Dimon’s ‘Cockroach’ Fear Revives Threat of Growing Credit Cracks

26:04Hey, one of the things I wanted to ask you, before we go, because I was thinking about yesterday, that OpenAI Broadcom deal. And it just sent shares of Broadcom rocketing. But I also looked at the socks. It made me look at every name I think was higher yesterday or almost every one. Same thing today. A lot of names we've seen. Actually, today was a little bit of a different trade. But it just made me look at the SOX, which is up 32 % year to date. It's up about 75 % from mid-April. I mean, does it make sense that every name is higher considering the spend and what is going on? Yes and no. I mean, there's a lot goes into a data center.

26:46There are a lot of analog chips, a lot of power converters, a lot of the basic components that are needed to support these, you know, hundreds of thousands of dollars worth of computers. I'm talking about an individual computer. So yes and no, but ultimately the real winners here are it's just a handful of companies and we've been talking about them. Broadcom is in that conversation. NVIDIA is the absolute beneficiary of this already and AMD is trying to get in there and is showing the best potential to actually get in there and be a presence. Well, yeah, and certainly one we were talking about in a big way today.

27:21Ian, thank you so much. Appreciate your reporting, finding some time once again for us. Bloomberg News, U.S. Semiconductor reporter Ian King out there on the West Coast. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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30:24Transcription by CastingWords 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. Well, even so, the world is kind of moving on and we're seeing the new contours of global commerce taking off amid these global tariffs. Let's see what Enda Curran has to say and what it means in terms of the global macro environment. He is Bloomberg News global economy reporter. He joins us from our Bloomberg News Washington, D.C. Bureau. And good to have you here. First off, we do see these Wall Street swings on what's coming out between U.S.

31:01and China. Why is this still, just remind everybody, why is this still the most important global economic relationship in the world? Or is it starting to kind of change a little bit? Well, they are the two world's biggest economies. They are, of course, completely interlocked with each other. China is the world's biggest manufacturer. but of course America is their biggest customer it's the biggest consumer market in the world so obviously the trade tensions between them do spill over to everybody kind of caught in the middle of that in terms of supply chains and that's what we're kind of seeing some reaction or some response now to the rest of the world and even if your starting point is that yes we'll always have to do business with America because the consumer is so powerful there trading partners are kicking tires on, hang on a sec, who else can I do business with?

31:48How else can I diversify my markets? China is looking around, say, buying more agricultural produce from South America, as we know, but also its exports are going gangbusters to parts of the world other than America. And then those other countries in the middle are saying, you know, who else can we start doing more trade deals with? They're accelerating trade negotiations. They're accelerating ways of doing business with each other, looking for new markets. So it's very early stages, but that U.S.-China trade war is starting to poke some change in the global trade. You know, I mean, I think the question is, the question that J.D.

32:20Vance probably doesn't have an answer to, can China be cut off from U.S. trade longer than we can stay solvent? Because the rare earth minerals that they have, we cannot get in size from anywhere else. And we're not going to be able to process them here, to refine them here anytime soon. So, you know, Meredith Whitney, in a note on Sunday, said, aside from the massive dependence on the U.S. industrial complex for these rare earth metals and magnets, the U.S. military is 100 percent dependent on them and nearly depleted of its reserves. So, I mean, don't we need them more than they need us right now?

33:04Yeah, I think we're all at a point now where we are fully aware that if there is a vulnerability in the hawkish trade stance that the US is taking on China, it's on rare earth supplies. China is the one digging them out of the ground. China is the one that's taking on the refining risk there, the environmental risk and the cost associated with it at a scale that no other country is doing. And that's why America and everybody else is so reliant on China and getting those minerals out here. And that's why China, of course, it's well aware of its leverage. It's floated those export controls that it did last week or the week before that, of course, has sent shockwaves, not just through the US, but the rest of the world, too.

33:42And China is making clear that it's in control of these. Now, this is a policy error, though. If you go back maybe 15 years ago, there was a big, there was a discussion around rare earth supply at that time. There were other options on the table. It's not just China that has these minerals. Other countries could have put money into the ground and put the money into the resources and the facilities needed to extract these. There are some companies in the U.S. that are talking about are trying to get off the ground at the moment in doing this. But the point is, we're at a stage where China has a grip and a lock on the system to the point where everybody else is years behind.

34:13It will take a long time. Well, it's not just getting them out of the ground. I mean, I talked to industrial CEOs who do business globally and have told me, look, Look, we've seen the refining process in China and it is horrific. It is the kind of environmental risk that American voters just would not be willing to take. So no one else can refine them at these levels, at least with today's methods, without sacrificing like a portion of humanity. So we're not going to do that, are we? Well, and that's entirely right. Environmental risk is a big part of the equation. that but there are some companies by the way there are including some in the u.s who are looking for cleaner ways to do this so but obviously nothing like on the scale that china currently offers but other countries as well are coming to the table pakistan for example is floating itself as a potential partner for these minerals for the u.s they can be sourced from other countries too that's why argentina is in the mix at the moment when when we talk about the support that the u.s treasury is offering argentina one of the reasons is because of the minerals argentina has so but But yes, the point is that no one's doing it on the scale that China is right now.

35:25And until that changes, China has leverage over the rest of the global trading system. Hey, I want to go into your story that looks at global trade flows. And you look at what shipping companies are seeing and some of the changes. But there's a quote in the story, an associate professor of economics at the University of California at Davis, Ina Siminovitska. And it's this individual saying, it's very clear that we are redrawing the map of international trade. we're going to see a lot more bilateral trade agreements between countries and subgroups of countries. She predicts this. What does that mean for economic growth for individual countries and for the global economy overall?

36:00Do we know anything? Is it good? Is it bad? Well, it's early stages, but we're getting, we are seeing signs now that countries are looking at accelerating trade negotiations with each other and signing deals with each other. Now, the European Union as one example. They've finally gotten that deal signed with Indonesia. They are getting that big trade negotiation with South America, Mercursor, off the ground, trying to get that ratified. Other countries are also looking at doing business more with each other, like New Zealand and Switzerland and the UAE are among a group who've gotten together in this kind of a loose trading agreement that they've pulled together over recent months.

36:38And the point of all of this is, as I said at the start, it's nobody suggesting the US is not the world's biggest consumer market and that they don't want to do business here. That's not the point. But they're seeing the tariffs going up at the fastest pace since World War II. It's more complicated, more costly for some of the businesses who want to do trade with the US. And they're asking what else can they do to diversify and mix up their supply lands and their markets. And we're seeing it in Peruvian fruit farmers. They're looking for new alternative markets in Lesotho. They're looking for alternative textile markets, maybe in Europe and in Asia.

37:13So, you know, as I say, the tariff wall, when it's gone up on the U.S. side, it's not about countries not wanting to do business here, but they are certainly kicking tires on where else they can diversify. And that's what these trade negotiations are getting a shot in the arm, as one of the professors quoted in the article said to us. All right, we're talking with Ander Curran, global economy reporter at Bloomberg News in our D.C. Bureau. At the same time, we are monitoring the White House, the Cabinet Room. President Trump is there with President Malay of Argentina. They are having a bilateral lunch and obviously meeting, monitoring any headlines that come out of that meeting.

37:51In the meantime, you know, and you talk about in this story, these bilateral relationships, or at least folks that you talk to are talking about a lot more bilateral trade agreements. Who wins, though? Big countries, small countries, middle-sized countries? Is there clear winners and losers on that metric? Well, probably the biggest countries will be the ones who come out of this in better order, because, you know, the system up until now, whether one agrees with it or not, but the broad system up until a few years ago had been rules of the road set by the World Trade Organization. This is where countries big and small could come together and have their disagreement and argue out their case for whatever the grievance was in the trade world.

38:33But, you know, we've moved past that now. we're kind of moving to this bilateral sort of approach to doing trade deals. So when you have a big country, they're able to set the terms on the table. And the smaller country, of course, has to work around that. And that's where we are. It's not just the US, of course. China is the other big player in the global trading system. They, as we just spoke about, hold the cards in so many areas now when it comes to not just rare arts, but they're the world's factory. So they also will set terms. and countries that are worried about China's volume of exports and trying to compete against China, too, given the scale and competitiveness in which they can produce products versus other countries.

39:13So the big picture is better for bigger countries, tougher for smaller countries. All right. And DeCurrin, thank you so much. On today's news and his story, Global Economy Reporter at Bloomberg News, you can read the entirety of it. It's on the Bloomberg and at Bloomberg.com. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

39:33Support for the show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve the workflow and your agent handles the rest. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined.

40:12An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by public investing. Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. When you own your own business, you own every decision. Now own the card that rewards you for it. The Chase Sapphire Reserve for Business card brings the best Sapphire Reserve benefits to business owners who expect hardworking rewards.

40:56Designed to meet the needs of business owners at scale, this pay-in-full card elevates your travel experience and offers premium benefits and value toward business services that will take your business to the next level. Fuel your business and maximize rewards with 8x points on all purchases through Chase Travel, 3x points on social media and search engine advertising, annual partnership credits, and more. Make every journey more rewarding with a$300 annual travel credit and access to a network of airport lounges. whether you're looking for pre-flight productivity or time to rest and recharge.

41:30Chase Sapphire Reserve for Business. It's the card that gives back all you put in. Learn more at chase.com forward slash reserve business. Chase for Business. Make more of what's yours. Accounts subject to credit approval. Restrictions and limitations apply. Cards are issued by JPMorgan Chase Bank N.A., member FDIC. The Big Take podcast from Bloomberg News keeps you on top of the biggest stories of the day. My fellow Americans, this is Liberation Day. Stories that move markets. Chair Powell opened the door to this first interest rate cut. Impact politics. Change businesses. This is a really stunning development for the AI world and how you think about your bottom line.

42:12Listen to The Big Take from Bloomberg News every weekday afternoon on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. 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. I'm driving in my car. How about you let me drive? Oh, no, no, no, no. This is not a toy. Who's going to drive you home? Honey, please, I'll do the driving. Drive home. Excuse me, I want to drive. You drive, stay in the present. It's the question that drives us.

42:53This is the drive to the close. The punk to music will drive us till the dawn. On Bloomberg Radio. All right, folks, let's get to it. We've got about 18 minutes to go until we wrap up the trade on this Tuesday. Carol Master along with Isabel Lee. Tim is off this week. And we've got a market that's just rolling over its best levels of the session. So what does that mean? We're down about 12 points on the S &P 500. and we've got the NASDAQ 100, which has been under more pressure today. It's down about two thirds of 1%. It's down about 161 points. I look at the S &P 500, though, Isabel, still most names in the index are higher today.

43:28Can I talk about crypto? You can talk about crypto. Bitcoin is down by more than 3%. And Ether is the one leading the broader downturn, actually. It's the largest altcoin. It's down by almost 5%, wiping out really billions since the biggest one-day industry drop on Friday. We've seen crypto under pressure as of late, right? A lot of pressure. And that really raises a question of we thought this was the haven, but then it's behaving like a risk asset. It's really funny because I feel like, yeah, we see it exactly, exactly. We see it kind of following the markets really closely. Hey, let's get to some of the earnings that we saw today.

44:02We've talked about the big banks so far that were out early this morning. Another one that came out is BlackRock. Stocks up about 3.5 % in today's session, rallying as the world's largest fund manager, pulled in$205 billion of client money in the third quarter and expanded its footprint in private credit and all assets. As we drive to the close, Kathy Seifert is with us. She's vice president of CFRA Research. She covers BlackRock. She joins us from New Jersey. Kathy, good to have you here with Isabel and me. BlackRock, investors like what they got from the company. Tell me about it. This company, massive, sees so much.

44:40They continue to grow. Do you like what you heard from the company? Yes, I do. And I have a buy recommendation on BlackRock. And I was encouraged by what I heard on the call and also in the numbers they reported. And basically, BlackRock laid out a strategy of basically having three pillars of growth. Strong ETF, a strong ETF offering and strong ETF inflows, an increased exposure to alternative assets, and an enhanced suite of offerings in its technology services business, trademarked Aladdin. And in the quarter, we saw basically it hitting on all of those cylinders. You know, the market has been decent this quarter.

45:28And I think a lot of asset managers are going to see their assets under management grow because of decent market performance. But it's important to see who's bringing in or who's, you know, who's producing organic growth, who's bringing assets in the door. And in that, you know, on that score, BlackRock really hit it out of the park this quarter. So you detail the three pillars driving the growth. But what caught my eye is that private markets and tech services revenue now exceed those from ETFs and fixed income. And I'm an ETF reporter, so this really caught my antenna. Was that outcome anticipated or were you expecting that?

46:04Well, that growth that we saw in the quarter is basically there's some year to year bumps because of the inclusion of some acquisitions. That's not likely to be a run rate. But nevertheless, one of the strategies at BlackRock is to increase revenue contributions from both their technology business and their private market business. And, you know, if you'll recall, they've spent the last couple of years pretty aggressively acquiring really pipelines in the private market and alternative asset space through which they can grow product. I mean, I think they did it very intelligently. And I think what we saw this quarter was the fruits of their labor, which is a positive.

46:51Speaking of private markets, we saw that fees there have grown around 136 percent year over year through third quarter of 2025. How sustainable is that growth, especially as we enter this really challenging macro and economic macro and rate environment? Well, I mean, that growth is not a run rate, and it reflects a contribution from acquisitions. But I do think that they can produce on a firm-wide basis mid-teen revenue growth, which is significantly greater than many of their peers. And if you look at the asset management space, on one end of the spectrum, you have kind of the traditional long-only asset managers, many of whom are bleeding assets.

47:31And you have the private equity firms that have had really good performance, but recently have struggled a little bit because there's some issues with realizations and whatnot. Sort of in the middle of that is BlackRock, which is sort of a hybrid of both models. So I think the private or the alternative asset revenue contribution will enhance overall revenue growth. But the ETF business, which is very deep and very broad and also has made a number of innovations. You were talking about crypto before. BlackRock brought in more crypto assets than some of its competitors brought in firm wide in this quarter.

48:15So, you know, their suite of ETFs is really unmatched. And you have the combination of those two things really widens the competitive edge or the competitive moat around BlackRock. When you look at alts, crypto and then traditional assets, is it just a moment of time or just before we start to see alts and crypto on par with traditional assets? In what way do you mean on par? In terms of making up their overall asset composition, in terms of assets under management. So I'm just saying, as we see the growth, we know we hear from Larry Fink and from BlackRock overall about the importance of private markets, private credit.

48:57So I'm just curious if you see a moment in time, or are we ready there? All through what? 663 billion of client assets. So I guess we're kind of there or close to it, right? Right. We're close to it, but I don't I mean, I don't necessarily know if BlackRock is for is necessarily, you know, wanting that mix to shift that much. I mean, there is there is a positive to having alternative assets. They tend to not be as correlated to the broader markets as, you know, equities and fixed incomes are. But, you know, for BlackRock, it was important because the ETF business was becoming increasingly commoditized.

49:40Fee structures were pretty rapidly decelerating, shifting into alts and private credit, you know, achieved several goals. It enhances their competitive position, but it also enhances their revenue growth, which is important. Is there any question that wasn't answered for you? Just got about 25 seconds. No, I think the one, you know, the one issue at BlackRock is a succession issue. I don't think Larry Fink is leaving anytime soon, but that's always, you know, that's kind of always an issue. And sort of what executive changes they're going to make to sort of bolster their operations amid this asset mix shift.

50:20All right. Going to leave it on that note. Kathy, great to get some time with you. Kathy Seifert. She's vice president at CFRA Research, covering BlackRock, as she mentioned at the top. She does have a buy rating on the stock. BlackRock shares up 3.6%. Do you want to share on a competing network? BlackRock CEO Larry Fink said AI is not a bubble, but there will be failures. And he said on AI, in terms of, I guess, their own spending, this is capital that is mostly well spent. I know, right? Yeah. Time will tell. This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, and anywhere else you get your podcasts.

50:58Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

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