Daybreak Weekend: US CPI, Paris AI Summit, Trade War

Bloomberg Audio Studios, Podcasts, radio news. 0:00:10.320 --> 0:00:12.719 This is Bloomberg day Break Weekend, our global look at 0:00:12.720 --> 0:00:14.840 the top stories in the coming week from our Daybreak 0:00:14.880 --> 0:00:17.560 anchors all around the world. Straight ahead on the program, 0:00:17.560 --> 0:00:20.240 and look ahead to some key data in the US 0:00:20.560 --> 0:00:23.759 how it may impact FED policy moving forward. I'm Tom 0:00:23.840 --> 0:00:24.759 Lusby in New York. 0:00:25.120 --> 0:00:28.560 I'm Kroline, Hepkeitt in London, where we're asking what next 0:00:28.760 --> 0:00:30.200 in the global AI race. 0:00:30.760 --> 0:00:34.120 I'm dek Chrisner looking at the potential fallout of Donald 0:00:34.120 --> 0:00:37.040 Trump's trade war with China. 0:00:38.400 --> 0:00:42.440 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:42.440 --> 0:00:46.160 eleven three Yeero, New York, Bloomberg ninety nine to one, Washington, DC, 0:00:46.640 --> 0:00:50.880 Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, 0:00:51.320 --> 0:00:54.520 Sirius XM one twenty one, and around the world on 0:00:54.600 --> 0:00:57.760 Bloomberg Radio, dot Com and the Bloomberg Business App. 0:01:02.280 --> 0:01:04.360 Good day to you. I'm Tom Busby. We begin today's 0:01:04.360 --> 0:01:06.800 program with some key economic data here in the US. 0:01:07.440 --> 0:01:12.560 CPI data on Wednesday, US retail sales on Friday. Now 0:01:12.600 --> 0:01:15.160 for more on these readings, what they tell us about 0:01:15.200 --> 0:01:18.600 the consumer, how they may impact FED policy, moving forward, 0:01:18.760 --> 0:01:23.760 we're joined by Stuart paul Us, economist with Bloomberg Economics. Stuart, 0:01:23.760 --> 0:01:26.800 thank you for being here. Now, before we look ahead, 0:01:27.040 --> 0:01:29.320 let's start with some important data we just got at 0:01:29.360 --> 0:01:32.160 the end of this past week, the January jobs report. 0:01:32.400 --> 0:01:35.240 Why don't you tell us those numbers and how do 0:01:35.240 --> 0:01:35.840 you read this? 0:01:36.440 --> 0:01:39.680 So my read of the January jobs report is that 0:01:39.720 --> 0:01:42.240 it's a bit mixed. The data are a bit mixed. 0:01:42.640 --> 0:01:46.119 Headline job growth actually surprised to the downside. We had 0:01:46.120 --> 0:01:49.920 just one hundred and forty three thousand jobs added in January. 0:01:49.960 --> 0:01:53.000 That's below our estimate about two hundred thousand jobs added 0:01:53.080 --> 0:01:56.000 during the month. And in addition to that, there were 0:01:56.080 --> 0:02:00.640 downward revisions of past month's data. But and this is 0:02:00.680 --> 0:02:02.800 where it gets to be a little bit mixed, the 0:02:02.880 --> 0:02:07.200 downward revisions weren't as steep as we had expected. As 0:02:07.240 --> 0:02:10.160 most of Wall Street had expected, we saw just six 0:02:10.240 --> 0:02:13.920 hundred and ten thousand fewer workers on payrolls at the 0:02:14.120 --> 0:02:18.119 end of twenty twenty four. Most folks were expecting over 0:02:18.200 --> 0:02:21.640 nine hundred thousand fewer workers on payrolls at the end 0:02:21.680 --> 0:02:24.640 of twenty twenty four. So those downward revisions weren't actually 0:02:24.680 --> 0:02:28.480 as steep as folks had expected. Where we did see 0:02:29.040 --> 0:02:32.400 a little bit of negative details were in some of 0:02:32.440 --> 0:02:35.040 the industry level composition of those revisions. So at the 0:02:35.080 --> 0:02:37.359 end of twenty twenty four, there were fewer workers working 0:02:37.360 --> 0:02:42.120 in professional and business services, leisure and hospitality, manufacturing, some 0:02:42.200 --> 0:02:45.960 of those more cyclically sensitive industries. So we take the 0:02:46.000 --> 0:02:49.079 downward revisions, we take the industry level composition, we take 0:02:49.160 --> 0:02:52.959 slowing payroll growth to start twenty twenty five, and it's 0:02:53.000 --> 0:02:56.920 really just not a great picture in terms of the 0:02:57.000 --> 0:02:59.960 labor market right now. It does characterize labor market cool. 0:03:00.600 --> 0:03:04.040 But we did see the unemployment rate move lower. 0:03:03.840 --> 0:03:06.520 That's exactly right. Adding to the mixed nature of this 0:03:06.639 --> 0:03:10.400 job report, we see the unemployment rate inching lower. Some 0:03:10.480 --> 0:03:14.880 of that is because of updates and revisions to how 0:03:14.919 --> 0:03:17.480 the household survey is computed. A lot of it comes 0:03:17.520 --> 0:03:21.880 from revisions or updates to the total population. The estimate 0:03:21.880 --> 0:03:24.920 of the population increased by about three million people, and 0:03:24.960 --> 0:03:28.200 the number of people who the Bureau of Labor Statistics 0:03:28.360 --> 0:03:32.840 estimates are employed increased by way more than we had anticipated. 0:03:33.160 --> 0:03:35.480 That creates downward pressure on the unemployment. 0:03:35.120 --> 0:03:38.840 Where people joining the workforce, unemployment I mean sounds like 0:03:40.080 --> 0:03:42.600 former President Biden left on a pretty high note here. 0:03:42.680 --> 0:03:44.720 If it's four percent unemployment. 0:03:44.280 --> 0:03:48.120 That's right. Adding to his economic legacy of delivering a 0:03:48.120 --> 0:03:51.560 slower pace of inflation without creating a massive disturbance in 0:03:51.560 --> 0:03:53.960 the labor market. That's going to be part of his 0:03:54.120 --> 0:03:58.560 economic legacy. And so again, you know, as he exited 0:03:58.640 --> 0:04:02.120 on the twentieth of January, this is a rather favorable 0:04:02.680 --> 0:04:05.560 little detail for his economic legacy. But in terms of 0:04:05.600 --> 0:04:08.360 the job to report overall, it is a pretty mixed picture. 0:04:08.560 --> 0:04:13.000 Payrolls not looking great, but then again unemployment inching down. 0:04:13.680 --> 0:04:18.599 Now you mentioned inflation and the legacy of former President Biden, 0:04:19.240 --> 0:04:20.919 I mean, it has been the bete noir for this 0:04:21.000 --> 0:04:24.520 economy and for consumers. And what are you expecting to 0:04:24.520 --> 0:04:28.400 see on Wednesday? That would be the January CPI. Everybody 0:04:28.400 --> 0:04:30.760 goes to the gas station, everybody tries to buy eggs 0:04:30.800 --> 0:04:34.360 if there are eggs in there. There's a lot into this. 0:04:34.880 --> 0:04:37.200 What do you expect to see and why? What is 0:04:37.240 --> 0:04:38.919 the reason it is so stubbornly high. 0:04:39.040 --> 0:04:42.840 We're expecting to see headline inflation registering zero point three 0:04:42.920 --> 0:04:45.520 percent on a monthly basis. That's a little bit slower 0:04:45.520 --> 0:04:48.680 than we saw in December. There are a couple tricky 0:04:48.839 --> 0:04:53.400 seasonal factors operating the background that are allowing for that 0:04:53.640 --> 0:04:57.800 slow down in the monthly pace of headline inflation. But 0:04:58.120 --> 0:05:01.320 underneath the surface, what's going on the sumer level for 0:05:01.520 --> 0:05:06.080 headline inflation is that gasoline prices are exceptionally stable through 0:05:06.120 --> 0:05:09.279 the winter. Typically, you would expect to see a major 0:05:09.320 --> 0:05:14.159 decline in December that never materialized that boosted the December number. 0:05:14.560 --> 0:05:17.480 Now as we get into January, there's less of that 0:05:17.520 --> 0:05:20.960 going on again. Just at the pump, things are relatively stable, 0:05:21.320 --> 0:05:22.520 and so we're going to see a little bit of 0:05:22.520 --> 0:05:25.200 a slow down to the pace of headline inflation. When 0:05:25.240 --> 0:05:27.800 it comes to the core, we're also expecting to see 0:05:27.880 --> 0:05:32.279 just barely zero point three percent monthly inflation. That's faster 0:05:32.760 --> 0:05:35.600 than we saw it in December zero point two percent December, 0:05:36.120 --> 0:05:39.560 but favorable base effect will allow the annual measure of 0:05:39.600 --> 0:05:42.440 core inflation to inch down just a little bit to 0:05:42.560 --> 0:05:46.560 three point one percent, still stubbornly high. It's still characteristic 0:05:46.600 --> 0:05:50.080 of that long last mile to the FEDS two percent target, 0:05:50.920 --> 0:05:52.760 And a lot of what's going on in the background 0:05:53.200 --> 0:05:57.800 is that goods disinflation deflation in goods, which is typical 0:05:58.200 --> 0:06:02.520 for the US decade, It's just not there. We're just 0:06:02.600 --> 0:06:06.400 not getting that goods deflation that we would typically rely on. 0:06:06.600 --> 0:06:08.760 Now on Friday, we're gonna see the result of this 0:06:08.880 --> 0:06:12.000 with retail sales for January. What are you expecting to see? 0:06:12.480 --> 0:06:15.000 Is the consumer pulling back? And is it not just 0:06:15.160 --> 0:06:17.520 low way journers but all consumers. 0:06:17.960 --> 0:06:21.080 What I'm really seeing for the retail sales number is 0:06:21.120 --> 0:06:27.240 a consequence of pretty negative weather consequences from the polar vortex. 0:06:27.279 --> 0:06:31.479 In January. We saw really dismal auto sales during the month. 0:06:31.720 --> 0:06:34.679 The annualized pace of auto sales fell to about fifteen 0:06:34.720 --> 0:06:38.080 point six million units from sixteen point eight million units 0:06:38.120 --> 0:06:41.919 in December. So that major decline is characteristic of folks 0:06:41.960 --> 0:06:45.160 who just really don't want to walk the lot and 0:06:45.320 --> 0:06:49.120 get pitched on, you know, the undercoat cealant by the salesman. 0:06:49.480 --> 0:06:51.560 It's just too cold to do that during the month 0:06:51.560 --> 0:06:54.320 of January during a polar vortex. And when you have 0:06:54.400 --> 0:06:57.320 auto sales declining like that, that could result in headline 0:06:57.360 --> 0:07:00.240 retail sales declining by that zero point four percent during 0:07:00.240 --> 0:07:02.560 the month. And that's what we expect well a. 0:07:02.480 --> 0:07:05.040 Lot to look forward to. Our thanks to Stuart paul Us, 0:07:05.120 --> 0:07:09.440 economist with Bloomberg Economics. We move next to corporate earnings 0:07:09.440 --> 0:07:12.840 from the fast food giant McDonald's. It's fourth quarter results 0:07:12.840 --> 0:07:15.360 out on Monday. For more on the world's biggest burger chain, 0:07:15.440 --> 0:07:18.320 the state of the fast food industry, and whether consumers 0:07:18.760 --> 0:07:21.520 are pulling back on their spending. We're joined by Michael Halen, 0:07:21.600 --> 0:07:26.560 Bloomberg Intelligence Senior Restaurant and food service analyst. Michael, thank 0:07:26.600 --> 0:07:30.440 you for joining us. Now, Like every other dining establishment, 0:07:30.520 --> 0:07:33.720 McDonald's has how to face a lot of challenges. Rising costs, 0:07:34.040 --> 0:07:37.800 look at the price of eggs, higher salaries, cautious consumer spending. 0:07:38.080 --> 0:07:40.880 It also had an E Coli outbreak last year that 0:07:40.960 --> 0:07:43.640 may have really set things back. So what are you 0:07:43.960 --> 0:07:46.760 looking for in this earnings report out on Monday. 0:07:47.360 --> 0:07:49.880 Yeah, I think this earning report is going to be 0:07:49.920 --> 0:07:53.040 kind of ugly, So, you know, to your point, e 0:07:53.160 --> 0:07:57.760 Coli through a wrench into things. They had started off 0:07:57.760 --> 0:08:01.120 the quarter well October seem store sales were up mid 0:08:01.200 --> 0:08:04.320 single digits, Traffic was positive. They had kind of re 0:08:04.440 --> 0:08:08.160 established themselves as as you know, one of the big 0:08:08.160 --> 0:08:10.720 dogs in terms of value providers in there in the 0:08:10.760 --> 0:08:13.400 restaurant business in the United States. With their five dollars 0:08:13.400 --> 0:08:15.960 meal deal, it was going really well. Uh and then 0:08:16.000 --> 0:08:20.320 they were hit that E Coli outbreak. And so from 0:08:20.440 --> 0:08:22.800 data we've seen and you know, just what we expect 0:08:22.800 --> 0:08:26.800 November and December, we're probably pretty pretty tough months for 0:08:27.000 --> 0:08:29.200 the chain. You know, I think what the street is 0:08:29.240 --> 0:08:32.920 really interested in is how January is doing so far. Right, 0:08:32.960 --> 0:08:37.559 They've they've revamped their mcvalue menu, which hasn't been touched 0:08:37.559 --> 0:08:40.920 in quite some time, and we think that could could 0:08:41.000 --> 0:08:43.160 create some buzz. You know, the street really wanted to 0:08:43.200 --> 0:08:46.400 see some some progress here on the same source. 0:08:46.400 --> 0:08:50.360 Sales and traffic. Well, I'd say more than any other chain, 0:08:50.400 --> 0:08:53.679 they are pretty nimble. They're willing to change. And how 0:08:53.679 --> 0:08:57.760 do you think they McDonald's did reacting to that ecali scare. 0:08:57.800 --> 0:09:00.320 I mean they shut things down right away. That quarter 0:09:00.320 --> 0:09:03.720 pounder was unavailable I think nationwide even for a while, 0:09:03.840 --> 0:09:07.640 just to la fears. But how do you think they 0:09:07.679 --> 0:09:08.400 came back from that? 0:09:08.920 --> 0:09:11.160 Yeah, so sales and traffic haven't bat back. I think 0:09:11.200 --> 0:09:14.040 they handled it pretty well. They quickly, you know, stop 0:09:14.240 --> 0:09:17.720 serving quarter pounders and quick got to the bottom of 0:09:17.720 --> 0:09:21.160 the issue. You know, I think what's going to help 0:09:21.240 --> 0:09:23.960 McDonald's versus say Chipotle, which was the last you know, 0:09:24.360 --> 0:09:27.400 largely coal air brick in the industry. You know, we 0:09:27.480 --> 0:09:30.640 think this is going to be a much shallower event 0:09:30.720 --> 0:09:33.400 for McDonald's because it wasn't their fault. It wasn't because 0:09:33.440 --> 0:09:39.000 of poor procedures or cleanliness issues or cross contamination or 0:09:39.040 --> 0:09:41.640 anything like that. They receive bags of onions from a 0:09:41.679 --> 0:09:44.240 distributor that were infected with E. Coli, right, And so 0:09:44.280 --> 0:09:46.280 for that reason, we think this is going to be 0:09:46.280 --> 0:09:51.240 a much shallower impact the same sort of sales. We 0:09:51.280 --> 0:09:54.440 had some work done by a partner of ours, Cognovi Labs. 0:09:54.480 --> 0:10:00.640 They use AI to analyze tweets and online forums and 0:10:00.960 --> 0:10:03.400 things of that nature. And what their research found for 0:10:03.480 --> 0:10:08.680 us was that mentions of ecal i quickly faded throughout 0:10:08.720 --> 0:10:12.120 the fourth quarter in November and by year end, and 0:10:12.160 --> 0:10:18.280 also the negative emotions tied to ecoali comments dissipated pretty quickly. 0:10:18.320 --> 0:10:20.960 And so that what that tells us is that we 0:10:21.080 --> 0:10:23.040 think this is going to be a much faster recovery 0:10:23.080 --> 0:10:25.400 than ben Chipotle experience. We don't know if it's going 0:10:25.440 --> 0:10:27.760 to be the end of by the end of one 0:10:27.840 --> 0:10:30.000 Q or not. But you know, there's a potential for 0:10:30.040 --> 0:10:32.520 them to increase sales LITW single digits here in the 0:10:32.559 --> 0:10:35.920 second quarter, which, like I said earlier, the street wants 0:10:35.920 --> 0:10:37.840 to see progress. We want to see progress in this 0:10:38.679 --> 0:10:41.400 earnings report. We want to hear that January is doing 0:10:41.440 --> 0:10:43.760 better than December, which did better than November. 0:10:43.880 --> 0:10:47.240 Right right, right now. You mentioned the five dollars meal 0:10:47.280 --> 0:10:50.480 deals that they had, and everybody, it seems, came up 0:10:50.480 --> 0:10:52.520 with our own meal deals after that, and not just 0:10:52.559 --> 0:10:56.920 fast food but quick service restaurants, casual dining chains. Do 0:10:57.000 --> 0:11:01.160 you think that really changed the industry McDonald's launching those 0:11:01.200 --> 0:11:03.480 five dollars It seems like that started. I think in 0:11:03.559 --> 0:11:06.240 June of last year they extended it still going on. 0:11:06.320 --> 0:11:08.400 You say, now they're going to revamp their mcvalue meal. 0:11:08.920 --> 0:11:12.160 I mean, is this for right now here to stay? 0:11:12.720 --> 0:11:16.360 Yeah, And I'd say that the big reason is that 0:11:16.360 --> 0:11:22.200 that quick service chains are heavily frequented by low income consumers, 0:11:22.200 --> 0:11:26.640 and low income consumers are are still being impacted more 0:11:26.679 --> 0:11:30.000 than other consumers by inflation. Inflation is cumulative, right, and 0:11:30.040 --> 0:11:32.439 so last year was a restaurant's recession. And that's why 0:11:32.480 --> 0:11:35.320 we saw McDonald's start to lean into this. You know, 0:11:35.480 --> 0:11:37.400 early in the year. Last year, there was a lot 0:11:37.520 --> 0:11:41.160 of shade being thrown at McDonald's because a big mac 0:11:41.160 --> 0:11:43.959 meal was eighteen dollars at a store in Connecticut, right, 0:11:44.000 --> 0:11:46.559 And there was other quick service and fast casual names 0:11:46.600 --> 0:11:48.839 like five Guys actually had a twenty two or twenty 0:11:48.840 --> 0:11:51.880 three dollars meal deal, right, And so it was really 0:11:51.960 --> 0:11:55.320 important for Quick Service to re establish that value proposition, 0:11:55.400 --> 0:11:58.560 and that's why they did these five dollars meal deals, 0:11:58.559 --> 0:12:01.280 and that's why they're going to continue to do them. 0:12:01.360 --> 0:12:01.560 Right. 0:12:02.320 --> 0:12:05.400 It was a tough year for restaurants, and Quick Service 0:12:05.440 --> 0:12:08.520 had to do what they could to keep the low 0:12:08.559 --> 0:12:11.720 income consumers coming back. You know, we're we're more bullish 0:12:11.760 --> 0:12:15.959 on twenty twenty five. You know, with asset prices including 0:12:16.120 --> 0:12:19.920 SMP bitcoin, home prices all near all time highs, we think, 0:12:20.400 --> 0:12:22.520 you know, middle income, higher income consumers are going to 0:12:22.600 --> 0:12:26.520 spend more. You know, we think there could be you know, 0:12:26.559 --> 0:12:28.840 the results since the election have been better as well, 0:12:28.880 --> 0:12:32.199 and so and some of the economic data that we watch, 0:12:32.280 --> 0:12:34.720 and so, you know, for that reason, the low income 0:12:34.720 --> 0:12:37.440 consumer could be a little bit better too. But you know, 0:12:37.559 --> 0:12:40.280 because of the impacts of inflation on them, we think 0:12:41.360 --> 0:12:44.679 quick services is probably the segment of the industry we're 0:12:44.720 --> 0:12:47.280 the least excited about in twenty twenty five, and so 0:12:47.360 --> 0:12:49.319 you're going to continue to see these discounts. 0:12:49.679 --> 0:12:52.600 Oh that's good. Well McDonald's Q four earnings along with 0:12:52.640 --> 0:12:56.120 the return of the Shamrock shake out on Monday, Haart 0:12:56.120 --> 0:12:59.000 thanks to Michael Hale and Bloomberg Intelligence Senior restaurant and 0:12:59.040 --> 0:13:02.360 food service Adaly. Coming up on Bloomberg day Break Weekend, 0:13:02.400 --> 0:13:05.280 we'll look at what comes next in the global AI race. 0:13:05.640 --> 0:13:19.760 I'm Tom Busby, and this is Bloomberg. This is Bloomberg 0:13:19.840 --> 0:13:22.000 day Break Weekend, our global look ahead at the top 0:13:22.040 --> 0:13:24.920 stories for investors in the coming week. I'm Tom Busby 0:13:25.000 --> 0:13:27.480 in New York. Up later in our program, we'll look 0:13:27.480 --> 0:13:30.559 at the potential fallout of Donald Trump's trade war with China. 0:13:30.720 --> 0:13:34.160 But first, a summit on artificial intelligence taking place in 0:13:34.320 --> 0:13:37.200 Paris this week, set to bring together the biggest names 0:13:37.200 --> 0:13:40.160 in the sector, including government officials and business leaders. But 0:13:40.800 --> 0:13:44.400 this comes after Chinese startup Deep Seek jolted competitors around 0:13:44.440 --> 0:13:47.480 the world with a debut of its AI model, trained 0:13:47.480 --> 0:13:50.200 at just a fraction of the cost of rivals. How 0:13:50.240 --> 0:13:53.760 will the international community respond for more? Let's go to 0:13:53.800 --> 0:13:56.559 London and bring in Bloomberg day Break europe banker Caroline 0:13:56.600 --> 0:13:57.959 hepger Tom. 0:13:57.720 --> 0:14:00.560 The AI Action Summit is duced to take place in 0:14:00.600 --> 0:14:04.480 Paris in the next few days and at a fascinating moment. 0:14:04.880 --> 0:14:07.440 It will be the first trip abroad for the newly 0:14:07.480 --> 0:14:12.040 installed US Vice President jd. Vance. The Trump administration is 0:14:12.160 --> 0:14:15.480 keen to take a leading role in this area. Just 0:14:15.520 --> 0:14:20.200 look at President Trump's Stargate initiative, a one hundred billion 0:14:20.280 --> 0:14:25.840 dollar venture designed to accelerate AI development. Plus, the gathering 0:14:25.920 --> 0:14:29.920 takes place in the wake of Chinese firm Deep Seeks model, 0:14:30.240 --> 0:14:34.000 raising questions about the billions of dollars firms have spent 0:14:34.400 --> 0:14:39.960 to develop artificial intelligence technology and whether Beijing is closing 0:14:40.000 --> 0:14:43.840 the gap with the US in this rapidly developing sphere. 0:14:44.480 --> 0:14:47.920 So what's in store at the Paris AI Action Summit 0:14:48.040 --> 0:14:52.120 and beyond for the industry, I've been asking Bloomberg's Technology 0:14:52.200 --> 0:14:54.440 opinion columnist Pami Olsen. 0:14:55.080 --> 0:14:58.400 The summit came about in twenty twenty three as an 0:14:58.400 --> 0:15:02.960 AI safety summit in the UK and Bletchley Park which 0:15:03.000 --> 0:15:05.400 is kind of famed for being home to a lot 0:15:05.400 --> 0:15:09.400 of computer related innovation, and it was brought together, I think, 0:15:09.400 --> 0:15:12.280 out of concern about the speed at which AI was 0:15:12.320 --> 0:15:15.840 developing and the sense that there needed to be guardrails 0:15:15.880 --> 0:15:17.880 put in place. And there was a lot of talk 0:15:17.920 --> 0:15:21.200 back then about not just the short term risks of AI, 0:15:21.440 --> 0:15:25.720 such as the rise of misinformation that chatbots could contribute to, 0:15:26.160 --> 0:15:31.600 or the way that they could perhaps entrench certain stereotypes, 0:15:31.920 --> 0:15:37.640 racial stereotypes, gender stereotypes, and biases, but also the potential 0:15:37.720 --> 0:15:43.440 existential risk that AI could bring to civilization. These were 0:15:43.440 --> 0:15:45.920 the sorts of things that Rishie Sunak, who was the 0:15:45.960 --> 0:15:48.760 British Prime Minister at the time and he was hosting 0:15:48.800 --> 0:15:51.920 the event, spoke about. It's a very different tone this 0:15:52.040 --> 0:15:56.640 time around. The name has changed from AI Safety Summit 0:15:56.760 --> 0:15:59.600 to AI Action Summit, and I think that's a very 0:15:59.640 --> 0:16:04.480 interesting sting potential shift there in how governments want to 0:16:04.520 --> 0:16:09.160 approach AI Now. They seem to be more eager to 0:16:09.280 --> 0:16:12.600 kind of remain ahead in this race and maybe even 0:16:12.680 --> 0:16:17.120 stimulate and encourage their own national champions more so than 0:16:17.200 --> 0:16:20.080 putting guardrails in place for companies, which was really the 0:16:20.120 --> 0:16:22.760 focus of the first of the first stummit. 0:16:23.280 --> 0:16:26.280 Yeah, so why is this taking place now? 0:16:26.320 --> 0:16:26.520 Then? 0:16:26.880 --> 0:16:29.200 Well, as I understand it, this is an annual event, 0:16:29.280 --> 0:16:31.200 and so there was one in twenty twenty three, then 0:16:31.200 --> 0:16:34.360 there was another one in Seoul, South Korea last year, 0:16:34.400 --> 0:16:37.240 and this year we've got one in Paris. That the 0:16:37.280 --> 0:16:40.720 reason these have started is again just because of these 0:16:40.840 --> 0:16:45.240 rapid advancements. You know, since chat GPT came out two 0:16:45.320 --> 0:16:48.800 years ago, the rate at which AI models have been 0:16:48.840 --> 0:16:52.880 improving is even taking scientists by surprise. You know, some 0:16:52.920 --> 0:16:55.400 of the academic studying this stuff will read one paper. 0:16:55.760 --> 0:16:57.680 By the time they've finished reading it, it's sort of 0:16:57.840 --> 0:17:01.200 out of date because Anthropic or open AI or Google 0:17:01.240 --> 0:17:04.040 have come up with something more incredible, like a video 0:17:04.080 --> 0:17:09.679 generation tool. And you know, for businesses, investors, and policy makers, 0:17:09.520 --> 0:17:13.400 it's been very tricky just to keep up, whether it's 0:17:13.400 --> 0:17:15.639 to try and plug these systems into your businesses or 0:17:15.640 --> 0:17:18.040 try and put the standards in place to keep them safe. 0:17:18.880 --> 0:17:21.560 So and the other reason why I think this is 0:17:21.600 --> 0:17:25.680 happening is I think that governments have realized over the 0:17:25.760 --> 0:17:29.440 last decade that Silicon Valley companies should not be left 0:17:29.440 --> 0:17:33.639 to regulate themselves and governments need to come together and 0:17:33.880 --> 0:17:37.520 maybe put together some sort of international agency related to 0:17:37.520 --> 0:17:40.879 the United Nations that can put some standards in place 0:17:41.359 --> 0:17:44.920 that companies have a perhaps a legal obligation to follow, 0:17:45.320 --> 0:17:50.800 because you know, there is nothing like that yet in existence. 0:17:50.840 --> 0:17:54.600 And just a case in point, Google announced that they 0:17:54.640 --> 0:17:57.639 are now removing their own ban on the use of 0:17:57.680 --> 0:18:02.320 their AI for a military purpose, for weapons and for 0:18:02.480 --> 0:18:05.960 surveillance tools, and so this has really caused a lot 0:18:06.000 --> 0:18:11.920 of concern and consternation, particularly among civil society organizations and 0:18:12.760 --> 0:18:16.160 policy makers that really governments need to step in and. 0:18:16.040 --> 0:18:20.280 Do something interesting. So in terms of the heads of 0:18:20.320 --> 0:18:22.440 state who are going to be there and the important 0:18:22.480 --> 0:18:25.960 players out of Silicon Valley, who do you think will 0:18:25.960 --> 0:18:29.080 be them? And obviously in Manu and Macon, but also 0:18:29.200 --> 0:18:34.240 possibly JD. Vans possibly the other Silicon Valley leaders. Could 0:18:34.280 --> 0:18:39.040 things get a bit tense given that everybody is jostling 0:18:39.080 --> 0:18:41.639 to be at the forefront of this AI race. 0:18:42.080 --> 0:18:44.199 You know, at first I thought there might be a 0:18:44.240 --> 0:18:48.119 lot of tension between the US and China, so as 0:18:48.160 --> 0:18:51.080 there always is on this topic of AI governance. But 0:18:51.119 --> 0:18:54.880 it was interesting when the first AI s at International 0:18:54.920 --> 0:18:57.760 AI sam It happened in the UK two years ago. 0:18:58.840 --> 0:19:02.439 China sent uh this kind of biace minister for Science 0:19:02.480 --> 0:19:05.320 and Technology, and he was really kept at arm's length 0:19:05.800 --> 0:19:09.720 on these kind of national security concerns. Now I think 0:19:09.760 --> 0:19:12.880 it's going to be different. I think that China's officials, 0:19:13.080 --> 0:19:15.680 and China is sending one of its top government officials 0:19:15.680 --> 0:19:19.479 a very close ally to Jijiping, much higher ranking than 0:19:19.480 --> 0:19:21.760 the guy who came the first time. I think he's 0:19:21.800 --> 0:19:25.280 going to be given a much warmer welcome, just because 0:19:25.320 --> 0:19:28.159 of deep seat that the Chinese company that in the 0:19:28.240 --> 0:19:31.119 last couple of weeks has really shocked the market with 0:19:31.160 --> 0:19:36.080 its ability to make AI models so efficiently and really 0:19:36.119 --> 0:19:40.840 disrupt the economics of this new market. And so just 0:19:40.920 --> 0:19:44.280 given what Chinese companies have been achieving in research and development, 0:19:45.720 --> 0:19:47.639 I think the Chinese officials there are going to be 0:19:47.640 --> 0:19:51.680 given a warmer welcome. Overall, there might well be some 0:19:51.680 --> 0:19:55.959 some tensions over what policy should be, but also it 0:19:56.000 --> 0:19:58.360 really just depends on who ends up who ends up 0:19:58.400 --> 0:20:03.840 going to represent the United States, and I believe some 0:20:03.920 --> 0:20:05.960 quite high ranking people from India are going to be 0:20:06.000 --> 0:20:08.679 there as well. And again that's I think again that 0:20:08.720 --> 0:20:11.680 comes down to what happened with deep Seat Deep Deep 0:20:11.760 --> 0:20:15.680 Seek showed that the you know, the current AI race 0:20:16.240 --> 0:20:20.480 in it, the guaranteed winners are not necessarily American companies, 0:20:20.680 --> 0:20:24.640 America's tech giants. It could be smaller companies from developing nations. 0:20:25.520 --> 0:20:28.680 Yeah, which is which is fascinating, isn't it that Deep 0:20:28.720 --> 0:20:34.040 Seek has for such a rethink. But a lot of 0:20:34.040 --> 0:20:38.840 the big US companies are still committed to spending on 0:20:38.840 --> 0:20:42.800 on growth open AI in particular and others. I wonder 0:20:42.840 --> 0:20:46.600 whether there's any development in on that front. As far 0:20:46.640 --> 0:20:47.920 as you're concerned. 0:20:47.640 --> 0:20:49.720 I think the spending is going to continue, and we 0:20:49.920 --> 0:20:53.440 saw a commitment to that actually just in last week 0:20:53.640 --> 0:21:00.960 when tech companies like Microsoft and Meta Platforms were announcing 0:21:01.040 --> 0:21:03.840 their earnings. So it was an awkward time for them 0:21:04.000 --> 0:21:07.800 because they had just been completely undercut in a way 0:21:07.640 --> 0:21:10.320 by deep Seek, and then they had to talk to 0:21:10.400 --> 0:21:15.080 their investors about these tens of billions of dollars They 0:21:15.080 --> 0:21:18.800 want to continue spending on AI, and I think actually 0:21:19.840 --> 0:21:25.480 they can continue. They do have some justification to spend 0:21:25.480 --> 0:21:28.840 that much because in the last week there have been 0:21:29.359 --> 0:21:33.639 a lot of security concerns raised about deep Seek. Some 0:21:33.880 --> 0:21:36.840 security researchers have said that although deep Seek made its 0:21:36.880 --> 0:21:40.200 model very efficient, it's actually really low on the scale 0:21:40.280 --> 0:21:43.920 when it comes to the ability for people to jail 0:21:43.960 --> 0:21:47.479 break its model, meaning they could get it to do 0:21:47.560 --> 0:21:53.600 things it's not supposed to, or steal private information that 0:21:53.680 --> 0:21:56.800 the model is kind of plugged into. So I think 0:21:56.800 --> 0:22:00.760 that would really hurt deep seak prospects in terms of 0:22:00.760 --> 0:22:04.159 getting business customers potentially, And that is a little bit 0:22:04.200 --> 0:22:08.119 of a vindication for the tech giants who are spending 0:22:08.200 --> 0:22:11.640 a lot on infrastructure, billions and billions of dollars on infrastructure, 0:22:11.720 --> 0:22:14.400 which isn't just the power AI, but also to keep 0:22:14.400 --> 0:22:15.359 it secure. 0:22:15.600 --> 0:22:18.240 And tell us also a little bit about one of 0:22:18.240 --> 0:22:22.400 the other ventures within AI, which is Stargate and what's 0:22:22.480 --> 0:22:24.520 kind of happening with that and why people think it's 0:22:24.560 --> 0:22:27.840 so interesting what may come in the weeks and months ahead. 0:22:28.359 --> 0:22:31.359 Yeah, so I think we really it's it's an open 0:22:31.440 --> 0:22:35.000 question because this is a project that was a five 0:22:35.080 --> 0:22:40.760 hundred billion dollar project to really just boost the infrastructure 0:22:41.720 --> 0:22:45.919 investment in the US on AI data center spending and 0:22:46.000 --> 0:22:49.800 so forth. I've heard some people say that five hundred 0:22:50.280 --> 0:22:53.480 million like the billion. It doesn't it doesn't need to 0:22:53.520 --> 0:22:57.800 be that high. That for what the government is trying 0:22:57.840 --> 0:23:00.240 to do and what open ai is trying to do 0:23:00.320 --> 0:23:03.679 as a potential beneficiary to all this just does not 0:23:03.800 --> 0:23:07.480 need that amount of funding. But we'll see, i suppose, 0:23:07.480 --> 0:23:11.080 in the in the months ahead, whether open ai actually 0:23:11.119 --> 0:23:15.639 is able to make good on some of the discoveries 0:23:15.640 --> 0:23:18.840 that deep seek has made, because remember deep seek is 0:23:19.880 --> 0:23:22.439 not strictly open source, but it's it's an open weights 0:23:23.680 --> 0:23:28.159 uh model, and that it has put the blueprints for 0:23:28.240 --> 0:23:31.000 its incredibly efficient model on the Internet for anybody to 0:23:31.040 --> 0:23:34.320 copy and use. So if open ai and Microsoft and 0:23:34.359 --> 0:23:37.280 Google just start poppying what China has come up with, 0:23:37.440 --> 0:23:41.080 they're probably going to start building much more efficient AI 0:23:41.160 --> 0:23:44.280 models and maybe they won't need all that infrastructure that 0:23:44.920 --> 0:23:48.280 has been you know, applauded and talked up in the 0:23:48.359 --> 0:23:50.400 last few weeks with Stargate. 0:23:50.320 --> 0:23:53.680 We've had that. Of course, the big tech companies are 0:23:54.680 --> 0:23:59.240 ditching commitments to TODI as the federal government in the 0:23:59.359 --> 0:24:01.720 US is how much of a role do you think 0:24:01.760 --> 0:24:05.320 the regulation is going to play now in determining the 0:24:05.359 --> 0:24:07.919 future of AI? And this is also very important as 0:24:07.960 --> 0:24:11.520 we sit in Europe and think about the tensions between 0:24:11.640 --> 0:24:16.240 you know, the European understanding of safety for consumers and 0:24:16.600 --> 0:24:18.320 a very different approach in the US. 0:24:18.920 --> 0:24:24.120 Yeah, And I think that's something hopefully that will actually 0:24:24.160 --> 0:24:28.280 gain some more attention at this summit in the next 0:24:28.280 --> 0:24:32.879 few days, because what we've seen, you know, what I 0:24:32.880 --> 0:24:34.639 talked about in the beginning, is this kind of shift 0:24:34.680 --> 0:24:39.439 in tone and in terms of governments being not just 0:24:39.520 --> 0:24:43.040 in the US but even in the UK shifting away 0:24:43.119 --> 0:24:50.040 from framing themselves as you know, standard bearers, putting in 0:24:50.040 --> 0:24:53.600 the standards and the guardrails for companies to build AI safely. 0:24:54.920 --> 0:24:58.199 And I hope that we will continue to sort of 0:24:58.560 --> 0:25:02.560 continue that confidence in that role that governments have to play. 0:25:02.880 --> 0:25:05.840 My thanks there to Bloomberg's Pami Olson for joining me. 0:25:06.000 --> 0:25:10.480 So technology with the potential to transform our lives and 0:25:10.520 --> 0:25:14.920 for some global leaders a matter of national security. Where 0:25:14.960 --> 0:25:17.800 will the world's journey with AI take us? 0:25:17.880 --> 0:25:18.280 Next? 0:25:18.760 --> 0:25:22.199 We will have full coverage of the AI Action Summit 0:25:22.280 --> 0:25:25.840 in Paris for you here on Bloomberg. I'm Caroline Hepka 0:25:25.960 --> 0:25:28.480 in London and you can catch us every weekday morning 0:25:28.640 --> 0:25:31.520 for Blueberg Daybreak you at beginning at six am in London. 0:25:31.800 --> 0:25:33.840 That's one am on Wall Street. Tom. 0:25:34.280 --> 0:25:36.840 Thanks Caroline and coming up on Bloomberg day Break weekend, 0:25:36.880 --> 0:25:39.399 we'll look at the potential fallout of Donald Trump's trade 0:25:39.440 --> 0:25:43.200 war with China. I'm Tom Busby and this is Bloomberg. 0:25:54.640 --> 0:25:57.160 This is Bloomberg day Break Weekend, our global look ahead 0:25:57.160 --> 0:25:59.440 at the top stories for investors in the coming week. 0:26:00.040 --> 0:26:02.760 Tom Busby and New York. President Trump has to some 0:26:02.880 --> 0:26:06.680 extent made good on his promises of tariffs. The US 0:26:06.800 --> 0:26:10.600 reaching deals to delay implementing tariffs on neighbors Canada and Mexico, 0:26:10.640 --> 0:26:13.639 but tariffs on Chinese goods are now in effect. And 0:26:13.680 --> 0:26:16.000 for a look at the potential fallout, let's get to 0:26:16.040 --> 0:26:19.040 the host of the Daybreak Asia podcast, Doug Krisner. 0:26:19.440 --> 0:26:22.200 Tom, the US China trade war seems to be underway. 0:26:22.480 --> 0:26:25.600 Donald Trump's thread of those US tariffs loomed over the 0:26:25.600 --> 0:26:29.760 presidential campaign and they're now a reality, a blanket ten 0:26:29.800 --> 0:26:32.960 percent tariff on all Chinese goods imported to the US. 0:26:33.400 --> 0:26:35.960 So the question now is where do we go from here. 0:26:36.400 --> 0:26:39.840 Let's cross to Singapore where we find Bloomberg opinion columnist 0:26:40.040 --> 0:26:44.000 Karishma Vaswani. She has been writing about the potential backlash. 0:26:44.240 --> 0:26:47.160 Karishma joining us from our studios in the Lion City. 0:26:47.400 --> 0:26:49.239 Thank you for making time to chat with us. It's 0:26:49.280 --> 0:26:52.000 always a pleasure. Can I start by getting your initial 0:26:52.119 --> 0:26:53.920 reaction to what we know so far. 0:26:54.400 --> 0:26:57.040 I think what you're seeing from the United States and 0:26:57.160 --> 0:27:01.080 from President Donald Trump is a degree of what he 0:27:01.200 --> 0:27:03.760 said that he was going to do on the campaign trail, 0:27:03.840 --> 0:27:06.159 that he was going to be tough on drugs, he 0:27:06.280 --> 0:27:08.439 was going to be tough when it came to trade. 0:27:09.240 --> 0:27:11.560 You know, one of the things I found particularly notable 0:27:12.160 --> 0:27:15.280 in my research was that with regards to some of 0:27:15.320 --> 0:27:19.200 the most important issues for Americans, and you'll know this well, Doug, 0:27:19.480 --> 0:27:22.840 you know, being based out there, that they wanted their 0:27:22.960 --> 0:27:26.720 leader to focus on drugs, possibly even more so, some 0:27:26.800 --> 0:27:30.760 surveys suggested, than reducing the budget deficit and even unemployment. 0:27:31.200 --> 0:27:34.359 So that's what he's showing to his domestic audience. He's saying, Look, 0:27:34.400 --> 0:27:38.760 I'm tying tariffs and trade to this issue of drugs 0:27:38.800 --> 0:27:42.119 coming into our borders and immigrants coming into our borders, 0:27:42.160 --> 0:27:44.960 and I'm going to show the world whose boss now. 0:27:45.240 --> 0:27:47.440 In the short term, as I argue in my column, 0:27:47.640 --> 0:27:50.560 he seems to have achieved that, certainly with Canada and Mexico, 0:27:51.040 --> 0:27:53.560 In the long term, I feel like this will be 0:27:53.600 --> 0:27:56.680 a massive reputational damage to the United States in terms 0:27:56.720 --> 0:27:59.920 of its image as a fair player, a global act, 0:28:00.400 --> 0:28:04.360 and a force of stability. Instead, I think countries will 0:28:04.359 --> 0:28:06.360 be looking at the US and trying to figure out 0:28:06.440 --> 0:28:10.280 their Trump two point zero playbook, and you know, getting 0:28:10.280 --> 0:28:12.919 a sense that the US under Trump is going to 0:28:12.920 --> 0:28:15.440 be quite unpredictable. And then that brings us to China. 0:28:15.480 --> 0:28:17.800 Of course, Yes, well that's the next question. What do 0:28:17.840 --> 0:28:20.119 we know about the degree to which this is resonating 0:28:20.240 --> 0:28:22.680 in Beijing. I mean, this is not the first time 0:28:23.000 --> 0:28:26.680 that President Trump has dealt with Chinese President Chi Jinping. 0:28:26.760 --> 0:28:29.280 There was a trade war during the first Trump administration. 0:28:29.640 --> 0:28:32.200 Is this resonating in a slightly different fashion now? 0:28:32.600 --> 0:28:35.439 I think it is simply because China is in a 0:28:35.520 --> 0:28:39.120 very different position now. One the economy isn't as strong 0:28:39.160 --> 0:28:40.040 as it was back then. 0:28:40.240 --> 0:28:40.560 Two. 0:28:41.080 --> 0:28:43.280 I think it is fair to say that sigen Ping 0:28:43.320 --> 0:28:48.760 President Cigenping is looking to legitimize his image as a 0:28:48.920 --> 0:28:52.320 sort of, you know, somebody who can bring stability to 0:28:52.440 --> 0:28:55.880 the Chinese economy and to the political situation. It's impossible 0:28:55.920 --> 0:28:58.160 to know, of course, given how opaque it is it's 0:28:58.200 --> 0:29:00.960 like a black box out there. But certainly when you 0:29:01.000 --> 0:29:04.000 look at economic indicators, use unemployment, all of that, that's 0:29:04.040 --> 0:29:06.680 been under pressure for quite some time in China, so 0:29:07.240 --> 0:29:09.240 you know it is coming off a back foot. But 0:29:09.280 --> 0:29:11.880 I thought it was really interesting that what we saw, 0:29:12.040 --> 0:29:16.120 instead of a capitulation the way you know, the Canada 0:29:16.280 --> 0:29:19.680 and Mexico actions have been perceived to be, what we 0:29:19.720 --> 0:29:24.440 saw instead was proper retaliation, and China decided to hit back, 0:29:24.520 --> 0:29:27.480 or at least threaten to retaliate with its own set 0:29:27.480 --> 0:29:29.920 of taros, saying that it would implement a fifteen percent 0:29:29.960 --> 0:29:33.400 tarafon coal and liquified natural gas products, as well as 0:29:33.400 --> 0:29:36.680 a ten percent tarifon crude oil, agricultural machinery, and large 0:29:36.720 --> 0:29:39.680 engine cars imported from the US from the tenth to February. 0:29:39.680 --> 0:29:43.600 So that still gives us some time. Between the two men, 0:29:44.080 --> 0:29:47.040 Siagean Ping and Donald Trump. You know, it's been indicated 0:29:47.080 --> 0:29:49.080 from the US that they're going to have a conversation. 0:29:50.440 --> 0:29:52.680 He has talked. Trump has talked in the past about 0:29:52.720 --> 0:29:55.240 what a good relationship he has with Sigean Ping. He's 0:29:55.240 --> 0:29:58.320 talked about TikTok being on the table, And I think 0:29:58.400 --> 0:30:01.680 all of this is quite perform pomative from both sides, 0:30:01.720 --> 0:30:04.120 saying like, look, we're willing to deal, but it has 0:30:04.200 --> 0:30:05.800 to be on our terms as well. I think that's 0:30:05.800 --> 0:30:07.239 what you're getting from the Chinese right. 0:30:07.480 --> 0:30:10.840 So at the same time that those retaliatory tariffs were announced, 0:30:10.880 --> 0:30:14.680 China launched an antitrust probe into Google. I thought that 0:30:14.800 --> 0:30:18.120 was very interesting. I spoke earlier with Annabel Droolers, she 0:30:18.240 --> 0:30:21.360 is our tech reporter from Hong Kong. Here's what she 0:30:21.480 --> 0:30:22.040 had to say. 0:30:22.360 --> 0:30:24.320 Well, it is a little bit confusing, actually, you could 0:30:24.320 --> 0:30:26.800 probably say because a lot of people would know that 0:30:26.800 --> 0:30:29.840 that Google hasn't been available as a search engine in 0:30:29.920 --> 0:30:32.560 China going all the way back to twenty ten. So 0:30:33.160 --> 0:30:35.720 you know, the question is really what exactly is China 0:30:35.760 --> 0:30:38.400 going to be looking into. And essentially what they're announced 0:30:38.560 --> 0:30:43.640 is an investigation into Alphabet's Google for alleged antitrust violations. 0:30:44.120 --> 0:30:46.800 The real focus of this is perhaps going to pertain 0:30:46.840 --> 0:30:48.920 and this is what our Bloomberg intelligence team is saying, 0:30:48.960 --> 0:30:51.000 but it could relate to the market dominance of the 0:30:51.000 --> 0:30:54.680 Google Android mobile phone operating system, which is in China's 0:30:54.680 --> 0:30:58.040 smartphone sector of course, and according to data from IDC, 0:30:58.240 --> 0:31:01.160 approximately seventy percent of smartphone sort are sold in China. 0:31:01.160 --> 0:31:04.120 We're Android based last year, so that could be the 0:31:04.200 --> 0:31:05.680 sort of the broader focus that. 0:31:05.720 --> 0:31:09.360 Is Annabel Jewelers our tech reporter in Hong Kong. Let's 0:31:09.400 --> 0:31:13.600 get back to our conversation with Kriishma Vaswani Karishma. Where 0:31:13.600 --> 0:31:16.280 do we go from here in terms of the tension 0:31:16.360 --> 0:31:19.040 on the technology side between the US and China. We 0:31:19.120 --> 0:31:22.960 know that during the Biden administration those strict export controls 0:31:22.960 --> 0:31:26.760 were put in place on semiconductors. This became revisited with 0:31:26.920 --> 0:31:29.600 the story on deep Seek a couple of weeks ago. 0:31:30.080 --> 0:31:32.560 Now we're talking about Google. Where do we go here 0:31:32.600 --> 0:31:33.360 on the tech front? 0:31:33.720 --> 0:31:36.480 Yeah, I think Google, you know, it's a bit of 0:31:36.480 --> 0:31:39.560 a symbolic gesture, to be very honest, and I think, 0:31:39.640 --> 0:31:42.640 you know, our tech correspondent in Hong Kong sort of 0:31:42.680 --> 0:31:45.520 alluded to that. I see it as quite a separate 0:31:45.600 --> 0:31:49.520 issue from things like deep Seek, as well as the 0:31:50.680 --> 0:31:54.240 limited access for Chinese firms pretty much no access to 0:31:54.520 --> 0:31:57.760 high end US technology. And I think what China is 0:31:57.800 --> 0:31:59.920 saying with that is, look, this is our first south 0:32:00.280 --> 0:32:02.400 and it's not a big one. It's not something that 0:32:02.440 --> 0:32:04.920 could really hurt you all that much. You know, it's 0:32:04.960 --> 0:32:07.680 still an investigation at this point and it hasn't reached 0:32:07.720 --> 0:32:10.480 any sort of decision yet. But I think what China 0:32:10.520 --> 0:32:13.840 is showing by saying that it's looking into this and 0:32:13.880 --> 0:32:17.760 it's a big, massive American tech company, is that, you know, 0:32:18.160 --> 0:32:20.520 you know, push us a little bit further, Trump, and 0:32:20.560 --> 0:32:22.680 we could go further too, And if you want to 0:32:22.680 --> 0:32:26.080 get into this tip for tat retaliatory kind of battle, 0:32:26.160 --> 0:32:28.560 we can do that. We did that in the first 0:32:28.640 --> 0:32:31.040 administration and if you look back, it's quite interesting. And 0:32:31.280 --> 0:32:33.400 some of our colleagues have written about this on the 0:32:33.440 --> 0:32:37.440 Bloomberg website as well, tracking the first set of tariffs 0:32:37.480 --> 0:32:41.400 during the first trade war and looking at pretty much 0:32:41.480 --> 0:32:44.800 the sort of mirroring of what China did every time 0:32:44.920 --> 0:32:47.000 Trump put in a new set of tariffs. And I'm 0:32:47.000 --> 0:32:50.120 sure you know this phrase in dating culture, Doug, but 0:32:50.280 --> 0:32:54.880 matching your energy recently learned that, and I think that's 0:32:54.920 --> 0:32:58.560 what China is trying to do at this point as well, 0:32:58.600 --> 0:33:03.000 but not to the extent that it would antagonize Trump completely. 0:33:03.280 --> 0:33:05.680 It's to leave that door open and say we're willing 0:33:05.760 --> 0:33:08.760 to talk, but it has to also work in our favor. 0:33:08.920 --> 0:33:11.120 You know, I mentioned the export controls that were put 0:33:11.200 --> 0:33:14.480 in place under the Biden administration. Those were not unilateral. 0:33:14.920 --> 0:33:19.640 The cooperation came from Japan also the Netherlands. Are we 0:33:19.680 --> 0:33:23.160 in a situation now where Trump is functioning more unilaterally 0:33:23.240 --> 0:33:26.360 and could that be problematic for the United States going forward? 0:33:26.680 --> 0:33:29.560 I think it's extremely problematic, and I think it's a 0:33:29.640 --> 0:33:32.000 really good question that you've posed. It's frankly, it's the 0:33:32.040 --> 0:33:34.440 focus of one of my columns coming up, so I'll 0:33:34.480 --> 0:33:36.400 be sure to come up and talk to you about 0:33:36.400 --> 0:33:38.760 that when I do publish. But I think this is 0:33:38.760 --> 0:33:43.040 a huge issue because what Trump has done with regards 0:33:43.080 --> 0:33:46.960 to the actions, for example, with close allies like Canada 0:33:47.040 --> 0:33:51.280 and Mexico. The signal that sends to other countries like Japan, 0:33:51.520 --> 0:33:54.760 South Korea is that we're all at risk, right Like, 0:33:54.800 --> 0:33:57.880 if Canada and Mexico aren't safe, then who is safe? 0:33:58.120 --> 0:34:01.800 And in the past, the Biden administry worked really effectively 0:34:02.280 --> 0:34:04.520 in places like the South China Sea in the Indo 0:34:04.560 --> 0:34:08.359 Pacific from business, trade and geopolitics to say, look, it's 0:34:08.360 --> 0:34:11.359 in your interests to side with us, and yes, China 0:34:11.400 --> 0:34:13.319 is a massive trading partner for you, but we're going 0:34:13.360 --> 0:34:16.359 to keep you safe. We are on your side, and 0:34:16.400 --> 0:34:19.200 that built a degree of goodwill that I think a 0:34:19.239 --> 0:34:20.799 lot of the time is sort of lost in the 0:34:20.840 --> 0:34:24.239 geopolitical conversation when it comes to looking back at the 0:34:24.239 --> 0:34:27.000 Biden administration and you know, we have to be fair. 0:34:27.040 --> 0:34:29.879 There were lots of missteps as well. But I think 0:34:29.920 --> 0:34:33.240 the key thing going forward if Trump is serious about 0:34:33.320 --> 0:34:37.840 keeping Americans safe, about ensuring that American supremacy to some 0:34:37.960 --> 0:34:41.880 extent is still you know, valid and something that is 0:34:41.960 --> 0:34:45.880 respected around the world, then tearing up trading agreements, not 0:34:46.040 --> 0:34:49.160 paying attention to close allies like Japan and South Korea, 0:34:49.600 --> 0:34:52.200 not making sure that these sort of alliances are in 0:34:52.239 --> 0:34:55.040 place in the Indo Pacific, in South China Sea. That 0:34:55.120 --> 0:34:58.279 will make America a more dangerous place and reduce the 0:34:58.320 --> 0:35:01.759 supremacy of the United States on the international state. 0:35:02.000 --> 0:35:05.680 Very recently, US Secretary of State Marco Rubio traveled to 0:35:05.719 --> 0:35:10.680 Panama and he essentially echoed Trump's complaints about Chinese influence 0:35:11.160 --> 0:35:13.920 or certain parts of the Panama Canal. How do you 0:35:13.920 --> 0:35:16.040 think that resonated in Beijing. 0:35:16.640 --> 0:35:20.560 I think that will worry them a lot, because you know, 0:35:21.160 --> 0:35:25.920 the Chinese have managed to parley their economic influence into 0:35:26.040 --> 0:35:29.120 geopolitical influence around the world. That was what Belton Road 0:35:29.280 --> 0:35:32.080 was definitely about. And you know, again, I think it's 0:35:32.080 --> 0:35:35.800 important to take a balanced view here. What Rubio is 0:35:35.800 --> 0:35:38.680 saying is not necessarily wrong. It's just the methods I 0:35:38.680 --> 0:35:41.480 think that he's using might seem a bit heavy handed 0:35:42.360 --> 0:35:45.520 when you look at the way international diplomacy might well 0:35:45.560 --> 0:35:49.279 be conducted. But it does echo a lot of what 0:35:49.320 --> 0:35:52.040 the Biden administration has said before as well. 0:35:52.560 --> 0:35:55.960 Karishma, thank you so much for joining us. That's Korishma Vaswani, 0:35:56.000 --> 0:35:59.799 columnist for Bloomberg Opinion. So let's turn out and get 0:35:59.840 --> 0:36:03.520 some deeper market analysis. I spoke with Stephanie Leon. She 0:36:03.760 --> 0:36:07.120 is the chief investment officer at Stashua. We know the 0:36:07.160 --> 0:36:09.799 situation in China is quite different from what it was 0:36:10.320 --> 0:36:12.920 during the last Trump administration, and I'm wondering whether She 0:36:13.120 --> 0:36:17.400 Jinping knows or feels that he has a much weaker 0:36:17.440 --> 0:36:18.439 hand to play right now. 0:36:19.160 --> 0:36:21.399 Yes, I think, I mean to a certain extent. Of course, 0:36:21.440 --> 0:36:24.840 the economic situation now is a lot weaker in China, 0:36:25.320 --> 0:36:28.080 but I also think that there is kind of a 0:36:28.200 --> 0:36:34.320 change in the global view from both sides of the continents. 0:36:34.400 --> 0:36:37.520 Right from a US perspective, of course, if you ask 0:36:37.560 --> 0:36:39.880 a medium Phota a few years ago, they would be 0:36:39.960 --> 0:36:42.560 much more pro China. Now today, I think it's sort 0:36:42.600 --> 0:36:46.560 of just across the aisle. People are kind of seeing 0:36:46.680 --> 0:36:49.240 China as a as a threat, more as a competition 0:36:49.360 --> 0:36:52.759 than a friendly kind of trade neighbor. Also from the 0:36:52.840 --> 0:36:55.440 China side, we have to recognize that, I mean, the 0:36:55.520 --> 0:36:59.600 leadership from President she is basically that we have to 0:36:59.640 --> 0:37:01.040 develop our own economy. 0:37:01.120 --> 0:37:01.319 Right. 0:37:01.400 --> 0:37:04.399 They can't rely on the external trade. It can't rely 0:37:04.560 --> 0:37:08.240 on a clio global trade anymore like they've done before, 0:37:08.640 --> 0:37:11.680 and therefore there is a lot more focus on developing 0:37:11.680 --> 0:37:14.120 the domestic economy, and I think that's kind of where 0:37:14.120 --> 0:37:16.200 the government is focusing on now. Of course, in the 0:37:16.200 --> 0:37:20.120 past few months we've seen some gestures of stimulus, but 0:37:20.200 --> 0:37:24.479 I think largely what the market wants is from the 0:37:24.520 --> 0:37:28.000 government to directly stimulate consumption and also investment in that 0:37:28.160 --> 0:37:29.160 so far we haven't seen that. 0:37:29.320 --> 0:37:31.520 So I'm trying to understand Stephanie, whether or not this 0:37:31.880 --> 0:37:35.560 US China trade war will become protracted. Okay, ten percent 0:37:35.640 --> 0:37:39.000 may not be a lot initially, but Trump has already 0:37:39.040 --> 0:37:41.640 said that this tariff could go as high as sixty percent, 0:37:41.680 --> 0:37:44.200 and I'm imagining that that would inflict a lot of 0:37:44.280 --> 0:37:46.640 pain on the export economy in China. 0:37:47.080 --> 0:37:51.520 Yeah, I think. I mean, if eventually sixty percent gets imposed, 0:37:52.120 --> 0:37:56.120 and it gets imposed on the most critical components, then 0:37:56.239 --> 0:37:58.839 I think, yes, of course it will depen growth in China, 0:37:58.920 --> 0:38:01.600 given that export is the very, very important But I 0:38:01.600 --> 0:38:04.560 think we also to remember that also dampests growth and 0:38:04.840 --> 0:38:07.160 push us up inflation potentially in the US as well. 0:38:07.480 --> 0:38:10.560 And I mean Trump administration knows that. 0:38:10.080 --> 0:38:13.799 That was definitely Young chief investment officer at Stashaway and 0:38:13.840 --> 0:38:16.279 I'm Doug Krisner. You can catch us weekdays for the 0:38:16.320 --> 0:38:20.520 Daybreak Asia podcast. It's available wherever you get your podcast. 0:38:20.840 --> 0:38:23.600 Tom. Thank you, Doug. And that does it for this 0:38:23.760 --> 0:38:26.360 edition of Bloomberg day Break Weekend. Join us again Monday 0:38:26.360 --> 0:38:28.560 morning at five am Wall Street Time for the latest 0:38:28.560 --> 0:38:31.000 on markets overseas and the news you need to start 0:38:31.040 --> 0:38:34.680 your day. I'm Tom Buzby. Stay with us. Top stories 0:38:34.680 --> 0:38:37.840 and global business headlines are coming up right now.