Against the rogue States Development of a nuclear arsenal. We will never accept a nuclear north korea. Alisa when asked about possible pyongyang andn south korea ahead of the winter olympics, haley said north korea can talk with anyone they want, but the u. S. Will not acknowledge it until they agree to ban the Nuclear Weapons they have. Police in brazil say the search is on for 99 inmates who escaped during a prison riot. Left nineur uprising inmates dead and another 14 injured. Global news 24 hours a day powered by more than 2700 journalists and analysts. This is bloomberg and Bloomberg Technology is next. Emily im emily chang. This is Bloomberg Technology. Coming up, the Biggest Company on the planet go on a buying spree in 2018 . We look at apples billions of dollars of cash on hand and possible m a targets. Plus, bitcoins hangover. Can the currency regain its peak . And the Consumer Electronics show is just around the corner. We will talk about who is going and the likely buzz, but first, to our lead. Trillione about 2. 7 worth of mergers last year the , lowest tally in four years. Will 2018 see a new rush of merger mania . When projectionist that amazon will buy yet another major brickandmortar business in 2018 on top of its recent purchase of whole foods, and he says that his 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, this would be one piece is a demographic grab. The mom demographic is critical to how amazon thinks about their business. Our next guest, says apple will likely get aggressive in the coming year. Apple will benk the big buyer . The big thing is with the new Trump Administration, it opens up the opportunity to bring in a lot of cash internationally to the u. S. Invested in r d, engineering, as well as other companies, and do not forget stock buybacks. While we do lay out a list of potential shopping targets, we also want to note that stock buyback is probably going to be on the front of most companies out there, to buy that their own stock. Emily you mentioned Political Uncertainty. We do have a chart here on the bloomberg terminal showing the relationship between Political Uncertainty in the u. S. And m a volume. You think apple has the problem of too much cash. What do you think their 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 tune of 50 billion to 70 billion per year. When we think about m a, it is important for a company to invest in itself and innovation. Then, what kind of items are they missing. Apple has talk time and time again about more content and creation of that content. You are thinking disney . That is when people talk about as well as others. When people think about these big mergers, people say they are too big. We believe apple over time has not only look at small but also large major mergers. Emily they may have looked, but they have never done it. The biggest acquisition they did was the acquisition of beats, which, to be fair, did happen under tim cook. Maybe a sign he is more open to deals in the future, but what makes you think it will be something so 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. More importantly also is Artificial Intelligence and content where people want to access everything now and immediately, no matter where they are at home, in their car, on the subway, commuting. People want access everywhere. We believe apple is going to look at this and all these new invest. Opportunities to emily what about apple by in tesla . People have talked about that, and in our analysis, we talked about eps accretion and things like that. Sibley put, tesla makes cars. Apple outsources. Apple is in charge of operating systems and a User Experience, so we simply do not see this as a high priority. Emily they do make phones. Jim they outsource the phones. Emily they outsource manufacturing, but not design. Jim true. Emily when you look more probably, what do you see happening . We heard jean munster predicting that amazon could buy target. Jim i think people think of tech as being a small area of innovation and now we are seeing these new disruptive innovations coming along, that m a will heat up. Ofthink this will be a year what we call merger mania out there, and size will not really create a constraint on things. Also stock buyback will be a natural spot that will allow for eps accretions to go higher. We think this will be a big year for merger mania. Emily do you think it will go through regulatory issues like we see 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 buy on apple, you think it can go even higher. By . Tax reform is one way to bring things up. We actually expect apple to see growth. People say everyone in the u. S. Has an iphone. That is not true. We actually see that apple is growing its share in areas where the lower price phones such as in india and china can gain traction. We think it could get to 200 by years end. Emily how do you think tax reform will impact other giants like google, for example . We laid out a scenario of the actual financial impact. For apple it is 7 decrease in eps accretion on lower taxes and 7 for buying back stock. For other companies, it could be even greater than that, so apple kind of fits in the midpart as far as where the ranking goes. Some companies who have a lot more north america focus have north of 20 accretion from that. We put together the chart and will come back to you with those. Emily thank you so much for stopping by. Areof the u. K. , regulators considering penalties on the worlds biggest tech at leasts to create incentives for them to remove terrorist propaganda from their social networks more quickly according to the sunday times. U. K. s security minister said patience is running out fast. Coming up, bitcoin off to a rocky start this year. Can the worlds biggest cryptocurrency maintain its 2017 hype . This is bloomberg. Emily emily a story we are thielsng, Peter Founders Fund has amassed bitcoin. The Venture Capital firm but 15 million to 20 million worth of bitcoin and the Holding Value reached hundreds of millions of dollars as the Digital Currency soared last year. Meantime, bitcoin made gains in after the news broke. Tech leading the rally for the first trading day of the year. Stocksined by our reporter, abigail doolittle. Bloomberg rallying but still off its peak from a few weeks ago. Tell me what happened. Lots of volatility for bitcoin. You are right about that for sure. Last month, we saw lots of volatility. Put in ange after it alltime high of 90,500, swooping below this tells us 11,000. 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 up as much as 12 , finishing higher by about 8. 5 percent, so the bulls taking it, but relative to this kind of marketplace, it is pretty handy to take a look at the technicals. Where looking at a chart trying to tell where the buyers and sellers land. This is a sixmonth chart. Over the last six months, bulls very much in charge. Beautiful uptrend going from almost 1000 at this time last year, close to 20,000 in middecember, but here is that volatility, these wild swings. The point to be made here, right now, were looking at lower highs. That tells us that the sellers are perhaps gaining a little momentum in the buyers are a little bit tired. We actually have a lower low today and yesterday. That is a lot of technical jargon, but its a way of saying the battleground is likely to continue between the bulls and bears. The chart may suggest to some degree that perhaps sellers are going to have their way, but anything is possible, of course, with bitcoin. Emily definitely interesting news from controversial investor peter thiel. Talk about technology, starting strong again. Abigail a bullish day for the start of 2018. Before we turn to nasdaq, s p 500 putting in a record high, as did the nasdaq, but this was the first time for the s p 500 since 1992. The bulls are in charge relative to tech. We have seen the nasdaq outperformed in a big way. Lot of it was a tech, but it was also biotech. Relative to tech, we were looking at lots of strength to the chip. Some of the stocks there that really drove those gains amd and micron. Amd some stocks gaining on data for the month of november in an Industry Report and then andtive to biotech, biogen, insight, many others gaining in a significant way for sure. Emily we were talking about apple earlier. I see green across the stream green across the screen. What else did you see . apple finishing higher by about 1. 8 . Piperlson over at reiterated his price target based on a bullish iphone customer survey. Last week, of course, a good weekend for apple on the possibility the iphone x is not doing quite as well as some might like. Facebook, amazon, netflix, google all doing very well. Netflix up almost 5 , really having a big day after shares were upgraded to outperform. The analyst there really believing they could take over from a subscription standpoint. What really stands out, last november,e end of they looked a little bit wobbly with web the longest losing stretches and about 13 months, but we have a chart to show that 2018 really started off in a pretty bullish way for these banks stocks. Take a look at this move higher for the Merrill Lynch index, up. Bout 2. 75 that was driven by amazon results, breaking sort of this stalemate that we saw at the end of december. Seems some of that could have had to do with investors letting the big gains of 2017 ride and now that we are looking at a new year, the bulls are back. Tech coming in hot in 2018. Im sure you will have lots to talk about this year. Our stocks reporter there. Coming up, tesla reports fourthQuarter Sales and production later this week. Will it shed light on the model threes production hell . We will discuss. This is bloomberg. Emily a chinese internet entrepreneur has defied orders to return home. Orders came to help attack a tech company he founded resolve its 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 3s last quarter than it did in the past three months. Another analyst says it may have increased by a factor of 40. Tesla will report for Quarter Sales and production later this month. Joining us now is our reporter who covers all things tesla. What we know . Have regular people, 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. Now we are seeing the first wave of deliveries going to regular people. Granted these are usually people , who also own a model as or and ask. I actually saw my first in the wild the other day. Emily on the road. They did scale back their 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. The week between christmas and new years was very busy. Emily what are the reviews . What are tweets saying . The first people who have them seem to be pretty happy. There seem to be mild issues that are probably software related, but there have not been any reports of major breakdowns with the battery or many major issues yet. Emily what will we hear later this week . Basically, most automakers report sales on a monthly basis. Tesla doesnt quarterly. Quarterly sales and delivery, which the same thing for them. Emily i am seeing more model be cleared. Ild, to how does this fit into the overall strategy, releasing finally a car for the masses . We will learn a lot about where they are in terms of production hell. If they sold 5000 model 3s in the quarter, that would be phenomenal. Our analysts estimate its probably more like 2900. The question is how they work through these bottleneck issues, and as long as they can say theyre on track for the first quarter, that would be good. The production issues . They said they had issues with their battery module, and there have been a number of other untold issues they have not specified. Emily how are investors reacting . The stock is up in anticipation of what they will release tomorrow. Longterm investors remain bullish on the company. The main thing is that the car seems to be getting fairly positive reviews. Emily we were talking tech merger mania potentially for 2018. We had a citigroup analyst on the show earlier who talked about the us ability of apple buying tesla, which i know has been raised for years now. He does not think it is likely. What do you think . It is a perennial rumor. It is hard for me to imagine elon musk selling his company to someone else unless he could retain full control. How would that work . I do not see elon reporting to. Im cook emily well, you never know. There has also been talk about will elon one day hand over the and stay atla spacex, which is his other baby, but maybe a more preferable baby we dont know. That is a good question. Has publicly said he will step model 3tesla once production is up and running, but he has also said he loves tesla like his own child and will never leave the company. Emily it is unclear which one he loves more, right . Right. He loves them all. He will always be involved in some way as chairman of the board but not ceo. What is interesting about tesla is they do not have a coo. Who in their talent is being groomed for that role . Musk, speaking of elon what is happening with spacex. They are expecting two to 30 launches, which is a progressive target that may slip, but their first launch is later this week. A secretive military payload, and then they are planning to do their first ever made in test. Light be alli know you will over those numbers when they cross. Thanks so much for dropping by. Every of won a lawsuit brought Apartment Investment and management company, one of the largest residential landlords in the United States. The suit alleges that the online home sharing marketplace enables tenants to break their lease agreements through unauthorized sublets. A federal judge ruled airbnb is protected by the Communications Decency act, a 1996 law that shields Online Service providers from liability. Coming up, we will hear from microsoft as president and chief legal officer about the role of tech in the current administration. If you like bloomberg news, check us out on the radio. You can listen on the bloomberg app, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Youre watching Bloomberg Markets middle eastern or taking on the first four headlines from around the world. The Trump Administration says it may impose new sanctions on iran as the number of people arrested in street protests. Thepresident tweeted that people of iran are finally acting against a brutal and corrupt regime. You and Ambassador Says the u. S. Has no unilateral plans but once an emergency session of the security council. President trump has offered conflicting opinions on north korea, saying the prescience of sanctions could even could ease tensions, but then resorting to schoolyard games about nuclear. He said he had a Bigger Nuclear button then kim jongun viewed kim jongun. Fueled by growth and ride hailing, the increasing chance of a ban on human operated vehicles in cities and the race to dominate tech, Autonomous Cars are supposedly going to talk 22 million in shells by 2030. Kicking markets midsession, we are seeing the regional benchmark index hold onto and build on record highs. Japan still offline. It will come back until thursday. Take a look at the regional indices we are seeing our threeputt the philippines up by 1. 6 . China also building on solid gains from yesterday. Today,eturn in tech taiwan is up about 7 10 of 1 . Good moves coming through in hong kongs session. They run the lunch break did stellar session yesterday and we are seeing the hang seng on that break up by one third of percent. At theave a look currency market, it is a story of dollar strength, a little bit of weakness coming through in the asian currencies. The aussie dollar off. Look at the bond space, essentially following what we saw in the u. S. Treasury market. You are seeing asian bonds, mostly lower. Yields rising across the board with the exception of china, the yield on the air to your note down by 4. 3 basis points. Theing at what is driving Market Action today, the story of what we saw on wall street as well as tech players living in the region. Lifting in the region. Seeing very Strong Movement in mining stocks today as well. That is despite the fact that we have started to see a little bit of a switch out of aluminum dropping on china, and oil out of its twoyear high. Emily this is Bloomberg Technolo