Thinks peloton is not just a fad. That bullish sentiment coming up. First, we begin with a continued dominance of tech in the u. S. Market. Stocks upadmit, the 1. 7 , nasdaq up more than 1 . Is something bigger going on . It feels like 2019. This unstoppable rally keeps going. It does not feel like a relief rally, because yesterday after the signing of the trade deal, it was just the stocks that trumped 1 . The other averages posted average highs, s p 500 and dow. Typically a relief rally would come after a big selloff from the major averages. It feels a little bit more like perhaps the early stages of euphoria within the bubble paradigm. That starts with capitulation, then with dislocation into the economic face and then phase and then euphoria. Does that match the fundamentals . Trading at ant, greater than 20 times forward pe. As you note last year, earnings fell by double digits. They are expected to fall for the Fourth Quarter and the First Quarter of 2020. By the end of the year, analysts are looking for double digits growth for tech and chips. For the chips, the first half of the year is difficult. It seems like investors could be a little bit ahe of taylor speaking of getting ahead of ourselves, i want to show you a chart here. Another day, another new record high, another trillion dollar company. That would be none other than alphabet. You can see it catching up to the likes of apple and microsoft. What did alphabet do to join the 1 trillion club . They have been executing. Arethat reason, investors rewarding those shares, putting it into the elite status. In terms of what it means, when you have the dow hitting big psychological levels, does it mean something . Probably less so. In this case, it truly is an elite status. Three companies in the world, pointing to the dominance of tech and internet. Relative to alphabet moving forward, it doesnt mean managers are going to have to wait the stock. More largecap and tech managers are already overweighting. It probably does not help their fundamentals, but it is nice to when you have a large market cap. This has come on stellar performance and large numbers. Thats very impressive. Taylor i want to talk about fundamentals and technicals. We are coming up on earnings when we look at fundamentals. Chart is pretty amazing. Scary, even. The s p 500 tech index and the blue boxes are where the index has been well above the 200 day moving average. Investors are ahead of themselves. You can see a period in 2017 into 2018, that was not a problem. At that time, the rsi on the bottom indicator was well into overbought territory, close to 85 and 86. Right now, we are 18 above the 200 and moving average, far more than earlier. I say only the rsi is only at 77 relative to 85. The need the service, a little at beneath the service, little bit of a bearish divergence. This earnings season has got to be knocked out of the park or we will see some quick consolidation. Taylor thank you on all things market with bloombergs abigail doolittle. Comcast officially unveiled its entry into the streaming universe. The service, dubbed peacock, is not launching until april. While it will feature new original content, it is going to rely heavily on hopes that viewers will continue to tune in and pony up for old favorites like the office, parks and recreation, and brooklyn 99. There will be three different pricing tiers ranking from free to 9. 99 per month. To tell us how peacock will fare against the likes of netflix and disney plus, our analysts are joining us. How does peacock stand out in this crowded market . What comcast has said and telegraphed is that it is free to a lot of people. You see in the marketplace, netflix costs 10 to 13 depending on your package. Apple Service Costs about five dollars. Disney plus is seven dollars. From sixnywhere dollars to 10. The two that are coming up our hbo max and peacock. Hbo max is loading as much programming as possible and charging a high price relative to the others. That is 15. Peacock for its most basic plan is free. There is one basic package of five dollars and another at 10, but you will be able to access lots of shows and movies at no cost. They are framing it as an advertising play. In competitionst with the likes of netflix and hulu but also with facebook and youtube. Taylor does the Pricing Strategy mean anything . It seems like a race to zero. Michael i think lucas is right. I think people are missing the point here. These guys are in this to protect their core business. Comcasts core business is providing cable service, they want that 85 cable bill. They will do everything they can to protect that core business and give their core customer a reason not to cut the cord. Netflix can only survive if they can charge every single customer. Hbo is already charging customers, so they are just enhancing their core Business Model by giving customers more for the same price. These guys are all approaching the streaming wars differently. At the end of the day, i think the right solution is that all cable customers get all content on demand all the time. Or 50 a month more to be able to watch i love lucy on my comcast subscription. That has been the problem. The deals that are cut with the talent that creates the shows, youre only able to go back Something Like five weeks on broadcast television. That is what opened the window for netflix to get content. Comcast realized they can keep their Nbc Universal stuff and bundle it and give it away for free. Warner realized we can keep our own hbo content and bundle it for free. Amazon is giving everything away anyway. Netflix is way behind because they dont have a first window to monetize that content. Disney, comcast, warner bros. All win. Netflix and amazon lose. Fortunately, amazon has another Side Business that they can rely on to funnel this. Taylor give me a reaction to the content wars. It is interesting to see how netflix is standing out with more oscar nominations. You have comcast coming in with more original programming, but old disney, a backlog of material. In the content wars, where does comcast stand out . Lucas michael is right in that this fits into the comcast broader strategy, which is the streaming will never be the Major Business for comcast. They dont want streaming video over the internet to be the dominant platform. Comcasts interest is selling you cable and increasingly selling you internet. It wants you to view comcast and buy internet from comcast, and it makes a healthy margin on that. They will offer peacock, even the paid version of peacock, as free bundled into those people who either get cable from their Internet Service. They are not going to compete at the same level as some of the other players. That leads me to believe that it will not be quite as successful. It might be fine for comcast corporation. Comcast will make a ton of money selling Internet Service for the for seeable future, but they have to figure out how they want to position peacock in the marketplace against netflix, amazon, disney plus. Disney plus has a pretty clear brand proposition. Same with netflix. Netflix has a little bit of something for everybody. Im not sure what comcast and peacock represents to the average consumer and they probably have to spend a lot of money to make it known. Taylor i wonder the capacity for these Different Streaming Services per person, per household. Lucas the average household spends Something Like 85 on cable. As you can see from netflixs numbers, add 12. 99 to that. We are spending 100 per month on video content. People are very comfortable spending 100. Above median Household Incomes 125. Ne going to they will add as Many Services as they perceive they need to add. Adding concept that is not necessarily original, they could the old stuff like friends, th ey are not all exclusive. Disney has old stuff like the simpsons, which makes it worthwhile for a guy like me. People have the capacity to spend 30 or 40 if they are below me in income. I see the streaming services proliferating. I dont think they are competing for subscribers for the first year or two. That will come when they start to saturate and people have three subtractions and cant justify the fourth one. Taylor the never old Michael Pachter and lucas shaw. Thank you both for joining us. Coming up, Microsoft Joins a Global Movement to fight Climate Change. We will hear from its legal officer brett smith about plans the tech giant has in store. This is bloomberg. Taylor microsoft made a major investment announcement in the effort to fight Climate Change wednesday. It will invest 1 billion in companies and organizations working on carbon reducing technology. I spoke with microsoft president and chief legal officer, brett smith, earlier. Microsofts commitment to put a billion dollars into innovation is a piece of a broader plan, but the fund itself will really be focused on accelerating innovation and climate reduction and Removal Technology where money is not flowing already. One area where we see paramount importance is the creation of new and Better Technology that will enable us all to remove carbon from the atmosphere. Another area where we see a critical need for money where it is not yet flowing is, for example, project finance for Renewable Energy sites in developing markets. There are some parts of the world, especially in the United States and western europe, where capital is already flowing for new Renewable Energy. Not everywhere. We want our money to make a difference. Taylor are you really looking outside the u. S. To deploy this 1 billion . Brad certainly in part we are looking outside the United States. When it comes to the creation of new places that will generate Renewable Energy. But when it comes to technology innovation, it doesnt know boundaries or specific countries. I am sure there will be some of this flowing inside the United States, across europe and around the world. Taylor as you take a look at microsofts goals, you have a plan by at least 2030 to be net carbon negative. Where are we on achieving that goal . Brad in many ways, the most ambitious thing we are seeing today is as you just mentioned, we will be carbon negative as a company by 2030, not just for our company, but for our supply chain, for our socalled value chain. By 2050, we will remove from the environment all of the carbon that microsoft has emitted either directly or for electrical consumption since we were founded in the year 1975. That is a big goal. We have a detailed plan, but we have a lot of work to do. Thats why we say this is a decadelong ambition for us. Taylor you are working with your suppliers and customers to make sure they are doing their own initiatives in terms of being net Carbon Neutral as well. How are you folding in these goals with your contracts with suppliers and customers to make sure they are held accountable . Brad it requires a detailed plan which we have been putting together over the past months. One aspect when it comes to supply, naturally the supply of electricity for ourselves. What we are saying is that by the year 2025, we will have purchased power agreements in place for 100 Renewable Energy for all of our data centers, all of our buildings and campuses worldwide. But then there is all of the other emissions that are generated as part of our supply chain. We will be implementing by next year new tools and processes for our suppliers. We will want to see consistent measurement of their emissions. We want to help our suppliers with new tools so they can reduce their emissions. We will be talking with our suppliers in the coming months. I think you can expect to see us forward with new economic incentives so that as we are buying goods and services, we are focused on encouraging our suppliers to reduce their emissions, and if they do, i think they will find it easier to sell their products to microsoft. Taylor that was brad smith of microsoft. We will hear from him again next about how microsoft and other big tech could benefit from the u. S. China phase one trade deal. This is bloomberg. Taylor more from microsoft president brad smith. Smith spoke out about the longlasting tensions between the u. S. And china. He says the divisions between technologies risks a c technoloy cold war. I asked him to elaborate on his comment. Brad it was a good and important step. It adds stability, it creates a foundation for additional progress. It adds to business confidence. We were definitely very happy to see it and supportive of it. I think we should all want to see continued progress made by the two governments together. Taylor you were talking about a real threat of a Technology Cold war. What does that look like to you . Brad i think that a phase one trade deal doesnt necessarily put to rest the other Technology Issues that have become part of the geopolitical landscape. These are not just the two largest economy in the world, they are the economies that have the strongest tech sectors. Both governments are focused on the National Security implications of technology products. The 5g conversation has become a conversation around national and economic security. I dont think that is going to change because of a phase one trade deal. We should all expect this to be a complicated issue, an important issue, and one that is going to be topical on an ongoing business throughout the decade. Taylor you only get about 2 of global sales from china. I wonder if that has been more of a concerted effort to protect yourself until these issues are resolved . I am thinking ip theft, forced tech transfer. Does this perhaps change anything for microsofts fundamental business . Brad today, the u. S. Government has concerns about certain aspects of Chinese Information Technology coming into the u. S. You see the thing where the shoe is on the other foot in china. I dont think that is going to change anytime soon. Simply because of a connection that the governments in each country see between Information Technology and their National Security. I think that means they are there are still very important opportunities for collaboration. Theres a lot of basic research that happens in the Technology Space that is really global. Theres the creation of software code, including by opensource developers. It takes place on a global basis, people writing code in china, the United States, europe, and ultimately bringing it together. I think the world is going to need our two countries to Work Together, even while we manage these tensions. If you take Something Like sustainability, if you look at carbon, the two countries that have the biggest impact are china and the United States. We need to Work Together to solve some of the worlds big problems for our own sake as countries and for the world as a whole. Taylor i want to move as well onto the jedi pentagon contract and the subsequent amazon lawsuit. They are effectively saying you didnt deserve it. How do you respond . Brad every contract we have is important. Some contracts are different and even unique. For microsoft, our jedi contract to support the United States military is not just an issue of commercial responsibility, it is a question of national responsibility. We welcome and embrace that. We sought this contract out. One of the reasons we did is we recognized not only would Cloud Technology become vital for the nations defense, but we knew we had the wherewithal to build a better product. It is worth keeping in mind that the procurement process for this contract from start to finish was almost two years. One thing that we did was put more engineers on it and focus on constantly improving our product to meet what we knew would be the defense departments needs. I look at this and i think there is an interesting lesson for all of us. Certainly in the world of business, but maybe in life more broadly. First, never assume that you are so far ahead that you cant lose. Never conclude that you are so far behind that you cant catch up. Every day, we focus not just on catching up, but leading. I think that when the full story is told, when people understand it, what they are going to find is that this country has dedicated people who work for the department of defense who focused on one thing and one thing only. Buying the technology that would best protect the country. Taylor that was microsofts brad smith. Coming up, how foxconn is making a deal with fiat to help charge up the road. Thats next. This is bloomberg. Taylor this is bloomberg technology. We join bloomberg daybreak australia to bring you the latest in global tech news. Im taylor riggs in San Francisco with shery ahn in new york and haidi stroudwatts in sydney. Lets take a look at the top global tech stories. It could get harder for u. S. Tech companies to secure foreign investments. U. S. Treasury Treasury Department regulations will force companies that handle sensitive personal data like social media and Health Care Firms to go under increased vetting. The rules will take effect february 13. Apples main chipmaker is reporting Quarterly Sales well above analyst estimates. They also posted fourthquarter earn