Zero Tariffs Would Benefit EU Automakers More Than

really doing well. He talked to reporters at the White House talking about Canada. He says they want to be part of the deal we've gotten until Friday, and he says, the President says, I think we're probably on track. Well, let's find out if we're really on track. We've got Michael Dean, our senior analyst European Automotive for Bloomberg Intelligence.

Plus we've got Josh wind Grove. He's our Canadian government reporter for Bloomberg and he just happens to be in our nation's capital in Washington, d C. Josh wind Grove. We got just a small comment from Christopher Freeland, the Foreign Minister of Canada talking about intense negotiations with Robert Leitheiser.

Any update on what exactly is going on in those negotiations. Yeah, you're getting a good window into the glamour of trade reporting here, and I'm just calling from the streets of Washington where we're loitering and hanging on every word that Christie Freeland has to throw our way on the way in and out of these meetings, to sort of swinging in and out as they bringing the political figures and bring sort of the technical experts who you might lovingly

call the true nerds, the nerds with three cred to commast on these issues. But you know, there isn't a sense of panic in the air. It's hard to finger on the even there were twenty four hours or so from this sort of quadline self imposed political deadline, which is frankly all that not that real the deadline. Uh, you know, there's there's not really uh back against the wall field to it. Also, I think that's reflected in the views you're hearing from Trump and Trudeau that maybe

they're untracked to get something. What's interesting is that it a day where it does seem like there is progress being made towards some kind of North American free trade agreement, albeit not by that name. There does seem to be a softening between the European Union and the US as well, with the European Union proposing reportedly anyway, uh, that they are willing to strip away all tariffs if the US

is willing to do the same. And Michael, I'd love you to come on in here, how significant, how surious is this, How seriously should we take this? And how significant would it be for the auto industry in particular? Hi? There? Yes, So, the German automakers set about one point two million cars in the US. About half of these are imported from the EU. So this would remove a two and a half percent tariff, which isn't massive in the scheme of things.

But what I think the bigger issue here is if it removes the threat that Donald Trump proposed in import tariff. I think that's the bigger positive here for the European carmakers. Michael, who would benefit more if all tariffs were done away between the EU and the US. Would it be the US automakers or the European automakers? Almost certainly the EU given the numbers. I just talked about over half a

million vehicles being exported to the US each year. Michael, does the United States really have an export strategy when it comes to automobiles targeting the European Union? Well, they have brands in Europe. They have fought which which still does very well. UM as you know, GM sold Opal recently,

which wasn't such a success. So there hasn't really been a major sort of export mark kids for the US manufacturers into the EU EU, and I don't think that will change all right, So we have that softening of the European Union in the US. It seems like there is a good rapport or at least not a bad report between Canada and the US and Mexico. So Josh, what are we looking for to determine whether or not this is going to be a done deal, They're going to meet the deadline, and whether or not this is

just basically nap to two point over a few tweaks. Yeah. I think the parallel here is that it's less about what can be achieved by deal and the threat that

comes off the table. It's the same thing with THEU cars less about two and a half percent in the shread and the same with NAFTA, because whatever they deal get a deal on this Friday, will be a deal in principle at best, subject a month of for the talks, legal haggling, you know, in trade like single words in a trade agreement can mean all the difference in the world. So you know, it's just sort of looking for a political wing to get Trump satisfied, I guess. And it's

gonna come down to dairy and dispute Panels. US wants to basically do away with media dairy system and the Panels, and I guess they're looking for a way to save a little bit of both. Josh, is there any way to disentangle US automobile production from what happens in Canada, specifically in Ontario? Uh? Not painlessly? Um. You know, Canada is a huge ex border of autos to the US to supply chains or deeply integrated some parts across the border six times before they actually end up in a car.

So if you started tariffing it, it would be US automakers who would have would be certainly among those feeling the pain. In US consumers would be among most paying the price. Because I feel like this gets lost. It's so timble, but it's like it gets lost in the tariffs are paid by the country that applies book right, So US tarrap is paid by the US people buying the goods. John swing Grove, We're gonna let you go. A lot of trade reporting to be down. Josh wyn

Grove is Canada government reporter for Bloomberg News. Michael stick with US. I want to talk about the auto industry, and I want to talk about the news that we got out earlier today with the European Union. How credible is what we learned today that the European Union would be European Union will be willing to drop all tariffs if the US were to do the same. Is that likely?

Is that realistic? I think it's possible. Given the magnitude of the exports from the EU and how important the German auto industry is to the EU, I think this definitely is credible. How big is the auto industry for the German economy? Can you give us some perspective? What German auto makers have about a hundred billion dollars of revenues from the US. About of that is directly for exports to the US. So yes, it's it's very significant.

And what about hundred and twenty thousand Americans actually work for European Union car companies in the United States and states such as South Carolina, Alabama, Mississippi, and Tennessee. Right, that's correct. So both BMW and Mercedes have made the US their suv hub production base um globally, and therefore they produce over six hundred thousand vehicles annually in the US. Plus Folkswagon produces about two hundred thousand units, so it's

very significant. Thank you so much. Michael Dean senior analyst covering the European automative automotive sector for Bloomberg Intelligence, coming to us from London. Michael, thank you. He's an investor who follows Warren Buffett. David Deets is the founder and the chief investment strategist for Point View Wealth Management, helping to manage more than three hundred million dollars of stomer assets based in Summit, New Jersey. David diet is always

a pleasure. When did you first invest alongside Warren Buffett and Berkshire Hathaway. Well, I've been a long term Berkshire halfway holder. Uh, that goes back into the nineties. Part of it is just so that I get tickets to go out to Omaha um and see him in person. And I was lucky enough to be in Omaha just this past May. And uh, he's still as witty and instructive and insightful as he's ever been. And of course his sidekick there um Charles munger Is, is doing the

same thing. And over the years, I'd have to credit him as being so informative to our investing strategy here at Point View. All right, so let's talk about how he has informed your strategy. In particular recently, he was on earlier a couple of competing networks talking about how he likes airlines, he prefers stocks over bonds. What's been

your biggest takeaway so far today? Well, you know, I think the number one question everyone's mind here we are in the longest bold market ever by some metrics, is does he still like stocks today? And you know, I felt he answered the question with yes for the long term. Um, you know, he always wishes to buy things cheaper, but he offered one comparison. He said, look, if you had a chance to buy a thirty year treasury bond or invest in a well diversified basia stocks. The stock choice

is a no brainer. So over the long haul, he likes stocks, particularly relative to where interest rate start today. Interestingly enough, he also opined in real estate, and he thought stocks are cheaper than real estate. I know we have lots of clients, a lot of people out there are looking as an alternative to the stock market real estate. He would inject a note of caution into that. What

about acquisitions. Do you believe that Warren Buffett is searching for large acquisitions or is he going to be spending time looking on bolt on acquisition small earth. Well, he's looking at everything. You know. His problem is he's just got this huge, massive cash hoard too, as he put it, would put it move the needle. He needs to make a big acquisition fifty billion or more, almost an S ANDP. Having said that, of course, they're still opportunistic in areas

where they see a lot of growth. So for example, we just learned that he, along with other tech giants, have invested in an Indian company which focuses on mobile payments. So I think he's he's open to everything, but he really needs the big one. Okay, But David Diets in his annual letter to investors. He talked about paying a sensible purchase price for an acquisition, and he said that this has been a barrier to virtually all the deals that they reviewed. In he said, prices for decent companies,

far from spectacular have hit an all time high. You think that still exists, Well, yeah, I do. I mean, we haven't heard of any big acquisitions from him, and that's why, um, you know, I think he made the easy uh comparison in terms of where the stock markets today by just comparing it against you know, these super low interest rate bonds. Um. What has been as biggest acquisition this year and recently is buying shares of Apple.

But with Apple now the largest company on the planet, well over a trillion dollar market cap and hitting all time highs as we speak, it's hard to argue that that is a great value today. And even he has said that when he's first started buying very heavily in Q one, the stock price got away from him. He didn't admit to buying a few shares this quarter. But certainly, although he loves the business, I don't think that you'd, uh, you know, you'd walk away and say he loves the

stock price right now? So over the years that you've been following Warren Buffett, what's been the most valuable advice that you've taken from him? You know, I think it's it's two things. Really. One is to think long term. You know, so many people on Wall Street they're they're looking at a chart and looking at it. You know, what can the stock market do for me? And the next day, the next week, the next month, He argues, you know, think about holding if think about holding companies

for a lifetime. And I think that gives him a staying power um, which really works to his benefit when the rest of us are so short term oriented. I think the second thing, of course, is don't look at stocks this pieces of paper, he says, Look underneath him, look under the hood. They are operating businesses. You know, if you wouldn't buy the stock if the stock market was closed for the next six months, don't even consider

your purchase. These are operating businesses. Understand what makes them tick, how the cash flows work. Only then can you make an intelligent acquisition. David Deets. One of the quotes from his annual letter is that Charlie Munger and warm Buffett that he says they both sleep well, and they leave. It is insane to risk what you have a need in order to obtain what you don't need. Do you believe that those words describe many of the acquisitions that

have been reported so far this year? Well, you know that that's uh, there's been a lot of acquisitions out there. But certainly, just in his comments this morning, you know, he talked about debt and so forth, and and uh, certainly the idea that you should leverage yourself deeply in order to make an acquisition. UM. I think he's very negative on if the company won't stand as own merits and only makes sense if you leverage it to the hill,

he'd be very leery about UM. And so I think that that's one great takeaway for for Wall Street investors. Don't operate on margin. Don't use you know, next month's rent money, only use money that you can afford to ride with for a long period of time. David DIDs stick with David DIDs is founder and chief investment strategistic

Point View Wealth Management, based in Summit, New Jersey. We are about to head over and here from the Oracle of Omaha himself, I personally am very interested to hear what he might be saying about is more than one hundred billion dollar cash pile where he is going to put it. Also, he has made news to this year talking about starting his own healthcare initiative with a number of other companies. Perhaps he will give some insight into that.

He is sitting down with Bloomberg television anchor David Weston at his annual charity lunch at Smith and Malensky in New York City. Berkshire Hathaway chief executive Warren Buffett to be speaking about everything from stocks, two bonds to what he will do with this massive cash pile. Right, and just to put it into context, the shares of Berkshire Hathaway they are hired by about six percent so far this year. And uh, Warren Buffett holds a thirty six

and a half percent stake in the company. Yeah, so definitely really an interesting time. Also interesting will be whether or not the good times are over, whether the opportunities that Warren Buffett has experienced over his decades of a track record, whether those have passed, Whether this is a different time and that just cannot happen given where valuations are. Yeah, and and to wonder whether the valuations are better here in the United States or whether they're better overseas. Yeah,

I thought that it was really interesting. Without Indian acquisition, I thought that that was compelling, especially at a time when there's a lot of money going to startups in India. But this sort of growing recognition that that is a huge market that will surpass China in population in the upcoming decade, not to mention it's sort of technological developments

and and the other advances in its economy. So it's sort of interesting to see whether there is value to be found there um and if so, where and how as a foreign investor it is to get into that. Yes, and also it will be interested to hear if he has anything to say about tariffs and how tariffs supplied by the United States will affect the prices that consumers have to pay based on those pass along costs. David David Deeds come back on in here, David Deed's founder

in chief investment strategist at Point View Wealth Management. Do you expect, to Pim's point, do you expect Warren Buffett to be political in any way? Um? Well, already in some comments earlier today, quite frankly, he was asked the question about the economy, and the issue of tariffs did come up, and of course he's a long term holder of Sherwin Williams, the famous paint company, and he did allude to tariffs by talking about hey either having to pay a lot more for their pails and so um uh.

You know, having been at the annual meeting in in May and and and knowing how he feels about tariffs, he is very much a free trader, and so that was kind of availed backhand negative comment on the whole concept of tariffs. Um. The other thing that I thought was most interesting that the issue of Jerome Powell came up. Of course, he's the chair of the Federal Reserve. Um,

we're in a period of slightly rising interest rates. But what I really liked, I think boats well for the Marcus as he expressed the most confidence in Mr Powell. He said he's not perfect, but he's going to focus on the job and he's well equipped to do the job. And I thought that was a real plus for investors going forward. Here David Deed's quick question to you, when you are in Omaha attending the annual meeting of Berkshire Hathaway,

are you aficionado of dairy Queen. Well, you know, I do smile, and I do like dairy Queen, to be honest with you, and I do smile every time I go there, knowing that in a very very small way, I'm kind of benefiting from my purchase as a very indirectly as a holder of Berkshire Hathway Stock. Hey, David Dean's Point View Wealth Management and stick with us also not only dairy Queen, but also Diet Coke, right, because he's a very aficionado at the Oracle of Amaha of

Diet Coke. We seem to be having some technical difficulties with respect to the interview, but a lot of really interesting things. Pim uh that, Warren Buffett said there, and just sort of digest some of these things. Let's bring in David Deet's President, chief investment strategist at Point View Wealth Management. Um, he sounded really bullish. What was your takeaway? Yeah, I thought there's a couple of great things for investors that we just heard. One is, don't time that market?

Is this a perfect time to invest? No, he said, you know, it's not two thousand eight, nineteen seventy, it's not nineteen seventy four, when was the cheapest period in his lifetime. But still stocks look better than bonds. And if you, you know, invest in a diverse array of stocks, you're going to do well over the long haul. I thought that was a great message. The second one is

always by quality. He talked about return on equities being look for companies which are making good money, um, the Apple, they are deploying to have a sensible business plans and tremendous some defensible brands, and buy them and hold them. I thought that was just a great message. But David, hang on just a second. I mean, it's hardly likely that he would say anything that would be contrary to that, right.

I mean, that would be the news if Warren Buffett came out and said I want to spend money on companies that deploy capital needlessly and heedlessly and spend it on ridiculous things. I mean, that would be the headline. I mean, it's not exactly Warren Buffett's forte to be sort of tossing money around. I mean he's a kind of parsimonious when it comes to his investment philosophy. Well, I think you're exactly right, And if you read his

annual reports over the years and look at his latest activity. Obviously, as he says, he's not out there with a shovel putting money into the market. You know. Having said that, of course, when you look at all the great investors around the world and look at their track records, your heart pressed to identify somemon who has better. So even though you could say he's talking his book a little bit, nevertheless, I think you have to give him the benefit of

adapt because of how well he has done. Yeah. One thing that I thought was really interesting was when David West of Liver Television asked him about a tool Goande, the New Yorker writer and physician who Warren Buffett is taped to head his healthcare initiative, and David West asked, what's he doing? And Warren Buffett responded, he's thinking, what did you make of that? Well, I mean, you know,

the healthcare issues are so far proved almost to be intractable. Um. You know, the share of DDP in America keeps going up this allocane net direction, and no one seems to have the silver bullet as to how the rain cost he had still provide Americans for the best healthcare possible. That's why Warren and Jamie Diamond Uh and a couple of others have teamed together to try and come up

with a solution. But from everything I heard this morning here, no magic solution has been developed, but at least they're working on it, and and that's where we are now with the Warren's project there. Thanks very much for being with us. David Diets is the founder and the chief investment strategist for Point View Wealth Management, helping to manage more than three million dollars of customer assets based in Summit,

New Jersey. This was the year that oil was going to climb, possibly back to its prior highs, and yet that was not to be. Joining us now to find out what to expect in the months ahead for the price of Crewed is Rob Hayworth, senior investment strategist at us Bank Wealth Management, helping to oversee it more than a hundred and fifty billion dollars of assets. Rob, thank

you so much for being with us. I'm looking right now out crude just under seventy barrel, and I'm wondering, from your perspective, are we going to break out significantly to the upside of the downside, because frankly, it's been split among the people we've spoken to, with people making arguments on either side. Yeah, our point of view is for the rest of this year, you're probably actually range

bound on oil at this point in time. There is a tremendous amount of bullish sentiment in the in the futures market, but you're starting to turn the calendar from from peak demand summer season in into the softer demand fall season, so that's going to limit the upside. But there's a bit of a floor in here when you think about the Iran sanctions, the cuts in production that are going on in Iran. So we think right now

this market is kind of caught between these two factors. Uh, and we're probably going to stay in this in this price range for through the rest of the year. Well. Obviously worth investing in domestic oil production, either in the midstream or up stream. Yeah. A couple of months ago we actually published a quick paper on an opportunity of midstream energy infrastructure companies, and we think that opportunity still exists.

You've got oil prices hovering at this reasonable price range as we can you know, see even in the Permian infrastructure is fairly tight, meaning there's not enough storage, there's not enough transportation UM and and so demand for these UH for these services is fairly high. And you're coming off a fairly rough patch for these midstream energy companies.

So valuations are fairly cheap, yields are attractive relative to other things like high yield bonds UH and and now with some of this recapitalization in the in the industry and the change in structure from master limited partnership to more seed corporations, we think that catalyst is there to start to unlock that value. You know, one thing that I'm curious about. If you think that oil prices are going to remain range bound, what's the big risk to

your thesis. Yeah, that's a that's a great question. I think there'll probably be two. One is US production deteriorates a little faster than than we expect UM. That would be a key problem I think for UH for oil prices. And then and then the second is really to the extent of this global trade war starts to impair global

economic activity UM. Right now, expectations in the market are for demand to continue to grow and absorb this supply coming online, particularly as as OPEC, especially Saudi Arabia and and they're non OPEC partner Russia ramp up their production. Um, you need that demand to continue to expand. And I think if if we get a a surprise softening from some you know, unforeseen escalation in the trade tip, um, that would be that would be kind of problematic for

the for the global oil markets. Rob. I just want you to look ahead a little bit, maybe you know, two years, three years or so, because of new rules that are going into effect in terms of shipping oil, uh, you know on the nation on the world's oceans. Do you believe that it's going to get more expensive to actually transport oil and as a result, that's going to

filter into the price. Uh? Yeah, in general, we think we would see that that is true, right, I mean that that's one of the bottlenecks we still really have in in this industry, is is this infrastructure. So ultimately prices could take higher over time, but it's but we've still you know that that's Uh, it's tough to price at this point in time because oil is always priced on what's going on right now, what is going on with supply demand right now. But there's certainly that opportunity

in the future. Are there any places within the energy complex where you think that there are securities that are overvalued right now? Um, we're generally, you know, we we have a pretty selective process around around security selection. We're not heavy into the integrated space. We're not heavy um into into a broad swath of of exploration and production. We're probably more interested in domestic at this point than

we are everything else. So so we've been pretty selective in terms of this midstream opportunity some exploration and production, uh, but but avoiding many of the other segments for now. Rob has investment in goal changed. Yes, I think sentiment has finally rolled over. It's been such a rough road for gold since it you know, touched touched its peak a few years ago. And and as you've been breaking down, we've finally seen futures market sentiment moved from that long

to net short uh. And I well, I think you've seen a bounce in the last uh, the last couple of weeks. Um. The struggle is the fundamental headwinds for golden now against you, And I think the sentiment in the market has rolled over and it's going to be tough for it. To regain that bullish for until until you you, you know, until prices are finally washed out.

So a higher interest rates from the Fed, a stronger US dollar due to somewhat better US economic growth than rest of world UM is going to keep providing that headwind, and I think a sentiment probably remains negative for tom sometime and keeps pressure on gold prices. Many thanks, Rob Hayworth, Senior investment strategist, US Bank Wealth Management based in Seattle, helping to manage more than a hundred and fifty billion dollars of customer assets. Well, we marked ten years since

the financial crisis of two thousand and eight. Many people remember it as the time when bear Stearns, Lehman Brothers disappeared, But there were some winners in that two thousand eight crisis. Any Massa is here now. She's our investing reporter for Bloomberg News to tell us all about how one company managed to transform itself taking advantage of some problems in well other companies. And this has to do with black Rock and Barkley start off. And he's great to have

you here. Maybe just talk a little bit about what happened at Barkley's that ended up benefiting black Rock. Sure well, So Barclay's did not accept UK government bail out money and they were looking to shore up their capital reserves, so they ended up putting up for sale their I shares business and that was their e t F business.

And what ended up happening is that was a unit of a bigger business called b g I, and black Ock swept in with this thirteen point five billion dollar deal to buy all of b g I and in that acquisition it got into the e t F space and now we think of it as such a huge player, in fact, the world's largest player in e t F. And this was the transformative moment. And you know when they did this deal back in the throws of the crisis,

when that happened. It's so interesting, Annie, because this clearly was a huge boom for black Rock when it comes to how many assets they have with more than six trillion dollars under management. What about profitability though, sure so um obviously they are a highly profitable business and they have basically paved the way in a couple of different ways for that UM through e t S and various other products. Et F are about a third of their business now, but it's pretty stark if you consider that

they weren't in that space at all. In fact, they had determined that they wouldn't be able to build it from scratch in their own internal uh you a review, and then once this came up for sale, they said, Hey, we have a chance to get into this business that that we want to be in, and that's how that acquisition happened, and that piece of their business grew and grew over the past decade. Financial risk software? What is it? And what did black Rock do in order to capitalize

on everybody's fear. It's like, you know, after a hurricane, everyone says, I got to go out and buy hurricane insurance. After two th eight, people were worried about risk to their financial assets exactly. So another way that this the past ten years have been tied to their growth is after the crisis and the crash, firms were looking for ways to better assess their financial risk and and better

evaluate uh those types of risks. So black Rock already had this Aladdin product that they sell which does just that, helps helps you analyze all the risks in your portfolio, and that business has uh really shown some growth over the past decade, and they were able in a changing regulatory environment to to i think, find some new customers for that software, you know, just sort of taking a

step back. Black Rock certainly did benefit a lot in the wake of the crisis from these specific businesses, but in general, asset managers were big winners. I mean, yes, there's a certainly consolidation now, but if you think about it in general, because of some of the stimulus packages, people flooded into asset managers and there was more business that kind of went to the buy side from the cell side as a result of this, right, I mean, as black Rock kind of a sort of a lens

to view this shift through, that's exactly right. And one other way that you might look at it is these asset managers have not been given the too big to fail stamp that the big banks have. Oh. I mean that includes black Rock, but it also includes peers like Fidelity. Um. You know, the asset management community has been able to avoid being labeled too big to fail, even though they did for a while they were a little bit in

limbo over whether that would happen. And ultimately that you know, it seems like that scrutiny has tapered fifteen seconds on Larry Fink and how important he has been to this success. Sure, well, he's obviously the face of the company, and he's only become more I think powerful and visible uh in in these in the past decades. Thanks very much for being

with us. Annie massa investing reporter for Bloomberg. We encourage you to read her story about Black Rocks decade, how the crash helped forge a six point three trillion dollar giant. Much appreciate it. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm

on Twitter at Lisa Abramo wits one. Before the podcast, you can always catch us worldwide on Bloomberg Radio.