First to our top story, job numbers came out friday while overall payroll gains were up in july along with a rise in hourly earnings. That wasnt enough to keep stocks out of the red, the worst week of 2019. This as President Trump decided to ratchet up the trade war with china, announcing a slew of new tariffs for the start of september, and dont forget the fed cutting Interest Rates for the First Time Since 2008. A move chairman powell describes as a midcycle adjustment to keep the economy expanding. We have tom thibodeau, the ceo and our editor mike regan. Why were markets caught off guard by the president s escalation of the trade war, when really there has been no end in sight. If you look back to the g20 meeting last month, there seems to be, if not progress, at least 80 escalation of tensions. When we started the week, President Trump was tweeting on monday about china, criticizing them. At that point it didnt seem like he was ready to escalate things with fu catching people offguard in the hopes because they were hoping that the status quo was going to continue. Its obvious the trade delegation to china this week, robert and Steven Mnuchin went on on behalf of President Trump its clear they made no progress there. Trump is going back to that. To really ratchet up pressure with this threat of new tariffs. China vowed to retaliate. How is this impacting jobs . We see strong job growth across the board, really from entrylevel to expert. We continue to see a lot of job openings and a lot of hiring. The Telecom Sector is shedding their nontechnical staff. We continue to see strong results. Also for some of the new emerging areas. Typically a dovish fed sent stocks soaring. Why did it work this time . He did cut rates. Investors were hoping he would not just signal one or two cuts, but that the fed was embarking on an aggressive campaign, considerably lower rates for the foreseeable future. There are reasons chairman powell wouldnt want to do that, wouldnt want to tip his hand if he was planning that aggressive approach. Thats what the futures and bond market were pricing in. To have him push back against that notion really caused people to push back against what they ought pushback that what they thought will happen will happen. Where are the most jobs being added . A massive expansion in cybersecurity jobs in particular, and that is not just the people who are down in the basement at nsa. Working at the front lines, doing tech support, doing network administration. We have a deficit, maybe a 30 shortfall in terms of numbers we then you see emerging fields. 50,000 total in the u. S. Edging towards the 100,000 by this time next year. We are starting to see some of these new technology domains. Artificial intelligence, they are having an impact on the job market. As you take a look here in the bloomberg, this means President Trump will be slapping tariffs on literally every single thing imported from china. Some products have been spared. This is how the white house has been spinning at. Our experience and our modeling suggests the Consumer Impact is very small and the biggest burden is falling on china. This means the cost of an iphone could be raised. How much does that have to do with it . Collect Semiconductor Stocks were among the weakest groups. That sector of the stock market that was in large part because of bad earnings. They did a side of these macro issues as part of the reason why its cut its 2020 outlook. I think the whole supply chain of tech hardware is in place must to continue to follow. We will see what next week brings. Alphabets google says it will require rivals to bid to become listed as alternative search providers on android phones. Consumers will choose between google and three other companies as their default search engine. The European Commission find google for 4. 8 billion dollars over antitrust concerns. Square slowing down. Wall street thinks dumping caviar could be the right move. And if you like bloomberg news, check us out on the radio. This is bloomberg. Shares a square taking a hit. The biggest slide since november 2017 for the event tech company. Shares closed ultimately above that. This is gross payment by them has been on a steady decline since late 2014. Joining us to discuss, Senior Research analyst at moffitt who has a neutral recommendation on square. Is the drop warranted . I think this one is the buying opportunity. Todays reaction was overdone, definitely. The topline news of the day was that square was selling caviar to door for 410 million. That was a positive move. We have been waiting for square to do this. Caviar is under intense pressure from players like uber eats and grubhub. It is not a core business for square. We estimate this running at a 50 million rate. It will be a cash generating transaction for square. One square bought caviar, i remember thinking this doesnt make sense to me. I never understood what they intend to do. Any high growth is that High Technology company is going to experiment highgrowth Technology Companies going to experiment in different areas. They had this fullservice integrated solution for restaurants. Restaurants are over 25 of their volume, so they thought of caviar as an extension. They bought this business five or six years ago. The entire competitive environment in food delivery has changed since then. I dont fault them for buying caviar in the first place. They are getting it over to door dash. They will still have some skin in the game. An entirely different competitive landscape. In addition to the caviar sale, for the first times square disclosed the revenue run rate for their cash out business, which is the consumer business. This is the app that generates most of its revenues from debit cards, consumers using debit cards from consumers transferring funds around. That literally in the last three years has gone from less in one million to and revenue to a quarterly run rate of 530 million. They are refocusing on their two core ecosystems, consumer and seller. And the one taking off with the steep trajectory is consumer. By selling off caviar they are able to balance their investment between the consumer ecosystem and also their traditional core seller business, which is the pos system. Talk about square cash. It has been a closet hit. What is the importance of that business . As a standalone business, it is an interesting attractive example of these banking models that is an alternative to a checking account, instead of these consumers that use a mobileenabled Digital Banking model. Where it can be exciting for square is it gives square a twosided ecosystem. Both consumers and merchants, which enable it to create these Network Effects that are so powerful, where they can do things like, for example, they offer a rewards program through the cash app. They can market that to the sellers as a differentiator of their offering. That truly is the holy grail of payments to have 80 have a twosided ecosystem and square has developed one of those in the last couple of years. You have investors who dont agree with you. I appreciate you sharing your perspective. Thank you so much for joining us. Apple and barclays have ended their rewards card program at the head of this months launch of apples new credit card, a move apple hopes will have its customers paying for a plethora of new services. Joining us to discuss is mark in l. A. It was something that was very popular a few years ago. I know fewer people have been using it. I remember 10 years ago if you wanted to buy a mac from an apple store, they would promote this thing. Its become less popular. This relationship is powerful for barclays. It was a big point for them. Woman sacks is knocking on the door with their apple car and thats rings the room for berkeley to play with apple here. My colleague and i discovered that indeed is going away. You have reported it will happen this month. What are we expecting when this Program Debuts . The program will launch this month. You will be able to sign up. To be able to still get the credit card. What this is going to do is they are going to get consumers away a single credit card. Apple has a lot of people making apple purchases, as well as Subscription Service transactions through itunes, the app store. For goldman sachs, this is going to make them more of a consumer name. Uptodate it has been business focused high network individuals. This is something that is going to be mainstream. Some controversy around siri. Apple suspending the program whereby human employees actually listen to some of our queries to siri to supposedly improve how she or here performs. This after a story by the guardian exposing some of these internal practices. Apple has made privacy a cornerstone of its Marketing Strategy and the way that it designs its products. Tell us about this. . Apple likes to say what happens on your iphone stays on your iphone. This was their promo tagline on a big billboard they posted in vegas in january. It appears that is only the case unless you are talking to siri. You may have some contractors listening to that. Apple says fewer than 1 of utterances to siri are reviewed, which would be a low number given the hundreds of millions of people who do you siri when it works. Now google has been reviewing their internal program. Apple is doing the same. And when they do bring it back into the full, users will be able to opt out from having their utterances spoken to siri for review. They should have made that an opt in option months ago. Thank you so much for joining us. We will have an exclusive interview with a chief security officer. This is bloomberg. As President Trump escalates his trade war with china, one Company Continues to be caught in the middle. Huawei has seen a dramatic slowdown in sales growth. Shery ahn spoke with huaweis chief officer and asked how huawei is addressing vulnerability in its products. We have been actively involved in independent evaluation of our products around the world. Most recently, the oversight award in the united kingdom. We sell on all the carriers, not the Core Networks which would be the sensitive networks, but the radio access networks. They have identified vulnerabilities in our software. And they have brought to our attention important lessons we can learn, so we are committed as a Global Company to spend 2 billion over the next five years to improve our engineering process. To make sure we are more consistent so there wont be as many vulnerabilities that are there. And to make our code more readily adaptable for new technologies with Artificial Intelligence. We think our competitors would value from similar evaluations to make their products more secure as well. We are going from a 4g into a 5g world. The ecosystem is becoming more complex. The 5g architectures are becoming more complex. When that happens carriers might not have much control over the edge of the network. The coalition of Companies Globally that has been developing their impressive standards to address these specific threat environments we see, it will be in involving thing because different use cases will roll out. Theyve identified those threats and come up with new standards greater security and assurance and transparency for everybodys products. This distinguish between the core of the network it has access to the most sensitive data. There is a security interface between the core and the radio access. Theres a security interface between that and the customers. The beauty of what we are seeing is the modeling vision it helps manage the risk and helps make sure that there is diversity so you have more resilience if there is a shutdown. The core is physically going to move closer to the edge, the separation is going to be maintained with the security enhanced as 5g rolls out. Do you see any progress with your meetings in australia . The Australian Government spoke out that they are not making a change in the policy. I think we have to remember there is a geopolitical environment with the u. S. China talks. The u. S. Or poorly encourage the Australian Government a year ago to block huaway from the 5g network. Theres no chance or in reports like that we would be shocked if they said anything different than what they said. There seems to be an image problem with huaway. We are seeing allegations and violations. We have seen several accusations from Different Companies about huawei fueling trade secrets. How do you convince the people that you can trust huawei . The kinds of measures we are talking about, measures that provide assurance and transparency regarding the products and conduct of employees is one way to do it. When you look at the Global Campaign taking place for 18 months, its astounding when you look at the number of countries, even close allies, that have pushed back. They have been given no evidence of major cybersecurity wrongdoing. They are going to continue to pursue a Risk Mitigation approach that would be applied to all vendors. Block huaway if you must, but take the measures necessary to make the commute occasions networks more secure. That was an exquisite interview with huaweis chief security officer. How tech stocks are faring amid earnings and escalating trade tensions. Emily this is bloomberg technology. Im emily chang in san francisco. It was another big week for tech earnings. Apple projected fourthquarter earnings that toppled analyst estimates, signaling optimism around iphones. Qualcomm shares tumbled thursday after the company gave a disappointing forecast driven by weak smartphone demand. Trump threatened to impose more tariffs on chinese imports. That continued into friday. Joining us to discuss in salt lake city, jason ware. In san francisco, mobile expert joe madden. Thank you for joining us. Lets start with the trade war. What did you think how is it impacting big tech now and how is it going to impact big tech companys over the next six months given there is a resolution and still a lot of uncertainty . Joe there was a lot of drama going on in the chip world with companies not being able to ship to their customers. In a longterm strategy, some Chip Companies buy into the idea that the u. S. Needs to push back to protect ip. It is a shortterm versus longterm tugofwar right now. Emily jason, we have had generally positive results from Tech Companies, including apple this week. Yet, they are still feeling the pain. Jason yeah, we take a little bit of a Bigger Picture view. We have had some strong tech reports this week but if you go back starting with ibm on july 17, we have seen a lot of companies in the Technology Space report good earnings. Whether it is intel, microsoft. They are saying the growth stories are still intact. While the trade war is an issue given the International Foreign revenue these Tech Companies have, i still think they have a tail wind at their back. Emily joe, you have done a lot of research on huawei specifically in the whole trade war has illuminated how interconnected u. S. And Chinese Companies are. You have to companies that supply technology to huawei suffering because they can no longer supply that technology because of the white house blacklist. Huawei trying to develop its own operating system because it cannot get an operating system from google. Do you think this will permanently or more deeply sever ties between the u. S. And china that have existed for a long time . Is that good or bad . Joe i think there will be a Lasting Impact that the chinese ecosystem will develop more fully. We are forcing that to happen. Huawei is really in a bad position and no one sees it yet. The reason is that huawei really knew this was coming, they started stockpiling components roughly the first of the year. They started buying ahead on things like fpga components, modems, rf components and things like this. They are actually Still Producing base stations and some phones using american components they have stockpiled. They have not run out of inventory yet. Huawei announced some excellent earnings that surprised people. It did not surprise people in the chip world because they knew they were shipping ahead of demand and building up inventory. As we have gone through our analysis, we see huawei is likely to run out three to four months from now. At that point, we think the pressure will increase. We will see more progress in the trade talks. Emily so, jason, what does it mean for Companies Like qualcomm, like apple, like intel . Jason so, it is multifaceted. Qualcomm is saying, for example, not only is the trade war and the relationship with huawei a headwind, but if you look at what is happening with 5g, an extra layer on this, there is a lot of inventory in the channel for 4g and technologies that proceed 5g that will be flushed out. It will create a doughnut hole for Companies Like qualcomm. If you look at apple, there is an argument to be made this will be a tailwind for apple in the second half of 2020 for their iphone device lineup if 5g hits at that time. We can get a bit of a pickup in apples business. Apple has the services store going for it in spades and the wearable category looks pretty good. It is a tale of two different narratives. Emily all of this is happening as countries around the world race to 5g and apple has been a company that has been slow to adopt 5g. Yet, it seems like everybody is having trouble getting 5g out into the wild. We have samsung might have it out earlier. We have not seen that. What does that mean gi