>> from the heart of where

innovation, money, and power collide, in silicon valley and yonder, this is "bloomberg technology" with emily chang. emily: i am emily chang in san francisco, this is "bloomberg technology." and wild day to end a wild week, the s&p on the brink of a bear market, bounces back to a dramatically session rally. still on its longest losing streak in more than 20 years. we try to make sense of the madness. plus, panic in public and private markets. we will explore how startups are getting creative as they try to stay afloat. and that coin dipping below $29,000. how long does the crypto crunch keep up and is there hope on the horizon? we will discuss. all that in a moment. first, it looks like we would

end the day in bear market territory, but a late afternoon bounce back saved the day. is it only a matter of time now? ed ludlow is here to walk through the movers and who is feeling the most pain. ed: you get to friday afternoon and you see this on the screen and you think it has been a nothing kind of day. not so, volatility across volatility markets. there was this late comeback back on the s&p 500, we escaped the bear market label. but you look at the nasdaq 100, still softer by 3/10 of 1%. tech at its lowest level since november 2020. s&p also lower, the seventh consecutive weekly decline. bitcoin has been interesting, it held its own earlier in friday's session, about $30,000 a token, but fell in the last hours of trading. now about $29,000 a token.

the volatility in the equity market was much more chill in the bond markets. you look at the u.s. 10 year yield, 2.78%. we are down five basis points but not one of the days where we saw a big 12 or 14 basis point jump or decline. much more calm bond market even though we saw a move into haven assets, risk off sentiment. you see the dollar gaining strength as well. ultimately this is the story, come with me to my terminal. a bear market territory is where we are falling, 20% on an index or asset, from the most recent high. we were at that level through much of friday's session, but the late come back and sees us down 18.6% from the january 3 high on the s&p 500. the question really is the direction of travel from this point. do we continue to see pressure on equity markets or turn a corner into next week? we are hoping to turn a quarter because i will be honest, it has been a stressful week, i'm exhausted, you are exhausted,

and we could all do with positivity. lastly, specific movers to talk about. apple up to 10th of 1% in friday's session but a real drag on the index through the week. tesla has lost $10 billion of market cap the last five days or so. it has been a real drag on the index. on the one hand we are think about the fed come on the one hand inflation, looking about the outlook for higher rates, but we still have supply chain problems as lockdowns in china and we are focused on the impact on u.s. corporates. earnings disappoint, a big plunge on that. a big drag on the s&p 500. the story there is a supply chain issues. i'm looking at ross stores, down 22%. the other big story of the week, retail, the consumer, mixed estimates, the cut forecast, the tested outlook. the world is changing and there is a lot to consider. emily: interesting indeed on the back of those target results. we are seeing tech stocks down

across the board. i want to talk about this and more with our guests. he is with the firm behind the compound etf. also joined by a managing director that covers some of the biggest names. how much farther do we have to go before we hit bottom? >> that was a pretty negative set up. [laughter] let's see we can find a silver lining. the one thing that has been particularly unique to us about this selloff has been how uniform it has been across some any different technology companies, from e-commerce to media, to software, but that doesn't necessarily reveal what's been happening under the surface. in retail and e-commerce and media, you've seen subscriptions canceled, spending pullback, margins compressed, supply chain issues you've been talking about. one area that stuck out to us is cloud computing.

you take a business like amazon, down 37% year-to-date, that has been an enormous amount of wealth destruction. but because aws has still perform so well, amazon's price is down about 50% or 62 on evaluation right -- evaluation they says. what we've been telling investors is you've been given an opportunity to dig companies that are burning cash because you are getting opportunities to buy great businesses like aws or service now that have been growing in spite of what the market has been saying. emily: who are the losers? robert: well, you certainly have the carvanas, companies that have extremely marketing driven growth stories that are very expensive. we talked a lot about the ridesharing company's last time we were together. peloton falls into this group.

any business where you see them spending more of their gross profit on marketing dollars than any other op ex, that usually a red flag and those tend to be the companies, the businesses that right now are struggling the most it's only getting more and more extensive to acquire customers when you get into the demand, evaporating clients. emily: dan, you cover some of the biggest names in focus. for example, apple, which is facing some challenges that are now facing companies across the board. how do you think apple weathers this? does apple keep innovating? is it a safe spot? dan: it continues to be a rock of gibraltar stock in a business market.

it is holding up much better than expected. as your other guests talked about, everything is going to get thrown out in this risk off environment and that creates the opportunities. look at apple, we think the services business alone is worth over $1 trillion. microsoft another example. it will be indiscriminate selling and that is the opportunity in terms of how we are handling clients emily: -- clients. emily: robert, does apple stand out as withstanding the storm? robert: it is fine, a safe place to put money. probably not the place where you will get devastatingly awesome investment returns the next 10 years. that is also exciting about a market like this, if you can look past the fundamentals of some of the businesses, investors are reevaluating and saying each pieces of technology are actually going to matter the most over the next 10 years?

everything was focused around the iphone and app store the last 10 years. those are likely to continue to remain important, but they will look much more mature. you see that in some of the regulatory dealings we are having to shake out with businesses like apple right now. there are opportunities to look deeper. you did a great interview the other night with roadblocks. we think that could be one of the most important businesses. it is tracking to be bigger than nintendo. how many assets exist in the market that a public investor can participate in to live with that type of household recognition? whether it is a businesslike roblox, or cloud computer like aws, these are some of the technologies we think will matter most this decade. emily: you can check out that interview with the ceo of roblox

on studio 1.0. dan, i want you to react a little bit. his apple may a little too safe in this and varmint? dan: split adjustment, they say the same thing about it at $50 and $100. apple continues to be so much more beyond i think how investors appreciate it. it is one million iphones 25% have not upgraded the last years could -- years. like robert talked about, i think in these environments, you have to look at software, cybersecurity, and what we believe will be on the stalwart side. we believe apple will be one of them. in my opinion, we will see a pre-trillion -- $3 trillion

market cap. emily: i can't let you go without talking about tesla, no longer the top dog in cathie wood's flagship fund. facing different forces based on the elon musk and twitter deal p what you think -- twitter deal. what will the story for tesla b and the uncertainty about whether the ceo will buy twitter? robert: in terms of china and the zero covid situation, that has been a huge headwind. when it comes to twitter, it has become a full on circus show that has almost turned into the twilight zone. you look at elon musk, he opened pandora's box at a time when investors needed handholding. it continues to be uncertainty. not just on twitter in terms of tesla stock perspective, but the

rest of the situation. he needs to give comfort to investors at a time when risk assets are getting thrown out the window. emily: what is your take on the tesla/twitter situation and that they are intricately entwined? robert: do i have to have a take? emily: everybody has to have a take. [laughter] robert: i actually think no matter what happens, whether elon musk buys twitter or not, i think it will turn out to be a better company three or four years down the road as a result of this moment of turmoil. it is forcing the company to reevaluate its business model, realizing they can get away with charging their biggest accounts for tweeting, and they should be. we are on twitter a ton, we would pay but they don't charge us anything. there is a way to unlock traditional social media monetization mechanisms. they haven't taken advantage of,

no matter who was running the company. we now think that is more likely to happen. we are kind of wondering, twitter board, maybe you reopen the process -- why did you -- why did you not run the full process? why didn't you see if google wanted to take a swing? who knows, the regulators have not been quite as aggressive as people feared they might be. we think this saga is far from over and there is a wide range of dental outcomes for twitter. -- potential outcomes for twitter. tesla is still a car coming so it doesn't fall in the universe we follow closely. emily: i knew you would have a take. robert and dan, good to have you. we will see what next week holds. coming up, a warning to startups

trying to survive the market meltdown. my next guest says crowdfunding could be the answer. this is bloomberg. ♪

emily: belts tightening across the board and startups also feeling the pain, with valuations cut and layoffs underway. for more, i am joined by johnny price. we see what is happening in public markets, it is a lot more difficult to understand exactly what is happening in the private markets. what are you seeing? how much uncertainty and panic is there? johnny: there's a lot of

uncertainty. that is the right word. i think we are seeing less contraction, especially early stage. i think growth stage is contracting more in recent months. i think we are seeing less to date. mixed reactions from vcs and founders i'm talking to. but obviously i'm not sure if you saw, one company, the founders saying buckle up, rein in spending, get to default alive and profitability asap, it could be a rough few months and years ahead. emily: you've got that, you have other vcs sending out black swan memos. on the other hand, i saw this from an early stage investor, he tweeted, "unlike vcs predicting doom, i am bullish for early stages startups. this downturn and differs from 2000 and 2008. if you are a ceo, don't panic,

obsess about making something people want." what is your reaction? would you agree? jonny: i think you could argue that. i am a little more pessimistic maybe. i think it will be harder and harder for early stage founders to raise capital over the coming six months. emily: why? jonny: because there is less -- vcs will be tightening their belts. we will see valuations in the public market compress. i just think it will be harder for starting stage founders to raise. parts to 2008 we saw that and i think we will see it again in 2022. emily: we saw focus on some the called community rounds, different from venture capital funding and also typical crowdfunding, as i understand

it. can you explain what that means? jonny: absolutely. we allow anyone invest in startups they love. for 80 years, securities laws of this country, as you know, didn't allow ordinary americans to invest in startups. you had to be accredited credited to invest in early stage companies the jobs act of 2012 now allows everyone, not just accredited investors or rich people, to invest in startups they love. what we are trying to do at wefunder is popularize community rounds. it was called equity crowdfunding when it was rolled out. we don't love the term crowdfunding. we are trying to rebranded as a community around -- as a community round. the idea is founders can raise

up to $5 million per year from their customers, from their community, and alongside conventional investors, vcs and angels. mercury is a great example. recently they raised from and recent and others and then let customers invest on the same terms. the ceo has called the wefunder investors his favorite investors. he think that is a good thing to do for his revenue, puts more cash in the bank at a time that, as we've been talking about, it's not the worst thing in the world. generally a good thing to do for start up owners to be delighting customers by letting them invest. emily: give us idea how much money has actually been community raised. right now it seems to be the

exception and not the rule. doesn't have to scale up dramatically if the next to or or facebook or google is going to be community funded? jonny: absolutely. it is still a small percent of early-stage capital right now. community rounds are very small. it has been growing. in march of 2021, there were improvements to regulations. since then, we seen significant growth in the sector. the sector overall about 4x in 2021, and i think there was a break on the sector. i think 2022 will be countercyclical. we will see, you could have me back in a years time and we could see if that has been borne out.

if vc pulls back in 2022 like expects, i think more and more early-stage will be looking toward our investors to be a buffer and enable them to raise capital they would otherwise be struggling to. but to your point, is not a panacea. this is hopefully a silver lining on a day of dark clouds it is still a relatively small part of early-stage capital formation. you can only raise $5 million per year. but we are seeing positive trends. emily: another string that can be pulled. jonny price, thank you. coming up, we go to miami for a check on the crypto market. that is next. this is bloomberg. ♪

emily: bitcoin dropping below $29,000. what will the weekend hold as crypto continues to trade? i'm joined by mike from our miami bureau. talk about the factors at play. it seems that cryptocurrencies are so tightly correlated with what we are seeing in equities, which is the opposite of what any investors hoped they would do. mike: we are getting there, it will take a little time. right now it is significant that the stock market is going down, the fed is jawboning, it's got to reduce the ability for people to buy stock and reduce risk assets. crypto is a prime part of that. they went up the most and they have to come down. the way you started the significant -- the segment, the most significant is this weekend. markets are shut but bitcoin is

trading and that is what the market is turning to realize this is the world's most fluid global trading vehicle. that is starting to trickle in. i am sensing offers above and the start market. and bitcoin is down about 2% and nasdaq down about 4%. so bitcoin is outperforming even though it has higher volatility. emily: not all digital tokens are viewed equally. are there any winners? mike: bitcoin will be the biggest winner along with gold. gold up about 2% this week and bitcoin is the digital version of gold. the way i view gold is if you are not allocating some to bitcoin if you're a gold investor, you are missing out. the bottom line really happening in this space is the proliferation of crypto dollars. we heard about the algorithmic crypto dollar that broke down,

but on coin market cap now, the top four, bitcoin, a theory him -- ethereum, and to others. i think what we are seeing in the space is a better way to transact, crypto dollars. emily: we will be watching to see how wild the weekend is. mike with us in miami. i'm going to let you get started with your weekend. we will have more on the selloff and what it means for tech coming up next. this is bloomberg. ♪

emily: welcome back to "bloomberg technology." i want to get back to ed ludlow for more on the s&p 500 losing streak, the longest a couple of decades. ed: we were talking about how we ended flat on the s&p 500 there were volatility, your guest saying perhaps i'm a little dramatic, you know i love being a diva on a friday about the markets. but over the week, that's a lot of red on the screen. the s&p 500 down 3%. the declines in technology heavy indexes like the nasdaq, also seen big declines. good reporting on the bloomberg, where if you have a 401(k) and you think your diversified because your tracking as a key -- s&p 500, if you strapped out the tech

stocks, the decline would be lesser. look at that block of red, the second consecutive weekly decline for the s&p driven by tech, apple the biggest losing streak since 2001 we started talking about analysis, what we saw now is like the dot-com bubble. full disclosure, i wasn't doing this in 2001. emily: neither was i. i am a little older than you but i wasn't. ed: no comments. but i have studied the history. are we seeing what we saw in the dot-com bubble and what happens next? emily: indeed. from apple to tesla, some of the biggest names in the s&p 500 fueling this relentless a selloff that briefly pushes the

broad equity benchmark it bear market territory. for more, i want to bring in our guest. eric, is this different than the dot-com bus or not? eric: i was working a couple blocks away from where you are now during that. it is different this time. the biggest factor is a macro setback. with the fed funds at 6.5%, that was an elevated level. right now we think we would peek at maybe 3.5% for fed funds. i think in terms of the selling we saw back then, it was relentless. it certainly feels relentless now but we think there is more of a calming effect that should emerge. a little later this year. we expect a little more volatility but we don't have the same fed funds backdrop that we had back then.

a little more optimistic than i was then. emily: you used the word relentless. does that also mean you think the selloff is unwarranted given the fundamentals? we saw a lot of companies, especially tech companies, is on results. eric: i don't think it's unwarranted, as tough as it is to experience. when you go from fed funds, the production put out, they were basically nothing. you have this repricing that started with the two year and three year treasury and asset classes have to react. ultimately our viewpoint is the overall repricing is probably in the sixth or seventh inning. probably a little more to go. especially when you see evidence of demand and disruption. we are not saying that quite yet but some of the retail earnings the past couple of weeks indicate there is possibility still. we think there's probably a

little more downside left but not quite the scenario from 2000 and 2001. emily: where are we on calling a bottom? how much worse is this get? eric: for us, i think the downside scenario is another 5% to 7% against brought s&p, maybe a little more for nasdaq. i think the fed has a decision to make and that will be the market sending a clear signal that this is a challenging environment and we are starting to see some erosion of corporate profits as well as consumer activity. we think that would be really a heads up period where the fed says we see it, but we have to contain inflation. that could be trapdoor. but we think it will come down 5% to 7% more from here. emily: where are the opportunities and tech? there's a lot of confusion, for

example, netflix with the first subscriber loss in a decade. disney pulled through with surprisingly optimistic subscriber numbers. eric: i think a couple areas we find attractive, one would be software-as-a-service. we think that installed base, possibly ongoing revenue, is attractive. that is a model you have seen adopted from a number of different companies. we still think there is opportunity there. i would say on a broader basis, if you look at the bias from cfos and ceos, they record eyes were not getting more productive as an economy, -- they recognize we are not getting more productive as an economy, so we think that is an area that as we see more hybrid workflows continue, it is a spot we think has opportunity. we would be moving up in cap and quality, this is more of a duck and cover strategy in the near term.

but we think software-as-a-service as well as what we are seeing with respect to a broad infrastructure, remain attractive. emily: in the flipside, the losers, who do you think the losers are? eric: there is a saying probably appropriate right now, it is too late to sell into early to buy on some of the more challenged business models. i would say the super consumer heavy businesses, those would be more at risk. let's call it the nice to have subscription models, those are not areas we think would be attractive. if you look at the macro perspective, there really is some erosion in spending power because of inflation, but we think the wealth effect is relevant. we talked about crypto earlier, portfolios in general. you start seeing home values in the bay area and other areas where that is very strong, that

is the next leg that we think some of those secondary and tertiary subscription models are more at risk. emily: how bullish are you on crypto? we touched on this earlier, i think a lot of crypto investors were hoping crypto would be immune to broader equity selloff but so far that hasn't been the case. eric: you know, it is something that if you look at the correlation across broad crypto and the correlations of assets that were supposed to act differently than they did, they are really here and really levered. if you look at nasdaq, appropriately thought as a tech heavy index, the worst-performing subset of nasdaq the industrial components. i think what that says is a sensitivity toward the consumer is becoming more of a challenge. if you look at some of the issues we are seeing right now across currency and currency risk, the dollar has been a one-way trade higher, that's

another factor i think the correlations between dollar, consumer, those are things that have been the other way than people expected at the start of the year. emily: all right, eric, we will see what next week brings thanks for your perspective. coming up, crypto still falling as we were talking about. my next guest has some thoughts about when we might see the bottom there. and how low it could go. this is bloomberg. ♪

emily: it is time for our crypto report. it seems that crypto winter is in full swing. i am joined by our guest. i want your take, how long will winter last and how cold will it get? how much lower is this going to go? >> thank you for having me. i think it is just the beginning of crypto winter, to be honest. i'm very surprised people are expecting it will continue to hover around 30 k, i expected to go town to between 14, 18 maybe 22 k as a stable point. but remember we've seen this past two times, this is nothing new. every time it goes to an all-time high, there is a point it comes down and finds a new

lower point as a base point. i think we will stay here for at least a year to a year and a half, and yeah -- i don't think it will go back to 50 or 60 k for another year and a half we will see another all-time high, for ethereum too. especially for ether. a lot of people will have technology with major adoption. a lot more people in the space for that adoption will trigger back -- the space. that adoption will trigger back. emily: you think bitcoin will stay in the $20,000 range for the next year, year-and-a-half intentionally? kavita: yeah, we can see some more deaths and more highs, but i don't think it will get back

to 60 or 70 k anytime soon. emily: huh. what does the new high become after that? a lot of investors are waiting for that. kavita: a lot of people have been talking about bitcoin at 100 k, and i can't really predict it could be or not, but i think it will definitely find a new high. last time it was 64,000-something. every time if you look at the history and data, every time it has gone back is not purely speculative. speculation is part of it but it's also the adoption of technology, and by companies and institutions. that makes it go up. twitter having a mechanism makes it go up. i see the same thing with other technology driven tokens. we will see the adoption aching it go to an all-time high, but i

don't think it will happen in another year, year-and-a-half. emily: i'm curious what you think about what is going on at coinbase and it is the most established platform for the trading of cryptocurrency. obviously there business is somewhat divorced from the actual trading of cryptocurrency. what do you think the fate of coinbase is? kavita: coinbase is a centralized exchange. i don't see all the speculation about coinbase going bankrupt. i don't believe that because the currency is so strong. i do fink when it dips, you don't see -- think that when it dips, you don't see so much trading volume. 430 million losses i understand in a company in expansion mode. but in cryptocurrency, this is

what you expect. will that make them disappear? n't think so. they've already announced they will have a hiring freeze, take care of costs, etc. i see them strong. but with different measures intact. emily: we keep hearing it is time to build and add love to get more specific. when it comes to crypto projects, what makes it and why? what gets washed out? kavita: a lot of fluff gets washed out. as a pcp investor in the space, i can tell you every time there is a high, everyone who thinks i have an idea, it is like $100 million valuation and now you're back to $25 million valuation. last time, we saw defi built during the crypto venture and that is pushing the adoption and

the money coming into the space, which also was associated with that. before that in 2016 and 2017, the smart contract on ethereum made us come down from the height of $1700. if you're going into the space, multi-chain indexing, search results, a lot of analytics, that will build out, and maybe a whole new info structure platform. people have been buying in fts for multimillion dollars and they don't have a structure for in fts right now -- nfts right now. emily: i'm curious about your thoughts on elon musk potentially taking over twitter, given israel in the crypto community and his role in the crypto community himself. do you think decentralized social media is possible with blockchain technology? kavita: as of the current

technology that i've seen in the space, i don't think so. identity has been a huge problem in the space, we need to figure out a lot of indexing, identity. should social media -- the reputation system is a huge problem we are still figuring out. in the future could there be a technology where it could be truly decentralized? absolutely. but it is not possible any technology -- with any technology in the space so far. emily: are you calling elon musk fluff? kavita: i think he's a visionary. he probably thinks over years he will build. it's like 10 years passed he said he would put people on mars. he has put a spacecraft on the therapeutic there has been -- spacecraft on there. but he's put a spacecraft on their. -- there.

it would be great for tech and people, but is it possible in two or three years? i don't think so. emily: looking forward, the market is still reeling from the terra debacle. what is next for stablecoin? kavita: i think we have to make a d 30 asian -- differentiation. the definition of stablecoin came. you have to show in audits, to results to they really haven't dollars, cash equivalent, bonds, treasuries, etc. to support it. i think terra is different, it's been on the problematic side. one thing we've learned, though the decentralized world will also push away and have a different version of programmatic stablecoin, we don't have a lot of gaps as of

now, as terra has shown. will there be a problematic stablecoin -- programmatic stablecoin? i believe so. during the crypto winter, i don't think so. a lot of faith has been shaken. emily: all right, thank you for giving it to us straight. more to come. this is bloomberg. ♪

emily: want to get back to the markets and bring back ed ludlow. does this volatility continue next week or not? an investor earlier thought you were being dramatic. ed: if we knew the answer to which we markets would go, we would all be very rich. all we can do as journalists is look at past data. the thing about the s&p 500, we almost fell into a bear market, a 20% decline from the most recent high. we've seen this before on an intraday basis. 1998, 2011, 2018, the market on an intraday basis must some cases went beyond 20% in decline. but it never actually closed in a bear market and we never got close to those levels in the weeks that followed. it is a psychological test for the markets. and really the conversation is,

what are we worried about? is it inflation, the fed? where do we look for hope? emily: it's interesting hearing our guest speakers, that the fundamental issues are very different right now from what we saw in 2001, for example. ed: and we should bring it back to tech. some of these companies like apple that are feeling a lot of pain, these are amazing companies, strong balance sheets. there is so much happening at once. when we talk about tech broadly, we have to remember the story. the fed will raise rates, and higher rates discount the value of future profits, making tech stocks less attractive as an option. but we are also worried the fed can fight inflation without causing recession. if they raise rates to quickly, the economy might crash. no one does well in a bad economy, not even apple. emily: if you look at the company fundamentals, a company like apple, on the brink of bankruptcy literally in the late

1990's. a completely different story today. apple will keep making new products. ed: right. they've got a lot of cash, innovation, scale. and we wonder about the rest of the world. we put aside the fed into the inflation picture and we worry about supply chains. the long towns in china. a big problem has been sorry, we missed earnings because we could not sell enough products because our supply chain is in tatters. emily: and the question is how investors interpret it. there's also the twitter/elon musk overhang because of a different merit -- different narrative. is elon musk going to buy twitter? is he going to take tesla down with it? ed: i thought i was going to get through an entire show without talking about elon musk. i really thought this would be the day. elon musk is very busy, he is the ceo of tesla and the market

is asking, is he distracted? but also with twitter, all of the indecision about will the deal happen, when will it happen? twitter did not suffer like the rest of tech stocks. it hasn't seen the declines other companies have. there is a question why. because it was subject to a takeover deal, take private deal. should twitter be revalued and elon musk come in at a lower price -- who knows? emily: twitter annual meeting next week and you will be there. we will be talking about it a lot. ed ludlow, thank you. that does it for "bloomberg technology." have a wonderful weekend. david westin is next, talking about inflation and all of this in a moment. ♪

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david: