tv Bloomberg Technology Bloomberg February 2, 2018 11:00pm-12:00am EST
>> i'm mark crumpton. let's start with the check of first word news. the white house says a newly released gop memo raises serious concerns about the department of justice in the fbi's handling of the rush investigation. a former fbi director, james comey, is not impressed. he asked on twitter, "that's it?" be called the memo dishonest, misleading, and not worth the damage it has done the public trust in u.s. intelligence agencies. the memo was declassified by president trump and released friday by house republicans. the president says his immigration plan is necessary to protect human borders. the plan offers a path to citizenship for 1.8 million
undocumented immigrants brought into the country as miners. the president called for billions to fund the border wall and cuts to legal immigration. with the future of nafta still in doubt, secretary of state rex tillerson is in mexico at the start of a five nation trip to latin america. it comes at a time of tension over president trump's insistence that mexico pay for the border wall. the flu outbreak continues to grip the u.s.. the cdc's is one out of every four teen visits to doctors and clinics last week were for symptoms. that is the highest level since the swine flu pandemic in 2009. in new york, i mark crumpton. "bloomberg technology" is next. ♪
emily: this is "bloomberg technology." coming up, after roaring into 2018, markets are in for their worst week in two years. we will break down the catalysts, including apple's entry into a bear market. the cryptocurrency conundrum. is bitcoin and bubble territory? will attract the highest and lows as prices change across the board. opening arguments beginning for monday as uber goes to war. our take on the trade secrets shaking up silicon valley. a massive selloff in stocks. the average is sinking in friday's session. into this year, u.s. stocks close at its worst week in two years due to rising investor concerns aboutweak corporate earnings. i want to bring in abigail doolittle.
what is happening? what is the force behind today's selloff? abigail: it was an extraordinary day for u.s. stocks. down about 1%. after fluctuating a little bit, the momentum continued to go to the sellers, finishing significantly lower as we just saw. at the lowest for some traders. strategists would say it was an ugly close. the dow having its worst day since the brexit back in june 2016, just to put the sense of risk off into perspective. interesting you mentioned how we are having the worst week, we did have the worst week since january and february of 2016. interesting about that is the idea is a continuation of what we have been seeing all week. january, for the s&p 500, was the best week since march 2016. now we have the worst week since january 2016. really big reversal. behind us, we had overbought conditions through that rally
for the s&p 500 in january, plus rising rates. those weak earnings reports were talking about. relative to the overbought conditions, everybody sometimes want to pin a selloff to a specific reason, sometimes it is just because stocks have been going up so much they are due a little consolidation. if we happen to the bloomberg, this could be what is happening here. this is a six-month chart of the nasdaq 100. we see the nasdaq 100 moving down. it appears likely to touchdown to those levels. that would represent a pullback of greater than 5%. we have not seen that in a long time for the major averages. a move to the yellow, that would be a true correction down more than 10%. on the bottom, we have an oscillator that suggests the nasdaq 100, big tech and biotech, is coming off of overbought conditions and we could see this pullback continue.
emily: let's talk about apple shares closing down 4.3%. this is on the back of the earnings report. 77.3 million iphones when analysts were looking for closer to 80 million. i spoke to tim cook and he said he cannot be prouder of the iphone x's performance. it has been the most popular phone every week since it has come out and the average selling price as a result has gone higher. investors not satisfied. abigail: interesting point. on the one hand, we have the company and the iconic, wonderful products, that iphone x that tim cook is so proud of, and the average selling price did rise for apple. those a plus. on the other hand, we have this stock in wall street dictations. sometimes there is a disconnect where it gets a little ahead of itself and they bring back estimates that did happen here around apple. and it was not quite enough. we have discipline and for investors that the growth they
had been looking for not quite achieved, puts the outlook for the march quarter not quite enough. there sometimes can be a little separation between expectations and what the company performs. if we look at the technicals on apple, this helps to complain it away. while the company has great products, the street had bigger expectations. this is a one-year chart relative to the moving average. the buyers had been in control. on today -- in today's selloff, the sellers are starting to take control about on a one-year basis. it is for $150, which you put it into an official bear market. there are still signals at the bottom of the chart. it seems like the selling pressure can continue as wall street reconciles the idea the growth they were hoping for, hoping perhaps apple would make the estimates, despite the
concerns that was not likely to happen. we also had a selloff for apple, disappointing there from an early standpoint. acquisition costs rising. that is expected to continue. we had weakness for the chip sector there too. we saw some i cap equipment companies selling off in a big way. amd reported earlier this week, the quarter and outlook were good but a little messy in terms of accounting changes, plus the idea that management seeing a little dust being a little conservative with the outlooks. you put all of this together with valuations were talking about being very high. stocks may have been priced to perfection coming into this earnings week, and a lot of the big tech companies not delivering the way investors had hoped. emily: what are the key drivers you are watching next week? abigail: from a macro standpoint we need to keep an eye on rates. that has been one of the macro
pressures on markets. rates rising very quickly, unexpectedly with the overbought conditions. many strategists were talking about a possible pullback. what would be the trigger? not only a lot of people talking about raising rates, a traditional, simple cause and that is what has seemed to cause the broader selloff. hats raising rates could slow the economy are make future earnings look less impressive. we will also have some other key earnings reports next week. sky works, akamai, gilead sciences, and tesla. the mbi had its worst week since october 2016. pressured in part by president donald trump talking about bringing done drug pricing. plus, we had the drug care consortium between jpmorgan, berkshire hathaway. a possible bright spot, we have twitter.
is technically confirmed for a big new hire. bloomberg does have a breaking news network with twitter, on twitter, tick tock. next week, the report earnings. perhaps they could meet, maybe even beat. emily: abigail doolittle covering a offer us in new york. thanks so much for breaking it all down. in the latest revolving, door sony will promote the ceo after helping to restore earnings of the japanese electronics icon. they saw him bring discipline to the giant after years of losses. he will become sony chair april 1. coming up, cryptocurrencies keeps lighting. the coin and its increasing board of rivals continue 2018 in the red. more concerns ahead next.
emily: ubs could require in place to get approval before trading cryptocurrencies in the personal accounts. the bank confirmed it is considering additional rules and requirements for some staff. chairman axel weber warned of a "massive drop in bitcoins value and does not trader offer it to retail clients." stay with bitcoin. it hit a low for the year after
setting an all-time high of $19 by december 18. and has fallen by as much as 60%. it has been hit from expectations of government oversight, fears of price manipulation, and lingering concerns that it is another asset bubble. joining us from new york is the managing partner of future early ventures, focusing on big data and blockchain's. also, cory johnson. walk us through the moves of the last weekend put into context for the selloff that has been happening over the last month. cory: it has enormous volatility in the history of cryptocurrency tradings. i think we have also seen the currency is being tied together as if it is all the same. those that are merely a stored value. the store was open and there was not much value for a good part of the day.
a dramatic selloff in the last couple of days. it bounce off the bottom. if you bought the syrian this if you bought the syrian this morning in new york and closed at the position of the end of the day, you are up by 30%. fantastic moves today. bounce back. when i look at the function, you can see some of the biggest currencies for the day, bitcoin down 5%, ripple up 0.5% for the day. ethereum down. tremendous volatility around the trading of these things, i think it will start to be interesting when they start trading in different directions because of the different cryptocurrencies have different prospects. emily: is all of this making you do anything differently at future perfect ventures? >> not really. those of us who have been in the states for a while, we're used to volatility and we expected a downturn to happen. we had seen the prices go up so quickly the end of last year. the last time bitcoin was at
this price where it is right now was only in early november. if you are going to zoom out of the graph, you certainly can see we had quite a bit of run-up in the prices and there had been regulatory actions over the past week, a large hack that happened in japan oh to the sum of $500 million stolen from an exchange. we are going to see more of the regulatory crackdown, and that spooked some of the newer investors in the market. emily: cory, walk us through next week. what misery expecting and watching? cory: the volatility will not go away this week, next week, or a year from now. one would have thought the options trading would have helped produce it because there would have been longer notions. the volatilities are so extreme, a longer-term contract is pricing in volatility and
inability to see what the prices are going to be. it might be that way for a long time. i think once the use cases start to get more clear and the partnerships and real businesses are putting together start to put the currencies to use and they start being used in payment and money transfer, then we will see what things have value more than speculative and actual punctual value. i that will not change next week. it will not change for the next years, but over the long term. those are the kinds of developments that we will have to -- that will have to take place for it to be anything but funny money. emily: how closely are you watching regulation? we have been following what is going, on in japan with point check and now we know authorities have rated coin check after the robbery. how much of a concern is this? jalak: a huge concern. it has been an unregulated
market for quite some time. this reminds me of what happened in the late 1990's, except to a bigger extreme with the .com boom. people see a run-up in prices, they want to get in on the action, and then the exchanges allowed them to do that. allows the retail investors to get an. -- in. i think this is good news for the market for the longer term. we need to weed out the bad actors and make sure the security or exchanges have better security provisions in place. that was a challenge with coin checks. they were under conversations with the regulators in japan when the hack happened to fix their security provisions. emily: what kind of regulation would you like to see? jalak: that is a great question. i do not think we should look at too much regulation the markets, because we do not want to stifle innovation.
however, we need to make sure that investors are protected from coin offerings that are making false claims, that some of these coin offerings that have gone crackdown from the fcc recently had very little that they were offering in terms of white papers and technology. and yet they were still able to follow through with their coin offering. i think it is a good idea for regulators to stay on top of folks were just using this as a way to raise money. however, as cory mentioned, there is a lot of gray underlying technology being built in the blockchain sector. we certainly do not want to over regulate so that goes away. emily: when will we start seeing the fruits of that blockchain technological innovation that everyone keeps saying is going
to be so transformative but so much of it is still on the price of bitcoin? cory: first, i think it is on you and i and everyone in the world of journalism to see it more than just juggling and stock prices and a funny graphic with a chart. there are a lot of interesting and happening technologically. once you start to focus on what the companies are trying to do, you can say, that some stupid, that is not a real business, and that is a good solution to a problem. we were talking before we went on and one of the difficult things for us as journalists and investors is we're talking about money and the transfer of wealth. businesses that are involved in managing money and transferring money and moving money are very hesitant to say how they do it, when they do it, and that they are trying something new. if it gets screwed up, they will get blamed for it.
they are worried about the appearance of risk. the reason banks have giant corinthian colleges in front of them is not because they were built by the greeks, but they wanted to convince depositors their money was a safe -- was fake. discussing current technological changes is something difficult for banks and financial institutions to do, even as they are undertaking tremendous change. for that reason, i think it has been really hard to see when bitcoin has been put to use, when the theory him has been -- ethereum has been used for trade. their customers will not tell us. emily: cory johnson, editor at large. thanks so much. along with the founder and manager of future perfect ventures, thank you both. coming up, mobile game has turned into an overnight sensation and now more investors want in on the fun. who could be backing the game show next? this is bloomberg. ♪
emily: hq trivia has stolen the hearts of millions of players and has been backed by big names, like lightspeed venture partners. now, founders fund wants in on the game. hq trivia is raising money in a new round of financing, valuing the company at $100 million. this funding round is supposed be led by the founders. joining us now, max chafkin who got an inside look at the trivia phenomenon. not a surprise that more people want in. what do you make of it? max: this is what was taught about the end of december. -- talked about at the end of december. it is an impressive valuation because it is young with 30 employees. it is hot. the last time we spoke about
trivia hq three or four weeks ago, they were doing on a good day like 700,000 viewers and now it is up over 1.5 million. a lot of growth. that is something vc's. -- vc's like. emily: remind us of those scandals. this has to do with bad behavior of one of the founders. what happened? max: there were allegations that came up in a report of "creepy behavior." jeremy lu, the partner from lightspeed who had done the deal kind of came out and said he had done an investigation. nothing to see here, the company denied it. as we learned today, behind the scene investors were poking up running of the company. for me, the takeaway is silicon valley, if you want to look at
it is making progress on gender issues. the fact that hq would be subjected to scrutiny at this stage feels is something slightly new. and, they were able to do the deal so that is causing outrage and twitter. the other hand, if you look a bit of progress. emily: what is it that investors are so optimistic about when it comes to the future of this company? behavior aside, what is the potential behind this idea? max: the thing that is exciting to the point of view of investors is the fact these are concurrent viewers. 1.5 million may not seem like a huge number, but the thing you have to remember is when you see a you tube video that has been viewed 100 million times, that is coming over the course of weeks, months, or even years. concurrent viewers are much better for advertising. advertisers can reach a set audience at a set time. that is the closest thing to
television advertising where the high rates are. this is maybe the first time we've seen something that looks like a legitimate threat to the kind of television advertising that makes the big bucks. that is what is enticing. emily: where is this going? what are the potential future avenues of business here? max: they told me back when i spoke to them at the end of last year that the -- the ceo told me they see themselves grading additional shows. they would like to have a 20 47 television network that would have lots of interactive components. the idea is to build on what they have now. emily: and beyond. max chafkin as always, thank you so much. coming up, waymo versus uber. the jury has been chosen and the trial begins monday.
>> you are watching "bloomberg technology". here is a check of first word news. house republicans released a memo today on the early stages of the fbi investigation into the trump campaign manager russia. president trump these remarks before the memo was released. >> it is a disgrace what is happening to this country, and when you see that and some might bash some of the other things -- a lot of people should be ashamed of themselves, and much worse than that. i sent it over to congress and whatever they will do it is fine. is declassified, and we will see what happens. >> the president advocated for the release.
prime minister theresa may insists the u.k. does not have to choose between frictionless trade between the eu and the ability to forge new trade deals. she tells the bbc that she does not believe those are the only objectives. our government is split and those who want to maintain the terror free single market and customs union. the father of three of the victims of dr. larry nassar try to attack them today during a sentencing hearing. he was quickly tackled by bay less. earlier he told a judge he would like five minutes alone with the doctor. when secretary-general anthony gutierrez says he is encouraged by the talks between two koreas, but more talks need to be done. is especially encouraged linking both extremes of the peninsula. >> our objective remains
peaceful -- for that, it is essential that discussion takes place in this process, and the u.n. will do anything possible to encourage them in that regard. >> the 2018 winter olympic torch continues as it marks one week until opening ceremonies for the games. more than 7000 torchbearers will travel through nine provinces and eight major cities before the torch arrives in pyeongchang. will happen on february 9. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. this is "bloomberg technology". keep it here.
♪ emily: this is "bloomberg technology". the big story today is the massive selloff of u.s. stocks, the dow turning into its worst performance since june of 2016. was another wild week for the crypto market, according to its lowest level this year. today's falcon the value of bitcoin is the latest proof that the cryptocurrency is the biggest bubble in history. that nyu economics professor correctly predicted the 2008 financial crisis, but his calls on oil and s&p 500 was wrong, among others. spoke to bloombergs tom keene earlier today. >> it is the biggest bubble in history, to compare it to the
mississippi bubble are the tax bubble. >> you are comparing bitcoin to tulips? >> much worse. it crashed by 60% compared to the peak of mid-december, it crashed 30% last week, and 10 today. the value of bitcoin is zero. >> crypto folks on twitter, it is a bloomberg summation of this culture and event, the question is crypto people say they can separate the crypto industry, blockchain, all the rest of it -- from the value of bitcoin. can you separate crypto from the price decay of bitcoin? >> know, first of all there are
something like 1300 plus cryptocurrencies fields -- some are worse and have no intrinsic value like bitcoin. the coin is a bubble. there is a blockchain saying that could the revolutionary industry, but they have been around for 10 years and their only application is bitcoin or cryptocurrencies is a scam. have lots of other things -- you have applications with hundreds of millions using them, but after 10 years, what else can they offer? nothing. cryptocurrencies are a scam. emily: facebook to amazon to apple and more -- a plethora of tech earnings this week and the much anticipated waymo and uber trial.
we talked about apple surprising iphone sales. >> there is a positive and negative in the numbers. the positive first, average selling prices. a very closely watched metric went up considerably. that is an indication that when people got an iphone date allocated towards the higher act, the iphone x that starts at a thousand dollars. apple is getting you to think about the installed base of users, 1.3 billion people are on the iphone, and that is a group of people that we can sell apps,
services, entertainment, all types of things to. there is this idea of the net increase of the number of iphone sold, and that brings us to the negative side of apple. they sold fewer iphones than analysts expected -- analysts but those numbers down further. this whole idea of the iphone x creating a super cycle -- ally likes to talk about a super cycle, this idea that it will create a wave of buying and mass purchases. a bunch of upgrades -- that is receiving from the conversation. it is a very big install base, and you can't move that shift very much in any given quarter. emily: would you say this is not a super cycle? >> somebody pointed out earlier today that there has been one super cycle which is when the iphones got very big and everyone upgraded. this one was pronounced dead this morning which is a contrast to a couple of months ago when excitement was high.
emily: we will continue to monitor apple, but let's get to facebook. for the first time ever the number of users declined in the united states. this is the biggest market for the long time, but we are hitting saturation points. >> mark zuckerberg has a lot on his hands -- based on the traditional metrics -- time spent and how engaged people are, those may sit -- those metrics are going to go away. the one positive from the conference call is that the cfo said that advertising goal is going to keep rolling the matter what happens, and the stock went up a day after. emily: the changes they make emily: the changes they make with sharing with more family and friends versus news is increasing engagement and facebook says it is doing it for the good of the user base and moral obligation. it is not ultimately going to lead to more time spent. >> that came down in the fourth quarter, and in the long term, it is going to be good. it is going to be your interaction and it is going to be more meaningful, but in the short term, there is a lot of changes that is putting people
off. this is at the facebook that i remember and the videos i am not seeing them, so that is not to be neither as it used to. emily: best talk about amazon. anything back to report or is it just smiles? >> it is hard to find a case -- a bad case for amazon. they are spending a lot, but all of this investment that jeff bezos and his company have been making is starting to pay off. with some big-time in the fourth quarter. we are buying stuff for christmas, that was gangbusters. we are also seeing payoff in terms of amazon web services business. this thing they created in-house many years ago just for their own cloud computing business -- they started to sell that
outside and it has really taken off. they saw more results of that in the fourth quarter. but it forward, there is all sorts of businesses jeff bezos is getting into. the pot whole foods, as they bring technology to whole foods stores, and this week we saw them announcing this health care initiative with jpmorgan and berkshire. they're going to create this paradise for millions of employees and families -- you can see them taking that on the road and opening up to the masses later. emily: doubling down and a super bowl commercial which we are all expecting. >> this sunday. emily: the uber waymo jury selection has started. what is happening? >> waymo wanted a regular jury because the argument is going to
be he left and still our stuff and he is not very nice. uber once a technical jury because they're going to say he that some of the stuff with them, we didn't get it, but some of the stuff he tucked is not the same as the ones we are developing. emily: you can read all about the uber and waymo case on our new feature called hyperdrive, and it is a dedicated webpage on bloomberg.com and will feature our best reporting from teams across the bloomberg news universe. youtube is taking steps to increase transparency when it comes to political content. starting on friday double plays notices that are funded by government. this comes as social media companies face increased scrutiny over their efforts to disclose the identities of
assets -- meaning germany, hungary, and romania. discussions are at an early stage with no assurance that the deal will go through. now a story we have been following, l technology says they are weighing options including a potential ipo or a business combination with vmware. joining me to discuss his alex barinka. what is happening as far as we know? >> the company came out and said what we reported last week that they are considering some kind of move to get dell public again after they were taken private in 2013. they did come out, and the last bit is important because they specifically said no other company is involved. michael dell's empire -- are vmware, that is who we are talking about right now. as he considers options, which could be do nothing at this point.
why is this important? dow has been trying to get everything under one roof. have been trying to finance a another deal, and my sources they're trying to put all of these things together. there is interesting reaction from the streets since we brought this news last week. some people do not see why a reverse merger with vmware make sense. some think it will be in the middle where dell will have interaction with vmware. right now it seems like the cards are on the table and being discussed at the board level for dell. emily: that said, what is the most likely scenario? >> it seems like the intention is to simplify this. according to folks i am talking to, dell and vmware will be under one roof and that is the reverse option, it will get dell
public, but there are hiccups there. michael dell himself in the dell company has a 97.7% voting rights in vmware. there's potentially fairness and legal issues for the minority shareholders if the guy who votes for this company and buying his own company -- there could be some contention. emily: there is a elaborate engineering going on here. >> from what i've heard, this was not the plan from the beginning. whether it is dell or silver lake, they are very savvy. when you think back of the emc deal, they needed money to finance -- that is where the tracking stock came from. it was big in thousand and revised it to raise money to have to stop out there that trade the valuation of vmware.
creativity has been in the playbook for them and getting these things under one roof will require a creative solution with very convincing rationale. unless they go the ipo route for dell, then there will be more maneuvering down the road to get these under one umbrella. but we will be on top of it and tried to get the next steps first. emily: i know you will be, but what is the timeline? >> the timeline is that it is still early, they are still considering alternatives, and for us it is important because it has elevated to the board level, so these are real decisions they are making. but exactly when? there has been no date set on this and no and finish line to our knowledge. to me that says it is still early and they're working through these different options. emily: alex barinka always on it. thank you so much alex.
and the international space station, dare replacing a box in the main antenna and it is the second spacewalk in as many weeks. on january 23, two u.s. astronauts make the upgrade to robotic arm. the nfl reported a 60% increase in incidents of concussions this season. the brain chama puts players at risk of a serious degenerative disease. how researchers and businesses are trying to reduce that risk before it is too late. >> cte is often found in the brain of deceased athletes, military veterans, and others of repeated brain trauma. hundreds have donated their brains to the concussion legacy foundation, brain bank. >> this is a former nfl player who died in his early 70's, and
this is a veteran who also died in his early 70's. >> dr. ian mckee dissects these brains. >> i can see it is likely affected. >> she recently accepted the brain of new england patriots player aaron hernandez was convicted of murder and then committed suicide. >> the brain is showing signs of trauma. >> cte impacted his decision-making and ability to control rage and aggression. she thinks we are underestimating how many people have cte. >> we are able to distinguish between cte and controls and alzheimer's disease. the next question is can we do this in the blood and in living people. we aren't there yet with those answers. >> the need for diagnosis in the
living is motivating companies to work faster on technology that could diagnose concussions and cte in as few as 30 minutes. kevin is the ceo. >> it is a high-powered microscope and by doing that we can see biomarkers you couldn't see before in the blood. >> there is in grants from the nfl and went public, and their stock is up more than 40%. the company built a machine called samoa for $175,000. >> for the first time in history we are able to see brain health and blood, and that is a major breakthrough. that is leading to a less invasive testing and where able to see evidence of concussions and there is beginning evidence to see that accumulate of effect of concussions. >> it will also detect alzheimer's disease, multiple sclerosis, and als.
he thinks that goes in concussions will be easier than diagnosing cte. >> diagnosing cte and the living is probably a couple of years away. we are excited to see the progress, but reducing some of the work and to actually test in the laboratory takes time. there's little regulatory approvals -- there's regulatory approvals and a lot of red tape to go through. >> new york mount sinai hospital is scanning for the disease in the living, but it is one step in a series of questions are those with serious head trauma. there is still no cure for cte. >> even if we had a great idea for treatment, there is no way to test whether it is effective or not. if we can develop a biomarker agency. >> bloomberg news.
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