Tesla’s Earnings; Cantor, SoftBank Back New Crypto Firm | Bloomberg Technology

Bloomberg Technology Summary

Key Concepts:

• Tesla's stock reaction to earnings, Elon Musk's time allocation, Model Y changeover, Robotaxi outlook
• Intel's restructuring, job cuts, AI strategy, manufacturing competitiveness
• Trade war tensions, tariff impacts, potential recession, geopolitical factors
• Antitrust pressure on Big Tech (Apple, Meta, Google), DOJ investigations, potential remedies
• Venture capital for manufacturing, critical infrastructure, re-industrialization
• Bitcoin accumulation, Bitcoin per share metric, 21 Capital's strategy, ETF comparison

Market Overview and Geopolitical Context

• The NASDAQ is adding to a two-day gain, with big tech leading the way, up 4.8%.
• Bitcoin is on the higher side.
• Scott Bessent is soothing markets with the recognition that "America First does not mean America Alone," signaling a potential course correction in trade policy.
• Kailey Leinz reports from D.C. that the administration is trying to pivot away from worst-case scenarios regarding American isolationism and protectionist policy.
• Bessent expects de-escalation of the current tariff situation with China, calling it unsustainable.
• President Trump expects a deal with China, with tariff rates below the current 145%.
• The Wall Street Journal reports the administration could cut tariffs on Chinese goods by as much as half, depending on the product and U.S. national security interests.
• Trump reiterates that he thinks China and the European Union have been "ripping the U.S. off," but expects a fair deal with China.
• Treasury Secretary Scott Bessent later clarifies that there has been "no unilateral offer" from Trump to cut China tariffs.

Tesla's Earnings and Elon Musk's Focus

• Tesla's stock is up significantly (8% initially, later pulling back to 7%) despite a poor earnings report.
• The market reacted positively to Elon Musk's statement that he will reduce his time allocation to DOGE and allocate more time to Tesla.
• Musk stated, "Starting next month, my time allocation back to DOGE will drop significantly. I will have to continue doing it for the remainder of the President's term to make sure the waste and fraud we stopped does not come roaring back."
• One analyst notes that while the numbers were terrible, expectations were already low, and Musk's focus on Tesla is what investors wanted to hear.
• The worst profit number since 2021 and a revenue drop show fundamental issues.
• William, a semi-conductor analyst, notes that Tesla had already updated investors and industry delivery numbers a month prior, so the "mess" wasn't very big relative to updated estimates.
• Disappointment came in energy and generation (solar) and accelerated R&D investments.
• Musk's "greatest superpower is in delivering huge technological advancements by spending little money but very focused talent."
• Moderating political sentiment by spending less time in the public eye doing government projects will be good for the stock.
• The Model Y changeover was disruptive, and it will take time to parse how much demand there is for that model.
• The question is going to be, how much can they rely on that one vehicle?
• The CyberTruck is not living up to expectations.
• There will be a cheaper Model Y in the first half of the year.
• The Robotaxi outlook for what is happening in Austin in June was a recommitment.
• Musk talked about a limited launch of a handful of vehicles for the driverless rides in Austin.
• Musk expects significant revenues from full self-drive in the middle of 2026.

Intel's Restructuring and AI Strategy

• Intel's shares are surging after plans to cut over 20% of its staff, the first major restructuring under the new CEO.
• The problem is the decision-making at Intel has become bloated.
• The goal is to get rid of middle management and focus on making money on technology that is competitive.
• Intel needs to sweep away "meetings and empire building and silos" to catch up with competitors like NVIDIA.
• Intel has "lost the game on AI" and needs to focus on manufacturing and catching up with TSMC.
• Manufacturing was meant to be coming more to home and then gets pushed back because of current quandaries about whether there will be government support for the Chips Act.
• The lack of Chip Act funding is not the reason Intel is not investing in the U.S.
• Intel has lost the benefit of being first and they are struggling with going from one note to the next.
• Intel is still outsourcing to Taiwan, which shows that TSMC has taken the lead.

Trade War and Economic Outlook

• Sentiment has gotten so dire that many companies are putting up OK numbers.
• Many companies may not give guidance because the uncertainty is high.
• Vertive has assumed full tariff impact in their guidance.
• By September, the trade wars will no longer be the focus, and the market will have moved on to something else.
• The AI trade is still prevalent.
• If the U.S. continues to ratchet up tariffs on foreign goods and there is a retaliatory effect, there is a 90% probability of a recession.
• If the U.S. can "thread the needle" and not be as aggressive, there may be a soft landing at 1% GDP growth.

Antitrust Pressure on Big Tech

• DOJ antitrust officials are looking into Walt Disney and a deal to take a controlling stake in a company.
• The European Union has fined Apple and Meta, with fines relatively modest compared to previous fines.
• Apple has said it will appeal the fine, about 500 million Euros.
• Meta's Global Head of Policy says this is a discriminative act from the European Union and that is continuing to unfairly target American businesses.
• The EU fines are less than 0.15% of global annual revenue for both companies.
• The European Commission says this is an independent regulatory action and has nothing to do with trade talks.
• The cofounder of Instagram says the photo sharing app could have thrived without Facebook.
• Meta CEO Mark Zuckerberg treated Instagram growth as a threat and starved the app of resources after the purchase.
• The U.S. government is seeking to prove the social media giant created an illegal monopoly through acquisition of Instagram and WhatsApp.
• The Justice Department is trying to find remedies to ensure that Google no longer seems to be a monopoly.
• One of the remedies is to sell off Chrome, and OpenAI would be interested in buying Chrome if it were for sale.
• Google's defense in not wanting to spin off Chrome is the underlying technology for Chrome is open-source and it is used by different browsers from different companies, including Amazon.
• The DOJ contends that Chrome is a key gateway into the internet and internet search and if it were to be controlled by another party then that would help break up the power that Google has about user data, user queries, everything that feeds into Google Search and improving that product.

Venture Capital for Manufacturing

• Jeff Rosenthal is launching a new venture capital firm with a $200 million fund to back startups to reshape manufacturing.
• The firm will back and build companies focused on critical infrastructure and industry in the U.S.
• This spans digital infrastructure, robotics, AI compute, and is guided by trends with AI and compute, the re-industrialization of global industry, and electrification of everything.
• The firm started building a couple years ago, thinking about the idea of building in the spaces.
• The firm is not just passive capital.
• The firm is principally an investment firm and spends the majority of its time identifying and earning the right to back the best founders.
• The firm may direct investments in companies and its first build company cofounded a nuclear company, which is a fleet scale nuclear developer powering AI in the United States.
• Technical innovation gives confidence that the cost of labor can be competed on a global scale domestically.
• The firm focuses on businesses that are efficient to equity and can scale with asset capital or debt.

21 Capital and Bitcoin Accumulation

• Cantor Fitzgerald is creating a new company called 21 Capital, accumulating Bitcoin.
• It plans to launch with more than 42,000 Bitcoin.
• The company was inspired by the public companies acquiring Bitcoin.
• The company aims to bring credibility and start up upside.
• The company will build Bitcoin products and give Bitcoin growth to shareholders.
• The company will introduce two new metrics: Bitcoin per share and Bitcoin return rate.
• The CEO's job is to grow the Bitcoin per share.
• The company is a vehicle like an ETF, but where an ETF's exposure is static, 21 Capital will build Bitcoin products and operative cash flow and use the capital markets to grow Bitcoin on its balance sheet.
• The company wants its shareholders to get richer in Bitcoin terms.
• The company has over 20% margin and only 75 employees.
• The company is hopeful to have its shares listed on a stock exchange.
• The company intends to raise as much capital as it can to acquire Bitcoin.
• The company will never have Bitcoin per share negative.
• The company plans on raising capital in all different sectors and markets and blending Bitcoin and incorporating it in the financial system to deliver powerful equity to public markets.
• The selling point versus ETFs is that when you buy a share, let's say 0.05 Bitcoin per share, the company intends to close deals and add Bitcoin to its treasury to where you get a press release and say, 21 Bitcoins per share grew to 0.06.

Conclusion

The broadcast covers a range of topics from market reactions to earnings reports (particularly Tesla), Intel's restructuring and AI strategy, geopolitical and trade tensions, antitrust pressures on Big Tech, venture capital investments in manufacturing, and a new company focused on Bitcoin accumulation. The key takeaway is that the market is currently driven by sentiment and geopolitical factors, with companies needing to adapt to a changing landscape and potential recessionary pressures. The focus on AI, manufacturing, and Bitcoin highlights emerging trends and investment opportunities.