caroline: from bloomberg's world headquarters in new york, i am caroline hyde. romaine: let's look at where financial markets ended the day. the s&p 500 closes at a record high. caroline: we are traveling a lot today. around the world. first, from wall street, silicon valley megan tech stocks help to carry the s&p 500 to record highs.

tesla the first company to report as we kick off a huge week of earnings. what the company is doing in terms of his business in china. that is where we will go next, beijing, the crackdown rocking investors. questions of how far xi jinping is willing to go. finally, we go to europe, but in a different time and place. we speak to patrick wyman on what we can learn going back to the 15th century. before we can figure out the history, let's talk about the markets right here, right now, today. joe: i am hoping we can get some good stock pick lessons from europe in the 1500s. the last couple of days, chinese stocks getting clobbered. tesla still up about half a percent.

moving a lot lately, chinese stocks. it seems like every sector coming under regulatory scrutiny. of course, we saw with the fintech, more recently with online education. romaine: absolutely. we saw swan, the big food delivery company. really, there is this idea of a broader cloud here, beijing and xi jinping really consolidating power, that any company doing business with china is doing it in the way the government wanted to be done. joe: katie, have you ever seen anything like this, where it feels like here in the u.s., we will to an investigation and 10 years later, we will give you a $10 million buy . china going sector by sector and seriously cutting down the power

of these companies. katie: it is pretty wild. i think a lot of people were surprised to see them cracking down on the education sector. this is one crackdown in a series of crackdowns. just a widespread nature i think is really spooking investors. what is interesting to me is it is not showing up in u.s. tech stocks yet. a lot of those multinationals have a lot of exposure to china. joe: there is that chart. caroline: phenomenal in terms of the overall selling pressure. we had alicia levine earlier, saying you can analyze it. but it feels sort of like that liquidity from the u.s. is there or not. katie: that does not seem to be the concern right now, which is interesting because china has been trying to make itself more investable for foreign investors, especially in the

bond market. when i speak to investors and analysts, how do you feel confident putting your money in china right now? the only answer, you really have to have a long-term horizon. for the next few months, even the next few years, that does not seem that possible. romaine: i want to bring it back to the u.s. a lot of action in the treasury market. we saw the real yield go down to 1.13, which i would think is not good. katie: that will actually bring us global again. it is a record low. if you look at the rest of the week, we have the fed, gdp, a case of 8.5% growth. if you look worldwide, you have the u.s. where half of the population is vaccinated. that is not the case globally. now you have the delta variant.

all of that is being priced in u.s. bonds. it seems like they moved away from thinking about inflation, or worrying about it at least. joe: so far, there have been no signs. container ships keep going up and to the right. rents keep going up and to the right. there does seem to be this tension. but it is not like the inflation data is turning. katie: i want to get an updated version of transitory. the bond market is not that worried about inflation. you can make that case about the stock market. but if you look at what companies are saying on earnings calls, consumer confidence, there is a lot of worrying about inflation. this real divide where the market is not that worried about corporations really are. caroline: the 14% move in piquant, being a hedge against inflation. katie: if i wanted to make a

macro argument, i would point to the real yield. i don't think that is happening. you had the amazon news, also an incredible short squeeze. almost 900 million worth of crypto shorts were liquidated today. romaine: did you do that annotation with the green arrow? katie: i can't claim credit for that one. romaine: coming up, we will talk more about that crackdown in china. we'll bring you the latest on the plunge in u.s.-chinese stocks. an update in the stalemate on u.s.-chinese relations. this is bloomberg. ♪ . ♪

romaine: we just touched on china investing with katie grayfield. we need to dig a little deeper. over the past five months, you have seen almost $800 billion in value erased off of u.s.-listed chinese stocks. some would say that is the end of the world. others would say dip buying opportunities. joe: there are a bunch of buying opportunities. we have seen the past two days, that line in white. the golden dragon index down a lot. but this has been underperforming u.s. markets for quite some time, even going into the latest crackdown. caroline: especially when you are looking at superfund managers such as kathy would, saying to get out. joe: for more, let's welcome

claire valentine. kathy would, what kind of exposure did she have to china and is she totally out now? >> for two of her funds, they had as much as a percent or 9% this year. now, barely any chinese equity exposure. she is very involved in innovation and growth companies. she has very much trims that. romaine: so she has trimmed that. it is not really unheard-of. joe kind of alluded to this idea that a lot of these industries have been under pressure for a while. february, the last time we have seen a real peak and some of these names. are some of these bigger investors, are they looking at china and really saying, this time is different and we have to reconsider being investors?

>> a lot of what i am hearing talking with fund managers, the chinese government has increasingly crackdown. it is, to say chinese equities will start performing better. caroline: of course, cathie wood is renowned for support of elon musk and tesla. people have been worried about the regulatory risks of that particular stock. at what point do we start worrying about u.s. companies? >> it is a great question because everything is so interconnected. in terms of cathie, so far, she is very bullish on tesla. the fact that she was taking these positions in chinese equities. the fact that she is trimming her bets in china, that is a

pretty good signal. joe: obviously part of the reason people keep getting earned on this trade, the stocks look pretty cheap, then you throw in the big narrative that china is still a relatively poor country, a billion consumers, cheap stocks, it must go up long term. is anyone looking at, yes, the headlines are awful now, no, we have not seen any crackdowns like this, but it is too cheap to pass up? >> it is kind of like you said, we keep seeing these dips and it keeps dipping lower. the key aspect, the stock rebounds. i think the case is getting harder to make. romaine: we are still talking about the second largest economy out there, which could become the world's largest economy. a reason why u.s. companies are

attracted to it. at the end of the day, these fund managers, these companies but they are in it to make any. if china provides an economy that allows them to do that, i would think that money flow would still be there. >> concerns in the u.s. about as we have reached -- about if we have reached peak economic growth. in china, we have seen some of those numbers start to turnover. i think it is an open question about, is it a regulatory crackdown or are we passed the economic growth? caroline: it is sort of interesting in terms of the flows you do see, we keep worrying about sector after sector, the education sector, big tech. these sectors are in some way i threat to the power. are there sectors that the state is sort of embracing, like the infrastructure of technology,

chipmaking and the like? >> i was just looking at one of the etf's. it is actually seeing inflows right now. some analysts i talked to said that that fund has a lot of large-cap chinese tech holding. tencent holding, then alibaba. in the case of this crackdown, maybe those can hold up better. caroline: in terms of price action. claire valentine, all things for today china and meanwhile, china lashed out at u.s. policies. saying their relationship is in a stalemate. let's talk policy for china. >> i am standing outside the number one resort in eastern china. that is where top diplomats from

the u.s. and china met to discuss relations between the two countries. these relations in recent weeks and months have been to -- have been deteriorating further. on the u.s. side, issues ranging from human rights in xinjiang hong kong, the south china sea and taiwan. the u.s. side stressed to china, u.s. collaboration with allies is not meant to be seen as a u.s.-china threat. on the other hand, china pushed back saying it does not accept american interference in what it calls domestic affairs and will not be lectured to by the u.s. the next big question, will this meeting lead to another meeting of president xi asian and president joe biden? maybe another set of meetings

between the summit of the u.s. and china possibly later in the year. for that to happen, we need more talks. given that these talks took so much effort to arrange, it does not augur well for smooth communication between the two superpowers. romaine: that was colin murphy, given us that report. we are going to pivot coming up to eight slightly different topic. we are talking about -- the rise of the east. there was a time when it was the rise of the west. there was a period between the 1490's and 1530's. patrick wyman has a new book. we will speak with him after the break. ♪

joe: the four decades between

1490 and 1530 saw the development of everything from printing, mass media, globalization. according to our next guest, those years marked a decisive turning point of european history. patrick wyman, author of "the verge." he joins us with more. it's a you could give us a stock tip you learned from the 14 90's or 1500, or you could tell us what it was about that period specifically that we could speak of and find useful for understanding how economic development happens. patrick: i think the biggest thing is to focus on the mechanisms that enable technological change as opposed to innovation itself. gunpowder was not new. the printing press was not exactly new. voyages of exploration had been leaving western europe for several decades by this point. but over the course of four

decades, there is a remarkable shift in scale. i think at the root of that were the mechanisms that allowed people to pour money into these countries. they were all scalable. romaine: there was also a consolidation of that capital into certain industries. i am curious if you can explain that consolidation and more importantly if there are any parallels we could draw to today's economy? patrick: i think the biggest parallel is the intense disruption that went along with the capital in these industries. almost overnight, exploration would be something that would disrupt the entire economy, building an overseas empire to building small states on the fringes. the application of larger funds meant that armies, instead of being 5000 door 10,000 men come or going to be 50,000 or 100,000, or that -- they could

keep 100,000 at a specific time. you could go from having few printing presses to tons of printing presses. when you have companies like uber, just purely by having money pumped into them over years and years, very quickly you can get enormous changes to establish industries and structures. caroline: you talked about parallels before. one of them you say is the lack of concern with consequences of it. you have been talking about mercenaries, bloodshed. what are the elements that you see nowadays? patrick: i think there is a strong emphasis on short-term right now. i think that is one of the does -- one of the defining features of our moment. natalie quarter to quarter but year-to-year. when we think in those terms,

what we think about is getting an immediate return on our investment, we are not concerned about what kind of presidents we are laying down, what kind of incentives we are laying into the groundwork of the world we have. i think that is the biggest similarity. the people who funded voyages of exploration wanted to get their money back. the way that those early explorers often went about doing that was by enslaving the people they found there. they knew that people were a profit center. when you fast forward several hundred years, what you end up with is is to shoot a lysed systems of -- what you end up with is institutionalized systems of chattel slavery. in the beginning, playing many centuries down the road. we should look hard at the structures and incentives of our own world and think about what in a few centuries this could lead us to? joe: a lot of modern technological disruptions, new

forms of corporation, whether we are talking about uber, facebook or whatever, they have really not been around very long. and yet it feels like this is par for the course. what does history say about the connection between periods of rapid change to the economy in investment structure and, as you talk about, disruption of societal fabric? patrick: not all periods of history are created equal. you can have periods of time where the structures are pretty stable. the institutions are solid. then you can have other periods where things change quickly. we always want to isolate a variable, think about how we are going to track patterns over time. history does not happen like that. it is not single variables. it is collections of things. there are moods in the air. people may be involved in

multiple different processes. these periods of time, we can think of them as critical junctures. in a period of upheaval, things can change dramatically over a few years. i think the second world war we think of one, but i think there is a good chance that post great recession, we are in one now. romaine: is it necessitated by military conflict or some sort of great conflict that causes death and pain? is that the only way to sort of make that leap forward? patrick: i don't think that is the only way to make that leap forward. but what we have all these sources of social stress, skyrocketing inequality, people being concerned about those things, most of all a gap between what people think they are owed and what they are getting. when you have high levels of education but not enough jobs to support that. high levels of debt, not a

chance of getting the kind of lifestyle people think they are owed or deserved. i think that cap between expectation and reality is dangerous today and was at the start of the 16th century too. caroline: patrick wyman, author of "the verge," also, a podcast, "tides of history" and "fall of rome." speaking of fall, only up 10%. joe: we had a whole conversation and we did not get patrick's take on crypto. fiat is not going anywhere. i want to see some of those charts that shows safe haven bond yields going back to the 1500s. you see those every once in a while. romaine: i think i follow

different people. [laughter] caroline: that does it for "what'd you miss?" joe: "bloomberg technology" is next. romaine: this is bloomberg. ♪ and there you have it -

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>> from the heart of where innovation, money, and power collide, in silicon valley and beyond, this is "bloomberg technology" with emily chang. emily: coming up in the next hour, tesla shares up in late trading after reporting second-quarter results. strong demand for its electric cars continuing as elon musk's compy