Stocks Fall Before Nvidia’s High-Stakes AI Results

Summary

Bloomberg Businessweek — "Stocks Fall Before Nvidia’s High-Stakes AI Results"

Date: November 18, 2025
Hosts: Carol Massar and Tim Stenovec

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Episode Overview

This episode of Bloomberg Businessweek zeroes in on market jitters preceding Nvidia’s much-anticipated AI earnings report, the broader implications for AI valuations, and how institutional investors are navigating the volatility. The show also explores shifting U.S.-Saudi relations and the economic ramifications through conversations with experts on global finance and geopolitics. The closing segment focuses on the role of individual investors in contemporary markets, especially amidst corrections and political uncertainty.

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1. AI Valuations, Market Correction, and the State of Play

[01:43–09:11]
Featuring: Carol Massar, Tim Stenovec, Vance Howard (CEO, Howard Capital Management), Daniel Pinto (JPMorgan Chase)

Key Topics & Insights

• AI Valuation Reevaluation:

  • Daniel Pinto (JPMorgan Chase Vice Chair) signals that current AI industry valuations may be due for correction, noting a mismatch between projected and realistic productivity gains.
    • Quote: "It’s possible there is probably a correction there… You are considering a level of productivity that... may not happen as fast as the market is pricing." — Daniel Pinto [02:03]

• HCM Byline Model — A Buyer's Market:

  • Vance Howard’s investment model remains in 'buy' territory, believing in trend-based, mathematical analysis rather than emotional decision-making.
  • He downplays the impact of 'momentum trading' fads, saying algorithmic trading now dominates volume.
    • Quote: "It's a non-emotional, mechanical, repeatable process... It's just a trend indicator and we think it's a very good trend indicator." — Vance Howard [03:20]
    • Quote: "It doesn't matter anymore. It's a big computer game. I mean, you're trading against algorithms anymore. What's 85% of all the volume?" — Vance Howard [03:56]

• AI and Automation’s Real-World Impact:

  • Prediction that AI and robotics (e.g., Tesla’s Optimus) will profoundly disrupt the workforce and corporate profitability, potentially raising unemployment as companies replace jobs with robots.
    • Memorable Moment: Howard describes a robot in Austin, Texas “walking around with a cowboy hat... stops at every red light.” [04:27]

• Caveats of Trend-Based Strategies:

  • Howard discusses the mechanical limits of his model—how violent market whipsaws can result in both missed upsides and painful losses, emphasizing scaling in/out over all-or-nothing moves.

• Risks on the Horizon:

  • National debt and the potential for systemic banking crises are flagged as bigger macro risks than daily market moves.

• AI Bubble? Different from Dot-com:

  • Howard argues today's AI leaders actually generate profits, drawing contrast with bankrupt dot-com startups of the late 1990s.
    • Quote: "They're making money hand over fist. They're making money so fast they can't spend it." — Vance Howard [08:48]

• Big Tech Bullishness:

  • Howard remains bullish on the 'Magnificent 7' big tech names ("hoping Nvidia drops so I can buy more"), forecasting higher prices in five years.
    • Quote: "Because five years from now, Nvidia is going to be a lot higher than it is today." — Vance Howard [09:03]

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2. U.S.–Saudi Relations, Diversification, and Geopolitical Investments

[11:33–20:36]
Featuring: Carol Massar, Tim Stenovec, Dr. Ellen Walsh (Transversal Consulting, Atlantic Council Fellow)

Key Topics & Insights

• Saudi Investment Push:

  • Discussion of Crown Prince Mohammed bin Salman’s planned U.S. investment, with questions about how Saudi can fund deals amid low oil prices. Walsh notes the PIF’s independence from oil revenues.

• Economic Diversification Outcomes:

  • Saudi Arabia’s much-publicized turnaround from oil dependence is assessed as incomplete, with most major goals unmet.
    • Quote: "Have they achieved the goals...to diversify from oil? The answer is no...What they have done is...introduced some very important changes..." — Dr. Ellen Walsh [14:04]

• Friend or Frenemy Dynamics:

  • Walsh highlights differing perceptions: Saudi Arabia sees the U.S. as a best friend; the U.S. sees the Kingdom as a strategic partner, but not an ally of the caliber of Canada or the UK.
    • Quote: "Saudi Arabia has a very different view of the relationship than the United States does...In the Saudi mind, the US is a best friend..." — Dr. Ellen Walsh [15:53]

• Defense and Security Deals:

  • F-35 sales to Saudi, and their implications for regional security and U.S.-Israel relations, are viewed as highly conditional (e.g., dependent on progress toward Palestinian statehood, which Walsh deems unlikely soon).

• AI Chips and Investment:

  • The PIF’s interest in U.S. technology, especially AI/chips, is emphasized, but direct Saudi chip production is seen as unlikely. Data centers, backed by incentives like free land and energy, may become the focus.
    • Quote: "The PIF wants to make these investments in these firms because that's their way of kind of getting their hands on this technology." — Dr. Ellen Walsh [19:30]

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3. U.S.-Saudi Integration & Political-Economic Transparency

[21:04–33:55]
Featuring: Carol Massar, Tim Stenovec, Dr. Adam Posen (President, Peterson Institute for International Economics)

Key Topics & Insights

• Saudi-U.S. Integration Path:

  • Dr. Posen views Saudi investments in the U.S. as more about diversifying the Saudi economy away from fossil fuels than as a unique opportunity for the U.S.
    • Quote: "Deeper integration with the US is a path towards [diversification] and it is a credible path..." — Dr. Adam Posen [21:41]

• Conditionality and Security:

  • Suggests that any U.S. security or tech sharing (e.g., the F-35) should be contingent on major Saudi concessions, whether geopolitical or investment-driven.
    • Quote: "It needs to be tied to something of that caliber...some sort of agreement on how the Saudis will influence Pakistan...investment...in rebuilding Gaza..." — Dr. Adam Posen [23:44]

• Business–Political Blurring:

  • Raises concerns about the Trump Organization’s business ties with Saudi Arabia, warning of new norms where political decisions are perceived as linked to personal or familial enrichment.
    • Quote: "What matters is this very strong perception...that you link things...this is a huge step change. We've not seen anything like this, at least since Teddy Roosevelt." — Dr. Adam Posen [25:17]

• Global Ramifications of Poor Governance:

  • Warns that if the U.S. abandons established anti-corruption norms, it could lower global standards and investment appeal, reduce economic returns, and increase inequality and instability.
    • Quote: "It means the US is setting an example that you can get away with it...it will reduce the returns on capital. It will divide the world..." — Dr. Adam Posen [29:33]

• Domestic Neglect Amid Global Focus:

  • Posen flags risks from health care subsidy cuts, anti-migration policies, and inflationary pressures, arguing that not enough attention is paid to domestic social welfare.
    • Quote: "It's not about choosing the global versus domestic. It's about choosing the self-interested versus the public welfare." — Dr. Adam Posen [33:55]

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4. Market Correction, Retail Investors & Sentiment

[37:05–42:20]
Featuring: Carol Massar, Tim Stenovec, Stephanie Gill (Chief Investment Officer, Robinhood Markets)

Key Topics & Insights

• Nature of the Pullback:

  • Gill believes the current market downturn is a "healthy correction," not a crash—driven by overstretched valuations and the natural ebb and flow of the market.
    • Quote: "I think it's a healthy correction. You get them every one to two years. Sometimes we forget that." — Stephanie Gill [37:48]

• Proof Points for Tech and AI Investment:

  • Investors now demand evidence that large investments in AI are producing real, scalable returns at both enterprise and consumer levels.

• Rise of Individual Investors:

  • Gill notes the democratization of markets, with individuals now crucial players, especially in smaller-cap names, though their impact on mega-caps is more limited.
    • Quote: "Individual investors are now a core part of the financial ecosystem, reshaping how capital markets function." — Stephanie Gill [39:24]

• Retail Sentiment and Crypto Volatility:

  • Retail investors, particularly in crypto, are accustomed to high volatility and often "trim" when prices rise and "add" when they crash, showing a level of resilience.
    • Quote: "Those at play in the crypto space are very used to large swings...when it's down a lot, they do add." — Stephanie Gill [41:36]

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5. Notable Quotes & Memorable Moments (with timestamps)

• AI Valuation Caution:

  "It's possible there is probably a correction there and that correction will also create a correction in the rest of the segments in the S&P and in the industry..."
  — Daniel Pinto [02:03]

• On Algorithmic Trading:

  "It doesn't matter anymore. It's a big computer game. I mean, you're trading against algorithms anymore. What's 85% of all the volume?"
  — Vance Howard [03:56]

• AI’s Societal Impact:

  "You'll have one person working in the cash restaurant, five people that are robots that are serving the coffee. This only costs 15 to 20 grand for Optimus the robot."
  — Vance Howard [04:47]

• On F-35s and Regional Power:

  "If the Pentagon has severe concerns about it, I think it may not actually go through as much as Trump wants it to go through."
  — Dr. Ellen Walsh [19:22]

• On Erosion of U.S. Political Norms:

  "We had laws and...expectations...that the US did not deal in family enrichment...this is a huge step change."
  — Dr. Adam Posen [25:17]

• Retail Resilience in Crypto:

  "There's kind of a meme out there that says...when stock investors have a big drag down, the crypto investors are like, 'Welcome to the way it feels.'"
  — Stephanie Gill [41:28]

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6. Key Timestamps

• [01:43] Kicking off: Daniel Pinto's warning on AI valuations
• [03:00–06:48] Vance Howard on market signals, algorithmic trading, and market psychology
• [07:53–08:30] Macro risks: U.S. national debt and financial system vulnerabilities
• [11:33–13:45] U.S.-Saudi meetings and investments; PIF funds explained
• [14:04–16:58] Saudi diversification progress
• [19:22] F-35s, AI chips, and geopolitical technology transfer risks
• [21:41] Dr. Adam Posen: Saudi diversification and U.S. interests
• [23:44] Strategic conditionality in U.S.-Saudi arms and investment deals
• [25:17–29:33] Political-business ties, erosion of norms, global precedent
• [37:05–39:24] Stephanie Gill on current corrections, AI investment evidence, and individual investor influence
• [41:28] Retail investor mentality and crypto swings

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7. Takeaways

• Markets are prepping for volatility around Nvidia and AI earnings, but many managers see opportunities, not systemic threats, unless macro risks like debt or a hard landing manifest.
• AI's productivity and adoption cycle could support valuations, but not as quickly as recent hype implies; mechanical models help investors cut through noise, though their limitations are acknowledged.
• U.S.-Saudi relations are shifting toward deeper economic entanglement, dictated as much by political expediency as by strategic logic; tech transfer and security deals are points of tension.
• Transparency and anti-corruption norms in U.S. political economy are under pressure, raising global governance concerns.
• Despite the dominance of institutions, individual investors—especially millennials and Gen Z—are increasingly active, resilient, and have growing albeit niche influence.

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For listeners seeking a comprehensive picture of where markets, geopolitics, and the investing landscape are headed, this episode provides expert perspective, critical caution, and a healthy dose of realism.

Transcript

[Carol Massar]

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[Podcast Announcer]

Bloomberg Audio Studios Podcasts Radio News this is Bloomberg businessweek Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Massar and Tim Stenbec on Bloomberg Radio.

[Carol Massar]

We did though also kick off today with something that just kind of is stuck staying with us, a warning from JPMorgan Chase Vice Chairman Daniel Pinto. He said, and kind of gave us all a heads up that valuations in the AI industry are due for a reassessment. It's something Tim and I have been trying to get into today, which could reverberate across the stock market. Here's what he said.

[Daniel Pinto]

It's possible there is probably a correction there and that correction will also create a correction in the rest of the segments in the S and P and in the industry because you are probably in order to justify these valuations, you are considering a level of productivity that it will happen but not it may not happen as fast as the market is pricing.

[Tim Stenbeck]

We have a JP Morgan Chase Vice Chair Daniel Pinto earlier today that was at the Bloomberg Africa Business Summit in Johannesburg. Curious what buy or sell signal signals our next guest is seeing. Great to have back with us, Vance Howard, CEO and portfolio manager at Howard Capital Management. About $6 billion in assets under management. He joins us here in the Bloomberg Interactive Brokers studio. This is the question we've Been wanting to ask you since, you know, last time we spoke to you. Is the HCM byline model telling you to buy or sell?

[Vance Howard]

Right now it's telling us to buy. The HCM byline is positive. Any pullbacks viable till it changes trend and, you know, sort of discard the noise and just buy what's actually happening. The market's very, very healthy. But six great months, I mean, how do you not get, how do you not have a pullback after six months?

[Tim Stenbeck]

Just one step back, explain the HCM byline model and the data takes into account and then what it tells you to do.

[Vance Howard]

It's a non emotional, mechanical, repeatable process because I want to take as much emotion out of it as I possibly can, which is incredibly challenging with the amount of things that are thrown at each and every one of us every day. But it's a math based tool. It's just a trend indicator and we think it's a very good trend indicator. It's done very well for us. Perfect. No, but good. Yes.

[Carol Massar]

Does momentum, though, the momentum trade, mess it up at all?

[Vance Howard]

No, not at all. But I love the momentum trade because I love to be in those stocks, I love to be in those sectors. You got to trade momentum. You can't sit in dead money.

[Carol Massar]

Yeah, but when is momentum fomo like you're like just tracing something without really fundamentally thinking about it.

[Vance Howard]

Well, it's a big computer game.

[Carol Massar]

Does it matter?

[Vance Howard]

Well, it's a big computer. Yeah, it doesn't matter anymore. It's a big computer game. I mean, you're trading against algorithms anymore. What's 85% of all the volume?

[Carol Massar]

But don't fundamentals matter?

[Vance Howard]

Well, they're always going to end up mattering in the end. But look at what's happening, Carol. When you look at what's happening with AI, look at what's happening with Tesla and that robot they're coming out with. Optimus. How much is that going to make an impact on so many companies? Profitability and earnings per share.

[Tim Stenbeck]

That's if they come out with the robot.

[Vance Howard]

Do what?

[Tim Stenbeck]

That's if they do come out with the Robot.

[Vance Howard]

I think 20, 26. He's going to.

[Tim Stenbeck]

You think so?

[Vance Howard]

Oh, yeah.

[Tim Stenbeck]

He doesn't always meet deadlines well, but.

[Vance Howard]

When he does, it's usually a big show. They've got one of those things walking around Austin, Texas right now with a cowboy hat on, literally walking.

[Tim Stenbeck]

Definitely no person inside it.

[Vance Howard]

Oh, he stopp. He stops at every red light. He stops at every stop sign. He gets out of people's way. This thing is amazing.

[Carol Massar]

Wait, what do you think it's going to do, though? How do you think it's going to impact our life?

[Tim Stenbeck]

Are you real?

[Carol Massar]

Come on. We like it. Yeah.

[Vance Howard]

Here's the thing. Here's how it's going to impact your life. Let's take a. And I've thought about this a lot with our trading team. Let's just take Starbucks, for instance. What if you got one person working in the cash restaurant, five people that are robots that are serving the coffee. This only costs 15 to 20 grand for Optimus the robot to make a cup of coffee. You've eliminated four or five jobs right there. You don't have to worry about somebody complaining, coming in for work, getting.

[Carol Massar]

But do robots go out and buy high heels? Probably not. So, like, like, I do think about.

[Tim Stenbeck]

That's a really good point.

[Carol Massar]

I do think about what, what robots are not going to be spending in the economy and what that means longer term.

[Vance Howard]

Right. I think you're going to see, I think you're going to see unemployment organically move higher, but I think you're going to see corporate profits and a lot of these companies move higher. Also, look at what happened with Walmart. Walmart's a boring company in my opinion.

[Carol Massar]

But what happens if there isn't a lot of consumer spending going on, which is so much the backbone of the economy? Doesn't that filter through until we have these lower economic growth and are people out of work? That's not a good thing.

[Vance Howard]

That's not a good thing. It's a terrible thing. But look, I can't change it and I can't stop it. Neither can the three of us inside this room. But what we do have is the HCM buy lines where stocks want to sell off. We got a mechanical system to say we need to unwind some positions.

[Tim Stenbeck]

Okay, so when was the last time it told you to sell?

[Vance Howard]

We had a sell signal in April when we had the tariff tantrum in Devon. And then we came back in and it was not a great trade for us because it was so violent, so volatile, because it is a trend indicator. Trend changes all in like 48 hours. That's tough to trade. So, okay, so you'll remember before we jump onto that, you'll remember the Nasdaq was down 28 in a matter of days. Yeah, that's tough trades.

[Tim Stenbeck]

The s and P500 low for the year was back in on April 8. Did you, what day did you sell and what day did you get back in?

[Vance Howard]

Do you remember to be quite candid, I don't remember.

[Tim Stenbeck]

But did you miss, did you miss some of the upside?

[Vance Howard]

We missed some of the upside. We did. Painfully for us. And. But you know when you trade and.

[Carol Massar]

You felt some of the downside.

[Vance Howard]

We did and we did. And it was a painful trade for us. I'm going to admit. It wasn't a great trade for us. Remember the bylaws for everybody, it feels like. But it's a. 70, 30, 30% of the time. It's not going to work. So we're going to whip something.

[Tim Stenbeck]

Do you, do you go. Do you go all in and all out at times?

[Vance Howard]

No, we scale.

[Tim Stenbeck]

You scale? Because we were, I mean, we were talking with somebody just last week, a manager who says that, you know, he. This was a really interesting conversation. He basically said, I'm so tactical that I'm willing to go to 100% cash for all of my clients at any given moment. Do you ever do that?

[Vance Howard]

We have before. In 2008, we were 100%. The only way that we'll go 100% to cash is if the banks are imploding. And that's what was happened in 2008. So if we're 30% out or 60% out, the all or none game's a tough game to trade.

[Daniel Pinto]

It is.

[Tim Stenbeck]

I mean, the tax implications of that are huge.

[Vance Howard]

Well, tax implications, but catching both sides of the trade. Perfect. Are really tough.

[Tim Stenbeck]

So he said, I would rather pay 20% taxes than have 30% declines.

[Carol Massar]

I forget who that was. You're right. Like, I can't remember.

[Tim Stenbeck]

I'll find it.

[Carol Massar]

Well, my. The private credit market.

[Tim Stenbeck]

Oh, you create something more.

[Carol Massar]

Oh, thank you. So akin to the great financial crisis because it does feel like increasingly we're seeing things every day. People are worried.

[Tim Stenbeck]

Yeah.

[Vance Howard]

And I think that what's going to. What should worry people is our national debt. I think that's a tipping point. If that cracks, I think we've got a real problem.

[Carol Massar]

Like, real. Like the great financial crisis.

[Vance Howard]

I think like the great financial crisis, it's systemic. Yeah, it's. Yeah, it's going to affect everything. I mean, the banks are going to lock up. Credit's going to lock up. People aren't going to be short or long term loans.

[Ellen Walsh]

How.

[Carol Massar]

When you say banks, you mean the big banks too?

[Vance Howard]

I think the big banks, of course. And I think it's going to affect everybody. I mean, what do you got? X amount of trillions of debt that we currently have. And every day it's getting larger and larger and larger. It's unsustainable. And if they keep printing money, Carol, your dollar, my dollar all of a sudden is not worth a dollar. It's worth a nickel. And so you got it. That's it. The printing of money's gonna have to stop too.

[Carol Massar]

What about the AI bubble? I shouldn't call it bubble because we don't know if it's a bubble. We just know it's a big spin right now.

[Vance Howard]

Which bubble? The AI.

[Carol Massar]

Oh, AI.

[Vance Howard]

It's not a big spin. This is different. When we looked at you remember in 1999 and we had the three year bear market, they had all these tech stocks that blew up. They weren't making any money. They were not making any money.

[Carol Massar]

Look at what's going on.

[Vance Howard]

They're making money hand over fist. They're making money so fast they can't spend it. What happens if in five to seven years, to 10 years, Microsoft is so profitable they're paying an 8 or 10 or 12% dividend?

[Carol Massar]

So 10 seconds, you're still owning the Big Mag 7, the big tech, the hyperscalers.

[Vance Howard]

I am.

[Ellen Walsh]

You're buying them.

[Daniel Pinto]

I pull back.

[Vance Howard]

I am hoping that Nvidia comes out with something that shocks the market. They drop down so I can buy more. Because five years from now, Nvidia is going to be a lot higher than it is today.

[Carol Massar]

It's a shame you're not more bullish. I'm just kidding. Vance Howard, Chief Executive Officer, Portfolio Manager at Howard Capital Market. Thanks so much.

[Tim Stenbeck]

Stay with us. More from Bloomberg Businessweek Daily coming up after this.

[Carol Massar]

Bloomberg businessweek is brought to you by Evolving Money, a podcast that explores how cryptocurrency is the next logical evolution of the financial system. The program investigates how traditional finance firms are integrating crypto into their operations now that Washington has begun to pass much needed regulations. Follow the podcast, which is sponsored by Coinbase. Wherever you get your audio programs.

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[Carol Massar]

All right, Saudi Crown Prince Mohammed bin Salman at the White House with President Trump earlier today. This evening, by the way, there's a black tie dinner, not a an official state dinner, although at that dinner we did hear Elon Musk would be there.

[Tim Stenbeck]

Tiger woods reportedly will be there as well.

[Carol Massar]

Yeah, a lot of officials, right. There's also an investment conference planned for tomorrow that executives from companies including Chevron, Pfizer, they will be attending. So we wanted to kind of put this in perspective because typically you would see these two kinds of leaders meet and you think energy policy would come up, although it really didn't. Let's get to it with Dr. Ellen Walsh. He's president of Transversal Consulting, senior fellow at the Atlantic Council, author of Saudi Ink, joining us from Boca Raton, Florida. Ellen, so good to have you back here. Feels like Saudi Ink and US Inc. Are kind of merging. Tell me about this meeting because it was kind of fascinating. It really wasn't about conversations around oil or the energy markets.

[Ellen Walsh]

It was absolutely fascinating, especially if you had an opportunity to watch the press conference live. I think everything from the marble floors to the White House to whether or not Saudi Arabia is going to join the Abraham Accords was covered. What's interesting is the amount of money that Mohammed bin Salman is talking about potentially investing in the United States. And I think the big question on everyone's mind is where are they getting this money from, given that oil prices are pretty low and I think the answer really is you have to look at the Saudi investment fund, the pif, because that's really where they have a lot of their investment dollars and ready to deploy. And it really that. That that fund is really independent of the price of a barrel of oil. So I think the question of whether Saudi can deliver this money, the answer is yes. But whether they actually will deliver on this is another question. And I do think that a lot of that money is probably earmarked for defense purchases. And that really depends on whether they do go through with this agreement to sell Saudi Arabia F35s and other defense equipment that is somewhat controversial and hasn't necessarily been sold to Saudi Arabia.

[Tim Stenbeck]

Previously, Carol mentioned that you're the author of Saudi Ink, the history of Saudi Arabia and Aramco, and I wonder now how successful the Saudi Arabian government has. Has been the Kingdom of Saudi Arabia of diversifying its economy away from oil. Has it been successful?

[Ellen Walsh]

That is a really great question. And I think the answer is if you're looking at and you're trying to say, have they achieved the goals that they set out to achieve when they announced their big plan to diversify from oil, the answer is no, they have not really achieved those goals. I think really a lot of those goals were not. Not achievable goals. What they have done is they have introduced some very important changes that I think can certainly help make the Saudi economy more robust over time. We're talking making it easier for foreigners to visit the country, both for tourism, but also to work, opening up the workspace for women. And important societal changes like that, I think in the long run will help diversify their economy. But if you're asking whether their economy is still very much dependent on the energy industry, the answer is yes. Aramco, on the other hand, has over the past, you know, 50 years, I would say, significantly diversified itself from simply an upstream company that sold a lot of crude oil to a very diverse energy company that has multiple revenue streams. So they're not just dependent on what the price of a barrel of oil is. They make a lot of oil products. They're getting into natural gas. They make money off of trading oil and the financial sense. And so they're making a lot of money that is not dependent on whether the price of a barrel of oil is $60 or $80.

[Carol Massar]

So I guess what this relationship that we are seeing between the United States and Saudi Arabia, I feel like it's always been a bit of a frenemy kind of relationship between the two nations. Having said that there's been times where it's been stronger times when it has not. Is this the relationship going forward in your view?

[Ellen Walsh]

What's so interesting about the relationship between the US And Saudi Arabia is that Saudi Arabia has a very different view of the relationship than the United States does. In, in the Saudi mind, the US Is a best friend, that they've always been so close and they've cultivated an entire kind of aura and idea about this friendship. They think the US Is a huge ally. If you look at it from the US Perspective, Saudi Arabia is at least it can be a strategic partner. But Saudi Arabia would not be considered an ally to the United States the same way Great Britain or Canada might be considered an ally. And so I think that that leads to very different opinions about what exactly is going to go on. So, you know whether or not Saudi Arabia has a defense agreement? Yes, traditionally we have had defense agreements, but from the US Perspective, that's not always so guaranteed. If it's beneficial to the US Then it will happen, but it's not necessarily a guarantee. It's not necessarily this allyship that the Saudis often perceive the relationship to be.

[Carol Massar]

Well, it's interesting when you say Canada and the UK in particular Canada, I feel like, you know, it looks almost a friendlier relationship between the U.S. and Saudi Arabia than it certainly does between U.S. and Canada right now. I guess my question really, you know, Ellen, is are we laying the ground for whoever is in the White House next, be it Democrat or Republican, that this is the relationship, or could it change and get different depending, again, who is in the White House?

[Ellen Walsh]

I think that there's always kind of a baseline. And you could see that when Trump was kind of fishing for a compliment from nbs, as you know, oh, well, he's the best president. You know, they've had the best relationship with Trump. And MBS kind of answered that with, well, we've always had, you know, Democrat or Republican, we've always had good relations with President United States. And then he mentions Reagan as a particularly good one. So I think that NBS is certainly looking at this as he's got to lay the groundwork for his good relationships with presidents that are going to come after Trump, whereas Trump is seeing it as the here and now, the military.

[Tim Stenbeck]

Balance of power in the Middle east, the potential F35s that Saudi Arabia could get as a result of making a deal with the United States. President Trump said he would approve selling the F35 fighter jet to Saudi Arabia. I'm just wondering how that changes the balance of power when it comes to the militaries in the region, especially with regard to Israel, which for years has been a US ally. And also what US interest the US would have an interest in selling F30 fives apart from getting the revenue to a US company?

[Ellen Walsh]

Exactly. I do think from Trump's perspective, he thinks that the F35s are the greatest airplane ever to be made, and so he loves that everybody wants them. And so it's more of an economic issue. I think from the Pentagon's perspective, they're looking at it as more of a strategic issue. Now, the UAE apparently got assurances they would be able to purchase these when they signed the Abraham Accords. And it was believed that this would also be a condition for Saudi Arabia. I think it's very, very clear now that Saudi Arabia is not going to join the Abraham Accords. They're not recognizing Israel unless they get. Unless there's a. There's an assured pass for the Palestinian state. I don't see that happening anytime in the near future. So I think we're kind of going to be at a standstill here. And if the Pentagon has severe concern, concerns about it, I think it may not actually go through as much as Trump wants it to go through.

[Carol Massar]

Is that more tricky or is it the AI chips that are more tricky and Saudi Arabia need both?

[Ellen Walsh]

The chips are very tricky. I do think that that's really what's going to be the focus of this investment meeting and this dinner, is that the PIF wants to make these investments in these firms because that's their way of kind of getting their hands on this technology. I think from the US Security perspective, they don't want their chips to be in any connection with Chinese technology equipment. And so there are serious concerns, cybersecurity concerns there that are going to have to be dealt with. But I do see the PIF potentially making investments in these firms. I don't see necessarily us producing semiconductors and chips in Saudi Arabia, but I do think the Saudis can make a case to. To try to get data centers in the kingdom, particularly if they can assure the security of the equipment in their country. And also if they offer, you know, basically free land and free energy, I could see. I could see that being a very powerful draw.

[Carol Massar]

All right, great stuff, Ellen. Thank you so much. Dr. Ellen Wall, President of Transversal Consulting, senior fellow at the Atlantic Council.

[Tim Stenbeck]

Stay with us. More from Bloomberg businessweek Daily Coming up after this. This is the Bloomberg Business Week Daily podcast. Listen live each weekday starting at 2pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station.

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[Carol Massar]

All right, we're going to stay on global relationships, the economies that drive them, and turn on over to Dr. Adam Posen. He's president the Peterson Institute for International Economics. He joins us from I believe the nation's capital on this Tuesday. Yes, Washington, D.C. Dr. Posen, good to have you back here on Bloomberg and on Bloomberg businessweek Daily. These relationships, I first got to ask you, you know, watching the relationship, what seems to be a very close relationship between the United States and Saudi Arabia and I think about their economies. How do you see see it, what's significant for you here in watching this?

[Daniel Pinto]

Thank you, Carol, for having me back on Bloomberg businessweek Daily. I want to pick up on some things you discussed with your previous guest, which is there is a huge economic leaving aside the national security incentive for Saudi to behave in this way, in that mbs, the crown prince has very definitely been seeing part of his agenda to try to transition Saudi away from over dependence on export of fossil fuels. And it's the right thing for them to do from the economic perspective. And obviously Saudi for many decades has been accumulating surpluses of cash and trying to invest them. They've been trying to diversify. I wouldn't go quite as far as your previous guest did in extolling how much Iran costs diversify, but they've been trying. I think the deeper integration with the US Is a path towards that and it is a credible path towards that. That's not to say they haven't been doing a lot of good things in terms of domestic investment and on the economic front on liberalization. They have. And I know a lot of very serious money investors who are very excited by this. But just to say this puts them on the path. For the US However, I think it's less important economically. It is more about the security relationship or at least it should. Never been a shortage of people willing to invest in the US or at least except without with the exception of a few years in the late 70s and early 80s, not since 1900. And that remains the case even though things are happening to make the US A little less attractive. So for the US I think there has to be more of the security, diplomatic conditionality. Just simply getting Saudi investment in the US Is not that big a gain.

[Tim Stenbeck]

What type of conditionality, especially in exchange for F35 state of the art jets.

[Daniel Pinto]

Tim, I think that's the right question. And I would not say it necessarily needs to be tied to Israel recognition in the Abraham Accords, but it needs to be tied to something of that caliber. So maybe it's something about how they're relating to Iran or something about the Saudi mutual guarantees with Pakistan, some sort of agreement on how the Saudis will influence Pakistan. Or maybe it's about the investment which the Saudis have indicated they're willing to do in rebuilding Gaza and deals dealing with what will be refugee issues there. All I'm saying is that it has to be something substantial. But I also think you want the F30 fives, of course, are a big carrot, but you also want to think of it in terms of the relationship. And this is what is key, whether it's UK or Saudi or Japan.

[Carol Massar]

Adam, you talk about relationships and I think about something that came up questioning by reporters of the President and MbS while at the White House and that is about kind of the relationships, relationships that the Trump Organization has with Saudi Arabia on business deals. And we have a story in the Bloomberg about the Trump Organization planning a luxury resort in the Maldives with a Saudi Arabian partner. It's just one case. I'm just curious. You've watched, you've talked about, you've analyzed different administrations. This kind of what seems to be a mixing melding. I know the president answered the question. He said I have nothing to do with family business. But, but, but how do you see this?

[Daniel Pinto]

No, I appreciate your asking that, Carol, and, and I don't want to be mean, but it doesn't matter whether the president literally in the narrow sense has nothing to do with it or not. We had laws and were more importantly we had norms and we had expectations from the press, from the public, from the markets that the US did not deal in family enrichment. When you're in public office, let alone when you're the president, you must, some of your viewers might remember the old John Adams miniseries in which John Adams alienated both his daughter and his son in law or one of his sons and his son in law because he wouldn't advance them while he was in the White House. And what matters is this very strong perception which is obvious in Qatar, in the United Arab Emirates, in Saudi. But even with the gold that was offered just the other day to the president, there is this perception that you link things. Now I don't want to over dramatize this. There are a lot of countries in the world, world, including Saudi, including Turkey, including China, where this kind of ties go on between the leaders, families and chosen friends and foreign policy and other governments. It's not good, it's not fair, it's wasteful and distortionary, but it's also not the end of the world. Businesses and investors can proceed. But for the US this is going back to your original question. This is a huge step change. We've not seen anything like, like this at least since Teddy Roosevelt, meaning 120 years.

[Carol Massar]

So just to be fair, because we certainly get feedback from our audience and to say that the president says I'm not involved though, you know, and we've had, you know, any president that walks into the White House, Republican or Democrat, you know, certainly has allegiances to industries or so on.

[Daniel Pinto]

I agree, I agree. It's never going to be absolute. And we all know the stories of people going back to Jimmy Carter's brother selling beer, that there's always relatives who try to profit on these things. But the so again, this isn't about ascribing malevolent intent, but you want to have a system in place where people expect and feel, particularly investors, but also average citizens expect and feel that this is an exception, not the rule that you occasionally have the rogue family member, but that on the one hand, policy choices are not being driven and being perceived as driven by these things. And on the other hand, that economic choices are being made on a commercial basis. And that's why no matter how many times people of different parties and different administrations or appointments fail on this front, you want to have a system of scrutiny and rules and presumptions that and discourages our elected officials from being so overt about it. I think to be fair, you know, the Trump administration and the sons of President Trump and Secretary Ludnick and the Middle east negotiator guy and all these people, you know, they're being very open. And I think that in one sense does matter, like they are with crypto. But in another sense that doesn't solve the problem because then the perception is still people are being favored, decisions are being made on a bad basis. You have to offer gold crowns or hotel deals to make things happen.

[Carol Massar]

And transparency doesn't necessarily negate actions.

[Vance Howard]

Right?

[Daniel Pinto]

Yeah. Dr. Well said.

[Tim Stenbeck]

Dr. Posen, you said it's not the end of the world if we're in a situation such as this or in a society such as this.

[Daniel Pinto]

But it's not the end of the world.

[Tim Stenbeck]

But I'm wondering if there are potentially long term economic repercussions that happen in societies that don't necessarily have the Same rules in place. If we can look to history or modern history to get an understanding of what the implications of that could be in the US in your view?

[Daniel Pinto]

Oh, I think they're enormous. I think then because it's the US which, as I've argued, Tim, has been the linchpin of the rules based, law based system of economies Since World War II, it has repercussions around the world because it means the US is not only enforcing the norms against this kind of corruption or perceived corruption or tied political choice making. It means that the US is setting an example that you can get away with it and other people should get away with it and it breaks down the regimes and the operating principles we have to deter these things. So when I say it's not the end of the world, I don't mean to suggest it's not, not very harmful. It will reduce the returns on capital. It will reduce the ability of average people and normal businesses to get access to opportunities. It will divide the world. It will increase instability in investment markets. It will waste public money. It's bad in a lot of ways. I just merely want to be very clear that though it's unusual for the US in the last hundred plus years to behave this way, in our long ago history and in other countries around the world, this has taken place and that there have been much smaller, much less overt examples of this by your previous U.S. administration.

[Carol Massar]

Well, and you know, just thinking about all you've just said, Dr. Posen, and then kind of squaring that with the recent government shutdown and the domestic issues that kind of came to the forefront, you know, the one in eight Americans who are on some kind of food assistance or food stamps, you know, the amount of Americans that are just struggling to put food on their table, a roof over their head, I want to bring it down then with so much focus on global issues. And some would say when you're president, you have to look beyond the US borders as well as within the US borders. But having said that, what is it that you know is maybe being ignored in your view domestically? That's really got to be ignorant addressed.

[Daniel Pinto]

Again, you're asking very profound questions. I'll just say that in an enlightened administration, the reason you get involved in the rest of the world is because it ultimately is to, if you set up a rest of the world that feels safer and less corrupt and more stable and less subject to disease and refugee flows and wars, that's ultimately to the benefit of the average American. And if you have open and free commerce on a rules based basis that raises American opportunities and American citizens purchasing power. So I agree with you. There's a question of how you prioritize. And this goes to the point with Saudi I'm not sure that that should be the biggest priority of an American administration right now. It's fine. You can walk and chew gum. It can be one of the things. So when you say what's in the domestic front, I think the removal of health care support subsidies and access to Medicaid and to all these Obamacare related things is going to materially affect the health and well being of millions of human beings in the US and that is bad economically, but it's bad in human terms. I think the reduction of options through the anti migration policies, through other policies that make it so more people, mostly women in late middle age, have to stay home to be caregivers to elders and to children and to disabled people is materially bad for humans and is a huge pressure on people. And I think the combination of anti migration policy attacks on the Fed tariffs, deal making, some of which looks corrupt developed, all adds to a more inflationary environment which reduces real incomes for people. So there's a whole bunch of things on the domestic front. But I just want to say that it's not about choosing the global versus domestic. It's about choosing the self interested versus the public welfare.

[Carol Massar]

I think we need to leave it there. That I got to say sometimes I'm in awe of our guests and I certainly am on this Tuesday. Dr. Posen, thank you so much. Really appreciate all we could. Same here. Thank you for joining us. Dr. Adam Posen, President of the Peterson Institute for International Economics.

[Tim Stenbeck]

Stay with us. More from Bloomberg businessweek Daily Coming up after this.

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[Carol Massar]

Lot to talk about with our next guest. It is our weekly discussion on Women, Money and Power where we explore the economic implications of the wealth shift of money to women and really how to navigate them. We welcome Stephanie Gill. She's Chief Investment Officer at Robinhood Market. She's here in studio. Stephanie, good to have you here. There's a lot going on. I kind of say that Tim and I say that it feels like almost every day. Let's start broadly with the market environment. We've seen quite a pullback in a lot of risk on assets, whether it's the Mag 7, whether it's Nvidia, whether it's semiconductors, whether it's Bitcoin. Is this a market reset, a sell off or market crash that we're kind of getting near? Or neither I think, or none of.

[Stephanie Gill]

The above I think it's correction. So I don't know if one of those was part of that. I think it's a healthy correction. You get them every one to two years. Sometimes we forget that. And we just got off of a period of no data. Valuations had gotten really high. And there is a legitimate question around how much companies are spending versus how much they're making in terms of cash flow and in the largest companies. So that's going to affect the broader market.

[Carol Massar]

Big tech and I'm talking about big tech and AI.

[Stephanie Gill]

And obviously Amazon's borrowing, borrowing, outsizing it to 15 billion doesn't necessarily help that narrative. So I think you just need to start seeing proof that there's a return on invested capital. There are other things that are working, though, in the market.

[Tim Stenbeck]

We'll get to some of the things that are working, but I want to know what the proof would look like in your view. What do you need to see from some of these companies to show, okay, the money that we're spending is actually paying off?

[Stephanie Gill]

I think you need to start seeing money from the actual investments that they're making in terms of like AI investments, how it actually reaches the consumer, how it reaches enterprise. Like we know in the private area, Anthropic is doing a little bit more revenue, right, because they're enterprise focused versus like an open AI that's more consumer focused. So I think if people are investing money in places that are going to prove out that revenue comes, I think the other thing is that you're the change in the one big beautiful bill, right? Gave that 100% expensing. And that's kind of something that I'm looking forward to in the future as well, which is that, like, that's not just AI investing, but also in other tech and infrastructure and like that can start to lift the market to.

[Carol Massar]

One of the things I want to ask you about. You shared some notes with our producer Ariel Agami, and it you said or you noted, global markets have fundamentally changed. Individual investors are now a core part of the financial ecosystem, reshaping how capital markets function. What was once the domain of institutions is now open and accessible to millions of individuals worldwide. I understand where you're coming from, but I was thinking about what Dr. Adam Posen, President of the Peterson Institute for International Economics, said coming off of the meeting between President Trump and Mohammed bin Salman of Saudi Arabia, that this idea that capital flows actually are being controlled to some extent by moves out of the White House, whether it's taking stakes in companies or it's the AI spend that is controlling so much or it's what some say is a transactional White House where invest here and you get the this. It's very different in some regard in a lot of ways from what we've had in the past.

[Stephanie Gill]

I've personally never watched so many political shows in my career of over 20 years like you have. That is part of what you have to know as an investor makes me.

[Carol Massar]

Question like do individual investors really still have a lot of say here?

[Stephanie Gill]

I think they do, but not necessarily in the biggest companies. Like I, you know I think there's. They actually are seeing. Some of the individual investors I think are seeing things before the institutional investors and that they many are so aligned with the White House and what they're doing that they're like this is what I think the future is. I also think that it's not necessarily showing up in the largest companies. There are other companies, smaller ones that they kind of gather together and sort of community invest and those aren't the biggest companies but they are ones that are more volatile but they have a longer time horizon. Most of the people on our platform are average age of 35. You know know more than two thirds of our company is millennials and Gen Z. So that's what you know. I think it's the same as thing as sorry thing is being on a trading desk and kind of talking about investment ideas together. Now they're in X doing the same thing in stuff.

[Tim Stenbeck]

They're probably watching crypto closely to Bitcoin down 25 to 30% depending on when you look at it from those all time highs just last month.

[Stephanie Gill]

Yeah.

[Tim Stenbeck]

What does that do? Not, not, not for your customer and not for the Robinhood user. But, but what does that do for sentiment or does it give any indication of sentiment?

[Stephanie Gill]

I think it does because you have seen actually some really big institutions sell some large positions too recently. Not just in bitcoin but obviously in video and other names I think. But then there was buyers too from Berkshire Hathaway. I think, I think those at play in the crypto space are very used to large swings and they're you know I think there's kind of a meme out there that says if you're invest like when stock investors have a big drag down they're like, you know the crypto investors are like welcome to the way it feels. So I actually think they're kind of used to it. We haven't really seen a huge shift. If anything most of our customers when they're investing. They play the volatility in that when it goes up a lot, they'll trim their positions. When it's down a lot, they do add.

[Carol Massar]

We have to jump. So much going on. Come back soon because we would like to continue the Stephanie Guild, Chief Investment Officer at Robinhood Mark this is the.

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