>> THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. CAROLINE: I'M CAROLINE HYDE IN NEW YORK. ED: THIS IS BLOOMBERG TECHNOLOGY. CAROLINE: COMING UP, INTEL. WE WILL BREAK DOWN THE
IMPLICATIONS. ED: CHINA TECH FIRMS REPORT EARNINGS -- AMID AN UNCERTAIN ECONOMY AND WE WILL BREAK DOWN THE RESULTS AND A LOOK AT WHY JD.COM IS BUCKING THE SLOWDOWN. CAROLINE: CRYPTO 6 -- -- BITCOIN CUSTODIAN BITGO -- THE CL WILL JOIN US LATER TO DISCUSS HOW AND WHY THEY DID IT.
LET'S CHECK IN THE MARKETS AND THERE IS A SLOWDOWN ON THE BORDER MARKETS. THE NASDAQ IS SLOWING DOWN. WHEN YOU LOOK THE BEST -- THE NASDAQ 100, WE ARE SEEING NERVOUSNESS ENCAPSULATING THE STORY IN CHINA, THE MACRO IMPLICATIONS OF WHAT THAT MEANS FOR THE U.S. AND INVESTOR SENTIMENT. THE TWO-YEAR YIELD DIPPING DOWN.
WE ARE SEEING 4.94 ON THE TWO-YEAR. THE POUND, THIS IS THE INFLATION ANXIETY GRIPPING THROUGH THE U.S.. INFLATION IS HOT IN THE U.K. 6.9%. THE POUND IS THE OUTPERFORMER WHEN YOU LOOK AT THE KEY CORE CURRENCIES. ONE KEY CURRENCY, BITCOIN UP 3/10 OF A PERCENT. THE LANGUAGE AT THIS LEVEL -- WE LANGUISH AT THIS LEVEL. ED: WE WILL HAVE A BIG EMPHASIS ON
CHINA ON THE SHELF. ED: -- -- ON THIS SHOW. JD.COM BEAT EXPECTATIONS. THE STOCK, U.S. LISTED SHARES DOWN 3.6%. WE WILL GO TO THE BLOOMBERG TEAM THAT COVERED EARNINGS LATER IN THE SNOW -- SHOW. CHINA, TESLA CUTTING PRICES IN CHINA OVERNIGHT, MODEL S AND MODEL X CUT. THIRD DAY IN A ROW WHERE WE HAD
NEWS BY TESLA DOING SOMETHING IN WRITING. INTEL IS WALKING AWAY AND ABANDONING ID -- A DEAL TO BUY TOWER SEMI. THE CONCERN IS THE TIMELINE. IT GOES TO THE CORE OF THEIR FOUNDRY BUSINESS AND WE WILL TALK TO ONE OF OUR GUESTS ABOUT WHAT THIS MEANS FOR THE FOUNDRY SIDE. YOU CAN SEE THE IMPACT OF THE
MARKET, TOWER SEMI DOWN 10%, INTEL BY -- DOWN BY 2.7%. CAROLINE: LET'S GET TO ONE OF OUR REPORTERS. IT WAS A SCOOP BUT MAYBE THE MARKET SAW IT COMING BECAUSE TOWER AT -- SOLD OFFER MONTHS. >> WAS ABOUT CATCHING THE FINALE AND EVEN WHEN WE PUT UP THE STORY, WE WERE WONDERING WHAT COULD HAPPEN IF THERE IS A HAIL MARY. CHINA'S WALKED OUT -- WATCHDOG
UPDATE THEIR WEBSITE AT ALL HOURS AND THERE IS POSSIBLE -- A POSSIBILITY THAT THEY COULD UPDATE A DEAL BUT ONCE WE FOUND IT WASN'T HAPPENING, WE UPDATED IT. ED: WALK US THROUGH THE TIMELINE OF THE DEAL BECAUSE THERE WERE MULTIPLE JURISDICTIONAL OR REGULATORY CHALLENGES. INTEL SEEMED CONFIDENT WHEN THEY ANNOUNCED THE DEAL THAT IT WILL GET IT DONE BY THE DEADLINE.
>> THEY ANNOUNCED IT IN FEBRUARY 2022 SO THAT WAS 18 MONTHS AGO. IT HAVE BEEN DRAGGING ON. -- IT HAD BEEN DRAGGING ON. CHINA IS OFTEN THE LAST REVELATORY HURDLE YOU SEE IN TRANSACTIONS. THEY HAVE JURISDICTION OVER SO MANY DEALS THAT HAVE CONNECTION TO CHINA SO ANYTHING WITH SEMI CONDUCTORS HIS HEART -- IT'S HARD TO TOUCH. IT IS NOT GOING AWAY.
ANY DEAL IN SEMICONDUCTORS COULD FACE SIMILAR RISKS. >> WE KNOW THERE IS A CONCERN ABOUT AI AND CHIPS WHEN IT COMES TO GEOPOLITICS, DOES IT ALL COME DOWN TO GEOPOLITICS? IS THERE ANYTHING THAT INTEL COULD SEE A SILVER LINING IN? >> ANYTHING FROM CHIPS, ELECTRIC VEHICLES IN I, IT IS SENSITIVE -- ELECTRIC VEHICLES AND AI, IT IS SENSITIVE. ANY DEAL IN THE SPACE WILL FACE SCRUTINY. OTHER DEALS LIKE CLOTHING ARE PROBABLY SAFE ARE -- FOR NOW.
ANYTHING LIKE TECHNOLOGY WILL BE A ROUGH ROAD IN TRADERS -- AND TRADERS WILL NOT LIKE WHAT HAPPENS. ED: THANK YOU VERY MUCH. I WANT TO GET COMMENTS FROM THE INTEL CEO. HE SAID WE ARE EXECUTING WELL ON A ROAD MAP TO BE DATE -- TO REGAIN TRANSISTOR PERFORMANCE AND POWER PERFORMANCE LEADERSHIP BY 2025, BUILDING MOMENTUM IN CUSTOMERS -- WITH CUSTOMERS AND THE BROADER ECOSYSTEM AND INVESTING TO DELIVER GEOGRAPHY -- YOU'RE ROUGHLY DIVERSE AND RESILIENT MANUFACTURING FOOTPRINT THE WORLD NEEDS. THAT IS THE STORY, HOW DOES THIS IMPACT INTEL'S BIG PLAN TO BECOME THE FOUNDRY CHOICE? >> WE WILL TALK ABOUT THAT. YOU HAVE TO LOOK AT THE SITUATION FOR INTEL AND SAY THERE IS A SILVER LINING, THERE IS NOTHING AGAINST INTEL PARTNERING WITH TOWER MOVING FORWARD.
THE PROPHETS IN THE --PROFITS IN THE FOUNDRY IN THE LEADING EDGE -- PART IN THE LEADING EDGE -- FOUNDRY ARE IN THE LEADING EDGE. CHINA WILL BE COMPLEX AND AS LONG AS WE PUT OUR MICRO REGRESSIONS -- AGGRESSIONS TO MAINTAIN OUR LEADERSHIP AND PUSHED CHINA, DEALS LIKE THIS WILL NEVER MAKE IT THROUGH. ED: EXACTLY SO. CAROLINE -- WOULD TELL ME THEY ARE SUPER CONFIDENT THAT INTEL WILL BECOME THE LEADER IN MANUFACTURING. ONE WAY TO GET THERE ORGANICALLY AND THE OTHER THING IS SHOPPING AND SHOPPING SEEMS TO BE OFF THE TABLE. ED: IS SHOPPING OFF THE TABLE -- CAROLINE: IT SHOPPING OFF THE TABLE IN THE U.S. AS WELL? -- IS SHOPPING OFF THE TABLE IN THE U.S. AS WELL?
>> CHINA IS GOING TO BE A PROBLEM FOR THE U.S. FOR SOME TIME AND THE U.S. IS GAINING LEADERSHIP BUT THE MOVES IT HAS MADE WITH ASML, THE LEADING EDGE PROCESS CAPABILITIES HAVE PUT CHINA ON THE DEFENSE AND THEY HAVE USED SOME OF THE DIFFERENT COMPONENTS FOR SEMI CONDUCTORS TO HOLD AGAINST THE U.S.. I SEE THE MOVE THAT IS LARGELY GOING TO BE OK WITH INTEL. YOU CAN TAKE SOMETHING LIKE A
GLOBAL FOUNDRIES DEAL, AT LEAST A CONSIDERATION OF THAT BECAUSE GLOBAL FOUNDRIES EXITED SIGNIFICANT PARTICIPATION IN CHINA SO THERE IS ANOTHER OPPORTUNITY THERE AND IF SOMEONE WANTED TO GO SHOPPING, THAT CAN HAPPEN WITHOUT NEEDING CHINA'S APPROVAL. I THINK INTEL WILL WIN THE MARKETS, THEY ARE GOING TO ADORE INTEL MORE IF INTEL CAN WIN AT THE LEADING EDGE. THE LAGGING EDGE HAS CAUSED ISSUES IN THE SUPPLY CHAIN BUT I AM NOT AS NEGATIVE ON THIS. THE RIGHT PARTNERSHIP COULD END
UP BEING A WINNER. ED: THE BENCHMARK INTEL SETS ITSELF WITH ITS S TS. MC. DANIEL: THE ACQUISITION OF TOLERANCE IS NOT GOING TO IMMEDIATELY MAKE INTEL ON THE SAME PLANE AS TSMC AS A GLOBAL FOUNDRY.
IT WAS A STEP FORWARD AND GAVE THEM A COMPLETE SET OF CAPABILITIES. I HAVE SPOKEN TO SOMEONE WHO SAID IT IS A MULTISTEP PROCESS, THE COMPANY PROVIDING MORE RESILIENCY OPTION FOR COMPANIES LIKE NVIDIA AND CAULKED -- CALL, -- QUALCOMM. I THINK THE IMMEDIATE OPPORTUNITIES FOR INTEL TO BE OF FOUNDRY -- TO LESSEN THE U.S. AND PARTS OF THE WORLD'S DEPENDENCY ON ASIA AND TSCM TO COMPETE --TSMC TO COMPETE. IF IT CAN WIN MORE ON THE LEADING EDGE, THAT IS WHERE THE OPPORTUNITY IS, IT CAN BE A NUMBER TWO. IT IS A LONG WAY TO BE ON
TSMC'S LEVEL. CAROLINE: YOU SAY THERE IS A PARTNERSHIP AND DEALS CAN BE DONE BUT CAN THEY BE DONE IN -- INTERNALLY IN THE U.S? >> THE DOJ LOOKS AT SOME OF THESE DEALS, HAVING SAID THAT, A LOT OF DEALS HAVE BEEN ABLE TO BE COMPLETED, WE HAVE SEEN CHINA STOP DT -- BIG DEALS IN THE PAST. WE ARE SEEING THE U.S.
GO THROUGH A HIGH AMOUNT OF SCRUTINY. IF YOU START, -- STOP M&A, YOU COULD BE PUTTING AT RISK THE UNITED STATES LEADERSHIP. THE CHIP AND SCIENCE ACT, THE PURPOSE OF THE ACT WAS TO MAKE SURE WE ARE DEFENDING THE GLOBAL LEADERSHIP OF THE U.S. IN SEMIS. ED: WE HAVE BEEN TRACKING 13FS IN THE DEADLINE.
YOUR REACTION TO THAT? DANIEL: INTEL HAS BEEN UNDER CONTINUOUS PRESSURE. I HAVEN'T HAD A CHANCE TO REVIEW THE POSITIONS AND THE CHANGES IN THE POSITIONS. INTEL HAS HAD A NICE RUN AND IT SHOWED PROMISE IN HAD A BETTER ORDER BUT THE OUTLOOK, THE COMPLEXITY AND CHINA'S ECONOMY HAS -- MAKES TECHNOLOGY PLAYS RISKY IN THE NEAR TERM. CAROLINE: WE KEEP AN EYE ON THAT STOCK. WE THINK YOU FOR YOUR ANALYSIS -- WE THANK YOU FOR YOUR ANALYSIS. WE ARE WATCHING SHARES OF SAMSUNG, THE ADLS AT THE MOMENT -- BY MORE THAN HALF IN THE SECOND QUARTER AND IT IS SELLING OUT OF THIS BECAUSE IT WANTS TO USE THE PROCEEDS OF OF THAT SALES TO INVEST IN ITSELF IN CHIP PRODUCTION MILES. CHIP -- QUITE THE THEME.
ED: COMING UP, ANOTHER THEME ON THE SHOW, SHINY -- CHINA, RECOGNIZE -- RISING ECONOMIC TURBULENCE IN CHINA. THIS IS BLOOMBERG. CAROLINE: WE HAVE TO TALK CHINA BECAUSE YOU KNOW THE RISING ECONOMIC TURBULENCE IN THE COUNTRY AND IT IS WEAKENING CONSUMER DEMAND. WE GIVE AN EYE ON TENCENT, THEY REPORTED REVENUE THAT MISSED ESTIMATES. ALL OF THIS AS WE SEE MORE CHINESE TECH FIRMS COMING OUT AND WE WANT TO SEE WHO IS WINNING AND LOSING. WE WANT TO GET TO THESE PEOPLE IN NEW YORK.
HENRY, I GO TO YOU FIRST BECAUSE THE DETAILS AND NUANCES WITHIN TENCENT, WHERE WAS IT OUTPERFORMING AND WHERE WAS IT LACKLUSTER? >> TWO ELEMENTS ARE IN PLAY, ONE IS ADVERTISING AND TENCENT HAS BEEN -- SEEN GAINS IN ADVERTISING BECAUSE IT IS PUSHING THROUGH ITS TIKTOK LIKE STREAM. THE DISAPPOINTING PART IS IN GAMING. WHEN YOU TALK ABOUT GAMING, IT IS ABOUT DOMESTIC GAMES. MOST GAMING REVENUES AT HOME AND ABROAD ARE LOWER THAN ANALYST COMMIT SO TENCENT WAS SAYING THIS IS A TEMPORARY PHENOMENON AND THIS REVENUE SHOULD REBOUND IN THE THIRD QUARTER. THEY ARE LESS PUSHY ABOUT IN GAME COMMERCIALIZATION FOR GAMERS AND PLAYERS DURING THE QUARTER TO TAKE THE GAME LONGEVITY. IT REMAINS TO BE SEEN FOR THE THIRD QUARTER. ED:
THE COMPANY LEVEL, JD WAS A DIFFERENT STORY, SALES BEAT ESTIMATES. YOU LOOK AT THE ADRS, THE U.S. LISTED SHALES ARE -- OF BOTH, THEY ARE MARKEDLY LOWER. INVESTORS ARE CONCERNED ABOUT THE STRENGTH OF THE CHINESE CONSUMER AND ECONOMY. >> TENCENT IS ONE OF THE BIGGEST HUMVEES IN CHINA AND THE BUSINESS FOLIOS SPANS FINANCE AND ENTERTAINMENT AND BECAUSE IT IS SEEN AS A BAROMETER OF CHINA, WHAT DOES IT TELL US? IT IS A BE CAREFUL OF WHAT YOU WISH WAR SITUATION BECAUSE THE BEGINNING OF THE YEAR, EVERYONE WAS HOPING FOR THE BIG REBOUND TO SPUR GLOBAL GROWTH BUT WHEN THAT DIDN'T HAPPEN, INVESTORS SAID WE SHOULD WISH FOR A LITTLE WEAKNESS SO THE CHINESE CENTRAL BANK COULD INJECT LIQUIDITY BUT WE HAVE DATA SHOWING WEAKNESS IN CHINA AND INVESTORS ARE NOT LIKING THAT. THESE ARE REALLY THE ACADEMY OF THE CHINESE GROWTH IN GENERAL WHICH HAS BEEN -- THE ABU DHABI OF THE CHINESE GROWTH IN GENERAL WHICH HAS -- DE PINZIMINI --THE EPITOME OF CHINESE GROWTH IN GENERAL WITH HAT -- WHICH HAS BEEN LACKLUSTER. HENRY: JD.COM BEATING ESTIMATES AND
EXPECTATIONS HERE. THE EXPECTATIONS HAVE BEEN LOW SO FAR BECAUSE THE CONSUMERS, THE RETAIL SALES HAVE BEEN DOING WELL OUT OF CHINA -- HAVE NOT BEEN DOING WELL AFTER -- OUT OF CHINA. JD.COM'S RETAIL MERCHANT -- MARGIN WAS BELOW ESTIMATE AND THAT IS WHY JD STOCK IS TRADING LOWER IN THE U.S. SO THE CONCERN IS COMPETE -- HIS COMPETITION IS MOVING HIGHER BECAUSE ALIBABA IS PUSHING ITS MARKET SHARE. IT IS LOSING MARKET SHARE TO OTHER PLAYERS LIKE KATIE --JD.
IT IS GOING HEAVY, ITS VALUE FOR MONEY, INVESTING CAMPAIGN SO THAT IS THE CONCERN HERE SO THE MARGIN IS DISAPPOINTING. CAROLINE: ISABEL, WE AIN'T DONE YET. THERE WILL BE TELLTALE SIGNS, IS A, -- OTHER COMPANIES -- THE COMPANIES ARE GIVING EARNINGS AND WHAT MORE CAN WE GLEAN? ISABELLE: PEOPLE WILL LOOK AT OTHER TECH COMPANIES BECAUSE THERE ARE MANY BIG PLAYERS IN CHINA. IF YOU THINK THIS DOESN'T MATTER IN OTHER ECONOMIES, YOU WANT TO AGAIN BECAUSE WE HAVE BLOOMBERG ECONOMY SAYS -- IF CHINA HUNDRED -- IT MAY TO THE FED TO CUT RATES SOONER THAN EXPECTED SO IT IS -- CHINA IS A BIG PLAYER, THE SECOND-LARGEST ECONOMY AND WHATEVER HAPPENS IN THE NATION IS SOMETHING THE WHOLE WORLD WATCHES. ED: WOW.
WE COVERED A LOT OF GROUND. OR TO COME THIS WEEK, -- MORE TO COME THIS WEEK. WHY RECRUITMENT COMPANIES ARE PULLING BACK THEIR ANNUAL GUIDANCE BECAUSE THE LABOR MARKET IS SQUEEZING ITS CLIENT PLUS A CEO IS JOINING US. THE E-COMMERCE STORY CONTINUES. THIS IS BLOOMBERG. ED: IT IS TIME FOR WORK SHIFTING WHERE WE LOOK AT THE CHANGING LANDSCAPE OF THE LABOR MARKET AMID ADVANCES IN TECHNOLOGY. RECRUITMENT COMPANIES ARE ABANDONING ANNUAL EARNINGS FORECAST AMID A SQUEEZE THAT HAS BEEN SPREAD BY SOFTENING LABOR MARKET IN WHICH EMPLOYERS ARE PLAYING FOR -- ARE PAYING FOR FEWER JOB LISTINGS.
THE OWNER OF INDEED AND GLASSDOOR WARNED IT WAS NOT SURE YET IF THE GROWTH WOULD RETURN DESPITE EXPECTING $500 MILLION OF ANNUAL COST SAVINGS AFTER CHOPPING 2400 JOBS INCLUDING 15% OF INDEED'S WORKFORCE. THE GAP BETWEEN OPERATIONS IN CHINA AND INDIA, FOXCONN WILL BEGIN PRODUCTION FOR THE IPHONE 15 IN INDIA. SOURCES SAY THE FACTORY WILL BEGIN MAKING THE -- SHIPPING THE DEVICES AFTER WEEKS -- ONLY WEEKS AFTER BUILDING IN CHINA.
THAT DELAY WAS DRASTICALLY REDUCED LAST YEAR AND APPLE PRODUCED 7% OF ITS I -- IPHONES IN INDIA AT THE END OF MARX -- MARCH AND AMAZON IS IMPOSING A NEW FEE ON MERCHANTS THAT DON'T USE ITS -- U.S. GOVERNMENT IS POISED TO FOLLOW AN ANTITRUST LAWSUIT AGAINST THE E-COMMERCE GIANT? THOUSANDS OF THIRD-PARTY SELLERS WHO SHIP PRODUCTS THEMSELVES WILL START PAYING 2% FEE ON EACH SALE STARTING IN OCTOBER? -- OCTOBER. CAROLINE: LET'S GET INTO COMMERCE BECAUSE THE NEWS, THE RETAIL SALES COMING IN STRONG TODAY, WE HAVE EARNINGS FROM TARGET, PROFIT GAINS FOR THE COMPANY AND WE ARE TRYING TO UNDERSTAND WHERE IS THE CONSUMER AND HOW IS IT SHIFTING AND SPENDING IN THIS ENVIRONMENT. WE HAVE AN EXPERT, RACHEL TIPOGRAPH, FOUNDER AND CEO OF THE PLATFORM -- E-COMMERCE PLATFORM MIKMAK. ARE YOU SURPRISED BY THE RESILIENT -- RESILIENCE OF THE U.S. CONSUMER? >> I AM NOT BECAUSE AMERICANS LOVE TO SPEND AND DON'T LIKE TO SAVE AND WHAT WE ARE SEEING IS EXACTLY THAT.
TO QUOTE ONE OF MY DEAR FRIENDS, ELITE -- A LEAD ANALYST AT FORRESTER, WHAT WE ARE SEEING IN THE MARKET IS THE CONSUMERS STILL HAVE HALF $1 TRILLION FROM THE PANDEMIC TO SPEND THROUGH AND THEY ARE DOING THAT DESPITE THE BRANDS AND RETAILERS RAISING PRICES SO WHAT WE ARE SEEING AN 80'S EARNINGS -- SEEING IN THE EARNINGS, RETAILS -- RETAILERS ARE HAVING AN CREDIT -- INCREDIBLE MARGINS? CAROLINE: THEY LOOK NERVOUS LOOKING FORWARD. WHAT ARE E-COMMERCE PAY ARE SEEING AND HOW MUCH ARE WE SPENDING OUR WALLET ONLINE OR EXPERIENTIALLY? >> TARGET IS NERVOUS FOR ALL THE RIGHT REASONS AND WHAT WE ARE SEEING IS CONSUMERS ARE SPENDING ON ESSENTIALS. THEY ARE SPENDING ON GROCERIES, ALCOHOL, PERSONAL CARE, PET CARE, BEAUTY. THEY ARE NOT SPENDING ON NONESSENTIALS SO FASHION, CONSUMER ELECTRONICS.
THAT DISCRETIONARY SPEND IS GOING TOWARDS TRAVEL AND DINING OUT SO FOR TARGET, IF THEY WANT TO BE OPTIMISTIC ABOUT THEIR FUTURE, THE BIG QUESTION THEY NEED TO ANSWER IS HOW ARE THEY GOING TO BEAT WALMART AT GROCERY? THAT IS THE NAME OF THE GAME, A FOCUS ON GROCERY TO DRIVE THE HABITUAL WIKI -- WEEKLY SHOPPING BEHAVIOR. ED: I SPOTTED SOMETHING ON THAT NOTE THAT IS RELEVANT. I WAS GOING THROUGH EARNINGS ON THE TRANSMIT -- ON THE TRANSCRIPT BECAUSE I LOVE AT -- IT. THEY SAID THERE WAS A FAVORABLE MIX OF SAME THING -- SAME DATE SERVICES THROUGH THE CHANNEL. IS THAT SOMETHING THAT TARGET CAN USE TO TAKE ON WALMART BECAUSE I KNOW HAVING COVERED THAT COMPANY, THE E-COMMERCE STRATEGY IS IN THE MOMENT, PICK IT UP. RACHEL: IT IS WHAT THE INDUSTRY LIKES TO CALL BY ONLINE AND PICK UP IN STORE AND IT IS PROFITABLE SO THE RETAILERS WANT TO ENCOURAGE CONSUMERS TO SHOP THAT WAY AND TARGET IS TRYING TO DO THAT. THEY ARE ENCOURAGING PEOPLE TO
COME INTO THE STORE WITH STARBUCKS PICKUP BUT WALMART HAS MADE A MAJOR PUSH, A BIG PART OF BECOMING A WALMART PLUS SUBSCRIBER IS HAVING EVEN AFTER PICKUP, FASTER DELIVERY. TARGET HAS TO ANSWER THE QUESTION, HOW ARE THEY GOING TO BEAT WALMART AT BUY ONLINE, PICK UP IN STORE? ED: RACHEL TIPOGRAPH, ALWAYS GREAT TO HAVE YOU HERE ON BLOOMBERG TECHNOLOGY. CRYPTO FIRM BITGO -- WE WILL SPEAK TO THE CEO MIKE BELSHE. CAROLINE: WELCOME BACK TO BLOOMBERG TECHNOLOGY. I'M CAROLINE HYDE IN NEW YORK.
ED: I AM ED LUDLOW IN SAN FRANCISCO. THE NASDAQ 100 SOFTER BY 6/10 OF A PERCENT. WE ARE TREADING OUT -- THE LOWEST -- WE ARE TRENDING AT THE LOWEST LEVEL IN ABOUT A MONTH.
PART OF IT IS A GLOBAL MACRO DISCUSSION ABOUT THE HEALTH OF THE ECONOMY, PHYSICALLY CHINA LOOKING AT TECH STOCKS, LARGELY MOVING TO THE DOWNSIDE OF THE SESSION. I AM LOOKING AT COINBASE, YOU'RE GETTING SIGNS OF PROGRESS FOR REGULATORY APPROVAL BUT THE STOCK IS DOWN 1.4%, DOWN FOR THE SIXTH STRAIGHT SESSION, THE WORST WEEK OF THE CLIENT SINCE APRIL. WE QUICKLY FELL AWAY.
GETTING THE DETAILS ON THE REVELATORY PROGRESS AND UNDERSTANDING THE REACTION WITH BLOOMBERG'S SONALI BASAK. EXPLAIN TO ME, THIS WAS SUPPOSED TO BE A BIG MOVE FOR THE INDUSTRY AND YOU LOOK AT SHARES LOWER, HARD TO UNDERSTAND. SONALI: ALL THINGS START AND END ON WHERE THE QUOTE -- CRYPTO IS GOING AND BITCOIN HAS BEEN UNDER PRESSURE. THE POINT WE ARE MAKING IS WHAT DOES IT MEAN FOR COINBASE TO BECOME A FEATURES CLEARING MERCHANT. THE IDEA OF THIS WAS THEY TRIED FOR A COUPLE YEARS AND THE DERIVATIVES MARKET AND THE FUTURES MARKET AROUND BITCOIN HAS BECOME LARGE. FOR COINBASE TO BECOME A FUTURES CLEANING MERCHANT, IT ADDS ANOTHER PLAYER IN THE MARKET WHICH HAS BECOME SMALLER OVER THE YEARS IN THE BROADER DERIVATIVES MARKET.
FOR COINBASE TO BE DOING THIS MAKES THIS OPTION MORE AVAILABLE TO RETAIL TRAILERS -- TRADERS AND INSTITUTIONS. THIS IS NOT SOMETHING THAT WILL BE ROLLED OUT TOMORROW. IT WILL BE OFFERED IN BECOMING WEEKS. ED: APPROVAL TO SELL CRYPTO FEATURES IN THE U.S.. IN THAT ERA OF TECH SHOWDOWNS AND CAGE FLIGHTS, THERE IS ONE RELATIONSHIP THAT WE PAY ATTENTION TO WHICH IS COINBASE AND THE FTC. DOES THIS REPRESENT A TURN IN
THE ROAD FOR THE RELATIONSHIP? ABIGAIL: BACK IN WALL STREET, THERE IS A CAGE FIGHT BETWEEN THE FCC AND THE FTC ONE HOUSE UNDER AGRICULTURAL WHEN IT COMES TO CONGRESS AND ONE BEING HOUSED UNDER THE WORLD OF BANKING AND FINANCE ENDS -- ALLOWS MORE CRYPTO PRODUCTS TO BE ALLOWED UNDER THE WING OF THE CFTC. WHEN WE LOOK AT THE LAWSUITS BETWEEN THAT FTC AND COINBASE AS WELL AS THE WORLDS OF BOOMING LANDSCAPES OF ETF -- TRIED TO BITCOIN. ONE PERSON GIVES IT A 65% CHANCE THAT APPLICATIONS ARE APPROVED BY THE END OF THE YEAR AND THE CFTC RELATIONSHIP, THE POSITIVITY BEHIND IT IS ONE OF THE REASONS WHY THERE IS OPTIMISM, EVEN FOR COINBASE'S ON THE SURFACE OUR RELATIONSHIP ON THE FCC. ON THE BOTTOM LINE, THE ABILITY TO WORK FOR THE BOTTOM OF THE INDUSTRY THAT COULD FACE APPROVAL THIS YEAR.
>> THANK YOU VERY MUCH. CAROLINE: LET'S STICK WITH THE WORLD OF CRYPTO BECAUSE CRYPTO CUSTODY FIRM BITGO RAISED $100 MILLION FOR ITS SIRI --SERIES C ROUND. MIKE BELSHE IS WITH US, BITGO CEO. AT THE TIME WE ARE TALKING ABOUT CONCERNS AND RAISING MONEY -- WHAT? DID YOU MIKE: MIKE: HAVE TO PROVE IT IS THAT -- >> WHAT DID YOU HAVE TO PROVE? MIKE: I THINK BITGO DOES STAND ABOVE AND IT COMES TO AN EXIT OF FOUR THINGS. EVERYONE IS TALKING ABOUT REGULATORY SAFETY AT THIS POINT, WE HAVE A BACKSTOP OF A MACROECONOMY THAT IS REALLY STRUGGLING. THE LAST THING YOU WANT IS TO HAVE YOUR INVESTMENTS IN CRYPTO BE ON THE WRONG SIDE OF THE REGULATORS.
BITGO HAS BEEN BUILDING AROUND REGULATED CUSTODY FOR LONGER THAN ANYONE. WE STARTED THIS IN 2017 AND HAVE FOUR TRUST COMPANIES -- CAROLINE: CAN I JUMP IN BECAUSE WITHIN REGULATORY CONCERNS AND HEADWINDS COMES A LACK OF CLARITY. DOES THAT AFFECT YOUR BUSINESS PARTICULARLY OR ARE YOU SAYING IT IS A BOON FOR YOU? >> THE LACK OF CLARITY HAS MOSTLY BEEN CENTERED AROUND WHAT THE FCC CONTINUED -- CONSIDERS TO BE SECURITIES AND WHAT IS NOT. THERE IS A DEBATE. AS A CUSTODIAN, WE CAN FULL SECURITIES AND COMMODITIES. WE ARE NOT AN EXCHANGE SO WE DON'T GET HIT BY THAT PART OF THE MARKET SO FOLKS THAT ARE LOOKING TO PARTICIPATE IN THESE ASSET CLASSES CAN HOLD IN THIS CUSTODIANS. >> $100 MILLION IS A NICE CHUNK OF CHANGE, WHAT WILL YOU USE THAT FUNDING FOR? MIKE: THE BUSINESS DEMAND AROUND THE GLOBE IS CONTINUOUS. WE HAVE BEEN IN THIS INDUSTRY
OVER 10 YEARS. WE HAVE BEEN THE BEDROCK FOR THE WORLD OF CRYPTO AND WE ARE EXPANDING IN THE U.S. AND ABROAD. WE HAVE FOUR TRUST COMPANIES AND WE HAVE SOME COMING IN SOUTHEAST ASIA SOON AS WELL AS THE MIDDLE EAST AND WE HOPE TO PUT THAT TOGETHER AS WELL AS ROBUSTIFY FOR OUR PRODUCT LINE AND PICKUP UP ADJACENT PRODUCTS AND SERVICES THAT CAN BALANCE OUT THE SERVICE OF A. .
CUSTODIAN ED: YOU HAVE INTERESTING HISTORY IN M&A. IF YOU GO SHOPPING AND TRY TO DO M&A, HOW WILL YOU DO IT DIFFERENTLY THIS TIME AROUND TO PULL OFF A DEAL? MIKE: YOU DO DILIGENCE IN DEALS. IF SOMEONE EXPECTS EVERYONE IS PERFECT BEFORE YOU DO THE DILIGENCE, THEY PROBABLY DON'T HAVE A PROCESS FOR US BUT AS LONG AS WE HAVE DILIGENCE UNCOVERING THE PROBLEMS, THAT IS NOT AN ISSUE SO I AM SURE YOU ARE TALKING ABOUT PRIME TRUST IN THE DILIGENCE IS GRACE -- RIGHT. WE FOUND EVERYTHING THERE AND SAID IT WILL NOT WORK. CAROLINE:
WHAT IS INTERESTING ON THE M&A FRONT, IS THAT YOU ARE GOING TO BE BOUGHT AT A LOWER VALUATION THEN YOU ARE NOW CONSIDERING -- WHICH IS AMAZING CONTINUAR IS -- WHICH IS AMAZING CONSIDERING THE TURBULENCE IN 2021. HOW ARE YOU BRINGING TRANSPARENCY TO YOUR INVESTORS AND CAN YOU BRING TRANSPARENCY FOR YOUR INVESTORS. HAPPY OH GEEZ -- YOU HAD THE OGS OF PANTERA -- JON: WE HAVE SEEN INVESTMENTS -- MIKE: WE HAVE SEEN INVESTMENTS FROM ALL SEGMENTS. GOLDMAN SACHS HAS BENEFIT -- HAS BEEN AN INVESTOR FOR SOME TIME. IT WOULD HAVE MADE A GREAT STRATEGIC SENSE TO BRING TOGETHER SOME OF THE BEST OF WALL STREET AND TECHNOLOGY AND BITGO. THE FCC WASN'T REALLY -- READY TO GALAXY THE UNITED STATES.
THE FTC IS STRUGGLING HOW TO HAVE U.S. PUBLIC COMPANIES. THAT IS LOCKED UP AND THERE HAS BEEN NO CRYPTO COMPANIES THROUGH THE FCC RECENTLY. AS THAT TERMS, BITGO WILL BE HERE AND A LOT BIGGER. WE HAVE -- ARE EXCITED ABOUT THE OPPORTUNITY WE HAVE FORWARD. WE HAVE GROWN A LOT.
WE HAVE EXPANDED IN MARKET SHARE PRETTY MUST -- MUCH ALL ACROSS SEGMENTS AND GALAXY HAS ITS OWN TROUBLES. WE ARE HAPPY TO RUN ON OUR OWN. ED: $100 MILLION ROUND, $1.75 BILLION VALUATION.
ENTIRELY NEW INVESTORS IN THE ROUND, WHO ARE THEY? MIKE:MIKE: WE HAVEN'T REVEALED THAT YET. ED: I AM GETTING THE -- GIVING YOU THE OPPORTUNITY FOR THAT. MIKE: WE APPRECIATE THAT AND WE WILL GET BACK TO YOU. . BUSINESSWISE, WE WILL SHARE.
CAROLINE: IS THERE AN ELEMENT THAT YOU ARE SEEING GLOBAL INTERESTED IN YOUR COMPANY? IS IT LARGE INTEREST IN THE U.S? MIKE: THIS IS INTERNATIONAL AND U.S. INVESTORS. THE REGULATORY LANDSCAPE, WE TALK ABOUT THE U.S. VERSION OF IT ALL THE TIME. EVERY REGULATOR IN EVERY COUNTRY IS LOOKING HOW TO -- ON HOW TO DEAL WITH DIGITAL ASSETS RIGHT NOW. WE SUDDENLY HAVE -- FIND OURSELVES IN A WORLD WHERE WE HAVE TO MEET EACH OF THOSE AND IT WILL BE INTERESTING -- AN INTERESTING CHALLENGE BECAUSE IF EACH REGULATOR REQUIRES CUSTODY ON THE GROUND IN THEIR COUNTRY, IT IS ODD AND UNUSUAL. WE WILL HAVE A WAVE OF SORTING
OUT OF THE BASE ONE ON THE RIGHT REGULATIONS AND THERE WILL BE SOME NORMALIZATION AND SOME DIFFERENCES BUT THERE IS A LOT OF WORK GOING ON ABROAD AND WE WANT TO HIT THAT. WE THINK THERE WILL BE MORE WROTE OUTSIDE OF THE U.S. THEN INSIDE. THE U.S. LOOKS TO BE DRAGGING THE MARKETS BY NOT GETTING AHEAD ON THE REGULATORY FRONT. CAROLINE: WE THANK YOU FOR TALKING ABOUT THE DEAL, THE REGULATORY ENVIRONMENT AND HOW YOU ARE MANAGING TO RAISE AND YOUR EXPERIENCE BEING WITH GOOGLE CHROME AND BUILDING BITGO. COMING UP, WE HAVE TO TALK ABOUT QUANTUM COMPUTING.
PHASECRAFT WILL BE WITH US. WE WILL DIVE INTO WHY THAT IS IMPORTANT. THIS IS BLOOMBERG TECHNOLOGY. ♪ ED: PHASECRAFT, A BRITISH START UP SPUN OUT FROM THE UNIVERSITY -- COLLEGE OF LONDON -- THE SOUND FOR CONTENT MACHINERY AND MORE, AND JOINING US NOW FROM THE U.K. IS THE PHASECRAFT CEO.
I AM EXCITED FOR THIS ONE, ALGORITHMS, STEP-BY-STEP SEQUENCE PROCEDURE TO PERFORM CALCULATIONS. SUPERPOSITION, ENTANGLEMENT. LET'S START WITH WHAT IS A QUANTUM ALGORITHM.
>> A QUANTUM ALGORITHM IS AN ALGORITHM THAT RUNS ON A QUANTUM COMPUTER AND WHAT QUANTUM ALGORITHMS DO IS THAT THEY TAKE ADVANTAGES OF UNIQUE -- QUANTUM MECHANICS AND QUANTUM ENTAIL -- ENTANGLEMENT IN ORDER TO PERFORM CALCULATIONS THAT CANNOT BE DONE ON ANY STANDARD COMPUTER, WHAT WE CALL A CLASSICAL COMPUTER. THIS IS USEFUL AS WELL AS BEING AN AMAZING SCIENTIFIC FACT. THERE ARE PROBLEMS WHICH WE WOULD LOVE TO SOLVE, AND IN PARTICULAR THOSE INVOLVING THE MODELING OF QUANTUM SYSTEMS THAT OCCUR IN NATURE LIKE INVESTING IN SOLAR POWERS -- PANELS. THAT IS WHY THEY ARE IMPORTANT. CAROLINE:CAROLINE: THEY HAVE BEEN EXPERIMENT TO LARGELY. SOME HAVE BEEN IN PRACTICE -- SOME HAVE SAID IMPLACABLE.
-- IMPRACTICAL. ASHELY: I HAVE BEEN WORKING IN THE FIELD FOR 20 YEARS IN THE RATE OF PROGRESS HAS BEEN SOLID AND REALLY EXCITING. WE ARE AT THE EARLY STAGES OF THE DEVELOPMENT OF QUANTUM COMPUTING HARDWARE, THE WAY WE THINK OF IT IS HERE AT THE EQUIVALENT STAGE OF THE 19 40'S OR 50'S WITH STANDARD COMPUTERS AND WHILE THERE ARE IMPORTANT THINGS WE CAN DO WITH COMPUTERS IN 1950, THEY WERE LIMITED AND THAT IS WHY BACK THANK YOU NEEDED TO -- BACK THEN YOU NEEDED TO COME WITH VERY ADVANCED -- WE ARE DEVELOPING THE ALGORITHMS WHICH CUT DOWN THE RESOURCEFUL -- RESOURCE REQUIREMENTS FOR QUANTUM COMPUTERS DRAMATICALLY BY FACTORS OF PERHAPS ONE MILLION OR MORE TO RESOLVE PROBLEMS ON THE MACHINE SWEEP. HAVE NOW WHAT WE HAVE IN THE
NEXT TWO YEARS TIME. ED: WHAT ARE YOUR RESOURCE REQUIREMENTS? WHAT WILL YOU USE THE MONEY RAISED TO DO? ASHLEY: WE ARE VERY MUCH THE R&D STAGE OF QUANTUM COMPUTING AND QUANTUM ALGORITHMS. YOU WILL USE THAT -- DO THAT FOR THE NEXT FEW YEARS. QUANTUM COMPUTING OUTPERFORMING
CLASSICAL PERFUMING -- COMPUTING FOR A PROBLEM OF INTEREST SO WE WILL BE USING THE FUNDING WE RECEIVED AN ORDER TO BUILD AMAZING R&D TEAM TO MAKE THESE ALGORITHMIC IMPROVEMENTS AND BREAKTHROUGHS. CAROLINE: YOU TALK ABOUT MATERIAL REST EVERY, AND CLIMATE, YOU MENTIONED SOLAR. IT IS INTERESTING ON HOW THE U.K. SITS IN THIS. WHO HAS THE MOST AI PROWESS?
WHO HAS THE MOST QUANTUM POWER? IS THERE A LOT OF TECHNICAL TALENT IN THE U.K.? ASHLEY: THAT U.K. IS A GREAT PLACE TO DO QUANTUM COMMUNITY -- COMPUTING. THE U.K. GOVERNMENT HAS SUPPORTING -- BEEN SUPPORTING QUANTUM FEUDING EXTENSIVELY IN FIRST WITH ACADEMIC RESEARCH FUNDING AND MORE RECENTLY WITH SUPPORT FOR THE INDUSTRIAL SECTOR. WE HAVE SEEN THE NEXT PHASE OF THE U.K.
TECHNOLOGY PROGRAM WILL BE 10.5 BILLION POUNDS. THERE ARE OTHER COUNTRIES IN THE WORLD TO DO QUANTUM COMPUTING. THE U.S. AND CANADA BUT THE U.K. IS VERY STRONG AND THIS IS REFLECTED IN THE FACT THAT THERE ARE AROUND 40 QUANTUM STARTUPS IN THE U.K.
WHICH IS IMPRESSIVE. ED: YOUR FIELD IS BROADLY CAUGHT IN THE U.S. TECHNOLOGY EXPORT RESTRICTIONS TO CHINA.
DO YOU WORRY ABOUT THAT, YOUR ABILITY TO WORK WITH CHINA OR THE FUTURE OR -- OF YOUR OFFERING GOING INTO THE CHINESE MARKET? ASHLEY: FIRSTLY, I WOULD SAY, THESE EXPORT CONTROLS OR POTENTIAL CONTROLS IN THE FUTURE, SOMETIMES THE ARE IMPLEMENTED IN THE GOVERNMENT FOR THE -- A VARIETY OF REASONS AND THE ONLY POINT I WOULD MAKE ABOUT CHINA IS THAT THERE HAS BEEN IMPRESSIVE PROGRESS ON THE CHINESE QUANTUM HARD WAY -- HARDWARE IN THE PAST YEARS. THEY ARE ONE OF THE TOP QUANTUM HARDWARE PLAYERS IN THE WORLD AND I WOULD SAY THE FIELD OF QUANTUM COMPUTING HAS BEEN MARKED BY A HIGH DEGREE OF INTERNATIONAL COOPERATION IN THE PAST AND I HOPE IT WILL CONTINUE. CAROLINE: GREAT TO SPEAK WITH YOU. ASHLEY MONTANARO FOR PHASECRAFT, CEO AND COFOUNDER ON THEIR RAISE AND WHAT THEY WILL USE THE MONDAY -- THE MONEY FOR. THIS IS -- WE WILL TALK ABOUT U.K. FOOTBALL FOR A MINUTE. THIS IS BLOOMBERG TECHNOLOGY. ED: LET'S GET BACK TO AMAZON? . . WILL BE -- WE MENTIONED A COMPANY -- THE COMPANY WILL BE CHARGING A NEW FEE -- OUR REPORTER WROTE THAT STORY AND JOINS US NOW.
TIMELY REPORTING IN THE AMTEK -- IN THE ANTITRUST CONTEXT BUT EXPLAIN THIS ONE. >> THAT MEANS YOU DON'T USE AMAZON'S LOGISTICS SERVICES BUT YOU GET THAT PRIME BADGE ON THAT SITE WHICH INCREASES YOUR SALES BECAUSE PEOPLE ARE MORE LIKELY TO BUY THINGS THEY KNOW THEY WILL RECEIVE IN A DAY OR TWO. THEY ANNOUNCED THAT THEY WILL IMPOSE AN -- A 2% REVENUE FEET.
--FEE. CAROLINE: DWELL ON THE ANTITRUST CASE BECAUSE I THOUGHT THERE WERE THESE LAST-MINUTE NEGOTIATIONS BEHIND THE SCENES AND THEY TRY TO PUT TO BED ANY ANXIETY AROUND COMPETITION AND NOW THEY DO THIS. SPENCER: THIS -- THE ANTITRUST ARGUMENT AGAINST AMAZON HAS BEEN SPRAWLING AND ALL OVER THE PLACE BUT THIS IS MORE ABOUT TYING, WHERE YOU USE YOUR DOMINANCE IN ONE INDUSTRY, AND IN AMAZON'S CASE, IT IS THE ONLINE MARKETPLACE WHICH CAPTURES OR THAN A THIRD OF U.S. ONLINE SPENDING. IT IS USING IS DOMINANCE -- ITS DOMINANCE TO USE -- SWITCH TO LOGISTICS. IF AMAZON CAN USE ITS MARKETPLACE TO COERCE MORE PEOPLE TO USE ITS JUST THICK SERVICES, THAT IS POTENTIALLY AN ANTITRUST NO-NO CALLED TYING. ED: WHEN BE COVERED EARNINGS A COUPLE WEEKS AGO, WE MADE THE POINT ON THE BLOG THAT AMAZON IS GETTING BETTER AT MAKING MONEY ON THE DOT COM STUFF THAT IS HIGHER MARGIN, DOES THIS FEE FALL INTO THAT BUCKET? SPENCER: THIS FALLS INTO THE AMAZON CELLO -- SELLER SERVICES FEE AND AMAZON'S THIRD-PARTY SELLER SERVICES MAKES MORE MONEY THAN THE AMAZON WEB SERVICES CLOUD COMPUTING.
WE HAVE A CHART THAT SHOWS AMAZON'S STORE SALES THAT -- WHERE THEY SERVE AS A RETAILER DROPPING FROM 60 SOMETHING PERCENT IN 2017 TO 40% AND THE SERVICE SELLERS BE CLIMBING SLOWLY. THOSE TWO REVENUE SERVICES ARE CONVERGING AND AMAZON IS FINDING IT MORE PROFITABLE TO CHARGE PEOPLE TO SELL THINGS ON THE PLATFORM RATHER THAN TO SELL THINGS ITSELF. CAROLINE: FASCINATING. SPENCER SOPER, HERE A DAY AFTER HIS BIRTHDAY. WE THANK YOU.
WE HAVE TWO BRITS. WE WILL TALK FOOTBALL BECAUSE THERE IS A GOOGLE TREND SHOWING SEARCHES FOR THE PEOPLE WORLD CUP SHOWING SEARCHES -- AFTER DRYING OR MESSING -- AFTER LIONEL MESSI DOING FANCY FOOTWORK. ED: I DO SUPPORT WHALES BUT I AM BACKING THE LIONESS.
THE FIRST WORLD CUP FINAL FOR ENGLAND'S WOMEN. IT IS WHAT PEOPLE ARE TALKING ABOUT, NOT JUST ON GOOGLE TRENDS BUT ON X. I SEE LIONEL MESSI ON EVERYWHERE -- EVERY SOCIAL PLATFORM AND LITTERED ACROSS APPLE TV+. ROMAINE: WE WANT TO HEAR ABOUT --CAROLINE: WE WANT TO HEAR ABOUT SPORTING PROGRESS AND EXTRAORDINARY TALENT AND WANT TO DISCUSS IT ACROSS SOCIAL MEDIA WHETHER IT IS ANECDOTES OR QUOTES OR PICTURES OF -- OR PATRIOTISM. LIONEL MESSI HAS BEEN SUCH A WIN FOR MLS BUT EVERYTHING TO DO WITH MIAMI. ED:
TIM COOK NAME CHECKED LIONEL MESSI ON THE APPLE EARNINGS CALL. CAROLINE: TECHNOLOGY IS EVERYWHERE AND THAT DOES IT FOR THIS EDITION OF BLOOMBERG TECHNOLOGY. ED: A HUGE WEEK SO FAR, CHECK OUT
2023-08-17