announcer: from the heart of where innovation, money, and power collide in silicon valley and beyond, this is "bloomberg technology" with caroline hyde and ed ludlow. ed: i'm ed ludlow in san francisco. caroline hyde is off this week. silicon valley bank finds a buyer. we will give the details of first citizens' takeover and what it means for the biggest financial -- failure since a financial crisis. mike wilson warns of elevated risk in markets. we discussed with greg boutle bnp paribas of.

-- greg boutle of bnp paribas. the semiconductor index is down. first citizens stepping in for svb. yields higher, risk off going through the bitcoin, below 27,000 u.s. dollars this is a week where we are antsy, waiting for the amount of fed speak to come. this chart tells the story of the yields moving in relation to s&p futures. we thought we would get a bullish tilt. that is the macro picture with movers.

>> a tech company working with nonprofits. the stock up nearly 12%. it rejected an unsolicited takeover bid from clear lake capitol for $71 a share. they said it is too low and shareholders agree. guggenheim raise the price target from nine dollars to $12. . a good day for snap. the story of the day is what is going on in the banks. first citizens will buy svb. lots in the deal for citizens in particular, one of the top 15 largest u.s. banks. stock is up 48%. that is spring a relief rally

for first republic. shares higher by 16% at the moment. thanks of the big outperformer today. over the past month, a totally different story. energy and financials leading losses. on top, communication services and tech names. that is one of the more interesting details of the past month we have lived through is that growth has taken back the leadership ed: ed: crown from value. -- readership crown from value. ed: for citizens is buying silicon valley bank. what are the numbers behind this transaction. >> very murky at this point. very unclear how it was being valued and what we should say,

there is a lot of moving parts. they are looking for what will be safest for the banking system and for the nation as a whole. they had given a good-looking deal to first citizens. it is positioned in a way that they have a great shot at making this work. you saw in the share action, it is extraordinary. in the 10 years i have covered it, i have not seen a share price react quite like that. you get a 50% run-up in the stock. it reflects the market and investors giving management a huge amount of credibility to integrate this successfully. ed: this is what the venture

capital community wanted, a reincarnated form of silicon valley bank to survive. now, still a threat to that industry because of what has happened in the banking sector. ed h.: there is a threat generally because they were shown to be a little bit not cautious in the amount of exposure. generally, you are seeing it in the bank stocks. there is some recovery around the banking industry and regional banks. it is still going to be an issue. the end of the concern in the banking sector. ed: raking headlines. disney has begun the first round

of the 7000 job cuts it announced in early february. in a memo to staff, they say the first wave of those impacted will come in the next few days with a larger wave of layoffs happening in april. a reminder this is 7000 or so it layoffs part of a broader plan to target $5.5 billion of cost savings announced when bob iger took the reins back earlier this year. this is a staggered approach disney is taking. first round of layoffs will be initiated in the next few days and a beer wave in april. shares not moving huge in response come up .7%. turning to the equity market and the tech sector more widely. mike wilson of morgan stanley warned that repricing of the sector will elevate wrist -- risk. >> there will be more

cost-cutting in that space because it was so egregious and over was worse. it will be a drip, drip. markets tend to figure this out ahead of the numbers coming down and because the bond market just repriced itself overnight, the risk for the equity market is elevated now more than the last six or 12 months. ed: or we are joined by greg boutle of bnp paribas. back to disney in the layoffs. what is your read on that eared what does it tell you about the health of the economy we are at the right now. greg: best year the equity market was driven by the re-parsing of rates and multiples. this year for the broader equity market and tech is the second order effects of higher rates feeding into the real economy,

and that takes the form of a recessionary backed up where job cuts are on the agenda. ed: we are talking about signs of stress. the potential of a downturn. look at the vix. when you look at the data sets, what is the conclusion you are drawing? greg: we say it recessionary repricing. if you look at the vix, the price of vix optionality, explosive 50 point two day move. looking at the bond market, massive shifts in pricing over the last two weeks. looks like recessionary price action. when compared to the broader equity markets, a 2% downturn in the s&p. there are different messages coming from different asset classes. ed: apple is down 1.2% in the

session but friday closing at a september high. it trails the pack of mega cap tech names, paving like non-risky assets. why is that? greg: for the broader index, it is being driven by the d correlation between tech or sectors like tech and the rest of the market. we are seeing the market taking the repricing of rates and saying discount rates are materially lower and multiples should be higher. we are not looking for a repricing of the growth prospects. our view is inherently they are a huge part of the economy and tied to the outlook of the real economy. the reason why the market is costs -- pressing were cautious is what we have seen over the last two weeks is troubling. ed: we can talk about tech for

an entire hour if we want but the point you are making is that not all tech is created equally, especially from a valuations perspective. there are corners of the sector have become a bit too expensive at this stage. greg: absolutely. when we talk about tech, it is hard to talk about as a single index. we see this as good quality that have sound balance sheets. those text stocks are different than cyclicals and the speculative stocks that have a lack of free cash flow and earnings and have a leverage on the balance sheet. we think the outlook and how they will react to different resumes is potentially bifurcated. ed: a frustrated are you with the federal reserve's messaging

right now? greg: i'm not frustrated with the messaging but they have a hard issue to navigate. they have ongoing inflationary measures. not long ago we were talking about 50 basis point rate hike no we are looking at the measures for this more difficult environment. they are between a rock and a hard place. it is one of the reasons why there is caution in the equity market. on the one hand, the fed might do some recession and that will be bad for risky assets in tech is a risky asset as a whole. if we get a better economic outlook in the short-term and upside, we think the fed will tighten and that is something that is tech valuations can sustain. ed: thank you for your time. disney has begun the previously announced round of layoffs, 7000

job cuts it says it was doing back in february. the first wave of employees impacted will be notified in the next oracle base. -- next four days. this is according to a memo bob iger set to staff -- sent to staff. the workers will be notified for these summer, a more broader plan to target $5.5 billion of savings. no big knee-jerk reaction to the headlines. these were cuts announced back in february. in the tech space, huawei has developed software tools capable of designing chips as advanced as a 14 nanometers, to help chinese companies sidestep u.s. sanctions and replace american technology. while weight is along many technology providers working to place u.s. components and

software from ai chips. coming up, we stay in china as the ccp sees a business friendly outlook. we will bring you the details next. take a look at alibaba, shares down 1.3%. we see adr push higher on the siting of jack ma who has appeared to have returned to mainland china for his first time in a year. gains now down 1.3% we will continue to track that story. this is bloomberg. ♪

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ed: the newest bloomberg big take, alibaba founder jack ma has resurfaced in china after months of overseas travel, considering to be the best chance of repairing their reputation with china and beyond. bloomberg opinions alex webb to discuss. we had the china development forum in china, basically a pitch for the economy after lifted the covid zero restrictions. in the same weekend, the poster child for chinese tech returns to the country. it tell us the story. alex: it is a fascinating piece from the colleagues in china. jack ma, founder and chairman of alibaba, forced to step down after criticizing elements of the chinese regulatory regime and what we have seen now is

they are trying to bring him back in in terms of promoting chinese interest and saying china is open to his and his, particularly in the tech space and he has resisted those calls, which says a lot about how desperate china is getting to re-boost that tech space which drove a pillar of growth for a number of time and now realize how badly they need it as growth in general slows a bit. ed: focus of the reporting has been the economy since the lifting of covid zero but actually for xi jinping, there is a balance between ideology and tech friendly policy, reversing some not tech friendly policy in the past. how is that playing out for the tech sector in china? alex: while he is trying to give the tech economy a new lease of life, the situation has changed. they are not the government

supported entities they once were. they are getting a little bit more government influence and how they are run. they have particularly what they do with data and there was reporting for a long time the chinese authorities are becoming increasingly concerned about firms such as alibaba, because they have a huge influence on chinese daily life and they also have a huge amount of data that could be used for the government but did not want to bring to much control under the right it companies. ed: let's get back to the breaking disney news, the first of what was expected to be 7000 job cuts, key part of a $5.5 billion savings drive the company announced back in february. we knew this was coming, and they are enacting those layoffs.

good news for the stock, right? >> this was very much expected we have $5.5 billion of cost cuts and 3 billion of those are from content savings but 2.5 million will be the counter is part of that. 7000 employees is 4% of their global workforce. the cost cuts are underway and this is important for them to get back to profitability and that is restoring the magic for dizzy. -- disney. ed: gains accelerating. it was said there will be a smaller wave of cuts, several thousand in april and will be concluded by the summer. why is it important this is done quickly? geetha: it is important because of all of the whole narrative

now shifting so quickly to profitability. for the longest time, this was always about streaming subscribers getting the maximum number of subscribers and now the new narrative has been the focus on profitability. for that, they have identified some a different cost cuts in the organization. it is important for them to get this done quickly because they are undergoing a larger structural reorganization. they are trying to simplify the entire operations with espn becoming its own segment. it is important to get all their ducks in a row before going ahead to wall street and telling them things are really taking shape. ed: thank you so much. coming up, a strong 2023 fiscal report out of salesforce has led to elliott investment management backing off.

details of why the activist investor will not proceed with the plan. this is bloomberg. ♪

ed: time norfork talking tech. security researchers at a moscow lab have found mao wait in pi nduoduo. it found earlier versions exploited bonner abilities to explore backdoors and gain unauthorized access to user data and notifications. tiktok's possible valuation could possibly escape u.s. scrutiny. it could come at a lower cost compared to hooters valuation --

twitter's valuation for $20 billion, according to research by bloomberg intelligence. twitter is looking for whoever leaked parts of its proprietary source code, posted on the widely used code repository by microsoft. twitter now wants them to identify anyone who posted or downloaded or uploaded its code. salesforce has an agreement with elliott investment management, the activist investor, which will not go ahead with a plan to nominate directors. brady ford has the story. it is the case of marc benioff lives to fight another day. >> they were very positive on benioff. when an activist comes in, the odds of ceo getting kicked out is on the table.

salesforce had a rough six months and saw the dangerous cocktail of slowing growth and increase calls for margins. the most recent earnings report lou everyone's expectations out of the water. this is one of those rare cases where an activist like elliott, known for being pretty active, decided to say we are happy with what is happening and we will take a step back without a concession with management changes. ed: this is a stock up more than 40% so far in 2023. that is the share performance story. what is the outlook for a salesforce right now? roadie: it is having the slowest -- bordy: they are having -- brody: there big focuses on profitability. they laid off 8000 people

earlier in the year, even stuff as minute as we want less salespeople because we had a ton of people hired. that is music to the ears of investors who have been saying, your profit margin is maybe 10 percentage points lower than a company like oracle or other more mature software players. the outlook, a lot of analysts would say much more positive today than maybe six months ago. ed: after salesforce posted the earnings, elliott hinted they wanted to see more and i guess they did. coming up, another rival to chatgpt, coming out of da tabricks. we get it all from their ceo. this is bloomberg. ♪

laura: keeping you up-to-date -- lisa: keeping you up-to-date with news from around the world. ukraine is demanding a meeting of the u.n. security council after vladimir putin's announcement on nuclear weapons. the value of a security council meeting is unclear because russia could veto any action proposed. hungary is set to vote on finland's proposal to join nato. turkey, the only other nato member not to act on finland's bid is expected to vote before its parliament goes into recess ahead of may elections. the u.s. is pushing for finland and sweden's applications to be completed before july. in israel thousands of people demonstrated in the latest show of opposition to benjamin

netanyahu's plan to reduce the power of the supreme court. protesters took to the street after benjamin netanyahu fired his defense minister for criticizing the plan. police battle demonstrators outside netanyahu's home in jerusalem. prince harry and elton john were in a london courtroom for a hearing into allegations the daily mail tabloid committed widespread privacy breaches. the parent company is accused of breaking and entering into private property and hiring private investigators to bug homes and cars to record private investigations and listen to voicemails. the newspapers lawyers are asking for the case to be thrown out. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts and more than 120 countries. i am lisa mateo. this is bloomberg. ed: welcome back to bloomberg

technology. a rare ipo, pre-site ai, data analytics firm owned by abu dhabi cheese 42 drew orders for its $496 million ipo. that is the latest sign of strong demand for middle east offerings. the listings will be abu dhabi's second of the year and was oversubscribed 136 times. let's stick with ai. data bricks has launched an ai language model that it says developers didn't replicate to build their own chat gpt like apps. joining us is the ceo. first question. why is it called dolly? ali: because dolly was the first clone of a sheep. dolly the open-source large language model we released is very similar. almost like a clone of these existing models.

the main difference is it only cost us $30 to produce it using just three machines whereas all these other things have been using hundreds of thousands of hours and have been trained on trillions of documents. that is why we called it dolly. it also sounds like doll e, the product put out by open ai. ed: a more narrow data set. you talked about the price comparison. think about the technology. what is capable with your with what chat gpt is offering now? ali: the key point that took us all by surprise in november of last year was this ability to have this human interaction where it is going back and forth and reasoning with you. people thought you need tens of thousands of machines and lots of money, billions. that is the thing we did for $30.

the key thing is we open sourced it. any organization can use it. with open ai and these other models, those are proprietary and owned by a specific company. ed: let's go deep into the nitty-gritty. this is a years old large language model. talk to me about the architecture. things are moving really fast. what is the architecture this is based on. rachel metz just joined us at bloomberg news. she is asking me the question, is this a generative system using transformer architecture? what is new? ali: absolutely. it is using transformer architecture which is a secret sauce. it is a generative model.

it is quite small and has not been trained on lots of documents and not a lot of money has been spent on it. we think the secret sauce lies in the small data set we trained it on. we had a data set with questions and answers of how humans like to have this kind of dialogue you and i are having in that small data set is the secret sauce and it turns out maybe you do not need these huge models. maybe the industry is going in the wrong direction. all you need is the specific data set and that is when you crack the code on this human interaction. ed: i tweeted you are coming on the show in one of the audience questions was about the ethical considerations around this. they are asking how data bricks approaches the ethical side of what it is offering. ali: that is super important to us. we think the best way is for the community to collaborate on an open model that we can actually understand.

we have the source code rather than it being locked down. it is super important we do research on the ethical aspects. open sourcing is really critical. every organization can have these so we can understand what they're doing with their data and understand what the model is doing rather than it coming out of a black box you do not have control over. only very few companies have control over it. ed: there is intense interest in this space. you heard us talk about pre-site and its oversubscribed ipo in abu dhabi. will data bricks ipo when the window opens? ali: that is a steppingstone. over the next 10 years this will have a huge impact and there is no doubt this will be a successful company. ipo is a steppingstone. we are not obsessed with whether it happens in the next six months or whenever it is.

we will do that when market conditions are appropriate. ed: you could do it within the next 12 months? ali: we are ready already. we have 6000 employees, we have the finances. we are operating, even though we are private pump as a public company. ed: final question on raleigh -- final question on dolly. if you make dolly cheaper, what is the risk it opens up access to bad actors? ali: the ethical aspects of this are super important. i think these models are superpowerful and it can help us do things better. they can help us make education better, health care better. they will be great for humanity but bad actors can use it to do bad things. not just dolly. any of these models. any technology can be used by good guys and bad guys. we need regulations and we need

to understand how the models work in the best way to do that is open them up and have them be open sourced rather than be propriety so every company can leverage this technology. we think in every industry the winners will be data and ai companies. it does not matter which industry vertical. they will be data and ai leaders so let's open it up and understand what they are doing. ed: data bricks ceo. come back and tell us how that progresses over the next year. thank you very much. speaking of ipo's -- an effort by its founder to get the sale done even after tech valuation have plunged. the company backed by softbank is prepared to file a fresh initial public offering document as soon as this week. in the filing ovo outlined plans to sell just a third of the shares originally planned. coming up, we turn to backers of silicon valley in our vc

spotlight feature and speak to -- pinterest climbing after ubs raised its price target and its buy rating on what it sees as advertising growth. roku jumping after susquehanna updated the stock. two movers to the upside when it comes to tech. this is bloomberg. ♪

ed: time for vc spotlight.

let's get a look at the venture forms powering growth in silicon valley. let's start on the news of the day. first citizens coming in to buy part of svb's deposit book. you and your company have some exposure to svb. what you make of the outcome. >> i think it is not surprising. we are hoping someone would come in and by the bank so the relationships continue. in terms of exposure we work a lot with bootstrap companies so they are not the core market for silicon valley bank's. we did not have as much exposure as some of our peers in the industry. i think this is a good outcome in terms of making sure that stability continues for folks going forward. i do expect to see a change in underwriting of policies around what profile of companies can get debt and on what terms relative to what we were seeing

in the past. ed: in every coffee meeting i've had come every phone call, vc's remind me they are investing on a 10 year time horizon. what have you made of the last couple of weeks? what you think the impact has been to how you go about doing business? elodie: i think there are groups that have been relying on debt, either as part of their initial investment strategy or more recently, we were hearing this the last six to eight months, there was a crunch in the public markets about a year ago and it has taken some time for that correction to materialize in private market valuations. we were looking at companies over the last two quarters. anytime we talked about their need for cash going forward we got a lot of responses around we would rather take on debt then take on a down round. i suspect for those types of groups that game has ended and there will have to be corrections on the private side

of valuations. from our perspective it is an overdue correction we have been waiting for for the last couple quarters. in terms of how -- go ahead. ed: i want to jump in and ask in that vein, what a term sheet looks like. they're all of these big picture themes in january through early february. bigger checks and slightly earlier stages. that all went away through tighter financial conditions when svb collapsed. what are you seeing in the sheets that come across your desk. elodie: i see it less in the term sheets other than valuations have rationalized compared to where they were in the last 18 to 24 months. the largest change we are seeing is a better alignment between founders and investors. for the last few years there has been a narrative in the market that more money at a higher

valuation is the way to showcase founder friendliness. founders have woken up to the reality that taking on more money at higher terms does not necessarily play to their benefit in the long run. we are starting to see a lot of founders who are asking more around how do you partner with us as organizations and as individuals? what type of value add are you bringing beyond a capital check? that focus on partnership behind more rational valuations is what we are focusing on. ed: did you just use the term founder friendly? i have heard that before the last few weeks. what does it mean? elodie: we have a very special -- we have a very specific definition, which is a dedication to making sure the companies we partner with have all of the resources and opportunities to succeed. for us that has meant we make sure there is clear alignment between us as an investor and the companies and the founders going in.

that does not necessarily mean the highest valuations, it means the right amount of capital for the strategy they are looking to enact. we have seen a game of we will raise as much as we can at the highest price. getting to a billion as fast as possible. that is the thing that has changed in terms of the definition of founder friendly. that is not a very friendly place to be. that is changing the definition of what founders are looking for in terms of being more thoughtful, asking more questions of the investors in terms of what you do to help your company's, how are you playing this. it is a 10-year game. it is a 10 year game of the company can live for 10 years. if they will run out of cash in 18 months because there is not the proper partnership at the board level where investors are challenging the founders as opposed to letting them run wild, that is a big piece of what we are seeing change in the market. ed: the health of the stocks

themselves, really focused on software and mobile applications. where you inspired about right now? elodie: if you're an investor who has been through a downturn you know what is coming, which is a closer alignment on entry point between funds in the companies they work with. there are a lot of countercyclical businesses that do well in these kinds of times so we are familiar with a business that enables you to sell your clothes. that is a company that can do reasonably well and good times. as economic pressures start to mount folks may be looking for a way to make more money so they are eager to part ways with items of clothing they have not worn recently. if you're looking to save money baby will be looking to buy secondhand rather than firsthand. that is the type of countercyclical businesses we could see out of these times. more broadly when you have more pressure economically and you

have less capital going into the market you start to see a lot of small advantages so you're able to hire better talent for a more rational price and you're able to get more bang for your buck when it comes to marketing and all of your dollars cannot just go to the facebook and google's of the world. i think you'll start to see businesses be built more efficiently than we have seen the last few years. ed: interesting firm, looking at early growth, looking globally, not just the u.s. but europe and israel as well. coming up, details on the meeting between apple ceo and china's commerce chief. why the u.s. company still relies heavily on china for the production of its most important products. as we had to break, there are two names i'm looking at, meta and snap. both of their price targets raised. snap stock up almost 2%. that stock down 2% in the monday session. this is bloomberg.

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ed: it is back and it is going viral. i'm talking about hbo's hit series succession, out with its final season. the family comes in on episode one and everyone is swinging. while we are still waiting on

those viewership numbers, succession stands as one of the top series out of the warner bros. platform. it does have big shoes to fill. earlier this year the last of us made its debut and the series premier garnered 4.6 million u.s. viewers. the biggest premier in hbo history with nearly 10 million viewers, house of the dragon. apple ceo tim cook met at china's mr. of finance at a time of heightened tensions between washington and beijing. mark gurman joins us now. i think this is the first time tim cook has been to mainland china. what did he discuss with the chinese commerce minister? mark: it is possible he has been there multiple times since the start of the pandemic. in terms of one of these, what i call state visits, the last one we know about was from 2019 where he spoke at the economic

state sponsored conference. you've seen him post pictures from apple retail stores and beijing. you see him speak at that conference. he talked about having a symbiotic relationship with china where both have grown together over the past few decades in terms of that partnership. in terms of the meetings, he discussed regulatory matters, he discussed the supply chain. it is very important for apple to have a positive relationship with the chinese government. as you know, apple is the unique american technology company to essentially have free reign in china. they can operate most of their online services, they can sell their hardware products, they can operate 30 retail stores. meta, amazon, they do not have that luxury in china. ed: the supply chain is fascinating because that word was in the statement from the chinese ministry. in your latest podcast you

discuss this idea about longer-term apple moving it supply chain dependence from china. mark: it does not make sense for apple to be so tied to one country. there are so many concerns in terms of u.s. and chinese tensions. there is the human rights aspect but there is a communist aspect. there are so many reasons apple may visit china. beyond that there is a factor that some of these chinese laws and regulations over last several years have created product delays. iphone 14 pro shipments last year. macbook air shipments in the middle of last year. these are due to covid zero policies. there is unpredictability and potential volatility which could hurt apple's underlying business which require shipping tens of millions of units of their latest devices. ed: in your latest newsletter you talk about ar/vr.

what is the main takeaway? mark: apple's mixed reality headset will be announced in june at the worldwide developers conference. that is going to be a big test for the company, if this could be a hit. inside the company they believe this could play out similarly to the apple watch. maybe a dud at first but over time become a major hit. ed: bloomberg's mark gurman on all things apple out of l.a.. that does it for this edition of "bloomberg technology." so much to recap on the podcast wherever you find your podcasts. a quick check in on markets. check the underperformer in monday session. nasdaq off .5% of the s&p 500 is up .2%. a lot of that story to do with relief in the u.s. banking sector. also tech movers in the s&p 500 as well. the other thing to take note on is all of the fed speak this

week on bloomberg technology. this is bloomberg. ♪

>> welcome matt: to bloomberg etf iq. matt:the whole gang is back together. no was in florida, no one has covid, the banking crisis is over, the fed already did its job. katie: it's all good. matt: first citizens has come to the rescue of svb, buying it after the biggest bank failure in more than a decade. and now, the banking sector is rebounding. katie: you can see that if you look on this board behind me. we have first citizens up in the