Tariff Whiplash Sends Tech Stocks Back Into Retreat | Bloomberg Technology
ANNOUNCER: THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. CAROLINE: INVESTORS ON EDGE AFTER THE PAUSE AND MONSTER RALLY. MARKETS BRACING FOR PROTRACTED GLOBAL VOLATILITY. MARKETS UP, REMEMBER THE EUPHORIA? ALL COUNTRIES EXCEPT FOR CHINA PAUSED. WE DROP AGAIN TODAY. ANXIETY ABOUT WHAT CHINA MEANS IS STILL THERE.
ED: TESLA JUMPS 22% YESTERDAY, PULLED BACK TODAY. APPLE IMPACTED. 90 DAY PAUSE ON 56 COUNTRIES .
REUTERS REPORTED APPLE AIRLIFTED TONS OF IPHONES FROM INDIA TO THE U.S. I AM HERE FOR IT. CAROLINE: AREN'T WE JUST? THE PAUSE IS A RELIEF. INVESTORS REMAIN WORRIED. 125% TARIFF STILL ON CHINA. KAILEY LEINZ BREAKS DOWN THE INTRICACY. KAILEY: ACCORDING TO KEVIN HASSETT, DIRECTOR OF THE NATIONAL ECONOMIC COUNCIL, 15 DEALS HAVE BEEN PRESENTED AND THEY ARE INTENDING TO TAKE THEM ONE BY ONE.
PRESIDENT TRUMP ADMITTED THIS IS ABOUT NEGOTIATION, DESPITE THE MESSAGING WE ORIGINALLY GOT FROM SECRETARY BETH SENT THAT THIS WAS THE ART OF THE DEAL. THE PRESIDENT ADMITTED HE WAS WATCHING THE BOND MARKET GET QUEASY. THAT CONTRIBUTED TO THIS PAUSE. 10% IS STILL IN PLACE AND CHINA IS STILL IN PLACE, IN ADDITION TO 84% RECIPROCAL TARIFFS CHINA PLACED ON U.S. IMPORTS.
THAT COULD START A DECOUPLING OF THE TWO LARGEST ECONOMIES. TECHNOLOGY COMPANIES WERE RIPPING YESTERDAY, GIVING BACK GAINS TODAY. THERE IS STILL RISK HERE FOR APPLE AND NVIDIA. PRESIDENT TRUMP SAID HE IS EXPECTING BEIJING. THERE HAS BEEN NO SIGN THEY ARE INTERESTED IN MAKING PROGRESS, SUGGESTING CHINA DOESN'T WANT TO BLANK FIRST -- BLINK FIRST. TIKTOK IS ONGOING LEVERAGE. ED: THE WHITE HOUSE KEEPS TALKING ABOUT APPLE. CRAZY TIMES. INDIA.
SCOTT BESSENT LISTED INDIA AS ONE OF THE EARLY ON NATIONS. IF YOU ARE A DEMOCRAT, TRYING TO RESPOND, WHAT ARE YOU HEARING? KAILEY: DEMOCRATS ARGUE THIS IS CHAOTIC. THERE IS SO MUCH UNCERTAINTY AROUND POLICY.
THERE WAS CONCERN FROM DEMOCRATS YESTERDAY ABOUT POTENTIAL MARKET MANIPULATIVE EFFECT FROM THESE VACILLATION'S. PRESIDENT TRUMP SAID IT WAS A GOOD TIME TO BUY YESTERDAY AND THEN HOURS LATER, THERE WAS THE BIGGEST RALLY SINCE '08. ADAM SCHIFF SUGGESTED THIS REQUIRES INVESTIGATION INTO POSSIBLE INSIDER TRADING. THE PRESIDENT IS SAYING CHINA TARIFFS ARE STICKING. THERE IS A 90 DAY PAUSE FOR OTHER COUNTRIES. WE HAVE SEEN TIME AND AGAIN, HE HAS THE POWER TO CHANGE HIS MIND QUICKLY.
WE HAVE OPPORTUNITIES TO HEAR FROM THE PRESIDENT TODAY. CABINET MEETING SCHEDULED NOW. SIGNING A BILL LATER. WE WILL SEE IF HE GIVES SURPRISING ADDITIONAL NEWS. ED:
OVERNIGHT, CHINA ANNOUNCED IT WILL MODERATELY REDUCE U.S. MOVIES ALLOWED IN IN RESPONSE TO TARIFFS. IT IS A NEW FRONT IN THE TRADE WAR AND COULD SIGNAL BEIJING'S WILLINGNESS TO TARGET AMERICAN SERVICES WHICH COULD INCLUDE TRAVEL. CAROLINE: SO MUCH TO SUGGEST ON THE WIDER
IMPLICATIONS. CAN YOU TRADE IN THIS ERRATIC MARKET? >> IT IS EASY TO LOSE MONEY DOING SO. IT IS BETTER TO HOLD. BEFORE THE TARIFF HALT, WE SAID 5000 WAS A GOOD SUPPORT LEVEL SO NOW THAT WE BOUNCED OFF THAT HARD, WE ARE NEUTRAL ON EQUITIES. I WOULD COUNSEL HEDGE FUND MANAGERS TO TRIM CAUTIOUSLY BECAUSE THERE IS RAPID POLICY COMING OUT OF THE WHITE HOUSE. COULD BE 1:10 P.M. IN THE AFTERNOON. IT'S BETTER TO GET POSITION AND
HOLD. CAROLINE: THINKING ABOUT POTENTIALLY NAMES YOU WANT TO RECOMMIT TO, HOW MUCH ARE YOU THINKING ABOUT EXPOSURE TO CHINA? JAY: 100%. ALSO OVERSEAS MARKETS.
WE FAVOR GETTING EARLY REGIONAL BANKS. NO EXPOSURE TO INTERNATIONAL. THEY HAVE CREDIT EXPOSURE. DON CONSENSUS CALL THAT THE ECONOMY IS STRONG.
THEY ARE NOT DEPENDENT ON INVESTMENT BANKING. THEY ARE DEPENDENT ON RATES/SPREADS. BEING MORE CONSERVATIVE IN THIS MARKET. ED:
I AM STARING AT A FIVE DAY NASDAQ 100 CHART. NET FLAT OVER FIVE DAYS. THE DRAMA WITHIN THOSE DAYS. DO YOU NET UNDERSTAND TARIFF POLICY OF THE WHITE HOUSE? ARE YOU ABLE TO MAKE INFORMED MARKET DECISIONS BASED ON YOUR UNDERSTANDING OF THAT? JAY: DEFINITELY NOT. WE ARE NEUTRAL IN EQUITIES. WE ARE CONSTRUCTIVE ON INFLATION. THAT VIEW WAS VALIDATED THIS
MORNING. NEGATIVE HEADLINE INFLATION. EVERYONE WANTS TO TALK TARIFFS. NO ONE TALKS ABOUT THE 20% DROP IN ENERGY. THAT IS PROFOUND. IT IS POSITIVE FOR INFLATION. IT NEVER GETS MENTIONED. UNCERTAINTY, THERE ARE TWO CAMPS IN THE WHITE HOUSE.
THE HAWKS AND THE DOVES. THE DOVES ARE MORE PRO-BUSINESS. ELON MUSK CALLED NAVARRO A DUMB BAG OF BRICKS. THAT'S ALMOST UNPRECEDENTED. I DON'T THINK THAT HAPPENS IN
NORMAL ORGANIZATIONS WHERE COLLEAGUES ARE PEJORATIVE. WE DON'T KNOW WHO WILL WIN THE DEBATE. SCOTT BESSENT HAS THE LATEST VICTORY. WE ARE NEUTRAL ON STOCKS. FIXED INCOME LOOKS ATTRACTIVE.
ED: RECESSION CALLS PULLED ON THE PAUSE. SHOULD OUR AUDIENCE BRACE FOR RECESSION? JAY: OUR CALL, NO RECESSION BUT SLOW GROWTH. REAL THING PEOPLE ARE MISSING, THE SLOWDOWN IS MOSTLY CAUSED BY HAWKISH FED POLICY, NOT TARIFF POLICY.
ENERGY DECLINE OFFSETS THE TARIFF INCREASE. THE REAL ISSUE IS ULTRA TIGHT FED POLICY. WE THINK THE FED HAS A FLAWED STRUCTURE, POLICY FRAMEWORK. THEY ARE DANGEROUS AND CAN CREATE RECESSION.
INFLATION DATA WILL BE SO POSITIVE, THEY WILL BE FORCED TO CUT LATER IN THE YEAR. CAROLINE: U.S. ECONOMY POSITIVITY, THE FACT MAYBE THAT MEANS WE HAVE A RESILIENT CONSUMER FOR APPLE FUNDS, AMAZON PRODUCTS. ANY STOCKS IN THE TECH WORLD WORTH ADDING TO? JAY: ABSOLUTELY. DOESN'T SOME CONSERVATIVE BUT WE THINK IS MORE CONSERVATIVE -- AMAZON. HALF WALMART. PRICE INSENSITIVE. PASS-THROUGH. THE CEO WAS ON SAYING AWS
DEMAND IS STRONG. THEY GET TRADED LIKE A TECH STOCK. THEY ARE CUTTING COSTS. THAT'S LIKE REGIONAL BANKS. PRETTY DEFENSIVE IN A MARKET DESTABILIZED BY A WHITE HOUSE THAT CANNOT SORT WHO IS IN CHARGE. CAROLINE: INVESTOR SHAREHOLDER LETTER TODAY RESPONDING TO CURRENT VOLATILITY CONSUMERS SEE. YOUR VIEW ON AI? IF AWS SEES DEMAND, MANY ARE TRYING TO WORK OUT WHETHER THE AI BUBBLE IS INTACT. JAY: WE THINK SO. STOCKS ARE DOWN SO AI MIGHT BE FALLING APART.
THEY HAVE TWO BETAS. THEY ARE TWICE AS VOLATILE AS THE MARKET. YOU SELL THE INVESTMENT BANKS, TECH STOCKS. DOESN'T MEAN THE AI MARKET HAS
CHANGED. WE BELIEVE THERE WILL BE CONTINUED AI SPENDING. IT IS INVESTMENT AND NOT CONSUMPTION THAT DRIVES RECESSIONS. AI SPENDING IS OFFSETTING SLOW HOUSING MARKET. RATES HAVE COME DOWN 50 POINTS. IT WAS DISCONCERTING YESTERDAY
WHEN THEY WERE SKYROCKETING. THAT IS HELPFUL. IT WILL NOT GET THE HOUSING MARKET TO BOOM, BUT STABILIZE. STABILIZING HOUSING, STRONG TECH SPENDING ADDS UP TO SLOW GROWTH, 1% TO 2% RANGE. ED: OUR CASE STUDY TODAY IS APPLE. SHORT-TERM, THEY ARE AIRLIFTING IPHONE HANDSETS FROM INDIA TO THE U.S. LONG-TERM, A WORLD IN WHICH THE
IPHONE IS ASSEMBLED IN THE U.S. DO YOU SEE THAT BEING ACHIEVABLE FOR THIS WHITE HOUSE? JAY: NOT REALLY. THE FUNDAMENTAL FLAW OF THE HAWKISH TRADE OUTLOOK. NOTION YOU CAN HAVE A TRADE BALANCE WITH ALL COUNTRIES, WHICH IS RIDICULOUS. IN THE SENSE, LOW INCOME COUNTRIES HAVE LOW LABOR.
THEY WILL BE EXPORTERS. THAT IS ONE WAY THEY GROW. SECOND THING, IF YOU RUN A GIGANTIC DEFICIT, YOU HAVE TO HAVE A TRADE DEFICIT. FINANCIAL FLOWS NEED TO EQUAL PHYSICAL CLOSE. THE FIRST THING YOU WANT TO DO
FOR ZERO TRADE DEFICIT IS LOWER YOUR BUDGET DEFICIT. THAT OBJECTIVE IS RIDICULOUS. THAT MIGHT HAVE LED TO THE BACK OF BRICKS COMMENT FROM MUSK, NOT ME. THAT IS WHY IT IS DISCONCERTING. ONE SIDE IS NUTTY. THE OTHER IS PRO-BUSINESS. WE DON'T KNOW WHO WILL WIN.
CAROLINE: THE WHITE HOUSE WILL ADOPT A PLAN TO ADOPT TRUMP'S TAX CUTS AND ADDRESS THE DEBT CEILING. MANY THOUGHT TAX POLICY WOULD OFFSET TARIFFS. IF THE HOUSE CAN PUSH FORWARD, IS THAT THE RIGHT POLICY? JAY: ABSOLUTELY. IF WE END UP WITH 2% GDP, THAT IS $600 BILLION TAX INCREASE. WE NEED TO OFFSET THAT. THAT IS THE FLAW OF THE INITIAL
STRATEGY. IT CAME TO FAST -- TOO FAST. YOU WOULD HAVE HAD PLENTY OF TIME IN A YEAR. IT CAME WAY BEFORE THE TAX CUT.
50 STABILIZE THE MARKET. IT IS AN OWN GOAL. THEY DIDN'T NEED TO DO THAT. CAROLINE: WE PLAY SOCCER. [LAUGHTER] JAY: I TRIED THAT WITH ONE OF YOUR REPORTERS AND THEY WERE LIKE WHAT DOES THAT MEAN? TIMING WAS HORRIBLE. COULD HAVE GOTTEN TO THE EXACT SAME PLACE BY JUST SAYING WE WILL DO THIS AND NOT DOING IT RIGHT AWAY. WAIT UNTIL THE FED FIGURES OUT INFLATION.
IT WASN'T EARNINGS SEASON. WE THINK EARNINGS WILL CALM PEOPLE DOWN. WHEN YOU HEAR FROM COMPANIES, STOCKS TEND TO RALLY. THEN YOU GET CERTAINTY. DELTA'S GUIDANCE WAS BAD. THIS WAS BEFORE THE
ANNOUNCEMENT, THE STOCK SKYROCKETED. MOST NEWS WILL BE VIEWED POSITIVELY. EARNINGS WILL STABILIZE IT. TARIFF NEWS CAME AT A TERRIBLE TIME DURING A NORMALLY WEAK MARCH.
NOT THAT WE ARE SUPER BULLED UP, BUT WE THINK IT WILL STAY IN THIS 5000 RANGE. IT IS NOT STABLE BUT IT WILL BANG AROUND. WE ARE NEUTRAL, NOT NEGATIVE. ED: I THINK YOU ARE QUOTING HOWARD MARKS ON THE OWN GOAL ANALOGY. TSMC'S AI RELATED GROWTH SURGE, MORE NEXT.
CAROLINE: U.S. LISTED SHARES OF TSMC. ADR'S FOLLOWING THE MARKET LOWER AFTER RALLYING HARD YESTERDAY. THE COMPANY POSTED SALES GROWTH, 42% ON AI DEMAND AHEAD OF U.S. TARIFFS. THE INVENTORY BUILDUP IS SO PLAIN TO SEE. PETER: WE DON'T HAVE ALL THE NUMBERS YET. WE HAVE THIS QUARTER. 42% IS STRONG. THEY BUMPED UP REVENUE.
$100 BILLION RUN RATE COMPANY, 42%. EXTRAORDINARY. WE FIND OUT NEXT WEEK EARNINGS. WE WILL FIGURE OUT HOW MUCH OF THIS IS INVENTORY. THERE IS PROBABLY STOCKPILING GOING ON. THEIR BIGGEST CUSTOMERS ARE
APPLE AND NVIDIA. THEY MAY BE ACCELERATING PURCHASES TO GET AHEAD OF TARIFFS SO CUSTOMERS DON'T HAVE TO PAY HIGHER THE NEXT FEW DAYS. ED: THE DATA IS ANALOGOUS WITH FRONTRUNNING TARIFFS IN THE SHORT-TERM. LONG-TERM TSMC PLEDGED BILLIONS TO BUILD CHIPS IN THIS COUNTRY. HAVE WE LEARNED ANYTHING MORE? PETER: THEY DIDN'T SAY ANYTHING AT THIS POINT. THEY PREVIOUSLY PLEDGED $65
BILLION. THEY SAID THEY WOULD ADD ANOTHER $100 MILLION. THEY WANT TO MAKE CHIPS IN THE U.S. TO DIVERSIFY GEOPOLITICALLY, PARTLY TO SERVE CUSTOMERS LIKE APPLE/NVIDIA/TESLA MORE EFFECTIVELY. THEY WILL AVOID TARIFFS THAT
THEY WILL GET HIT WITH. TSMC DOESN'T SELL MANY CHIPS DIRECTLY TO THE U.S. BUT VIA APPLE AND NVIDIA, THEY COULD GET HIT BY TARIFFS THAT GO THROUGH THEIR PRODUCTS. ED: THANKS. NEXT, MORE ON APPLE. STAY WITH US. ♪ CAROLINE: APPLE SHIPPED IPHONES FROM INDIA TO THE U.S. TO BEAT TRUMP'S TARIFFS. 600 TONS FROM INDIA. WHO KNOWS WHAT THEY WERE
SHIPPING ON JUMBO JETS FROM CHINA? ED: I CHECKED THE MATH SEVEN TIMES. AVERAGE WEIGHT OF AN IPHONE. LONG-TERM, CAN THEY BUILD OUTSIDE OF CHINA? IN THE U.S.? THROUGH NOSE? LET'S GET MORE. -- WHO KNOWS? LET'S GET MORE.
IN A WORLD WHERE THE IPHONE IS BUILT IN AMERICA, SOME SAID IT WOULD BE 90% MORE EXPENSIVE. >> I DON'T THINK IT WILL HAPPEN ANYTIME SOON. APPLE HAS OTHER OPTIONS BEFORE THE U.S..
IT'S UNREASONABLE TO THINK APPLE CAN SUCCESSFULLY BUILD IPHONES HERE. THE SHIPMENT FROM INDIA -- APPLE HAS THE OPPORTUNITY TO RETHINK HOW AND WHERE THEY BUILD IPHONES TARGETING THE U.S. MARKET. THEY COULD SHIFT FROM CHINA TO INDIA OR OTHER MANUFACTURING FACILITIES TO AVOID HARSHER TARIFFS CHINA IS FACED WITH TODAY. ALL OF THIS COULD CHANGE TOMORROW OR THIS AFTERNOON. CAROLINE: [LAUGHTER] OF COURSE. . MARGIN PRESSURE. HOW MUCH CAN THEY PASS ON TO STRESSED CONSUMERS? CAROLINA: TWO ASPECTS. ONE IS TO REMEMBER HOW STRONG
APPLE RELATIONSHIP WITH THEIR SUPPLIER/MANUFACTURER IS. THERE MAY BE A NEGOTIATING PART THERE. IT'S NOT JUST APPLE PASSING TO THE CONSUMER BUT APPLE TRADING WITH THEIR CHAIN TO SEE HOW BEST EVERYBODY CAN ARRIVE THIS WAY. AT THE END OF A DAY YOU WANT TO KEEP APPLE BUSINESS WITH YOU FOR A LONGER TIME.
CONSUMER, IT'S A CRITICAL MOMENT FOR APPLE IN THE U.S. WHEN IT COMES TO SERVICES AND APPLE INTELLIGENCE. THEY WILL WANT THE UPGRADE CYCLE TO CONTINUE. THEY MIGHT DECIDE IT IS WORTH SACRIFICING MARGINS SHORT-TERM TO HAVE MORE REVENUE COMING FROM SERVICES/INTELLIGENCE LONGER-TERM. ED: THE TRUMP TARIFFS ON CHINA ADD UP TO 145%. APPLE DECLINES ACCELERATING 5%.
NASDAQ 100 EVEN LOWER. AIRLIFT. HAVE YOU EVER SEEN NOT? CAROLINA: I HAVE NOT. IT IS SOMETHING NEW. IT COMES WITH THE VOLATILITY NOW. CAROLINE:
THE EXPERTISE AND CONTEXT. THANKS. COMING UP, MORE ON THE MARKET REACTION AS LOSSES ACCELERATE. NASDAQ OFF BY ANOTHER 4%.
♪ CAROLINE: WELCOME BACK, I'M CAROLINE HYDE IN NEW YORK. A QUICK CHECK ON THESE MARKETS BECAUSE WE ARE ACCELERATING OUR LOSSES, SUB 4% ON THE NASDAQ 100 AFTER A MONSTER RALLY YESTERDAY, THE BIGGEST GAME SINCE 2008. IS IT PROFIT-TAKING, TRYING TO UNDERSTAND CHINESE TARIFFS TO THE TUNE OF 140 5% WHAT THAT MEANS TO THE OVERALL RISK SENTIMENT. WE HOLD ABOVE 80,000 ON BITCOIN. INDIVIDUAL MOVERS, COMING UP IN TERMS OF ADRS TRADE. CHINA LOOKING TO IMPROVE STIMULUS LOCALLY PAID THAT MEANS E-COMMERCE PLAYERS SUCH AS THE DOMESTIC RELATED WILL BE DOING WELL.
FADING EVERMORE ON APPLE. BEST RALLY SINCE 1998 SINCE YESTERDAY WE ARE UP BY MORE THAN 5% AS TARIFFS IMPACT THAT. ANDY JASSY LOOKING INTO HIS INVESTOR AND SHAREHOLDER NOTE FOR BROADLY WORRIED ABOUT EXPOSURE. ED:
LET'S GET BACK TO THE TARIFF STORY. NOW TOTAL CHINESE IMPORTS AROUND 140 5%. KAILEY LEINZ WILL DO SOME MATH FOR ME BECAUSE I'VE LOST TRACK ON WHETHER THIS INCLUDES RECEPTACLES, AND HOW WE GOT TO 145%. KAILEY: THIS REALLY IS ABOUT MATH AND HOW THESE TARIFFS PLAY ARE ON TOP OF EACH OTHER AS THERE ARE DIFFERENT REGIMES THEY ARE SUBJECT TO.
AS PRESIDENT TRUMP MADE CLEAR HE HAS RAISED THE RECIPROCAL TARIFF RATE ON CHINA TO 125 PERCENT. THAT'S BEEN ESCALATED MULTIPLE TIMES DUE TO CHINA'S RETALIATION. THAT DID NOT INCLUDE THE 20% TARIFF YOU'D ALREADY PUT INTO PLACE ON CHINESE GOODS EARLIER THIS YEAR OVER THE TRADE OF FENTANYL. ADDING THAT 125 TO THAT 20% THAT WAS ALREADY EXISTING GUESSES TO THE TOTAL RATE OF 145%. THIS WAS THERE IN THE WHITE HOUSE FINE PRINT. IT'S DIFFICULT TO UNDERSTAND WITH THIS FAST-MOVING STORY HOW WILL THESE TARIFFS WORK IN TANDEM TOGETHER.
IT SEEMS IT'S A FIGURE THAT WAS HIGHER THAN THE PREVIOUS UNDERSTOOD IT TO BE. WHICH IS WHY WE ARE SEEING THINGS TAKE A TURN DESPITE THE FACT PRESIDENT TRUMP IN THE OVAL OFFICE SAID HE COULD NOT IMAGINE TAKING TARIFFS ON CHINA ANY FURTHER THAN HE ALREADY HAD BUT MAYBE PERHAPS THIS IS FURTHER THAN WAS PREVIOUSLY UNDERSTOOD KEEPING IN MIND CHINA HAS 84% RETALIATORY RATE ON U.S. GOODS IT REMAINS TO BE SEEN WHETHER THEY WILL ESCALATE THAT FURTHER AND WHETHER THEY ARE WILLING TO PICK UP THE PHONE AND TALK TO DONALD TRUMP, HE WANTS TO MAKE A DEAL, THINKS CHINA WANTS TO MAKE A DEAL. WE HAVE SEEN NO SIGN OF THAT AS THIS TRADE WAR ONLY SEEMS TO BE INTENSIFYING. ED:
KAILEY LEINZ OUT OF D.C., CHIEF MATHEMATICS CORRESPONDENT, THANK YOU VERY MUCH. LET'S GET BACK TO THE MARKETS REACTION. SPECIFICALLY IMPORT TARIFFS, CRAZY. RYAN WHO COVERS THE TECH SECTOR JOINS US. THE BIGGEST JUMP SINCE 1998,
TESLA SINCE 2013. THE QUESTION IS WHY. WHY THOSE LEVELS OF GAINS AND THE COOL DOWN THIS MORNING? >> THANKS FOR HAVING ME ON. YESTERDAY WAS A HUGE RELIEF RALLY. I'M SURE THERE WAS SOME SHORT COVERING, SOME ALGORITHMIC TRADING FEEDING INTO THE MASSIVE GAIN WE SAW YESTERDAY. ONCE THE DUST SETTLED A BIT PEOPLE REALIZED THE TARIFFS AGAINST CHINA WERE RAISED, THERE IS STILL A LOT OF UNCERTAINTY AND I THINK THE PAUSE IN ITSELF IS A SIGN OF HOW ERRATIC ALL THE POLICIES HAVE BEEN. THERE'S BEEN INTRODUCTIONS RETALIATIONS, ESCALATIONS NOW A PAUSE AND IT'S HARD TO KNOW WHAT THE NEXT STEP WILL BE.
IT'S HARD TO KNOW HOW TO POSITION OR UNDERSTAND WHAT THE ECONOMIC OUTLOOK MIGHT LOOK LIKE. CAROLINE: RYAN WITH THE ONGOING UNCERTAINTY NARRATIVE. LET'S TRY AND GET SOME CERTAINTY ON WHAT TO DO WITH THE PORTFOLIO NOW. YOU'VE ACTUALLY BEEN COMMITTED TO ADDING CERTAIN NAMES. TESLA BEING ONE OF THEM. WHY DO THAT WITH THE EXPOSURE
TO CHINA. >> THAT'S A GREAT QUESTION. WE WERE ADDING TO IT SINCE THE MARKET PEAKED BECAUSE IT GOT CLOBBERED AND IT WAS BELOW CURRENT LEVELS. THAT IS AN ONGOING CONCERN. WE OWNED THAT STOCK AND WE TALKED ABOUT AFTER CYBER CAB IN SOUTHERN CALIFORNIA BUT OWNED IT FOR THE MG BUSINESS AND AS AN AI PLAY. SO THE EV'S MATTER BUT I THINK IT'S ANALOGOUS TO APPLE EARLY DAYS WHEN WE WERE BUYING IT 2013, 2014. THE IPHONE WAS A MEANS TO THE
SERVICES BUSINESS. CAROLINE: INTERESTING TO BRING THE BROADER CONTEXT YOU CAN STILL HOLD ONTO THESE MOVES. NVIDIA ANOTHER ONE YOU'VE BEEN ADDING TO. MANY HAVE BEEN QUICK TO SAY EXPOSURE TO CHINA. SOME ANALYSTS ARE SAYING THIS
IS ONE OF OUR FAVORITE PICKS. THEY ARE PRETTY PROTECTED FROM THE BROADER TARIFF IMPACT. HOW ARE YOU LOOKING AT THAT NAME? NANCY: WE KNOW JENSEN HUANG THAT WITH THE PRESIDENT TO TRYING TO CARVE OUT. WE ARE LOOKING AT IT AS PART OF THE DAY DEEPSEEK CAME OUT WHICH WAS ANOTHER CHAOS SEEMED -- I SEEM TO ATTRACT IT. AND WHAT WE THOUGHT WAS SAID INCREASE THE USE CASE AND THE AVAILABILITY OF AI AS AN OPTION AND WE SAW THAT IN THE FOURTH QUARTER EARNINGS EVEN THOUGH THEY ARE BACKWARD LOOKING WE HEARD FROM CEOS HOW BROADLY THEY ARE USING IT ACROSS SECTORS. YOU HEARD SPOTIFY SAYING WE ARE NOT HIRING ANYBODY UNLESS YOU CAN PROVE THEIR JOB CAN BE DONE BY AI. I THINK NVIDIA IS THE CORE OF
THAT. MOST OF OUR INVESTMENTS HAVE BEEN ON THE SOFTWARE SIDE, WE SHIFTED TO SOFTWARE ABOUT FIVE OR SIX MONTHS AGO. BUT WE STILL LIKE THAT NAME. IT'S MUCH SMALLER HOLDING THAN BROADCOM WHICH WE CALL THE POOR MAN'S NVIDIA. WE DO LIKE TO ADD TO THAT
WEAKNESS AND IT GETS THESE PERIODS IT HAS HISTORICALLY PAID IF YOU'VE OWN TESLA SINCE THE IPO IT'S BEEN A BEAR MARKET WAS 50% OF THE TIME YET IT'S UP THOUSANDS OF PERCENT. SO YOU HAVE TO PICK YOUR SPOTS. BE SURE TO TRIM IN THESE VOLATILE NAMES AND THAT'S WHAT WE DID LAST SUMMER.
AND THEN WE ARE ADDING BACK IN. ED: IT'S ALWAYS GREAT HAVING YOU BACK ON THE SHOW. I DON'T THINK YOU ATTRACT CHAOS. YOU JUST INVEST IN THE AREAS THAT ATTRACT CHAOS, IT'S DIFFERENT. THERE ARE TWO NAMES YOU HAVEN'T DISCUSSED AND EVERY TIME YOU'RE ON THE SHOW YOU HAVEN'T DISCUSSED ONE IN PARTICULAR WHICH IS META-ALSO AMAZON. A REALLY INTERESTING POINT WHICH IS AMAZON HAS THIS DUAL MANDATE, IT IS A TECHNOLOGY STOCK AND A RETAIL STOCK PENDING ON HOW YOU LOOK AT IT LIKE A WALMART OR IT'S A CLOUD PROVIDER. NANCY: AMAZON WAS IN OUR FIVE FOR 25 AND IT'S A MEMBER OF OUR 12 BEST IDEAS PORTFOLIO AND THEN WE OWN IT IN OUR GROWTH STRATEGY. I THINK IT'S A DEFENSIVE
TECHNOLOGY NAME THAT YOU CAN BE ADDING TO AND WE HAVE DONE THAT. BUT I WROTE MY NOTES A COUPLE DAYS AGO AND WE'VE ADDED TO IT SINCE THEN, SO I THINK IT IS AN IMPORTANT THING TO OWN, OUR POSTER CHILD FOR INVESTING THEME OLD ECONOMY COMPANIES THAT HAVE PIVOTED TO THE NEW TECHNOLOGIES IS WALMART. YOU SAW THEM CONFIRM THEIR ANNUAL GUIDANCE AND THEN ANDY JASSY CAME OUT AND SAID WHAT JAMIE DIMON SAID, WE ARE CUTTING COSTS. WE ARE GOING TO OUR MANAGEMENT TEAMS AND SAYING WHERE CAN WE SAVE MONEY.
THAT'S A WELL-MANAGED COMPANY AND IN ALL WEATHER STOP -- STOCK. WE BOUGHT SPOTIFY. I WAS BEATING MYSELF UP UNTIL I LOOKED AT THE RELATIVE PERFORMANCE SINCE WE'VE DONE THAT AND WE'VE DONE MUCH BETTER IN SPOTIFY THOUGH I THINK META-IS A NAME YOU CAN EASILY OWN AGAIN AND ADD TO THIS WEEK -- THIS WEAKER ENVIRONMENT. THAT SAID THE AD REVENUE FOR AMAZON IS PROJECTED TO GO DOWN HALF AS MUCH AS MEADOWS IF THIS ALL CONTINUES.
I THINK AMAZON IS THE BETTER PLAYER FROM HERE AND THAT'S WHERE WE'VE BEEN PUTTING OUR MONEY TO WORK. SPOTIFY NETFLIX EARNINGS WE THINK WILL HOLD UP IN A LOW GROWTH POTENTIALLY RECESSIONARY ENVIRONMENT, THOUGH GOLDMAN WITHDREW THEIR RECESSION FORECASTS. MAYBE WE ARE JUST GOING SLOW GROWTH. ED: HOW DO YOU ASSESS COMMUNICATION FROM POLICYMAKERS OVER THE LAST FIVE DAYS. NANCY: IT HAS BEEN HORRIFIC.
I HAVE BEEN AT THIS FOR OVER 40 YEARS AND I HAVE NEVER SEEN A MORE BOTCHED POLICY ROLLOUT THAN THIS. I THINK IT DID A LOT OF DAMAGE TO THE ADMINISTRATION. I KNOW YESTERDAY WE GOT THE DECLARATION THIS WAS INTENDED ALL ALONG AND YOU DON'T UNDERSTAND THE ART OF THE DEAL AND THEN BILL ACKMAN SAID THIS WAS EXECUTED PERFECTLY BY THE PRESIDENT WHICH MAKES ME THINK HE WAS SELLING YESTERDAY. BUT I THINK IT'S BEEN HORRIBLE. YOU ARE SEEING MORE AND MORE SCOTT BESSENT AND KEVIN HASSETT AND I THINK THAT WILL BENEFIT THE ADMINISTRATION, THOUGH THEIR MESSAGE HAS BEEN IMPERFECT AS WELL. IT MAKES NO SENSE FROM AN
ECONOMIC STANDPOINT. 10% TARIFF WHICH KIND OF ACT LIKE A FLAT TAX AND STOP DISTORTING BEHAVIOR, BUT RIGHT NOW IF YOU THINK ABOUT FACTORY BUILD WE ARE UP THE LAST THREE YEARS IT HAS EXPLODED AND IT CONTINUED IN THE FIRST TWO MONTHS OF THIS YEAR. WE ARE HEARING NEW FACTORIES PUT ON HOLD. THAT'S WHAT HAPPENS WHEN YOU DISTORT POLICY. CAROLINE: HOW ARE THEY ABOUT REMAINING
COMMITTED TO FUNDS EXPOSED TO EQUITIES. NANCY: WE SPENT A LOT OF TIME DOING WEBINARS WITH OUR CLIENTS AND SINCE THE MARKET PEAKED. THERE WAS ALREADY A SHARP CORRECTION GOING ON. CAROLINE: THIS WHOLE DEEPSEEK WAS THE MAG SEVEN PROBLEM. DO YOU AGREE WITH SCOTT BESSENT? NANCY: I THINK THAT WAS ALSO RIDICULOUS. THAT'S WHEN IT STARTED, THAT SORT OF FRANTIC MESS.
NO OF COURSE NOT. I THINK THAT'S WHERE THESE GUYS ARE LOSING CREDIBILITY BECAUSE GUYS WHO DO THIS FOR A LIVING LOOK AND SAY THAT'S NOT WHAT IT WAS PRETTY CAROLINE: SCOTT BESSENT USED TO DO THAT FOR A LIVING. NANCY: AND TOOK A HARD STANCE ON MANY ISSUES. WHEN YOU GO TO AN ADMINISTRATION YOUR JOB IS TO BE AN ADVOCATE FOR THE POLICY PROJECT. PROJECTED WHICH IS WHY WE'LL NEVER BE IN POLITICS. OUR CLIENTS ARE PRETTY MEASURED. I GOT CALLS YESTERDAY SHOULD I ADD MORE MONEY.
IT IS LIKE NO, LET'S WAIT. BUT MOSTLY WE HAVE SEEN FLOWS IN. NOT MOSTLY, 100%. ED: GOOD TO HAVE YOU BACK WITH US, THANK YOU.
META-FACES BACKLASH FROM WHISTLEBLOWER TESTIMONY TO CONGRESS AND PREPARES TO FIGHT THE FTC ON ANTITRUST ALLEGATIONS. MORE ON THE SOCIAL MEDIA GIANTS BATTLES NEXT, THIS IS "BLOOMBERG TECHNOLOGY." ♪ >> YOU ARE LOOKING AT A LIVE SHOT OF THE PRINCIPAL ROOM.
CHECK OUT THE BLOOMBERG TECHNOLOGY PODCAST. AS WELL AS ONLINE ON APPLE SPOTIFY AND I HEART. THIS IS BLOOMBERG. CAROLINE: QUICK CHECK ON THESE MARKETS, THE LOSSES ARE ACCELERATING PAID OFF BY MORE THAN 4% ACROSS THE S&P AND THE NASDAQ WE WIPE OFF A THIRD OF YESTERDAY'S GAINS. THE POINTS DRAGS WHEN THERE'S ONLY SIX OR SEVEN NAMES IN THE GREEN ON THE NASDAQ 100 EVERYTHING ELSE IN THE RED. BOOKING HOLDINGS IS A KEY POINT DRAG. BUT SO TOO IS META-AND LET'S
JUST TALK ABOUT META-AND SOCIAL MEDIA MORE. THE EU'S GOVERNING RULES ON DIGITAL PLATFORMS SHOULDN'T BE CONSIDERED TRADE BARRIERS WITH THE UNITED STATES THAT'S ALL THE COURT INTO THE EU DIGITAL CHIEF. SPEAKING WITH OLIVER CROOK THE DIGITAL CHIEF REALLY OUTLINE HOW THE EU RULES ARE FAIR FOR EVERYONE. >> THESE ARE THE SAME RULES FOR EVERYBODY SO THEY ARE NOT LIKE TRADE RULES, WHEN WE -- WE KNOW WE HAVE SAME RULES FOR ALL THE COMPANIES. SO FOR THE EUROPEAN COMPANIES AND CHINESE OR U.S. COMPANIES, IT IS FAIR FOR EVERYBODY AND THESE ARE NOT CREATING TRADE BARRIERS.
>> WE'VE BEEN EXPECTING SOME DECISIONS SPECIFICALLY ON META-AND ASK. IS THERE A DELAY THAT DUE TO THE PRESSURE BEING PUT BY THE TRUMP ADMINISTRATION, WHEN CAN WE EXPECT PROGRESS? >> WE HAVE SEVERAL INVESTIGATIONS, AND OF COURSE WE ARE ENFORCING THE RULES RESPECTING ALSO THE DUE PROCESS SO AND THEY ARE ALWAYS WHEN WE ARE DOING INVESTIGATIONS THE MAIN PURPOSE IS ALSO THAT THE ONLINE PLATFORMS THEY ARE COMPLYING WITH OUR RULES AND OFTEN THIS IS THE CASE. DURING INVESTIGATIONS THEY ARE ALSO CHASING THEIR BEHAVIOR AND THAT'S WHAT WE WANT, THAT THEY ARE ASKED -- RESPECTING OUR RULES. OLIVER: WHAT WOULD YOU LIKE, WHAT IS
THE ENDGAME, WHAT WOULD YOU LIKE X TO LOOK LIKE? >> WHAT WE ARE SAYING IS VERY MUCH THE ONLINE PLATFORMS HAVE TO PROCESS HOW THEY ARE ASSESSING AND MITIGATING THE SYSTEMATIC RISKS THEY ARE POSING FOR CIVIC DISCOURSE FOR PROCESSES AND WELL-BEING. AND ALSO THAT THEY ARE TRANSPARENT WITH THAT SO THAT THE USERS KNOW CERTAIN CONTENT IS SHOWN FOR THEM AND THEY ALSO HAVE CHOICES ON HOW TO CHASE ALL SORTS OF RECOMMENDS. OLIVER: I WOULD LIKE TO GET YOUR IDEA OF THE CHANNEL OF COMMUNICATION. HAVE YOU SPOKEN TO ELON MUSK, TO MARK ZUCKERBERG? WHO HAVE YOU SPOKEN TO? HENNA: NORMALLY IT'S OUR COMMISSION'S TECHNICAL TEAM WORKING WITH THOSE PLATFORMS WITH THEIR LAWYERS AND THAT IS ALL THE DIALOGUE WE HAVE GOING ON. WHEN WE ARE ENFORCING THE RULES IT'S NOT ONLY DURING INVESTIGATIONS WE HAVE SEVERAL PARTS SO WE HAVE DIALOGUE WITH ONLINE PLATFORMS. SPECIFICALLY DONE BY OUR SERVICES AND THEN
WE HAVE A DIFFERENT CODE OF CONDUCT WE ARE PREPARING DIFFERENT GUIDELINES PAID ONLINE PLATFORMS, THERE ARE SEVERAL PARTS HOW WE ARE IMPLEMENTING AND ENFORCING THE RULES. ED: THAT WAS THE EU DIGITAL CHIEF SPEAKING WITH OLIVER CROOK. META-IS FACING CONGRESSIONAL CRITICISM OVER ITS DEALING WITH CHINA FOLLOWING WHISTLEBLOWER TESTIMONY YESTERDAY.
THE PRINCIPAL ACCUSATION IS THAT MEADOW WAS BRIEFING AS EARLY AS 2015 BUT READING YOUR STORY IT'S MORE ABOUT THE REACTION AND THEORY. >> INFECTED THINK THIS CONGRESSIONAL HEARING ENDED UP BEING AN OPPORTUNITY FOR MEMBERS OF CONGRESS ON BOTH SIDES OF THE AISLE TO TAKE AIM AT MARK ZUCKERBERG. THEY CALLED HIM INAUTHENTIC AND DISINGENUOUS. EVEN REPUBLICANS WERE QUESTIONING HIS MAGA-F ICATION IF YOU WILL, OF THE COMMENTS ON JOE ROGAN TO SUGGEST HE'S ALIGNED WITH TRUMP'S AGENDA. THIS PROVED TO BE A BLASTING OF ZUCKERBERG AND ONE THAT WE IMAGINE WILL CONTINUE WHEN THEY SAY THEY WILL CALL HIM TO CONGRESS.
>> HE'S ALSO POTENTIALLY GOING TO BE SPEAKING BECAUSE OF THE FTC INVESTIGATION AS WELL, THIS IS NOT A GREAT TIME TO HAVE FEDERAL LEADERS SEEMINGLY NOT BEHIND YOU PARTICULARLY WHEN THEY WILL BE QUESTIONING THE PURCHASE OF WHATSAPP, INSTAGRAM AND BREAKING THIS COMPANY APART. >> BEGINNING ON MONDAY WE WILL SEE PERHAPS THE MOST EXISTENTIAL THREAT TO THE COMPANY BEGIN WITH THE FTC TRIAL. SO YOU'VE GOT THE THREAT FROM REGULATORS, LAWMAKERS AND THAT PRESSURES FROM EUROPE AS YOU POSTED IN THAT VIDEO. >> ONE OF THE CONTRIBUTOR SO THE DOWNSIDE. THANKS SO MUCH KEEPING US UP TO SPEED. WE WILL BE DIGGING INTO SOME OTHER NEWS OR ST MICRO CUTTING AS MANY AS 2800 WORKERS OVER THE NEXT THREE YEARS.
THIS IS BLOOMBERG TECHNOLOGY. ♪ ED: FIRST UP ST MICRO ANNOUNCED PLANS TO CUT HIS MANY AS 2800 JOBS OVER THREE YEARS IN AN EFFORT TO INCREASE EFFICIENCY AND AUTOMATION THOUGH THERE WAS NO MENTION OF TARIFFS, THE SEMICONDUCTOR MANUFACTURER SAYS THE LATEST COST-CUTTING EFFORTS WILL RESHAPE THEIR MANUFACTURING AND RESIZE GLOBAL COST BASE. THE COMPANY'S SUPERVISORY BOARD IS OFFICIALLY BACKED ITS CEO JUST ONE DAY AFTER THE ITALIAN GOVERNMENT PUBLICLY WITHDREW THEIR SUPPORT OVER TOP MANAGEMENT. PLUS AMAZON EQUIP SOME OF ITS
DELIVERY IN EUROPE WITH DEFIBRILLATORS TO HELP SPEED UP A TO HEART ATTACK VICTIMS. CALLED PROJECT PULSE THE IT PROMPTED DRIVERS AND WOULD RECEIVE ALERTS FROM CITIZEN RESPONDER APPS. AMAZON CONCLUDED AFTER SEVERAL MONTHS AND IS EVALUATING FEEDBACK ON FEATURE OPPORTUNITIES. TESLA SHOWROOM IN SAUDI ARABIA THE LATEST SIGN ELON MUSK HAS BEEN BEHIND A BITTER FEUD WITH ONE OF THE KINGDOM'S MOST POWERFUL MEN. EXPECTED TO SHOWCASE ITS VEHICLE LINEUP ALONGSIDE THE CYBER CAP AND ROBOT. TESLA'S ENTRY INTO SAUDI ARABIA MARKS A SIGN OF GOODWILL TOWARDS THE SAUDI'S AND A POTENTIAL GROWTH MARKET FOR THE COMPANY. CAROLINE: LET'S RETURN TO AMAZON BECAUSE
IT ALSO RELEASED ITS ANNUAL LETTER TO SHAREHOLDERS THIS MORNING. CEO ANDY JASSY ACKNOWLEDGING LATER DISCUSSING THAT SELLERS COULD BE PASSING ON SOME TARIFF COSTS TO CUSTOMERS. FOR MORE WE ARE JOINED BY TOM. IT'S TO THE LETTER. REALLY TRYING TO SHOW THE AI
DEMAND IS STILL THERE AND THEY ARE TRYING TO BE MORE AGILE WITH IT. >> THEY WANT TO BE LIKE A START UP, THEY WANT TO BE FIRM, THEY WANT TO BE AGILE AND WHAT AMAZON, ONE OF THE SAYINGS THAT AMAZON IS ALWAYS DAY ONE. REMEMBER WHAT IT'S LIKE WHEN YOU ARE A NEW BUSINESS AND A NEW COMPANY YOU ARE JUST STARTING OUT AND THE WORLD IS YOUR MOISTURE.
AND THAT IS SOMETHING THAT JASSY HAS WORRIED ABOUT AMAZON EMPLOYEES LOSING OVER THE LAST COUPLE OF YEARS. THAT'S WHY HE SAID THEY ALL HAVE TO COME BACK AFTER COVID, AFTER PEOPLE WORKING FROM HOME, PEOPLE ARE LOSING THAT SENSE, CULTURE IS EXTREMELY IMPORTANT TO AMAZON AND HE WANTS THEM TO GET THAT STARTUP MENTALITY WHICH IS SO IMPORTANT FOR THESE COMPANIES. ED: I WANT TO QUICKLY GO TO THE CONVERSATION CAROLINE HAD WITH ANDY JASSY EARLIER IN THE YEAR BECAUSE IT'S ALL ABOUT CAPEX. LISTEN TO THIS. CAROLINE: YOU DID SAY $100 BILLION RUNWAY FOR CAPEX EXPENDITURE. CAN YOU GIVE US A PERCENTAGE RATE OF HOW MUCH THAT GOES TO DISTRIBUTION LOGISTICS AND TO AI. ANDY:
THE LION SHARE THE MOST OF IT. THE LION SHARE IS THAN 50%. CAROLINE: IS IT MORE THAN 80%. ED: NO CLUES IN THE LETTER ABOUT CAPEX EXPERT EARNINGS ISN'T FAR AWAY. I THINK THIS IS THE HERE AND NOW WHAT PEOPLE CARE ABOUT. TOM: WE ARE SEEING THAT IN THE MARKETS, WITH THE WAYS THAT STOCKS INCLUDING AMAZON ARE GETTING WHIPSAWED. HINTING AT THAT IN AN INTERVIEW
WITH ANOTHER NETWORK TALKING ABOUT HOW THERE IS AN EXPECTATION THAT SOME OF THEIR SELLERS ARE GOING TO PASS PRICES. TARIFFS ON TO THEIR CUSTOMERS. THEY RECEIVE A LOT OF INVENTORY, THERE'S A LOT OF PRODUCTS AND SELLERS WHO ARE CHINA-BASED OR CHINA AFFILIATED. IF THAT TARIFF STAYS WHERE IT IS , THAT IS ABSOLUTELY GOING TO AFFECT AMAZON'S ABILITY TO COMPETE WITH OTHER ONLINE SELLERS. ESPECIALLY IF THOSE SELLERS ARE ABLE TO DIVERSIFY THE SUPPLY CHAIN AND GET THOSE PRODUCTS FROM SOMEWHERE ELSE. A LOT OF IT IS MADE IN CHINA SO
A LOT OF COMPANIES WILL BE AFFECTED EQUALLY IN MANY WAYS AMAZON WILL DO WHAT IT CAN TO KEEP PRICES LOW. BUT THERE'S NO WAY THAT THOSE PRICES WILL NOT BE PASSED ON IN SOME WAY TO END USERS. CAROLINE: EVEN AS BLOOMBERG SHOWING THEY BEEN CHANGING THAT UP IN RESPONSE TO ALL OF THIS. TOM GILES WHO FLEW IN ON THE REDEYE, WHAT A HERO. THANK YOU FOR BEING HERE IN NEW YORK. THAT DOES IT FOR THIS
ADDITIONAL BLOOMBERG TECHNOLOGY. THESE MARKETS WITH SIGN ONCE AGAIN. >> YOU PUT IT RIGHT EARLIER. IT'S A THIRD BACK WHAT WE GAINED YESTERDAY. THEY'RE IS STILL CONCERN ABOUT TARIFFS. A 90% MARKETS EUPHORIA LAST NIGHT READ EVERYONE'S TAKEN A
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