But it will buy more time for negotiation with democrats on a longerterm funding plan. Donald trump will deliver his first state of the Union Address on january 30th. Paul ryan formally invited him today. He called it an opportunity to lay out the work that needs to be done for the american people. John kelly has denied reports of that the white house is planning to remove Rex Tillerson and replace him with cia director mike on pao. Global news 24 hours a day powered by more than 2700 journalists and analysts, this is bloomberg. Mike on pao. Emily i am emily chang, and this is bloomberg technology. Coming up, the bitcoin waiting game. The ceo gives his take on the volatility of the worlds most traded cryptocurrency. Plus, the spotlight shines on google. How will big tech respond . Ai at the front lines. How machines have affected social media. Technology stocks rebounded in thursday trading from the worst drop in more than a year. While the nasdaq is recovering, the dow staged the third triple digit gain in a week. Where are we in the market cycle . Our equity strategist joins us from new york along with our guest host for the hour, david kirkpatrick. Gina, i will start with you. Where are we . You said these stocks could be subject to rotation risks at the end of the year. Is that what we are seeing now . We saw a little bit of it in november. It is highly unlikely, given history that stocks that outperformed in januarynovember will continue to outperform all the way into december because you typically see rotation in december and january. They may face a nearterm headwind. That said, when you look out over 6, 12, 18 months, tech is generally ask acted to produce robust earning growths and market expansion. The fundamentals are there. There is nothing to suggest in the price trends, even with the modest pullback yesterday, that there is anything ominous on the horizon yet. For the last couple of months we have been debating whether the issues around fake news and election meddling would impact the markets. We have not really seen that yet. Do you think there are big risks at play . I think there are, but i dont think there is any impact on stocks in the short term unless there was a Dramatic Development we dont know of now. I do believe and i have been talking to people about this recently that unless the Big Companies take much more concrete efforts van they have taken so far to address fake news and other issues causing great concern, their stock will be affected. This is a longterm social trust and whether that would be impaired. I do think they will probably take some gestures over time, but at the moment, it is not looking that promising. Emily how would you differentiate between what we will see in the shortterm term and to the longterm . With investors who are looking to catch up and find opportunities, they are looking at value stocks to give them pop at the year end. That makes sense given what is happening with financials, regulation, potential for tax reform, and what we are seeing in inflation and the 10 year treasury. When you are looking over 12, 14, 18 months, what you see is the Earnings Growth rates for tech are really tough to ignore. Even though valuations are high, they are nowhere near where they were in the peak, and a lot of people use that not to get into text. Frankly, fundamentals are much stronger and we have not seen that embed itself into stock prices. There is still a longer tail i think, secular tailwind for the tech sector. But you cannot ignore in the shortterm the tremendous gains we have had over the year that continue to power the sector. Emily with fundamentals being strong, david, what signs will you be looking for that some of the risks you are concerned about are having an impact . Again, i think its longterm. We have seen some interesting stuff in recent days and weeks from the tech giants. I actually think it is a matter of what congress decides to do, and that seems to be more or less nothing in any nearterm scenario. To be honest, i do think we have a big problem, but its not going to be reflected in the stock price certainly within the next few months. Ask me again in six months. Emily gina, say there is regulation. Would that have an impact . I think it would. The reason i say that is because other sectors, especially financials, have actually decreased in regulatory pressure. At least from a general Investor Sentiment perspective. We have not seen any real decline in regulation for financials. We have at least seen a decrease in the rate of regulation and maybe even a halt to regulatory pressures. In that relative comparison, just the perception that regulation may impact the tech sector does defeat it compared to financials. That said, when you compare to financials, it is a little bit of a headwind. Emily Gina Martin Adams of bloomberg intelligence, thank you very much. David kirkpatrick, you are sticking with me for the hour. Meanwhile, bitcoin has had a roller coaster week, soaring before crashing. Lloyd blankfein, ceo of Goldman Sachs and mike bloomberg, founder and majority older of bloomberg lp, sat down with alix steel to talk about if they see value in the cryptocurrency. Its not for me, but there were a lot of things that werent for me in the past that worked out very well. If you told me it was 20 years ago and it worked out i could tell you why it worked out, but based on everything i know, i am not guessing that it will work out. But i am not going to say its a fraud. I cant. I think people confuse bitcoin with block chain. There is a technology where you can have different accesses to data, different people control it, you can see who is doing what and that sort of thing, and there are places were that is useful. In fact, the bloomberg system is a block chain. Its just that instead of having users control it, we control it, but it has all the asked attributes of that. A whole bunch of cryptocurrencies are started. Every day you have a new one. Thats something different. Whether or not the governments of the world will lose control of monetary policy, i am skeptical. Something that moves up and down 20 in a day doesnt feel like maybe with the currency, but its a commodity. You move up in the commodity business. Talk to me about the unregulated trading world of bitcoin. Where is the fraud going to come. The whole concept is well, first of all is it buyer question mark seller . Price discovery . People are using it to perpetrate fraud because you cannot trace it. So its cash. Its hard to pay with cash sometimes. The world is going in a different direction when you think about it. Look in china. Everybody is paying with their smart phones. People on the streets really need help. Instead, they are begging for money. They have a sign with a code, a qr code, if you want to give them money, point your cell phone and they have a bank account, and thats the way they are getting their money. China is heading in that election, and they have gone a very large way, as has india, doing the same thing, getting rid of cash. One of the reasons is you can stop the black market, stop the drug dealers, track where currency is going. America may not be ready to go there, but we are going to be left behind if we dont because this is a much more efficient way of paying for goods and services. They are going to know what everybody is doing with their money. Of course they are going to know. The google already knows. And amazon. Are you not talking to any of your guys . You know, well see. If it works out and gets more established and trades like a store value and it doesnt move up and down 20 them there is liquidity and it, well get to it. But when do Small Business people have to think about their Bitcoin Strategy . I would worry about opening the doors to people who want to do business planning. Emily lloyd blankfein, ceo of Goldman Sachs and mike bloomberg, founder and majority owner of bloomberg lp with alix steel. We are watching shares of the semiconductor. Apple designed its own Power Management chip to use in the iphone. Dialogue relies on apple for about three quarters of its revenue. Coming up, serious shakeups at nbc could have serious repercussions on ratings. We will have all the details next. Emily more on a story rocking the media world, the fate of nbcs flagship morning show. Matt lauer was fired for Sexual Misconduct. The today show is locked in a fierce ratings battle with abcs good morning america. Matt lauer was likely to anger much of the Networks Coverage of the olympics in anchor much of the Networks Coverage of the olympics in january. New revelations are still coming out. How much will this hurt nbc . That is really what investors in comcast will be wondering. The station had been a leader in the ratings. It had started to die down in key demographics. However, the cost of effectively having for people just talking to each other meant it was a real revenue generator for nbc. There are lots of names floating around. As you mentioned, the Winter Olympics are something he was going to be heavily involved in. That was very important for nbc. That could be an opportunity for them to roll out a new lineup. Emily lets talk about the ratings in the revenue here. Are we expecting an actual impact in the numbers . Its interesting. Matt lauer is not as popular as he once was. He once had strong recognizability among viewers. There were a number, like 11 of tv watchers who listed him as a favorite tv personality, but he has not been as popular recently. Maybe that has weakened. Nbc is going to have to contend with finding someone to replace him, but he has always been a polarizing character anyway. Emily cbs this morning also reeling after charlie rose was fired. Also over Sexual Misconduct and similar allegations. How do you think this will shake up the morning show seen in general . You have two shows essentially reeling with their main star gone. It is a fascinating time in tv. We have seen on the cable news side that bill oreilly got kicked out because of misconduct tv. And allegations that they still denying. Fox news hasnt really found a think the same footing. Thats still the number one leader in cable news. The charlie rose show, its probably too early to tell. But it is an opportunity to bring new, fresh faces to the network. Its going to be interesting to see if they are going to be able to find the talent. From some i have spoken to, agents, they have said its not that easy to find stars. They are hard to come by. Emily bloomberg has ended its production and distribution arrangement with charlie rose. Replacement talks to come shortly. Thanks so much. Now, to another story we continue to watch, and reports about the culture at google and a history of interoffice relations that have been a focal point of frustration for employees. We are joined by our tech officer and our guest host for the hour, david kirkpatrick. Alastair, i will start with you. Relations this week about andy rubin leaving after having an inappropriate relationship. Now we have another Bigger Picture story about how interoffice relationships have been a longtime trend at google. That is not necessarily new to many of us, but in this climate, it is really hitting home. In a story written by a former colleague of mine. He basically reported a long history of top google executives in consensual relationships, but often relationships with subordinates. These were often not reported. Some came out in the media a few years ago, and the general effect on other employees at google was that they felt it was not as much of a meritocracy as may be outwardly google looked, and it caused a lot of concern to women. Some women, for example, did well, but they had to spend a lot of time with male executives. It was implied that they got time with executives because they were good looking and things like that. Many of these relationships were well known. Melissa meyer, amanda rosenberg, a new relationship with david drummond. The chief Legal Counsel and one of his subordinates. Do you think this is problematic . And if so, how problematic . It seems problematic for google. The information also pointed out that the company is making a very determined effort to change its policies to enforce its rules much more methodically. But i think all of us, as you know, as you mentioned yourself, who have covered this company have observed that we are in a different moment now. I think the entire industry is moving toward more awareness of what is proper and what isnt and to try to really come up with rules and policies that prevent men in particular from abusing their power over women. I think its worth noting that google is probably, more than any other big company, the most effective machine for producing extremely talented and effective Women Leaders in tech. So, thats a weird possible sort of contradiction. But even as we can see they have had problems with these power relations and potential abuse, they also have generated a very, very extraordinary number of talented Women Technology leaders. Emily i have spoken to women who think its the best place theyve ever worked and some who think it can be sexist and misogynistic. Alastair, what you think about the way they have handled things recently . These are very recent situations where people were allowed to leave quietly. 1. I wanted to make, there was a quote in that story that i thought one point i wanted to make, there was a quote in that story that a woman said she experienced bad things but less bad things than at other companies. I think maybe googles approach to this type of thing changed four or five years ago. I think people being asked to leave is an example of that. The problem is, they allow them to go. And in and andy rubins case, i think they gave him 100 million and he got a great job at uber. Emily thanks so much. David kirkpatrick, youre sticking with us. Much more coming up, and remember, bloomberg tech is streaming live on twitter. This is bloomberg. Emily alibaba is in talks to invest in a chinese facial recognition startup. They are keen and owning a sizable stake but have no interest in exerting control over the ai startup. It is valued at more than 2 billion and is considered one of the more it fans to players in Machine Vision technology. If it goes through, jack ma will have corralled to major facial recognition two major facial recognition startups. Morgan stanley shows apple gained shares of activated smartphones this year. Coming up, big tech is battling online extremism, and now they say they are making major progress. How are they doing it . Thats next. If you like bloomberg news, check us out on the radio on bloomberg. Com, and on sirius xm. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. The u. S. Senate will resume voting. , rule makers rejected a proposal. Their votes to this mechanism would have raised taxes automatically. Goldman sachs says bitcoins wild ride this year means, it is too soon to lay out a strategy. 20 drop from that level into thursday. Something that moves up and down 20 a day does not feel sure. If it works out and it gets more established and it trades like a stored value and it does not move up and down 20 , we will get to it. Japan has now set a formal date on when the emperor will be stepping down. He is set to secede his father or. Ever emper we had that delayed u. S. Tax boat on one hand vote on one hand. There has not been that much action and currency markets. The one is sliding along with chinese bond yields. These young saying has been fluctuating today, tencent is extending losses. Week for thest stock. s gaugep in tencent with the gambling stocks. To reopennting down in hong kong and china at the top of the hour. This is bloomberg. Emily youtube removing tens of thousands of sermons and lectures by al qaeda recruiter. Facebook says its ai tools are spiting 90 of content on their platform. We must also step up our efforts to crack down on terrorist use of the internet. Companies have made tremendous progress on this. Facebook has improved its ability to detect and remove terrorist content. Emily joining us now is an advisor to the counter extremism project and my guest host for the hour, david kirkpatrick. Explain the significance of some of the content removal we have seen more recently. Absolutely. I remember being your with you in studio a couple of weeks ago after the tech hearings. We have seen some progress. We are not all the way there yet. The move by youtube is pretty significant. Its something my organization has been pushing them to do. We have been writing letters and putting pressure on them. There is an oped today by our founder and ceo and president bushs former Homeland Security adviser pushing to get this content off their platform, and they finally did it. Now, when you search for videos that were there by an extreme jihadist cleric who inspired individuals all over the globe, those videos, which violate the terms of service, are no longer up there in most cases. Having said that, he is not the only individual, not the only terrorist, not the only problem on these platforms. But this is something we have been calling for a long time. Emily we have a quote from that oped. They say its only half the battle. The new focus is company policies, industrywide standards and technologies that will be paramount in keeping the public safe. How much more of this content is out there . How hard is it to spot . How quickly does it go up online . There is a lot of content that is generally problematic, but we are talking about the worst of the worst. Individuals and organizations that are on the Terror Organization list from the state department, individuals on the Treasury Department sanctions list. Individuals you cannot do Financial Transactions with we dont think should have safe haven to operate on facebook, twitter, wordpress or smaller platforms. And there are soluti