announcer: 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. this is bloomberg technology. coming up in the next hour, stocks set for the longest losing streak since january over concern the fed combating inflation will throw the u.s. into recession. it's another sign of a worsening crypto downturn -- coinbase announced it will lay off 18% of its workforce following other crypto companies also cutting staff. and my exclusive interview with chuck robbins on where he sees the economy headed and how the

company is navigating the downturn and supply chain pains. he will join me for an exclusive interview. you will get to all that but u.s. stocks on their longest losing streak in six months. but tech faring better with a late in the day rebound, helping to keep the sector in the green. what change for tech today? ed: it was volatility swinging between gains and losses. snapping four straight days of declines and in pockets of that performance, semiconductors up, the mega caps really interesting, pushing the index higher. the bond market leading the equity market by the nose. the u.s. 10 year yield pushing even further and it is all eyes on the fed and its meeting on

wednesday. come with me to the bloomberg terminal and the nasdaq 100 on a quarterly basis, the right-hand side of the screen -- that is scary. look at that performance on a quarterly basis. go to the far left-hand of the screen, the.com bubble, that's the discussion we are having. in the tech sector, there is hope if the fed acts decisively then yields will come under control. if yields come under control, we will see the equity market easing. look at the movers -- performing well during that tuesday session, tesla up, apple up, oracle is the outperformer on strong earnings. voices saying valuations have come down in the tech sector. look at companies with strong

free cash flows and that is the difference. amazon down 1.3%. 2020 to come of the year they lose market share, a very different story. emily: the bear market for bitcoin has entered its deepest, dark phase, according to one industry watcher. even long-term holders are coming under extreme pressure. sonali basak joins us. this coinbase layoff does not look good for the crypto market. sonali: that nibbling you saw in the tech industry, you did not see it in the bitcoin market. you saw a massive decline of more than 50%, you did not see that big a decline but you did see a 5% decline over 24 hours. significant enough. let's talk about what this means

in terms of coinbase. that huge announcement, the 18% layoff figure and you did not see coinbase shares fall as much as you saw bitcoin itself fall. that is interesting because a lot of days you see bitcoin fall, you see coinbase fall further. coinbase actually fluctuating. meaning you don't know how investors feel about something like job cuts, worries about hiring plans in a market like this. let's talk about the other crypto cuts you are seeing here. gemini, 10% -- crypto.com, another 5% and this doesn't even include robinhood. the question is is it contained to a certain area or are we going to see some of this

carnage float into other areas and will put more pressure on the company then? emily: big questions to consider. we will get to you later with our crypto report. i went to dive into the market as we wait for the fed's decision. what are you expecting from the fed tomorrow and how is it impacting your strategy? >> the fed has to be aggressive, no question about it. they are well behind the curve and have been for some time. we never really bought into the transitory inflation nonsense and this has gotten far beyond anyone's expectations. our expectation is they act aggressively for the first time. i think we all want them to take it carefully and slowly, but the reality is they do more damage if they are more aggressive than if they don't.

we think they are aggressive and think the market expects that. i don't think tomorrow impacts our long-term strategy regardless. it's about the trend of inflation and interest rates which we think are breaking a secular 40 year bull market and starting to turn into a secular long term bear market for bonds. there is a lot happening right now and the fed is just one piece of the puzzle. emily: what is the biggest risk in tech? leo: the problem is there still a lot of speculation. to wear out speculation in any bubble type market, when we look around at things like crypto or stay-at-home stocks in the covid years, there's tremendous speculation and tremendous stories. it takes time and multiple shots at the speculation before you

wind it completely out. more than likely what you see is these massive downturns. you probably get some recoveries but then you return back and until you get the last it of hope out of the market, you don't see actual bottoms. there was a great statistic i just heard in the introduction that these companies have cash flow, so this may be a little different. back in the dot-com bubble, microsoft had cash flow and cisco had cash flow. if you look at cisco, it was at $90 at the top of the dot-com bubble. nine was well below its fair value and it took decades for it to come back before we started to see reasonable prices. i think tech, you have to be careful. emily: interesting used cisco as an example because i'm going to speak to chuck robbins, the ceo later this hour. we -- take ellison.

-- take a listen. >> the real challenges several things have happened, some of which are more controllable than others. the part that is less controllable is around inflation. we thought inflation would start to attenuate and with the war in ukraine, it went the other way and significantly accelerated. emily: you got these massive companies like amazon that have no control over where these numbers are going. what do you think the long-term impact is going to be on a company like amazon and other companies that rely on the health of the consumer? leo: history shows us when the cost of capital exceeds the return on capital, we go into recession. the cost of capital is rising rapidly and we are going to see a significant recession from companies like amazon and many

others. if you are not inflation sensitive, it's going to be a serious pressure on earnings. some of these reliable growth companies have steady growth patterns are going to see those patterns get disrupted and that is going to affect pe multiples. the reality is with inflation, we have it, it is accelerating and one of the reasons is we are not addressing the problem. we have to go to the core of the problem and until we do that, inflation will continue to surprise us. we cannot answer a supply-side inflation event with more demand. that has been the method of replacing and repairing inflation, so the fed has to get aggressive. emily: lots to continue to watch. thank you for giving us your input there.

for the first time since agreeing to buy twitter, elon musk will address twitter employees. he will speak virtually at a companywide meeting on thursday and take questions. it has been in a chaotic state since the deal came together. while musk has a passionate contingent of employees, another contingent is openly critical, with the questions about bots and wanting to negotiate his deal. twitter executives say they plan to enforce the agreement. coming up, is this future of streaming forced? we will talk the future of streaming, next. this is bloomberg. ♪

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emily: as netflix looks to turn around and already rough year, it's opening squid game will be it savior. netflix is turning it into a reality competition called squid games: the challenge. it has set off not only the largest cash in -- cast in history but the biggest lumps on cash prize -- 456 real players hope to win $4.56 million. if you seen the show, you know the significance of the number. but unlike the original series,

there will be any war. the worst face -- worst fate anyone will face is going home empty-handed. apple is betting big on sports, they just signed a 10 year deal to stream major league stocker -- major league soccer. also on apple tv, this deal coming one day after disney lost out on the streaming rights to the popular indian premier league. if you are a baseball fan, you know having those sports rights are important. a sports going to be the next big streaming differentiator? >> i think the reality is all of these streaming platforms are realizing just how difficult it is not just to attract subscribers but reengage them. it is hard. there's a reason netflix spent

$17 billion here on content. it's not like they do it because they want to spend too much money and toss and burn capital. the difference between the old cable days -- if you wanted to cancel your cable service, you had to literally call up comcast or time warner cable, spend the better part of your day on hold being transferred around the department, if you actually got through and tried to quit or cancel, then you had to return your equipment and stand in line -- it was torture. now if you want to cancel a service, it is point and click and cancel. in many ways, sports is being used as a tool all these companies are looking at to bring new subscribers and retain existing subscribers. i think it's a hard business model and it's one of the reasons they haven't converted to over-the-top yet. they are looking at sports as another tool to drive subscribers. emily: how big a deal is apple

picking up soccer or disney losing out on cricket? do you see these wins and losses as not necessarily big deals? rich: i think apple is a huge deal. every single person that looks at the media space or runs a media company should be thinking about what apple is doing. the only thing holding the traditional media bundle is cable and broadcast networks. the only thing holding these bundles together is sports. all the best entertainment programming -- name one big new show that aired on linear tv in years. everything is starting at premium -- i don't care whether we are talking about squid game or murderers in the building on hulu -- everything is happening on streaming. the only thing left is sports. yet look at what just happened. amazon has taken the number two

series and thursday night football, only on amazon prime, then you see the deal with malice today. every day, the last pieces holding together the tv bundle are being stripped away. that means two things -- more and more cord cutting and the bottom line is these legacy media companies are facing more and more pressure because most of them are built around broadcasting cable network. emily: how much m&a you think we are going to see? would you say there's a 0% chance? rich: i hate zeros. i've learned never to say never. if you said eight weeks ago is netflix going to do advertising, i would have said no chance. everything is up for debate. the odds of buying roku are hard to imagine.

why would you want to be in the device is next? netflix benefits from being available on every device and not competing. buying roku would them into battling against companies like samsung and disney when that is just very hard for me to believe. i think netflix is focused on an asset-light approach, outsourcing. there was a story they may be looking at using comcast's printing will and that makes a tremendous amount of sense. they are going to connect with lots of platforms. they will work with roku and trade desk but i would be surprised if netflix is going to make a significant acquisition. that is just not their style at all. emily: they are turning this good game success into a reality competition. is now culturally the right time for a competition like this? rich: with the world melting down -- if you watched squid

games, it feels like the right time for a squid games reality series. but you are bringing up a greater issue. none of the streaming services are broken. the reality is it is all about content. consumers are going to gravitate to the services where they spend the most time and have the most content that keeps them entertained. the reality is netflix is by far and away the biggest service. 25% of all time spent to connected tv's is on netflix. they need more iconic shows. stranger things has been huge coming back. all four seasons were the top four series watched on netflix a couple of weeks ago. there's no doubt that franchise content is critical and that's why you see netflix lean into doing more, not just a second season of squid games, but how can they build the franchise even farther? i think you'll see netflix pivot from having just volume of

series, really making sure they have a good number of series that are water cooler conversation that create the buzz they need. i think they haven't had enough of that and that's part of the reason they suffered over the last few quarters. emily: we have seen a few disney stories, more game of thrones, hiring the head of content, how optimistic are you about the leadership and culture he's trying to create given the challenges he faces? rich: he came in at a very hard time, right in the middle of the pandemic was no easy task. he was having an incredible resurgence, they literally can't keep up with demand and they are raising price. but the real question is what is his plan?

is espn and sports the future question right they just bowed out of sports on streaming in india. certainly bowing out of digital streaming is a big deal and it points to a larger existential question of what is the future of business? is it about disney studios? the theme parks that work well together? do they need to be in the broadcast tv business? i think there's some very big decisions and we are all waiting. the reality is is there a future for who or do they put more of that on disney plus? there are some big structural decisions and that is what the board is waiting for, to see what disney ultimately looks like. i'm surprised the board came out a comment -- the contract

expires in february 2023. either renew his contract door tell us they are bringing in a new ceo. it seems strange we are waiting to figure out what happens next. the whole group is down substantially and i think investors want to know what is the structural future of disney? what assets are they getting rid of? we haven't gotten that since from disney over the last six months. emily: you make a very good point. always good to have you. coming up, as we continue to watch this volatile market, will hear about concerns of a recession and tech valuation. this is bloomberg. ♪

emily: he believes we will have a techno-economic war, likely between u.s. and china. he talked about tech valuations and what it takes to be a vc on bloomberg wealth with david rubenstein. vinod: the way i look at it is what is the underlying innovation going on and how large a market is it? if it is large then the valuation will look large. if you look at google, it's great valuation. but it's a 20% growth company went on a 50% growth company. 30% or 40% would be considered local. then you are addressing large

markets and have a proprietary advantage. then the valuation methods are very different and traditional valuation approaches don't really work. but continuing to apply them as companies mature is a mistake. david: is the valuation so high that it will be difficult to get returns out of venture investing? vinod: given the hype the last five years, we see a decline in returns, not for everybody. the good funds continue to be disciplined about valuations but i do think in general, the industry will see a decline. emily: coming up, cisco.

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emily: welcome back to bloomberg technology. stocks fall even further on fears the fed's aggressive policy to fight inflation will throw the u.s. into recession. is this rightful cause for alarm? where are we headed for the next half of the year? i went to get into all of this and more with chuck robbins who is joining us from cisco live, the company's first in person conference in two years. how is it going? bring us the atmosphere from the floor. how does it feel to be back in person? chuck: thanks for having me. we are putting the live back in cisco live. we have 16,000 of our closest friends in lot of partners demonstrating, there's a lot of education. there is a slew of great product announcements and everybody is

as you would expect, excited to be together in person. i think -- we joked today that we are so glad we are not doing this over video link. so there's a lot of energy. emily: cisco has always been considered a bellwether for the economy. i have 200 what your customers are telling you and how inflation and what's happening in the markets has impacted their spending. chuck: we talked today with our customers and partners about over the last five or six years, we've dealt with a global trade war, we've dealt with a pandemic, social justice issues, supply chain issues, we have a war in ukraine, inflation, so our customers, while it is not the new normal, we are dealing with the reality that there's always something going on in the world and technology has proven to be so effective at keeping the global economy and

productivity at a great level. technology is going to remain strategic and most of them say they are powering ahead. we will see. emily: elon musk says he has a super bad feeling about the economy. jamie dimon says he's preparing for an economic hurricane. how does chuck robbins feel? chuck: i remain optimistic, but i'm thinking specifically about the importance of technology to our customers. emily: looks like we lost chuck robbins joining us from cisco live. we will work to get his shot back up. right now, we will had to break. clean base slashing 18% of its workforce. our darker days ahead? are there any bright spots left for crypto. we will discuss. this is bloomberg. ♪ >> a number of people are trying to figure if they should get

out. i don't think we have natural buyers. i think we have natural sellers and nobody knows what the bottom is for that. he also have a bit of pain in the crypto space. ♪

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>> we are seeing sentiment at an all-time low. i don't think i've ever seen people feel this negative about the industry. that said, there are plenty of

crypto firms hiring. we were seeing layoffs for sure but this core ideology that powers this movement is intact. emily: that was nick carter earlier on bloomberg. the dual shaking that p5 in ways that may have serious repercussions for the crypto market. i want to talk about all that and more with our crypto contributor, cinelli bostick. there is chaos in crypto markets, markets more broadly, but especially the crypto markets. where is the bottom? >> it's impossible to know. we are seeing real job losses in real people losing real money. that's in contrast with record high inflation and purchasing power for families, so it's not a great picture. but it is hardly just the crypto market. it's a much broader global

economy meltdown. emily: when you see clean base slashing 18% of its workforce, what is your reaction? sheila: my reaction is we are in a contraction phase. other firms are hiring. what we are seeing is a pivot to core principles, building a brand-new technology system is not easy. if i were new to this industry, i would be nervous. but in the six or seven years i've been here, i've seen a bunch of cycles come and go. my hope is we will come out of this the way we have before. sonali: you mention real people losing real money -- how does the ftc look at something like this and want to protect investors after so much money has already been lost? sheila: i think the frustration as we have been looking to agencies who have been calling this for some time, saying we do

need a bill to distinguish this from the very legitimate projects that exist. instead, we are seeing intense litigation against legitimate actors for minor infractions rather than clarity for what the industry really needs. wearing a lawyer hat, i'm not super thrilled about the engagement we are hearing. sonali: even the lack of clarity, how much does that give the ecosystem when you know what you can build? how do you invest in projects when you don't know what is possible? sheila: what we are seeing a response to his when there's this high degree of uncertainty, people are not sure what to do. we've been asking for many years for guardrails, guidelines on how to engage. in some cases, that's happening. we see a lot of support on

legislative side in the house. there was a recent bill to try to clarify. a lot of engagement abroad. but the ftc not taking the same approach. sonali: i'm looking at what's happening with tara -- -- with terra. these are structures that seem to be legitimate but are having major issues. what do you say to reassure them? sheila: it's not that hard to differentiate these things from other things. it's unclear to me what kind of insolvency are we seeing here? is it cash or balance sheet insolvency? coinbase trapped its spending. we don't have regulatory clarity

. as far as terra, it does not reflect the broader crypto ecosystem. i think the thing to note is education is really important. crypto is not a monolith. every crypto platform has a varied different approach, every stablecoin is different. all of that nuance is critically important for us to understand as we look at regulation. emily: where do you see legitimate potential? sheila: i'm interested in solving real problems for real people. it's interesting to see crowdfunding of wartime defense for ukraine. we've seen examples where we are focusing on real problems and we also know we've got 1.7 billion people without access to basic financial services. it's a massive gap.

having those things and understanding there's a gigantic market there that needs to get baseline checking account kinds of services, those are projects that will see longevity and stamina and see them or emerge from this moment we are in stronger than ever. emily: sheila warren, thanks for sharing your view. sonali basak, thank you for joining us. coming back up, chuck robbins, cisco ceo once more from cisco live for more of that exclusive conversation. next. this is bloomberg. ♪

emily: we are back with chuck robbins, ceo of cisco. we were talking about the economy, elon musk says he has a super bad feeling, jamie dimon is paring for an economic hurricane. how would you phrase it? chuck: i remain optimistic but i understand there is a lot of complexity in the world. we are focused on delivering technology to our customers, focused on delivery are shareholders. there's a lot of complexity. i think the fed is going to move tomorrow. we are paring for what we can control and will respond accordingly. emily: are you preparing for a possible recession? you have to be planning for different scenarios. chuck: we are always planning for different scenarios but we've done enough downturns that we have playbooks and know how to deal with those appropriately. i'm trying not to borrow any trouble even though i understand

it's a complex environment we are operating in. emily: let's talk about the supply chain. where you see it impacted? how long will these problems in general be with us? chuck: on the supply chain front, we are seeing capacity issues around semiconductors because every product on the planet seems to have one or more semiconductors in it. we have seen pc demand has slowed, which has freed up some components in the marketplace. we are starting to see inventories that brokers increase. they build their inventories from oversupply that suppliers have acquired. we are starting to see some good signs but we are 3, 6, 9 months, honestly.

emily: the big debate is do you go back to work full-time or not , webex, one of cisco's top products helped enable remote work. what is cisco's policy on remote work? how are you thinking about it? chuck: number one, we've opened our offices and are leading with the manager and team to determine how many days a week do need to be in the office as a team to drive productivity. then which days do you want to come in as a team? we don't think it makes sense to mandate days were people come in the office. before the pandemic, we had almost 15% of employees work from home over time -- anyway. they will be interacting over video anyway so we are leaving it up to the teams but also building a whole set of products and solution portfolio trying to

solve this hybrid work issue because every customer has a different approach they are taking and we believe there is technology that can help them. emily: do you think elon musk calling workers back to the office, is he going to be on the wrong side of history? chuck: every company is different and what they need. there are groups that have decided they need to be in the office more often and our engineering teams that want to collaborate, they are spending more time in the office then our other team. it would be difficult to critique another ceos decision about what they need their employees to do, but we think the strategy is working so far and see the innovation continue to pour out of the organization. we are quite comfortable with where we are. emily: if the future of work is hybrid -- i know that is one of the focuses of cisco live. talk about the threat landscape

you see for businesses and the vulnerability they face in terms of shoring up their defenses and getting systems ready and able to enable this kind of work for the long-term future. chuck: they complexity that has been created over the past few years, every customer is dealing with employees are massively distributed. they are on public clouds and private clouds as well as data is being distributed. we have iot becoming real and new devices coming on the network. it creates a new paradigm around how our customers need to defend in security. which is how we announced -- why we announced secured connect plus. we are bringing technologies to help for this new environment and at the same time, it is imperative that we have to stay focused on employee hiring. all of the passwords and things

we count on everyone to do every day continues to be one of the biggest risks in the system. emily: on m&a, are there any areas you are interested in or potential targets you could share? chuck: [laughter] i've been asked a few times of our m&a strategy has changed and i say our strategy hasn't changed. the openness to talking to us might have changed. we remain interested in the same areas we are interested in. there are emerging areas around observability. we start with is it a strategic bit for the technology portfolio. as long as those three were, the valuations make more -- assets fit in that criteria more than six months ago. emily: any chance cisco would make a competing bid for vmware?

chuck: i'm not going to comment on that. we are constantly looking at all of our potential targets out there and we build partnerships with companies, we acquire and do lots of our own innovation and research and development and we will continue to focus on all of those. emily: you've been in this industry for a long time and have been working at cisco for a long time. one of our guests pointed to cisco's stock and what happened in that busts and how long it took to get where it is now. how do you see the downturn in the longer term picture? i'm curious how you are evaluating it. chuck: it's funny you say i've been around for a long time. you were one of my first interviews when i became ceo. i think what has happened is there's a higher value put on

being profitable clearly. there's a lot of similarities and companies that have great ideas and similarities with the.com bust. i've heard people talk about it and there were quality companies that emerged. what will be realized is what are the business models that will emerge have the ability to make money over the short term. the market is going to reward real companies and make real earnings. our current quarter, the last earnings call was a record year for cisco, so we are pretty happy with where we are. emily: as you are mapping out your plans, what is your strategic advice to yourself in terms of how you get from this point to the end of the year dealing with the unpredictable forces? chuck: my advice is look back at what you've done over the last two and half years because there

will be different crises and we are dealing with another right now. it sounds cliche but we focus a ton on the stuff we really can control. i've been that way almost all my life. the things i can't control we monitor and plan for about don't worry about them. we are going to continue to execute and deliver technology we think our customers really need. as everyone is trying to modernize and build their architecture for the new world, candidly to deal with the next crisis and be ready, because sony of our customers were not ready when we went into the pandemic. emily: chuck robbins. i remember that first interview you did with me. i appreciated the time then and now. thank you for joining us. we will let you get back to cisco live. chuck: great. emily: i went to get to another big enterprise company -- it sank to a 16 month low in monday's market fall. but now having the best day in six months after fourth-quarter

cloud sales. ed ludlow has been taking a deep dive on that. ed: how quickly things change. we want to move into cloud and cloud is less than a quarter of revenue and they performed. they are giving a bullish outlook about growth. 25% in the third quarter, at a time most are worried about recession, cisco -- [laughter] they are really important to get a read on the economy because this is where businesses spend their money. emily: you heard what chuck robbins said. he's optimistic but it is, located. what is oracle saying about the economy? ed: there are macroeconomic headwinds, but what is interesting is just like cisco did, they are maintaining the idea that demand is there. even smaller businesses are willing to spend on moving

because over the course of the pandemic, they learned investing in moving the cloud is cost-efficient. it might be an upfront cost or a brave decision but you are not labored with a lot of hardware or service. seems like a smart choice. emily: you still need technology to keep remote workforce is connected. larry ellison -- we don't talk about him enough. last year, we were talking about his plans. talk to us about a company we don't talk about very much but is still a giant industry. ed: we talk about him more as a silicon valley kind of name. he owns a big chunk of oracle. he has a vested interest.

he stepped down from the board of tesla. he's an ally of elon musk. he is a reported backer of musk's bid but is also running an important company in oracle. emily: interesting to see how his career has evolved. thank you. that's it for this edition of bloomberg technology. full coverage right here on wednesday of the fed meeting. we are expecting those rates to rise 75 basis points. also we are joined by victoria green with g squared and the chief strategy officer of queen shares talking crypto. that's all coming up tomorrow. i'm emily chang in san francisco. this is bloomberg. ♪