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US China Trade Talks Start in London With Aim to Ease Export Curbs · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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  Speaker 1: us live on YouTube.
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  Speaker 2: So the SMP closed around six thousand on Friday. We
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  Speaker 2: are above barely that level now, but nonetheless, I mean
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  Speaker 2: we are now officially in a bowl market. So now
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  Speaker 2: our eyes turned to the trade talks in London between
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  Speaker 2: US and China representatives, and that's going to be enough
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  Speaker 2: to start moving the needle for the equity market higher.
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  Speaker 2: Joining us now is Brendan Murray. He is Bloomberg Global
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  Speaker 2: Trade Editor. What's a win for both sides.
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  Speaker 3: A win for both sides is going back to the
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  Speaker 3: Geneva agreement from a month ago and saying here are
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  Speaker 3: the clear goalposts that we set for each other and
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  Speaker 3: that we're going to try to meet going four forward,
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  Speaker 3: and then setting the setting the stage for future rounds
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  Speaker 3: of talks that they have enough in common and the
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  Speaker 3: tone in the room is good. Remember, these are two
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  Speaker 3: sides that sat sat together a month ago and came
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  Speaker 3: away and didn't really understand what they had agreed to.
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  Speaker 3: So so here we are again. They just started the
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  Speaker 3: discussions a couple of hours ago here in London. It's
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  Speaker 3: expected to go well into the into the early evening,
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  Speaker 3: maybe even into Tuesday if if they get hung up tonight.
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  Speaker 3: So the the real goal here is to re establish
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  Speaker 3: the framework for some talks were two months from the
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  Speaker 3: the end of the ninety day reprieve that that both
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  Speaker 3: both sides agreed to when they brought their tariffs down.
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  Speaker 3: So time is ticking and these are complicated talks and
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  Speaker 3: they can't They're not going to be done in just
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  Speaker 3: a few meetings.
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  Speaker 4: So the real the real.
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  Speaker 3: Goal here is momentum and maintaining the forward momentum.
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  Speaker 5: I know, my strategy would be just walking down to
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  Speaker 5: the local pub, you know, have a couple of pints,
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  Speaker 5: work this thing out. I mean not tough, going to.
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  Speaker 4: Be Brendan, where are we on terrrifts?
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  Speaker 6: Are here?
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  Speaker 5: I can't keep track of where we are on tariffs?
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  Speaker 5: Could you just remind us kind of what the current
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  Speaker 5: status is?
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  Speaker 3: Yeah, So part of that ninety day reprieve was to
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  Speaker 3: bring the very high tariffs down one hundred and forty
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  Speaker 3: five percent on Chinese imports into the US. Extremely high
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  Speaker 3: tariffs for US goods going to China. They brought those down.
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  Speaker 3: The US is at about thirty percent on Chinese goods
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  Speaker 3: now China brought theirs down to ten. So those are
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  Speaker 3: by no means low tariffs. Those are still having an effect.
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  Speaker 3: They're diminishing the share of trade that's moving between the
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  Speaker 3: two countries, So tariffs are going to be there for
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  Speaker 3: a while. Those are Those aren't the kinds of things
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  Speaker 3: you start taking off this early in a negotiation. Those
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  Speaker 3: are leverage that you take off later on down the road,
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  Speaker 3: once you can accomplish some of the other things that
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  Speaker 3: you accomplish. And for the moment, the US is focused
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  Speaker 3: on seeing the those rare earth elements, those key magnets
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  Speaker 3: and other things that are needed to make batteries and
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  Speaker 3: high tech medical equipment come start flowing back to the
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  Speaker 3: US so American companies don't have to shut down their
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  Speaker 3: production lines. And China wants some of the export restrictions
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  Speaker 3: that the US put on it's high tech exports to
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  Speaker 3: China some of those lifted. It seems like the two
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  Speaker 3: sides came into these talks willing to give up some
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  Speaker 3: of those. So we'll we'll have to wait and see
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  Speaker 3: where it goes from here, but we're expecting that they
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  Speaker 3: they'll come away from these discussions with some sort of
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  Speaker 3: basis to continue the negotiations on a whole host of
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  Speaker 3: other things. Tariffs, like I said, not going to be
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  Speaker 3: addressed today, those are further down the road.
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  Speaker 2: What who is the leverage? This is my favorite question
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  Speaker 2: in a minute, who's the leverage?
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  Speaker 3: Well, you could argue that both sides have leverage. Look,
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  Speaker 3: President Trump has said he'll just take he'll take terriffs
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  Speaker 3: back up, and he'll cut off the US trade with
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  Speaker 3: with China as he did. You know initially China would say, yeah,
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  Speaker 3: well we'll just starveview of rare earth elements and see
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  Speaker 3: how well your auto industry survives a couple of months
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  Speaker 3: of that. So both sides have a fair amount of leverage.
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  Speaker 3: This is a game of pain thresholds. How much pain
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  Speaker 3: can your economy take? How much backlash can you take
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  Speaker 3: from the general public, from lawmakers. So we're at the
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  Speaker 3: very early stage of the leverage that's being applied, and
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  Speaker 3: you could argue that both sides have a fair amount
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  Speaker 3: of it. It's just who can withstand it the longest.
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  Speaker 4: Right, Very good.
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  Speaker 5: Brenda Murray, global Trade editor for wear Bloomberg News, joining
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  Speaker 5: us from London, where there's talks are taking place between
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  Speaker 5: the Chinese and the American trade debt delegations. And again
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  Speaker 5: it just feels like if they're having dialogue, that's a
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  Speaker 5: good thing to me. I don't think anything, I don't know,
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  Speaker 5: necessarily bad, but you got to keep talking and kind
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  Speaker 5: of pushing the ball down the road.
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  Speaker 3: I guess.
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  Speaker 1: Well.
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  Speaker 2: That's my question too, is like what's going to be
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  Speaker 2: good news for the market. Do you just need no
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  Speaker 2: bad news news?
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  Speaker 6: I think that might be it, or do you.
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  Speaker 2: Start to need some trade deals where the ink assigned
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  Speaker 2: not necessarily with China, but with somebody kind of lets
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  Speaker 2: go yeah.
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  Speaker 5: I don't know, we'll see.
• 5:10
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• 5:23
  Speaker 6: YouTube in DC. There's still stuff going on as well.
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  Speaker 2: Nathan Dean, Bloomberg Intelligence Senior policy analyst, joins us now. Nathan,
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  Speaker 2: obviously the headline over the weekend is the riots in
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  Speaker 2: LA and then the National Guard being sent in without
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  Speaker 2: the governor having.
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  Speaker 6: Asked for it. What is how is that unfurling in
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  Speaker 6: DC right now?
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  Speaker 7: So I would say, you know, it was one of
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  Speaker 7: those things where President Trump wanted this fight because it
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  Speaker 7: plays to one of his key messages that won him
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  Speaker 7: the election, and that.
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  Speaker 4: Was on immigration.
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  Speaker 7: But you know, in terms of how it plays in
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  Speaker 7: terms of things like the one big beautiful bill or
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  Speaker 7: to tariffs or to the you know that's really not
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  Speaker 7: happening just yet. You know, there was a lot of
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  Speaker 7: discussions about medicaid cuts and snap reductions and inflation reduction acts,
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  Speaker 7: and those messages are very difficult for Republicans, but they're
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  Speaker 7: still moving forward. So when it comes to Los Angeles
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  Speaker 7: and this idea of troops, I think President Trump certainly
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  Speaker 7: wants that to try and deflect some that messages away
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  Speaker 7: from medicaid cuts. For example, the question is, you know,
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  Speaker 7: we anticipate the one big beautiful build going into July.
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  Speaker 7: You know, will California go into July? Time will only tell.
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  Speaker 5: So where are we on either I don't know, cuts
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  Speaker 5: too expenses like medicaid or new revenue like taxes. Where
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  Speaker 5: are we in that discussion these days?
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  Speaker 7: Yeah, So you know, there's really three things that came
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  Speaker 7: out of the House bill. It's the Medicaid, it's the
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  Speaker 7: Snap benefits, and it's the Inflation Reduction Act. Now, each
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  Speaker 7: one of those was given a certain timeframe of when
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  Speaker 7: those tax you know, tax credits, and then the Medicaid
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  Speaker 7: cuts an example, when they would actually take into effect.
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  Speaker 4: Now, the House Conservatives insist if.
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  Speaker 7: Medicaid, for example, that would start in December twenty twenty six,
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  Speaker 7: the Inflation Reduction Act twenty twenty eight. All this being said, now,
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  Speaker 7: what the Senate is doing at the moment is looking
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  Speaker 7: how to mod moderate it. And so Senator John Thune
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  Speaker 7: gave a statement just last week saying that we're going
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  Speaker 7: to anticipate a lot of that pushing back. So what
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  Speaker 7: we're telling our clients is is that go back to
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  Speaker 7: the original House in ways and means text where for
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  Speaker 7: a lot of these tax cuts and a lot of
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  Speaker 7: these tax extensions they would start taking place in like
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  Speaker 7: twenty twenty eight or twenty twenty nine, beyond Trump's the
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  Speaker 7: rest of his administration. That's where we think the Senate
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  Speaker 7: goes now when it comes to Medicaid in particular. Obviously
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  Speaker 7: it's a very difficult vote for a lot of Republicans
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  Speaker 7: that have either constituencies or states that are heavily development
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  Speaker 7: or heavily reliant on Medicaid. You know, we think that
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  Speaker 7: most likely that those ultimate decisions, if you will, are
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  Speaker 7: going to be votes to kick the can and push
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  Speaker 7: those cuts off, so that if a future president wants
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  Speaker 7: to come back and revisit it, that person would have flexibility.
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  Speaker 3: Right.
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  Speaker 2: Interesting in terms of the few between Elon Musk and
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  Speaker 2: President Trump, I guess it's a twofer like one.
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  Speaker 6: Where are we with that?
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  Speaker 2: But then more importantly, kind of what is dose doing
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  Speaker 2: within the government without Elon Musk?
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  Speaker 4: So it seems like we're sort of at a truce
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  Speaker 4: at the moment.
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  Speaker 7: Now I say that obviously it could change almost instantly.
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  Speaker 7: But in terms of where we are with that, well,
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  Speaker 7: the White House sent what is known as a recissions
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  Speaker 7: package trying to codify around nine billion dollars in cuts.
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  Speaker 7: Now this is mostly USAAD State and PR We looked
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  Speaker 7: at it from an investment point of view, and we
• 8:21
  Speaker 7: actually don't think there's much their market moving. But the
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  Speaker 7: reason why it's important to talk about is that this
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  Speaker 7: is the first of many recisions packages that will come
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  Speaker 7: probably throughout the rest of this year. Now the White
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  Speaker 7: House can literally say, essentially say, look, Doges, identify these
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  Speaker 7: billion dollars number of cuts. Now we need Congress to
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  Speaker 7: go in there and actually approve this. Now, you don't
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  Speaker 7: need a filibuster. It's just a majority vote in the House,
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  Speaker 7: majority vote in the Senate. But obviously there are differences
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  Speaker 7: between what Doge wants to do and what Senators want
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  Speaker 7: to do. This happened one time in twenty eighteen, and
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  Speaker 7: the Republicans just said, look, I can't vote to cut these.
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  Speaker 4: Things that are ultimately going to impact my districts.
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  Speaker 7: So we are going to continue to see things like
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  Speaker 7: clean energy tax I'm sorry, loans grants, and so forth
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  Speaker 7: like that. Those recisions packages are most likely coming later
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  Speaker 7: this year.
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  Speaker 5: Last week, Alex and I were broadcasting remotely from Washington,
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  Speaker 5: DC area. One afternoon, I was walking around town, walking
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  Speaker 5: past a Department of Agriculture, which is a massive building
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  Speaker 5: taken up like a whole square block, and it was
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  Speaker 5: quit in time and people were coming out by the thousands.
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  Speaker 5: I mean, I don't you know, it goes back to
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  Speaker 5: I don't know what we don't know what these people do,
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  Speaker 5: and I'm sure they're doing good work. But now that
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  Speaker 5: Elon Musk is out of the picture, is dose still
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  Speaker 5: a thing? Are people just going to come back into
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  Speaker 5: the federal workforce now?
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  Speaker 7: Well, anecdotally, I would say yes, DOUGH is still a thing.
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  Speaker 7: Just talking to my friends and family around the region,
• 9:43
  Speaker 7: they certainly are still ACQUI and there are DOGE employees
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  Speaker 7: at pretty much all these agencies. And what I would
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  Speaker 7: say is is that rather than being the bully pulpit
• 9:53
  Speaker 7: of Elon Musk, now each agency leader is the one
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  Speaker 7: that actually has to make that decision. For example, over
• 9:58
  Speaker 7: at the Federal Reserve, DOGE isn't there yet are as
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  Speaker 7: much as I can tell, they're not there yet.
• 10:03
  Speaker 4: But FEDWCE Chair for Supervision.
• 10:05
  Speaker 7: If you look at Michelle Boumanever's speech for last week,
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  Speaker 7: it had a lot of Doughe elements to it in
• 10:09
  Speaker 7: terms of saying, look, we need to get cut, we
• 10:12
  Speaker 7: need to actually become more streamlined, and so.
• 10:14
  Speaker 4: Forth like that.
• 10:14
  Speaker 7: So the idea of DOJ is certainly going through the agencies,
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  Speaker 7: but the bully pulpit of Elon Musk isn't there, so
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  Speaker 7: you will see cuts and you will see streamline efforts
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  Speaker 7: continuing throughout the rest of this year.
• 10:25
  Speaker 2: A Nathan, thanks a lot, super appreciate Nathan, Dean Bloomberg
• 10:27
  Speaker 2: Intelligence and your policy analyst, joining us from Washington, DC.
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  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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  Speaker 2: Alex youel here alongside Paul Sweeney. This is Bloomberg Intelligence Radio.
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  Speaker 2: They cover two thousand companies and one hundred and thirty
• 10:57
  Speaker 2: industries all around the world. Split up, that's not a
• 11:01
  Speaker 2: surprise at all for anyone on Wall Street. Is Warner
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  Speaker 2: Brothers Discovery splitting into two publicly traded companies, one with
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  Speaker 2: HBO Max film and TV business, the.
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  Speaker 6: Other with its cable business.
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  Speaker 2: The stock is up over seven percent and for more
• 11:12
  Speaker 2: Keitha Mrangana than Bloomberg Intelligence analysts on US media is
• 11:16
  Speaker 2: with us.
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  Speaker 6: Githa do we like this plan was what in it?
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  Speaker 5: Was?
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  Speaker 6: It all surprising?
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  Speaker 8: We liked the plan, Alex. This has been many months
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  Speaker 8: in the making, so last December they had actually reorganized
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  Speaker 8: the existing business into these two separate units, the TV
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  Speaker 8: business and then the streaming and the studio business, kind
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  Speaker 8: of eventually paving the way for exactly the announcement today.
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  Speaker 8: I think the surprising part and this is a little
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  Speaker 8: bit of a pleasant surprise for Warner Brothers, Discovery has
• 11:44
  Speaker 8: really been on the debt side. So as you well know,
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  Speaker 8: well the linear TV business is challenged, but the bigger
• 11:51
  Speaker 8: problem for WBT has really been a huge amount of debt.
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  Speaker 8: And this debt was really as part of the combination
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  Speaker 8: of Warner Brothers and Discovery, which happened a few years ago.
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  Speaker 8: At that point the company had over fifty five billion
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  Speaker 8: dollars in debt. They've paid about nineteen billion down, but
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  Speaker 8: they still have thirty five billion. But what they're doing
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  Speaker 8: now as part of this transaction is they have a
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  Speaker 8: tender offer out there, really kind of looking to streamline
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  Speaker 8: the capital structure. So when you have these two new
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  Speaker 8: public companies, there's going to be a much more manageable
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  Speaker 8: debt load. At both of those companies, and I think
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  Speaker 8: investors are really reacting positively to that news Keetha.
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  Speaker 5: When they put the companies together, one of the arguments
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  Speaker 5: was to create scale to compete against Netflix and Disney.
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  Speaker 5: What happened to that argument.
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  Speaker 8: Yeah, exactly, Paul. You know, yes, they did create scale
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  Speaker 8: as far as the TV networks part of the business
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  Speaker 8: was concerned. You know, you have Discovery, which is really
• 12:46
  Speaker 8: the leader when it comes to nonfiction. You have you know,
• 12:49
  Speaker 8: the Warner Networks and HBO, which is the leader when
• 12:51
  Speaker 8: it comes to fiction and quality dramas and scripted series.
• 12:55
  Speaker 8: And they thought that that would do well. But unfortunately
• 12:58
  Speaker 8: what happened is, you know, and all media companies, as
• 13:01
  Speaker 8: you will know, Paul, have this conundrum because they have
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  Speaker 8: the TV business, which brings in a lot of the cash,
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  Speaker 8: but is literally a no growth business. In fact, it
• 13:09
  Speaker 8: doesn't decline. Both advertising as well as affiliate fees are
• 13:12
  Speaker 8: in decline. But then you had the streaming business, which
• 13:14
  Speaker 8: initially kind of had a little bit of trouble because
• 13:18
  Speaker 8: you know, in that whole game of subscribers and that
• 13:21
  Speaker 8: land graph for subscribers, they actually ended up incurring a
• 13:25
  Speaker 8: huge amount of losses. But there is this whole wave
• 13:28
  Speaker 8: of content cost rationalization. We've seen a turnaround and all
• 13:31
  Speaker 8: of the streaming businesses and Warner Brothers Discovery actually has
• 13:34
  Speaker 8: kind of led the charge there. So they were actually
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  Speaker 8: the first to get profitable in terms of streaming, and
• 13:39
  Speaker 8: so now we're seeing this huge disconnect, or at least
• 13:42
  Speaker 8: they are saying that there is this huge disconnect between
• 13:45
  Speaker 8: the TV network's business and the streaming the studios business,
• 13:48
  Speaker 8: which should arguably get a much higher multiple, and that's
• 13:52
  Speaker 8: kind of the reason for this split. So we're seeing
• 13:54
  Speaker 8: how multiple companies do this. Actually, so Comcast, which has
• 13:56
  Speaker 8: the NBC division, they're splitting out their cable networks. We
• 13:59
  Speaker 8: had Live Skate and Stars, where you have Lion Skate
• 14:02
  Speaker 8: as a movie independent movie studio, Stars of the media networks,
• 14:06
  Speaker 8: and now you have Warner Brothers Discovery. So there's this
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  Speaker 8: whole big movement now towards you know, this vertical kind
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  Speaker 8: of separation if you will, I mean, do.
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  Speaker 2: They all come together then and create kind of one
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  Speaker 2: less great TV network thing?
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  Speaker 8: Yeah, that's kind of the plan. So the most logical combination,
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  Speaker 8: and this has been floated around for for months now,
• 14:28
  Speaker 8: is that with this news of the Comcast, you know,
• 14:31
  Speaker 8: the NBC cable network separation. Who would have would that
• 14:34
  Speaker 8: become like this kind of roll up vehicle, And that's
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  Speaker 8: kind of what you know, a lot of the industry
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  Speaker 8: experts are thinking, they're expecting now that you have this
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  Speaker 8: news today with Warner Brothers Discovery, everybody's kind of expecting
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  Speaker 8: down the road, some combination of maybe that Warner Brothers
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  Speaker 8: Discovery TV assets along with the Comcast assets and who
• 14:52
  Speaker 8: knows who else kind of spins off their networks and
• 14:55
  Speaker 8: then that becomes this giant kind of TV network umbrella.
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  Speaker 8: Going back to Paul's point about scale, because scale really
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  Speaker 8: matters now at this business.
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  Speaker 5: All right, how about Paramount, the other sick child in
• 15:08
  Speaker 5: your coverage, what's going on there?
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  Speaker 8: Yeah, so we really don't know what's going on there.
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  Speaker 8: So there's been a lot of ups and downs, Paul,
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  Speaker 8: with the whole closing of the deal. So the Paramount
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  Speaker 8: sky Dance transaction, it was announced last year sometime in July.
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  Speaker 8: It was supposed to close by the first half, by
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  Speaker 8: the end of the first half of twenty twenty five,
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  Speaker 8: but there's just been so many different press reports. They've
• 15:32
  Speaker 8: had to do different things to appease the current administration
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  Speaker 8: to a peace President Trump, I'm not sure he is
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  Speaker 8: yielding so easily. So we're actually it's still kind of
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  Speaker 8: fifty to fifty Paul, whether that transaction actually, yeah, actually closes.
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  Speaker 8: So there's just too many things up in the air.
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  Speaker 8: And then again there's the lingering question because we know
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  Speaker 8: that sky Dance is really was really only interested in
• 15:55
  Speaker 8: the Paramount's studio business. So again what they kind of
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  Speaker 8: do with the TV network's business they do with the
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  Speaker 8: streaming business, that's all a huge question mark. So visibility
• 16:04
  Speaker 8: very very limited right now for Paramount.
• 16:07
  Speaker 2: I guess I just wonder if you stick all the
• 16:09
  Speaker 2: cable networks together, how does that actually generate real income?
• 16:14
  Speaker 2: I mean, I know that's a cash cow to some extent, right,
• 16:16
  Speaker 2: but then you have a lot of debt and there's
• 16:17
  Speaker 2: no growth. Like, what kind of asset is that?
• 16:21
  Speaker 8: Yeah, it's definitely a melting ice cube kind of an asset,
• 16:24
  Speaker 8: which is exactly what you know, the TV networks have
• 16:26
  Speaker 8: been the argument that all of these media companies making
• 16:30
  Speaker 8: are making alex is that somehow by kind of banding together,
• 16:34
  Speaker 8: you know, because each one of them will have one
• 16:36
  Speaker 8: or two networks that is kind of a must have networks.
• 16:39
  Speaker 8: If you're looking at Warner you have CNN. You know,
• 16:42
  Speaker 8: if you're looking at again, if you're looking at the
• 16:45
  Speaker 8: NBC networks, you have USAU have MSNBC. So you know,
• 16:48
  Speaker 8: there are definitely always going to be some must have
• 16:50
  Speaker 8: networks in each portfolio and kind of putting them all
• 16:54
  Speaker 8: together will stem that rate of decline, or at least
• 16:56
  Speaker 8: that is the argument that they're making. But again we've
• 16:59
  Speaker 8: seen that couret cutting has actually been far worse than
• 17:02
  Speaker 8: what it was initially projected, So again it remains to
• 17:06
  Speaker 8: be seen. But the idea is they want to milk
• 17:08
  Speaker 8: it till it kind of runs dry.
• 17:10
  Speaker 5: Can do we have any any early feedback from Orlando
• 17:13
  Speaker 5: with the new Universal Park? John Tucker's asking it's fun?
• 17:17
  Speaker 1: Yeah, so it is.
• 17:19
  Speaker 8: It is awesome, and we you know the initial so
• 17:22
  Speaker 8: this actually only opened about ten to fifteen days ago, Paul,
• 17:26
  Speaker 8: And so far everything seems to be going in the
• 17:28
  Speaker 8: right direction for Epic Universe and for Comcast, and we
• 17:32
  Speaker 8: know that they are really kind of doubling down on
• 17:34
  Speaker 8: their parks business. They actually have a new park coming
• 17:37
  Speaker 8: out just out of London, and they have all these
• 17:38
  Speaker 8: other attractions that are opening in the US as well,
• 17:41
  Speaker 8: but so far from Orlando, the signs are pretty pretty strong.
• 17:45
  Speaker 2: So my daughter's ten, she's never once asked to go
• 17:48
  Speaker 2: to Disney and she has asked to go to this thing.
• 17:51
  Speaker 8: Really.
• 17:52
  Speaker 5: Yes see, it's interesting, isn't it. But now you're going
• 17:55
  Speaker 5: to go to Orlando, you go to the universal thing.
• 17:58
  Speaker 5: You say, since we're here, let's do a couple at
• 18:01
  Speaker 5: Disney World, And that's kind of the plan.
• 18:02
  Speaker 6: There, right, Yeah, No, we're not doing either of those things.
• 18:05
  Speaker 2: I'm just saying more just on like the buzz for
• 18:07
  Speaker 2: the actual kids who are going to make their parents
• 18:09
  Speaker 2: do that.
• 18:10
  Speaker 6: Go figure. All right, Keith. Always good to catch up.
• 18:11
  Speaker 2: Keith running off on Boomberg Intelligence Analyst on US media.
• 18:17
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 18:21
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• 18:24
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• 18:27
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• 18:31
  Speaker 2: All right, Alex de Oli, Paulsweeni, this is Boomberg Intelligence Rady.
• 18:33
  Speaker 2: We bring you all the top news in business, economics
• 18:35
  Speaker 2: and finance. There are a lens of our Bloomberg intelligence folks.
• 18:38
  Speaker 2: They cover two thousand companies and one hundred and thirty
• 18:39
  Speaker 2: industries all around the world. So the SMP is treating
• 18:43
  Speaker 2: a six thousand and eight now what Ann Berry is founding.
• 18:47
  Speaker 2: A managing partner at Thread Needle joins us now. And
• 18:49
  Speaker 2: the question I was asking before break is do we
• 18:52
  Speaker 2: need actual good news for a sustained move higher to
• 18:55
  Speaker 2: all time highs or is it less bad news going
• 18:58
  Speaker 2: to be enough?
• 19:00
  Speaker 9: Unfortunately, it feels like less bad news is going to
• 19:03
  Speaker 9: be enough. Alex and I continue to be perplexed as
• 19:05
  Speaker 9: to how the market level can be higher today than
• 19:08
  Speaker 9: it was before we started down this Liberation Day tariff regime.
• 19:11
  Speaker 9: So I think the market sentiment is such like, don't
• 19:14
  Speaker 9: shock us with something terrible, and we're just going to
• 19:16
  Speaker 9: keep on humming on up. That's how it feels at
• 19:17
  Speaker 9: the moment.
• 19:19
  Speaker 5: Technology, and give us your thoughts on just the tech
• 19:22
  Speaker 5: sector in general. Is that still a leading sector for
• 19:25
  Speaker 5: this market overall?
• 19:28
  Speaker 9: So I think tech has been extremely highly valued for
• 19:31
  Speaker 9: two years at this point. But what's been really interesting
• 19:34
  Speaker 9: to me about this earning season is a lot of
• 19:36
  Speaker 9: these businesses, those that have been giving out and increased
• 19:39
  Speaker 9: guidance have been rewarded with increased investor support, and I
• 19:44
  Speaker 9: think there are some areas of tech that continue to
• 19:46
  Speaker 9: be interesting. A lot of these software companies that are
• 19:48
  Speaker 9: becoming one stop shop for enterprises both large and small.
• 19:52
  Speaker 9: So it does feel like there are certain pockets of opportunity.
• 19:54
  Speaker 9: But I do think that the market's becoming slightly more
• 19:57
  Speaker 9: disciplined around which are providing more guide guidance to walk
• 20:01
  Speaker 9: to the upside and not hiding behind this you know,
• 20:04
  Speaker 9: macro uncertainty narrative.
• 20:06
  Speaker 2: Well to that point, does the macro uncertainty still touch
• 20:09
  Speaker 2: these specific areas of tech?
• 20:12
  Speaker 9: Well, I'll sort of answer that alex from two different perspectives,
• 20:14
  Speaker 9: and one is from the actual client perspective, the customer perspective.
• 20:18
  Speaker 9: And so when I think about the boardrooms that I'm
• 20:20
  Speaker 9: sitting in, the conversation we're having is, you know, whether
• 20:24
  Speaker 9: we're manufacturing business or consumer businesses, we are concerned about
• 20:28
  Speaker 9: the macro outlook despite what I think is a euphoric
• 20:31
  Speaker 9: equity market, and as a result, when it comes to
• 20:33
  Speaker 9: hiring decisions, when it comes to capex capital expenditure decisions,
• 20:37
  Speaker 9: we're being more thoughtful and more conservative but the one
• 20:41
  Speaker 9: space that is still getting allocation of dollars is productivity
• 20:45
  Speaker 9: enhancing software and so places like into it that I
• 20:47
  Speaker 9: look at, places like Salesforce that I look at, you know,
• 20:51
  Speaker 9: their share prices. Crm's been down into it, it's been up,
• 20:54
  Speaker 9: It's been awarded for a great, great post tax season.
• 20:57
  Speaker 8: You know.
• 20:57
  Speaker 9: I do see spend continuing to go there. It's about
• 21:00
  Speaker 9: sorting through to try and find the places where valuation
• 21:02
  Speaker 9: looks reasonable.
• 21:04
  Speaker 5: And what's the state of play of AI? I mean,
• 21:06
  Speaker 5: prior to all this tariff talking of twenty twenty five,
• 21:09
  Speaker 5: all the market talked about cared about valued was AI.
• 21:13
  Speaker 5: We've kind of stepped away from that a little bit.
• 21:15
  Speaker 5: What's your view today about AI and maybe how investors
• 21:18
  Speaker 5: should have exposure to it.
• 21:20
  Speaker 9: I'm not sure that we have stepped away from AI,
• 21:22
  Speaker 9: but I think instead of it being this sort of
• 21:24
  Speaker 9: novelty that's grabbed headlines, it's something that instead is woven
• 21:28
  Speaker 9: into all the depths of the earnings narrative. So if
• 21:32
  Speaker 9: you look back at the earnings called transcripts, the vast
• 21:34
  Speaker 9: majority of business was talking about the ways in which
• 21:37
  Speaker 9: they were currently or planning to incorporate AI into their
• 21:41
  Speaker 9: own product development, into enhancing efficiency, into using it for
• 21:45
  Speaker 9: marketing and for sales, and to reaching out consumers. So
• 21:47
  Speaker 9: I think it's actually now becomes something that's become table stakes.
• 21:51
  Speaker 9: We've moved past AI as a headline grammar into if
• 21:54
  Speaker 9: it's a headline, it may be maybe for the downside,
• 21:56
  Speaker 9: because you know, it's a surprise to the market. So
• 21:59
  Speaker 9: I I think it's now here, and I think it's
• 22:01
  Speaker 9: where a place where we're looking more watchfully to see
• 22:05
  Speaker 9: evidence of return on investment, and we're starting to see it.
• 22:08
  Speaker 9: We're starting to see some businesses come out and talk
• 22:10
  Speaker 9: about specific ways it added to the top line and
• 22:12
  Speaker 9: of the bottom line. I think those who aren't coming
• 22:14
  Speaker 9: out seeing that are going to suffer in the second
• 22:16
  Speaker 9: half of this year. So the question what do you like, Well,
• 22:20
  Speaker 9: there's a couple start with the US on that theme.
• 22:23
  Speaker 9: I do like into it they had. It was sort
• 22:25
  Speaker 9: of a surprising one to me because I'd had in
• 22:27
  Speaker 9: the back of my mind this bias when you looked
• 22:29
  Speaker 9: at what had happened to H and R block over time.
• 22:31
  Speaker 9: But when it came to the core tax product they
• 22:33
  Speaker 9: do TurboTax that was set for complete AI disruption. It
• 22:37
  Speaker 9: was going to be fully automated in the irs has
• 22:39
  Speaker 9: been talked about for two years now, issuing their own software,
• 22:43
  Speaker 9: and I thought that's going to be really difficult for
• 22:44
  Speaker 9: folks like TurboTax. They knocked it out of the park
• 22:47
  Speaker 9: there on the path for forty seven percent growth this year.
• 22:50
  Speaker 9: And what they figured out is that yes, the consumer,
• 22:53
  Speaker 9: yes the small business wants to have AI to improve
• 22:56
  Speaker 9: the efficacy of their tax file and get their refunds faster,
• 22:59
  Speaker 9: but they also want human beings they pick up the
• 23:01
  Speaker 9: phone and talk to. People are now, I think, sufficiently
• 23:04
  Speaker 9: spooked by the pace of change and the complexity of
• 23:07
  Speaker 9: change in the tax system that they're wanting a human
• 23:09
  Speaker 9: being to talk to and to walk them through what
• 23:12
  Speaker 9: it is they should be doing instead of filing themselves
• 23:14
  Speaker 9: or relying on just technology. So to me, that marriage
• 23:16
  Speaker 9: of human and artificial intelligence is one of the reasons
• 23:19
  Speaker 9: I like into it, and there are others.
• 23:21
  Speaker 5: Like it, And thanks so much for joining us. Really
• 23:23
  Speaker 5: appreciate it and very founder managing partner Threadneedle from New
• 23:26
  Speaker 5: York City.
• 23:27
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