Credible. Global news 24 hours a day. Powered by more than 2,700 journalists and analysts in more than 120 countries. Im mark crumpton. This is bloomberg. Bloomberg technology is next. I am cory johnson in for emily chang and this is Bloomberg Technology. A closearkets come to finally and thank god u. S. Stocks gaining on the day. The big tech names were the leaders on the downside and on the upside. We will take a look. Libor scandals. A look at bloomberg settles. The highstakes lawsuit against waymo. With amazon. The giant stepping up plans to create its own delivery business, leaving ups and fedex behind. What a day on wall street. Stocks finishing higher ultimately. Down in the last hour. More than 1 across the board. Tech Companies Leading some of the gains. Anyones guests for what can happen. Friday with so much volatility, it is turning out more than 1000 points today. Amazing to watch. A massive decline earlier this week. This is the biggest weekly losses of the year and going back quite a ways. Was go to Abigail Doolittle with a look at it. Radio, we were all watching the crazy swing in the last error when the market went down to way up. Abigail unbelievable. The entire week is unbelievable. Today mimicking tuesday. Monday we have a huge selloff in we have the markets swinging between gains and losses in a rebound rally. Similar to today. We have a big selloff yesterday. One point near the open, major averages up more than 1 then down. then up down, up at the end it was hard to watch almost like watching tennis. What way will it go . The end of the day, the buyers did take it and frenzied buying action. Buy the dip, if you will or the fomo, fear of missing out. It is a nice way for investors to end a wild week but interestingly, cory, when you take look at the technicals, a lot of the major averages look vulnerable to the downside, considering their below important moving averages. The 50 and 100. That tells you sellers are lurking. Itll be interesting to see how it plays out next week. Cory i love how you i know how you love your technical. Yesterday, there was a really decided bounce when that happens. Abigail there was a bounce but it was interesting. I will show a chart i have been showing all day of the s p 500 day moving its 200 average breakers the nasdaq relative to its 200day moving average. The work to the downside is ahead for the major averages. In fact, the russell 2000 is moving definitively. Cory what is at the bottom . Abigail this is pretty interesting. It is actually the spread between the nasdaq 100 and its 200day moving average brady goes back to 2011. When you recall the big rally out of week 2 from 2010 into 2011, at that point the nasdaq 100 was about 18 above its 200day moving average. Overbought. And august 2011, we had a big correction dipping back down. Similar situation here. Mussununga so long ago we were 60 above the 200day moving average, now getting closer to the 200day moving average about 4 above. If we do anything similar to 2011 are any corrective time. Periods, it could be overbought. Apple is a piece of that. Missing that shipments, apple right now on pace if you can believe it for its worst year since 2008. That is a piece that some investors are forgetting about. Weisenthal tweeted today the dow is moving in 100point increments. Seeink i really do want to you do one of those hashtags and emojis up your analysis using the tools of modern society. Fomo for example, why not . Fomo. Abigail i sent out a tweet not long ago talking about a wild week. Emojia little jaws because that is what it is like. You have the jawsbiting investors and everyone think there is a bottom. Continue ase it can it goes on. Those names having their worst week since 2016. Bitcoin has been higher on the week. Investors a little less worried about pressures. Bitcoin miners is an important part of bitcoin chips. Great stuff. We will have to fomo without you all weekend but we will see more of you next week. Thank you very much. What a spring in dan flax, our Senior Analyst covering the debt sector in new york. He has seen a couple of market site cycles. What is your of emoji about what we saw this week in trading . A little bit of a Lightning Strike because the markets have a strong 2017. I think some of the volatility we are seeing is concerns about inflation and rising Interest Rates. Stepping back, if you look at some of the fundamental drivers for many of the technology , the build out of cloud, next generation networks, we think the fundamental story remains on track. If you look at the microsoft result they were healthy and we continue to like that name on the longterm basis. Cisco, which reports next week, we think they are continuing to transition to more software and services. Theyve executed well in the security business. Another name we. 2, which is Motorola Solutions, elite are in public safety. They have done a good job security. Executing. We think there are a lot of opportunities in the market while the volatility may continue longterm. We think there are attractive names here. Hing i think people do not understand when they think about a rising rate environment, if you have this cash flowing out, that number goes higher. Companies have to earn more. Appropriate revaluation down of even highgrowth names we see in technology. Dan i think that is reasonable. Ift i would point out is the revenue and earnings and cash flow are able to grow at outsides rates for these company, in our view, there are still shares for the companys outperform. Cory then why is motorola losing . It is 5 topline yearoveryear. Dan we think the magic of Motorola Solutions have been a Margin Expansion and earnings story. We think the earningspershare growth is actually more than two ax that rate. The reason i mentioned in my guys because we think there are pockets of opportunity in the market and there are stories ful drivers inr the case of Motorola Solutions. Cory we are seeing margins got from 20 to 27 over about a year. That is what we want to see. As we start to select these names, let us imagine we have a market bumping along for lows instead of the rise we have to 2009. K as one of the characteristics of the Technology Stocks i should Say Technology companies, postsox you want to invest in . Dan were looking about companies that want to build platforms. The advantage of being a Platform Company as you can attract people on both sides. For example, if you look at amazon which theres obviously a lot of debate about the growth rates and the future of the company, but ultimately they are bringing together buyers and sellers in their core business. They have also built up amazon b services, the biggest cloud platform. Companies able to build these Digital Assets have robust Growth Opportunities over multiple years. We are still likely to have volatility in the stoxx. Ks. Hey if they are able to manage through different cycles, they have the ability to create tremendous amount of value for all of their stakeholders. Cory there is also a weird thing that weve seen. Wallstre people on who have never beenet wall street wall street left never been around an environment of raising rates. They are not young, just younger than the bull market. Dan i think that is a fair point. Looking at companies specifically and their fundamentals, in our view, even in an environment where rates are rising, if companies are able to develop their businesses advantage oftake afv new opportunities, even in that environment, there are opportunities for them to continue to create value. Certainly, rising Interest Rate environment can have an impact. I suggest if rates rise gradually, it is a little bit easier. If you have shocks to the system, certainly the market more were negatively in return. That is what we try to do a in a day of. Cory i did love the operating margins in green o motorolar solutions. Were pointing out exactly yo u are saying if there is moderate growth the business is kicking more into the bottom line. Does you should go to your bosses and get a raise. You have done a fine job this week. They queue, dan thank you, dan. Walmart, billions of dollars with a stake in the ecommerce market in india. Walmarts stake will be as much as 20 . Boostf the deal will the valuation 20 billion u. S. Dollars. A trial that captivated Silicon Valley. Deal with waymo and uber comes to a surprising end. We will bring the details next grade if you like. Bloomberg news, check us out on the radio and check us out on our radio show. Go to bloomberg. Com and serious xm station 119. This is bloomberg. Cory the trial of the year for Silicon Valley is over. Already. Waymo 245 million worth of equity and cut to an end the trial of Self Driving Technology that may have been stolen. It is less than a week since the trial started and gives waymo 0. 34 percent stake in uber. Us start with our legal guy. You cover a lot of trials. Having settled early. They rarely make it to court. He spent a lot of time in the court. How unusual is this . It is surprising that this case took as long as it did to settle. I think it is a reflection of the emotions behind it for each side. Component. Emotional cory what do you mean emotional . I think google generally genuinely felt alphabet ceo here was angry about everything that went on. All the former they saw all their former employees go to their competitor, right . There is not an evidence. Hard evidence that there was wrongdoing done by the former employee, anthony levandowski. Real evidence a very bad behavior that over, in fact, uber condoned by hiring away from waymo. Cory that does not necessarily condone. Anyone can hire away and it does not mean you are condoning illegal behavior. What was it like when travis, the ceo showed into court and had a couple of days of testimony . It seemed like this really hinged on what he said. Bit think that is a overrated, though he did a good job. There is no denying that, and ubersrtainly helped position and gave him leverage. Maybe google are waymo caseht we will wint h the based on his testimony. Not the case. The testimony that came after was when they were trying to hit hard. Entink they knew they wer going to get the goods out of him and that was the gimbal. Ultimately, waymo got what it wanted out of the lawsuit. Look at this great video our team captured in the wee hours. It sound like there was a scene. So many journalists, when of those parties. Yeah, tons of reporters there. Different people from a company. Tony west, ubers chief legal officer. [laughter] tony west. Chief legal officer was there. People coming in and out. Who we didnt see was larry page, alphabets ceo. They settled before he had to testify. Money. Cost a lot of 235 million in equity that over had. They spent 680 million to acquire lewandowskis company and they probably spent out on theomberg analyst was radio and said it probably cost them 15 million to go to trial. The money, speak to which it was not at all. I think the real cost are here for over was a Public Relations disaster. This was a steady drip of that information coming out about uber and what it did to get the engineer at the center of the lawsuit. Those the real price exacted, i think. They paid rich dividends over a course of the year and a Public Relations attack. The acquisition of auto in the first place and developing 600 million in equity earn outs. A lot of those earn outs have not occurred. Some of the payments may have been 100,000, were talking about. I would take that number. The number is 0. 4 . They are taking less than 1 of over, one of the most uber. 54bank valued uber at billion blended. The 74 billion they are using to come up cory is that what theyre using . Yes. Cory and they have to do that or else we do not know but we think you might regret issue into new shares to late investors, so they will continue this phone evaluation of 72 billion. This comes from waymo. What this is actually working, you can do the math. Cory it is not worth that much. Yeah yeah yeah. Somewhatnews story between 100 million in 250 million. Still a ton of money. Cory we try to its planet a little more clearly. For those of you keeping the score at home. There was a valuation at softbank that agreed to pay for a little bit of their investment equal to the earlier valuations of uber. It is possible that the people who paid those valuations got a promise that there was ever an official lower valuation they would be issued more shares, which would have diluted everyone else. Uber does not want to trigger that so they continue to use this ridiculous number of serving the 2 billion only 2 million, even though they let softbank by lower than that. To do get a sense that something changed this week . That it was going in a different direction . Favoring a result before someone . It was not going as well for waymo as i think they thought it would help hopes and i think it went better for uber than would have been the case. When you got your most of waymos case and they had sized up what they had, in terms of the settlements and the money, i think the money did not matter. I said all along the money did not matter. What we learned is uber has agreed to not use the trade secrets that they would do the design around in the hardware and they also agreed to not use waymo software, which they tried to get into the case and failed. Surface, they got what they wanted out of the settlement. To zoom outcome i think we lose track of how much waymo got out of this. Ubers ceo has changed in a letter the demands made against travis, part one, one of the big problems was waymo. Anthony levandowski, the man that got everyone angry, was fired. Lamy give myself the last word. Two things. A friend of mine worked with lewandowski and said the sky was so impressive that he could walk into a room and listen to eight different arguments and put them into two ideas and have people start to figure things out and he was a truly impressive guy. He might still have a future in Silicon Valley, which would not think. Another thing i will say is everyone in the valley had such interest in this thing because the idea of dealing ideas and moving with documents from one company to the next, i cannot believe how many parents of atrosse games are people cocktail parties would bring this up. Thank you much both of you, both for bloomberg news. Covering a brief trial for us. Thanks guys. To create oned million jobs in the u. S. , but will they . Well head to the Olympic Village to hear about the companys impact on that promise so far. This is bloomberg. Upy alibaba president cut Stephen Engle at the winter the picks of john chen and says the company is on its way to great million jobs by 2021. Millions of jobs in 18 years sitting in our platform and it is too early to quantify how many we have created, but we know based on the mime a business we are doing that jobs are being created. Cory he talks volatility in the equities market. Not concerned about shortterm volatility, i think the fundamentals in the world in terms of gdp growth and the way markets have responded on the back of the financial crisis, while not everywhere, is looking good. Most of the world looks pretty good. Cory coming up, amazon continues its move towards world domination. Ups and fedex in their way, and Bloomberg Technology is livestreaming on twitter. Every weekday at 2 00 on the east coast this is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Are watching Bloomberg Technology and lets begin with first world news. The budget bill that President Trump side on friday concludes huge spending increases for the military and the pentagon will get 94 billion more for its budget your than 2017, the biggest yearoveryear windfall since the budget sort of the nation was fighting wars in afghanistan and iraq. Total, 700 billion budget provides more in defense spending in china and russia. Number two official at the Justice Department plans to step down after nine months on the job. That is according to the new york times, which says rachel brand is leaving for a general counsel position in the private sector. She is next in line in succession of deputy general Robert Rosenstein was overseeing Robert Muellers special investigation. Michel barnier warned friday that talks over transition. Could fail. Several discussions are being discussed with the border of ireland. Issues through the particular relationship what and protect, and a good friday agreement. Pence is atident the Opening Ceremony in the Winter Olympics in south korea, sitting in the vip box just in front of the sister of north Korean Leader kim jongun. Pence says the games should not be used for an opening of talks until the norths Nuclear Program is up for negotiations. U. S. Olympic committee used a preolympic simoni opening toference to apologize athletes who were abused by dr. Larry nassar. Who chose to testify and those who did not have demonstrated bravery and poise and strength in difficult circumstances. The olympic system failed you and we are so incredibly sorry. Usoc also sent a representative to listen to the testimony of messieurs sentencing nassar testimony. Global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Cory this is Bloomberg Technology and am cory johnson. Amazon may now be looking into getting into shipping. Out aup expects to roll service in los angeles in the coming weeks. Amazon is testing out a delivery and withe fall me and san francisco, lets set with you, what is the news here and how does it differ in what we reported in the fall . The news is that they are wrapping up further and executing. Amazon is looking at making deliveries on behalf of its merchants in the big thing is amazon making deliveries from the warehouse is owned by their merchants, not just their own warehouses which they have been experimenting with with the and uberamazon flex, type thing where people who spend time in their own vehicle can make the deliveries. And they can make deliveries from other warehouses other than their own. Are showing amazon rented planes, and the contract 30 or 40 planes, is this or first . Last mile last mile. Last mile is always visible, you see the big round ups tracking your neighborhood, and amazon is heavily in the logistics. It is thirdparty logistics for its merchants already and for years, and this is the most visible form of logistics, which is the last mile, that to your doorstep delivery. We talked about what amazon will look like in 2020 and one prediction we talked is aboutngst ourselves the global need for shipping and amazon is greater than anyone can do, because nothing is big enough. If you look at their shipping costs, it could be upwards of 60 billion by 2025. Which is feasible, and what that entails is that investments have to go up. If you look at this news report year, here, ups make billions in revenue. You have to think about how much shipping cost is increasing and how do you scale that to skill revenues, and if you look at this new story, what is interesting is that because they come out for half of amazons gross sales, this is a big piece. That amazon handle all of your ecommerce need. Your amazon will handle transactions, amazon will ship your product, amazon will arrange for someone us to ship it. Jitendra and the warehousing as well, so this connects the equation and becomes a onestop solution. There are a big part of the revenue engine and makes it easier to attract more thirdparty sellers. Cory it seems to me web services is a model here because web services started with amazons need for peak capacity of computing that they didnt need, so why not sell it to other people and all of a sudden what services is born and becomes their secondlargest business. You can see how they will view shipping the same way, a might not meet so many in june so they can rent out that extra capacity in june. They definitely need the capacity, and another thing to consider which makes amazon uncomfortable is that there is a shipping duopoly of ups and fedex. If they are too dependent on them, and they have Pricing Power over amazon, so the best defense is to vertically integrate and try to do that on your own. A big tiein is the grocery push. The big thing groceries bring to the table is frequency. Volume,n establishes even if theyre not making money, that is a good way for them to load extra things into the basket, extra things onto those tricks that are delivering groceries that are highermargin. Cory you think this is going to be global for them . Jitendra internationally they are stronger in handling their shipping, if you look at india for example. It will be big and supporting the program more than it will be a standalone service. Will be hard for them to be the scale of ups and fedex, but if they marry it with thirdparty and they collect seller fees, then it starts making more sense. Cory sorry, for the thirdparty stuff they are shipping, they want just be doing shipping to amazon customers but wherever the thirdparty sellers want to sell their stuff . Jitendra yes. Cory interesting. When you make amazon uncomfortable, i know you like it too, so keep doing it. Much thank you very much. We talked to a longtime tv executive with hits like this is us and the blacklist, and the search for an executive for the the executive resigned after Sexual Harassment accusations. Coming up will talk to a man west grandiose plans to keep the planet from overheating. Crazy idea, and we are bringing you the best interviews from the week, including a conversation with paypal cofounder max luncheon levchin. This is bloomberg. Cory youtube is going to spend all ads on a channel for probably damaging videos, this is a big story. He appeared to show a body hanging from a tree in japan, and he is one of the highestpaid youtube stars, and his income stream is expected to be millions and millions of dollars. You are probably familiar with the dangers of Global Warming. Blowing carbon emissions, increasingly frequent superstorms and more, and what can be done about it . Some pretty nutty sounding ideas to cool the earth. Create a shield around the earth, and more. It is called geoengineering, and more resources into this field, antonio, president for Atmospheric Research studying atmospheric sciences, professor. Good afternoon. Cory talk to me about what can be done. Unfortunately we have to address the notion of deniers out there, they surely will love this. It is not such a crazy idea after all because there are natural episodes in the climate system within the earth system that demonstrate that this is possible. For example, in 1991, a volcano in the philippines injected something in the order of 17 megatons of sulfate into the atmosphere and the small particles actually filter the solar radiation from reaching the earth and actually cooled the global temperature of the planet by. 6 degrees celsius over a span of 12 to 15 months. This one aspect of geoengineering is to do this deliberately if we are serious about trying to maintain our Global Warming and threshold of two degrees warming. Cory how do you do that with a volcano . Great question, it will be done artificially with a series of rocket launches, airplane deployment at different latitudes and frequencies in order to decrease the incoming shortwave radiation. That is one technique. Another technique would be to fertilize the ocean with iron to cause massive balloons of algae to draw down and take carbon out of the atmosphere and sequester into the ocean. Theoretically, it is possible, andthere are huge ethical governance issues about the sort the literate manipulation deliberate manipulation. Cory give us examples. A route nation unilaterally anddes to geoengineering, what are the downstream and unintended consequences of Global Engineering and how will it change global dissipation patterns and down streams from this one rogue nation . There is an area where we dont know. It is the colin powell rule, you break it, you own it. Once you cap are with the weather, you are responsible for every flood and every sunken beach and every whatever. Regard, there is attribution issues, how do you know if it is naturally occurring hurricane and whether it was caused by geoengineering or not, so this is pandoras box. We are not advocating for, but we need much more research so we have a better understanding of what are the unintended consequences. Cory what is the chaos theory notion . Notion that there is a typhoon somewhere else, surely that will come in to place your, but you talk about taking it seriously. It seems that it has been difficult if not impossible to come up with Global Climate agreements, for example the u. S. Coming out of the paris accord and taking this seriously and doing the other thing, that would be to reduce carbon and keep these things from happening and the destruction of our systems. That is a point. It has taken us 20 years to get to the paris accord and now were talking about cory we are not even there yet, it is amazing. Yes, we need to do the research, but all the nations of the world coming to agree on geoengineering would take a worldwide cataclysmic disaster to get all the nations the world to agree in short order to dissipate like this. Cory by the time it happens it late. E too all the more reason to do the research now so that we do know what it takes and what those consequences might be. Cool, weird, wonderful stuff. Thank you so much. We appreciate it. Coming up, Facebook Whats the easiest for you that you dont like their comments, we are going to find out next. This is bloomberg. Cory the beat Capital Group has closed its First Venture other sectors, is interesting to us for many reasons, not the least of which is that he founded a Little Company known as facebook. Yes we himself as a bc since relocating to singapore and avoided paying taxes on his andive facebook gains formed a partnership with boston consulting. If you dont like a facebook comment, facebook heard your complaints and the social media giant is testing a button where you can down vote comments. Here to tell us more about this is sarah frier who covers facebook on bloomberg. Sarah it is not a dislike or thumbs down button, when you see a comment to the right of the like and reply option, there is a down vote option, and so far this is a small test in the u. S. Facebook is not using it to write comments and is only happening on public posts, those are posts from public figures and media organizations. This is very interesting to me because in 2016i wrote the story of how facebook is rethinking the like button. Never wanted to consider having a dislike button because it would have to much negativity on the side and people didnt want to get on facebook and be upset. , theyit is interesting flatout ripped off the idea of snapchat with Instagram Stories and facebook stories. House nd their white and everyone else. Now this is taking something that reddit has that is popular, and one can look at reddit and say how come facebook cap on what reddit has successfully . Are they going to take their best ideas from everywhere like apple used to . There is a lot of concern about the content on facebook and they want to get signals from their users whether or not they like if what they are seeing is quality. Cory is it a fake news concern or harassment, hate speech concern . Sarah the trolls who come and write anything things that completely cause people to get angry, and get into fights online. People spent lots of time on facebook and it is just the arguments that happen between people on different sides of the aisle in the comments, and this takes those comments that are lower quality, the namecalling and harassment, and gives facebook a reason to see. Before, ialked this did Financial Analysis of facebook and it is striking to , the leastgrowth impressive ever for facebook, which is still a huge audience. And yet we sought revenue per user was up quite a bit, which is the same marker, even though the platform is a growing, marketers are paying a lot to be in front of those users. Mark zuckerbergs notion that people should use facebook less and should not be addicted to it, maybe see more feeds from their friends, this goes along with that. I thinkbsolutely, facebook wants us to focus on quality and not quantity. Controversy about the down vote comment is that it can be easily if you were a troll looking to look at comments on my post and i dont like you, i can down vote you. Cory this is a rough show. We tell the truth here. [laughter] cory it would change the tenor and facebookrse, hasnt done that in the past. Sarah theyre trying to make facebook a place where people have meaningful conversations and time well spent, those are two buzzwords of the year. It is going to be unclear to us for a while of how we get there. Cory i like you so much, even though you dont like me. No downloads for you downvotes for you. That does it for boomer technology. We are Live Streaming on twitter. Thats it for now. This is bloomberg. Have a great weekend. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. We use so why do we pay touterst and cthave a phone connected. When were already paying for internet . Shouldnt it all just be one thing . Thats why Xfinity Mobile comes with your internet. You can get 5 lines of talk and text included at no extra cost. So all you pay for is data. Choose by the gig or unlimited. And now, get a 200 prepaid card when you buy an iphone. Its a new kind of network designed to save you money. Call, visit, or go to xfnitymobile. Com. David did you always know that you wanted to run fidelity . Abigail i never felt any pressure to. David did your father say if you worked hard in 20 or 30 years, you will be the ceo . Abigail he was not the guy to make promises to anybody. David what do think investors mostly want . Abigail everything. David was it complicated growing up with your father and family being famous . Abigail we were not famous at all. I mean this was the equities market in the 1970s, david. David as you look at what your future will be . Abigail i think this is the moment that i have been waiting for. Would you fix your tie, please . David people would not recognize me if my tie was fixed, but ok. Just leave it this way. All right.