1 00:00:01,480 --> 00:00:04,840 Speaker 1: From the heart of where innovation, money and power Collie 2 00:00:05,040 --> 00:00:09,760 Speaker 1: in Silicon Valley, NB. This is Bloomberg Technology with Caroline 3 00:00:09,840 --> 00:00:26,640 Speaker 1: Hide and Ed Ludlow. I'm Caroline Hide and Bloomberg's World 4 00:00:26,640 --> 00:00:29,480 Speaker 1: headquarters in New York, and I'm Ludlow in San Francisco. 5 00:00:29,560 --> 00:00:33,240 Speaker 1: This is Bloomberg Technology coming up. Tech stocks facing headwinds 6 00:00:33,280 --> 00:00:35,960 Speaker 1: as we head into earning season. We'll discuss why the 7 00:00:35,960 --> 00:00:39,519 Speaker 1: sector is twenty percent rally may be disconnected from reality. 8 00:00:40,360 --> 00:00:43,479 Speaker 1: Plus a plunge in PC shipment's Apple seeing a forty 9 00:00:43,520 --> 00:00:47,040 Speaker 1: percent drop in shipments. Is the industry grapples with unsold inventory. 10 00:00:47,080 --> 00:00:49,760 Speaker 1: We'll bring you the details next, and mention capital firm 11 00:00:49,880 --> 00:00:53,320 Speaker 1: Eclipse raises one point you billion for two new funds, 12 00:00:53,400 --> 00:00:57,160 Speaker 1: both dedicated to backing startups trying to modernize physical industries. 13 00:00:57,320 --> 00:01:01,000 Speaker 1: Will have an exclusive conversation with Fanning Partner or Susan. 14 00:01:01,320 --> 00:01:04,000 Speaker 1: But first, let's check in on these publicly traded markets 15 00:01:04,000 --> 00:01:06,360 Speaker 1: at the moment, and interesting that we've had a little 16 00:01:06,400 --> 00:01:08,000 Speaker 1: bit of a flip reverse. I think we just want 17 00:01:08,000 --> 00:01:09,959 Speaker 1: to go back to the broader markets. Head I seem 18 00:01:09,959 --> 00:01:11,399 Speaker 1: to be jumping the gun and being trying to tell 19 00:01:11,440 --> 00:01:13,959 Speaker 1: everyone your micro moves. It is a lot about chips. 20 00:01:14,000 --> 00:01:16,640 Speaker 1: We are seeing a focus on the sales that are 21 00:01:16,640 --> 00:01:19,360 Speaker 1: happening at the moment in terms of PCs. What that 22 00:01:19,400 --> 00:01:21,959 Speaker 1: means also for the flood of infantry and chips. But 23 00:01:22,040 --> 00:01:23,679 Speaker 1: let's just move it on to what's happening in terms 24 00:01:23,720 --> 00:01:25,520 Speaker 1: of the broader markets. If we can the nastac off 25 00:01:25,520 --> 00:01:27,440 Speaker 1: by nine tenths of a percent, This is more about 26 00:01:27,440 --> 00:01:30,080 Speaker 1: the jobs print on Friday, more about the economic fundamentals, 27 00:01:30,120 --> 00:01:32,920 Speaker 1: more about the Federal Reserve maybe giving us another twenty 28 00:01:32,920 --> 00:01:35,600 Speaker 1: five basis points hike in May. Two year yield up 29 00:01:35,640 --> 00:01:38,120 Speaker 1: two basis points, so boring cost, justus rising to that 30 00:01:38,120 --> 00:01:40,640 Speaker 1: for all important four percent level. Bloomberg dollar indexts on 31 00:01:40,640 --> 00:01:42,720 Speaker 1: the higher side as we start to price in a 32 00:01:42,760 --> 00:01:45,000 Speaker 1: more hawkish fed. Moving on, because what does it mean 33 00:01:45,040 --> 00:01:48,200 Speaker 1: for the world of crypto? While Bitcoin, even amid this 34 00:01:48,360 --> 00:01:51,640 Speaker 1: dollar strength ed, we're still seeing Bitcoin managing to pull 35 00:01:51,720 --> 00:01:53,720 Speaker 1: up actually more than a percentage point. We're above that 36 00:01:53,840 --> 00:01:56,600 Speaker 1: twenty eight thousand level. We all I, of course, what's 37 00:01:56,600 --> 00:01:59,000 Speaker 1: happening in the world of eth ethereum. We're expecting that 38 00:01:59,120 --> 00:02:01,480 Speaker 1: upgrade come Wednesday. A lot of volatility likely to come. 39 00:02:01,520 --> 00:02:03,920 Speaker 1: What about the micro though. Yeah, when it comes to 40 00:02:03,920 --> 00:02:06,560 Speaker 1: single movers, the markets in the tech sector are trading 41 00:02:06,800 --> 00:02:09,120 Speaker 1: what happened Friday because it was a holiday here in 42 00:02:09,120 --> 00:02:13,120 Speaker 1: the US. Also, you know kind of thin volumes. Samsung, 43 00:02:13,200 --> 00:02:15,679 Speaker 1: the world's biggest maker of memory chips, basically said they're 44 00:02:15,680 --> 00:02:18,320 Speaker 1: going to cut production to meaningful levels get rid of 45 00:02:18,320 --> 00:02:20,920 Speaker 1: the supply glut. You see names like Micron and Western 46 00:02:20,960 --> 00:02:24,880 Speaker 1: Digital trading markedly higher, even though broadly tech is down. 47 00:02:25,120 --> 00:02:30,200 Speaker 1: TSMC also posting numbers second consecutive quarterly sales miss, and 48 00:02:30,200 --> 00:02:33,160 Speaker 1: that is weighing on the US ADRs of TSMC down 49 00:02:33,240 --> 00:02:35,760 Speaker 1: three percent. The other data point we've woken up to 50 00:02:35,840 --> 00:02:39,880 Speaker 1: this Monday morning is the IDC PC tracking data. A 51 00:02:39,919 --> 00:02:42,519 Speaker 1: long story, shortcarrow. We will get into it later in 52 00:02:42,560 --> 00:02:45,360 Speaker 1: the show. With IDC a big drop year on year 53 00:02:45,440 --> 00:02:48,680 Speaker 1: in PC shipment's Apple certainly the worst, more than forty 54 00:02:48,680 --> 00:02:51,240 Speaker 1: percent drop in its shipments. The stop reacting two percent. 55 00:02:51,480 --> 00:02:53,920 Speaker 1: Dell also sort of drop, but it's a little bit higher, 56 00:02:53,919 --> 00:02:55,840 Speaker 1: a little more sangwim when it comes to that name. 57 00:02:55,880 --> 00:02:58,079 Speaker 1: The reason we care is that is not a good 58 00:02:58,160 --> 00:03:00,960 Speaker 1: leading indicator or four bow for what's to come in 59 00:03:01,000 --> 00:03:03,760 Speaker 1: this earning season. Around the quarter for those hardware makers 60 00:03:03,800 --> 00:03:06,600 Speaker 1: carry Yeah, and it is all about now bracing ourselves 61 00:03:06,639 --> 00:03:09,840 Speaker 1: for the earning season. What we anticipate, whether or not 62 00:03:09,919 --> 00:03:12,480 Speaker 1: we can see any real fundamental reason for it, is 63 00:03:12,520 --> 00:03:14,560 Speaker 1: basically a ball market that we've gone back into in 64 00:03:14,600 --> 00:03:17,000 Speaker 1: the NASDAC and it seems as though when you go 65 00:03:17,040 --> 00:03:19,040 Speaker 1: to the m Live pulse, this is a great way 66 00:03:19,080 --> 00:03:22,240 Speaker 1: of getting the Bloomberg user that people who are managing 67 00:03:22,280 --> 00:03:26,760 Speaker 1: money trading these stocks deciding really whether they're optimistic or not, 68 00:03:26,800 --> 00:03:29,560 Speaker 1: and ultimately it feels like they're not particularly they think 69 00:03:29,760 --> 00:03:32,880 Speaker 1: only fourteen percent in fact, think that the earnings are 70 00:03:32,880 --> 00:03:35,120 Speaker 1: going to be strong enough to really vindicate some of 71 00:03:35,120 --> 00:03:37,480 Speaker 1: the rally we've seen it. The other part that we're 72 00:03:37,480 --> 00:03:39,680 Speaker 1: looking at with this is the rotation into tech came 73 00:03:39,720 --> 00:03:42,000 Speaker 1: at the expense of the banks. Right, you think about 74 00:03:42,040 --> 00:03:44,680 Speaker 1: what happened with SVB, So the question we ask ourselves 75 00:03:44,720 --> 00:03:47,840 Speaker 1: going forward is, well, that's a little bit artificial because 76 00:03:47,840 --> 00:03:50,760 Speaker 1: what hurt the banks is also worrying for the tech sector. 77 00:03:50,800 --> 00:03:53,840 Speaker 1: Forty one percent of respondents saying what we saw with 78 00:03:54,120 --> 00:03:56,800 Speaker 1: SVB could spill over in some of the bigger names. 79 00:03:56,920 --> 00:03:58,720 Speaker 1: What does that mean going into earnings? What does that 80 00:03:58,760 --> 00:04:00,680 Speaker 1: mean for the tech sector, Well, we are s our audience. 81 00:04:00,800 --> 00:04:02,600 Speaker 1: And this is what they've had to say in recent weeks. 82 00:04:02,640 --> 00:04:15,400 Speaker 1: Carry the decline in the yields is actually driving tech stocks. 83 00:04:15,640 --> 00:04:18,880 Speaker 1: And if you take a look at the Quintessential Central Fangman, 84 00:04:19,200 --> 00:04:22,160 Speaker 1: they peaked at twenty eight percent of the SMP. They 85 00:04:22,240 --> 00:04:25,960 Speaker 1: trotted around eighteen and they've really inched up recently. And 86 00:04:26,040 --> 00:04:29,240 Speaker 1: that's being because you know that discounting mechanism, which is 87 00:04:29,320 --> 00:04:32,600 Speaker 1: represented by the yield, has resulted in those long tail 88 00:04:32,680 --> 00:04:35,760 Speaker 1: cash flows being worth more. These tech companies, if we're 89 00:04:35,760 --> 00:04:37,960 Speaker 1: talking to some of the bigger ones, I think they're 90 00:04:37,960 --> 00:04:41,200 Speaker 1: defensive and the standpoint of the health of their balance sheets. 91 00:04:41,800 --> 00:04:45,120 Speaker 1: You can see that when the banking crisis erupted that 92 00:04:45,360 --> 00:04:49,400 Speaker 1: even some of the bigger fan companies actually outperformed in 93 00:04:49,440 --> 00:04:53,240 Speaker 1: a relative basis because essentially their balance sheets are stellar. 94 00:04:53,640 --> 00:04:57,600 Speaker 1: The cost cutting once that started happen, the bottom and tech, 95 00:04:57,720 --> 00:04:59,920 Speaker 1: in my opinion, was done, and that's why I believe 96 00:05:00,480 --> 00:05:03,240 Speaker 1: there is still another ten to fifteen prison upside tech. 97 00:05:03,279 --> 00:05:05,000 Speaker 1: If you look at the seven biggest tech stocks in 98 00:05:05,040 --> 00:05:07,920 Speaker 1: the US, I think they make up almost more than 99 00:05:07,960 --> 00:05:09,760 Speaker 1: ten percent of the SMP. Five hundred in terms of 100 00:05:09,760 --> 00:05:12,239 Speaker 1: market cap, and that's only going to grow as people 101 00:05:12,240 --> 00:05:14,800 Speaker 1: find that that's the only place to hide. But once 102 00:05:14,880 --> 00:05:17,760 Speaker 1: earnings start to slow down, you should see that. You 103 00:05:17,760 --> 00:05:20,719 Speaker 1: should see this segment start to start there. You should 104 00:05:20,720 --> 00:05:27,720 Speaker 1: see their share prices start to fall a breadth of 105 00:05:27,800 --> 00:05:30,560 Speaker 1: viewpoints their head. But actually, what hasn't there been in 106 00:05:30,600 --> 00:05:33,400 Speaker 1: breadthin is the market rally in the first quarter. It 107 00:05:33,480 --> 00:05:35,320 Speaker 1: was all down to some of these big tech names. 108 00:05:35,320 --> 00:05:37,919 Speaker 1: That's why it's important for the broader market, right, And 109 00:05:37,960 --> 00:05:39,160 Speaker 1: you look at the run up and then as that 110 00:05:39,240 --> 00:05:41,200 Speaker 1: one hundred the first three months of this year, the 111 00:05:41,360 --> 00:05:45,800 Speaker 1: rotation into tech, it's completely odds with earnings expectations. The 112 00:05:45,960 --> 00:05:47,520 Speaker 1: data shows that we think it's going to be a 113 00:05:47,520 --> 00:05:50,599 Speaker 1: pretty rubbish season, particularly for megacap tech. So how do 114 00:05:50,600 --> 00:05:53,440 Speaker 1: you tally those two things? And also how expensive? Therefore 115 00:05:53,520 --> 00:05:55,880 Speaker 1: tech has become twenty four times on the NASA one 116 00:05:55,960 --> 00:05:59,039 Speaker 1: hundred in terms of forward earnings. That's more than we've 117 00:05:59,040 --> 00:06:00,960 Speaker 1: seen over the last Hey, let's get straight to it 118 00:06:01,000 --> 00:06:02,920 Speaker 1: with all. The woman has a few ancess for us, 119 00:06:03,000 --> 00:06:05,159 Speaker 1: Gina Mouston Adams. We're so prettied to say she's coming 120 00:06:05,160 --> 00:06:07,880 Speaker 1: to us. Of course, you know, our Broombag intelligence Gina, 121 00:06:08,000 --> 00:06:12,200 Speaker 1: we are seeing a lot of adam more basically, how 122 00:06:12,200 --> 00:06:14,599 Speaker 1: we've set ourselves up for the earning season. People bracing 123 00:06:14,600 --> 00:06:16,680 Speaker 1: for the numbers to come down and actually what there 124 00:06:16,760 --> 00:06:20,120 Speaker 1: since two thousand and six. Yeah, it should be a 125 00:06:20,120 --> 00:06:22,279 Speaker 1: pretty rough earning season, not just for tech but really 126 00:06:22,279 --> 00:06:24,640 Speaker 1: for the SMP five hundred at large. And indeed it's 127 00:06:24,640 --> 00:06:27,640 Speaker 1: expected to be a pretty rough first half altogether. Analysts 128 00:06:27,640 --> 00:06:30,400 Speaker 1: are now forecasting greater than seven percent decline in the 129 00:06:30,440 --> 00:06:32,920 Speaker 1: first half. Remember at the beginning of the year, they 130 00:06:32,920 --> 00:06:35,760 Speaker 1: were expecting only a two percent decline, So in the 131 00:06:35,800 --> 00:06:38,520 Speaker 1: matter of just a few weeks, analyst expectations have been 132 00:06:38,560 --> 00:06:41,360 Speaker 1: plumbing techs a big part of that. Both the tech 133 00:06:41,480 --> 00:06:45,840 Speaker 1: and communication sector, which of course houses stuck like Alphabet 134 00:06:46,240 --> 00:06:49,120 Speaker 1: and meta stocks that we generally think of as tech. 135 00:06:49,560 --> 00:06:51,760 Speaker 1: Both of those segments of the SMP five hundred are 136 00:06:51,760 --> 00:06:54,400 Speaker 1: anticipated to produce double digit declines and earnings for the 137 00:06:54,480 --> 00:06:57,799 Speaker 1: first quarter on the heels of a really rough fourth quarter. 138 00:06:57,960 --> 00:07:00,640 Speaker 1: So not much good news anticipated to come with the 139 00:07:00,640 --> 00:07:04,480 Speaker 1: first quarter earning season. It's the only thing that from 140 00:07:04,480 --> 00:07:09,080 Speaker 1: a fundamental perspective, may be enabling some better performance from 141 00:07:09,080 --> 00:07:12,280 Speaker 1: these stocks on the communication side is the valuations are 142 00:07:12,400 --> 00:07:14,720 Speaker 1: very very low. This is a group that has been 143 00:07:14,760 --> 00:07:16,400 Speaker 1: trading off for the better part of a year and 144 00:07:16,400 --> 00:07:18,160 Speaker 1: a half, so at least on that side of the 145 00:07:18,200 --> 00:07:22,040 Speaker 1: space where the Googles and that rather alphabet and Meta 146 00:07:22,280 --> 00:07:25,400 Speaker 1: Netflix disneys of the world are trading at relative discounts. 147 00:07:26,120 --> 00:07:28,800 Speaker 1: So that has emerged. And then also we have seen 148 00:07:28,840 --> 00:07:31,760 Speaker 1: a tremendous amount of cost cutting. So the consensus is 149 00:07:31,800 --> 00:07:34,880 Speaker 1: anticipating that within the first half of this year these 150 00:07:34,920 --> 00:07:38,680 Speaker 1: companies will prove enough cost cutting, rationalization of expenses and 151 00:07:38,720 --> 00:07:41,520 Speaker 1: the like that they can produce a margin turnaround by 152 00:07:41,560 --> 00:07:44,960 Speaker 1: the end of twenty twenty three. Gina, we talked about 153 00:07:44,960 --> 00:07:47,680 Speaker 1: the rotation into tech they kind of gained and then 154 00:07:47,720 --> 00:07:50,200 Speaker 1: as that one hundred, this sort of starkist example of 155 00:07:50,200 --> 00:07:52,400 Speaker 1: that you have megacat tech in that indatex. You also 156 00:07:52,480 --> 00:07:55,880 Speaker 1: have very high multiple software names, some of them preprofit 157 00:07:55,920 --> 00:07:59,440 Speaker 1: as well. Why is there such a why are they 158 00:07:59,440 --> 00:08:02,280 Speaker 1: so odd? The sort of outlook for a poor earning 159 00:08:02,320 --> 00:08:05,840 Speaker 1: season and the performance of that index, Well, I think 160 00:08:05,840 --> 00:08:08,600 Speaker 1: there's a combination of things going on. The first is, 161 00:08:08,800 --> 00:08:11,840 Speaker 1: even though outlook the alok for earnings is relatively negative, 162 00:08:11,880 --> 00:08:15,000 Speaker 1: we did price in a very negative outlook for earnings 163 00:08:15,000 --> 00:08:17,080 Speaker 1: by the end of twenty twenty two. Really, as of 164 00:08:17,160 --> 00:08:20,280 Speaker 1: the early part of October twenty twenty two, the market 165 00:08:20,320 --> 00:08:23,160 Speaker 1: was pricing for a significant decline in earnings to come. 166 00:08:23,640 --> 00:08:26,880 Speaker 1: We did see the relative momentum and analyst revisions reach 167 00:08:26,920 --> 00:08:29,200 Speaker 1: a low at the point as well, So even though 168 00:08:29,240 --> 00:08:32,400 Speaker 1: revisions are still going lower, they're not going lower as 169 00:08:32,440 --> 00:08:35,240 Speaker 1: fast as they were in the fall of last year, 170 00:08:35,720 --> 00:08:38,760 Speaker 1: so that has created some degree of stability. I think 171 00:08:38,800 --> 00:08:41,000 Speaker 1: another thing to consider is at the start of this year, 172 00:08:41,080 --> 00:08:44,080 Speaker 1: some of these stocks were incredibly discounted. Again, these are 173 00:08:44,080 --> 00:08:47,160 Speaker 1: the communications segments of tech, not the traditional tech, but 174 00:08:47,160 --> 00:08:51,360 Speaker 1: the communication stucks were trading at very extreme discounts relative 175 00:08:51,400 --> 00:08:54,560 Speaker 1: to their long term history, which would imply they were 176 00:08:54,600 --> 00:08:57,480 Speaker 1: relatively prepared for very negative earnings news. And then many 177 00:08:57,480 --> 00:09:00,880 Speaker 1: of these companies came out and announced cost cutting measures 178 00:09:00,920 --> 00:09:04,559 Speaker 1: that allowed for the consensus to start to think about 179 00:09:04,559 --> 00:09:08,480 Speaker 1: a potential margin finally forming for this segment of the index. 180 00:09:08,960 --> 00:09:11,439 Speaker 1: And then the whilest I would say really did support 181 00:09:11,440 --> 00:09:14,000 Speaker 1: the rotation was about interest rates. We've seen a pretty 182 00:09:14,080 --> 00:09:18,280 Speaker 1: big rally and interest rates, which naturally results in improvement 183 00:09:18,360 --> 00:09:21,160 Speaker 1: in some of the longer duration, higher growth segments of 184 00:09:21,240 --> 00:09:25,040 Speaker 1: the index in terms of valuation expansion. So it's not 185 00:09:25,120 --> 00:09:27,600 Speaker 1: been about earnings really, it's more about a lot of 186 00:09:27,640 --> 00:09:30,880 Speaker 1: other factors that have helped some near term recovery in 187 00:09:30,880 --> 00:09:35,720 Speaker 1: this group. Caroline, you mentioned earlier the valuation question. You 188 00:09:35,760 --> 00:09:38,559 Speaker 1: know later in the show we're going to pass over 189 00:09:38,640 --> 00:09:41,120 Speaker 1: the IDC data with IDC. I'm looking forward to that. 190 00:09:41,360 --> 00:09:44,360 Speaker 1: How much is that a crystal ball for the trouble 191 00:09:44,440 --> 00:09:47,120 Speaker 1: macro environment we're in right now for technology? Yeah, Gina, 192 00:09:47,360 --> 00:09:49,760 Speaker 1: to that point, you used to always come on around 193 00:09:49,800 --> 00:09:51,520 Speaker 1: earnings in the clothes when I was lucky enough to 194 00:09:51,559 --> 00:09:54,600 Speaker 1: be in those hours as well, and thinking about when 195 00:09:54,640 --> 00:09:57,280 Speaker 1: you get about earnings from For me, the canary in 196 00:09:57,320 --> 00:10:00,240 Speaker 1: the coal mine was nearly always snap and it was 197 00:10:00,280 --> 00:10:03,000 Speaker 1: about advertising. But now all were starting to think more 198 00:10:03,040 --> 00:10:08,640 Speaker 1: about well, inventory, about consumer, about demand, about the chip sector. Yep. 199 00:10:08,760 --> 00:10:11,559 Speaker 1: And I think this is a really important distinction between 200 00:10:11,600 --> 00:10:14,120 Speaker 1: This is why I keep talking about the communication stocks 201 00:10:14,280 --> 00:10:17,880 Speaker 1: versus the tech stocks. Communication stocks are a different group 202 00:10:17,960 --> 00:10:21,200 Speaker 1: intentionally because fundamentally they trade on a slightly different cycle. 203 00:10:21,600 --> 00:10:25,120 Speaker 1: Communication stocks led this down draft. Remember that's where you 204 00:10:25,160 --> 00:10:28,679 Speaker 1: saw a tremendous amount of margin weakness. That's where Snap 205 00:10:28,800 --> 00:10:32,240 Speaker 1: was absolutely a good leading indicator. Now we're moving into 206 00:10:32,240 --> 00:10:34,760 Speaker 1: a slightly different portion of the cycle, which you would 207 00:10:34,800 --> 00:10:38,400 Speaker 1: expect would probably hammer away at some of the tech 208 00:10:38,480 --> 00:10:42,520 Speaker 1: strengths and tech specific strengths, which is really more about 209 00:10:42,600 --> 00:10:45,480 Speaker 1: not only software and services, but those hardware names, the 210 00:10:45,480 --> 00:10:49,840 Speaker 1: communications equipment names, the semiconductor's names. The areas of the 211 00:10:49,880 --> 00:10:53,160 Speaker 1: index that are really traditional tech they're subject to an 212 00:10:53,160 --> 00:10:57,400 Speaker 1: inventory cycle, are the areas where, unfortunately valuations are still 213 00:10:57,440 --> 00:11:01,360 Speaker 1: a little bit overpriced. Earning's weakness is emerging, has emerged 214 00:11:01,440 --> 00:11:04,000 Speaker 1: over the last year, certainly with an inventory crisis that 215 00:11:04,080 --> 00:11:10,080 Speaker 1: has emerged but is likely reaching more critical levels. And frankly, 216 00:11:10,120 --> 00:11:12,679 Speaker 1: I think the investor base is really captivated by the 217 00:11:12,720 --> 00:11:14,920 Speaker 1: idea of a cycle, and in particular with Apple and 218 00:11:14,960 --> 00:11:18,720 Speaker 1: Microsoft really being able to shrug off risks fast quickly 219 00:11:18,720 --> 00:11:21,199 Speaker 1: and recover quickly. Yeah, and that's a notion that we're 220 00:11:21,200 --> 00:11:23,040 Speaker 1: going to really question over the course of the next 221 00:11:23,080 --> 00:11:25,640 Speaker 1: earning season is how much of this is a short 222 00:11:25,720 --> 00:11:28,559 Speaker 1: term weakness versus a long term weakness. How rapidly can 223 00:11:28,640 --> 00:11:32,520 Speaker 1: these companies to recover strength into twenty twenty four that 224 00:11:32,720 --> 00:11:34,839 Speaker 1: is likely to frame. I think the outlook for these 225 00:11:34,920 --> 00:11:38,000 Speaker 1: ducks and how many times can they mention artificial intelligence 226 00:11:38,040 --> 00:11:40,640 Speaker 1: to get people on sited Gina Marston Adams, I mean, 227 00:11:40,720 --> 00:11:52,160 Speaker 1: thank you so much opening meg Intelligence. IDC out with 228 00:11:52,200 --> 00:11:55,560 Speaker 1: its latest report showing PC demand is plunging, with Apple, 229 00:11:55,880 --> 00:11:58,880 Speaker 1: for example, seeing a more than forty percent decline in 230 00:11:58,960 --> 00:12:02,200 Speaker 1: shipments year year in the first quarter, joining us an 231 00:12:02,200 --> 00:12:05,760 Speaker 1: now I DC Group Vice President for Consumer Device Trackers 232 00:12:05,840 --> 00:12:08,439 Speaker 1: Ryan Reith, and Ryan, you know, Apple is the kind 233 00:12:08,440 --> 00:12:11,120 Speaker 1: of headline here that across the industry we're back below 234 00:12:11,240 --> 00:12:14,520 Speaker 1: early twenty nineteen levels for shipments. What is the principal 235 00:12:14,559 --> 00:12:18,240 Speaker 1: cause really demandsload? Good to talk to you guys, by 236 00:12:18,280 --> 00:12:21,800 Speaker 1: the way, it's nice like going on again put on. Honestly, 237 00:12:21,920 --> 00:12:23,880 Speaker 1: it's really a demand story at this point. You know, 238 00:12:23,920 --> 00:12:26,480 Speaker 1: I think you know the way we're looking at the 239 00:12:26,679 --> 00:12:30,640 Speaker 1: entire market is we're basically at a correctional standpoint, and 240 00:12:30,760 --> 00:12:33,400 Speaker 1: the correction is not just going to be this Q 241 00:12:33,520 --> 00:12:36,760 Speaker 1: one that we just put out a report this morning. Realistically, 242 00:12:36,800 --> 00:12:39,320 Speaker 1: the correction is going to be probably most of this 243 00:12:39,440 --> 00:12:43,360 Speaker 1: year or the industry sees some growth around PCs. But 244 00:12:44,320 --> 00:12:46,080 Speaker 1: so yeah, that's kind of where we're at at this stage, 245 00:12:46,080 --> 00:12:48,720 Speaker 1: it's not a supply issue. It's not anything there. It's 246 00:12:48,760 --> 00:12:51,880 Speaker 1: really a demand issue. And Ryan, the reasoning behind the 247 00:12:51,920 --> 00:12:56,320 Speaker 1: demand issue. Is it that well, some of these computers 248 00:12:56,320 --> 00:12:59,360 Speaker 1: haven't been upgraded of late, with silantipitating Apple to do 249 00:12:59,400 --> 00:13:01,440 Speaker 1: that in the second half of the year, everyone already 250 00:13:01,480 --> 00:13:04,040 Speaker 1: over indexed on purchasing them. Or is it actually when 251 00:13:04,040 --> 00:13:05,920 Speaker 1: I worried about our finances, we don't want to make 252 00:13:05,960 --> 00:13:10,000 Speaker 1: big purchases. It's probably more of the ladder. I think 253 00:13:10,000 --> 00:13:11,920 Speaker 1: it's uh, you know, you've got sorry about that. I 254 00:13:11,960 --> 00:13:15,480 Speaker 1: just pumped the table here. Um, you've got the you know, 255 00:13:15,480 --> 00:13:18,080 Speaker 1: you've got the ongoing you know, inflation concerns that are 256 00:13:18,200 --> 00:13:20,960 Speaker 1: rising costs of goods already, you know, the global recession 257 00:13:21,040 --> 00:13:23,920 Speaker 1: fear has not gone away. It's been tempered a little 258 00:13:23,920 --> 00:13:25,520 Speaker 1: bit in some regions. So I think it's probably more 259 00:13:25,520 --> 00:13:30,800 Speaker 1: of the ladder that both consumers, companies and education institutions 260 00:13:30,840 --> 00:13:33,040 Speaker 1: are sort of holding onto their purse strings a little 261 00:13:33,040 --> 00:13:35,440 Speaker 1: bit tighter than they would And it makes sense. And 262 00:13:35,640 --> 00:13:38,640 Speaker 1: I think a lot of the industry, from supply chain 263 00:13:38,679 --> 00:13:42,520 Speaker 1: all the way up to the OEMs, they foresaw this coming. 264 00:13:43,640 --> 00:13:45,840 Speaker 1: I think the question was really what's the magnitude going 265 00:13:45,880 --> 00:13:49,080 Speaker 1: to be, And nobody wanted to, you know, over sort 266 00:13:49,120 --> 00:13:51,280 Speaker 1: of correct on the downside because they didn't want to 267 00:13:51,280 --> 00:13:54,120 Speaker 1: miss an opportunity like many did throughout the pandemic. So 268 00:13:54,160 --> 00:13:56,479 Speaker 1: I think we're at that point now where you're gonna 269 00:13:56,559 --> 00:13:58,319 Speaker 1: you know, we already heard a little bit from Samsung 270 00:13:58,679 --> 00:14:01,720 Speaker 1: around memory, but we've got some really important tech earnings 271 00:14:01,760 --> 00:14:03,079 Speaker 1: coming up in the next couple of weeks. Would you 272 00:14:03,120 --> 00:14:05,480 Speaker 1: guys know very well? I think we're going to start 273 00:14:05,520 --> 00:14:07,440 Speaker 1: to hear a little bit more, probably hear a little 274 00:14:07,480 --> 00:14:11,360 Speaker 1: bit more. You know, the storm's not over, more so 275 00:14:11,520 --> 00:14:14,520 Speaker 1: than the positives. But you know, I just want to 276 00:14:14,520 --> 00:14:16,920 Speaker 1: sort of just preface by sort of saying that we 277 00:14:17,000 --> 00:14:19,600 Speaker 1: still believe that, you know, we get into next year, 278 00:14:19,680 --> 00:14:22,280 Speaker 1: that we're going to be at at or a little 279 00:14:22,320 --> 00:14:24,920 Speaker 1: above pre pandemic level. So there is some positive in 280 00:14:25,000 --> 00:14:27,040 Speaker 1: all this, but we're going to hear some negativity not 281 00:14:27,080 --> 00:14:29,880 Speaker 1: only from what we put out today but realistically probably 282 00:14:29,920 --> 00:14:32,080 Speaker 1: through the next couple of course. And ed, I mean, 283 00:14:32,120 --> 00:14:35,880 Speaker 1: we already heard the warnings. The CFO of Apple himself, 284 00:14:35,920 --> 00:14:38,440 Speaker 1: Luca was saying we're going to see double digit declines 285 00:14:38,520 --> 00:14:40,400 Speaker 1: in the map part of the business. But it's not 286 00:14:40,640 --> 00:14:44,280 Speaker 1: just Apple being affected. Yeah, And we were saying earlier, Ryan, 287 00:14:44,320 --> 00:14:46,520 Speaker 1: you know, how much is your data set a crystal 288 00:14:46,560 --> 00:14:48,960 Speaker 1: ball ahead of earning season? But I wonder if we 289 00:14:48,960 --> 00:14:51,560 Speaker 1: can actually get even more granularity. Right, it's not Apple. 290 00:14:51,880 --> 00:14:54,960 Speaker 1: You look at Dell greater than thirty percent, decline HP 291 00:14:55,160 --> 00:14:58,000 Speaker 1: greater than twenty four percent. Is there any geographic or 292 00:14:58,040 --> 00:15:06,200 Speaker 1: demographical breakdown you can see real pullback from the consumer. Yeah, well, 293 00:15:06,200 --> 00:15:08,600 Speaker 1: it's happening across the board. I would say the pullback 294 00:15:08,640 --> 00:15:11,400 Speaker 1: that we're seeing now, the shift is probably more angled 295 00:15:11,400 --> 00:15:14,080 Speaker 1: towards the developed markets in the last six months, and 296 00:15:14,120 --> 00:15:16,960 Speaker 1: the reason for that is because more of the developing 297 00:15:17,160 --> 00:15:20,400 Speaker 1: markets around the world had already sort of corrected for 298 00:15:21,320 --> 00:15:24,080 Speaker 1: consumer pullback, you know, hit a little bit harder on 299 00:15:24,200 --> 00:15:27,760 Speaker 1: the wallet and so forth, and businesses sort of followed 300 00:15:27,880 --> 00:15:31,000 Speaker 1: in sort of in that same segue, meaning, you know, 301 00:15:31,040 --> 00:15:34,480 Speaker 1: businesses in these emerging markets sort of said, hey, look, 302 00:15:34,480 --> 00:15:37,360 Speaker 1: if we needed a PC, maybe we could do another 303 00:15:37,400 --> 00:15:40,320 Speaker 1: six months without buying that PC. Or if people were 304 00:15:40,320 --> 00:15:42,800 Speaker 1: going to refresh every five years, maybe we can get 305 00:15:42,800 --> 00:15:45,080 Speaker 1: them to six years now. And that sort of prolongs 306 00:15:45,120 --> 00:15:48,720 Speaker 1: the cost. So again, I know, developed market versus emerging 307 00:15:48,760 --> 00:15:50,920 Speaker 1: market doesn't really sort of break down the geographies. But 308 00:15:51,120 --> 00:15:53,720 Speaker 1: you know, I think when you look at things, you know, 309 00:15:54,000 --> 00:15:57,920 Speaker 1: our expectation is that, you know, the the North American 310 00:15:57,920 --> 00:16:01,120 Speaker 1: market has still been doing good in comparison to the 311 00:16:01,160 --> 00:16:05,800 Speaker 1: global market. You know, we've seen pockets of again I 312 00:16:06,000 --> 00:16:09,040 Speaker 1: use the word strength very lightly because it's really not 313 00:16:09,120 --> 00:16:11,320 Speaker 1: strength but a little bit better sort of opportunity in 314 00:16:11,360 --> 00:16:13,640 Speaker 1: some of the European markets. China seeing a little bit 315 00:16:13,640 --> 00:16:15,920 Speaker 1: of recovery. Going to take a little bit more time there, 316 00:16:16,000 --> 00:16:18,720 Speaker 1: especially on the consumer side. So it's really spread out, 317 00:16:18,760 --> 00:16:22,360 Speaker 1: but it's probably hitting the pullbacks and the developing markets 318 00:16:22,400 --> 00:16:24,120 Speaker 1: a little bit more just because of the cost. Ran 319 00:16:24,200 --> 00:16:27,320 Speaker 1: reath great breakdown, thank you of IDC Group, and he 320 00:16:27,400 --> 00:16:29,320 Speaker 1: led us there. He started talking about China and the 321 00:16:29,400 --> 00:16:31,960 Speaker 1: demand from that country. Let's stick with Apple and in fact, 322 00:16:31,960 --> 00:16:34,920 Speaker 1: it's relationships with China, and you know that it's one 323 00:16:35,080 --> 00:16:37,800 Speaker 1: US business that's facing some of the steepest challenges. So 324 00:16:37,880 --> 00:16:41,920 Speaker 1: we say to selective decoupling as it's been called from China. 325 00:16:42,000 --> 00:16:44,640 Speaker 1: It's a key lawmaker has been saying after a series 326 00:16:44,640 --> 00:16:47,080 Speaker 1: of meetings with executives and experts in Hollywood and Silicon 327 00:16:47,120 --> 00:16:49,560 Speaker 1: Valley over the last week or so. Let's go for 328 00:16:49,600 --> 00:16:52,640 Speaker 1: more on this from the most Economics Tom Orlick and Tom, 329 00:16:52,640 --> 00:16:57,200 Speaker 1: we're talking about Mike mcgallagher in particular, discussing this selective decoupling. 330 00:16:57,240 --> 00:17:02,000 Speaker 1: What does he mean exactly? So we've got Mike Gallagher, 331 00:17:02,440 --> 00:17:06,520 Speaker 1: the chair of a new House committee on US China 332 00:17:06,560 --> 00:17:11,480 Speaker 1: relations heading over to California, meeting with Tim Cook of Apple, 333 00:17:12,119 --> 00:17:18,919 Speaker 1: meeting with Bob Iger of Disney, and talking about this 334 00:17:19,040 --> 00:17:23,560 Speaker 1: concept of selective decoupling. Now, the idea here is that 335 00:17:23,600 --> 00:17:26,560 Speaker 1: there are some aspects of the US China relationship which 336 00:17:26,600 --> 00:17:30,920 Speaker 1: are strategically important. Most here in Washington, DC, for example, 337 00:17:31,240 --> 00:17:34,440 Speaker 1: don't want China to get the edge in artificial intelligence, 338 00:17:34,680 --> 00:17:37,480 Speaker 1: and that's why there's now a ban in selling China 339 00:17:37,680 --> 00:17:42,200 Speaker 1: the leading edge semiconductors which are required to do leading 340 00:17:42,280 --> 00:17:47,440 Speaker 1: edge AI work. Other parts of the relationship, though, snapping 341 00:17:47,480 --> 00:17:53,920 Speaker 1: together iPhones, watching Disney movies, cooperating on climate change, there's 342 00:17:53,960 --> 00:17:57,560 Speaker 1: a desire to keep those relationships on an even keel. 343 00:17:58,280 --> 00:18:01,719 Speaker 1: The big question, of course, is well, in practical terms, 344 00:18:02,040 --> 00:18:05,040 Speaker 1: for a company like Apple, for a company like Disney, 345 00:18:05,280 --> 00:18:08,399 Speaker 1: what does that selective decoupling look like, and is it 346 00:18:08,440 --> 00:18:12,440 Speaker 1: in fact possible to have intense colastetition, intense rivalry over here, 347 00:18:12,840 --> 00:18:17,679 Speaker 1: but normal relationships over there. Tomorlick of Bloomberg Economics, who, 348 00:18:17,720 --> 00:18:20,480 Speaker 1: of course, Caroline spent many years in China at the 349 00:18:20,480 --> 00:18:23,040 Speaker 1: heart of that economy, so knows both sides. All right. 350 00:18:23,240 --> 00:18:25,399 Speaker 1: Coming up, We're going to talk Tesla, which is building 351 00:18:25,440 --> 00:18:29,040 Speaker 1: a large new battery factory in China in Shanghai, further 352 00:18:29,119 --> 00:18:32,240 Speaker 1: cementing China's place at the top of the global energy 353 00:18:32,280 --> 00:18:35,439 Speaker 1: storage supply chain. More with that next, sickem of the 354 00:18:35,440 --> 00:18:38,480 Speaker 1: world of mask. Twitter has changed its description tag for 355 00:18:38,680 --> 00:18:44,000 Speaker 1: MPR to government funded Media from state affiliated media following 356 00:18:44,000 --> 00:18:46,719 Speaker 1: criticism last week. You probably saw this one. The company 357 00:18:46,760 --> 00:18:50,640 Speaker 1: rewrote the label on Saturday, following pushback from MPR, which 358 00:18:50,640 --> 00:18:54,080 Speaker 1: hasn't used the platform itself since April fourth. MPR CEO 359 00:18:54,200 --> 00:18:58,760 Speaker 1: had called the state affiliated media label quote unacceptable. This 360 00:18:59,000 --> 00:19:12,320 Speaker 1: is Bloomberg time now for Talking Tech. Open AI sending 361 00:19:12,359 --> 00:19:14,679 Speaker 1: its eyes in Japan. The co found Racio some altman 362 00:19:14,720 --> 00:19:17,240 Speaker 1: who's here. He says, the organization is looking at opening 363 00:19:17,240 --> 00:19:20,560 Speaker 1: an office there and expanding Japanese language services. After meeting 364 00:19:20,560 --> 00:19:22,960 Speaker 1: with the country's prime Minister, let's move to Uber now 365 00:19:23,040 --> 00:19:25,320 Speaker 1: because it's Middle East unit is selling a fifty percent 366 00:19:25,320 --> 00:19:28,520 Speaker 1: stake worth four hundred million in its Kareem super app 367 00:19:28,560 --> 00:19:31,720 Speaker 1: to Emirates Telecom. Now, that's an Aberdabi based firm trying 368 00:19:31,720 --> 00:19:35,240 Speaker 1: to reinvent itself as a global tech investor. And Tesla 369 00:19:35,400 --> 00:19:38,760 Speaker 1: will build a large new battery factory in Shanghai the 370 00:19:38,800 --> 00:19:42,719 Speaker 1: ev Makawar manufacturer those megapacks, those large scale energy storage 371 00:19:42,760 --> 00:19:45,240 Speaker 1: units in the new facility, adding to its factory for 372 00:19:45,320 --> 00:19:47,239 Speaker 1: evs in the area, and ed you're going to talk 373 00:19:47,280 --> 00:19:49,800 Speaker 1: about that more. Yeah, I've got DNA Hole who covers 374 00:19:49,800 --> 00:19:52,040 Speaker 1: all things Tesla for us here in San Francisco with 375 00:19:52,119 --> 00:19:54,280 Speaker 1: me on set. You and I always talk about when 376 00:19:54,280 --> 00:19:56,440 Speaker 1: we're trying to report out these things. It's not a surprise. 377 00:19:56,520 --> 00:19:58,919 Speaker 1: Elon Musk has always said long term, we need more 378 00:19:58,960 --> 00:20:01,880 Speaker 1: giga factories all over the world. But this one's quite 379 00:20:01,880 --> 00:20:04,800 Speaker 1: interesting because it's in China. Yeah, I mean, Tesla is 380 00:20:04,840 --> 00:20:07,280 Speaker 1: really doubling down on its investment in China at a 381 00:20:07,320 --> 00:20:10,000 Speaker 1: time when the like tensions between Washington and Beijing are 382 00:20:10,040 --> 00:20:12,359 Speaker 1: kind of at an all time high. And this is 383 00:20:12,400 --> 00:20:15,800 Speaker 1: not super surprising. At Investor Day, last month, Tesla talked 384 00:20:15,840 --> 00:20:19,120 Speaker 1: about the energy transition. They've always made it very clear 385 00:20:19,119 --> 00:20:21,359 Speaker 1: that they are more than a car company. You know, 386 00:20:21,440 --> 00:20:24,760 Speaker 1: for years energy storage took a backseat to the cars, 387 00:20:24,840 --> 00:20:27,399 Speaker 1: but now we're seeing Tesla talk a lot more about 388 00:20:27,440 --> 00:20:29,720 Speaker 1: the energy storage products. A lot of news from tests 389 00:20:29,720 --> 00:20:32,520 Speaker 1: are over holiday weekend, which often happens. They cut prices 390 00:20:32,520 --> 00:20:35,520 Speaker 1: again in the United States. Where and how and why? 391 00:20:36,000 --> 00:20:39,240 Speaker 1: So they changed the prices on their website late Thursday 392 00:20:39,280 --> 00:20:43,040 Speaker 1: night Friday as a market holiday, cut the X and 393 00:20:43,040 --> 00:20:46,760 Speaker 1: asked quite a bit, you know, shipped off some prices 394 00:20:46,800 --> 00:20:49,600 Speaker 1: of the three and the why. Musk has said that 395 00:20:49,640 --> 00:20:52,280 Speaker 1: they're going to chase volume over margins, and I don't 396 00:20:52,280 --> 00:20:54,119 Speaker 1: know if investors are super thrilled with that, but I 397 00:20:54,119 --> 00:20:56,320 Speaker 1: mean he's made it very clear that in the short term, 398 00:20:56,320 --> 00:20:58,760 Speaker 1: this is the way to go. We saw prices rise 399 00:20:58,880 --> 00:21:01,119 Speaker 1: up quite a bit because of the chip shortage. Now 400 00:21:01,160 --> 00:21:04,280 Speaker 1: they're coming back down and he's determined to maintain that 401 00:21:04,320 --> 00:21:06,640 Speaker 1: pole position and he's going to cut prices to move 402 00:21:07,119 --> 00:21:09,719 Speaker 1: on them. All right, Bloom bogs Downahole, who leads our 403 00:21:09,760 --> 00:21:19,919 Speaker 1: coverage of all things Elon Musk, All Things Tesla. Welcome 404 00:21:19,960 --> 00:21:21,840 Speaker 1: back to mow Med Technology. I'm Caroline Hide in New 405 00:21:21,920 --> 00:21:24,840 Speaker 1: York and I'm med lod Low in Sam Francisco. We've 406 00:21:24,840 --> 00:21:28,360 Speaker 1: got some thin trading, to be honest, amid the holiday weekend, 407 00:21:28,520 --> 00:21:31,919 Speaker 1: but most major equity indicias lower a lot of trading 408 00:21:32,040 --> 00:21:34,679 Speaker 1: driven around FED bets and has that one hundred off 409 00:21:34,760 --> 00:21:37,080 Speaker 1: by a percentage point. Also, the US listed shares of 410 00:21:37,200 --> 00:21:40,240 Speaker 1: China Tech down more than one and a half percent, 411 00:21:40,480 --> 00:21:43,480 Speaker 1: sort of underperforming the market where there's outperformances in the chips. 412 00:21:43,720 --> 00:21:45,960 Speaker 1: Look at the Philadelphia semi conductor index up eight tens 413 00:21:46,040 --> 00:21:48,399 Speaker 1: or one percent. When you look at the individual movers, Caroline, 414 00:21:48,400 --> 00:21:50,800 Speaker 1: you kind of understand why. It's the memory chip makers 415 00:21:51,040 --> 00:21:54,879 Speaker 1: really pushing higher significant single digit gains that dragging up 416 00:21:54,920 --> 00:21:58,399 Speaker 1: that index, all after Samsung said on Friday that it 417 00:21:58,520 --> 00:22:00,440 Speaker 1: was going to cut production and memory chips to a 418 00:22:00,520 --> 00:22:02,960 Speaker 1: meaningful level take some of that supply glut out of 419 00:22:03,040 --> 00:22:05,959 Speaker 1: the market. Where there is weakness is TSMC, which, as 420 00:22:06,000 --> 00:22:09,359 Speaker 1: you know over the weekend said that it essentially has 421 00:22:09,359 --> 00:22:13,359 Speaker 1: had its second consecutive coursely sales miss against expectations. But 422 00:22:13,800 --> 00:22:16,560 Speaker 1: how quickly things are changing this sector from supply glut 423 00:22:16,760 --> 00:22:19,840 Speaker 1: to no demand. What is going on. Yeah, and ultimately 424 00:22:19,960 --> 00:22:23,159 Speaker 1: the self prescriptions that are going on at Samsung cutting 425 00:22:23,200 --> 00:22:27,280 Speaker 1: its production and TSMC actually cutting its capital expenditures. That's 426 00:22:27,280 --> 00:22:30,000 Speaker 1: the game. With Joanne Phoene, Partner Portfolio manager and Advisors 427 00:22:30,000 --> 00:22:32,280 Speaker 1: Capital Management, who really we looked to you for the 428 00:22:32,320 --> 00:22:34,600 Speaker 1: expertise in the chip sector right now, joe Anne, because 429 00:22:34,840 --> 00:22:39,080 Speaker 1: should we expected all of this? Yeah, Caroline's good to see, 430 00:22:39,080 --> 00:22:41,600 Speaker 1: you know, the challenges of the chip industry you're facing 431 00:22:41,800 --> 00:22:44,119 Speaker 1: look like they are coming to an end, which is 432 00:22:44,160 --> 00:22:47,480 Speaker 1: the good news. The cuts at Samsung for a manufacturing 433 00:22:47,520 --> 00:22:51,080 Speaker 1: capacity is always part of a big bass boom cycle 434 00:22:51,160 --> 00:22:53,240 Speaker 1: in the memory chip world. We're seeing that play out. 435 00:22:53,640 --> 00:22:56,200 Speaker 1: But the Apple and TSMC news, you know, it has 436 00:22:56,280 --> 00:22:59,600 Speaker 1: some people wondering just how far down the PC sales 437 00:22:59,600 --> 00:23:01,320 Speaker 1: are going to ago and how long that part of 438 00:23:01,359 --> 00:23:03,920 Speaker 1: the world is going to take to recover. And this 439 00:23:04,440 --> 00:23:06,879 Speaker 1: becomes circular in a way, and are we kicked off 440 00:23:06,960 --> 00:23:10,280 Speaker 1: the conversation of today really discussing some of the Apple issues, 441 00:23:10,320 --> 00:23:12,600 Speaker 1: the fact that they're seeing a slowdown in PCs that 442 00:23:13,000 --> 00:23:16,560 Speaker 1: just is highlighting the electronics demand that diminishes and ultimately 443 00:23:16,640 --> 00:23:19,080 Speaker 1: that hits chips. I think John, this is where It's 444 00:23:19,119 --> 00:23:21,320 Speaker 1: hard to understand what's going on, right, Is this a 445 00:23:21,400 --> 00:23:24,320 Speaker 1: demand issue for the end market memory chips go into 446 00:23:24,760 --> 00:23:29,040 Speaker 1: PC's are the consumer electronics? Is this chip customers going 447 00:23:29,080 --> 00:23:31,520 Speaker 1: through inventory and that there is a supply gout? What 448 00:23:31,680 --> 00:23:33,680 Speaker 1: for you is the single biggest factor right now that's 449 00:23:33,720 --> 00:23:37,399 Speaker 1: hurting the chipmakers. You know, if for those exposed to 450 00:23:37,480 --> 00:23:41,560 Speaker 1: the consumer PCs and smartphones, it's certainly a demand decline 451 00:23:41,720 --> 00:23:45,119 Speaker 1: right after the surgeon purchases during the works of the pandemic, right, 452 00:23:45,200 --> 00:23:48,080 Speaker 1: we're seeing them digest that and wait till they need 453 00:23:48,160 --> 00:23:51,240 Speaker 1: to upgrade their PCs and their smartphones. So I think 454 00:23:51,280 --> 00:23:54,240 Speaker 1: demand is largely driving what's going on bulth with Apple 455 00:23:54,280 --> 00:23:56,680 Speaker 1: on TSMC and have already gone on at the other 456 00:23:56,760 --> 00:24:00,399 Speaker 1: PC manufacturers. The latest data from IDC just can firms 457 00:24:00,480 --> 00:24:04,480 Speaker 1: that Apple's higher priced PCs are now seeing that same 458 00:24:04,560 --> 00:24:06,600 Speaker 1: kind of drop off. And don't forget we also saw 459 00:24:06,840 --> 00:24:11,160 Speaker 1: news recently that Apple was cutting its demand for chips 460 00:24:11,200 --> 00:24:14,360 Speaker 1: out of TMSMC, particularly the newest chip, the M two, 461 00:24:14,880 --> 00:24:17,000 Speaker 1: and that you know, was also a signal of what 462 00:24:17,160 --> 00:24:19,480 Speaker 1: this was likely to be for them for the first quarter. 463 00:24:20,600 --> 00:24:23,840 Speaker 1: You've taken us there. It's the next generation technology The 464 00:24:23,960 --> 00:24:26,600 Speaker 1: first thing that Caroline thinks of Joan when she wakes 465 00:24:26,720 --> 00:24:30,320 Speaker 1: up is artificial intelligence, and when she goes to sleep, 466 00:24:30,920 --> 00:24:33,480 Speaker 1: artificial intelligence is all any of us think about the moment. 467 00:24:33,920 --> 00:24:36,639 Speaker 1: But in the chip sector, that's what's driving sales right now. 468 00:24:36,680 --> 00:24:39,480 Speaker 1: You look at Vinvidia as the kind of prime beneficiary 469 00:24:39,560 --> 00:24:41,840 Speaker 1: of that. Is that an area that excites you as 470 00:24:41,840 --> 00:24:45,320 Speaker 1: an investor, Yeah, ed, you've just bridged to the exciting 471 00:24:45,359 --> 00:24:48,480 Speaker 1: area of the chip world, which is high performance computing, 472 00:24:48,600 --> 00:24:51,840 Speaker 1: the generative AI. And don't forget there's also a broader 473 00:24:51,960 --> 00:24:54,680 Speaker 1: demand for chips out there in industrial applications and medical 474 00:24:54,880 --> 00:24:57,720 Speaker 1: care applications. So while we do see right the PC 475 00:24:57,880 --> 00:25:01,520 Speaker 1: and smartphone space in a demand and driven decline and 476 00:25:02,040 --> 00:25:04,280 Speaker 1: all the inventory problems that came along with that, we 477 00:25:04,440 --> 00:25:07,600 Speaker 1: continue to see a secular that is, multi year growth 478 00:25:08,040 --> 00:25:10,920 Speaker 1: in the other areas of a more advanced chips demand, 479 00:25:11,040 --> 00:25:14,120 Speaker 1: like for Invidia chips, like for servers. We know data 480 00:25:14,160 --> 00:25:16,679 Speaker 1: centers are continuing to expand we have all this traffic 481 00:25:16,840 --> 00:25:19,480 Speaker 1: running across the Internet, and now all of this demand 482 00:25:19,560 --> 00:25:23,399 Speaker 1: for really high intensity computation driving the demand, for example, 483 00:25:23,440 --> 00:25:26,320 Speaker 1: for Invidia chips. So one has to look more broadly 484 00:25:26,680 --> 00:25:29,639 Speaker 1: at the chip space and not just focus in on 485 00:25:29,720 --> 00:25:32,720 Speaker 1: the PCs, which we know they're encyclical decline, but there 486 00:25:32,760 --> 00:25:35,240 Speaker 1: are plenty of opportunities for our companies to continue to 487 00:25:35,320 --> 00:25:39,879 Speaker 1: grow through those other areas. I'm saying it's a family affair, 488 00:25:39,960 --> 00:25:42,160 Speaker 1: and my husband did all of the Easter egg hunt 489 00:25:43,119 --> 00:25:46,040 Speaker 1: clues this weekend VACHACPT and nearly blew my mind. But 490 00:25:46,480 --> 00:25:48,800 Speaker 1: so to us, John, I mean about aside from the 491 00:25:48,840 --> 00:25:52,040 Speaker 1: excitement of ultificial intelligence, there was some hope, some silver 492 00:25:52,160 --> 00:25:55,240 Speaker 1: linings coming from for example IDC saying some of this 493 00:25:55,359 --> 00:25:58,879 Speaker 1: pullback means maybe TSMC and the like start to get 494 00:25:59,000 --> 00:26:01,240 Speaker 1: where they manufact show in order as we start to 495 00:26:01,520 --> 00:26:04,680 Speaker 1: see a bifurcated world of China US as the US, 496 00:26:04,800 --> 00:26:06,639 Speaker 1: but also that things are going to pick back up 497 00:26:06,680 --> 00:26:09,680 Speaker 1: in twenty twenty four. Yeah. I think that's fair and 498 00:26:09,760 --> 00:26:11,240 Speaker 1: one of the things we've been looking at as a 499 00:26:11,320 --> 00:26:16,000 Speaker 1: potential positive driver for these markets. In addition to eventual 500 00:26:16,720 --> 00:26:19,760 Speaker 1: stabilization and ultimately cuts in interest rates, which will help 501 00:26:19,760 --> 00:26:22,080 Speaker 1: these higher growth stocks to recover as they have been 502 00:26:22,440 --> 00:26:24,760 Speaker 1: right since late last year. The next thing to come, 503 00:26:25,119 --> 00:26:27,600 Speaker 1: we do believe is going to be a recovery in 504 00:26:27,760 --> 00:26:30,240 Speaker 1: earnings outlooks for the second half of this year and 505 00:26:30,359 --> 00:26:32,399 Speaker 1: in twenty twenty four, and you know, you saw that 506 00:26:32,520 --> 00:26:35,680 Speaker 1: Micron report and it was terrible, but yet they said, hey, 507 00:26:35,760 --> 00:26:38,440 Speaker 1: we're looking at the end of this inventory clearing cycle. 508 00:26:38,520 --> 00:26:40,560 Speaker 1: Things are going to get better. And so I think 509 00:26:40,720 --> 00:26:44,719 Speaker 1: that ultimately the tech investor is recognizing that cyclical declines 510 00:26:44,720 --> 00:26:47,760 Speaker 1: are temporary. We're probably at the worst it's going to get. 511 00:26:48,240 --> 00:26:51,520 Speaker 1: Probably see companies come out with almost terrible earnings here 512 00:26:51,560 --> 00:26:54,280 Speaker 1: for the first quarter and cautious guidance, but they're probably 513 00:26:54,280 --> 00:26:56,159 Speaker 1: going to point beyond that and say, yeah, this is 514 00:26:56,200 --> 00:26:59,560 Speaker 1: a cyclical decline. We still have these structural drivers. Let's 515 00:26:59,560 --> 00:27:02,119 Speaker 1: everybody look forward to that, because these companies still have 516 00:27:02,240 --> 00:27:04,840 Speaker 1: a lot of earnings power, and earnings got ahead of 517 00:27:04,880 --> 00:27:07,200 Speaker 1: them once we get through the circlebal decline, and and 518 00:27:07,440 --> 00:27:09,920 Speaker 1: these are companies that have to think for the very 519 00:27:10,000 --> 00:27:12,000 Speaker 1: long term, particularly when I think about R and D. 520 00:27:12,840 --> 00:27:15,880 Speaker 1: Well like the point you be made about where they manufacture. Sorry, Joam, 521 00:27:16,000 --> 00:27:17,640 Speaker 1: So it's just you know, one thing we haven't talked 522 00:27:17,680 --> 00:27:19,920 Speaker 1: about recently is the Chips Act. You know, you have 523 00:27:20,200 --> 00:27:24,399 Speaker 1: Intel trying to reinvent itself on the foundry side, but 524 00:27:24,520 --> 00:27:29,000 Speaker 1: also TSMC. Looking at Arizona as an investor, is there 525 00:27:29,000 --> 00:27:32,159 Speaker 1: an opportunity to put your money among those names that 526 00:27:32,280 --> 00:27:35,240 Speaker 1: are due to get public money support? Right is what's 527 00:27:35,240 --> 00:27:37,760 Speaker 1: happening in the Chips Act, the rethink on production and 528 00:27:37,800 --> 00:27:40,560 Speaker 1: supply chain. You know, I think that's going to be 529 00:27:40,640 --> 00:27:43,680 Speaker 1: a relatively minor driver of the stocks. It certainly gives 530 00:27:43,840 --> 00:27:47,720 Speaker 1: Intel a lifeline to get it past this technology, you know, 531 00:27:47,880 --> 00:27:51,600 Speaker 1: stumbling walk they've gone over. Gives them time potentially to 532 00:27:51,760 --> 00:27:54,760 Speaker 1: get into the foundry business. We're not so excited about 533 00:27:54,840 --> 00:27:57,240 Speaker 1: that name in particular, but the other ones, though. What 534 00:27:57,320 --> 00:28:00,560 Speaker 1: you can start from these subsidies is ultimately decline in 535 00:28:00,600 --> 00:28:03,560 Speaker 1: the depreciation that they'll have to take against these new factories, 536 00:28:03,800 --> 00:28:06,280 Speaker 1: and that should help sustain their margins. That's a good thing, 537 00:28:06,400 --> 00:28:09,800 Speaker 1: but it wouldn't drive our investment thesis. Overall. We still 538 00:28:09,840 --> 00:28:12,240 Speaker 1: want to look to see whether they have a leading 539 00:28:12,359 --> 00:28:15,240 Speaker 1: edge in the chips they're producing or designing, and whether 540 00:28:15,280 --> 00:28:18,000 Speaker 1: they're serving the right markets, the ones that are really growing. 541 00:28:18,320 --> 00:28:20,480 Speaker 1: So I wouldn't use that as a real driver of 542 00:28:20,520 --> 00:28:23,159 Speaker 1: an investments at this point, but it should help sustain 543 00:28:23,240 --> 00:28:26,480 Speaker 1: some margins. And one company, of course, we were shining 544 00:28:26,480 --> 00:28:28,080 Speaker 1: a line in the companies that do well on the day, 545 00:28:28,119 --> 00:28:30,760 Speaker 1: the Microns, because Samsung's going to pull back in terms 546 00:28:30,800 --> 00:28:33,440 Speaker 1: of its supply Joan. But I remember speaking to the 547 00:28:33,520 --> 00:28:36,560 Speaker 1: CEO of Micron, who a year or so ago was saying, 548 00:28:36,880 --> 00:28:40,160 Speaker 1: boom bus cycles that're over, weren't it for the long term. 549 00:28:40,200 --> 00:28:42,640 Speaker 1: We're going to see IoT, we're going to see autos, 550 00:28:42,720 --> 00:28:45,440 Speaker 1: and we're going to have this perpetual need for chips 551 00:28:46,720 --> 00:28:50,960 Speaker 1: that doesn't seem to ever work out. That wasn't the 552 00:28:51,040 --> 00:28:53,880 Speaker 1: great hope, and we heard it from many companies, from 553 00:28:53,920 --> 00:28:57,000 Speaker 1: Texas Instruments to Micron to others. I think, though, we 554 00:28:57,120 --> 00:28:58,479 Speaker 1: have to take a little bit of a step back 555 00:28:58,520 --> 00:29:01,480 Speaker 1: recognize two things. One, it is the case that the 556 00:29:01,600 --> 00:29:04,080 Speaker 1: demand in the use of chips is far more diverse 557 00:29:04,240 --> 00:29:07,640 Speaker 1: now than it was the case in the nineteen nineties 558 00:29:07,680 --> 00:29:10,440 Speaker 1: and the first decade of the two thousands is what 559 00:29:10,640 --> 00:29:13,720 Speaker 1: happened to disrupt that whole thesis that chip demand was 560 00:29:13,760 --> 00:29:17,080 Speaker 1: more diversified and therefore there'd be less of these cycles, 561 00:29:17,360 --> 00:29:19,640 Speaker 1: which in the past had really been driven by the PC. 562 00:29:19,840 --> 00:29:22,080 Speaker 1: And when the new chip came out, what happened was 563 00:29:22,120 --> 00:29:25,960 Speaker 1: we hit a pandemic and the pandemic coordinated the purchases 564 00:29:26,040 --> 00:29:27,960 Speaker 1: by lots of companies and lots of people of new 565 00:29:28,040 --> 00:29:31,360 Speaker 1: PCs and new smartphones, and now we're seeing the backside 566 00:29:31,400 --> 00:29:33,880 Speaker 1: of that where they're now pausing since they just bought 567 00:29:33,920 --> 00:29:35,960 Speaker 1: a bunch of new stuff and they're waiting. We didn't 568 00:29:35,960 --> 00:29:38,440 Speaker 1: expect to see that kind of a shot to the 569 00:29:38,520 --> 00:29:42,080 Speaker 1: PC and smartphone cycle that really probably only came about 570 00:29:42,120 --> 00:29:44,240 Speaker 1: because of the pandemic. I think once we get beyond this, 571 00:29:44,720 --> 00:29:47,880 Speaker 1: I think that more diversified and market dynamic will come 572 00:29:47,920 --> 00:29:50,960 Speaker 1: back into place and we'll see much smoother cycles going forward. 573 00:29:51,320 --> 00:29:54,600 Speaker 1: Or the chip industry as a whole. Joan Poeni partner 574 00:29:54,640 --> 00:29:58,120 Speaker 1: and portfolio manager had Advises Capital Management. Someone Caroline on 575 00:29:58,200 --> 00:30:01,440 Speaker 1: the research and investing side has covered that sector for 576 00:30:01,600 --> 00:30:03,959 Speaker 1: a long time, and it's interesting to get the kind 577 00:30:03,960 --> 00:30:08,000 Speaker 1: of real time views on that newsreaction from an investor's perspective. 578 00:30:08,240 --> 00:30:12,080 Speaker 1: Now coming up, betting on real world industries to redefine 579 00:30:12,400 --> 00:30:14,480 Speaker 1: the next decade of tech. We're gonna be joined by 580 00:30:14,480 --> 00:30:17,080 Speaker 1: a CLIPS founding partner, Leo Susan for more in that 581 00:30:17,200 --> 00:30:19,960 Speaker 1: next character. Yeah, let's just check in what's happening in 582 00:30:19,960 --> 00:30:22,040 Speaker 1: the world of crypto, there was this key story if 583 00:30:22,040 --> 00:30:24,600 Speaker 1: you're following the FTX fallout, well, the debtors, they've just 584 00:30:24,680 --> 00:30:27,640 Speaker 1: been releasing their first report since the collapse, and it 585 00:30:27,760 --> 00:30:31,040 Speaker 1: doesn't paint a pretty picture. Unsurprisingly now, the report says 586 00:30:31,080 --> 00:30:34,400 Speaker 1: that the company lacked fundamental financial and account and controls, 587 00:30:34,920 --> 00:30:38,480 Speaker 1: stifled descent within the company, and that top members even 588 00:30:38,640 --> 00:30:42,160 Speaker 1: joked internally about their tendency to all lose track of 589 00:30:42,360 --> 00:30:45,880 Speaker 1: millions of dollars in assets. Former CEO Sam Bankwinfried faces 590 00:30:45,920 --> 00:30:48,800 Speaker 1: trial in October after pleading not guilty to forward and 591 00:30:48,960 --> 00:30:51,600 Speaker 1: campaign financial law charges. Let's just check in though, on 592 00:30:51,680 --> 00:30:54,280 Speaker 1: the broader crypto's scene right now, because bitcoin the strength 593 00:30:54,360 --> 00:30:56,920 Speaker 1: still there. We're at twenty eight twenty eight and a 594 00:30:56,960 --> 00:30:59,920 Speaker 1: half thousand now, and even if getting a little bit 595 00:31:00,000 --> 00:31:02,280 Speaker 1: of a bid despite strength in the US dollar today, 596 00:31:02,560 --> 00:31:05,720 Speaker 1: we're all thinking about Wednesday. We're all thinking about the Shanghai, 597 00:31:05,920 --> 00:31:09,040 Speaker 1: the ongoing nature of a move from proof of work 598 00:31:09,080 --> 00:31:11,480 Speaker 1: to proof of steak with Ethereum, and some of the 599 00:31:12,400 --> 00:31:15,240 Speaker 1: unstaking of some of those eighteen million ether that have 600 00:31:15,320 --> 00:31:17,600 Speaker 1: been locked up for a few years. From New York, 601 00:31:17,680 --> 00:31:31,560 Speaker 1: from San Francisco, there's a Bloomberg have private markets become 602 00:31:31,680 --> 00:31:34,200 Speaker 1: a victim of their own success. That's what new research 603 00:31:34,480 --> 00:31:38,240 Speaker 1: from Bloomberg Intelligence would suggest. As a surgeon fundraising more 604 00:31:38,280 --> 00:31:41,440 Speaker 1: than doubled in recent years during the error of low rates. 605 00:31:41,640 --> 00:31:45,520 Speaker 1: This environment curvated created some perverse incentives for valuations, right 606 00:31:45,600 --> 00:31:48,600 Speaker 1: as cash rich firms chase deals. B i AN Lists, 607 00:31:48,760 --> 00:31:51,880 Speaker 1: in a note published today, say they now expect institutional 608 00:31:51,960 --> 00:31:55,280 Speaker 1: investment in private equity and venture capital to cool off 609 00:31:55,520 --> 00:31:58,920 Speaker 1: as restructuring marked down, slowing dry powder for deals and 610 00:31:59,280 --> 00:32:02,840 Speaker 1: rising interest rates force basically a reevaluation of that risk 611 00:32:03,080 --> 00:32:06,240 Speaker 1: reward equation. Now, there are some firms out there that 612 00:32:06,320 --> 00:32:09,640 Speaker 1: are still raising money, powering through with new fund. Silicon 613 00:32:09,720 --> 00:32:12,680 Speaker 1: Valley firm ECLIPS just raise one point two billion dollars 614 00:32:12,720 --> 00:32:16,200 Speaker 1: for two new funds, both dedicated to backing startups Caroline 615 00:32:16,200 --> 00:32:20,160 Speaker 1: that are trying to modernize physical industries. Fund five will 616 00:32:20,200 --> 00:32:23,400 Speaker 1: focus on early companies, while Early Growth Fund two or 617 00:32:23,480 --> 00:32:26,800 Speaker 1: back more mature companies. Delighted to say that the Clips 618 00:32:26,800 --> 00:32:31,040 Speaker 1: founding partnerle Or Susan joins us, Now, this is interesting. 619 00:32:31,400 --> 00:32:36,440 Speaker 1: You want to back startups that make stuff, actual physical stuff. 620 00:32:37,040 --> 00:32:41,640 Speaker 1: Why why is that so appealing to you? Because, first 621 00:32:41,640 --> 00:32:43,360 Speaker 1: of all, thanks for having me focus, and you know, 622 00:32:43,640 --> 00:32:46,720 Speaker 1: it's because it's matter and the end of the day, 623 00:32:46,720 --> 00:32:50,120 Speaker 1: we'll live in the physical world. Seventy five trillion out 624 00:32:50,120 --> 00:32:52,959 Speaker 1: of thee hundred trillion dollars, it's industries the belt physical 625 00:32:53,280 --> 00:32:56,240 Speaker 1: and those industries did not add the same digital ons 626 00:32:56,280 --> 00:32:58,760 Speaker 1: formation that we are sol familiar in the world of 627 00:32:59,120 --> 00:33:04,040 Speaker 1: Internet and etc. We want to digitize in those industries 628 00:33:04,400 --> 00:33:06,200 Speaker 1: because I think it's matter and because I think the 629 00:33:06,320 --> 00:33:10,600 Speaker 1: impact from financial point of view is going to be tremendous. Leo, 630 00:33:10,680 --> 00:33:13,760 Speaker 1: there's a name at your firm familiar to me, Charlie Mwonghi, 631 00:33:13,880 --> 00:33:16,600 Speaker 1: who was an executive at Riving, and that got me 632 00:33:16,720 --> 00:33:20,080 Speaker 1: thinking about your strategy. A lot of the areas you're 633 00:33:20,120 --> 00:33:24,880 Speaker 1: looking at require scale and they're very capital intensive. Does 634 00:33:24,960 --> 00:33:29,280 Speaker 1: that make them more risky as a VC investment? You know, 635 00:33:29,600 --> 00:33:33,400 Speaker 1: that's actually kind of was the perception. The reality is 636 00:33:33,560 --> 00:33:36,680 Speaker 1: to technology reached a point right now that you actually 637 00:33:36,760 --> 00:33:39,520 Speaker 1: don't need the same amount of capital you needed before 638 00:33:39,680 --> 00:33:43,240 Speaker 1: because you just goes talked about semi conductor. I can 639 00:33:43,360 --> 00:33:46,120 Speaker 1: use semi conductor of the shelf. I can use contract 640 00:33:46,200 --> 00:33:48,760 Speaker 1: manufacturing of the shelf. I can use the same open 641 00:33:48,840 --> 00:33:52,120 Speaker 1: source and cloud infrastructure that our friends in the area 642 00:33:52,160 --> 00:33:54,480 Speaker 1: of Internet is being developed, and I can apply that 643 00:33:54,600 --> 00:33:57,720 Speaker 1: in the physical world, meaning the cost of capital and 644 00:33:57,800 --> 00:34:01,480 Speaker 1: the needful capital went down dramatically and the upside is 645 00:34:01,480 --> 00:34:04,280 Speaker 1: a seventy five trillion. So what we're seeing is a 646 00:34:04,400 --> 00:34:07,320 Speaker 1: new area of our opportunities for new founders to come 647 00:34:07,360 --> 00:34:11,239 Speaker 1: and change the industries that matter. You know, Caroline, what's 648 00:34:11,239 --> 00:34:15,680 Speaker 1: so fascinating. We're talking on a daily basis about artificial intelligence, software, 649 00:34:15,800 --> 00:34:19,520 Speaker 1: Web three again software. Now, there must be a chunk 650 00:34:19,560 --> 00:34:22,040 Speaker 1: of investors out there that are interested in getting into 651 00:34:22,480 --> 00:34:25,839 Speaker 1: physical assets, physical companies building real stuff, even though at 652 00:34:25,880 --> 00:34:28,640 Speaker 1: the moment, for a lot of institution investors, you were 653 00:34:28,680 --> 00:34:31,080 Speaker 1: just saying it's a time to rethink your allocation to 654 00:34:31,200 --> 00:34:35,040 Speaker 1: private markets. And therefore, how hard or indeed easy was 655 00:34:35,080 --> 00:34:39,080 Speaker 1: it to raise money? What the LPs look like? Yeah, 656 00:34:39,120 --> 00:34:43,040 Speaker 1: we raised money from a nonprofit institution in the United 657 00:34:43,080 --> 00:34:47,240 Speaker 1: States that will be our endowment foundation and pensions hospital system. 658 00:34:48,239 --> 00:34:50,560 Speaker 1: I probably needs to say right now, Oh, it was 659 00:34:50,640 --> 00:34:52,920 Speaker 1: really easy. We did it in two months. We will 660 00:34:52,920 --> 00:34:55,440 Speaker 1: oversubscribed all of the things that probat of this is 661 00:34:55,480 --> 00:34:59,160 Speaker 1: will say that's true, but that's actually another point. The 662 00:34:59,280 --> 00:35:02,360 Speaker 1: point is. We are seeing some of the most amazing 663 00:35:02,440 --> 00:35:06,200 Speaker 1: founders right now in the market. Wants to be ellen mosques, 664 00:35:06,640 --> 00:35:09,240 Speaker 1: They wants to go cars, they wants to build rockets. 665 00:35:09,480 --> 00:35:13,080 Speaker 1: They understand that the impact of technology can be much 666 00:35:13,200 --> 00:35:17,080 Speaker 1: more superior in the physical world than what we've been 667 00:35:17,200 --> 00:35:19,719 Speaker 1: trained in Silicon Valley. It's all about SaaS, It's all 668 00:35:19,719 --> 00:35:23,600 Speaker 1: about recount revenue. That's just not true anymore. Where are 669 00:35:23,680 --> 00:35:28,360 Speaker 1: these founders that you're seeing. This is not a Silicon 670 00:35:28,480 --> 00:35:31,440 Speaker 1: Valley things. You need agriculture in China, and you need 671 00:35:31,600 --> 00:35:36,480 Speaker 1: logistics in Austin, Texas. You needs manufacturing in Berlin, and 672 00:35:36,680 --> 00:35:40,040 Speaker 1: you need industrial systems in Abu Dhabi. This is a 673 00:35:40,120 --> 00:35:44,560 Speaker 1: global efforts to take the industries the powering our life 674 00:35:45,239 --> 00:35:48,440 Speaker 1: and digitizing them. And I'm telling you that some of 675 00:35:48,560 --> 00:35:52,160 Speaker 1: the smallest people right now are not doing any more 676 00:35:52,239 --> 00:35:56,200 Speaker 1: only crypto or SaaS or enterprise software. They are taking 677 00:35:56,239 --> 00:35:59,680 Speaker 1: the long roads to go and build companies that will matter, 678 00:36:00,080 --> 00:36:04,120 Speaker 1: that will move the economy into a digital phase. Lee 679 00:36:04,239 --> 00:36:07,160 Speaker 1: or you reference China, so you do plan to take 680 00:36:07,920 --> 00:36:10,800 Speaker 1: some of your funds raised from US based investors to 681 00:36:11,000 --> 00:36:15,400 Speaker 1: deploy into startups that are based in China. We are 682 00:36:15,400 --> 00:36:17,920 Speaker 1: one hundred percent focus on Today in the United States, 683 00:36:18,239 --> 00:36:21,960 Speaker 1: we are all based in Carlo, alto thirty of US, 684 00:36:22,040 --> 00:36:25,280 Speaker 1: and we are focusing on investing in the domestic area. 685 00:36:26,120 --> 00:36:28,359 Speaker 1: I will tell you that we're spending most of our 686 00:36:28,480 --> 00:36:33,160 Speaker 1: time on onshore manufacturing, semiconduct, those batteries, defense systems that 687 00:36:33,360 --> 00:36:36,680 Speaker 1: are very domestic oriented. And this is currently where is 688 00:36:36,680 --> 00:36:38,719 Speaker 1: our focus on. But that's not mean that there is 689 00:36:38,760 --> 00:36:42,160 Speaker 1: no opportunities in China real quickly. Or there is one 690 00:36:42,239 --> 00:36:44,920 Speaker 1: company that's looking for some money and that company is 691 00:36:45,000 --> 00:36:48,920 Speaker 1: Virgin Orbits. First of all, are you interested in investing 692 00:36:48,960 --> 00:36:51,400 Speaker 1: in Virgin Orbit? And second of all, how do you 693 00:36:51,440 --> 00:36:54,200 Speaker 1: do due diligence on the physical space? How hard is that? 694 00:36:55,840 --> 00:36:59,960 Speaker 1: So we all operate those that operating those industries from below, 695 00:37:00,120 --> 00:37:04,120 Speaker 1: Revian Apples, some Sara, flex Ge and many others, and 696 00:37:04,280 --> 00:37:06,080 Speaker 1: that's kind of I think would bring us the edge 697 00:37:06,120 --> 00:37:09,200 Speaker 1: to be able to not only diligence in those companies 698 00:37:09,520 --> 00:37:12,960 Speaker 1: when they have two guys in a presentation, maybe a dog, 699 00:37:13,840 --> 00:37:16,759 Speaker 1: but also to help them building when they're scaling into 700 00:37:16,800 --> 00:37:20,359 Speaker 1: commercialization and then hopefully into the public market. One day 701 00:37:21,520 --> 00:37:28,200 Speaker 1: on the Virgin I will likely pass ah exclipts founding partner, Leo, 702 00:37:28,320 --> 00:37:30,840 Speaker 1: You've been so fruitful in all the rest of your answers. 703 00:37:30,880 --> 00:37:33,879 Speaker 1: We thank you for politely deciding not to answer, Leo. 704 00:37:33,920 --> 00:37:45,680 Speaker 1: Susan Senator Elizabeth Warren and Representative Alexandria Ococia Cortez are 705 00:37:45,840 --> 00:37:49,360 Speaker 1: demanding answers over Silicon Valley banks close relationships with some 706 00:37:49,400 --> 00:37:51,520 Speaker 1: of its customers now in let us since Sunday I'm 707 00:37:51,560 --> 00:37:54,440 Speaker 1: reviewed by Bloomberg. The Democrats are asking fourteen of the 708 00:37:54,520 --> 00:37:57,640 Speaker 1: largest depositors with SVB about the nature of their connections 709 00:37:57,640 --> 00:38:01,120 Speaker 1: with the bank, including where the board members actives investors 710 00:38:01,400 --> 00:38:03,959 Speaker 1: when they received special benefits such as lines of credit 711 00:38:04,080 --> 00:38:06,960 Speaker 1: from SVB. Well, Hannah Miller wrote that story. We're very 712 00:38:07,000 --> 00:38:10,480 Speaker 1: pleased to welcome her to the show and anyone responding 713 00:38:10,560 --> 00:38:14,040 Speaker 1: to these letters so far, Yeah, so far, I've only 714 00:38:14,120 --> 00:38:18,160 Speaker 1: heard back from Robox, so we haven't seen many responses 715 00:38:18,239 --> 00:38:20,799 Speaker 1: come through yet. But it'll be interesting to see whether 716 00:38:20,880 --> 00:38:24,000 Speaker 1: these companies choose to answer these letters, and if they don't, 717 00:38:24,120 --> 00:38:27,480 Speaker 1: what Warren and AOC will say. You know, Hannah, I 718 00:38:27,480 --> 00:38:30,760 Speaker 1: will never forget that weekend, the Saturday and Sunday following 719 00:38:30,800 --> 00:38:33,640 Speaker 1: Silicon Valley Banks collapse. You and I were working together right, 720 00:38:33,719 --> 00:38:36,920 Speaker 1: and we very quickly learned that actually many, in many 721 00:38:36,960 --> 00:38:41,160 Speaker 1: cases depositors did use other services for the bank. What 722 00:38:41,400 --> 00:38:43,480 Speaker 1: is that the kind of CrOx of what Warren is 723 00:38:43,480 --> 00:38:47,480 Speaker 1: trying to find out here. Yes, so Silicon Valley Bank 724 00:38:47,760 --> 00:38:51,879 Speaker 1: was just this cherished institution among venture capitalists and tech 725 00:38:51,960 --> 00:38:55,920 Speaker 1: startup founders, and they had a wide, wide range of services. 726 00:38:56,440 --> 00:38:58,839 Speaker 1: You know, you could go to them for your own 727 00:38:58,960 --> 00:39:02,440 Speaker 1: personal finance as well as those for your company. So 728 00:39:03,360 --> 00:39:07,040 Speaker 1: the contagion here that was felt when SBB collapse was 729 00:39:07,080 --> 00:39:11,640 Speaker 1: really widespread and at Warren and AOC want answers as 730 00:39:11,680 --> 00:39:16,280 Speaker 1: to whether these personal relationships that SVB had with founders 731 00:39:16,320 --> 00:39:20,880 Speaker 1: and vcs actually contributed to its collapse. It's interesting that 732 00:39:20,920 --> 00:39:23,400 Speaker 1: they're going to a lot of the big now public 733 00:39:23,680 --> 00:39:27,200 Speaker 1: companies for these sorts of answers. Is the real end 734 00:39:27,320 --> 00:39:31,640 Speaker 1: person they're trying to label here the VC community. I 735 00:39:31,760 --> 00:39:34,440 Speaker 1: think they are targeting the VC community. I mean, both 736 00:39:34,520 --> 00:39:38,360 Speaker 1: Warren and AOC have been extremely outspoken and critical about 737 00:39:38,400 --> 00:39:42,880 Speaker 1: what happened with SVB. There are concerns here that you know, 738 00:39:43,040 --> 00:39:46,520 Speaker 1: SVB was so willing to provide short term funding, you 739 00:39:46,600 --> 00:39:49,919 Speaker 1: know that it may have contributed to instability at the bank, 740 00:39:50,400 --> 00:39:53,279 Speaker 1: so they want to closer look. They want to see 741 00:39:53,400 --> 00:39:57,360 Speaker 1: how you know, SVB coddled its clients. I think that 742 00:39:57,480 --> 00:40:01,480 Speaker 1: was the word that Warren used. So it's very interesting 743 00:40:01,640 --> 00:40:04,480 Speaker 1: to see how this will play out. All right, Bloombogs 744 00:40:04,480 --> 00:40:07,120 Speaker 1: Hannah Miller, thank you very much for your reporting. Now 745 00:40:07,320 --> 00:40:09,759 Speaker 1: we've been talking about it and it's going viral. The 746 00:40:09,920 --> 00:40:12,680 Speaker 1: Super Mario movie. It just topped the box office and 747 00:40:12,800 --> 00:40:15,879 Speaker 1: it's the biggest opening weekend for a film so far 748 00:40:16,000 --> 00:40:18,839 Speaker 1: this year. Super Mario is released on Wednesday to take 749 00:40:18,840 --> 00:40:21,080 Speaker 1: advantage of the spring break in East the holidays, and 750 00:40:21,160 --> 00:40:23,760 Speaker 1: over the five day period it took in two hundred 751 00:40:23,800 --> 00:40:27,279 Speaker 1: and five million dollars domestically according to comScore, and with 752 00:40:27,440 --> 00:40:30,160 Speaker 1: a global hall of three hundred and seventy eight million, 753 00:40:30,480 --> 00:40:33,480 Speaker 1: it's the biggest opening of any movie so far in 754 00:40:33,560 --> 00:40:36,160 Speaker 1: twenty twenty three is out in Japan. Yet that was delayed, 755 00:40:36,160 --> 00:40:38,879 Speaker 1: there wasn't it. That's the big question. Delay because it's 756 00:40:38,880 --> 00:40:41,400 Speaker 1: a tough crowd to please, and still they rake in 757 00:40:41,520 --> 00:40:43,960 Speaker 1: all of that money globally, quite astounding. Have you watched it? 758 00:40:44,800 --> 00:40:47,800 Speaker 1: I haven't, but I will, Okay, I might wait until 759 00:40:47,840 --> 00:40:51,120 Speaker 1: it's more for a family affair, but great amount of 760 00:40:51,160 --> 00:40:52,759 Speaker 1: focus on that. I didn't even get to ask you though, 761 00:40:52,840 --> 00:40:55,200 Speaker 1: ed whether you've picked up your fire Festival two tickets. 762 00:40:55,880 --> 00:40:58,879 Speaker 1: I wish we had got this in. I haven't picked 763 00:40:58,960 --> 00:41:01,600 Speaker 1: up my fire Festival too tickets, But that is certainly 764 00:41:01,640 --> 00:41:03,600 Speaker 1: something that's taught us. Bound Twitter right now, don't worry, 765 00:41:03,640 --> 00:41:05,479 Speaker 1: We'll go and do a little video for social media. 766 00:41:05,600 --> 00:41:08,320 Speaker 1: Come follow us at Bloomberg Technology. Meanwhile. That does it 767 00:41:08,400 --> 00:41:11,640 Speaker 1: for this edition of the show Bloomberg Technology. Yeah, it 768 00:41:11,760 --> 00:41:13,960 Speaker 1: was packed, big focus on markets and chips. You can 769 00:41:14,000 --> 00:41:17,560 Speaker 1: recap on the podcast Apple, Spotify, iHeart Bloomberg, wherever you 770 00:41:17,640 --> 00:41:20,680 Speaker 1: get your podcasts. From New York, from SF, this is 771 00:41:20,719 --> 00:41:21,239 Speaker 1: Bloomberg