WEBVTT - Hostage Deal, OpenAI Saga, and Deere Earnings 0:00:00.120 --> 0:00:04.360 Bloomberg is now on your dashboard with Apple CarPlay and 0:00:04.360 --> 0:00:08.160 Android Auto. It gives you access to every Bloomberg podcast, 0:00:08.280 --> 0:00:11.560 live audio feeds from Bloomberg Radio, print stories from Bloomberg 0:00:11.640 --> 0:00:14.920 News in audio form, and the latest headlines of the 0:00:14.920 --> 0:00:18.600 click of a button with Bloomberg News. Now it's free 0:00:18.680 --> 0:00:21.439 with the latest version of the Bloomberg Business App. That's 0:00:21.680 --> 0:00:24.400 the Bloomberg Business App. Get it on your phone in 0:00:24.440 --> 0:00:27.760 the Apple App Store or on Google Play. Just download 0:00:27.800 --> 0:00:30.560 the app, connect your phone to your car and get started. 0:00:30.960 --> 0:00:34.400 And it's all presented by our sponsor, Interactive Brokers. 0:00:35.400 --> 0:00:38.600 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:38.640 --> 0:00:39.800 my co host Matt Miller. 0:00:40.200 --> 0:00:44.279 Every business day we bring you interviews from CEOs, market pros, 0:00:44.320 --> 0:00:48.160 and Bloomberg experts, along with essential market moven news. 0:00:48.720 --> 0:00:51.839 Find the Bloomberg Markets Podcast called Apple Podcasts or wherever 0:00:51.960 --> 0:00:55.080 you listen to podcasts, and at Bloomberg dot Com Slash podcast. 0:00:55.720 --> 0:00:59.560 Let's flip gears. Let's head back to the geopolitics of 0:00:59.560 --> 0:01:01.800 it all impact it has on the market. You know, 0:01:01.840 --> 0:01:04.640 the news coming out of Israel that I'm reading out 0:01:04.680 --> 0:01:08.160 on the Bloomberg kerminal Here Israel and Hamas agreed to 0:01:08.200 --> 0:01:13.880 her short truce for hostage release. Agrees to free fifty hostages, 0:01:13.920 --> 0:01:17.280 possibly more in days ahead. The deal would mark the 0:01:17.400 --> 0:01:21.440 first lull in the war since the attacks on October seventh. 0:01:21.440 --> 0:01:23.280 So I guess if nothing else, that in and of 0:01:23.319 --> 0:01:26.120 itself is probably some good news. Bobby Ghost joins is 0:01:26.280 --> 0:01:28.560 he's an editor with Bloomberg Opinion. He joins his life 0:01:28.560 --> 0:01:31.080 here in our New York studio. Bobby, I mean, just 0:01:31.120 --> 0:01:33.880 to me, it feels like good news, maybe a little 0:01:33.920 --> 0:01:36.360 bit of thawing here. How do you read it? 0:01:36.920 --> 0:01:38.680 I wouldn't go quite so far as to say that 0:01:38.760 --> 0:01:42.040 there's a thought it is good news. Okay, Look, it's 0:01:42.120 --> 0:01:45.160 great news for the hostages and their families. It gives 0:01:46.040 --> 0:01:49.840 ordinary civilians in Gaza a break from the bombing. It's 0:01:49.880 --> 0:01:52.480 a cessation of hostilities for fort days. And Israel is 0:01:52.520 --> 0:01:56.440 already saying Prime Minisnetnya, who's already saying, moment that ends, 0:01:56.600 --> 0:01:59.760 we go back to bombing Gus, we go back to fighting. 0:02:00.400 --> 0:02:06.360 So there's you know, it's not really a thaw. It's 0:02:06.360 --> 0:02:10.119 a deal that was struck in Katar with very strong 0:02:10.520 --> 0:02:14.359 pressure from the United States on all parties to make 0:02:14.400 --> 0:02:19.480 this happen, and we should thank God for small mercies, 0:02:19.480 --> 0:02:22.000 as they say, and as I said, for the people 0:02:22.040 --> 0:02:24.400 who are benefiting the most from this deal, the mercies 0:02:24.440 --> 0:02:24.960 are not small. 0:02:25.000 --> 0:02:26.000 They're quite absolutely. 0:02:26.080 --> 0:02:29.080 Yeah, we're seeing fifty hostages from Gaza will be freed 0:02:29.880 --> 0:02:32.440 and the release of one hundred and fifty Palestinians who 0:02:32.440 --> 0:02:36.400 are in Israeli jails at the moment. But tell us fabi, 0:02:36.480 --> 0:02:40.360 because this is exactly what Israel has not wanted, in 0:02:40.400 --> 0:02:43.240 the sense that any pause is a chance for Hamas 0:02:43.320 --> 0:02:47.399 to regroup, get the military operations back together. I mean, 0:02:47.560 --> 0:02:50.840 this is that something to be feared then that there 0:02:50.880 --> 0:02:54.600 could really be maybe an escalation in the violence after this. 0:02:55.120 --> 0:02:57.080 I think it's I think this is why it's taken 0:02:57.120 --> 0:02:59.240 this long for the truth to happen. Israel had to 0:02:59.240 --> 0:03:04.120 be absolutely certain that the chances of Hamas regrouping and 0:03:04.160 --> 0:03:09.480 rearming we were as small as possible. If I mean, 0:03:09.639 --> 0:03:12.440 there's always that possibility. But Israel would not have made 0:03:12.520 --> 0:03:15.040 this deal if it didn't have a high degree of 0:03:15.040 --> 0:03:17.920 confidence that it can prevent that from happening, or it 0:03:17.960 --> 0:03:23.679 can manage how much Hamas rearms. Presumably this means it 0:03:23.680 --> 0:03:26.359 will be paying much closer attention to the borders, much 0:03:26.360 --> 0:03:29.399 closer attention to those tunnels through Egypt to make sure 0:03:29.400 --> 0:03:33.200 that Hamas does not get and it has already brought 0:03:33.240 --> 0:03:37.400 so much damage on Hamas infrastructure that there must be 0:03:37.440 --> 0:03:40.360 a high degree of confidence that you know, Hamas's arms 0:03:40.400 --> 0:03:45.600 making facilities in Gaza City, for instance, will be will 0:03:45.600 --> 0:03:47.080 not easily be revived. 0:03:47.760 --> 0:03:49.440 That's kind of where I wanted to go, because I 0:03:49.520 --> 0:03:52.120 know that the stated objective of Israel is to destroy 0:03:52.200 --> 0:03:55.440 Hamas and its leadership. How do you define that? How 0:03:55.480 --> 0:03:58.160 do you know when it's happened? If I kind of 0:03:58.160 --> 0:04:01.320 fear it's like the drug cartel, tick out one kingpin 0:04:01.400 --> 0:04:03.800 and then the next person just rises right up again. 0:04:04.080 --> 0:04:06.720 Yeah, this is not and they're not fighting a conventional military. 0:04:06.840 --> 0:04:12.040 This is a terrorist group. And you know, the leadership 0:04:12.080 --> 0:04:15.240 can change and has changed as well, has a long 0:04:15.360 --> 0:04:18.800 history of taking out top Hamas leaders. The thing just 0:04:18.880 --> 0:04:21.360 keeps coming back. And you also have to remember that 0:04:22.560 --> 0:04:25.960 in the process of trying to eliminate Hamas in this way, 0:04:26.600 --> 0:04:31.719 it's also creating the circumstances the for Hamas to be 0:04:31.720 --> 0:04:34.719 able to recruit. You've got sure hundreds of thousands of 0:04:34.800 --> 0:04:39.320 young Palestinians in Gaza and elsewhere who are outraged by 0:04:39.360 --> 0:04:43.720 what they see, and a small proportion of that population 0:04:43.920 --> 0:04:48.039 will be more amenable to joining Hamas now, shall we say, 0:04:48.040 --> 0:04:50.480 than there were before. So it's you know, this is 0:04:50.520 --> 0:04:52.919 not this is not the kind of war where where 0:04:52.960 --> 0:04:56.279 which ends with people signing an armistice and making a 0:04:56.320 --> 0:04:58.960 peace deal. And that's been the problem. The Biden administration 0:04:59.040 --> 0:05:03.440 has said consistently from the beginning that they've been asking 0:05:03.520 --> 0:05:07.760 the Israelis to define what victory looks like and explain 0:05:07.920 --> 0:05:12.560 what happens the day after, and until now, the Israelis 0:05:12.600 --> 0:05:15.880 have not provided that information. They've not communicated it in 0:05:16.680 --> 0:05:19.520 private to the Biden administration. They certainly have not communicated 0:05:19.560 --> 0:05:20.400 it publicly. 0:05:20.800 --> 0:05:23.599 And of course whatever that timeline may be as well, 0:05:23.760 --> 0:05:27.679 is probably pretty daunting to think of, Like the task ahead, 0:05:27.760 --> 0:05:30.880 how long that may take makes me wonder if there 0:05:30.920 --> 0:05:34.600 could be perhaps the need for more cease fires in 0:05:35.680 --> 0:05:37.480 the time to get to that endpoint. 0:05:37.760 --> 0:05:42.680 Yeah, So we'll see if this one works and everybody 0:05:42.720 --> 0:05:47.159 shows good faith, and that then hopefully creates the circumstances 0:05:47.160 --> 0:05:49.720 for another one down the line, and another one, and 0:05:50.400 --> 0:05:54.200 maybe this is the kind of conflict where, because everyone 0:05:54.279 --> 0:05:56.719 is so painted into their own corners and the opposite 0:05:56.800 --> 0:05:59.799 ends of the room, that the advances that can only 0:05:59.839 --> 0:06:06.080 be incremental. It might be that this is the only way, slow, painful, 0:06:06.360 --> 0:06:08.480 deadly as it is, this might be the only way 0:06:08.520 --> 0:06:10.760 we begin to move towards some kind of resolution. 0:06:11.080 --> 0:06:14.680 Is there a scenario where Israel does not end up 0:06:15.120 --> 0:06:17.120 occupying Gaza? I can't think of a scenario where they 0:06:17.120 --> 0:06:20.840 don't to preserve the piece. I mean, does a UN 0:06:20.880 --> 0:06:22.440 player role? I mean, what do we think about the 0:06:22.520 --> 0:06:22.960 day after? 0:06:23.520 --> 0:06:26.200 Well, so here's the thing. Now, Israel has a signal 0:06:26.400 --> 0:06:29.440 that it is willing to do that in order to 0:06:29.480 --> 0:06:32.919 make sure Hamas does not come back. But this is 0:06:32.960 --> 0:06:36.640 not a popular idea among Israelis. For a start. Israelis 0:06:36.680 --> 0:06:39.840 don't want an occupation of Gaza because they know what 0:06:39.880 --> 0:06:42.400 that will entail, not just in terms of costs, but 0:06:42.480 --> 0:06:46.440 also the risks that come with that. Nobody else wants 0:06:46.480 --> 0:06:49.120 to do that. Nobody else wants to perform that role. 0:06:49.320 --> 0:06:53.479 I don't think any Western peacekeepers would have credibility there. 0:06:54.440 --> 0:06:57.719 The United Nations will eventually have to play a role, 0:06:57.720 --> 0:07:02.840 but until now, you know, Secret General gu terrorists has 0:07:02.880 --> 0:07:06.279 been sort of saying, look, we're not this is not 0:07:06.400 --> 0:07:10.880 going to become a protectorate of the United Nations. The 0:07:10.960 --> 0:07:15.640 Arab countries, who would logically be part of the biggest 0:07:15.640 --> 0:07:19.600 part of any peacekeeping effort. Their view is why should 0:07:19.640 --> 0:07:24.040 we clean up Israel's mess. This can't become a thing 0:07:24.080 --> 0:07:27.400 where you go in and bomb Palestine or parts of 0:07:27.680 --> 0:07:31.840 Palestinian territories to smithereens and expect us to come and 0:07:31.880 --> 0:07:34.080 clean it up for you afterwards. So there's going to 0:07:34.080 --> 0:07:37.400 be a lot of reluctance. The crucial question for everybody 0:07:37.480 --> 0:07:42.480 is peacekeeping toward what end? If there is a clear 0:07:42.560 --> 0:07:46.560 path after the fighting is over for a two state solution, 0:07:47.280 --> 0:07:50.440 then I can see and their sort of cost iron 0:07:50.480 --> 0:07:53.160 guarantees to that. Then I can see the Arab states 0:07:53.200 --> 0:07:56.040 saying all right, we will take some of this responsibility 0:07:56.480 --> 0:07:59.040 if there is a clear path that this never happens again. 0:07:59.160 --> 0:08:03.720 All right, So on that two state solution, who is 0:08:03.760 --> 0:08:06.800 the biggest impediment to that actually happening at this point? 0:08:07.400 --> 0:08:12.320 I mean, there's so many impediments, and at different times 0:08:12.360 --> 0:08:17.560 their you know, their relative weight changes, but Israel is 0:08:17.560 --> 0:08:21.360 an impediment. The current administration Israel. The coalition government that 0:08:21.520 --> 0:08:24.360 Benjamin Ettania who has put together has no interest in 0:08:24.400 --> 0:08:28.200 a two states solution. Many of his partners have openly 0:08:28.240 --> 0:08:30.720 said that's not what they want, that they will oppose it. 0:08:32.280 --> 0:08:37.280 The Palaestine authority, which is deeply corrupt, deeply completely inept, 0:08:38.200 --> 0:08:41.840 and has not dared to test its popularity with an 0:08:41.920 --> 0:08:44.920 election in years and years and years. They are an impediment. 0:08:45.160 --> 0:08:48.920 And of course Hamas and hamas is enablers is Iran 0:08:49.120 --> 0:08:51.800 is a very big part of the piece problem too. 0:08:52.040 --> 0:08:56.400 So yeah, the problem a problem, this intractable and this complicated. 0:08:56.920 --> 0:08:59.320 There are lots of people who have to share the blame. 0:08:59.679 --> 0:09:01.960 Just really quickly. Hear Bobby in our last thirty if 0:09:01.960 --> 0:09:04.840 you could just explain to us what this second stage 0:09:04.880 --> 0:09:08.200 could look like with a possible extension to free more hostages. 0:09:08.400 --> 0:09:11.320 Well, so there's some talk that after these fifty, if 0:09:11.400 --> 0:09:15.080 Hamas continues to release hostages in a sort of steady 0:09:17.040 --> 0:09:20.000 set of ten and day fifteen a day, then there's 0:09:20.040 --> 0:09:24.040 some hope that the cessation of hostility the truth can 0:09:24.160 --> 0:09:27.480 be extended again. This is something we should all hope 0:09:27.480 --> 0:09:30.080 for and keep our fingers crossed. It it happens, but 0:09:31.240 --> 0:09:32.360 we'll believe it when it happens. 0:09:32.400 --> 0:09:34.040 Yeah, absolutely, all right, Bobby, thank you so much for 0:09:34.080 --> 0:09:34.440 joining us. 0:09:34.440 --> 0:09:34.760 Bobby go. 0:09:34.880 --> 0:09:38.120 She's a calmnist for Bloomberg Opinion, has got a tremendous 0:09:38.160 --> 0:09:42.480 amount of experience in international affairs reporting, certainly in that 0:09:42.520 --> 0:09:44.040 part of the world over there in the Middle East. 0:09:44.040 --> 0:09:46.480 We appreciate getting a few minutes of his time. Here. 0:09:48.120 --> 0:09:51.959 You're listening to the tenth Can't Live program Bloomberg Markets 0:09:52.000 --> 0:09:55.080 weekdays at ten am Eastern on Bloomberg dot Com, the 0:09:55.160 --> 0:09:58.320 iHeartRadio app and the Bloomberg Business App, or listen on 0:09:58.360 --> 0:10:00.000 demand wherever you get your podcast. 0:10:00.120 --> 0:10:05.240 All right, let's around table this open AI. I'm gonna 0:10:05.240 --> 0:10:08.000 call it a debacle, and that's editorializing, but that's just 0:10:08.080 --> 0:10:09.920 it just seems to me. It's a debacle, and I 0:10:09.920 --> 0:10:12.560 think Silicon Valley should be embarrassed by what's happened over 0:10:12.559 --> 0:10:15.120 the last four or five days. But we're gonna bring 0:10:15.160 --> 0:10:17.640 some smart people who analyze this stuff much better than 0:10:17.679 --> 0:10:19.600 I do. Man deep Seeing, he's a senior tech Analystrom 0:10:19.600 --> 0:10:25.040 Bloomberg Intelligence Ed Ludlow Bloomberg Technology hosts out in San Francisco, 0:10:25.800 --> 0:10:27.280 so that he has to take some of the blank 0:10:27.480 --> 0:10:28.600 He's part of the culture out there. 0:10:28.760 --> 0:10:28.840 Ed. 0:10:29.559 --> 0:10:32.600 I mean, I guess we have Sam Altman going back 0:10:32.840 --> 0:10:37.040 to open AI. I guess that's good news. The next 0:10:37.120 --> 0:10:39.360 question I think most people have is who's going to 0:10:39.400 --> 0:10:41.600 be on this board and will it be an effective board? 0:10:41.760 --> 0:10:42.280 Yeah? 0:10:42.400 --> 0:10:46.440 Yeah, I mean the mechanics of it are that Brett Taylor, 0:10:46.520 --> 0:10:50.800 who was once the Coco of Salesforce, but he's I 0:10:50.800 --> 0:10:53.600 guess he's more famous for being the chairman of Twitter 0:10:53.640 --> 0:10:57.200 that's sold to Elon Musk, is taking a board seat. 0:10:57.760 --> 0:11:01.119 Then you have Larry Summers, well known to this program, 0:11:01.160 --> 0:11:05.600 this network. Reminder that Larry Summers is a pay contributor 0:11:05.760 --> 0:11:10.400 to Bloomberg Television. I'm supposed to say that, and then 0:11:11.000 --> 0:11:14.439 beyond that, The news for me is that and this 0:11:14.520 --> 0:11:16.440 is you know, we've covered the ins and outs of 0:11:16.480 --> 0:11:20.160 the negotiation pretty closely, right, guys that I know that 0:11:20.200 --> 0:11:24.360 Sam Altman and Greg Brockman were pushing really hard to 0:11:24.400 --> 0:11:28.040 get at least temporary board seats in this whole thing, 0:11:28.240 --> 0:11:32.760 but they didn't. So this thing's far from settled. The 0:11:32.800 --> 0:11:34.560 reason I'm late, and I apologize for that, is I 0:11:34.559 --> 0:11:36.599 was on the phone with the source who's involved in 0:11:36.640 --> 0:11:39.480 all of this, and Sam Altman goes back. Most people 0:11:39.480 --> 0:11:41.120 get what they wanted, but it ain't the end of 0:11:41.120 --> 0:11:43.200 the story. There's a lot we still have to find out. 0:11:43.520 --> 0:11:45.680 Well, you know, I would like to bring in Man 0:11:45.720 --> 0:11:49.080 Deep here because this has been, as Paul said, very 0:11:49.160 --> 0:11:52.720 chaotic four or five days. And for those of us 0:11:52.760 --> 0:11:55.480 who are maybe just joining Man Deep, if you could 0:11:55.480 --> 0:11:58.760 take us back to when Sam Alman was suddenly ousted 0:11:58.800 --> 0:12:01.880 from open Ai. Again, I don't think we have really 0:12:01.920 --> 0:12:04.760 a reason yet as to why that happened, but maybe 0:12:04.760 --> 0:12:06.600 if you could give us a timeline of what has 0:12:06.679 --> 0:12:07.960 transpired from them to now. 0:12:09.080 --> 0:12:12.400 Well, I mean clearly, you know, it was a shocker 0:12:12.480 --> 0:12:15.120 to everyone in terms of the way he was outid 0:12:15.160 --> 0:12:18.600 and there wasn't any transparency around the reasons. In fact, 0:12:18.600 --> 0:12:22.520 when they made the three new board member announcement today 0:12:22.840 --> 0:12:25.880 they said there will be an independent investigation. So clearly 0:12:26.280 --> 0:12:29.040 there's a lot to unpack. As Ed was alluding to, 0:12:29.200 --> 0:12:32.720 but look for a company like OpenAI that has a 0:12:32.800 --> 0:12:36.520 convoluted structure. So last week they I think it came 0:12:36.559 --> 0:12:39.920 into focus that they have a profit structure within a 0:12:39.960 --> 0:12:43.000 nonprofit and now we are trying to you know, make 0:12:43.080 --> 0:12:46.520 sense of what would a good governance structure look like. 0:12:47.080 --> 0:12:49.959 We have three board members. We know, this is pretty 0:12:50.120 --> 0:12:53.000 unusual the CEO not being on the board. So if 0:12:53.080 --> 0:12:55.720 Sam is going back to be the CEO and he's 0:12:55.760 --> 0:12:58.040 not on the board, who the other board members are? 0:12:58.160 --> 0:13:01.200 There is so much to you know, talk about here, 0:13:01.240 --> 0:13:03.760 and this is not the way it's going to pan out. 0:13:03.880 --> 0:13:07.560 I mean, the reason why no one cared until last 0:13:07.559 --> 0:13:10.599 week is because you know, open Aye was a startup 0:13:10.760 --> 0:13:13.000 and you know it had the backing of Microsoft, so 0:13:13.440 --> 0:13:16.080 corporate governance wasn't as big of a focus. But the 0:13:16.120 --> 0:13:19.240 way he was ousted, it's like, this is so unusual, 0:13:19.280 --> 0:13:22.120 and I'm sure a lot of the startups are thinking 0:13:22.160 --> 0:13:25.880 about their corporate structure now, you know, and their backers, 0:13:25.920 --> 0:13:28.280 the vcs and the early investors. 0:13:28.760 --> 0:13:30.440 Ed, what are you hearing from your sources out there 0:13:30.480 --> 0:13:35.280 as to maybe the value the impact on the value 0:13:35.360 --> 0:13:39.640 of this company here that's been really impacted negatively and 0:13:39.679 --> 0:13:40.040 how so. 0:13:41.800 --> 0:13:44.320 I love this question for me. This is the question 0:13:44.640 --> 0:13:48.160 because the story of the last five days is that 0:13:48.280 --> 0:13:51.960 open aiyes valuation, which right now, based on a transaction 0:13:52.080 --> 0:13:55.240 we can get into that's pending, is eighty six billion dollars. 0:13:55.840 --> 0:13:58.240 I reported a couple of months ago. Revenue has a 0:13:58.480 --> 0:14:00.840 run rate of about a billion dollar for this year 0:14:01.200 --> 0:14:03.720 billion dollars of sales, eighty six billion dollar valuation. 0:14:03.960 --> 0:14:04.160 Wow. 0:14:04.400 --> 0:14:06.720 And the basics of this for the audience listening all 0:14:06.720 --> 0:14:09.720 around the world is we care because open ai is 0:14:09.760 --> 0:14:13.280 the leading AI startup. Let's just accept that as a baseline. 0:14:14.240 --> 0:14:17.720 What we learned is that its value is intimately tied 0:14:17.760 --> 0:14:20.840 to the intellectual capital that's there. In other words, Sam Altman, 0:14:20.920 --> 0:14:23.760 Greg Brockman, and the seven hundred and sixty eight other 0:14:23.840 --> 0:14:27.800 people that work there, all of them started a mutiny 0:14:28.000 --> 0:14:31.040 to try and bring Sam back. They were successful, but 0:14:31.120 --> 0:14:34.520 there was a real threat that all seven hundred and 0:14:34.600 --> 0:14:38.240 seventy employees would just resign, They would just leave. Then 0:14:38.280 --> 0:14:40.160 what are you left with? A very large building in 0:14:40.200 --> 0:14:43.600 downtown San Francisco with incredible compute costs and no one 0:14:43.640 --> 0:14:46.200 in it. That's the way to frame it, right, I 0:14:46.200 --> 0:14:49.200 don't think that that's unreasonable. And sources this morning and 0:14:49.280 --> 0:14:54.080 keep phoning me and saying that's the story like on paper. 0:14:54.760 --> 0:14:57.040 You know the people behind this, there aren't that many 0:14:57.120 --> 0:15:01.080 of them, And I think, yeah, sorry, guys, you know 0:15:01.320 --> 0:15:03.520 I jump in, but for me, that's that's the kind 0:15:03.520 --> 0:15:04.080 of key point. 0:15:04.400 --> 0:15:07.080 Yeah, No, I think that's spot on. And I mean, Mandy, 0:15:07.240 --> 0:15:09.640 maybe you can help us, like, you know, break down 0:15:09.640 --> 0:15:12.200 this math a little bit here. As you know, as 0:15:12.200 --> 0:15:16.080 we're just hearing that we've got one billion in revenue 0:15:16.400 --> 0:15:19.680 to an eighty six billion valuation, I mean my head 0:15:19.680 --> 0:15:21.600 is spinning. What does that make sense to you? 0:15:22.160 --> 0:15:25.400 Well, so look at you know, all the startups and 0:15:25.760 --> 0:15:27.840 you can go back in time in terms of, you know, 0:15:27.960 --> 0:15:31.720 the companies that have ridden these technology waves. There is 0:15:31.800 --> 0:15:35.840 that promise. Okay, if you have a breakthrough technology, investors 0:15:35.880 --> 0:15:38.560 don't really focus that much on the revenue that you 0:15:38.640 --> 0:15:40.800 have right now, but the potential. 0:15:40.560 --> 0:15:41.920 And in the works problem. 0:15:42.560 --> 0:15:46.000 Well, I think this is different. Opening Eye does have 0:15:46.120 --> 0:15:49.040 an intellectual property and they are foundational. I mean think 0:15:49.120 --> 0:15:52.120 of Nvidia, right, they are foundational to what is going 0:15:52.160 --> 0:15:54.720 on in AI with their chips. Well, this is another 0:15:54.760 --> 0:15:58.000 foundational element in terms of you know, a lot of 0:15:58.040 --> 0:16:03.280 companies are standardizing on open Eeye's base model and they 0:16:03.320 --> 0:16:06.320 have embedded it in their tech stack. Everything is happening 0:16:06.400 --> 0:16:09.840 on top of what Opening Eye is offering at the baseline. 0:16:09.840 --> 0:16:12.560 In terms of a large anglid model. But now I 0:16:12.600 --> 0:16:15.240 think it puts doubts in the mind because think of 0:16:15.480 --> 0:16:19.760 operating system like Windows operating system was the standard on 0:16:19.800 --> 0:16:22.840 which all these applications were built. Opening Eye had that 0:16:22.960 --> 0:16:25.920 kind of aura, and suddenly that has put doubts and 0:16:25.960 --> 0:16:29.320 that's why there was this high valuation. So I'm not 0:16:29.400 --> 0:16:32.080 surprised by the evaluation, but the chain of events has 0:16:32.160 --> 0:16:34.200 kind of put doubts in people's mind right now. 0:16:34.480 --> 0:16:38.040 Hey, ed to be honest, before this, I really didn't 0:16:38.080 --> 0:16:41.600 know who Sam Altman was, and I certainly wasn't aware 0:16:41.760 --> 0:16:44.080 of the kind of the presence he really does command 0:16:44.080 --> 0:16:47.400 within a tech space and within Silicon Valley. How do 0:16:47.480 --> 0:16:50.280 you think, I mean, where does he go from here? 0:16:50.360 --> 0:16:52.120 I mean, it seems like he's gonna be the focus 0:16:52.120 --> 0:16:54.800 of now I'm gonna pay attention to whatever he says 0:16:54.800 --> 0:16:57.480 and does going forward. I mean, his role in all 0:16:57.520 --> 0:16:59.200 of this, it's taken a much higher profile. 0:17:00.080 --> 0:17:00.280 Yeah. 0:17:00.280 --> 0:17:04.320 Look, Sam Altman is a serial entrepreneur, a serial founder. 0:17:04.440 --> 0:17:06.600 He has been a name out here in Silicon Valley 0:17:07.119 --> 0:17:11.520 for some time. He has really been thrust to prominence 0:17:12.200 --> 0:17:15.760 as open Ai became the face of AI. You know, 0:17:15.840 --> 0:17:19.520 that's the reality of it. In the last year, you know, 0:17:19.600 --> 0:17:23.000 he's just beloved by the open Ai staff. You know, 0:17:23.480 --> 0:17:27.680 I'm not exaggerating. Almost the entirety of open aas entire 0:17:27.680 --> 0:17:30.399 company threatened to resign if he was not brought back. 0:17:30.760 --> 0:17:34.520 The investors love him. The investors were adamant that he 0:17:34.560 --> 0:17:37.359 came back, and that they were behind the scenes trying 0:17:37.400 --> 0:17:41.080 to do that, including Microsoft. Right Satya Nadella, the Microsoft CEO, 0:17:41.200 --> 0:17:44.240 was a real peace broker in all of this. We understand. 0:17:45.560 --> 0:17:48.080 And yet this is why I say that this story 0:17:48.119 --> 0:17:51.080 is not finished. There will be an independent investigation as 0:17:51.080 --> 0:17:53.119 to why the board fired him in the first place. 0:17:53.400 --> 0:17:56.480 We have got no idea, to be frank, why they 0:17:56.520 --> 0:17:59.760 did that. I just, you know, without being self serving, 0:18:00.800 --> 0:18:04.320 I did report on Saturday as an example, that he 0:18:04.560 --> 0:18:07.560 was out there weeks, within the last few weeks raising 0:18:07.600 --> 0:18:11.360 almost one hundred billion dollars for a new chip company 0:18:11.480 --> 0:18:14.840 to take on Nvidia make custom silicon for training AI models. 0:18:15.080 --> 0:18:18.080 One hundred billion dollars from a standing start. That's the 0:18:18.200 --> 0:18:22.160 kind of command he has, and the investors, like SoftBank, 0:18:22.200 --> 0:18:24.320 move battle La, they were willing to jump in. 0:18:25.359 --> 0:18:27.760 I mean, the one thing I would point out is 0:18:27.760 --> 0:18:32.160 you know, whenever a founder gets more attention than the company, 0:18:32.560 --> 0:18:34.840 that's never a good thing. If you go back in time, 0:18:34.960 --> 0:18:37.600 you know, the focus is just on the founder and 0:18:37.640 --> 0:18:41.120 what he's doing that hasn't been viewed very well by 0:18:41.200 --> 0:18:44.320 the investors. And if they are thinking about doing an IPO, 0:18:44.720 --> 0:18:47.320 that's the last thing you want is the founder getting 0:18:47.320 --> 0:18:50.359 all the focus and taking you know, the focus away 0:18:50.359 --> 0:18:53.280 from the core product, which is the large acred model 0:18:53.280 --> 0:18:53.960 they have developed. 0:18:54.040 --> 0:18:59.080 Could say it sounds like another sam perhaps of fts. 0:18:59.240 --> 0:19:01.160 Ed love, thank you so much for joining us, Ed Lolo. 0:19:01.200 --> 0:19:04.280 He's in our San Francisco office. He is embedded in 0:19:04.280 --> 0:19:06.960 that Silicon Valley space. And then man Deep Singh, he's 0:19:06.960 --> 0:19:10.480 our senior technology analysts here at Bloomberg Intelligence. He's seen 0:19:10.520 --> 0:19:13.080 it all. He's seen the tech come and go, he's 0:19:13.119 --> 0:19:15.960 seen the tech mobiles come and go. So we appreciate 0:19:15.960 --> 0:19:19.760 getting their perspective. So it seems like it's quieting down 0:19:19.840 --> 0:19:23.440 there in Silicon Valley in Open AI. And now we'll 0:19:23.480 --> 0:19:25.680 just see how it's kind of fleshes out the board 0:19:25.760 --> 0:19:28.520 and some governance issues and some ownership and you know, 0:19:28.600 --> 0:19:31.439 but I guess the last fridays it's kind of like 0:19:31.640 --> 0:19:33.680 a do over, so we'll keep on top of that. 0:19:33.840 --> 0:19:36.960 You're listening to the tape. Cat's are live program Bloomberg 0:19:37.000 --> 0:19:40.600 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:19:40.680 --> 0:19:43.880 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:19:43.920 --> 0:19:46.760 You can also listen live on Amazon Alexa from our 0:19:46.760 --> 0:19:52.439 flagship New York station, Just say Alexa play Bloomberg eleven thirty. 0:19:53.200 --> 0:19:56.320 Street Kumark. He's the president of Street Kumar Global Strategies, 0:19:56.600 --> 0:20:00.000 former Chief Global Strategists and Chairman Asset Allocation Commitie at 0:20:00.160 --> 0:20:03.400 TCW Group. A little asset manager out there in LA. 0:20:03.480 --> 0:20:06.639 But the highlight on his extensive resume for me for 0:20:06.800 --> 0:20:11.040 your senior vice president at Drexel Burnham Lambert. Those folks, 0:20:11.480 --> 0:20:15.000 they were slinging it back in Maybe they were slinging 0:20:15.000 --> 0:20:16.800 it back in the day, folks, Shwi, thanks so much 0:20:16.800 --> 0:20:19.320 for joining us. You're based out in LA, but we're 0:20:19.320 --> 0:20:21.400 in New York, so we appreciate you. You coming in here 0:20:21.400 --> 0:20:24.560 to our New York studio. Talk to us about how 0:20:24.640 --> 0:20:27.280 you viewed twenty twenty three. We're closing out a pretty 0:20:27.320 --> 0:20:30.960 decent year here for most you know, most markets here 0:20:31.320 --> 0:20:32.960 closing out twenty twenty three, and how are you thinking 0:20:32.960 --> 0:20:34.120 about twenty twenty four. 0:20:34.600 --> 0:20:37.480 Paul, great questions, and I think twenty twenty three we 0:20:37.560 --> 0:20:40.320 had expected by now to be in recession, which is 0:20:40.359 --> 0:20:43.800 not come yep. The labor market is very strong, the 0:20:43.840 --> 0:20:48.520 consumer spending is very strong. I think what was underestimated 0:20:48.680 --> 0:20:51.960 was the extent of stimulus that was in the system, 0:20:52.000 --> 0:20:54.600 both in terms of the fiscal stimulus, which came from 0:20:54.600 --> 0:20:57.680 the final months of the Trump administration first few months 0:20:57.720 --> 0:21:02.440 of the Biden administration. And don't forget the balance sheet 0:21:02.480 --> 0:21:06.040 of the Federal Reserve doubled from bloated levels from the 0:21:06.080 --> 0:21:09.480 beginning of COVID to the beginning of twenty twenty two. 0:21:09.960 --> 0:21:12.399 And we had zero interest rates for a long period 0:21:12.440 --> 0:21:15.040 of fact, so everybody loaded up. And one and a 0:21:15.080 --> 0:21:18.280 half years later after the tightening began, I think we 0:21:18.320 --> 0:21:21.360 are still not back yet. But the point I make 0:21:21.440 --> 0:21:24.480 and I say to my clients is that recession is 0:21:24.520 --> 0:21:28.560 something that has been postponed, but it's been delayed, but 0:21:28.640 --> 0:21:31.520 it's not denied. So I think we are still going 0:21:31.560 --> 0:21:34.960 to see signs of a recession. And what is me 0:21:35.040 --> 0:21:38.200 the most is as you have interest rates, having risen 0:21:39.040 --> 0:21:41.760 and the balance sheet of the FED is still being tightened. 0:21:41.800 --> 0:21:44.880 It did not pause, and when the two of them 0:21:44.960 --> 0:21:47.200