Transcripts For BLOOMBERG Bloomberg West 20160826

Warn about refugees are not islamophobes. Theyre not. Mark in italy, rescue crews continue the search for survivors following yesterdays devastating earthquake. At least 250 people were killed. There were more aftershocks today. Former fifa president sepp blatter is appealing his ban from football. He pledges to accept the verdict of the court of arbitration for sport. Blatter denies wrongdoing in authorizing a twoyear 1 million payment to former fifa Vice President michael plantini in 2011. From new york, i am mark crumpton. Bloomberg west is next. Emily im emily chang, and this is bloomberg west. Coming up uber burning through , significantly more than 1. 2 billion in the first half of the year. We will take you through the unprecedented losses. From the companys latest investor call. Plus, driverless car tech may be racing ahead, but who is writing the new rules of the road . We will hear from the u. S. Secretary of transportation about self driving regulation. And, could someone hack your pacemaker . We will take a look at the security vulnerabilities of medical devices and a bold new call from carson block. But first to our lead mounting , financial losses at uber. On a private Conference Call with investors, head of finance good to gupta explained that uber lost more money in the Second Quarter even than it did in the first, totaling more than 1. 2 billion in just the first half of the year. Uber turned a profit in the u. S. In q1 but lost 100 million in the u. S. Into two. In the Second Quarter alone investors were told losses , exceeded 750 million. And uber has lost over 4 billion over the course of its lifetime. But with more than 16 billion already raised in cash and debt, how big are these losses . Here to help us break it down, these possibly unprecedented numbers our Bloomberg News uber , reporter eric newcomer. Great job, eric. It is growing fast, but it is losing faster. How worried should we be . Said, uber has a lot of money in the bank. They have 1 billion in cash. They have a credit line of 2 billion and 1. 2 billion in loans. They have the money. It is a matter of when can they turn around their burn rate . It is something they can do, but the question is whether it will be as big of a business as it is today if they have to pull back on their losses. Emily where are these losses coming from . Is it china, is it subsidies . Eric it is definitely subsidies. China mostly. In two years, they have lost 2 billion there, especially in the Second Quarter. They were getting ready to negotiate with didi to cut a deal. They had every incentive to get as much market share to say, we deserve this bigger stake in your company because we are a bigger stake of the market. And so they were going full tilt in china. Emily and these are subsidies in china. Can they remain competitive . Eric when they are competing in a market with another player, drivers are super pricesensitive. Anyone in san francisco, new york where lift and uber are competing, you can sort of see drivers with both apps. So, you have to make sure youre giving drivers the best pay if you want them to work for your service. Emily so didis going to get uber 1 billion for its china business. Im out with these losses change or subside how much will these losses sub side when uber is no longer in china . Eric it is hard to say. Just the First Quarter of this year, uber was profitable in the united states. Now it is losing 100 billion. Uber can really change its rough and ability by saying instead of , 20 from bookings from drivers we will only take 15 and all of , a sudden things skyrocket. Without even knowing what they are sort of goals are the next quarter, it would be hard to guess exactly what is going to happen because the environment is so fluid. Emily now, another new number in your reporting is that the valuation is 69 billion. That is up from 62. 5 billion, which is already eyepopping. Explain that number. Million is what is called the premoney evaluation. Then you get all of this money, you add it up and then the postmoney valuation for a while, uber was spending at 68 billion. Didi invests another 1 billion. We end up at 69 billion. The first post valuation. Emily my favorite part of your story is where you talk about whether or not there is precedent for this, and its hard to recall a company that lost this much money this fast. You mentioned amazon never lost more than 1. 4 billion in 2000. That was a lot 16 years ago. ,eric and they laid off like 15 of the workforce. Emily is there any precedent for a company to lose this much money this fast even if it has this much potential . Eric right, you know, i went around and emailed a bunch of academics. We cannot figure out a lot, but a lot of people pointed to amazon. I looked at cosmo, the dot com era of lost phantoms. Together they only lost 1 billion. Even if you look at public chip makers, it is hard to find companies that have invested quite as much as uber. So it is really hard. And of course ubers not buying , big manufacturing facilities or anything like that. They are spending money on subsidies that go away after they have spent them. So it is really unprecedented, but it has the ambition of amazon where it is like we want , to build this huge network. Then we are going to turn on the profit. Emily they also have their projects, Driverless Cars. Launching in pittsburgh this month. Eric newcomer, great reporting. Thank you so much. Keep it up. We are going to have much more coming on the future of transportation in our interview with secretary of transportation anthony foxx later this hour. Another story we are watching, apple is working on a video sharing and editing app as the Company Looks to catch up with snapchat and facebook. They have already developed successful social media platforms. The news comes at a time when apples hardware business is slowing. Tim cook is turning to the Services Business as a way to generate more revenue. I want to bring in a reporter who broke this story. Mark, explain how this would work. Mark apple sees that lots of users are really hooked on snapchat, facebook messenger, twitter, instagram, and they want a piece of this pie, this big social media and social Media Network industry. They are creating an application to allow users, and to do this the goal is to do this under one minute, to record something, edit it with filters and then be able to upload it and send it to any existing social network from within the app. They are basically entering this as the content creator which will really push the iphone to a new generation of social users. Emily is that in competition with facebook and snapchat, or would it really be competitive . Mark i would not say this would put apple in direct competition with snapchat and facebook, but it would put apple in competition in terms of eyeballs. In terms of looking at these programs really important. How many minutes a day people spend in each of these applications. Snapchats latest numbers indicate that people spend 50 minutes a day in the application. So if apple can get those eyeballs, even a few minutes from snapchat, they are still going to have many more monetization opportunities. And on top of that it really , pushes people to buy these products if they like the applications compatible to the iphone. Emily how much revenue could this actually add to the Services Business . Obviously this good increase engagement, increase interest in the actual hardware, but what about that Services Business that tim cook is trying to grow . Mark right, so the Services Business grew 20 yearoveryear in the previous q3 quarter, netting 6 billion in revenue for this past quarter which is a big increase in the Services Business than prior years. We will not know how much this application, if it indeed launches, will affect the revenues of services until we know how they monetize it. The application is an Early Development within apple. I do not even think they know exactly how they want to make money from this product yet. Emily when might we see this, mark . Mark right now the plans call for release sometime next year in 2017 as a standalone app to download from the app store. Were preinstalled, but it is to be seen if apple ends up launching it. They have created applications in the past to kill them and development. We will see how this goes. Emily and last question, i know you said they are not necessarily going to be in direct competition with facebook and snapchat, but these platforms already have well entrenched ways that users get their video up on these networks. We have seen, you know google , try and fail many times to get into social networking. Do you think it is too little too late for apple . Mark you know, i think it is too little too late for apple , but what they bring out is nearly identical to what every player is doing. But the design, this application is focused around being able to record a video, edit it, draw on it, ship it anywhere to friends all under one minute. The goal to be able to do this onehanded, making it quick and easy for users. So we will see if apple is able to reach that goal. Emily all right, looking forward to seeing it. Mark gurman, thank you so much. Mark thanks. Emily well, gamestop shares are taking a big hit in afterhours trading. The video Game Retailer posting a sales decline of 10 . The Second Quarter is typically the slowest of the year for games. But that number was steeper than the maximum 7 decline. Gamestop has been trying to reduce its dependence on physical game sales. More players of buying products online. Coming up, the unorthodox pairing of a team of hackers and one of wall streets most respected shortsellers. We are talking about the complicated ethics of carson blocks lifechanging short next. This is bloomberg. Emily renowned short seller carson block has set his sights on a new target, st. Jude medical. The Muddy Waters Research founder warns that tens of thousands of americans are living with ticking time bombs in their chest. Pacemakers and defibrilators that can be easily compromised by low level hackers. And in a nightmare scenario, could be tampered with to match launch an attack on users. Holdings studies security flaws in medical devices and found that st. Judes stood out in a bad way. St. Judes stock sunk on the news, part of what he wanted. Erik schatzker sat down with carson block for an exclusive interview and asked about the ethics of publishing information that could be dangerous in the wrong hands. Carson somebody might make the argument, well, if you kept your mouth shut, everybody would be safer. What they really . Statequite possible that actors are aware of this already. We have to be more concerned with nonpaid actors. I mean, we believe that the balance of interest is clearly in informing people of the risks and holding the Company Accountable so that something can be done. I do not believe that sticking ones head in the sand and pretending a problem does not exist and hoping nothing goes wrong i do not believe that is the ethical course of action ever. Erik why do it in a public forum as opposed to a private channel . Carson we do not have confidence that st. Jude would do anything to make patients aware of this. Erik how about the fda . Why not just inform the fda . Carson you know there is , precedent for, there is a researcher named billy rios who identified flaws in an insulin pump. He informed the fda, and he ultimately became very frustrated because nothing happened, and he went public. Now i think the fda, it sounds as though they are more concerned about Cyber Security , and they are more attuned to the risks, but ive never dealt with the fda. And again, we feel it is important that users know, and and we dont just necessarily have confidence in saint jude and maybe even some of the institutions of government that the right thing is going to happen. I mean st. Jude is a large company. I am sure it is very politically connected. It could bring a lot of pressure to bear on the fda if there was a private back channel discussion. I mean, this is just the real world here. We did not want to risk that. Erik how many people are at risk . Carson i meancarson , st. Judes the number of implantable device users, we do not know how many still have devices, but over the past, since 2008, looks like there have been in the u. S. About 1. 1 million of these devices implanted. And now that is including crts. I want to make clear, people really should read our report because there is important detail in there that we obviously cannot get into here. But one of the things that is an important caveat here is that medsec tested icds and pacemakers. Of the ecosystem, they can the same communication protocol roughly. Because of lack of device availability, they were not able to test of those, so the crt portion remains theoretical. Erik if the fda is not creating treating Cyber Security as a critical issue why should , investors feel any different . Carson so that is draft guidance which they have given industry time to comment on. It should largely resemble that. Generally over 90 of medical device recalls have been initiated by manufacturers. Now that is probably because there was the sort of sword of damocles where the fda says, you do not recall this, we will. So, you should look like youre wearing the white hat here. That guidance shows the fdas current thinking on Cyber Security, and is it is really important for people to understand that in that guidance, there is actually an example of an implantable cardiac device that is compromised, and where the fda says that ok, this would likely , rise to the level of, this would be an uncontrolled risk that would mandate some sort of remediation. So, based on that draft guidance, it is clear to us, our interpretation of the draft guidance, that the st. Jude implantable devices fall far below the standard established by that draft guidance. And when we say that we think there is risk of having to recall their devices, it is based on looking at that which does illustrate the fdas thinking on the matter. Erik ok, but as you point out these are Draft Guidelines and , they have yet to be finalized. We do not know necessarily what the calendar for that is. In the meantime, what reaction are you hoping for . What, at a minimum, needs to happen if your short is going to be successful . Carson look, there is what we hope happens, and there is what probably one happens. Probably happens. I have been probably shorting companies for six years. Very seldom have they ever said, you know what, some of this criticism is valid. So we are expecting to be told patient security is number one. These guys are shortsellers, they are looking to profit on the back of a price decline, etc. , etc. Erik dont be fooled by a wolf in sheeps clothing. Carson that is what they will say. They could take it seriously. They could investigate this. And they could without kicking and screaming recall the devices and stop selling them until they fix the problems. Erik ok what if that does not , happen . Carson we are hoping that the fda, which we are expecting to facilitate a dialogue between the fda and medsec, we are hoping that the fda says you , need to recall these devices. Emily muddy waters founder carson block with our very own Erik Schatzker there. Besides the ethics of possibly top tipping off malicious hackers to this vulnerability, there is the ethical question of why. Why they came to a short seller instead of the fda. Earlier, matt miller and scarlet fu asked the ceo to clarify her firms business arrangement with muddy waters. What we are interested in achieving here it is mitigations. We also want the consumers matt critics are going to say they are interested in achieving profitability for your company. You maximize profit first by going to carson block in publishing this short, rather than going to st. Jude first. Justine i believe that carson has a track history of holding Large Companies accountable. And that is why we are excited to partner with muddy waters. Not only do we want saint jude to be held accountable but to and to respond with urgency, but we want the patients and the public to be aware. The public has a right to know. About the risks associated with this bit of technology. And we felt very strongly that st. Jude medical were likely to shut this up and potentially do nothing. Matt medsec is for profit. You are first and foremost, this is a Business Model to make money. Justine we are a research company. We incur a lot of expenses in the process of conducting research. This is not lightweight equipment, this is not software only. Our lab has a lot of hardware. Of course we are looking to recover our costs. But our motivations here are to medical places accountable so mitigations can be done as quickly as possible. Keep in mind, that is not going to be a small undertaking because of these inherent vulnerabilities throughout the ecosystem. And to draw attention to the public eye so patients are aware of the risks associated with the technologies coming out of st. Jude medical. Stephen how do you respond to, or what do you think about the companys response . St. Jude says the allegations are absolutely untrue. Their chief Technology Officer says there are several and security measures in place. We conduct security measures and an ongoing basis. We work specifically on merlin at home and on our devices. Justine what i do know is that we found vulnerabilities across the ecosystem. We developed what we called proof of concept to demonstrate those vulnerabilities. To verify that they exist. We put together by chaining all these vulnerabilities together, we put together three different attack scenarios which we reproduced internally under controlled conditions. We have demonstrated to muddy waters, and they reproduced them as well. We have definitely verified the existence of these vulnerabilities that are used, that are present in st. Judes medical equipment that is being deployed today. Scarlet you are monetizing your research. You obviously have a business arrangement here with muddy waters. Tell us specifically how you would make money off of this by passing on information to muddy waters . Do you make money regardless of whether muddy waters goes through with this short and makes money off of it or is it only if the short makes money . Matt are you paid a fee . Justine we are paid on a fee basis and as consultants. Our compensation with muddy waters is connected to its investment. Emily medsecs ceo. Cyber Security Experts say the actual risk of hacks against st. Jude patients is mostly theoretical. There have been no publicly documented cases of medical devices being hacked. To cause patients harm. Pittsburgh,orget singapore is the first place in the world to achieve one important self driving car milestone. Details next. This is bloomberg. Emily two stocks were watching today. True car and autobytel plunging with bigtime rivals in the car website world. Amazon unveiled amazon vehicles which will feature reviews, images and specifications on thousands of car models. You can Research Cars on the site, you just cannot buy them there. Similar to other sites, its designed to complement amazons other marketplaces for car parts. And singapore has beat the rest of the world in the first public trial of driverless car technology. A small group of residents there can now hail six self driving taxis with their smartphones. It is a specially designated area. A startup called nutonomy is running the trial. It is in talks with three other Asian Countries as well as unnamed u. S. And u. K. Cities Holding Similar self driving taxi trials. Coming up, staying with car tech. Do not miss our conversation with u. S. Transportation secretary anthony foxx on how the government is trying to stay ahead of self driving cars and drone regulation next. You can listen on the radio. You can listen on the Bloomberg Radio app and bloomberg. Com. And in the u. S. On sirius xm. This is bloomberg. Top stories this hour, fed policy makers making the case for a rate hike ahead of Janet Yellens speech. The kansas city senator repeated that higher wages are needed with inflation on the rise. Should raise rates patiently and gradually. We will hear from him in a moment. A sixth prices fell for straight month in japan, keeping more pressure on the boj. It is further away than ever. Pressure onped more the boj governor corona. Kuroda. They consider a possible policy revamp when they meet on september 21. Dinas Biggest Bank Says bad loan ratio stopped carmakers from earnings. Boc, China Construction Bank of communications, they also said they had bad debt revisions because of regulatory actions in the Second Quarter. There is warning that it is too early to say the worst is over. Global news 24 hours a day powered by northern 2600 journalists and analysts in more than 120 countries. This is bloomberg. Lets get the latest from the markets and send it over to david. David just 11 hours away or a little under that from the eagerly awaited speech from janet yellen. We will look at how the yields are trading. Very high trading ranges for a lot of this, especially the 10 year. Japan is negative nine. Three or four basis points, so it is a tent basis point range. You look at the u. S. 10 year, more than 1. 6 , australia stock between five and ask. We are watching china given the changing money market tactics from the pboc in terms of injecting liquidity. Uneventful bond market. Fairly blinking. It looks like a lot of nothing. The u. S. Dollar, dollaryen, 100. 49. Euro telling the same story. Aussie dollar showing the same thing. A little bit of movement with offshore expectations, all of this cash on the pboc might perhaps move the needle as far as liquidity is concerned. Mixed volumes. Let me end with this. Ipos in china trading, there you go, very good day. Emily this is bloomberg west. I am emily chang. The race for Driverless Cars is heating up with automakers in detroit embracing Innovative Technologies from silicon valley, including self driving cars connected cars and smart , sensors. But one major question still remains. What are the rules . When we get that . Who is at fault if something goes wrong . The transportation secretary anthony foxx announced today that he intends to publish driverless car guidelines this summer. We sat down with secretary fox for an exclusive interview. Take a listen. Secretary foxx look, we are at the early stages of a revolution in transportation technology. And piloting these automobiles in real time is going to be part of how we learn how to make them even safer overtime. Were working on guidance through our department that will also, i think, help the industry understand what we are going to expect from a safety standpoint. This is a burgeoning area, and we are going to work hard to make sure everyone is safe. Emily so i know you said now that you are going to be putting out these guidelines by the end of the summer. What will those look like . Any concrete things you can share . Secretary foxx i have to let you wait for the guidelines. But emily what we are trying to , do is to try to lay out a framework that will make sure the industry understands the departments point of view and what our expectations are of industry. The states have played a significant role in regulating operations of cars. And so we are going to talk , about some of that. And we are also going to talk about how our approach may or may not change in some places where we think it may should change. Emily why just guidelines rather than explicit rules and for something that involves the lives of millions of people . Secretary foxx i think there will be rules and regulations to follow, but we are at the beginning point of a very quick revolution in transportation technology. For us, it is going to be very important to signal to industry and all the stakeholders where we are headed so that they can plan accordingly and as the rules come about, there will be more details filled in. Emily now u. S. Regulators are investigating the tragic death usingesla driver who was autopilot at the time. You really believe these autopilot features make us safer . If so how much safer . , secretary foxx i do. I think there are technologies that will do better. Right now we have, we have had 33,000 deaths on our highways last year. We want those numbers to go down. And some of the data tells us that autonomous and connected cars can reduce by as much as 80 of the fatalities and and accidents that occur on our roadways. This is a huge opportunity but it has to be done safely and it has to signal we are sending to the industry. Emily last month you alluded to premarket steps when it comes to self driving technology. What might those entail . again, we have to wait on the guidelines to come out. The problem we are trying to solve is that along with a Disruptive Technology of autonomous vehicles, connected vehicles, there is also the possibility that we get a wide range of entrance into the marketplace trying to build new automobiles. Right now we have a Self Certification system where the industry, automakers, they have standards they are required to apply those standards, but they actually selfcertify that they are meeting the standards. We do not actually find till after something has gone wrong where they have not met the standards. So our point is as we shift to this new era, we need to have a conversation about whether we should be doing Something Different on the frontend to make sure the vehicles are safe. Emily what are the negatives to self driving cars . Do you see any . Secretary foxx i think there are an awful lot of positives, but i think one of the things is that there are places that, where we do not know what we dont know. Part of what we are trying to do with these guidelines is to account for the fact that theyre going to be learnings that come about overtime, but we know certain things. We know that safety has to be thought about at the very beginning of the development of this technology. And manufacturers are going to have to have huge amounts of vigilance on that issue in order to prove to us they can meet standards. Emily how worried are you about car hacking . Secretary foxx it is a concern. It is a concern that we in government have and should have. It is also concern that industry has and should have. I think that automakers themselves individually are doing a lot to ensure the systems are safe. I would like to see the industry doing even more together to make sure that across the system, were getting great safety. Emily were seeing a lot of tieups between detroit and silicon valley, gm and lyft, googlefiat chrysler, do you have concerns about the Big Companies coming together around regulation . Foxx obviously you know i have to be careful not to , put my thumb on the marketplace. Its an interesting convergence of the technological edge with the conventional automakers. I think there are symmetries where folks are seeing on the technology side, folks out here arent as used to building cars and putting cars on the road which is a very complicated business outside of the leadingedge technology. On the conventional side, there are ideas out here being harvested and incorporated into vehicles all the time. So it is really not that surprising to see that trend occur. But i think youre going to continue to see a wide spectrum of entrance into the automobile market. Emily up until now the federal , government has focused on the safety of cars whereas states have focused on the safety of drivers. How will that change in this new paradigm . Secretary foxx that is one of the questions that i hope our guidance speaks to. Which now that you have the possibility of the car and the software working together to operate the vehicle, what should states, what should their role be in this new world . Frankly, i think that were trying to come up with a way for approvals to occur so that you do not have 50 different variations on how a particular Autonomous Car is viewed across the country, that you get sort of equivalence across the country. And that is something we are working towards, but i will let the guidance speak for itself. Emily now i know you guys are dealing with this tesla investigation. There will be more accidents as more cars get on the road. In those instances is the driver , at fault . Is the driver at fault if there hand was not supposedly to be at the wheel . Or is the company at fault . Secretary foxx right now there is some data that says that we could get as much as an 80 reduction in fatalities and accidents. I want to point out that 80 is not 100 . So we do understand that there will continue to be some level of accidents that occur. Hopefully, we can get closer to zero, but we are going to keep working at it. On the core question you asked, look we have got a lot of work , to do with the industry to be able to assure ourselves that we are getting the performance out of these vehicles we need. Emily have you been in a self driving car . Secretary foxx i have. Emily which car . Secretary foxx i have been in a google car. Emily what did you think . Secretary fox it takes a little getting used to. Im a bit of a control freak. When you are not in control, it is kind of hard. Emily when was that . Was it recent . Secretary foxx a couple years ago. Emily i want to talk about drones. There are so many drones already flying across the country. Google and amazon are testing commercial applications of drones. What are the challenges that lay ahead in regulating this industry . Secretary foxx you know with , drones, first of all there is , a huge amount of promise for commercial applications of drones, everything from agriculture to surveying the rail system to fighting forest fires. There is so much that can be done with this. I think the commercial uses of it are moving along quite well. Our rule that will take effect on monday of next week, august 29, will enable more commercial uses without having to go through our current application exemption process. Its really going to open the door to many, many more uses that commercial users can put to uass. On the other hand, i think as we have commercial uses, hobbyists, airplanes, like the integration of all those different uses into a single system is going to be the most complicated part of this. And is going to require all users to be vigilant. So we are working with the hobbyist industry to make sure people know where the nofly areas are, because we have had incidents around the country where that has been a challenge. And we are going to have to continue educating the public. Emily the Transportation Industry is changing quickly. How do you see drones potentially playing a role in the transportation . Secretary foxx it is interesting to think about. Will it take trips off the road . Will the Delivery Systems that some companies are promising provide us with a third way to move things that wasnt there before and reduce the number of trips that are taken on the surface Transportation System . Its an open question because, as we are asking that question, our population is continuing to grow. Well see. I dont know that we know that answer right now. But what i do know is that we are going to see uses of these drones that dramatically change our lives. The idea, for example, that when we are fighting a forest fire, there may be hugely dangerous places where human beings would be endangered by going to stop a forest fire, where a drone can now go in and do some of that work for us. Some of those applications are pretty exciting to think about. Emily i know you are also very focused on smart cities. What role do you see for startups and Big Tech Companies in shaping the transportation of the future . Secretary foxx i think this is a really huge opportunity for the Tech Community and for cities. Our cities are becoming even more dynamic as more population flocks into the cities. Transportation challenges are becoming more complicated, and the need for greater choices is increasing. And people want to be able to bike and walk and drive and ride a train or a bus or a light rail system or subway. I think the question for the Tech Community is, how well have you thought about the uses of all users . There is so many technologies now that require the use of a smartphone. But when you are a mayor of a city, and i can speak from experience you have to think , about the people who dont have a smart phone. That community is going to learn a lot about how to deepen the penetration of the technologies they are generating, and the more they are able to do that, i think the more they will find a ready audience in the cities. Emily u. S. Department of presentation secretary anthony foxx. Coming up, political campaigns are flocking to social media more now than ever. We will speak to the man behind president obamas winning tech strategy in past elections and discuss how snapchat is changing the game. This is bloomberg. Emily a story we have been following, alibaba is considering an ipo in hong kong in the first of next year. Have run into regulatory hurdles for a dual listing in shanghai. People familiar with the matter say a Mainland China ipo has not been completely ruled out yet. It controls chinas Biggest Online Payment Service alipay and was last valued at 60 billion. The u. S. President ial election is now just 90 days away, and both Hillary Clinton and donald trump are looking to social media to book their tickets to the white house. Both candidates have stepped up their spending on snapchat in the last month. The move is the first Significant National advertising spending on the platform for both campaigns. President obamas 2012 Reelection Campaign ceo joins me now here in the studio. I am so curious what has been going through your mind as you have been watching his campaigns of these campaigns unfold, knowing that you were the person in the drivers seat for the obama campaign. What that would be like if you were doing the same for hillary now. I have been paying a lot of attention to what is happening on the hillary side. I do not think i could have done as good a job as they are doing. I mean, we did a lot of neat things in 2012, but what they are doing in 2016 is unprecedented. Some of the apps they released recently an sms phone banking app. They are hitting all of the things we would expect in this day and age, social media, all of those. Emily both the clinton and Trump Campaigns are upping spending on snapchat. This is obviously a Popular Platform among millennials, but it would not be good because millennials dont vote. Is it worth it . Erik i think harper i think millennials do vote. They voted in 2012. We will have to see. This thing about snapchat, is that the narrative tool a tool to tell stories. One of the things we have seen in the hillary campaign, there is a lot of Great Stories she is telling about her success is and what she will do when she hopefully becomes president. Emily obviously, saying millennials dont vote was a gross exaggeration. If you are trying to reach them now, where would you be spending your money . Would you spend your money on facebook or twitter or snapchat . What is the most important platform . The answer to that question is yes. You would just be spending your money. You do not know what is going to work. If you look back to 2008, twitter was unproven. We did not know if it was going to work. No one knows if it did work. But in 2012, it was suddenly this thing we knew about or you so you have to always keep your eye on what is next. Not just what is next, but what is happening between the four years since last campaign. Snapchat, no one can deny they are where stories are told. Emily there is another survey out about tv ads. Hillary clinton and the clinton groups have spent 114 million on television ads. Trumps campaign and groups have spent 19 million. He is getting a lot of free publicity, but is that a smart way to not spend your money . Harper well i mean, i would prefer to be on the hillary side in this equation. Purely because emily you are saying it is still worth it to spend money on tv . Harper there is a lot of middle americans not on snapchat. There is a lot of sports fans not on snapchat. A lot of those people have tvs. It is important to reach into those homes. You look at the cool stuff we didnt 2012, we had to optimize. I have to imagine the Clinton Campaign is doing a lot to optimize those tv buys. That 140 million might be worth 250 million. The thing that is important is they are actually doing the work to get the votes. I just dont think the Trump Campaign is doing that work. Emily does it matter if he is on cable news all day long . Harper maybe. But i dont know. Emily because it changes the calculus. Harper i think it does change the calculus, but what we are starting to see his cable news is starting to react to all of the lying he is doing. It might blow up in his face a little bit. Emily if you were the cto of Hillary Clintons campaign, what would you be doing right now . How would you be doing things differently than you did in 2012 . Emily the first thing i would do harper the first thing i would do is hire the current cto of the campaign. It is such a different campaign. Primaries, they really did a good job. Seeing what they have done with a candidate, an amazing candidate, i think they are doing fine. Emily trump is a very different kind of candidate, different opponent than i think anyone has ever faced. How would you do things differently in light of trump . How would you take him on . From a technical perspective . Harper i think we saw what should happen happened today in nevada where you have Hillary Clinton doing a speech, talking about what trump really stands for. That is exactly what needs to happen. The truth is oftentimes in campaigns, technology is not the answer. The answer is making sure the candidate is getting their message out. I think that is happening. Emily we have 90 days to go. How do you see the campaigns playing things, playing their cards, over the next 90 days . Harper all campaigns, all elections, they narrow. I think we will see the field narrow a bit. Hopefully not too much. We are going to see that the technology is going to matter. All of the good analytics that the Hillary Clinton campaign is doing to help the field and all the people out there knocking on doors, that stuff is going to matter. Im excited to see that. Hopefully i will be out there with them. Emily when you say the field will narrow, what do you mean . Harper right now we have a lot of polling. And i think trump has a 25 chance of winning, not a very big percent, but i think that will narrow. That will grow, people start thinking who i am going to vote , for . 90 days out, people are still not thinking about the election. They are seeing a lot of ads in these battleground states. But you know in california, no , one is speaking about this election. They are thinking about how crazy it is, but they are not thinking who am i going to vote who am i going to vote for . , emily how big a problem do you think the emails are for hillary . Harper i am not sure. I actually do not think that is a problem. The reason is everyone has email. Everyone has emails that say things we wish were not out there. They are not super damning. Emily we do not know what is in them. There are 33,000 that we have not seen. Harper i still stand by that. They are not anything damning. I do worry that releasing emails that should not be released will open up National Security things or things taken out of context. I think that will lead to more issues. Because we do not know what was happening then. Emily all right, harper reed former cto of the obama , campaign. Thank you so much for joining us now at braintree. Great to have you. Tomorrow on bloomberg, do not miss our special coverage of the jackson hole economic symposium. Ahead of fed chair Janet Yellens speech at 10 00 a. M. , we will bring you interviews from the fed president s James Bullard and Robert Kaplan as well as dennis lockhart. This is bloomberg. Emily a story that is trending president obama has , gone where no u. S. President has gone before, into virtual reality. Hes narrating a 360 degree representation of yosemite park. National geographic joined facebooks oculus studios. They produced a free video. Its out today to mark the Centennial Anniversary of the u. S. National park service. And a pie in the sky idea literally. Dominos pizza says it has tested drone delivery in auckland, new zealand, and is on track to be airborne later this year. Why new zealand . The country approved commercial Drone Deliveries last year, but skies of new zealand are not going to be filled with flying pizzas anytime soon. Dominos has employed drones in only one location and local regulations still require that drones remain in sight of a pilot at all times. Meaning your robot pizza guy will still come with a human chaperone. That does it for this edition of bloomberg west. That is all for now. From san francisco, this is bloomberg. Angie it is noon here in hong kong. All of the makers have been making the case for a rate hike ahead of Janet Yellens speech. It was repeated that higher rates are warranted, but we were told that the fed should raise rates patiently and gradually. Prices fellnsumer for a fifth straight month, piling pressure on the boj. The inflation target moves increasingly out of reach. The figures from the last meeting before governor kuroda was forced into a policy revamp. And vice chairman