May 13, 2024 • 42 mins
Bloomberg's Caroline Hyde and Ed Ludlow break down the latest headlines on Nvidia, Arm, Intel and more. Plus, Apple nears a deal with OpenAI to add ChatGPT to the iPhone, and shares of GameStop surge amid speculation that Roaring Kitty is back liking the stock.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
From the heart where innovation, money and power.
Speaker 3 (00:11):
Collie in Silicon Valley, NBN.
Speaker 1 (00:14):
This is Bloomberg Technology with Caroline Hyde and Ed loved.
Speaker 4 (00:18):
Love and Karline Hein and Bloomberg's world headquarters in New York.
Speaker 5 (00:34):
Now I'm Ed Loudlow in San Francisco. This is Bloomberg
Technology coming up.
Speaker 4 (00:38):
Full chip coverage ahead. We're bringing the latest headlines from
in video, arm, Intel and more.
Speaker 5 (00:44):
Plus, Apple nears a deal with open Ai to add
chat GPT to the iPhone.
Speaker 4 (00:48):
Details ahead and shares of game stock. They surge him
in speculation that Roaring Kitty is back liking the stock.
We discussed that and so much more throughout the sabat
first Le's turn around, attention to the macro picture, some
new headlines coming out from.
Speaker 6 (01:02):
The New York FED.
Speaker 4 (01:03):
When it comes to consumer sentiment of the direction of
travel and inflation, and it's still running hot, Dave pot
three percent in terms of where consumers see inflationary pressures
being in about a year. That's overall in the midterm.
We're still holding on too. Gains though three tens percent higher.
Remember we get a CPI print on Wednesday PPI on
Tuesday a lot to digest.
Speaker 6 (01:20):
From the macro perspective.
Speaker 4 (01:21):
Two year yield remaining higher, so boring costs coming down,
yield slipping so two years money going in. Yields go
lower by some two basis points. Bloomberg Dollar Index also
down a little bit. Look some of the anxiety around
in flesher around inflation just stiling back a little bit
on the day despite that New York Fed data. Let's
move on and have a look at what's happening in
the world at bitcoin, because well, even though dollar's only
(01:42):
off by about ten percent, crypto is surging higher, up
two point four percent.
Speaker 6 (01:45):
And ed, I know you're going to.
Speaker 4 (01:46):
Focus in on game Stop and this is more the
reader cross from some of that means stock frenzy and
when it means on the related names in crypto.
Speaker 6 (01:54):
We're up two percent on bitcoin. What if you've got
on the micro.
Speaker 5 (02:00):
Stop memestock mania is back. This is a two day
chart to kind of illustrate the point. GameStop was up
one hundred and ten percent in the session it was halted.
We're now up around sixty percent, and it's just from
one social media post from Roaring Kitty aka Keith Gill
aka the source of all the original interests around GameStop.
(02:24):
You know about the movie, you know about what happened
on Reddit. I think Reddit's higher, robinhood is higher. There's
a lot of trading that's going on. Later in the show,
we're going to dig really deep, but I give you
game Stop. We're looking at other stories in the chip sector.
In principle, there are three clear headlines and semiconductors.
Speaker 7 (02:42):
Intel is up three point five percent. The Journal reporting.
Speaker 5 (02:44):
It's close with the deal with Apollo for eleven billion
dollars of financing for an Ireland fab.
Speaker 7 (02:50):
ARM is up more than five percent.
Speaker 5 (02:52):
Nike reporting that ARM is readying an AI product next year,
didn't say where it got the info, but SoftBank's going
to support them financially bring it to market. And then
videos actually high three ten to one percent. It had
been lower after the Information reported that China is instructing
domestic companies to stop ordering chips from Nvidia. We have
a very big segment coming up everything chips. The big
(03:14):
take today is on chips. There are a lot of
individual stories to pass through. There is a lot going on, and.
Speaker 4 (03:19):
There is a lot of discussion of China visa VI
the US coming from well key leaders in US government.
Speaker 6 (03:26):
We had a.
Speaker 4 (03:26):
Great conversation with Janet Yellen earlier own AMERI Horder and
sitting down with her for an exclusive really discussing China
in particular. Janey Ellen really feeling that China is not
playing by the rules on trade and sort of going
on to say that maybe we will see China escalating
in the so called tit for tat on trade.
Speaker 6 (03:42):
Just take a lesson. Listen to what Treasures actually told
us earlier.
Speaker 8 (03:47):
He believes it unacceptable as I do, to be completely
dependent on China in these areas, and he wants to
make sure given this that China is really not playing
by the rules in this sense. They have enormous subsidies
(04:08):
in critical areas of advanced manufacturing.
Speaker 4 (04:11):
There's a focus on increasing tariffs at a time where
there's anxiety around inflation. How does this alter the picture
of your investment landscape visus A. Janet Wi is with
us RBC Bruin Dolphin, head of market Analysis, and it
is a time where investors try and navigate seeming headwinds,
but an ability to keep on going for the growth
of AI how do you think this lands the China
(04:32):
versus US at the moment?
Speaker 3 (04:33):
Janet, good morning, hairline. Thanks for having me.
Speaker 1 (04:37):
I think in terms of the tech investment side, we
will still be heavily preferring the US. I mean, the
DOS is a hop of innovation, and I think the
regulatory pressure on China would remain, and I think the
trade tension parality will hit China more than the US.
Speaker 3 (04:56):
So I think from an.
Speaker 1 (04:57):
Investment perspective, I think all these trade tennis, it's obviously
it's not great from our price or from global growth
trade and the global market and certainty point of view.
But I think sticking with the US investment seems.
Speaker 5 (05:11):
To be the right approach exactly. I'm trying to pass
all of this together, right. I think there's a growing
confidence that inflationary pressures are easing off, but a big
part of that is US fiscal policy. Right, we're talking
or Jalant Yellen talking about how China has some anti
competitive practices, but here in the United States, if you
(05:31):
take the chip industry, this country is also pumping billions
of dollars into supporting its growth. How does that impact
you as an investor?
Speaker 3 (05:41):
I think the clear evidence is that.
Speaker 1 (05:45):
There's a lot of investment from a sovereign perspective into
a semiconductors given it is such an important strategic sector.
So I think the conclusion is that there will be
lots of money going into it, lots of investment, A
lot of big players will be involved, and I think
primarily again the US companies are likely to be benefit
(06:05):
from this initiative, and that's why we still have a
positive stance on the general semiconductor value chain story, either
from the equipment production or from the design, from the manufacturing,
the boundaries along the whole supply chain. I think there's
still going to be lots of investment going into it.
(06:26):
I think valuations in these US companies are still quite
reasonable given that they're strong earnings growth, and I think
we still have pretty good visibility into the twenty twenty
five earnings from the order's guidance, etc. So I think
the investment thesis we have is that invest in US tech,
particularly favoring in the semi conductory sector.
Speaker 5 (06:49):
Janet, do we see a rate cut from the FED
this year to your mind, and if so, when and
in what increment?
Speaker 7 (06:58):
Well, it is.
Speaker 9 (06:59):
Difficult to say.
Speaker 1 (07:00):
I think the bar for a rage cut is definitely
higher now will await the CPI print on Wednesday, But
I think the Fed, I think they have a leaning
on the next move being a rage.
Speaker 3 (07:11):
Cut rather than a rate hype.
Speaker 1 (07:13):
So I think there's still some preference aren't eventually cutting.
I think they're really each thing on doing that, but
they just need the data to allow that so our viewers,
that is more likely to happen in the fourth quarter.
But I think the FAT can really move, you know,
where the data allows. I think there's a lot of
chatter about how the FED may not be able to
move because of the timing of the presidential election, but
(07:34):
we think the FED will focus on the data instead
of trying to be a pure not to be political.
Speaker 4 (07:41):
I want to go back to what you just mentioned
about valuations looking pretty good at these levels, and many Janet,
have just been I mean holding their breath the ARM
ninety times future earnings valuation that we've seen in ARM
pops on the day we're going to have a much
deeper dive into the chip sector in a moment with
their own in king. But Janet, from an investment landscape perspective,
do you have to keep on building in the AI
(08:03):
infrastructure play or do we broaden out at this moment.
Speaker 1 (08:07):
So, I think to your point about the valuation of
our I can't really comment on an individual company, but
obviously we know that within the sector there are a
lot of players and there will be different ranges of evaluations.
I've talked about it as a group because of the
straw and a scroll. I think some of the major
players are the valuations are reasonable, but you have to
(08:30):
to really look into an individual case. I think in
terms of the broadening of the thing, we already have
seen that. I mean there is more confirmation from meget
cap tech companies that there is commercialization of AI that
is gaining traction. We see that from Alphabet, Microsoft, Amazon,
for example. So it has broadened out beyond the just
(08:50):
the cheap sector. And I think there has been quite
a significant pickup in the utility sector right because of
the electricity demounts. So I think they will continue to broaden,
but I think it has already started.
Speaker 4 (09:03):
I look at evaluation of one particular means Stop today
janet three thousand times future earnings is where the current
price of game stop is. Are we going to see
mean stock frenzy really hit us hard once again.
Speaker 1 (09:18):
Well, it is hard to say. I think right now
we are seeing a couple of individual stops having that reaction.
I'm not sure if that's going to last. Is a
lot driven by social media, but I do think that
what the current situation is an indication that the risk
sentiment is back. I think, you know, the positive risk
(09:40):
sentiment is not constrained anymore by you know, this high
interest rate and environment, these current level of bios. I
think the market rally or the market sentiment has already
you know, we already passed the stage when it's totally
just driven by the fad and bornios for example. So
there there's clearly have plenty of cash still sitting around,
(10:03):
are waiting to be deployed.
Speaker 7 (10:04):
Right.
Speaker 5 (10:06):
Risk sentiment is back, says RBC Brew and Dolphin head
of market analysis, Janet Marie. Great to have you on
the show. Let's continue our coverage of semiconductors is Today's
Bloomberg Big Take focuses on the eighty one billion dollar
investments made by the US and European Union towards the
(10:29):
next generation of semis joining US as Bloomberg Zin and King,
one of the members of the team that went through
this with the big take. We have a case study
today right which is Intel in Ireland. The Journal reporting
that there is advance exclusive talks to Apollo for eleven
billion in financing. Actually we broke that they were in
talks quite some time ago. But the need for cash
(10:50):
and a global footprint is clear through the lens of Intel.
Speaker 1 (10:54):
Yeah.
Speaker 10 (10:54):
No, I mean Intel is actually in a slightly different
situation to some of its rivals like TS and Samsong. Frankly,
it needs the money way more than they do, and
they can afford to be selective where they take government money,
what terms they take. Intel, because of the situation it's
put itself in over the last five or so years,
really needs the cash from pretty much any source it
(11:16):
can get if it's to fulfill what it's trying to do, and.
Speaker 4 (11:19):
Let's talk about fulfilling what it and more broadly, the
US is trying to do what globally countries and companies
are trying to do. Do we get to an extent
where we have too much supply in.
Speaker 10 (11:31):
I mean, this is the concern at the moment. The
concern really though, is focused on what's called the sort
of legacy chips, the older types of production, the type
of thing that Intel, TSMC and Samsong are building here
in the US. Frankly, there's not enough supply of that
kind of production right now, so not so much worried
about that, but some of the more simpler kind of
(11:54):
stuff in view of the amount of production being put
in place in places like China, that is certainly something
that people are focused on and worried about.
Speaker 5 (12:02):
AI is a big driver of this. Let's take a
look at today's big take. Specifically, the headline global chip
battle intensifies with the eighty one billion dollar subsidies surge,
But within that there are two different stories. There's kind
of like the long term capacity on sharing story, and
then there's psych everyone's knee jerk reaction to keep up
with what's happening in real time.
Speaker 10 (12:23):
Yeah, I mean, there's you know, everybody's focused on AI.
But if we believe that this is the future of computing,
if we believe that this isn't just a step function,
that this is something quite dramatically different, then obviously the
ability to control that has enormous implications, both in terms
of economics and insecurity, and having that production close at
(12:45):
hand is really important, and this.
Speaker 4 (12:48):
Goes global, not to mention what's currently underway and reporting
with ARM getting more deeply into AI and soft bank banking,
that we've got so much to digest. Ianking, a brilliant
deep dive comes to the big take. Go read it
online on your terminal. But let's stick with what this
all means in terms of competitiveness US versus China.
Speaker 6 (13:08):
President Joe Biden is said, of course, to not.
Speaker 4 (13:10):
Just thinking about the chip sector, but more broadly about
tariffs for drupling them on than Chinese electric vehicles, for example,
sharply increasing levees for other key industries.
Speaker 6 (13:19):
And it's come as soon as today.
Speaker 4 (13:21):
For more, let's bring in Eliza Tobin, senior director for
Economy at the Special Competitive Studies Project, And Liza, we
were just talking about this in the context of a
frenzy of money from government to support the chip industry.
But meanwhile Biden's trying to push back EV's coming to China,
trying to push back solar coming to China from China
to the US. Is that really got any bite to it?
(13:43):
It seems more like bark right now.
Speaker 2 (13:47):
Good morning, Caroline ed Greater be on with you. Yes, No,
this is a really strong move from the Biden administration,
as you noted the reporter saying that they are thinking
of quadrupling the terrif right on Chinese evs. As we know,
China has rocketed to become the top producer of evs
in just the last few years. They struggled for a
(14:08):
long time to build a competitive auto export industry and
now they have gotten there with evs. So currently US
automakers are insulated by the existing Trump era tariffs, which
are about twenty seven point five percent, But clearly the
Biden administration is concerned that going forward, China could use
its dumping strategy to underprice US automakers and flood the
(14:31):
market as they are already doing in Europe and elsewhere.
Speaker 5 (14:35):
Eliza, good Morning is ed in San Francisco. So, as
you point out, sources say that the EV tariff would
rise to one hundred and two point five percent. But
based on what you just said, I don't get it.
I checked, okay, and there are four China made evs
that retail in this country at incredibly small volumes, Pollstar
two and four, the new Lotus that's coming, and the
(14:59):
Volvo ex thirty. What's the point in the tariff if
those are only the only four models available and they
only sell in very small numbers.
Speaker 2 (15:10):
The Biden administration is trying to get a head of
the floods. So, as you noted, right now we are insulated.
American consumers are by and large not buying Chinese evs.
They're not coming into our market. But I think they
see the writing on the wall. German automakers are under threat.
Europe is importing these things. They're going into Japan, they're
(15:32):
going in elsewhere, threatening other global automakers. So if the
Biden administration wants to give the IRA subsidies, the Inflation
Reduction Acts subsidies, which of course incentivize green tech production
here in the United States, I think the administration wants
to give these incentives of fighting chances so that we
can retain an auto industry here in the United States
(15:56):
as the world transitions to evs. So it's actually a
time to raise the terrorists because it won't directly impact
people's pocketbooks because as you noted, Americans are not yet
buying Chinese evs.
Speaker 4 (16:08):
And yet, Eliza, you know, when you're thinking about special
competitiveness in particular, this is the project that you focus
in on. All of this is undermining, undermining ultimately the
efficiency of global trade subsidies here, tariffs there, All of
it will sort of it isn't a mediating what should
(16:29):
be just the natural flow of things.
Speaker 6 (16:31):
Is this what is necessary ultimately from.
Speaker 4 (16:33):
Your perspective, to ensure that US does remain competitive when
it comes to key industries.
Speaker 2 (16:39):
There has been this national debate over efficiency versus resilience,
and the lesson from COVID, from Russia's invasion of Ukraine,
from these other global supply chain crises we've had in
the last few years is that efficiency economic efficiency is
not the only thing we need to think about as
a nation, and so there's been increasing discussions of resiliency
(17:02):
and what steps do we need to take as a
nation to make sure that we continue to build emerging
technologies here in the United States. We have suffered from
massive de industrialization over the last several decades as we've
outsourced the production of our technology to East Asia, especially China.
(17:22):
So now there's a national conversation about looking ahead, we
want to make sure we're able to build some of
these emerging technologies here in the United States not only
design them, but build them, because that's essential to our
long term growth in productivity as well as our national security,
making sure we can make things here at home.
Speaker 5 (17:44):
Liza Tobin of the SCSP, thank you very much. So
coming up on the program, French President a Manue Macron
t outs billions of dollars in foreign investments from tech giants.
Speaker 7 (17:53):
We're going to have those details.
Speaker 4 (17:54):
Next, Karen, such global conversation. Meanwhile, let's just bos in
what's happening for us doc over here? We're not seventy
percent in the last couple of days on squarespace. Why
it's going private Permira and all cash transaction, valuing the
company in approximately six point nine billion dollars. We're going
to see some vcs giving some more investment General Atlantic
Acel for example.
Speaker 6 (18:15):
This is bruly meg Technology.
Speaker 4 (18:31):
Microsoft it plans to spend four point three billion dollars
building cloud and AI infrastructure in France, announcing its latest
major outlay on artificial intelligence technology. Now, Microsoft is aiming
to help train a million people support two thousand, five
hundred startups in France by twenty twenty seven.
Speaker 7 (18:47):
Now.
Speaker 4 (18:48):
Earlier this year, unveiled a partnership and a fifteen million
euro investment into mistral Ai. It's a Parisian startup competing
with the course the likes of open Ai. And we
want to stick with France with investment in France because
in manual Macron has just unveiled more than fifteen million
euros in foreign investments from US tech giants like Microsoft,
but also like Amazon, like IBM, like banks such as
(19:09):
Morgan Stanley. It's all a part of well trying to
spa France's economy, to repair its public finances, basically establish
Paris as well as Europe's post Brexit business and financial hub,
joining us on all of this. It's Blomberg opinion. Coconomists
Lionel Laurent. You know, it's interesting. It's a bit of
a PR exercise that happens every year over at the
(19:30):
Elyc Palace. But what ultimately is being done by Macron
to inject some optimism.
Speaker 11 (19:36):
You're right, choose France. It's a bit of a cheesy slogan.
It could be the cover of an investment brochure, but
it's not just PR because since he's become president this
has really bit about the art of the deal Micron style.
Speaker 7 (19:48):
Every year he gathers one.
Speaker 11 (19:49):
Hundred and fifty one hundred and eighty international CEOs wines
and dines them in Versailles and gives them the pitch
of the French economy. He'll say, it's doing its job,
it's doing the work. He's done the work of reforming France.
And what are you going to do for France From
the corporate side, which is invest and I think this
is that puts it, I think a cut above Davos
(20:11):
because there is investment. You could argue if it's expansion
of the existing staff instead of new projects. You can
argue if even fifteen billion is that sort of world
changing or impressive at the level of tech. But look,
I think there is something genuinely real to this. There's
a there's a seed of depth to this that's not just.
Speaker 5 (20:32):
Pr Yeah, Leonor, I think Mistrel put France on the
map a little bit, you know, in terms of the
conversation around AI development. But beyond that, we don't often
go to you, you know, during the program as frequently
as we do other countries, and it's at a time
where France's economy is on a shakier footing.
Speaker 11 (20:52):
Wow, that that cuts the here brutal, brutal. I think
you touched on something which is about relative relative worth
right now. Mccare came into power at a time when
the UK was effectively voting itself out of European leadership
with Brexit, and Angela Merkle's twilight years had begun. I think, honestly,
(21:15):
as long as the UK is seen as a kind
of Brexit tainted economy, and as long as Germany's industrial
model is seen to be suffering, France will still have
a card to play. Now. I think those two cards,
to be precise, are human capital. It still has smart,
talented engineers being pumped out of its graduate schools and universities.
And the other thing is tax credits. There's an R
(21:37):
and D tax credit in France that explains why so
much of what you're seeing is R and D research centers,
whether it's tech or banks. So clearly there is something
in it for these companies.
Speaker 5 (21:48):
It's not as pr Leonel Laurent of Bloomberg opinion from France,
we appreciate it. Welcome back to Bloomberg Technology, ed Lovelow
here in San Francisco.
Speaker 6 (22:06):
And I'm hired back in New York.
Speaker 4 (22:07):
Let's check on these markets, said, because now we're managing
to hold onto our gains in the face of some
inflratory pressure being shown by the New York Fed that
consumer sentiment showing that still there's elevated inflratory anticipation coming
from the consumer base. But on a week we have
CPI and the week we have PPI, which is cautious
ahead of those macro pieces of data. We're up a
tenth percent on the NASAK ten yure yields just holding
lower at four point four eight. I'm looking at Bitcoin
(22:28):
managing to ramp up two and three quarters a percent.
Speaker 6 (22:31):
Let's call it dollar a little weaker.
Speaker 4 (22:33):
Is this more of a spillover effect from the means
stock frenzy. Let's move it on one and shine light
what's happening with good old game stock. We are so
back up sixty three percent? But is Keith Gill so back?
Will he return to social media? Of course he did
pop a particular picture on x many feeling that perhaps
Roaring Kitty is back when it comes to liking games,
(22:54):
game stop and memestock mania seems to be back, and
we'll talk about it later. I shinal light, what's happening
with the chipset to the Socks Index. Apps up fourteen percent,
coming off of its highs, but had some notable names
pushing high Intel that reporting for the Wall Seat Journal,
building on Bloomberg's reporting that maybe we'll have some financing
from Apollo with Intel to build yet more ultimately industrial capability,
manufacturing capability this time in Ireland. We're also seeing what
(23:17):
arm is currently up to on the day as there's
anticipation that they're going to be focusing more on AI
thanks to SoftBank. I'm looking at Alphabet though, up by
one point six percent. Why more competition? Are they not
going to be able to integrate Gemini within the new
Apple iPhone? Is it going to be open Ai that
wins out Apple? Up more than one point six percent
and deep dive on it for us.
Speaker 5 (23:37):
Yeah, let's get more on that potential Open Ai Apple
agreement and bring in Bloomberg intelligence analyst Anna ra Grana. So,
Anna rag As you know, Bloomberg reported quite late Friday
nights that Apple and Open Ai are close on a
deal to bring chat GPT to the iPhone.
Speaker 7 (23:54):
You published your.
Speaker 5 (23:54):
Reaction this morning and in summary you're saying it's a
pretty sound strategic move outline your thesis.
Speaker 12 (24:03):
Yeah, so when you think about it, you know, Apple's
not been at the forefront of Generator AI, and the
next WWDC or the Worldwide Developer Conference in June is
really you know, aimed at AI. And if Apple's not
able to showcase really cool features, then you're not going
to have another round of you know, bad iPhone sales
over the next twelve months. So they really need to
(24:24):
push something out that gets consumers excited go get a
new phone. Requires a little bit more you could say,
processing power, you know, all sorts of things that go
with it. So from that point of view, I think
it's a good deal if they partner with somebody. You know,
personally I'd like to partner. I like them to partner
with both of them, frankly, not just with open aiye,
but Google also because you know, if you know, as
(24:45):
you remember, when it comes to search, Google pays them
quite a bit of money and I don't personally don't
want that partnership to go away for any reason.
Speaker 4 (24:54):
Was it also, though basically an acknowledgment as we've heard,
with perhaps teaming up with Alphabet and Gemini, they just
aren't going to be innovating themselves on this level.
Speaker 6 (25:03):
Would they ever usurp and build.
Speaker 4 (25:05):
Their own large ancuage model or is that just not
where they're going to be bringing AI to bear?
Speaker 12 (25:10):
See, they are spending money and I'm sure they'll have
their own technology that goes into it. But as Apple
has done it in the past, they'll like to partner
with other companies that specialize in that area. And you know,
there is no secret they have that deal with Google.
When it comes to search, they use cloud resources from AWS,
they use cloud resources from Google, so they don't want
(25:31):
to do.
Speaker 3 (25:31):
Everything in house.
Speaker 12 (25:32):
And if this helps them they sell more iPhones next year,
you know, I'm okay with them going and partnering with
anybody that's out there and.
Speaker 6 (25:40):
A Grana loving it.
Speaker 4 (25:41):
Bloomberg Intelligence, thank you very much for shining light on
your own thesis. Let's get that of Tom Forte, DA
Davidson analyst, and it seems to be the marriage that
the investor base wants to see.
Speaker 6 (25:51):
But not on Alphabet's perspective.
Speaker 13 (25:54):
Yeah, I think from Apple's perspective, investors are anxiously waiting
for the company's AI strategy. So whether it's using Google
or whether it's using open AI to create an advance
the strategy. I think that's something that potentially you get
investors excited. I just it's certain though then you may
not see the boost the iPhone sales. They certainly need
(26:18):
the boost, still have their revenue today, and then at
least on a near term basis, AI is still a
chip story for Nvidia, or hyperscale cloud computing story for
Azure AWS or Google Cloud.
Speaker 5 (26:32):
Tom Anna Rag said that if this helps sell iPhones
next year, it's a good thing. There's a much bigger
discussion happening in the smartphone market about whether or not
this is the year of the AI smartphone, principally focused
on Android powered by a Snapdragon processor. Do you see
(26:52):
an upgrade cycle if this deal gets done?
Speaker 13 (26:56):
The answer is I think of the upgrade cycle from
five G as being kind of the bell weather and
the advantage there was that the carriers had invested billions
of dollars to upgrade their network.
Speaker 3 (27:10):
So they were very vested in getting an upgrade cycle.
Speaker 13 (27:14):
To me, if you want to call it a potential
AI upgrade cycle, I would put that as a distant
second to the five G upgrade cycle. But right now,
I think Apple could use any help when it came
to sign the iPhone given the overdependence. Again, half their
revenue last year came from iPhones.
Speaker 6 (27:31):
I mean it is key.
Speaker 4 (27:32):
They're also, of course all in on services, and I
suppose that's also a key driving force here. Ultimately, Tom,
there has been this handwringing, this worry that Apple is
behind the curve, and that yes, they made the pivot
away from the cars, but it comes too little, too late.
Do you have optimism that they can steal that back,
particularly for AI on device.
Speaker 13 (27:54):
No, I do not, and I still actually wish that
they would return to cars.
Speaker 3 (27:58):
I've talked about how I'm a Model.
Speaker 13 (28:00):
Three owner and I see a million opportunities for Apple
to do it better.
Speaker 3 (28:04):
Again, I think we have to keep it in perspective.
Speaker 13 (28:06):
AI could be a tremendous boost to apples sales and
profits over the long term. On a near term basis,
it could have a positive impact, and I guess iPhone
sixteen sales to the extent that they're able to market
something interesting. But I think investors have to be realistic
on the near term expectations over the next twelve to
(28:27):
eighteen months, on Apple's ability to leverage AI, and it's
just not as compelling as a lot of the other
big tech companies.
Speaker 5 (28:35):
Tom, there's a lot of frenemies out there. At the moment,
I asked my audience on social media, is an Apple
Open Ai deal for chat GBT on the iPhone good
for Microsoft? Because I'm trying to make sense of all this,
most respondents say good for Microsoft.
Speaker 3 (28:51):
What do you think absolutely good for Microsoft?
Speaker 13 (28:53):
When you think about Microsoft's involvement with open Ai, it's
good for Microsoft.
Speaker 3 (28:59):
So yes, I think that I like how to use
the word front of me.
Speaker 13 (29:02):
This is a challenge for Apple, which is does it
want to leverage open ai given its relationship with Microsoft?
Speaker 3 (29:09):
Does it want to leverage Google?
Speaker 13 (29:11):
Does it want to entrust someone else to something that
could potentially be this important being artificial intelligence. I still
look at the Siri as an opportunity for Apple to
do something better there.
Speaker 3 (29:24):
So this is certainly a challenging situation for Apple.
Speaker 6 (29:27):
Come on, sirih you can do it.
Speaker 4 (29:29):
Meanmail, Tom, what about the Vision pro going on sale
to more countries? We understand China, Japan, France, Germany?
Speaker 3 (29:35):
Can I help at the margin?
Speaker 13 (29:37):
Yes, I think the most interesting thing we learned about
Vision pro in the March quarter was how they talked
about at the enterprise level, which maybe makes the thirty
four to ninety nine price point make more sense. But
the challenge we talked about services Hardware sales were down
double digits in the March quarter, and I think if
you continue to have declines with hardware at some point,
(29:58):
that's going to transit or translate lower services sales, which
is another challenge for the stack.
Speaker 6 (30:03):
Yeah, I misspoke.
Speaker 4 (30:05):
Likely to expand to China, to Japan, to France to Germany.
Speaker 5 (30:10):
Likely ed, Yeah, And I think most people say it
be a bit foolish if they did not. Tom Forte,
Managing director of Maximum Group. Great to have you on
the programs Thanking. Now coming up on the show, our
Kagos founder Bilhuang is defending himself against fraud and market
manipulation charges in Manhattan. Today we go outside the courthouse. Next,
this is Bloonbog Technology.
Speaker 4 (30:45):
Now let's get out to a Manhattan federal court where
our Keago's Capital management founder bilh Wang sand trial over
his firm's twenty twenty one collapse, facing charges of fraud,
of racketeering, conspiracy that could end with him behind bars
for the rest of his life tried alongside the former
Archago's CFO Patrick Halligan outside that courtroom Shanali Bassek. And
(31:06):
we understand that the defense lawyer for Bill Wang, currently
Barry Burke, is taking this down really talking about how
investment banks were falling over themselves to work with the company,
and really some of the bets that he made from
our perspective in tech was Vikom CBS. Now paramount saying
content was King Shannali.
Speaker 9 (31:24):
Yeah, he is.
Speaker 14 (31:24):
Really driving home that argument to your point. Here, you
do see the defense council now speaking right after the
prosecution had made their opening argument, and the defense is
making this case that our KAGOS was a family office.
Speaker 9 (31:37):
And it was not responsible for outside money. Bill Wang
was responsible for his own funds.
Speaker 14 (31:44):
It also made the case there that when he made
these bets, it was his own money that he lost,
not investors' money on the outside, although we do know
separately that the banks themselves had lost a significant amount
of money through engaging in these swap agreements with Huang's firm.
Now we look at the defense here and they also
talk about the nature of the bets themselves. You may
(32:05):
remember when all of this started to unravel. It was
around ViacomCBS. So you do have the defense attorneys speaking
to a jury largely not versed in the world of finance,
Caroline and explaining that Bill Wang was betting on stocks
that he believed in and that's why he was betting
so much.
Speaker 9 (32:24):
Some of his earlier bets like Netflix.
Speaker 14 (32:26):
Were hugely profitable for him back in the day, and
now when he was thinking about the new bets put
to work, he was making the case that content is king,
like you're saying, and that's why he bets so much
on Viacom, essentially through borrow money.
Speaker 5 (32:42):
You know, for US prosecutors, this is a big white
collar crime case. You know, it's up there in terms
of the scale and the action by their offices with
what happened with FTX and others. What are you expecting
to happen, Shanali? How many days weeks will this go
on for?
Speaker 14 (33:00):
We take a number of weeks, and remember we do
have just opening arguments. As we've been talking about, we
could hear from witnesses ed as soon as today. One
of the early witnesses, very early on in this trial,
will be for example, counterparties over at ubs that was
on the other end of the Billhang call when it
came to asking for margin. Now, I would also say,
(33:22):
remember that there are two people that worked at Arcagos
that have pled guilty and can also be testifying potentially
throughout the course of this trial in those weeks, and
one big question mark was how much they acted alone
or because of the culture at Our Chagos and directed.
Speaker 9 (33:39):
By Bill Huang to do so. This will get.
Speaker 14 (33:42):
Quite contentious because we know that the defense plans to
show that the banks acted on their own. You saw
it in the opening arguments, this idea that these banks
were falling over themselves to work for Bill Huang when
he was at his height.
Speaker 9 (33:55):
Now, remember another piece of evidence.
Speaker 14 (33:57):
That we wonder about whether it will show the light
of day and how it will be used is Credit
Sweez's own risk profile and risk assessment of itself as
it failed.
Speaker 9 (34:08):
As we know, Our Chagos wasn't.
Speaker 14 (34:10):
The only reason Credit Suitee had failed, but it was
a massive contributing factor to those significant losses faced by
Credit Swee as it was failing. So a lot of
complicated questions in the course of this trial it could
take weeks to play out. They're facing a number of
charges here, including racketeering, securities fraud, and wire fraud. The
(34:31):
charges alone each could face up to twenty years in prison.
And as we know, some of the attorneys in here,
the prosecutors were involved in the FTX trial very recently
as well. So this is in an office coming very
hard down on white collar crime Sanli.
Speaker 4 (34:48):
Has anything changed to protect this happening again from fominly
office perspective, from counterpolity perspectives.
Speaker 14 (34:56):
That's the best question I think coming out of this,
because this trial does have thetential to draw light again
to a lot of the practices that got us here,
and if you think about it, swaps rules in some
form have been altered.
Speaker 9 (35:09):
The SEC had taken a look at it, The.
Speaker 14 (35:11):
SEC and the CFTC have fought over jurisdiction around a
lot of these trades. Some of the ways that they
have been changed were simply post two thousand and eight
Dodd Frank rules that were changed not until recently. But
to a point about family offices and disclosure that has
not been changed, and that is something that regulators may
take a look at once again, given what happened here
(35:33):
and given that nothing.
Speaker 9 (35:35):
Is really different for any future problems.
Speaker 4 (35:38):
Dollie sloud out there. We thank you for being outside
the Manhattan Court. Now let's have to go to you.
Speaker 7 (35:43):
Ed.
Speaker 5 (35:44):
Yeah, let's get some other news headlines in today's Talking
Tech and First Soft Bank laid out plans to get
more aggressive in AI and other fields after reporting a
second quarter profit and surge in the value of assets,
including a surge of armstock since the IPA last year plus.
Jaumi aims to begin making and selling an SUV similar
(36:05):
to Tesla's Model hy as early as twenty twenty five,
embarking on a major new expansion, with production of its
debut SU seven electric car set to reach about one
hundred thousand units this year. And zero one Dot Ai,
the Beijing startup founded by tech pioneer Kaifu Lee, is
introducing its first AI application for consumers, a step aimed
(36:27):
at helping China capitalize on the promising technology. The firm's
free productivity assistant is called one G and it's the
latest in a series of AI products it's developing.
Speaker 7 (36:37):
Kaifulee spoke with Bloomberg's David.
Speaker 5 (36:39):
Ingless and Yvon Mann about that in competition from big
tech companies, listen to.
Speaker 15 (36:44):
This companies like Meta, Google, Microsoft are putting fifty one
hundred times more resources in this, so we certainly don't
take it lightly. So as we catch up with currently
best model, we realize that even better models will come
from Open Air and others, and we want to stay
as close as we can. But we also think it's
(37:07):
about building a great user experience, is really understanding what
the users want and using that, which is China's advantage.
As Jen said earlier, if you think about Chinese applications,
TikTok is better than Instagram. Products like Temu and Shean
have taken over the world. Users love it. I think
(37:29):
China's ability to develop great applications that focus on what
users want and that product market fit is a unique
attribute to Chinese companies.
Speaker 6 (37:41):
I feeling that.
Speaker 5 (37:51):
Game Stop shares surged amid speculation on the return to
social media by Keith Gill aka Roaring Kit, and it's
driven a meme stock mania emblematic of what happened in
twenty twenty one. That's his latest post on actually see
it right there?
Speaker 7 (38:09):
What does it mean?
Speaker 5 (38:11):
Let's bring in Bloomberg's Bailey Lipschaltz, who, along with meme
stock mania, is so back, Bailey, You're back. Roaring Kitty's back.
But what does that mean?
Speaker 16 (38:21):
I don't know, And it means that he's back to Twitter.
He posted a video that actually had clips of the
movie Wolverine. He also posted a montage that had a
Ferris Bueller on his day off.
Speaker 7 (38:33):
It's a lot of.
Speaker 16 (38:34):
Questions and it's circulating Reddit, stock, Twits, Discord, you name it,
and investors are speculating that if Roaring Kitty's back on
social media, maybe that means he likes the stock again,
and maybe that's a reason people should buy the stock.
That's really the galaxy brain of the retail crowd at
this point as it relates to GameStop.
Speaker 4 (38:52):
Because yeah, just give us the context of where else
this is a lit of fire, not only just GameStop,
but crypto related to games and also well just heavily
shortened names that are out there in the retail space.
Speaker 16 (39:04):
Exactly everything that moved back in twenty twenty one costs
and see you name it. Beyond, which bought the bed
back and Beyond ran from the company after it went bankrupt,
is rallying. Carently, it's really just kind of like a
question around what the next stock could be, and it
almost brings back the shades and the argument around is
this retail traders or is this Wall Street? And are
(39:25):
people speculating where they can put money to work? And
what actually is driving the rally because when you look
at what happened back in twenty twenty one, obviously the
retail crowd was part of it. Obviously they were buying
call options, but there are a lot of questions around
who else was buying because Wall Street doesn't really let
other people make money if they can get in on
the trade.
Speaker 4 (39:42):
Well besidesly, so is this a going to target shortstocks
and any particular hedge funds in particular as we saw
back in twenty twenty one, But also did the retail
crowd want to be parling in using robin Hood once
again because robin Hood came out sort.
Speaker 6 (39:55):
Of a foe and a friend in the situation.
Speaker 16 (39:59):
Yeah, a whole the bit around removing the buy button
as an area I don't want.
Speaker 7 (40:02):
To get into, but it does.
Speaker 16 (40:06):
But it does seem like we are still seeing those
animal spirits and that's really one of the questions is
who's buying and who's selling. Because we saw GameStop up
sixty eight percent. In the three weeks prior to the
Roaring Kiddy post, we saw the busiest week from a
volume perspective since April twenty twenty two, so people were
buying the stock out of the money.
Speaker 7 (40:24):
Call options were active in the two.
Speaker 16 (40:26):
Weeks leading up to today's rally, so a lot of
questions about what actually was going.
Speaker 3 (40:30):
On under the surface.
Speaker 5 (40:32):
I see, I see some animal spirits in you, and
you're reporting in your grasp of the data. There are
some animal spirits in other names, like Reddit's higher robin
hood at was higher. I saw on down Detecta that
e trade has been difficult for some users since the open.
Speaker 7 (40:49):
So take that information.
Speaker 5 (40:50):
It just explained the basics of the relationship of the
trading in these names and what's happening with meme stalts
more broadly.
Speaker 16 (40:58):
So we're seeing really a pushback into a lot of
those retail names, and that's new names like Trump Media
and Reddit and old names like AMC and Costs. But
we are seeing a lot of these systems being inundated
with buy orders, and that really can put a strain
on some of the systems to try to pair up
buyers and sellers. And that's why you see a number
of these trades kind of potentially fail to deliver and
(41:18):
a number of other issues.
Speaker 3 (41:20):
This is not the short.
Speaker 16 (41:21):
Mania that it was in twenty twenty one when over
one hundred and forty percent of game Stop was sold short.
It's closer to twenty four percent. But this is creating
a lot of issues for the underlying systems that are
trying to match up these.
Speaker 9 (41:32):
Buy and sell orders.
Speaker 16 (41:33):
And that also with the volatility and with some of
the swings where people were trying to put in orders
at that's totally saw the stock halted eight times for
volatility in the first hour because there was so much
of an order and an order backlog among these retail
platforms that don't have clients, that have clients that do
not have access to after hours or pre market trading,
so that also can create kind of this bottleneck, if
(41:54):
you will, of buy and sell orders in that first
sixty minutes. Even the first ten minutes of trading was
quite volatile.
Speaker 7 (42:00):
I'm quite heckic.
Speaker 4 (42:02):
It's back, it's up and training right now, and Bailey
Lipshalt's have a feeling we'll have a busy day.
Speaker 6 (42:07):
We thank him on all things Meme frenzy.
Speaker 4 (42:09):
Meanwhile, look, that does it for this edition of Bloomberg Technology.
There's some discussions happening, and what's Opening Eyes about to
announce in the next couple of minutes.
Speaker 5 (42:19):
Yeah, so a big event coming up the top of
the hour, And now you've got a hard choice. Tonight,
you can recap the podcast Bloomberg Technology, which is a
must listen, or you can watch the movie Done Money,
which is basically a buyer pic of Roaring Kiddy.
Speaker 7 (42:33):
Check both out.
Speaker 5 (42:33):
This is Bloomberg Technology from San Francisco in New York.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
From the heart where innovation, money and power.
Speaker 3 (00:11):
Collie in Silicon Valley, NBN.
Speaker 1 (00:14):
This is Bloomberg Technology with Caroline Hyde and Ed loved.
Speaker 4 (00:18):
Love and Karline Hein and Bloomberg's world headquarters in New York.
Speaker 5 (00:34):
Now I'm Ed Loudlow in San Francisco. This is Bloomberg
Technology coming up.
Speaker 4 (00:38):
Full chip coverage ahead. We're bringing the latest headlines from
in video, arm, Intel and more.
Speaker 5 (00:44):
Plus, Apple nears a deal with open Ai to add
chat GPT to the iPhone.
Speaker 4 (00:48):
Details ahead and shares of game stock. They surge him
in speculation that Roaring Kitty is back liking the stock.
We discussed that and so much more throughout the sabat
first Le's turn around, attention to the macro picture, some
new headlines coming out from.
Speaker 6 (01:02):
The New York FED.
Speaker 4 (01:03):
When it comes to consumer sentiment of the direction of
travel and inflation, and it's still running hot, Dave pot
three percent in terms of where consumers see inflationary pressures
being in about a year. That's overall in the midterm.
We're still holding on too. Gains though three tens percent higher.
Remember we get a CPI print on Wednesday PPI on
Tuesday a lot to digest.
Speaker 6 (01:20):
From the macro perspective.
Speaker 4 (01:21):
Two year yield remaining higher, so boring costs coming down,
yield slipping so two years money going in. Yields go
lower by some two basis points. Bloomberg Dollar Index also
down a little bit. Look some of the anxiety around
in flesher around inflation just stiling back a little bit
on the day despite that New York Fed data. Let's
move on and have a look at what's happening in
the world at bitcoin, because well, even though dollar's only
(01:42):
off by about ten percent, crypto is surging higher, up
two point four percent.
Speaker 6 (01:45):
And ed, I know you're going to.
Speaker 4 (01:46):
Focus in on game Stop and this is more the
reader cross from some of that means stock frenzy and
when it means on the related names in crypto.
Speaker 6 (01:54):
We're up two percent on bitcoin. What if you've got
on the micro.
Speaker 5 (02:00):
Stop memestock mania is back. This is a two day
chart to kind of illustrate the point. GameStop was up
one hundred and ten percent in the session it was halted.
We're now up around sixty percent, and it's just from
one social media post from Roaring Kitty aka Keith Gill
aka the source of all the original interests around GameStop.
(02:24):
You know about the movie, you know about what happened
on Reddit. I think Reddit's higher, robinhood is higher. There's
a lot of trading that's going on. Later in the show,
we're going to dig really deep, but I give you
game Stop. We're looking at other stories in the chip sector.
In principle, there are three clear headlines and semiconductors.
Speaker 7 (02:42):
Intel is up three point five percent. The Journal reporting.
Speaker 5 (02:44):
It's close with the deal with Apollo for eleven billion
dollars of financing for an Ireland fab.
Speaker 7 (02:50):
ARM is up more than five percent.
Speaker 5 (02:52):
Nike reporting that ARM is readying an AI product next year,
didn't say where it got the info, but SoftBank's going
to support them financially bring it to market. And then
videos actually high three ten to one percent. It had
been lower after the Information reported that China is instructing
domestic companies to stop ordering chips from Nvidia. We have
a very big segment coming up everything chips. The big
(03:14):
take today is on chips. There are a lot of
individual stories to pass through. There is a lot going on, and.
Speaker 4 (03:19):
There is a lot of discussion of China visa VI
the US coming from well key leaders in US government.
Speaker 6 (03:26):
We had a.
Speaker 4 (03:26):
Great conversation with Janet Yellen earlier own AMERI Horder and
sitting down with her for an exclusive really discussing China
in particular. Janey Ellen really feeling that China is not
playing by the rules on trade and sort of going
on to say that maybe we will see China escalating
in the so called tit for tat on trade.
Speaker 6 (03:42):
Just take a lesson. Listen to what Treasures actually told
us earlier.
Speaker 8 (03:47):
He believes it unacceptable as I do, to be completely
dependent on China in these areas, and he wants to
make sure given this that China is really not playing
by the rules in this sense. They have enormous subsidies
(04:08):
in critical areas of advanced manufacturing.
Speaker 4 (04:11):
There's a focus on increasing tariffs at a time where
there's anxiety around inflation. How does this alter the picture
of your investment landscape visus A. Janet Wi is with
us RBC Bruin Dolphin, head of market Analysis, and it
is a time where investors try and navigate seeming headwinds,
but an ability to keep on going for the growth
of AI how do you think this lands the China
(04:32):
versus US at the moment?
Speaker 3 (04:33):
Janet, good morning, hairline. Thanks for having me.
Speaker 1 (04:37):
I think in terms of the tech investment side, we
will still be heavily preferring the US. I mean, the
DOS is a hop of innovation, and I think the
regulatory pressure on China would remain, and I think the
trade tension parality will hit China more than the US.
Speaker 3 (04:56):
So I think from an.
Speaker 1 (04:57):
Investment perspective, I think all these trade tennis, it's obviously
it's not great from our price or from global growth
trade and the global market and certainty point of view.
But I think sticking with the US investment seems.
Speaker 5 (05:11):
To be the right approach exactly. I'm trying to pass
all of this together, right. I think there's a growing
confidence that inflationary pressures are easing off, but a big
part of that is US fiscal policy. Right, we're talking
or Jalant Yellen talking about how China has some anti
competitive practices, but here in the United States, if you
(05:31):
take the chip industry, this country is also pumping billions
of dollars into supporting its growth. How does that impact
you as an investor?
Speaker 3 (05:41):
I think the clear evidence is that.
Speaker 1 (05:45):
There's a lot of investment from a sovereign perspective into
a semiconductors given it is such an important strategic sector.
So I think the conclusion is that there will be
lots of money going into it, lots of investment, A
lot of big players will be involved, and I think
primarily again the US companies are likely to be benefit
(06:05):
from this initiative, and that's why we still have a
positive stance on the general semiconductor value chain story, either
from the equipment production or from the design, from the manufacturing,
the boundaries along the whole supply chain. I think there's
still going to be lots of investment going into it.
(06:26):
I think valuations in these US companies are still quite
reasonable given that they're strong earnings growth, and I think
we still have pretty good visibility into the twenty twenty
five earnings from the order's guidance, etc. So I think
the investment thesis we have is that invest in US tech,
particularly favoring in the semi conductory sector.
Speaker 5 (06:49):
Janet, do we see a rate cut from the FED
this year to your mind, and if so, when and
in what increment?
Speaker 7 (06:58):
Well, it is.
Speaker 9 (06:59):
Difficult to say.
Speaker 1 (07:00):
I think the bar for a rage cut is definitely
higher now will await the CPI print on Wednesday, But
I think the Fed, I think they have a leaning
on the next move being a rage.
Speaker 3 (07:11):
Cut rather than a rate hype.
Speaker 1 (07:13):
So I think there's still some preference aren't eventually cutting.
I think they're really each thing on doing that, but
they just need the data to allow that so our viewers,
that is more likely to happen in the fourth quarter.
But I think the FAT can really move, you know,
where the data allows. I think there's a lot of
chatter about how the FED may not be able to
move because of the timing of the presidential election, but
(07:34):
we think the FED will focus on the data instead
of trying to be a pure not to be political.
Speaker 4 (07:41):
I want to go back to what you just mentioned
about valuations looking pretty good at these levels, and many Janet,
have just been I mean holding their breath the ARM
ninety times future earnings valuation that we've seen in ARM
pops on the day we're going to have a much
deeper dive into the chip sector in a moment with
their own in king. But Janet, from an investment landscape perspective,
do you have to keep on building in the AI
(08:03):
infrastructure play or do we broaden out at this moment.
Speaker 1 (08:07):
So, I think to your point about the valuation of
our I can't really comment on an individual company, but
obviously we know that within the sector there are a
lot of players and there will be different ranges of evaluations.
I've talked about it as a group because of the
straw and a scroll. I think some of the major
players are the valuations are reasonable, but you have to
(08:30):
to really look into an individual case. I think in
terms of the broadening of the thing, we already have
seen that. I mean there is more confirmation from meget
cap tech companies that there is commercialization of AI that
is gaining traction. We see that from Alphabet, Microsoft, Amazon,
for example. So it has broadened out beyond the just
(08:50):
the cheap sector. And I think there has been quite
a significant pickup in the utility sector right because of
the electricity demounts. So I think they will continue to broaden,
but I think it has already started.
Speaker 4 (09:03):
I look at evaluation of one particular means Stop today
janet three thousand times future earnings is where the current
price of game stop is. Are we going to see
mean stock frenzy really hit us hard once again.
Speaker 1 (09:18):
Well, it is hard to say. I think right now
we are seeing a couple of individual stops having that reaction.
I'm not sure if that's going to last. Is a
lot driven by social media, but I do think that
what the current situation is an indication that the risk
sentiment is back. I think, you know, the positive risk
(09:40):
sentiment is not constrained anymore by you know, this high
interest rate and environment, these current level of bios. I
think the market rally or the market sentiment has already
you know, we already passed the stage when it's totally
just driven by the fad and bornios for example. So
there there's clearly have plenty of cash still sitting around,
(10:03):
are waiting to be deployed.
Speaker 7 (10:04):
Right.
Speaker 5 (10:06):
Risk sentiment is back, says RBC Brew and Dolphin head
of market analysis, Janet Marie. Great to have you on
the show. Let's continue our coverage of semiconductors is Today's
Bloomberg Big Take focuses on the eighty one billion dollar
investments made by the US and European Union towards the
(10:29):
next generation of semis joining US as Bloomberg Zin and King,
one of the members of the team that went through
this with the big take. We have a case study
today right which is Intel in Ireland. The Journal reporting
that there is advance exclusive talks to Apollo for eleven
billion in financing. Actually we broke that they were in
talks quite some time ago. But the need for cash
(10:50):
and a global footprint is clear through the lens of Intel.
Speaker 1 (10:54):
Yeah.
Speaker 10 (10:54):
No, I mean Intel is actually in a slightly different
situation to some of its rivals like TS and Samsong. Frankly,
it needs the money way more than they do, and
they can afford to be selective where they take government money,
what terms they take. Intel, because of the situation it's
put itself in over the last five or so years,
really needs the cash from pretty much any source it
(11:16):
can get if it's to fulfill what it's trying to do, and.
Speaker 4 (11:19):
Let's talk about fulfilling what it and more broadly, the
US is trying to do what globally countries and companies
are trying to do. Do we get to an extent
where we have too much supply in.
Speaker 10 (11:31):
I mean, this is the concern at the moment. The
concern really though, is focused on what's called the sort
of legacy chips, the older types of production, the type
of thing that Intel, TSMC and Samsong are building here
in the US. Frankly, there's not enough supply of that
kind of production right now, so not so much worried
about that, but some of the more simpler kind of
(11:54):
stuff in view of the amount of production being put
in place in places like China, that is certainly something
that people are focused on and worried about.
Speaker 5 (12:02):
AI is a big driver of this. Let's take a
look at today's big take. Specifically, the headline global chip
battle intensifies with the eighty one billion dollar subsidies surge,
But within that there are two different stories. There's kind
of like the long term capacity on sharing story, and
then there's psych everyone's knee jerk reaction to keep up
with what's happening in real time.
Speaker 10 (12:23):
Yeah, I mean, there's you know, everybody's focused on AI.
But if we believe that this is the future of computing,
if we believe that this isn't just a step function,
that this is something quite dramatically different, then obviously the
ability to control that has enormous implications, both in terms
of economics and insecurity, and having that production close at
(12:45):
hand is really important, and this.
Speaker 4 (12:48):
Goes global, not to mention what's currently underway and reporting
with ARM getting more deeply into AI and soft bank banking,
that we've got so much to digest. Ianking, a brilliant
deep dive comes to the big take. Go read it
online on your terminal. But let's stick with what this
all means in terms of competitiveness US versus China.
Speaker 6 (13:08):
President Joe Biden is said, of course, to not.
Speaker 4 (13:10):
Just thinking about the chip sector, but more broadly about
tariffs for drupling them on than Chinese electric vehicles, for example,
sharply increasing levees for other key industries.
Speaker 6 (13:19):
And it's come as soon as today.
Speaker 4 (13:21):
For more, let's bring in Eliza Tobin, senior director for
Economy at the Special Competitive Studies Project, And Liza, we
were just talking about this in the context of a
frenzy of money from government to support the chip industry.
But meanwhile Biden's trying to push back EV's coming to China,
trying to push back solar coming to China from China
to the US. Is that really got any bite to it?
(13:43):
It seems more like bark right now.
Speaker 2 (13:47):
Good morning, Caroline ed Greater be on with you. Yes, No,
this is a really strong move from the Biden administration,
as you noted the reporter saying that they are thinking
of quadrupling the terrif right on Chinese evs. As we know,
China has rocketed to become the top producer of evs
in just the last few years. They struggled for a
(14:08):
long time to build a competitive auto export industry and
now they have gotten there with evs. So currently US
automakers are insulated by the existing Trump era tariffs, which
are about twenty seven point five percent, But clearly the
Biden administration is concerned that going forward, China could use
its dumping strategy to underprice US automakers and flood the
(14:31):
market as they are already doing in Europe and elsewhere.
Speaker 5 (14:35):
Eliza, good Morning is ed in San Francisco. So, as
you point out, sources say that the EV tariff would
rise to one hundred and two point five percent. But
based on what you just said, I don't get it.
I checked, okay, and there are four China made evs
that retail in this country at incredibly small volumes, Pollstar
two and four, the new Lotus that's coming, and the
(14:59):
Volvo ex thirty. What's the point in the tariff if
those are only the only four models available and they
only sell in very small numbers.
Speaker 2 (15:10):
The Biden administration is trying to get a head of
the floods. So, as you noted, right now we are insulated.
American consumers are by and large not buying Chinese evs.
They're not coming into our market. But I think they
see the writing on the wall. German automakers are under threat.
Europe is importing these things. They're going into Japan, they're
(15:32):
going in elsewhere, threatening other global automakers. So if the
Biden administration wants to give the IRA subsidies, the Inflation
Reduction Acts subsidies, which of course incentivize green tech production
here in the United States, I think the administration wants
to give these incentives of fighting chances so that we
can retain an auto industry here in the United States
(15:56):
as the world transitions to evs. So it's actually a
time to raise the terrorists because it won't directly impact
people's pocketbooks because as you noted, Americans are not yet
buying Chinese evs.
Speaker 4 (16:08):
And yet, Eliza, you know, when you're thinking about special
competitiveness in particular, this is the project that you focus
in on. All of this is undermining, undermining ultimately the
efficiency of global trade subsidies here, tariffs there, All of
it will sort of it isn't a mediating what should
(16:29):
be just the natural flow of things.
Speaker 6 (16:31):
Is this what is necessary ultimately from.
Speaker 4 (16:33):
Your perspective, to ensure that US does remain competitive when
it comes to key industries.
Speaker 2 (16:39):
There has been this national debate over efficiency versus resilience,
and the lesson from COVID, from Russia's invasion of Ukraine,
from these other global supply chain crises we've had in
the last few years is that efficiency economic efficiency is
not the only thing we need to think about as
a nation, and so there's been increasing discussions of resiliency
(17:02):
and what steps do we need to take as a
nation to make sure that we continue to build emerging
technologies here in the United States. We have suffered from
massive de industrialization over the last several decades as we've
outsourced the production of our technology to East Asia, especially China.
(17:22):
So now there's a national conversation about looking ahead, we
want to make sure we're able to build some of
these emerging technologies here in the United States not only
design them, but build them, because that's essential to our
long term growth in productivity as well as our national security,
making sure we can make things here at home.
Speaker 5 (17:44):
Liza Tobin of the SCSP, thank you very much. So
coming up on the program, French President a Manue Macron
t outs billions of dollars in foreign investments from tech giants.
Speaker 7 (17:53):
We're going to have those details.
Speaker 4 (17:54):
Next, Karen, such global conversation. Meanwhile, let's just bos in
what's happening for us doc over here? We're not seventy
percent in the last couple of days on squarespace. Why
it's going private Permira and all cash transaction, valuing the
company in approximately six point nine billion dollars. We're going
to see some vcs giving some more investment General Atlantic
Acel for example.
Speaker 6 (18:15):
This is bruly meg Technology.
Speaker 4 (18:31):
Microsoft it plans to spend four point three billion dollars
building cloud and AI infrastructure in France, announcing its latest
major outlay on artificial intelligence technology. Now, Microsoft is aiming
to help train a million people support two thousand, five
hundred startups in France by twenty twenty seven.
Speaker 7 (18:47):
Now.
Speaker 4 (18:48):
Earlier this year, unveiled a partnership and a fifteen million
euro investment into mistral Ai. It's a Parisian startup competing
with the course the likes of open Ai. And we
want to stick with France with investment in France because
in manual Macron has just unveiled more than fifteen million
euros in foreign investments from US tech giants like Microsoft,
but also like Amazon, like IBM, like banks such as
(19:09):
Morgan Stanley. It's all a part of well trying to
spa France's economy, to repair its public finances, basically establish
Paris as well as Europe's post Brexit business and financial hub,
joining us on all of this. It's Blomberg opinion. Coconomists
Lionel Laurent. You know, it's interesting. It's a bit of
a PR exercise that happens every year over at the
(19:30):
Elyc Palace. But what ultimately is being done by Macron
to inject some optimism.
Speaker 11 (19:36):
You're right, choose France. It's a bit of a cheesy slogan.
It could be the cover of an investment brochure, but
it's not just PR because since he's become president this
has really bit about the art of the deal Micron style.
Speaker 7 (19:48):
Every year he gathers one.
Speaker 11 (19:49):
Hundred and fifty one hundred and eighty international CEOs wines
and dines them in Versailles and gives them the pitch
of the French economy. He'll say, it's doing its job,
it's doing the work. He's done the work of reforming France.
And what are you going to do for France From
the corporate side, which is invest and I think this
is that puts it, I think a cut above Davos
(20:11):
because there is investment. You could argue if it's expansion
of the existing staff instead of new projects. You can
argue if even fifteen billion is that sort of world
changing or impressive at the level of tech. But look,
I think there is something genuinely real to this. There's
a there's a seed of depth to this that's not just.
Speaker 5 (20:32):
Pr Yeah, Leonor, I think Mistrel put France on the
map a little bit, you know, in terms of the
conversation around AI development. But beyond that, we don't often
go to you, you know, during the program as frequently
as we do other countries, and it's at a time
where France's economy is on a shakier footing.
Speaker 11 (20:52):
Wow, that that cuts the here brutal, brutal. I think
you touched on something which is about relative relative worth
right now. Mccare came into power at a time when
the UK was effectively voting itself out of European leadership
with Brexit, and Angela Merkle's twilight years had begun. I think, honestly,
(21:15):
as long as the UK is seen as a kind
of Brexit tainted economy, and as long as Germany's industrial
model is seen to be suffering, France will still have
a card to play. Now. I think those two cards,
to be precise, are human capital. It still has smart,
talented engineers being pumped out of its graduate schools and universities.
And the other thing is tax credits. There's an R
(21:37):
and D tax credit in France that explains why so
much of what you're seeing is R and D research centers,
whether it's tech or banks. So clearly there is something
in it for these companies.
Speaker 5 (21:48):
It's not as pr Leonel Laurent of Bloomberg opinion from France,
we appreciate it. Welcome back to Bloomberg Technology, ed Lovelow
here in San Francisco.
Speaker 6 (22:06):
And I'm hired back in New York.
Speaker 4 (22:07):
Let's check on these markets, said, because now we're managing
to hold onto our gains in the face of some
inflratory pressure being shown by the New York Fed that
consumer sentiment showing that still there's elevated inflratory anticipation coming
from the consumer base. But on a week we have
CPI and the week we have PPI, which is cautious
ahead of those macro pieces of data. We're up a
tenth percent on the NASAK ten yure yields just holding
lower at four point four eight. I'm looking at Bitcoin
(22:28):
managing to ramp up two and three quarters a percent.
Speaker 6 (22:31):
Let's call it dollar a little weaker.
Speaker 4 (22:33):
Is this more of a spillover effect from the means
stock frenzy. Let's move it on one and shine light
what's happening with good old game stock. We are so
back up sixty three percent? But is Keith Gill so back?
Will he return to social media? Of course he did
pop a particular picture on x many feeling that perhaps
Roaring Kitty is back when it comes to liking games,
(22:54):
game stop and memestock mania seems to be back, and
we'll talk about it later. I shinal light, what's happening
with the chipset to the Socks Index. Apps up fourteen percent,
coming off of its highs, but had some notable names
pushing high Intel that reporting for the Wall Seat Journal,
building on Bloomberg's reporting that maybe we'll have some financing
from Apollo with Intel to build yet more ultimately industrial capability,
manufacturing capability this time in Ireland. We're also seeing what
(23:17):
arm is currently up to on the day as there's
anticipation that they're going to be focusing more on AI
thanks to SoftBank. I'm looking at Alphabet though, up by
one point six percent. Why more competition? Are they not
going to be able to integrate Gemini within the new
Apple iPhone? Is it going to be open Ai that
wins out Apple? Up more than one point six percent
and deep dive on it for us.
Speaker 5 (23:37):
Yeah, let's get more on that potential Open Ai Apple
agreement and bring in Bloomberg intelligence analyst Anna ra Grana. So,
Anna rag As you know, Bloomberg reported quite late Friday
nights that Apple and Open Ai are close on a
deal to bring chat GPT to the iPhone.
Speaker 7 (23:54):
You published your.
Speaker 5 (23:54):
Reaction this morning and in summary you're saying it's a
pretty sound strategic move outline your thesis.
Speaker 12 (24:03):
Yeah, so when you think about it, you know, Apple's
not been at the forefront of Generator AI, and the
next WWDC or the Worldwide Developer Conference in June is
really you know, aimed at AI. And if Apple's not
able to showcase really cool features, then you're not going
to have another round of you know, bad iPhone sales
over the next twelve months. So they really need to
(24:24):
push something out that gets consumers excited go get a
new phone. Requires a little bit more you could say,
processing power, you know, all sorts of things that go
with it. So from that point of view, I think
it's a good deal if they partner with somebody. You know,
personally I'd like to partner. I like them to partner
with both of them, frankly, not just with open aiye,
but Google also because you know, if you know, as
(24:45):
you remember, when it comes to search, Google pays them
quite a bit of money and I don't personally don't
want that partnership to go away for any reason.
Speaker 4 (24:54):
Was it also, though basically an acknowledgment as we've heard,
with perhaps teaming up with Alphabet and Gemini, they just
aren't going to be innovating themselves on this level.
Speaker 6 (25:03):
Would they ever usurp and build.
Speaker 4 (25:05):
Their own large ancuage model or is that just not
where they're going to be bringing AI to bear?
Speaker 12 (25:10):
See, they are spending money and I'm sure they'll have
their own technology that goes into it. But as Apple
has done it in the past, they'll like to partner
with other companies that specialize in that area. And you know,
there is no secret they have that deal with Google.
When it comes to search, they use cloud resources from AWS,
they use cloud resources from Google, so they don't want
(25:31):
to do.
Speaker 3 (25:31):
Everything in house.
Speaker 12 (25:32):
And if this helps them they sell more iPhones next year,
you know, I'm okay with them going and partnering with
anybody that's out there and.
Speaker 6 (25:40):
A Grana loving it.
Speaker 4 (25:41):
Bloomberg Intelligence, thank you very much for shining light on
your own thesis. Let's get that of Tom Forte, DA
Davidson analyst, and it seems to be the marriage that
the investor base wants to see.
Speaker 6 (25:51):
But not on Alphabet's perspective.
Speaker 13 (25:54):
Yeah, I think from Apple's perspective, investors are anxiously waiting
for the company's AI strategy. So whether it's using Google
or whether it's using open AI to create an advance
the strategy. I think that's something that potentially you get
investors excited. I just it's certain though then you may
not see the boost the iPhone sales. They certainly need
(26:18):
the boost, still have their revenue today, and then at
least on a near term basis, AI is still a
chip story for Nvidia, or hyperscale cloud computing story for
Azure AWS or Google Cloud.
Speaker 5 (26:32):
Tom Anna Rag said that if this helps sell iPhones
next year, it's a good thing. There's a much bigger
discussion happening in the smartphone market about whether or not
this is the year of the AI smartphone, principally focused
on Android powered by a Snapdragon processor. Do you see
(26:52):
an upgrade cycle if this deal gets done?
Speaker 13 (26:56):
The answer is I think of the upgrade cycle from
five G as being kind of the bell weather and
the advantage there was that the carriers had invested billions
of dollars to upgrade their network.
Speaker 3 (27:10):
So they were very vested in getting an upgrade cycle.
Speaker 13 (27:14):
To me, if you want to call it a potential
AI upgrade cycle, I would put that as a distant
second to the five G upgrade cycle. But right now,
I think Apple could use any help when it came
to sign the iPhone given the overdependence. Again, half their
revenue last year came from iPhones.
Speaker 6 (27:31):
I mean it is key.
Speaker 4 (27:32):
They're also, of course all in on services, and I
suppose that's also a key driving force here. Ultimately, Tom,
there has been this handwringing, this worry that Apple is
behind the curve, and that yes, they made the pivot
away from the cars, but it comes too little, too late.
Do you have optimism that they can steal that back,
particularly for AI on device.
Speaker 13 (27:54):
No, I do not, and I still actually wish that
they would return to cars.
Speaker 3 (27:58):
I've talked about how I'm a Model.
Speaker 13 (28:00):
Three owner and I see a million opportunities for Apple
to do it better.
Speaker 3 (28:04):
Again, I think we have to keep it in perspective.
Speaker 13 (28:06):
AI could be a tremendous boost to apples sales and
profits over the long term. On a near term basis,
it could have a positive impact, and I guess iPhone
sixteen sales to the extent that they're able to market
something interesting. But I think investors have to be realistic
on the near term expectations over the next twelve to
(28:27):
eighteen months, on Apple's ability to leverage AI, and it's
just not as compelling as a lot of the other
big tech companies.
Speaker 5 (28:35):
Tom, there's a lot of frenemies out there. At the moment,
I asked my audience on social media, is an Apple
Open Ai deal for chat GBT on the iPhone good
for Microsoft? Because I'm trying to make sense of all this,
most respondents say good for Microsoft.
Speaker 3 (28:51):
What do you think absolutely good for Microsoft?
Speaker 13 (28:53):
When you think about Microsoft's involvement with open Ai, it's
good for Microsoft.
Speaker 3 (28:59):
So yes, I think that I like how to use
the word front of me.
Speaker 13 (29:02):
This is a challenge for Apple, which is does it
want to leverage open ai given its relationship with Microsoft?
Speaker 3 (29:09):
Does it want to leverage Google?
Speaker 13 (29:11):
Does it want to entrust someone else to something that
could potentially be this important being artificial intelligence. I still
look at the Siri as an opportunity for Apple to
do something better there.
Speaker 3 (29:24):
So this is certainly a challenging situation for Apple.
Speaker 6 (29:27):
Come on, sirih you can do it.
Speaker 4 (29:29):
Meanmail, Tom, what about the Vision pro going on sale
to more countries? We understand China, Japan, France, Germany?
Speaker 3 (29:35):
Can I help at the margin?
Speaker 13 (29:37):
Yes, I think the most interesting thing we learned about
Vision pro in the March quarter was how they talked
about at the enterprise level, which maybe makes the thirty
four to ninety nine price point make more sense. But
the challenge we talked about services Hardware sales were down
double digits in the March quarter, and I think if
you continue to have declines with hardware at some point,
(29:58):
that's going to transit or translate lower services sales, which
is another challenge for the stack.
Speaker 6 (30:03):
Yeah, I misspoke.
Speaker 4 (30:05):
Likely to expand to China, to Japan, to France to Germany.
Speaker 5 (30:10):
Likely ed, Yeah, And I think most people say it
be a bit foolish if they did not. Tom Forte,
Managing director of Maximum Group. Great to have you on
the programs Thanking. Now coming up on the show, our
Kagos founder Bilhuang is defending himself against fraud and market
manipulation charges in Manhattan. Today we go outside the courthouse. Next,
this is Bloonbog Technology.
Speaker 4 (30:45):
Now let's get out to a Manhattan federal court where
our Keago's Capital management founder bilh Wang sand trial over
his firm's twenty twenty one collapse, facing charges of fraud,
of racketeering, conspiracy that could end with him behind bars
for the rest of his life tried alongside the former
Archago's CFO Patrick Halligan outside that courtroom Shanali Bassek. And
(31:06):
we understand that the defense lawyer for Bill Wang, currently
Barry Burke, is taking this down really talking about how
investment banks were falling over themselves to work with the company,
and really some of the bets that he made from
our perspective in tech was Vikom CBS. Now paramount saying
content was King Shannali.
Speaker 9 (31:24):
Yeah, he is.
Speaker 14 (31:24):
Really driving home that argument to your point. Here, you
do see the defense council now speaking right after the
prosecution had made their opening argument, and the defense is
making this case that our KAGOS was a family office.
Speaker 9 (31:37):
And it was not responsible for outside money. Bill Wang
was responsible for his own funds.
Speaker 14 (31:44):
It also made the case there that when he made
these bets, it was his own money that he lost,
not investors' money on the outside, although we do know
separately that the banks themselves had lost a significant amount
of money through engaging in these swap agreements with Huang's firm.
Now we look at the defense here and they also
talk about the nature of the bets themselves. You may
(32:05):
remember when all of this started to unravel. It was
around ViacomCBS. So you do have the defense attorneys speaking
to a jury largely not versed in the world of finance,
Caroline and explaining that Bill Wang was betting on stocks
that he believed in and that's why he was betting
so much.
Speaker 9 (32:24):
Some of his earlier bets like Netflix.
Speaker 14 (32:26):
Were hugely profitable for him back in the day, and
now when he was thinking about the new bets put
to work, he was making the case that content is king,
like you're saying, and that's why he bets so much
on Viacom, essentially through borrow money.
Speaker 5 (32:42):
You know, for US prosecutors, this is a big white
collar crime case. You know, it's up there in terms
of the scale and the action by their offices with
what happened with FTX and others. What are you expecting
to happen, Shanali? How many days weeks will this go
on for?
Speaker 14 (33:00):
We take a number of weeks, and remember we do
have just opening arguments. As we've been talking about, we
could hear from witnesses ed as soon as today. One
of the early witnesses, very early on in this trial,
will be for example, counterparties over at ubs that was
on the other end of the Billhang call when it
came to asking for margin. Now, I would also say,
(33:22):
remember that there are two people that worked at Arcagos
that have pled guilty and can also be testifying potentially
throughout the course of this trial in those weeks, and
one big question mark was how much they acted alone
or because of the culture at Our Chagos and directed.
Speaker 9 (33:39):
By Bill Huang to do so. This will get.
Speaker 14 (33:42):
Quite contentious because we know that the defense plans to
show that the banks acted on their own. You saw
it in the opening arguments, this idea that these banks
were falling over themselves to work for Bill Huang when
he was at his height.
Speaker 9 (33:55):
Now, remember another piece of evidence.
Speaker 14 (33:57):
That we wonder about whether it will show the light
of day and how it will be used is Credit
Sweez's own risk profile and risk assessment of itself as
it failed.
Speaker 9 (34:08):
As we know, Our Chagos wasn't.
Speaker 14 (34:10):
The only reason Credit Suitee had failed, but it was
a massive contributing factor to those significant losses faced by
Credit Swee as it was failing. So a lot of
complicated questions in the course of this trial it could
take weeks to play out. They're facing a number of
charges here, including racketeering, securities fraud, and wire fraud. The
(34:31):
charges alone each could face up to twenty years in prison.
And as we know, some of the attorneys in here,
the prosecutors were involved in the FTX trial very recently
as well. So this is in an office coming very
hard down on white collar crime Sanli.
Speaker 4 (34:48):
Has anything changed to protect this happening again from fominly
office perspective, from counterpolity perspectives.
Speaker 14 (34:56):
That's the best question I think coming out of this,
because this trial does have thetential to draw light again
to a lot of the practices that got us here,
and if you think about it, swaps rules in some
form have been altered.
Speaker 9 (35:09):
The SEC had taken a look at it, The.
Speaker 14 (35:11):
SEC and the CFTC have fought over jurisdiction around a
lot of these trades. Some of the ways that they
have been changed were simply post two thousand and eight
Dodd Frank rules that were changed not until recently. But
to a point about family offices and disclosure that has
not been changed, and that is something that regulators may
take a look at once again, given what happened here
(35:33):
and given that nothing.
Speaker 9 (35:35):
Is really different for any future problems.
Speaker 4 (35:38):
Dollie sloud out there. We thank you for being outside
the Manhattan Court. Now let's have to go to you.
Speaker 7 (35:43):
Ed.
Speaker 5 (35:44):
Yeah, let's get some other news headlines in today's Talking
Tech and First Soft Bank laid out plans to get
more aggressive in AI and other fields after reporting a
second quarter profit and surge in the value of assets,
including a surge of armstock since the IPA last year plus.
Jaumi aims to begin making and selling an SUV similar
(36:05):
to Tesla's Model hy as early as twenty twenty five,
embarking on a major new expansion, with production of its
debut SU seven electric car set to reach about one
hundred thousand units this year. And zero one Dot Ai,
the Beijing startup founded by tech pioneer Kaifu Lee, is
introducing its first AI application for consumers, a step aimed
(36:27):
at helping China capitalize on the promising technology. The firm's
free productivity assistant is called one G and it's the
latest in a series of AI products it's developing.
Speaker 7 (36:37):
Kaifulee spoke with Bloomberg's David.
Speaker 5 (36:39):
Ingless and Yvon Mann about that in competition from big
tech companies, listen to.
Speaker 15 (36:44):
This companies like Meta, Google, Microsoft are putting fifty one
hundred times more resources in this, so we certainly don't
take it lightly. So as we catch up with currently
best model, we realize that even better models will come
from Open Air and others, and we want to stay
as close as we can. But we also think it's
(37:07):
about building a great user experience, is really understanding what
the users want and using that, which is China's advantage.
As Jen said earlier, if you think about Chinese applications,
TikTok is better than Instagram. Products like Temu and Shean
have taken over the world. Users love it. I think
(37:29):
China's ability to develop great applications that focus on what
users want and that product market fit is a unique
attribute to Chinese companies.
Speaker 6 (37:41):
I feeling that.
Speaker 5 (37:51):
Game Stop shares surged amid speculation on the return to
social media by Keith Gill aka Roaring Kit, and it's
driven a meme stock mania emblematic of what happened in
twenty twenty one. That's his latest post on actually see
it right there?
Speaker 7 (38:09):
What does it mean?
Speaker 5 (38:11):
Let's bring in Bloomberg's Bailey Lipschaltz, who, along with meme
stock mania, is so back, Bailey, You're back. Roaring Kitty's back.
But what does that mean?
Speaker 16 (38:21):
I don't know, And it means that he's back to Twitter.
He posted a video that actually had clips of the
movie Wolverine. He also posted a montage that had a
Ferris Bueller on his day off.
Speaker 7 (38:33):
It's a lot of.
Speaker 16 (38:34):
Questions and it's circulating Reddit, stock, Twits, Discord, you name it,
and investors are speculating that if Roaring Kitty's back on
social media, maybe that means he likes the stock again,
and maybe that's a reason people should buy the stock.
That's really the galaxy brain of the retail crowd at
this point as it relates to GameStop.
Speaker 4 (38:52):
Because yeah, just give us the context of where else
this is a lit of fire, not only just GameStop,
but crypto related to games and also well just heavily
shortened names that are out there in the retail space.
Speaker 16 (39:04):
Exactly everything that moved back in twenty twenty one costs
and see you name it. Beyond, which bought the bed
back and Beyond ran from the company after it went bankrupt,
is rallying. Carently, it's really just kind of like a
question around what the next stock could be, and it
almost brings back the shades and the argument around is
this retail traders or is this Wall Street? And are
(39:25):
people speculating where they can put money to work? And
what actually is driving the rally because when you look
at what happened back in twenty twenty one, obviously the
retail crowd was part of it. Obviously they were buying
call options, but there are a lot of questions around
who else was buying because Wall Street doesn't really let
other people make money if they can get in on
the trade.
Speaker 4 (39:42):
Well besidesly, so is this a going to target shortstocks
and any particular hedge funds in particular as we saw
back in twenty twenty one, But also did the retail
crowd want to be parling in using robin Hood once
again because robin Hood came out sort.
Speaker 6 (39:55):
Of a foe and a friend in the situation.
Speaker 16 (39:59):
Yeah, a whole the bit around removing the buy button
as an area I don't want.
Speaker 7 (40:02):
To get into, but it does.
Speaker 16 (40:06):
But it does seem like we are still seeing those
animal spirits and that's really one of the questions is
who's buying and who's selling. Because we saw GameStop up
sixty eight percent. In the three weeks prior to the
Roaring Kiddy post, we saw the busiest week from a
volume perspective since April twenty twenty two, so people were
buying the stock out of the money.
Speaker 7 (40:24):
Call options were active in the two.
Speaker 16 (40:26):
Weeks leading up to today's rally, so a lot of
questions about what actually was going.
Speaker 3 (40:30):
On under the surface.
Speaker 5 (40:32):
I see, I see some animal spirits in you, and
you're reporting in your grasp of the data. There are
some animal spirits in other names, like Reddit's higher robin
hood at was higher. I saw on down Detecta that
e trade has been difficult for some users since the open.
Speaker 7 (40:49):
So take that information.
Speaker 5 (40:50):
It just explained the basics of the relationship of the
trading in these names and what's happening with meme stalts
more broadly.
Speaker 16 (40:58):
So we're seeing really a pushback into a lot of
those retail names, and that's new names like Trump Media
and Reddit and old names like AMC and Costs. But
we are seeing a lot of these systems being inundated
with buy orders, and that really can put a strain
on some of the systems to try to pair up
buyers and sellers. And that's why you see a number
of these trades kind of potentially fail to deliver and
(41:18):
a number of other issues.
Speaker 3 (41:20):
This is not the short.
Speaker 16 (41:21):
Mania that it was in twenty twenty one when over
one hundred and forty percent of game Stop was sold short.
It's closer to twenty four percent. But this is creating
a lot of issues for the underlying systems that are
trying to match up these.
Speaker 9 (41:32):
Buy and sell orders.
Speaker 16 (41:33):
And that also with the volatility and with some of
the swings where people were trying to put in orders
at that's totally saw the stock halted eight times for
volatility in the first hour because there was so much
of an order and an order backlog among these retail
platforms that don't have clients, that have clients that do
not have access to after hours or pre market trading,
so that also can create kind of this bottleneck, if
(41:54):
you will, of buy and sell orders in that first
sixty minutes. Even the first ten minutes of trading was
quite volatile.
Speaker 7 (42:00):
I'm quite heckic.
Speaker 4 (42:02):
It's back, it's up and training right now, and Bailey
Lipshalt's have a feeling we'll have a busy day.
Speaker 6 (42:07):
We thank him on all things Meme frenzy.
Speaker 4 (42:09):
Meanwhile, look, that does it for this edition of Bloomberg Technology.
There's some discussions happening, and what's Opening Eyes about to
announce in the next couple of minutes.
Speaker 5 (42:19):
Yeah, so a big event coming up the top of
the hour, And now you've got a hard choice. Tonight,
you can recap the podcast Bloomberg Technology, which is a
must listen, or you can watch the movie Done Money,
which is basically a buyer pic of Roaring Kiddy.
Speaker 7 (42:33):
Check both out.
Speaker 5 (42:33):
This is Bloomberg Technology from San Francisco in New York.
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