Logistics partners ups and fedex. Tech out how big Cap Companies apple and facebook fared in 2019 and how each is set up for the new year. A look at tech in the markets most notably semiconductors, taking a look at the stock index, we see that chipmakers a bottomed out nearly a year ago and have been on a rally since then. Chipmaker micron adding to that they reported firstquarter earnings this week. Have a strong outlook between four and a half and 4. 8 million in revenue. Shortly after the Company Reported i got insight from the whorities and analyst joined me on the phone. They are seeing tightness in certain areas. Also they are calling the bottom for memory in general. They think this Current Quarter will be the bottom of the cycle. That fits with the tightness. It fits with the fact that they it also very much parallels the guidance they gave for flat gross margins, which again suggests that pricing is normalizing finally. Does this have any implications for an expansion of capacity . Point, they are the remaining conservative in their cap back. There cap back has been steady. That is the prudent thing to do, to wait for demand to come back. He did note that there is a point of uncertainty in terms of how much inventory china has accumulated, just coming back from asia that is it something i continued to hear from billers over there. I think they are taking a prudent course right now and not yet investing cap backs if the recovery continues i would expect that memory in general will move to support their customers and expand capacity, but that is not happening yet. Ourm showing a chart to terminal audience, which is as you described the share price of micron and the lower and lower dram and memory chip prices. We have been calling for a bottom for much of 2019. Are we confident that we have hit a bottom in those memory chip prices . I am. On nand looking at pricing moving forward, i think contract haveiations around pricing been concluded favorably for calendar t1. When you look forward in the nand space, you have a huge driver of demand in new gaming consoles which are shifting from hard drives to ssds. You also have an added boost predicated upon 5g. On the dram side, it is slightly more difficult to call. Having said that, i am starting to hear that server dram contract is moving up. That is the first sign that we have really bottomed on the dram side. Over the last couple weeks they are starting to rebound. Large cloud customers which are important they have increased their buying. While there is not as much visibility there, i think that we have seen a bottom. Bryson. That was matt soared to aey record high this week, hovering near elon musks goal. You may recall that back in august 2018, he tweeted that he sought to take tesla private at 420 a share. Most recent stock surge came from a report that tesla is considering cutting the price of its china belt model three by 20 or more. More on that story, i talked to bloombergs greg trudeau. Electricve a lot of vehicles and cars in general that are priced below where you see the tesla model three. When the price came out for the made in china model three, it caught a lot of people by surprise because it is not that big of a difference. The whole different the whole reason for doing they could bring the price down by avoiding import duties. Youre seeing tesla make a bet here. There is going to be a natural goodwill of getting a plan open, getting government on board. There is a lot of purchases of electric vehicles in china. Tesla is making a bet that the initial buzz about having the model three built in china will itself carry them for the First Six Months next year, then you bring the price down. A chart thatg you im showing inside my terminal which is the big headwind and macro back shop that is slowing car sales across the curve in china from the last year or so. Is a 20 price cut enough to offset this drop in demand . If you are elon musk and you are looking at that chart, you are more nervous about the state of the china market then if you look at when those drops were kicking in, it is around the time that tesla was getting a deal, signing on the dotted line to get this belts. ,t was built extremely quickly this was a muddy field in january of this year. Were talking about a plant that is already open and cranking out cars, potentially delivering them to customers within the next few days and weeks. This all happened extremely fast and we have seen some softness in the china market. The degree to which the market deteriorated this year caught a lot of Car Companies off guard. It is a cause for concern, if you are tesla. Despite the fact that you have real brand power and a lot of star power as a company that is on the leading edge of electrification. Craig what has changed taylor what has changed for tesla that they can afford to bring the price down now. Cann that some buyers waited out . Craig it will be interesting to see how long they can wait out for a priced off price drop. If you think about what tesla has been up to this point, it is a company that is made all of its cars and high cost california. It does not have serious manufacturing breath across the world and some lowercost markets. Lower labor costs are going to come down significantly. You are able to avoid levees into tariffs and get special treatment in terms of incentives and so forth. Definitely you could see that price come down further if the initial demand is not quite what they are expecting here. Taylor that was blumbergs crew bloombergs craig trudell. Shipping Holiday Shipping expectations. If you like bloomberg news, check us out on the radio. You can listen on bloomberg. Com xm in the u. S. This is bloomberg. Taylor with less than a week left before christmas, it is do or die for the delivery machine amazon. As it is ditching longtime Logistics Partners like ups and fedex, the ecommerce giant is beefing up its Delivery System to prepare for the strain of holiday orders and expectations. I spoke with Spencer Stauffer wednesday from seattle. It is handling more of its deliveries than ever before. It is estimated that half of all amazon packages will be thatered by this ats a amazon developed. It is independent contractors, flux drivers who do in uber type thing who deliver packages for amazon. It is the first year that amazon is doing so much of its own delivery so aggressively. We have got some hints of bad weather coming. That is always the big wildcard a system that can work a great through decent weather can break down in bad weather. A lot of it will be dependent on mother nature. Taylor those are things that are outside of its control. There are things that are inside of its control have they mastered that last Mile Delivery . Spencer theyre spending a lot of money on it and they are doing a fairly decent job. Independent experts who monitor the shipping things are saying with fedexe on par and ups. They are also doing things different than ups and fedex and a big part of it is having ultimo trucks are even these backup flux drivers hitting the same neighborhoods on the same day. When you think about seeing a postal truck, you will usually see it once a day and then not again until tomorrow. You might see multiple amazon vans crisscrossing your neighborhood on the same day. That is inefficient in logistics, but amazon says it is necessary to provide the capacity that we need to get everyone there packages in time for christmas. Taylor am i right or jumping too many hoops if i wonder if we should look at amazon as a Logistics Company and not a Ecommerce Company . Spencer they have been a Logistics Company for years. It is always the backend part warehousing and storage. They have been a logistics game for a very long time. We are seeing them increasingly branch out from that with the planes and with the last mile of delivery which is the most visible. Commonlyto see most the Postal Service stock and the big brown ups truck. Now youre likely seeing those blue amazon prime vans as frequently or more frequently than youre seeing anything else. Taylor that was a spencer soper. One of the biggest sources of funding for Silicon Valley startups is the vision fund. It was the focus of a businessweek cover story. It is depicting a culture of recklessness. Sarah mcbride helped to bring this story to light. She joined me on wednesday. It is an incredibly he has an incredibly interesting guy. He is an a korean immigrant to japan. He grew up in this hardscrabble way, supersmart, came to the u. S. , attended berkeley, moved back to japan, started softbank. One of the things that stood out about his background to me is in 2000, he invested 20 million in alibaba and that stake is now worth 130 billion. Is a smart guy. Taylor what do we know about his management style and how it has fueled this environment for these outside sarah he is a go big or go home guy. He wants his portfolios and investment professionals to think bigger. Sometimes that is great. When a young entrepreneur comes to him and he tells them you are going to be the next jack ma. Your company is going to be bigger than you think, have you thought of this business idea or that business idea . But sometimes he gets impatient. We have this detail in the story about during a Conference Call he was talking to one of his investment professionals about full check alliance, a chinese company, and was basically saying why are your outlooks for this company so small . This company can be bake and was sort of berating this guy on the phone for not thinking can be big and was sort of berating this guy on the phone for not thinking big enough in a way that made the people on the call feel embarrassed. Focusinge would not be on this company as much if it were not for we work. If we work had structurally changed anything within that culture do we know anything about that . Sarah after we work derailed ipo, they had to reread desha rethink things. Rethink things. Sun said he regretted how things played out at we work. Theyre still going to think big and press people to grow their company is as hard and fast as they can, i do not think it will be growth at all costs anymore. Taylor that was sarah mcbride. You can read more of this story and others in the december 23 issue of bloomberg businessweek. Theng up big tech is on quest for dominance in consumer banking. We will discuss how it is all shaking up with one of the latest unicorns in the space. Less later, an app that helps you break in the money during the holiday sheet shopping season. This is bloomberg. Taylor apple wallets, over money, google checking accounts it seems like everywhere you look at big tech is getting into the Financial Services game. What is that trend doing too big tech . Practice. He ceo of a it has a partnership with mastercard. Financialim about the product opportunity. I believe that there is a clear distinction between distribution and actual innovation in the Financial Services. I think a lot of the Big Tech Companies what they are doing is it creating new Distribution Channels for existing products. For example, you amazons credit card is issued by american express. I believe that if there is no Technology Development in the backend, it will not change much. A lot of the opportunities are nontechfirms and firms to rebuild the Technology Behind it and not use the technology billed by the bank. As you talk about that in some of the partnerships, i notice you have a partnership with mastercard what are you hoping to bring them and what are they bringing you in terms of that technological innovation. Henrique it is an exchange of knowledge. They work with banks in a Global Market and have accumulated a lot of knowledge and expertise. Me bringing the side of technology from Silicon Valley, it is a solid partnership. We can learn of them, they can learn of us. We get to use their big distribution networks. Anywhere that mastercard works. Taylor how are you hoping to differentiate yourself . We talked a lot about uber money for example. If youre technology, what else are you hoping to use to make sure that you stand out and in what is a very crowded field . Henrique we focus on businesses instead of consumers. A lot of focus has been on building a Financial Service for consumers. Businesses. Y for we rebuild the system from scratch. We do not use any Legacy Software provided by the banks like most of these other companies. We rebuilt everything from scratch and that allows us to create functionality that did not exist before. For example, not requiring any personal guarantee on business cards or having extremely simple expense managements on your card. Taylor how are you expanding outside of the traditional tech worlds . Into ecommerce or lifesciences businesses . Are you taking on more clients from those sectors . Henrique we are of the view that you cannot pull businesses together into one thing. Like eight start up and then Ecommerce Company and lifesciences and restaurants or they are all completely different businesses. In the future, a lot of products will be catered towards these vehicles instead of generic to s ps. The same way that in the Business World there are thin fintechs geared towards millennials. We have beender showing your valuation. Nearly a 2. 6 billion dollar valuation over the summer. I ask a lot of the unicorns to come in here if it is helpful or hurtful given the extra scrutiny at now being valued over a billion dollars. Henrique for us it is on the helpful side. A capitalintensive service because we are lending money. To establish credibility with our members, the valuation definitely helps. More than that, being able to raise a larger amount of money is what is enabling us to go and disrupt this sector of Financial Services which is full of a big and established banks. It is hard to do that without the money. Ceo henryat was brex rique. Hen lopez testified in washington earlier this month about the impact of Artificial Intelligence on Capital Markets and jobs. He joins bloomberg and me on tuesday. We have data sets that were not available to our three years ago. For example when you say data, how is this different from say two years ago to just a few years ago and how fast has the change been . A few years ago, we did not or even data that comes from narratives. Distracting sentiment from these news articles. Today they exist. We can extract information that is valuable for making decisions. I wonder if this is a zerosum game. To retrain a way some of these employees . Marcos there is a way to retrain employees. As a matter of productivity gains, not all of them will be able to retain their jobs, but in many cases we can retrain these individuals. They do not need they do not need their jobs to be completely animated, but these can assist to help them make better investment decisions. Is the how vulnerable industry to crowdsourcing . How could it what can it do to the Hedge Fund Industry for example . Marcos that is a particular case where we can crowdsourcing the forecasting of prices on dust to the data science community. It has so far been done by a very narrow set of individuals. Now you can turn this information to the entire data set community. People working at national labs, pharmaceutical companies, and they can use their expertise to forecast returns and turn these decisions into investment products. Taylor i found it fascinating in your testimony when youre talking about Renaissance Capital which has been one of the early adopters of machine learning. Average annual returns of 35 how far off are we from this being a crowded trade where everyone uses this . That those outsize returns are no longer outsize . Marcos it is a small percentage of the total a u. N. When you think of the tens of thousands of dollars using decisionmaking processes or even quantitative decisionmaking processes not may not based on machine learning, there is a lot of room for deploying this. This is not a crowded trade by any means. We are seeing trades on skilled individuals and students. You have to train these students to go and work with the data and algorithms. What happens if you continue to see these u. S. China trade tensions and you educate them here and the visa procedures become harder all of these people leave the United States . Marcos this is a concern that many of our professors have. 90 of our students are here on a visa. Many of the students will graduate and not be able to stay in the United States. As a result, we are essentially training our competitors. Taylor there was marcus lopez cornell, professor at university. Making money while you shop a japanese ecommerce site wants to help you do just that. We will hear from the companys president next. Bloomberg technology is livestreaming on twitter. Check us out at two technology. Follow us at quick take on twitter. This is bloomberg. Taylor welcome back to the best of bloomberg technology. I am taylor riggs. Its the final stretch of Holiday Shopping season and ecommerce platform rakuten is confident it can attract customers with a cashback program. But how does it make money . Rakuten president kristen gall spoke to alix steel tuesday about their Business Model. Kristen the Holiday Shopping season is it really interesting this year, particularly because we have one less week between black friday and christmas this year. What we are seeing is unprecedented deals at a massive amount of retailers. I think you are definitely seeing marketplaces pop up in a big way. Their deals are aggressive, but also an interesting trend is in the direct to consumer world. We have a lot of retailers like all of these smaller players that a