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.
