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Speaker 1: From Mahard where Innovation, Money and power Collie in Silicon

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Speaker 1: Vallet Nbon.

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Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Lovelove.

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Speaker 3: I'm scarlettfu in for Caroline Hide at Bloomberg's world headquarters

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Speaker 3: in New York, and.

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Speaker 4: I'm Alex Franka in for Ed Ludlow in San Francisco.

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Speaker 4: This is Bloomberg Technology coming up.

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Speaker 3: In video's blowout forecast sparks a two hundred and sixty

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Speaker 3: billion dollar AI rally. We'll break down the results in

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Speaker 3: how to trade the red hot technology.

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Speaker 5: And as a catastrophic US default. Looms will speak to

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Speaker 5: one tech industry veteran who joined CEOs in signing an

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Speaker 5: open letter to the President and Congress over their extreme

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Speaker 5: concerns on the matter.

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Speaker 3: Plus a one point eight billion dollar deal in a

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Speaker 3: three D printing space. We'll discuss why Stratusists is acquiring

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Speaker 3: desk Metal.

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Speaker 4: With its CEO. All that and a lot.

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Speaker 3: More coming up, But first we want to get your

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Speaker 3: check on the markets. Here at midday on this Thursday,

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Speaker 3: and you have the S and P five hundred moving

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Speaker 3: higher by half of one percent, all thanks to technology.

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Speaker 3: Look at the Philadelphia Semiconductor Index hired by almost six

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Speaker 3: percent thanks to video is better than expected sales forecast.

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Speaker 3: Alex will get into that a little bit later, but

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Speaker 3: it's not as if all chip makers are rising. You

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Speaker 3: actually have weakness in Intel and analog devices as well.

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Speaker 3: There's a lot of anks to over the debt ceiling

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Speaker 3: and how little progress seems to be there seems to

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Speaker 3: be right now as we get closer to June.

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Speaker 4: First, you can see the yield on the two.

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Speaker 3: You're moving up by seven basis points to four point

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Speaker 3: four or five percent. This is actually the tenth straight

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Speaker 3: day that yields have been moving up, reflecting a persistent

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Speaker 3: decline in demand for that security. Fitch actually put the

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Speaker 3: US on credit watch for a possible downgrade, even as

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Speaker 3: it says it does expect some kind of deal at

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Speaker 3: the last minute. Markets are also pricing in increase odds

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Speaker 3: that the Federal Reserve will possibly raise interest rates at

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Speaker 3: one of its next two meetings. Data is showing inflation

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Speaker 3: remains fairly sticky, and in fact, the GDP report showed

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Speaker 3: a faster rate of growth than what had been previously estimated.

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Speaker 3: So with the US dollar strength thing, let's change up

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Speaker 3: the boards here. What you'll see is that commodities are lower,

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Speaker 3: especially those price in US dollars like New York crud

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Speaker 3: WTI off by four percent at the moment, snapping a

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Speaker 3: three day advance. Saudi Arabia this week saying that people

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Speaker 3: shorting the oil market should watch out, although that was

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Speaker 3: follow up by Russia saying that it's unlikely OPEK and

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Speaker 3: its partners, including Russia, will be cutting production in the

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Speaker 3: near term. Gold future is also down by nine tens

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Speaker 3: of one percent. I bring this up only because I

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Speaker 3: was reading somewhere Alex that one analyst said institutional messters,

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Speaker 3: when they are looking for someplace to hide out, they

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Speaker 3: hide out in gold. When individual mesters are looking for

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Speaker 3: somewhere to hide out, they go to bitcoin. Right now,

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Speaker 3: neither of these safe havens is catching a bid, but

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Speaker 3: it's an interesting explanation of gold versus coin, Alex.

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Speaker 5: I'll get to some of those safe havens Scarlet, but

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Speaker 5: first I want to bring you to some of the red.

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Speaker 5: On the day Snowflake is taking its biggest plunge in

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Speaker 5: over a year, it reported disappointing sales outlook for the

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Speaker 5: current quarter. That software company is known for charging customers

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Speaker 5: on a pay as you go model, but it told

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Speaker 5: investors that the uncertain economic conditions have clients slowing down

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Speaker 5: on using their products.

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Speaker 4: Now let's move into some of that grain.

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Speaker 5: Dish is surging the most in six months on a

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Speaker 5: Wall Street Journal report that it's in talks to sell

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Speaker 5: its new mobile phone service through Amazon.

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Speaker 6: Now.

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Speaker 5: Dish already uses Amazon's cloud to run core elements of

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Speaker 5: the FIG network it's developing, but this move would give

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Speaker 5: the company access to Amazon's millions of customers. Now into

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Speaker 5: some of our bigger movers of the day, Microsoft is

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Speaker 5: trading at a sixteen month high. Investors are really on

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Speaker 5: the hunt for the next AI trade.

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Speaker 4: We've been talking about.

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Speaker 5: Save Haven's and this company has been out front on

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Speaker 5: that AI trade. It's not new news that Microsoft has

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Speaker 5: been out front in AI. It's the biggest stakeholder in

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Speaker 5: open AI and brand and is already bringing artificial intelligence

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Speaker 5: to its cloud offerings and its software. What is giving

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Speaker 5: it a little bit of a lift today is perhaps

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Speaker 5: a bit of the halo effect from the top stock

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Speaker 5: I'm watching today, which I will take us to. Now,

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Speaker 5: let's go to Nvidia. I told you everyone's looking for

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Speaker 5: the next AI trade. This is why in Video's up

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Speaker 5: a whopping twenty seven percent at record high levels and

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Speaker 5: flirting with that big sticker one trillion dollar valuation. The

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Speaker 5: chip maker reported a revenue forecast that surprised even the

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Speaker 5: most bullish of analysts on sales of its processors used

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Speaker 5: in you guessed it AI technology, It sells to customers

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Speaker 5: like Microsoft, like Alphabet and others. Analysts at Susquehanna even

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Speaker 5: called this the greatest beat of all time of any.

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Speaker 4: Earnings report they've seen.

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Speaker 5: This stock also could be benefiting from that safe haven

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Speaker 5: effect we've seen in tech stocks lately. We'll dig in

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Speaker 5: to that shortly, but first I want to get more

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Speaker 5: on in Vidia and that AI demand that's been booming.

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Speaker 5: So let's bring in Bloomberg's Ian King and big report

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Speaker 5: out of in Vidia yesterday. Lots of excitement on the forecast.

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Speaker 5: Dig into the numbers here for.

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Speaker 7: Us, Yeah, I mean the embarrassed Wall Street. The prediction

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Speaker 7: of eleven billion, which would be their biggest quarter ever

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Speaker 7: for the current period, fifty three percent higher than where

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Speaker 7: the average expectation was, and the numbers on the quarter

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Speaker 7: were similarly a lot stronger. Even the poultry long forgotten

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Speaker 7: nobody cares about PC businesses looking better for them as well.

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Speaker 7: It really just you know, wildly surprised everybody on the

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Speaker 7: upside and gave investors exactly what they were looking for,

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Speaker 7: which is like, show me the company that's actually making

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Speaker 7: money out of this AI thing.

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Speaker 3: Yeah, it seems like it's hitting on all cylinders. Ian

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Speaker 3: how is it when you zoom out a little bit here,

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Speaker 3: that in video always seems to be on the front

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Speaker 3: lines of whatever the new hot thing in tech is.

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Speaker 3: I remember super high in video games in videos there,

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Speaker 3: Bitcoin mining in videos there, and now AI in videos there.

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Speaker 7: Yeah, I mean it's you know, to hear it on

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Speaker 7: a fundamental level from their CEO, we're talking about what

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Speaker 7: he calls a shift in computing to accelerated computing. That's

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Speaker 7: the idea that instead of using a type of chip

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Speaker 7: that kind of does everything quite well, which would be

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Speaker 7: an Intel CPU, you're using a chip for a very

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Speaker 7: specific purpose that's really good at doing things in a

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Speaker 7: very simple things relatively, but in a very parallelized way.

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Speaker 7: So it's going to give a huge rush to say

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Speaker 7: training AI software or actually taking that software and doing

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Speaker 7: the implementation of it, recognizing you know, cats in videos

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Speaker 7: or what you're saying to your Alexa speaker and making

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Speaker 7: that much more efficient and much better now.

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Speaker 5: And I don't want to damper on the day for

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Speaker 5: in Video they're having a big one.

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Speaker 4: But this does make me wonder when.

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Speaker 5: You think about the hyperscalers that it sells to. When

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Speaker 5: you think about folks like Meta, a lot of those

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Speaker 5: companies are known for wanting to vertically integrate their entire

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Speaker 5: infrastructure stack. How long are invidious processors kind of the

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Speaker 5: bell of the ball. At what point do you see

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Speaker 5: some of the customers actually pushing into creating their own silicon.

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Speaker 7: I mean you nailed it. I mean you wrote about

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Speaker 7: it recently. This is absolutely the question that's hanging over them,

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Speaker 7: and in Video has two answers to that. One is

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Speaker 7: we're going to run faster than they can because we've

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Speaker 7: got a head start on this. We're good at it.

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Speaker 7: And the second answer to this is if AI is

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Speaker 7: only the preserve of Microsoft, of Meta, of Amazon Notable US,

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Speaker 7: then that's not good enough. It needs to be a

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Speaker 7: type of technology that every company that doesn't have these

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Speaker 7: these abilities can just walk into. So what they've been

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Speaker 7: doing is making devices, is making cloud services, and their

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Speaker 7: own software that would help pharmaceutical companies, robots companies, automotive

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Speaker 7: companies get into this. So they're kind of trying to

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Speaker 7: hedge their bets there and stay ahead of the game.

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Speaker 4: Yeah, they've done a great job as seeing ahead of

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Speaker 4: the game.

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Speaker 3: You know, we've been talking about how Wall Street strategists

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Speaker 3: like Michael Hartnet of Bank of America have talked about

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Speaker 3: how there is this mini bubble in AI and a

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Speaker 3: bubble technology. Is there any acknowledgment of this in San Francisco,

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Speaker 3: ground zero of all this technology that perhaps things are

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Speaker 3: getting a bit frothy.

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Speaker 7: Well, if you look at the the inbox of any journalist,

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Speaker 7: it's going to be full of pitches with the words

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Speaker 7: AI in it. So what does that tell you? I mean,

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Speaker 7: we've been through this before, obviously, but no, I think,

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Speaker 7: you know, in Vidia is a real good case in point,

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Speaker 7: and the way the market has reacted is also a

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Speaker 7: good case in point. Not every chip stock is up today.

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Speaker 7: Intel is down right, and some of the others aren't

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Speaker 7: sling out. So I think there's a little bit more sobriety,

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Speaker 7: at least in my sector. In terms of other areas,

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Speaker 7: who knows, there's a lot of talk.

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Speaker 3: Yeah, well in videos delivering and it is profitable compared

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Speaker 3: to some of the companies in past moments of excesses.

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Speaker 4: Ian Hiking. Thank you so much.

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Speaker 3: Ian, with his decades of experience covering semiconductors.

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Speaker 4: In Asia and the US.

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Speaker 3: Let's get more on the markets and bring in Mona Mahajan.

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Speaker 3: She is Edward Jones's senior investment strategist. Mona, I know

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Speaker 3: that you were listening to us talk to Ian just now.

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Speaker 3: I'm curious with the S and P five hundred six

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Speaker 3: tens of one percent, clearly powered by Nvidia in these

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Speaker 3: big tech names, but the now losing ground by four

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Speaker 3: tenths of one percent because it doesn't have that AI exposure.

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Speaker 3: Is this overall a strong stock market or a fragile

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Speaker 3: stock market given how narrow the winners are.

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Speaker 4: Yeah, it's a great question.

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Speaker 1: Stcarlett, and look this year the SMP broadly is up

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Speaker 1: about seven percent plus, but it has been very narrow leadership.

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Speaker 1: In fact, only three sectors are outperforming the broader market.

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Speaker 1: Those are of course, technology, comm services, and consumer discretionary.

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Speaker 1: So those growth parts of the market, quality growth parts

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Speaker 1: of the market. Some of those sectors are up twenty

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Speaker 1: percent plus, so back in bull market territory. And meanwhile,

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Speaker 1: the cyclical and more defensive parts of the market are lagging.

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Speaker 1: So you know, as long term investors, we would certainly

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Speaker 1: like to see a broader participation in a market rally

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Speaker 1: that to us is a more healthy sign that the

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Speaker 1: economy of the underlying fundamentals and the market broadly has.

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Speaker 4: More room to run.

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Speaker 1: Now, this narrow leadership not only driven by a few

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Speaker 1: sectors and a few names. We're also seeing valuation expansion

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Speaker 1: creep back into the marketplace as well.

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Speaker 4: Keep in mind earnings.

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Speaker 1: Although earnings growth this past quarter did exceed expectations, we're

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Speaker 1: still looking at negative earnings growth and really now three

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Speaker 1: back to back negative earnings quarters, So valuation is expanding.

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Speaker 4: Breath has been narrow.

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Speaker 1: But what we will say broadly is that some of

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Speaker 1: the reasons that investors have gotten back into the market

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Speaker 1: they do have this alternative sitting in cash and cash

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Speaker 1: like instruments, is because some of these technology players have

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Speaker 1: provided a compelling reason to get involved.

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Speaker 3: Let me broaden out our conversation a little bit here,

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Speaker 3: because obviously the excitement over Nvidia and any company that

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Speaker 3: has ties to AI is papering over some weak spots

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Speaker 3: in the overall market and the economy. Fitch, for instance,

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Speaker 3: put US on watch for a possible downgrade of its

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Speaker 3: credit rating. Does it matter that it's Fitch versus SMP

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Speaker 3: or Moody's, or is any one of the three big

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Speaker 3: ratings companies downgrading the US potentially enough for investors to

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Speaker 3: have to sell. I'm just trying to get ahead of

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Speaker 3: what we could see if the worst happens.

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Speaker 1: Yeah, you know, it's an interesting question. And look, I

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Speaker 1: think our base case continues to be that the US

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Speaker 1: does not default on its debt, and in fact, both

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Speaker 1: sides of Congress come together in a negotiated resolution.

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Speaker 4: We've seen some historic precedent for that.

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Speaker 1: In fact, seventy eight times has Congress come together to

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Speaker 1: raise the debt ceiling since nineteen sixty. Twenty of those

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Speaker 1: times have been since twenty eleven, and six of those

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Speaker 1: have been in using extraordinary measures. So there is precedent

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Speaker 1: for this, and we do think that will be the

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Speaker 1: most likely path forward. But in the meanwhile, we will

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Speaker 1: certainly get consternation, and the Fitch warning is certainly one

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Speaker 1: signal of that. We would say, if you know, in

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Speaker 1: that tail risk scenario that the US does default, any

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Speaker 1: of the rating agency downgrades will be meaningful, and not

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Speaker 1: only that we will have broader impacts and equity bond markets,

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Speaker 1: but also things like payments to you know, key areas

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Speaker 1: of the economy, social, secure, medicare, defense, etc. So there

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Speaker 1: are real meaningful impacts of not only the downgrade but

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Speaker 1: the default itself.

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Speaker 4: But we're still hopeful.

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Speaker 1: That, you know, as we approach the X state, really

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Speaker 1: both sides can come together, and both sides will probably

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Speaker 1: have to concede to some extent, but we'll get that

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Speaker 1: negotiated resolution.

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Speaker 5: Mana, if we do have that, as you say, kind

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Speaker 5: of outside case of default. Even if we don't, some

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Speaker 5: economists are saying that this whole back and forth could

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Speaker 5: push us into something of a mild recession. If that

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Speaker 5: does happen, here, where do you rotate your investments?

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Speaker 4: Is it back to cash? What are you looking at?

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Speaker 5: If that is kind of the scenario we see over

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Speaker 5: the next twelve eighteen months.

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Speaker 1: Yeah, you know, look, I think certainly the mild recession

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Speaker 1: scenario is one that is now somewhat baked into markets.

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Speaker 1: In fact, if you look at the Bloomberg Consensus estimate's

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Speaker 1: Q three and Q four two back to back quarters.

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Speaker 1: They are looking for negative or calling for negative GDP.

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Speaker 1: It's minor negative point five percent, but still sub zero

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Speaker 1: GDP for two quarters, and that is now probably the

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Speaker 1: most well advertised mild recession on the horizon.

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Speaker 4: If we do get more.

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Speaker 1: Meaningful volatility around the debt ceiling, that could create just

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Speaker 1: feedback loops around the consumer pulls back. There's hesitation to invest,

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Speaker 1: even in safe haven assets, and that does have an

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Speaker 1: impact and a ripple effect through equity and bond markets.

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Speaker 1: We'd say, in that scenario, you certainly want to be

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Speaker 1: more defensive, and in that scenario defensive probably still means

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Speaker 1: areas of the market like staples, health care utilities, but

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Speaker 1: also still overweight some of those cash and cash like instruments.

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Speaker 1: So that kind of bar belle between the equity and

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Speaker 1: the bond market on the defense side. Now, as we do,

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Speaker 1: you know, if that does not occur, and as we

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Speaker 1: do get through a resolution and the economy goes through

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Speaker 1: a mild recession and looks towards recovery, that's when really

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Speaker 1: we think about a more broadening participation. As we talked

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Speaker 1: about earlier, that recovery playbook should include leadership from areas

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Speaker 1: like small cap stocks like international em equities, and also

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Speaker 1: of course longer duration bonds and cyclical parts of the market.

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Speaker 4: So not just tech leading the way.

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Speaker 1: We do think as we look towards the back half

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Speaker 1: of the year and towards potential recovery, we'll have a

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Speaker 1: more sustainable, broader leadership in the market as well.

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Speaker 5: I have to ask one last one on tech. We

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Speaker 5: did see during the pandemic era era, the tech, particularly

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Speaker 5: big tech was really gaining, particularly on digital advertising strength

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Speaker 5: e commerce.

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Speaker 4: But when that kind of time.

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Speaker 5: Period ended, investors turned back to the fundamentals. Cost structure

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Speaker 5: was in play, fundamentals of these companies were in play.

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Speaker 5: Is there a risk here for these big tech names

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Speaker 5: that are really getting a lot of love these days

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Speaker 5: from the equity markets that if we have a quarter

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Speaker 5: of maybe shakeier fundamentals, that you could see a big

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Speaker 5: sell off in that sector in particular.

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Speaker 1: Yeah, you know, look, there's certainly a case to be made,

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Speaker 1: an a credible case that we're getting into overbought territories

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Speaker 1: and a pullback and period of consolidation we think probably

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Speaker 1: would be normal healthy in some cases, given the excess

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Speaker 1: moves that we've seen. That being said, you know, in

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Speaker 1: an era of low growth, the low economic growth, investors

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Speaker 1: do tend to gravitate towards higher growth parts of the market,

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Speaker 1: especially those with defenseable business models, strong free cash flow,

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Speaker 1: and those that are returning value to shareholders through buybacks.

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Speaker 1: So there is you know, perhaps a little bit of

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Speaker 1: consolidation volatility ahead, but the long term picture we think

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Speaker 1: looks a little bit more balanced and still healthy for technology.

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Speaker 5: Mona Mahazan, thank you for taking us through today and

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Speaker 5: in the future.

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Speaker 4: That's Mona Mahazan and Edward Jones.

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Speaker 5: I appreciate you joining us all right.

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Speaker 3: In the three D printing world, Stratasists agree to acquire

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Speaker 3: Desktop Metal. It is an all stock deal that'll create

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Speaker 3: a leading company in the industry at about one point

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Speaker 3: eight billion dollars. Joining us now is yav zeif STRATUSUS CEO,

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Speaker 3: Yov thank you so much for joining us. Your company

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Speaker 3: recently rejected a takeover offer from rival. I know Dimension,

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Speaker 3: yet here you are getting ready to buy just top Metal.

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Speaker 3: Why does this particular combination make sense.

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Speaker 6: Because it will reshape the industry, the three D printing

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Speaker 6: industry or auditive manufacturing for years is failing to deliver

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Speaker 6: what manufacturing really needs. But with the combination, we'll create

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Speaker 6: the scale to deliver.

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Speaker 5: And with that scale, are there certain clients or certain

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Speaker 5: slices of industry that you think you can really sell

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Speaker 5: into now that you're pulling in this additional functionality with

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Speaker 5: this acquisition.

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Speaker 6: Definitely, we are leading in the aerospace and automotive markets,

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Speaker 6: and we're also leading in dental and medical, but we

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Speaker 6: didn't have the metal paths we are focusing on polymer

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Speaker 6: Now together there we are setting to the same customer

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Speaker 6: through the same channels, a much bigger portfolio, broader portfolio,

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Speaker 6: and will be very profitable to leverage our scale.

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Speaker 5: Yeah, if you say profitability, talk to us day one.

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Speaker 5: What is the financial impact on Stratasis from bringing this

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Speaker 5: company in the fold? Are we talking in immediate revenue boost?

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Speaker 5: Is there a margin accretion? Kind of talk us through

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Speaker 5: the financial side of this acquisition.

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Speaker 8: Great question. We are the only profitable strategies.

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Speaker 6: Is the only profitable business in the three D printing arena?

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Speaker 6: Desktop Metal announced that there will be profitable by the

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Speaker 6: end of the year. When we combine us together, we'll

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Speaker 6: be the first above one billion dollar company in this industry,

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Speaker 6: this is huge. In twenty twenty five will sell one

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Speaker 6: point one billion with even the imagin of ten to

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Speaker 6: twelve percent. This is something that does not exist today

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Speaker 6: in editing manufacturing because we are not mature enough yet.

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Speaker 3: And I appreciate your pointing out that you are profitable

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Speaker 3: and you're a leader in that space. Three D printing

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Speaker 3: seems to be a pretty fragmented space right now. Give

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Speaker 3: us a sense of who wants you combine with desktop,

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Speaker 3: you'll be able to better compete with. Now, even beyond

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Speaker 3: the three D printing ecosystem.

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Speaker 6: We will be better equipped to comp with the entire

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Speaker 6: you know, second tiered for fifth because we are number one,

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Speaker 6: and the main reason is the broadest portfolio, unmixed material portfolio,

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Speaker 6: material and software is key in our industry and those

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Speaker 6: are also the one that generate the profit. So when

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Speaker 6: we are coming to customers, we have two huge advantages.

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Speaker 6: One is that we are selling in whatever it needs,

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Speaker 6: not we have what we have because we are covering

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Speaker 6: the whole technological space, so we are not selling what

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Speaker 6: he needs.

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Speaker 8: We sell what he needs.

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Speaker 6: The second thing is that we have a full solution,

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Speaker 6: including the material and the software, so the customer does.

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Speaker 8: Not need to look outside our platforms.

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Speaker 3: Another advantage you could have or you could tap into

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Speaker 3: is the shareholders of desktop Desktop Metal went public in

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Speaker 3: twenty twenty through respect and one of it's biggest shareholders

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Speaker 3: is Alphabet with about a three percent stake in the company.

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Speaker 3: Do you anticipate working more closely with Alphabet as a

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Speaker 3: result of this transaction.

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Speaker 6: No doubt that we can benefit and cooperate with the

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Speaker 6: great shareholder base of desktop Metal. It's a group of

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Speaker 6: people that believe in innovation. Desktop Metal is bringing the

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Speaker 6: innovation to the table, but we are bringing the establishment,

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Speaker 6: the go to market, the infrastructure to make this innovation

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Speaker 6: a real product, the deliver values to the best mankey

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Speaker 6: customers in the world.

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Speaker 5: You say you look at them for help on innovation

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Speaker 5: and bring in that innovative spirit.

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Speaker 4: What specifically are we talking about.

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Speaker 5: When you think about the alphabets of the world and

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Speaker 5: how they can kind of lend some of that innovative

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Speaker 5: spirit to you as well.

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Speaker 8: The stop Meta located in Boston.

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Speaker 6: They are highly linked to MIT and that tells the

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Speaker 6: entire story. It's so hard to find talent in our

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Speaker 6: industry and the ability to have great links in the academia,

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Speaker 6: great shareholder that are interested.

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Speaker 8: In breakthrough technologies. I think it's a great way to

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Speaker 8: stick forward.

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Speaker 5: Well, thanks for walking us through this acquisition today. Stratasi's CEO,

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Speaker 5: yov Ziff, appreciate you joining us. More coming up, Microsoft

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Speaker 5: is pushing back. It's formally filing to appeal the UK

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Speaker 5: decision to block its mega merger with Activision Blizzard.

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Speaker 4: More on that next.

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Speaker 5: This is Bloomberg and keeping our eyes on shares of Splunk.

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Speaker 5: The software company reported first quarter revenue that beat expectations

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Speaker 5: and gave a second quarter forecast that's ahead of the

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Speaker 5: CONCESSUS consensus estimates. The shares are coming down on the

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Speaker 5: days they were up this morning, now write about unchanged.

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Speaker 4: We'll continue watching throughout the show. This is Bloomberg. It's

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Speaker 4: time now for talking tech.

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Speaker 5: First Up Grabs co founder is stepping down from her

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Speaker 5: operational roles at the company by year's end. She helps

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Speaker 5: start the Singapore based ride handling and food delivery company

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Speaker 5: more than a decade ago, and currently leads its technology

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Speaker 5: and corporate strategy teams. Tan will also give up her

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Speaker 5: seat on the board, though she will remain an advisor

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Speaker 5: to the company and Microsoft president Brad Smith says the

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Speaker 5: US should make a new agency to regulate artificial intelligence

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Speaker 5: and the licensing requirements necessary to operate those AI tools.

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Speaker 5: Smith outlined the company's policy regarding AI and echoed sentiments

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Speaker 5: from OpenAI Sam Altman, saying that government oversight quote will

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Speaker 5: ensure that humans remain in control of the technology. And

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Speaker 5: In other Microsoft news, the company has formally filed its

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Speaker 5: appeal against the UK's Competition and Markets Authority after the

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Speaker 5: Anti Trust agency blocks its sixty nine billion dollars deal

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Speaker 5: to buy Activision Blizzard. The CMA says it stands by

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Speaker 5: its decision, arguing it would enable Microsoft to set the

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Speaker 5: terms of the gaming market and sticking with video games,

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Speaker 5: look at shares of Nintendo over the last few weeks.

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Speaker 5: It took just three days for the latest installment in

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Speaker 5: the Legend of Zelda franchise to some more than ten

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Speaker 5: million copies worldwide. Four million of those were in the

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Speaker 5: America's where the new game became Nintendo's fastest selling game ever.

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Speaker 4: From New York and San Francisco. This is Bloomberg.

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Speaker 5: Welcome back to Bloomberg Technology. I'm Alex Brankan San Francisco,

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Speaker 5: and I'm Scarlett Foo in New York. Let's get a

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Speaker 5: check on the markets.

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Speaker 3: Right now, because the NASAC is flying high at the

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Speaker 3: moment thanks to Nvidia's blowout sales forecast on the back

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Speaker 3: of demand for its AI chips. And you look at

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Speaker 3: the New York Fang Index, in which in Nvidia has

442
00:22:50,080 --> 00:22:52,760
Speaker 3: the biggest waiting a thirteen percent waiting. It's flying even

443
00:22:52,800 --> 00:22:54,760
Speaker 3: higher of more than three percent. And of course let's

444
00:22:54,760 --> 00:22:56,720
Speaker 3: look at Nvidia itself gaining.

445
00:22:56,400 --> 00:22:57,679
Speaker 4: More than twenty five percent.

446
00:22:57,720 --> 00:22:59,640
Speaker 3: And in fact, there's a great story on the Bloomberg

447
00:22:59,680 --> 00:23:04,080
Speaker 3: that betting against Nvidia have suffered massive losses. We're talking

448
00:23:04,119 --> 00:23:07,199
Speaker 3: about a two point three billion dollar paper loss just

449
00:23:07,240 --> 00:23:10,600
Speaker 3: today alone because of its big, big spike higher. Now,

450
00:23:10,680 --> 00:23:13,200
Speaker 3: on the downside, you have the ETF that tracks shorter

451
00:23:13,320 --> 00:23:16,199
Speaker 3: duration treasuries. We're talking one to three hour maturities. It

452
00:23:16,280 --> 00:23:18,639
Speaker 3: is down for an eighth straight day, the longest losing

453
00:23:18,640 --> 00:23:21,120
Speaker 3: streak in nineteen years, believe it or not. When there's

454
00:23:21,119 --> 00:23:23,480
Speaker 3: a sell off in bonds, yields go up, reflecting the

455
00:23:23,560 --> 00:23:26,600
Speaker 3: increased payouts that investors demand to buy the securities. And

456
00:23:26,600 --> 00:23:28,520
Speaker 3: that's where I want to go next, because of course,

457
00:23:28,640 --> 00:23:31,679
Speaker 3: the debt sealing drama dominates even as the market overall

458
00:23:31,720 --> 00:23:34,119
Speaker 3: is hired. Today. Take a look at this next chart.

459
00:23:34,280 --> 00:23:37,120
Speaker 3: It is a snapshot of the US government's checking account.

460
00:23:37,119 --> 00:23:39,000
Speaker 3: This is the amount it has on hand to pay

461
00:23:39,040 --> 00:23:41,600
Speaker 3: its bills, whether it's paying interest on its debt or

462
00:23:41,920 --> 00:23:45,359
Speaker 3: sending out Social Security checks. As of Tuesday afternoon, it

463
00:23:45,440 --> 00:23:48,439
Speaker 3: had about seventy six billion dollars. That move higher in

464
00:23:48,520 --> 00:23:51,240
Speaker 3: mid April, which you can see that little blip in

465
00:23:51,280 --> 00:23:53,800
Speaker 3: the last part of the chart was a result of

466
00:23:53,840 --> 00:23:57,680
Speaker 3: people and companies paying their taxes. Treasury Secretary Janet Yellen

467
00:23:57,720 --> 00:24:00,280
Speaker 3: has identified June first as a date the government may

468
00:24:00,359 --> 00:24:02,120
Speaker 3: run out of money to honors obligations.

469
00:24:02,400 --> 00:24:04,240
Speaker 4: According to economists of Goldmen.

470
00:24:04,000 --> 00:24:06,480
Speaker 3: Sex, this cash level that we're looking at here will

471
00:24:06,520 --> 00:24:09,400
Speaker 3: drop below thirty billion by June eighth or June knife.

472
00:24:09,760 --> 00:24:12,080
Speaker 3: That is seen as the bare minimum for meeting federal

473
00:24:12,119 --> 00:24:14,520
Speaker 3: obligations that come do alex.

474
00:24:15,200 --> 00:24:17,679
Speaker 5: And While as the negotiations in Washington over the US

475
00:24:17,760 --> 00:24:20,640
Speaker 5: debt limit persists, the risk of defaulting for that first

476
00:24:20,680 --> 00:24:23,200
Speaker 5: time is growing. That's why more than one hundred and

477
00:24:23,200 --> 00:24:26,199
Speaker 5: forty CEOs and Wall Street executives have been sounding the

478
00:24:26,240 --> 00:24:29,400
Speaker 5: alarm bells and a letter to the President and congressional leaders.

479
00:24:29,440 --> 00:24:31,720
Speaker 4: The group rights quote, high.

480
00:24:31,560 --> 00:24:35,720
Speaker 5: Inflation has created stresses in our financial system, including several

481
00:24:35,760 --> 00:24:38,840
Speaker 5: recent bank failures. Much worse will occur if the nation

482
00:24:39,000 --> 00:24:42,440
Speaker 5: default on our debt obligations. We strongly urge that in

483
00:24:42,520 --> 00:24:44,600
Speaker 5: a cord be reached quickly so that the country can

484
00:24:44,600 --> 00:24:48,399
Speaker 5: invert this potentially disast devastating scenario. Joining us now with

485
00:24:48,440 --> 00:24:51,520
Speaker 5: more insight is Charles Phillips, managing partner and co founder

486
00:24:51,560 --> 00:24:54,359
Speaker 5: of Recognized Partners. He's also one of the many that

487
00:24:54,560 --> 00:24:58,240
Speaker 5: signed that letter. Now, Charles, that letter was set May sixteenth.

488
00:24:58,280 --> 00:25:01,400
Speaker 5: It's been a few days since the and we've had

489
00:25:01,600 --> 00:25:05,359
Speaker 5: a headlines cross like Speaker Kevin McCarthy saying today, quote,

490
00:25:05,359 --> 00:25:07,840
Speaker 5: I don't know if we'll have a deal today. He

491
00:25:07,880 --> 00:25:10,239
Speaker 5: also said yesterday they need seventy two hours. They're going

492
00:25:10,240 --> 00:25:12,960
Speaker 5: to take the seventy two hours to review and pass

493
00:25:13,119 --> 00:25:13,840
Speaker 5: any bill that.

494
00:25:13,840 --> 00:25:14,639
Speaker 4: Does come through.

495
00:25:15,200 --> 00:25:19,399
Speaker 5: How has the urgency changed since you and your fellow

496
00:25:19,520 --> 00:25:23,400
Speaker 5: CEOs and leaders wrote that letter just a little over

497
00:25:23,440 --> 00:25:24,000
Speaker 5: a week ago.

498
00:25:24,960 --> 00:25:27,160
Speaker 9: Well, there's a reason the markets are starting to react.

499
00:25:27,160 --> 00:25:29,640
Speaker 9: You can see the credit default swats forager of changing

500
00:25:30,080 --> 00:25:32,280
Speaker 9: and there's plenty of indicators out there, so it's gotten

501
00:25:32,280 --> 00:25:34,800
Speaker 9: more urgent. It just so happens. And recognize we own

502
00:25:34,800 --> 00:25:37,160
Speaker 9: a bunch of technology colpanies who had our annual meeting

503
00:25:37,200 --> 00:25:39,000
Speaker 9: this week, so all of our companies were in, all

504
00:25:39,000 --> 00:25:41,639
Speaker 9: of our investors were in. And normally you talk about

505
00:25:41,680 --> 00:25:45,159
Speaker 9: technology changes, evaluation, operational improvements, and now we have to

506
00:25:45,160 --> 00:25:48,920
Speaker 9: talk about this. We just went through a banking crisis, wondering,

507
00:25:49,040 --> 00:25:51,439
Speaker 9: you know, kind of cost of credit. We had some

508
00:25:51,600 --> 00:25:54,639
Speaker 9: SVV problems in FRB. We've solved those, and now we

509
00:25:54,720 --> 00:25:56,680
Speaker 9: have to deal with this. Will your cost of capital

510
00:25:56,720 --> 00:25:59,120
Speaker 9: be hire in six months? And three months and a month?

511
00:25:59,119 --> 00:26:01,239
Speaker 9: That did you know about? So the planning aspect of

512
00:26:01,240 --> 00:26:03,119
Speaker 9: this is we can have a gun people and so

513
00:26:03,240 --> 00:26:05,840
Speaker 9: the uncertainty is the thing that people don't like dealing

514
00:26:05,840 --> 00:26:06,480
Speaker 9: with right now.

515
00:26:06,680 --> 00:26:08,720
Speaker 3: So that's interesting that you've been having these meetings and

516
00:26:08,760 --> 00:26:11,320
Speaker 3: it keeps coming up. How are some of the leaders

517
00:26:11,640 --> 00:26:14,360
Speaker 3: and the executives planning around this or through this?

518
00:26:15,160 --> 00:26:17,399
Speaker 9: Well, fortunately we don't use a lot of leverage in

519
00:26:17,400 --> 00:26:19,920
Speaker 9: our portfolio. We have some companies, but it certainly made

520
00:26:19,960 --> 00:26:22,240
Speaker 9: us think differently about it. Don't count on that because

521
00:26:22,240 --> 00:26:23,600
Speaker 9: we don't know what the cost is going to be.

522
00:26:23,800 --> 00:26:25,760
Speaker 9: We may have to use more equity, but not everybody

523
00:26:25,760 --> 00:26:28,400
Speaker 9: has that leeway to do that, so it means perhaps

524
00:26:28,440 --> 00:26:30,359
Speaker 9: fewer deals get done, or you get done at a

525
00:26:30,359 --> 00:26:33,400
Speaker 9: different price. The second thing is we rely on certain

526
00:26:33,480 --> 00:26:36,240
Speaker 9: state and local government budgets, so we have companies that

527
00:26:36,320 --> 00:26:39,320
Speaker 9: sell into that market. With the slugs windows closed, they

528
00:26:39,359 --> 00:26:42,080
Speaker 9: can't fund the infrastructure spending that they normally rely on.

529
00:26:42,480 --> 00:26:44,520
Speaker 9: We need those state and local governments to be spending

530
00:26:44,520 --> 00:26:47,119
Speaker 9: because we have companies that rely on those contracts. So

531
00:26:47,280 --> 00:26:49,480
Speaker 9: it has implications that ripples down to the state and

532
00:26:49,520 --> 00:26:50,480
Speaker 9: local level as well.

533
00:26:50,840 --> 00:26:52,800
Speaker 3: That's really interesting and something that perhaps a lot of

534
00:26:52,840 --> 00:26:56,600
Speaker 3: lawmakers in Washington may not be immediately aware of. In

535
00:26:56,640 --> 00:26:59,560
Speaker 3: your current role, you're obviously around entrepreneurs all the time,

536
00:26:59,800 --> 00:27:02,960
Speaker 3: learning about new technologies from them, in turn helping them

537
00:27:02,960 --> 00:27:07,040
Speaker 3: think through strategies, recruiting, connecting with customers. What do you

538
00:27:07,040 --> 00:27:09,960
Speaker 3: think Congress and the White House as well don't fully

539
00:27:10,080 --> 00:27:13,199
Speaker 3: understand about how their actions reverberate in the private sector.

540
00:27:13,960 --> 00:27:16,800
Speaker 9: I think they don't understand that the US brand around

541
00:27:16,880 --> 00:27:19,040
Speaker 9: the world accrues to each one of our companies that

542
00:27:19,200 --> 00:27:23,760
Speaker 9: we're viewed as understanding business, very innovative, but coming from

543
00:27:23,800 --> 00:27:27,119
Speaker 9: an economy that's rock solid, that is risk free treasuries,

544
00:27:27,200 --> 00:27:30,360
Speaker 9: so that we have fiscal discipline and so we all

545
00:27:30,480 --> 00:27:33,159
Speaker 9: kind of benefit from that brand. When you start to

546
00:27:33,240 --> 00:27:35,320
Speaker 9: question that a bit, well, okay, you know, different from US,

547
00:27:35,400 --> 00:27:38,639
Speaker 9: you get a certain patino around that, and that people

548
00:27:38,680 --> 00:27:40,840
Speaker 9: believe that we know what we're doing because we're from

549
00:27:40,840 --> 00:27:43,920
Speaker 9: the US, and so the brand aspect of that, I

550
00:27:43,960 --> 00:27:46,520
Speaker 9: think people just don't quite understand that it hurts all

551
00:27:46,520 --> 00:27:47,200
Speaker 9: over the companies.

552
00:27:48,119 --> 00:27:51,879
Speaker 5: Charles, That reputational risk is really interesting. I'm curious with

553
00:27:51,960 --> 00:27:58,120
Speaker 5: you as an investor yourself at recognize, does that reputational

554
00:27:58,200 --> 00:28:02,600
Speaker 5: risk of these kind of chaotic conversations of the banking

555
00:28:02,640 --> 00:28:05,560
Speaker 5: crisis that's gone on with some of the important funders

556
00:28:05,560 --> 00:28:08,280
Speaker 5: of places like the tech sector like SVB, does that

557
00:28:08,359 --> 00:28:12,399
Speaker 5: reputational risk post some challenges for you as you're looking

558
00:28:12,520 --> 00:28:14,639
Speaker 5: for your growth investments going forward.

559
00:28:15,840 --> 00:28:19,040
Speaker 9: Sure, so we're competing with other investors around the world,

560
00:28:19,240 --> 00:28:21,400
Speaker 9: and so we want to look like we have an edge.

561
00:28:21,440 --> 00:28:23,680
Speaker 9: Part of it is we have an operational background. Part

562
00:28:23,680 --> 00:28:25,800
Speaker 9: of it is we're from the US, and part of

563
00:28:25,800 --> 00:28:27,560
Speaker 9: it is we have a lower cost to capital win.

564
00:28:27,680 --> 00:28:29,800
Speaker 9: So any one of those things that starts to break down,

565
00:28:29,960 --> 00:28:32,919
Speaker 9: you look not as strong as you would otherwise, and

566
00:28:33,119 --> 00:28:34,760
Speaker 9: you don't want people asking the question in the room

567
00:28:34,760 --> 00:28:37,640
Speaker 9: what's going on over there? And so I just think

568
00:28:37,720 --> 00:28:42,640
Speaker 9: the implications for the job market in general. If we

569
00:28:42,640 --> 00:28:45,160
Speaker 9: can't pay our bills, social Security or whether it's our

570
00:28:45,160 --> 00:28:47,320
Speaker 9: military or whatever, these things start to break down, it

571
00:28:47,360 --> 00:28:50,920
Speaker 9: just looks like chaos everybody. And I think people thought

572
00:28:51,080 --> 00:28:53,920
Speaker 9: that this couldn't really happen. You know, maybe they're playing

573
00:28:53,920 --> 00:28:55,600
Speaker 9: a game of chicken, but they always work it out.

574
00:28:55,640 --> 00:28:58,200
Speaker 9: But now you never know because things have gotten so

575
00:28:58,320 --> 00:29:00,960
Speaker 9: PARTI sand it could actually happen. So that's what's different now,

576
00:29:01,040 --> 00:29:03,440
Speaker 9: as people say, this could be a real thing that happens.

577
00:29:04,400 --> 00:29:08,480
Speaker 5: So then do you start looking geographically to regions outside

578
00:29:08,560 --> 00:29:11,480
Speaker 5: the US where the companies aren't sitting in a room

579
00:29:11,720 --> 00:29:14,600
Speaker 5: and having to cope with uncertainty or a kind of

580
00:29:14,840 --> 00:29:18,400
Speaker 5: a pause in really innovative strategies because there's too much

581
00:29:18,800 --> 00:29:21,400
Speaker 5: chaos potentially looming for the economy here.

582
00:29:21,280 --> 00:29:21,760
Speaker 4: In the US.

583
00:29:22,680 --> 00:29:25,760
Speaker 9: Well, we've always been global, so we have companies in Ukraine,

584
00:29:25,800 --> 00:29:28,440
Speaker 9: do in Latin America, all over the world, and so

585
00:29:28,640 --> 00:29:31,840
Speaker 9: but relative to where we could be investing. Does it

586
00:29:31,920 --> 00:29:34,280
Speaker 9: make perhaps the US look a little less attractive than

587
00:29:34,280 --> 00:29:37,080
Speaker 9: it would otherwise, Sure, but that's like any global investor,

588
00:29:37,200 --> 00:29:39,560
Speaker 9: So that's the everything. Capital can flow anywhere these days.

589
00:29:40,440 --> 00:29:43,160
Speaker 3: You served on President Obama's Economic Recovery Board. You also

590
00:29:43,200 --> 00:29:44,840
Speaker 3: served on the board of the New York Fed, so

591
00:29:44,880 --> 00:29:47,920
Speaker 3: you've seen the fallout from political intransigence and also I've

592
00:29:47,920 --> 00:29:51,920
Speaker 3: been in rooms with policymakers to discuss the economy. How

593
00:29:51,960 --> 00:29:54,480
Speaker 3: do you think the twenty twenty three debt ceilings standoff

594
00:29:54,880 --> 00:29:57,240
Speaker 3: differs from what we've seen in the past or is

595
00:29:57,280 --> 00:29:58,440
Speaker 3: this just business as usual?

596
00:29:58,440 --> 00:30:00,080
Speaker 4: To some extent, this.

597
00:30:00,200 --> 00:30:02,600
Speaker 9: One seems more severe. It was shorter back then in

598
00:30:02,640 --> 00:30:04,680
Speaker 9: twenty eleven, but we still have lost two point four

599
00:30:04,720 --> 00:30:06,680
Speaker 9: trigg in a market cap, a big and three and

600
00:30:06,760 --> 00:30:10,600
Speaker 9: extra interest cause so it still had implications this could

601
00:30:10,680 --> 00:30:12,560
Speaker 9: go on longer because the size of it is so

602
00:30:12,640 --> 00:30:17,120
Speaker 9: much larger, and so we had certain faith back them

603
00:30:17,160 --> 00:30:18,760
Speaker 9: that people had to work it out. They didn't want

604
00:30:18,760 --> 00:30:20,880
Speaker 9: alimal getting to happen. We're not sure that right now,

605
00:30:20,920 --> 00:30:22,440
Speaker 9: so it makes it seem worse than it is.

606
00:30:24,160 --> 00:30:27,480
Speaker 5: Charles, Thank you for breaking down down those private sector implications.

607
00:30:27,480 --> 00:30:30,200
Speaker 5: Of US for US thanks to Charles Phillips, managing partner

608
00:30:30,440 --> 00:30:32,400
Speaker 5: and co founder of Recognized Partners.

609
00:30:33,200 --> 00:30:34,200
Speaker 4: Still coming up.

610
00:30:34,160 --> 00:30:36,720
Speaker 5: The impact of generative AI on retail.

611
00:30:36,840 --> 00:30:38,400
Speaker 4: We'll discuss all that and more with.

612
00:30:38,360 --> 00:30:41,800
Speaker 5: The CEO of Buy Now, Pay Later platform klarnap next.

613
00:30:42,680 --> 00:30:46,440
Speaker 5: Speaking of buy Now, Pay Later, we're also watching shares

614
00:30:46,520 --> 00:30:49,680
Speaker 5: of best vive first quarter profits top estimates, and the

615
00:30:49,720 --> 00:30:53,080
Speaker 5: company reiterated its annual target. Best Buy CEO of views

616
00:30:53,160 --> 00:30:56,240
Speaker 5: this year as the bottom for the decline in tech demand.

617
00:30:56,680 --> 00:30:57,960
Speaker 4: This is Bloomberg.

618
00:31:12,400 --> 00:31:14,320
Speaker 5: Let's now take a look at the future of retail,

619
00:31:14,360 --> 00:31:17,240
Speaker 5: which could be more personalized and tech focused in the

620
00:31:17,240 --> 00:31:20,480
Speaker 5: context of the generative AI revolution. At least that's a

621
00:31:20,560 --> 00:31:23,479
Speaker 5: projection laid out in Clarna's new Future of Retail report.

622
00:31:23,800 --> 00:31:27,840
Speaker 5: Clarna CEO Sebastian Shimantowski joins us now for more on this.

623
00:31:28,360 --> 00:31:29,520
Speaker 4: Sebastian, you are.

624
00:31:29,440 --> 00:31:31,880
Speaker 5: Looking ahead to how people are going to be opening

625
00:31:31,880 --> 00:31:35,720
Speaker 5: their pocketbooks. How will AI really start to show itself

626
00:31:35,760 --> 00:31:37,520
Speaker 5: in terms of where people are spending in retail?

627
00:31:38,760 --> 00:31:38,920
Speaker 8: Right?

628
00:31:38,960 --> 00:31:40,479
Speaker 10: I think first of all, was like, I mean I

629
00:31:40,520 --> 00:31:43,800
Speaker 10: tried this my first in November. When it got you know,

630
00:31:43,880 --> 00:31:45,600
Speaker 10: stopped trending on Twitter or whatever, and I was like,

631
00:31:45,640 --> 00:31:47,600
Speaker 10: what's this thing? And I got to tell you that

632
00:31:47,720 --> 00:31:49,400
Speaker 10: it was magic to me, like I felt like when

633
00:31:49,440 --> 00:31:52,160
Speaker 10: I opened Internet the first time twenty years ago. So

634
00:31:52,200 --> 00:31:55,360
Speaker 10: I think it's you know, super impressive. We I know

635
00:31:55,440 --> 00:31:58,000
Speaker 10: instantly got in touch with Sam and I said, look,

636
00:31:58,080 --> 00:31:59,800
Speaker 10: I want clon out to be your favorite guinea pig.

637
00:32:00,000 --> 00:32:01,960
Speaker 10: We're at open AI. Like you know, you throw it

638
00:32:01,960 --> 00:32:04,280
Speaker 10: at as, we'll try it will learn. And I think

639
00:32:04,280 --> 00:32:06,040
Speaker 10: that's the way to deal with these things. When you

640
00:32:06,040 --> 00:32:08,160
Speaker 10: see a dramatic shift like this, you just want to learn,

641
00:32:08,240 --> 00:32:10,920
Speaker 10: iterate and understand it. And I even coded myself on

642
00:32:10,960 --> 00:32:12,720
Speaker 10: the lank chain the other day, so I feel quite cold.

643
00:32:12,800 --> 00:32:14,560
Speaker 10: Never done that before. As one of my biggest regrets,

644
00:32:14,600 --> 00:32:17,240
Speaker 10: I never became an engineer. With that said, look, I

645
00:32:17,240 --> 00:32:19,920
Speaker 10: think what's very clear here is that the tool is

646
00:32:19,960 --> 00:32:23,480
Speaker 10: out there. The applications that are really changing things and

647
00:32:23,600 --> 00:32:25,280
Speaker 10: not yet, but they're going to come in the next

648
00:32:25,320 --> 00:32:28,080
Speaker 10: six to twelve months. We are going to see better

649
00:32:28,120 --> 00:32:33,360
Speaker 10: shopping experiences, you know, shopping assistance providing you a you know,

650
00:32:33,800 --> 00:32:37,320
Speaker 10: a higher conversion rate for the retailers, you know, assisting

651
00:32:37,360 --> 00:32:40,680
Speaker 10: consumers to find better prices, better offers, et cetera. So

652
00:32:40,760 --> 00:32:43,760
Speaker 10: I'm expecting to see an explosion of new tools and

653
00:32:43,800 --> 00:32:46,600
Speaker 10: services coming in the next twelve months, which will you know,

654
00:32:46,720 --> 00:32:49,480
Speaker 10: utilize these technology to provide a much richer and more

655
00:32:49,520 --> 00:32:52,480
Speaker 10: accurate experience for consumers.

656
00:32:53,200 --> 00:32:55,080
Speaker 2: So super super interesting to follow.

657
00:32:55,120 --> 00:32:57,240
Speaker 10: And also there seems to be, as the study shows

658
00:32:57,240 --> 00:33:01,440
Speaker 10: of ours, a huge, you know, big opening among consumers.

659
00:33:01,480 --> 00:33:03,200
Speaker 10: They're willing to try and test these things, and they

660
00:33:03,240 --> 00:33:05,520
Speaker 10: also believe that it can make a difference for them.

661
00:33:06,360 --> 00:33:08,200
Speaker 5: When I think about kind of the evolution of retail,

662
00:33:08,320 --> 00:33:11,160
Speaker 5: we had kind of the mall start to bring things

663
00:33:11,160 --> 00:33:13,000
Speaker 5: together on a regional.

664
00:33:12,600 --> 00:33:14,720
Speaker 4: Basis or a town based basis.

665
00:33:15,000 --> 00:33:17,640
Speaker 5: Then we had online shopping where you could buy anything

666
00:33:17,640 --> 00:33:20,440
Speaker 5: from anywhere. Then the e commerce players showed up. But

667
00:33:20,520 --> 00:33:23,000
Speaker 5: that's kind of evolved to this world where you almost

668
00:33:23,000 --> 00:33:25,360
Speaker 5: have too much choice, right if you log onto any

669
00:33:25,400 --> 00:33:27,800
Speaker 5: of the e commerce platforms, it's almost hard to narrow

670
00:33:27,840 --> 00:33:30,560
Speaker 5: it down if you don't know exactly what you're looking for.

671
00:33:31,040 --> 00:33:33,840
Speaker 5: So is that kind of a problem that you expect

672
00:33:33,920 --> 00:33:36,680
Speaker 5: some of those early applications might be a really kind

673
00:33:36,720 --> 00:33:39,360
Speaker 5: of low hanging fruit one to solve when it comes

674
00:33:39,400 --> 00:33:43,280
Speaker 5: to bringing AI in perhaps to help folks discover things

675
00:33:43,680 --> 00:33:46,120
Speaker 5: based on their own preferences a little bit more easily.

676
00:33:47,280 --> 00:33:48,800
Speaker 2: I think you totally spot on look.

677
00:33:48,920 --> 00:33:51,240
Speaker 10: I mean, remember, like when you were living in a

678
00:33:51,480 --> 00:33:53,080
Speaker 10: like I did, in a small city of two hundred

679
00:33:53,080 --> 00:33:54,920
Speaker 10: thousan people. It's growing up there, there was one department

680
00:33:54,960 --> 00:33:58,320
Speaker 10: store and they had very nicely curated everything we needed

681
00:33:58,320 --> 00:34:00,680
Speaker 10: to buy for us. So everything was there. We didn't

682
00:34:00,720 --> 00:34:04,000
Speaker 10: need to look elsewhere. And nowadays you're like, you know,

683
00:34:04,200 --> 00:34:06,200
Speaker 10: overwashed with all this stuff. But I think in general

684
00:34:06,200 --> 00:34:08,640
Speaker 10: you should think about retail as three things. You think

685
00:34:08,640 --> 00:34:11,359
Speaker 10: about the products and the brand themselves. You think about

686
00:34:11,400 --> 00:34:14,200
Speaker 10: the curation, and then you think about, you know, the

687
00:34:14,200 --> 00:34:16,520
Speaker 10: technology and the logistics to bring the product to the

688
00:34:16,560 --> 00:34:18,799
Speaker 10: consumer at the time they wanted and at the right

689
00:34:18,800 --> 00:34:20,680
Speaker 10: price and so forth. Right, And I think on the

690
00:34:20,719 --> 00:34:23,600
Speaker 10: curation side, Internet has gone crazy, right We've seen everything

691
00:34:23,640 --> 00:34:28,360
Speaker 10: from Instagram shopping, you know, shoppable valuables, you know Instagram

692
00:34:28,400 --> 00:34:31,400
Speaker 10: people trying to affect you to like, or influencers recommending products,

693
00:34:31,440 --> 00:34:35,920
Speaker 10: but also obviously the retailers and you know, the brands

694
00:34:35,960 --> 00:34:38,799
Speaker 10: themselves trying to curate. I think the curation, to your point,

695
00:34:38,880 --> 00:34:41,239
Speaker 10: is one of the areas there is a huge opportunity

696
00:34:41,560 --> 00:34:42,880
Speaker 10: to offer better creation.

697
00:34:43,000 --> 00:34:45,360
Speaker 2: We launched search in the US.

698
00:34:45,400 --> 00:34:47,640
Speaker 10: I mean, there's been nobody launching search in the US

699
00:34:48,160 --> 00:34:50,560
Speaker 10: against Amazon for the last fifteen years, and we see

700
00:34:50,560 --> 00:34:54,400
Speaker 10: in tremendous traction to reinvent product search just like these

701
00:34:54,520 --> 00:34:57,920
Speaker 10: these things. Right, So, how do you both intent driven

702
00:34:57,960 --> 00:35:00,120
Speaker 10: discovery where you're looking for the exact right product but

703
00:35:00,280 --> 00:35:02,839
Speaker 10: right price, you know, et cetera, But also the kind

704
00:35:02,840 --> 00:35:06,000
Speaker 10: of inspirational That's definitely an area where I.

705
00:35:05,920 --> 00:35:08,040
Speaker 2: Think and curation is so critical. I want it to

706
00:35:08,040 --> 00:35:09,319
Speaker 2: be personal to be right.

707
00:35:09,640 --> 00:35:12,320
Speaker 10: You take is a good example of that in China,

708
00:35:12,719 --> 00:35:15,640
Speaker 10: you know it's nowadays it's used to be eighty percent search,

709
00:35:15,719 --> 00:35:19,560
Speaker 10: twenty percent was recommendations by AI. Currently eighty percent of

710
00:35:19,560 --> 00:35:22,319
Speaker 10: what people buy on TMOL et cetera are recommendations by

711
00:35:22,320 --> 00:35:24,759
Speaker 10: AI that are specific to means an individual and not

712
00:35:24,840 --> 00:35:27,279
Speaker 10: search anymore. So that just shows you like what this

713
00:35:27,400 --> 00:35:29,359
Speaker 10: technology can mean as.

714
00:35:29,280 --> 00:35:31,880
Speaker 3: A shift, yeah, and certainly making things more efficient in

715
00:35:31,920 --> 00:35:35,160
Speaker 3: the process. Google CEO wrote in and not ed recently

716
00:35:35,280 --> 00:35:38,360
Speaker 3: that building AI responsibly is the only race that matters

717
00:35:38,400 --> 00:35:41,000
Speaker 3: as opposed to building up your AI chops, and he

718
00:35:41,080 --> 00:35:43,880
Speaker 3: also brought up regulation there too. What are you seeing

719
00:35:43,920 --> 00:35:47,840
Speaker 3: as some of the potential problems or pitfalls or areas

720
00:35:47,840 --> 00:35:50,239
Speaker 3: that might be concerning that would result from the use

721
00:35:50,320 --> 00:35:51,920
Speaker 3: or integration of AI in.

722
00:35:53,480 --> 00:35:54,960
Speaker 4: Shopping, for instance, in your world?

723
00:35:56,360 --> 00:35:58,399
Speaker 10: Well, I think as also since we're a payments company,

724
00:35:58,440 --> 00:36:01,880
Speaker 10: obviously fraud is a big, big cluss, right, and we

725
00:36:01,920 --> 00:36:04,239
Speaker 10: can see that this is going to have implications on

726
00:36:04,320 --> 00:36:07,200
Speaker 10: fraud protection. I think, what you know, there's a lot

727
00:36:07,480 --> 00:36:10,200
Speaker 10: I think on a societal level as a society, and

728
00:36:10,360 --> 00:36:12,600
Speaker 10: I actually I respect that a lot. When I speak

729
00:36:12,640 --> 00:36:15,359
Speaker 10: to people tech leads, I am very happy to hear

730
00:36:15,440 --> 00:36:18,680
Speaker 10: them not only promote the amazing opportunities that this presents,

731
00:36:18,719 --> 00:36:21,520
Speaker 10: but also kind of highlight the risks and that we

732
00:36:21,920 --> 00:36:23,359
Speaker 10: treat this in a mindful way. But that's more from

733
00:36:23,400 --> 00:36:25,680
Speaker 10: a society perspective. If I think more of my business,

734
00:36:25,960 --> 00:36:28,839
Speaker 10: I think there's one critical thing that could actually make

735
00:36:28,880 --> 00:36:31,760
Speaker 10: a huge difference from politicians in some markets in Europe.

736
00:36:31,800 --> 00:36:34,680
Speaker 10: Sweden is a good example where based currently we have

737
00:36:34,800 --> 00:36:38,560
Speaker 10: an electronic identification that is available to everyone.

738
00:36:38,560 --> 00:36:39,680
Speaker 2: Everyone has it on the phone.

739
00:36:40,120 --> 00:36:43,920
Speaker 10: That means there is no fraud, there is no problems

740
00:36:44,000 --> 00:36:47,799
Speaker 10: with people pretending to be somebody else. There's much less

741
00:36:47,800 --> 00:36:50,000
Speaker 10: fraud than in many other markets that we see. It's

742
00:36:50,040 --> 00:36:53,640
Speaker 10: a simple thing a digital pathport and digital identification. And

743
00:36:53,800 --> 00:36:55,919
Speaker 10: I think another law that we should expect to see

744
00:36:56,080 --> 00:36:58,440
Speaker 10: is if I interact with something, I want to know

745
00:36:58,480 --> 00:37:00,600
Speaker 10: if it's a computer or human. I think you have

746
00:37:00,640 --> 00:37:04,160
Speaker 10: the responsibility to be very very transparent about that. So

747
00:37:04,200 --> 00:37:06,200
Speaker 10: I think those are two very simple things that could

748
00:37:06,239 --> 00:37:10,080
Speaker 10: actually mitigate some of the early risks and changes that

749
00:37:10,400 --> 00:37:12,680
Speaker 10: for to your point, AI will come, We'll.

750
00:37:12,480 --> 00:37:15,640
Speaker 3: Bring There are people who are out there who might

751
00:37:15,680 --> 00:37:19,560
Speaker 3: say that Karna is pivoting towards AI and a commitment

752
00:37:19,560 --> 00:37:23,319
Speaker 3: to AI as regulation comes forth. On by now pay

753
00:37:23,360 --> 00:37:26,760
Speaker 3: later in Australia, for instance, potentially in the UK as well,

754
00:37:26,960 --> 00:37:28,000
Speaker 3: how would you respond to that?

755
00:37:29,440 --> 00:37:30,000
Speaker 2: We'll get it.

756
00:37:31,160 --> 00:37:34,600
Speaker 10: But I think the buy now, pay later is a

757
00:37:34,880 --> 00:37:38,640
Speaker 10: fantastic credit product for consumers because you know, everyone should

758
00:37:38,680 --> 00:37:40,920
Speaker 10: watch Sorry to make some marketing here for somebody else here,

759
00:37:40,920 --> 00:37:43,200
Speaker 10: but you should watch credit Cards Explain on Netflix and

760
00:37:43,239 --> 00:37:45,680
Speaker 10: you'll get a twenty five minute quick summary of all

761
00:37:45,719 --> 00:37:48,319
Speaker 10: the bad practices of all the stuff the banks have

762
00:37:48,360 --> 00:37:50,640
Speaker 10: been doing with credit cards, how they really try you

763
00:37:50,719 --> 00:37:53,239
Speaker 10: to build up the biggest balance to revolve on it

764
00:37:53,239 --> 00:37:55,080
Speaker 10: on the longest period of time. I mean, the average

765
00:37:55,080 --> 00:37:57,960
Speaker 10: balance in the US right now stands it's five three

766
00:37:58,320 --> 00:38:01,120
Speaker 10: hundred dollars compared to one hundred fifty dollars for our

767
00:38:01,160 --> 00:38:04,400
Speaker 10: binapay later products. So I think that like it's interest free,

768
00:38:04,520 --> 00:38:07,520
Speaker 10: it's fixed installments. We don't push a credit limit in

769
00:38:07,520 --> 00:38:09,239
Speaker 10: your face to try to make you believe that you

770
00:38:09,280 --> 00:38:11,600
Speaker 10: can spend more than you have. I mean, we're trying

771
00:38:11,640 --> 00:38:14,080
Speaker 10: to build a responsible credit card. Like, no, it's still credit,

772
00:38:14,480 --> 00:38:17,320
Speaker 10: so obviously all you know, credit has risks in itself

773
00:38:17,320 --> 00:38:19,400
Speaker 10: and needs to be offered in a responsible way. But

774
00:38:19,680 --> 00:38:23,560
Speaker 10: as a credit form, it is superior to the credit

775
00:38:23,600 --> 00:38:25,520
Speaker 10: at the credit cards, and it's actually also better for

776
00:38:25,600 --> 00:38:29,240
Speaker 10: us in an uncertain economical environment because we underwrite every transaction.

777
00:38:29,280 --> 00:38:31,880
Speaker 10: That's why we're seeing forty percent below credit card industry

778
00:38:31,920 --> 00:38:35,479
Speaker 10: standard losses because when we shift our underwriting, it takes

779
00:38:35,480 --> 00:38:38,080
Speaker 10: me two months and half of my balance sheet is

780
00:38:38,120 --> 00:38:42,680
Speaker 10: underwriting on the new methodology. So I can really adjuct

781
00:38:42,760 --> 00:38:45,160
Speaker 10: quickly change to an economical environment like this one, while

782
00:38:45,200 --> 00:38:47,279
Speaker 10: you know, banks will wait two years before they see

783
00:38:48,200 --> 00:38:50,560
Speaker 10: the shift in their balance sheet due to the changes

784
00:38:50,560 --> 00:38:51,160
Speaker 10: in underwriting.

785
00:38:52,120 --> 00:38:53,759
Speaker 5: Sebashian and I want to ask one more quick one on

786
00:38:54,200 --> 00:38:57,319
Speaker 5: ai because we've been talking about that the race is on.

787
00:38:57,520 --> 00:38:59,080
Speaker 4: The race is probably also on for talent.

788
00:38:59,440 --> 00:39:01,440
Speaker 5: I know you jumped in really quickly to work with

789
00:39:01,520 --> 00:39:04,520
Speaker 5: open Ai, but what does hiring like look like internally

790
00:39:04,520 --> 00:39:07,360
Speaker 5: at Karna? Where are you finding kind of the individuals

791
00:39:07,400 --> 00:39:09,920
Speaker 5: who can make sure that that type of technology can

792
00:39:10,239 --> 00:39:13,440
Speaker 5: be seamlessly tested and integrated into what you're rolling out

793
00:39:13,440 --> 00:39:14,080
Speaker 5: for consumers?

794
00:39:15,480 --> 00:39:15,879
Speaker 2: You know what?

795
00:39:15,960 --> 00:39:19,920
Speaker 10: I think it's obviously an important question, and obviously, you know,

796
00:39:20,040 --> 00:39:22,160
Speaker 10: data scientists and so forth are in higher demand.

797
00:39:22,160 --> 00:39:22,920
Speaker 2: I wouldn't say.

798
00:39:22,760 --> 00:39:24,680
Speaker 10: That's the case, but I also want to get again

799
00:39:25,320 --> 00:39:28,799
Speaker 10: how much this is just about, you know, curiosity and

800
00:39:28,960 --> 00:39:32,120
Speaker 10: encouraging people within your culture to innovate and.

801
00:39:32,040 --> 00:39:33,680
Speaker 2: To try and to test.

802
00:39:34,280 --> 00:39:36,520
Speaker 10: I you know, one way that I measure right now

803
00:39:36,680 --> 00:39:40,440
Speaker 10: clonas ai involvement is I look, we offer all of

804
00:39:40,440 --> 00:39:44,560
Speaker 10: our employees a chat city before powered open Ai account,

805
00:39:44,719 --> 00:39:46,759
Speaker 10: and we're just looking at how many are actually using it.

806
00:39:46,840 --> 00:39:48,600
Speaker 10: And I think right now we're at about one thousand,

807
00:39:48,680 --> 00:39:51,960
Speaker 10: five hundred among five thousand employees. I want to get

808
00:39:52,000 --> 00:39:54,279
Speaker 10: to five thousand. I want each one of them to

809
00:39:54,440 --> 00:39:57,000
Speaker 10: experiment and learn how to utilize this technology. I mean

810
00:39:57,040 --> 00:39:59,399
Speaker 10: it took years for people to really discover the power

811
00:39:59,440 --> 00:40:01,720
Speaker 10: of Google twenty years ago and how much that could

812
00:40:02,239 --> 00:40:04,480
Speaker 10: save you time and make you more efficient and more productive.

813
00:40:04,840 --> 00:40:07,640
Speaker 10: So like I think also like one shouldn't underestimate, just

814
00:40:07,680 --> 00:40:09,759
Speaker 10: like encouraging and.

815
00:40:10,800 --> 00:40:13,720
Speaker 2: Inspiring people in timely to adult to eat different pride.

816
00:40:14,480 --> 00:40:17,000
Speaker 3: So it's about experimenting and engaging right now before we

817
00:40:17,000 --> 00:40:18,399
Speaker 3: can draw any big conclusions.

818
00:40:18,800 --> 00:40:19,960
Speaker 4: Really appreciate your joining us.

819
00:40:19,960 --> 00:40:23,920
Speaker 3: Sebastian Simia Kowski, the CEO of Clarina, joining us from

820
00:40:23,960 --> 00:40:34,719
Speaker 3: Stockholm at the moment. Florida Governor Ron DeSantis' live event

821
00:40:34,760 --> 00:40:38,200
Speaker 3: on Twitter was more by technical glitches with servers struggling

822
00:40:38,200 --> 00:40:40,600
Speaker 3: to handle the demand, and led to his announcement being

823
00:40:40,600 --> 00:40:43,719
Speaker 3: hosted on venture capitalist David Sax's account instead.

824
00:40:44,120 --> 00:40:47,360
Speaker 4: Sax was moderating, that was insane.

825
00:40:47,400 --> 00:40:51,799
Speaker 2: Sorry, we are actually doing this from David Taxis Twitter

826
00:40:51,800 --> 00:40:54,800
Speaker 2: account because it looks like doing it from mine basically

827
00:40:55,120 --> 00:40:57,960
Speaker 2: broke the Twitter system.

828
00:40:58,280 --> 00:40:59,799
Speaker 3: Joining us now to break down the launch of dis

829
00:41:00,120 --> 00:41:03,800
Speaker 3: this his presidential run on Twitter is Bloomberg's Sarah Fryer, Sarah,

830
00:41:03,880 --> 00:41:06,359
Speaker 3: how much of this technical train wreck can you tie

831
00:41:06,400 --> 00:41:10,960
Speaker 3: back directly to Elon Musk's staff firings and various cost cuts.

832
00:41:11,840 --> 00:41:14,560
Speaker 11: Well, they don't have a lot of the people that

833
00:41:14,600 --> 00:41:16,440
Speaker 11: they used to have who were working on this kind

834
00:41:16,480 --> 00:41:20,840
Speaker 11: of infrastructure stability. They got rid of use of a

835
00:41:20,920 --> 00:41:24,600
Speaker 11: data center that they had in Zacramento, which increased the

836
00:41:24,680 --> 00:41:27,360
Speaker 11: stress on their systems, and they've been making product changes.

837
00:41:27,840 --> 00:41:32,160
Speaker 11: So those factors plus the fact that they didn't really

838
00:41:33,160 --> 00:41:36,560
Speaker 11: prepare for this moment. It seems like they didn't stress

839
00:41:36,600 --> 00:41:39,000
Speaker 11: test their systems or this wouldn't have happened.

840
00:41:39,440 --> 00:41:39,680
Speaker 4: Now.

841
00:41:39,719 --> 00:41:42,680
Speaker 5: I was tuning in yesterday and Elon muss said, hopefully

842
00:41:42,680 --> 00:41:45,160
Speaker 5: this can be a platform with people of divergent political

843
00:41:45,239 --> 00:41:47,879
Speaker 5: views to exchange those views. I have to ask, though,

844
00:41:47,880 --> 00:41:50,400
Speaker 5: in the course of that conversation, did they put diverse

845
00:41:50,400 --> 00:41:52,160
Speaker 5: political views on display.

846
00:41:52,000 --> 00:41:53,440
Speaker 4: With this Ron DeSantis announcement?

847
00:41:53,480 --> 00:41:53,640
Speaker 2: Oh?

848
00:41:53,680 --> 00:41:57,360
Speaker 11: Absolutely not. It was questions by people who were favorable

849
00:41:57,360 --> 00:42:00,399
Speaker 11: to that campaign, and listen, this could blow back on

850
00:42:00,520 --> 00:42:06,440
Speaker 11: Musk and Twitter's business because historically social media executives have

851
00:42:06,560 --> 00:42:09,040
Speaker 11: not tried to align themselves with a particular party. They've

852
00:42:09,040 --> 00:42:11,560
Speaker 11: tried to be neutral because what they're trying to do

853
00:42:11,680 --> 00:42:14,640
Speaker 11: is have the widest possible user base and the widest

854
00:42:14,640 --> 00:42:17,840
Speaker 11: possible set of advertisers who want to spend money reaching

855
00:42:17,920 --> 00:42:21,960
Speaker 11: those users. And if Twitter positions itself as you know,

856
00:42:22,000 --> 00:42:25,120
Speaker 11: we are more friendly to one political party over the other,

857
00:42:25,680 --> 00:42:29,279
Speaker 11: then I do think that some advertisers will shy away

858
00:42:29,280 --> 00:42:29,680
Speaker 11: from that.

859
00:42:30,920 --> 00:42:31,600
Speaker 4: But I did.

860
00:42:31,400 --> 00:42:34,560
Speaker 11: See the new CEO, Linda Yakarino in the room.

861
00:42:34,880 --> 00:42:37,279
Speaker 4: She was there. She was there, and so were you.

862
00:42:37,600 --> 00:42:39,440
Speaker 4: She could fix it. Maybe we'll see.

863
00:42:39,520 --> 00:42:41,680
Speaker 5: Thank you Sarah for wrapping that up for us. Thanks

864
00:42:41,719 --> 00:42:42,320
Speaker 5: to Bloomberg.

865
00:42:42,360 --> 00:42:43,239
Speaker 4: Sarah Friar and.

866
00:42:43,280 --> 00:42:45,840
Speaker 5: David Sacks will be joining Bloomberg TV in thirty minutes

867
00:42:45,880 --> 00:42:48,560
Speaker 5: to talk about this more. That does it for this

868
00:42:48,680 --> 00:42:51,840
Speaker 5: edition of Bloomberg Technology. Don't forget to check out the

869
00:42:51,840 --> 00:42:54,160
Speaker 5: b Tech podcast. You can find it on the terminal

870
00:42:54,239 --> 00:42:58,479
Speaker 5: as well as online on Apple, Spotify. iHeart and this

871
00:42:58,800 --> 00:42:59,560
Speaker 5: is Bloomberg.

872
00:43:00,200 --> 00:43:03,320
Speaker 8: He doesn't decide it when you don't. The hype w