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Let's get back to the trade story, which remains front and center here. It seems like we're in a period where negotiations are happening between the Trump administration and a number of different countries over a number of different teriff measures here. So it's important to try to stay on top of kind of where we are, and we have a good team doing that. Brenda Murray joins US Global
Trade editor for Bloomberg News. He's in London, Brendan, it seems like the president over the next several weeks, is it fair to expect that we'll get some announcements on trade deals with some of our major trading partners.
Yeah, well, it depends on what you mean by a deal to say that we're likely to get a number of announcements laying out the path for talks for an eventual deal. Trade deals are very complicated. They take a long time to hammer out and to get anything meaningful, it's going to take a lot of time. But what you could see are some sort of interim proposals, interim agreements that would would set the US and the trading
partner on that course. Some of those who are sort of have an early lead would be India, South Korea, Japan. These are big export economies that the US wants to trade more with to reduce the tariff and non tariff barriers that they have with the US economy. So we could see we could see some action along those lines.
But again, to expect anything major, anything fundamentally changing the picture of the US trade imbalances like Donald Trump would like to see, is probably a bit of wishful thinking.
Now, Bertie, you said Treasury Secretary Scott bet And said, the administration working on them by lateral trade deal with seventeen key partners, but not including China. So where does China stand in all this?
Yeah, well this is the big you know, this is the big This is the big prize, right, is some sort of deal with China. And if if the US and China aren't even talking and by all accounts according to that they've not really having any sort of formal discussions that would lead in the right direction toward a formal sit down discussion that you know, you're leaving out a big part of the imbalance, the big, you know,
the biggest imbalance that the US has. So you can talk trade deals with Japan and South Korea and India and other countries, but the real prize is that Donald Trump wants is a trade deal with China, and so far they're going nowhere.
I'm that, you know, David Rosenberg, a frequent guest on Bloomberg Surveillance formerly Merrill Lynch. He's and he's a Canadian, and out with a tweet saying basically, hey, everybody, I know you're focused on China, but you need to figure out something with Canada because Canada is the big trading partner with the US, as is Mexico.
Where do we stand. Do you think with Canada and Mexico?
Yeah, well, the Canadians don't sound like they're of course they're in there. You know, they're in the middle of an election right now, and they don't they don't sound like they're in any big hurry to do a deal. The Prime Minister Mark Karney said the other day we'd rather have a good deal rather than a fast deal. So we'll see how that election plays out. That could that could dictate the course of of of any negotiations. But you know, in the meantime, the Canadian economy is
going to suffer. American auto companies are going to suffer because they rely so much on Canadian suppliers. So you could look for a lot more disruption the longer that drags out with the cloud of uncertainty hanging over it, as it has for several weeks.
And but what about the big company. Let's say Walmarts and Targets are retailers. They have to replenish their inventories. Where do they stand in all this?
Yeah, so this is a big story we have out today is that retailers like Walmart and Target, the big ones and small companies are looking at those one hundred and forty five percent tariffs on goods from China and saying, we can't do that, we can't afford that. That's twice, well more than twice what we could pay. So we're just canceling orders from China. And so what we're seeing is in a couple of weeks when those orders would have already gotten here. We're going to see volumes through
US ports go down. We're going to see inventories through warehouses go down, and in the big retailers have even said privately to President Trump, according to our reporting, that you know, this could be this could mean shortages and price hikes. So the wave of decoupling that is underway between China and the US hasn't really hit the real economy. Right now, we hear the administration say, oh, well, you know, Wall Street has had a good run. It's time for
us to focus on Main Street. We'll main streets about ready to get hit with some of this, and unless things change fast, then we're going to start seeing it in in a lot of in some layoffs in in industries like trucking and logistics and warehousing where really the rubber meets the road between trade and the US economy.
Are we past the point of no return?
Brendan, in terms of some of the economic damage that could be done, you know, in terms of supply chain not getting the stuff that we typically get.
Well in the short in the short run.
If President Trump announced later today that which nobody would expect this, that he was he was freezing all tariffs and we were gonna this was gonna be he was going to try to do this another way. If he kind of backpedaled on everything, we'd still have a supply whiplash. All those canceled orders would be placed again, and we would have, you know, the volumes surging through US ports. And we saw during the pandemic what happens when when the the nodes of of supply change get bogged down.
Is we had one hundred and twenty ships parked outside the port of Long Beach in Los Angeles. So that's the kind of thing. Most people don't think it's going to happen on that kind of scale, but the system can't handle big declines or surges in volumes, and that's what we're looking at over the next several weeks or a few months.
All right, Brendan, thank you so much for joining us Avius. Appreciate getting your reporting. That's Brendan Murray, a Global trade editor for Bloomberg News joining us from London. And again there's some reporting out of Bloomberg and others over the weekend, just simply the volume of ships leaving Chinese ports setting sail for presumably the west coast of the US, and we often talk to Gene Soroca, who runs the Port
of Los Angeles on Long Beach. We'll search to get back in touch with them in the next couple of days. But some of those sailings have declined dramatically just in the last couple of weeks. So perhaps that's reflecting what was Brendan was suggesting, was maybe some canceled orders from some US wholesalers and retailers.
Will stay on top of that story.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Applecarclay, and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
All right, big earnings week out there for the S ANDP five hundred. We have twenty trillion dollars in market cap.
It's going to report earnings this week. That is big. We had about eleven billion last week.
And some of the big companies that can report and are the technology companies, and you really want to get a handle on kind of how they're.
Viewing the world these days. So we asked a couple of the smart folks that we know to to join us here.
Anurag Rana Man Deep singing their senior technology channels for Bloomberg Intelligence. Honra joins us from Chicago, and Mandeep is in our Bloomberg Interactive Brokers studio Man Deal.
Let me start with you here.
I mean, just given what you've heard so far from some of the big tech companies and what you expect this week, how is how are some of the companies, these big technology companies, which had been real drivers for the stock market, how are they kind of saying they're seeing the world out there these days?
Yeah?
I think in the case of Meta, I mean clearly they are exposed to the deminimous rule where companies in China can't really ship any products below eight hundred dollars anymore. And that was a big driver of ad spending from Timu and Chain and some of these advertisers. So that's going to impact Meta. We saw in the case of Alphabet, the click ads grew only two percent, the pricing was
relatively stable. So I think in the case of Meta, the ad pricing may come under more pressure compared to an alphabet, and the ad impressions may be better than alphabet. So because of the FTC case against Meta and similarly for Alphabet. These companies have regulatory pressures as well, but there is no doubt that the macro environment has changed
for the worse. And I don't see, you know, even though the impact would show up more in two Q, I don't see how they guide better than they did in the fourth quarter.
What about AI spend? How much of an impact is that going to have? Are the investors going to be looking to that?
So Meta raised their CAPEX the last time they reported to sixty five billion, and in between there was news that Meta is looking for an Amazon and Microsoft to share some of that capex because they have an open source model. So I think they're under pressure to kind of cut back on the CAPEX or the reality lab spend. But so far no one has pulled back on AI capex given you are still in a supply constrained environment when it comes to the GPUs and overall AI infrastructure.
So it'll be interesting to see what they end up doing.
Hey, Anurag, you know, I kind of think with even within technology, which is such a great growth story and can batter some slowdowns, I think of the software companies that you cover is kind of maybe one of the safer places to be within technology. What do you expect to hear from the Microsoft's of the world.
Yes, you know, on a relative basis, I think you're right about that. But at the same time, they do have an impact on the second degree demand. If the enterprise text spending starts to cut down, you know, that has an impact on software space as well. So so
that's the something we will be looking for. But I would agree with Mandib that we are not anticipating a drop in capex either from Microsoft or AWS later this week, because that those are the names that dictate a lot in terms of, you know, how AI spend will shape up over the next twelve months.
Where within the text act on a route do you think you could see maybe some of the biggest exposure to I guess just tariffs and maybe a slowing global economy.
Yeah, so Apple is going to be in front and center over there. There's so much news about you know, their ability to move the supply chain that's not that easy. We do anticipate some pull forward and demand for them. We know the you know, Apple stores were really crowded before the tariff date, and you know that that will
show up in some of the numbers. But the question is going to be what kind of guidance can they give, and in fact, if they can even give guidance at this point, and you know, how if there is a big number that goes up on tatifs can they even fulfill the demand. So there's going to be a lot of noise around that supply chain and what they're doing to offset that, both in the near term and in the long term.
And the other big story for today IBM planning to invest one hundred and fifty billion in the US over the next five years. Mandy, can you break it down for us? What does that include? That's a pretty big number.
Yeah, I mean, look in the case of five AM, they are not a big spender on AI capex, so clearly, you know, they are looking to expand in terms of their own investments, whether it's mainframe related or any other type of R and D around quantum. But we've heard that from Apple, you know, five hundred billion dollars over the next four years. So a lot of these tech companies are looking to appease the administration, which is keen
to you know, bring manufacturing back. Interesting to see where IBM sort of thinks about investing the one hundred and fifty billion dollars because, as I said, they're not a big player when it comes to the AI infrastructure play that the other hyperscalers are involved in.
Hey, an er, guessin you remember a lot of the CEOs that you and man deep cover making their way to Washington, DC over the last three four months having meetings with the President members of administration. Is there a sense that they're getting the benefit of that or is it having any impact because I'm not sure I see that.
Well. One could argue that, you know, the smartphone exemptions that we got or the consumer electronics may have had something to do with it. But we'll find out if that can continue or not. But you know, frankly speaking, these companies are the ones that are really putting us at the forefront. I will be very surprised if we see a much more hostile behavior against them. The big question is Hasmond you mentioned there are a few antitrust
cases going across them right now. For a bunch of these companies, we'll find out how the administration takes over or you know, puts their credibility or the backing behind those deals.
Man, if you mentioned before quantum computing when we were talking about IBM, I mean, are we going to be hearing more and more of that come in the future, because we've been hearing so much about AI. But is quantum kind of going to move forward?
I think at this point, you know, given the macro environment we are in, I would focus more on what the companies think, as you know, monetizable in the near term.
Quantum would be further out. At the same time, I mean, could you know one to two percent of those CAPEX dollars go into quantum, Yes, but the big chunk would still be allocated towards AI and you know, specifically inferencing, because everyone seems to be quite bullish about the type of use cases that are emerging around AI agents and what it means for the overall enterprises.
All Right, fellows, thank you so much for joining us. Always appreciate getting you guys, particularly when we get you guys together on rog Rana. Man deep seeing there to two folks that kind of run our global technology research effort at Bloomberg Intelligence, and like you have to do. Technology is a global business. Therefore you need to have expertise on the ground all around the world, and we
do Asia, Europe, North America. We've got it covered for you, and man Deep and on rog run that business for us. We appreciate getting a couple of minutes of their time. It's gonna be a big week for earnings continued big week for technology companies to what extent is their business be impacted by some of the economic uncertainty that may be building out there as a result of maybe some
uncertain tariff policy issues. So we'll see how that plays out this week when you get more again twenty trillion dollars in market cap those companies reporting this week.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecarcklay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your or watch us live on YouTube.
And we've got a lot of economic data, and maybe the question is when are we can start seeing some of the uncertainty in some of the economic data, whether it's GDP or inflation.
And that kind of thing. So we got attention to that.
So if you're a professional money manager, there's plenty to keep you busy. Kim Farest, founder and chief investment officer Bouque Capital Partners Joints this year, Kim, kind of with that set up, what do you think is driving socks here? Do we earnings or some of this bigger I guess economic data issues or is it just what comes out of the Twitter account or ex account or of a certain president.
I think all of the above. But here's what I've learned from doing this for the past. I can't believe that twenty six years of looking at markets is in a given day they can really only process one or two ideas. I kid you not. If you go back to what happened on Friday, you can suss out what what drove the market? What was and you look at the stocks, and you look at the data that comes out and you go, Aha, this is what drove the market.
So I'm going to make a bold prediction that the thing that drove the markets last year clearly was in Nvidia and the AI trade. And this week we're going to get a little bit more information on whether or not the AI trade is dead, and I think the answer is no, because we got a sneak peek from
what happened on Thursday. I think it was Thursday. Every day seems like a lifetime anyhow with Google, and Google reiterated that they are going to continue spending on their AI build out, and so we expect Microsoft, Meta, and Amazon to all say the same thing.
It's actually a very good point. And Kim, I've been asking the question all morning are we going to see more cost cuts? Because there was a story in the Wall Street Journal that said corporate CEOs are like saying the market version of the serenity prayer right now. Costs are the only thing that they can really control, and in the face of total uncertainty, that's the lever they're pulling.
But I was talking with Gargey chow Duri of Blackrock this morning and she said, well, you know what, Google didn't cut its capex, so maybe we won't see cutting capex from the other hyperscalers. And that's really what's driving this market, is that AI trade that that you know,
we obviously saw so big last year. What about other companies though, Kim, are you worried that we're going to start seeing especially smaller companies start to fire our employees, start to you know, close down stores, start to reduce costs wherever they can.
So the answer is always yes, right for the troubled, like Macy's is going to close a store in this I don't know how big. It was a huge, huge mall and there's only three things it now maybe four if you consider the collectibles shop that's in there as well.
That's amazing business. That's like something it really doesn't.
But that's I'm painting this right. Joanne Fabrics pulled the plug there, but we've got Macy's that is now going to pull the plug. Dick's Sporting Goods is going to pull the plug. But the township of Frasier has its township building in that building. But it's massive. It is the hugest, most empty building I've ever seen in my entire life. But that is what we get is companies that aren't succeeding are going to reshuffle the decks.
Now Dixon is.
Doing pretty well, but in that mall, nobody's going to the mall. They're going to move somewhere else, no kidding. So that goes on all the time. But the I would even say smaller companies that are successful are not going to just indiscriminately higher. What companies do have right now is technology that tells them what the pipeline is doing in real time. Most even small companies have a CRM system where they can see what demand looks like. And I think that is going to drive things, not tweets,
not you know, headlines. It's going to be what's happening with our business. And if your business is sick, you're going to make some.
Cuts, Kim. I mean looking at the S and P.
I made the comment earlier that depends on kind of your glass half end to your half full kind of person that you know. The the bad news is that the S and p's down, you know, ten percent roughly from.
Its peak earlier this year.
The good news is that it's up ten percent from the bottom. How do you view kind of the what's going on out there in the stock market generally, Well.
Again, I'm kind of a mathematician, that's my basic training was That's what I graduated with a degree in that and computer science. So I like to take apart the pieces of the S and P. And if I look at what was driving the S and P last year and pretty much through the end of the year was the AI trade. So that's the big mag seven. I was going to call them the Big seven mag seven
and then you know, especially in Vidia. Now Nvidia has come down a lot, right, yeah, yeah, so that is overweight in the S and P or it was really overweight in the S and P five hundred calculation. So you have to look at that, and if you look at the rest of the S and P five hundred, they're really not going all that up or down. Right that most of that dip down and dip back up was the Magnificent seven and that was the blessing last
year and it's the curse this year. So you index buyers are just going to have to put.
Up with that.
It's actually at one point it was down thirty seven percent, peaked to trough, you know, with the peak being like the very beginning of January and the trough being two weeks ago. We've had a pretty powerful rally though over the past four days. Today it's you know, looking not looking like it's gonna continue.
But we had.
The Swig Breadth Thrust indicator triggered for at least the eighteenth I've seen three different estimates of how many times have been triggered since nineteen forty three, but it's been at least eighteen times, and each of those eighteen times, KIM, It's resulted in double digit gains on average, like fifteen percent six months out and twenty five percent twelve months out.
Do you put any trust into the swig breadth thrust indicator, which basically just says NYC stocks only, I think forty percent of them were at new highs, and then within ten days sixty one and a half.
Percent of them were at new hives. Totally clear.
Yeah, so I'm going to use one of my favorite phrases that I think irritate people. That's interesting but irrelevant because the truth is a lot. And remember, I'm a math person. I used to be an AI person, which is math. I love math, but it tells me what happened in the past, not what's going to happen in the future. And there's so much that can happen in the future, like deals, tariff deals signed not signed, wars
not wars, you know, just everyday life. That doesn't necessarily let you with assurance know what's going to happen to your stocks in the future. So I'm I'm cheered by this. If that happens, go whatever, indicator, But I'm not gonna you know, run my money based on it.
I was excited last week about It's the swig Martin Swig and the swag breadth thrust indicators.
All right, put that out on social media. I'm sure that I got a lot of hits. Kim Forrest, thank you so much for joining us. Chimis founder and chief investment officer of Bouquet Capital Partners.
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