WEBVTT - Powell Spooks Markets, More Job Cuts at Meta 0:00:13.440 --> 0:00:15.960 And Caroline Hide and bloom Mug's world headquarters in New 0:00:16.040 --> 0:00:19.200 York and Amed Lovo in San Francisco. This is Bloomberg 0:00:19.200 --> 0:00:23.320 Technology coming up, Hawks hit stocks, Jerome Poal's spooks markets 0:00:23.600 --> 0:00:26.720 that says Mike Wilson, Open at Morgan Stanley WARN's Growth Equities, 0:00:26.720 --> 0:00:30.320 Face Pressure Ahead will bring you the details class more 0:00:30.440 --> 0:00:33.559 job cuts at Meta, the Facebook parents planning to lay 0:00:33.560 --> 0:00:36.279 off thousands as soon as this week. More on our 0:00:36.320 --> 0:00:40.080 Bloomberg exclusive ahead. And China shakes up oversight of its 0:00:40.280 --> 0:00:43.680 vast tech arena. That's as Sijing ping focuses on fending 0:00:43.680 --> 0:00:47.599 off US sanctions and achieving self sufficiency in areas from 0:00:47.640 --> 0:00:50.800 AI to chips. All that and so much more coming up, 0:00:51.040 --> 0:00:53.280 and there is a lot to digest in the macro 0:00:53.400 --> 0:00:55.760 part of these markets today. It was one of a 0:00:55.840 --> 0:00:58.720 perspective coming from Jerome Poal coming out fighting. And we 0:00:58.800 --> 0:01:01.400 see that maybe the Federals is not done tackling inflation 0:01:01.760 --> 0:01:03.800 NAS that falls one and a quarter percent, So big 0:01:03.840 --> 0:01:06.000 tech on deck. We look at all country World Index. 0:01:06.080 --> 0:01:09.399 In fact, all this worry around what the Federal Reserve, 0:01:09.440 --> 0:01:12.120 the Central Bank to the world will do affected European trading. 0:01:12.319 --> 0:01:14.080 We're off by one point three percent. When you look 0:01:14.080 --> 0:01:17.080 at the all country benchmarks, and I'm looking at this inversion, 0:01:17.400 --> 0:01:19.800 this of course is that the two year bond yields 0:01:20.040 --> 0:01:22.840 the capositor boring at the two year is higher than 0:01:22.959 --> 0:01:25.199 at the tenure at the moment by a four percentage point, 0:01:25.360 --> 0:01:27.400 So we see negative one hundred and four basis points 0:01:27.400 --> 0:01:29.520 when you're looking in the eleven inversion. This signals the 0:01:29.560 --> 0:01:31.800 worry that the market has about a recession. To come 0:01:31.840 --> 0:01:33.679 flick it on a gear. Let's look at the US 0:01:33.760 --> 0:01:35.160 do a strength that we saw on the back of 0:01:35.160 --> 0:01:37.559 that hawkish tone, and then that Bitcoin is under pressure 0:01:37.560 --> 0:01:40.280 too by one point nine percent, and share power ed 0:01:40.480 --> 0:01:44.080 having some fighting words for crypto in particular as well. Yeah, 0:01:44.080 --> 0:01:46.679 those fighting words where they were the main driver when 0:01:46.680 --> 0:01:49.120 it came to single stock names in the equity markets, 0:01:49.120 --> 0:01:52.800 although some individual stocks I look too. Rivian down fourteen 0:01:52.840 --> 0:01:55.120 and a half percent. The company plans to offer one 0:01:55.120 --> 0:01:58.240 point three billion dollars in green convertible notes that could 0:01:58.280 --> 0:02:01.440 potentially have a dilutive effect on outstanding shares down the road. 0:02:01.480 --> 0:02:04.200 Tests are under pressure down three percent. Is must talked 0:02:04.200 --> 0:02:07.880 about Twitter's debt bird and Amazon was down two tenths 0:02:07.880 --> 0:02:10.520 of a percent, Alphabet parent of Google down one point 0:02:10.560 --> 0:02:13.560 three percent. Those two names Goldman's top tech picks for 0:02:13.639 --> 0:02:16.400 twenty twenty three, that didn't do much to support the stock. 0:02:16.600 --> 0:02:19.040 After fed Power made those kinds. Then Meta, I will 0:02:19.040 --> 0:02:22.160 actually just show the trading Meta had been markedly higher 0:02:22.440 --> 0:02:25.000 after my colleagues and I reported that more layoffs are 0:02:25.000 --> 0:02:27.800 coming in the thousands as soon as this week, and 0:02:27.840 --> 0:02:31.160 then post Power completely fell away, actually ending up trading 0:02:31.200 --> 0:02:33.480 down two tenths of one percent. That is the effect 0:02:33.960 --> 0:02:36.400 the chairman Power is having in this market. Carry and 0:02:36.440 --> 0:02:38.280 we go back to basics. We haven't talked about this 0:02:38.320 --> 0:02:41.120 in a little while, but the prospect of higher rates 0:02:41.400 --> 0:02:45.000 discounting the present value of future profits, particularly for that 0:02:45.120 --> 0:02:47.639 tech sector, and then you price in that recession risk, 0:02:47.680 --> 0:02:49.840 which is now back on the table as well. But 0:02:49.919 --> 0:02:51.840 this is the conundrum, of course, that the Federals of 0:02:52.000 --> 0:02:54.440 has to focus on. When you've got inflation still well 0:02:54.440 --> 0:02:57.440 above the two percent target, it affects the labor market, 0:02:57.480 --> 0:02:59.320 as you have been reporting, with the likes of Meta, 0:02:59.400 --> 0:03:02.360 companies have to start to squeeze, they have to put 0:03:02.919 --> 0:03:05.160 jobs on the line. And I thought that Elizabeth Warren 0:03:05.200 --> 0:03:08.120 of course, really coming out lasking look what you say 0:03:08.160 --> 0:03:09.720 to those jobs that are going to be lost, and 0:03:09.800 --> 0:03:12.840 Chef House saying I tell them that everyone is affected 0:03:12.840 --> 0:03:15.239 by inflation. But ed dig into the micro detail that 0:03:15.240 --> 0:03:17.359 you've been reporting out. Just tell us a little bit 0:03:17.400 --> 0:03:21.680 about well, what the under duress over at Meta. Whether 0:03:21.720 --> 0:03:23.520 this is something we can read across to the rest 0:03:23.600 --> 0:03:27.000 of the tech market. Yeah, understanding from sources is that 0:03:27.160 --> 0:03:30.440 vps and director levels staff are making lists. These are 0:03:30.480 --> 0:03:33.320 new layoffs, thousands of new potential job cuts on top 0:03:33.320 --> 0:03:35.800 of the eleven thousand from last year and on top 0:03:35.840 --> 0:03:39.560 of the flattening of middle management earlier this year, because 0:03:39.560 --> 0:03:42.120 they're still under duress. Right, this is the year of efficiency. 0:03:42.280 --> 0:03:44.880 It's just that Moore's needed to get there. And when 0:03:44.920 --> 0:03:47.280 we think about efficiency, many would say that's of course 0:03:47.320 --> 0:03:52.120 why key growthier names are being focused on, because suddenly 0:03:52.160 --> 0:03:55.760 their future growth perhaps looks less certain. It's what we've 0:03:55.760 --> 0:03:57.840 heard time and time again, particularly from some of the 0:03:57.920 --> 0:04:00.000 uber bears out there, one of them being Morgan Stanley 0:04:00.040 --> 0:04:02.680 is Mike Wilson who says, once again, even though we 0:04:02.720 --> 0:04:04.800 saw the sell off of twenty twenty two, you could 0:04:04.840 --> 0:04:07.760 see a twenty percent downside for the growth names. Just 0:04:07.800 --> 0:04:10.440 take a listen. I think there's plenty of stacks that 0:04:10.480 --> 0:04:12.440 are probably gonna your bankrupt, you know. I mean, I 0:04:12.440 --> 0:04:15.080 don't think that's a crazy statement, but that's not the 0:04:15.080 --> 0:04:17.560 bot of the stack market. Okay, So this is as 0:04:17.600 --> 0:04:19.840 a pocket of the stack market. And then I would 0:04:19.839 --> 0:04:22.320 say a bit overall the growthier stuff and the thing 0:04:22.440 --> 0:04:24.320 that even the sign bols names that have gone too 0:04:24.320 --> 0:04:26.719 far now because as much as twenty percent to ask 0:04:26.880 --> 0:04:32.960 no problem growthier stuff. Let's talk about well, one particular 0:04:32.960 --> 0:04:36.560 analyst who looks across the whole gamut of technology TMT 0:04:36.720 --> 0:04:40.560 names in general, Needham Managing Director and senior analyst, Laura Martin. 0:04:40.880 --> 0:04:42.679 Laura is so good to have you on the show 0:04:42.720 --> 0:04:46.360 and just tell us the breadth of companies that you analyze. 0:04:46.680 --> 0:04:51.359 The Are we currently throwing everything out with the bathwater 0:04:51.440 --> 0:04:54.680 at the moment because we're worried about future growth no 0:04:54.720 --> 0:04:58.320 matter who you are. Yes, Because as bond yields go up, 0:04:58.440 --> 0:05:01.760 bonds look more attractive as a substitute to equity. So 0:05:01.800 --> 0:05:04.520 we're getting net equity outflows into the bond market. That 0:05:04.560 --> 0:05:08.279 makes sense economically, and that's a higher level of the 0:05:08.320 --> 0:05:11.120 capital structure, so they have lower risk in cachase somebody 0:05:11.160 --> 0:05:14.800 does go bankrupt. And I think specifically, as you get 0:05:14.800 --> 0:05:19.800 this advertising down draft, advertising has eighty percent margins. So Google, 0:05:19.880 --> 0:05:23.960 specifically Google and Meta per Alphabet and Meta really are 0:05:24.000 --> 0:05:26.320 going to be under margin pressure if we go under 0:05:26.360 --> 0:05:30.320 recession and if advertising demand gets worse. Laura, in the 0:05:30.400 --> 0:05:32.760 context the multiples on some of the names that you 0:05:33.320 --> 0:05:35.640 do you cover. What's the biggest concern to the market 0:05:35.720 --> 0:05:38.039 right now? Is it this idea that rates will go 0:05:38.160 --> 0:05:40.719 higher in bigger increments or are we starting to get 0:05:40.760 --> 0:05:43.800 more and more concerned about how deeper recession might come. 0:05:44.960 --> 0:05:48.159 So the biggest concern is in a discount of cash flow, 0:05:48.200 --> 0:05:51.120 which is the academically rigorous way to value these companies. 0:05:51.640 --> 0:05:54.440 If you have a higher discount rate any cash flow 0:05:54.480 --> 0:05:57.320 that comes from like year four in future, like Amazon 0:05:57.480 --> 0:06:00.599 is making no money, Meta is to have it, you know, 0:06:00.680 --> 0:06:02.960 really in a down draft in his profit marches that 0:06:03.040 --> 0:06:06.240 all those out years become much less valuable. And so 0:06:06.320 --> 0:06:08.479 what you care about a lot is current year cash 0:06:08.480 --> 0:06:11.800 flow and next year's cash flow. And on that score, 0:06:11.960 --> 0:06:15.080 Apple ninety billion dollars a year of cash flow, like 0:06:15.240 --> 0:06:18.320 super Safe feels like a good place to hide super liquid. 0:06:18.760 --> 0:06:21.360 Google still continues to have high free cash flow. We'd 0:06:21.360 --> 0:06:23.839 like them to cut costs faster, but a lot of 0:06:23.880 --> 0:06:26.960 their value is not past year five, which in a 0:06:27.040 --> 0:06:30.080 rising interest rate environment, those past year five cash flows 0:06:30.080 --> 0:06:35.200 are really discounted harshly. Let's dig in on actually the 0:06:35.279 --> 0:06:38.520 only name that you have an underperform on, and it's Meta. 0:06:39.000 --> 0:06:42.200 They are trying to tork up efficiency in particular, they 0:06:42.200 --> 0:06:44.600 are of course looking towards their four jobs that are 0:06:44.640 --> 0:06:47.680 on the line, Laura, But ultimately I've looked at some 0:06:47.760 --> 0:06:50.200 of your decks on this company. After their earnings you 0:06:50.240 --> 0:06:52.640 said you'd like the word efficiency, but are they just 0:06:52.760 --> 0:06:55.480 rearranging all the chairs? And the Titanic is one of 0:06:55.480 --> 0:06:58.800 the phrases you used. True, I mean, I think the 0:06:58.880 --> 0:07:01.880 question we're asking is does Meta have a terminal value 0:07:01.920 --> 0:07:04.960 in its core business? Because one of the data points 0:07:04.960 --> 0:07:08.520 we're reading is most of the layoffs the CEO, Mark 0:07:08.600 --> 0:07:12.120 Zuckerberg is making sit in the core business of Meta 0:07:12.240 --> 0:07:16.600 that's being undermined by TikTok. Assuming TikTok doesn't get banned, 0:07:16.960 --> 0:07:19.520 the question we have is in the core business that 0:07:19.680 --> 0:07:23.200 funds the metavers, does he actually have a terminal value, 0:07:23.600 --> 0:07:26.040 or does he just lose all his creators and all 0:07:26.120 --> 0:07:29.680 his users in the first Royal countries to TikTok instead, 0:07:30.040 --> 0:07:32.360 assuming it stays in business. I think that's a very 0:07:32.400 --> 0:07:36.040 real question for these network effect businesses that benefit from 0:07:36.080 --> 0:07:38.880 network effects on the way up, it gets slaughtered by 0:07:38.880 --> 0:07:43.360 network effects like MySpace did on the way down. Yes, Laura, 0:07:43.440 --> 0:07:46.960 how worried you about brain drain? I find this really interesting. 0:07:47.000 --> 0:07:50.240 One source described this latest round of layoffs to me 0:07:50.360 --> 0:07:53.200 is more of a sledge hammer. If the eleven thousand 0:07:53.240 --> 0:07:55.440 in November were done with a scalpel, this is a 0:07:55.480 --> 0:07:58.520 sledge hammer. And I wonder, what's the risk that they 0:07:58.560 --> 0:08:01.320 lose all of these smart pool that are trying to 0:08:01.440 --> 0:08:04.360 drive this longer term transition, so they don't even get there. 0:08:05.400 --> 0:08:07.840 Agree one hundred percent. I think it's hard for morale 0:08:07.880 --> 0:08:11.320 to layoff people. I think what happens is if you're 0:08:11.320 --> 0:08:13.400 not sure you're going to get laid off, your most 0:08:13.400 --> 0:08:16.200 talented people go and proactively look for another job and 0:08:16.240 --> 0:08:19.080 get hired away. So you end up left with is 0:08:19.120 --> 0:08:21.680 a people who can't get the next job, So you 0:08:21.800 --> 0:08:24.320 end up with the people that are the worst of 0:08:24.360 --> 0:08:26.960 the Bell curve not the best because the best people 0:08:27.000 --> 0:08:31.520 go somewhere else where their job security is intact. Lastly, though, 0:08:31.680 --> 0:08:35.360 when you hear about actually other areas of focus, particularly 0:08:35.360 --> 0:08:37.160 for ANAS at the moment, is saying one area that 0:08:37.240 --> 0:08:40.920 could perhaps be an upside potential is artificial intelligence. Are 0:08:40.960 --> 0:08:43.040 you buying that, Laura, particularly for some of these big 0:08:43.040 --> 0:08:47.160 companies that you monitor. So it's a great question. So 0:08:47.640 --> 0:08:49.640 last year was the year of the metaverse. I think 0:08:49.640 --> 0:08:51.240 this year is going to be the year of AI. 0:08:51.400 --> 0:08:53.720 So the best question is when we're sitting here a 0:08:53.760 --> 0:08:56.080 year from now, in early twenty four, is anybody talking 0:08:56.120 --> 0:08:59.120 about AI or removed on to something else. I think 0:08:59.200 --> 0:09:02.000 most of these big tech companies have been using machine 0:09:02.160 --> 0:09:05.720 learning for a long time to make their recommendations better, 0:09:05.880 --> 0:09:09.560 to sort their search pages. They've all been using machine learning, 0:09:10.040 --> 0:09:13.439 you know, sort of chat, GPT and generative. AI is 0:09:13.520 --> 0:09:16.040 new to the consumer market, but a lot of these 0:09:16.040 --> 0:09:19.120 tech guys would say they've been using AI slash machine 0:09:19.200 --> 0:09:24.680 learning for years. So UM, I don't I don't know 0:09:24.840 --> 0:09:27.440 whether AI is as big a deal for these large 0:09:27.520 --> 0:09:30.840 tech driven companies as it is for the consumer where 0:09:30.880 --> 0:09:34.040 suddenly there's a use case it's really exciting in both 0:09:34.120 --> 0:09:39.040 like um both pictures and in and in you know answers. 0:09:39.520 --> 0:09:42.200 We're going to be putting that to a key salesforce 0:09:42.240 --> 0:09:45.600 executive a little bit later. Needam Managing director and senior analyst, 0:09:45.640 --> 0:09:47.760 Laura Martin. What a day to have you on. Thank 0:09:47.800 --> 0:09:59.800 you so much spending the time. So I'm now full 0:10:00.120 --> 0:10:03.640 VC roundup and we're starting with payment platform startup air 0:10:03.679 --> 0:10:06.760 Wall expect by ten Cent, which just acquired an online 0:10:06.800 --> 0:10:10.520 payment business license in China. The transaction cleared all regulatory 0:10:10.600 --> 0:10:13.800 hurdles with Chinese authorities and now allows air walls to 0:10:13.800 --> 0:10:17.079 become a third party payment provider in the world's second 0:10:17.160 --> 0:10:20.880 largest economy and boost its access to the local market. 0:10:21.480 --> 0:10:24.800 The founders of Argo AI, the autonomous vehicle company that 0:10:24.880 --> 0:10:28.280 was shut down last year, a launching a new self 0:10:28.360 --> 0:10:32.520 driving business that could specialize in trucking and ride hailing. 0:10:32.760 --> 0:10:36.800 According to sources, Amazon which almost rescued Argo last year 0:10:36.840 --> 0:10:40.360 but eventually pulled out, is not an investor in a 0:10:40.400 --> 0:10:44.400 new firm, and finally saleforces VCARM is launching a new 0:10:44.440 --> 0:10:47.280 two hundred and fifty million dollar fund, its largest to date, 0:10:47.440 --> 0:10:51.920 to invest in Guess what generative AI startups. The Enterprise 0:10:51.960 --> 0:10:56.920 Giant also unveiling new tools integrated with open aies technology 0:10:56.960 --> 0:11:01.040 and dubbed Einstein GPT. They will be used for functions 0:11:01.040 --> 0:11:05.600 such as drafting, customer service response or initial sales emails. 0:11:05.600 --> 0:11:07.200 We'll have more on that later this hour. Of course, 0:11:07.240 --> 0:11:12.360 Carrow with Salesforces Service Cloud CEO Clara she and ed 0:11:12.440 --> 0:11:14.600 to that point we were just doing from Laura Martin saying, look, 0:11:14.640 --> 0:11:16.600 so many of these big tech companies I've been using 0:11:16.600 --> 0:11:20.320 machine learning and other forms of artificial intelligence for years, 0:11:20.360 --> 0:11:23.920 and I thought it's really interesting that through Einstein Einstein, 0:11:24.080 --> 0:11:27.319 I'm sure it's mens known as Salesforce AI is Actually 0:11:27.880 --> 0:11:30.080 they've been using what is it, two hundred billion AI 0:11:30.200 --> 0:11:33.000 powered predictions per day anyway, So what really is this 0:11:33.160 --> 0:11:36.000 large language model going to be adding to in terms 0:11:36.000 --> 0:11:38.640 of their overall provision. I think I've got a smile 0:11:38.679 --> 0:11:40.400 in the corner of my mouth right because you say 0:11:40.400 --> 0:11:44.120 it Salesforce Open AI GPT in the headline. But it 0:11:44.160 --> 0:11:46.240 goes back to what everyone's been telling us on the show. 0:11:46.960 --> 0:11:50.720 Enterprise is where they see the most promise for these applications. 0:11:51.080 --> 0:11:53.440 It's just the headlines keep on coming and it's not 0:11:53.520 --> 0:11:56.640 just enterprise focused software companies using it. There's banks. I've 0:11:56.640 --> 0:11:59.599 been hearing a plenty of financial companies really trying to 0:11:59.600 --> 0:12:02.679 harness power of artificial intelligence. We can dive into that 0:12:02.720 --> 0:12:05.679 a little bit now with stephaniely Chun, general partner over 0:12:05.720 --> 0:12:08.880 at Portage. It's a global investment platform focused on fintech, 0:12:08.920 --> 0:12:11.439 on financial services. You've got what three billion dollars in 0:12:11.480 --> 0:12:13.480 assets on a management You've recently just closed a six 0:12:13.600 --> 0:12:16.360 hundred and fifty five million fund three as one of 0:12:16.360 --> 0:12:18.840 the largest early stage venture funds out there in the 0:12:18.840 --> 0:12:22.880 world of fintech, and so therefore step artificial intelligence. Is 0:12:22.920 --> 0:12:24.840 that a height that you're hearing or is it a 0:12:24.880 --> 0:12:28.840 reality that you're investing in. It's definitely the one exception 0:12:28.880 --> 0:12:32.040 to the macro that we've been seeing. And I would 0:12:32.040 --> 0:12:35.080 say we back the world wist innovative financial services companies, 0:12:35.120 --> 0:12:40.320 and we're already seeing interesting applications beyond enterprise and beyond 0:12:40.320 --> 0:12:43.640 the arvious, which I think most people would think, you know, 0:12:43.720 --> 0:12:48.600 how can AI in a large financial institution really improve 0:12:48.840 --> 0:12:51.640 customer service? That's kind of the first most obvious place, 0:12:52.240 --> 0:12:54.640 But I do think it can enable so much more 0:12:55.280 --> 0:12:58.000 in the future. I can imagine a world in which 0:12:58.040 --> 0:13:02.079 your complete financial picture or as a consumer is actually 0:13:02.080 --> 0:13:06.600 completely automated by AI. So it's beyond just being able 0:13:06.600 --> 0:13:11.560 to interact in natural language, but also be able to 0:13:11.760 --> 0:13:16.760 actually have the AI and or machine learning do things 0:13:16.840 --> 0:13:20.400 on your behalf. Steph, I know an area in fintech 0:13:20.480 --> 0:13:23.520 that you're really positive about is vertical sas, And what 0:13:23.559 --> 0:13:26.480 I wanted to ask you is do you make bets 0:13:26.960 --> 0:13:30.800 on AI related startups or do you make bets on 0:13:30.840 --> 0:13:34.840 the companies and startops that will benefit from other AI tools? 0:13:34.880 --> 0:13:37.560 Do you see what I mean. I'm much more excited 0:13:37.559 --> 0:13:42.120 about vertical specific sas than I am about horizontal AI, 0:13:42.640 --> 0:13:44.360 because at the end of the day, I think you 0:13:44.440 --> 0:13:50.320 still need very specific, semantic subject matter expertise and a 0:13:50.480 --> 0:13:53.959 focus on a specific target segment in order to create 0:13:54.120 --> 0:13:58.160 a great product experience. So we have always been focused 0:13:58.200 --> 0:14:02.440 on know your customer, serve your customer well, and AI 0:14:02.640 --> 0:14:05.280 is going to be a tool that allows you to 0:14:05.440 --> 0:14:09.000 better serve that customer and that segment. So ultimately, I 0:14:09.000 --> 0:14:12.120 think we're much more bullish on the vertical focus rather 0:14:12.160 --> 0:14:14.600 than the horizontal technology, which I think, at the end 0:14:14.600 --> 0:14:17.160 of the day is probably going to be owned by 0:14:17.280 --> 0:14:20.480 the likes of open AI ultimately, and I would add 0:14:20.520 --> 0:14:23.960 one other thing, which is in the future, if the 0:14:24.040 --> 0:14:28.720 models are in fact kind of commoditize, what really matters 0:14:28.880 --> 0:14:32.320 is the very specific data that you have, and proprietary 0:14:32.440 --> 0:14:35.800 data becomes the moat and the major advantage, and therefore 0:14:35.840 --> 0:14:42.240 that also favors vertical specific applications versus horizontal applications. Steph, 0:14:42.280 --> 0:14:43.960 I wanted to talk a bit about the environment that 0:14:44.040 --> 0:14:48.760 we're in. Matt Harris from Baying Venture Capital Partner's been 0:14:48.760 --> 0:14:51.880 on the show recently. We had Layliss study from Capital 0:14:51.960 --> 0:14:55.240 g both basically saying, actually, it's a great time to 0:14:55.320 --> 0:14:58.560 be writing checks, particularly at the earliest stage of the curve. 0:14:59.000 --> 0:15:00.680 Do you kind of agree with then there's a lot 0:15:00.680 --> 0:15:04.920 of opportunity in this moment, I would say, I would 0:15:04.960 --> 0:15:07.160 say it depends on how you how you think about 0:15:07.200 --> 0:15:09.920 what early stages. I think across the board, because of 0:15:10.000 --> 0:15:14.840 where the fed rates are, risk assets are now out 0:15:14.880 --> 0:15:17.520 of favor. I would say the largest impact has been 0:15:17.560 --> 0:15:20.440 on Series C in Series D in the market where 0:15:20.440 --> 0:15:23.600 we've seen valuations drop more than fifty percent at Series D, 0:15:24.120 --> 0:15:28.320 really mirroring the public markets dropping seventy percent I would 0:15:28.360 --> 0:15:30.640 say feed in Series A valuations which are on the 0:15:30.720 --> 0:15:33.880 earlier side of the curve have also We've also seen 0:15:33.880 --> 0:15:35.960 a trickle down effect to there, but it's been the 0:15:35.960 --> 0:15:39.560 biggest leg so valuations there have dropped more light ten 0:15:39.600 --> 0:15:42.440 to twenty five percent across the board. I would say 0:15:42.520 --> 0:15:46.320 it is a great time to be a venture investor. However, 0:15:46.440 --> 0:15:50.840 the later stage venture deals, where there's been an exodus 0:15:50.880 --> 0:15:54.080 and an imbalance of supply and demand in terms of capital, 0:15:54.280 --> 0:15:58.640 have seen the largest valuation fallouts. When you're looking at 0:15:58.640 --> 0:16:01.920 the early stages, you do staff where in the world 0:16:01.960 --> 0:16:04.320 do you focus, Because what's really interesting about your portfolios 0:16:04.400 --> 0:16:07.080 is so global. I'm looking at French, German and shottech 0:16:07.120 --> 0:16:09.760 companies for example. Is Europe right? Is it still about 0:16:09.800 --> 0:16:13.400 the US? Is in Asia? I would say, we've got 0:16:13.400 --> 0:16:15.760 a really global portfolio, but a third of our portfolio 0:16:15.840 --> 0:16:19.040 is in Europe. They are very significant, as you guys 0:16:19.080 --> 0:16:22.960 would know, regional differences even within Europe in terms of 0:16:23.240 --> 0:16:26.840 where the regulatory environment is going, in terms of if 0:16:26.840 --> 0:16:31.640 you look at the differences between banking, insurance, and wealth management. 0:16:31.960 --> 0:16:36.280 So we see global macro trends as being really interesting. 0:16:36.320 --> 0:16:38.440 There's investments to be made in Europe, investments to be 0:16:38.520 --> 0:16:41.680 made in North America. I would say in times like 0:16:41.960 --> 0:16:46.360 this where valuations have decreased, globally, we tend to see 0:16:46.600 --> 0:16:51.200 flight to capital two larger more established markets like the US, 0:16:51.680 --> 0:16:56.240 like the UK, etc. But obviously within fintech you need 0:16:56.280 --> 0:17:00.000 to be aware of the regulatory nuances of each specific country. 0:17:00.000 --> 0:17:04.560 And you are breaking steph Tube General partner at Portage, 0:17:04.600 --> 0:17:06.840 thank you so much. You know, we're moving our showtime 0:17:06.920 --> 0:17:10.359 next week earlier in the day, twelve eastern, nine am Pacific, 0:17:10.400 --> 0:17:12.280 and we want to take that global view. You know, 0:17:12.359 --> 0:17:15.120 it's interesting to have a partner on that looks globally 0:17:15.119 --> 0:17:17.760 and outside of North America. And let's turn very quickly 0:17:18.080 --> 0:17:22.440 to crypto. Gray Scales fight over its Bitcoin ETF begins 0:17:22.680 --> 0:17:25.960 in court. We bring you the latest details out from Washington, DC. 0:17:26.560 --> 0:17:41.879 That's next. This is Bloomberg. We're watching what's been happening 0:17:41.920 --> 0:17:45.119 in the crypto space, and you know what we see is, 0:17:45.400 --> 0:17:47.800 you know, quite a lot of turmoil. We see fraud, 0:17:47.920 --> 0:17:50.359 we see a lack of transparency, we see run risk 0:17:50.720 --> 0:17:53.080 lots and lots of things like that. And so what 0:17:53.080 --> 0:17:56.080 we've been doing is making sure that the that the 0:17:56.960 --> 0:18:00.800 regulated financial institutions that we supervise and regulate are careful, 0:18:00.880 --> 0:18:04.040 are taking great care in the ways that they engage 0:18:04.119 --> 0:18:09.360 with the with the whole crypto space. Some of FED 0:18:09.440 --> 0:18:12.640 chair Pal's remarks on the crypto market, of course this 0:18:12.680 --> 0:18:15.080 morning on Capitol Hill, and in fact some other news 0:18:15.080 --> 0:18:16.840 in terms of crypto A few minutes ago, we just 0:18:16.920 --> 0:18:19.679 learned that Finance US hasn't need one court approval to 0:18:19.720 --> 0:18:23.040 buy Voyage, a digital land Voyager, to end its bankruptcy 0:18:23.200 --> 0:18:26.720 repay customers. Of course, all of this following the fallout 0:18:26.720 --> 0:18:29.600 of FTX. Also today was the start of a court 0:18:29.640 --> 0:18:33.040 fight between gray Scale Investments and the SEC over plans 0:18:33.080 --> 0:18:35.719 to convert well It had hoped to convert his fourteen 0:18:35.760 --> 0:18:39.080 billion dollars bitcoin trust into an ETF police to say, 0:18:39.359 --> 0:18:42.000 our new resident in town of DC, one Kyley Line. 0:18:42.000 --> 0:18:43.720 So we miss a lot from New York, but doing 0:18:43.720 --> 0:18:46.840 amazing work from Washington, including your crypto show, Kayley. Just 0:18:46.840 --> 0:18:49.480 talk to us about actually what felt a lot of 0:18:49.560 --> 0:18:55.200 questioning coming out fighting almost on behalf of Grayscale. Yeah. Really, 0:18:55.240 --> 0:18:57.680 the tone of the three judges on their suppellate court 0:18:57.720 --> 0:19:00.560 today really seems to have shifted the odds of many 0:19:00.560 --> 0:19:03.480 people of Grayscale actually coming out with a victory here. 0:19:03.480 --> 0:19:07.440 Our own analyst to Bloomberg Intelligence and Elliot Stein previously 0:19:07.480 --> 0:19:10.439 had a sixty percent chance on the SEC being victorious 0:19:10.720 --> 0:19:13.320 in this case. They now actually think it's seventy percent 0:19:13.400 --> 0:19:17.480 odds in favor of Grayscale, because the judges did seem skeptical, 0:19:17.720 --> 0:19:21.439 skeptical of the SEC's argument that bitcoin futures should be 0:19:21.480 --> 0:19:24.399 treated differently than bitcoin spot. Of course, that's the argument 0:19:24.480 --> 0:19:26.840 that Grayscale has been pushing against, saying you should be 0:19:26.920 --> 0:19:30.200 treating futures and spot the same, the same concerns about 0:19:30.240 --> 0:19:33.760 fraud and manipulation. The SEC has should be applicable to both, 0:19:33.800 --> 0:19:36.320 and it did seem like those three judges maybe more 0:19:36.400 --> 0:19:39.439 sympathetic to Grayscale's view. Heading to the market reaction we're 0:19:39.480 --> 0:19:43.119 seeing today. Saw today GBTC up nine point six percent 0:19:43.200 --> 0:19:45.320 on the day, so that discount to its net asset 0:19:45.440 --> 0:19:49.760 value narrowed, Right, the market's going to try and discern 0:19:50.160 --> 0:19:51.920 what the outcome is going to be. Right. There's a 0:19:52.000 --> 0:19:54.439 risk in that, of course, and you know you're always 0:19:54.440 --> 0:19:57.560 hesitant to sale. What would happen if but in the event, 0:19:57.720 --> 0:20:01.720 ruling fools in gray Scales favor. It opens some doors, right, 0:20:01.760 --> 0:20:05.320 What does it mean for them and for this industry? Yeah, 0:20:05.520 --> 0:20:07.879 I mean if is obviously the operative word there, and 0:20:07.880 --> 0:20:10.040 it could still be a while before we ultimately get 0:20:10.080 --> 0:20:12.360 a ruling like second or third quarter. And then when 0:20:12.359 --> 0:20:15.800 we do, it matters what the language and that ruling is. 0:20:15.960 --> 0:20:18.119 Should the court rule in favor of gay Scale and 0:20:18.160 --> 0:20:20.800 put a gray scale and push back against the SEC's 0:20:20.840 --> 0:20:24.040 rejection of this application, Does it actually force them into 0:20:24.080 --> 0:20:26.240 accepting it or could it leave a door open for 0:20:26.320 --> 0:20:29.040 the SEC to slap it down another way? That will 0:20:29.080 --> 0:20:31.520 be really important. But of course, if gray Scale ultimately 0:20:31.600 --> 0:20:33.679 is able to make this conversion, it would get rid 0:20:33.720 --> 0:20:36.280 of their net asset value discount problem because it would 0:20:36.320 --> 0:20:39.600 allow redemptions. It would potentially turn into an ETF and 0:20:39.640 --> 0:20:42.080 it could mean that other products like it could be 0:20:42.119 --> 0:20:45.440 introduced in the market in the future. And we broke 0:20:45.520 --> 0:20:48.120 just before you came, of course, the news regarding Voyage 0:20:48.760 --> 0:20:51.360 being able to be sold to Binance US. There were 0:20:51.400 --> 0:20:54.000 other assets on deck when it comes to FTX, and 0:20:54.040 --> 0:20:58.480 actually it looks as though they're delaying the auction. Briefly, Yeah, 0:20:58.600 --> 0:21:00.960 ledger X, which was their of it IF's platform. It 0:21:01.000 --> 0:21:03.320 was actually one of the few areas of the FTX 0:21:03.320 --> 0:21:06.359 empire that remains solvent, had its auction delayed from today 0:21:06.600 --> 0:21:09.280 to March twenty second and clear the reason why. But 0:21:09.320 --> 0:21:12.879 that's something we're going to have to following those k lines. 0:21:13.000 --> 0:21:15.320 Our Voice, Finn red Voice add in DC, thank you 0:21:23.760 --> 0:21:26.159 my fashion til. The US claims that it seeks to 0:21:26.240 --> 0:21:30.120 outcompete China, but does not seek conflict. Yet in reality, 0:21:30.160 --> 0:21:34.200 it's so called competition aims to contain and suppress China 0:21:34.400 --> 0:21:37.399 in all respects and get the two countries locked in 0:21:37.440 --> 0:21:41.359 a zero sum game. Welcome back to Room Technology. I'm 0:21:41.400 --> 0:21:44.639 conne Hide in New York and Imed Lovelow in San Francisco. 0:21:44.720 --> 0:21:47.560 And that was just China's new foreign minister there calling 0:21:47.960 --> 0:21:51.320 the US approach to Beijing reckless gamble. And this of 0:21:51.359 --> 0:21:53.560 course is sort of put in stark contrast with what 0:21:53.600 --> 0:21:56.320 was happening on the Hill today, Congress moving yet closer 0:21:56.320 --> 0:21:59.680