Special Report: Tariffs and Turmoil — With Ryan Petersen and Adam Parker

Ryan Petersen is the CEO of Flexport. Adam Parker is the CEO of Trivariate Research. Today we host an 'emergency' special report on the impact of tariffs on tech and the economy. Join us for the first half where Petersen breaks down what the administration is hoping to do with its tariff policy, whether it's advisable, what the near and long term impacts will be, and whether Trump will blink. In the second half, Parker, a star equity analyst, highlights how Amazon, Apple, Google, Meta, Microsoft, NVIDIA, and Tesla will react to the tariffs. Tune in for a comprehensive deep dive on what's driving the biggest economic disruption in years and what happens from here. --- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. Here's Ryan Petersen's tariff briefing: https://youtu.be/Z1rBu2-lEY8?si=8ptEQdrU9yiCHWLO For weekly updates on the show, sign up for the pod newsletter on LinkedIn: https://www.linkedin.com/newsletters/6901970121829801984/ Support Big Technology? Here’s 40% off for the first year premium subscription: https://tinyurl.com/bigtechnology Questions? Feedback? Write to: [email protected] Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Alex Kantrowitz?

  What's behind Trump's tariff push? And where does it go from here? For tech and the rest of the economy? It's Tariffs and Turmoil, coming up right after this. This episode is brought to you by Genesis. What does it actually take to put a Gentic AI to work across an entire enterprise? I recently spoke with Genesis chairman and CEO Tony Bates about why orchestration is emerging as a competitive advantage in customer experience and what companies need to get right in the AI era. Then I sat down with Adam Mitchell, head of enterprise business solutions at Voya Financial, to go inside a large-scale agentic CX transformation, including the business decisions, trade-offs, and lessons along the way. You can watch both conversations now on my YouTube channel today.

• 0:45Alex Kantrowitz?

  It's never been more challenging to get frontier compute. How do you know where to look, who to trust, or how much to pay? Akash is an open cloud that provides easy access, flexibility, and peace of mind. That's how companies like Razor were able to cut their inference costs by 15 times. Visit akash.network/alex for a free consultation. That's akash.network/alex for a free consultation. Welcome to Big Technology Podcast, a show for cool, edited, nuanced conversation of the tech world and beyond. We have a special report for you today, an emergency podcast covering everything that's going on with tariffs, from the arguments that the Trump administration is making to

• 1:26Alex Kantrowitz?

  the impact on shipping today and the changes that we're going to see with the global supply chain. And then we'll also talk about tech stocks at the end. We're joined today by two great guests. First off, we're going to have Ryan Peterson, the CEO of Flexport. And then to talk about tech stocks, Adam Parker of Trivariat Research and a CNBC contributor is going to be here towards the end of the show. We're going to cover why Trump is doing this, if it's likely to succeed, when he might blink, what it means for the tech giants, including Apple, Amazon, Google, Meta, Microsoft, Nvidia, and Tesla. So let's bring in Ryan. Ryan, great to see you. Thanks for coming on, on short notice.

• 2:03Speaker 01

  Yeah, my pleasure.

• 2:05Alex Kantrowitz?

  So you, right now, I would say are the most sought after tech CEO. We appreciate you having the time to come and speak with us here at Big Technology. I just want to pick up a conversation that you and I have had in the past, which is about the merits of globalization. You remember you were on the show a couple of months, maybe a year ago, and I said, "You still believe in this globalization thing?" Because it had been taken some heat with the politicians. And you're like, "Yes, definitely, no doubt."

• 2:30Speaker 01

  Well, I gotta sell my own book, man. Where Vlexor's mission is to make global trade easy for everyone. So it's, our mission became more important this week is it's become harder. And so we gotta work even harder than ever.

• 2:41Alex Kantrowitz?

  Definitely. So let's just talk a little bit about what the White House. So to me, I've spent like a good chunk of the weekend trying to understand what is going on in the minds of those who are behind this policy. And I think we should just talk a little bit about what the White House is trying to do.

• 2:59Alex Kantrowitz?

  And then we can get into the merits and we can get into what the long-term impact might be. So I think the first thing that they're trying to do, I'll diagnose the problem, then we can go into some of the solutions. The first thing that they're trying to do is basically, it seems like they're trying to rearrange the economy. So this is from Finshots. Finshots, this article says, "Past economic policies favored the top 10% of Americans, or those wealthy enough to fuel spending and drive consumptions. But the bottom 50% haven't gained much. So while everything might look great on paper, in reality, half of America could still be struggling." And so what it seems like they're doing right now is they're trying to change the United States from a consumption economy to a production economy.

• 3:42Alex Kantrowitz?

  And they don't really care, it seems, at least in the time being, what it does to the stock market. This was Secretary, Treasury Secretary Scott Besson on Tucker Carlson this past week. "The top 10% of Americans own 88% of equities, 88% of the stock market. The next 40% own 12% of the stock market. The bottom 50 has debt." So what they're trying to do is basically rearrange this system that has been brought about by global trade and try to make it fairer for more people in the United States. What do you think about that perspective, Ryan?

• 4:17Alex Kantrowitz?

  Do they have a point?

• 4:18Speaker 01

  Sounds good. I guess the the problem, you know, is where rubber hits the road and what's in reality, you know, the global free. There's there's a million arguments for why manufacturing would be good, be great. We could do more manufacturing. The reality, however, is that manufacturing requires inputs that may come from other countries, machinery that comes from other countries. We're, you know, behaving a little bit like a guy who hasn't been to the gym for forty years and says, hey, I gotta get in shape. The doctor says you gotta get in shape. It's obvious, yeah, you have to get in shape, start going to the gym. But you don't go there and start deadlifting six hundred pounds and trying to run a marathon

• 5:01Speaker 01

  on the treadmill. You might you might die. Like, you gotta ease into these things and and kind of such a shock makes it very, very difficult to adapt. So that's for one. It's just like the way this is implemented is is probably gonna be unsuccessful. But on top of that, we just know from this. It's like very clear economic theory that globalization, that free trade benefits both parties. You don't engage in it if you can't. If anything, the thing that's caused problems in the US is our status as the world's reserve currency, which has allowed us to be rich, allowed it's made demand for our currency much higher than it would be otherwise. Countries kind of have to buy our currency. That makes Americans

• 5:42Speaker 01

  much richer. It makes it easy to buy goods from other places. And it's sort of an awesome thing that we get to be rich for it, but it does have its second order consequences that manufacturing doesn't make sense if you can buy stuff from other countries that's so much cheaper. Maybe tariffs are the path around that. But the reality is, having talked to a bunch of companies that are in active, active planning mode on building factories, they've actually paused that right now because all of a sudden, the machines that they have to buy are gonna cost twenty to fifty percent more, depending on where they're being sourced. And they just economics don't work anymore. And, you know, it'll take time for the you have to also have that machine made in America. Okay. But like, if it's not, what do you do? You have to stop man stop your plan to manufacture. So.

• 6:28Alex Kantrowitz?

  Okay.

• 6:28Speaker 01

  It can go on and on about about this. I'm very firmly anti tariff. It's bad for my business. So, you know, I'm selling my own book again, but

• 6:38Speaker 01

  there's plenty of economic theory from Milton Friedman onward to just show you Adam Smith, everybody else is show why free trade is benefiting both sides.

• 6:48Alex Kantrowitz?

  Yeah, but okay, here's here's what the argument I'm going to try to channel best in here. At least we should have his perspective represented. So what he says is that the United States, basically, the economy has grown into this consumption economy. They're addicted to Americans are addicted to cheap goods. We're cluttering our homes with stuff from Amazon. And, you know, while we're buying, we're not producing anymore. What do you think about that?

• 7:12Speaker 01

  Yeah, I mean, I hope that they're factoring in the export of digital services, financial services, you know, Netflix, for example, generates 60% of its revenue internationally of 33 billion of revenue. Like, if you're not counting all the Netflix exceptions in these other countries, you're not actually modeling the modern economy and the and the trade balances. I mean, that's ultimately trade. They're buying our services. So I don't know how they're doing it if they're just doing physical goods. I think you're coming up short. You know, Cambodia is probably not going to buy a lot of American manufactured goods, but I bet you they pay for some Facebook and Google ads and Tinder boosts and some other stuff. So, you know, the American economy is much different than it's not some like

• 7:54Speaker 01

  Charles Dickens industrial world like we we have very advanced services that services economy. And if you're not factoring that in, I think you're going to get the model wrong.

• 8:04Alex Kantrowitz?

  Yeah, it is interesting how tech has been both, I think, maybe not accounted for enough by the administration here. And then also like firmly in the crosshairs of the countries that are thinking about retaliating. And we're going to get into it in a moment. But since you brought it up, I mean, one of the things that's Europe is considering, for instance, to retaliate is to provide greater restrictions for American technology that is coming into the continent and not going one for one necessarily on production, but trying to get the digital services to feel the pain. I'm curious if you think that's going to be effective and what you think it means for the tech CEOs that basically

• 8:47Alex Kantrowitz?

  celebrated Trump's inauguration and sat there basically closer than the Vances.

• 8:54Speaker 01

  Yeah, it'll be very interesting. You know, even Elon's kind of distancing himself on the tariff issue. He's been posting Milton Friedman videos and say, you know, being, he's quite anti tariff and pro free trade. Um, so I do think you're going to see a split. I've seen it amongst my friends who who have supported this administration and then are now really, I don't know that they're willing to turn against the administration, but they're certainly against the tariff policy and how it's been implemented. And it feels a lot like central planning. It feels a lot like, um, setting up putting your head in the ground and imposing things that just don't have any ground in economic theory. And the tech industry will be the natural place to target. It's our best industry, our best companies. And if you wanted to retaliate against America, that would be the place to hit.

• 9:39Speaker 01

  So hopefully, hopefully, I think, I do have some confidence that this will get resolved. There was this rumor earlier today, I think we're going to drop this today, but, uh, earlier on Monday, where it said that, uh, they had agreed to a 90 day pause.

• 9:54Speaker 02

  Yeah.

• 9:55Speaker 01

  On tariff.

• 9:55Speaker 02

  It was fake news.

• 9:56Speaker 01

  And it turned out to be false, but it said the S and P surging and NASDAQ. Um, I, I believe there will be deals cut. I don't know if in time to pause the tariffs altogether. But, um, and I believe that because the cabinet secretary told me that there would be a, a pause, a negotiation, I should say, not a pause, but he said two weeks ago that this was the start and not the end of the, uh, of the process, that they want to send a message to the world's countries that they mean business, that America's, in his words, tired of being taken advantage of. But, um, and then they expect companies to come to the ta- countries to come to the table. And we've seen that now over the weekend, they announced that 50 different countries have come to try to negotiate.

• 10:39Speaker 01

  The EU just said they would take tariffs to zero, uh, to get a deal done. So, so has India. I mean, these are countries that have had pretty high barriers to US goods. Now tariffs aren't the main complaint. If you listen to, I do recommend people watch the administration's, um, you know, content that they're putting out. I thought Lighthizer's video, uh, recording with Tucker Carlson. He did a pretty good job of making his case, or at least so you can understand what the case is. Um, and their argument is really, it's not just the tariffs that these other countries put up, but it's the non tariff barriers, industrial policies, subsidized credit.

• 11:16Speaker 01

  Straight up manufacturing subsidies, they get free land, free buildings. They get, they may get repressed organized labor. That was a big part, you know, in Korea's rise, they made the six day work week mandatory and banned labor unions and, you know, and environmental laws, they don't, we have much stricter environmental laws. So there's all these other things that they're saying, hey, these are making America uncompetitive that, and our retaliation against that is tariffs. And so it's not just that they're trying to get equal tariffs. That's why they have these reciprocal tariffs that were, have nothing to do with the actual tariffs these people charge us. And that's a bit of what they were getting at, even if in fact it was implemented with a really silly formula that had nothing to do with that even, so.

• 11:58Alex Kantrowitz?

  Yeah. Okay, so that's really interesting. So it's both the intent, and I'm just like, we have to try to unpack the intent here to sort of understand what's happening. I feel, it seemed like a lot of analysis that has just been like, this is crazy. And, you know, look, maybe it's not advisable, but I think it's worth an exercise of trying to figure out what they're trying to do. So the intent seems to be both to bring manufacturing back into the United States in some way, and then also for US exporters to try to get them on more fair footing, so that they're able to export their goods. I mean, there might not be a huge market in Cambodia, but there certainly is in Europe.

• 12:32Speaker 01

  That, well, so I think there's at least four things that they want to achieve with this. One, we've already gotten to a little bit is, hey, they'd like to negotiate lower barriers, including tariff, but all these other barriers that I just mentioned, so that US exporters can be more successful. Two, they'd like to have manufacturing in the United States as a, really, it's a national security thing that in a time of war, you know, your car manufacturers become your tank manufacturers and everything else down the chain. So if we don't have manufacturing capacity, that is a national security threat to us. Third is, we have a massive debt crisis in this country, and they would like to raise revenue. You know, these tariffs will be very significant generator of revenue if nothing changes. And, and then there's something too, like culturally.

• 13:21Speaker 01

  They want to see us be a country that makes things. Uh, and, and there's some element of that in all of this that they don't want to see us be, uh, I don't know, you don't want to be that, what's that, uh, movie, the robot movie, Wally.

• 13:33Alex Kantrowitz?

  Wally.

• 13:34Speaker 01

  Things like that, people just cruising around outer space and don't know how to make anything or do anything like they don't, I don't think that's the future we want for our country.

• 13:42Alex Kantrowitz?

  I mean, then why, why do you think that this is a bad idea? I mean, you just outlined their plan pretty well.

• 13:46Speaker 01

  I mean, I can understand, yeah, if you can't, uh, this is like a good rule in life is like, don't argue with anybody unless you can state their position more clearly than they can.

• 13:54Alex Kantrowitz?

  Yes, and that's what we're trying to do here. So what would your counter argument? Ryan, go ahead, you can debate the administration that you just sort of put their, their perspective out. What's, why would you, uh, oppose what they're trying to do? I mean, these seems like, they seem like at least in the intent, good goals.

• 14:10Speaker 01

  Yeah, um, I think there are, those are, those are all reasonable things. The, the, you know, the short of it is, again, our modern economy, modern, if you look at how a Boeing airplane is made, uh, you know, some people have published some infographics of these, there are parts coming from all over the world. And that is an optimized supply chain. It's a complex system and we don't work in the simple centrally planned model like these, there's a very complex dynamic system. And, and you have this sort of fundamental principle of don't mess with things you can't understand. And nobody understands this, like across the broader economy. I mean, I bet you there's no one even at Boeing who understands all the details of where all these things come from.

• 14:51Speaker 01

  It's a complex system that has evolved and been put into place, um, through a many year process. And if you overnight try to upset that and say, oh no, I need you to do it this way. Like the reality is those manufacturer, those component manufacturers, parts manufacturers are not in the United States. You cannot source it. And so all you're going to do is jack up the price of manufacturing the airplane or anything else and actually hurt the manufacturing like you, you know, you're, you're, you're hurting your own stated goals, uh, would be the simplest way to refute this. To say nothing of, you know, actually President Millet in Argentina has made some very, he's a free market economist if there ever was one and he's put some very clear, and he's dealt with the exact same things in Argentina where he's been bringing down

• 15:36Speaker 01

  trade barriers and those trade barriers may protect American jobs. Now, in our case, these jobs have already left and we're trying to bring them back. So that's a different argument, but when there are trade barriers, they may protect the jobs. So let's say you have a product, your local company can produce the thing for $600 and they can produce it in Cambodia for 200. So you say, okay, let's put up tariffs to make the Cambodian product cost 610 dollars. So everyone has to buy ours in the US. Well, that extra $400 that consumers had to spend on the local thing, they would have spent on other stuff. They would have gone to buy travel services, hotels, other goods from other companies

• 16:19Speaker 01

  and that money doesn't get circulated and generate growth and demand for other things and or just end up in their savings account to pay for their kid's college. I mean, so, you know, we don't live in this simple world that where it can be centrally planned. The Soviets tried this, it's a disaster, you know, don't forget the images of Boris Yeltsin coming to the United States, looking at our grocery stores and having his mind blown by all of the the choice available through the free market. So it's very dangerous to play with systems that you don't understand.

• 16:52Alex Kantrowitz?

  Okay. One more thing I want to talk about with the plan and then we can sort of move on to whether this will stick and what the impacts are, even if it's rolled back now. But I want to ask you this one more thing, which is that there's also a conversation about this being about refinancing the debt. So the US has $34 trillion in debt, 7 trillion of that needs refinancing soon. Interest rates recently hit 4.8%. The idea is to drive down the interest rates, you know, basically by killing the stock market and therefore saving billions by refinancing the debt. What do you think about that plan?

• 17:29Speaker 01

  It's kind of genius. I don't think, I don't know. I mean, it sounds a little crazy, but I do think we have a massive debt crisis. Like, I acknowledge that. Uh, and on some level, you're a Ponzi scheme if you just keep spending more than you take in over a long enough period of time and, and it's compounding. We're now at the point where, you know, entitlements plus interest payments is a hundred percent of the tax revenue. And our taxes are already pretty high. So.

• 17:51Alex Kantrowitz?

  That's crazy. That is actually crazy. Yeah.

• 17:54Speaker 01

  Um, so yeah, but you do have a debt problem and tariffs will help with that if, it, you know, so you either have to raise income taxes, cut spending, uh, or yeah, raise taxes or cut spending and tariffs are a form of the taxes. So I'm not, I'm not saying you have to have zero tariffs and there's, there, there, I do acknowledge the points that they have around industrial policy of these other countries and, I'd like to see them use these tariffs and negotiate, you know, free trade agreements around the world and, and reduction of other types of subsidies for their local companies and other things. So all of that's valid. Um, I'd like to see government, I like what they're doing at Doge. Uh, I'd like to see more cuts to waste in government. Uh, I don't know if they can cut a trillion dollars.

• 18:37Speaker 01

  And their plan was to cut, you have two trillion dollar deficits. So the plan was to cut a trillion of spending and increase GDP enough that taxes go up by a trillion, taxes or tariffs. And we'll see if now that second half of that sentence seems at risk. I, I don't know that they're going to get, uh, GDP increases, at least in the short term.

• 18:55Alex Kantrowitz?

  Right. So we, we're looking now at these tariffs. So 10% tariff across the board went into play over the weekend. Now we're going to see another, all the bigger tariffs, like the extra 34% on China, that's supposed to go into play on April 9th, which is Wednesday. So Ryan, do you see what's going to happen next is basically the administration has announced these tariffs and now they're going to go try to negotiate with the other, all the countries on the list, maybe except the Penguin Island, uh, to try to figure out like what the appropriate working relationship would be and whether to actually keep those in place or lower them. Is that what the next week looks like?

• 19:35Speaker 01

  I think. I would give it like 70% chance that that's what's gonna happen. Not not within the two day, you know, they didn't give themselves a lot of time to negotiate these deals. So it may go live and then be undone. Now, remember, it's um, it's they did it April 9th, based on when the vessel departs at origin. So the actual that's when the clock starts, but the duties will be paid. These tariffs get paid when the vessel arrives. So you got, you know, another couple of weeks uh before that. So to potentially to to avoid these tariffs actually hitting. Um, I I I give it like a 70% confidence level that they negotiate some deals. I think the China tariffs probably stick.

• 20:16Speaker 01

  Um, and I I suspect what they're actually asking for from these countries is for them to put their own similar barriers tariff uh and otherwise against Chinese trade. And say, hey, take two sides here, take the US side or the Chinese side. Have it both ways. I suspect that that's a big part of the negotiation that's gonna go down with the EU and some other countries. Um, and I don't know how amenable people will be. I think a lot of countries rather, if you're forced to make that decision, you might rather have access to all the great manufactured products coming out of China.

• 20:50Alex Kantrowitz?

  Yeah, cutting China off is not a like a simple ask. I mean, they do make so much of the stuff around the globe.

• 20:55Speaker 01

  Especially for like developing world, like if you don't have a car industry native in your country, you gotta get these Chinese cars. They're so freaking good. They're so far ahead of anything that the the West or even Japan and Korea are making that like, if you're in Africa, you'd rather have some $10,000 amazing brand new Chinese car than you would. America, well, I don't know. It's a good trade off. It's a good question for them. You'd rather have an American military base protecting you or uh or Chinese cars.

• 21:23Alex Kantrowitz?

  I'm pretty sure if if what you're saying is is accurate, that that is the exact trade off that they're all gonna be considering this week, which is wild.

• 21:31Speaker 01

  I don't, you know, again, these are just like my intuitions. I've got a little bit of conversation with some administration folks, but I I don't really know how it's gonna play out at all.

• 21:40Alex Kantrowitz?

  Okay, so now the question is, all right, let's say this negotiation period does happen, the 70% uh, you know, possibility plays out, uh, then.

• 21:50Alex Kantrowitz?

  What are the risks? Because we've already seen the markets fall down. The S and P 500 is down 15% this year. It was slightly in the green when we started this conversation around what was probably a rumor that there was going to be a 90 day pause. Now it's back down again, so who knows? But the markets are crashing. And this is from Brad Gerstner. The danger with shock therapy approaches in complex systems. It's impossible to model the negative reflexivity. Ben Thompson also writes, the current economic system flawed the way we may now recognize it to be is a complex system built over decades. One ought to be very wary in remaking complex systems in a top down manner. There's a reason that new economic systems usually arise after major wars.

• 22:33Alex Kantrowitz?

  It's easier to build something new after the old thing has been destroyed. So what are the risks? Even if the US negotiates lots of deals that put them in a better position to export and maybe bring some manufacturing back home. What are the risks that this could do long term damage and have unintended consequences?

• 22:52Speaker 01

  I mean, there's massive risk here is the tariffs. I mean, take, for example, Flexport's customer base where we're one of the largest logistics providers in the world. And we did on Friday a call down for, I mean, we didn't get in touch with all of our customers, but we called a lot of customers on Friday and they, 28% of them told us that they're pausing all their ocean freight. All their bookings are paused. That's a massive, I mean, I don't think, I don't want to read too much into that. Is it a catastrophe if it holds? A lot of what's happened is these folks knew about April 2nd deadline for the last few months and pre-ordered and they've, they're well stocked on inventory and they, you know, they brought it in beforehand when the tariffs were lower. So that's a lot of it.

• 23:34Speaker 01

  The other, the other half is they're expecting like I am, that some of these countries will have deals cut and the tariffs may come down. So that's it. If it holds, I mean, you can already see it on day one. That's, that's massive. Business models are at risk. Merchants on e-comm, the ones that we track of our customers have raised prices of 5% to 10% already to the consumer.

• 23:57Alex Kantrowitz?

  Already?

• 23:58Speaker 01

  Already. And so you're going to see even more of that as these prices, as these actual tariffs flow through the system and start getting paid and the cost of goods sold goes up. So you'll have inflation.

• 24:10Speaker 01

  And yeah, I don't know, maybe interest, you know, the easiest way to balance trade is to have nobody trade with anybody. So they might achieve their goals, but it's gonna make everybody a lot poorer.

• 24:22Alex Kantrowitz?

  Uh, let's say they say, just kidding, is there gonna be stuff that's happened over the past week? That is already irreversible.

• 24:28Speaker 01

  Yeah, psychologically, some lack of confidence and um, perhaps, but at this point, you still have some time. It hasn't even taken hold yet. So and I don't, I don't think, you know, they didn't give themselves enough time. So they could say, okay, let's we're not, we're gonna pause. I, I thought the thing this morning was part of the reason it went so viral is it was credible. It would be like, that would be a sensible thing to do. Give ourselves a 90 day pause, uh, and then negotiate some deals and then you can come out of this looking like you got a win. Oh, actually, we wanted more free trade with Europe and now, you know, we got them to drop these barriers and that's a big win. Um. So there's still time for that. But every day that goes by becomes a lot more difficult.

• 25:10Speaker 01

  And if you just look, you know, the role of government is to set the rules. And define those and then business got to find a way to make money. So even if these tariffs hold, it's like, okay, cool. Your job as a business person doesn't change much. Still the same as it was before. Go find a way to make some money, given the, the rules of the game. The challenge becomes when the rules are constantly changing. And they're constantly changing right now by this administration every couple of days or weeks. There's new interpretation, new, new rules, new stuff coming down the pipeline. We have on April 17th, no one's talking about it right now, but they're in 10 days, they're going to impose fees on ships made in China when they make a port call in the US. It's gonna totally rearrange the shipping networks. And make ocean freight incredibly unreliable.

• 25:53Speaker 01

  So number one, that's coming down the pipeline. So if the rules are changing constantly. And that's true with this administration, but it also, we have to assume that there's gonna be another administration. This party or back to the Democrats, who knows, but. Four years from now and in two years you have the midterms. Remember that under the constitution, the president does not control the tariffs. Congress does. The only reason he's able to put these tariffs in is because of acts of Congress where they delegated powers to the president under a national emergency. So he declared an emergency when doing this. Well, Congress has the power to overrule that. But right now it's a Republican controlled Congress. So if he loses the Congress in the midterms, which if all this holds like he probably, he might. I'm not an analyst of politics, but.

• 26:36Alex Kantrowitz?

  Yeah, look at the market.

• 26:37Speaker 01

  He loses control of Congress, he no longer has control of the tariffs. And so if you're a business person going, how do I plan for this? Am I going to set up my manufacturing in a world where everything can change in two years? Like, no, you can't, so.

• 26:49Alex Kantrowitz?

  But do you think that the businesses are basically going to wait it out? I mean, from the customer, you spoke to so many of your customers and a lot of them are pausing. But do you think it's probably just them saying, listen, this is not going to last forever? Because Congress could shift or the president could shift.

• 27:04Speaker 01

  I'm not into the pausing. I think it's a few weeks and then we'll start.

• 27:07Alex Kantrowitz?

  Okay. But broadly, what are your customers saying about that?

• 27:10Speaker 01

  Businesses will have to pass through the higher price. The tariffs are that high. They will have to raise prices. We're already seeing that prices are going to go up even more. And then the demand for their products will fall. You know, we just know that that's economics 101. If you charge more, people buy less and that will shift consumption patterns to things that are, yeah, made in America, or even if it's just like not a manufactured good made in America. You, you got this, you can spend your dollar at a restaurant or, you know, get a massage, go travel to a hotel. Like there's other things that you'll spend your money on. And that will put these businesses at risk. And many of them are manufacturers. You know, the other thing that's happened, I was with one of our customers that does, I was at their factory a few weeks ago and they said that this is an American company,

• 27:55Speaker 01

  manufacturers in Los Angeles. And they said that demand for their products in Canada and in Europe has fallen off a cliff because of sentiment about America.

• 28:06Speaker 01

  And so you're like, even the American manufacturer who should benefit from all of this is seeing that it's hurting them.

• 28:11Alex Kantrowitz?

  Yeah, I guess if you try to rearrange the whole global trade system and you take down all your export barriers and people say, actually, we don't really like Americans, we're not going to consume your products anymore, then you've basically gone behind, even if you've won.

• 28:26Speaker 01

  We'll see, we'll see.

• 28:27Alex Kantrowitz?

  Complex. It is. So just reading through what you're saying, there is no going back at this. Like, like, basically, you can't wait it out. This is going to lead to price increases. No, and and companies will not be able to say, we're just gonna like, basically wait till the next Congress comes or the next administration. They're gonna have to all deal with it.

• 28:45Speaker 01

  And you know, I met with a customer, had dinner with a customer two nights ago, and $150, $150 million is what they spend on their products, business, enterprise electronics, 150 million of costs a year, and that's going up to 185. So it's an extra $35 million. I don't even know if they make 35 million in profit. I doubt it. So they're just literally, they have to raise prices for their products.

• 29:08Alex Kantrowitz?

  So you think inflation, we're gonna see inflation?

• 29:12Speaker 01

  Yeah, yeah, you're gonna see inflation. Now, the of the goods that are imported for 100% certain, the US relies on imports less than almost any country in the world. We're, you know, we think it for manufactured goods, sure, like on all the trinkets and Amazon goods and stuff are manufactured abroad. But as a, as an economy, it's only 14% of our GDP is imports. So that part of the economy is going to have inflation. Energy's coming down, right? That's what they're celebrating right now. The price of oil is down 15% in the last few weeks. Price of housing might come down if interest rates fall. There's

• 29:50Speaker 01

  other, there's other factors beyond that. So it, it's, it's a, it's hard to say that there'll be like, I'm not a macro economist by any means, but the price of imported goods will definitely go up.

• 30:04Alex Kantrowitz?

  Okay, let's talk quickly about what's going on with tech. First thing that we should talk about is this de minimis loophole has been closed. That is the way to basically get a package of some goods from Shein or Timu shipped from China and not have to pay duties on them. So that's going away. So I'm curious.

• 30:26Speaker 01

  I think, yeah, you have until May 2nd to buy as much of that stuff as you can duty free.

• 30:31Alex Kantrowitz?

  So how do you see that impacting your clients? And what do you think it means for Shein and Timu?

• 30:36Speaker 01

  Well, we fly a lot of e-commerce parcels in on our aircraft. We have three 747s that fly. And there's a lot of e-commerce parcels flying in those planes every week. So definitely a big impact. It's going to crash the price of air freight would be my prediction. I think it's possible. I don't want to speak to those companies in specific, but the model generally,

• 30:56Speaker 01

  the of e-comm parcels flying in from Asia. You know, the tariffs is one big part of their advantage that not paying, going duty free. But there's several others, you know, not having to pay for expensive US real estate for warehousing, expensive labor on warehousing. They're doing that at origin, less working capital. So the goods just like sort of just in time. You don't have as much inventory sitting there, not earning a return while it travels across the ocean or sits in a warehouse. Their last mile costs are lower because they're flying the plane into the local region instead of trucking it, instead of going to a port and then trucking it across the country. So there's a few other advantages that, and then, you know, their cost of goods.

• 31:39Speaker 01

  Remember, these duties are on the cost, not on the final price.

• 31:43Alex Kantrowitz?

  Right.

• 31:43Speaker 01

  And a lot of these companies are just like really good at sourcing goods very cheaply in a way that may overcome it. So I, I, it remains to be seen, but my suspicion from having analyzed a few of these and working with them is that the companies will keep, keep going and just have to pay the duties.

• 32:01Alex Kantrowitz?

  Yep. And bigger picture, tech has been hit hardest out of everyone here. We have like the entire magnificent seven is in correction territory, bear market territory, 20% down or more. Why do you think tech has been penalized like this?

• 32:16Speaker 01

  I don't know. I'm not, I'm certainly no Wall Street analyst. I only own one, one stock and that's.

• 32:22Alex Kantrowitz?

  Right. Okay. But I'll break it down for you. I mean, but so we talked a little bit about shipping, right? So that's probably going to hit Amazon as well. They import like the increased cost of goods coming in from China. Then you have advertising, right? I mean, Meta, Google, Amazon, they all make a lot of money for company, from companies advertising Chinese goods. So that will take a hit. Data center construction. I guess everywhere you look, somewhere in tech, there's, there's a risk. And then what we talked about previously, just like the EU potentially saying, okay, we'll let your stuff come in, but we're going to tax your, or continue to regulate your tech services highly. Is that the vibe that you get in Silicon Valley from tech CEOs? That it's just everywhere you look, there's, there's a challenge?

• 33:06Speaker 01

  I don't know. You know, I mean, I feel it's feels a little misguided to me. I think the tech sector is one that's going to keep dominating, keep growing. It's, it shouldn't be that affected by, by terrorists. But yeah, maybe the retaliation is that bad from other countries or, or something else that, that I don't quite understand. But I would expect things like Walmart to go way down more than, than the tech sector.

• 33:26Alex Kantrowitz?

  Yeah. So, okay, let's just talk before we leave big picture. What do you think the big picture and what's going to come next is going to be? And then again, just like, let's talk about what are the long-term impacts that this is going to happen? Like, what are some things you can't put back in the bottle once this gets going?

• 33:46Speaker 01

  Short-term is going to be a lot, a goods recession for sure. I mean, there will be less goods sold because prices will be higher. There will be, in the ocean freight markets, I predict that the price of ocean freight is going to fall really sharply. To levels we haven't seen since probably a decade, 2016, it was very, very cheap.

• 34:08Alex Kantrowitz?

  We were talking last time, 2,000 per container?

• 34:11Speaker 01

  2,000 is like the long-run historical average. 2016, it went down to about 900, and I think we might get there. Around the marginal cost of shipping an extra container. And the marginal cost is really low. I mean, the only reason it's not 200 is because of the, the labor cost, the union cost to unload the containers at the port. But so I think it would, I think it would drop really, really far.

• 34:36Speaker 01

  There's that to look forward to, but it won't, you know, there's a hundred thousand of goods in a container. So, you know, you're saving a thousand bucks on ocean freight, but you're spending $46,000 on the duties. It's not, it's not going to save, you're not going to help your business that much. But I think that's very relevant for our business, obviously. And we've got to have a strategy to go take market share by passing through low costs of ocean freight. So if you're out there, you're buying ocean freight, come to Flexport later this year for cheap ocean freight. I expect we'll have it. I think. Longer term, you know, I take the really long view is if you look at the graph of global trade, for the last 800 years, you've had 4% annual growth. That goes back to the Mongol invasions, which disrupted things a little bit, but then after

• 35:21Speaker 01

  that, it was just like up and to the right. But there are definitely blips, you know, in that period, you had the Black Death, you had, you know, the 30 Years' War, you've had wars between the Ottomans and the Venetians, you've had the Age of Discovery, you had World War I and II. All of those things look like little blips that you barely notice when you look at the 4%, what 4% exponential growth does, it looks like a vertical line going straight up. And so you're, you fast forward 10 years from now, I think all of it, I think there'll be more trade. I have pretty strong conviction, there'll be more trade, not less. Because it's just fundamentally, both sides are made better off, people want to do it. And there's always going to be governments that have reasons to restrict these things.

• 36:02Speaker 01

  But we live in a democracy, and so governments maybe get voted out if they do things that people don't like.

• 36:08Alex Kantrowitz?

  Right. Okay. We start on globalization, let's end on globalization. Again, Scott Besant, just listening to what he was talking about over the weekend, he said, "Last year, more Americans went on European vacations than ever before. Also, more Americans went to breadlines than ever before." I think that this idea that when you have free trade, everybody wins, maybe sometimes leaves out the fact that, you know, it can create bigger winners and bigger losers on certain sides when it plays out. I'm curious if I'm reading what you're saying right, that that's a problem to address, but these set of policies in the big picture aren't going to get it done.

• 36:48Speaker 01

  Yeah, like, I'm glad that they're looking out for working people and the bottom 50%. And I, I mean, I kind of agree with the diagnosis, I just don't agree with the solution, I think. Access to low-cost goods is very good for poor people. Like, the idea that, you know, and you're going to essentially plan their way into something, uh, something else is a little crazy. Um, so, I shouldn't say crazy, I just think their strategies are off and... But, uh, you know, he also admits, "They don't exactly know, they're gonna try some things, and what was happening before doesn't work." I basically agree with that, you can't have two trillion dollars of debt in perpetuity, it just compounds and escalates, and at some point you declare bankruptcy.

• 37:31Speaker 01

  Um, and the reserve currency status of the United States is perhaps the biggest, uh, problem. The cause, the biggest cause of these problems is also the biggest beneficiary to, the biggest cause of the cer- the great wealth of this country is the fact that we're the reserve currency, but, kind of, you're just, makes you rich, uh, makes people like, maybe too rich without having to work hard, you just get to be extremely wealthy because everybody needs your currency, and so you look at the US, we forget how rich we are. The US GDP per capita is like double of most of the countries that we think of as rich, like Japan, France, like, we're twice as rich per person as they are.

• 38:12Speaker 01

  Uh, and some of that's caused by the currency rather than just how productive we are and how great our geography is.

• 38:19Alex Kantrowitz?

  Yep. Well, Ryan, appreciate you coming on and explaining all this, taking a look at the actual policies, giving an explanation of what they might do, what the intent is, where you see the problems, and then the long-term, uh, potential consequences for our economy. You did a great webinar, like you mentioned, um, and I will link that in the show notes for anyone that wants to go take a little bit, uh, deeper look, it's called Liberation Day: Tariffs and Trade Impacts, What We Know and Where We Go From Here, it's a really great session, I recommend everybody check it out. And Ryan, it's always great to see you, thank you for coming on the show.

• 38:53Speaker 01

  Yeah, appreciate that, thanks for having me back.

• 38:55Alex Kantrowitz?

  All right. Thanks, everybody for listening. We're going to take a quick break and be back right after this with Adam Parker from Trivariat Research to talk about the stock implications on big tech. Back right after this. This episode is brought to you by AppPoint. Everyone's racing to roll out AI right now. Co-pilots, chatbots, agents doing real work. But here's the part nobody loves talking about. All that AI runs on your data, and most teams have no single way to see it, secure it, and prove it's under control. That's exactly what AppPoint does. For 25 years, they've been the trusted layer beneath the world's most demanding data, now extended across your entire

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• 41:06Alex Kantrowitz?

  So you heard Ryan Peterson, the CEO of Flexport, talk about what is going to happen and why we're seeing these tariffs, what comes next. We talked briefly about the equity picture. Let's speak a little bit more deeply about what is going to happen to big tech after these tariffs and after the entire market collapse with someone who knows about it just about better than anybody else. We're joined right now by Adam Parker, the CEO of Trivariat Research, here to break down all of what's going on with the big tech trade. Adam, great to see you. Welcome to the show.

• 41:42Speaker 03

  Great to see you too. Thanks for having me. I'm looking forward to the conversation.

• 41:45Alex Kantrowitz?

  Yeah, so I should say that you showed up in my LinkedIn inbox on Tuesday last week being like, hey, should we do a podcast sometime? And I was like, yeah, yeah, we should do a podcast sometime. And then all of a sudden, we see the tariffs go into effect, stock market crash. And yesterday, I'm at the gym and I'm like, we need to do an emergency show and Adam is the perfect person for this. So great to have you here.

• 42:05Speaker 03

  Thanks. Yeah, timing sometimes, you know, lucky, rather be lucky than good, you know?

• 42:09Alex Kantrowitz?

  I think, I know, I think there was some good to that as well. So I want to talk a little bit in the beginning about what's driving this tariff policy, because if you look at the common discussion of the tariff policy, a lot of people are scratching their head. There's seemingly no logic to it, no plan. Obviously, the equations they used to figure out the tariff amount, I think everybody can agree, kind of funny math. But I want to do my best job right now, putting out the at least strategy behind this. And I think if we understand the strategy, we might be able to figure out where it's going to go and whether Trump will blink, whether it will work. So I was reading a great post on this website called Finshots that does its best job to explain it. So let's just

• 42:54Alex Kantrowitz?

  go through it real quick. So the post says past economic policies favored the top 10% of Americans are those wealthy enough to fuel spending and drive consumption, but the bottom 50% haven't gained much. So everything might look, well, everything might look great on paper. In reality, half of America could still be struggling and indeed like we know they are. So the American consumer has kept the economy afloat for decades, but this dependence has also led to high debt, dangerous economic bubbles and rising inflation. Look at the US debt. It's currently at a staggering $34 trillion and 7 trillion of that needs refinancing soon at interest rates that recently hit alarming highs of around 4.8%.

• 43:37Alex Kantrowitz?

  It's like refinancing your home loan at peak interest rates, except now it's trillions at stake. That's why the US keeps pushing its debt limit ceilings or debt ceiling limits. So that is why Trump might prefer a falling stock market now. A falling market triggers investor panic, who then pull out of risky stocks and pour money into safer bonds. More demand for bonds pushes their price up, which in turn brings their yields or interest rates down, and that is exactly what Trump wants. So that is one explanation I've seen for why we're seeing the tariffs here and why Trump doesn't seem to care very much about the stock market. Adam, what's your perspective on that?

• 44:17Speaker 03

  I mean, there's a ton of things to unpack there and I think some, there's some kernels of truth to what's written there, but I also think there's some things that are being conflated or would have happened anyway. Right? You know, so as I go through what you said, I mean, look, I think we need, I think the consumer's slowing before the tariff announcements were really brought out in a big way. If you looked at almost all the corporate data points and the conferences, you know, go back to tech, you know, Morgan Stanley has a big tech conference in early March. I mean, definitely things were slowing prior to the last couple of weeks. The consumer was in good shape, but slowing also.

• 44:56Alex Kantrowitz?

  Like consumer spending was slowing.

• 44:58Speaker 03

  Consumer spending, you had kind of Walmart take their, their revenue down. Like there were some enough data points out there that think not falling off a cliff, but things were slowing broadly. Um, you know, from, from highs and so the sugar high post the red sweep, right? So, uh, so I'd say I'd start with that and then, and then I'd say, look like government debt and consumer debt are different. I don't, I don't think if you look at a broad swath of consumer data that the US, uh, consumer has a ton of debt. If you look at 90 day credit card delinquencies or other things, you're not seeing things that stressed yet. We could get there, but you're, you're, you're kind of even below average on some of those major, um, kind of consumer metrics. Um, so I, I think there's a bit of a, uh, maybe a bit of a, um, histrionic around how bad the consumer is on that point.

• 45:44Speaker 03

  I also would say like the top 10 versus the average, that's been a problem for a really long time. And in fact, isn't worse now than it was eight or 12 years ago, you know, in terms of the, uh, obviously if you look at the top 50 people, they've got this fortunately rich, but if you look like the top 10% versus average, I, I think it was actually kind of peaked during the Obama administration, depending on what day do you look at. So I, again, I think there's some things that are true. There's a divide between the very rich and the average for sure, but I don't think that's intensified. Nor do I think the consumer is in particularly terrible shape at the current moment. But, but I think the main part that I agree with or would sink into is that you can't, you, you can't really have rates back up a ton and be able to finance the government debt. And I do think the administration broadly needs to have lower, uh, yields.

• 46:30Speaker 03

  And that accomplishes a bunch of things eventually, right? Maybe gets housing going again if 30 or fixed comes down, which is obviously an important economic metric. It, it helps us refinance the debt and usually, uh, lower rates are good for equity multiples, right? So when you look at tech stocks and they had their peak EV to sales, it was when we had zero interest rates. So like that, that, that part of the cocktail, I think makes, makes the most sense to me.

• 46:53Alex Kantrowitz?

  All right, let's talk a little bit about the impacts on big tech. I feel like this is the important stuff that we're here for, what's going to happen to big tech after this. So, uh, just let's talk a little bit about what Dan Ives had to say. He said, this could become a black swan event. Uh, you're playing with the third rail. He cut his Tesla target, uh, to 315 from 550. And he says that Nvidia numbers could come down 10 to 15%. What do you think about that, Adam? I mean, do you think that this is a black swan event for tech?

• 47:23Speaker 03

  First of all, I'm jealous of Dan Ives fashion game. As I wear the white shirt and the blue blazer and the red and blue tie, I know he would be doing something a little more interesting. Look, I don't know what Tesla is worth. I have no idea. I think it's impregnable to analysis. So I don't know if it's worth 300, 500, 1,000 or zero. It's been trading so disconnected from what I understand the core business is for so long. That I more power to people who can price that. My view for a really long time had been for all the Mag7, we published this dozens of times, is you should be market weight the group. And the reason you should be is they're not particularly dissimilar. They're really well covered. You don't know anything about them that nobody else knows

• 48:08Speaker 03

  that's not in the price. Yet, you can't replicate them. I can't find 30 stocks to trade just like Tesla. 3.3% position each and I mirror its performance with less risk. Like you can't do that. So just why let it hurt you or help you? And that had generally been my view of that cohort really for years. And until early February, when the beta got high, the capex got high and all that stuff. So when we went underweight. So broadly, that's been my generic view of the Mag7. I think for Tesla, I really have no idea what it's worth. And I don't know how anyone can have confidence in saying it's value. When I worked on the buy side, we were short the thing a ton on its way up. So maybe there's a little bit of bitter scar tissue from trying to value it and being wrong in the past. You know, I worked when I worked at a big fund.

• 48:52Speaker 03

  So I don't see the Tesla. I don't have a differential view on Tesla. I think it's hard to value. The second one was about Apple, right? Zoe said?

• 49:04Alex Kantrowitz?

  No, he was talking about Nvidia.

• 49:05Speaker 03

  Nvidia. Oh, sorry. Nvidia, I do have a view a little bit. Now, I think you know, I used to be a semiconductor analyst for a long time. And so kind of guilty as charged is always liking the semis a little bit more than everything else. But I kind of feel like if the capex is going to stay high from the hyperscaleers, you're basically saying Nvidia's revenue is good. And if I kind of mark to market where I am this year, you know, Nvidia is down a ton. And I don't think they're going to miss their earnings in the short term. So I sort of think Nvidia is. Better positioned than the other Mac seven in the short term.

• 49:45Speaker 03

  And I'm a believer big time in the longer term, you know, kind of AI playbook, including in in particular healthcare, where if you go to Nvidia's website and scroll to the healthcare section, you'll get really enthusiastic about Nvidia's role. I think Jensen knows more about healthcare than most healthcare companies. Jensen, the CEO of Nvidia. So I I would say I like it, particularly after this huge reset. But, you know, you can't have CapEx be reduced a ton from the hyperscalers and not get a big miss from Nvidia. So there's that incongruity, but I think in the near term, its risk scores better than the other, a lot of the other Mac seven.

• 50:26Alex Kantrowitz?

  But that leads right into like what's going to happen with cloud and data centers. I mean, there's a double edged sword here, right? For cloud. First is, it's not just so semiconductors, I think, are exempt from the tariffs, although there was a 25% tariff on semiconductors coming in. But they're exempt. But it's not just the chip, right? Everything you need to build a data center is going to be more expensive, number one. So your CapEx is going to go up even higher to build this stuff. And the second is, who's the users? Who are going to be the users of these cloud services? Is it going to be Nike? Right? Because they need, they have, you know, needs to buy software and cloud hosting. They have a very large digital presence.

• 51:10Alex Kantrowitz?

  If Nike's margins go down and Nike's business is hit by tariffs, then all of a sudden, are they going to do that optional AI program from Azure? Are they going to do that, you know, new build out? And and move to cloud? Like, all of that starts to slow.

• 51:26Speaker 03

  Yeah, it's not, maybe it's not essential CapEx now, but the way I'm thinking about that, Alex, is like, like semis grew about 2% above GDP for 30 years. I think they're going to grow something like 5 to 7 to 8% above GDP. You know, if you look at the last two years, say, through the next eight, so that there'll be a 10 year window, they're going to grow way more. And so they're going to gain share of the global spending pie because they do things that aren't easy to replicate in a big chunk of it. And, you know, not all semis are the same, as you well know, there's industrial and auto semis and other things that are, you know, maybe the average selling prices are low, but. I don't think every company has to do their own build out to participate. Look, at Trivaria, we have an Nvidia chip. It's out on EQIX. We use it to search every areas called transcript

• 52:11Speaker 03

  for certain words and tag stocks and do all the analysis we do. I have the Mercedes C-Class or whatever, the Metrus. I don't have this. I don't have the Blackwall, but like, we're still 10 grand for the chip and it's massively efficient. So I think companies will find in a lot of cases that access to Nvidia products could really help them predict their employee behavior better, predict their customer behavior better, and maybe not have to do any net hiring. And so as your revenue grows 3%, 4%, 5% a year over a 5 to 10 year period, if you do that without any net hiring for a lot of companies, that's margin expansion. And we've seen, like, if I've learned one thing analyzing equities in the last 25 to 30 years, it's you do not short stocks where the margins are going up.

• 52:53Alex Kantrowitz?

  So do you think that they're gonna try to just replace people with AI more than ever now?

• 52:57Speaker 03

  Yeah, for sure. Absolutely. I think if you get better at predicting your employee behavior and your customer behavior, there's a lot of businesses that have lots of employees, low margins, and lots of revenue dollars, right? Think about the whole healthcare sector, right? McKesson, which has been a great stock, Cardinals, and a bunch of healthcare stuff that, you know, but the whole healthcare services sector, hospital, like, these companies are super inefficient where they can use technology and get much better, right? Like, have you been to a doctor lately? You look young and healthy, so you probably haven't, but like, what do they do? They hand you a clipboard and a pen and you like, circle stuff. Think about how stupid that is. Like, in terms of just, like, the ability to improve on their efficiency. So like,

• 53:41Speaker 03

  I think you will see cyber, of course, nobody cuts that, but then after that, I think you're gonna constantly think like, how can I replace employees with technology? How can I position myself to benefit from better analytics, et cetera, et cetera. So I'm bullish on the long-term kind of compute trade, and I'm bullish on semis. And Nvidia has still got the best product with the best company in this kind of positioning and in this area, and its stock's been reset. A lot from the recent high.

• 54:15Alex Kantrowitz?

  Right, but I'm just gonna ask it one more time. I mean, let's say you are a customer of these cloud companies. You have a big plan. You have a big AI implementation. By the way, we know 15% of AI proof of concepts make it out into production. 15% on a good day, right? You have a lot of experimental spend that's going with the cloud companies to try to figure out this AI thing. All of a sudden, every input that you have in your business goes up, maybe 25, maybe 40%. You are scrambling just to make the numbers work. Doesn't that AI, which AI spend, which is discretionary, if it's not 100% going to production, doesn't that get cut?

• 54:56Speaker 03

  For sure. Look, the one thing that you know for sure is semis are a cyclical business. Okay, and so what you're, there's a combination that causes the cyclicality. One is you spend CapEx, you put the depreciation burden on your, on your cost of goods sold, and then revenue slows and your margins get creamed, right? And we've seen that for 40 years. What you're saying is in a recession or, you know, kind of a growth pullback, will the revenue side be disappointing? It easily could be. And all I'm saying to you is like, some of that has to be in the price given, you know, Nvidia is down massively from the peak. So I guess, you know, we peaked at 149 on January 6,

• 55:35Speaker 03

  we're at, you know, 94 last. So like, that's, you know, kind of a garden variety semiconductor peak to trough stock correction already. If this gets really nefarious, could it go in half? Sure. So I'm looking, if I'm looking at this thing, I'm thinking, all right, maybe it has 15 to 20% downside and 80 or 100% upside in a two to three year view for the best company with like a genius CEO and a product area that grows above GDP. So like, it's, you definitely have to like it now more than you did three months ago.

• 56:05Alex Kantrowitz?

  Okay. All right. What about the ad-based companies? And we're going to get to Apple in a second. I guess we're building up to the big one. Here's Ben Thompson on Meta, Google, and Amazon, all the advertising-based businesses. Meta, Google, and Amazon will also be negatively impacted. Lots of cheap products means lots of advertising and lots of products on Amazon, specifically, much of which could disappear.

• 56:29Speaker 03

  Yeah, that makes sense to me. I mean, two, two things there. I mean, one is advertising is economically sensitive and a GDP slowdown or recession, if that's where we're headed, that, that business is going to slow. And then two, like Amazon, while it's a multifaceted company and AWS has been an amazing business, they still are like Walmart size now in terms of total revenue. Like they sell a lot of products to the consumer. They're not immune from a consumer correction. So when Walmart guides the revenue down, I sort of have to assume pro rata or close to pro rata, that's going to slow down their consumer spend, part of what they do. They're just, they're 2% of the US GDP or whatever alone in terms of their revenue dollars. So they're not immune from that. So yeah,

• 57:11Speaker 03

  that makes sense to me. And I, and I think, again, not to, not to be the ebullient, you know, stock, American, you know, buy, let's keep growing, you know, but to me, like, maybe some of that's in the price because Amazon stock has also fallen off a cliff, right? So I'm not saying it's all in there, but I want to get to how I'm thinking about that. But Amazon was at 242 on February 5th, it's at 163 now. It's down a third. Is that, is that a year or two of earnings for the company? Yeah, kind of. Right now, I'm not saying it started at the perfect valuation where it was in January because he had a lot of optimism after the election and all that. But it's, it's, it's

• 57:53Speaker 03

  kind of down to the lows where it was in 2024. And, you know, maybe that's reasonable based on what we know so far, particularly if we're going to get, you know, less negative news on tariffs going forward, and we're going to start thinking more about taxes and regulation and those things being beneficial to companies and, and, and lower rates driving a more optimistic kind of view. So that, I think that's the debate, not whether, you know, ad spending slows and, and consumer spending slows when, you know, when the economy slows.

• 58:27Alex Kantrowitz?

  I mean, I just saw a tweet that Amazon is the cheapest it's been in the past decade. That's crazy.

• 58:34Speaker 03

  Yeah, this has been a big, big correction. I mean, look, you know, you have to believe the forward estimates. And I think right now, nobody believes the forward estimates. I don't think this is a growth scare. I think that growth is actually slowing. So scare implies like you're wrong and you shouldn't be scared. Like, things are slowing and they're gonna slow and there's a soft patch for sure, if not something worse than that, already based on what's happened. But, so I think what reason the stock is down is because nobody believes Amazon's got 10% revenue growth in there for 2026. Nobody believes that, right? People think there's a chance it's zero.

• 59:06Alex Kantrowitz?

  Or negative.

• 59:07Speaker 03

  Yeah, right, right. Yeah, so I'm currently saying your 27 number, you know, your 26 number is now your 27 number, like you lost a year of growth. But it could be worse than that if we stay for, you know, a few months doing this. And I think that would make the reset not cheap, but just sort of like average on 27 or 28 earnings. And that's the debate. And the answer is, I don't know. Okay?

• 59:29Alex Kantrowitz?

  Right.

• 59:30Speaker 03

  So I feel like if I was lucky enough to be shorting a bunch of these lower quality companies, it's tempting to cover some because you know you can get run over if you get some more positive commentary. On the flip side, I think there's certain consumer businesses that, like, there's already gonna be a ton of damage. So like, the kind of research we're doing is looking at like China products. You could buy a Target and Walmart and Costco today and then seeing what the price is gonna be next week, later this week, and see like how quickly, if at all, do the prices come up, right? Like, there's ways you could try to get at this, but I guess what I'm convinced of, because of the fact that 19 of the last 20 times when the market did recover tech work, because semis have sold off so much and because they ultimately are growing faster relative to the economy than they did previously,

• 1:00:12Speaker 03

  that semis will work when it recovers and you just have to ask yourself like, do I buy, you know, semi cap equipment because it looks optimally cheaper, you know, or how do I, how do I play this? Right, that's a good debate.

• 1:00:25Alex Kantrowitz?

  All right, let's quickly talk about Apple and then the market has just opened as we're talking so and it looks ugly, so we'll talk about the market more broadly. But first, Apple, all right. Here is what Apple is dealing with on tariffs. So in India, where Apple, this is from Mark Gurman at Bloomberg, where Apple is increasingly building iPhones and AirPods, there's a 26% tariff. Vietnam, the company now makes AirPods, Apple iPads, Apple Watches and Max, 46%. Malaysia, Apple's producing Max, 24%. Thailand, the company is also making Max, 37%. Ireland, which is within the EU, gets a 20% tariff. Apple produces some iMax there.

• 1:01:09Alex Kantrowitz?

  Indonesia, where Apple is gonna start making AirTags and AirPods Max, 32% tariff. We also know China, where it has a lot of production. I think it's a total of like a 54% tariff.

• 1:01:23Alex Kantrowitz?

  What is gonna happen to Apple? Yeah, well, let's start there. What is gonna happen to Apple?

• 1:01:30Speaker 03

  Well, you know, again, I think Apple is more impaired than some of the other business models are. I certainly think it's more impaired than Nvidia.

• 1:01:39Speaker 03

  You know, with what I know now, the stock is also down 260 to 170. So it's also kind of in that one-third correction. Look, Apple doesn't really grow its net income a ton. I think if you look back the last 10, 15 years, its net income dollars have grown less than around 10% per annum. So it's almost barely been a growth company. It's, you know, value's gone up because they've converted from hardware to software and bought back a ton of stock and other stuff. So, you know, I don't, you know, it's really hard to have a different view on a company like this versus consensus. But, you know, but I think they appear more impaired. I could see the logic that look like it all comes down to like your Apple care and you're gonna keep your phone a little bit longer. So maybe it just delays the phone, you know, replacement cycle a little bit,

• 1:02:25Speaker 03

  particularly because people weren't super excited about the Siri AI enhancements or other things that would have stimulated. I think you and I were on the air once where you were being somewhat critical of those enhancements originally.

• 1:02:36Alex Kantrowitz?

  Yeah, I remember that. I had gotten like the initial beta rollout and You know, was like the first rollout of Apple Intelligence.

• 1:02:44Speaker 03

  Pretty bad. And I was like, this is not good. That's an interesting point, yeah. So, you know, so I think, but you know, I think it's going to hurt some of the peripheral business. Like, look, look, for people who aren't watching, like I'm holding up the, you know, the dental, the dental floss sized AirPods. It's kind of a bad product, okay? I mean, so often when I'm talking to somebody, which basically means my head of sales or my wife, they can't, they can't hear me, right? Or they seem to be, you know, so it's not a great product. They don't last very well. I think this is my seventh or eighth one. So I

• 1:03:18Alex Kantrowitz?

  You always got to get the Apple care on the AirPods.

• 1:03:20Speaker 03

  I'll get it. I get the Apple care and I think that helps their business model, but like, I'm not sure, I'm not sure that the product, I'll get another one, you know? I may switch to something else. So I think it's going to be bad for their growth rate and, and even if this stuff is, you know, removed or this is the peak of it, it gets worse. I could see this clipping your long-term growth assumption a little bit for the company, you know, structurally.

• 1:03:47Alex Kantrowitz?

  Yeah, it's, I think without a doubt, and they're going to have to raise prices. This is from Ben Thompson again.

• 1:03:52Speaker 03

  It's expensive already, too.

• 1:03:54Alex Kantrowitz?

  Yeah, it's a lot of money. And he says, "Apple will probably face little choice but to substantially raise prices. That has the direct problem of leading to fewer sales, even if iPhone demand is probably fairly inelastic, and the secondary problem of decreasing the market for Apple's service business, which is its primary source of growth." That is an ugly picture for Apple.

• 1:04:12Speaker 03

  Yeah, look, they're, they're, my, my, my kids who are all in college all have like Apple laptops and Apple phones and like, I, I, at work, like, we, we obviously kind of go more in the Microsoft Kuritsu, but like, you can buy like a decent Lenovo laptop for less than a thousand dollars and it's 3,000 for an Apple one. Like, the price premium for their products is massive and I'm not sure people are going to look around and say, "I'm going to buy all these products at these prices," especially if they try to raise it. I think they will bump up, I don't think the elasticity is that ubiquitous. I know for me, like with my own kids, when they are carrying their phones around, I'm like, you're holding, if I were told you were holding like 1,100 dollars in 100 dollar

• 1:04:56Speaker 03

  bills, would you be more careful, you know, dropping that thing on the sidewalk? Like, it's, it's, it's, you know, they're, I think of them as like expensive computers are carrying around.

• 1:05:05Alex Kantrowitz?

  Definitely.

• 1:05:06Speaker 03

  And I think I'm in a, you know, better shape than the median American or whatever. I, I, I think it's a problem. I, I do. But you know what? The problem with our logic right now is we're frothing up on negativity. And the stock went from 160 to 260 from April to January. We could have said all the exact same thing. So I think this tariff thing is just bad for their growth rate. And it definitely is going to cause like a, a delay to any cycle improvement. They need to, they need another leg up in technology. And that's why I pointed out your, your impression comment a few months back of like, it doesn't seem like there's anything enticing. I already have three cameras on the back. Do I need five? Like, I don't know. You know, I don't know what's going to entice me to get a new one.

• 1:05:43Alex Kantrowitz?

  Yeah. So the S and P, the market just opened, the S and P 500 dropped off the bat. I think it was down 5%. It's now come back up a little bit to 2.8% down. Adam, like, is there a put here? Like, is there a, is there a place where we see the administration say enough?

• 1:05:59Speaker 03

  Well, we wrote in our note to our clients is I'm watching carefully the financial conditions index and the VIX. If you take these back to like the more intense points that we've seen in prior cycles. And you kind of loosely say, how much are we down so far? If it gets back to those more severe points, how much more can we go down? This was before today's price action. It seemed like six to seven percent more lower. So if we're kind of halfway there already, I think every investor is looking around saying, you know, all right. I got 3%, 4% downside, but maybe now I'm back to 20, 25% upside. And so all of a sudden.

• 1:06:36Alex Kantrowitz?

  You're going to come back in?

• 1:06:37Speaker 03

  Yeah. I think we're close to people kind of wanting to make a trade. I've been hesitant to, I, look, there's nothing better than being a contrarian bow and being right. I mean, that's the, that's the, you know, nirvana. The problem is we've seen no behavior where companies that guide down act well. And we're heading into an earnings season with maximum CEO uncertainty. So if you and I run the company, you were the CEO or CFO, we would be doing our pregame about what we're going to say. No way are we letting each other guide, you know, anything but very conservatively for July numbers.

• 1:07:12Alex Kantrowitz?

  Yeah. I mean, it's going to be ugly. I just saw a tweet from Joe Isenthal at Bloomberg. This is now the worst three day performance for the S and P 500 since. Any guesses?

• 1:07:22Speaker 03

  Uh, eighty seven.

• 1:07:24Alex Kantrowitz?

  October nineteen eighty seven.

• 1:07:25Speaker 03

  Nailed it.

• 1:07:26Alex Kantrowitz?

  Yeah, yeah. I mean, holy crap.

• 1:07:29Speaker 03

  Yeah, yeah. No, but, but you know, because you had one or two, you had one huge day that was really bad there. But you know, I think we had like the limit, the limit issues there. You know, but I, I, I think that's because the starting valuations were kind of high and there's maximum uncertainty. And you don't, it's back to your original questions about like, what's the administration doing? Like, I don't think people know, reasonable people, I think you and I are like fairly reasonable. We're trying to think about it like, we don't really know.

• 1:07:55Alex Kantrowitz?

  Yeah, no idea.

• 1:07:56Speaker 03

  That uncertainty is usually bad for price to earnings. Like, if I'm really confident, I pay a high price earnings because I'm confident in the future growth and the stability of the growth. But if, if I'm not that confident, I should pay a lower price earnings for it. And I think that's, this is like case in point right now. And, and you know, what we offered in our note to investors was like, look, there's some consumer companies now that like everybody loves that traded really high multiple still. Like, are you sure Chipotle should trade at thirty seven times earnings? Because if they don't grow, like, it's not, so it's not just in tech. It's like across the market, there's a lot of, you know, travel data's falling apart. Like, there's a lot of stocks that could still go down a decent amount because their valuation, despite the correction, is still pretty high.

• 1:08:36Alex Kantrowitz?

  Yep. All right. So this is not investment advice, just for informational purposes. But are you buying or selling at this point?

• 1:08:42Speaker 03

  So what we told our investors is still a little bit too early, that I just need to see how much the numbers are coming down in April earnings and/or any stocks that guide down where the stock does not go down. As a former semiconductor analyst, that was the, that was the go signal, baby. Like Intel guides down and stocks flat, stocks, stocks unchanged. Then you're like, okay, bad news is fine, then you know, good news eventually is going to be good. And, but so far, like, think about any company, I mean, Micron a couple of weeks ago, it just got like eviscerated on their, on their, on their inventory, right? Like, so I'm looking, I'm focused a lot on inventory and capex. Semis work on inventory to sales. So if the inventory peaks and comes down, I don't think that's going to happen.

• 1:09:23Speaker 03

  I mean, and look at Micron's like a good example, like, you know, the stock was, uh, over a hundred bucks, uh, three weeks ago. It's at sixty one now.

• 1:09:31Alex Kantrowitz?

  Right.

• 1:09:33Speaker 03

  So I need a company to miss and and and understand exactly what the management teams are thinking. And then I need to see the market reaction for me to get in there. Sure, if we get some noon comment that we're now going to take a pause, everything's going to reverse and rip higher. But I still think that the damage will be done on the earnings for the next quarter or two. And I think that's what makes me still a little cautious. If somebody has a longer term horizon, then yeah, I think you'll be fine.

• 1:10:02Alex Kantrowitz?

  Okay, Adam, before we head out, I want you to shout out a little bit about what you do and where people can find your work.

• 1:10:08Speaker 03

  Thanks, Alex. Yeah, so for individuals or financial advisors, you should just go to tri vector research.com, T R I vector research.com. We sell several times a month, we write insights, offer ETFs, ETF analysis. So if you if you like an ETF, we decompose what you're exactly getting, videos, and also a monthly zooms where people ask me questions. It's 100 bucks a month, 1,200 bucks a year. Just launched that business last month. And then our core business is for institutions called TriBarry Research, which probably people can go to the site and check out. So we're also on X and on LinkedIn and all that stuff.

• 1:10:42Alex Kantrowitz?

  All the stuff.

• 1:10:42Speaker 03

  Appreciate it.

• 1:10:43Alex Kantrowitz?

  Well, Adam, great to see you. It's always fun to see you on set and it's great to have you here on the show.

• 1:10:47Speaker 03

  Yeah, let's do it again soon. All right.

• 1:10:49Alex Kantrowitz?

  Thanks a lot. All right, everybody, there you have it. The impact of the tariffs and where we're heading next. We'll see you on Wednesday for an interview with Google Cloud CEO Thomas Kurian. All right, that'll do it. We'll see you next time. Big Technology Podcast.

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