1 00:00:01,920 --> 00:00:07,200 Speaker 1: From Marhart where Innovation, Money and Power Collie in Silicon Valley, NBN. 2 00:00:07,560 --> 00:00:11,559 Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed lud Love. 3 00:00:25,960 --> 00:00:28,440 Speaker 3: I'm Caroline Heinde at Bloomberg's World headquarters in New York, 4 00:00:28,840 --> 00:00:30,360 Speaker 3: and I'm Ed Loudlin in San Francisco. 5 00:00:30,400 --> 00:00:33,200 Speaker 4: Happy Friday. This is Blaming Big Technology. 6 00:00:33,280 --> 00:00:35,640 Speaker 3: Coming up, Ed, we'll dig into the details coming to light, 7 00:00:35,720 --> 00:00:38,520 Speaker 3: I mean Google's anti trust trial. Will dive deeper into 8 00:00:38,560 --> 00:00:40,479 Speaker 3: that and get a look at big text performance this. 9 00:00:40,440 --> 00:00:44,839 Speaker 4: Week and how Huawei's surprise comeback marks a new phase 10 00:00:44,920 --> 00:00:47,720 Speaker 4: in the tech cold war. Will have the latest on 11 00:00:47,760 --> 00:00:51,160 Speaker 4: the US and China's battle for technological dominance. That's ahead. 12 00:00:51,360 --> 00:00:53,280 Speaker 3: Plus we'll get a read on the state of crypto. 13 00:00:53,440 --> 00:00:56,400 Speaker 3: One year since Fchex's collapsed and as the co founder 14 00:00:56,440 --> 00:01:00,000 Speaker 3: of Three Arrows Capital, it's detained trying to leave Singapore. 15 00:01:00,520 --> 00:01:02,640 Speaker 3: The first Let's check in on these markets, including crypto. 16 00:01:02,680 --> 00:01:04,760 Speaker 3: But I'm looking at the NASTAC actually coming off of 17 00:01:04,800 --> 00:01:06,759 Speaker 3: its highs. We're up more than one point four percent 18 00:01:06,800 --> 00:01:07,679 Speaker 3: in earlier trade. 19 00:01:07,720 --> 00:01:10,479 Speaker 5: The mood dips a little bit on the back of well, the. 20 00:01:10,440 --> 00:01:13,440 Speaker 3: Strike's still being protracted and shifting up a gear when 21 00:01:13,440 --> 00:01:15,600 Speaker 3: it comes to the auto sector. But when you looked 22 00:01:15,600 --> 00:01:18,279 Speaker 3: at some of the infrationary pressures, particularly the preferred gauge 23 00:01:18,319 --> 00:01:21,480 Speaker 3: from the Fed PCE, actually looking like inflationary pressure just 24 00:01:21,520 --> 00:01:23,320 Speaker 3: easing off a bit. So we're up six tens percent. 25 00:01:23,319 --> 00:01:25,839 Speaker 3: The two year yield dips down only by two basis points, 26 00:01:25,840 --> 00:01:28,000 Speaker 3: but still we're now at five point zero four let's 27 00:01:28,000 --> 00:01:30,520 Speaker 3: call it on the two year Blueberg Dollar index bounces 28 00:01:30,520 --> 00:01:32,360 Speaker 3: off of its lows, but we're still off by about 29 00:01:32,360 --> 00:01:35,440 Speaker 3: tenth of a percent, So I think that's helping risk 30 00:01:35,440 --> 00:01:37,800 Speaker 3: appetite today across the board. Moving on, have a little 31 00:01:37,840 --> 00:01:41,280 Speaker 3: look at what's happening on individual areas asset classes. I 32 00:01:41,319 --> 00:01:43,399 Speaker 3: bring you crypto because as the dollar is lower, so 33 00:01:43,520 --> 00:01:46,440 Speaker 3: to his bitcoin, so actually risk aversion when it comes 34 00:01:46,480 --> 00:01:48,640 Speaker 3: to the world of crypto, we're basically the bouncing around 35 00:01:48,680 --> 00:01:52,000 Speaker 3: a certain area of trade twenty six, eight hundred and seventy. Look, 36 00:01:52,080 --> 00:01:54,200 Speaker 3: we've been really range bound at the moment ed, but 37 00:01:54,240 --> 00:01:56,320 Speaker 3: going to some of the micros, the individual moves when 38 00:01:56,320 --> 00:01:57,400 Speaker 3: it comes to stocks. 39 00:01:57,560 --> 00:02:00,200 Speaker 4: Yeah, there's no sort of hyperbolic or standout move. I 40 00:02:00,200 --> 00:02:02,120 Speaker 4: know that we're going to be looking really closely at 41 00:02:02,160 --> 00:02:05,280 Speaker 4: Google and the government's antitrust pursuit of Google in the 42 00:02:05,320 --> 00:02:08,200 Speaker 4: search context. Throughout the show, that stock a little bit softer, 43 00:02:08,280 --> 00:02:11,160 Speaker 4: two tents of one percent in the session. Bloomberger reported, 44 00:02:11,200 --> 00:02:15,079 Speaker 4: citing sources that back in twenty twenty, Apple was considering 45 00:02:15,240 --> 00:02:18,760 Speaker 4: buying bing from Microsoft, that search engine. That's kind of 46 00:02:18,800 --> 00:02:21,920 Speaker 4: played into what's happening in the courts with the testimony 47 00:02:21,960 --> 00:02:25,160 Speaker 4: we've had from Apple executives about the relationship with Google 48 00:02:25,200 --> 00:02:28,240 Speaker 4: and search. That stock seven tens of percent higher. Not 49 00:02:28,280 --> 00:02:31,079 Speaker 4: saying there's a causal relationship there, but it's just interesting 50 00:02:31,080 --> 00:02:33,360 Speaker 4: to see Apple up for a second day. I actually 51 00:02:33,400 --> 00:02:35,320 Speaker 4: want to go back to the index level because there's 52 00:02:35,360 --> 00:02:38,000 Speaker 4: a lot going on right now. We're kind of modestly 53 00:02:38,080 --> 00:02:40,440 Speaker 4: higher on the week on the Nasdaq one hundred, around 54 00:02:40,480 --> 00:02:43,359 Speaker 4: half a percentage point or so, but we're snapping, as 55 00:02:43,400 --> 00:02:46,400 Speaker 4: it stands three straight weeks of declines on the Nasdaq 56 00:02:46,440 --> 00:02:50,080 Speaker 4: one hundred, and we're passing economic data. We're thinking about, well, 57 00:02:50,240 --> 00:02:53,320 Speaker 4: if the FED leaves rates higher for longer, does that 58 00:02:53,400 --> 00:02:56,480 Speaker 4: make megacaps attractive in the scheme of things. Na's that 59 00:02:56,520 --> 00:02:58,600 Speaker 4: one hundred up to six tens one percent on the week, 60 00:02:58,760 --> 00:03:01,320 Speaker 4: but actually September has been a bit rough for technology 61 00:03:01,720 --> 00:03:04,280 Speaker 4: in general, and I cited the case of Apple. Apple's 62 00:03:04,320 --> 00:03:06,359 Speaker 4: actually down quite a lot from each julypeak. What's going 63 00:03:06,400 --> 00:03:07,000 Speaker 4: on here, Karl? 64 00:03:07,160 --> 00:03:09,280 Speaker 3: Yeah, let's ask someone who knows who's going to get 65 00:03:09,440 --> 00:03:12,560 Speaker 3: us a broad investing outlook Sarada's money is with US 66 00:03:12,560 --> 00:03:16,320 Speaker 3: portfolio manager Martin Curry, head of Global Long Term Unconstrained 67 00:03:16,360 --> 00:03:17,400 Speaker 3: Invents Investing. 68 00:03:17,560 --> 00:03:19,320 Speaker 5: It's great to have you here, Welcome to the show. 69 00:03:19,400 --> 00:03:19,760 Speaker 6: Thank you. 70 00:03:20,240 --> 00:03:21,760 Speaker 5: What do you make of the landscape right now? 71 00:03:21,800 --> 00:03:23,680 Speaker 3: There are headwinds when it comes to regulation, there are 72 00:03:23,720 --> 00:03:26,799 Speaker 3: headwinds when it comes to macro environment when we're thinking 73 00:03:26,840 --> 00:03:29,799 Speaker 3: more inflationary pressure. Can technology still be an area to 74 00:03:29,840 --> 00:03:31,320 Speaker 3: be allocating over allocating to? 75 00:03:31,880 --> 00:03:34,960 Speaker 7: The short answer is yes, we're very positive still on technology, 76 00:03:35,000 --> 00:03:37,480 Speaker 7: but you have to be very selective in particular, you 77 00:03:37,560 --> 00:03:41,440 Speaker 7: have to have devolution discipline always, but more so at 78 00:03:41,520 --> 00:03:43,600 Speaker 7: this stage in the cycle, when we're heading into a 79 00:03:43,640 --> 00:03:48,600 Speaker 7: potential risk of sloden or potential recession. That discussion around 80 00:03:48,920 --> 00:03:53,120 Speaker 7: recession risk has receded for Visuo, but we believe that 81 00:03:53,160 --> 00:03:56,200 Speaker 7: when we're looking into twenty twenty four, there are headwinds 82 00:03:56,240 --> 00:04:00,760 Speaker 7: that could make the economic landscape more uncertain Notably, we've 83 00:04:00,760 --> 00:04:05,240 Speaker 7: got the US economy with grappling with rates that have 84 00:04:05,720 --> 00:04:08,880 Speaker 7: increased quite rapidly. We've got the Chinese economy as the 85 00:04:08,880 --> 00:04:13,160 Speaker 7: second largest economy globally that is starting to lose momentum, 86 00:04:13,160 --> 00:04:16,360 Speaker 7: and there's uncertainty but next year after the initial recovery 87 00:04:16,360 --> 00:04:18,240 Speaker 7: that we've seen this year. So there are a lot 88 00:04:18,279 --> 00:04:20,920 Speaker 7: of things to grapple with on the economic front. 89 00:04:21,560 --> 00:04:24,440 Speaker 3: You've grappled for years before, we've had downturns. I know 90 00:04:24,800 --> 00:04:26,960 Speaker 3: you come from very senior roles at Black Rock. You 91 00:04:27,320 --> 00:04:30,160 Speaker 3: waded through two thousand and eight financial crisis. You've been there, 92 00:04:30,240 --> 00:04:32,719 Speaker 3: done that, And therefore, with that sort of mindset, do 93 00:04:32,760 --> 00:04:35,839 Speaker 3: you have to be allocating into mega trends. You have 94 00:04:35,920 --> 00:04:39,400 Speaker 3: to be thinking about valuations, even with the optimism around AI. 95 00:04:39,480 --> 00:04:43,000 Speaker 3: I mean, as in video, just too extraordinarily highly valued now. 96 00:04:43,400 --> 00:04:45,040 Speaker 7: Yes, So there are a few things that we'd want 97 00:04:45,080 --> 00:04:48,159 Speaker 7: to highlight. Firstly, on valuation, we want to remain discipline, 98 00:04:48,200 --> 00:04:52,320 Speaker 7: so we use a discount rate that is capturing some 99 00:04:52,400 --> 00:04:57,640 Speaker 7: of the potential for rates to be longer higher for longer. 100 00:04:57,960 --> 00:05:00,720 Speaker 7: So we've got an assumption of five percent for our 101 00:05:00,760 --> 00:05:03,680 Speaker 7: restory rate in the long term and this is something 102 00:05:03,720 --> 00:05:07,120 Speaker 7: that we've been assuming for a long time. 103 00:05:07,160 --> 00:05:07,880 Speaker 6: So even when. 104 00:05:07,760 --> 00:05:10,240 Speaker 7: Rates were at zero close to zero negative in some 105 00:05:10,320 --> 00:05:14,880 Speaker 7: economies eighteen months ago, we use the assumption that monetary 106 00:05:14,880 --> 00:05:18,440 Speaker 7: policies would normalize and rates would go to initially four percent, 107 00:05:18,600 --> 00:05:21,800 Speaker 7: and then last September we increase assumption to five percent, 108 00:05:22,000 --> 00:05:24,360 Speaker 7: and that was on the basis of an assumption that 109 00:05:24,400 --> 00:05:28,400 Speaker 7: inflation was going to be stickier and longer lasting. So 110 00:05:28,440 --> 00:05:30,800 Speaker 7: we're assuming a long term inflation in our models of 111 00:05:30,839 --> 00:05:33,600 Speaker 7: three percent. So that's on the economic side and on 112 00:05:33,640 --> 00:05:36,640 Speaker 7: the valuation front. Then in terms of mega trends, you're 113 00:05:36,640 --> 00:05:40,240 Speaker 7: absolutely right. The way we look at opportunities going forward 114 00:05:40,320 --> 00:05:44,080 Speaker 7: is looking at three mega trends, demographic changes, future of technology, 115 00:05:44,400 --> 00:05:47,039 Speaker 7: and resource scarcity. And these are mega trends we'll be 116 00:05:47,080 --> 00:05:50,000 Speaker 7: talking about for the next decade, two decades, three decades. 117 00:05:50,000 --> 00:05:50,839 Speaker 6: They're here to stay. 118 00:05:50,960 --> 00:05:53,440 Speaker 7: There are themes that are evolving within those mega trends, 119 00:05:53,520 --> 00:05:57,440 Speaker 7: and AI is an important one in particular, but generally speaking, 120 00:05:57,520 --> 00:06:00,440 Speaker 7: that permits us to put our clients strateg is on 121 00:06:00,680 --> 00:06:05,400 Speaker 7: long term structural growth opportunities looking forward rather than looking backwards. 122 00:06:05,600 --> 00:06:09,200 Speaker 7: Then onto your third question, which is around Nvidia and 123 00:06:09,400 --> 00:06:12,839 Speaker 7: AI and valuation around that. Our view is that you 124 00:06:12,920 --> 00:06:17,320 Speaker 7: have to focus on companies that have a profitable profile, 125 00:06:17,720 --> 00:06:19,920 Speaker 7: and we look at that as companies that have high 126 00:06:20,000 --> 00:06:23,800 Speaker 7: returns and invested capital improvement in returns as well as 127 00:06:23,800 --> 00:06:26,279 Speaker 7: an attractive gross profile. And we like that gross to 128 00:06:26,320 --> 00:06:29,000 Speaker 7: come from revenues, not just profits. So when you look 129 00:06:29,000 --> 00:06:32,280 Speaker 7: at a company like Nvidia, we forecast sales growth at 130 00:06:32,400 --> 00:06:36,680 Speaker 7: Nvidia of about thirty percent annualized over the next five years, 131 00:06:36,920 --> 00:06:38,480 Speaker 7: and when you look at the bottom line, we're looking 132 00:06:38,520 --> 00:06:41,560 Speaker 7: at closer to forty percent annualized over the next five years. 133 00:06:41,680 --> 00:06:44,280 Speaker 7: So then when you're looking at the valuation of the stock, 134 00:06:44,360 --> 00:06:47,680 Speaker 7: even just taking the pe a P twelve months forward 135 00:06:47,720 --> 00:06:50,520 Speaker 7: of about thirty times, you look at a company on 136 00:06:50,560 --> 00:06:53,680 Speaker 7: a PE to earnings gross ratio over the next five 137 00:06:53,760 --> 00:06:57,000 Speaker 7: years of less than one. So that to us, as 138 00:06:57,040 --> 00:06:59,919 Speaker 7: a rule of some can argue that Nvidia still has 139 00:07:00,080 --> 00:07:01,360 Speaker 7: strong voluation support. 140 00:07:02,440 --> 00:07:04,400 Speaker 4: Zerio it to dead in San Francisco. It's good to 141 00:07:04,440 --> 00:07:07,359 Speaker 4: see you and thank you for making it through the 142 00:07:07,400 --> 00:07:10,160 Speaker 4: storm in New York City to join us on the program. 143 00:07:10,720 --> 00:07:12,840 Speaker 4: On that assumption that you just outline, I think it's 144 00:07:12,840 --> 00:07:15,960 Speaker 4: so interesting because there's an element of surprise that some 145 00:07:16,000 --> 00:07:19,240 Speaker 4: of the other mega caps in trench market positions big 146 00:07:19,280 --> 00:07:23,360 Speaker 4: balance sheets also get hit. Right that you outline this 147 00:07:23,400 --> 00:07:26,640 Speaker 4: assumption that the rest of the market has higher for longer. 148 00:07:27,160 --> 00:07:29,800 Speaker 4: Does the case for being overweight a name like Apple 149 00:07:29,880 --> 00:07:33,360 Speaker 4: or another megacap hold up in a world where treasuries 150 00:07:33,680 --> 00:07:35,800 Speaker 4: are pushing five percent? Do you see what I mean? 151 00:07:36,360 --> 00:07:39,520 Speaker 7: Yes, you're absolutely right hired. So there's a few things 152 00:07:39,520 --> 00:07:43,520 Speaker 7: to bear in mind. Yes, quality gross companies such as Apple, 153 00:07:43,640 --> 00:07:47,160 Speaker 7: such as Nvidia, which we define as high returns high 154 00:07:47,240 --> 00:07:52,240 Speaker 7: gross profile, generally tend to be impacted negatively by rising 155 00:07:52,320 --> 00:07:55,920 Speaker 7: rates or rising rates expectations because these are long duration names. 156 00:07:56,080 --> 00:07:57,480 Speaker 6: But there's a few aspects to mention. 157 00:07:58,400 --> 00:08:01,320 Speaker 7: Firstly, as you've got right in rates, you've got potential 158 00:08:01,560 --> 00:08:06,760 Speaker 7: risk of economic cycle turning more negative, and in that instance, 159 00:08:06,800 --> 00:08:11,160 Speaker 7: we want to have companies that have both structural growth 160 00:08:11,200 --> 00:08:14,800 Speaker 7: exposures because that permits them to generate their own weather 161 00:08:15,520 --> 00:08:18,400 Speaker 7: at a time when growth could be challenged at the 162 00:08:18,400 --> 00:08:22,200 Speaker 7: economic level. Secondly, companies that have strong balance sheets, because 163 00:08:22,240 --> 00:08:25,240 Speaker 7: if we're heading towards a sharp slowdown or potential risk 164 00:08:25,240 --> 00:08:29,679 Speaker 7: of recession, you want companies to have solid balance sheets. Thirdly, 165 00:08:29,840 --> 00:08:33,880 Speaker 7: companies that have pricing power because in a higher inflation 166 00:08:34,240 --> 00:08:37,480 Speaker 7: for longer environment, companies with pricing power will be able 167 00:08:37,520 --> 00:08:42,000 Speaker 7: to better protect their margins and force companies that have 168 00:08:42,360 --> 00:08:45,840 Speaker 7: resilience in terms of earning stand grades, because we still 169 00:08:45,840 --> 00:08:47,600 Speaker 7: have a view that there's going to be ongoing earning 170 00:08:47,600 --> 00:08:49,440 Speaker 7: standing grades. So we want to be in companies that 171 00:08:49,480 --> 00:08:52,720 Speaker 7: either resist those stand grades or are able to actually 172 00:08:53,760 --> 00:08:56,720 Speaker 7: quite at the opposite surprise on the upside. 173 00:08:56,800 --> 00:08:58,360 Speaker 6: And so when we look across some. 174 00:08:58,280 --> 00:09:01,520 Speaker 7: Of the technological landscape, we do companies that have all 175 00:09:01,559 --> 00:09:03,920 Speaker 7: those characteristics. And that's so once we want to focus 176 00:09:04,000 --> 00:09:07,400 Speaker 7: on so yes, nearer term, the market will always have 177 00:09:07,440 --> 00:09:11,320 Speaker 7: the knee jerk reaction of selling down or selling out 178 00:09:11,360 --> 00:09:15,280 Speaker 7: of quality growth companies as rates increase because of them 179 00:09:15,320 --> 00:09:18,400 Speaker 7: being longer duration and therefore more sensitive to rates. But 180 00:09:18,480 --> 00:09:21,080 Speaker 7: as you think about the second round effect of higher 181 00:09:21,160 --> 00:09:24,400 Speaker 7: rates bringing potential risks to the economic cycle, you want 182 00:09:24,440 --> 00:09:26,520 Speaker 7: to be in exactly those companies that can weather. 183 00:09:26,559 --> 00:09:29,360 Speaker 6: That's taught we've gone so macro. 184 00:09:29,520 --> 00:09:31,040 Speaker 4: I just want to go micro for a minute, because 185 00:09:31,080 --> 00:09:33,760 Speaker 4: I know you follow in video very closely. The news 186 00:09:34,120 --> 00:09:38,000 Speaker 4: twenty four hours ago was that France's regulator raided in 187 00:09:38,120 --> 00:09:41,920 Speaker 4: videos Paris offices in a sort of antitrust action. Do 188 00:09:42,040 --> 00:09:43,240 Speaker 4: something like that concern you. 189 00:09:44,679 --> 00:09:48,760 Speaker 7: We did see that there was that anti antitrust grade. 190 00:09:49,120 --> 00:09:51,640 Speaker 7: At this stage, we're still taking stock of that news. 191 00:09:52,120 --> 00:09:56,880 Speaker 7: We do have a consistent assessment of companies in terms 192 00:09:56,880 --> 00:10:00,280 Speaker 7: of risks, and in the company risk section we have 193 00:10:00,320 --> 00:10:04,520 Speaker 7: an element of regulatory risk assessment. We rate our companies 194 00:10:04,559 --> 00:10:06,959 Speaker 7: from one to five, one being low risk, five being 195 00:10:07,000 --> 00:10:09,320 Speaker 7: high risk, and in the case of Nvidia, we have 196 00:10:09,440 --> 00:10:13,360 Speaker 7: a risk rating on the regulatory side of three, so 197 00:10:13,600 --> 00:10:16,560 Speaker 7: neutral generally. So we're going to be keeping an eye 198 00:10:16,640 --> 00:10:21,320 Speaker 7: on this specific news, but at this stage we are 199 00:10:21,360 --> 00:10:22,839 Speaker 7: not able to comment any further. 200 00:10:23,640 --> 00:10:25,840 Speaker 3: You can go so global for us though, and I 201 00:10:25,920 --> 00:10:29,360 Speaker 3: like that you mentioned China as a macro headwind. China 202 00:10:29,440 --> 00:10:33,800 Speaker 3: on the geopolitical and micro perspective as well, is going 203 00:10:33,840 --> 00:10:36,520 Speaker 3: to be impacting the likes of in video of well, 204 00:10:36,679 --> 00:10:40,600 Speaker 3: any company Tesla with an exposure to China. How do 205 00:10:40,640 --> 00:10:42,480 Speaker 3: you think about that in your risk modeling? 206 00:10:42,840 --> 00:10:44,400 Speaker 6: It's an important focus for us. 207 00:10:44,400 --> 00:10:47,520 Speaker 7: So you asked earlier about mega trends, but within those 208 00:10:47,559 --> 00:10:50,520 Speaker 7: mega trends there are themes, and there are eight themes 209 00:10:50,520 --> 00:10:54,160 Speaker 7: that we particularly focus on going forward in the midterm. 210 00:10:54,520 --> 00:10:58,120 Speaker 7: Four of them are actually related to that technological and 211 00:10:58,640 --> 00:11:02,000 Speaker 7: potential geopolitical and certainty, and the biggest one is what 212 00:11:02,120 --> 00:11:06,080 Speaker 7: we label technological and geopolitical fragmentation, and that comes from 213 00:11:06,080 --> 00:11:11,319 Speaker 7: that risk around Taiwan and the China ambitions around Taiwan, 214 00:11:11,880 --> 00:11:15,280 Speaker 7: the US and the European approach to that territory, the 215 00:11:15,400 --> 00:11:19,240 Speaker 7: need to actually manage the geopolitical risk by the governments, 216 00:11:19,280 --> 00:11:23,520 Speaker 7: and therefore the US encouraging TSMC to build a plant 217 00:11:23,720 --> 00:11:27,160 Speaker 7: in their territory, Japan doing the same. We believe Europe 218 00:11:27,160 --> 00:11:31,239 Speaker 7: will be doing the same. That's leading to technological fragmentation. 219 00:11:31,640 --> 00:11:35,840 Speaker 7: There are potential challenges from that for companies like TSMC, 220 00:11:36,120 --> 00:11:39,520 Speaker 7: but there are also opportunities for companies like SML. We 221 00:11:39,600 --> 00:11:42,760 Speaker 7: believe that that technological fragmentation will be a benefit because 222 00:11:42,800 --> 00:11:45,360 Speaker 7: where they were shipping their tools to Taiwan, they'll be 223 00:11:45,400 --> 00:11:49,360 Speaker 7: shipping some to each of those territories. Those factories become 224 00:11:49,480 --> 00:11:53,120 Speaker 7: live and that will create some boosts to the top 225 00:11:53,160 --> 00:11:55,760 Speaker 7: line as well as scale economies, which will also enhance 226 00:11:55,760 --> 00:11:57,240 Speaker 7: the profitability of that company. 227 00:11:57,760 --> 00:12:00,920 Speaker 3: European chip equipment makers to big players in the US 228 00:12:01,040 --> 00:12:04,319 Speaker 3: and more globally. What a great conversation, Sarah does Manie, 229 00:12:04,440 --> 00:12:15,079 Speaker 3: thank you so much. Of course, from Martin Curry, Google 230 00:12:15,240 --> 00:12:18,440 Speaker 3: antitrust a trial it is underway with the latest piece 231 00:12:18,440 --> 00:12:20,760 Speaker 3: of evidence from the Justice Department saying that a senior 232 00:12:20,760 --> 00:12:24,079 Speaker 3: Google executive wants like in the company's search advertising business 233 00:12:24,600 --> 00:12:25,560 Speaker 3: to selling drugs. 234 00:12:25,840 --> 00:12:27,480 Speaker 5: Now, there is nuance to this, and. 235 00:12:27,440 --> 00:12:31,480 Speaker 3: We're talking about an executive, Michael Rozak, who's vice president 236 00:12:31,520 --> 00:12:35,200 Speaker 3: for finance at Alphabet's Google ed and he's made the 237 00:12:35,200 --> 00:12:39,880 Speaker 3: claim that, look, this was actually hyperbole, exaggeration, This was 238 00:12:39,920 --> 00:12:42,440 Speaker 3: all done for a course in communications. This is not true, 239 00:12:42,480 --> 00:12:44,520 Speaker 3: and I was not sending it to others. But still 240 00:12:44,880 --> 00:12:46,800 Speaker 3: this was a piece of evidence, and it's actually getting 241 00:12:46,960 --> 00:12:49,600 Speaker 3: very murky, a, isn't it as to what evidence should 242 00:12:49,600 --> 00:12:52,440 Speaker 3: be shown. Its arguments coming from both sides is what 243 00:12:52,440 --> 00:12:53,400 Speaker 3: should be made public. 244 00:12:54,200 --> 00:12:57,280 Speaker 4: So it's notes that Michael Rossak's made in a twenty 245 00:12:57,440 --> 00:13:03,040 Speaker 4: seventeen internal presentation only on communications. But his point was 246 00:13:03,640 --> 00:13:07,000 Speaker 4: that you can focus on the supply side, the advertisers, 247 00:13:07,400 --> 00:13:09,960 Speaker 4: not necessarily the end users, in much the same way 248 00:13:10,080 --> 00:13:12,440 Speaker 4: that if you're in the cigarettes industry, which was the 249 00:13:12,600 --> 00:13:15,720 Speaker 4: analogy that he made. You know, you're focus on the 250 00:13:15,800 --> 00:13:18,839 Speaker 4: selling the advertising, not the consequence to the end user. 251 00:13:19,160 --> 00:13:21,280 Speaker 4: That's the point he was trying to make. But it 252 00:13:21,600 --> 00:13:22,920 Speaker 4: a bit of a statement, isn't it. 253 00:13:23,080 --> 00:13:26,560 Speaker 3: Yeah, and perhaps as you're trying to claim an exaggerated. 254 00:13:25,880 --> 00:13:27,960 Speaker 6: One, exaggerated one. 255 00:13:28,000 --> 00:13:30,480 Speaker 4: Indeed. Okay, let's keep the conversation going on the anti 256 00:13:30,520 --> 00:13:34,320 Speaker 4: trust action against Google and bring in Adam Kavakovic, who's 257 00:13:34,360 --> 00:13:37,760 Speaker 4: the CEO and founder of the Chamber of Progress. Where 258 00:13:37,760 --> 00:13:42,880 Speaker 4: we're at the latest conversation is around the dominance of 259 00:13:43,000 --> 00:13:45,199 Speaker 4: search and you know it's important to point out this 260 00:13:45,280 --> 00:13:47,560 Speaker 4: is in the context of a trial brought by the government. 261 00:13:48,000 --> 00:13:51,760 Speaker 4: But what if you learned this week about how dominant 262 00:13:51,840 --> 00:13:53,640 Speaker 4: Google is in the search market. 263 00:13:55,160 --> 00:13:57,839 Speaker 8: Well, we're also only in week three of ten, and 264 00:13:57,840 --> 00:14:00,000 Speaker 8: it's hard to believe because we still have a work 265 00:14:00,160 --> 00:14:03,000 Speaker 8: trial ahead of us. I think this week was bookended 266 00:14:03,040 --> 00:14:07,320 Speaker 8: really by two main aspects of testimony. The first part 267 00:14:07,320 --> 00:14:09,800 Speaker 8: of the week was really about Apple. Eddiq from Apple 268 00:14:09,880 --> 00:14:13,080 Speaker 8: testified earlier in the week and the focus of his 269 00:14:13,160 --> 00:14:15,560 Speaker 8: testimony was that Apple has picked Google as at search 270 00:14:15,640 --> 00:14:19,280 Speaker 8: default because it thinks that Google's results are the best. 271 00:14:19,680 --> 00:14:21,640 Speaker 8: But even though at Google's deals with Apple have been 272 00:14:21,720 --> 00:14:23,800 Speaker 8: kind of the center of this case. There's another company 273 00:14:23,800 --> 00:14:26,360 Speaker 8: that kind of looms over this whole case, and that's Microsoft. 274 00:14:26,960 --> 00:14:30,480 Speaker 8: DOJ has argued that Being is Google's only real competitor 275 00:14:30,520 --> 00:14:33,280 Speaker 8: in general search, and that the reason it hasn't done 276 00:14:33,360 --> 00:14:36,920 Speaker 8: better is because of Google's search default deals, and Being 277 00:14:36,960 --> 00:14:40,240 Speaker 8: would probably be the biggest winner if the DOJ won 278 00:14:40,320 --> 00:14:44,040 Speaker 8: this case. Later in the week, we saw two separate 279 00:14:44,080 --> 00:14:48,280 Speaker 8: Microsoft executives testify the trial, and in their testimony it 280 00:14:48,320 --> 00:14:51,240 Speaker 8: kind of came out that Microsoft has underinvested in Being 281 00:14:51,280 --> 00:14:54,280 Speaker 8: compared to Google's investments, and they also acknowledged even the 282 00:14:54,400 --> 00:14:58,120 Speaker 8: Windows sets Being as the default search engine, most Windows 283 00:14:58,200 --> 00:15:01,200 Speaker 8: users actually quickly change their default search from Being to Google. 284 00:15:01,240 --> 00:15:04,320 Speaker 8: So that kind of undermined aspects of the government's argument 285 00:15:04,400 --> 00:15:07,360 Speaker 8: that search defaults are really sticky and hard to switch. 286 00:15:07,400 --> 00:15:10,320 Speaker 8: But the real main event is probably Sati and Adella 287 00:15:10,320 --> 00:15:14,040 Speaker 8: from Microsoft CEO. He'll be testifying next Monday, and but 288 00:15:14,080 --> 00:15:16,040 Speaker 8: as I said, this are seven more weeks of this trial. 289 00:15:16,080 --> 00:15:17,400 Speaker 8: That will be a moment to watch, but there'll be 290 00:15:17,400 --> 00:15:18,880 Speaker 8: a lot more moments. 291 00:15:18,560 --> 00:15:21,760 Speaker 3: And I think, well, we're all fascinated by how EDQ 292 00:15:21,880 --> 00:15:26,080 Speaker 3: would vindicate the billions that come towards Apple from this 293 00:15:26,240 --> 00:15:29,360 Speaker 3: focus on using Google's search. But what's so interesting was 294 00:15:29,400 --> 00:15:31,080 Speaker 3: come to light is that at one point back in 295 00:15:31,120 --> 00:15:34,160 Speaker 3: twenty twenty, well, Tim Kok and Sati and Adella were 296 00:15:34,200 --> 00:15:37,840 Speaker 3: in rooms talking about maybe even Apple buying thing that 297 00:15:37,960 --> 00:15:40,600 Speaker 3: of course didn't come to bear, in large part because 298 00:15:40,600 --> 00:15:42,200 Speaker 3: the argument was it's not as good a product. 299 00:15:42,280 --> 00:15:43,160 Speaker 5: But do you think. 300 00:15:42,960 --> 00:15:48,320 Speaker 3: That that really just shows the overall monopolistic environment in 301 00:15:48,360 --> 00:15:50,360 Speaker 3: which we are. Do you think that ultimately this is 302 00:15:50,480 --> 00:15:52,280 Speaker 3: better serving a consumer. 303 00:15:52,840 --> 00:15:55,400 Speaker 8: I don't know how that plays. That's important to say. 304 00:15:55,440 --> 00:15:57,800 Speaker 8: I think you know that came out through Bloomberg's reporting 305 00:15:57,880 --> 00:16:01,000 Speaker 8: non in court, but I don't know how that plays 306 00:16:01,040 --> 00:16:04,520 Speaker 8: because it's just uncertain. I think I don't know. It 307 00:16:04,600 --> 00:16:06,920 Speaker 8: seems somewhat peripheral to me to the heart of this question. 308 00:16:07,200 --> 00:16:09,680 Speaker 8: The heart of the trial is really how to Google 309 00:16:09,720 --> 00:16:14,240 Speaker 8: achieve its share in whether these search default deals were 310 00:16:14,320 --> 00:16:16,200 Speaker 8: the thing or whether it was their quality. And so 311 00:16:16,440 --> 00:16:18,440 Speaker 8: in a trial like this, there's sort of arguments and 312 00:16:18,880 --> 00:16:21,680 Speaker 8: things atmospherically that are kind of interesting and sallacious, but 313 00:16:21,680 --> 00:16:24,000 Speaker 8: I'm not sure have that much bearing on the core 314 00:16:24,080 --> 00:16:24,600 Speaker 8: of the case. 315 00:16:25,240 --> 00:16:27,960 Speaker 4: The other sort of big focus right now is the 316 00:16:28,000 --> 00:16:30,800 Speaker 4: FTC's action against Amazon. We knew it would come. It 317 00:16:30,840 --> 00:16:34,640 Speaker 4: did come Tuesday. By the way, out a chamber of progress. 318 00:16:34,720 --> 00:16:38,520 Speaker 4: You represent the technology industry, right, Your essentially industry grew, 319 00:16:38,600 --> 00:16:42,520 Speaker 4: so implants point out, But what is your assessment of 320 00:16:42,560 --> 00:16:46,840 Speaker 4: the FTC's likelihood of success in its action against Amazon. 321 00:16:47,480 --> 00:16:49,680 Speaker 8: Well, the interesting thing is this case probably won't see 322 00:16:49,720 --> 00:16:52,720 Speaker 8: a courtroom for two years at least, based on the 323 00:16:52,760 --> 00:16:55,680 Speaker 8: normal trajectory of these things. I think some of the 324 00:16:55,840 --> 00:16:58,960 Speaker 8: big dynamic I noticed about this case is it's really 325 00:16:59,120 --> 00:17:02,880 Speaker 8: motivated by the complaints of some sellers on Amazon. Sellers 326 00:17:02,880 --> 00:17:05,760 Speaker 8: are mentioned three hundred and sixty eight times in the 327 00:17:05,800 --> 00:17:10,000 Speaker 8: FTC's complaint, Consumers were only mentioned fifty one times. And 328 00:17:10,040 --> 00:17:13,200 Speaker 8: of course the FDC's argument is that Amazon's behavior towards 329 00:17:13,200 --> 00:17:16,479 Speaker 8: sellers has downstream impacts on consumers. But I think one 330 00:17:16,520 --> 00:17:18,400 Speaker 8: of the challenges they're going to face when they finally 331 00:17:18,480 --> 00:17:21,280 Speaker 8: do get to court is that Amazon has pro consumer 332 00:17:21,480 --> 00:17:25,879 Speaker 8: justifications for these behaviors. So good example, Amazon tells sellers 333 00:17:25,880 --> 00:17:28,120 Speaker 8: that if they want their products to have the Amazon 334 00:17:28,240 --> 00:17:31,720 Speaker 8: Prime label, they have to be shipped through Amazon's own warehouses, 335 00:17:31,760 --> 00:17:33,520 Speaker 8: And of course some sellers don't like that they don't 336 00:17:33,560 --> 00:17:37,080 Speaker 8: like the fees. But when Amazon experimented several years agone 337 00:17:37,200 --> 00:17:41,560 Speaker 8: giving sellers the freedom to ship prime products themselves, only 338 00:17:41,600 --> 00:17:44,760 Speaker 8: sixteen percent of the products made it to consumers in time. 339 00:17:45,200 --> 00:17:47,320 Speaker 8: So even though sellers might complain about a rule like 340 00:17:47,359 --> 00:17:50,159 Speaker 8: that and the FTC, does those rules protect consumers? And 341 00:17:50,200 --> 00:17:52,600 Speaker 8: so I think when this case finally gets to court, 342 00:17:52,800 --> 00:17:54,800 Speaker 8: you can bet that that's going to be a big 343 00:17:54,840 --> 00:17:57,240 Speaker 8: tension in the case the interest of sellers versus the 344 00:17:57,240 --> 00:17:58,400 Speaker 8: interest of the consumer. 345 00:17:58,920 --> 00:18:01,280 Speaker 3: Adams always great catching up with you, Thank you and 346 00:18:01,640 --> 00:18:05,400 Speaker 3: Kavakovic of the Chamber of Progress, wishing you a great weekend. Meanwhile, 347 00:18:05,400 --> 00:18:08,919 Speaker 3: coming up, well, we're not only discussing regulation here in 348 00:18:08,960 --> 00:18:10,720 Speaker 3: the US, but also let's go global as well. 349 00:18:10,800 --> 00:18:12,760 Speaker 5: US curbing China. 350 00:18:12,560 --> 00:18:15,080 Speaker 3: The chips there, but it hasn't actually stopped from developing, 351 00:18:15,119 --> 00:18:17,320 Speaker 3: surprising the advanced technology in that country. We'll bring you 352 00:18:17,320 --> 00:18:20,159 Speaker 3: the details from today's A big take. Yes, we're talking Huawei. 353 00:18:20,400 --> 00:18:47,560 Speaker 3: This has been big technology. 354 00:18:36,320 --> 00:18:36,480 Speaker 6: Now. 355 00:18:36,520 --> 00:18:39,640 Speaker 3: After years of geopolitical back and forth, the conflict between 356 00:18:39,760 --> 00:18:42,320 Speaker 3: US and China are over chips switching a crucial moment 357 00:18:42,359 --> 00:18:44,800 Speaker 3: and Huawei is one company at the center of things. 358 00:18:45,119 --> 00:18:47,679 Speaker 3: A surprise release of the Make sixty pro smartphone in 359 00:18:47,760 --> 00:18:49,800 Speaker 3: late August. Well, it was viewed kind of as a 360 00:18:49,840 --> 00:18:52,480 Speaker 3: statement to the United States, a statement that China may 361 00:18:52,520 --> 00:18:56,280 Speaker 3: still be able to capable to develop advanced technology despite 362 00:18:56,359 --> 00:18:59,040 Speaker 3: US restrictions. Is the focus of today's Big Take for 363 00:18:59,080 --> 00:19:00,680 Speaker 3: more on the broader tech which is between US and 364 00:19:00,760 --> 00:19:03,280 Speaker 3: China where police are welcome. Mark Montgomery is a retired 365 00:19:03,280 --> 00:19:06,159 Speaker 3: Rear Admiral and Senior director of the Central Cyber and 366 00:19:06,160 --> 00:19:11,399 Speaker 3: Technology Innovation And from your perspective, Mark, is China able 367 00:19:11,640 --> 00:19:13,440 Speaker 3: to bypass restrictions? 368 00:19:13,760 --> 00:19:16,240 Speaker 5: Do they even need to be using US technology? 369 00:19:16,320 --> 00:19:18,040 Speaker 3: Can they grow it at home now in a more 370 00:19:18,080 --> 00:19:19,160 Speaker 3: advanced manner than we thought? 371 00:19:20,440 --> 00:19:22,440 Speaker 9: Well, first, Carolyn, thanks for having me, And that's a 372 00:19:22,440 --> 00:19:25,880 Speaker 9: great question. I think it's probably a mix. First, we 373 00:19:25,960 --> 00:19:29,760 Speaker 9: do have to continue to uh, you know, put in 374 00:19:29,800 --> 00:19:36,360 Speaker 9: place export controls and other policy leavers to prevent the tech, 375 00:19:36,480 --> 00:19:40,320 Speaker 9: the transfer technology to China, really to prevent their military 376 00:19:40,320 --> 00:19:44,040 Speaker 9: from using dual use technology, to continue to build systems 377 00:19:44,040 --> 00:19:46,000 Speaker 9: at place US at risk, but also to create a 378 00:19:46,080 --> 00:19:50,280 Speaker 9: level playing field for our companies. And this phone definitely 379 00:19:50,320 --> 00:19:53,680 Speaker 9: shows that they can work their way around our export controls. 380 00:19:54,000 --> 00:19:57,400 Speaker 9: There's a few areas that really worry me. Risk five, 381 00:19:57,440 --> 00:20:01,359 Speaker 9: which is the open source chip design, is really getting 382 00:20:01,440 --> 00:20:02,040 Speaker 9: us in trouble. 383 00:20:03,720 --> 00:20:06,560 Speaker 4: Mark, I'm so glad you went there. Seven nanometer was 384 00:20:06,600 --> 00:20:08,520 Speaker 4: a surprise, right, and the chips found in the May 385 00:20:08,600 --> 00:20:12,439 Speaker 4: sixty pro Risk five the architecture, Why is that a 386 00:20:12,480 --> 00:20:15,320 Speaker 4: technological concern to you? You see it as a backdoor. 387 00:20:16,480 --> 00:20:19,240 Speaker 9: Absolutely, you described it perfectly. It is a backdoor to 388 00:20:19,400 --> 00:20:23,760 Speaker 9: allow the intellectual property work being done by engineers in 389 00:20:23,800 --> 00:20:27,000 Speaker 9: the United States to be easily exported into China. It 390 00:20:27,040 --> 00:20:30,919 Speaker 9: avoids the export controls that we put on very specific 391 00:20:31,520 --> 00:20:36,800 Speaker 9: company chip designs of certain sizes and the provision of 392 00:20:37,320 --> 00:20:42,359 Speaker 9: semiconductor manufacturing equipment for companies like AMSL and others. So 393 00:20:43,119 --> 00:20:47,200 Speaker 9: this is allowing that intellectual property get back into China. 394 00:20:47,359 --> 00:20:50,080 Speaker 9: And if you look at who's using the Risk five products, 395 00:20:50,160 --> 00:20:52,120 Speaker 9: it is broadly these Chinese companies. 396 00:20:53,320 --> 00:20:53,560 Speaker 6: Mark. 397 00:20:53,600 --> 00:20:56,960 Speaker 4: If the investigation finds breaches of sanctions, what is the remedy? 398 00:20:57,000 --> 00:20:58,760 Speaker 4: What can the US actually do about this? 399 00:21:00,040 --> 00:21:03,160 Speaker 9: What I think first, put the proper export control where 400 00:21:03,200 --> 00:21:06,199 Speaker 9: there was a gap, close the gap, and we definitely 401 00:21:06,200 --> 00:21:09,000 Speaker 9: have to get more agile. I mean, our export control 402 00:21:09,080 --> 00:21:13,679 Speaker 9: management are listing of companies who have made violations as 403 00:21:13,800 --> 00:21:19,200 Speaker 9: extremely pedestrian and not agile. We have to become more agile, 404 00:21:19,440 --> 00:21:21,760 Speaker 9: and we can't be playing whack a mole with a 405 00:21:21,840 --> 00:21:24,399 Speaker 9: thousand holes on the whack a mole grid, right. We 406 00:21:24,480 --> 00:21:28,199 Speaker 9: have to more aggressively determine what are those technologies we're 407 00:21:28,240 --> 00:21:32,040 Speaker 9: going to limit and pass broader export controls to get it. 408 00:21:32,080 --> 00:21:33,920 Speaker 6: I would tell you Risk five is a place i'd 409 00:21:33,920 --> 00:21:34,399 Speaker 6: go first. 410 00:21:35,200 --> 00:21:37,400 Speaker 5: Mark, great to have some expertise for you today. 411 00:21:37,440 --> 00:21:39,879 Speaker 3: Thank you, Mark Montgomery of the Center on Cyber and 412 00:21:39,920 --> 00:21:43,520 Speaker 3: Technology Innovation. From New York, from Washington, from San Francisco, 413 00:21:43,560 --> 00:21:46,840 Speaker 3: there's a Bluemberg Technology. 414 00:21:52,720 --> 00:21:54,880 Speaker 5: Welcome back to Bloemberg Technology. I'm Caninehid to New. 415 00:21:54,840 --> 00:21:57,680 Speaker 4: York and I'm ed Lovelow in San Francisco. Carra quit 416 00:21:57,800 --> 00:21:59,720 Speaker 4: check in on the markets. It is the last trading 417 00:21:59,720 --> 00:22:02,480 Speaker 4: session of September. Then as like one hundred on a 418 00:22:02,480 --> 00:22:05,040 Speaker 4: weekly basis, up six ten to one percent. We have 419 00:22:05,280 --> 00:22:08,639 Speaker 4: had till this point three straight weeks of declines at 420 00:22:08,640 --> 00:22:10,720 Speaker 4: the index level, and as we've discussed in the show, 421 00:22:11,119 --> 00:22:14,040 Speaker 4: there's this kind of recognition that whatever the Fed does 422 00:22:14,080 --> 00:22:16,639 Speaker 4: next in the moment, it's going to be a higher 423 00:22:16,680 --> 00:22:19,320 Speaker 4: for longer situation with rates, and I thought that Zero 424 00:22:19,359 --> 00:22:21,920 Speaker 4: Doors Money did a great job explaining how you position 425 00:22:22,000 --> 00:22:25,440 Speaker 4: yourself within the technology sector on that front. But September 426 00:22:25,480 --> 00:22:28,879 Speaker 4: itself has just been an interesting month, not just for 427 00:22:28,960 --> 00:22:31,480 Speaker 4: risk assets in the equity space, but bitcoin as well. 428 00:22:31,760 --> 00:22:35,440 Speaker 4: Bitcoin is holding around twenty seven thousand US dollars per token, 429 00:22:35,720 --> 00:22:37,320 Speaker 4: and you go back to the start of the month, 430 00:22:37,440 --> 00:22:40,640 Speaker 4: Basically over the last thirty days or so, we've traded 431 00:22:40,640 --> 00:22:43,199 Speaker 4: in this range between twenty six thousand US dollars per 432 00:22:43,240 --> 00:22:46,399 Speaker 4: token to just above twenty seven thousand US dollars per token. 433 00:22:46,680 --> 00:22:51,080 Speaker 4: The same factor is under consideration when it comes to Bitcoin, 434 00:22:51,119 --> 00:22:53,480 Speaker 4: our favorite risk asset as they are inequities. But it's 435 00:22:53,520 --> 00:22:56,280 Speaker 4: interesting to see a kind of less of a downward slide, 436 00:22:56,320 --> 00:22:58,760 Speaker 4: I suppose, like we've seen in some of the megacap 437 00:22:58,800 --> 00:23:02,840 Speaker 4: and higher evaluation x docs. Sticking with this space broadly, 438 00:23:02,920 --> 00:23:07,040 Speaker 4: liquidators to Three Arrows Capital said The hedge fund's co founder. 439 00:23:07,359 --> 00:23:12,240 Speaker 4: Suesu was apprehended in Singapore while trying to leave the country. 440 00:23:12,280 --> 00:23:14,960 Speaker 4: This afters you failed to comply with a court order 441 00:23:15,000 --> 00:23:19,240 Speaker 4: compelling him to cooperate with a liquidation investigation. Three aras 442 00:23:19,280 --> 00:23:23,199 Speaker 4: Capital's troubles started with the collapse of Lunar, you'll remember 443 00:23:23,200 --> 00:23:26,680 Speaker 4: and its algorithmic stable coin Ust about one year ago, 444 00:23:26,720 --> 00:23:29,160 Speaker 4: when the hedge fund failed to meet margin calls from 445 00:23:29,200 --> 00:23:32,880 Speaker 4: its lenders, which led to its fallout Caroline, and of. 446 00:23:32,840 --> 00:23:35,720 Speaker 3: Course that story continued to unravel. A few months later 447 00:23:35,840 --> 00:23:37,680 Speaker 3: it would be the turn of FTX, and of course 448 00:23:37,880 --> 00:23:40,520 Speaker 3: I'm about to get a heavy duty dose of reminding 449 00:23:40,520 --> 00:23:42,960 Speaker 3: ourselves of that time because sam Agmuan Fried is counting 450 00:23:43,000 --> 00:23:45,560 Speaker 3: to trial for what prosecutors alleged is one of the 451 00:23:45,600 --> 00:23:47,560 Speaker 3: biggest financial frauds in US history. 452 00:23:48,000 --> 00:23:50,480 Speaker 5: That's where in Bluembagcinia editor Macwagan to take. 453 00:23:50,359 --> 00:23:53,240 Speaker 3: The pulse of basically how it feels in the world 454 00:23:53,280 --> 00:23:55,760 Speaker 3: of digital assets right now, because you've been reading and 455 00:23:55,880 --> 00:23:59,639 Speaker 3: writing about one year on and it doesn't seem to upbeat. 456 00:24:00,880 --> 00:24:01,479 Speaker 2: Yeah, that's right. 457 00:24:01,520 --> 00:24:03,720 Speaker 10: And I think the headline in the story we had 458 00:24:03,760 --> 00:24:06,440 Speaker 10: out today sort of sums it up very nicely. It's 459 00:24:06,480 --> 00:24:10,879 Speaker 10: been miserable was a quote from Nico Cordiero, who's the 460 00:24:10,960 --> 00:24:16,000 Speaker 10: chief investment officer of a crypto hedge fund called strichs Lebiathan. 461 00:24:16,560 --> 00:24:20,400 Speaker 10: And there's a variety of reasons for that I think importantly, 462 00:24:20,440 --> 00:24:23,320 Speaker 10: on a personal level, a lot of people who work 463 00:24:23,400 --> 00:24:27,320 Speaker 10: in crypto now or did in the wake of FTX, 464 00:24:27,640 --> 00:24:30,360 Speaker 10: have just really been doing a lot of soul searching, 465 00:24:31,160 --> 00:24:34,399 Speaker 10: you know, their friends and family reaching out to them 466 00:24:34,560 --> 00:24:36,119 Speaker 10: asking them, why are you. 467 00:24:36,240 --> 00:24:37,040 Speaker 6: In this business? 468 00:24:37,240 --> 00:24:40,600 Speaker 10: You know, isn't this just a big scam. We talked 469 00:24:40,600 --> 00:24:45,280 Speaker 10: to one guy named Halal Diab. He started a basically 470 00:24:45,480 --> 00:24:50,159 Speaker 10: a analysis tool for the blockchain, and he said he 471 00:24:50,280 --> 00:24:54,600 Speaker 10: told my colleague Ana Arera that whenever the topic comes up, 472 00:24:55,040 --> 00:24:58,640 Speaker 10: even among his family, what he's doing with his career, 473 00:24:58,720 --> 00:25:02,560 Speaker 10: they just clunch up. There's just this suspicion and this 474 00:25:02,960 --> 00:25:06,080 Speaker 10: skepticism towards this asse class that has just gotten worse 475 00:25:06,119 --> 00:25:08,359 Speaker 10: and worse since FTX blew up. 476 00:25:08,800 --> 00:25:11,280 Speaker 6: And that's just sort of the personal human level, Carolyn. 477 00:25:11,320 --> 00:25:14,120 Speaker 10: You know, if you look at the numbers, the capital 478 00:25:14,240 --> 00:25:18,000 Speaker 10: coming into the market has really dried up. Venture capital 479 00:25:18,200 --> 00:25:21,840 Speaker 10: investments in the crypto space or at about seven billion 480 00:25:21,960 --> 00:25:24,000 Speaker 10: dollars a year to date according to Pitchbook. 481 00:25:24,480 --> 00:25:27,680 Speaker 11: In the heyday of twenty twenty one and twenty twenty two, 482 00:25:28,080 --> 00:25:30,960 Speaker 11: those full year values were about thirty billions. So that 483 00:25:31,119 --> 00:25:34,320 Speaker 11: you know that spicet of money from BC has dried up. 484 00:25:34,760 --> 00:25:38,040 Speaker 11: The money coming in for retail investors has also dried up. 485 00:25:38,080 --> 00:25:42,160 Speaker 10: So really the opportunity sets more than just the human element, 486 00:25:42,200 --> 00:25:47,080 Speaker 10: the opportunity sets for investors and traders in crypto have 487 00:25:47,280 --> 00:25:51,000 Speaker 10: really been decimated in this year since FTX blew up 488 00:25:51,200 --> 00:25:52,240 Speaker 10: and went bankrupt. 489 00:25:53,920 --> 00:25:54,560 Speaker 6: FA Vaccine. 490 00:25:54,680 --> 00:25:57,840 Speaker 4: Edit to Mike Reagan with just really must read peace 491 00:25:57,920 --> 00:25:59,880 Speaker 4: out on the Bloomberg and on dot com today. 492 00:26:00,000 --> 00:26:00,760 Speaker 6: Thank you very much. 493 00:26:00,960 --> 00:26:04,040 Speaker 4: Let's keep a conversation going now with Ayakontorovich, co CEO 494 00:26:04,160 --> 00:26:08,280 Speaker 4: and co founder of Fractal, an infrastructure provider enabling institutions 495 00:26:08,359 --> 00:26:12,240 Speaker 4: to clear, settle, and margin digital assets on chain, and Aya, 496 00:26:12,359 --> 00:26:14,440 Speaker 4: you heard what Mike had to say. He actually made 497 00:26:14,440 --> 00:26:17,400 Speaker 4: the point in the story that, yeah, bitcoin is an example. 498 00:26:17,440 --> 00:26:20,399 Speaker 4: What sixty percent year to day around twenty seven thousand 499 00:26:20,480 --> 00:26:24,679 Speaker 4: US dollars partoken, nowhere near sixty nine thousand US sol 500 00:26:24,720 --> 00:26:27,040 Speaker 4: has partoken. This idea that a lot of these digital 501 00:26:27,119 --> 00:26:31,360 Speaker 4: currencies will be in place of or alongside traditional currency 502 00:26:31,760 --> 00:26:35,200 Speaker 4: hasn't quite happened. Based on everything you just heard, what 503 00:26:35,320 --> 00:26:36,879 Speaker 4: do you think I. 504 00:26:36,880 --> 00:26:41,119 Speaker 12: Think it's important to really separate the difference between the 505 00:26:41,240 --> 00:26:46,160 Speaker 12: appreciation and depreciation of these currencies and the actual underlying 506 00:26:46,240 --> 00:26:49,639 Speaker 12: technology that's being built here that for example, we're working on, 507 00:26:49,800 --> 00:26:53,000 Speaker 12: but also a number of players, especially after what happened 508 00:26:53,320 --> 00:26:56,600 Speaker 12: with FTX in November, and I think it really emphasized 509 00:26:56,640 --> 00:27:00,760 Speaker 12: the need for transparency, better capital efficient and see collateral 510 00:27:00,840 --> 00:27:05,440 Speaker 12: management and operational overhead that the blockchain technology just naturally 511 00:27:05,920 --> 00:27:08,119 Speaker 12: is a better fit for. And I think that that 512 00:27:08,400 --> 00:27:12,000 Speaker 12: has really shown clear in the adoption of some of 513 00:27:12,119 --> 00:27:13,800 Speaker 12: those infrastructure providers. 514 00:27:13,840 --> 00:27:16,560 Speaker 13: Even if you look at going back to price. 515 00:27:16,359 --> 00:27:18,960 Speaker 12: Action, if you look at for example, maker Doo with 516 00:27:19,080 --> 00:27:21,640 Speaker 12: a maker token appreciating forty five percent in the last 517 00:27:21,680 --> 00:27:25,120 Speaker 12: thirty days relative to them being able to successfully bring 518 00:27:25,280 --> 00:27:30,600 Speaker 12: on tokenized treasuries on chain for die holders to get 519 00:27:30,680 --> 00:27:34,160 Speaker 12: access to. You've seen other forms of technology just being 520 00:27:34,320 --> 00:27:38,800 Speaker 12: better for different forms of settlement, whether it's between bonds, FX, 521 00:27:39,000 --> 00:27:43,200 Speaker 12: repo markets. Circle just announced that they are publishing or 522 00:27:43,880 --> 00:27:48,640 Speaker 12: pushing out a credit protocol which will basically have repos 523 00:27:48,720 --> 00:27:51,400 Speaker 12: on chain, and so I think that technology it takes 524 00:27:51,560 --> 00:27:54,960 Speaker 12: time for you to build these things long term, but 525 00:27:55,080 --> 00:27:56,520 Speaker 12: it's there and it's there to stay. 526 00:27:56,880 --> 00:27:58,800 Speaker 13: There's no doubt we're in a bear market, but we're 527 00:27:58,840 --> 00:27:59,520 Speaker 13: not going anywhere. 528 00:28:00,119 --> 00:28:03,400 Speaker 5: Do you think is institutional money still interested. 529 00:28:03,680 --> 00:28:06,240 Speaker 3: I mean, we had the anecdotal evidence of some people 530 00:28:06,320 --> 00:28:09,560 Speaker 3: getting frustrated around the dinner table, but that doesn't speak 531 00:28:09,560 --> 00:28:11,639 Speaker 3: to the fact that outside of their dinner table they 532 00:28:11,720 --> 00:28:13,720 Speaker 3: might still be able to be striking deals with really 533 00:28:13,760 --> 00:28:16,400 Speaker 3: big players from names that we have brumbergno, Morol. 534 00:28:17,320 --> 00:28:17,840 Speaker 5: Absolutely. 535 00:28:18,000 --> 00:28:20,119 Speaker 12: I think it's fair to say that all of the 536 00:28:20,280 --> 00:28:23,399 Speaker 12: large banks, both in the United States and globally have 537 00:28:23,600 --> 00:28:26,720 Speaker 12: a digital asset strategy right now, and they're all focusing 538 00:28:26,920 --> 00:28:30,040 Speaker 12: on the underlying technology and how it helps with operational 539 00:28:30,119 --> 00:28:33,560 Speaker 12: overhead for these banks, who have you know, teams of 540 00:28:33,640 --> 00:28:37,000 Speaker 12: a thousand plus people working on these specific issues where 541 00:28:37,000 --> 00:28:39,920 Speaker 12: it's not capital efficient and it's very expensive, and I 542 00:28:40,000 --> 00:28:44,560 Speaker 12: think specific to you know, these institutional investors, they're staying 543 00:28:44,720 --> 00:28:47,080 Speaker 12: in the space. The numbers have decreased in terms of 544 00:28:47,200 --> 00:28:50,400 Speaker 12: new allocation into the space, but that doesn't discredit all 545 00:28:50,440 --> 00:28:52,880 Speaker 12: of the money that has already been placed in the 546 00:28:53,040 --> 00:28:55,280 Speaker 12: industry and all of the work that's being done to 547 00:28:55,360 --> 00:28:56,760 Speaker 12: build these new technologies. 548 00:28:56,960 --> 00:28:59,640 Speaker 3: You just use the word discredit, and I think that 549 00:28:59,840 --> 00:29:03,560 Speaker 3: was I really gut punched to everyone, was that Sam 550 00:29:03,640 --> 00:29:08,800 Speaker 3: mag Munfrey discredited an ecosystem that people were already trying 551 00:29:08,840 --> 00:29:11,040 Speaker 3: to find the comfort levels with. Do you think in 552 00:29:11,080 --> 00:29:13,040 Speaker 3: a way that Traum next week will help clear that 553 00:29:13,400 --> 00:29:15,680 Speaker 3: air and makes outlet look he was doing what you 554 00:29:15,720 --> 00:29:17,240 Speaker 3: could do in any industry, or do you think it 555 00:29:17,280 --> 00:29:20,320 Speaker 3: will re engulf the whole crypto world and the worry 556 00:29:20,400 --> 00:29:24,120 Speaker 3: that SEC governor SEC chair Garagensta has. 557 00:29:25,000 --> 00:29:26,120 Speaker 5: I think a little bit of both. 558 00:29:26,520 --> 00:29:28,680 Speaker 12: I think the industry is very ready to close this 559 00:29:28,840 --> 00:29:31,960 Speaker 12: chapter move on, and I think that we are going 560 00:29:32,040 --> 00:29:34,280 Speaker 12: to revisit a lot of the pain and trauma that 561 00:29:34,440 --> 00:29:36,160 Speaker 12: a lot of these funds and many players in the 562 00:29:36,240 --> 00:29:38,520 Speaker 12: space had to deal with in November of last year 563 00:29:38,560 --> 00:29:40,880 Speaker 12: that led into you know, almost a year from now. 564 00:29:41,520 --> 00:29:43,320 Speaker 13: That said, and you'll see headlines on it. 565 00:29:43,400 --> 00:29:46,440 Speaker 12: I'm sure Gary Gensler will reference it in an addition 566 00:29:46,560 --> 00:29:49,800 Speaker 12: to push and delay the Bitcoin ETF. That said, there 567 00:29:49,840 --> 00:29:54,640 Speaker 12: are still rumors that the Ethereum ETF may get published 568 00:29:54,800 --> 00:29:57,480 Speaker 12: in as soon as October, so next week, and so 569 00:29:57,720 --> 00:29:58,800 Speaker 12: that I think there's. 570 00:29:58,720 --> 00:30:02,280 Speaker 13: Good news in the bad news. And again, SBF is 571 00:30:02,440 --> 00:30:04,240 Speaker 13: just a person. He's a human being. 572 00:30:04,840 --> 00:30:07,320 Speaker 12: That doesn't again to your point, it shouldn't discredit the 573 00:30:07,440 --> 00:30:10,400 Speaker 12: underlying technology and if anything, it should emphasize that we 574 00:30:10,440 --> 00:30:13,600 Speaker 12: should put more trust into the technology versus the people 575 00:30:13,680 --> 00:30:14,240 Speaker 12: managing them. 576 00:30:16,080 --> 00:30:18,600 Speaker 4: A number of industry leaders and participants have been on 577 00:30:18,680 --> 00:30:21,600 Speaker 4: the program with US basically outlining what they see as 578 00:30:21,640 --> 00:30:26,360 Speaker 4: a US administration and federal government that is not supportive 579 00:30:26,480 --> 00:30:30,080 Speaker 4: of the industry broadly, so they're being pushed offshore. Do 580 00:30:30,200 --> 00:30:32,760 Speaker 4: you recognize that as a trend or a theme. 581 00:30:34,560 --> 00:30:36,960 Speaker 12: I think there is no doubt about the fact that 582 00:30:37,160 --> 00:30:41,040 Speaker 12: currently if you go to geographies like Singapore, Hong Kong, 583 00:30:42,040 --> 00:30:45,520 Speaker 12: and Southeast Asia, the risk aversion is much higher and 584 00:30:45,560 --> 00:30:48,840 Speaker 12: there's higher appetite for crypto, especially with there being clear 585 00:30:49,000 --> 00:30:53,160 Speaker 12: regulatory standards for how to operate a business in these jurisdictions. 586 00:30:53,760 --> 00:30:57,160 Speaker 12: That said, again referencing this ethereum ETF, if we do 587 00:30:57,320 --> 00:30:59,320 Speaker 12: get guidelines for that in the next month, I think 588 00:30:59,360 --> 00:31:02,720 Speaker 12: that will really change the tone of the conversations that 589 00:31:02,760 --> 00:31:05,120 Speaker 12: are happening in the United States. And you're starting to 590 00:31:05,160 --> 00:31:09,000 Speaker 12: see that already with just markets overall. Implied volatility and 591 00:31:09,040 --> 00:31:12,480 Speaker 12: ethereum is up this week with institutions trading around that 592 00:31:12,560 --> 00:31:16,040 Speaker 12: potential rumor of the ETF approval, and you're seeing that 593 00:31:16,200 --> 00:31:19,280 Speaker 12: this week was actually a very big call option by 594 00:31:19,840 --> 00:31:22,480 Speaker 12: for institutional investors, and so that's really exciting as we 595 00:31:22,560 --> 00:31:23,520 Speaker 12: look into Q four. 596 00:31:25,240 --> 00:31:28,600 Speaker 4: Let's end on a positive notes Friday, it does seem 597 00:31:28,720 --> 00:31:32,920 Speaker 4: now to be potential for a lot to be approved, 598 00:31:33,000 --> 00:31:35,640 Speaker 4: a lot to happen. The question that the market keeps 599 00:31:35,680 --> 00:31:38,560 Speaker 4: asking is to regulates approve all of these proposed products 600 00:31:38,560 --> 00:31:41,040 Speaker 4: all at once so that they have a fair footing, 601 00:31:41,480 --> 00:31:43,080 Speaker 4: or do they stagger them? And I wondered if you 602 00:31:43,120 --> 00:31:43,960 Speaker 4: had an opinion on that. 603 00:31:46,520 --> 00:31:48,640 Speaker 12: From my perspective, it has to be all at once. 604 00:31:48,720 --> 00:31:51,960 Speaker 12: You really shouldn't be favoring different products in the market, 605 00:31:52,040 --> 00:31:54,560 Speaker 12: and I think that's probably one of the reasons that 606 00:31:54,680 --> 00:31:58,280 Speaker 12: you're waiting to get all of these approvals in whether 607 00:31:58,360 --> 00:32:01,040 Speaker 12: they choose to stagger or approve them. Either way will 608 00:32:01,080 --> 00:32:03,760 Speaker 12: be really good reflection for the market at large and 609 00:32:03,960 --> 00:32:07,200 Speaker 12: will mean that institutions at you know, who are comfortable 610 00:32:07,240 --> 00:32:10,000 Speaker 12: trading through their Carno parties, whether it's banks or asset managers, 611 00:32:10,320 --> 00:32:13,400 Speaker 12: will finally be able to access this underlying as a class, 612 00:32:13,680 --> 00:32:17,400 Speaker 12: which is how outperformed the market year to date. 613 00:32:18,040 --> 00:32:20,120 Speaker 5: Hi Cantanovich, great to have you here with us. 614 00:32:20,200 --> 00:32:22,440 Speaker 3: Thank you from Fractal Fanwhile, coming up more than the 615 00:32:22,440 --> 00:32:25,960 Speaker 3: potential US government shutdown and another industry it could be impacting. 616 00:32:26,200 --> 00:32:29,719 Speaker 5: But talk about defense tech next. More on that from 617 00:32:29,760 --> 00:32:31,120 Speaker 5: Blue Big Technology. 618 00:32:49,200 --> 00:32:51,840 Speaker 4: Time for Talking Tech and first Up. Nvidia may be 619 00:32:52,000 --> 00:32:55,240 Speaker 4: the target of an antitrust inquiry in France. The Wall 620 00:32:55,280 --> 00:32:59,200 Speaker 4: Street Journal reports that French enforces raided offices of a 621 00:32:59,320 --> 00:33:03,680 Speaker 4: business suspected of engaging in quote, anti competitive practices in 622 00:33:03,760 --> 00:33:06,280 Speaker 4: the graphics cards sector. It's important to note that the 623 00:33:06,360 --> 00:33:09,600 Speaker 4: agency did not name in Vidia in its statement. The 624 00:33:09,680 --> 00:33:12,440 Speaker 4: move follows a doom report published by the agency on 625 00:33:12,560 --> 00:33:16,960 Speaker 4: competition in the cloud computing market. And VideA also declined 626 00:33:17,000 --> 00:33:19,800 Speaker 4: to comment. And the US Commerce Department is setting aside 627 00:33:19,880 --> 00:33:23,880 Speaker 4: five hundred million dollars in government grants for smaller chip suppliers. 628 00:33:23,920 --> 00:33:26,440 Speaker 4: The funding is open to projects that cost less than 629 00:33:26,480 --> 00:33:30,400 Speaker 4: three hundred million dollars. The application process is also designed 630 00:33:30,600 --> 00:33:32,960 Speaker 4: to be less burdensome for some of those companies. It's 631 00:33:33,000 --> 00:33:37,120 Speaker 4: part of an effort to beef up domestic semiconductor production. Plus, 632 00:33:37,200 --> 00:33:40,840 Speaker 4: the United Auto's Workers' Union aren't the only union coming 633 00:33:40,920 --> 00:33:46,960 Speaker 4: to blows over labor. Construction workers responsible for building TSMC's Phoenix, 634 00:33:47,000 --> 00:33:51,480 Speaker 4: Arizona plant are also seeking project labor agreement. The contracts 635 00:33:51,480 --> 00:33:54,520 Speaker 4: would provide clarity over how the parties would address safety, 636 00:33:54,800 --> 00:33:57,800 Speaker 4: training and other issues as they arise before starting work 637 00:33:57,840 --> 00:34:01,680 Speaker 4: on TSMC's second site. In response, once TSMC says they 638 00:34:01,800 --> 00:34:04,360 Speaker 4: keep an open channel of communication with all our construction 639 00:34:04,480 --> 00:34:08,400 Speaker 4: partners and that also includes the unions Caroline well. 640 00:34:08,320 --> 00:34:11,359 Speaker 3: Aside from union focus, let's get back to the US 641 00:34:11,440 --> 00:34:14,879 Speaker 3: government more broadly, fast approaching yet another shut down. Unless 642 00:34:15,000 --> 00:34:17,840 Speaker 3: Congress enacts a temporary spending bill before the new fiscal 643 00:34:17,880 --> 00:34:21,279 Speaker 3: year starts on well October first, this weekend shutdown could 644 00:34:21,360 --> 00:34:24,560 Speaker 3: hold many facets of the US ecosystem, from services possessing 645 00:34:24,920 --> 00:34:28,520 Speaker 3: your passports, your visas, overside of financial swap markets, economic 646 00:34:28,600 --> 00:34:33,000 Speaker 3: reports from the Labor Department, some IRS services, and potentially 647 00:34:33,000 --> 00:34:36,040 Speaker 3: it could also impact the sector of defense technology. As 648 00:34:36,080 --> 00:34:38,040 Speaker 3: why we're going to focus for a moment, please to 649 00:34:38,040 --> 00:34:40,279 Speaker 3: welcome to the show, Jane Lee, Chief Government Affairs Officer, 650 00:34:40,280 --> 00:34:42,840 Speaker 3: a rebellion defense and also a former senior advisor to 651 00:34:42,960 --> 00:34:46,520 Speaker 3: Senate Majority leader on budget, on economic policy, on these 652 00:34:46,760 --> 00:34:49,799 Speaker 3: very matters, and therefore, Jane, and can you just steer 653 00:34:49,920 --> 00:34:51,840 Speaker 3: us a little bit as to how this could, in 654 00:34:51,960 --> 00:34:55,520 Speaker 3: your mind's eye affect innovation and indeed defense. 655 00:34:56,520 --> 00:35:00,959 Speaker 14: Absolutely defense has become more about code than combat these days. 656 00:35:01,520 --> 00:35:05,280 Speaker 14: And we actually at Rebellion Defense, we're a founding member 657 00:35:05,360 --> 00:35:09,200 Speaker 14: of the Software and Defense Coalition, a group of forty 658 00:35:09,320 --> 00:35:12,320 Speaker 14: CEOs and tech founders that are trying to push for 659 00:35:12,440 --> 00:35:15,920 Speaker 14: faster adoption of emerging technology and bring the best tools 660 00:35:15,960 --> 00:35:18,800 Speaker 14: and technology to the warfighter. This isn't about taking the 661 00:35:19,040 --> 00:35:22,320 Speaker 14: operator out of the equation, but enabling their ability to 662 00:35:22,440 --> 00:35:25,120 Speaker 14: do their mission better or faster and enable the technology. 663 00:35:26,000 --> 00:35:27,680 Speaker 2: You know who's not shutting down the doors. 664 00:35:27,719 --> 00:35:31,880 Speaker 14: It's China, and they're investing so much money into AI, 665 00:35:32,200 --> 00:35:38,399 Speaker 14: into technology, into enabling the platform performance. And so it's 666 00:35:38,640 --> 00:35:41,360 Speaker 14: really important and sucumbent upon us to make sure that 667 00:35:41,440 --> 00:35:42,560 Speaker 14: our government remains open. 668 00:35:44,120 --> 00:35:46,160 Speaker 4: Jane, I want to bring you the stat of the day, 669 00:35:46,520 --> 00:35:48,600 Speaker 4: but it shout out to Bloomberg Scarlet Foo, who's been 670 00:35:48,600 --> 00:35:53,319 Speaker 4: writing about this. The US government is currently spending more 671 00:35:53,440 --> 00:35:56,040 Speaker 4: to pay its interest on the thirty three trillion dollars 672 00:35:56,040 --> 00:35:59,160 Speaker 4: in national debt than it does on national defense. That 673 00:35:59,280 --> 00:36:03,080 Speaker 4: according to the the US Treasury's latest monthly statement. What's 674 00:36:03,160 --> 00:36:04,400 Speaker 4: the lesson we take from that? 675 00:36:06,400 --> 00:36:09,840 Speaker 14: Ultimately, there does need to be structural reforms moving forward, 676 00:36:10,280 --> 00:36:13,440 Speaker 14: But in the near term it's about keeping our doors 677 00:36:13,920 --> 00:36:18,960 Speaker 14: open again. Our foreign adversaries are not going to be 678 00:36:19,120 --> 00:36:23,440 Speaker 14: resting and in terms of stopping their investments while our 679 00:36:23,520 --> 00:36:27,440 Speaker 14: government waits and deliberates on funding the federal government. And 680 00:36:27,560 --> 00:36:29,719 Speaker 14: so again we need to join together in terms of 681 00:36:29,719 --> 00:36:32,680 Speaker 14: this short term deadline here to allow for an opportunity 682 00:36:32,760 --> 00:36:35,920 Speaker 14: to move forward, find consensus, and again keep our dwarves 683 00:36:35,960 --> 00:36:37,160 Speaker 14: and agencies operating. 684 00:36:38,000 --> 00:36:39,880 Speaker 3: If that was a temporary shutdown, can you just go 685 00:36:40,040 --> 00:36:44,880 Speaker 3: into intricacies of how this affects companies small and large, 686 00:36:45,000 --> 00:36:47,320 Speaker 3: what happens, what's put on ice, how does it actually 687 00:36:47,680 --> 00:36:48,480 Speaker 3: really hurt them? 688 00:36:51,320 --> 00:36:56,480 Speaker 14: Sure, in terms of small businesses, I'm concerned that actually 689 00:36:56,920 --> 00:37:00,399 Speaker 14: the defense industrial base isn't prepared for shutdown. The last 690 00:37:00,440 --> 00:37:03,600 Speaker 14: shutdown where Defense Department was materially impacted in terms of 691 00:37:03,600 --> 00:37:05,960 Speaker 14: their operations was actually a decade ago. 692 00:37:05,880 --> 00:37:06,720 Speaker 2: In twenty thirteen. 693 00:37:07,160 --> 00:37:09,800 Speaker 14: In twenty eighteen, the shutdown only lasted for a weekend. 694 00:37:10,120 --> 00:37:13,400 Speaker 14: In twenty nineteen, the shutdown was the longest shutdown in 695 00:37:13,480 --> 00:37:15,120 Speaker 14: US history, But DoD. 696 00:37:15,040 --> 00:37:17,280 Speaker 2: Actually already had enacted appropriations. 697 00:37:17,600 --> 00:37:20,759 Speaker 14: So if the shutdown is lengthy, ultimately there's going to 698 00:37:20,760 --> 00:37:24,120 Speaker 14: be a major squeeze on small businesses. Back in twenty thirteen, 699 00:37:24,160 --> 00:37:29,080 Speaker 14: the last major SHUTDOWNJO and congressional reports looked at the 700 00:37:29,160 --> 00:37:32,279 Speaker 14: impacts of small business operators that had federal contract with 701 00:37:32,360 --> 00:37:36,520 Speaker 14: the federal government, and there's a material impact on their pocketbooks, 702 00:37:36,640 --> 00:37:39,800 Speaker 14: their cash flow, and their ability to do operations. You 703 00:37:39,880 --> 00:37:43,080 Speaker 14: had to furlough employees. Ultimately, there was a decline in 704 00:37:43,160 --> 00:37:46,720 Speaker 14: small business contracts by a third. Spending on small business 705 00:37:46,760 --> 00:37:49,480 Speaker 14: engagements by DoD actually dropped by forty percent. 706 00:37:49,800 --> 00:37:52,440 Speaker 2: So there is material impact here for shutting our doors. 707 00:37:53,719 --> 00:37:56,560 Speaker 4: Jane, I'm sorry to jump around here. I'm just fascinated 708 00:37:56,640 --> 00:37:58,880 Speaker 4: by your background, your cv A case. You've been in 709 00:37:59,000 --> 00:38:03,359 Speaker 4: economic affairs policy on the government side. Now you're thinking 710 00:38:03,400 --> 00:38:07,040 Speaker 4: about defense and technology, and Caroline and I always talk 711 00:38:07,120 --> 00:38:10,560 Speaker 4: about the artificial intelligence in terms of the moral debate. 712 00:38:11,400 --> 00:38:14,080 Speaker 4: The industry is worried that the AI gets used for 713 00:38:14,239 --> 00:38:17,600 Speaker 4: defense or in the defense use case. But you're also 714 00:38:17,760 --> 00:38:21,239 Speaker 4: saying that China is spending in this area, so the 715 00:38:21,400 --> 00:38:26,080 Speaker 4: US should too. How do we balance that moral conundrum out. 716 00:38:28,200 --> 00:38:30,920 Speaker 14: Again, in terms of the pacing challenge of China, they've 717 00:38:30,960 --> 00:38:33,640 Speaker 14: made it very clear that in terms of emerging technology 718 00:38:34,160 --> 00:38:38,960 Speaker 14: for AI, for cloud computing, for hypersonics, for Director of Energy. 719 00:38:39,239 --> 00:38:42,040 Speaker 14: They want to be dominated by twenty thirty, and they 720 00:38:42,080 --> 00:38:47,040 Speaker 14: have again amassed their investments. They're all of their resource 721 00:38:47,120 --> 00:38:51,520 Speaker 14: to that particular goal and so trusted safe AI, for example, 722 00:38:51,560 --> 00:38:54,759 Speaker 14: the debate that's happening right now is absolutely important. We 723 00:38:54,880 --> 00:38:57,160 Speaker 14: have to make sure again that we're focusing in the 724 00:38:57,239 --> 00:39:00,879 Speaker 14: near term here about agency operations. This is about keeping 725 00:39:00,920 --> 00:39:03,719 Speaker 14: our doors open just to do business and keep our 726 00:39:03,760 --> 00:39:06,120 Speaker 14: investments skilling, because there will be material impact. 727 00:39:06,160 --> 00:39:08,960 Speaker 2: It slows down the capabilities to the warfighter. 728 00:39:09,080 --> 00:39:12,360 Speaker 14: There is again outcomes here that I think are unintended 729 00:39:12,400 --> 00:39:13,640 Speaker 14: consequences of a shutdown. 730 00:39:14,080 --> 00:39:17,120 Speaker 4: Jane Lee, Chief Government Affairs Officer, a rebellion defense. 731 00:39:17,200 --> 00:39:18,280 Speaker 6: Great to have you on the program. 732 00:39:18,440 --> 00:39:22,160 Speaker 4: These are difficult considerations and conversations that we're having. 733 00:39:29,719 --> 00:39:32,719 Speaker 3: New York Fed President John Williams making statements at the moment, 734 00:39:32,840 --> 00:39:35,320 Speaker 3: and the market not liking all of it, in particular 735 00:39:35,640 --> 00:39:38,360 Speaker 3: the fact that he expects a need for restrictive policy 736 00:39:38,719 --> 00:39:41,760 Speaker 3: for some time. Basically interest rates to remain high for longer. 737 00:39:41,800 --> 00:39:44,160 Speaker 3: We're looking at an SMP that has eroded all of 738 00:39:44,239 --> 00:39:46,480 Speaker 3: its gains for the day at the moment. Ends so 739 00:39:46,640 --> 00:39:48,520 Speaker 3: some risk aversion, even though he also goes on to 740 00:39:48,600 --> 00:39:50,600 Speaker 3: say that the FED is at or near peak level 741 00:39:50,960 --> 00:39:54,719 Speaker 3: of interest rates, but valuations they're still hot in some areas. 742 00:39:54,440 --> 00:39:54,920 Speaker 5: Of the market. 743 00:39:55,800 --> 00:39:58,759 Speaker 4: Yeah, that's putting it lightly. Indeed, the race for AI 744 00:39:58,920 --> 00:40:01,920 Speaker 4: chatbots is pretty hot right now. Character Ai is a 745 00:40:01,960 --> 00:40:05,840 Speaker 4: startup offering chatbots that can impersonate virtually anyone or anything, 746 00:40:06,200 --> 00:40:08,800 Speaker 4: and it's in early talks to raise new funding that 747 00:40:08,920 --> 00:40:11,520 Speaker 4: could value it at more than five billion dollars. That's 748 00:40:11,520 --> 00:40:13,919 Speaker 4: according to Bloomberg sources. I want to bring Bloomberg's Rachel 749 00:40:14,000 --> 00:40:16,959 Speaker 4: mets In, who leads our coverage of AI, and Rachel, 750 00:40:17,040 --> 00:40:18,920 Speaker 4: this is one I reported out with the team. Right 751 00:40:19,520 --> 00:40:23,480 Speaker 4: it's surprising because of where character ai is a company 752 00:40:23,880 --> 00:40:27,080 Speaker 4: and also in development of this technology. Is what is 753 00:40:27,239 --> 00:40:29,920 Speaker 4: character Ai? Does it make any money? Is it valued 754 00:40:29,920 --> 00:40:30,920 Speaker 4: at five billion dollars? 755 00:40:32,520 --> 00:40:35,239 Speaker 1: Well, let's save the valuation for a last but we 756 00:40:35,320 --> 00:40:36,960 Speaker 1: can start with what it is and what it does. 757 00:40:37,680 --> 00:40:41,120 Speaker 1: Character is a really interesting company. The people behind it 758 00:40:41,280 --> 00:40:43,280 Speaker 1: used to work at Google and they did some pioneering 759 00:40:43,360 --> 00:40:47,240 Speaker 1: work in AI there, and they built a large language model, 760 00:40:47,320 --> 00:40:50,200 Speaker 1: so a model that you can feed text too, like 761 00:40:50,280 --> 00:40:53,680 Speaker 1: a text prompt, and it will generate text in response. 762 00:40:54,520 --> 00:40:57,080 Speaker 1: What they built is a large language model that it's 763 00:40:57,239 --> 00:41:02,000 Speaker 1: users character. AI users can then customize in basically infinite ways. 764 00:41:02,040 --> 00:41:04,640 Speaker 1: They can give it some more dialogue, to refer to, 765 00:41:04,840 --> 00:41:08,400 Speaker 1: give it some details, and then you'll see if you 766 00:41:08,480 --> 00:41:11,960 Speaker 1: go on their website, they have all these different chatbots that. 767 00:41:11,960 --> 00:41:12,600 Speaker 13: People have made. 768 00:41:12,640 --> 00:41:14,879 Speaker 1: Some of the most popular ones are referring to video 769 00:41:14,960 --> 00:41:17,440 Speaker 1: game characters, so then you can other people can interact 770 00:41:17,520 --> 00:41:17,799 Speaker 1: with them. 771 00:41:18,080 --> 00:41:19,120 Speaker 2: It's pretty interesting. 772 00:41:19,200 --> 00:41:23,160 Speaker 1: There's Mario and other ones, and I mean I was 773 00:41:23,560 --> 00:41:25,800 Speaker 1: messing around with one that claimed to be a gassy 774 00:41:25,960 --> 00:41:27,239 Speaker 1: Unicorn at one point. 775 00:41:27,360 --> 00:41:28,000 Speaker 2: That was pretty fun. 776 00:41:28,400 --> 00:41:29,640 Speaker 5: Pretty sure your kids would have loved that. 777 00:41:30,360 --> 00:41:34,279 Speaker 3: Why then raise money and where is the revenue opportunity? 778 00:41:35,920 --> 00:41:38,160 Speaker 1: Okay, that is a really good question, or two really 779 00:41:38,200 --> 00:41:41,440 Speaker 1: good questions. So why raise money? What they're doing is 780 00:41:41,560 --> 00:41:45,000 Speaker 1: super expensive, and for the most part, they're not charging 781 00:41:45,080 --> 00:41:47,480 Speaker 1: people for it. It costs a lot of money both 782 00:41:47,560 --> 00:41:51,920 Speaker 1: to train this kind of AI system and to operate it. 783 00:41:52,160 --> 00:41:55,880 Speaker 1: So every time somebody types in something to the Mario 784 00:41:56,080 --> 00:42:00,200 Speaker 1: character or the Gassy Unicorn character, that is essentially that 785 00:42:00,320 --> 00:42:01,800 Speaker 1: is costing the money a little bit, you know, a 786 00:42:01,880 --> 00:42:03,399 Speaker 1: tiny bit of money at a time, but it adds 787 00:42:03,480 --> 00:42:07,040 Speaker 1: up very very quickly, and they recently introduced a service 788 00:42:07,360 --> 00:42:10,560 Speaker 1: where users pay I think it's ten dollars a month 789 00:42:10,600 --> 00:42:13,440 Speaker 1: if C plus is the surface, and that gives you 790 00:42:13,840 --> 00:42:16,360 Speaker 1: faster access because what users had been experiencing, like I 791 00:42:16,440 --> 00:42:19,080 Speaker 1: did when I reported a story on them recently, is 792 00:42:19,280 --> 00:42:21,480 Speaker 1: sometimes the website can't load, or the service just. 793 00:42:21,560 --> 00:42:25,320 Speaker 5: Isn't coming to wait for your guests, unicorn. 794 00:42:26,160 --> 00:42:28,759 Speaker 2: I know there aren't many worse things in the world. 795 00:42:28,880 --> 00:42:31,680 Speaker 5: Yes, Rachel Matt's brilliant story. That does it for this 796 00:42:31,880 --> 00:42:33,120 Speaker 5: edition of Like Technology Ed. 797 00:42:33,920 --> 00:42:34,120 Speaker 6: Yeah. 798 00:42:34,280 --> 00:42:37,080 Speaker 4: Check out the podcast recap show and stay safe, Caroline, 799 00:42:37,120 --> 00:42:38,759 Speaker 4: stay dry out in New York City.