Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
Speaker 1: from coast to coast with Carolline Hide in New York
Speaker 1: and Eva Low in San Francisco.
Speaker 2: This is Bloomberg Tech coming up and Thropic rebuffs investors
Speaker 2: pushing offers on funding that would value it at more
Speaker 2: than eight hundred billion dollars plus.
Speaker 3: Metro expands a multi billion dollar partnership with Broadcom to
Speaker 3: design and build custom.
Speaker 2: Chips and ASML the supply of cutting edge chip making
Speaker 2: machines raises, it's for your sales forecast. Is AI demand
Speaker 2: fuels growth.
Speaker 3: And that demand is fueling growth. When it comes to
Speaker 3: the benchmarks today, ed despite the ongoing anxiety about conflict
Speaker 3: in the Middle East, but hope optimism that some sort
Speaker 3: of extension to the ceasefire might be found, we are
Speaker 3: at or near record highs. The S and P five
Speaker 3: hundred is at a new record high. We hold onto
Speaker 3: these games towards the closed we're up three tens of percent.
Speaker 3: Then aw's that one hundred ever so closed to a
Speaker 3: record high that it had last year, up six tens
Speaker 3: of percent. But look at the length of games that
Speaker 3: we have had then, as that one hundred is now
Speaker 3: up for eleven straight days. It is increased by thirteen
Speaker 3: percent over that stretch. So long as win in streets
Speaker 3: is twenty nineteen.
Speaker 2: N single movers, this is what's driving the market right now.
Speaker 2: Look at Broadcom up almost four percent, Metas actually also
Speaker 2: pushing high. I think that's probably more in line with
Speaker 2: where the market's at right now. This is an expansion
Speaker 2: of an existing agreement. Broadcom works with Meta for their
Speaker 2: custom silicon, and later in the block we're going to
Speaker 2: talk to Mandate saying who leads our research and Bloomberg Intelligence.
Speaker 2: It was going to take a look at some of
Speaker 2: the pictures from when I visited Meta and get into
Speaker 2: detail about what those chips actually are. In private markets
Speaker 2: is where the big story is right now, and Tropic
Speaker 2: is drawing investor interests at evaluation of eight hundred billion
Speaker 2: dollars or higher. That would be a massive jump from
Speaker 2: its three hundred and fifty billion dollar price tag. Just
Speaker 2: in February, bluemokes that Tasha Mascarene is part of the
Speaker 2: team that broke this story.
Speaker 4: Let's be super clear.
Speaker 2: This is investors going to Anthropic and saying, you guys
Speaker 2: should raise money at this valuation, we want to do this,
Speaker 2: and Entropic saying we do not want to do this
Speaker 2: at this time.
Speaker 5: Yes, you're absolutely right. I mean, we've both been covering
Speaker 5: the AI boom long enough to know that the investor
Speaker 5: interest can soon turn into an actual deal. But in
Speaker 5: the case of Anthropic, I mean, they close their employee
Speaker 5: tender at around half of this new valuation just earlier
Speaker 5: this month, and so right now we're seeing Nthropic push
Speaker 5: back on those prices. But these are serious term sheets
Speaker 5: that we're hearing or even encroaching higher than eight hundred.
Speaker 4: And investors think the evaluation.
Speaker 5: On the valuation, Yes, and investors think that that's a
Speaker 5: good deal.
Speaker 3: Right now, Natasha, what sort of amount would they want
Speaker 3: to raise? Could they need to raise? Because as much
Speaker 3: as they steal all the headlines, if ideas that Opus
Speaker 3: four point seven is coming soon according to reporting, or
Speaker 3: indeed that we see Mythos being very staged rolled out,
Speaker 3: there is this concern that maybe it's stage because there
Speaker 3: isn't the access to compute and that costs money.
Speaker 5: Absolutely, I mean, I think at this point we don't
Speaker 5: know the exact numbers of how large the raise could be,
Speaker 5: but we do know that there is this time crunch
Speaker 5: that everyone is thinking about when it comes to Anthropic
Speaker 5: the IPO. As we've reported, this is a company that
Speaker 5: has already been a high profile startup for the past
Speaker 5: two years. But now there's this really real ticking time
Speaker 5: crunch for an IPO as soon as October, as we've reported,
Speaker 5: and so I believe that we're going to see new
Speaker 5: capital talks continue pretty relentlessly until then. It's really just
Speaker 5: a decision of if Anthropic needs it thinks it needs
Speaker 5: to secure that capital before it makes the jump into
Speaker 5: the public markets. To your point, the new model gives
Speaker 5: a real exact pinpoint reason to where where the capital
Speaker 5: would go at this moment.
Speaker 3: Brilliant reporting has always been braised in attach and mascotiness.
Speaker 3: Thanks so much, winning us on all things Anthropic. Let's
Speaker 3: go from private back to the public markets. So you
Speaker 3: see Meta up almost two percent, broad coom is up
Speaker 3: three point six percent. That's as they expanded that multi
Speaker 3: billion dollar partnership with the chip maker to design and
Speaker 3: build custom chips to power social media giants AI ambitions.
Speaker 3: Bloombag Intelligence has said that the move along when Meta's
Speaker 3: new news spark model shows stronger confidence and in house
Speaker 3: chips for inference. Though Meta could face more pressure on
Speaker 3: spending returns without a cloud business. Many seeing BlueBag intelligence
Speaker 3: helps pen that note joins us right now and just
Speaker 3: talk to us a little bit man deep about well,
Speaker 3: the desire to custom chips, what sort of edge does
Speaker 3: it give it when it's already dependent on AMD and
Speaker 3: video two.
Speaker 6: I mean, look, the proof is what Google has done
Speaker 6: with TPUs and when you think about, you know, token efficiency,
Speaker 6: there is no better company than Google when it comes
Speaker 6: to how they have ramped up TPUs for both training
Speaker 6: and influencing workloads. And now that Meta is getting more
Speaker 6: confident about it's on model, they have redesigned the pre
Speaker 6: training stack over the last nine months. They feel they're
Speaker 6: at a point where they are looking for token efficiency
Speaker 6: and I think that's where they want to go to
Speaker 6: the custom silicon route. It's worked for them when it
Speaker 6: comes to recommendation engines and now they want to do
Speaker 6: the same on the accelerator side with Broadcom Mandy.
Speaker 2: But I want to look at the specific Meta chips
Speaker 2: themselves MTIA Meta Training Inference Accelerator. These are some images
Speaker 2: that we took when we visited the MTIA Lab last
Speaker 2: month and basically how it works is right. They work
Speaker 2: with Broadcom on the design and architecture of the silicon
Speaker 2: and Broadcom then goes to TSMC and TS and what
Speaker 2: this deal represents is expanded volume commitment on that existing technology.
Speaker 2: You can check out you know, Bloomber's coverage of the
Speaker 2: specifics of the accelerators. At the same time, Meta is
Speaker 2: a big buyer of GPUs and other accelerators from elsewhere.
Speaker 4: That part of your.
Speaker 2: Research that you say they might be inhibited by lack
Speaker 2: of a cloud computing business. What do you mean by
Speaker 2: that if there's such a great buyer of capacity, Well.
Speaker 4: So think of it this way.
Speaker 6: If you are buying in video chips in volume, you
Speaker 6: want to rent them through your cloud business because for Microsoft,
Speaker 6: Azure or Amazon or even Google for that matter, it's
Speaker 6: a big source of you know, cloud revenue, cloud infrastructure
Speaker 6: revenue that these companies are generating in their respective segments.
Speaker 6: For a Meta, if you're focused on token efficiency and
Speaker 6: you're buying the most expensive chips out there without a
Speaker 6: cloud business, that makes that ROI equation very hard. And
Speaker 6: you know, they're at a point where they feel good
Speaker 6: about their model. They have three billion users to serve
Speaker 6: in terms of inferencing, they want to do it with
Speaker 6: their own chip.
Speaker 3: Is there average chance that with excess compute it does
Speaker 3: start becoming more of a cloud company matter.
Speaker 6: I don't think so, just because of the surface area
Speaker 6: they have with the family of apps, you know, WhatsApp, Instagram,
Speaker 6: the core Blue App, three billion users. If we are
Speaker 6: talking about personalized intelligence and you know AI agents that
Speaker 6: really work for consumers, they have you know, a lot
Speaker 6: of demand for inferencing that they can use their own
Speaker 6: infrastructure force. So to my mind, they should have done
Speaker 6: this probably a few years back in terms of starting
Speaker 6: a cloud business like Oracle did you know with this
Speaker 6: dep wave, But probably it's too late now.
Speaker 2: Those MTIA chips, what they are useful currently is is
Speaker 2: ranking recommendations in timelines. That's right, really focused on inference.
Speaker 2: So the idea that they leased them out, you've got
Speaker 2: to come back and get more into that. Man Deep
Speaker 2: seeing a Bloomberg Intelligence top Research. Thank you very much.
Speaker 2: Let's continue with this sort of AI demand story. Look
Speaker 2: at shares of ASML down four point four percent. Now
Speaker 2: the supplier cutting edge hip making Machines raised its four
Speaker 2: year sales forecast, but that brought it in line with
Speaker 2: analyst estimates and attention already turning to what can be
Speaker 2: expected for next year twenty twenty seven. Let's discuss with
Speaker 2: Tammy Chew. She's the head of Tech equity research at Behremberg.
Speaker 2: So it's kind of this contradiction, right. The headline is
Speaker 2: like really positive, raising that guidance, raising that outlook. The
Speaker 2: demand is clearly there, the stock falls and so like,
Speaker 2: it seems like the expectations were high. People are already
Speaker 2: looking much further ahead in terms of that demand picture.
Speaker 4: What was your read on it?
Speaker 7: Sure, So that's a very big point. So basically I
Speaker 7: would say don't forget that. To start with, ASMI is
Speaker 7: already up nearly forty percent year to date, and semi
Speaker 7: equipment segment has been one of the strongest i would
Speaker 7: say subsegment in tech year to date in this year.
Speaker 7: So therefore I would call the set of results reported
Speaker 7: by ASMO today as solid. They raised a four year
Speaker 7: guidance by four percent. The Q one gross margin was
Speaker 7: way above constant expectation because of strow mix. At the
Speaker 7: same time, they confirm that they are increasing their capacity
Speaker 7: to about at least eighty UV tools from at least
Speaker 7: sixty UVI tools year in twenty twenty seven. So I
Speaker 7: would say the set of results has been very strong,
Speaker 7: but at the same time as the most let's say successful,
Speaker 7: our high profile tech company in Europe Asmo's always well
Speaker 7: owned and asmox location has always been elevated. So I
Speaker 7: would call today's share price movement as just lack of
Speaker 7: revision on the back of this solid set of results
Speaker 7: instead of anything which is worse to me.
Speaker 2: Can we just linger for a moment what you just said,
Speaker 2: eighty eight zero EUV machines. So a lot of people
Speaker 2: they'll say, hold on, I don't understand that this is
Speaker 2: the world's most important maker of machines in the chip
Speaker 2: manufacturing process and they're guiding that they'll make eighty of them.
Speaker 2: Of course, the context is there one hundred million dollars apiece.
Speaker 2: Just explain why that number is significant?
Speaker 4: Sure?
Speaker 7: Of course, So those tools you are correct are sold
Speaker 7: for two hundred and thirty million each, So those are
Speaker 7: probably one of the most expensive set of tool in
Speaker 7: the market or in the world. And I would say
Speaker 7: that it's important because we are moving from sixty in
Speaker 7: this year and we were at about forty few years ago.
Speaker 7: So therefore, from forty to eighty, they're already doubling that capacity.
Speaker 7: They can serve the market, which is showing that AI
Speaker 7: demand and memory demand has been super solid over the
Speaker 7: next let's say six months or two years, and going
Speaker 7: forward is likely to support the further expuilled expansion of
Speaker 7: AI market or memory market. So therefore, as a result,
Speaker 7: I would say that eighty number, it doesn't look like
Speaker 7: a big number, but don't forget those tools are two
Speaker 7: hundred and thirty million each and we were at forty
Speaker 7: two years ago.
Speaker 3: Are they in any way supply strained here? Tammy? I
Speaker 3: mean some on the straight and hope to see the
Speaker 3: number ninety thrown around. Is there a limitation factor to them?
Speaker 3: Could they be making more so?
Speaker 7: In our being, we don't think that asma will be
Speaker 7: a bottleneck. You are right that ninety was mentioned previously
Speaker 7: as the potential capacity number, but ASMO has been super
Speaker 7: careful in terms of building capacity as for customer demand,
Speaker 7: because you don't want to end up in the situation
Speaker 7: that you build ninety tools or whatever the number is,
Speaker 7: but there is no demand for that. So therefore, as
Speaker 7: a result, I would say that eighty number is a
Speaker 7: result of smo's discussion with customers and that eighty number
Speaker 7: for the time being is a reflection of asmo's agreement
Speaker 7: with customer how to serve the and the market demand.
Speaker 7: And I don't think it's a limitation in theory. In
Speaker 7: my view, Asma can actually do more. Is the customer
Speaker 7: need more and what ASMO has been needing is to
Speaker 7: hire more people expand with their supply chain. So I
Speaker 7: don't think or be the bottleneck.
Speaker 3: Let's talk about the demand constraints or fulfillment, because it
Speaker 3: feels as though it's insatiable in terms of need for
Speaker 3: chips and therefore needs for equipment. But they had exposure
Speaker 3: to China. How is that continued to unfold?
Speaker 7: So from a China perspective, China used to be forty
Speaker 7: percent of their business two years ago and now with
Speaker 7: the non China business been growing strongly, China is about
Speaker 7: sub twenty percent of the total business, and China has
Speaker 7: been stable. I would say China was slightly better than
Speaker 7: the previous expected and China will be stable in this year.
Speaker 7: But in this quarter, the four year race was purely
Speaker 7: because of non China business was stronger than expected. So
Speaker 7: going forward, I would say ASM what will be continued
Speaker 7: to be driven by this non China business, AI investment
Speaker 7: memory shortage to further continue as the case for the
Speaker 7: next few years. And China. I do have the view
Speaker 7: that China will be flatish and China is working on
Speaker 7: their localization. Of course, month for China is not likely
Speaker 7: to fall off the cliff. So therefore, as a result,
Speaker 7: in conclusion, over the next few years a SMO will
Speaker 7: be driven by both factors, which non China business will
Speaker 7: likely to be the key driver.
Speaker 2: Talking about two hundred and thirty million for for EUV,
Speaker 2: I mean if you think about twin scan exc some
Speaker 2: of the people I talked to you go sub tun animeter.
Speaker 2: They can get three hundred and fifty million for that.
Speaker 2: We'll get back to it at another day. There's a
Speaker 2: big project. It's called TERRAFAB. It's basically on paper, but
Speaker 2: it says that in the future there'll be one terrawat
Speaker 2: of compute capacity put through fabs operated by Tesla, SpaceX
Speaker 2: and XAI. That would on paper make them one of
Speaker 2: the biggest buyers of ASML's equipment. Have you and the
Speaker 2: team modeled for that being real or for you, is
Speaker 2: it still an idea.
Speaker 7: I mean, we would love to and you're absolutely right.
Speaker 7: So ASMO do have a version of machine which cost
Speaker 7: three hundred and fifty million, which is called hi Enna.
Speaker 7: That's probably we'll be seen when Terrrafab is ready to
Speaker 7: take equipment. So for the time being, we haven't put
Speaker 7: Terrorfab in our numbers, but as for our understanding, the
Speaker 7: intention is real and there has been discussion already within
Speaker 7: the supply chain of our Terrafab, but for the time being,
Speaker 7: it won't be something happening in the significant way from
Speaker 7: a number perspective over the next two years, So therefore
Speaker 7: we haven't reflected that, but I do hope that we
Speaker 7: can put that in numbers in two years.
Speaker 3: Siven, We love the numbers. Timing to you, thanks for
Speaker 3: joining us, head of Tech Equity Research at Bahreenberg. Great
Speaker 3: to have you with us. Now, we've got a key
Speaker 3: conversation coming up with the IMF Managing Director Carstilina goo
Speaker 3: Java as the IMF Spring meetings they are underway in Washington.
Speaker 3: We're going out to Francin Laquar in a minute, discipling
Speaker 3: their tech. Let's talk about where the IMF is right now.
Speaker 3: Spring meetings are upon us in Washington. Francin Lava is
Speaker 3: alongside the IMF Managing Director, Christine Millenakle, gavea please take
Speaker 3: it away, fancy.
Speaker 4: Yeah, thanks so much.
Speaker 8: I'm so delighted to be really here by the host
Speaker 8: of the whole show where everyone from around the world
Speaker 8: shows up, Christina Gregeva, thank you so much for joining us.
Speaker 8: Look the IMF and your world economic outlook. Everyone here
Speaker 8: has read it three times just to understand exactly what
Speaker 8: the dynamic is.
Speaker 4: You've down credited your forecast. But there's also a.
Speaker 8: Scenario where the world economy skims recession.
Speaker 9: How likely is that depends on the longevity of the
Speaker 9: war in the Middle East and the scale of infrastructure
Speaker 9: destruction that happens see in the countries over there, and
Speaker 9: that is the big anon. We now have ceased fire.
Speaker 9: I pray it turns into a ruble peace, and in
Speaker 9: that case we can see somewhat faster recovery. But the
Speaker 9: uncertainty has been profound, and we only need to learn
Speaker 9: to operate in an environment of high end and permanent uncertainty.
Speaker 8: And even if there's a ceasefire that stays okay and
Speaker 8: there's some kind of diplomatic resolution. Is a market discounting
Speaker 8: the real impact on the price of all and their
Speaker 8: for inflation.
Speaker 9: Well, let me just say that even if the war
Speaker 9: ends tomorrow, it would take quite some time for the
Speaker 9: recovery to kick in, not only because of the infrastructure destruction.
Speaker 9: Tankers are slow moving vessels. A tanker that leads today
Speaker 9: would take forty days to reach the Pacific islands, So
Speaker 9: we have to keep in mind that the impact is
Speaker 9: already baked in. Why are markets so optimistic? I think
Speaker 9: part of the reason is because there is a high
Speaker 9: concentration of financial assets in the United States. The US
Speaker 9: economy is doing well. It is relatively not so impacted
Speaker 9: because the US is an export and not importer, and
Speaker 9: that creates that picture of dynamism and vibrancy. But I
Speaker 9: can tell you that's not the story of the rest
Speaker 9: of the world. In the rest of the world already
Speaker 9: there is a lot of pain.
Speaker 8: So I mean, does that mean that the market is mispricing,
Speaker 8: that all this market exuberance is actually misplaced?
Speaker 9: What it means is that markets are geared by events
Speaker 9: in the largest economy that are really positive. The United
Speaker 9: States is the only large economy that has high productivity growth,
Speaker 9: and markets are seeing that technology optimism is here. Markets
Speaker 9: are rushing on it. But should they be more caution?
Speaker 9: I would argue yes, because what we are seeing in
Speaker 9: terms of supply chain disruptions is already quite significant. And
Speaker 9: with every day that passes, that anchor is not levius
Speaker 9: living for a destination, and that delays the rebounds of
Speaker 9: the world economy.
Speaker 8: How much do you worry about governments trying to overadjust
Speaker 8: if inflation expectations goes up, and actually how much of
Speaker 8: a mess would this be?
Speaker 9: And so such an important question. So look at what
Speaker 9: is happening. Short term inflation expectations have moved up, not
Speaker 9: by much, though we have increased our inflation projection from
Speaker 9: three point eight percent to four point two percent. It
Speaker 9: is up, but not dramatically and very important. Long term
Speaker 9: inflation expectations don't budge. They're well anchored made they stay
Speaker 9: this way. So it is very important that central banks
Speaker 9: act carefully. Those that are in a good position of credibility,
Speaker 9: they can take weight and see attitude. They also have
Speaker 9: to signal we are prepared to act if it is necessary.
Speaker 9: But please don't rush my word is because of twenty two.
Speaker 9: Now central banks may say let's move faster, and that
Speaker 9: could be very dangerous because it would suffocate growth.
Speaker 8: I mean, we're looking back at every IMF World Bank
Speaker 8: meetings since twenty twenty. They spent something. Twenty twenty was
Speaker 8: COVID twenty twenty two. Of course, it was the Russian
Speaker 8: invasion of Ukraine. Then you had terriffs. I mean a
Speaker 8: shock after shock.
Speaker 9: So it looks like a layer cake, shock upon shock
Speaker 9: upon shock, except it is not at all tasty. I
Speaker 9: can tell you that everybody has to absorb reality and realities.
Speaker 9: We are in a more shocked prone world. Shocks will
Speaker 9: continue to come. What does it mean for fiscal authorities?
Speaker 9: The buffers when you are in good time, don't way
Speaker 9: your resources for monetary policy, Calibrate policy carefully, be prepared
Speaker 9: to active if and when necessary, and everywhere. Countries have
Speaker 9: to be much more alert to the high uncertainty within
Speaker 9: which we operate. Agility, adaptability, this is what we have
Speaker 9: to do.
Speaker 8: How worried are you about the UK? This was one
Speaker 8: of the countries I was down graded the most.
Speaker 9: I mean they are downgraded, but also we see the
Speaker 9: UK very mature approach to policy. The UK is very
Speaker 9: careful not to go into indiscriminate spending and Bank of
Speaker 9: England is very clear around the approach they are going
Speaker 9: to take the right approach to this situation. Actually, we
Speaker 9: see the UK in terms of fiscal response as a
Speaker 9: good example for others, because many other countries are rushing
Speaker 9: to throw money they don't have out of the good
Speaker 9: intention to help people. It has to be targeted, it
Speaker 9: has to be temporary, and it has to be done
Speaker 9: within the fiscal band boundaries of countries, and the UK
Speaker 9: is doing that. UK is also a country where there
Speaker 9: is a recognition that your best defense is growth. Pro
Speaker 9: growth policies are gonna be your buffer for the future.
Speaker 9: Not easy, But.
Speaker 8: I also want to ask you about Look the US
Speaker 8: is again President Trump is going after j Powell saying, look,
Speaker 8: you'll fire family, doesn't step down from the Fed. I mean,
Speaker 8: we go back to this idea of central bank independence.
Speaker 8: How problematic is it, especially in a time where actually
Speaker 8: central banks are a very very difficult job at hand.
Speaker 9: We have decades of evidence that independence center banks are
Speaker 9: an economic asset. They serve well when they have the
Speaker 9: opportunity to make decisions and the space to make decisions responsibly.
Speaker 9: And I can tell you one very interesting fact, center
Speaker 9: banks in emerging market economies outperformed their advanced economy peers.
Speaker 9: They have built that independence strength of data dependent policy making.
Speaker 8: Again, market seems to look through a lot of these concerns.
Speaker 8: Just we're you that the function of almost keeping things
Speaker 8: and tracks working differently.
Speaker 9: On one level, it is good that the economy functions
Speaker 9: because getting into panic is not going to help. So
Speaker 9: good functioning of markets is helping. Having that, we have
Speaker 9: seen titaning of financial conditions by some but not by man.
Speaker 9: We have seen currency depreciation of some emerging markets, again
Speaker 9: not dramatically. As long as we have a trajectory for
Speaker 9: the war to end and for economic activity to restart,
Speaker 9: we are in a very good place. But if you
Speaker 9: have a prolonged periods of time, it would be hard
Speaker 9: to keep optimistic.
Speaker 8: And I also wanted to ask you a little bit
Speaker 8: about some new countries or all countries that you know
Speaker 8: are trying to access some of your programs. I wanted
Speaker 8: to start with Venezuela, so CEE imf ready to recognize
Speaker 8: the acting president to start negotiations.
Speaker 9: At this point, Venezuela does not have recognition by majority
Speaker 9: of members. This being said, we are prepared to engage.
Speaker 9: Actually at a junior technical level. We have been approached
Speaker 9: in good faith by the Venezuelan authorities. They desperately need
Speaker 9: help because, as you know, the economy shrank from this
Speaker 9: to one third. They have a risk of hyperinflation knocking
Speaker 9: on the door. Eight million people are outside of the country.
Speaker 9: So once our membership decides, even when they decide to recognize,
Speaker 9: we are ready to go. It is a matter of membership.
Speaker 9: I can tell you one thing that there is an
Speaker 9: understanding among the region, the neighbors of Venezuela, Brazil, Colombia, Mexico, Chile.
Speaker 9: They don't want a failed state. They want Venezuela engaging
Speaker 9: with the funds.
Speaker 8: And do thank you so much for joining. I also
Speaker 8: send it back to your New York Fancine.
Speaker 3: A fantastic interview as ever, and we've got more coming
Speaker 3: from you. Next up the ECB Governing Council member the
Speaker 3: s A. Bloomberg Tech.
Speaker 4: Welcome back to blue Tech.
Speaker 2: The European Central Bank is facing a pivotal decision at
Speaker 2: the end of the month. Inflation risks are building daily.
Speaker 2: Is the Iran conflict drives energy prices higher. Bloomberg's Francine
Speaker 2: Lacroix is standing by with Jakim Nagel, Bundesbank President and
Speaker 2: Governing Council member of the European Central Bank Frean scene.
Speaker 8: Yeah, thank you so much, and I'm so delighted to
Speaker 8: speak to Yo Kenago. Thank you governor for joining us.
Speaker 8: Like you've said that a hike in April is an
Speaker 8: option if the inflation outlooks ours. Are we there yet?
Speaker 10: Well, I think it is a very opaque situation. I
Speaker 10: think I believe from today, from this time point, I
Speaker 10: would say there's not enough clarity what will happen in April.
Speaker 10: But I still keep the position that we should have
Speaker 10: all the optionalities that are necessary to tackle the situation,
Speaker 10: and we will take into account the data we will
Speaker 10: have in April, and then we will see.
Speaker 8: And I understand things flutuate, you know, on an hourly basis,
Speaker 8: But what do you need to happen to support a
Speaker 8: rate hikin April.
Speaker 10: Well, what I see is that this cretion around the
Speaker 10: strait of farmus is a very essential one. This is
Speaker 10: the little heel of the world economy. So this has
Speaker 10: to be resolved, and I believe this is ongoing, this uncertainty,
Speaker 10: and this will trigger also uncertainty regarding oil prices. Everything
Speaker 10: what is going around in the world is dependent on
Speaker 10: that question. This is a bottleneck, and so I believe
Speaker 10: two weeks can bring a lot of new information and
Speaker 10: we will take that into account.
Speaker 8: Good information as well, because you know, to be clear,
Speaker 8: I'm not a military strategist, but at the moment it's
Speaker 8: very difficult to see a way forward in the immediate term.
Speaker 10: Well, I'm not a military expert on that, but what
Speaker 10: I see is a lot of around this question. So,
Speaker 10: as I alluded to, is changing on a daily basis.
Speaker 10: So it's all about cheer economics in geopolitics, and from
Speaker 10: a monetary policy point of view, it's definitely not a
Speaker 10: very comfortable situation. I think it developed a little bit
Speaker 10: better over the course of the last week, but it's
Speaker 10: still a very delicate situation and as I said, a
Speaker 10: lot of uncertainties around this question.
Speaker 4: President.
Speaker 8: I mean, a lot of households, right, especially in Europe,
Speaker 8: will have the memory of twenty twenty two, the Russian
Speaker 8: invasion of Ukraine. Is that what's lifting also inflation expectations,
Speaker 8: maybe higher than warranted.
Speaker 9: I can't exclude this.
Speaker 10: I think it's you're perfectly right that households learned from
Speaker 10: the crisis in twenty twenty two, So we have to
Speaker 10: see how how they might react, how their reaction function is.
Speaker 10: This is one of the things we have to look
Speaker 10: at momentarily. I would say, on a medium term, inflation
Speaker 10: seems to be well anchored, but this can change. So
Speaker 10: it's really too early to say that we are again
Speaker 10: on a safe ground. It's still it's a very shaky situation.
Speaker 8: What the central banks learn from twenty twenty two. There's
Speaker 8: a lot of criticism that you were a little bit
Speaker 8: late to the game. Does that mean it gets readjusted
Speaker 8: in twenty six Well.
Speaker 10: I would say the situation in twenty two two was
Speaker 10: a different one. We came out of the pandemic now
Speaker 10: we are when this war started in the Middle East,
Speaker 10: we were pretty much on our targets, so the situation
Speaker 10: was completely different. Twenty twenty two, inflation was already high,
Speaker 10: so it is not the same situation. But we learned
Speaker 10: something from twenty twenty two. We will look at it
Speaker 10: and we will assess the situation again when we are
Speaker 10: coming together in Europe deciding about the future rate pass,
Speaker 10: but there is no pre commitment where we are going.
Speaker 10: I think we should have our flexibility here what we
Speaker 10: do and this gives us some let me see humto maneuver.
Speaker 4: Yeah, and again.
Speaker 8: Because the situation is so fluid, there are a number
Speaker 8: of scenarios. But does the baseline that the ECB has
Speaker 8: already warrant hikes?
Speaker 10: Well, I think the baseline scenario was based on data
Speaker 10: of bits of March. So now we're here four or
Speaker 10: five weeks later, so I would say we're somewhere in
Speaker 10: between our baseline scenario and our edwords scenario. Now we
Speaker 10: have to find out where it's going. It's going back
Speaker 10: to the baseline, Sinni. I'm a very happy person. But
Speaker 10: as I said, we should keep our flexibility. I think
Speaker 10: this is the strength of good central banking that we
Speaker 10: should take to We should take into account all the
Speaker 10: necessary information and then draw the right conclusions.
Speaker 8: But if it doesn't go back to baseline next three weeks,
Speaker 8: is that what warrants a hike. I'm trying to understand. Again,
Speaker 8: it's a timeline, right, so you're trying to hit a
Speaker 8: moving target.
Speaker 10: I will not exclude one or the other thing. I
Speaker 10: think this is something. It is too early to say
Speaker 10: where we are going. And as I said, I need
Speaker 10: more information about this keepingtionalities, I have to repeat myself
Speaker 10: here and then and then then we will and then
Speaker 10: we will see.
Speaker 8: Yeah, I'm trying to push in your stigus Gods, I
Speaker 8: like that.
Speaker 4: This is this is the game. Look.
Speaker 9: Your twenty twenty.
Speaker 8: Five strategy review also says that under certain circumstances, preemptive
Speaker 8: action to the anchoring may be necessary. Is I mean,
Speaker 8: were you thinking about a scenario like this?
Speaker 10: Well, I think up still now I do not see
Speaker 10: any de anchoring of inflation expectations. So this is good news,
Speaker 10: but this could could change. Maybe it's too early to
Speaker 10: come to the conclusion that everything is all right. So
Speaker 10: I guess we need some time and coming back to
Speaker 10: one pound. As long as the situation in the Middle
Speaker 10: East around the Strait of Hormouse is not resolved. If
Speaker 10: there's not a stable, let me say, situation about this
Speaker 10: bottleneck that is so important for the world's economy, the
Speaker 10: danger is rising that we will see again an inflation push.
Speaker 10: Uncertainty might go up even further, and this might trigger
Speaker 10: than a process that could really become very really, very
Speaker 10: tricky and I guess also dangerous government.
Speaker 8: I haven't mean, we've talked about hikes, but I haven't
Speaker 8: asked you about how you calibrate it. I mean, could
Speaker 8: you see two hikes a two point five percent sending
Speaker 8: a message of the mean business but actually not too much.
Speaker 9: Well, like baby hikes.
Speaker 10: You will not get from you any we say indication.
Speaker 10: I see what markets are, what is the market expectation? Well,
Speaker 10: as always I think the market. We'll see how we
Speaker 10: react in the governing council in Europe, and.
Speaker 8: I have to take this sy decent approach, I understand,
Speaker 8: which is why I love interviewing so much. But you know,
Speaker 8: would you say that equity markets are off, but actually
Speaker 8: option markets for hikes are, They're in a better place,
Speaker 8: because again we're not sure what the market is looking at.
Speaker 10: I appreciate the optimism of the equity markets. I think
Speaker 10: it is helpful to a certain extent that there's not more,
Speaker 10: let me say, trouble lens we see from from equity
Speaker 10: markets or stock markets. But again we should be very vigilant,
Speaker 10: very cautious, take all necessary information and look what's happened,
Speaker 10: what will happen over the course of the upcoming next
Speaker 10: two weeks, and I hope really that we will find
Speaker 10: a solution how to stabilize the situation.
Speaker 8: In the middle is if you see inflation and what's
Speaker 8: your paying threshold for looking at inflation GLO above target,
Speaker 8: if it's a bit short lived, like inflation at three percent,
Speaker 8: four percent, design like what you know, what's a trigger
Speaker 8: red alert sign.
Speaker 10: It looks like at least for the moment, As I said,
Speaker 10: we cannot say well, this is transitory or that will
Speaker 10: stay for a longer period. I will not tagle one
Speaker 10: number or give you one number that would make get
Speaker 10: me to that or maybe two that would make me nervous.
Speaker 4: So it is.
Speaker 10: It is not a very comfortable situation. But at the end,
Speaker 10: I believe we will deliver on our Minday, this is
Speaker 10: a surprise the ability and we will do everything what
Speaker 10: is necessary to keep the interest rates to where they
Speaker 10: are or change. We will decide on that in two weeks.
Speaker 8: Government, Thank you so much, it's always such a pleasure
Speaker 8: to speak to you.
Speaker 9: That was a bundessbag.
Speaker 8: President. I can naggle with that. I'm going to send
Speaker 8: it back to your New York and I'll have plenty
Speaker 8: more from IOMs throughout the day.
Speaker 2: Francy in Laqua, thank you very much. Let's get back
Speaker 2: to what's happening in technology and financial markets then, as
Speaker 2: that one hundred is up for an eleventh straight session,
Speaker 2: eleventh straight day, it's best run of gains since December
Speaker 2: of twenty nineteen. It's not quite at the record highs
Speaker 2: that it hit in October, but it's getting pretty close.
Speaker 2: And within that, a single name that I've been looking
Speaker 2: at is Tesla, up for a fifth straight day of gains,
Speaker 2: best run since September. Now, the story with Tesla is
Speaker 2: that it's lagged some of the megacap peers, so a
Speaker 2: kind of rally in terms of catch up makes a
Speaker 2: lot of sense. But at that gain of seven and
Speaker 2: a half percent, it's on track for its best day
Speaker 2: also since September.
Speaker 3: Carrac Yeah, let's focus in on another single name, Ed
Speaker 3: and it's on the higher side, but for reasons that
Speaker 3: it's cutting up to sixteen percent of its workforce. Talking
Speaker 3: about Snap and then push to end the years of losses.
Speaker 11: More on that.
Speaker 3: Next, this is Blue meg Tech. Let's check in on
Speaker 3: shares of Snap. They are rallying some nine percent a day,
Speaker 3: and the company is planning to cut it's people. About
Speaker 3: one thousand jobs will go sixteen percent thereof of staff
Speaker 3: and says it pushes to really raining costs and try
Speaker 3: and reach profitability. Blommog social media reporter Alex Learn wrote
Speaker 3: up the story and look, they're also closing down New Hire,
Speaker 3: so that's another three hundred that will not be replenished.
Speaker 3: Is this an AI play or is this really about
Speaker 3: just having less people to do more.
Speaker 12: I think it's a little bit of both. CEO Evan
Speaker 12: Spiegel sent in internal memo to employees this morning explaining
Speaker 12: his thinking around this, and he really referenced what he
Speaker 12: started starting last fall has been describing as a crucible
Speaker 12: moment where where Snap is really having to just move faster,
Speaker 12: break things, and really push more aggressively to achieve profitability.
Speaker 12: And so even though he did say that AI is
Speaker 12: one part of this, I think it's just one part
Speaker 12: of a larger story for them.
Speaker 2: In the memo, Alex Spiegel kind of outlines that in
Speaker 2: the dollar terms, how much money they think they can
Speaker 2: save and so go over those details. But they're still
Speaker 2: on track, it seems to go ahead with the plan
Speaker 2: for the augmented reality glasses.
Speaker 12: Yeah, you know, I don't have the numbers in front
Speaker 12: of me, but what I will say is yes, they
Speaker 12: are still planning to go ahead later this year with
Speaker 12: the debut of their first consumer pair of augmented reality glasses.
Speaker 12: I think, though, one thing that we should really be
Speaker 12: watching as the year progresses is what happens on the global,
Speaker 12: national and global regulatory stage. One piece I think that
Speaker 12: has been really challenging the business for Snap is just
Speaker 12: this growing, this growing push all around the world, including
Speaker 12: the United States, to ban social media for teams under
Speaker 12: the age of sixteen, to rain in some of the
Speaker 12: alleged addicted, addictive features on the platforms, as we've seen
Speaker 12: in some of the trials that are playing out in California.
Speaker 12: And I think all of those are our shure to
Speaker 12: sort of hang a cloud over any of the other
Speaker 12: exciting announcements and progress the company may make throughout the year.
Speaker 2: You said in the memo that the job cuts and
Speaker 2: hiring pullback will cut or reduce snaps annualized cost base
Speaker 2: by about five hundred million dollars by the second half
Speaker 2: of this year. Bloomberg's Alex Lavine with the details on
Speaker 2: snap Open AI is giving a select group of users
Speaker 2: access to a new AI model to help them find
Speaker 2: cybersecurity vulnerabilities. The move, of course, comes just one week
Speaker 2: after Rival and Thropic announced the limited release of Mythos
Speaker 2: due to concerns it may be capable of powering cyber attacks.
Speaker 2: Let's get the latest with Bloomberg's AI reporter Rachel Metz.
Speaker 2: And you know, it speaks for it's self the timing.
Speaker 2: But what do we need to know about Opening Eyes
Speaker 2: offering here? Who it's being made available to is also
Speaker 2: an important point in the context of how Anthropic handled
Speaker 2: their role.
Speaker 13: Out Sure, so Opening I started this program back in
Speaker 13: February actually, where they started allowing a trusted user base,
Speaker 13: a very small number of people at the time, to
Speaker 13: try out some of their models that they were going
Speaker 13: to be making available that would be tuned more toward
Speaker 13: finding cybersecurity vulnerabilities and probing for these kinds of things.
Speaker 13: And now what they're saying is this new model is
Speaker 13: going to be helpful for people in this program, a
Speaker 13: subset of people in this program to look for these things,
Speaker 13: kind of similar to what Anthropic is doing with Mythos.
Speaker 13: And they're allowing also a limited number of people. So
Speaker 13: Opening Eye is going to have just a handful of people.
Speaker 13: I think they might have said either dozens or hundreds initially,
Speaker 13: and then they're going to enlarge the number of people
Speaker 13: that are allowed to access this model, but it'll still
Speaker 13: be like individual cybersecurity people and then some companies that
Speaker 13: they work with that kind of thing.
Speaker 3: I think that's a really interesting different way of doing
Speaker 3: it than the mythos unravel because we're seeing people coming
Speaker 3: on this show the smaller cyber focus who haven't got
Speaker 3: access really want to or want to be able to
Speaker 3: help plug any of these vulnerabilities. But also what's notable
Speaker 3: is Opening I had set up this sort of cybersecurity
Speaker 3: program that people could go and apply for months ago.
Speaker 3: It's back in February, wasn't it.
Speaker 4: Yeah.
Speaker 13: I mean they've been working on various cybersecurity related things
Speaker 13: over a long period of time. This new model that
Speaker 13: they have, they're saying this is, you know, this is
Speaker 13: fine tuned to be especially meant for finding cybersecurity vulnerabilities,
Speaker 13: and it also is a little more permissive in the
Speaker 13: way that it lets people use it to look for
Speaker 13: those kinds of issues, where like a normal model that
Speaker 13: you use with chat GPT for instance, might not be
Speaker 13: able to do that. So it'll be interesting to see
Speaker 13: what kinds of things people say that they're finding who's
Speaker 13: using it. We still don't really know about who is
Speaker 13: being enabled to use this model, and also like how
Speaker 13: that compares versus people that are using mythos, which it
Speaker 13: sounds as of yet like it there are really varying
Speaker 13: results and opinions on that.
Speaker 4: Rachel, just a few basics.
Speaker 2: Is this model that open AI is making a limited
Speaker 2: release of in the cyber security context an open source model,
Speaker 2: or it's closed and just being made available to a
Speaker 2: small group of existing customers. That distinction I put to
Speaker 2: you because like people that come on the show basically
Speaker 2: argue that this is why open source works in this context.
Speaker 4: If you want the market to.
Speaker 2: Be able to test vulnerabilities, that would be a good method.
Speaker 13: Quickly, Yeah, I mean I think that, well, this is
Speaker 13: not an open source or an open weight model, and
Speaker 13: part of the reasoning behind that could be that such
Speaker 13: a model could also be used to find the vulnerabilities
Speaker 13: in other people so systems. So it'll be interesting to
Speaker 13: see how widely they open the access going forward. But
Speaker 13: for now it is to a very select group of
Speaker 13: people for opening I and ourselves for entrapicsmith first model.
Speaker 3: Most racial mets across the open Ai story. We really
Speaker 3: appreciate it. Look, let's turn our attention to Tomo Bravo
Speaker 3: right now because it struck a strategic partnership with Google
Speaker 3: Cloud to help its portfolio companies accelerate you guess at
Speaker 3: AI adoption. The arrangement will allow the portfolio companies to
Speaker 3: access Google Cloud's AI platform to improve product offerings, and
Speaker 3: for Google engineers to really embed with those businesses to
Speaker 3: help solve technical challenges. We're seeing this more and more
Speaker 3: ed with open Ai, for example, than some of the
Speaker 3: other portfolio companies within Thrive.
Speaker 2: Okay, coming up on the program, California Billionaires is stepping
Speaker 2: up their efforts to get Silicon Valley Darling Matt Mahon
Speaker 2: elected as the state's next governor.
Speaker 4: We have the story next. This is been in bog
Speaker 4: Tech time now for Talking tech.
Speaker 3: First up, China's Unitary began selling its cheapest humanoid robot
Speaker 3: on Alibaba's Ali Express Willy, expanding its international presence. Will
Speaker 3: be sold to markets including the US, seeking out customers
Speaker 3: in Tesla's home market at a time when the US
Speaker 3: company is still developing its humanoid Optimus product line. Plus
Speaker 3: Ali Baba, for its part, is also getting into robotics,
Speaker 3: so plans to develop and sell its own four legged
Speaker 3: model model, which would compete with Unitaris Go series. The
Speaker 3: Chinese company's Amat unit is also exploring the feasibility of
Speaker 3: humanoid robots. An AXL that's the VC firm that has
Speaker 3: backed the likes ofpanthropic cursor Perplexity, but its rose five
Speaker 3: billion dollars in new funds to keep up its big
Speaker 3: bets on AI. Now the firm will be dedicating four
Speaker 3: billion dollars to its fifth Leader's fund and six round
Speaker 3: and fifty million dollars into a sidecar fund to selectively
Speaker 3: increase the size of certain bet said okay.
Speaker 2: There is a vacuum in the California governor's race left
Speaker 2: by the abrupt exit of Eric Swalwell and the allegations
Speaker 2: of sexual assault claims, which we Weld denies. In his absence,
Speaker 2: tech billionaires are pouring money into the democratic campaign of
Speaker 2: Silicon Valley Darling. Matt Mayhan, the mayor of San Jose,
Speaker 2: has soalked through it with Bloombos California reporter Eliahu Chemisha.
Speaker 2: This is getting a lot of attention a lot of readers.
Speaker 2: It's a key race. San Jose's mayor is a name
Speaker 2: that's come up a lot in the last few months.
Speaker 2: What's changed, what's new and what are we learning about
Speaker 2: the pool of people backing him.
Speaker 11: Yeah, well San Jose's Matt Mayhan. After Eric Swawall exited
Speaker 11: the race has seen kind of a rush of some
Speaker 11: of the wealthiest people in California coming in to support him.
Speaker 4: So we have and he's a tech people, some of
Speaker 4: a lot of tech people.
Speaker 11: We have vinode Kosla, who put a million dollars towards
Speaker 11: his campaign yesterday. Mike Moritz of Sequoia, read Hastings of Netflix.
Speaker 11: Really big names in Silicon Valley and in California have
Speaker 11: coalesced around his campaign and they're back in the outside committee.
Speaker 11: They're sending millions of dollars towards towards him.
Speaker 3: Yeah, why do the billionaires like him so much? What
Speaker 3: is Matt mahon really thinking about for them?
Speaker 4: Yeah?
Speaker 11: Well, Matt kind of he emerged in the scene first
Speaker 11: when he opposed a wealth tax that's being proposed in California,
Speaker 11: there's a proposal to tax billionaire wealth and that kind
Speaker 11: of helped him gain some of these supporters. But in
Speaker 11: a wider sense, I think Silicon Valley is trying to
Speaker 11: insert itself in California's political scene beyond just the issues
Speaker 11: that their singular companies care about and more in kind
Speaker 11: of a wider sense, they're trying to promote a moderate
Speaker 11: democratic policies as they see.
Speaker 4: It, so that manifests itself in another way. Very quickly.
Speaker 2: You wrote about this five hundred million dollar funds to
Speaker 2: influence California politics. That was a March twelve, But again,
Speaker 2: tech names are putting into that fund.
Speaker 11: A lot of tech names of if you know Neil
Speaker 11: Metta from Green Oaks Capital, a lot of vcs are there.
Speaker 11: Coalescing is kind of this network effect. I mean, Sir
Speaker 11: Gey Brin, the co founder of Google, has been big
Speaker 11: in creating his own interest group to influence California politics.
Speaker 11: They're all about trying to kind of create government in
Speaker 11: California that is a little less progressive, more in the
Speaker 11: moderate sense, a little more anti tax, and it's about
Speaker 11: kind of creating efficiency and a little more pro tech
Speaker 11: as well.
Speaker 3: Bloombergs Elia Chemische, Thank you very much, indeed for the
Speaker 3: latest on politics. Now, somewhere else in Silicon Valley, something's
Speaker 3: going on, because we're to take a look at this stock.
Speaker 3: All birds shares going absolutely bonkers. Why because the former shoemaker,
Speaker 3: just days away from ceasing operations, says it's going to
Speaker 3: pivot its business into guess what ed AI Compute Infrastructure value.
Speaker 3: Love the shoes and now they're going to love their GPUs.
Speaker 2: Is that the cell? Yeah, rub your eyes, curried, adjust
Speaker 2: your set whatever we usually say.
Speaker 4: That is a one day chart, right am? I reading
Speaker 4: that correctly?
Speaker 3: It's going from not much to just twenty dollars let's
Speaker 3: call it. So, Yes, seven hundred percent is extraordinary. But
Speaker 3: it's got fifty million dollars in financing to basically build
Speaker 3: out AI native cloud data centers. It wasn't a neocloud
Speaker 3: ed fifty million.
Speaker 4: Dollars isn't that much?
Speaker 2: Yeah, GPUs a service or gpu as like sas, Meta
Speaker 2: is going to spend what in the next three years
Speaker 2: on AI six hundred billion.
Speaker 4: Fifty million.
Speaker 2: I don't know how they're going to launch a business,
Speaker 2: but no surprise, this is the most read story on
Speaker 2: Bloomberg right now and the.
Speaker 3: Most read And what's the rebrand going to be. I
Speaker 3: think they're going to be called New Bird. AI has
Speaker 3: that for the brand of Aubreen rebrands. That does it
Speaker 3: for this edition of bluebg Tech.
Speaker 2: A lot of newsflow coming from Bloomberg, some interesting market moves,
Speaker 2: and some important interviews around the global economy as well.
Speaker 2: Recap all of that on the podcast. You know where
Speaker 2: to find it. If you're watching the show, It's there
Speaker 2: on your screen if you're listening. Iheartspotify and Apple. This
Speaker 2: is Bloomberg Tech.