your choices. You can't choose your consequences, right,
and so we can't. We can't do that, And the
reality is there's going to be some.
Speaker 4 (39:36):
Consequences, consequences. It's been like a thing throughout her She's like,
I know, Mom, I know actions have consequences, but go ahead.
Speaker 1 (39:41):
But you can't choose them. And I think there will
be some now. I hope some of these are the
good things. I hope people realize, hey, I need managed
risk my portfolio all the time. I hope people realize, hey,
I need diversification all the time. These are some really
important things to kind of take home as principles to
live by. Not just need them when I when I
need them, that's.
Speaker 3 (39:59):
Not the Well how are your portfolios prepared for situations
like this? Because when I asked you earlier, you talked
about moving into Microsoft is basically ahead or Google rather
excuse me, a hedge for safety. Microsoft is another one
of your picks. But geographically, are you overweight US? Are
you global? When it comes to the equity side, there's
been a big theme this year moving away from US
(40:20):
exceptionalism and look no further than what's happening outside of
the US with the equity market returns beating the S
and P five hundred.
Speaker 1 (40:26):
For sure, and I think that's been if you look
at an AID allocation standpoint. This is something people have
been saying for a long time, right to diversify outside
the US. Now, we still are more US than outside
as a whole, but our outside global holdings have been increasing,
and we manage a global fund for clients, and that's
a very attractive fund for them. So I think that
you have to have some diversification outside the US absolutely.
(40:48):
I think you also have to have some other exposure.
UNI rates are doing really well right now, and quite frankly,
you know our ore ETF that may manage its tickers USDX.
It is more of a cash product, and so can
you get more on your cash if you have half
cash or need cash. These are some very important alternative
income type products you can use.
Speaker 4 (41:09):
I'm curious about the Global Fund because this is something
that certainly we kicked off the yard. But he was
talking about Europe, although people were still talking about American
exceptionalism as well. There was a point where the eurostocks
fifty was really showing some outperformance. We're now only up
about is it about one and a half percent on
the year, because it too has been beaten down. I mean,
where globally have you placed money for investors? Where has
(41:33):
money been flowing at this point? What do you what
are the international what's the international portfolio.
Speaker 1 (41:38):
Yeah, I think, I think when you look at that
there has been money moving Europe ways that definitely German Germany.
Speaker 4 (41:43):
But I would take one percent right now or one
and a half percent based on sne as.
Speaker 3 (41:47):
Opposed to a hold on decline of ten point four
percent this year.
Speaker 4 (41:51):
Yeah, I'm in, I'm in.
Speaker 1 (41:52):
But yeah, so I think some Europe's a really good
play right there. I think Germany has been a really
good play. And there's still some stuff out in Southeast
Asia and other area areas. Most of that is just
diversifieding away from the uncertainty that we're filling in the US.
Speaker 4 (42:06):
But if there's uncertainty your recession in the US is,
then should we just assume that it's a global recession?
Is that how you would think of it from an
investment perspective?
Speaker 1 (42:14):
I would, I mean think about it. S and P
five hundred companies to get over fifty percent or they're
close to of their revenues from overseas sales. We are
a global society, right by investing in the S and
P in some respects, you are investing in a global society.
We're more connected today than ever. A tweet in you know,
somewhere in California, lands in Dubai, and the whole market.
Speaker 3 (42:35):
Moves, you know, speaking of the whole market moving, I
bring this up all the time, So forgive me to
our loyal viewers and listeners who just keep hearing me
repeat the same thing over and over again. But the
fact is I have been speaking with friends who are
not you know, people who follow this stuff each and
every day, and this is getting on their radar. They're
getting scared, They're pulling money. They're saying there's a structural
(42:55):
shift happening. I have two friends who have done this.
Their concern is that the US is fundamentally weakening because
of trade barriers that are coming up, and we're going
to see a fundamental shift in the next few years.
And they're no longer bullish on America. Are they making
a mistake?
Speaker 1 (43:11):
Well, I don't know about that, but I know that
in every down market like this same thing we thought
about it in two thousand and eight, I mean big bad,
and I don't like twenty eighteen, February fifth, one day.
I mean, in these big down markets two thousand, stuff
go out and Google Warren Buffett two thousand, you know,
doesn't know what he's doing.
Speaker 7 (43:29):
Cool.
Speaker 1 (43:30):
Search for it, you're going to find article out of article,
a very well respected you know, columnist et cetera, talking
about how Warren buff had lost his marbles and wasn't
that the world changed? And yet what was he in
two thousand and two? A genius? Again?
Speaker 7 (43:43):
Right?
Speaker 1 (43:44):
And so yeah, so nine, I think that it's warranted.
I think you have to, you know, check your ego
at the door and be humble. I think, is is
this a different market? Is this changed? And maybe making
some changes there, but I think cashing out completely, I
don't think that's the right way.
Speaker 3 (44:00):
By the way, just a reminder, Berkshire Hathaway up for
this year by fourteen percent.
Speaker 4 (44:03):
Yeah again I would take that as well. Hey, Hurts Global,
by the way, is up about fifty two percent, So
the momentum to the upside it is just off the charge.
It just it's you know, what's going on here? Well,
it makes me wonder are we going to get some
kind of news or something.
Speaker 1 (44:16):
It doesn't Hurts have a pretty big private amount of
the shares held, so it doesn't have a huge float
as well on the Hurts so that also can help
with these short squeezes. Because there's not a lot of.
Speaker 4 (44:29):
Forty five percent of the float was shorted. So yeah,
anybody who's seeing this move to the episode. But it
does make me wonder on the news whether or not
we could see something. We're going to leave it there.
Thank you so much, and thanks for being with us
and doing that deep diving into the market. Steve Harden,
founder and CIO of Summit Global Investments joining us in studio. Folks.
We've got about three and a half minutes to go
until we wrap up the trade.
Speaker 2 (44:51):
This is the Bloomberg Business Week podcast, available on Apple, Spotify,
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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 Week
Daily Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 3 (00:33):
Well, as I mentioned, we really want to spend the
next few minutes going all in on China and everything
that's happening when it comes to US China relations. On
that China wants to see a number of steps from
President Trump's administration before it will agree to trade talks,
including showing more respect by reigning and disparaging remarks by
members of his cabinet. That's Carol, according to a person
familiar with the Chinese governments, thinking, that's.
Speaker 4 (00:54):
Right in other conditions, including more consistent US position and
a willingness to address China's concerns around American sanctions in Taiwan.
According to the person who asked not to be identified
to discuss internal thinking, we are all trying to gauge
what is the conversation if there is one going back
and forth, and whether or not there can be some
kind of resolution that doesn't impair both of these economies
(01:17):
so important really to global growth.
Speaker 3 (01:18):
Well, that's why we wanted to speak with Caroline Freud.
She's dean of the UC San Diego School of Global
Policy and Strategy. She was also a Senior Fellow at
the Peterson Institute for International Economics, a Global Director of Trade,
Investment and Competitiveness at the World Bank, and earlier did
time at the FED and the IMF. She's also the
author of the book Rich People, Poor Countries. The Rise
(01:39):
of Emerging market Tycoons and their Mega firm. She joins
us from La Joya, California. Caroline, it's good to have
you on the program. I want to start with this
idea of respect and really what it means in the
way that China is using it in your view in
regards to tariffs and the tit for tat when it
comes to this trade war.
Speaker 5 (02:00):
Yeah, I think you have to take into account that
China is a country that prides itself on having five
thousand years of civilization, so a five thousand year history,
and they do things gradually. They've had the time to
learn to do things gradually, and Trump is doing things
(02:21):
very chaotically, and that's not something they're used to dealing with.
There have been comments by Jadie Vance and others talking
about peasants lending money to buy things made by peasants
lending money to the US. So this isn't the way
to work with China. They expect to have a deal
(02:43):
worked out by the technical folks and then the leaders
to only meet once that deal is worked out. So
bottom up and gradual, not the top down and chaotic
that Trump is initiating.
Speaker 4 (03:01):
Is this just jocking? I keep wondering these two economies
still kind of need each other or do they not?
Like is there something we're missing in terms of what's
going in internally in China? And Tim and I have talked,
We've listened to some podcasts who said, you know, COVID
changed a lot of things and a lot of American
businesses pulled back or executives and eyes on the ground.
(03:23):
Maybe not so much in China, and there's a lot
more sophistication in terms of what they are producing and
how they are doing it that maybe is going unawares
by the world at large. But help us understand what
is China today? It's not just a manufacturer of sneakers
and T shirts.
Speaker 5 (03:43):
No, China is a very advanced country with some of
the frontier technologies on things like electric vehicles, autonomous driving,
and even in AI. They've made substanti progress, though they're
still behind the US. But there is a symbiotic relationship.
(04:06):
So China is worried about deflation, we're worried about inflation.
And these are exactly two sides of the same coin.
They have over capacity, We don't really have the capacity
or know how to do manufacturing anymore. And while there
have been problems with the relationship, we do need each other.
Speaker 4 (04:29):
And why do we still need each other? Why do
we still need each other? Because I think there are
some who say China maybe doesn't I don't know, or
maybe the US doesn't.
Speaker 5 (04:39):
Well, there are a lot of things we get from
China that we need to keep our economy going. So
we live in a world of global supply chains where
parts and components are coming from China as well as
other countries. So trying to manufacture in isolation is just
frankly a non starter. Won't be competitive in a global market.
(05:00):
China is also sitting on seven hundred billion in US
dollar assets. So that's another area where China has a
pretty big trump card to play. I don't think they will.
It's a country that wants stability. It's a careful in
any policy move it takes. But we very much need
(05:21):
each other. We need each the goods each other produces,
and we need to work together and work through this.
It's not perfect. Some decoupling is probably good, but sudden
and sharp is going to be painful. And that's why
we see it. With what's been happening with the stock
market now, I think we're not only having an own goal,
(05:43):
we're on our way to an own hat trick.
Speaker 3 (05:45):
The White House Press Secretary Caroline Levitch said this week
that China needs what the US has, which is consumers
who spend money. Is that accurate in your view?
Speaker 6 (05:56):
Yeah, it is.
Speaker 5 (05:57):
That's why they're suffering deflation, That's why have excess capacity.
They need what we have, but we need what they
have too. We have a population that's used to buying
things and buying things cheaply. The growth of the Chinese
economy has been part of what kept inflation so low
(06:17):
for so long and supported global growth so yes, they
need us, but I wouldn't say that doesn't mean we
don't need them. This is going to hurt us both.
It may be a question of who it hurts more,
but there could be a way to make it a
little softer for both of us.
Speaker 3 (06:37):
You know, one question that I keep asking anyone who
will speak to me about this is who has the
leverage in this negotiation between the US and China. You
said the relationship is symbiotic. These two countries need each other.
But is there one trading partner that is more powerful
than the other and why? Well?
Speaker 5 (06:55):
I think initially it looked like the US because China's
economy is already in a slowdown because of demographics, because
of their own property issues property crisis there, So it
looked like we had more power. They really really need
our consumer. But there's one thing they have that we
(07:18):
don't have, which is a population that they can control
and that is more willing to tolerate pain than the
US consumer. So at this point, I think it's kind
of a toss up.
Speaker 4 (07:33):
So does that just mean President g is willing to
inflict a little bit more pain maybe on his people
and means he can kind of fight this fight a
little bit longer than maybe the US can.
Speaker 5 (07:44):
Yeah, and he has more authorities, so he has complete
control of the media. So my understanding from Chinese colleagues
is that in the Chinese press now a lot of
people have access to VPNs, but in the Chinese press,
the average person doesn't know that tariffs are over one
hundred percent now, So the numbers aren't out there, the
information isn't out there. There's a calm there, and there's
(08:09):
an ability to control the economy, stimulate the economy, support
people that we just frankly don't have, as well as
the consumer here, who's going to be upset. You saw
what happen over price of eggs. Imagine when that's everything
you go to the store for.
Speaker 3 (08:27):
That's a really good point. That is a very good point.
Speaker 7 (08:29):
Hey.
Speaker 3 (08:30):
One of the reasons we wanted to speak to you
is you have done so much when it comes to trade.
A reminder, you were a senior fellow at the Peterson
Institute for International Economics, Global Director of Trade, Investment and
Competitiveness at the World Bank. How does this trade war end?
Speaker 5 (08:47):
That is the million dollar question. Hopefully it ends with negotiation.
So there does seem now to be negotiation with other countries.
Trump has made it clear that if she him up,
he'll take the call, so I think we can get there.
(09:08):
But right now we have two big trucks driving at
each other and it looks more like a game of chicken. So, uh,
it's time will tell I guess.
Speaker 4 (09:17):
Yeah, someone likened it too. What's that crazy like wrestling
stuff that goes on.
Speaker 3 (09:23):
I have no idea what you're talking about.
Speaker 4 (09:25):
Somebody did on surveillance this from my tweet, but it
was like, basically, that's what it looks like. I don't know.
I don't watch these wrestling things. Oh, UFC battle between
China and the United States, that's what it feels like.
That was on surveillance, overhead, on surveillance overheard, that's our
morning show.
Speaker 3 (09:39):
Hey, you're going to get a lot of pushback for
calling UFC wrestling. I'm just going to throw that out there.
Speaker 4 (09:45):
I'm so sorry. I'm so sorry. If the United States
aim Caroline is to contain the rise of China, if
that is the ultimate goal, then what.
Speaker 5 (09:58):
I think that's a really hard thing to do. China
is a big country, so I think it can slow it.
I think probably it already has with some of the
restrictions on technology. That the other side of that is
it's encouraging innovation in and of itself. So the fact
that we held back on AI chips probably made something
(10:20):
like deep Seek more likely. So I don't think there's
a holding back of a country the size of China.
So what we need to work towards is managing in
a world with China and working more closely with our allies.
(10:41):
So this could have been handled, in my view, much
better by working with countries in Europe, countries like Japan
and Australia, and sort of isolating China that way, encouraging
China to play by the rules that we want to
set as a globe. The US is less than fifteen
(11:02):
percent of global trade right now, so there's eighty five
percent of economic might out there without us. We really
can't engage in this fight alone, do our allies?
Speaker 3 (11:14):
And I use that term loosely right now, because I
think a lot of folks would say we're fighting with
allies right now, at least when it comes to trade.
Do they feel the same way about China? Just in
the last forty five seconds we had with you, I.
Speaker 5 (11:30):
Think they're beginning too and I think one thing this
will do is China now needs to sell all the
goods it's not selling to us somewhere else, and other
countries are very very worried about that. So in that sense,
we may pull them along with us. But Trump's vitriol
has certainly pushed them away. So I think we're going
(11:52):
to have to see. But I do think there's room
for that if we behave a little more nicely.
Speaker 4 (12:00):
Ah See, the world would be better if we all
just were a little bit nicer. It's really kind of
something that is looking at me said you're super nice. No,
I'm not looking at you, but I just Caroline, thank
you so much. We were really looking to do kind
of this deep dive because we feel like it certainly
is that relationship between the US and China so important
(12:20):
to kind of what happens next globally. She's Diana at
the UC San Diego School of Global Policy and Strategy,
joining us from La Joya, California.
Speaker 2 (12:30):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 4 (12:45):
All right, folks, one of our big business and market
stories today hit pretty early. Semi coonductor shares are selling off.
I'm looking at the socks down about six percent as
we speak, and I'm looking at all thirty names in
the Philadelphia Semiconductor Index lower in today's session, and Nvidia
the biggest, almost down about ten percent. AMD down about
(13:06):
nine percent. This has new US government restrictions on the
export of Nvidia chips to China and a disappointing report
from ASML holding really dimming the outlook for the semiconductor sector,
wiping out a lot of money, billions and billions of dollars.
AMD also saying that it expects to take a charge
of as much as eight hundred million on the Trump
Administration's new restriction. So let's get into it. We've got
(13:28):
a great roundtable. Bloomberg Intelligence Senior Semiconductor alis Kunjohn Sabani
is with us out there on the West Coast in
San Francisco. Also in our San Francisco bureau, Bloomberg Technology
co host ed Ludlow. Where to begin? Where to begin?
Kunjoh Let me just start with you, because we have
seen bands on the semi sector over the last few years.
(13:49):
What's the new news and the impact of such.
Speaker 8 (13:54):
You know, first of all, this does not a ban
as a license requirement, which in theory you could get approved.
But this was the event that this happened, was not surprising.
Maybe the timing was and the magnitude this time around
was much larger. And Nvidia has gone through multiple of
such sanctions to China and every time, you know, they
have to take take some revenue head because they could
(14:15):
not ship some products this time around. Over the last
few quarters, China has been creeping up as a percentage
of data center, getting close to sort of ten percent
in our estimate as of last quarter.
Speaker 7 (14:26):
So this the.
Speaker 8 (14:26):
Magnitude now continues to increase. And I think this the charge,
the five and a half billion charge, which we think
implies to about forteen to eighteen billion dollars of revenue
that they could have shipped, implies there was some definite
demand pull in in anticipation of such restrictions.
Speaker 4 (14:43):
So wait, let me just fine tune. So not a
bad forgive me so licensing, So what does that just
mean another document or something like, what's the distinction? Because
you obviously made it because it's an important one. What
is that distinction?
Speaker 8 (14:55):
Yeah, the prior restrictions on the Hopper family have come
as sanctions where the US government comes and just say
you cannot ship this product to China, period, and you
have to develop a new product that satisfied those conditions.
This time around, it's licensing where they can still ship
H twenty in theory if they get a license for
each respective customer to ship to China.
Speaker 3 (15:15):
Okay, important distinction. Thanks for explaining that. I want to
bring in Ed Ludlow, who follows, of course the space
closely and specifically asked about this H twenty technology. Ad
What is the technology that is being restricted at this
point and where could Chinese companies and where do Chinese
companies want to use this tech?
Speaker 9 (15:35):
Yeah, it's a so called AI accelerator or high performance
GPU and other components that go into a system that
largely are involved in the process of either training a
large language model or more relevant to H twenty and
the anxiety of this US administration inference, the H twenty
is a lower performance chip relative to the cutting edge
(15:59):
of what Nvidia does. It's the Blackwell, right, It's just
a variant. Right, It's a prior generation to Blackwell. It's
but on a slightly different architecture black Well. We can
go into the specifics of why it's different, but all
that you need to understand from a sort of markets
perspective and also like the political equation here is that
it doesn't do as much as the cutting edge accelerators
(16:22):
that in Video makes. But there's still anxiety from this
administration that China could use it in the context of
an AI supercomputer and that they will try and argue
presents a national security risk. And Kunjan's analysis is absolutely fundamental.
You guys ask the right question, what's the distinction on
a license and why a five point five billion dollar
(16:42):
write down? A five point five billion dollar write down
because in Video probably knows it ain't going to get
a license. Why else would you do the write down
and just clear that inventory off your desk. They kind
of seem to have a sense of where this is headed.
Speaker 4 (16:56):
So Coon John, I mean and love what you know
you said where the this is headed? Ad because I
do feel like the devil's in the details and it
keep seeing different things in terms of I feel like
the semi conductor world, but it does feel like this
administration bottom line, is going to continue to put some
kind of restrictions in different ways. Is that a fair assumption?
(17:16):
Is that a bad assumption?
Speaker 8 (17:19):
And that is definitely a fair assumption. And look, the
writing has been on the wild even before this administrative
steps in right that for the AI, the high end
AI semi makers, the China market TAM is just continuing
to shrink, and it will continue to shrink as we think,
even prior and this administration continue to sort of block
or limit the amount of highest, highest end performing chips
(17:42):
that China can get access to.
Speaker 3 (17:44):
Does it matter ed in the long run for China's
AI ambitions? Does this just slow China down? Or does
this actually hamper what they're trying to do? I mean,
look what happened with DEEPSEK.
Speaker 9 (17:56):
Yeah, it's super interesting. I mean, you know, even though
the write down on that even of H twenties is
indicative that Nvidia knows the doors closing in that market,
they could always come back with an even lower spec
chip that is within the parameters of the restrictions as
they understand them. One really interesting paradox here is the
(18:16):
side effect of the White House's policy, which is that
China does have some options right. The context is that
in the world of AI, fifty percent of the research
is being done out of China. Literally, fifty percent of
all AI researchers are Chinese or Chinese citizens working somewhere
around the world, but they have access to other technology.
(18:37):
Huawei is increasingly becoming the national champion of China. It
does not have a Blackwell, the highest performance chip that
Nvidia produces, but it does have something akin to the
AH twenty. And so now China has the ammunition and
poor word, the motivation to champion its own domestic player
and say, you know, you know what, have a leg up,
(18:59):
Let's use your AGE twenty equivalent instead.
Speaker 3 (19:01):
So interesting was the exact conversation I was having with
a colleague a little earlier, ed, Kunjon, I want to
bring you back in here, because you're also watching AMD
shares down nine point two percent nine point three percent
as we speak. The company said it expects to take
a charge of as much as eight hundred million dollars
after the Trump administration putting new restrictions on semiconductor exports
to China. What is the AMD product that we're talking
(19:21):
about here.
Speaker 8 (19:23):
Well, AMD also has a similar water down version that
it was going to ship to China. It's called the
three eight versus the three hundred series that it's shipping
everywhere else. You know, the impact on AMD. The number
for AMD were surprising to us in terms of the
exposure that we didn't think it happed to China. I
think when you look at apples to apples, the AMD
(19:45):
will be impacted a lot more than in media here
because sort of when you think about the lower tier
or the pre Blackwell version of GPUs, this is where
AMD competes with Nvidia, and we thought, you know, given
the price competitiveness in China, this is where AMD could
gain a little bit higher share than in the US.
So blocking this off for AMD to China will impact
(20:06):
it worse. Again, the scale is pretty different when you
compared to Nvidia ANDAMD.
Speaker 4 (20:11):
So what I want to ask you guys, and let
me go to you first, to ED, I mean, I
just feel like the news out of the chip sector,
I'm looking at the socks. It's just getting hammered. All
the names are down. I talked about Nvidia, AMD both
down about nine percent here in today's session, and we're
looking at an index that is down about six percent.
And we're down what thirty four to thirty five percent
(20:31):
from pink to trough. I mean, is there is it
just a normal semiconductor cycle that has as you know
that Ian King talks about, it's highs and lows, or
is it a really major rethink of AI or is
it just overall kind of market malaise and uncertainty.
Speaker 9 (20:49):
It's probably a rethink of supply chain. And it's really
been good to learn about how the semiconductor industry works.
Speaker 5 (20:55):
Right.
Speaker 9 (20:55):
This is where we tie in ASML. ASML was not
under pressure because of technology export restrictions. That was a
tariff story. But essentially the thing that they have in
common is that America wants the absolute cutting or leading
edge innovation to be kept to America. It doesn't want
China to have access. ASML does not make chips, It
(21:17):
makes the equipment that makes the chips, but their specific
equipment extreme ultra violet lithography machines are three hundred million
dollars apiece and they are crucial to making those cutting
edge chips. What the company told us this morning is
we don't know what's going to happen. We cannot quantify
it because it's more expensive doing business in America, asml
(21:38):
alreadly does quite a lot here, but it assembles its
final product in the Netherlands and it has some Asia
supply chain. So if you're a CEO, whether you're a
chip maker, a chip equipment maker, or a designer, you
now face a very simple calculus. It's going to be
more expensive for you to do business in America twenty
five to thirty five percent. That's just the cost of
doing things here, or you face doing things in a
(21:58):
jurisdiction in Asia, which we don't know the tariffon yet
because of the temporary White House reprieve. That's different to
market anxiety. Market fluctuations don't reflect the fluctuations that are
happening within these companies right now as they try to
assess how they're going to change their business models.
Speaker 4 (22:13):
Kon John Finally, final thirty seconds here in terms of
your thoughts here as we look at what's going on
in the overall semispace.
Speaker 8 (22:21):
Well, look, I've been in this space for twenty years,
and at every beginning of every cycle we say this
is a different cycle, and the exit of it we said, no,
the outcome was still the same, no matter what the
drivers there is definitely something different here where a lot
of global geopolitics is get involved. Put in context that
last year we were sort of peak of valuations. The
(22:41):
growth in AI was just increasing tremendously, which we know
cannot be sustainable. So yes, the drivers this time look
different for the cycle, but maybe the outcome might be
still similar to what we have seen.
Speaker 4 (22:52):
Okay, so not different this time around, right, not yet?
Speaker 1 (22:55):
Not yet?
Speaker 4 (22:56):
Okay, great stuff, guys, Thank you so much. Such an
important store today and certainly has does one that's really
got investor's attentions. Bloomberg Intelligence seamer semiconductor analyst kun John
Saboni out there in San Francisco. Also in San Francisco
at our bureau, Bloomberg Technology co host at Ladlocal.
Speaker 2 (23:14):
This is the Bloomberg Business Week Podcast. Listen live each
weekday starting at two pm Eastern up on Apple car
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 3 (23:35):
Okay. J Powell covered check did that. We're need to
do more a little later with Michael McKee. Semis covered
for now. Did that? Now to the all important really
read on the US consumer. US retail sales rote substantially
in March on a jump in car purchases and other
goods such as electronics, suggesting consumers were scrambling to get
ahead of tariffs. Maybe you buy a car, You buy
(23:58):
a car, You buy a car before those is going
to buy an iPhone?
Speaker 4 (24:01):
You buy an iPhone.
Speaker 7 (24:01):
Baby.
Speaker 3 (24:02):
Celia Tavarius is a president and CEO at the Credit
Data and Credit Risk Analytics for Advantage Score. He's back
with us here in the Bloomberg BusinessWeek Studio. It's a
joint venture of Experience, Equifax and TransUnion. Good to see you,
good this afternoon. Just an easy question for you, how
is the consumer doing?
Speaker 6 (24:17):
Consumers healthy? You know, we look at consumer health from
a credit score perspective. A perfect vantage score is eight fifty,
a really bad vantage core is three hundred. Through the
end of March, vantage score average was seven oh two.
Speaker 3 (24:33):
And how does that relate to other times in the
last four years.
Speaker 6 (24:36):
Let's say, well, that is high, and in fact it's
one point higher than last month, so it actually increased,
which was a big surprise you would have expected with
all the headlines that you've been covering that actually the
consumer would not be credit healthy. We actually saw the opposite,
very positive.
Speaker 4 (24:54):
Well, you know it's interesting too, And I guess what
I want to ask you. I know you've been there
for a couple of years. I'm thinking I think fandage
score goes all the way back to two thousand and six,
and there's just been a few things that have happened
in that time. We've had the Great Financial Crisis, We've
had the COVID shutdown, and here we are today. So
I am curious when you throw these numbers out, how
does it compare two other moments of crises.
Speaker 6 (25:16):
Yes, so the real insight here is that the consumer
does not feel crisis. This is a main Street versus
Wall Street dynamic that we're seeing through the end of March.
Main Street consumers feel credit healthy. They actually have a
higher credit score. We saw actually consumer payments, so the
late payments, credit delinquencies across every credit product, auto loans,
(25:41):
credit cards, mortgages, all of those delinquency rates improved compared
to February.
Speaker 3 (25:46):
I got to push back on this Wall Street versus
Main Street part of this because we kind of saw
proof with the Umish survey that we got, the results
that we got on Friday, that this is bleeding into
main street. Just to go over these numbers, your head
expected inflation at six point seven percent, that's the highest
going back to nineteen eighty one. Preliminary April consumer sentiment
falling to fifty point eight, the estimates for fifty three
(26:06):
point eight. Our team called it ugly in terms of
results that seems to be hitting consumers.
Speaker 6 (26:12):
This is where the difference in data makes a big difference.
Consumers what they say on a survey like the one
you just mentioned, and how they actually behave, which is
the data we collect on their actual credit cards and
other payments. There's a big difference. And what you see
through the end of March, and this is the early
view on the data that we're providing exclusively to Bloomberg,
is that consumers feel confidently cautious, right, so they're paying
(26:36):
down their credit balances. Credit utilization actually declined, they're actually
working hard to keep up on payments. Credit delinquencies across
all products actually declined on a month over a month basis,
So consumers are cautiously confident. What happens next, of course,
is the big question. But what we can see is
through the end of March, banks actually reduced their new
(26:59):
lend So banks are concerned, no question about it. Consumers
are not as much.
Speaker 4 (27:04):
So, Sylvia, are consumers paying more on balances, Like, there's
the activity picking up, and I'm just wondering if it's
anticipation of like things could get a little rough. Let's
pair down our you know, let's cut down on our balances.
Speaker 6 (27:17):
Yes, that's exactly what's happening. Consumers are actually paying more
on balances, which is.
Speaker 4 (27:22):
Plays into what Tim was talking about sentiment. If you're
worried about the future, you might work on your balances,
your credit balances.
Speaker 6 (27:28):
Yes, And just to be clear, you'd have to be
living under a rock not to perceive higher risk. But
the reality is consumers do feel confident about where they are.
They're credit healthy.
Speaker 1 (27:37):
Now.
Speaker 6 (27:38):
An alternative, Carol, you talked about what's happened in the past.
If you look back at the two thousand and eight crisis,
which you saw, there is a different behavior credit balances
spiking significantly and at the same time delinquency spiking. We're
not seeing that right now. In fact, it's the opposite.
Balances are being managed well and delinquencies are actually improving
(27:59):
rather than getting worse.
Speaker 3 (28:00):
How real time is your data? You're sharing data with
us from March, but the so called liberation Day was
April second, and that was the data caught everybody off guard.
We can just look to the market reaction for proof
of that. Do you have access to the April data? Yet?
Speaker 6 (28:14):
We look at the data on a very regular basis,
and the data we have the most comprehensive and most
frequent data Vantage Coore credit gage is published every single month.
We're the most definitive source out there because we score
all consumers.
Speaker 4 (28:27):
All right, to cut to the chase, we have a
minute laugh, what's the data showing you in real time?
Speaker 6 (28:30):
Well, the data showing us that this continued healthy credit
behavior is continuing through the early part of April. But look,
the reality is, as you heard in Chairman Powell's statements,
there's more risk than there has been before, in part
due to tariffs. Consumers see that as well, and they
want to be well prepared for any new risks that
can come.
Speaker 4 (28:50):
So delinquencies aren't going up or any of the activity
that you saw in March. It's kind of the same
thing you're seeing.
Speaker 6 (28:55):
That's exactly exactly right, and we're going to continue to
monitor that. Then I'm sure you'll have be back next
month to talk more.
Speaker 3 (29:01):
Silvio says, everything's awesome.
Speaker 4 (29:03):
Well, he's a cautiously optimistic.
Speaker 3 (29:05):
Exactly cautiously awesome, exactly rightious awesome.
Speaker 4 (29:08):
I like that. Listen, Thank you so much. I love
looking at data and getting an idea of what the
consumer is doing so important to the economy. Sylvia toavours.
He's president CEO at Vantage Score of course, the credit
data and credit risk analytics firm, joining us right here
in studio.
Speaker 7 (29:22):
Sylvia.
Speaker 4 (29:23):
Thank you.
Speaker 2 (29:24):
You're listening to the Bloomberg Business Week Podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and the Android Auto with the Bloomberg
Business app.
Speaker 7 (29:34):
Or watch us live on YouTube.
Speaker 4 (29:40):
Macle how about you let me drive?
Speaker 2 (29:42):
Oh no, no, no, no, this is not a toy an right, please,
I'll do.
Speaker 1 (29:50):
I want to drive.
Speaker 4 (29:51):
It's a good question.
Speaker 7 (29:55):
Good, this is the drive the clothes.
Speaker 1 (30:00):
That song's communicic well, Briar Jovin.
Speaker 7 (30:03):
Don on Bloomberg Radio.
Speaker 4 (30:05):
All right, TikTok, everybody, we've got just about eighteen minutes
to go until we wrap up the trade on this Wednesday,
April sixteenth. Remember it's today and tomorrow, and then we
are closed Friday for the Good Friday holidays. So we're
seeing we just see some selling off of J. Powell's
comments on no FED put and some other concerns. But
we are kind of rounding off our worst levels of
the session. So what is it.
Speaker 3 (30:26):
We'll only down two point eight percent on.
Speaker 4 (30:27):
The spive hundred, but it was worse. And it's interesting
with only about eighteen minutes, seventeen minutes to go that
we aren't seeing maybe another leg down. So I don't
know what that says.
Speaker 3 (30:36):
I don't know, but I love the optimism that you have.
Speaker 4 (30:39):
I know, I know, but you know me, I always
like to look and see what happens into the clothes.
Speaker 3 (30:42):
Let's see what David Harden has to say about this.
He's found in CIO of Summit Global Investments. They've got
about two billion dollars in assets under management, usually based
out in Utah. He's here in the Bloomberg Interactive Brokers studio.
How are you watching this environment?
Speaker 1 (30:56):
Well, both eyes right, like you can't take your your
ears eyes off the market. It's constantly keeping your attention.
Speaker 3 (31:04):
It's like having a toddler running around the house. I know,
you can't take your eyes off.
Speaker 1 (31:08):
That Rico rabbit, right, Yeah, they're going to break something
in your house. Yeah, so you have to pay attention.
You know, almost was forced out a little bit. We
had this really good retail sales this morning. You're thinking, Okay,
we like that. Mark didn't move much, but okay, And
I think that gave a little bit more freedom to
pal to say, Okay, well maybe I can be a
little bit more leanient on being negative. And I don't
(31:31):
mean negative, like he's not a negative person. I'm not
putting him down, but the news was received negatively. And
people don't want to hear persistent inflation, right, they don't
want to hear that. But the reality is is we
don't know, and that's what he said.
Speaker 4 (31:43):
So what do you do in terms of investing right now?
What have you been doing through the last couple of
weeks here with all this volatility and people saying, okay,
you don't sell at the bottom, got it? Tim and
I were kind of joking off air, Yeah, okay, I
get it. But if you've already lost potentially ten twenty percent.
Speaker 3 (31:58):
Yeah, we're twenty one week off off the s and
P five hund highs. We didn't close there, but we're
twenty percent.
Speaker 4 (32:03):
Off, right, But you could go down another twenty percent,
Well it could.
Speaker 1 (32:07):
You gotta be real if you're going.
Speaker 4 (32:09):
To I'm not saying they are. I'm just saying that,
you know, doesn't make sense to be really cautious and say,
all right, I don't want another twenty percent of f
lie potentially.
Speaker 1 (32:16):
So that's a difficult thing. If you're going to in
the middle of a hurricane, try to put up plywood.
Not a good idea. Preparing for the hurricane good idea.
So one of the things that I hope this drives home.
Speaker 4 (32:28):
But if you're in the middle of a hurricane and
you haven't put up the plywood, you go run, You
go find some safe haven.
Speaker 1 (32:33):
You get some protection for sure. And so there's two
aspects here. One is that I hope that people take
this away and say, hey, I need to have managed
risk in my portfolio as a safe haven. I need
to have some protection or downside protection all the time.
It's not something I go to when I need it.
It's something that the plywood takes up space in your garage.
It's just going to have to do that. People not
(32:54):
doing this, No, I don't think so. I don't think
people were managing risk. It was all how much exposure
at max seven do I have?
Speaker 3 (33:00):
That's imagining how do you think people should manage risk?
Obviously it changes depending on the person where they are
sure in their life and what they're tolerance for risk is.
But when you say downside protection, are you talking fixed income?
Are you talking crypto? What are you talking about?
Speaker 1 (33:13):
Well, like you said, it is you know, client dependent, right,
So for the large institutions that we manage money for,
it can be like how you're actually buying the securities?
When do you get in a different securities? What makes good?
For example, right now, the video down so heavily today,
right because of that China exposure and that big five
point five billion dollars right and AMD eight hundred million dollars.
(33:34):
So if I was looking at tech and I was
a big institution, maybe you look at something like even
though Google has AD revenue and people are going to
pull it right, they're going to slow down. It's going
to have a hit. Put twenty five billion in cash
flow in one quarter eighteen percent, you know, year over
year type of growth. It's a pe right now is
around sixteen. This is getting attractive. And it's a different
(33:56):
revenue source and non tariff specific revenue source that if
I was having to stay in tech, yeah and move
that that's a transition that you could make right now
in the storm?
Speaker 4 (34:05):
What you read when the United Airlines CEO comes out
and gives you two different scenarios and says, okay, you know,
IF's the recession, here's what you know our results are
going to look like. And if not, okay, you know
we're kind of going to be, you know, business as usual.
What do you how do you read that?
Speaker 1 (34:19):
Well, a couple of things. Number One, leadership. You have
to have leadership in a market like this. And here's
a person that came prepared right with two different scenarios
and showed a ton of leadership. This takes time to prepare,
It takes a team to prepare. It tells you a
lot about the scenarios, right, Yeah, that tells you a
lot about his team. And not that there isn't good
teams across the street, but he did a good job.
(34:40):
And I think that's a pattern that other leadership teams
in other you know, big companies need to follow. So
one very impressive from a leadership standpoint. Secondly, he called
it I don't know. I don't know what's going to
happen other companies.
Speaker 3 (34:52):
Other companies say I don't know and they pull their
guide in like Delta Airlines did last week. Right, is
this the same thing as guidance? You're just providing best
case scenario in worst case scenario.
Speaker 1 (35:04):
Well, in some respects you are. But I think that
you know, hey, marketing is there for a reason. Yeah,
and in some respects, I think that how you couch
that message and how you share that message matters, right,
message really does matter.
Speaker 3 (35:17):
And look, they still said that we're cutting capacity United Airlines,
that is cutting capacity in the third quarter of the year,
and we're making changes to adjust for people not flying
at the same rate that we thought they would.
Speaker 4 (35:28):
I just got to mention because we're just saying, hurt
shares quickly jump up to session highs.
Speaker 3 (35:32):
This is a good gainer for you.
Speaker 4 (35:33):
Yes, And you actually pointed it out to me earlier
in the day, so it is one of my gainers.
But it's up about twenty eight percent we've seen it up.
I think more than we just look session highs. Here,
we were up I think even closer to thirty percent.
Speaker 5 (35:45):
Here.
Speaker 4 (35:46):
We know that Pershing Square Capital Management has come out
revealing a large stake in Hurt, specifically buying about twelve
point seven million shares. That was a filing that came
out today. The stock's been up as much as thirty
two percent, So I just wanted to all that to
everybody's attention, since I don't know. When you see a
move like that, you kind of wonder if we might
get something.
Speaker 3 (36:06):
You made David pull out his phone. I wonder if
he's buying.
Speaker 1 (36:09):
Well, I had to check and make sure I didn't
miss anything.
Speaker 6 (36:13):
Here.
Speaker 1 (36:13):
Yeah, but you know, the market's still off, so it's been.
Speaker 4 (36:16):
Higher all day, but it just took a big move
to the upside market.
Speaker 3 (36:20):
The company that's been beaten up and it went through
bankruptcy process Tesla issue, which is actually a perfect segue
to talk to you a little bit about Tesla shares.
A Tesla off the worst levels of the day, down
only about seven percent right now, but it was down
more than seven percent. So bouncing off the lows, you're
you're steering clear of Tesla.
Speaker 1 (36:38):
Well, I think that I think you have to writ
I mean Number one talked about leadership earlier. There's a
lot of volatility there, right, and we all we all
love what Elon Musk has done, there's no doubt about it.
But you're managing risk is somewhat about managing your volatility, right,
It's not necessarily about our performance. Yeah, and so I
think Elon Musk, from a personality standpoint, will let us
(36:59):
know when it's time to buy Tesla. He hasn't done that.
Speaker 3 (37:02):
What do you mean like meaning he'll leave the government
and go back to Well, I think he's just on
his companies.
Speaker 1 (37:07):
Yeah, I think he's now spoken leader. I think he
lets you know. I mean he's not the now is
a great time to buy stocks signal that we got
on Wednesday of last year. Yes, right in the morning.
Speaker 3 (37:17):
The president's post to social media.
Speaker 1 (37:19):
Right right, and it wasn't even tweet right on his
social media.
Speaker 4 (37:21):
Like the business or you just don't like the stock
right now?
Speaker 1 (37:23):
No, I think the business is hurting you see California. Yeah,
registrations are down fifteen percent, that was announced. It's negative
earning surprise. So I think it has had some negative business,
but I think and don't get me wrong, Hey, I've
driven a Tesla. You guys have all driven different cars.
You love different cars. There's definitely a loyal following following.
I was driving behind the Tesla the other day and
a little bumper sticker said, I bought this pre crazy.
Speaker 4 (37:45):
We've talked about this on it, so yeah.
Speaker 1 (37:48):
I think that's out there. But having said that, from
a purchase perspective, I think there'll be better entry points
in the future. And I think Elon Musk will let
us know by a nownouncements by you know, he's of
his product. Guy, what's the next product? When he lets
you know about that, well, that's probably your time.
Speaker 3 (38:08):
You know. I got to tell you both, Carol and
I are obsessed with what's happening in China when it
comes to vehicles, and just the more I learn about
the evs that they have in China from companies like
Shao Mei huaweih BYD, the more I think we are
so far behind here in the US.
Speaker 1 (38:23):
Part of that's messaging, for sure, you're getting the good
message and that's how it should be, but part of
its reality we are behind. I mean, take a look
at some of our US based if you want to
say that US based manufacturing and products and our vehicles
are not what they could be and we need a
swift kick in the pants and get better.
Speaker 3 (38:43):
Just to remind everyone, and I bring this up all
the time. In the fall, we talked about the Ford CEO,
Jim Farley. He had been driving this Shaomi SU seven
ev you remember this, I do, and he didn't want
to give it up, which is pretty wide.
Speaker 4 (38:57):
That's wild, right exactly if you think about it. But
the history of an automaker like Ford, right, And then
thinking about that, so are there longer term implications from
this political and economic environment potentially an environment that lands
where we have a higher tariff. Maybe maybe it's on China,
(39:19):
maybe it's across the globe.
Speaker 1 (39:21):
I think. So it's like you tell your kids, Carol
in the sense but getting.
Speaker 4 (39:24):
Bet on that there's already going to be longer term
implications of this environment.
Speaker 1 (39:28):
You can only make your choices. You can't choose your consequences, right,
and so we can't. We can't do that, And the
reality is there's going to be some.
Speaker 4 (39:36):
Consequences, consequences. It's been like a thing throughout her She's like,
I know, Mom, I know actions have consequences, but go ahead.
Speaker 1 (39:41):
But you can't choose them. And I think there will
be some now. I hope some of these are the
good things. I hope people realize, hey, I need managed
risk my portfolio all the time. I hope people realize, hey,
I need diversification all the time. These are some really
important things to kind of take home as principles to
live by. Not just need them when I when I
need them, that's.
Speaker 3 (39:59):
Not the Well how are your portfolios prepared for situations
like this? Because when I asked you earlier, you talked
about moving into Microsoft is basically ahead or Google rather
excuse me, a hedge for safety. Microsoft is another one
of your picks. But geographically, are you overweight US? Are
you global? When it comes to the equity side, there's
been a big theme this year moving away from US
(40:20):
exceptionalism and look no further than what's happening outside of
the US with the equity market returns beating the S
and P five hundred.
Speaker 1 (40:26):
For sure, and I think that's been if you look
at an AID allocation standpoint. This is something people have
been saying for a long time, right to diversify outside
the US. Now, we still are more US than outside
as a whole, but our outside global holdings have been increasing,
and we manage a global fund for clients, and that's
a very attractive fund for them. So I think that
you have to have some diversification outside the US absolutely.
(40:48):
I think you also have to have some other exposure.
UNI rates are doing really well right now, and quite frankly,
you know our ore ETF that may manage its tickers USDX.
It is more of a cash product, and so can
you get more on your cash if you have half
cash or need cash. These are some very important alternative
income type products you can use.
Speaker 4 (41:09):
I'm curious about the Global Fund because this is something
that certainly we kicked off the yard. But he was
talking about Europe, although people were still talking about American
exceptionalism as well. There was a point where the eurostocks
fifty was really showing some outperformance. We're now only up
about is it about one and a half percent on
the year, because it too has been beaten down. I mean,
where globally have you placed money for investors? Where has
(41:33):
money been flowing at this point? What do you what
are the international what's the international portfolio.
Speaker 1 (41:38):
Yeah, I think, I think when you look at that
there has been money moving Europe ways that definitely German Germany.
Speaker 4 (41:43):
But I would take one percent right now or one
and a half percent based on sne as.
Speaker 3 (41:47):
Opposed to a hold on decline of ten point four
percent this year.
Speaker 4 (41:51):
Yeah, I'm in, I'm in.
Speaker 1 (41:52):
But yeah, so I think some Europe's a really good
play right there. I think Germany has been a really
good play. And there's still some stuff out in Southeast
Asia and other area areas. Most of that is just
diversifieding away from the uncertainty that we're filling in the US.
Speaker 4 (42:06):
But if there's uncertainty your recession in the US is,
then should we just assume that it's a global recession?
Is that how you would think of it from an
investment perspective?
Speaker 1 (42:14):
I would, I mean think about it. S and P
five hundred companies to get over fifty percent or they're
close to of their revenues from overseas sales. We are
a global society, right by investing in the S and
P in some respects, you are investing in a global society.
We're more connected today than ever. A tweet in you know,
somewhere in California, lands in Dubai, and the whole market.
Speaker 3 (42:35):
Moves, you know, speaking of the whole market moving, I
bring this up all the time, So forgive me to
our loyal viewers and listeners who just keep hearing me
repeat the same thing over and over again. But the
fact is I have been speaking with friends who are
not you know, people who follow this stuff each and
every day, and this is getting on their radar. They're
getting scared, They're pulling money. They're saying there's a structural
(42:55):
shift happening. I have two friends who have done this.
Their concern is that the US is fundamentally weakening because
of trade barriers that are coming up, and we're going
to see a fundamental shift in the next few years.
And they're no longer bullish on America. Are they making
a mistake?
Speaker 1 (43:11):
Well, I don't know about that, but I know that
in every down market like this same thing we thought
about it in two thousand and eight, I mean big bad,
and I don't like twenty eighteen, February fifth, one day.
I mean, in these big down markets two thousand, stuff
go out and Google Warren Buffett two thousand, you know,
doesn't know what he's doing.
Speaker 7 (43:29):
Cool.
Speaker 1 (43:30):
Search for it, you're going to find article out of article,
a very well respected you know, columnist et cetera, talking
about how Warren buff had lost his marbles and wasn't
that the world changed? And yet what was he in
two thousand and two? A genius? Again?
Speaker 7 (43:43):
Right?
Speaker 1 (43:44):
And so yeah, so nine, I think that it's warranted.
I think you have to, you know, check your ego
at the door and be humble. I think, is is
this a different market? Is this changed? And maybe making
some changes there, but I think cashing out completely, I
don't think that's the right way.
Speaker 3 (44:00):
By the way, just a reminder, Berkshire Hathaway up for
this year by fourteen percent.
Speaker 4 (44:03):
Yeah again I would take that as well. Hey, Hurts Global,
by the way, is up about fifty two percent, So
the momentum to the upside it is just off the charge.
It just it's you know, what's going on here? Well,
it makes me wonder are we going to get some
kind of news or something.
Speaker 1 (44:16):
It doesn't Hurts have a pretty big private amount of
the shares held, so it doesn't have a huge float
as well on the Hurts so that also can help
with these short squeezes. Because there's not a lot of.
Speaker 4 (44:29):
Forty five percent of the float was shorted. So yeah,
anybody who's seeing this move to the episode. But it
does make me wonder on the news whether or not
we could see something. We're going to leave it there.
Thank you so much, and thanks for being with us
and doing that deep diving into the market. Steve Harden,
founder and CIO of Summit Global Investments joining us in studio. Folks.
We've got about three and a half minutes to go
until we wrap up the trade.
Speaker 2 (44:51):
This is the Bloomberg Business Week podcast, available on Apple, Spotify,
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Carol Massar
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