Trump claims frozen Iranian assets to be used to buy corn, soybeans from U.S. farmers

[00:00:00] Speaker 1: Let's get down to business. We're monitoring Wall Street this morning after a pretty rough day yesterday. All major indexes fell, largely dragged down by tech stocks. But just a few seconds before the opening bell, we're going to get into what's happening with David Gurra, host of Bloomberg this weekend and the Big Take podcast, and Brendan Greeley, contributing editor for the Financial Times, author of the new book, The Almighty Dollar, and fellow pride of Tulane University. Roll wave. Always a joy. Roll wave. David, we will keep our Tulane pride to ourselves here at the table and come to you first, because a lot of the past two days has really been about tech companies and how much they're spending on AI. It's been a concern for a while. So why are we [00:00:36] David Gurra: starting to see it manifest now? Yeah, I mean, you're right. It has been a kind of persistent worry for a lot of investors that maybe investors have gotten over their skis, and these AI companies have as well. And so what we saw yesterday with Micron, one of these AI infrastructure companies, companies that makes chips, was a real sharp dip. That company reports earnings today. Look, there is this overarching fear that so much money has been poured into the prospect of AI, and there's been very little return on investment so far. How much patience or investors are going to have to see that kind of pay off? You ask why it's happening now. The kind of confluence that we're seeing here is with the Federal Reserve indicating it's likely to hike rates perhaps later this year. That's giving investors pause as well. So those two things coming together really contribute to what we've seen over the last couple of days. And again, Micron reporting earnings today, we'll see sort of what that company has to say about its prospects and the prospects of AI more broadly. [00:01:23] Speaker 1: And of course, that cheering was the opening bell. Sadly, not for David's points, though very well made. Brendan, the markets are looking a little better this morning. So were the past two days more of a bump in the road or something else? [00:01:35] Brendan Greeley: I think we're looking at the shift from AI from this beautiful story about the future, about how it's going to be awesome and better, to understanding AI as just another product. And when you look at that, we now have good research. Bain has done this on how companies are actually using AI. And we're figuring out two things. One of them is it's not unambiguous of the way it makes things more productive. It takes a lot of oversight. We're not necessarily in all cases saving time or saving labor. So this promise that companies are going to become even leaner, even more productive through AI, it seems like it's running into some friction. The other problem is it's expensive. Yes. And when we talk about, you know, AI changing the future, that's often executives in Silicon Valley who aren't really thinking about the costs personally of the tokens that they're using to spend on AI. But if you look across an entire company using tokens to code or, and tokens are again, just a fancy way of saying dollars to code or to automate certain administrative tasks, it's really expensive. And now you're looking at a problem, which is that these companies don't just sell the future. They sell a product. There's not enough uptake in that product. They're not providing enough revenue. And these extravagant promises that they're making actually are not borne out in valuations. Eventually with every new new technology, the dream comes crashing down and you're looking at a product. And I don't think that this is going to be a collapse in value. I do think it's going to be a more real realistic take. [00:02:59] Speaker 1: Yeah. It's a bit of a reality check, right? Because if you're saying I'm going to change the future, but you can use it now, people are going to say, cool, it's the future now. And as everything in my life actually changing. And I think the reality is more people start figuring out how do I adopt AI is it's not really doing everything that you said that it was going to do. And I wonder if that's what the markets are starting to reflect. [00:03:17] Brendan Greeley: Yeah, absolutely. And these promises are ridiculous. Like it's going to cure cancer. It's going to fix global warming. It's going to make you taller and smarter. Right. Yeah. And I think what we're actually looking at is people sitting at desks, looking at spreadsheets going, this is expensive. [00:03:30] Speaker 1: David, I want to pivot away from AI briefly to oil prices, which keep dropping and are now only a few dollars away from where they were before the war started. That's something the president himself is touting on the road. Diesel prices now below $5 a gallon, first time since March. Gas prices, though, are still up nearly 32 percent. This morning, President Trump said he's ordered the Justice Department to look into why they aren't falling faster. But we got warnings from oil executives early that this isn't just a switch you can flip on and off and see immediate prices fall at the pump. So talk about what's happening here. [00:04:02] David Gurra: That's exactly right. So look, this war started very quickly with the bombing campaign, and we saw the immediate effect that that had on the global economy. It is a harder thing to unwind what's happened here. We've seen the devastation that's been wrong in the global economy as a whole. So the president may wish for those prices to go down. He might encourage companies to lower those prices. He very well may be instructing his DOJ to do that, although I haven't confirmed that myself. I don't think that's what Bloomberg has as well. Look, there's a real level of frustration here. The way that oil markets, the way that energy markets work are not instantaneous. Purchases are made well in advance here, and this is going to take time to kind of equilibrate. And I should say that the broader point to make here is that this is still something that's based on a hope and a prayer. Yes, there's this memo of understanding. Yes, there's been this initial meeting between the vice president and his Iranian counterparts with some other intermediaries. But we've seen very little tangible progress here yet on ending cessations in any kind of permanent way. So we're seeing the oil markets react to that, the hope that that could change, Ali. But again, it's not permanent. And again, there's such a long lag time here when it comes to energy. It's unlikely that we're going to see that move down in gas prices. That's dramatic where diesel prices is dramatic anytime soon. Yes, they're coming down. That's a good thing for everybody, for businesses, for consumers. But I should point out both gas and diesel still markedly higher than they were before this war began. Also, if I put the politics lens on this, [00:05:21] Speaker 1: it makes sense that President Trump is trying to get out on the road in these swing seats and say prices are coming down amid an affordability crisis that voters have been cleared. They are top, top, top of their list for concerns in the midterms. At the same time, though, if these talks fall apart and they feel pretty tenuous, that promise immediately falls by the wayside. And I think, Brendan, what you and I were talking about is if we're in the vein of promises made, promises kept, you look no further than states that have a lot of competitive races and they also have a lot of farmers. I'm thinking specifically of places like Iowa. And when you look at the impact that farmers have felt from the Iran war on fertilizer, on prices of oil, but even when it comes to soybeans, and better you than me looking into the data on this, but you've said that it's striking. [00:06:02] Brendan Greeley: Yeah, I was curious this morning, you know, he made this promise we're going to sell soybeans to Iran now. It's very similar to promises he's made for... Which the Iranians say that's not what's happening. Yeah, sure. Of course. Of course. It never is. You know, but he also many times in his first administration, and again, has promised that China is going to buy more soybeans. I was curious. I actually dug into the Agricultural Department data on this. You know, they break out exports of soybeans by country. Strikingly, every year that Donald Trump has been in office, exports of soybeans to China have dropped. You cannot fix these things through diplomatic fiat or trade negotiations. You have to create an enduring and reliable market. And one of the things that we discovered is that in a trade war with China, China knew that soybean exports were a pain point politically for Trump in those states. And they also knew that they could get soybean exports from Brazil or from Argentina. And so I have a hard time understanding in the middle of all the other things we're asking of Iran, that they're magically going to start importing enough soybeans to make up any difference from any other country. It's just, I think we have to file that under the massive file cabinet of just stuff Trump says that has absolutely no purchase on reality whatsoever. [00:07:08] Speaker 1: No purchase on reality and also no tangible impact on the people that he is saying it to. If we stay with the politics of this moment and the money for a little bit, David, we've been talking about yesterday's midterms. And I have to ask about the one congressional primary here in the city where tech companies spent millions. They targeted Alex Boras, who supports regulating AI. He ended up coming in second. But he argues that it was a close race and that people are excited about his vision of regulating these AI companies. The irony, of course, is that Michael Lasher, who also won, says he's going to regulate AI. So we'll see what happens. But do you think that we're going to see more races like this come November that the AI companies hear someone say in a primary or in an election, I want to regulate these companies and they can pour in tens of millions of [00:07:50] David Gurra: dollars against them? Absolutely. I mean, an incredible quantity of money was poured into this race, I think 25 plus million dollars. And look, this issue of what happens to AI in terms of regulation is the roiling one here in the U.S. and around the world. And I couldn't help but think back a few years to when cryptocurrency was all the rage and there was this concern among those companies about how they might be regulated or not in Washington. The same sort of thing happened that led to all kinds of malfeasance with Sam Bankman-Fried and others who were really leaning into political spending. I think we're at a kind of similar moment here where you have, as Brennan was talking about just a moment ago, the excitement and enthusiasm about the prospect of AI, of feeling among those companies that they have to build something that is something. There's a rush to do that. And they see any kind of regulation, particularly rigorous regulation, as an incumbent to that. So I think going into the midterms, we're bound to see much more spending like this. And again, I think the bad kind of historical analog to what we saw with crypto just a few years ago is very front of mind to me going forward. And by the way, crypto still very much spending [00:08:53] Speaker 1: in politics. Just what we need. More money floating around here. David, Brendan, we will leave it there for now. Thank you. [00:09:14] Speaker ?: Thank you.