Apple Tops Sales Estimates Despite China Dip, Amazon Reports Cloud Unit Growth

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23:46Carol Massar:Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. Apple is out. Let's get to it, folks. OK, well, there were some beats and there were some misses. Let's start with the misses. Fourth quarter, Greater China Revenue, a big, big miss there. $14.49 billion. The estimate was for$16.43 billion. Overall revenue, though, coming in above$100 billion. That for the first time ever for the September quarter. Greater China revenue, 12 % below consensus estimate. Services came in with a nice beat. Another miss, surprisingly, the iPhone,$49.03 billion versus$49.3 billion.

24:30Carol Massar:Yeah, Mark Gurman saying operating expenses, which everyone is now closely watching thanks to Meta, came in line with expectations of$15.91 billion. I'm sure we will hear more about AI investing on the call. That's coming from our Mark Gurman, who covers Apple so closely and looks at consumer tech overall. Let's get to it with Jay Goldberg. He's senior analyst, semiconductors and electronics at Seaport Research Partners. He's got a buy on Apple joining us from San Francisco. Take it away, Apple. What do you think? Yeah, it looks it looks OK. It's not it's it's not perfect. It's not totally clean, but it's it's got some good stuff.

25:08It's got some, you know, OK stuff. Yeah, go ahead, Carol.

25:11Carol Massar:Well, what's good? What's OK? I mean, just going against my numbers, It looks like services is much stronger than I expected. iPhone was good. iPad was surprisingly good. I don't know if anyone tracks that anymore, but iPad was good. And gross margins were better than expected. I've been a little cautious about gross margins in consumer companies lately because memory prices are going up. But that's not I don't see that in Apple's numbers. So, you know, the China stuff, you pointed that out. I think that's that's concerning, not entirely surprising. It's not surprising, but it's 12 percent below consensus.

25:45So it surprised some people.

25:50Yeah, I mean, just given the state of the world, I think expecting too much from an American company selling it in China right now is going to always disappoint. But, you know, hopefully we have a trade deal and that all goes away. It's a trade truce, I think, is the way that we heard about it today. Trade truce. Is a trade truce enough for that to go away? I think so. I think more practically what was going on in China is the iPhone Air is not available there. It's hard to get here. Production hasn't fully ramped yet. And I think that's going to be the real hit. Right. And this is Apple. They know how to get their supply chain in time for the year and holiday shopping season.

26:26And I don't think the iPhone Air is readily available in China. So I think that will help. And so if you're a Chinese consumer and you're looking at it, you see the iPhone Air coming, you're going to hold off on your iPhone purchases now and wait for that.

26:38Carol Massar:All right. Shares of Apple now up about 1 % here in the aftermarket. So bouncing around, no doubt about it. Mark Gurman on our live blog, who covers Apple and often is breaking exclusives on the company, noting that while China is harsh, they are likely pleased, investors, they are likely pleased with the overall revenue growth of 8%, the giant services number. That's something Jay just pointed out. And the 6 % year-over-year iPhone growth, overall, a solid quarter. So top of mind for you, what is it that you would, what do you want to know more from when it comes to Apple here, Jay? I think I'm willing to wait on the AI story.

27:17I know your previous guest was talking about that, and he's absolutely right. The AI story is important for Apple, but I don't think it's important today. I can wait six months, nine months, a year for them to sort it out. Right. Remember when Apple Maps launched, whatever, 10 years ago? It was terrible. It was a joke. Now I use Apple Maps more than I use Google Maps. It's gotten better. Sometimes Apple just takes a while to get there. So I'm okay waiting with it. They need to solve it. That's really important, but they don't need to solve it this quarter. I would like to just hear them talk about the supply chain and what's going on in China and what's driving, what are the dynamics in the iPhone business?

27:51I think that's the most important. Is there a compelling reason for people to upgrade to 17, to the iPhone 17? I think the air is pretty intriguing. I'm on the fence. I usually upgrade every year. I think I'm going to hold out, though, because I'm pretty sure they're going to have a foldable phone next year. So that'll be exciting. But I think that everyone I talk to has the air is just raves about it. Like they're enthusiastic about this iPhone in a way that I haven't heard people be enthusiastic about an iPhone in many years.

28:22Carol Massar:Just to rehash, we've got now shares of Apple up about 1.8 % here in the aftermarket. So this is, despite those disappointing sales in China, which did fall short of analyst estimates, but strong overall sales in the period. Hey, let's go to our LA Bureau for a moment. We're going to come back to Jay Goldberg in just a minute or two. Mark Gurman is Bloomberg News Managing Editor for Global Consumer Technology. He is out there in our LA Bureau. Mark, fascinating in a short period of time, 12 minutes, to see the stock being sold off a little bit to now rallying almost 2%. Walk us through this quarter, what stands out here.

29:02Yeah, what stands out here is iPhone obviously grew tremendously, 6 % year over year. They beat in nearly every product category, except the iPad had an extremely slight miss on Wall Street forecasts. And again, those are just forecast numbers that get made up anyways. So I don't think too big of a deal there. The big one, though, is a big decline and miss in greater China. I think some of that can be attributed to the iPhone Air delay, which was not expected. When they originally announced the iPhone Air, they anticipated a September release alongside the other models. That model has been doing decently in China since it was released just about a week ago now.

29:43The other thing to point out is the seesaw you saw. Originally, the stock dipped on the China development, and maybe iPhone sales weren't as strong as some had anticipated. but Tim Cook told news outlets that got pre-briefed on the Apple earnings results earlier today that the December quarter would grow 10 to 12 percent on an annual basis, which is obviously a fantastic jump for them. That is a year-over-year growth in the holiday period we have not seen for a very long time, and Apple hasn't provided guidance in a very long time because of COVID and everything that's happened since then. So it's pretty significant.

30:24Yeah, shares up 2.9 % as we speak right now. Mark, just one more question for you, and then I know you got to run. On China and the big miss on China, you said it's not too surprising, yet still came in 12 % below consensus estimates. I'm not going to say Apple should throw in the towel in China, but how vulnerable is Apple in China? They're certainly vulnerable in China, but they have obviously a big retail portfolio there of about 50 stores. As I've said multiple times, they need to start launching products that are specific to the Chinese market. They still don't have their AI strategy together in China.

31:01And so we'll see once AI is implemented and iPhones in China next year, if that begins helping turn some things around. And we'll see, you know, we're going to have some pent up demand in China now for the current quarter, the first quarter of the holiday period, because the iPhone air didn't go on sale in September during the September period.

31:20Carol Massar:All right, Mark, we know you got to run over to the TV side. So appreciate you jumping on with us. Mark Gurman, he's Bloomberg News Managing Editor for Global Consumer Tech, really, as we remind everybody, our go-to on Apple, breaking all these exclusive. And right now, the stock is trending higher now, up about 3.5%. I will point out that Mark mentioned some news that the chief financial officer had shared with some various media outlets. I'm just looking at the Financial Times. And again, just going back to that, Apple gave a bullish outlook for its crucial holiday sales period, reported record annual profit.

31:56Carol Massar:Today, the CFO, Kevin Parick, saying Apple expects total company revenue to grow 10 % to 12 % year over year in the three months to December with iPhone revenue growing double digits. So that's what Mark was talking about. And that is probably why we are seeing Apple shares do that turnaround now up almost 4 % in the aftermarket. Yeah, pretty remarkable to see the turnaround. But you know, that's what happens. And you get more detail from executives, the call hasn't even started yet. So we'll wait for the call also to start and maybe we'll see some more movement there too. Just to repeat, fourth quarter iPad revenue coming in ever so slightly below estimates at$6.95 billion.

32:37Products revenue coming in above estimates. Greater China revenue A big miss there,$14.49 billion, 12 % below consensus estimates of$16.43 billion. Fourth quarter earnings per share coming in above estimates at$1.85. Mac revenue beating at$8.73 billion. Fourth quarter services revenue also beat there,$28.75 billion.

32:59Carol Massar:Quite a turnaround in the aftermarket trade. Let's go back. We've got still with us Jay Goldberg, Senior Analyst Semiconductors in Electronics. He's got a buy rating on Apple. He's over at Seaport Research Partners. He's there in San Francisco. Also in San Francisco at the Bloomberg News Bureau, Ed Ludlow, co-host of B-Tech, joining us. Of course, that airs on Bloomberg Television. I do want to ask you, Ed, since you've had some moments, too, to look at that Apple release. We just talked with Mark Gurman about what the CFO has said to, I guess, sharing with some media outlets about Apple revenue growing 10 to 12 percent per year or year over year, excuse me, in the final quarter of 2025 and what he sees with iPhone revenue growing double digits.

33:50Carol Massar:I mean, that sounds pretty optimistic. We can explain this. The orders for the iPhone 17 started on September 12th. The iPhone 17 went on sale September 19th. They've just reported a quarter that ended on September 27th. So they had eight days of data for the iPhone 17 generation. There is another outlet that clearly has had a briefing or an interview, and the CFO has guided very clearly on the trajectory of the iPhone 17 and its sales into the December quarter. and that's kind of what always happens um it doesn't explain necessarily or explicitly the greater china numbers though and you know uh mark i think he forgive me i was covering for him i was doing the vlog and he was running on the but you said apple's now up three percent markets are weird markets are weird but that's before i read the the ft but but on the on greater china Yes, the iPhone 17 Air did not go on sale because of the regulatory restriction on a handset that has e-SIM design.

34:56Does that explain the full thing, really? Because, you know, the most bullish estimates for greater China saw revenue from that country of$17 billion. You know, that's quite a gap to where they landed. And so maybe it's something else. But right now, I think we've discussed this with this program before, right? It applies to both Tesla and Apple. If you're a consumer and you're faced with the choice of buying a domestic product or an American product, there is a pressure and it's part of the calculus you have to make. We know that from the data. We're speaking with Ed Ludlow. He's the co-host of Bloomberg Tech on Bloomberg TV, 11 o 'clock Wall Street time.

35:34I want to bring in back Jay Goldberg, senior analyst, semiconductors and electronics with Seaport Research Partners. He's had some time to take a breath and look at some of these numbers. And I'm wondering if you've also had a time, Jay, to see that shares now up close to 3.3 % or 3.4 % in the after hours. Apparently, executives, including the company CFO, telling the Wall Street Journal that total company revenue will increase 10 % to 12 % in the holiday quarter. Was that above your estimate? Was that above your expectations? That's meaningfully above my estimate. It's pretty encouraging. Why is that so encouraging to you?

36:09And why was it so far? Why is that so far? But why is that meaningfully above your estimate? I think I think it comes down as simple as the 17 and the air are good phones. And as much as we want to talk about services and AI and all that, sometimes it's just as simple as make good phone number go up. You make it sound so easy. There's a complicated supply chain in there, too, I think. We just, Mark said we make up estimates. So, you know, I think it's that easy. All right. I would have told him you said that. But in all seriousness, the 17, so you see the 17, you see the 18, I don't want to call it the 18, but you see the foldable being a much, much bigger opportunity.

36:49That's where the super cycle, in your view, is going to come from? I don't know. I get a little wary of using the term super cycle. I'm not sure in today's market where everybody has a cell phone and they cost a thousand plus dollars, I don't know if we're going to have super cycles anymore. I do know there's a pretty substantial installed base of older phones, like 15s and 14s even. Those people are probably going to look to upgrade. You made a point earlier that Apple's always a little bit late to the game in some of these developments. And I think one of the big ones they missed a few years ago was large screens, right?

37:20This is a big debate. They didn't want to make it too big. And then they made them and they did really well. It took them two, three years to get in that market. And I think we're going to see the same thing with foldables. That's going to be a big category. But that's going to be an expensive phone. And in the interim, there's a really good alternative on the market right now. for, you know, and you and I know about the foldable because I talk about this stuff all day. But I think the average consumer isn't, you know, isn't that forward looking and is pretty happy with what's in front of them now.

37:47And that's that's that's compelling, a compelling buying proposition for them.

37:52Carol Massar:So, Ed Ludlow, come on back in here. I mean, everybody's kind of keying in on this outlook and obviously with good reason. Again, I kind of think to the call with investors and analysts. I mean, are people going to be asking all about that outlook? Is that what's at this point got to be the focal point? Yeah. I mean, I compare and contrast with last quarter, we were still asking about pull forward and the tariff effects of consumers going out and buying handsets. Again, that is not the same and doesn't explain behavior in sales data where the quarter they just reported was just eight real days of sales for the September quarter.

38:32And they're telling us via interviews with the FTA and the Wall Street Journal that they're looking at 10 % to 12%, I think is the range increase in sales in the holiday quarter. Where were those sales? Also, a lot of the optimism, and maybe your guests can weigh in on this, but a lot of the optimism about the third party or soft data for the iPhone 17 generation was about ASPs and mix. So yes, yes, OK, the iPhone 17 Air wasn't on sale in China, but there was a lot of evidence that people were going for the Pro and Pro Max, the more expensive rather than the base version, which is really good for Apple's print, right, and its financials.

39:14But we don't have anything to go on in the statement to support that. You know, generally speaking, because they didn't in real terms raise prices or they didn't put higher price points on the iPhone 17 necessarily, necessarily one way to get around that is to say look how great the pro version of this is it's really great it's just a lot more expensive and then encourage people to buy that you know that's

39:37Carol Massar:a an interesting story to dig into yeah jay dig into it for us anything on that so one of the things i'm sort of teasing through with my numbers is earnings are much higher than expected right i mentioned earlier gross margins were better than expected and i think some of that is apple has effectively put a price increase in place you can't necessarily see it obviously the cheapest phone is still pretty expensive but the way they segment the market and the way they put the 17 they price the pro the air and the 17 they've effectively raised prices a hundred dollars this quarter or this this cycle and i think that that has helped a lot and right and in terms of what i was saying about china the consumer there i think consumers there are actually very very trend conscious, especially the iPhone consumer there, they have a pretty good idea of what's available and may wait as a result.

40:28Jay, explain the segmentation when it comes to pricing, though. Consumers might not see it. Analysts certainly know it. How did Apple do it this time around? Oftentimes, they do it with the memory, with storage. Yeah, so the cheapest phone there is $100 more than it used to be, effectively. On a like-for-like basis, they didn't actually raise prices of the old phones, but they didn't lower them as much as they usually do. And they price the new one 100 bucks higher than the previous lower level. That's the segmentation.

40:54Carol Massar:Hey, Ed, just want you to come back in with a final thought, certainly on these Apple results. Yeah, I think all of the long-term questions still linger. You know, Apple continues to get a lot of criticism for innovation. You know, this is a really basic argument, but on Bloomberg Tech every single day and like all of the investors that I speak to on the phone, they'd make the very simple argument that why is it that Amazon, Alphabet, Meta and Microsoft have capital expenditures nearer to 100 billion per annum and Apple has 10? When is Apple going to take some risk and throw crazy money behind either talent or literal capital expenditures to do something like that?

41:39Apple doesn't do that necessarily, but the world is a different place. And, you know, maybe it's pie in the sky thinking that a sell side analyst on the call is going to ask that. But they might. And then it might get an answer. And, you know, that's kind of where we're at in this cycle.

41:55Carol Massar:All right, gentlemen, I'm going to leave it on that note. Jay Goldberg, Senior Analyst, Semiconductors and Electronics at Seaport Research, joining us from San Francisco. Thank you so much. Ed Ledlow, be sure to catch all of his coverage on BTEC tomorrow at 11 a.m. Wall Street time. He is co-host of BTEC on BTV every Monday through Friday. He's too out there in San Francisco at the Bloomberg News Bureau. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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44:17Or watch us live on YouTube. So much happening when it comes to big pharma today. It's not just about big tech. Shares of the clinical stage biotech company met Sarah surging more than 25 % at one point today. This after Novo Nordisk made an unsolicited bid for it, sparking a heated battle with Pfizer to get their hands on weight loss treatments that both drug makers want in order to regain lost ground in the booming market. Speaking of that, Eli Lilly raised its full year guidance as revenue from its blockbuster weight loss and diabetes drugs. Merck also shaved the top end of its 2025 revenue guidance.

44:51Now expect sales between 64 and a half and 65 billion dollars. So that's just some of what's happening when it comes to big pharma. For more, we're joined by Jessica Nix. She's a Bloomberg News health reporter. She joins us here in the Bloomberg Interactive Brokers Studio. I want to start with this fight for MetSara. Not every day we see sort of like a company being the bell of the ball like this. Oh, it has been quite the drama for a Thursday and quite a lot of news out of Big Pharma today. So overnight, Novo Nordisk, the Danish GLP-1 drug maker, has made a bid for this biotech company met Sarah trying to go after its new GLP-1 drug.

45:31Interestingly, Pfizer made a bid for it back in September for about$5 billion. Things were clean cut with that deal, ready to go, we thought. Novo's come in with this unsolicited bid. Pfizer's been trying to get in on this GLP-1 and weight loss drug action. It's a market that's expected to grow by$100 billion by 2030. It's huge. It's the thing right now is these weight loss drugs. And so Pfizer's trying to get in, And now Nova is sweeping out under under from them. Wait, so we remind me, so Pfizer doesn't have anything yet in this. Pfizer does not have anything in the weight loss drug space. They've tried and then they failed with their first drug.

46:07And so they were looking at MetSera is their way in on this fight. But Novo, interestingly, is also kind of losing in the weight loss drug fight just because you're first to market doesn't mean you're going to be. Why is Novo losing? I mean, the last couple of years, there were stories about how important this company was to the Danish economy. I mean, is it just because of Eli? Yes, it is. It's because Eli Lilly has come in guns a blazing and storming through the weight loss drug space. So Novo started with Ozempic. Obviously, everyone knows Ozempic now. Eli Lilly has now come in with that same class of GLP-1 drugs and their ZEP bound prescriptions are rising even today.

46:42And their earnings guidance, they said that those prescriptions were increasing. So everyone's going towards Eli Lilly right now instead of Novo Nordis. Novo has been falling behind.

46:52Carol Massar:We've talked with our Madison Muller of Bloomberg News, who's covered this space kind of from the beginning here, too. And you are covering it as well. I'm always like, well, what's the difference? I do know people who have taken the drug and gone from Ozempic to another brand or another name drugs because they're similar, but they're not all the same. You do see patients. Is Eli Lilly's offerings better? Is ZepBound better? Is Munjaro better? It's just a matter of what works better for your body. So Eli Lilly works with an ingredient called trizepatide. Novo Nordis works with semaglutide. And so it's just a matter of what works better for the patient.

47:31But Eli Lilly has been able to really market and go to physicians with these drugs as well and move ahead. Novo, interestingly, also has a new CEO who's trying to shake things up to be able to bring Novo up to the forefront of this fight.

47:44Carol Massar:They've owned the space, like it felt like, right, Tim? Oh, yeah. Out of the block. What's the special sauce that Metzara has? Like, what is it? What is it that they are offering up? They are offering a new type of drug that's also an injectable, but it's targeting a different hormone. So the hormone that's targeted right now with the current weight loss drugs is something called a GLP one. You hear that term a lot when we talk about weight loss drugs with Metcera's new drug. It's a hormone called amylin. And it also includes less side effects. When you take their drugs, you're not going to be getting those nasty, like nausea, vomiting side effects that you get with a GLP one.

48:18So it sounds like a better deal.

48:21Carol Massar:Why would I take a job? Anytime you can avoid the nausea and vomiting, I think is a good thing. Right, exactly. You said something that's interesting, which is still it's an injectable. And as Maxine Muller reminds us all the time, the real golden goose here is the pill. It is the pill. And so Eli Lilly has been working on its pill. It is ahead in marketing and in development for its pill. And they're saying, you know, by the end of the year, they're going to go to the FDA for approval. And this would be a GLP-1 pill? This would be a GLP-1 pill, correct. How do you make a pill? I mean, we're getting into the nitty gritty a little bit here.

48:49But how can you do something that is traditionally an injectable and make it pill form and have it still be effective? That is a really great question. And people much smarter than me are. But it's got to be really tough, because if it were easy, then Nova would have this. They would just put this in pill form. And I think that when I heard you talk about MetSera and this idea of it going after something different than a GLP-1, I was surprised that it was still an injectable because I think that would hold a lot of people back from actually using a drug. And it does. That's part of the reason why these companies want to go into the pill space, because a lot of people who are interested in taking a weight loss drug for whatever reason, as we're saying, it's tackling a lot of different problems that people are having, sleep apnea, heart disease, what have you.

49:33Pills now are a new way that people would be wanting to get into on this space.

49:37Carol Massar:So let's just talk. Novo shares are down about 2.3 percent. Pfizer's up about one third of one percent. It was up as much as one point seven percent earlier in this session. And then, of course, you've got Mitzera, which is just off and running like crazy. That stock, which is the target. 22 percent. Yeah. And continuing to hold on to that. Who has more to lose? It sounds like Pfizer because they just they're not in this game yet. Pfizer definitely has a little bit more to lose here. Pfizer is not in on the game right now. They've been losing since, you know, covid. They were big during covid.

50:11They made the shots. They really turned things around for the company there. They've been looking for their next big thing. And they thought this was it. So they do have a little bit more to lose. But interestingly, the shares are mostly unchanged today. Pfizer does have four days to respond to this bid to see if they can come in a little bit higher and start this bidding war. And who knows, Pfizer also made a deal with the Trump administration earlier this year. And so they might be trying to use some of their White House connects because they claim that this bid is against antitrust law in the U.S.

50:41Carol Massar:I guess what I would say right now, the market cap is about$6.7 billion. So I don't know if that's a great gauge of kind of where investors think this could go. That's for Mitzera. Yeah. So in other words... Which is up now 23%, as we speak. Yeah. I mean, if Novo is offered to bid a$6.5 billion deal... Then they think there's going to be someone else coming in offering potentially more. But just a little bit higher, right? Like, it doesn't feel like it's off and running that they think there could be even somebody else coming in. It is kind of fascinating. The market for GLP-1s or this class of drugs, even if the underlying agent is changing, it just continues to grow and grow?

51:19It completely continues to grow and grow. We expect by 2030 that the market's going to reach$100 billion. Where are we today? Oh, that is a great question. I don't know where we are at today, but, I mean, it's only going to grow from here. It is the drug to watch. So you said we're, well, I said that we had a big news, a lot of big news in Big Pharma today. I mentioned Merck shaving the top end of its 2025 revenue guidance, Lily raising its full year guidance. We talked about that. What else does our investing audience need to know about what we've heard thus far? I think this deal is probably driving the news today.

51:52Everyone's talking about it. We've got, you know, the clock's on for the four days. Interestingly, Albert Bourla, the Pfizer CEO, was supposed to appear at a conference here in Manhattan with some other pharma executives, including a Merck CEO as well. He ended up pulling out of the conference and the chief scientific officer went on instead and even said at the conference that he only had an hour to prepare before going on. So we're still figuring that out. He might have a little bit happening, but we don't we don't know for sure. So it is this this deal is definitely going on today. not necessarily investor related, but down in D.C., the Surgeon General nominees hearing was supposed to happen today with Casey Means.

52:34She ended up going into labor, and so they're having to delay the hearing.

52:38Carol Massar:Yeah, there's a lot going on in this space. It's kind of wild. Fascinating space. I really just it just blows my mind. Jess, thank you so much. Jessica Nix, health reporter at Bloomberg News, joining us in our Bloomberg Interactive Broker Studio. Stay with us. More from Bloomberg Business Week Daily coming up after this.

52:59Carol Massar:You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app, or watch us live on YouTube. So let's get to that U.S.-China meeting earlier today in South Korea between President Trump and President Xi. Deal, no deal. How about that one-year truce? That's what they're calling it. The two did meet on the sidelines of the APEC summit. U.S. cutting the fentanyl tariff, extending the existing truce and reciprocal tariffs. China resuming soybean sales and rare earth flows.

53:35Carol Massar:But maybe just a stabilization of relationships? Nothing more dramatic here, Tim? I don't know. Let's ask Caroline Freund. She's Dean of the UC San Diego School of Global Policy and Strategy, former senior fellow at the Peterson Institute for International Economics. She's Global Director of Trade, Investment and Competitiveness, formerly at the World Bank and earlier did time at the Fed and the IMF. She's out there in beautiful La Jolla, California. So the news today, the one year one year truce, where does that bring us in the context of the relationship in the between the U.S. and China from a trading perspective before President Trump took office for the second time?

54:10Is it back to what it was then or is there still tension from when he from from his policies early on?

54:17Carol Massar:Look, we have the world's top producer and the world's top consumer meeting, and they both have market power in their own way and they need each other. And that's what we saw. It was effectively a game of chicken. Trump started it and she stayed in the battle and both just put on the brakes. I think we're close to pre-liberation day tariffs, not necessarily close to where Trump came in. There are a few tweaks because we still have some of the fentanyl tariffs. U.S. firms are still facing this licensing regime on magnets. So there's still some things that are in place, but we're pretty close to the pre-liberation day tariffs.

55:00Carol Massar:Caroline, what is more significant, what they did talk about or what they didn't talk about, meaning Taiwan, TikTok, NVIDIA's high-tech chips, those Blackwell chips, China buying oil perhaps from Russia. Like there's some really important issues out there that felt like they were missing. Yeah. And I think we're going to see that going forward. There's going to be ambiguity on all of those difficult issues. But I also think there's market discipline on the worst case scenario of an escalating trade war. So they both realized how much they need each other. The U.S. market is just impossible to replace.

55:42Carol Massar:We account for 15 % of total global imports. There just is no one else who's going to take that. China accounts for the same, 15 % of global exports of goods. Who's going to, we can't completely replace China. So the countries have settled the deals that are in the areas that really matter for them right now for their economies. But we're going to see a lot of ambiguity on those much more complex issues. So were we played? Were citizens of both countries played? Were investors played? Did we kind of start at point A and go through the whole alphabet and then come back to point A? Yes. I think Trump has tried the kind of bullying technique, and it's worked with everyone else.

56:35Carol Massar:Early on, it looked like EU would also retaliate, but they're just too dependent on the U.S. for security. And that's very important right now. So they didn't. China is equivalent to the U.S. and China said, no, we're not going to be bullied. We can we also have things you absolutely need. And now there's kind of a truce. And I think we'll see this muddling along with market discipline on both sides. It'll hurt the U.S. too much to really do a lot more on China. It'll hurt China too much to do a lot more on the U.S. But in this period, in this period of truce, the most important thing is that we work with our allies to develop secure supply chains.

57:20Carol Massar:So we are not dependent on China for rare earths in the way we are now. So those allies, including Australia, Canada, where else? Yeah, exactly. So the agreement with Australia is fantastic, and we should be looking for more agreements like that. Latin America has a lot of rare earths that could be explored that we, you know, we're part of the Western Hemisphere. But we have a complicated relationship with some Latin American countries currently. Yeah, that's absolutely right. And so the strategy, we can't take on everyone at once. And China really is the biggest competitor, the biggest strategic threat to the U.S.

58:10Carol Massar:And we should be working to have agreements with countries where we can both pull them out of the China sphere and where they have things we might need. You couldn't possibly be thinking about the U.S. shooting on Venezuelan ships. I'm thinking about that. I'm thinking about. Yeah, yeah, I'm absolutely thinking about that. It's funny, not funny. Right. I'm also thinking about Argentina. Yeah. Yeah. It's complicated in a different way. Well, Caroline, and, you know, I do think about the U.S.'s position in the world at large. Like we still have trade agreements to be worked out with what used to be a big friend of ours called Canada.

58:50Carol Massar:And yet that is still up in the air. What is how does the rest of the world feel about the United States right now against China? Because I do feel like there is this thinking about China domination. And so people trying to do alliances to combat that. So is the U.S., as we see it, do that deal with Australia and maybe reaching out, realizing it can't do things alone? Are things changing a little bit in terms of the U.S. perception by the rest of the world? You know, I hope so. And I think if Trump leans into these agreements where countries haven't retaliated and goes forward in a respectful way, we could see that and we could see a lot more cooperation.

59:34Carol Massar:But the problem is that so far the U.S. has proven to be a kind of unreliable trade partner. Deals are made and then we back off from them and then new threats come up. And that's really problematic. So I think there's a lot of distrust, a lot of dislike with the U.S. And that's going to be a hurdle to overcome. At the same time, other countries need the U.S. market. Again, we're the world's top consumer and they need the defense from the U.S. So they will play. But it will work a lot better if we work on cooperative agreements than purely in in this kind of bullying mentality. We're going to hopefully talk to you a lot more between now and one year from now.

1:00:23But just make a prediction for us for one year from now. Will this truce hold?

1:00:28Carol Massar:Yeah, I think it will. There might be little glitches along the way. But again, the market will discipline Trump, whether it's the stock market, bond yields, companies complaining. And similarly, the China Chinese economy isn't that strong. We saw, you know, BYD tank today or recently because there's just not enough demand for Chinese goods. So I absolutely think it will hold, but we won't get a lot more. It'll hold the muddle along. And China continues to try and get that domestic economy going, but it's really been a struggle. Caroline Freund, she's dean of the UC San Diego School of Global Policy and Strategy.

1:01:29Carol Massar:every weekday on YouTube and always on the Bloomberg Terminal.

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