Police in brazil say the search is on for 99 inmates who escaped during a prison riot. Nine inmates are dead, 14 are injured. Global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. , isbloomberg technology next. Im emily chang. This is bloomberg technology. Could the Biggest Company on the planet go on a buying spree. We look at apples billions of dollars of cash on hand and possible ma and a targets here it plus, bitcoins hangover. Can the currency regain its peak . We will talk about the likely ,uzz around the the first there were about 2. 7 billion dollars of mergers last year, the lowest tally in four years. Will 2018 see a new rush of merger mania . Anotherill buy yet major brickandmortar business in 2018 on top of its recent purchase of whole foods and he says that is target. The timing on this is difficult. We think it is 2018, but seeing the combination of value is easy. This is not just a revenue grab, but a demographic grab. Om demographic is critical to business. Emily it is said that apple will likely get aggressive in the coming year. Why do you think apple will be the big buyer . Is with the new trump administration, it opens up the opportunity to bring in a lot of cash internationally to the u. S. Invest in r d as well as other companies, and dont forget stock buybacks. What we do lay out a list of potential shopping targets, we also want to know that stock buy back is probably going to be on the front of most companies out there. You mentioned Political Uncertainty. We have a chart here showing the relationship between Political Uncertainty and m a volume. You think apple has the problem of to much cash, what you think the target might be . Jim its not only a problem today, but also a problem getting worse. Thats a good thing. Too much cash growing to the billion per year. When you think about m and a, first it is important for a company to invest in itself and innovation. Second, what kind of items are they missing. And time talked time again about content and creation of content. Emily so you think about disney . Jim that is one people talk about among others. We believe apple overtime has looked at not only small, but actually large major mergers. Emily they may have looked, but they have never done it. The biggest acquisition they did was of which did happen under tim cook, which may be a sign that he is more open to deals in the future, but what makes you think it will be something highpriced . Jim before the tax law, there is a big penalty to bring the cash back, now that penalty is gone and a lot of things may open up. But the big thing is Artificial Intelligence and content were people want to access everything now, immediately, matter where they are. People want to ask us everywhere we believe simply apple is going to look at this and Artificial Intelligence and new ages of opportunities to invest. What about apple buying tesla . Jim people have talked about that. Simply put, tesla makes cars. Is inoutsources and apple charge of operating systems and User Experience. We dont see that as a high probability. Emily they do make phones . Jim they outsource the phones. Emily they outsource manufacturing, but not design. Jim true. Emily when you look more broadly, what you think we have heard predictions that amazon could buy target. What do you think will happen more broadly with that . Of i think people think tech as being a small area of innovation and now we are seeing these new disruptive innovations coming along that m and a will heat up. We think this will be a year we call merger mania out there and size really isnt create a restraint on things. Also stock buyback, a natural creations to go higher. This will be merger mania. Will goou think they through regulatory issues like we are seeing with at t and time warner . Jim i think so. A lot of the area we deal with as far as hardware in the User Experience doesnt see the amount of pricing competition or government scrutiny you raised earlier. Emily you have also reiterated your by on apple, you think it could good higher go higher. I do. Tax reform is one way to bring things up. We expect apple to see growth. People say everyone in the u. S. Has an iphone, but that is not true. Price phones lower growing. Emily how do you think the tax cut are going to impact some of the giants like google, for example . We laid out a scenario of the actual financial impact. 7 decrease in on lower taxes and 7 for buying back stock. Apple fits in the midpart as far as where the ranking goes. Some companies who have a lot thank north of 20 you so much for stopping by. Tax penalties are considered on Companies Like apple and google. U. K. Security minister ben wallace says patience is running out fast. But going off to a rocky start, can the cryptocurrency maintain its height . Check us out on twitter. This is bloomberg. Emily a story we are watching, heater teals amassed investment in bit going. The holdings of value reached hundreds of millions as the Digital Currency soared last year. Meantime, bitcoin made gains in tuesdays trade. In a breakdown, bitcoin and tax cut leading the rally for the first trading day of the year. We are joined by Abigail Doolittle. Bitcoin rallying, but far off from its cake. Tell us what happened. Abigail lots of volatility here for bitcoin. Last month we saw lots of volatility. A wide range of bitcoin. Below 11,000. G this tells us there is uncertainty about what is next. The bulls will tell you it is the thing of the future, at least blockchain, you have to be in it. The bear is saying its a bubble, there is mania. Lots of uncertainty the wide range in bitcoin last month, we are flashing that uncertainty and we are seeing at in 2018. Yesterday it was down 5 on the day, today bitcoin is basic the flat. And after that bullish report about founders, we saw it finishing higher about 8. 5 . Relative to this marketplace, it is handy to take a look at the technicals. At the end of the day youre trying to tell where the sellers and liars land. Chart. Ook at g btv almost a thousand dollars this time last year, close to 20,000 in middecember, but here is that volatility, the wild swings. The point here, emily, we are looking at lower highs here it that tells us the sellers are gaining momentum. We have a lower low today and yesterday to the recent lower lows. That is technical jargon, but a way of saying the battleground is likely to continue between the bulls and the bears. This chart may suggest that to some degrees these sellers are going to have their way. Anything seems possible with bitcoin, emily. Emily definitely interesting news from peter thiel. Talking about technology, starting strong again. Day for theullish start of 2018. Before we turn to nasdaq, s p 500 putting in a record high, but this is the first time for the s p 500 that has happened since 1992. We even nasdaq outperformed in a big way, up 1. 5 . Interestingly a lot of it was tech, but it was also biotech. And you are looking at the strength of the chip, stocks there that really throw those gains, amd and macron, and the named by bank of america, Merrill Lynch and other chip stocks gaining the month of november in an Industry Group or. And then relative to biotech, biogen and others gaining in a significant way, for sure. We were talking about apple earlier, but i see green across the screen for apple. What else did you see . Abigail there was another analyst out positive on apple as well. The other analyst was michelson at hyper. Pipermike olson at based on a bullish iphone customer survey. There is possibility that the iphone x isnt doing as well as e might like, but facebook, amazon, netflix, ogle all doing very well. Netflix up 5 , a big day after the analysts their believing they could take over from a subscription standpoint. And what stands out about the , inc. Ofce, last week america wobbly. Here we have a chart to show that 2018 has started off in a bullish way for the bank stocks. 3382, and look at. He bank index up about 2. 3 that was driven by amazon results, breaking this stalemate here we saw back the end of december. Some of that could of had to do with investors leading the big gains. Now that we are looking at of new year, the bulls are back. All right. Bloombergs Abigail Doolittle im sure you have lot to talk about this year. Tesla reports fourthquarter sales and production later this week. Will it shed light on the model three production this is bloomberg. Emily chinese internet entrepreneur has defied orders to return home. Attackcame to help company he founded resolve crushing debt. He says he needs to stay in the u. S. To work on his electric cars start up. He expanded into smart phones automobiles before coming under increased criticism from authorities. The Chinese Regulatory Commission issued an order for him to return by the end of 2017. Instead, he and his brother and wife have been empowered to handle affairs with the shenzhen listed firm. Tesla is keeping wall street guessing about sales of its model three sedan. The electric carmaker may have delivered four times more model threes and it did in the past three months. Other analyst say it may have increased by a factor of 40. Our correspondent who covers all things tesla. Have nonemployees started receiving their cars yet . Yes. And if you search on twitter you will see all kinds of information from people who have gotten their cars. The first waveng of deliveries going to regular people. These are usually people who also own a model as or and ask. You are starting to see them in the wild. I sell the first one myself the other day. Said, they did scale back delivery targets significantly, right . They are basically running a quarter behind. Elon musk has said its not likely to hit until later much. What everyone is wondering is common a cars did they deliver. I think we are hearing that a lot of cars were delivered in the last two weeks. Emily what are the tweets saying about the model three . The first people who have them seem to be pretty happy. Issues thate mild are probably software related, but no major issues yet. Emily what are we going to hear later this week, exactly . Automakersy most report sales on a monthly basis, tesla does it quarterly. Quarterly sales and deliveries are the same thing for them. Emily im seeing more model xs,to be clear model how is this finally releasing cars for the masses . Sold by thousand model threes, that would be phenomenal, but most analysts suggested is more like 2900, but i think more portly it is how they worked through bottleneck issues. As long as they are on track to the first quarter, that would be good. Emily what are the production issues . Dana they had issues with their battery module and a number of untold issues they havent specified. Emily how have investors reacted . Dana stock is up. It is interesting, because it is like i dont care about this quarter, i want to know whats going to happen next quarter. The car seems to be getting positive reviews. Were taught about tech merger mania. We talked about the possibility of apple buying tesla, which i know has been raised for years now. He didnt think . It was likely, what do you think dana it is a perennial rumor. It is hard for me to imagine elon musk elling his company to someone else unless he could retain full control. Seleka so, how would that work . I dont see elon musk reporting to tim cook. Emily you never known. There is also talk about will elon musk hand over the reins, and then stay with spacex. He may step down as ceo of tesla once model three is up and running, however, he has also said he loves tesla like his own child. Emily but it is unclear which one he loves more, right . Dana right. He will always be involved with tesla in some way. What is interesting is they in theave a coo, so who company is being groomed for that role, if anyone. Emily so, what is happening with spacex this year . Upight dana they are giving gearing up for a strong year. The first lunch is later this militaryecretive payload. And then it first test flight of a larger rocket that has been in development for some time. Emily all right. Thank you so much for stopping by. Airbnb has won a lawsuit brought on by a management company, one of the largest involving landlords in the United States. The suit alleged that the online home sharing market place allowed tenants to break their lease agreements and sublets. 1996 law that shields liability for my content users post. Coming up, we will hear from chief legal officer about the role of tech in the current administration. If you like bloomberg news, check us out on the radio. This is bloomberg. Urologic bloomberg technology. It is a check of your first word news. Own cheung kong continues to grip much of the u. S. To begin 2018. And chicago, the extreme cold front part of the Chicago River and made for a difficult return from the long holiday weekend. Boston has record for the in the colts not ever city. Temperatures have been below 20 degrees for the past week. The National Weather service has issued windchill advisories and freeze warnings covering an area from south texas to canada and from montana through new england. While al frankens time in the u. S. Is officially over, franken submitted his resume to the government of minnesota, his tina smith will resign tomorrow. He was forced to resign after several women came forward with allegations of Sexual Misconduct against him. Meanwhile, Michele Bachmann said she is considering running for frankens former senate seat in a november special election. Ofprotesters crowd district iran, theyre calling on iran to social media sites which people have been using to share news about the protests, they will use Virtual Private Networks that can gain access to block sites, global news powered by more than 2700 journalists and analysts in more than 120 countries, i am a alisa parenti, this is bloomberg. It is just after 5 30 p. M. Here in washington, 630 in the morning in hong kong, we are joined by david ingles with a look at the markets. Good morning and happy 2018 to you. Avid happy new year i am looking at markets right now, uninspired start of the year. It looks like we will get a little more a little more momentum and we will make our way toward major market markets this was the point. Japan is still shut for the holidays but it was trading, we will likely have gotten some gains there as well and were still seeing some momentum coming through there. Look at what we are here, the itsar is pushing toward sixth straight day of decline, we are going to christmas, gold continues to glitter as you can see. We are pushing toward the highest level in 3. 5 months. Retail sales due out here in hong kong later on in the afternoon, this is it for me. Im david ingles in hong kong. Quite this is bloomberg technology, i am emily chang. After many of Silicon Valleys Largest Companies protested his immigration policies. One of the loudest voices was microsoft and chief officer brad smith. They spoke with brad smith on a special surveillance with president and founder even bremner. They started the conversation by asking smith about the role of technology over the next five years. We are seeing technology have several important impacts, with the advent of Artificial Intelligence or ai. We are going to see an ongoing impact on not just businesses and government but also economies and jobs. I think people are bracing for that, we are looking to the future without a clear sense of exactly which jobs will be eliminated and new jobs will be created, what additional skills will people need in order to take these jobs. I think the other thing to think about is the international level,of this at one i teach i doubt it has become more global, this is another area where he has been saying that we are seeing the rise of china, we are seeing chinese tech leaders emerge as global tech leaders and at the same time we are seeing fragmentation there technology sector, are longer quite as global and internet. I think five years from now we may see more of that fragmentation. Part of your time is you are in Silicon Valley, youre in the real world seattle washington. Is a thing out of or washington, how afraid should San Francisco and the cliche of google or apple you are competitors, how afraid should they be of washington in 2018 . When i get tol, washington or new york, most people seem to think that seattle is either just next to Silicon Valley or part of it. Think for all of us, there is an increasing tension between the west coast and the east coast, i think we have been seeing this unfold over the last decade, you certainly see political commentators and washington dc identify the tech it is nota pinata, just those on the left, it is those on the right. I dont know that other people have transfer that concern about technology into a defined course of potential political regulation but that could, and i think it really behooves all of us in the tech sector to be listening to that and to be at addressing those concerns and acknowledging the concerns. Silicon valley has sometimes been slow to do. Lets move to the commonwealth of massachusetts or the english commonwealth and talk to you in about the cap tech comments. What does this mean . Youre the president of microsoft saying what will be global tech,s looks like youll see fragmentation, you see that in the internet space and as we move from the information revolution,o data it is much more top down. So the space that is being created, the way that people are engaging and the filters that they seek to engage in commerce, those are increasingly either coming from a bunch of fragmenting companies that are competing with each other, very sophisticated in the u. S. Or through the chinese government. Those are typically different models. That is not the u. S. Like globalization we have been thinking about. I think you can make an argument that the facebooks and googles and microsofts are easily as strategically important for the United States for the economy and the National Security as lockheed and raytheon everywhere during the cold war. I dont think the u. S. Government is prepared to align with these companies that way.