Transcripts For BLOOMBERG On The Move 20160530

Nothing should get in the way of the things you love. Get americas fastest internet. Only from xfinity. Television. Lets get straight to the bloomberg first world words. Falling for the night stay in a row, its longest losing streak in a year. The dollar has strengthened against all of its major peers. This is after janet yellen said on friday that an Interest Rate increase is likely. Japanese shares rose, while chinese retreated. Bonds are closed worldwide monday. The yen has sunk to a one month low against the dollar and japanese shares are set for thei r highest close since may. Growth stalled in april, increasing the likelihood of a delay. European truck maters, including volvo, will face the biggest cut in european history. The penalty could be imposed within weeks. Thepaper reports that charges relate to ris pricefixing. Group. Has quit the thecompany has accepted resignation. Noble shares have plunged 60 in the last year, what questions about the Accounting Practices during the commodity is crunch. Markets of closed in the u. S. And the u. K. For the holiday. Lets check in on the markets that have been trading across asia. We have seen a close higher by 1. 2 . The nikkei is up by 1. 4 . The shanghai composite in late trade also reversed earlier losses up by. 2 . And we have some pretty good gains coming in on the hong kong hang seng. Looking at the moves in currencies, the bloomberg dollars spot index has been very strong, up by fou. 4 . We start to see this speculation of an increased rate hike. The yen is weaker there. We are also seeing a little bit of weakness after the pboc weakened the yuan to the lowest since february of 2011. And the euro is pretty flat. Lets check in on the oil markets as well. We have seen a decrease coming through. Brent is down by. 5 . That we have seen some good moves in the wti contract. Stay with bloomberg television. Coming up next, it is bloomberg businessweek. We are inside the magazines headquarters in new york city. A new era for Insider Trading. Why kelly slater wants everybody to hang ten. That is all ahead on bloomberg businessweek. We are here with editor alan pollack. In the opening remarks, you talk about south africa. You talk about this momentum for president zuma to step down. This compares the situation in south africa with india, where the reporter who wrote the story used to be stationed. This raises the question of whether the congress can keep going. And talk to the how they have not solved all of the problems and there is growing discontentment. A means down the line it is possible they will start losing some important elections. Term, laying out here how a lot of these candidates are doing. You can gauge how popular these candidates are by how large the crowd is. It is a new way to guage this. It is really cool. A look here at new banks cropping up in indonesia, trash banks. It is a way to develop financial solvency and to get people to stop littering. The idea is you bring your trash to the bank and they pay you for your trash. And they can recycle some of it. And you can leave your money there and bank it. You can take money out of your bank. But it means that the trash is not going into huge landfills that are sort of littering some communities. It has been tried elsewhere too. Creating a Financial System for people who dont have much money. In the technology section, you talk about Virtual Reality in Chinese Companies. They are more interested in content, right . They are tried to figure out how to get into Virtual Reality without having to commit to one headset. It is obviously, a race to make vr a real thing. Here you have a lot of different mergers. There realize that is going to be the case so they say ok, whatever headset, we will create content for you. With china, the numbers are always so big. The potential for this market is huge. It is absolutely huge. You look at how the definition of Insider Trading has changed over time. It has changed a lot since ivan boesky was the start of Insider Trading decades ago. And what we look at is why it is so hard to prosecute Insider Trading. That is because Insider Trading, s definition has really changed. There have been a series of chases that have come out of the series of prosecutions in new york where a number of traders had appealed to higher and higher courts. Ultimately, a couple traders charged 2012 had their convictions overturned this redefined what Insider Trading is and what the government has to prove in order to successfully prosecute. It has to do with who is right . You the info, it has to do with how much you know about the initial source of information, whether you got a benefit from this information, and then there is more debate about what that benefit had to have been. Part of the reason this definition even exists is because they dont want people who are say, whistleblowers trying to report fraud to the outside world who are not doing it for any personal gain. They dont want to silence those people. There are times when you can legitimately disclose information. Experts thinkgal about this . It seems like a shift in figuring out Insider Trading. They are divided, of course. They have raised some good points saying well, this campaign against all of these hedge funds ultimately overreached. They point to this one case that led to this redefinition. Two hedgeradtraders, funds in new york one connecticut, actually. They were at one end of a chain of people who were sharing information about dell. A friend told a guy who worked at a hedge fund. A very twisted game of telephone. [laughter] exactly. And eventually these guys at the end here this and they trade. They argue, this came from investor relations. Is that even possible it was Insider Information . The government tried to say, well, you clearly had market moving information. They were a couple other things that were disturbing. In some cases, they had been paying sources, but ultimately, they had been successfully arguing that they did not know if that original leak who worked at dell got anything of value from that. If he did, he would have betrayed the trust of his company. And they succeeded and now we are waiting for the Supreme Court to look at another case and perhaps, clarify some of the questions surrounding this. What is the attitude toward this in the sec . They are very frustrated. [laughter] they are often frustrated, that is sort of their natural state of mind. No, as soon as this happened, the phone started to ring. I want to undo my settlement. I want my money back. I paid you all of these fines. There have been many cases where people try to go back and say, i did not know about the benefit. There is a lot of that going on. And then on the criminal side, the prosecutors had to vacate a number of guilty pleas and convictions because of us. Will this make it tough to prosecute or go after Insider Trading Going Forward . It definitely will make it harder in certain types of cases. They will go unpunished, basically. And of course, there are some who argue that maybe some of those cases were ones that should not have been right. There is obviously a lot of information sharing in the market every day. Where do you draw the line of what is criminal . People need to know, what is going to get me in jail . You know, there is certainly that argument, but there are certain groups of people who you know, are getting the information secondhand and you could see a scenario where a firm adopted officially, or unofficially, a dont ask and dont tell policy. Selfpublishing goes from the french to mainstream. And what a snapchat account might tell us about the future of tv. Plus, can kelly slater sell his new wave machine to the world . That is ahead on bloomberg businessweek. Welcome back to bloomberg businessweek. You can find us on radio, on xm chat. Also in new york and in the bay area, 960. Look at the wave machine designed by surfing legend, kelly slater. We spoke with reporter josh dean. There has always been the quest for the artificial wave, which is more or less what the pros experience in the ocean. There have been many trys. Kumutha go back to december, right . Youtube, the video on kelly slater. He put a video on his instagram feed, at first which was a shot of this perfect wave. Then you see him on this wave. Then, it is revealed it is artificial. I think his voice says, this is the greatest manmade wave ever made. He has been working with a team of scientists at usc. The surf world immediately celebrated this thing and said, my god, kelly slater has done it. Where is this wave . Because he did it under some sequence the, didnt he . He did it where you would not expect it. It is in the san joaquin valley. Feresno would be the nearest place you have heard of. It is an farm country. Many people said it was because of secrecy. That was true, but honestly, it is a 20 acre lot with a 700 yard long pool. An artificial lake, pretty much. If you wanted to purchase that in los angeles it would be about 20 million. Basically, they found a plot they could afford. How complicated was it . Obviously, he was working with usc. It was extremely complicated. Engineers and scientists have been working on this for two decades four decades. Certainly, professional surfers have always tried to find people who could crack the code. And it has turned out to become located. They spent 10 years on it. They started with scale models and then computer models and eventually in 2014, started building it. It is a proprietary design. They use a hydrofoil, which the best way to the government is an airplane wing that creates the swell. The contours of the bottom of the pool, just like the floor of the ocean, causes that wave to break. In the ocean, the swells come in and then the coral reef causes that wave to break. You went to see it. What did it look like . It looks amazing in video, but in person, it is even more impressive. It is hard to sort of appreciate the power of it. It is big. It is not huge, because he did not want it to be huge. It was not supposed to be pipeline. It is manageable. It sounds like a wave and when you come near it, it looks like a wave. Speaking of going mainstream, the focus this week is on small businesses. We spoke with the editor. We are seeing the start of something, where people have the options. These outfits that have names like pronoun. They are getting aggressive about targeting people, often fathers who are frustrated about the neglect they are experiencing. They are giving them attractive deals. They are sharing revenue. And one of the things they are letting them do is keep the copyright. So, that is important for a lot of people. In some cases, we can see authors whose novels have gone out of print and they are returning to these platforms to republish. Are all of the platforms the same . They all have different revenue models. Some of them are just market places where people can find talent and contract with these people. Some of them have more sophisticated tools where people can do collaborative work, not emailing files backandforth. There is actually a Technology Platform there you can access. Others, you have they will put you in touch with an editor and designer. They have separate pr firms. How much is this about the advent of the ereader . It is fairly cheap to disseminate a book that way. It definitely is, but i think it is an evolution. I think right now, something about half of all books on kindle direct our self published books. Half of them, wow. One quarter of books on that platform are counted in that. There is one note of caution. We spoke with a consultant who said that digital books may have peaked in 2014. They sell back the share of the overall books out there. He thinks there is a bit of fatigue. People perhaps, at the end of the day after sitting in front of a computer all day want to go back to print. Up next, how cold coffee is overtaking hot copy. Hot coffee. Also, why anybody who works in tv should get to know arsenictv. Welcome back to bloomberg businessweek. In the companys and industries section, how the cold Coffee Business is booming. More and more people are drinking their coffee cold year round. According to some of the experts we spoke to, there are a lot of coffeehouses these days where they are actually serving more cold drinks than hot, even in the winter months. You are talking about a starbucks or a petes coffee. Yes, those, and the craftier places, like the cool hipster place. That and you are also getting prepackaged coffee in demand. That is where starbucks and and dr, cocacola, pepper recently announced a partnership they are all getting in on this ready to drink bottled and canned coffee that is served cold. Talk to us about the market size. How big is this compared to the coffee we all like . It has been growing in double digits since 2011. It is supposed to hit 3. 6 billion in 2020. What is the demand globally . Globally, it was at about 18 billion in 2015. Are there any markets where you can see growth . In japan, it is huge. They have vending machines there that serve all different kinds of bottle coffee beverages. And actually, cocacola is getting into that market. They are actually the number one player globally, even though in the u. S. Starbucks and pepsi are dominant. What surprised you when you started working on this story . I personally drink ice coffee more than hot coffee, even in the winter. I was fascinated by the fact that i am not the only one. This is something that not only tons of startups are getting into, but it is really big players. Look at what some say is the future of television. Arsenic is a snapchat account. It is not a business or media company. It really only exists inside the snapchat app. It is where scantily clad models do provocative things on camera. It sounds kind of crazy, but it is one of the hottest things in media right now. Playboy tried to buy them. I had a conversation with the playboy ceo and he candidly admitted they were rebuffed. He said they were still there interested. Everybody is excited about this thing, though it is very weird. It is all women who jump into hot tubs in bikinis . It is all women right now, but they have the conditions for this. They have big expectations for this. You look back at vice, and it was pretty sleazy back in the way. They have widened their content. And i think arsenictv could do the same thing. You mention the founders. Who are they . Billy hawkins, who is spike lees agent. They were starting a Different Company that was a rent the runway kind of thing and this grew as a side project and took on a life of its own. How is anybody making money off of this . In some ways, nobody is making money. However, the models are getting paid by Smaller Companies like protein shakes and clothing or whatever, to basically record little ads on instagram. The main model in the store is making some are between 6,000 and 10,000 each month. Because she has followers. She has followers and followers are worth money. There is a question as to whether this is sustainable. People are getting into the game doing Product Placement on social media. This economy could collapse. But for now, you have these blist and clist celebrities who are able to make a decent living inside of instagram. And their goal cant just be to make a decent living. Sticking to where our culture is right now, this is the platform of the moment to elevate yourselves kardashian style to fame and fortune. There are some questions out there right now as to what fame is. Everybody things, i will do this snapchat thing and that i will become famous for real. In a lot of ways, i think the snapchat stars are the stars. If you ask a 16yearold, who are the most famous people, some percentage would be people you have heard of and some would be these influencers. We are in a moment of flux. Why are they not making money off of snapchat . Snapchat is so new. If you are an advertiser, you dont know exactly how many people are looking at a snap. As a result, there is basically no money yet. Though there could be some soanya snapchat releases what is known as an api. Bloomberg businessweek is available on newsstands now. And oman. What was your favorite part of this this week . I really liked what was going on in indonesia. People can bring in trash and get money. It is creating a Financial System. I found that fascinating. I really liked the cover story. This was somebody i knew about and had heard a bit about. Josh really brings this into focus. And i feel like the cover tells the story perfectly. All right, everybody. We will see you next week. You are watching bloomberg television. Lts get straight to the bloomberg first world news. Gold has fallen for the ninth day in a row. This is after Federal Reserve chair janet yellen said friday that an Interest Rate increase is likely in the coming months. Japanese shares rose, while chinas retreated. The treasury contract fell. Bonds closed worldwide on monday. The yen has a son to a onemonth low against the dollar. A the yen has sunk to onemonth low against the dollar. Japans retail sales growth stalled in april, increasing the likelihood of a delay. European trust makers, including volvo, will face the biggest fine in auto history. The penalty could be imposed within weeks and could top the 1. 4 billion euro record. This relates to pricefixing and collusion. The chinese billionaire is offering 4. 4 billion to buy out and privatize the Hong Kong Listed property in its. Property units. The deals aim to relocate listings have been under the spotlight after the chinese stock regulator voiced concerns that this could flood the market. The markets are closed in the u. S. And the u. K. Today for the memorial day and the spring holiday, respectively. We have got european stock markets just coming online. The euro 600 adding to those very strong gains we have seen in the month of may. We are seeing more gains come through on germanys index, ahead of the german consumer prices. They are expected to fall into a slower pace in may. 40 is france, the cac down by. 1 . Check in on the trading day in asia. In shanghai, it is pretty flat. The nikkei though, is having a pretty good session. The best gain we have seen for the month of may and the highs close since april. The japanese yen weakening by. 9 against the dollar. That is also about a one month low. With bloomberg. Coming up next, we have the best of the west. Emily this is best of bloomberg west, where we bring you all of the top interviews. Coming up, carmakers are choosing sides as toyota and vw disclose new investments. We speak to the man leading the pack in Southeast Asia. Plus, alphabet chair speaks out on breakthroughs ahead in health technology. We have his exclusive interview from the bloomberg breakaway summit, next. And peter thiel strikes back. How he has been secretly funding hole cogan in multiple cases. Funding hulk hogan in multiple cases. This news comes as the car industry braces for change, especially when it comes to the future of car ownership. By investing in the main players, the biggest car brands are hoping to secure a place in the future. Ups week, toyota tieeamed with uber. Here we take a look at the space to see who is leading the pack. Carmakers are choosing sides in the ride hailing wars. This week alone, toyota committed an undisclosed amount to uber, with plans to get into the car leasing game. In january, General Motors took a stake in lyft. And lets not forget apples billion dollars bet on didi. Which of the ride hailers are leading the pack . Uber might get all of the headlines, but lyft is taking on a much bigger rival in many u. S. Cities Enter International partnerships with didi and grab. In china, didi claims to have 99 of the market. It boasts close to 300 million users in over 400 million cities, completing 4. 3 billion rides in 2015. And grabs dominates in Southeast Asia with a presence in 30 cities and a fastgrowing motorbike service. Meanwhile, get dominates in europe. As these startup scramble for the from of the, it is still too early to tell how the ride hailing wars will play out. Now, to get a sense of how the warts are shaping up in Southeast Asia, i caught up with grabs ceo. Grab has raised 700 million and has over 50 of the market share in private cars. Take a listen. Grab has the largest mobile tech plant. We have very localized services. So, imagine we have taxis, cars, and motorbikes. Bikes. As he know, motorbikes, you jump on right behind and it navigates you through the traffic, as you would imagine. So, we basically give back two and a half hours of commute time too many citizens. You have an interesting personal story. Your greatgrandfather drove a taxi. Your grandfather brought the Auto Industry to Southeast Asia in your family still runs a car business. Tell me a little bit about this. So, cars have been in my family blood for a long time. And because of that, we felt very comfortable dealing with for example, government, because they follow my father working with governance before we build a factory. Getting the appropriate licenses. And getting the land so for us, learning from how the family ran business on how important reputation is, working with government through a collaborative approach to basically build and that is how grab was founded. With the launch four years ago, we launched with a senior from the government. Idi announced a big ridesharing partnership back in december. How is that progressing and when will we see more integration . Well, you will see a global roaming product where for example, it in San Francisco you can book a car in beijing, in singapore. You have access to the Worlds Largest transport. So, the idea is i can go to singapore and open my lyft app. Exactly. You have to start again and reinstall the app or put in your credit card. So, when will we see it in fullswing . Thin. Soon. So, how worried are you about ubers Global Expansion plans . Well, competition makes us all better. For us at grab, we focus on serving our customers. Going back to the global roaming product, again, we are focused on the customer experience. As we continue with localized Services Like grab bike, and motorbike taxis, we are very unique. We are unique to the city. We will add a new payment the. Payment piece. In Southeast Asia, 95 of Southeast Asians use cash. We said, how do we reinforce the message . How do we make didi the most relevant to customers in Southeast Asia . We are really reinvesting in this payments piece to make sure that our customers on all of the new services will join up. Does that mean uber does not worry you . For us, it is all about growing that market share and serving our customers, winning their harearts, and continuing o be number one. Didi is estimated at 2. 6 million. What about grab . There is a range of valuations out there, but how we think about it is, are we good value . Yes, we believe we are good value. Do we believe that investors believe in Southeast Asia . Southeast asia has one of the fastestgrowing internet populations in the world. People like softbank and cic believe that grab is positioned to ride that wave. How much have you raised in your last round . In total, it is close to 700 million. How do you continue to raise money to fund your expansion . We are always open to Great Investors and great partners all throughout the world. Today we have seen people like softbank really being very bullish about Southeast Asia and about grab. So, didi, for example is said to be targeting an ipo next year. What about you guys . Grab, right now, really targets at building more value, building the biggest and greatest mobile tech company. We are always thinking of how to find great partners. Ipos is one of the options on the table for us. s shares up, hpe surge this week. What the deal means for the business. Smartphonesofts business. Is this the right move for the company . Shares in Hp Enterprise have been riding high this week after the company says it is merging its troubled business with science corp. This is the half of the old hewlettpackard that focuses on servers and storage for customers. We spoke with our Bloomberg Analyst Senior Analyst who covers hp for more details. What is your first take away from this deal . Is this something that was expected . It was not expected, it makes sense, to be quite honest. To have one part of the entity focus on hardware, predominantly networking, storage, and servers and then finding a way to exit the sevres business to a company that focuses on that portion of the business. It is a good strategy. It refocuses the company on a smaller piece of the pie. But again, the risk here is that you have an extremely smaller pie you are focusing on, one this is on hardware, predominantly selling to corporate ip systems. Will that be the longterm growth area for hpe . And do we need services to bolster that . That remains to be seen, but in the near term, this makes sense . What does this mean for meg whitman . This gives her a focus. After the slip, hp has done well. Announcement, the cash flow has been improving. The debt profile should get better and these are the Measurable Results she has improved. She has to she gets credit for that. Deal this is after a bad under former hp ceo. When you look at the earnings now, years after the acquisition was done, anything else you would tease out that we should be watching with of the new hp . At the end of the day, this is not a company that is going to post incredible growth rates from a revenue standpoint. This is modest revenue at best, coupled with have because cuts from time to time. Hopefully, the Earnings Growth rate is likely better than the Sales Growth Rate and there is a good amount of cash flow coming i. Coming in. So, this is the way we have to think about hp and hp ink. That was our Bloomberg Intelligence Senior Analyst. Now, this week microsoft over visually cut 1800 jobs and writi ng down close to 1 billion in assets. Microsoft could not compete against apple and samsung. Now, even those players are struggling in a maturing argument. How theown to ask smartphone wars will play out. I will start with you. Microsoft has all but given up. Does this mean they have given up . They gave up in the actual device war, i think. In terms of the software, i have not. Many of their customers in the fortune 500 are managing their mobile management. They have downloaded software to these alternative devices that are non pcs. I think the way they will target the mobile market is a lot different than the way we thought they would go in. That is through these ongoing subscriptions they are selling to their customers. I think they are taking the right approach, and taking a completely different pathway, which will probably be a more profitable pathway. Microsoft did not have a lot of market share to begin with, but who is getting what . And of the market slows, who gains the momentum . I think right now, what we theseeing are big shifts in vendors outside of apple and samsung, who are still the giants. In this recent quarter, we saw two new Chinese Companies enter the top five, for example. Oppo. As they are now trying to get into the 15 business internationally. If you look back three or four years, we have the people come and go over time. I a those of the companies we are seeing today. If you ask me that question next year, you will see more localized players because it will not always be the chinese. For microsoft, does this mean no phones and no tablets either . It is the refocus back on software. They dont want to be in businesses that have no margin. And this was a business that was a tough one, right . And that was a business that Steve Ballmer pushed. It was his last assignment. If amy had the entire decision, they probably would not have made that decision. My belief is that they are cleaning up what was part of the old game and this is the right approach. They are repositioning the company around mobility and the cloud. So, it comes in a different form. These sufferers of scripture, we get those subscriptions these software subscriptions, we get those subscriptions across any device we have. That has been resonating with cios we have spoken with. That is why the Enterprise Business has done so well. Are there any other small market share players that are hanging on that you could see getting out of the business . I think those localized players will come and go. Which ones right now . Time will tell. As we start to see the middle east come on board real strong. We can see localized players in india. But there are a couple of big name players that are facing some challenges. From a hardware perspective, we can see a turning point. Sony is in that same space. I hate to call the demise of anybody, but these companies are struggling to make money off of hardware. I would argue that microsoft is not out of mobile, but they are in it in a different way. Isnt nokia still licensing its name to some companies . There is no question. They have made public announcements about that. They are trying to come back from how low microsoft actually took the brand. Selling off of the feature phones space, that is still a big piece of the market in a number of areas. I think that holds a lot of weight there. That also comes with supplychain agreement. Whether or not they can revive things under the nokia brand, i think that will be a lot tougher. So, what is the future of microsoft in a world where there is not much mobile device growth . With the cloud, with what is happening with the public cloud. You are seeing this as a real focus point they are pushing towards. They will not give up the perpetual software business, but they are starting with the cloud first. They want to lead with the solution. If you look at their business in the intelligent cloud, they are outpacing most of their peers. They have a number of brandnew releases on the server side that are coming up next week. I think this will help them in the application portfolio. They have new apps they have focused on. There are different ways that they are going down that we think again, are more back to the core of what microsoft was. Yes, they care about the consumer, but they understand what they are good at and going back to their courre, whcich from wall streets view, is a good thing. We are starting to see the operating margin stabilize and slowly improve. So, we think again, this will be a multitier shift. Again, this will be a multiyear shift. This will not happen all at once, but we think they are creating the right future. It is just going to take time. Those were the ceos of idc and ubs. And peter thiel strikes back. How he has secretly been funding holk hogan in multiple case of. Multiple cases. This week we learned that billionaire investor and facebook board member peter thiel secretly helped bankroll the Defamation Case that resulted in a 140 million verdict. A lawsuit was filed by hulk hogan in 2012 and the drilling threatened and the ruling threatened the very existence. Highlightsolvement how it will funded individual can influence the state of a media organization. Owen outed peter thiel is gay in 27. He is no Business Editor for the San Francisco chronicle. Talkedt up with him and about the recent developments. No one but you know now, do you have any regrets about writing that story . I have no regrets. I dont believe i outed peter thiel. I believe he did so himself to a wide circle of people in silicon valley. They said, it is ok for us to know, but the unwashed masses should not know this about one of our own. Gawker was founded to discuss open secrets. Also, fundamentally, as a gay man as a game in yourself. As a gay man myself, i think it is ok to live in a world where it is not viewed as some kind of schoolyard taunt, but simply a human fact that is interesting. Interesting because not everybody is gay but it should be ok to discuss. What are your thoughts . It is also ok not to be. You are right. I support your right. [laughter] and i support yours. Because we are moving towards a world where it does not matter. And if it does not matter, why not say it . Should a person be entitled to say it and to whom they say it, because it is their business . To me, it is not so much whether it is gay or not gay. The question should be, should a human being be able to determine how they express themselves, whether you agree or i agree . Published this story, did you debate it . Where was it an automatic, yes, we are doing this. The conversations with denton were typically one way. He would give me a tip and i would run with my investigation. That is typical between any editor and you know, their boss up the editorial chain. You get a possible story, you look into it, and you determine what the story is you want to write. This is the story i wanted to write. A letter was just released to peter thiel saying this. Redictive decadelong campaign theil told the new york times, i refuse to believe that journalism means massive privacy violations. It is because i respect journalists that i dont believe they are endangered by fighting back against gawker. I think the larger issue is, should billionaires be able to dictate what is sai about themd . Do we want to live in a world where the subject of coverage gets approval over every single thing a journalist writes . If they dont like anything you write, are they going to find some secret lawsuit . Are they going to use every tool they can to stop it is about the successes and failures of his capital hedge fund. It is about his decisions as a facebook board member very early on in his life when he was a private company. All of these things were things that he may not have wanted us to run. To get a veto on every single thing went hard on bill cosby before anyone else did, Hillary Clinton in the emails, tom cruise in scientology. Good bill cosby get to determine what we write about him . That is personal business. I think we live in a world these are all fair questions. You can see the perspective of the journalist. Your intent is as admirable as you described it. I dont believe that is the intent of everybody and i do public,the american which is evidenced by the selection, and some consequences for journalists. The fact that you get to write what you want when you want whether it is true or not oftentimes people right things and put their own spin on it. This is an interesting question about how do prosecutors get consequences, how did government officials get consequences . This is an example of a consequence you get where they are shooting back, saying if you want to do this, we get to do this. Emily should there be consequences for peter thiel . How do you think he should handle it . He is in a tough position. He was the earliest backer of company, who put the first real money into that company. , for a venture capitalist to remain on the rd he certainly has that. Like he is not just diverse. With the newfound concern about the neutrality of facebooks news feed, and helps to have a trump delegate on the board. I think many of these are very fair questions. Like most people, we care about what is in our best interest. So, Mark Zuckerberg and the rest of the board gets to determine what good Corporate Governance is, or wall street can determine whether they support that Corporate Governance. I would point out that facebook is structured that wall street doesnt really get a vote. They knew that. They published that, same with google. They published all that so you knew before you invested what they were entitled to do. Lets not say that wall street gets a vote. Emily one last question. Owen, did you ever hear from peter thiel around that time . Have you heard from him since . I never got anything on the record publicly, any kind of push back, any kind of dissatisfaction. Emily that was owen thomas, Business Editor and former gawker reporter with check ceo. Coming up, the alphabet chair on why europe is antiamerican and on to entrepreneurs. His exclusive interview from the breakaway summit next. Okay, ready . Whoa [ explosion ] nothing should get in the way of the things you love. Get americas fastest internet. Only from xfinity. Juliette lets get her to the first word news. Gold has fallen for the ninth day in a row, its longest losing streak in the year, as the dollar strengthens versus its major peers. Thus janet yellen said on friday that an Interest Rate increase is likely in coming months. Japanese shares rose monday what the shanghai composite closed flat. Treasury 10 futures contracts fell by the most in almost two weeks. Treasury bills, notes, and bonds are close worldwide today. The yen has gone down to a onemonth low against the dollar, and the topix has seen its highest close since a sales tax increase will probably be delayed. Japans retail sales growth stalled in april, and a growing weakness of private consumption is increasing the likelihood of the delay. After theading higher sunday times reported that the company may improve its bid for monsanto. It could value the u. S. Company at about 66 billion, compared to the 62 million bid that they rejected. Markets are closed in the u. S. And u. K. Today for the memorial day and spring bank holiday, respectively. Lets check in on the markets that are trading. European equity markets opened about 30 minutes ago, mostly higher. The stoxx 600 is up by about 1 10 of 1 , adding to those already solid gains that we have seen across may. s biggestis up 2. 4 , monthly gain since november. Still likely to see a little bit of nervousness ahead of the brexit vote in june and the upcoming spain elections. We are seeing the dax higher by one third of 1 . German consum prices grew monday, expecting sales at a slower pace. Pretty flat on the cac 40 in france. Gdp and frances i. 61 . Consumer spending in france unexpectedly fell in april. Lets also look at the moves in foreign exchange. We have seen that big jump in the dollar index, of 4 10 of 1 . It is having its biggest monthly gain since; 2014 the odds of a june rate hike are around 30 . Of course, the euro has fallen slightly against the dollar and the pound. The japanese yen is also low, its lowest level since april 27. A plane sales tax could be delayed, and we have seen new strength coming through in the dollar. Stay with bloomberg. Theng up next, best of wets. Emily welcome back to the best of bloomberg west. Im emily chang. Alphabet chair eric schmidt spoke at the bloomberg breakaway conference this week and singled out improvements in health and technology that he sees ahead. Our bloomberg editor in chief asked schmidt if the private sector was better investing in these projects than the u. S. Government. I am not willing to fall into the traditional cynicism about government. Let me observe that our government spends an enormous amount of money on the wrong things. I would like to have a little bit of it on the things that are moon shots, enormous scale things that can benefit the country. John you gave the example of health. What is another moonshot . Eric i will give you two examples the health thing is it can be understood as analog meets digital. So up until now, doctors have been living in an analog world and god knows, its incredibly painful and complicated. We have been living in this Digital World where we have all of the math and we understand scalable systems. We have finally been able to break through with modern monitoring systems, the genetics breakthrough, the dna sequencing machines and all of that kind of stuff, so you can get proper personal medicine and really change things. There is a technology that you can reassemble and do gene editing. I can describe it if you want, but it is a very, very big deal. This is transformative not just of a little city like new york, but of the whole globe. That is how profound this is. It is a race. There is a similar one with ai and machine learning, which google is trying to do, primarily. So, that is one category. In energy, the most interesting question to me is can you i will say it rhetorically can you solve climate change, which im sorry to say is actually true, in case you are concerned. [laughter] eric it is actually true that carbon does lead to these things. Theres some evidence the current relative lull in warming, and i know it has actually slowed down a little bit and will actually get worse pretty soon. I can go on and on about that. There are people debating whether the Renewable Solutions are sufficient to solve this problem 100 years from now and if they are not, the most likely solution is nuclear. Nuclear has a gazillion problems. Nuclear has never been able to be driven by the private sector alone. Heres the question and i dont know the answer do you need a federal program to drive safe nuclear . Right . That is being debated now. That is an example of the kind of debate. Im not taking a position because im not a physicist. John two questions on government. One obvious one, out of the existing candidates, i know you are a supporter of hillary, in general, do you see any sign that they are thinking in these ambitious ways on the president ial trail . Eric it is important to remember that Campaign Seasons are a silly season. [laughter] i have done enough campaigns now where i do not worry too much about it. Its more of a question of do you believe the presidency and the leaders in europe understand the importance of science and so forth . There has been a problem on the republican side that theres a group of republicans, but not all of them, who do not admit to the importance of science and i mean that specifically the Technology Platforms. The kind of things that are real. I dont know, whatever the prejudice is, and maybe theres a Similar Group on the democratic side. But, it is a real problem when science becomes politicized. Right . Where does that matter to you . If we have not figured out how to do stem cells from blood, you might be dying from some disease because of some advanced technique that is now available is not available to you. This stuff matters. Remember all of the debates about stem cells . Emily eric schmidt, chairman of alphabet speaking at the Bloomberg Live breakaway summit in new york. Coming up, the Search Engine building a self driving car and betting big on Voice Technology. Im not talking about google. I am talking about baidu. The companys chief scientists next. Emily baidu, the chinese Search Engine is branching out of its core product, most notably, Voice Technology. It is also developing an Autonomous Car ready for purchase in 2018. I caught up with the chief scientist of baidu. He believes it could change the world just like electricity did. We started by discussing how that applies to self driving cars. I think that baidu has a different approach to self driving cars that most of the companies. Let me explain. Say youre driving along, and there is a construction worker on the road. The construction worker does that, you should stop. He does that, you should go. The behavior is totally opposite depending on the subtle hand gesture the construction worker makes. No ai system today can reliably distinguish between stop and go. We have a different perspective which is we should make modest infrastructure changes by give that construction worker the ability to clarify communication. With little changes like that, we are optimistic about getting to self driving cars quickly. Youre planning on testing your cars in china and i think the u. S. As well. What is the difference in how the drivers work between the two countries . What does it mean for ai and how the car works . Andrew drivers in china are incredibly aggressive. I was in a car on the way to the airport a couple weeks ago. It was a three lane highway. There were five cars driving sidebyside. [laughter] a big highway. Not quite sure what it is a more challenging environment. And we can get data from that challenging environment. Emily are you still on track to have Driverless Cars on the road in two years . Andrew we are still on track to commercialize by late 2018. John how are you going to make this available to automakers and auto partners and how will you share the data between your Self Driving Car Technology and the automaker . Andrew you know, we are very focused on developing the technology right now. We are pondering with automakers. I hope we will navigate to a place and generate tons of value for automakers. And for consumers. Emily you have a personal assistant called doer. What are your ambitions . Andrew one of the things im really excited about his voicebased communication. The whole world is moving to cell phones. We spend so much time typing on these tiny keyboards. I think if you can talk to your cell phone rather than type on a keyboard, it will be transformative. You know, i think that most people underestimate the difference between 95 accurate speech recognition and 99 . 99 is not a 45 improvement. It is a game changer. It is the difference between you barely using and using it at all of the time. Since the beginning of last year, across all baidu products, we have seen a number of voice interactions triple. I think we are past the need, we have definitely seen rapid uptake. John once you get to 99 , is that good enough that you can sell that speech recognition and build a business . What are your thoughts on that . Andrew one of the things we are trying to think through is how to take our ai capability is offer it to other companies. The ones that make sense. One of the challenges of ai is there are so many valuable variables to using ai that at least right now, it takes skilled ai people together with skilled domain expertise. And have those teams come together and work together. Emily there are reports that deep speech ii can transcribe chinese languages better than a person. How is that actually possible . Andrew our system has five years of audio data transcribed. This is in some ways a Staggering Amount of data for a system to learn from. Especially with speaking quickly or accented speech, our system is better than a person at transcribing short phrases. Emily is it possible to do the same for english . Because, obviously, chinese written language is somewhat so much more complicated than the english written language, but will we get to a point where machines are better at transcribing voice than humans . It still seems like that, based on the english language systems ive worked with, it is a long way off. Andrew you know, it turns out, we are much closer to understanding the meaning behind a sentence. Transcribing it word by word, short phrases, its easier than human. It turns out the mistakes a machine makes affects the meeting more whereas a human get a few words wrong, but the underlying meaning is carried on. There is still a limit of understanding where machines are not approaching humans. We are working on it. I hope our english and understanding performance is rapidly improving. Emily any plans to take on amazon echo or google home . Andrew i think speech at home is a fascinating area. I think it is in the early stages. I think amazon has done a nice job on its current echo product. It is still not clear how that plays out. Emily one of the interesting things about a Voice Technology is it could actually challenge traditional Business Models like googles model and baidus business model. How do you see voice shaking up the way that you guys currently make money . Andrew i think that baidu and other companies are seeing voice input as a Strategic Direction that we must do well in. You know, this thing transformed the whole tech industry. Steve jobs had the touch screen, he did it really well, but hbc might have been the first touchscreen. There is a fundamental new way for us to interact with computers. The cell phone, the smartphone transformed everything. I think speech recognition has an equal opportunity. Emily that was baidu chief scientist, andrew ng, and art Bloomberg News reporting. Coming up, where will fitness maker pebble announce a new batch of products including its first ever nonsmart watch device . Pebble ceo is with us for an exclusive interview, next. Emily pebble announced the first ever nonsmart watch device this week. Pebble core. They took to kickstarter to raise the money as they have done the past, raising 4. 5 million in the first eight hours. The market for Wearable Health devices is heating up as apple and fitbit try to expand their business. So, what is pebble offering . How do they stack up against the competition . Pebble ceo eric joins me for an exclusive interview to discuss it. What is new . Eric the big news is that we have created our first nonsmart watch product called pebble core. It is a tiny clip you can clip onto your shirt or belt, and you can go running without your phone. It does spot of five streaming and it tracks your run using gps. It can even send an emergency text if something happens while youre running. Emily so how is it different from fitbit . Eric it is a little different. This is meant to do a lot of the things your phone with or without having to strap your phone on your shoulder. Where fitbit does tracking, this is aiming strictly at the running market. Emily it doesnt have a heart rate monitor, but you can sync it with the watch. Can you expand on that . Eric this goes on to your belt or shirt. They can talk to your pebble. Your pebble now has a builtin heart rate monitor. It makes a great combo. The watch has a sensor that learns more about your personal body. This tracks your gps and plays music. Emily this is the newest watch. What iteration is this . Eric this is now our sixth smart watch. Emily whats new . Eric this one has a heart rate monitor built into the back. It tracks your heart rate while you work out or sleep. It has got pebble health, which is our new health initiative. Emily so this is coming out in january of next year. Why skip the Holiday Season . Why wait . Eric for us, we wanted to get it out into the world. That is why we announced it on kickstarter today. I mean, it is a complete in new product. This type of computer has never been built before. Emily so it is as fast as you can build it. Eric this is as fast, and it is also because we are going out into the community. We built this with the benefit of 1. 8 Million People who have purchased it in the past. Also, the developer community. We have over 50,000 developers who build apps and watch races for pebble watches. This is a completely new product. We dont want to surprise people. We want to give them a chance to see what is coming up next. That is why we have been at this early and on kickstarter. Emily lets look at the numbers out there. Idc says pebble captures 7 of market share. That is for smart watch makers, but that i will drop to 2. 7 . Apple has a nearly 50 . Android wear, 21 , what do you make of those numbers . Eric i dont know that those backup the numbers that we are seeing. Like i said, we shifted over 1. 8 million pebbles in the last 3. 5 years. We are a small Company Going up against some pretty big giants. In the last three years, i think we are pretty much neck and neck with google or the android platform right now. Were taking a special stance. We are trying to build something that is a focused, simple, straightforward product. Our motto is a great smart watch has to start with being a great watch first. That is why we have a watch with a battery life of up to 10 days. It is not something you have to charge every night when you go home. It is not like a Consumer Electronics product. Emily the way ibc puts it, they will enjoy modest growth in the short term, however, Competitive Pressures will cause it to lose share to giants like watch os and android wear, how do you respond to that . Eric again, i just dont see that in the numbers we are seeing. Just today, we sold 22,000 watches in the last 8. 5 hours. That stacks up pretty well against some of the competitors that were seeing. Emily how do you stay relevant . What is the longterm . Eric for us . We see a network of devices on your body. Like i said, this is the first nonwatch product we have created. It is not going to be the last. I think there is an opportunity for many types of devices on your body capturing information in helping you live a better life. Emily you did announce you were laying off 25 of your workforce earlier this year. What happened there . You said money is tight these days. So, what happened there and what is the next phase . How do you get through that . Eric earlier this year, we structured our company to focus on profitability. We knew there were a couple of key things we had to do this year. The kickstarter launch being one of them. We are planning for a bunch of new products on the software side, the hardware side. We are really focused on creating a great smart watch experience that has awesome notifications and health tracking. We are planning to be profitable by the end of the year. Emily you have been doing this now for four years. I went to the original pebble garage four years ago. How would you describe the startup funding environment right now . Eric it is not necessarily something i spend a lot of time worrying about. We funded the business mostly in the last four years through our Kickstarter Campaign and sales. In the last six months, we veered a little bit into less profitable territory. We are ending to get back to profitability. Emily that was the pebble ceo. That does it for this edition of the best of bloomberg west. We will bring you all the latest throughout the week. Next week, we speak to u. S. Energy secretary when the Clean Energy Ministerial comes to San Francisco. Tune in at 6 00 p. M. Eastern, 3 00 p. M. Pacific. See you then. You are watching bloomberg television. Lets get straight to the bloomberg first word news. Gold has fallen for the ninth day in a row, its longest losing streak in the year, in the dollar strengthened versus all major peers. That is after janet yellen said on friday that an Interest Rate increase is likely in coming months. The shanghai composite close flat. Treasury 10 year future contracts fell by the most in almost two weeks. Treasury bills, notes, in bonds are closed worldwide today. The yen sank to a onemonth low versus the dollar, in the topix saw its highest