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tv   Bloomberg West  Bloomberg  January 25, 2016 11:00pm-12:01am EST

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injury: asian stocks have reversed the two day rebound as oil slips back below $30 per barrel. we are seeing losses across the region after korean gdp retreated. the correlation between shares and oil prices is at its highest since 2015. the malaysian prime minister has been cleared of corruption in the case ordered closed. this follows the discovery of hundreds of millions of dollars in an account. the cash came from the saudi royal family in $470 million has been interred.
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sales causedfast mcdonald's to surge producing the best quarterly growth in four years. .ales were up 4% in china over 24 hundred journalists in 150 news bureaus around the world, this is bloomberg news. let's take a quick look at the markets, hong kong and china are closed for lunch but here is how they were trading in the morning session, the shanghai composite down more than 2%. this was the picture following that sentiment -- i am back in half an hour, time now for bloomberg west. ♪ emily: you're watching bloomberg west.
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twitter stocks tending again, jack dorsey turning around the sinking ship. all lines on apple as the tech giant prepares to announce earnings. how long they can keep up the pace. announces job investors signaled they are not so sure. twitter shares are tanking again, closing down almost 5% after the company lost for key members of its executive leadership team. jack dorsey confirmed the departures in a tweet saying that he was hoping to talk to the twitter employees about this later this week but i want to set the record straight now.
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it comes as the company struggles to improve its site quickly enough to reverse a slowdown in user growth. how much will these departures impact his turnaround plans. there are a lot of reports but what do we know? sara: we know for sure that these people have left twitter. jason's off the head of vine has left twitter. we know that they are adding to members of the board based on information from sources. we also know they are getting close to hiring a cmo. many changes at the top. somewhat expected with jack dorsey coming in in october and evaluating things.
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it has been a couple of months and he knows what is working and what is not working. people know if they want to work with him. emily: we have seen a revolving door at twitter. some heartfelt tweets from the people that are leaving. om: this is a changing of the guard. new people to advise jack. we don't know if they're going to hire a new head of product. it may not be necessary as much as jack is in charge of products. in any ceo transition you see
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this kind of turnover. this is twitter. he lives in a public space. they have a bigger glare on them right now. i don't think it is anything unusual. it was a regular company no one would notice. sara: jack has another job so for him to be the product visionary at twitter it takes on a lot. om: he felt compelled to take on this responsibility. he feels that he could turn around twitter. the presence of a founder is always very helpful. whoever the founder is.
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there's a certain level of empathy that is acquired. i am not really that upset about these people leaving. they have moved on to the next big thing. emily: i want them to succeed the stock continues to drop. do you think jack dorsey can turn things around? david: i don't know honestly. i hope so. i think this is a little bit unusual in the sense that it is not a sinking ship but it is a
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ship that has a captain that is really eager to make big changes. he has a vision of twitter is a fundamentally consumer oriented company. unfortunately that is not really what has been functioning as. it may be that the people who have left are people who more or less they go it believe has been. emily: does twitter become a bigger part of the conversation? om: there has been only one successful turnaround ever, and that was apple. that was a longshot done by steve jobs. it could easily have gone the other way. we came in bringing up steve jobs but technology is not
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really about turnarounds. in the case of twitter we have to leverage the expectations. not every company has to have a billion users. not every social media service has to be as big as facebook. it has been in the same place for a very long time. it needs to start making incremental movements leading up to big changes. in order to be relevant. they don't need to be a billion user company. they could be a 500 million user company. that would be just fine. the lack of growth is because there has been a lack of creative thinking around how to get it moving. david: twitter remains way too hard to use for ordinary people. that has to change. the same problems that ordinary people felt from the beginning are still there. jack thinks that a lot of people
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should be able to use twitter just by reading what other people tweet. he hasn't conveyed that. i am amazed at how many people don't even realize you can use it that way. that is a serious problem. it was never going to be the size of facebook. it could be a very much bigger company that it is. not the way functions today. emily: u.s. stocks slipped on monday after their first weekly advance this year. >> the bottom fell out of the markets right at the end of the trading on monday. breaking a two-day winning
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streak from last thursday. oil was to blame. the pci crude also hit another low. breaking its best two-day rally since 2008. the nasdaq also down. the industrials and consumer staples were the biggest laggards. down more than 2%. whole foods fell 5%. the stock was downgraded to underperform. sandisk fell to its lowest point since october. cl essays said it would be very difficult for western digital to walk away from it sandisk acquisition. seagate fell to its lowest point since 2012. western digital fell to its
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lowest point since 2013. after jeffries said it is pricing and extreme bear case for the stock. the retailer should be earnings expectations due to strong amazon prime adoption. emily: job cuts are on the way at sprint. the wireless carrier is reducing its workforce by 2500 people or 7% of its total staff. part of the $2.5 billion cost-saving plan. shares of sprint slid on the news. concerns that the progress in attempting to turn around the company sent stocks and bonds plunging to multiyear lows. are apple's growth days behind it?
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emily: ahead of its earnings report, apple is bringing out a product that will have faster chips and more capacity. perhaps a new product will help revive apple's stock. investors are craving signs of growth. the shares are down five and a half percent this year. down 13% since the last earnings call. can apple get back to blockbuster growth, and where
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with that growth come from? the broader markets are also down. crawford: i think that apple will be able to develop some growth but that growth any aggregate in the overall smartphone category i think they will struggle to get over 5% growth going forward over the next few years. when you think about all the product cycles that they are going through right now. they may see individual quarters when they grow up to 10%. we are going into a new era now. it has different growth associated with it. make no mistake. they have built an unrivaled unparalleled ecosystem and that
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system will continue through disproportionate amounts of value to apple in the years coming. emily: we know they've been working on a car. what are the chances that apple can create another blockbuster category like the iphone? david: i think the chances are pretty good. we don't know what might be. i don't rule out the possibility that it could be the watch after it goes through a few more iterations. cars are huge opportunity for apple. if they really do well with the software in cars they could get out of this cycle there in right now. where they are a hardware company with the much lower margins than some of the companies there compared to. i am optimistic about their
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ability to make big product category changes. emily: could the watch be the next big product category? crawford: not anytime soon. wearables will be a category. but it is more likely than not in commercial applications. eyewear as well as other kinds of wearable devices. as far as the car is concerned apple may want to buy tesla but think they would only do it for ip. then nailing the software for cars is really important it is about them collecting data and then making better predictions
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from that data. better proximity decisions. knowing what your context is. that means leveraging back to that smartphone ecosystem because they will be a lot more smartphones moving in cars that there will be cars with apple's operating system anytime soon. it comes back to them expanding the smartphone category. emily: apple has been the subject of so many perception shifts. is apple at risk of becoming a victim of this shift where it becomes more of an intel or an oracle and not a growth stock? david: i don't think that is the way to think of it. apple is a consumer company with perhaps the greatest global
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brand. those other companies don't have anything like that. apple and worst could start selling other stuff that maybe isn't even is good but it has this amazing perception that could help it in a lot of businesses. i think the problem is not so much that it is becoming a value stock is that it is a hardware business and they don't have a killer new product. emily: alphabets closing in on apple as the world's most valuable company. could alphabets surpass apple as the most viable company? david: i think it probably well. if things like that matter. google has a software business
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and those things can grow. the markets are extraordinary. google is doing so many things right. we don't have the fundamental concerns about them that we have about apple. emily: thank you. we will be all over apple earnings later this week. spotify is on a roll. now it has web videos. we will tell you all about it next. plus driverless cars are put into overdrive thanks to some serious investing in artificial intelligence. we will see how it stacks up to google. ♪
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emily: spotify is ready to
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expand into the video streaming business. it will launch an android video content apple later this week. with the ios counterpart coming next week. it consists mostly of short clips and content created by spotify's partners including espn and the bbc. lucas: we know what they said last may when they held an event in new york to announce this. they were partners with lots of traditional media companies such as espn. it is not just music videos. it is not just adding to the music part of the platform. it is also entertainment videos. they talk about the free service
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as a funnel for the pay service. they are trying to offer more in this free service so they can bring in more users and hopefully convert them into paying customers. emily: some companies are developing original music themed series. david: i will do have to remember when mtv actually played music videos. i think it could succeed. people are giving spotify a lot of their attention. if there is video they are the grips people i think they will watch it. there's every reason to think that they like so many other players were trying to move up can do that. it wasn't the first thing i thought about. the more i mused about it, i realize it's a real possibility
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for them to succeed. lucas: what it takes to stand out tends to be original content. something nobody else has. youtube is the king in this area. because they have every video imaginable. facebook is popular because it has users on there for something else. with spotify they need something sexy to bring people in and make them realize there are videos there. it is not a nap where people are spending hours actively scrolling through spotify. you tend to pick something in put on right away. they will need some compelling programming. my first reaction was that this
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was good for their business. advertising supported audio stream is not that big. spotify makes money charging people for subscriptions. david: it is very possible that they will eventually show video ads. the high-end of the tech business is where so many of the bigger companies and the more ambitious companies are trying to do a wider variety of things. spotify is clearly not exempt from that. they construct doing all kinds of entertainment stuff. maybe down the road they will compete with netflix. emily: they say that clothes
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angie: asian stocks have reversed a two date slump -- a two day slump. also though third quarter -- also third-quarter gdp figures are treated. the correlation between shares and oil prices is at its highest level since 2013. and the malaysian prime minister has been cleared of corruption and the case is now ordered closed. this follows the discovery of hundreds of millions into the accounts, claiming that it was linked to the struggling
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investment fund. the attorney general says it came from the saudi royal family. $470 million has been returned. some bank of japan officials are said to be seeing a close call at this week's policy meeting. sources tell us the slumping oil prices has dimmed to the bank's inflation outlook. haruhiko kuroda plated down the impact of recent turbulence on the japanese economy. authorities pulling out of japan due to lack of profit. the company says all operations in the country will be shut down by the end of the year and it will continue to offer customer support. automaker to first react to slow sales in indonesia. last year general motors says it closed down in the largest car market. 24 hundred
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journalists around the world, this is bloomberg news. let's check in on how the markets have been trading, here is the bond. yvonne: market jitters before the central banks meet this week. we are seeing the nikkei to g5 , hoveringght now around those lows as the shanghai stocks fall 2% in taiwan stocks also falling 1%. at a very bigity high right now, rising about 80%. the asian volatility indexes close to those numbers. it had thrown a lot of money in theose heathen plays, shanghai composite is now raising more fresh concerns about this selloff. the bank of america is expecting another 30%.
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australia and india are shut for the holidays and we will see how rings go. ♪ emily: now to israel. a growing start up. a banner year for israeli on maneuvers. 1400 new companies are registered in the country raising a total of over three and a half billion dollars. the investment crowd funding platform is hosting the second annual -- summit. we have details in jerusalem. elliott: almost 3000 delegates from 50 countries braved storms to make it to this summit. it could be the biggest ever investment conference to take place in jerusalem.
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the founder -- i caught up with him earlier. a lot of passion here. how does -- >> so far, it is actually working in our favor. i do not think that will last forever, but for example, this came back from asia where the investor appetite, despite all the market turmoil was higher than ever. part of it is wanting to get their money out of local currency and into currency that is local. part of it is the sense that long-term innovation is where your money needs to be. it is not just in the public innovation companies, but it is in the private innovation companies because real returns today are in private companies.
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when you're broke or cause and says, i have a hot deal, uber at $62 billion and it is still private, the right response is telling your broker, why did you not give me this offer when it was 50 million or $100 million? the problem was it was not available. on sites like ourcrowd the field -- future googlers -- >> they've raised under million dollars. i this time next year, they hope it will double. emily: now to europe. switching gears to return to -- for a moment. that was a major theme of discussion at the world economic forum last week. the argument is that as issues become more and more advanced we will see a big jump in productivity at the expense of many people. losing their jobs.
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that will put pressure on wages and consumption and forest central bankers hands. our guest host, david kilpatrick is back from dallas. i wonder, how big a concern is this for the world's most powerful voices and economics? does this argument makes sense to you? david: i don't know about the interest rate piece, but there is no question that a huge and quite consistent theme for several days of dollars was what will happen to jobs and a mechanized future. the robot is sized, automated future. i think a lot of jobs have already gone away and i think a lot of able are already saying that. it is not something that might happen, this is happening now. i just looked up -- the san francisco airport train has no drivers and it has been there since 2003. i remember when i first wrote that, i thought, that is the future of jobs. there is a lot of concern among leaders about what happens when we, the eminent elite of the world start getting resented for
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continuing to make money when ordinary people do not have any income. that is what they're worried about. emily: in fact, the world economic forum calculated over 5 million jobs will be lost by 2020 and 15 major and emerging economies. on the one hand, you have people saying that this will be a huge change and it will be painful. on the other, there are people who say robots will not take our jobs, innovation is just going to create more jobs. who is right? david: everybody is right and nobody really knows. there is no question my opinion that new jobs that we cannot imagine now will get created as we move into a more automated future. the problem is the transition and him as everybody agrees that however optimistically you are about the long-term, there's going to be tremendous his location in the short term. like i said, even one of the reasons we are seeing all of this uptake for donald trump and bernie sanders right now is that people are feeling that they do not have the jobs that they want and the incomes that they want. it is partly because of automation now. emily: it will surly be an argument to watch.
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david: anchors are still ok, emily. emily: except on people start watching online. david could patrick with us for the hour. free wi-fi, you can find it at starbucks and airports and countless coffee shops, but one place you would likely still have to pay is luxury hotels which are still charging customers for internet access. but, a report from residents consultancy says that it is the number one change while the travelers want ahead of privacy. a summing pool, or a hotel restaurant. so, when will the travel industry catch up? we will have to wait and see. another story we are watching, federal health inspectors have found deficiencies at the fairness blood testing lab in northern california. this is according to the wall street journal. it is another setback for their nose a company consent -- theranos. coming up, this week's earnings bonanza, what you need to know and a report from tech giant like face book, microsoft, and amazon. ♪
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emily: now, a look at what is trending. his solitaire not challenging enough for you anymore? there is a new application for you. 83 or a former secretary of defense has released his first application, a mobile game called churchill. named after everyone's favorite british prime minister, winston churchill. he's to play truly hard games to keep his mind sharp. it is played with two decks of cards. my saturday night just got a whole lot more interesting. it is time now to greet the week we have to begin with the bonanza of tech giants reporting this week. we'll be very busy over grappling request as we know, apple reports this week along with facebook, amazon, microsoft, and alibaba.
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what can we expect from these powerhouses? joining me as my guest host for the hour, david could patrick, ceo of economy. and our blue -- liver news reporter. let's start with you. let's start with facebook. we were having a conversation earlier about apple. can they keep the growth up. the same applies to facebook. facebook has impressed over and over again, but can they continue to do so? >> what is interesting is the surprise with continued growth. the focus is shifting more toward instagram and video. what kind of monetization potential camera that bring -- and that bring to the table? we think the trench to continue into the fourth quarter but there will be definitely more color coming on what the impact to be expected in 2016 coming out of instagram nvidia. emily: everybody is again for
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more color around instagram and messenger and oculus. david, you wrote the book on facebook. you know better than anybody else what to expect, but how would you answer that question about, what becomes facebook's new source of growth, a year or two years or three years down the line? david: they clearly think that the biggest source of growth is new users and developing countries. that is why they put so much behind this free basics program that has become very controversial in india. they will continue to just power forward. they have not had a backorder practically in memory. the last couple of years, anyway. i think they do not really need a new source of growth. their business as it is structured now is going forward beautifully. i think they will start making more and more money from instagram, though. emily: exactly. do you see instagram, or potentially messenger, or oculus -- becoming a much bigger part of the facebook story?
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bigger than facebook, itself? data: bigger than facebook itself, probably not. instagram will become a bigger and bigger part of the company. they have a limited the fee. instagram is kind of replacing facebook for young people in the united states. it does not even bother them. that may continue globally and they could shift a lot of their focus that way. i still think that the court facebook product, especially in on developed countries is going to be huge and go to multibillion, not just one and a half billion dollars as it is today. emily: what about amazon? will you be watching for? they're doing new things like amazon and go. >> it was the same this quarter as for last quarter. [indiscernible] there is something called a -- that they keep on pitching about. more prime customers attract
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more third-party sellers on the platform. it attracts more prime customers because it is expensive action. emily: but we do not know how many prime customers there are. >> when the number is big enough to be impressive, they will come out and say that. what is interesting is the profit growth impact we see from the -- is pretty much work in the clockwork right now. emily: what do you think are the most interesting things to watch when it comes to amazon these days? david: there are some interesting things about amazon, but they had a killer holiday quarter. we talked endlessly about how well they did and how much e-commerce happened around christmas. i think that a retailer has become, in some ways the dominant enterprise company, software innovator with her
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amazon web services is an amazing development that if i were abm nhp and cisco and others, i would worry about that. i love my amazon and go. there is something probably the national -- apple wishes it had invented. emily: i have been hearing a lot of reviews about amazon echo. i do want to turn to alibaba. continuing questions about how ambitious alibaba has become. and bonnie, you're been looking closely at this. why are investors feeling this way right now? bonnie: short interest in alibaba has surged to 14 month high. short sellers has already seen some benefits from it. there selloff has been paying off. because, alibaba is so big, the u.s. investors yet as -- chinese economy. now we have the economy -- 25
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year low. also the stocks entered a bear market. it is an easy way for investors to have a short alibaba exposure if they have concerns on the chinese economy, chinese stock markets. when we see the investors are saying alibaba shares as i share that reflects the state of the chinese economy. you can see from alibaba's business line that they have sellers exposed to china's economy from the online retail stores to finance, to even off-line stores. basically, a lot of it has to do with the people's concerns over china, in general. emily: a lot to digest this week. alibaba, facebook, amazon, microsoft, apple. thank you all for joining us. now, to technology and politics colliding. this time, a slightly failed attempt at a -- a hawaii county councilman who is running for
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state senate decided to try to reach of voters through social networking site. specifically, the dating application, tender. the tactic was innovative, but it did not pan out as he plans. tinder is of course a dating at. we are told that the honolulu civil be, that after he connected with users, he would steer the conversation back to his platform. he has since pulled his campaign from the application. coming up, a search giant hoping to get ahead in the race toward driverless cars. sound familiar? it is the story of google, yes, but also --. we caught up with the executive leading this charge at china's biggest search engine, his thoughts, next. ♪
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emily: and this addition of drive, apple project titan is set to be at a standstill.
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according to the website, apple insider, the company has placed a hiring freeze on the team responsible for their secretive automotive development. this is after apple has been aggressively, or supposedly aggressively, poaching engineering talent from tesla. the report goes on to say that the design chief expressed displeasure with the team's progress. on friday, it was reported that steve was stepping down. he was nominated by tim cook to lead the venture for driverless cars. people say that departure has not changed apple's plans to develop a card. also, tesla is looking to open a factory in china by midyear. asian technology sites as the automaker is checking locations and picking a partner. why?
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because cars made in china are not hit with the high taxes usually charged by the government on imports. tesla ceo eli must says it is doing well where it has 15 stores across seven of china's major states. now, a crack at the potentially lucrative market for driverless cars. china's largest search engine is hoping to leverage the huge amounts of money it has poured into artificial intelligence research. but it is up against there is competition in the united states. google, of course is already logged more than to me miles of self driving car testing. bloomberg caught up with baidu senior vice president involved with this project. why he is not worried about being too late to the game. >> chinese carmaker started making cars 100 years after others. the technology -- [indiscernible] electric cars, intelligent cars, the court technology shifts in the engine and the cable to artificial intelligence. that is a area where china is very close to the united states. that gets china the chance to catch up and take leadership. emily: joining us now from tokyo is peter. still with us, david
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kirkpatrick. i will start with you, david. does baidu have a chance? david: why not? i think they have as good a chance as google. i think there are distinct differences in the chinese market that a chinese company will be better able to take advantage of. i also think that just as google has some logical positioning and self driving cars because the database aspect is so huge, running a gigantic software backend is going to be necessary to provide the guidance for these vehicles and the intelligence behind them. i think baidu is just as likely to do that well as google. emily: explain how far along they are when it comes to developing self driving cars? specifically compared to google. >> baidu has been very quiet about what it is doing with all driving cars. it is the largest search engine
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in china. it has also been investing a lot of money into artificial intelligence, also has a winning position in mapping technology within china. the argument that they would make is china's a market that is different from other markets, so that they feel like they have a home field advantage when it comes to developing this technology. they can partner with local carmakers and they have some insight into how the china market is going to work for drivers as opposed to other markets in the world. emily: what is interesting is that they may well have an advantage in china, is not here in the united states. and he also spoke to why that is. take a listen to what he said about the chinese car market, specifically. >> many people who are returned after years of living abroad find out they are not used to driving in china. they are afraid of driving in china because the conditions on which -- are more chaotic. they have a robot that is trained on u.s. roads. it would struggle to adapt to the way that chinese people crossroads. our robots, are trained on chinese rise.
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emily: i thought that was interesting point, david. i wonder, china is one thing, can they stack up the competition in the united states? david: who knows and we will really have self driving cars, anyway. also, i would just note that baidu is one of the so-called companies with alibaba, and every one of the three wants to do everything. it would not also price me of alibaba got in on this as well. i think chinese software is likely to work best on chinese roads, if and when we have self driving cars. for sure. emily: interesting, peter, what you make of that suggestion? peter: i know you visited china recently and you have seen the conditions of traffic in china. in the chaos that you can see on the road there. i think he has a point. china roads are pretty good test case for the kind of sensitivity that you would need any self driving systems. i think that is probably a good test case. there will be a home field advantage in china and may be more challenging to expert
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technology. it will be a big market. they will do well in china and try to expand elsewhere. emily: an urban jungle, indeed. in beijing, peter. and david compassion. thank you both so much for joining us today. and it is time now for today's edition of best day ever. who is having a good one today? well, it depends on how much he loves his job. facebook ceo mark zuckerberg is back at work after two months on paternity leave with newborn baby, max. and just like the rest of us, he cannot decide what to wear. he posted this picture today of his extensive wardrobe diversity. the trademark gray t-shirt and hoodie. welcome back to work, mark zuckerberg, just in time for earnings on wednesday. i believe you were in a gray shirts were interview last year. that doesn't for this edition of "bloomberg west." tomorrow kicks off a big week of tech earnings starting with apple, that is all today from san francisco. ♪
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