Speaker 1: I'm Caroline hired a Blomberg's World headquarters in New York
Speaker 1: and imed Ludlow in San Francisco. This is Bloomberg Technology
Speaker 1: the market risk on when it comes to tech. Caroline
Speaker 1: not too hung up on all the talk about UFOs
Speaker 1: had geopolitics not front and center for many an investor
Speaker 1: in terms of a risk capasite. Let's get to it
Speaker 1: a geopolitics at least coming up this our ed Secretary
Speaker 1: of State Blincoln's widely considering a meeting with China's top diplomat,
Speaker 1: the first face to face talks as the US shot
Speaker 1: down a Chinese by balloon. We talked tech security plus
Speaker 1: in spite of those rising tensions with China, Ford teaming
Speaker 1: up with a Chinese company to build a giant EV
Speaker 1: battery plant in Michigan. Our conversation with Lisa Drake, Ford's
Speaker 1: vice president of EV Industrialization, and the continued crypto crackdown
Speaker 1: is putting a binance link token in the crosshairs. More
Speaker 1: on the potential regulation later this hour, but first we
Speaker 1: check in those markets and as you say, enthusiasm when
Speaker 1: it comes to stocks. At least said I'm looking at
Speaker 1: one and a half percent higher on the NASAC. Now,
Speaker 1: remember last week it had its worst sell off this year,
Speaker 1: so now we're back on it seems as though some
Speaker 1: of the forward looking consumer expectations for inflation just starled
Speaker 1: down a bit the data today. We all look for
Speaker 1: that CPI print, that inflation print tomorrow, ms CI or
Speaker 1: Country World the next up eight tenths of percent. Europe
Speaker 1: had a good risk on rally as well. Two year
Speaker 1: boring costs basically flat, but we did see some elevation
Speaker 1: in terms of two your boring costs, mainly thinking that
Speaker 1: the Fed is going to have to still tackle inflation
Speaker 1: that's above six percent as we anticipate for tomorrow. Flick
Speaker 1: it on one risk asset that did not get much love,
Speaker 1: and it has been crypto. Look, we're down over the
Speaker 1: course of two days. I'm looking at the Bloomberg Galaxy
Speaker 1: INDEXUS looks at the most crypto as a whole, not
Speaker 1: just of course Bitcoin, but some of the other major
Speaker 1: traded currencies, and it was on the downward trajectory. The
Speaker 1: reason ed we all know some worries about the crackdown, yeah,
Speaker 1: and looking at single names across and as I think
Speaker 1: the vast majority a t of names were in the green,
Speaker 1: but there are some interesting stories kind of buried within that.
Speaker 1: Microsoft up three percent, continue momentum, but you saw a
Speaker 1: number of analysts out with notes syfel or Steve Fell
Speaker 1: for example, out with a by rating and upgraded price target,
Speaker 1: basically saying this is a transformational year. AI is a
Speaker 1: part of that. But four year twenty four is when
Speaker 1: we'll really see Microsoft start to flex twily, up two percent,
Speaker 1: layoffs another round of cuts seventeen percent, which we'll get
Speaker 1: into later in the show. But the market cheering that
Speaker 1: despite it being an unpleasant conversation you alluded to. It
Speaker 1: Forward up two point eight percent, finally confirming that scoop
Speaker 1: from Friday that it is Michigan and it is a
Speaker 1: partnership with c at L for their latest battery plant
Speaker 1: for e VS moved to the downside. Tesla down just
Speaker 1: one percent this Monday, but on a two day basis
Speaker 1: carrying over from Friday, it's the biggest two day drop
Speaker 1: in six weeks. And I just flagged that out because
Speaker 1: a lot of voices in the market, Caroline kind of
Speaker 1: looking at that as a as a sort of treading
Speaker 1: water stock ahead of that CPI print on Tuesday, Well,
Speaker 1: not treading water at the moment, ed is a lot
Speaker 1: of the tension our UFOs and before we get to
Speaker 1: our own Twitter poll around and let's just get your
Speaker 1: speed with the fact that the US has just shot
Speaker 1: down it's forth flying objects since China's allegends by balloon
Speaker 1: last week, although Secretary State Anthony Lincoln is considering a
Speaker 1: meeting with China's Foreign Minister Wangi at a security conference
Speaker 1: later this week. This as Native Secretary General that's En
Speaker 1: Stolnberg says, China and Russia are increasing surveillance and intelligence
Speaker 1: against the Alliance. China, but those Russia are increasing their
Speaker 1: intelligence as activities against natile hours with many different platforms.
Speaker 1: We see it with satellites, more and more satellites, and
Speaker 1: we see them with balloons. That highlights the importance of
Speaker 1: our vigilance are increased presence, and also that we ramp
Speaker 1: up and step up how we share intelligence and how
Speaker 1: we monitor and protect our airspace. A's the international reaction.
Speaker 1: Let's get the reaction of Bloomberg's Alex Wayne out of Washington.
Speaker 1: Alex just tell us is this untoward? Is this weird?
Speaker 1: Or is it the fact that finally people are starting
Speaker 1: to shoot them down. We don't have a lot of
Speaker 1: answers about about what's going on and why US fighter
Speaker 1: jets are suddenly shooting so many weird objects out of
Speaker 1: the sky so far. UM. The White House Press Secretary
Speaker 1: Crane Jehan Pierre did say today that there is quote
Speaker 1: no indication end quote that it's aliens. So I suppose
Speaker 1: that explanation is ruled out and we should look for
Speaker 1: for a more mundane source for these objects. UM. The
Speaker 1: Defense Secretary Lloyd Austin said in Europe today that they
Speaker 1: have not yet recovered any debris from the objects that
Speaker 1: were shot down over the weekend, and they were shot
Speaker 1: down in some pretty remote areas over Lake Huron and
Speaker 1: in Alaska and our Canada as our as our graphics
Speaker 1: shows there, these are gonna be difficult places to get
Speaker 1: to get to recover the reece. I think it's gonna
Speaker 1: be a while. So we have any answers, that's what
Speaker 1: as to what these things are. UM. We do know
Speaker 1: that they were shot down because they presented a threat
Speaker 1: to aviation. UH. That's that comes from John Kirby, the
Speaker 1: U s National Security spokesman, who also spoke at the
Speaker 1: White House Press briefing today. I guess in part the
Speaker 1: news flow around this story is driven because for the
Speaker 1: first time, we're actually all going out and looking for
Speaker 1: these things. You know, That's the sense that I get
Speaker 1: from your team's reporting in d C. I mean, there's tie,
Speaker 1: it's the broader context, the U S. China relationship. What
Speaker 1: is happening there? What is the latest on the actions
Speaker 1: the US have taken and how they viewed that relationship
Speaker 1: with China. Yeah, well, it's not helping relations with China obviously.
Speaker 1: The Chinese, of course, accused US of using balloons to
Speaker 1: spy on them. That was firmly denied by the White
Speaker 1: House earlier today. I do think these things are are
Speaker 1: being discovered because since the Chinese that the alleged Chinese
Speaker 1: by balloon floated across the US UH North American air
Speaker 1: defenses have started looking for the objects, and sure enough
Speaker 1: they're finding them. Um, that doesn't mean they're they're all
Speaker 1: spied devices from from China or Russia or elsewhere. Um.
Speaker 1: There there could be more, you know, much more ordinary explanations.
Speaker 1: Perhaps there are some sort of commercial aircraft or research
Speaker 1: aircraft or something that that just got off course. I
Speaker 1: guess floated too high in the air and and the
Speaker 1: the Air Force felt like they had to be removed.
Speaker 1: Bloomberg's alex Wayne Top reporting out of d C. Thank
Speaker 1: you very much, and Caroline, I've been up for a
Speaker 1: long time today. I've covered a lot of stories and
Speaker 1: a lot of shows and as well, I just I
Speaker 1: just didn't think Monday would have me uttering you fo.
Speaker 1: And as you know, we're trying to keep our audience
Speaker 1: out there in the loops. We asked, you know, what
Speaker 1: do you guys think about UFOs? Are you worried? Are
Speaker 1: you concerned? This is the response. This is humanity for you.
Speaker 1: Of what was a lot of respondents saying not bothered,
Speaker 1: not bothered. They're more bothered about Rhianna. They're more bothered
Speaker 1: about Manchester United potentially being brought by Kata they potentially, though,
Speaker 1: are also realistic head how much is this actually tip
Speaker 1: for tap? How much is this generally going on over
Speaker 1: the skies? How many these sources of objects potentially of
Speaker 1: being sent over various from US, over to other countries
Speaker 1: and then back to US surveillance we know is kind
Speaker 1: of something we live with. Yeah, juries out until they
Speaker 1: actually find the objects which were shot down. Then then
Speaker 1: we can talk about UFOs. But let's continue the conversation
Speaker 1: nonetheless and broaden it to the risks in technology moving forward,
Speaker 1: which could become a major headwind for the sector. According
Speaker 1: to Bank of America. Take a listen. I think the
Speaker 1: other shooter drop for tech is just the regulatory background
Speaker 1: when you think about cyber attacked data privacy. This is
Speaker 1: an issue that's affecting the man and woman on the street.
Speaker 1: M let's bring in John holt Quist, vice president of
Speaker 1: Intelligence analysis at Mandy and Security um Google Cloud. John,
Speaker 1: you've heard all the preamble, the geo political tension UFOs
Speaker 1: out there. Three, the year of bracing for risk in
Speaker 1: whatever form it comes. Well, we see a tremendous amount
Speaker 1: of you know, activity from all kinds of all the
Speaker 1: kinds of corners of the earth. We see stuff from
Speaker 1: the Chinese actors, Russian actors, North Korean actors, and they're
Speaker 1: increasingly aggressive and increasingly targeted everyday people. Right We see,
Speaker 1: for instance, North Korean actors now are carrying out a
Speaker 1: campaign it's affecting hospitals in the United States and the
Speaker 1: globe where they're trying to ransom those hospitals for money, right,
Speaker 1: John Manny and specializes in cybersecurity intelligence, seeing what's out there.
Speaker 1: What conversations are you having with customers, big corporate customers
Speaker 1: about the risk they face. What are they most worried about? Well,
Speaker 1: you know, I think we see a lot of you know,
Speaker 1: see a lot of our customers are actually pretty pleased
Speaker 1: with the intelligence we've been able to give them these days.
Speaker 1: We were much better than we used to be at
Speaker 1: seeing what these actors are up to. The problem really
Speaker 1: is is how do you change your posture, your security
Speaker 1: posture and actually you know, adapt to the adversary. And
Speaker 1: that's a tough job, right. It takes a lot of
Speaker 1: It takes a lot of work to actually, you know,
Speaker 1: shift shift your posture every time you actor developed, something
Speaker 1: like new ransomware or a new tactic is developed. And
Speaker 1: that's precisely what we have to do. We have to
Speaker 1: evolve ahead of of these of these actors. John, how
Speaker 1: much when you're asking your clients and people you talk
Speaker 1: with when you're going and putting fort leadership out there
Speaker 1: with reports that you just have done today, for example,
Speaker 1: how much is this self inflicted from some companies? How
Speaker 1: much is it that actually we have the right security
Speaker 1: to put in place, it's just people aren't putting it in.
Speaker 1: We're still leaving holes and vulnerabilities. Well, you know, it's
Speaker 1: it's it's really hard to always be perfect in this
Speaker 1: in this space. And you know, adversaries absolutely take advantage
Speaker 1: of the smallest mistakes, right. I think that's in many
Speaker 1: of the cases we've seen they have you know, for instance,
Speaker 1: they take advantage of users who may not understand what
Speaker 1: they're looking at, or or they may take advantage of
Speaker 1: misconfiguration for instance. That happens all the time. But really,
Speaker 1: you know, these are very advanced adversaries and in many
Speaker 1: cases these are state actors, these are spies. They are
Speaker 1: not easy targets. Uh. And we we have we have
Speaker 1: been forced to essentially continue to raise our game against
Speaker 1: an adversary that, uh, we shouldn't really have to face.
Speaker 1: But we do talk to us about how people, how
Speaker 1: clients feel about their security levels. What are they most
Speaker 1: worried about? Is it nation state actors or is it activists?
Speaker 1: Is it just people wherever they might be based, wanting
Speaker 1: to do some financial run somewhere in some way runk
Speaker 1: it for us the anxiety amongst people, Uh, I think,
Speaker 1: you know, I think it's what's really interesting is that, uh,
Speaker 1: for every organization, the threat picture has is entirely different, right,
Speaker 1: And that's why the intelligence is so important. You have
Speaker 1: to determine who matters the most to you, right uh.
Speaker 1: Right now, for instance, we're seeing this campaign of North
Speaker 1: Korea against hospitals and and and I think hospitals probably
Speaker 1: didn't consider these actors a threat before, but now they
Speaker 1: have to reconsider their their entire security posture because of this. UM.
Speaker 1: I've seen many time, and many times I've seen organizations
Speaker 1: who thought that Russian State actors were gonna be the
Speaker 1: you know, be the ones who went after them, and
Speaker 1: the reality is was Russian criminals were the ones that
Speaker 1: caused him the real pain. Uh, using intelligence to actually
Speaker 1: make those decisions is what gets you ahead of the adversary.
Speaker 1: Don hold Quest, vice president of Anteligens Andnalysis, and Mandy
Speaker 1: and just terrific and time the conversation. Thank you so
Speaker 1: much for coming on the show. Now coming up, could
Speaker 1: that be a man extinction event coming up for early
Speaker 1: in mid stage companies. That's what I VPS Tom Laverry thinks.
Speaker 1: And we'll ask him next why this is Bloomberg. The
Speaker 1: inflation will come down, but I think it will stay
Speaker 1: persistent for a period of time, probably longer than we
Speaker 1: originally anticipated um when they started bringing interest traits up.
Speaker 1: I personally am optimistic that we will find a balance
Speaker 1: point in the five percentage range. That's my personal view.
Speaker 1: Of course, I'm at this from one person's view, but
Speaker 1: I also think that that we will end up staying
Speaker 1: there for longer. That was Nasdack, chair and CEO Adina
Speaker 1: Freedman speaking at the Saudi Capital Market Forum in readd
Speaker 1: and giving her take on rate hikes, inflation, and the
Speaker 1: I p O pipeline. I want to stick with this
Speaker 1: conversation and get the private markets take with i VP
Speaker 1: general partner Tom Lavero and about his prediction for start
Speaker 1: ups in this landscape. I VP has eight point seven
Speaker 1: billion dollars of assets deployed or under management. Tom, you
Speaker 1: tweeted at the end of January that late twenty three
Speaker 1: would be a mass extinction event for early to midstage startups.
Speaker 1: We've had one FED meeting since and we have an
Speaker 1: inflation print tomorrow. Look we're showing it on the screen. Now.
Speaker 1: Do you stick with that thesis? Right? Now in this moment, absolutely,
Speaker 1: I think the trends that I was talking about in
Speaker 1: that threat are going to persist for at least a
Speaker 1: couple of years. LP capital pulling back, a fewer adventure
Speaker 1: dollars going out. I've heard some things out in the marketplace,
Speaker 1: and my question, she is, what do these startups do
Speaker 1: then if they face a mass extinction event. I've heard,
Speaker 1: for example, some going to their bankers and saying, get
Speaker 1: someone to buy me because I can't raise funds. My
Speaker 1: valuation has come down. Is that what's happening right now?
Speaker 1: I think a lot of startups in the past couple
Speaker 1: of years that were kind of marginal got funded and
Speaker 1: that was an easy money environment. That change, and so
Speaker 1: we're trying to get out there and tell founders the
Speaker 1: world has changed, be conservative with your cash. Raise sooner,
Speaker 1: and you're absolutely right, there's gonna be a lot more
Speaker 1: M and A as the valuations on these startups come down.
Speaker 1: The public markets, buyers, the pe buyers are taking notice. Okay,
Speaker 1: raise sooner in this current environment, Tom, what does that
Speaker 1: look like? What sort of foundations can you hope for?
Speaker 1: What are you being pegged to? Is it profitabilities at
Speaker 1: revenue it's a good question. It depends on the given startup,
Speaker 1: but I think as a rule of thumbs, startups go
Speaker 1: into the red zone on how much cash they have
Speaker 1: left when they've got about twelve months of cash. So
Speaker 1: you should be raising before then, ideally, and certainly have
Speaker 1: your round close by, say six or seven months of
Speaker 1: cash left at the latest um. And in terms of valuations, listen,
Speaker 1: the public markets have reset to a place that we
Speaker 1: think we view as healthy. It was unhealthy. We had
Speaker 1: public private companies going fifty a hundred times revenue. Those
Speaker 1: days are gone, and now if you look at the
Speaker 1: public markets growth, adjust those and that's a good benchmark
Speaker 1: for startups. Tom I VP has more than forty years
Speaker 1: in this game, and you stick around for forty years
Speaker 1: by being sort of collaborative, by working well with other
Speaker 1: players in the space as well. I'm interested in your
Speaker 1: perspective of what it's like right now when people are
Speaker 1: coming to you for a check, and how you're treating
Speaker 1: the earlier investors. I'm hearing time and time again that
Speaker 1: some of the first checks that are being written and
Speaker 1: then when you go to the second round, they're they're
Speaker 1: losing a lot of their power those first early money
Speaker 1: in their being diluted enormously if they haven't got the
Speaker 1: money to be able to put in at the same
Speaker 1: time as your second round or third round. How are
Speaker 1: you seeing that evolve. Who's losing out who's winning here? Tom,
Speaker 1: It's a great question. Our style of investing, we tend
Speaker 1: to invest in the things that are growing the fastest,
Speaker 1: and we try and partner with those early stage investors.
Speaker 1: But I think the early stage investors are paying attention
Speaker 1: to the markets. They have portfolio companies that are later
Speaker 1: stage that are about to go public or maybe went public.
Speaker 1: So I think we're generally on the same page. Where
Speaker 1: it gets tricky, of course, is when startups have to
Speaker 1: raise a new round below the valuation of their last round.
Speaker 1: That's called a down round, and that's where incentives can
Speaker 1: diverge from early investors and late investors. We haven't done
Speaker 1: one of those down rounds because we're really focused on
Speaker 1: the companies that are growing, But I think we're going
Speaker 1: to have to grapple with that here in the next
Speaker 1: couple of years as well. The whole industry. There's those
Speaker 1: that delayed funding from last year. I'm hearing that in
Speaker 1: some cases Series B investors want to see evidence of
Speaker 1: profit and then you have structured deal. You have a choice,
Speaker 1: do a structured deal and avoid a downround or do
Speaker 1: a down round. How do you handle all of those situations? Yeah,
Speaker 1: and to be clear, we're not looking for profitability. We
Speaker 1: want companies to be efficient but also grow and so
Speaker 1: for us we do mostly Series B and C investing,
Speaker 1: and we expect companies to be taking pretty significant losses.
Speaker 1: But what we're focused on is the unit economics. And
Speaker 1: so what we tell companies is get those unit economics right,
Speaker 1: and if they get the unit economics right, we can
Speaker 1: evaluate whether we want to fund them. Tom always such
Speaker 1: great analysis. Thank you for bringing that Twitter storm onto
Speaker 1: the real life of television with us. Tom Lavero, We
Speaker 1: thank you, my VP general partner, stay well. Meanwhile, Amazon
Speaker 1: squeezing more money from its own two million small businesses
Speaker 1: at sell products on its online marketplace. Now for the
Speaker 1: first time, Amazon's average cut of each sale surpassed fifty
Speaker 1: two that's going to a study one marketplace Pulse, which
Speaker 1: sumples sell the transactions going back to and with online
Speaker 1: shopping not as strong after pandemic era lockdowns ended, many
Speaker 1: sellers are now struggling to make money, prompting some to
Speaker 1: handle shipping themselves and to spend less to advertise on
Speaker 1: Amazon sites. Plus matters. Chief business officer Marmy Levine stepping
Speaker 1: down after more than twelve years with the company. Metro
Speaker 1: announced that earlier today. Levine has held several possessions at Meta,
Speaker 1: including head of Global Policy, chief operating officer over at Instagram.
Speaker 1: Levine will leave her post later this month and depart
Speaker 1: the company this summer. Her exit, of course, comes at
Speaker 1: a time of transition. Let's called it for Meta, which
Speaker 1: announced in November that it would be cutting more than
Speaker 1: eleven thousand jobs in the first major workforce production Twilio,
Speaker 1: it's the latest tech company to slash jobs and sing
Speaker 1: it again. The software maker is saying it will cut
Speaker 1: about sevent of workers, just months after a previous major
Speaker 1: round of layoffs. Now the CEO also is saying they're
Speaker 1: planning to reduce office space and pair back benefits as
Speaker 1: part of the focus on profitability. Here for more is
Speaker 1: Bloomberg's Roodie Ford and it is notable that they've had
Speaker 1: to come back and do a second call here. Yeah,
Speaker 1: this is frightening if you're a tack worker, right, because
Speaker 1: I think most of us assume that if you get
Speaker 1: a major layoff as they had was about eleven back
Speaker 1: in September, you think, if you made it, I'm cool.
Speaker 1: But no, I mean this show is that if market
Speaker 1: conditions continue to worse and companies will make additional cuts.
Speaker 1: Today this brings it to a total of about twenty
Speaker 1: six percent of the company, which by my math, I mean,
Speaker 1: know if I'm wrong, anybody watch him, but I think
Speaker 1: that is larger than any other large, publicly traded tech company. Yeah,
Speaker 1: it is an interesting beast, isn't it? Eleven billion dollar
Speaker 1: market cap even with the cuts head count at sixty
Speaker 1: six thousand. What I thought was so interesting as well
Speaker 1: is that they have a found a CEO, Jeff Lawson,
Speaker 1: and he's addressing his own compensation. What do we learn
Speaker 1: about the cutbacks he's making to his own compensation. Yeah,
Speaker 1: so they didn't make a huge deal of it, but
Speaker 1: he cut his compensation, and many of us are tempered
Speaker 1: to say, oh, understanding, ceo. But you gotta remember that's
Speaker 1: a mounch to about point four percent of the total compensation, right,
Speaker 1: I mean, this is not a huge reduction. Um, this
Speaker 1: is he's still making Uh well, we don't know does
Speaker 1: new com packages, but compared to one it's about point
Speaker 1: four percent and he made about fourteen point five million.
Speaker 1: So we're seeing a lot of CEOs take cuts and compensation.
Speaker 1: But you've got to remember when it comes to executives,
Speaker 1: it's not in the base salary, it's in the stock options.
Speaker 1: I mean, we therefore wonder what several looks like, what
Speaker 1: benefits and how they support the work, is that they
Speaker 1: do have to let go a second time. It seems
Speaker 1: as though a lot of tech companies have tried to
Speaker 1: be helpful in that way. Ultimately they'll give the read
Speaker 1: across for us, Bertie, is this is twally different? Is
Speaker 1: it more exposed than others or could this be a domino?
Speaker 1: Twilio has some uniquely unique troubles here. For example, they're unprofitable.
Speaker 1: I mean we both know that unprofitable tech has been
Speaker 1: battered in the current market. Announcer and I think they
Speaker 1: lost of market value in two But I think, no
Speaker 1: matter what company you are, if you're seeing this at
Speaker 1: a second round of layoffs is possible. That's a frightening
Speaker 1: thing across the market, no question, Hey, Bertie, as you
Speaker 1: look across the companies that you cover, what what is
Speaker 1: the kind of commonality between them? Is this it? The
Speaker 1: layoffs are due for this year? Are we expecting more? Well,
Speaker 1: they're a handful of large companies that happened on layoffs.
Speaker 1: A lot of people have spectleing why Apple hasn't done them,
Speaker 1: Oracle hasn't done them. UM, I would say that we
Speaker 1: are not done. We don't know that, but we see
Speaker 1: reports almost every single day of this person in the
Speaker 1: company's anxious more layoffs are coming. So I think it
Speaker 1: is not put to bed. I think that people should
Speaker 1: continue to watch um and if market conditions continue to worsen,
Speaker 1: no one knows, right Bloom Doug's Brady for great reporting,
Speaker 1: Thank you very much. A crackdown on crypto keeps coming.
Speaker 1: This time authorities are taking on two pretty key pillars
Speaker 1: of the ecosystem. Number one, stable coins being most traded
Speaker 1: crypto tokens out there, and to finance the world's biggest exchange.
Speaker 1: Now on this occasion, the New York Finance Regulator wants
Speaker 1: to stop to the issuance of b u s D
Speaker 1: that is the third biggest stable coin out there, and
Speaker 1: also a binance related coin basically is actually issued via
Speaker 1: US regulated entity called paxos. There's about sixteen billion dollars
Speaker 1: of them out in circulation. Stable coins keep their value
Speaker 1: pegged to another asset, often one US dollar. They're about
Speaker 1: a hundred thirty billion dollars or stable coins out there,
Speaker 1: and they're often used as a way of providing you stability.
Speaker 1: Basically a non volatile crypto asset that often used for
Speaker 1: parking your funds in between trades. They're kind of like
Speaker 1: an oil that helps grease the cogs of trading in crypto. Basically,
Speaker 1: it acts as liquidity. BUSD is particularly important to Binance
Speaker 1: because it gets US investors an ability to access its
Speaker 1: exchange no wonder therefore, investors got worried. You saw Busd
Speaker 1: fall off of its one dollar pegg. You also saw
Speaker 1: other Binance tokens like the Binance coin for and in fact,
Speaker 1: a lot of other crypto assets and crypto related stocks
Speaker 1: fell hard. Today. Overall, you're seeing nactually US regulators getting
Speaker 1: pretty busy this year. You've had fines handed out some
Speaker 1: big exchanges like Cracking, like coin based. You've had Gemini
Speaker 1: and Genesis, other names will know in this space that
Speaker 1: are under investigation all of this as well. Regulators want
Speaker 1: to get on top of the crypto ecosystem and make
Speaker 1: sure it's being analyzed. So unless as now are bracing
Speaker 1: the SERVI scrutiny. So that's so we sound let's dig deeper,
Speaker 1: put in Mootionari Bassett is here for more and the
Speaker 1: pack SAS decision tell us the backstory also around where
Speaker 1: pack SASS is being eyed. That because it's not just
Speaker 1: the New York regulator but some bigger ones, we understand
Speaker 1: to other reporting and there are a few different issues
Speaker 1: at play here. Let's talk first about the stable coin issue,
Speaker 1: because you had mentioned here this is one of the
Speaker 1: largest stable coin it's the third largest in circulation, sixteen
Speaker 1: billion dollars in circulation. And again it has to relate
Speaker 1: to binance itself. But again the stable coin industry is
Speaker 1: provid adds a lot of liquidity to the overall crypto ecosystem,
Speaker 1: so to the extent that in the past several months
Speaker 1: we saw lending attacked. Now we're seeing a source of
Speaker 1: liquidity in the crypto ecosystem severely attacked. But remember this
Speaker 1: is not about PASOS, a US regulated New York A
Speaker 1: Department of Financial Services regulated entity. It's about the relationship
Speaker 1: between paxos and Binance. So if you look at the
Speaker 1: Department of Financial Services statement on this, they note they
Speaker 1: say it's important to note that paxos and b USD
Speaker 1: was authorized to be issued on the ethery and blockchain,
Speaker 1: but was not authorized by the Department of Financial Services.
Speaker 1: Was the binance peg. It's a form of be token
Speaker 1: if you well, it's a wrapped version that relies on
Speaker 1: the stable coin as collateral. Remember we had Emily noel
Speaker 1: Over at Bloomberg also reporting that Circle has also, separately,
Speaker 1: according to people familiar with the matter, raised concerns about
Speaker 1: binances relationship with the stable coin ecosystem. So this is
Speaker 1: really one shoot to drop in a larger story. There's
Speaker 1: a distinction to be made between this and the staking
Speaker 1: issue that you that we raise against in our in
Speaker 1: our interview last week, which seems a long time ago.
Speaker 1: Now what is it? Yeah, the staking issue. Remember it
Speaker 1: also applies to the Ethereum network if you will as well,
Speaker 1: because it's moved to proof of steak. But remember, at
Speaker 1: the end of the day, the SEC is looking for
Speaker 1: the ways that the crypto ecosystem falls under investor protection
Speaker 1: laws that exist, so importantly when we're looking at a
Speaker 1: separate issue as it pertains to Paxos, we're looking at
Speaker 1: this issue where that they could be facing compressible lawsuit
Speaker 1: from the SEC for violating potential investor protection laws. Now
Speaker 1: we have not seen any SEC complaints to that effect,
Speaker 1: but we have seen PASOS issue the statement saying that
Speaker 1: they categorically disagree with the SEC staff that these would
Speaker 1: fall under federal securities law and said unequivocentally there are
Speaker 1: no other allegations. So you see two different regulators extending
Speaker 1: their authority over the crypto ecosystem, and two very different ways.
Speaker 1: The only thing that the Paxo situation has in common
Speaker 1: with what you saw with the Staking issue is the
Speaker 1: SEC putting more under their wing in crypto as it
Speaker 1: pertains to the existing investor protection laws. Bloomberctionalibasse, trific reporting.
Speaker 1: Thank you. Let's continue the conversation and bringing Clara Medally,
Speaker 1: director of research at cryptocurrency market data provider Kaiko. Clara,
Speaker 1: when we think about the pack sovice issue, you believe
Speaker 1: that there will be a pretty profound impact on stable
Speaker 1: coins broadly. What will that impact be? Well, I think
Speaker 1: one thing that's interesting about the BUSD case is that
Speaker 1: today bust is mostly just used on Binance and on
Speaker 1: Binance smart chain, which is the blockchain operated by the exchange.
Speaker 1: BUSD doesn't really have much use on other cryptocurrency exchanges.
Speaker 1: So that's why this regulatory action was very much targeted
Speaker 1: Binance and not necessarily stable coins as a whole, because
Speaker 1: Paxos was the one to issue BUSD. However, I don't
Speaker 1: think this makes other stable coin issues issuers immune, specifically
Speaker 1: U s t C and U S t T, although
Speaker 1: it will be very difficult to regulate tether Um simply
Speaker 1: because the largest stable coin is not actually domicile in
Speaker 1: the United States. That was a part of the conversation,
Speaker 1: right Binance positioning b U s D is is a
Speaker 1: strong competitor to tether their market shares have changed proportionately
Speaker 1: over the last few years. Where does that leave us
Speaker 1: in the relationship between b U s D and tether
Speaker 1: So this morning we looked at on Binance and we
Speaker 1: found that of total trade volume on Binance is actually
Speaker 1: denominated in in bus D. This is up from t
Speaker 1: at the start of the year, and I think Binance
Speaker 1: has made a huge marketing push to actually get more
Speaker 1: users of bus d, So it seems that they were
Speaker 1: very much not expecting this move, this regulatory enforcement action.
Speaker 1: UM and Binance is actually incentivized to have their own
Speaker 1: stable coin because stable coins are very useful within defy ecosystems.
Speaker 1: And what I mean by this is binance smart chain
Speaker 1: and any type of decentralized protocol that is part of
Speaker 1: the Binance ecosystem. So now that they don't have this
Speaker 1: lever of growth, essentially we're now left with Tether. Tether
Speaker 1: today accounts for the vast majority of all trading activity
Speaker 1: in crypto, so busd actually was a nice counterweight to
Speaker 1: Tether's influence UM. As we've seen in crypto, it's never
Speaker 1: good to have UM all all risk concentrated in a
Speaker 1: single centralized entity. But I'm afraid that with Tether we
Speaker 1: sort of have this. Now. Tether can't be regulated in
Speaker 1: the US because it's not domiciled here. Now finance was
Speaker 1: using pack sauce that was regulated in the US. Could
Speaker 1: they issue have a different issue for a bus D
Speaker 1: somewhere else so that they can ensure they still have
Speaker 1: a stable coin, but it's not under the legal oversight
Speaker 1: of the United States. Yeah, theoretically yes. And I think
Speaker 1: that's the biggest critique with this type of enforcement action
Speaker 1: is that it's not getting to the root of the problem,
Speaker 1: and rather what you would see is actually a type
Speaker 1: of regulatory arbor charge. That's what we see with all
Speaker 1: of the exchanges that don't have their headquarters in the
Speaker 1: United States. Is there simply finding jurisdictions where they can
Speaker 1: operate and do what they want. Is that going to
Speaker 1: be in overall global means of regulating in the near future.
Speaker 1: As anyone talking with other countries and we we've got
Speaker 1: any sort of clout other than the SEC, that's a
Speaker 1: good question. I know that in Europe they they've taken
Speaker 1: a much broader approach to regulation and actually taken the
Speaker 1: path of issuing guidance rather than enforcement actions. And so
Speaker 1: we can already see that there's a large difference across regions.
Speaker 1: But I think for now it's going to be very
Speaker 1: difficult to get a global approach because there will always
Speaker 1: be jurisdictions that are trying to attract business first um
Speaker 1: and that always comes with crypto actors that are sort
Speaker 1: of looking for the friendliest jurisdictions. We were talking with
Speaker 1: Snali a few moments ago about the distinction between what
Speaker 1: we're seeing finance paxos and what we saw last week
Speaker 1: from the SEC and cracking, And in our conversation with
Speaker 1: Gary Glensler, what's your read on that specific situation with
Speaker 1: the SEC basically cracking down on unlicensed security offerings. I
Speaker 1: think that krack in so cracking had one of the
Speaker 1: largest centralized staking providers, but it was very different from
Speaker 1: what we saw on coin base. But that doesn't mean
Speaker 1: that coin bas is not immune from a regulatory action
Speaker 1: against their staking service. But there were key differences and
Speaker 1: like sort of the nitty gritty of how each one
Speaker 1: was run, and I think that's what attracted the SEC
Speaker 1: to first go after crackings. UM. I also think coin
Speaker 1: bas is likely to put up a fight. They have
Speaker 1: a lot more to lose in this case because they've
Speaker 1: actually successfully diversified their revenue into the staking business over
Speaker 1: the past year. UM And I think one key thing
Speaker 1: I want to emphasize is that staking is not like
Speaker 1: the returns on on your assets that you got with
Speaker 1: the centralized lenders such as Celsius. It's a lot different.
Speaker 1: Staking is something fundamental to blockchain technology and specifically the
Speaker 1: Ethereum blockchain, and so it's actually benefiting most people that
Speaker 1: are staking. There's no losers to staking today. Um when
Speaker 1: you're out there having conversations with players inside the world
Speaker 1: of crypto and those that are sort of interested by standers,
Speaker 1: and then those that are regulating. Ultimately, the calling card
Speaker 1: of many a company, particularly the US, has been we
Speaker 1: want regulation. Do they like this sort of regulation that
Speaker 1: they're currently saying, Well, this is regulation by enforcement. I
Speaker 1: don't think anyone really likes regulation by enforcement. But that
Speaker 1: doesn't mean that the industry doesn't like regulation. In fact,
Speaker 1: after FTX, everyone's expecting this. In fact, it's much needed
Speaker 1: for any centralized service provider. We're seeing after the Celsius
Speaker 1: the ft X collapse is that you can't really operate
Speaker 1: with some degree of regulation or transparency, and it's more
Speaker 1: the enforcement actions that are catching the industry off guard. Clara,
Speaker 1: thank you so much. I will i'll dare anyone and
Speaker 1: certainly can never dare myself to be as lucid and
Speaker 1: as I take it as you are am local time
Speaker 1: for you, so staying up late in Paris, I know
Speaker 1: crypto never sleeps. Mcclara medally come back soon, we hope.
Speaker 1: Director of research at KO Yeah, a terrific interview coming up.
Speaker 1: It's the first time of vehicle designed without human controls
Speaker 1: has carried passengers on a public road. Will have more
Speaker 1: on that story next And before we had to break carriage.
Speaker 1: You want to take a look at Palenteer. Really interesting
Speaker 1: the shares surging in after hours for Palenteer. The company
Speaker 1: recording its first ever quarterly profit in the final three
Speaker 1: months to get this caroline one cent per share on
Speaker 1: a gap basis, and it's saying that this year four
Speaker 1: year twenty three will be its first profitable year. But
Speaker 1: the market likes it. We're up sixt in after hours.
Speaker 1: This is Bloomberg Zooks, the self driving startup owned by Amazon,
Speaker 1: carried passengers in its fully autonomous vehicle on public roads
Speaker 1: for the first time last week. The electric vehicle, which
Speaker 1: does not have a steering wheel, ran a marble long
Speaker 1: route carrying staff staff well kind of between zoos is
Speaker 1: two main buildings in Foster City, California. The firm will
Speaker 1: now operate a shuttle for employees on the same trip
Speaker 1: while it seeks additional clearances to expand that service to
Speaker 1: the public. Let's bring in the company CEO I H Evans,
Speaker 1: and I I think I'm right and saying you were
Speaker 1: along for that maiden voyage on a very small stretch
Speaker 1: of road. I know that you're always very modest about
Speaker 1: what these kind of things mean, but how close does
Speaker 1: this bring you to making this a commercial service? First
Speaker 1: of all, thank you for having me. And look, yeah,
Speaker 1: modesty is important, being humble is important. But this is
Speaker 1: a big moment. I'm not going to a downplay it.
Speaker 1: I was along for the ride. This is really the
Speaker 1: beginning of that foundation that from here we add additional
Speaker 1: operational design domains, more testing, extend our permit to carrying
Speaker 1: the public, and then on to our first a customer.
Speaker 1: How much does it matter that you beat crews General
Speaker 1: Motors is crews to carrying passengers on a public road
Speaker 1: in a purpose built autonomous vehicle. So, ed, I think
Speaker 1: you know me. Well, um, there's a reason I call
Speaker 1: crews and others fellow travelers as well as competitors, and
Speaker 1: so we're in a race with the business and creating it.
Speaker 1: It does feel good though it's been nine years working
Speaker 1: on this product and getting it out there, and so
Speaker 1: it does feel good. But this is about zoos and
Speaker 1: focusing on going to a market. Okay, so take us
Speaker 1: there going to market. What sort of timeline are we
Speaker 1: looking at for a paying customer? So first thing is
Speaker 1: carrying our our employees. They will teach us a lot
Speaker 1: about the service. Anytime you carry hundreds and you know
Speaker 1: a couple of thousand people, you learn a lot about
Speaker 1: the service. We're also seeing what's going on out there.
Speaker 1: So look, we're going to continue testing. We're going to
Speaker 1: continue expanding the operational design domain. We're already breaking on
Speaker 1: the first I can tell you that thirty five miles
Speaker 1: an hour feels really great. I can tell you that
Speaker 1: the vehicle handle some really interesting scenarios flawlessly. And so
Speaker 1: it's about making sure we're already and we've said we're
Speaker 1: going to go to Las Vegas, We're going to San
Speaker 1: Francisco and continue from there. Oh, come to New York. Meanwhile,
Speaker 1: I mean the traffic is terrible, unfortunately, A sure, but
Speaker 1: I'm not afraid of the traffic in New York. But
Speaker 1: you know, there's nothing called snow. Yea, that's what. We
Speaker 1: haven't had any yet. We haven't had any snow. I
Speaker 1: don't know what's happening with global warming, but it still
Speaker 1: knows snow in New York and people are worried I
Speaker 1: should but talk to me about you said, Look, nine
Speaker 1: years in the making, you've been in the business in February,
Speaker 1: how many of you actually manufactured? Now, how many do
Speaker 1: you think you can run up too? Okay, So we've
Speaker 1: manufactured like in you know, tents. Basically we're building more
Speaker 1: as we speak. As far manufacturing, we have a manufacturing
Speaker 1: facility were in in California right by our headquarters, where
Speaker 1: we have enough to cover several cities. I Shay, as
Speaker 1: you know, I've been in that factory with you. I've
Speaker 1: seen how you make them in a sort of modular
Speaker 1: package Lego type way. When you came in in fabry tween,
Speaker 1: I was sort of Caribo line about this earlier. Your
Speaker 1: principal job was to secure this company's financial future, and
Speaker 1: you did it. Amazon bought Zooks. What is Zooks is
Speaker 1: access to capital like and the parent Amazon had to
Speaker 1: make a lot of layoffs. Is Zooks having to cut
Speaker 1: back in a similar way. So, um, Look, the partnership
Speaker 1: with Amazon has been fantastic. Obviously, we understand that with
Speaker 1: the macroeconomic environment one needs to be prudent. We are
Speaker 1: sad that you know, folks are losing their jobs across
Speaker 1: the industry. It's a small type industry. We all know
Speaker 1: each other. Zooks has always been prudent. I have actually
Speaker 1: an internal phrase that I an ashayism. We don't binge
Speaker 1: and we don't purge. We're very prudent. We are lucky
Speaker 1: and fortunate to be in a situations where we're still
Speaker 1: going to grow this year, but we will continue to
Speaker 1: be prudent. What is the next big milestone for Zooks?
Speaker 1: What do we hold you to account on m hmm, Well,
Speaker 1: getting to the point where we're carrying non Zooks employees.
Speaker 1: So first, all Zooks employees right now, not everybody can ride.
Speaker 1: Um by the spring, all Zooks employees will be able
Speaker 1: to ride on a continuous basis. And then extending the
Speaker 1: permit to be able to carry external passengers, and then
Speaker 1: again that first playing customer. I've told you that that's
Speaker 1: my big, big personal milestone. You have told me that
Speaker 1: a number of times. Now will have you back when
Speaker 1: you achieve it. Zooks CEO Iishie Evans, thank you so
Speaker 1: much for joining us and bloom Lay Technology. Now staking
Speaker 1: in the world of evs. Ford announced the plan to
Speaker 1: build an EVA battery plant in Michigan in partnership with
Speaker 1: China's see A t L, a deal that will create
Speaker 1: about jobs, but which comes at a time of growing
Speaker 1: tensions between the US and China. I caught up with
Speaker 1: Ford's vice president of EV Industrialization, Lisa Drake earlier today.
Speaker 1: Have listened. You know, as part of that plan for
Speaker 1: eight percent, we've announced that will build two million units
Speaker 1: in and if you think about it, this LP battery
Speaker 1: plant which we have announced will build over four hundred
Speaker 1: thousand vehicle sets worth of batteries. That's about of that
Speaker 1: two million, And this battery plant will be be able
Speaker 1: to build one of the lowest cost types of batteries
Speaker 1: in the United States, especially when you take into account
Speaker 1: production tax credit. So this is a key landmark project
Speaker 1: for US on our way to eight percent, Lisa, A
Speaker 1: key landmark. You've had an event there today. Did you
Speaker 1: invite President Biden to that event? Well, I think you'd
Speaker 1: have to uh to refer that question to the White House,
Speaker 1: but I can tell you we've certainly appreciated the White
Speaker 1: House in the administration and support on the project so far.
Speaker 1: At least, so of course we know that the White
Speaker 1: House has at least been pushing pretty hard here to
Speaker 1: uh expand I guess the availability not only of course
Speaker 1: of the cars themselves, but the batteries another technology that
Speaker 1: we need to make those cars. But of course a
Speaker 1: lot of questions also about who we partner with. This
Speaker 1: deal with the Chinese company. I'm sure, as you know,
Speaker 1: whether it's fair or not, is going to raise a
Speaker 1: lot of questions here about what we're sharing with that
Speaker 1: company with regards to our own homegrown technology. How do
Speaker 1: you address those criticisms? Well, I'd start with the fact
Speaker 1: that the l f P technology is very prevalent in
Speaker 1: the US already. It's in many of our consumer electronics devices.
Speaker 1: It's actually being imported today and some of our competitor evs,
Speaker 1: and so the technology exists in the US. This project
Speaker 1: is really meant to de risk that importation strategy by
Speaker 1: actually localizing it here, building the technology here in the
Speaker 1: United States and in the state of Michigan. And we
Speaker 1: have the Ford industrial know how and the manufacturing capability
Speaker 1: that will we will bring to bear, and we're licensing
Speaker 1: the actual chemistry and the technology from c at L
Speaker 1: but most of the knowledge base will reside in Michigan
Speaker 1: and in the United States. Just keep on coming these
Speaker 1: EV conversation for the vice president of EV Industrialization at
Speaker 1: least a Drake there with Romaine in at earlier Meanwhile,
Speaker 1: Ferrari CEO Benedetto Vina told Bloomberg that the Italian supercar
Speaker 1: manufacturer is fully on track to unveil its first fully
Speaker 1: electric vehicle, saying electrification is a new way to provide
Speaker 1: customers with a unique driving experience. We had a clear
Speaker 1: planned We have a lot of competencies in the company
Speaker 1: to keep their little think it cass from more point
Speaker 1: of view, from my dynamic, from from performance, it's called
Speaker 1: the signed So we would the electric turn adding wouldn't
Speaker 1: be a unique ad void did it go viral and
Speaker 1: it's still viral today. Sunday super Bowl and Tech along
Speaker 1: with Rihanna a key player at this year's game, Apple
Speaker 1: been in big on course of Rihanna's halftime show, ed
Speaker 1: I mean she dropped the mic. Extraordinary that she was
Speaker 1: able to announce pregnancy at the same time as performance.
Speaker 1: At the same time, it's basically getting on what looked
Speaker 1: like giant iPhones in the Sky. She did a little
Speaker 1: bit of product placement with a fency brand. There was
Speaker 1: a lot of product placement for a lot of other
Speaker 1: things throughout the course because we're all in it for
Speaker 1: the ads. Yeah, electric vehicles, we knew this was coming.
Speaker 1: The out sean combustion engine vehicles in a ratio of
Speaker 1: three to one according to Bloomberg any f analysis of
Speaker 1: the ads at the halftime you had Will Ferrell with
Speaker 1: General Motors. It was it was cheeky, but we knew
Speaker 1: it was coming. And we'll see if there's a reaction
Speaker 1: in this marketplace. Crypto ad in sight, but there was
Speaker 1: actually I think Google had one for its phone work
Speaker 1: Day had quite a fun one coming back with what
Speaker 1: was one of the key signers and kiss like across
Speaker 1: the board. I always love the ads As a Brit
Speaker 1: I'm in it for the halftime. I'm in it for
Speaker 1: the adverts. Don't use the term rock star unless you're
Speaker 1: a rock star. Absolutely brilliant. I know you enjoyed it.
Speaker 1: I'm sure we all did so. Joyous viral moment. We're
Speaker 1: going to be consuming these videos for years to come. Meanwhile,
Speaker 1: that does it for this edition of Bloomberg Technology. Tune
Speaker 1: back in tomorrow C three AI, the CEO Tom Siebel
Speaker 1: is going to be joining us live five pm New
Speaker 1: York time, t PM San Francisco. Don't forget a lot
Speaker 1: to recap on the podcast apples, Spotify, I Heart, wherever
Speaker 1: you get your podcasts. For today's episode, This is Bloomberg.