July 8, 2025 • 19 mins
Watch Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence hosted by Paul Sweeney and Lisa Mateo
George Ferguson, Bloomberg Intelligence Senior Aerospace, Defense, & Airlines Analyst, discusses the latest on Boeing. Boeing said it delivered 60 aircraft in June, its best showing in 18 months that reflects improvements in its factories and the resumption of US jet exports to China.
Mandeep Singh, Bloomberg Intelligence Senior Tech Industry Analyst, discusses Apple losing its top AI models executive to Meta’s hiring spree. Ruoming Pang, a distinguished engineer and manager in charge of the company’s Apple foundation models team, is departing, according to people with knowledge of the matter.
Brandon Daniels, CEO of Exiger, discusses the latest on President Trump’s tariffs. Trump began notifying trading partners of the new rates on Monday ahead of what was initially a deadline this week for countries to wrap up trade negotiations with his administration.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Eastern on Apple, Cocklay and Android Auto with the Bloomberg
Business App. Listen on demand wherever you get your podcasts,
or watch us live on YouTube.
Speaker 2 (00:24):
Boeing shares have really been under pressure lately, investors waiting
detail to from flight data equipment. So here to tell
us more about it, break it all down for us.
George Ferguson Bloomberg Intelligence, Senior Aerospace Defense Airlines analyst, George,
I want to start with the flight data equipment to
start here. Have they found all of them? And what
particularly will they be looking for when it comes to
(00:46):
this equipment.
Speaker 3 (00:47):
Yeah, so I'm not totally sure if they've found all
the equipment anything, had found some of the recorders. I
think once they get into it, I assume you're talking
about the Air India crash, right, correct, correct, When they
get into it, I think one of the items are
absolutely going to focus on is going to be what
was going on in the engines and that Air India
(01:09):
seven eighty seven. You know, look at Boeing seventy seven
can lose one engine and still take off and gain altitude.
So the videos we saw circumstances indicate that both engines
potentially were not producing enough lift. So my guess is
that's where the focus is going to be is on
(01:31):
what was going on in the engines. It was eleven
year old airplane, so we think that what it all
is said and done, probably not going to be a
manufacturing issue, either at Boeing or ge from original manufacturer,
and probably going to be some sort of engine issue,
which I think would probably you know, put Boeing not
(01:55):
in the responsible category, you know, for that that crash,
even though obviously something we're never happy to see and
you know, very sorry about that.
Speaker 4 (02:04):
George, You've in your coverage of Boeing and your discussions
with us, you've always made sure that we focus on
what's important. That is the deliveries of aircraft. June was
a great month, wasn't.
Speaker 3 (02:16):
It looked pretty good. So we see about US sixty deliveries.
Of that, I think we had maybe forty two or
so seven thirty seven deliveries. Seven thirty seven is the
money maker, so that's super important. Of those forty two,
we're focusing very closely on how many were first flown
(02:40):
in twenty twenty five. And the reason we're doing that
is we know Boeing has a lot of inventory airplanes,
so if they're boosting deliveries through inventory airplanes, that's indicating
to us that the factory isn't as strong as we
would hope. What we're seeing right now when we look
at Syrium data is five of those forty two airplanes
are inventory deliveries airplanes that were flown previous to this year,
(03:04):
So that indicates it something around thirty seven Max's came
through the rentin factory in June. That's a pretty nice number.
That corresponds pretty well with Boeing CEO's indication that they
were producing at a thirty eight ish through put in
the factory and that they were going to be breaking
(03:25):
into forty two's levels sort of in the back half
of the year. And so this absolutely confirms I think
the improving health of the Boeing production system and that
retin factory.
Speaker 2 (03:38):
Now, George, you mentioned CEO Kelly Ordberg. What's the war
on the street. How has he been handling this new role?
I mean, a lot of pressures on him.
Speaker 3 (03:45):
Yeah, I mean, I think when it's all done, it's
going to be a function of did he get quality improved,
did he improve throughput? Did he generate cash? Did he
improve the balance sheet of Boeing, you know, sort of
stave off any downgrades? And right now I'd say the
report card would be pretty good for what Kelly Orbrick
is doing.
Speaker 4 (04:04):
And George, you also told us that, you know, tooling
up these factors to crank a production, it's not as
easy as it sounds. It's a little bit more difficult
in manufacturing and automobile coming down the line here, and
that goes to the labor issue. You need some pretty
highly trained labor and coming out of the pandemic, that
was a challenge. How is Boeing doing these days on
that front?
Speaker 3 (04:25):
Yeah, So, you know, if we measure it from the
throughput in the factory, it looks like it's it's doing better.
We're hearing, you know, better sort of noises from the
supply chain that labor is stabilizing. I think we see
in the country right the labor market isn't as sort
of white hot as it was coming right out of
(04:46):
the pandemic, especially for you know, some of this manual
labor that they're looking for and so I think that
helps stability. That stability allows you to go ahead and
train people and through put. So it appears to us
all all those indicators that you know, labor stabilizing qualities improving,
(05:08):
and that's definitely having Boweing benefiting from it.
Speaker 2 (05:12):
George, you mentioned deliveries earlier. The Paris Air Show is
a huge event for these airlines. Yes, yes, how did
how did Boeing fair coming out of that?
Speaker 3 (05:22):
Yeah, So we haven't seen a lot of orders for
Boeing recently, and we you know, we didn't see any
Paris air Show right they had pulled out. I think
just as they're monitoring the developments of that Air India crash.
But we really haven't seen a lot of orders recently
for Boeing. I suspect that given the tariff backdrop, you're
just not going to see a lot of orders for
(05:43):
Boeing until that tariff backdrop gets cleared right. Boeing has
one factory they build seven thirty sevens at it's in
the US, So terraffs between US and the rest of
the world always get in the way. That has to
get cleared.
Speaker 4 (05:55):
Up, George. Great stuff has always George Ferguson's senior airspace
depends in airlines unels.
Speaker 1 (06:01):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Applecarplay and Android Auto
with the Bloomberg Business app. Listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 2 (06:15):
We're going to keep it here kind of in that
AI tech space. I want to go to Man Deep thing.
He's Bloomberg Intelligence senior tech industry analysts. So Man Deep,
we have this sign of just how competitive the AI
space is for talent. So you have Meta possibly poaching
Apple's top AI executive, offering this big, big, big payout.
Explain to us first of all, who this guy is
(06:38):
and how much are they offering him.
Speaker 5 (06:40):
Well, I don't know the exact dollar amount what they're offering,
but clearly Meta is going big in terms of poaching
the top AI researchers. We saw that with the scale
AI aquahars, they pretty much post the founder and look,
I think they want to assemble the top fifty AI
(07:03):
researchers that are out there who have got published papers.
And they are paying up in this case because they've
made all the big investments in terms of compute, in
terms of infrastructure, but they don't have a cloud business
or some other form of monetization that you know Google
(07:24):
has or a Microsoft has. So from that perspective, I
think it's crunched time for them to really show that,
you know, they can develop an ecosystem with their large
aguage model, which has been underperforming relative to OpenAI, Google
and Cloud. And I think it's the founder Mark Zuckerberg
(07:45):
who really is going all out. I mean, you can't
expect any other CEO to be that aggressive with paying
five billion dollars for fifty people. Literally, that's what the
expense that we are talking about Facebook. A Meta as
a company has over seventy six thousand employees with an
(08:06):
expense space of one hundred and fifteen billion. They're adding
five more billion for fifty people. That's all we're talking about.
Speaker 4 (08:14):
Wow, that's an order magnifade. Yeah, all right, so it's
clear that metas all in. What does this mean for Apple?
Speaker 3 (08:22):
This?
Speaker 4 (08:22):
If I were an Apple Cheryl, I'd be concerned here A,
I'm losing talent, but B I've already it's coming from
an area where I feel like I'm under invested already
perhaps I'm already behind. What do you think this means
for Apple?
Speaker 5 (08:35):
I mean, clearly everyone on the research site realizes that
Apple doesn't have the big AI cluster that these companies have,
and you know, generative AI is all about having a
large cluster, training your model on that cluster, and then
really building from there. So from that perspective, Apple has
(08:56):
lagged behind. And if you're a top AI researcher, there
are better companies to work for right now, so I'm
not surprised, you know, a top AI researcher has ended
up taking up the offer. But for Apple, look, they're
going to use a combination of partnerships and some on
device AI investment, which is what they have done in
terms of, you know, their own model efforts. They're going
(09:19):
to partner with cloud open AI, probably Google as well
once the anti trust issues are over, and that's how
they're going to provide the functionality. As long as it's
cloud based. They have the app infrastructure to offer AI
for on device AI, they have to do it natively
at the operating system level. You can't really leverage the
(09:42):
large acreage model from open AI on device because you
have to really open up your operating system, which Apple
won't do.
Speaker 2 (09:50):
I have to add some kind of AI in my resume.
Speaker 6 (09:52):
I think.
Speaker 2 (09:53):
On this, Maddie, what kind of tone does this set
for the industry, what kind of messages sending?
Speaker 5 (10:01):
I mean, to my mind, this is a very high
risk play right now. The market sentiment is Meta can
do no wrong. They are making all the right moves
with getting these you know, big AI researchers, but at
the end of the day, it is you know, they're
doubling down on capex, adding more opics. So from a
(10:22):
spending perspective, Meta is going all in, and so you know,
once it starts to weigh on free cash flow and
the returns are not there, which is why I said,
you know, with everyone else, you see the AI monetization.
You know, if you have a coding agent from Microsoft
or Google, they are monetizing it with Meta. All these
(10:42):
are upfront investments with the hope that if we'll add
more engagement time across their family of apps, they will
probably have a killer AI product that they'll be able
to monetize with in addition to their recommendation systems. So
the stakes are getting higher and higher, but clearly they
are doubling down in terms of their investment, and at
(11:03):
some point the monetization question, kay King, Probably not this
earning season, but maybe a couple of quarters from now.
Speaker 4 (11:10):
All right, Man deep Seeing, big, big numbers. That's his companies, folks.
They just they traffic in huge numbers, huge investments, huge revenue, huge,
huge free cash flow. That is the state of global
technology these days, centered in the United States. Men Deep
Seeing senior techannels for Bloomberg Intelligence. We appreciate that, and
again Meta going all in, not that they weren't before,
(11:32):
but it's just kind of another example the type of
investments they are making there.
Speaker 1 (11:38):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Applecarclay, and Android Auto
with the Bloomberg Business app. Listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 4 (11:52):
I think from the pandemic, we all became familiar with
this concept of supply chains and global supply chains and
where stuff comes from. And boy, when the ship stops sailing,
that's a problem. And do we need to bring some
of that stuff closer to home? And that's one of
the reasons I think for President Trump and his focus
on tariffs here. But let's get a sense of what
the global supply chains are looking at now and how
(12:14):
they may react in a world where tariffs are higher.
Brandon Daniels joins the CEO of EXEG. He joins us
from Chicago. Brandon, how do you put into context all
this talk about tariffs and kind of what it means
for the global supply chain and how we get stuff,
where we make stuff, where we import stuff from. How
do you guys think about that?
Speaker 6 (12:35):
Absolutely? Well, thank you for having me on. It's good
to talk to you guys today. I think when we
think about it, it is a reflection of a major
shift in priorities across across all countries from a global
commerce perspective. Right, Like, when you think about what the
(12:56):
United States is doing and what the administration is doing,
is there they're trying to prioritize three things, right. The
first thing that we've in our discussions and in our
talks with the administration, they want to bring back manufacturing
where the United States can be competitive. And that's that's
what our customers are utilizing our AI tools today and
(13:17):
our multi tier supply chain visibility to understand where can
they actually source in the United States in a way
that is at parity with their global sourcing requirements. And
so that is mostly focused on where labor arbitrage has
been taken out of the equation. So think things like
additive manufacturing, Think things like you know, largely automated production floors.
(13:44):
You know, those are the areas where you're starting to
see major cost collapse in between emerging markets and more
sophisticated markets, because the cost of the manufacturing equipment it's
the same across the globe, the cast of the land.
I mean, there's there's parts of North Texas that are
(14:05):
cheaper than parts of heav A, China. And with the
volume of operators necessary in these factories going down and
them having to be also more higher skilled, uh, the
the major labor arbitrage effect kind of dwindles, and so
they want to move those areas of automated manufacturing back
(14:27):
to the United States. And so I see our customers
focused on those commodity areas as well as you know,
some of the more specialized areas that require automated manufacturing floors. Uh,
that stuff coming back to the US. The second thing
is national security and economic security. So from a national
security perspective, you know, there's a there's a core focus
(14:49):
on semiconductors because AI is the future of our national
security capacity, whether it's in managing you know, UA s
and drones, or it's in you know, fighting cyber attacks.
AI is where it's at. And then the other area
is in pharmaceuticals. It's actually keeping our you know, medical
(15:10):
supply chains clean UH and independent. And you know, obviously
we pulled back the veil on that in COVID Exeger
was the technology utilized by the federal government to purchase
seven billion dollars of goods and to do it in
a way that didn't in a way that we could
get it to the healthcare frontlines quickly and in a
(15:30):
way that didn't allow for fraud, waste, abuse, and adversarial investment.
And I think they're looking to try to expand that
and trying to bring back pharmaceutical manufacturing, medical device manufacturing
to the United States. And so when when I look
at this, I see those two first strategies getting you know,
sort of being prioritized. The last one is honestly to
(15:54):
ramp up our actual external UH tariff collection. You know,
there have been estimates between thirty and one hundred billion
dollars of transhipment per year. You saw this in the
deal with Vietnam, where it was twenty percent tariffs and
then forty percent tariffs on expected or potential transshipment goods. Right.
(16:17):
So one of the things that we've seen is China
has used this sort of global economic coercion to create
veneer centers of manufacturing across the globe, and the US
is trying to crack down on that to level the
playing field.
Speaker 2 (16:32):
All right, bern I hear you got to talk about
a couple of things, so AI pharmaceuticals. One of the
things you mentioned in your notes is how auto is
there going to be the best case study and how
nuanced this policy really is? Can you dig into that
for us?
Speaker 5 (16:45):
Yeah?
Speaker 6 (16:45):
Absolutely, so auto manufacturing is a great case study of
where all of this might be going. I don't think
we'll end up with just blanket country level policies. And
I think those blanket country level policies will get nuanced
down to the HTS code or to the actual sort
(17:07):
of segment or sector of goods, right. And I think
that they will get nuanced down to a place where
you know, the recognized dependencies we have on critical minerals
or specialty alloys, or on specific goods that are indigenous
to some of our allies, you know, where those are
necessary for us to do the manufacturing in the United States.
(17:30):
I think those goods will become subject to exceptions or
exemptions very similar to USMCA so. So automotive is a
great example of this because basically, you can have fifteen
percent of your auto that's being manufactured in the United States.
You can have fifteen percent of it be parts, components,
(17:51):
and goods from other places, and your entire tariff burden
can be offset by the three point seventy five percent
tear credit you get on the vehicle's MSRP, right, and
so it's almost like you have your tariff free if
you have fifteen percent of the goods coming from everywhere else.
(18:11):
And that's because we realize that in many cases there
are things that the US doesn't make yet, and it's
going to take a while for the US or allies
to build those things right, and we want to give
you know, people the ability to have some leniency there.
Speaker 4 (18:27):
Red headline crossing the Bloomberg terminal, Trump says August one,
tariff deadline won't be extended. We'll have more reporting on that.
Brandom got thirty seconds left here. When you talk to
your customers, who's going to pay tariff costs? Is there
going to be the importer or the manufacturer, the distributor
or the consumer or how are these tariffs going to
be worn by the economy.
Speaker 6 (18:48):
I think the consumer is going to be the last
to feel it. And I think, you know, the fact
is this is going to be absorbed somewhere in the
supply chain. In twenty eighteen, when we had the regional
Trump tariffs on steel, you know, the entire defense industry,
the entire automotive industry, airline industry, they all ate it,
(19:10):
right because you just needed the steel, yeah, and you
didn't and you didn't want to affect the end market.
I think that the consumer is going to be the
last the feeling on this fr I.
Speaker 4 (19:19):
Hopefully that is the case. Brandon Daniels, Thank you so much.
Brandon Daniels. He's the CEO of Exeger, joining us from Chicago,
Vias zoom talking about tariff talk about supply chains, fascinating
and fluid situation.
Speaker 1 (19:30):
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Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Eastern on Apple, Cocklay and Android Auto with the Bloomberg
Business App. Listen on demand wherever you get your podcasts,
or watch us live on YouTube.
Speaker 2 (00:24):
Boeing shares have really been under pressure lately, investors waiting
detail to from flight data equipment. So here to tell
us more about it, break it all down for us.
George Ferguson Bloomberg Intelligence, Senior Aerospace Defense Airlines analyst, George,
I want to start with the flight data equipment to
start here. Have they found all of them? And what
particularly will they be looking for when it comes to
(00:46):
this equipment.
Speaker 3 (00:47):
Yeah, so I'm not totally sure if they've found all
the equipment anything, had found some of the recorders. I
think once they get into it, I assume you're talking
about the Air India crash, right, correct, correct, When they
get into it, I think one of the items are
absolutely going to focus on is going to be what
was going on in the engines and that Air India
(01:09):
seven eighty seven. You know, look at Boeing seventy seven
can lose one engine and still take off and gain altitude.
So the videos we saw circumstances indicate that both engines
potentially were not producing enough lift. So my guess is
that's where the focus is going to be is on
(01:31):
what was going on in the engines. It was eleven
year old airplane, so we think that what it all
is said and done, probably not going to be a
manufacturing issue, either at Boeing or ge from original manufacturer,
and probably going to be some sort of engine issue,
which I think would probably you know, put Boeing not
(01:55):
in the responsible category, you know, for that that crash,
even though obviously something we're never happy to see and
you know, very sorry about that.
Speaker 4 (02:04):
George, You've in your coverage of Boeing and your discussions
with us, you've always made sure that we focus on
what's important. That is the deliveries of aircraft. June was
a great month, wasn't.
Speaker 3 (02:16):
It looked pretty good. So we see about US sixty deliveries.
Of that, I think we had maybe forty two or
so seven thirty seven deliveries. Seven thirty seven is the
money maker, so that's super important. Of those forty two,
we're focusing very closely on how many were first flown
(02:40):
in twenty twenty five. And the reason we're doing that
is we know Boeing has a lot of inventory airplanes,
so if they're boosting deliveries through inventory airplanes, that's indicating
to us that the factory isn't as strong as we
would hope. What we're seeing right now when we look
at Syrium data is five of those forty two airplanes
are inventory deliveries airplanes that were flown previous to this year,
(03:04):
So that indicates it something around thirty seven Max's came
through the rentin factory in June. That's a pretty nice number.
That corresponds pretty well with Boeing CEO's indication that they
were producing at a thirty eight ish through put in
the factory and that they were going to be breaking
(03:25):
into forty two's levels sort of in the back half
of the year. And so this absolutely confirms I think
the improving health of the Boeing production system and that
retin factory.
Speaker 2 (03:38):
Now, George, you mentioned CEO Kelly Ordberg. What's the war
on the street. How has he been handling this new role?
I mean, a lot of pressures on him.
Speaker 3 (03:45):
Yeah, I mean, I think when it's all done, it's
going to be a function of did he get quality improved,
did he improve throughput? Did he generate cash? Did he
improve the balance sheet of Boeing, you know, sort of
stave off any downgrades? And right now I'd say the
report card would be pretty good for what Kelly Orbrick
is doing.
Speaker 4 (04:04):
And George, you also told us that, you know, tooling
up these factors to crank a production, it's not as
easy as it sounds. It's a little bit more difficult
in manufacturing and automobile coming down the line here, and
that goes to the labor issue. You need some pretty
highly trained labor and coming out of the pandemic, that
was a challenge. How is Boeing doing these days on
that front?
Speaker 3 (04:25):
Yeah, So, you know, if we measure it from the
throughput in the factory, it looks like it's it's doing better.
We're hearing, you know, better sort of noises from the
supply chain that labor is stabilizing. I think we see
in the country right the labor market isn't as sort
of white hot as it was coming right out of
(04:46):
the pandemic, especially for you know, some of this manual
labor that they're looking for and so I think that
helps stability. That stability allows you to go ahead and
train people and through put. So it appears to us
all all those indicators that you know, labor stabilizing qualities improving,
(05:08):
and that's definitely having Boweing benefiting from it.
Speaker 2 (05:12):
George, you mentioned deliveries earlier. The Paris Air Show is
a huge event for these airlines. Yes, yes, how did
how did Boeing fair coming out of that?
Speaker 3 (05:22):
Yeah, So we haven't seen a lot of orders for
Boeing recently, and we you know, we didn't see any
Paris air Show right they had pulled out. I think
just as they're monitoring the developments of that Air India crash.
But we really haven't seen a lot of orders recently
for Boeing. I suspect that given the tariff backdrop, you're
just not going to see a lot of orders for
(05:43):
Boeing until that tariff backdrop gets cleared right. Boeing has
one factory they build seven thirty sevens at it's in
the US, So terraffs between US and the rest of
the world always get in the way. That has to
get cleared.
Speaker 4 (05:55):
Up, George. Great stuff has always George Ferguson's senior airspace
depends in airlines unels.
Speaker 1 (06:01):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Applecarplay and Android Auto
with the Bloomberg Business app. Listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 2 (06:15):
We're going to keep it here kind of in that
AI tech space. I want to go to Man Deep thing.
He's Bloomberg Intelligence senior tech industry analysts. So Man Deep,
we have this sign of just how competitive the AI
space is for talent. So you have Meta possibly poaching
Apple's top AI executive, offering this big, big, big payout.
Explain to us first of all, who this guy is
(06:38):
and how much are they offering him.
Speaker 5 (06:40):
Well, I don't know the exact dollar amount what they're offering,
but clearly Meta is going big in terms of poaching
the top AI researchers. We saw that with the scale
AI aquahars, they pretty much post the founder and look,
I think they want to assemble the top fifty AI
(07:03):
researchers that are out there who have got published papers.
And they are paying up in this case because they've
made all the big investments in terms of compute, in
terms of infrastructure, but they don't have a cloud business
or some other form of monetization that you know Google
(07:24):
has or a Microsoft has. So from that perspective, I
think it's crunched time for them to really show that,
you know, they can develop an ecosystem with their large
aguage model, which has been underperforming relative to OpenAI, Google
and Cloud. And I think it's the founder Mark Zuckerberg
(07:45):
who really is going all out. I mean, you can't
expect any other CEO to be that aggressive with paying
five billion dollars for fifty people. Literally, that's what the
expense that we are talking about Facebook. A Meta as
a company has over seventy six thousand employees with an
(08:06):
expense space of one hundred and fifteen billion. They're adding
five more billion for fifty people. That's all we're talking about.
Speaker 4 (08:14):
Wow, that's an order magnifade. Yeah, all right, so it's
clear that metas all in. What does this mean for Apple?
Speaker 3 (08:22):
This?
Speaker 4 (08:22):
If I were an Apple Cheryl, I'd be concerned here A,
I'm losing talent, but B I've already it's coming from
an area where I feel like I'm under invested already
perhaps I'm already behind. What do you think this means
for Apple?
Speaker 5 (08:35):
I mean, clearly everyone on the research site realizes that
Apple doesn't have the big AI cluster that these companies have,
and you know, generative AI is all about having a
large cluster, training your model on that cluster, and then
really building from there. So from that perspective, Apple has
(08:56):
lagged behind. And if you're a top AI researcher, there
are better companies to work for right now, so I'm
not surprised, you know, a top AI researcher has ended
up taking up the offer. But for Apple, look, they're
going to use a combination of partnerships and some on
device AI investment, which is what they have done in
terms of, you know, their own model efforts. They're going
(09:19):
to partner with cloud open AI, probably Google as well
once the anti trust issues are over, and that's how
they're going to provide the functionality. As long as it's
cloud based. They have the app infrastructure to offer AI
for on device AI, they have to do it natively
at the operating system level. You can't really leverage the
(09:42):
large acreage model from open AI on device because you
have to really open up your operating system, which Apple
won't do.
Speaker 2 (09:50):
I have to add some kind of AI in my resume.
Speaker 6 (09:52):
I think.
Speaker 2 (09:53):
On this, Maddie, what kind of tone does this set
for the industry, what kind of messages sending?
Speaker 5 (10:01):
I mean, to my mind, this is a very high
risk play right now. The market sentiment is Meta can
do no wrong. They are making all the right moves
with getting these you know, big AI researchers, but at
the end of the day, it is you know, they're
doubling down on capex, adding more opics. So from a
(10:22):
spending perspective, Meta is going all in, and so you know,
once it starts to weigh on free cash flow and
the returns are not there, which is why I said,
you know, with everyone else, you see the AI monetization.
You know, if you have a coding agent from Microsoft
or Google, they are monetizing it with Meta. All these
(10:42):
are upfront investments with the hope that if we'll add
more engagement time across their family of apps, they will
probably have a killer AI product that they'll be able
to monetize with in addition to their recommendation systems. So
the stakes are getting higher and higher, but clearly they
are doubling down in terms of their investment, and at
(11:03):
some point the monetization question, kay King, Probably not this
earning season, but maybe a couple of quarters from now.
Speaker 4 (11:10):
All right, Man deep Seeing, big, big numbers. That's his companies, folks.
They just they traffic in huge numbers, huge investments, huge revenue, huge,
huge free cash flow. That is the state of global
technology these days, centered in the United States. Men Deep
Seeing senior techannels for Bloomberg Intelligence. We appreciate that, and
again Meta going all in, not that they weren't before,
(11:32):
but it's just kind of another example the type of
investments they are making there.
Speaker 1 (11:38):
You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 4 (11:52):
I think from the pandemic, we all became familiar with
this concept of supply chains and global supply chains and
where stuff comes from. And boy, when the ship stops sailing,
that's a problem. And do we need to bring some
of that stuff closer to home? And that's one of
the reasons I think for President Trump and his focus
on tariffs here. But let's get a sense of what
the global supply chains are looking at now and how
(12:14):
they may react in a world where tariffs are higher.
Brandon Daniels joins the CEO of EXEG. He joins us
from Chicago. Brandon, how do you put into context all
this talk about tariffs and kind of what it means
for the global supply chain and how we get stuff,
where we make stuff, where we import stuff from. How
do you guys think about that?
Speaker 6 (12:35):
Absolutely? Well, thank you for having me on. It's good
to talk to you guys today. I think when we
think about it, it is a reflection of a major
shift in priorities across across all countries from a global
commerce perspective. Right, Like, when you think about what the
(12:56):
United States is doing and what the administration is doing,
is there they're trying to prioritize three things, right. The
first thing that we've in our discussions and in our
talks with the administration, they want to bring back manufacturing
where the United States can be competitive. And that's that's
what our customers are utilizing our AI tools today and
(13:17):
our multi tier supply chain visibility to understand where can
they actually source in the United States in a way
that is at parity with their global sourcing requirements. And
so that is mostly focused on where labor arbitrage has
been taken out of the equation. So think things like
additive manufacturing, Think things like you know, largely automated production floors.
(13:44):
You know, those are the areas where you're starting to
see major cost collapse in between emerging markets and more
sophisticated markets, because the cost of the manufacturing equipment it's
the same across the globe, the cast of the land.
I mean, there's there's parts of North Texas that are
(14:05):
cheaper than parts of heav A, China. And with the
volume of operators necessary in these factories going down and
them having to be also more higher skilled, uh, the
the major labor arbitrage effect kind of dwindles, and so
they want to move those areas of automated manufacturing back
(14:27):
to the United States. And so I see our customers
focused on those commodity areas as well as you know,
some of the more specialized areas that require automated manufacturing floors. Uh,
that stuff coming back to the US. The second thing
is national security and economic security. So from a national
security perspective, you know, there's a there's a core focus
(14:49):
on semiconductors because AI is the future of our national
security capacity, whether it's in managing you know, UA s
and drones, or it's in you know, fighting cyber attacks.
AI is where it's at. And then the other area
is in pharmaceuticals. It's actually keeping our you know, medical
(15:10):
supply chains clean UH and independent. And you know, obviously
we pulled back the veil on that in COVID Exeger
was the technology utilized by the federal government to purchase
seven billion dollars of goods and to do it in
a way that didn't in a way that we could
get it to the healthcare frontlines quickly and in a
(15:30):
way that didn't allow for fraud, waste, abuse, and adversarial investment.
And I think they're looking to try to expand that
and trying to bring back pharmaceutical manufacturing, medical device manufacturing
to the United States. And so when when I look
at this, I see those two first strategies getting you know,
sort of being prioritized. The last one is honestly to
(15:54):
ramp up our actual external UH tariff collection. You know,
there have been estimates between thirty and one hundred billion
dollars of transhipment per year. You saw this in the
deal with Vietnam, where it was twenty percent tariffs and
then forty percent tariffs on expected or potential transshipment goods. Right.
(16:17):
So one of the things that we've seen is China
has used this sort of global economic coercion to create
veneer centers of manufacturing across the globe, and the US
is trying to crack down on that to level the
playing field.
Speaker 2 (16:32):
All right, bern I hear you got to talk about
a couple of things, so AI pharmaceuticals. One of the
things you mentioned in your notes is how auto is
there going to be the best case study and how
nuanced this policy really is? Can you dig into that
for us?
Speaker 5 (16:45):
Yeah?
Speaker 6 (16:45):
Absolutely, so auto manufacturing is a great case study of
where all of this might be going. I don't think
we'll end up with just blanket country level policies. And
I think those blanket country level policies will get nuanced
down to the HTS code or to the actual sort
(17:07):
of segment or sector of goods, right. And I think
that they will get nuanced down to a place where
you know, the recognized dependencies we have on critical minerals
or specialty alloys, or on specific goods that are indigenous
to some of our allies, you know, where those are
necessary for us to do the manufacturing in the United States.
(17:30):
I think those goods will become subject to exceptions or
exemptions very similar to USMCA so. So automotive is a
great example of this because basically, you can have fifteen
percent of your auto that's being manufactured in the United States.
You can have fifteen percent of it be parts, components,
(17:51):
and goods from other places, and your entire tariff burden
can be offset by the three point seventy five percent
tear credit you get on the vehicle's MSRP, right, and
so it's almost like you have your tariff free if
you have fifteen percent of the goods coming from everywhere else.
(18:11):
And that's because we realize that in many cases there
are things that the US doesn't make yet, and it's
going to take a while for the US or allies
to build those things right, and we want to give
you know, people the ability to have some leniency there.
Speaker 4 (18:27):
Red headline crossing the Bloomberg terminal, Trump says August one,
tariff deadline won't be extended. We'll have more reporting on that.
Brandom got thirty seconds left here. When you talk to
your customers, who's going to pay tariff costs? Is there
going to be the importer or the manufacturer, the distributor
or the consumer or how are these tariffs going to
be worn by the economy.
Speaker 6 (18:48):
I think the consumer is going to be the last
to feel it. And I think, you know, the fact
is this is going to be absorbed somewhere in the
supply chain. In twenty eighteen, when we had the regional
Trump tariffs on steel, you know, the entire defense industry,
the entire automotive industry, airline industry, they all ate it,
(19:10):
right because you just needed the steel, yeah, and you
didn't and you didn't want to affect the end market.
I think that the consumer is going to be the
last the feeling on this fr I.
Speaker 4 (19:19):
Hopefully that is the case. Brandon Daniels, Thank you so much.
Brandon Daniels. He's the CEO of Exeger, joining us from Chicago,
Vias zoom talking about tariff talk about supply chains, fascinating
and fluid situation.
Speaker 1 (19:30):
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