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Let's go a little technology here.
You're thinking about some of the big tech names and how are they going to deal in the world where tariffs are going to be higher on a global scalue.
Think about some of these big tech.
Firms and they sell their hardware and software and services everywhere, so they are truly global rok Rana joints as Bloomberg Intelligence Technology and US. What's the tech call in a higher tariff world on roun.
Oh, it's so bad right now. I mean, look at Apple. I mean it's really surprising that Datchain. You know, they rocked up so much on China. Now that's going to have a massive impact on Apple. Most of the problem exam made there. You know, you can cut it and slice it in any way. They cannot offset the margin risk. The iPhone sales are going to be traumatically impacted in the second half most likely, you know, it's going to
be will see how China reacts to this. China accounts for twenty percent of sales for Apple, so the local population, you know, let's see if they're going to go with local brands. I mean, it's just a big mess for
Apple frankly at this point. But when we look at the other vendors, when you look at the software companies, which even though they don't have the direct exposure to China, I think when you look at an economic slowdown like this, you're going to see breaks on technology spending and by default, you know a lot of what these guys sell to
the market. We looked at growth estimates as of December thirty first, the top fifty software companies, they had a median growth rate of thirteen point two percent two days ago.
We looked at it.
People have not brought their numbers down, it's only it's still twelve point four percent. So we think that number gets cut down by quite a bit over the next you know, one month when.
It off and that's not in the stocks yet.
That's I can't tell whether that's on the stocks or not, but it's definitely not in the cell side estimates. Consensus out there.
Well, here's what I wanted to kind of pull back a little bit. We talked about this with Mike sort of what the headline and tariff risk is and then what the actual fundamentals of the tech industry. And that brings us to the news that Microsoft, that Bloomberg broke, is pulled back on a bunch of data projects, right, and there was a whole list right, UK, Indonesia, Australia, Illinois, North Dakota, Wisconsin, et cetera. Is So, how do you read that?
Like, is that a sign that.
We're pairing back everything and it's.
All over or what? No, how do I read that? I will wait for sut there to make his comments on the conference call, because there is a very's likelihood that he may say, listen, I'm happy to lease that same amount, just not build it. So from that point, it's okay with me, because they're still seeing the inference coming in and they still going to spend the money. These are just deciding not to build it themselves, which is fair. I mean, it's you know, either rent or buy.
I mean it's you know, it's it's up to them. So I think those are going to be the most critical comments but it's tough for me to see how any executive can give any decent guidance into going into you know, this particular environment. Uh, you know the later this month.
So important rent versus by Okay, this is why I had that tutorial with Anorat. This is why you got to do a call. You got to call them up after the show for half an hour, yep, and then you will understand all things.
Tom keen watching the show here trying to learn tell.
Us that he doesn't have the tail.
Front exactly exactly.
Okay, So then if it is just a tariff impact, then if that's really like what is rocking these docks, which companies are most exposed? Like which software companies are going to be hurt the hardest?
See?
I think Apples the one, you know, we talked about it.
But then you have to look at it where.
The valuations are still higher than pre pandemic levels. You know, look at somebody like a Shopify. It's down huge today because that evaluations a bit high. So it's now they have a lot of DOGE exposure as well. So there is a there are names out there that are that are far more you know, on on that value range. Where far more expensive than historical loans.
Again, so but we're not making a valuation call here, No, No, we areble because there's.
Still risks to estimates.
It is probably a massive risks to estimates, and we don't know where the growth is going to be in the second half right now, and we have seen in the past recessions things drive up very quickly.
How's actual demand for iPhones? This might seem like an insanely rudimentary question right now based on all we're dealing with, but what's the underlying move there?
If you were to ignore everything on the taraff side, The demand was just in line with what it has been in the last two to three years. So we
are not seeing a major spike in demand. Although in some Western countries where they have launched app launched Apple Intelligence, they have seen some improvement, but China has still been weak and that has been the big story with Apple and what we were hoping by the end of this year fiscal year this, you know, September October, when they launched the next phone, Apple Intelligence, will be in all
the major regions. The new phone form factor come out, that slim iPhone seventeen that Goeman talks about and all of that creates a new excitement. But I mean everything is fair game at this point.
All right, an Ron appreciate that on our run does all the technology stuff for Bloomberg Intelligence in our studio.
How big is that?
I mean, that's because you got your big AI conference, essuy, which was extraordinary successful. I stopped by a few times.
The room was packed. It's really going to be actually for yeah, yeah, exactly.
I learned things.
Yeah, you learned things. So it's good stuff.
So anyway, you're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple, Cocklay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Alex deal here alongside Paul Sweeney and John Tucker. This is Bloomberg Intelligence Radio. We bring you all the top news and business, economics and finance through our lens of our Bloomberg Intelligence folks. They cover two thousand companies and one hundred and thirty industries all around the world. Let's
pick up them. What John Tucker was just talking about in terms of Stilantis temporarily halting some production Canada and Mexico forward already offering steep discounts to keep customers coming into the showrooms. Volkswagon warning dealers it's going to tack on import fees to the vehicles it ships to the US because today those twenty five percent tariffs and imported
cards are already on the docket joining US now. Steve Man, Bloomberg Intelligence, Global Autos and Research analysts, can you walk us through these kind of ripple effects, right, like steep discounts getting them into the showroom, like Volkswagen doing import fees, Like what does that roll out to look like?
Yeah, I was just having some costs this morning with some clients and that was the big question. You know, how much of that tariff costs can they pass down on to the consumers. It's a big debate. It really depends on the automakers. But in general, uh, you know, I think the automakers will have to eat that cost because you know, we're actually facing a downturn in the auto industry. Inventories are high. If you look at delinquency rates on auto loans, they're at a very high rate
over in the last few years. So I don't think consumers are are willing to open up the purse strings any further.
So, Steve, why are Ford and General Motors down? This is my dumb question of the day. Wouldn't the domestic automakers be positive today while the internationals would be down because of the terriffs. Aren't these tarfts designed to protect the domestic auto manufacturers.
Yeah, Trump's announcement of reciprocal tarofts. You know it gave well quote unquote reprieve or exemption on autos not really right because they are announced to twenty five percent tariff last week, nothing more additional. I guess, so, I guess you're right. I mean, no news is good news at the moment. But I think you know, I think you know the stocks have trying it down quite a bit since last week already. But it's not done yet, right,
because there's May third another deadline on auto tariffs. That's when they're going to announce. How are the parts that do not meet the U s m c A or not just US MSA that do not meet the US content rule quote quote unquote US content rule will apply to to auto parts.
But to that point, it's just currently the tar tariffs are in place for already made cars coming into the US. We get the auto parts one, as you point out, coming in May. Third, Are you surprised at Ford sort of lowering and offering discounts to get people in their showrooms right now? Like that would feel like the opposite of what you would expect with tariffs in plays.
Yeah.
Uh, you know, this is what I said earlier. I think the automakers will have to eat this. Uh that's
now they're going to have to lower the costs. Uh, well, definitely not raise the cost But like I said earlier too, they're you know, it's coming in a bad time where inventories are at you know, pre COVID levels really, so you know, they're you know, and the consumers are not buying as many cars as they they would, So they're going to have to not only eat it, but I have to, like in this case, for we'll have to even cut prices.
What does this mean for the transition to electric vehicles?
Because it felt like for.
The US OE ms they were almost doing it begrudgingly because they kind of had to. The market was going there. They didn't really want to. The economics weren't there. Now I've got pressure on my core business. Does that slow down do you think? Or is that going to impact the move towards EV's.
There's always been a debate. Right now evs are battery evs are about eight nine percent you know, penetration in the US market. There's debate in terms of if that's going to grow. But I think that's where in this segment, that's where we actually will see clearer winner and losers. I actually think the the pure place, the Rivians, the Lucid, and the Tesla will be clear winners because if you look at the legacy automakers, they're actually building a lot
of these evs in Mexico to bring down costs. They offer a more attractive, attractive prices for consumer. But now with these tarraffs, you know, you know, g now they're going to have to raise prices on EV's, not really cut prices to bring in consumer. And you know, unfortunately GM was actually on our way uh to to profitability on EV's and that's gonna you know, these terrors are going to derail that that effort.
Do you really think that we're going to see uh for more like GM build more auto plants in the US. Is that actually gonna happen.
I think with the global tariffs, with the auto terrafts plus the reciprocal taroffs, it's actually up ending this supply chain that's that's been put in place since nineteen sixty five, you know, first kind of auto agree between US and Canada, which was called the autopack.
This whole. These these rors are up ending that.
And I do think that the US, these US automakers will bring vehicle assembly back, and it's going to have a ripple effect because they're going to force a lot of the suppliers to also come back to the US as well. So it's it's, uh, we don't exactly know how much it will cost. We've made some estimates can cost up towards of over four billion dollars just to bring just to you know, construct a new plant, a green field plant in the one greenfield plant.
In the US.
They talked about, have any of the companies that you covered they talked about were willing to make that investment.
Have not, But I bet there's gonna be a lot of questions during the earnings costs talk about it.
Though at this point they got to talk about it, which company think is best points to actually do that if they were to pour some billions into that.
I still think the US automakers will actually, relatively speaking, will be better off than say the Europeans, uh, and some of the Asians like South Korea, South Korean, because the US auto and the US automakers do have additional capacity in the US that they actually can bring that capacity, shift that production back into the US where the Europeans and some day Asians will have to build greenfield sites which could cost about four billion dollars for a plant.
Wow, And I'll build it in Tennessee or South Carolina or Alabama one of the non Union states.
And there you go. They've already done that. All right, Steve Man, thanks so much for joining U.
Steve Man, he's a global autos and industrials research channels for Bloomberg Intelligence, actually in New York City here today and I'm believte Sure Studio. I know so many people can say.
That you're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Apple Coarcklay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Alex Deeler alongside Popsmuni. This is Bloomberg Intelligence Radio. We are brought to you right now for interactive Brooker Studio right here in midtown Manhattan, and also check us out on YouTube as well. Let's go to another area and sector that will obviously be quite impacted by tariffs, and that is shipping. Lee clas Cow as Boomberg Intelligence and your Transportland and Shipping analyst. So Lee, if I gain
this out, I see a couple of things. One, trade flows re route, so the shippers are still doing stuff, they're just doing stuff in different directions. Or we see trade really start to shut down. What's your base case?
What we've been saying for a while that tariffs are not good for the freight markets, and the reason for that is obviously they're inflationary and the consumer is a big part of the US economy, so it's going to have an impact on things that we import. So it's going to impact companies like Maersk and how Hug, Lloyd and Costco those are marine shipping lines because they'll be hauling less containers from Asia to the United States. It'll
impact railroads. It's as Union Pacific and CSX because still be hauling less freight. It'll impact truckload carriers and LTR carriers and also is going to obviously impact the parcel carriers like FedEx and ups. And we're kind of seeing that in the market right now. The Dow Joant Transports down, you know, over seven percent. Well the general markets down around four percent right now. So you know, these are highly cyclical names and they're really uh, you know, the
demand really goes with where the economy is going. And what this is telling us is that it's going to be hit to the economy. What was announced yesterday after the close out of the White House.
So Lee, I spoke with our one of our favorite transportation anols earlier this morning, Tony Hatchet.
Now we get to speak to Lee Glasgow. So this is a good day. Say, how does that hurt? Now to my faves two of my faves.
I worked for Tony way way way back in the day, and I.
Work with Lee at BI. So it's all good. Lee.
I mean, if you're CSX or Union Pacific, you're kind of just waiting to see what your customers, like Ford Motor Company or the the farmers are going to tell you about what they need in terms of demand. Are you hearing anything now about bookings or any of that kind of stuff.
I mean, what we're seeing so you know, obviously, what we're seeing in the liner market is a couple of the liners have announced blank sailings. And what that means is that they're either going to you know, skip a port or they're just going to discontinue a whole loop of a ship going from Asia to the US and back to Asia. So we're starting to see that now. When we actually saw container rates Transpacific container rates actually spike a little bit this week and that's really been
driven on that and and some general rate increases. So we are starting to see that. And then you know, have to remember there was a lot of pull forward to demand ahead of these towers, right and so what that's going to do is that means inventories are full right now, and so that's going to create very difficult comps in the second half of the year. And you know, when we were seeing intermodal volumes up mid to high single digits, uh, you know, you could see that going
to declines in the second half. So and that's you know, intermodal impacts railroads. So all the railroads. So you know, we mentioned you Pacific, and it also impacts Norfolk Southern and Berkshire Hathaway's Burlington Northern. Also impacts big players in the emobile business like Hub Group or JB. Hunter or Schneider. So you know, the impact to the tariffs are really going to be felt for transportation companies. And that's all assuming that these tarists stick. Right if tomorrow the President
wakes up and says, I forget about it. You know, uh, the then game on, right, it's like that Wayne's World scene, you know, a game off, game on. So so you know, we we we could be you know, back to normal because you know, what we were really banking on this year was a freight recovery for the truckload sector and kind of the truckload sector also, uh does impact other aspects of the freight economy, and that recovery really seems down to be pushed out a lot further than what
we thought three months ago. You know, when President Trump you know, got into the White House, and you know, we thought that this was going to release all these animal spirits and you know, low taxes, low regulation, that's going to be great for the economy. But then now we have the risk of tariffs, and you know the end game is going to be interesting. So you know a company like Nike, they manufacture a lot of sneakers
in Vietnam, but you know, an average sneaker worker. I just looked us up on the internet, so hopefully this is right. You know, they make something like two hundred and fifty dollars a month. I mean that that manufacturing is not going to come to the United States. So what are the goals of these tariffs?
Right?
Because you know, to bring that to the United States. You know obviously it's twenty dollars an hour, forty hours a week. That that's a lot more than two hundred and fifty dollars a month.
But yes, to be sure, and I think that everyone doesn't necessarily know how what would the end goal is. Here's my really silly question. And I'm just looking in the ship like MARSK or any of the actual shippers. If we're rerouting goods in a less efficient route, for example, does that actually mean that they make more money or no?
Yes so so near so the near term vent any disruption is good for the shipping markets and transports and free forwarders, but that that that good part is very short lived. Uh, And so you know we're not we're not going to see all of a sudden sneakers manufacture in Eastern Europe. It's just that's where they're manufactured. So they're just going to be coming in and they're just going to be more expensive and we're just going to
buy less of them. So it's not like we're not talking about like the Red C crisis where the SEUs Canal is pretty much shut down to the container liner market, or you know, droughts in the Panama Canal or a war in Ukraine. Those really impacted trade flows. It's going to take a long time to change where things are manufactured.
Sure now on the dry bulk side and the tanker side, I mean that could get a little more disrupted, but a lot of those commodities are kind of exempt already, so they may not really be impacted as much as really contain a lot of market.
Gully with barely class GA Bloomberg Intelligence, Thanks a lot.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Apple, Cocklay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Because let's get to some of the stocks definitely on the move. That's Nike.
We were off huge here.
I mean, this is the lowest level we've seen since November of twenty seventeen, the worst selloff since June of last year. Punham Goyle is senior US e Commerce and retail analyst at Bloomberg Intelligence. Punham this is a completely unfair question. But where is the bottom or the revaluation for the stock here?
I guess it depends on how are they going to on these prices? Right, So, you know, a fifty four percent tariff on China, forty six percent on Vietnam, where Nike makes fifty percent of its footwear. These are big, big numbers. There's no way they can absorb even half of this. These companies have laser thin profit margins, you know, high single digits, operating margins, low double digits maybe at best for some of them. It's just something they can't absorb.
So prices will rise to the consumer and the consumer will pull back. And that's where we struggle because inventory will pile up again. If you talk specifically about Nike. Nike's in a position today where they need to get rid of excess inventory, and that's been the push that they've been pushing for the last two quarters.
We're just kind of getting it together.
Yeah, exactly. So now this happens, So does the problem become worse? I think so. I think as prices rise, consumers fall back. Now there's more inventory that needs to be disposed. And it's just the surple effect that they can't escape. So things are going to get much uglier before they get better, or we think even if they can get better.
So from the last I guess terariff scenario of several years ago plunam, did we learn any lessons? There were the retailers able to.
Pass long price increases?
Where they did they end up taking it in the margin?
What did they do?
So in the last round there were ways to offset it. So what happened in the last round was it was only China that had the tariffs, So retailers shifted production out of China into Vietnam, into Cambodia, into Bangladesh, and they were able to diversify that cost exposure, but they didn't bring production to the US. Today, there's no place to really diversify it and bringing it back to the
US is I think impossible. I mean, we don't have the infrastructure, We don't have the skilled labor to do this anytime soon yet alone years.
Right, So that's the whole point. It's like they already did this and then they have to like do it again, Like where would they go? What other companies? I knew Nike is getting hit really hard. You gave the incredible statistics in terms of how much they make overseas and essay, Vietnam, what other country? What other companies are going to be hit as hard?
So every company that manufacturers in Asia will be hit. There's really no escape here. All Birds a very small company. One hundred percent of their footwear is made in Vietnam. Oh Adidas thirty nine percent. Lulu Lemon, which before yesterday did escape the TERRAF front because they did not manufacture in China. Now they have forty percent of their manufacturing in China in Vietnam. I'm sorry, so they're exposed to now. So it's really everyone apparel. We are a net importer
of apparel and footwear. We don't make it here. We don't make enough here to say we can bring it back here. It's in Asia, and the Asian countries across the board have very high tariffs on them, which is going to impact pricing and costs and margin.
Are there any brands I don't know how to? I mean, are there companies that are going to be winners here?
Maybe they're that they're they're all American manufacturing and so on and goods, and they.
Are, but they don't manufacture anything. So think about the resale companies right when you go and these are much smaller companies, but when you go to a throat up, when you go to a poshmark, when you go to an eBay, they're selling stuff that already existed in the marketplace. So as consumers seek these deep value do they start thrifting More possible. It just depends on how high prices
will go and how consumers will pull back. But these values driven companies that offer deep, deep discounts, whether it's the off price even to some extent as inventory piles, or whether it's like a Walmart which offers just better pricing, we'll see consumers trade down, we'll see consumers full back, and we'll see consumers seek discount. It's a traditional retail cycle, but this time it's just big. The impact is really big on retailers.
And that's why the TJX is of the world right with the resale. So if you have the extra inventory, where does it go TJX? And then that rams up their own inventory and availability for customers.
Under Rummer down sixteen percent today via I mean, these are American companies just getting hammered.
One of them. Get my scan in Theodore secondhand on Poshmark cheaper than what they are now. It's a whole thing.
Oh, it's a whole thing. Put it on. What I'm talking about, all right?
Put them, thanks a lot, put them. Goyle a senior US e commerce and retailing list at Bloomberg Intelligence. Joining us.
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