Sri lanka has raised its key Interest Rate of the First Time Since july to bolster the rupee. That lending and deposit rates were increased by 25 basis points. Sri lanka is struggling to balance growth and record inflation amid the worst drought in 40 years. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Turning now to the markets. Afternoon trading getting underway and hong kong and china. The hang seng down. 1 . Shenzhen and shanghai both down slightly. Caroline im caroline hyde. This is Bloomberg Technology. Coming up, googles advertising crisis goes global. Big brands in the u. S. Join the u. K. In the backlash over terrorism. Fitbit turns 10, the ceo reflects on the early hypergrowth and the recent troubles facing the company in its turnaround efforts. The senate votes to nullify fcc broadband privacy rules. What that means for internet giants and your data. Googles advertising crisis goes global. It began with an investigation by the london times newspaper, which found that some ads ran with youtube videos promoting terrorism and antisemitism. The Guardian Newspaper even the u. K. Government pulled display ads from googles display network and youtube. Then wednesday, the boycott spread across the atlantic, with at t, verizon, johnson johnson, halting spending on ads, and youtube as well. Google tried to head off the backlash this week with updated policies, but eric schmidt told people that google cannot guarantee that this will not appear that are considered inappropriate. How big of a problem is this . Alphabet was downgraded to hold on monday. He joins us by phone. , ourigital perspective analyst joins us by skype. Also, our Bloomberg Technology reporter. Mark, i want to kick things off with you. Mark the particular question is why now . This is not a new problem, youtube has had this for years. There is a couple things. One is the political climate, a lot of sensitivity around fake news, hate speech, terrorism. The second is there has been this kind of growing noise and the Advertising Industry about google and facebook and their control. Marketers have been pushing for more uniform measurement standards and thirdparty audits. Now they are seeing an opening and seizing it. Caroline jpmorgan also following on, taking ads off youtube. Mark correct. Caroline brian, first to you. Of course you downgraded alphabet to hold on the news that it affected the u. K. , but your worry was that this could have global repercussions. It clearly does. How much you worry about the stocks performance Going Forward . Brian i think it is subject in small part, not major part, to headline risks from here. Namely, you will see more brands demonstrating their concern, announcing they are pulling their ads from youtube. So for google does not appear to understand the gravity of the situation. It is on some levels mindboggling, and on the other hand it is not surprising because it is very googleey. This will go on a little while. They will solve it eventually. When i meant that the repercussions would be global and would have an impact on their business, it is not about the boycott per se. We will never notice or see that in the numbers unless it did persist for weeks on end. What is going to happen is that every advertiser is now going to have a conversation with google that is not focused on what the be on searches and enhanced brand building, what the strategy is on thinking about moving from tv into digital, not on how to put spending into facebook from google or the other way. Conversation is around safety. Google is on the defensive for the next 36 months. Any conversation they have that will have an impact in terms of their ability to expand business at the pace that they would have with the large brands serviced by agencies. Paul, lets take it out a step and look a little bit to look at the display business and youtube that it is affecting. This is not the search business of google. It is a major cash cow. How does this affect advertising spending generally . Fors you said, perspective, search is googles bread and butter as you said. It represents three times what it spent on video on youtube. Search in the u. S. Is about 37 billion this year. 78 of that is on google. They are by far the dominant player. If you look at video advertising, that is about 12. 5 billion. A thirdt is about o of what search represents overall. Google has 20 of the u. S. Digital video advertising business. We are talking about big dollars. This comes at a critical time for google, because as brian was saying, they are trying to expand the conversation, to draw those tv advertising dollars, to present themselves as more of a haven for tv style advertising. The search business is something they have been doing, they know how to do. It will continue. They know it better than an body else, but video is certainly google and youtube have a major presence, but there are a lot of other players who are vying for those same tv advertising dollars. The stakes are very high. Caroline mark, you have been nodding your head throughout. Brian called this rather googleey, perhaps the lack of reaction. We have heard from eric schmidt, the chief business officer. Why are they not reacting fast, or are they not taking it seriously enough . Mark to be fair, brian is probably the only analyst that has downgraded it. I talked to other analysts who are shrugging this off. To this point, that will not have a Material Impact on revenue. Maybe there is not an expectation that this might change the caliber of the conversation. Google has weathered this before. They are not panicking, maybe to brians point that they should be. I think we have to think about the fact that a lot of advertisers do not have a lot of other options. Where else are they going to go . They could go to facebook, snap, a new emerging advertising channel, verizon, aol, but google is the best bang for your buck. Caroline talk to us about the rivals. Verizon, which might be dining out on this problem, so who might be the winners here . It is interesting that. Some of the companies that have pulled their advertising from youtube temporarily are ones that do stand to benefit, because they are in direct competition. I think though that when you look across the competitive landscape, what is interesting to me is that all of the potential players, and we have mentioned all of them are many of the major ones, they really all have the same risk level. What just happened is not necessarily a youtube problem. It is a Programmatic Advertising problem. It is a problem that happens when advertising is propagated through an Automated System throughout a very, very Broad Network of websites and Digital Properties without necessarily being able to control and vet every single one. Facebook has had advertising issues with its ad platform over the years. Snapchat has had problems and probably will continue to. As long as advertising is bought and sold this way, it will remain a risk. Google has said that they cannot guarantee 100 brand safety. Maybe the issue here is, can they go from 98 to 99 . They need to do more, but i dont know how much more they can do. Competitors are facing the same basic problem. Finish it off for us. You downgraded it to a hold. Ould it take alphabet, what moves would you to see move it back to a buy . What would worsen it . What would have to the key catalyst there . Brian the downgrade was in part because the stock has risen since the last time i published a note on google. The prices are down a little bit. Necessarily becomes a whole. If the price had been a lot low already, it would have been a buy. I think what happens next, it is going to be a little bit of time. The right answer is not 98 , 99 . The right answer is zero. Large print advertiser expectations are that google is a company that can have a much up for some driving cars, balloons in new zealand, a company that can have robots running down the street. They can have a moonshot for a completely 100 brand safety environment, even if they do not get there completely. One screenshot of a brand sponsoring a beheading is one too many. Caroline they need to plan. It has been great to have your opinion. Thank you for joining us on skype. Brilliant now, a story we are to have you with us. Now, a story we are watching, wikileaks has released new documents that reportedly contain techniques the cia uses to infect apple devices. According to the group, there were several cia projects devoted to infecting Apple Mac Computers firmware, meaning the infection remains even if the operating system is reinstalled. The documents also disclosed tools to infect iphones. Earlier this month, Julian Assange said he is willing to work with Tech Companies to close security gaps. The cia has said, it does not confirm the legitimacy of such leaks. In other apple news, the iphone company has finalized a deal to workflow,e start up and app that allows users to put together apps using a string of commands. Workflows threeperson teams being hired by apple who will continue to develop the app. Details on financials were not released. Coming up, fitbit hits a major milestone. We will hear from the ceo from a companys 10 Year Anniversary and what is next in their turnaround strategy. All episodes of Bloomberg Technology are now Live Streaming on twitter, check us out bloombergtechtv. This is bloomberg. Caroline fitbit is turning 10. The last decade has been anything but a walk in the park. Five years ago, cory johnson took a walk with the then private startup ceo. Now five years, one ipo and over 60 million products sold later, the took another walk on the two streets of San Francisco. We talked five years ago, you said we are Software Guys making hardware. I do not think we thought about the challenges we would encounter. He just went and did it. My cofounder eric and i are Software Guys. Weve never done hardware. Cory now five years later, ceo james park is sticking to the claim, even though it is the hardware that makes it that household name. James it is really about the combination of the two working well together that creates the magic. I do not know i dont think we can classify ourselves as strictly a Software Company or hardware company. Cory hypergrowth might be a hard thing to manage, but growing cells more slowly can be just as difficult. We had a rocket ship of a company for quite a long time. We shipped our first product in 2009, 5000 units. Last year, we shipped over 20 million. It has been pretty stratospheric growth. Now the challenges, we are moving into a slightly different environment. It is a new set of issues that myself and the company has to tackle. Cory which are what . James moving from an environment of hypergrowth to one where we have to be more efficient and focus on fixing a lot of the things that we had ignored in the past because of our growth profile. I think that is a good thing for the company. It is time for us to reflect, look at the things that are working, not working, make your fixes and passed back to growth. Cory fitbits firstever contraction has been painful to employees and wall street. Since their ipo in 2015, their shares have plummeted over 71 . So Many Companies have stayed private for longer periods of retrospectder if in you think the negatives would outweigh the positives. James there are always positive and negatives. The positives for us is that for a long time we were not very well capitalized as a company. We had hypergrowth, but our Balance Sheet was pretty light. We always viewed the ipo primarily as a financing event. When we went public, we raised hundreds of millions of dollars, and it was the Largest Consumer electronics ipo in history. That was a huge event. It put a lot of cash in our Balance Sheet. In the end of december we had approximately 700 million in cash. That gives us a lot of confidence for us to operate the business Going Forward. Working capital, sleep at night r d m a, its a lot of , security to the business. Cory when you look at the stock price, stock price is stock price, but i wonder what that means for you in terms of the Business Plan and keeping behind the high margins that you have kept and other decision to have made there. You can certainly goose earnings or goose sales, i would think if you lower prices and cut margins, but you have chosen not to do that. Why is that . James pricing is something you cannot reverse from. So we want to make sure that people really value our products. I think maintaining pricing discipline is an important part of that. Invest a lot in significant and Innovative Research and development. That is something we want to continue. The stock price and public investors, that is all very important considerations on how we run our business. It is also one input. I what shareholders would like us to see is properly managing some of the shortterm interests, but also look at the longterm. I hope we are able to do that as a business. Customer demand resulted in a Fourth Quarter revenue fall of 19 . Announcing a restructuring plan, taking 4 million from 110 employees. How do they plan to turn around . James streamline our product portfolio. We have way too many trackers. A real focus on software, publishing, guidance, personalization. The later adopters in this category want a solution rather than just a touch and tracking. Data and tracking. We want to move into adjacencies like smart watches. The acquisition of pebble, factor, and coin, all play into that strategy. We have announced we are entering that category. It is a move that will immediately double our addressable market, so that is a huge area of growth. There are form factors beyond the risk that we are looking at as well. As part of our restructuring, we are looking at the business in two perspectives. One consumer, but more importantly what we call in a price health where we have started targeting employers, but want to start to target insurers and other partners in health ecosystem. Cory you are running a hundred thousand units at a time. James there will be Incredible Opportunity for bulk recurring sales tied to health plans. Ultimately it comes down to inspiring sales to getting customers on their feet. What is something you wish someone wouldve told you five years younger you . James sure challenges today that wouldve been easier to manage a big cash as a private company because you are less visible, not being judged on a daytoday basis, so a lot of the things you have to do to chart a path back to growth and profitability are definitely a lot harder in a public spot. Spotlight. What i think about on a daily basis is how we transform fitbit into a product that is nice to have, to something that is a must have. Caroline fitbit ceo james park and bloombergs cory johnson. Coming up, we will hear from one of the biggest players in online lending. Ceo greg gibbs on his outlook for china and the tech industry. Fintech industry. Tv esting function, on the bloomberg. You can watch his life and see interviews and dive into any securities or bloomberg functions we talk about. You can become part of the conversation by sending us instant messages during the show. This is for bloomberg subscribers only am afraid. Check it out at tv. This is bloomberg. Caroline greg gibbs, ceo of one of the largest players of the online lending industry, says the company has benefited from the decrease in peertopeer bands in china. The number of players in the industry, we used to talk about 2000, 3000. Now we are talking about 1000. Out of that thousand, the top 20 have got 50 of the market, the other 980 have the other 50 . We have seen in our case, our market share double roughly over the last year. Caroline lufax is valued at 18. 5 million. Eeye jumped after Goldman Sachs upgraded the company to a buy from celebrating, and increased its price target to 15. The goldman note says, the introduction of analytic facts, will address many of the firms previous challenges. Ed williams will unveil new business models, a five dollar per month subscription service. Earlier this year, williams swore off advertising on the medium platform and cut one third of its staff. Few details about the benefits have been released. It will include exclusive content and early access to new experiences. The site will remain free to those who are not members. It looks like bob iger is sticking around at disney. The ceo of over a decade has agreed to a contract extension that will keep him atop the Worlds LargestEntertainment Company until july 2019. He said he would not extend his contract afterwards. Bob igers annual salary will remain unchanged, but youll get 5 million for agreeing to the new contract. This settles who were run the company for the immediate future as the board of directors continues to search for his replacement. The move also gives him the time to address proms at disneys most profitable business, espn. Coming up, as google works to rectify its growing ad controversy, more analysts are weighing in. Well break it down next. Thats next. If you like bloomberg news, check us out on the Bloomberg Radio. You can now listen to us on the Bloomberg Radio app, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. It is 1 30 p. M. In hong kong. President obamas top trade negotiator says the trump administrations withdrawal from the tpp is an error of judgment. He says a wide ranging trade deal may go ahead without the u. S. , leaving american businesses and farmers cut out. He sees worrying signs of protectionism. Things, the those only one he has done is indicate the u. S. Will withdraw from tpp, which i think its a terrible mistake and creates a void that china is filling in the region and will affect our strategic position in the region as well. Of malaysia has introduced new rules on currency fixing. They include the naming and shaming of wrongdoers. The bank will also state why the penalty is being imposed and how much is being fine. It is a move to ensure stability it. The ring kaisa to hold longawaited board meeting. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Now it is time to check how markets have been trading in the asia pacific. Here is sophie kamaruddin. Stocks in tokyo and sydney looking like comeback kids. Banks and telcos leading gains a sx 200 closing. 8 higher. Japanese shares set for the biggest rally in two weeks. Shares in korea slipping with samsung under pressure, off setting the rise in other stocks. The hang seng down. 1 . Have been suspended in hong kong following a drop of 90 , a fellow dairy operator taking a tumble today. We are seeing property stocks also under pressure. General concerns about china property curbs on the mainland. Under pressure, dropping to the lowest since january and headed for a record weekly decline. In asia, equities rising for at the 10th time in 11 days and shrugging off declines in wall street. We are live from london at the top of the hour. This is bloomberg. Caroline this is the Bloomberg Technology. I am caroline hyde. As we mentioned at the top of the hour, alphabet shares have been under pressure since their advertising crisis is picking up steam. Abigail doolittle gives more reaction as well as the broader markets. Lets focus on u. S. Stocks. What is behind this . We had a roller coaster for the day. Nasdaq, s p 500, and were up nearly. 5 , then around 3 00, it started to turn lower. This came as the house did delay voting on that Health Care Bill. Really adding some uncertainty, but what does it mean for the reflation trade. Investors are banking on the possibility that trumps policies could reinflate the economy. That is unlikely to happen if this bill is not pass. That is really what was behind these losses, a small extension of that selloff on tuesday. To take a look at those dips and gains, here is an intraday chart of the nasdaq. You can see that it was a bit of a volatile session on an intraday basis. The nasdaq down a bit, the reason being what you were talking about with google, alphabet was one of the biggest drags on the tech sector. In fact also on the nasdaq and s p 500, plus we also had apple, microsoft, nvidia trading lower. So it it of a reversal yesterday when tech was these top sector. We have these high beta stocks with sawing up and down. Today was a bit of a down day for tech. Caroline when you are looking at alphabet, it is down four days in a row, 22 billion wiped off its market cap. Some analysts are not all going much lower. Investors seem to care. Why . This is an interesting thing happening with alphabet. J j pulled its advertising for on objection content. Within the last hour, hour and half, jpmorgan followed suit. These companies do not want their ads next to content that could be objectionable. Out to, i reached someone who said he thinks this is a nearterm blip. He thinks these huge advertisers cannot ignore a one billion user platform. In fact, paul sweeney agreed with this. , wee hop into the bloomberg can get a better scope for google. This is g btv 2366, it represents advertising revenue. That is been in the high teens, huge growth on a 90 billion revenue company. Bloomberg Intelligence Analyst paul sweeney says you do not see that anywhere else. Right now he says this is a reputational issue for alphabet. It out dont stop quickly and come up with a response to it, it could turn into a business issue. They want to prevent that from happening. Relative they stock in the nearterm, it appears that there could be a little more pain ahead. If we hopped into the bloomberg and look at g btv 7070, this is alphabet over the last six months in relation to its 50 day average in blue, which has been support. And its 200 Day Moving Average in yellow, which was support on the election selloff. We see that on todays move down. It sliced through that 50 Day Moving Average. The last time it happened alphabet moves right down to the 200 a moving average. So its just there could be some more shaky trading action ahead for alphabet, that investors are really going to be taking a little bit of caution as these advertisers perhaps move away from that youtube platform for now. Caroline as ever, shining a light on the technical indicators for us. Brilliant analysis. Abigail doolittle, thank you. Lets continue our discussion of google with bloomberg editor at large cory johnson. We are hearing that the stock is sold off to some extent. The stock was downgraded to a hold. He is saying this is reputational to a certain extent, and it is a new area of growth in video . Cory that is the crucial part. That is the place where most of the growth is supposed to happen. While they have this fantastic profitable business, the places where growth was supposed to happen was in video. That is why this is an actual concern for investors. Caroline it is fascinating is what we heard that jpmorgan is pulling it. Verizon is interesting, because out aould potentially win little bit. Cory verizon is not just an advertiser this is nonsearch advertising were talking about here. Verizon is a direct competitor with their acquisition of yahoo . Both aol and yahoo , there was a big focus on the technology around video ads. When they were doing all these acquisitions and spending all and money on this, both aol yahoo were talking about spending a lot of money on technology and video ads. What kind question mark exactly the kind to make sure ads show up in places they are meant to show up where they have the most impact. Verizon announcing their throwing gasoline into the fire of this story and wanting to fuel this because they want to want advertisers to think of other places. They know advertisers continue to go there. They are saying stay away from google. Look at yahoo . They are already looking at facebook and google. What is happening on advertising online is a two horse race with facebook and google gobbling up so much of the real estate. Are they going to go to twitter, look at snapchat . They are leaving yahoo to go to those new formats, google once to keep what it has gotten. Verizon is a dog in that fight. Caroline i love the analogy. When we looking at overall Programmatic Advertising, this might not the only googles problem. Could this actually spread . Could people turn their away attention away from this and jump onto other video providers . Cory that is exactly the argument other providers will have to make. Google is a very effective place for advertising when he comes to search. Someone searches for boat engine propeller, there is a high likelihood theyre trying to buy a boat engine propeller. Video is brand focused and a different kind of advertising. The people at yahoo and verizon yahoo , aol, Tim Armstrong crew, think they are a better brand than google. They want to emphasize that. They want to emphasize videos place where they can lead. Mobile video is even more of their focus, where the ultimate winners have yet to be chosen. Caroline well see if anyone else is tainted with this. Great to have fewer on and you are an asset as ever, cory johnson. Now on todays funding board, soundcloud says it has received 70 million in debt to fund growth plans. Earlier this year, the Music Service warned it may not run out of money if it did not attract more paying customers. Soundcloud has secured a credit line. In the statement the company said the credit would be used to develop technology and hiring. Soundclouds decision to take on debt comes after the preceded in raising initial funds for investors and considered a potential sale. Coming up, would Companies Think twice about automation if it comes with a tax for robots . We will propose the question to an m. I. T. Professor next. This is bloomberg. Caroline the story we are watching, sap plans to capitalize on president trumps efforts to encourage u. S. Companies to repatriate cash held overseas. Bill mcdermott says that plan could boost business spending on largescale software upgrades. The Company Announced nuts and an ipo that would allocate for investments in software 35 million companies. In San Francisco and berlin were announced. Automation is disgracing more and more American Workers and freezing pay for others. Now the main fear is not all human workers will become obsolete, but that automation will increase inequality among humans. One suggestion to avoid this development, tax the robots, or the companies the robots work for. Joining us now is an professor of Information Technology at and coauthor of race against the machine. Great to have you here. First of all, where you discuss it a little bit by the like of thinkiants out there that may taxing robots would be the right thing to do. Sure. Bill is a very smart guy. I appreciate him trying to clear up this issue. I dont think taxing robots is not the right way to go about this. There has been stagnating of a and middles income jobs have disappeared. There is a question about how to go about this. Taxing robots is not the best approach. What we want to do is encourage people to use robots in a more creative way to make shared prosperity and not just automate existing jobs. Caroline this is fascinating. To that point, you have just 1 million prize for highTech Companies that do increase job potential for middle wage earners, low wage earners, a dock that help those. This is on the same day that the World Economic forum is coming here to San Francisco with a center to focus on the Fourth Industrial Revolution and how we can have practices and best ways ensuring it for the public good as well. How can these things be for the public good . What sort of technology are you envisioning here . Erik here at m. I. T. , we recognize that technology is a tool, and robots are tools. They can be used in a lot of different ways. They can automate work, lower wages, make work more productive and creative and increase wages. The trick is to steer people in the right direction. There are a number of companies that are working very hard on that, and one of the reasons we created that 1 million inclusive innovation challenge is to recognize and reward the companies doing that. For instance, a textile mill in lowell, massachusetts, that has put in machinery that allows textile manufacturing to be more flexible and personalized, customized. And as a result, it is more viable. They can pay their workers more than they are paid in other countries come and create more by for customers at the same time. Caroline i just mentioned the Fourth Industrial Revolution there. Your book, which im halfway through, the second machine age, which is a brilliant read. This is not the first Industrial Revolution or machine age weve had. Is the pace of disruption faster this time around . How quickly does the government have to respond as well. Erik there is no question its happening faster now. The steam engine also improve, what it was once every 70 years, but it is a different scale now and affecting more jobs. It is affecting the whole oformation economy, and most us do information work these days, so it is an important change we are seeing. If we handle it right, it will be one of the best things that happen to us, but not just government policies, but policies by ceos, decisionmakers, and by all of us as workers. There are a lot of changes and a that need toions be made. Caroline certainly this is something ibm and the government are potentially retraining. I have a race on of course to finish your second machine age because you have another book coming out coauthored with same author. This one is, machine platform crowd, harnessing the digital revolution. In this book you say you must rethink the integration of lines and machines. Another man who thinks about this integration is elon musk. His view isw that right, the potentially we will become some sort of cyborg and that is the only way humans can remain relevant . Erik i talked about that. I think he is right in the long run. Our generation, we are more focused on Artificial Intelligence and other tools that allow human and machine decisionmakers to work and coordinate and divided problems in ways they can be more effective. Some day of eventually we will have that net directly on our brains that allows us to communicate with machines. I did not think that is anything we will be buying in 2017. Caroline professor of Information Technology at Mits Sloan School of management. Good luck with the competition and thank you for joining us today. Coming up on bloomberg friday television, noted short summer carson block from muddy waters will join daybreak americus to talk about his latest position in the market. Catch that conversation 8 00 a. M. Eastern time, 12 00 p. M. In london. Coming up, the u. S. Senate sent a big message to Internet Service providers. What it means for your data. This is bloomberg. Caroline now to a stock we are watching. Shares of bitcoin, not a stock, but an asset. Bitcoin had a strong trading day, the currency was up almost 3 in more than 1000 per coin. This after the aggressive selling on wednesday slammed it below the 1000 level for the second time since the beginning of february. 2017 has been a volatile year for bitcoin. It crash 35 amid crackdown on trading by china. It rallied another 75 in march, hitting a record high. That was though before the secs rejection of the winkle etf application. The u. S. Senate has put it to overturn the fcc privacy rule. The rules finalized wouldve prevented internet providers from sharing her the browsing history. The final vote tally was joining 5048. Us is litigation and government analysts. Great to have you with us. The u. S. Senate took up the fcc privacy government Internet Service providers. That was this afternoon, it went against it. Remind us exactly what the rules would havel done. Matt the art of this issue is how your Internet Service provider can use data about how you use your smartphone, how you browse the internet. What the fccs rules from request your basically did is they said that before your Internet Service provider, at t, verizon, comcast, before they can use that data, they have to ask your permission. Why that bother the companies, cable companies, is because the companies that dominate this online ad revenue market, facebook, google, they dont have to do that. They dont have to ask for your permission at the front end. They came along and said this is burdensome, unfair. Caroline the fcc has a different view on things. It seems as though this could be on the agenda for the isps. It has gotten voted in and now has to get through the house. Will it become law . Matt its a very good bet to become law. Most legislation is harder past to pass through the u. S. Senate. The republicans have an even larger edge in the u. S. House of representatives. They passed this is on a partyline basis with 50 republicans voting for, 48 democrats voting against. I think they will have an easier time in the house. I do not think there is any doubt that donald trump will sign it. That is certainly, what many people felt that he was against these elements, and particularly against Net Neutrality. This is something that the new head of the sec has voted against previously. Can we make a leap year from the fact that the privacy laws are being undone . That this could be the same case for the overall Net Neutrality rules as well . Matt i think that neutrality is the elephant in the room. That is the next big fight that is coming. But it is important to note i think that it is going to be much harder to undo in Congress Passed by thethis narrowest margin. It did so with the republicans using a rarely used measure that state not require them to duck a filibuster. They only needed 50 votes. They do not need 60 votes. With Net Neutrality, it will not be that easy. They might need to do more compromising, it might be something that congress cannot sec will have a look at it itself. Caroline it is interesting, the fcc. Matt arguably, one of the aspects of using this filibuster skipping law is that it prevents the fcc from adopting substantially similar rules in the future. It is not clear what that means, because this provision has never been used before. But i think what is likely is that the fcc is likely to step back and is likely to look to the ftc and to states to step in to fill in the privacy regulation. Bloomberg Intelligence Analyst, thank you very much. A complex story that you brought to us. Thank you very much indeed. That does it for this edition of Bloomberg Technology. Remember all episodes are now Live Streaming on twitter. Check us out bloombergtechtv. York,s 5 00 p. M. In new 2 00 p. M. In San Francisco. That is all for now. This is bloomberg. Anna has Republican Leaders plan to vote on their health care plan. Investors await a key test to trump persuasion power. Matt Credit Suisse is said to be selling stock for 3 billion francs rather than taking part of its swiss unit public. Anna e. U. Leaders had to rome to celebrate 60 years of unity while the u. K. Prepares to serve divorce papers. Matt and will the cuts continue . That is the question before oil markets as opec members meet in kuwait. We are live on the ground. Anna welcome to bloomberg daybreak europe, our flagship warning shot from london. Im anna edwards. Matt and im matt miller. Anna lets talk about currency markets. Many investors seem to be watching capitol hill. We do see some yen weakening overnight. A slightly longer view, this is the first drop in the yen weve seen in nine days. I was drawn to the strength of the yen recently. A nice column on the bloomberg, the title of it is, has anyone checked out they can recently . Clues asre looking for to where markets go, we miss the obvious. Yen strength over the last eight days has been a feature. Briefly,k up to 110 so can buy fewer yen for the dollar and that is going to be one of the interesting aspects of todays trade. We are going to get one of the best currency guests on the program today. Im looking forward to that discussion with kit juckes. Lets look at the Asset Classes a lot going on with currencies. Do i put the euro in there, the was argued to me is sexier, so i included that. Falling back below 1. 25. If you look at the intraday chart, it is a rather abrupt move. Take a look at the s p futures. 0. 25 . P just about it will be interesting to see how important that Trump Health Care vote is. We will see if investors care this afternoon. Nymex crude coming back again as opec prepares to meet in kuwait but not back to 48 yet. Anna what happens in the senate, that is one question, and how much read across is there from this bill into others . Matt i think that is the most important question. Anna lets check out the japanese market. Matt keeps putting the pound in the risk radar because hes so excited what he can buy with nonpound in pounds. Lets look at the close on the japanese market. The nikkei up by 0. 9 . Strength coming through in asian equities. Asian index. E msci matt lets get the bloomberg first word news. For that we go to sophie kamaruddin. E the u. K. Terror attack has claimed a fourth victim with police saying a 75yearold man has died of his injuries. Last night, thousands of people gathered to remember those killed. Cities around the world have shown their solidarity with london, including berlins Brandenburg Gate being lit up with the union flag, and the eiffel tower in paris going dark. Ive seen over the last 11 months evidence of all the things the police and Security Services do to keep us safe. Sophie frances president ial race took an inflammatory turn last night. Francois fillon accused Francois Hollande of directing a covert operation to middle with the judicial investigation against him and helping to spread damaging revelations. The republican nominee is being investigated for allegedly giving family members fictitious jobs paid with public money. Has steppedral bank up measures to cool the Property Market by asking banks in beijing to scrutinize home loans to newly divorced couples and Funding Sources for borrowers. The home buyers divorced for less than a year will be considered secondhome purchasers when they apply for mortgages. Banks are also banned from providing mortgages to buyers using leveraged Financial Products for down payments. If former pboc Deputy Governor has cautioned of the potential impact of u. S. Monetary policy on the chinese economy. He was speaking to bloomberg in high non. China has to be very careful. We are living in such an interconnected world. U. S. Interest rates and the bond market do have an impact on china. Sophie global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Lets check in on the markets in asia. Were seeing regional equities rise for the 10th time in 11 days. U. S. Futures also pointing to a higher open. Caution of abating somewhat. In asia, we are seeing stocks in tokyo and sydney looking like come back kids today. Japanese shares rallying the best in two weeks time as the yen falls for the first time in nine days. Were seeing the kospi slip, down 0. 2 with samsung shares under pressure, offsetting the rise in stocks like cosmetics players, and the hang seng deepening its drop today, with dairy stocks part of the drag there. Take a look at some of the movers in asia. Sliding over 90 at one point, now down 85 . The shares have been suspended from trading in hong kong. This drop is a record and it did white over 4 billion market value. It is chinas Largest Dairy farm operator. Concerns that restrictions on chinese buyers with impact sales. Toshiba adding almost 7. 5 in tokyo after a hedge fund the came the companys top shareholder. Kamaruddin with the update from hong kong. Wall street seems to be watching washington now. House Republican Leaders expect to vote today on their health. Are bill the legislation under pressure by the trump administration. Gop leaders are approaching the vote without knowing for sure if they have enough support to pass it. The bill has been viewed by investors as a test of what a Trump White House can get done in the legislature. Doubts regarding that undermine the stock rally resulting in a rocky week for equities. Joining us this morning, kit juckes, global strategist at societe generale. Welcome to the program. Happy friday. Lets talk about where we head around this Health Care Bill and the Bigger Picture about what it means. How significant is it as a test of trump . Kit in the nearterm it is significant in the sense that Donald Trumps victory in the president ial election created a huge amount of euphoria for the dollar, for bears in the bond market and bowls in the equity market, and it all feels much less exciting now. The whole thing is going through, really, what is he going to get done . Disappointment, any sense that hes not really going to boost growth, you have to start by looking at how much the equity markets or emerging markets anna does this move on this vote . Is it that significant that it changes your view on dollaryen . Kit i think so, in the sense 10yearont think treasuries, i dont think 240 is a stopping point. Dollaryen is either going down it is the kind of friday morning in my life. I think we react one way or the other. I think regardless that the question is whether im buying dollaryen here are lower, but i want to be long, because even if he doesnt get this through today, theres enough meat on the bone of the fiscal expansion on the u. S. Economic cycle to justify 3 Interest Rates. Matt hes got a lot more important legislation. Chris collins, congressman out of new york yesterday, said if the healthcare bill doesnt pass, we dont care. Were going to move on to tax reform, which im guessing is much more important to the markets. Kit it will be in the long run. This is a moot thing about the rally hitting a speed bump in a pretty big way. By the way, it is a shakeout of the one outstanding position in the market, which is that weve had a huge short position in the treasury market pretty much from 30 seconds after the election. That may be when we get the data. It may be that that has been completely cleaned out. We may get to a position where the net position is in short. Anna it doesnt sound like this is worrying you bond too much. For is Approval Ratings donald trump falling and disApproval Ratings rising. Kit i think this is what we see in the market. Can he get things done . Where we overexcited . Part of me thinks this is the hangover after the joy of the markets. I think it is fair to say the real story is what happens on cuts,ts, Corporate Tax what happens on bringing dollars back into u. S. Corporations. These are kind of more important economic things in front of us. Matt how will that affect the dollar . If he does get the tax reform through and corporations start repatriating dollars, we saw a massive rally after his election in the dollar index of about 7 . That is all but gone at this point. It is only up 2 since november 8. Kit i think we will make a new high, but not a big one. As long as i get fed funds for 3 i think i will get 10year yields for 3 . I think i will get real yields from zero to about 1 . I think i get those moves to get the dollar up, but behind, european economy is recovering. At least the French Election will come and go and then we will Start Talking about what the ecb is doing with its Bond Buying Program. We will talk about when they raise rates. As the rest of the world shifts, the amount of dollars support i will get from a stronger u. S. Economy starts to fade. Im not sure we got a peek in the dollar that is more than 1 above where we were in december. Anna im guessing you dont think inflation has picked in the u. S. Anz saying it is close. We need a fiscal boost or a surprise on core inflation to get that core inflation trade reigniting. Kit we are not far off the peak in terms of what we are going to see yearoveryear on headline inflation. Ago, theok back a year effect is kind of now and not much further. I think the bigger story for me isnt what happens to cpi inflation. It is what happens to wage growth and underlying economic activity. To bring you back to the dollar and the fed, what i care about is, in my going to get 10year real yields to one or is 60 basis points as good as it gets . Anna thank you very kit juckes getting us started this morning, global strategist at societe generale. Matt frances president ial race takes an inflammatory turn. Francois fillon accuses the french president of plotting to destroy his candidacy. This is bloomberg. Anna welcome back. This is bloomberg daybreak europe. Hong kong, pretty flat on the hang seng. Many investors watching what is coming out of capitol hill over the next 24 hours in terms of trumps ability to get through that Health Care Bill. Weve got breaking news from Credit Suisse. Credit suisse raising its bonus pool. We now have the details of Tidjane Thiams total compensation. This is according to the banks annual report this friday. Giving us further details on settlements over in the united rmbs. Over matt thats right. Mortgage bonds settlement information there coming across. The bonus pool is going to be fascinating for bankers. Mostly weve seen cuts across European Bank bonus pools. Not as deep as deutsche bank, but nonetheless cuts. Very interesting is the cet one ratio. The capital buffer so to speak has fallen to 11. 5 . Anna being hit by the settlement on rmbs it seems, taking a charge of 272 million swiss francs and the cet one ratio on the move. Credit suisse is considering selling stock valued at more than 3 billion swiss francs as an alternative to this plan to raise capital by lifting part of its swiss unit. This according to people with knowledge of the matter. Matt great scoop. Were going to discuss that in detail later. Right now, want to get the Bloomberg Business flash. Sophie . Sophie a onetime Goldman Sachs is throwing in the towel on his 7 billion firm. Biggest fundthe startups and is returning client money after 13 years. Or firm expects to return the percent of all Investors Capital by the end of next month. Shares of chinas Dairy Holdings were suspended after plunging in hong kong. The crash wiped out about 4. 2 billion in market value. Muddy Waters Capital said the close to zeroth in question is profitability. Huishan said the allegations were groundless. We will bring you an interview with carson block at midday u. K. Time. Hong kongan of a group has added his voice to the chorus of leaders warning against the global rise of production is in. Viktor was speaking to bloomberg in china. And that is your Bloomberg Business flash. Matt thanks very much. Sophie kamaruddin in hong kong. Anna frances election took an inflammatory turn yesterday. Residentfillon accused hollande of plotting to destroy his candidacy. Fillon alleged a covert operation to metal with a probe into charges against him and called on judges to investigate. Marine le pen heads to moscow warm wordsowing some from the kremlin. Caroline connan joins us now. How did fillon perform last night . Some aggressive words for the current president. Caroline he was playing kind of his last cards after kind of failing to show a good performance in the debate on monday. He blamed the french president for directly leaking some documents and information to the media over the past few weeks. He referred to a book that may suggest it would be some kind of wantt black cabinet if you at the interior ministry across the street from the elysees palace. Incalled the judicial system france to open an investigation into the french president himself. That was enough for Francois Hollande to react within the hour. The french president published a statement saying that the allegations of Francois Fillon were lies and the state never interfered with the justice system. We will see if this helps Francois Fillon get his popularity back. Matt as if that werent enough drama, marine is visiting russia. Why . Caroline this trip was not in her official agenda, just like her trip to new york early january when she visited trump tower without meeting donald trump. This time Marine Le Pen is not planning to meet with the russian president either. She has some meetings with russian lawmakers including the speaker of the state duma. Hidingine le pen is not that she is an admirer of the russian president. She called the sanctions on russia completely stupid. In 2014 aeceived back 9 million euro loan from a russian bank. The russian government is not trying to hide its endorsement either. Foreign minister Sergey Lavrov compared Marine Le Pen to donald trump, saying they were both realists and antiglobalists. Matt thanks very much. Caroline connan in paris. Kit juckes is with us, will strategist at societe generale. Theres much been made about this asymmetric risk around a lot and victory. Apparently unlikely. At the same time, if it were to happen, possibly very damaging to the markets. What do you make of it . Kit i think the risk is still there. Were she to win a referendum on ditching the euro and having a franc, where she to start pushing on what the European Union is about, i think the euro is in really big trouble. We still have that risk. At the beginning of the year, i thought eurodollar would get to parity between the first of january and the election. Where we are in the polls, the risk is just as big but shes now not in first place in the first round balls. So shes more of a tail risk than she was before. The markets are two thirds of the way to saying that she just cant win. Anna we had jeffrey yesterday from ubs on and we were surprised by the percentage he would attach to the likelihood pen win. This is that he you go function. It is showing macron overtaking Marine Le Pen in the first round voting. This is the polling data. All the usual caveats about relying on polls apply perhaps. Than i wouldgher were it not the uncertainty, but even so, 20 , Something Like that. Shes always had the one fundamental problem, that you can look at all the polls and people who suggest they are going to support her, and you get stuck at a number under 12 million. If you get 80 turnout, she needs 18 million to win. You wind it down to 60 something percent and she needs 15 million. How does she get more people to vote for her in the second round by a big margin . Who are the new voters she appeals to . That has always been the fundamental issue, that she needs to find way more new voters than the brexit candidate in the u. K. With a trump camp in the united states. Matt assuming she doesnt win, where do you see the euro going . You thought it was going to parity. We got pretty close. You can access it on your bloomberg. Where do you see the euro going now . Euro and thethe year on the other side of 1. 10. I think it could spike closer to 1. 20. The euro has been held down in that range by negative Interest Rates and a Bond Buying Program that has got foreigners crowded out of european bond markets and tapering, talkt of relaxed matt we do get tapering next month. The Bond Buying Program goes from 80 billion to 60 billion. Isnt that tapering . Kit if that is considered by the market as a step im with matt. I dont know how fast we will get the market excited about it, but if we only managed to get eurodollar just below where it was in 2015, at this stage, with all of this bond buying, i think the danger of a japanese yen style spike in the currency just on the capital flows anna what is the danger of a taper tantrum and where does that show up with regards to the ecb . Kit a taper tantrum shows up with a 1 german bund yield and eurodollar very close to 1. 20 and mario draghi trying to work out how to get it back down to 1. 10. Bear in mind, fair value for the euro is probably 1. 20. Anna kit juckes, global strategist at societe generale, stays with us. Lots more to get through. Matt including brexit. Lets look at the pound. Seeing continued weakness in the pound. 1. 2476 as the pound comes down. We do typically see some strong currency moves at this time in the morning. We will ask what is going on. We will also talk about the price of crude. This is bloomberg. Anna welcome back. This is bloomberg daybreak europe. 6 30 here in london. This is soul and we have the dollar against the korean won almost entirely on the move. We were discussing how unusual that is for the korean currency to be entirely unmoved. You get the sense you are in a limbo day. Matt speaking of limbo, check out the kospi right now, just closing in south korea, down about 0. 2 . The kospi has been in limbo as we talked about yesterday, just up, down, every day coming back to where it was the day before. Right now trading