WEBVTT - A Quantum Leap Into the Next Generation of Computing 0:00:01.360 --> 0:00:05.720 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.040 --> 0:00:22.840 You are listening and watching Bloomberg Business Week. Carol Master 0:00:22.960 --> 0:00:25.200 along at just Matten. She is in for Tim steneviek 0:00:25.600 --> 0:00:27.440 on this Friday? Is it Friday? 0:00:27.560 --> 0:00:27.639 Just? 0:00:27.760 --> 0:00:28.600 I think it's Friday? 0:00:28.840 --> 0:00:29.160 It is? 0:00:29.240 --> 0:00:30.080 It's been every week. 0:00:30.120 --> 0:00:30.680 I hope it is. 0:00:31.600 --> 0:00:34.120 Either way, Folks, everybody in that control room, we're leaving 0:00:34.159 --> 0:00:36.239 after this show. I'm just telling you we're counting it 0:00:36.240 --> 0:00:38.680 a Friday. It is Friday, of course, it's just been 0:00:38.720 --> 0:00:41.559 a busy dance week. We have, though, a really interesting 0:00:41.600 --> 0:00:44.280 next segment coming up because you know Jess. Earlier this 0:00:44.400 --> 0:00:47.600 year McKenzie came out there, of course, the Consulting Giant, 0:00:47.800 --> 0:00:50.800 and they wrote about quantum technology and they noted, and 0:00:50.840 --> 0:00:54.120 this is a quote, quantum computers represent a completely new 0:00:54.120 --> 0:00:57.160 approach to computing. And while they won't replace today's computers, 0:00:57.160 --> 0:01:00.040 by using the principles of quantum physics, they will be 0:01:00.080 --> 0:01:05.679 able to solve very complex statistical problems that today's computers cannot. 0:01:05.880 --> 0:01:09.520 And quantum computing has so much potential and momentum that 0:01:09.600 --> 0:01:13.440 McKinsey has identified it as one of the next big 0:01:13.720 --> 0:01:17.200 trends in tech. Quantum computing alone, just one of the 0:01:17.319 --> 0:01:21.080 three main areas of emerging quantum technology, could account Carol 0:01:21.160 --> 0:01:24.319 for nearly one point three trillion dollars in value by 0:01:24.440 --> 0:01:25.880 twenty thirty five. 0:01:25.959 --> 0:01:27.480 So do you think we've got everybody's attend to now? 0:01:27.560 --> 0:01:29.680 I think we do, all right, So let's get into it. 0:01:29.720 --> 0:01:34.520 We welcome Raj Hasra, president and CEO at Quantinum. I 0:01:34.520 --> 0:01:36.800 hope I'm saying it correctly. There's a lot of us 0:01:36.840 --> 0:01:40.800 in there. He's with us on zoom from Portland, Oregon. Raj, 0:01:41.160 --> 0:01:42.800 nice to have you here with us. Say the name 0:01:42.840 --> 0:01:44.080 of your company. I want to make sure we've got 0:01:44.080 --> 0:01:44.600 it correctly. 0:01:46.360 --> 0:01:49.680 That's great to be here, and it is. You got 0:01:49.680 --> 0:01:53.320 it almost ninety percent right. It's Quentinumum quantin Yes, there 0:01:53.320 --> 0:01:54.640 are a couple of skis in there. 0:01:55.280 --> 0:01:57.200 Okay, we want to make sure we had it right. Listen, 0:01:57.200 --> 0:02:00.440 I'm so glad that we have you here. First, I'll 0:02:00.600 --> 0:02:02.640 tell us a little bit about what your scientists and 0:02:02.680 --> 0:02:05.200 your team and your company are working on what's the mission, 0:02:05.240 --> 0:02:06.320 what's the core business? 0:02:08.960 --> 0:02:14.000 You put Quantinuum is the world's largest full stack hardware 0:02:14.160 --> 0:02:19.640 plus software quantum focus company. We have only one singular focus, 0:02:19.760 --> 0:02:24.840 and that is to accelerate quantum computing technologies and its 0:02:24.880 --> 0:02:29.280 commercialization to solve as you've were noting just now, some 0:02:29.360 --> 0:02:34.880 of those society's largest challenges around inside generation, around cybersecurity. 0:02:35.480 --> 0:02:37.960 It is the next big thing because it is what's 0:02:38.000 --> 0:02:40.960 going to cause the next big value to society and 0:02:41.080 --> 0:02:44.640 value in economics. So our job is future. 0:02:44.280 --> 0:02:46.240 In So help me out here because we're all saying 0:02:46.240 --> 0:02:49.519 the next big thing in technology is AI Artificial intelligence. 0:02:49.600 --> 0:02:52.600 Is there a connective tissue between AI and quantum technology? 0:02:53.200 --> 0:02:55.959 They should? We be thinking about them as two different 0:02:55.960 --> 0:02:57.440 things are highly connected. 0:02:58.680 --> 0:03:01.120 Absolutely done. You hit it on the head. AI is 0:03:01.120 --> 0:03:03.600 a huge force. Think of it as an algorithm set, 0:03:03.720 --> 0:03:05.840 think of it as a methodology, think of it as 0:03:06.280 --> 0:03:10.480 as working on data. The key to it is what 0:03:10.560 --> 0:03:15.120 infrastructure does it run on? So if you not AI 0:03:15.200 --> 0:03:18.200 is all about data, more data every day, you know 0:03:18.280 --> 0:03:21.639 GPT three four five, The training models are getting huge 0:03:21.760 --> 0:03:25.440 lots of data and it's going to run into, and 0:03:25.480 --> 0:03:29.800 it's running into two specific challenges, how do you compute 0:03:30.120 --> 0:03:33.000 with this fast amount of data in a sustainable and 0:03:33.120 --> 0:03:36.640 efficient manner? And number two, which I think you've you've 0:03:36.640 --> 0:03:41.280 seen quite a bit in recent talk about AI being 0:03:41.880 --> 0:03:46.160 trustable by being interpretable and transparent. That is the decisions 0:03:46.200 --> 0:03:47.840 it makes. How do you know it's right? How do 0:03:47.840 --> 0:03:52.760 you know it's the right thing. So quantum computing is 0:03:52.880 --> 0:03:56.320 very relevant to both. There are places in classical AI 0:03:56.440 --> 0:03:59.920 techniques today that quantum is a better way to compute 0:04:00.040 --> 0:04:05.120 from either data storage perspective or data you know compassion perspective, 0:04:05.400 --> 0:04:08.800 or just the raw processing of it. And the more 0:04:08.840 --> 0:04:13.320 exciting part of it is quantum allows things like languages 0:04:13.400 --> 0:04:15.920 to be represented in these models in such a way 0:04:16.320 --> 0:04:20.520 that you can actually make them transparent and interpretable, that 0:04:20.600 --> 0:04:23.920 you can say why, you know exactly why it made 0:04:23.920 --> 0:04:26.720 the decisions and told you what answers it did. And 0:04:26.880 --> 0:04:29.920 that is huge because it not lets those kinds of 0:04:30.160 --> 0:04:34.200 AI techniques be brought into the realm of regulated industries. 0:04:34.720 --> 0:04:37.880 Imagine it's not just chat GPD, you know, helping you 0:04:37.920 --> 0:04:41.440 write an email to your friend. It is chat GPD 0:04:41.600 --> 0:04:46.920 or large language models making large decisions in industrial workflows, 0:04:47.000 --> 0:04:51.880 in banking and finance, in linguistics of you know, trying 0:04:51.880 --> 0:04:55.039 to decide what RNA is and DNA modeling can do. 0:04:55.200 --> 0:04:59.760 So that the application is huge for AI to benefit 0:04:59.760 --> 0:05:04.440 from quantum computing as the next generation computing infrastructure that 0:05:04.560 --> 0:05:07.520 not only makes it more powerful and efficient, but also 0:05:07.600 --> 0:05:12.240 makes it interpretable and transparent, thereby making bigger use of 0:05:12.279 --> 0:05:13.080 it for society. 0:05:13.480 --> 0:05:16.560 You worked at Intel for about twenty five years, and 0:05:16.640 --> 0:05:19.960 when you're there, you obviously also were incorporating AI and 0:05:20.080 --> 0:05:23.080 machine learning there that really helped revitalize Intel's growth after 0:05:23.120 --> 0:05:25.400 obviously a prolonged period of decline there. What did you 0:05:25.520 --> 0:05:28.040 learn from what when it came to AI, and how 0:05:28.080 --> 0:05:30.400 are you going to end up utilizing that in your 0:05:30.680 --> 0:05:31.960 role at this point. 0:05:33.040 --> 0:05:37.240 That's a great question. As you noted, I was at 0:05:37.240 --> 0:05:39.920 Intel for twenty five years and what we saw the 0:05:39.960 --> 0:05:45.560 growth of classical computing CPU or central processing INNIT based computing, 0:05:46.480 --> 0:05:51.000 dive expand to heterogeneous compute where you had accelerators for 0:05:51.120 --> 0:05:55.800 various workloads. AI was an emerging workload, and what I 0:05:55.880 --> 0:05:59.640 learned was there is you have to do a few 0:05:59.680 --> 0:06:03.680 things in order to successfully deliver the customer expectations. You 0:06:03.800 --> 0:06:06.919 have to build the right infrastructure for the right workload. 0:06:08.320 --> 0:06:11.520 Number two is you have to work with the software 0:06:11.560 --> 0:06:14.640 industry or the software portion and not just build hardware 0:06:14.640 --> 0:06:18.440 and build them in lockstep. So there's a complete solution available. 0:06:18.480 --> 0:06:20.720 There isn't just a hardware asking for software to be 0:06:20.760 --> 0:06:25.039 written for it. And the third thing is what we 0:06:25.120 --> 0:06:30.359 learned is patients in adoption and patience and integrity in 0:06:30.680 --> 0:06:33.760 stating what the results are fundamentally important, so you don't 0:06:33.839 --> 0:06:36.840 create a hip cycle that collapses on you. That is 0:06:36.920 --> 0:06:40.880 exactly what I bring to continue. We are working on 0:06:40.960 --> 0:06:43.640 innovative hardware, but we are a full stack company and 0:06:43.680 --> 0:06:47.240 we are developing hardware and software in concert so we 0:06:47.320 --> 0:06:51.160 can actually build solutions for our customers. I'll give you 0:06:51.200 --> 0:06:55.480 an example. Just last week we announced that names like 0:06:55.920 --> 0:07:01.479 Airbus and BMW are working to incorporate quantum technology into 0:07:01.560 --> 0:07:05.200 their standard workflows that exist today to look at next 0:07:05.240 --> 0:07:08.599 generation fuels or what's called new energy. They're using quantum 0:07:08.640 --> 0:07:12.840 computing technology from US, working with us both our hardware 0:07:13.000 --> 0:07:16.360 and our software to look at better ways and more 0:07:16.400 --> 0:07:20.720 efficient batteries and fuels of the future. That's something they 0:07:20.800 --> 0:07:24.880 cannot do with classical computing for very long, if at all. 0:07:25.720 --> 0:07:30.200 So Yeah, the lessons learned are customer relationships, early and 0:07:30.320 --> 0:07:34.320 closed relationships between hardware and software, and working together to 0:07:34.440 --> 0:07:37.520 build out true economic use cases. 0:07:37.560 --> 0:07:39.160 All right, well listen, We're going to have to continue 0:07:39.160 --> 0:07:41.840 this conversation another time. We have run out of time, 0:07:41.840 --> 0:07:45.480 but we really appreciate it. Continuum CEO and President Raj 0:07:45.720 --> 0:07:48.280 Howzar joining us from Portland, Oregon. You are listening and 0:07:48.320 --> 0:07:51.160 watching Bloomberg BusinessWeek, and this is Bloomberg Radio. 0:07:51.840 --> 0:07:55.440 You're listening to the Bloomberg Business Week podcast. Catch us 0:07:55.440 --> 0:07:58.840 live weekday afternoons from three to six Eastern Listen. 0:07:58.720 --> 0:08:02.160 On Bloomberg dot com, the iHeartRadio app, and the Bloomberg 0:08:02.200 --> 0:08:05.000 Business app, or watch just Live on YouTube. 0:08:06.040 --> 0:08:08.200 All right, guys, we are going to wrap up. We're 0:08:08.240 --> 0:08:10.000 not quite done. We still a couple of hours here 0:08:10.000 --> 0:08:11.960 on Bloomberg Business Week, but I do feel like we 0:08:12.240 --> 0:08:16.080 started the week, and Jess, we several times came back 0:08:16.120 --> 0:08:18.680 to what was one of the big stories. Yes, the 0:08:18.880 --> 0:08:21.280 move that we saw along the US Treasury curve and 0:08:21.320 --> 0:08:24.360 really among global sovereign dead if you will, in terms 0:08:24.400 --> 0:08:27.800 of yields moving up. But China every day, there was 0:08:27.840 --> 0:08:30.120 a stack of new headlines. 0:08:30.160 --> 0:08:33.000 There definitely wasn't especially because this is the world's second 0:08:33.120 --> 0:08:36.440 largest economy behind the US and then obviously the third 0:08:36.480 --> 0:08:39.040 one is Japan. But this is really crucial to see 0:08:39.080 --> 0:08:42.800 how that economy, if you're seeing, particularly especially this year 0:08:42.840 --> 0:08:45.000 is supposed to be this big rebound year for the economy. 0:08:45.080 --> 0:08:47.440 What does that mean when you have different trajectories for 0:08:47.480 --> 0:08:48.560 both of their central banks. 0:08:48.600 --> 0:08:51.080 It's been tough going and we saw that in certainly 0:08:51.120 --> 0:08:53.720 the economic data points a deflation feear, is a weekending 0:08:53.760 --> 0:08:57.400 housing market, a crisis in the shadow lending sector, so much, 0:08:57.440 --> 0:09:00.880 a surprise rate cut. So let's get to it. Shazad 0:09:01.160 --> 0:09:03.199 Kazi is back with us. We're so delighted he's got 0:09:03.200 --> 0:09:05.520 to report out a new note and he asks, is 0:09:05.640 --> 0:09:09.520 China starting to collapse? Chazad, of course, is managing director 0:09:09.520 --> 0:09:12.480 at China Facebook International. They were founded over a decade 0:09:12.520 --> 0:09:15.520 ago and really to work with and help institutional investors 0:09:15.960 --> 0:09:20.760 and corporate CEOs navigate China's notoriously black box economy. That's 0:09:20.800 --> 0:09:23.160 how they write it on their website. It's so well said. 0:09:23.440 --> 0:09:28.160 He joins us on this Friday afternoon. Shazad the report 0:09:28.480 --> 0:09:30.600 you ask, is China's starting to collapse? 0:09:31.320 --> 0:09:31.640 Is it? 0:09:31.880 --> 0:09:33.160 Or is that just ridiculous? 0:09:34.920 --> 0:09:38.520 No, in China is not collapsing at all. The market 0:09:38.679 --> 0:09:42.200 is just so disappointed at the way twenty twenty three 0:09:42.240 --> 0:09:45.880 is unfolded. They were expecting a big boom basket recovery. 0:09:46.640 --> 0:09:50.280 We always argue that was very unrealistic. That has not happened, 0:09:50.600 --> 0:09:53.719 and so the investor in community has settled on the 0:09:53.800 --> 0:09:56.240 narrative that China's on the version of collapse and the 0:09:56.280 --> 0:09:57.959 only thing that can save the day now is a 0:09:58.000 --> 0:10:01.320 big bang stimulus. We of course argue back and push 0:10:01.360 --> 0:10:02.640 back against that whole thesis. 0:10:02.840 --> 0:10:06.120 What's been the catalyst to prevent us seeing a bigger 0:10:06.160 --> 0:10:08.480 rebound here in China's economies? And so many people were 0:10:08.520 --> 0:10:10.120 expecting that to happen in twenty twenty three. 0:10:11.679 --> 0:10:13.600 I think some of the assumptions going into twenty twenty 0:10:13.600 --> 0:10:16.120 three were just misplaced. You know, we had two years 0:10:16.120 --> 0:10:19.000 of a very bad economic shock because of zero COVID 0:10:19.040 --> 0:10:21.960 policies and of course the deflating of the property bubble, 0:10:22.000 --> 0:10:26.200 which really you know, not only destroyed household wealth but 0:10:26.280 --> 0:10:29.959 really crushed consumer confidence. So expecting the Chinese households to 0:10:30.040 --> 0:10:32.760 come strongly into twenty twenty three and spending left and 0:10:32.840 --> 0:10:37.000 right was very, very unrealistic. Couple that with the fact 0:10:37.080 --> 0:10:39.400 that you know, there is slow down in the external 0:10:39.480 --> 0:10:43.280 environment for China as reflected and its export orders as 0:10:43.280 --> 0:10:46.200 seen through you know, sort of the manufacturing recession, if 0:10:46.240 --> 0:10:49.160 you will, that we're seeing take place in Europe. We're 0:10:49.200 --> 0:10:51.520 certainly seeing pretty you know, slow down in manufacturing out 0:10:51.559 --> 0:10:54.360 here in the United States. Those are starting to add on. 0:10:54.679 --> 0:10:57.840 And of course the critical thing the property market, which 0:10:57.880 --> 0:11:01.640 is in a multi year restructure phase and will be 0:11:01.720 --> 0:11:05.000 a problem story I think for the Chinese economy for 0:11:05.120 --> 0:11:06.160 several more years to go. 0:11:06.600 --> 0:11:09.200 Just forgive me, I mean, Shazad, go back to what 0:11:09.240 --> 0:11:10.800 you said, did you say? What did you say about 0:11:10.800 --> 0:11:12.760 the big banks in China? What was needed? 0:11:15.559 --> 0:11:18.480 The idea right now, the consensus is that, you know, 0:11:18.600 --> 0:11:22.439 China needs to unleash big fiscal stimulus projects, the kind 0:11:22.480 --> 0:11:25.160 that they did in the aftermath of the global financial crisis. 0:11:25.440 --> 0:11:30.079 And only can big bang physcal stimulus save the Chinese economy. 0:11:30.800 --> 0:11:33.520 But that's not going to happen. Chinese policy makers are 0:11:33.559 --> 0:11:36.080 looking to de risk the system. They wanted to bring 0:11:36.200 --> 0:11:38.839 down this whole you know, this over leveraged problem that 0:11:38.880 --> 0:11:40.959 they have in the economy. They're not going to, i think, 0:11:40.960 --> 0:11:42.199 add further fuel to fire. 0:11:42.320 --> 0:11:45.200 So then what Okay, So it's great that it's kind 0:11:45.200 --> 0:11:47.760 of contained domestically, all right, or at least how you're 0:11:47.760 --> 0:11:51.280 seeing it. But I mean, if if what's needed is 0:11:51.679 --> 0:11:55.160 not going to be done, then what's I mean? You know, 0:11:55.240 --> 0:11:56.680 I think we talked with you earlier in the week, 0:11:56.760 --> 0:11:59.160 like what do we need to in terms of a 0:11:59.240 --> 0:12:02.560 reset think about the China growth engine? 0:12:04.000 --> 0:12:04.240 Yeah? 0:12:04.280 --> 0:12:06.319 I think you know, as we discussed the other day. 0:12:06.360 --> 0:12:09.520 First of all, investors need to understand that they're looking 0:12:09.559 --> 0:12:12.720 at a structural slowdown in China. They're looking at the 0:12:12.760 --> 0:12:16.400 economic management of the country depart from the model that 0:12:16.440 --> 0:12:18.760 they're used to where we used to get high rates 0:12:18.800 --> 0:12:22.160 of growth. Now China is actually paying the price for 0:12:22.200 --> 0:12:25.959 some of it. The political leadership in China has decided 0:12:26.000 --> 0:12:28.559 that they have the appetite to pay the political price 0:12:28.600 --> 0:12:31.080 because they see it as short term pain and a 0:12:31.160 --> 0:12:34.000 much you know, they're time horizon is a lot longer 0:12:34.000 --> 0:12:37.120 than the markets and investors, I think, and they're willing 0:12:37.160 --> 0:12:38.760 to pay the price today in order to set the 0:12:38.800 --> 0:12:43.440 economy on a more healthy, sustainable pace of growth, even 0:12:43.480 --> 0:12:45.560 though it's going to be a much slower pace of 0:12:45.559 --> 0:12:48.920 growth than anybody I think anticipated China hitting you know, 0:12:48.920 --> 0:12:51.040 they're going to potentially do five percent this year, We're 0:12:51.040 --> 0:12:54.480 looking at sub five percent for sure moving forward, maybe 0:12:54.559 --> 0:12:57.320 even one percent or no growth down the line if 0:12:57.320 --> 0:13:01.120 things continue to deteriorate and they're unsuccessful transitioning the economy. 0:13:01.120 --> 0:13:02.920 All right, not apples to apples, But is this kind 0:13:02.960 --> 0:13:05.079 of a kin if I think about Paul Volker when 0:13:05.080 --> 0:13:07.120 you had to rain and inflation in the seventies, like 0:13:07.160 --> 0:13:08.640 you had to do something that was going to make 0:13:08.679 --> 0:13:11.480 it very uncomfortable, but was going to put the US 0:13:11.600 --> 0:13:13.760 economy on the right trajectory. Is that kind of where 0:13:13.840 --> 0:13:16.920 China is, and it's kind of the responsible way of 0:13:17.440 --> 0:13:20.439 you know, managing your economy. 0:13:21.440 --> 0:13:24.920 Within the property market. And the way they deflated the bubble, 0:13:25.760 --> 0:13:28.800 I agree with that completely. They you know, pain, it 0:13:28.920 --> 0:13:30.960 has to be endured because that's what happens when you 0:13:31.000 --> 0:13:33.839 deflate bubbles. But that's exactly what they're trying to do. 0:13:34.200 --> 0:13:36.280 And this year, I think is a great example of 0:13:36.320 --> 0:13:39.680 the fact that they haven't jumped in to do massive bailouts. 0:13:39.720 --> 0:13:42.680 The last two years, they haven't done massive bailouts, so 0:13:42.720 --> 0:13:45.480 I think that's indicative of the fact that they are 0:13:45.640 --> 0:13:47.760 willing to put the economy on the right track and 0:13:47.840 --> 0:13:51.199 to avoid what could potentially have been a much worse 0:13:51.240 --> 0:13:53.640 hard landing. We may, I think, have gotten the Chinese 0:13:53.640 --> 0:13:56.240 hard landing that everybody predicted this whole time. Over the 0:13:56.280 --> 0:13:58.320 last couple of years, with the evergrand crisis and the 0:13:58.320 --> 0:14:00.080 property crisis that we've seen, you. 0:14:00.040 --> 0:14:02.520 See any sort of red flag's brewing when it comes 0:14:02.559 --> 0:14:04.079 to their property market. 0:14:05.880 --> 0:14:08.320 I mean, this year has been, you know, a very 0:14:08.320 --> 0:14:10.360 disappointing story for those who bet on the fact that 0:14:10.360 --> 0:14:13.240 property was on a steady road to recovery. You know, 0:14:13.280 --> 0:14:17.040 you're getting sales weakness, you're getting price weakness. Anytime you 0:14:17.080 --> 0:14:20.360 see an improvement in the numbers, it's not at all sustainable. 0:14:20.520 --> 0:14:22.800 And it may very well just be the fact that 0:14:22.840 --> 0:14:25.680 year over year results are so distorted this year, given 0:14:25.680 --> 0:14:28.320 the on again, off again switch that the economy was 0:14:28.360 --> 0:14:32.000 put on last year, the property market and specifically the 0:14:32.080 --> 0:14:36.600 residential market, the housing market, you know, has I think 0:14:36.680 --> 0:14:38.960 a lot more disappointment. I had sort of like a 0:14:39.000 --> 0:14:42.160 one step forward, two steps back type of scenario. We'll 0:14:42.160 --> 0:14:44.120 see what happens, by the way, on the commercial real 0:14:44.240 --> 0:14:47.440 estate side of the economy, which oftentimes will escape attention. 0:14:47.680 --> 0:14:50.600 The commercial property developers are also suffering, as we've seen 0:14:50.600 --> 0:14:53.480 in China pagebooks numbers over the last couple of months. 0:14:53.720 --> 0:14:56.480 All right, So I'm thinking about our audience, who, just 0:14:56.560 --> 0:14:58.680 like the rest of us, over the last couple of weeks, 0:14:58.720 --> 0:15:02.280 are feeling a little overwhelmed by all of the headlines 0:15:02.280 --> 0:15:04.320 coming out of China. As you say, China is not 0:15:04.400 --> 0:15:07.680 starting to collapse, and maybe and what's going on is 0:15:07.720 --> 0:15:10.760 really kind of the responsible thing in terms of getting 0:15:10.800 --> 0:15:13.560 the Chinese economy back on track. So what should we 0:15:13.680 --> 0:15:16.760 keep on our radar? And just got about forty seconds. 0:15:17.320 --> 0:15:20.440 So don't fall for the China's Leman moment story. It's 0:15:20.480 --> 0:15:20.960 not happening. 0:15:20.960 --> 0:15:21.600 As we said. 0:15:22.320 --> 0:15:25.080 If there is a larger crisis that begins to brew, 0:15:25.360 --> 0:15:28.840 I would expect more policy support and banks to step in, 0:15:29.280 --> 0:15:33.480 potentially taking over certain companies and certain projects. But at 0:15:33.520 --> 0:15:35.120 the same time, don't go to the other end of 0:15:35.160 --> 0:15:37.640 the spectrum and start thinking there's going to be big, 0:15:37.800 --> 0:15:41.000 big bailouts taking place, big fiscal projects being announced. A 0:15:41.040 --> 0:15:44.280 lot more nuanced and sophisticated tracking is needed this time around. 0:15:44.320 --> 0:15:47.520 But there might be more stuff that goes that falls down, 0:15:47.600 --> 0:15:50.920 more bankruptcies, but that's going to be okay. Just really quickly. 0:15:52.360 --> 0:15:55.760 We will continue to get mini crisis along the way. Absolutely. 0:15:56.160 --> 0:15:58.240 I don't foresee this turning into a big Leman moment. 0:15:58.320 --> 0:16:00.760 You can get Leman moments in a non commercial financial system, 0:16:00.880 --> 0:16:01.840 which is what you have in Chi. 0:16:02.040 --> 0:16:03.880 So great to check in with you two times this week. 0:16:03.920 --> 0:16:08.640 Shazad Kazi over at China Bacebook International, he's the managing director. 0:16:08.800 --> 0:16:10.400 Have a great weekend. This is Bloomberg. 0:16:11.160 --> 0:16:14.720 You're listening to the Bloomberg Business Week podcast. Catch us 0:16:14.760 --> 0:16:18.760 live weekday afternoons from three to six Eastern on Bloomberg Radio, 0:16:18.960 --> 0:16:22.240 the Bloomberg Business app, and YouTube. You can also listen 0:16:22.360 --> 0:16:25.440 live on Amazon Alexa from our flagship New York station 0:16:25.920 --> 0:16:28.680 Just Say Alexa playing Bloomberg eleven thirty. 0:16:30.600 --> 0:16:33.160 We are living in unusual times. I feel like we 0:16:33.360 --> 0:16:37.720 can't say that enough. Having said that, the macro impacting everything, 0:16:37.720 --> 0:16:40.360 and that includes cryptoes. We had a period of unusual 0:16:40.440 --> 0:16:43.200 calm in the crypto markets and that kind of came 0:16:43.240 --> 0:16:45.640 to an end abruptly this week. The notion of higher 0:16:45.640 --> 0:16:48.400 for longer interest rates, sparking a sell off and risk assets, 0:16:48.400 --> 0:16:51.640 and that included bitcoin. It led to mass liquidations of 0:16:51.640 --> 0:16:53.600 bullish bets. And then there was the Wall Street jonal 0:16:53.640 --> 0:16:56.200 report about SpaceX writing down the value it's bitcoin holding, 0:16:56.240 --> 0:16:56.760 so it was. 0:16:56.760 --> 0:16:59.880 Just a lot, right, And then you're also seeing risk, 0:17:00.120 --> 0:17:01.400 so it's like you're talking about when it comes to 0:17:01.400 --> 0:17:04.879 Bigcoorn sliding as much as eight percent, so clearly under pressure. 0:17:04.920 --> 0:17:09.040 And then everybody's still watching that thirty thousand dollars threshold. 0:17:08.560 --> 0:17:11.200 When it comes to big but we're below it, right, correct, 0:17:11.240 --> 0:17:13.040 All right, So let's get to it our weekly crypto 0:17:13.119 --> 0:17:15.760 segment back or with us, I should say's Frank Holmes. 0:17:15.920 --> 0:17:19.080 He's executive chairman and at the small cap publicly held 0:17:19.160 --> 0:17:22.320 High Digital Technologies. It's a crypto mining company, roughly three 0:17:22.359 --> 0:17:25.200 hundred and twenty onine, three hundred and twenty one million 0:17:25.240 --> 0:17:27.720 in market cap. It's up one hundred and sixty three 0:17:27.760 --> 0:17:30.359 percent year to date. He is on Zoom from San Antonio, 0:17:30.440 --> 0:17:34.159 Texas from Jessics home state. Yes, Frank, nice to have 0:17:34.240 --> 0:17:35.320 you here, Happy Friday. 0:17:35.960 --> 0:17:39.280 How are you outstanding in a bear market? 0:17:40.400 --> 0:17:42.840 Well, tell us about that? What do you make kind 0:17:42.840 --> 0:17:45.240 of the recent trade, it is a bear market, although 0:17:46.600 --> 0:17:49.000 we're I guess what, we're about sixty percent above where 0:17:49.000 --> 0:17:50.959 it started the year on bitcoin, So we have had 0:17:51.000 --> 0:17:51.760 a pop this year. 0:17:52.800 --> 0:17:55.840 Yeah, that's true, That's absolutely true. But after a brutal 0:17:55.960 --> 0:17:58.800 sell off last year. Well, what's interesting to me is 0:17:58.800 --> 0:18:01.480 that the dollar is is up almost we do this 0:18:01.680 --> 0:18:06.520 rolling twenty day standard deviation movement off the dollar versus 0:18:06.520 --> 0:18:10.399 ten yure government versus gold, and versus bitcoin, and what 0:18:10.480 --> 0:18:12.960 we're seeing right now going to the Jackson Hall meeting 0:18:13.000 --> 0:18:16.560 next week, is the dollar's up almost two standard deviations. 0:18:16.920 --> 0:18:19.480 That's a huge move on the upside. And this week 0:18:19.520 --> 0:18:21.399 we saw a goal break below the two hundred day 0:18:21.400 --> 0:18:25.000 moving average, and naturally yesterday was bitcoin took it on 0:18:25.040 --> 0:18:28.080 the chin. And I think these collateral assets are moving 0:18:28.080 --> 0:18:31.679 in opposite directions and direction to the dollar. So I 0:18:31.680 --> 0:18:33.840 think that that's what we're living with. But I. 0:18:36.520 --> 0:18:39.159 That's interesting because Carol and I were talking about how 0:18:39.160 --> 0:18:41.440 that had a correlation with the dollar as well, when 0:18:41.480 --> 0:18:44.440 you're talking about what that means for stock prices too, 0:18:44.520 --> 0:18:47.280 but for bitcoin in particular, because earlier this year, especially 0:18:47.320 --> 0:18:50.119 when it came in March, that turned into one of 0:18:50.200 --> 0:18:52.639 those particular assets that we're actually rallying in addition to 0:18:52.680 --> 0:18:54.960 technology stocks. But I'm curious as far as the dynamic 0:18:55.040 --> 0:18:58.720 right now between what's happening with bitcoin and obviously what 0:18:58.720 --> 0:19:00.639 we're seeing with the bond market at this point. 0:19:01.520 --> 0:19:04.320 Well, we had the two year, the five year, ten year, 0:19:04.359 --> 0:19:07.520 and the twenty year government bond yields all screaming this week, 0:19:08.040 --> 0:19:11.720 and that makes it very difficult for alternative asset classes. 0:19:12.720 --> 0:19:15.359 And I think that sort of risk off is clearly 0:19:15.920 --> 0:19:18.639 is the trade rate now, and that's part of that contagion. 0:19:19.080 --> 0:19:23.280 But bitcoin did take off after Silicon Valley bankruptcy. We 0:19:23.320 --> 0:19:25.560 did see that. What's interesting to me is that it's 0:19:25.640 --> 0:19:28.399 not as over sold as it was a year ago 0:19:28.880 --> 0:19:32.359 in May of twenty twenty two. Is actually when you 0:19:32.400 --> 0:19:35.359 look at the elasticity, the movement, the bands of how 0:19:35.440 --> 0:19:38.720 much it goes up over twenty days versus down twenty days, 0:19:39.359 --> 0:19:42.720 it was actually more over sold last year or when 0:19:42.840 --> 0:19:43.840 FTX blew up. 0:19:45.040 --> 0:19:46.960 Hey, listen, if you can, Frank, tell us little bit 0:19:46.920 --> 0:19:50.400 about your business, because you guys are certainly you know, 0:19:50.560 --> 0:19:53.359 involved in I feel like you know so much that 0:19:53.400 --> 0:19:56.240 we talk about, whether it's the connection of AI the 0:19:56.760 --> 0:19:59.080 web three digital transformation. I'll look a little bit at 0:19:59.119 --> 0:20:00.879 your website in terms of of the things that you 0:20:00.920 --> 0:20:04.439 guys are involved in. You're operating massive data centers, are 0:20:04.480 --> 0:20:06.399 you building new ones? Give me an idea of the 0:20:06.400 --> 0:20:09.080 business environment and where you guys are spending the most 0:20:09.119 --> 0:20:10.919 money and the most time in the most effort. 0:20:11.800 --> 0:20:14.959 The biggest growth is AI, clearly, and we have the 0:20:14.960 --> 0:20:19.280 most experience. High was the first to use GPU chips 0:20:19.640 --> 0:20:22.760 and has first actually crypto money company ever go public 0:20:22.800 --> 0:20:26.160 in twenty seventeen, and it ushered in many other companies 0:20:26.160 --> 0:20:28.920 coming into the space. Well, we've been taking our data 0:20:28.920 --> 0:20:31.240 centers and slowly been building out and last year we 0:20:31.320 --> 0:20:34.480 purchased almost seventy million dollars of these high performance and 0:20:34.600 --> 0:20:38.399 VIDIA chips, and now we're building out the expansion of that. 0:20:38.520 --> 0:20:41.479 And we see that as much more stable, high profit 0:20:41.520 --> 0:20:45.640 margin business than actually bitcoin mining. Bitcoin mining has these 0:20:45.640 --> 0:20:49.679 incredible moves to it where your profit margin expands dramatically 0:20:49.720 --> 0:20:52.040 and then all of a sudden it contracts. So our 0:20:52.080 --> 0:20:57.560