Tech Outperforming and Musk's Interview With Trump | Bloomberg Technology

Market Overview

• The NASDAQ gained 0.7% last week, recovering most of the losses from the previous week.
• The S&P 500 finished the week flat.
• Investors are anticipating a busy week of economic data releases, including CPI, PPI, jobless claims, retail sales, and consumer sentiment.
• The VIX jumped 23% on Monday, but markets recovered after that.
• The VIX spike was considered technical and not indicative of a major panic.
• The market is difficult to read, especially during the summer.
• Investors are not favoring tech stocks, and the "great rotation trade" from large-cap to small-cap stocks has fizzled.
• Deutsche Bank reported that investors cut equity allocation the most since the pandemic, indicating a shift in sentiment.
• Investors are now concerned that the Federal Reserve took too long to cut rates, leading to a panic in the market.

AI and the Tech Sector

• Nvidia is a major mover in the market, with its earnings report on August 28th being a significant calendar item.
• There is a debate about the future of AI, with some investors concerned about the lack of practical use and others optimistic about the potential for growth.
• Companies like Palantir, ServiceNow, SAP, Oracle, IBM, and Meta are all investing heavily in AI, hoping to avoid becoming the "Blackberry of the AI era."
• The Federal Reserve's policy changes are also impacting the tech sector.
• The technology sector is deflationary, allowing companies to achieve more with fewer resources.
• Despite job cuts in San Francisco, companies believe AI will help them grow and scale.
• While the market is not strong, the technology sector is a good long-term investment.
• Regulation is a headwind for AI, but regulators will likely play catch-up.
• Regulators will be most involved in mergers and acquisitions, making it difficult for large companies to acquire smaller ones.

Elon Musk and Donald Trump

• Elon Musk and Donald Trump are scheduled to have an interview on X, their first public interaction since Musk endorsed Trump.
• The interview is expected to cover topics such as immigration, social issues, DEI, trans rights, and the economy.
• Elon Musk believes that Donald Trump's return to the White House could have a positive long-term impact on Tesla, despite a potential short-term negative impact.
• Musk and Trump share common ground on issues such as cryptocurrency and space exploration.
• Trump's potential return to Twitter, now known as X, could be a side effect of the interview.
• Trump's views on electric vehicles and charging infrastructure are likely to be discussed, as he has previously expressed interest in the topic.

Electric Vehicle Industry

• The industry is moving towards electrification, with the total cost of owning an electric vehicle now lower than gasoline or diesel vehicles.
• Despite a recent slowdown in the market, major companies like Pepsi, FedEx, UPS, and Walmart are planning multi-year rollouts of electric trucks and medium-duty vehicles.
• The Biden administration's infrastructure bill has had a significant impact on the electric vehicle industry, with investments in electric school buses and public charging stations.
• The speaker believes that continued public investment and regulations are crucial for the growth of the EV industry.
• There is a risk that the political climate could negatively impact the EV industry, as there is a potential for the unwinding of regulations and public investments.

Business and Finance News

• Rewrite, a Chinese self-driving automotive company, is seeking $440 million in a U.S. IPO, which would give it a market value of about $5 billion.
• RT Global has agreed to buy a major stake in Altice, a deal that would bolster the company's international expansion.
• Film studios have dropped their opposition to a California measure that would give actors more control over the use of their digital replicas, voices, and likenesses.
• Disney has announced sequels to several of its films, following the success of "Inside Out" and "Deadpool."

Susan Wojcicki's Legacy

• Susan Wojcicki, a prominent figure in the technology industry, has passed away at the age of 56 after a battle with cancer.
• Susan Wojcicki was a key figure in the early days of Google, lending her garage to Larry Page and Sergey Brin to start the company.
• She was a leader in the company, responsible for building out its core advertising business.
• Wojcicki was brought over to YouTube in 2014 and became CEO.
• She focused on spotlighting creators and influencers, which helped to establish YouTube as a platform for online stars.
• Wojcicki also dealt with brand safety issues that arose from the platform's popularity.
• Under her leadership, YouTube became a dominant advertising platform.
• She made the decision to drop YouTube's plans to compete with Netflix and Amazon Prime.
• Wojcicki's legacy includes turning YouTube into a profitable business and a key pillar of Google's growth.
• She was a role model for women in technology.
• Susan Wojcicki, former CEO of YouTube, is credited with establishing maternity leave at Google.
• Wojcicki's public persona as a mother is seen as a strength of her leadership.
• Wojcicki's decision to maintain a lower public profile is contrasted with the high profiles of Sheryl Sandberg and Marissa Mayer.
• Wojcicki's lower profile is suggested as a reason why YouTube has avoided some of the criticism faced by other social media platforms.

Tech Market Update

• The discussion then shifts to the tech market, with Meta dragging the index lower.
• The Japanese yen is weaker against the dollar, and Bitcoin is down 8%.
• Nvidia is leading the Nasdaq 100 higher, while Intel is down 0.8% after postponing a key event.
• Intel's recent earnings report and cost-cutting measures have led to negativity surrounding the company.
• Intel's conferences used to set the agenda for the industry, but investors are now looking for new developments from the company.
• Intel is facing challenges in the AI market, particularly in the data center market, where NVIDIA is dominating.
• Intel is planning to hold smaller events to try and regain attention and showcase its products.

Apple's Upcoming iPhone Models

• Apple is expected to release the iPhone 16, which is predicted to maintain stable sales but not bring significant innovation.
• The iPhone 16 will feature minor changes, including a new button on the Pro models that allows for autofocus and picture taking.
• Apple will also release a new, slimmer iPhone 17 model to replace the iPhone 16 Plus, as well as a new lower-end iPhone SE to boost sales in emerging markets.
• The upcoming iPhone models will all support Apple Intelligence, but it is not expected to significantly boost sales immediately.

IPO Market

• The IPO market is open, but the volume of IPOs has dried up.
• Companies that have gone public recently have performed well, but the volume of IPOs has decreased.
• Companies that went public in the past raised significantly less capital than companies that went public in recent years.
• Companies that have raised hundreds of millions of dollars in private funding may not need to go public, as they have sufficient cash and have hit their performance targets.
• Some companies may go public at a lower valuation than they would have in 2020 or 2021.
• Companies that have not performed well may not be able to go public.
• Companies may go public to provide liquidity for employees and to benefit from the rigor of being a publicly traded company.
• The process of going public has become more expensive and time-consuming, leading companies to wait until they are larger.
• Companies with revenues under $5 billion are finding it difficult to attract investors in the public market.
• The private market is increasingly supporting companies later in their life cycle, providing liquidity through secondary markets.
• A company with $300 million in revenue and 60% growth recently completed a secondary offering instead of going public, opting to wait until they are larger.
• The IPO window is impacted by market volatility, particularly in the lead-up to elections.
• The speaker believes that Bytedance will eventually go public, but it will likely happen in Asia, not the US.
• The speaker believes that Bytedance's US business is a small part of its overall business and that losing it might actually accelerate their IPO timeline.

TikTok and the Crypto Market

• TikTok is a global business that is similar to Nike.
• Facebook and Snapchat are lobbying to have TikTok shut down.
• Crypto startups raised $2.7 billion in the second quarter of the year.
• Bitcoin fell 13% in the second quarter.

Expedia's Second-Quarter Results

• Expedia posted better-than-expected second-quarter results.
• Expedia downgraded its expectations for the rest of the year due to softening travel demand.
• Expedia CEO Ariane Gorin stated that the company saw strong growth in its consumer business and P2P segment.
• Expedia is keeping an eye on the third quarter due to softening air ticket and car rental prices.
• Events like the Euro Football Summer Tournament and the Olympics are driving travel demand.
• Taylor Swift's concert tour is also driving travel demand.
• Expedia is optimistic about the long-term travel outlook, despite current economic challenges.
• Expedia is using data and technology to personalize travel recommendations for customers.
• Expedia launched a loyalty program in the U.S. and U.K. that allows travelers to earn and redeem rewards across Expedia, Hotels.com, and VRBO.
• Expedia is evaluating how to best implement its loyalty program in other countries, where it may have only one dominant brand.
• Expedia's CEO, Ariane Gorin, believes that the company's strong brands and value propositions will help it navigate the current economic climate.
• Ariane Gorin, CEO of Expedia, emphasizes the importance of understanding customer needs and tailoring products and services accordingly.
• Gorin identifies the potential headwind of decreasing prices for the travel industry, but views it as a positive development as it makes travel more affordable.
• The segment concludes with a reminder to listen to the Bloomberg Technology podcast on various platforms.