>> from the heart of where innovation 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. misleading the public and security lists are a ticking time bomb. what it means for musk's attempt to get out of the deal. my one-on-one with melinda gates from the gates foundation that shows the world is not doing so great. also the changing philanthropic landscape and how she is taking action post roe. her relationship with bill. all of that in a moment. let's get a look at markets with stocks plunging. especially tech.

ed ludlow is joining us now. ed, what happened? ed: for focus on the consumer price index and inflation print which came in hotter than it was expected. we built up anticipation that inflation would be cooling off and it did not. the full focus on the fed meeting next week. look at the nasdaq, the s&p 500 the main gauge of u.s. equity , the s&p 500, the biggest drop since june 2020, the nasdaq with the biggest drop since march 16, 2020. you and i remember that day in the context of the pandemic era. there was a push higher in yields, bitcoin was caught up in this broader risk off sentiment. dropping 10%. back down to 20,000 u.s. dollars. we are really reconsidering where we stand with the fed. if you look at my terminal chart, look at what happened. this is the story of the day. expectations with the context of rates shooting up in the s&p 500. how quickly the psychology of the market can change.

if you want more superlatives, look no further than apple with the biggest drop since earlier this year, march of this year. 150 billion u.s. dollars from market cap. it was off the back of a four-day nasdaq rally with confidence around apple and the surge in the stock after the stronger-than-expected data. elsewhere, twitter update tenths of 1%. we will cover the reasons throughout the show. peloton down 10%, after hours it actually rose on the news that john foley was leaving the company. the market changing its mind, caught up throughout the day. emily: thanks for the breakdown, we will dig further into the selloff from what it means. victoria joins us now. what do you make of this so suddenly in the session?

>> today as when reality met expectations on inflation and i think market had gone into this. we are definitely up inflation and today was a wake up that inflation is still here and very sticky inflation. it is no longer just about energy. food, housing, medical expenses, a lot of areas we thought were getting better really were not. today was a step back into the reality, 4% terminal rate may be too low, we're still in a sticky environment that may prove to be difficult to bring down, especially food prices. emily: what do you make of what happened with tech in particular? what distinguishes the tech part of the selloff from the rest of the selloff? >> tech stocks tend to be growth stocks. higher multiples, promising higher than market growth.

that is why you buy them. you are paying more today for a dollar of future earnings. every time you see something like this, you check on how long of a duration stock to you want. most tech stocks tend to be promising further future growth. right now, it's show me. what can you produce and how successful are you. you do not see anyone immune to it. any of them, including microsoft , tech stocks did not hold up well. the semiconductor took more pain. a lot of that is repricing expectations. the fact that it's a high probability that continues to slow down and that puts pressure like we saw with nvidia. people are not upgrading their computers as frequently. that will put pressure on the growth multiples they need to go. the worst thing you want to own

own a growth stock that stopped growing because you own a dud. emily: are the markets going to be back up tomorrow? what do you think? or is this some soda turning point to a further drop? a more prolonged drop in markets? victoria: we do see this as a bear market rally. we will test our lows. we saw the support around 3900 on the s&p. as we digest, you have a week between now and the fed and people are going to get very nervous about what the fed is going to do. is it going to be 50 and 50, this reality of the tightening cycle. then it is not just about the united states, but what other economies are doing, how much they are tightening rates, what that does for mortgage rates.

in australia, they're going to be hit with interest rates. i to gets too early to buy the dip. you might get a relief rally, but do not get foam a about the market. emily: how are you changing decisions about where you park your money and how much of it goes to growthy-tech and not? victoria: we want stocks that have defensible modes. what will the cash flow look like if the world continues to slow? there is nowhere to hide. it doesn't matter if you are eating out or at the grocery store. we have some factors that will make food worse. the avian flu, eggs and chicken. there is no alternative.

as treasury yields come up, you do have an alternative, you don't want to take any duration risks, but if you look across the landscape, you see what is well above the average dividend yield and they will keep going up. the world of tina is also rotating. you may see a flight to safety. you are seeing pressure on the rates market. if you hide at the short end, you may be able to make some money. emily: victoria green from g squared private wealth. victoria, thanks for breaking it down. coming up, all you need to know about testimony from the twitter whistleblower and what it means for elon musk. that is next. this is bloomberg. >> it took me maybe 30 minutes to reach out to when employee. what do we know about this

person? it took that person 10 minutes to get back to me and said, here is who they are, this is the address where they live and this is where they are physically at this moment. they are on their phone, we know their phone number, and the other accounts they have tried to set up on the system and hide. and we know they are on the other social media platforms as well. ♪

emily: it was an edge of your seat kind of testimony from a former twitter executive turned whistleblower. he slammed twitter's management, operations, and called the security risks a ticking time bomb. here is some of what he told the senate judiciary committee. >> twitter leadership is misleading the public, lawmakers, regulators, and even its own board of directors.

what i discovered when i joined twitter was this enormously influential company was over a decade behind industry security standards. to put it bluntly, twitter leadership ignored its engineers because key parts of leadership lacked the competency to understand the scope of the problem. more importantly, executive incentives pushed profit over security. they don't know where it lives or where it came from. unsurprisingly, they can't protect it. which leads to the second problem. employees have to have too much access to too much data into many systems. there was not an easy ability to find which engineers had logged into which system and what data they had access to. i explained this to mr. dorsey.

my understanding is he did not understand this prior to bringing me in. >> does he understand it now? how about your ceo? does he understand this. >> since he has been there for 10 years and rose up through the ranks and has talked to the engineers -- >> is that a yes? >> i believe yes. i am reminded of a conversation with an executive where i said i am confident we have a foreign agent and their response was, since we already have one, what does it matter if we have more? let's keep growing the office. emily: here to discuss is the founder and ceo of chamber of progress and bloomberg's own alex who covered the hearing today. adam, i want to stop what was -- start with you. what was your initial reaction to the testimony? it seems like not a good day for twitter. >> he claimed the company security is lacking at the company has disputed that.

others pointed out it was his responsibility to strengthen security. the question of whether security is sufficient will ultimately be one for the federal trade commission to determine. no company likes having their internal disputes and challenges aired publicly. there are clearly conflicts between zatko and peraga. i think with security, it is a hard topic because despite the political table pounding, the reality is nuanced. twitter has had a few high-profile hacks but they are not a regular occurrence. every day without a hack is a success. there is no prize for a day without breaches. could most companies do more to improve security? certainly. does twitter do security better

than most companies? most certainly. emily: what were your big takeaways about the big revelations here? and what this might actually mean for its dispute with elon musk given that it did not seem like bots and spam really came up. >> i will start with the takeaways that are not ask related and related to what adam was saying. there was a lot of political table pounding and a lot of calls for increased enforcement, increased regulation. and emily, there were surprising allies. folks like lindsey graham the republican from south carolina aligning with elizabeth warren, the democrat from massachusetts saying we are working on something to better regulate tech companies. amy klobuchar and chuck grassley leaning into this idea. senator blumenthal suggested we might need a regulatory agency to regulate tech.

all of that is in the realm of d.c. and the ongoing conversation of the role in big tech and where regulation comes in. the elon musk part kind of place -- plays into into a little bit of what we heard from zatko, what he described as almost a cultural aspect of the company where he said the company kind of fights fires, moves from fire to fire. make short-term changes, isn't thinking long-term about security. they are thinking long-term about growing revenue and users. that point, even though it is not specifically one of the three reasons that elon has given to back out of the deal, i think that would be the one he might be most interested in. he has leaned on this idea that the board and the executives have misrepresented data. while we did not hear about bots or spam accounts, the cultural element might be the one we see

pulled into the argument that musk is poised to take in october. emily: what do you make of that? our bloomberg intelligence analyst have concluded they don't think this testimony will have a material adverse impact on twitter's attempt to hold musk to this deal. they still think it's a 0% chance this deal goes through. what do you think about what zatkos said that rises to the level of impacting whether or not this happens at all. >> i'm not a stock analyst. one of the thing that was surprising to me was the extent to which the bots and did not come up today. in the past, we have seen republicans in congress fairly eager to talk about twitter in a way that is very much in line with musk's goals.

that was a bit of a surprise to me. that is really a separate process. i compare this a lot to the frances haugen testimony last year. policymakers introducing a number of bills. there were eight different bills introduced last year mostly dealing with social media. today's testimony was uniquely about twitter and its security practices. that question is most likely looked at in great detail. the question of bots is, as we know, a central question of the litigation the company is engaged with. there was nothing new that comes out of the hearing but i think changes the direction. emily: comparing it to frances haugen's testimony, that was really impactful and seems to have significantly adverse effects on facebook which has since changed its name and still working on trying to clean up its reputation.

one more question about the elon musk part of this, alex. twitter has responded saying that they stand ready and willing to complete the merger with elon musk. they say 98.6% of shareholders today approved elon musk doing this deal. that was expected. but twitter is still saying that we are going to make this happen whether you like it or not. >> yeah, it's a funny situation where the owner could be a man who has had three ticks in the i don't want to do this deal bucket. shareholder approval was significant, at least that very large majority thinks this is the best path forward for shareholder value for this company.

certainly, we will be following the play-by-play going into october. we have seen a little bit of drama, the judge coming to musk saying you need to give up your text messages and then going to twitter saying you need to reveal more data. there will be more fencing back and forth as we go into the next couple of months. this is another check box for this deal to continue to that litigious end we are set on right now. emily: another thing said was that twitter is more concerned about foreign regulators than u.s. regulators. what did you make of that and if

it will goad the ftc taking more aggressive action or other regulators? >> the ftc has an existing consent decree which is 11 years old with twitter. it will take a closer look on if it is living under the terms. i don't think there is any doubt. one question was if the federal government had enough resources. lindsey graham talking about if we need a new agencies. the ftc last year, there was a proposal by the biden administration to read a whole new bureau at the ftc focusing on privacy and data security. and that is a very good idea. but unfortunately, republicans killed that proposal. including some of the same republicans that were complaining today about the ftc not doing enough. there is a lot more policymakers can do. they can pass a consumer privacy bill. they have been stalling on that. the ftc can issue more comprehensive data security rules. they have been reluctant to do that. they preferred to reset it once.

the problem is, it does not set clear security rules for other companies to follow. they just recently kicked off rulemaking. there is a case that rulemaking should be focused on data security as privacy. emily: alex, what is next? we are now about a month away from the day that this trial was supposed to start. elon musk uv twitter. >> what is next is continuing this evidentiary area process. against the backdrop of one of -- what is going on in d.c. one of twitter's executives will be there alongside mehta, youtube, and tiktok execs as well. for twitter, they will have dueling distractions. big ones for whether or not this deal gets done with musk. we saw he was watching and tweeting today, perhaps cheekily. but we know the jokes turned serious so i'm sure there will be bobs and weaves on that side of the deal as well as in d.c. in terms of if there is any kind of action here.

after frances haugen, the facebook whistleblower did go down to washington. there were bills proposed but not a ton of significant changes yet. if there are moves on the political worry side, if history is any guide, those might be slower than what we see on the deal that is expected. emily: thank you both for your commentary today. we are going to continue to watch every twist and turn. we will be right back. this is bloomberg. ♪

emily: meta says it needs its rivals to share some of their most closely held secrets in order to defend its antitrust suit. meta has subpoenaed 132 companies like snap, tiktok, and clubhouse saying it will help the argument against the 2020 lawsuit claiming the company has a monopoly on social networking. the trial isn't likely until 2024 at the earliest. it was a huge night for streamers, particularly hbo and apple at the emmys. hbo taking home 12 awards, mostly thanks to succession and white lotus. apple took on the top comedy

award for ted lasso. netflix scoring three any wins including outstanding lead actor for squid game. the emmys have become a focal point of the competition between the largest media and tech companies and their streaming services. it is the sharpest drop in the market since the onset of the pandemic. much more on the evolving tech outlook after tuesday's selloff. this is bloomberg. ♪

emily: welcome back to bloomberg technology. i am emily in san francisco. back to the markets and the tech tumble. what are you watching?

ed: there was the idea that it was really tech that really suffered, one of the most speculative corners of the market. but that technology communication services were the worst subsectors of the s&p 500. the s&p 500 having its worst day since june of 2020. the concern is about higher rates. the market pricing a 75 basis and hike. -- basis point hike. some are talking about 100 basis point hikes. technology is vulnerable to higher rates because they discount the present value of future profits. we thought a lot of what the fed would do was priced in. the more speculative areas of the market.

we bring up this next list of movers, the mega caps that really suffered. they are sometimes seen as defensive strauch's -- stocks because of their strong balance sheets and their reputation be in quality and a hostile environment. apple, microsoft -- specifically, apple has shown staying power in the face of inflation. the iphone 14 pre-lim data is really strong. but they were not spared. all corners of the tech sector hit by the selloff. those mega caps were hit as well. emily: look at all that red. want to stick with the tech down torn. the portfolio manager at upheld, how are you moving your money around after a day like today? >> relative to earlier this year when we were watching tech all,

the entire market fell with it. that is a little bit of a different set up for investors. you have a lot of investor conferences going on right now with software companies reporting reasonably strong numbers. they are not softening guidance or pre-announcing a bad order. we have yet to hear on the micro side of things that things have worsened. but what you are continuing to see is these multiples moving around really fast. that came from the 10 year interest rate expectations being the highest they have been in 12 years. we still see some pockets of expansiveness in tech. we don't think the market has bottomed everywhere. emily: where are the pockets? >> you have snowflake at 30 times revenue. it is an excellent company with

an excellent product and their customers are really excited about giving the company more money. they are also plowing every dollar into sales and marketing. as we have been talking about this profitless tech, we have seen the tech universe splintered here. we have companies that are streaming in e-commerce. and it is unlikely when those companies are going to recover. the amazon fulfillment center is not generating a lot of cash. with what meta is building and what google is building, every dollar, they see $.60 of operating cash flow for the next year. we see two worlds forming within

the tech universe here. those that generate incremental positive returns are rapidly shifting a portfolio. emily: so the question remains, how much worse will this get? a lot of people thought that jay powell was bluffing and i wonder if this is some vindication for him and for the fed? does it make you more inclined to say yes, we are heading into a recession? >> if we are going to talk economics, it does -- the more credibility jay powell has, the better off the u.s. dollar is. since his last comments, he said no matter how things might look like they are improving, i will stay stubborn with my interest rate hikes. the market heard those comments and thought, is inflation going to get better? that is good for everybody. we were up 5.5% going into today and we're starting over as if the month is starting all over again. i think jay powell has absolutely rebuilt some of the credibility that he lost being behind the curve year or so ago.

if he is able to sustain that, we will have a stronger dollar. that is great news for all investors. emily: what do you think happens tomorrow, right? is this a bottom? do we have further to fall? or are we going to swing -- you know, do we swing back to the green and today is just a blip in reaction to this bad inflation data? >> you know, we do our best to analyze the present and not predict the future. the market does have a funny way of going in the opposite direction that it did the day before.

there are also a ton of studies that talk about how most of the money made in the stock market happens when the stock market is closed. that very well could happen in a situation like this if folks come in tomorrow thinking the market is oversold. but we look at where we are in the quarter. we are nearing the end of september, nearing the end of the third order. companies are four weeks to five weeks away from another earnings. we are in that period of the year where we see growth rates accelerate. adobe have been reporting relatively low price inflation in digital goods specifically. what we will be looking for in these earnings calls just a month or so away is that businesses are continuing to report strong numbers in spite of some pretty challenging macro headwinds. we feel reasonably good about the businesses we are owning here going into the fourth order -- quarter. you don't get opportunities to buy these companies. emily: robert cantwell, upholding's portfolio manager. thank you. traditional finance and blockchain collided. what is behind the new pilot project from swift? the global secure messaging system for financial institutions and what it means for people and money everywhere. this is bloomberg. ♪

emily: time for the crypto report. swift is testing out blockchain.

our crypto contributed has more. what exactly happened? >> the idea ms. blockchain -- is critical financial infrastructure. russian banks were cut off from swift. remember, it connects banks globally. as a lifeline between the bank and messaging system among different firms, hundreds of of companies routinely. why does blockchain matter? it involves citigroup, one of the most global banks in the world. vanguard, these are all companies that deal a lot with

the safety and security of assets around the world. it could be potential to operate critical infrastructure simply with how messaging and communications work across institutions across the world. emily: so how long will this pilot be running? and if it works, could we see a potential change in the underlying technology? >> the reason i brought up the russia issue as well is when they were really cut off and certain institutions were cut off from swift, there was a lot of concerned about russia, china really developing their own type of swift or rival to swift. by means of technology and other infrastructure to really start to communicate. and you do see some traces of that and acceleration of that this year. the idea of using blockchain to

really strengthen infrastructure among the swift system itself, is there potential? absolutely. when you think about blockchain itself, there is a huge debate in the fintech community, in the banking committee. is blockchain the best technology to really be used to communicate among all of these entities? is it the safest and most secure? at the end of the day, this is a way to kind of put the network together. they are responsible for the safety and security of that data. there are some applications that can really be helpful in the future. clearly, tracking that data, seeing what is possible in terms of money laundering and fraud within their own firms. have to make that decision if blockchain is the best means to do it. emily: fascinating. thank you for breaking that down. some of this is wonky stuff.

as always, we appreciate it. coming up, how is the world doing when it comes to achieving equality and ending poverty? things are slow. really slow. we will hear from melinda gates and jamie zimmerman of the gates foundation next. this is bloomberg. ♪

emily: melinda french gates says the pandemic has stalled progress on critical issues like poverty and climate change, calling gender inequality the most alarming. this among new findings from the goalkeepers report released by

the bill and melinda gates foundation. back in march of last year, french gates told me that women were in crisis as the pandemic dragged on. i asked her about the state of women now. take a listen to what she had to say. >> i would say still in crisis. women's livelihoods were destroyed by the pandemic. whether you were in the informal sector or whether you had a job, women are saying i can't do my job at the same intensity as before or at all if i don't have safe and affordable childcare. that is just a problem. we have pushed women out of the workforce and we have so many girls across the world who are not in school anymore. emily: how could a recession or prolonged economic downturn make this worse?

>> inflation also makes it worse, right? that economic downturn, the fact that it is more expensive to get food or to get you'll means -- fuel means that we are already seeing more hunger around the world. and we are seeing because of the ukrainian prices -- crisis, there is less food. there are families in the state of hunger and particularly women, people who are food insecure, three out of five are women. emily: the report does not mention the overturning of roe v. wade but you made it clear that you think america has taken a huge step backwards. what is the foundation doing to support abortion rights? what are you doing to support abortion rights? and where do you think the work and the urgency needs to be focused? >> at the foundation we continue to work on family planning for low and middle income countries because women are still crying

out for that. at pivotal, i'm working on getting more women in political positions of power in the united states. we would not have these laws overturned if we had more females in our house of congress and in our senate. of that i am certain. emily: when it comes to the foundation, you said you and bill said if found, you would step down as cochair? how is your working dynamic of all? can you continue to work together? will you still be there next year when that deadline comes? bill and i have worked effectively together for a very long time including while we were going through a difficult time in our family life and through a divorce. we showed up and worked then and during the pandemic. and we do today. we have a board and met for the first time with our board of trustees last week in person. and i think what they would all tell you is that bill and melinda remain completely committed to this institution and to working effectively together and that's what we are doing today. emily: how is the board going? i know you added board members. up to four. i know you said you considered adding more. how has that changed the

dynamic? >> for right now, we have the board that we would like to half -- to have. that is fantastic. and they are pushing on our thinking. that is what we wanted from a board. we want to good governance. bill and i are not getting any younger. the board asked fantastic questions last week about resource allocation, about partners, about our internal teams. about how we are incentivizing and motivating. i'm looking forward to more discussions with the board. emily: i want to get back to the gates foundation report. the goalkeepers report finds that almost every indicator of the stated development goals is off-track for achieving them by 2030. jamie zimmerman joints me now to increase low income women's economic empowerment through access to and use of digital financial services.

thank you so much for joining. what is your big takeaway for this report aside from we are moving way too slow. >> thanks, emily. looking at the goalkeepers report that came out today, we are seeing big takeaways that women have been taking a major hit. gender equality is stalling and falling behind. melinda said it so well and we are in a state right now where the hits just keep coming. you have inflation. floods climate crises, food , insecurity. and we are looking for ways that we can find new tools and interventions that can help us overcome some of these really difficult situations that we are finding ourselves in. the pressures women are facing. labor force participation. inability to recover. looking for those points of light in the darkness.

i think the one point we are actually seeing progress is around financial access. and for the first time since we have been tracking this data and recording this data, we are seeing the gender gap and financial inclusion narrowing during even this really challenging time. and women taking up mobile money services in the last few years. emily: tell us what you mean by mobile money because you talk about it as a tool that can help increase gender equity. what do you mean by that? how is it working? >> it is essentially a basic financial product that you can access on a basic phone with basic conductivity.

it is a service that is provided by your network operator. it is a financial tool that you can receive money, send money, and even save a little bit of money.tons of interesting innovs are happening with mobile money where it is connecting to other tools and things that women need like the ability to pay for health care services. to pay utility bills, pay your toll when you're driving down the highway. it is an alternative to financial services that we see in the developing world. and it is very popular because the barriers for entry are much

lower than the bank account. if we have a phone whether it's a basic phone or a smartphone in their hand, you can bank on your phone without it being a bank account. they tend to be disadvantages for women. emily: it's good to know that at least on one measure, things are getting better. that said, horrible name -- market. inflation is rising. how much do you worry a prolonged downturn can set women back? >> we are seeing a lot of pressure on women. digital tools and being able to participate in the digital economy and the new digital future we see coming, we saw

massive acceleration of digitization nobly -- globally the last few years. it will be through participating equally in the economy of the future. it will help move us from trying to keep track and not fall too far behind and maybe recover a little bit to actually becoming a resilient, robust economy and society. that is true everywhere in the world. we need a gender equal digital future. we need to have women on equal footing with both access to digital tools, access to digital economy, and equal footing on the ability to use the digital tools that are out there and are coming. and through all of that is where we see a lot of acceleration in

the face of change. we saw mobile money accelerate in the last several years because we found ways to make it accessible to women to meet their needs and tried to get that equality and access. it has helped women get through this challenging time, but actually recover out of it. i think it is going to be a kind of multi-hands on deck approach we are going to have to it take to ensure the tools of the future are things in women's hands had made for women. i think that is what gets us through to the next more resilient future that we will need to write. emily: here is to progress and faster progress. thanks for shining a light on this, jamie zimmerman, deputy director of digital conductivity at a gender equality at the gates foundation. that does it for this edition of the show. i'm emily chang. this is bloomberg. ♪

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