We explore amazons Delivery System as it ditches ups and fedex. The year that was. We check out how Big Tech Companies apple and facebook fared insystem as it 2019 and hs set up for the new year. Tech in with a look at the markets, most notably, semi conductors. We see that chipmakers bottomed out nearly a year ago and have been on a riproaring rally since then. Micron adding to that sentiment, as the Company Reported firstquarter earnings wednesday. Micron impressed wall street with a strong outlook of between 4. 54. 8 billion dollars in revenue. Shortly after the Company Reported, i got insight from Wedbush Securities analyst matt bryson, who joined me on the phone after the analyst call. Seen tightness in certain areas. Also, they are calling the bottom for memory in general. They think this Current Quarter is going to be the bottom of the cycle. That fits with the tightness in certain areas. And very much parallels the groep the guidance they gave for gross flat margins, which suggests that prices are normalizing finally. Does this have any implications for capex or expansion of capacity . At this point, they are remaining conservative in their capex outlook. They are keeping their guidance study. I think that is the prudent thing to do, to wait for demand to come back. They did note that there is a point of uncertainty in terms of how much inventory china has accumulated. I have just come back from asia. That is something i continue to hear from assistant billers over there. I think they are taking the prudent course right now and not yet investing capex. If the recovery continues, i expect that memory general will look to support their customers and expand capacity but thats not happening yet. I am showing a chart to our terminal audience in my terminal, which is the share price of micron, and then it is the lower and lower dram in memory chip prices. We have been calling for a bottom for a lot of 2019. Are you confident we have really had a bottom in those memory chip prices . On nand, i am. Looking at pricing moving forward, i believe contract negotiations around solidstate drive pricing have been concluded favorably for calendar q1. When you look forward in the nand space, you have got a huge driver of demand in the new gaming consoles, which are shifting from hard drives to ssds. You also have an added boost and better handset outlook, in part predicated by 5g. On the dram side, it is slightly more difficult to call. I am starting to hear that server dram contract is moving up. In my mind, thats the first assigned that we have really bottomed on the dram side. Spot pricing over the last couple of weeks is starting to rebound. Cloud customers, who are an important point of demand for dram, have increased buying. While there is not quite as much visibility there, yes, i think we have seen a bottom. Taylor that was matt bryson of Wedbush Securities. Tesla shares soared to a record high this week, hovering near elon musks goal of 420 per share. You may recall that back in august of 2018, he tweeted that he sought to take tesla private at four dollars to cents per . 20 four dollars and 4. 20 per share. I talked to story, bloombergs craig trudell. You do have a lot of electric vehicles, just cars in general that are priced, even premium cars priced below where you see the tesla model three. When the price came out for the made in china model three, i think it caught a lot of people by surprise because its not that big a difference and the whole sort of reason for building this plant locally is the idea that they can bring the price down by avoiding import duties and so forth. You are seeing tesla make a bet here that there is going to be just sort of natural sort of goodwill of getting a plant opened, getting governments on board. There are a lot of government purchases of electric vehicles in china. Tesla making a bet that the sort of initial buzz about having the model three built in china will itself kind of carry them for e First Six Months next year and then you bring the price down. I am going to show a chart which is the big headwind and the macro backdrop slowing car sales across the curve really in china for the last year or so. Is a 20 price cut enough to offer offset this drop in demand . Good question. If you are elon musk looking at that chart, youre a lot more nervous about the state of the china market than really if you look at when those drops were really kicking in, its around the time that tesla was getting a deal, signing on the dotted line to get this plant built. It was built extremely quickly. That is unusual. This was a muddy field in january of this year. We are talking about a plant that is already opened and cranking out cars, potentially delivering them to customers within the next few days or weeks. This all happened extremely fast. Inhave seen some softness the china market, but the degree to which the market really deteriorated this year i think caught a lot of Car Companies off guard. It is a cause for concern if you are tesla, despite the fact that you have real brand power and a lot of star power as a company that is sort of on the leading edge of electrification. What has changed for tesla that they can afford bringing the cost bringing the price down now, instead of just from the getgo, given that some customers can just wait and hold out and not by it and wait until prices drop, right . I think thats a really interesting point and it will be interesting to see how long they can hold out before doing a price drop. When you think about what tesla has been up to this point, it has been a company that has made all of their cars in california. It does not have serious breadth across the world in some lower cost markets so labor costs will come down significantly. You are able to avoid levies and tariffs and get special treatment in terms of incentives and so forth. So definitely, you could see that price come down further if the initial demand is not quite what they are expecting here. Taylor that was bloombergs craig trudell. ,fter ditching ups and fat x hout fedex, how amazon is bulking up to meet Holiday Shipping expectations. If you like bloomberg news, check us out on the radio. You can listen on the bloomberg cap, bloomberg. Com, and in the siriusria except xm. This is bloomberg. Weekr with less than a left before christmas, it is do or die time for the delivery machine amazon has been assembling over the past few years. As it ditching long Logistics Partners like ups and fedex, the ecommerce giant is beefing up its Delivery System to prepare for the strain of holiday orders and expectations. I spoke to bloombergs Spencer Soper wednesday from seattle. Spencer it is handling more of its deliveries than ever before. So its estimated that about half of all amazon packages will be delivered by this system that amazon has created. Contractorspendent who start their own businesses by leasing a bunch of bands and hiring people vans and hiring people. Its also thats flex driver. Its the first year that amazon is doing so much of its own last Mile Delivery so aggressively. We have got some hints of bad weather coming. That is always the big wildcard. They want a system that can work great through decent weather a system that can work a great through decent weather can break down in bad weather so a lot of it will be dependent on mother nature. Taylor those are things outside of its control and there are things inside of their control, like that last mile. Have they mastered that last Mile Delivery . They are spending a lot of money on and doing a fairly decent job. There are a lot of independent experts who monitor the shipping. They are hitting 90 plus, basically on par with fedex and ups. They are also doing things difficul differently than ups and fedex. A lot of is having multiple trucks or these backup flex drivers adding the same neighborhoods on the same day. When you think about seeing a postal truck, you will usually see it maybe once a day and then its gone. You might see multiple Amazon Events and vehicles vans and vehicles crisscrossing your neighborhood every single day. Amazon is saying this is necessary to provide the capacity we need and get everyone there packages in time for christmas. Taylor spencer, am i right or jumping too many hoops if i wonder whether we should start looking at amazon as a Logistics Company, no longer an Ecommerce Company . Spencer they have been a Logistics Company for years. It has always been more the back end part, warehouses, storage, parking items. They have been in the logistics game for a very long time. We are just seeing them increasingly branch out from that with the planes and now with the last mile of delivery. Used to seeing most commonly the Postal Service trucks and the big brown ups trucks. Now you are likely seeing those blue amazon prime vans as frequently or more frequently than you are seeing anything else. Taylor that was Spencer Soper. One of the biggest sources of funding for Silicon Valley was the focus of a Bloomberg Businessweek cover story. Employees that depicted a culture of recklessness within softbank. Sarah mcbride helped bring this story to life and she joined me on wednesday. Hes an incredibly interesting guy. Hes a korean immigrant to japan. Ofgrew up in this very kind hardscrabble way, supersmart. Came here to the u. S. , attended berkeley, moved back to japan, started softbank. One of the things that stood out about his background to me is that in 2000, he invested 20 million in alibaba. That steak is now worth 130 billion. He is a smart guy. Taylor what do we know about his management style and how it of fueled this environment for these outside bets . Hes a big go big or go home guy. He wants his Portfolio Companies and investment professionals to keep thinking bigger. Sometimes, that is great, like when a young entrepreneur comes to him and he tells them, you are going to be the next jack ma , your company is going to be even bigger than you think, have you thought of this business idea or that business idea . But then sometimes he gets impatient. We have this detail in the story about how during a conference call, he was talking to one of his investment professionals , aut full Truck Alliance chinese company, and was basically saying, why are your outlooks for this company so small . This company can be big, and was a sort of berating this guy on the phone for not thinking big enough. Taylor when we talk about some of these outside bets, we would not be here or focusing on the company so much if it werent for we work and sort of the big debacle of wework. Do we know anything about if wework has structurally change anything inside that culture . After the derailed ipo, they really had to rethink things. Masayoshi son expressed a kind of he said he regretted how everything had played out at wework and how it had created some changes in thinking inside the fund. Stillis still they are going to think big and depressed people to grow their companies as hard and fast as they can, but i dont think its going to be growth at all costs anymore. Taylor that was bloombergs sarah mcbride. You can read more of this story and others in the december 23 issue of Bloomberg Businessweek. Coming up, big tech is on a quest for dominance in consumer baking. We will discuss how it is all shaking up fintech with one of the latest unicorns. Later, a nap helps you rake in the money during the Holiday Shopping season. This is bloomberg. Taylor apple wallet, uber money, google checking accounts. It seems like everywhere you look, big tech is getting into the Financial Services game. So what is that trying to doing to fintech . We asked the ceo of recently minted unicorn that has a partnership with mastercard. I asked him about the Financial Product opportunities. I believe that there is a clear distinction between distribution and actual innovation in financial. I think a lot the Big Tech Companies, what they are doing is just creating few Distribution Channels for existing products. So for example, amazons credit card is issued by jp morgan and american express. If there iseve that no Technology Development in the back end, it will not change much. I think a lot of the opportunity are for both fintech firms and nonfintech firms that actually rebuild the Technology Behind it and dont use the technology built by the banks. Taylor so as you talk about that and some of the partnerships, i noticed that you have a partnership with mastercard. What are you hoping to bring them and what are they bringing you in terms of that technological innovation . I think it is exchange of knowledge. They have been working with banks and have accumulated a lot of knowledge and expertise over the years. And we, bringing the side of technology and innovation from Silicon Valley. It is a very Solid Partnership because we can learn from them, they can learn from us. We get to use their big distribution network, so brex card works anywhere where mastercard works. Taylor how are you hoping to differentiate yourself . We talked a lot about uber money, for example. What else are you hoping to use to make sure that you stand out in what is a very crowded field . The first thing we do is focus on businesses instead of consumers. A lot of the focus has been on building, you know, if Financial Services for consumers. Brex is for businesses. Number two, we rebuilt the entire system from scratch. We dont use any kind of Legacy Software provided by the banks like most of these other companies. We basically rebuilt everything from scratch, and that allows us to create functionality that did not exist before. For example, not requiring any kind of personal guarantee on business cards or having extremely simple expense managements on your card. Taylor how are you expanding outside the traditional fintech world . I am thinking into ecommerce or lifesciences businesses . Are you increasingly taking on more clients from those new sectors . So we basically are of the view that, you know, you cant pull businesses together into one thing. A startup and Ecommerce Company in a hotel and lifesciences and restaurants, they are all completely different businesses. In the future, a lot of the products will be catered to these verticals instead of being s. Generic to smb there are new fintechs focused on millennials and the affluent and under banked. We think in business, it will start be focused on the vertical. Taylor i wonder. We have been showing your valuation, getting a newly 2. 6 billion valuation over the summer. I ask a lot of the unicorns that come here if it is helpful or hurtful, given the extra scrutiny that comes with now being valued at more than 1 billion. A i think for us, as Financial Services company, it is definitely more on the helpful side. Fairly a capitalintensive business because we are lending money. In order to lend money, we need money. In order to establish credibility, the valuation definitely helps. More than that, being able to raise a large amount of money is what is enabling us to actually go and disrupt this sector, Financial Services, which is full of very big and established banks. Its very hard to do that without the money. Ceo. R that was the brex robots have replaced thousands of routine jobs on wall street and now they are coming for the higher ups. Thats the contention of a Cornell University professor and the former of Machine Learning at aqr capital. He testified in washington earlier this month about the impact of Artificial Intelligence on Capital Markets and jobs. Onjoined bloomberg and me tuesday. Today we have a data sets that were not available 23 years ago. The only way to monitor these data sets is by utilizing these complex techniques. Taylor when you say data, how is this different from 10 years ago to just a few years ago and how fast has the change been . A few years ago, we did not credit card transactions, engineering data, or even data that comes from narratives, reading stories, extracting sentiment from news articles. These data sets did not exist before and today, they exist, and they are able to we can extract information that is valuable for making investment decisions. Taylor i wonder if this is a zerosum game, if the robots and the Machine Learning wins, highpaying finance jobs lose or if there is a way to retrain some of these employees. There is definitely a way to retrain these employees. Not all of them will be able to retain their jobs. But in many cases, we can retrain these individuals so that these algorithms augment their capabilities. They dont need their jobs to be completely automated, but these algorithms can assist. How vulnerable is the finance industry to say crowdsourcing . What could it do to the hedge fund industry, for example . Thats right. Tournament is a particular case where we can crowd source the forecasting of prices on all sorts of Asset Classes to the data science community. It is a job that has so far been done by a very narrow set of individuals within hedge funds. Now, you can turn this information to the entire community, people working at nasa,