Speaker 1: From the heart of where innovation, money and power colli
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay. I'm Emily Check in San Francisco, and this
Speaker 1: is Bloomberg Technology. Coming up in the next hour. Market meltdown, stocks, SINC,
Speaker 1: yields surge, investors getting jennery about whether the Fed can
Speaker 1: fight inflation without plunging the economy into recession, plus a
Speaker 1: m D getting caught in the sell off after surging
Speaker 1: post earnings. We're gonna talk to a MDC at least
Speaker 1: to sue about how she is still driving massive growth
Speaker 1: amidst forty year inflation, lockdowns in China and an ongoing
Speaker 1: chip crisis. And Uber shares down now multiple days in
Speaker 1: a row despite releasing earnings early to avoid lists market
Speaker 1: wipe out. Our conversation with Uber CEO Dara Kazra Shay
Speaker 1: later this hour why he's confident about demands and consumers
Speaker 1: on the road ahead. We will get to all of
Speaker 1: that in a moment. Be first to look at the market.
Speaker 1: Stocks plunge with bonds in a violent reversal from Wednesday.
Speaker 1: The Fed's decision to raise rates initially boosted markets, but
Speaker 1: tech stocks have since had one of their sharpest U
Speaker 1: turns ever. Bloombergs at Ludlow here to break it all down,
Speaker 1: and yeah, you're completely right. Only and the long list
Speaker 1: of superlatives. Right then, has that one very tech heavy
Speaker 1: index having its worst day since September twenty n y
Speaker 1: s Fang plus index, Megacaps the US listed shares of
Speaker 1: Chinese techcos having its worst day since September twenty twenty.
Speaker 1: You look on that screen US tenure yield, the benchmark
Speaker 1: ten year treasury with the yield about three percent for
Speaker 1: the first time since November two thousand and eighteen. That's
Speaker 1: just a snapshot in time. That's just Thursday session. It's
Speaker 1: a complete U turn, as you say, reversal from what
Speaker 1: we saw on Wednesday following that FED decision to raise
Speaker 1: rates by fifty basis points in the commentary from FED
Speaker 1: pal around that. In fact, you look at the NASA
Speaker 1: one hundred over the course of two days, right, we
Speaker 1: bring that up on the screen and just think about
Speaker 1: the overnight change in psychology. We went to bed Wednesday
Speaker 1: night thinking the Fed's got this fifty basis points in
Speaker 1: line for the next few meetings. No discussion of a
Speaker 1: seventy five basis point hike. The FED has this, they
Speaker 1: can fight inflation without bringing us into recession. We wake
Speaker 1: up and its complete different story. We're worried about stagflation.
Speaker 1: We're worried about the FED doing enough to combat what
Speaker 1: we're seeing with the inflation picture. But also there was
Speaker 1: a lot of fighting talk from Power. Write Emily. He's
Speaker 1: talking about the strength of the economy, the tight labor market.
Speaker 1: And then we have earning season corporate America hearing some
Speaker 1: really positive noises. Hard to get my head around, indeed,
Speaker 1: and you know there are a number of former FED
Speaker 1: officials who didn't agree that this was enough and that
Speaker 1: this would be plunging the economy into a recession. I
Speaker 1: spoke with Uber CEO dar Kazra Shahi earlier today about
Speaker 1: their earnings results. We've seen their stock slide now multiple
Speaker 1: days in a row, despite a different picture from lift.
Speaker 1: Take a listen to his reaction. We're focused on what
Speaker 1: we can control. Can we build a great service UH
Speaker 1: and can we ride the reopening, both in terms of growth,
Speaker 1: bookings growth, profit growth, ultimately free cashul growth and the
Speaker 1: answer based on a results and based on what we
Speaker 1: see going forward as a resounding yes. And what do
Speaker 1: you make of that? Yeah, well, the share performance speaks
Speaker 1: for itself. You know, they gave a pretty bullish outlook
Speaker 1: the demand is coming, you know, and echoed what Lift
Speaker 1: was saying, and yet they had their worst two day
Speaker 1: drop on uber stock since March. They were kind of
Speaker 1: caught up in the contagion we've lift. There's no hiding
Speaker 1: place here, right, Let's look at the megacaps and how
Speaker 1: some of the biggest names in the world of technology
Speaker 1: performed on Thursday. Some of the worst performers on then
Speaker 1: as that one hundred. I had to look twice on
Speaker 1: my Bloomberg, but this was the worst day for Apple
Speaker 1: and Microsoft since October. You know, they're not just sensitive
Speaker 1: to what we're saying with higher rates, rising yields, but
Speaker 1: there's also now a discussion about well, what's going on
Speaker 1: with supply chains globally and the situation we're trying to lockdowns.
Speaker 1: You've got a pretty good guest come up next to you,
Speaker 1: has a strong view of ninety strong indeed ed, thank
Speaker 1: you well. It was a nightmare on Elm Street day
Speaker 1: for the nastack. That's how my next guest is framing
Speaker 1: today's sell off, Dan i'ves, managing director of Rubbush Securities,
Speaker 1: joins me. Now, so Dan, what's your take on just
Speaker 1: how bad this nightmare is gonna get and how long
Speaker 1: it's gonna last. I mean, look today, if you look
Speaker 1: at I'll call you the declines relative to the advances
Speaker 1: over I mean just to sell off. I view it
Speaker 1: almost we're nearing some sort of capitulation stage. I mean,
Speaker 1: my conversations with tech investors were so negative today it's
Speaker 1: almost bullish, and I think I just continue to point
Speaker 1: to this is just a white knuckle period post fed
Speaker 1: that I believe we're going to look back and some
Speaker 1: of these quality tech is way over sold. You know,
Speaker 1: if you're willing to hold it through this roller coaster,
Speaker 1: why is it hitting tech harder than other sectors. I
Speaker 1: think it's a few things. I think. First off, I
Speaker 1: mean you're seeing a de leveraging degressing across the board,
Speaker 1: and obviously a lot of institutions really wellevert to tach.
Speaker 1: I think the other thing is that with all these
Speaker 1: high multiple names and even ones that that that are
Speaker 1: not even expensive names like Apple, Microsoft, in my opinion,
Speaker 1: you're just seeing right now the street being like Okay,
Speaker 1: I don't believe numbers into the next year. What am
Speaker 1: I gonna pay? I'm totally uncertain. I'm just gonna sell
Speaker 1: these names. And I could just tell you cover in
Speaker 1: Tech twenty two years. The only time I've seen times
Speaker 1: like this in O eight, o nine and even going
Speaker 1: back to the early days of COVID. So I think
Speaker 1: we're starting to get that panic stage. And then it's
Speaker 1: like I talked about, mean you look at earning season,
Speaker 1: it's it's to have and have nots but enterprise, cloud, cybersecurity, strong,
Speaker 1: SEMIS because we as obvious at leasas who will talk
Speaker 1: about strong, So of course the other side hugely we
Speaker 1: e commerce and other names. But I think we are
Speaker 1: starting to get to what I've view is in this
Speaker 1: horror show opportunities. We saw Lift lose a third of
Speaker 1: its market value yesterday and another gem from you you
Speaker 1: called their spending guidance a nighties rock star like disaster.
Speaker 1: Uh Uber shares also getting caught up in that here
Speaker 1: despite a very different outlook. What do you make of
Speaker 1: that look? I think if you look at Lift, I mean,
Speaker 1: something just doesn't connect in terms of that conference college
Speaker 1: I probably is probably one of the top three worst
Speaker 1: conference calls I've heard in twenty plus years of Wow
Speaker 1: doing this, and I think part of it is just
Speaker 1: they couldn't explain why they're spending. The driver's shortage is there,
Speaker 1: but even as you were talked about like, it's not
Speaker 1: where it was six months ago, even nine months ago,
Speaker 1: So spending so far ahead of this it was a
Speaker 1: head scratcher. And you know, I when I look at
Speaker 1: what Uber's doing, I think that obviously in sympathy because
Speaker 1: these stocks trade almost starts being huts, you know, they're
Speaker 1: almost combined in terms of how they trade and pandem.
Speaker 1: I think Uber's way over so with clearly in the
Speaker 1: investment penalty box and need to prove themselves. But I
Speaker 1: think this was just way too aggressive spending that I'd
Speaker 1: be surprised if they ultimately spend that when it's all
Speaker 1: said done. Uh. In other news, I want to ask
Speaker 1: you about this long list of unusual names that have
Speaker 1: joined Elon Musk in his deal for Twitter. Larry Ellison,
Speaker 1: who's of course on the Tesla board, Andreas and Horowitz, Sequoia,
Speaker 1: the Qutar Investment Authority and Finance. What do you make
Speaker 1: of how this is coming together. Look, I think in
Speaker 1: this poker game, Musk obviously got Twitter and then ultimately
Speaker 1: it was about the financing component to ultimately undo a
Speaker 1: bit of his burden in terms of whoeveraging his Tesla stock,
Speaker 1: both in the debt and the equity. Look, this is
Speaker 1: a who's who in terms of who he got, you know,
Speaker 1: from both coasts and even globally. Ellison obviously you know,
Speaker 1: a huge confident. It is not a shock, but you
Speaker 1: go through from injuries in a sequoia, the fidelity and others.
Speaker 1: I think it also just shows Musk is not just
Speaker 1: doing this aloon. He's going to have a team strategically,
Speaker 1: even though you know in theory could be temporary CEO,
Speaker 1: I think over time he moves more of a chairman role,
Speaker 1: and I think that's something that even on an overreaction today,
Speaker 1: his golden child continues to be Tesla. All Right, Dannas
Speaker 1: web Bush As always appreciate you joining us and your metaphors.
Speaker 1: After surging post earnings to its best day in months,
Speaker 1: A and D also getting pulled into the cell off
Speaker 1: the chip maker posting more than five billion dollars for
Speaker 1: the quarter and raising it's full of your forecast I
Speaker 1: want to bring in a m D CEO, Lisa, so
Speaker 1: now to talk more about her outlook. Lisa, thank you
Speaker 1: as always for joining us. Look, we're seeing the highest
Speaker 1: inflation in forty years, lockdowns in China, which is a
Speaker 1: huge production hub for the chip industry, and a major
Speaker 1: ongoing war. How is it that you are managing to
Speaker 1: post se growth and raising your full yer forecast. Well,
Speaker 1: first of all, Emily, it's great to be here with
Speaker 1: you as always, and UM. As you said, there are
Speaker 1: a lot of things that are going on UM, a
Speaker 1: lot of differ disturbances around the world. But you know,
Speaker 1: for us, it's really about focusing on our long term strategy,
Speaker 1: delivering for customers and our partners, UM ensuring that we're
Speaker 1: getting new products coming out. And you know, we have
Speaker 1: a great strategy. We have a very very strong product
Speaker 1: portfolio for this year, and we're excited about the growth
Speaker 1: that we saw both in the first quarter and then
Speaker 1: more importantly what we see going forward. You know, it's
Speaker 1: a it's a really great time to be in UM.
Speaker 1: You know, the high performance computing market and this is
Speaker 1: where our focus is. So yeah, we were very unhappy
Speaker 1: with the growth that we're seeing big tech is underwater.
Speaker 1: A m D got caught up in the sell off today.
Speaker 1: What are you preparing for in terms of how you
Speaker 1: plan to navigate a very uncertain macro environment. Well, you know, Emily,
Speaker 1: I think the important thing is for us to focus on,
Speaker 1: you know, the big picture. I mean, you know, a
Speaker 1: m D today is such a different company than we
Speaker 1: were even just a few years ago. You know, we
Speaker 1: completed our acquisition of zy Links, which has you know, um,
Speaker 1: you know, a set of markets that are a diverse
Speaker 1: set of markets. And then when you add that to
Speaker 1: our data center strategy and the progress that we've made
Speaker 1: in the data center, I think, you know, what we're
Speaker 1: really doing is trying to navigate. Yes, there are um
Speaker 1: a set of macro issues and and also geographic issues
Speaker 1: that we're dealing with, but fundamentally, people need more high
Speaker 1: performance processors and more technology and that's what we do.
Speaker 1: And so it is very much about you know, having
Speaker 1: a long term strategy, a very diversified set of markets,
Speaker 1: and ensuring that we're focus on execution every single day
Speaker 1: to deliver to our customers. So the biggest problem in
Speaker 1: the chip industry has continued to be supply, not matching
Speaker 1: up with demand, and you made a decision to outsource
Speaker 1: to t SMC, which has been widely credited for some
Speaker 1: of you know, a MD's recent success. You know, when
Speaker 1: you look ahead, do you see being able to have
Speaker 1: enough supply to support all this growth, all of this
Speaker 1: demand that you're seeing. Well, I have to say, Emily,
Speaker 1: we've been working on you know, sort of ramping up
Speaker 1: supply for the last eighteen months. I think, you know,
Speaker 1: even pre pandemic. Uh. You know, we knew that our
Speaker 1: strategy meant that we would grow um, you know, very
Speaker 1: substantially over the next few years. We've been working with
Speaker 1: our partners, UM, not just on the wafer side, of course,
Speaker 1: on the wafer side, but also um, you know, the
Speaker 1: back end side, substrate capacity, back in capacity, all the
Speaker 1: components that you need and UM, yes, we've been able
Speaker 1: to bring on a significant amount of capacity and that's
Speaker 1: what helped us grow you know so much. You're last year,
Speaker 1: UM as well as this first quarter, and you know
Speaker 1: for the rest of the year, we're forecast six annual growth.
Speaker 1: So we are bringing on a lot of capacity and
Speaker 1: it is something that is very strategic for us, not
Speaker 1: just this year, but into and beyond. The data center
Speaker 1: has been a huge success story for you. How much
Speaker 1: of this demand is coming from big cloud providers like
Speaker 1: AWS and Microsoft versus increasing demand from other companies building
Speaker 1: out their own data centers. Yeah, so the data center
Speaker 1: has been our big strategic bet Emily over the last
Speaker 1: few years, and we've done extremely well with the largest
Speaker 1: hyper scale ers. You know, ten of the largest hyper
Speaker 1: scalers UM are using a m D in very significant way,
Speaker 1: both on internal workloads as well as their external facing workloads.
Speaker 1: We're also making a lot of progress with enterprise customers
Speaker 1: and customers who are looking at building out a hybrid environment.
Speaker 1: So you know that you know, we grew UM. You know,
Speaker 1: we've basically doubled UM in the first quarter in the
Speaker 1: overall data center, but we doubled in each of cloud
Speaker 1: and enterprise. And what you're seeing there is there's just
Speaker 1: a demand from more computing UM when you think about
Speaker 1: digital transformation, business transformation, UM, all of the AI that's
Speaker 1: out there. So there's continues to be very high demand
Speaker 1: in the data center. Now, there's been speculation about the
Speaker 1: PC market and whether it's hit a pandemic peak in
Speaker 1: tel CEO, pat Gaalsinger very bullish on this. Are you
Speaker 1: as bullish? Where do you think the PC market is
Speaker 1: really headed? Sure? So, Emily, you know, in the context, um,
Speaker 1: you know, the PC market had its best year, um.
Speaker 1: You know, really last year. I mean it was a
Speaker 1: very strong year for PCs. As you know, there was
Speaker 1: a lot of need for you know, updated PCs and
Speaker 1: the updated infrastructure, as you know, we were in in
Speaker 1: the middle of the pandemic. When you look at this year,
Speaker 1: we are taking a little bit more conservative of view
Speaker 1: of the PC market. You know, we we believe that
Speaker 1: will probably be down let's call it high single digits.
Speaker 1: But even with that, we're talking about a market that's
Speaker 1: gonna be over three hundred million units UM this year.
Speaker 1: So my view of the PC market it's about which
Speaker 1: segments that you're in, you know, sir. Only some of
Speaker 1: the low end and some of the more consumer facing
Speaker 1: UM areas of the PC market have taken a little
Speaker 1: bit of a soft spot here in the first half
Speaker 1: of the year. UM. I will say though, if you
Speaker 1: think about commercial PCs, people are investing a lot in
Speaker 1: I t UM still because they want the productivity. If
Speaker 1: you look at high end premium UM PCs as well
Speaker 1: as gaming PCs. There's actually good demand for those. So
Speaker 1: I do the PC market as a very good market,
Speaker 1: but one where you know, we do have to watch
Speaker 1: some of the volatility that's that that is in there. Okay,
Speaker 1: Now I have to ask about your reaction to the
Speaker 1: Supreme Court's leaked draft opinion, which shows that Row versus
Speaker 1: Wade could very well be overturned and soon. A MD
Speaker 1: has a good portion of its workforce in Texas, where
Speaker 1: you know, more aggressive anti abortion legislation has already been passed.
Speaker 1: You've got companies like Salesforce that have offered to pay
Speaker 1: for their employees to leave Texas if they want to.
Speaker 1: How are you thinking about all of this as a
Speaker 1: business leader? Well, Emily, look, we're certainly watching the developments
Speaker 1: very closely. I don't want to get ahead of the
Speaker 1: actual ruling. I think they're there's still um, you know,
Speaker 1: there's still some clarity to be brought. But you know,
Speaker 1: our priorities always going to be first and foremost with
Speaker 1: our employees and ensuring the health and safety of our employees.
Speaker 1: So we're certainly watching the situation very carefully, and we'll
Speaker 1: make sure that you know we're We're focused on our
Speaker 1: employees and d CEO Lisa Sue. Thank you as always
Speaker 1: for taking the time to join us. Thank you, good
Speaker 1: to see you again. All right. Coming up, he helped
Speaker 1: unionize the first Amazon warehouse in the United States. Christian
Speaker 1: Smalls joins us next from Washington, fresh off his meeting
Speaker 1: with President Biden. He's next. This is Bloomerk Amazon that
Speaker 1: labor union president Christian Smalls test to find before members
Speaker 1: of Congress today about his efforts to unionize workers across Amazon. He,
Speaker 1: along with other union leaders, also just met at the
Speaker 1: White House with President Biden, Vice President Harris, and Labor
Speaker 1: Secretary Marty Walsh. He helped workers at an Amazon facility
Speaker 1: on Staten Island become the first in the country to unionize. However, Monday,
Speaker 1: a nearby Amazon facility voted against unionitation. He joins us
Speaker 1: now live from Washington. Chris, great to have you back
Speaker 1: here on the show. You tweeted that you met the
Speaker 1: President earlier today and that he told you you got
Speaker 1: him into trouble. Tell me a little bit about that
Speaker 1: meeting and what you think he meant by that. Yeah,
Speaker 1: I believe when he came out a couple of weeks
Speaker 1: ago and said Amazon would coming for you. I think he,
Speaker 1: uh he just overstepped it a little bit, and uh
Speaker 1: he was svised he's sitting here and but you know,
Speaker 1: it's great to see that. Uh he still recognizes that.
Speaker 1: You know, we had to have some regulations with the
Speaker 1: company as far as unionizing. So you also spoke with
Speaker 1: President Harry By, President Harris Labor Secretary Marty Walsh. Should
Speaker 1: they indicate if they're planning to get more actively involved
Speaker 1: in Yes, absolutely, you know, Uh, well, we had a
Speaker 1: great conversation. Uh. They spoke to not just myself, but
Speaker 1: other leaders and organizers in other industries like Starbucks and
Speaker 1: are e I and uh uh what else, Uh, artistic
Speaker 1: industry as well. We had a librarian as there as well.
Speaker 1: I'm gonna give recognition to all of them. Um. And
Speaker 1: we definitely think that there's going to be some more
Speaker 1: support coming from the political realm. Um. I know that
Speaker 1: they have been mentioned that they have um implemented some
Speaker 1: some things in the administration that they're willing to roll
Speaker 1: out over the next couple of months. And that's going
Speaker 1: to help us out on the ground. And I'm I'm
Speaker 1: excited to be a part of that conversation. Now you're
Speaker 1: testified before a Senate committee today, and I have a
Speaker 1: portion of that testimony. This is your response to a
Speaker 1: question from Senator Lindsey Graham. That's the reason why I'm
Speaker 1: here to represent the workers who make these companies go.
Speaker 1: And I think that it's in your best interest to
Speaker 1: realize that it's not a a left or right thing.
Speaker 1: It's not a Democrat or a Republican thing. So workers
Speaker 1: things to workers issue, and we're the ones that are suffering.
Speaker 1: What's your sense of whether the senators were speaking to
Speaker 1: today understood that in a Congress that is often so
Speaker 1: divided by partisanship. Yeah, I mean, well, I just had
Speaker 1: to reiterate that, you know, I wanted to make them
Speaker 1: understand that, you know, uh, our voices matter. You know,
Speaker 1: the corporations get the UM have the first say and everything.
Speaker 1: They get to control everything, whether it's the market, whether
Speaker 1: it's uh the laws, lobbying whoever, it's uh, even the
Speaker 1: government is some aspect. You know, we don't have a
Speaker 1: say at the bottom as workers. UM. The only way
Speaker 1: we have a say in the voices when we collectively
Speaker 1: come together and when we collectively say we want the union,
Speaker 1: UM that that right should be given to us, and UM,
Speaker 1: that's what I want to make sure that that message
Speaker 1: was clear cut that the workers are the ones who
Speaker 1: generate the revenue for these corporations. And you know, I
Speaker 1: think he uh he got the message because he didn't
Speaker 1: last long. He left halfway through. But you know, I understand,
Speaker 1: you know, this is uh something that has to be said,
Speaker 1: It has to be spoken about. Now. You won at
Speaker 1: one of the Staten Island warehouses. The union one Amazon though,
Speaker 1: is appealing that decision and they said they were disappointed
Speaker 1: with the outcome of the election there. They believe having
Speaker 1: a direct relationship with the company the company employees, having
Speaker 1: a direct relationship with the company is best for the employees.
Speaker 1: You lost at a warehouse across the street. And I'm
Speaker 1: curious where you plan to do this next, given that
Speaker 1: clearly it's not necessarily a done deal. Yeah, we're we're
Speaker 1: prepared on our side, UM to go to the core
Speaker 1: hearing and hear out the evidence if uh there is some,
Speaker 1: and we will take our actions from there. UM. Definitely
Speaker 1: talking to our legal representation on our side to get
Speaker 1: the best advice as far as our first election. But
Speaker 1: at the same time. You know, Amazon should recognize the
Speaker 1: fact that the Amazon workers at that facility voted for
Speaker 1: the union in favor of the union over five hundred workers, um,
Speaker 1: over five hundred ballots. Uh work where um the difference?
Speaker 1: And as far as the second election, you know, we uh,
Speaker 1: we definitely you know, overshotted a little bit. You know,
Speaker 1: we we took on a huge task. We've been campaigning
Speaker 1: for quite a while, over a year. Um. We had
Speaker 1: a new facility, new workers, new organizers in that building, UM,
Speaker 1: and they just didn't enough time to convince enough of
Speaker 1: their co workers, which is understandable. So for us, we
Speaker 1: just have to reassess and get back to work and
Speaker 1: get back to organizing. So are we going to see
Speaker 1: you filing union positions petitions outside Staten Island soon? And
Speaker 1: if so, where quickly? Oh? Well, I can tell you
Speaker 1: we're going nationwide. You know, every building in the country
Speaker 1: has contacted us already, and we want to continue with
Speaker 1: that plan to get everybody in the country set up.
Speaker 1: You're saying, every Amazon warehouse in the country has contacted
Speaker 1: you about the project of unionizing every Amazon facility in
Speaker 1: the country, um, and then some has contacted the Amazon
Speaker 1: LA reunion and we will have a conference that will
Speaker 1: address everybody nationwide. All Right, Christian Smallst, President of the
Speaker 1: Amazon Labor Union, Fresh Office meeting with President Biden. Thank
Speaker 1: you Chris for trying to thank you. Welcome back to
Speaker 1: Blomberg Technology, Emily check in San Francisco. I want to
Speaker 1: get back to the market and volatility and starts spreading
Speaker 1: to crypto. To our at Ludlow, been taking a look
Speaker 1: there and what do you see, just another long list
Speaker 1: of superlatives for bitcoin. This was the single biggest intra
Speaker 1: day drop since January. And again it's a two day story, right,
Speaker 1: a violent u turn because we saw bitcoin pushed towards
Speaker 1: forty dollars per token following that FED decision to raise
Speaker 1: rates by fifty basis points the commentary from FED chair
Speaker 1: j Pale, and then we just drop off and we're
Speaker 1: down back towards thirty six thousand dollars per token. In
Speaker 1: this higher rate environment, bitcoins traded in a very narrow range.
Speaker 1: It's struggled to break out of that range. We've never
Speaker 1: really got back to the highs that we had at
Speaker 1: the start of the year, and we saw other old
Speaker 1: coins like Salana, for example, selling off during and ether
Speaker 1: as well during the session on Thursday. Earning season continues though,
Speaker 1: and there are some after hours movies that I want
Speaker 1: to look at. Lucid reaffirming it scary idents to build
Speaker 1: between twelve thousand and fourteen thousand vehicles this year, but
Speaker 1: it's raising prices because supply chain issues are ongoing. The
Speaker 1: stock trading water in after our zero really interesting, big
Speaker 1: set off in zero down nine and a half percent,
Speaker 1: tepid outlook, and the worry here is that higher rates
Speaker 1: the Fed impacts mortgage rates and that could impact will
Speaker 1: cool off the housing market. And look Block End. We
Speaker 1: haven't spoken about Block in a while, right, formerly known
Speaker 1: as Square up ten percent, and after hours they're talking
Speaker 1: about strength in their traditional payments processing business. And very
Speaker 1: quickly during the session Thursday, there were just two stocks
Speaker 1: on the NASA in the green, one of them Booking
Speaker 1: Holdings up three point three percent, earnings, bullish outlook, a
Speaker 1: summer of travels coming Emily. But just a few day
Speaker 1: days ago Expedia said exactly the same thing. They're down
Speaker 1: six point seven percent on Thursday. M A lot of
Speaker 1: narrative of Expedia recession fears might hit them, A lot
Speaker 1: of love for booking, not really sure what's going on that?
Speaker 1: All right, Well I got someone who might have an
Speaker 1: opinion about that thing. You as ed said. Expedia shares
Speaker 1: tumbling since their earnings report earlier this week. This is
Speaker 1: rising inflation and a potential recession looms over the summer
Speaker 1: travel season ahead. Joining me now, Peter Kurrent, Vice harre
Speaker 1: and CEO of the Expedia group to talk about that
Speaker 1: and more so. Look, Peter, you saw the chart. What's
Speaker 1: your reaction to that. Yeah, I mean we weren't expecting it.
Speaker 1: I think people are overreacting to, uh, some of the
Speaker 1: inflation worries, some of the other travel players and concerns.
Speaker 1: But we haven't seen any of any of the inflation
Speaker 1: worries affecting the booking so far going into you know,
Speaker 1: the summer season and in other and longer stays. So
Speaker 1: we were a little surprised. We thought it was a
Speaker 1: good quarter and uh, you know, I think I think
Speaker 1: we expect a continued good travel season despite inflation concerns.
Speaker 1: So there's no question that people want to travel, aken,
Speaker 1: but at what point does inflation sap that demand? Yeah,
Speaker 1: I think what we saw through COVID that you know,
Speaker 1: on a macro basis, was a lot of savings in
Speaker 1: most households. Uh and also and overspending consumer goods. And
Speaker 1: what we're starting to what we've expected to see and
Speaker 1: what we've been starting to see is a sort of
Speaker 1: a fall back to norms and probably an overspend on services,
Speaker 1: including travel and hospitality. So we've been expecting that, and
Speaker 1: that seems to be playing out. Obviously long long term,
Speaker 1: who knows on inflation, but in the near term, inflation
Speaker 1: worries don't seem to be canceling people's ambition to travel,
Speaker 1: whether they might maybe rewrite down what they're hoping to do,
Speaker 1: you know, maybe not Paris but San Diego. You know,
Speaker 1: we might see some of that. But again, we expect
Speaker 1: people to travel regardless, and you know, we participate in
Speaker 1: all segments of travel, and if if people travel a
Speaker 1: little more modestly, you know, we'll pick that up. So
Speaker 1: we we expected to be strong, at least for the
Speaker 1: foreseeable future. So you saw a steep rise in bookings
Speaker 1: compared to last year, but you're still not back to levels.
Speaker 1: I spoke to Airbnb CEO Brian Chansky just yesterday. Somehow
Speaker 1: he always comes on the day before you, so I
Speaker 1: have to get your reaction to it. Uh. You know,
Speaker 1: he talked about how they are now ahead of pre
Speaker 1: pandemic levels even in cities. Take a listen to what
Speaker 1: he had to say. Well, it's already fully I mean,
Speaker 1: it's already above at this very moment with Airbnb. I
Speaker 1: can't say it's above for everyone. I don't know if
Speaker 1: hotels are back to planting levels, but we are next time, Peter,
Speaker 1: you're gonna have to come on twenty four hours before hiking.
Speaker 1: But either way, Look, what's you're reacting? You know, how
Speaker 1: do you explain some of the differences that we're seeing. Sure, well,
Speaker 1: a couple of things. One is, you know, we saw
Speaker 1: very robust growth in our alternative commenta Inverbo during COVID,
Speaker 1: as did Airbnb in segments, and as cities have come
Speaker 1: back for them. Uh more. You know, cities aren't fully back,
Speaker 1: but cities have done better in the last quarter. Uh
Speaker 1: and so they're getting the benefit that Verbo for us
Speaker 1: doesn't really participate in urban markets. So we've both been
Speaker 1: strong throughout COVID, and I think the extra lift of
Speaker 1: cities coming back put them into positive territory. But what
Speaker 1: Brian referred to, which is true. Hotels are not fully
Speaker 1: back across the globe. Not all geographies are back across
Speaker 1: the globe. So our mix of business, which you know,
Speaker 1: we have markets like in North America where we are
Speaker 1: fully back and more, and we have markets like a
Speaker 1: Pack that are still way under where they've been because
Speaker 1: they're still largely closed down. So it's a mix of business.
Speaker 1: And that's what the story has been really throughout most
Speaker 1: of COVID, which is depending on where you were strong.
Speaker 1: If you were in a strong place and the business
Speaker 1: was there because of COVID, you did well. And as
Speaker 1: COVID unravels and we start to see cities come back,
Speaker 1: long haul international come back, you know, all the corridors
Speaker 1: open geographically, that business will be back. We are definitely
Speaker 1: back and more than back in many markets. You've got
Speaker 1: some other news today unveiling your Expedia group Open World
Speaker 1: ECONMMER platform. What is this and how is it going
Speaker 1: to augment the broader business? Yeah, So, as you know,
Speaker 1: we've talked before about how we've been re platforming our
Speaker 1: technology to drive our own B two C business faster.
Speaker 1: But what we realized in doing that was that if
Speaker 1: We built our platform to be externalizable, essentially in micro services,
Speaker 1: that we could provide the underpinnings for travel commerce for
Speaker 1: really any players. We have a very robust B two
Speaker 1: B business. We power lots of airlines selling rental cars
Speaker 1: or packages. We power rewards programs, we power a RPS
Speaker 1: travel program, many things, but these are big enterprise level deals.
Speaker 1: What we're building now is an ability to sort of
Speaker 1: take our whole stack and turn it into micro services.
Speaker 1: So if if a partner just wants to use our
Speaker 1: service capabilities or payment capabilities, or any parts of our
Speaker 1: e commerce stack or the whole thing, or sell cars
Speaker 1: or just activities or anything to augment their business, we
Speaker 1: can provide that capability so that we think it's going
Speaker 1: to dramatically expand the number of partners we can have
Speaker 1: in our B two B universe, which ultimately expands how
Speaker 1: much travel we can sell for our partners and how
Speaker 1: many travelers we can serve. All right, Peter Kerr, Vice
Speaker 1: Sharon CEO of the Expedia Group. Always good to have
Speaker 1: your view of the future here on the show. Peter,
Speaker 1: Thank you. Thanks Emily. Coming up Bitcoin plunging the most
Speaker 1: in January, what's going on? There. We'll have all the
Speaker 1: details next, Mrs Bloomberg. Let's get to our crypto report now.
Speaker 1: With Bitcoin dropping the most into January, this is the
Speaker 1: market route deepens and its concerns about a recession. Bloom
Speaker 1: with Katie Greifeld here for more. Katie, take it away. Well, Emily, first,
Speaker 1: I want to start big and just walk through what
Speaker 1: a horrible day in markets this was. If you look
Speaker 1: at the SMP five hundred, the biggest stock benchmark in
Speaker 1: the world, it was down three point six percent today. Somehow,
Speaker 1: that's only the worst day in a week. A lot
Speaker 1: of that pain came in tech stocks, so the NAZAC
Speaker 1: one hundred, that was its worst stay since September twenty.
Speaker 1: A lot of that selling came in the biotech sector.
Speaker 1: I saw a great stat today that if you look
Speaker 1: at that sector, a fifth of it is worth less
Speaker 1: than the cash it holds. But a lot of that
Speaker 1: pain came in those speculative tech areas. You're looking at
Speaker 1: the Arc Innovation a t F down eight point nine percent.
Speaker 1: That's after it's it's biggest inflow in about a year
Speaker 1: earlier this week. That's got to hurt. But yeah, a
Speaker 1: lot of the action was in Bitcoin, the world's largest cryptocurrency,
Speaker 1: down eight point four percent today. If you zoom out
Speaker 1: and look over, you know, a five a period, it's
Speaker 1: down eight point six per cent. So a lot of
Speaker 1: that pain just came today and again. But if you
Speaker 1: go back to the stock market, really really painful consumer discretionary,
Speaker 1: a lot of selling in that sector, a lot of
Speaker 1: selling in the e commerce names in particular. I'm thinking
Speaker 1: about Amazon, I'm thinking about eBay and Tesla of course
Speaker 1: also selling off in a big way with that text
Speaker 1: sell off, So it wasn't just Bitcoin. To be clear,
Speaker 1: just how broad based was this sell off, it was
Speaker 1: pretty remarkable, Emily, really the space, the whole cryptocurrency ecosystem,
Speaker 1: it tends to move as one. But most of the
Speaker 1: losses came in Bitcoin, which I thought was interesting. If
Speaker 1: you compare that to ethereum, for example, that's the second
Speaker 1: largest cryptocurrency, it was only down six point four percent,
Speaker 1: only being a relative term there. So yeah, Bitcoin sort
Speaker 1: of the underperformer among the big coins. But if you've
Speaker 1: broughten out and look at some of the old coins,
Speaker 1: I'm thinking about Avalanche, I'm thinking about so Lana. Those
Speaker 1: were down as much as fifteen percent at one point
Speaker 1: at the worst of it. And again this is all
Speaker 1: as we talk about the FED, the macro environment, liquidity
Speaker 1: coming out of that syst the system. What does that
Speaker 1: mean for cryptocurrencies? And it seems so far it's not
Speaker 1: too good. And you know, let's talk a little bit
Speaker 1: about some of the companies that have made bitcoin crypto
Speaker 1: a part of their business in ways large and small.
Speaker 1: How did this impact them? Well, I mean, we gotta
Speaker 1: go straight to micro Strategy for that, right, I mean,
Speaker 1: in what was interesting about the earnings report obviously Bitcoin,
Speaker 1: they took a hit on their Bitcoin holdings. We know
Speaker 1: that Bitcoin has had a rough couple of months. But
Speaker 1: was really interesting was on the earnings call you heard
Speaker 1: micro Strategy CFO line out that if Bitcoin falls to
Speaker 1: twenty one dollars per coin, micro Strategy would face a
Speaker 1: margin call at that point and probably have to sell
Speaker 1: some of their Bitcoin holdings. Of course, Bitcoin it's not
Speaker 1: close to their yet, it's still hovering around thirty six
Speaker 1: thousand dollars a coin. But if this trend continues, and
Speaker 1: the trend has been lower, we could get there conceivably.
Speaker 1: All right, lots to watch ahead. Bloomberg's Katie Greifeld, thank
Speaker 1: you for that update. When I get back to the
Speaker 1: markets in a minute. But earlier I spoke with Uber
Speaker 1: CEO dar kas Rasha. He asked for his reaction to
Speaker 1: Uber shares taking a leg down even after releasing earnings
Speaker 1: early to avoid comparisons to Lift, take a listen. I
Speaker 1: think the reaction to Lift was significantly more negative than
Speaker 1: than Uber. So maybe we're not in the same boat,
Speaker 1: but it definitely affected us, and I do think we're
Speaker 1: just in completely different places. You know. You see with
Speaker 1: Uber is the benefit of scale, the benefit of globalization,
Speaker 1: the benefit of diversification, and the benefit of discipline in
Speaker 1: these in these markets. You know, we are by far
Speaker 1: the number one player in the US have been for
Speaker 1: some period of time. So when earners looked to come
Speaker 1: back to the marketplace and start earning in a flexible way,
Speaker 1: they're coming to Uber feet and that's a real advantage.
Speaker 1: When they come to Uber, they're busy all the time,
Speaker 1: not only driving people around, but also delivering or shopping, etcetera.
Speaker 1: The opportunities to earn on the platform are greater than
Speaker 1: ever and in a reopening scenario, a lot of advantage
Speaker 1: comes to the number one player and the number two
Speaker 1: player in this case left maybe having a hard time.
Speaker 1: From a globalization standpoint, everyone knows that the reopening outside
Speaker 1: of the US has happened much faster. So we have
Speaker 1: been dealing with reopening dynamics bringing drivers back onto the platform.
Speaker 1: We made big investments last year. For some period of time,
Speaker 1: we've been used to this. We built muscles to do it,
Speaker 1: and we're much more diversified so that we can you know,
Speaker 1: lead into the West Coast which is reopening fast, while
Speaker 1: you know the East Coast has lots of profitability. UK
Speaker 1: all over the world, we have lots of profits to
Speaker 1: pull from so that we can lean into reopenings. But
Speaker 1: we're not too dependent on one place. We're just a
Speaker 1: very different global player. And then from a different cecifically standpoint,
Speaker 1: we've had delivered be a very very big part of
Speaker 1: our business. And as with reopening, delivery growth rates, while
Speaker 1: they're healthy, um, they're not growing quite as fast. So
Speaker 1: we're able to take careers who used to be drivers.
Speaker 1: A bunch of our courage used to be drivers. They're
Speaker 1: not driving people because of safety concerns. Now the COVID
Speaker 1: safety concerns are largely behind us. We can bring them
Speaker 1: back to drive, or we can hire, or we can
Speaker 1: bring owners onto the platform, both to deliver things and
Speaker 1: to drive people. We just have a very fundamental business
Speaker 1: advantage over any monolone player out there. So you're saying
Speaker 1: when drivers come back, they're going to come back to
Speaker 1: Uber first. And you did say you don't plan to
Speaker 1: significantly increase incentive investments to get those drivers back. Lift
Speaker 1: is planning to increase those investments. And I talked to
Speaker 1: John zim Or, the president of Lift, about why take
Speaker 1: a listen to what he had to say. I'm not concerned. Uh.
Speaker 1: And in fact, the message we're saying is that we
Speaker 1: see the demand coming back and therefore we want to
Speaker 1: invest in supply. So this is part of the reason
Speaker 1: their stock one off a cliff. Are you saying you
Speaker 1: won't have to increase incentives and that this won't lead
Speaker 1: to a subsidy war, because that's what we've seen in
Speaker 1: the past. We have already invested in incentives. Remember Europe
Speaker 1: opened up last year, Latin America has has already opened,
Speaker 1: so we have been through this exercise before last year.
Speaker 1: Lift is a year behind us in some aspects as
Speaker 1: far as the reopening goes. So we're very very confident
Speaker 1: in terms of demand coming back. We're very confident in
Speaker 1: terms of supply. Remember we have a structural advantage and
Speaker 1: that we can bring on couriers which are easier to
Speaker 1: bring on, we can upsell them into driving because the
Speaker 1: earnings opportunities now are very very significant. Uh. And as
Speaker 1: a result of this fundamental structural advantage, we're confident not
Speaker 1: only in top line growth, but also in margins. Remember
Speaker 1: we guided lift, you know, I think there are numbers
Speaker 1: one from seventy five million and even DA to fifty
Speaker 1: and a guide at ten to twenty. During that same period,
Speaker 1: we've gone from eighty six million to a hundred sixty
Speaker 1: eight million to two hundred forty two seventy millions. So
Speaker 1: we've been headed in opposite directions for some period of time,
Speaker 1: and I think based on what we heard from them,
Speaker 1: we're headed up. We're headed into pre cash fuow territory.
Speaker 1: You did report a massive loss five point nine billion
Speaker 1: dollars in part tied to your other investments, Aurora D.
Speaker 1: D Grab Are you reassessing your strategy at all? Here?
Speaker 1: We're not reassessing your strategy. You know, those investments were
Speaker 1: part of mergers and acquisitions, different activities, and I think
Speaker 1: we made the right moves, as you can see based
Speaker 1: on the operating results that were displaying, which are absolutely
Speaker 1: industry leading. We're going to take a careful look at
Speaker 1: those equity UH stakes. We have plenty of liquidity. We're
Speaker 1: moving towards free casual profitability, so we will look to
Speaker 1: monetize those stakes in return capital. When we're two the
Speaker 1: one way the other tour shareholders over a period of time.
Speaker 1: But we're caught in the same down draft that everybody
Speaker 1: else is caught in right now, uber CEO dar Causa
Speaker 1: shot he there. You can catch that full interview at
Speaker 1: Bloomberg dot com. I want to get back to today's
Speaker 1: market meltdown and bring in Robert Kentwell Upholdings portfolio manager.
Speaker 1: Robert just how many companies are gonna get caught in
Speaker 1: this down draft and how long does it last? Family.
Speaker 1: It's been pretty ugly, but we are almost at the
Speaker 1: end of earning season here, and your your team has
Speaker 1: done a great job of reporting a lot of the
Speaker 1: bad numbers out there. Um e Commerce has had its
Speaker 1: first negative quarter year every year and just about as
Speaker 1: far back as most folks can remember, even in the
Speaker 1: first half of commerce was still up over the last year,
Speaker 1: and that has a lot of repercussions to other industries, software, rides, sharing, advertising, Well,
Speaker 1: with these so awful to be frank, we think there's
Speaker 1: something big going on here, and we think investors are
Speaker 1: reevaluating whether or not these are actually technology companies with
Speaker 1: limitless scale and low hot pretty costs. Well, you have
Speaker 1: Netflix is now being valued like a cable station. Other
Speaker 1: investors are looking at Facebook's meta's capital intensity and saying
Speaker 1: is this does their future look more like a T
Speaker 1: and T S than it does Google? And you've seen
Speaker 1: multiples re rate faster than we've seen in a really
Speaker 1: long time across these assets because investors not, in our opinion,
Speaker 1: they've likely moved too far in that direction. But you know,
Speaker 1: we've got to do our jobs and pass through it
Speaker 1: and find the good deals here. Meantime, you've had a
Speaker 1: flood of retail investors coming into this market over the
Speaker 1: last couple of years thanks to companies like robin Hood.
Speaker 1: What happens to them, well, a lot of them might
Speaker 1: not exist. You saw something very similar in the in
Speaker 1: the in the late nineties, Internet boom. If you remember
Speaker 1: the explosion of the trades and the merriage trades, and
Speaker 1: a lot of those businesses ultimately had to merge to
Speaker 1: stay alive. Someone out of business, uh, someone private. And
Speaker 1: you know, this Twitter deal very well could be the
Speaker 1: first big transaction that we're seeing, but far from the last.
Speaker 1: So we expect a lot of consolidation. We expect some shutdowns. Uh.
Speaker 1: We we expect the I p O window to remain
Speaker 1: pretty darn't shut So we don't think over the next
Speaker 1: twelve months, you're you're more likely to see a shrink
Speaker 1: in the total number of companies available for investment, uh,
Speaker 1: than you are to see new companies available for investment.
Speaker 1: Where do you expect to see consolidation? Who do you
Speaker 1: expect to see shut down? Well, the worst the business model,
Speaker 1: the more likely to consolidation. So you could you've had
Speaker 1: a lot of the right sharing books on here in
Speaker 1: the last twenty four hours. That space is just desperate for,
Speaker 1: you know, continued consolidation. Just Eat Takeaway and door Dash
Speaker 1: have been big consolidators. Uber's tried to be now they're
Speaker 1: now they're investing. So we think that space is just
Speaker 1: going to continually have to do deals amongst its until
Speaker 1: they get to a small enough under a number of
Speaker 1: players to be profitable. Um, what should buy lift? Ah?
Speaker 1: Have you ever seen two businesses more in need of
Speaker 1: a merger? But like the right sharing space is really
Speaker 1: challenging because they're they're competing for the same thing ultimately,
Speaker 1: which is they thought these You know, I was in
Speaker 1: San Francisco with you for the last ten years while
Speaker 1: these businesses were quickly being built up, and they were
Speaker 1: parading themselves as these as these complicated, fast growing software platforms,
Speaker 1: and they were treating humans like commodities. And if we've
Speaker 1: learned anything over the past two years here, humans are
Speaker 1: actually a very precious input cost into the function of
Speaker 1: these businesses, and those business models are more dependent on humans.
Speaker 1: And it's just about any business you've seen come out
Speaker 1: of Silicon Value in the last decade. And that is
Speaker 1: a really competitive place to be and it's a really
Speaker 1: hard place for investors to sit around and be patient
Speaker 1: for them to find ways of scaling those business models.
Speaker 1: So how long does this drag out? How long are
Speaker 1: we in the red here? Well? Amazon told us that
Speaker 1: starting on May fifteen, growth rates relative to last year
Speaker 1: would start to look better and better, um, and we
Speaker 1: tend to believe them. If you remember last year, the
Speaker 1: first half was incredibly strong, the fastest growth you've seen
Speaker 1: in the US and last fifty years. The second half
Speaker 1: totally different story, one of the worst holiday seasons that
Speaker 1: the US has experienced in twenty years. So the comps
Speaker 1: relative to last year are going to keep improving. That
Speaker 1: likely investors tend to have existential crisis when growth rates
Speaker 1: are slowing down and management teams are surprised at how
Speaker 1: poorly their businesses are performing. But it's gonna get a
Speaker 1: lot easier as the year goes on. And it's very
Speaker 1: possible that as you see some of these growth rates
Speaker 1: start to stabilize glat into last year's numbers, you might
Speaker 1: see some of these multiples come back to more middling ranges. Well,
Speaker 1: that sounds like somewhat of a silver lining. Upholdings Portfolio
Speaker 1: Manager Robert Knt, Well, thanks for giving it to us
Speaker 1: straight of prey shade it. That does it for this
Speaker 1: edition of Bloomberg Technology. Were going to continue to follow
Speaker 1: the sell off right here on the show and on
Speaker 1: Bloomberg Television over the next twenty four hours. And guess
Speaker 1: who's coming on tomorrow Doortos CEO Tony Shoe will ask
Speaker 1: him if consolidation is in the future. And don't forget
Speaker 1: to check out our podcast anywhere you get your podcasts.