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tv   First Up With Angie Lau  Bloomberg  March 27, 2016 6:00pm-8:01pm EDT

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♪ emily: i'm emily chang and this is the best of "bloomberg west." we have compiled our best interviews of the week. coming up, apple introduces a smaller, cheaper iphone. how are investors digesting it? we will discuss. we remember andy grove, a plus, founding father of silicon valley and a mentor of the biggest minds. and i sit down with shopify, checking in with the e-commerce company as reports swirl of an acquisition by google. first, to our lead. apple unveils a new iphone, the iphone s6 with a smaller screen
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and smaller price tag. starting out at $399, it is the cheapest new iphone ever. the company appealing to both to customer -- loyal to the iphone 5 and new buyers in high-growth markets like china and india. investors initially were not crazy about the reveal. shares dipping as the event got underway, but i do want to point out that investors are typically slow to digest apple product announcements. looking back since steve jobs died in 2011, shares rose 1.5% after product launches, but retreated 1.8% three months later. right after the event, i spoke with gene munster in minneapolis. i started by asking, how will investors look at apple? >> i think investors are already concerned. they should take away the are being finally more aggressive,
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may be appropriate the aggressive but the pricing that should be more resonant with the emerging markets. this is a great price point because it will be more attractive, but at the same time, not at the cost of their margins. so, investors should feel good about that. the second piece, the march guidance they gave, many investors believed that included the anticipated lower that is a end phone. sign that it will not be out until march 31. the quarter ends on march 26. that means the march quarter doesn't benefit. investor, one of their takeaways should be to feel better about the march guidance based on the timing of when the phone is available. emily: porous, this is the lowest priced iphone ever. will this help reinvigorate iphone sales? >> i think iphone sales are doing well, just not growing. let's be clear, there are one billion devices out there, not all of them iphones, but we are
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looking at a huge audience that is going to expand. perhaps slower than we are used to, but one billion people potentially using apple devices here. now, how much faster can they grow? how many more users are not consumers alike on? again, there are several billion people on the planet. probably most of them will have smartphones in the next two years. there is always going to be that green opportunitfor them. i don't know if this is it. we will see more iteration. they are just going to keep improving this product. emily: cu is going to buy this phone? is it for people in emerging markets? for people who have not upgraded yet? people who already have an iphone, but want the smaller screen? who are they targeting? ben: when we look at intent to purchase and the installments, we see a portion of the base that has not moved. it is not always price-driven. invite be a portion, 20% of our
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annual said they wanted to upgrade but are not sure about the size. they will upgrade at some point. which device will they choose? do they like the small? i think the existing base, the holdouts that are adamantly set, that is relatively small. if our panel indicates correctly, that is 10% to 15% of those owners. the important thing is that they are bringing the platform up to current generation technology, but i do think we are seeing, they were very intentional saying that a first-time buyer buys in at this screen size. it also has to do with the price. if you look at rural china, india, indonesia, it is the price point. this is indicative of a maturing middle. consumers, as they grow and mature, saying i'm drawn to apple and like the apps, they are willing to pay more and apple is meeting them at the
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middle with this price range. emily: to what extent is apple swimming against the tide? there is an economic slowdown happening in china, potential economic hiccup in russia and brazil. the smartphone market is quickly saturating. to what extent is this outside of apple's control? >> a lot of it is. they are still doing well in some emerging markets. in china, units grew at 18% year-over-year, and deceleration since september, but better than overall industry growth of smartphones in china, close to 10%. so, yes, they are up against the headwind. everyone is up against the headwind. i think the shares reflect that given the multiple that it is trading at. most important, when you put it all together, it should be a mid to high single digit growing business for the next several years with the benefit of the emerging markets.
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even with the headwind, it should be a growing business. emily: we are seeing a very low priced iphone and iwatch cut, lowering the price by $50. what you make of that? could this impact the brand? >> my thinking is not on the price of the device purchased, but on a per day basis? if you work out how long they stay in use, are upgraded, you get to an interesting figure. i used to say that an apple product on a one dollar per day figure. i have refined that, and now it is $.70 per day. on a per product basis we saw $17 for the lowest iphone and up to $31 for the most expensive -- not the most expensive, but the high-end model. think about that. $30 a month, it is $1 a day.
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$15 or $17, that is $.50 a day. this is how i think we should think about these products, and ask ourselves, how many of those customers there are and how many services on top of that? we are looking at $10, $20 a year in additional service revenue per device. it can be boiled into one model and reduced to how many users you have, how much they spend on each device, and you get a valuation. emily: you have done a lot of work on the watch. no one knows how well the watch is selling. you are wearing yours. my two guests earlier have them but do not wear them. we are now seeing a price cut. can this be more than a niche product with an update or redesign? >> there is a couple of ways to think about the watch. one thing is that this was not something preceding it that gave us a frame of reference.
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the iphone was built, most and of us had future phones understood cell phones. the ipad was successful because we were familiar with the iphone. this is such a brand-new category of product, it takes time to get your brain around it. we still see high levels of consumer satisfaction, which is not your techies. we see within the mainstream markets, your everyday buyers who are finding value. this is just version one. we are optimistic that this product goes. again, the question is how big is the size of the market? we will have this are all new categories, how big is the opportunity for the markets? the research that we see continues to suggest that there is certain something there. how they that goes is going to be the constant debate. they will continue to evolve this product. putting a modem in it and unbundling it from the iphone would make sense, better improvement of native apps. that will come as it matures.
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as a v1 product, what we are seeing in the market is positive. there's something there, but it is in its infancy. emily: ellis piper jaffray and gene munster, horace and ben. coming up, we remember one of silicon valley's founding fathers. intel's former chairman andy grove who died on monday at the age of 79. we will look back at his legacy. that's next. ♪ ♪
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emily: this week, the tech world has been mourning the death of andy grove, who died on monday at 79 years old. he played a central role in the creation of the semiconductor industry on which today's turn it ages built. he was a mentor to steve jobs, larry ellison, and mark zuckerberg. all turning to him for advice. i spoke to tech leaders who knew him, including craig barrett, who took over as ceo of intel. he told me about the impact andy grove had on him personally.
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craig: i worked with andy for 35 years. and, you know, i greatly respected his inside, his wisdom, his strategic thought, and how straightforward he was. i think he was the most direct human being i ever met on the face of the earth. he knew exactly where -- you knew exactly where he was coming from, and he always had a great strategic idea of what to do next. emily: intel was known as the world's best managed company, yet he was also known as a ruthless leader. yet, people still followed him. what would you say were the hallmarks of his style? craig: i do not think "ruthless" is the right word. i think being straightforward and practicing constructive confrontation, which is one of these intel buzzwords describing their country -- culture. you always knew where he was coming from. he would not tolerate shallow thinking.
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he wanted every strategy well thought out, well considered, and did not manage -- mind challenging anyone in the company, or the industry for that matter. emily: what was it like trying to fill his big shoes? would he continue to try to influence you even when you were the ceo and he wasn't? craig:, no, well intel has had, such a tremendous history of leaders -- icons in the industry. bob noyce, gordon moore and andy grove. following those three is a daunting task for anyone. but, i worked very closely with andy on a consulting basis after he left the ceo position. i followed him. he was helpful. he was respectful of decisions i made. so, he was a wonderful mentor. he did not overstep, overreach.
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and he respected the next generation of management coming into play. emily: young ceos revere andy grove. his book on management is like the bible. i wonder, do you think his leadership style survives generations, or can other styles be just as successful? craig: certainly, there is not one way to manage a company. andy imprinted his style into the culture of intel. and the company goes to great pains to really indoctrinate all the new hires into the company, into the cultural style, where strategic thought is important, constructive confrontation. addressing issues, running communications up and down the company. the lowest level employee feels free to contact the ceo at any time with an idea. all those were things andy put into the company and into play. they are still all alive and
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well. emily: craig barrett. when we return, i will speak with one of the men andy grove mentored. ben horowitz of andreessen horowitz. we will hear more about andy grove and his extraordinary life. i will sit down with a ceo and later in the hour, discussing the issues facing the world of cyber security. ♪
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♪ emily: as we remember a pioneer of the tech industry, former ceo and chairman of intel, the late andy grove died on monday, i spoke to ben horowitz, cofounder of andreessen horowitz who had his own special relationship with andy grove, a beloved mentor and teacher. he talked about his role in shaping silicon valley. ben: not only did he build the foundational company, and to get to the microprocessor intel was in the memory business.
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that is usually the end when you get to 13 years. and he faced brutal competition from the japanese, including subsidies from the japanese government to his competitors, which forced him to switch the business that late in its life to microprocessors, something he foresaw might be a big market, but at the time was tiny. intel, as a result, the u.s. ended up being the center of the microprocessor market and the pc industry, which led us to be the center of the internet. he kind of was the foundation for the u.s.'s leadership in technology. you know, that was a really big thing, but beyond that, he was also the cultural foundation of silicon valley and that his leadership in turning around
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once he achieved what he did, and making sure others knew how to do it, was unprecedented. really, nobody has done it as well since, but we have lived and it has made every company off of it, that has read the book or followed andy grove better. emily: that leads me to my next question them a which is, the idea of a turnaround is still elusive to most big tech companies out there, with perhaps only apple truly turning itself around. now, we are seeing yahoo! and ibm going through difficult times. what do you think andy grove's advice would be to them? or, what did he think about them in his final months? ben: yeah. there is probably some things he said to me i should not share. but, i will say this, i think that the thing andy and a steve jobs had in common was the
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courage to take the company in a direction that maybe nobody at the time really thought was a good idea. and i think what you see a lot in leadership now is what i would consider more followership. what do the shareholders want us to do or what do the analysts think is a good idea? and you look at what steve jobs did with apple or andy did with intel, no one reported on it. nobody was an armchair strategist. neither would have sent them in the directions they took. but they did the work, they knew what the right direction once, and were ok with whatever happened to them. they were ok doing with doing what they believed was right. i think that defined andy as a leader. the thing that people who follow him take away is that courage and determination to do what is
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right. emily: it seems like so many young people want to be opera knowers, want to come to silicon valley and let the silicon valley dream. what was his take on you onto per knowers today? some who may be called overly arrogant or naive, and what lessons should they take from andy grove? ben: i think andy really continue to believe in people and even the young people, people considered arrogant, he spent time with a lot of the young ceos. drew houston of dropbox, mark zuckerberg, if you look at mark's career and what he has done with the company and philanthropically, you can see that he has learned a lot from andy. he knows the importance of giving back. andy's career was so influenced by how grateful he was that this
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country took him in as a refugee at 18 years old, he had nothing. he came over on a boat. he got a few dollars a month and we let him be a citizen. and he never, ever stop trying to repay that. he paid it forward to all of us. it is such an amazing thing. that level of gratitude and belief in humanity is what we all try to take from him. emily: horowitz, speaking to me about the death of former intel ceo andy grove. now with me to discuss, our intel reporter, ian king. he met and become many times. i want to touch on something that ben mentioned, how he became this way. how did he become so great? share a little about his story. ian: he wrote a moving book about that process, his childhood growing up in europe
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during the war in eastern europe. being jewish, what happened to his family when the nazis occupied hungary, and when it was fought over by the soviets when they took it over. how his family was persecuted and he had to escape. emily: you met him many times. what was he like? ian: scary. and inspiring, but scary. everybody we have spoken to, they all talk about his intellectual honesty, his love of the truth. that was absolutely what he was like. you couldn't have a flirty, flattering conversation. he was not interested in his own celebrity or power. all he cared about was getting to the truth. he would push people's buttons until he got what he felt was useful out of them. emily: david kirkpatrick is still with me, david, i'm sure you have your own stories about andy grove, having covered silicon valley for so many years. how do you remember him? david: listening to all of these wonderful comments, one thing that has not been mentioned is
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that he played a key role in building the ecosystem that is silicon valley now. you know, this complex relationship between microsoft and intel that led to the incredible success of the pca, of which he was one of the great champions of. bill gates is not a pushover. andy grove was a formidable match for him. it was necessary, in those years, that both companies were led by super strong, super intelligent, rational, but feisty leaders who wanted to win and push each other around. in the end, they knew they had to win together. he was not mean, but he was very gruff and straightforward. he was an incredibly nuanced thinker. there are so many wonderful things about him. he was generous, too. that is something that might not have come through some of the other comments. when i first started covering tech, he got to know me and gave me pointers on what i should think about.
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emily: quickly, your profile of andy today opened with this amazing anecdote about a conversation with steve jobs and larry ellison. share that with us. ian: they went to his house on his birthday to celebrate. they both thought, by way of tribute, they would tell him that he was the only man in silicon valley that they could work for. his response was that he would not have hired either one of them. he thought they were flaky. [laughter] emily: he told them they were complete flakes. is that the andy you know? david: that sounds very much like andy. he was not going to sugarcoat anything. he wasn't mean, he just told it like it was. you had to be braced for unpalatable truths when you hung around with him. but he wasn't going to mess around, or waste your time. he wanted to make a great company, industry, and he was ultimately a great american that wanted to build the country up. emily: that was ian king and
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david kirkpatrick. up next, we will speak to the adobe ceo about the areas of focus beyond products like photoshop. we head to las vegas, next. if you like bloomberg news you can listen on the bloomberg radio app on and in the u.s. on xm. best of "bloomberg west," continues after this break. ♪
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♪ emily: welcome back to the best of "bloomberg west." i'm emily chang. turning to cyber security, it is one of the hottest startups disrupting the industry, pulling in hundreds of millions of funding. they're racking up $3.5 billion in valuation. this week, i spoke to cofounder orion hindawi, who took the reins of ceo from his father.
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orion: i think we are doing what i have wanted to do for eight years. to build something we are proud of, ship it to customers, and have 99% of them renew. so, the really interesting thing about our business is a lot of people obsess about things like revenue, cash flow and i do, too, but what is important to me is that our customers love our product. every year, they are able to pull out technology they do not like and replace it with tanium. emily: you raised another $100 -- $300 million you have not touched, is that the case is among >> yes. why take new money if you do not need it? orion: i said a year ago that what was happening in the valley will not continue. that we were running in a profligate environment. a lot of people were spending money like they didn't know what to do with it. they were just wasting it. i thought there was going to be a real turn.
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we saw an opportunity to raise money because we did not we could do it again for a long time and if you look at the market now, it is very likely people will not be raising money in york county evaluations they want for a long time. i am happy we break it so we have the cushion to execute without having to worry about the dynamics of the market, or if there is a downturn in the economy. emily: who gets left. behind? orion: people are being left behind already. emily: what companies? orion: in the security industry, there is point solution after point solution that is losing millions of dollars per year and they are desperately trying to raise money or be acquired. eyesight was just acquired by fire eye. sometimes the acquired are unsustainable and will be a target for acquisition. a lot of the security market does not deserve to exist. that will shake out soon. emily: in this age where there are more cyberattacks than ever,
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are there a lot of companies and people in danger because their cyber security firms are not doing their job? orion: 100%. a lot of people are relying on a foundation that is crumbling. very quickly, they will have to take antivirus and firewalls, some of the endpoint capabilities they have and some of the companies they deal with, and upgrade them if they want to prevent the next attack. the reality is our attackers are stealing billions of dollars a day of credit cards and health care data. the are not going to stop. as an industry come up and great solutions, our customers will lose that ip and information and credit card data at an increasing clip. emily: apple versus the fbi, your take? orion: it is more complicated than people give it credit. i know in the valley, it is a very popular to say definitely that apple, but the reality is our society is based on the idea that a warrant, when issued, should be followed.
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if we end up with a black box in everyone's pocket, law enforcement will have a harder time doing their job. conversely, if you break encryption and put backdoors into products, nothing ever stays secret. it is a difficult problem to solve. while everyone wants to say encryption is awesome, if you don't have law enforcement, the society breaks down. emily: should tech companies be able to create warrant-free spaces? should the government be able to look at this? orion: i think the government has a reasonable need to get to data to prevent the next attack. if we build systems that are so closed that it is impossible for them to do their jobs, i'm afraid we will all suffer. emily: you said an ipo is in your sites. it is only fair to employees. is that something we will see this year? orion: that is hard to answer. i don't know what will happen
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with the market. i think people are realizing it is frozen. i have seen the ceos counting on going public that are terrified. they are losing money, but thought the market would make up for it. they are realizing that won't happen. we are in a luxurious position where we are making money. we can choose when to go so we aren't forced into an unfriendly market. i will say, i continue to believe our investors and employees, and even our customers deserve to have us go ipo. emily: you think they would like to see you become a public company. orion: i think they want to see we are running a tight ship. they want to know we will exist in five years. frankly, some companies that have gone public opinion price for it. when customers look at their financials, they realize they are non-substantial. we are very clear. emily: i caught up with the adobe ceo. the company is in the midst of a
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multiyear effort to shift its product lineup from desktop to the cloud. adobe shares were higher after the latest report. sales and profits beat estimates for the first quarter. adobe boosted its forecast for the full year. i spoke with the ceo in las vegas, asking him how he looks at his business. shantanu: we had a strong quarter across the board. all three of our growth businesses -- the creative cloud, adobe marketing cloud, and adobe document cloud did well. creative, as you know, we successfully reimagined the creative process by moving the business to the cloud. in the marketing business as well, we had a strong quarter. i think what is driving it is every single business around the world is talking about the impact of digital and how they have to put the customer front and center. our products and technology enabled them to make the transformation. we are seeing demand for
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digital, and that is boding well for adobe. emily: you are very close to completing the shift from subscription to license based sales. in what particular areas of the business using the most strength? shantanu: i would say that we are through the heart of the transition. that is why we have talked about how the creative business will grow greater than 20% this year from the peak. the marketing cloud will grow at 20% this year. so, i think both of those businesses are certainly fueling their growth. in creative, it is all about the mobile applications that are being created. of the video being consumed a mobile devices. on the marketing, it is about the platforming the core infrastructure to deal with the demands of digital. emily: longer-term, what of the areas of competition that you are more worried about? we have been talking about andy
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grove today. the day after his passing. his famous line, "only the paranoid survive." what are you paranoid about? shantanu: we're paranoid in terms of how technology will disrupt the entire industry. i think the good news for adobe is that we have always been a product company at our core and in our dna. as long as we continue to innovate -- we have transformed our businesses by focusing on the customer. so, when you are always looking for that next innovative startup, and with individuals who have a great idea, i think, you know, we have been continuing to innovate within the company, and will continue to do so. emily: you are in las vegas hosting a digital marketing conference, one of the lesser known areas of your business. it is not photoshop. it is not acrobat. why is marketing a big focus for adobe?
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shantanu: we have always been about art. if you look at the impact of our products like photoshop, illustrator, indesign, and premier, there is not a piece of communication out there that did not have some use of adobe software. if you years ago, -- a few years ago we recognized the world was moving to re-platform its web infrastructure. every business had to put the customer's digital journey front and center. we recognized that if we have done with art with the science of marketing, that would he a -- that we thought that would be a unique opportunity. finance had been automated. hr had been automated. no one was targeting the chief revenue officer, the chief marketing officer with technology. we are the undisputed leader in that category right now. it is a business that continues to grow north of 20%.
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i think we were first to recognize this large, untapped opportunity that we think will be something like a $25 billion plus opportunity. emily: that was shantanu narayen speaking to me from las vegas. coming up, shopify extending its partnerships, even as reports say it may be a target, and acquisition target or a silicon power player. we will hear from tobi lutke. then, we dive into the world of space startups. ♪
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♪ emily: reports this week that alphabet might be eyeing acquisitions for their cloud business. shopify is on the short list, which provides for vendors selling items on pinterest and twitter. they are not stopping the software maker from forging new partnerships, announcing new platforms like the coupon app
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ebates. the discovery act and the home design platform. shopify's ceo tobi lutke going well. >> they picked us up the year ago with the idea that let's get in more places. let's give people a place to show their products and buy these things directly and it has been going amazingly. we have great partnerships and as you mentioned. emily: facebook has tried e-commerce before. it has always fizzled. why is it going to work now? do people really want to shop on facebook? tobi: ads are behind a lot of facebook's business. they are advertising places that sell products. shopify is for advertising anyway. to bring us closer together with the identity and maybe the credit cards that facebook has on file -- a compelling
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experience for the people shopping. emily: what about amazon? how much, in terms of sales, has been generated by the amazon partnership? tobi: amazon partnership has been mostly about their web store business. they have brought over a lot of merchants that have been selling on the platform. it has been a great partnership. they have enabled payments directly through amazon, the ability to ship the product directly into the amazon marketplace. it is a meaningful channel for the people on our platform. emily: what about google? what have your talks with google been like? tobi: yeah. it is a little bit hard for me to comment. i know where you're going with this. [laughter] emily: let's talk about the elephant in the room. has google talked to you? are they trying to buy you?
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tobi: as a public company, i cannot comment. emily: do you wonder about google as a competitor? they've been trying to expand their shopping efforts. tobi: google, and everyone else frankly, is finally taking e-commerce seriously. everyone realizes what an important role it plays. would be one to do it shopify is we want to be a neutral office. we want to power the merchants. we love helping entrepreneurship. we want to make it easier to build these online businesses. no one paid attention to how difficult this was. we built the back office. we are getting your orders in and getting your packets out. and then we integrate with facebook. we give you online stores or you can sell directly. that is really our role. emily: you're getting so much information about the payments
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business because you work for these businesses. who is winning in payments? is it paypal, stripe? tobi: they both have a good place. now, paypal, through acquisition of a company called norv is, and in stripes' case it is more home-built, but it is a sign of how products like retail is very place. important. we have looked closely. if you sign up for a new shopify, you get shopify payments, which is related to stripe, and we automatically set you up with paypal as well. emily: now, the new trudeau government is making tech part of their plan. just another big boost today. how does the canadian government keep entrepreneurs from moving to silicon valley and taking their ideas here? tobi: well, coming to the valley, you meet a lot of
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canadian friends. [laughter] it is the ambition of the canadian government to get everyone to keep building the companies in canada. we started in ottawa. we have 4500 people in canada. it is suddenly a great place to build long-term companies. and, the new focus is very welcome. justin trudeau is savvy on technology. he really, really understands it. it is fun right now. emily: that was shopify ceo tobi lutke. coming up, we dive into the world of space startups and the first accelerator for the aerospace industry. stay with us. ♪
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♪ emily: this week, i looked at the world of space startups. the starburst accelerator, after starting out in france, is setting up shop in los angeles, helping aerospace companies off the ground. i spoke with the founder,
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francois chopard, about what he is excited about. why did you start this accelerator? what kind of support do aerospace startups need, besides a lot of cash? francois: i am an engineer by my background. i worked for the u.s. air force research labs. i'm passionate about aerospace. then, i've been doing consulting for the past 20 years. emily: so, you are in paris, l.a., munich, singapore here it why these places? francois: we wanted to be global. our startups need to be connected to grow their businesses with large corporations as fast as possible. for us, the major hub combining aerospace, science, corporate aerospace, also money, and entrepreneurs, we wanted to be in all the locations where the startups can meet and collaborate with large
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corporations. emily: where does space talent cluster? do they come to you? francois: it is a combination. we start with universities, whether in the l.a. area, m.i.t., asia, europe -- these people, these engineers with phd's want to do something different. they do not want to work for large corporations anymore. they want more autonomy. they want to make a difference. they want to be more empowered. they want to put their name into history like elon musk with spacex. emily: so, they're not only trying to build rockets like musk? francois: there are so many different subjects and startups. we are working with more than 300 across the globe. out of the different areas, we can name electric cars, vertical
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takeoff and landing capabilities. we are talking about -- there are probably 20 startups working in that area. there is a lot of them that want to work on satellite constellations, whether it is through observations or communications. inside the aircraft, a lot is going on. in the cabin, for example, more connectivity with the startups that want to do big data. there are more sensors. we want to operate aircraft that are smarter and more efficient. emily: now, a lot of people think of spacex as the only space startup. there is also sierra nevada. which we've had on this show. do you think we will see more space and aerospace startups on the main stage? when and why? francois: beyond spacex, people are spurred by what he was able to demonstrate with a proper business model and good valuations.
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it showed the way too many more of them. now, with that, there is more and more who want to invest and more and more who want to develop their own products. there are 300 to 400 mature startups with strong technological world-class products coming to the market. so, maybe not all of them will succeed, but the landscape in 10 years to 15 years will be different. emily: and elon is helping? francois: absolutely. by what he is doing, what he has announced with hyper loop. with the launch electrical cars. yes, by showing the way, of course -- emily: that was the starburst accelerator founder francois chopard. that does it for this edition of the best of "bloomberg west." we will see you again next weekend. ♪
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♪ ,ngie: taking action kickstarting japan stubborn economy. promote the ceo to the job. , streaming"first up" on mobile and yvonne: straight to our top
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first round of economic stimulus in japan. david for more, devil is in the details. local media reporting that the government is planning to announce something. did might be tomorrow when shinzo abe comes out. on what thel depend first quarter gdp will look like . , frontloadinges spending under the regular budget, planning to announce details on the same day that the new budget was approved by the lower house a few weeks ago becomes law.
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ftshopping vouchers and give certificates for younger people to boost consumer spending wage increasing for teachers, public works projects. over the weekend, a poll an increase of support fiscal stimulus. what they need is demand. as ae are pointing to this new channel that could kickstart the economy. it might come tomorrow. tax,e: this planned sales
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is that canned? >> expect this to be one of the main talking points. toldiday, shinzo abe parliament the plan is to proceed. the by minister is now considering pushing that back. if they push it back, they plan to push it back 1-2 years. another poll conducted -- i am surprised that the percentage who oppose it is not higher, but two thirds don't want to see prices increase. for for tomorrow, and wait may 18.
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will be able to determine the size and scope of the new deal. yvonne: an activist investor has group to avoid in nominating its next ceo. is 83 years old. he may try to of 711s son succeed him and i say that competence in the ability to run the company successfully, not family ties or ,rying to preserve the dynasty
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should be the criteria for choosing the next ceo. nepotism and should be the candidate for the leading job. third point has started to take action on this news. loeb has spoken to other investors who share the hedge fund's views. a lot: we have heard
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about corporate reforms from shinzo abe. say anything more about that? >> he is quite happy and praised shinzo abe. this is not surprising because loeb has a lot riding on japan inc. were talking about bets on , sony, ihi. transparency and efficiency very important for loeb. yvonne: we will see if seven and
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i continues that. we are less than one hour away from the open. let's go to tokyo. futures in chicago, modest a littlet expecting we were dealing with thin volumes given the , but now a weaker yen. australia, new zealand, hong kong, all marking the easter holiday. , chinesedlines industrial profit snapped a losing streak. the national bureau of gainstics says the were influenced by several factors.
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the bureau said the industrial sector faces many difficulties. a company will hold a scheduled board meeting on wednesday as negotiations over a rescue deal for sharp drag on. the deal may be discussed depending on the state of talks. sharks banks will push back the deadline for $4.5 billion in loans to facilitate the deal. a deals hoping to reach as soon as possible and will disclose the news promptly when a decision is reached. and the capedel crusader have given warner bros. its best ever domestic opening. $170 million at north american theaters, topping estimates. china was included in the worldwide release, 424 million global takings. it becomes the first of several
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films planned by the end of the decade. myanmar is now officially open for business. the stock exchange is entering its first full trading week oner a historic session friday. we have more on this story. formuch choice out there traders, one company listed. butot much choice at all, the fact we saw that one stock friday,is debut on climbed by 19%, showing you how much appetite there is. in thebeen 20 years making to get the stock exchange off the ground. cause by the asian financial crisis, then the military government, and an underdeveloped financial system.
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the stock did climb by 19% daily limit. more than 112,000 shares exchange hands. say there is an appetite for stock market in myanmar. where expecting six more companies, including two financial firms, myanmar citizens bank and one other. they are six companies that have been given approval for listing. gdp is shown myanmar's based on per person per capita. cambodia, laos, vietnam, and myanmar, vietnam is in front in terms of its gdp per capita. , veryite line is myanmar much playing catch-up to what we have seen from second ranked laos. 5164 usd in terms of
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the gdp per capita, narrowing that gap. we have two thirds of the country's people living in poverty in rural areas. there is a lot of room for development and the financial system to get off the ground. company rising by that limit of 19%, showing a strong appetite for the stock market in myanmar. yvonne: thank you so much. you can get more at our digital bloomberg business, bringing the best together of news, business week, television, and digital content and one address. also on investors have been betting on a
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copper rally, and already in retreat. how sri lanka hopes to turn itself into a wi-fi paradise with the help of google. that is on we take a look at china's and australia's changing relationship with both economies in transition. , the possibility of more stimulus in japan and the boj's latest sentiment survey. why the bank of singapore is not overly up in the sick "first up" when "first up" -- overly optimistic when "first up" returns. stay with us. ♪
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kong,is 714 a.m. and hong these are the stories making headlines. breakaway faction of the
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taliban says it carried out the bombing of an easter sunday party, 65 killed. the group says it was aimed at the christian community. pakistan announced three days of mourning and businesses remain closed today. more than 300 wounded in the blast, and people say the number of dead is likely to rise. former prime minister has stepped up his campaign against the current leader. he says the financial scandal means the country cannot wait to been years for the next election. he was cleared by the attorney general of wrongdoing over hundreds of millions of dollars in his private account. he said the cash came from political supporters in the gulf, and most of it was payback. vietnam and china have held talks in hanoi in the hope of easing tensions over disputed waters. amidstense ministers met growing arguments over the south china sea.
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the two sides said they are determined to solve their differences in a peaceful way. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. i am rosalind chin. yvonne: time for look at the stories were we are watching in asia. ,etro china's disasters numbers other giants will be watch close and tuesday. the estimates aren't pretty. the second straight year of .eclining debt income we get the latest official take
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on how the chinese economy is doing with the release of march manufacturing pmi data on friday. unexpected eight month of contraction, 49.5 reading after a 49.9 figure in february, the weakest in seven years. also on friday, a snapshot of .apan inc.'s investment plan the boj will be hoping its move to negative interest rates has translated into growing business confidence despite gains in the yen and slowing growth in china. economist at the bank of singapore, richard, great to see you. a slew of data coming in after a quiet couple of weeks. i wanted to get your take on the recent headlines from japan, inflation at zero, now shinzo abe plans new stimulus and may
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frontload spending measures. the devil is in the details. are you optimistic about this package? not particularly, no. in real issue for japan terms of fiscal policy is whether or not they will postpone the consumption tax increase. they could not postpone it again, but it looks as if they are heading in that direction. is the case -- we just heard from the prime minister saying that they plan to lift the consumption tax to 10% as planned. the prime minister doesn't believe the economy is in dire circumstances and the effects of the sales tax will be as damaging as the first one. richard: of course he will always talk up the economy.
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i think the economy is doing ok. i saw some judgments in recent days, and they've chosen the people who advised him to endpone it, i think in the they will take the easy call, to push it back again. yvonne: we talk about the fiscal measures, but we continue to see falling corporate profits due to the yen appreciation weighing on capital spending, overseas condition still lackluster. is this going to mean we will see some boj policy action and april or leading up to july? yeah, as you say, it's probably going to be a bit softer because the yen has appreciated, and that was in response to the boj's halfhearted moves at the end of january. the question becomes do they try harder or do they decide the
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market does not seem to be responding to anything we do. of the bank of japan has become quite unpredictable in the last year or so. they don't give a clear message on what they think will work, so i think the betting is they will do something, but it is hard to judge what form that will take. yvonne: we have seen negative rates here, and it has not done much to weaken the yen, so that is further dampening the inflationary pressures. do you think inflation has reached the bottom yet in japan? think inflation reached the bottom 2-3 years ago. the headline of those figures on friday was around zero, but if you strip out energy in particular, then you're running think there so i
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has been a genuine lift al qaeda deflation, but it has -- a deflation,t out of but it has been a difficult path. yvonne: do you believe negative rates are working, helping the increase --in 10 to that in tend to increase investment and wages. ? we are still seeing stagnant consumption. thing,: it is a complex but it's not a big policy is the but the reality difficulty is finding profitable investment decisions for companies with cash. a minor move into negative rates will not achieve much. when offset by a stronger yen,
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the net-net the carpets are feeling discourages -- and the corporate's are feeling that discourages them. yvonne: one more question in terms of the yen are we heading to two digit figures? richard: i think the fed will be june, and is by think that will give some relief to the yen. i think it is more likely the relief will come from that u.s. side than the japan side. when the u.s. raises rates, that was in the yen back towards 120. yvonne: 120, a call from the bank of singapore. coming up, one of the world's biggest private wealth funds says it is always a good time to invest in china. back in two.
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is ♪ ♪
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yvonne: welcome back. you are watching "first up". china's slowdown is being overblown. stephen engle caught up with the ceoeffrey and asked of rockefeller and company about china's growth targets. growth, that is very robust economic growth. thes down from the high chinese experienced for many years, but still quite substantial. ,rom an investor's standpoint we watch the sustainability of that level of growth going forward.
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the leadership in china has articulated a new five-year plan , a variety of economic and other reforms. we and other investors will be watching the implementation of those. the overall thrust from a conceptual and policy standpoint is in the right direction. >> you see an opportunity for increasing investment in china? >> sure. there are always opportunities to invest in china. companies around the world are looking for investment opportunities in china. if for only one reason, the market is so big, largest population center. while it has experienced tremendous growth, it has tremendous open runway ahead. sector under see a appropriate terms and conditions
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not being right for external investment in partnership with or on a sole basis by a u.s. company or other. >> what would be the main concern of your primary investors? >> week, like the chinese, are ensurewanting to ourselves of transparency, fairness, level playing field treatment, when it comes to actually making investments in the economy. i'm talking about direct investment, a company goes in and makes an investment in china , or a chinese company into the u.s.. when it comes to the capital markets, we are investors in the international capital markets, their if the financials are transparent, a fair amount of liquidity in the shares, we will look at shares of a chinese company just like any other the economic on
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merits of the business as we perceive them. , australia-china commodity boom fades,
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♪ yvonne: good morning. it is 8:30 in tokyo in a live look outside the palace this morning. we are 30 minutes away from trading there as well as south korea. the top stories this hour, the japanese prime minister, shinzo abe is preparing a new stimulus to assure -- shore up the economy which may include shopping vouchers. it also says he will frontload spending messieurs -- measures in the project to finance new projects this year. he will announce a delay in may. urged 7-elevens
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to will avoid nepotism when it comes to selecting its next leader. speculationding to that the current ceo, suzuki will name his son as chief executive. the selection should not be based on family. it should be the current president. the first full week of business today after it's company is sort during friday's historic opening session. on its firstd 19% day. it is the only stock listed on the exchange although more companies are expected to join later this year. investors are barred from trading for the time being. powered by over 2400 journalists and bureaus around the world, this is bloomberg news. no markets trading so farn this easter monday, but australia and new zealand closed.
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let's go to japan here really quick. we did see the nikkei and friday up 6/10 of 1%. up 3%,seeing futures are modest gains in tokyo. we are in the middle of the easter holiday, of course and seeing a weaker yen. 38 is where we stand on the japanese currency. speaking of japan as far as the start goes for the ipo markets, 2016 has been pretty poor, more than a quarter of debutantes have opened below their offered price and that has been compounded by the stock at the beginning of the year. let's bring in heidi. what has investors and a funk? >> this is not been a good start to the year. you can partly blame it on the stock market. dealership opening low it's price last week.
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this is the six company to open below its opening price. let's bring you want to have that compares to previous years. it is not a great record. six companies out of 21 last 2014, 18 of those open below opening prices. doing some quick math here, about a 22% of those companies opening the love the opening very areas last year was a good year, 8% and this year we are up to almost 30% of all openings. last year, we had that massive japan post listing where we had at least one of those stock prices at 77% over the past two days trading. it is certainly a long way away from that. --have the mobile game maker game maker opening 8% lower.
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it is not discriminating in terms of segments or sector on how poorly the ipos are doing. this is partly because of the japanese and global selloff in equities we had at the beginning of the year, the tropics of down as well. --topix down as well. investors could not give the funds to buy listings because they had lost money in that selloff at the start of the year. yvonne: analyst saying it is more neutral now. thes not going well because broader market is beginning to recover but the sentiment toward ideas has not. haidi: we have seen them recovery is starting to take hold for japan, a decent week last week, but after the fabric lost bythe topix has
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about half and still down for the year. , sayingy, some analysts a lot of these companies coming onto the market in japan last attractiveness. as an investor, you do not find these investments attractive and you cannot buy in. we have started to see a recovery, that it is a long way away from the year 2000 during the ipo heyday. we had a record of 204 companies listed. it is feeling more stagnant this year and the ones coming onto market are not doing well so far. yvonne: thank you so much. let's move on to india because it is the hottest market in the world when it comes to high-speed trade, high-frequency arithmetic -- tech
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trades. what is behind this question m? >> it has taken five years for this to become a dominant force in india. they make up a total of about 40% of total markets and that is in fact the greatest proportion in the developing world. ceo said theye reduced the average processing time from 300 milliseconds to just six microseconds. that is how fast because of advances in technology and understanding how these systems work. some high-frequency profits are because they can see the orders of regular investors and they get in their and push up prices before the regular
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investors, long-term investors can make their trade so they are forced to either sell or prices are increased for the regular trade, and also exchanges are looking more at individual investments into the market instead of focusing on getting fees from the trades. brokers areion of going to propose some changes to the authority. they are concerned that high-speed traders do not have adequate risk management in place. the bse says they want to welcome all concentrate, and they say this has brought important benefits for higher trading volume, but they also say they are doing a lot of high-frequency trades compared with the market size and they do need a clear understanding of the risks involved.
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they are considering higher speeds for traders who select -- flood the market with unfilled orders. yvonne: we are seeing man trying to outmaneuver machines. back in 2012, there were some broad guidelines issued but they have not taken any steps since then. in december, they were considering some proposals among lock in, andn -- bloc also creating an adaptive, micro -auction. so far, as far as we know, no action has been taken. yvonne: thank you so much. let's take a look at what we are following on the bloomberg this morning. is swiss drugmaker has been
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ordered to hand over the records of 18,000 orders. they are accused of wining and dining doctors. washington wants details on what material was provided. exploded.he u.s. has apple says it may not need to help the fbi unlocking iphone linked to a case in new york and has asked a judge to delay the deadline. the company says if a third company opens the iphone of the san bernardino killer, the same thing could happen in new york. apple continues its privacy battle with the government. may seek help from
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microsoft. microsoft is said to have told bidders it is eager to continue the elationship, whoever owns the company. microsoft has apologized after its experiment with artificial intelligence took a turn for the worse. lastly, and introduced -- it bot.duced in ai chat to midi plateys the system. that was a look at some of the stories making headlines this morning. yvonne: china's economic rebalancing may be working. that is according to new data out from australia. let's go over there and bring in paul allen. good morning to you. we know that china driven commodities group, that is winding down but it looks as though chinese demand for other
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australian products, that is picking up. paul: we are seeing it in all demand, cases from beef no powemilk powder demand. we will look at how the chinese demands are impacting the australian economy. tourism arrivals from china hit one million in 2015, a record, and it will not be long before tourism arrivals past those in hong kong. when this chinese tourists arrive in australia, they spend $5.7 billion in 2014. infrastructure is lagging a little bit behind. the construction of a second casino in sydney which will be embraced. boom asn has enjoyed a
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well. chinese students studying in australia, enjoying a similar spike. for 2016.ollments they pay full fees with the university likes. they do not qualify for student loans programs and they provide property through their parents once they arrive as well. none of these things i have mentioned is obviously a replacement for the void left by the end of the mining boom, but it is encouraging to see some diversity in the australian economy. interesting we did hear from the governor this lastly, saying the real question is how is this transition going to be sustainable as they have not experienced in effect before like this, so the weaker dollar, the australian dollar, the demand from china, how has that helped with all of this? paul: it is also impacting services. there are five in total on the
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bloomberg. services relative to the mining boom and its contribution to gdp, illustrating that services not quite filling the void, but it is gone from being a .5% track on the economy to a .5% contributor. it is now exceeding the boost of commodity's house investment. the bank is encouraged by the amount of diversity that is now coming through in the australian economy as china rebalance is. you can expect to see a series of the stories on the bloomberg online and on bloomberg tv as we look more into this issue over the next five days. yvonne: of course, australia one of the markets closing for easter monday. for joining us live from city. coming up, the dollar rebound. can this sustain the game? we will discuss that and a lot more when "first up" returns.
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♪ >> hello, and welcome back. it is 7:45 in hong kong and these of the stories making headlines around the world. has threatened a preemptive nuclear strike on the u.s. with a propaganda video. it combines footage with computer animation to depict a nuclear missile destroying washington. north korea has issued a series of threats involving missiles after being hit with tougher u.n. sanctions. outgoing of taiwan's president has elected its first female leader in 104 years. chinese president, xi jinping congratulates her saying she hopes that she hopes she we continue economic growth for taiwan.
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he lost to the pro independent party. sanders has momentum in the race for the democratic presidential nomination after sleeping three caucuses -- sweeping three caucuses during the weekend, hawaii, alaska and washington. pe socialist senator is inning his hopes on the california primary. powered by over 2400 journalists in 150 bureaus around the world, this is bloomberg news. yvonne: this week, u.s. jobs report will determine whether the dollar can sustain its rebound from a nine-month low. it will also show the federal views on the possible pro rate hike. let's take a closer look with the chief economist from new
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york. jason, a pleasure to have us on the show. we talk about this resurgent dollar we saw last week that has seen oil and commodities lower. does this have any momentum? we see the federal government pulling a 180. jason: i think the dollar does have some leverage for the week ahead. it is all about fed expectations. the fact that they did not move in march, but now it looks like they could move in april, that is going to be what everyone is watching for this week, and that does have the potential to keep the dollar not only supported but moving higher in the week ahead. yvonne: we do see in terms of the market, this april hike is very unlikely, 6% chances. do you see this as a turning point here? we are not seeing different
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signs from the bank of japan when it comes to negative rates. has been a trend for a number of months for lower highs and lower lows for the dollar, and that is true, but comments you had last week from dennis walker to the president of the bank of atlanta, seem to indicate this is something that the fed is thinking about. that itth, it was said is a live population, the rate hike, and the data this week is going to be critical. the fed is considering every piece of data out there. you are data dependent and they will be watching the jobs these, the isn, and if things are positive as they are likely to be, then that could be another reason why a fed rate hike gets intentionally priced in. yvonne: this is going to be crucial for oil and commodities as well. i want to get your take on that, because we see this copper rally only lasting one month.
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the iron ore has been a wild ride as well. aluminum moving some ground as well. how does this play into the fact of oil price and the rest of the sector as a whole? on: i think the most important thing is aluminum is leading that cohort of commodity prices. if you look at aluminum, the technical trading around it whether you are looking at the 100 day moving average or the 30 day moving average or a trend of higher lows that you have seen since november, this is really important because as it went higher, it led oil, led copper and now it has fallen and for the last two weeks you have seen a decline. that led oil and copper over the last week. aluminum has been leading these for the last two years. yvonne: we are seeing oil around $40 and a little bit lower for the wti. where you see prices going, how
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low could ago for the next 12 months? short we could see some term moves, and by the end of the year we could see the average prices in the 40's dollar to $45 range but of course in the next week or so, as the dollar strengthens and you have risk of a fed hike in april, you could see the downward pressure, and of course on top of all the data and the technicals going on, young is giving a speech this week that will be hotly watched. that will have a huge impact on commodities as well as equities. yvonne: what about this opec meeting? we have heard everyone is on board except for iran and libya, which are the two countries with the greatest capacity halting output. with a 70 effect -- will this have any effect? outputshose are two big . i think what is going to be
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thertant what happens of june meeting, but i do not think without libya and definitely without i ran there, it is definitely tough to see too much of a group decision around this since those are going to be two of the nations that are going to be pushing supplies higher moving forward because they have lost production over an amount of time in the not-too-distant past. yvonne: we will have time for one more question. you want to get your forecast when it comes to dollar-yen. should we take china at face value when they said it will not devalue the currency? weak is the chinese pmi going to be friday morning in china? that is going to be really important. china's manufacturing has been in recession for 14 of the last 16 months. we are going to beat 14 415 based on the date of the comes up this week.
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the people's bank of china needs to do more in order to stimulate growth that could push the currency lower in the immediate as the dollar strengthens. personally, i am concerned about the u.s. economy later this year and there are a number of things that are worrisome. thee of the things slowing u.s. growth, the risk of recession could push the dollar lower in the next 12 to 24 months and as that happens, regardless of what the people's bank of china does, you could see the currency strengthen against the dollar because the dollar strength is overpriced. yvonne: we will have to leave it there. jason, thank you so much. contrastingome earnings forecast as three japanese countries in our radar ahead of the market opening in tokyo. we will look at some possible market movers when "first up" ♪ returns. ♪ ♪
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yvonne: welcome to the stock exchange. we are looking ahead to the openings in japan and south korea. here to tell us what stocks they are keeping an eye on on this easter holiday, not much people out there playing ball yet. to say it is a marvelous day but it is not. [laughter] david: not marvelous at all. why not so marvelous? >> visual software up for cds and dvds also specializing in digital graphics and it is very territoryverbought considering they make cds and dvds. i am watching a semi conductor.
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you cannot get excited about that in the morning. it is nine months and its operating profit rose 29%. it is pretty strong coming out after the bell last week. also, on the bloomberg, on the outperformerave an and hasn't done well your today but hoping it will do well today. david: you even drew flowers on it. pick for everyone watching from the beach, the resale electronics, that is my pick, lowered its profits. that sounds perfect. thank you so much, guys for it that is the verdict from the stocks. we will be back in one hour to see how the stock market has done. looking into the next hour of the show, speculation on stimulus.
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ready to offer the economy another helping hand, county down to the opening on tokyo. whether you are watching
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♪ yvonne: taking action, shinzo abe finalizing new measures to kickstart japan's economy. , not to promote the ceo son to the top job for seven and i. sharp once a deal as soon as possible as the hom hai board prepares to me. -- to meet. i am yvonne man


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