Speaker 1: From Marhart where Innovation of Money and Power Collie in
Speaker 1: Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde
Speaker 1: and Ed loved.
Speaker 2: Love live from New York and San Francisco. This is
Speaker 2: Rumberg Technology coming up.
Speaker 3: All eyes on Powell Markets on Edge and we watch
Speaker 3: the tech sector ahead of the FED.
Speaker 4: Plus Microsoft and black Rocket teaming up planning to launch
Speaker 4: a thirty billion dollar AI investment fund.
Speaker 3: And Google wins in court this time EU judges overturning
Speaker 3: the company's one and a half billion euro antitrust Fine,
Speaker 3: but first check in on these markets, I will Gail Doolittle.
Speaker 5: Well, Caroline, we are just hours away from one of
Speaker 5: the most anticipated FED decisions in years.
Speaker 6: Because of course.
Speaker 5: It's all but likely that they will and backed cut
Speaker 5: at this next meeting for the first time in four years.
Speaker 5: But the big question is we'll be twenty five basis
Speaker 5: points or fifty basis points according to probability within the
Speaker 5: Bloomberg terminal. Right now, we are looking at a fifty
Speaker 5: seven percent chance of a fifty basis point cut. This
Speaker 5: would be one of the first times this has happened
Speaker 5: in a non emergency capacity, perhaps raising questions of what
Speaker 5: are they seeing Why are they going to make such
Speaker 5: a big cut if it happens. Not so long ago,
Speaker 5: former Saint Louis FED president James Buller did tell CNBC
Speaker 5: he thinks the chances of a fifty basis point cut
Speaker 5: is actually overblown. So we have seen this probability coming
Speaker 5: in about five percent since those comments at the highs
Speaker 5: on Monday at seventy percent, but the main point is
Speaker 5: more than fifty percent. What has this done for stocks?
Speaker 5: Well over the last couple of months, since we have
Speaker 5: seen some of the sectors, in particular technology peak, We
Speaker 5: have that magnificent seven in the bottom panel of this
Speaker 5: chart that we're looking at down about five percent, whereas
Speaker 5: you have some of the rate sensitive sectors utilities, real estate, staples, healthcare,
Speaker 5: defensive sectors doing better because their dividends will look less attractive.
Speaker 5: That is not the case though, since the FED started hiking.
Speaker 5: Let's take a look at technology since that time period.
Speaker 5: It is clearly the top sector, up sixty percent. In fact,
Speaker 5: all of the sectors a nice rally except for real estate.
Speaker 5: Higher rates, of course lower the values on real estate.
Speaker 5: So that is the one loan sector over the last
Speaker 5: two years that has done poorly and then finally ed.
Speaker 5: This is mind blowing in a way. In Vidia, over
Speaker 5: the last two years since that FED hiking cycle had started,
Speaker 5: up more than seven hundred and seventy percent. We have
Speaker 5: the likes of Meta up nearly three hundred percent. Microsoft
Speaker 5: and Apple not to be left out, both up about
Speaker 5: fifty seventy five percent, big, big rally for tech, but
Speaker 5: more recently, as we've had this rotation into other sectors,
Speaker 5: tech cooling off. But you can see those investors over
Speaker 5: the last couple of years doing quite well.
Speaker 4: Bloomberg's Abigail Dolittle, thank you. Let's keep the discussion going
Speaker 4: with Megan Horneman's CIO of the Dense Capital Advisors, and
Speaker 4: we start by asking how significant is today's FED decision
Speaker 4: for the technology sector.
Speaker 7: I think it's definitely very important for the tech sector
Speaker 7: as well as the entire market. I think that if
Speaker 7: the yields keep moving higher as we've seen here as
Speaker 7: of late, then that's negative for technology, and technology is
Speaker 7: rallying on the anticipation that we're going to get fifty
Speaker 7: basis points from the FED today. If that doesn't occur,
Speaker 7: I think that that's going to put at this rally
Speaker 7: and technology at risk.
Speaker 4: There's a part of the mag seven story, Megan, where
Speaker 4: those names are performing in isolation of everything else that's
Speaker 4: happening in our world because of the commitment to invest
Speaker 4: in the infrastructure supporting AI. How closely tied are the
Speaker 4: two stories that and central bank policy?
Speaker 7: Well, I think central bank policy and then the story
Speaker 7: around technology. They're separate things. The infrastructure with technology the
Speaker 7: advancements that we're going to see. This is going to
Speaker 7: evolve over time, but the valuations that you're seeing on
Speaker 7: these stocks is linked to interest rate policy and as
Speaker 7: well as yields. If this interest rate policy does not
Speaker 7: deliver with what we're in, with what these heightened valuations
Speaker 7: are anticipating, then you're going to see some valuation correction
Speaker 7: in these names.
Speaker 3: Is that limited to the big caps or more broadly
Speaker 3: across technology in and of itself, Megan.
Speaker 7: I think it's broadly across technology and any even some
Speaker 7: of the communications services, any of these growth type of
Speaker 7: names that you've seen with these very high valuations. These
Speaker 7: high valuations are pricing in perfection. They're pricing in that
Speaker 7: the FED will come in deliver with these interstrate cuts.
Speaker 7: They'll come in and save the day like we've been
Speaker 7: used to over the past couple decades. And they're also
Speaker 7: pricing in perfection for the economy these things. None of
Speaker 7: this is set in stone right now, so I think
Speaker 7: that there is still there's a big risk here for
Speaker 7: some of these growth and high pe level sectors.
Speaker 3: Is that just in the US or do we see
Speaker 3: the wind taken out of the sales of European tactoo.
Speaker 7: Megan, Well, well, we don't have as much technology in
Speaker 7: some of the European indices. They're not as tech heavy
Speaker 7: as the US is. But we have seen the correlation here.
Speaker 7: When we have the sell off in the growth or
Speaker 7: technology here in the US, it does tend to filter
Speaker 7: into overseas as well.
Speaker 4: Megan, How important to you and the technology investor around
Speaker 4: the world is the path forward thereafter? We can't help ourselves, right,
Speaker 4: We've been waiting for September eighteen and we already ask
Speaker 4: then what increments do we have further rate cuts in
Speaker 4: the path from there?
Speaker 8: Right?
Speaker 7: That's a great question because they can do several things
Speaker 7: today at this meeting. They can deliver with twenty five
Speaker 7: basis points, which is why I think that they should
Speaker 7: do They should reiterate that they're can going to continue
Speaker 7: to monitor data, they'll act accordingly. It's meeting by meeting,
Speaker 7: and then if they could go with fifty basis points,
Speaker 7: they could come in and say this is a fine tuning.
Speaker 7: We're going to be on hold now, and then you're
Speaker 7: going to get the cuts that are priced into the
Speaker 7: market for the rest this year move out. The most
Speaker 7: important thing today, whether it's technology or the rest of
Speaker 7: the stock market is what are they going to say
Speaker 7: from the dot plots going forward? What are they saying
Speaker 7: for the unemployment, their estimates that they're going to have
Speaker 7: to put out, What are they saying as far as inflation,
Speaker 7: because let's keep in mind inflation has come down significantly,
Speaker 7: but it's still in certain areas is very sticky. So
Speaker 7: their press conference and the projections that they put out
Speaker 7: after the meeting, they're more important, obviously in fact, to
Speaker 7: us than whether it's twenty five or fifty basis points.
Speaker 3: Today, Megan, there's whole other parts of the capital structure
Speaker 3: you can earn within technology. What does this mean for
Speaker 3: the debt corporate debt of Apple of some of the
Speaker 3: names that have just so much cash on the balance sheet,
Speaker 3: as well. Do bond markets feel the pressure in the
Speaker 3: same way that the equity side will.
Speaker 7: I think bond marites do, they will feel the same way.
Speaker 7: I mean, let's be honest that the yields have come
Speaker 7: down quite a bit. They're backing up a little bit now,
Speaker 7: but yields have come down substantially. And then when you
Speaker 7: look at the longer term over the over yields and
Speaker 7: whether you're looking at long term debt, there's just this
Speaker 7: focus on treasury. There's a main there's a major issue
Speaker 7: from the treasury side of things, that is the deficit,
Speaker 7: and there's not been anything to address that. And I
Speaker 7: don't see even with an election coming up, that there's
Speaker 7: anything that's going to change that. The amount of issuance
Speaker 7: on that long end of the curve. So anybody who's
Speaker 7: focusing on debt or has is debt heavy, and I've
Speaker 7: realized that technology sector is not as debt heavy as
Speaker 7: other sectors going to have an impact on these long
Speaker 7: ends of the of the yeal curve.
Speaker 4: Megan, I'd like to end the conversation by trying to
Speaker 4: learn from the year that's gone about what might happen
Speaker 4: in the year ahead. And I use in Nvidia as
Speaker 4: the case study capital expenditures an investment. But the other
Speaker 4: phenomenon that's happened is retail investors have pied piled into
Speaker 4: in video as well. How does a change an interest
Speaker 4: rate environment just kind of change the fanfare of the
Speaker 4: market and the psychology of the market over the next
Speaker 4: twelve months.
Speaker 7: Well, it all comes down what is the price of
Speaker 7: those stocks.
Speaker 6: And when you look.
Speaker 7: At stocks that have very high elevated price to earnings multiples,
Speaker 7: we saw what happened in twenty twenty two. If interest
Speaker 7: rates rise across the board and you see those high
Speaker 7: pe level stocks and that's technology specifically, they end up
Speaker 7: getting hurt by this. So going into next year, I
Speaker 7: still think the Fed has the flexibility to continue to
Speaker 7: cut rates. I just don't think that they're going to
Speaker 7: deliver the way that the market is pricing this in
Speaker 7: right now.
Speaker 3: Burn and c IO, Megan Hornemann, it's great to have
Speaker 3: you today with thank you. Look what's interesting about these
Speaker 3: markets is perhaps you wish you had the investment vice
Speaker 3: or decision making prowess of well the investing elite ed
Speaker 3: think Warren Buffett, think Stanley droc and Miller think David
Speaker 3: Tepper and so many more. Today we understand and ETF
Speaker 3: is trying to promise just that sort of power of
Speaker 3: AI fintech startup Internigion Alpha. They're launching a chat pot
Speaker 3: powered by chat Gemini Claude. They call them the Investment Committee.
Speaker 3: They're going to act like these hedge fund officionados to
Speaker 3: make decisions.
Speaker 8: What do you think?
Speaker 4: We know the obsession of the market of those names.
Speaker 4: But what I find astonished about the story is the
Speaker 4: simplicity of it that basically it's a strategy generated through
Speaker 4: a generative AI tool. You listed them, but you just
Speaker 4: go into it and ask what's the strategy here? What
Speaker 4: would Warren Buffett do? And you get a response and then.
Speaker 8: The ETF trades off it.
Speaker 3: I don't know, We'll see how this one plays out,
Speaker 3: but it's an interesting launch today.
Speaker 8: Meanwhile, coming up, we've got so.
Speaker 3: Much more to talk about, and of course there's a
Speaker 3: serious side to what's happening in terms of geopolitics, and
Speaker 3: it affects technology because pages and telecom devices are exploding
Speaker 3: in Lebanon more in the developing situation.
Speaker 9: Next this is Blue Meg Technology.
Speaker 4: An update from Lebanon More Pages and other telecommunication devices
Speaker 4: exploding in Lebanon, just one day after a series of
Speaker 4: similar deadly blasts. That's according to reporting by the state
Speaker 4: run national news agency. Bloomberg Television's Jamana Bassecci joins us
Speaker 4: with the latest. What do we know about the events
Speaker 4: of the last hour and what's happening in Lebanon.
Speaker 10: Jamana, that's right, So it appears that another attack on
Speaker 10: Hesbala's telecommunication devices has occurred. Just in the last hour.
Speaker 10: We are hearing of handheld radio's walkie talkie devices against
Speaker 10: also exploding in people's hands, cars and across at homes.
Speaker 10: Even and this of course comes after yesterday the attack
Speaker 10: where more than two thousand pagers when off, simultaneously exploding
Speaker 10: into the pagers that these Himbala operatives have been using. Now,
Speaker 10: it is important to note here that Israel has declined
Speaker 10: to take or has not commented on any of the
Speaker 10: attacks that have taken place or the incidents. But both
Speaker 10: Hezballah and the Lebanese governments were quick to point the
Speaker 10: finger at Israel, saying that Israeli intelligence would have been
Speaker 10: behind this very elaborate operation. But what is clear here
Speaker 10: is that this war that has been going on a
Speaker 10: hot war, so to speak. Ever since October seventh on
Speaker 10: Israel's northern border has developed and transformed into a new
Speaker 10: type of warfare as cyber warfare, and lots of questions
Speaker 10: are being asked about how these specific devices have been compromised.
Speaker 3: Can you tell us a little bit about the supply
Speaker 3: chain ultimately here, Jeman Or of what you say is
Speaker 3: an elaborate attack, the Taiwanese company gold Apollo has spoken.
Speaker 11: Out yes, So the branding on the pages that were
Speaker 11: detonated yesterday can be pointed back to a very not
Speaker 11: well known Taiwanese manufacturer called gold Apollo, and they actually
Speaker 11: issued a statement saying that those sicular models that you
Speaker 11: were used for detonations yesterday were not ones that they
Speaker 11: manufactured themselves.
Speaker 1: Instead, it was actually.
Speaker 10: A company called BAC that were based in Hungary that
Speaker 10: had obtained the licensing to use the branding on devices
Speaker 10: that they manufactured. Now, Bloomberg did try to reach out
Speaker 10: to BAC for comments, We have not heard back from them.
Speaker 10: But again, all of this is part and parcel of
Speaker 10: a very elaborate plan, and it seems to be the
Speaker 10: case that it's not just the pages that were compromised,
Speaker 10: but other telecommunication devices that Hezbollah militants have been using,
Speaker 10: and experts in the field say that the way this
Speaker 10: could have been done is by whoever tampered with the
Speaker 10: devices putting in small quantities of explosive device. They ten
Speaker 10: explosive material ten to twenty grounds that would get triggered
Speaker 10: on a signal that would come through so that they
Speaker 10: would all explode simultaneously. The country is on high alert
Speaker 10: because this is the second such intelligence breach in two days.
Speaker 4: Several parties involved and we're awaiting responses from others who
Speaker 4: understanding is that Lebanon and Hezbullah, which is a group
Speaker 4: the United States announces as a terrorist group, have accused
Speaker 4: Israel of being behind the attack. We haven't heard from Israel.
Speaker 4: What else do we know about the political situation?
Speaker 10: Yamana, Yes, well, again it is fast moving and as
Speaker 10: I was just highlighting, within Lebanon, now there's major concern
Speaker 10: that we're moving to a new type of warfare and
Speaker 10: that in the past the war had been conducted solely
Speaker 10: on the southern part of the country in borders. But
Speaker 10: now what's happening is there's been a complete intelligence breach.
Speaker 10: People are very concerned about what this means for telecommunications
Speaker 10: within the country and the potential for further action or
Speaker 10: further operations coming out of Israel. The background to this,
Speaker 10: of course, since yesterday the Israeli Prime Minister Benjamin Attaannapolos
Speaker 10: said that there is another new war objective now, and
Speaker 10: that is to return security to the northern border of Israel,
Speaker 10: so that citizens within the country can return back. They
Speaker 10: had been evacuated and had been forced to move dis
Speaker 10: plate ever since October seven, and so there is a
Speaker 10: focus from Israel and from the Israeli government to do
Speaker 10: something about the situation on that border. The concern of
Speaker 10: ours is that in the absence of the diplomatic solution,
Speaker 10: we may be looking at something like a full scale invasion.
Speaker 3: Risk of a serious, dramatic escalation is what the United
Speaker 3: Nations is currently saying. Jamana Bassecci, thank you so much
Speaker 3: for coming to us from Middle East. It is time
Speaker 3: for today's AI in action. Well bringing in Catherine Costareva.
Speaker 3: She is the CEO of Creatio. It's a no code
Speaker 3: platform enabling that the automation of workflows and CRN thanks
Speaker 3: to the power of artificial intelligence. Just announced two hundred
Speaker 3: million dollars in new funding over the summer. You've got
Speaker 3: a one point two billion dollar valuation. The value of
Speaker 3: what you provide is well, less engineers and code is needed.
Speaker 3: I can build my own application using just creatia.
Speaker 1: So true, And first of all, thank you very much
Speaker 1: for having me. I'm excited to be here today with you.
Speaker 1: And you know what, when we founded the company ten
Speaker 1: years ago, the biggest value we brought to our clients
Speaker 1: was time to value the ability to build your applications,
Speaker 1: not being a professional software developer. And right now we're
Speaker 1: doing that with the help of AI, and that's definitely
Speaker 1: the future.
Speaker 6: In the world of technology.
Speaker 4: I think we so ask ourselves about disruption versus what
Speaker 4: the incumbents are doing. And I've spent a lot of
Speaker 4: time with Salesforce and speaking to Salesforce executives and they
Speaker 4: would tell you, Catherine, they're doing exactly the same thing.
Speaker 6: How do you respond to that?
Speaker 12: Oh?
Speaker 1: Love the question. So let's start with the evolution of coding. Right,
Speaker 1: if we go back into eighties, it was high coding.
Speaker 1: You basically couldn't build the application, not being a professional
Speaker 1: software developer, and then low code came. It's like rapid
Speaker 1: application development industry and then no code emerged. So what
Speaker 1: Creation is doing different from our competitors is actually giving
Speaker 1: the ability to design your applications not being a professional
Speaker 1: software developer, which and not being in tech industry at all,
Speaker 1: which actually allows time to value, time to market to
Speaker 1: be significantly faster. With the help of AI, you not
Speaker 1: only develop your own apps and automate multiple use cases,
Speaker 1: you actually replace people in multiple different rules like case resolutions,
Speaker 1: like sales management, like campaign management, and in comparison to Salesforce,
Speaker 1: the biggest difference at Creation is that you build those intents,
Speaker 1: you build those use cases, not being a technical person,
Speaker 1: so you define the use cases where AI is helping
Speaker 1: you to automate tasks without being a professional developer. On
Speaker 1: the creation of platform, you.
Speaker 8: Said replace people.
Speaker 3: For many that is the key worry around artificial intelligence.
Speaker 3: Most people try to say they'll be augmented. Have you
Speaker 3: known that your clients replaced people?
Speaker 10: I love.
Speaker 1: Looking at it through augmentation, right, we actually empower our
Speaker 1: end users to do their job better.
Speaker 8: But you said replace people. So have people been replaced
Speaker 8: at your clients?
Speaker 1: Do you think partially yes? Like if we talk about
Speaker 1: call center like people are doing more intelligent work, so
Speaker 1: replaced in a very good way because basically AI is
Speaker 1: taken over routine tasks while more intelligent work is being
Speaker 1: done by people like let me give you an example
Speaker 1: with building workflows, building your own applications with the help
Speaker 1: of AI. AI does this work for you while you
Speaker 1: do more intelligent work, which is integration of workflow apply
Speaker 1: keations into the ecosystem of your organization. So it does
Speaker 1: require more skills, which is a benefit for workers because
Speaker 1: they can grow in their professional skills.
Speaker 3: We want to thank you for bringing the pros, the
Speaker 3: cons and indeed what you're building the creatio and your valuation.
Speaker 8: CEO Kevin Custareva, thank you very much.
Speaker 3: Indeed, now shifting to another part of AI, Blackrock and Microsoft,
Speaker 3: they're teaming up on one of the largest efforts to
Speaker 3: date to bankroll the buildout of data warehouses and energy
Speaker 3: infrastructure behind the boom in artificial intelligence. This of course
Speaker 3: being a normous undertaking from an infrastructure perspective, and we
Speaker 3: want to be digging into some of the intricacies around
Speaker 3: this particular deal that has been struck between an enormous
Speaker 3: asset manager and indeed Larry Fink was posting on various
Speaker 3: platforms yesterday ed about how much they are seeing this
Speaker 3: whole seismic shift and the need for artificial intelligence, the
Speaker 3: shares scale of money needed.
Speaker 8: But actually he seemed to think it was relatively easy to.
Speaker 3: Come by, Lin Dahn and pleased to say, joins us more, Lynn,
Speaker 3: this is a massive amount of money and expertise coming
Speaker 3: from in video too.
Speaker 13: It is, and thank you for having me. It sounds massive,
Speaker 13: doesn't it. Thirty billion dollars sounds massive, But it's just
Speaker 13: the tip of the iceberg. I mean, remember that even
Speaker 13: before this thirty billion dollar fund was announced, Microsoft had
Speaker 13: already had already signed a multi billion dollar contract with
Speaker 13: Brookfield just to build some renewable energy plants that would
Speaker 13: in turn supply the electricity for data centers that are
Speaker 13: necessary for AI. And before this announcement, we had this
Speaker 13: scoop on how Sam Altman, the head of OpenAI, was
Speaker 13: working on his own plan for AI infrastructure and pushing
Speaker 13: for it here in the US. That would have also
Speaker 13: cost tens of billions of dollars. So we are in
Speaker 13: the end talking about hundreds of billions of dollars of
Speaker 13: AI infrastructure necessary to keep the boom happening, and this
Speaker 13: is just the latest announcement exactly.
Speaker 4: So when I read this story by Boomberg Center, Rush
Speaker 4: and Dina Bass, it's all the same names really that
Speaker 4: we've been talking about. What's different a little bit about
Speaker 4: the black Rock and Microsoft initiatively seems to be there
Speaker 4: is a more micro focus on energy, but also deploying
Speaker 4: capital outside of the US as well.
Speaker 13: That's right, and that is actually something that has been
Speaker 13: a big part of Sam Altman's push too, has been
Speaker 13: going out there abroad trying to attract foreign sources of
Speaker 13: money to fuel this AI boom. It was very interesting
Speaker 13: to see the Abu Dhabi Fund invested in this. But also,
Speaker 13: as you said, the energy part of it is the
Speaker 13: critical part. And when our very own Bradstone interviewed Sam
Speaker 13: Altman at Davos a year ago, he said something very similar.
Speaker 13: He said, I don't think that the world has yet
Speaker 13: realized how big of an increase we are talking about
Speaker 13: in energy demands.
Speaker 8: Because of the AI boom.
Speaker 13: By our estimates at Bloomberg Intelligence, we're talking about possibly
Speaker 13: ten times more energy being put toward AI data centers
Speaker 13: by twenty thirty than today's levels. So for sure, the
Speaker 13: focus needs to be on the energy aspect of the equation.
Speaker 3: Just briefly, we know that people were the administration at
Speaker 3: the White House last week talking about aim structure.
Speaker 8: Is this the fruits of those labor That's right?
Speaker 13: And I mean, I don't know if this fund is
Speaker 13: the fruits of those labors, but for sure, what came
Speaker 13: out of those conversations, as far as we know from sources,
Speaker 13: was an agreement for a task force that would look
Speaker 13: at these issues together. And I think that a part
Speaker 13: of that, we'll be looking at all of the permitting
Speaker 13: and the regulatory hurdles that need to be cleared in
Speaker 13: order for these massive power plants and data centers to
Speaker 13: even be fathom for one to even fathom them being
Speaker 13: built in the US, just in terms of like the
Speaker 13: environmental permits and the space.
Speaker 6: Blue Boslindann, thank you very much.
Speaker 8: I'll come back to Bluebog technology. I'm Caroline Hid in
Speaker 8: New York.
Speaker 6: Mamed Lalalo in San Francisco.
Speaker 8: The day is here, ed fed day two pm.
Speaker 3: Will we get a rate cut to the junior twenty
Speaker 3: five or fifty basis points that is what the market
Speaker 3: weighs and watches for and we currently just tread water
Speaker 3: basically on the Nasdaq one hundred.
Speaker 8: We're off by a tenth of a percent.
Speaker 3: Now there is some concerns the risk a version building
Speaker 3: is to what it means for technology once we get
Speaker 3: those rate cuts. Let's move on and look at the
Speaker 3: individual movers, because actually on the higher side, we have
Speaker 3: got Apple powering higher today and this is the biggest
Speaker 3: lift from a points perspective, or up one point seven percent.
Speaker 3: So all eyes on those mags seven names and where
Speaker 3: they can continue to run in the way that we've
Speaker 3: been so used to even with a hiking cycle. We're
Speaker 3: looking at for you, ed Ubisoft, I do Star Wars Outlaws.
Speaker 3: There's been a lot of worries about this new game.
Speaker 3: And actually for once we've got bmo annas they're saying
Speaker 3: it is so cheap now this French name of maker
Speaker 3: of of course in the latest games that we've got
Speaker 3: to be buying in it jumps more than six percent.
Speaker 3: Remember it is down about fifty percent year to date though,
Speaker 3: And I'm looking at Alphabet just treading water also ahead
Speaker 3: of the FED. But there's been some interesting micro news. Yes,
Speaker 3: there's a YouTube creator's event happening right here in New
Speaker 3: York and some unveilings there. But there's a key event
Speaker 3: that happened earlier in Europe and you got the details.
Speaker 6: Yep.
Speaker 4: Google won a court fight with the European Union over
Speaker 4: a one point seven billion dollar fine for illegally stopping
Speaker 4: rivals from placing ads on third party websites. The court
Speaker 4: cited key mistakes in the original twenty nineteen pro Bloomberg.
Speaker 4: Sam Stalton joins us from Brussels. So this is a
Speaker 4: positive outcome for Google. Explain the basics of the court's decision.
Speaker 14: Yeah, so it is actually quite a rare win for
Speaker 14: Google in the European Union's courts. Here, it's important to
Speaker 14: say this is a win in the lower tier court
Speaker 14: as the EU General Court in Luxembourg, So the decision
Speaker 14: can actually be appealed to the European Court of Justice,
Speaker 14: which is the bloc's highest court. Effectively, this one point
Speaker 14: seven billion dollar fine was slapped on Google in twenty
Speaker 14: nineteen after EU Antitrust Chief Magadeta Vestage said that it
Speaker 14: was illegally preventing rival search engines run by the likes
Speaker 14: of Yahoo and Microsoft from placing ads on websites like
Speaker 14: online newspapers, travel platforms and blogs, etc. But now, of
Speaker 14: course that one point seven billion dollar fine has been
Speaker 14: struck out by EU judges, who, as you've just said,
Speaker 14: cited a number of errors in the Commission's investigations, including
Speaker 14: in their definitions of certain things like market definition and
Speaker 14: the duration of the alleged abusive behavior.
Speaker 3: Yeah, I mean Google itself funnily enough, saying they're pleased
Speaker 3: with this response. They said it really factored on a
Speaker 3: very narrow subset of text only search ads, and basically
Speaker 3: they've gone back and changed the con tracks from twenty sixteen.
Speaker 3: But this isn't the only focus on ad tech and
Speaker 3: its power within that space, not just in Europe but
Speaker 3: also in the US.
Speaker 1: Yeah.
Speaker 14: Indeed, so you have too parallel I suppose fronts really
Speaker 14: on Google's advertising technology business. So the case today was
Speaker 14: really more about display advertising, but when it comes to
Speaker 14: advertising technologies, there's a much more if you like, existential
Speaker 14: risk to Google's long term sustainability in these types of markets.
Speaker 14: You have the Department of Justice case that's obviously in
Speaker 14: broad in legal proceedings at the moments, but also in
Speaker 14: the European Union they have their own investigation open into
Speaker 14: Google's advertising technologies, which we assume could lead to an
Speaker 14: eventual breakup order potentially in the coming months. That's an
Speaker 14: investigation that still needs to be concluded. That the European
Speaker 14: Commission is certainly making progress on what would be its
Speaker 14: fourth investigation into Google business and potential abuses of dominance.
Speaker 3: Samas Dalton me, thank you so much on all things
Speaker 3: EU versus big tech. Let's talk about what's happening on
Speaker 3: the hill in big tech because tech firms will be
Speaker 3: the focus of a US Senate Intelligence Committee hearing on
Speaker 3: election threats. Executives from the likes of Google, but also
Speaker 3: Microsoft and Meta are all set to appear.
Speaker 6: It emerges.
Speaker 3: Jackie Davilas joins us from DC with more who expected
Speaker 3: to hear from today?
Speaker 15: Jackie, Well, while everyone's tuning into the FED decision, I'm
Speaker 15: going to be on Capitol Hill at that Senate Intelligence
Speaker 15: Committee hearing, and we're expected to see executives like Google's
Speaker 15: Can't Walker, Metas, Nick Clegg, and Microsoft's president Brad Smith.
Speaker 15: And really what the focus here today will be what
Speaker 15: is the role and responsibility of tech companies in detecting
Speaker 15: misinformation and disinformation online, particularly as it relates to foreign
Speaker 15: interference in our elections, and this has been a key
Speaker 15: focus for this bipartisan panel. It's chaired by a Democrat,
Speaker 15: Mark Warner from Virginia, and the vice chair is Marco
Speaker 15: Rubio from Florida. This is an issue that both sides
Speaker 15: of the isle care about, and what they want to
Speaker 15: understand is what have companies been doing to fulfill their
Speaker 15: commitments to detect this kind of interference in elections online. Now,
Speaker 15: just yesterday, very timely, Microsoft published a detailed report that
Speaker 15: showed that Russia was actually spreading phony videos online that
Speaker 15: we're targeting Vice President Kamala Harris's campaign. And this is
Speaker 15: just kind of the type of report that you've seen
Speaker 15: some tech companies come out and publish and say this
Speaker 15: is what we're seeing from our end of things. Open
Speaker 15: AI and May also released a similar report that says
Speaker 15: they detected some foreign interference from actors like China, Iran
Speaker 15: in Israel in trying to change political discourse around the world. Now,
Speaker 15: open ai won't be present at the hearing today, but
Speaker 15: this is the kind of report and action that senators
Speaker 15: want to hear. You know that the companies are proactively
Speaker 15: doing to prevent this kind of disinformation from proliferating.
Speaker 4: What the US voter Bloomberg Technology audience member might ask is, well,
Speaker 4: hold on, it's less than two months until the election.
Speaker 4: So is this great Senate hearing with these technology executives
Speaker 4: going to have a focus or an impact on the
Speaker 4: upcoming presidential election or is the idea it's bigger picture,
Speaker 4: the integrity of our election's longer term.
Speaker 15: Jackie both ed and that's exactly right. I think Russia
Speaker 15: is such a focus for this committee on both sides
Speaker 15: of the aisle. They've clearly been trying to sway US
Speaker 15: elections even before this upcoming one in November. But what
Speaker 15: you're saying exactly, it's this integrity, you know, our institution
Speaker 15: in people's ability to believe that what they see online
Speaker 15: is actually true. Now, we don't have a lot of
Speaker 15: time before the election, but as you know, things spread
Speaker 15: so quickly online, especially in this new age of generative AI,
Speaker 15: and so whatever they can to do to at least
Speaker 15: put the spotlight on companies so they can proactively move
Speaker 15: and detect and prevent this kind of stuff from making
Speaker 15: it onto our phones in a second. I mean, it's
Speaker 15: an effort, but will it be effective is yet to
Speaker 15: be seen.
Speaker 3: Taylor Swift has had rather a lot to say about it.
Speaker 3: Of late Bloomberg's Jackie Devilos, We thank you and have
Speaker 3: we got coming out?
Speaker 4: Some more news headlines from around the world. It's time
Speaker 4: for talking tech us up. Amazon named SAMMYA. Kumar is
Speaker 4: its new head of consumer business in India starting October first.
Speaker 4: Kumar joined Amazon in nineteen ninety nine and also leads
Speaker 4: the consumer businesses for the Middle East, South Africa and Turkey.
Speaker 6: Plus.
Speaker 4: JP Morgan's in discussions with Apple to take over their
Speaker 4: credit card portfolio from Goldman Sachs.
Speaker 6: JP Morgan among a slew of.
Speaker 4: Credit card issuers that have looked to take over the
Speaker 4: Apple card, which launched with Goldman five years ago and
Speaker 4: is now seeking to look elsewhere. And hackers behind a
Speaker 4: cyber attack of drug distributor Senkora were paid seventy five
Speaker 4: million dollar dollars.
Speaker 6: That's according to sources.
Speaker 4: The payment was made in three installments in bitcoin and
Speaker 4: is the largest known cyber extortion payment ever made.
Speaker 3: Caroline Wow coming up twenty three and Me's entire board
Speaker 3: so Special Purpose Forward just quit in protest of the
Speaker 3: CEO's plans.
Speaker 8: To take the company private. Details.
Speaker 9: Next, this is bluem Meg Technology.
Speaker 3: We're watching shares of twenty three and mes actually rebounding
Speaker 3: after well seven all of them. Independent board members resigned
Speaker 3: yesterday protesting CEO and Rajiski's plan to take the company private,
Speaker 3: and the directors said that there hasn't been any notable
Speaker 3: progress on presenting a proposal. Who most Leanna Baker has
Speaker 3: more on this. I mean it's only up two percent
Speaker 3: and it has been under pressure. This is extraordinary. It
Speaker 3: was a special committee to analyze whether or not a
Speaker 3: deal would look good and clearly they're voting with their feet.
Speaker 16: So it's an interesting situation. And Anne Rodjiski actually controls
Speaker 16: the company, she controls the vote, so it's all up
Speaker 16: to her what happens. But a special committee did form
Speaker 16: and they've been waiting for a fully financed offer to
Speaker 16: come in and that just hasn't happened yet. So it
Speaker 16: seems like they're frustrated. And some of these big Silicon
Speaker 16: Valley names are on the board, like Sequoia's role if
Speaker 16: the Botha has resigned in others, so we'll see what happens.
Speaker 16: But Anne wojisk does so want to take the company private,
Speaker 16: and really the balls in her court because she has
Speaker 16: a control of the situation.
Speaker 4: It's one hundred and eighty million dollars less than market
Speaker 4: cap company trading at thirty five cents a share, nowhere
Speaker 4: near it's seventeen dollars sixty five cents peak. Doesn't seem
Speaker 4: that hard. I mean, what do we know about the
Speaker 4: financing package. Who's going to be getting involved in the
Speaker 4: take private Leanna.
Speaker 16: At this point, we don't know who would be involved,
Speaker 16: but we know that Wajiski has bid forty cents a share,
Speaker 16: which is above where the stock is trading, although it
Speaker 16: is sort of a penny stock. You remember that this
Speaker 16: company went public through a SPAC deal and it did
Speaker 16: have high profile backers before, like Richard Branson and other
Speaker 16: big names. But at that point it was worth several billion.
Speaker 16: Now it's just a fraction of that. And we'll see.
Speaker 16: For now, the special committee has a banker. We're not
Speaker 16: aware if the company itself is exploring a sale, but
Speaker 16: Wojiski has said she is open to other offers. So
Speaker 16: it could make sense for this company, out of the
Speaker 16: limelight of the public markets, to sort of reset and
Speaker 16: potentially restructure to return to growth.
Speaker 4: Blom Bose Leanna Baker, who leads our deal's team, thank
Speaker 4: you very much.
Speaker 6: Just get some more news.
Speaker 4: KKR and Goldman backed home renovation startup live Space is
Speaker 4: getting closer to going public. The platform connects customers we've
Speaker 4: designed for home makeovers in markets like India and Singapore.
Speaker 4: Expects its first net income in the first quarter of
Speaker 4: twenty twenty five. Live Space skits eighty five percent of
Speaker 4: its revenue from that India market.
Speaker 6: Carol, Let's talk.
Speaker 3: About someone who's probably eyeing the IPO market and indeed
Speaker 3: the venture landscape. Some with a lot of expertise, like
Speaker 3: Goreguaz with us Bryden Park Capital partner co founder just
Speaker 3: made a recent JO one and fifty million dollar investment,
Speaker 3: for example, in the ticketing marketplace Tippic. And you have
Speaker 3: significant expertise having run big tech businesses yourself. Mike, what
Speaker 3: do you think of the IPO landscape? Are we going
Speaker 3: to rev back up post election?
Speaker 12: You know, I think it's a it's a strange environment
Speaker 12: where in order to go public now, I think there's
Speaker 12: a bigger burden for quality and I think that there's
Speaker 12: so many companies that have gotten to rule of forty.
Speaker 12: They're proven, the big can managed customers that they're SaaS companies,
Speaker 12: they've been through several renewal cycles. I think we're going
Speaker 12: to see a lot of companies, you know, running out
Speaker 12: to an IPO, and there's a lot of investors that
Speaker 12: are looking for liquidity, So the pressure between the companies
Speaker 12: being stronger proven as well as you know investors looking
Speaker 12: for liquidity. I think you're to see a number of
Speaker 12: IPOs come out in the new year.
Speaker 3: All of forty being and your revenue growth rate, profit
Speaker 3: margin being at least forty percent, so looking strong and resilient.
Speaker 3: Where then do you make your bets in the very
Speaker 3: early stages we just talked about how you assigning money
Speaker 3: to take pic to be able to take on the
Speaker 3: nights of oh cee Geek and other areas, to buy
Speaker 3: tickets to real life events where else looks at appetizing
Speaker 3: right now, Mike, I.
Speaker 12: Think you have to have a philosophy and a thesis
Speaker 12: of where you want to invest in. You don't definitely
Speaker 12: don't want to be investing in what's happened in the
Speaker 12: past or incremental solutions to legacy systems. You want to
Speaker 12: be into difficult, high ip hard problems to solve, and
Speaker 12: when you take a look at that, you know the
Speaker 12: areas that we think are soon exciting is anything to
Speaker 12: do with AI and being on the place of AI,
Speaker 12: where we're trying to help companies solve bigger problems that
Speaker 12: have never been solved before, or adding massive value to
Speaker 12: problems that currently exist, but doing it better, faster, or cheaper.
Speaker 12: We have a handful of investments that we've done along
Speaker 12: that those ways. You take a look at a company,
Speaker 12: we have Corelogics. It started off as a logs company
Speaker 12: and they've added three new products that are massive tams.
Speaker 12: Silver Fort in the identity management space. If there's anything
Speaker 12: that you want to be paying attention to right now
Speaker 12: is zero trust and identity management. And when you take
Speaker 12: a look at how Silverfort solved that problem, they've done
Speaker 12: it in a way nobody else has ever been able
Speaker 12: to do it before. You know they can solve you know,
Speaker 12: multi factor authentication, So the same thing that irritates us
Speaker 12: alve where you put in your password and they send
Speaker 12: you a text message. You can never do that for
Speaker 12: service accounts or for on premise systems, and silver Fort
Speaker 12: has absolutely nique technology to be able to do that
Speaker 12: that nobody else really has. So you want to be
Speaker 12: thinking of those types of things. How do you build
Speaker 12: a big company when you start with a company that's
Speaker 12: just got one product.
Speaker 4: Having a focus on cybersecurities is not unique, Mike, But
Speaker 4: we have loads of people in the show that say
Speaker 4: it's right for disruption.
Speaker 6: But it seems like a crowded field to me.
Speaker 12: You're one hundred percent correct. I think I see two
Speaker 12: or three things happening in cybersecurity. You know, everybody's moving
Speaker 12: through this concept of XDR and the whole notion is
Speaker 12: we've been actually pretty good at detecting, we haven't been
Speaker 12: great at responding. And we have four million people in
Speaker 12: the cybersecurity world right now that have experience in cybersecurity.
Speaker 6: We need eight million.
Speaker 12: There's no way we're going to be able to get
Speaker 12: four million more people that are highly qualified in cybersecurity.
Speaker 12: So it's going to have to come through automation. And
Speaker 12: I think AI is gay play a significant role.
Speaker 4: In making that happen, Mike, real quick, because I can't
Speaker 4: resist it's what's it like being on a cap table
Speaker 4: with Rory McElroy.
Speaker 12: Well, Roy's a you know First of all, he is
Speaker 12: an absolute gentleman, and he's actually very good investor in
Speaker 12: You know, it's nice to have a celebrity like that,
Speaker 12: especially a quality person of his nature associated.
Speaker 1: With your firm.
Speaker 4: Mike Grebuire of Brighton Park Capitol, really good to have
Speaker 4: you on the program.
Speaker 6: It's been more than fifty.
Speaker 4: Years since an astronaut last walked on the Moon, but
Speaker 4: this decade could see a number of countries attempt to
Speaker 4: send humans back. So who's in the race and why now?
Speaker 4: Bloomberg's Tom Gibson has more listen to this.
Speaker 17: America plans to send four astronauts into Luna orbit, including
Speaker 17: the first woman and first person of color, as part
Speaker 17: of the Artemist program. This will set the stage for
Speaker 17: the next artem mission to have people on the Moon
Speaker 17: in the next few years. But while Neil Armstrong only
Speaker 17: spent a few hours on the Moon, the Artemis astronauts
Speaker 17: will be there for much longer, spending at least six
Speaker 17: days on the lunar surface. China also hopes to have
Speaker 17: people on the Moon by twenty thirty.
Speaker 18: Jane Tongo kum Jiang Kirk with a Triniatian.
Speaker 17: Die and has achieved a series of impressive firsts. It
Speaker 17: was the first and so far only nation to land
Speaker 17: on the far side of the Moon and the first
Speaker 17: to send samples from there back to Earth.
Speaker 18: Going to the fares side of the Moon is especially hard.
Speaker 18: Of course, it never actually faces Earth, and so communicating
Speaker 18: with anything on the farest side of the Moon is
Speaker 18: really really hard.
Speaker 17: All this has America worried.
Speaker 19: I don't want China to get to the South Pool
Speaker 19: first with humans and then say this is our stay out.
Speaker 18: Bill Nelson, the NASSA administrator, has frequently referred to China's
Speaker 18: policies here on Earth, in particular the South China Sea,
Speaker 18: where China has said all these islands in the South
Speaker 18: China Sea, they belong to us. Bill Nelson has said
Speaker 18: in the same way that they did this grab in
Speaker 18: the South China to see their potential that they would
Speaker 18: try to do something on the Moon, and so we
Speaker 18: have to make sure to stop that.
Speaker 3: You can catch the full episode at Bloomberg dot com.
Speaker 3: Now let's get back to the tech markets, because today
Speaker 3: or here on Earth, is fed Decision Day primposed Shinani Bassek. Look,
Speaker 3: you're looking across assets as you do on your show
Speaker 3: day in day out. But we want to shine a
Speaker 3: lens and what's happening with technology within the implication of
Speaker 3: the bill market.
Speaker 20: For example, absolutely, let's take a look at what's just
Speaker 20: happened to the two year or for example, over the
Speaker 20: past month, and what it's meant for technology stacks and
Speaker 20: if there's been a relationship. The two year over the
Speaker 20: past month has drastically fallen in terms of the yield
Speaker 20: movement here more than forty basis points. If you could
Speaker 20: take a look at that, you are down now to
Speaker 20: three sixty five, with the market expecting that the Fed
Speaker 20: would cut fifty basis points today. Of course you have
Speaker 20: economists more in disagreement there, but with that pricing moves,
Speaker 20: let's flip up the board and see what the SMP
Speaker 20: and the NASDAC have done over that timeframe as well.
Speaker 8: And in fact you have.
Speaker 20: The Nasdaq outperforming or the S and P five hundred
Speaker 20: rather outperforming the Nasdaq one hundred, but the S and
Speaker 20: P five hundred really rising marginally and the NASAK flat
Speaker 20: to lower. If you flip up the board one more
Speaker 20: time here, because this is where you actually see that
Speaker 20: move much more distinctly. The SMP equal weighted index, which
Speaker 20: had reached a record yesterday, is up more than three
Speaker 20: percent over that same timeframe. This is really paying more
Speaker 20: attention to those companies outside of tech in a more
Speaker 20: equal way. With a mag seven down one point seven percent,
Speaker 20: even with that yield movement being so drastic on the
Speaker 20: move lower, this Philadelphia Semiconductor Index down five point six percent,
Speaker 20: almost five point seven percent, and only a handful of
Speaker 20: stocks really in the green over that timeframe. So what
Speaker 20: does that say At the beginning of the year, when
Speaker 20: people have thought that a lower discount rate would really
Speaker 20: fuel these tech sacks, that has not happened in the
Speaker 20: past month. So what you really need then is a
Speaker 20: new narrative that is based on earnings, that is based
Speaker 20: on that AI payout and not as related to interest
Speaker 20: rates as we had expected in the past.
Speaker 4: Caroline Shnali I looked up from my desk this morning,
Speaker 4: massive TV screen Bloomberg Open.
Speaker 6: Interest, the show that you anchor.
Speaker 4: Forwards fed's day, is here banner across the screen. How
Speaker 4: palpable is the excitement, tension, anxiety of all the investors
Speaker 4: you have on your show, particularly those that are focused
Speaker 4: on tech.
Speaker 20: Listen, it's fascinating because on one hand, the AI story
Speaker 20: has dominated this market, has it not, And you felt
Speaker 20: that excitement to shift away. Actually for a moment this morning,
Speaker 20: ed away from that story about interest rates and towards
Speaker 20: that text story because it is still driving so much
Speaker 20: of the market. I think about what Kate Moore over
Speaker 20: at Blackrock said, and this idea that perhaps people are
Speaker 20: taking the chips off the table right now. They could
Speaker 20: be taking the chicks off for a little bit longer,
Speaker 20: but that doesn't take away from today. The idea that
Speaker 20: we are on the precipice of a historic rate cutting
Speaker 20: cycle twenty five or fifty at the end of the
Speaker 20: day could cause some volatility, but the rate and the
Speaker 20: path forward is what really matters at the end of
Speaker 20: the day, complicated even more by an election in November.
Speaker 8: Shanani Massek and thank you so much for talking us
Speaker 8: through it all. That does it for this edition of
Speaker 8: Bluebog Technology.
Speaker 3: But look, as we expect that momentous decision, we're not
Speaker 3: doing all that much. And then as that one hundred
Speaker 3: by three tens percent, a little bit of anxiety ed.
Speaker 4: I think that's what the market is called treading water anxiety.
Speaker 4: But we're very excited a lots recap in the show
Speaker 4: Away from the Fed recap the podcast.
Speaker 6: You know where to find it.
Speaker 4: On the Bloomberg platforms, on Apples, Spotify, and iHeart Big
Speaker 4: thanks to the team out in New York City. Big
Speaker 4: thank you to everyone here in SF. This is Bloomberg Technology.