We talked about the potential threats to National Security. Many airbnb customers may be out of luck. We have the details. We begin with the volatile state of the global markets. Andy went into lockdown u. S. Virus cases spiked. The dow jones entered a bear market wednesday, the s p tumbling into their market territory after President Trump announced a ban on travel from europe. For the next 30 days. The new rules will go into effect friday. Companies would lose on the downturn and uber and lyft shares fell on the reality that customers are sheltering in place. I asked dan ives for his take on the volatility. Need to put goal post around in terms of demand. When i look at the core names, a lot of the faang names, to me, we continue to believe these are buying opportunities and you navigate the volatility. Look upon a normalized environment, even if you stress test the models, here, you by apple and you by microsoft. These are names you think might benefit people dont want to take a look transport. Take public transport. How bad is it for them . I look at names like microsoft, apple, some of the cloud. Luber, guiltyat until proven innocent stocks. Uber, guilty until proven innocent stocks that will continue to get punched across the board. They came out and said it they. Ave not seen any changes still very volatile names. I still like them longterm, but theres no floor in terms of the stoxx. Emily is there any specific name you are particularly worried about . We can look out the june, out to the fall, but we do not know what is going to be happening at that point. Dan look, that is why i think when you look at security, cybersecurity, you have to separate out some of what i view as the nonessential purchases, versus what you need to spend on. When i look at names in cybersecurity, those names are in a stress test model. You look at nonessential purchases, especially these private companies that are going to struggle, i think it will form what i believe will be a surge of m a across cloud and tech over the next three to six months given some valuations we are seeing. Emily where are we going to see that m a . Are people going to be making big buys right now . Dan i firmly believe if we sit here four to six weeks from now we have already seen a handful of m a. Look at microsoft, google, gcp, ibm, you go across the board, adobe. Right now they are continuing to look to expand their cloud empire. If you look at the private and public side, a lot of these stocks that are down 30 , 40 , 50 . That is why i believe strategic as well as financial buyers are going to put in the floor of software over the coming months. Emily dan ives there. According to bloomberg, the impact the coronavirus on advertising demand could drive losses of over 3 billion for google. Despite the frenzy to by Hand Sanitizer and bleach wipes online, even amazon profit estimates are at whisk risk. We look at it from two lenses. One is the impact see on the sector. Tever impact simon saw china saw, we are going to see a greater effect in q2. It takes a chunk out of that, but if you look countryspecific. What does the italian quarantine mean for the countries. As these concerns spread outside of china, u. S. , germany, france, italy, these countries account for a majority of revenues for these companies and that is why we feel a pullback coming from key verticals and Key Countries can lead to u. S. Companies seeing what the Chinese Companies saw in 1q. U. S. Impact would be in q2. Emily on the one hand people are flocking to amazon to get Hand Sanitizer and bleach wipes. You can imagine that is driving a lot of business. On the other hand, amazon is the epicenter of the u. S. Coronavirus outbreak. They just closed seattle area public schools. They are fighting counterfeiters and price gouging. People are worrying about getting coronavirus from amazon packages. What does this mean for amazon . Jitendra a lot of uncertainty on that front. If you look at the Distribution Centers in the u. S. , there is a high concentration in california and seattle. But we have not yet seen the effect. The report next week will give give us good insight. When supply chain gets overwhelmed, costs tend to rise. What that all means is eventually also you have to pay for employees when they cannot show up to work and things look that. The sum total of this is they are unlikely to meet profit expectations for this year. So we see expectations for the entire sector really gets probably a reset at the end of april, and that reset then sort of gives them the room for outperformance in the second half if we see the development for the rest of the world follow what china did in the last two months. Emily that was bloomberg intelligence. Malicious hackers are trying to exploit fears of the coronavirus outbreak. We hear from a cybersecurity expert. And if you like bloomberg news, listen to us on the bloomberg app, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Emily Cybersecurity Firms have reported surges of fission phishing attacks and malicious actors praying upon peoples fears to trick them. For more, i spoke to a Senior Vice President at a Cybersecurity Firm wednesday. You have a series of capable actors who are looking to use the epidemic to spread malware. Its too get into your email and establish longterm footholds, or establish ransomware or the like in this current environment. Emily talk to us about the threat level in cyberspace, given what is happening, the uncertainty, so many people working from home. Is there a threat to our National Security right now . Jamil i think there is. There has been a longterm threat from intellect from property theft. As people start to work from home, a lot more of the economy depends on highly secured cyber infrastructure. That is what we are utilizing now to conduct our daytoday business more and more, even more so now. People recognize this is a situation, and criminal actors are exploiting this. We will see what nationstates do going forward, but they know they are going to use longterm hooks. Emily what are companies and individuals supposed to do if they are working from home . They may be do not have all the security protocols. Jamil one of the keys for companies is to use vpns. For individuals you can buy vpn software and at least your information is secure. You can also leaves the latest in behavioral Threat Detection to protect your networks if you are a company. Part of this is Companies Working with one another in a collective defense posture to defend against these threats as we enter this new environment where we are all working from home, and recognizing this is just how it may be for a while to come. Emily you are at the rsa security conference in San Francisco a couple weeks ago, the same conference that now three people attended and have now tested positive for covid19. One of those folks is sadly in a medically induced coma. This is a huge gathering for your industry. I am curious how this is impacting folks in your industry right now. Jamil people are taking wise precautions. There were 36,000 people at the conference. Only a handful apparently have this issue. But the concern is you did not want it spreading, you do not want to be a point of spread. So a lot of people are working from home. We have seen Major Tech Companies announce they are going to have your staff stay home. Just more generally, a better precautionary measure. At least for this industry, you want to be cautious and careful. We will see what happens. We are now about 12 days out from rsa ending, so the incubation period is 14 days. By this weekend we should know better if there are further cases, but it is better to take precaution then not. Emily that said, the disease is continuing to spread. Earlier today cbs was evacuated. Two of its new yorkbased employees tested positive for coronavirus. They are asking employees to work from home. This is certainly going to get worse before it gets better. What are you most concerned about from a National Security perspective . Jamil honestly, one of the things is people overpanicking and getting too worried and not engaging in their normal bit normal daytoday business or economic activity. We have seen a lot of public spaces be left behind, people staying at home. But you can still get your work done. This is not the zombie apocalypse, as it were. The thing to do is just be safe, take normal precautions. And any cyber arena, take smart precautions. But do not stop doing business. The general variables of the economy are good and solid. We want to avoid a panic here. Emily that said, what would you like to hear from the white house at this point . Some of the panic might be tied to the fact that we are not getting a lot of information. The president has been set to unveil a plan but that has not happened. The Daily Briefing today by the Vice President was canceled. What should we be hearing from the white house . Jamil the w. H. O. Today declared it a pandemic. This is a huge concern. It has been a pandemic since h1n1 years ago. We want the white house to come out and tell us the plan. We know this will happen, we know the fed will continue to cut rates to the extent they are able to do so. For all we know, they will engage in quantitative easing. I think the economy will stay strong. I think the government will do the right thing. All we need for the white house and leadership in congress to do is to step up and say we will do what is necessary to keep the economy going. As long as we get that i think we are in solid shape. Emily that was jamil jaffer at iron at. If you are trying to cancel a trip, dont expect a refund from airbnb. We have all the details and disgruntled travelers next. Universities around the world continue to shut down. How can kids keep learning at home . Put Classes Online is next. This is bloomberg. Emily travel is being hit by the coronavirus, but if you booked through airbnb, you may be out of luck. Airbnb is enforcing no Cancellation Policy unless you are in certain countries, leaving 97 others where the coronavirus has spread. I got details from olivia carville. We are seeing a lot of frustration at the moment from guests, people who booked trips years in advance and really want to go. Statusreached pandemic and Health Authorities are advising people against travel and families we are talking about think it is in their best interest to protect their family but also to try and avoid actually spreading the coronavirus. They dont want to take the trip anymore and are trying to cancel. The airline and hotel have both refund them. They could still safely travel to japan according to the cdc guidelines, the from their families position, they have a 10yearold son and dont think. T is safe not offering advice i heard the response that if the cdc conditions are followed, you can safely travel to japan. Well, nobody knows if they could safely travel are not. Airbnb has responded to all of the frustration, saying we are a twosided marketplace. It is not the travelers but the hosts who are the customers. Tell us more about airbnbs side of the story. They are in a particularly difficult position. We note the travel sector has been the hardest hit. Airlines are canceling flights, hotels are closing, businesses are per happening travel, and events are being canceled across the world. While airlines and hotels only have to do with the customer, airbnb is a twoway platform. On airbnb you have a host who will rent out a home, and you have a guest who intends to stay there. From their perspective every time it gets canceled, the host is least outofpocket. Traditionally airbnb has always had a refund policy that was kind of up to the hosts discretion. They could choose whether they wanted a flexible refund policy, which means you could cancel up 48 hours before we arrived, or no refund before you cancel. The problem we have here is you created this extenuating circumstance around coronavirus that only applies to three countries. A lot of people are traveling beyond those three and do not feel safe. Emily in some cases you found anecdotal stories where perhaps the host would refund the money but airbnb still took its fee. Meantime, this is a company that was planning to go public this year at 30some billiondollar valuation. If you look at a company like marriott that is a 33 billiondollar market cap, do we buy the idea that airbnb cannot cover for these travelers in a crisis like this . Olivia that is the question. We know that they have been cash flow positive and they have turned a profit in 2017 and 2018. We believe they did lose in 2019 but that has yet to come out. We do know that for airbnb, they were founded in 2008 during the Global Financial crisis. This is the second biggest challenge the company has faced. And unfortunately, it is coming in the year they intend to go public. Emily all right. Bloomberg technologys olivia carville. Tesla overtook boeing wednesday is the most valuable industrial company. By 10 billion. It is as much about boeings pain as teslas gain. Boeing has a double whammy where it is dealing with the coronavirus, the impact on travel globally, people are traveling less, definitely flying less. Emily and continuing to deal with the 737 max. We are approaching the oneyear anniversary of that being grounded. If you look at the decline of boeings shares so far this year, that is how tesla has managed to creep up. It is amazing we are even to be fair to tesla, talking about tesla in the same breath as boeing. This legacy, huge industrial name with 80 billion of revenue last year. Tesla get 25 billion of revenue last year. It is a crazy concept that investors have been talking about. They have been talking about how tesla has been coming a quote, unqoute real company. Tesla shares are up 55 year to date. It is expanding its Production Capacity to 500,000 new vehicles this year. Its increasing its base of industry. Already up and running in china, plans for europe next year. Perhaps a new factory in the u. S. As well. Emily tesla has been a real company for a long time, lets be honest. Theres an irony in that elon musk tweeted last week the coronavirus panic is dumb. Meanwhile today, talking about opening new factories in the u. S. Ed on the coronavirus we did not know how it is impacting tesla. January 30 the cfo said it will delay production in china by 1. 5 weeks, but we have not heard much more. We do not know what the situation is over the three fremont factory over the water from us. Elon tweets, he draws attention away perhaps from the company and onto himself. But they are looking at this new potential factory here in the United States to produce the cyber truck, and even a model y factory they hope will be on the east coast, according to another tweet. Emily tesla has not been immune to the volatility. The Stock Plunged almost 14 monday, regained about half that yesterday, down again today. You have to think if there is a broader economic downturn, that impacts a carmaker. Ed there are two schools of thought. The first is where is teslas demand coming from. This ties into the cyber truck debate. Demandre signs that the for what was once a concept vehicle is strong. In a market of pickup trucks, which is entrenched with three players, analysts raise is it just the diehards, the people who really believe in a concept and will go for it, or is it this idea that if the world is going to shift to a renewable energy, sustainable source of energy and letter vehicles, that tesla has first mover advantage . Even in a recession people buy vehicles. Yes, used do better than new in a recession. But tesla is pretty much the sole player, so it depends on what kind of support to get. Emily does tesla have an advantage over other carmakers in this moment . Ed we have done some reporting around this. Part of the big gain this year comes from this idea that technologywise, tesla could be three to five years ahead of the big germans. This is what is incredible about the story. Teslas market cap is greater than volkswagen, it volkswagen reduced 10 million vehicles last year. What investors are looking at is look at the range, look at actually the volumes they are producing. No matter how many billions of dollars these legacy european makers are putting into evs, they have yet to build a single viable competitive vehicle. Emily coming up, as the coronavirus spreads globally, workers had home en masse. Could Virtual Reality help the workforce . We are livestreaming on twitter, and be sure to follow our global breaking news network on twitter. This is a bloomberg. Is Bloomberg Emily welcome back to the best of bloomberg technology. Magic leap, which raised millions to build an augmented reality device, is reviewing options, including a sale. They are considering Strategic Options that could include a partnership or a significant stake before a potential listing. We spoke to the chief product officer about their technology. Been innovating in this space for eight years. Building technology for all day and everyone. Point fore inflection , a 128se is sooner billion market opportunity. Enterprise is taking off first and then the consumer is falling. Well when we see the 5g deployment become broader. Early consumers adopt even today, but otherwise it is in the 2020 timeframe. We see enterprise customers drive Adoption Across hundreds of use cases. They are using it across the point whence, training use, cloud creation, which is incredibly important as people collaborate across time and space. I will never forget your first demo and the early concept videos of checking emails in the air. We have not seen that yet. How transformative is the technology . Truly transformative. Both of the examples you used you can do today. Alone, got multiple employees living in magic leap all day. I have folks who got rid of all of the monitors on their desk and they work. They have five or six monitors up, they have a video in the background. Use cases are what we are deploying today, there are actually five. Paris, bnpustomer in paribas. Iny are using magic Leap Software to connect employees around the world. Also working with customers on projects out of the ground and the initial intent was to become more green. Given whats going on today, is helping people collaborate around the world. The Consumer Market is not really developed yet. How do you get the consumer . Starting in the 2023 timeframe, we are starting to see that Inflection Point happen. Magic fleet that customers are adopting and they are excited about our next aneration product, which is significant step forward for the industry. Size ande half the double the fieldofview. It really removes the compromises you have to make in todays platforms from an experience perspective. Products get us towards the vision we are driving, which is all day, everyone, everywhere. We are not building a helmet or a flimsy set up like lenses that dont deliver. Competitors are building their own products. Time to look at getting funding through the ipo market . I cant speak to those conversations. But what i can tell you is that in those eight years, we have built a significant, broad portfolio that has put a moat around our leadership in the space. And that makes it difficult for. Ompetitors to enter the market we have got our Second Generation product which continues to expand our leadership. That gives us tremendous that we can grab a share of that market and thats what we are excited about and confident in. That was omar khan. Chief product officer of magic leap. Investors are trying to raise cash for what could be the biggest hostile takeover in years. Spite recent productions, xerox is resisting its bid. We spoke to a xerox nominee to the hp board and the former ceo of callan. Cowan. I have no comment on what i would do as an operating board member but what i would do assuming the board agreed is engage in meaningful conversations and on what terms. The board has given us detailed reasons for why they rejected. You think they were wrong . Yes. They rejected on incomplete facts and have not done their diligence. Have not been able to. Engaged and not done their Due Diligence to find out if the synergies are real. All of those things are still up in the air. Some things the board or management have said would be bad, do you disagree with them . The leverage, xerox believes, there would still be investmentgrade after the transaction. Projections, i find them credible. A gooderage would be 2x, capital structure. What about the characterization of xerox as a desperate company . Thats pejorative, obviously. I made a lot of those comments case, it isin this not a desperate company. In fact, it has got management that is quite skilled at negotiating this bertans. Desperate times. They have managed a declining deliveredd shareholder returns. Theoretically, you get onto the board do you get excited about what the four dollars a share 24 a share . Shareholder, i would say its higher than the cash was before the announcement and half the company. I think it is a nolose, frankly. Have they got the financing, does that change in this market . The banks are in and of xerox reaffirms they are still in. Look from the outside, you have to have conviction you would be a better steward of the capital there. What gives you the confidence you would indeed be better . I dont want to personalize this against any director, i think they are all capable. You will have to replace one. Probably the weakest. But its clear i have a different approach to the activity going on. I would probably insist it be run differently in some respects that i dont know yet. Say a crediblely party has come, made an overture, once discuss consolidation in an industry that needs it and i think we should make that conversation. This sounds cliched, when you go on aboard, you have an obligation. You are the board which represents the owners and you owe it to the owners to give it a look. Was xeroxs nominee for the hp board. Parents prepare to teach their children in the midst of School Closures around the world. We speak to the ceo of an Online Education company next. And how one of chinas Largest Education Companies is faring as the coronavirus spreads around the world. This is bloomberg. Emily now to the impact of the virus on education. Many schools and universities are asking students not to return to campus in moving Classes Online. There are questions for schools around the world about whether to close and how to keep kids learning in the meantime. I spoke to the ceo of khan academy, a Nonprofit Educational Organization that offers online videos to 93 million users globally. There are a lot of actors trying to put things together so we can keep students learning. The reality is there are some places that have already canceled schools native wide. Nationwide. It will probably accelerate in the u. S. Over the next few weeks. The reality is, they are likely to last through summer because we will probably not see peak cases or several weeks now. One logistic change that could happen is it could shift Summer Vacation up a few months and just resume class in the back half of summer. Assuming that is not going to happen or we see some type of hybrid, a lot of districts are thinking of how to virtualize. Theres a lot of complexity there. You can operationally do it, but there are equity issues of if all students have access. We are thinking about how do we put our materials together, they are all free and accessible, looking for ways of teachers and parents and officials to keep track of what students are doing. How do we make it easy to use if students are home for extended periods of time, possibly months, so they can keep learning. Emily how do you structure a day of learning at home . What can parents and teachers do . My general sense is to keep it as simple as possible. If i have young kids, Elementary School age, if you can do two or three hours of focused learning a day, that would be great. I would really focus on the basics, maybe an hour of reading, an hour of math. Just focus on students being able to read and parents spending time talking about what theyre reading with them. If they are even younger, you could read with them. For very young kids, we have an app that has over 100 titles and has other things on math and science, its all noncommercial. If youre going to elementary or middle school age, there is a reading this we can provide for parents. On the math side, we feel we have families covered from as early as prek all the way through high school and college, whatever they need. Students are able to put in two 30 minute sessions a day of focus practice, the system will progress along and they can get there basics covered. Above and beyond that, if you get theirics basics covered. Above and beyond that, if you can do an hour of writing a day, journaling, thinking about what is going on in the world, that is interesting. For high school, we can support them for biology, chemistry, physics. We have economics and American History and civics as well. Emily do you have any lessons or anecdotes from across asia where you mention that students have been at home for weeks, where things are working and where things might not be working . It is coming in bits and pieces. It first came on our radar last week, teacher and south korea when a teacher in south korea had to virtualize and is using khan academy heavily with his students. Thats when we realized we had to start working heavily and it was our duty as an ngo. Emily if there are widespread School Closures here in the United States for an indefinite amount of time, how welloff do you think our children will be . Its obviously not great, it is not an ideal situation, but as much as possible, i think we can try to make it a last a glass halffull type of situation. To use the able types of online materials we talked about, part of the glass halffull is whatever patterns we can get people learning. For what set a pattern is traditionally called the where not only are kids not learning, but they forget. So that is in opportunity of sorts. I hope that districts are able to provide some support for kids who dont have resources at home or internet. Certain places open. The density will be lower so theres less of a chance of spreading the virus. Khan there. Pinduoduo remains positive despite its recent sales miss. We hear from the president of strategy next. This is bloomberg. Emily several companies are expecting headwinds from the coronavirus pandemic, including chinese ecommerce diets giants like alibaba. Nduoduo is no exception. They missed estimates, but the president of strategy is still positive. Avid we have seen at the outbreak ecommerce played a big part in supportability supporting and stabilizing the lives of daily people. We are the second largest in china in terms of user account, so millions have come to rely on us for daily necessities. In trying times like this our priorities are with our users, so we have continued to provide subsidies against daily supplies and necessities from the very beginning when we see surge in demand outpacing supply. The other thing i would point gross that 13 of our merchandise volume is in agricultural produce. Online been a strong platform for the purchase of agricultural products. We leverage our network through this very difficult time to make sure farmers whose businesses are able topacted make goods available efficiently online consumers. At the same time we spent time making sure goods are delivered to users in the comfort of their home. But there has been a disruption to the supply chain. Even alibaba has said there could be an impact on consumer spending. David absolutely. We also expect to see a negative impact to our growth. That said, we have been observing positive trends in terms of Consumer Behavior as china resumes work since the 10th of february. Recovery in the Delivery Network in china and we have seen a pickup and activities in our merchants and users. Take february, a three day campaign of our 10 billion renminbi Subsidy Program. What we have seen is we sold 50,000 iphones and 20,000 max within the first they of that, so our outlook remains positive. Is there a risk for smaller merchants . Yes, they are more exposed because of cash flow concerns andthe price disruptions higher cost of logistics. We have actually set aside billions in reserves for a Subsidy Program to help ease that transition back to normal. Results thatced still fell short of expectations. Are you disappointed . On the contrary, we are positive. We believe the fourth was actually very strong. First of all, we hit a new milestone, the one trillion renminbi mark in around 4. 5 years. We added 50 million active users in the fourth quarter. Thats around twice that of our nearest competitors. Peopleinue to see more coming to our platform and becoming engaged and that bodes well for the long term. Revenue is not our focus. Our priority is improving user engagement. You are competing with alibaba, targeting millions 2024. Can you do that earlier . We added twice what our competitors have added in the last quarter. We see no reason why that pace shouldnt continue. Strategy . Your been seen as a platform targeting the third tier cities. Are you maintaining that strategy or will you be tweaking that to compete . Im actually really glad you asked this question because it will allow me to clarify. Designed as a platform that serves the entire population. If you look at user distribution , it is like chinas distribution between rural and urban areas. But as we begin to win more trust with our users, we are actually seeing activities pickup. In november, 45 of their merchandise was generated by users in first tier cities. Strategy, i would say our understandontinue to and promote interactions between our users, to understand what they may be using for and to continue tole and encourage them to share their experience with other people. Black friday last year, you partnered with amazon, which was seen as successful. Any reason to think you will deepen that partnership . Amazon and us partnered to bring thousands of units to the chinese customers. This is consistent with our strategy of differentiated shopping and access to Higher Quality products with certainty around offense and to around authenticity and we will continue collaborations going forward. Emily that was the Vice President of strategy. That does it for this edition of the best of bloomberg technology. Tune in every day 5 p. M. In new york, 2 00 p. M. In San Francisco. We are also livestreaming on twitter. And be sure to follow our global breaking news network pick take quiktake on twitter. This is bloomberg. Jonathan from new york city for our audience worldwide, im jonathan ferro. Bloomberg real yield starts right now. Jonathan coming up, market volatility dominating an ugly week. Central banks worldwide continue to step in as a big fiscal effort slowly comes together. We begin with the big issue. Can fiscal stimulus stem the rout . The fed and Monetary Policy. Bank of england. Not going to be enough to offset those nearterm disruptions. Very difficult for Monetary Policy alone to reassure markets. Just cutting Interest Rates is ineffective. We all agree it will not do much