Transcripts For BLOOMBERG Bloomberg Technology 20170523

Sir roger moore, the debonair star of the james bond movies in the 1970s and 1980s has died. He has been active with the United Nations childrens fund. He was 89. Im Alisa Parenti. Thank you for watching. This is bloomberg. Emily Bloomberg Technology this is Bloomberg Technology. Coming up, the Trump Administration rolls out its budget proposal. We will analyze the potential impact on tech. Plus, uber swerves into yet another bump in the road, this time costing the company millions. Microsofts more powerful fifthgeneration surface pro hits markets next month. We will preview the device and its potential. First, to our lead. U. S. Stocks pushed ahead with small gains for the fourth day in a row despite news of the out of manchester. Abigail, give us the roundup today of what happened in trading. Abigail it was a quiet day for stocks in the u. S. The dow, s p 500, and nasdaq finished fractionally higher and not really much of a reaction to that terror tragedy. This is pretty consistent with what we have seen over the last year or even more so. Perhaps investors weighing in saying that the tragedy is unlikely to affect the corporate. Utlook for u. S. Companies we also have the vix trading lower, so not a lot of fear there. Names ande high beta nasdaq traded higher. Nvidia was lower. Paul sweeney, intelligence high beta names tend to trade down significantly. We are not really seeing a reaction, and the reaction from , we see stocks finishing down about. 4 , so not a huge decline, but that was much more related to companyspecific action as opposed to anything to do with that terror tragedy in manchester. Stocks . At about chip they underperformed. What happened . Abigail wells fargo downgraded shares to market perform. And analyst citing lackluster growth opportunities. Plus, Morgan Stanley plus analyst has been relatively bullish but conceded that analyst day yesterday was a bit disappointing, so those shares fell. We also have amd down. The stock has been week after its rocket ride over the last more recently down, and the cause for the weakness saying its unlikely the expected in death intel deal comes through for amd. We saw a selloff for the stocks in april. It did weigh on the major averages. We see a beautiful oneyear uptrend for the stocks, but on that uptrend has started to reverse, but the stocks below it, which tells us buyers are starting to fade. If sellers decide to aggressively move then, it could cause more volatile action. Perhaps a decent declined to the downside. As you know right now, technology is the top sector this year, so it is important that the strength in chips holds up. There could be some volatility ahead, and very quickly after our postmarket trading, we have shares of intuit popping sharply after the tax and Accounting Software maker boosted its fullyear forecast. Investors are clearly chairing this. It was a bit of a slow tax season, but they say demand for their Accounting Software is strong. Our bloomberg newss stocks reporter Abigail Doolittle there with the roundup. Thanks so much. Trumps the fire full budget, detailing massive cuts totaling 3. 6 billion President Trump released a full budget. Part of the foundation here is sustained 3 economic growth. Everything we do in this administration, and free single time i am called into the oval immigrationt is on policy, health care policy, tax reform policy, trade policy, budgets and spending, the focus is sustained economic growth. First of all, talk to us a little bit about the impact that this budget specifically sectors we care about like security, like infrastructure. This budget does have a large number of cuts, but the president wanted to focus a lot on security, when it comes from security on foreign threats, so there is a large increase on military spending. Military contracts can be expected to increase under this budget, as well as cybersecurity. There is 1. 4 billion for a new cybersecurity budget. Theres also tax dollars for Infrastructure Spending as part of the president s trillion dollar infrastructure plan. The rest of the money is expected to come from the private sector, but the president is cutting a lot of social safety net programs. He says his idea is to focus more on defense and less on domestic spending, and he believes he will be able to get the economy growing so people will not need as many of those social safety net programs. Meantime, solar tax credits were extended for seven years. What is not getting cut . The president is focused on certain programs both democrats and republicans can get behind, things like the paid family leave proposal the president put into his budget as a Bipartisan Program that would on paid familyng leave, things like solar tax credits which request support, before the most part, the Environmental Protection agency very largeo get a cut as well as several agencies that focus on Climate Change and climate science. On aresident has focused few areas including solar, where he has not a those drastic cuts. Not made those drastic cuts. Emily the proposal involves cutting the sec fcc budget and the renting the Agency Auction off more spectrum licenses. In spendingcut would reduce the size and probably lead to layoffs or at least a reduction in the staff size of the fcc, so you could see fewer fcc actions, and you could also see it auctioning off more spectrum. That is something mobile Wireless Companies might be interested in, but one caveat is this is a proposal from the president was will go to congress, and congress will likely take its own liberty with this proposal and decide what to keep and what to strike out. From what we hear, they are likely to focus on using their own priorities and writing their own budget bill before the budget ending runs out in september. Emily how long do we expect that process to take . On how it could depend close negotiators from both parties are able to get over the next few months. We are hearing the president s budget is likely dead on arrival in congress, and that could help bring negotiators to the table because democrats have largely said this budget is not something they are even willing to negotiate over because there are so many cuts in it, but once republicans and democrats can agree on some topline numbers and agree to not cut as many programs as the president wants to cut over the next few months, you could likely expect them to come to some kind of agreement, either over the summer or into the fall. They have that hard deadline in september when the funding runs out, so that will put some pressure on them to come to a deal before then. Thanks so much for that report. Coming up, a former uber veteran just completed funding on his next start up. Why he says self storage is the next industry set for disruption. This is bloomberg. Is in the hot seat again. The Company Admits to its new york city drivers millions of dollars by improperly calculating passenger fares. They were taking customer fares based on the pretax some instead of after taxes and fees. Will pay drivers back 900 each, which will cost the company tens of millions of dollars. Forisrael is indicting uber allegedly offering illegal rides. The company pick up passengers a governmentat license. Undercover agents have been posing as passengers for several months. The Ridesharing Service is illegal in israel where drivers are banned for charging for rise in private cars. Instead, it has been Offering Service in tel aviv where passengers pay private car drivers a reimbursement for things like gas. The Service Launched in israel attention to lower ller lure customers away from local rivals. A new startup is trying to make its name in the 30 billion allstar self storage market. It was founded by the former head of product at uber, who just left the company last year. He joins me in the studio. Have to ask you about uber first. It has been in the news. You have been credited with the idea of coming up with the idea of coming up with search pricing. What is your take on the fact that it does not seem like it has been settled yet . Search pricing happens around us every day surge pricing. On a late night in boston, bars close around 1 45 every weekend, and we could not satisfy all that demand, so in order to get drivers to come out, we had to try paying the more, and it turns out that we increase rates, demand goes down, supply goes up, and it is something that goes on around us every day with hotels, with storage. I did not invent the idea of supply and demand. It was something talk to me in econ 101 in college. Has todo you think uber answer to these drivers who feel like they have not been treated fairly time and again . Michael at the end of the day, aboutplaces are all supply. I wrote a blog post about a year ago that said supply is the foundation of a great marketplace. At the end of the day, uber does not have a product will supply. We started a company, tro, that partners with professional movers and Storage Companies. Without them, we have no benefit. Emily talk about what you learned at uber that you are applying to troth. Uber, the idea was black cars. They would come get you, drive you 10 minutes, and they might wait an hour everywhere else. Moving and storage is a category that has not changed dozens of years. Typically, if you store today, you have to rent the unit, rent a truck, by the boxes, and then you have to call your friends. Usually that is all fine, too. I dont know about you when i call my friends, they dont really pick up if it is for moving and storage help. In this case, it is bringing that to their business and connecting them with more customers. Is your Value Proposition . What do you offer that no one else does . Michael they have taken as an approach a vertically integrated approach. Lease andd makespace own warehouses, trucks, and employed drivers. We are taking a page from other Market Forces such as uber to connect moving and storage customers moving and Storage Companies with customers. We can help them expand and grow their business and create more jobs. Emily what about when it comes to culture . What page will you be taking to that . When it comes michael culture is something said at the very early stages of your company. John, my cofounder and cto and i partbly spend the First Talking about culture every day. In the storage category, a customer wants honesty, empathy. Moving is one of the things that is the most stressful you can go through in your life. Emily how about stepping on toes . The end of the day, we do believe deeply in Something Like ownership. Owners, for example, empowering Storage Companies. Internally, we also believe in taking the extra step to complete something and get it done. There have been a lot of questions about the uber culture and if that led to the problems it is having today. Did you see Early Warning signs that things could get off track . You were there for four years. Thats why im asking. Michael all i can say about that is cultures are founded and set at the very early stages, ve, we are trying to set a culture that is customer centric, that is about it but the and honesty about hot the about empathy and nesty. Emily how easy is it to get money . How much is stored in the coffers . Michael that is also a great question that im not equipped to answer. We are lucky to have a great partner in greylock partners. We have known them for years they are fortunate enough to be partners with us. I cannot comment on the fundraising landscape in that we are currently heads down building our service. To see it. Ted thanks so much for joining us. Michael thanks for having me. Take care. Bitcoin continues its record run. The crypto currency jumped to a new record high. Recent recently said the rally is being driven partner partially by moving out of riskier assets and moving into more established crypto currency. An exclusive interview. Which jobs in banking will be replaced by robots in the next five to 10 years . And check us out on the radio. You can listen on the bloomberg app, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Americas biggest lender, wells fargo, is in the midof an effort to rebound from the oneest scandal in its hundred 65year history, the discovery of 3. 5 million fake accounts. In the wake of the scandal, they eliminated some u. S. Bankers, changed authorization structure and denied bonuses to top executives. Large erik editor at schatzker caught up with tim asking which jobs will be replaced by computers five or 10 years from now. That is function repetitive can be done as well buy a machine as by a human. I think any function that requires judgment, that requires listening, that requires empathy can be done only by a human, so i think you are going to see our evolve. Continue to that is why we are so excited about the innovation we are bringing to our customers, but there will always be a place in our industry for human contact, for human contact. The jobs you look at today, how many are repetitive . Tim i do not know off the top of my head, but to the extent that we have a role that is repetitive that could be replaced by a machine over time, that is not to say we will not create new roles. Our payments, virtualization, and Innovation Group did not exist nine months ago. We have 31,000 people in that group right now. Why is it so important for wells fargo to be the first mover in technology . Of moneypending a lot to be first in consumer experience. Why is that important . Tim i hope that is the case, by the way, because it will provide Better Service and experience to our customers, but thats why we want to do it. Our customers love using the branch network. They like using our network capabilities. We were voted number one by keynote this year. They like using our online capabilities. We brought Online Banking to the industry in the mid90s, so we have been innovating for a long time. The reason we want to do it is because that is what our customers want. Coming up, major testimonies at the capital are bringing more heat to ties between trump and russia. We will dive into what the former cia director has to say on russian cyber meddling. And i want you to check out our interactive tv function. You can watch us alive. If you miss an interview, you can go back and check it out. You can send producers a message, send me a question, play along with the charts we show on the air. This is for bloomberg subscribers only. Check it out at tv. Alisa im Alisa Parenti in lexington. You are latching Bloomberg Technology. Lets start with intent of first word news. President trumps 2018 but it arrived on capitol hill with Mick Mulvaney defending the 3. 6 trillion budget cut. The proposal is being criticized for slashing u. S. Safety net programs. He does the policies will be putting unemployed into the workforce. British Prime Minister theresa may raised the nations threat level, saying another attack may be imminent. The Terror Threat level is raised from severe different critical. Authorities identified 22yearold resident salman abedi as the suspect. French president macri and is Holding Meetings with businesses and Union Organizations to discuss reforming labor markets. He pledged to reform the labor markets during his campaign. French unemployment has hovered around 10 four years. Former ethiopian minister of health has been elected as the next director general of the world health organization. He is the first african task to leave the health agency. Heath exceeds chinas margaret chan, who held the post for 10 years. The nfl has moved the 2021 super bowl from let tampa bay. The move comes after delays pushed the opening of a 2. 6 billion football stadium in inglewood, california. News 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Im Alisa Parenti. This is bloomberg. Just after 5 30 p. M. Tuesday in in sydney. 7 30 a. M. We are joined by paul allen with a look at the markets. The asx futures pointing up a little bit, 2 10 of 1 . We will keep an eye on bhp at the moment. Immediate reports to sell u. S. Shale assets. Those reports are unconfirmed. Bhp has offered no comment. The dollar edged back above . 70 overnight. This is as we wait on the april trade balance. That is expected to show a 260 7decline to million. The nikkei futures pointing a little higher. Elsewhere in asia , keep an eye on noble group in singapore. This is pending announcement today after snp warned of a possible default. That prompted a rather dramatic collapse in their share price. Im paul allen in sydney. More from Bloomberg Technology, next. Emily this is Bloomberg Technology. Im emily chang. Former cia director john brennan testified before the House Intelligence Committee tuesday. For the first time, he publicly said he was concerned about possible ties between russia and the trump campaign, saying that russia brazenly interfered in u. S. Elections, including actively contacting members of the campaign. He stopped shy of calling it collusion. He also says hes concerned over reports that President Trump shared classified information with the rushes russians on may 10 in the oval office. I dont know what was shared in the oval office, but if the reports in the press are true that mr. Trump decided to spontaneously share intelligence with the russians, i think he would have violated two protocols. Emily our global News Reporter joins us from the washington. What where the biggest revelations from the testimony today . Reporter good afternoon. I think the big takeaway that a lot of people had was the early on concerned that brennan expressed, this idea that he was confronting russian officials as far back as august about these concerns. The expression he used was pull at the threads, that he knew way back then that they had to see what was going on. I think that was a wakeup call, or a new revelation for people. Timeline, as you mentioned, seems to be worthy. It we get any more information about how intelligence officials handled these revelations at the time . He often said he would have preferred to talk about some of session. Ngs in closed i wondering what happens behind closed doors. Reporter they came out of the miked door meeting and conley and adam schiff, the top ranking members of the committee, declined to speak. There were several times were rather said he would discuss in closed session because of classified information. They kept pretty well to that script because they came out with a sort of brush off, no comment right now. Emily the white house did release this comment, saying this mornings hearing back up what we have said all along that there is no evidence of any russiatrump campaign collusion. Brennan today was repeatedly pressed for names, but he wouldnt give any of them appeared was your take on that . Reporter particularly trey gowdy, a congressman who made a name for himself during the benghazi hearings, he repeatedly pressed for specific names. That was when brennan was really carrying that one back. He said that was sort of a classified something to be done in a classified setting. I dont think the republicans on the committee were quite satisfied with that answer. Emily brennan said also repeatedly that russias middling in cyberspace is obvious and has been out in the open. Howwe get any more color on it can be handled or prevented . Reporter voter information between brennan and the committee members. What is interesting is brennan said today this is a pattern going back many decades, that was the exact phrase he used. Turn ofnk another phrase he used occasionally was insidious. He said sometimes people were being cultivated as an intelligence asset dont even realize it, and may unwittingly be an intelligence asset. Emily last question, any line of site online former fbi director james comey will be testifying . Reporter there really is no line of sight. Senate they said they were trying to get something together after memorial day. In the house right now, some testimony was put off. We will check back in on that. Emily thank you so much, terrence. Staying in washington, post mate ceo testifying before congress earlier, making the case for integrating robotics into his agent Business Model of ondemand delivery. In january, they teamed up with starship technologies to test deliveries via self driving word robots, but it sparked regulatory concerns around safety and fears around the displacement of human workers. I asked lehman about the fear and how he imagines robots integrating into the postmates delivery network. If i paint a picture 10 years from now, i think we will have what we believe is a site walk class robot doing short range deliveries, highly dense metropolitan areas is where we can deploy our sibor class robots in the most efficient way. These are deliveries that are suitedot needed for human labor. They are relatively short. I think the return of monetary value is not as great. This is where we think we can have the biggest impact. Emily what do you have to say to the elon musks or the Stephen Hawkings of the world who are concerned that robots will supersede humans, or perhaps even become us . I think its a question of time. Right in hisis remarks that we have to be careful, specifically when it comes to ai. I think what he is trying to ai, like fund like open they are great ways to get broader base to people and not have isolated, intelligent ai operating summer. When it comes to robots, they already augment our life. Automation happened a while ago. While there are some areas where we still have to explore the impact, there are others where automation cant come fast enough. There are jobs that are simply not say for secure enough for humans to perform, and i think that is something positive that we should focus on. Bill gates has proposed that governments should task robot workers just like they tax human workers. What do you think of that . I think theres definitely an interesting discussion to be had. I think theres a time and place for this discussion. Right now we are still in the experimentation. We spoke to congress about not putting too many roadblocks into into communities so that we can at least six or the impact explore the impact. It allows us to have some data and have deep analysis. Then once we understand the impact and how we can augment and use robots in our cities, we can have a discussion if we need to find a way to tax them or do anything else to protect the workforce we have today. I think we should agree that we hug to appreciate and bear the future. Emily theres a question about whether the postmates model can scale. Can you get a concrete number that Shows Progress . I think it is scaled well. These are external questions. These are obviously not questions we ask ourselves. We are doing over 2 million deliveries per month. This year, we will move 1 billion in commerce on the postmates platform. We paid out 300 million in income to postmates on the platform. We are in 44 markets across the u. S. We are attacking international territory. Think the platform scales, and i think it is something customers love and appreciate. Emily what about plans for International Expansion . You talked about launching in london. That hasnt happened yet. Is it going to happen, and if so, when . You will definitely see us lunch internationally. I think we have been more concentrated on penetrating the u. S. Market. Ultimately, that is the decision we did earlier this year. We will launch outside the u. S. Im not sure if europe is the first market, but you can think of it is definitely a market of interest for us. Emily my conversation with the postmates ceo. It was this day and had 15 years ago that netflix made its public debut. Back then, it was simply a dvd rental service. Since then, they have had a strong run, but not without stumbles. They lost nearly 80 of value between july and november 2011 after it raised fees and attempted to split up dvd and streaming services. Still, the company is a massive growth story. A rise 40 each year in stock on average. Coming up, microsoft unveils the new surface pro to give the aging product line a spark. Will the device boost the tech giants sales . This is bloomberg. Emily microsoft is refreshing its surface pro. At an event in shanghai, they unveiled the new laptop hybrid. Microsoft also announced a special version of windows 10 that lets the Chinese Government use its own encryption on its computers. Bloombergs Seattle Bureau chief joins us from seattle with more. Longtime microsoft reporter, congratulations on the bureau gaig. id. How is it doing . Reporter they had a decline in revenue. The surface pro is the workhorse of their line. The version that was out in the market had been getting pretty old. People were buying other windows to his lines, or buying the ipad. They needed a refresh. Thats what we got out of the shanghai event. Emily how important is hardware still to microsoft . It was a 4 billion business for the last fiscal year. It has been quite a focus in just in to revenue, terms of coming up with new categories where they can show what windows can do. Anyone ory, this to two in one laptop tablet hybrid, they pioneered it, but apple stepped up. This new version of the battery life by about 15 , has a new intel chip, and has interesting and compelling features, like the luxury material on the keyboard that they had in the laptop. Just for volume, it is important for them to get a new version of this in the market. This is also the first launch they have done of a product outside the u. S. There was a desire to show the importance of the chinese market. They are giving China Special version of windows 10. They announced this in china. Why is that . Reporter the Chinese Government has not been willing to use either windows eight or windows 10, which obviously, we are talking the entire Chinese Government state, local, and state owned enterprises. The code is a huge market off to windows closes a huge market off to windows. The chinese cited security concerns. So they had two years to come up with a version they cannot use. They allowed they can use. They allow the government to provide their own encryption. It means the Chinese Government doesnt have to send data outside of the country and doesnt have to have microsoft in their machines updating. They can also delete apps they dont want to use. It gives them a greater do degree of control. At the same time, the government is fraught with concerns about Civil Liberties and blocking. That is an issue for them. Emily the knot bass dina bureau chief,tle with an update. Thank you. Coming up, how the u. K. Compares to sick silicon valley. That is next. This is bloomberg. Emily weve been taking a look at the longstanding diversity problem in the technology industry. This is a problem not limited to silicon valley. I want to get the Caroline Hyde in london, taking a close look at diversity and Venture Capital in the u. K. Caroline it seems as though when it comes to boosting the number of women in tech, people focus on how many females are in engineering or leadership, but theres another key area in tech where women are underrepresented Venture Capital. To bring more women and minorities into Venture Capital firms and it just, published first of its kind data that 160 bc th Venture Capital firms in the u. K. , only 20 have women at the top. It is a consenting statistic. We compare that to the labor force in the u. K. In general, it women working across all industries. We are behind. Only 20 print 27 in the hole investment industry, so investment in particular, it is quite shocking. We just dont have those decisionmakers making calls on investing in companies that will be the Biggest Companies of the future in the u. K. Economy. Going forward, do you feel this underrepresentation is changing the investment mode of certain funds . How would having a greater balance help the Investment Decision . Big problem. s a one thing i first found when i , the fact that it is a very male environment, you are looking around the room and views. Are giving their it is all white, straight males. You are not getting that breadth of opinion. When i make a decision of a company, we invest in early stage, we need different views on the table and different segments of society represented. It is just a white male type, and then we are not going to get those views. They will make poor decisions. Caroline it is too homogenous. Come here it geographically for us. How does it stack up, the u. K. Versus the u. S. . In the united states, the most recent statistics, there are 11 female partner level employees in u. S. Vc. We are slightly ahead of them. However, if you take out the two biggest funds in our study that we looked at, you can around the same number. The difference is imperceptible. I think they are similar. I think looking at the broader vc investment picture in the u. S. , you have 45 women in the u. S. Industry, versus 27 in the u. K. We fall behind the u. S. On that front as well. Caroline and therefore, when you are looking at what can be done to raise decisionmakers to be more balanced, whether on a female basis, and ethnic basis, hetero or homosexual as well, how will you make diversity something that is prioritizing prioritized . There was no data a year ago on what the ratio was in the u. K. Industry. The first call was to do the study and understand what gender looks like in the u. K. That has given us a more clear picture and a clear target as well. We have a 20 target of senior women in investment rules i 2020 by 2020. Diversity vc, we have four different areas we are investing in. It is about attracting more women into the industry, about retaining and promoting women already in the industry so they can get up to senior roles, it is about accessing a broader system to promote diverse entrepreneurship, and continuing to collect data like this. Into on beyond the u. K. Europe, and beyond gender, like race, ethnicity, and industry background. Caroline as a female at downing ventures, how do you think can be accessed, such as yourself . Practicescticing that can be used . Things thats going out and talking about what Venture Capitalism is as a career. A lot of young people really know it exists. How to meetknow people in industry and develop the first connections to set up that interview. At we do is we go to talk universities and schools, putting people on stage, talking about how they got into the industry. That includes people like me and my background before the venture, it was not traditional. Talking about the steps which i made, which were unconventional, gives a sense of a template to follow, and hopefully inspires more young people to get into it. Caroline much more balanced needed. Back to you. Emily thank you, caroline. That does it for this edition of Bloomberg Technology. All episodes are Live Streaming on twitter. Check us out at bloomberg tech ,v weekdays 5 p. M. In new york 2 p. M. In san francisco. Thats all for now. This is bloomberg. From our studios in new york city, this is charlie rose. We begin this evening with a look at President Trumps first trip abroad as president. He landed in israel this morning after two days in saudi arabia. This comes after the report last week that trump had revealed classified information to russian officials that Israeli Intelligence provided to the united states. Trump appeared alongside Benjamin Netanyahu today, and responded to the allegation. I nevert trump mentioned the word or the name israel. Never mentioned it during that