WEBVTT - TSMC Jumps and Tesla Falls 0:00:01.440 --> 0:00:05.120 From the heart where Innovation, money and power colle in 0:00:05.240 --> 0:00:06.720 Silicon Valley, NBN. 0:00:07.080 --> 0:00:11.120 This is Bloomberg Technology with Caroline Hyde and Ed loved Love. 0:00:24.239 --> 0:00:26.440 I'm Karen hide A Bloomberg's Voltec quarters in New York. 0:00:26.520 --> 0:00:29.560 Ed Ludlow is on assignment. This is Broomberg Technology coming up. 0:00:29.640 --> 0:00:32.920 T SMC shares jump the most. It's February despite a 0:00:32.960 --> 0:00:36.000 global slump and chip demand and warnings of softness but 0:00:36.080 --> 0:00:40.440 size of stabilization. We discuss Tesla risking margins in order 0:00:40.479 --> 0:00:43.120 to boost sales volumes. The company has been cutting car 0:00:43.159 --> 0:00:46.200 prices on a near monthly basis, and Elon Musk hinted 0:00:46.400 --> 0:00:49.480 and more cuts to come. And SpaceX is one step 0:00:49.520 --> 0:00:52.480 closer to getting humans to Mars after getting its starship 0:00:52.560 --> 0:00:55.480 off the ground. We'll break down the surprise ending to 0:00:55.520 --> 0:00:58.400 the historic launch the first. As always, we check in 0:00:58.440 --> 0:01:01.440 on these markets and as you see, we're actually getting 0:01:01.440 --> 0:01:03.880 some reprieve to some of the individual movers today. We 0:01:03.920 --> 0:01:05.880 wanted to go more broad to start, but I'll go 0:01:05.920 --> 0:01:08.240 in on the micro for the first and foremost. IBM 0:01:08.680 --> 0:01:11.360 currently up nine tens percent as it gave a forecast 0:01:11.360 --> 0:01:14.360 for annual revenue in line with analyst projections delivering of 0:01:14.400 --> 0:01:18.600 cautiously optimistic sign perhaps amid this uncertain economy, LAM Research 0:01:18.680 --> 0:01:22.080 up seven point seven percent, really managing to outperform as 0:01:22.080 --> 0:01:25.240 some of those China curbs aren't impacting the company quite 0:01:25.280 --> 0:01:27.520 as much as it had anticipated. Remember this has come 0:01:27.640 --> 0:01:30.240 as we have breaking news that Biden is to unveil 0:01:30.400 --> 0:01:34.360 China investment curbs before the G seven summit in May. 0:01:34.640 --> 0:01:36.720 We moved back to the broader in the season nasdakov 0:01:36.760 --> 0:01:39.600 by five tenths seven percent. We're still worried about the economy. 0:01:39.640 --> 0:01:42.720 The headwinds we see actually signs more of those recessionary 0:01:42.840 --> 0:01:45.200 headwinds upon us, some of the jobless claims coming in 0:01:45.280 --> 0:01:49.640 higher than expecting, some of those business macro data not 0:01:49.840 --> 0:01:52.000 ringing quite so strong. Today. We see the two year 0:01:52.040 --> 0:01:55.120 yield therefore fall on the back of perhaps potential for 0:01:55.160 --> 0:01:57.080 the Federal Reserve not have to hike quite so far 0:01:57.160 --> 0:01:59.680 so fast. We're at four point one six bitcoin as 0:01:59.680 --> 0:02:01.840 we see some risk aversion down by two and a 0:02:01.880 --> 0:02:04.760 half percent. Now, all of this is as we try 0:02:04.800 --> 0:02:07.320 to digest what's happening in LAM Research on the higher 0:02:07.360 --> 0:02:10.360 side of things in terms of chips. But what we 0:02:10.400 --> 0:02:14.280 saw interestingly is moved some TSMC in particular actually rising 0:02:14.639 --> 0:02:18.400 even though perhaps we saw well signs of concern around 0:02:18.440 --> 0:02:21.160 this business, seeing am places to say, is here with us, 0:02:21.400 --> 0:02:25.400 just walk us through the ADRs of TSMC up even 0:02:25.440 --> 0:02:27.919 though what we're still bottoming when it comes to the 0:02:27.960 --> 0:02:29.400 chip cycle. According to the CEO. 0:02:29.720 --> 0:02:32.080 Yeah, and the results were much better than feared. You 0:02:32.080 --> 0:02:35.919 could see their pricing actually grew eleven percent, even though 0:02:35.960 --> 0:02:38.960 way for shipments were down fifteen percent. But the pricing 0:02:39.000 --> 0:02:42.200 held up quite nicely, which is reflected in the gross margin. 0:02:42.280 --> 0:02:46.440 So compare TSMC's gross margin versus microns. Microns was the 0:02:46.520 --> 0:02:49.799 worst quarter in the history of the company negative thirty 0:02:50.080 --> 0:02:53.000 one percent in the case of TSMC, two to three 0:02:53.080 --> 0:02:56.040 hundred basis point decline, and the pricing, like I said, 0:02:56.080 --> 0:02:59.040 held up very well. So and they didn't cut capex 0:02:59.080 --> 0:03:01.760 ahead of the ear there will speculation they're going to 0:03:01.919 --> 0:03:04.880 cut their capex. That didn't happen. The room for the 0:03:04.960 --> 0:03:06.640 reaffirm the capex for this year. 0:03:06.720 --> 0:03:09.160 And the reason they're spending is because they have to 0:03:09.200 --> 0:03:12.560 diversify their own supply chain for their end user, largely 0:03:12.600 --> 0:03:14.919 because of what Joe Biden's doing in terms of executive 0:03:15.000 --> 0:03:17.079 orders to target China US relations. 0:03:17.120 --> 0:03:21.040 Absolutely, they have to open overseas fabs. One in Arizona, 0:03:21.200 --> 0:03:25.079 one in Japan. They're talking about, you know, production being 0:03:25.160 --> 0:03:29.160 live by twenty twenty four, So clearly they are diversifying. 0:03:29.160 --> 0:03:31.560 They have no choice, and that is where the gross 0:03:31.560 --> 0:03:35.080 margin impact may show up, because those fabs aren't going 0:03:35.120 --> 0:03:37.160 to be as profitable as the ones they have in 0:03:37.200 --> 0:03:40.400 Taiwan right now. So that's the longer term risk they 0:03:40.440 --> 0:03:44.160 have because as they diversify their locations and the factories, 0:03:45.040 --> 0:03:47.280 it will have an impact on their pricing and you 0:03:47.280 --> 0:03:49.560 know the cost structure. So clearly that's a risk. But 0:03:50.000 --> 0:03:53.440 they have the visibility and the commemits from their you know, 0:03:53.520 --> 0:03:57.520 strategic partners like Apple, like Nvidia, these are the customers 0:03:57.520 --> 0:04:00.840 of PSMC, and they have visibility for you know, demand 0:04:00.920 --> 0:04:05.080 on like the three nanometer node, the two nanimeter node, 0:04:05.600 --> 0:04:09.000 they will run at full utilization. I'm worried about Intel 0:04:09.120 --> 0:04:12.440 and you know what will happen to them because of 0:04:12.480 --> 0:04:15.400 what we solve with Micron. And I think if you 0:04:15.520 --> 0:04:18.480 are diversified right now, you are in a good spot. 0:04:18.680 --> 0:04:23.159 TSMC's exposure to high performance computing was forty four percent 0:04:23.160 --> 0:04:26.640 of their revenue. Remember smartphones was the largest segment. Now 0:04:26.640 --> 0:04:30.479 it's high performance computing. That's where the AI chips come 0:04:30.480 --> 0:04:32.960 into play. And I think if you're not diversified right 0:04:33.000 --> 0:04:35.680 now as a chip manufacturer, you have a problem. 0:04:35.720 --> 0:04:38.760 So you push us perfectly forward. It's trying to sort 0:04:38.760 --> 0:04:40.720 of read the tea leaves when an IBM is out 0:04:40.720 --> 0:04:43.400 there saying, actually, we're a bit more upbeat despite and 0:04:44.040 --> 0:04:46.920 you know, slowing and headwind economy. We've got companies. You 0:04:47.000 --> 0:04:48.120 just have to be in the right place at the 0:04:48.160 --> 0:04:50.120 right time to weather this current quarter right. 0:04:50.200 --> 0:04:54.120 Absolutely, Autos again, Bryce autos revenue grew thirty eight percent. 0:04:54.240 --> 0:04:56.520 Is still small, but it could be the next high 0:04:56.560 --> 0:05:00.680 performance computing segment. Remember high performance computing was much smaller 0:05:00.720 --> 0:05:04.240 three years back. So that's where if you're a manufacturer 0:05:04.560 --> 0:05:07.400 you need to diversify. And I think Intel that's what 0:05:07.440 --> 0:05:09.120 they need to show when they report earnings. 0:05:09.520 --> 0:05:11.520 Don't tell me Internet of Things is actually becoming a 0:05:11.560 --> 0:05:13.839 reality man, deep thing. We love them on there, just 0:05:13.880 --> 0:05:15.400 pushing us forward to what you need to be worried 0:05:15.440 --> 0:05:18.000 about with the next set of earnings. Let's go from 0:05:18.120 --> 0:05:20.880 chips to evs now in terms of earnings and Tesla 0:05:21.200 --> 0:05:23.760 actually down quite hard today after its first quarter margins 0:05:23.800 --> 0:05:26.000 were hit by a slew of price cuts. 0:05:26.560 --> 0:05:30.800 While we reduced prices considerably in early Q one, it's 0:05:30.800 --> 0:05:33.240 worth noting that our operating margin remains among the best 0:05:33.240 --> 0:05:36.039 in the industry. We've taken a view that pushing for 0:05:36.080 --> 0:05:39.040 higher volumes and a larger fleet is the right choice 0:05:39.040 --> 0:05:43.160 here versus a lower volume and higher margin. 0:05:43.560 --> 0:05:46.040 Let's bring in the Wesley Group managing partner and former 0:05:46.120 --> 0:05:48.880 Tesla board member Steve Wesley for more on this. So 0:05:49.440 --> 0:05:52.080 is this the right course of action short term pain 0:05:52.560 --> 0:05:53.800 for long term market share? 0:05:55.000 --> 0:05:56.200 Well, I think it absolutely is. 0:05:56.279 --> 0:05:58.719 I mean, look at the solid Q and results record 0:05:58.720 --> 0:06:01.680 deliveries sold to four hundred twenty three thousand units on 0:06:01.760 --> 0:06:04.000 a way to doing one point nine to two million 0:06:04.080 --> 0:06:07.359 units this year. That's studying twenty three point three billion 0:06:07.360 --> 0:06:11.280 in revenues, slightly above forecast net profit two point five 0:06:11.360 --> 0:06:15.560 billion for the fifteenth consecutive profitable quarter, share price up 0:06:15.600 --> 0:06:18.680 fifty one percent for the year. Aren't argue with those numbers, 0:06:18.920 --> 0:06:21.440 but I think they're doing the right thing, cutting costs, 0:06:21.880 --> 0:06:23.039 expanding market share. 0:06:23.200 --> 0:06:24.320 That is a smart move. 0:06:24.680 --> 0:06:26.640 I mean, as you say, revenue is rising it raise 0:06:26.680 --> 0:06:29.680 twenty four percent. But you say it's hard to argue, 0:06:30.120 --> 0:06:33.680 but investors are arguing they're cutting the overall market capitalization 0:06:33.720 --> 0:06:36.680 of this company on the day pretty hard. What do 0:06:36.720 --> 0:06:38.400 you think investor has got wrong? Do they just get 0:06:38.400 --> 0:06:40.039 too ambitious in the short term? 0:06:40.880 --> 0:06:42.920 I think there is probably a bit of a billion's 0:06:42.960 --> 0:06:45.000 in the marketplace. But I think as people step back 0:06:45.000 --> 0:06:49.760 and look at this, as Elon said, this is essentially 0:06:49.760 --> 0:06:52.080 one of the most profitable auto companies in the world. 0:06:52.160 --> 0:06:54.960 They can afford to trigger a global price for it, 0:06:55.000 --> 0:06:57.400 and that is just what they're doing. They're taking price cuts, 0:06:58.200 --> 0:07:01.960 prices down six times this year, already twice more in 0:07:02.000 --> 0:07:05.200 the last thirty days. That's stunning. But they can afford 0:07:05.240 --> 0:07:09.000 to do it. Others can't. What's interesting here people need 0:07:09.040 --> 0:07:12.240 to understand, they say, is there a demand issue? 0:07:12.440 --> 0:07:15.240 Absolutely not. The entire world is going all electric. 0:07:16.040 --> 0:07:20.840 Customers bought ten million electric vehicles last year. They're projected 0:07:20.880 --> 0:07:23.880 to be at twenty million vehicles a year within just 0:07:24.040 --> 0:07:26.440 three years, so there's not going to be a shortage 0:07:26.480 --> 0:07:30.000 of demand. Elon I think is smart. He's buying market 0:07:30.040 --> 0:07:32.160 share when they can, and I think that move's. 0:07:31.880 --> 0:07:32.520 Going to pay off. 0:07:32.680 --> 0:07:35.880 I mean it's worth reatrating yet operating margin is down, 0:07:35.920 --> 0:07:38.320 but it's still above eleven percent. You look at GM's 0:07:38.520 --> 0:07:40.720 that's just six point six percent. You look at Forwards, 0:07:40.800 --> 0:07:44.800 that's just four percent. What is there any concern around 0:07:44.920 --> 0:07:47.640 Elon and his navigation of this company at the moment, 0:07:47.720 --> 0:07:51.320 He's meant to be giving us the Cyberdrup production pretty soon, 0:07:51.640 --> 0:07:53.840 but he is still kind of distracted, it feels like, 0:07:53.960 --> 0:07:56.680 with what's going on with Twitter, and he's also got 0:07:56.720 --> 0:07:59.400 a space company that is running and making big strides 0:07:59.400 --> 0:08:00.720 on Well. 0:08:00.720 --> 0:08:05.720 Look, who knows how distracted he is. Just looking at 0:08:05.760 --> 0:08:08.400 the numbers, you've got to be pleased. Where the car 0:08:08.440 --> 0:08:11.360 company that's going from one point three to one million 0:08:11.440 --> 0:08:14.360 in vehicle sales last year to one point nine or 0:08:14.400 --> 0:08:17.520 two million this year. Factually, they're just growing faster than 0:08:17.560 --> 0:08:22.000 anybody else out there. Second, because Tesla has been smarter 0:08:22.360 --> 0:08:26.760 and executed better on the profitability issue because of three things. First, 0:08:26.800 --> 0:08:30.320 to bring battery production in house that lowers costs. Second, 0:08:30.360 --> 0:08:33.760 the clear Leader and what's called Ota software. They're miles 0:08:33.800 --> 0:08:36.920 ahead of anybody else on that. Third, the clear Leader 0:08:36.960 --> 0:08:40.720 and the robotization of the manufacturing process. They get cars 0:08:40.840 --> 0:08:43.560 produced in a fraction of the time of others. What 0:08:43.640 --> 0:08:46.000 does that lead to two ex The gross margins of 0:08:46.040 --> 0:08:48.440 Old So I get three ex. The gross margins of Toyota, 0:08:48.720 --> 0:08:52.520 almost five x the gross margins of Ford. Now those 0:08:52.600 --> 0:08:54.559 numbers will come down a little bit, but as long 0:08:54.600 --> 0:08:58.400 as he can expand the Tesla name, I think Tesla's 0:08:58.440 --> 0:08:59.520 going to be looking awfully good. 0:08:59.559 --> 0:09:01.439 Ian's a move. 0:09:01.280 --> 0:09:03.040 That may hurt him a little bit for the short term, 0:09:03.040 --> 0:09:05.440 but it's going to pay big dividends for the long term. 0:09:05.559 --> 0:09:08.240 Steve, you talk about how demand is not the issue here. 0:09:08.280 --> 0:09:10.760 I just want to bring in another viewpoint from a 0:09:11.120 --> 0:09:14.800 key senior equity strategist that federated Hermes. That's one Linda Distil. 0:09:14.880 --> 0:09:16.120 Just have it Listen to what she had to say. 0:09:16.880 --> 0:09:19.040 As we know in these last couple of years with COVID, 0:09:19.120 --> 0:09:21.080 first she couldn't find a car, and then there were 0:09:21.120 --> 0:09:23.320 too many cars, you know, there was a glut of 0:09:23.400 --> 0:09:26.040 used cars, et cetera. And so now and now we 0:09:26.120 --> 0:09:30.040 have Tesla saying basically saying, we'll sacrifice margins in the 0:09:30.160 --> 0:09:33.320 name of using this factory space that we have. So 0:09:33.440 --> 0:09:37.920 as long as the consumer still has money, then yeah, 0:09:37.960 --> 0:09:41.360 that's a blessing. That's a piece of disinflation, and they'll 0:09:41.360 --> 0:09:43.040 probably take them up on it too. 0:09:43.400 --> 0:09:47.520 Anything Steve would make you second guess that the consumer 0:09:47.600 --> 0:09:50.480 has money, not at all. 0:09:50.559 --> 0:09:52.800 Look, I generally agree with what she said, but what 0:09:52.840 --> 0:09:55.080 you've got to remember here is when Tesla first bout 0:09:55.080 --> 0:09:58.560 out the Model three, for example, all out the door, 0:09:58.679 --> 0:10:02.120 it was about a sixt car. Today it's at forty thousand, 0:10:02.200 --> 0:10:05.080 and with government stimulus, it's really down to and state 0:10:05.120 --> 0:10:07.560 stimulus that are also available down to about thirty two 0:10:07.559 --> 0:10:10.160 to thirty three thousand. This is getting pretty close to 0:10:10.160 --> 0:10:14.320 where Honda Accord is. At those prices, there is not 0:10:14.480 --> 0:10:17.440 going to be any demand issue, and I think that's 0:10:17.440 --> 0:10:20.880 why long term, Elon's making the right move. 0:10:21.160 --> 0:10:22.680 What do you want to see from Elon in terms 0:10:22.679 --> 0:10:25.840 of his own investment now in terms of continuing to 0:10:25.920 --> 0:10:30.080 expand production, because when they had their sort of great 0:10:30.280 --> 0:10:33.240 master plan that they just came out with earlier this year, 0:10:33.400 --> 0:10:36.160 it felt like some of the production levels were just extraordinary. 0:10:37.200 --> 0:10:38.319 Well they are extraordinary. 0:10:38.559 --> 0:10:41.359 You've got to look at most of the other competitors, 0:10:41.480 --> 0:10:44.280 GM four, they have one or two EV plants up 0:10:44.320 --> 0:10:47.680 and running. Tesla already has four gigafactories, a new one 0:10:47.679 --> 0:10:50.240 in moderate coming which will be up literally in less 0:10:50.280 --> 0:10:54.640 than twelve months. New battery plants in Shanghai and later 0:10:54.760 --> 0:10:59.000 have already online. So Tesla, simply put, is just moving 0:10:59.200 --> 0:11:01.400 faster than other You got to give them credit for that. 0:11:01.760 --> 0:11:04.680 Just look at the numbers of comparison. You know, in 0:11:04.720 --> 0:11:10.800 the honorable mentioned category of Bard announced ten thousand evy 0:11:10.960 --> 0:11:13.400 unit sales compared to four hundred and twenty three thousand 0:11:13.480 --> 0:11:18.280 for Tesla General Motors at twenty thousand. They're not catching up, 0:11:18.400 --> 0:11:21.840 they're falling further behind. The fascinating news if we step 0:11:21.880 --> 0:11:24.280 back and look at it is the major competitors to 0:11:24.320 --> 0:11:29.479 Tesla are two Chinese companies, buyd and Sais. 0:11:29.760 --> 0:11:33.000 This is a global changing of the guard, and. 0:11:32.960 --> 0:11:37.560 I think investors should look back and see really three things. First, 0:11:37.760 --> 0:11:42.560 Tesla's extending their lead. Second, the Chinese are coming quickly, 0:11:43.040 --> 0:11:47.320 and third, a lot of these smaller firms Canoe and 0:11:47.400 --> 0:11:50.480 Fisker and so on Lordstown, they're just going to have 0:11:50.520 --> 0:11:53.800 a hard time making the cut. I think Ewe is 0:11:53.880 --> 0:11:56.880 pressing consolidation in the industry, and I think he's going 0:11:56.920 --> 0:11:58.319 to be the winner when all is said and. 0:11:58.280 --> 0:12:00.080 Done, Steve, I just want to drill it on that 0:12:00.240 --> 0:12:02.560 really interesting point about China. We know that actually some 0:12:02.679 --> 0:12:05.560 Chinese demands and frustrated by the price cuts, but the 0:12:05.640 --> 0:12:09.160 Chinese investment is there. We know commitment to Shanghai, for example, 0:12:09.200 --> 0:12:12.360 not only with car production but battery production. Are you 0:12:12.480 --> 0:12:15.360 worried about geopolitics here? We just hear that President Biden 0:12:15.400 --> 0:12:18.760 will unveil China investment curbs before the G seven summit. 0:12:18.800 --> 0:12:21.640 He doesn't want US companies like Tesla investing in China. 0:12:22.400 --> 0:12:24.760 Yeh, Look, there's a tailor two cities here. 0:12:25.559 --> 0:12:30.440 On the upside, China's the world's largest auto market, and 0:12:30.559 --> 0:12:34.440 Tesla has moved quickly put to manufacturing facility there, and 0:12:34.520 --> 0:12:36.199 Tesla is killing it in China. 0:12:37.600 --> 0:12:40.800 The flip side of that curve is, if there's. 0:12:40.679 --> 0:12:45.520 Ever a real estrangement, a geopolitical crisis, and anything like 0:12:45.559 --> 0:12:48.400 what happened in the Ukraine where Russia nationalized a lot 0:12:48.400 --> 0:12:50.120 of our companies, Tesla would be in a world of 0:12:50.200 --> 0:12:53.880 hurt because forty percent of their capacity comes from China today. 0:12:54.160 --> 0:12:56.200 But in the meantime, if you want to win in 0:12:56.240 --> 0:12:58.400 the auto industry, you've got to be playing in China. 0:12:58.559 --> 0:13:00.000 It is the largest market in the world. 0:13:00.000 --> 0:13:04.360 World seven of the top ten bigger selling evs are 0:13:04.480 --> 0:13:08.280 Chinese names. So right now, Tesla's played the game well. 0:13:08.320 --> 0:13:09.959 And I think if you're elin Mask, you have to 0:13:10.000 --> 0:13:13.120 be going to bed every night playing praying that the 0:13:13.960 --> 0:13:15.800 cord work with China doesn't get worse. 0:13:16.160 --> 0:13:18.360 Right now, he's looking awfully smart. We'll see. 0:13:18.440 --> 0:13:19.800 I'm not sure he's in a bed. I think he's 0:13:19.840 --> 0:13:23.120 on a sofa somewhere on a Twitter. Obviously, we'll be 0:13:23.360 --> 0:13:26.480 in the factory maybe when he gets his few hours asleep. 0:13:26.520 --> 0:13:28.880 We thank you so much, the Wesley Group managing partner, 0:13:29.000 --> 0:13:32.559 Steve Wesley, They're great to have you. Meanwhile, let's talk 0:13:32.559 --> 0:13:35.120 about it. President Joe Biden aiming to sign an executive 0:13:35.160 --> 0:13:37.960 order in the coming weeks there will limit investment in 0:13:38.040 --> 0:13:41.520 key parts of China's economy by US businesses. And that's all. 0:13:41.520 --> 0:13:44.360 According to sources, the administration has been debating the measure 0:13:44.400 --> 0:13:46.640 for almost two years now, and it plans to take 0:13:46.679 --> 0:13:49.120 action before a summit of the Group of Seven that's 0:13:49.160 --> 0:14:01.480 true to start on May nineteenth. In Japan. SpaceX's Starship 0:14:01.600 --> 0:14:04.480 Rocket I didn't quite complete its mission on a second 0:14:04.520 --> 0:14:08.240 launch attempt starship appeared to explode in the sky several 0:14:08.240 --> 0:14:11.280 minutes after lifting off from the facility over at Bocachico 0:14:11.320 --> 0:14:14.520 in Texas. More on these events, we joined Bublomgg's law 0:14:14.559 --> 0:14:17.200 and Grush, who was just at the launch site earlier, 0:14:17.240 --> 0:14:20.160 and Elon Musk himself set expectation. He said, look, as 0:14:20.200 --> 0:14:22.280 long as we don't blow up the launch pad, and 0:14:22.560 --> 0:14:24.160 they didn't know they didn't. 0:14:24.200 --> 0:14:26.720 They actually got pretty far away from the launch pad, 0:14:26.720 --> 0:14:28.760 and I will say from the ground it was a 0:14:29.120 --> 0:14:33.320 spec spectacular site well before the explosion happened. I mean, 0:14:33.360 --> 0:14:35.920 we could feel the rumble in our chest of those 0:14:35.920 --> 0:14:38.240 thirty three engines. Though I think when I looked at 0:14:38.280 --> 0:14:40.680 the livestream later not all of those thirty three engines 0:14:40.680 --> 0:14:42.400 you can see on the screen were actually a light. 0:14:42.520 --> 0:14:45.440 So there were some engine problems. I think apparently we'd 0:14:45.520 --> 0:14:49.280 like some more confirmation from SpaceX. But yes, they did. 0:14:49.120 --> 0:14:52.320 Get valuable data, hopefully just from being able to clear 0:14:52.400 --> 0:14:53.160 the launch pad. 0:14:53.360 --> 0:14:55.200 But yeah, something didn't quite go right. 0:14:55.280 --> 0:14:59.440 Around two and a half minutes into flight, the stages 0:14:59.480 --> 0:15:02.920 were host to separate and instead the rockets. 0:15:02.600 --> 0:15:06.200 Seemed to vere wildly for. 0:15:08.440 --> 0:15:12.280 Sit there. Oh, I think we're taking some hits on 0:15:12.320 --> 0:15:14.120 this line, Lauren, I'll just ask one more question and 0:15:14.160 --> 0:15:17.000 hopefully your line stabilizes a little bit. But SpaceX did 0:15:17.120 --> 0:15:21.960 say the experience a rapid unscheduled disassembly before stage separation, 0:15:22.240 --> 0:15:25.680 So nuance there push us forward. We knew that there 0:15:25.720 --> 0:15:28.400 was a delay. They then came on four twenty, which 0:15:28.440 --> 0:15:30.000 we know is a key day for you, a musk 0:15:30.080 --> 0:15:33.000 in many ways. What do we expect next? A little 0:15:33.040 --> 0:15:35.360 bit more description of what went wrong and then the 0:15:35.360 --> 0:15:35.960 next test light. 0:15:36.040 --> 0:15:37.520 I guess yeah. 0:15:37.520 --> 0:15:40.080 For me personally, I really want to know what actually 0:15:40.160 --> 0:15:42.840 caused the mishap, you know, why did the stage separation 0:15:43.000 --> 0:15:44.280 not occur as planned? 0:15:44.640 --> 0:15:46.720 What was going on with those engines that appeared to 0:15:46.720 --> 0:15:47.160 be out? 0:15:47.400 --> 0:15:49.800 And then also I'd like to know from SpaceX whether 0:15:49.880 --> 0:15:52.320 or not, you know, the rocket broke up on its own, 0:15:52.400 --> 0:15:55.360 or if they terminated the rocket personally with the flight 0:15:55.440 --> 0:15:57.960 termination system. It's a system they can use to blow 0:15:58.040 --> 0:16:00.720 up the rocket to protect you know, the un public. 0:16:01.080 --> 0:16:03.280 And then yes, you know, how will they incorporate the 0:16:03.360 --> 0:16:06.320 lessons learned from this flight into the next flight that 0:16:06.360 --> 0:16:08.480 they do, which I believe Elon said would happen in 0:16:08.480 --> 0:16:11.120 the next few months. So very much, looking forward to 0:16:11.160 --> 0:16:13.480 the timeline, and then I'll show the root cars of 0:16:13.520 --> 0:16:14.960 this issue. 0:16:15.200 --> 0:16:19.240 Extraordinary. We continue to keep across all of it with 0:16:19.240 --> 0:16:21.240 our own layngrase. We thank you so much for making 0:16:21.280 --> 0:16:24.880 the time. Meanwhile, let's turn our attention to the financial 0:16:24.880 --> 0:16:27.640 world for a moment, because the American Express set aside 0:16:27.760 --> 0:16:30.040 well a little bit more cash to cover any possible 0:16:30.120 --> 0:16:33.280 loan losses as the economy starts to slow. That did 0:16:33.440 --> 0:16:35.680 ultimately weigh on some of the earnings. Even though the 0:16:35.680 --> 0:16:39.240 CEO would say, look, this is just a normalization. Shares 0:16:39.360 --> 0:16:43.080 fell despite expending volume still climbing fourteen percent. I got 0:16:43.120 --> 0:16:46.000 to have a chat with ceosd squay about investments in 0:16:46.080 --> 0:16:48.760 financial technology in particular, and he said, no, we had 0:16:48.880 --> 0:16:51.600 AI in our models forever, in our credit models and 0:16:51.600 --> 0:16:55.080 our four models. How we market to our customer. Where 0:16:55.080 --> 0:16:57.800 we're thinking about AI even more now is in our 0:16:57.840 --> 0:17:01.640 customer service. And of course sort of maybe chuckle with 0:17:01.640 --> 0:17:03.400 the fact that look, the new technology a couple of 0:17:03.480 --> 0:17:05.640 years ago was all about blockchain. Now it's all about 0:17:05.680 --> 0:17:08.720 new tech that is GPT. And he in particularly is 0:17:08.720 --> 0:17:11.200 saying they're looking at the stuff for a while, and oh, 0:17:11.200 --> 0:17:13.240 we'll just have to do it in a controlled way 0:17:13.400 --> 0:17:16.399 and make sure you find the right business case. Have 0:17:16.520 --> 0:17:18.200 much more on what anx CEO had to say a 0:17:18.200 --> 0:17:20.359 little bit later in the two pm hour mean while 0:17:20.359 --> 0:17:23.320 coming up and look at today's big take, which I 0:17:23.359 --> 0:17:26.560 have to say exposes the dangers of TikTok's algorithm to 0:17:26.640 --> 0:17:59.720 troubled teams. This is a Bloomberg Today's Bloombog big take. 0:18:00.040 --> 0:18:02.560 It's an emotional one. It sheds light on the ways 0:18:02.560 --> 0:18:05.600 in which TikTok's personal feed can actually be a never 0:18:05.720 --> 0:18:09.119 ending stream of anxiety of negativity. As part of her 0:18:09.200 --> 0:18:12.040 series on TikTok and it's trust and safety issues Bloombags, 0:18:12.080 --> 0:18:15.200 Olivia Carvill writes that the app's algorithm has led teenagers 0:18:15.640 --> 0:18:19.760 down rabbit holes related to self harm, to depression, human suicide. 0:18:20.080 --> 0:18:23.840 Lisa Say Olivia joins me now and it's heart wrenching 0:18:23.840 --> 0:18:26.199 this story a mother having to after the death of 0:18:26.200 --> 0:18:29.520 her child, look at what terms he searched for on 0:18:29.640 --> 0:18:33.959 an app such as TikTok, He's search for Batman, basketball, weightlifting. 0:18:34.720 --> 0:18:35.640 What did he get instead? 0:18:36.680 --> 0:18:40.400 What Chase nescal was seen as a stream of content 0:18:40.480 --> 0:18:45.600 about anxiety, depression, unrequired love, self harm and in some 0:18:45.680 --> 0:18:50.560 cases suicide. I actually watched this account and it's still 0:18:50.600 --> 0:18:55.640 sending their content today. It was really difficult to see 0:18:56.040 --> 0:18:58.280 what he would have seen in to try and put 0:18:58.320 --> 0:19:00.920 yourself in the shows of a teenage boy watching never 0:19:01.040 --> 0:19:03.960 ending streams of really sad videos. 0:19:04.840 --> 0:19:08.760 What there for does this say about an algorithm that 0:19:09.840 --> 0:19:12.840 in many ways people turn to TikTok for joy, for hilarity, 0:19:12.960 --> 0:19:16.760 for fun. Why is this happening to vulnerable teenage children? 0:19:17.080 --> 0:19:19.480 And that's what his parents kept asking is they thought 0:19:19.520 --> 0:19:22.919 TikTok was about creating joy, that's the company's slogan. They 0:19:22.960 --> 0:19:26.200 thought it was funny, happy dance videos. And when I 0:19:26.320 --> 0:19:29.160 went to meet them in Long Island earlier this year, 0:19:29.680 --> 0:19:32.320 they asked that question of where are the happy videos? 0:19:32.640 --> 0:19:34.679 You know, we were looking at his account together and 0:19:34.760 --> 0:19:36.919 what it's still being sent today and there are no 0:19:37.080 --> 0:19:40.840 happy videos coming through. TikTok said that it has worked 0:19:40.840 --> 0:19:43.320 on this specific issue, and it's been working on it 0:19:43.359 --> 0:19:48.080 for years, trying to break up repetitive videos about sad topics, 0:19:48.359 --> 0:19:52.800 whether that's depression or eating disorders or suicide related content. 0:19:53.200 --> 0:19:56.400 But effectively, what this account shows us is that those 0:19:56.440 --> 0:19:59.960 efforts have fallen short. In some cases they haven't worked. 0:20:00.640 --> 0:20:04.480 TikTok have responded. You've had a spokesmen in particular speech 0:20:04.520 --> 0:20:06.760 to you seeing they're committed to safety the well being 0:20:06.800 --> 0:20:11.800 of its users, but especially teens. Researchers and child's coologists. 0:20:11.840 --> 0:20:13.840 They're getting more and more anxious about this, aren't they? 0:20:14.119 --> 0:20:17.880 What steps? Can anything be done? From a regulatory perspective? 0:20:17.880 --> 0:20:20.040 Where next goes in your reporting journey? 0:20:20.760 --> 0:20:22.720 Well, I think one of the biggest concerns for child 0:20:22.720 --> 0:20:27.760 psychologists and researchers is that we're seeing this looming youth 0:20:27.840 --> 0:20:31.600 mental health crisis. We're seeing new data showing that kids 0:20:31.640 --> 0:20:36.639 are experiencing higher levels of hopelessness, of suicidal thoughts, of anxiety, 0:20:37.080 --> 0:20:40.879 and alongside that we're seeing explosive use of social media. 0:20:41.040 --> 0:20:44.280 So while causation is very hard to prove, the correlation 0:20:44.480 --> 0:20:47.399 is right there in front of us, and that begs 0:20:47.400 --> 0:20:50.400 the question of what more can be done. TikTok isn't 0:20:50.440 --> 0:20:53.240 the only platform that has a recommendation engine that is 0:20:53.280 --> 0:20:56.520 pushing harmful content to kids, and one of the calls 0:20:56.560 --> 0:20:59.679 that we've seen time and time again from researchers is 0:20:59.720 --> 0:21:03.760 given us transparency, let us study your algorithm. Let us 0:21:03.840 --> 0:21:07.080 understand how it works, what drives it, what powers it. 0:21:07.520 --> 0:21:10.440 Right now, these companies aren't willing to provide that kind 0:21:10.480 --> 0:21:14.640 of transparency to researchers, and that is frustrating the academic community. 0:21:14.680 --> 0:21:18.560 They feel locked out from studying a phenomenon that is 0:21:18.640 --> 0:21:21.399