WEBVTT - Tech Selloff and Big Box Bash 0:00:02.400 --> 0:00:05.800 From the heart of where innovation, money and power collive 0:00:06.519 --> 0:00:11.080 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:11.119 --> 0:00:27.920 Emily jay I Ed Ludlow in San Francisco in for 0:00:27.960 --> 0:00:31.159 Emily Chang. This is Bloomberg Technology coming up in the 0:00:31.200 --> 0:00:35.919 next hour. Tech tumbles, retailers sinks stocks. This is concerns 0:00:35.920 --> 0:00:39.000 around earnings adds to fed anxiety. We speak to a 0:00:39.080 --> 0:00:43.680 seasoned investor who sees opportunity in the drop. Plus it's 0:00:43.720 --> 0:00:46.760 not just tech stocks. Cryptocurrencies are in the gutter this 0:00:46.840 --> 0:00:49.720 year too, and the meltdown shows no signs of easing. 0:00:49.800 --> 0:00:52.600 Then again, some coins are holding up better than others. 0:00:52.600 --> 0:00:55.920 Will have all the details and Elon Musk is at 0:00:55.920 --> 0:00:59.560 it again. Twitter's board says it's committed to the billionaires 0:00:59.560 --> 0:01:04.120 original takeover deal despite elons Bok concerns. The Tesla ceo 0:01:04.240 --> 0:01:07.800 also using the social media platform to vent frustrations on 0:01:07.880 --> 0:01:10.560 the ev maker getting yanked from a key e s 0:01:10.600 --> 0:01:13.360 G index. All of that later this out we'll get 0:01:13.360 --> 0:01:14.959 to at a moment, But first let's get a look 0:01:15.000 --> 0:01:18.360 at market's pain for stocks. The SMP five hundred suffering 0:01:18.440 --> 0:01:21.319 its deepest one day drop in almost two years, Bloomberg's 0:01:21.440 --> 0:01:25.920 data here with the latest Riddika consumer retail tech all 0:01:25.959 --> 0:01:28.600 in the red, all in the red, indeed ed and 0:01:28.640 --> 0:01:31.319 this today has been nothing short of brutal. When you 0:01:31.360 --> 0:01:34.800 have the SMP five closing down some four the now 0:01:34.880 --> 0:01:37.600 ZACK one hundred being weighed down even more, down some 0:01:37.760 --> 0:01:40.600 five percent. You have those heavy weights like Apple and 0:01:40.680 --> 0:01:44.600 Amazon also down today over five percent in today's session, 0:01:44.600 --> 0:01:46.720 and really big tech not even being helped out by 0:01:46.760 --> 0:01:49.320 the fact that we did have lower yields today on 0:01:49.440 --> 0:01:52.960 that tenure it was down some eleven basis points for 0:01:53.040 --> 0:01:56.000 that really not helping the market out today as we 0:01:56.040 --> 0:01:59.120 saw that flight into safety and treasury is really getting 0:01:59.120 --> 0:02:00.520 a bid. And of course, one we talk about that 0:02:00.600 --> 0:02:03.160 risk off sentiment, we've got to talk about bitcoin ed 0:02:03.240 --> 0:02:08.080 below that thirty thousand dollar threshold there of course, if 0:02:08.080 --> 0:02:10.760 you actually think a bitcoin in the may alone down 0:02:10.800 --> 0:02:14.440 more than that collapse and stable coin last week not 0:02:14.520 --> 0:02:17.720 recovering those losses, but for today at least, that pressure, 0:02:18.000 --> 0:02:21.920 that's selling pressure really accelerated after those target earnings, so 0:02:22.000 --> 0:02:26.959 amiss on those analysts expectations and that profit outlook being 0:02:27.000 --> 0:02:29.960 cut to six percent from eight percent. Now, this is 0:02:30.000 --> 0:02:32.959 not about sales. This is not about revenues. It was 0:02:33.000 --> 0:02:36.480 about higher freight costs, it was about higher inventory levels. 0:02:36.760 --> 0:02:38.600 All of that really weighing on the stock. And it 0:02:38.639 --> 0:02:41.280 was a similar story that we saw with Walmart. Walmart 0:02:41.280 --> 0:02:44.200 stock now down over the past two days and Target 0:02:44.200 --> 0:02:47.280 of course having its worst day since the nine seven. Now, 0:02:47.360 --> 0:02:49.000 let us flip up the board because when we talk 0:02:49.000 --> 0:02:51.240 about margins, when we talk about those coming under pressure, 0:02:51.480 --> 0:02:54.720 let's look at those Cisco earnings that we just got 0:02:54.800 --> 0:02:57.560 after the market closed, and you see that stock absolutely 0:02:57.560 --> 0:03:00.840 plunging down from their percent here. They got hit with 0:03:00.880 --> 0:03:04.920 those China COVID lockdowns, the supply chain issues really coming 0:03:04.919 --> 0:03:06.720 to the forefront. They also got hit by the Russia 0:03:06.840 --> 0:03:09.880 Ukraine war and of course inflation playing a key part. 0:03:09.919 --> 0:03:12.600 Will that way on customer demand or will set back 0:03:12.639 --> 0:03:15.600 to Cisco after those earning fat stock after hours punging 0:03:15.639 --> 0:03:19.959 some head. Yes, Cisco a real bell weather of corporate spending. 0:03:19.960 --> 0:03:22.519 Our thanks to Bloomberg's Ridika goot To and let's stick 0:03:22.520 --> 0:03:24.880 with markets. I want to bring in mel like a Messino. 0:03:25.000 --> 0:03:27.680 She's the CEO of WE Family Offices, which has more 0:03:27.880 --> 0:03:31.760 than fourteen billion dollars in assets, under management. Mel You've 0:03:31.760 --> 0:03:33.880 seen a lot of markets. What do you make of 0:03:33.919 --> 0:03:36.560 a daylight today? Well, I think we're going through a 0:03:36.640 --> 0:03:39.880 paradigm shift. You know, we're going through a regime change, 0:03:40.040 --> 0:03:41.920 and I think the markets are getting used to the 0:03:42.000 --> 0:03:46.400 fact that the very drivers that droves this fantastic investment 0:03:47.000 --> 0:03:49.000 environment for the last ten years, it's not going to 0:03:49.080 --> 0:03:51.840 be there anymore. We're not going to have low inflation, 0:03:51.920 --> 0:03:54.120 we're not going to have low interest rates, we're not 0:03:54.160 --> 0:03:57.600 going to have globalization, We're not going to have frankly, 0:03:57.680 --> 0:04:01.560 very benign geopolitical markets. So so I think that a 0:04:01.600 --> 0:04:04.520 lot of the things that lead to wonderful markets over 0:04:04.520 --> 0:04:06.360 the last ten years are going to change, and so 0:04:06.480 --> 0:04:08.480 I think the market is trying to figure out what's 0:04:08.520 --> 0:04:10.760 the new paradigm gonna look like, what's it going to 0:04:10.840 --> 0:04:13.920 be in the next ten We'll look here a chart 0:04:13.960 --> 0:04:17.839 on the Bloomberg terminal evaluations on the NASTAC one hundred, 0:04:17.880 --> 0:04:21.000 we're getting nearer to ten year average on that price 0:04:21.120 --> 0:04:25.360 projected profit right, and we're getting nearer too pre pandemic levels. 0:04:25.960 --> 0:04:30.800 Do you sense opportunity in a daylight today? Absolutely? Absolutely, 0:04:31.200 --> 0:04:33.000 because I think a lot of the things that are 0:04:33.040 --> 0:04:36.880 worrying the corporates, a lot of the supply chain issues, 0:04:37.760 --> 0:04:40.760 lower profit margins, inflation cre How are you going to 0:04:40.800 --> 0:04:43.520 solve it? You're gonna solve it through technology. So I 0:04:43.920 --> 0:04:46.120 think that the name of the game is going to 0:04:46.160 --> 0:04:49.159 be productivity, and what's going to drive productivity. It's going 0:04:49.200 --> 0:04:52.440 to be technology. So I think there's a tremendous opportunity 0:04:52.480 --> 0:04:56.600 that's happening right now. Now. You're the former CEO of 0:04:56.680 --> 0:04:59.919 JPMorgan Private Bank, You've been in the market's a long time, 0:05:00.000 --> 0:05:02.880 and there's a lot of take on board inflation, the 0:05:02.920 --> 0:05:06.600 outlook for higher rates, supply chain issues, China. Can go 0:05:06.640 --> 0:05:08.960 on and on if you'd like me to. What's driving 0:05:08.960 --> 0:05:13.320 the psychology of this market. I think it's inflation. I 0:05:13.520 --> 0:05:16.400 think it's it's really the fact that for those of 0:05:16.520 --> 0:05:19.599 us who remember, and I do remember, once inflation starts, 0:05:19.640 --> 0:05:22.040 it's really hard to get it under control. And we 0:05:22.080 --> 0:05:26.560 really have been blessed with this unbelievable investment climate over 0:05:26.600 --> 0:05:29.000 the next ten years, over the last ten years, and 0:05:29.040 --> 0:05:31.000 I think people are trying to figure out how we're 0:05:31.040 --> 0:05:33.320 going to be able to bring down inflation. What is 0:05:33.360 --> 0:05:35.120 it going to look like over the next ten years? 0:05:35.160 --> 0:05:37.799 What is it gonna take? And again, I'm not a trader. 0:05:37.839 --> 0:05:39.960 I'm more of a long term investor, so I really 0:05:40.000 --> 0:05:43.040 look at the next ten years. A few things caught 0:05:43.080 --> 0:05:44.880 my eye when you and I were talking the markets 0:05:44.880 --> 0:05:48.320 throughout the day. You see opportunities in particular sectors and 0:05:48.400 --> 0:05:53.400 subsectors talking about artificial intelligence, cybersecurity, some perhaps those long, 0:05:53.640 --> 0:05:59.520 longer duration software stocks. Where do you see that opportunity specifically? Well, 0:05:59.680 --> 0:06:02.640 would the opportunity around all of the sudden you think 0:06:02.680 --> 0:06:06.760 about all of the areas their productivity is really going 0:06:06.839 --> 0:06:10.320 to change the new paradigm. Uh, it's it's really going 0:06:10.360 --> 0:06:12.599 to be. For example, let's take the health care sector 0:06:12.640 --> 0:06:15.200 and take a look at the demographics on the United 0:06:15.240 --> 0:06:18.320 States technology. I think it's going to make a huge 0:06:18.360 --> 0:06:20.560 difference in the healthcare and I think you have to 0:06:20.640 --> 0:06:24.080 play it across the equity spectrum. You have to play 0:06:24.080 --> 0:06:26.839 an adventure, you have to pay play it in girls, 0:06:26.880 --> 0:06:28.560 you have to play it in the private markets on 0:06:28.600 --> 0:06:31.839 the public markets, So you have to play it across 0:06:31.880 --> 0:06:35.480 the board. Same thing with cybersecurity, same thing with artificial 0:06:35.520 --> 0:06:39.600 intelligence or the cloud. Right, I just want to come 0:06:39.600 --> 0:06:42.880 back to Cisco with downt and after hours, Cisco is 0:06:42.920 --> 0:06:46.280 active saying it's impossible to catch up on supply given 0:06:46.320 --> 0:06:48.680 the current situation. You think about their exposures, what we 0:06:48.720 --> 0:06:52.159 see in the semiconductor space, their exposure to China. But 0:06:52.240 --> 0:06:56.280 you against the opportunity in semiconductors taught me about that well. 0:06:56.320 --> 0:06:58.760 We do see a lot of opportunity in semiconductors, where 0:06:58.800 --> 0:07:01.400 it's going to take time because I think new factories 0:07:01.400 --> 0:07:03.640 are going to have to be built. There's going to 0:07:03.720 --> 0:07:06.440 be tremendous demand. But we're going through this adjustment, and 0:07:06.520 --> 0:07:09.159 I think that's where the issue is is that we're 0:07:09.160 --> 0:07:11.520 going through this adjustment. It's taking down a lot of 0:07:11.560 --> 0:07:14.640 great companies that will I think emerge stronger as a 0:07:14.680 --> 0:07:17.280 result of this. They will emerge differently as a result 0:07:17.320 --> 0:07:20.160 of this, and there will be I think tremendous opportunity 0:07:20.200 --> 0:07:25.120 in that space, including with companies like Ziska. We've seen 0:07:25.200 --> 0:07:28.280 this under performance of the NAZAC one hundred relative to 0:07:28.280 --> 0:07:32.000 the broader market, right, the sensitivity of tech to higher rates, 0:07:32.040 --> 0:07:36.520 the psychology around that going forward, what is the key 0:07:36.640 --> 0:07:39.840 data that we're looking at. Do we track inflation or 0:07:39.880 --> 0:07:43.960 do we assess the markets faith that the FED can 0:07:44.040 --> 0:07:47.720 handle inflation without causing a soft hard landing or indeed 0:07:47.720 --> 0:07:51.080 delivering a soft landing. Well, the economy is really moving, 0:07:51.520 --> 0:07:53.640 UH is pretty hot right now, and it's going to 0:07:53.760 --> 0:07:56.800 take a bit to cool it down. So I think 0:07:56.840 --> 0:08:00.280 that and the consumer is still spending even and though 0:08:00.320 --> 0:08:04.520 you're seeing the Walmart and and and Target results, but 0:08:04.600 --> 0:08:07.680 I think that the economy is probably strong enough not 0:08:07.760 --> 0:08:10.760 to have a recession this year. But I think we 0:08:10.880 --> 0:08:13.320 might get a recession next year, but I don't think 0:08:13.360 --> 0:08:16.960 it will be long, right, male, final question, you also 0:08:17.000 --> 0:08:20.840 see opportunity in private markets towards me about that. We 0:08:20.920 --> 0:08:24.360 see lots more opportunity actually in private markets than in 0:08:24.400 --> 0:08:27.040 public markets. And I think there's a tremendous amount of 0:08:27.040 --> 0:08:29.480 money to be put to work. And I think that 0:08:29.640 --> 0:08:32.640 exactly what's happening in the public markets will bring down 0:08:32.720 --> 0:08:38.160 valuations and we'll create fantastic opportunities in the private markets 0:08:38.880 --> 0:08:42.880 across the whole spectrum, the whole spectrum. Indeed, mel like 0:08:42.920 --> 0:08:55.080 a Messino CEO of We Family Offices. Thank you, as 0:08:55.120 --> 0:08:59.000 Elon Musk continues to tweet and tweet and tweet his 0:08:59.080 --> 0:09:02.240 concerns about twee this problems sources say his deal to 0:09:02.280 --> 0:09:05.000 buy the platform is still very much going forward. For 0:09:05.080 --> 0:09:07.400 more and where things stand, I'm joined by Bloomberg's Deals 0:09:07.440 --> 0:09:12.920 reporter Michelle Davis, along with Bloomberg Technology executive editor Tom Giles. 0:09:12.920 --> 0:09:14.559 And Tom, I'm going to start with you, just bring 0:09:14.679 --> 0:09:16.439 us up to speed. Where do we stand with this? 0:09:16.520 --> 0:09:19.720 What a Twitter saying and all of this? Yeah, well Twitter, 0:09:20.040 --> 0:09:23.880 Twitter thinks the deal's going forward. Um as our colleague Michelle, 0:09:23.880 --> 0:09:26.120 who were about to talk to broke the news yesterday, 0:09:26.360 --> 0:09:28.760 Twitter's board came out and said, we're going to enforce 0:09:28.840 --> 0:09:32.280 this merger agreement. We've got an agreement in place where 0:09:32.280 --> 0:09:35.480 Elon Musk is going to pay fifty twenty for our company, right, 0:09:35.640 --> 0:09:38.840 and we expect that deal to go through. So all 0:09:38.920 --> 0:09:43.160 this talk, all this background noise about bots and the 0:09:43.280 --> 0:09:46.800 deals on hold, which ain't a thing, by the way, 0:09:47.360 --> 0:09:50.840 not a thing. Twitter is like, the deal goes forward, 0:09:50.960 --> 0:09:52.560 all right, So Michelle, I want to get the inside 0:09:52.559 --> 0:09:54.760 scoop from you. But first we had Natasha Lamb from 0:09:54.760 --> 0:09:58.360 our junior capital on the show on Tuesday. Listen is 0:09:58.400 --> 0:10:02.200 what she had to say about this whole situation. I 0:10:02.240 --> 0:10:05.520 think Twitter has had so many challenges over the years, 0:10:05.840 --> 0:10:09.080 which is why you've seen you know, CEOs come and 0:10:09.120 --> 0:10:12.280 go move around, why you're seeing what's happening with Elon 0:10:12.400 --> 0:10:15.520 Musk right now. Um, you know, Unfortunately, right now I 0:10:15.559 --> 0:10:18.120 feel like I feel like Elon Musk is like a 0:10:18.160 --> 0:10:22.640 cat playing with a bottle of string, a cat with 0:10:22.679 --> 0:10:25.600 a ball of string. But what you're hearing, Michelle is 0:10:25.600 --> 0:10:30.280 in the background, the bankers, the advisors, business as usual. Yeah. 0:10:30.320 --> 0:10:34.160 Everyone that I've been talking to, um, you know, seems 0:10:34.160 --> 0:10:37.360 to have the impression that things the Steel will proceed 0:10:37.600 --> 0:10:42.319 as planned. One big sign of that is that the 0:10:42.440 --> 0:10:46.000 proxy filing hit yesterday morning. That's you know, this big, 0:10:46.040 --> 0:10:49.720 more than page long documents that explains how the deal 0:10:49.760 --> 0:10:53.040 came together. Um. It's something that was put together in 0:10:53.080 --> 0:10:56.280 coordination between the Musk camp and the Twitter camp, and 0:10:56.280 --> 0:10:58.880 it's something that Musk would have had to personally sign 0:10:58.920 --> 0:11:01.120 off on before would been filed. And this is a 0:11:01.600 --> 0:11:05.040 proxy that you know outline the deal terms twenties. So 0:11:05.240 --> 0:11:08.360 that's the clearest indication that you know, both sides do 0:11:08.960 --> 0:11:12.280 see this deal going forward, despite the you know tweets 0:11:12.320 --> 0:11:17.240 that we're seeing on Twitter. Michelle, I've got a question, 0:11:17.360 --> 0:11:20.280 so all this chatter, all this noise in the background 0:11:20.320 --> 0:11:23.920 about Boughts and whether or not he had all the 0:11:23.960 --> 0:11:27.200 information he needed before he agreed to this deal. What 0:11:27.440 --> 0:11:31.000 happens if he decides I don't want to pay fifty 0:11:31.840 --> 0:11:35.720 What are the means that he has at his disposal. So, 0:11:35.920 --> 0:11:37.520 you know a lot of people have talked about the 0:11:37.520 --> 0:11:40.439 fact that the deal has a breakup fee and that 0:11:40.520 --> 0:11:42.880 you know, people say that he could just pay this 0:11:42.960 --> 0:11:45.880 billion dollar break up and walk away. That's not true. Um, 0:11:45.960 --> 0:11:49.080 this deal actually includes as it's seller friendly, So it 0:11:49.120 --> 0:11:53.120 includes this legal provision called specific performance, which basically means 0:11:53.320 --> 0:11:55.840 I must decides he wants to walk away, Twitter can 0:11:55.840 --> 0:11:57.800 take him to court and get a court order that 0:11:57.840 --> 0:12:00.320 says you have to complete the steale, you have to 0:12:00.360 --> 0:12:01.960 come up with the finance, and you have to pay 0:12:02.080 --> 0:12:05.880 for Twitter. Um. Other options that he could take is 0:12:05.920 --> 0:12:08.680 he could try to show that there was something called 0:12:08.679 --> 0:12:12.679 a material adverse event. Um, it's a mac cause and 0:12:12.760 --> 0:12:15.280 he could say, you know, there was like some change 0:12:15.320 --> 0:12:18.680 to the business that materially, for a sustained period of time, 0:12:18.679 --> 0:12:21.520 is going to change Twitter's outlook. Um, But the burden 0:12:21.520 --> 0:12:23.800 of proof is on him. He would have to show 0:12:23.800 --> 0:12:26.320 this so him saying, uh, you know, Twitter, I'm not 0:12:26.360 --> 0:12:28.600 going through this deal until you prove to me that 0:12:28.679 --> 0:12:31.960 box make up fewer than five percent of accounts. That's 0:12:32.000 --> 0:12:35.200 not Twitter doesn't have to prove anything. Um. The other 0:12:35.240 --> 0:12:38.240 thing is he waived his right to do diligence when 0:12:38.320 --> 0:12:41.280 he was going about this deal and presented that as 0:12:41.360 --> 0:12:44.560 something that, uh, you know, was a vote in favor 0:12:44.559 --> 0:12:46.000 of the deal. He said, you know, I'm someone who's 0:12:46.000 --> 0:12:47.560 gonna be able to do this quickly. I won't even 0:12:47.559 --> 0:12:49.959 do diligence and so kind of doesn't have a like 0:12:50.120 --> 0:12:53.400 to stand on. And then finally, Twitter has made public 0:12:53.400 --> 0:12:56.360 disclosures about the fact that you know, it estimates that 0:12:56.440 --> 0:12:58.680 the box make up fewer the five percent of accounts, 0:12:58.679 --> 0:13:01.839 but it's also in securities filing said, including in its 0:13:02.040 --> 0:13:05.199 most recent ten K said the number could be higher 0:13:05.200 --> 0:13:08.160 than that. So it for the people I talked to 0:13:08.200 --> 0:13:10.760 you say that it would be a judge would be 0:13:10.840 --> 0:13:14.000 hard press to agree with Musk on this. Um. What 0:13:14.120 --> 0:13:16.720 could happen is, you know, he could walk he could 0:13:16.760 --> 0:13:19.920 try to walk away. Twitter could take him to court. Um. 0:13:20.040 --> 0:13:23.160 And then in order to avoid some you know, lengthy 0:13:23.160 --> 0:13:27.840 protracted court battle. Um, there could be a scenario where 0:13:27.840 --> 0:13:32.120 the two come to some settlement. But at this point, um, 0:13:32.440 --> 0:13:34.920 from my understanding, you know, Twitter does not have any 0:13:34.920 --> 0:13:39.920 reason to renegotiate a deal. The contract is in their favor, um, 0:13:39.960 --> 0:13:42.520 and so it seems like the deal has to go 0:13:42.559 --> 0:13:46.679 ahead unless unless must can prove that there's some you know, 0:13:46.800 --> 0:13:50.400 material adverse effect to the business. Meantime, Tom wierrating on 0:13:50.400 --> 0:13:53.000 the share price right, you know, we saw the sell 0:13:53.000 --> 0:13:55.360 off in Twitter stock accelerate with the broader market, but 0:13:55.480 --> 0:14:01.800 basically the skepticisn't from the market that sent materializes. Meantime, 0:14:02.280 --> 0:14:06.959 Elomuski is tweeting a lot about his political affiliations, and 0:14:07.160 --> 0:14:10.760 we wonder, is this him getting ahead of scrutiny of 0:14:10.800 --> 0:14:13.800 a deal. Is this him trying to get allies in DC? 0:14:14.280 --> 0:14:16.120 What's your ead? Sure, there's a couple of things going on. 0:14:16.200 --> 0:14:19.800 He talked about his disillusionment with the Democrats, how in 0:14:19.840 --> 0:14:23.240 the next election he's voting Republican and this is apparently 0:14:23.280 --> 0:14:24.920 the first time he's done and I haven't seen his 0:14:25.000 --> 0:14:27.880 voting records, but that's what he's saying. So what's interesting 0:14:27.920 --> 0:14:29.960 about that? You have a couple of dynamics going on 0:14:30.360 --> 0:14:35.280 This is a guy whose market is moving, is shifting. 0:14:35.320 --> 0:14:40.080 He started in California's company started in California. He's moved 0:14:40.200 --> 0:14:44.040 to Texas. He's shifting towards wanting to sell trucks. He's 0:14:44.080 --> 0:14:47.680 got a different constituency. The market for electronic vehicles in 0:14:47.720 --> 0:14:51.080 California anyway is saturated. He needs to embrace a whole 0:14:51.120 --> 0:14:56.520 new constituency people who drive trucks, different constituency than the 0:14:56.520 --> 0:14:59.240 Californians were buying e vs. Right, So that's one side 0:14:59.280 --> 0:15:01.440 of the equation. The other side of the equation is, 0:15:01.720 --> 0:15:04.640 as you pointed out, there's a lot of scrutiny around 0:15:04.680 --> 0:15:07.720 this deal, and there's a lot of scrutiny around UH, 0:15:07.840 --> 0:15:10.840 around Tesla and his in his management of Tesla, whether 0:15:10.880 --> 0:15:15.040 it's Nitza, whether it's the SEC looking at things he's 0:15:15.040 --> 0:15:20.080 tweeted about sales of Tesla stock, and reportedly the SEC 0:15:20.400 --> 0:15:24.280 is looking into the timing of his disclosure around the 0:15:25.040 --> 0:15:28.960 Twitter state. So the government is already scrutinizing a lot 0:15:29.040 --> 0:15:33.760 about Elon Musk and what he says in potential manipulation 0:15:34.040 --> 0:15:37.960 of securities, and so this could be him just getting 0:15:37.960 --> 0:15:40.760 ahead of it and saying, look, I told you so well. 0:15:40.920 --> 0:15:43.400 We knew this was already happening. We didn't need Ellen 0:15:43.520 --> 0:15:47.760 to tell us sec NITSA. These agencies have already been 0:15:47.760 --> 0:15:52.400 doing it for months. Michelle, very quickly, five seconds. What's 0:15:52.440 --> 0:15:55.400 the probability of this deal happening? I couldn't tell you. 0:15:56.720 --> 0:16:00.160 Tom at twenty, I don't think it happens. I think 0:16:00.160 --> 0:16:03.320 there's some kind of negotiation, just like Michelle was talking about. 0:16:03.520 --> 0:16:06.840 They go to court, he negotiates the price down. All right, 0:16:07.800 --> 0:16:11.000 wait and see Bloomberg's Michelle Davis and Tom Giles, executive 0:16:11.080 --> 0:16:13.800 editor for Bloomberg Technology. Thanks to you both coming up. 0:16:13.840 --> 0:16:16.600 We dig deep in today's market sell off as investors 0:16:16.600 --> 0:16:20.360 assess the impact of higher prices on earnings and economic growth. 0:16:20.680 --> 0:16:38.680 This is Bloomberg. Let's get straight back to the sell 0:16:38.720 --> 0:16:41.640 off in financial markets. All corners of the equities market 0:16:41.720 --> 0:16:44.840 sold off Wednesday, with tech among the worst performing sectors. 0:16:44.880 --> 0:16:47.640 Joining us to digest the drop is Bloomberg Senior editor 0:16:47.720 --> 0:16:52.000 for Markets and opinion columnist John Authors. John on Wednesday, 0:16:52.080 --> 0:16:55.040 like this, when you see the red across the Bloomberg terminal, 0:16:55.400 --> 0:16:58.600 where do you look for answers? Well, first of all, 0:16:59.000 --> 0:17:01.360 this is one of those is which has gone back 0:17:01.400 --> 0:17:03.360 to the kind of synchronization we saw in No. Seven 0:17:03.360 --> 0:17:07.040 and oh eight. So if you look at how bond 0:17:07.119 --> 0:17:10.199 yields have moved on how the oil price have moved today, 0:17:10.240 --> 0:17:13.119 both rose until about eight nine o'clock in the morning, 0:17:13.760 --> 0:17:19.679 tested new levels, decided they weren't going there, and slid 0:17:19.840 --> 0:17:23.600 the rest of the day. And basically stocks have fallen 0:17:23.680 --> 0:17:28.360 in line with the oil price and with bondyields all day. 0:17:28.400 --> 0:17:35.000 It's a very coherent bet actually against inflation, the bet 0:17:35.080 --> 0:17:38.080 that the miss ties back into target. Although it has 0:17:38.119 --> 0:17:41.320 a huge impact on the whole of the tech sector, 0:17:42.359 --> 0:17:46.159 it ties into this belief that inflation might be bitten 0:17:46.160 --> 0:17:51.399 off by companies having to write, having to swallow sallow 0:17:51.480 --> 0:17:55.399 with bad margins, tighten margins. These are big declines, and 0:17:55.440 --> 0:17:59.560 you wrote this fantastic column on Tuesday about the dangers 0:17:59.640 --> 0:18:02.159 of by sing the dip. You basically talk about how 0:18:02.520 --> 0:18:07.240 fund managers, investors their sanguin about stagflation or persistent inflation. 0:18:07.240 --> 0:18:10.320 Any you look at the outlook for rates, but all 0:18:10.320 --> 0:18:13.960 of these players, they're underweight tech and texts most sensitive 0:18:13.960 --> 0:18:17.080 to rates. Walk me through that one. Um, it's certainly 0:18:17.080 --> 0:18:19.200 true that in the environment of the last few years, 0:18:19.280 --> 0:18:22.240 tech has been very sensitive to rates at the moment 0:18:22.560 --> 0:18:26.439 when it's more of a straightforward play of am I 0:18:26.560 --> 0:18:30.600 comfortable being in stocks or bonds? Do I think there's 0:18:30.640 --> 0:18:37.280 going to be inflation? Uh? And stagflation or recession? At 0:18:37.320 --> 0:18:39.240 this point, I think you need to get back to 0:18:39.280 --> 0:18:42.719 the Willie Sutton dictum who was, you know, when he 0:18:42.720 --> 0:18:45.080 was asked why he robbed banks, he said, because that's 0:18:45.080 --> 0:18:47.520 where the money is. If you want to take profits 0:18:47.560 --> 0:18:49.159 at the moment, if you want to get out of 0:18:49.920 --> 0:18:53.240 the equity market, then the most liquid stocks in which 0:18:53.320 --> 0:18:56.879 people are probably sitting on profits still are the big 0:18:57.040 --> 0:19:00.400 tech fang stocks. So it's the main reason they're down. Yeah, 0:19:00.400 --> 0:19:02.120 come with me, it's might be mactaminal. Take a look 0:19:02.119 --> 0:19:04.639 at this chart. We've talked about the pain in certain 0:19:04.680 --> 0:19:08.880 pockets of this market, arc Innovation ETF being one seen 0:19:08.960 --> 0:19:12.800 big declines. At the same time we've seen five straight 0:19:12.800 --> 0:19:16.919 weeks of flows. Okay, a little drop off in that. Still, 0:19:16.760 --> 0:19:20.960 what is the psychology here? What is driving that? I 0:19:21.040 --> 0:19:25.720 fear it's a lottery ticket vibe of you might as 0:19:25.720 --> 0:19:27.959 well shoot for the moon. You might you don't have 0:19:28.040 --> 0:19:30.320 much money anyway. The only way it's really going to 0:19:30.400 --> 0:19:33.040 make a difference, few as if you buy something that's 0:19:33.119 --> 0:19:37.480 really going to to rip higher. ARC has had a 0:19:37.520 --> 0:19:41.560 lot of publicity and also people like to invest in 0:19:41.680 --> 0:19:46.400 something that's a little exciting, which obviously the ARC stocks are, 0:19:46.520 --> 0:19:51.520 whereas the likes of Targets and Walnut aren't. So. But 0:19:51.640 --> 0:19:54.560 I think that's a disconnect between the retail markets and 0:19:54.640 --> 0:19:57.240 the broader institutions who are mostly behind what's been going 0:19:57.240 --> 0:20:00.240 on today. John. When I was a kid, I was 0:20:00.280 --> 0:20:03.480 obsessed with dinosaurs, and as you know, I'm a Londoner. 0:20:03.480 --> 0:20:05.960 I used to go to the Natural History Museum. Look 0:20:06.000 --> 0:20:09.399 at the skeletons going across the Bloomberg terminal. I go 0:20:09.480 --> 0:20:12.679 under your bio and I see the word brontosaurus. What 0:20:12.720 --> 0:20:16.520 are you talking about? Forward to me about a brontosaurus moment? Okay, Well, 0:20:16.640 --> 0:20:19.199 I was also a fan of Dippy the Diplodocus in 0:20:19.240 --> 0:20:21.040 the in the main hall at the Metro History Museum 0:20:21.040 --> 0:20:25.080 in London. As love the Brontosaurus. It's a reference to Yes, 0:20:25.119 --> 0:20:30.000 another British guy, Jeremy Grantham who in oh seven, as 0:20:30.560 --> 0:20:36.320 as the housing market had already turned and subprime mortgage 0:20:36.400 --> 0:20:41.720 dealers were beginning to go bankrupt was I asked him 0:20:41.760 --> 0:20:44.280 why is the stock market still holding up so much? 0:20:44.320 --> 0:20:47.320 And he said that the stock market is basically like 0:20:47.520 --> 0:20:51.400 a brontosaurus. A brontosaurus, if you bit its tail, it's 0:20:51.680 --> 0:20:54.600 nervous system. Its brain was so limited that it would 0:20:54.600 --> 0:20:56.520 take a long time to know that its tail had 0:20:56.520 --> 0:20:59.200 been bitten, to feel the pain. And in the same way, 0:20:59.240 --> 0:21:02.760 he said that the up markets take some extremely long 0:21:02.800 --> 0:21:06.520 time to cotton onto what is happening elsewhere in the economy, 0:21:06.560 --> 0:21:09.440 elsewhere in the markets. You know, I've always wanted to 0:21:09.480 --> 0:21:13.320 do that, talk about dinosaurs in financial markets. You've made 0:21:13.359 --> 0:21:25.159 my day. Look Bloomberger Billium columnists John Orthord, Welcome to 0:21:25.160 --> 0:21:28.480 Bloomberg Technology. I'm Ed Ludlow in San Francisco. Shares of 0:21:28.520 --> 0:21:31.480 retailers plunged on Wednesday, leading the sell off on Wall 0:21:31.480 --> 0:21:35.720 Street after US retail giants cut their growth outlooks. Bloomberg's 0:21:36.080 --> 0:21:39.360 Ridoutta joined to the latest Which names are we watching? Well? 0:21:39.640 --> 0:21:43.040 Yesterday it was Walmart. Today it was Target actually having 0:21:43.080 --> 0:21:47.040 its worst day since seven It was a miss on 0:21:47.080 --> 0:21:50.280 those earnings and actually cutting their profit outlook to six 0:21:50.320 --> 0:21:52.960 percent from eight percent. This was not about sales. It 0:21:53.000 --> 0:21:55.719 was about those higher freight costs, higher fuel costs, and 0:21:55.760 --> 0:21:59.400 also those inventory levels rising actually up some fort from 0:21:59.440 --> 0:22:01.800 a year ago. That was a similar story that we 0:22:01.840 --> 0:22:05.240 saw from Walmart yesterday, which is also down in the 0:22:05.320 --> 0:22:08.679 session today. But this is not just your traditional retailers 0:22:08.680 --> 0:22:11.399 that are being hit today. That has extended over to 0:22:11.480 --> 0:22:13.679 some of your e commerce stocks. I'm looking at Etsy, 0:22:13.880 --> 0:22:16.359 I'm looking at Wayfam, looking at eBay. All of those 0:22:16.400 --> 0:22:18.199 were down today. They suffer some a lot of the 0:22:18.280 --> 0:22:22.879 same problems, supply chain issues, inflation. Those stocks actually on 0:22:22.920 --> 0:22:25.639 a year today basis getting hit even harder than the 0:22:25.680 --> 0:22:28.280 likes of Walmart than the likes of Target. But you've 0:22:28.280 --> 0:22:30.439 got to remember when we talk about these e comma stocks, 0:22:30.600 --> 0:22:34.280 these were actually your pandemic darlings. But that of course 0:22:34.280 --> 0:22:36.680 started to falter and we got that reopening, that stay 0:22:36.840 --> 0:22:39.480 stay at home began to suffer as people got back 0:22:39.560 --> 0:22:42.359 out there and started shopping back in their brick and mortarn. 0:22:42.440 --> 0:22:45.520 If you actually look at the selective e Commerce index, 0:22:45.560 --> 0:22:48.960 it's actually given up about half of the peak of 0:22:49.160 --> 0:22:53.560 the pandemic gains. And of course, when we talk about 0:22:54.000 --> 0:22:57.280 shoppers changing, it's not just how they shot but also 0:22:57.400 --> 0:22:59.639