>> from silicon valley and belonged, this is bloomberg technology with caroline hyde and it -- ed ludlow. ed: i'm in san francisco. caroline hyde is off today. coming up, ibm's $4.6 billion deal for back to you. we speak to the company's chief commercial officer about the acquisition as big blue goes on a buying spree. seven deals this year. plus aston martin and lucid strike a deal. shares a surge after the luxury names joined forces.

we will bring you the details and get the outlook for tech stocks and crypto. let's get a state of play when it comes to markets. we are coming off the biggest weekly decline in technology shares since mark when the banking crisis was in play. the nasdaq 100 softer by .3%. there is a big focus on economics and what central banks around the world will continue to do in the face of inflation. some outperformance in the u.s. listed shares of technology companies. look at the golden dragon up .8%. there was a move into bonds thursday and friday last week at the expense of technology shares. bitcoin holding about 30,000 u.s. dollars. in terms of single movers, it is all about ibm. it is getting a bit of a boost. we are up a percentage point on ibm shares. it is all about 4.6 lien dollar

deal for acios. i want to get quick analysis and reaction on this deal from the bloomberg intelligence senior. do you think this is a smart move by ibm? i think we might be having some trouble with anna. what we can do is pay the and get the inside scoop on what is happening with this deal. i want to bring in rob thomas. you heard the preamble. this is kind of the move that matches what you have done with red hat. just give us the y on when you went shopping. >> thanks for having me. cio's ceo's, and cfo's are all trying to do with technology complexity and spending. think of apptio as a virtual command center to understand your technology spend, cloud spend and your labor spend.

i would say timing is everything. is there a better time to have software that can do that type of analysis? i don't think so. every company is thinking about how do i optimize my spend on technology, reduce complexity? i think this is a perfect time for what is happening in the market. ed: you are taking apptio from vista equity partners. what role did smith play in this and can you give me a sense of how he financially benefits from what is an all cash deal? >> i think only they can answer the returns question. we have been partners with apptio for a couple of years. this is not a new management team or company to us. they were founded in 2007. what attracted us to this space is that it is recurring revenues, software. these are big focuses for ibm. it is unattractive growth rate and has all of the attributes

that we look for in a deal. because we were users of the product and because we have been partners, we got a pretty good idea what it can do which is what made this the right time. ed: what does that he'll tell us about strategy going forward? seventh deal. will you continue to be active? >> we are always active and open-minded about m&a. it is the seventh deal of the year, makes of consulting and software. we are always looking for how to accelerate our strategy around hybrid cloud and ai. in may, we announced our generative ai platform. bear thinking about what are our capabilities that we could bring into that. another thing that was interesting is apptio collect data that represents $450 billion of i.t. spend. we think that is very unique and how we can then help clients together to optimize and manage their spending.

ed: we are kind of calling this m&a monday. it has been quiet in tech at least, 2023 so far. do you see yourselves as being opportunistic in that sense? taking advantage of the lack of activity? >> i think you always have to be patient and you have to run a discipline process. if you look at the market over the last couple of years, we have gone through adjustments around interest rate. for a time, it was hard to figure out deals that would make sense as we look at our financial model and what we need to do. we are open-minded that will start to change and this is a good example where we saw the right equation for a deal. we will continue to look really in the areas we are focused on, hybrid cloud, automation, data, cybersecurity, sustainability. these are the areas we are investing in investment. ed: of those, which is the priority? a lot of emphasis right now in

the field of artificial intelligence, generative ai as well. do you see yourselves prioritizing that? >> i think it is hard to pick one priority because getting back to apptio, this is about our thesis around automation where we have done deals around robotic process automation, deals around ai operations. this is kind of the. third piece to the puzzle i would not pick one or the other but certainly there is a lot happening in generative ai. watson x is about building data, ai governance. i would say all of those are potential spaces where today, we are aggressively building, but we would also look to partner potentially. ed: the final one on the markets. is there an advantage in going out into the private markets and doing deals with private business versus looking at some of the publicly traded tiers? >> it is really not part of our criteria when we are looking at deals. we're looking more at

strategic's like what is the synergy as part of ibm? where the ownership resides, it really is not anywhere in our criteria because those are things we have to work through. ed: in this ai boom, there is going to be increased demand on the data center and compute side. what are you seeing in the context of ibm and your need going forward? >> i would say what is happening in compute is probably perfect for the strategy we set out three years ago which is hybrid cloud. with hybrid cloud, you can run your applications, manager data, and you can do that across any cloud. clients with a hybrid strategy which i think is all most every client now, they can choose the right price and the right performance depending on what they want to do. and just one cloud, you don't really have that flexibility so you have to deal with increasing compute cost. with a hybrid cloud is perfect

for this moment because you can optimize your spend and the economics around how you deploy technology. ed: ed: and yourselves in terms of capacity planning, how active have you been? >> we are always thinking about what is coming next. we announced with general motors earlier this year work we are doing around winek's on vehicles. think of that as edge computing. it is not just about data centers. it can happen from edge to public cloud to private cloud. ed: i think they like the deal, a lot being complementary with how it exists within the hybrid cloud strategy. if there is one takeaway you want to leave investors with and why we care about, what is it you were most excited about to get the deal closed on? rob: every client is trying to

put more technology to work for their business, there is a rule of thumb that is may be 80% is about keeping the lights on, 20% for innovation. with ibm, i think we can change that to free up more dollars for innovation and that will be the start of creating more investments for hybrid cloud for ai, so this is about unleashing innovation. ed: thanks for your time on the 4.6 billion dollars deal. coming up u.k. luxury carmaker teaming up with a saudi bank. why the deal is being heralded as a game changer as both companies aim to steer away from financial woes. this is bloomberg. ♪

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ed: aston martin banking on a new partnership with luxury electric carmaker to help lead its growth in eeev market. lucid will receive more than $230 million in stock cash in exchange for battery components. joining us to break things down is shawn, what does aston martin get out of this? >> they get a clearer path to making an actual ev, this is something they have been out for a long time. you go back more than half a decade, they partnered with a chinese technology company, whose founder was making

electric vehicles at the time. the project went nowhere, they almost got to the report -- the point of releasing the car. they have been stumbling around ever since as they are trying to right the ship and raise money to move them into a new world. this gives them a better view of something and access to what is thought of as some of the better powertrain components in an ev right now. ed: we have covered this company for a long time and lucid has leaned into the idea they are a technology leader, the energy density of the pack. lucid cannot get its own house in order from a production perspective. i guess for lucid, what do they get out of it? they become a supplier of parts. sean: this is a return to form of them. something like 15 years ago, founded as a battery

manufacturer with the goal of becoming a supplier. it took them a long time before they decided to go out and try to make their own car and come up with the brand, that has flipped things around and eaten the original goal in some respects. now, they are back in that role. it is something they talked about, they were trying to raise money when they were still private. they almost partnered with ford at one point, so this is a long time coming. ed: president biden speaking at the white house on the topic of russia, listen in. >> convened are key allies on a zoom call to make sure we are all on the same page. it is critical that we are in a coordinate response and what to anticipate. they agreed with me we had to make sure we gave putin no excuse to blame this on the west or nato.

we made it clear we were not involved, we had nothing to do with it. this was part of a struggle within russian system. i also talked at length with president zelenskyy, we will be keeping in contact and i will be speaking with him late today or early tomorrow to remain on the same page. i told him no matter what happened in russia, no matter what happened in russia, we will continue to support ukraine's defense and sovereignty and territorial integrity. we agreed to follow-up and stay in constant contact. i am also in constant contact with allies to maintain coordination. i will be speaking with the head of state after this meeting and making sure we are on the same page. we are going to keep assessing the fallout of this weekend's events and the implications for russia and ukraine. it is still too early to reach a

definitive conclusion about where this is going. the outcome of all of this remains to be seen. no matter what comes next, i will keep making sure our allies and partners are closely aligned in how we are reading and responding to the situation. it is important that we stay coordinated. i would like to turn today's announcement by asking the question, did you lay all of that cable? [laughter] she is a wonder woman, i was watching her in the other room. ed: president biden speaking at the white house, addressing the weekend's events in russia where a group of mercenary forces marched on moscow, the president saying the u.s. is prepared for a range of scenarios when it comes to russia. he has made it clear to the russians that the u.s. was not involved in the events and not involved in the situation in russia. he has spoken with president zelenskyy of ukraine and the

u.s. will continue to support ukraine. the outcome of the events in russia remained to be seen. he did not give a hypothesis of what might happen, they are continuing to assess what is happening and we will track that story here on bloomberg television all day long. japan's government unveiled a $6 billion deal to buy out and take direct control of the world leader in chipmaking. this is bloomberg. ♪

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ed: time for talking tech. education technology firm began damage control after losing its auditor and three board members in a week. the billionaire founder reached out to investors to ensure than the indian startup will finally release long-delayed financials and strengthen its accounting processes. japan's government unveiled a $6.3 billion deal to buy out a privatized js are, taking direct control of the world leader in chipmaking. it can help tokyo expand its power over compounds essential for making advanced semiconductors like those in missile control centers and apples iphones. jd plans to great innovative retail for groceries.

the number two imris company -- the number two company will deliver food to consumers. alibaba is planning to seek approval of its own grocery arm spinoff in two weeks, according to hong kong's economic times. we are in new york with the latest. >> so this has been the subject of talks for a while now, ever since the historic shakeup alibaba has gone through. the big conglomerate will what into six, it was announced earlier this year. this is among the first in the pipeline. it might just come to fruition, it will list as early as two weeks, which is july or august. it will go public in november. we also have the logistics arm of alibaba, that is looking to go public next year if things go as planned.

ed: you have been watching ted lasso, it is ok. i'm not worried. that is go back to the story we started on, jd. making an obvious move to take on alibaba, what is the latest? isabelle: jd had a big meeting last week, they said it will create an independent arm and merge with the grocery retail store with other units to create something like the innovation retail you said. i do not want to say it is meant to compete with alibaba grocery spinoff, but it does kind of look like that. to alibaba, a lot of people compared to sam's club. it has dine in, delivery and grocery all in one. maybe that is what jd is looking to do. last year, china growth did not pan out as expected. maybe they are banking on this year with this new thing. they had a meeting where they will announced it will create

seven listed firms with market values of 14 billion, this is probably one of them. ed: i was looking at the nasdaq, there was outperformance. a lot of news flow related to assistant chairs. alibaba, jd, there is a lot a focus on the health of chinese tech. and alibaba's case, what is the big one we are waiting on? what is it that investors are most focused on? isabelle: i think they are curious how it will pan out. this is alibaba, the first in china to do this every since the intense crackdown we have seen from the government, they were getting angry at monopolies, saying they are being reckless. alibaba's big move was widely seen as a response to the government. it is hard to imagine this happened on their own. likely this is with the blessing of the government, that is what a lot of investors are looking for in china.

maybe this will be the blueprint for other companies. can jd follow it? ken other rivals follow it? a lot of people are saying it may be good because it will make more companies. they will have agency over board of directors and increase share value. they might even be bigger than alibaba. big companies can move slower. that is what people are looking out for, how this will play out down the line. ed: thank you. coming up, turning our attention to the markets and getting the view from kathryn rooney vera and her outlook on tech. a quick look at shares, this is the focus of the tech watch column, softer by 3/10 of 1%. hypo around ai. if you look at the consensus recommendation, the proxy ratio hold, buy and sell, it is the

lowest among all the software names on the russell 1000 software subsector index. tesla off by five percentage points, goldman is the latest name to downgrade the stock, citing the run-up in shares. up more than 100% year-to-date, but declining average selling prices for ev's. that is the fourth analyst we have tracked in the last week downgrading the stock, morgan among those. one stop to watch, this is bloomberg technology. -- stock to watch, this is uber technology. ♪

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ed: welcome back to bloomberg technology. i want to get a quick check on the markets, we have seen declines accelerate, particularly on the nasdaq 100. the story is we are coming off the worst week for markets since march and there is a lot of focus on the macro picture, what the fed will or will not do in terms of moving toward rate cutting and reevaluation. higher rates discount the present value of future cash flows, that is the story. outperformance in semiconductor stocks, up 7/10 of 1%. you yes -- u.s. 10 year yield holding around 3%, bitcoin still

above 30,000 u.s. dollars, hitting the highest level in one year. there were two movers to the downside, the first being tesla. declines accelerating beyond 5%, goldman is downgrading the stock to neutral. looking at other factors like the declining price of ev's, moving the fourth analyst in about a week to download the stock. alphabet downgraded ubs to neutral, near-term monetization risks. in the medium-term, talking about the pivot to generative ai and what it will do in terms of impacting out inventories. we should zoom out and get more market analysis and welcome kathryn rooney vera. what happened last week? look at the nasdaq 100, we have the biggest weekly decline since

march. bitcoin hits a one year high on friday, what was driving both of those things? kathryn: all signs point to the federal reserve driving most of the market action and expectation of additional rate hikes being discounted. previous to that, the market had wholeheartedly embraced the idea of rate cuts being the next step for the federal reserve. the dot plot shows the fed is expecting two more hikes at 25 basis points each. even today, the markets are not believing the fed and expecting one rate hike. i think economic data is going to be clutch in terms of market movement going forward, whether the economic data from initial jobless claims, core pce, super court index all of that coming out this week indicating whether or not the market is right or the fed has got it right.

that is where the markets are focused, especially on the technology sector, which has been the foremost front-runner of the rally we have seen year to date. ed: what does the fed need to see in the data to move from hiking to pausing to eventually cutting rates? kathryn: there has to be irrefutable evidence the labor market is rolling over. there has to be a clear trend, not just data dependency focused on one or two months. a clear trend regard to the super core, what the fed looks at. shelter seems like it is going to start to trend lower, but there has to be trends with regard to getting to the 2% core pce target. this fed has grappled with credibility, remember the fiasco with transitory inflation overrunning the easing policy went long in the tooth by about

a year. i think markets could be disappointed with regard to the fed propensity to prop up economic growth versus inflation. this is a fed that needs to clawback some inflation fighting credibility and more likely than not will hike or hold rates at a terminal rate of 525, more likely 550, for an extended period of time. that in itself is negative for stocks, cyclicals, interest rate sensitive sectors, which technology is. ed: we are shown the nasdaq 100 year-to-date performance up 35% or so. a big part of that story was a few signal names, it was all ai related. when you look at the breadth of the market, how do you see investors offsetting the ai hike driving us to the upside, then fed risk to the downside? kathryn: in the short-term, if

you believe the market has further upside, which it could if we get good inflation data showing the fed may be does not have to go so long or much higher for longer, you could get additional upside. if you want to play that trade, you want to look at the latter. see the divergence between the nasdaq and small tax, then play small caps, financials or energy. my perspective over the course of the next six to 12 months, however is that we should be disproportionately overweighted on defensive sectors, which have not seen a significant run up your today. that has been in favor of technology, a very narrow breadth of the s&p 500 recent surge. look at defensive's in u.s. equities and specifically look in rates. look at the twos, tends. hold a position in gold, cash.

bloomberg had a beautiful chart where it showed high-grade bond, earnings yield. they are all pretty much within a range of 20 to 30 basis points. i think the risk reward favors being defensive over chasing the market. ed: another beautiful chart is near-term bitcoin. it happened friday, what is the driver behind bitcoin? a lot of people put emphasis on the blackrock filing, june 15 that happened. others point to longer-term indicators that all of the chaos is out-of-the-way and we can move on. but what is driving the risk asset? i think we may have some technical issues with kathryn rooney vera, it is a mayhem monday. we thank you for your time.

interesting conversation in the markets. coming up, we talk about generative ai impact on the retail space. we go from the public market to the private market to talk with lizzie francis next, this is bloomberg. ♪

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ed: data bricks has agreed to buy mosaic for about 1.3 billion dollars. the company said in a statement it struck the deal with the goal of making generative ai accessible to all organizations,

so they can build with their own tools and data. the acquisition expected to close july 31. let's dive deeper into ai, how it is playing out in the context of the consumer with lizzie francis at m 13. lizzie, everything is at the intersection of everything else. how do you see the world tech, consumer and now generative ai? lizzie: thanks for having me on. it is an incredibly exciting time for innovation across the board with ai, there is no sector that is more ripe for transformation then retail. what we are seeing is in the last decade or so, commerce has had an unbelievable tailwind at its back. particularly the adoption of digital for consumers post-covid moving online means that brands

and retailers have to meet consumers in multiple places, and consumers are expecting a great experience. ai can impact that in two critical ways. it can improve productivity for very complicated retail businesses, and on the consumer side, it can delight consumers by allowing brands and retailers to think about ways they can personalize consumer experience in create waste to remove pain points -- ways to remove pain points. all of that is powered by ai and we are seeing rapid transformation happening this year. ed: when you think about potential portfolio companies you are investing in, in the context of consumer facing companies or technology, are you looking to them to be ai

adjacent or native companies? lizzie: we are looking at both. you will find their companies being born that are powered by ai, then there are companies that are leveraging ai for application. the way that we are thinking about the future of commerce and what we are interested in when it comes to investing is where we'll be transformation occur over the next 10 years, and how can it have a deep impact on the consumer? we just recently invested in a company that is a fantastic one-stop shop for entrepreneurs and founders to ideate new brands and products, then bring them to market rapidly. they are entirely powered by ai. what used to be a very long and cumbersome process to launch new products or brands now takes a matter of days. in retail, even internally when

you are launching 's of products, that can take up to a year to ideate then source and test. now imagine that all happening within days. you could sign up, perhaps you want to launch a new mustache grooming brand. within days, you could have a fantastic brand, new design, you could source products and bring it all to market. these are the types of businesses powered by ai that are where we are interested in investing. you also have the application layer. imagine two of our portfolio companies that are leveraging ai in different ways. imagine for consumers, when they go shop at a brand or retailer, they can have a totally new store or new experience every day that is personalized for them based on large data sets that retailers can crunch in

real-time, leveraging ai in ways they could not before. ed: we talk on this show every day about the energy, ai is given all kinds of subsectors. how has it impacted valuations in the consumer tech space? lizzie: it is interesting. this is not 2020 or 2021 anymore, but we are seeing the pricing for ai is higher than it would be in other sectors. companies powered by ai or ai driven. you can see that in unicorns for this year, the last 5, 3 of them are ai. today has been quite a day for mna in the markets. but that the early and later stages, we are seeing some healthy and rich pricing for ai driven companies. having said that, i think it is an important moment for us to realize much like the adoption of commerce online or mobile or

cloud, this is one of those moments in the market where we will see a rapid pace of innovation in this particular sector. even though the pricing is rich, this is one of those moments where great companies are born. we love to invest in the very early stage of companies being born during interesting moments that will transform lives over the next decade or more. 1999, rich pricing. google, paypal, ebay. these are transformative brands that have driven tremendous value. it is exciting to see the rapid rate at which these businesses are being born. ed: we have tried to ask where the innovation is happening. you are coming to us from los angeles, we associate l.a. with may be the entertainment industry and start up innovation in the gaming space.

is it more than that? lizzie: l.a. is a wonderful ecosystem for entrepreneurs and m 13 is privileged to have our headquarters here. there are deep roots in the community on the tech side. entrepreneurs and founders that have started great businesses, it is a very close knit community. and inclusive. one of the things i love we have seen over the last decade is we are producing more engineers that are graduating out of university, people love to be in a community that supports and nurtures each other at the earliest stages. i think what you will find is this convergence of community and technology and venture dollars flowing in the earliest stages with a diverse and interesting group of founders across commerce, media, technology, we will see many new brands being born here and businesses to invest in.

ed: when we cover consumer tech, it is often in association with celebrity endorsement. is that something you are encountering as well? lizzie: i think there is always a great story to be told and i think yes, l.a. lens itself to incredible celebrities who can share and amplify that story. you are starting to see now that people realize they can quickly move to market if they have a passion or conviction around a particular area. honest company or other folks that have celebrity spokespeople, if you are passionate about something, why not amplify and use your voice? we have an incredible company called life force that has tony robbins behind it. being able to leverage that community and amplify the message and value proposition of life force is an unbelievable opportunity. i think all of these things make

sense and we will continue to see the scale -- this scale and evolve over time. ed: interesting conversation about the startup ecosystem, thank you your time. from consumer tech to rockets, why spacex has made over 1000 changes to starship. we will have the details next, this is bloomberg. ♪ (♪♪) this electric feels different... because it's powered by the most potent source of energy there is ... you. this is the lexus variety of electrification ... inspired by, created for and powered by you. ♪

>> if there are a number of changes between the last flight and this one. well over 1000. i think the probability of this next flight working, getting to orbit, is much higher than the last one. maybe it is 60%. ed: that was elon musk speaking over the weekend on twitter spaces, saying spacex has a much better chance after making over 1000 changes to starship.

what a way to spend a saturday morning. what did we learn about the changes that spacex made to starship? >> he highlighted a few of the changes, perhaps the biggest was that spacex will implement something called hot staging. for non-rock enthusiasts, if you watch the last starship launch, they had a problem with the staging. that is when the top of the vehicle separates from the heavy booster. it did not separate as planned during that flight and vehicle started twirling out of control. moving forward, they're going to introduce something known as hot staging. basically, the engines on the starship spacecraft are going to ignite while the super heavy booster is still attached.

it is something that russians have done with their vehicles before. it means they're going to have to take extra precautions to make sure -- that was one of the biggest things we learned. elon detailed updates to the engines that they made. plenty of the engines on the bottom of the booster flamed out during the launch. hopefully that will prevent that from happening in the future. ed: kind of in case you missed it, we reported friday afternoon that spacex is basically selling employee shares or offering them, valuing spacex at 150 billion dollars, the valuation keeps going up. what was interesting was the cash on the balance sheet, about $5 billion. private company, you get a sense of its financial health. musk talked about how much they are spending on the starship

program, what did he say? loren: so far, they've invested about $2 billion and he expects it to approach $3 billion this year. it is the most complicated program that spacex has implemented today. i would expect that number to continue to go up. ed: what is the roadmap from here? musk always misses his own self-imposed deadlines and timelines, so what do we know about the roadmap for more starship launches? loren: he loves the number six. each time he gives an update, it is six weeks away. no different during this phase. the pad upgrades they will be doing, if you remember when they did launch, they cost quite a bit of damage to the surrounding area and their own launchpad. but they are doing a bunch of upgrades. he expects those to be done in approximately six weeks.

he has said six weeks before, in fact right after starship launched the first time. he said they'd be launching again in four to six weeks. ed: whether it is six weeks notice or six minutes notice, i know i can always call on you for all things spacex. that does it for this edition of bloomberg technology, do not forget to recap. we have our podcasts forever you get your podcasts, it is on apple, spotify, i heart and all of the bloomberg apps. we are one day into what is going to be a big week for the technology sector. markets are coming off the biggest drop for the nasdaq 100 on a weekly basis since march, thinking about the fed. there are some green shoots and energy in the private markets. what happens with venture capital? we will continue that

conversation, a big one coming tomorrow. this is bloomberg technology. ♪ somebody would ask her something and she would just walk right past them. she didn't know they were talking to her. i just could not hear. i was hesitant to get the hearing aids because of my short hair. but nobody even sees them. our nearly invisible hearing aids are just one reason we've been the brand leader for over 75 years. when i finally could hear for the first time, i started crying. i could hear everything. call 1-800-miracle and schedule your free hearing evaluation today. bridgett is here. call 1-800-miracle she has no clue that i'm here. she has no clue who's in the helmet. are you ready? -i'm ready! alright.

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katie: welcome to bloomberg etf iq. i am katie greifeld. matt: and i am matt miller. there's a lot of geopolitical news that has happened. katie: a lot of matt: macroeconomics as well. matt:we will go through it when we talk about the $10 trillion etf industry right now. we will speak in just a moment with jeff sherman, the deputy cio of double line capital. katie: and we will also discuss with jeff the implications of the federal pause and where rates might go from here. matt: also, as we wait the