Let's get to the big story.
Breakdown.
The State of the Union address was the longest in history.
Trump focused heavily on domestic issues and made no reference to America's economic competition with China.
At the same time, the Supreme Court striking down the president's emergency tariffs, yet the government began charging a 10% tax on nearly all imports.
While trade confusion lingers.
The real story is the sudden fear of AI disruption.
And of course the Citrini research blog post warning that AI could disrupt entire parts of the economy.
And anthropic accusing three prominent Chinese AI startups of improperly using its cloud model to boost their own systems, raising national security concerns.
Well joining me this morning to weigh in is Brendan Ahern, CIO at Cranesures.
Brendan, good morning.
Thank you so much for joining me.
So first and foremost, here we are the morning after the State of the Union address, but it was very interesting because Trump did focus heavily on domestic issues but made no reference to America's economic competition to China.
So what do you make of that?
Yeah, yeah, I think it's a very good point.
I mean, he did double down, so to speak, on tariffs.
That was a big part of his narrative and certainly went after the Supreme Court for their decision to strike down the IEPA tariffs.
But, but I think this is because of his upcoming trip to China that we know at the end of March, President Trump will travel to China to meet with President Xi, and I think, I think he Wants to announce bigger trade deals.
We have a trade truce, but could that be expanded?
Could we see commitments in terms of Boeing, Soybean, and Nvidia chip purchases, as well as there's been a lot of chatter about could Chinese companies actually manufacture or partner with US manufacturing companies.
So I think, I think it's not surprising he left China off to the side during this speech.
And speaking of tariffs, plenty of reactions to the Supreme Court ruling on tariffs last Friday.
The Supreme Court ruled that emergency tariffs are unlawful, yet the CBP is collecting 10%, with the rate swinging from 15% on Saturday back to 10%.
So what does this uncertainty due to long term trade partners, especially ones like China?
Yeah, I think it's kind of an interesting, uh, time period because there's a little bit of uncertainty on what exactly is this policy going to be, could Future court decisions strike down, but I think, I think, I think the president, you know, very clearly wants the 10% tariff.
He's long held a belief that tariffs are a positive, that it generates revenue.
I mean, obviously that's actually paid by US consumers and US companies.
Foreign countries do not write a check to the US government, you know, it's just passed along to US consumers and Uh, so I think, I think, you know, we'll probably stay at this 10% level because it's not, not creating too much inflation, not too much harm to the US consumer, and it's something that foreign manufacturers can actually tolerate.
They'll just compress their margins.
Yes, and Brendan, while I have you here, we're counting down to Nvidia earnings today after the closing bell.
So one thing I do want to get your take on is of course the Sass apocalypse, but also Trump announcing a new so-called ratepayer protection pledge and under the Planned technology companies stateside would have to cover higher electricity costs in communities where new AI data centers are built from.
So what do you make of this from affordability as well as what it does to the bottom line of some of these tech companies.
Yeah, I think Remy, you know, I think it's, you know, a big element of the president's speech was focused to the domestic economy, and the economy, arguably there's elements that are doing well, there's elements that are not, but, but going into the midterm elections, you know, we should expect President Trump to pay a lot of attention to raising the domestic economy, addressing issues, concerns from consumers, you know, things like food prices, oil prices, and I think a growing concern.
Amongst voters is going to be, could all this AI-driven electricity demand, could that raise prices for residents who are voters?
So so I think it's not surprising that technology companies are going to have to pay their way.
They're going to have to ensure that it doesn't raise electricity costs for residents who are ultimately voters and going into the midterm.
That's going to take a much, much higher priority.
And I do want to get your take on Anthropic as well because there have been plenty of headlines about Anthropic this week, but the company is claiming that Deepsek, Mini Max, as well as Moonshot AI created more than 24,000 fake accounts and ran over 16 million.
Actions were flawed and the company is saying that the firms used a technique known as distillation where a new model learns by trading on the outputs of a more advanced system.
So what do you make of this and how much do you place credence on this given that report?
Yeah, I think it's, it's hard to prove, obviously.
I mean, it's an accusation.
I think, I think ultimately that many of the Chinese, particularly deep Sikh, you know, the foundation for that AI model clearly could not have been done without the efforts of not just anthropic but, but an open AI.
At the same time, I would point to, you know.
Alibaba's QN model, which is actually they've doubled market share in China from 17 to 34% over the course of 2025.
They're going to monetize that AI, that large language model, through their cloud computing business.
We'll see very similar efforts from Tencent and Badu.
So you know, there's a whole host of players.
There there's going to be good actors and bad actors, but I don't think you can argue that this China growth in AI is stolen or copycat wholesale.
I mean, I mean this is decades of STEM graduates and from China, and we're seeing that come to fruition in things not just like AI, but EV, clean technology, humanoid robotics.
And finally, before I let you go, we have time for one more question.
So I am going to ask you about recent market moves that are showing just how fast investors can change their view of risk and this does also come on the heels of that Citrini research post.
So what do you make of that and what are your key takeaways?
Yeah, I think, I think, you know, this is something that, you know, we discuss internally because, you know, you know, within, within Crane shares we use large language models from, from Grok, uh, XAI as well as um Anthropic Cloud and you know, the, the amount we pay is barely de minimis.
It's compared to what we're paying, say the sales for.
So, so we use AI, you know, you're really at big data sets, you know, basically examining this data, and it's.
Basically free or very, very low cost because you have huge amounts of US private equity basically funding these companies as they try to grow market share at the same time on the software side, if you eliminate all your software.
We know down the road these agents, you know, the prices are going to increase, maybe not quite as much as on the software side, but we just know down the road.
So it's something that, you know, even within crane shares, it's a debate we're having, but I think ultimately these companies are in a race to garner market share, and they're burning a lot of cash.
Capital and you know just you know, can they get out in front of the software companies, actually convince people to eliminate them.
That, that I think the market kind of shot first, asking questions later, but, but time will tell.
I don't think software is ever going away completely at the same time, they're going to have to see a lot of margin pressure and a lack of growth going forward.
Yeah.
And speaking of which, after the closing bell, we will be getting earnings out from Salesforce as well in addition to Nvidia, so I'm sure all of us will be listening in on the earnings call and watching that earnings report closely.
So Brandon, we will have to leave it there.
So thank you so much for joining us this morning and thank you so much for sharing all of your insights.
Thank you, Rabbi.
