WEBVTT - Sam Bankman-Fried's Trial and Micron's Probe in China 0:00:01.400 --> 0:00:06.680 From Marhart where Innovation, Money and Power Collie in Silicon Valley, NBN. 0:00:07.040 --> 0:00:10.320 This is Bloomberg Technology with Caroline Hyde and. 0:00:10.480 --> 0:00:11.080 Ed Love Love. 0:00:24.760 --> 0:00:27.160 I'm Caroline Heide of Bloomberg's World headquarters in New York 0:00:27.160 --> 0:00:30.320 and Lovelow. He's on assignment. This is Bloomberg Technology. Coming 0:00:30.400 --> 0:00:33.440 up the trial of Sam Magman Freed. He kicks off 0:00:33.440 --> 0:00:36.839 in Manhattan as he faces charges of swindling millions of 0:00:36.880 --> 0:00:40.440 dollars from his crypto platform FTX. We of course will 0:00:40.440 --> 0:00:43.360 have full coverage ahead. And as micro Versus is a 0:00:43.360 --> 0:00:46.559 cybersecurity probe by the Chinese government, a bipartisan group of 0:00:46.640 --> 0:00:49.360 US senators where they're looking to visit China to address 0:00:49.360 --> 0:00:52.320 this very issue, we'll have more on the US China relations, 0:00:52.400 --> 0:00:56.720 plus and artificial intelligence. Can it help hedge funds outperform? 0:00:56.800 --> 0:01:00.000 The answer, well, that's not so so straightforward. For breakdown 0:01:00.040 --> 0:01:02.640 the results in our Bloomberg Big Take later this hour, 0:01:02.680 --> 0:01:05.200 But first let us check on these markets. We're looking 0:01:05.240 --> 0:01:07.720 at strength in the US dollar as we anticipate maybe 0:01:07.840 --> 0:01:09.679 a FED having to remain hawkish. 0:01:09.680 --> 0:01:11.119 We're up some three tens a percent. 0:01:11.160 --> 0:01:13.440 Look, this is the strongest the Dollar index has been 0:01:13.640 --> 0:01:14.600 in about ten months. 0:01:14.600 --> 0:01:18.080 Moving on, what does that mean? Well, for another key asset. 0:01:17.800 --> 0:01:20.440 That we look at versus the US dollar, Bitcoin currently 0:01:20.480 --> 0:01:22.399 on the lower side world by one point eight percent 0:01:22.440 --> 0:01:24.400 on the day, and this is after we'd seen a 0:01:24.440 --> 0:01:26.640 little bit of buying yesterday. So once again, is it 0:01:26.640 --> 0:01:29.520 profit taking or is it also a look towards the 0:01:29.560 --> 0:01:32.000 trial of Sam bagmuin freed what does the industry make 0:01:32.000 --> 0:01:32.240 of it? 0:01:32.319 --> 0:01:34.520 As it starts today? We know that he's. 0:01:34.319 --> 0:01:36.479 Facing charges that he's sort of billions of dollars from 0:01:36.480 --> 0:01:39.279 his crypto platform FTX. Let's go out to Kaylee Lines 0:01:39.319 --> 0:01:41.200 for more, who is on the ground in front of 0:01:41.240 --> 0:01:44.840 the U. S. District Courthouse and just tell us exactly 0:01:44.959 --> 0:01:46.800 the state of play what we're anticipating today. 0:01:46.880 --> 0:01:50.720 Kaylee, Well, today, Carolina, it really is all about jury selection. 0:01:50.880 --> 0:01:52.840 This is just one step in what could be a 0:01:52.880 --> 0:01:55.000 trial that plays out over the course of the next 0:01:55.200 --> 0:01:58.320 six weeks at a maximum. Today they are looking at 0:01:58.320 --> 0:02:01.120 potential jurors, vetting them as we see they have dismissed 0:02:01.120 --> 0:02:03.640 a number already, and we understand the judge is hoping 0:02:03.680 --> 0:02:06.480 to finish today, if not be finished by tomorrow morning, 0:02:06.520 --> 0:02:08.200 and then once the jury has said it really will 0:02:08.240 --> 0:02:11.000 get into the argument phase of this case. As you mentioned, 0:02:11.040 --> 0:02:13.760 he is facing a number of charges related to fraud 0:02:13.760 --> 0:02:14.960 and money laundering. 0:02:14.639 --> 0:02:15.400 Seven in total. 0:02:15.440 --> 0:02:18.480 If convicted of the maximum sentence, he could spend the 0:02:18.480 --> 0:02:20.440 rest of his life in prison. We could be looking 0:02:20.440 --> 0:02:22.960 at a sentence here of over one hundred years if convicted. 0:02:23.000 --> 0:02:25.560 He of course has pleaded not guilty. But really, over 0:02:25.600 --> 0:02:27.840 the course of this trial is when we're going to 0:02:27.840 --> 0:02:30.040 see a lot of the facts of the case born out, 0:02:30.080 --> 0:02:32.240 both from the prosecution and then of course the defense. 0:02:32.280 --> 0:02:34.480 Sam bankman Fried has frequently said it was never his 0:02:34.600 --> 0:02:37.000 intent to commit fraud on anyone, and. 0:02:37.000 --> 0:02:40.440 Of course this has ramifications for those who are watching 0:02:41.160 --> 0:02:44.680 exposure with FTX, but more broadly crypto as a whole. 0:02:44.880 --> 0:02:46.520 Of course, on the shining like. 0:02:46.520 --> 0:02:49.200 Within our crypto show that's playing out later, Kaylee, What 0:02:49.240 --> 0:02:50.520 does the industry make of all of this? 0:02:50.600 --> 0:02:53.040 Are they waiting with beta breath? Yeah? 0:02:53.240 --> 0:02:56.160 In many ways, Caroline, the industry already has been grappling 0:02:56.200 --> 0:03:00.000 with the after effects of FTX and alimeter researches, enclosure 0:03:00.280 --> 0:03:03.119 and the allegations that were made against Sam bankman Free. 0:03:03.160 --> 0:03:05.079 Because we have to keep in mind this individual, we 0:03:05.120 --> 0:03:07.440 are referring to this thirty one year old was not 0:03:07.840 --> 0:03:10.320 just the CEO of FTX, he was also a leading 0:03:10.400 --> 0:03:13.560 voice for the crypto industry as a whole. He frequently 0:03:13.600 --> 0:03:18.000 appeared on Capitol Hill lobby before lawmakers for the industry. 0:03:18.040 --> 0:03:20.080 He was seen as one of the most credible voices 0:03:20.080 --> 0:03:22.920 in the business, and so when all of that imploded, 0:03:23.200 --> 0:03:27.000 the credibility of the wider industry really did take a hit. Now, 0:03:27.280 --> 0:03:30.000 this could be somewhat of a cathartic moment for the 0:03:30.080 --> 0:03:32.320 industry once this trial is wrapped up and they can 0:03:32.360 --> 0:03:33.680 kind of put the issue to bed. 0:03:33.680 --> 0:03:34.840 But I think in a lot of. 0:03:34.760 --> 0:03:37.240 Ways, the industry is still dealing with the after effects, 0:03:37.240 --> 0:03:39.680 still trying to recover, re establish some of the credibility 0:03:39.680 --> 0:03:42.920 as there's a lot of regulatory and legislative effort underway 0:03:43.200 --> 0:03:47.760 in Washington, and the Sam Bankman free aftertaste may still 0:03:47.800 --> 0:03:49.880 be lingering in some ways, and this trial could really 0:03:49.920 --> 0:03:52.960 revive a lot of that dirty laundry a well. 0:03:52.960 --> 0:03:56.160 Put kayleie lyones, thank you. We appreciate the coverage throughout 0:03:56.240 --> 0:03:58.120 the day, and we want to now bring you some 0:03:58.960 --> 0:04:01.440 expertise him in terms of what this does mean for 0:04:01.480 --> 0:04:05.160 the industry regulation written Lard also central bank adoption. Ishua 0:04:05.240 --> 0:04:08.320 prasadam pleased to say, Cornell University professor of Trade Policy 0:04:08.360 --> 0:04:08.720 is with us. 0:04:08.720 --> 0:04:09.800 And of course, most. 0:04:09.600 --> 0:04:13.240 Notably you have worked for the IMM the International Monetary Fund. 0:04:13.120 --> 0:04:14.600 But also you're the author of the. 0:04:14.560 --> 0:04:18.160 Future of money, how the digital revolution is trans forming 0:04:18.279 --> 0:04:24.000 currencies and finance. What does this particular lawsuit, this particular 0:04:24.080 --> 0:04:26.719 moment in history mean for the adoption more broadly of 0:04:26.760 --> 0:04:27.840 crypto do you think. 0:04:29.279 --> 0:04:29.920 So, Caroline. 0:04:29.920 --> 0:04:32.919 As Katie correctly pointed out, the industry is hoping that 0:04:33.000 --> 0:04:35.280 this will be a cathartic moment in the sense of 0:04:35.640 --> 0:04:40.760 cleaning out some of the Charlattans and perhaps also providing 0:04:40.800 --> 0:04:43.760 some regulatory clarity if regulators do move forward. 0:04:44.240 --> 0:04:45.400 But the reality is. 0:04:45.320 --> 0:04:49.320 That Sambangmenfield again was seen as a messiah in some 0:04:49.400 --> 0:04:51.719 of these circles, and he was seen as delivering on 0:04:51.760 --> 0:04:55.000 some of the promises of decentralized finance. 0:04:55.480 --> 0:04:57.600 Now, what the FTX collapse. 0:04:57.279 --> 0:05:01.080 Really shows is how far the no of bitcoin and 0:05:01.120 --> 0:05:05.120 decentralized finance, which was supposed to turn away from traditional 0:05:05.160 --> 0:05:09.080 financial institutions, how far it has strayed from that promise. 0:05:09.560 --> 0:05:12.240 In effect, what we are seeing is that many of the. 0:05:12.120 --> 0:05:16.760 Problems of traditional finance are being imported into the cryptocurrency world, 0:05:17.080 --> 0:05:20.919 in particular centralization in the form of exchanges like ftx, 0:05:21.200 --> 0:05:25.159 which becomes single points of failure, and the notion that 0:05:25.279 --> 0:05:28.600 we can actually have decentralized trust, which is the whole 0:05:28.680 --> 0:05:32.000 underpinning of bitcoin, doesn't quite seem to be bearing out, 0:05:32.200 --> 0:05:35.279 because we are seeing that people seem to want to 0:05:35.480 --> 0:05:39.920 hold their crypto assets in centralized exchanges like ftx, where 0:05:39.920 --> 0:05:43.320 they also undertake trading activities. So right now we seem 0:05:43.320 --> 0:05:46.600 to be seeing a lot more centralization rather than decentralization. 0:05:47.560 --> 0:05:48.400 That's interesting. 0:05:48.800 --> 0:05:53.520 Where could we see an optimization of decentralized exchanges they 0:05:53.600 --> 0:05:56.359 do exist, there's unis what for example, how are we 0:05:56.440 --> 0:06:00.839 seeing a movement towards that future of crypto at all. 0:06:02.040 --> 0:06:03.840 I think we are beginning to see a bit of 0:06:03.839 --> 0:06:07.919 a bifurcation. There are many people who view bitcoin and 0:06:08.040 --> 0:06:13.120 other cryptocurrencies as financial assets really, and those are the people, 0:06:13.200 --> 0:06:16.880 including many somewhat nie retail investors, who seem to be 0:06:18.520 --> 0:06:22.960 taking the speculative approach to cryptocurrencies and they're holding onto 0:06:22.960 --> 0:06:25.760 these assets. But at the same time there is actually 0:06:25.760 --> 0:06:30.360 a rather vibrant market of decentralized finance, which so far 0:06:30.440 --> 0:06:33.640 has not really delivered and its promise of democratizing finance. 0:06:33.960 --> 0:06:37.880 It's created a lot of financial engineering, speculation and so forth. 0:06:38.120 --> 0:06:40.320 But I think there is real promise there that with 0:06:40.520 --> 0:06:43.599 blockchain technology we might be able to move to a 0:06:43.680 --> 0:06:46.760 world where we no longer rely on traditional institutions, where 0:06:46.880 --> 0:06:50.680 blockchain based finance through smart contracts and so on, can 0:06:50.720 --> 0:06:53.360 make financial systems a lot more efficient. 0:06:54.360 --> 0:06:56.080 What is necessary to get there? 0:06:56.400 --> 0:06:59.160 Is it clear regulation, not just in the US, but 0:06:59.200 --> 0:06:59.840 more globally. 0:07:01.240 --> 0:07:03.839 Regulation is certainly going to be needed, Carol, And I 0:07:03.880 --> 0:07:08.039 think regulation that creates guard rails, so that first of all, 0:07:08.080 --> 0:07:11.040 you have some of the basic elements of financial stability, 0:07:11.480 --> 0:07:15.400 institution specific stability as well as systemic stability taken care of, 0:07:15.920 --> 0:07:20.600 investor protection considerations taken care of, and most importantly, guardrails 0:07:20.600 --> 0:07:23.840 to make sure that we don't have excessive concentration in 0:07:23.880 --> 0:07:29.000 the space or decentralized finance being used purely for speculation 0:07:29.320 --> 0:07:32.760 or for illicit transactions of various sorts. 0:07:33.040 --> 0:07:33.840 And I think the. 0:07:33.760 --> 0:07:37.880 Notion of the industry policing itself through technology, I think 0:07:37.880 --> 0:07:39.800 it's not going to work. We are going to need 0:07:39.880 --> 0:07:42.840 some guardrails, and the question is how best do we 0:07:42.840 --> 0:07:46.320 set up those guardrails without stifling the innovation together. I 0:07:46.360 --> 0:07:49.520 think there are steps being taken in many jurisdictions, including 0:07:49.560 --> 0:07:51.840 the US, but we are still a long way away 0:07:51.880 --> 0:07:54.640 from the right sort of regulatory environment so that we 0:07:54.720 --> 0:07:59.720 can get this ecosystem to foster and thrive without necessarily 0:08:00.280 --> 0:08:02.480 creating illegal and illicit activities. 0:08:02.720 --> 0:08:05.960 Sure give us your therefore birds eye perspective, your global 0:08:06.160 --> 0:08:09.920 expertise here, because are there areas where you think leading 0:08:09.920 --> 0:08:13.480 the charge in terms of a best fit regulatory environment. 0:08:15.240 --> 0:08:19.040 Now, Europe, the United Kingdom, and Japan have move forward 0:08:19.120 --> 0:08:22.680 in terms of at least trying to define various categories 0:08:22.680 --> 0:08:27.240 of cryptocurrencies and crypto assets more broadly, and that's certainly 0:08:27.280 --> 0:08:30.360 helpful as a start, but I think a Caroline, there 0:08:30.400 --> 0:08:34.520 is really still a sort of conceptual struggle going on 0:08:34.600 --> 0:08:37.280 in terms of trying to decide whether one can take 0:08:37.360 --> 0:08:40.840 existing regulatory frameworks and fit these new products into them, 0:08:41.200 --> 0:08:44.120 or if these are new technologies that require completely different 0:08:44.160 --> 0:08:48.040 regulatory frameworks. One thing that is becoming clear is that 0:08:48.160 --> 0:08:50.880 these are not the traditional sorts of products. They do 0:08:50.960 --> 0:08:55.600 have spilloversts into traditional financial systems, and they're going to 0:08:55.640 --> 0:08:58.439 need a coordinator approach at the global level rather than 0:08:58.480 --> 0:09:03.079 fragmented approaches at the national level. So we're making progress, 0:09:03.400 --> 0:09:04.400 but very slowly. 0:09:05.200 --> 0:09:08.000 What does the role of the central banks have here, Ishue, 0:09:08.040 --> 0:09:09.959 I know this is something you've looked in more broadly 0:09:10.000 --> 0:09:12.240 because of the digital revolution, as you call it in 0:09:12.240 --> 0:09:14.240 your book, how it's impacting currencies more broadly. 0:09:15.440 --> 0:09:19.240 I think the biggest legacy of cryptocurrencies really is going 0:09:19.280 --> 0:09:22.200 to be that they have shown a pretty harsh light 0:09:22.640 --> 0:09:27.720 into the inefficiencies of traditional financial systems, especially international payments. 0:09:28.040 --> 0:09:30.079 Now central banks are responding. 0:09:29.600 --> 0:09:33.440 To this, partly through regulat reactions, but partly also by 0:09:33.480 --> 0:09:37.640 fostering better forms of digital payments that are much more inclusive. 0:09:38.000 --> 0:09:41.400 In many parts of the world, payments are largely digital already, 0:09:41.679 --> 0:09:44.280 with physical currency or cash not playing a big role. 0:09:44.360 --> 0:09:48.360 So many central banks are moving towards central bank digital 0:09:48.400 --> 0:09:49.400 currencies that can be. 0:09:49.440 --> 0:09:51.040 Used for retailed payments. 0:09:51.120 --> 0:09:54.240 In the US, it is catalyzed action by the effect 0:09:54.280 --> 0:09:58.600 to move towards a suite of better wholesale and retail. 0:09:58.280 --> 0:09:59.760 Payments in the form of FED now. 0:10:00.080 --> 0:10:02.600 So I think a lot of nice changes are brewing 0:10:02.640 --> 0:10:07.080 in financial systems, including in domestic international payments thanks to 0:10:07.120 --> 0:10:11.000 crypto currencies. But whether crypto currencies themselves will play a 0:10:11.080 --> 0:10:13.240 very important role in this I think remains. 0:10:12.920 --> 0:10:13.440 To be seen. 0:10:15.120 --> 0:10:19.000 There is therefore this sort of tension between generally a 0:10:19.080 --> 0:10:24.439 centralized version of what the utopia is of purity centralization 0:10:24.679 --> 0:10:26.720 and then and of course there's the need for regulation. 0:10:27.040 --> 0:10:30.320 Well broadly, when you've written a book about this, when 0:10:30.320 --> 0:10:33.800 we've seen the highs and the lows of exuberance around 0:10:33.840 --> 0:10:37.040 crypto die off, how many people are still asking you 0:10:37.480 --> 0:10:38.360 for your guidance? 0:10:38.600 --> 0:10:41.720 How many years do you think this wi ultimately take. 0:10:43.200 --> 0:10:45.600 I think there is a fundamental shift in terms of 0:10:45.679 --> 0:10:50.520 digitization of payments as I mentioned, but also you know, 0:10:50.640 --> 0:10:54.440 the ability for financial institutions to conduct existing forms of 0:10:54.440 --> 0:10:58.120 business in more efficient ways, but also to foster more 0:10:58.200 --> 0:11:03.040 competition among financial systems. And certainly, as we see cross 0:11:03.200 --> 0:11:08.120 boarder finance become much more friction free thanks to these 0:11:08.160 --> 0:11:12.079 new technologies which are being adopted even by traditional financial institutions, 0:11:12.440 --> 0:11:14.959 I think we will see significant efficiency gains. 0:11:15.240 --> 0:11:17.119 The real concern is whether. 0:11:17.040 --> 0:11:19.840 Like in the cryptocurrency EQUL system, we end up seeing 0:11:19.880 --> 0:11:24.520 even more concentration in traditional finance because existing incumbents could 0:11:24.600 --> 0:11:27.920 end up using these technologies to their advantage. And I 0:11:27.920 --> 0:11:30.400 think this is where regulators will play a very important 0:11:30.440 --> 0:11:33.160 role to make sure that regulations don't just become a 0:11:33.280 --> 0:11:36.880 barrier to entry for new financial firms, but just create 0:11:37.000 --> 0:11:40.319 new guard rails for this innovation to thrive. 0:11:41.440 --> 0:11:44.480 Asuan really great to get your expertise as an author 0:11:44.559 --> 0:11:46.640 and of course as a professor a trade policy over 0:11:46.640 --> 0:11:49.840 at Cornell University issue process there, we thank you. Meanwhile, 0:11:49.840 --> 0:11:52.520 coming up, look, we're going to talk about the future 0:11:52.520 --> 0:11:55.559 of regulations slightly differently. Here US senators hoping to meet 0:11:55.559 --> 0:11:58.560 the Treasure and present changing paying in China next week, 0:11:58.960 --> 0:12:02.000 and that's just talks about Micron are clearly on the agenda. 0:12:02.440 --> 0:12:04.880 We're going to unpack what the congressional leaders hope to 0:12:04.920 --> 0:12:08.160 accomplish on their visit. Meanwhile, let's head over to Asia. 0:12:08.240 --> 0:12:10.320 When we're looking at one particular stock, we have seen 0:12:10.360 --> 0:12:12.400 the trading of it here in the United States, of course, 0:12:12.440 --> 0:12:16.640 American depository receipts of TSMC now notable that this stock 0:12:16.720 --> 0:12:20.360 has eraised seventy seven million dollars of its market cap 0:12:20.559 --> 0:12:23.760 since the June high. It's basically well lost more value 0:12:23.800 --> 0:12:27.040 than any other Asia traded stock. We're bracing for their 0:12:27.080 --> 0:12:29.880 earnings October the nineteenth, but also for the prolonged weakness 0:12:29.880 --> 0:12:30.520 in the chip sector. 0:12:30.520 --> 0:12:33.000 We're currently under pressure once again. Today. This is Bluebog 0:12:33.040 --> 0:12:49.920 technology time. Now for talking tech. 0:12:49.960 --> 0:12:53.240 First up, several Taiwan based tech firms. We're actually helping 0:12:53.320 --> 0:12:57.080 Huawei build a secret network of chip plants across southern China. 0:12:57.400 --> 0:13:00.720 Now it's unclear whether the company's potential involvement violates American 0:13:00.800 --> 0:13:03.760 sanctions because of just how complex the curbs against Huawei are, 0:13:03.800 --> 0:13:06.560 but Huawei did not respond to a request for comment 0:13:06.679 --> 0:13:09.880 on Bloomberg story. Meanwhile, Japan is approving as much as 0:13:09.960 --> 0:13:14.120 one point three billion dollars in subsidies for Micron's Hiroshim factory. 0:13:14.360 --> 0:13:17.880 This will help Micron install ASML that's the European maker 0:13:17.920 --> 0:13:21.360 of equipment. It's extreme ultra violet lithography equipment used to 0:13:21.360 --> 0:13:22.160 make advanced chips. 0:13:22.240 --> 0:13:23.479 That the approval marks. 0:13:23.240 --> 0:13:26.360 A win for Micron as it grapples with uncertainty in China, 0:13:26.559 --> 0:13:29.080 one of its largest markets. And also on Micron, and 0:13:29.160 --> 0:13:31.600 let's talk about that Chinese relationship. A bipartisan group of 0:13:31.679 --> 0:13:34.520 US senators hope to meet President Hujinping in China next 0:13:34.559 --> 0:13:38.400 week with discussions about Micron being top of Maligne. The delegation, 0:13:38.720 --> 0:13:42.559 led by Senate Majority Leader Chuck Schumer and Republican Micropo, 0:13:43.000 --> 0:13:45.680 will raise the issue of Micron's ability to do business 0:13:45.720 --> 0:13:48.280 in China. It's all according to Bloomberg sources, Micron faces 0:13:48.360 --> 0:13:52.079 an ongoing probe by the Chinese government cybersecurity administration. And 0:13:52.120 --> 0:13:54.080 we want to get more on this entire story with 0:13:54.120 --> 0:13:57.439 amriy Horden co host a balance of power and I mean, ultimately, 0:13:57.480 --> 0:13:59.640 how likely is it that these senators will actually meet 0:13:59.679 --> 0:14:00.480 with Jingping. 0:14:02.240 --> 0:14:05.840 Well, we do know from an interview our colleagues had 0:14:05.880 --> 0:14:10.040 with Senator Mike Crapo that that is one ask, But 0:14:10.240 --> 0:14:13.400 so far at this moment, Chijingping has not guaranteed that meeting. 0:14:13.559 --> 0:14:15.199 There's going to be a flurry of meeting when these 0:14:15.520 --> 0:14:18.120 group of by Parson senators go over to Beijing. 0:14:18.480 --> 0:14:19.680 We do know that in twenty. 0:14:19.560 --> 0:14:23.280 Fifteen, Shijingping did sit down with a number of congressional 0:14:23.320 --> 0:14:26.840 leaders on a state visit. But normally these trips, what 0:14:26.880 --> 0:14:29.800 you would see is that senators or any sort of lawmakers, 0:14:29.800 --> 0:14:33.360 a cabinet minister. They would meet with other ministers within 0:14:33.800 --> 0:14:37.920 the Chinese Communist Party government apparatus, but not Sijingping himself. 0:14:37.960 --> 0:14:42.320 But potentially a she meeting could be on the agenda, 0:14:42.360 --> 0:14:45.520 and this could also open up the door for that 0:14:45.600 --> 0:14:49.080 Biden Shijingping also potential meeting that could happen in November 0:14:49.120 --> 0:14:49.680 at APAK. 0:14:49.960 --> 0:14:51.000 So that's the first thing. 0:14:51.040 --> 0:14:53.840 Potentially there's a she meeting with these by Parson group. 0:14:53.680 --> 0:14:55.120 Of senators, the others. 0:14:55.120 --> 0:14:57.440 Of course, what's brought up, So Senator Schumer said, other 0:14:57.480 --> 0:14:59.720 things will be brought up, like human rights, like fetanyl. 0:15:00.040 --> 0:15:02.760 But we do know that Micron is really important for 0:15:02.800 --> 0:15:06.240 both these this vice partisan group, not just where Micron 0:15:06.280 --> 0:15:09.800 is headquartered, but where they're potentially going to build new factories. 0:15:09.840 --> 0:15:12.000 One is going to be put in New York. And 0:15:12.160 --> 0:15:15.000 Micron came out over the summer saying about half of 0:15:15.040 --> 0:15:18.040 their sales are linked to companies headquartered in China. 0:15:18.480 --> 0:15:20.920 This cybersecurity review has been a huge. 0:15:20.640 --> 0:15:22.680 Deal on this company, whether or not how much they 0:15:22.680 --> 0:15:25.400 could do business in China, but also on their revenue. 0:15:25.680 --> 0:15:27.920 I mean, what is it about half of its China 0:15:27.960 --> 0:15:29.040 sales seem to be at risk? 0:15:29.040 --> 0:15:30.480 At the moment. So you're reminding us. 0:15:30.360 --> 0:15:34.560 At Crapo's course of showing the support of Boise Idaho. 0:15:34.640 --> 0:15:36.640 You've got Chuck Schumer of New York. 0:15:37.240 --> 0:15:41.080 But why coalesces around this particular company this particular moment, 0:15:41.080 --> 0:15:44.680 What does it say more broadly about US China tech relations. 0:15:44.240 --> 0:15:47.560 Because it's disintegrating sort of across the board. Well, it 0:15:47.600 --> 0:15:48.520 has disintegrated. 0:15:48.880 --> 0:15:51.960 Part of the Chinese government will say that is because 0:15:52.000 --> 0:15:55.520 of the export controls and the other penalties and sanctions 0:15:55.800 --> 0:15:59.240 that you're seeing from this administration. This administration, the Biden 0:15:59.240 --> 0:16:01.320 administration has been very clear they want to take a 0:16:01.400 --> 0:16:03.800 narrow approach, but they do want to make sure that 0:16:03.880 --> 0:16:06.960 China is unable to get their hands on critical tech 0:16:07.160 --> 0:16:11.000 that potentially China could use to bolster their military. So 0:16:11.080 --> 0:16:13.440 many see that what China has been doing in terms 0:16:13.440 --> 0:16:17.320 of the Cybersecurity administration looking at what's going on in micron, 0:16:17.600 --> 0:16:20.280 they view that as a tit for tat coming back 0:16:20.320 --> 0:16:23.160 to the United States about what they did, what they're 0:16:23.200 --> 0:16:28.160 doing when it comes to US technology that companies want 0:16:28.200 --> 0:16:30.760 to get their hands on in China. So it does 0:16:30.840 --> 0:16:32.640 feel like is an all time low, which is why 0:16:32.680 --> 0:16:35.360 if these Senators were to meet with Shijing Ping, it 0:16:35.440 --> 0:16:37.720 potentially could help thaw some of that, especially when it. 0:16:37.720 --> 0:16:38.400 Comes to Micron. 0:16:38.840 --> 0:16:41.640 Why to Micron is still coming full sackle. We thank 0:16:41.640 --> 0:16:43.760 you so much, Blue Mix Amory Holden with a breakdown. 0:16:43.760 --> 0:16:52.840 Then this, in my. 0:16:52.840 --> 0:16:59.280 Opinion, is going to be a super huge impact general 0:16:59.520 --> 0:17:02.800 AI and so on. It can have an enormously beneficial 0:17:03.280 --> 0:17:04.960 productivity impact. 0:17:06.960 --> 0:17:09.280 Ray Dally there with our own David Weston talking about 0:17:09.320 --> 0:17:13.200 the impact of AI, but sticking with more broadly artificial intelligence, 0:17:13.320 --> 0:17:15.320 how it's up ending many industries, and we keep talking 0:17:15.359 --> 0:17:16.000 about on the show. 0:17:16.000 --> 0:17:17.760 But when it comes to actually hedge. 0:17:17.520 --> 0:17:21.600 Funds like Bridgewater Associates, many money managers just answering the 0:17:21.640 --> 0:17:25.119 technology actually lead to outperformance. It's a subject of today's 0:17:25.119 --> 0:17:26.959 Bloomberg Big Take, and one place to say that one 0:17:26.960 --> 0:17:29.199 of the authors is with us Bloomberg's Justina Lee and 0:17:30.200 --> 0:17:32.560 fascinating deep dive that you do to show that at 0:17:32.600 --> 0:17:36.080 the moment, while all these stocks are worring higher on 0:17:36.119 --> 0:17:39.879 the back of AI bets, actually deploying AI within the 0:17:39.960 --> 0:17:42.800 stock picking industry is pretty hard to do, right. 0:17:44.119 --> 0:17:44.840 Yeah, exactly. 0:17:45.000 --> 0:17:47.560 I mean, it really is the irony of this year's 0:17:47.600 --> 0:17:50.320 stock market. And I think what a lot of investors 0:17:50.320 --> 0:17:53.680 are discovering is that financial data is very different from 0:17:53.760 --> 0:17:56.639 a lot of other kinds of data because it's a 0:17:56.640 --> 0:17:59.800 bit like if you were training Chad GPT and like gibberish, 0:18:00.000 --> 0:18:02.080 because if you look at you know, what is moving 0:18:02.440 --> 0:18:04.879 the SMP five hundred every day. I mean, there's so 0:18:05.000 --> 0:18:07.920 much noise in there that you're just kind of pushing 0:18:07.960 --> 0:18:10.280 all that data through the machine. I mean, the machine 0:18:10.320 --> 0:18:12.960 is picking up a lot of noise which might not 0:18:13.080 --> 0:18:16.119 be that helpful in helping you predict what happens, you know, 0:18:16.160 --> 0:18:18.840 to the SMP tomorrow. And I think that is the 0:18:19.000 --> 0:18:21.320 problem that a lot of hedge funds are running into. 0:18:21.400 --> 0:18:24.600 But that's definitely not stopping a lot of quantitative investors 0:18:24.600 --> 0:18:26.440 from trying to like crack that puzzle. 0:18:26.720 --> 0:18:28.800 And they've actually been trying to crack the puzzle for 0:18:28.880 --> 0:18:32.359 long before Chatch GPT became part of our Lexican RT. 0:18:32.520 --> 0:18:34.480 Justina and talk to us about some of the individuals 0:18:34.480 --> 0:18:36.480 who spoke to in particularly the co founder of Research 0:18:36.520 --> 0:18:39.280 Affiliates went off and founded in twenty sixteen, I think 0:18:39.400 --> 0:18:42.280 was it reliant Global Advisors and AI driven sort of 0:18:42.480 --> 0:18:46.080 quin fund, and well he was really upended during the 0:18:46.119 --> 0:18:48.520 COVID crisis, right, because there's just no data for that. 0:18:50.320 --> 0:18:52.880 Yeah, I think the COVID crisis is a great illustration 0:18:53.040 --> 0:18:56.240 of why AI is really hard on finance, because you know, 0:18:56.320 --> 0:18:58.240 the English language is not that different. 0:18:58.280 --> 0:18:59.440 You know, one hundred years. 0:18:59.280 --> 0:19:01.520 Ago from now, cats and dogs have looked the same, 0:19:01.560 --> 0:19:04.720 and that's why our iPhone can kind of recognize animals. 0:19:05.119 --> 0:19:06.919 But you know, when it comes to financial data, there 0:19:06.920 --> 0:19:09.639 are a lot of regime changes. But I think the 0:19:09.720 --> 0:19:11.800 hope for a lot of people like Jason you know, 0:19:12.600 --> 0:19:15.359 who's the co founder of Research Affiliates, who is a 0:19:15.400 --> 0:19:18.800 convert to using machine learning in finance, is that he's 0:19:18.880 --> 0:19:21.360 hoping if you feed a lot of the data into 0:19:21.400 --> 0:19:24.639 the machines, they're kind of picking up how the environment 0:19:24.720 --> 0:19:27.359 is changing as well, and that will make his systems 0:19:27.480 --> 0:19:30.840 more adaptive. And that is sort of I think the 0:19:30.960 --> 0:19:33.000 dream of a lot of people that are trying to 0:19:33.040 --> 0:19:35.000 apply machine learning in finance. 0:19:35.760 --> 0:19:36.359 At the moment. 0:19:36.359 --> 0:19:40.720 Though with AI, with all the issues with the data 0:19:40.840 --> 0:19:44.320 garbaging garbage out, are we able to still see that 0:19:44.560 --> 0:19:48.480 quant funds and indeed, just AI driven ways of stop 0:19:48.520 --> 0:19:51.600 picking is kind of okay compared to people. Are we 0:19:51.640 --> 0:19:53.080 already seeing jobs being lost? 0:19:55.560 --> 0:19:57.600 Yeah, I think for now, not just yet. 0:19:57.640 --> 0:20:00.160 I mean, if we look at the track record of 0:20:00.240 --> 0:20:03.560 AI hetch funds, you know, there is a hedge fund index. 0:20:03.600 --> 0:20:05.679 I mean, they're not really doing much better than the 0:20:05.720 --> 0:20:09.119 hedge fund industry overall, and so it's not obvious that 0:20:09.160 --> 0:20:12.680 they're necessarily better than humans. But one perspective I've heard 0:20:12.720 --> 0:20:15.080 from reporting this story is that in a way they 0:20:15.080 --> 0:20:17.040 don't need to be better than humans. I mean, if 0:20:17.080 --> 0:20:19.959 you can kind of run a portfolio that does just 0:20:19.960 --> 0:20:23.159 as better but with far fewer humans, that might already 0:20:23.200 --> 0:20:25.960 be more efficient. And I think we kind of, you know, 0:20:26.080 --> 0:20:28.240 zoom out a little bit and look at kind of 0:20:28.280 --> 0:20:31.400 the use of AI in terms of productivity hacks. I mean, 0:20:31.440 --> 0:20:34.200 everywhere on Wall Street we're seeing a lot of uses 0:20:34.240 --> 0:20:37.920