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>> Well, there you have it. Fed chair J

Powell wrapping up comments roundt

questions at an event at Harvard

University. It was a moderated

discussion in a principles of economics

class. Let's take a look at markets on

the back of those comments. We actually

saw yields fall across the curve as Fed

chair Jay Powell spoke. Look at that.

Down on the 2-year and the 10-year by,

let's go ahead and call that nine basis

points. We also did see stocks move off

their lows of the session when Fed chair

J Powell was speaking. The NASDAQ 100

right now up close to 210 of 1%. The S&P

500 intraday up 4/10en of 1%. The S&P

was flat going into this and the NASDAQ

100 was ever so slightly lower. I want

to bring in Bloomberg's international

economics and policy correspondent Mike

McKe. Mike, apart from no selfies with

Jay Powell, which seems like a

relatively good rule when you are

someone like Jay Powell, I I want to

hear about the big takeaway from this.

It it really seems like supply shocks

have the the Fed has little control when

it comes to supply shocks such as the

one we're seeing right now in oil. Is

that the big takeaway from him speaking

earlier today?

Yeah, if there is a takeaway, it would

be that the Fed doesn't know what's

going to happen because it does have

this supply shock that's going to weigh

on the inflation rate. Uh it could also,

if the inflation rate stays up for a

while, weigh on demand. So, the Fed is,

as Paul repeated several times, well

positioned to sit and wait for a while.

Now, if you look at Fed funds futures,

they traded the opposite of where

they've been uh during Pal's comments.

they they now price in some cuts. I'm

not sure that's the right reading of

this. I don't think the Fed knows yet

where they're going to go. Uh except

that they're going to be on hold for a

while. He noted risks to both sides to

growth and uh employment and as well to

inflation, but expressed confidence the

Fed will get inflation down to 2% at

some point.

>> Tariffs have a one-time impact on

inflation. He said inflation

expectations remain well anchored. The

FOMC will reach its 2% inflation goal

and the Fed's tools have no meaningful

effect on supply shocks. That doesn't

necessarily mean though, Mike, that we

will not see and are not seeing an

inflationary effect from this more than

month-long conflict in Iran. What can

the Fed do or what will the Fed do if we

do see inflation flow through as a

result?

>> Well, it depends on what areas inflation

flows into. If it's oil prices, gasoline

prices, uh those are things that the Fed

can't do much about. If it starts to get

into the broader economy, which it will

in the sense that higher diesel prices

are going to mean it's going to cost

more for your package to be delivered,

that sort of thing, and uh for trucks to

resupply the rest of the country. If it

starts to get into other areas of the

economy, they might think about a rate

increase, but they'll probably do more

jawboning than anything else because

they feel that at some point the

straight will open, the oil will flow

again, and it may take a while, but

inflation will come down. and he made

the point that if the Fed raises rates

now, uh the effects are long and

variable and could take us a year or

more to start to hit the economy and the

economy might be in a totally different

situation by then and the Fed rate move

wouldn't be good news. So the Fed is

going to be very very cautious about

what they're going to do going forward

because mostly they think this is going

to be about oil prices and they just

have to keep an eye on the rest of the

economy. Bloomberg TV and radio

international economics and policy

correspondent Mike McKe. Mike, thanks so

much. Well, there's higher energy prices

in focus. The war in Iran officially

enters its second month. Treasury

Secretary Scott Besson indicated some

optimism about a reopening of the

straight of war moves, but that's as

President Trump renewed threats against

Iran if a deal isn't made soon. Let's

bring in Bloomberg Balance of Power

co-host Kaylee Lions to break it all

down. Kaylee, the president said the US

is in quote serious discussions with a

new regime in Iran. An Iranian official

earlier said there haven't been any

direct talks. Do we know who is talking

to whom right now?

>> Well, that's a major question, Tim.

Whatever talks are happening are through

intermediaries. You had the likes of

Egypt, Pakistan, Turkey all meeting this

weekend as they seek an end to this

conflict. though representatives from

the US and Iran were not at that table

and as you say Iran contends that they

are not talking directly with Washington

having rejected the 15-point ceasefire

plan uh in public that President Trump

told reporters aboard Air Force One last

night that Iranians had accepted most of

those 15 points though we didn't specify

which one. So there's a bit of a he said

she said situation here when it comes to

the US and Iran. It also is a bit of a

good cop bad cop situation Tim except

frankly President Trump seems to be

playing both of those roles is on the

one hand he is citing good progress in

negotiations. he says are happening. On

the other hand, he's taking to true

social and threatening Iranian

infrastructure, the energy

infrastructure, oil wells, cargo island.

He said all of these things, even uh

water infrastructure through

desalination plants could be targeted.

According to the president, if the

straight of Hormuz is not open for

business, which of course right now it

is not. So, the escalation risk is

certainly there, especially considering

thousands more American service members

have arrived uh in the theater. Of

course, you had thousands of Marines and

sailors aboard an amphibious assault

ship. You have more Marines and Army

paratroopers uh that have been ordered

there. And you have reports in the likes

of the Wall Street Journal and the

Washington Post that the president is

seriously considering putting troops on

the ground in some form. The Wall Street

Journal talking about the idea of

seizing enriched uranium, something that

would likely require ground forces and

take some time. You also had the

president telling the Financial Times

that he would like to take Iran's oil,

something that could involve the seizure

of Carg Island, which is also something

that is likely to need ground forces.

Then the other escalatory thing we have

to keep an eye on here is of course the

Iranian proxies, the Houthis who over

the weekend launched attacks, missiles

and drones at Israel specifically.

Remember how disruptive the Houthies

were in the Red Sea beginning back in

2023. Very disruptive to commercial

shipping. So that poses a threat to the

alternate route through the Red Sea that

other Gulf nations like the Saudis are

using to try to get their energy exports

out. So there's escalatory risk at the

same time, Tim, that the president is

still talking about this diplomatic

off-ramp. I guess uh though when you

still have Iran saying that the claims

the president is making around Iran,

accepting these points when Iranian

officials are calling them uh excessive

and illogical, it doesn't seem like we

are necessarily getting any closer to

concrete resolution here.

>> Bloomberg's Kaylee Lines, more from her

and Joe in the 1:00 hour on balance of

power. Thanks so much, Kaylee. Well,

back to markets because the NASDAQ 100

has slipped into correction territory.

The sell-off in big tech now flashing

signals that have marked turning points

in the past. Many in Wall Street now see

the sector as a potential opportunity,

pointing to oversold conditions and the

likelihood of relief rallies even amid

uncertainty tied to the Iran war. For

more, let's bring in Denise Chisum,

Fidelity's director of quantitative

market strategy. Denise, in your view,

is this a turning point? Is this a

buying opportunity when it comes to

tech?

Yeah, when you look at the data, I mean,

there's certainly concerns around the

technology sector since it's been such

dominant leadership in the markets, but

it's interesting when you look at the

mathematical setup. We saw this very,

very briefly in the tariff tantrum last

year, but the the sector is now in the

bottom third of its cheapest when you

look back to the data since the '60s.

And we haven't really been this cheap

from a valuation perspective in over 10

years. And look, I mean, there's always

the potential that it could be different

this time or there's a value trap, but

there is a very linear relationship

between the cheaper the sector has been

historically, the more likely it is to

outperform 70% odds or not 100% odds,

but the riskreward when you take a

one-year time horizon, I can't say if

the bottom is in right now, but when you

take a a longer term time horizon, it

does look more like an opportunity. Now,

that those 70% odds are actually sticky.

Even if things like operating margins

decline or earnings revisions come down,

which is kind of a mathematical way to

say whatever it is that you're worried

about might be partly priced in at this

point. I

>> I think what people might be concerned

about right now, Denise, is that this

sell-off looks a little bit different if

you peel back the layers of, you know,

quote unquote tech because there's this

worry about AI and and the idea that

that AI will lead to the demise of some

in the software industry. the so-called

SAS apocalypse, where are you seeing

deals? Because just just because we're

seeing something as relatively cheap

doesn't necessarily mean there's

opportunity around the corner, right? To

your point in terms of a value trap.

Now, look, I'll I'll let the fundamental

analysts tackle what will happen to

software from a, you know, long-term

perspective, but when I look at the

data, you see something very rare

historically. You have an industry

that's never been more profitable,

pinned to the 100th percentile of their

profitability. And yet what we've seen

over the last 3 months only has been a

devaluation such that relative forward

pees are now in the almost the bottom

decile. So you have this massive

disconnect between the valuation and the

operating profit. That is rare.

Historically when you look back in all

industries to the 60s you only see this

happen 2% of the time. The instances

that it happens are things like the

financial crisis. So one of the ways

that we can sort of tackle this

quantitatively is to say well it is

different but we have seen a little bit

of this movie before in some ways

software is going through its own great

financial crisis pricing now how has

that worked historically speaking now N

is only 2% so you can't draw broad

conclusions but we have seen this

historically in technology sectors like

communications uh you know comm

equipment and hardware even though we

haven't seen it in software we've also

seen it in semiconductors when you look

back historically and it's you know in

some ways the odds from a go forward

perspective once you're priced like this

what are your odds of outperformance

over the course of the next 12 months

and what's your average outperformance

over the next 12 months is look it's

only 50/50 which is hard to say that

that's a table pounding by it's not but

it is to say that the average

outperformance of all these sectors is

around zero in the sense that they tend

to be at the point where much is priced

in and downside might be more or less

limited.

>> Denise, I do wonder. Yeah, go ahead.

>> The technology sectors like

semiconductors and com equipment have

actually had higher odds of

outperformance, which gets to a little

bit of what chair pal was talking about,

which is technology as a sector has a

history of reinventing itself. And yes,

there may be in fact bankruptcies within

the software industry, but there might

be companies that are actually coming in

to create new products as well. I

understand the urge to to use history as

a guide here, but I but I do wonder for

those of people who are out there who

say, "Wait a second. We are on the verge

of a new industrial revolution. We are

seeing something with AI that we've

never seen before in modern investing

and in the modern economy. Do you have

to throw the history textbook out the

window or the market's history textbook

out the window in an environment like

this?"

>> Well, I'm always struck by the fact that

it is always different this time, right?

co was very different. Tariffs were very

different and yet the patterns are very

sticky. I do think that there's always a

knee-jerk reaction behind, you know,

equity markets need to be reflective of

very good times in the economy or no

existential risk. But when you study

history, you know, you see over and over

again that sometimes the market goes up

and climbs the wall of worry despite

whatever you are worried about ending up

coming to fruition. And I do think that

what is the definition of this cycle

when I look at the math is that the

equity market has remained much more

fearful on an ongoing basis than we see

in most credit markets which are tend to

be the smarter markets. You know more

you see that fear and that knee-jerk

reaction the more likely the market is

to be higher. Not to say over any

three-month time horizon but it is to

say over any long-term time horizon. So

yes, could it be different this time?

But I think history shows you that those

differences might end up being tailwinds

that you don't suspect, like

productivity, like higher GDP growth,

like higher earnings growth, like more

profitability in the overall market as

well.

>> And taking a look at WTI crude, it's up

to $102 a barrel. Uh Brent is at about

$112 a barrel. To what extent are high

energy prices a drag on the tech

industry?

>> On the tech industry, you know, in in

some ways, you can think of it as a

cyclical industry. So, I think it's

proyclable in the sense that it's tied

to the US economy overall. I mean,

energy prices are interesting in that I

understand why the knee-jerk reaction is

to look at real energy prices over time.

And we've seen them spike in, you know,

obviously 1980 and even the high in 2008

from a real inflation adjusted

perspective was nominally higher was

actually higher than the the peak in in

1980. So, you draw those peaks and you

say that there's real uh very strong

correlation to very uncomfortable

economic situations. But it is quite

different, right? History can show you

what the similarities are and also the

differences, which is to say that oil

intensity has actually declined

substantially in the overall economy. So

that effect on the same price might

actually have a much less impact than

you think on the overall economy. And in

some ways to think about it in very

practical terms instead of just oil

prices to think about the stress that it

could impact on corporate profits

specifically when we're talking about

equity prices. If you renormalize those

oil prices in relation to corporate

profits, you'd see that that spike in

1980 effectively was $1,000 in terms of

the price per barrel that it would take

to equate the same stress. Which is not

to say that higher energy prices don't

take a bite off the US consumer. They

do. They you see declines in real income

growth and especially over the short

run, demand is relatively inelastic. But

what you do see is I think that the

comparisons to the 70s and 80s of

stagflation, this is a very different

economy and it might be much more

absorbable than you think, which might

mean back to technology that more of

that is priced in than you may think.

>> Okay, some really good historical

context. Denise Chisum of Fidelity

Investments, thanks so much for joining

us on Bloomberg Tech. Well, coming up,

NASA is preparing to send astronauts

back to lunar orbit for the first time

since the 1970s. It's a critical

milestone for broader US space

ambitions. We'll discuss that next. This

is Bloomberg Tech.

Some news in Elon Musk's world. A top

judge in Delaware said she will no

longer preside over a handful of

lawsuits involving Musk and his

companies and will reassign several

Muskrelated cases. This comes after the

billionaire's lawyers alleged she had

shown bias against him after she had

ruled against him in highprofile cases.

Well, NASA is sending astronauts back to

the moon for the first time in over 50

years. The lunar flyby will test the

Aremis 2 spacecraft, paving the way for

a lunar landing in 2028. Let's get more

on this historic mission from our

reporter Lauren Brush at NASA's Kennedy

Space Center. Lauren, good to have you

on the program, especially joining us

from Kennedy Space Center. I think if we

think historically about the moon

mission when we did this 50 years ago,

we were locked in this space race with

the Soviet Union. A very different time

now. Why spend so much money to go back

to the moon?

>> Well, I think it just depends on who you

ask. You know, uh recently there has

been a lot of concern uh brought up

about the fact that China is also

sending astronauts to the moon. And so

you'll hear lawmakers and even, you

know, NASA executives talk about the

need to beat China to the moon. Uh

there's been concern that maybe they

will get there first and kind of stake a

claim to that area, preventing our

exploration of it. But for more peaceful

reasons, you know, there's a lot that

NASA hopes to gain from the moon. For

instance, there's this idea of

jumpstarting a lunar economy. So finding

ways to make money off the moon,

possibly for a an economy around the

moon. And then of course it's learning

how to live off of another planetary

body. That's no small small feat. And

eventually, you know, the goal is to get

to Mars. And so learning to live off of

the surface of the moon, those lessons

can then be applied to Mars living

someday. Lauren, how is this a test for

NASA in an environment where there's,

you know, significant investment in the

private space industry, namely in a

company like SpaceX, which is is

expected to IPO this year. What does

this mean for NASA? What's at stake?

>> The unique thing about Artemis is that

it is kind of a an amalgam of the old

and the new, right? So they are using a

lot of their longtime long-term

contractors like Boeing and Lockheed

which will be on display with this

mission and with when it comes to

landing on the moon NASA has contracted

and outsourced the lander development to

newer players like SpaceX and Blue

Origin. So it's actually kind of a

mashup of the old and new way of doing

business. And so it'll be a test to see

if those if those companies can work

together in this and these different

contracting mechanisms can actually, you

know, work together to put people on

back on the surface of the moon.

>> Bloomberg's Lauren Grush live at Kennedy

Space Center. Thanks, Lauren. Check out

her reporting and the entire team's

reporting on the Bloomberg terminal and

at bloomberg.com. More on space with the

SpaceX IPO this time. That's next. This

is Bloomberg Tech.

Let's pivot now to the business of space

as investors gear up for the highly

anticipated mega IPO from SpaceX. Joseph

Alagna is the founding partner of

Buttonwood Funds. It's invested in the

Elon Muskled company four times in the

past year and a half. Joseph, good to

have you on the program this morning. I

I want to start with a potential $1.75

trillion valuation at an IPO that raises

a whopping $75 billion which our team

reported last week. Would this represent

a satisi a satisfying valuation or exit

for you at Buttonwood Fund?

>> Uh I don't know if we would exit or not.

I mean, we're about to go public in a

few weeks, so I can't really talk about

what we're going to doing what we're

doing going forward, but uh you know,

the $ 1.75 trillion IP IPO valuation,

you know, was uh was announced right

after the merger with XAI and you know,

before that was 1.5 at the end of last

year before they talked about the

merger. Um, but no one's really talking

about the addition of Terraab yet and

how what that impact has and I do think

that that is going to be uh a gamecher

for for SpaceX.

>> Why do you think that'll be a gamecher?

>> Well, he he really has the total

ecosystem now with Terraab. Um, he no

longer is going to be dependent on chips

from Nvidia. You know, might might be

one of the reasons why you're seeing,

you know, Nvidia stock act the way it

is. Um, you know, Elon Musk is the type

of guy that does not like to be

dependent on other companies. Look what

he did with the Tesla, you know, with

the with the gigawatt factories. You

know, he didn't want to be buying

batteries and be dependent to to other

companies. So, he it's it's it's the

same playbook that I think he's doing

right now with with with SpaceX and

building a a significant infrastructure

play in space and uh artificial

intelligence like no one's ever seen

before.

>> Okay. So, that raises a really important

question, Joseph. What are what are

people investing in if they invest in in

SpaceX in the IPO? Are they investing in

your monopoly in space? Are they

investing in an AI company, a telecom's

company, or is it Elon who they're

investing in? Well, I I always say it's

Elon because there really is no one else

out there quite like him. Um but you

know he what he's what he's put together

here with AI space you know um and the

combination here in infrastructure play

he's got a moat now that that that's

built around him that makes uh very

difficult for any other company to

really truly be a competitor. You know

we've seen other companies like Amazon

try to compete with SpaceX as far as

their Starlink division is and their

satellite you know deployment. Um but

now uh things are are are quite

different. the ecosystem he has now

built I don't think anyone is going to

be able to touch.

>> You did mention you're a little limited

in what you can talk about because of

your fund going public in the near

future. Can can you give us some more

color around a timeline there?

>> Uh we expect to probably start trading

in May uh possibly early June. Um SpaceX

is is one of 11 positions within the

Buttwood First Access Fund that we're

bringing public. um the second second

largest to Anthropic um but uh we also

had XAI as a position in the fund and

now they merge together but they're

still slightly less than our position in

Anthropic which is the largest.

>> There are other funds that do give

access to public market investors and in

privately held companies. What makes

Buttonwood different? Yeah, you know,

we're starting to see this trend now,

right, of public vehicles that own

public companies that are uh like I you

want to call them the preipos, you know,

uh what makes us different, I believe,

is is really the timing that uh you know

that we've invested in some of these

companies and you know, um I think when

you look at at the at some of these

other vehicles that might have similar

portfolios to to ours, you know, I think

you have to ask yourself, well, you

know, the the portfolios might look

similar, but you know, when did

management purchase these uh securities?

That might not do any thing for someone

that steps in and buys a portfolio

that's uh that looks the same as as

another portfolio now, but it should

give you some insight on management uh

ability to identify companies in the

future because obviously all these funds

including mine will be adding other

public uh private companies you know uh

preipo companies uh in the future. You

mentioned Anthropic. You have invested

in Anthropic over the past year and a

half and would give access to investors

to that through this fund. Where do you

see Anthropic playing differently than

XAI?

>> Well, XAI's got a long way to go to

catch up to Anthropic. I don't know if

they have a will. you know, Anthropic's

really, you know, focused on the

enterprise customer and and and and that

was a very smart move by them, you know,

um and and the reason why we chose

Anthropic, you know, over a year and a

half ago is when, you know, everyone's

very concerned about uh artificial

intelligence and how it can kind of, you

know, run run a miss and, you know, they

have guardrails that they put on with

their constitutional AI and uh they've

been taking a different approach to

artificial intelligence than say some of

the other companies that are out there

that are really just looking for growth.

So, you know, I just think that's

probably why you see entropic grow so

quickly,

>> right?

>> Um, XAI now is going to have capital

that I think that they needed. I think

they were having a hard time competing

with the Nethropic in chat.

>> We got to run up against the clock.

Appreciate you joining us, Joseph Alana,

managing member and founder partner of

the Buttonwood Fund. That is going to do

it for this edition of Bloomberg Tech.