Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: From the heart where innovation, money and power.
Speaker 3: Collie in Silicon Valley, NBN.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed loved.
Speaker 4: Love and Karline Hein and Bloomberg's world headquarters in New York.
Speaker 5: Now I'm Ed Loudlow in San Francisco. This is Bloomberg
Speaker 5: Technology coming up.
Speaker 4: Full chip coverage ahead. We're bringing the latest headlines from
Speaker 4: in video, arm, Intel and more.
Speaker 5: Plus, Apple nears a deal with open Ai to add
Speaker 5: chat GPT to the iPhone.
Speaker 4: Details ahead and shares of game stock. They surge him
Speaker 4: in speculation that Roaring Kitty is back liking the stock.
Speaker 4: We discussed that and so much more throughout the sabat
Speaker 4: first Le's turn around, attention to the macro picture, some
Speaker 4: new headlines coming out from.
Speaker 6: The New York FED.
Speaker 4: When it comes to consumer sentiment of the direction of
Speaker 4: travel and inflation, and it's still running hot, Dave pot
Speaker 4: three percent in terms of where consumers see inflationary pressures
Speaker 4: being in about a year. That's overall in the midterm.
Speaker 4: We're still holding on too. Gains though three tens percent higher.
Speaker 4: Remember we get a CPI print on Wednesday PPI on
Speaker 4: Tuesday a lot to digest.
Speaker 6: From the macro perspective.
Speaker 4: Two year yield remaining higher, so boring costs coming down,
Speaker 4: yield slipping so two years money going in. Yields go
Speaker 4: lower by some two basis points. Bloomberg Dollar Index also
Speaker 4: down a little bit. Look some of the anxiety around
Speaker 4: in flesher around inflation just stiling back a little bit
Speaker 4: on the day despite that New York Fed data. Let's
Speaker 4: move on and have a look at what's happening in
Speaker 4: the world at bitcoin, because well, even though dollar's only
Speaker 4: off by about ten percent, crypto is surging higher, up
Speaker 4: two point four percent.
Speaker 6: And ed, I know you're going to.
Speaker 4: Focus in on game Stop and this is more the
Speaker 4: reader cross from some of that means stock frenzy and
Speaker 4: when it means on the related names in crypto.
Speaker 6: We're up two percent on bitcoin. What if you've got
Speaker 6: on the micro.
Speaker 5: Stop memestock mania is back. This is a two day
Speaker 5: chart to kind of illustrate the point. GameStop was up
Speaker 5: one hundred and ten percent in the session it was halted.
Speaker 5: We're now up around sixty percent, and it's just from
Speaker 5: one social media post from Roaring Kitty aka Keith Gill
Speaker 5: aka the source of all the original interests around GameStop.
Speaker 5: You know about the movie, you know about what happened
Speaker 5: on Reddit. I think Reddit's higher, robinhood is higher. There's
Speaker 5: a lot of trading that's going on. Later in the show,
Speaker 5: we're going to dig really deep, but I give you
Speaker 5: game Stop. We're looking at other stories in the chip sector.
Speaker 5: In principle, there are three clear headlines and semiconductors.
Speaker 7: Intel is up three point five percent. The Journal reporting.
Speaker 5: It's close with the deal with Apollo for eleven billion
Speaker 5: dollars of financing for an Ireland fab.
Speaker 7: ARM is up more than five percent.
Speaker 5: Nike reporting that ARM is readying an AI product next year,
Speaker 5: didn't say where it got the info, but SoftBank's going
Speaker 5: to support them financially bring it to market. And then
Speaker 5: videos actually high three ten to one percent. It had
Speaker 5: been lower after the Information reported that China is instructing
Speaker 5: domestic companies to stop ordering chips from Nvidia. We have
Speaker 5: a very big segment coming up everything chips. The big
Speaker 5: take today is on chips. There are a lot of
Speaker 5: individual stories to pass through. There is a lot going on, and.
Speaker 4: There is a lot of discussion of China visa VI
Speaker 4: the US coming from well key leaders in US government.
Speaker 6: We had a.
Speaker 4: Great conversation with Janet Yellen earlier own AMERI Horder and
Speaker 4: sitting down with her for an exclusive really discussing China
Speaker 4: in particular. Janey Ellen really feeling that China is not
Speaker 4: playing by the rules on trade and sort of going
Speaker 4: on to say that maybe we will see China escalating
Speaker 4: in the so called tit for tat on trade.
Speaker 6: Just take a lesson. Listen to what Treasures actually told
Speaker 6: us earlier.
Speaker 8: He believes it unacceptable as I do, to be completely
Speaker 8: dependent on China in these areas, and he wants to
Speaker 8: make sure given this that China is really not playing
Speaker 8: by the rules in this sense. They have enormous subsidies
Speaker 8: in critical areas of advanced manufacturing.
Speaker 4: There's a focus on increasing tariffs at a time where
Speaker 4: there's anxiety around inflation. How does this alter the picture
Speaker 4: of your investment landscape visus A. Janet Wi is with
Speaker 4: us RBC Bruin Dolphin, head of market Analysis, and it
Speaker 4: is a time where investors try and navigate seeming headwinds,
Speaker 4: but an ability to keep on going for the growth
Speaker 4: of AI how do you think this lands the China
Speaker 4: versus US at the moment?
Speaker 3: Janet, good morning, hairline. Thanks for having me.
Speaker 1: I think in terms of the tech investment side, we
Speaker 1: will still be heavily preferring the US. I mean, the
Speaker 1: DOS is a hop of innovation, and I think the
Speaker 1: regulatory pressure on China would remain, and I think the
Speaker 1: trade tension parality will hit China more than the US.
Speaker 3: So I think from an.
Speaker 1: Investment perspective, I think all these trade tennis, it's obviously
Speaker 1: it's not great from our price or from global growth
Speaker 1: trade and the global market and certainty point of view.
Speaker 1: But I think sticking with the US investment seems.
Speaker 5: To be the right approach exactly. I'm trying to pass
Speaker 5: all of this together, right. I think there's a growing
Speaker 5: confidence that inflationary pressures are easing off, but a big
Speaker 5: part of that is US fiscal policy. Right, we're talking
Speaker 5: or Jalant Yellen talking about how China has some anti
Speaker 5: competitive practices, but here in the United States, if you
Speaker 5: take the chip industry, this country is also pumping billions
Speaker 5: of dollars into supporting its growth. How does that impact
Speaker 5: you as an investor?
Speaker 3: I think the clear evidence is that.
Speaker 1: There's a lot of investment from a sovereign perspective into
Speaker 1: a semiconductors given it is such an important strategic sector.
Speaker 1: So I think the conclusion is that there will be
Speaker 1: lots of money going into it, lots of investment, A
Speaker 1: lot of big players will be involved, and I think
Speaker 1: primarily again the US companies are likely to be benefit
Speaker 1: from this initiative, and that's why we still have a
Speaker 1: positive stance on the general semiconductor value chain story, either
Speaker 1: from the equipment production or from the design, from the manufacturing,
Speaker 1: the boundaries along the whole supply chain. I think there's
Speaker 1: still going to be lots of investment going into it.
Speaker 1: I think valuations in these US companies are still quite
Speaker 1: reasonable given that they're strong earnings growth, and I think
Speaker 1: we still have pretty good visibility into the twenty twenty
Speaker 1: five earnings from the order's guidance, etc. So I think
Speaker 1: the investment thesis we have is that invest in US tech,
Speaker 1: particularly favoring in the semi conductory sector.
Speaker 5: Janet, do we see a rate cut from the FED
Speaker 5: this year to your mind, and if so, when and
Speaker 5: in what increment?
Speaker 7: Well, it is.
Speaker 9: Difficult to say.
Speaker 1: I think the bar for a rage cut is definitely
Speaker 1: higher now will await the CPI print on Wednesday, But
Speaker 1: I think the Fed, I think they have a leaning
Speaker 1: on the next move being a rage.
Speaker 3: Cut rather than a rate hype.
Speaker 1: So I think there's still some preference aren't eventually cutting.
Speaker 1: I think they're really each thing on doing that, but
Speaker 1: they just need the data to allow that so our viewers,
Speaker 1: that is more likely to happen in the fourth quarter.
Speaker 1: But I think the FAT can really move, you know,
Speaker 1: where the data allows. I think there's a lot of
Speaker 1: chatter about how the FED may not be able to
Speaker 1: move because of the timing of the presidential election, but
Speaker 1: we think the FED will focus on the data instead
Speaker 1: of trying to be a pure not to be political.
Speaker 4: I want to go back to what you just mentioned
Speaker 4: about valuations looking pretty good at these levels, and many Janet,
Speaker 4: have just been I mean holding their breath the ARM
Speaker 4: ninety times future earnings valuation that we've seen in ARM
Speaker 4: pops on the day we're going to have a much
Speaker 4: deeper dive into the chip sector in a moment with
Speaker 4: their own in king. But Janet, from an investment landscape perspective,
Speaker 4: do you have to keep on building in the AI
Speaker 4: infrastructure play or do we broaden out at this moment.
Speaker 1: So, I think to your point about the valuation of
Speaker 1: our I can't really comment on an individual company, but
Speaker 1: obviously we know that within the sector there are a
Speaker 1: lot of players and there will be different ranges of evaluations.
Speaker 1: I've talked about it as a group because of the
Speaker 1: straw and a scroll. I think some of the major
Speaker 1: players are the valuations are reasonable, but you have to
Speaker 1: to really look into an individual case. I think in
Speaker 1: terms of the broadening of the thing, we already have
Speaker 1: seen that. I mean there is more confirmation from meget
Speaker 1: cap tech companies that there is commercialization of AI that
Speaker 1: is gaining traction. We see that from Alphabet, Microsoft, Amazon,
Speaker 1: for example. So it has broadened out beyond the just
Speaker 1: the cheap sector. And I think there has been quite
Speaker 1: a significant pickup in the utility sector right because of
Speaker 1: the electricity demounts. So I think they will continue to broaden,
Speaker 1: but I think it has already started.
Speaker 4: I look at evaluation of one particular means Stop today
Speaker 4: janet three thousand times future earnings is where the current
Speaker 4: price of game stop is. Are we going to see
Speaker 4: mean stock frenzy really hit us hard once again.
Speaker 1: Well, it is hard to say. I think right now
Speaker 1: we are seeing a couple of individual stops having that reaction.
Speaker 1: I'm not sure if that's going to last. Is a
Speaker 1: lot driven by social media, but I do think that
Speaker 1: what the current situation is an indication that the risk
Speaker 1: sentiment is back. I think, you know, the positive risk
Speaker 1: sentiment is not constrained anymore by you know, this high
Speaker 1: interest rate and environment, these current level of bios. I
Speaker 1: think the market rally or the market sentiment has already
Speaker 1: you know, we already passed the stage when it's totally
Speaker 1: just driven by the fad and bornios for example. So
Speaker 1: there there's clearly have plenty of cash still sitting around,
Speaker 1: are waiting to be deployed.
Speaker 7: Right.
Speaker 5: Risk sentiment is back, says RBC Brew and Dolphin head
Speaker 5: of market analysis, Janet Marie. Great to have you on
Speaker 5: the show. Let's continue our coverage of semiconductors is Today's
Speaker 5: Bloomberg Big Take focuses on the eighty one billion dollar
Speaker 5: investments made by the US and European Union towards the
Speaker 5: next generation of semis joining US as Bloomberg Zin and King,
Speaker 5: one of the members of the team that went through
Speaker 5: this with the big take. We have a case study
Speaker 5: today right which is Intel in Ireland. The Journal reporting
Speaker 5: that there is advance exclusive talks to Apollo for eleven
Speaker 5: billion in financing. Actually we broke that they were in
Speaker 5: talks quite some time ago. But the need for cash
Speaker 5: and a global footprint is clear through the lens of Intel.
Speaker 1: Yeah.
Speaker 10: No, I mean Intel is actually in a slightly different
Speaker 10: situation to some of its rivals like TS and Samsong. Frankly,
Speaker 10: it needs the money way more than they do, and
Speaker 10: they can afford to be selective where they take government money,
Speaker 10: what terms they take. Intel, because of the situation it's
Speaker 10: put itself in over the last five or so years,
Speaker 10: really needs the cash from pretty much any source it
Speaker 10: can get if it's to fulfill what it's trying to do, and.
Speaker 4: Let's talk about fulfilling what it and more broadly, the
Speaker 4: US is trying to do what globally countries and companies
Speaker 4: are trying to do. Do we get to an extent
Speaker 4: where we have too much supply in.
Speaker 10: I mean, this is the concern at the moment. The
Speaker 10: concern really though, is focused on what's called the sort
Speaker 10: of legacy chips, the older types of production, the type
Speaker 10: of thing that Intel, TSMC and Samsong are building here
Speaker 10: in the US. Frankly, there's not enough supply of that
Speaker 10: kind of production right now, so not so much worried
Speaker 10: about that, but some of the more simpler kind of
Speaker 10: stuff in view of the amount of production being put
Speaker 10: in place in places like China, that is certainly something
Speaker 10: that people are focused on and worried about.
Speaker 5: AI is a big driver of this. Let's take a
Speaker 5: look at today's big take. Specifically, the headline global chip
Speaker 5: battle intensifies with the eighty one billion dollar subsidies surge,
Speaker 5: But within that there are two different stories. There's kind
Speaker 5: of like the long term capacity on sharing story, and
Speaker 5: then there's psych everyone's knee jerk reaction to keep up
Speaker 5: with what's happening in real time.
Speaker 10: Yeah, I mean, there's you know, everybody's focused on AI.
Speaker 10: But if we believe that this is the future of computing,
Speaker 10: if we believe that this isn't just a step function,
Speaker 10: that this is something quite dramatically different, then obviously the
Speaker 10: ability to control that has enormous implications, both in terms
Speaker 10: of economics and insecurity, and having that production close at
Speaker 10: hand is really important, and this.
Speaker 4: Goes global, not to mention what's currently underway and reporting
Speaker 4: with ARM getting more deeply into AI and soft bank banking,
Speaker 4: that we've got so much to digest. Ianking, a brilliant
Speaker 4: deep dive comes to the big take. Go read it
Speaker 4: online on your terminal. But let's stick with what this
Speaker 4: all means in terms of competitiveness US versus China.
Speaker 6: President Joe Biden is said, of course, to not.
Speaker 4: Just thinking about the chip sector, but more broadly about
Speaker 4: tariffs for drupling them on than Chinese electric vehicles, for example,
Speaker 4: sharply increasing levees for other key industries.
Speaker 6: And it's come as soon as today.
Speaker 4: For more, let's bring in Eliza Tobin, senior director for
Speaker 4: Economy at the Special Competitive Studies Project, And Liza, we
Speaker 4: were just talking about this in the context of a
Speaker 4: frenzy of money from government to support the chip industry.
Speaker 4: But meanwhile Biden's trying to push back EV's coming to China,
Speaker 4: trying to push back solar coming to China from China
Speaker 4: to the US. Is that really got any bite to it?
Speaker 4: It seems more like bark right now.
Speaker 2: Good morning, Caroline ed Greater be on with you. Yes, No,
Speaker 2: this is a really strong move from the Biden administration,
Speaker 2: as you noted the reporter saying that they are thinking
Speaker 2: of quadrupling the terrif right on Chinese evs. As we know,
Speaker 2: China has rocketed to become the top producer of evs
Speaker 2: in just the last few years. They struggled for a
Speaker 2: long time to build a competitive auto export industry and
Speaker 2: now they have gotten there with evs. So currently US
Speaker 2: automakers are insulated by the existing Trump era tariffs, which
Speaker 2: are about twenty seven point five percent, But clearly the
Speaker 2: Biden administration is concerned that going forward, China could use
Speaker 2: its dumping strategy to underprice US automakers and flood the
Speaker 2: market as they are already doing in Europe and elsewhere.
Speaker 5: Eliza, good Morning is ed in San Francisco. So, as
Speaker 5: you point out, sources say that the EV tariff would
Speaker 5: rise to one hundred and two point five percent. But
Speaker 5: based on what you just said, I don't get it.
Speaker 5: I checked, okay, and there are four China made evs
Speaker 5: that retail in this country at incredibly small volumes, Pollstar
Speaker 5: two and four, the new Lotus that's coming, and the
Speaker 5: Volvo ex thirty. What's the point in the tariff if
Speaker 5: those are only the only four models available and they
Speaker 5: only sell in very small numbers.
Speaker 2: The Biden administration is trying to get a head of
Speaker 2: the floods. So, as you noted, right now we are insulated.
Speaker 2: American consumers are by and large not buying Chinese evs.
Speaker 2: They're not coming into our market. But I think they
Speaker 2: see the writing on the wall. German automakers are under threat.
Speaker 2: Europe is importing these things. They're going into Japan, they're
Speaker 2: going in elsewhere, threatening other global automakers. So if the
Speaker 2: Biden administration wants to give the IRA subsidies, the Inflation
Speaker 2: Reduction Acts subsidies, which of course incentivize green tech production
Speaker 2: here in the United States, I think the administration wants
Speaker 2: to give these incentives of fighting chances so that we
Speaker 2: can retain an auto industry here in the United States
Speaker 2: as the world transitions to evs. So it's actually a
Speaker 2: time to raise the terrorists because it won't directly impact
Speaker 2: people's pocketbooks because as you noted, Americans are not yet
Speaker 2: buying Chinese evs.
Speaker 4: And yet, Eliza, you know, when you're thinking about special
Speaker 4: competitiveness in particular, this is the project that you focus
Speaker 4: in on. All of this is undermining, undermining ultimately the
Speaker 4: efficiency of global trade subsidies here, tariffs there, All of
Speaker 4: it will sort of it isn't a mediating what should
Speaker 4: be just the natural flow of things.
Speaker 6: Is this what is necessary ultimately from.
Speaker 4: Your perspective, to ensure that US does remain competitive when
Speaker 4: it comes to key industries.
Speaker 2: There has been this national debate over efficiency versus resilience,
Speaker 2: and the lesson from COVID, from Russia's invasion of Ukraine,
Speaker 2: from these other global supply chain crises we've had in
Speaker 2: the last few years is that efficiency economic efficiency is
Speaker 2: not the only thing we need to think about as
Speaker 2: a nation, and so there's been increasing discussions of resiliency
Speaker 2: and what steps do we need to take as a
Speaker 2: nation to make sure that we continue to build emerging
Speaker 2: technologies here in the United States. We have suffered from
Speaker 2: massive de industrialization over the last several decades as we've
Speaker 2: outsourced the production of our technology to East Asia, especially China.
Speaker 2: So now there's a national conversation about looking ahead, we
Speaker 2: want to make sure we're able to build some of
Speaker 2: these emerging technologies here in the United States not only
Speaker 2: design them, but build them, because that's essential to our
Speaker 2: long term growth in productivity as well as our national security,
Speaker 2: making sure we can make things here at home.
Speaker 5: Liza Tobin of the SCSP, thank you very much. So
Speaker 5: coming up on the program, French President a Manue Macron
Speaker 5: t outs billions of dollars in foreign investments from tech giants.
Speaker 7: We're going to have those details.
Speaker 4: Next, Karen, such global conversation. Meanwhile, let's just bos in
Speaker 4: what's happening for us doc over here? We're not seventy
Speaker 4: percent in the last couple of days on squarespace. Why
Speaker 4: it's going private Permira and all cash transaction, valuing the
Speaker 4: company in approximately six point nine billion dollars. We're going
Speaker 4: to see some vcs giving some more investment General Atlantic
Speaker 4: Acel for example.
Speaker 6: This is bruly meg Technology.
Speaker 4: Microsoft it plans to spend four point three billion dollars
Speaker 4: building cloud and AI infrastructure in France, announcing its latest
Speaker 4: major outlay on artificial intelligence technology. Now, Microsoft is aiming
Speaker 4: to help train a million people support two thousand, five
Speaker 4: hundred startups in France by twenty twenty seven.
Speaker 7: Now.
Speaker 4: Earlier this year, unveiled a partnership and a fifteen million
Speaker 4: euro investment into mistral Ai. It's a Parisian startup competing
Speaker 4: with the course the likes of open Ai. And we
Speaker 4: want to stick with France with investment in France because
Speaker 4: in manual Macron has just unveiled more than fifteen million
Speaker 4: euros in foreign investments from US tech giants like Microsoft,
Speaker 4: but also like Amazon, like IBM, like banks such as
Speaker 4: Morgan Stanley. It's all a part of well trying to
Speaker 4: spa France's economy, to repair its public finances, basically establish
Speaker 4: Paris as well as Europe's post Brexit business and financial hub,
Speaker 4: joining us on all of this. It's Blomberg opinion. Coconomists
Speaker 4: Lionel Laurent. You know, it's interesting. It's a bit of
Speaker 4: a PR exercise that happens every year over at the
Speaker 4: Elyc Palace. But what ultimately is being done by Macron
Speaker 4: to inject some optimism.
Speaker 11: You're right, choose France. It's a bit of a cheesy slogan.
Speaker 11: It could be the cover of an investment brochure, but
Speaker 11: it's not just PR because since he's become president this
Speaker 11: has really bit about the art of the deal Micron style.
Speaker 7: Every year he gathers one.
Speaker 11: Hundred and fifty one hundred and eighty international CEOs wines
Speaker 11: and dines them in Versailles and gives them the pitch
Speaker 11: of the French economy. He'll say, it's doing its job,
Speaker 11: it's doing the work. He's done the work of reforming France.
Speaker 11: And what are you going to do for France From
Speaker 11: the corporate side, which is invest and I think this
Speaker 11: is that puts it, I think a cut above Davos
Speaker 11: because there is investment. You could argue if it's expansion
Speaker 11: of the existing staff instead of new projects. You can
Speaker 11: argue if even fifteen billion is that sort of world
Speaker 11: changing or impressive at the level of tech. But look,
Speaker 11: I think there is something genuinely real to this. There's
Speaker 11: a there's a seed of depth to this that's not just.
Speaker 5: Pr Yeah, Leonor, I think Mistrel put France on the
Speaker 5: map a little bit, you know, in terms of the
Speaker 5: conversation around AI development. But beyond that, we don't often
Speaker 5: go to you, you know, during the program as frequently
Speaker 5: as we do other countries, and it's at a time
Speaker 5: where France's economy is on a shakier footing.
Speaker 11: Wow, that that cuts the here brutal, brutal. I think
Speaker 11: you touched on something which is about relative relative worth
Speaker 11: right now. Mccare came into power at a time when
Speaker 11: the UK was effectively voting itself out of European leadership
Speaker 11: with Brexit, and Angela Merkle's twilight years had begun. I think, honestly,
Speaker 11: as long as the UK is seen as a kind
Speaker 11: of Brexit tainted economy, and as long as Germany's industrial
Speaker 11: model is seen to be suffering, France will still have
Speaker 11: a card to play. Now. I think those two cards,
Speaker 11: to be precise, are human capital. It still has smart,
Speaker 11: talented engineers being pumped out of its graduate schools and universities.
Speaker 11: And the other thing is tax credits. There's an R
Speaker 11: and D tax credit in France that explains why so
Speaker 11: much of what you're seeing is R and D research centers,
Speaker 11: whether it's tech or banks. So clearly there is something
Speaker 11: in it for these companies.
Speaker 5: It's not as pr Leonel Laurent of Bloomberg opinion from France,
Speaker 5: we appreciate it. Welcome back to Bloomberg Technology, ed Lovelow
Speaker 5: here in San Francisco.
Speaker 6: And I'm hired back in New York.
Speaker 4: Let's check on these markets, said, because now we're managing
Speaker 4: to hold onto our gains in the face of some
Speaker 4: inflratory pressure being shown by the New York Fed that
Speaker 4: consumer sentiment showing that still there's elevated inflratory anticipation coming
Speaker 4: from the consumer base. But on a week we have
Speaker 4: CPI and the week we have PPI, which is cautious
Speaker 4: ahead of those macro pieces of data. We're up a
Speaker 4: tenth percent on the NASAK ten yure yields just holding
Speaker 4: lower at four point four eight. I'm looking at Bitcoin
Speaker 4: managing to ramp up two and three quarters a percent.
Speaker 6: Let's call it dollar a little weaker.
Speaker 4: Is this more of a spillover effect from the means
Speaker 4: stock frenzy. Let's move it on one and shine light
Speaker 4: what's happening with good old game stock. We are so
Speaker 4: back up sixty three percent? But is Keith Gill so back?
Speaker 4: Will he return to social media? Of course he did
Speaker 4: pop a particular picture on x many feeling that perhaps
Speaker 4: Roaring Kitty is back when it comes to liking games,
Speaker 4: game stop and memestock mania seems to be back, and
Speaker 4: we'll talk about it later. I shinal light, what's happening
Speaker 4: with the chipset to the Socks Index. Apps up fourteen percent,
Speaker 4: coming off of its highs, but had some notable names
Speaker 4: pushing high Intel that reporting for the Wall Seat Journal,
Speaker 4: building on Bloomberg's reporting that maybe we'll have some financing
Speaker 4: from Apollo with Intel to build yet more ultimately industrial capability,
Speaker 4: manufacturing capability this time in Ireland. We're also seeing what
Speaker 4: arm is currently up to on the day as there's
Speaker 4: anticipation that they're going to be focusing more on AI
Speaker 4: thanks to SoftBank. I'm looking at Alphabet though, up by
Speaker 4: one point six percent. Why more competition? Are they not
Speaker 4: going to be able to integrate Gemini within the new
Speaker 4: Apple iPhone? Is it going to be open Ai that
Speaker 4: wins out Apple? Up more than one point six percent
Speaker 4: and deep dive on it for us.
Speaker 5: Yeah, let's get more on that potential Open Ai Apple
Speaker 5: agreement and bring in Bloomberg intelligence analyst Anna ra Grana. So,
Speaker 5: Anna rag As you know, Bloomberg reported quite late Friday
Speaker 5: nights that Apple and Open Ai are close on a
Speaker 5: deal to bring chat GPT to the iPhone.
Speaker 7: You published your.
Speaker 5: Reaction this morning and in summary you're saying it's a
Speaker 5: pretty sound strategic move outline your thesis.
Speaker 12: Yeah, so when you think about it, you know, Apple's
Speaker 12: not been at the forefront of Generator AI, and the
Speaker 12: next WWDC or the Worldwide Developer Conference in June is
Speaker 12: really you know, aimed at AI. And if Apple's not
Speaker 12: able to showcase really cool features, then you're not going
Speaker 12: to have another round of you know, bad iPhone sales
Speaker 12: over the next twelve months. So they really need to
Speaker 12: push something out that gets consumers excited go get a
Speaker 12: new phone. Requires a little bit more you could say,
Speaker 12: processing power, you know, all sorts of things that go
Speaker 12: with it. So from that point of view, I think
Speaker 12: it's a good deal if they partner with somebody. You know,
Speaker 12: personally I'd like to partner. I like them to partner
Speaker 12: with both of them, frankly, not just with open aiye,
Speaker 12: but Google also because you know, if you know, as
Speaker 12: you remember, when it comes to search, Google pays them
Speaker 12: quite a bit of money and I don't personally don't
Speaker 12: want that partnership to go away for any reason.
Speaker 4: Was it also, though basically an acknowledgment as we've heard,
Speaker 4: with perhaps teaming up with Alphabet and Gemini, they just
Speaker 4: aren't going to be innovating themselves on this level.
Speaker 6: Would they ever usurp and build.
Speaker 4: Their own large ancuage model or is that just not
Speaker 4: where they're going to be bringing AI to bear?
Speaker 12: See, they are spending money and I'm sure they'll have
Speaker 12: their own technology that goes into it. But as Apple
Speaker 12: has done it in the past, they'll like to partner
Speaker 12: with other companies that specialize in that area. And you know,
Speaker 12: there is no secret they have that deal with Google.
Speaker 12: When it comes to search, they use cloud resources from AWS,
Speaker 12: they use cloud resources from Google, so they don't want
Speaker 12: to do.
Speaker 3: Everything in house.
Speaker 12: And if this helps them they sell more iPhones next year,
Speaker 12: you know, I'm okay with them going and partnering with
Speaker 12: anybody that's out there and.
Speaker 6: A Grana loving it.
Speaker 4: Bloomberg Intelligence, thank you very much for shining light on
Speaker 4: your own thesis. Let's get that of Tom Forte, DA
Speaker 4: Davidson analyst, and it seems to be the marriage that
Speaker 4: the investor base wants to see.
Speaker 6: But not on Alphabet's perspective.
Speaker 13: Yeah, I think from Apple's perspective, investors are anxiously waiting
Speaker 13: for the company's AI strategy. So whether it's using Google
Speaker 13: or whether it's using open AI to create an advance
Speaker 13: the strategy. I think that's something that potentially you get
Speaker 13: investors excited. I just it's certain though then you may
Speaker 13: not see the boost the iPhone sales. They certainly need
Speaker 13: the boost, still have their revenue today, and then at
Speaker 13: least on a near term basis, AI is still a
Speaker 13: chip story for Nvidia, or hyperscale cloud computing story for
Speaker 13: Azure AWS or Google Cloud.
Speaker 5: Tom Anna Rag said that if this helps sell iPhones
Speaker 5: next year, it's a good thing. There's a much bigger
Speaker 5: discussion happening in the smartphone market about whether or not
Speaker 5: this is the year of the AI smartphone, principally focused
Speaker 5: on Android powered by a Snapdragon processor. Do you see
Speaker 5: an upgrade cycle if this deal gets done?
Speaker 13: The answer is I think of the upgrade cycle from
Speaker 13: five G as being kind of the bell weather and
Speaker 13: the advantage there was that the carriers had invested billions
Speaker 13: of dollars to upgrade their network.
Speaker 3: So they were very vested in getting an upgrade cycle.
Speaker 13: To me, if you want to call it a potential
Speaker 13: AI upgrade cycle, I would put that as a distant
Speaker 13: second to the five G upgrade cycle. But right now,
Speaker 13: I think Apple could use any help when it came
Speaker 13: to sign the iPhone given the overdependence. Again, half their
Speaker 13: revenue last year came from iPhones.
Speaker 6: I mean it is key.
Speaker 4: They're also, of course all in on services, and I
Speaker 4: suppose that's also a key driving force here. Ultimately, Tom,
Speaker 4: there has been this handwringing, this worry that Apple is
Speaker 4: behind the curve, and that yes, they made the pivot
Speaker 4: away from the cars, but it comes too little, too late.
Speaker 4: Do you have optimism that they can steal that back,
Speaker 4: particularly for AI on device.
Speaker 13: No, I do not, and I still actually wish that
Speaker 13: they would return to cars.
Speaker 3: I've talked about how I'm a Model.
Speaker 13: Three owner and I see a million opportunities for Apple
Speaker 13: to do it better.
Speaker 3: Again, I think we have to keep it in perspective.
Speaker 13: AI could be a tremendous boost to apples sales and
Speaker 13: profits over the long term. On a near term basis,
Speaker 13: it could have a positive impact, and I guess iPhone
Speaker 13: sixteen sales to the extent that they're able to market
Speaker 13: something interesting. But I think investors have to be realistic
Speaker 13: on the near term expectations over the next twelve to
Speaker 13: eighteen months, on Apple's ability to leverage AI, and it's
Speaker 13: just not as compelling as a lot of the other
Speaker 13: big tech companies.
Speaker 5: Tom, there's a lot of frenemies out there. At the moment,
Speaker 5: I asked my audience on social media, is an Apple
Speaker 5: Open Ai deal for chat GBT on the iPhone good
Speaker 5: for Microsoft? Because I'm trying to make sense of all this,
Speaker 5: most respondents say good for Microsoft.
Speaker 3: What do you think absolutely good for Microsoft?
Speaker 13: When you think about Microsoft's involvement with open Ai, it's
Speaker 13: good for Microsoft.
Speaker 3: So yes, I think that I like how to use
Speaker 3: the word front of me.
Speaker 13: This is a challenge for Apple, which is does it
Speaker 13: want to leverage open ai given its relationship with Microsoft?
Speaker 3: Does it want to leverage Google?
Speaker 13: Does it want to entrust someone else to something that
Speaker 13: could potentially be this important being artificial intelligence. I still
Speaker 13: look at the Siri as an opportunity for Apple to
Speaker 13: do something better there.
Speaker 3: So this is certainly a challenging situation for Apple.
Speaker 6: Come on, sirih you can do it.
Speaker 4: Meanmail, Tom, what about the Vision pro going on sale
Speaker 4: to more countries? We understand China, Japan, France, Germany?
Speaker 3: Can I help at the margin?
Speaker 13: Yes, I think the most interesting thing we learned about
Speaker 13: Vision pro in the March quarter was how they talked
Speaker 13: about at the enterprise level, which maybe makes the thirty
Speaker 13: four to ninety nine price point make more sense. But
Speaker 13: the challenge we talked about services Hardware sales were down
Speaker 13: double digits in the March quarter, and I think if
Speaker 13: you continue to have declines with hardware at some point,
Speaker 13: that's going to transit or translate lower services sales, which
Speaker 13: is another challenge for the stack.
Speaker 6: Yeah, I misspoke.
Speaker 4: Likely to expand to China, to Japan, to France to Germany.
Speaker 5: Likely ed, Yeah, And I think most people say it
Speaker 5: be a bit foolish if they did not. Tom Forte,
Speaker 5: Managing director of Maximum Group. Great to have you on
Speaker 5: the programs Thanking. Now coming up on the show, our
Speaker 5: Kagos founder Bilhuang is defending himself against fraud and market
Speaker 5: manipulation charges in Manhattan. Today we go outside the courthouse. Next,
Speaker 5: this is Bloonbog Technology.
Speaker 4: Now let's get out to a Manhattan federal court where
Speaker 4: our Keago's Capital management founder bilh Wang sand trial over
Speaker 4: his firm's twenty twenty one collapse, facing charges of fraud,
Speaker 4: of racketeering, conspiracy that could end with him behind bars
Speaker 4: for the rest of his life tried alongside the former
Speaker 4: Archago's CFO Patrick Halligan outside that courtroom Shanali Bassek. And
Speaker 4: we understand that the defense lawyer for Bill Wang, currently
Speaker 4: Barry Burke, is taking this down really talking about how
Speaker 4: investment banks were falling over themselves to work with the company,
Speaker 4: and really some of the bets that he made from
Speaker 4: our perspective in tech was Vikom CBS. Now paramount saying
Speaker 4: content was King Shannali.
Speaker 9: Yeah, he is.
Speaker 14: Really driving home that argument to your point. Here, you
Speaker 14: do see the defense council now speaking right after the
Speaker 14: prosecution had made their opening argument, and the defense is
Speaker 14: making this case that our KAGOS was a family office.
Speaker 9: And it was not responsible for outside money. Bill Wang
Speaker 9: was responsible for his own funds.
Speaker 14: It also made the case there that when he made
Speaker 14: these bets, it was his own money that he lost,
Speaker 14: not investors' money on the outside, although we do know
Speaker 14: separately that the banks themselves had lost a significant amount
Speaker 14: of money through engaging in these swap agreements with Huang's firm.
Speaker 14: Now we look at the defense here and they also
Speaker 14: talk about the nature of the bets themselves. You may
Speaker 14: remember when all of this started to unravel. It was
Speaker 14: around ViacomCBS. So you do have the defense attorneys speaking
Speaker 14: to a jury largely not versed in the world of finance,
Speaker 14: Caroline and explaining that Bill Wang was betting on stocks
Speaker 14: that he believed in and that's why he was betting
Speaker 14: so much.
Speaker 9: Some of his earlier bets like Netflix.
Speaker 14: Were hugely profitable for him back in the day, and
Speaker 14: now when he was thinking about the new bets put
Speaker 14: to work, he was making the case that content is king,
Speaker 14: like you're saying, and that's why he bets so much
Speaker 14: on Viacom, essentially through borrow money.
Speaker 5: You know, for US prosecutors, this is a big white
Speaker 5: collar crime case. You know, it's up there in terms
Speaker 5: of the scale and the action by their offices with
Speaker 5: what happened with FTX and others. What are you expecting
Speaker 5: to happen, Shanali? How many days weeks will this go
Speaker 5: on for?
Speaker 14: We take a number of weeks, and remember we do
Speaker 14: have just opening arguments. As we've been talking about, we
Speaker 14: could hear from witnesses ed as soon as today. One
Speaker 14: of the early witnesses, very early on in this trial,
Speaker 14: will be for example, counterparties over at ubs that was
Speaker 14: on the other end of the Billhang call when it
Speaker 14: came to asking for margin. Now, I would also say,
Speaker 14: remember that there are two people that worked at Arcagos
Speaker 14: that have pled guilty and can also be testifying potentially
Speaker 14: throughout the course of this trial in those weeks, and
Speaker 14: one big question mark was how much they acted alone
Speaker 14: or because of the culture at Our Chagos and directed.
Speaker 9: By Bill Huang to do so. This will get.
Speaker 14: Quite contentious because we know that the defense plans to
Speaker 14: show that the banks acted on their own. You saw
Speaker 14: it in the opening arguments, this idea that these banks
Speaker 14: were falling over themselves to work for Bill Huang when
Speaker 14: he was at his height.
Speaker 9: Now, remember another piece of evidence.
Speaker 14: That we wonder about whether it will show the light
Speaker 14: of day and how it will be used is Credit
Speaker 14: Sweez's own risk profile and risk assessment of itself as
Speaker 14: it failed.
Speaker 9: As we know, Our Chagos wasn't.
Speaker 14: The only reason Credit Suitee had failed, but it was
Speaker 14: a massive contributing factor to those significant losses faced by
Speaker 14: Credit Swee as it was failing. So a lot of
Speaker 14: complicated questions in the course of this trial it could
Speaker 14: take weeks to play out. They're facing a number of
Speaker 14: charges here, including racketeering, securities fraud, and wire fraud. The
Speaker 14: charges alone each could face up to twenty years in prison.
Speaker 14: And as we know, some of the attorneys in here,
Speaker 14: the prosecutors were involved in the FTX trial very recently
Speaker 14: as well. So this is in an office coming very
Speaker 14: hard down on white collar crime Sanli.
Speaker 4: Has anything changed to protect this happening again from fominly
Speaker 4: office perspective, from counterpolity perspectives.
Speaker 14: That's the best question I think coming out of this,
Speaker 14: because this trial does have thetential to draw light again
Speaker 14: to a lot of the practices that got us here,
Speaker 14: and if you think about it, swaps rules in some
Speaker 14: form have been altered.
Speaker 9: The SEC had taken a look at it, The.
Speaker 14: SEC and the CFTC have fought over jurisdiction around a
Speaker 14: lot of these trades. Some of the ways that they
Speaker 14: have been changed were simply post two thousand and eight
Speaker 14: Dodd Frank rules that were changed not until recently. But
Speaker 14: to a point about family offices and disclosure that has
Speaker 14: not been changed, and that is something that regulators may
Speaker 14: take a look at once again, given what happened here
Speaker 14: and given that nothing.
Speaker 9: Is really different for any future problems.
Speaker 4: Dollie sloud out there. We thank you for being outside
Speaker 4: the Manhattan Court. Now let's have to go to you.
Speaker 7: Ed.
Speaker 5: Yeah, let's get some other news headlines in today's Talking
Speaker 5: Tech and First Soft Bank laid out plans to get
Speaker 5: more aggressive in AI and other fields after reporting a
Speaker 5: second quarter profit and surge in the value of assets,
Speaker 5: including a surge of armstock since the IPA last year plus.
Speaker 5: Jaumi aims to begin making and selling an SUV similar
Speaker 5: to Tesla's Model hy as early as twenty twenty five,
Speaker 5: embarking on a major new expansion, with production of its
Speaker 5: debut SU seven electric car set to reach about one
Speaker 5: hundred thousand units this year. And zero one Dot Ai,
Speaker 5: the Beijing startup founded by tech pioneer Kaifu Lee, is
Speaker 5: introducing its first AI application for consumers, a step aimed
Speaker 5: at helping China capitalize on the promising technology. The firm's
Speaker 5: free productivity assistant is called one G and it's the
Speaker 5: latest in a series of AI products it's developing.
Speaker 7: Kaifulee spoke with Bloomberg's David.
Speaker 5: Ingless and Yvon Mann about that in competition from big
Speaker 5: tech companies, listen to.
Speaker 15: This companies like Meta, Google, Microsoft are putting fifty one
Speaker 15: hundred times more resources in this, so we certainly don't
Speaker 15: take it lightly. So as we catch up with currently
Speaker 15: best model, we realize that even better models will come
Speaker 15: from Open Air and others, and we want to stay
Speaker 15: as close as we can. But we also think it's
Speaker 15: about building a great user experience, is really understanding what
Speaker 15: the users want and using that, which is China's advantage.
Speaker 15: As Jen said earlier, if you think about Chinese applications,
Speaker 15: TikTok is better than Instagram. Products like Temu and Shean
Speaker 15: have taken over the world. Users love it. I think
Speaker 15: China's ability to develop great applications that focus on what
Speaker 15: users want and that product market fit is a unique
Speaker 15: attribute to Chinese companies.
Speaker 6: I feeling that.
Speaker 5: Game Stop shares surged amid speculation on the return to
Speaker 5: social media by Keith Gill aka Roaring Kit, and it's
Speaker 5: driven a meme stock mania emblematic of what happened in
Speaker 5: twenty twenty one. That's his latest post on actually see
Speaker 5: it right there?
Speaker 7: What does it mean?
Speaker 5: Let's bring in Bloomberg's Bailey Lipschaltz, who, along with meme
Speaker 5: stock mania, is so back, Bailey, You're back. Roaring Kitty's back.
Speaker 5: But what does that mean?
Speaker 16: I don't know, And it means that he's back to Twitter.
Speaker 16: He posted a video that actually had clips of the
Speaker 16: movie Wolverine. He also posted a montage that had a
Speaker 16: Ferris Bueller on his day off.
Speaker 7: It's a lot of.
Speaker 16: Questions and it's circulating Reddit, stock, Twits, Discord, you name it,
Speaker 16: and investors are speculating that if Roaring Kitty's back on
Speaker 16: social media, maybe that means he likes the stock again,
Speaker 16: and maybe that's a reason people should buy the stock.
Speaker 16: That's really the galaxy brain of the retail crowd at
Speaker 16: this point as it relates to GameStop.
Speaker 4: Because yeah, just give us the context of where else
Speaker 4: this is a lit of fire, not only just GameStop,
Speaker 4: but crypto related to games and also well just heavily
Speaker 4: shortened names that are out there in the retail space.
Speaker 16: Exactly everything that moved back in twenty twenty one costs
Speaker 16: and see you name it. Beyond, which bought the bed
Speaker 16: back and Beyond ran from the company after it went bankrupt,
Speaker 16: is rallying. Carently, it's really just kind of like a
Speaker 16: question around what the next stock could be, and it
Speaker 16: almost brings back the shades and the argument around is
Speaker 16: this retail traders or is this Wall Street? And are
Speaker 16: people speculating where they can put money to work? And
Speaker 16: what actually is driving the rally because when you look
Speaker 16: at what happened back in twenty twenty one, obviously the
Speaker 16: retail crowd was part of it. Obviously they were buying
Speaker 16: call options, but there are a lot of questions around
Speaker 16: who else was buying because Wall Street doesn't really let
Speaker 16: other people make money if they can get in on
Speaker 16: the trade.
Speaker 4: Well besidesly, so is this a going to target shortstocks
Speaker 4: and any particular hedge funds in particular as we saw
Speaker 4: back in twenty twenty one, But also did the retail
Speaker 4: crowd want to be parling in using robin Hood once
Speaker 4: again because robin Hood came out sort.
Speaker 6: Of a foe and a friend in the situation.
Speaker 16: Yeah, a whole the bit around removing the buy button
Speaker 16: as an area I don't want.
Speaker 7: To get into, but it does.
Speaker 16: But it does seem like we are still seeing those
Speaker 16: animal spirits and that's really one of the questions is
Speaker 16: who's buying and who's selling. Because we saw GameStop up
Speaker 16: sixty eight percent. In the three weeks prior to the
Speaker 16: Roaring Kiddy post, we saw the busiest week from a
Speaker 16: volume perspective since April twenty twenty two, so people were
Speaker 16: buying the stock out of the money.
Speaker 7: Call options were active in the two.
Speaker 16: Weeks leading up to today's rally, so a lot of
Speaker 16: questions about what actually was going.
Speaker 3: On under the surface.
Speaker 5: I see, I see some animal spirits in you, and
Speaker 5: you're reporting in your grasp of the data. There are
Speaker 5: some animal spirits in other names, like Reddit's higher robin
Speaker 5: hood at was higher. I saw on down Detecta that
Speaker 5: e trade has been difficult for some users since the open.
Speaker 7: So take that information.
Speaker 5: It just explained the basics of the relationship of the
Speaker 5: trading in these names and what's happening with meme stalts
Speaker 5: more broadly.
Speaker 16: So we're seeing really a pushback into a lot of
Speaker 16: those retail names, and that's new names like Trump Media
Speaker 16: and Reddit and old names like AMC and Costs. But
Speaker 16: we are seeing a lot of these systems being inundated
Speaker 16: with buy orders, and that really can put a strain
Speaker 16: on some of the systems to try to pair up
Speaker 16: buyers and sellers. And that's why you see a number
Speaker 16: of these trades kind of potentially fail to deliver and
Speaker 16: a number of other issues.
Speaker 3: This is not the short.
Speaker 16: Mania that it was in twenty twenty one when over
Speaker 16: one hundred and forty percent of game Stop was sold short.
Speaker 16: It's closer to twenty four percent. But this is creating
Speaker 16: a lot of issues for the underlying systems that are
Speaker 16: trying to match up these.
Speaker 9: Buy and sell orders.
Speaker 16: And that also with the volatility and with some of
Speaker 16: the swings where people were trying to put in orders
Speaker 16: at that's totally saw the stock halted eight times for
Speaker 16: volatility in the first hour because there was so much
Speaker 16: of an order and an order backlog among these retail
Speaker 16: platforms that don't have clients, that have clients that do
Speaker 16: not have access to after hours or pre market trading,
Speaker 16: so that also can create kind of this bottleneck, if
Speaker 16: you will, of buy and sell orders in that first
Speaker 16: sixty minutes. Even the first ten minutes of trading was
Speaker 16: quite volatile.
Speaker 7: I'm quite heckic.
Speaker 4: It's back, it's up and training right now, and Bailey
Speaker 4: Lipshalt's have a feeling we'll have a busy day.
Speaker 6: We thank him on all things Meme frenzy.
Speaker 4: Meanwhile, look, that does it for this edition of Bloomberg Technology.
Speaker 4: There's some discussions happening, and what's Opening Eyes about to
Speaker 4: announce in the next couple of minutes.
Speaker 5: Yeah, so a big event coming up the top of
Speaker 5: the hour, And now you've got a hard choice. Tonight,
Speaker 5: you can recap the podcast Bloomberg Technology, which is a
Speaker 5: must listen, or you can watch the movie Done Money,
Speaker 5: which is basically a buyer pic of Roaring Kiddy.
Speaker 7: Check both out.
Speaker 5: This is Bloomberg Technology from San Francisco in New York.