Speaker 1: From the heart where Innovation of Money and.
Speaker 2: Power Collie in Silicon Valley, NBN. This is Bloomberg Technology
Speaker 2: with Caroline Hyde and Ed Ludlow.
Speaker 3: I'm Caroline Heinde, a Bloomberg's World headquarters in New York.
Speaker 3: Ed Ludlow is off today. This is Bloomberg Technology coming up.
Speaker 3: Full earnings coverage ahead. We wrap Spotify's results and push
Speaker 3: your head to the all important alphabet Microsoft and Snap
Speaker 3: Plus what does Twitter's change to x I mean for
Speaker 3: the company's brand value? Will break down the potential implications
Speaker 3: and how is AI rewriting the rules for the two
Speaker 3: hundred billion dollar gaming industry. We'll sit down with Super
Speaker 3: League Gaming CEO and a hand for her thoughts. The
Speaker 3: first big week for earnings. What is one hundred and
Speaker 3: seventy companies reporting this week? But the two who want
Speaker 3: to keep an eye on to Microsoft alphabet is also
Speaker 3: going to be Snap as cool as well. Let's let's
Speaker 3: dig into some of the key AI plays with Anna
Speaker 3: Agrana from Roomberg Intelligence, who I'm pleased to say is
Speaker 3: on the all important week right here in the New
Speaker 3: York studio and the rallies have been hard. What forty
Speaker 3: five percent at least for Microsoft so far this year.
Speaker 3: The valuations must make a few people question whether they
Speaker 3: can live up to it.
Speaker 2: Yeah.
Speaker 4: I think that's why, you know, we'll see tonight when
Speaker 4: the cloud results come out, is whether there is any
Speaker 4: kind of a push from the increased use do chat
Speaker 4: GPD or is that offset by week corporate spending. And
Speaker 4: I think that remains the biggest question for Microsoft. They
Speaker 4: have to come out and defend their cloud numbers and
Speaker 4: showcase that there should be an improvement in that over
Speaker 4: the next twelve months for you know, this valuation to.
Speaker 3: Hold and so maybe looking forward to when AI can
Speaker 3: start to be revenue generating. But when we look at Alphabet,
Speaker 3: everyone's been worried about whether it's been a competitive threat
Speaker 3: to their search business.
Speaker 4: Yeah, but I think that's too soon to call that.
Speaker 4: It's going to take a while before all of these
Speaker 4: things really, you know, play out. Microsoft is behind on
Speaker 4: search and I don't think that they can catch up
Speaker 4: in a quarter or so. You know, it's it's very
Speaker 4: impressive to see what the chat GPT has been able
Speaker 4: to do, but you know, habits are not going to
Speaker 4: change overnight. It's going to take some time for that
Speaker 4: to happen. But as I said, cloud business is where
Speaker 4: it really gets defined for Microsoft because if you look
Speaker 4: at it, Azure's growth was forty seven percent a year ago,
Speaker 4: It's going to be around twenty six twenty seven percent today,
Speaker 4: So it's a massive drop from that high bar. But
Speaker 4: the question is is this the quarter where this we
Speaker 4: know we see the bottom and we start to see
Speaker 4: a U turn next quarter or is it going to
Speaker 4: take another quarter or two for that to play out.
Speaker 4: And I think that will be driven by comments from
Speaker 4: the CEO and the CFO, is that the new AI
Speaker 4: workloads are they really coming, you know, with a lot
Speaker 4: of momentum, or we are still going to be a
Speaker 4: while before we see that.
Speaker 3: Looks at Microsoft, of course we're anticipating hopefully that the
Speaker 3: bottom is in for advertising when we look at what
Speaker 3: Alphabet's going to be pulling in great setup for US
Speaker 3: and Agarana on all things Microsoft and of course some
Speaker 3: of the other big beasts all love you out there,
Speaker 3: is that actually maybe these big beasts to run too far,
Speaker 3: Maybe you need to be cautious on some of the
Speaker 3: magnificent seven Cafmoon Navaria is one of those voices. Chief
Speaker 3: Market stretchgist over at Stonext Group and Catherine, how are
Speaker 3: you trading? How are you thinking ahead of these big,
Speaker 3: all important results.
Speaker 5: Well, we have earnings this week coming up with some
Speaker 5: of the major powerhouses and Microsoft and Visa and Verizon
Speaker 5: across the board. You have some big names reporting earnings,
Speaker 5: some which are ech between twenty and twenty three percent
Speaker 5: of their respective ETF and indexes within the communications sector,
Speaker 5: within technology. So it's going to be very important that
Speaker 5: these beat for the market to continue to move higher.
Speaker 3: They are likely to do so.
Speaker 5: But what I would say is that we're at the precipice,
Speaker 5: or we're at the very.
Speaker 3: Peak of where we are.
Speaker 5: Anticipating the Fed to stay on hold. Everyone's expecting twenty
Speaker 5: five basis points tomorrow and then on hold for a
Speaker 5: good amount of time. My expectation, however, is that if
Speaker 5: the consumer remains as strong as it has Caroline, we
Speaker 5: had consumer confidence commit at the highest in two years today,
Speaker 5: then it's going to be very difficult for the FED
Speaker 5: to get to that two percent target with service sector
Speaker 5: inflation as robus as that is and will continue to be.
Speaker 5: If that's the case and the FED has to hike again,
Speaker 5: then this is negative for those highly interest rate sensitive
Speaker 5: sectors and stocks which are the biggest heavyweights in the indices.
Speaker 3: So good that you put it in the macro context.
Speaker 3: I'm therefore interested in if you have ridden this wave,
Speaker 3: the Magnificent seven, the big AI trade, do you have
Speaker 3: to now protect the downside? Do you stop profit taking?
Speaker 5: Well, it's a good moment to at least play the laggards,
Speaker 5: and what we've seen is some of those laggards catch up.
Speaker 5: This is the catch up trade is the definition of
Speaker 5: so so it's really been tech and specifically AI that
Speaker 5: has led the market rally year to date. We have
Speaker 5: not seen material appreciation in materials or banks or industrials
Speaker 5: until today, so we are seeing industrials jump quite a bit.
Speaker 5: We at stoneacks have a really big commodity section, and
Speaker 5: the guys are more enthusiastic with regard to possible demand
Speaker 5: for these materials. If China does in fact come with
Speaker 5: a material or a significant infrastructure or stimulus package of
Speaker 5: some sort, so I would say, play the catch up trade,
Speaker 5: Play the laggards, the cyclical laggards that will benefit from
Speaker 5: what could be a very good print on Friday. If
Speaker 5: we get core PC coming at less than four point six,
Speaker 5: where it's kind of been for a significant period of time,
Speaker 5: maybe four point one four point two. Then that's going
Speaker 5: to be additional boost for the the for the long
Speaker 5: risk trade, which is in my view, the most overcrowded
Speaker 5: trade today. So yes, there are potential to still play
Speaker 5: this rally, but I would advise clients that everything is cyclical.
Speaker 5: We are in an economic cycle, and in my view,
Speaker 5: the next phase of the economic cycle is going to
Speaker 5: be recession. Timing is the tricky point.
Speaker 3: And it's that global recession.
Speaker 5: Well, you know, I think it's meaningful to talk about
Speaker 5: different stages. So perhaps the US enters recession after Europe does,
Speaker 5: or China enters slow down, So there's different phases, so
Speaker 5: it doesn't have to all happen at once, and we
Speaker 5: shouldn't expect it to. But I do believe that these
Speaker 5: delayed impacts, and everyone talks about the infast, infamous, long
Speaker 5: and long and prolonged impact of monetary policy in a
Speaker 5: data dependent FED doesn't really mesh. So what I would
Speaker 5: say is, look on Friday's number. Friday's number is probably
Speaker 5: going to be very good, and I would say Thursday
Speaker 5: and Friday with second quarter, GDP, Caroline and core PC
Speaker 5: coming in respectively Thursday and Friday are going to need
Speaker 5: more important data points than Wednesday's very well expected twenty
Speaker 5: five basis point hike. If the United States is or
Speaker 5: if the Federal Reserve is really serious about its two
Speaker 5: percent target doesn't change, it isn't complacent with a three
Speaker 5: handle or a high two handle, then we could get
Speaker 5: an additional additional hike. And if that's the case, then
Speaker 5: we're talking five hundred and fifty basis points maybe more
Speaker 5: in total rate hikes that will start to affect the
Speaker 5: credit cycle. We're already seeing some difficulty with regard to
Speaker 5: payments in the real economy.
Speaker 3: Causin just how many of your clients are wanting to
Speaker 3: play the AI tech trade, how many of them feel
Speaker 3: they've missed it, how many of them feel that there's
Speaker 3: other names they could look at, other than some of
Speaker 3: the really big tech heavyweights.
Speaker 5: Well at so next, we do cover a wide breath.
Speaker 5: So it's everything from commodities to tech, to securities to
Speaker 5: globle payments and clearing. So it's a massive company. We
Speaker 5: have four thousand people and it's a fortune one hundred
Speaker 5: and that is deck listed actually, but a lot of
Speaker 5: clients are keen on following this trend, and you know,
Speaker 5: they follow the buck. So what I would say is
Speaker 5: there's a lot of interest with regard to the laggards,
Speaker 5: looking at the small caps which have lagged, for example,
Speaker 5: the triple ques in a very meaningful way. So there's
Speaker 5: interest in finding ways to play this momentum driven multiple
Speaker 5: expansion driven rally without getting into the high flyers at
Speaker 5: exorbitant multiples. And my contention on Caroline is that the
Speaker 5: growth sector, specifically AI in tech, is trading at exorbitant multiples.
Speaker 3: And I sort of asked a little bit about hedging.
Speaker 3: You sort of gave this very thoughtful response about well,
Speaker 3: them playing some of the laggards in different industries, But
Speaker 3: what about volatility gauges? What about looking at ways to
Speaker 3: protect your downside? Is there a way of doing that
Speaker 3: for some of these well, very lofty valuations.
Speaker 5: And that's another way that our clients are playing this
Speaker 5: with our options desk against stone cks. What they're doing
Speaker 5: is they are buying vxx options, or they're buying puts
Speaker 5: on the S and P five hundred index. These are
Speaker 5: ways to protect in a cheap way. Of course, because
Speaker 5: the market is so exuberant and complacent at the current levels,
Speaker 5: making this kind of a countercyclical portfolio policy. And this
Speaker 5: is something that I published in my piece last week.
Speaker 5: It's important to think counter cyclically when the market is
Speaker 5: so exuberant and so powerfully positive, to protect yourself, and
Speaker 5: you can do so in a cheap way. You can
Speaker 5: hold a nice portion in cash, buy some gold by
Speaker 5: defensive sectors which are very cheap at current levels because
Speaker 5: no one's really anticipating and I think that the recession
Speaker 5: risk is massively underappreciated currently. So that's staples, that's utilities,
Speaker 5: that's healthcare. These are sectors that are defensive and value
Speaker 5: driven in nature, and that's also where clients are focused.
Speaker 3: Great to get the perspective diversifications where it's at. Katin Manivera,
Speaker 3: thank you so much, Chief market strategist at stoneA X Group. Meanwhile,
Speaker 3: coming up, we've got more on the earning theme. Spotify
Speaker 3: look at misses on estimates on revenue, but it does
Speaker 3: give a strong monthly active US account. We're going to
Speaker 3: dig into the details speaking of earnings as well. Actually,
Speaker 3: Katra mentioned the name Verizon. We're watching shares up Percenter's
Speaker 3: point largest US wildless carrier actually reported earnings that beat
Speaker 3: estimates of profits for subscribers after a rid of a
Speaker 3: surprising turnaround in that customer growth from New York. This
Speaker 3: is Bloombg technology. Let's take a look at Spotify because
Speaker 3: the reported earnings before the market open this morning. And look,
Speaker 3: the shares are getting beaten up off the back of
Speaker 3: it because second quarter revenue and third quarter revenue well forecast.
Speaker 3: They missed expectations. So look the forecast for monthly active
Speaker 3: users was better than expected. We're trying to gauge the
Speaker 3: analyst reaction to this one city in particular, dean spotifyer
Speaker 3: by saying that given their revenue miss quote, we would
Speaker 3: not be surprised to see the shares trading lower. Shares
Speaker 3: currently down as you see what fourteen percent almost on
Speaker 3: this day of trade, Sunday sharmar and pleased to say
Speaker 3: it's another analyst we can turn to with this moment.
Speaker 3: Third Bridge joining for more and look, it's the worst
Speaker 3: days is February twenty twenty two for this particular stock.
Speaker 3: Were you as concerned by the forecast as the market
Speaker 3: seems to.
Speaker 6: Be again calin' going to have going to be on again.
Speaker 6: A couple of things over you, I think when you're
Speaker 6: thinking about this longer term, right, yes, the market is
Speaker 6: clearly being a life spot of five because of certain misses,
Speaker 6: and I think this is mostly around their issue with
Speaker 6: slightly missing their gross profit margin targets. But if you
Speaker 6: look at the bigger picture over here, right THEMAU as
Speaker 6: well as a premium subscriber editions that they were able
Speaker 6: to achieve in this last quarter really shows that their
Speaker 6: overarching strategy of gaining more subscribers in developed markets and
Speaker 6: developing markets is beginning to play our play out. I
Speaker 6: think the big thing over here to bear in mind
Speaker 6: for retail and institutional investors is Spotify is executing on
Speaker 6: rationalizing its cast space. It's really trying to be a
Speaker 6: leaner machine across the entire board. But such things do
Speaker 6: take some time to materialize in terms of earning. So
Speaker 6: while we are seeing a yd really substantial shareprise rally
Speaker 6: versus the slash that we saw in twenty twenty one
Speaker 6: to twenty twenty two, I think, based on our observations
Speaker 6: and the expressive interviewed at Third Bridge, the penalization right
Speaker 6: now might be more of a short term reaction as
Speaker 6: everybody's getting used as this information and sort of getting
Speaker 6: prepared for what QT and Q four holds for them.
Speaker 3: Okay, so push ahead the premium price height that we
Speaker 3: found finally catching up with other offerings out there from
Speaker 3: Amazon and the like. Do you think that will in
Speaker 3: any way crimp back on that user uptick?
Speaker 6: We've seen such a great question, right, So that's something
Speaker 6: that everybody is waiting to see how it's going to
Speaker 6: play out based on the observations and the analysis we
Speaker 6: have done.
Speaker 2: Music as well as music.
Speaker 6: Streaming is quite a commodity and people tend to not
Speaker 6: hurn as much as they would expect. If you think
Speaker 6: about Spotify's timing with this as well, they're doing it
Speaker 6: after majority of other players have already taken this move,
Speaker 6: so it's kind of defensive on their path to do
Speaker 6: this and also imperative of them to do it as well. Again,
Speaker 6: difficult to say currently at the stage whether it's going
Speaker 6: to lead it to a huge amount of churn, of
Speaker 6: substantial slow down.
Speaker 2: An uptic of new consumers.
Speaker 6: But if the price that they're playing right now versus
Speaker 6: other players, it's more or less in line or slightly competitive,
Speaker 6: it shouldn't be as negative and impact as everybody's anticipating. Also,
Speaker 6: fair enough, Spotify has indicated it's going to be doing
Speaker 6: this for a while, so it shouldn't necessarily be such
Speaker 6: a shock to the markets across the board because they
Speaker 6: pushing for this for a long time as well.
Speaker 3: This is a stock, as you say, that's rallied hard
Speaker 3: on the year up now seventy seven percent. I'm interested
Speaker 3: to standing on whether it's been the AI exuberance that
Speaker 3: has been caught up. And we know that they have
Speaker 3: an AIDJ for example, but how much can artificial intelligence
Speaker 3: add to the bottom line in any way?
Speaker 6: So you know, great thing over here. A couple of
Speaker 6: things when it comes to AI right. First off, the
Speaker 6: share price value, if you really think about it, it
Speaker 6: has been driven because of the huge layoffs that they
Speaker 6: had they got out of down our staff as well.
Speaker 6: They've really been trying to clean out their operations and
Speaker 6: build out that oppec space, which is what investors have
Speaker 6: been asking for over that time. I don't think that
Speaker 6: this is that much of an AI play in terms
Speaker 6: of what's driving the share price valuy. I think around
Speaker 6: artificial intelligence a big thing that everybody wants to understand
Speaker 6: right now, Yes, it's a buzzword, but Spotify has been
Speaker 6: implementing AI and mL for a substantial period of time,
Speaker 6: even when they recommend their music to us, right so,
Speaker 6: they have already dipped us into this water. There is
Speaker 6: some contentious issues coming out right now between the music
Speaker 6: the record labels as well as the digital streaming platforms,
Speaker 6: but they've always had a contextuous relationship.
Speaker 2: When we're thinking about AI and mL.
Speaker 6: A big thing over here is just going to be
Speaker 6: how much more technology do they need to acquire, how
Speaker 6: much more money do they need to spend on this?
Speaker 6: And then how does that story play into their cash constraints,
Speaker 6: on into their profitability constraints. That, of course, is something
Speaker 6: that hasn't been directly addressed so quickly, And perhaps the
Speaker 6: next quarter or two will tell us about how Spotify.
Speaker 2: Is going to think about investments in this.
Speaker 6: So only then will we get to know exactly how
Speaker 6: the market's going to react to those costs or the
Speaker 6: investment costs for that.
Speaker 3: I mean, meanwhile, go back to the cost cutting. We
Speaker 3: are anticipating further job cuts, I think they said in
Speaker 3: the next quarter of the CFO and don Astrov you mentioned,
Speaker 3: I mean a big talent loss from a podcasting perspective,
Speaker 3: But is this the right direction to be trimming costs
Speaker 3: when it comes to talent and people?
Speaker 6: So I think the big thing with don Astrov as well, right,
Speaker 6: so quite creative in terms of the content that was
Speaker 6: being created podcasting, especially back into twenty twenty two, was
Speaker 6: the buzz where that Spotify was going for at that time.
Speaker 6: But it's been pretty evident so far that monetization and
Speaker 6: podcasting is pretty hard. Despite an increase in consumption across
Speaker 6: the board, the technology that they had, or the entire
Speaker 6: situation of how music streaming or podcast advertising works, it
Speaker 6: doesn't really lend itself at the current moment to create
Speaker 6: monetization opportunities. What they're going to be doing over here
Speaker 6: is going to be getting smarter in terms of the
Speaker 6: content that they have. They're going to be trying to
Speaker 6: monetize that a lot better. And if that requires them
Speaker 6: to take a certain amount of hits or have a
Speaker 6: certain degree of losses to curtail and get a bit leaner,
Speaker 6: they're still providing that story of profitability which the market
Speaker 6: cares about. Again, right, they've shifted or the market is
Speaker 6: shifted from that story of podcasting growth towards a story
Speaker 6: of a bit more of a conservative company with better margins.
Speaker 3: Sundy. Great to catch up with you. Thank you, Sandy
Speaker 3: Shehama working at five pm over there in Europe. Third
Speaker 3: Bridge Analyst time now for Talking Tech. First up show
Speaker 3: Me plans to focus on five G smartphones and Alena
Speaker 3: product portfolio in India. Now that what's dominating, Chinese manufacturer
Speaker 3: is trying to call back market share lost the rivals,
Speaker 3: including South KOREIZ Samsung. In India, it's, of course, its
Speaker 3: second biggest market. Meanwhile, Adobe's twenty billion dollar takeover of
Speaker 3: design startup Figma is on calls for an investigation from
Speaker 3: EU merger regulators. Purchase is also facing global scrutiny as
Speaker 3: the US Justice Department prepares an antitrust lawsuit seeking to
Speaker 3: block the merger, and Sequoia while it's kind a third
Speaker 3: of its talent division, a sign of continued restructuring in
Speaker 3: the world of Silicon Valley startups and VC now. The
Speaker 3: move comes as the firm parts ways with at least
Speaker 3: five investing partners, two of which the champion Sequi's doomed
Speaker 3: backing of Crypto exchange FTX. Let's go back to the
Speaker 3: M and A theme though, if we're just talking Adobe
Speaker 3: and Figma, what then of Amazon's deal for its acquisition
Speaker 3: of I Robot. Now I robot is actually now going
Speaker 3: to come at a lower price point for Amazon, it
Speaker 3: would seem for the rumor maker. It's now going to
Speaker 3: be fifty one dollars seventy five per share, down from
Speaker 3: sixty one per share when it was originally agreed. Change.
Speaker 3: We understand off sets some rather expensing debt that I
Speaker 3: robot is taking on. Let's go to Spencer Solaper, who
Speaker 3: is oman on the ground when it comes to Amazon
Speaker 3: and Spencer, I'm interested in this pretty hefty price car.
Speaker 3: I mean, were you anticipating it because it is a
Speaker 3: pretty expensive debt deal that they've struck.
Speaker 7: Yeah, and it actually it seems like the regulatory scrutiny
Speaker 7: is slowing the steal down is actually benefiting Amazon because
Speaker 7: you know, this is I Robot's an example of another
Speaker 7: one of these kind of pandemic darlings that people were
Speaker 7: just snatching them up right and left when everyone was
Speaker 7: locked at home and trying to keep their holms nice.
Speaker 7: And now they're struggling from people returning to normal habits,
Speaker 7: which I guess includes keeping a messy house or cleaning
Speaker 7: the house yourself. And so yeah, so they're able to
Speaker 7: cut their price in response to this debt that I
Speaker 7: Robot had to take on because the market is softer.
Speaker 3: We've been naming ours various things back at home. But
Speaker 3: I'm interested, Like for Amazon, there's another key price point
Speaker 3: for them and cost base, which is of course as people,
Speaker 3: and we know that Amazon have been trimming on that people.
Speaker 3: There's an interesting news point today that well, the deal
Speaker 3: between UPS and teamsters, so their own delivery force seems
Speaker 3: to have been struck. Now what does that mean for Amazon,
Speaker 3: because of course we know that they have tension with
Speaker 3: labor unions.
Speaker 7: Yeah, that it is interesting. So in your term, Amazon
Speaker 7: wasn't sweating a UPS strike too much, even though Amazon
Speaker 7: is UPS's largest customer. I think one in ten UPS
Speaker 7: packages actually come from from Amazon in the US. But
Speaker 7: still Amazon wasn't sweating it too much because they have
Speaker 7: their own delivery network. They have, you know, their branded
Speaker 7: vans out there run by small businesses, and they also
Speaker 7: have like this flex army of drivers like kind of
Speaker 7: like Uber that you can deliver Amazon packages in your
Speaker 7: own van, so they've definitely diversified that, and also at
Speaker 7: summertime so things aren't slow if there was like a
Speaker 7: summertime strike, that's actually a good time for Amazon to
Speaker 7: see a to see a labor strike for its delivery
Speaker 7: people because there's just not as much demand to say
Speaker 7: the holidays. But longer term, this is an interesting development
Speaker 7: because the teamsters have said, we're going to focus on
Speaker 7: UPS and get our contract and then we're coming for
Speaker 7: you Amazon, because Amazon does have thousands of these delivery
Speaker 7: service partners that employ hundreds of thousands of drivers, and
Speaker 7: the teamsters don't like how little those drivers are getting
Speaker 7: paid and the conditions that they're working in. And so
Speaker 7: now they're going to take this contract that they have
Speaker 7: with UPS and try to dangle it in front of
Speaker 7: those drivers who are delivering packages for Amazon and say, hey,
Speaker 7: you guys deserve a lot better, why don't you come
Speaker 7: on board with us? So I think we're going to
Speaker 7: see more of a fight between the teamsters and Amazon
Speaker 7: now that the UPS situation has resolved.
Speaker 3: Interesting UPS getting a bit of a boost on well
Speaker 3: some clarity at least from that deal, But it's a
Speaker 3: so for a great way across to Amazon. Thanks so much.
Speaker 3: Welcome back to Bloomberg Technology. I'm Karen Hide in New York.
Speaker 3: Let's get you up to speed where these markets are trading,
Speaker 3: because we know that about forty percent of the entire
Speaker 3: market cap of the likes of the S ANDP are
Speaker 3: coming for earnings this week. Tech managing to push on
Speaker 3: higher the key market capitalizations and Microsoft of Alphabet, they're
Speaker 3: both giving us numbers after the bell. People optimistic that
Speaker 3: perhaps they can vindicate in some way the massive run
Speaker 3: up we've seen in market capitalization and valuations at the
Speaker 3: first half of the year. We're looking at the Golden
Speaker 3: Dragon index. That's of course the NAZAG Golden Dragon over
Speaker 3: there in China, those names that are traded here in
Speaker 3: the US. On the upside, that comes more on a
Speaker 3: macro picture and the fact that China is looking to
Speaker 3: once again support its own economy, giving wind actually to
Speaker 3: a lot of some of the mining names out there.
Speaker 3: That's why Europe managed to trade higher in today's trade
Speaker 3: as well. I'm looking at a two year yield on
Speaker 3: the downside, interesting some steepening of that yield curve today,
Speaker 3: the tenure selling off bonds rising in terms of a
Speaker 3: boring cost there and atu overall price falling. That's on
Speaker 3: the back of consumer confidence when good news is bad
Speaker 3: news consuming a confidence really strong at the moment. What
Speaker 3: does the FED therefore do in terms of trying to
Speaker 3: suppress inflation when the economy still looks pretty good. Let's
Speaker 3: have a look at what's happening in terms of individual
Speaker 3: names for you, though, because an XP semi conductor actually
Speaker 3: numbers doing better than expected, we're particularly seeing growth in
Speaker 3: the automotive sector. For this chip maker, we're up four percent.
Speaker 3: What does that read across mean for the rest of
Speaker 3: the chip makers today and the rest of the week.
Speaker 3: I'm looking at Raitheon Technologies because yes, it makes engines.
Speaker 3: That is deeply a tech story, and we're seeing it
Speaker 3: on the downside because some of the paint, the powder
Speaker 3: paint used in some key engines is actually causing issues.
Speaker 3: They're going to have to investigate and do more assessments
Speaker 3: that it's going to cost them, so they're done by
Speaker 3: some thirteen percent. We're looking at Microsoft, though, up a
Speaker 3: percentage point ahead of their all important numbers, and we
Speaker 3: know so much of that's going to be about it's
Speaker 3: cloud or as it's generative AI, and also what's happening
Speaker 3: with the gaming, the focus on activision. We can weave
Speaker 3: all of that together now because generative AI, we know,
Speaker 3: is opening up a potential to lower gain production costs,
Speaker 3: with one analyst telling Bloomberg that the money, the time
Speaker 3: that people needed to complete one big gain can we
Speaker 3: come hard. Part of that cost saving could come down
Speaker 3: to tools like well cub Co, an anime character generator
Speaker 3: by preferred networks. Just take a listen.
Speaker 7: First, we will generate some rundown characters to begin with.
Speaker 8: Click on the generated generate. Ah, yeah, not safe for work.
Speaker 9: As with many industries across the board, AI is disrupting
Speaker 9: the business of making video games. We're headed to preferred
Speaker 9: networks in Tokyo to create our very own anime character
Speaker 9: in less than five minutes. Generative AI is opening up
Speaker 9: the potential to lower game production costs, with one analyst
Speaker 9: telling Bloomberg that the money, time, and people needed to
Speaker 9: complete one big game can be.
Speaker 8: Cut in half.
Speaker 9: Part of that cost saving could come down to tools
Speaker 9: like Crypto, an anime character generator by preferred networks.
Speaker 8: Okay, so this girl, I like her. She seems real happy.
Speaker 4: And then you can click the fuse.
Speaker 9: And emerge something together and it will give you a
Speaker 9: variety of new characters based on the cater you had
Speaker 9: to You can also fine tune the character's features, like
Speaker 9: giving it twenty years and different expressions.
Speaker 8: I want minds have glasses and I'm naming her Kinko.
Speaker 8: After you create the character, you can chat with the character.
Speaker 8: Love your hair today.
Speaker 9: Still, critics argue Generative AI is trained on art without
Speaker 9: consent from the original creators, who says they began debating
Speaker 9: copyright concerns three years ago.
Speaker 3: Opinion, how you go. Sorry, we didn't have the the
Speaker 3: translation for that at the very end, but we thank
Speaker 3: Kareemimuri in Tokyo for that piece. Meanwhile, sticking with gaming,
Speaker 3: super League Gaming is a leading launch pad for brands
Speaker 3: and creators and pretty dynamic gaming metaverse. In fact, here
Speaker 3: to talk more about the metaverse advertising bum or bust,
Speaker 3: Super League Gaming CEO and hand. It is great to
Speaker 3: have some time with you, Anne, And look, we look
Speaker 3: ahead to meta the actual company that's rebranded itself a
Speaker 3: couple of years ago, its earnings. We're looking towards whether
Speaker 3: advertising is still there, whether people are particularly in the
Speaker 3: gaming sector are seeing a new avenue you are, you're
Speaker 3: still seeing a commitment from brands to want to reach
Speaker 3: a new audience through gaming and the metaverse.
Speaker 2: Yeah.
Speaker 3: Absolutely.
Speaker 1: I think the reality is is the definition of gaming
Speaker 1: has changed a great deal. You know, when in the
Speaker 1: early days, when you were trying to advertise in a game,
Speaker 1: you were interrupting the game experience. And then really with
Speaker 1: the explosion of these open world gaming platforms that are
Speaker 1: like open canvases, games like platforms like Rodbox and Minecraft
Speaker 1: and increasingly Fortnite, it really allows brands to be brought
Speaker 1: natively into the landscape of the game, and so it
Speaker 1: changes that experience in the way brands kind of like
Speaker 1: product placement on steroids, can deeply interact with harder to
Speaker 1: reach audiences. So I think the definition of in game
Speaker 1: advertising and what that means and looks like and why
Speaker 1: users want it and appreciate it and engage with it
Speaker 1: more has changed a great deal.
Speaker 3: Can you give us any facts, numbers, data that can
Speaker 3: just put the confidence back into people that brands also
Speaker 3: wanting to commit real money to this.
Speaker 1: Yeah. I mean, look, there's no doubt that while you've
Speaker 1: got you know, meta's great news with three billion aggregated users.
Speaker 1: You know, still your that digital ad dollars are down, right,
Speaker 1: ad spends down, But that's really about traditional digital advertising
Speaker 1: because that's been underperforming now for the last couple of years,
Speaker 1: and so when brands are trying to seek much deeper
Speaker 1: engagement that top of the funnel, including that conversion over
Speaker 1: into physical sales. Interacting in these open world gaming platforms
Speaker 1: again is a way to reach a hard to reach
Speaker 1: audience and actually achieve those marketing outcomes that right now
Speaker 1: traditional social media is and delivering on.
Speaker 3: I think what is it, fifty six billion by twenty
Speaker 3: twenty four is where you see in game advertising and
Speaker 3: projected growth to go. How much does that convert into
Speaker 3: real sales? What sort of data did you see as
Speaker 3: to when I'm interacting with it on Twitch and I'm
Speaker 3: seeing a particular brand that I actually go out and
Speaker 3: purchase something.
Speaker 7: Yeah.
Speaker 1: Again, you know when you think about seeing an ad
Speaker 1: on YouTube or in Twitch and clicking over on that conversion,
Speaker 1: there's lots of studies there showing that our eyeballs are
Speaker 1: glazing over those ass We can't head X fast enough, right,
Speaker 1: we're tuning them out. The difference for what we do.
Speaker 1: A good example is what we did for Mattel with
Speaker 1: Barbie late last year is we actually baked a Barbie
Speaker 1: Dreamhouse virtual world inside an existing game world that already
Speaker 1: had tons of players, and during that course of that month,
Speaker 1: we were able to have sixty million visits to Barbie's Dreamhouse.
Speaker 1: You could swim in the pool, you could dejayn the
Speaker 1: roof deck. Again, this is about kind of deep engagement
Speaker 1: that enhances the gameplay. Another great example is two promotions
Speaker 1: we ran for Chipotle where you could in one case,
Speaker 1: go through a Halloween maze and find a secret phrase
Speaker 1: for a burrito. The second one was a build a
Speaker 1: Burrito campaign. During the course of those two campaigns, we
Speaker 1: gave away one hundred and thirty thousand real life burritos,
Speaker 1: but also set records for highest digital app download day
Speaker 1: and one of the highest digital food sales days for Chipotle.
Speaker 1: So that digital of physical crossover is a really powerful
Speaker 1: thing that's much more sticky in a virtual world experience
Speaker 1: that again is interactive for the user.
Speaker 3: Does it have to be massive brands?
Speaker 1: You know, it's a great question. Actually, we do a
Speaker 1: lot of work with like Universal, and you'd expect with
Speaker 1: a lot of the studios you know, Netflix, Disney, Paramountain
Speaker 1: is one of our investors. And what Universal did last
Speaker 1: year is they tested new IP. So yes, we do
Speaker 1: a lot with minions and some of their more known IP,
Speaker 1: but equally they dropped some animated characters that kids had
Speaker 1: never seen before and we were able to test for them.
Speaker 1: You know how much kids responded to the different characters
Speaker 1: ahead of the debut in the movie theaters. And I've
Speaker 1: often said to some of the larger toy makers in
Speaker 1: the world and others, like, let's find your next billion
Speaker 1: dollar toy line in the metaverse. First, let's sample different IP. Frankly,
Speaker 1: let's engage those young audiences in helping us actually craft
Speaker 1: that great new toy line and really start to reverse
Speaker 1: that flow from digital to physical. But also just think
Speaker 1: about the smarter cogs supply chain savings by just doing
Speaker 1: your R and D turning it on its head.
Speaker 3: It is interesting that, of course, in this economic environment,
Speaker 3: all companies are focused on the bottom line. They can't
Speaker 3: be growth at any cost anymore. And also at the
Speaker 3: same time, we have this server building around artificient intelligence,
Speaker 3: and it sort of immediately saw these crypto companies or
Speaker 3: even dare I say Mark Zuckerberg himself talking way more
Speaker 3: about AI than he was about the metaverse at his
Speaker 3: last earnings, how much you've see companies being torn about
Speaker 3: where they put their R and D or their marketing
Speaker 3: spend to work.
Speaker 1: Yeah, it's a great question because in some ways, you know,
Speaker 1: super League was talking about the metaverse prior to Matter rebranding, right,
Speaker 1: And in a way we've all had to kind of
Speaker 1: suffer through the highs and lows of that hype cycle
Speaker 1: a bit. I think what's exciting for the positioning of
Speaker 1: metaverse AI, as you just saw in your previous segment,
Speaker 1: can play a really important role in the generation of
Speaker 1: gamified experiences and worlds, and so all those things will
Speaker 1: only make that marketing spend or investment by brands more efficient.
Speaker 1: But what I would say about just the term metaverse,
Speaker 1: and I think even when I read some of the
Speaker 1: comments that the head of metaverse a metaverse recently said
Speaker 1: at some conferences, I think that they are showing that
Speaker 1: there is more of a hybrid view. Now you know,
Speaker 1: there's social media, and then there was the strong point
Speaker 1: of view of a fully immersive metaverse world with headsets
Speaker 1: and hardware, right, and our point of view has always
Speaker 1: been that there is a world we're living in right
Speaker 1: now in the middle that doesn't revolve around hardware. There's
Speaker 1: already hundreds of millions of people who love these two
Speaker 1: D virtual worlds that have all.
Speaker 2: Of that same feeling of immersion.
Speaker 1: It may not be as immersive, but it's a way
Speaker 1: that they enjoy socializing and living. And so super League
Speaker 1: is a publishing engine for the immersive web, and what
Speaker 1: we're doing right now is helping brands understand that to
Speaker 1: change their dot com experience.
Speaker 3: Super League Game CEO and hand, thank you so much
Speaker 3: for your time today digging into just how willing markets
Speaker 3: I'll spend right now. Meanwhile, coming up Twitter, it's now
Speaker 3: x you know it, Musk took that social platform well
Speaker 3: to his favorite letter. We're going to go into the
Speaker 3: history and just discuss what perhaps is at stake here
Speaker 3: from New York as the blue meg technology. So Elon
Speaker 3: Musk has explained his decision to strip Twitter of its
Speaker 3: famous bluebird logo, saying it made sense when the platform
Speaker 3: was just about short messages going back and forth like
Speaker 3: birds tweeting, but now as a platform expands its character
Speaker 3: limit and look at moves towards his vision of in
Speaker 3: everything app says the Twitter name does not make sense
Speaker 3: in that context, so must be adieu to the bird.
Speaker 3: Let's talk about the brand destruction. Let's talk about X
Speaker 3: as a historical fat point. Philip Schumacher's with a CEO
Speaker 3: of open source identity verification platform identity dot com, also,
Speaker 3: of course the former Apple App Store director, along with
Speaker 3: Bluemerg's own Max Chafkin for more. Max, I want to
Speaker 3: start with you on the history of this, because it
Speaker 3: all felt very well wind and overnight. But actually, if
Speaker 3: you look back at history or indeed what he was
Speaker 3: just saying as he was looking to buy Twitter, this
Speaker 3: kind of makes sense.
Speaker 10: Yeah, this is very much Elon Musk essentially putting himself
Speaker 10: in Twitter's brand, the ex brand, and this idea of
Speaker 10: having kind of a super app goes back to the
Speaker 10: late nineties when Elon Musk started the company that would
Speaker 10: become PayPal. You know, the history is very interesting. Elon
Speaker 10: Musk actually merged this company X dot com with PayPal,
Speaker 10: became CEO, and then was ousted after a very controversial
Speaker 10: effort to change the name from PayPal to X dot com.
Speaker 10: At the time, a lot of employees felt like that
Speaker 10: was a really insane decision just because PayPal had a
Speaker 10: really great brand. It was a verb, you know, very much,
Speaker 10: the way that Twitter.
Speaker 3: Was a verb.
Speaker 10: And also when you're talking about finance, right, trust and
Speaker 10: so on is very important, and I think this issues
Speaker 10: could be at play here.
Speaker 1: You know.
Speaker 10: On the other hand, Elon Musk has managed to defy
Speaker 10: the laws of business gravity many times, so it's possible
Speaker 10: that this will look brilliant in retrospect.
Speaker 3: Let's talk about whether it could look brilliant. Philip, from
Speaker 3: your perspective, do you think Twitter now X could win
Speaker 3: back not only advertisers but the consumer to have the
Speaker 3: trust that this could be a payments player and a
Speaker 3: big one.
Speaker 2: Yes. Absolutely.
Speaker 11: I see so many people writing Twitter or X's obituaries
Speaker 11: right now saying that it's over, and I.
Speaker 2: See the opposite right.
Speaker 11: I see Elon fulfilling his long term dream of having
Speaker 11: a universal app, a super app, whatever you want to
Speaker 11: call it, that's going to do a variety of things.
Speaker 11: He wants to change the way we pay people, the
Speaker 11: way that people get monetized for their content. I see
Speaker 11: this as really the beginning of something huge, and there's
Speaker 11: no stopping Elon when he really wants something.
Speaker 3: Philip, to your point of course, with someone who's very
Speaker 3: much steeped in the world of Web three right now,
Speaker 3: how much is this having to adopt Web three or
Speaker 3: crypto or will it be more of what we were
Speaker 3: associate PayPal and Memo with.
Speaker 11: Yeah, I think Elon really wants to adopt crypto and
Speaker 11: he wants to embrace the Web three ideals, but I
Speaker 11: think that will be selling it short.
Speaker 2: I think he needs to embrace both.
Speaker 11: You can live in a world that's Web three and
Speaker 11: Web two to be able to handle payments, et cetera.
Speaker 11: I mean, he's making Twitter. It's essentially a universal name space.
Speaker 11: People want to know who I am. I'm PBS identity.
Speaker 11: I don't necessarily get my whole name. I get the
Speaker 11: handle that I've chosen, and from that point on people
Speaker 11: can send me money directly to that, and for me,
Speaker 11: it's something that bridges this gap between Web two and
Speaker 11: Web three.
Speaker 3: Max. The history is so fascinating, and the fact that
Speaker 3: he ultimately was ousted because people felt that this was
Speaker 3: a mad move and brand destruction. How much you're reading
Speaker 3: and feeling that ultimately we are destroying something with Twitter,
Speaker 3: with tweets with the bird or not the actually people
Speaker 3: want to be involved in the brand of Elon.
Speaker 10: Yeah, I mean I think if you look at Elon
Speaker 10: Musk's history and you look for weaknesses, you know, obviously
Speaker 10: has a lot of strengths, as philibers are saying. But
Speaker 10: but the weakness I think is ego, right, and you've
Speaker 10: seen it get him, get him into trouble before when
Speaker 10: he sort of stepped in it on Twitter. And you know,
Speaker 10: this is a case where you're taking a very well known,
Speaker 10: very successful media brand and and and taking it apart.
Speaker 10: And I mean the verb thing does strike me as
Speaker 10: a as a challenge. I mean, it's hard to know.
Speaker 10: Elon yesterday on Twitter said that they're called X's now,
Speaker 10: which is kind of hard to say. And so I
Speaker 10: think it's going to be a challenge. And of course
Speaker 10: there is you know, this kind of very far out
Speaker 10: vision of payments and so on. But number one question
Speaker 10: is do you trust Twitter, which is run by a
Speaker 10: guy who you know spends a lot of his day.
Speaker 3: It is not run by a guy, or is it?
Speaker 3: I mean that point, can Linda stare us Max.
Speaker 10: That's a very good question, right, I mean and and
Speaker 10: and she has come out sort of embracing this and
Speaker 10: and very much has you on's back. I just think
Speaker 10: the question is, you know, why buy this company for
Speaker 10: forty four billion dollars if you were going to take
Speaker 10: away the brand. The brand seems like it was part
Speaker 10: of the value here. Of course, Elon Musk has a
Speaker 10: very valuable brand as well, so I suppose we'll see.
Speaker 3: Of course. Lastly, Philip, Apple app Store, you help build
Speaker 3: the review operations team, you help build in and of itself.
Speaker 3: I'm looking at the app store and this bluebird still
Speaker 3: there and it's still called Twitter. How quickly can you
Speaker 3: sinkly sing up? From an app perspective?
Speaker 11: He could have He could have done a sink immediately, right.
Speaker 11: It's it's not it's it's pretty trivial for them to
Speaker 11: be able to submit the changes, get the get the
Speaker 11: logo updated.
Speaker 2: And then have the up the app updated in a
Speaker 2: matter of hours.
Speaker 11: So why that's taking a longer time makes me wonder
Speaker 11: if there's some additional features that that he hasn't announced
Speaker 11: that are going to go with it as well. Otherwise
Speaker 11: it should have been through already.
Speaker 3: There's a run fast mentality here. We'll see how much
Speaker 3: they're breaking things. Philip Shoemaker, we thank you so much,
Speaker 3: CEO of Identity dot Com. Bloomberg's Max Chafkin, brilliant, really
Speaker 3: shining a light on the history of all of this,
Speaker 3: and go follow his tweets because it's certainly caught my attention.
Speaker 3: Got to talk about snap parent company, of course, the
Speaker 3: Snapchat set to report earnings after the bell today, and
Speaker 3: for more on what we can expect, let's bring in
Speaker 3: Bloomberg's Alex Brinka and Well a couple of years ago,
Speaker 3: it really set the tone for the rest where the
Speaker 3: advertising market was going for the Metas for the alphabets,
Speaker 3: is it a bell weather anymore at the.
Speaker 12: Moment, Alex Well, Timing wise, I would say no, because
Speaker 12: Snap actually is reporting with alphabet on the day. But
Speaker 12: in terms of what we can potentially expect for meta tomorrow,
Speaker 12: we'll still be looking at snap That's because they are
Speaker 12: kind of the pure play digital ad company who relies
Speaker 12: on online ads on Snapchat for the vast majority of
Speaker 12: their revenue, which has also Caroline been kind of the
Speaker 12: problem with this stock. As economic conditions have continued to
Speaker 12: be a little bit sluggish, their revenue is so tied
Speaker 12: to how marketers are feeling because they are kind of
Speaker 12: brand revenue upper funnel revenue generator, so they have been
Speaker 12: kind of really hit hard when it comes to this
Speaker 12: pullback and spending that we've seen from marketers across the board.
Speaker 3: They've really tried to put themselves out there as experimental though,
Speaker 3: and particularly around artificial intelligence. Is that going to reaped
Speaker 3: any reward in this economic environment?
Speaker 12: That is exactly what investors will be looking for. I
Speaker 12: think the big question here with Snap is, Okay, you've
Speaker 12: cut costs.
Speaker 3: Over the last year.
Speaker 12: We've seen them lay off twenty percent of the workforce,
Speaker 12: rain and a lot of their spending. Things are getting
Speaker 12: a little bit more stable, as the analyst from UBS
Speaker 12: and JP Morgan predict they will be when they report today.
Speaker 12: But where is the growth going to come from? Is
Speaker 12: it artificial intelligence like they have in their chatbot, their
Speaker 12: AI chatbot on the app. Is it going to be
Speaker 12: augmented reality where they've built an entirely new business unit
Speaker 12: around it earlier this year to sell that to enterprises
Speaker 12: and retailers. We don't have a lot of that clarity yet,
Speaker 12: and that's exactly what we'll be looking for from the
Speaker 12: executive today. Hey, Snap, you used to be kind of
Speaker 12: the growthy social media stock on the block. Now you've
Speaker 12: reported one quarter, your first ever quarter of declining revenue
Speaker 12: three months ago. We expect revenue will decline this month
Speaker 12: as well. At what point do you come back to growth?
Speaker 3: And to that point, just remind us of growth of
Speaker 3: actual uses, because I mean, well, is it Threads just
Speaker 3: eclipsed their entire US user base in about five days.
Speaker 3: But it's a very niche, bespoke age group.
Speaker 12: Right absolutely, And let's expect only a three percent increase
Speaker 12: from three months ago in terms of users to around
Speaker 12: three hundred and ninety million and change. So Threads is
Speaker 12: right there. And obviously you can't forget about the big
Speaker 12: private company that's been taking Snap users or their time, TikTok,
Speaker 12: who kind of has has bullied in on this young
Speaker 12: user group that Snap used to be very much known for.
Speaker 12: So that kind of three percent expected user growth this
Speaker 12: quarter is really endemic of the problem with this company. Hey,
Speaker 12: if your revenue isn't growing, we need to see you
Speaker 12: growing on userbase or engagement. You have this new subscription
Speaker 12: Snapchat Plus, that folks are paying money for and Snap
Speaker 12: has been able to convert users to pay for new features,
Speaker 12: which has been kind of ahead of its competitors, but
Speaker 12: as of three months ago, there were still only three
Speaker 12: million people paying for that. We'll be looking for that
Speaker 12: updated number as well, so that user number could be
Speaker 12: an inflection point, but again we'll be looking for something
Speaker 12: a little bit more strong for them as to what
Speaker 12: to expect in the next six months.
Speaker 3: Ax gerenca across that one hundred Mini news is in
Speaker 3: the US and the Inner Mini worldwide. Let's see how
Speaker 3: they grow. Thank you so much as we look ahead
Speaker 3: to Snap. That's it for this edition of Bloom Meg Technology.
Speaker 3: Don't forget to check out our podcast from New York.
Speaker 3: This is Blue Meg Technology.