WEBVTT - Big Tech Selloff May Signal Turning Point 0:00:02.520 --> 0:00:08.559 Bloomberg Audio Studios, podcasts, radio News. Well, there you have it, 0:00:08.920 --> 0:00:13.600 fetchjer J. Powell wrapping up comments roundtable questions at an 0:00:13.640 --> 0:00:17.040 event at Harvard University. It was a moderated discussion in 0:00:17.079 --> 0:00:20.720 a principles of economics class. Let's take a look at markets. 0:00:20.800 --> 0:00:23.959 On the back of those comments, we actually saw yields 0:00:24.000 --> 0:00:26.000 fall across the curve. 0:00:25.880 --> 0:00:27.400 As fed jer J. Powell spoke. 0:00:27.480 --> 0:00:29.639 Look at that down on the two year and the 0:00:29.680 --> 0:00:31.560 tenure by let's go ahead and. 0:00:31.600 --> 0:00:33.280 Call that nine basis points. 0:00:33.560 --> 0:00:36.199 We also did see stocks move off their lows of 0:00:36.240 --> 0:00:37.920 the session when fed jer J. 0:00:38.040 --> 0:00:38.680 Powell was speaking. 0:00:38.720 --> 0:00:41.040 The NASAQ one hundred right now up close to two 0:00:41.120 --> 0:00:43.040 tenths of one percent, The S and P five hundred 0:00:43.120 --> 0:00:45.880 intra day up four tenths of one percent. The S 0:00:45.920 --> 0:00:48.360 and P was flat going into this in the NASAQ 0:00:48.400 --> 0:00:49.240 one hundred. 0:00:49.440 --> 0:00:51.640 Was ever so slightly lower. 0:00:51.960 --> 0:00:54.400 I want to bring in Bloomberg's International Economics and Policy 0:00:54.400 --> 0:00:59.120 correspondent Mike McKee. Mike, apart from no selfies with J. Powell, 0:00:59.160 --> 0:01:02.200 which seems like a relatively good rule when you are 0:01:02.280 --> 0:01:04.840 someone like J. Powell, I want to hear about the 0:01:04.840 --> 0:01:08.600 big takeaway from this it really seems like supply shocks 0:01:09.160 --> 0:01:11.560 have the FED has little control when it comes to 0:01:11.560 --> 0:01:13.600 supply shocks such as the one we're seeing right now 0:01:13.880 --> 0:01:16.560 in oil. Is that the big takeaway from him seeking 0:01:16.600 --> 0:01:17.200 earlier today. 0:01:18.480 --> 0:01:20.360 Yeah, If there is a takeaway, it would be that 0:01:20.400 --> 0:01:22.679 the FED doesn't know what's going to happen because it 0:01:22.720 --> 0:01:25.120 does have this supply shock that's going to weigh on 0:01:25.760 --> 0:01:29.959 the inflation rate. It could also if the inflation rate 0:01:30.040 --> 0:01:33.160 stays up for a while away on demand. So the 0:01:33.200 --> 0:01:38.200 FED is, as Pal repeated several times, well positioned to 0:01:38.240 --> 0:01:41.479 sit and wait for a while. Now, if you look 0:01:41.520 --> 0:01:44.560 at FED fund's futures, they traded the opposite of where 0:01:44.640 --> 0:01:49.600 they've been during Poll's comments. They now price in some cuts. 0:01:49.960 --> 0:01:52.440 I'm not sure that's the right reading of this. I 0:01:52.440 --> 0:01:54.680 don't think the FED knows yet where they're going to go, 0:01:55.640 --> 0:01:57.800 except that they're going to be on hold for a while. 0:01:58.000 --> 0:02:03.520 He noted risks to both sides to growth and employment 0:02:03.720 --> 0:02:07.320 and as well to inflation, but express confidence the FED 0:02:07.400 --> 0:02:10.400 will get inflation down to two percent at some point. 0:02:10.960 --> 0:02:13.280 Tearis have a one time impact on inflation, He said, 0:02:13.320 --> 0:02:16.639 inflation expectations remain well anchored. The FMC will reach its 0:02:16.639 --> 0:02:19.520 two percent inflation goal, and the fed's tools have no 0:02:19.600 --> 0:02:20.800 meaningful effect. 0:02:20.800 --> 0:02:21.960 On supply shocks. 0:02:22.240 --> 0:02:24.280 That doesn't necessarily mean, though, Mike, that we will not 0:02:24.360 --> 0:02:27.320 see and are not seeing, an inflationary effect from this 0:02:27.360 --> 0:02:30.640 more than month long conflict any wrong. What can the 0:02:30.639 --> 0:02:32.920 FED do or what will the FED do if we 0:02:32.960 --> 0:02:35.160 do see inflation flow through as a result. 0:02:36.120 --> 0:02:40.120 Well, it depends on what areas inflation flows into. If 0:02:40.120 --> 0:02:43.960 it's oil prices, gasoline prices, those are things that the 0:02:44.000 --> 0:02:46.480 FED can't do much about. If it starts to get 0:02:46.480 --> 0:02:50.040 into the broader economy, which it will in the sense 0:02:50.080 --> 0:02:52.840 that higher diesel prices are going to mean it's going 0:02:52.880 --> 0:02:55.440 to cost more for your package to be delivered, that 0:02:55.560 --> 0:02:59.360 sort of thing, and for trucks to resupply the rest 0:02:59.360 --> 0:03:02.200 of the country. If it starts to get into other 0:03:02.240 --> 0:03:05.160 areas of the economy, they might think about a rate increase, 0:03:05.200 --> 0:03:08.120 but they'll probably do more jaw bating than anything else, 0:03:08.240 --> 0:03:11.960 because they feel that at some point the strait will open, 0:03:12.440 --> 0:03:15.640 the oil will flow again, and it may take a while, 0:03:15.720 --> 0:03:18.200 but inflation will come down. And he made the point 0:03:18.240 --> 0:03:22.960 that if the FED raises rates now, the effects are 0:03:23.080 --> 0:03:25.960 long and variable and could take as a year or 0:03:25.960 --> 0:03:28.440 more to start to hit the economy, and the economy 0:03:28.520 --> 0:03:31.800 might be in a totally different situation by then, and 0:03:31.960 --> 0:03:34.920 the FED rate move wouldn't be good news. So the 0:03:35.000 --> 0:03:37.720 Fed is going to be very very cautious about what 0:03:37.760 --> 0:03:41.280 they're going to do going forward because mostly they think 0:03:41.320 --> 0:03:43.920 this is going to be about oil prices, and they 0:03:43.960 --> 0:03:46.240 just keep an eye on the rest of the economy. 0:03:46.560 --> 0:03:50.040 Bloomberg, a TV and radio international economics and policy forsponded 0:03:50.200 --> 0:03:53.360 Mike McKee, Mike, thanks so much well. Thre's higher energy 0:03:53.400 --> 0:03:56.080 prices in focus the war and Iran officially enters its 0:03:56.080 --> 0:04:00.240 second month. Treasury Secretary Scott Besn't indicated some optimism about 0:04:00.240 --> 0:04:02.040 a reopening of the Straight of horm moves, but that's 0:04:02.080 --> 0:04:05.440 as President Trump renewed threats against Iran. If a deal 0:04:05.520 --> 0:04:08.200 isn't made soon, Let's bring in Bloomberg Balance of Power 0:04:08.240 --> 0:04:10.800 co host Kaylee Lyons to break it all down. Kaylee, 0:04:10.880 --> 0:04:14.040 the President said the US is end quote serious discussions 0:04:14.080 --> 0:04:16.760 with a new regime in Iran. An Iranian official earlier 0:04:16.760 --> 0:04:19.480 said there haven't been any direct talks. Do we know 0:04:19.520 --> 0:04:21.200 who is talking to whom right now? 0:04:22.680 --> 0:04:25.120 Well, that's a major question, Tim. Whatever talks are happening 0:04:25.200 --> 0:04:28.000 are through intermediaries. You had the likes of Egypt, Pakistan, 0:04:28.040 --> 0:04:30.159 Turkey all meeting this weekend as they seek an end 0:04:30.200 --> 0:04:32.760 to this conflict, though representatives from the US and Iran 0:04:32.760 --> 0:04:34.919 were not at that table, and as you say, Iran 0:04:34.960 --> 0:04:37.480 contends that they are not talking directly with Washington, having 0:04:37.560 --> 0:04:41.000 rejected the fifteen point ceasefire plan in public that President 0:04:41.040 --> 0:04:43.200 Trump told reporters a board Air Force one last night 0:04:43.240 --> 0:04:46.719 that Iranians had accepted most of those fifteen points, that 0:04:46.760 --> 0:04:48.560 we didn't specify which one. So there's a bit of 0:04:48.560 --> 0:04:51.240 a he said, she said, situation here when it comes 0:04:51.240 --> 0:04:52.800 to the US and Iran. It also is a bit 0:04:52.839 --> 0:04:55.200 of a good cop bad cop situation, Tim, Except frankly, 0:04:55.200 --> 0:04:57.720 President Trump seems to be playing both of those roles. 0:04:57.800 --> 0:04:59.640 Is on the one hand, he is citing good progress 0:04:59.640 --> 0:05:01.960 and ages ciations he says are happening. On the other hand, 0:05:02.160 --> 0:05:05.720 he's taking to true social and threatening running an infrastructure, 0:05:05.720 --> 0:05:08.440 the energy infrastructure, oil wells, carg Island. He said, all 0:05:08.440 --> 0:05:12.000 of these things, even a water infrastructure through desalination plants, 0:05:12.200 --> 0:05:14.840 could be targeted. According to the President, if the straight 0:05:14.839 --> 0:05:16.839 off news is not open for business, which, of course 0:05:16.920 --> 0:05:19.600 right now it is not. So the escalation risk is 0:05:19.640 --> 0:05:24.120 certainly there, especially considering thousands more American service members have arrived. 0:05:24.400 --> 0:05:25.400 In the theater. 0:05:25.560 --> 0:05:27.920 Of course, you had thousands of marines and sailors aboard 0:05:27.920 --> 0:05:30.880 an amphibious assault ship. You have more marines and Army 0:05:30.920 --> 0:05:34.400 paratroopers that have been ordered there. And you have reports 0:05:34.440 --> 0:05:35.919 than the likes of the Wall Street Journal in the 0:05:36.000 --> 0:05:40.480 Washington Post that the President is seriously considering putting troops 0:05:40.480 --> 0:05:42.560 on the ground in some form, the Wall Street Journal 0:05:42.640 --> 0:05:45.400 talking about the idea of seizing enriched uranium, something that 0:05:45.440 --> 0:05:47.880 would likely require ground forces and take some time. You 0:05:47.920 --> 0:05:50.479 also had the President telling the Financial Times that he 0:05:50.480 --> 0:05:53.480 would like to take Iron's oil, something that could involve 0:05:53.560 --> 0:05:56.240 the seizure of carg Island, which is also something that 0:05:56.279 --> 0:05:59.400 is likely to need ground forces. Then the other escalatory 0:05:59.440 --> 0:06:00.800 thing we have to keep an eye on here is, 0:06:00.839 --> 0:06:03.240 of course, the Iranian proxies, the Houthis, who over the 0:06:03.240 --> 0:06:06.960 weekend launched attacks, missiles and drones at Israel. Specifically, remember 0:06:06.960 --> 0:06:09.280 how disruptive the Houthies were in the Red Sea beginning 0:06:09.320 --> 0:06:12.360 back in twenty twenty three, very disruptive to commercial shipping, 0:06:12.400 --> 0:06:14.520 so that poses a threat to the alternate route through 0:06:14.560 --> 0:06:17.040 the Red Sea that other Gulf nations like the Saudis 0:06:17.040 --> 0:06:19.760 are using to try to get their energy exports out, 0:06:19.800 --> 0:06:21.880 So there's exculatory risk at the same time, Tim that 0:06:21.880 --> 0:06:24.760 the President is still talking about this diplomatic off ramp. 0:06:24.760 --> 0:06:27.400 I guess though, when you still have Iran saying that 0:06:27.440 --> 0:06:31.080 the claims the President is making around Iran accepting these points, 0:06:31.120 --> 0:06:35.120 when Iranian officials are calling them excessive and illogical, it 0:06:35.320 --> 0:06:38.479 doesn't seem like we are necessarily getting any closer to 0:06:38.640 --> 0:06:39.760 concrete resolution here. 0:06:39.839 --> 0:06:43.760 In Bloomberg's Kaylee lines more from her and Joe in 0:06:43.800 --> 0:06:45.800 the one o'clock hour on a Balance of power. 0:06:45.839 --> 0:06:47.840 Thanks so much, Kayleie well back to market. 0:06:47.839 --> 0:06:50.960 It's because the NASAQ one hundred has slipped into correction territory. 0:06:50.960 --> 0:06:53.719 The selloff in big tech now flashing signals that have 0:06:53.800 --> 0:06:56.880 marked turning points in the past. Many and Wall Street 0:06:56.880 --> 0:06:59.479 now see the sector as a potential opportunity, pointing to 0:06:59.480 --> 0:07:03.400 oversold conditions and the likelihood of relief rallies, even amid 0:07:03.480 --> 0:07:05.159 uncertainty tied to the Iran war. 0:07:05.400 --> 0:07:06.200 From where let's bring a. 0:07:06.200 --> 0:07:10.440 Denise Chisholm, Fidelities, Director of Quantitative Market Strategy. Denise, in 0:07:10.480 --> 0:07:12.400 your view, is this a turning point? Is this a 0:07:12.440 --> 0:07:14.160 buying opportunity when it comes to tech. 0:07:15.040 --> 0:07:16.600 Yeah, when you look at the data, I mean, there's 0:07:16.600 --> 0:07:19.320 certainly concerns around the technology sector since it's been such 0:07:19.440 --> 0:07:22.600 dominant leadership in the markets. But it's interesting when you 0:07:22.640 --> 0:07:24.800 look at the mathematical setup. We saw this very very 0:07:24.880 --> 0:07:28.400 briefly in the tariff tantrum last year, but the sector 0:07:28.520 --> 0:07:31.840 is now in the bottom third of its cheapest when 0:07:31.880 --> 0:07:34.000 you look back to the data since the sixties, and 0:07:34.040 --> 0:07:37.600 we haven't really been this cheap from a valuation perspective 0:07:38.040 --> 0:07:40.960 in over ten years. And look, I mean, there's always 0:07:40.960 --> 0:07:42.800 the potential that it could be different this time, or 0:07:42.840 --> 0:07:45.320 there's a value trap, but there is a very linear 0:07:45.360 --> 0:07:49.000 relationship between the cheaper this sector has been historically, the 0:07:49.120 --> 0:07:52.160 more likely it is to outperform seventy percent odds or 0:07:52.160 --> 0:07:54.680 not one hundred percent odds. But the risk reward when 0:07:54.720 --> 0:07:56.760 you take a one year time horizon, I can't say 0:07:56.800 --> 0:07:58.680 if the bottom is in right now, but when you 0:07:58.880 --> 0:08:02.080 take a longer term time horizon, it does look more 0:08:02.120 --> 0:08:05.320 like an opportunity now that those seventy percent odds are 0:08:05.360 --> 0:08:09.360 actually sticky, even if things like operating margins decline or 0:08:09.360 --> 0:08:12.280 earnings revisions come down, which is kind of a mathematical 0:08:12.320 --> 0:08:14.440 way to say, whatever it is that you're worried about 0:08:14.680 --> 0:08:16.240 might be partly priced in at this point. 0:08:16.480 --> 0:08:19.000 I think what people might be concerned about right now, Denise, 0:08:19.160 --> 0:08:21.600 is that this sell off looks a little bit different 0:08:21.600 --> 0:08:24.360 if you peel back the layers of quote unquote tech, 0:08:24.440 --> 0:08:28.280 because there's this worry about AI and the idea that 0:08:28.640 --> 0:08:31.760 AI will lead to the demise of some in the 0:08:31.800 --> 0:08:34.559 software industry, the so called saaspocalypse. 0:08:34.880 --> 0:08:36.200 Where are you seeing deals? 0:08:36.200 --> 0:08:39.640 Because just because we're seeing something is relatively cheap doesn't 0:08:39.640 --> 0:08:41.720 necessarily mean there's opportunity around the corner. 0:08:42.440 --> 0:08:44.280 Right to your point in terms of a value trap. 0:08:44.400 --> 0:08:47.520 Now, look, I'll let the fundamental analysts tackle what will 0:08:47.559 --> 0:08:50.679 happen to software from a long term perspective, But when 0:08:50.720 --> 0:08:53.640 I look at the data, you see something very rare. Historically, 0:08:53.720 --> 0:08:56.920 you have an industry that's never been more profitable, pin 0:08:57.040 --> 0:08:59.920 to the one hundredth percentile of their profitability, and yet 0:09:00.080 --> 0:09:03.079 what we've seen over the last three months only has 0:09:03.120 --> 0:09:07.360 been a devaluation such that relative forward pees or now 0:09:07.440 --> 0:09:10.040 in the almost the bottom decile. So you have this 0:09:10.120 --> 0:09:13.560 massive disconnect between the valuation and the operating profit that 0:09:13.679 --> 0:09:14.160 is rare. 0:09:14.320 --> 0:09:14.840 Historically. 0:09:14.880 --> 0:09:18.160 When you look back in all industries to the sixties, 0:09:18.360 --> 0:09:20.319 you only see this happen two percent of the time. 0:09:20.720 --> 0:09:25.520 The instances that it happens are things like the financial crisis. 0:09:25.760 --> 0:09:27.360 So one of the ways that we can. 0:09:27.280 --> 0:09:29.920 Sort of tackle this quantitatively is to say, well, it 0:09:30.000 --> 0:09:32.720 is different, but we have seen a little bit of 0:09:32.760 --> 0:09:35.640 this movie before. In some ways, software is going through 0:09:35.720 --> 0:09:40.040 its own great financial crisis pricing, now, how has that 0:09:40.320 --> 0:09:41.480 worked historically? 0:09:41.480 --> 0:09:42.079 Speaking now? 0:09:42.200 --> 0:09:45.760 And is only two percent, so you can't draw broad conclusions. 0:09:45.800 --> 0:09:49.920 But we have seen this historically in technology sectors like communications, 0:09:50.760 --> 0:09:54.040 common equipment, and hardware. Even though we haven't seen it 0:09:54.160 --> 0:09:56.640 in software, we've also seen it in semiconductors. When you 0:09:56.679 --> 0:09:59.280 look back historically, and it's you know, in some ways 0:09:59.280 --> 0:10:02.560 the odds, but go forward perspective, what's your price like this, 0:10:02.960 --> 0:10:05.080 what are your odds of out performance over the course 0:10:05.080 --> 0:10:07.120 of the next twelve months, and what's your average out 0:10:07.120 --> 0:10:09.560 performance over the next twelve months? Is look, it's only 0:10:09.600 --> 0:10:11.480 fifty to fifty which is hard to say that that's 0:10:11.520 --> 0:10:14.800 a table pounding buy. It's not, but it is to 0:10:14.840 --> 0:10:17.560 say that the average out performance of all these sectors 0:10:17.840 --> 0:10:20.760 is around zero, in the sense that they tend to 0:10:21.000 --> 0:10:24.640 be at the point where much is priced in and 0:10:24.800 --> 0:10:26.760 downside might be more or less limited. 0:10:27.080 --> 0:10:29.040 Denise, I do want, yeah, go ahead. 0:10:29.760 --> 0:10:33.839 The technology sectors like semiconductors and common equipment have actually 0:10:33.920 --> 0:10:37.160 had higher odds about performance, which gets to a little 0:10:37.200 --> 0:10:40.480 bit of what sharepal was talking about, which is technology 0:10:40.520 --> 0:10:44.040 as a sector has a history of reinventing itself. 0:10:44.280 --> 0:10:45.960 And yes, there may be in. 0:10:45.880 --> 0:10:49.200 Fact bankruptcies within the software industry, but there might be 0:10:49.360 --> 0:10:52.120 companies that are actually coming in to create new products 0:10:52.160 --> 0:10:52.559 as well. 0:10:52.679 --> 0:10:55.960 I understand the urge to use history as a guide here, 0:10:56.600 --> 0:10:59.120 but I do wonder for those people who are out 0:10:59.120 --> 0:11:01.840 there who say, wait a second, we are on the 0:11:01.960 --> 0:11:05.160 verge of a new industrial revolution. We are seeing something 0:11:05.160 --> 0:11:09.559 with AI that we've never seen before in modern investing 0:11:09.720 --> 0:11:12.200 and in the modern economy. Do you have to throw 0:11:12.240 --> 0:11:15.319 the history textbook out the window, or the market's history 0:11:15.320 --> 0:11:17.560 textbook out the window in an environment like this. 0:11:18.400 --> 0:11:20.480 Well, I'm always struck by the fact that it is 0:11:20.520 --> 0:11:23.320 always different this time right, COVID was very different, terrorists 0:11:23.320 --> 0:11:26.080 were very different, and yet the patterns are very sticky. 0:11:26.400 --> 0:11:29.360 I do think that there's always a knee jerk reaction behind. 0:11:29.480 --> 0:11:32.320 You know, equity markets need to be reflective of very 0:11:32.360 --> 0:11:35.680 good times in the economy or no existential risk. But 0:11:35.760 --> 0:11:38.400 when you study history, you know you see over and 0:11:38.440 --> 0:11:40.920 over again this. Sometimes the market goes up and climbs 0:11:40.920 --> 0:11:43.800 the wall of worry despite whatever you are worried about, 0:11:44.160 --> 0:11:47.120 ending upcoming to fruition. And I do think that what 0:11:47.640 --> 0:11:49.760 is the definition of this cycle when I look at 0:11:49.760 --> 0:11:53.160 the math, is that the equity market has remained much 0:11:53.200 --> 0:11:56.600 more fearful on an ongoing basis than we see in 0:11:56.640 --> 0:11:59.600 most credit markets, which are tend to be the smarter markets. 0:12:00.280 --> 0:12:02.080 More you see that fear. 0:12:01.920 --> 0:12:04.319 And that knee jerk reaction, the more likely the market 0:12:04.400 --> 0:12:06.400 is to be highed, not to say over any three 0:12:06.400 --> 0:12:08.720 month time horizon, but it is to say over any 0:12:08.760 --> 0:12:11.440 long term time horizon. So yes, could it be different 0:12:11.480 --> 0:12:14.200 this time, But I think history shows you that those 0:12:14.240 --> 0:12:17.960 differences might end up being tailwinds that you don't suspect, 0:12:18.320 --> 0:12:22.600 like productivity like higher GDP growth, like higher earnings growth, 0:12:22.960 --> 0:12:25.480 like more profitability in the overall market as well. 0:12:25.600 --> 0:12:27.360 I'm taking a look at WTI crew, It's up to 0:12:27.400 --> 0:12:29.640 one hundred and two dollars a barrel. Brand is at 0:12:29.640 --> 0:12:32.040 about one hundred and twelve dollars a barrel. To what 0:12:32.120 --> 0:12:32.679 extent are. 0:12:32.679 --> 0:12:35.000 High energy price is a drag on the tech industry. 0:12:36.040 --> 0:12:38.320 On the tech industry, you know, in some ways you 0:12:38.320 --> 0:12:40.200 can think of it as a cyclical industry. So I 0:12:40.200 --> 0:12:42.240 think it's pro cyclical in the sense that it's tied 0:12:42.280 --> 0:12:45.199 to the US economy overall. I mean, energy prices are 0:12:45.240 --> 0:12:48.040 interesting in that I understand why the knee jerk reaction 0:12:48.200 --> 0:12:48.480 is to. 0:12:48.480 --> 0:12:50.640 Look at real energy prices. 0:12:50.240 --> 0:12:52.240 Over time, and we've seen them spike in you know, 0:12:52.280 --> 0:12:54.800 obviously nineteen eighty and even the high in two thousand 0:12:54.800 --> 0:12:58.120 and eight from a real inflation adjusted perspective was nominally higher, 0:12:58.400 --> 0:13:00.679 was actually higher than the peak. 0:13:00.600 --> 0:13:01.400 In nineteen eighty. 0:13:01.679 --> 0:13:04.120 So you draw those peaks and you say that there's real, 0:13:04.920 --> 0:13:09.080 very strong correlation to very uncomfortable economic situations. But it 0:13:09.120 --> 0:13:09.880 is quite different. 0:13:09.960 --> 0:13:10.120 Right. 0:13:10.200 --> 0:13:13.040 History can show you what the similarities are and also 0:13:13.120 --> 0:13:16.040 the differences, which is to say that oil intensity has 0:13:16.080 --> 0:13:20.079 actually declined substantially in the overall economy, so that effect 0:13:20.360 --> 0:13:23.720 on the same price might actually have a much less 0:13:23.880 --> 0:13:26.560 impact than you think on the overall economy, and in 0:13:26.559 --> 0:13:29.040 some ways to think about it in very practical terms 0:13:29.080 --> 0:13:32.760 instead of just oil prices, to think about the stress 0:13:32.960 --> 0:13:35.960 that it could impact on corporate profits, specifically when we're 0:13:35.960 --> 0:13:40.040 talking about equity prices. If you renormalize those oil prices 0:13:40.120 --> 0:13:43.320 in relation to corporate profits, you'd see that that spike 0:13:43.400 --> 0:13:47.840 in nineteen eighty effectively was one thousand dollars in terms 0:13:47.880 --> 0:13:50.360 of the price per barrel that it would take to 0:13:50.440 --> 0:13:52.960 equate the same stress. Which is not to say that 0:13:53.040 --> 0:13:56.520 higher energy prices don't take a bite off the US consumer. 0:13:56.600 --> 0:13:58.319 They do. You see declines in. 0:13:58.280 --> 0:14:00.800 Real income growth and especially year of the short run 0:14:00.800 --> 0:14:03.640 demand is relatively an elastic. But what you do see 0:14:03.679 --> 0:14:05.800 is I think that the comparisons to the seventies and 0:14:05.840 --> 0:14:09.520 eighties of stagflation, this is a very different economy and 0:14:09.559 --> 0:14:12.640 it might be much more absorbable than you think, which 0:14:12.760 --> 0:14:16.280 might mean back to technology, that more of that is 0:14:16.400 --> 0:14:17.640 priced in than you may think. 0:14:17.800 --> 0:14:21.800 Okay, some really good historical context. Denise Chisholm of Fidelity Investments, 0:14:21.840 --> 0:14:22.920 thanks so much for joining. 0:14:22.760 --> 0:14:24.320 Us on Bloomberg Tech. 0:14:24.480 --> 0:14:26.960 Well coming up, NASA is preparing to send astronauts back 0:14:27.000 --> 0:14:29.720 to lunar orbit for the first time since the nineteen seventies. 0:14:30.040 --> 0:14:33.800 It's a critical milestone for broader US space ambitions. We'll 0:14:33.800 --> 0:14:45.080 discuss that next. This is Bloomberg Tech. Some news in 0:14:45.080 --> 0:14:48.240 Elon Musk's world. A top judge in Delaware said she 0:14:48.280 --> 0:14:50.680 will no longer preside over a handful of lawsuits involving 0:14:50.760 --> 0:14:54.520 Musk in his companies, and will reassign several Musk related cases. 0:14:54.840 --> 0:14:57.520 This comes after the billionaire's lawyers alleged she had shown 0:14:57.600 --> 0:15:00.400 bias against him after she had ruled against him in. 0:15:00.440 --> 0:15:01.920 High profile cases. 0:15:03.280 --> 0:15:05.520 Well, NASA is sending astronauts back to the Moon for 0:15:05.560 --> 0:15:08.360 the first time in over fifty years. The lunar flyby 0:15:08.560 --> 0:15:10.920 will test the Artemis to spacecraft, paving the way for 0:15:10.960 --> 0:15:14.000 a lunar landing in twenty twenty eight. Let's get more 0:15:14.040 --> 0:15:16.280 on this historic mission from our reporter, A Lauren Brush 0:15:16.320 --> 0:15:19.640 at NASA's Kennedy Space Center. Lauren, good to have you 0:15:19.840 --> 0:15:22.840 on the program, especially joining us from Kennedy Space Center. 0:15:23.280 --> 0:15:24.160 I think if we think. 0:15:24.040 --> 0:15:27.280 Historically about the Moon mission, when we did this fifty 0:15:27.360 --> 0:15:29.880 years ago we were locked in this space race with 0:15:29.920 --> 0:15:32.640 the Soviet Union a very different time. Now, why spend 0:15:32.720 --> 0:15:36.760 so much money to go back to the Moon, Well, I. 0:15:36.720 --> 0:15:39.080 Think it just depends on who you ask. You know, 0:15:39.840 --> 0:15:44.640 recently there has been a lot of concern brought up 0:15:44.680 --> 0:15:47.720 about the fact that China is also sending astronauts to 0:15:47.800 --> 0:15:51.320 the Moon, and so you'll hear lawmakers and even you know, 0:15:51.440 --> 0:15:54.760 NASA executives talk about the need to beat China to 0:15:54.840 --> 0:15:57.960 the Moon. There's been concerned that maybe they will get 0:15:57.960 --> 0:16:01.480 there first and kind of stay a claim to that area, 0:16:01.680 --> 0:16:03.440 preventing our exploration of it. 0:16:03.840 --> 0:16:05.080 But for more. 0:16:04.880 --> 0:16:08.400 Peaceful reasons, you know, there's a lot that NASA hopes 0:16:08.440 --> 0:16:10.800 to gain from the Moon. For instance, there's this idea 0:16:10.800 --> 0:16:14.440 of jump starting a looter economy, so finding ways to 0:16:14.480 --> 0:16:18.720 make money off the Moon, possibly for an economy around 0:16:18.760 --> 0:16:21.680 the Moon. And then of course it's learning how to 0:16:21.800 --> 0:16:25.240 live off of another planetary body that's no small small 0:16:25.240 --> 0:16:27.680 feet and eventually, you know, the goal is to get 0:16:27.720 --> 0:16:30.200 to Mars, and so learning to live off of the 0:16:30.240 --> 0:16:33.200 surface of the Moon, those lessons can then be applied 0:16:33.280 --> 0:16:34.560 to Mars living someday. 0:16:34.880 --> 0:16:36.800 Lauren, how is this a test for NASA in an 0:16:36.880 --> 0:16:40.480 environment where there's you know, significant investment in the private 0:16:40.520 --> 0:16:43.160 space industry, namely in a company like SpaceX, which is 0:16:43.200 --> 0:16:45.960 expected to IPO this year. What does this mean for NASA? 0:16:45.960 --> 0:16:46.600 What's at stake? 0:16:47.920 --> 0:16:51.280 The unique thing, Artemis is that it is kind of 0:16:51.440 --> 0:16:55.360 an amalgam of the old and the new. Right, so 0:16:55.520 --> 0:16:57.960 they are using a lot of their long time, long 0:16:58.080 --> 0:17:01.800 term contractors like Boeing and which will be on display 0:17:02.080 --> 0:17:05.480 with this mission. And when it comes to landing on 0:17:05.520 --> 0:17:09.360 the Moon, NASA has contracted and outsourced the lander development 0:17:09.440 --> 0:17:13.680 to newer players like SpaceX and Blue Origin. So it's 0:17:13.720 --> 0:17:15.760 actually kind of a mashup of the old and new 0:17:15.840 --> 0:17:17.960 way of doing business. And so it'll be a test 0:17:18.000 --> 0:17:21.439 to see if those companies can work together in this 0:17:21.560 --> 0:17:25.879 and these different contracting mechanisms can actually work together to 0:17:25.920 --> 0:17:27.720 put people back on the surface of the Moon. 0:17:27.920 --> 0:17:31.359 Bloomberg's Lauren Grush live at Kennedy Space Center. Thanks Lauren, 0:17:31.480 --> 0:17:33.680 check out her reporting in the entire teams reporting on 0:17:33.720 --> 0:17:36.480 the Bloomberg Terminal and at Bloomberg dot com. More on 0:17:36.520 --> 0:17:38.760 space with the SpaceX IPO this time. 0:17:38.920 --> 0:17:41.280 That's next. This is Bloomberg tech. 0:17:52.000 --> 0:17:54.080 Let's fivoting out of the business of space as investors 0:17:54.119 --> 0:17:57.800 gear up for the highly anticipated mega IPO from SpaceX. 0:17:58.000 --> 0:17:59.240 Joseph Alagna is. 0:17:59.200 --> 0:18:02.040 The foundingner at Buttonwood Funds. It's invested in the Elon 0:18:02.119 --> 0:18:05.199 Musk led company four times in the past year and 0:18:05.200 --> 0:18:07.760 a half. Joseph, good to have you on the program 0:18:07.880 --> 0:18:10.480 this morning. I want to start with a potential one 0:18:10.720 --> 0:18:14.600 point seventy five trillion dollar valuation at an IPO that 0:18:14.720 --> 0:18:17.960 raises a wopping seventy five billion dollars, which our team 0:18:18.000 --> 0:18:22.520 reported last week. Would this represent a satisfy, satisfying valuation 0:18:22.640 --> 0:18:24.840 or exit for you at Buttonwood Funds. 0:18:25.680 --> 0:18:26.960 I don't know if we were to exit or not. 0:18:27.040 --> 0:18:29.200 I mean, we're about to go public in a few weeks, 0:18:29.200 --> 0:18:30.560 so I can't really talk about what we're going to 0:18:30.640 --> 0:18:33.600 doing we're doing going forward. But you know, the one 0:18:33.600 --> 0:18:38.000 point seventy five trillion dollar IPO valuation, you know, was 0:18:38.000 --> 0:18:41.679 was announced right after the merger with Xai, and you 0:18:41.720 --> 0:18:44.119 know before that was one point five at the end 0:18:44.160 --> 0:18:47.320 of last year before they talked about the merger. But 0:18:47.359 --> 0:18:49.800 no one's really talking about the addition of terror fab 0:18:49.880 --> 0:18:52.800 yet what that impact has. And I do think that 0:18:52.800 --> 0:18:57.159 that is going to be a game changer for for SpaceX. 0:18:57.200 --> 0:18:58.679 Why do you think that'll be a game changer. 0:18:59.520 --> 0:19:03.200 Well, he really has the total ecosystem now with terrafab, 0:19:04.200 --> 0:19:06.399 he no longer is going to be dependent on chips 0:19:06.400 --> 0:19:09.200 from Nvideo. It might be one of the reasons why 0:19:09.200 --> 0:19:11.600 you're seeing, you know, in video stock act the way 0:19:11.640 --> 0:19:15.840 it is. You know, Elon Musk is the type of 0:19:15.880 --> 0:19:18.800 guy that does not like to be dependent on other companies. 0:19:18.800 --> 0:19:21.040 So look what he did with the Tesla, you know, 0:19:21.080 --> 0:19:23.120 with the with the Gigawat factories. You know, he didn't 0:19:23.119 --> 0:19:25.560 want to be buying batteries and be dependent to to 0:19:25.720 --> 0:19:28.280