WEBVTT - Google in DOJ Crosshairs and 13F Filings Hit 0:00:01.440 --> 0:00:06.720 From Marhart where Innovation, Money and Power Collie in Silicon Valley, NBN. 0:00:07.080 --> 0:00:10.600 This is Bloomberg Technology with Caroline Hyde and Ed. 0:00:10.640 --> 0:00:11.360 Lud Love. 0:00:25.400 --> 0:00:26.920 Live from New York and San Francisco. 0:00:26.960 --> 0:00:30.760 This is Bloomberg Technology Google. It's in the crosshairs. Bloomberg 0:00:30.800 --> 0:00:33.840 reports Washington is thinking about breaking up the Search Giant 0:00:34.200 --> 0:00:36.560 after that Landmark, Antitrust. 0:00:35.920 --> 0:00:40.000 Win, Big Tech, Nvidia and Bitcoin ETFs. In focus is 0:00:40.040 --> 0:00:43.280 the thirteen f filing sit insight on the secretive world 0:00:43.280 --> 0:00:45.960 of hedge funds tech holdings. 0:00:45.600 --> 0:00:46.400 An earning season. 0:00:46.400 --> 0:00:48.440 It continues, we push our head to Cisco as a 0:00:48.520 --> 0:00:52.520 company cuts costs and jobs amid a shift to aid head. 0:00:53.760 --> 0:00:55.960 Yeah, let's get right to Alphabet, the parent of Google 0:00:56.000 --> 0:00:58.080 shares a down three and a half percent after a 0:00:58.160 --> 0:01:01.680 slow start at the open within two standard deviations. The 0:01:01.680 --> 0:01:06.680 headline that Bloomberg's reporting is that DOJ officials and attorneys 0:01:06.760 --> 0:01:10.080 are assessing a bid to break up the Search Giant, 0:01:10.120 --> 0:01:12.520 and as you know, Caro, there are many other options 0:01:12.560 --> 0:01:16.560 being discussed at actions that could be taken. We also 0:01:16.560 --> 0:01:18.400 are going in later in the show to talk about 0:01:18.440 --> 0:01:22.360 the pixel event. Right the hardware game from Google is 0:01:22.400 --> 0:01:24.399 that a part of the stock story this morning not 0:01:24.560 --> 0:01:27.720 really clear, but it's a big headline where the nuance 0:01:27.800 --> 0:01:29.400 is important, and it's a big. 0:01:29.240 --> 0:01:31.680 Market cap erosion seventy one billion dollars on the day. 0:01:31.720 --> 0:01:34.600 And of course yesterday the Department of Justice, well we 0:01:34.640 --> 0:01:38.160 were understanding from Bloomberg's own reportant are potentially considering a 0:01:38.200 --> 0:01:41.480 bid to break up Google following the Landmark court ruling 0:01:41.560 --> 0:01:44.160 that found that the company monopolized the online search market. 0:01:44.560 --> 0:01:47.039 Let's get into it in Mosley and Nylan has been 0:01:47.319 --> 0:01:50.840 bringing us scoop after scoop in Washington, DC, And just 0:01:50.920 --> 0:01:54.080 how likely, how realistic is that we go back to 0:01:54.480 --> 0:01:56.240 two decades ago in the Microsoft fight. 0:01:58.000 --> 0:02:01.520 Yeah, so the Justice Appartment is considering recommending a breakup. 0:02:02.280 --> 0:02:04.800 They have a couple options on the table to see 0:02:04.840 --> 0:02:08.760 if they could require that Google sell off the Android 0:02:08.760 --> 0:02:11.880 operating system that's the hardware that you guys were talking about, 0:02:12.280 --> 0:02:15.320 the Chrome web browser, or potentially AdWords, which is the 0:02:15.360 --> 0:02:18.120 platform it uses to sell the text ads that appear 0:02:18.200 --> 0:02:19.840 at the top of the search results page. 0:02:19.919 --> 0:02:21.720 It's all going to be up to the judge. 0:02:21.440 --> 0:02:23.760 Though, he's the one who gets to choose the remedy. 0:02:24.280 --> 0:02:29.120 And you know they did had proposed breaking up Microsoft 0:02:29.160 --> 0:02:31.320 back in the day, and the courts just didn't go 0:02:31.440 --> 0:02:34.760 for it, and instead Microsoft ended up being under a 0:02:34.760 --> 0:02:37.080 consent decree that went on for more than ten years. 0:02:37.360 --> 0:02:39.840 So that's sort of what they're mulling. Should they try 0:02:39.880 --> 0:02:43.800 and propose a breakup that's sort of like pain a 0:02:43.840 --> 0:02:46.720 lot upfront and that it's over, or should they do 0:02:46.800 --> 0:02:50.800 something that goes along for oversight for many, many years. 0:02:51.520 --> 0:02:54.000 You know, Leah, the stock is down more significantly in 0:02:54.040 --> 0:02:55.880 this moment than it was in after hours when the 0:02:55.919 --> 0:02:58.720 story broke. There are many factors behind that. There's not 0:02:58.800 --> 0:03:02.600 much research out in response. What's interesting about the reporting 0:03:02.680 --> 0:03:05.960 is sources are giving us into an insight how the 0:03:06.000 --> 0:03:08.880 DOJ works, right, So tell us who they're speaking to, 0:03:09.320 --> 0:03:12.680 who they're soliciting information from, and kind of the things 0:03:12.720 --> 0:03:15.680 on the table, so to speak, of where they might 0:03:15.720 --> 0:03:16.600 go next. 0:03:17.320 --> 0:03:20.480 Yeah, So the Justice Department doesn't make this decision in 0:03:20.520 --> 0:03:23.720 a vacuum. They're consulting with a lot of third parties 0:03:23.760 --> 0:03:28.000 who've been impacted by Google's behavior, So obviously other search engines, 0:03:28.360 --> 0:03:32.480 but also like advertisers, people who advertise on Google, you know, 0:03:33.000 --> 0:03:36.680 lots of other websites that could be impacted by this. 0:03:37.000 --> 0:03:40.040 One thing that they are very interested in is Google's 0:03:40.080 --> 0:03:43.120 move into AI. They're a little bit concerned that Google 0:03:43.160 --> 0:03:46.520 could use some of its dominance in the search area 0:03:46.680 --> 0:03:50.040 sort of to leapfrog other companies and AI. So that's 0:03:50.080 --> 0:03:51.520 one thing they're also looking at. 0:03:51.560 --> 0:03:53.200 Are there any sort of. 0:03:53.440 --> 0:03:56.600 Restrictions they need to put on Google's development there? One 0:03:56.680 --> 0:04:01.040 possibility is sort of requiring that any information that they 0:04:01.120 --> 0:04:03.880 collect for the purposes of search is not allowed to 0:04:03.920 --> 0:04:05.400 be used for purposes of AI. 0:04:06.400 --> 0:04:08.360 So this is just the beginning. 0:04:08.520 --> 0:04:11.200 You know, there's going to be a hearing next month 0:04:11.600 --> 0:04:13.920 to sort of set up the procedure for how this 0:04:14.040 --> 0:04:17.760 remedy gets put into place. But you know, these are 0:04:17.760 --> 0:04:20.360 some of the initial thoughts that they have been thinking. 0:04:20.880 --> 0:04:23.760 As you say, it's just the beginning, and Alphabet and 0:04:23.880 --> 0:04:27.640 Google itself are going to fight this. How open to 0:04:27.880 --> 0:04:30.840 political persuasions? Is this going to be like we're looking 0:04:30.880 --> 0:04:34.240 at an election in November? Would anything change on the 0:04:34.240 --> 0:04:34.599 back of that. 0:04:36.240 --> 0:04:39.400 That's the other possibility. You know, if there is a 0:04:39.440 --> 0:04:42.720 Trump administration next year, there will be all new folks. 0:04:42.839 --> 0:04:45.400 They might have different ideas about what they should see her. 0:04:45.600 --> 0:04:47.040 But the one thing you do need to remember is 0:04:47.080 --> 0:04:50.599 this case actually started in the Trump administration. It was 0:04:50.640 --> 0:04:54.960 the Trump administration's folks on antitrust in twenty twenty who 0:04:54.960 --> 0:04:56.080 brought the original case. 0:04:56.880 --> 0:04:58.920 So the Trump. 0:04:58.720 --> 0:05:02.440 Administration, a second truck administration would probably want to continue 0:05:02.680 --> 0:05:05.640 pursuing a remedy against Google. They might just have different 0:05:05.640 --> 0:05:07.520 ideas about how to go get about it. 0:05:08.680 --> 0:05:11.279 Most Leah Nylan reporting out of Washington, d C. Thank 0:05:11.320 --> 0:05:13.719 you very much. That was the reporting. Let's get the 0:05:13.720 --> 0:05:17.000 reaction sell side first. Dan I is from Webbush writing 0:05:17.040 --> 0:05:19.080 this on the subject to break up of the big 0:05:19.120 --> 0:05:22.560 tech business models is highly unlikely down the road. Although 0:05:22.720 --> 0:05:26.120 business model tweaks and heaviest scrutiny of M and A 0:05:26.440 --> 0:05:29.120 will be front and center, there's also the sort of 0:05:29.160 --> 0:05:32.560 industry and academic perspective. Christina Kafara is the co founder 0:05:32.800 --> 0:05:36.480 and vice chair at Competition Research Policy Network. You're an 0:05:36.560 --> 0:05:39.600 expert in this field, so let's start with the likelihood 0:05:39.680 --> 0:05:43.599 that the DOJ launches an initiative or bid to break 0:05:43.760 --> 0:05:45.120 up Google. 0:05:47.000 --> 0:05:49.080 Thank you, Ed and Caroline, it's a pleasure to be here. 0:05:49.520 --> 0:05:54.520 The likelihood reflects the viewing side of DJ and will 0:05:54.560 --> 0:05:59.279 broadly held outside that Fundamentally, the purpose of all of 0:05:59.320 --> 0:06:03.720 these actions needs to be to restore or to induce competition. 0:06:04.279 --> 0:06:07.719 It is pointless to have just an opinion or a 0:06:07.800 --> 0:06:10.680 judgment that tells us that Google is a monopolist. We 0:06:10.800 --> 0:06:14.000 have a number of those in Europe. We have failed, however, 0:06:14.080 --> 0:06:18.960 in Europe to follow that through and implement measures remedies 0:06:19.000 --> 0:06:24.719 that were really capable of increasing competition. So the question 0:06:25.440 --> 0:06:29.080 is to what extent will the judge, as Leah was saying, 0:06:29.200 --> 0:06:33.800 just that you feel the appetite and the opportunity to 0:06:33.960 --> 0:06:38.520 push the remedy following his decision into a real that 0:06:38.760 --> 0:06:40.840 can create that competition. 0:06:41.680 --> 0:06:43.720 So Christina, on the word appetite, You forget that there 0:06:43.720 --> 0:06:47.400 are people behind this story. Our reportings based on anonymous sources. 0:06:47.440 --> 0:06:51.520 But we're trying to infer the thinking of DOJ officials 0:06:51.520 --> 0:06:54.840 and attorneys. Why in this moment might they feel this 0:06:54.920 --> 0:06:58.200 is realistic as a course of action, if not a breakup, 0:06:58.200 --> 0:07:01.240 but the other potential actions that Leah reported on just 0:07:01.279 --> 0:07:01.919 a moment ago. 0:07:03.279 --> 0:07:06.720 The reason why it is now a salient moment for 0:07:06.760 --> 0:07:10.120 this kind of action is that there is a global 0:07:10.200 --> 0:07:13.480 sense that anti trust action against big tech and Google 0:07:13.520 --> 0:07:17.600 in particular has not delivered, and fundamentally, because the reaction 0:07:17.800 --> 0:07:22.000 is being too timid, we haven't adopted measures that were 0:07:22.120 --> 0:07:27.800 capable of inducing competition. So the Department to Justice follow 0:07:27.840 --> 0:07:32.600 what Jonathan Canter said. He called this decision mount rushmore 0:07:32.840 --> 0:07:36.880 of anti trust historic monumental. This is the time when 0:07:36.920 --> 0:07:40.800 we need to get serious about whether we use anti trust. 0:07:40.800 --> 0:07:45.120 There's a real industrial policy tool to create competition in 0:07:45.200 --> 0:07:49.600 sectors where we have failed so far with half witted measures, 0:07:49.720 --> 0:07:54.120 and or we continue to do something which is marginal 0:07:54.320 --> 0:07:58.960 targeted and very prescriptive, but at the same time does 0:07:59.040 --> 0:08:02.400 not deliver competition, which is the goal here. So the 0:08:02.440 --> 0:08:05.720 Department of Justice will feel that this is this salient 0:08:05.800 --> 0:08:09.680 moment at which to pursue this kind of aggressive. 0:08:09.760 --> 0:08:12.880 Christina is a gender three and a half percent fall 0:08:12.920 --> 0:08:15.840 in market cap and share price. It's a big move 0:08:15.880 --> 0:08:18.840 on the day, but it certainly doesn't reflect the idea 0:08:18.880 --> 0:08:21.400 that it will be broken up. So is this in 0:08:21.480 --> 0:08:24.679 any way realistic And what do you anticipate will actually 0:08:24.680 --> 0:08:28.120 be the real soulce here? 0:08:29.200 --> 0:08:32.360 The markets never really anticipate that antitrust is going to 0:08:32.400 --> 0:08:36.080 do very much. And this is the text is the 0:08:36.160 --> 0:08:38.880 outcome of this case in which the judge is delivered 0:08:38.920 --> 0:08:43.040 a very thoughtful, very wealthul opinion. Is it going to 0:08:43.080 --> 0:08:45.440 be serious or is it going to be again nibbling 0:08:45.480 --> 0:08:48.000 at the margin of the problem. So I think markets 0:08:48.040 --> 0:08:50.880 are just waiting to see. Of course, the prospect of 0:08:50.960 --> 0:08:54.280 breaking up Google is very ambitious. On the other hand, 0:08:54.520 --> 0:08:56.720 if we don't do it now, then when how are 0:08:56.679 --> 0:08:59.320 we're going to create competition. A judge that just simply 0:08:59.400 --> 0:09:03.000 mandates that Google can no longer pay for exclusivity on 0:09:03.040 --> 0:09:06.200 Apple Os Samsung should note that this kind of measure 0:09:06.280 --> 0:09:10.240 is going to be performative, is not going to deliver 0:09:10.440 --> 0:09:11.600 anything of substance. 0:09:11.760 --> 0:09:15.120 What would be substantive from your perspective, Christina, Is it 0:09:15.160 --> 0:09:18.480 about going into all the which ways that Google basically 0:09:18.520 --> 0:09:21.000 impacts the ecosystem and trying to unravel it, Because that's 0:09:21.080 --> 0:09:22.920 a herculean task. 0:09:23.960 --> 0:09:26.720 It is at qli N And in fact, I fear 0:09:27.080 --> 0:09:30.960 that we might end up with proposals that are at 0:09:31.040 --> 0:09:36.200 rue Goldberg machine of various little measures, of various attempts 0:09:36.280 --> 0:09:39.440 to deal with the control points that Google has. There 0:09:39.480 --> 0:09:41.640 is no question that the tentacles have gone deep in 0:09:41.760 --> 0:09:46.080 multiple control points, and unless we addressed those choke points, 0:09:46.160 --> 0:09:49.200 then we are not finding a solution. Redlining a contract 0:09:49.200 --> 0:09:55.520 prohibiting exclusivity is not an answer. So breakup is difficult, 0:09:55.520 --> 0:09:57.880 but there are precedents in the US. Of course, you 0:09:57.960 --> 0:10:04.240 have done add the most significant president there and it 0:10:04.320 --> 0:10:07.880 unleashed competition and innovation. Of course, there will be massive 0:10:07.960 --> 0:10:10.839 challenges because Google will not take this line down. There 0:10:10.840 --> 0:10:15.200 will be possibly years of challenge. But fundamentally, you have 0:10:15.240 --> 0:10:19.200 an ecosystem in which you have YouTube and Google Search, 0:10:19.240 --> 0:10:24.920 which are the two most important websites that people actually use. 0:10:25.200 --> 0:10:27.440 And then you have the same company owning the most 0:10:27.480 --> 0:10:32.040 important browser, Chrome, and if you allow all of that 0:10:32.080 --> 0:10:34.400 to be under the same umbrella, the incentive of this 0:10:34.520 --> 0:10:37.720 company are continually to use all of these pieces of 0:10:37.840 --> 0:10:41.880 the technology to favor itself, to drive revenues for itself 0:10:42.240 --> 0:10:47.640 in ways that cement their monopoly, continue continually forevermore without 0:10:47.679 --> 0:10:53.200 allowing anyone to come in with Microsoft Office opened twenty 0:10:53.240 --> 0:10:58.319 billion over five years to be able to be on 0:10:59.400 --> 0:11:05.600 Safari instead of Google Search, and. 0:11:03.720 --> 0:11:05.800 We have to leave it here. But we really appreciate 0:11:06.080 --> 0:11:09.360 the nuancewer perspective. Christina Kafara, co founder and vice chair 0:11:09.360 --> 0:11:11.040 of the Competition Research Policy. 0:11:10.720 --> 0:11:14.880 Network, we thank her. Meanwhile, coming up thirteen F filing. 0:11:14.559 --> 0:11:17.280 Season, we'll discuss the latest and what those hedge funds 0:11:17.280 --> 0:11:17.760 have been up to. 0:11:18.120 --> 0:11:26.800 This is blue meg technology. 0:11:32.720 --> 0:11:36.280 It is so called thirteen F filing season or moment. 0:11:36.440 --> 0:11:37.040 What does that mean? 0:11:37.080 --> 0:11:39.960 It's where investment managers where hedge funds are forced to 0:11:39.960 --> 0:11:42.240 disclose what their US equity holdings have been in the 0:11:42.240 --> 0:11:45.080 previous quarters. It's a snapshot, but it's an interesting one, 0:11:45.120 --> 0:11:45.679 and we break. 0:11:45.480 --> 0:11:46.839 It down Bloomberg's Hemma palma. 0:11:47.440 --> 0:11:51.040 Much is being made of some holdings of bitcoin ETFs? 0:11:51.440 --> 0:11:53.480 Yes, what do you make of the reporting there? Yes, 0:11:53.520 --> 0:11:54.560 so it's kind of interesting. 0:11:55.200 --> 0:11:59.640 The SEC, if you recall, approves spared ETFs with bitcoins earlier, 0:12:00.440 --> 0:12:02.959 and so we had seen some buying. It looks like 0:12:03.000 --> 0:12:05.280 Goldman Sachs bought about four hundred million of it. 0:12:05.480 --> 0:12:05.640 Now. 0:12:05.640 --> 0:12:07.680 The thing to keep in mind with thirteen and f's 0:12:07.720 --> 0:12:10.040 is it gives us some clarity, but not full clarity, 0:12:10.320 --> 0:12:12.400 So we don't know which part of the bank necessarily 0:12:12.400 --> 0:12:16.520 bought it. We also don't know intentionality behind trades. So 0:12:16.640 --> 0:12:20.160 is it a bullish bed fundamentally on these ETFs and 0:12:20.240 --> 0:12:23.640 bitcoin or is it an opportunity to capitalize the volatility 0:12:23.679 --> 0:12:26.640 of the trade or is it a shorts against longer 0:12:26.679 --> 0:12:29.880 hedge along that against shorts you might hold, but it 0:12:29.920 --> 0:12:32.840 is interesting to see some significant buying in that space. 0:12:34.040 --> 0:12:36.440 Lindsay and New York's going to bring up the Nvidia chart. 0:12:36.559 --> 0:12:39.160 I think it's an interesting case study, right, because the 0:12:39.280 --> 0:12:41.640 data is backward looking. You want to go into the 0:12:41.720 --> 0:12:46.120 dark world of hedge funds and particularly stock picking funds, right. 0:12:46.160 --> 0:12:48.600 So the headlines I see is that a number of 0:12:48.600 --> 0:12:52.800 funds increase their position in Nvidia. It's interesting because it's 0:12:52.840 --> 0:12:55.040 the period ending June thirtieth, and as you see on 0:12:55.080 --> 0:12:58.640 the chart, we hit high on I think June eighteenth. 0:12:58.640 --> 0:13:00.040 What have you learned so far through. 0:12:59.920 --> 0:13:02.240 The Yeah, So that's one of the key themes we're 0:13:02.280 --> 0:13:04.280 looking at for this thirty and f season is how 0:13:04.320 --> 0:13:08.600 were funds, especially stock pickers, positioned just ahead of the 0:13:08.720 --> 0:13:11.000 time that we then saw in July and then got 0:13:11.040 --> 0:13:13.920 worse in August. So we did see some nominal buying 0:13:13.960 --> 0:13:18.160 of Navidia. Wisconsin's pension bought a little bit, UBSS Management 0:13:18.160 --> 0:13:21.840 bought a bit Co two trimmed their position in Nividia slightly. 0:13:21.960 --> 0:13:25.120 So it's interesting to see how funds were positioning their 0:13:25.120 --> 0:13:28.080 books ahead of what was a very tumultuous several weeks. 0:13:29.040 --> 0:13:31.280 What else are you managing to peel back in terms 0:13:31.360 --> 0:13:33.400 of some of the key players when it comes to 0:13:33.400 --> 0:13:35.280 technology names, the CO two is the D one. 0:13:35.360 --> 0:13:38.959 Precisely, so KO tow some interesting movement there. They slashed 0:13:39.000 --> 0:13:42.520 their alphabet position by thirty eight percent, I'll be prescient exactly, 0:13:42.640 --> 0:13:45.880 and they also slashed a salesforce position by about sixty percent, 0:13:45.960 --> 0:13:48.880 so two prescient moves ahead of this downturn. They ditched 0:13:48.880 --> 0:13:53.080 their Instacar position entirely, trimmed Meta, trimmed Navidia, so some 0:13:53.120 --> 0:13:55.640 really interesting moves ahead of this volatility that we saw. 0:13:55.960 --> 0:13:59.040 They started about six new positions. One of them is 0:13:59.080 --> 0:14:02.280 in g g Vanova, which is a company we're hearing 0:14:02.280 --> 0:14:05.040 a little bit more about that's the spinout from GE 0:14:05.559 --> 0:14:09.240 that's more energy focus. So they started a new position 0:14:09.240 --> 0:14:11.840 in that company that stock us up about thirty seven percent. 0:14:12.920 --> 0:14:15.959 Hemy you've done a really brilliant job of explaining the basics, 0:14:16.000 --> 0:14:18.840 you know, to the audience around the world on Bloomberg technology. 0:14:18.920 --> 0:14:21.640 Many of them will not understand thirteen f So we 0:14:21.680 --> 0:14:25.680 went over stock picking in directional bets. There's a lot 0:14:25.720 --> 0:14:28.360 more to come, right, we can't in aggregate say this 0:14:28.520 --> 0:14:31.560 is what the story was, just explain basically how it 0:14:31.560 --> 0:14:33.440 will play out over the next couple of days. 0:14:33.640 --> 0:14:37.240 Yes, so hedge funds are required to file these thirteen 0:14:37.400 --> 0:14:40.480 F positions, which shows their positions as of the end 0:14:40.480 --> 0:14:42.720 of the second quarter, and so what that means is 0:14:42.760 --> 0:14:44.320 we get a bit of a backwards. 0:14:43.880 --> 0:14:45.400 Looking view into these funds. 0:14:45.560 --> 0:14:47.200 They have to file it by the end of day 0:14:47.200 --> 0:14:50.400 to day. Oftentimes we see these filings coming in later 0:14:50.480 --> 0:14:53.040 in the day as maybe some funds procrastinate till ear 0:14:53.080 --> 0:14:55.320 later in the day, so we get more of an 0:14:55.360 --> 0:14:58.880 aggregate sense of how funds were positioned later in the afternoon. 0:14:58.920 --> 0:15:01.160 So tomorrow we'll have a little but more clarity in 0:15:01.280 --> 0:15:03.440 whole as to like what the positions were with what 0:15:03.480 --> 0:15:07.400 the popular buys and the more popular selling trends were. 0:15:08.040 --> 0:15:10.600 But keep in mind, even though this data is backwards looking, 0:15:10.840 --> 0:15:13.920 it's still helpful because hedge funds are notoriously secretive about 0:15:13.960 --> 0:15:16.400 what stocks are in and so this gives us some 0:15:16.480 --> 0:15:21.520 insights into what and how they're thinking might be across 0:15:21.520 --> 0:15:24.800 the sector, but especially in tech, which is precisely interesting 0:15:24.840 --> 0:15:25.720 these days. 0:15:26.480 --> 0:15:29.200 And interesting on this program. Bloombergs Hemma Palmer, thank you 0:15:29.280 --> 0:15:32.160 very much. Let's talk about markets more broadly. Core US 0:15:32.240 --> 0:15:35.040 inflation ease for a fourth month on an annual basis 0:15:35.040 --> 0:15:38.320 in July, keeping the Fed on track to lower interest 0:15:38.400 --> 0:15:41.560 rates next month. How's that going to impact the technology 0:15:41.560 --> 0:15:45.200 sector and technology stocks? Joining us now is Rob Howeth, 0:15:45.680 --> 0:15:50.080 senior investment strategists at US Bank Asset Management. It feels 0:15:50.600 --> 0:15:52.280 they're like there's been some anxiety of. 0:15:52.320 --> 0:15:53.040 Late in the market. 0:15:53.040 --> 0:15:56.000 So I think back to that fateful Monday after the 0:15:56.000 --> 0:15:58.760 boj We talked a lot about the yen carry trade. 0:15:59.040 --> 0:16:01.720 But what to you all mind is the principal driver 0:16:01.880 --> 0:16:05.280 in financial markets right now, particularly when you focus on 0:16:05.400 --> 0:16:07.400 technology and the equities market. 0:16:07.440 --> 0:16:11.320 Good morning, yeah, good morning. In the end, it is spending. 0:16:11.440 --> 0:16:14.760 Right what we've seen really drive tech stocks. I think 0:16:15.320 --> 0:16:18.800 for the bulk of this year is much higher investment 0:16:19.040 --> 0:16:23.680 in technology infrastructure to support artificial intelligence. I think the 0:16:23.800 --> 0:16:26.920 question before US as we look ahead is not is 0:16:26.960 --> 0:16:30.000 that going to continue? But does it broaden out? Is 0:16:30.040 --> 0:16:34.640 the consumer still healthy enough to increase goods spending which 0:16:34.680 --> 0:16:39.160 puts further pressure on technology infrastructure or we've seen fairly 0:16:39.240 --> 0:16:43.240 light auto sales. We've seen the consumer weakening, I think, 0:16:43.640 --> 0:16:46.479 and they've been focused this year so much on services. 0:16:46.520 --> 0:16:50.400 Some of the news we're seeing indicates some a lack 0:16:50.440 --> 0:16:53.920 of clarity on services spending into year end, and does 0:16:53.960 --> 0:16:56.960 that pivot into goods spending like on autos or other 0:16:57.560 --> 0:16:59.680 durable goods that we know have lots of chips in 0:16:59.720 --> 0:17:02.200 them as well? So does that put more pressure on 0:17:02.800 --> 0:17:05.840 technology infrastructure as we look into year ed That's not 0:17:05.880 --> 0:17:08.720 clear to us, but it's a question we have. 0:17:09.640 --> 0:17:12.359 Well, there are many days until August twenty eight for 0:17:12.480 --> 0:17:15.879 notable date because Nvidia reports earnings, and that may answer 0:17:15.920 --> 0:17:19.040 some of your questions. What's your approach to that. It's 0:17:19.080 --> 0:17:22.440 a single name that's driving the entire market at the moment. 0:17:23.800 --> 0:17:26.439 It's a single name that remains important to be in 0:17:26.600 --> 0:17:29.520 portfolios and at a market way, we would say, But 0:17:29.600 --> 0:17:32.159 our approach is we think this rally really has to 0:17:32.200 --> 0:17:34.680 broaden out a little more. We're looking more towards an 0:17:34.680 --> 0:17:38.040 equal weight SMP five hundred position because we think that 0:17:38.080 --> 0:17:42.000 there needs to be more beneficiaries than just technology. If 0:17:42.000 --> 0:17:44.240 this economy is really holding up as well as the 0:17:44.320 --> 0:17:47.920 data would indicate, right we're seeing softer inflation, but we're 0:17:47.920 --> 0:17:51.960 seeing still low unemployment, still good wage growth, still good 0:17:52.000 --> 0:17:55.960 GDP growth, and so we need to see more beneficiaries 0:17:56.000 --> 0:17:59.600 of this economic activity beyond technology as we look into 0:17:59.640 --> 0:18:00.040 the year. 0:18:00.600 --> 0:18:03.080 Well go across asset class for US as well. 0:18:03.440 --> 0:18:06.760 Should you be only thinking of equities in the tech space, 0:18:06.840 --> 0:18:07.760 what about fixed income? 0:18:07.800 --> 0:18:09.000 What about their corporate bonds? 0:18:09.960 --> 0:18:13.040 Fixed income is certainly extremely attractive. We're looking a little 0:18:13.040 --> 0:18:16.879 more at getting more credit exposure in our in our 0:18:16.920 --> 0:18:21.080 fixed income portfolios, whether it's a high yield municipal bonds 0:18:21.119 --> 0:18:26.240 for taxable investors or below investment grade corporate credit. I 0:18:26.240 --> 0:18:28.800 think the interesting thing in the technology space is often 0:18:28.840 --> 0:18:34.160 they're so cash rich that that you're getting high quality 0:18:34.200 --> 0:18:36.440 bonds there as well. So we would look to get 0:18:36.520 --> 0:18:41.159 some credit exposure at this point in portfolios because the 0:18:41.160 --> 0:18:44.399 economy is holding up fairly well. The interesting thing is investors. 0:18:44.480 --> 0:18:48.680 Investor sentiment is still very robust in credit compared to equity. Right, 0:18:48.720 --> 0:18:51.280 We've we've seen softness in the equity market here of late, 0:18:51.720 --> 0:18:54.919 but that that credit sentiment has stayed very strong. So 0:18:54.960 --> 0:18:57.000 there's not a lot of expectations there yet that this 0:18:57.119 --> 0:18:58.160 is a slowing economy. 0:18:58.800 --> 0:19:00.720 Well pay with so good to catch up with you. 0:19:00.760 --> 0:19:01.320 Thank you very much. 0:19:01.320 --> 0:19:05.360 Indeed, senior investment strategists of US Bank Asset Management across 0:19:05.440 --> 0:19:12.720 the essay classes for US. 0:19:14.520 --> 0:19:15.600 Time for AI and action. 0:19:15.760 --> 0:19:20.560 How is artificial intelligent artificial intelligence being implemented right now? 0:19:20.920 --> 0:19:22.240 We can speak to a founder about it. 0:19:22.280 --> 0:19:25.280 Minisong, co founder and CEO of elise AI, who's just 0:19:25.320 --> 0:19:27.960 announced that you're raising money. You've got a billion dollar 0:19:28.040 --> 0:19:30.639 valuation and it's all about helping renters. 0:19:30.960 --> 0:19:33.159 Am I correct? How are you helping rentors with AI? 0:19:34.400 --> 0:19:35.880 Yes, that's exactly correct. 0:19:36.080 --> 0:19:40.600 So elise AI is an AI technology company based in 0:19:40.640 --> 0:19:44.159 New York City that serves the housing and healthcare industries. 0:19:44.840 --> 0:19:50.119 Both of these industries experience significant operational challenges because the 0:19:50.200 --> 0:19:54.919 day to day operations are largely managed by arcane and 0:19:55.000 --> 0:20:00.080 manual processes. So we provide AI technology that allows our 0:20:00.080 --> 0:20:05.639 customers to automate the most important and business critical functions. 0:20:05.840 --> 0:20:10.560 So in the housing industry, for example, we provide an 0:20:10.600 --> 0:20:14.440 AI that helps renters with all of their needs from 0:20:14.920 --> 0:20:19.520 looking for an apartment, to touring, to handling their maintenance 0:20:19.520 --> 0:20:24.959 requests to even renewing their leases. And this helps housing 0:20:25.000 --> 0:20:29.119 providers be able to serve more renters, faster and better, 0:20:29.880 --> 0:20:33.600 and also at a lower cost. And today our AI 0:20:34.040 --> 0:20:38.920 is already used by over seventy percent of the largest 0:20:38.920 --> 0:20:43.639 property management companies in the US, and we've also expanded 0:20:43.640 --> 0:20:47.000 into the healthcare market, So in the healthcare industry, our 0:20:47.160 --> 0:20:51.840 AI similarly automates the day to day workflows like scheduling 0:20:51.880 --> 0:20:56.840 appointments that allow our customers to manage their businesses more effectively. 0:20:58.119 --> 0:21:01.800 Seventy five million dollars billion dollar value. Congrats, there's a 0:21:01.840 --> 0:21:04.720 lot of people sitting behind you. Who are they, what 0:21:04.760 --> 0:21:06.440 are they working on? And what are you going to 0:21:06.560 --> 0:21:09.400 use those funds for? Because you seem pretty busy already. 0:21:10.800 --> 0:21:12.159 We are extremely busy. 0:21:12.280 --> 0:21:15.520 So we're at our office headquartered here in New York City, 0:21:16.240 --> 0:21:21.120 and behind me are a bunch of really really talented engineers, 0:21:21.280 --> 0:21:25.280 product and many people that are supporting new customers every 0:21:25.359 --> 0:21:29.359 day in transforming their businesses using AI. So we're using 0:21:29.359 --> 0:21:34.360 the funding to expand our team and help more customers 0:21:35.320 --> 0:21:39.320 and build more innovative products to create efficiencies in their operations. 0:21:39.720 --> 0:21:43.160 We've got about thirty seconds Sapphire Ventures led the around 0:21:43.280 --> 0:21:45.560 others point seventy two Divco West. 0:21:45.600 --> 0:21:47.719 How is it like they're raising funds? 0:21:49.080 --> 0:21:52.000 It was surprisingly really easy. 0:21:52.440 --> 0:21:55.320 I think there's a lot of funding available for great 0:21:55.359 --> 0:22:00.000 businesses solving really important problems, and we're really excited to 0:22:00.040 --> 0:22:01.600 I've partnered with. 0:22:01.119 --> 0:22:03.440 With people who understood how the industry should be. 0:22:04.680 --> 0:22:07.880 Minnesotan co founder and CEO of elise A I, thank you. 0:22:07.920 --> 0:22:17.280 Very much, Welcome back to bluemot tenology. 0:22:17.320 --> 0:22:19.879 I'm Caroline Hid in New York and Amed Lodlow in 0:22:19.960 --> 0:22:20.760 San Francisco. 0:22:21.119 --> 0:22:21.960 Quick check on these. 0:22:21.800 --> 0:22:25.040 Markets said, because, well, the whipsawing of Nvidia means that 0:22:25.040 --> 0:22:28.520 we're now currently flat on the Nasdaq one hundred index. 0:22:28.560 --> 0:22:31.119