Bloomberg SurveillanceAnastasia Amoroso, iCapital Chief Investment Strategist, suggests buying the AI dip. Stephanie Roth, J.P. Morgan Private Bank Senior Markets Economist, says it's been a pretty impressive cooling of the labor market over the course of this year. Michael Nathanson, SVB MoffettNathanson Senior Research Analyst, discusses the Disney, Charter Communications standoff. Kona Haque, ED&F Man Head of Research, says oil at $90 a barrel is "significant" as it pushes the whole commodity index higher. Daniel Tannebaum, Oliver Wyman Global Anti-Financial Crime Practice Leader, says the US is still calibrating how to respond to China.
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This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along with Jonathan Farrow and Lisa Abramowitz. Join us each day for insight from the best an economics, geopolitics, finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and anywhere you get your podcasts, and always on Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App. We've got a very important guest here. Stop if you are in the stock market for Anastasia Amrosa chief investment strategist at I Capital. Her deceptive charm is she says exactly what she thinks in her notes. It's lost in translation sometimes, but there it is a single sentence. It's what everyone wants to talk about. You say, buy the dip and tech.
AI discuss Tom this time.
I put it at the top of the note to make sure to get lost, so use as a headline. And I think investors should use this spike in yields that are denting technology to get back into those shares, and especially artificial intelligence, because Tom, if you think about long term what drives shares, it's not so much I mean it's not valuations, it's not rates, but it's whether tech and stocks can deliver earnings growth, revenue growth. That's what long term drives stocks, and so that's why I think investors would be smart to look through the near term volatility and to enter this long term, multi year theme on any dips.
Tech is a broad story, of course, as you well know. Is it just AI or is Apple a part of that story?
I mean, Apple certainly is a part of that story, but it is more cyclical versus secular. And you know, obviously there's an AI component to Apple as well. But you know, the type of tech companies that I think we should be focused on are the ones that are benefiting from this multi year AI opportunity. So they have the secular tailwind, but at the same time they're also benefiting from the cyclical upside as well. And again I would squarely look to the AI beneficiary basket that I think we can find both of those.
Just to extrapolate out though, what the longer term loiflications are for other sectors outside of AI. Does this sort of decoupling and shift towards certain industries at the expense of others mean that we are going to have higher inflation or lower inflation. Right, does this boost some of these talks or is it just these stocks are going to grow independent of any sort of macro thesis just because of the boom in AI.
Well, if you think about inflation, and you know, part of what's driving our inflation today is lack of labor supply, and if we are to solve that challenge, the great thing to do is to invest in artificial intelligence that has the potential to boost productivity. So I think as more and more, you know, CFOs, CEOs and also chief technology officers are kind of racing to boost their investments in artificial intelligence because they're trying to preserve their bottom line. I think that's what's ultimately going to provide a big boost for AI companies because there's a bit of fomo going on right now, and it's not in the stock market, but there's fomo amongst IT managers that more and more of them want to make sure they're investing in AI because if they don't and their competitors do, they will be left behind.
I'm trying to wrap my head around what the implications on a broader level are of companies investing more in AI, a number of these very specific ones doing very well, and then a whole bunch of industries doing terribly really getting left out, and certainly with jobs that are not going to be available. Cashier is getting put out of work. For example, according to the Bank to recent fed to recent US data, what sectors are going to lose that are you avoiding as AI does sort of reigns supreme.
Yeah, well, I think you know, anything that's related to you know, low margin sectors like retail for example. You know, that's not the space that I'm very interested in right now. But if you think about long term, you know, if you are trying to boost margins once again, maybe you do replace some of the labor that is comes with higher wages, if you do replace that with you know, robotics, that you replace that up with automation. You know, that's the way to preserve those margins. But I would say near term, you know, it's not an avoidance strategy, it's more of a preference strategy. You know, where do I think the incremental dollar spending of IT managers is going to go. It's on that specific theme. And that's why I say, you know, rates bumps come and go recession fears come and go. But this is a theme that managers are prioritizing for the coming years, I.
May well accelerate. It makes you wonder whether some of these labor deals are the last kind of labor dales will ever see like this, given that acceleration into those kind of things that you're talking about.
Yeah, I mean, I think that would be a big call to make to say these are the last of the labor deals. And the reason I say that is, you know, all this tremendous artificial intelligence potentially we're talking about it automation that's not going to happen in a blink of an eye.
You know.
Obviously the adoption of strategy BT for example, seems like it did happen in the blink of an eye. We got to one hundred million users in two months. But it does take time to for example, you know, install automation in a factory.
You know, it does take time, you.
Know, to uh to make sure that AI is you know, can go mainstream. So so I think that time is years and not quarters.
John, you were saying that rate spikes come and go, and I'm just curious. On the other side, Yes, there's a preference for AI, the ballast, the sort of offset in your portfolio. Can it still be a bond call at a time where there is such uncertaintance your call on AI is sort of independent of that in a very strong way. Yeah, it is, uh.
I mean, it's one of the things that we're going to have continue to have the highest conviction in it. But at the same time, it can be the only thing. And you know, I do think the other ballast to the portfolio has to be something that provides you protection against inflation being more sticky. And obviously we have oil prices, John, you were whispering, you know, spiking to ninety dollars, ninety dollars pressure.
Just veryly would you like.
The whisper in your mic right now?
I think Tom is saying something about buying Chech and AI, But I would also couple that with energy because you know, it's very clear that Saudi Arabia and Russia are intent on keeping oil prices elevated. And you know, if that's the case, that I want to be in that space as well.
Anestagia, thank you, this was wonderful and a stagia amo there if I capital outspoken on growth Tom for a lot of this year.
It's great you have a chance to talk to her on this, but I mean, Brian Belski over at be More Capital Markets now modeling five thousand stories. Yeah, yeah, some of them are modeling out in here five thousand as well. Like sounds like she's always push but as is like, so she's on the edge of five thousand there.
But right, I like, Brian right bullish, right, Yeah, I mean.
But but you know, Ana stage I think is on the edge of five thousand. We're not hearing enough of this.
I'm not sure she said that's.
Still right here.
Job, you canber or.
Not right now?
With changing markets. A brief from Stephanie Roth, senior market's economist JP Morgan, Private Bank, good luck with his data. Faroli's going to age. He's going to get his first gray hair off of this, no question about it. How do you, within the continuum of JP Morgan look at this American economy given the shock I see on my screen the two year yield five point zero three percent.
Yeah, I mean it was It's definitely a surprise a claim to just continue to move lower. Granted there is some seasonality issues within the summer months, so it's possible we'll see a bit of a reversal of that when we head into September. If you look at the overall jobs picture, what we saw last week was the kind of the opposite picture, and those are are more a little bit less less volatile data. So we saw quis rate continue to come down. That's bound back down to where we were before the pandemic. You saw jobs, you know, the the picture there. Continue to see a rebalancing in the labor market. The three month average in non farm perils is one hundred and fifty thousand, which isn't that far from the break even rate, especially if you factor in some of the immigration trends that we're seeing.
So you believe in immaculate cooling of the job market.
I think we're starting to see signs of that. It's pretty impressive the extent to what you're seeing the job market continue to cool down. Absent today's data, you're seeing wages continue to soften, the demand for labor does continue to cool down, and I think we'll just just see more of this. It's been a pretty impressive cooling of the labor market throughout the course of this year. If you look at the beginning part of this year, job gains were double what they were today what they are today.
So do you believe that the Chicago Fed is correct when the new research paper dropped where most of the effect from the five point two to five percent points of increases that we've seen in rates going back some eighteen months, that that has mostly been percolating through the system. It's having its effect, and it can bring us down to two percent by mid next year.
Yeah. If you look at inflation so far, it's come down quite a bit. Inflation, I would say, is trending around three percent. There are summer months also brought down the data, maybe artificially so, so we'll probably in the next couple months sea it tick up a little bit. So I would say the trend in inflation right now is three percent. The Fen's not fighting four and a half to five percent anymore.
Let me stay in the markets here they are on the move here at John Ferro and A the nine o'clock on television. I'll be with Paul Sweeney here to get to the market opening. Nasdaq futures negative one point one percent in significant retreat, down one hundred and seventy three. Nasdaq one hundred points. We go from negative twenty six to negative twenty nine now on SPX down seven tenths of a percent, the vix out to fifteen point three to three at LEASTA you mentioned the euros through one oh seven. There it is stronger dollar. I have a one oh five lisa on DXY.
Yeah, this is a concern for Europe. How they deal with this, especially do they have to hike rates further? Regardless, US has continued to be strong and it does seem like the soft landing still is the preeminent issue that people are talking about out.
In the US.
What does that mean in terms of higher for longer and possibly not seeing rate cuts next year?
Arey dnsbec you won seven point three three you want is not where it was a couple of days ago. So there's sort of a global follow on here is well, what's your conviction? I mean, you've got such an eclectic team at JP Morgan. What is your conviction in your belief right now? Or do you feel like you could change it? September twelfth, CPI, September fourteen, DCB. What's your belief in your theories?
So I feel good about the base case that we'll have this soft dish landing. Growth should probably slow in the first part of next year. But there are two tails. The one tail is that growth it's better than expected in the next couple of months, and then you have the other tail where we get a more significant slowdown and the lags just take longer, and then that leads us to kind of a more material recession. So I feel good about the base case, but I think you're right there is a lot of uncertainty around those tails.
Do you think that inflation can stay at two percent if the Fed starts aggressively cutting rates next year.
Yes, if they do it once they feel really good about the labor market cooling. So you probably need to see the unemployment rate rise a little bit more. So that three point eight percent that we saw that was largely driven by supply coming back online. In order for the Fed to really be cutting interest rates, you need to see a little bit more softest in that coming from a more material rise in unemployment.
What is that line in the sand? Is there one? Is it four and a half percent the target that they were looking at in terms of where they expected this year's unemployment rate to end.
I think it's a little bit.
It could be a little bit lower than that, somewhere in between four and four and a half percent, especially because back then inflation was a little bit higher. Now it's come down in a pretty significant way, so the importance of getting more material slowing in the economy is just a little bit less.
So we get some pre market moves here right now. Negative thirty on SPX gets my attention. But Apple, Lisa sort of moldy all day and now moldier. Let's see if a talk is it. I got a negative one seventy seven, you know, pre market down a solid three point four percent, and that's off a couple of days of retreat.
Well, and it comes on the heels of headlines that China is banning the iPhone amongst certain government officials. But just tying that to the economic story is really important when it comes to what this means for ongoing trade tensions between the US and China and how isolated the US strength is from some of that. That to me is a big question mark.
I mean a big question mark, Stephanie. Is the heart of the matter here, and it comes to me is the September meeting in play, you know, the jargon here is at Lisa reads the minutes, I don't is it a live meeting? Is it a live meeting?
I mean, of course every meeting is live, But I think we're more talking about the November meeting is where we're really potentially talking about another hike. Even Waller was out, you know, earlier this week. He sounded a lot more dubbish than he's been. It seems like the desire is to pause and wait a little bit. What you saw in the base book was just signs that there's some softening in the labor market. It kind of makes sense to just wait a meeting and see our base cases that they're not making.
Them, at least to save me here nasdek on one point three percent.
Well, just following on this discussion around China and what's going on, how isolated the US and the strength there is, is there any knock on effects that people aren't fully accounting for when it comes to I don't want to say decoupling, what do they say de risking? However you want to phrase it right that we hear about between the US and China, how do you model that.
I think the real transmission is that we're getting on shoring back to the US economy. Right, So production is now starting to pick up here you're getting I mean, semiconductor chip facility production is really strong. So the structures have been one of the reasons why the US economy has been so resilient. So at the margin, it's been a support for the US economy and the manufacturing sector. And I think we kind of forget that China is a little bit less relevant for the global economy than it used to be. It's not really the importer of goods, especially since it's not really boosting their property market, and it hasn't for years.
Well.
But given that a lot of people say that the decades of disinflation and very low inflation were driven by globalization and by importing cheaper goods from overseas, does that reverse and this is sort of underpinning some of the angst about higher yields for longer, I think I don't.
I think it would take. It's a really long story, right, And we still import a much larger share of goods from China than we used to. It has come down from twenty eighteen levels, but it's still quite high relatively speaking, and import goods it's really a commodities channel. So to the extent that China impacts the global commodities chain, then that's that's really what goes into goods prices.
So what's your run rate in real GDP? Now, Atlanta GDP's got like a near six percent, five point six percent number. I know you don't believe in that, But what's the math to get us to the end of the year.
We're looking at about three percent, are potentially higher higher in three Q and four Q you should probably see quite a bit weaker, a couple of headwinds heading into the fourth quarter. You have cent debt payments, just some some seasonal FI actors, and the momentum should be slower then. But Atlanta FED is very much overstated and they know the error in their model is very high at the beginning of the quarter.
Stephanie Roth with us with JP Morgan, thank you so much. JP Morgan, Thank you someone who keeps track of the nth. We're gonna get to this right now. It's so important. Michael Nathanson joins US senior research analysts SVB Moffatt Nathan Nathanson, Michael, you guys absolutely nailed cord cutting. Where are we in the continuum. If you were talking to Charter management today, how much worse is this going to get for the Charters of the world.
Yeah, good morning. It's an interesting question. Craig Maffa, who covers Charter, would say, Look, Charter is becoming indifferent to being in a video business right so it's it's not the business. It was a decade ago, but going forward, they're saying to us, we don't really need to be is business anymore. It's a low margin business. Broadband and mobile phone is our future. If you keep pushing rates as high as you are, mister ESPN can't. We can't afford to actually services business anymore. So it's bad enough for them to walk away from video, which is a shocking statement given that they have the more video customers than anyone in this country.
Right now, Michael, how do you think this guests resolve this current spat? What do you think the endgame looks like?
John? I would have thought it would be resolved by today, right. I think the law this goes into another weekend. The endgame if it's not resolved by Monday night football Bills Jets. I think what happens is that Disney will be dropped, ESPM be dropped from Charter systems, and that Disney will have to work extra hard to convince people who are in Charter to take either Hulu or YouTube TV. Right So, I think, you know, if this is not resolved by this weekend, it's a huge problem. The problem here is that Charter want the apps that Disney is selling to its own customers given for free to charge customers. Right so we all complain about the building and the double you know, the expenses of now building a new bundle, they want to give that bundle back for free, the streaming bundle to the customers, and that is a non starter. Right So the ask is so wide from what actually Disney can do, so we're not very hopeful this can be resolved.
Pretty embarrassing at the moment, Michael, given that we've got tennis players in news conferences in the US Open saying they can't watch the tennis themselves from their hotel rooms. Now, when we think about losers, I'm thinking first and foremost to the consumer, the customer who can't watch the sport they'd like to watch right now without paying up for alternatives. Michael, who is the big loser out of these two sides in this conflict, currently.
The big losers are both. You know, I would say to you, the bigger loser in the long term if it's not resolved is Disney, because this will become stand operator for teacher cross the industry. Right, So Disney, which has a ton of fixed sports contracts, will lose distribution and carriage across the PATV world. Right, So that is untenable. It's unthinkable. We could go Charter and the rest of the video business will say to you, look where indifferent. You know, we've seen other cave operators the emphasize video. So the big luwers, so John played forward to, will be sports leagues, right, all the leagues and all the players who have counted on TV inflation to pay their salaries. That's going to be a huge challenge going forwar.
Right.
So this is the beginning of a multi layer problem for a ton of industries.
That you know that no one's thinking about right now, Michael, does it really point to a new model for both sports and for streaming. And it's a model really pioneered by or perhaps exemplified by line on miss Lionel Messi and what he's doing with Apple Plus, given the fact that he is getting a chunk of that, there's the revenue, there's the upside, and oh yeah, Apple Plus sign ups have been off the through the roof in response to his celebrity. Is this the new model and the winning model that you foresee going forward?
See Lisa, I want to said to you, the new model is the old model. The old model will work well, right, which is you'd one place, one bundle, one linear bundle where all your sports were available, right, and life of us. We don't understand why the industry is both media and distribution have not worked to make a skinnier bundle of sports. You know, John talks about Peacock and Premier League. That content should be in the bundle. When the US opens playing the first couple of rounds of golf, I want to see it on ESPN. The problem is that the two sides have not come together to create a new bundle, and thus all the rights are fragmented. So I am very fearful of the consumer experience going forward has not solved. It is suboptimal. As you guys have joked about, to watch seventeen different sports apps to watch your team, and it's and they're killing what was the golden goose, and it drives as crazy that people want to build over the top sports apps when the model worked in the old bundle, that was the best way to get sports. It was all there.
Yeah, Michael Nathan's and by holds cell Disney I've enjoyed from one eighty nine, loaded the boat on my trip to Disneyland and Anaheim one eighty nine, and we're joining it at eighty one. You got to rebound to one point fifteen in an outperform, justify your outperform.
Yeah, so we upgraded it when Bob Ayer came back at ninety. Right, we're down ten percent. The call here is that their streaming business should be a lot more profitable than in a pierce today when they buy in Hulu, which is probably going to happen to the end by the end of the year. Now, we think there's a lot more margin opportunity at at streaming. Plus the park business is close to where the stock value is today. So our calls you're buying the stock with parks fully valued and an option on streaming profitability. Neither margins are negative can Netflix margins twenty percent? So we think that's the big difference the bundle. Really, this is a lot of noise. It doesn't matter that much the long term because the market puts sole little value on linear hassets. Right, look at where Paramount trades or Warner Brother's trades. They're lowly valued companies. And that's not the call of Disney. It's Parks plus streamer.
Yeah, Michael quick, heare because John wants to get in. If you have that where it's a Parks or a bolt on streaming for free. Great, can you generate a free cash flow out of the parks businesses? Support the dividend, support use of cash inside.
You will you know, it's a great question. The Compani used to make ten billion are free cash flow? They make four billion today four billions as largely parks. So you would say four billion is your support for cash flow? You know for dividends for a buyback, you will be a lower cash flow business would be a higher multiple business. And you know, Tom, there are media companies that have twenty percent casual yields that no one cares about today, right, So we're looking at cashlow yields just explode and no one cares because of the sustain ability as you guys have asked us morning is certainly.
A question, Michael. I can't think of a CEO that is more loved. Despite the fact that Stock's not doing well, Goldman is down six percent year today, Solomon gets a ton of bad press, Disney's down about six percent year today. Bobbiker still gets all this media love, Michael. Where does that media love come from? Is he doing a good job? These problems were all blamed on shapek who was in the job for five minutes. When does Bob I got start to own some of these issues.
I think you know our calmis is give give Bob twenty twenty four. Right, you're turning a battleship around. The real issue in our view was, well, John, we could spend another hour on Disney chapig overspent on streaming. He basically was chasing subscribers, not profitability. It takes time to turn that around. They have to buy in Hulu. But I think what we would say, and I think it's your criticism, is that the communication out of Disney since Bob has come back has been very poor. Right. They basically have thrown out a ton of ideas and they've teased the market without delivering on what the story actually is going to be, you know, truth be told. The stock is training where it is and there's very little lone only support right now. Right so, I think the market has voted and our call is like, this is about twenty twenty four fixing businesses that should be more profitable. But John, it's a fair comment. This ESPN issue, a lot of it was built on Bob talking about what he was going to do in the future, because Disney's not been aggressively leaking their content into streaming like ESPN anyway, but he's been talking about we're going to do this at some point, and I think charters managements, Look, if you're going to do this, why are we paying for ESPN tech?
They do this for another at too. Michael, I've just been screened down because I've got five seconds left on the clock, exactly, Michael, Thank you, buddy, Michael, Nathan Cent of SVB Muffett Nath and Cent.
Oh, let's do commodities right now. We can do this with a trillion expert away from just oil focused. Kina Haik is outstanding at ED and f Man unsofts on the agricultures and that you know, kinda. You know, I'm really trying to cut back on my sugar consumption. I'm just thrilled to tang zero. It's really really helped me out with less sugar involved. And yet sugar to the moon. Is there a global price for sugar? Should Americans be concerned about a surge and sugar in India?
Yeah, So we have the global sugar price that's actually reach eleven year highs. This happened yesterday, and it's because we're falling into deficit. This Anino weather phenomenon that we've been seeing for the last three four months really impacts the weather in Asia, particularly those cane growing regions in India and Thailand who are major sugar cane exporters. They're suffering from declining gels and the world's just going to have to live with a lot less exports out of these two key regions. So I think that's a sudden type in the supply demand balance for global sugar, which is cause prices to search higher.
Well, I look at the prices again, but I want to go back to what it means for Americans because I think you know, all of us around the table, Lisa Less Sugar, John Less sugar even I'm trying to cut back sugar. That's sort of a zeitgeist out there right now in America. Are we going to adjust here because of higher sugar prices like we would the higher cattle prices.
Did you get to see how quickly the follow through will be at the retail level? I think obviously, because it's the futures price, there's going to be a time like by the time the sugar buyers actually start passing that on at a supermarket level, so there will be some lag on that eventually, though, prices will probably have to raise rise higher, and then it's a question of really it's the income elasticity. How much do you actually consume sugar? Is it going to be high enough for you to actually reduce intake. I suspect that a lot of Americans probably don't consume as much sugar as maybe someone in Africa or Asia does, where sugar is a cheap calorie, which is still compounds for quite a bit of your average diet. So I do think that in actual consumption, the trend has been falling definitely in developed countries because of obesity concerns diet concerns, but in other parts of the world. I think sugar is still very cheap source of calorie, where it's still very much part of the basket.
We weren't basket. We weren't talking about sugar yesterday. We weren't talking about the day before, even as it surged to eleven year highs. We were not talking about rice, even as it surged to fifteen year highs. We were talking about oil, and we were wondering whether this was supply side or demand side, and whether this was something that was a broader indication of activity and demand, or whether this was something with Saudi Arabia sticking their thumb on the scales. Do you think there's something bigger going on throughout the commodity space with the price increases that we've seen in a vast number of specific sectors.
Yes, I think oil. Ultimately it's a linch pen. It's it's the driver of most commodities, and it's the biggest component in all the futures commodity indexes. So the fact that oils reached ninety dollars per barrel is significant and it means that the whole commodity index pushes higher. For sugar, it does impact it because Brazil, which is the largest sugar producer in the world, has an optionality to produce ethanol or sugar, and ethanol is influenced by crude oil prices, So there is that linkage. But I think right now today the agricultural commodity sector is slightly diverged away from crude oil only because we are looking at a weather market.
Yeah, but Conna, I just want to take this a step further because, let's say, just putting the agricultural side aside, there is a question about whether iron ore is setting the same signal that oil is that something is maybe not as weak as people had previously expected, whether it's China or elsewhere, or if there is some other dynamic that could cause inflation to surge again in other areas. Do you think that that's a fair categorization.
I think one thing that is common to the whole community complex is the fact that China, which has been such a drag on the commodity sector for much of this year, is really talking out the amount of stimulation that the government is going to be putting in so that in itself can provide some latent optimism that if the China starts to stimulate its economy. There will be more demand for oil, agriculture, metals, you name it. So I think that could be definitely one potential. Otherwise, I think we're looking at pretty disparate little sectors of eggs, metals, and energy at this moment in time. And crude OL's rising only because of the OPEC cutback, because otherwise demand is not really shifted much. I'd say the economic side on for crudel has been perish to neutual, let's say, and.
Kind of a week or ago, thanks for the update, kind of hack there of AD and f.
Matt Our guests has been great here and particularly through a tumultuous August, and it was wonderful. We couldn't get Tannebaum in earlier because he's you know, he's got like six he's got like sixth summer he treats, he goes to I mean he handles it from Bar Harbor all the way down to that.
You know, you're sitting right here, you can ask know well he does.
I mean, we couldn't get him in in August. Finally here in September, Daniel Tannebaum joins his partner, global anti financial Crime Practice leader at Oliver Wyman about the sum of all our fears. How do you interpret the media frenzy and lots of non experts acting like experts about stuff you're expert in.
I mean, that's not out of sync with how things have worked for quite a while anyway, But I mean, speaking of tussles, I mean some of the reactions you're seeing out of China. I mean, let's remember, China has had somewhat of a muted response to years of Trump aggression. They never really reacted to that. They've only really begun reacting in kind, whether it was paying visits with national security officials to a variety of American businesses, beginning to ban access to certain commodities, now potentially banning certain devices within Chinese government offices. I think we're now finding ourselves kind of in a true tit for tat that we hadn't seen before. And I think the government is still calibrating how to respond, because we've had a lot of visits of US government officials to China over the last few weeks and months to really try and instill business confidence, and moves like what's happened this week do precisely the opposite the.
Tea leaf that I follow is foreign direct investment into China. You are hardwired to this debate with the clients of Oliver Wyman. Are corporations going to pull back or is it a figment of our twenty twenty three imagining?
Right now? The question I get from clients, that we get from clients more often than not, is what is everyone else doing with China? So like everyone's looking at it exactly to make sure they're not out of sync. I don't see any pullback. You've already seen some companies begin to and following kind of Janet Yellen's remarks, de risk their supply chain, look to diversify. That's really where India has a potential opportunity on the heels of the G twenty of trying to encourage more investment in manufacturing within India, obviously taking advantage of some of the challenges in China. But I think most of my clients are really looking to understand where they're potentially exposed. They may not be deepening any relationships, but they're also not pulling back.
This is a compelling point. It's something that Lelan Miller talked about. You just have to reframe where you see the growth opportunity in China. They're not pulling back yet. Does this up the ante though? Did you get some frantic phone calls this morning from your retreats wherever they may be saying, you know, does this change the dial if they're willing to go after Apple, which employs millions of Chinese.
I didn't get any calls on this yet today, although it's been it's early yet. I certainly got a lot of calls on the outbound sifiis executive order and there's a lot of questions. There's a lot of there's an industry comment period that's been proposed to really look at where potential investment into China may be heavily restricted by the US. But there's a lot of questions on what that looks like. So it's certainly halting some investment, but it's not basically forcing a preemptive divestment.
And just when you talk about tip for tatten in foreign investment, this data came out this morning that I thought was interesting that the value of completed Chinese foreign direct investment transactions in the US was about two and a half billion dollars last year. That was less than half the amount back in two thousand in nine, so this twenty twenty one it was the smallest since two thousand and nine. We're looking at already something that's percolating. Do you think that the companies that you speak to fully appreciate how quickly it's moving right now?
No, I don't. And again you see actions like what happened this week on banning certain technology devices that weren't necessarily on anyone's radar. I think right now everyone's trying to keep their ear to the ground and try and react and assess their kind of risks and exposure as rapidly as possible. That's about the best you can do at the moment, which is really try and see where do I have the biggest potential challenges based on where China is going, based on where the US is going from a restriction standpoint, and how do we not get caught in the middle, which is obviously the last thing companies want is to be ground zero for some of these issues, like some banks have been over the last few years. Frankly to shift to Europe.
In Ukraine and the war in Ukraine, the Indian relationship with Russia was complex, almost mystical. Is India our l is India, Ukraine's l or not. Yes.
I think India is walking an interesting line that'll come to a head this weekend. They obviously have a prominent role in bricks, but they're obviously hosting G twenty. They're trying to increase foreign investment in their country to take advantage of some of the challenges that China is seeing. And they've been taking advantage of Russia's predicament economically in buying cheap oil to confurther their own ambitions. I do think, and again, the US has been somewhat reluctant, as have its allies, to force countries to choose a side. But I do think you're seeing the US push more military cooperation with India, which it never had previously. India previously bought most of its arms from Russian suppliers. Now the US is looking to try and diversify as an enticement to bring them really into the warm hug of the West's side more actively.
Is this the reason why we're seeing a solidification with the potential meeting between Russia and North Korea and elite of those two nations that we're seeing a sort of solidification in other areas.
I mean, you know, Russia turning to North Korea. They're not turning to North Korea for advanced weaponry. They're turning to it for basic munitions. And I am not a military expert, nor will I pretend to be, but they're not going to the North Koreans for advanced things. They're going for the basics, which is not really a ringing endorsement for how well things are going. I do think India has an opportunity now to potentially play a much larger role in the global economy, but it is walking that line. It hasn't actively spoken out against the conflict in Ukraine. It's still buying Russian oil, it's still trying to benefit from its relationship from the US and be the leader of the global South. You can only take that so far, Dan.
Thanks to the brief, don't be a stranger. It's going to be a wild September, to say the least, Which to Tan Obamas with Oliver Wyman, truly expert on sanctions. Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and anywhere else you get your podcasts usen live every weekday starting at seven am Eastern. I'm bloomberg dot com, the iHeartRadio app tune In, and the Bloomberg Business app. You can watch us live on Bloomberg Television and always I'm the Bloomberg Terminal. Thanks for listening. I'm Tom Keen, and this is Bloomberg
