Successful launch, the apple card issued by Goldman Sachs hit some snags in 2019. First, our top story. Tech continues to be the outperformer in 2019 with the nasdaq on track for its best year since 2013. The tech index is up 35 , just 3 shy of 2013s banner year. It is largely due to apple and the chipmakers. Joining us is abigail doolittle. I am showing on my terminal a chart about divergence, winners and losers. What is your take away from the divergence . Abigail the clear winners, apple and facebook. Apple up 85 , facebook up 55 . The others up closer to 20 or 30 . Still great gains. And the complex is overall higher. 2019 really the year of record highs. The complex overall, the last record high overall back in july but those two Companies Really pulling away with the lead, apple and facebook. Apple putting in record high after record high. And behind that buying power, you have to think it had something to do with 2018. Because between october and december 2018, apple fell about 40 . This year, they preannounced early in january and investors went all in even though technicals looked a little bit shaky. You have to think that some of those traders felt it would be a pretty sure bet. Facebook, last year was a real disaster. They had a bumpy road, then of course that horrible second quarter, the trading day in july. Last year, down 25 . Another case of the stock down more than some of the peers. Those two stocks in particular. Taylor earlier, we were showing a chart of the gains in market cap. How much of the total increase can be attributed to the market cap gains . Abigail apple, this year, gaining more than half 1 trillion. There are not a lot of publicly traded companies out there that are even worth half 1 trillion. That stock is almost 5 of the s p 500. The other four stocks, when you put those together, about 13 , 14 . A pretty good chunk of the gains for the index coming from some of those big names. You do not have microsoft on the board but that is another big piece. Taylor you do technicals better than anyone and this is the rsi. Is there any concern we are overvalued . Abigail the faang on top does not look too parabolic. It has been a long time since an alltime high. Even so, that rsi, momentum indicator in overbought territory. What makes it concerning, because a lot of technicians do not mind if it goes above 70. Even if it goes 80 or 90. The thing they are looking for is higher highs. Rsi rounding back to 70. If it goes distinctly below 70, that could signal early 2020 could see some bearish momentum, some consolidation of these huge gains. Taylor talk to me about tesla. A series of record highs, pulling back from that today. Analysts talking about some concerns around demand. Abigail tesla is extraordinary. Lives. Cat, it has nine more than nine lives if you think about all the way back to 2010. It is the best performing of the auto stocks. This year alone, at one point, down 50 year to date. Since the june low, up 140 . The bulls and the bears, the huge sentiment whipsaw shown by this stock. More recently, traders shown that the company could hit some of the delivery numbers. On the other hand, saying they may not make the number relative to deliveries for 2019, a little shy. Plus profitability could weigh a little bit on the Fourth Quarter in terms of when those numbers are reported. Overall tesla on the year coming back from that huge deficit. It seems netnet that the coverage for this company and its stocks seemed to be pretty incredulous and i dont want to say mocking, but a little bit of that. It seems as though the street is getting more bullish, putting aside this note today. Taylor thank you to bloombergs abigail doolittle. For more, i want to stick with tesla. A major milestone. The first 15 units of model three sedans assembled at teslas new shanghai plant delivered to Company Employees on monday. Joining us from new york, bloombergs auto reporter. Craig, i want to look at a chart i am showing inside my terminal. You know the story, all the bulls and bears are banking on china for tesla. Is todays news enough to solidify tesla in that market . Craig you see the red bars in that chart. Really signifying just how much people are expecting china to sort of carry the water for the general ev market. And thats really the case for tesla as well, and the reason why people have been so optimistic about this company. When you look at the rally, it is a significant portion of the reason why investors are growing so bullish with this company. Obviously people were willing to give elon musk a little bit of benefit of the doubt after the thirdquarter Earnings Release when they reported surprise profit. The optimism more recently that this is a company that will be able to unlock potential in the china market is sort of a bet being made here. Its aer your question, little unclear at this point just how much this will have a significant effect on tesla because we are not seeing the price of the model three drop significantly yet. The company, we may find, will be able to bring the price down for the model three once it is able to localize a little bit the production of that car and the sedans are more sort of localized in that market. Taylor are those production targets realistic this time around . Craig we talk about the heated debate over this. A lot of it is because of the shakiness of the execution that is relative to the predictions elon musk tends to make. This is a ceo that has talked about early on being able to make 1000 of these cars per week, at some point getting to 3000. He has talked about the idea that the longterm demand picture for tesla in china could be around 5000 a week. The analysts at cowan who we talked about earlier, a little more on the bearish side, is skeptical that the company will be able to hit those kind of levels. Especially with the government in china sort of pulling back on subsidies. We have seen the ev market in china struggle the last 5, 6 months as a result of that pullback. Taylor we heard from the general manager of tesla in china on their goals. Take a listen, what he had to say. Our goal is to sell all vehicles manufactured at our shanghai factory. We are confident in achieving that. Taylor i wonder, what is the downside risk, that may be the bulls are wrong. If china doesnt live up to what it says . Craig this is a company that has not paid a significant amount of money for the factory that they built so quickly. Sort of an under the Radar Development last week. Was the company securing financing . This is a tab they are only paying off going forward, as opposed to something they have paid for already. Meanwhile, you have a company that, and musk, a company with endless ambition. Hes already moved onto the next factory he wants to build outside berlin. For this rally to be sustainable, musk will be able to deliver some sustainable earnings, something they have not been able to do up to this point. Taylor thank you for joining us. Netflix says the most popular releases on its streaming service this year were things it produced. Among them, the comedy movie murder mystery and the new season of stranger things. Netflix is now relying more than ever on its own programming to keep viewers loyal. Coming up, from the big four of tech and more, we will have the charts that show you what matters most. Thats next. If you like Bloomberg News, check us out on the radio, the bloomberg app, bloomberg. Com, and in the u. S. , on sirius xm. This is bloomberg. Taylor wework reportedly will have to pay almost 17 million to its coceos if they are fired or leave for any reason. Thats according to the financial times. Exit package terms were sent to shareholders ahead of a offer by softbank. Bloomberg opinion has been looking at the top themes of technology for 2019, from unchecked Data Collection to apple shifting to a servicesbased business model. Shira ovide broke it down into a different charts looking at the us nowar, and joining with her, john freeman. One of my favorite charts was the continued frustration between tech management and employees. What have you noticed about increasing tensions between the big tech management and employees . Shira this is not a new issue, but its become louder in the last year, particularly at some of the Large Companies like facebook, google, microsoft, who have an outsized impact on the world. You see more agitation internally from employees who are both concerned about internal issues like pay equity or Sexual Harassment policies, and external issues in terms of how their products are used in the world, whether it is environmental destruction, concerns about working with government agencies, harmful effects of products like social media. Taylor at what point if at all do you incorporate this into your fundamental analysis . John for me, what i like to look at as i am gauging the trajectories of these companies, and in this case, sort of that management versus employee equilibrium, look at the Unemployment Rate in boston, in silicon valley. It is incredibly low. Probably more than any other time that i remember, perhaps since the 1990s. You have had the techies, the programmers, the people who are working, actually have a lot of leverage, a lot more leverage than they did i think historically. There are things they can do to enact positive change. I think at the end of the day, obviously if it is measured and reasonable, it can be a very positive thing. Taylor another chart as i scroll down the list was the rise of tiktok, and the headwinds, government scrutiny, is that outweighing the tailwinds in your opinion . Shira we will see. The other issue about tiktok, they are spending a lot of money on advertising to get on peoples phones, and we will have to see if it turns out to givefad, but we have to them credit for giving this kind of predictive short video app that many millions of people around the world have fallen in love with. Its given us maybe some of the few moments of joy in 2019. Taylor you take a look at tiktok and even other big tech, the increased regulatory scrutiny, antitrust rhetoric, how does this impact your view of big tech . John for facebook and google specifically, regulation is the biggest risk. It is really the only risk that matters i think for 2020, 2021. Otherwise, those businesses are on rails and fundamentally doing extremely well. The big difference i see is how the Companies Manage the risk. On that front, google is doing much better i think than facebook. Facebook still needs to learn how to deal with washington, be more proactive. I think the Libra Cryptocurrency effort right after the Judiciary Committee had come out and said, we will investigate social Media Networks more about nefarious influence on elections, then just weeks later, they are announcing libra. I think that ticked people off. I am hoping facebook kind of learns and follows in the footsteps of google about how to manage Regulatory Risk because it is coming, but it can be very mild. In terms of data privacy, in my opinion, it can actually be a clarifying moment for the market and actually boost the use of data, more of a data market. With all of the users keeping the privacy and control of the data that they dont want out there. I think we need more progress on that. Taylor the third and final chart was amazon. They showed us this Holiday Season that they are a logistics company. What do you feel are amazons successes and blind spots . Shira the logistics data point you mentioned is really instructive. It is not glamorous but you have a company that, in a very short time, has transformed from one that is mostly reliant on Package Delivery companies to a company that now, at least by amazons telling, is handling the majority of packages its elf. That is a very fast turnaround. These are the kind of things we want Large Companies to do, to be able to fundamentally change what they do. At the same time, amazon strategies and products come with enormous downsides. The company has been unwilling in my view to reckon with those downsides. You have stories about the company prioritizing speed and efficiency over the safety of drivers and the public, when you put drivers on roads who are under extreme pressure to deliver packages, enormous volumes of packages very quickly. You have similar stories about working conditions in amazon warehouses and some of the lax standards about products sold by thirdparty merchants. There are downsides that come with the power. Taylor shira ovide thank you for joining us. John freeman, you will be sticking with us for your 2020 tech preview. Bloomberg technology is livestreaming on twitter. Follow quick take on twitter. This is bloomberg. Taylor we are back with cfra Vice President of Equity Research john freeman. His calls for 2020. Alphabets google cloud offering, oracle undergoing a big transformation and facebook entering the Cloud Business. How do you see facebook entering what is a pretty crowded Cloud Business . John it is crowded at the application layer. You have salesforce and all of those Different Software service companies. But in terms of infrastructure as a service, essentially what amazon does with the aws service, there were really only three competitors, at least in north america. There is microsoft azure, aws, and google cloud. Google cloud being a relatively new entrant, that went from zero to now above 8 billion of an annual run rate. I think the thing that distinguishes these guys is obviously they have done a lot of innovative stuff, but it is scale. Facebook, amazon, google, and microsoft operate data center infrastructures, cloud infrastructure, that are orders of magnitude bigger than anyone else. That is the ticket to entry. From my point of view, why wouldnt they . I know they have discussed it. And just makes total sense, and it would give them regulatory protection. They would be the last entrant into a market of three players, they would be the fourth, so they would probably avoid a lot of the regulatory scrutiny as opposed to entering the consumer space. It seems like low hanging fruit. Taylor you have talked about the other three entrants in that market. Another one of your calls is that google cloud will make significant roadway into that. How do they keep up with amazon and microsoft . Which have dominated to this point. John i think scale really wins the game. Google has differentiated to use on analytics, Getting Developers to use the tensor flow framework for machine learning, ai basically. Microsoft and amazon are involved in that too. But thats one of the things google can do to differentiate. Tensor flow is very popular among developers and the Developer Community is always a great leading indicator of what is going to be successful and what is going to be adopted. Taylor finally, oracle is splitting up hardware and software. John i think it is time. There have been a couple of decades of acquisitions that were really targeted at the old Client Server sort of world where you wanted to give an Enterprise Customer the database, operating system, everything. That was effective. But in the cloud world where most of these enterprises are now trying to outsource their infrastructure to the google and amazon and microsoft azure, then Value Proposition turns around and it hurts oracle. They are not able to do deals on the database side because the Application Side competitors get worried, and vice versa. I think there is negative synergy that they can unlock a lot of value by doing so. Taylor we will have you back in a year at least to find out. Thank you, john freeman. Coming up, we continue our look back at the best of Bloomberg Technology 2019. We will hear from apple cofounder Steve Wozniak on his gripes with the apple card. This is bloomberg. Taylor this is Bloomberg Technology. Im taylor riggs in san francisco. Bloomberg was first to report that Goldman Sachs was being investigated for alleged discrimination over its apple card algorithm. Social media postings in november by Technology Entrepreneur and apple cofounder Steve Wozniak complaining about unequal treatment of their wives ignited a firestorm. Bloomberg technology spoke to wozniak from san jose. Articleswere a lot of saying it was alleging gender bias as the only possible explanation. My wife thought that. I know apple is the least biased of all the companies, the least discriminatory, the only big company in the United States that guarantees equal pay for equal work by gender, so that was out of the thing. It was Goldman Sachs. And they have listened, maybe because i got involved. I dont like to get special privilege just because of my past, but they got involved, and they are really going to make the changes. Allow you to will get to a human. I dont believe looking into the algorithm is the solution or changing the algorithm is the solution. It is somehow being able to get individual attention in cases the algorithm misses. You mentioned part of the problem is that when you are trying to get someone on Customer Support for a company this size, it can be hard. He said it is too big. Talking about Goldman Sachs, or apple, or both . Steve all the companies can be hard to get to. Apple is actually good because you have good human support in the apple with the geniuses if , if you have apple care. Apple does a good job making good support available. I decided a long time ago, having a good product isnt as valuable as having good support for whatever you get. When you choose to weigh in on Somethin