CPI Report, AI Chip Boom, and Starlink's Business | Bloomberg Technology
>> FROM THE HEART OF HER INNOVATION, MONEY AND POWER COLLIDE IN SILICON VALLEY AND BEYOND, THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. CAROLINE: ON CAROLINE HYDE IN NEW YORK. ED: THIS IS BLOOMBERG TECHNOLOGY. CAROLINE: FULL COVERAGE ON THE INFLATION PRINT CPI HARDER THAN EXPECTED OPENAI BOARD MEMBER LARRY SUMMERS JOINS US TO DISCUSS. ED: TSMC SALES SURGE AFTER RIDING THE AI CHIP BOOM. WE WILL BREAK DOWN THE DETAILS AND DISCUSS IN TALES PROCESSOR. CAROLINE:
SPACEX PRICE STARLINK SATELLITE PROCESS BURNING THROUGH MORE CASH THAN IT BRINGS IN GREAT THE EXCLUSIVE BLOOMBERG REPORTING AND SO MUCH MORE THROUGH THIS HOUR. IT IS A MACRO DAY IN THE MARKET IS UNDER PRESSURE IS ONCE AGAIN PRICING INCREASES ARE STILL RUNNING HIGHER THAN THE MARKET WANTS TO SEE. HIGHER THAN HAD BEEN ANTICIPATED IN THE FEDERAL RESERVE ONLY GETS TO HIKE ONE OR TWO TIMES THIS YEAR.
THE MARKET IN THE FED SIGNALED WE REPRICE THIS IDEA THE FED HUT -- THE FED CUT WILL BE COMING. WE SEEN THE FALL ON THE NASDAQ MORE BROADLY. WE ARE SEEING A REAL PUSHBACK IN TERMS OF THE BOND MARKET. WE SEE YIELD SPIKING ON THE FRONT-END ON THE TWO-YEAR BUT HIGHER ACROSS THE CURVE. NOTABLY WE ARE DOWN FROM THOSE 21 BASIS POINT MOVE WE SAW EARLIER BUT NEVERTHELESS WE ARE BASICALLY AT THE HIGHS OF THIS YEAR.
LOOKING AT THE BLOOMBERG DOLLAR INDEX THAT STRENGTHENS INTO A FAR MORE HAWKISH TONE FROM THE MARKET SIGNALING THE FED DOESN'T AND CANNOT HIKE AS MANY TIMES -- CUT AS MANY TIMES THAT HAVE BEEN ANTICIPATED. THAT'S UP SOME 7/10 FEELING PERHAPS WE HAVE TO REMAIN HIGHER FOR LONGER SO IF YOUR RATE CUTS COMING FOR THE REST OF THE YEAR HAVE A LOOK AT WHAT'S HAPPENING IN THE PRICE OF BITCOIN. WE WILL SEE RISK ASSETS SELLOFF ACROSS THE BOARD. 7/10 OF 1% ON THE BITCOIN. AS WE REPRICE WITH THE FEDERAL RESERVE HAS TO DO AND REMAIN HIGHER FOR LONGER WHAT YOU WATCHING? ED: THREE SEMICONDUCTOR NAMES STANDING ON THEIR OWN TWO FEET RATHER THAN BEING CAUGHT UP IN WHAT'S HAPPENING WITH THE POST CPI TRADE, META IS BASICALLY FLAT, NEXT-GENERATION IS INFERENCE ACCELERATOR ITS OWN AI CHIP THAT WILL NOW BE DEPLOYED, NOT DOING MUCH FOR THE STOCK. INTEL IS DOWN. AI ACCELERATOR COMING IN THE THIRD QUARTER.
INTEL STAYS IT OUTPERFORMS IN SOME TRAINING CASES. IT WILL BE COMPARABLE. THAT'S DOWN 2.3%. TAIWAN SEMICONDUCTOR THESE ARE SHARES THAT ARE 1% THAT SOFT SALES JUMP. A BETTER-THAN-EXPECTED 16%.
THAT'S THE BEST JUMP IN GROWTH TO 2022. IS TSMC RIDING THE AI WAVE. THIS IS THE WORLD'S BIGGEST CONTRACT MANUFACTURER SEMICONDUCTORS. >> LET'S DIG INTO TSMC. WE ARE PLEASED TO WELCOME IAN
KING. IT WAS A SURPRISE BUT WE PERHAPS WERE ANTICIPATING A REAL STRENGTHENING OF TSMC'S BUSINESS BECAUSE OF AI. >> ALL ROADS LEAD TO TAIWAN RIGHT NOW AND IF YOU GO TO BUILD ANYTHING WHETHER IT'S NVIDIA, ACCELERATORS WHO ARE DOING BETTER IN SERVERS THAN INTEL. THERE ALSO GETTING INTO
BROADCOM AND NETWORKING. AND YOU ARE PAYING FOR THAT MOST EXPENSIVE STUFF. >> THERE ARE SOME SPECIFIC NAMES THAT ARE INTERESTING.
A STORY YOU'VE BEEN WRITING. THEY ARE BRINGING IN NEXT GEN AND TIA CHIP. THEY WANT TO DEPLOY FOR THEIR OWN TRAINING AND INFLUENCE PURPOSES PREYED WHAT YOU MAKE OF IT? >> THIS IS THEM JOINING THAT LONG LIST OR LENGTHENING LIST OF THESE COMPANIES SAYING I CAN DO THIS BETTER IN TERMS OF WHAT I CAN DO. THAT'S THE PROBLEM ISN'T IT. THEY DO NOT WANT TO BE PAYING MASSIVE PREMIUMS THEY ARE PAYING TO NVIDIA. WHEN IT COMES TO GENERAL-PURPOSE PROCESSOR LIKE THIS ONE PERHAPS WE CAN DO IT BETTER THAN INTEL. CAROLINE: ISN'T IT CAROLINE:FASCINATING
THAT WE SEE THIS CAROLINE: THE DAY AFTER THE CLOUD EVENT FROM ALPHABET WHERE THERE IS THIS ONGOING TENSION OF THESE BIG PROVIDERS OF CLOUD BUT ALSO RUNNERS OF AI AND BUILDERS OF LARGE LANGUAGE MODELS WANTING TO DEPEND ON NVIDIA. IS THIS THE RELATIONSHIP THAT CAN CONTINUE? >> IT'S BEEN GOING ON FOR YEARS. AWS IS REALLY SHOWN WE'VE GOT THE SIZE TO MAKE THE ECONOMICS WORK SO WE WILL DO THIS. AT THE SAME TIME THE ACTUAL REAL SILICA AND COMPANIES ARE STILL JUST ABOUT IN THE LEAD, THEY'RE STILL ABLE TO PUSH THE LIMITS. THAT THE BALANCE IS STRUCK.
>> INTEL HAS INTRODUCED ITS LATEST AI ACCELERATING. IT WILL BE AVAILABLE IN THE THIRD QUARTER OF THIS YEAR BUT LIKELY NOT AT SCALE. ITS PERFORMANCE IS WHERE THEY ARE FOCUSED. WHAT ELSE DO WE NEED TO KNOW. IAN: IT'S THE ELEPHANT IN THE ROOM WHICH IS WHAT NVIDIA ANNOUNCED, THEY HAVE THE NEW BLACKWELL ARCHITECTURE AND THEY WERE FORCED TO BASICALLY ADMIT YESTERDAY WE DON'T KNOW HOW WE WILL COMPARE TO THAT AND THE INFLUENCE PEOPLE ARE TAKEN FROM THAT IS YOU WON'T BE ABLE TO COMPARE. CAROLINE: IAN -- ED: IAN KING A VERY BUSY MAN. THE CPI REPORT WITH TREASURY SECRETARY AND AI BOARD MEMBER LARRY SUMMERS COMING UP. WE WILL BE RIGHT BACK THIS IS
BLOOMBERG. ♪ ED: COINBASE AND CIRCLE PENNED LETTERS TO SENATOR SCHUMER AND MCCONNELL URGING CONGRESS TO ENACT A COMPREHENSIVE REGULATORY FRAMEWORK FOR STABLECOINS AND DIGITAL ASSET MARKET STRUCTURE ONE WEEK AFTER THE U.S. APPEALS COURT REVIVED A LAWSUIT AGAINST COINBASE ACCUSING THE CRYPTOCURRENCY EXCHANGE OF FACILITATING THE SALE OF UNREGISTERED SECURITIES. JOINING US IS THE CHIEF POLICY
OFFICER AT COINBASE. LET'S START WITH THE SUIT OR THE REVIVAL OF THE SUIT LAST WEEK AND GET YOUR IMMEDIATE RESPONSE TO IT. >> THE SUIT YOU ARE TALKING ABOUT IS A PRIVATE ACTION THAT HAS GONE INTO APPEALS. WE DID QUITE WELL AT THE TRIAL LEVEL. SO WE LOOK FORWARD TO GOING TO
DISTRICT COURT AND SORTING THOSE OUT. THE BIG ISSUE IS LITIGATION REGARDING THE SEC AND WE FEEL GOOD ABOUT WHERE WE ARE ON THE MAJOR PILLARS OF THE SEC'S CASE AGAINST US GETTING KNOCKED OUT AT THE EARLY STAGE IN THE TRIAL. WE LOOK FORWARD TO THAT PROCESS. >> WE ARE GOING TO TALK ABOUT YOUR RELATIONSHIP WITH TC IN THE REGULAR TORY PATHWAY BUT ONE THING YOU REFLECTED ON LAST YEAR IS IN YOUR INDUSTRY WE CONTINUE TO REGULATE THROUGH LAWSUITS. WIT -- WOULD YOU SAY THAT'S A FAIR STATEMENT AND IN THE CONTEXT OF THE CONSUMER SUIT AND THE SEC THAT'S WHAT'S HAPPENING STILL? FARYAR: ABSOLUTELY.
OUR COMPANY GOAL IS TO GET CLARITY. THE RIGHT WAY TO REGULATE PARTICULARLY THE U.S. IS GOOD TO BE A DIGITAL ASSET TECHNOLOGY IS FOR CONGRESS AND THE ADMINISTRATION TO DO WHAT THEY SAY THEY WANT TO DO WHICH IS CREATE COMPREHENSIVE FRAMEWORKS AROUND THE MARKETS AND STABLECOIN ISSUANCE. I THINK WE CAN DO IT ON A
BIPARTISAN BASIS AND WE HOPE OUR LETTER IS ENCOURAGING OF THAT TO HAPPEN. ED: YOU'VE WRITTEN THIS LETTER, WHY? >> WE HAVE SHARED TRAJECTORY FOR LAW ENFORCEMENT. SPECIFIC POWERS THE TREASURY SHOULD HAVE AND WE ARE SUPPORTIVE OF BUT WE ALSO WANT TO REMIND EVERYONE THE BIG PICTURE IS WE NEED THE INDUSTRY TO GROW IN THE UNITED STATES REFLECTING U.S. VALUES AND OTHER U.S. LAWS. THE BIGGER THE U.S. INDUSTRY IS IN THE MORE COMPREHENSIVE IT IS IN TERMS OF DEFINING CRYPTO GLOBALLY THE BETTER IT IS FOR AMERICAN NATIONAL SECURITY. >> THE LAWSUITS WE DISCUSSED IN THIS INITIATIVE IS YOU'RE TRYING TO MAKE EVERYONE FEEL BETTER, THAT -- LET'S BE HONEST, SAM BANKMAN-FRIED WAS A BIG STORY THE LAST WEEK.
HIS SENTENCING, THAT'S YOUR JOB, ARE YOU MAKING ANY PROGRESS IN CONVINCING A WIDE RANGE OF PEOPLE THAT THIS IS A CLEANER INDUSTRY THAT'S MAKING PROGRESS? FARYAR: ABSOLUTELY. MUCH OF THE BAD ACTION WE SAW WERE OFFSHORE. FOR A LOT OF PEOPLE IT SURPRISES THEM THERE IS A DIVIDING LINE BETWEEN THE U.S. INDUSTRY AND THOSE OFFSHORE REGULATION. AT THE END OF THE DAY 52 MILLION AMERICANS HAVE BOUGHT CRYPTO PER THE AMERICAN PEOPLE VOTED WITH THEIR FEET AND THEIR POCKETBOOK SO THEY WANT TO UPDATE THE SYSTEM WITH THE CRYPTO ECONOMY AND REGULATION TO KEEP UP WITH THAT.
THERE'S A BIG GAP BETWEEN POLICYMAKERS AND THE PUBLIC AND I THINK ONCE THE PEOPLE SEE HOW MANY AMERICANS HAVE PARTICIPATED I THINK THEY WILL UNDERSTAND. >> WE WERE AWARE OF SOME LAWMAKERS THOUGHTS ON YOUR INDUSTRY. IF THERE IS ONE AREA OF LINGERING CONCERN IT'S ABOUT THE USE OF CRYPTO WHICH IS A BROAD TERM NOW IN FINANCE OR WHITE-COLLAR CRIME. HOW MUCH PROGRESS ARE YOU MAKING GETTING D.C. ON BOARD TO WORK TOGETHER ON THAT FRONT? >> I THINK THE DEPUTY SECRETARY SAID IT WELL THE TRADITIONAL FINANCIAL SECTOR IS BY FAR THE LARGER THREAT. THAT'S HER MOST OF THE ILLICIT ACTIVITY OCCURS.
THEY LOOK AT CRYPTO AS AN AREA OF POTENTIAL FUTURE EMERGENCE. AND THE AMOUNT OF BAD ACTIONS IN CRYPTO IS TOO MUCH, COMPANIES LIKE OURS FOLLOW-UP THE SAME RULES TRADITIONAL FINANCE DOES. THE SECRECY ACT, REGULATED AND SO ON. I THINK THOSE WHO KNOW KNOW THE INDUSTRY IS A GOOD ACTOR. >> IT'S CLEAR WHAT YOU WANT BUT WE HAVE THIS HOUSE FINANCIAL SERVICES COMMITTEE PIECE OF LEGISLATION, NO TRACTION THERE. WHY IS THERE NO TRACTION REALLY? >> IT'S RARE FOR THEM TO PASS BILLS THROUGH TWO DIFFERENT MINIS WITH STRONG BIPARTISAN VOTES.
ANY LEGISLATION DONE IS GOOD BE HARD TO DO BUT IF YOU TAKE A STEP BACK AND REALIZE YOU'VE GOT DEMOCRATS AND REPUBLICANS COMING TOGETHER TO UNDERSTAND DIGITAL ASSETS. I THINK THAT'S EXCITING. >> CHIEF POLICY OFFICER GREAT DISCUSSION HERE IN SAN FRANCISCO. ED: WE'VE -- CAROLINE: WE'VE GOT TO TURN BACK TO THE MICRO PICTURE. HOTTER THAN EXPECTED THIRD STRAIGHT TIME THAT INFLATION PRESSURES ARE COMING IN FASTER MONTH ON MONTH. THIS IS AFFECTING THE MARKET. CHECK OUT WHERE WE ARE SEEING BOND MARKETS.
YIELDS OF THE HIGHEST SO FAR THIS YEAR UP SIGNIFICANTLY HIGHER LOOKING AT THE TWO YEAR YIELD SOME 18 BASIS POINTS. SOME OF THE KEY OUTPERFORMER'S. META-OUTPERFORMING. AS WE SEE CHIPMAKERS MORE BROADLY SINKING BUT I'M LOOKING AT THE BLOOMBERG DOLLAR INDEX CURRENTLY UP SOME 8/10 OF A PERCENT. THIS IS AS WE SEE THE BLOOMBERG DOLLAR INDEX AT ITS HIGHEST SINCE NOVEMBER OF LAST YEAR SO DOLLAR HIGHEST WE'VE SEEN THIS YEAR. YIELDS HIGHEST SINCE WE'VE SEEN THIS YEAR. PUTTING IT INTO CONTEXT WE ARE STILL NEAR THE HIGHEST FOR EQUITY WAGE MARKS WE'VE SEEN ON RECORD.
WHAT IS THE TAKEAWAY OF THE CPI PRINT? WHAT IS THE FED DO IN TERMS OF RATE CUTS. HIS JUNE ON THE TABLE. SO MUCH MORE TO DISCUSS NEXT WITH DAVID. DAVID: I'M DAVID WESTIN WE ARE JOINED
BY LARRY SUMMERS OF HARVARD. GREAT TO HAVE YOU WITH US ON SHORT NOTICE. WE'VE BEEN TALKING ABOUT INFLATION ON WALL STREET WEEK FOR SOME TIME. YOU'VE BEEN WARNING ABOUT IT. WHAT YOU MAKE OF THE NUMBERS WE
SAW TODAY? LARRY: I WAS NOT HUGELY SURPRISED BY THE NUMBERS. IN AN ECONOMY THAT'S GROWING FASTER WITH AN UNEMPLOYMENT RATE THAT HAS A THREE HANDLE IN THE PRESENCE OF MASSIVE AND GROWING BUDGET DEFICITS AND EPICALLY EASY FINANCIAL CONDITIONS, THE IDEA INFLATION WOULD REMAIN ROBUST OR ACCELERATE SHOULD NOT BE A SURPRISE TO ANYONE. THAT'S WHAT THE DATA SUGGESTS. IT WAS NOT MERE SOME OBSERVER FOR SUPER CORE INFLATION THAT IS TAKING OUT THE TRANSITORY STUFF AND BY THAT MEASURE ABOVE 6% RATE AND THE THREE-MONTH RATE EXCEEDS THE SIX-MONTH RATE. AND THAT EXCEEDS THE ONE YEAR.
THIS CONFIRMS THE IDEA OF THE NEUTRAL RATE IS WAY ABOVE THE 2.6% LEVEL THAT THE FED HAS BEEN USING AS A NORTHSTAR. IN MY VIEW IT PUTS BACK ON THE TABLE IT'S STILL NOT WHAT I WOULD EXPECT BUT YOU HAVE TO TAKE SERIOUSLY THE POSSIBILITY THAT THE NEXT RATE MOVE WILL BE UPWARDS RATHER THAN DOWNWARDS AND ANYTHING COULD HAPPEN. MARKETS COULD CRASH, INDICATORS COULD TURN DOWN BUT ON CURRENT FACTS A RATE CUT IN JUNE IT SEEMS TO ME WOULD BE A DANGEROUS AND EGREGIOUS ERROR COMPARABLE TO THE ERRORS THE FED WAS MAKING IN THE SUMMER OF 2021 WHEN IT JUST DID NOT GET THE THREAD. ON INFLATION.
DAVID: CHAIR JAY POWELL HAS TALKED ABOUT SPECIFICALLY. ARE THERE ABERRATIONS YOU SEE IN THIS DATA. YOU'VE SOME PEOPLE SAYING THIS IS REALLY HOUSING AND AUTO INSURANCE. THERE ARE A COUPLE OF OUTLIERS. IS THAT RIGHT? >> YOU CAN ALWAYS FIND PARTICULAR INDICATORS, THAT ARE UP OR DOWN. WHEN YOU ARE MAKING UP A STORY MONTH AFTER MONTH THAT'S A PROBLEM.
WHEN COMMODITY PRICES ARE SPIKING AND THOSE ARE BEING TAKEN AS A MARKET INDICATOR OF INFLATION EXPECTATIONS, WHEN BREAKEVENS HAVE RISEN, WHEN THE POLITICAL ECONOMY OF THE COUNTRY IS HEAVILY ABOUT INFLATION TRYING TO DISMISS IT ON AN INDICATOR BY INDICATOR BASIS, IS IT AN UP -- IS AN ODD THING TO DO. A TECHNICAL SUBJECT PRICED IN FOR HOUSING. I DON'T THINK THERE ARE MANY AMERICANS WHO FEEL LIKE HOUSING IS BECOMING MORE AFFORDABLE THESE DAYS. WE REALLY DON'T.
SO TO ARGUE THAT SOMEHOW HOUSING ISN'T A SOURCE OF INFLATION PSYCHOLOGY SEEMS TO ME TO BE QUITE A SURPRISING VIEW TO TAKE. WHY ARE WE THINKING ABOUT RATE CUTS WHEN THE ECONOMY IS BELOW WHAT THE FED THINKS IS THE NORMAL UNEMPLOYMENT RATE. WHEN THE ECONOMY IS GROWING FASTER ABOVE TARGET AND PLAUSIBLY ACCELERATING, THE FED HAS ONCE AGAIN IN IMPORTANT RESPECTS LOST ITS WAY OVER THE LAST SIX OR NINE MONTHS IN THE SAME WAY MAKING POLICY AND MAKING FORECASTS BASED ON HOPE RATHER THAN ON A HARDHEADED LOOK AT REALITY. I THINK THAT THE FED DID A GOOD JOB OF CLEANING UP ON THE ERRORS THEY HAD MADE IN 2021. AND I THINK IT IS REASONABLE TO THINK THAT THEY WILL PAVE IT OFF OF THE ERRORS THEY MADE LAST FALL THAT LED MARKETS TO BE LUDICROUSLY EXPECTING SIX CUTS THIS YEAR. AND I AM HOPEFUL THAT THAT WILL HAPPEN.
BUT I THINK THE FED NEEDS TO LEARN SOME IMPORTANT LESSONS FROM THIS EXPERIENCE. I'LL SAY ONE OTHER THING IF I COULD. THERE'S BEEN A LOT OF TALK ABOUT 1995 AS SOME KIND OF USEFUL ANALOGY. I THINK NOT. THE UNEMPLOYMENT RATE IS 5.6% IN 1995, EQUITY MARKETS HAVE SHOWN BY THE FACT THEY MORE THAN DOUBLED SUBSEQUENTLY WERE NOT FROTHY PARTICULARLY IN 1995. WE HAD JUST COME OFF OF A MAJOR
PROGRAM OF DEFICIT REDUCTION RATHER THAN BEING IN A PROGRAM OF UNPRECEDENTED FISCAL EXPANSION. AND WE HAD REALLY CLEAR EVIDENCE OF A KIND WE DON'T HAVE NOW OF PRODUCTIVITY ACCELERATION. AND INTEREST RATES WERE HIGHER THAN THEY ARE RIGHT NOW. SO THE CASE THAT SOMEHOW THIS MOMENT LOOKS LIKE 1995 AND THAT'S A REASON FOR CUTTING IS SOMETHING THAT I FIND INEXPLICABLE. ANOTHER THING THAT SEEMS TO ME IS PROBLEMATIC IS THE NOTIONS THAT ARE INCREASINGLY ROOTED ABOUT THAT THE FED IS GOING TO SLOW QT. OF COURSE ONE OF THE THINGS THAT TODAY'S MOVEMENTS IN INTEREST RATES, THE INTEREST RATES MOVES THAT WE SEE OVER THE LAST MONTH MEAN IS THAT THE FED EFFORTS TO DO PERRY TRADES IN THE BOND MARKET HAVE PROVEN TO BE EXTREMELY EXPENSIVE.
FOR TAXPAYERS. AND THE LENGTH OF TIME FOR WHICH THE FED IS GOING TO BE SHOWING ANNUAL LOSSES OR MARK TO MARKET BASIS, LARGE BALANCE SHEET LOSSES, THAT LOOKS LIKE IT IS LONGER THAN WE THOUGHT SOME MONTHS AGO. WE NEED A FED THAT STAYS FOCUSED ON WHAT IS VERY CLEARLY THE FOCUS OF THE AMERICAN PEOPLE WHICH IS PRICE STABILITY AND I'M AFRAID THERE ARE SOME SIGNS IN THE LAST FEW MONTHS THEY HAVE LOST THEIR FOCUS IN FAVOR OF MORE AMBITIOUS ECONOMIC THEORIES ABOUT PREEMPTING SLACK THAT'S NOT HAPPENING OR SOME SUCH. >> YOU ARE THE FIRST TO WARN US THAT THINGS CAN CHANGE. WE CAN'T PREDICT WITH HIM HAPPEN IN THE FALL NEXT YEAR.
YOU THINK IT'S DEFINITELY A MISTAKE FOR THE FED TO CUT IN JUNE. BUT GIVEN WHERE WE ARE RIGHT NOW AND WHAT YOU KNOW RIGHT NOW IF YOU HAD TO MAKE A DECISION WILL WE SEE ANY CUTS THIS YEAR AND WHAT'S THE LIKELIHOOD OF AN INCREASE. LARRY: JUST TO QUIBBLE WITH WHAT YOU SAID, I SAID ON CURRENT FACTS I SEE NO CASE FOR A CUT IN JUNE. BUT FACTS CAN CHANGE. INFLATION INDICATORS COULD COME
IN MUCH LOWER THAN MOST OF US ARE EXPECTING. THE ECONOMY COULD TURN DOWN. SO NEVER MAKE ABSOLUTE JUDGMENT ABOUT POLICY SEVERAL MONTHS FROM NOW BECAUSE ALL KINDS OF SURPRISES COULD HAPPEN. I THINK THE ODDS ARE THAT THE NEXT RATE CUT WILL BE DOWN RATHER THAN UP. BUT I THINK YOU HAVE TO ASSIGN A GREATER PROBABILITY TO THE NEXT RATE MOVE BEING UP THEN YOU DID SEVERAL MONTHS AGO.
I DON'T KNOW WHETHER IT'S 15% OR 25% BUT SOMEWHERE IN THAT RANGE IS WHAT I WOULD SAY FOR THE NEXT RATE CUT UP. I STILL THINK THE ODDS PROBABLY FAVOR ANOTHER RATE CUT THIS YEAR. BUT NOT BY VERY MUCH AND NOT BY AS MUCH AS IS PRESSED INTO THE MARKETS EVEN AFTER THE ADJUSTMENT THAT WE HAVE SEEN. SO IN REALITY, MARKETS ARE ADJUSTING TO REALITY. THE FED IS ADJUSTING TO REALITY BUT I THINK THE PROCESS IS SLOWER THAN WOULD BE IDEAL. DAVID:
DOES THE FED HAVE THE POWER TO GET THEIR ARMS AROUND INFLATION AT THIS POINT THROUGH MONETARY POLICY OR THERE ARE OTHER FACTORS LARGER THAN WHAT THEY CAN AFFECT. >> I THINK THE FED HAS CONSIDERABLE INFLUENCE OVER INFLATION EXPECTATIONS WHICH ARE AN IMPORTANT DETERMINANT OF SUBSEQUENT INFLATION AND MONETARY RESTRAINT DOES INFLUENCE THE ECONOMY WHICH FEEDS THROUGH INTO THE INFLATION PROCESS. WE OUGHT TO BE DOING EVERYTHING WE CAN ON THE SUPPLY SIDE ANYTIME ANYBODY SEES IT A MONOLITH WE OUGHT TO BE GOING AFTER IT.
I AM ALL FOR EFFECTIVE COMPETITION POLICY THAT RESTRAINS PRICE INCREASES. I THINK THE MOST IMPORTANT COMPETITION POLICY IS MAINTAINING ECONOMIC OPENNESS. AND ALLOWING COMPETITION FOR U.S. GOODS FROM LESS EXPENSIVE FOREIGN GOODS.
THAT'S THE MOST IMPORTANT COMPETITION POLICY, THE MOST IMPORTANT ANTI-GOUGING POLICY, THE MOST IMPORTANT CONTAIN EXCESSIVE PROFIT MARGINS POLICY AND SO I AM SORRY TO SEE THE EXTENT OF BIPARTISAN CONSENSUS IN FAVOR OF POLICIES THAT ARE RELATIVELY PROTECTIONIST. DO PEOPLE REALLY THINK THERE IS AN OVERWHELMING DANGER BUT WE WILL HAVE EXCESSIVE PRODUCTION OF BATTERIES IN THE WORLD GIVEN CLIMATE CHANGE? DO PEOPLE REALLY THINK THERE IS AN OVERWHELMING DANGER THAT WE WILL HAVE AN EXCESSIVE EFFORT TO USE SOLAR POWER. IF NOT, I WORRY IN INFLATIONARY TIMES ABOUT POLICYMAKERS DECRYING THE GROWTH OF CAPACITY. THERE'S BEEN A CERTAIN AMOUNT OF THAT ON SECRETARY YELLIN'S TRIP TO CHINA AND IN U.S. RHETORIC ON A BIPARTISAN BASIS. WE SHOULD COMPLEMENT THE FED WITH FISCAL POLICIES THAT ARE ORIENTED TOWARDS RESTORING CREDIBILITY, RECOGNIZING THE DEFENSE SPENDING THAT'S GOING TO NEED TO COME AND ALLOWING FOR IT AND WITH MICROECONOMIC POLICIES THAT ARE COMPETITION BLOATED, THE MOST IMPORTANT OF WHICH IS OPENNESS TO THE GLOBAL ECONOMY WITH RESPECT TO GOODS, WITH RESPECT TO LABOR, WITH RESPECT TO THE FLOW OF CAPITAL. DAVID: YOU MENTIONED 1995 AND PRODUCTIVITY.
IS THERE HOPE WE COULD GET HOPE FOR INFLATION BECAUSE OF GENERATIVE AI. WE HAD JAMIE DIMON THIS WEEK SAYING IT'S LIKE A STEAM ENGINE. IS THERE A PROSPECT THAT WE COULD GET SOME DOWNSIDE RISK WITH INFLATION FROM GENERATIVE AI? LARRY: I THINK IT IS A QUESTION ABOUT HORIZONS. AGAIN, I NEVER MADE COMPLETELY CONFIDENT PREDICTIONS BECAUSE THE ONE THING WE KNOW ABOUT THE ECONOMY IS THAT IT SURPRISES US. I THINK IT'S POTENTIALLY A VERY IMPORTANT FACTOR IF YOU LOOK THREE OR FOUR YEARS OUT. I WOULD BE VERY SURPRISED IF IT WAS AN IMPORTANT FACTOR IN THE NEXT YEAR OR TWO.
I THINK THE FACT OPENAI -- NOT OPENAI, ARTIFICIAL INTELLIGENCE IS A POTENTIAL COMPETITOR FOR COMMENTATORS LEADS THIS TO KIND OF HAVE MORE SALIENCY IN COMMENTARY THAN IT OTHERWISE WOULD. SO FOR THE LONG RUN I THINK THIS COULD BE A HUGE EVENT FOR INFLATION, A HUGE EVENT FOR PRODUCTIVITY GROWTH BUT I WOULD BE PRETTY SURPRISED IF THE EFFECTS WERE REALLY LARGE IN THE SHORT RUN. DAVID: I THINK YOU FOR SAYING COMMENTATORS AND NOT INTERVIEWERS. ONE LAST QUESTION IMPORTANT TO BLOOMBERG AUDIENCES, FINANCIAL CONDITIONS YOU REFERRED TO THE SIGNALING OF CUTS LAST FALL. FINANCIAL CONDITIONS HAVE BEEN OFF TO THE RACES.
TO WHAT EXTENT DO YOU THINK THEY PLAYED A SIGNIFICANT ROLE IN THE NUMBERS WE GOT TODAY? LARRY: I THINK THERE'S NO QUESTION THAT THE $12 TRILLION OF WEALTH HAVE BEEN CREATED, HAVE CONTRIBUTED TO GREATER SPENDING WHICH CONTRIBUTED TO THE INFLATIONARY PRESSURE. I THINK THE AVAILABILITY OF CREDIT HAS HAD SIMILAR KINDS OF EFFECTS. I THINK IT'S HARD TO QUANTIFY PRECISELY BUT THERE'S NO QUESTION THAT FINANCIAL CONDITIONS HAD A ROLE. SOMETIMES THE INDICATORS ARE DIFFERENT INDICATORS ARE POINTING IN DIFFERENT DIRECTIONS. THIS TIME ACTIVITY IS SUPERFAST. UNEMPLOYMENT IS VERY
LOW. FISCAL IS HIGHLY EXPANSIONARY, FINANCIAL CONDITIONS ARE VERY LOOSE. AND ON THE GROUND INFLATION MEASURES ARE ABOVE TARGET AND POSSIBLY ACCELERATING. WHAT IS THE THEORY OF A RATE CUT INTO THAT CONFIGURATION.
I DON'T THINK THERE IS ONE. I THINK THE FED HAS MUNICATION CHALLENGE IN KEEPING IT ON THE TABLE BECAUSE ANYTHING CAN HAPPEN. IT CAN BE FINANCIAL ACCIDENTS, THERE CAN BE SUDDEN CHANGES REDUCED TO EMPLOYMENT. THERE COULD BE GLOBAL DEVELOPMENTS. NEVER RULE ANYTHING OUT. I THINK THERE IS A COMMUNICATION CHALLENGE AROUND THE FACT IN THIS SCENARIO. WE DO NOT NEED RATE CUTS RIGHT
NOW. DAVID: THAT'S A LARRY SUMMERS OF HARVARD. BACK TO YOU. ED: LET'S GET A QUICK CHECK IN ON MARKETS. THROUGHOUT THE COURSE OF THAT
INTERVIEW WE PAIRED DECLINES FROM A SESSION LOW 1.3% TO AROUND 1% WE ARE TREADING WATER AT THE START OF THIS WEEK TO THAT HOT CPI PRINT. NOT SEEING ANY MOVEMENT IN THE SHORT END OF THE CURVE IN THE BOND MARKET WITH CPI FRONT AND CENTER. IN TERMS OF THE NEWS CYCLE WE CONTINUE TO MOVE INDIVIDUAL NAMES. AI AND THE IMPACT ON
INFRASTRUCTURE BILL WHICH LARRY SUMMERS WAS TALKING ABOUT THERE CONTINUES TO BE STORIES IN TERMS OF INDIVIDUAL NAMES WE ARE LOOKING AT. THREE MAIN STORIES IN THE CHIP SPACE TODAY AS THE DIRECTOR SWITCHES UP THE BOARD. ALPHABET SHARES DOWN 1%. HELPING THE CLOUD NET EVENT
WHERE THEY DEMONSTRATED THE GEMINI PRO 1.5 GENERATION MODEL IS READY FOR THE ENTERPRISE USE CASE AND WE DUG INTO THAT THROUGHOUT THE SHOW. DOWDY THREE COMING IN THE THIRD QUARTER. THE MARKET NOT TRADING IT MUCH. META UP HALF A PERCENTAGE
POINT, INTRODUCING THEIR OWN AI, THEY'RE ARE STARTING TO DEPLOY, THAT SHARE HAS PUSHED HIGHER SINCE THAT NEWS CAME OUT. THOSE OF THE PUBLIC MARKETS. LET'S TALK ABOUT THE PRIVATE MARKETS. SPACEX IS PRICED.
STARLING SATELLITE BUSINESS STILL BURNING THROUGH A LOT OF CASH. SOURCES FAMILIAR WITH THE FINANCES OF THE WORLD'S MOST VALUABLE STARTUP SAY STARLINK HAS LOST AT TIMES AS MUCH AS $450 ON EACH OF THE MILLIONS OF GROUND TERMINALS IT SHIPS. AND THE COMPANY'S TOP BRASS THAT THE BUSINESSES IN QUOTES FOR TRAJECTORY. BUT COULD STARLINK BE TURNING THE CORNER.
>> THIS IS WHERE I ASK FOR YOUR EXPERTISE ON THIS. THE JOY OF BEING A PRIVATE COMPANIES YOU DON'T HAVE TO MAKE PUBLIC STATEMENTS ABOUT YOUR FINANCES THIS IS A COMPANY THAT PROBABLY HAS TO RAISE MONEY IN THE PRIVATE FIELD. ULTIMATELY WHAT IS REVENUE DOING AT THE SAME TIME AS PROFITABILITY IS STILL NOT QUITE THERE. ED: WE KNOW THIS IS A KEY YEAR WHERE REVENUE FROM STARLINK, CONSOLATION BASED INTERNET OUTPACES THE LAUNCH BUSINESS BUT WHAT SOURCES ARE TELLING US IS SPACE X CAN BE QUITE SELECTIVE IN THE FINANCIALS IT PUTS FORWARD WHEN THEY DO A FUNDING ROUND OR INVESTORS ASKED. THEY'VE ZEROED IN ON MANUFACTURING JUST LIKE TESLA DID TO IMPROVE THE MANUFACTURING PROCESS FOR THE SATELLITES THEMSELVES AND THE GROUND RECEIVERS. THE MARGINS ARE IMPROVING AND
WHAT I HEARD FROM SOURCES IS AT THE END OF 2023 THEY HIT THIS PROFITABLE METRIC AND THAT'S CONTINUED IN A MORE MEANINGFUL WAY INTO 2024. CAROLINE: IT IS NOTABLE, A GREAT STORY YOU'VE WRITTEN WITH COLLEAGUES AS WELL, THAT THE CFO ISN'T HINTING THERE WILL BE AN IPO ANYTIME SOON. YOU WANT TO BE SEEING WHEN STARLINK IS SUCH A LINCHPIN FOR SPACE X IN TERMS OF SEPARATING OFF AS A BUSINESS. >> THE SIMPLE EQUATION IS THIS, OF THE LAUNCH AT STARLINK UNITS NEED TO BE PROFITABLE AND THAT PROFITABLE FUND DEVELOPMENT OF STARSHIP WHICH WILL GET HUMANKIND TO MARS.
LET'S KEEP THE CONVERSATION GOING. JOINING US IS A MANAGING PARTNER , BUT ALSO TRANSITIONING GENERAL PARTNER AT MANHATTAN VENTURE PARTNERS. THAT'S A FIRM INVESTING IN SPACE X ACROSS MULTIPLE FUNDS UNDER THEIR MANAGEMENT. YOU'VE INVESTED AND TRACKED THIS COMPANY FOR A LONG TIME. HOW ZEROED IN ARE YOU ON STARLINK AND ITS PROFITABILITY? ANDREA: I WOULD SAY OVERALL AS WE LOOK AT SPACE X VALUED AT NORTH OF $180 MILLION AT THIS POINT IN TIME AND HAS DEPLOYED 5600 ACTOR SATELLITES WHICH IS TREMENDOUS. THOUGH OBVIOUSLY BELOW THE
SINGLE TARGET OF TENS OF THOUSANDS OF SATELLITE THAT THEY CAN ACHIEVE. OVERALL, WHAT THAT SAYS ABOUT THE PROFITABILITY MARGIN CAN INCREASE BUT THE MONEY THEY SPEND ON SATELLITES AND SPENDING MONEY ON GROUND HAS TO CONTINUE DECREASING. WITH THAT BEING SAID WE KNOW STARLINK WILL ALWAYS BE THIS AMAZING HARBINGER FOR ALL THE LAUNCHES THEY ARE DOING.
WE SAW THIS WEEK THAT SPACE X CONTINUES TO BUILD GREAT MOMENTUM TO THEIR CUSTOMERS WITH THEIR BANDWAGON TEST FLIGHTS AND INTENDING TO SEND HALOS WITH ALL THEIR CUSTOMERS BUT WITH STARLINK THEY HAVE REALLY BUILT THAT MOMENTUM, THEY CONTINUE REDUCING LATENCY OTHERWISE THEY ARE IN A WORLD WHERE THEY SEE THAT CONSUMER TRUST DIMINISH. >> WHAT ABOUT TRUST A VIEW, THE PEOPLE WRITING THE CHECKS. WHEN YOU BEEN WRITING CHECKS AT THE VERY BEGINNING OF SUCH A BUSINESS, IT WAS ALL ABOUT MAKING THE VISION A REALITY LET ALONE PROFITABILITY BUT WHEN WE SEE THE NUANCES PROFITABLE TERRITORY DOES IT WORRY YOU PERHAPS SOME OF THEM ARE HERE AND NOW IT'S LIVING UP TO THE SORT OF STATEMENTS. >> I WOULD SAY OVERALL THERE'S BEEN TREMENDOUS GAINS HAPPENING AT SPACE X. WHAT THEY'VE ACHIEVED, WE HAVE A LOT OF TRUST IN SPACE X BECAUSE ELON AT THE HELM HAS ALWAYS BEEN KNOWN TO MAKE BOISTEROUS STATEMENTS AROUND THE NATURE OF PROFITABILITY GROWTH OF HIS COMPANIES. THE MOMENTUM AND THE TRUST WE HAVE IS SHOWN BY WAY OF VARIOUS COMPONENTS OF CUSTOMERS ACROSS BUSINESS AND WITH THAT BEING SAID WITH STARLINK WE HAVE SEEN THE CONTINUE EXPANDING THEIR COVERAGE. AS WE KNOW THERE'S A LOT OF
ENTRANCE COMING INTO THE SPACE, WHAT THEY ARE DOING WITH THEIR KUIPER PRODUCT FOR EXAMPLE. OF COURSE ON A MUCH SMALLER SCALE THERE WILL BE A LOT OF WORK DONE BUT TOOK SPACE X QUITE A LONG TIME TO GET TO THE POINT WHERE IT IS. BUT OVERALL I WOULD SAY SPACE X HAS SUCH A LEG UP IN COMPETITION BOTH TO MASTECH AND INTERNATIONAL AND IT'S REALLY ELON AT THE HELM.
>> REALLY SORT OF OPERATING AT THIS SPACE X PRESIDENT SHE HAD A GREAT LINE ON A PODCAST SAYING THERE'S PROBABLY 150 ROCKET CUSTOMERS OUT THERE. THERE'S 8 BILLION POTENTIAL CUSTOMERS OF STARLINK. WHAT DO THEY NEED TO DO NOT ONLY IN TERMS OF REVENUE PROFITABILITY BUT EASE-OF-USE AND RELIABILITY TO MAKE SURE WE SEE MORE THAN THE CURRENT USER BASE.
>> OVERALL THEY HAVE TO CONTINUE OPTIMIZING SATELLITE POSITIONING WITHOUT LIABILITY. THEY HAVE TO IMPROVE THEIR GROUND INFRASTRUCTURE, THEY HAVE TO ADDRESS TECHNICAL ISSUES PROPERLY AND BE RELIABLE WITH THEIR CUSTOMER SERVICE. I DO SAY AMAZON OVERALL HAS HAD A TREMENDOUS CUSTOMER SERVICE ARM AND AS THE PROJECT COMES IN IN A NEW ENTRANCE TO THE SPACE OVERALL WE HAVE TO SEE THAT SPACE X WILL KEEP UP WITH THAT RELIABILITY. STARLINK THEY HAVE TO CONTINUE
COVERAGE. INVOLVE TARGETING SPECIFIC REGIONS BUT STILL HAVE SATELLITE DEPLOYMENTS THAT ARE NECESSARY AND MARKETING THOSE EFFORTS TO POTENTIAL SUBSCRIBERS. WE KNOW THAT AS AMAZON CONTINUES , THEY HAVE A CAPTIVE AUDIENCE OF POTENTIAL CUSTOMERS WHICH WILL MEAN INCREASING COMPETITION ACROSS THE BOARD. ED: SPACE X IS A FANTASTIC COMPANY, THE STARLINK TECHNOLOGY WE'VE DISCUSSED ENDLESSLY AND THE FINANCIALS ARE WHAT THEY ARE. THEY WILL BE PROFITABLE, THEY
WON'T BE AND WE WILL GET HUMAN CLIENTS TO MARS ON STARSHIP MAYBE. YOU'RE AN INVESTOR, THERE IS INTENSE INTEREST. HOW DIFFICULT IS IT TO GET A HOLD OF SPACE X AND SAY WANT TO INVEST IN YOUR COMPANY.
WHAT IS THE COMPETITION LIKE TO HAVE A PIECE OF THAT PIE. >> I WOULD SAY IT'S A VERY COMPETITIVE TABLE. THE EQUITY LEDGER OF SPACE X IN GETTING INVOLVED AS AN INVESTOR YOU HAVE TO MOVE TO BE A VALUE ADDED BACKER AND BE WILLING TO STAY WITH THEM OVERALL. WITH THAT BEING SAID BECAUSE OF
THE ENORMOUS AMOUNT OF CAPITAL THAT SPACE X HAS RAISED TODAY YOU HAVE TO PROVE IF YOU WANT TO BE AN INVESTOR IN SPACE X YOU ARE WILLING TO ALSO DEPLOY QUITE A LARGE CHECK OF THE PRIVATE MARKET INVESTOR. WITH THAT BEING SAID SPACE X HAS BEEN QUITE SELECTIVE AND YOU WILL SEE THE NEWER INVESTORS THAT HAVE JOINED THE TABLE ARE ONES THAT CAN REALLY WEIGH INTO THE COMPANY NOW WITH A LARGE CHECK VALUE ADD AND MOST LIKELY BE THE SAME INVESTORS WHO WILL ANCHOR THE COMPANY GOING INTO THE IPO AND CONTINUE INVESTING ONCE THE COMPANY GOES PUBLIC IF AND WHEN THAT HAPPENS. ED: GREAT TO CATCH UP AND TALK SPACE X. AN ADDITIONAL THREE UNDER MILLION DOLLARS SECURED AND FUNDING FOR HIS VENTURE FUND. WE SIT DOWN WITH THE FOUNDER
AND GENERAL PARTNER. STAY TUNED, THIS IS BLOOMBERG TECHNOLOGY. PRIME MINISTER WILL BE HOLDING A JOINT NEWS CONFERENCE LIVE AT 12:30 P.M. EASTERN TIME. THIS IS BLOOMBERG. >> TOYOTA VENTURES HAS RAISED $300 MILLION FOR HIS VENTURE FUND 150 MILLION FOR ITS FRONTIER FUND AND 150 MILLION FOR ITS CLIMATE FUND. JOINING US TO DISCUSS WHERE
THEY WILL BE INVESTING IS THE FOUNDER AND GENERAL PARTNER AND YES THEY ARE IN THE EARLY STAGE VENTURE ARM OF TOYOTA WHICH HAS $8 MILLION IN ASSETS UNDER MANAGEMENT. THEY ARE TALKING A LOT ABOUT THAT FOR THE LAST YEAR IN THE CONTEXT OF EV OR NO EV. THIS IS MORE MONEY FOR YOU TO PLAY WITH. HOW INVOLVED IS THE MOTHERSHIP. IN JAPAN, IN EACH INVESTMENT OPPORTUNITY YOU LOOK AT. >> I THINK OUR MISSION IS TO DISCOVER WHAT'S NEXT FOR TOYOTA.
>> THERE IS A DECOUPLING BETWEEN WHAT THE CORPORATE PARENT IS DOING. WE VIEW TOYOTA AS A LIMITED PARTNER. WE ARE A VENTURE CAPITAL FUND AND THE START UP IS OUR CUSTOMER AND SO THERE IS I THINK A HEALTHY DECOUPLING BETWEEN WHAT WE ARE DOING WHICH IS INVESTING FOR THE VERY LONG TERM, THE GOOD NEWS FOR US IS WE HAVE A VERY ENGAGED, A THOUGHTFUL AND PATIENT LIMITED PARTNER IN TOYOTA AND THEY HAVE CONTINUED TO SUPPORT US AND OUR CONNECTION WITH THE STARTUPS THAT ARE BRINGING THE DISRUPTIVE INNOVATION TO THE MARKET.
>> A LOT OF THE LEGACY ARE IN A VERY SIMILAR WAY AND THEY ARE LOOKING FOR SOMETHING TO ADD. WITHIN THAT IS A HUGE RANGE. SOFTWARE, BATTERY TECHNOLOGY, TOYOTA'S ARE FOCUSED ON HYDROGEN AS I UNDERSTAND IT. JUST OUTLINE WHERE YOU ARE LOOKING.
>> WE HAVE TWO FUNDS, ONE WHICH IS FOCUSED ON AI IN MOBILITY AND ROBOTICS. FINTECH AND THEN OUR CLIMATE FUND WHICH IS FOCUSED ON CARBON CAPTURE AND STORAGE. RENEWABLE ENERGY, BATTERY ELECTRIC. EVEN FAR-REACHING TECHNOLOGIES LIKE NUCLEAR FUSION. SO WE ARE REALLY DISCOVERING WHAT IS NEXT FOR TOYOTA LOOKING IN PLACES THAT ARE OFTEN NOT LOOKED AT BY A BIG FORTUNE GLOBAL COMPANY. >> A LOT OF ROBOTICS IN THERE WHEN I'M LOOKING AT PORTFOLIO COMPANIES. WHAT ABOUT EXITS?
ARE YOU ANTICIPATING THAT YOU WILL BE ABLE TO SEE THE REAP -- REAP SOME REWARDS FROM THESE INVESTMENTS THIS YEAR. JIM: WE OPERATE AS AN EVENT -- A CAPITAL FUND. RETURNS ARE IMPORTANT. WE ARE STRUCTURED ALONG A DECADE LONG GPL P TERM. SO WE DO EXPECT TO SEE
FINANCIAL RETURNS ALONG THE WAY, WE ARE PATIENT. WE WORK WITH OUR STARTUPS EVERY DAY TO SEE THEM COME UP WITH THEIR INNOVATIONS AND BRING THEM TO MARKET, GROW THEIR VALUATIONS AND ULTIMATELY END AN EXIT THAT WORKS FOR THEM. THE OTHER INVESTORS AND US AS WE COUNT OURSELVES AMONG THOSE INVESTORS. CAROLINE: HOW COMPETITIVE IS OUT THERE IN
THAT SPACE? >> IT DEPENDS ON THE SECTOR. WE LOOK INTO DEEP TECH, AND PLACES WHERE WE THINK THE WORLD IS GOING BECAUSE WE ARE SO PATIENT. WE CAN ACTUALLY DEEP TECH THAT ARE NOT NECESSARILY RUNNING THE TYPICAL EVALUATION BEING VERY -- POPPING IN VALUATION. IN CERTAIN AREAS IN AI. CAROLINE: STARTED YOUR CAREER AS A ROCKET ENGINEER, FASCINATING TO SEE IN THIS AREA.
THANK YOU SO MUCH FOR YOUR TIME. WE WILL TALK ABOUT CHRISTIE'S VENTURE ARM. THIS IS BLOOMBERG TECHNOLOGY. ♪ CAROLINE: CHRISTIE'S VENTURES HAS NOW REACHED 10 INVESTMENT SINCE ITS LAUNCH BY ADDING TWO NEW COMPANIES TO ITS PORTFOLIO.
WE ARE NOW HERE WITH THEIR GLOBAL HEAD ALONG WITH NICK ADLER. YOU ARE INVESTING IN AREAS WHERE ART MEETS TECHNOLOGY. TALK US A LITTLE BIT ABOUT SOME OF THESE INVESTMENT ROUNDS AND HOW COMPETITIVE IT IS. >> THANK YOU FOR HAVING US. ALWAYS A PLEASURE TO TALK HERE. AS YOU KNOW WE INVEST IN FOUR AREAS OF TECHNOLOGY STARTING WITH FINTECH BECAUSE PEOPLE THING -- WE'VE BEEN DOING THAT FOR 257 YEARS AS AN ART COMPANY. WE STARTED PIONEERING TWO YEARS AGO. AI MORE RECENTLY AND FINALLY
WHEN CALLING HUMAN COMPUTER INTERFACES OR HARDWARE. CHIPS ON A MACRO PLAY ARE INTERESTING, THEY ALSO CONNECT PEOPLE IN INTERESTING WAYS. CONSERVE WORKS WITH INSTITUTIONS LIKE MOMA AND THE SMITHSONIAN LIBRARY AND ARCHIVES TO TRACK HOW THEIR CONSERVATION IS PROGRESSING. ARE THEY HAVING SOME CRACK'S DEVELOP. ALL OF THOSE ARE IMPORTANT IN CHIPS. CHIPS ARE VERY INTERESTING
INTERFACE. THAT'S INTRIGUING FOR US TO INVEST IN. CAROLINE: TALK ABOUT NFC CHIPS. WHY? NICK: IT'S A CATEGORY WHETHER IT'S
THE RARITY OR THE TRAITS, BEEN A COLLECTOR, WELL-KNOWN KNOWN AS A DESIGNER. WHEN HE AND I CONNECTED WE SAW THIS WORLD 2024 HAS A 20 $50 MILLION MARKET. 10% OF RETAIL RIGHT NOW. THEY WANT TO FLEX IT. THEY WANT TO LEARN MORE ABOUT IT.
>> YOU'RE ALSO ON THE INTERSECTION OF WEB THREE AS WELL. YOU'VE GOT SUCH AN INTERESTING CAREER BACKGROUND IN LAW HAVING SET UP FILM FESTIVALS. WHO IS BIG IN THE NFT SPACE. WHY PAY NFC CHIPS. >> WE STARTED BY THINKING BUT HOW COULD THESE PHYSICAL ITEMS MANIFEST THEMSELVES IN THE DIGITAL WORLD. ABOUT DESIGNERS WORKING TO DESIGN DIGITAL NFT IS AS CLOTHING. HOW CAN THEY WORK WITH GAMES LIKE CALL OF DUTY OR GTA. THE MORE WE EXPLORE DIGITAL THE
MORE WE REALIZED THAT'S ONE OF THE BEAUTIFUL THINGS THAT THEY OFFER SO THIS HAS JUST OPENED UP A WHOLE WORLD FOR US TO EXPLORE. CAROLINE: THEREIN LIES THE UNDERLYING TECHNOLOGY. BACKING A HYPE CYCLE WHEN IT COMES TO CRYPTO. HOW DO YOU SEE THE WOOD THROUGH THE TREES? DEVANG: WE LOOK AT IT FROM TWO PARAMETERS.
WE HAD A DUAL MANDATE, ONE WAS A POTENTIAL FOR RETURNS AND WHERE THE TRADITIONAL VENTURE WOULD LOOK LIKE. WE LOOK AT INVESTMENTS AS POTENTIAL AVENUES OF BRINGING NEW CAPABILITIES. SIMILAR TO WHAT THE PREVIOUS HOST WAS TALKING ABOUT. OUT OF THE 10 INVESTMENTS FIVE OF THEM WERE ACTIVELY INSIDE OF CHRISTIE'S. WE CAN BRING THEM TO CUSTOMERS.
THE FEEDBACK YOU SAW BRINGING THOSE TECHNOLOGIES. THIS YEAR, THAT GIVES US A REAL POSITIVE TECHNOLOGY WITHOUT DEPLOYING CAPITAL AND RESOURCES. CAROLINE: FASCINATING HOW YOUR RELATIONSHIP BUILT AROUND THAT PARTICULAR EVENT. WE THANK YOU. THAT'S IT FOR BLOOMBERG TECHNOLOGY. ED:
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