April 14, 2025 • 34 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Mark Zuckerberg took the stand in federal court Monday as the first witness in the US Federal Trade Commission’s antitrust trial seeking to break up Meta Platforms Inc.
The company’s founder and chief executive officer will face questions about the company’s acquisitions of Instagram and WhatsApp. The FTC is seeking to force Meta to divest those platforms, alleging the acquisitions gave Meta an illegal monopoly on portions of the social networking industry.
In initial questioning by the FTC’s lead trial lawyer, Daniel Matheson, Zuckerberg described the company’s early history and acknowledged that he rejected advice to sell the company early on because it would not be possible to compete with MySpace.
Zuckerberg went on to describe the creation of the Facebook news feed in 2006 to facilitate “real connections to actual friends.” That use is key to the FTC’s argument that the company is primarily focused on sharing information with friends and family.
Today's show features:
- Bloomberg Intelligence Senior Antitrust Litigation Analyst Jen Rie on Meta Faces Potential Breakup With Start of Antitrust Trial
- Bloomberg News Editorial Board Member Christine Harper on Volcker’s Lessons for Restoring US Credibility
- Bloomberg News Managing Editor for Global Consumer Tech Mark Gurman on Apple's Supply Chain
- We Drive to the Close with Andrew Slimmon, Senior Portfolio Manager at Morgan Stanley Investment Management
Hosts: Carol Massar and Tim Stenovec Producer: Sebastian Escobar
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News. This is Bloomberg Business
Weekdaily reporting from the magazine that helps global leaders stay
ahead with insight on the people, companies, and trends shaping
today's complex economy. Plus global business finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:32):
Mark Zuckerberg taking the stand in federal court today as
the first witness in the us FTC's antitrustriuse seeking to
break up Meta platforms. He's the company's founder and CEO.
Of course, he set to face questions about Meta's acquisitions
of Instagram and WhatsApp. The FTC is seeking to force
Meta to divest those platforms, alleging the acquisitions gave Meta
(00:52):
an illegal monopoly on portions of the social networking industry.
To that, here's FTC Chair Andrew Ferguson earlier on Fox
outlining the case.
Speaker 3 (01:01):
Here, we have actual evidence that the transactions turned out
to be anti competitive and have given Facebook and Met
a tremendous amount of power. We certainly think it's a monopoly,
and we think that the evidence that we're going to
put on a trial, is going to show that it's
a monopoly. And look, we all saw full on in
twenty twenty how much power these social media platforms have
(01:22):
over every aspect of our daily life, of our politics,
our elections, our social lives, our economic lives. And that's
what this case is about, is about addressing that sort
of power and making sure that twenty twenty can never
happen again.
Speaker 2 (01:37):
That was FDC Chair Andrew Ferguson on Fox earlier today
outlining the case from where we bring in Jenery Bloomberg Intelligence,
senior analyst for Anti Trust. She joins us here in
the Bloomberg Interactive Brokers studio. I wanted to play that
clip for you because it sounds like the case is
about a couple different things, at least to the FTC chair.
(01:58):
What is the case actually about, because it sounded very political,
and this is a case that has been a long
time in the making, that has spanned administrations.
Speaker 4 (02:07):
Right, Well, it really is just about Facebook's acquisitions of
Instagram and WhatsApp. Now long time ago. There were other
allegations in the suit, they've all been thrown out. They're gone,
having to do with not working with competitors. It's just
these acquisitions. And the allegation is that for both of
those companies, Facebook at the time called Facebook and not
Meta was concerned that they would grow or be bought
(02:29):
by a Google or somebody like some other big tech
platform and become a real competitor to Facebook and give
them a tough time in social networking, and so they
bought them instead. It's sort of what they call a
buy and bury, although they didn't bury strategy, and they're
saying that just those acquisitions that itself was anti competitive contents.
Speaker 2 (02:46):
So hold on, is that is that not allowed?
Speaker 5 (02:50):
Like, you know, there's a business strategy to me, you know.
Speaker 2 (02:52):
If you think about it, Like, let's just think about
it from the consumer package goods business. A large soda
manufacturer going and buying a fast rising upstart that is
making some sort of drink that a lot of people
are seeming to enjoy.
Speaker 6 (03:08):
Is that anti competitive? So it is an anti competitive
on its face.
Speaker 4 (03:12):
No, And first of all, it has I'm not a
lawyer with a monopoly position. Do you have a monopoly
and have you done this to maintain your monopoly? That's
the allegation here. So a company that isn't considered a monopolist.
They can do something like that. The other thing is
we're talking about buying Barry, So sometimes these things look
anti competitive where a dominant company buys up and upstart
(03:33):
and then kills it it's gone, which didn't happen here.
Speaker 6 (03:36):
See that.
Speaker 5 (03:36):
Yes, I'm not going to say who, but when we've
definitely seen that with various big.
Speaker 6 (03:41):
Tech companies, exactly happens, right, We've seen it.
Speaker 4 (03:44):
But that isn't the case here, which I think makes
this case a little bit difficult for the Federal Trade
Commission because they didn't. Facebook didn't just buy Instagram and
WhatsApp and kill them off. They put resources in and
they improved companies that were really very nascent at the
time that they were acquired.
Speaker 5 (03:59):
The issue is in boy, this makes them even a
bigger monopoly when it comes to the social world or
is that part of it as well?
Speaker 7 (04:06):
Well?
Speaker 6 (04:06):
That is part of adding it.
Speaker 4 (04:07):
That is part of it that they basically just maintained
this monopoly they had in personal social networking and what
it's and by just buying up everybody, they own them all.
They keep Facebook blue, they call it the original and
Instagram separate they're two different products even though they're both
owned by Meta, and that they maintain this monopoly over
personal social networking. And what that results in is lack
(04:28):
of choice for consumers, lack of quality.
Speaker 6 (04:31):
Maybe there's less privacy protections.
Speaker 4 (04:33):
There are more ads. Maybe if you had some competitor,
you'd have better options as consumers. That's the allegation here.
Is it TikTok calling good point?
Speaker 6 (04:43):
Very good point? So what's at stake? Because Mark Zuckerberg.
Speaker 5 (04:46):
Already taking the stand in federal court today, what did
we learn from any of that? I know it's all
kind of happening in real time.
Speaker 4 (04:52):
It is right, He's really important here because they're two
sides to this case. That makes it very strange. There
are a lot of documents, mostly Iszuckerberg authored by him
or he contributed to in an email chain from twenty twelve.
In twenty fourteen, when these companies were bought saying it's
better to buy than compete. Right, this is bad. It
looks like the intention is we don't want to compete.
(05:13):
We just want to buy them up so that they
won't be competing with us. But on the other hand,
you have the situation where they put the money in
they built these companies up. And also you have to
prove as a plaintiff that it caused consumer harm. Maybe
the intention was bad, and Mark Zuckerberg's going to have
to explain away those documents and what he meant at
the time. But even if they proved that the intention
(05:36):
was bad at that time, they also have to approve
they also have to prove that consumers were harmed.
Speaker 6 (05:41):
That is very difficult.
Speaker 4 (05:42):
Think about it. Many years ago. Technology advances and changes
very quickly. We have TikTok. Now we didn't have TikTok.
Then YouTube has expanded since then. So would we be
in a better position had they right now, had they
not bought the companies, those companies could be gone for
all we know, or they could exist in some weakened
form than they exist today. And how do you prove
(06:04):
the consumers would be better off?
Speaker 5 (06:05):
And I think that's a big problem here, One last
question real quickly, like twenty seconds.
Speaker 6 (06:09):
Might they potentially have to.
Speaker 4 (06:11):
Get rid of these That's what the FTC is seeking,
And that's a big deal because about fifty percent of
the ad revenue for Meta comes from Instagram.
Speaker 5 (06:19):
That changes the business dynamics. Jen Thank you so much, Jenniferree.
She's senior anti trust litigation analyst here at Bloomberg Intelligence.
Speaker 1 (06:26):
You're listening to the Bloomberg Business Week podcast. Catch US
Live weekday afternoons from two to five these During that
listen on Applecarplay and Android Otto with the Bloomberg Business app,
or watch US Live on YouTube.
Speaker 5 (06:39):
Focus on news out of Washington, DC and the President,
especially when it comes to tariff's The explosion and changing
of tariff terms have led to a lot of volatility
and global financial markets and a lot of questions about
what's ahead in terms of the global macro outlook. It
also risks adding to the inflation concerns here in the
United States. Bottom line, it's a tough environment. As we
(07:00):
heard this morning from Goldman Sachs CEO David Solomon on
his earnings call with analysts.
Speaker 8 (07:05):
This uncertainty around the past forward and fears over the
potentially escalating effects of the trade war have created material
risks to the US and global economy. We are encouraged
by the administration's recent actions to pursue a more gradual
policy process that allows for considered negotiations with many countries,
but how policies will evolve is still unknown.
Speaker 5 (07:26):
Of course, that was Goldman's CEO David Solomon earlier this
morning on that earnings call. Unknown's uncertainties not easy, any
of it for the Fed to determine monetary policy going forward.
And as Bloomberg's Christine Harper writes in a Bloomberg opinion
piece looking back at former Fetchair, Paul Volker's career could
provide lessons for President Trump and his in his administration. Christine,
(07:48):
by the way, is Bloomberg News editorial board member co
author with Paul Volker of the book about his life.
It's entitled Keeping at It, The Quest for Sound Money
and Good Government. Christine joins us here in studio, I said,
when you walked in, we've been thinking about you a lot,
because we've talked about Paul Volker before with you in
kind of stressful times and certainly these higher inflationary times.
(08:10):
Paul Volker, you write about two episodes during his life
that are important. One takes us back to the administration
of Richard Nixon in nineteen seventy one.
Speaker 9 (08:17):
Go there with us.
Speaker 10 (08:18):
Yeah, So he was part of he was a younger
member of the Nixon administration. He was under Secretary of
Monetary Affairs, which he actually remembers as being one of
the greatest job in the world.
Speaker 9 (08:30):
He loved it.
Speaker 10 (08:32):
But at that time, the US had this unsustainable requirement
that it honored this thirty five dollars per ounce price
for gold. And at that point, after decades of overseas
spending of dollars on the Marshall Plan and various investments overseas,
countries abroad had so many dollars that everybody kind of
(08:56):
knew there wasn't really enough gold to back at all.
Speaker 9 (08:59):
And so it was up.
Speaker 10 (09:00):
To the Nixon administration to sort of admit that and
come out with an announcement and it was a unilateral
declaration on a Sunday night in August in nineteen seventy one.
Vulger was very involved in a whole weekend of talks
about it at Camp David. In the lead up, everybody
was surprised. It was known as the Nixon Shock, and
(09:23):
they recognized that suddenly taking the value of gold off
of any kind of anchor meant that there could be
just chaos and the value of the dollar could plummet.
So they put on all these wage and price controls
at the same time they created tariffs. They tried to
do all these things to manage the fallout, and also
Vulker was immediately sent overseas to start talking to the
(09:44):
financial leaders of every country major country, an extensive there
was an extensive plan to be sure.
Speaker 9 (09:51):
They weren't perfect.
Speaker 10 (09:52):
They did some crazy things, and they had this Treasury
secretary at the time, John Connolly, who only lasted for
eighteen months under Nixon, who it's a sort of Texas,
you know character, and he was a little nuts. But
then George Schultz came along and they had a much
more focused sort of way of dealing with it. So
it wasn't perfect, but it was compared to what we're
(10:13):
seeing with Trump and these tariffs. It was there was
a rationale to it that everybody could understand. There was
real economic thinking behind it.
Speaker 2 (10:21):
So that was nineteen seventy one. Fast forward to nineteen
seventy nine when Vulker becomes Jimmy Carter's fed chair.
Speaker 6 (10:27):
Fed chair.
Speaker 10 (10:27):
Yeah, because the result of having no anchor to the
dollar was that there was inflation. I mean, there were
other reasons for the inflation, for the problems, but you know,
the value of the dollar was thinking inflation was incredibly high.
It was it was destroying the American economy, and so
Jimmy Carter brought in Paul Vulker, even though Vulker told
(10:48):
him before he when he sort of was talked to
for the job, I'm going to do whatever it takes
to kill inflation. That might mean to higher interest rates,
it could be really bad for the economy, and Jimmy
Carter chose him anyway. So it pretty much was one
of the factors that sank Jimmy Carter's reelection because the
economy got really it was really tough, but it was
(11:09):
successful bringing down inflation, and the sort of vulgar commitment
to price stability right was so powerful, and so you know,
the integrity he had in pursuing that aim was so
completely believable that from then on, instead of the gold standard,
the dollar was known as being on the vulgar standard.
Speaker 6 (11:29):
It's pretty wild.
Speaker 5 (11:30):
I mean, are we in the process of kind of
losing that concept and idea.
Speaker 10 (11:35):
So that was sort of the point I was making
in my piece was that you know, really what the
vulgar standard amounts to is this belief that there are
public servants in America, whether they're you know, appointed or
political or civil servants, but who are going to do
what's right for America and make sure there's price stability
and make sure there's sort of economic rationale behind things.
Speaker 9 (11:54):
Of course, it's not always been perfect.
Speaker 10 (11:56):
There have been mistakes, but when there are crises, you
see over and over again these political figures will sort
of retreat to the background and let experts like you know,
when George Bush was dealing with the financial crisis, it
was really Hank Paulson and BERNANKI who were handling it
for America. But Butch wasn't kind of you know, back
then there wasn't so much tweeting, but he wasn't like
(12:17):
getting in the middle of it so much. And and
you know, even when Bill Clinton was dealing with you know,
the bond market turmoil at the beginning of his you know,
he recognized that Bob Rubin had more expertise. And so
we've had presidents that listened to economic experts. This feels
different because really a lot of anybody who looks at
(12:40):
what the administration put out has immediately mocked the you know.
Speaker 6 (12:47):
The confidence certainly in the United States, right.
Speaker 10 (12:49):
And the yeah, and I mean when they saw the
the formula that was used to justify the tariffs.
Speaker 9 (12:55):
I mean, none of it makes sense.
Speaker 10 (12:57):
The various explanations coming out from thedministrations.
Speaker 9 (13:00):
Contradict each other.
Speaker 10 (13:02):
So even if you think that the general idea of
being presenting a new trade order in the world makes sense,
the way they're going about it is so haphazard that,
you know, as David Solomon was saying, like nobody knows
what's happening, and it's very hard to make any sort
of forward planning.
Speaker 2 (13:21):
As Carol mentioned, we're seeing this hit consumer confidence. Yeah,
you know, going into this term. A question that we
asked a lot of our guests, Christine, was do we
see maybe the markets, the bond market or the equity
market or both become checks to what the president is doing,
at least when it comes to his economic agenda. In
your view, did we see that happen last week?
Speaker 10 (13:41):
Well, I'm not an expert on what's making the administration
do anything, but I don't.
Speaker 2 (13:46):
Think anybody is except for the president.
Speaker 10 (13:48):
I've just seen the reporting saying that Trump said, you
know that the bond market was getting a little queasy
or whatever.
Speaker 2 (13:53):
Words he used about guardrails here.
Speaker 10 (13:56):
Yeah, I mean, the borrowing costs of the United States
government is a huge guardrail. I mean, no, none of
the administration's policies are going to succeed if suddenly we're
paying a huge amount more in interest every year. So
you know, you can cut as many federal jobs as
you want, you can cut all the services from the
federal government.
Speaker 9 (14:16):
But if we're if all that you.
Speaker 10 (14:18):
Know, savings is you know, overtaken by having to pay
more on interest on our debt, I don't know where
where that's getting us.
Speaker 5 (14:25):
What do you think the president could do in terms
of you know, or he and his key economic advisors
to maintain the confidence in the US by citizens of
the US and also the global world.
Speaker 6 (14:34):
Well, based on what well I.
Speaker 10 (14:36):
Think, you know, it does seem that a more consistent
approach would be helpful. That's what you hear from business leaders,
That's what you hear from foreign leaders. They want to
understand what the aims are here. They want to clear
path forward and you know, not a daily change in
the in the tariff regime and plans, and you know,
not sort of terriffs by tweet.
Speaker 5 (14:58):
That doesn't whether I want to ask you what if
you think what if that's his aim, is to just
constantly upset people and keep them kind of on edge,
whether it's global leaders, whether he definitely has shown a
difference to the equity market, it's certainly the bond market
that caught his attention.
Speaker 6 (15:15):
But what if that is his strategy?
Speaker 5 (15:17):
What could be as you think about you've covered so
much in terms of crises and just made off crypto
like just so many things of your purview. How do
you like how how are we thinking about kind of
the US as an economic and financial might.
Speaker 10 (15:32):
Yeah, I mean the US is sort of based on
this idea that you can your money is safe lending
to the US government. And if we have a policy
that nobody understands or trusts and seems all to be
designed to satisfy the whims of one person, it's going
to be harder and harder for us to maintain that,
and that would be really damaging for Americans. So ideally,
(15:54):
what would be good to see you to say back
to your question, is for you know, the president to
start listening to some of his I mean it does
sound like Treasury Secretary Scott Persens taking sort of the
front the lead on this. The markets certainly trust him
a bit more. He's talked a lot more about it,
kind of a gradual approach, and so, you know, I
think there's hope. That's why markets seem to be a
little quieter today that you know, maybe some reason will prevail.
(16:18):
It's but I mean, the president is very impulsive, and
so it's it's very hard to know what.
Speaker 9 (16:24):
Will really happen.
Speaker 2 (16:25):
Yeah, what are potential long term risks in your view
if during this administration the US moves away from this
vulgar standard, right, does that have ramifications beyond selection?
Speaker 11 (16:38):
Well?
Speaker 10 (16:38):
Sure, I mean I think what you see is that
the borrowing costs of the US go up because you know,
people whether it's American citizens or people overseas, just start
putting their money, the money that they want to make
sure is there no matter what. They're not necessarily going
to put it in treasuries or or all of it
in treasuries. They might start finding other places. That's good
for you know, other countries and their debt or other markets,
(17:00):
but it's.
Speaker 9 (17:01):
Bad for the US borrowing.
Speaker 10 (17:03):
And you know, you just see inflation cause because you'll
have higher costs for Americans having to try to buy
things overseas. I think there's just all these privileges Americans
have gotten used to knowing that the dollar was sort
of needed by everybody in the world and sought sought after,
and the same with you know, US treasuries is at risk,
(17:24):
I think, I mean, it's not going to go away immediately,
but we've taken it for granted for a long time.
Speaker 6 (17:29):
Philiy J.
Speaker 5 (17:29):
Powell could find himself in a really complicated right in
terms of if Tavis make things more expensive and there's
more inflation pressures in what could be potentially a slow
in growth environment.
Speaker 6 (17:38):
Yeah, that's tricky.
Speaker 10 (17:39):
Yeah, I mean you saw that in the seventies after
the Nixon chaka you so basically these bouts of stagflation,
and it was really hard. I mean, the FED at
the time wasn't able to deal with the inflation. They
were too concerned about the h the slow growth and they,
you know, basically Arthur Burns, that fed Cherman at the time,
was a close political ally of Richard Dixon, and many
(17:59):
people believe he just let inflation, you know, happen because
he wanted to make sure Nixon could get re elected.
And that turned out to be a really big problem
for the US economy twenty five seconds.
Speaker 5 (18:13):
If Paul Volker was here, what would you want to
ask him about this environment?
Speaker 9 (18:17):
Just quickly? Well, I know he would.
Speaker 10 (18:19):
I mean, at the big point he wanted to make
in the book was the importance of competent government.
Speaker 5 (18:24):
You know, it's a true public servant, right, Yeah.
Speaker 10 (18:27):
And so he realized sort of like the big takeaway
at the end of his life was we need to
have good, well trained people staffing the US government. So
I think he would be really upset at all the
ways we're treating federal workers.
Speaker 5 (18:40):
All right, great stuff, Thank you so much, so appreciate it.
Christine Harper, Bloomberg News editorial board member, co author with
Paul Voker on the book Keeping at It, The Quest
for Sound Money and Good Government.
Speaker 1 (18:53):
This is the Bloomberg Business Week podcast. Listen live each
weekday starting at two pm. He'stern on Applecarplay and Droid
Auto with the Bloomberg Business app. You can also listen
live on Amazon Alexa from our flagship New York station.
Just say Alexa play Bloomberg eleven thirty.
Speaker 5 (19:11):
We're talking Apple. Yeah.
Speaker 2 (19:12):
I mean, this, after all, is the company that's most
exposed to a tariffs or a tit for chat chat
with China when it comes to the mag seven shares rallying.
Speaker 11 (19:19):
Though.
Speaker 2 (19:20):
On that reprieve, we talk about the company's massive global
supply chain a lot with our Mark Kerman, who's Bloomberg
News Managing editor for Global Tech. He joins us here
in the Bloomberg BusinessWeek studio. You had a busy weekend always, yes,
I mean, but this is easier than usual. And I
was struck by one of the pieces that I read
that you wrote, which said Apple basically was able to
(19:42):
avoid its biggest crisis since the pandemic back in twenty twenty.
Speaker 12 (19:47):
That's right, And you know I didn't listen to your
full conversation with the with the prior guest. He's great,
But if we're talking about Apple, I don't believe that
they're going to be moving their supply change to the Yes,
maybe it'll happen in our lifetime, but I don't think
it's going to happen in the next ten years.
Speaker 2 (20:05):
What happens if tariffs on China continue to exist, there's
no exemption for Apple. Can Apple satisfy US customers through India?
It seems by the way, it would seem to defeat
the purpose of the tariffs.
Speaker 12 (20:20):
But well, today no, but I would say within a
year two yes, Right now they can probably fulfill maybe
seventy five percent of the US demand that they need
in India. If they ramped up and burn the midnight
oil for the next few months, they'd probably be able.
Speaker 7 (20:34):
To do it.
Speaker 11 (20:35):
But they would be able to do.
Speaker 12 (20:36):
It pretty cleanly. I would think in a year or
two from now, they're already thirty forty maybe a little
bit more than that million units. The US represents probably
one hundred million units per year, maybe a little bit less,
so less than the rest of world, So you know,
you're quickly, you're quickly getting there.
Speaker 5 (20:56):
What does it do to the relationship though, between Apple
and China ultimately is what it does.
Speaker 12 (21:01):
Yeah, that's the elephant in the room, because China can't
be too happy here. And I think the argument that
Apple is trying to make is how important China is.
Speaker 11 (21:10):
To the rest of the world.
Speaker 12 (21:12):
Right still needing to produce one hundred to million iPhones,
You're still producing all of those phones for the rest
of the world. So basically the idea is splitting the
supply chain INTWO and again Apple supply chain goes well
beyond the iPhone. But let's face it, what we really
care about is the iPhone. The other stuff's cool, but
this is where we're at. India's for US, China's for
the rest of the world, including China. It's pretty it's
(21:34):
pretty important.
Speaker 2 (21:35):
Still, but again, it would defeat the purpose of the
tariffs on China if you were in a move whole point.
Speaker 6 (21:40):
That's but that's the challenge.
Speaker 2 (21:41):
That's the challenge I think Apple might face when it
comes to dealing with the Trump administration.
Speaker 12 (21:45):
Well, is it possible that Trump says, well, Apple is
using India as sort of a lever here to get
out of the tariffs, I'm going to put this huge
new tariff on India. Also, that's a real question, right,
And so I think that is what's making this so
challenging for Apple is that it kind of feels like
whack a mole to some extent. If we're not going
to just manufacture stuff in the US, we're going to
(22:07):
have policies that are shifting, right almost every day. We
can have a president here who can, to your point,
add an India tariff to a significant degree overnight, so
they can put all their eggs in the India basket
and then oh my god, we're gonna have to move
somewhere else. Now we're actually gonna have to move to
the US. And so they've got a lot of cash.
Maybe they're needing to start dipping into those cash reserves,
(22:30):
whether it means to offset price hikes or to move something.
But I just don't see the feasibility of moving to
the US. It's just so unlikely. Let me just drop
you a scenario here. I feel like, short of lying
to Trump, if I'm Tim Cook and telling him we're
gonna move to the US, just give us a few
(22:52):
years and betting that Trump won't be back for a
third term, right, which obviously is not legal, but obviously
they've been talking about it. I don't think it's going to happen.
Speaker 9 (23:01):
But anyways, the.
Speaker 12 (23:02):
Bet is that Trump's gone three and a half years.
They could tell Trump is going to take us four years,
but we're going to get there because of you. So
they can announce all this stuff, say they're going to
do it, but never actually do it knowing he's gone.
That's one lever Tim Cook could pull. I don't know
if the act well, because maybe you get advance after
(23:22):
Trump and you know who knows what he does. But
I think most people would understand these things take time
and there's no way you can move to the US.
But I guess if I'm Apple, I could say we're
going to do this and just not do it and
then come up with the reason four years why it
didn't work out. One other thing, you could say we're
going to move one component or one thing, or packaging.
Speaker 6 (23:43):
Talking about packaging with us packaging.
Speaker 12 (23:45):
Yeah, just come up with something.
Speaker 6 (23:47):
Mar we have to You talked.
Speaker 5 (23:48):
About all their cash on the balance you we always do.
Can they survive three and a half years of higher
prices and deal with it and just write it out?
Speaker 8 (23:55):
Yes?
Speaker 5 (23:56):
Okay?
Speaker 12 (23:57):
Are they going to know?
Speaker 11 (23:59):
Maybe? Do they want to?
Speaker 12 (24:01):
I think is what I was meaning to say.
Speaker 11 (24:02):
Absolutely not.
Speaker 12 (24:03):
But there's no scenario in which they're going to start
charging two grand for these phones.
Speaker 11 (24:08):
They're going to eat some of it.
Speaker 12 (24:10):
Like I said, Apple, if this is again, if it
needs to happen, there's a I would say it's a
coin flip at this point if they're going to need
to do this, But you're gonna split it a few ways.
You're gonna split it between Apple eating it. You're gonna
split it consumer eating it. You're gonna split it as
the supplier eating it, right, and so we'll see what happens.
Speaker 5 (24:28):
Fun times right, not really, no, I know sarcasm.
Speaker 9 (24:33):
Mark German, thank you so much.
Speaker 5 (24:34):
Good to have you here in studio, Bloomberg News, Managing
editor for Global Consumer Tech. Hey, when we come back
past as prologue, why the chump administration? May you want
to check out one former FED chair's handling of matters
that's coming up on Bloomberg Business Weekdaily.
Speaker 11 (24:46):
This is Bloomberg.
Speaker 1 (24:48):
You're listening to the Bloomberg Business Week Podcast. Catch us
live weekday afternoons from two to five eas during Listen
on Applecarplay and Android Otto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 11 (25:03):
Mac.
Speaker 6 (25:04):
I'll about you.
Speaker 9 (25:05):
Let me drive.
Speaker 6 (25:05):
Oh no, no, no no, this is not a toy.
Speaker 8 (25:08):
Who's going to due hory?
Speaker 1 (25:10):
Please?
Speaker 6 (25:11):
How the gravels?
Speaker 9 (25:13):
Let's wait?
Speaker 5 (25:13):
I want to drive.
Speaker 6 (25:14):
It's a question drive. This plea is the drive to
the clothes dot Com for me?
Speaker 5 (25:24):
A thing?
Speaker 8 (25:24):
Well?
Speaker 11 (25:25):
Dry rot Kelvin.
Speaker 6 (25:26):
Down on Bloomberg Radio.
Speaker 5 (25:28):
All right, everybody, we've got about eighteen minutes to go
until we wrap up the trade on this Monday, April fourth,
Carl Master Tim Stanevik live in our Bloomberg Interactive Broker
studio and bouncing around here. In terms of the equity trade,
I just heard the team breaking down the numbers. We're
definitely off our loads of the session, back up certainly
on the S and P and the down near our
highs of the session. That means up about one point
(25:49):
four percent on the S and P five hundred, Dow
Jones Industrial Average and the Nasdaq one hundred both tim
up about one and a quarter percent.
Speaker 2 (25:56):
So we're back.
Speaker 6 (25:57):
So we're back.
Speaker 5 (25:58):
Yeah, I mean, it's it's it's an interesting kind of
mellow day. And yeah, it's interesting to see green across
the screen, which was highly expected.
Speaker 2 (26:08):
Last night at what we saw over the weekend, well
because of.
Speaker 5 (26:11):
Right, what we saw over the weekend and stuff, and
we definitely saw I think Asia overnight saw some rallies.
Speaker 2 (26:16):
But I'm still very confused by it, and I'm hoping
Andrew Sliman can help help me see the light.
Speaker 5 (26:22):
Lets see what he has to say.
Speaker 2 (26:23):
The senior portfolio manager and head of the Applied equity
Advisor's team at Morgan Stanley Investment Management. He joins us
from Chicago. Andrew, good to have you back on with us.
The reason I say I'm surprised is because I think
there's it's fair to say a lot of folks out
there would say it after this weekend. Yes there's this pause,
(26:44):
but we still don't have clarity on what exactly is
going to happen when it comes to trade in tariffs.
Speaker 6 (26:49):
Fair.
Speaker 7 (26:51):
Absolutely, thanks for having me on. But look, I think
last Wednesday was a pivotal day because you can get
growth scares where the market's down fifteen up to almost twenty.
Speaker 11 (27:03):
Percent, and that's a growth scare.
Speaker 7 (27:04):
But once the market gets past twenty percent down, the
likelihood of recession is very high, and that's when the
credit markets start to quake. And basically Trump came out.
President Trump came out and said, I don't like to
see what I saw on the bond market, so I'm
putting a delay on. So I think in effect what
he did was he put a you know, he put
(27:27):
a floor on equities. You know, he didn't want him
to go down more than twenty percent, and so you
know that's what growth scare. You know, you can have
a v bottom like we had in twenty eighteen and
twenty twenty, or you can have a retest like we
saw in nineteen ninety eight, twenty eleven, twenty twenty two.
(27:49):
You just don't know. But the point is sometimes you
don't have retests, and maybe this is one of those times.
Speaker 6 (27:55):
Sometimes you do, sometimes you don't.
Speaker 5 (27:56):
I mean, isn't it safe to say, Andrew that investors
are still kind of struggle to game out what the
scenario is and the economic spillovers of a trade war,
even if it's maybe not at one hundred and forty
five or one hundred and twenty five percent, many folks
were saying even a ten percent across the board trade
tariff or tariff I should say, from the United States
against trading partners.
Speaker 6 (28:17):
It's a big deal.
Speaker 5 (28:18):
It changes the dynamics of certainly how you think about companies,
how do you think about their earnings, and how you
think about investments one hundred.
Speaker 7 (28:27):
Percent, but a lot of stocks are down a lot
more than ten percent. I mean, you know, whatever the
tariff and packed stocks are down. You've got some of
these big mag seven stocks that were down over thirty percent,
so a lot of bad news was priced into them.
And I'm a big believer in watching kind of earnings
(28:49):
and earnings revisions, but at times like this, I mean
I chucked that playbook because I don't think anyone knows.
I read a research piece where someone, you know, an
analysts brought down their Apple estimates by thirty percent, and
then they reduced that to only down seven percent. No
one knows, So the question becomes what is embedded in
(29:12):
stock prices? And there was a lot of bad news,
so I think the market is rallying on the expectation.
Maybe it's not the worst scenario. I'm not pounding the table.
I'm just saying the answered. Tim's first question is why
is the market going up? I think you know that
the news is slightly not as bad as it was,
(29:33):
you know, before last Wednesday, and the markets respond to
positive ready to change.
Speaker 2 (29:39):
Are you concerned about I don't know a good word
for this, but it's it's It's like the idea that
if you're an executive at a firm that's trying to
make decisions about CAPEX, trying to make decisions about hiring,
and you really don't really know how much you're going
to have to pay due to tariffs, there's this like
(30:03):
paralysis that happens, I imagine.
Speaker 11 (30:07):
Do you think that's happening? Correct?
Speaker 7 (30:10):
My next question to you is how much is the
stock down? You know, because if a stock isn't down
much and that heck comes out, then I'm worried. If
the stock's down a lot because the market anticipates paralysis,
then I'm not as worried. So yeah, I think there'll
be a lot of that. But then the question is
what's the setup going into that, you know, earning something.
(30:32):
I think the market anticipated that there will be this paralysis.
Speaker 2 (30:37):
So is the market fairly pricing in the risk in
your view?
Speaker 7 (30:44):
Well, I mean last Wednesday was uh, but you know,
we've had a heck of a rally here off the
low and uh, you know, the more you get a
few more days and I'm going to turn a little
bit more cautious that I was. You know, I wrote
a piece in that last Tuesday that just said you
got the playbook says down to fifteen percent?
Speaker 2 (31:06):
What in your view changed? What in your view change
on Wednesday? Because Carolyn, I've been talking about this for
the past few days. What changed on Wednesday? Yes, it's
a ninety day reprieve, but still means that you know,
eighty five days from now, we're going to be talking
about this again.
Speaker 8 (31:22):
Yeah.
Speaker 7 (31:22):
Yeah, My view changed because of what the President said.
Speaker 11 (31:26):
Very important. He didn't say, hey.
Speaker 7 (31:29):
We're putting a ninety day you know, reprieve on because
you know all these company countries are coming forward. He
said he's putting a reprieve on because he heard Jamie
Diamond said chance of recession. He said he's putting a
reprieve on because he didn't like what he saw on
the bond market. That tells me he's watching the financial markets, right,
(31:49):
He is watching it. So to me, that's what's changed.
That's the key is that he's not just hey, we're
just going to push forward and it's going to be
pain out there, but it's all for the good.
Speaker 11 (32:00):
No, right, keep pivoted, Andrew.
Speaker 5 (32:02):
Have you ever been in like an uber or a
cab and they're like, you know, foot on the guest stop,
foot of the guest on the guest Stop's agreed. Yeah, Well,
so my point is so he backs off, but we
know he likes tariffs. The President has been very clear
for years and years and years in.
Speaker 2 (32:22):
The English language is what he said to.
Speaker 11 (32:25):
What that means.
Speaker 7 (32:26):
Carol is the more the market goes up in this
little bounce, the more he emboldens himself to not care
about the market. So I think it goes back to
this point of how do you invest in that environment?
Speaker 5 (32:38):
Though, where he might be like Tariff's on, No, okay,
market sells off, bond market gets crazy, Tariff's off, you know, like,
how how do you CEOs are saying, I don't know
how I make decisions. I don't know how I do
things going forward? Like how do you do stuff? Sorry,
about forty five seconds left.
Speaker 7 (32:54):
I think you invest when the market is down, and
you get a little bit more bearish. When the market's up,
you have to tack against the you know, conventional wisdom.
People were screaming scared after the market it drops seventeen percent.
That's ridiculous. Likewise, to think it's all fine now, that's
(33:16):
naive also, So my my base view on the year is, look,
it's a pause year. We've had two great years in
a row for equities where the multiple got a little high.
We're due for a pause here, but they'll be trading opportunities.
I don't think this is the last time the market's
going to drop like this. I just wouldn't chase it.
Assuming everything's fine.
Speaker 6 (33:38):
Now we're still up forty we're still backing again.
Speaker 5 (33:42):
We're still up forty one percent on the S and
P five hundred twenty end of twenty twenty two.
Speaker 11 (33:47):
It's great, that's not so bad. Well, that's why we
need a pause here.
Speaker 5 (33:51):
Just don't look at for one can right nowful. It's
a painful not doing it. Not doing it, Andrew, thank
you so much. Andrew Slimmon. He is senior portfolio man
Morgan's Daily Investment Management, joining us from Chicago.
Speaker 2 (34:03):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 4 (34:11):
Listen live weekday afternoons from two to five pm Eastern.
Speaker 2 (34:15):
On Bloomberg dot com, the iHeartRadio app, tune In, and
the Bloomberg Business App. You can also watch us live
every weekday on YouTube and always on the Bloomberg terminal
Bloomberg Audio Studios, Podcasts, Radio News. This is Bloomberg Business
Weekdaily reporting from the magazine that helps global leaders stay
ahead with insight on the people, companies, and trends shaping
today's complex economy. Plus global business finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:32):
Mark Zuckerberg taking the stand in federal court today as
the first witness in the us FTC's antitrustriuse seeking to
break up Meta platforms. He's the company's founder and CEO.
Of course, he set to face questions about Meta's acquisitions
of Instagram and WhatsApp. The FTC is seeking to force
Meta to divest those platforms, alleging the acquisitions gave Meta
(00:52):
an illegal monopoly on portions of the social networking industry.
To that, here's FTC Chair Andrew Ferguson earlier on Fox
outlining the case.
Speaker 3 (01:01):
Here, we have actual evidence that the transactions turned out
to be anti competitive and have given Facebook and Met
a tremendous amount of power. We certainly think it's a monopoly,
and we think that the evidence that we're going to
put on a trial, is going to show that it's
a monopoly. And look, we all saw full on in
twenty twenty how much power these social media platforms have
(01:22):
over every aspect of our daily life, of our politics,
our elections, our social lives, our economic lives. And that's
what this case is about, is about addressing that sort
of power and making sure that twenty twenty can never
happen again.
Speaker 2 (01:37):
That was FDC Chair Andrew Ferguson on Fox earlier today
outlining the case from where we bring in Jenery Bloomberg Intelligence,
senior analyst for Anti Trust. She joins us here in
the Bloomberg Interactive Brokers studio. I wanted to play that
clip for you because it sounds like the case is
about a couple different things, at least to the FTC chair.
(01:58):
What is the case actually about, because it sounded very political,
and this is a case that has been a long
time in the making, that has spanned administrations.
Speaker 4 (02:07):
Right, Well, it really is just about Facebook's acquisitions of
Instagram and WhatsApp. Now long time ago. There were other
allegations in the suit, they've all been thrown out. They're gone,
having to do with not working with competitors. It's just
these acquisitions. And the allegation is that for both of
those companies, Facebook at the time called Facebook and not
Meta was concerned that they would grow or be bought
(02:29):
by a Google or somebody like some other big tech
platform and become a real competitor to Facebook and give
them a tough time in social networking, and so they
bought them instead. It's sort of what they call a
buy and bury, although they didn't bury strategy, and they're
saying that just those acquisitions that itself was anti competitive contents.
Speaker 2 (02:46):
So hold on, is that is that not allowed?
Speaker 5 (02:50):
Like, you know, there's a business strategy to me, you know.
Speaker 2 (02:52):
If you think about it, Like, let's just think about
it from the consumer package goods business. A large soda
manufacturer going and buying a fast rising upstart that is
making some sort of drink that a lot of people
are seeming to enjoy.
Speaker 6 (03:08):
Is that anti competitive? So it is an anti competitive
on its face.
Speaker 4 (03:12):
No, And first of all, it has I'm not a
lawyer with a monopoly position. Do you have a monopoly
and have you done this to maintain your monopoly? That's
the allegation here. So a company that isn't considered a monopolist.
They can do something like that. The other thing is
we're talking about buying Barry, So sometimes these things look
anti competitive where a dominant company buys up and upstart
(03:33):
and then kills it it's gone, which didn't happen here.
Speaker 6 (03:36):
See that.
Speaker 5 (03:36):
Yes, I'm not going to say who, but when we've
definitely seen that with various big.
Speaker 6 (03:41):
Tech companies, exactly happens, right, We've seen it.
Speaker 4 (03:44):
But that isn't the case here, which I think makes
this case a little bit difficult for the Federal Trade
Commission because they didn't. Facebook didn't just buy Instagram and
WhatsApp and kill them off. They put resources in and
they improved companies that were really very nascent at the
time that they were acquired.
Speaker 5 (03:59):
The issue is in boy, this makes them even a
bigger monopoly when it comes to the social world or
is that part of it as well?
Speaker 7 (04:06):
Well?
Speaker 6 (04:06):
That is part of adding it.
Speaker 4 (04:07):
That is part of it that they basically just maintained
this monopoly they had in personal social networking and what
it's and by just buying up everybody, they own them all.
They keep Facebook blue, they call it the original and
Instagram separate they're two different products even though they're both
owned by Meta, and that they maintain this monopoly over
personal social networking. And what that results in is lack
(04:28):
of choice for consumers, lack of quality.
Speaker 6 (04:31):
Maybe there's less privacy protections.
Speaker 4 (04:33):
There are more ads. Maybe if you had some competitor,
you'd have better options as consumers. That's the allegation here.
Is it TikTok calling good point?
Speaker 6 (04:43):
Very good point? So what's at stake? Because Mark Zuckerberg.
Speaker 5 (04:46):
Already taking the stand in federal court today, what did
we learn from any of that? I know it's all
kind of happening in real time.
Speaker 4 (04:52):
It is right, He's really important here because they're two
sides to this case. That makes it very strange. There
are a lot of documents, mostly Iszuckerberg authored by him
or he contributed to in an email chain from twenty twelve.
In twenty fourteen, when these companies were bought saying it's
better to buy than compete. Right, this is bad. It
looks like the intention is we don't want to compete.
(05:13):
We just want to buy them up so that they
won't be competing with us. But on the other hand,
you have the situation where they put the money in
they built these companies up. And also you have to
prove as a plaintiff that it caused consumer harm. Maybe
the intention was bad, and Mark Zuckerberg's going to have
to explain away those documents and what he meant at
the time. But even if they proved that the intention
(05:36):
was bad at that time, they also have to approve
they also have to prove that consumers were harmed.
Speaker 6 (05:41):
That is very difficult.
Speaker 4 (05:42):
Think about it. Many years ago. Technology advances and changes
very quickly. We have TikTok. Now we didn't have TikTok.
Then YouTube has expanded since then. So would we be
in a better position had they right now, had they
not bought the companies, those companies could be gone for
all we know, or they could exist in some weakened
form than they exist today. And how do you prove
(06:04):
the consumers would be better off?
Speaker 5 (06:05):
And I think that's a big problem here, One last
question real quickly, like twenty seconds.
Speaker 6 (06:09):
Might they potentially have to.
Speaker 4 (06:11):
Get rid of these That's what the FTC is seeking,
And that's a big deal because about fifty percent of
the ad revenue for Meta comes from Instagram.
Speaker 5 (06:19):
That changes the business dynamics. Jen Thank you so much, Jenniferree.
She's senior anti trust litigation analyst here at Bloomberg Intelligence.
Speaker 1 (06:26):
You're listening to the Bloomberg Business Week podcast. Catch US
Live weekday afternoons from two to five these During that
listen on Applecarplay and Android Otto with the Bloomberg Business app,
or watch US Live on YouTube.
Speaker 5 (06:39):
Focus on news out of Washington, DC and the President,
especially when it comes to tariff's The explosion and changing
of tariff terms have led to a lot of volatility
and global financial markets and a lot of questions about
what's ahead in terms of the global macro outlook. It
also risks adding to the inflation concerns here in the
United States. Bottom line, it's a tough environment. As we
(07:00):
heard this morning from Goldman Sachs CEO David Solomon on
his earnings call with analysts.
Speaker 8 (07:05):
This uncertainty around the past forward and fears over the
potentially escalating effects of the trade war have created material
risks to the US and global economy. We are encouraged
by the administration's recent actions to pursue a more gradual
policy process that allows for considered negotiations with many countries,
but how policies will evolve is still unknown.
Speaker 5 (07:26):
Of course, that was Goldman's CEO David Solomon earlier this
morning on that earnings call. Unknown's uncertainties not easy, any
of it for the Fed to determine monetary policy going forward.
And as Bloomberg's Christine Harper writes in a Bloomberg opinion
piece looking back at former Fetchair, Paul Volker's career could
provide lessons for President Trump and his in his administration. Christine,
(07:48):
by the way, is Bloomberg News editorial board member co
author with Paul Volker of the book about his life.
It's entitled Keeping at It, The Quest for Sound Money
and Good Government. Christine joins us here in studio, I said,
when you walked in, we've been thinking about you a lot,
because we've talked about Paul Volker before with you in
kind of stressful times and certainly these higher inflationary times.
(08:10):
Paul Volker, you write about two episodes during his life
that are important. One takes us back to the administration
of Richard Nixon in nineteen seventy one.
Speaker 9 (08:17):
Go there with us.
Speaker 10 (08:18):
Yeah, So he was part of he was a younger
member of the Nixon administration. He was under Secretary of
Monetary Affairs, which he actually remembers as being one of
the greatest job in the world.
Speaker 9 (08:30):
He loved it.
Speaker 10 (08:32):
But at that time, the US had this unsustainable requirement
that it honored this thirty five dollars per ounce price
for gold. And at that point, after decades of overseas
spending of dollars on the Marshall Plan and various investments overseas,
countries abroad had so many dollars that everybody kind of
(08:56):
knew there wasn't really enough gold to back at all.
Speaker 9 (08:59):
And so it was up.
Speaker 10 (09:00):
To the Nixon administration to sort of admit that and
come out with an announcement and it was a unilateral
declaration on a Sunday night in August in nineteen seventy one.
Vulger was very involved in a whole weekend of talks
about it at Camp David. In the lead up, everybody
was surprised. It was known as the Nixon Shock, and
(09:23):
they recognized that suddenly taking the value of gold off
of any kind of anchor meant that there could be
just chaos and the value of the dollar could plummet.
So they put on all these wage and price controls
at the same time they created tariffs. They tried to
do all these things to manage the fallout, and also
Vulker was immediately sent overseas to start talking to the
(09:44):
financial leaders of every country major country, an extensive there
was an extensive plan to be sure.
Speaker 9 (09:51):
They weren't perfect.
Speaker 10 (09:52):
They did some crazy things, and they had this Treasury
secretary at the time, John Connolly, who only lasted for
eighteen months under Nixon, who it's a sort of Texas,
you know character, and he was a little nuts. But
then George Schultz came along and they had a much
more focused sort of way of dealing with it. So
it wasn't perfect, but it was compared to what we're
(10:13):
seeing with Trump and these tariffs. It was there was
a rationale to it that everybody could understand. There was
real economic thinking behind it.
Speaker 2 (10:21):
So that was nineteen seventy one. Fast forward to nineteen
seventy nine when Vulker becomes Jimmy Carter's fed chair.
Speaker 6 (10:27):
Fed chair.
Speaker 10 (10:27):
Yeah, because the result of having no anchor to the
dollar was that there was inflation. I mean, there were
other reasons for the inflation, for the problems, but you know,
the value of the dollar was thinking inflation was incredibly high.
It was it was destroying the American economy, and so
Jimmy Carter brought in Paul Vulker, even though Vulker told
(10:48):
him before he when he sort of was talked to
for the job, I'm going to do whatever it takes
to kill inflation. That might mean to higher interest rates,
it could be really bad for the economy, and Jimmy
Carter chose him anyway. So it pretty much was one
of the factors that sank Jimmy Carter's reelection because the
economy got really it was really tough, but it was
(11:09):
successful bringing down inflation, and the sort of vulgar commitment
to price stability right was so powerful, and so you know,
the integrity he had in pursuing that aim was so
completely believable that from then on, instead of the gold standard,
the dollar was known as being on the vulgar standard.
Speaker 6 (11:29):
It's pretty wild.
Speaker 5 (11:30):
I mean, are we in the process of kind of
losing that concept and idea.
Speaker 10 (11:35):
So that was sort of the point I was making
in my piece was that you know, really what the
vulgar standard amounts to is this belief that there are
public servants in America, whether they're you know, appointed or
political or civil servants, but who are going to do
what's right for America and make sure there's price stability
and make sure there's sort of economic rationale behind things.
Speaker 9 (11:54):
Of course, it's not always been perfect.
Speaker 10 (11:56):
There have been mistakes, but when there are crises, you
see over and over again these political figures will sort
of retreat to the background and let experts like you know,
when George Bush was dealing with the financial crisis, it
was really Hank Paulson and BERNANKI who were handling it
for America. But Butch wasn't kind of you know, back
then there wasn't so much tweeting, but he wasn't like
(12:17):
getting in the middle of it so much. And and
you know, even when Bill Clinton was dealing with you know,
the bond market turmoil at the beginning of his you know,
he recognized that Bob Rubin had more expertise. And so
we've had presidents that listened to economic experts. This feels
different because really a lot of anybody who looks at
(12:40):
what the administration put out has immediately mocked the you know.
Speaker 6 (12:47):
The confidence certainly in the United States, right.
Speaker 10 (12:49):
And the yeah, and I mean when they saw the
the formula that was used to justify the tariffs.
Speaker 9 (12:55):
I mean, none of it makes sense.
Speaker 10 (12:57):
The various explanations coming out from thedministrations.
Speaker 9 (13:00):
Contradict each other.
Speaker 10 (13:02):
So even if you think that the general idea of
being presenting a new trade order in the world makes sense,
the way they're going about it is so haphazard that,
you know, as David Solomon was saying, like nobody knows
what's happening, and it's very hard to make any sort
of forward planning.
Speaker 2 (13:21):
As Carol mentioned, we're seeing this hit consumer confidence. Yeah,
you know, going into this term. A question that we
asked a lot of our guests, Christine, was do we
see maybe the markets, the bond market or the equity
market or both become checks to what the president is doing,
at least when it comes to his economic agenda. In
your view, did we see that happen last week?
Speaker 10 (13:41):
Well, I'm not an expert on what's making the administration
do anything, but I don't.
Speaker 2 (13:46):
Think anybody is except for the president.
Speaker 10 (13:48):
I've just seen the reporting saying that Trump said, you
know that the bond market was getting a little queasy
or whatever.
Speaker 2 (13:53):
Words he used about guardrails here.
Speaker 10 (13:56):
Yeah, I mean, the borrowing costs of the United States
government is a huge guardrail. I mean, no, none of
the administration's policies are going to succeed if suddenly we're
paying a huge amount more in interest every year. So
you know, you can cut as many federal jobs as
you want, you can cut all the services from the
federal government.
Speaker 9 (14:16):
But if we're if all that you.
Speaker 10 (14:18):
Know, savings is you know, overtaken by having to pay
more on interest on our debt, I don't know where
where that's getting us.
Speaker 5 (14:25):
What do you think the president could do in terms
of you know, or he and his key economic advisors
to maintain the confidence in the US by citizens of
the US and also the global world.
Speaker 6 (14:34):
Well, based on what well I.
Speaker 10 (14:36):
Think, you know, it does seem that a more consistent
approach would be helpful. That's what you hear from business leaders,
That's what you hear from foreign leaders. They want to
understand what the aims are here. They want to clear
path forward and you know, not a daily change in
the in the tariff regime and plans, and you know,
not sort of terriffs by tweet.
Speaker 5 (14:58):
That doesn't whether I want to ask you what if
you think what if that's his aim, is to just
constantly upset people and keep them kind of on edge,
whether it's global leaders, whether he definitely has shown a
difference to the equity market, it's certainly the bond market
that caught his attention.
Speaker 6 (15:15):
But what if that is his strategy?
Speaker 5 (15:17):
What could be as you think about you've covered so
much in terms of crises and just made off crypto
like just so many things of your purview. How do
you like how how are we thinking about kind of
the US as an economic and financial might.
Speaker 10 (15:32):
Yeah, I mean the US is sort of based on
this idea that you can your money is safe lending
to the US government. And if we have a policy
that nobody understands or trusts and seems all to be
designed to satisfy the whims of one person, it's going
to be harder and harder for us to maintain that,
and that would be really damaging for Americans. So ideally,
(15:54):
what would be good to see you to say back
to your question, is for you know, the president to
start listening to some of his I mean it does
sound like Treasury Secretary Scott Persens taking sort of the
front the lead on this. The markets certainly trust him
a bit more. He's talked a lot more about it,
kind of a gradual approach, and so, you know, I
think there's hope. That's why markets seem to be a
little quieter today that you know, maybe some reason will prevail.
(16:18):
It's but I mean, the president is very impulsive, and
so it's it's very hard to know what.
Speaker 9 (16:24):
Will really happen.
Speaker 2 (16:25):
Yeah, what are potential long term risks in your view
if during this administration the US moves away from this
vulgar standard, right, does that have ramifications beyond selection?
Speaker 11 (16:38):
Well?
Speaker 10 (16:38):
Sure, I mean I think what you see is that
the borrowing costs of the US go up because you know,
people whether it's American citizens or people overseas, just start
putting their money, the money that they want to make
sure is there no matter what. They're not necessarily going
to put it in treasuries or or all of it
in treasuries. They might start finding other places. That's good
for you know, other countries and their debt or other markets,
(17:00):
but it's.
Speaker 9 (17:01):
Bad for the US borrowing.
Speaker 10 (17:03):
And you know, you just see inflation cause because you'll
have higher costs for Americans having to try to buy
things overseas. I think there's just all these privileges Americans
have gotten used to knowing that the dollar was sort
of needed by everybody in the world and sought sought after,
and the same with you know, US treasuries is at risk,
(17:24):
I think, I mean, it's not going to go away immediately,
but we've taken it for granted for a long time.
Speaker 6 (17:29):
Philiy J.
Speaker 5 (17:29):
Powell could find himself in a really complicated right in
terms of if Tavis make things more expensive and there's
more inflation pressures in what could be potentially a slow
in growth environment.
Speaker 6 (17:38):
Yeah, that's tricky.
Speaker 10 (17:39):
Yeah, I mean you saw that in the seventies after
the Nixon chaka you so basically these bouts of stagflation,
and it was really hard. I mean, the FED at
the time wasn't able to deal with the inflation. They
were too concerned about the h the slow growth and they,
you know, basically Arthur Burns, that fed Cherman at the time,
was a close political ally of Richard Dixon, and many
(17:59):
people believe he just let inflation, you know, happen because
he wanted to make sure Nixon could get re elected.
And that turned out to be a really big problem
for the US economy twenty five seconds.
Speaker 5 (18:13):
If Paul Volker was here, what would you want to
ask him about this environment?
Speaker 9 (18:17):
Just quickly? Well, I know he would.
Speaker 10 (18:19):
I mean, at the big point he wanted to make
in the book was the importance of competent government.
Speaker 5 (18:24):
You know, it's a true public servant, right, Yeah.
Speaker 10 (18:27):
And so he realized sort of like the big takeaway
at the end of his life was we need to
have good, well trained people staffing the US government. So
I think he would be really upset at all the
ways we're treating federal workers.
Speaker 5 (18:40):
All right, great stuff, Thank you so much, so appreciate it.
Christine Harper, Bloomberg News editorial board member, co author with
Paul Voker on the book Keeping at It, The Quest
for Sound Money and Good Government.
Speaker 1 (18:53):
This is the Bloomberg Business Week podcast. Listen live each
weekday starting at two pm. He'stern on Applecarplay and Droid
Auto with the Bloomberg Business app. You can also listen
live on Amazon Alexa from our flagship New York station.
Just say Alexa play Bloomberg eleven thirty.
Speaker 5 (19:11):
We're talking Apple. Yeah.
Speaker 2 (19:12):
I mean, this, after all, is the company that's most
exposed to a tariffs or a tit for chat chat
with China when it comes to the mag seven shares rallying.
Speaker 11 (19:19):
Though.
Speaker 2 (19:20):
On that reprieve, we talk about the company's massive global
supply chain a lot with our Mark Kerman, who's Bloomberg
News Managing editor for Global Tech. He joins us here
in the Bloomberg BusinessWeek studio. You had a busy weekend always, yes,
I mean, but this is easier than usual. And I
was struck by one of the pieces that I read
that you wrote, which said Apple basically was able to
(19:42):
avoid its biggest crisis since the pandemic back in twenty twenty.
Speaker 12 (19:47):
That's right, And you know I didn't listen to your
full conversation with the with the prior guest. He's great,
But if we're talking about Apple, I don't believe that
they're going to be moving their supply change to the Yes,
maybe it'll happen in our lifetime, but I don't think
it's going to happen in the next ten years.
Speaker 2 (20:05):
What happens if tariffs on China continue to exist, there's
no exemption for Apple. Can Apple satisfy US customers through India?
It seems by the way, it would seem to defeat
the purpose of the tariffs.
Speaker 12 (20:20):
But well, today no, but I would say within a
year two yes, Right now they can probably fulfill maybe
seventy five percent of the US demand that they need
in India. If they ramped up and burn the midnight
oil for the next few months, they'd probably be able.
Speaker 7 (20:34):
To do it.
Speaker 11 (20:35):
But they would be able to do.
Speaker 12 (20:36):
It pretty cleanly. I would think in a year or
two from now, they're already thirty forty maybe a little
bit more than that million units. The US represents probably
one hundred million units per year, maybe a little bit less,
so less than the rest of world, So you know,
you're quickly, you're quickly getting there.
Speaker 5 (20:56):
What does it do to the relationship though, between Apple
and China ultimately is what it does.
Speaker 12 (21:01):
Yeah, that's the elephant in the room, because China can't
be too happy here. And I think the argument that
Apple is trying to make is how important China is.
Speaker 11 (21:10):
To the rest of the world.
Speaker 12 (21:12):
Right still needing to produce one hundred to million iPhones,
You're still producing all of those phones for the rest
of the world. So basically the idea is splitting the
supply chain INTWO and again Apple supply chain goes well
beyond the iPhone. But let's face it, what we really
care about is the iPhone. The other stuff's cool, but
this is where we're at. India's for US, China's for
the rest of the world, including China. It's pretty it's
(21:34):
pretty important.
Speaker 2 (21:35):
Still, but again, it would defeat the purpose of the
tariffs on China if you were in a move whole point.
Speaker 6 (21:40):
That's but that's the challenge.
Speaker 2 (21:41):
That's the challenge I think Apple might face when it
comes to dealing with the Trump administration.
Speaker 12 (21:45):
Well, is it possible that Trump says, well, Apple is
using India as sort of a lever here to get
out of the tariffs, I'm going to put this huge
new tariff on India. Also, that's a real question, right,
And so I think that is what's making this so
challenging for Apple is that it kind of feels like
whack a mole to some extent. If we're not going
to just manufacture stuff in the US, we're going to
(22:07):
have policies that are shifting, right almost every day. We
can have a president here who can, to your point,
add an India tariff to a significant degree overnight, so
they can put all their eggs in the India basket
and then oh my god, we're gonna have to move
somewhere else. Now we're actually gonna have to move to
the US. And so they've got a lot of cash.
Maybe they're needing to start dipping into those cash reserves,
(22:30):
whether it means to offset price hikes or to move something.
But I just don't see the feasibility of moving to
the US. It's just so unlikely. Let me just drop
you a scenario here. I feel like, short of lying
to Trump, if I'm Tim Cook and telling him we're
gonna move to the US, just give us a few
(22:52):
years and betting that Trump won't be back for a
third term, right, which obviously is not legal, but obviously
they've been talking about it. I don't think it's going to happen.
Speaker 9 (23:01):
But anyways, the.
Speaker 12 (23:02):
Bet is that Trump's gone three and a half years.
They could tell Trump is going to take us four years,
but we're going to get there because of you. So
they can announce all this stuff, say they're going to
do it, but never actually do it knowing he's gone.
That's one lever Tim Cook could pull. I don't know
if the act well, because maybe you get advance after
(23:22):
Trump and you know who knows what he does. But
I think most people would understand these things take time
and there's no way you can move to the US.
But I guess if I'm Apple, I could say we're
going to do this and just not do it and
then come up with the reason four years why it
didn't work out. One other thing, you could say we're
going to move one component or one thing, or packaging.
Speaker 6 (23:43):
Talking about packaging with us packaging.
Speaker 12 (23:45):
Yeah, just come up with something.
Speaker 6 (23:47):
Mar we have to You talked.
Speaker 5 (23:48):
About all their cash on the balance you we always do.
Can they survive three and a half years of higher
prices and deal with it and just write it out?
Speaker 8 (23:55):
Yes?
Speaker 5 (23:56):
Okay?
Speaker 12 (23:57):
Are they going to know?
Speaker 11 (23:59):
Maybe? Do they want to?
Speaker 12 (24:01):
I think is what I was meaning to say.
Speaker 11 (24:02):
Absolutely not.
Speaker 12 (24:03):
But there's no scenario in which they're going to start
charging two grand for these phones.
Speaker 11 (24:08):
They're going to eat some of it.
Speaker 12 (24:10):
Like I said, Apple, if this is again, if it
needs to happen, there's a I would say it's a
coin flip at this point if they're going to need
to do this, But you're gonna split it a few ways.
You're gonna split it between Apple eating it. You're gonna
split it consumer eating it. You're gonna split it as
the supplier eating it, right, and so we'll see what happens.
Speaker 5 (24:28):
Fun times right, not really, no, I know sarcasm.
Speaker 9 (24:33):
Mark German, thank you so much.
Speaker 5 (24:34):
Good to have you here in studio, Bloomberg News, Managing
editor for Global Consumer Tech. Hey, when we come back
past as prologue, why the chump administration? May you want
to check out one former FED chair's handling of matters
that's coming up on Bloomberg Business Weekdaily.
Speaker 11 (24:46):
This is Bloomberg.
Speaker 1 (24:48):
You're listening to the Bloomberg Business Week Podcast. Catch us
live weekday afternoons from two to five eas during Listen
on Applecarplay and Android Otto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 11 (25:03):
Mac.
Speaker 6 (25:04):
I'll about you.
Speaker 9 (25:05):
Let me drive.
Speaker 6 (25:05):
Oh no, no, no no, this is not a toy.
Speaker 8 (25:08):
Who's going to due hory?
Speaker 1 (25:10):
Please?
Speaker 6 (25:11):
How the gravels?
Speaker 9 (25:13):
Let's wait?
Speaker 5 (25:13):
I want to drive.
Speaker 6 (25:14):
It's a question drive. This plea is the drive to
the clothes dot Com for me?
Speaker 5 (25:24):
A thing?
Speaker 8 (25:24):
Well?
Speaker 11 (25:25):
Dry rot Kelvin.
Speaker 6 (25:26):
Down on Bloomberg Radio.
Speaker 5 (25:28):
All right, everybody, we've got about eighteen minutes to go
until we wrap up the trade on this Monday, April fourth,
Carl Master Tim Stanevik live in our Bloomberg Interactive Broker
studio and bouncing around here. In terms of the equity trade,
I just heard the team breaking down the numbers. We're
definitely off our loads of the session, back up certainly
on the S and P and the down near our
highs of the session. That means up about one point
(25:49):
four percent on the S and P five hundred, Dow
Jones Industrial Average and the Nasdaq one hundred both tim
up about one and a quarter percent.
Speaker 2 (25:56):
So we're back.
Speaker 6 (25:57):
So we're back.
Speaker 5 (25:58):
Yeah, I mean, it's it's it's an interesting kind of
mellow day. And yeah, it's interesting to see green across
the screen, which was highly expected.
Speaker 2 (26:08):
Last night at what we saw over the weekend, well
because of.
Speaker 5 (26:11):
Right, what we saw over the weekend and stuff, and
we definitely saw I think Asia overnight saw some rallies.
Speaker 2 (26:16):
But I'm still very confused by it, and I'm hoping
Andrew Sliman can help help me see the light.
Speaker 5 (26:22):
Lets see what he has to say.
Speaker 2 (26:23):
The senior portfolio manager and head of the Applied equity
Advisor's team at Morgan Stanley Investment Management. He joins us
from Chicago. Andrew, good to have you back on with us.
The reason I say I'm surprised is because I think
there's it's fair to say a lot of folks out
there would say it after this weekend. Yes there's this pause,
(26:44):
but we still don't have clarity on what exactly is
going to happen when it comes to trade in tariffs.
Speaker 6 (26:49):
Fair.
Speaker 7 (26:51):
Absolutely, thanks for having me on. But look, I think
last Wednesday was a pivotal day because you can get
growth scares where the market's down fifteen up to almost twenty.
Speaker 11 (27:03):
Percent, and that's a growth scare.
Speaker 7 (27:04):
But once the market gets past twenty percent down, the
likelihood of recession is very high, and that's when the
credit markets start to quake. And basically Trump came out.
President Trump came out and said, I don't like to
see what I saw on the bond market, so I'm
putting a delay on. So I think in effect what
he did was he put a you know, he put
(27:27):
a floor on equities. You know, he didn't want him
to go down more than twenty percent, and so you
know that's what growth scare. You know, you can have
a v bottom like we had in twenty eighteen and
twenty twenty, or you can have a retest like we
saw in nineteen ninety eight, twenty eleven, twenty twenty two.
(27:49):
You just don't know. But the point is sometimes you
don't have retests, and maybe this is one of those times.
Speaker 6 (27:55):
Sometimes you do, sometimes you don't.
Speaker 5 (27:56):
I mean, isn't it safe to say, Andrew that investors
are still kind of struggle to game out what the
scenario is and the economic spillovers of a trade war,
even if it's maybe not at one hundred and forty
five or one hundred and twenty five percent, many folks
were saying even a ten percent across the board trade
tariff or tariff I should say, from the United States
against trading partners.
Speaker 6 (28:17):
It's a big deal.
Speaker 5 (28:18):
It changes the dynamics of certainly how you think about companies,
how do you think about their earnings, and how you
think about investments one hundred.
Speaker 7 (28:27):
Percent, but a lot of stocks are down a lot
more than ten percent. I mean, you know, whatever the
tariff and packed stocks are down. You've got some of
these big mag seven stocks that were down over thirty percent,
so a lot of bad news was priced into them.
And I'm a big believer in watching kind of earnings
(28:49):
and earnings revisions, but at times like this, I mean
I chucked that playbook because I don't think anyone knows.
I read a research piece where someone, you know, an
analysts brought down their Apple estimates by thirty percent, and
then they reduced that to only down seven percent. No
one knows, So the question becomes what is embedded in
(29:12):
stock prices? And there was a lot of bad news,
so I think the market is rallying on the expectation.
Maybe it's not the worst scenario. I'm not pounding the table.
I'm just saying the answered. Tim's first question is why
is the market going up? I think you know that
the news is slightly not as bad as it was,
(29:33):
you know, before last Wednesday, and the markets respond to
positive ready to change.
Speaker 2 (29:39):
Are you concerned about I don't know a good word
for this, but it's it's It's like the idea that
if you're an executive at a firm that's trying to
make decisions about CAPEX, trying to make decisions about hiring,
and you really don't really know how much you're going
to have to pay due to tariffs, there's this like
(30:03):
paralysis that happens, I imagine.
Speaker 11 (30:07):
Do you think that's happening? Correct?
Speaker 7 (30:10):
My next question to you is how much is the
stock down? You know, because if a stock isn't down
much and that heck comes out, then I'm worried. If
the stock's down a lot because the market anticipates paralysis,
then I'm not as worried. So yeah, I think there'll
be a lot of that. But then the question is
what's the setup going into that, you know, earning something.
(30:32):
I think the market anticipated that there will be this paralysis.
Speaker 2 (30:37):
So is the market fairly pricing in the risk in
your view?
Speaker 7 (30:44):
Well, I mean last Wednesday was uh, but you know,
we've had a heck of a rally here off the
low and uh, you know, the more you get a
few more days and I'm going to turn a little
bit more cautious that I was. You know, I wrote
a piece in that last Tuesday that just said you
got the playbook says down to fifteen percent?
Speaker 2 (31:06):
What in your view changed? What in your view change
on Wednesday? Because Carolyn, I've been talking about this for
the past few days. What changed on Wednesday? Yes, it's
a ninety day reprieve, but still means that you know,
eighty five days from now, we're going to be talking
about this again.
Speaker 8 (31:22):
Yeah.
Speaker 7 (31:22):
Yeah, My view changed because of what the President said.
Speaker 11 (31:26):
Very important. He didn't say, hey.
Speaker 7 (31:29):
We're putting a ninety day you know, reprieve on because
you know all these company countries are coming forward. He
said he's putting a reprieve on because he heard Jamie
Diamond said chance of recession. He said he's putting a
reprieve on because he didn't like what he saw on
the bond market. That tells me he's watching the financial markets, right,
(31:49):
He is watching it. So to me, that's what's changed.
That's the key is that he's not just hey, we're
just going to push forward and it's going to be
pain out there, but it's all for the good.
Speaker 11 (32:00):
No, right, keep pivoted, Andrew.
Speaker 5 (32:02):
Have you ever been in like an uber or a
cab and they're like, you know, foot on the guest stop,
foot of the guest on the guest Stop's agreed. Yeah, Well,
so my point is so he backs off, but we
know he likes tariffs. The President has been very clear
for years and years and years in.
Speaker 2 (32:22):
The English language is what he said to.
Speaker 11 (32:25):
What that means.
Speaker 7 (32:26):
Carol is the more the market goes up in this
little bounce, the more he emboldens himself to not care
about the market. So I think it goes back to
this point of how do you invest in that environment?
Speaker 5 (32:38):
Though, where he might be like Tariff's on, No, okay,
market sells off, bond market gets crazy, Tariff's off, you know, like,
how how do you CEOs are saying, I don't know
how I make decisions. I don't know how I do
things going forward? Like how do you do stuff? Sorry,
about forty five seconds left.
Speaker 7 (32:54):
I think you invest when the market is down, and
you get a little bit more bearish. When the market's up,
you have to tack against the you know, conventional wisdom.
People were screaming scared after the market it drops seventeen percent.
That's ridiculous. Likewise, to think it's all fine now, that's
(33:16):
naive also, So my my base view on the year is, look,
it's a pause year. We've had two great years in
a row for equities where the multiple got a little high.
We're due for a pause here, but they'll be trading opportunities.
I don't think this is the last time the market's
going to drop like this. I just wouldn't chase it.
Assuming everything's fine.
Speaker 6 (33:38):
Now we're still up forty we're still backing again.
Speaker 5 (33:42):
We're still up forty one percent on the S and
P five hundred twenty end of twenty twenty two.
Speaker 11 (33:47):
It's great, that's not so bad. Well, that's why we
need a pause here.
Speaker 5 (33:51):
Just don't look at for one can right nowful. It's
a painful not doing it. Not doing it, Andrew, thank
you so much. Andrew Slimmon. He is senior portfolio man
Morgan's Daily Investment Management, joining us from Chicago.
Speaker 2 (34:03):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 4 (34:11):
Listen live weekday afternoons from two to five pm Eastern.
Speaker 2 (34:15):
On Bloomberg dot com, the iHeartRadio app, tune In, and
the Bloomberg Business App. You can also watch us live
every weekday on YouTube and always on the Bloomberg terminal
Hosts And Creators
Tim Stenovec
Carol Massar
Popular Podcasts
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy And Charlamagne Tha God!
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
Decisions, Decisions
Welcome to "Decisions, Decisions," the podcast where boundaries are pushed, and conversations get candid! Join your favorite hosts, Mandii B and WeezyWTF, as they dive deep into the world of non-traditional relationships and explore the often-taboo topics surrounding dating, sex, and love. Every Monday, Mandii and Weezy invite you to unlearn the outdated narratives dictated by traditional patriarchal norms. With a blend of humor, vulnerability, and authenticity, they share their personal journeys navigating their 30s, tackling the complexities of modern relationships, and engaging in thought-provoking discussions that challenge societal expectations. From groundbreaking interviews with diverse guests to relatable stories that resonate with your experiences, "Decisions, Decisions" is your go-to source for open dialogue about what it truly means to love and connect in today's world. Get ready to reshape your understanding of relationships and embrace the freedom of authentic connections—tune in and join the conversation!