April 7, 2025 • 41 mins
Bloomberg’s Caroline Hyde and Ed Ludlow discuss turmoil in the markets as tariff uncertainty sends tech stocks whipsawing. Plus, Samm Sacks, New America senior fellow, joins to talk about how the trade war with China is weighing on a possible deal to sell TikTok to a US buyer. And Greg Martin, co-founder of Rainmaker Securities joins to explain what conflicting liquidity pressure and market turmoil mean for the IPO market.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news from the heart of
where innovation, money and power collide in Silicon Valley and beyond.
This is Bloomberg Technology with Caroline Hyde.
Speaker 2 (00:19):
And Ed Ludlow live from New York. I'm Caroline Hyde
and I'm.
Speaker 3 (00:38):
Ed Ludlow in San Francisco. This is Bloomberg Technology.
Speaker 2 (00:41):
And it's another day ed of US stocks whip soaring
following President Trump's tariffs. This is nervy investors respond to
the speculation on tariff delays since refuted by the White
House and reports of a legal challenge to those libbes.
Speaker 3 (00:55):
Well in the context of tariffs in this market and
the technology sector, it is the mag seven Names that
the focus think about Nvidia and Gain, a name that
was significantly lower swung to a gain. It's held that
game and list downgrades and cuts is part of the
story in Apple and Tesla, but at one point in
the session, Apple was on track for its biggest three
day drop since October of two thousand. I want to
(01:16):
show you some data that was brought up by Apollo
Global in their newsletter this morning, and it is the
mag seven Names, and then North America are US revenues
and Amazon's case sixty one percent majority in North America
excluding AWS, but for most of them, most of those
sales come from outside the US and jurisdictions where taris
will be held hardest. And that's why there's concern in
(01:37):
part that it will be a hit to earnings going forward.
Speaker 2 (01:40):
And boy, hasn't that been a story for Apple. Now,
let's just return to the keystock that renowned tech bull
Dan ives and Webbush has cut his price target for
the iPhone maker. He's gone way down to two hundred
and fifty dollars from three hundred and twenty five while
maintaining though an outperform rating. Johnny us now Bloomberg's ran Vlastellaca.
Apple has been in the io of the storm, and
(02:01):
Dan I's singling that out over the course of the weekend.
Speaker 4 (02:05):
Yeah, good morning, thanks for having me. Apple is really
sort of a poster child for terrif related risk right now.
It does so much manufacturing overseas, especially in countries like
China and Vietnam, which are some of the countries that
have been hit with some of the highest tariff rates.
So there is so much uncertainty surrounding the company, surrounding
its earnings potential in this kind of environment. What are
(02:25):
they going to do? What are tariffs going to look like?
Are they going to have to raise prices? If they do,
what is that going to mean for demand? Are they
going to have or are they going to absorb these
higher costs? If so, what does that mean for margins
and earnings? There are so much uncertainty here Because we're
talking about Apple, which is still the biggest company in
the world, It's obviously has a lot of implications for
the market overall.
Speaker 3 (02:47):
We were talking before the show about is this a
historic Monday or not? Biggest three day drop for Apple
going back to two thousand. That gives me a sort
of sense of scale, but talks to me about the
stock Ryan, I mean, our colleagues at Bloombag Intelligence don't
think Apple raises prices. It has used mechanisms around the
world to stay competitive on the services side, in particular.
Speaker 5 (03:07):
How's the stock viewed?
Speaker 6 (03:10):
Well?
Speaker 4 (03:10):
I think so much of this really depends on what
happens with tariffs. There's so much uncertainty on that point.
And if they stay in place as they currently are,
you know, the outlook is very grim. But if they
come off tomorrow, which you know doesn't seem like it's honestly,
you see who knows. You know, people are still pretty
positive about the company's longer term potential, maybe eventually with AI,
(03:31):
with services, growth, with earnings. It still has a bunch
of cash, a very strong balance sheet. There's certainly reasons
to be optimistic, but a lot of people I talk
to are just very skeptical about it.
Speaker 6 (03:40):
Now.
Speaker 4 (03:40):
I will say that if you look at its RSI,
it's trading at some of the most oversold levels in years.
So there is certainly an argument to be made here
that some people feel like it's gotten oversold, Like you said,
biggest three day drop at least at one point since
before the iPod. So that tells you the kind of
buying opportunity if you like the stock that you could
be looking at here.
Speaker 3 (03:58):
Welcome to this Monday Bloom those rights Plaseelica, Thank you
very much. Let's get more on the wider market tat
term Or. Angela Zeo, CFRA Research VP, Senior ecuty analyst
joins us.
Speaker 5 (04:07):
Now and I want.
Speaker 3 (04:08):
To go back to the point that we raise at
the top of the show that if you put the
mag seven side by side, Angelo, and look at the
revenues they derive from outside of the United States. Apple
catches the eye right, there's a lot of it coming
x USA or x North America. How are you modeling
that this morning?
Speaker 7 (04:25):
Yeah, now, thanks for having me. So as far as
that's concerned, yeah, I mean, look, listen, listen, I mean,
Apple is it's really tough to be a technology hardware
a company right now, and to us, Apple is probably
facing its toughest tests in about two decades, it's called
since the financial crisis, where it actually prospered because of
the iPhone launch at that point in time. But when
you kind of look at Apple specifically here to your point,
(04:47):
forty three percent of sales here in the US the
rest internationally. So it is a true global company. And
the fact that they do have you know that most
of their iPhone production in the in China is the
issue out here. We do think as far as the
tariff concerns are concerned. Right now, there's essentially this twenty
billion dollar or so deficit that they're going to have
to make up in terms of you know, if you
(05:10):
were a look at over the last twelve months and
kind of extract the type of tariff hit that they
would have gotten from importing all those goods the in
terms in the US. So when you think about that
and you look at the potential of what they could
do here in terms of offsetting that twenty billion dollar increase,
I think there are a number of things that they
can do, but I don't think personally it's something along
(05:32):
the lines of them increasing iPhone prices by about thirty
percent or so across the line here in the US,
because that's just going to cause way too much demand destruction.
Speaker 2 (05:41):
So they swallow a marginhead But right now the investor
base is having to swallow serious headline pressure. We're being
whip swored by the latest. We don't know whether this
could suddenly on a dime spin into the green. We're
off by two and a half percent. How do you,
as a long term investor hold the trade? Angelou?
Speaker 8 (05:59):
Yeah, I mean you look at where the stock is
at now.
Speaker 7 (06:02):
I mean we've seen essentially a thirty percent plus correction
in the shares, So in our view, it's at this
point it's too late to sell the shares if you're
an Apple investor. We've told investors we think there's downside
to about one hundred and fifty five to one hundred
and sixty five dollars a share. That would essentially apply
a peak to trough of about forty percent.
Speaker 8 (06:22):
And those are declines that we've seen in the.
Speaker 7 (06:24):
Past from Apple stock, and they've recovered and hit new
highs back then. We think this is a point in
time where Apple is going to be able to adjust
to whatever new scenario that we see. If these fifty
percent plus tariffs from China are here to stay, we
think they're going to adjust their business model for that,
whether it be increasing their iPhone prices by one hundred
(06:46):
dollars across the board with the iPhone seventeen cycle, and
then you know, potentially kind of you know, when you
look at it from an installment cost perspective, that's fairly
limited to the consumer out there. But nonetheless, there are
a number of things we think Apple can do here
to kind of right size their model.
Speaker 2 (07:02):
Let's go to the other areas that you focus. You
will focus on a lot of chip names, and many
are worried about the exposure of semiconductors to supply chain
in Asia, even though there was a carve out of
semi conductors coming from Asia from a tariff perspective, they're
in the green today, Angelou. Is that the right way
to be analyzing the sell off of Lake?
Speaker 8 (07:20):
Yeah, it's interesting.
Speaker 7 (07:21):
So you kind of when we were looking at the
shares this morning for a lot of these names, specifically
a namelike Nvidia, we thought it was essentially overdone. But
you kind of look at the decline we've seen from
peak to trough on the semiconductor side of things, it's
been about a forty percent of climb, which is actually
similar to the decline that we saw from peak to
trough back in twenty twenty twenty two. And again it's
(07:42):
one of those situations you never know where the bottom
is on the chip side of things, but there is
clearly some very strong secular opportunities tied to the chip sector,
specifically on the AI side of things.
Speaker 8 (07:54):
We think that infrastructure build out continues.
Speaker 7 (07:57):
Clearly, it's going to be somewhat ratcheted down because those.
Speaker 8 (08:00):
Of the tariff situation we're in right now.
Speaker 7 (08:03):
But nonetheless, I mean, it is an opportunity that you know, persists,
we think over the next decade or so, and you
know in video clearly at that top of the list.
But when you look at the profitability of these companies
on that AI trade that is going to remain in tact,
of course, with some downside to the estimates. But again,
the forty in production we've seen in the share prices reflective.
Speaker 5 (08:24):
Let me jump in here.
Speaker 3 (08:25):
The bigger question to me is is not just where
the infrastructure build out continues, it's whether the hyper scalea
capex moderates, because profit estimates for many of these companies
in the semi space are predicated on that.
Speaker 5 (08:37):
What's your call on that investment cycle?
Speaker 8 (08:40):
Yeah, so, I mean we do think that it's going
to be challenged.
Speaker 7 (08:43):
So you kind of look at a year ago and
essentially the capex numbers just continue to go higher and
hire and our view it actually we've probably seen, you know,
somewhat of a peak type capex number here in the
near term.
Speaker 8 (08:57):
We don't think you're talking peak levels at all. Long term.
Speaker 7 (09:00):
We actually think as you go into twenty twenty six,
we're looking at a capex increase of about four percent
for the high purpose scalers. On a combined basis, it's
going to be north of thirty percent this year. It
starts to level out though, absolutely, but nonetheless I mean
you kind of look at the secular themes that drive
infrastructure spending. It is the cloud, it is digital ad spend,
and long term, those are going to be trends that
(09:23):
continue to see higher revenue.
Speaker 3 (09:24):
World Angela, How does this technology market compare to ninety eight,
two thousand and two thousand and eight and every day
of your working life that's gone before it.
Speaker 8 (09:34):
Yeah, that's a great question.
Speaker 7 (09:36):
I think, you know, specifically from a valuation perspective, I
think the good news is we don't have a valuation
problem in tech, and I think historically that has been
an issue. These are historically very high growth oriented type names,
and you always have to worry about how much can
these names really kind of decline. I think the great
thing is when you look at tech here specifically, if
it's driving it, it is big tech, and big tech
(09:59):
has massive cash flow generation.
Speaker 8 (10:01):
Even if we kind.
Speaker 7 (10:02):
Of discount some of the tariff issues at hand, right now,
you're still talking about an Apple, if they don't offset
that twenty billion or so, it's still going to generate
potentially ninety billion or so on an annualized basis. That
would be your worst case scenario. So when we start
thinking about the drivers here of tech. The discount now
that you've seen here over the last nine to ten
(10:24):
months on the valuation side of things now trading less
than twenty times on a calendar twenty six pass Again,
those estimates have to go down. But when we kind
of look at things here, you got to look at
it from a long term perspective. You look at that
twenty percent or so discount on broader tech and I
think you know, overall, if you're a long term investor,
(10:45):
I think there's an opportunity here over.
Speaker 8 (10:47):
The next couple of days weeks. You just got to
be willing to lose some money in the near term.
Speaker 2 (10:52):
Rite that volatility. Angelo Zino of CFIRA, Great to have
you on the show. Thank you. Coming up, we're going
to check in on Teslas stock price following a dramatic
price target cut from Wedbush. We're on that next, and
what are you drilling into?
Speaker 3 (11:04):
So I think it's fair to say a lot of
people work this Sunday, and one of the only markets
open to look at was crypto and bitcoin in particular.
We went from like eighty eight thousand US dollars per
token Friday night down now to around seventy eighty five hundred.
It's moderated, but there's divergence with gold. There is the
tariff story hitting crypto assets, and we'll continue to track
(11:24):
it because that was a lot of the focus over
the weekend. Just in case you missed it, stick with us,
we'll be right back. This is Bloomberg Technology tesler trading
at one point in this session below two hundred and
(11:46):
eighteen dollars a share, a price at which COMMAS secretary
Howard Lutnik predicted they'd never fall to again. That decline
followed a forty three percent price target cut by Webbush
Securities analyst Daniel Iive, citing Trump's trade policies and a
brand crisis created by Elon Musk, Bloomberg's Global Auto's Edisi
Crazydales here for more from London. When I was reading
(12:09):
the Ives, note there were some very specific points, which
is that, for example, in China, it's not just the
tariffs themselves, it's the reputation and association of Musk with
the policy that might drive Chinese consumer is to buy
domestic models.
Speaker 9 (12:25):
Yeah, that's right, and I mean I think what we've
seen from the Trump administration is that they've really sort
of you know, stoked this nationalistic sentiment in other countries already.
You think about Canada being a great example of this,
maybe not great, but an example of this, where you know,
at hockey games suddenly you know there's a booing of
(12:46):
the national anthem, and you know, we don't have to
go that far back in history to think of other
companies that you know, have felt the brunt of sort
of nationalistic sentiment in China and and you know, felt
blowback from that. And so I think that's what I
was maybe was alluding to here, And it's maybe a
risk that we haven't seen necessarily in China, where you know,
(13:10):
whereas we've seen these Tesla takedown protests in other countries,
it's not something that we're seeing on the streets of say,
you know, Shanghai or Beijing.
Speaker 2 (13:19):
He calls for Elo Musk to step up Craig and
to show leadership. Now, last time I check. I don't
think el must particularly cares what Wall Street analysts think
or ask of him, But are we anticipating a return
to leading this business rather than his role at the
White House.
Speaker 9 (13:36):
I think there was a lot of sort of hope
and optimism last week right when Politico reported that Musk
you know, was on the cusp of stepping back officially
from his roles. But I think, you know, not only
did we hear Musk dispute that and say it's you know,
fake news, we also heard you know, from jd Vance,
the Vice President, talk about this idea that you know,
Doje is nowhere near done, and allude to the idea
(14:00):
that Musk is going to continue to advise this administration
you know, for you know, long into the future, and
so even if officially he is no longer a special
government employee. I think this, this notion that he would
fully step back from politics seems you know, seems like
a stretch, given given how sort of assertive and hands
(14:20):
on he's been to this point. Maybe he does go
back to spending more time, you know, say in Austin
or at facilities like in California. But I think the
bigger problem here is the sort of daily drumbeat of
his posts on X that could be really divisive.
Speaker 2 (14:38):
Crater Dal, thanks so much for joining us as always. Meanwhile,
coming up, we're going to take a closer look at
how the US China trade tensions could also be playing
into the negotiations for TikTok. Sam Sak, senior fellow at
New America joining US ed, what are you keeping an eye.
Speaker 5 (14:51):
On market's over in Asia overnight?
Speaker 3 (14:54):
And also a piece of news, this is the mc
i AC Asia Pacific Information Tech in debt. Clearly heavy clients,
but this as President Trump said that he has spoken
to the Japanese Prime minister. Also getting some headlines crossing
the Bloomberg terminal. Relating to Asia, Trump says China must
back off thirty four percent tariff increases by April eighth.
(15:16):
Trump says that talk to China on possible meetings will
be terminated, and he threatens a fifty percent additional tariff
on China starting April ninth if they don't meet an
Eightril eight deadline. He's talking about to back off of
the thirty thirty four percent. I think we call them
reciprocal tariffs right Carrow that were put in place by
(15:37):
the Chinese.
Speaker 8 (15:47):
The reporters.
Speaker 7 (15:48):
We had a deal pretty much with Jake jack nadded
deal but pretty close, and then China changed the deal
because of tariffs.
Speaker 8 (15:56):
If I gave a little of jarriffs, A proven a
deal at fifteen Brothers which shows you the power of derives.
Speaker 3 (16:03):
There was President Trump speaking last night of allD Air
Force one, saying China's objections to US tariffs stored a
deal to sell.
Speaker 5 (16:10):
Off TikTok and keep it operating in the US.
Speaker 3 (16:12):
In the last two minutes, the President has posted on
truth social threatening a fifty percent additional tariff on China
if they don't remove the thirty four percent reciprocal tariffs
that China had put in place by April eighth. You
said a deadline that post. I think Carry was seeing
all kinds of assets react. Some that I'm seeing, for
(16:33):
example God and Dragon index and as that modern edgines is, we.
Speaker 2 (16:37):
Have more boers, go for it.
Speaker 5 (16:39):
Carry pick it up.
Speaker 2 (16:39):
President Trump saying that all talks with China have been
terminated unless tariffs are pulled. So thus far, unless there
is a change of sentiment coming from China and they
withdraw as you were just articulating that extra thirty four
percent that they put on on Friday, then all China
talks are terminated unless those tariffs are pulled.
Speaker 3 (17:01):
Yeah, I'm going to look at some of the assets,
just really quick shares like Ali Barba's US listed ADRs
clearly getting hit, but the Nazet Golden Dragon China Index
down almost four percent.
Speaker 5 (17:11):
So it's important.
Speaker 3 (17:12):
Let's get back to the story we're talking about, and
that is the future of TikTok in the United States.
Bloombos Kirk Wagner joins us, and essentially, Kurt, what the
President said last night on Air Force One confirmed what
you had reported a couple of days earlier that the
tariff policy of this White House derailed a deal that
was being negotiated with China to have US investor ownership
(17:36):
of TikTok in the US.
Speaker 10 (17:37):
Take it from there, Well, that's exactly right. This deal,
as Trump said, was close to being done. They had
the framework in place, and you know, the tariffs hit.
The tariffs are announced, and China said, you know, we're
going to pause on this thing. And the news you
just shared Ed and Caroline makes me think that we're
we're definitely nowhere close to a deal now.
Speaker 6 (17:56):
Right.
Speaker 10 (17:57):
Things are getting more intense, not less intense on this
traf war. And so you know, as Trump said, the
tariffs work, I would say tariffs have consequences. Right in
this case, the deal for TikTok is sort of in
the crosshairs of this thing.
Speaker 6 (18:10):
We knew that would be the case.
Speaker 10 (18:12):
I think I'm not sure if we knew it would
be quite this much in the middle of all this,
but you know, part of the geopolitical fight here, Kit.
Speaker 2 (18:19):
Wagner, we thank you. We have now got the perfect
voice to discuss the implications of US and China on
technology and more broadly, Sam Sas is with US senior
fellow at New America. You have worked for tech giants
like Zeemans setting up their businesses over in Asia, who
speak the language, interpret what is going on at the
moment and how China is going to fight the US
(18:41):
on this.
Speaker 11 (18:42):
China anticipated the tariffs, but they were shocked by the scale.
And what we're seeing now is the leadership in Beijing
is trying to both signal resolves. They say we've got
this under control, We've diversified our economy, but they're also
still hoping for some space for a deal. And let's
watch how they navigate doing both at the same time.
(19:03):
In you know, TikTok, the deal was ready to come,
but tariffs derailed it. And now China's saying we still
can maintain leverage at this key moment.
Speaker 3 (19:13):
Sam I'm just going to remind our audience of the
breaking news of literally the last thirty seconds, which is
that President Trump is saying that all talks of China
have been terminated. He had threatened an additional fifty percent
tariff if China had not removed the thirty four percent reciprocal.
Speaker 5 (19:28):
Tariff by April eighth.
Speaker 3 (19:30):
The question who's in the stronger position here, the United
States or China.
Speaker 11 (19:36):
Well, first of all, there were no talks actually planned
with China, so I'm not sure where that's coming from.
Speaker 2 (19:43):
You know, China has already moved forward.
Speaker 11 (19:45):
We heard news that they're building a rail line linking
to Europe. They want to secure their exports to Europe.
It's going around Russia. They're trying to accommodate European sanctions.
They're looking towards emerging economies. They've signaled that they've already
significan reduced their trade and investment with the United States.
Speaker 2 (20:03):
So they've priced this in.
Speaker 11 (20:05):
But their economy is weak and they want to try
to offset the domestic pressure on the economy in the
hopes that maybe Trump will come around. But look, we're
quickly moving toward a downward escalatory spile. If Trump moves
forward with these compounding tariffs.
Speaker 2 (20:20):
If you are Apple, if you are Tesla that has
significant revenue in China and you're implicated by the brand
destruction of a domestic consumer going for China right now,
how do you respond? You wait this out and trying
to make changes to your business model at this moment.
Speaker 11 (20:36):
The problem is these companies attempted to change their business
model with the China plus one diversifying to India, to Vietnam.
But now those transshipment companies have also been hit by tariffs,
and I think multinationals are reeling from that. Same In
the fashion industry, they were double producing lines to countries
that are now impacted by the tariffs. The prices are
(20:57):
just going to be passed to the consumer and multi
nationals are going to be hiding in the process.
Speaker 3 (21:03):
So Sam, I go very quickly back to my same question.
But who's got more leeway here to put their economy
through pain?
Speaker 5 (21:10):
China or the United States?
Speaker 11 (21:12):
You know, what do you do when both countries are
under pressure domestically? I think the United States came out
as from a very strong position in their own economy. Well,
China was weak, and now that may Flip.
Speaker 3 (21:27):
Sam Sachs, New America Senior Fellow, just the perfect guest.
Speaker 2 (21:39):
Welcome back to bluemog Technology. I'm Caroline Hide in.
Speaker 3 (21:41):
New York and I'm Medladlow in San Francisco. Let's talk
about the markets and whipsaw, volatility, girations. Call it what
you will. The breaking headlines of the last thirty minutes.
Our President Trump talking on truth social about ending tariff
negotiations with China. Then as that one hundred is swung
from a four percent decline or more early in the
(22:02):
session to again now it is down one point nine percent.
It's probably better exemplified in some of the single mover
names in the context of tariffs. There is a big
focus in the research notes and the activity on social
media around the mag seven names because of their exposure
in terms of revenue outside of the United States. In
Nvidia is a name that has swung between a significant
(22:22):
loss with significant gain. It is now slightly softer. Tesla
continues to be under pressure. Apple down six percent, and
we will get to more about Apple with Bloombo's Mark
German in a moment. Amazon now flat but had actually
had a big reversal of fortunes.
Speaker 5 (22:35):
Earlier in the day.
Speaker 3 (22:36):
Caro, It's very hard to piece where you win and
lose in this market. But I think mag seven is
interesting if you just think about where their businesses are
around the.
Speaker 2 (22:44):
World, and the threat of ongoing headline risk is one
that investors are having to navigate. Case in point, the
last thirty minutes trade. Let's discuss it with Isabelle Lee
who joins us on the impact of those that have
controlled the stock market, ultimately the big owners wool Street.
They've been pushing back over the course of the weekend.
I think of Bilackman's been speaking out, I've Haas, Weinstein,
(23:07):
a whole long list, Jaban Diamond. How have they basically
seen the move shift away from them of late with
Trump's commitment to tariffing, certainly China. In the last tenty minutes.
Speaker 12 (23:18):
Exactly, it's really been hard to your point headline risk,
and I want to point out that this intra day
gap of seven percent, more than seven percent, is the
largest since twenty twenty. And of course the whole of
the country and the whole of the world are affected,
but especially the investing class. We have around ten percent
of Americans or at least the richest ten percent invested
in a huge chunk of this, and they really don't
want to look at their four oh one case. There
(23:38):
was a meme that says four to one K is
now two to one K, and it's really astonishing. We
have strategists cutting down their price targets, vis jump to fifty.
We have one after the other downgrading their us US
and even FED cuts are shifting by the hours. So
it's really an exciting market. We spent the whole weekend
this big tick I did with Bildana Hirich and Denizza Takova.
We were just calling people and everyone was really just worried.
(24:00):
That was a common threat.
Speaker 5 (24:02):
Team in the control room.
Speaker 3 (24:03):
Let's bring up those pictures from last Wednesday where President
Trump walked out with the chart of death. There it is,
there is the president countries listed by tariffs and I
think reciprocals as well. Just anecdotally, some of the responses
you got to that specific board in his hands were
some of the most astonishing things I've seen in print journalism.
Speaker 12 (24:24):
Recap some we have Rich Seinberg, he's a senior wealth
advisor and he was saying he's used to all the
stress but then this is one of the most frustrating
he's seen. In fact, he's very, very frustrated. We have
that quote in the story. Jay Hatfield of Infrastructure Capital
was saying that this is quote unambiguously stupid and there's
no reason to cause a quote trade war like this.
And to Caroline's point, on top of all of this
(24:46):
is the reverse wealth effect. We had wealth effect for
the good of two years. Everyone was feeling flushed, everyone
was feeling happy taking vacations. But now it's the exact opposite,
and that can have real implications in the economy. If
you look at your four O and K, or your
retirement or just your investments in general, you may not
I want to take that vacation, You may not want
to buy that big appliances. And yes, maybe the richest
Americans whld majority of the docks, but if you're an
average American, if you have fifty thousand inner bank account
(25:08):
at twenty percent, wipe down is still significant. In fact,
if that's your wholeness egg, it's a lot scarier than
for those who are wealthy.
Speaker 3 (25:16):
Bloombergs is a la brilliant reporting. Good to catch up,
Thank you very much. Let's get back to Apple, and
after years of avoiding iPhone price hikes in the United States,
Apple may need to finally concede to raise it's nine
hundred and nine nine dollars flagship model pricing as tariff's
hit production. Let's got to bloombergs Mark German. This was
the subject of this weekend's Power On. You explained the
(25:39):
historic strategy very well, which is Apple's not raised prices.
It has removed the bottom tier of handset and only
offered a premium. So what happens nextly?
Speaker 13 (25:49):
There is precedent for Apple raising prices outside of the US.
We've seen it post Spruxit in the UK. You've seen
price adjustments in the European Union. We saw twenty five
percent iPhone price sits in twenty twenty two in Japan,
seen some adjustments in Canada and Australia. But you're right
in the US it's been pretty stagnant. It's actually been
(26:09):
one of the only things in the technology world over
the last decade that's been pretty consistent.
Speaker 6 (26:14):
But given these tariffs.
Speaker 13 (26:15):
Something's got to give, and there's going to be adjustments
with suppliers. They're going to push suppliers to give them
better pricing. They're going to eat some of the costs themselves,
They're going to make supply chain changes, but ultimately I
do strongly believe they will have to make some price adjustments,
probably with the iPhone seventeen launch later in the year,
and this is going to be a big sea change trap. Well,
(26:36):
obviously it's a big shift, but they do have some
ways to help the consumer here. They've got a trade
in program, they have installment plans through all the carriers now,
so I think from a consumer standpoint, it's not going
to be a massive negative.
Speaker 5 (26:49):
Now.
Speaker 13 (26:50):
We've seen some analyst reports and commentary over the last
few days. I saw one website claim that a maid
in USA iPhone would cost thirty thousand dollars per unit.
I've seen analysts notes saying a made in USA iPhone
could cost three thousand to thirty five hundred dollars. The
good news is that these are completely misguided. Apple's not
(27:11):
moving production to the US, certainly not for the iPhone.
What you're going to see is them moving to more
of these safe havens outside of China that are pushing
tear that are going to get hit with tariffs, but
less so India, for instance, You know, prior to Trump's
post earlier today about a fifty percent tariff, India was
at fifty percent of the size of the tariff on China,
(27:33):
coming in around twenty six percent versus the prior fifty
four percent, right, and so.
Speaker 6 (27:38):
That is a big improvement.
Speaker 13 (27:40):
Vietnam is in the high forties, but that's still an
improvement over the fifty four percent, and they've been stuffing
the US channel over the last several months with more
units in order to avoid those tariffs.
Speaker 2 (27:51):
Can I quickly get your expertise on what Tim Cook
is thinking about right now as well? We all thought
he was a marvelous politician in and of himself the
way and which had managed to navigate the previous administration.
How much do you think he's desperately trying to get
some sort of carve out.
Speaker 6 (28:07):
Extremely desperately.
Speaker 13 (28:08):
But it seems like Trump, as we expected, is even
more emboldened than his second tour or his second term,
and he is doing ever he wants at this point.
It doesn't seem like he's working with companies on exemptions.
It doesn't seem like he cares about who showed up
to his inauguration doesn't seem to care that Apple said
they're going to invest half a trillion dollars in the
(28:28):
US basically because of him. He's just doing whatever he wants,
and it doesn't seem like he's taking the impact into
a gap.
Speaker 3 (28:38):
There's how this is playing out in markets, in the
stock analysis, and then there's how it's playing out in
the culture, how everyday people talk about MAGA and tariffs
and Apple. This is a video from a post that
overheard on Wall Street made and I'm not sharing it
with you, Mark Flippant Lee, but they're suggesting that in
the future Wall Street analysts will quit and start assembling
(28:59):
iPhones in the Middle West. As far as I can tell,
you said that won't happen. Just explain in thirty seconds why.
Speaker 13 (29:05):
I mean there's I mean, they're certainly you know, they
have the right to quit their jobs and become manufacturing workers.
But I don't anticipate Apple moving outside of Asia in
any considerable way. The one thing I do see them
doing is decentralizing their supply chain, right, but I don't
see that coming to the US. I think you'll see
(29:27):
more production in parts of South America, right, maybe parts
of Europe, maybe parts of in more parts of India
and China, but I don't think Midwest manufacturing facilities to
create iPhones are coming anytime soon. I certainly don't think
they're on the table right now.
Speaker 2 (29:42):
Makes for a good meme for Mark German is nothing
but straight talk. We thank you so much.
Speaker 5 (29:47):
Nice.
Speaker 2 (29:47):
Let's take a quick look at what's happening in semi
conductors right now, though ed because throughout the trading day
we have basically been in the green websodes somewhat on
this headline risk. But the socks up more than a
percentage point in video now about one and a half percent,
taking off that anxiety around the yet further tariffs coming
China's way, if Trump is to be believed, onto social
broadcom up three percent. Let's dig into what all of
(30:09):
this means to the industry. Peter Elstrom and Pisa say
is doing a tour of the US at the moment
you're here with me in New York, and people basically
had seen the chips sector wade because of again it's
exposure from a supply chain to Asia. Why are they
managing to shake it off a little bit today?
Speaker 14 (30:23):
Well, the volatility here is really surprising. I thought I
knew what the tariffs were as I was walking over
here to the set, and they changed even on my
way over. So we know that Taiwan is going to
get hit with tariffs around thirty two percent. China also
is looking at some tariffs at this point, so there
are concerns about what exactly those costs are going to be.
As products move into the US. There'll be an exception
for the chips themselves, at least so far, we've seen
(30:45):
the White House carve out this exception for the actual chips,
but there's not an exception for the products in TSMC
of course makes products for Apple as German was referring
to earlier, and also Nvidia in particular, and it's not
exactly clear what those products are to do when it
comes to these tariffs. You may see some exceptions there,
and the analysts are trying to figure this out right now.
(31:06):
They do believe that invidious servers coming into the US
are going to be exempted from the tariffs, but it's
not clear and the White House hasn't been able to
give clarity on that point so far.
Speaker 3 (31:16):
It's an amazing point that that actually many don't understand
specific policies relates to tariffs.
Speaker 5 (31:21):
The other part of it.
Speaker 3 (31:22):
Is that everything your team's reported for the last two years,
which is the United States wants to have more semiconduct
and manufacturing that fabs take time and billions of dollars
to implement and build.
Speaker 5 (31:33):
Where are we at in that process?
Speaker 14 (31:34):
Right You talked about these companies that are trying to
sidestep the tariffs from the Trump administration right now, Apple,
of course has been very good at this. Look at TSMC,
though certainly not as high profile. But TSMC came forward,
they were already spending sixty five billion dollars on chip
capacity in the US. They promised to spend another one
hundred billion dollars on capacity in the US. You think
(31:55):
that they would be one of the companies that will
get some exemptions here, But so far the Trump administration
has been holding pretty firm and it's not clear exactly
how they're going to be affected. As they make chips
in Taiwan and send them over to the US. Still
they have their the bulk of their manufacturing in Taiwan.
They need to be able to send those chips someplace
else and then they come into the United States. So
(32:16):
TSMC is making progress in building this geographic diversification, but
they haven't made that much progress so far.
Speaker 2 (32:24):
What's so interesting is tomorrow we get samsung preliminary revenue.
It's going to be down and they're in the line
of fire when it comes to US CUBS. And at
the same time, we're all worried about AI infrastructure bubbles
that we were talking about even before this, right, So
how much were dialing up into what already is a
feeling that we're over allocated to the chip sector.
Speaker 14 (32:44):
Well, that's the big question with all of these huge
investments into AI and into data centers in particular. We
know that the hyperscalers are spending tens of billions of
dollars at this point on that capacity, but we don't
know what kind of revenue is sitting on the other
side of it. So we're trying to get some insight
into that. Samsung is certainly going to talk about their
progress in making memory chips for AI. They've been behind
(33:05):
s k Heinex in particular in terms of building that
kind of capability pairing up with Nvidia at this point,
but we're going to get some sign of their progress
tomorrow and we'll see whether they give us any indication
about what that AI demand is in the.
Speaker 5 (33:19):
End, Bloomberg's piter Eil stream over in New York. Thank
you so much.
Speaker 2 (33:31):
Let's turn to another side of the markets right now,
because twenty twenty five was supposed to see a rebound
in IPO demand, but look, this market route following Trump's
tariff announcements has led several companies Klana stub Hub, for example,
to pause their plans here to talk about this. Or
Greg Martin, co founder of Rainmaker Securities. Rainmaking was meant
to be on and now we understand there's a pullback
(33:52):
because these markets are treacherous. Greg, are all IPOs on ice?
Speaker 6 (33:57):
Well, thank you for having me on.
Speaker 15 (33:58):
I was hoping to be able to talk about the
excitement we were going to have coming into Clarna and
subub hitting the road and hopefully a re emergence of
the IPO market. But the worst thing for the IPO
market is uncertainty and instability, and that's what we have
in stage right now. I mean the vix at forty
five and approaching fifty. It's crazy how instable we are
(34:19):
right now, and it's a huge web blanket on the
IPO market.
Speaker 2 (34:22):
Stub Hub Clana. We see Chime, for example, delaying the
brands that we know have already paused, but there's others
waiting in the wings. We're already discussing, Well, maybe they'd
be She and Bolt discord many had been articulated in
the markets, varying amounts of reports is say whether or
not they'd actually tap. But Greg, do we think there
has to be a step away for the entirety of
(34:45):
twenty twenty five as it stands.
Speaker 15 (34:47):
I think that's strong. I think it's a little bit
wait and see. We're definitely in pause mode. I think
people want to see what materializes. I remain an optimist.
I'm hopeful that trade deals will get done. This uncertainty,
this instability persists for a long time, and if we
start to have years of a global recession and you know,
trade wars, it could push this thing considerably to the
(35:11):
end or next year.
Speaker 6 (35:12):
I think right now it's really up in the air.
Speaker 15 (35:14):
As we pointed out, Slarner and StubHub of delayed Hinge
Health was supposed to go public, Chime.
Speaker 6 (35:19):
Circle just filed last week.
Speaker 15 (35:22):
It's just a lot of uncertainty, and I think right
now it's wait and see mode.
Speaker 6 (35:25):
So I think it's probably at least a quarter of pause.
Speaker 3 (35:28):
What's interesting, let's bring those names back up, is a
lot of people work at those companies. A lot of
them have a broad base of investors. Many of them
the employees and investors watch this program. Does this pause
in the IPO window open up the secondaries market or
put pressure on the companies to give employees liquidity in
other ways?
Speaker 15 (35:50):
Absolutely, we've had a huge dearth of liquidity, you know,
since twenty twenty one, frankly, and people have been waiting
for the IPO market to open up. We've started to
see companies doing tender offers in order to alleviate some
of the liquidity pressure, but there's still a ton of
liquidity for pressure that persists. And Frankly, in this period
of there's a lot of fear in the market, and
(36:11):
employees and workers in all of these companies are starting
to think, you know, I'd like to have a little
bit more of my net worth and cash, and so
I think there's going to be a lot of pressure
for companies to enable secondaries trading. So I do expect
some secondaries trading will happen the flip side of that, though,
is it investors when they buy secondaries, when they buy
into these private companies before they go public, they want
(36:32):
to see a public market in the future because they
start to think about liquidity. So there's there's there's a
there's a trade off there, and so we are going
to see more liquidity pressure, but we also will see
a little bit of a pause on demand.
Speaker 6 (36:43):
So it'll be interesting to see how the market plays out.
Speaker 3 (36:46):
Greg, is this an America problem or it's a global
market problem?
Speaker 6 (36:50):
Five pos, It's a global problem. I mean this is
this is something that hits.
Speaker 15 (36:55):
Everybody everywhere, in every part of the world, and it
needs to be sorted out. We're seeing every market affected
by this, and you know, the United States is the
center of it all of course, but everyone is affected
by this and it needs to get sorted out or
else we could have some long term issues.
Speaker 2 (37:10):
India was really active, for example, Greg, though, I want
to just see where the blame lies, because briefly, core
weave wasn't exactly accepted with welcome arms when it came
to the market. It since rallied a bit, but was
this already in the making.
Speaker 6 (37:25):
I don't think it was necessarily in the making. I mean,
it was a unique story.
Speaker 15 (37:29):
It had major customer concentration issues, it had a huge
amount of debt, and frankly, it's actually traded up quite
well since the IPO and actually is still up about
twenty percent since an IPO to forty, despite the major
market pullback last week.
Speaker 6 (37:43):
So I don't think this has anything.
Speaker 15 (37:46):
I don't think this was necessarily in play before Core
or We was a different story. I think this is
something that hit from left field, and I think it's
something that we're all having to deal with and right
now we're just not certain which direction we'll go, and
that's why the market.
Speaker 6 (37:58):
Is in pause.
Speaker 3 (38:00):
Crade Martin, co founder of Remaker Securities, thank you very much.
Speaker 2 (38:11):
Well, the EU remains open to and strongly prefers negotiations.
Speaker 6 (38:17):
We will not weigh end up endlessly.
Speaker 3 (38:22):
That was EU Trade Minister Maraschefkevich. Now, trade ministers from
the Block have been meeting in Luxembourg and discussing how
the Block should respond to Trump's tariffs. For more, let's
bring in Bloomberg's Michael Sheppard. That's the thing about tariff's,
they can go both ways. There's a response. What do
we know about the EU's position as it stands well, as.
Speaker 16 (38:40):
We heard from the Trade Minister, they are willing to
sit tight for a minute, but not for too long.
They want to see how the effects of the latest
down dreft in markets play out here in Washington and
whether it might cause the Trump administration to start rethinking
the levees that they have imposed on the block. That
is not just the twenty percent across the board tariffs
(39:02):
that Trump unveiled last week, but also the measures targeting
autos that took effect on Thursday, and then the levies
that took effect previously against steel and aluminum. Taken together,
they have really angered officials in the European Union and
prompting calls for a strong response and a potential retaliation
that could take aaim at America's biggest tech companies. And
(39:24):
this would be through a measure known as the Anti
Coercion Instrument, and that could result in higher taxes, including
through the Digital Service Tax, against American tech giants, the
ones that we know so well like Meta, Google and others.
Speaker 2 (39:37):
Chev what's interesting is the EU is going to be
watching closely what's just been posted on true social Trump
threatening yet more tariffs on China because of their tough response.
So how does the EU navigate not having yet further
tariff are their direction?
Speaker 16 (39:52):
Well, Caro, they are really having to walk a type
rope here. And even before his tariff's announcement last week,
President Donald Trump warned both China and the European Union
in social media posts that he would retaliate against them
over any reprisals that they unveiled, and China responded very
quickly last week to Trump's across the board tariffs, hitting
(40:14):
all Chinese goods with heavy tariffs of their own. And
because the European Union has waited a moment, they have
a chance now to see how that possibility of a
reprisal to a reprisal from the US could play out.
Speaker 3 (40:28):
I just want to think of materially how this impacts
technology companies, right, So, for example, Apple makes some iMac
products in Ireland, part of the EU, subject to a
twenty percent tariff. Intel has a fab in Ireland, other
facilities in Germany under consideration. Just that sort of physical component.
Speaker 16 (40:45):
Mike, Well, it's the physical components, but it's also the
whole demand side question too. If there's a chill in
the global economy. If there's an overall bump in inflation,
that will also weigh on on global commerce and even
anything happening on these shores. If it's important to the US,
even if it's just consumed in the US, tech companies,
(41:08):
like every other business across the US, will start to
feel it. A lot of the tariffs are paid here
by consumers in this country. It's not just as the
President is like to say, those countries paying the cost.
Speaker 5 (41:20):
As he sees it, all.
Speaker 2 (41:22):
Stock markets currently down shepiy, thank you, Mike Shephard. There, Look,
let's quickly look at how the markets have fared. It's
been ugly in Europe and the stocks six hundred is
sold off in particular ASML is still off. But we
think more broadly about the US just in gyration mode.
At the moment, we're off by three quarters percent on
the na's that one hundred. We're in a bear market.
We're likely going to enter a bear market on the
S and P five hundred. But that does it for
(41:42):
this edition of Bloemberg Technology. And we really are speaking
once again with Ed Ludlow back in the fold in
San Francisco. It's a joy to have you back on
Bloomberg Audio Studios, podcasts, radio news from the heart of
where innovation, money and power collide in Silicon Valley and beyond.
This is Bloomberg Technology with Caroline Hyde.
Speaker 2 (00:19):
And Ed Ludlow live from New York. I'm Caroline Hyde
and I'm.
Speaker 3 (00:38):
Ed Ludlow in San Francisco. This is Bloomberg Technology.
Speaker 2 (00:41):
And it's another day ed of US stocks whip soaring
following President Trump's tariffs. This is nervy investors respond to
the speculation on tariff delays since refuted by the White
House and reports of a legal challenge to those libbes.
Speaker 3 (00:55):
Well in the context of tariffs in this market and
the technology sector, it is the mag seven Names that
the focus think about Nvidia and Gain, a name that
was significantly lower swung to a gain. It's held that
game and list downgrades and cuts is part of the
story in Apple and Tesla, but at one point in
the session, Apple was on track for its biggest three
day drop since October of two thousand. I want to
(01:16):
show you some data that was brought up by Apollo
Global in their newsletter this morning, and it is the
mag seven Names, and then North America are US revenues
and Amazon's case sixty one percent majority in North America
excluding AWS, but for most of them, most of those
sales come from outside the US and jurisdictions where taris
will be held hardest. And that's why there's concern in
(01:37):
part that it will be a hit to earnings going forward.
Speaker 2 (01:40):
And boy, hasn't that been a story for Apple. Now,
let's just return to the keystock that renowned tech bull
Dan ives and Webbush has cut his price target for
the iPhone maker. He's gone way down to two hundred
and fifty dollars from three hundred and twenty five while
maintaining though an outperform rating. Johnny us now Bloomberg's ran Vlastellaca.
Apple has been in the io of the storm, and
(02:01):
Dan I's singling that out over the course of the weekend.
Speaker 4 (02:05):
Yeah, good morning, thanks for having me. Apple is really
sort of a poster child for terrif related risk right now.
It does so much manufacturing overseas, especially in countries like
China and Vietnam, which are some of the countries that
have been hit with some of the highest tariff rates.
So there is so much uncertainty surrounding the company, surrounding
its earnings potential in this kind of environment. What are
(02:25):
they going to do? What are tariffs going to look like?
Are they going to have to raise prices? If they do,
what is that going to mean for demand? Are they
going to have or are they going to absorb these
higher costs? If so, what does that mean for margins
and earnings? There are so much uncertainty here Because we're
talking about Apple, which is still the biggest company in
the world, It's obviously has a lot of implications for
the market overall.
Speaker 3 (02:47):
We were talking before the show about is this a
historic Monday or not? Biggest three day drop for Apple
going back to two thousand. That gives me a sort
of sense of scale, but talks to me about the
stock Ryan, I mean, our colleagues at Bloombag Intelligence don't
think Apple raises prices. It has used mechanisms around the
world to stay competitive on the services side, in particular.
Speaker 5 (03:07):
How's the stock viewed?
Speaker 6 (03:10):
Well?
Speaker 4 (03:10):
I think so much of this really depends on what
happens with tariffs. There's so much uncertainty on that point.
And if they stay in place as they currently are,
you know, the outlook is very grim. But if they
come off tomorrow, which you know doesn't seem like it's honestly,
you see who knows. You know, people are still pretty
positive about the company's longer term potential, maybe eventually with AI,
(03:31):
with services, growth, with earnings. It still has a bunch
of cash, a very strong balance sheet. There's certainly reasons
to be optimistic, but a lot of people I talk
to are just very skeptical about it.
Speaker 6 (03:40):
Now.
Speaker 4 (03:40):
I will say that if you look at its RSI,
it's trading at some of the most oversold levels in years.
So there is certainly an argument to be made here
that some people feel like it's gotten oversold, Like you said,
biggest three day drop at least at one point since
before the iPod. So that tells you the kind of
buying opportunity if you like the stock that you could
be looking at here.
Speaker 3 (03:58):
Welcome to this Monday Bloom those rights Plaseelica, Thank you
very much. Let's get more on the wider market tat
term Or. Angela Zeo, CFRA Research VP, Senior ecuty analyst
joins us.
Speaker 5 (04:07):
Now and I want.
Speaker 3 (04:08):
To go back to the point that we raise at
the top of the show that if you put the
mag seven side by side, Angelo, and look at the
revenues they derive from outside of the United States. Apple
catches the eye right, there's a lot of it coming
x USA or x North America. How are you modeling
that this morning?
Speaker 7 (04:25):
Yeah, now, thanks for having me. So as far as
that's concerned, yeah, I mean, look, listen, listen, I mean,
Apple is it's really tough to be a technology hardware
a company right now, and to us, Apple is probably
facing its toughest tests in about two decades, it's called
since the financial crisis, where it actually prospered because of
the iPhone launch at that point in time. But when
you kind of look at Apple specifically here to your point,
(04:47):
forty three percent of sales here in the US the
rest internationally. So it is a true global company. And
the fact that they do have you know that most
of their iPhone production in the in China is the
issue out here. We do think as far as the
tariff concerns are concerned. Right now, there's essentially this twenty
billion dollar or so deficit that they're going to have
to make up in terms of you know, if you
(05:10):
were a look at over the last twelve months and
kind of extract the type of tariff hit that they
would have gotten from importing all those goods the in
terms in the US. So when you think about that
and you look at the potential of what they could
do here in terms of offsetting that twenty billion dollar increase,
I think there are a number of things that they
can do, but I don't think personally it's something along
(05:32):
the lines of them increasing iPhone prices by about thirty
percent or so across the line here in the US,
because that's just going to cause way too much demand destruction.
Speaker 2 (05:41):
So they swallow a marginhead But right now the investor
base is having to swallow serious headline pressure. We're being
whip swored by the latest. We don't know whether this
could suddenly on a dime spin into the green. We're
off by two and a half percent. How do you,
as a long term investor hold the trade? Angelou?
Speaker 8 (05:59):
Yeah, I mean you look at where the stock is
at now.
Speaker 7 (06:02):
I mean we've seen essentially a thirty percent plus correction
in the shares, So in our view, it's at this
point it's too late to sell the shares if you're
an Apple investor. We've told investors we think there's downside
to about one hundred and fifty five to one hundred
and sixty five dollars a share. That would essentially apply
a peak to trough of about forty percent.
Speaker 8 (06:22):
And those are declines that we've seen in the.
Speaker 7 (06:24):
Past from Apple stock, and they've recovered and hit new
highs back then. We think this is a point in
time where Apple is going to be able to adjust
to whatever new scenario that we see. If these fifty
percent plus tariffs from China are here to stay, we
think they're going to adjust their business model for that,
whether it be increasing their iPhone prices by one hundred
(06:46):
dollars across the board with the iPhone seventeen cycle, and
then you know, potentially kind of you know, when you
look at it from an installment cost perspective, that's fairly
limited to the consumer out there. But nonetheless, there are
a number of things we think Apple can do here
to kind of right size their model.
Speaker 2 (07:02):
Let's go to the other areas that you focus. You
will focus on a lot of chip names, and many
are worried about the exposure of semiconductors to supply chain
in Asia, even though there was a carve out of
semi conductors coming from Asia from a tariff perspective, they're
in the green today, Angelou. Is that the right way
to be analyzing the sell off of Lake?
Speaker 8 (07:20):
Yeah, it's interesting.
Speaker 7 (07:21):
So you kind of when we were looking at the
shares this morning for a lot of these names, specifically
a namelike Nvidia, we thought it was essentially overdone. But
you kind of look at the decline we've seen from
peak to trough on the semiconductor side of things, it's
been about a forty percent of climb, which is actually
similar to the decline that we saw from peak to
trough back in twenty twenty twenty two. And again it's
(07:42):
one of those situations you never know where the bottom
is on the chip side of things, but there is
clearly some very strong secular opportunities tied to the chip sector,
specifically on the AI side of things.
Speaker 8 (07:54):
We think that infrastructure build out continues.
Speaker 7 (07:57):
Clearly, it's going to be somewhat ratcheted down because those.
Speaker 8 (08:00):
Of the tariff situation we're in right now.
Speaker 7 (08:03):
But nonetheless, I mean, it is an opportunity that you know, persists,
we think over the next decade or so, and you
know in video clearly at that top of the list.
But when you look at the profitability of these companies
on that AI trade that is going to remain in tact,
of course, with some downside to the estimates. But again,
the forty in production we've seen in the share prices reflective.
Speaker 5 (08:24):
Let me jump in here.
Speaker 3 (08:25):
The bigger question to me is is not just where
the infrastructure build out continues, it's whether the hyper scalea
capex moderates, because profit estimates for many of these companies
in the semi space are predicated on that.
Speaker 5 (08:37):
What's your call on that investment cycle?
Speaker 8 (08:40):
Yeah, so, I mean we do think that it's going
to be challenged.
Speaker 7 (08:43):
So you kind of look at a year ago and
essentially the capex numbers just continue to go higher and
hire and our view it actually we've probably seen, you know,
somewhat of a peak type capex number here in the
near term.
Speaker 8 (08:57):
We don't think you're talking peak levels at all. Long term.
Speaker 7 (09:00):
We actually think as you go into twenty twenty six,
we're looking at a capex increase of about four percent
for the high purpose scalers. On a combined basis, it's
going to be north of thirty percent this year. It
starts to level out though, absolutely, but nonetheless I mean
you kind of look at the secular themes that drive
infrastructure spending. It is the cloud, it is digital ad spend,
and long term, those are going to be trends that
(09:23):
continue to see higher revenue.
Speaker 3 (09:24):
World Angela, How does this technology market compare to ninety eight,
two thousand and two thousand and eight and every day
of your working life that's gone before it.
Speaker 8 (09:34):
Yeah, that's a great question.
Speaker 7 (09:36):
I think, you know, specifically from a valuation perspective, I
think the good news is we don't have a valuation
problem in tech, and I think historically that has been
an issue. These are historically very high growth oriented type names,
and you always have to worry about how much can
these names really kind of decline. I think the great
thing is when you look at tech here specifically, if
it's driving it, it is big tech, and big tech
(09:59):
has massive cash flow generation.
Speaker 8 (10:01):
Even if we kind.
Speaker 7 (10:02):
Of discount some of the tariff issues at hand, right now,
you're still talking about an Apple, if they don't offset
that twenty billion or so, it's still going to generate
potentially ninety billion or so on an annualized basis. That
would be your worst case scenario. So when we start
thinking about the drivers here of tech. The discount now
that you've seen here over the last nine to ten
(10:24):
months on the valuation side of things now trading less
than twenty times on a calendar twenty six pass Again,
those estimates have to go down. But when we kind
of look at things here, you got to look at
it from a long term perspective. You look at that
twenty percent or so discount on broader tech and I
think you know, overall, if you're a long term investor,
(10:45):
I think there's an opportunity here over.
Speaker 8 (10:47):
The next couple of days weeks. You just got to
be willing to lose some money in the near term.
Speaker 2 (10:52):
Rite that volatility. Angelo Zino of CFIRA, Great to have
you on the show. Thank you. Coming up, we're going
to check in on Teslas stock price following a dramatic
price target cut from Wedbush. We're on that next, and
what are you drilling into?
Speaker 3 (11:04):
So I think it's fair to say a lot of
people work this Sunday, and one of the only markets
open to look at was crypto and bitcoin in particular.
We went from like eighty eight thousand US dollars per
token Friday night down now to around seventy eighty five hundred.
It's moderated, but there's divergence with gold. There is the
tariff story hitting crypto assets, and we'll continue to track
(11:24):
it because that was a lot of the focus over
the weekend. Just in case you missed it, stick with us,
we'll be right back. This is Bloomberg Technology tesler trading
at one point in this session below two hundred and
(11:46):
eighteen dollars a share, a price at which COMMAS secretary
Howard Lutnik predicted they'd never fall to again. That decline
followed a forty three percent price target cut by Webbush
Securities analyst Daniel Iive, citing Trump's trade policies and a
brand crisis created by Elon Musk, Bloomberg's Global Auto's Edisi
Crazydales here for more from London. When I was reading
(12:09):
the Ives, note there were some very specific points, which
is that, for example, in China, it's not just the
tariffs themselves, it's the reputation and association of Musk with
the policy that might drive Chinese consumer is to buy
domestic models.
Speaker 9 (12:25):
Yeah, that's right, and I mean I think what we've
seen from the Trump administration is that they've really sort
of you know, stoked this nationalistic sentiment in other countries already.
You think about Canada being a great example of this,
maybe not great, but an example of this, where you know,
at hockey games suddenly you know there's a booing of
(12:46):
the national anthem, and you know, we don't have to
go that far back in history to think of other
companies that you know, have felt the brunt of sort
of nationalistic sentiment in China and and you know, felt
blowback from that. And so I think that's what I
was maybe was alluding to here, And it's maybe a
risk that we haven't seen necessarily in China, where you know,
(13:10):
whereas we've seen these Tesla takedown protests in other countries,
it's not something that we're seeing on the streets of say,
you know, Shanghai or Beijing.
Speaker 2 (13:19):
He calls for Elo Musk to step up Craig and
to show leadership. Now, last time I check. I don't
think el must particularly cares what Wall Street analysts think
or ask of him, But are we anticipating a return
to leading this business rather than his role at the
White House.
Speaker 9 (13:36):
I think there was a lot of sort of hope
and optimism last week right when Politico reported that Musk
you know, was on the cusp of stepping back officially
from his roles. But I think, you know, not only
did we hear Musk dispute that and say it's you know,
fake news, we also heard you know, from jd Vance,
the Vice President, talk about this idea that you know,
Doje is nowhere near done, and allude to the idea
(14:00):
that Musk is going to continue to advise this administration
you know, for you know, long into the future, and
so even if officially he is no longer a special
government employee. I think this, this notion that he would
fully step back from politics seems you know, seems like
a stretch, given given how sort of assertive and hands
(14:20):
on he's been to this point. Maybe he does go
back to spending more time, you know, say in Austin
or at facilities like in California. But I think the
bigger problem here is the sort of daily drumbeat of
his posts on X that could be really divisive.
Speaker 2 (14:38):
Crater Dal, thanks so much for joining us as always. Meanwhile,
coming up, we're going to take a closer look at
how the US China trade tensions could also be playing
into the negotiations for TikTok. Sam Sak, senior fellow at
New America joining US ed, what are you keeping an eye.
Speaker 5 (14:51):
On market's over in Asia overnight?
Speaker 3 (14:54):
And also a piece of news, this is the mc
i AC Asia Pacific Information Tech in debt. Clearly heavy clients,
but this as President Trump said that he has spoken
to the Japanese Prime minister. Also getting some headlines crossing
the Bloomberg terminal. Relating to Asia, Trump says China must
back off thirty four percent tariff increases by April eighth.
(15:16):
Trump says that talk to China on possible meetings will
be terminated, and he threatens a fifty percent additional tariff
on China starting April ninth if they don't meet an
Eightril eight deadline. He's talking about to back off of
the thirty thirty four percent. I think we call them
reciprocal tariffs right Carrow that were put in place by
(15:37):
the Chinese.
Speaker 8 (15:47):
The reporters.
Speaker 7 (15:48):
We had a deal pretty much with Jake jack nadded
deal but pretty close, and then China changed the deal
because of tariffs.
Speaker 8 (15:56):
If I gave a little of jarriffs, A proven a
deal at fifteen Brothers which shows you the power of derives.
Speaker 3 (16:03):
There was President Trump speaking last night of allD Air
Force one, saying China's objections to US tariffs stored a
deal to sell.
Speaker 5 (16:10):
Off TikTok and keep it operating in the US.
Speaker 3 (16:12):
In the last two minutes, the President has posted on
truth social threatening a fifty percent additional tariff on China
if they don't remove the thirty four percent reciprocal tariffs
that China had put in place by April eighth. You
said a deadline that post. I think Carry was seeing
all kinds of assets react. Some that I'm seeing, for
(16:33):
example God and Dragon index and as that modern edgines is, we.
Speaker 2 (16:37):
Have more boers, go for it.
Speaker 5 (16:39):
Carry pick it up.
Speaker 2 (16:39):
President Trump saying that all talks with China have been
terminated unless tariffs are pulled. So thus far, unless there
is a change of sentiment coming from China and they
withdraw as you were just articulating that extra thirty four
percent that they put on on Friday, then all China
talks are terminated unless those tariffs are pulled.
Speaker 3 (17:01):
Yeah, I'm going to look at some of the assets,
just really quick shares like Ali Barba's US listed ADRs
clearly getting hit, but the Nazet Golden Dragon China Index
down almost four percent.
Speaker 5 (17:11):
So it's important.
Speaker 3 (17:12):
Let's get back to the story we're talking about, and
that is the future of TikTok in the United States.
Bloombos Kirk Wagner joins us, and essentially, Kurt, what the
President said last night on Air Force One confirmed what
you had reported a couple of days earlier that the
tariff policy of this White House derailed a deal that
was being negotiated with China to have US investor ownership
(17:36):
of TikTok in the US.
Speaker 10 (17:37):
Take it from there, Well, that's exactly right. This deal,
as Trump said, was close to being done. They had
the framework in place, and you know, the tariffs hit.
The tariffs are announced, and China said, you know, we're
going to pause on this thing. And the news you
just shared Ed and Caroline makes me think that we're
we're definitely nowhere close to a deal now.
Speaker 6 (17:56):
Right.
Speaker 10 (17:57):
Things are getting more intense, not less intense on this
traf war. And so you know, as Trump said, the
tariffs work, I would say tariffs have consequences. Right in
this case, the deal for TikTok is sort of in
the crosshairs of this thing.
Speaker 6 (18:10):
We knew that would be the case.
Speaker 10 (18:12):
I think I'm not sure if we knew it would
be quite this much in the middle of all this,
but you know, part of the geopolitical fight here, Kit.
Speaker 2 (18:19):
Wagner, we thank you. We have now got the perfect
voice to discuss the implications of US and China on
technology and more broadly, Sam Sas is with US senior
fellow at New America. You have worked for tech giants
like Zeemans setting up their businesses over in Asia, who
speak the language, interpret what is going on at the
moment and how China is going to fight the US
(18:41):
on this.
Speaker 11 (18:42):
China anticipated the tariffs, but they were shocked by the scale.
And what we're seeing now is the leadership in Beijing
is trying to both signal resolves. They say we've got
this under control, We've diversified our economy, but they're also
still hoping for some space for a deal. And let's
watch how they navigate doing both at the same time.
(19:03):
In you know, TikTok, the deal was ready to come,
but tariffs derailed it. And now China's saying we still
can maintain leverage at this key moment.
Speaker 3 (19:13):
Sam I'm just going to remind our audience of the
breaking news of literally the last thirty seconds, which is
that President Trump is saying that all talks of China
have been terminated. He had threatened an additional fifty percent
tariff if China had not removed the thirty four percent reciprocal.
Speaker 5 (19:28):
Tariff by April eighth.
Speaker 3 (19:30):
The question who's in the stronger position here, the United
States or China.
Speaker 11 (19:36):
Well, first of all, there were no talks actually planned
with China, so I'm not sure where that's coming from.
Speaker 2 (19:43):
You know, China has already moved forward.
Speaker 11 (19:45):
We heard news that they're building a rail line linking
to Europe. They want to secure their exports to Europe.
It's going around Russia. They're trying to accommodate European sanctions.
They're looking towards emerging economies. They've signaled that they've already
significan reduced their trade and investment with the United States.
Speaker 2 (20:03):
So they've priced this in.
Speaker 11 (20:05):
But their economy is weak and they want to try
to offset the domestic pressure on the economy in the
hopes that maybe Trump will come around. But look, we're
quickly moving toward a downward escalatory spile. If Trump moves
forward with these compounding tariffs.
Speaker 2 (20:20):
If you are Apple, if you are Tesla that has
significant revenue in China and you're implicated by the brand
destruction of a domestic consumer going for China right now,
how do you respond? You wait this out and trying
to make changes to your business model at this moment.
Speaker 11 (20:36):
The problem is these companies attempted to change their business
model with the China plus one diversifying to India, to Vietnam.
But now those transshipment companies have also been hit by tariffs,
and I think multinationals are reeling from that. Same In
the fashion industry, they were double producing lines to countries
that are now impacted by the tariffs. The prices are
(20:57):
just going to be passed to the consumer and multi
nationals are going to be hiding in the process.
Speaker 3 (21:03):
So Sam, I go very quickly back to my same question.
But who's got more leeway here to put their economy
through pain?
Speaker 5 (21:10):
China or the United States?
Speaker 11 (21:12):
You know, what do you do when both countries are
under pressure domestically? I think the United States came out
as from a very strong position in their own economy. Well,
China was weak, and now that may Flip.
Speaker 3 (21:27):
Sam Sachs, New America Senior Fellow, just the perfect guest.
Speaker 2 (21:39):
Welcome back to bluemog Technology. I'm Caroline Hide in.
Speaker 3 (21:41):
New York and I'm Medladlow in San Francisco. Let's talk
about the markets and whipsaw, volatility, girations. Call it what
you will. The breaking headlines of the last thirty minutes.
Our President Trump talking on truth social about ending tariff
negotiations with China. Then as that one hundred is swung
from a four percent decline or more early in the
(22:02):
session to again now it is down one point nine percent.
It's probably better exemplified in some of the single mover
names in the context of tariffs. There is a big
focus in the research notes and the activity on social
media around the mag seven names because of their exposure
in terms of revenue outside of the United States. In
Nvidia is a name that has swung between a significant
(22:22):
loss with significant gain. It is now slightly softer. Tesla
continues to be under pressure. Apple down six percent, and
we will get to more about Apple with Bloombo's Mark
German in a moment. Amazon now flat but had actually
had a big reversal of fortunes.
Speaker 5 (22:35):
Earlier in the day.
Speaker 3 (22:36):
Caro, It's very hard to piece where you win and
lose in this market. But I think mag seven is
interesting if you just think about where their businesses are
around the.
Speaker 2 (22:44):
World, and the threat of ongoing headline risk is one
that investors are having to navigate. Case in point, the
last thirty minutes trade. Let's discuss it with Isabelle Lee
who joins us on the impact of those that have
controlled the stock market, ultimately the big owners wool Street.
They've been pushing back over the course of the weekend.
I think of Bilackman's been speaking out, I've Haas, Weinstein,
(23:07):
a whole long list, Jaban Diamond. How have they basically
seen the move shift away from them of late with
Trump's commitment to tariffing, certainly China. In the last tenty minutes.
Speaker 12 (23:18):
Exactly, it's really been hard to your point headline risk,
and I want to point out that this intra day
gap of seven percent, more than seven percent, is the
largest since twenty twenty. And of course the whole of
the country and the whole of the world are affected,
but especially the investing class. We have around ten percent
of Americans or at least the richest ten percent invested
in a huge chunk of this, and they really don't
want to look at their four oh one case. There
(23:38):
was a meme that says four to one K is
now two to one K, and it's really astonishing. We
have strategists cutting down their price targets, vis jump to fifty.
We have one after the other downgrading their us US
and even FED cuts are shifting by the hours. So
it's really an exciting market. We spent the whole weekend
this big tick I did with Bildana Hirich and Denizza Takova.
We were just calling people and everyone was really just worried.
(24:00):
That was a common threat.
Speaker 5 (24:02):
Team in the control room.
Speaker 3 (24:03):
Let's bring up those pictures from last Wednesday where President
Trump walked out with the chart of death. There it is,
there is the president countries listed by tariffs and I
think reciprocals as well. Just anecdotally, some of the responses
you got to that specific board in his hands were
some of the most astonishing things I've seen in print journalism.
Speaker 12 (24:24):
Recap some we have Rich Seinberg, he's a senior wealth
advisor and he was saying he's used to all the
stress but then this is one of the most frustrating
he's seen. In fact, he's very, very frustrated. We have
that quote in the story. Jay Hatfield of Infrastructure Capital
was saying that this is quote unambiguously stupid and there's
no reason to cause a quote trade war like this.
And to Caroline's point, on top of all of this
(24:46):
is the reverse wealth effect. We had wealth effect for
the good of two years. Everyone was feeling flushed, everyone
was feeling happy taking vacations. But now it's the exact opposite,
and that can have real implications in the economy. If
you look at your four O and K, or your
retirement or just your investments in general, you may not
I want to take that vacation, You may not want
to buy that big appliances. And yes, maybe the richest
Americans whld majority of the docks, but if you're an
average American, if you have fifty thousand inner bank account
(25:08):
at twenty percent, wipe down is still significant. In fact,
if that's your wholeness egg, it's a lot scarier than
for those who are wealthy.
Speaker 3 (25:16):
Bloombergs is a la brilliant reporting. Good to catch up,
Thank you very much. Let's get back to Apple, and
after years of avoiding iPhone price hikes in the United States,
Apple may need to finally concede to raise it's nine
hundred and nine nine dollars flagship model pricing as tariff's
hit production. Let's got to bloombergs Mark German. This was
the subject of this weekend's Power On. You explained the
(25:39):
historic strategy very well, which is Apple's not raised prices.
It has removed the bottom tier of handset and only
offered a premium. So what happens nextly?
Speaker 13 (25:49):
There is precedent for Apple raising prices outside of the US.
We've seen it post Spruxit in the UK. You've seen
price adjustments in the European Union. We saw twenty five
percent iPhone price sits in twenty twenty two in Japan,
seen some adjustments in Canada and Australia. But you're right
in the US it's been pretty stagnant. It's actually been
(26:09):
one of the only things in the technology world over
the last decade that's been pretty consistent.
Speaker 6 (26:14):
But given these tariffs.
Speaker 13 (26:15):
Something's got to give, and there's going to be adjustments
with suppliers. They're going to push suppliers to give them
better pricing. They're going to eat some of the costs themselves,
They're going to make supply chain changes, but ultimately I
do strongly believe they will have to make some price adjustments,
probably with the iPhone seventeen launch later in the year,
and this is going to be a big sea change trap. Well,
(26:36):
obviously it's a big shift, but they do have some
ways to help the consumer here. They've got a trade
in program, they have installment plans through all the carriers now,
so I think from a consumer standpoint, it's not going
to be a massive negative.
Speaker 5 (26:49):
Now.
Speaker 13 (26:50):
We've seen some analyst reports and commentary over the last
few days. I saw one website claim that a maid
in USA iPhone would cost thirty thousand dollars per unit.
I've seen analysts notes saying a made in USA iPhone
could cost three thousand to thirty five hundred dollars. The
good news is that these are completely misguided. Apple's not
(27:11):
moving production to the US, certainly not for the iPhone.
What you're going to see is them moving to more
of these safe havens outside of China that are pushing
tear that are going to get hit with tariffs, but
less so India, for instance, You know, prior to Trump's
post earlier today about a fifty percent tariff, India was
at fifty percent of the size of the tariff on China,
(27:33):
coming in around twenty six percent versus the prior fifty
four percent, right, and so.
Speaker 6 (27:38):
That is a big improvement.
Speaker 13 (27:40):
Vietnam is in the high forties, but that's still an
improvement over the fifty four percent, and they've been stuffing
the US channel over the last several months with more
units in order to avoid those tariffs.
Speaker 2 (27:51):
Can I quickly get your expertise on what Tim Cook
is thinking about right now as well? We all thought
he was a marvelous politician in and of himself the
way and which had managed to navigate the previous administration.
How much do you think he's desperately trying to get
some sort of carve out.
Speaker 6 (28:07):
Extremely desperately.
Speaker 13 (28:08):
But it seems like Trump, as we expected, is even
more emboldened than his second tour or his second term,
and he is doing ever he wants at this point.
It doesn't seem like he's working with companies on exemptions.
It doesn't seem like he cares about who showed up
to his inauguration doesn't seem to care that Apple said
they're going to invest half a trillion dollars in the
(28:28):
US basically because of him. He's just doing whatever he wants,
and it doesn't seem like he's taking the impact into
a gap.
Speaker 3 (28:38):
There's how this is playing out in markets, in the
stock analysis, and then there's how it's playing out in
the culture, how everyday people talk about MAGA and tariffs
and Apple. This is a video from a post that
overheard on Wall Street made and I'm not sharing it
with you, Mark Flippant Lee, but they're suggesting that in
the future Wall Street analysts will quit and start assembling
(28:59):
iPhones in the Middle West. As far as I can tell,
you said that won't happen. Just explain in thirty seconds why.
Speaker 13 (29:05):
I mean there's I mean, they're certainly you know, they
have the right to quit their jobs and become manufacturing workers.
But I don't anticipate Apple moving outside of Asia in
any considerable way. The one thing I do see them
doing is decentralizing their supply chain, right, but I don't
see that coming to the US. I think you'll see
(29:27):
more production in parts of South America, right, maybe parts
of Europe, maybe parts of in more parts of India
and China, but I don't think Midwest manufacturing facilities to
create iPhones are coming anytime soon. I certainly don't think
they're on the table right now.
Speaker 2 (29:42):
Makes for a good meme for Mark German is nothing
but straight talk. We thank you so much.
Speaker 5 (29:47):
Nice.
Speaker 2 (29:47):
Let's take a quick look at what's happening in semi
conductors right now, though ed because throughout the trading day
we have basically been in the green websodes somewhat on
this headline risk. But the socks up more than a
percentage point in video now about one and a half percent,
taking off that anxiety around the yet further tariffs coming
China's way, if Trump is to be believed, onto social
broadcom up three percent. Let's dig into what all of
(30:09):
this means to the industry. Peter Elstrom and Pisa say
is doing a tour of the US at the moment
you're here with me in New York, and people basically
had seen the chips sector wade because of again it's
exposure from a supply chain to Asia. Why are they
managing to shake it off a little bit today?
Speaker 14 (30:23):
Well, the volatility here is really surprising. I thought I
knew what the tariffs were as I was walking over
here to the set, and they changed even on my
way over. So we know that Taiwan is going to
get hit with tariffs around thirty two percent. China also
is looking at some tariffs at this point, so there
are concerns about what exactly those costs are going to be.
As products move into the US. There'll be an exception
for the chips themselves, at least so far, we've seen
(30:45):
the White House carve out this exception for the actual chips,
but there's not an exception for the products in TSMC
of course makes products for Apple as German was referring
to earlier, and also Nvidia in particular, and it's not
exactly clear what those products are to do when it
comes to these tariffs. You may see some exceptions there,
and the analysts are trying to figure this out right now.
(31:06):
They do believe that invidious servers coming into the US
are going to be exempted from the tariffs, but it's
not clear and the White House hasn't been able to
give clarity on that point so far.
Speaker 3 (31:16):
It's an amazing point that that actually many don't understand
specific policies relates to tariffs.
Speaker 5 (31:21):
The other part of it.
Speaker 3 (31:22):
Is that everything your team's reported for the last two years,
which is the United States wants to have more semiconduct
and manufacturing that fabs take time and billions of dollars
to implement and build.
Speaker 5 (31:33):
Where are we at in that process?
Speaker 14 (31:34):
Right You talked about these companies that are trying to
sidestep the tariffs from the Trump administration right now, Apple,
of course has been very good at this. Look at TSMC,
though certainly not as high profile. But TSMC came forward,
they were already spending sixty five billion dollars on chip
capacity in the US. They promised to spend another one
hundred billion dollars on capacity in the US. You think
(31:55):
that they would be one of the companies that will
get some exemptions here, But so far the Trump administration
has been holding pretty firm and it's not clear exactly
how they're going to be affected. As they make chips
in Taiwan and send them over to the US. Still
they have their the bulk of their manufacturing in Taiwan.
They need to be able to send those chips someplace
else and then they come into the United States. So
(32:16):
TSMC is making progress in building this geographic diversification, but
they haven't made that much progress so far.
Speaker 2 (32:24):
What's so interesting is tomorrow we get samsung preliminary revenue.
It's going to be down and they're in the line
of fire when it comes to US CUBS. And at
the same time, we're all worried about AI infrastructure bubbles
that we were talking about even before this, right, So
how much were dialing up into what already is a
feeling that we're over allocated to the chip sector.
Speaker 14 (32:44):
Well, that's the big question with all of these huge
investments into AI and into data centers in particular. We
know that the hyperscalers are spending tens of billions of
dollars at this point on that capacity, but we don't
know what kind of revenue is sitting on the other
side of it. So we're trying to get some insight
into that. Samsung is certainly going to talk about their
progress in making memory chips for AI. They've been behind
(33:05):
s k Heinex in particular in terms of building that
kind of capability pairing up with Nvidia at this point,
but we're going to get some sign of their progress
tomorrow and we'll see whether they give us any indication
about what that AI demand is in the.
Speaker 5 (33:19):
End, Bloomberg's piter Eil stream over in New York. Thank
you so much.
Speaker 2 (33:31):
Let's turn to another side of the markets right now,
because twenty twenty five was supposed to see a rebound
in IPO demand, but look, this market route following Trump's
tariff announcements has led several companies Klana stub Hub, for example,
to pause their plans here to talk about this. Or
Greg Martin, co founder of Rainmaker Securities. Rainmaking was meant
to be on and now we understand there's a pullback
(33:52):
because these markets are treacherous. Greg, are all IPOs on ice?
Speaker 6 (33:57):
Well, thank you for having me on.
Speaker 15 (33:58):
I was hoping to be able to talk about the
excitement we were going to have coming into Clarna and
subub hitting the road and hopefully a re emergence of
the IPO market. But the worst thing for the IPO
market is uncertainty and instability, and that's what we have
in stage right now. I mean the vix at forty
five and approaching fifty. It's crazy how instable we are
(34:19):
right now, and it's a huge web blanket on the
IPO market.
Speaker 2 (34:22):
Stub Hub Clana. We see Chime, for example, delaying the
brands that we know have already paused, but there's others
waiting in the wings. We're already discussing, Well, maybe they'd
be She and Bolt discord many had been articulated in
the markets, varying amounts of reports is say whether or
not they'd actually tap. But Greg, do we think there
has to be a step away for the entirety of
(34:45):
twenty twenty five as it stands.
Speaker 15 (34:47):
I think that's strong. I think it's a little bit
wait and see. We're definitely in pause mode. I think
people want to see what materializes. I remain an optimist.
I'm hopeful that trade deals will get done. This uncertainty,
this instability persists for a long time, and if we
start to have years of a global recession and you know,
trade wars, it could push this thing considerably to the
(35:11):
end or next year.
Speaker 6 (35:12):
I think right now it's really up in the air.
Speaker 15 (35:14):
As we pointed out, Slarner and StubHub of delayed Hinge
Health was supposed to go public, Chime.
Speaker 6 (35:19):
Circle just filed last week.
Speaker 15 (35:22):
It's just a lot of uncertainty, and I think right
now it's wait and see mode.
Speaker 6 (35:25):
So I think it's probably at least a quarter of pause.
Speaker 3 (35:28):
What's interesting, let's bring those names back up, is a
lot of people work at those companies. A lot of
them have a broad base of investors. Many of them
the employees and investors watch this program. Does this pause
in the IPO window open up the secondaries market or
put pressure on the companies to give employees liquidity in
other ways?
Speaker 15 (35:50):
Absolutely, we've had a huge dearth of liquidity, you know,
since twenty twenty one, frankly, and people have been waiting
for the IPO market to open up. We've started to
see companies doing tender offers in order to alleviate some
of the liquidity pressure, but there's still a ton of
liquidity for pressure that persists. And Frankly, in this period
of there's a lot of fear in the market, and
(36:11):
employees and workers in all of these companies are starting
to think, you know, I'd like to have a little
bit more of my net worth and cash, and so
I think there's going to be a lot of pressure
for companies to enable secondaries trading. So I do expect
some secondaries trading will happen the flip side of that, though,
is it investors when they buy secondaries, when they buy
into these private companies before they go public, they want
(36:32):
to see a public market in the future because they
start to think about liquidity. So there's there's there's a
there's a trade off there, and so we are going
to see more liquidity pressure, but we also will see
a little bit of a pause on demand.
Speaker 6 (36:43):
So it'll be interesting to see how the market plays out.
Speaker 3 (36:46):
Greg, is this an America problem or it's a global
market problem?
Speaker 6 (36:50):
Five pos, It's a global problem. I mean this is
this is something that hits.
Speaker 15 (36:55):
Everybody everywhere, in every part of the world, and it
needs to be sorted out. We're seeing every market affected
by this, and you know, the United States is the
center of it all of course, but everyone is affected
by this and it needs to get sorted out or
else we could have some long term issues.
Speaker 2 (37:10):
India was really active, for example, Greg, though, I want
to just see where the blame lies, because briefly, core
weave wasn't exactly accepted with welcome arms when it came
to the market. It since rallied a bit, but was
this already in the making.
Speaker 6 (37:25):
I don't think it was necessarily in the making. I mean,
it was a unique story.
Speaker 15 (37:29):
It had major customer concentration issues, it had a huge
amount of debt, and frankly, it's actually traded up quite
well since the IPO and actually is still up about
twenty percent since an IPO to forty, despite the major
market pullback last week.
Speaker 6 (37:43):
So I don't think this has anything.
Speaker 15 (37:46):
I don't think this was necessarily in play before Core
or We was a different story. I think this is
something that hit from left field, and I think it's
something that we're all having to deal with and right
now we're just not certain which direction we'll go, and
that's why the market.
Speaker 6 (37:58):
Is in pause.
Speaker 3 (38:00):
Crade Martin, co founder of Remaker Securities, thank you very much.
Speaker 2 (38:11):
Well, the EU remains open to and strongly prefers negotiations.
Speaker 6 (38:17):
We will not weigh end up endlessly.
Speaker 3 (38:22):
That was EU Trade Minister Maraschefkevich. Now, trade ministers from
the Block have been meeting in Luxembourg and discussing how
the Block should respond to Trump's tariffs. For more, let's
bring in Bloomberg's Michael Sheppard. That's the thing about tariff's,
they can go both ways. There's a response. What do
we know about the EU's position as it stands well, as.
Speaker 16 (38:40):
We heard from the Trade Minister, they are willing to
sit tight for a minute, but not for too long.
They want to see how the effects of the latest
down dreft in markets play out here in Washington and
whether it might cause the Trump administration to start rethinking
the levees that they have imposed on the block. That
is not just the twenty percent across the board tariffs
(39:02):
that Trump unveiled last week, but also the measures targeting
autos that took effect on Thursday, and then the levies
that took effect previously against steel and aluminum. Taken together,
they have really angered officials in the European Union and
prompting calls for a strong response and a potential retaliation
that could take aaim at America's biggest tech companies. And
(39:24):
this would be through a measure known as the Anti
Coercion Instrument, and that could result in higher taxes, including
through the Digital Service Tax, against American tech giants, the
ones that we know so well like Meta, Google and others.
Speaker 2 (39:37):
Chev what's interesting is the EU is going to be
watching closely what's just been posted on true social Trump
threatening yet more tariffs on China because of their tough response.
So how does the EU navigate not having yet further
tariff are their direction?
Speaker 16 (39:52):
Well, Caro, they are really having to walk a type
rope here. And even before his tariff's announcement last week,
President Donald Trump warned both China and the European Union
in social media posts that he would retaliate against them
over any reprisals that they unveiled, and China responded very
quickly last week to Trump's across the board tariffs, hitting
(40:14):
all Chinese goods with heavy tariffs of their own. And
because the European Union has waited a moment, they have
a chance now to see how that possibility of a
reprisal to a reprisal from the US could play out.
Speaker 3 (40:28):
I just want to think of materially how this impacts
technology companies, right, So, for example, Apple makes some iMac
products in Ireland, part of the EU, subject to a
twenty percent tariff. Intel has a fab in Ireland, other
facilities in Germany under consideration. Just that sort of physical component.
Speaker 16 (40:45):
Mike, Well, it's the physical components, but it's also the
whole demand side question too. If there's a chill in
the global economy. If there's an overall bump in inflation,
that will also weigh on on global commerce and even
anything happening on these shores. If it's important to the US,
even if it's just consumed in the US, tech companies,
(41:08):
like every other business across the US, will start to
feel it. A lot of the tariffs are paid here
by consumers in this country. It's not just as the
President is like to say, those countries paying the cost.
Speaker 5 (41:20):
As he sees it, all.
Speaker 2 (41:22):
Stock markets currently down shepiy, thank you, Mike Shephard. There, Look,
let's quickly look at how the markets have fared. It's
been ugly in Europe and the stocks six hundred is
sold off in particular ASML is still off. But we
think more broadly about the US just in gyration mode.
At the moment, we're off by three quarters percent on
the na's that one hundred. We're in a bear market.
We're likely going to enter a bear market on the
S and P five hundred. But that does it for
(41:42):
this edition of Bloemberg Technology. And we really are speaking
once again with Ed Ludlow back in the fold in
San Francisco. It's a joy to have you back on
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