To let transgender students use bathrooms and locker rooms consistent with their chosen gender identity. The ruling applies nationwide through the judge said federal officials failed to follow rules requiring an opportunity for comment before such directives are issued. German chancellor angela merkel, france holland and matteo renzi promised to increase joint European Security efforts in the wake of terror attacks. Supreme leaders spoke aboard a aircraft carrier. I am mark crumpton, this is bloomberg. Bloomberg west is next. This is bloomberg west. Coming up to my tech takes charge. Why the sector is exerting more control in u. S. Markets than at any other time since the. Com bubble. This is going ecommerce start up behind the great wall. They cut a deal with alibaba to give amazon a run for their money. And chinas big plans for the advertising aid. Media. That is the latest to be snapped up by chinese investors. The ceo joins us later this hour. First, to the lead. Tech stocks exerting more control over u. S. Markets than in any other time since the internet bubble. The largest tech stocks, were talking microsoft, alphabet, this split, amazon, seeing massive multiyear rallies. That is closest to its widest ever. We have more. Break it down with me. Exit is getting to be about 21 . When you look at the magnitude in terms of how much the percentage changes, it is relative to the rest of the market. It is picking up a bigger slice so you are looking at 21 . You can see that in the white line with the infotech. Obviously the biggest one right now. Compare that to Something Like financials, it has been flat for that group throughout this recovery. The tech stocks have led the way. It has been a bit of a turnaround in the earnings reports, where tech has been leading so you are looking at 20 , 14 or 15 for the financials. Those are typically the biggest groups. You can see how this compares. This level we are at four tech is a bit higher than it has been. Nothing quite compared to where we were in 2000. I want to bring up another chart here that is interesting. Looking at the sale story. There is this is a function of market cap. Market cap is shares in price. At the same time you have to think about what is going on with them of its big leaders. Amazon, facebook, google, microsoft. Some of the companies that have been leading the charge in terms of that market cap expansion. This shows the diversions that has shown. Valuations are high but part of the sobriety of this rally has been the fact that there are still pretty low valuations and some of these big companies. The you look at microsoft, google, they are getting back to ratios down to it as closer to zero. You have an s p average of about three. There is not quite the same exuberance. Maybe that is why investors are that he this rally and not too concerned. Remy a lot of people got caught in the. Com bubble. This is basically the story in one simple chart. You can see what was going back in 2000, 1999. The top panel here is the tech sector in the white. The price to earnings in the past 12 months versus the s p and blue. This is pretty amazing. The spread is at the bottom. Look at how high tech stocks were valued. Not even come to what we had today. You have 20 to 21 pe in the tech as well as the s p. Things are blown out of proportion. It accurate to thousand, you have tech stocks trading 80 times 12 month earnings and it was building, hard to know when you hit that top that we will youve see that flat line, basically the same and i have one must chart that is showing the same principle. This is looking at those earnings so boiling it down a little more acutely when you look at profits. This speaks to the idea that rings are pretty highly valued in some areas of tech market but nothing incredible especially when you think about whether or not earnings can provide a backstop. The blue line assuring you that tech Earnings Growth eps this is what we have been following the last year. We have not gone anywhere but tech is still up, up 25 since the start of the bull market. That earnings backdrop gives people encouragement and whether things are blown out of proportion. Reny the nasdaq and the s p tech sector have been up 23 . Some amazing numbers there. Turning out to asia. Alibaba has been adding social features to its mobile app to attract younger customers and get them to stand the app longer and entice them to spend more money. That strategy may be paying off. Active numbers jumped and mobile revenue is up to two and 6 billion in the june quarter. People are visiting the app more than seven times a day spending over 25 minutes in total. Compare that to nine minutes on amazons mobile app or 16 minutes on twitter. Some interesting stuff here. How were they able to do this . Celine they started with a simple app but it has evolved into something much different from what we think of as typical as ecommerce. Amazons stats are much lower. They have this very young base of users and to hook them and they need to add all the social features. A conjoint one of over 1000 special Interest Groups, you can watch live feed from your favorite blog or testing out your favorite makeup or read your favorite news feed. That is what keeps them coming back for more. Reny it seems like the numbers are not playing out on that just yet. Definitely an envy. What is the disconnect in terms of the companies . Celine facebook has tried to get people to shop and insight, they have added the buy button. Same thing with twitter and interest and amazon has not made any major inroads into social network. There is a host of reasons why there are these differences but the main one is china has his enormous base that is growing and they are used to the extremely cramped interfaces. To a typical western Smartphone User it would be overwhelming. So because of that the chinese ecosystem these companies have an able to put everything altogether, you can look at reach out, social message, book a taxi, get a haircut. That is why it has been hard to change the habits of the u. S. Consumer . If they want to put everything up against the wall to see what sticks it is helping there. I do want to bring up a quote that you had from the cofounder of alibaba talking about his comparison with facebook. He said on facebook you are friending your friends but they start with strangers and use data to find a commonality of interest and create a community. Do you think in the west that that could make traction . Celine he is saying the ecommerce site has all these data points. They are able to group people into what you buy, what you like, creepy. That is why there are these forcing special Interest Groups from fishing or Wedding Planning or baby planning. In the u. S. Amazon, they have not really try to do this. They said they would have to change habits. I am used to going to facebook to talking to my friends and going to amazon to why things and going to twitter to look at news and tweets. It is hard to change habits and it will take more years to be comfortable social networking and on other types of apps. We do know that they have invested in snapchat. He does not want folks to know that. There is another road here. He says we do want to learn and understand how snapchat is engaging with young users. We are intrigued by the product and impressed with evan steele, the founder and we want to be partners was with him. Why does he not want people to know . They do not want to comment. They know the u. S. Media, we are all over this. Alibaba and septet, tell us everything. They do not want people speculating. Alibaba is a super longterm oriented strategy. Most of what he said was off the record but what i can say is they really are looking to see what septet is doing, how they are able to hook in all of these young users in the u. S. And maybe five, 1015, even 20 years down the line all of this knowledge they are gaining from the u. S. Investments are going to pay off when it comes full force in the u. S. Thank you. Now to todays revolving door in tech. Tableau has a new ceo. Succeeding the cofounder. He comes from the Cloud Computing division of amazon. Shares sparked spiked 5 but it is a small recovery for the embattled stock. It had 42 through mondays close. Tableau is trying to transition its Software Tools to a cloudbased substitution model and is grappling with slowing sales growth. Coming up, asias internet giants may be scrabbling to diversify but j. D. Coms laser focused on retail. We will talk strategy with the cto of chinas secondbiggest Ecommerce Company next. Indias biggest ecommerce startup is heating up not in a good way. We will focus on the internal turmoil at flip cart later this hour. This is bloomberg. One story we are watching. Regulars say there is a huge difference in the value it places on its intellectual property depending on whether it is in europe or the United States. In europe amazon claims the i. T. Behind its went shopping platform is immensely valuable. It does this to justify the billions of dollars in taxfree revenue it has collected since moving its affect assets to luxembourg. Authorities on both sides of the atlantic are asking questions with the virus telling amazon it owes 1. 5 billion in back taxes. Amazon maintains it is following the law and has sued in response. We are expecting a decision this fall. China is one of the hottest markets in the world for ecommerce. Annual Online Shopping volume made double to more than 1 trillion by 2018. One company poised to capitalize on that is j. D. Com. This is chinas economic is ecommerce operator behind alibaba. The company struck a major deal with walmart agreeing to buy its walls are its website. Joining us now from San Francisco to discuss how the finches company is positioning itself is the chief technology officer. Jd. Com is stating on its core retail, we were talking about alibaba moving into the cloud and social and entertainment. Do you see any change similar to alibaba in the near or midterm future . First, thank you for having me. We have [indiscernible] the largest social Media Company in china. Over 800 million chinese users use it every day. 50 of their time are spent and the ecommerce platform will integrate right in. You do not need a jd account. You can purchase a product and that will pay. 50 of new users were [indiscernible] lets talk about strategy in terms of jd. Com relative to alibaba and other competitors. What makes your strategy better question mark if i were an investor why would i want to invest in your Company VersusSomething Else when other companies are expanding into other areas . Guest we have the Largest Online [indiscernible] in china. We have 234 warehouses across china and over 6700 delivery stations. We provide the same day deliveries to all major cities in china including second day deliveries. 85 of orders last year or delivered within the same day or the second day deliveries. This is a tremendous speed and service is tremendous asset for us and also we are [indiscernible] that is an area of concern. What we see is a shift in chinese consumers is moving away from price being the primary consideration when going Online Shopping. And authenticity and service became more important today. In june we talked about jd. Com what does jd. Com see in terms of that deal . We are collaborating and continuing to build the brand in the business. We were launching a [indiscernible] on jd. Com. We are pursuing online to offline initiatives and we will [indiscernible] to improve our product selections for our users from china. Is the company considering any other kinds of partnerships or similar deals there . Chen we are always looking at how to service our customers better. Leveraging each other supply chains will be important to improve product selections. Next walmart gets a 5 stake because that deal. What is the benefit for walmart here . Chen walmart is participating in ecommerce in china. As this we are always looking at innovating and adapting to everchanging user needs. This is the strength of a local company. And walmart can participate in that fastgrowing sector. Just earlier today for its cannot with an article with the headline, saying that i wanted to get your thoughts on that. Tencent had bought shares and today it is more than 21 . Do you think jd. Com would be open to a take over there . Tencent always see the value of jd, has confidence in jd. To execute and deliver the height Quality Customer service. We have always had a Strong Partnership with consent and we believe it is a winwin for both companies. Lets talk about the future of ecommerce. We are talking about amazon with their drones buying up their own planes to get their products across the country and around the world. What is your forecast for jd. Com, any the in the drone region to . Yes. We have today most of the participation is not participating in ecommerce and china. The cost is five to six more times times more expensive than cities. What were doing is using our drones to deliver the product and packages to the villagers and lives we have we have over 100,000 chinese villages and from there the customer can pick up the goods or their representatives candidate or the goods from there. We are not going to deliver the package to individual customers. We had a Pilot Program in place to deliver packages to will customers. In the median term we intend to rely this program to more areas in china. We will leave it there. Thank you for your time. Still to come, we will continue with asias fastchanging ecommerce landscape and dig into the serious going pains growing pains at flipcart. The city is gearing up to be the testing ground for a fleet of self driving ubers. This is bloomberg. The rally in chip stock is taking on historic dimensions. Up 20 following the eighth straight weekly game. If that rally continues it would be the longest such streak since 1995 create all this is the Broader Market remains flat area at this rally is a sign of economic strength somewhere to the growth of Railroad Stocks about a century ago. That has boded well for future stock market performance. And shares climbing to the highest us year after japans run asus electronics the talks may not end in a deal. It is looking overseas for r d acquisitions. Coming up. Selling itself to a group of chinese investors were 900 million. We will hear from the ceo and founder of media. Net. You can now listen on the Bloomberg Radio app and on sirius xm. This is bloomberg. [ clock ticking ] time. You only have so much. Thats why we want to make sure you wont have to wait on hold. And you wont have to guess when well turn up. Because after all we should fit into your life. Not the other way around. Everything is cool when youre watching a screen everything is awesome, when youre sharing a meme a voice remote, show me angry kings you know whats awesome . Everything apps that please, more selfies, endless hours of the best tvs brand new apps, shows to go, awesome internet thats super whoa. Everything is awesome xfinity. The future of awesome. Energy stocks are taking a hit across the region with the hang seng falling the most in a week. Petro china is leading the retreat in hong kong, with oil extending its biggest losses early august. Won is rebounding and emergingmarket currencies on further hawkish comments from the fed. Energy prices taking on earnings as well, oil posted an 89 fall in firsthalf profit. Oil prices dropped 27 on the year, while lng tumbled 40 . Petrobras crashed in the second quarter, with revenue down 21 . To exchanges are likely allow Voting Rights for certain companies. Applicants will need to meet artain requirements on similar proposal in october after a position for regulators. Global news, 24 hours a day, powered by over 2600 journalists in more than 120 countries. This is bloomberg. Lets get back to the latest on the market with david ingles, checking things out. How are we looking . Point, what is very interesting is that we are still budgeting and we are trading have a look at the big movers across the region, Online Gaming stocks hammered again. Is leaningagency toward Standing Firm against the offer of one of its bigger shareholders on donating its shares. Exchange. We will see. Shipping, a lot of optimism on the restructuring rent that it is planning to submit. The hanjin Umbrella Company as well. Ono, drug cancer treatments. Asian equities looking mixed. This is across japan, malaysia. We are seeing a fallback, 45 of talks on the way down. Im not going to say it is very interesting there is nothing happening, but we might get something in 15 minutes. Have a look at the yields. They almost fell below zero. The last bid to cover, 98. 2. Ramy this is bloomberg west. A group of chinese investors says it will pay 900 million for startup media. Net. The deal to acquire the company, which provides technology to power ads, may not be as cut and dry as it first seemed. The consortium has plans to sell the company to beijings miteno communications in a move that closely resembles a reverse merger, where a private Company Takes over a public one then bypasses the formalities of an initial public offering. Joining us to talk about the deal is founder, div turakhia. First question of all the companies in the world, why did you decide to sell it to a chinese one . Firstly, thank you for having me. What an exciting journey it has been for us. This process got started around the end of 2015. We got interest from a u. S. Listed company. We had been building this company several years. We started in 2010. We decided to hire bankers. In the process, we got incredible amounts of interest, seven bidders in the final round of the process. We decided this one made the most sense for us. They had the right combination that we were looking for. Ramy what was that right combination . What were you specifically looking for . We were not looking in the first place, right . We wanted to continue building this business. With this particular opportunity, we got the opportunity to keep growing the business, the ability to get upside in various different structures that we can work out with the consortium. We get access to additional markets that we would never have gotten access to. It is the worlds secondlargest advertising market. This year, it will be a 40 billion plus market. Next year, it is expected to grow to 50 billion plus. Right now, media. Nets revenue comes almost entirely from the u. S. A small percentage comes from canada, the u. K. , and a small percentage from the rest of the world. We thought this would be great for the company. Without the right local partner in a country like china, there is absolutely no way you could actually scale in local relationships. Local relationships will allow us to leverage our technology and grow in a large market. At the same time, less competitive than the u. S. Ramy the deal was structured a bit unusually, some would say. Others would say a little more bluntly that it looks like a reverse merger. I want to give you the opportunity to comment. What do you say to people who say it is a reverse merger . In a reverse merger, we would get stock off the public entities. That is not what is happening. There is a reason this transaction is structured this way. Miteno wants to transfer to a global and scalable business. They have the plan and the funding lined up. But as a public company, it is a timeconsuming process. If you are in a Competitive Bidding process and have to go through a timeconsuming regulatory process in parallel, there is a good chance you will not make it. This was a competitive process. The only way we could have done this was this particular structure where they start a consortium, get funding into that consortium by media. Net entirely, and once we get the Regulatory Approvals in china, it will become part of miteno. In a reverse merger, you have the private Company Getting shares of a public company. That is not what is happening here. Ramy last year, china made a call for more investment into the ad tech space. Some see it potentially as saying, we need help. Can you walk us through how far behind the ad tech space is in china compared to the United States . That happened for a couple reasons. Online advertising as a Global Business is a massive business. Even at that size, depending on what reports you read, between 160 billion and 200 billion this year and growing. In china, it is growing faster than the other markets. China is, because of the natural hurdles that exist to enter the market, especially for foreign countries, it is less sophisticated. It is behind the u. S. It will be a year or two behind the u. S. , maybe more. At the same time, it has a unique set of challenges. The china mandate may not just be to grow within china, which is obviously great. The china overall mandate longterm is you will see an increase in Outbound Investments from china for companies that are global, that have lots of scale, a real Business Model that will be longterm sustainable. That is what miteno and chairman zhang want to do build a Global Business, not just a china business. The goal is to not only add china as a market but double down on u. S. And european challenges. Ramy you are a serial entrepreneur. What is next . My plan is to continue with these guys. That was one of the primary reasons when we had several options we had options from the u. S. , europe, and china. The highest u. S. Bid was about 20 . The highest u. S. Bid was from a wellknown p. E. Fund. P. E. Funds would want to discount the value they could givebecause they need to make upside on their exit. From a value standpoint, we thought we were at the same point. The primary differentiator was all these different value adds in terms of being able to access additional markets, get access to incredible talent that exists in china, be able to access the capital market, and look at deals of various sizes. Across the next few years we have completed our first phase. We have had a great journey in this first phase. As we enter the second phase of growth, we expect to multiply the business from where it is today. I want to be a part of that. I am going to be a part of that. So is the rest of my management team. We are going to get lots of autonomy, and we have a lot of upside we can work out in various different deals. Ramy media. Net founder and ceo, div turakhia. Congrats again on the deal. One of chinas most popular selfie app makers is planning a public a view. Meitu aims to raise 1 billion in a listing on the Hong Kong Stock Exchange sometime in the Fourth Quarter this year. That is according to sourcing by the wall street journal. In april, meitu was seeking valuation on the private market of more than 3 billion. At the time, the app had about 270 million monthly active users. Coming up, we will focus on flipkart as a downturn in funding hits the ecommerce giant especially hard. This is bloomberg. Ramy indias largest Online Shopping service, flipkart, is feeling the heat. Its regular town hall grew tense on friday after employees accused management of betrayal following hundreds of job cuts. Chairman Sachin Bansal said the job cuts stemmed from poor performance, saying he lost his own title for the same reason. The pressure is on from amazon. Joining us from tokyo is bloombergs peter elstrom. To what degree does flipkarts problems showcase the general issues in tech in india . It is a broader issue. This is a very dramatic meeting, as you mentioned. Flipkart has gatherings with employees once a month. The cofounders have the opportunity to discuss issues that come up. This particular one grew quite tense because employees were upset that many colleagues have lost their jobs. They had come to the company hoping they were on a growth trajectory. Sachin bansal was frank with them about how they missed performance targets and needed to do better. The reason he lost his ceo job was because of performance targets. He is still chairman, but that was a frank admission that drew applause from employees. Ramy to what degree is it an issue of funding . Funding is drying up there. It is a broader issue. There are two things going on in india. There was a boom in Investment Capital in 2014. You are seeing that taper off quite a bit. It is squeezing the startup sector more broadly. The challenges for flipkart are more intense because of the targeting of amazon into the india market. Amazon has said it will spend billions of dollars hiring employees. It is marketing aggressively in the market. It wants to take a big slice of the ecommerce market in india. That puts pressure on flipkart. Ramy what would they specifically need to do in order to take advantage of flipkart turning over . Well, the market is growing very quickly in amazon. The Retail Market in india is quite fractured at this point, even more than the u. S. You need to be able to not just sell goods reliably and get them to customers reliably. You need the infrastructure in place to capitalize on that growth. Amazon has lots of experience in the u. S. And has done reasonably well in other markets, but this market is unlike any other they have competed in. Ramy how can Flipkart Mount a response to amazon . Can they . Flipkart has an advantage here. They are ahead at this point. They also have domestic knowledge that probably works to their advantage in terms of language, customizing apps, recommendations make a big difference, too. They have a bit of a lead, but they need to continue to innovate, expand geographically, and add more merchants to stay ahead of amazon. Ramy peter, stay right there. I want to get your take on another story, china smartphone makers with their sights set on the u. S. Do they really stand a chance . Shira ovide is not so sure. She joins us right here in new york. What is the take away from that piece . The takeaway is we have seen in recent weeks a number of chinese handset makers saying theyre going after the u. S. Xiaomi and huawei are going to go after the u. S. With highend smartphones. The battle should be really interesting. Ramy the interesting part is in terms of specs . Pricing . How can apple and samsung defend themselves . Apple and samsung in the u. S. Divy up the market. They have outsized market share compared to the rest of the world. The thing that is interesting about xiaomi and huawei is they are making highend phones for not highend prices. Kind of an 800 topline price we have come to expect from samsung and the iphone. Ramy with xiaomi, hugo barra was on bloomberg recently talking about their strong intent to get into play. I want to get into a little of that. We will lead with channels that allow us to get in touch with a young generation that is enthusiastic about technology. Definitely going to make our way there. Ramy do you think xiaomi will be able to break in . Huawei will have a better chance. They have incredible expertise in telecom and chips which has allowed them pricing advantage which xiaomi does not have. If anyone can make inroads, it might be them in terms of chinese handset makers. Ramy peter, i want to bring you in. What is your take on what is happening with chinese and u. S. Smartphone makers in terms of them trying to get in there . I think the chinese smartphone makers are going to have a hard time in the u. S. Market for a couple of different reasons. I think, first of all, you need to think about which of these companies is going to be able to aggressively moving to the u. S. Xiaomi is using a Business Model that has historically not worked in the u. S. They are trying to bypass carriers without subsidies. U. S. Consumers like to get that subsidy when they sign up for a contract. Selling to them directly online has been tried in the past and it never works. In terms of huawei, they have some technology advantages. They jumped to the top of the chinese Smartphone Market quickly. But the name sets off alarm bells in the u. S. For a variety of reasons, not all of them necessarily wellfounded. U. S. Carriers are not going to support huawei coming to the u. S. And a big way and give them the subsidies to take market share. When you look at the other players in china, those companies do not have ambitions to move into the u. S. Market. Having said that, the u. S. Market is tumultuous. You have seen tons of change. Apple and samsungs dominance is a bit of an anomaly. Ramy i want to get your thoughts on criticisms about xiaomi. A lot of people are saying it is an allout copycat of apple. Do you think this has any legs to it . Historically, xiaomi had i. P. Problems Getting Started in china. They did not have the i. P. Other companies had. That has changed. They went to microsoft, which bought the Nokia Smartphone business, and they bought a ton of patents from them. They will be able to defend that. At industry gatherings, you need i. P. To defend themselves. Their Business Model is a problem. Ramy any thoughts of threats of lawsuits if they come to the u. S. . It will be interesting to see if there will be an i. P. Battle. We have seen the smartphone wars on the patent front cool down from the days when apple and samsung seem to sue each other everyday. Ramy thank you very much, shira, and peter. Coming up, what happens to one of the greatest basketball players of all time after he retires . We will tell you about kobe bryant Venture Capitalist, next. Ramy niantec had a big july thanks to pokemon go. According to new numbers, niantec recorded more active u. S. Users in july than snapchat, twitter, or pintrest. These numbers are good enough to put niantec in eighth place in the category. It remains to be seen whether pokemon go can keep these users engaged longterm. Data shows a decline in engagement. Daily active users have been in a slow decline since they peaked in midjuly. Another story we are watching. Kobe bryant is an 18time allstar and the winner of five nba championships. He is adding Something Else to his resume Venture Capitalist. Bryant has teamed up with investor jeff stibel to launch a 100 million fund called bryantstibel. The two have worked together in the past, having made 15 deals with Companies Since 2013. They team up to create a Los Angelesbased fund that will focus on tech, media, and Data Companies and expect it to last the next few years. We will see if he is as successful at Venture Capital as he was at basketball. Time to find out who is having the best day ever. Instagram. The app has joined the exclusive one billion download club on google play. Instagram is the 19th app to do this and the fourth owned by facebook. One thing to keep in mind, the download counter does not differentiate between unique installations, meaning one user could be responsible for multiple downloads. This is not an easy feat when you consider android itself only had 1. 4 billion users as of september 2015. That does it for this edition of bloomberg west. Tomorrow, do not miss our exclusive interview with the cofounders of reddit, Steve Huffman and alexis ohanian. This is bloomberg. Oil is down again extending declines after the biggest lost loss in three weeks. We are waiting on inventory numbers. Rishaad trading volumes are thin across asiapacific as investors choose to sit this one out. Ended a deadas saga a debt saga. Rish