Trump Tariffs Roil Markets, Musk's DOGE In Action
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Live from New York, I'm Caroline Hyde.

And I'm Jackie Davalos in San Francisco. This is Bloomberg Technology. Coming up, all eyes on President Trump's tariffs on Mexico, Canada and China, roiling global markets. Plus, another big week for tech earnings coming up with Palantir kicking it off after the closing bell today. And a look at Elon Musk's doge drive as he claims to cancel payments to federal contractors for first time.

the story of the day. We move markets on the back of tariffs. There is talk now coming that potentially those tariffs are delayed by a month coming from the president of Mexico. We're off of our lows. We're down 8, 10% on the Nasdaq 100. We're nowhere near the sell-off of this time last week in reverberations to deep seek, but we are down nonetheless as a global story unfolds. Move on. Look at what happened to the world of crypto. Over the course of the weekend, this was your liquid asset of choice. We fell hard on Sunday. We're now off by 3% over the last three trading days, but we climb back on

off of today's lows. Move on and have a look at what's happening on individual movers. I bring you the biggest points drivers to the downside. Currently, Tesla off by more than 4%. We think of the repercussions to autos. The repercussions to phone sales. Apple off by 3.4%. Nvidia is currently off by 1.8%. As we think about the semiconductors in the

overall concerns around global tariffs. Let's get right to it. We most Kayleigh Lyons joins us for more. And maybe they don't come in for a month, but still the shockwaves from a 25% tariff on Canada, Mexico, and slightly less to China.

Well, and Caroline, it's only Mexico that the president has confirmed. The U.S. president, that is Donald Trump, will see the tariffs delayed for a month after speaking with Mexican President Claudia Scheinbaum. An agreement has been reached in order to have this delay in place for Mexico to send 10,000 troops to its northern border with the U.S. in order to help stem the flow of fentanyl and migrants. That is the route

of the issue that Donald Trump really has here, that he is using tariffs as leverage to try to extract concessions from. And it does seem that he did indeed get those. And in the interim one-month period where this extension will be in place, Mexican officials will be negotiating with officials from the Trump administration, Secretary of State Marco Rubio, Treasury Secretary Scott Besson, and...

ultimately, who is presumed to be confirmed as Commerce Secretary Howard Lutnick. They will all be leading those negotiations. As for the other two countries that tariffs are set to go into effect at midnight tonight, no news yet as to whether Canada can avoid its 25% levies, 10% on energy imports, specifically a lower level, and of course, 10% on all

imports coming in from China. President Trump has already spoken to Canadian Prime Minister Justin Trudeau once today. He is scheduled to do so again at 3 p.m. Eastern time. So we'll see if they too can reach some kind of agreement to stave these off for a period of time. If not, these tariffs will go into effect at midnight and Canada in return will be placing retaliatory tariffs

on 30 billion Canadian dollars worth of U.S. goods at midnight. We're seeing other ripple effects as well. The premier of Ontario, that province, has announced today a cancellation of a contract with Starlink valued at nearly $70 million. It was set to go into effect in June of this year. That has been put on pause, and the provincial government says no U.S. companies will be getting provincial contracts so long as tariffs are in place. The question is going to be, will they go in place just hours from now?

Kayleigh, what else do we know about the reaction from the business community kind of on the back of these Mexico and Canada tariff escalations?

Well, the business community has had a bit of a mixed reaction, Jackie. Mostly by and large, companies are hesitant to embrace the notion of tariffs, and that goes for things like the Chamber of Commerce, represented here in D.C., and other business leaders as well who have warned about the potential inflationary impacts. Obviously, this administration has pushed back on the notion that these would be inflationary, saying, if any,

that would bring a one-time price increase rather than a sustained period of inflation. You're also seeing some reaction here in Washington with questions raised around the legality of all of this. The powers that Donald Trump is using here to enact these levies are the 1977 International Emergency Economic Powers Act. That traditionally is applied when it comes to sanctions, not import tariffs. And there is a question as to whether or not this authority would actually stand up in court if challenged legally

when it is being used in this way, whether this is actually a national security-oriented emergency or not, as the president contends that it is, again, talking about the flow here of fentanyl and migrants over the borders.

Bloomberg's Kayleigh Lyons, thank you. Now let's get to the tariffs impact on the chip world and Asia, with TSMC shares tumbling by the most in nearly six months as trading resumed on Monday, playing catch up to a global AI sell-off with Trump's new tariffs. Bloomberg's Peter Elston joins us to discuss. Peter, let's walk through what we know about Trump's discussion with Nvidia CEO Jensen Huang and what he has signaled regarding tariffs on chips so far.

Yeah, well, what we've seen really is, as you were laying out just before this, the rules of the game are changing almost by the hour here. Many, many changes for these companies to deal with, both NVIDIA, TSMC, Hanhai, some of the other companies that we've seen move in the markets these days. TSMC is an interesting example. They're the most advanced chipmaker out there.

It takes them years and tens of billions of dollars to build these factories. So their timeframe for making decisions from a business standpoint is quite a bit different than some of these policy changes that have been made. They make most of their advanced chips right now in Taiwan. They make them for Apple and they make them for Nvidia and they ship them into the United States and into other markets. So with Trump's tariffs, this idea that maybe they would move production into the United States, it's a little bit

of a different time frame. They are building a factory in the United States, but that's going to take some time for them. So we're seeing both this depression on the stock price catching up with what happened with DeepSeek last week. And on top of that, now we have these tariff concerns, whether they are delayed or not.

or not. It's interesting Bernstein actually putting out a note still having Nvidia in an outperform saying they see little impact from tariffs on stocks like Nvidia right now in the overall industry. So how do investors gain this out more broadly Peter?

Well, there are a couple of concerns layered on top of each other. There's the deep-sea concerns that we saw last week that knocked almost $600 billion off the market cap of Nvidia, of course. That was more around the idea that this Chinese company had been able to build an AI model that was competitive with the best in the West, including

open AI's model for a much, much lower cost. There's still a lot of things that we don't know about how that model was built, exactly what chips they used. They did say that they used a bunch of Nvidia chips there too. But I think that primary concern is that perhaps some of these AI companies are going to try to do things

more cheaply rather than trying to invest the tens of billions of dollars or hundreds of billions of dollars that we've heard from OpenAI and Microsoft and most recently SoftBank in this Stargate venture. On top of that, you have the tariff concerns that President Trump has talked about. He may layer tariffs on top of computer chips too. That would hit some of these companies, including TSMC, probably Samsung, some of the other players, Asian players that have been very active in this market.

We keep an eye across all of it. Peter L. Strom, we thank you. Let's bring in Sylvia Jablonski now, CEO, CIO of Defiance ETFs, to discuss the broader market impact, how you, as someone who needs to be assessing your overall exposure here, does try to game out what is a very fluid situation.

Hi, good morning. Well, it is a very fluid situation. And I think, you know, the only thing you can kind of do as an investor, whether you're a retail investor or institutional investor, is just kind of keep an eye on what's going on with these negotiations, right? I think that hearing from...

Mr. Hassett this morning, it sounded like all of this was around the idea of not importing drugs, fentanyl into the U.S., immigration types of issues, border control issues. And if that's really the case and we see kind of what happened with Mexico, the delay of this and ongoing conversations is probably a positive thing and maybe it feels like

it won't go into effect. But of course we have that backdrop of domestication, bringing everything back online to the US to be produced in the US and things like that. So we kind of have to see where all of this lands and kind of adjust accordingly.

Sylvia, we have some companies coming up later this week and into the month that are reporting earnings. What do you expect will be covered as it relates to tariffs and perhaps that looming threat? What do you want to hear from management in some of those conference calls?

I think it's too soon. I think it's very difficult for them to address the situation because we don't know whether or not the tariffs will be going into effect or not. I think there will be some comments along the lines of,

you know, we're keeping an eye on this and it's a moving target in a fluid situation, similar to, you know, similarly to how you phrased it. The difficulty is, you know, if we get these tariffs, then these companies arguably will probably raise prices. It probably will impact future earnings and GDP growth and things like this. But I don't think anybody wants to touch it this week until we get a little bit more color. We might get that, you know, today or

or within the next 24, 48 hours. And I think that'll kind of help the situation. What I think everybody's looking for from earnings, particularly this week when you have some of the big tech giants coming out with their earnings is talk of AI, right? Are we monetizing this? What are the top and bottom lines going to look like? What kind of revenue generation should we expect? How's it going to start filtering into the XMAG 493 other names that aren't the kind of providers of all this stuff? I think that's really what the market's

out to sea. And if that's the case and the tariff thing becomes more of a benign event, well, then you have a great dip buying opportunity here, right? But we need a little more time to shake that out.

There's kind of two stories that are playing out right now. You have this need to invest in more AI infrastructure, but at the same time, you have investors who are really wary of overspending on that front as well. How do you think companies are going to kind of weigh that, especially as we're seeing more of a bigger push coming out of Washington to really build out infrastructure?

I think it's, you know, to the latter of your point, I think there's this, you know, big push from Washington to participate in the build out of AI infrastructure. You know, the U.S. has been left behind so many times when it comes to tech and tech advancements. And I think that's why DeepSea kind of rattled the markets, right? Like, oh, look, look what they just did. Right. And so so I think that there will be a lot of investment and focus on building out AI infrastructure, making sure it's

the best infrastructure in the world and also the most cost efficient infrastructure in the world for what it's actually providing. And so I think that spend will continue. And AI is just the beginning of it, right? I think we're stage one of AI, right? Stage two will be how it impacts drug companies, pharmaceutical companies, aerospace and defense. Hearing that on the earnings calls from, again, those ex-mag names,

And then I think step three is like, well, what else is there, right? And that could arguably be quantum computing, the next fourth industrial revolution of technology and super competing there. And so there's a lot of spend that will probably continue to go into AI. I think it's just early days still. And you've been providing exposure to quantum in particular, Sylvia, but you also provide exposure to crypto. Crypto was the asset to sell in an illiquid market over the weekend.

How do you think that crypto's exposure is going to be to volatile markets, but still an administration that is pro the space?

So crypto has this funny, the market has a funny relationship with crypto, right? I think sometimes we think of it as gold, right? Digital gold and an inflation hedge. And then other times we view it as a risk asset, like a semiconductor stock or a high growth tech stock or something like this. And so I think that right now it's just behaving like the latter. Investors are spooked about tariffs, what that means for the broader economic picture. And so crypto is something that's easy to buy and sell. And so it suffers along with

You know, the stocks that we see being hit the hardest today, particularly those in the Nasdaq. But again, you know, we think crypto is going to be one of the best opportunities to have in a portfolio, specifically Bitcoin, specifically names like MicroStrategy that track Bitcoin. And so I think you're going to see some dip buyers here. And, you know, we see crypto moving around today, right, to that effect. So let's see.

But positive news on tariffs and crypto, you know, it'll be an asset class to watch, I think, in a favorable sense. Sylvia Jablonski of Defiance ETFs, thank you. Now coming up, Elon Musk's Doge team demand access to sensitive government information and start shutting down payments to federal contractors. This is Bloomberg. This is the Bloomberg Business Week Minute brought to you by Amazon Business. I'm Carol Masser.

Green stocks have had a rough few years as the industry has struggled due to high interest rates, which made it more costly for green companies to get financing, homeowners to buy solar panels and drivers to buy EVs. And on top of that, pandemic lockdowns and supply chain issues. And the S&P Global Clean Energy Index is down by almost two thirds since 2021.

And yet some green investors are finding a silver lining in the presidency of Donald Trump, despite his anti-green policies. And that's because of low market valuations and improving earnings outlook. Investors single out battery producers as more electric grids install them to manage loads and store power when solar or wind installations are idle. Others say check out clean energy companies outside the U.S., noting China's strong support for green tech.

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Elon Musk's Doge team is shutting down payments to some federal contractors, singling out the U.S. Agency of International Development as a criminal organization, and appears to have access to sensitive systems used at the U.S. Treasury Department. Let's bring in Bloomberg's Max Chafkin for more. And is this not the remit of government efficiency?

We are in some crazy territory right now where we have a billionaire who's running six companies, who has some kind of affiliation with the White House but is not entirely clear, but is very, very close, of course, to President Trump, is kind of running around Washington

disrupting in, I'd say, in both the positive and negative sense of that word, the operations of the federal government. We saw over the weekend reports that Musk had taken over Treasury, the Department of Treasury's payment system. That's like the money that the U.S. government has to pay all of its contractors. That was a

a pretty crazy action then. Last night, Musk got on a Twitter Spaces and essentially said he was shutting down USAID. Congress created USAID. It's not clear that that's something that Elon Musk is allowed to do. So a lot of questions and just a ton of chaos in the federal government right now.

Max, what do we know about who's aiding Elon Musk at this point in some of these efforts? I mean, this isn't the first time that he's stormed into an organization and taken it over. Can you talk to us a little bit about the parallels, perhaps, that Twitter has and what we can kind of expect on this front? Granted, it is government. Absolutely, yeah. I mean, this is very similar to the period immediately following Elon Musk's purchase of Twitter, where he brought in this very small crew of loyalists,

A combination of people who have sort of worked with him for a really long time, as well as, you know, like 20ish-year-old intern types who are doing all sorts of stuff. The e-mail that went out to federal workers last week's subject line, "fork in the road," Musk sent a nearly identical e-mail to Twitter employees before laying off many of them.

I will say there are huge differences, again, between -- it's pretty obvious to say this, but between the federal government and a $44 billion private company that Elon Musk controlled. And that's why you're seeing a lot of criticism from Democrats, as well as groups that are concerned about funding being cut off. And, of course, there will be political implications of this as well.

Senator of Oregon, Ron Wyden, most vocal out there saying, "You can't do this." But for all of us who've been so close to Doge and the birth of it,

can't be surprised in the least that he's running roughshod. No. I mean, I think it's somewhat surprising how quickly this has moved. But you're right. This is what Trump and Elon Musk said when they were running, when Trump was running for president. And so in that sense, it's not a surprise. I do think there were a lot of people, a lot of

sort of moderates who supported Trump who were hoping for something different. It's kind of similar to the tariff story, right? There's a hope that this would all be bluster or something. And this is what they said they were going to do. And one difference though here again is that Elon Musk doesn't work for the government or it's not clear what his authority is. He hasn't been subject to a confirmation hearing. He hasn't put his financial stuff in a trust.

He's also very erratic, right? This is probably more extreme than it would have been if it were just, if it were a different Trump appointee who was doing this. But having somebody with Musk's temperament and reputation and just, frankly, energy levels sort of takes us to another level. Bloomberg's Max Chavkin, thank you.

OpenAI and SoftBank deepening their relationship further, joining forces in a joint venture to sell AI services to businesses across Japan. Now SoftBank founder Masayoshi San and OpenAI CEO Sam Altman took to the stage in Tokyo to outline this new venture with hiring a thousand people to market OpenAI products to a range of Japanese industries. Sam Altman also talked about the company's next AI agent. It's called Deep Research.

which can conduct online research on a user's behalf and is powered by chatbot ChatGPT. Jackie Moore on AI developments now.

Let's discuss AI safety and how US AI policy could be shaped by China's advances following DeepSeek. We're joined by Doug Kalidas from the group Americans for Responsible Innovation. Doug, it seems like we have a different narrative going now. After DeepSeek developments last week, it's kind of sparking this renewed escalation in an arms race in AI. But at the same time, you know, you have the Biden administration's executive order

on AI being rescinded in Trump's first week in office? Where does this leave any kind of priority for AI safety in the US? That's a very good point. And these are a lot of the arguments that we're hearing. We believe that step one is understanding what the problem is. Now, what you'll often hear people say is that the problem is that China is going fast and the US needs to go faster. Sure.

But why is China going fast? Is China going fast because they're independently developing their own technology that can rival U.S. technology? No, and I don't think anyone believes that. They're piggybacking off of U.S. efforts. They're using U.S. chips or U.S. design chips, and they're using U.S. design algorithms. So if we're serious about keeping our lead over China, we have to understand how they're getting access to this technology and act accordingly. If we simply run faster and they're holding onto our back, we are not going to outrun them.

So you have worked for senators when you're going and advising government. Do you just say, "Look, fast follow is the way forward from China, but here's what we do to protect ourselves"? What is the response?

It's difficult. And I think the understanding is that there are different policy tools that the U.S. government has used to try to prevent China from fast following. And we understand them as chip controls, export controls, concerns about security of both closed-weight and open-weight models. And these things are very technical. But I do think that a lot of what you're hearing about how none of these things are working and we just need to throw it all away or think about what we're doing misses the mark.

We know that a lot of the chip export controls have a time delay. So what China was using to train their models was based off of chips that they are no longer able to get in large part. So we needed to give the export controls time to work. There's also a very good argument to be made about expanding the export controls and covering trips that probably should have been covered the first time around but weren't for whatever reason. So there's a number of things that we can do instead of simply throwing our hands in the air. But does that not choke China?

the golden goose that has been Nvidia. How do you ensure that they prosper at the same time as curtailing their ability to sell? What's really interesting is that if you looked at Nvidia's reaction to what the Biden administration did, they certainly complained about what was called the diffusion rule, which limited some of their exports. However, the diffusion rule really didn't have much impact on Nvidia stock price. It was pretty minimal.

And if you look at what happened with DeepSeek, that obviously had a major impact on NVIDIA's stock price. So we would make the argument that NVIDIA actually does well if you prevent some of these non-U.S. companies from simply using tools to more or less steal technology from the U.S., particularly the algorithms, by using NVIDIA chips. So in the long run, I believe this would actually benefit companies like NVIDIA.

Doug, pivoting to Washington a bit, when you were on the show in November, you mentioned that you were actually a fan of one of President Trump's executive orders from his first administration. And the man behind that order was Michael Kratzios, who was just appointed to be the director for the Office of Science and Technology due to be confirmed at the end of the month. And I'm curious what knowing about Kratzios and his approach in the past as former White House chief technology officer, what kind

What kind of approach to policy are you expecting from his office? So, Kratios is a very serious person and he understands the technology well. And I would put in the same can Howard Lutnick, who's Trump's designee to be the Commerce Secretary. So, Kratios and Lutnick are going to be two of the people who have the biggest influence on AI policy in the Trump administration.

And we saw a lot in his most recent hearing, his confirmation hearing, saying that he believes in the export controls. He believes we need to be serious about clamping down on Chinese access to U.S. technology. And he's going to see it through. And, you know, I think that he and Krasio together will really want to do whatever they can to maintain the U.S. lead in innovation. An interesting day for the EU's AI Act to be going into force as well. Doug Kalidas, it's great to have some time with you from Americans for Responsible Innovation.

Welcome back to Bloomberg Technology. I'm Caroline Hyde in New York. And I'm Jackie Daviles from San Francisco. Let's have a quick check on these markets because, boy, volatility, the name of the game today. The reverberations of tariffs that were initially going to be 25% Canada, Mexico, 10% China, may be delayed by a month. That's what the Mexican president says in the latest. We bounce off our lows, right?

Now, off of the lows, down still 0.8%. Nowhere near the wipeout we had this time last week on the back of deep-seek anxiety, but tariff anxiety is clear. And let's just think about some of the other feed-across, other angles that we're watching. President Trump's tariffs is, in fact, there's a plan to eliminate a long-held tariff exemption for packages worth less than $800, Jackie. This is a low

Chinese e-commerce retailers like Chien, like Temu to ship cheap products directly to the U.S. consumer without tariffs. It's given them an advantage over homegrown Amazon, of course. Spencer Sober can give us the read-through. Look, some of the bouncing off of the lows happening with the Chinese companies as well after that Mexican headline. But this is all surrounding how they're able to bypass costs at the moment, and that's going to come to an end.

Yeah, it's clear as mud right now exactly how it's going to play out. The key question is Trump imposed this new 10 percent tariff on goods from China and then eliminating this de minimis loophole. The big question now is, does that apply just to the new 10 percent or to the old tariffs as well? And we're still kind of getting clarity, you know, minute by minute on

that. Either way, it's going to hurt these Chinese firms like Timu, which is owned by PDD in China, as well as Shein, because they've been able to send items one package at a time to U.S. consumers, slipping in under that $800 threshold for De Minimis, where they're eluding the tariffs, whereas bigger retailers, including Amazon, will generally bring in

big cargo containers by ship and they're paying the tariff on all of the inventory in those containers because the threshold is measured by each particular shipment. So if you're sending one individual shipment, you're below the 800. But if you have a larger shipment of lots of inventory, you're above the threshold.

Spencer, do you have any sense of just how much of an impact potential tariffs could actually mean for Timu and Xi'an? I mean, they've seen a huge run-up over the last couple years. Can they afford to basically bear some of the brunt of this, or are they more sensitive to a disruption? Yeah, that's the million-dollar question. They've all been kind of bracing for this. Timu in particular is already, you know, sourcing more inventory in the U.S.,

You know, the downside of their model of shipping to consumers direct from China is that it takes a long time. And so they've been trying to source more inventory within the U.S. to be closer to customers just like Amazon and get it to them more quickly. The downside of that is they don't have this tariff savings. And if that tariff savings completely goes away, the million-dollar question is, do these companies actually survive?

And that's where there's just going to be a lot of debate, and we'll have to see what happens. But they've already been positioning, expecting some change like this to happen.

Bloomberg's Spencer Soper, thank you. Let's get more on the impact of U.S. tariffs on China. We're joined now by Amy Seligow, partner at Albright Stonebridge Group. Amy, let's talk about what we know about Trump's previous approaches to tariffs and what we can learn perhaps from his past escalations on China. What does it mean kind of going into this new administration? And are you seeing kind of similar tactics or new ones perhaps being employed now?

Great to be with you. I think what's so interesting is, as he threatened to do, President Trump imposed tariffs almost immediately. And so he almost had to rely on IEPA, on this International Emergency Economic Powers Act, to justify immediate tariffs against, of course, Canada, Mexico and China.

And that is novel for this president. And so the way that he deals with justifying lifting the tariffs will be novel as well. Very different from how he deployed tariffs in the past after investigations that demonstrated harm through Section 232, Section 301 of U.S. trade laws. This use of IEPA to justify tariffs, I think, gives him

a little more or a lot more bargaining power and leverage on the one hand, but also justification to pull the tariffs back. He, under IEBA, talked about the flows of fentanyl coming into the United States from China going through Canada and Mexico, as well as, of course, illegal immigration. But in talking about the tariffs that he's about to impose, he also talks about the trade imbalance.

And that, I think, gives China the justification to challenge the use of IEPA to put these tariffs on China in the first place. And that's exactly what China has already done. Rather than threaten immediate retaliation—they've been very vague about that—

they have said, is this even legal, what the president is doing? And so really, I do think we are in a different place in the second Trump administration than we were in Trump 1.0 and how he used tariffs last time. I'm looking at the market reaction to something that has been well signaled, and it was shocked.

Apple is still the biggest drag on the downside to the Nasdaq. We're seeing Nvidia and Tesla. So we're trying to work out what it means for phone shipments, for ship shipments, for auto shipments, which are so globally dependent, Amy. What do you think the ripple effect is going to be?

incredibly disruptive, without a doubt. And so I think the reason that so many are shocked are not because the president hasn't said it all along on the campaign trail and since his election, but because of these profound consequences that you just mentioned, Caroline. It is going to be significant. I will say, however,

The president is looking for a deal here. He is looking to use this leverage of this threat of these tariffs in order to justify likely, maybe pulling them back. I shouldn't say likely, maybe pulling them back quickly

if he sees progress from China, more progress on the fentanyl trade flows and of course on illegal immigration. Two issues that during the transition period it sounds like the US government and the Chinese government have been making progress.

And so I think, again, that is why we're so surprised this is happening so quickly. We shouldn't be. The president promised it. But I think he's doing this in order to have some leverage to make some kind of deal. And my final point, Caroline, just the Chinese government has been much more reluctant to be vehement in its opposition than Canada and China.

and the Mexican governments because, of course, the tariff rate is much smaller, even though the threat President-elect Trump had made was a much larger tariff levy. And so we are early in. The Chinese government is going to play a long-term game in negotiating with this new team. What was way more shocking was actually deep-seek. That did come completely by surprise. And that adds another layer of complexity. What do you think that means for chip exports going forward?

It's going to be a real challenge, as we all saw. Of course, the Nvidia CEO for the first time met President Trump on Friday and of course is talking about this. The Trump administration very early on, through an executive order, has said, "We are really going to promote AI dominance by the United States by putting in place more restrictions." And so

I do think that the deep-seek arrival on the scene, coinciding with the inauguration of President Trump, necessitated a response from the Trump team. I think, as you were just talking about with Spencer, the new team is still coming into shape that is going to be directing these policies. But I anticipate we're going to see more export controls. We are going to see more threats of tariffs.

in order to deal with that. That is going to have some real ramifications for the American companies, technology companies that continue to rely on China. President Trump, I think Robert Lighthizer, many have said, this is going to cause some pain because we do need to transform the way that our country maintains its economic leadership role. Not going to be easy in the short term.

Amy, you mentioned that China here is playing the long game. Help us map out some potential scenarios for what retaliation could look like. Well, I think that the Chinese government wants to take it slow in retaliation that could have broad-based impact because, of course, we know that the government is talking to the new team in the White House now.

Of course, the vice president of China was here for the inauguration. He met with his counterpart prior to the inauguration. So vice president-elect at the moment, J.D. Vance and Vice President Han Zheng sat down together, talked about a whole host of issues. The vice president of China stayed in the U.S. through the inauguration and then flew right back to China. But what this means is the two sides clearly are

already talking. President Trump himself has intimated that he wants to go to China early, he wants to have some kind of a deal. And so to answer your question, I think the Chinese government is very much keeping that in mind as it thinks about retaliation. Of course, they don't want to adversely impact the Chinese government still struggling in its economic recovery. But

but they have to respond somehow. And so we'll likely take a very targeted retaliatory measure, likely targeting some U.S. company. And so that's not good news for the American business community that absolutely is concerned about the prospect of retaliation. But I foresee that retaliation will be quite measured for the time being. Amy Sellecko, deep expertise on China and U.S., Albright Stonebridge Group, we thank you. Coming up,

Palantir is set to report results after the closing bell. Can earnings live up to the explosive stop run for the software giant in the last year? That's next. This is Bloomberg Technology. This is the Bloomberg Businessweek Minute brought to you by Amazon Business. I'm Carol Masser.

Green stocks have had a rough few years as the industry has struggled due to high interest rates, which made it more costly for green companies to get financing, homeowners to buy solar panels and drivers to buy EVs. And on top of that, pandemic lockdowns and supply chain issues. And the S&P Global Clean Energy Index is down by almost two-thirds since 2021.

And yet some green investors are finding a silver lining in the presidency of Donald Trump, despite his anti-green policies. And that's because of low market valuations and improving earnings outlook. Investors single out battery producers as more electric grids install them to manage loads and store power when solar or wind installations are idle. Others say check out clean energy companies outside the U.S., noting China's strong support for green tech.

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It's another big week for tech earnings. First up, Palantir. Its extraordinary valuation is going to be in focus with the stock trading at levels some see as just difficult to maintain. Bloomberg's Carmen Renneke is with us. A phenomenal run-up, a valuation that is 200 times, the price is 200 times future earnings. Can 28% growth in revenue do it?

I mean, it remains to be seen. I think something that's so interesting about Palantir's stock is just how bullish investors are. Obviously, we saw an incredible run last year. And even in the last few weeks, you know, the shares slumped at the beginning of the year, but have rallied nearly 30% just in the last two weeks to a record high just before this earnings report. So investors are excited about this company. I think they're excited about the long-term potential here. And I mean, Palantir has a lot to prove in this earnings report.

Carmen, there's an AI arms race that just seems to be intensifying in recent weeks. I'm curious what Palantir's edge is here. We're very familiar with its contracts with the Defense Department, but what else is there to their business model that perhaps could benefit from this AI arms race we're seeing? So I think one of the biggest growth places for Palantir going forward is actually in commercial contracts. So as you said, we know that it's a big market.

It has a lot of business with the US government, globally with other governments, and it's also really building out the private side. So commercial contracts and especially bringing its AI to the table and saying, "This is how this could help you in your businesses." So I think that's something that people are really wanting to see. They want to see continued growth in the commercial side of Palantir's business. And you're right, it's really coming out on top as a big AI outperformer. Bloomberg's Carmen Reinecke, thank you.

Now, airspace drone monitoring technology startup Hidden Level has announced it's expanding its role in national security with $100 million in investment. Joining us now to discuss is Jeff Cole, Hidden Level CEO and co-founder.

Jeff, the defense industry and Silicon Valley have not typically had the most seamless of relationships, especially when you think about just how slow the Pentagon moves. Why don't you talk to us a little bit about how your technology actually works and what it took to really get this kind of massive contract in the books for you?

Yeah, no, thank you for having me. It's wonderful to be here. You know, as a company, we're based in upstate New York in Syracuse. A team, we founded the company in 2018 out of a basement, but we're a team that's been together for almost 20 years doing this type of tech with the defense industry, with the commercial industry.

And we really saw what we needed to do was bring to life next-generation sensing technology in a cost-effective manner, make it available not only through our hardware sales but through our infrastructure where we sell airspace awareness data on small drones, large aircraft. This made it ultimately much easier for the end users. So combining a mixture of dual-use commercial applications, defense, national security, our focus was on

making sure we have fun while addressing a safer and smarter world. So that's what really made this, I'll say, a journey that was really supported by our venture capitalists is not just that we were addressing DoD national security, but also the commerciality of a safer world. Strategic investors like Lockheed Martin Ventures as well as DFJ supporting this $100 million raise, now worth more than half a billion.

I'm interested as to how you compete against the Lockheed, how you can ensure that you're getting under the new administration new contracts for startups such as yourself.

Yeah, so not only have we brought in incredible investors like Lockheed, Booz Allen, DFJ, and so many others, but part of the reason we did that with folks like Lockheed Martin and Booz Allen was strategic partnerships. We have a very different business model. We sell hardware direct at firm fixed price. We have this data infrastructure that's available to DoD, federal, state, local, and enterprise commercial users online.

So rather than trying to replace, we're a new feature, something that the defense industry is able to integrate into existing solutions very quickly. This is shown by our recent deployments all throughout the Northeast to support a wide array of drone concerns and issues, and then also our involvement in the inauguration and through our budding partnership most recently with Palantir.

Jeff, can you give us a sense of where your technology is actually being deployed? Any regions or perhaps the scale of prototypes out there currently? Yeah, one of our largest deployments is in the DC area. It's been live since 2021.

It was actually a natural progression for us after supporting the U.S. government in deployments throughout the Northeast that they asked us to help assist with the inauguration. So in support of NORTHCOM and Joint Task Force National Capital Region and with our partnership with Palantir, we expanded our capabilities by putting our passive radar technology in that infrastructure we already had out

and we're able to provide an extremely comprehensive low altitude to high altitude picture on everything from small drones to manned aircraft. Many will be thinking about New Jersey, Jeff, but many will also be thinking of the context of this race, whether it's an AI race versus US-China, whether it's a drone race versus US-China. What do you make about the risk levels right now?

The complexities of our airspace are immense. Adding small drones, adding AI, the things that you could do with drones 10 years ago versus right now is just rapidly changing. And the complexities of our airspace, all the folks that are involved, the stakeholders, not just

DOD federal and state and local but it's also our commercial users, the power grid, everything. This just adds for challenge and difficulty. It was a big reason for starting Hidden Level was with our infrastructure we were able to integrate all these users simultaneously for the first time ever where they can all work off the same air picture. This gave them the ability to have very rapid response and quick decision-making which is needed as the complexity of the airspace is just getting worse.

And nothing brings that into sharper relief than the tragedy that occurred last week in Washington. Jeff Cole, Hidden Levels CEO, we thank you. Oh, it was a big night for Beyoncé. She won her first album of the year at the Grammys last night for her album, country album, Cowboy Carter, and became the first black artist to win Best Country Album. For more blue mags, Ashley Carman joins us. She would say it's a lost time coming. Her husband would say it's a long time coming. What do the viewers make of it?

I mean, I think this was a moment that everyone has been waiting for. Last year, Jay-Z talked to the Grammys about basically saying, like, Beyonce's won more Grammys than any artist in history, and yet she has not won album of the year. So it was kind of, I don't want to say an ultimatum, but it felt like it sort of put the pressure on of, like, she's up again. Is she going to get snubbed again? Is Taylor going to take it home? Mm-mm. And this year, finally, she's got it. Ash...

Ashley, not to bring it back to technology all the time, but I am curious, given everyone... You can do that. You can do that, Jackie. You can bring it back to technology all the time. Well, given every big artist and music labels in the room tonight, or last night, I'm curious what the relationship between AI and the music industry, where does that stand right now? Did you get kind of a vibe for where that is at the moment?

So actually, this kind of was a story that I would say hasn't really been picked up much, but the Beatles won for their song, Now and Then, which used AI to actually clean up the vocals from John Lennon, some tape that had been left over that just without AI really would have been difficult. It was very muddy and difficult to get the lyrics and the song out of it.

And so they actually won for that track, which is kind of a historic moment because they've been very open about the AI use there. And as you might recall, last year there was sort of a debacle around that artist Ghostwriter who had made an

used AI to make a track featuring quote unquote, you know, fake Drake and fake The Weeknd. So he wasn't allowed to submit that song last year. And so this year, this was sort of the officially sanctioned AI use case.

Meanwhile, there's going to be some smarting done by Drake as Kendrick Lamar romps home. I'm also interested in what this all spells for some key earnings this week. We've got Spotify coming up and this is their bread and butter. Yes, totally. I mean, Spotify, you mentioned the Kendrick Lamar or the Drake lawsuit over the Kendrick Lamar diss track.

Drake had tried to bring Spotify into this previously. He ended up not doing anything with that and suing UMG. But I think Spotify's already had a hell of a year. Their stock is doing very, very, very well. So I can't imagine that...

anything about last night changes that for them. Spotify, we wait for earnings tomorrow. And indeed, we are expecting some revenue growth of 13%. Ashley Carman, great to have you with us. That does it for this edition of Bloomberg Technology. You do not want to forget to check out our own podcast. You can find it on Spotify or indeed on Apple and iHeart. This is Bloomberg. Feeling buried in a never-ending to-do list that comes with running a business, managing orders, tracking expenses? It's a lot.

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