Transcripts For BLOOMBERG Best Of Bloomberg Technology 20240

BLOOMBERG Best Of Bloomberg Technology July 13, 2024

Old law protecting google and facebook. The coronavirus is taking a toll with tech leading the losses. Apple card revenue guidance for the march quarter with the outbreak continuing to affecting the chain. Impactfulonavirus is but not permanently impactful. T is a temporary blip on the demand side longerterm for apple. We will see a nice rebound when this is over. Apple made a big bet on china. Contained,. Is not this will continue to be a problem. Could be a virus problem longer than the market thanks. Theres no better ceo to handle the challenges then tim cook. Iile it is very concerning think having him at the helm is very reassuring. It is hard to shift production in a matter of weeks. Myly reaction from colleagues to assess what he thinks the supply Chain Disruption will not hurt demand. Since apples announcement the demand it is really supply Chain Disruption. The markets are opening in china but people are being very cautious. There is an effect that will play out over the next month or so. It will probably take until the. Nd of march it is a supply impactor. Emily we got revenue guidance from apple. What has changed for you . Guidancedid not give and with the march quarter would be. We looked at our numbers and took a cut based on the biggest impact. People end up buying Surgical Products unlike downloading the app store. That is a big reason for a cut. Apple has said they are going to invest in the modem business. They will be investing in tv plus and other opportunities. Sales may be cut by 15 or 16 . They are going to invest in future opportunities despite the lending impact. Emily for more on apple and the broader impact of the coronavirus we are joined by mark lehman, president of j and p securities. Their the first Big Tech Company to mention the Coronavirus Impact and i dont expect them to be the last. It is amazing how resilient the market is today. We had a preview of the market close yesterday. A lot of speculation on how about the market would be and the nasdaq was up today. It shows you the amount of demand in the marketplace. Nobody was expecting the stock market to be slightly up today. Emily what is driving the tech markets . You have numbers that have been as good if not better than people expected. Rates are really dipping this year. Assentbeen an enormous ascent. There is a lot liquidity in the marketplace. These type of liquidity bubbles i dont want to use that word but we are waiting for correction. We have not seen a big correction. I expect more and more people have capitulated into this year despite news like apple. The supply chains are so huge and interconnected. Is all the bad news around the supply chain out of the way . There is never just one cockroach. My guess is the news is behind us. I think there will be more news ahead of us. Deaths will go down at some point but that has not happened. On howger this goes on many new cases there are the longer the supply chain is in affected. Year atthe chinese new the same time. Tech. A weaker period for i am expecting more announcements over time. Emily that was mark lehman. Sticking with apple they are considering giving rival apps more prominence on devices after criticism that offers a unfair advantage to its products. Being a default app is very key. These are the services you are going to use. They are very hard to replace. Being default means you send me a text message with a web link and it will always take me to safari. Installed,ad chrome it would not change. It give safari an edge over the competition. That is what apple is considering changing. It will be called i was 14 to be 14 to be able to switch to google or safari. This is something the u. S. Government was asking apple about. Seen what happened to android in the eu. It is also a bad user experience. Say im a Google Chrome user and im not able to use it to its full potential. Maybe i will switch to android. Apple wants to avoid that. How many apps are we talking about the could be affected . Apple has 38 apps that are preinstalled on the phone. It is more complicated than you think but the big are firefox, gmail,chrome, microsoft, yahoo mail and the list goes on. Even if they give the option you got to figure default apps will remain the default for 99 of users. That is the way to put it. 99 of people not know what is going on. However, that 1 is very key. Even though apple has so many basemers that small user are super loyal and they influence their friends and influence other people. Real quick on security, is there any issue this would compromise the security aspects that some people find attractive about the iphone . In some cases allowing some software and features to not be default could cause security concerns but in terms of the web browser into mail that is not good to be a big influence or. Come, morganto stanley makes a big acquisition by wall street firm since the financial crisis. We will talk with james gorman about why the bank is buying e trade. Check us out on the radio bloomberg app, and in the u. S. On sirius xm. This is bloomberg. Emily Morgan Stanley is diving deeper into retail by buying e trade for 13 billion. The acquisition comes in response to customers wanting more access to digital banking. Spoke to gorman soon after the announcement. Weve had a strategy to continue to diversify and build a balance sheet. The transaction was started back in 2009. Mason west was a small deal. I felt that e trade was an incredible brand, and incredible company. They are clearly doing stuff on the digital side at a pace that was ahead of where we were. With the constant debate of build versus buy and felt we were in the condition to make a bold move. Why was e trade the right business as opposed to in your business . You said digital was a big deal. Did you consider robin hood . I like e trades business model. Theyve got a lot of clients, a huge workplace, they have one of the best Digital Online banking businesses in the marketplace and they sit on 600 billion of assets. 600tock plan business is billion and we have 21 billion in combined revenue. It is not comparable. Robin hood is a completely different kind of business. I like real businesses, real clients, real profits. Real clients but these are much different than Morgan Stanley has traditionally taken on. How does this change the fabric of Morgan Stanley . Less than new with think. It does not change the fabric at all. The stock clients are all corporate institutions. That is not different at all. For many of us, having advisory relationships, have online accounts whether with banks or a Financial Institution providing financial advice. The channels in the last 20 years have come together. What you have got to do is build businesses that make your clients happy. Be convenient for them, not convenient to you. Our financial advisors, including myself, are constantly working electronically, digitally, with the financial advisors. 13 billion is a pretty hefty price tag for e trade. What do you tell the people on wall street who might believe you are overpaying . I think they are jealous. [laughter] that does not bother me at all. Would paid a 3 billion premium last year. We put at risk 4. 5 months of last years earnings. To buy a iconic institution. This is going to improve all financial models. This is a nobrainer from the perspective. You said you believe this will create a fullscale digital bank. They have it. E trade also has 4000 employees. You have more than 15,000 advisors in your Wealth Management unit. What does this mean . That is almost 20,000 people. Do you need 20,000 people to run the part of the business five years from now . We have a lot more. Were talking about is the advisors of which we have about 15,000. Staff ispporting probably at 30,000 or 35,000 people. But most ofme jobs this job fits neatly and it will be run as e trade and said Morgan Stanley. If the bank is digital, does that mean it needs more employees less employees . No. They are going to do banking with other institutions but they can do it all at Morgan Stanley now. We have 7 trillion of assets. We want to bring the funds in here. You have the number one stock trading business in the world. Jp morgan is trying to knock at your door and it comes to that. How does the e trade acquisition at your trading business . That is the equity business number one in the world. The technology within the equities business for the electronic trading platforms that i think e trade could be adding. We are excited about using their technology not just in Wealth Management across our Asset Management platform. That was Morgan Stanley ceo, james gorman. Adil prompted a downgrade from wells fargo senior analyst. Analystannot be a bank without being a parttime tech analyst. The acquisition of Morgan Stanley buying e trade is about digital banking. I think it is a fair question but 13 billion for a company that is this stock market sensitive . At a time when you have peak Retail Investor engagement and high stock prices. We not saying this is the top but this is not the bottom. The plain old timing of this paying 15 times the earnings for a company for starters is not ideal. I heard a lot about the corporate stock plan business and this is a fantastic business. It is really undervalued in e trade. Is that argument not backed up . This goes to the idea of revenue synergies. A Brokerage Firm can get customers in a variety of ways, digital delivery, or through the workplace and to the extent Morgan Stanley has a broader suite of products if you are in e trade customer, you should said this is fantastic. I would love to be in e trade customer even more now. You will have so much more of Morgan Stanleys research and products and ways to have the experience. Having said that, if you are a Morgan Stanley shareholder, that comes with a lot of complexity and i think costs over time. We think the synergies expectations, just like with the other mergers over three decades, might be too optimistic. To think it was a competitive process . Do you think others were involved . We have no idea at this point and i cant wait to find out. What is interesting is there is change in control provisions for e trade management. Certainly a lot of questions about the timing of those but the question has come up could other buyers come in here . Coming up, lithium batteries have long been tempted as the solution touted as the solution to carbon emission. Details next. This is blumberg. Emily tesla got a new street high target for most bullish analyst on the street. The price target cap raised from some hundred 29. 729 dollars. Electric cars underscore knee after mcafee said they were able to trick a tesla into speeding during a test. Researchers put a strip of electrical tape over a 30 mile an hour speed limit sign causing the vehicle to mistakenly read 85 Miles Per Hour and automatically accelerate. Tesla has not responded to the study. Tesla has agreed to buy cheaper batteries that do not use cobalt for its model three production. The lithium ion phosphate batteries remain alternative to cobalt. And nickel products lithium batteries have long been touted as the solution but production of lithiumion batteries may be more problems. Alix steel has the details. The 20th century with the age of the internal combustion engine. The 21st century would belong to the battery. By 2040 the majority of cars around the world will be powered by batteries. They will admit far pollutants but the elements used in batteries have their own challenges. Lithium is a water guzzler. If lithium prices stay low, they may not be worth the cost to mine. They would opt for the more risky method of pumping salt water underground to extracted. Nickel is used in leak lithiumion batteries to boost Energy Density and allow electric vehicles travel faster and farther. Ersis not clear whether min can keep a steady stream coming. Cobalt presents an ethics problem. It helps keep the battery cool during charging and discharging but they are terrible conditions for miners in the congo. Some workers are only four years old. Your car may not be made more cleanly. Emily for a look at how other automakers are trying to keep up alix spoke with peter rollins. A potential competitor she asked how long tesla can dominate the ev market. Tesla dominates because the are the technological leader. Ways not recognized is this is a tech play. Technology is recognized and that is a major factor in the recent surge in share prices. Lucid going to want to be a car company . We are a tech company. This is a technology play and that is not sufficiently recognized. There is room for lucid to thrive alongside tesla. We have a world of Luxury Products which dominated by the german automakers mercedes, audi, and bmw. Andd is a luxury ev company we are going to compete with the core competitors which of the german companies. Mercedes s class is the core competitive car. Theres plenty of room for lucid to thrive and coexist alongside tesla. Part of the issue with this whole transition has been money. Automakers are pouring money into this. It is not yet possible even the battery prices are coming down. You going to need more money to make this happen . Weve got great funding in place. We are in a healthy financial situation to start production. We will need to raise more to accelerate the growth of the company because we have a wonderful window of opportunity in the next few years. We want to accelerate growth. We will need more capital to do that and we want to accelerate the growth of a sustainable mobility to the world. Right now, that is what mankind needs. A Widespread Adoption of renewable, sustainable mobility three nubile sources. Can you put numbers on it . How much more you think you will need to raise and how quickly you can grow . I dont want to be too specific because it is early days but although we are a tech company the auto business is capitally. Were looking at nine figure sums. Due think the market is open to that . Have toditional oems cut people and they rewarded tesla, what is the response . The traditional are they have because their processes and many of those are suited to the rapid transition to electric mobility. We are a startup with a startup mentality. Lucid motors is based in Silicon Valley and we are very entrepreneurial with our spending. Philosophy is run that way. What is different about a lucid car or battery or execution from a tesla or other ev out there . It is worldclass technology. We supply the batteries to all the cars in formula e. We have a proven battery technology. Ceo, peter was lucid rollinson. Margrethear from vestager next. We are livestreaming on twitter and be sure to follow the global breaking news network at quick take on twitter. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Emily welcome back, i am emily chang. The eu has a new strategy to deploy artificial intelligence. They employ new new rules they want to deploy Similar Technology in europe. Facebook and google will not be exempt. Move is the latest attempt to leverage the vast developed market as well as compete with the u. S. And chinas hightech power. As the European Commission unveils its white paper on regulating social media and ai Margrethe Vestager says she favors one eu tax for the companies. There is a difference between a shift in town and a shift in behavior tone and a shift in behavior. I think everyone appreciates we can have a debate about the responsibility of joining the platforms but the important thing is to see change on the ground and we are still considering if more regulation is needed to make sure all the things we discussed and decided is represented when we are in the digital reality. We know the eu has been pushing hard for tax reform and digital services. Is that something you think will finally be the year we see the move . That is what we are pushing for. We would like to tell all the many businesses who pay that taxes and the many wh people who work there that they are not faced with unfair business. Corporate taxation does not understand digital value creation. We will do our best within the framework to create a consensus. Going back to Mark Zuckerberg, do you get a sense youre serious and they have to pay more tax in europe . I think so and i think they find it is kind of tricky. If each members make their own system, they have to deal with one set of rules in one country and another set and another country. May be it is easier to say this is how it is done in europe, one stop,. Go. Re you emily there is new scrutiny on a new u. S. Law the protects google and facebook from lawsuits over content posted. Back then the hope was the law would allow the internet to flourish but the u. S. Attorney general, william barr, gets his way that will change. Giving broad immunity to platforms that purposely blinds themselves and allow illegal conduct does not create incentive to make the online world safer for children. He made those comments at a workshop he convened wednesday to study amending section 230. We spoke to ben brody who is covering the story. The upshot is there are a lot of complaints. We hurriedly attorney general let out a lot child safety, the power of platforms, we heard other people talk about drug sales, gun sales, misinformation, hate speech, the list goes on. But what exactly we do about it and that is up to congress not the department of justice that is not something that has been settled. We may be getting closer but ultimately congress is going to have to change the law if it is going to change. That means if it will change this year, passing something in an election year. I dont think were quite there but what we are seei

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