Musk's New Efficiency Role, Bitcoin Passes $90K | Bloomberg Technology

Market Update and Political Transitions

• Bitcoin has reached a record high of over $92,000, a 30% increase since the U.S. election results were announced last week (1m3s).
• The "Trump trade" is back on, with Tesla's stock up over 30% since election day, and Elon Musk is set to meet with President-elect Trump in Washington D.C. (1m21s).
• President-elect Trump is scheduled to meet with President Biden at the White House, a meeting that was not extended by Trump to Biden in 2020, and is a significant part of the transition process (1m51s).
• The meeting between Trump and Biden is expected to be a peaceful transition of power, with the administration pledging to cooperate, but the subject matter of the meeting has not been disclosed (2m11s).

Elon Musk's New Role and Government Efficiency

• Elon Musk will be meeting with House Republicans later, and has been assigned a role in the Department of Government Efficiency, along with Vivek Ramaswamy, to help cut waste and improve efficiency (3m22s).
• Musk and Ramaswamy will not have the power to exercise spending cuts, but will make recommendations to Congress, which will ultimately decide on budgets and appropriations (3m52s).
• The appointment underscores the close relationship between Trump and Musk, who is now the richest man in the world (4m14s).
• Elon Musk's new role in efficiency cuts has raised questions about whether he can successfully apply his expertise in stripping out costs and improving efficiency in the corporate world to the government sector, with a goal of cutting $2 trillion in costs (4m46s).
• Experts note that there is a vast difference between how government agencies operate and how corporate entities are run, with differences in employee contracts, pay, and performance metrics, as well as the type of services or products provided (5m14s).
• The Department of Government Efficiency is not a traditional department, but rather an entity that operates outside of government, with many questions surrounding its structure and how it will function (5m48s).
• There are concerns about whether Musk will continue as CEO of Tesla while taking on this new role, and how he will target areas for efficiency cuts from outside of government (5m58s).
• The initiative raises questions about the potential for conflicts of interest, with Musk potentially pulling in people from his own ventures and entities to work on the effort (6m21s).
• Musk has previously complained about the regulatory environment, stating that he needs the "shackles of regulation" removed in order to achieve his goals, such as sending humans to Mars (6m48s).
• However, critics argue that removing regulations could harm people who do not have the same level of insulation from life's inconveniences as Musk, who is the world's richest man (7m12s).
• The goal of cutting $2 trillion in costs is seen as a difficult target to reach, as it would require cutting into benefits considered sacred, such as Medicare, Social Security, and veterans' aid (7m50s).
• Instead, the goal is seen as a "direction of travel" or a notional target, with the actual target potentially being lower, such as $2 trillion over 10 years (8m22s).

Market News and Tech Updates

• In other news, Tesla's stock is down 1% after the National Highway Traffic Safety Administration announced a sixth recall for the Cybertruck in the last 12 months (8m45s).
• Spotify's stock is up more than 9% after the company reported earnings, with 252 million paying subscribers and a focus on cost-cutting and improving margins (9m19s).
• DirectTV is determining its planned acquisition of Dish Network in 10 days if bondholders don't agree to a debt exchange, while Charter announces a plan to buy Liberty Broadband (10m17s).
• With the lifting of regulations and restrictions, M&A is expected to become more fervent in the United States, benefiting companies involved in M&A, asset managers, and investment banks (10m52s).
• Financials, particularly companies like KKR, BlackRock, and AllianceBernstein, are expected to do well due to the lifting of regulations and restrictions (11m4s).
• The technology trade is seeing risk-on perpetuate, with areas like crypto and Tesla experiencing significant gains since the election results (11m28s).
• The MAG7, system software, and semiconductor areas are expected to continue leading the pack, while cybersecurity and other areas may also gain prominence (11m48s).
• Companies like The GEO Group, CoreCivic, and other colonies in the defense area, especially those related to security, are expected to do fairly well (12m11s).
• Tech investors are at risk of a surprise going forward, but an overweight recommendation on tech is maintained due to its growth potential in calendar years 2024, 2025, and 2026 (12m38s).
• Near-term, tech looks pricey, trading near a 65% premium to its longer-term forward PE, compared to the 40% premium in the market itself (12m58s).
• Elon Musk's potential role in the government may keep Tesla in the news, but a hold recommendation on the company is maintained (13m27s).
• NVIDIA's Jensen Huang announced a huge partnership with SoftBank to build an AI infrastructure for Japan, including a supercomputer build-out with new Blackwell chips (14m0s).
• Apple is set to announce a new command center wall-mounted display to control appliances, handle video, and use AI to navigate apps, in an effort to catch up with Alphabet and Amazon in the smart home space (14m32s).
• Just Eat will sell Grubhub for an enterprise value of $650 million, with Wonder paying $142 million in cash and taking on $500 million in Grubhub debt, with the deal expected to be completed during the first quarter of 2025 (14m57s).

Trump-Biden Meeting and AI Development Challenges

• A meeting between President-elect Trump and President Biden is currently taking place at the White House, with Trump appreciating the smooth transition process (15m15s).
• The meeting is a historic moment, as it did not occur during the previous transition in 2020, but is happening in 2024 (17m59s).
• The discussion then shifts to artificial intelligence, with companies like OpenAI, Google, and Anthropic facing roadblocks and diminishing returns from their costly efforts to develop new models (18m26s).
• The main challenge for these companies is that bigger is not always better, and data is increasingly becoming an issue, with a need for enough and the right kind of data (19m10s).
• Rachel Metz mentions that there are problems and solutions, and this is not the end of the road for AI development, with companies expected to concentrate on post-training processes to fine-tune their models (19m50s).
• OpenAI has released a model called O1 that uses reasoning and compute near the end of the process, taking a prompt from a user and doing calculations before giving results (20m11s).
• Other companies, such as Anthropic and Google, are also working on similar kinds of agents, with Sam Altman discussing the need for more synthetic data and clear information about limitations (20m33s).

DeepL's New Language Translation Products

• DeepL has been facilitating businesses to mitigate language barriers with text translation since 2017, helping customers with tasks such as sending emails or translating documents in different languages (21m31s).
• The company is now focusing on spoken language, aiming to help people who may not understand the language being spoken in meetings or conversations, and to include them in the conversation (21m59s).
• DeepL is releasing two new products: one that provides translate captions during virtual meetings, and another that targets one-on-one conversations happening in different languages (21m9s).
• The products apply the quality of textual translation that DeepL is known for, bringing security and high-quality voice translation to a broad range of industries (22m55s).
• DeepL's edge is its security, which is particularly important for highly regulated industries such as finance and law (23m10s).
• Spoken language is inherently more complicated than written language, with unclear sentences and difficulty in finding commas or stops, making it challenging to train large language models (23m39s).
• Despite the challenges, DeepL's technology is already bringing a lot of value to customers' daily lives, and the company is confident that it will continue to develop and improve over the next few years (24m5s).

Elon Musk's Influence and Government Efficiency Deep Dive

• Elon Musk's influence on the next White House is an important conversation topic, and his role in shaping the future of technology and politics will be closely watched (24m24s).
• President Trump has met with President-elect Biden at the White House, with both leaders making brief statements and pledging a smooth transition of power (25m16s).
• A meeting took place at the White House between President Biden and President-elect Trump, marking a significant event as it did not happen in 2020 when Trump contested the election victory and did not extend an invitation to Biden (25m52s).
• Elon Musk is set to meet with House Republicans and Donald Trump, and although he won't have a formal role in the government from a cabinet perspective, he will be taking a leadership role, including heading the Department of Government Efficiency (26m50s).
• Musk's role in the Department of Government Efficiency is expected to involve shaking things up and disrupting government agencies, with Vivek Ramaswamy presumably consulting with the President (27m20s).
• The goal of the Department of Government Efficiency is to find areas where efficiency can be improved, potentially by cutting unnecessary costs, but it's noted that taking an axe to a government agency is different from cutting jobs in the private sector (27m49s).
• Elon Musk's past actions, such as his acquisition of Twitter (now known as X), are being compared to his potential approach to the Department of Government Efficiency, where he dramatically cut the workforce and eliminated entire sections, including PR and content moderation (28m11s).
• The result of Musk's actions at Twitter (X) has been a company that has lost tremendous value, is valued 80% less than it used to be, and has become a very different business that is not operating well (29m5s).
• Questions are being raised about whether Musk's approach to the Department of Government Efficiency will have a similar impact on the federal government (29m26s).
• The Trump camp has released a statement saying that the Department of Government Efficiency will work outside of government, but it's unclear whether Musk's role will be advisory or formal, and whether he can stay at the helm of Tesla (29m33s).
• Additionally, Tesla has issued a recall on the Cybertruck, the sixth in the last 12 months (29m45s).
• Elon Musk's deep care and passion for his products are crucial for their success, and it is uncertain whether he can effectively manage multiple companies and work with the government simultaneously (30m19s).
• Tesla shareholders might demand Musk's return to the helm if problems emerge, especially considering his current involvement with the government and calls with Zelenskyy (30m59s).

Cryptocurrency, Market Trends, and Tech Investments

• Bitcoin's price has surpassed $90,000, with some cryptocurrencies like Solana rising significantly, possibly due to pent-up demand and the expectation of a crypto-friendly administration in the US (32m5s).
• The rise of meme coins, such as Dogecoin, which is up 10% on the day, might be driven by speculation and momentum, rather than fundamentals (32m33s).
• Future Perfect Ventures does not hold any Dogecoin, but acknowledges its current momentum, which might be partly due to Elon Musk's endorsement (32m47s).
• Tencent, a Chinese internet giant, reported revenue growth for the third quarter, with its domestic gaming business being a bright spot, growing revenue by 40% year-over-year (33m59s).
• However, there are concerns about consumer sentiment in China, and Tencent's fintech and payment business is a worrying area (34m11s).
• The company plans to push out new content during the Lunar New Year period to drive more user engagement (34m42s).
• A company's growth has been slowing down due to a weaker macroenvironment and consumer spending, with revenue growth moderating to 2% year-over-year, the slowest pace since the COVID-19 lockdown days of 2022 (35m7s).
• Swiggy, an Indian food delivery platform, made a stock market debut in India with a 17% gain, resulting in a $2 billion gain from its investment (35m27s).
• The listing of Swiggy in India is a significant moment for the markets and the technology sector in India, as it shows the health of the Indian markets and the strength of the economy (35m43s).
• The listing of domestic companies in India is important for the country's economy, as it provides further health to the market and shows the trajectory of growth (36m54s).
• A long-term investor's goal is to find exceptional companies and replicate successful investments, such as the early bet on Tencent, which is now the biggest giant in China (37m31s).
• The investor looks for opportunities in growth markets around the world, including India, Brazil, and Europe, and seeks growth and exceptional founders and companies wherever they are (38m14s).
• The investor is interested in fintech, food delivery, and marketplaces, as these areas have a lot of growth potential, and is looking to find opportunities that can connect people with services and offerings they need (38m57s).
• The investor believes that food delivery is broader than just food, and can be a way to take a high-frequency and high-engagement offering and broaden it to a whole suite of services and offerings (39m4s).
• There are over 100 positions available to enhance the ecosystem and the ecosystem could also enhance those positions (39m37s).
• The risk profile of some technology names and geography like India and China may have changed following the outcome of the U.S. election, but it's too early to tell (39m54s).
• The administration's cabinet positions have started to be floated, and the announcement with Moscow and Vivek Ramaswamy was made overnight, but it's unclear how this will affect markets and risk profiles (40m10s).
• The focus is on ensuring that exceptional companies perform strongly under their watch, and finding those companies at the right valuation (40m24s).
• Valuations in the U.S. are expensive, not just in the public domain but also in the private domain, particularly with respect to AI opportunities (40m46s).
• Better risk-reward opportunities are seen outside of the U.S., in markets such as Europe and India, despite elevated foundations in India (40m58s).

Brain Implants, AMD Layoffs, and Show Wrap-up

• A company has filed for an IPO in the United States, with the number of shares to be offered and the price range yet to be determined (41m28s).
• Brain implants are being explored as a potential way to restore sight to the blind, with a growing number of tech stocks deploying resources into this field (42m7s).
• Companies are working on various strategies, including putting electrodes in the retina rather than the brain, which has shown promising results in experiments (43m37s).
• One company, run by the former president of Neural Link, has unveiled promising data based on an experiment with a few dozen people who had implants in their retina and were able to focus on letters and see larger letters (43m47s).
• Other companies are working on techniques that might help people who are completely blind (44m13s).
• Breakthroughs in technology seem like small steps, such as enabling people to see flashes of light rather than fully formed images, but these advancements are promising and take place one step at a time (44m21s).
• AMD, the chipmaker, is cutting about 4% of its workforce, which is approximately 1000 employees, mainly focusing on sales and marketing positions, due to the tough market for AI accelerators (44m51s).
• AMD's shares are down 2%, and the company has around 26,000 staff, with the headcount reduction aiming to trim some areas, including sales and marketing (44m43s).
• The show is wrapping up, and the latest developments in brain technology, as well as other news, will be discussed further in the Bloomberg Technology podcast, available on Apple, Spotify, and all Bloomberg platforms (45m48s).
• Elon Musk is reportedly in Washington, D.C. and may likely meet with House Republicans alongside President-elect Trump, although the details are not confirmed (45m38s).