August 1, 2025 • 26 mins
- Jamieson Greer, US Trade Representative at Office of the US Trade Representative
- Stephanie Roth, Chief Economist at Wolfe Research
- Jeffrey Rosenberg, Portfolio Manager: Systematic Multi-Strategy Fund at BlackRock
- Tom Forte, Senior Consumer Internet Analyst at Maxim Group
- Michael Collins, Exec Portfolio Advisor: Multi-Sector at PGIM Fixed Income
Jamieson Greer, US Trade Representative at Office of the US Trade Representative, joins Bloomberg Television for a discussion on tariff policy and US trade as the Trump administration reaches its August 1 deadline on tariffs. Stephanie Roth, Chief Economist at Wolfe Research and Jeffrey Rosenberg, Portfolio Manager: Systematic Multi-Strategy Fund at BlackRock, and Michael Collins, Exec Portfolio Advisor: Multi-Sector at PGIM Fixed Income react to the July jobs report. Tom Forte, Senior Consumer Internet Analyst at Maxim Group, reacts to Apple earnings as Big Tech earnings wrap up.
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Episode Transcript
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Speaker 1 (00:02):
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Speaker 2 (00:11):
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Speaker 1 (00:36):
Jamison Greer is joining us now, Jamison, Ambassador, Thank you
so much for being with us. I know you've been
incredibly busy. I can imagine you haven't slept much. I
am curious how much we're seeing the end of negotiations
or the beginning of the end, as there still seem
to be some loose ends to be tied up.
Speaker 3 (00:56):
Well, I would say that, you know, we've spent the
past one hundred and twenty days negotiating with dozens and
dozens of countries, and with some of these countries, the
deals have been good enough that the President's been willing
to accept them. With other countries, they're just going have
a tariff. But we have you know, you can look
at some of the information that's gone out there. We
have fact sheets, we have a joint statement with Indonesia
(01:17):
that give some details. You know, we'll be finishing the
paperwork in the next weeks and maybe a couple of months,
but these deals are pretty much set.
Speaker 4 (01:25):
They are set, right.
Speaker 3 (01:26):
We wouldn't make an agreement unless we all knew the
contours of it and the countries knew it. And it's
an exciting time because the president has essentially reset the
global trading system, and so we'll be you know, finalizing
everything that's been agreed to on paper and then monitoring
compliance going forward.
Speaker 5 (01:40):
And Messagre, Can you help us understand how you landed
on some of these rates, Specifically a country like Switzerland,
it went from thirty one percent on Liberation Day, April
second to now thirty nine percent, even though you and
your colleagues were in negotiations with the Swiss trading partners.
Speaker 6 (01:58):
Sure well.
Speaker 3 (01:58):
So, first of all, the rates are largely determined by
the trade deficit of a country with the United States
and what the country is willing to do to address
that trade deficit Switzerland. You know, this is surprising to
some to hear, but we have nearly forty billion dollar
trade deficit with Switzerland for a country of nine million.
Now we value our relationship with Switzerland certainly, but during
(02:19):
our discussions with them, you know, we weren't able to
reach agreement on the best way to reduce that trade
deficit at all. Right, they ship enormous amounts of pharmaceuticals
to our country. We want to be making pharmaceuticals in
our country. So this is a challenging situation. And so
we have, you know, high tariffs not just on Switzerland,
but many countries where we weren't able to fully resolve
a path forward on reducing the trade deficit and opening markets.
Speaker 5 (02:42):
My understanding was that the US in Switzerland actually had
a negotiated text and it was just waiting on sign
off from President Trump.
Speaker 1 (02:48):
Is that accurate?
Speaker 4 (02:50):
I think that's an overstatement.
Speaker 3 (02:51):
I mean, the reality is all of these countries you
trade back and forth paperwork and then you take it
back to your leaders to get guidance from them, and
so nothing's agreed, and tell everything's agreed. That's what every
trade negotiator knows. So you know, the reality is we
negotiate with lots of countries. Listen, there are a lot
of countries that didn't get a deal that we've been
negotiating with, and they, of course, they all want a deal.
They all want to deal with the United States. So
(03:13):
I can understand that. You know, folks may want to
try to manifest a deal in the last minutes, but
we just have to do it's right for America, and
the President stands that too.
Speaker 5 (03:22):
I'm thinking of other countries like Taiwan, which that rate
went down, India, Switzerland. Of course we know you are
in negotiations with So between now and August seventh, could
some of these countries that you spent a lot of
time with your counterparts get a deal.
Speaker 4 (03:38):
Well, that's not my focus.
Speaker 3 (03:40):
I feel like we've been able to get everything set
on August first. Of course, any country that wants to
talk to us, they can always talk to us, and
I'm sure some will be eager to find ways to
reduce the deficit, open their markets, etc.
Speaker 4 (03:51):
But we're really focused right now on implementing the deals
that have been reached, well.
Speaker 7 (03:57):
On implementing those deals. Representative, you meant that you would
be looking and monitoring them for any violations. How will
this administration judge what is a violation and what the
consequences of that would be.
Speaker 3 (04:09):
So, for example, you know, we put out a fairly
detailed joint statement with Indonesia and we're finalizing the underlying agreement,
and in there you can see that they've made commitments
on tariff levels where they're going to remove all of
their tariffs. They've made commitments on non tariff barriers with
respect to you know, agricultural inspections and the way they
treat certain digital trade. And so our office, which has
(04:32):
hundreds of people, the Office of the gust Trade Representative,
they watch this and they make sure that Indonesia actually
does what it's supposed to do, and if they don't,
the President has his teriff authority. I mean, all of
the deals are premised and the modified rates for these
countries are premised on them actually opening their market, making
the investment and purchase commitments they've agreed to, and if
you don't, you can have the tariffs go back into place.
Speaker 4 (04:52):
This is basic trade enforcement. That's what we intend to
do here, Ambassador.
Speaker 1 (04:56):
Right now, there are a number of countries coming out
and saying this is part of a negotiation, and they
plan to keep talking with the team over in the
Trade Organization and trade representatives from the United States. Is
that just messaging to their own political constituents or is
that reality?
Speaker 3 (05:12):
Well, listen, they certainly have their domestic constituents they have
to talk to. You can be sure that I woke
up this morning to a number of trade ministers texting
me and emailing me, and I'm sure they're reaching out
to my colleague, Secretary LATINX, Secretary Beston, et cetera.
Speaker 4 (05:29):
And my job is to talk to these folks.
Speaker 3 (05:31):
I'm always going to talk to these folks, and you know,
if they have proposals, you know, I'll talk to them
and I'll brief the president. You know, we're focused on
implementation and doing, you know, what's right to change the
trading system to one that benefits American workers.
Speaker 1 (05:43):
How much are you also hearing from US companies concerned
about certainty and whether they're going to get clarity on
exactly what the rates are going to be, whether they
will stick, whether there will be adjustments, and how some
of these things will work with transcenational shipments of getting
penalized forty percent.
Speaker 3 (06:00):
So So with respect to certainty, you know, President Trump
has been talking about a new tariff program.
Speaker 4 (06:06):
For for literally years, decades.
Speaker 3 (06:09):
In some instances, you know, he has tariffs from his
first term that are still in place. So sometimes when
companies say we want certainty, what they mean is we
want a different outcome, right, And you know by by
putting you know, the market has baked in a lot
of the tariffs we put in. You know, the new
tariffs that we issued last night are firm. That's why
we put it out in a very clear list. Everyone
can see it and understand. With surotect a transhipment that's
(06:32):
always been illegal, and so we're just going to put
an additional forty percent tariff on that. So, you know,
I understand that there are going to be edge cases
where companies have to change their supply chains and no
one wants to do that. They just want status quo.
But we can't have the status quo. The status quo
is what led to offshoring and the loss of some
of our key industries. So during that supply chain shift,
(06:52):
you know, that can be challenging for some companies. And
I talk to a lot of these folks. I wanted
to understand the president's trade policy. I want to hear
about any you know on in tended consequences. But the
presence trade policy is moving forward and we're shifting from
a seventy year policy based on purely efficiency to a
new policy based.
Speaker 4 (07:08):
On fair and bounce trade, and the world is agreeing
with US.
Speaker 1 (07:11):
Investor agree.
Speaker 5 (07:12):
What about the unintended consequences of what's going on with
the sectoral tariffs on autos? The Ford CEO was on
Bloomberg Television yesterday talking about the price disadvantage compared to
auto companies if they're making a car in Japan because
of the input costs of twenty five percent on those
inputs that they need to make the car coming into
the United States versus the fifteen percent right that Japan
(07:35):
now has. What's the point of the auto sectoral tariff
if basically it's going to be bilateral now with country
by country.
Speaker 3 (07:44):
So first of all, you know, there are only a
handful of countries that export cars to US, right essentially,
you know Germany, Japan, in a couple of countries of
the European Union. We also have Canada, Mexico, and we
had our domestic producers. You know, choose over a couple
of decades off for a lot of that production to Mexico,
and so naturally there is some some challenge as they
(08:05):
as they continue to reshure that and we understand that, right,
I mean, our goal is long term. We're not looking
at quarterly earnings as policy makers. We're looking at a
way to make sure that we have a strong, robust
industrial base here that provide good jobs for our workers
and support the national security. So you know, we're in
constant contact with the domestics, with the unions and everybody.
(08:26):
And you know, I understand that the that the auto
companies are receiving a credit for content that's made in America,
which is how it should be.
Speaker 4 (08:34):
That's what we're trying to incentivize.
Speaker 5 (08:35):
When you're looking and you're thinking long term, are you
preparing for Supreme Court ruling against using IEPA for these tariffs?
And if so, what's the plan be.
Speaker 3 (08:46):
So the case is at the Federal Circuit right now.
We had the arguments yesterday. You know, lots of questions,
a lot of preparation. Dog did a great DJ did
a great job. We had a great team out there.
We feel very confident in the case. You know, if
if there's still questions coming out of the Federal Circuit
or further litigation that goes to the Supreme Court, we're
confident there that this statue clearly says the President has
(09:08):
the authority to regulate imports.
Speaker 4 (09:09):
That's the language.
Speaker 3 (09:10):
No, not my words, it's a statute statutes language.
Speaker 4 (09:14):
You know.
Speaker 3 (09:14):
In case there's a national emergency, the Presence declared a
national emergency, So we feel confident, you know, if it
goes the other way, then we'll manage that. The reality is,
the countries understand the type of leverage that President Trump
has created. That's why they're doing these deals, and they're
going to stick regardless of what happens in litigation.
Speaker 1 (09:30):
That's where I wanted to finish, And we just have
a couple of minutes. We are out of time with you,
I know, but I am curious what the game plan
is should there be some sort of overruling of IEPA.
Do you already have section two thirty two and others
lined up?
Speaker 3 (09:44):
Well, well, listen, we always have all kinds of plans.
And I'm not going to go deep into our strategy here,
mostly because we're pretty confident on the current plan. But
we will do whatever it takes to make sure that
the President can continue to rectify the trade deficit and
change the global trading system. This is a historic thing.
This is once in a hundred years that you have
the chance to reorder global trade like this, and we're
(10:05):
doing it, and we'll use whatever tools are necessary to
do it.
Speaker 1 (10:07):
US Trade Representative Jamison Greer, thank you so much for
being with it. Stephanie Rothawolf research still here and I'm
looking right now at some of the internals of this data,
and it includes average hourly earnings that ticked up to
(10:29):
three point nine percent from the previous three point seven percent.
You can see right now across the board there are
still signs that things are solid, you know, even the
unemployment rate. Yes, it ticked up, but not to the
significant degree that some people were worried about. What is
the inflationary risk here longer term at a time when
the Fed is being prompted to cut from a number
(10:50):
of different reasons, and there still are these tariffs in
the system.
Speaker 4 (10:54):
Yeah, this is a challenge.
Speaker 8 (10:57):
The data that we're seeing is largely appears to be
rifferent by immigrat and that actually tightens the labor market
for blue collar workers.
Speaker 1 (11:03):
So what we might.
Speaker 8 (11:04):
See is a labor market, which is something that was
kind of known heading into this event, but it's now
the reality. It's kind of painful because what we're seeing
is job gains that have slowed down tremendously. It results
in upward pressure on wages and then upward pressure from tariff.
So it's like a stagflationary type of thoughts shop, which
we're starting to see play out in the data. It's
(11:25):
just a really complicated mix for the FED to kind
of deal with from here. So it looks like the
labor market is okay, it's not as weak as these
numbers today suggest. This is largely different by immigration in
an economy that's hanging in there.
Speaker 1 (11:38):
Mike, to that point, maybe the economy is hanging in there,
but on the margins, this is by government bonds sell
corporate bonds.
Speaker 9 (11:46):
You know, corporate bond spreads, as you know, as we've
all been talking about, are really tight. I mean, you're
not getting a lot of extra yield to buy corporates
and high yield bonds, and obviously you're seeing a little
bit of a knee jerk reaction negative action in the
stock market as well, and this, you know, this whole
tariff theme is definitely one of of not only inflationary,
(12:07):
you know, is you know we just talked about the
stagflationary risk is real, but it can certainly result in
margin pressures for companies and I think that is still
to come, and I think we are starting to see
some early evidence of that. And obviously that could put
some pressure on corporate earnings, that could put some pressure
on credit quality and and on corporate spread. So yeah,
(12:30):
I think higher quality bonds and adding duration are the
two themes we've we've been sticking here. The big question
for the FED, right, and Stephan you kind of talked
about this. I let's say growth is zero and the
unemployment rate is you know, four and a half or five,
but inflation is at three. You know, what does the
FED do in that world? Right, that that kind of
stagflationary world. And and my gut is, you know, the
(12:53):
FED and even Powell, who is is a labor market dove,
would err on the side of saving the economy, saving jobs,
saving the labor market and write off this inflationary risk
as being a one off. So I think that's the
kind of the risks the way they're skewed.
Speaker 1 (13:12):
My colin Symphijian fixed Income, thank you so much for
your time. And before we got this number, we saw
a forty percent chance of a rate cutpying bike bakes
into the market if for the month of September, And
right now we have a seventy one percent chance of
a rate of a rate cut in September. Joining us
now is Jeff Rosenberg of a Black Rock we heard
(13:33):
there from Mike Collins by Bonds. Is that your takeaway?
Speaker 10 (13:38):
Well, certainly the market takeaway because the market's repricing September
and it makes a lot of sense, and you guys
hit on it, and I think it is the takeaway
from today's report, which is it's the revision's story.
Speaker 6 (13:49):
Remember there's been this undercurrent.
Speaker 10 (13:51):
Of a debate about whether non farm payrolls in the
labor market report is really mismeasuring the deterioration, and you
see that in these first prints versus the revisions.
Speaker 6 (14:04):
Wallers talked about it.
Speaker 10 (14:05):
It's a little bit of vindication here, and that's basically
saying his argument may hold sway or convince more people
to come on his side of the argument. And you know,
maybe they missed the opportunity in July, but it certainly
raises the odds that you get it in September. And
that's why you're seeing the big move. As you pointed
(14:26):
out in the front end.
Speaker 6 (14:27):
Of the curve.
Speaker 1 (14:27):
Well, the President agrees with you.
Speaker 5 (14:28):
He took to true socials had strong descents on the
FED board and will only get stronger given the revisions.
The downside revisions, Is this now a trend of this
fragility we're seeing in the labor market.
Speaker 10 (14:40):
Well, it was one of the numbers that Mike highlight
it at the beginning. You know, when you take the
revisions into account, you know, the three month average change
in non for barrows drops from one hundred and fifty
thousand average. There's just really a very you know, pretty
strong labor market to thirty five thousand, which is which
is you know, a dramatic shift. Now, as Mike just mentioned,
(15:02):
you know, maybe we need to reset what we think
is break even. But with the revisions, it's a dramatically
different picture to what the labor market is saying. And
as also Mike was talking about, you know, you have
a pretty strong year over year average hourly earnings figure,
wage inflation. You know, the market is not caring about
(15:24):
that because I agree with Mike. I think in the
debate between the dual mandate of inflation versus full employment,
they're going to air on the side of full employment.
And that's why, again, I think you're seeing this big
move in the front end of the curve despite you
know what we're not really talking a lot about, which
is the wage number.
Speaker 7 (15:43):
Jeff, I just wanted to jump in because we had
heard from Powell this week who de emphasized the nonfarm
payroll numbers themselves and said pay attention to the unemployment rate,
and we were just talking with Stephanie about this idea
of it being impacted more by labor supply and things
like imm So given that, couldn't you say maybe for
this bond market, I shouldn't get over my skis in
(16:05):
joining this rally because we did have things like PCE
yesterday which showed a stubborn rate of inflation.
Speaker 10 (16:13):
Yeah, it's a really good point, and he did focus
on that, and the unemployment rate, you know, ticked up
one tenth and that was kind of aligned with expectations.
But he also said in that press conference that the
slowing in the labor markets even if it's both demand
(16:33):
and supply with the equilibrium raises the risk that the
downside risk would be to labor markets.
Speaker 6 (16:41):
It was a little bit of a tell on.
Speaker 10 (16:44):
Yes, we're in equilibrium now because you're getting both the
supply and the demand side falling. But the risk is
that the supply side sort of stops falling and the
demand side continues. And I think that's kind of what
the market is looking through here, particularly around this trend
with the revisions, you know, more accelerated than say what
(17:05):
we've seen in terms of labor force participation which you
mentioned a minute ago, which actually tacked down here again
a tenth. But maybe you start to see that stabilize
while the demand side doesn't stabilize.
Speaker 6 (17:16):
And that's the risk that the market's pricing in right now.
Speaker 4 (17:19):
Jeff.
Speaker 7 (17:19):
Not all markets are pricing in things equally. I just
pulled up what the future session is doing. You actually,
just looking at the line chart would not even have
any idea that we had any big economic piece of
data come out s and P five hundred futures are
basically at the level they were before. Is this a
market that's not paying attention to the jobs numbers or
it's just not bad enough for them to react, or
(17:40):
maybe it's smooth sailing because it means that we could
get cuts. What do you make of how risk is not.
Speaker 10 (17:45):
Reacting well, you know, and I looked at some of
the futures and they looked like they were reacting and down.
I think when you look cross market, you know, we
talked a little better about this earlier this week. You've
got to be a little bit careful about reading into
the equity market. You know, this is very much sort
of a macro conversation fed policy macroeconomic performance. The stock
(18:11):
market is not the economy, and the stock market is
not even the S and P five hundred. It's really
the S and P seven or six, and then you've
got the.
Speaker 6 (18:18):
Four ninety three. There's tremendous differential.
Speaker 10 (18:21):
Look at sort of small cap performance versus you know,
S and P five hundred performance, which is again it's
sort of more dominated.
Speaker 6 (18:27):
By the tech story.
Speaker 10 (18:29):
So those stories and we're in the middle of earning season,
you know, they can be much more dominant and reflective
of those issues than they are what we're talking about
here in the macro data.
Speaker 6 (18:40):
I think when you look at the.
Speaker 10 (18:41):
Two year that's mapping to FED expectations, and that's a
pretty good message.
Speaker 6 (18:46):
I think when you start looking across.
Speaker 10 (18:48):
Into the equity market, you've got to be a little
bit more aware that you know there's other factors going
on in this environment of very concentrated equity valuation within
the indices that can kind of lead to a misread
across from the macro data.
Speaker 1 (19:03):
Jeff Rosenberg of Blackrock, thank you so much for being
with us. And as Jeff was talking about the chances
of a September a FED rate cut, we're increasing it
again to seventy six percent now from forty percent. Stephanie
Rotha full Research here with us for a final thought.
You've been parsing through all of this. Notably, the three
month average of the net change in jobs has fallen
(19:23):
to its lowest level going back to July of twenty
twenty or June of twenty twenty. What's your takeaway.
Speaker 8 (19:29):
I think the labor market has softened. Part of it
is a big part of it has to do with immigration.
Another big part of it has to do with government.
About half of the revisions are driven by the government sector.
So we're looking at an economy that's holding up, labor
market has cooled down, and inflation is going to be
heating up. This is a really challenging backdrop for August
for risk markets.
Speaker 6 (19:48):
And Marie.
Speaker 1 (19:49):
The President's responding, he's coming out on truth social.
Speaker 5 (19:51):
Yeah, he's not exactly saying what's happening in the jobs market,
but he's signaling. This is the reason why he thinks
the Fed is quote his words too little, too late.
Speaker 6 (20:00):
Powell is a disaster. Dropped the rate.
Speaker 1 (20:02):
I Meanwhile, the SMP not even responding. It's all about
big tech.
Speaker 6 (20:05):
No, not responding at all.
Speaker 7 (20:06):
Again, you would have no idea that this piece of
data came out. It is the bond market that is responding,
sending us to a more than seventy percent odds that
we will get that rate cut next decision.
Speaker 1 (20:16):
Stephanie Roth of Wolf Research, thank you so much. Apple
reporting is best quarter in over three years. Is iPhone
demand picked up worldwide, including in China. Amazon shares and
(20:36):
meanwhile falling after reporting the tech client underwhelming cloud growth.
Joining us now is Tom Forte of the Maxim Group. Tom,
how bad really was Amazon versus just not absolutely moonshot
blowing out expectations like some of the other tech giants.
Speaker 11 (20:54):
Yeah, I definitely think that Amazon was a victim of expectations.
Had the company reports before Microsoft instead of after, we
might be talking differently without downplaying investor concerns about the
competitive landscape in cloud computing and artificial intelligence. But I
do see the market's reaction to Amazon as more reflection
(21:16):
of high expectations than poor performance. Sales and profits were
better for the quarter, and if you look at the
ranges for the outlook for next quarter, they were better
as well.
Speaker 1 (21:27):
So tob Before we get to Apple, there is this
issue of what the constraint is for Amazon's AWS, their
cloud computing unit, which has really been their main profitability driver.
Is it just capacity? Is it that they can't build
out quickly enough to meet demand, or is it that
they're losing share that they don't have the same kind
of AI advancement that's say the Googles and the Microsoft have.
Speaker 11 (21:48):
Yeah, so I would argue that it's more about capacity.
So Microsoft is working closely with OpenAI, Amazon's working closely
with anthropic. Amazon is the market leader as far as
market share. Google to their credit and Microsoft, to its credit,
are growing at faster rates off smaller bases, but I
would argue that of those choices, it's more about capacity
(22:10):
than necessary market share.
Speaker 7 (22:12):
Tom, how do you understand whether we reward these companies
or punish them for the capital expenditures that they're doing.
Is there a hint of that in Amazon, that they're
spending too much to justify what isn't as strong growth
as the other mag seven in big hyperscalers.
Speaker 6 (22:27):
Yes.
Speaker 11 (22:27):
So I think the beauty of Andy Jassey as CEO
versus Jeff Bezos is Andy's fond a way for the
company to continue to generate strong profits and free cash
flow and invest So I think that if we were
talking about a Jeff Bezos led Amazon, there would be
kind of ebbs and flows of investment spending. Andy has
figured out a way to unlock sustain profitability even with
(22:50):
heightened investment. And I think Amazon, both under Bezos and
under Jasse has investors trust that the investments will ultimately
pay off, including for our official intelligence.
Speaker 7 (23:01):
And then there was Apple, Tom, And one of the
more interesting things that Tim Cook said on the call
was that he thinks only one percentage point of the
ten percentage growth in revenue was due to a pull
forward effect. Tom, is that even measurable. How much faith
do you put in that number?
Speaker 6 (23:17):
Yeah.
Speaker 11 (23:18):
So they looked at their sales trends in April as
it pertained to iPhones and max and discerned that consumers,
hearing all the chatter on tariffs, bought ahead of concerns
that tariffs would raised the prices of those products, and
as you pointed out, it contributed to about one hundred
basis points of growth on a ten percentage point growth.
(23:40):
So I think that.
Speaker 6 (23:40):
Pull forward was a factor.
Speaker 11 (23:42):
The concerning thing to me in Apple's results is that
they're acknowledging that they're behind on artificial intelligence. The good
news is they're taking action. They're raising their capex, which
is much more modest versus Amazon, and they even hinted
at strategic M and A, which I thought highly unusual
for Apple.
Speaker 5 (24:01):
Is it a little too late though, when it comes
to what Apple's doing in terms of AI, given the
fact that we see Meta basically go in take their
top talent and leave Apple still struggling.
Speaker 11 (24:12):
Yeah, I think I don't know that I would say
it's too late.
Speaker 6 (24:14):
It's definitely late.
Speaker 11 (24:16):
So the good news is now we know that we
should expect an elevated Sirian next year enhanced by artificial intelligence.
That was a question mark even into the Developers conference. Recently,
I think Apple has shown a consistent ability to play
catch up. They're not always first, but their best. Maybe
they won't be the best in AI, but certainly they
(24:37):
can be better than what they are today.
Speaker 5 (24:39):
Does this show you the fact that Apple is saying
that potentially is going to have to look elsewhere for AI,
that they're just changing their strategy for a company that
we know loves to build in house.
Speaker 11 (24:51):
I think they're saying that everything's on the table. So
I don't think they're saying, hey, we're going to lean
into strategic m and A unlike we've done in the past.
I think that they're going to pull every lever they
can to materially enhance the artificial intelligence experience on their products.
That's how I view that statement, Tom forty.
Speaker 1 (25:09):
This past week has been about American exceptionalism driven by
big tech, and we've certainly seen some blockbuster results. We're
quibbling with the details about Amazon, but still a pretty
solid set of numbers. And I just wonder when you
have the likes of Michael hartnant Over at Bank of
America talking about a bubble in tech stocks and evaluation
that just seems to have gotten over the skis even
of all of the optimism that you saw in the earnings.
(25:32):
What's your response.
Speaker 11 (25:34):
Yeah, So if you looked at the peer set for Apple,
the PE went to about thirty five times from closer
to twenty eight times between last quarter and this quarter.
So I think there's a lot of high expectations in
big tech that they're going to lay in the plane
or however you want to think about it when it
comes to both tariffs, AI investment and getting a return
(25:55):
on the AI investment. So, as a long time followed
the industry, going back to ninety six, having survived the
dot com bubble, I do think that there's a lot
of high expectations. It's reflected in the big PE multiples
you're seeing in big tech.
Speaker 1 (26:09):
Tom Forte of Maxim Group, thank you so much for that.
Speaker 2 (26:13):
This is the Bloomberg Surveillance Podcast, bringing you the best
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Speaker 2 (00:11):
This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
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(00:33):
Bloomberg Terminal and the Bloomberg Business App.
Speaker 1 (00:36):
Jamison Greer is joining us now, Jamison, Ambassador, Thank you
so much for being with us. I know you've been
incredibly busy. I can imagine you haven't slept much. I
am curious how much we're seeing the end of negotiations
or the beginning of the end, as there still seem
to be some loose ends to be tied up.
Speaker 3 (00:56):
Well, I would say that, you know, we've spent the
past one hundred and twenty days negotiating with dozens and
dozens of countries, and with some of these countries, the
deals have been good enough that the President's been willing
to accept them. With other countries, they're just going have
a tariff. But we have you know, you can look
at some of the information that's gone out there. We
have fact sheets, we have a joint statement with Indonesia
(01:17):
that give some details. You know, we'll be finishing the
paperwork in the next weeks and maybe a couple of months,
but these deals are pretty much set.
Speaker 4 (01:25):
They are set, right.
Speaker 3 (01:26):
We wouldn't make an agreement unless we all knew the
contours of it and the countries knew it. And it's
an exciting time because the president has essentially reset the
global trading system, and so we'll be you know, finalizing
everything that's been agreed to on paper and then monitoring
compliance going forward.
Speaker 5 (01:40):
And Messagre, Can you help us understand how you landed
on some of these rates, Specifically a country like Switzerland,
it went from thirty one percent on Liberation Day, April
second to now thirty nine percent, even though you and
your colleagues were in negotiations with the Swiss trading partners.
Speaker 6 (01:58):
Sure well.
Speaker 3 (01:58):
So, first of all, the rates are largely determined by
the trade deficit of a country with the United States
and what the country is willing to do to address
that trade deficit Switzerland. You know, this is surprising to
some to hear, but we have nearly forty billion dollar
trade deficit with Switzerland for a country of nine million.
Now we value our relationship with Switzerland certainly, but during
(02:19):
our discussions with them, you know, we weren't able to
reach agreement on the best way to reduce that trade
deficit at all. Right, they ship enormous amounts of pharmaceuticals
to our country. We want to be making pharmaceuticals in
our country. So this is a challenging situation. And so
we have, you know, high tariffs not just on Switzerland,
but many countries where we weren't able to fully resolve
a path forward on reducing the trade deficit and opening markets.
Speaker 5 (02:42):
My understanding was that the US in Switzerland actually had
a negotiated text and it was just waiting on sign
off from President Trump.
Speaker 1 (02:48):
Is that accurate?
Speaker 4 (02:50):
I think that's an overstatement.
Speaker 3 (02:51):
I mean, the reality is all of these countries you
trade back and forth paperwork and then you take it
back to your leaders to get guidance from them, and
so nothing's agreed, and tell everything's agreed. That's what every
trade negotiator knows. So you know, the reality is we
negotiate with lots of countries. Listen, there are a lot
of countries that didn't get a deal that we've been
negotiating with, and they, of course, they all want a deal.
They all want to deal with the United States. So
(03:13):
I can understand that. You know, folks may want to
try to manifest a deal in the last minutes, but
we just have to do it's right for America, and
the President stands that too.
Speaker 5 (03:22):
I'm thinking of other countries like Taiwan, which that rate
went down, India, Switzerland. Of course we know you are
in negotiations with So between now and August seventh, could
some of these countries that you spent a lot of
time with your counterparts get a deal.
Speaker 4 (03:38):
Well, that's not my focus.
Speaker 3 (03:40):
I feel like we've been able to get everything set
on August first. Of course, any country that wants to
talk to us, they can always talk to us, and
I'm sure some will be eager to find ways to
reduce the deficit, open their markets, etc.
Speaker 4 (03:51):
But we're really focused right now on implementing the deals
that have been reached, well.
Speaker 7 (03:57):
On implementing those deals. Representative, you meant that you would
be looking and monitoring them for any violations. How will
this administration judge what is a violation and what the
consequences of that would be.
Speaker 3 (04:09):
So, for example, you know, we put out a fairly
detailed joint statement with Indonesia and we're finalizing the underlying agreement,
and in there you can see that they've made commitments
on tariff levels where they're going to remove all of
their tariffs. They've made commitments on non tariff barriers with
respect to you know, agricultural inspections and the way they
treat certain digital trade. And so our office, which has
(04:32):
hundreds of people, the Office of the gust Trade Representative,
they watch this and they make sure that Indonesia actually
does what it's supposed to do, and if they don't,
the President has his teriff authority. I mean, all of
the deals are premised and the modified rates for these
countries are premised on them actually opening their market, making
the investment and purchase commitments they've agreed to, and if
you don't, you can have the tariffs go back into place.
Speaker 4 (04:52):
This is basic trade enforcement. That's what we intend to
do here, Ambassador.
Speaker 1 (04:56):
Right now, there are a number of countries coming out
and saying this is part of a negotiation, and they
plan to keep talking with the team over in the
Trade Organization and trade representatives from the United States. Is
that just messaging to their own political constituents or is
that reality?
Speaker 3 (05:12):
Well, listen, they certainly have their domestic constituents they have
to talk to. You can be sure that I woke
up this morning to a number of trade ministers texting
me and emailing me, and I'm sure they're reaching out
to my colleague, Secretary LATINX, Secretary Beston, et cetera.
Speaker 4 (05:29):
And my job is to talk to these folks.
Speaker 3 (05:31):
I'm always going to talk to these folks, and you know,
if they have proposals, you know, I'll talk to them
and I'll brief the president. You know, we're focused on
implementation and doing, you know, what's right to change the
trading system to one that benefits American workers.
Speaker 1 (05:43):
How much are you also hearing from US companies concerned
about certainty and whether they're going to get clarity on
exactly what the rates are going to be, whether they
will stick, whether there will be adjustments, and how some
of these things will work with transcenational shipments of getting
penalized forty percent.
Speaker 3 (06:00):
So So with respect to certainty, you know, President Trump
has been talking about a new tariff program.
Speaker 4 (06:06):
For for literally years, decades.
Speaker 3 (06:09):
In some instances, you know, he has tariffs from his
first term that are still in place. So sometimes when
companies say we want certainty, what they mean is we
want a different outcome, right, And you know by by
putting you know, the market has baked in a lot
of the tariffs we put in. You know, the new
tariffs that we issued last night are firm. That's why
we put it out in a very clear list. Everyone
can see it and understand. With surotect a transhipment that's
(06:32):
always been illegal, and so we're just going to put
an additional forty percent tariff on that. So, you know,
I understand that there are going to be edge cases
where companies have to change their supply chains and no
one wants to do that. They just want status quo.
But we can't have the status quo. The status quo
is what led to offshoring and the loss of some
of our key industries. So during that supply chain shift,
(06:52):
you know, that can be challenging for some companies. And
I talk to a lot of these folks. I wanted
to understand the president's trade policy. I want to hear
about any you know on in tended consequences. But the
presence trade policy is moving forward and we're shifting from
a seventy year policy based on purely efficiency to a
new policy based.
Speaker 4 (07:08):
On fair and bounce trade, and the world is agreeing
with US.
Speaker 1 (07:11):
Investor agree.
Speaker 5 (07:12):
What about the unintended consequences of what's going on with
the sectoral tariffs on autos? The Ford CEO was on
Bloomberg Television yesterday talking about the price disadvantage compared to
auto companies if they're making a car in Japan because
of the input costs of twenty five percent on those
inputs that they need to make the car coming into
the United States versus the fifteen percent right that Japan
(07:35):
now has. What's the point of the auto sectoral tariff
if basically it's going to be bilateral now with country
by country.
Speaker 3 (07:44):
So first of all, you know, there are only a
handful of countries that export cars to US, right essentially,
you know Germany, Japan, in a couple of countries of
the European Union. We also have Canada, Mexico, and we
had our domestic producers. You know, choose over a couple
of decades off for a lot of that production to Mexico,
and so naturally there is some some challenge as they
(08:05):
as they continue to reshure that and we understand that, right,
I mean, our goal is long term. We're not looking
at quarterly earnings as policy makers. We're looking at a
way to make sure that we have a strong, robust
industrial base here that provide good jobs for our workers
and support the national security. So you know, we're in
constant contact with the domestics, with the unions and everybody.
(08:26):
And you know, I understand that the that the auto
companies are receiving a credit for content that's made in America,
which is how it should be.
Speaker 4 (08:34):
That's what we're trying to incentivize.
Speaker 5 (08:35):
When you're looking and you're thinking long term, are you
preparing for Supreme Court ruling against using IEPA for these tariffs?
And if so, what's the plan be.
Speaker 3 (08:46):
So the case is at the Federal Circuit right now.
We had the arguments yesterday. You know, lots of questions,
a lot of preparation. Dog did a great DJ did
a great job. We had a great team out there.
We feel very confident in the case. You know, if
if there's still questions coming out of the Federal Circuit
or further litigation that goes to the Supreme Court, we're
confident there that this statue clearly says the President has
(09:08):
the authority to regulate imports.
Speaker 4 (09:09):
That's the language.
Speaker 3 (09:10):
No, not my words, it's a statute statutes language.
Speaker 4 (09:14):
You know.
Speaker 3 (09:14):
In case there's a national emergency, the Presence declared a
national emergency, So we feel confident, you know, if it
goes the other way, then we'll manage that. The reality is,
the countries understand the type of leverage that President Trump
has created. That's why they're doing these deals, and they're
going to stick regardless of what happens in litigation.
Speaker 1 (09:30):
That's where I wanted to finish, And we just have
a couple of minutes. We are out of time with you,
I know, but I am curious what the game plan
is should there be some sort of overruling of IEPA.
Do you already have section two thirty two and others
lined up?
Speaker 3 (09:44):
Well, well, listen, we always have all kinds of plans.
And I'm not going to go deep into our strategy here,
mostly because we're pretty confident on the current plan. But
we will do whatever it takes to make sure that
the President can continue to rectify the trade deficit and
change the global trading system. This is a historic thing.
This is once in a hundred years that you have
the chance to reorder global trade like this, and we're
(10:05):
doing it, and we'll use whatever tools are necessary to
do it.
Speaker 1 (10:07):
US Trade Representative Jamison Greer, thank you so much for
being with it. Stephanie Rothawolf research still here and I'm
looking right now at some of the internals of this data,
and it includes average hourly earnings that ticked up to
(10:29):
three point nine percent from the previous three point seven percent.
You can see right now across the board there are
still signs that things are solid, you know, even the
unemployment rate. Yes, it ticked up, but not to the
significant degree that some people were worried about. What is
the inflationary risk here longer term at a time when
the Fed is being prompted to cut from a number
(10:50):
of different reasons, and there still are these tariffs in
the system.
Speaker 4 (10:54):
Yeah, this is a challenge.
Speaker 8 (10:57):
The data that we're seeing is largely appears to be
rifferent by immigrat and that actually tightens the labor market
for blue collar workers.
Speaker 1 (11:03):
So what we might.
Speaker 8 (11:04):
See is a labor market, which is something that was
kind of known heading into this event, but it's now
the reality. It's kind of painful because what we're seeing
is job gains that have slowed down tremendously. It results
in upward pressure on wages and then upward pressure from tariff.
So it's like a stagflationary type of thoughts shop, which
we're starting to see play out in the data. It's
(11:25):
just a really complicated mix for the FED to kind
of deal with from here. So it looks like the
labor market is okay, it's not as weak as these
numbers today suggest. This is largely different by immigration in
an economy that's hanging in there.
Speaker 1 (11:38):
Mike, to that point, maybe the economy is hanging in there,
but on the margins, this is by government bonds sell
corporate bonds.
Speaker 9 (11:46):
You know, corporate bond spreads, as you know, as we've
all been talking about, are really tight. I mean, you're
not getting a lot of extra yield to buy corporates
and high yield bonds, and obviously you're seeing a little
bit of a knee jerk reaction negative action in the
stock market as well, and this, you know, this whole
tariff theme is definitely one of of not only inflationary,
(12:07):
you know, is you know we just talked about the
stagflationary risk is real, but it can certainly result in
margin pressures for companies and I think that is still
to come, and I think we are starting to see
some early evidence of that. And obviously that could put
some pressure on corporate earnings, that could put some pressure
on credit quality and and on corporate spread. So yeah,
(12:30):
I think higher quality bonds and adding duration are the
two themes we've we've been sticking here. The big question
for the FED, right, and Stephan you kind of talked
about this. I let's say growth is zero and the
unemployment rate is you know, four and a half or five,
but inflation is at three. You know, what does the
FED do in that world? Right, that that kind of
stagflationary world. And and my gut is, you know, the
(12:53):
FED and even Powell, who is is a labor market dove,
would err on the side of saving the economy, saving jobs,
saving the labor market and write off this inflationary risk
as being a one off. So I think that's the
kind of the risks the way they're skewed.
Speaker 1 (13:12):
My colin Symphijian fixed Income, thank you so much for
your time. And before we got this number, we saw
a forty percent chance of a rate cutpying bike bakes
into the market if for the month of September, And
right now we have a seventy one percent chance of
a rate of a rate cut in September. Joining us
now is Jeff Rosenberg of a Black Rock we heard
(13:33):
there from Mike Collins by Bonds. Is that your takeaway?
Speaker 10 (13:38):
Well, certainly the market takeaway because the market's repricing September
and it makes a lot of sense, and you guys
hit on it, and I think it is the takeaway
from today's report, which is it's the revision's story.
Speaker 6 (13:49):
Remember there's been this undercurrent.
Speaker 10 (13:51):
Of a debate about whether non farm payrolls in the
labor market report is really mismeasuring the deterioration, and you
see that in these first prints versus the revisions.
Speaker 6 (14:04):
Wallers talked about it.
Speaker 10 (14:05):
It's a little bit of vindication here, and that's basically
saying his argument may hold sway or convince more people
to come on his side of the argument. And you know,
maybe they missed the opportunity in July, but it certainly
raises the odds that you get it in September. And
that's why you're seeing the big move. As you pointed
(14:26):
out in the front end.
Speaker 6 (14:27):
Of the curve.
Speaker 1 (14:27):
Well, the President agrees with you.
Speaker 5 (14:28):
He took to true socials had strong descents on the
FED board and will only get stronger given the revisions.
The downside revisions, Is this now a trend of this
fragility we're seeing in the labor market.
Speaker 10 (14:40):
Well, it was one of the numbers that Mike highlight
it at the beginning. You know, when you take the
revisions into account, you know, the three month average change
in non for barrows drops from one hundred and fifty
thousand average. There's just really a very you know, pretty
strong labor market to thirty five thousand, which is which
is you know, a dramatic shift. Now, as Mike just mentioned,
(15:02):
you know, maybe we need to reset what we think
is break even. But with the revisions, it's a dramatically
different picture to what the labor market is saying. And
as also Mike was talking about, you know, you have
a pretty strong year over year average hourly earnings figure,
wage inflation. You know, the market is not caring about
(15:24):
that because I agree with Mike. I think in the
debate between the dual mandate of inflation versus full employment,
they're going to air on the side of full employment.
And that's why, again, I think you're seeing this big
move in the front end of the curve despite you
know what we're not really talking a lot about, which
is the wage number.
Speaker 7 (15:43):
Jeff, I just wanted to jump in because we had
heard from Powell this week who de emphasized the nonfarm
payroll numbers themselves and said pay attention to the unemployment rate,
and we were just talking with Stephanie about this idea
of it being impacted more by labor supply and things
like imm So given that, couldn't you say maybe for
this bond market, I shouldn't get over my skis in
(16:05):
joining this rally because we did have things like PCE
yesterday which showed a stubborn rate of inflation.
Speaker 10 (16:13):
Yeah, it's a really good point, and he did focus
on that, and the unemployment rate, you know, ticked up
one tenth and that was kind of aligned with expectations.
But he also said in that press conference that the
slowing in the labor markets even if it's both demand
(16:33):
and supply with the equilibrium raises the risk that the
downside risk would be to labor markets.
Speaker 6 (16:41):
It was a little bit of a tell on.
Speaker 10 (16:44):
Yes, we're in equilibrium now because you're getting both the
supply and the demand side falling. But the risk is
that the supply side sort of stops falling and the
demand side continues. And I think that's kind of what
the market is looking through here, particularly around this trend
with the revisions, you know, more accelerated than say what
(17:05):
we've seen in terms of labor force participation which you
mentioned a minute ago, which actually tacked down here again
a tenth. But maybe you start to see that stabilize
while the demand side doesn't stabilize.
Speaker 6 (17:16):
And that's the risk that the market's pricing in right now.
Speaker 4 (17:19):
Jeff.
Speaker 7 (17:19):
Not all markets are pricing in things equally. I just
pulled up what the future session is doing. You actually,
just looking at the line chart would not even have
any idea that we had any big economic piece of
data come out s and P five hundred futures are
basically at the level they were before. Is this a
market that's not paying attention to the jobs numbers or
it's just not bad enough for them to react, or
(17:40):
maybe it's smooth sailing because it means that we could
get cuts. What do you make of how risk is not.
Speaker 10 (17:45):
Reacting well, you know, and I looked at some of
the futures and they looked like they were reacting and down.
I think when you look cross market, you know, we
talked a little better about this earlier this week. You've
got to be a little bit careful about reading into
the equity market. You know, this is very much sort
of a macro conversation fed policy macroeconomic performance. The stock
(18:11):
market is not the economy, and the stock market is
not even the S and P five hundred. It's really
the S and P seven or six, and then you've
got the.
Speaker 6 (18:18):
Four ninety three. There's tremendous differential.
Speaker 10 (18:21):
Look at sort of small cap performance versus you know,
S and P five hundred performance, which is again it's
sort of more dominated.
Speaker 6 (18:27):
By the tech story.
Speaker 10 (18:29):
So those stories and we're in the middle of earning season,
you know, they can be much more dominant and reflective
of those issues than they are what we're talking about
here in the macro data.
Speaker 6 (18:40):
I think when you look at the.
Speaker 10 (18:41):
Two year that's mapping to FED expectations, and that's a
pretty good message.
Speaker 6 (18:46):
I think when you start looking across.
Speaker 10 (18:48):
Into the equity market, you've got to be a little
bit more aware that you know there's other factors going
on in this environment of very concentrated equity valuation within
the indices that can kind of lead to a misread
across from the macro data.
Speaker 1 (19:03):
Jeff Rosenberg of Blackrock, thank you so much for being
with us. And as Jeff was talking about the chances
of a September a FED rate cut, we're increasing it
again to seventy six percent now from forty percent. Stephanie
Rotha full Research here with us for a final thought.
You've been parsing through all of this. Notably, the three
month average of the net change in jobs has fallen
(19:23):
to its lowest level going back to July of twenty
twenty or June of twenty twenty. What's your takeaway.
Speaker 8 (19:29):
I think the labor market has softened. Part of it
is a big part of it has to do with immigration.
Another big part of it has to do with government.
About half of the revisions are driven by the government sector.
So we're looking at an economy that's holding up, labor
market has cooled down, and inflation is going to be
heating up. This is a really challenging backdrop for August
for risk markets.
Speaker 6 (19:48):
And Marie.
Speaker 1 (19:49):
The President's responding, he's coming out on truth social.
Speaker 5 (19:51):
Yeah, he's not exactly saying what's happening in the jobs market,
but he's signaling. This is the reason why he thinks
the Fed is quote his words too little, too late.
Speaker 6 (20:00):
Powell is a disaster. Dropped the rate.
Speaker 1 (20:02):
I Meanwhile, the SMP not even responding. It's all about
big tech.
Speaker 6 (20:05):
No, not responding at all.
Speaker 7 (20:06):
Again, you would have no idea that this piece of
data came out. It is the bond market that is responding,
sending us to a more than seventy percent odds that
we will get that rate cut next decision.
Speaker 1 (20:16):
Stephanie Roth of Wolf Research, thank you so much. Apple
reporting is best quarter in over three years. Is iPhone
demand picked up worldwide, including in China. Amazon shares and
(20:36):
meanwhile falling after reporting the tech client underwhelming cloud growth.
Joining us now is Tom Forte of the Maxim Group. Tom,
how bad really was Amazon versus just not absolutely moonshot
blowing out expectations like some of the other tech giants.
Speaker 11 (20:54):
Yeah, I definitely think that Amazon was a victim of expectations.
Had the company reports before Microsoft instead of after, we
might be talking differently without downplaying investor concerns about the
competitive landscape in cloud computing and artificial intelligence. But I
do see the market's reaction to Amazon as more reflection
(21:16):
of high expectations than poor performance. Sales and profits were
better for the quarter, and if you look at the
ranges for the outlook for next quarter, they were better
as well.
Speaker 1 (21:27):
So tob Before we get to Apple, there is this
issue of what the constraint is for Amazon's AWS, their
cloud computing unit, which has really been their main profitability driver.
Is it just capacity? Is it that they can't build
out quickly enough to meet demand, or is it that
they're losing share that they don't have the same kind
of AI advancement that's say the Googles and the Microsoft have.
Speaker 11 (21:48):
Yeah, so I would argue that it's more about capacity.
So Microsoft is working closely with OpenAI, Amazon's working closely
with anthropic. Amazon is the market leader as far as
market share. Google to their credit and Microsoft, to its credit,
are growing at faster rates off smaller bases, but I
would argue that of those choices, it's more about capacity
(22:10):
than necessary market share.
Speaker 7 (22:12):
Tom, how do you understand whether we reward these companies
or punish them for the capital expenditures that they're doing.
Is there a hint of that in Amazon, that they're
spending too much to justify what isn't as strong growth
as the other mag seven in big hyperscalers.
Speaker 6 (22:27):
Yes.
Speaker 11 (22:27):
So I think the beauty of Andy Jassey as CEO
versus Jeff Bezos is Andy's fond a way for the
company to continue to generate strong profits and free cash
flow and invest So I think that if we were
talking about a Jeff Bezos led Amazon, there would be
kind of ebbs and flows of investment spending. Andy has
figured out a way to unlock sustain profitability even with
(22:50):
heightened investment. And I think Amazon, both under Bezos and
under Jasse has investors trust that the investments will ultimately
pay off, including for our official intelligence.
Speaker 7 (23:01):
And then there was Apple, Tom, And one of the
more interesting things that Tim Cook said on the call
was that he thinks only one percentage point of the
ten percentage growth in revenue was due to a pull
forward effect. Tom, is that even measurable. How much faith
do you put in that number?
Speaker 6 (23:17):
Yeah.
Speaker 11 (23:18):
So they looked at their sales trends in April as
it pertained to iPhones and max and discerned that consumers,
hearing all the chatter on tariffs, bought ahead of concerns
that tariffs would raised the prices of those products, and
as you pointed out, it contributed to about one hundred
basis points of growth on a ten percentage point growth.
(23:40):
So I think that.
Speaker 6 (23:40):
Pull forward was a factor.
Speaker 11 (23:42):
The concerning thing to me in Apple's results is that
they're acknowledging that they're behind on artificial intelligence. The good
news is they're taking action. They're raising their capex, which
is much more modest versus Amazon, and they even hinted
at strategic M and A, which I thought highly unusual
for Apple.
Speaker 5 (24:01):
Is it a little too late though, when it comes
to what Apple's doing in terms of AI, given the
fact that we see Meta basically go in take their
top talent and leave Apple still struggling.
Speaker 11 (24:12):
Yeah, I think I don't know that I would say
it's too late.
Speaker 6 (24:14):
It's definitely late.
Speaker 11 (24:16):
So the good news is now we know that we
should expect an elevated Sirian next year enhanced by artificial intelligence.
That was a question mark even into the Developers conference. Recently,
I think Apple has shown a consistent ability to play
catch up. They're not always first, but their best. Maybe
they won't be the best in AI, but certainly they
(24:37):
can be better than what they are today.
Speaker 5 (24:39):
Does this show you the fact that Apple is saying
that potentially is going to have to look elsewhere for AI,
that they're just changing their strategy for a company that
we know loves to build in house.
Speaker 11 (24:51):
I think they're saying that everything's on the table. So
I don't think they're saying, hey, we're going to lean
into strategic m and A unlike we've done in the past.
I think that they're going to pull every lever they
can to materially enhance the artificial intelligence experience on their products.
That's how I view that statement, Tom forty.
Speaker 1 (25:09):
This past week has been about American exceptionalism driven by
big tech, and we've certainly seen some blockbuster results. We're
quibbling with the details about Amazon, but still a pretty
solid set of numbers. And I just wonder when you
have the likes of Michael hartnant Over at Bank of
America talking about a bubble in tech stocks and evaluation
that just seems to have gotten over the skis even
of all of the optimism that you saw in the earnings.
(25:32):
What's your response.
Speaker 11 (25:34):
Yeah, So if you looked at the peer set for Apple,
the PE went to about thirty five times from closer
to twenty eight times between last quarter and this quarter.
So I think there's a lot of high expectations in
big tech that they're going to lay in the plane
or however you want to think about it when it
comes to both tariffs, AI investment and getting a return
(25:55):
on the AI investment. So, as a long time followed
the industry, going back to ninety six, having survived the
dot com bubble, I do think that there's a lot
of high expectations. It's reflected in the big PE multiples
you're seeing in big tech.
Speaker 1 (26:09):
Tom Forte of Maxim Group, thank you so much for that.
Speaker 2 (26:13):
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