tv Bloomberg West Bloomberg August 18, 2015 8:30pm-9:01pm EDT
emily: tech investors get worried about china. could the falling yuan. be the tip of the iceberg? i'm emily chang. this is bloomberg west. comcast and nbc reach for a younger audience with buzz feed. social media is ripping up the election playbook. all of that ahead on bloomberg west. first of our top story. turmoil returns to chinese markets.
top investors are dumping stocks. 6% wiped off the index. the tech heavy index faring worse. 7% down, adding drama to what has been a rocky summer. how worried should tech investors be? how will global tech be impacted? i am joined by u.s. economist karl, we had been talking about chinese tech companies. what about global technologies that have exposure in china? guest: the question is how far is the currency going to be moving? you need to evaluate whether it
is their cost basis or predominant sales market. producers who are domiciled in mainland china are going to be much more competitive. that could be good news for them. that is a key reason why china is allowing the currency to fall to stimulate the export sector. both tech companies and other mainline companies doing business in china are going to face smaller corporate profits. emily: it is interesting, companies like facebook, google, twitter are not even in china because the government has locked them out but what about these other companies we are talking about here? guest: it is enormously important for apple and qualcomm. china is 12% of their revenue. the devaluation is going to reduce apple's revenue in dollar
terms by $30. how does apple compensate? it has to raise the price, which is difficult to do because they were at the top of the market and they are facing competition, or the business becomes less profitable for them. the additional problem is the chinese economy is slowing. we are in a bad period for luxury consumers. they are selling between $900 and $1200. these are luxury products. apple needs to penetrate more markets in china. they're going to have trouble selling those phones pretty have been selling well in beijing . emily:. china accounts for a quarter of
revenue as far as june goes. let's talk about what it could mean for longer-term demand. the iphone is $300 more expensive for consumers. you have the smartphone market saturating. could that kill demand? consumer demand for iphones in china? guest: sure. it depends on how the chinese economy performs. there a big question marks there. the chinese equity market is manipulated to some degree. the second factor is going to be how far this runs. a lot of folks are saying china is moving towards a more openly traded currency prithee want to be the reserve currency print the other camp says maybe they are devaluing to stimulate the export sector.
3-4% move in the yuan is not going enough to jumpstart the economy. if china wants to be -- [indiscernible] emily: how much further will it fall? guest: if china wants to be competitive in the u.s., look at the other major trading partners, the mexican pesos have moved 12% -- 25%. canadian dollar 20%. japanese yen 20%. china has moved 4%. there is a place for it to move if they are playing that strategy here. i'm not a strategist. i will avoid making an explicit forecast but if china was to return back to the same level of competitiveness in the u.s. with major trading partners it would require a 20% move. emily: if that happens how worried are you?
guest: i would be enormously worried. i don't believe it is going to happen. you would have a few percentage points down but i would view this development as a long-term positive. the motivation behind china's move to a more fixed flexible exchange rate is to motivate to global reserve currency status. you will see a big increase in demand for assets. i can see a case for appreciation. emily: what about the markets? guest: the stock market is a lottery in china. it is not the economy and the economy is not the stock market. broadly speaking there are still many companies trading beyond any measurable fundamentals. even some are somewhat vague. there is not the degree of analysis of companies to be confident in those earnings. at the same time there is interesting value stories starting to appear in the
sectors of less pressure per there are some interesting value ideas there. emily: all right. we are one to keep our eye on china. we look at where the markets opened today. thank you for joining us. ted benson turned his button into a system to log information about his baby. each is made up of a wi-fi radio. when you press a button to connect to your wi-fi network and links it to a google spreadsheet. he says connecting to the wi-fi could allow users to do almost anything.
amazon unveiled the button in march of this year. it costs five dollars. coming up, buzz feed gets an investment from 30 rock. and how the pentagon is drastically expanding its drone program. and being chased down by robots may be closer than you think. check out boston dynamics robot taking a test run through a forest. ♪
emily: now to another story we are watching. the purchase comes on the tail end of an investment that was announced last week. acquisition raises softbank state to 80%. sprint's stock rose 4% today and was up 37% this month. they see the turnaround efforts taking two years. coming off of last week's dismal media earnings, universal invested in buzzfeed. nbc universal invested the same amount in box media. what does it mean for the future of digital media companies? keith, $200 million is a lot of money. i hope buzz speaking keep it out.
guest: buzz feed has been innovators in bringing to digital content to the world. it is the new way things are going to operate. nbc was smart of making this investment. this is the future for ways you reach millenials. emily: you see buzz feed forming partnerships with universal, yahoo!, everyone is trying to figure out how to get people to see their stuff. guest: a lot of these platforms, they have aggregated big audiences. smartly, a of new media and new wave companies are integrating and doing partnerships because they can tap into that distribution quickly. emily: who gets the better end of the deal? guest: it is the rare opportunity where it is for both. they get a great valuation per they get to work with an old media player.
for nbc they get to be nimble during a time when the media business is changing so rapidly you have to find ways to innovate. it works great. emily: what is buzz feed really? do they get the olympics? it happens once every couple of years. guest: right now they have funny videos. but they get is data. a lot of these new companies understand how to use data, to understand what viewership is doing much more than the traditional companies per there are a reason they are looking at them as experts in this field. they can use the analytics to drive monetization. emily: comcast is looking into launching a major online video platform, that what can you with
what verizon seems the working on. guest: from what i have read, it is a mixed between what verizon is working on, and what youtube is going to do. it is called watchable. a lot of these copies are going to be a part of that. it is this attempt of the old and new coming together. everyone is trying to figure it out.
emily: what about the future of where live video is going? it gets a lot of buzz but it hasn't really taken off. you have these french media veterans trying to create a live video competition to netflix. where is this going? guest: we are in the first generation of video in general. look at the cisco data. 85% of all the internet data traffic is going to be video. we are still in the early leanings of this process. [indiscernible] emily: why is it taking so long for periscope to take off? guest: they put up some numbers this week that were pretty impressive. emily: hard to judge the numbers. guest: we have done more live streaming the anyone. the industry is growing. live is a different medium. it has a different interactivity and way you watch the videos. it is a different thing but it is equally as powerful. emily: you how i feel.
i think it is important. thank you for joining us. in drone news, the pentagon is planning to ramp up drone usage by 50% over the next decade. the move will expand surveillance and intelligence collection in areas including the ukraine, iraq, the south china sea, north africa. the plan expands the united states capability for lethal airstrikes, responsible for 3000 deaths since 2004. next, from trump to hillary, social media platforms may be the stars of the presidential race for the new way they are reaching voters after the break. smart roads may be able to charge cars.
this year but restricted to test areas currently off-limits to drivers. donald trump is riding high after the first gop debate. 24% of voters are backing from, making him the front runner. he is beating competitors on social media. his rants reach 3.8 million followers. social media is no longer a supporter of a strategy. they are becoming the strategy. snapchat is playing a new role in the election with nine candidates. will it actually help? steve hilton is with me for more uses of data.
we're going to get with that in a moment. social media has been ripping up the playbook. donald trump comes in and just explodes it all. how is trump and social media changing this election? guest: it's interesting how it is not changing things. if you look at how it has democratized parts of our lives, our access to information, going on vacation, all of these things that have been changed, politics hasn't. in fact you are seeing thing goes going the wrong direction. if you are participate. more and more of the funding of campaigns is concentrated in fewer and fewer hands. that is the opposite of things we want to seeing. more people funding campaigns for that is going backwards despite the social media. emily: interesting. not for lack of trying.
a debate on twitter, jeff and hillary throwing barbs at each other. guest: they are keeping to the narrow political audience. if you want a healthy democracy we have to get water for dissipation. emily: how do they do that? guest: our approach is to say the starting point has got to be objective information. one of the things research shows as people are sick of the spin and the things candidates say and they don't know who to trust. they have no idea who to support. unless you are a partisan you have no idea. are starting point is to get objective database not on the opinions of candidates or their
policies that of what we, our research shows, is the predictor how they would behave in office, who gives the money. emily: you can basically taken issue like guns. you can write your stance on that issue. it will show me several candidates that actually have a dog in the fight when it comes to guns. i can donate to their campaigns. is that the best way to get people to take action? guest: there are many ways. one of the is getting people, making it easier for people to find candidates that match their priorities and donate to their campaigns because we believe if we increase the small donors we can dilute the influence of the big money donors. it is not just about having money. many tell is election time they literally have no idea who the candidates are on the long ballot, for political positions like statewide races that determined things that affect
people's lives. emily: this is about educating people. guest: through data that is objective. and simple tools they can use on their cell phone, presented in a way they can use in their lives. which is so far untouched by that. emily: have you think the presidential election is impacted? have you see crowd pack? guest: we launched a year ago for the midterms. we have been testing various things out. the best response we have seen is when it comes to those local elections. we did an experiment in philadelphia, you have many
elections going on but philadelphia was one. we gave people information about everyone on their ballot. right down to local judges, offices that had never been informed about. we found great interest from young people. we found that nearly half of the people that used our election guide were under 34 years old. people say young people are not interested. if you give them the right data in a simple form they do get involved. emily: which brings me to snapchat. you have been talking to snapchat about working more closely. what you think is snapchat's role here? i think i'm too old. guest: i agree with you. i'm older than you. i'm totally too old. i will have a cell phone. that is how out of touch i am with that. the thing with all these technologies in terms of reaching people is it is right and you understand why candidates want to try to reach peak will in different ways particularly younger people, i don't think it is about the method of reaching them, it is about the message of the
candidates, where they stand, and whether they are offering something people want for you can use these new ways of reaching people, but if they don't want what you are selling it will make any difference. our approach, the starting point is to get people objective information they can believe and that is the starting point for engagement. emily: we are went to check in with you as the election progresses. i would love to see how that thinking evolves. thank you. tomorrow, i'm going to be speaking with the cofounder of kik. it is taking on a $50 million investment. that is tomorrow right here on bloomberg west. ♪
>> from our studios in new york city, this is "charlie rose." charlie: the american flag flew over the american embassy in cuba. the flag-raising the latest step in the process by the obama administration. we have a senator who attended the ceremony and the director of the cuba documentation project at the national security archives in washington. i want to talk about cuba and it's importance, but there is much date as you know about what