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Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed.
Speaker 2: Ludlow live from New York.
Speaker 3: I'm Romain Bostic and I'm Jackie Devallas in Washington. This
Speaker 3: is Bloomberg Technology coming out. Trump and TSMC are expected
Speaker 3: to announce a one hundred billion dollar investment in the US.
Speaker 4: That's according to reports.
Speaker 3: Plus, we'll dig into the potential impact of the US
Speaker 3: tears on the tech sector, especially chips, as that deadline
Speaker 3: approaches and Honora dominates the twenty two five oscars while
Speaker 3: Disney's Hulu takes a hit crashing during the ceremony. We'll
Speaker 3: have all the details, but first let's get a check
Speaker 3: on those markets.
Speaker 4: What do you see, Romaine, There's a.
Speaker 5: Lot to check here right now.
Speaker 6: You're looking at a market that has really been on
Speaker 6: a roller coaster ride. The inter day chart of the
Speaker 6: NASTAQ one hundred really indicative of that. We came into
Speaker 6: this morning with an expectation of a continuation of that
Speaker 6: tech rebound off of that strong rally on Friday, but
Speaker 6: that got kneecapped about thirty minutes into the sessions, some
Speaker 6: economic data showing further contraction in the manufacturing sector here
Speaker 6: in the United States, combined with an increase in the
Speaker 6: price index here inflationary pressures rearing their head. But then
Speaker 6: guess what a little bit of a reprieve came in
Speaker 6: just around a little bit around ten thirty here in
Speaker 6: New York City, headlines from the Wall Street Journal saying
Speaker 6: that the Trump administration does plan to announce further investments
Speaker 6: in the chip space here in the United States, a
Speaker 6: one hundred billion dollar commitment from TSMC Taiwan Semiconductor over
Speaker 6: the next four years. This may not look like much
Speaker 6: on your screen, but you did see a rebound in
Speaker 6: tech stocks. The one percent dropped they were seeing in TSM.
Speaker 6: They were down about three percent earlier in the session.
Speaker 6: The rest though, of the Philadelphia Semiconductor Index right now
Speaker 6: straddling the line, Jackie, between gains and losses.
Speaker 3: Let's get more on that CSMC deal with Bloomberg's Mike Shepherd,
Speaker 3: who's joining us now, Mike, what do we know about
Speaker 3: this potential deal?
Speaker 7: Well, we've been able to confirm here what the Wall
Speaker 7: Street Journal had reported earlier that TSMC will announce at
Speaker 7: one thirty PM with Donald Trump in the White House
Speaker 7: plans for up to one hundred billion dollars of investment
Speaker 7: in the US. And what we know from beforehand from
Speaker 7: our coverage of TSMC and the big push to expand
Speaker 7: chips manufacturing here in the US, there were already plans
Speaker 7: by the company for up to sixty five billion dollars
Speaker 7: in investment, supported by some money from the Biden era
Speaker 7: chipsack programs. But the idea would be to build some
Speaker 7: plants in Arizona.
Speaker 5: They are have one that.
Speaker 4: Was actually ed.
Speaker 7: TSMC was lured by Trump to Arizona back in twenty twenty.
Speaker 7: That plan is now up and running, its yields or
Speaker 7: even exceeding what we typically see from plants by TSMC
Speaker 7: back home in Taiwan, and there are plans for as
Speaker 7: many as three more plants as well.
Speaker 6: So Mike, give us a CeNSE here, though, when we
Speaker 6: talk about these dollar commitments, and we've seen a lot
Speaker 6: of these commitments, what's the follow through? I mean, there
Speaker 6: was a story on the Bloomberg terminal over the last
Speaker 6: forty eight hours saying that Intel is having trouble getting
Speaker 6: some of its chip plants up and running in the
Speaker 6: timeframe that had originally set out. How much progress has
Speaker 6: TSMC made so far on those previous commitments, But one.
Speaker 7: Of the biggest differences between TSMC and Intel is really
Speaker 7: the customer base. And Intel has struggled to find customers
Speaker 7: that would be able to sustain a plan of the
Speaker 7: skill of the one in Ohio that you just mentioned.
Speaker 7: And TSMC, on the other hand, it is the world's
Speaker 7: leading maker of artificial intelligence to chips and the demand
Speaker 7: for that is insatiable. As we know, they are the
Speaker 7: leading foundry for Nvidia and in video. We just saw
Speaker 7: the earnings last week. Jensen Wang, the CEO of Nvidia,
Speaker 7: looking ahead to really demand that is hard to meet
Speaker 7: for their products, Blackwell and others, as this capex that
Speaker 7: we're seeing globally going into artificial intelligence really seems to
Speaker 7: be on course to continue unabated. And this actually fits
Speaker 7: in with Donald Trump's own vision for artificial intelligence. He
Speaker 7: wants to make sure that the US remains dominant in
Speaker 7: this area, and even by having a foreign flagged and
Speaker 7: owned company like TSMC in the US expanding that does
Speaker 7: fit his vision. One he articulated before the election of
Speaker 7: having companies from a broad invest in the United States.
Speaker 5: All right, Mike Shepard, a man in DC.
Speaker 6: There, as we await that press conference, that announcement by
Speaker 6: President Donald Trump's schedule for one thirty pm out of Washington,
Speaker 6: we should point out the Philadelphia Semiconductor Index has been
Speaker 6: on a ride down one percent, up a couple of
Speaker 6: percent now straddling the line between gains and losses. No
Speaker 6: help from Nvidia, no help from TSMC, but you are
Speaker 6: seeing a lot of the other names rally here into
Speaker 6: that session, Lamb Research, Lattice, and Intel among your big gainers.
Speaker 6: Let's bring fionas and got it into the conversation City
Speaker 6: Index senior analysts to talk a little bit more about
Speaker 6: the tech trade, and Fiona, I am curious about where
Speaker 6: sort of the fuel is going to come for the
Speaker 6: next leg of this. I guess we can call it
Speaker 6: chip slash AI trade.
Speaker 5: Where's that come from?
Speaker 8: Yeah, it's a really good point, because you know, it's
Speaker 8: been a difficult start to twenty twenty five. You know,
Speaker 8: we've seen that the reflected in share prices, which across
Speaker 8: the board have struggled since the.
Speaker 9: Start of the year.
Speaker 8: So you know, I think we're very much getting to
Speaker 8: this stage where the markets are looking as you correctly
Speaker 8: pointed out that next catalyst.
Speaker 9: But I think it's also worth bearing in mind.
Speaker 8: That there are several clients that are just looming over
Speaker 8: the sector, and I think one of those clouds that
Speaker 8: we're waiting for a bit more clarity on is what
Speaker 8: Trump's intending to do as far as export bands are concerned.
Speaker 9: You know, there are some sort.
Speaker 8: Of reports that potentially we could see more export bands
Speaker 8: to China coming into place potentially this week. I think
Speaker 8: once we start to get a bit of a clearer
Speaker 8: picture of how the Trump administration is looking to position
Speaker 8: itself as far as the chip sector is concerned, I
Speaker 8: think that could help at least stem.
Speaker 9: Concerns that have been weighing on the sector.
Speaker 8: And I think the other thing is that we just
Speaker 8: also need to get a little bit more clarity I
Speaker 8: think over the outlook for sort of reduced costs as
Speaker 8: far as AI is concerned. Obviously, we've had earning season
Speaker 8: and we've learned a lot. We know that spending is
Speaker 8: still high. But I think the whole deep seek disruption,
Speaker 8: just so the seed of doubt, which I don't feel
Speaker 8: how been removed yet, So I think we just need
Speaker 8: a little bit more clarification as to what the outlook
Speaker 8: is as far as being able to reduce spending on
Speaker 8: AI CAPEX spending is concerned.
Speaker 3: To your point about what Trump's policies mean for the
Speaker 3: semiconductor sector, there is some concern that tariffs or other
Speaker 3: policies could eventually lead to price increases in the space.
Speaker 3: There's been some debate about how much of an effect
Speaker 3: that would actually have on companies' abilities to offer them
Speaker 3: at a price that's still appealing to their customers.
Speaker 4: Where do you land on that.
Speaker 3: Is that something that you're watching as a potential detractor
Speaker 3: to the space going forward?
Speaker 9: Yes, you know, I think that's a really good point.
Speaker 8: We do obviously need to consider when we're talking about
Speaker 8: trade tariffs. We also need to consider about what that
Speaker 8: means for pricing and potential inflationary pressures that that might
Speaker 8: cause in those pricing and obviously, you know there are
Speaker 8: going to be ceilings and limits that you know, prices
Speaker 8: may potentially reach where customers say, well, actually at that
Speaker 8: level it's too high, we're going to rain in our orders.
Speaker 9: So I think that's something that we need to watch
Speaker 9: very carefully.
Speaker 8: But obviously on the back of that, we also know
Speaker 8: that there is obviously a huge importance based on tech,
Speaker 8: based on AI, based on chips, and so you know
Speaker 8: that they are very much continued to be the future
Speaker 8: of sort of you know, where the world is going.
Speaker 9: So we need to keep that in mind when we
Speaker 9: think about, you know what.
Speaker 8: Level our company is going to say that's too far,
Speaker 8: that's too high for us right now. So whilst we
Speaker 8: will be keeping an eye on it, I don't think
Speaker 8: it's necessarily right now at a point which is causing concern,
Speaker 8: but it potentially could do in the future if we
Speaker 8: find that those inflation that those hearoffs do have inflationary impacts.
Speaker 6: Are you comfortable, though, Fiona, when you look at the
Speaker 6: valuations in the market for some of these names that
Speaker 6: the market has bid up, are you comfortable with those
Speaker 6: valuations given what you just said, Because.
Speaker 8: We've obviously had a very strong run up now we've
Speaker 8: also had a pullback since the start of the year,
Speaker 8: so I think that pullback has actually meant shown that
Speaker 8: the market is pricing in those concerns.
Speaker 9: I do think that we need to have more.
Speaker 8: Clarity before we're going to see any further increases in
Speaker 8: valuations while before we see any strong rally higher longer term,
Speaker 8: I'm still bullish on the sector. I think short term
Speaker 8: there is a potential for there to be more choppiness
Speaker 8: as we wait for those points to be clarified.
Speaker 3: That City Index senior analyst for your nursing kind of things.
Speaker 4: So much for joining US.
Speaker 3: President Trump's sweeping tariffs is said to take effect tomorrow,
Speaker 3: placing new twenty five percent levees on Canada and Mexico
Speaker 3: and an additional ten percent on China.
Speaker 4: More on the global.
Speaker 3: Tariffs impact, Christine McDaniel's senior research fellow at.
Speaker 4: The Mercada Center, joins us.
Speaker 3: Now, Christine, we've heard a lot about terrafts over the
Speaker 3: last couple of weeks. Talk to us about the scope
Speaker 3: and scale of these compared to what's been discussed in
Speaker 3: the past.
Speaker 10: So these these are much larger than what has been
Speaker 10: discussed in the past, not only in terms of magnitude
Speaker 10: of the terraffs, but also in terms of the amount
Speaker 10: of trade that it will affect. So, you know, the
Speaker 10: North American economy is a powerhouse and the US is
Speaker 10: at the center of that. It's it's a big, you know, big,
Speaker 10: big part of it. It's a big producer, it's a
Speaker 10: big consumer. We have products going back and forth across
Speaker 10: the border, you know, several times before it ends in
Speaker 10: a finished product, you know, just looking at the tech
Speaker 10: and chip sector alone, just doing some back of the
Speaker 10: envelope this morning, you know, we're talking about fifty three
Speaker 10: billion dollars in tariff's pay. So the US imports from
Speaker 10: Canada about forty three billion worth in tech and chips,
Speaker 10: and from Mexico it's about one hundred and sixty eight billion,
Speaker 10: So twenty five percent of that, you know, over fifty
Speaker 10: billion dollars in tariffs, and that's going to come.
Speaker 9: Out of out of the North American economy, you know.
Speaker 10: And so whether it's Mexico, US or Canada, you know,
Speaker 10: depending on different market factors. But it's definitely not going
Speaker 10: to lower prices for US consumers. And so it's just
Speaker 10: a matter of how much it will raise prices. And
Speaker 10: then overall, just looking at the entire North American you know,
Speaker 10: trading relationship, we're looking at two hundred and twenty seven
Speaker 10: billion in tariffs, so you know, these are not small numbers.
Speaker 6: Yeah, well, let's break it down here into some of
Speaker 6: the industry specific areas. We focused a lot on this
Speaker 6: network one kind of the bigger areas like automotives. Obviously
Speaker 6: commodities are going to be impacted as well. But in
Speaker 6: the area of technology, are there sort of direct tariffs
Speaker 6: so we should be looking at that could actually impact
Speaker 6: technology products that are crossing the border.
Speaker 10: Yeah, yes, I mean there's so so many. I mean,
Speaker 10: so look at the raw materials you know, coming from Canada,
Speaker 10: the component production that happens in some in Canada, a
Speaker 10: lot in Mexico, the assembly, testing and packaging that happens
Speaker 10: largely in Mexico. You know, that will all really hurt
Speaker 10: the pricing power of US you know, sellers, US businesses here. Uh,
Speaker 10: and it will either eat it in the profit margins
Speaker 10: or they'll pass it on to US consumers and or
Speaker 10: you know, the Canadians and Mexicans will will take a hit.
Speaker 10: I mean, we're looking at a sector where there's been
Speaker 10: what like, have a trillion to a trillion dollars of
Speaker 10: investment announced just in the US and very recently. So
Speaker 10: you know, it's the tariffs will will make it's going
Speaker 10: to be harder to get a good bang for the
Speaker 10: buck with these tariffs.
Speaker 6: Yeah, and of course for a lot of folks, so
Speaker 6: they're going to start to see those tariffs kick in
Speaker 6: or for night to night. March fourth, of course, is
Speaker 6: the deadline at least for those big ones on Mexico
Speaker 6: and Canada, additional terrifts down the road, and of course
Speaker 6: these reciprocal terrorists Christine that the President has also spoken
Speaker 6: about here, you've been on the inside. I mean, you
Speaker 6: know what goes on inside the Trade Reps Office, you
Speaker 6: know what goes inside the Department of Commerce, you know
Speaker 6: what goes on inside the ITC. Are those mechanisms for
Speaker 6: debate and more importantly for negotiation still there or is
Speaker 6: this pretty much a negotiating process that begins and ends
Speaker 6: with Trump himself?
Speaker 10: Yeah. This is a very different USTR Commerce experience, you know,
Speaker 10: than than what was under George W. Bush administration. The
Speaker 10: you know, there is an of course interagency analysis and
Speaker 10: meetings that happened. Uh but but in terms of you know,
Speaker 10: to what extent that analysis really feeds into and and
Speaker 10: can affect the president's decision making?
Speaker 11: Is you know something else?
Speaker 10: I mean, I remember with in the Bush administration, we
Speaker 10: had you know, a number of interagency meetings where we
Speaker 10: always were asked, you know, what would be the national
Speaker 10: economic effect? Is this in the national economic interest? And
Speaker 10: you know, and and the White House was always interested
Speaker 10: in the downstream effects, I mean very seriously interested, and
Speaker 10: that would often come into be a pretty big part
Speaker 10: of their decision making. You know, you don't necessarily see
Speaker 10: that with this current administration. But still early days. I
Speaker 10: mean there's still several hours.
Speaker 9: Of the day left.
Speaker 10: And and you know, Commerce Secretary of Lutnik over the
Speaker 10: weekend said the situation is fluid. That they feel apparently
Speaker 10: that Canada and Mexico has made a lot of progress
Speaker 10: on the border. That and they're very happy they've had
Speaker 10: the lowest crossing ever on the border, but they're still concerned,
Speaker 10: you know, at Faetanyel continues to come into the country,
Speaker 10: so maybe it won't be twenty five percent and it
Speaker 10: will be something less. So everybody's on the sort of
Speaker 10: a wait and see approach, which apparently is what they
Speaker 10: like people to be in that position.
Speaker 5: Well, the clock is ticking right now.
Speaker 6: Christine McDaniel over at the Mercadis Center a long career
Speaker 6: of course in Washington. As we now turn our attention
Speaker 6: to another part of the market that is affected by
Speaker 6: what's going on in Washington, and that is cryptocurrencies. Over
Speaker 6: the weekend, the President turned the truth social to announce
Speaker 6: his plans for a strategic crypto reserve, which would include
Speaker 6: lesser known digital assets like XRP and Salana. The news
Speaker 6: ignited and immediate crypto rally, a rally that has pared
Speaker 6: back quite a bit over the last few hours. Here
Speaker 6: Bill down a hire joining us right now who covers
Speaker 6: crypto for us here at Bloomberg. We have seen a
Speaker 6: bit of a turnaround in some of these coins.
Speaker 5: Well done.
Speaker 6: I wish you to point out some of the crypto
Speaker 6: stocks like Marathon and a few others a micro strategy
Speaker 6: as well, still in the green. How much stock can
Speaker 6: we put in that announcement that Trump made over the
Speaker 6: weekend about this cryptocurrency reserve as well as this big
Speaker 6: crypto summit that's coming up on Friday at the White House.
Speaker 12: I think it's really good question, and the key thing
Speaker 12: to keep in mind is that we just are lacking
Speaker 12: a ton of details. So we had the social media
Speaker 12: announcement over the weekend that mentioned these maybe we can
Speaker 12: call them lesser known coins, and later the President tweeted
Speaker 12: again to say that you know, Bitcoin and ether of
Speaker 12: course are going to be included as well. I think
Speaker 12: it's very It's not un surprising to see the initial
Speaker 12: enthusiasm leading to a rally in crisis and then sort
Speaker 12: of the comeback. It's something we've seen in cryptocurrencies in
Speaker 12: the past couple of weeks, in the past couple of months.
Speaker 4: It's sort of historically.
Speaker 12: Something that's been part of the cryptocurrency market, where you
Speaker 12: see the initial euphoria and then a drawdown following. You know,
Speaker 12: maybe once things settle down a little bit and people
Speaker 12: start to look at the announcement a bit more skeptically,
Speaker 12: But I do think that we definitely need to just
Speaker 12: have much more information on the strategic Crypto Reserve before
Speaker 12: we can make any solid proclamations.
Speaker 3: Speaking of skepticism built on I here in Washington, some
Speaker 3: Republican lawmakers who are allies of Trump have actually pushed
Speaker 3: back on the notion of using taxpayer dollars to fund
Speaker 3: risky assets like crypto. So this idea of a crypto reserve,
Speaker 3: what would that look like in practice? I know it's
Speaker 3: still a bit theoretical, but could you kind of break
Speaker 3: that down for us a.
Speaker 12: Bit, right, that's one of the key considerations, I think.
Speaker 4: And if we think back.
Speaker 12: To early January when the initial announcement about the Strategic
Speaker 12: Reserve was made, I think the administration had said something
Speaker 12: like it would be funded with seizures, lawful seizures, so
Speaker 12: you know, whenever there's an FBI raid for example, or
Speaker 12: something along those lines, because the government does have crypto
Speaker 12: holdings from such activities and such actions. So I think
Speaker 12: the initial idea that was that part of that would
Speaker 12: be coming from things like that, But we just we
Speaker 12: just don't know, and I think some of the skepticism
Speaker 12: that we've seen in the wake of this weekend's announcement
Speaker 12: does have to deal with that where people are where,
Speaker 12: where actually would the funding be coming from.
Speaker 4: That's Bloomberg's with Donna Halik. Thank you so much for
Speaker 4: joining us.
Speaker 3: Coming up a Texas startup landed spacecraft on the Moon.
Speaker 4: We'll discuss what this means.
Speaker 3: For the future of space exploration and the US position
Speaker 3: in the space race.
Speaker 4: This is Bloomberg, all.
Speaker 6: Right, shares of companies in the space race. We're actually
Speaker 6: on a pretty wild ride today as well. That was
Speaker 6: after a private company called Firefly Aerospace successfully landed its
Speaker 6: first robotic spacecraft on the Moon. That was over the
Speaker 6: weekend of partnership with NASA that had taking it on
Speaker 6: its journey on January fifteenth. The spacecraft carrying ten tools
Speaker 6: and experiments built by NASA, including a drill that would
Speaker 6: bury itself into the lunar soil to test the temperature.
Speaker 6: There you can see some of the other stocks here
Speaker 6: related to Firefly. Moving on that news, including rocket Lab
Speaker 6: and AST Space Mobile. Lauren Grush joining us right now
Speaker 6: to talk a little bit more about what we learned,
Speaker 6: and this was pretty momentous, only the second time, I
Speaker 6: believe in history we've got a commercial spacecraft successfully touched
Speaker 6: down on the Moon, of course a lunar One of
Speaker 6: the stocks we showed their intuitive machines did it, I
Speaker 6: think sometime back last year.
Speaker 2: Here.
Speaker 6: What was his significance of what happened over the weekend,
Speaker 6: specifically when it came to Firefly lorn right, Well, you.
Speaker 13: Just explained it right there. This is only the second
Speaker 13: time a commercial company has landed a vehicle intact on
Speaker 13: the lunar surface. But something special about Firefly's landing is
Speaker 13: they're kind of hailing it as the first fully successful
Speaker 13: landing because even though Intuitive Machines did land their lander
Speaker 13: for the first time last year, unfortunately that lander did
Speaker 13: tip over when it reached the surface. It was coming
Speaker 13: into fast and so it had to end its mission prematurely.
Speaker 13: But with Firefly, it looks like they stuck the landing
Speaker 13: upright and they even got some really great pictures from
Speaker 13: the lander right as soon as they made it to
Speaker 13: the surface. So from all we've seen so far, it
Speaker 13: looks like a pretty successful mission.
Speaker 3: Through and through Lauren, how much room is there for
Speaker 3: startups that are operating in the space srace to really
Speaker 3: get in here because a lot of the news that
Speaker 3: we hear is around SpaceX.
Speaker 4: Yeah.
Speaker 13: Absolutely, I mean this specific mission, Blue Ghost was part
Speaker 13: of an overall NASA effort to help fund private and
Speaker 13: public companies to develop lunar landers to reach the surface
Speaker 13: of the Moon. So this is something that NASA really
Speaker 13: wants a very diverse ecosystem of commercial companies, and so
Speaker 13: they've been partially funding landers to transport instruments and experiments
Speaker 13: and tools to the lunar surface to help learn more
Speaker 13: about the Moon. As part of its ongoing efforts to
Speaker 13: eventually land humans on the surface of the Moon. So
Speaker 13: this is what NASA wants.
Speaker 11: They want more.
Speaker 13: Companies than just SpaceX, you know, getting all the headlines,
Speaker 13: and so far it looks like their while they've had
Speaker 13: some mixed success, are starting to have more success as well.
Speaker 3: That's Bloomberg's Lauren Gresh. Thanks for joining us. What are
Speaker 3: you looking at?
Speaker 4: Romain?
Speaker 6: All right, Jackie, Jackie, time for talking tech, and first up,
Speaker 6: we're going to take a look at BYD, the company
Speaker 6: looking to raise as much as five point two billion
Speaker 6: dollars in a primary placement. According to terms seen by Bloomberg,
Speaker 6: the Chinese automaker offered one hundred and eighteen million shares
Speaker 6: at three hundred and thirty three to three hundred and
Speaker 6: forty five Hong.
Speaker 5: Kong dollars each.
Speaker 6: That's a discount of almost eight point four percent of
Speaker 6: Monday's closing price in Hong Kong, plus Bydu planning to
Speaker 6: raise one point four billion dollars with an offering of
Speaker 6: offshore bond sales. According to sources, the deal made price
Speaker 6: as soon as Wednesday, and would be the first bond
Speaker 6: offering for China's leading search engine since twenty twenty one.
Speaker 6: The deal also comes before the company must repay a
Speaker 6: six hundred million dollars security that's due on April seventh.
Speaker 6: And finally, Chinese AI startup Zepou has raised more than
Speaker 6: one one hundred and forty million dollars as interest in
Speaker 6: domestic AI rises following deep Seat's meteoric growth. The financing
Speaker 6: round led by local government back firms and joins existing
Speaker 6: backers Ali, Baba and ten Cent.
Speaker 5: Zipou was last valued at about three.
Speaker 6: Billion dollars during its last funding round in May twenty
Speaker 6: twenty four. Welcome back to Bloomberg Technology. Caroline Hyde and
Speaker 6: Ed lower offarm Romain Bok.
Speaker 4: In New York, and I'm Jackie Deballis in Washington.
Speaker 6: Let's go to quick check on markets which have been
Speaker 6: oscillating all day long. Jackie moving partly on big news
Speaker 6: out of Washington, moving partly on the back of economic data,
Speaker 6: and of course moving partly on the back of what
Speaker 6: we talked about on Friday, which was that recheck of valuations,
Speaker 6: the dip buyers coming in trying to boost tech stocks
Speaker 6: that trade fading a little bit here on this Monday
Speaker 6: morning in video leading the charge down down about five
Speaker 6: percent here on the day. But when take a look
Speaker 6: at the rest of the MAC seven a bit of
Speaker 6: a mixed bag. You are seeing people come back in
Speaker 6: the Tesla. You did see a bid earlier in the
Speaker 6: day into Meta. A lot of people taking a look
Speaker 6: at that big drop in valuations that we would see
Speaker 6: over the past few days and weeks, a MAG seven
Speaker 6: as a whole, Jackie still in correction territory. Maybe that
Speaker 6: provides a dip buying moment for some investors, but for others,
Speaker 6: maybe it's just stay on the sidelines.
Speaker 3: Lexis Ohanian, the co founder of Reddit, could get involved
Speaker 3: with another social media platform. Ohanian is joining billionaire Frank
Speaker 3: McCourt's bid to buy TikTok's US operations as a strategic advisor.
Speaker 3: That's according to reports from Reuters. Now TikTok's parent company
Speaker 3: byte Edance is experiencing a reversal of fortunes. That's despite
Speaker 3: facing a possible ban of TikTok in the US, the
Speaker 3: Chinese social media company is now valued at more than
Speaker 3: four hundred billion dollars. Three major investors marked up the
Speaker 3: company's value For more on this. Mitchell Green, founder and
Speaker 3: managing partner of Lead Edge Capital joins us. Now you're
Speaker 3: an investor in byte Dance, help us understand what this
Speaker 3: four hundred billion dollar investment really means. Is this coming
Speaker 3: from byte Dance as other ventures or is this just
Speaker 3: really a TikTok story?
Speaker 11: Jackie, thanks so much for me. I appreciate it is.
Speaker 14: I think it's say the value the valuations that people
Speaker 14: are holding these companies at. And remember, unlike people, you know,
Speaker 14: the general public, the people valuing these companies have access
Speaker 14: to the company financials and I'm not going to sit
Speaker 14: and talk about the financials about private company on TV. However,
Speaker 14: the the fundamentals, you know, fundamentals of the business that
Speaker 14: are extremely strong, and I think this is actually more
Speaker 14: of a Chinese story supporting the fundamentals than a in
Speaker 14: a US TikTok story. You know, you know, look at
Speaker 14: our in our model, we actually zero out the US
Speaker 14: business and make it worth nothing. And we've done that
Speaker 14: over the last year or so because there's so much
Speaker 14: uncertainty with what's going on. Well, well, as you can
Speaker 14: make work very well value in the business in the
Speaker 14: US and.
Speaker 6: Zero Well, that's what I'm curious about here, Mitchell, because
Speaker 6: when we talk about this idea is particularly this run
Speaker 6: up we've seen in a lot of the other stocks
Speaker 6: in China on this idea that there is not just
Speaker 6: homegrown in terms of the supply of what's going on
Speaker 6: to this market, but the idea that the demand itself
Speaker 6: will also be homegrown. In your model, you think that's
Speaker 6: enough to justify the run up that we've seen in
Speaker 6: some of these names.
Speaker 11: Chinese business is gigantic.
Speaker 14: Keep in mind these valuations you're seeing are as of
Speaker 14: twelve thirty one. A lot of the Chinese run up
Speaker 14: is coming in the last month six weeks, and so
Speaker 14: I actually sust so public comparables. You know, if you
Speaker 14: were looking at ten Center or Ali Baba, which are
Speaker 14: probably the two best comps, those stocks have actually dined
Speaker 14: very well over the last forty five days, and so
Speaker 14: that wouldn't actually that run upn't even been factored into
Speaker 14: that four hundred billion dollars in BRYCE.
Speaker 3: Talk to us about where this leaves Byte Dance in
Speaker 3: this broader array of tech companies that are trying to
Speaker 3: notch a lead in generative AI. Where does this leave
Speaker 3: Byte Dance And could twenty twenty five be the year
Speaker 3: that China really makes a dent compared to some of
Speaker 3: the AI giants we've seen as of late out of
Speaker 3: Silicon Valley.
Speaker 11: I wouldn't bet against China.
Speaker 14: They were some of the foremost innovators around e commerce.
Speaker 14: So if you look at companies like Ali Baba or
Speaker 14: pdd Pindoto or ten Cent in the gaming space, some
Speaker 14: of the best innovations around e commerce have come out
Speaker 14: of China. I would if you read a lot of
Speaker 14: government Chinese policy around what they're trying to do around
Speaker 14: whether it's chips, semiconductors, you know, netwar Earth, I would
Speaker 14: expect that they're going to make a serious play an AI,
Speaker 14: whether deep is that is that one or is it
Speaker 14: some other one. I think Deep Seek does show though
Speaker 14: that A deep Seat does show that there will be
Speaker 14: a lot of innovation not only by Chinese companies, but
Speaker 14: American companies as well, around around AI and the software
Speaker 14: and using software to make AIM much more powerful and cheaper.
Speaker 11: And I still.
Speaker 14: Believe AI today is massively hyped and will.
Speaker 11: Under deliver in the near term, but over.
Speaker 14: The next ten twenty years it will massively like you know,
Speaker 14: over delivered what people think. You know, people always overestimate
Speaker 14: the near term and underestimate the long term when it
Speaker 14: comes to technological change.
Speaker 11: I think you're going to see the same thing here.
Speaker 14: And you know, I joke in nineteen ninety seven you
Speaker 14: can build a it can cost you fifty million dollars
Speaker 14: from some microsystems to build a website. You can build
Speaker 14: the same website today you and I for ten dollars
Speaker 14: with that credit card.
Speaker 11: The same thing is going to happen with AI.
Speaker 14: And so I think we are in the really early ings,
Speaker 14: and I would expect to see Chinese companies, you know, really,
Speaker 14: you know, drive to the trying to drive to the
Speaker 14: forefront of that, just as American companies are going to
Speaker 14: as well.
Speaker 4: Mitchell.
Speaker 3: Obviously, here in Washington, we're seeing President Trump ratchet up
Speaker 3: those tensions with Beijing via tariffs. Chip exports are also
Speaker 3: part of the uncertainty there. How will the US potentially
Speaker 3: kneecap China's ability.
Speaker 4: To gain ground?
Speaker 3: TikTok has been an interesting political story as well.
Speaker 4: How are you thinking about the political risks around the company?
Speaker 3: And you said you're zeroing it out in your model,
Speaker 3: but do you think at all that that TikTok story
Speaker 3: is going to weigh on the byte edance prospects going forward.
Speaker 11: I am not a political strategist. I assure you, if
Speaker 11: you're asking me about what to do.
Speaker 14: For political strategy, you should probably do the opposite of
Speaker 14: anything that I would say. Again, we value the US
Speaker 14: business at nothing because of so much uncertain What I
Speaker 14: will say is, if you were to go back and
Speaker 14: look what happened on the on the weekend that they
Speaker 14: shut it down, they clearly shut it down. The Chinese
Speaker 14: dad they were going to be, you know, they were
Speaker 14: going to be an infringement with a bunch of like
Speaker 14: you know, service providers who then take legal risks, so
Speaker 14: they need to shut it down. Both sides of the
Speaker 14: aisle in Washington came running to try to keep it open.
Speaker 11: So you appear, if you look at from the outside, that.
Speaker 14: Both parties in Washington want to keep this app around
Speaker 14: for I don't know, probably a host of reasons, and so.
Speaker 11: I think we just have to watch and see what happens.
Speaker 14: But I don't have any Frankly, the fact that you're
Speaker 14: in Washington and a journalist, you probably have more, you know,
Speaker 14: more opinions and insight into the political strategy of Washington.
Speaker 6: But your your opinion, though is an investor matters in
Speaker 6: this as well, even if you don't necessarily know all
Speaker 6: the ins and outs of Washington, Because I I'm curious, Mitchell,
Speaker 6: about just this idea of the whatever economic or financial
Speaker 6: relationship the US and China will have in a formal capacity,
Speaker 6: and if that is a thing of the past to
Speaker 6: the point where you have to start looking at Chinese
Speaker 6: businesses in the US is basically being worth nothing, and
Speaker 6: maybe the flip side of that for US businesses in China.
Speaker 6: I mean, when do you get to the point where
Speaker 6: you feel comfortable in making that call, Well.
Speaker 14: We invested in a Chinese company right over the last year,
Speaker 14: as you bought hit Dan stock, and so we just
Speaker 14: don't need the math to work given how well the
Speaker 14: business is doing in China. That being said, I suspect
Speaker 14: this is all going to get tied up, whether it's
Speaker 14: tariffs TikTok. I'm sure this is all on the table
Speaker 14: and that the relevant parties are negotiated and it's all
Speaker 14: in a bucket, and a lot of this is intertwined again,
Speaker 14: and I have no unique insight that.
Speaker 11: All I know is that I can buy what I
Speaker 11: was buying when we were buying by Dance.
Speaker 14: We did not need to put any value in the
Speaker 14: US business because of how cheap we were able to
Speaker 14: buy the overall business related to it. And that's more
Speaker 14: just about I just don't know if the app's going
Speaker 14: to stay on or not. Now, what happened six weeks
Speaker 14: ago would lead me to believe more that some sort
Speaker 14: of deal will happen.
Speaker 11: What that deal looks like is Your guess is as
Speaker 11: good as mine.
Speaker 14: I suspect there will be if some deal does happen.
Speaker 14: I think one thing that people don't remember here is
Speaker 14: that sixty roughly sixty ish percent of the company is
Speaker 14: owned by you know, non Chinese investors, and forty percent
Speaker 14: is owned by Chinese people. So just some sort of
Speaker 14: deal spin it out and that forty percent becomes slightly less.
Speaker 14: Your guess is fine, I would expect if some sort
Speaker 14: of happens, Yeah, then it will be large US strategics,
Speaker 14: better investors. Yeah, the likes of Microsoft, Amazons Oracles versus
Speaker 14: an individual investor group just given untum of dollars we're
Speaker 14: talking here, all right, great value, all.
Speaker 6: Right, Mitchell, we have to live it there, Mitchell Green,
Speaker 6: managing partner, Ford Lead Edge Capital. All Right, coming up here,
Speaker 6: we're going to continue our focus on tech and with
Speaker 6: a specific focus on AI and that HP deal that
Speaker 6: we learned about just last week about them buying the
Speaker 6: AI startups Humane. It's raising a lot of questions about
Speaker 6: whether the two companies are a good fit. That conversation
Speaker 6: up next right here on Bloomberg Technology.
Speaker 15: One of the key strategies of the company is really
Speaker 15: about integrating AI into all of our products so customers
Speaker 15: can experience AID and Humane has key technologies that will
Speaker 15: allow us to accelerate that development.
Speaker 2: The CEO of HP Inc.
Speaker 6: They're talking about his company's deal to acquire AI startup Humane,
Speaker 6: how it's a way for the company to help develop
Speaker 6: its own AI ambitions. That was the promise, at least
Speaker 6: for now, though it seems more like it troubleshooting, which
Speaker 6: has some wondering if HP really is a good fit
Speaker 6: for the surviving employees of Humane. That's the topic of
Speaker 6: today's Tech in Depth newsletter, and Bloomberg's and your Tech
Speaker 6: editor Dana Wollman joins us right now to talk a
Speaker 6: little bit more about that. This was kind of a
Speaker 6: curious acquisition. We all kind of remember Humane. There's that
Speaker 6: little aipin a lot of hype around it, the reviews
Speaker 6: of it weren't so much. HP managed to pick this
Speaker 6: thing up for what one hundred million dollars?
Speaker 5: What exactly are they going to do with this?
Speaker 16: So HP has said that it wants to incorporate AI
Speaker 16: into more of its products and specifically have that AI
Speaker 16: process locally instead of the cloud, and has cited benefits
Speaker 16: ranging from the cost to the security benefits and just
Speaker 16: the general efficiency. And so you're going to I imagine
Speaker 16: see AI working in the background on products that include computers,
Speaker 16: even printers, And there is some precedent for this in
Speaker 16: the industry, just that AI is already used in other
Speaker 16: consumer products to fine tune things that we might consider
Speaker 16: boring and maybe not so glamorous. Think TV settings settings
Speaker 16: on your TV that you wouldn't normally want to dig
Speaker 16: into or fiddle with.
Speaker 5: Yeah, it's impossible. I don't know how Jackie feels about that.
Speaker 3: Dana, Well, this is an interesting newsletter because it really
Speaker 3: highlights just the incredible tech talent former Apple employees that
Speaker 3: are now at HUMANE and could potentially bring some new
Speaker 3: hardware into the AI space that perhaps you know, obviously
Speaker 3: didn't work out in the Humane context, but talk to
Speaker 3: us about what this reveals about how HP plans to
Speaker 3: really take on hardware ambitions going forward.
Speaker 16: So there are no indications that HP wants to build
Speaker 16: any AI specific hardware.
Speaker 4: The way Humane was dreaming of its.
Speaker 16: Looking to work AI into some of its existing kinds
Speaker 16: of products, and even before this acquisition, Humane had pivoted
Speaker 16: to developing an AI software platform, kind of what I
Speaker 16: would describe as the equivalent of a smart home platform,
Speaker 16: except here we're not talking about the smart home or
Speaker 16: consumer products. We're talking about a mix of both consumer
Speaker 16: and enterprise products. But really the underpinning software meant to
Speaker 16: power all of these products, and as remain hinted at
Speaker 16: at the in the intro, it is sort of an
Speaker 16: odd coupling. HP is known for taking a very conservative
Speaker 16: approach to its products, and Humane bless them. If anything
Speaker 16: was ambitious and had some delightfully weird ideas, they clearly
Speaker 16: didn't work out, But you cannot call Humane conservative.
Speaker 4: Certainly.
Speaker 3: That's Bloomberg Staane A.
Speaker 4: Wolman things. So much for joining us.
Speaker 3: You can subscribe to Bloomberg's Tech in Depth newsletter from
Speaker 3: our analysis and scoop about the business of technology from
Speaker 3: Bloomberg journalists around the world. But as we get into
Speaker 3: the potential impacts of tariffs on the tech sector and
Speaker 3: fintech sector with Bruce Vaughan van Son of Citizens Financial CEO. Bruce,
Speaker 3: we were just talking about humane that's coming out of HP.
Speaker 3: You know, they're a hardware manufacturer, and right now a
Speaker 3: huge question is just what impact tariffs are going to
Speaker 3: have on those that have this kind of exposure. You're
Speaker 3: at the technology conference right now in San Francisco.
Speaker 4: What vibe are you getting.
Speaker 3: About potential concerns and uncertainty this leaves for tech?
Speaker 17: Yeah, I would say that there's a lot of optimism
Speaker 17: broadly emanating from the conference, and so we see some
Speaker 17: great innovation and companies making great strides, and I would
Speaker 17: say the tariff issue is out there, but it's not
Speaker 17: top of mind. So there's been a think a big
Speaker 17: backlog in terms of VC owners getting capital back to
Speaker 17: their investors. And so we're all waiting for the IPO
Speaker 17: calendar to finally break through and that logjam to break,
Speaker 17: and hopefully we'll see deals start to pick up as
Speaker 17: the year goes by, may be led by a couple
Speaker 17: big ones in the middle of the year.
Speaker 6: How confident are you in that, Bruce. I mean, we
Speaker 6: came into this year with a lot of optimism that
Speaker 6: market conditions would be favorable for a lot of these
Speaker 6: private companies to finally reach the public market. Obviously, a
Speaker 6: lot has gone on in the last few weeks that
Speaker 6: have maybe change that thesis, if you will. What gives
Speaker 6: you the confidence that by the time we get over
Speaker 6: the next few months, conditions will be ripe for that.
Speaker 17: Yeah, I'd say more broadly than just the tech sector,
Speaker 17: but the rollout of the new Trump administration policies is
Speaker 17: causing a fair amount of uncertainty, particularly around the tariffs,
Speaker 17: but there's also some real positives to come, particularly around
Speaker 17: regulatory policy implementation, around tax and fiscal policy implementation once
Speaker 17: legislation is passed. So I think this uncertainty will start
Speaker 17: to lift as we go through the year, and then
Speaker 17: that kind of natural dynamic around needing liquidity and the
Speaker 17: deal calendar picking up will start to manifest itself as
Speaker 17: we get to the middle of the year and then
Speaker 17: continue to pick up through the second half of the year.
Speaker 3: Bruce, let's talk about one of those potential tailwinds coming
Speaker 3: out of the regulatory space. The CFPB being gutted by
Speaker 3: Elon Musk's DOGE could be a boon for the fintech sector.
Speaker 3: We heard from the Klarna CEO just last month that
Speaker 3: he was optimistic this could lead to some positives.
Speaker 4: For the field. What are you seeing?
Speaker 3: How could we see this play out, more startups coming
Speaker 3: back in expansion.
Speaker 17: I think it's still early days to see exactly what
Speaker 17: it means. Certainly, the CFPB was a very strong regulator
Speaker 17: and probably more tilted to consumers and focused on kind
Speaker 17: of controlling what took place in both the banking sector
Speaker 17: and near banking sector. So I think having a change
Speaker 17: there and new leadership there will naturally be positive for
Speaker 17: banks and for fintech sector. But it's still early days,
Speaker 17: and I think one of the things that we are
Speaker 17: focused on is what happens to the supervisory responsibilities on
Speaker 17: the consumer that still remain with the agencies. We've been
Speaker 17: doubled up between the CPPB and the agencies in terms
Speaker 17: of supervision, and so that needs to be rationalized. So
Speaker 17: a lot to play out on that front. But yes,
Speaker 17: I think FinTechs are kind of looking forward to seeing
Speaker 17: how this plays out.
Speaker 6: All right, Bruce got to leave it there far too short.
Speaker 6: Up a conversation Bruce Benson citizens financial CEO and share
Speaker 6: them in there. All right, Well, Hollywood just held its
Speaker 6: annual Oscars Awards, and if you tried to tune in
Speaker 6: through the streaming platform Hulu, well you might have had
Speaker 6: some trouble. Hulu turning out to be the biggest loser
Speaker 6: of the night, as the streaming service experience technical glitches
Speaker 6: at the start and throughout, crashes and locked out customers.
Speaker 6: Bloomberg's Lucashaw joins us right now to talk a little
Speaker 6: bit more about what exactly happened. And this is in
Speaker 6: the first time, and we've had big events that were
Speaker 6: put on streaming that for whatever reason, the streaming services
Speaker 6: just couldn't handle. Was it just too many people trying
Speaker 6: to get on at the same time.
Speaker 18: Look, this is the reason that when you're talking about
Speaker 18: sporting events or live events, they end up going with
Speaker 18: broadcasters because they are reliable, they know they're going to work.
Speaker 18: There seemed to be a couple of different issues with Hulu.
Speaker 18: There was some crashing, but then also the program sort
Speaker 18: of ended early. Sometimes when you have things that run
Speaker 18: long on streaming services, they sort of like default ending.
Speaker 18: I didn't have it happened to me last night because
Speaker 18: I was watching on YouTube TV, but I have had
Speaker 18: it happen to me. I think with an event on
Speaker 18: Netflix before and look, streaming is just you know, as
Speaker 18: silly or basic as it sounds. Live events are a
Speaker 18: new frontier for streaming and there are going to be
Speaker 18: kinks to be worked out for the next few years.
Speaker 18: Remember this is the first time that Hulu had ever
Speaker 18: shown the Oscars. It seems crazy to think that they
Speaker 18: should have been doing it with the last few years.
Speaker 18: But Disney has a couple of years ahead of it
Speaker 18: to try to work out the kinks.
Speaker 5: So what comes next?
Speaker 6: So I mean we talk about I mean Disney, I
Speaker 6: think has this contract through twenty twenty eight to continue
Speaker 6: airing the Academy Awards, and with the idea that I
Speaker 6: would assume whatever new contract is struck is probably going
Speaker 6: to be much more streaming focus. So is that enough
Speaker 6: time to sort of work out the kinks?
Speaker 18: Yeah, I think it's plenty of time to work it out.
Speaker 18: I mean, you look at you know, Netflix, even from
Speaker 18: Mike Tyson, Jake Paul to NFL Christmas Day, not to
Speaker 18: say that they've compared figured out what they're doing, but
Speaker 18: they didn't have the same problems. I think most of
Speaker 18: these companies, it only takes you a year or two.
Speaker 18: We don't have constant problems with this. You know, Peacock
Speaker 18: NFL playoff game didn't have huge problems.
Speaker 5: There may always.
Speaker 18: Be some issues if there are just too many people
Speaker 18: trying to watch. But yeah, Disney has the rights through
Speaker 18: twenty eight I still think they're the favorite to keep it.
Speaker 18: But the Academy is definitely exploring its options in the
Speaker 18: next few months, and maybe this will make them want
Speaker 18: to go with a more reliable streaming partner.
Speaker 5: Yeah.
Speaker 6: Well, for what it's worth, Lucas, for those of us
Speaker 6: who did watch it on a regular platforms here, it
Speaker 6: was actually entertaining. I mean, Conan had some nice singers there,
Speaker 6: and I think some of the winners and losers were
Speaker 6: a surprise, so a lot of folks. I'm still upset
Speaker 6: Demi Moore didn't finally get her flowers, Lucas Gott I
Speaker 6: have to leave it there, Lucas Shaw, who covers all
Speaker 6: things Hollywood for us out there on the West Coast
Speaker 6: here at Bloomberg.
Speaker 2: This is Bloomberg.
Speaker 5: Technology, Caroline Hyde.
Speaker 6: We'll be back at some point, and so too will
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