From the heart of where innovation, money and power collide in Silicon Valley and beyond. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Live from New York and Caroline.
Hyde and I'm Jackie Devalas in San Francisco. This is Bloomberg Technology coming up.
All eyes on President Trump's tariffs on Mexico, Canada and China roiling global markets. Plus another big week for tech earnings coming up with Panete kicking it off after the closing bell today, and a look at Elon Musk's doge drive as he claims to cancel payments to federal contractors. For first the story of the day, we move markets on the back of tariff. There is talk now coming that potentially those tarifs arelayed by a month, coming from
the President of Mexico. We're off of our lows eight ten percent on the Nastak one hundred. We're nowhere near the sell off of this time last week in reverberations to deep seek, but we are down nonetheless as a global story unfolds. Move on, Look at what happened to the world of crypto over the course of the weekend. This was your liquid ascid of choice. We fell hard on Sunday. We're now off by three percent over the last three training days, but we climb back off of
today's lows. Move on and have a look at what's happening on individual movers. I bring you the biggest points drivers to the downside. Currently Tesla off by more than four percent. We think of the repercussions to auto's, the repercussions to phone sales, Apple or by three point four percent. In video is currently off by one point eight percent. As we think about the semiconductors in the overall concerns around global tariffs, Let's get right to it.
Who most Kaylee Lines joins us for more.
And maybe they don't come in for a month, but still the shockwaves from a twenty five percent tariff on Canada, Mexico and slightly less to China.
Well in Caroline. It's only Mexico that the president has confirmed. The US President, that is, Donald Trump will see the tiarifs toll lead for a month. After speaking with Mexican President Claudia Scheinbaum, an agreement had been reached in order to have this delay in place for Mexico to send ten thousand troops to its northern border with the US in order to help stem the flow of fentanyl and migrants.
That is the route of the issue that Donald Trump really has here that he is using tariff's leverage to try to extract concessions from and it does seem that he did indeed get those. And in the interim one month period where the extension will be in place, Mexican officials will be negotiating with officials from the Trump administration Secretary of State Marco Rubio, Treasury Secretary Scott Besstt, and ultimately who is presumed to be confirmed as Commerce Secretary,
Howard Lutnik. They will all be leading those negotiations. As for the other two countries that tariffs are set to go into effect at midnight tonight, no news yet as to whether Canada can avoid its twenty five percent levies, ten percent on energy imports specifically a lower level, and of course ten percent on all imports coming in from China.
President Trump has already spoken to Canadian Prime Minister Justin Trudeau once today today he is scheduled to do so again at three pm Eastern time, so we'll see if they too can reach some kind of agreement to stave these off for a period of time. If not, these tariffs will go into effect it at midnight in Canada and Return will be placing retaliatory tariffs on thirty billion Canadian dollars worth of US goods at midnight. We're seeing
other ripple effects as well. The Premiere of Ontario, that province has announced today a cancelation of a contract with Starlink valued in nearly seventy million dollars. It was set to go into effect in June of this year. That has been a put on pause and the provincial government says no US companies will be getting provincial contracts so long as tariffs are in place. The question is going to be will they go in place just hours from now?
Kayleie.
What else do we know about the reaction from the business community kind of on the back of these Mexico and Canada terriff escalations.
Well, the business community has had a bit of a mixed reaction, Jackie, mostly by enlarged companies are are hesitant to embrace the notion of tariffs and echoes for things like the Chamber of Commerce represented here in DC and other business leaders as well, who have warned about the potential inflationary impacts. Obviously, this administration has pushed back on the notion that these would be inflationary, saying, if anything, it would bring a one time price increased rather than
a sustained period of inflation. You're also seeing some reaction here in Washington with questions raised around.
The legality of all of this.
The powers that Donald Trump is using here to enact these levees are the nineteen seventy seven International Emergency Economic Powers Act that traditionally is applied when it comes to sanctions, not import tariffs, and there is a question as to whether or not this authority would actually stand up in court if challenged legally when it is being used in this way, whether this is actually a national security oriented emergency or not, as the President contends that it is.
Again talking about the flow here a fentanyl and migrants.
Over the borders.
Bloomberg's Kaylee lyons, thank you.
Now, Let's get to the tariff's impact on the chip world and Asia. With TSMC shirts stumbling by the most in nearly six months, as trading resumed on Monday, playing catchup to a global AI sell off with Trump's new tariffs Bloomberg's peerrelst joins us to discuss Peter through what we know about Trump's discussion with and Nvidia CEO Jensen Wang and what he has signaled regarding tariffs on chips so far.
Yeah, well, what we've seen really is you, as you were laying out just before this, the rules of the game are changing almost by the hour. Here, many many changes for these companies to deal with both Nvidia, TSMC, on Hi some of the other companies that we've seen move in the markets these days. TSMC is an interesting example.
They're the most advanced chip maker out there. It takes them years and tens of billions of dollars to build these factories, so their timeframe for making decisions from a business standpoint is quite a bit different than some of these policy changes that have been made. They make most of their advanced chips right now in Taiwan. They make them for Apple, and they make them for Nvidia, and they ship them into the United States and into other markets.
So with Trump's tariffs, this idea that maybe they would move production into the United States, it's a little bit of a different timeframe. They are building a factory in the United States, but that's going to take some time for them. So we're seeing both this depression on the stock price catching up with what happened with deep Seak last week, and on top of that, now we have these tariff concerns, whether they are delayed or not.
It's interesting Bernstein actually putting out a note still having in Video and an outperform saying they see little impact from taris on slocks like in Video right now in the overall industry.
So how to investors gain this out more broadly?
Peter, Well, there are a couple of concerns layered on top of each other. There's the deep seat concerns that we saw last week that knocked almost six hundred billion dollars off the market cap of Invidia. Of course, that was more around the idea that this Chinese company had been able to build an AI model it was competitive with the best in the West, including open AIS model, for a much much lower cost. There's still a lot of things that we don't know about how that model
was built, exactly what chips they used. They did say that they used a bunch of Invidia chips there too, But I think that primary concern is that perhaps some of these AI companies are going to try to do things more cheaply rather than trying to invest. The tens of billions of dollars are hundreds of billions of dollars that we've heard from open Ai and Microsoft and most
recently Soft Bank in this Stargate venture. On top of that, you have the tariff concerns that President Trump has talked about he may layer tariffs on top of computer chips too. That would hit some of these companies, including TSMC, probably Samsung, some of the other players, Asian players that have been very active in this market.
Thank you an eye across all of it, Peter Elstrom me, thank you. Let's bring in Silvia Jablonski, now CEO CIO.
Of Defiance CTS, to discuss the broader market impact.
How you, as someone who needs to be assessing your overall exposure here, does.
Try to game out what is a very fluid situation.
Higen warning, Well, it is a very fluid situation. And I think you know the only thing you can kind of do as an investor, what are your retail investor institutional investors just kind of keep an eye on what's
going on with these negotiations, right, I think that. Hearing from mister Hassett this morning, it sounded like all of this was around the idea of not important you know, drugs fund and all into the US immigration types of issues, border control issues, and if that's really the case and we see, you know, kind of what happened with Mexico, that the delay of this and ongoing conversations is probably a positive thing and maybe it feels like it won't go into an effect.
But of course we have that.
Backdrop of you know, domestication bringing everything back online to the US to be produced in the US and things like that, so you kind of have to see where all of this lands and you know, kind of adjust accordingly.
So we have some companies coming up or later this week and into the month that are reporting earnings. What do you expect will be covered as it relates to tariffs and perhaps that looming threat. What do you want to hear from management and some of those conference calls.
I think it's too soon. I think it's it's very difficult for them to address the situation because we don't know whether or not the tech, you know, whether the tariffs will be you know, going into a factor or not. Right, I think there will be some comments along the lines of, you know, we're keeping an eye on this, and it's a moving target and food situation similar to you know,
similarly to how you phrased it. The difficulty is, you know, if we get these tariffs and these companies arguably will probably raise prices, it probably will impact future earnings and SHEP growth and things like this. But I don't think anybody wants to touch it this week until we get a little bit more color. We might get that, you know, today or within the next twenty four to forty eight hours,
and I think that'll kind of help the situation. What I think everybody's looking for from earnings, particularly this week when you have you know, some of the big tech giants coming out with their earnings, is talk of AI.
Right, are we monetizing this?
What are the top and bottom lines going to look like?
What kind of.
Revenue generations should we expect, you know, how is it going to start filtering into the you know, XMG four hundred and ninety three other names that aren't the you know, kind of providers of all this stuff. I think that's really what the market's out to see. And if that's the case, and you know, the tariff thing becomes more of a benign event, Well, then you have a great buying opportunity here, right, But we need a little more time to shake that out.
There's kind of two stories that are playing out right now. You have this need to invest in more AI infrastructure, but at the same time, you have investors who are really wary of overspending on that front as well. How do you think companies are going to kind of weigh that, especially as we're seeing more of a bigger push coming out of Washington to really build out infrastructure.
I think it's, you know, to the letter of your point. I think there's this you know, big push from Washington
to participate in the build out of AI infrastructure. You know, the US has been left behind so many times when it comes to tech and tech advancements, and I think that's why Deep Sea kind of read all the markets right like, uh oh, look look what they just did, right, And so I think that there will be a lot of investment and focus out in building out AI infrastructure, making sure it's you know, the best infrastructure in the world and also the most cost efficient infrastructure in the
world for what it's actually providing. And so I think that's been will continue and AI is just the beginning of it, right. I think we're stage one of AI right. Stage two will be how it impacts drug companies, pharmaceutical companies, aerospace and defense, you know, hearing that on the earnings calls from.
Again those x mag names.
And then I think step three is like, well what else is there?
Right?
And that could arguably be quantum computing, the you know, next fourth Industrial revolution of technology and supercomputing there and so there's a lot of spend that will probably continue to go into AI. I think it's just early days still.
And you've ben providing exposure to quantum in particular silvia, but you also provide.
Exposure to crypto.
Crypto was the asset to sell in an a liquid market over the weekend. How do you think that crypto is exposure is going to be to volatile markets but still an administration that is process space.
So crypto has this funny the market has a funny relationship with crypto, right. I think sometimes we think of it as as gold, right, digital gold and an inflation hedge, and then other times we view it as a risk asset like a semiconductor stock. Or a high growth tech stock or something like this. And so I think that right now it's just behaving like the latter. Investors are spooped to about tariffs, what that means for the broader
economic picture. And so crypto is something that's easy to buy and sell, and so it suffers along with you know, the stocks that we see being hit the hardest today, particularly those.
In the NASDAC.
But again, you know, we think crypto is going to be one of the best, you know, opportunities to have in a portfolio, specifically bitcoin, specifically names like micro Strategy that track Bitcoin, and so I think you're going to see some dip buyers here, and you know, we see crypto moving around today right to that effect. So let's see put positive news on.
Tariffs and crypto.
You know, it'll be an asset to class to watch, I think in a favorable sense.
Sylvia Deblonsky of Defiance ATFS Thank you. Now coming up, Elon Musk's Doowe's team demand access to sensitive government information and start shutting down payments to federal contractors. This is Bloomberg.
Elo Musk's gohog team is shutting down payments to some federal contracts, singling out the US Agency of International Development as a criminal organization and appears to access to sensitive systems used.
At the US Treasury Department. Springing bloemgs Max Schafkin for more and is this not the remit of government efficiency?
We are in some crazy territory right now where we have a billionaire who's running you know, six companies, who has some kind of affiliation with the White House, but it's not entirely clear, but is very very close, of course, to President Trump. Is kind of running around Washington disrupting in i'd say, in both the positive and negative sense of that word, the operations of.
The federal government.
We saw over the weekend reports that Musk had taken over Treasury in the Department of Treasury's payment system, that's like the money that the US government has to pay all of its contractors.
That was a pretty crazy action.
Then last night Musk got on a Twitter faces and essentially said he was shutting down USAID.
Congress created a USAID.
It's not clear that that's something that Elon Musk is allowed to do. So a lot of questions and just a ton of chaos in the federal government right now.
Max what do we know about who's aiding Trump, who's aiding Elon Musk at this point in some of these efforts. I mean, this isn't the first time that he's stormed into an organization and taken it over. Can you talk to us a little bit about the parallels perhaps that Twitter has and what we can kind of expect on this front. Granted it is government, absolutely, yeah.
I mean this is very similar to the period immediately following Elon Musk's purchase of Twitter, where he brought in this very small crew of loyalists, a combination of people who've sort of worked with him for a real, really long time, as well as you know, like twenty year old intern types who are doing all sorts of stuff. The email that went out to federal workers last week, last week so object line quote fork in the road, Musk sent a nearly identical email to Twitter employees before
laying off many of them. Now, I will say there are huge differences again between it, It's pretty obvious say this, but between the federal government and a forty four billion dollar, you know, private company that Elon Musk controlled, And that's why you're seeing, you know, a lot of criticism from from Democrats as well as groups that are concerned about funding me cut off. And of course there will be political implications of this as well.
Senator of Oregon Ron Wyden most vocal out there saying you can't do this. All of us have been so close to doze and the birth of it. Can't be surprised in the least that he's running roughshild No.
I mean, I think it's somewhat surprising how quickly this has moved. But you're right, this is what Trump and Elon Musk said when they were running, when Trump was running for president, and so in that sense, it's not a surprise.
Do you think there were a lot of people, a lot of sort.
Of moderates who supported Trump who were hoping for something different. It's kind of similar to the tariff story, right, there's I hope that you know, this would all be bluster or something, and and and you know, this is what what they said they were going to do.
And and one difference though here again.
Is that Elon Musk doesn't work for the government, or it's it's not clear what is what his authority is. He hasn't he hasn't been subject to a confirmation hearing he hasn't put his financial stuff in it in a trust. He's also very erratic. Right, this is probably more extreme than it would have been if it were just were a different Trump appointee.
He was doing this, but.
Having somebody with musks temperament and reputation and just frankly energy levels, uh, sort of takes us to another level.
Bloomberg's mass Chapkin, thank you.
Open Ai and self back deepening their relationship further, joining forces and a joint venture to say AI services to businesses across Japan. Now, Sulfa Bank founder Masoshi Sun and open Ai CEO Samalmon took to the stage in Tokyo to outline this new venture with hiring one thousand people to market open ai products to arrange Japanese industries. Sam Almond also talked about the company's next AI agent.
It's called deep Research, which.
Can conduct online research on a user's behalf and is powered by chatbot chatchubt Jakimore and AI Developments.
Now, let's discuss AI safety and how USAI policy could be shaped by China's advances. Following Deep Seek were joined by Doug Caladis from the group Americans for responsible.
Innovation, Doug, it seems like we have a.
Different narrative going now after deep sea developments last week. It's kind of sparking this renewed escalation in arms race in AI. But at the same time, you know, you have the Biden Administration's Executive Order on AI being rescinded in Trump's first week in office. Where does this leave any kind of priority for AI safety in the US.
That's a very good point, And these are a lot of the arguments that we're hearing. We believe that step one is understanding what the problem is.
Now.
What you'll often hear people say.
Is that the problem is that China is going fast and the US needs to go faster. Sure, but why is China going fast. It's China going fast because they're independently developing their own technology that can rival US technology. No, and I don't think anyone believes that they're piggy backing off of US efforts. They're using US chips or US
design chips, and they're using US design algorithms. So if we're serious about keeping our lead over China, we have to understand how they're getting access to the technology and act quarterly. If we simply run faster and they're holding onto our back. We are not going to run them.
So you have worked for senators. When you're going in advising government, do you just say, look, fast follows the way forward, but from China.
But here's what we do to protect ourselves. What is the response?
It's difficult, and I think the understanding is that they're different policy tools that the US government has used to try to prevent China from fast following, and we understand them as as chip controls, export controls, concerns about security of both closed weight and open weight models, and these things are very technical. But I do think that a lot of what you're hearing about how none of these things are working and we just need to throw it all away or think about what we're doing.
Missus the mark.
We know that a lot of the chip export controls have time delay, so what China was using to train their models was based off of chips that they are no longer able to get in large part, so we needed to give the export controls time to work. There's also a very good argument to be made about expanding the export controls and covering trips that probably should have been covered the first time around, but weren't for whatever reason.
So there's a number of things that we can do instead of simply throwing our hands in the air.
But does that not choke the golden goose that has been in Vidio?
How do you ensure that they prosper?
At the same time, Asktailing there been a it's up.
What's really interesting is that if you looked at Nvidia's reaction to what the Biden administration did, they certainly complained about what was called the diffusion rule, which limited some of our exports. However, the diffusion rule really didn't have much impact on Nvidia's stock price. It was pretty minimal, and if you look at what happened with deep Seek, that obviously had a major impact on Nvidia's stock price.
So we would make the argument that Nvidia actually does well if you prevent some of these non US companies from simply using tools to more or less steel technology from the US, particularly the algorithms, by using Nvidia chips. So in the long run, I believe this would actually benefit companies like Nvidia.
Doug pivoting to Washington a bit.
When you were on the show in November, you mentioned that you were actually a fan of one of President Trump's executive orders from his first administration, and the man behind that order was Michael Kratzio's, who was just appointed to be the director for the Office of Science and Technology do to be confirmed at the end of the month, And I'm curious, what, knowing about Kratzios and his approach in the past as former White House Chief Technology Officer,
what kind of approach to policy are you expecting from this office.
So Kratios is a very serious person and he understands the technology well. And I would put in the same can Howard Lutnik, Who's Trump's designed to be the Commerce Secretary. So Kratzio's and Lutnik are going to be two of the people who have the biggest influence on AI policy than Trump administration. And we saw Lutnik at his most recent hearing, his confirmation hearing, saying that he believes in
the expert controls. He believes we need to be serious about clamping down on Chinese access to US technology, and he's going to see it through. And I think that he and Cratsios together will really want to do whatever they can to maintain the US lead in innovation.
An interesting day for the EU's ai AC to be going into force as well. Doug Kaladis's great test some time with you from American's for Responsible Innovation, Welcome back to Blue Meg Technology.
I'm Caroline Hide in New York and.
I'm Jackiedavils from Pan Francisco.
Yess I have quite check on.
These markets because boy, volatility the name of the game today. The reverberations of tariffs that were initially going to be twenty five percent Canada, Mexico, ten percent China may be delayed by a month. That's what the Mexican president says in the latest rebounce off. Our lows are up now offer the lows down still eight ten percent, nowhere near the wipeout we had this time last week on the back of deep seak anxiety.
But tariff anxiety is clear.
And let's just think about some of the other feed across other angles that we're watching.
President Trump's tariffs is in.
Fact there's a plan to eliminate in long held tariff exemption for packages worth less an eight hundred dollars, Jackie. This is allowing Chinese e commerce retailers like She and like Tamu to ship cheap products directly to the US consumer without tariffs. It's given them an advantage over homegrown Amazon.
Of course, Spencer Soper can give us the read through look.
Some of the bouncing off of the low is happening with the Chinese companies as well after that Mexican headline. But this is all surrounding how they're able to bypass costs at.
The moment, and that's going to come to an end.
Yeah, it's clear as mud right now exactly how it's going to play out. The key question is Trump imposed this new ten percent tariff on goods from China and then eliminating this Deminimus loophole. The big question now is does that apply just to the new ten percent or to the old tariffs as well. And we're still kind of getting clarity, you know, minute by minute on that.
Either way, it's going to hurt these Chinese firms like t Mood, you know, which is owned by PDD in China as well as she In because they've been able to send items one package at a time to US consumers, you know, slipping in under that eight hundred dollars threshold for d Minimus where they're eluding the tariffs whereas bigger retailers, including Amazon, will generally bring in big cargo containers by ship and they're paying the tariff on all of the
inventory in those containers. Because the threshold is measured by each particular shipment. So if you're sending one individual shipment, you're below the eight hundred, but if you have a larger shipment of lots of inventory, you're above the threshold.
Spencer, do you have any sense of just how much of an impact potential tariffs could actually mean for Timu and she In? I mean, they've seen a huge run up over the last couple of years. Can they afford to basically bear some of the brunt of this or are they more sensitive to a disruption?
Yeah, that's the million dollar question they've all been kind.
Of bracing for.
This team of particular is already you know, sourcing more inventory in the US. You know, the down side of their model of shipping to consumers direct from China's that it takes a long time, and so they've been trying to source more inventory within the US to be close to customers just like Amazon and get it to them more quickly. The downside of that is they don't have this tariff savings, and if that tariff safe savings completely goes away, the million dollar question is do these companies
actually survive? And that's you know, that's where there's just going to be a lot of debate and we'll have to see what happens. But they've already been positioning expecting some change like this to happen.
Bloomberg, Spenser Sober, thank you. Let's get more on the impact of US tariffs on China. We're joined now by Amy Seligo, partner at Albright Stone Bridge Group.
Amy, let's talk about what we know.
About Trump's previous approaches to tariffs and what we can learn perhaps from his past escalations on China.
What does it mean kind.
Of going into this new administration and are you seeing kind of similar tactics or new ones perhaps being employed now.
Great to be with you.
I think what's so interesting is, as he's threaten to do, President Trump imposed tariffs almost immediately, and so he almost had to rely on IEPA on this International Emergency Economic Powers Act to justify immediate tariffs against of course Canada, Mexico and China. And that is novel for this president.
And so the way that he deals with justifying lifting the tariffs will be novel as well, very different from how he deployed tariffs in the past after investigations that demonstrated harm through Section two thirty two Section three oh one of US trade laws. This use of IEPA to justify tariffs I think gives him a little more or a lot more bargaining power and leverage on the one hand,
but also justification to pull the tariffs back. He under IEPA talked about the flows of fentanyl coming into the United States from China, going through Canada and Mexico, as well as of course illegal immigration. But in talking about the tariffs that he's about to impose, he also talks about the trade imbalance, and that I think gives China the justification to challenge the use of IIPA to put these tariffs on China in the first place. And that's
exactly what China has already done. Rather than threatened immediate retaliation, they've been very vague about that. They have said, is this even legal what the President is doing? And so really I do think we're in a different place in the second Trump administration than we were in Trump one point zero and how he used.
Tariff's last time.
I'm looking at the market reaction to something that has been well signaled, and it was shocked. Apple is still the biggest drag on the downside to the Nasdaq was seeing in video and Tesla. So we're trying to work out what it means for phone shipments, for ship shipments, for autoshipments, which are so globally dependent.
Aiming, what do you think the ripple effect is going.
To be incredibly disruptive, without a doubt, And so I think the reason that so many are shocked are not because the President hasn't said it all along on the campaign trail and since since his election, but because of these profound consequences that you just mentioned, Caroline, It is going.
To be significant.
I will say, however, the President is looking for a
deal here. He is looking to use this leverage of this thread of these tariffs in order to justify likely maybe pulling them back, I shouldn't say likely, maybe pulling them back quickly if he sees progress from China, more progress on the fenteryel trade flows, and of course on the illegal immigration, two issues that during the transition period, it sounds like the US government and the Chinese government have been making progress, and I think again that is
why we're so surprised this is happening so quickly.
We shouldn't be.
The President promised it, but I think he's doing this in order to have some leverage to make some kind of deal. Yeah, and my final point, Caroline, just the Chinese government has been much more reluctant to be vehement in its opposition than Canada and the Mexican governments because, of course the tariff raid is much smaller, even though the threat President elect Trump had made was a much
larger tariff levy. And so we are early in the Chinese government is going to play a long term game in negotiating with this new team.
What was way more show came was actually deep seek that did come completely by surprise, and that adds another layer of complexity. What do you think that means for chip exports going forward?
It's going to be a real challenge, as we all saw. Of course, the Nvidia CEO for the first time, I met President Trump on Friday and of course is talking about this. The Trump administration very early on, through an executive order, has said we are really going to promote AI dominance by the United States by putting in place more restrictions, and so I do think that the Deep seek arrival on the scene, coinciding with the inauguration of
President Trump, necessitated a response from the Trump team. I think, as you were just talking about with Spencer, the new team is still coming into shape that is going to be directing these policies. But I anticipate we're going to see more export controls. We're going to see more threats of tariffs in order to deal with that. That is going to have some real ramifications for the American company,
these technology companies that continue to rely on China. President Trump, I think Robert Leittheiser many have said, this is going to cause some pain because we do need to we need to transform the way that our country maintains its economic leadership role. Not going to be easy in the short term.
Amy, you mentioned that China here is playing the long game. Help us map out some potential scenarios for what retaliation could look like.
Well, I think that the Chinese government wants to take it slow in retaliation that could have broad based impact because of course we know that the government is talking to the new team in the White House now of course, the Vice president of China was here for the inauguration. He met with his counterpart prior to the inauguration. So Vice President Elect at the moment JD. Vance and Vice President Han Jung sat down together talked about a whole
host of issues. The Vice President of China stayed in the US through the inauguration and then flew.
Right back to China.
But what this means is the two sides clearly.
Or are already talking.
President Frump himself has intimated that he wants to go to China early. He wants to have some kind of a deal. And so to answer your question, I think the Chinese government is very much keeping that in mind as it thinks about retaliation. Of course, they don't want to adversely impact the Chinese government still struggling in its economic recovery, but they have to respond somehow, and so will likely take a very targeted retaliatory measure, likely targeting
some US company. And so that's not good news for the American business community that absolutely is concerned about the prospect of retaliation. But I foresee that retaliation will be quite measured for the time being.
Amy Seliko deep expertise on China and US or Wright Stonewridge Group.
We thank you.
Coming up Palantaires set to report results after the closing bell. Ken earnings live up to the explosive stop run for software John and last year. That's next, This is Bloomberg Technology.
It's another big week for tech earnings. First up Paleteer.
Its extraordinary valuation is going to be in focus with the stock trading at levels some see is just difficult to maintain. Bloomberg's common ranicky is with us a phenomenal run up, a valuation that is two hundred times the price is two hundred times future earnings.
Can twenty eight percent growth and revenue do it?
I mean, it remains to be seen.
I think something that's so interesting about Palneer stock is just how bullish investors are. Obviously, we saw an incredible run last year.
And even in the last few weeks.
You know, the shares slumped at the beginning of the year, but have rallied nearly thirty percent just in the last two weeks to a record high just before this earnings report.
So investors are excited about this company.
I think they're excited about the long term potential here and I mean Pounteers a lot to prove in this earnings report.
There's an AI arms race that just seems to be intensifying in recent weeks. I'm curious what Palenteer's edge is here. We're very familiar with its contracts with the Defense Department, but what else is there too their business model that perhaps could benefit from this AI arms race we're seeing.
So I think one of the biggest growth places for Palenteer going forward is actually in commercial contracts. So, as you said, we know that it's a big like it has a lot of business with the US government with globally with other governments, and it's also really building out the private side, so commercial contracts and especially bringing its AI to the table and saying this.
Is how this could help you in your businesses.
So I think that's something that people are really wanting to see.
They want to see continued.
Growth in the commercial side of Palenteer's business, And you're right, it's really coming out on top as a big AI outperformer.
Bloomberg's Carmen Ryanicky thank you now. Airsprace drone monitoring technology startup Hidden Level has announced it to and its role in national security with one hundred million dollars in investment. Joining us now to discuss is Jeff cole In Level CEO and co founder Jeff. The defense industry and Silicon Valley have not typically had the most seamless of relationships, especially when you think about just how slow the Pentagon moves.
Why don't you talk to us a little.
Bit about how your technology actually works and what it took to really get this kind of massive contract you know in the books for you.
Yeah, no, thank you for having me. It's wonderful to be here.
You know.
As a company, we're based in upstate New York and Syracuse.
A team we founded the company in twenty eighteen out of a basement, but we're a team that's been together for almost twenty years doing this type of tech with the defense industry, with the commercial industry, and we really saw what we needed to do was bring to life next generation sensing technology at a cost effective manner, make it available not only through our hardware sales, but through our infrastructure where we l airspace awareness data on small
drones large aircraft. This made it ultimately much easier for the end users. So combining a mixture of dual use commercial applications, defense national security. Our focus was making sure we have fun while addressing a safer and smarter world. So that's what really made this, I'll say, a journey that was really supported by our venture capitalist is not just that we were addressing DoD national security, but also the commerciality of a safer world.
Strategic investors like Lockheed, Martin Ventures as well as DFJ supporting this one hundred million dollar RAYS now worth more than.
Half a billion.
I'm interested as to how you compete against the Lockheed, how you can ensure that you're getting under the new administration, new contracts to startups such as yourself.
Yeah.
So not only have we brought in incredible vestors like Lockheed, BOOZL and DFJ and so many others, but part of the reason we did that with folks like Lockey, Martin and Booze Allen was strategic partnerships. We have a very different business model. We sell hardware directive firm, fixed price. We have this data infrastructure that's available to DoD, federal, state, local, and enterprise commercial users.
So rather than trying to.
Replace, we're a new feature, something that the defense industry is able to integrate into existing solutions very quickly.
This is shown by our recent deployments all.
Throughout the Northeast to support a wide array of drone concerns and issues, and then also our involvement in the inauguration and through our budding partnership most recently with Palenteer.
Jeff, can you give us a sense of where your technology is actually being deployed any regions, or perhaps the scale of prototypes out there currently.
Yeah, one of our largest deployments is in the DC area.
It's been live since twenty twenty one. It was actually a natural progression for us, after supporting the US government in deployments throughout the Northeast, that they asked us to help assist with the inauguration.
So on support of Northcom and Joint.
Task Force National Capital Region, and with our partnership with Palenteer, we expanded our capabilities by putting our passive RDAR technology in that infrastructure we already had out, and we're able to provide an extremely comprehensive low altitude to high altitude picture on everything from small drones demand aircraft.
Many will be thinking about New Jersey, Jess, but many will also be thinking of the context of this race, whether it's an AI race versus US China, whether it's a drone race versus US China, What do you make about the risk levels right now?
The complexities of our airspace are immense, adding small drones, adding AI, the things that you could do with drones ten years ago versus right now is just rapidly changing. And the complexities of our airspace. All the folks that are involved, the stakeholders, not just dud in state and local, but it's also our commercial users as a power grade,
everything this just adds for challenge and difficulty. It was a big reason for starting in Level was with our infrastructure, we were able to integrate all these users simultaneously for the first time ever where they can all work off.
The same air picture.
This gave them the ability to have very rapid response and quick decision making, which is needed as a complexity of the airspace is just getting worse.
And nothing brings that into sharper relief than the tragicy that occurred last week in Washington.
Jeff Cole hidden Level CEO, We Thank You.
Oh.
It was a big night for Beyonce.
She won her first Album of the Year at the Grammys last night for her album Country Album Calwoodkater and again the first black artist to win Best Country Album for moll Bloemmeggs. Ashley Carmen joins us she would say it's a lost time coming. Her husband would say it's a long time coming.
What are the viewers to make that?
I mean, I think this was a moment that everyone has been waiting for. Last year, jay Z talked to the Grammys about basically saying like, Beyonce's won more Grammys than any artist in history, and yet she has not one Album of the Year. So it was kind of, I don't want to say an ultimatum, but it felt like it sort of put the pressure on of like she's up again. Is she gonna get snubbed again? Is Taylor gonna take it home? And this year, finally.
She's got it.
Ash Ashley not to bring it back to technology all the time, but I am curious, given you can do.
That, You can do that, Jackie, you can bring it back to technology all the time.
We'll give every big artist and music labels in the room tonight or last night. I'm curious what the relationship between AI and the music industry.
Where does that stand right now? Did you get kind of a vibe for where that is at the moment.
So actually this was a story that I would say it hasn't really been picked up much. But the Beatles won for their song Now and Then, which used AI to actually clean up the vocals from John Lennon some tape that had been left over that just without AI really would.
Have been difficult.
It was very muddy and difficult to get the lyrics and the song out of it. And so they actually won for that track, which is kind of a historic moment because they've been very open about the AI use there. And as you might recall, last year, there was sort of a debacle around that artist ghostwriter who had made and used AI to make a track featuring quote unquote,
you know, Fake Drake and Fake the Weekend. So he wasn't allowed to submit that song last year, and so this year this was sort of the officially sanctioned AI use case.
I meanwhile, there's going to be some smarting dung by Drake as Kendrick Lamar RUMs home. I'm also interested in what this little spells close and Kia and Exist week we got Spotify coming off, and this is that Bendon Batta.
Yes, totally, I mean Spotify.
You mentioned the Kendrick Lamar or the Drake lawsuit over the Kendrick Lamar distrack.
Drake had tried to bring Spotify.
Into this previously. He ended up not doing anything with that ensuing.
UMG.
But I think you know, Spotify's already had a hell of a year. They are their stock is doing very, very very well, so I can't imagine that anything about last Night changes.
That for them. Spotify.
We wait for earnings tomorrow, and indeed we are expecting some revenue growth of thirteen percent.
Ashley Common, great to have you with us.
That does it for this edition of Bloomberg Technology. You do not want to forget to check out our own podcast. You can find it on Spotify or indeed on Apple and ihow as a Bloomberg