Transcripts For BLOOMBERG Bloomberg West 20160630

Terrorists from buying guns. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am markountries. Crumpton. This is bloomberg. Bloomberg west is next. Cory im cory johnson, in for emily chang. This is bloomberg west. Aftertors investing tela a feature causes a fatal crash. First Kim Kardashian, now gordon ramsay. Mobileret to celebrity games defense. In San Francisco the redhot Real Estate Market may be cooling. Deflating rents in what was the hottest Real Estate Market in the country. Tesla shares dropping on the news that a model s was involved in a fatal crash. The Highway Safety administration opening a preliminary investigation after a tesla apparently led to a fatal collision may 7, 2015. For more on this, lets bring in tim higgins from washington. What happened . Tim tesla saying a tractortrailer was crossing a divide highway and when it was perpendicular, the tesla hit it. One of the key things tesla is saying is the white trailer up against a bright sky and the car as autopilot did not see it, and the driver did not see it. Its been one of the areas of this technology that there has been something such as snow that this technology has a hard time seeing. Its not surprising that perhaps a white background was not picked up. Cory not as advertised for this. Some of the features were rolled on initially in teslas autopilot and then the company pulled back, as i understand it is inwe know where this the relationship of Tesla Technology as it has been on the road . Tim tesla brought back some technology after videos are showed up on the internet, people doing silly things and questioned the safety. The driver is supposed to keep their hands on the wheel and be able to take control if something goes awry and there is a system that is essentially supposed to slow the car down if the driver is not paying attention. Issues is about the development of driverless cars. Is not anology driverless car technology. If we were looking at a scale of 0 to 4, this is probably a 2 with 4 being autonomous. Some features such as keeping the car in a lane, being able to take your feet off the pedal and hands off the wheel, it would go forward and slow down if something came in its way. Tesla has made a point of trying to say their vehicles can handle the situations. Initially there were reports sans article in the New York Times about a driver who could not keep a good charge in cold weather. This suggests this is not an allpurpose vehicle. Reporter this technology, this idea of using sensors and cameras to control the car looking out into the future, there have been issues with other technology regarding snow and rain and lighting situations, and the human eye has a remarkable ability to see things and its trying to train the computer to see it as well. They are still kind of developing some of that. Updates can happen after you bought the car, the software can be changed after the car is already in the field. Does this suggest that maybe this was not ready for prime time . Tim this technology was rolled out last year. In january they made some changes, limiting some of the ability of this kind of Going Forward we saw a earlier this year. They have the ability to change the software, much like your cell phone or iphone will update. Bet this will probably watched for closely is the conversation about autonomous cars. There has been concern about having a fatality and what that would mean to the development of this technology. Valentines day this year, the google car got into a fender bender with a city bus in california. That got a lot of attention and concern about what would happen on that day when somebody dies in an autonomous vehicle, and what it setback this kind of development. Cory finally, my conversation he told me the thing with elon musks is he takes risks the rest of us would not take. The venture capitalist cited the autopilot thing, putting this out here to see how it works in the market. This approaches risktaking in a different frame. Yeah, its not something atypical automaker would make. Beenal motors has developing this technology for years and they are reluctant to put it out there. They tested on tracks and thats the way theyve been rolling it out. They talked about having something similar to this out sooner, and still hasnt brought it out yet. Tesla definitely on the leading edge of rolling this out, whereas others have in slow. Cory tesla shares down. A company which also contributes a lot of technology that goes behind this and other driverless cars, stock tanking in afterhours trading. We are going to keep looking at mobile eye and tesla and this story, and we are grateful to have you help us do that. Micron announcing a Restructuring Plan along with quarterly earnings. The memory chip company will be cutting jobs. Wn 2. 9 billion dollars, 25 lower than last year. I am bringing bloombergs ian king. S quarter for micron micron has always been a bellwether for the industry. Tell us whats happening in pcs. Is it still a pc story . Ian its no secret the pc market is on a multiple year down slope. I just listened to a Conference Call for an hour where all they got were questions about what are you doing to get better at production, what are you doing to improve your costs between because theres a gap between them and their competition right now. Some ahere is always logical provider who would just pummel the market with production, flood the market with chips. Micron would suffer, even if they were accurately predicting demand, somebody else could crush the market they have acquired competitors to keep that from happening. So what happened . They have acquired competitors, but not enough. Their plan was to hoover of everybody, consolidate everything and make it rational. That works fine unless you are ronics market for elect which is multiple times larger than you which can spend whatever it feels like. There is another company out there which micron filed to get. Years ago, they failed to get them. It is doing better than micron right now. That is there a suggestion they are flooding the market to hurt micron . Ian samsung basically accelerates production to make it more difficult i dont know if its the case, but theres a gap in peoples minds between the alegria production samsung has, its cost is there a sense that they have a handle on the problem . Ian this is the issue. They were talking about how quickly they are going to improve. They also basically admitted that they missed the boat on one particular technology transition. You pick your poison. Cory which transition you are talking about here . Ian 3d nine flash. It is in your phone and basically acts like a hard disk use do in a computer, transition to 3d non flash, more advanced production more capable of storing more bits. Cory more capacity or more different . Ian there are production limits to what were happening, so theyve had to move to this socalled 3d non flash technology. Cory how does it work . Reporter its about how many electrons you can trap, cory, as you know. Flat production, where you are making it fit on it that service. Now we are moving upstairs. Cory ian king, thank you. Coming up, the creator of the Kim Kardashian hit mobile game is not ian king, but it someone else. They call him the fairy godmother of celebrity games. Plus, the redhot San Francisco Real Estate Market might be cooling off. A slowdown right here in San Francisco. Cory amazingly, many britons had no idea what brexit was. . According toturn wikipedia, the cofounder, searches surged over the past week. Union,gs like european things about the referendum, the page describing the referendum, all of the politicians who became more famous as a result of what is going on, all of those, big traffic. People wanted the background right cory according to wales, page traffic was up by a factor of 10 following the vote. Behind the hit Kim Kardashian hollywood game is out with its latest Celebrity Partnership moving from the fire of hollywood to the frying pan of the kitchen, Gordon Ramsays dash. Wilbur ramses game be able to recreate successfully . Mobile ith the glu having had this success, knowing its more than about picking a celebrity, what is it . Primed to be the culinary, hospitality, and restaurant category killer. Gordon is the most recognized chef in the world. Hes done 10 tv shows, has a huge social always for a chef, and hes a disciplined worker. We discovered over the last year hes been really on this game from the start. We have been working with him for 18 months. We know the game monetizes, its a good fit for his audience. Hes been all over the details of this. We are optimistic. Like the michelin star version, its our version for gordon ramsay. Ultimately, we know hes going to be behind this 100 . It could be maybe the biggest hit of the year for glu. Cory there is certainly a food category when it comes to games. What if the demographic of those games . Niccolo typically they are more female. One of the things we are bullish on for gordons game, he pulls in men and women of all ages. Hes cool for the younger demographic, hes been around for 20 years. Serious foodies know he is a serious chef. People looking for a bit more entertainment know he can deliver that as well. Its white broad, quite broad , and food is one of the Fastest Growing sports on tv, general zeitgeist. We might be spot on for catching that fire in the game as well. Cory when you pick celebrities for your game surly you get surely you get approached by many of them. What are the key characteristics of a celebrity you think will do well in a game . Niccolo kim had just celebrated her anniversary. There can be really big numbers here. Cory 158 million in revenue for Kim Kardashian hollywood . Niccolo for the game, not her. Though she has a royalty off of that. The power of what can be achieved if you get this wonderful residence between resonance between audience, game, marketing partnership, etc. We look for three things, size of social falling. For gordon it is 12 million. Kim was 40 million, we started talking to her three years later, when hundred 60 million. We were really good for her brand. I think our game would be really good for gordons brand. Ultimately, willing this to work with us on the ingredients it takes to make the game release oh, really authentic cory all the ingredients . Niccolo all the ingredients. Hes got the ingredients in exactly the right order. If you get that three things together, social plus monetization of the game plus authenticity, you can produce an outside hit. Thehink celebrities raise floor on a title performance. They also raise the ceiling. Revenue prediction is an imperfect science in the game space. Gordon,xcited about because he can pull in three demographics. The court gordon fan base, all the restaurant culinary gamers, and the men who would not normally play restaurant, culinary, or food games. Cory because . Niccolo because they necessarily see it something see it as sometimes something not as masculine as a shooting or racing game. Hasorically, diner dash tended to be 70 , 80 female. These are skillbased games. This will require some dexterity. Sessions, a requires more attention and focus. It brings in a different kind of gamer. Cory whats next . About this, ift you are not just looking at a celebrity and writing around it. You are looking at a category. Niccolo we are. We are trying to find a category with a proven game mechanic and a celebrity to fit that we have used celebrities as marketing partners, brand and marketing partners. If you dont build a great game, you wont get a hit. Our next one down the pipe is probably nicki minaj, actually. Thats a completely different bucket of r b, rap, etc. Oft successful female rapper all time, maybe most successful rapper of all time. Cory come on. Best female, maybe. I cant wait until you bring nicki here. Niccolo de masi, ceo of glu mobile, good to see you. Hel gates and how he thinks can wipe out some diseases afflicting the poor. Cory breaking news, apple said to be in talks to buy jayzs title. An interesting thing going on there. Title has been an exclusive title as exclusive tidal has exclusive relationships with exclusive musical relationships with jayz and beyonce. Focus on pharma, going deep in the Global Business of pharma and biotech, a range of stories and analysis across every one of those platform. Bill gates has made it his mission to use modern medicine to wipe out diseases around the world. He sat down with eric schatz or in boston to talk about discussing vaccines. Vaccines have still been the tool that say the most lives. Inventing new vaccines for hiv, malaria, tb, a number of these diseases that are still out literally killing millions of people, thats a top priority for us. Erik and other areas like gene therapies, or gene editing, how much promise to you think they have relative to the perhaps easier work that can be done in Vaccine Development . Editing is such a basic tool and its going to pervade all the work in the biological sciences. Diagnosis, even for doing gene knockouts to understand disease models, you really cant understate what a great set of tools they are. Where our foundation season, we see them in our plant and animal work because it will speed up help on animalnd disease. This is a superior system to affect mosquito populations that are carrying the virus. ,or Something Like hiv aids its possible although theres a lot of hurdles that you do gene editing to cure somebody from the disease, which that would be fantastic and siu dont have it. I see it in so many of the Different Foundation programs. Erik many of the most advanced remedies are awfully expensive to develop, and the companies behind them are incentivized to generate the maximum profit possible. Im thinking of things like valeant and touring, but also the cost of pepsi treatments and therapy hep c treatments and therapy. What in your mind is the best way to control costs so these medicines and treatments are not just available for the rich and well insured . I think the Current System, despite some extreme properlyt i think have been labeled as inappropriate, i think the Current System is better than most other systems one can imagine. Curing hepatitis c, this is a phenomenal ring. Now you have multiple Drug Companies competing in terms of a quality and the price of that offering. The Drug Companies are turning out miracles, and we need their r d budgets to stay strong. They need to see the opportunity. For things like alzheimers, they can reduce medical costs so dramatically and improve the human condition. And the pharmaceutical companies have been great partners of our foundation. When we need help in doing science, they are unique in what they can do. Also, they are very good about tiered pricing. Example,ke hep c as an and all the responsible to the poorhey countries had an approach that wasnt towards them making money, just driving access. Tiered pricing is often the way you can square the idea of being able to fund new miracles. You really want both. Gates, thewas bill cochair of the bill and Melinda Gates foundation with bloombergs erik schatzker. For full coverage of pharma, visit farm ago on the Bloomberg Pharma go on the bloomberg terminal of bloomberg. Com at bloomberg. Com pharma. Mark i am mark crumpton. Carney says the bank of england will probably have to ease policy in the near future to counter the fallout from last weeks brexit vote. And now seems plausible that uncertainly could remain elevated for some time, with a greater drive on activity than we had previously projected. Moreover, its effects will likely be reinforced by tighter financial conditions and possible negative spillovers to growth in the u. K. And its Major Trading partners. Centralrney said the bank will not hesitate to act if necessary. The navy says the u. S. Crew members detained by iran after straying into its waters in january were quote, derelict in performing their duties. Investigators cite weak leadership, poor judgment, and a lack of toughness. Six officers and three sailors have been disciplined or face disciplinary action. Cleveland believes officers will wear body cameras on their riot gear during the Republican National convention. The Arizona Company Taser International is loaning 300 mounting units to the city before the convention big lens begins july 18. With the x weeks away, soup kitchens and rio are closing because the state has failed to pay suppliers serving meals to the poor. Suppliers owed seven and a half Million Dollars and has not been paid for more than a year. I am mark crumpton, this is bloomberg. Paul, good morning. Paul good morning, mark. Lets check in on the new zealand first, up and running for 30 minutes on friday. Its fractionally up, after another strong lead from wall street. Here in australia we are set for our third consecutive day of haynes gaines. Way for data in japan, we are expecting Large Manufacturing and nonmanufacturing index. Also the Unemployment Rate for may expected to hold steady at 3. 2 . Take a look at the cpi, that is expected to fall again, down to. 5 of 1 . In china, manufacturing and nonmanufacturing pmi is out. It is expected to show a slight contraction to 50. It will be a big weekend in australia. Go to the polls in 24 hours time. Currently show support between the government and opposition is evenly split. The Prime Minister is warning australians against casting votes for smaller parties as the risk of a Hung Parliament could impact on the economy. Im paul allen from bloomberg tv in sydney, australia. Office landlords are bracing for a cooling of San Franciscos uber hot commercial Real Estate Market. The vacancy rate jumped 7. 3 in the second quarter, the biggest increase in vacancy since the start of 2009. Good to see you. Nice pocket square. This is really interesting to me. 1999like surge in real estate the last 2 or 3 years. We have early reports of companies subletting space. You and i talked about it on bloomberg radio. This seems to be a trend. Its a little bit of a trend, we feel its a correction. We dont feel like it is a tech bubble bursting at all. This market can sustain that heat forever. We have been through that now for about five years. Its about time for a correction, in all honesty. Cory five longers, being longer five years, longer than the dot com bubble. Robert it is much broader this time, any case. We saw adjusted for inflation, rents as high as 96 a square foot on average for office space in San Francisco. Cory i look at my window and see cranes every direction. Theres a lot of residential construction. But there are a handful of commercial buildings going up, most notably the salesforce building. And there is a building right across the street that will have a few condos. New inventory is coming on the market and what effect is that having . Had 3. 8 million square feet under construction right now. That 3. 8 million square feet under construction is 25 preleased. 75 of the space coming on has yet to be leased. Robert thats true, essentially from the end of this year through 2018. We have a wide bandwidth for this space to roll onto the market rate we have 3. 5 million square feet of tenants in the market right now. 11 of those are looking for 100,000 square feet or greater. The top 4 of those tenants, this would be pure expansion if they come into San Francisco, a couple of them are coming in from outside of San Francisco. Life sciences and tech, big surprise. Life science downtown is a bit of a surprise. Robert they have been in mission bay for some part of it and down at the peninsula. Weve seen most of that activity for them there. This is a tenant coming from outside of San Francisco looking for space in the city. Cory what is happening in terms of price . Robert pricing has flattened out a bit. Its up 9. 3 year over year, which is still pretty dramatic. Cory it is still of 9 . Up 9 . Robert you have tenants and landlords who are slow to adjust to the changing market. Its a quarter or two kind behind when adjustments start to happen. Weve had some less expensive space lease, and some higherpriced space, to the market. That change the dynamics a bit. Cory robert sammons, thank you very much. Its a secretive startup started by some at googlers, e xgooglers, the nea, and mark cuban. Artificial intelligence, trying to reindex the web and surface sales lead. Cuban, asking him, why invest in node. Node is changing the whole sales rate of process, the wholesale data stack. In the past we worried about management,r communicating with customers. We left out 80 of the data. There were so Many Networks and extended data that wasnt being captured to change that whole thing and make it a full sail stack. You are taking this notion of the web, how it works now, which is go look for the thing that you know what it is you are looking for, and instead doing what . We are going out and distilling all the information on the web and making it personalized based on what is relevant to them. In the case of sales and marketing, what is relevant to them understanding what is their total market, who are the people and companies they should sell to for the next 5 years. We surface that information to our customers and help them on executing on that strategy. Is an infinite amount of data out there. The challenge is how do you sort the signal through the noise. It brings the signal to you and extracts the noise. Cory it turns it inside out. We explain our results are why a particular company is relevant to a customer. All the way down to what is the message the sales rep should say. Cory it seems like this is the ultimate solution to the big data problem. Mark certainly not going to slow down, and the data formats, so being able to communicate effectively and knowing as much as you can about your target, identifying new targets machine learning, deep learning, ai, whatever you want to call it, that is what node is going to do. Coming up, apple is said to be in talks to acquire jayzs tidal music service, according to the wall street journal. Cory care. Com, shares soaring 38 . Google Capital Equity fund on by alphabet has taken a stake in care and makes it now the companys largest shareholder. Google capitals First Investment in a public company. Babysitters,ces senior care, and house sitters. Google says its unlikely to change european operations after britains vote to leave the eu. Chairman eric schmidt says the region must avoid a wrecking barriers that would hurt Digital Companies and entrepreneurs. Spanish police searched googles offices in madrid, part of an intensifying tax probe across europe, claiming the internet giant does not pay as much tax as it should. Google just released new Diversity Networks for the First Time Since 201 women4, 201 30 of google employees. 47 of google employees. Stock we are watching, jerusalembased mobile eye does some of the softwares possible for we mention the problem the tesla had, investigation after the death of a driver. Bmwnews comes weeks after unveiled the driverless concept car. Correspondentt has more from tel aviv. Bmwobileye teaming up with does not come as a huge surprise. Been a customer before of mobileye. I think its with high up with intel that is the most interesting from mobileyes perspective. Intel is the worlds biggest chipmaker and rules the roost when it comes to service of pcs and laptops. It has been a bit of a laggard when it comes to in car technology. It is the tech that moves into cars that is becoming an increasingly important selling point for auto manufacturers. A tie up with mobileye and b w is attractive. This is a real validation of this technology, not just for the worlds leading luxury carmaker is developing driverless cars, but the worlds biggest chipmaker is on board to you only have to look at mobileyes stock price to see its been a bit of a roller coaster since the ipo and it does have its fair share of the tractives. Detractives. Citron says its high margins will eventually come down when the competition heats up. Though this seems to be the first public announcement of a relationship with intel or mobileye, when of the cofounders of the company, the Computer Vision genius behind its tech, he has another startup called all cam. It helps visually impaired and blind people see whats around them by basically telling them what they otherwise would see if their eyesight was ok. On ofcapital, the venture intel, is an investor in all cam. Perhaps one of the mobileyes cofounders leveraging that relationship. Elliott gotkine, Bloomberg News, tel aviv. Cory turning back to a story we are monitoring, apple said to be in exploratory talks to acquire tidal, the music streaming service, according to an unnamed the wall street journal source. For more, lets turn to our Bloomberg News reporter. Tidal, which i had this week so i could see the kanye west video reporter it is those sort of a good names which were cory rihanna has exclusive stuff with him. I want that stuff on i have to wait otherwise. Tidal based at 4. 6 million users, less than 1 3 of what apple has. Its way less than what spotify has got. Tidal has these relationships with highprofile artists. Apple missed out on getting the kanye album exclusively. You look at beyonce and lemonade and all those other massive names, that is what apple would be buying. They hadtried the exclusive to the new drake album, which is terrific. Reporter i will trust your taste. May be a foolish decision. The other day Rolling Stone had an interview with a couple of top guys in apple music heard they played they paid for the top line bilng album topline bling album. Any this should be advantage prayed this guy has had a history of establishing strong relationships with artists going back 4 decades. Maybe theyve got that in with jayz as well. Alex its a bit of a blow and it shows the extent to his reach. There are a bunch of others he has not been able to bring on board. Cory are we looking at a world where apple is seeking to keep music relevant . Once it was their strong suit. Now if music can still be a big thing for them. Alex people talk about music as a service, music is typed into your home piped into your home the same weight of water is. The things that attract new users are the bigticket names, the huge megastars of the world. Apple has got to make sure it is trying to reach that ball. They are trying to bring on these bigticket names to attract the new users. Cory what an amazing time we live in, where content creators, whether drake or beyonce or the netflix and powered filmmakers and actors are the beneficiaries of all of this technology. Alex it is partially an admission of how the emphasis of music has changed. The initial pitch for it was like, we are going to allow the kid in their bedroom allowing his own demo to put stuff direct the out to apple music. That is not at all the case. To grow this product, they need to turn to the megastars. Cory its not garageband, it straight. Alex its drake. Alex yes, and drakes garage is more expensive cars. Cory coming up, would you trust a robot with your retirement . What about your lawsuit . Cory j. P. Morgan chase wrapping up a spin tech entrance. A sixmonth program called in residence, get access to funding and networks as well as jpmorgan facilities, systems, and presumably expertise. There is something the guys did not predict, robot divorce lawyers. Other rhythms guide couples through a series of questions to find points of agreement, proposed solutions. Similar systems have rolled out in england and canada. The veteran ceo is a pioneer in another industry that has an automated, the world of investing. Hes one of the leading robo advisors, trying to beat the market with lower fees. Great to have you on. You guys have seen terrific growth in investment. Still leading the world over wealthfront and others. On you haveomes this big competition coming in from the likes of schwab and vanguard. Its been tremendously validating to see the quick adoption and fast growers from the traditional industry. We always said from the moment we launched in 2010, if we were successful in building the future of financial services, we were going to have lots of competition because everybody is going to have to do this if they are going to want to compete. We think everything is changing, the way everyone managed their money. Of course all these Big Companies are getting into it and it is validating that they are. As they enter this space, we seem to grow faster. After schwab latched we grew 30 faster. Helping to educate the market about what we are doing is helping us to grow faster. We have grown 300 in the last year alone. Cory the question has been how you guys deal with a down market. There is a report in the wall street journal that said you guys shut down trading for a couple of hours during the financial turmoil postbrexit. Tell us what happened. I love this story. Because roboadvisors are hot and because brexit is a big story, people are talking about this. Intelligentlyade for our customers. Every day we weighted the market open and hesitated the market closed so we could get good execution for our customers. We are always not trading about 60 minutes a day. Because of the chance for Something Like the flash crash we saw and protected our customers against last august, we turned up trading for about 160 minutes. It was really good for our customers that we did that and its great now that the media is surfacing that this service we have been providing to our customers all along. Cory so you have always not traded for 60 minutes at the close or the open . Thats right great if you ask anyone about how to trade etf, experts always say those are dangerous times to trade. We have our inhouse experts we are always consulting and optimizing the way betrayed. Benefit. Unique other robo advisors dont do this, didnt do this, and we protect you better. Cory trading well is great when it works. Beding in those hours can profitable, thats why most of the trading happens in those 2 hours. Our investors are not trying to actively turn the market great we are not etrade. We are not the place you go to get market time. Our customers are longterm investors are it they want to buy, hold, invest in major goals of the future. This is the way that the vast majority of americans want to trade. They dont want to have to worry about getting murdered in a flash crash, which is what happened to a lot of people on august 24 when they traded at the open. Its interesting thinking about what happens and the argument that you guys are attracting maybe younger investors with less money, but when schwab and vanguard open up their robo advisors, all they are doing is shifting from a higher fee environment to a lower fee environment, effectively lowering the of those companies. Date of the same way you are describing. It seems incumbents are effectively shifting some of their clients to different forms of charging lower fees. Weve always said this is a product for everyone. There is a misconception out there that maybe most of our 2 3omers or millenials of our assets come from customers who are older than age 35, Something Like 30 of our assets come from people who are 50 . We have built products like retireguide and Retirement Income and continue to invest in products are younger and older younger and or older customers. Average account is 28,000 and we have 4. 80 in dollars total assets 4. 8 billion total assets under management. Thank you very much. That does it for this edition of bloomberg west. From our studios in new york city, this is charlie rose. Charlie we begin this evening with the Terrorists Attack in turkey, three suicide bomber is injured over 40 people and injured killed over 40 people and injured over 1200 people 200 people. The Prime Minister Ahmet Davutoglu said that isis was responsible. These three people captured just before one of the blasts tour through the main airport. And one attacker is captured in these shaky images ce