'Bloomberg Technology' Full Show (03/16/2023)
>> THIS IS A BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. CAROLINE: I AM CAROLINE HYDE. COMING UP, FULL COVERAGE OF THE BANKING FALL OUT. THAT IS SECRETARY YELLEN APPEARS BEFORE THE SENATE. ED: THE U.K. TAKING A BAN ON THE GOVERNMENT
PHONES. CAROLINE: AN EXCLUSIVE CONVERSATION WITH THE CEO OF MICROSOFT. TO THE ECONOMY AND BEYOND, WE WILL REVIEW OUR CONVERSATION AND SO MUCH MORE.
VOLATILITY IN THE BOND MARKET REPRIEVE AS WE HEAR REPORTS FROM THE WALL STREET JOURNAL AND OTHER OUTLETS THAT WE WOULD SEE SYSTEMIC BANKS IN THE U.S. COME IN AT UNDER SUPPORT. THE VIX ACTUALLY ENDING OUT OF VOLATILITY. WE SEE THE ECB HIKE RATES AS MANY HAVE PERHAPS NOT ANTICIPATED THE 50 POINT BASIS HIKE MOVE.
THE MOVEMENT INTO THIS PARTICULAR ASSET TO, DESPITE VOLATILITY IN THE U.S. DOLLAR WE ARE UP 16% ON BITCOIN. DIG IN TO SOME OF THE MICRO MOVES SC. ED: MICROSOFT IS INTEGRATING AI INTO THE MARKET SUITE. IT WAS A PRERECORDED PRESENTATION. SOCIAL MEDIA STOCKS ALSO FISHING HIGHER ON THE BLOOMBERG REPORT. THE U.S. IS TELLING, SELL YOUR STAKE IN TIKTOK. THE BANKING SECTOR IS A DYNAMIC.
WE LOOK AT FIRST REPUBLICAN. WE ARE TRADING DOWN TO NORM PERCENT FOR A RECORD LOW. -- 25% FOR A RECORD LOW. CAROLINE: KEEP A CLOSE EYE ON THE BANKING REPERCUSSIONS. QUESTIONS AROUND THE STABILITY OF REGIONAL BANKS LIKE FIRST REPUBLIC AND THE FILE OF SVB AND SIGNATURE BANK. JANET YELLEN STILL THERE ON CAPITOL HILL TAKING QUESTIONS. WE HAVE BEEN HEARING TOUGH FOCUS ON THE BANKING FALLOUT. LET'S GO TO KAILEY LEINZ.
WHAT HAS BEEN AT STAKE? KAILEY: SHE HAS NOT BLAMED THE REGULATORS, BUT SHE HAS MADE A POINT TO SAY SUPERVISION AND REGULATION NEEDS TO BE REVISITED AND LOOK AT. WE WERE HEARING THE EXCHANGE BETWEEN THE SECRETARY AND ELIZABETH WARREN, WHO AS WE ALL KNOW HAVE BEEN POINTING TO THAT 2018 ROLLBACK OF CERTAIN DODD-FRANK REQUIREMENTS FOR BANKS THAT HAVE HAD LESS THAN $250 BILLION IN ASSETS. TO UNDO THAT IN RECENT DAYS. SENATOR HORN WERE ASKING HER ABOUT STRESS TEST AND IF IT WOULD'VE HELPED IN THIS CASE. SECRETARY YELLEN MADE A POINT TO SAY THE ISSUES OF THESE BANKS THAT FAILED WAS ABOUT LIQUIDITY. WHAT STRESS TESTS TESTS IS
CAPITAL. SHE DID ADMIT TO SUPERVISORY ISSUES ARE RELEVANT HERE BECAUSE IN THEORY, THE POOR RISK MANAGEMENT ON THE ART OF THESE BANKS, SOME OF THE OTHER ISSUE SHOULD HAVE CAME UP ON THE SUPERVISORY PRACTICES. ED: WE HAVE THE HEADLINE FROM YELLEN SAYING WE NEED TO RE-EXAMINE THE RULES. A TOUGHER BANK REGULATION NEEDS TO COME FROM CONGRESS. WHERE DO WE GO FROM HERE ON THIS? WHAT IS THE ADMINISTRATION GOING TO PUSH FOR? KAILEY: A STRENGTHENING OF THESE ROLES.
MANY IN THE DEMOCRATIC PARTY ARE AS WELL. WE HAVE A DIVIDED CONGRESS, REPUBLICANS ARE IN CONTROL OF THE HOUSE. REPUBLICANS ARE NOT IN FAVOR OF STRENGTHENING REGULATION. WE GOT A LOT OF PUSHBACK AROUND THAT THAT IS CONTINUING IN HEARING TODAY. YOU'RE HERE QUESTIONS ON THE
PART OF REPUBLICANS, INCLUDING JAMES LANKFORD OF OKLAHOMA ABOUT THE PRESIDENT AND THE FBI FED JOINTLY TOOK OVER THE LAST WEEKEND. LANGFORD WAS ASKING ABOUT COMMUNITIES AND IF THEY WERE GOING TO GET THE SAME TREATMENT AND THAT ALL DEPOSITORS WERE HOLD FEARED IT IS ONLY WHEN THE FTSE, MYSELF, THE FED IMPOSES A SYSTEMIC RISK. LANGFORD ASKED HER, HOW ARE YOU GOING TO STOP DEPOSITS FROM LEAVING COMMITTEE BANKS AND GOING TO THE BIG GUYS. SHE STRUGGLED WITH THE ANSWER. SHE SAID IT WAS NOT THE INTENTION. CAROLINE: BEING SUPPORTED BY THE BIG GUYS. KAILEY:
THE BIG BANKS IN THE COUNTRY ARE TRYING TO GET TOGETHER FOR SOME KIND OF A RESCUE MISSION FOR FIRST REPUBLIC AFTER BLOOMBERG REPORTED THAT THE BANK WAS LOOKING AT ITS OPTION, INCLUDING A SALE THAT HAS CAUSED A VOLATILITY IN THE STOCK. SECRETARY YELLEN DID RECEIVE A QUESTION IN THIS HEARING ABOUT THE FDIC AND THE ROLE OF POLITICS AROUND POTENTIAL. IT WAS QUESTIONING THE BIDS THAT THE FDIC RECEIVED AND THAT MERGER PROCESS WAS NOT GOING FOR IT LAST WITH DUE TO THE POLITICAL CONVERSATION AND TENSIONS AROUND THE DESIRE FOR BANKS TO MERGE AND GET BIGGER. THAT WAS ANOTHER INTERESTING MOMENT IN THIS TESTIMONY. IT WILL BE INTERESTING TO SEE WHAT THIS FULLY TAKES SHAPE AS BECAUSE WE DO HAVE ALL OF THE DETAILS. ED: LET'S STICK WITH THE BANKING
CRISIS AND BRING IN CHIEF INNOVATION OFFICER. YOU HEARD WHAT KAYLEE HAD TO SAY, YOU HAVE BEEN IN THE ORGANIZATION FOCUSED ON TECH. WHEN HIS FDIC DOING RIGHT NOW BEHIND THE SCENES BEHIND THE BEST OF YOUR KNOWLEDGE? THE DEPLOYMENT OF THE INSURANCE FUND, WHICH DOES NOT HAPPEN VERY OFTEN. THEY'RE WORKING WITH OUR
PROCESS IN CONJUNCTION OF THE ARE RUNNING THE ACQUISITION PROCESS . THE THIRD THING THAT HAS GOT A LOT OF PEOPLE LOSING SLEEP IS THEY ARE RUNNING AROUND LOOKING AT ALL OF THE OTHER BANKS IN THEIR PORTFOLIO MAKING SURE THERE ARE NOT ANY OTHER HIDDEN PROBLEMS THAT THEY DID NOT HATCHED IN THE EXAMPLE -- EXAMINATIONS OVER THE LAST FEW YEARS. ED: THE SIGN RELIEF ON THE BACK STOCK. IT IS STILL INCREDIBLY COMPLICATED FOR A DEPOSITOR TO PIPIT ON THEIR STRATEGY WITH BANKING. CAROLINE: THIS IS NOT THAT EASY TO GO ABOUT AND DIVERSIFY YOUR FUNDING. A LOT OF THE BANKS, JP MORGAN, SOME OF THEM SAYING YOU NEED MUCH HIGHER INITIAL BASE OF MONEY TO PUT IN SOME OF THE MINIMALISTS OUT OF THE REACH. FROM THAT PERSPECTIVE, HOW MUCH
DO YOU THINK THE FDIC'S PLACE THIS ROLE APPEARED YOU HAVE TO . SO THAT PEOPLE CAN STILL ACCESS FUNDS WHEN THEY NEED THEM BUT FOLLOWED UP BY LARGER SYSTEMIC INSTITUTIONS. SULTAN: THE THIRD ORDER RIPPLE EFFECTS THAT ARE PROBABLY NOT GOING TO BE FAULT THROUGH FOR A WHILE. SILICOM BANK HAD A OUTSIZED IMPACT IN TERMS OF WHERE IT WAS HOLDING DEPOSITS, ESPECIALLY THE VENTURE CAPITAL ECOSYSTEM. REDISTRIBUTING THAT ACROSS 15 BANKS BECOMES A ENTIRE RESTRUCTURING OF THE ECOSYSTEM. IT IS GOING TO TAKE MONTHS, AND
EVEN A FEW YEARS FOR THAT TO SHAKE OUT. ED: YOU WROTE A OP-ED FOR BLOOMBERG WHEN YOU LEFT THE FTSE SAYING, ULTIMATELY, THE FBI IS A FEDERAL BUREAUCRACY IS HESITANT AND HOSTILE TO TECHNOLOGICAL CHANGE. ARE WE SEEING A CHANGING OF THE ROLE IN WHICH BANKING WAS EXECUTED BEEN A PROBLEM FOR REGULATORS AND INSTITUTIONS? SULTAN: WE HAVE SEEN A TREMENDOUS CHANGE IN BANKING. EVERYTHING IS BASED ON
TECHNOLOGY. THE MOVEMENT OF TECHNOLOGY IS A REAL-TIME DIGITAL FUNCTION, WHETHER IT IS ON YOUR SMARTPHONE OR AT THE CENTRAL BANK LEVEL. WE ARE DECADES BEHIND IN TERMS OF USING TECHNOLOGY WHETHER IT IS A DEPOSIT CRISIS ARE WATCHING THE FLOW OF FUNDS. WE HAVE SEEN ISSUES WHERE SOME HAVE ACTUALLY RAN OUT OF MONEY. WE ARE AT THE POINT WHERE THE REGULATORY INFRASTRUCTURE NEEDS TO BE UPGRADED TO THE FIRST CENTURY. THAT WAS ONE OF THE THINGS THAT
CONCERNED ME WHEN I WAS INSIDE AND THE MOTIVATION OF THE OP-ED. CAROLINE: THE U.S. IS PUSHING FIRST REPUBLIC TO BE RESCUED. WE ARE STILL SEEING FIRST REPUBLIC STOCKS DOWN. WE ARE SEEING A SLIGHT RECOVERY.
THE OFFICIALS ARE PUSHING FIRST REPUBLIC. FASCINATING, THE WAY THE SPEED AT WHICH THIS CONTINUES TO ENVELOP REGIONAL LENDERS. ED: JP MORGAN, CITI, BANK OF AMERICA. WE WERE EXCITED TO HAVE YOU BECAUSE YOU SAT AT BOTH SIDES OF THE TABLE. HOW DOES THIS PLAY OUT TO THE REAL WORLD OF ECONOMY QUESTION ARE ALL OF THESE HEADLINES THAT HAVE CROSSED. IF YOU'RE SEEING THEY ARE
TRYING TO RUN A BUSINESS, -- IF YOU ARE SITTING HERE TRYING TO RUN A BUSINESS, HOW WORRIED SHOULD YOU BE? SULTAN: IF I AM THE MANAGER OF A START UP, I SHOULD HAVE MY CAPITAL DISTRIBUTED AMONGST NUMBER OF INSTITUTIONS. IN TERMS OF PRODUCTS AND SERVICES, MAYBE THERE ARE RETAIL AND SMALLER BANKS THAT MAKE MORE SENSE. TO FIGURE OUT WHAT TO DO WITH MY BUSINESS, THAT IS A ENTIRELY DIFFERENT CONVERSATION. WE ARE SEEING A CULTURAL FIGHT GOING ON BETWEEN DIGITAL NATIVE PEOPLE WHO WANT DIGITAL TECHNOLOGY IN THEIR BANKING AND FINANCIAL SYSTEM, WHETHER IT IS ANY OF THESE MODERN WAYS OF USING TECHNOLOGY. A REVELATORY ENVIRONMENT THAT IS FUNDAMENTALLY STILL ANALOG.
I THINK WE ARE GOING TO SEE A LOT OF IMPACTS. THERE ARE A LOT OF COMPANIES THAT I AM LOOKING AT WHETHER S POTENTIAL OR CURRENT INVESTMENTS THAT WILL WONDER IF THEY SHOULD BE OPERATING IN THE UNITED STATES BECAUSE OF THE CONFLICT. WHAT THIS HAS DONE IS INSTITUTED A LOT OF AMBIGUITY WHERE DISH SHOULD BE AS A OPERATIONAL MANAGER. A LOT OF US ARE LOOKING AT THIS FOR THE FIRST TIME AND SAYING, WE GOT TO BE VERY THOUGHTFUL, UNDERSTAND THE REGULATORY ENVIRONMENT, CAPITAL ENVIRONMENT AND ALSO WHERE THE CUSTOMERS ARE. I THINK 2023 DOES NOT LOOK A
LOT LIKE 2019. I WILL SAY THAT. ED: WE SHOULD NOT MAKE LIGHT OF ANY OF THIS. WE ARE GOING TO ONE CRISIS TO THE NEXT. WHAT HAPPENED WITH SILVER GATE FOR EXAMPLE, THERE IS A CHANGE EFFECT. CAROLINE: I WANT TO GET YOUR PERSPECTIVE ON THIS BECAUSE THERE SEEMS TO BE A GROWING ANXIETY AMONG CRYPTO FOUNDERS THAT THEY ARE BEING BLOCKED OUT OF THE MI MAINSTREAM ECOSYSTEM, UNABLE TO FIND LENDERS TO PROVIDE FOR THEM. YOU BELIEVE THAT? SULTAN: I DO. FIRST OFF, SILICON VALLEY BANK HELD A TREMENDOUS PERCENTAGE OF VENTURE DEBT. THEY CREATED THE MARKET.
THAT IS JUST GONE. THAT IS USUALLY A FUNDING STRUCTURE. IT IS ABSOLUTELY CLEAR IN THE LAST YEAR THERE HAS BEEN A NUDGE AND IT IS MOVING FROM A NUDGE INTO SOMETHING STRONGER THAN THAT BY CERTAIN PARTS OF THE REVELATORY COMMUNITY TO GET THE CRYPTO ECOSYSTEM OUT OF THE UNITED STATES BANKING SYSTEM.
WE SEE FROM EXAMINERS TELLING BANKS TO THAT SOMETHING STRONGER. THERE IS A RUMOR GOING AROUND THAT WHOEVER BUYS SIGNATURE THEY CANNOT THINK CRYPTO'S. UNTIL CONGRESS ACTUALLY CREATES A LEGAL STRUCTURE FOR THIS, I THINK WE WILL BE IN A SITUATION WHERE IT IS EASIER FOR CRYPTO NOT TO OPERATE INSIDE OF THE AMERICAN BANKING SYSTEM. CAROLINE: FASCINATING PERSPECTIVE.
LET'S GO BACK TO SOME OF THE BANKING -- NEWS. SOME OF THE YOUTUBE BIG TO FAIL SYSTEMIC IMPORTANT LENDERS ARE GOING TO RIDE -- SOME OF THE POTENTIALLY BIG TO FAIL SYSTEMIC LENDERS. ED: EVERYONE POPPED FIRST REPUBLIC WOULD BE NOT SAVED, BUT HERE WE ARE TALKING ABOUT -- THOUGHT FIRST REPUBLIC WOULD NOT BE SAFE, BUT HERE WE ARE. CAROLINE: THIS IS ALL SURROUNDING REGULATION. THERE'S ANOTHER COMPANY. WE JUST WANT TO SHOW YOU A LITTLE WHAT IS HAPPENING IN THE SHARES OF SNAP. THE PARENT COMPANY OF SNAP CHAT IS GETTING A BOOST TODAY.
THE U.S. IS PLANNING TO BAN TIKTOK. U.K. IS TAKING ACTION AGAINST THE APP. WE WILL REVIEW DETAILS. LATER, WE WILL BRING YOU OUR EXCLUSIVE INTERVIEW WITH MICROSOFT'S CEO. THIS IS BLOOMBERG. >> TODAY'S GENERATION OF AI IS ALL AUTOPILOT. IT IS A BLACK BOX THAT WE SORT OF USE THAT IS DICTATING IN FACT HOW OUR ATTENTION IS FOCUSED. THE THING THAT IS MOST EXCITING CAROLINE: TIKTOK IS LOOKING FOR WAYS TO AVOID A GOVERNMENT BAN FEARED OF COMPANY N.
ALEX IS ON BUSINESSWEEK TODAY WITH THE STORY. YOUR REPORTING YESTERDAY REALLY NOTABLE. TALK ABOUT WHERE WE ARE GOING WITH THE STORY OF TIKTOK. >> IT SEEMS LIKE IF THERE'S EVER A TIME THAT THE CIRCUMSTANCES HAS BEEN DIRE FOR THIS EVOLUTION OF WHAT HAPPENS TO TIKTOK IN THE U.S., IT IS KIND OF AT ITS HIGHEST PEAK. REPORTING ON TUESDAY THE COMPANY'S LEADERSHIP HAS BEEN DISCUSSING A POTENTIAL SEPARATION AS A LAST RESORT.
THE BIDEN ADMINISTRATION FROM THE TREASURY DEPARTMENT HAS TOLD THE COMPANY THAT BYTEDANCE NEEDS TO SAIL SHARES. IT IS THIS COMBINATION OF A MONTH-LONG EFFORT BY THIS COMPANY TO CONVINCE THE U.S. GOVERNMENT THAT THE $1.5 BILLION THEY ARE SPENDING ON SECURITY PRACTICES ARE ENOUGH TO RELAY CONCERNS ABOUT NATIONAL SECURITY RISKS. ED: TIKTOK'S PROPOSAL HOW U.S. USES DATA.
IT APPEARS TO NOT BE CONVINCING ENOUGH. WHAT IS TIKTOK'S POSITION. >> THE CEO WILL LEAN INTO WHEN HE TESTIFIES AT THE HOUSE NEXT WEEK IS THAT THAT WANT TO LAY OUT THE FACTS THAT WHAT THEY ARE DOING IS ENOUGH. BRINGING THEIR DATA TO THE CENTER IS ENOUGH, BREAKING ON THE PANEL FOR FOLKS TO OVERSEE THE OPERATIONS IS ENOUGH. I THINK THERE'S SOMETHING IN THE BACKDROP TO THIS THAT HAS BECOME A PROBLEM FOR THEM. FEAR OF WHAT CHINA COULD DO, WE ARE HOW THEY COULD USE THIS APP THAT IS CHANGING TO USERS, THE FEAR HAS PLACED A CLOUD OVER ALL OF THIS, I ENCOURAGE YOU TO READ OUR STORY IN BUSINESSWEEK THAT GETS INTO A LOT OF THE BACKGROUND ON HOW THEY GOT HERE.
IT IS NOT JUST ABOUT FACTS, EVEN THOUGH IT IS WHAT TEL -- TIKTOK CEO LIKES TO TALK ABOUT. AS THE ADVERSARY THAT IS DRIVING THE CONCERNS AROUND TIKTOK. CAROLINE: YOU DO NOT WANT TO BE SELLING OFF A KEY ASSETS. BLOOMBERG INTELLIGENCE IS RUNNING THE MATH. >> THEY PUT A 40 AND $50 BILLION ON THIS ONE ASSET.
TIKTOK MIGHT GET BANNED HERE. A BIG COMPANY, KIND OF A GYM IN BYTEDANCE'S PORTFOLIO. CERTAINLY IT SEEMS THAT BYTEDANCE WOULD NOT WANT TO LET GO OF THIS ASSET. IF THE GOVERNMENT SAYS HEY, IT IS EITHER DIVEST THIS OR YOU ARE BANNED HERE, OUR SOURCES ARE TELLING US THAT IS SOMETHING THAT THEY WILL HAVE TO CONSIDER. ED: WE ARE SHARING THE SHARE PERFORMANCE . THEY MIGHT GAIN EYEBALLS IF TIKTOK IS BACK IN THE U.S.
REMIND OUR AUDIENCE OF HOW BIG TIKTOK IS HERE WITH THE UNITED STATES. >> ANALYSTS PUT THE NUMBERS AND MORE THAN 100 MILLION. YOU CAN LOOK AT PLACES LIKE INDIA WHERE TIKTOK HAS BEEN BANNED FOR A LONG TIME. I WAS AT SNAP'S INVESTOR CONFERENCE LAST MONTH AND THEY WERE BRAGGING ABOUT HOW WELL THEY WERE DOING IN THAT COUNTRY. YOU HAVE TO BELIEVE IT IS THEIR BIGGEST COMPETITOR FOR YOUNG USERS IS NOT THERE ANYMORE. IT IS A OBVIOUS THING FOR ME THAT WE SEE A LITTLE BIT OF LIFT IN THE SHARES NOW THAT A BAND SEEMS TO BE BACK ON THE TABLE FOR A COMPANY THAT IS DRIVING THE PRODUCT DEVELOPMENT IN ALL OF ITS PEERS BECAUSE WHAT IT HAS ROLLED OUT IN THE U.S. IS REVOLUTIONARY.
CAROLINE: WE THANK YOU SO MUCH FOR RUNNING US THROUGH. ED: AN EXCLUSIVE CONVERSATION WITH THE MICROSOFT CEO. SHARES OF MICROSOFT UP ON THE DAY. THEY TURNED THE CORNER WHEN THE MARKET TURNED ABOUT AN HOUR AGO. THERE SOME REACTION THAT NEWS ED: MICRO FOSS -- MICROSOFT IS INFUSING OPEN AI. THE NEW SOFTWARE SUITE WILL DEBUT IN THE COMING MONTHS.
MICROSOFT IS TESTING IT WITH SEVERAL COMPANIES. CEO SPOKE WITH EMILY ABOUT HOW CHANGES ARE HAPPENING. >> IT FEELS IT IS HAPPENING FAST. IT WAS STARTED WORKING ON THIS A GOOD FOUR YEARS AGO. IN SOME SENSE YOU CAN THINK ABOUT ONE OPEN AI AND MICROSOFT CAME TOGETHER AND SAY, THE NEXT GENERATION OF A LARGE LANGUAGE MODELS NEED NEW INFRASTRUCTURE, LET'S BUILD INFRASTRUCTURE, TUNE THE INFRASTRUCTURE.
THIS JUST BEING FOUR YEARS PLUS IN MAKING ONCE WE STARTED SEEING UPSCALING THE FACTS, THE PROMISE OF THE EMERGING CAPABILITIES EVEN THAT STARTED SHOWING UP IN THE LARGE LANGUAGE MODELS, THAT IS WHY LAST YEAR, THE APPLICATION OF THESE LARGE LANGUAGE MODELS INSIDE OF COPILOT WAS THE BIGGEST PRODUCT OUT THERE TODAY. THAT GAVE US CONFIDENCE THAT WE CAN APPLY IN MORE CONSCIENCE -- CONTEXT APPEARED IT HAS BEEN FOUR YEARS IN THE MAKING AND A GREAT PARTNERSHIP. CAROLINE: THE INDUSTRY PIONEER SAYS THAT CHINA MAY ACTUALLY BE ABLE TO MATCH THE UNITED STATES IN ARTIFICIAL INTELLIGENCE THINGS TO EXPERTISE. >> I HAVE TRIED IF YOU HAVE THESE.
CERTAINLY, YOU CANNOT COMPARE THEIR CHINESE QUALITY WITH THE ENGLISH QUALITY. THE ENGLISH WAS TRAINED ON SO MUCH MORE HIGH-QUALITY ENGLISH DATA. TO FIX IT TO COME COMPANIES WOULD HAVE TO GET A LARGE AMOUNT OF CHINESE DATA. THAT WILL TAKE A YEAR FOR IT TO HAPPEN. CAROLINE: PERFECT TIMING. LOOK AT THE MARKET CAPITALIZATION HIT IT TOOK. ED:
HONG KONG SHARES DOWN THE SEVEN AND A HALF PERCENT. THIS IS A LONG-TERM DISCUSSION. WHEN IT COMES TO THOSE AI >> THE ELEVATED LEVEL OF UNCERTAINTY REINFORCES THE DATA-DEPENDENT APPROACH TO OUR POLICY RATE DECISIONS, WHICH WILL BE DETERMINED BY OUR ASSESSMENT OF THE INFLATION IN LIKES OF THE ECONOMIC FINANCIAL DATA. THE DYNAMIC OF UNDERLYING INFLATION AND THE STRENGTH OF A MONETARY POLICY TRANSMISSION. WE ARE MONITORING CURRENT MARKET TENSIONS CLOSELY, AND STAND READY TO RESPOND AS NECESSARY TO PRESERVE OUR STABILITY AND FINANCIAL STABILITY IN THE EURO AREA.
THE EURO AREA BANKING SECTOR IS RESILIENT WITH STRONG CAPITAL AND LIQUIDITY POSITIONS. IN ANY CASE, OUR POLICY TARGET IS FULLY EQUIPPED TO PROVIDE LIQUIDITY SUPPORT TO THE EURO AREA FINANCIAL SYSTEM IF NEEDED AND TO PRESERVE THE SMOOTH TRANSMISSION OF MONETARY POLICY. ED: THAT WAS CHRISTINE LAGARDE. THIS IS THE PICTURE IN EUROPEAN MARKETS. WE HAVE THE HALF-POINT HIKE WE EXPECTED FROM THE ECB, BUT NOT A LOT OF GUIDANCE ON WHAT HAPPENS NEXT. STOCKS MUTED VOLATILITY. THE STOCKS 600 UP 1.3%. CREDIT SUISSE NOT WITHIN THAT
INDEX BUT UP 20%. THE SWISS NATIONAL BANK STEPS IN TO PROVIDE LIQUIDITY SUPPORT. EURO-DOLLAR STABILIZING AT 106. WE HAVE SEEN INTERESTING MOVES ON THE EURO-DOLLAR IN RECENT DAYS. GERMAN TO EUROPE, ABOUT 60 BASIS POINTS, NOT THE SAME FLUCTUATIONS WE HAVE SEEN IN THE UNITED STATES ON THE SHORTER END OF THE CURVE. BUT WAS NOT A BIG REACTION IN
INITIAL MARKETS IN THE MOMENT, THE ECB BECAUSE WE HAVE A LOT OF QUESTIONS ON WHAT HAPPENS NEXT. CAROLINE: WE WILL SEE WHAT HAPPENS NEXT WHEN IT COMES TO CREDIT SUISSE. ANALYSTS ARE SEEING AND MOST LIKELY WILL PROMPT TAKE OFF OF THAT SOURCE LENDER.
WELL THE BANK'S CAPITAL POSITION IS NOT AN ISSUE, THE SITUATION IS WITH ONGOING MARKET CONFIDENCE ISSUES WITH ITS STRATEGY AND ONGOING FRANCHISE EROSION. WANT TO DIG IN ON FIRST REPUBLIC. THE EFFECT OF FINDING ON THE SENTIMENT OF THE EUROPEAN TECH SENTIMENT AS WELL. LET'S START WITH THE ON THE CREDIT SUISSE AND THE WORRIES ON FIRST REPUBLIC.
ARE WE GOING TO SEE MORE CONSOLIDATION? >> THAT ARE HARD THINGS ABOUT BANK MERGERS. IF YOU HAVE A BANK THAT IS GOING THROUGH SOME STRESS, PUTTING INSIGHT ANOTHER BANK CUT STRESS THAT BANK. THERE'S A LOT OF WAYS CONSOLIDATION HAPPENS BEYOND MERGERS AND ACQUISITIONS. THE BIGGEST THINGS PEOPLE ARE TALKING ABOUT IS THE IDEA THAT PEOPLE ARE PULLING THEIR RISKS FROM CERTAIN BANKS, DIVERSIFYING THEIR FUNDING BASIS. ALL THINGS TO SEE HOW TO PROTECT THEIR CLIENTS AT THE END OF THE DAY. WHEN I TALK TO MY SOURCES, THIS
IS DIFFICULT, THERE ARE MANY -- THINK OF A SILICON VALLEY BANK, THERE ARE MANY THAT ARE STANDING BEHIND CREDIT SUISSE FOR A BIG REASON. THEY HAVE BEEN THE LARGEST COUNTERPARTY AND THERE IS A PROBLEM AND A RISK TO COUNTERPARTIES CONSOLIDATING. THIS IS A PROCESS HAPPENING FOR COUPLE OF MONTHS -- CREDIT SUISSE HAS BEEN UNDER STRAINED. THE CONCERNS THAT ARE BEYOND JUST TODAY WHAT WE ARE SEEING THE STOCK RISE AND THE RISK OVER THE NEXT COUPLE OF WEEKS ARE STILL IN THE MINDS OF INVESTORS. THE STOCK HAVE GOTTEN THE LIFT BUT THE BONDS HAVE NOT GOTTEN THE SAME LOVE BEHIND IT. ED: CAROLINE HAVE BEEN TALKING ABOUT THE REAL TERMS IMPACTED TO FINANCIAL CONDITIONS, STARTUPS IN AMERICA IN THE ABILITY TO RAISE FUNDS. WHAT IS THE CONVERSATION IN
THAT RESPECT TO EUROPE. >> THE IDEA THAT A LOT THE FUNDS THAT ARE GOING TO BE DRYING UP, THIS HAS BEEN CLEAR FOR A YEAR NOW, WHEN YOU ARE LOOKING AT THE INTEREST RATES HEIGHTS THAT WAS THE ECB TODAY, THAT IS A KEY CONCERN FOR THE COMPANIES. A LOT OF THE COMPANIES, ESPECIALLY IN THE EUROPEAN ECOSYSTEMS HAVE BEEN BORN OUT OF A DOVISH MONETARY POLICY OUT OF THE ECB FOR A LONG TIME. THAT IS WHERE THESE COMPANIES WERE FOUNDED. ESPECIALLY DURING THE PANDEMIC THEY SAW DOVISH ECONOMIC POLICY TRICKLE INTO THESE POLICIES APPEAR TO CAPITALISTS WILL EUROPE HAVE BEEN SIGNALING THIS GOING TO BE A CONCERN GOING FORWARD, ESPECIALLY WITH BIG COMPANIES WITH MASSIVE VALUATIONS THAT WE SAW IN BE PANDEMIC AND WHERE THEY CAN GO FROM THERE WHEN IT COMES TO RAISING MORE CAPITAL. A LOT OF THESE COMPANIES ARE LAYING OFF STAFF, JUST AS COMPANIES IN SILICON VALLEY ARE.
WHEN IT COMES TO RAISING CAPITAL, THEY ARE WORDED, ESPECIALLY THE LATE STAGE COMPANIES WHEN IT CAN COME WITH SIGNIFICANT VALUATION CURVE. CAROLINE: CAN YOU REMIND US OF THE PLAYERS? NOT JUST THE STARTUPS OF THE KEEP AN EYE ON. WHEN YOU THINK ABOUT THE PROLIFERATION OF REGIONAL LENDERS IN THE U.S., I IMMEDIATELY THINK OF GERMANY AND LONDON'S BANK. THERE ARE A LAWFUL A LOT OF SMALL -- AWFUL LOT OF SMALL LENDERS THERE.
AGGI: IT IS POTENTIALLY A GROWTH ENGINE FOR THE EUROPEAN ECONOMY FOR A LONG TIME. THAT WAS APPARENT DURING THE PANDEMIC. SOMETHING THAT I FIND IT NOTABLE THAT WHILE SILICON VALLEY BANK'S WAS SOMETHING THAT WAS PARTICULARLY FOCUSED ON THE U.S.
AND U.K., SITTING HERE, THERE WAS ATTRACTION FROM SILICON VALLEY BANK WHEN IT COMES TO THE VENTURE DATA PRODUCTS. THAT WAS SEEN BY A LOT OF STARTUPS AND COMPANIES HERE AS A POTENTIAL ALTERNATIVE TO DOING MORE VENTURE EQUITY ROUNDS. LOSING A PLAYER LIKE VENTURE DEBT PLAYER LIKE SILICON VALLEY BANK IS ALSO SEEN TO A RISK TO THE EUROPEAN ECOSYSTEM. ED: WHAT ALL THIS HAS IN COMMON IS A DEPOSIT LISTS. REGRESSED THE LATEST HEADLINES THAT HAVE COME ACROSS THE BLOOMBERG TERMINAL JUST IN THE LAST THREE MINUTES OR SO.
SONALI: THE U.S. IS PUSHING THE IDEA OF A FIRST REPUBLIC RESCUE WITH BIG BANKS. A LOT OF BIG BANKS IS A PART OF THESE DISCUSSIONS. MORGAN STANLEY, PMC ARE ALL A PART OF THESE DISCUSSIONS ACCORDING TO PEOPLE FAMILIAR WITH THE MATTER.
THESE DETAILS ARE STILL BEING WORKED OUT. IF YOU ASKED YOURSELF WHY WE ARE AT THIS POINT IN PARTICULAR, THERE ARE A LOT OF QUESTIONS THAT WILL BE ALLOWED BY REGULATORS OR WANT TO BUY THE BIG BANKS WELL THEY HAVE LOVED FIRST REPUBLIC AS THE ENTERPRISE. REALLY ABLE TO GET A LOT OF THE CALIFORNIA CLIENTS INTEGRATE LOANS EXTENDED TO THOSE CLIENTS. THE WEALTH MANAGER WAS THE SWEETHEART. J.P. MORGAN, THERE'S A DEPOSIT CAP. UNLESS EURO TO MAKE THE NEXT J.P.
MORGAN CHASE, IS A CRISIS -- UNLESS YOU ARE GOING TO MEET THE NEXT J.P. MORGAN CHASE, IS A CRISIS LIKE THIS VERY PUBLIC. OR DO THEY GO ABOUT IT WOULD AS OF THIS RESCUE OF THE BIGGEST BANKS. ED: THINGS TO YOU BOTH. COMING UP, MORE ON THE BANKING CRISIS IMPACT, PARTICULARLY ON TECH INVESTMENT VENTURE. CAROLINE: WE HAVE GOT TO THINK ABOUT THE FUNDING THAT HAS BEEN DRAWN OUT.
JUST CHECK OUT THE SHARES SLAMMING TODAY. IT SAID IT WILL HALT OPERATIONS WHILE ATTEMPTING TO GET MORE FUNDING. A PART OF ITS VALUE BEING ERODED ON THE DAY. -- A THIRD OF ITS VALUE BEING ERODED ON THE DAY. THIS IS BLOOMBERG.
ED: FOUNDERS AND KEY EMPLOYEES OF THE COLLAPSED FTX GROUP RECEIVED 3.2 BILLION DOLLARS IN PAYMENTS AND LOANS COMING FROM THE TRADING HOUSE ACCORDING TO COURT FILINGS, THAT INCLUDES 2.2 BILLION FROM SAM BANKMAN-FRIED WHO IS NOW AWAITING TRIAL AFTER PLEADING NOT GUILTY. MORRIS CHANG SAYING GLOBAL -- IS DEAD FOR THE CHIP INDUSTRY. IT IS GOING TO THE SECTOR. CHINA IS AT LEAST FIVE TO SIX
YEARS BEHIND TAIWAN IN CHIPMAKING TECHNOLOGY. PAKISTAN'S EDUCATION START UP RAISED THE NATIONS TECH PROVIDER IN SPITE OF THE GLOBAL VENTURE FINANCING SLUMP. THE COMPANY RAISED $2.8 MILLION IN A SEED ROUND LED BY EUROPE'S LARGEST SPEED INVESTORS.
SPENDING IN PAKISTAN IS FORECASTED TO HIT EVERY $7 BILLION. CAROLINE: CLOSER TO HOME IN THE U.S. AND EUROPE. FORMER HEAD OF CORPORATE DEVELOPMENT OF HER PINTEREST. KAMRAN: YOU WOULD NEVER THINK -- I THINK IT OVERSTATE HOW IMPORTANT SVB HAS BEEN TO THE TECHNICAL SYSTEM.
THEY THE NERVOUS SYSTEM. IT IS THE HEIGHT OF THE INDUSTRY IN TERMS OF ALL OF THE DIFFERENT -- HEART OF THE INDUSTRY IN TERMS OF ALL OF THE DIFFERENT THINGS THAT THEY DO. YOU KNOW, THEY LEND THE STARTUPS.
THEY HAVE A NINE AND A HALF BILLION DOLLAR VENTURE PORTFOLIO AS WELL AS PHYSICIANS -- POSITIONS. THEY'RE IN A MAJOR SPONSOR OF EVENTS AND CONFERENCES. THEY LANDED DIRECTLY INTO WORKING CAPITAL VENTURE FUNDS.
THERE THE CENTERPIECE. CAROLINE: WHAT IS INTERESTING NOW, EVERYONE IS LIKE, YOU SHOULD HAVE DIVERSIFIED YEAR FOUNDS. ULTIMATELY -- DIVERSIFIED YOUR FUNDS. HOW DIFFICULT IS IT WHEN YOU ARE A FIRST-TIME VC FUND OR A FOUNDER? HOW HARD HAS BEEN TO DIVERSIFY? 44% SAYS IT IS HARD AND COMPLICATED. HOW HARD WAS IT FOR YOUR PORTFOLIO COMPANIES? KAMRAN: THEY WANT TO KNOW YOU ARE A LEGITIMATE BUSINESS.
IT'S NOT YOU CAN PULL YOUR MONEY OUT OF SVB AND TRANSFER SOMEWHERE ELSE. YOU HAVE HAD TO HAVE ANOTHER MAKE ACCOUNT OPEN. SOME PEOPLE PUT THE FOUNDS IN A PERSONAL ACCOUNT BECAUSE THEY HAD NO OTHER BANK ACCOUNT.
IT HAS BEEN A CHALLENGE TO FIGURE OUT WHERE ELSE YOU'RE GOING TO PUT YOUR MONEY. YOU'RE SIGNATURE INFLUENCE TOGETHER STARTER BANKS AND OTHER BUSINESSES, OF COURSE J.P. MORGAN AND CITI. YOU ARE ALSO SEEING SOME FOLKS TRYING TO OPEN A J.P. MORGAN FOR A CITI SAYING IT. IS BRUTAL. . THERE'S A BIG REPERCUSSIONS WHEN IT COMES TO FINANCIAL CONDITIONS CONTRACTING.
CAROLINE: MORE BROADLY, WHAT THAT MEANS FOR RISK SENTIMENTS? ED: HOW DIFFICULT IS IT FOR YOUR FOUNDERS TO SHOW OUT AND ASK FOR MONEY? HOW TYPICAL PHYSICALLY YOU CONVINCE OTHERS TO WRITE TEXT RUSSIAN MARK -- HOW DIFFICULT IS IT -- HOW DIFFICULT IS IT FOR YOU TO CONVINCE OTHERS TO WRITE CHECKS? KAMRAN: I SPOKE TO A FOUNDER THIS MORNING. IN IS NOT LIKE WE ARE AT A STANDSTILL -- IT IS NOT LIKE WE ARE AT A STANDSTILL. IT IS CAUSING PEOPLE TO TAKE MORE TIME TO FIGURE OUT WHAT THEY'RE GOING TO DO. THEY ARE DIVERSIFYING THEIR BANK ACCOUNTS AND NOT WHAT YOU NEED TO DO WITH TREASURY MANAGEMENT. WE'LL GET BACK TO FUNDRAISING AND GROWTH IN THE NEXT FEW WEEKS. ED:
THERE ARE AREAS THAT PEOPLE ARE STILL EXCITED ABOUT. WE SPENT THE FIRST THREE MONTHS OF THIS YEAR BULLISH. NEW FINDINGS BEING LAUNCHED, CHECKS BEING WRITTEN, ARE THERE AREAS YOU WILL SEE ACTIVITY IMMINENTLY? KAMRAN: AI IS THE BIG HOT SECTOR. IT HAS BEEN AROUND FOR YEARS HAS ALWAYS BEEN BEHIND THE SCENES. NOW, IT HAS BECOME MORE
MAINSTREAM. FINTECH IS STILL A MASSIVE SECTOR OF BIG OPPORTUNITY. AS PEOPLE HAVE FOUND IN THE PUBLIC SECTOR, THE BANKS HAVE BEEN IN A LOT OF TROUBLE THIS WEEK. THE NASDAQ HAS DONE QUITE WELL. PEOPLE ARE MOVING TOWARDS THE LARGER CAP TECH NAMES.
IT COULD BE PEOPLE IN THE ECOSYSTEM THAT COULD HELP WITH INVESTING IN STARTUPS. FINTECH IS STILL A SECTOR THAT IS BOOMING. HEALTH CARE IS ONE THAT IS STILL GETTING A LOT OF INVESTMENT. IT IS ONE OF THE HOTTEST SECTORS RIGHT NOW.
CAROLINE: FIRST REPUBLIC IS A POISED TO GET $30 BILLION IN DEPOSITS FROM BANKS. THIS IS SUPPORT COMING FROM THE BIGGEST LENDERS OUT THERE. THIS IS A DEAL THAT WANTED TO BE ORCHESTRATED AS SOON AS TODAY. THE U.S. PUSHING FROM THIS -- FOR THIS RESCUE, THE GOVERNMENT IS TRYING TO ORCHESTRATE IT. WE UNDERSTAND A SYSTEMICALLY IMPORTANT LENDER IS INVOLVED.
NOUN 13% OF THE DAY FOR THIS PARTICULAR COMPANY. ED: A MOVING REAL-TIME SITUATION. WE HAVE LEARNED NEW NAMES INVOLVED IN THIS PROCESS. CAROLINE: WE ARE GOING TO BE DIGGING INTO THE BREAKING NEWS TO REMIND YOU THAT SOME 30 MILLION DEPOSITS ARE GOING TO BE TRANSFERRED TO FIRST REPUBLIC TO BE ABLE TO STABILIZE THIS BANK. WE ARE GETTING TO FIND OUT WHAT THIS MEANS FOR YOU AS A FOUNDER. THIS IS BLOOMBERG.
CAROLINE:CAROLINE: FIRST REPUBLIC IS POISED TO GET 30 BILLION DOLLARS IN DEPOSITS BEING ORCHESTRATED BY THE U.S. GOVERNMENT COMING FROM A NUMBER OF KEY BANKS IN THE U.S. DETAILS OF THE RESCUE STILL BEING WORKED OUT BUT MAY BE ANNOUNCED AS SOON AS THURSDAY. FIRST REPUBLIC IS CURRENTLY PAUSED. ED: BACK TO TECHNOLOGY. DRONE DELIVERY START OF ZIPLINE HAS UNVEILED NEW TECH AS A VISION OF A DELIVERY SERVICE USING THE NEXGEN DRAWN FROM EVERYTHING FROM SALADS TO MEDICINE -- DRONE FROM EVERYTHING FROM SALADS TO MEDICINE. HOW IS THIS GENERATION DIFFERENT THAN THOSE WE ARE
FAMILIAR WITH FROM ZIPLINE? KELLER: WE HAVE SPENT SEVEN YEARS BUILDING AND PUTTING AUTOMATIC LOGISTICS AT WORK TODAY WE SERVE ENTERPRISE AND HEALTH CARE CUSTOMERS. WHEN SERVE HOSPITALS GLOBALLY TODAY -- WE SERVE HOSPITALS GLOBALLY TODAY. THE ULTIMATE VERSION OF THIS TECHNOLOGY IS THE ABILITY TO DELIVER DIRECTLY TO HOMES IN A WAY THAT IS 10 TIMES FASTER, HALF THE COSTS AND A ZERO EMISSION. WE HAVE BEEN USING 3000 POUND GAS VEHICLES WITH COMBUSTION DELIVERED BY HUMANS. THERE IS A BETTER WAY TO DO
THAT. ED: YOU HAVE A NEW COMMERCIAL AGREEMENT FOR WHERE THIS TECHNOLOGY WILL BE DEPLOYED. WHO IS GOING TO BE USING IT GEOGRAPHICALLY? KELLER: WE HAVE PARTNERSHIPS WITH THE GOVERNMENT OF RWANDA, WHICH IS ONE OF OUR FIRST PARTNERSHIPS. OVER THE COMING MONTHS WE WILL ANNOUNCE MORE PARTNERS OVER THE NEXT GENERATION TECHNOLOGY PLATFORM ACROSS THE U.S. WE ARE IN THE MIDST OF A LOT OF
PUBLIC NUISANCE. EW. CAN YOU TALK TO ME TO YOUR EXPOSURE AND HOW THE LAST THREE DAYS HAVE BEEN FOR YOU? KELLER: WE ARE LIVING IN CHAOTIC TIMES. WE MAKE WITH A DIVERSE PORTFOLIO UP BANKS.
WELL-CAPITALIZED TODAY. WE ARE WELL-CAPITALIZED TO FULLY SCALE THIS INFRASTRUCTURE. ED: I KNOW YOU'RE WORKING ON SIGNIFICANT FAA APPROVAL. WHEN ARE WE GOING TO SEE YOU GUYS BREAK THE NEXT MILESTONE IN THE UNITED STATES? KELLER: THE GOOD NEWS IS ACTUALLY THAT THE FAA HAS ENABLED ZIPLINE TO TURN ON OUR SYSTEM IN THE U.S., THIS IS THE KEY TECHNOLOGY THAT
IS REQUIRED TO FLY. THERE ARE SOME OTHER COMPANIES -- COUNTRIES THAT ARE HAVING THIS AT A NATIONAL SCALE, THE FAA IS DOING THE RIGHT THING TO HAVE THIS SERVICE WERE A REALITY FOR EVERYBODY WHO LIVES IN THE U.S. ED: ZIPLINE CEO. THANK YOU SO MUCH. TITER FOUND NATURAL -- TIES OR FINANCIAL CONDITIONS AND WHAT IS HAPPENING WITH MANY OF THE BANKS THAT SUPPORT THIS TYPE OF COMPANY. CAROLINE: SHARES STILL ONLY DOWNSIDE. WE UNDERSTAND THAT 30 BILLION DOLLARS IN DEPOSITS COMING TO THAT BANKS CORRECTION FROM SOME OF THE BIGGEST LENDERS IN THE UNITED STATES. ED: OVER THE WEEKEND WE WERE REPORTING FIRST REPUBLIC.
NOW, WE ARE CONCERNED THAT THIS BANK NEEDS BAILING OUT. CAROLINE: WE ARE GOING TO BE TALKING TO THE CEO OF MERCURY TOMORROW, ONE OF THE COMPANIES THAT HAVE BENEFITED FROM THE SVB, FIRST REPUBLIC POTENTIALLY AND ULTIMATELY FINDING NEW HOMES, LIKE MERCURY AND CAPITAL. FIRST REPUBLIC IS A POISED TO GET $30 BILLION IN DEPOSITS.
2023-03-18 15:06
