Transcripts For BLOOMBERG Bloomberg 20240704

Sonali welcome to bloomberg markets. Lets look at the markets quickly. We have a lot of red on the screen. We have the s p 500 now down about one half of 1 . The nasdaq 100 is seeing bigger can kleins. The russell 2000 even more than that. Its now down about 1. 5 on the day, quickening its losses and thats on the back of higher yields. The twoyear yield just flying higher. Its above 4. 67 on the day. Thats a three basis point move. You have to remember how far weve come. We will dive into the Economic Data we had this morning that is driving the yields higher. Michael mckee joins us now to bring us up mike mike to date. This is a nerd indicator. Business inventories are just out at the moment. Its not a really good number. 0. 0 after a 0. 3 increase the month before. That is down from 0. 4 . It suggests the u. S. Is not building inventories as much as people might have thought. There was a feeling that because gdp has shown inventories declining for the last months that we would see factories start to ramp up because of people are buying stuff, they will need stuff to buy. But they are not buying stuff either. You look at what happened with the retail sales report today and it was disappointing to say the least. Its fallen significantly in january and the rebound in february wasnt as great as anticipated, up 0. 6 . The core of the retail sales which is the Retail Control Group that goes into gdp was flat on the month after a 34 5 decline a month before. This tells you the economy slowing down but at the same time, prices are not slowing down. Another interruption to the inflation story is ppi comes in, up 0. 6 on a month thats double what had been anticipated and the super court rate of food, trade and energy is up 0. 4 . Its difficult for the fed to make the case that we are continuing to see the kind of good news they wanted to see before this march meeting. Sonali before the march meeting, it seems like we are getting conflicting data. On one hand, inflation is upside surprising. And some of the data is slowing down. How does that set us up not just for the conversation into next week but the dot plot . Mike there are some fed officials who between meetings have been talking about maybe fewer rate cuts this year. Raphael bostic talked about the possibility there might not be any. It would only take two members of the committee to move their dots up in order for us to move down from three cuts to maybe 2 four fewer. There is the possibility that could happen if they think inflation is not where they wanted to be. Weve only had a month of really bad inflation news so we will see if thats what they do next week. It is now maybe a more live possibility than it was before. Sonali we thank you so much for keeping an eye on the data. Will get more insight into markets and how they are being impacted by the Economic Data. We are joined by the head of u. S. Equity strategy at socgen. When you look at some softening data, particularly among the consumer and you look at retail sales, do you start to worry about some sectors of the market that have been reaching new highs, finally hitting that mark in recent weeks . I think its a very fair question. Currently, the breadth is all in large caps. It started in small caps but the russell is down for the year. I dont think the market is excited about the real economic strength in the u. S. Its more focused on largecap, strong Balance Sheet and is still focused on nasdaq. I think the story for equities especially in the u. S. Is all about the nasdaq. Sonali what about the russell . You seen a lot of data start to mess with the russell when you saw the inflation data and use of the russell 2000 take a hit and its taking a hit again today. But will finally bring love back to the small and midcaps . Do you think they have a risk of being left out of this rally entirely . [no audio] sonali we are frozen with you there for a minute. We want to bring you more of how the market is reacting after the data at the top of the hour as well. We did see a quickening of losses while we try to get our guest back, we saw a quickening of losses in the russell 2000 index. We are having not only higher yields but worse than expected Economic Data when you look at the consumer front in particular. What is more impacted than other areas in an environment like this . We are seeing anything thats not the big tech sector being left out of that love. While we are waiting, lets go to emily to see was moving in markets. What are you taking a look at . Youre talking about the consumer and im looking at Dollar General. They have over 20,000 storefront locations and they been able to turn their business around after consumers are pulling back from purchasing pretty much anything during this period of higher inflation. The comps came in 4. 7 . The samestore Sales Forecast beat and this is compared to their competitor dollar tree. Just yesterday, we saw dollar tree fall about 14 and they plan to close about 1000 stores. Now we have Dollar General saying they plan to slow store openings but they will be opening about 800 stores which sounds rudy good for Dollar General was sounds pretty good for Dollar General. These two can foam consumer focused companies. Sonali what else is moving . For scare is down more than 30 . Wall street journal reported the company has hired advisors to assist with the possible bankruptcy filing. We are still waiting for more information on this but we know that about two weeks ago, bloomberg have reported the electric Vehicle Company was in talks with nissan for a lifeline for potential liquidity challenges. Their most recent Earnings Report was weaker than expected a few weeks ago. They also said they will be slowing their production and they have technical issues. This company was one of the highflying spacs that went public via the special Acquisition Company during the pandemic and the share price has fallen almost 100 since then. Sonali for scare shares now down about 50 , the most ever and at the lowest ever as well. What else are you keeping an eye on . How is the tone shifting among investors . One stock has been moving around all morning. Most metrics on the earnings front actually beat in the stock is down 4 of the earnings were pretty good. The fullyear revenue forecast beat fourthquarter revenue and eps profit. A number of wall street analysts upgraded their price target, jp morgan, evercore and yet the stock is down 5 . Perhaps the First Quarter forecast mr. Revenue. They see revenue at 330 million versus 347. I was looking for the Earnings Report for this Automation Software company that deals with generative ai. I was looking for what was driving the stock lower and analyst notes says the Earnings Report does not speak to that yet so we will have to look more into that. Sonali thank you so much. Coming up, well talk about saudi arabia in talks with top banks on wall street. We will have the details on that deal next. This is bloomberg. Sonali saudi arabia has a record secondary share sale in aramco. The saudis plan to hire jp morgan is one of the main underwriters. Bank of america and Morgan Stanley are also contending in the deal. It could raise as much as 20 billion. Joining us more is matthew in riyadh. Why now and how competitive is it for these banks to get on this deal . As you say, its an intensely competitive process. Back in 2019 when they first did the ipo of aramco which raised around 30 billion which was the biggest ipo deal in history. Its an intensely competitive process before for these banks. Its not something that proved to be particularly remunerative for them. The fees were low but the pressure was on to get on it for credentials purposes rather than because it will raise a huge amount for the investment banks involved in the process. The saudi government is particular keen on trying to do this because as we get further through this plan that the crown prince has to invest in diversifying the economy and invest internationally as well into creating the Sovereign Wealth Fund here, making it one of the worlds biggest, the pressure is on to find sources of being able to fund that. Aramco has traditionally always been the cash cow for the saudi government. That remains so. Is now being used in different ways. The Equity Offering is being done to try to get the cash upfront so it can be used to accelerate investment plans elsewhere around the country and internationally. Sonali this is four years after saudi arabia raised about 30 billion in the ipo. That was the roles largest that was the Worlds Largest stock sale. Part of the team here, the Financial Advisor to pick the underwriters. The Fee Structure, talk to us about the Fee Structure and how this is unique for a deal like this . The investment banks around 2015 had very small presence in saudi arabia. It was a very close market and now its opening up and we are seeing a lot of offerings taking place locally. Big things like aramco is starting to attract more like jp morgan and bank of america. They need to staff up and build their presence here. The challenge has been that should that these deals are done very thin fees in comparison to what you might get if you did a similar size ipo in the u. S. Or europe or even asia. The challenge of doing these deals is trying to find ways to make sure it still ends up being , you still get your payday out of it. The banks are keen to show their relationships with the kingdom and show the relationship with the government in the hope they will make a huge amount of money on these big deals. You can then use it as ways to get other mandates whether this is working for doingm a mandates, these are all institutions that are very closely linked. The governor of the pif is also the chairman of aramco. He is a key client for these banks who they want to please so they can get in on other deals which will end up giving them a bigger payday in the future. Sonali we thank you for all the details. Its a tense moment for the Global Banking industry to get in on that megadeal. Lets get back to the markets but the head of u. S. Equity strategy at soft gin. Nice to have you back. We started talk about the ipo market or the listing market because there is an exuberance that has been underpinning these markets not the least for new stock to hit the tape. How do you feel about the exuberance . Its a fair point. Is it exuberance or optimism . I think theres a fine line between those two. Watching the markets in global m a transactions, they have barely picked up. They are usually one of the first signs that happens during exuberance at the start of ipos moving to mna and being leveraged. Thats a natural progress of the bond market. So far, everything feels like irrational optimism rather than exuberance. Sonali have you feel about where the exuberance or optimism endds . We were talking about where the russell 2000 stands and there is a possibility these stocks get left out of the rally. How do you feel . There is not a huge difference in the largecap. They have the best leverage, the best at profile. Small caps still have massive refinancing. I would say the ideal best scenario would be to say to everyone by small caps in the u. S. They had to be 200 basis points or higher. At the moment, i saw the ppi today, the market is evaluating the optimism excitement that we had back at the end of last year and if that will persist. Nondiscretionary rate cuts are more Rate Adjustments rather than a rate cutting cycle. He needed strongly positive to say small caps will perform in line before large away large caps are doing. Sonali the fact that yields on the twoyear up above 4. 67 and the drift higher weve seen in recent days. Kind of equities are most impacted in that environment that does not necessarily see five rate cuts this year as investors had expected at the end of last year . Usually when these shortterm rates are rising, good growth and good inflation is not a problem. The main thing we are watching as the fixed income volatility. It staying stable or going lower than the bond market will be very boring. It will be a very tight range. If we stay at that backdrop, the only thing we need is the volatility in fixed income not to go up. We expect the ball to come down and to catch up from the movement next to whats there in these different asset classes. Sonali the other area im interested in is semiconductors. If you were excited about the movement upward in the largecap technology stocks, you are much more excited about what you saw in anything driven higher by the nvidia boom. How do you think those equities will continue to fair . I think the tech story in the u. S. , it has more room. My message run with the bulls for nasdaq and semiconductors. What we are watching for is the capex cycle for ai and different semiconductors, that needs to slow down. That only slows down when he Earnings Growth rate start slowing down for all the largecap tech. We are expecting a slowdown in growth but its more backloaded. We will see what the Earnings Growth will be and thats with the market will look for. Its going to buy any weaknesses that happens in nasdaq during the first half. Sonali its like you have to run with the bulls or get run over these days. If you think about areas you are willing to start to sell a little bit, where you look . I think the profittaking elements should be there. We are still conscious of bond proxy parts of the market. The lower end of the trading raised by the u. S. 10 year bond yields and what that means is if we have an idea of bond levels going lower and the cycle, anything with a bond proxy, just avoid it and start selling it. Apart from that, short duration we like. We have a lot of things to like at this point. Sonali when you talk to clients, they think about how to hedge against this rally without getting burned are getting run over by the bulls. How do they protect themselves . In terms of best protection, it has to be anything linked to whats exposed to a lot of leverage. Despite Credit Conditions getting easier, we have seen material outperformance within the credit market of the leveraged part of the credit market. If anyone was to protect, be focused on the credit market and protecting on that side more than protecting on growth, more than protecting if there is a big chinese disinflation that takes place. I dont think that will be a growth part of the equation. Sonali talking is through complicated market ahead of all of the Economic Data in a big fed meeting next week. Still ahead, we will look at Companies Making the most buzz on social media on social climbers up next. This is bloomberg. Okay yall we got ten orders coming in. Big orders starting a business is never easy, but starting it eight months pregnant. Thats a different story. I couldnt slow down. We were starting a business from the ground up. People were showing up left and right. And so did our Business Needs the chase ink card made it easy. When you go for Something Big like this, your kids see that. And they believe they can do the same. Earn unlimited 1. 5 cash back on every purchase with the chase ink business unlimited card. Make more of whats yours. Sonali time for social clitocks making waves on social media this morning. First up is adidas making the social rounds. The german sportswear giant is getting hit by the fallout from its costly breakup with the wrapper formally formerly known as kanye west. It is trying to work through the high inventory of unsold sneakers. X under armour founder is returning as the ceo in april. He replaces the ceo that was in the position for little over a year. Positive operating data for robinhood that includes rising assets under custody and surging trading volume. You can follow the latest company buzz ontre and on your bloomberg terminal. Spacex launched its huge space link aircraft a little while ago. Ed we dont know the status, we lost the camera feed and its about 65 kilometers so below the common line. It was traveling at about 25,000 Kilometers Per Hour which is about 15,000 Miles Per Hour. What was astonishing is as starship reentered earths atmosphere and came below an altitude of 100 Kilometers Per Hour, the signal was maintained for an incredibly long time. It was engulfed by flame for more technically plasma. The reason that spacex was able to maintain such a strong camera connection is because starlink, there is a starlink unit locally on board starship. When coming from a higher altitude and space down to earths atmosphere, the starship is able to maintain constant connection with different starlink satellite which allows spacex to give is that camera feed. The blanket statement, the story here is that spacex has just sent its starship system further and at higher speed than it has ever done before. From a Pure Technology perspective, this will be a huge success. There was a kind of uncontrolled crash of the booster into the gulf of mexico. They were going to simulate a landing up to the point it hit the water but i think they lost control. There will be a postmortem on that in the coming days. Sonali lets talk about the significance of this for elon musk and spacex. Weve been reporting that this is one small step of his broader goal of eventually taking humans to mars. What does today mean . Ed this sounds flippant but its a test of rocket science. There are so many things they had to prove. For example, starships heatshield i hope we can get those pictures for the audience but as it reenters earth atmosphere, it becomes engulfed with what looks like flame, that plasma. Falling at hypersonic speeds, it showed us that the heatshield that spacex designed which is 18,000 hexagonal ceramic tiles worked. Theyve not been able to test this before. What happens if you put starship into space and let it fall at 25,000 Kilometers Per Hour . And then reach subsonic speed . The point really is that we dont know what happens after that. The technology works. The whole future of this company in the near term to deploy greater volumes of its starlink satellites to build a more comprehensive constellation, that will allow more people around the world to use starlink internet. If a human being is going to get on board starship, this is evidence they are making progress for that to be a reality and make it say. It has to be automated and fully functional before any human would get on board. Sonali while we wait for more news of how the ship is faring now, how do you think the drama of this moment is unfolding . Ed for what its worth, in my career as a technology journalist, that was probably the most exciting 15 minutes ive ever had. For many people watching, they will as well. There are no humans on board this time around but just the scale of starship, the fact that he can carry a payload of up to 150 metric tons, the sheer thrust power of the super heavy booster and the 33 raptor engines involved in that, the whole separation. This is at the cuttingedge of what mankind is been able to do with its space technology. The main point is that until this point, all of the things elon musk says about the future are quite abstract that mankind be in interplanetary species, that we can get internet anywhere in the world using a 500 ground receiver from starlink, by making evidence the system is improving and the starship will soon arrive, it kind of adds some weight behind those things. No matter how scifi you think it is, its technology in action and thats cool. Sonali lets take a big step back and walk us through what to expect out of the logistics here . Ed i think there is a lot we dont know. The ultimate or in the spacex feed is still showing that starship is at 65 kilometers altitude. Thats highly unlikely. The chance is that something is happening we dont know for certain. There will be an investigation on what did or didnt happen in the process. The authorities will also have a very close look following starship test one and two. The faa and environmental agencies looked at the impact of what were essentially explosions locally around the texas basin in boca chica but also in this instance, the booster lands in the gulf of mexico. We dont know where starship is. The aim was to landed in the indian ocean and that takes coordination across multiple Government Agencies and jurisdictions. They will look into that and as all Elon Musk Companies think, when will be the next one . We always say on this network we show a falcon nine launch that the rocket system that spacex launches most regularly has become routine. It has become routine and the reason thats the case is spacex is able to launch with an incredible cadence. A part of the progress that analysts and space industry veterans want to see what starship is that spacex can launch the system of regularity. This is very exciting but it Means Nothing if it doesnt happen again soon and so on and so forth. Sonali how do you think about this particular landing relative to the last two . If there is a moment where it doesnt go exactly as planned, how do things end up playing out . Ed as i said, the simple matter here is that starship went further in terms of distance at higher altitude and higherspeed than they had previously achieved. They were always going they were not going to recover either the booster or the spacecraft but there is trying to simulate a landing. They probably havent achieved that. We wont know for a number of days, when starship goes from hypersonic to sub hypersonic speed, as a terminal velocity of about two under Miles Per Hour where does a belly and tries to right size itself using a gimbal system where the flaps and the positioning of the raptor engines right size is it. Its probably likely they didnt achieve it that far. Spacex has told us that spacex loses starship during reentry Cutting Mission short. Thats a little bit harsh, i think they got pretty close. Sonali this is now breaking news and spacex now confirming theyve lost the starship during reentry and the mission was cut short. What does this mean now that its confirmed . Ed spacexposition on this if you go whatever my local time was this morning that even getting off the launch pad would be a success. The payload in this case is not a satellite, its not a human being, its the data that the starship system is generating and feeding back to spacex. The fact that they were able to launch the combined system, the booster and the spacecraft, get it to the orbital height they did, they had a successful hot separation in that process. Starship traveled on its telemetry into the indian ocean and it started to reenter earths atmosphere. The camera feed was maintained because the onboard starlink and the signal was lost at 65 kilometers altitude, sorry, for some reason the spacex feed, they are holding pies. Im wondering what theyre trying to demonstrate and what analogy they are going for. Up until that point, everything was unprecedented. Sonali i believe its pi day. Ed thats my best interpretation. Sonali thank you so very much for sticking with us through another historic moment for spacex. We will bring you updates as we know them. Lets take a quick check on the market after that excitement. We have a lot of red on the screen, the s p 500 is down more than 0. 1 and the russell 2000 is still down almost 1. 5 on the day. We are seeing some turns and the nasdaq but roughly flat on the day. The two year yield is Holding Steady about three basis points higher. That is after some critical Economic Data, the last big set of data released before that massive fed meeting next week. From the u. S. Central bank to across the world, the Greek Central Bank says the ecb must cut rates twice before the summer break. The ecb left policy unchanged last month for a fourth consecutive meeting with officials converging around you as the appropriate juncture to start easing. We will talk more about this view with bank of ireland ceo miles ogrady has the perfect view of this conundrum. How do you see the dynamic going here if they dont cut enough . What would be the impact into the broader Financial System . Good morning. Bank of ireland is 241 years old and the u. S. Is 250 years old. We are meeting our investors and corporate clients. We know inflation has toned down from your ago with a. 6 in the euro zone. We are likely to get to the longterm target of 2 over the next 1218 months and that will impact Monetary Policy we can expect rates to come down over the course of this year. Thats up positive to get to a more normalized rate environment for bank of ireland. Sonali how much does it matter how much they cut . It is important because much of our earnings is protected from error hedging strategy so its important. Whats important from my perspective as ceo is we get visibility on what a normalized rate is over the next three or four years. Thats almost more important than the rate cut. Bank of ireland is generating returns last year of 17. 3 . Weve got a target of 15 after 2025 and that supported by a rate environment between two and 3 . Thats the sweet spot for bank of ireland. Sonali do you think it gets there . I do, you look at inflation coming down and we will see the view is how they will move on rates in april but more likely june. I think we can begin to see the rate coming down. Sonali if you believe rates might be somewhat higher for a little longer, do you have any worries as a ceo that perhaps the economy softens to drastically work too quickly . There is a risk in the euro zone generally in relation to growth and thats informed by the rate environment. From our perspective, my focus is on her home market with 76 of earnings coming from ireland. Irelands story is a banking consolidation so thats a positive factor supporting those customers but ireland will grow and we expect Economic Growth in ireland be between three and 4 over the next number of years. Thats very supportive back to the point around our target of 15 return with sustainability of that return in good shape. Sonali what would be the biggest driver of that growth . In ireland, we have a number of very positive factors. Last year, our Balance Sheet grew by 23 . Large increase yearoveryear and supported by the mortgage market. Our income was up strongly with an 8 increase in customer numbers which is strong. Our wealth business which is an important part of our business grew by 18 last year. That level of progression last year and we see that over the next few years will be supportive of our earnings capability. Sonali there are other parts of the Property Market that many investors around the world are starting to get worried about. How do you view this dynamic especially if rates stay a little higher for a little longer . Will there be more stress . We know commercial real estate is under a degree pressure right now. We understand the factors for that and have an increasing rate environment thats not translating into yields. We got changes in behaviors in relation to colleagues going back to the office. My view is that quality commercial real estate, office space that is either new or has been refurbished and is in good locations, im optimistic that that part of the market will be good. The other part from an irish perspective on commercial real estate is homebuilding. We know the huge demand and last year we produced 34,000 homes. We know there is a demand of about 50,000. Im very happy to support that part of commercial real estate to bring new homes to the market. Sonali what is your conversation like with other lenders and private Capital Providers . What is clear is that there is plenty of capital out there to put into ireland. This week, im meeting many of our many of my investors in bank of ireland because bank of ireland, we call ourselves the National Champion and would got a coverage of financial services. Investing in bank of ireland is a way of investing in the Irish Economy as well. On that basis, there is strong support for ireland. Sonali we thank you so much for your time and happy st. Patricks day. Thank. Sonali i had a great time in dublin when i was there myself. Good to hear, thank you very much. Sonali we will check now on the markets with abigail doolittle. Abigail we are looking at markets for the nasdaq 100 that are down on the day, 1. 4 over the last five days. Down earlier now trying to make a little bit of a rebound on the day. Lets take a look at the s p 500 because you will see whether its higher or slightly lower. Still down slightly lower and one reason for the pressure is hotter than expected, warmer than expected ppi coming in higher than expected that inflation is more sticky that some would like. The 10 year yield is up nine basis points after backing up 30 or 40 in the last month. You are looking at a 10 year yield closer to 430 pressuring stocks but also pressuring technology stocks. Nvidia is down another day in a row. The mega rally out of the october 23 lows up more than 600 . Up more than 80 over the 2022 lows. The technical suggest there could be more weakness ahead for nvidia and will that move into the market overall . You can see a beautiful uptrend but you can see incredible extension. 95 above the 200 day moving average. The rsi coming out of overbought territories of the recent highs are on less than enthusiastic buying power. It suggests we could see more consolidation ahead. Sonali we thank you so much for keeping an eye on the market and everything moving under it. We will hear from the senior fellow at the Hoover Institution and Stanford University about investor concerns in china. This is bloomberg. Abigail this is bloomberg markets. Coming up, and interview with senator mark warner at 5 p. M. In london this is bloomberg. Sonali its time for wall street week daily. David westin sat down with Elizabeth Economy senior fellow at the Hoover Institution at Stanford University and asked her about the chinese president s plan for Economic Growth. Its about investing in technology. An advanced manufacturing. When he talks about marshaling the new productive forces, hes explicit. Its about space commerce come about evs, ai. There is a whole ai plus initiative. They will integrate ai through all the sectors of the economy. Hes moving away from the traditional sectors which is been quite weak and oversubscribed. Into advanced manufacturing and innovation thats i he will grow the economy, hes relying on the coastal promises where you have an incredible manufacturing ecosystem and leaving the rest of the country willing to suffer through. David i thought the chinese theory was to replace export growth with personal consumption domestically. That doesnt sound like growing a lot of personal consumption within china. There were no moves made at this mpc to do that. What we would have look for is something to do with wages because back in the summer, the Government Cut the wages of civil servants, some by one third. Professors personally are taking on a second and third job just to make ends meet. If people dont have income, they are not out there spending and they havent done anything to build up their social welfare net. They been talking about this for decades. Do something for health care or education so people feel comfortable spending. David there is a confidence issue we believe within china itself and a confidence issue in terms of Foreign Investors going in. Where they stand on that and is that an issue . Is xi jin ping concerned about that . I was in china and august and met with senior economic officials. I went with secretary rolando and we heard consistently from the premier down to the minister of commerce that they welcome foreign business and they want u. S. Business to be there in their Holding Meetings with International Business saying we welcome you but there are no steps, no concrete steps being taken to demonstrate that. What you have is the Security Apparatus in china taking all sorts of measures that are signaling the opposite. I think there is a battle between the economic reformers, the few that still remain, and the Security Apparatus. The Security Apparatus has been inspired. Its clear that the Security Side of things is winning. David theres a sense that president x hasi concentrated more Power Internet himself and beijing. Is there room for dissension in china . I think theres room for debate. The reason there hasnt been a third plenum which happen this fall is when china lays out economics for the next five years. Mpc is a oneyear plan this would be a fiveyear plan. That suggests there still is a lot of debate. Its clear for the time being the Security Apparatus is in control. David the chinese economy is the secondlargest in the world and it strikes me that when we were dealing with the soviet union in the 60s and 70s, we could avoid that economically. The west cannot avoid china so what is the u. S. And western policy economically toward china now . There are many debates within the United States and among our european and asian allies about how we strike the right balance. The code word derisking. What does that mean and how do we look at that . There are number of ways where we are derisking in the United States. There is the issue around National Security and asked the most important. Whatever it is we are selling to china or investing we are doing, we are not doing anything thats helping them technologically with products that are going to potentially undermine our own National Security. I think thats number one number one and theres derisk around supply chains and that happened because of covid. That was our wakeup call when we couldnt get personal protective equipment that we needed, it was all located in china, all the manufacturing of the gloves in the mast and every thing else, we realized we can have that kind of dependence on any one source. Now, the big issue is semiconductors and that isnt even about china, its about taiwan, our reliance on taiwan for advanced semiconductors. Its about talking with our businesses and businesses understanding the risks of an overdependence on china or any other one source for critical supply. Sonali that was Elizabeth Economy, senior fellow at the Hoover Institution at Stanford University. Tomorrow on wall street week daily, we will be joined by kent rogoff, the harvard professor of economics. You dont want to miss that conversation. This is bloomberg. Get help reaching your goals with j. P. Morgan wealth plan, a digital money coach in the chase mobile® app. Use it to set and track your goals, big and small. And see how changes you make today. Could help put them within reach. From your first big move to retiring poolside and the other goals along the way. Wealth plan can help get you there. J. P. Morgan wealth management. Sales tax automatically. Avalarahhhhhh what if tax rates change . Ahhhhhh filing sales tax returns . Ahhhhhh business license guidance . Ahhhhhh crossborder sales . Ahhhhhh item classification . Ahhhhhh does it connect with acc. . Ahhhhhh ahhhhhh ahhhhhh sonali President Biden released a statement opposing the potential takeover of u. S. Steel by japanese giant nippon steel. He said u. S. Steel shares of the pittsburghbased company are extending losses today and kailey leinz joints me now from washington, d. C. Lets talk about steel country, how important is it for President Biden and frankly his competitors to also be targeting this space . Kailey incredibly, keeping in mind that pennsylvania specifically is a key battleground swing state in the selection has a large Steel Industry and a lot of steelworkers. The Steelworkers Union have come out against this deal and biden has been a very prounion president. He directly addressed steelworkers in the statement saying he told them i would have their backs and i meant it. It is about the politics of this fundamentally which is why we see this unusual move by a president coming out against the transaction like this. Its not exactly clear what daring the statement from President Biden will have on the reveal already underway into the United States. At the Treasury Department, they would have the ability to block or approve this deal or have it amended National Security grounds if they so choose. Theyve been looking into the nippon connection to china as part of that review. This is a japanese company, a close u. S. Ally which is why many had questions about the National Security question. It would probably be about supply chains and retaining american control of key supplies like steel. It will probably be more of an upper climbed out that the president has come out against this to get this 14 billion transaction through. A lot of this is about politics at the end of the day. Sonali on the other hand, is still the present weighing in. How does the white house statement conflict or complement what is happening at the agencies . Kailey it is in keeping with the scrutiny the deal already has been under, maybe theres been skepticism throughout the administration including the Treasury Department which cynthias has looked is scythias has look at this deal. This wasnt exactly from the president , called to block the still outright so it sounds like messaging cecile workers and to the state of pennsylvania it sounds like messaging to steelworkers and to the state of pennsylvania. The review will be ongoing. Sonali our big thanks to kailey leinz in washington. The politics on the market moves are a large deal of high interest globally. Coming up on Bloomberg Technology, the cofounder and president joins Bloomberg Technology, the cofounder of amber technology. This is bloomberg. From the heart of word in addition, money, and power collide in Silicon Valley and beyond, this is Bloomberg Technology with Caroline Hyde and ed ludlow. Caroline i am Caroline Hyde from bloombergs World Headquarters in new york. Ed im ed ludlow in san francisco. Caroline we will have full coverage of tiktok from what we can expect in be senate, who wants to buy it, and the response from china and the impact on content cr