Trump, Apple Announced Fresh $100 Billion US Investment

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2:14News. This is Bloomberg Business Week Daily. Reporting from the magazine that helps global leaders stay ahead. with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Masser and Tim Stenevek on Bloomberg Radio. All right, we're all in on tech. Older tech, new tech. We're going to talk about OpenAI's possible valuation. We're going to get to that in just a moment. We've got to talk about that Apple, Matt. Yeah, no, absolutely. I mean, look, it's a$3 trillion company.

2:56I kind of hesitated because it's like old, new, like it's all kind of crisscrossing a little bit. Apple is definitely high tech still. Definitely high tech. It's not the printing press. But is it old tech or is it new tech? I think Apple is, as much as we sort of joke about or talk about the fact that they don't seem to be on the forefront of AI, they still are doing things that amaze us and change our lives for the better, right? And that everybody uses as a benchmark. We're also focusing on what seems to be an announcement that's expected to come from President Trump around 4.30 p.m. Wall Street time about another big investment by Apple into the U.S.

3:32Lots of questions. We knew we needed to kind of get a reality check once more from Bloomberg News Managing Editor for Global Consumer Tech. We're talking about Mark Gurman. He's out there in L.A. Mark, good to have you back. Apple shares, investors are bidding it up more than five and a half percent as we speak. We've talked about these investments that Apple is doing in the United States previously. Some were already, I think, announced. But this isn't about bringing the iPhone supply chain to the U.S., is it? Here's where the stock is up. Stock is up because investors, I think, this is just a guess, know exactly what's going on here.

4:09This is marketing. Tim Cook, the CEO of the world's greatest marketing company is telling Donald Trump, who wants to tell his base that he's getting the biggest company based in the U.S. to do whatever he wants, that they're going to be doing more in the U.S. The reality is that Apple invests billions per year already in the U.S., right? They make glass through Corning in Kentucky for iPhone screens. They manufacture with a company called Finisar Face ID components. That's for 3D facial recognition scanning. They do some chip production in Arizona. And so Apple is earmarking another$100 billion, we're told, to a total of about$600 billion over the next half decade or so for U.S.-based manufacturing.

4:58They're going to put a fancy name on it, right? They're calling it the Apple Manufacturing, something related to Apple manufacturing, U.S. manufacturing, American manufacturing program, AMP, I believe Apple's going to call it. The reality is, unless they announce that they're building plants in the U.S. to do final assembly, to do mass manufacturing of iPhones and Macs and other products, they're not doing what Trump has been talking about for years. They're not doing what we've been talking about for years. As far as I'm concerned, I don't believe that's happening. But anything short of that, this is more marketing.

5:33Do we know, I mean,$100 billion is a heck of a lot of money, but are they spending that in one year? Are they spending that in five years? You know, are they adding that to the, haven't they already earmarked half a trillion to spend over the next four? Yeah, they've already earmarked half a trillion. So they're going to add to that. We don't have the exact details yet because obviously Apple has not put an announcement yet. Trump and Cook haven't made their joint Oval Office announcement yet, but in all likelihood this is going to be about further investments in companies in the US doing manufacturing and R &D and development of components that are then flown to China, India, Vietnam, Malaysia, Thailand to then be mass produced in Asia to be sent all around the world.

6:20Now, I want to be very clear. I'm not criticizing Apple's manufacturing strategy. Obviously, Apple's manufacturing strategy of production in India, in China, and elsewhere in that part of the world is the only way that they are able to produce the quantity that they produce today, at the fit and finish they produce today, and the cost that they produce today. There are so many reasons why mass production in the U.S. is just not feasible. But I don't want anyone to be under the belief that a change is going to be happening this afternoon where all of a sudden iPhones and Macs and iPads and watches can be made in the US.

6:56If Apple is able to say that and then execute on that, I will be hugely surprised. But my belief, this is going to be a lot of spin and more of the same. And the background here is obviously tariffs. Those smartphone exemptions are running out. Today, Apple has basically said in total across last quarter and the current quarter, about a$2 billion headwind because of tariffs. That's absolutely nothing, right? That's like Tim Cook could sleep 14 hours a night knowing if they're going to get taxed$2 billion a quarter. The problem is that those exemptions are going to start running out, and Apple wants to avoid that.

7:31So how do we avoid that? We make a deal. I'll come to the Oval Office as Tim Cook and say, we're going to do more in the U.S. We're going to make Trump look good. Trump will be happy. Maybe give us some exemptions. So we'll see how it all works out, but that's exactly what's going on here. So transactional, and it's just getting some of the heat off of Tim Cook and Apple. Textbook definition. Yeah, getting the heat off of Tim Cook and Apple. We'll see if it works, right? Donald Trump can say anything in that Oval Office meeting. Tim Cook can say anything in that Oval Office meeting. We'll see how it goes.

8:01This is a tried and true playbook. Tim Cook has done this with Trump so many times, and it's basically worked every time. Apple has never been largely impacted to any material degree by any of Donald Trump's policies or tariffs, either in the first administration or thus far in the second administration. All right, let's talk about the fun stuff. now. The products, right? You mentioned the Apple Watch. Obviously, we're both using iPhones. I was on an iPad this morning. I have a Mac at home. I just tried to buy a Thundermax ECU for my Harley Davidson, and I found out it only works with Windows.

8:38And I thought, people use Windows? How much market share does Apple actually have? Because Carol and I live in this ecosystem. We don't even think of Android products, but people do use those. And like them. Well, the U.S. is basically half and half. It tilts a little bit more to Apple when you're talking about phones, tablets. Apple is really the market leader. Smartwatches, Apple's the market leader by far. When you're talking about computers, right, in the U.S., they have pretty good market share. But on a global level, the vast majority, you know, close to 80 percent of the market is still dominated by Windows.

9:18But they have made strides. And, you know, the most important thing with the Mac is people keep buying them. People are holding on to them. People are sticking in the ecosystem and they're buying more iPhones and iPads because of it. People get exposed to one product. They want to buy other products. 30 seconds. Does Tim Cook hate all of this? Well, I don't know how Tim Cook feels. I mean, if I were Tim Cook, I mean, this is kind of exciting, right? Get to go to the Oval Office, get to have a press conference with the president, regardless of who the president is. I get to usher in all these new products.

9:50You know, Apple is dealing with some complexities right now with AI. Not everything is going well. So it's kind of exciting that he gets to kind of put his foot down right now and try to, like, hammer people home that something needs to change. So no more coasting. I'm guessing he loves his job, and this is just one exciting part of it. Well, I have to say investors are pretty excited, too, because as we said, this is a stock that has definitely lagged some of the other Mag7 and big tech companies right now up about just shy of 6 % here in the trade. The thing about AI for business, it may not automatically fit the way your business works.

10:27At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone.

11:04That's exactly what the people at Optum are trying to do every day. They're a health care company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills.

11:43Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. wise is the smart way to manage the currencies you need around the globe if you've ever sent money internationally using a traditional bank there's a good chance you've paid more than you realized hidden fees exchange rate markups and extra charges can quietly add up before your money even arrives there's a better way try wise wise uses the exchange rate you'd usually find on google helping you avoid the unwelcome surprises that often come with international transfers Whether you're sending money to family overseas, spending while on your holiday abroad, or paying bills across borders, Wise makes moving money simple, transparent, and straightforward.

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12:53This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work. I'm Carol Masser. DoorDash, the largest food delivery company in the U.S., is building its own delivery drones and has gained the necessary FAA approvals to operate them commercially. The latest in its effort to delegate more orders to robots as a way of cutting delivery times. Bloomberg's Natalie Lung reports the company says it has been conducting pilot programs with various restaurants, some of which have seen their order volume grow during the test period. The effort marks an expansion of DoorDash's in-house robotics efforts to reduce reliance on human couriers for some orders, as their wages constitute a key expense to the business.

13:36Drones are also a way for DoorDash to cut delivery times on orders from more remote locations that some dashers may not want. That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com today by selecting Work Mode. Available on Plus and Pro Plans. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 p.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. or watch us live on YouTube. I want to talk a little bit about the markets.

14:16As Matt was talking about the outperformance in terms of the impact on the overall market, we're talking about Apple, right? Really pushing up the overall trade today. Yeah, Apple has been a bit of a loser lately, right? It's the second worst performer. I don't know if I say a loser, but a laggard. Okay, it's a$3 trillion company. It's not a loser. And I buy everything they make. Yeah, they're doing okay. My point is the stock has underperformed five of the MAG7 stocks this year to date and five of the MAG7 stocks over the past five years. So it's not doing as badly as, say, Amazon. I'm sorry, Tesla this year or Amazon over the last five years.

14:59Right. But it needs a push. Right. And right now it's getting a push from this announcement. But what the market really wants is some AI news out of Apple. What are they going to do to solve the AI problem? We know they'll do something. It's kind of interesting, though. But again, maybe the read is that if they're doing this deal, maybe the White House will back off of Apple and, I don't know, maybe be a little bit more sensitive to its needs. And whenever I say something about their lack of leadership in AI, you're like, ah, don't worry about it. Because we know you're going to buy the next iPhone.

15:29And whatever they do, they could buy any AI company. But new phones ahead of the tariffs. Because, yeah. So anyway, let's get to Jillian Wolf. She is Bloomberg Intelligence Global Equity Strategist. She's here in studio in our Bloomberg Interactive Broker Studio. Sorry for our rant and rave. That's fine. I love a good rant and rave. You sit down there with GMA? I sit right next to GMA. Nice. So all day, it's just me and GMA going off. The equity's power club of Bloomberg. I think we drive everybody else crazy, probably. I read your note every morning before we do our editorial meeting for the show.

16:03So thank you very much for your guidance. Thank you. So talk to us about Apple and how much that is impacting the trade today. So I think one of the broader things we're worried about just in the tech space in the U.S. that we've noted is that the premium for U.S. tech in particular over international tech is really at an all-time high. It's not to say that U.S. tech maybe doesn't warrant some premium, because it probably does. But does it warrant this much of a premium is a big question. And one of the things we've found that's a bit of a driver of this U.S. premium over the last decade is they've really been able to expand their operating margins faster, U.S.

16:37tech over international tech. And one of the things we're starting to maybe see come up is that if you're going to have this reshoring from companies like Apple, what is that going to do to this operating margin edge that these companies used to have? If that was really driving the premium up so much, does it put that premium at risk if their costs are going to go up if they do invest more in the U.S.? So there's this immediate good news of, yes, maybe there'll be some deal with Trump and Trump's going to help them out. But in the longer run, there's this broader concern of can these U.S. companies maintain their edge if their costs start to go up?

17:09But they're not really going to invest in the U.S. I mean, exactly. We say what we all know. This is just paying lip service to Donald Trump, telling him what he wants to hear, stroking his ego. Yes. And of course, you know, when he's out of office, they're going to focus back on Chinese factories, Indian factories. Exactly. Getting us cheaper stuff, because that's what we want more than anything is cheap goods in this country. Right. I mean, it's what makes sense most for their business model. But even Tim Cook said on the latest 2Q call, he really emphasized how much uncertainty there is. He specifically said not to take their September Q3 guidance numbers and use that to extrapolate much further forward because they don't know what's going to happen with tariffs, because they don't know what's going to happen with prices.

17:55So it's definitely a concern that's hanging over the market. I mean, I think one of the bigger pieces of news you were just mentioning AI was what happened a month ago with the AWS deal in Korea. They're building this massive AI data center out of Korea, not in the U.S., and that's allowed the Korean stock market to be the best-performing market by far over the last three months. I mean, they're up over 25 % because one of their largest companies, SK Group, is going to be in charge of building that. So now you're starting to see U.S. companies, if anything, further invest in key areas like AI in emerging Asia.

18:27But that's what, Jillian, companies do, right? Exactly. I mean, they tend to also like to do build outs in the markets that they sell in. It's not always the case. And there's some goods that just make sense to make in certain places because it's just that much cheaper. But you do increasingly kind of see companies doing that, right? Exactly. So is it really that much more ramped up? Or I don't know. Like, I'm not quite sure what the read is on that. It's difficult to say because you're getting a lot of conflicting information, right? You might have this$100 billion investment from Apple in the US.

18:58You have this AWS build out in Korea. Ultimately, companies are going to keep looking for cheap ways to build their products. Right. Right. That's just smart business. It is. And the U.S. market has broadly, we talk a lot on our team about how the economy is not the stock market, right? So while improved U.S. manufacturing obviously helps for the U.S. economy. Were you searching no? I hate it when people, this has become a mantra. You know, Carol said it. I heard somebody on Romaine's show say it. Now you say it. No one ever said the economy is the stock market or the stock market was the economy.

19:30I mean, the stock market is a discounting mechanism that looks at the future of the economy, maybe. But sorry. Well, but it's been difficult because you've seen the market hit these new highs. Manufacturing data is poor. Consumer sentiment data is poor. So what's happening? And the answer is, particularly in the U.S., maybe more so than even in other markets, you're seeing the equity market really unmoor itself from manufacturing results. The stocks in the U.S. don't really rely on manufacturing activity in the U.S. We're not really a manufacturing economy. Well, let me tell you something. I have a four-year-old daughter and a one-year-old daughter.

20:03You do. And I'm not hoping that they end up building iPhones at a factory in like Elizabeth, New Jersey. Like that's not the future that I'm planning for those kids. Again with the New Jersey. I said Elizabeth. I know. But anyway. I'm a lifelong New Yorker. I'm a. Is Jillian, is this market going to rotate or are investors going to finally rotate out of this mega cap concentration? because we were talking to Bill Smead the other day and he said it reminds him of 1987. You know, we have 10 stocks making all the profits and getting all the gains. Like, when does that change? It's very concentrated right now.

20:40But what we're seeing, we break down the earnings growth of the MAG-7 versus the ex-MAG-7 on our team. We look at that a lot. The MAG-7 being those magnificent seven stocks and the S &P 500. And right now, what we're still seeing and what analysts are still projecting on the street is that the MAG7 are going to grow earnings in aggregate faster than everyone else. But that's expected to slowly converge as we move into 2026. So we see that as a potential driver out of that maybe MAG7 or nothing trade, but we're still seeing it take place. The MAG7 are still, have been growing earnings faster, are projected to keep growing earnings a bit faster for the next few quarters.

21:17We're really going to need to see the rotation pick up. But I think it's something that investors are keeping an eye on, particularly as tech just becomes so expensive in the U.S. as well. I mean, at what point are the strong fundamentals going to justify these multiples? But beyond the MAG-7, you are saying you're seeing earnings growth in other sectors, right? So that is the opportunity for catch up, right? There is. And the gap between the earnings growth of the MAG-7 and the other sectors is narrowing. I mean, in 2024, it was huge because the MAG-7 had this big AI bump. Right. I mean, we had a little bit of this, there is no alternative to the MAG-7 because they just looked so much better.

21:50It's not to say that everything else looked bad. It just looked significantly less good. I just always think - Right now they're 26 % and the rest is 4%, whereas they previously were like 68 % and the rest was two. Yeah, I mean, there was a period of time where the rest was negative, honestly, and all the growth was coming from the MAG-7. So we have at least got a return to growth outside of the MAG-7. I know this because I read her research all the time. I can tell. I love it. I feel like I'm talking about it. First time I'm talking about it. Oh, thank you. Come back anytime. time. Jillian Wolf, Global Equity Strategist at Bloomberg Intelligence.

22:22This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg 1130. From a tech company that we don't but probably should be talking a lot more about to an iconic corporate brand company and stock. It's a company that continues to kind of mesh its longstanding businesses with new ones and kind of evolve along the way. We're talking about Walt Disney. Stock is down about 2 % in the trade.

22:57It was down as much as 5.2 % earlier on. Let's get to what you need to know about their earnings and also some of the news that we got early this morning. Geeta Ranganathan is with us. She's Bloomberg Intelligence Senior Media Analyst, again out there in Princeton, New Jersey at BI headquarters. All right, Geeta, I think initially Disney was up in the pre-market on some of that ESPN news and then earnings came out and then it kind of shifted in another direction. Walk us through all of the news flow this morning. Yeah, plenty of news for this morning, Carol. I actually thought that the earnings was extremely strong.

23:31I mean, if you were looking for a beat and raise, you got it. I think why we saw a little bit of that pullback in the shares after they reported was because maybe the guidance raised was not as much as people had hoped for so they did take their eps for the full year uh up to 18 growth from last year and that compares to 16 is what they had projected earlier i think maybe the street the buy side was looking for something closer to 20 or over that uh but but really i mean the big news of course and you spoke about this the pre-market was you know the nfl taking a 10 equity stake in espn espn getting control of some of those nfl media assets, including NFL Network and Red Zone.

24:10And why this is important, Carol, at this point of time is because ESPN is actually going a la carte. For the very first time in its history, they're going to offer all of the ESPN TV content on a streaming platform. That's going live in a few weeks, August 21st. It's a big deal. It's a huge deal. Yeah. I mean, the reason, Geetha, that makes me happy and probably everyone else who pays $80 a month for a cable subscription that he doesn't use is I can now cut that cord completely because all I want from it is NFL football and I can just buy that from ESPN plus. Yeah. And you're going to get even more of it, Matt.