Misinformation as elon musks x faces backlash over changes to its content Safety Policies. Caroline and well return to the trial of freed as it enters its second week with a key witness taking the stand. First, lets check in on these markets because as we see the geopolitical tensions, we also factor in what that means for macroeconomic policy here in the United States. Many are dialing back the anticipation of a fed hike coming in the next month. Nasdaq currently up. Were looking at a 10year yield after being shut yesterday, the bond market reopens with a significant move to yields to the down side. The vix also does back that volatility, that fear index, just off by one. Lets have a look at whats really some of the assets that are focused on israeli tech. This is the e. T. F. Weve shown a light on yesterday coming from arc. The arc israeli innovation e. T. F. Managing to bounce back a little bit today. But dig into the microfor us. Ed there are a few new stories and movers out there not to do with the israelhamas war. In the e. V. Space, u. B. S. Upgrading its call on the stock, saying that the 1. 5 billion convertible notes that it announced last thursday kind of shores up finances. Now its time to go back to the fundamentals of this e. V. Business, chasing tesla. Remember, last thursday this stock fell 23 . Biggest drop on record after announcing that convert, convertible notes have a dilutery effect on existing shareholders. And teslas up 3 . The informations reporting that theyve chosen austin as the site to build out their dojo supercomputer. So when we think about a. I. , just remember, teslas in that race. More to do with security, cybersecurity, and a. I. Palentiere also moving to the upside. Its won a contract with the u. S. Army to support its a. I. Capabilities. That having an impact on that stock, up 3 . Also look at some of the reddit forums. A lot of retail forums talking about palantir right now in context with israel. Caroline lets turn back to that context. The war fighting enters the fourth day. Joining us, youre in tel aviv at the moment. Bring us up to speed with what youre anticipating. Reporter i think actually, good evening. I think actually the most Interesting Development that were going to be seeing today, and this is not a sure thing yet, will be that israel is actually looking as a new government. Weve been getting messages this afternoon that israels Ruling Coalition said it wants to form a rare emergency government with the opposition following saturdays attacks by hamas. And theyre now finalizing the final details. So we cannot say that this is surely going to happen, but it does look like this is going to happen and in essence what this means is that the entire operation in gaza that were looking at and that the israeli officials are saying will be taking a long time, maybe several weeks or more than that ahead, then that will be run by a very narrow, small war cabinet that will be comprised of Prime MinisterBenjamin Netanyahus party and opposition Leaders Party with the other parties that are parties that are nationalist, more far right, out of the picture, only for that, only for the war operation. And then after the war, well see what happens politically. But thats the most Significant Development were looking at today. Ed you and your colleagues in our bureau and actually on this program, we talked to some of those that have been part of the mobilization effort. 300,000 reservists. Many of them Technology Industry workers. What is the latest sort of military response and action on the ground in israel . Reporter yes, so that is an interesting question and today weve been actually hearing a lot of i. D. F. Officials speak to us about the focus now being aerial attacks on gaza. And the chief i. D. F. Spokesperson tells us this morning that the attacks that have been taking place, especially last night, but throughout the last 36 hours or so, have been unprecedented in the terms that they are very fierce. What the air force now is doing at gaza, theyre striking in rounds that are taking place every four hours. Theyre just going back and forth. Theyre striking thousands of targets over there. They have also reported that they have managed to kill, from with these aerial attacks, to figures in hamas to key figures in hamas this afternoon. Thats what the focus is on now and theyre describing that they built a steel wall, thats what they call it, along the gaza fence in order to stop any more possible infiltrations. So theyve actually placed a lot of tanks over there and some aerial vehicles that are shooting down anyone and thats what they stress, anyone who is trying to cross the fence, no matter who they are, thats the main focal point of what the Israeli Air Force is doing. Just in one more sentence, ill tell you that obviously they are preparing for much larger ground operation and theyre doing that by mobilizing a lot of soldiers and reserve forces towards the southern border and the northern border as well. Ed one of many colleagues in israel and the middle east who are doing minute by minute reporting of whereas happening. Were very grateful to have you here on bloomberg technology. Lets turn to the intelligence side of this conversation. How did hamas get around one of the most sophisticated Surveillance States to stage its attack against israel . Joining us now is the former chief of staff for the cybersecurity and Infrastructure Security Agency cisa. Theres the hard war, hard tech component. Then theres the soft power, soft tech component. What you have learned about hamas cyber activity in what has been 48 hours already since the attack . First of all, thanks so much. Its incredibly early in this crisis. Were seeing just the increased escalation over the last few days. Were now seeing deaths over 1,000, potentially over 1600, hostages being taken. And the concern that theres going to be a second front, certainly on the northern side with hezbollah. What american intelligence officials need to be asking right now, they are asking, is what direct role, if any, did iran have in the supplying, the preparation, the encouraging of this attack . We know that iran views its alliance with hamas as a point of leverage, as its looking to destabilize and derail the engagements with israel and saudi arabia. And so certainly civilian casualties on both sides would obstruct any attempt toward a type of agreement between israel and saudi arabia. So the tools available to all sides are not just kinetic. Its not just the fierce fighting that was just talked about. There are Cyber Weapons and cyber tools which we know everybody has access to. Caroline lets talk about those Cyber Weapons, cyber tools. Already being deployed. You say its very early days in the crisis. Already weve seen Cyber Attacks being aimed at both sides. Can you tell us sort of what these look like in the early iterations and whether theyre going to be ramped up as days go forward . Its hard to know where they will escalate to. But certainly right now were seeing unofficial reports of attacks, the use of malwear, defacement of websites. We saw back in 2011, 2012, that iran used attacks against the United States financial sector. The capabilities of all nation states in cyber are enough. Theyre not necessarily as sophisticated as russia or china. But we know that the capabilities exist and that if there is a war that is going to access all tools, that cyber could be used in lieu of kinetic weapons but more likely in conjunction with them. Caroline interestingly, rob joyce, director of cybersecurity over there at the National Security agency, hes saying thus far the Cyber Component hasnt been that significant, it has been more of these denial of service elements. But that they could ramp up. Im interested as to how difficult it is to parse through who are activists, where are they coming from and what really the end goal is here . Its a great question. Because what were looking at right now really is how can we be resilient . Rob is absolutely right. What were seeing, were not seeing any targeted attacks at this point. But what we want to be really aware of is how can we prepare . How can we be resilient against what could come . When we saw the imminence of russias invasion of ukraine, cisa put out a shieldsup advisory to Critical Infrastructure companies to say, heighten your awareness, heighten your vigilance, lower the threshold for reporting what were talking about now isnt necessarily what we know to be coming but the importance of being prepared, being resilient and being vigilant as we create a more resilient infrastructure for the United States. Ed youre talking about preparedness. Yesterday professor of columbia, former deputy National Security advisor in israel, said that this wasnt a lack of intelligence. It was a lack of imagination. That the security and Intelligence Forces just didnt think that something of that scale could happen because they couldnt imagine it. Put that in the cyber context for us. You seem to be suggesting that a lot of that competence and knowhow would come from the iran side or a third party actor, not necessarily hamas itself. Its hard to know. Certainly iran has these capabilities and weve seen iran use cyber capabilities. I think your point about failure of imagination is obviously ed not my point. The professors point. Brings us unfortunately back to 9 11 and what we look at as human nature. We often prepare for that which we know we can respond to. Our challenge is the ability to prepare for that which is more frightening, more devastating, more destructive. Whether were preparing, we have to be when were preparing, we have to be thinking about how can cyber play a role in this and what do we need to prevent, prepare and to be resilient . Ed you were with cisa through july of this year. I want to ask you about palantir and the privatepublic relationship, there have been loads of questions posed about them over the weekend. Do you have any experience you can draw on or opinion on the role that the private sector can play in the intelligence and cyber space data related Going Forward . One of the things that i was so pleased with and proud to be a part of at cisa and with the federal government is the improved relationship between industry and government. In Threat Intelligence, in the ability to share information. The solar winds attack that happen back in 2020 was identified by the Company Fireeye and the ability then for the private sector to share information with government, for government to do the same in realtime, so we can create not a complete Threat Intelligence picture but certainly a more comprehensive one, so that coming together industry and government can respond. We know that one entity cant respond and retaliate on its own. Respond and react. We have to be able to work together. Caroline so great to get your cisa experience and now c. E. O. Of Liberty Group ventures. Thank you for your time today. Meanwhile, coming up, were going to be turning back to the markets for a look at just how these geopolitical moments are impacting the investment space at large. Do stick with us. This is bloomberg technology. Thanks to avalara, we can calculate sales tax automatically. Avalarahhhhhh what if tax rates change . Ahhhhhh filing sales tax returns . Ahhhhhh business license guidance . Ahhhhhh crossborder sales . Ahhhhhh item classification . Ahhhhhh does it connect with acc. . Ahhhhhh ahhhhhh ahhhhhh caroline Central Banks seem to be the catalyst for todays trading action. Joining to us break down the shortterm and longterm in terms of your Technology Sector, hillary. Were pleased to welcome Senior Research analyst at Technology Software at clear bridge. Give us your sort of birds eye perspective right now. When we are in the throes of knee jerk reactions, when we see selloffs becoming is that is the Immediate Response to a geopolitical threat and concern, is that the right way to be thinking about your Technology Investments right now . Its a very good question. Thanks for having me. Its good to be here. You know, whats interesting is we havent seen that knee jerk selloff this time so far. I think the market is interpreting a relatively isolated circumstance, well see if that proves to be the case. At clear bridge we tend to be longterm investors, we take a longterm horizon and we like to use periods of weakness to add to key portfolio positions. In technology specifically, while i dont see q3 in particular as any kind of barn burner quarter or major catalyst either way for the sector, i do see a period between now and mid to late next year when we should actually see Technology Start to decouple in terms of growth from the broader economy. Thats partly due to a. I. And a variety of other factors. But i do see technology as a place where investors will want to continue to invest. Caroline and which particular drivers, which, you know, forces of change do you focus in on when you think of an nvidia which has had parabolic growth in terms of its market valuation, based on an a. I. Fundamental viewpoint, but also is exposed to geopolitical tensions when it comes to china and u. S. , and major exposure in terms of supply chains when it comes to israel . How do you dissect what it means to be a longterm view . Sure. Nvidias side, because there are certain factors driving the results versus other, most Tech Companies have exposure somewhere in israel and such places. And the longterm geopolitical situation is a dynamic one. But i dont see associated disruption as the primary concern. As weve seen from the markets, the primary concern has been the rising dollar in Interest Rates, theyve had a better quarter than anyone else out there. And that puts nearterm pressure on translated revenues and earnings and also on valuations. But to the extent that these types of conflicts dont grow out of control, they tend to present opportunities to invest in longterm trends. Its interesting because yesterday we saw Security Companies rally, i think theyre rallying again today. And Security Companies are some of the ones with the largest exposure to israel. Some of them are based in israel or were based in israel and have dual headquarters. But in periods of rising geopolitical tension, there tends to be heightened adoption of security solutions. So its a push and pull between what that disruption looks like and what the outcome looks like in terms of increased revenues. And we live in a remote world. Technology pioneered remote work. They were doing it long before we were as a broader economy, with the pandemic. So weve seen circumstances where companies can adapt fairly quickly. But in israel theyre deploying a lot of folks, theyre deploying a lot of reservists. So there could be just some disruptions along the way. Ed its ed in san francisco. Do you like charts . You strike me as somebody thats a chart watcher, that likes charts. I wonder what makes you say that. But i dont dislikes charts. [laughter] ed ok. Lets bring up one chart. I want you to explain something to me. Nasdaq 100 against the s p 500 Software Index here today. The s p 500 Software Index is a very limited basket but it has kind of enterprise sass, cyber is in there as well. What is it then thats driving those Software Names . Higher multiple or otherwise right now. If it isnt fed, if it isnt geopolitical risk, what is your outlook based on . Investors like to focus on Higher Technology multiples as though growth were equivalent between tech and the broader economy. But growth is not equivalent between tech and the broader economy. Technology is where nearly all of the growth has been coming from. So in this recent period where we had rising dollar and rising Interest Rates, tech actually outperformed the broader economy in s p. With a. I. And the precursor investments to a. I. And a normalization of spending environment in tech, which i believe has been in recession, a very mild recession over the course of the better blaster year, better part of the last year, that looks poised to be the case even more so Going Forward. Tech valuations with software as a proxy for enterprise tech are just at their fiveyear prepandemic average. Theyre just a hair above their 10year prepandemic average. Meaning excluding the pandemic period where valuations were really elevated. I think thats a decent back drop for tech into 2024 where in the second half i expect a. I. To be much more of a catalyst when we talk about that more if you like. Ed i think were out of time unfortunately. That was a loaded question. I know you like charts. Who doesnt like charts . How can you not like a chart . Ed exactly. But it is good to have you back on the program. Well have you back very soon. Coming up, the trial of Sam Bankmanfried enters its second week with a key witness taking the stand today. Well tell you who and bring you the details next. This is bloomberg technology. Ed it is time for talking tech. Uber soft fell the most since may since they delayed the release of their new free to play game. Originally scheduled this summer. The company cited, quote, inconsistencies in the Game Experience as the cause of the delay