WEBVTT - Bitcoin Tops $30,000 and the Pentagon's Leaked Intelligence 0:00:01.360 --> 0:00:06.600 From hard where Innovation, Money and Power Collie in Silicon Valley, NBR. 0:00:06.960 --> 0:00:11.000 This is Bloomberg Technology with Caroline Hide and Ed Lovedlow 0:00:24.960 --> 0:00:27.360 in Caroline Hide every Bloomberg's World headquarters in New York, 0:00:27.760 --> 0:00:30.280 and I'm Ed Lovelow in San Francisco. This is Bloomberg 0:00:30.320 --> 0:00:34.000 Technology iming our Bitcoin tops thirty thousand dollars. We'll discuss 0:00:34.120 --> 0:00:37.080 what's driving the gains the assets getting a boost on 0:00:37.120 --> 0:00:40.000 those moves. Class will take a deep dive into one 0:00:40.000 --> 0:00:43.519 of the biggest US intelligence leaks in recent history. More 0:00:43.560 --> 0:00:47.000 details on the breach ahead, and we'll be all across 0:00:47.040 --> 0:00:50.519 the race for artificial intelligence dominance capital g Anous is 0:00:50.520 --> 0:00:54.000 one hundred million dollar funding round for an AI research platform, 0:00:54.040 --> 0:00:58.000 Alpha Sense. But first let's check in on these public markets, 0:00:58.040 --> 0:01:01.080 because actually tech is feeling little less love than the 0:01:01.080 --> 0:01:02.680 rest of the benchmarks. Today we're up by four ten 0:01:02.800 --> 0:01:05.200 percent on the NASAC all important data point. You heard 0:01:05.200 --> 0:01:07.920 it from Alex Guy just earlier. The CPI print tomorrow. 0:01:07.920 --> 0:01:10.360 A little bit of nervousness therefore around owning big tech. 0:01:10.600 --> 0:01:12.560 Some of the key tech names as will drill into 0:01:12.600 --> 0:01:15.120 a little bit later, But All Country World Index interesting 0:01:15.160 --> 0:01:17.240 me on the higher side. Europe came back after the 0:01:17.280 --> 0:01:20.160 Easter holiday, the extended break and managed to put a 0:01:20.160 --> 0:01:22.119 little bit of fuel under that fire. Two year yield though, 0:01:22.160 --> 0:01:24.240 just rises up some five basis points. As we all 0:01:24.360 --> 0:01:26.480 attention on CPI and what it means for the federals 0:01:26.480 --> 0:01:29.160 EVE move it on. What's happening in terms of crypto 0:01:29.440 --> 0:01:32.639 thirty thousand dollars well above Now we managed to break 0:01:32.760 --> 0:01:35.199 three of that trading range at the twenty eight thousand. 0:01:35.240 --> 0:01:38.080 We were generally languishing around for the past few weeks, 0:01:38.080 --> 0:01:41.640 and what does it mean some really psychological levels being hit? Now? 0:01:41.720 --> 0:01:44.560 Are we going back to eclipsing the prices where we 0:01:44.600 --> 0:01:47.800 saw the three hours capital disintegration where you saw Terra 0:01:47.880 --> 0:01:50.400 Luna de marcle. We're now up seven percent over the 0:01:50.440 --> 0:01:53.200 last two days. Yeah, the big question is still why. 0:01:53.520 --> 0:01:56.160 But the what is playing out in equity markets as well? 0:01:56.200 --> 0:01:59.240 You look at crypto related stocks, we're markedly higher in 0:01:59.280 --> 0:02:01.680 a number of actually want to go to micro Strategy 0:02:01.960 --> 0:02:05.120 because the four billion dollar bet that it made on bitcoin. 0:02:05.240 --> 0:02:08.240 That company is now back in the black because bitcoin 0:02:08.360 --> 0:02:12.119 is trading above the average transaction price. There's so much 0:02:12.120 --> 0:02:14.840 out there today about well, what happens if the FED 0:02:15.080 --> 0:02:17.720 brings rates back down? What does that mean for Bitcoin? 0:02:17.919 --> 0:02:20.000 What happens if we enter a recession? Then you look 0:02:20.000 --> 0:02:23.520 at the relative performance of Bitcoin to other I guess 0:02:23.800 --> 0:02:26.079 risk assets, you know, in terms of the best performance 0:02:26.080 --> 0:02:28.040 of the year. I still don't have a great sense 0:02:28.080 --> 0:02:31.600 on what is happening. Luckily, we've got a couple of guests, 0:02:31.639 --> 0:02:33.600 so go be perfectly placed to discuss it all as 0:02:33.600 --> 0:02:36.280 well as the upgrade as soon as tomorrow. But in begs, 0:02:36.360 --> 0:02:40.160 Katie Greifeld kicks us off, Katie, what are you seeing 0:02:40.240 --> 0:02:42.040 around the world of crypto at the moment? What don't 0:02:42.040 --> 0:02:44.760 you There are so many narratives as to what could 0:02:44.760 --> 0:02:47.720 be pushing bitcoin higher. In particular, there's a lot of narratives. 0:02:47.720 --> 0:02:51.079 There's no satisfying answer other than the one that this 0:02:51.120 --> 0:02:54.200 is a macro asset. It tends to follow sort of 0:02:54.200 --> 0:02:57.959 the macro narrative that's of the day and of the day. 0:02:58.000 --> 0:03:00.359 Of the past few weeks, the narrative has been that 0:03:00.400 --> 0:03:02.280 the FED is going to be forced to cut rates 0:03:02.360 --> 0:03:05.520 at some point this year. That would obviously be good 0:03:05.520 --> 0:03:08.000 news for the likes of tech, for the likes of crypto. 0:03:08.040 --> 0:03:10.520 When you think about that low interest rate environment that 0:03:10.680 --> 0:03:13.919 really pushed investors out the risk spectrum. What's been interesting 0:03:14.160 --> 0:03:16.120 over the past few days is that you've seen bitcoin 0:03:16.200 --> 0:03:18.959 sort of break apart from tech. Today is a great 0:03:18.960 --> 0:03:21.799 example of Bitcoin up what almost four percent. Then you 0:03:21.840 --> 0:03:24.160 look at the NAZAC one hundred down about half a 0:03:24.200 --> 0:03:27.720 percent or so, so maybe those correlations coming apart a 0:03:27.760 --> 0:03:31.080 bit to the benefit of bitcoin. I would say, though, 0:03:31.080 --> 0:03:33.840 that liquidity in this space is still very, very low 0:03:33.880 --> 0:03:36.680 despite this rebound. I think it's also a question of 0:03:36.680 --> 0:03:39.280 who is in this market, who is buying right where 0:03:39.480 --> 0:03:42.360 the thirty thousand US dollar potoken mark for the first 0:03:42.400 --> 0:03:45.960 time since June of last year, but still significantly far 0:03:46.000 --> 0:03:48.720 from the November twenty twenty one high. What are the 0:03:48.760 --> 0:03:53.240 big forces in terms of institutions names driving this market, Katie, 0:03:53.760 --> 0:03:55.800 None to speak of, really, and that's part of the 0:03:55.840 --> 0:03:58.440 reason why you have liquidity so low right now. According 0:03:58.520 --> 0:04:02.320 to some measures, bitcoin equidity hovering near a ten month low. 0:04:02.360 --> 0:04:06.400 You haven't really seen a big institutional push with this rebound, 0:04:06.400 --> 0:04:08.400 and if you look at some of the retail flows 0:04:08.440 --> 0:04:11.160 I like to track exchange traded products both in the 0:04:11.280 --> 0:04:14.880 US and Europe, you really haven't seen any meaningful influence 0:04:15.080 --> 0:04:17.680 to speak of. So the tourists are gone from this market, 0:04:17.680 --> 0:04:20.800 the institutions are gone from this market. You're left with 0:04:20.880 --> 0:04:24.279 sort of the crypto believers who are pushing the price 0:04:24.360 --> 0:04:26.800 higher again in very low liquidity, which has helped to 0:04:26.880 --> 0:04:29.599 the upside. But if we get some sort of upset, 0:04:29.680 --> 0:04:32.920 perhaps in the form of a more hawkish FED than expected, 0:04:32.960 --> 0:04:36.200 that low liquidity could exacerbate things to the downside as well. 0:04:36.839 --> 0:04:39.240 All right, bloom bows, Katie Greyfeld, thank you very much. 0:04:39.320 --> 0:04:42.640 Welcome now Spencive bog At Blockchain Capital or general partner 0:04:42.760 --> 0:04:46.599 here with me in San Francisco. You are essentially a 0:04:46.640 --> 0:04:52.159 fundamental investment analysts. You lead research. What did the fundamentals 0:04:52.160 --> 0:04:54.120 tell you about what on earth is happening with bitcoin 0:04:54.279 --> 0:04:56.200 right now? So most the fundamentals that we deal with 0:04:56.240 --> 0:05:00.800 are early stage, But which fundamentals are there any fundamentals point? So, 0:05:00.839 --> 0:05:02.799 most of the fundamentals we work with for early stage 0:05:02.800 --> 0:05:04.680 startups are related to all the things you'd see in 0:05:04.720 --> 0:05:07.280 any traditional software startup. Right We're looking at user growth, 0:05:07.320 --> 0:05:10.840 we're looking at transaction activity depending on the particular company. 0:05:11.240 --> 0:05:14.359 Now here for bitcoin, when we're trying to describe or 0:05:14.400 --> 0:05:16.880 explain the price action. We always want to come back 0:05:16.880 --> 0:05:19.680 to one reason, but the reality is that there's a 0:05:19.720 --> 0:05:24.359 wide variety of market participants in crypto, and so I 0:05:24.360 --> 0:05:27.760 think that there's myriad factors at play simultaneously. You already 0:05:27.800 --> 0:05:29.920 touched on a few of those, but one of them 0:05:29.960 --> 0:05:32.440 is the lingering inflation. Say, I want to channel my 0:05:32.520 --> 0:05:37.080 inner Katie Greifeld, Sure, because she lives bitcoin second by second. Yeah, 0:05:37.360 --> 0:05:41.159 and she basically points out no earnings, no cash flow, 0:05:41.800 --> 0:05:44.919 no underlying business for you to analyze. You actually just 0:05:45.000 --> 0:05:47.599 pointed out the opposite. Those are exactly the sort of 0:05:47.640 --> 0:05:52.320 criteria looking at when assessing bitcoins. Push higher. Sure, So 0:05:52.360 --> 0:05:53.880 I mean for a lot of people looking at this, 0:05:54.000 --> 0:05:57.440 I think they're seeing there's still some concerns about inflation. 0:05:57.560 --> 0:05:59.680 So the idea of a scarce asset with a fixed 0:05:59.680 --> 0:06:05.000 supply has appeal. There's still some lingering banking concerns, even 0:06:05.040 --> 0:06:08.240 though the peak of the concerns have died down. But 0:06:08.320 --> 0:06:11.840 that increases demand for an asset that people can securely 0:06:11.920 --> 0:06:14.960 self custody as owners. Right. So those are two of 0:06:15.000 --> 0:06:18.440 maybe the four reasons I'd say that are driving bitcoin higher. Hey, Caro, 0:06:18.680 --> 0:06:22.520 In the technology sector, whether it's equities, whether it's crypto. 0:06:22.600 --> 0:06:25.440 If in doubt go back to inflation in the FED. 0:06:26.400 --> 0:06:28.320 I mean that was always the argument. Was it an 0:06:28.320 --> 0:06:30.960 inflation hedge that didn't seem to bear out from the 0:06:31.080 --> 0:06:33.680 numbers when we saw inflation spencer. But we do see 0:06:33.720 --> 0:06:36.560 it more of a buffeted about by the Federal Reserve 0:06:36.600 --> 0:06:40.680 and risk tolerance. What about institutional players we're talking to 0:06:40.760 --> 0:06:42.840 Katie about that, are they starting to be tempted to 0:06:42.880 --> 0:06:47.440 come end back in when we see a thirty thousand level. Absolutely, 0:06:47.480 --> 0:06:49.920 I think for the institutional players, I mean, listen, we 0:06:50.000 --> 0:06:52.680 run a venture capital fund that invest in early stage companies. 0:06:52.720 --> 0:06:55.040 A lot of our limited partners in our fund are 0:06:55.160 --> 0:06:59.679 large institutional allocators, endowments and pension funds in an increasing 0:06:59.760 --> 0:07:04.200 number of them own cryptodirectly, primarily bitcoin and or ether, 0:07:04.680 --> 0:07:07.680 but then they also want additional exposure via venture capital funds. 0:07:07.680 --> 0:07:10.360 They're invested in the space, so there is absolutely an 0:07:10.360 --> 0:07:13.280 appetite from them, But overall, I would say that most 0:07:13.280 --> 0:07:15.200 of them allocated over the past couple of years and 0:07:15.200 --> 0:07:18.720 have not been adding more recently. Go to eighth for us, 0:07:18.760 --> 0:07:21.640 because we are looking towards what is the continuation of 0:07:21.680 --> 0:07:24.720 the upgrade to more of a proof of state concept. 0:07:24.800 --> 0:07:28.920 We're having the Shanghai upgrade tomorrow. In Layman's terms, what 0:07:28.960 --> 0:07:31.000 does that mean? Do you expect there to be more 0:07:31.080 --> 0:07:35.840 volatility around the space. I don't expect a lot of volatility, 0:07:35.880 --> 0:07:38.080 but in Layman's terms, what's going on here is that 0:07:38.360 --> 0:07:41.400 the way that the Ethereum network is secured is by 0:07:41.440 --> 0:07:45.720 people providing or staking their capital their ether into the 0:07:45.760 --> 0:07:50.440 protocol itself. They're rewarded for doing so financially. And what 0:07:50.560 --> 0:07:54.160 happens tomorrow is people are now able to withdraw the 0:07:54.160 --> 0:07:56.960 ether that they have stated. So this only started a 0:07:57.000 --> 0:07:59.680 little over a year ago when we had the merge, 0:07:59.720 --> 0:08:02.880 that of stake really came into into being, and now 0:08:02.880 --> 0:08:04.960 we're about to see is that people can withdraw the 0:08:05.040 --> 0:08:08.920 assets that they have staked. That said, from our conversations 0:08:08.960 --> 0:08:11.120 around the market, we're not seen a lot of demand 0:08:11.160 --> 0:08:14.200 for people to unstake their assets, so we mostly think 0:08:14.200 --> 0:08:16.440 that this will be a non event tomorrow. Yes, when 0:08:16.480 --> 0:08:19.120 so many have been saying it feels as though the 0:08:19.200 --> 0:08:22.040 players who stake there, if they're long term committed to 0:08:22.040 --> 0:08:25.480 the space, but ed whether or not vench capital remains 0:08:25.560 --> 0:08:28.240 long term committed to the space amid some of the 0:08:28.280 --> 0:08:31.240 debacles of last year. That's still the key question, particularly 0:08:31.240 --> 0:08:34.400 as they know much more nervous to write checks. Yeah, 0:08:34.440 --> 0:08:36.760 and that's where I would go to Spencer next. Because 0:08:37.040 --> 0:08:40.800 we've been distracted by artificial intelligence, we've looked at volatility. 0:08:40.840 --> 0:08:44.040 I mean, as an asset class, bitcoin still carries a 0:08:44.080 --> 0:08:47.360 lot of volatility. Spenser. The root of my question is 0:08:47.880 --> 0:08:50.480 have any of the sort of psychological drivers in this 0:08:50.559 --> 0:08:52.880 market change so far in twenty twenty three when you 0:08:52.880 --> 0:08:55.600 think about the SVB fallout, or has the cryptoc community 0:08:55.720 --> 0:08:57.880 kind of just got on with it. Mostly people have 0:08:57.960 --> 0:08:59.600 just gotten on with it, right, I mean, there are 0:08:59.640 --> 0:09:02.800 some new headwinds I think from FTX collapse that are 0:09:02.880 --> 0:09:06.720 presenting regulatory headwinds, but overall, the industry is just pushing forward. 0:09:06.840 --> 0:09:09.199 It is much more organized than it has been historically, 0:09:09.240 --> 0:09:12.319 at least in terms of tackling some of these regulatory 0:09:12.320 --> 0:09:15.480 and political issues. So overall, what we're seeing is for 0:09:15.600 --> 0:09:18.400 venture capital firms, they're following the talent and they're watching 0:09:18.480 --> 0:09:20.680 there continues to be a flow of high quality talent 0:09:21.040 --> 0:09:24.400 into cryptocompanies and crypto markets. Spencie, you just mentioned that 0:09:24.520 --> 0:09:27.040 though that got on with it amid the collapse of 0:09:27.440 --> 0:09:32.440 signature of Silva Silva Gate. I'm interested in the banking 0:09:32.520 --> 0:09:37.040 rails though, and how much that has impacted liquidity. It's 0:09:37.080 --> 0:09:39.280 certainly been an impact. I mean, several of the largest 0:09:39.280 --> 0:09:43.320 banks that were servicing crypto companies provided critical infrastructure for 0:09:43.400 --> 0:09:46.400 all of those companies to be able to exchange capital 0:09:46.400 --> 0:09:49.680 on a twenty four seven basis. That's particularly important for 0:09:49.760 --> 0:09:52.920 crypto markets that operate twenty four seven three sixty five. 0:09:53.480 --> 0:09:55.760 Now some of those banks have been put out of business, 0:09:56.160 --> 0:09:59.360 and there is an open opportunity for someone to recreate 0:09:59.360 --> 0:10:03.319 the infrastruct the previously existed. All Right, Spencer Boga blockchain 0:10:03.400 --> 0:10:06.800 capital with bitcoin and around thirty thousand, two hundred and 0:10:06.800 --> 0:10:17.360 fifty nine dollars per token. The US is facing tough 0:10:17.480 --> 0:10:20.640 questions from allies after a trove of classified documents were 0:10:20.679 --> 0:10:24.200 leaked online to the global public. Former US National security 0:10:24.240 --> 0:10:26.559 advisor that's John Bolton spoke about the league earlier on 0:10:26.600 --> 0:10:30.840 Bags of Valence Taken Listen. I would also caution at 0:10:30.840 --> 0:10:34.360 this point that we not draw too many conclusions that 0:10:34.480 --> 0:10:38.520 this could be an influence operation by somebody we don't 0:10:38.559 --> 0:10:41.040 know who And once you get into the world of 0:10:41.120 --> 0:10:45.720 counter intelligence, it makes being in a whole mirrors look easy. 0:10:45.880 --> 0:10:50.240 It's very complicated. Let's try and break down some of 0:10:50.280 --> 0:10:53.000 the complexities with our own. Nick Wadhams, he's Bloomberg News 0:10:53.080 --> 0:10:56.480 National Security editor, just how big a trove of information 0:10:56.600 --> 0:11:01.480 is this ening? Well, it's pretty darn and it really 0:11:01.520 --> 0:11:04.200 confirms in a lot of ways what we had known 0:11:04.360 --> 0:11:08.000 and what US officials had been telling us publicly about 0:11:08.040 --> 0:11:10.199 what their really biggest fears are. And the big one 0:11:10.240 --> 0:11:14.320 there is Ukraine and specifically the possibility that Ukraine will 0:11:14.440 --> 0:11:17.960 run out of ammunition in the fight against Russia, both 0:11:18.080 --> 0:11:23.160 artillery shells but also air defenses. So it seems to 0:11:23.200 --> 0:11:25.560 be we're really peeling back the veneer a bit and 0:11:25.640 --> 0:11:28.720 getting into the real nitty gritty of just how worried 0:11:29.240 --> 0:11:32.400 US officials are about how Ukraine's going to be able 0:11:32.440 --> 0:11:35.720 to defend itself against Russia. Nick, when we look over 0:11:35.880 --> 0:11:39.400 history at leaks of this kind, the questions quickly become 0:11:39.880 --> 0:11:44.600 where the documents originated from and they're authenticity? Right? What 0:11:44.640 --> 0:11:48.800 have officials I'd said on that? Well, this is really 0:11:48.840 --> 0:11:51.360 the big question that we're all trying to figure out, 0:11:51.400 --> 0:11:53.680 So how authentic are they and in what ways were 0:11:53.720 --> 0:11:57.839 these documents potentially manipulated. You had John Bolton on saying, 0:11:57.840 --> 0:12:01.280 you know, this could have been a counter intelligence operation itself, 0:12:01.600 --> 0:12:04.320 and you know, so there is a big question about 0:12:04.400 --> 0:12:08.240 how authentic these documents are and what the reason was 0:12:08.320 --> 0:12:10.720 for their leak. So if this is someone on the 0:12:10.760 --> 0:12:13.600 inside saying this has to get out to expose what's 0:12:13.640 --> 0:12:16.040 really going on behind the scenes, well that's one thing, 0:12:16.080 --> 0:12:19.439 sort of an Edward Snowden Chelsea Manning type of situation. 0:12:19.559 --> 0:12:22.400 Or if this is Russia that got those documents and 0:12:22.440 --> 0:12:25.720 then manipulated some of the numbers in there to create 0:12:25.760 --> 0:12:28.000 a false impression, you know, I mean this is again 0:12:28.040 --> 0:12:31.080 that hall of mirrors at John Bolton referenced Nick. So, actually, 0:12:31.320 --> 0:12:36.400 when we're sitting here as technology consumers of information, is 0:12:36.440 --> 0:12:40.280 this a cyber threatened hack or actually is when will 0:12:40.320 --> 0:12:42.360 we understand whether this is something that the US could 0:12:42.360 --> 0:12:46.480 have protected. Well, it's a great question because it's it's 0:12:46.520 --> 0:12:49.719 going to again run us up against what US officials 0:12:50.120 --> 0:12:53.200 tell us and what the truth may actually be. So 0:12:53.280 --> 0:12:55.920 we know there is an investigation going on right now. 0:12:56.559 --> 0:12:59.240 The big question will be Okay, it was this a leak? 0:12:59.480 --> 0:13:01.440 Was this some on the inside who got this? Else? 0:13:01.679 --> 0:13:05.320 Was this a hack? Was this some sort of counterintelligence operation? 0:13:05.600 --> 0:13:08.560 There's so much we don't know, and so much likely 0:13:08.600 --> 0:13:11.520 they're not going to tell us because to tell us 0:13:11.600 --> 0:13:14.600 what exactly happened here is in turn going to expose 0:13:15.000 --> 0:13:17.840 US sources and methods. So we're still trying to sift 0:13:17.840 --> 0:13:21.040 through all of that stuff. My suspicion is, given the 0:13:21.080 --> 0:13:23.320 gravity of this and what US officials have been willing 0:13:23.320 --> 0:13:25.600 to say about how grave this leak is, that it 0:13:25.760 --> 0:13:27.600 was in fact a leak or a hack and not 0:13:28.240 --> 0:13:32.520 some sort of influence operation. All right, our thanks to 0:13:32.559 --> 0:13:36.200 Bloomberg Nick quadens out of DC on Bloomberg Technology here 0:13:36.480 --> 0:13:39.200 now Over in the UK, m I five, which is 0:13:39.240 --> 0:13:43.640 Britain's domestic intelligence service, is appointing its first female head 0:13:43.800 --> 0:13:48.760 of its cyber spying agency GCHQ. Ankist Butler, the current 0:13:48.840 --> 0:13:51.840 Deputy Director General, will take up her new posts in May. 0:13:52.080 --> 0:13:54.800 The change in leadership comes at a pretty sensitive time 0:13:54.880 --> 0:13:57.000 is the US and its allies, as we've just discussed, 0:13:57.240 --> 0:14:00.120 continue to deal with the fallout of the series of 0:14:00.160 --> 0:14:04.000 intelligence leaks have emerged online in recent days. She will 0:14:04.040 --> 0:14:06.920 replace the outgoing director Sir Jeremy Fleming, who's held that 0:14:07.000 --> 0:14:10.439 position for the last six years. Caroline, stick with Cybersecurity 0:14:10.480 --> 0:14:12.439 for a moment, because we're going to look at shares 0:14:12.480 --> 0:14:15.880 of Acami right now after being upgraded by Papisanla to overweight, 0:14:16.200 --> 0:14:17.719 managing to tick up two and a half percent. The 0:14:17.720 --> 0:14:20.280 analyst sighting and recent Paul black and shares the offering 0:14:20.280 --> 0:14:22.400 an opportunity to get into the stock as the company 0:14:22.480 --> 0:14:25.160 is likely to refocus its profit strategy and speaking to 0:14:25.200 --> 0:14:28.840 some analyst calls, look at NASDAK the company Nazdac Inc. 0:14:29.080 --> 0:14:31.680 The shares of you know, the stock exchange operator is 0:14:31.680 --> 0:14:34.480 downgraded to equal weight from overweight over Morgan Stanley. The 0:14:34.480 --> 0:14:38.440 analyst sees risks to growth for the outlook of Nasdac Solutions. 0:14:38.520 --> 0:14:40.720 It's the business that makes up actually seventy percent of 0:14:40.760 --> 0:14:44.600 the company's revenue. Nevertheless, trading flat on the day coming up, 0:14:45.200 --> 0:14:48.200 and we'll wonder how banks stack up when it comes 0:14:48.240 --> 0:14:51.320 to well how they use artificial intelligence. We'll speak with 0:14:51.400 --> 0:14:56.080 Evidence CEO about all the firm's recent report analyzing AI 0:14:56.200 --> 0:14:58.760 in financial services. Even got a shout out from the 0:14:58.800 --> 0:15:21.680 one I know need, Jamie Diamond it's bring back. This 0:15:21.800 --> 0:15:25.880 is a incredibly disruptive new technology. I think we're seeing 0:15:25.920 --> 0:15:29.840 opportunity and potential platform shift that we haven't seen in 0:15:29.840 --> 0:15:33.200 a long time. Regulation can put us where we need 0:15:33.240 --> 0:15:35.920 to be if we have the strength to put it 0:15:35.960 --> 0:15:38.640 in place. I do think it's just impossible to regulate. 0:15:38.680 --> 0:15:43.600 All the leading AI lebs know they're creating something dangerous, 0:15:43.720 --> 0:15:45.680 but none of them really want to stop it. The 0:15:45.800 --> 0:15:48.840 way that Chinese companies go about the AI space is different. 0:15:48.880 --> 0:15:52.760 They just don't have the same approach toward the morality 0:15:52.800 --> 0:15:55.120 around these technologies that we do in the US. The 0:15:55.160 --> 0:15:58.120 impact on jobs is real, but it doesn't have a 0:15:58.200 --> 0:16:01.040 super intelligence that will have mine of its own. It's 0:16:01.080 --> 0:16:03.840 on all of us and particularly investors to think about 0:16:03.880 --> 0:16:07.520 the questions and the potential falls, you know, as well 0:16:07.560 --> 0:16:11.520 as of the opportunity and value it creates. The debates 0:16:11.520 --> 0:16:14.040 are still clear our previous guests. They're weighing in on 0:16:14.080 --> 0:16:16.000 what are the risks, what are the opportunities that come 0:16:16.000 --> 0:16:19.680 when using particularly generative AI in various sectors? How will 0:16:19.720 --> 0:16:22.840 AI we shape the competitive landscape? In particular? Go focus 0:16:22.880 --> 0:16:25.640 in on banking right now is to help answer that question. 0:16:25.720 --> 0:16:28.120 Alexandra musa is Ada. She is a CEO and co 0:16:28.200 --> 0:16:32.640 founder of Evidence, which tracks AI integration in financial services. Alexandra, 0:16:32.840 --> 0:16:34.640 you've got a bit of a shout out and JP 0:16:34.680 --> 0:16:38.600 Morgan's annual letter Jamie Diamonds in particular, what is it 0:16:38.680 --> 0:16:41.560 that you're doing? How are you measuring what AI is 0:16:41.680 --> 0:16:45.400 being adopted by banks? So we are published about eight 0:16:45.440 --> 0:16:49.160 weeks ago the first public benchmark on AI adoption for 0:16:49.280 --> 0:16:52.280 banks and what we do it has not been done 0:16:52.320 --> 0:16:56.440 before in terms of taking outside in view by holding 0:16:56.440 --> 0:16:59.640 a mirror up to the banks and looking at the 0:16:59.760 --> 0:17:03.840 AI capabilities. So what we do is that we go 0:17:03.880 --> 0:17:07.560 and we measure the banks on the strength of their 0:17:07.560 --> 0:17:11.840 AI ecosystem and then we rank them according to the 0:17:11.920 --> 0:17:15.240 scores that they get against their strengths of this ecosystem, 0:17:15.280 --> 0:17:19.920 which we break down into four areas talent, innovation, leadership, 0:17:19.920 --> 0:17:24.159 and responsible AI. Okay, so talent bringing on the right 0:17:24.200 --> 0:17:25.879 people the right parts of the banks you need to 0:17:25.880 --> 0:17:29.840 build up. What about responsible AI? What are banks doing 0:17:29.840 --> 0:17:32.720 about that at the moment? Yeah, it is, I mean 0:17:32.800 --> 0:17:36.639 on the on the talent and the leadership and innovation side, 0:17:36.640 --> 0:17:38.600 that's sort of really in the engine room. You know, 0:17:38.600 --> 0:17:42.920 have you got the right talent AI? You know dev 0:17:43.119 --> 0:17:46.320 ops and mL ops, and you look at implementation talent 0:17:46.400 --> 0:17:50.080 and so on and on. The innovation is whether you're 0:17:50.080 --> 0:17:52.880 sort of following a build or buy approach, whether you're 0:17:53.040 --> 0:17:56.879 looking at research and patents or what sort of partnerships 0:17:56.920 --> 0:18:01.080 you have, also what you're investing in or acquiring. But 0:18:01.240 --> 0:18:04.120 on the doing all that is great way looking at 0:18:04.119 --> 0:18:06.960 the raw horsepower, but doing it in a responsible manner 0:18:07.040 --> 0:18:11.200 is really critical, and especially now given the release of 0:18:11.280 --> 0:18:13.920 chat GPT and a lot of banks and a lot 0:18:13.960 --> 0:18:16.479 of other sectors too, but banks looking at how to 0:18:16.520 --> 0:18:22.200 incorporate large language models. The responsible aid is really important 0:18:22.240 --> 0:18:27.560 in terms of making sure that your clients customers are 0:18:27.720 --> 0:18:30.520 comfortable with the handling of all of this data and 0:18:30.640 --> 0:18:33.679 with the use of AI tools on that data. And 0:18:33.720 --> 0:18:37.960 it's really important to show that you're following frameworks of 0:18:38.080 --> 0:18:41.679 responsible and ethical AI as you use it. Yeah, alexandre 0:18:41.840 --> 0:18:44.600 I appreciate the depth of the methodology. You know. In 0:18:44.640 --> 0:18:47.240 recent weeks, Caroline and I have name checked a number 0:18:47.280 --> 0:18:50.120 of banking ceo is. Brian moynihan first week of March 0:18:50.240 --> 0:18:53.200 was talking about how they're dabbling. There's work to do 0:18:53.640 --> 0:18:57.359 when it comes to modernizing banking technology with regards to AI. So, 0:18:57.440 --> 0:18:59.960 who are the winners and losers on your index? Who's 0:19:00.040 --> 0:19:03.640 scores highly, who scores poorly? Yeah, well we have as 0:19:03.720 --> 0:19:06.880 you know, we have JP Morgan top the index, came 0:19:06.920 --> 0:19:11.280 out number one in the index. Interestingly, a raw bank 0:19:11.320 --> 0:19:16.840 of Canada came second, a smaller bank, but predominantly we're 0:19:16.880 --> 0:19:20.199 seeing the North American banks in the top ten, with 0:19:20.320 --> 0:19:25.399 the European banks lagging somewhat and the UK banks lagging 0:19:25.440 --> 0:19:29.040 the European banks. That brings me my next question, which 0:19:29.160 --> 0:19:32.240 is we learned in the aftermath of Silicon Valley Bank 0:19:33.240 --> 0:19:36.879 or relearned how global the banking industry is. How close 0:19:37.040 --> 0:19:40.320 is the coordination that you see between different geographies and 0:19:40.359 --> 0:19:43.879 regions in the banking system on how to implement AI 0:19:43.960 --> 0:19:48.560 across borders. Well, there's there's no real coordination between the 0:19:48.640 --> 0:19:52.199 banks across. The way that implementation is happening in the 0:19:52.240 --> 0:19:55.359 European banks is quite different from the way that is 0:19:55.400 --> 0:19:59.520 being done in the northern North American banks. The North 0:19:59.560 --> 0:20:03.760 American banks take an approach much more looking at how 0:20:03.800 --> 0:20:06.400 big tech is organized, so having R and D centers 0:20:06.600 --> 0:20:11.240 and being much using AI across the banks, whereas the 0:20:11.320 --> 0:20:14.760 European banks take more of an engineering approach where they're 0:20:14.800 --> 0:20:20.640 going in silos and implementing AIM more in a siloed approach. 0:20:21.119 --> 0:20:24.000 So you do see differences in the approaches that the 0:20:24.040 --> 0:20:27.520 banks are taking whether you be in Europe or North 0:20:27.560 --> 0:20:30.119 America and Amaxandra, does any of that come down to 0:20:30.359 --> 0:20:36.720 how governments or cross institutional viewpoints are of how to 0:20:36.800 --> 0:20:40.080 regulate how to ethically build AI, because many would say, actually, 0:20:40.080 --> 0:20:42.359 when you think of the regulation being developed around it, 0:20:42.440 --> 0:20:45.119 actually Asia or indeed Europe really leaves the pack in 0:20:45.160 --> 0:20:50.159 this way. Yes, I mean the interesting aspect here is 0:20:50.160 --> 0:20:54.360 actually that the North American Canadian banks were very visible 0:20:54.880 --> 0:21:00.080 around the guard rails that they're putting in place. And 0:21:00.080 --> 0:21:02.360 now we have to remember that banks are heavily regulated 0:21:02.400 --> 0:21:05.000 to begin with, so a lot of this is happening internally. 0:21:05.480 --> 0:21:10.080 What we're capturing is what is expressed externally in terms 0:21:10.280 --> 0:21:15.159 of you know, principles around explainability responsible AI in general 0:21:15.600 --> 0:21:18.240 and the people they're putting in place and the lines 0:21:18.240 --> 0:21:21.760 of defense across the banks that they're visible about. In Europe, 0:21:21.760 --> 0:21:25.520 you've got GDPR regulation right, and so there's a different 0:21:25.600 --> 0:21:28.280 that sits slightly differently in the banks, and they're expressing 0:21:28.680 --> 0:21:30.720 the guard rails that they're putting around it in slightly 0:21:30.760 --> 0:21:35.840 different ways. But you could say that there are advanced 0:21:35.840 --> 0:21:38.280 thinking at the European level with the AI Act in 0:21:38.720 --> 0:21:44.040 motion right now, but because of the GDPR regulation in place, 0:21:44.480 --> 0:21:46.879 there is there's a lot of thinking that has been 0:21:46.880 --> 0:21:49.360 done in the European banking system. Great house and time 0:21:49.400 --> 0:21:52.320 with you. We thank you, Alexandra, Thank you a CEO 0:21:52.400 --> 0:22:03.439 and co founder of Evidence. Welcome actively Meg Technology. I'm 0:22:03.480 --> 0:22:06.720 Karain Hide in New York, loved in San Francisco. It's 0:22:06.760 --> 0:22:08.880 just quickly checking on these markets because we had seen 0:22:09.200 --> 0:22:11.840 broadly technology stocks in the US under pressure. We still 0:22:11.840 --> 0:22:13.720 remain as that one hundred of the big benchmark that 0:22:13.720 --> 0:22:16.080 remembers up about ninety percent so far this year, down 0:22:16.320 --> 0:22:19.000 half percent six out of seven days trading. That is 0:22:19.040 --> 0:22:21.160 on the lower side the Fang index. This is about 0:22:21.240 --> 0:22:24.160 big tech getting sold off today, the Microsoft, the alphabets 0:22:24.240 --> 0:22:26.400 we see across the board just under pressures. Who worry 0:22:26.440 --> 0:22:30.159 about that CPI, that inflation print tomorrow? Bitcoin though, shogging 0:22:30.200 --> 0:22:32.560 off any of the risk asset concerns. Another three percent 0:22:32.600 --> 0:22:35.840 as we hit some key technical levels thirty thousand swift 0:22:35.840 --> 0:22:39.080