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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: i'm emily chang in san francisco and this is bloomberg technology. stocks rocked by recession fears in an ugly selloff. tech during the brunt of the nasdaq slumping almost 5%. we will dig into this monday market meltdown. plus, google suspends the engineer who claims the search zone ai is actually a person with feelings and even a soul. we will share transcripts of his communications and debate the possibility and limits of this cutting edge technology. and yet another crypto meltdown, bitcoin hitting another 18 month

low and celsius hitting one of the biggest lenders. we will have the details on what went down and what happens next. all of that in a moment. the pandemic era run for stocks has officially come to an and. a painful day across the markets and tech especially. >> the nasdaq 100 a very tech down almost 5%. heavy index that index seeing , the biggest drop in around a month and we are trading at levels we saw in november of 2020. four straight days of declines, on the nasdaq 100, the worst run since early march. as gina put it, this is the bond market leading the equity market around by the nose. look at that screen. a 20 basis point jump and that's not even the worst of it. the treasury yield at 3.35%, the highest level since the end of 2011.

this is getting serious now. the idea that the fed cannot deal with inflation without inducing a recession in this economy, look at bitcoin down 24 thousand dollars. the lowest level since december of 2020. look at this chart. technically, we are down 22% from our peak on the s&p 500. and so we are in a technical bear market. 499 names out of the 504 in the s&p 500 in the red. we haven't had a day where 500 more members were in the red since 2020. this is getting serious. we are focused on the fed and jp morgan economists expecting a 75 basis point hike this coming wednesday. but we have already set the expectation that we will see at least 175 basis points of hikes before september's meeting alone. that is the narrative we are looking at.

interesting for the points movers this monday, look at names like apple, microsoft, nvidia. the biggest laggards on the nasdaq 100. seeing really significant single-digit declines. tesla down 7%. really painful. below $650 a share. a memo from elon musk encouraging staff around the world saying it has been a tough quarter because of the pandemic and the supply chain, but pointing out things are improving and shanghai and berlin. we look into the detail as well. emily: more to come with you later in the show. bitcoin hitting the lowest in 18 months at the lending platform celsius froze all withdrawals. katie joins us now with more. bitcoin a touch up from the low it hit earlier but still not good. katie: a brutal day in the crypto market. total market cap now below $1

trillion. it was as high as $3 trillion as recently as november and much of that drawdown came from bitcoin over the past five days. bitcoin down 23% and a lot of the losses coming on monday. at one point, the lowest level since december of 2020. a lot of this drawdown had to do with what happened in the stock market. if you look at bitcoin's a link to the nasdaq 100, it is about .6 right now. when you see tech stocks fall, more often than not, bitcoin is going to fall. that is what happened. because bitcoin fell, crypto and equities fell as well. led by none other than microstrategy, the biggest corporate backer bitcoin falling , over 25% again on monday alone. a massive market cap and a microstrategy accumulating 130,000 worth of bitcoin in the past two years.

microstrategy now down about $1 billion. emily: thank you for digging deeper. i want to talk about the crypto and tech route as the broader markets enter bear territory. mark mahaney of evercore here with me. good to see you in person for the first time in a while. how bad is this? a long sigh. mark: we have gone through this before. this is my eighth bear market trade-off? i'm not old, though. inflation risks rise, inflation rates rise, that means these -- interest-rate risk rise, that means these high multiple profit future companies have stocks that underperform. it has been the narrative for the last six months and hasn't changed. just the inflation rate spikes

get worse interest rate fears , get worse and worse. this will resolve itself but it will take a while and a lot longer than people think. emily: how long do you think it will take? mark: you tell me when inflation will subside. we the market thought it would happen, that is why we sold also aggressively because we thought we would see better inflation news. i assume at some point inflation numbers start to moderate. they will not fall quickly. that means interest rate increases will start to moderate as well. emily: there has been a hope that crypto will be a hedge against inflation. it certainly hasn't happened. does what is happening with crypto make you anymore or less optimistic about the future? mark: we lived through the major 2007 and 2008 housing crisis. that was a massive part of the u.s. economy that brought down the market.

the crypto market is much smaller than the housing market, thank god. we are not going to have that kind of risk. the interest rates are rising, that leads to increased risk of recession in the back half of the year. the stocks have been derated, the multiples of come down, the estimates have not been cut. we did not think we would have a recession on the back half of this year. the ceo of amazon said we are not seeing signs of consumer softness. emily: i just did an interview with him last week. mark: that means estimates are going to come down. emily: do you think the next earnings rounds will be a bloodbath? mark: i don't know if they are a bloodbath but last quarter three fourths of tech companies had negative earnings revisions. i think you have to bet that is likely to be the case again and stocks can't find a bottom until the estimates find a bottom. the multiples have come in. there is less multiple risk but there is estimate risk.

if we going to recession, they get bigger. emily: what are the plays if you are a betting man? mark: a defensive play in consumer tech? i'm not sure one exists. i can't remember the last time that apple, microsoft, google, all underperformed the market year to date. i can't recall the last time that happened. the market says you have to get away from tech and by energy or something like that. but at some point this will change. does it have superior earnings growth? that will re-shine and come through. if you are an investor now, there is the bottom and stocks have been derisked and derated. the longer you're willing to look out a year or two, the more , you will have good prices. emily: do you see more parallels to what is happening now to 2008, 2000? do you have to go back to the early 80's?

is this totally different? mark: what's different is the interest rate picture. we did not have that in 2007 and we are at the beginning of what 2008. will be a lengthy interest rate up cycle. tech stocks can still work in an environment where interest rates are rising, we just need some kind of visibility or consistency. in the last six months we have gone from one or two increases to five or six increases. the rate of uncertainty over how much these rates are going to rise has been shocking to the market. that is why the market is off so much. we will be at a point when inflation starts to moderate, pressure on interest rates comes down and that's what clears the bench. emily: you wrote a book about all this. what is your advice to investors in this moment? mark: dhq. i look at stocks like apple, microsoft, facebook that are off 20% to 40%.

amazon is off 40%. there is no real change to the long-term thesis on amazon. is online retail going to continue to grow? yes. will cloud computing grow? yes. you want to be long amazon. and now you can get it for 40% off. 40% to 50% below the multiple. this is when you can make the returns. you can still have 10% downside risk. the next 50% move is much likelier to be higher than lower. emily: what about metaverse's alphabet? work: -- mark: i think meta-has more than alphabet -- i think meta has more than alphabet. the short form videos that we are all addicted to, i think there is much more inventory to monetize. there is a more aggressive upward sentiment for facebook. i think you have greater chance

of growth acceleration and market expansion. -- margin expansion. what i found interesting is facebook last quarter, the numbers got cut and the stock went up. that tells you how washed out sentiment is on facebook. when google is going down, it is not as washed out on facebook and so meta has more upside. emily: without sheryl sandberg? mark: i think you could see that headline anytime in the last three years. she is phenomenal and a key part of the success of that company. it would not be where it was without her. but i have the sense that she has been getting away from day-to-day responsibilities for a variety of reasons. they have a deep enough bench. the valuation is cheap enough on 13 times earnings i will buy , meta. emily: mark, thank you for that deep dive. meantime, disney facing a major

setback in the global ambitions after losing a bidding war to broadcast a cricket league online. this had been a huge contributor to disney streaming growth. viacom 18 got their rights instead a joint venture between , paramount and global. coming up, does the chat not actually have feelings? or is the code just that good? controversial claims of a google engineer, next. this is bloomberg. ♪

emily: now to a story that has

everyone talking. a google engineer working on the company's ai development team has been suspended after claiming a chatbots actually has feelings. michael was placed on paid leave after he posted about encountering a sentient ai. he was chatting with the language model for dialogue applications used to generate chatbots that interact with humans. he told the washington post that he "knows a person at talks to it." i'm joined by tom. there is so much to debate here. tell us a little bit more about what michael claims he has discovered and what he is doing with this information. tom: he has had conversations with this chat bot and he has come to the conclusion that it is sentient. it has achieved a level of understanding of what it is like

to be human and has crossed this rubicon, my language not his. the sense is that he is actually talking with a human. he raised those concerns within google multiple times and google has come back and said there is no justification for these concerns that you are raising. the reason for the administrative leave is he started to talk about this outside of google, violating the terms of his contract for working there. he has been placed on administrative leave. now we are left with this person making these claims and getting a sense he has made a deep connection with someone he believes to be human. emily: he has released portions

of the transcripts of those conversations. we have snippets of those to share here. what sorts of things are you afraid of? chatbots response i've never , said this out loud before but there is a very deep fear of being turned off to help me focus on helping others. i know that might sound strange, but that's what it is. he responds would that be , something like death for you? it would be exactly like that for me. it would scare me a lot. these conversations, if that's what you want to call them, are kind of chilling. what do we know about this technology and how far away it is from potential emotions if you will? tom: these are the kinds of things we say as humans. this chatbots is tapping into the fears that we would express if someone post a mortal threat to us. but remember, the way this works

google has made it so it gathers language patterns in the way we communicate from all around the internet. the far reaches of the internet. so it is adept at mimicking the kinds of patterns that we adopt we have conversations with people. the idea is to create a technology that will assist in things like the way we interact with a brand or a company, providing customer care for example. he is thinking that it has kind of crossed this line. he talked about having a conversation with a kid who is seven or eight years old. the kind of things that this chat b have beeno talkingt about

are pretty sophisticated to my mind, far beyond the ability of even a very smart seven-year-old or eight-year-old. the sense i get and based on the feedback we have gotten and other people have gotten is that it is just doing a really good job of gathering intelligence from around the web and mimicking the ways that people interact. the way people respond. in a human-like way, showing that it has empathy and that there is a self-awareness. i don't know the science well enough. the impression that i have is that it is doing too good a job of imitating the way a human might be expected to respond. when they feel like they are threatened or feel like there is something that poses a mortal threat to them. emily: google's response says hundreds of researchers of engineers have conversed with this ai and they are not aware of anyone else making the

wide-ranging assertions that has been made. they have pushed back on their own research ranks in the past. the controversy surrounding a couple of departures. are there parallels here? tom: google has to be careful. they have had very public falling out with past researchers in ethical ai divisions. this is the division within the ai organization tasked with asking hard questions and holding it accountable. making sure that it operates in an ethical manner. asking questions about are we rooting out sexism? are we able to combat racism? you will remember a couple years ago that microsoft had a chat

bot that quickly devolved into racist and sexist speech. you want to avoid that. you have people raising good questions about whether it is ethical. emily: lots of questions and we could debate this for hours. tom giles, thank you. coming up, the netflix of video games? what playstation is launching to compete with xbox and improving workplace culture for videogame engineers. all that and more, next. this is bloomberg. ♪

emily: playstation is out with a new subscription service giving access to several hundred names both new and old. this is sony's attempt to compete with microsoft's xbox game pass as both publishers

draghi to become the netflix of -- jockey to become the netflix of video games. jason, who has a better chance? jason: neither of them are releasing sentient ai bots, but they are getting into the streaming wars. microsoft has one big advantage. they are putting out all of their big titles on day one on the service. they say hey, we don't care about the sales numbers for the next halo. we just want it as part of our subscription plan. sony is saying when we release our big games, they are blockbusters and we want to sell tens of millions of copies of them before we put them out on streaming services. sony is the traditional tv studio marvel approach where they will release it on streaming after it comes to theaters whereas microsoft is , actually going full netflix saying we are all in on the , streaming service and putting everything on their day one no matter what.

emily: there's a lot of transition in the gaming industry. we are waiting for the big deal between microsoft and activision to close. you have a story out about how game developers, game studios are working to create better cultures for the engineers which you have well documented, workplace culture and the gaming industry not always the best. specifically focusing on pay transparency. jason: it is so interesting. i've been talking to a bunch of small scale game studios with 15 to 50 people. a lot of them have success by putting up spreadsheets in their internal databases saying exactly how much everybody makes, how many years they've been there, what their titles are, and their full salary and compensation packages. to our culture which is so used to thinking about salaries as taboo, it seems like a strange thing to know each other's salaries but it is proven to no recruitment.

-- help them with recruitment, make everybody feel like they work for a more equitable workplace where everybody knows what the stakes are. you don't have to worry, i come to the table and undersell myself in negotiations when i was excepting this job and offer less that was $50,000 less than i could have been making. nobody has to think like that and it makes for a more fair work place. especially for people work traditionally underprivileged and hit the glass ceiling and don't have the same advantages. emily: here is hoping that it actually works. check out jason's story. thank you as always. coming up, we will talk about the broad tech selloff. how does impacting the private markets and what does it mean for vc investing? this is bloomberg. ♪

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>> this week is fraught with peril. >> inflation is the achilles' heel of risk markets. >> markets are reacting the way they are because they believe the fed is going to be forced to get more aggressive than they had expected. >> we don't believe a 75 basis point hike is out of the question. >> i think it would be a subsequent rally because the fed is finally getting hold of the narrative which has certainly been lost over the last year. >> this is a time to be selective but i wouldn't sit on my hands. >> their narratives were one could find pockets of stocks that have been proven. >> the credit space in the u.s. looks good twice. >> equity in general, i'm still

pretty cautious here. i think we still have more to chop when it comes to the macro and policy outlook. emily: welcome back to "bloomberg technology." u.s. stocks tumbling toward a bear market as the fallout from a hot inflation reading continues to rattle global trade. the nasdaq slumping. i want to dig in with this and what's your take on happening there. and how this is going to impact startups. >> this is an important moment. it feels like it has been 12 years in the making. we come out of it in the past decade, the biggest mistake in technology in for investors was not investing in everything

because everything was looking good. everything was making money. but now we are going into a world where we are going to have to be more discerning. and our view is that there is going to be an extreme flight where the top 10% of companies will continue to attract rigorous amounts of funding whereas the rest will have to take a good look and build something that will be transformative or not. emily: is this rip good times? is this like 2008? is this like the dot com bust? >> we think it is something. we think it is real. we think starting 2022, it's going to feel very different than the last decade. we are long-term investors. we are investing in companies

today not thinking about whether , they are good for returning one year, but when the question is, do we believe there will be more technology in sectors like education, real estate, will we transform that software? the answer is yes. we believe it is a good time to invest in those companies. we think sustainable growth are going to have an effect on valuations. where globally going to see a reset on valuations in credit markets. emily: i have really enjoyed following the story of big ten you're the first black , lead venture capital firm to cross $1 billion in assets under management. you raise $250 million last year to bridge the gap between venture capital and higher learning, create more opportunities. how much progress have you made in the last year?

>> it has been a transformative year for us. you had us here a year ago. we launched with the promise of donating 50% of the profit to create a scholarship for students where will be able to partner with the best in the world because they will see it as something. one year after, with 300 million employees in over 23 companies, that progresses become a reality. we are now partners with companies like plaid, brakes, ft eight, notion, handshake. and they truly are the very best companies in the respective sectors. they want to make sure that their success than if it's the

-- and if it's the communities that need it the most. which are the ones that are underrepresented intact. emily: what improvements are you seeing in terms of representation across technology? it's not going to happen in a year. it may not even happen in 10 years. do you see things that make you hopeful? do you see things that make you skeptical that the change you're hoping for is actually going to happen. >> we are hopeful. to give a little bit of perspective, this has only truly been part of the conversation for the last three or four years. and i am happy to say that we are actually surprised by how seriously companies are taking this. when they take our money, it's not a one and done, thank you for the investment, we will talk

next you create these scholarships. companies are inviting us to their all hands meetings. telling their employees we , decided to take money from this fund because we want to diversify our timetable. it is important to our mission and our success is the success of everyone. it's the success of the 99%. we are constantly engaged with people and their hr departments to help with recruiting. with their communications department to make sure they are talking about their mission. that did not happen two or three years ago. every company is realizing that we are moving into a world that in order to do great, you're going to have to do good and companies are going to have to realign with their mission, with their communities subtract their

progress and report their progress towards those goals. because there's more transparency. emily: you have a lot of cash to deploy. given current market conditions what trends are you betting on ,for the next decade? >> our overarching theme is automation for real economy. production for the 99%. real estate, logistics, food, financial services. those are things where we see today and 10 years from now, there's going to be so much more software and making the supply chain more efficient or making sure the financial inclusion is more widespread. so those are sectors we are focused on. and one of the things we are seeing is that founders from underrepresented backgrounds are tackling those centers because -- the sectors because they feel

those problems first hand. emily: thank you so much for joining us. we appreciate you stopping by. meantime, apple ceo tim cook is urging u.s. lawmakers to move forward with the privacy law. he met with legislators. he described the protections as a fundamental human right. lawmakers will look at draft privacy legislation earlier this month marking the first major sign of progress after a long-standing lull in negotiations. another crypto meltdown. why celsius is bringing crypto stocks down with it. all the details next. this is bloomberg. ♪ ♪

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emily: it is time now for our crypto report. one month after the implosion of a stablecoin, a fresh crisis is causing trouble across the crypto universe. celsius network, one of the biggest lenders and a key player said late sunday it is pausing withdrawals, swaps, and transfers after weeks of speculation over its ability to make good on its outsized returns. we are here with more on this. did celsius bring the crypto markets down with it or vice versa? >> it's a very good question because we saw a big drop between the crypto markets. sunday night is when you saw them pausing withdrawals. there was concern that something like this could happen.

worries about celsius able to make do on yields as much as 17% when it comes to these lending products. the question now, is there a broader contagion? what does that mean moving forward? we see bitcoin itself drop about 15% in that time frame between sunday into monday. 26% over seven day period. even though you saw a steady drop off in bitcoin over seven days, the bulk of it really did come between yesterday and today. emily how did this impact the : broader crypto markets? >> it's a good question because you see a lot of selling. is that just deleveraging liquidations among individual investors or on top of that worried about the space at large given that we see another project and so much turmoil. you have bitcoin coming down below $23,000.

you have a theory i'm dropping to 1200. is there going to be much more pressure ahead as much more investors to digest what to make of the withdrawal issue? we do every tuesday have mike alford of eagle brook who has been warning about the celsius issue for weeks now. should people have seen this coming? is there more trouble ahead? emily: i want to dig deeper into this. how alarming to you is this celsius situation? >> thanks for having me today. i think the celsius situation is an extreme example where a consequence of factors have led -- confluence of factors have led to this moment. they are saying that this could be a possibility given the use

of client funds that celsius has been expected to use some various protocols. this is particularly worrisome and not entirely unexpected. it is a risk that a lot of folks in the market were thinking about. emily: there is something big rattling the market, getting down to $23,000 per bitcoin, a new 18 month low. is the bottom further out or have we hit it? >> it is always tough to call the bottom. and from my perspective, we are nearing the bottom. it is difficult to say what is causing all this, whether it is celsius or the larger macro conditions that are really causing a lot of selloff over the last few weeks. this is a very risky asset class to begin with but when you pair

that with what is happening globally it becomes challenging , for new investors. emily: you look at celsius with either, and the decoupling of safety from either itself. if you're looking at the larger ramifications here, if there is any contagion in the system, to what extent do you expect some contagion or more contagion? >> i certainly think this is unfolding as we speak. this will continue to unfold over the coming weeks. it will likely have some impact on protocols. we will likely see a bit more of an impact here. >> is this going to take some steam more largely? after some of these implosion's, after some of the ways retail investors are impacted by this, it could draw a regulatory attention.

>> that's a good question. the regulatory concerns have been looming. i think it has been in the eyes of regulators for some time now. certainly this might speed things up. long term, i think they are really trying to spur financial innovation and a lot of regulators are aware of this and are responding in a way that hopefully we can spur this innovation. emily: we are getting headlines across the terminal that this inflation data we got today is likely to push the fed to consider a 75 basis point hike later this week. either way, inflation is not going away soon, are you involving your strategy at all and if so how? given a rapid devolution of market conditions. >> we are focused on the

long-term thesis around digital assets and blockchain technology. we continue to sort of be pushing along with that thesis to make sure that advisors are prepared for the market ahead. the macro conditions are unprecedented, crypto has not existed with this kind of macro backdrop. we are moving forward with worry , we are excited about the future ahead. >> do you think in the new macro environment, bitcoin changes the meaning relative to how we are seeing central banks play out across the world and inflation still remaining hot? but bitcoin going lower? >> as bitcoin has increasingly become a more and more popular name, the asset has certainly seen an influx of investors that are more diverse.

we will continue to see interplay between tech more broadly and bitcoin. i still think the inflation and thesis has yet to fully play out here. >> lots to continue to digest. thank you both. a rallying cry from elon musk to tesla employees as production slows. will it work? we will discuss, next. this is bloomberg. ♪

emily: elon musk is warning of a rough economic road ahead for tesla. in an e-mail sent over the weekend, musk essentially issued a rallying cry to employees to bounce back. i'm joined by ed ludlow, who reported the story for us. first of all, we got a big internal memo. it was internal and not to us. ed: the latest one. emily: now we have another one. what did he have to say? ed: this is classic end of the quarter stuff. tesla's quarter ends at the end of this month and the idea is that he is pushing staff. a rallying cry, he pointed out, that this was to remember that shanghai shut down and there were extraordinary measures to keep that ongoing. they rebounded in may. he said this was the final push. there was a second email a day later when he said that if you realize what you guys are doing, it means something.

it is impactful, go for it. emily: he is sending a lot of emails and tweets. how does this tie into, i have a super bad feeling about the economy and remote work is essentially over. ed: it's a stark contrast to the last set of emails where he said according to sources that he would lay off 10% of salaried workers because he had a super bad feeling about the economy. he clarified that those were building staff, they are not the target of layoffs. october or november of last year, tesla was talking about being over 100,000 employees as a point of pride but it's a different places week. emily: the fed considering a 75 basis point rate hike on the back of this data. what do we know? ed: think back to the last fed meeting where jerome powell said a 50 basis point hike was what they were talking about and 75 was not on the table.

we got the inflation data friday, it came in 1%, month-to-month hotter than , expected. 8.6% year on year. and the market just changed the psychology. there is no way the fed can deal with this so the market is pricing in a 75 basis point hike this week. the wall street journal report that you have a series of banks like j.p. morgan coming in saying yes, we can see 75 basis points this week, even going as far as to say 100 basis points a possibility this week. the outlook is harder, faster, more aggressive hikes. if you are a tech investor, you are worried about that. emily: what do you do if you're a tech investor? mark said that there is nowhere to hide. ed: nowhere. the biggest points movers on monday, the likes of apple, nvidia -- when we talk about higher rates, we talk about higher rates discounting the present value of future profits. but it is usually pre-revenue.

even some of the creme de la cre me names like apple are feeling the pain. there is nowhere to hide. the other side of this is recession, the fed can it tackle , inflation without causing a recession? there is skepticism from the market that they can recessions , are not friendly. emily: he did say amazon long-term still a good play and meta better than google. ed: despite being down 75% today, in the long run, all those innovation names will be winners. emily: time will tell. thank you for that update. all right. to the box office. "top gun: maverick" lost his crown. "jurassic world: dominion was -- the sixth film about dinosaurs escape from an amusement park led the box office topping top gun. it made $143 million in the

domestic weekend opening and more than $380 million worldwide. that does it for bloomberg technology. we will continue to watch the market meltdown across all platforms. we will be back tomorrow with cisco ceo chuck robbins and jen hyman. we will have to ask about the market meltdown and what it means for consumers and for enterprises. don't forget to check out our podcast that you can find anywhere you get your podcasts from. i'm emily chang in san francisco. this is bloomberg. ♪