tv Bloomberg Technology Bloomberg July 7, 2017 11:00pm-12:00am EDT
alisa: i am alisa parenti from washington and you are watching "bloomberg technology." presidents trump and putin had their first confirmed meeting today in hamburg. trump confronted putin about russia's meddling in the campaign which putin denied. putin also complained about economic sanctions. the president also met with the mexican president of the g-20 summit. trump still insist mexico pay for his proposed border wall. mexico said it would do no such thing. homeland secretary john kelly is in mexico where he watched troops destroyed poppy fields as part of the drug war.
senate majority leader mitch , mcconnell plans to produce a new replacement bill for the affordable care act in about a week but he is leaving open a potential plan b if the g.o.p. effort falls short. he says if common ground is not reached within the party, they could take action on the private health insurance market. protesters and police clashing at the g-20 now. we wanted to bring you live pictures of that. the two groups have faced off since the summit started in germany yesterday. police say 196 officers have been injured during the two days of clashes with activists. global news 24 hours a day powered by more than 2700 journalists and analysts. i am alisa parenti and this is bloomberg. ♪ ♪
caroline: i am caroline hyde in london, in for emily chang. this is "bloomberg technology." coming up, the silicon valley view on the june jobs report and the outlook for tech workers with the increasing threat of automation. investigators say russian hackers are chief suspects in a breach of u.s. power plants. we will look at how they may have pulled off the cyber attack and the potential endgame. samsung reports a second quarter for the ages. can it maintain momentum? we will discuss. first to our lead. june payrolls coming in strong, 222,000 positions added. that beat forecasts. but wage growth weaker than expected. check out this chart on the bloomberg. in the white line, u.s. average hourly earnings change year on
year. june up 2.5%. month on month, just a .2% increase. we are seeing the lack of inflationary pressure. are the workers underemployed or perhaps technology is allowing employers to hold down wages longer? we are joined by andrew chamberlain, chief economist at a massive jobs database. and our guest host, david kirkpatrick, c.e.o. of techonomy. i'm focusing on the silver lining and the numbers. more people joining the labor force. when we look at bloomberg analysis, it looks like department stores, telecoms, these are the biggest job losses. we are seeing disruption affecting jobs at the moment, aren't we?
>> absolutely. we know blue-collar jobs are clearly going to be affected. what many people are not talking about is that white-collar jobs will be affected also. loan officers and other white-collar roles increasingly being replaced by apps and software are at risk as well. we see an indication of that today. caroline: ai becoming more prevalent and relevant. david, is the u.s. ready for this? >> i don't think the u.s. is ready for it. before i make another comment, i want to say we absolutely need to have policy and investment to accommodate the reality that job dislocation is going to become pervasive across the economy, including white-collar professions. but there is an irony about the handwringing in silicon valley
about job losses because of automation given we are closer to full employment that we have been in a long time. we don't have enough unemployment. caroline: the time to be having this concern is a slightly odd one, nevertheless we look forward and to this odd conundrum. we are seeing near record amounts of employment at the moment. however, we are not seeing any wage pressure building into the system. can you talk about the underlying reasons for this? perhaps it is not automation feeding into this yet. >> underneath the 2.5% wage growth, there is a lot of diversity. it is misleading to focus on the topline figure. it depends on what city you're
in and what job you're doing. that determines your wage growth. health care and software, they are seeing wages rise at 3% to 4% per year. manufacturing and design engineers are seeing wages falling. excessive focus on the topline figure does miss the fact there are labor shortages in places like san francisco and not like atlanta and houston. caroline: how do we read into this on a more general basis? how can policy help? is it by helping people move from state to state, to make labor mobility more easy? >> labor mobility will help. part of the problem today is we have close to 6 million job openings in the united states. many people who need jobs are not in the same cities creating jobs. anything from housing policy to tax policy, anything that encourages people to relocate to where there is work will help. there's also this issue of training and making sure people
have the right skills, making sure universities are teaching what employers need to hire today. i don't think that is happening and why you are seeing things like boot camps to fill in the gaps. caroline: talk to us about the handwringing you talked about in the fact that many are talking about taxing robots in the future. are you an overall optimist or pessimist of this on the effect on people and the economy? >> i'm an optimist on everything. in silicon valley, you give them credit for recognizing the profound innovations they are bequeathing to the world, and you mentioned ai being one of them, is clearly changing the job landscape dramatically.
they have stepped up and leaders are actively and publicly worried about that. there is no question we need to train people. we need to do a better job of connecting companies to the availability of workers. but it is weird that people do not want to move. there was a study this week i saw that young people are spending so much time on video games, young men, that is one of the reasons they are not working as much. they love just hanging out playing video games. it is astonishing some things happening throwing off the traditional calculations. caroline: wow. andrew, you are a man all about calculations. talk of july numbers, the rest of 2017, where do we see the pattern of weeks group going. do we remain at this stagnant wage growth level? >> today marks the eight-year anniversary of economic expansion and we don't see any end in sight. it is hard to believe we could continue to have sluggish job
growth with 8 million job openings. i am optimist about automation. history and evidence are clear. automation always ends up creating more jobs and raises wages in the long run. i think people should be optimistic about growing automation. they should he happy it allows us to produce more per hour of work. when we will know automation is affecting the labor market is when we see the productivity numbers rise. today we see slow productivity. with automation working, you would see more output. i will wait for the evidence on automation and maybe dial back fears until we see data. caroline: thank you very much, andrew. david kirkpatrick is sticking it out.
elon musk's tesla has won a contract to provide what he calls the world's largest lithium battery which will be used to backup australia's power grid. the carmaker promises to provide 11 megabits of storage. trump and putin at the g-20. russian hackers are chief suspects in a breach of at least a dozen u.s. power plants including a nuclear one in kansas. "bloomberg technology" is live streaming on twitter. check us out weekdays at 5:00 in new york, 2:00 in san francisco, 11:00 in london, 10:00 even. this is bloomberg. ♪
caroline: the chinese smartphone maker has turned a corner in sales. they reported second-quarter shipments rose 70%. it is targeting shipments of 100 million units in 2018. the smartphone maker which slipped to six in the first quarter is trying to regain the dizzying growth it made as one of china's most successful startups. bloomberg has learned russians may be behind cyber attacks a dozen or more u.s. power plants, positioning themselves to potentially disrupt supply, although there is no threat to public safety at. this as trump and putin agreed to look at security threats at the g-20 in germany. mike riley wrote this great
story and is joining us from washington now. still with us, david kirkpatrick. mike, talk us through it. we have trump and putin talking. it looks like russian hackers are looking to potentially disrupt the infrastructure of the u.s. what is happening? >> the confluence of the meeting and the news breaking about the attacks on power plants shows there is a lot going on behind the scenes even as the leaders are meeting. in terms of the russians, how you determine these are russian hackers, there were private security at the power plant and also the f.b.i. and n.s.a. multiple sources said all fingers seem to be pointed at russia. the context of this and why the u.s. government is so worried is in the last two years, russian hackers took down the ukrainian
power grid two different times. they get more sophisticated as if they are using the ukraine as a testbed for this. when hackers that seem to be connected to russia start hitting a dozen power plants in the u.s., it makes them very nervous. caroline: fascinating really. i want to get david's opinion. how concerned are you? david: you mean when we start losing power because the russians are turning it off? i hope that is not true? as mike went about, cyber forensics are better than a lot of people realize. while hacking is a problem, detection is improving. the thing i slightly disagree about is the fact the u.s. government is worried. if we were, i think our president would be making this a bigger concern. i don't think president trump is
worried about this even though you could make the case the russian government is waging a kind of war on our economy. if we really are so worried that power plants might start going out because of their behavior, we should be taking action at least in public statements and proceeding much differently than we are. i don't hear that kind of talk coming from washington. caroline: mike, is there talk coming from washington? can you paint some background? you did some great investigative journalism into what went on at wolf creek nuclear site. >> the first point is we are in a relatively unique position. people in the national security part of the government that have to think about the power grid are pretty worried about this. but by all accounts, president trump does not particularly think the russians tried to influence the election.
as a result, i think that means the way he views any of these claims are going to be clouded by his sense of what hackers, especially russian hackers, did or did not do during the election. it is a unique position for the government to be an and does create this split personality within different parts of the government. in terms of what the hackers did, the u.s. government did send out, and they do this in situations like this, they sent out a warning to utilities and stakeholders with a lot of information about how they could detect these same hackers in their systems. one of the things that was clear is you could see the malware the hackers were using to get in to the office computers seem to be scanning internal parts of the network looking for connections between those computers and control systems. it is the control systems that would control turbines and other things. as far as we know, they have not been successful.
the concerned the government put out was they are worried these guys are going to burrow into these networks which might give them the ability to pull the trigger on something more serious at a time of their choosing. caroline: fascinating amount of depth you managed to get into. david, when you look at the significant global cyberattacks in the last couple of months, are companies getting this? is investment going into this weekly enough and is our government reacting quickly enough? david: there has been a big shift in the way companies think about cybersecurity in the last two or three years. at the board level, most companies are talking about this. c.e.o.'s are on alert this is a big deal. money is being spent. we have a challenge for public aisle seat and strategy. we need a global treaty on this. we need global discussions among nations to discuss what is proper and what is not.
the fact that is not happening in being discussed as urgent worries me. caroline: plenty to mull over the weekend. mike riley, great piece. i urge you to go on to bloomberg.com and read it. u.s. stocks rebounded from the biggest selloff since may closing out the week with the gains. feature i would like to bring to your attention is our new interactive tv function. you can find it at tv on the bloomberg. this is for bloomberg subscribers only. this is bloomberg. ♪
caroline: a new note from the j.p. morgan analyst says twitter continues to make positive product changes. that includes the interface updates rolled out in june. he also expects more engagement to translate into ad revenue growth. j.p. morgan still has a neutral rating on the stock. tech stocks ended the week on a high note in the united states. the nasdaq recovered a bit from losses last week. here for more reaction, let's bring in abigail doolittle. still with us, david kirkpatrick. take us through the u.s. moves. abigail: a pretty impressive session. we saw a nice rally for all three major averages. the nasdaq stood out. more than 1%, led by lots of big tech names, plus apple. all of these stocks have big gains on the day and did not appear to be driven by anything fundamental outside of a boost in confidence and optimism, probably on the better-than-expected jobs report. let's look at the group function
return. see tech on top, up 17%. up in a big way. a solid day for technology. let's put this in the context of the pullback. we still have the nasdaq down about 3% from the last all-time high on june 9. this is just the best day since last wednesday. investors not sure they want to be buying the dip or still cautious. time will tell. we still have earnings season again. caroline: europe, we saw technology at number two. it was up on the week. asia was down for technology stocks.
abigail mentioned fang. are you a buyer when we see this dip and volatility? david: keep in mind, my company is called techonomy. i'm a big believer this is the way the economy is moving. in general, i would buy on the dips, especially for great companies not going anywhere and that show every sign of consolidating more profit for them and perhaps at the cost of the rest of the economy. techonomy, technology -- technology is the future of the u.s. and global economy. it is as simple as that. caroline: abigail, you kept a close eye on the volatility we are seeing. talk us through how it is across
the board in sentiment. abigail: it is pretty fantastic what is happening relative to volatility, especially volatility for tech. kevin kelly was making a big deal of the spread between the s&p 500 vix and the tech vix. we have the s&p 500 vix down and 11, near all-time lows. you made a big deal of the fact the s&p 500 vix dropped below the tech vix -- or the tech vix dropped below the s&p 500 vix. it has given back some of the gains. he thinks this vxn near 17 could be a tell on overall volatility for the markets, perhaps led by
earnings season. something to keep an eye on. caroline: talking of volatility, when only needs to see the $8 billion wiped off the market cap of tesla this week. good job as always, abigail. david kirkpatrick with techonomy, his favorite word, sticking with us. we look at samsung's historic earnings report. how the company continues to thrive despite crises knocking at its door. you can listen on the bloomberg radio app and in the u.s. on sirius xm. this is bloomberg. ♪
alisa: i am alisa parenti in washington and you are watching "bloomberg technology." let's start with a check of your first word news. we want to begin by taking a live back to hamburg where police have resorted to water cannons in an effort to contain protesters at the g-20 summit. nearly 200 police officers have been injured in clashes with thousands of protesters. world leaders gathered for the talks have condemned the violence. these are live pictures. we will keep you posted if there are further developments. presidents trump and putin had their first confirmed tweeting today in hamburg. trump confronted putin about russia's meddling in the election campaign which putin denied.
russia's economy minister says putin also complained about economic sanctions. both leaders discussed how best to move forward. >> they had a robust and lengthy exchange on the subject. the president pressed president putin on more than one occasion regarding russian involvement. president putin denied such involvement, as i think he has in the past. the two leaders agreed this is a substantial hindrance. alisa: the russian foreign minister was also at the meeting. secretary tillerson said the russians asked for proof and evidence of moscow's involvement in the 2016 election. the u.s. and russia also announced a cease-fire for southwest syria in an increased effort to stop the civil war. u.s. officials say the agreement would take effect sunday at noon damascus time. angela merkel arrived at a
concert hall in hamburg for a show and dinner with other world leaders. during the first working session of the summit, the chancellor said the countries must work together to solve the world's problems. >> we all know the big challenges and we know that time is short. therefore, solutions can only be found if we are ready to compromise when we approach each other without giving up too much because there are differences as well. alisa: the british foreign secretary has traveled to the middle east in a bid to end the political crisis with qatar. his first stop, saudi arabia, one of the first nations to cut diplomatic ties. the european union's bailout authority has approved a $9.7 billion aid package for greece.
the majority of the funds will be dispersed on july 10. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am alisa parenti and this is bloomberg. ♪ caroline: this is "bloomberg technology." i am caroline hyde, in for emily chang. retail hiring increased by 8100 in june. interesting recovery from just a few months ago when the sector shed 30,000 positions in march. the industry has been hard hit by the so-called amazon effect, the shift from brick-and-mortar to less labor-intensive online sales. samsung has had troubles of late, from exploding smartphones to the heir apparent on trial. it reported its best quarterly
profit effort. samsung's revenue beat estimates as well. he just returned and attended one of the trials. still with us, my guest cohost, david kirkpatrick. you have great insight for us. the silver lining for samsung, the numbers. in particular, your area of expertise, chips really are flying. >> i don't care about phones, it is only the memory chips that matter. that is really what is going on. that is the heart of samsung as it became a modern, successful company and it is a success that has continued to this day. it has been brutal competing
against samsung in the memory chip industry. basically everyone has given up apart from a few and that has had a commencement effect on the balance of supply and demand. those chips are going into all manner of new things these days helping on the demand side. samsung is definitely making a lot of money out of that market. caroline: fantastic for the chip side of the business. they are also in an area i'm not sure you're keen on either, organic l.e.d. screens. is this an area where the price can remain fantastic? >> i do care about it because it is basically semiconductor technology as well. if you want to make a phone with that screen, you have to go to samsung. they are the ones that put the factories in place and developed the technology at an extremely high scale. the rumor is even apple is going to have to come hat in hand to
samsung later this year and say give us as many screens as you can, please. caroline: this is what is so interesting. what is samsung going for in terms of the bottom line? s8 doing well ahead of the 10th anniversary of the iphone. david: you have to say samsung has revived as an impressive phone maker. they are head-to-head with apple again. it is interesting to think about this most diversified company. there is probably no company we can think of that does more things than samsung. they subsidized semiconductors and chips when it was hurting and now prices are double what
they were a year ago. that is impressive. it is amazing with all the problems they have had that they are showing this historic profit today. it is a very impressive company. but they have taken advantage of possibly unfair advantages they have in korea. caroline: interesting. let's focus on that now and some of the problems. you have come back from south korea. you went to court. remind us why jay y. lee is there. it is due to corruption. >> he is accused of trying to bribe the president of the country, who is on trial in a nearby courtroom, in order to get influence from the korean presidential office to help consolidate his control over the samsung group. obviously, samsung denies that. but that is why he is on trial. caroline: where are we in terms of the stage of the trial? the clock is ticking. >> if what i saw and my colleagues told me they have seen is anything to go by, it is not going very well for the prosecution. they have not really found the smoking gun. they have not found somebody willing to turn on him.
everything so far has been pretty circumstantial at best, according to what we have been told from experts. the prosecutors are kind of running out of time in terms of the amount of witnesses they can prove. i heard the judge was getting irritated with them asking the same question over and over again and getting the same question over and over again. no, i never saw anybody. no, it never happened. caroline: it needs to be wrapped up by august. otherwise, he walks free. you feel potentially they do need to be looked at and held to account. david: we would not in the united states allow any of these to behave the way they do, i don't believe. of these giant, sprawling companies that dominate the korean economy, samsung is the biggest. i believe samsung alone represents 20% of all of korea's exports.
is that right? >> 20% of gdp. david: even worse. i don't believe we would let a company have that kind of dominance in our economy. you've got to believe that would require extraordinary scrutiny in any country. whether they have gotten to this point, i doubt. >> they have been an enormously successful of south korean people and brought in money mainly from overseas. the company saw them as making south korea a better company and this is the engine of growth we need. caroline: it continues to innovate. we will see how the s8 continues to perform as we edge closer to the new apple iphone. david kirkpatrick, my guest host for the hour, sticking with me. bloomberg is reporting the u.s.
chipmaker is said to be working on a possible sale sending the shares today up as high as 15% at one point. this is according to people familiar with the matter. the company has battled several other big chipmakers in court. in 2015, rambus began restructuring and selling its own branded chips. coming up, the latest in the ongoing saga between uber and the alphabet rival. why larry page will be heading to the courtroom, up next. this is bloomberg. ♪
against uber. the latest move in the ongoing fight over driverless technology. bloomberg also learned larry page has been ordered to submit to questioning by uber lawyers. joining us is eric newcomer whose has been reporting on this story. still with us, david kirkpatrick. eric, why drop three out of four parts of the pattern infringement? >> the judge in the case had been urging off of the two pull -- urging alphabet to pull away from the patent cases. this has really been a trade secret lawsuit from the get-go, that there have been these four patent cases. alphabet is basically walking away from three of them and only has one left. they have switched to something else.
the remaining suit is around the patents uber is still using and not the one they have agreed not to use. caroline: what is the rationale behind questioning larry page? >> larry had a one-on-one conversation with levandowski, at the heart of the case, who is pleading the fifth. if they want to learn what that was about, they have to talk to larry page. larry page has side projects. he has these flying cars that compete with alphabet. it is not that crazy anthony levandowski was working on things similar to what alphabet was doing. that was sort of the culture at google. i think they will definitely want to ask larry page questions about standard practice and whether anthony was doing anything that odd here. caroline: pleading the fifth, it means anthony levandowski does not have to be giving evidence.
talk us through what this means for uber current state of affairs. this hits to the heart of their own business model and forward thinking for where the company goes. is this something you are keeping a close eye on? david: it is one more -- i would not say nail in the coffin because uber continues to thrive -- but when there are a lot of nails going into something, i can hardly think of a tech company that has more blots on its reputation than this one. it would be great for them if they get out of this case is unscathed. eric's reporting has been great helping me understand what is going on. currently, no c.e.o., sort of being led by arianna huffington,
is that is who is sort of in charge? we don't really know. tons of people have left. the scandal of sexual harassment, all kinds of things still simmering. and yet, everybody is still using it and it is growing around the world. caroline: back to this particular court case. it seems as though uber has come out fighting with respect to the fact that three out of four patent infringement cases have been dropped. do they have a leg to stand on? >> they are definitely happy to see that. like i said, the judge sort of saying alphabet should pull back on them was a strong sign. i think it is going to come down mostly to these trade secrets cases. even that, alphabet has to pull down from more than 100 to less than 10. that is mostly about what he jury can reasonably focus on. they will focus on fewer than 10 claims and dig deep on them. there are still questions about
what alphabet has been able to turn up. they have not really tied uber to having these files or asking levandowski about these files. there is a lot the judge has been saying you still need to prove a lot. caroline: the saga continues. keep reporting, eric newcomer. david kirkpatrick staying with us. the war of words is showing no signs of slowing down. why the iphone is crying foul on the u.k. chipmaker's version of events. this is bloomberg. ♪
publicly since april. i spoke with the reporter on this story and asked when the supplier knew that the partnership with apple was on the chopping block. >> imagination technologies is not a company people hear about or care about, but it is an interesting story because of their business. they are an example of the business closely linked to apple. their whole business is cultivated around bowing to apple. in april, they disclosed they were losing this contract and their stock limited 60%. they came out and said a lot of things about how they doubted apple could do this without
violating their intellectual property. there was a bit of making this seem like it came out of nowhere. investors saw the stock drop. it was clear they were surprised by the move. caroline: it seems as if apple is refuting the timeline imagination technologies has put in the market. >> it gets interesting because apple has said the timeline imagination has given to investors was not really accurate. the apple told them as soon as february they would be dropping them completely but even going back to 2015 apple was winding down the relationship because it was planning to develop the technology itself. caroline: two years previous, it had been giving warnings. two months previous, they had been informed this was likely to happen. what can they come to the market and explain? this is against market practice and in many ways deemed illegal not to be letting investors know something that will significantly affect share price.
>> talking with an attorney that used to work for the u.k. regulator, this is something they will be looking into. there are nuances a company does not have to disclose. imagination says they had a contract with apple starting in 2014 with nondisclosure agreements, saying we cannot based on this agreement with apple, we cannot talk about the ups and downs of negotiations and the talks which are constantly ongoing. they said when they got the final, clearest word that there was no going back, that this was ending, that happened at the end of march. and on the next business day, they say that is when they disclosed it. it is clearly in dispute. it is something i am sure some regulators in london will be looking into. caroline: we have statements from apple. what does imagination tell you? >> imagination says they disclosed it in the proper manner, that they did it when they had clarity from apple.
that is kind of a keyword in the legalese of this thing. it depends on the interpretation of these things. lawyers will be involved, as they tend to be with apple lately, as another supplier, qualcomm, and a two of them are entangled in a mess. caroline: a question to broaden this out. this is not something just affecting imagination technologies in terms of its dependence on apple. many companies are very dependent on apple. are there other suppliers many are worrying about? >> apple and the iphone was this incredible success story. there were a lot of companies who got the components inside to do a very specific little thing. but those businesses got caught on the rocket ship and went like this. of course along with that, their business became more and more reliant on apple.
apple is known, if they decide a technology is core to what they want to do, that they will build it out themselves. chips is something they have been doing more internally because you're able to get more power out of it or you can fine-tune it specific to the function you want to do, whether with siri or augmented reality. as they try to do more of this on their own, suppliers may no longer be making the one little thing and the business can collapse. the people who work there and the investors. it is a domino effect the company of apple's size can have. caroline: still with us is my guest host, david kirkpatrick, from new york. the supply chain function. lean into your television. this is so important.
i want you to try and see. this is dialog semiconductor, another supplier to apple. check out its dependence on apple. 75% of its revenue is from apple. samsung, just 8%. then single figures. why aren't these companies changing? >> i don't know how you would change if you were one of these companies. apple is within its rights to do what it wants. from the company's perspective, live by the sword and die by the sword, they cannot turn the revenue away. they want be profitable revenue. then suddenly apple has a win, and their business goes away. that has to be scary. but does dovetail with another big issue that i think is coming up more about this small number
of globally dominant tech giants. is there a different kind of responsibility given their unprecedented scale? it may be that tim cook has to think about this differently than a typical company. ultimately, i would say he is completely within his rights. caroline: fascinating. that does fit into many more debates. this is something we could expand on. fascinating points made by my guest host for the hour, david kirkpatrick. we wish you a wonderful weekend. that is it for this edition of "bloomberg technology." starting monday, we will begin our "focus on tech week" showcasing this subject on bloomberg television, bloomberg radio, and the web. on monday, we will hear from david clark just as they are gearing up for amazon prime day. that is all for now.
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