May 19, 2025 • 36 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
The US was stripped of its last top credit rating by Moody’s Ratings, reflecting deepening concern that ballooning debt and deficits will damage America’s standing as the preeminent destination for global capital and increase the government’s borrowing costs.
Moody’s lowered the US credit score to Aa1 from Aaa on Friday, joining Fitch Ratings and S&P Global Ratings in grading the world’s biggest economy below the top, triple-A position. The one-notch cut comes more than a year after Moody’s changed its outlook on the US rating to negative. The credit assessor now has a stable outlook.
“While we recognize the US’ significant economic and financial strengths, we believe these no longer fully counterbalance the decline in fiscal metrics,” Moody’s wrote in a statement. Moody’s blamed successive administrations and Congress for swelling budget deficits that it said show little sign of abating. On Friday lawmakers in Washington continued to work towards a massive tax-and-spending bill that’s expected to add trillions to the federal debt over the coming years.
Today's show features:
- Bloomberg News Rates Reporter Michael Mackenzie on Bond market reaction to Moody's Downgrade
- Nick Wadhams, Bloomberg National Security Team Leader, on Trump Says Ukraine, Russia to Start Ceasefire Talks Immediately
- Mark Gurman, Bloomberg News Managing Editor for Global Consumer Tech, on Bloomberg Big take story: Apple Is Spending Billions and Still Hasn't Managed to Crack AI
- and we Drive to the Close with Ryan Detrick, Chief Market Strategist at the Carson Group
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business
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
(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
The blow landed late Friday. It was during our program,
Bloomberg Business.
Speaker 3 (00:36):
Reshocked it daily.
Speaker 2 (00:38):
I was shocked. Yeah, yeah, I mean it was late
in our show, was close to five o'clock. We knew that,
you know, this would be a big story over the
weekend and on Monday.
Speaker 3 (00:47):
Yeah.
Speaker 2 (00:47):
The big question is what would happen to the bond market.
This we're talking about is Mooting's ratings revealing that it had
run out of patients and was lowering its credit score
on the world's biggest borrower below the top triple A level.
Moody saided a year. There's a long pattern of rising
debt and budget deficits which showed no sign of abating,
and deeply rooted political polarization. We got with us Michael McKenzie.
He's Bloomberg News Rates reporter. He joins us here in
(01:09):
the Bloomberg Interactive Brokers studio. I was watching what was
happening with the thirty year where it went above five
percent today. Ye, it's come back, it's come back. Yeah,
so actually someone's buying it.
Speaker 3 (01:23):
Yeah, but no one bought.
Speaker 2 (01:24):
The div yields are actually down now. Yeah, I'm a
little confused.
Speaker 3 (01:28):
Can you help us out?
Speaker 4 (01:29):
Well, the thirty has been rising for some for quite
a while now, so it's essentially back to levels that
we saw in twenty twenty three. That was in the
aftermath when Fitch had downgraded the US, and then of
course it was late twenty twenty three when Moodies put
the rating on watch and they've now followed through. So
from that point of view, it's not a surprise. I
(01:50):
think what's happening here is the biggest story is the
budget reconciliation process that's currently going through Congress has unnerved.
Speaker 5 (01:57):
A lot of bond investors.
Speaker 4 (01:58):
So I was already working on a story a couple
of weeks ago talking to some big investors about this,
and what you were hearing from people was none of
these spending cuts they're talking about are remarked, So the
bob market is going to look through that. So Moody's
managed to just push yields up a little bit more.
So he opened up this morning above five percent in thirties.
We've come back down, but we're still at elevated levels.
(02:20):
And really the issue you're seeing here with the treasury
market is the US this year is it's going to
be having to refinance or roll over about eight trillion
dollars a debt. The budget deficits around two and a
half trillion. And this is where Moody's has said. What
Moody's told us we already knew. But what Moody's also
(02:40):
painted is a picture that's pretty disturbing, and it's one
that's sort of what the Congression Budget Office has also
has been saying. If you look out ten years, this
is not going to get any better. In fact, it's
going to get worse. We're already the US is now
already in a position where it's interest rate cost of
service in the interest rate costs is bigger than the
(03:00):
defense budget. It's going to get become bigger than Social Security.
It's going to become the biggest element. And so you
essentially say, if you look at the US economy today,
that eighteen percent of its revenues are going towards paying
interest rate cost and that's why rates being above four
percent across the curve is so damaging for the US.
Speaker 5 (03:19):
So, you know, folks will say, listen, we've talked about
the problem of the US deficit years ago.
Speaker 3 (03:26):
It was in every conversation.
Speaker 5 (03:27):
Then it kind of seemed to go away, and we
just see it getting bigger and bigger.
Speaker 3 (03:30):
Others will also say, hey, listen, where else are you
going to go? I mean, the.
Speaker 5 (03:34):
Size of the US treasury market, the liquidity that it
offers investors.
Speaker 3 (03:40):
So where else are you.
Speaker 5 (03:41):
Really really going to go? So there's that argument. So
are they right, Michael? I do wonder is there some
point where the deficit gets so big it's gonna be
problematic for US citizens, right, who aren't going to get
certain services they're going.
Speaker 3 (03:54):
To Maybe like, is there some point where it does
become an issue? Or are the other folks saying else
you're going to go?
Speaker 4 (04:00):
So now there's an element of that, true, Carol. I mean,
but I think the US is reaching. It has the ability,
it has the exorbitant privilege you be in the reserve currency,
and there are no alternatives at this point. But it
is you're at a point now where it's going to
hurt the economy more and more. And it's just because
(04:21):
why because rates will stay higher and the more volatile,
because you're going to be rolling over all this. So
the Treasury is now issuing more long term short term
debt because they got scared in late twenty twenty three
when the bomb market had a bit of a mini
rebellion about them trying to increase ten year and thirty
year issuers. But that means if you're issuing more short
day to debt, you're getting to a point where you're
rolling over more on the front end of the curve
(04:43):
that could potentially under investors at some point. So really
you've got the US has got to get some physical discipline.
The problem is a cause it's very politicized, and both
sides of Congress like spending money and have been able
to borrow. And that's what also Movies pointed out, it's
successive administrations. You know, this is a bipartisan problem and
(05:06):
it requires bipartisan so solutions.
Speaker 2 (05:09):
We've heard about bond vigilantes coming in and the specter
of them has been there for years. We always hear
the James Carville quotation, yes, about being as powerful as
the bond market. Yeah, re encourage that's what he wants
to be. But we haven't seen them emerge this time around.
Speaker 4 (05:28):
We've seen flickers of it. We saw it in April
when the tariffs. I think the other problem with this administration.
Speaker 2 (05:33):
That's when the bond market got a little year by Yeah.
Speaker 4 (05:35):
Because the dollar has been weakening, and so you're seeing
foreign investors who's made a lot of money of the
last ten years owning US assets, equities, credit, and also
treasuries have been rebalancing. The problem with this, of course,
is if this rebalancing continues to become something bigger. I
do think when you do talk to a lot of
bond investors, they don't like the thirty year part of
(05:56):
the curve. You know, it's just too much duration, and
ultimately you're going to have a steepy Yelk curve as
a result.
Speaker 5 (06:04):
I mean, we've seen the dollar come way down, right
if I look at it, just even the dollar indow.
Speaker 4 (06:08):
We began the year very very richly valued as the
US equities. So you can make an argument if you're
sitting offshore and you've had a really good run investing
in US assets for the past decade. You should be rebalancing,
and it's probably time to rotate into other markets. So
it could be just a rebalancing, But if you look
at the numbers, the US debt numbers, the debt servicing costs,
(06:31):
this is alarming. And I don't think anyone in Washington
really They just don't seem to be that concerned. So
it's going to require a bomb market vigilantism, flexing of
the muscle to kind of snap everyone's attention.
Speaker 5 (06:44):
I love that you went there, because I keep trying
to make sense out of stuff that was at Milkan
this year of a lot of really smart investment professionals
managing trillions of dollars saying, hey.
Speaker 3 (06:55):
Listen, it's a rebalancing.
Speaker 5 (06:57):
When you see investors start to look at Europe and
elsewhere because they became overexposed to the US.
Speaker 3 (07:03):
Market, and that's what's going on. I'm trying to make
sense of.
Speaker 5 (07:06):
Is that what's going on or is it also some
concern over the US fiscal position, the US economic position
going forward and whether or not it's going to be
different and so you don't want to have as much
exposure to the to the US, or maybe it's.
Speaker 3 (07:18):
A little bit of both.
Speaker 4 (07:19):
I think it's a question of both. It's also a
question of this, you know, this administration where it's tariff
and trying to rework the global trading system. That's a
big problem too for investor sentiment. That's really unnerved people.
And again, you've got a weaker dollar when rates are
going higher in the US. That's that's kind of strange,
and that's a signal that people are shedding US dollar assets.
Speaker 3 (07:41):
I want to ask you forgive me. I'm going to
jump in, Okay, I know. Why should Americans care.
Speaker 5 (07:51):
About a high US fiscal deficit? Why should they care?
Should they at higher rates along the curve?
Speaker 4 (08:01):
It means that tough spending choices are coming down the pipe,
and it's going to be entitlements and that's going to
affect all Americans are currently putting away money in Social
Security down the road. The other factor here is that
the most important interest rate for Americans generally is that
thirty year fixed mortgage rate that is now currently at
a very high level, and that is directly influenced by
(08:23):
the ten year treasury yield, because most mortgages in America
typically get refinanced on a ten year basis. If the
ten year yield remains in that four and a half
to five percent range, possibly even higher, you're not going
to get a refinancing of your home loan anytime soon.
More importantly, as people like Jeffrey Gunlack have pointed out,
if we do go into another recession at some point
(08:45):
and you can never rule that out, then the budget
deficit is going to get even worse because tax revenues
will decline and spending will go up because more people
be filing for unemployment insurance and things like that, which means,
he argues, that you could actually see ten year and
thirty ye yelds go even higher because the deficit will
get worse. So instead of coming down that they normally
do in a recession, the long end of the curve won't.
(09:06):
And if that tenure remains stuck, you're not going to
get that big, juicy refinancing of home loan that you
normally get when you get a recession. So it does matter,
It's really important, and unfortunately, one of the people I
spoke to with the story said, most Americans don't probably
understand or realize that the interest rate costs is now
exceeding the defense budget.
Speaker 3 (09:27):
Yeah, they should all of that.
Speaker 5 (09:29):
If you missed any of it, go back and check
out our podcast, because that's kind of why you should care,
not even kind of, it's why you should care and.
Speaker 6 (09:36):
Listen to well.
Speaker 2 (09:37):
Also read Michael McKenzie's story. It's on the Bloomberg terminal
and also at Bloomberg dot com. Michael McKenzie, he's a
Bloomberg News rates reporter. He joined us here in the studio.
Speaker 4 (09:46):
Up.
Speaker 1 (09:46):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five. Yes during
listen on Applecarplay and Android Otto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 5 (10:00):
One of the things that certainly has been front and center,
and that is a call between President Trump earlier today
and Russian President Vladimir Putin apparently went on for more
than two hours.
Speaker 3 (10:09):
We do have some headlines out of it.
Speaker 5 (10:11):
Curious to see that what our Nick Wadhams has to
say about it and what he is hearing about what
this means in terms of progress towards ending the Russia
Ukraine War.
Speaker 3 (10:19):
So let's get to Nick.
Speaker 5 (10:21):
He is in our Washington DCPR He's Bloomberg News National
Security Team leader.
Speaker 3 (10:25):
Nick, to check in with you.
Speaker 5 (10:26):
So what do we know and does it feel like
this is a step forward. It's always hard for me
to kind of make sense over what is real progress.
Speaker 7 (10:35):
Well, I think it really very much depends on your
point of view. The analyst we've been speaking to in
folks around the administration suggests that this could not have
been a better day for Vladimir Putin. Essentially, what you
see if you parse President Trump's truth post that came
out of this meeting is a lot. He says, there's
a lot of forward momentum. It was very constructive, and
(10:57):
ceasefire talks will start immediately. That goes very much against
what European leaders had wanted. They wanted to had initially
set a deadline for ceasefire by May twelfth, and if
that didn't happen, then you would have sanctions. Their argument is, listen,
you don't need negotiations for a ceasefire. You just stop
shooting the guns and then you have a ceasefire. But
(11:18):
what you see in that truth post is for one thing,
the President does not appear to be putting any pressure
on Russia, no mention of sanctions. And then the next
thing he says is essentially, this is a conversation that
has to happen between Russia and Ukraine and no one else,
and so he's essentially pulling the US out of that
conversation and saying it's up to the two of you.
(11:38):
So it really feels like a very positive moment for
Vladimir Putin. If he wants to play for time, he
just got a really strong signal from President Trump that
the US is going to give it to him.
Speaker 2 (11:50):
Nick some additional information coming from IFx Kremlin says that
Putin and Trump didn't discuss ceasefire timeframe, but they did
agree to meet in person in the future. Given what
we've heard from the Kremlin and what we've heard from
President Trump in the Truth Post, what questions do you
still have about this two hour conversation?
Speaker 7 (12:11):
A lot of big questions. So, okay, no mention of
a time frame around a ceasefire. That appears to be
a win for Vladimir Putin. This has been an absolute
meat grinder of a war. But he does have the
personnel and the munitions on his side. So in a
war of attrition, if it takes a long time, that's
going to be a victory for him. The other question
is how does Ukraine stay in this fight? What does
(12:33):
the US do in terms of providing additional weapons ammunition?
I mean, the US has been so crucial and sent
over so many weapons systems. So if the US, if
the Trump administration says we're not going to provide that anymore,
We're not going to give you money to buy weapons anymore,
what happens to all those US systems once Ukraine uses
up all the ammunition that it has. So there's going
(12:56):
to be a lot of focus right now around timelines
and allowing you know, hey, there's going to be a
Trump Putin meeting. When will that happen? Will it happen
in June or July or August? Could Putin drag that out?
Final question for me is what happens to this big
sanctions bill in Congress? Senator Graham, who's been an ally
of the president, says, hey, we've got this big sanctions bill.
It's got eighty members of Congress or eighty senators, Republicans
(13:19):
and Democrats alike. Let's do this thing. As a way
of putting leverage on Putin. Well, what happens to that
right now? Folks we talk to suggest it's dead in
the water. Trump is going to have no appetite to
sign that in the law.
Speaker 5 (13:31):
Man, it just feels like back and forth, back and forth,
back and forth. So who's going to bring this nick
ultimately to an end? I mean, the Vatican is now
saying that they'd be interested in I guess according to
the President, and hosting negotiations to bring about a truce.
But seriously, you understand these situations, Who is it that
ultimately is it President Trump that says let's do it,
you know, and can put the pressure on Putin? Who
(13:51):
is it that ultimately gets this thing to end?
Speaker 7 (13:54):
Well, I mean it's a great question. And I mean
that's what's so interesting about this true social posts today
because for so long the President and the folks around
him has been saying, you know, listen, Donald Trump is
the only person who can bring this to a close.
I mean, remember in the campaign, he said he would
have this thing solved in twenty four hours. Now in
this post he seems to be saying, we're not going
(14:16):
to be involved in these conversations that's going to happen
between Ukraine and Russia. So he's sort of bowing out.
So then the big question is, Okay, well, what does
Vladimir Putin want to do? He seems to have no
incentives to stop to fight the fighting. So the only
way that it, I mean, at least according to the
folks we've been speaking to, the only way you can
really get him to sit up and to take notices
for the US to say we are going to join
(14:38):
this sanctions effort and maybe go after oil and really
squeeze the Russian economy in a way that they the
previous rounds of sanctions have not been able to do.
Right now, though it looks like President Trump has no
appetite to do that.
Speaker 2 (14:52):
All right, Nick, going to have to leave it there.
I really appreciate you taking the time keeping us up
to speed once again. The Kremlin did say that Trump
and Putin didn't dis gus Ceespire time frame. This is
coming from IFx, but Carol, they did say that the
President and Vladimir Putin agree to meet in person in
the future.
Speaker 5 (15:08):
Yeah, so it's like TBDTBDTBD dates and certainty or what
I think investors are looking for.
Speaker 1 (15:14):
This is the Bloomberg Business Week Daily Podcast. Listen live
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Just say Alexa Play Bloomberg eleven thirty.
Speaker 2 (15:32):
It is Today's Big Take. It's one of the most
read stories on the Bloomberg terminal. It features exclusive interviews
with Apple insiders about how Apple has been falling short
when it comes to cracking AI. Here's how one senior
member of Apple's AI team put it to our team.
This is a crisis, and yes that is a quote.
Mark German is Bloomberg News Managing editor for Global Consumer Tech.
(15:52):
He joins us here in the Bloomberg Interactive Brokers Studio. Mark,
I was struck by this, you know, just at the
beginning of your piece, there's a picture of Phil Schiller
introducing Siri back in twenty eleven, and there are these
thought bubbles and it says will it rain? And Cooper Tino,
what's the weather like today? Do I need an umbrella today?
I was shocked to look at the small print and
see that was from twenty eleven, because in my view,
(16:14):
that's kind of what Siri still does.
Speaker 6 (16:16):
Uh yeah, that's the problem. That is a problem. Siri
was revolutionary fifteen years ago. It was amazing for its
first couple of years because we let's see, how do
I want to say this. It wasn't great, but it
was still amazing and futuristic and sci fi and better
than everything else. Then Amazon came around, Google came around,
(16:38):
Microsoft came around, and they just blew Apple out of
the water. The technology is just all legacy technology that
they've been using for a long while now for all
intents and purposes, we're not talking about a Sirie that's
based on the same large language models and foundation model
technology that you're seeing from open AI and Gemini from
Google and you know, and thropic, you name it. And
(16:58):
so yeah, they have fallen way to the way south.
Speaker 2 (17:01):
Well, speaking of Google, there was a big hire there
from twenty eighteen who was supposed to be the guy
who did AI at Apple.
Speaker 6 (17:09):
He was supposed to be the guy who did AI
at Apple, and he's still the guy who does AI
at Apple. That's John gen Andrea biggest miss was generative AI.
They seem to have not seen this coming, and if
they did see it coming, they did little to nothing
about it. They really, i'm told, started on the generative
aipath after Craig Fedderigi, the head of software engineering, used
(17:30):
chat GPT to finish some code for a personal project
he was working on over the holiday break they take
this little one week break at the end of December.
He was working on some personal software, as one does,
and he figured out the power. Yeah, figured out figured
out the power of chat gpt, and then immediately they
set iOS eighteen for twenty twenty four. This is gonna
(17:52):
be the big AI release for Apple. From a marketing standpoint,
it was. They marketed it really well AI for the
rest of us, just like the computer for the rest
of us forty years ago. And you know, okay, we're good, yes,
other than the other than the marketing. You know what,
let's take a step back in the robotics world. In
(18:15):
the humanoid robotics world, the fundamental thing that a humanoid
robot has to do is go to your kitchen, pick
up a glass of water, and bring it to you
without dropping it. Okay, Tim almost dropped his water all
over him, So that's where I got the idea to
mention this. The problem isn't so much the iPhone and
the AI capabilities on today's devices. The problem is is
(18:36):
can Apple make AI that's good enough to power a
robot that's not going to spill their water like Tim right?
There is And so the worry is not necessarily about
the technology today, but it's the technology of tomorrow in
a decade from now. And so the iPhone, you know,
its rain is going to be over at some point.
But that's not really what matters here. I think that's
that's not big picture enough. The big picture is the
(18:57):
next set of stuff. We've seen AI already lead to
the car cancelation in part. There were many other factors.
But if Apple was able to get an L five
car with tip top AI and great safety features Level five, yep,
they would have brought it to market. So you know,
we've already seen AI cost them one big category. They
were supposed to have a big smart hump push this year.
(19:18):
It's been delayed. It was supposed to happen in March.
Now it probably won't happen till the end of this
year or next year. The AI not working cost that
now They're already having trouble coming up with use cases
for air pods and watches with camera and smart glasses
with cameras because you need real good AI to use that.
So the iPhone doesn't matter, it's everything that comes after it.
Speaker 3 (19:38):
So why can't they get this right? Is it personnel?
Speaker 1 (19:42):
Is it?
Speaker 3 (19:43):
Culture? Is what?
Speaker 6 (19:44):
Is it both? It's personnel mismanagement, it's culture. Apple's wired
in a very specific way. I get into it in
the story. They're wired to. They sit down, they map
out what they want to do, and then they make
the investment to get there. AI sort of works the opposite.
You don't know exactly where you're going to land. It's
a little bit messier to run, a little bit faster,
(20:07):
it's a little bit you know, more expensive to pull off.
And so it's just a philosophical product development question, right,
And so Apple has to change AI moves so fast.
You know, there is a new AI provider or a
major new AI technology on a weekly basis at this point,
even more frequently. But Apple's wired to release one major
software upgrade every year and a smaller software upgrade in
(20:29):
the spring. So they're going to need to move away
from that idea as well if they really want to
stay at pace with the rest of the technology industry.
So AI and Apple, it's just so interesting. It's like
putting two magnets next to each other. They're just going
to push away, right, And so Apple's going to have
to change at a very core level to really be
(20:50):
able to make meaningful change and to have a meaningful
improvement in their GENAI world.
Speaker 2 (20:56):
You know, I'm thinking about this, and there Mark, when
when you talk about Apple, and you know this better
than anyone else, people a common refrain and I don't
think this is true, but it's that Apple stopped innovating
after Steve Jobs. And you can go and kind of
look at Apple's share price in what has happened with
investors in the way that Tim Cook has led the company.
The concern that I potentially would have in a situation
(21:19):
like this as an observer, is, is this Tim Cook's legacy
here missing AI?
Speaker 6 (21:23):
First of all, I don't agree with the idea that
Apple stopped innovating since Steve Jobs.
Speaker 8 (21:30):
I agree with that. I agree with you.
Speaker 6 (21:31):
No, No, I know you agree. If you think about it,
they basically haven't innovated or done something wholly new since
the iPhone? Right now, are we really expecting that? I
think yes to some extent, But like you look at it,
and like the iPad to the iPhone was like the
Vision pro to the iPhone, right, they're both different reincarnations
(21:54):
of that same operating system. You put the Apple Watch
in that category as well, So you have sort of
the central product, the iPhone, and you just kept building
and building around it and building it up into new
form factors. And they haven't really done an entirely new
product experience from the ground up, and so you know
at some point they'll get there, but right now, it's
about new form factors. And honestly, I'm not sure Tim Cook.
(22:18):
I'm not sure anyone would have done a better job
than Tim Cook over the last fifteen years or so
since Steve Jaw has passed away. So certainly could have
they done a lot better, yes, but they've also could
have done much, much much worse.
Speaker 3 (22:31):
You I want to ask you, does any of this matter?
Speaker 5 (22:33):
Because you write in the story being late to a
potentially world changing advance isn't necessarily catastrophic for Apple, but
there are risks.
Speaker 3 (22:40):
Of being late too.
Speaker 6 (22:41):
Well, it's not catastrophic for Apple because being late implies
that they're going to get there, and so you know,
as long as they're late, it's not catastrophic. But they're
going to need to get there because, like I said,
they're going to miss so many upcoming technological waves if
they don't master this. I said this to someone I
was on the radio with earlier, and they were a
little surprised. But think about it for a minute. You're
going to agree with me. AI is as core of
(23:04):
a technology as the touchscreen. Right. That's a big bowl claim. Right.
So Apple is known for taking core technologies and pushing
them to new form factors, and so multi touch touchscreen,
that's the type of touch screen that lets you do
multiple gestures at once, lets you do the pinch and
the swipe. That's called multi touch. That was a core
technology that allowed them to build the iPhone and the iPad,
(23:28):
all their macs and iPads and whatever they're releasing these days.
The core technology at the heart of that are their chips,
their in house processor design. AI is the core technology
that's going to enable robots the glasses to maybe'll look
at cars again in the future. Who knows, it's not
something they're looking at right now, to be clear, And
so they need to master that core technology to get
to the next era of hardware. Apple's a hardware company,
(23:51):
right and if they want to continue making the money
they're making, they're going to need to do new hardware.
And the way to do new hardware is to come
up with new core technologies.
Speaker 3 (23:59):
But they are this guy.
Speaker 6 (24:00):
You even printed it out.
Speaker 8 (24:01):
I love it.
Speaker 3 (24:03):
Are you kidding? But they heard this guy back in
twenty eighteen. Yes, it's almost a decade.
Speaker 6 (24:09):
You're not quo, but getting close. You're right, and that's
that's unbelievable. But yeah, yeah, we're close to a decade
since he's been there.
Speaker 3 (24:15):
You're right, all right.
Speaker 5 (24:16):
So from someone who knows this company so well, I mean,
how are you thinking about or who are you watching
or what are you watching?
Speaker 3 (24:22):
Internally? I mean the company? Yeah, obviously listen to you.
Speaker 5 (24:25):
They listen to others have conversations saying where are you Apple?
Speaker 3 (24:28):
When it comes to AI John.
Speaker 6 (24:30):
G Andrea JG. As he goes by, I don't think
he's long for Apple.
Speaker 3 (24:34):
I is that good.
Speaker 6 (24:36):
I'm not going to opine on whether it's good or
not for a person to no longer be at a company.
But I'll put it this way. They've already stripped him
of all products related responsibility. They removed Siri from him,
they remove robotics from him. They're going to probably remove
some more things from him. They want to squish him
down to a role that's entirely focused on large language
(24:57):
model and courts AI technology research, which is really good
at and so I mean, if they're taking away seventy
five percent of your remit, you know, you may decide
that the writing's on the wall, it's time to get
out of here. I don't think it's going to happen imminently.
I don't think he wants it to happen, But I
think at some point a change will be made, whether
it's because he decided or because Apple force his hand.
(25:19):
But I don't expect them to fire him. Apple doesn't
do that for senior executives of that level unless you
really do something bad and for all intentsive purposes. JG's
a great guy. He's very well liked, he's very respected
in the machine learning and AI.
Speaker 3 (25:37):
Can can he get them to where they need to be?
Speaker 6 (25:39):
He can be a piece of that puzzle. Don't forget
Apple is constructed by a functional model, So you have
design teams, you have partwer engineering teams, you have software
engineering teams that bring together the product at the end
of the day, if you dilute JG to only focus
on AI research, but you have other people in charge
of like AI product development, I think it's possible that
(26:02):
that's a winning formula, but clearly him running all of
AI was not a good formula.
Speaker 2 (26:06):
We only have thirty seconds left. Could Apple acquire its
way out of this? They've partnered with chat ept Open Eye.
Speaker 6 (26:12):
Well, first of all, yes, they need to acquire as
much a talent as possible, but that's also another cultural
issue where they have this cultural allergy to integrate large
scale companies. The Beats acquisition internally disaster, the Intel Modem
acquisition for a billion and twenty nineteen disaster. They just
have a terrible track record of taking these humongous companies
(26:36):
and pulling them into Apple. So you know, it's a
cultural thing through and through that they need to make
some shifts on. But if they resolve all that, they've
branding the right people, they make the right cultural changes.
It's Apple. They've got the brand, they've got the button,
they've got it all got to say.
Speaker 3 (26:51):
I was in the car, I doing a lot of
things the other weekend talking to Syria. I'm like, you
just not bringing it, Bud, You're.
Speaker 2 (26:56):
Not bringing it.
Speaker 6 (26:57):
The worst thing for serial for meal. Keep this real quick,
is I like go to sushi restaurants. I'll say a
sushi restaurant and Syria ask how to get there? Okay,
and then it takes me to the Japanese city the
restaurant is named after in Japan. Why would you take
me somewhere six thousand miles away.
Speaker 1 (27:10):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eastering. Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 6 (27:26):
Mac.
Speaker 1 (27:27):
I'll bet you let me drive.
Speaker 2 (27:28):
Oh no, no, no no, this is not a toy.
Speaker 3 (27:33):
Alright, please, I'll travels great. I want to drive.
Speaker 6 (27:39):
It's a good question.
Speaker 3 (27:44):
This is the drive to the clothes plums for me.
Speaker 8 (27:47):
Well, Kelvin Don on Bloomberg.
Speaker 3 (27:50):
Radio, all right, TikTok, everybody.
Speaker 2 (27:52):
Just send someone for Carol. That's what I'm gonna say.
Speaker 6 (27:54):
What do you mean?
Speaker 8 (27:54):
No, You're good?
Speaker 2 (27:56):
Summer Carol, this is what I like. I know, you know,
fresh from a big graduate congratulation days off.
Speaker 8 (28:02):
Yeah, it's always.
Speaker 2 (28:03):
Good, right, visit to a historic part of the country, I.
Speaker 3 (28:05):
Know, and I'm really into the historic parts of our country.
Speaker 5 (28:08):
I don't know, it's like getting back to our roots
kind of understanding it.
Speaker 2 (28:11):
What you should have bought the meme coin so you
could have made a visit too. Well, it was going
to be the White House, but oh no, because you're not.
Now you're not one of the top holders.
Speaker 3 (28:21):
Have afforded afforded it?
Speaker 2 (28:22):
It was it was Yeah, it was a lot of Yeah,
you'd have to but you could have sold ahead, you
could have sold And I don't know how much the
coins went for, but I mean that these were the
top holders. I don't know how much the purses were.
I yess, the walls I did not know. We're not
we're not allowed to do that here.
Speaker 3 (28:36):
The whole security issue of like who's going to be
because it's.
Speaker 2 (28:38):
Still an issue.
Speaker 3 (28:39):
They don't know who.
Speaker 2 (28:39):
It is still an issue.
Speaker 5 (28:40):
All right, let's talk about the markets a little bit,
because still an issue is kind of where we go
from here. But having said that, investors seemed to be
shrugging off, certainly the downgrade by Moody's on Friday.
Speaker 3 (28:51):
Let's get into it. Ryan Dietrich is back with us.
Speaker 5 (28:53):
Great to have with us, chief market strategist with the
Carson Group joining us.
Speaker 3 (28:58):
Ryan, it is good to have you here with us.
How do you you know we've talked to you.
Speaker 5 (29:02):
We always give you props about the last couple of years,
really getting your market calls right. It does feel like
we're gonna wait and see mode whether it comes to
FED action.
Speaker 3 (29:12):
What we get on tariffs. Where are you on the
markets right now?
Speaker 8 (29:16):
Yeah, Carol and Tim, thanks for me back.
Speaker 9 (29:17):
I looked, last time I was on with you was
April tenth, right, So that was the day after that
huge rally. We sold off pretty hard and we talked
then about the idea that we could be due for
a pretty big bounce.
Speaker 8 (29:28):
Now.
Speaker 9 (29:28):
I didn't think it'd be quite like this, but it's
where we are, so Carly, last week, if you were
running around missed it. We had a big update on Monday,
up three percent, and then the next four days all
were green, and I said, that's pretty rare because usually
if a big up Monday, usually you give some back.
Speaker 8 (29:43):
We didn't. Last week.
Speaker 9 (29:44):
March of two thousand and three is the only time
we saw a week like last week, and that was
actually the lows of really the bear market, if you will,
from the tech bubble and the war started in Iraq
and then off to the races. I get it, sample
size of one, but the we've been saying for a
while now the lows are in. I know it's pretty
obvious now, but we were saying that four weeks ago
(30:05):
that lows were probably in, and we still think, you know,
this market wants to go higher, and we're listening to it.
Speaker 2 (30:11):
Why does it want to go Why does it want
to go higher?
Speaker 8 (30:13):
Right now?
Speaker 2 (30:13):
I think that's still a lot of people who have
looked at, you know, the twenty percent increase that we've
seen off those April eight lows are saying, wait a second,
we didn't necessarily get something fundamental shift except for this pause.
Speaker 9 (30:27):
Yeah, Tim, that's a that's a great question there, and listen,
it's I think it's all about expectations. I mean, what
was being priced into the market this time five six
weeks ago was just you know, almost say the end
of the world. But that's the way people felt like
they were talking and you see it and then no,
that's not the case. We just had a really solid
earning season, right.
Speaker 2 (30:44):
I know.
Speaker 9 (30:45):
The consumer's not perfect, we get it, but the consumer
is still okay, the labor market's still solid. All these
things are why we say it was like a beach
ball under the water. You release it, it goes up. Here's
one thing to think about since March. Starting on March ninth,
they're at twenty seven trading days. The S and P's up,
like we just said, nearly twenty percent, right over nineteen percent.
Speaker 8 (31:03):
If you go back in history.
Speaker 9 (31:04):
Other times we saw that much strength and only twenty
seven trading days. You're talking off the lows in seventy four,
the lows in eighty two, the lows in two thousand
and nine, the lows off of twenty twenty and now,
I mean, those.
Speaker 8 (31:16):
Were not the worst times to think.
Speaker 9 (31:18):
You know, what the market is telling is something, and
we're just hoping a lot of people are paying attention
because those were pretty solid times. And that blast of
strength we've seen is not a shortcovering rally. It's not
a bear market rally. It is it is kicking off again.
In our opinion. Another you know, continuation, I guess we'll
say of honestly, this bold market has been in place
since October twenty twenty two.
Speaker 3 (31:37):
Uh, so many things I want to come back at
you with.
Speaker 5 (31:39):
Right having said that, we talked with our Juda Martin Adams,
our chief equity strategist here at Bloomberg Intelligence, and she
reminded us put out some research and she says, however,
while US equities have been a key beneficiary of de
escalating tensions, they continue to lag major global markets in
the rebound toward pre tariff liberation day highs. So even
though the bounce back when you go outside the United
(32:02):
States has even been better.
Speaker 8 (32:05):
No shout out to Gina.
Speaker 9 (32:06):
She's awesome, obviously, and that's true, you know, in the
money that we run for our Carson partners. I've come
on with you guys for a while for a couple
of years, and we like the US. We like the US.
Speaker 8 (32:15):
Honestly, starting earlier this year.
Speaker 9 (32:17):
We've kind of taken We're still in US, yes, don't
get me wrong, but we have some exposure to developed international.
Speaker 8 (32:23):
Specifically Europe.
Speaker 9 (32:24):
I mean, when we saw Germany break out the fiscal
bazooka a couple of months ago, we said, wow, there's
something going on here. So yes, you know, diversification used
to be a dirty word. Diversification was used to having
to say you were sorry. Then you have a year
like this was like, wow, I guess I'm a lot
of investors are glad you're diversify because if you have
global global portfolio, you're up nicely this year. Right, if
(32:45):
you're all in mag seven, all in all in the US,
we get it. I guess you're positive kind of now,
but it sure was a long trip to get there.
So listen, and when you're an uncertain diversive, diversification really
can work. And that's a nice way investors need to
remember that.
Speaker 2 (32:58):
Yeah, I mean, you're you're positive for the air. As
long as he didn't sell I'm kind of saying under my.
Speaker 8 (33:01):
Brow, well, you know right, true, I totally totally agree.
Speaker 9 (33:06):
And again, we came into this year in our outlook
that we've put out you know, in January ely this year, Yes,
we were bullish, Yes we're optimistic. We said there could
be a twelve to fifteen percent peak to trough correction
because we hadn't had one in a while. By the way,
after a twenty percent game. The first quarter is usually
pretty weak. The first quarter in the last twenty years
has been pretty weak. Oh and post election years, the
first quarter is actually one of the worst quarters out
(33:28):
of a four year cycle. So all those things stacked
up that we could have some indigestion. No, we didn't
see a near bear market. No we didn't see a
ten percent crash after Liberation Day, but we did see
the potential for some volatility, and now just as quickly,
obviously we're on the other side of that.
Speaker 8 (33:42):
Fortunately.
Speaker 5 (33:43):
Hey, though, Ryan, is it a Pica trough correction that
we just needed because there was too much you know,
fluff in the markets at this point?
Speaker 6 (33:49):
Or is it?
Speaker 5 (33:50):
I mean, the trade really reacted to the news out
of the White House. It's why we talked about it
so much, because you could see clear correlations based on
what was coming from the President and his views on
tariffs in particular, and the markets reacted. So there was
a fundamental basis to it. And if the fundamental basis
going forward, especially when it comes to tariff's, is that Yes. Indeed,
(34:12):
Libby Cantrell of PIMCO, who we talked to earlier, you know,
we could potentially still be in a much higher, historically
higher tariff environment going forward, and that has implications for markets.
Speaker 9 (34:25):
There's a lot there, you know, if everybody's thinking to
like somebody's in thinking. I like to use that quote
a lot, General Patten. It sure felt like late last
year everybody was bullish. I mean, these long term bears
were claiming their bullishul time. We're looking around as people
that were taking a lot of arrows and body shots
in twenty three early twenty four from being bowlish, thinking, Oh.
Speaker 8 (34:43):
And I do think we needed that wash out. I
do think we need to shake the tree a little bit.
Speaker 9 (34:47):
There was a little too much fraud up seventy four,
seventy five percent off the October twenty two lows.
Speaker 8 (34:52):
Maybe it was necessary.
Speaker 9 (34:53):
I didn't think it'd be again twenty percent, but it's
what happened, and that's what shook a lot of those
hands out. But you're right, you know when President Trump,
I mean, what's the phrase he used this, It's gonna
be close enough for government work. Tariff the most beautiful
word in the English dictionary. It's not like this was
a total surprise.
Speaker 8 (35:08):
Now I get it.
Speaker 9 (35:09):
When he held up that board on liberation to April second.
Those numbers were higher than we expected, but I'm not
sure I did read Libby's note today.
Speaker 8 (35:16):
I mean Liby's Lebby's awesome. Also.
Speaker 9 (35:17):
You know, the reality is, I think markets can live
with ten to fifteen percent tariffs. They couldn't live with
what we were seeing a couple months ago because that's
what's being priced in. And then that's kind of where
we are. And you know, if they bring all those
teriffs back, yeah we're we're probably gonna go right back down.
Speaker 8 (35:31):
But I don't think that's the case. I think we're
kind of through that. And now what do we have.
Speaker 9 (35:35):
We've got deregulation coming potentially better, the lower taxes coming.
Those are the things also come in the second half
of this year.
Speaker 5 (35:40):
We're now a little change on the year. What do
you see it's by end of the year. Do you
think we'll be up five ten percent?
Speaker 3 (35:45):
What do you call it? Got ten seconds here?
Speaker 9 (35:47):
Yeah, we came into this year we said between ten
and twelve percent. I'll tell you what I think we're
we're still thinking of that's very likely. We had a
round trip, but we think it's possible.
Speaker 5 (35:54):
Ryan d Jake got a run Chief market Strategies, with
the Carson Group joining us on this Monday.
Speaker 1 (35:59):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot com,
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(36:20):
and always on the Bloomberg terminal
Bloomberg Audio Studios, Podcasts, radio news. 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
(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
The blow landed late Friday. It was during our program,
Bloomberg Business.
Speaker 3 (00:36):
Reshocked it daily.
Speaker 2 (00:38):
I was shocked. Yeah, yeah, I mean it was late
in our show, was close to five o'clock. We knew that,
you know, this would be a big story over the
weekend and on Monday.
Speaker 3 (00:47):
Yeah.
Speaker 2 (00:47):
The big question is what would happen to the bond market.
This we're talking about is Mooting's ratings revealing that it had
run out of patients and was lowering its credit score
on the world's biggest borrower below the top triple A level.
Moody saided a year. There's a long pattern of rising
debt and budget deficits which showed no sign of abating,
and deeply rooted political polarization. We got with us Michael McKenzie.
He's Bloomberg News Rates reporter. He joins us here in
(01:09):
the Bloomberg Interactive Brokers studio. I was watching what was
happening with the thirty year where it went above five
percent today. Ye, it's come back, it's come back. Yeah,
so actually someone's buying it.
Speaker 3 (01:23):
Yeah, but no one bought.
Speaker 2 (01:24):
The div yields are actually down now. Yeah, I'm a
little confused.
Speaker 3 (01:28):
Can you help us out?
Speaker 4 (01:29):
Well, the thirty has been rising for some for quite
a while now, so it's essentially back to levels that
we saw in twenty twenty three. That was in the
aftermath when Fitch had downgraded the US, and then of
course it was late twenty twenty three when Moodies put
the rating on watch and they've now followed through. So
from that point of view, it's not a surprise. I
(01:50):
think what's happening here is the biggest story is the
budget reconciliation process that's currently going through Congress has unnerved.
Speaker 5 (01:57):
A lot of bond investors.
Speaker 4 (01:58):
So I was already working on a story a couple
of weeks ago talking to some big investors about this,
and what you were hearing from people was none of
these spending cuts they're talking about are remarked, So the
bob market is going to look through that. So Moody's
managed to just push yields up a little bit more.
So he opened up this morning above five percent in thirties.
We've come back down, but we're still at elevated levels.
(02:20):
And really the issue you're seeing here with the treasury
market is the US this year is it's going to
be having to refinance or roll over about eight trillion
dollars a debt. The budget deficits around two and a
half trillion. And this is where Moody's has said. What
Moody's told us we already knew. But what Moody's also
(02:40):
painted is a picture that's pretty disturbing, and it's one
that's sort of what the Congression Budget Office has also
has been saying. If you look out ten years, this
is not going to get any better. In fact, it's
going to get worse. We're already the US is now
already in a position where it's interest rate cost of
service in the interest rate costs is bigger than the
(03:00):
defense budget. It's going to get become bigger than Social Security.
It's going to become the biggest element. And so you
essentially say, if you look at the US economy today,
that eighteen percent of its revenues are going towards paying
interest rate cost and that's why rates being above four
percent across the curve is so damaging for the US.
Speaker 5 (03:19):
So, you know, folks will say, listen, we've talked about
the problem of the US deficit years ago.
Speaker 3 (03:26):
It was in every conversation.
Speaker 5 (03:27):
Then it kind of seemed to go away, and we
just see it getting bigger and bigger.
Speaker 3 (03:30):
Others will also say, hey, listen, where else are you
going to go? I mean, the.
Speaker 5 (03:34):
Size of the US treasury market, the liquidity that it
offers investors.
Speaker 3 (03:40):
So where else are you.
Speaker 5 (03:41):
Really really going to go? So there's that argument. So
are they right, Michael? I do wonder is there some
point where the deficit gets so big it's gonna be
problematic for US citizens, right, who aren't going to get
certain services they're going.
Speaker 3 (03:54):
To Maybe like, is there some point where it does
become an issue? Or are the other folks saying else
you're going to go?
Speaker 4 (04:00):
So now there's an element of that, true, Carol. I mean,
but I think the US is reaching. It has the ability,
it has the exorbitant privilege you be in the reserve currency,
and there are no alternatives at this point. But it
is you're at a point now where it's going to
hurt the economy more and more. And it's just because
(04:21):
why because rates will stay higher and the more volatile,
because you're going to be rolling over all this. So
the Treasury is now issuing more long term short term
debt because they got scared in late twenty twenty three
when the bomb market had a bit of a mini
rebellion about them trying to increase ten year and thirty
year issuers. But that means if you're issuing more short
day to debt, you're getting to a point where you're
rolling over more on the front end of the curve
(04:43):
that could potentially under investors at some point. So really
you've got the US has got to get some physical discipline.
The problem is a cause it's very politicized, and both
sides of Congress like spending money and have been able
to borrow. And that's what also Movies pointed out, it's
successive administrations. You know, this is a bipartisan problem and
(05:06):
it requires bipartisan so solutions.
Speaker 2 (05:09):
We've heard about bond vigilantes coming in and the specter
of them has been there for years. We always hear
the James Carville quotation, yes, about being as powerful as
the bond market. Yeah, re encourage that's what he wants
to be. But we haven't seen them emerge this time around.
Speaker 4 (05:28):
We've seen flickers of it. We saw it in April
when the tariffs. I think the other problem with this administration.
Speaker 2 (05:33):
That's when the bond market got a little year by Yeah.
Speaker 4 (05:35):
Because the dollar has been weakening, and so you're seeing
foreign investors who's made a lot of money of the
last ten years owning US assets, equities, credit, and also
treasuries have been rebalancing. The problem with this, of course,
is if this rebalancing continues to become something bigger. I
do think when you do talk to a lot of
bond investors, they don't like the thirty year part of
(05:56):
the curve. You know, it's just too much duration, and
ultimately you're going to have a steepy Yelk curve as
a result.
Speaker 5 (06:04):
I mean, we've seen the dollar come way down, right
if I look at it, just even the dollar indow.
Speaker 4 (06:08):
We began the year very very richly valued as the
US equities. So you can make an argument if you're
sitting offshore and you've had a really good run investing
in US assets for the past decade. You should be rebalancing,
and it's probably time to rotate into other markets. So
it could be just a rebalancing, But if you look
at the numbers, the US debt numbers, the debt servicing costs,
(06:31):
this is alarming. And I don't think anyone in Washington
really They just don't seem to be that concerned. So
it's going to require a bomb market vigilantism, flexing of
the muscle to kind of snap everyone's attention.
Speaker 5 (06:44):
I love that you went there, because I keep trying
to make sense out of stuff that was at Milkan
this year of a lot of really smart investment professionals
managing trillions of dollars saying, hey.
Speaker 3 (06:55):
Listen, it's a rebalancing.
Speaker 5 (06:57):
When you see investors start to look at Europe and
elsewhere because they became overexposed to the US.
Speaker 3 (07:03):
Market, and that's what's going on. I'm trying to make
sense of.
Speaker 5 (07:06):
Is that what's going on or is it also some
concern over the US fiscal position, the US economic position
going forward and whether or not it's going to be
different and so you don't want to have as much
exposure to the to the US, or maybe it's.
Speaker 3 (07:18):
A little bit of both.
Speaker 4 (07:19):
I think it's a question of both. It's also a
question of this, you know, this administration where it's tariff
and trying to rework the global trading system. That's a
big problem too for investor sentiment. That's really unnerved people.
And again, you've got a weaker dollar when rates are
going higher in the US. That's that's kind of strange,
and that's a signal that people are shedding US dollar assets.
Speaker 3 (07:41):
I want to ask you forgive me. I'm going to
jump in, Okay, I know. Why should Americans care.
Speaker 5 (07:51):
About a high US fiscal deficit? Why should they care?
Should they at higher rates along the curve?
Speaker 4 (08:01):
It means that tough spending choices are coming down the pipe,
and it's going to be entitlements and that's going to
affect all Americans are currently putting away money in Social
Security down the road. The other factor here is that
the most important interest rate for Americans generally is that
thirty year fixed mortgage rate that is now currently at
a very high level, and that is directly influenced by
(08:23):
the ten year treasury yield, because most mortgages in America
typically get refinanced on a ten year basis. If the
ten year yield remains in that four and a half
to five percent range, possibly even higher, you're not going
to get a refinancing of your home loan anytime soon.
More importantly, as people like Jeffrey Gunlack have pointed out,
if we do go into another recession at some point
(08:45):
and you can never rule that out, then the budget
deficit is going to get even worse because tax revenues
will decline and spending will go up because more people
be filing for unemployment insurance and things like that, which means,
he argues, that you could actually see ten year and
thirty ye yelds go even higher because the deficit will
get worse. So instead of coming down that they normally
do in a recession, the long end of the curve won't.
(09:06):
And if that tenure remains stuck, you're not going to
get that big, juicy refinancing of home loan that you
normally get when you get a recession. So it does matter,
It's really important, and unfortunately, one of the people I
spoke to with the story said, most Americans don't probably
understand or realize that the interest rate costs is now
exceeding the defense budget.
Speaker 3 (09:27):
Yeah, they should all of that.
Speaker 5 (09:29):
If you missed any of it, go back and check
out our podcast, because that's kind of why you should care,
not even kind of, it's why you should care and.
Speaker 6 (09:36):
Listen to well.
Speaker 2 (09:37):
Also read Michael McKenzie's story. It's on the Bloomberg terminal
and also at Bloomberg dot com. Michael McKenzie, he's a
Bloomberg News rates reporter. He joined us here in the studio.
Speaker 4 (09:46):
Up.
Speaker 1 (09:46):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five. Yes during
listen on Applecarplay and Android Otto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 5 (10:00):
One of the things that certainly has been front and center,
and that is a call between President Trump earlier today
and Russian President Vladimir Putin apparently went on for more
than two hours.
Speaker 3 (10:09):
We do have some headlines out of it.
Speaker 5 (10:11):
Curious to see that what our Nick Wadhams has to
say about it and what he is hearing about what
this means in terms of progress towards ending the Russia
Ukraine War.
Speaker 3 (10:19):
So let's get to Nick.
Speaker 5 (10:21):
He is in our Washington DCPR He's Bloomberg News National
Security Team leader.
Speaker 3 (10:25):
Nick, to check in with you.
Speaker 5 (10:26):
So what do we know and does it feel like
this is a step forward. It's always hard for me
to kind of make sense over what is real progress.
Speaker 7 (10:35):
Well, I think it really very much depends on your
point of view. The analyst we've been speaking to in
folks around the administration suggests that this could not have
been a better day for Vladimir Putin. Essentially, what you
see if you parse President Trump's truth post that came
out of this meeting is a lot. He says, there's
a lot of forward momentum. It was very constructive, and
(10:57):
ceasefire talks will start immediately. That goes very much against
what European leaders had wanted. They wanted to had initially
set a deadline for ceasefire by May twelfth, and if
that didn't happen, then you would have sanctions. Their argument is, listen,
you don't need negotiations for a ceasefire. You just stop
shooting the guns and then you have a ceasefire. But
(11:18):
what you see in that truth post is for one thing,
the President does not appear to be putting any pressure
on Russia, no mention of sanctions. And then the next
thing he says is essentially, this is a conversation that
has to happen between Russia and Ukraine and no one else,
and so he's essentially pulling the US out of that
conversation and saying it's up to the two of you.
(11:38):
So it really feels like a very positive moment for
Vladimir Putin. If he wants to play for time, he
just got a really strong signal from President Trump that
the US is going to give it to him.
Speaker 2 (11:50):
Nick some additional information coming from IFx Kremlin says that
Putin and Trump didn't discuss ceasefire timeframe, but they did
agree to meet in person in the future. Given what
we've heard from the Kremlin and what we've heard from
President Trump in the Truth Post, what questions do you
still have about this two hour conversation?
Speaker 7 (12:11):
A lot of big questions. So, okay, no mention of
a time frame around a ceasefire. That appears to be
a win for Vladimir Putin. This has been an absolute
meat grinder of a war. But he does have the
personnel and the munitions on his side. So in a
war of attrition, if it takes a long time, that's
going to be a victory for him. The other question
is how does Ukraine stay in this fight? What does
(12:33):
the US do in terms of providing additional weapons ammunition?
I mean, the US has been so crucial and sent
over so many weapons systems. So if the US, if
the Trump administration says we're not going to provide that anymore,
We're not going to give you money to buy weapons anymore,
what happens to all those US systems once Ukraine uses
up all the ammunition that it has. So there's going
(12:56):
to be a lot of focus right now around timelines
and allowing you know, hey, there's going to be a
Trump Putin meeting. When will that happen? Will it happen
in June or July or August? Could Putin drag that out?
Final question for me is what happens to this big
sanctions bill in Congress? Senator Graham, who's been an ally
of the president, says, hey, we've got this big sanctions bill.
It's got eighty members of Congress or eighty senators, Republicans
(13:19):
and Democrats alike. Let's do this thing. As a way
of putting leverage on Putin. Well, what happens to that
right now? Folks we talk to suggest it's dead in
the water. Trump is going to have no appetite to
sign that in the law.
Speaker 5 (13:31):
Man, it just feels like back and forth, back and forth,
back and forth. So who's going to bring this nick
ultimately to an end? I mean, the Vatican is now
saying that they'd be interested in I guess according to
the President, and hosting negotiations to bring about a truce.
But seriously, you understand these situations, Who is it that
ultimately is it President Trump that says let's do it,
you know, and can put the pressure on Putin? Who
(13:51):
is it that ultimately gets this thing to end?
Speaker 7 (13:54):
Well, I mean it's a great question. And I mean
that's what's so interesting about this true social posts today
because for so long the President and the folks around
him has been saying, you know, listen, Donald Trump is
the only person who can bring this to a close.
I mean, remember in the campaign, he said he would
have this thing solved in twenty four hours. Now in
this post he seems to be saying, we're not going
(14:16):
to be involved in these conversations that's going to happen
between Ukraine and Russia. So he's sort of bowing out.
So then the big question is, Okay, well, what does
Vladimir Putin want to do? He seems to have no
incentives to stop to fight the fighting. So the only
way that it, I mean, at least according to the
folks we've been speaking to, the only way you can
really get him to sit up and to take notices
for the US to say we are going to join
(14:38):
this sanctions effort and maybe go after oil and really
squeeze the Russian economy in a way that they the
previous rounds of sanctions have not been able to do.
Right now, though it looks like President Trump has no
appetite to do that.
Speaker 2 (14:52):
All right, Nick, going to have to leave it there.
I really appreciate you taking the time keeping us up
to speed once again. The Kremlin did say that Trump
and Putin didn't dis gus Ceespire time frame. This is
coming from IFx, but Carol, they did say that the
President and Vladimir Putin agree to meet in person in
the future.
Speaker 5 (15:08):
Yeah, so it's like TBDTBDTBD dates and certainty or what
I think investors are looking for.
Speaker 1 (15:14):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Applecarplay and
Android Auto with the Bloomberg Business App. You can also
listen live on Amazon Alexa from our flagship New York station,
Just say Alexa Play Bloomberg eleven thirty.
Speaker 2 (15:32):
It is Today's Big Take. It's one of the most
read stories on the Bloomberg terminal. It features exclusive interviews
with Apple insiders about how Apple has been falling short
when it comes to cracking AI. Here's how one senior
member of Apple's AI team put it to our team.
This is a crisis, and yes that is a quote.
Mark German is Bloomberg News Managing editor for Global Consumer Tech.
(15:52):
He joins us here in the Bloomberg Interactive Brokers Studio. Mark,
I was struck by this, you know, just at the
beginning of your piece, there's a picture of Phil Schiller
introducing Siri back in twenty eleven, and there are these
thought bubbles and it says will it rain? And Cooper Tino,
what's the weather like today? Do I need an umbrella today?
I was shocked to look at the small print and
see that was from twenty eleven, because in my view,
(16:14):
that's kind of what Siri still does.
Speaker 6 (16:16):
Uh yeah, that's the problem. That is a problem. Siri
was revolutionary fifteen years ago. It was amazing for its
first couple of years because we let's see, how do
I want to say this. It wasn't great, but it
was still amazing and futuristic and sci fi and better
than everything else. Then Amazon came around, Google came around,
(16:38):
Microsoft came around, and they just blew Apple out of
the water. The technology is just all legacy technology that
they've been using for a long while now for all
intents and purposes, we're not talking about a Sirie that's
based on the same large language models and foundation model
technology that you're seeing from open AI and Gemini from
Google and you know, and thropic, you name it. And
(16:58):
so yeah, they have fallen way to the way south.
Speaker 2 (17:01):
Well, speaking of Google, there was a big hire there
from twenty eighteen who was supposed to be the guy
who did AI at Apple.
Speaker 6 (17:09):
He was supposed to be the guy who did AI
at Apple, and he's still the guy who does AI
at Apple. That's John gen Andrea biggest miss was generative AI.
They seem to have not seen this coming, and if
they did see it coming, they did little to nothing
about it. They really, i'm told, started on the generative
aipath after Craig Fedderigi, the head of software engineering, used
(17:30):
chat GPT to finish some code for a personal project
he was working on over the holiday break they take
this little one week break at the end of December.
He was working on some personal software, as one does,
and he figured out the power. Yeah, figured out figured
out the power of chat gpt, and then immediately they
set iOS eighteen for twenty twenty four. This is gonna
(17:52):
be the big AI release for Apple. From a marketing standpoint,
it was. They marketed it really well AI for the
rest of us, just like the computer for the rest
of us forty years ago. And you know, okay, we're good, yes,
other than the other than the marketing. You know what,
let's take a step back in the robotics world. In
(18:15):
the humanoid robotics world, the fundamental thing that a humanoid
robot has to do is go to your kitchen, pick
up a glass of water, and bring it to you
without dropping it. Okay, Tim almost dropped his water all
over him, So that's where I got the idea to
mention this. The problem isn't so much the iPhone and
the AI capabilities on today's devices. The problem is is
(18:36):
can Apple make AI that's good enough to power a
robot that's not going to spill their water like Tim right?
There is And so the worry is not necessarily about
the technology today, but it's the technology of tomorrow in
a decade from now. And so the iPhone, you know,
its rain is going to be over at some point.
But that's not really what matters here. I think that's
that's not big picture enough. The big picture is the
(18:57):
next set of stuff. We've seen AI already lead to
the car cancelation in part. There were many other factors.
But if Apple was able to get an L five
car with tip top AI and great safety features Level five, yep,
they would have brought it to market. So you know,
we've already seen AI cost them one big category. They
were supposed to have a big smart hump push this year.
(19:18):
It's been delayed. It was supposed to happen in March.
Now it probably won't happen till the end of this
year or next year. The AI not working cost that
now They're already having trouble coming up with use cases
for air pods and watches with camera and smart glasses
with cameras because you need real good AI to use that.
So the iPhone doesn't matter, it's everything that comes after it.
Speaker 3 (19:38):
So why can't they get this right? Is it personnel?
Speaker 1 (19:42):
Is it?
Speaker 3 (19:43):
Culture? Is what?
Speaker 6 (19:44):
Is it both? It's personnel mismanagement, it's culture. Apple's wired
in a very specific way. I get into it in
the story. They're wired to. They sit down, they map
out what they want to do, and then they make
the investment to get there. AI sort of works the opposite.
You don't know exactly where you're going to land. It's
a little bit messier to run, a little bit faster,
(20:07):
it's a little bit you know, more expensive to pull off.
And so it's just a philosophical product development question, right,
And so Apple has to change AI moves so fast.
You know, there is a new AI provider or a
major new AI technology on a weekly basis at this point,
even more frequently. But Apple's wired to release one major
software upgrade every year and a smaller software upgrade in
(20:29):
the spring. So they're going to need to move away
from that idea as well if they really want to
stay at pace with the rest of the technology industry.
So AI and Apple, it's just so interesting. It's like
putting two magnets next to each other. They're just going
to push away, right, And so Apple's going to have
to change at a very core level to really be
(20:50):
able to make meaningful change and to have a meaningful
improvement in their GENAI world.
Speaker 2 (20:56):
You know, I'm thinking about this, and there Mark, when
when you talk about Apple, and you know this better
than anyone else, people a common refrain and I don't
think this is true, but it's that Apple stopped innovating
after Steve Jobs. And you can go and kind of
look at Apple's share price in what has happened with
investors in the way that Tim Cook has led the company.
The concern that I potentially would have in a situation
(21:19):
like this as an observer, is, is this Tim Cook's legacy
here missing AI?
Speaker 6 (21:23):
First of all, I don't agree with the idea that
Apple stopped innovating since Steve Jobs.
Speaker 8 (21:30):
I agree with that. I agree with you.
Speaker 6 (21:31):
No, No, I know you agree. If you think about it,
they basically haven't innovated or done something wholly new since
the iPhone? Right now, are we really expecting that? I
think yes to some extent, But like you look at it,
and like the iPad to the iPhone was like the
Vision pro to the iPhone, right, they're both different reincarnations
(21:54):
of that same operating system. You put the Apple Watch
in that category as well, So you have sort of
the central product, the iPhone, and you just kept building
and building around it and building it up into new
form factors. And they haven't really done an entirely new
product experience from the ground up, and so you know
at some point they'll get there, but right now, it's
about new form factors. And honestly, I'm not sure Tim Cook.
(22:18):
I'm not sure anyone would have done a better job
than Tim Cook over the last fifteen years or so
since Steve Jaw has passed away. So certainly could have
they done a lot better, yes, but they've also could
have done much, much much worse.
Speaker 3 (22:31):
You I want to ask you, does any of this matter?
Speaker 5 (22:33):
Because you write in the story being late to a
potentially world changing advance isn't necessarily catastrophic for Apple, but
there are risks.
Speaker 3 (22:40):
Of being late too.
Speaker 6 (22:41):
Well, it's not catastrophic for Apple because being late implies
that they're going to get there, and so you know,
as long as they're late, it's not catastrophic. But they're
going to need to get there because, like I said,
they're going to miss so many upcoming technological waves if
they don't master this. I said this to someone I
was on the radio with earlier, and they were a
little surprised. But think about it for a minute. You're
going to agree with me. AI is as core of
(23:04):
a technology as the touchscreen. Right. That's a big bowl claim. Right.
So Apple is known for taking core technologies and pushing
them to new form factors, and so multi touch touchscreen,
that's the type of touch screen that lets you do
multiple gestures at once, lets you do the pinch and
the swipe. That's called multi touch. That was a core
technology that allowed them to build the iPhone and the iPad,
(23:28):
all their macs and iPads and whatever they're releasing these days.
The core technology at the heart of that are their chips,
their in house processor design. AI is the core technology
that's going to enable robots the glasses to maybe'll look
at cars again in the future. Who knows, it's not
something they're looking at right now, to be clear, And
so they need to master that core technology to get
to the next era of hardware. Apple's a hardware company,
(23:51):
right and if they want to continue making the money
they're making, they're going to need to do new hardware.
And the way to do new hardware is to come
up with new core technologies.
Speaker 3 (23:59):
But they are this guy.
Speaker 6 (24:00):
You even printed it out.
Speaker 8 (24:01):
I love it.
Speaker 3 (24:03):
Are you kidding? But they heard this guy back in
twenty eighteen. Yes, it's almost a decade.
Speaker 6 (24:09):
You're not quo, but getting close. You're right, and that's
that's unbelievable. But yeah, yeah, we're close to a decade
since he's been there.
Speaker 3 (24:15):
You're right, all right.
Speaker 5 (24:16):
So from someone who knows this company so well, I mean,
how are you thinking about or who are you watching
or what are you watching?
Speaker 3 (24:22):
Internally? I mean the company? Yeah, obviously listen to you.
Speaker 5 (24:25):
They listen to others have conversations saying where are you Apple?
Speaker 3 (24:28):
When it comes to AI John.
Speaker 6 (24:30):
G Andrea JG. As he goes by, I don't think
he's long for Apple.
Speaker 3 (24:34):
I is that good.
Speaker 6 (24:36):
I'm not going to opine on whether it's good or
not for a person to no longer be at a company.
But I'll put it this way. They've already stripped him
of all products related responsibility. They removed Siri from him,
they remove robotics from him. They're going to probably remove
some more things from him. They want to squish him
down to a role that's entirely focused on large language
(24:57):
model and courts AI technology research, which is really good
at and so I mean, if they're taking away seventy
five percent of your remit, you know, you may decide
that the writing's on the wall, it's time to get
out of here. I don't think it's going to happen imminently.
I don't think he wants it to happen, But I
think at some point a change will be made, whether
it's because he decided or because Apple force his hand.
(25:19):
But I don't expect them to fire him. Apple doesn't
do that for senior executives of that level unless you
really do something bad and for all intentsive purposes. JG's
a great guy. He's very well liked, he's very respected
in the machine learning and AI.
Speaker 3 (25:37):
Can can he get them to where they need to be?
Speaker 6 (25:39):
He can be a piece of that puzzle. Don't forget
Apple is constructed by a functional model, So you have
design teams, you have partwer engineering teams, you have software
engineering teams that bring together the product at the end
of the day, if you dilute JG to only focus
on AI research, but you have other people in charge
of like AI product development, I think it's possible that
(26:02):
that's a winning formula, but clearly him running all of
AI was not a good formula.
Speaker 2 (26:06):
We only have thirty seconds left. Could Apple acquire its
way out of this? They've partnered with chat ept Open Eye.
Speaker 6 (26:12):
Well, first of all, yes, they need to acquire as
much a talent as possible, but that's also another cultural
issue where they have this cultural allergy to integrate large
scale companies. The Beats acquisition internally disaster, the Intel Modem
acquisition for a billion and twenty nineteen disaster. They just
have a terrible track record of taking these humongous companies
(26:36):
and pulling them into Apple. So you know, it's a
cultural thing through and through that they need to make
some shifts on. But if they resolve all that, they've
branding the right people, they make the right cultural changes.
It's Apple. They've got the brand, they've got the button,
they've got it all got to say.
Speaker 3 (26:51):
I was in the car, I doing a lot of
things the other weekend talking to Syria. I'm like, you
just not bringing it, Bud, You're.
Speaker 2 (26:56):
Not bringing it.
Speaker 6 (26:57):
The worst thing for serial for meal. Keep this real quick,
is I like go to sushi restaurants. I'll say a
sushi restaurant and Syria ask how to get there? Okay,
and then it takes me to the Japanese city the
restaurant is named after in Japan. Why would you take
me somewhere six thousand miles away.
Speaker 1 (27:10):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eastering. Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 6 (27:26):
Mac.
Speaker 1 (27:27):
I'll bet you let me drive.
Speaker 2 (27:28):
Oh no, no, no no, this is not a toy.
Speaker 3 (27:33):
Alright, please, I'll travels great. I want to drive.
Speaker 6 (27:39):
It's a good question.
Speaker 3 (27:44):
This is the drive to the clothes plums for me.
Speaker 8 (27:47):
Well, Kelvin Don on Bloomberg.
Speaker 3 (27:50):
Radio, all right, TikTok, everybody.
Speaker 2 (27:52):
Just send someone for Carol. That's what I'm gonna say.
Speaker 6 (27:54):
What do you mean?
Speaker 8 (27:54):
No, You're good?
Speaker 2 (27:56):
Summer Carol, this is what I like. I know, you know,
fresh from a big graduate congratulation days off.
Speaker 8 (28:02):
Yeah, it's always.
Speaker 2 (28:03):
Good, right, visit to a historic part of the country, I.
Speaker 3 (28:05):
Know, and I'm really into the historic parts of our country.
Speaker 5 (28:08):
I don't know, it's like getting back to our roots
kind of understanding it.
Speaker 2 (28:11):
What you should have bought the meme coin so you
could have made a visit too. Well, it was going
to be the White House, but oh no, because you're not.
Now you're not one of the top holders.
Speaker 3 (28:21):
Have afforded afforded it?
Speaker 2 (28:22):
It was it was Yeah, it was a lot of Yeah,
you'd have to but you could have sold ahead, you
could have sold And I don't know how much the
coins went for, but I mean that these were the
top holders. I don't know how much the purses were.
I yess, the walls I did not know. We're not
we're not allowed to do that here.
Speaker 3 (28:36):
The whole security issue of like who's going to be
because it's.
Speaker 2 (28:38):
Still an issue.
Speaker 3 (28:39):
They don't know who.
Speaker 2 (28:39):
It is still an issue.
Speaker 5 (28:40):
All right, let's talk about the markets a little bit,
because still an issue is kind of where we go
from here. But having said that, investors seemed to be
shrugging off, certainly the downgrade by Moody's on Friday.
Speaker 3 (28:51):
Let's get into it. Ryan Dietrich is back with us.
Speaker 5 (28:53):
Great to have with us, chief market strategist with the
Carson Group joining us.
Speaker 3 (28:58):
Ryan, it is good to have you here with us.
How do you you know we've talked to you.
Speaker 5 (29:02):
We always give you props about the last couple of years,
really getting your market calls right. It does feel like
we're gonna wait and see mode whether it comes to
FED action.
Speaker 3 (29:12):
What we get on tariffs. Where are you on the
markets right now?
Speaker 8 (29:16):
Yeah, Carol and Tim, thanks for me back.
Speaker 9 (29:17):
I looked, last time I was on with you was
April tenth, right, So that was the day after that
huge rally. We sold off pretty hard and we talked
then about the idea that we could be due for
a pretty big bounce.
Speaker 8 (29:28):
Now.
Speaker 9 (29:28):
I didn't think it'd be quite like this, but it's
where we are, so Carly, last week, if you were
running around missed it. We had a big update on Monday,
up three percent, and then the next four days all
were green, and I said, that's pretty rare because usually
if a big up Monday, usually you give some back.
Speaker 8 (29:43):
We didn't. Last week.
Speaker 9 (29:44):
March of two thousand and three is the only time
we saw a week like last week, and that was
actually the lows of really the bear market, if you will,
from the tech bubble and the war started in Iraq
and then off to the races. I get it, sample
size of one, but the we've been saying for a
while now the lows are in. I know it's pretty
obvious now, but we were saying that four weeks ago
(30:05):
that lows were probably in, and we still think, you know,
this market wants to go higher, and we're listening to it.
Speaker 2 (30:11):
Why does it want to go Why does it want
to go higher?
Speaker 8 (30:13):
Right now?
Speaker 2 (30:13):
I think that's still a lot of people who have
looked at, you know, the twenty percent increase that we've
seen off those April eight lows are saying, wait a second,
we didn't necessarily get something fundamental shift except for this pause.
Speaker 9 (30:27):
Yeah, Tim, that's a that's a great question there, and listen,
it's I think it's all about expectations. I mean, what
was being priced into the market this time five six
weeks ago was just you know, almost say the end
of the world. But that's the way people felt like
they were talking and you see it and then no,
that's not the case. We just had a really solid
earning season, right.
Speaker 2 (30:44):
I know.
Speaker 9 (30:45):
The consumer's not perfect, we get it, but the consumer
is still okay, the labor market's still solid. All these
things are why we say it was like a beach
ball under the water. You release it, it goes up. Here's
one thing to think about since March. Starting on March ninth,
they're at twenty seven trading days. The S and P's up,
like we just said, nearly twenty percent, right over nineteen percent.
Speaker 8 (31:03):
If you go back in history.
Speaker 9 (31:04):
Other times we saw that much strength and only twenty
seven trading days. You're talking off the lows in seventy four,
the lows in eighty two, the lows in two thousand
and nine, the lows off of twenty twenty and now,
I mean, those.
Speaker 8 (31:16):
Were not the worst times to think.
Speaker 9 (31:18):
You know, what the market is telling is something, and
we're just hoping a lot of people are paying attention
because those were pretty solid times. And that blast of
strength we've seen is not a shortcovering rally. It's not
a bear market rally. It is it is kicking off again.
In our opinion. Another you know, continuation, I guess we'll
say of honestly, this bold market has been in place
since October twenty twenty two.
Speaker 3 (31:37):
Uh, so many things I want to come back at
you with.
Speaker 5 (31:39):
Right having said that, we talked with our Juda Martin Adams,
our chief equity strategist here at Bloomberg Intelligence, and she
reminded us put out some research and she says, however,
while US equities have been a key beneficiary of de
escalating tensions, they continue to lag major global markets in
the rebound toward pre tariff liberation day highs. So even
though the bounce back when you go outside the United
(32:02):
States has even been better.
Speaker 8 (32:05):
No shout out to Gina.
Speaker 9 (32:06):
She's awesome, obviously, and that's true, you know, in the
money that we run for our Carson partners. I've come
on with you guys for a while for a couple
of years, and we like the US. We like the US.
Speaker 8 (32:15):
Honestly, starting earlier this year.
Speaker 9 (32:17):
We've kind of taken We're still in US, yes, don't
get me wrong, but we have some exposure to developed international.
Speaker 8 (32:23):
Specifically Europe.
Speaker 9 (32:24):
I mean, when we saw Germany break out the fiscal
bazooka a couple of months ago, we said, wow, there's
something going on here. So yes, you know, diversification used
to be a dirty word. Diversification was used to having
to say you were sorry. Then you have a year
like this was like, wow, I guess I'm a lot
of investors are glad you're diversify because if you have
global global portfolio, you're up nicely this year. Right, if
(32:45):
you're all in mag seven, all in all in the US,
we get it. I guess you're positive kind of now,
but it sure was a long trip to get there.
So listen, and when you're an uncertain diversive, diversification really
can work. And that's a nice way investors need to
remember that.
Speaker 2 (32:58):
Yeah, I mean, you're you're positive for the air. As
long as he didn't sell I'm kind of saying under my.
Speaker 8 (33:01):
Brow, well, you know right, true, I totally totally agree.
Speaker 9 (33:06):
And again, we came into this year in our outlook
that we've put out you know, in January ely this year, Yes,
we were bullish, Yes we're optimistic. We said there could
be a twelve to fifteen percent peak to trough correction
because we hadn't had one in a while. By the way,
after a twenty percent game. The first quarter is usually
pretty weak. The first quarter in the last twenty years
has been pretty weak. Oh and post election years, the
first quarter is actually one of the worst quarters out
(33:28):
of a four year cycle. So all those things stacked
up that we could have some indigestion. No, we didn't
see a near bear market. No we didn't see a
ten percent crash after Liberation Day, but we did see
the potential for some volatility, and now just as quickly,
obviously we're on the other side of that.
Speaker 8 (33:42):
Fortunately.
Speaker 5 (33:43):
Hey, though, Ryan, is it a Pica trough correction that
we just needed because there was too much you know,
fluff in the markets at this point?
Speaker 6 (33:49):
Or is it?
Speaker 5 (33:50):
I mean, the trade really reacted to the news out
of the White House. It's why we talked about it
so much, because you could see clear correlations based on
what was coming from the President and his views on
tariffs in particular, and the markets reacted. So there was
a fundamental basis to it. And if the fundamental basis
going forward, especially when it comes to tariff's, is that Yes. Indeed,
(34:12):
Libby Cantrell of PIMCO, who we talked to earlier, you know,
we could potentially still be in a much higher, historically
higher tariff environment going forward, and that has implications for markets.
Speaker 9 (34:25):
There's a lot there, you know, if everybody's thinking to
like somebody's in thinking. I like to use that quote
a lot, General Patten. It sure felt like late last
year everybody was bullish. I mean, these long term bears
were claiming their bullishul time. We're looking around as people
that were taking a lot of arrows and body shots
in twenty three early twenty four from being bowlish, thinking, Oh.
Speaker 8 (34:43):
And I do think we needed that wash out. I
do think we need to shake the tree a little bit.
Speaker 9 (34:47):
There was a little too much fraud up seventy four,
seventy five percent off the October twenty two lows.
Speaker 8 (34:52):
Maybe it was necessary.
Speaker 9 (34:53):
I didn't think it'd be again twenty percent, but it's
what happened, and that's what shook a lot of those
hands out. But you're right, you know when President Trump,
I mean, what's the phrase he used this, It's gonna
be close enough for government work. Tariff the most beautiful
word in the English dictionary. It's not like this was
a total surprise.
Speaker 8 (35:08):
Now I get it.
Speaker 9 (35:09):
When he held up that board on liberation to April second.
Those numbers were higher than we expected, but I'm not
sure I did read Libby's note today.
Speaker 8 (35:16):
I mean Liby's Lebby's awesome. Also.
Speaker 9 (35:17):
You know, the reality is, I think markets can live
with ten to fifteen percent tariffs. They couldn't live with
what we were seeing a couple months ago because that's
what's being priced in. And then that's kind of where
we are. And you know, if they bring all those
teriffs back, yeah we're we're probably gonna go right back down.
Speaker 8 (35:31):
But I don't think that's the case. I think we're
kind of through that. And now what do we have.
Speaker 9 (35:35):
We've got deregulation coming potentially better, the lower taxes coming.
Those are the things also come in the second half
of this year.
Speaker 5 (35:40):
We're now a little change on the year. What do
you see it's by end of the year. Do you
think we'll be up five ten percent?
Speaker 3 (35:45):
What do you call it? Got ten seconds here?
Speaker 9 (35:47):
Yeah, we came into this year we said between ten
and twelve percent. I'll tell you what I think we're
we're still thinking of that's very likely. We had a
round trip, but we think it's possible.
Speaker 5 (35:54):
Ryan d Jake got a run Chief market Strategies, with
the Carson Group joining us on this Monday.
Speaker 1 (35:59):
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