Tariff Whiplash Sends Tech Stocks Back into Retreat
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Bloomberg Audio Studios. Podcasts. Radio. News. From the heart of where innovation, money, and power collide. In Silicon Valley and beyond. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. ♪

Live from New York and San Francisco, this is Bloomberg Technology. Investors, they are back on edge after President Trump's tariff pause and monster rally yesterday. And this is tariffs on China remain in place. Markets now bracing for a potentially protracted period of global trade volatility. Let's check in on these markets. We're currently up over the last two days almost 8%. Remember the euphoria that swept through the markets as tariffs were put on pause. All countries are

except for China, now have a 10% blanket tariff. But we drop again once again today, Ed, and it looks as though the anxiety about what China really means for the broader markets is still there. Yeah, let's give some illustrative examples of the companies impacted, right? Tesla jumped 22% yesterday. This is a two-day chart. It's pulled back today. So it goes from having its biggest jump since 2013 to pulling back. Apple, another company impacted, right? Switching up the boards and looking at Apple today.

90-day pause on 56 countries that had tariffs implemented while the administration boosts the tariff level on China. Apple's so interesting, and later in the show we'll dig deep into it. Why? That Reuters report that they airlifted tons, literally 1.5 million iPhones from India into the US. This is kind of crazy markets news cycle, and I'm here for it. How

Aren't we just? And President Trump's tariff pause is a welcome relief, Ed. But look, investors are remaining wary of the wider economic impact of those 125% tariffs still on China. White House National Economic Council Director, that's Kevin Hassett, saying there have been well-advanced trade talks and offers with other nations. Bloomberg's Kayleigh Lyons breaks it down. Just the intricacy, the 10% blanket tariff on everyone but China, but some get close to a deal, it seems.

Yeah, according to Kevin Hassett, who was speaking on another network, he's the director of the National Economic Council. They've already had more than 15 deals presented to them, and they are intending to take these bilaterally, one by one, the entire trade team, which could include Hassett, but as well as Treasury Secretary Scott Besson, Commerce Secretary Howard Letnick, and of course, President Trump himself, who...

admitted yesterday that while this is about negotiation, it was also about the market, despite the messaging we initially got from the White House press secretary and Secretary Besant that this was always part of the plan. This was the art of the deal. It's all about negotiations. The president himself admitted he was watching the bond market get a little queasy and felt that people were getting

Yippee, and that contributed to this move at least to lower or to pause 90-day, 490 days reciprocal tariffs on all countries except China. But yes, that 10% is still in place and that 125% levy on China in place as well, in addition to the 84% reciprocal tariff that China has placed on U.S. imports. And that could effectively have the effect of starting a

a decoupling of the two largest economies, which obviously has major implications for firms with heavy Chinese exposure, including the technology companies that we saw ripping yesterday, as you guys were just talking about, giving back some of those gains today, as there is still risk here for a company like Apple and Nvidia. And although President Trump said yesterday he does think China wants to make a deal, he's expecting a phone

call from Beijing and would love to talk to Xi Jinping. There has been no sign from Xi or the Chinese government yet that they are interested in making that forward progress, suggesting that China does not necessarily want to blink first here, keeping in mind that the idea that there's still ongoing conversations over a TikTok divestiture deal adds an additional piece of leverage and complication to any conversations that are had.

You know, Apple's going to be a big focus in the show today because the White House keeps talking about it. Yesterday's jump, the biggest since 1998. It's just crazy times. And India's a focus. I was interested in our reporting that Besant listed India as one of the nations he'd speak with early on. What is the D.C. reaction, right? If you're a Democrat and you're trying to respond to the White House tariff policy, what are you hearing?

Well, essentially what Democrats argue is that this is just chaotic, that there is so much uncertainty around the policy and then that has the same detrimental impacts of these policies staying in place. There was also a lot of concern on the part of primarily Democrats yesterday about the potential market manipulative effect

of President Trump's swings when it comes, or vacillations when it comes to this policy, keeping in mind that it was yesterday morning he said on True Social it was a good time to buy, then hours later sparked the biggest rally we've seen since 2008 with this decision. And many, including Senator Adam Schiff of California, have suggested that this requires an investigation into possible insider trading. So that is another narrative we are hearing. All of it, though, just speaks to the uncertainty around this policy, keeping in mind that while the president is now saying that China,

tariffs are sticking in place, that there is a 90-day pause in place for other countries. We have seen time and again that he does have the power to change his mind and to do so very quickly. What stands today on Thursday isn't necessarily going to stand tomorrow necessarily. And of course, we're going to have potentially multiple opportunities to hear from the president today. He's scheduled to be holding a cabinet meeting right now, signing a bill later, present some opportunities for him to speak to the press, and we'll see if he has any additional surprising tariff news for us.

Bloomberg's Kayleigh Lyons in Washington, D.C. Thank you very much. Another story overnight. China also announced it will, quote, moderately reduce the number of U.S. movies allowed into the country in response to the U.S. government's tariffs. The move is seen as a new front in the trade war and could signal Beijing's willingness to target American services, which could include travel, intellectual property, royalties and transportation.

Still so much to digest on the wider tariff implications on tech. Let's get to it. Jay Hatfield is with us, Infrastructure Capital Management CEO. Can you trade in this erratic market?

You can but it's very easy to lose a lot of money doing so so it's really better for most investors is to hold their positions Although I will say we have been even before the tariff halt We had said that 5,000 was a good support level. So now that we've kind of bounced off that hard I think we're just neutral on equities right now, but I would counsel even hedge fund managers on

to trade cautiously because there's erratic policy coming out of the White House. They can announce it at 1.10 in the afternoon. And so it's better to just get to your position and kind of hold it. When you're thinking about

potentially the names that you'd like and want to recommit to. How much are you thinking about exposure for China at the moment? 100%, I guess. And also to overseas markets. So we favor, I think you had a guest on earlier, regional banks. They have no exposure to international. They do have credit exposure, but we think we have a non-consensus call that the economy is pretty strong.

And so those banks have come down almost as hard as the investment banks, but they're not dependent on investment banking. They're really just dependent on rates and spreads. So be more conservative in this market.

Jay, I'm just staring at a five-day NASDAQ 100 chart and I'm staring at it because effectively net we're flat over the course of five trading days. Then you think about the drama that were within those five trading days. Do you net understand the tariff policy of the White House and are you able to make informed markets decisions based on your understanding of that policy?

Thanks Ed, definitely not. I mean that's really why we're neutral on equities. We're actually pretty very constructive on inflation which that view is validated this morning. So we had negative headline inflation.

And just to mention that too, everybody wants to talk about tariffs, but nobody talks about the 20% drop in energy. That's very profound. That's very stimulative to the US economy. It's very positive for inflation, but it never gets mentioned. But to your point about uncertainty, there's basically two camps in the White House, the hawks and the doves. The doves are more pro-business. You kind of saw that when Elon Musk

called Navarro a dumb bag of bricks. Like that's almost unprecedented. I don't think that happens in normal organizations where colleagues are highly pejorative. So because we don't really know who's going to win that debate, it seems like Besant has the latest victory. We are, like I said, we're neutral on stocks. We'd be more conservative and also fixed income looks pretty attractive.

Jay, recession calls were pulled on the White House's 90-day pause. Should our audience of technology investors, technology employees, founders, startup leaders be braced for a recession in your mind?

Our call is there's no recession, but slow growth. But the real thing that also people are missing, in our opinion, is that the slowdown is mostly caused by hawkish Federal Reserve policy and not by tariff policy. As I mentioned, energy decline pretty much offsets the tariff increase. So the real issue is ultra-tight Fed policy. We think the Fed has a flawed structure.

policy framework. They're very dangerous and they potentially could create a recession, but we do think the inflation data is going to be so positive they'll be forced to cut rates later in the year. I'm really interested in that U.S. economy positivity, basically, and the fact that that means maybe we've got a resilient consumer for Apple phones, maybe we've got a resilient consumer for Amazon products. Are there any stocks in the tech world that you think are

worth adding to, not just regional banks? Absolutely. And this doesn't sound conservative, but we think is more conservative. Amazon. They're kind of half Walmart and they're price insensitive. They're just pass-through entity. And the CEO is on this morning saying that AWS demand is extremely strong.

So they get traded like a tech stock, but they're half a retail stock and they're cutting costs. So that's, again, like regional banks, pretty defensive in a market that has been destabilized by this White House. They can't really sort out who's in charge. Andy Jassy has been putting out his investor and shareholder letter today and responding to some of the...

current volatility that his consumers see. But then push us forward as to what your view is on AI and if AWS still sees insatiable demand. Many have been trying to work out whether the AI bubble that has so inflated this market is anyway intact, is it?

We think so. Everybody looks at the market and says, "Oh, well, the stocks are way down, so AI must be falling apart." They're just high beta stocks. They have two betas, so they're twice as volatile as the market. So the market's going down. What do you sell? You sell the volatile stuff. You sell the investment banks. You sell tech stocks. This doesn't mean the AI market has changed.

And that's one reason, though, because we do believe there will be continued AI spending, and Jassy's comments certainly validate that. Really, it's investment and not consumption that drives recessions. So AI spending is offsetting a slow housing market. And another thing that people haven't focused on, rates have come down 50 basis points. It was disconcerting yesterday when they were skyrocketing, by the way.

I thought the market might crash then. But that is helpful. It's not going to get the housing market to boom, but stabilize. So if you look at investment, you can predict recessions pretty well. Stabilizing housing, strong tech spending, that adds up to slow growth, say, in that 1% to 2% range. Jay, our case study today, I think, is Apple.

and in the short term, they're airlifting iPhone handsets from India into the United States. In the long term, the White House sees a world in which the iPhone is assembled in the United States. Do you see that future being achievable for this White House? Not really. That's sort of the fundamental flaw of the hawkish trade outlook, is there's a notion that you can have a trade balance with all countries.

which is ridiculous in the sense that low-income countries have low labor. They're going to be exporters. That's one way they grow.

And then the second thing is if you run a gigantic budget deficit, you have to have a trade deficit. Financial flows need to equal physical flows. So the first thing you need to do if you want to have zero trade deficit is lower your budget deficit. So that objective is ridiculous. It might have led to the bag of bricks comment.

from Musk, not me. And so that's why it's disconcerting to be in this market because one side is arguably nutty and the other side is more pro-business and we don't know who's going to win.

Jay, at the moment, it looks as if the House is going to adopt a plan to advance Trump's tax cuts and also the debt ceiling hike. I want to get your take on how we can align what many had thought would be a tax policy that offsets some of the volatility of tariffs. If the House can push forward and agree $1.5 trillion in cuts for the budget, is that the right policy right now?

Absolutely. So that offsets the, if we end up with sort of 2% of GDP, that's about a $600 billion tax increase. So we need to offset that. And in fact, that's what the flaw of the initial strategy was, is that it just came too fast. You could have just said, well, in a year we'll do this. And then you had plenty of time. And so they came way before the tax cut. And that's what's destabilized the market. And it's just an own goal if you play soccer, because they didn't,

they didn't need to do that. It was just coming out of this. We play soccer on this. Oh, good, yeah, good. I tried that with one of your reporters and they looked at me like, what does that mean? I'm not the biggest soccer fan either, but I know what that is. So that's the issue is that timing was horrible. They could have gotten the exact same place

by just saying they're going to do this without doing it right away, waiting for the tax cut, waiting for the Fed to figure out inflation's coming down. So it was just at the absolute wrong moment. Also, it wasn't earnings season. We think earnings season will calm people down, maybe not get the market to skyrocket. But when you hear from companies, their stocks tend to rally.

Because then you get certainty, even if it's not great, like Delta's guidance was highly, you know, was bad actually. And stock, this is before the announcement, skyrocketed. So we think any news or most news will be viewed positively and the earnings season will stabilize it.

So all this tariff news came at the absolute terrible time during a normally weak March. So now, not that we're super bulled up about the market, but we think it'll stabilize kind of in this 5,000 to 6,000 range. It's not very stable, 5,000 to 6,000, but be banging around in that range. So we're neutral, not negative. We were negative before this policy change.

Jay Halfield of Infrastructure Capital Management, who I think was quoting Howard Marks on the own goal analogy. Thank you very much. Now coming up, tariff threats actually help fuel TSMC's AI-related growth surge at the start of the year. We'll have more next. This is Bloomberg Technology.

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Quick check on the U.S. listed shares of TSMC, their ADRs. Look, they're going to be following the broader market lower at the moment, off by 4.8% after they rallied hard yesterday. But we've got to keep in mind that the company actually posted sales growth 42% on, of course, AI demand, ahead of U.S. tariffs. For more, let's bring in Peter Elstrom. And what's interesting is the inventory buildup is so plain to see. This is the chip provider for Apple, for NVIDIA.

Right, we don't have all the numbers from TSMC yet. All we've gotten is the revenue for this quarter. As you say, though, it's a 42% growth rate. It's very, very strong. They bumped up revenue to $25.5 billion. So you've got a $100 billion run rate company that's growing at 42%. It's pretty extraordinary. What we don't know, we'll find out next week as they report more broadly their earnings. We'll get more detail on that.

We'll figure out how much of this is inventory. As you say, there's probably some stockpiling going on right here. Two of their biggest customers are Apple and Nvidia in particular. They may be accelerating some of their purchases to get ahead of some of these tariffs so that their customers don't have to pay high tariffs as they get into the next few days.

You know, the data is highly analogous with what we saw from PC shipments, right? Front-running tariffs they knew were coming. That's short-term. Long-term, TSMC has pledged billions of dollars to build chips in this country.

Have we learned anything more about that and its progress? Well, they didn't say anything at this point, but you're right. They had previously pledged to invest $65 billion. More recently, they said they're going to add another $100 billion onto that in U.S. investments. They clearly want to make chips in the U.S. partly to diversify themselves geopolitically. Partly, they'll be able to serve these customers like Alibaba.

Apple, like Nvidia, like Tesla, more effectively if they're able to do it in the U.S., and they'll avoid some of those tariffs if they're going to get hit with those. Now, TSMC doesn't sell that many chips directly into the U.S., but via Apple and via Nvidia, some of their other customers, they could get hit by tariffs that go through their end products.

Bloomberg's Peter Ahlstrom, thank you. Quick look at shares of Apple falling after yesterday's massive rally. There's also reports that it shipped about 1.5 million iPhones from India to the United States in an effort to beat President Trump's tariffs. According to Reuters, Ed, it's fascinating that 600 tons worth from India, who knows what they were shipping on jumbo jets from China. Right.

Right. I did the math. I checked the math. 600 tons, the average weight of an iPhone around seven ounces. So with packaging, I think 1.5 million makes sense. That's short term. Long term, the only question is, can they build the iPhone outside of China and where? Here in the United States? Who knows? Let's get more on the fallout of U.S.-China tariffs and its impact on Apple. Carolina Milanesi, president and principal analyst at Creative Strategies, joins us. I mean...

In a world where the iPhone's built in America, there are many estimates. Bank of America this week said it would be 90% more expensive. That is an interesting scenario, Carolina.

It's a very interesting scenario and one that I don't think is going to happen anytime soon. I think that Apple has other options before coming to the U.S. And that's because unless we are moving part, at least of the supply chain, to the U.S., it's really unreasonable to think that Apple can be successfully building iPhones here. So what you're seeing with the shipment coming from India is that

Apple has the opportunity not just to ship, but to actually rethink how and where they build iPhones that are targeting the U.S. market. So they could shift from China to India or other manufacturing facilities to avoid some of the harsher tariffs that China is faced with today.

Obviously, all of this can change tomorrow or this afternoon. What about, of course it can, but the margin pressure? How much will they suck up some of the margin pressure? How much do you think they can pass on to a pretty stressed consumer here in the US right now?

There's two aspects of it. One is to remember how strong Apple relationship with their supplier manufacturer is. And so there might be a negotiating part there where it's not about just Apple passing on to the consumer, but is Apple trading with their supply chain to see how best

everybody can ride this wave, right? At the end of the day, you want to keep the Apple business with you for the longer time. And then when it comes to consumer...

I think it's a very critical moment for Apple here in the U.S. market when it comes to services and Apple intelligence in particular. So they will want the upgrade cycle to continue. And they might decide that it's worth sacrificing some of their margins in the short term to then have more revenue coming from services and Apple intelligence longer term.

A story's hit the terminal just now clarifying that the Trump tariffs on China now add up to 145%. You see Apple declines, accelerating 5%, Nasdaq 100 pushing even lower. An airlift, though, have you ever seen that in your career? We just have 30 seconds, Carolina. I have not. It's definitely something new, and I think it comes with the volatility that we're in right now. Carolina Milanesi, there with all the expertise and the context, president and principal analyst at Creative Strategies.

Welcome back to Bloomberg Technology. I'm Caroline Hyde in New York. Quick check on these markets, Ed, because we are accelerating our losses. We're sub 4% on the Nasdaq 100. After a monster rally yesterday, the biggest gain since 2008, we fade some of that. Is it profit-taking? Is it, once again, trying to understand what Chinese tariffs that now are to the tune of 145%, what that means to the overall risk sentiment? We're off by 4% on Bitcoin, but hold above 80,000.

move on to the individual movers that I want to shine a light on because look, JD.com

AD.com up more than three and three quarters percent in terms of ADRs traded here in the United States. China looking to improve stimulus locally. That means e-commerce players that are domestic related and focused are going to be doing well. But we are fading our rally in Alibaba. We're fading, of course, ever more on Apple. Best rally since 1998 yesterday. We're now up by more than 5% as those tariffs to China impact that company. Amazon off by almost 5%.

Andy Jassy looking strong into his investor and shareholder note. But more broadly, we're worried about exposure there as well. Ed, what have you got? Well, let's get back to the tariff story. President Trump's tariff on Chinese imports now total at least 145%. Bloomberg's Kayleigh Lyons, who leads our political coverage for us in D.C., is actually going to come and do some math for me because I've lost track on whether this includes reciprocals. It doesn't. And how we got to 145%. Kayleigh.

Yeah, Ed, this really is about math and how these tariffs layer on top of each other, as there are different tariff regimes that China is subject to. As President Trump made clear yesterday in his post on True Social, he has raised the reciprocal tariff rate on China to now 125 percent. That, of course, has been escalated multiple times due to China's retaliation. But that did not include the 20 percent tariff that he had already put into place on Chinese goods earlier this year over the trade of fentanyl. So it's about as

adding that 125 to that 20% that was already existing, which gets us to the total rate of 145%. Now, this was actually all there in the White House's fine print, but obviously it's difficult to understand with this fast-moving story how all of these tariffs work in tandem together, but it does seem that this is a figure

That was higher, at least, than the market previously understood it to be, which is why we are seeing things take a turn. And this comes despite the fact that President Trump in the Oval Office yesterday said that he couldn't imagine taking tariffs on China any further than he already had. But maybe perhaps this is further than was previously understood, keeping in mind that China has still an 84 percent retaliatory rate on U.S. goods. It remains to be seen whether or not they will escalate that further and whether or not they are

willing to pick up the phone and talk to Donald Trump, as he has suggested he is willing to talk to Xi Jinping, wants to make a deal, thinks China wants to make a deal. But we have seen no sign of that yet, as this trade war between the two largest economies only seems to be intensified.

Bloomberg's Katie Lyons out of DC, chief mathematics correspondent. Appreciate it. Thank you very much. Let's get back to the market's reaction to tariffs, specifically the pause on tariffs. Like yesterday afternoon, crazy. Bloomberg's Ryan Fuselica, who covers the tech sector, joins us. Apple, I think, biggest jump since 1998. Tesla, biggest jump since 2013. The question is why? Like why those levels of gains and now the pullback this morning?

Hey, thanks for having me on. So obviously yesterday was a huge relief rally, and I'm sure there was some short covering, some algorithmic trading, all kinds of things just feeding into the massive gain that we saw yesterday. But I think once the dust settled a little bit, people kind of realized, you know, hey, the tariffs against China were raised. There's still 10% tariffs kind of broadly. There's still a lot of uncertainty. And I think just sort of the pause in itself is just a sign of how sort of

erratic all the policies have been. There's been introductions, retaliations, escalations, and now a pause. And it's just very hard to know what the next step is going to be. And therefore, it's very hard to know how to position or understand what the economic outlook might look like.

Ryan Vlastelica, with the ongoing uncertainty narrative, we appreciate it. Let's try and get some certainty on what to do with your portfolio now. Nancy Tengler, CEO and CIO of Laffer Tengler Investments, joins us now. And you've actually been committed to adding certain names, Tesla being one of them. Why do that with the exposure to China? Yeah, well, that's a great question.

We were adding to it since the market peaked because it got clobbered, and it was actually below current levels. But that is an ongoing concern, though we own that stock for, and we talked about this after CyberCab, WeRobot Day in Southern California, but we own it for the energy business, and we own it as an AI play. So, yes, the EVs matter, but I think it's analogous to advertising.

Apple, early days when we were buying it, 2013, 2014, the iPhone was a means to the services business. Really interesting to bring broader context you can still hold on to amid these day-to-day volatile moves. NVIDIA, another one you've been adding to. Yes. Many have been quick to say exposure to China. However, some analysts are coming out now saying this is one of our favorite picks. They're actually pretty protected from the border tariff impact. How are you looking at that, Neha?

Yeah, and we know that Jensen Wong met with the president recently to try to get a carve-out. We're looking at that as part of what we think. You know, I was on the air on the day Deep Seat came out, which was another chaos. I seem to attract it. Chaos, that is. And what we thought was that it would increase the use cases and the availability of products.

of AI as an option. And we saw that in the fourth quarter earnings, even though they're backward looking, we heard from CEOs how broadly they're using it across sectors. And you heard today Spotify saying, "We're not hiring anybody unless you can prove that their job can't be done by AI."

So I think NVIDIA is obviously the core of that. Most of our investments have been on the software side. We shifted to software about five, six months ago. But we still like that name. It's much smaller holding than our major holding Broadcom, which we've called the poor man's NVIDIA.

But we do like to add to it on weakness. And it gets these periods. It has historically. Just like Tesla. If you've owned Tesla since the IPO, it's been in a bear market almost 50% of the time. Yet it's up thousands of percent. So you just have to pick your spots. Be sure to trim in these more volatile names when they run up. And that's what we did last summer. And then we're adding back in.

Hello, Nancy. It's always great to have you back on the show. I don't think you attract chaos. I think you just invest in the areas that attract chaos. It's different. There's two names that you haven't discussed. And every time you come on the show, I always say you haven't discussed one in particular, which is Meta, but also Amazon. Caro brought up a really interesting point earlier, which is, you know, Amazon has this dual role.

It is a technology stock and it is a retail stock, depending on how you look at it, like a Walmart or it's a cloud provider. Talk to me how you feel about them both. So Amazon was in our five for 25 that I published on 1231. And it's a member of our 12 best ideas portfolio. And then we own it in our growth strategy. So I love the name. I think it's a defensive technology name that you can be adding to in here. And we have done that. But I wrote my notes earlier.

a couple days ago and we've added to it since then. So, I think it's an important name to own. Our poster child for our investing theme of old economy companies that have pivoted to the new technologies is Walmart. You saw them confirm their annual guidance and then Andy Jassy came out today and said what Jamie Dimon said. We're cutting costs. We're not

Frantically cutting costs, we're going to our management teams and saying, where can we save money? That's a well-managed company. I think it's an all-weather stock. Meta, we sold, as you know, and bought Spotify. And so I was beating myself up until I went and looked at the relative performance since we've done that. And we've done much better in Spotify, though I think Meta is a name you can easily own online.

again, an add to in this weaker environment. That said, the ad revenue for Amazon is projected to go down half as much as Meta's if this all continues. So I think Amazon's the better player from here and that's where we've been putting our money to work. And then Spotify and Netflix are names that we think will hold up in kind of a low growth, potentially recessionary environment, though Goldman withdrew their recession forecast, so.

maybe we're just getting slow go. Nancy, how do you assess communication from policymakers over the course of the last five days? It's been horrific, Ed. I just, I've been at this for over 40 years. I have never seen a more botched policy rollout than this. And I think it

It did a lot of damage to the administration. I know yesterday, you know, we got the declaration that this was intended all along and you just don't understand the art of the deal. And then Bill Ackman came out and said, oh, this was executed perfectly by the president, which makes me think he was selling yesterday into the strength. That's just speculation.

But I think it's been horrible. And you're seeing more and more of Scott Bessett and Kevin Hassett, and I think that will benefit the administration, though their message has been imperfect as well. It makes no sense from an economic standpoint. Now, 10% tariff.

would kind of act like a flat tax and it would move, it would stop distorting behavior. But right now, if you think about factory build, you know, we're up three, last three years, it has exploded and it continued into the first two months of this year. We're now hearing new factories being put on hold. That's what happens when you distort policy.

How do your clients feel about it? How are they about remaining committed to funds exposed to equities? So we've spent a lot of time doing webinars with our clients since the market peaked in because there was already a sharp correction going on. Yeah, this whole deep seek was actually the MAG7 problem, not MAGA. Right. Do you agree with Bess?

with Besson? Oh, no. I thought that was also ridiculous. I'm sorry. I thought that was when it started, though, you know, the sort of franticness. But then we got a rally. No, of course not. I think that's where these guys are losing credibility because those of us that do this for a living look at it and go, no, that's not in fact what it was. Besson used to do it for a living.

I know. Isn't that interesting? Yeah, and took a very hard stance on many issues. But no, but when you go to an administration, your job is to be an advocate for the policy projected by the administration, which is why I will never be in politics. But our clients are pretty measured. You know, I got calls yesterday, should I add more money? And it was like, no, no, let's wait. This is not done. But mostly we've seen flows in. Hmm.

Yeah, not mostly. 100%. Yeah. For Tengler Investments, Nancy Tengler, it's good to have you back with us. Thank you very much. Coming up on the show, Meta faces backlash from whistleblower testimony to Congress and prepares to fight the FTC on antitrust allegations. We'll have more on the social media giants' battles next. This is Bloomberg Technology.

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Losses are accelerating. We're off by more than 4% across the S&P and the Nasdaq. We wipe off about a third of yesterday's gains. The points drags. In fact, there's only six or seven names in the green on the Nasdaq 100, everything else in the red. Booking holdings is a key point drag. ASML, it's ADR, is a key point drag. But so too is Meta. And let's just talk about Meta and social media a little bit more, because the EU's governing rules on digital platforms like X, like Meta, shouldn't

be considered trade barriers with the United States. That's all according to the EU digital chief, Henna Fukuna. Speaking with Bloomberg's Oliver Crook, the digital chief really outlined how the EU's rules are fair for everyone. Take a listen. These are same rules for everybody. So these are not like trade rules. So when we speak about Digital Service Act, Digital Markets Act or AI Act, we know that we have same rules for all the companies who are

operating in the European Union, so for the European companies and also for Chinese or U.S. companies, so it's very fair for everybody and these are not creating trade barriers. And the digital service has actually been expecting some decisions specifically on Meta and on X. Is there a delay to that due to the pressure being put by the Trump administration? When can we expect progress on those?

We have several investigations going on under the Digital Service Act, ten different investigations and of course we are enforcing the rules, respecting also the due process. And always when we are doing investigation from the Commission side, of course the main purpose is also that we want that the online platforms that they are complying with our rules and often this is the case during the investigations that they are also chasing their behavior and that is of course

what we want, that they are respecting our rules. So for example with X, which is I think the most advanced investigation that you have, what would you like, what is the end game? What would you like X to look like? How would you think is an appropriate way for it to sort of shift?

What we are saying in our rules is very much that online platforms have to have the processes in place, how they are assessing and mitigating the systematic risks they are posing for civic discourse, for electoral processes, for people's well-being. And also that they are transparent with their actions, that the users know, for example, why certain content is shown for them, and the users have to have also choices how to change also the recommender system.

And I'd like to also get an idea of your sort of channel of communication to these companies. Have you spoken, for example, to Elon Musk? Have you spoken to Mark Zuckerberg? Who have you spoken to of the taxis? And what are those conversations like? Normally, it's, of course, our commission's technical team who is working with those platforms, technical teams with their lawyers. And that is all the time the...

dialogue we have going on. So when we are enforcing the rules, it's not only the investigation. So we have all the time several parts. So we have all the time dialogue with online platforms, especially of course it's done by our services. And then also we have different code of conducts. We are preparing different guidelines. Online platforms, they are also carrying their own independent orders. So there are several parts all the time how we are implementing and enforcing the rules.

That was EU Digital Chief Henne Verkennen speaking with her own Oliver Crook. Now, Meta is facing congressional criticism over its dealing with China following whistleblower testimony yesterday. Remember, it's Riley Griffin back here with me in SF.

The principal accusation made by the whistleblower is that Mehta was briefing the Chinese Communist Party as early as 2015. But reading your story, it's more about the reaction and fury of the lawmakers, if anything. No doubt. In fact, I think this congressional hearing ended up being an opportunity for members of Congress on both sides of the aisle, these senators, to take aim at Mark Zuckerberg. They called him inauthentic and disingenuous.

Even Republicans were questioning his magification, if you will, the comments he's made on Joe Rogan, the famous podcaster, to suggest he's aligned with Trump's agenda. So this proved to be a blasting of Zuckerberg and one that we imagine will continue when they say that they're going to call him to Congress. I mean, he's also potentially going to be speaking...

Because of the FTC investigation as well. This is not a great time to have federal leaders seemingly not behind you, particularly when they're going to be questioning the purchase of WhatsApp, the purchase of Instagram and potentially breaking this company apart.

Yeah. Beginning on Monday, we're going to see perhaps the most existential threat to the company begin with the FTC trial. So you've got the threat from regulators, lawmakers, and then pressures internationally from Europe, as you had just posted in that video. Meta currently off by 6.4% on the day, one of the worst points contributors to the downside. Riley Griffin, thanks so much for keeping us up to speed.

It's time for Talking Tech. And first up, STMicro announced plans to cut as many as 2,800 jobs over three years in an effort to increase efficiency in automation. Though there was no mention of tariffs, the semiconductor manufacturer says the latest cost-cutting efforts will reshape their manufacturing footprint and, quote, resize global cost base. Meanwhile, the company's supervisory board has officially backed its CEO, Jean-Marc Chéry, just one day after

after the Italian government publicly withdrew their support over top management. Plus, Amazon had equipped some of its delivery vans in Europe with defibrillators to help speed up aid to heart attack victims. Called Project Pulse, the program involved over 100 contract drivers who were trained on the devices, who would receive alerts from citizen responder apps

Amazon concluded the program after several months and is evaluating the feedback on future opportunities. And Tesla is set to open a showroom in Saudi Arabia, the latest sign that Elon Musk is putting behind a bitter feud with one of the kingdom's most powerful men. The showroom is expected to showcase its vehicle line up alongside the cyber cab and Optimus robot. Tesla's entry into Saudi Arabia marks a sign of goodwill towards the Saudis and a potential growth market for the company. Caroline.

And let's just return to Amazon, because it also released its annual letter to shareholders this morning. CEO Andy Jassy acknowledging they want to be more like a startup, but also later discussed that sellers could be passing on some tariff costs to customers. For more, we're joined by Bloomberg's Tom Giles. Let's go to the letter first and foremost, because really trying to show that AI demand is still there, and also they're trying to be more agile with it.

They want to be very, like a startup, they want to be firm, they want to be agile. And what Amazon, one of the sayings at Amazon is always day one. It's always day one. Remember what it's like when you are a new business, you're a new company, you're just starting out,

and the world is your oyster. And that's something that Jassy has worried about Amazon employees losing over the last couple of years. That's why he said they all have to come back after COVID, after people were working from home. He said, come back because people are losing that sense. Culture is extremely important at Amazon, and he definitely wants them to get that startup mentality, which is so important for these companies.

I just, Tom, want to quickly go to the conversation Caroline had with Andy Jassy earlier in the year, because it's all about CapEx, right? Listen to this.

You did say basically $100 billion run rate for CapEx expenditure. Can you give us even like a percentage breakdown of how much that goes to distribution, logistics, and how much goes to AI? Well, lion's share is, you know, tells you most of it. You know, the lion's share is more than 50%, yes. Is it more than 80%? We're playing the warmer and colder game? Yes, exactly. No clues in the letter about CapEx. Earnings isn't far away. But I think this is in the here and now what people care about.

Well, right now people are focused on tariffs, right? And we're seeing that in the markets. We're seeing it with the ways that stocks, including of Amazon, are getting whipsawed. He hinted at that in an interview with another network talking about how, yeah, there's an expectation that some of their sellers are going to pass prices

tariffs onto their customers and look they receive a lot of there's a lot of inventory there's a lot of products there's a lot of sellers who are China based or China affiliated and so if that tariff stays where it is that is absolutely going to affect

Amazon's ability to compete with other online sellers, especially if those sellers are able to diversify their supply chain, get those products from somewhere else. A lot of it is made in China, so a lot of companies are going to be affected equally in many ways. Amazon's going to do what it can to keep prices low, he said.

But there's no way that those prices will not be passed on in some way to end users. Even as Bloomberg reporting yesterday showed that they've been trying to get that inventory, been changing it up in response to all of this. Tom Giles, who flew in on the red eye, landing this morning. What a hero. We thank him for being here in New York. Meanwhile, that does it for this edition of Bloomberg Technology. Ed, these markets whipsawing once again.

Yeah, you put it right earlier. It's a third back of what we gained yesterday, but there's still concern about tariffs. A 90-day pause sent markets to euphoria last night. I think everyone's taking a bit of a breather. Come back to us tomorrow on Bloomberg Technology. This is Bloomberg Technology.

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