Bring new skills and experience to aging workforces. Supreme Court NomineeMerrick Garland met today with Democratic Senators al franken of minnesota and Kirsten Gillibrand of new york. The Republican Leadership refuses to consider judge garlands nomination, saying the next president should choose a successor to antonin scalia. Colombia says it will hold peace talks. The government has exploratory discussions of the National Liberation army. The talks raise hopes for and end to Political Violence in the country. Global news, 24 hours a day, powered by our 2400 journalists and more than 150 news bureaus around the world. From the Bloomberg News room, i am mark crumpton. Cory im cory johnson, in for emily chang, and this is bloomberg west. Microsoft makes a big new bet on Artificial Intelligence after the last ai project lead to a stream of profanity laced tweets. We will show you what Satya Nadella has in store. Foxconn stopping negotiations to acquire sharp at a discount. Through will tell you how the iphone hack has one japanese stocks soaring. But first tower lead. To our lead. Microsoft opening his Developers Conference in San Francisco. Satya nadella making a big bet on Artificial Intelligence. A week after his last Artificial Intelligence effort flamed out in an embarrassing and hilarious fashion, microsoft launched a tweeting program which went from antiseptic tweets to racism and sexism hours later, but he is going for take two. We want to take that power of human language and apply it more pervasively to all the computing interface and computing interaction. To do that, though, you have to infuse to computers and computing around us intelligence. That means you have to bring forth these technologies of Artificial Intelligence and Machine Learning so that we can teach computers to learn human language, have conversational understanding, teach them about the broad context of people and places and things. Context about your preferences, your personal knowledge, so that they can really help you with your everyday tasks and life, both at work and elsewhere. Cory does microsoft have a future in ai . Deana bass and the glad to have you with San Francisco. You were there all day. What were you talking about . A lot of the focus is microsoft has been working on ai for a while. They have toplevel researchers on it, but the new focus is tai, the first example we got in the u. S. , these chat bots, that do things for you in a humanlike fashion. Microsoft wants than in commercial areas, but also to sell you things and provide customer service. They are not only going to make them themselves, what they were pitching is asking people to write bots themselves. They put out a bunch of developer tools. Cory we have had people say on this program that microsoft is quietly making a big comeback with Satya Nadella. Is microsoft very relevant . People are paying attention again, and there is a lot of interesting stuff happening. This is a company that is more more tuned in to the overall state of programming and coding, but every now and then the old microsoft comes out and bad things happen. Cory interesting. From to perspective microsoft is a company that dominated technology, that flatout dominated every conversation about technology regardless of the aspect not that long ago. 10, 15 years ago. Now its in the background. What matters most with microsoft . What matters most is building a future. Steve ballmer, that is the one big hit on his legacy. Input microsoft in this odd position, the pass is still the past is still haunting them. For the future, it is carving out a new market. Artificial intelligence seems to be a strong part of that; conversation is a platform. Cory that sounds thoroughly ridiculous. I also think the success of asur i say asher. Cory their we go. Thats a huge success for them, even with amazon and their in their backyard. But you see a lot of your clients talking about this. Absolutely. Its part of the big two. What microsoft hopes to do is is infuse intelligence into that delivery of cloudbased services. Cory like a bouncing paperclip that will help us use word . [laughter] in this instance, developers can call it, the different apis Walking Around the convention center, there were all these cameras. And when you walk by, they can tell you what your emotional state is. Oh, your happy. Oh, youre sad. Youre 31, 51. They are trying to make those tools available, along with search recommendations, so developers can incorporate them. Cory your thoughts about the cloud . I think theyre killing it. Theyre number two. I think were back to clippy. It was based on the idea that an interface like that could help people deal with microsoft word, and things like watson are trying to do it for the whole world. Why didnt clippy work . The idea of a conversational assistant wasnt bad, but it did not know when to shut up. The idea that microsoft is pitching is with ai in Machine Learning, these things will understand your context and will understand what you need and when you need it. That is the bet for them. They are not the only company pitching this kind of thing. Cory yeah. To any of you use amazon echo . Your take . It is catching on for a reason. It actually seems to understand natural language. That is something Satya Nadella cory its not just that it understands you. Siri works, but i dont use it for a lot. People use siri for things like they are in the middle of driving and they need to send a text, which is ok, but its not super intelligent. Its not like order me something. Today they showed the idea youre chatting about your travel, and a bot says do you want me to make a recommendation on your Favorite Hotel . That is proactive intelligence. Cory is this anything more than the advancement of moores law, computational power along the line of Machine Learning . That is been talked about for 70 years, but we are finally at a point that only because of these advancements of semiconductors, is there something going on. When you talk to people in the world of ai, they will tell you that things on deep learning, theres a new statistical approach, new models for representing knowledge, doing weird things with data. New things are happening, there are new approaches, lots of excitement. But the basic idea is still the same. The dna of tai is not entirely dissimilar from what we saw with clippy. What is new is that you you have huge amounts of Information Available to everybody, that they can use for the open web, and on these databases to play with. Hundreds of millions of users to interact with. Cory yeah. Incredible stuff. I wish alan turning touring was here to see this. Thank you very much. A stock we are watching, the micron, the Worlds Largest maker of memory chips reporting its first quarterly loss since 2013. Sluggish demand for laptops means their prices are in the tank, with revenue for the Current Quarter resulting in a five cent to . 12 loss for every share. Coming up, terry gallus on how tricky negotiating worked. This is an amazing story of negotiation. Cory we have a Little Red Book we hear Little Red Book and we think communism, but now that same name has become a symbol of capitalist success. They are giving a 1 billion valuation to Online Shopping sites and overseas merchants of local buyers. The funds will bankroll the Little Red Book expansion. A new deal the main assembler iphones and the First Television sets. Foxconn is able to get a reduced price in the stake of sharp. The university of michigan professor has never seen, even though we talk all the time, we email constantly, this is an amazing story, what happened with foxconn, with sharp. Sharp had another suitor in japan that was going to make some help to keep it a japanese company. Talk about what foxconn did to seal the deal. Foxconn is pretty clever. I dont ever want to negotiate with them over anything. They came in, they made an offer that was a stronger offer than the incj deal. A typical japanese deal that involved government and who knows what else. Foxconn comes in and puts a deal on the table that is much more valuable to the company. The company, of course, takes it. Then the Company Gains the foxconn sword. Take the sword; here are some big contingent liabilities we didnt tell you about. Foxconn knew what to do. They said, well, wait a minute, we have got to rethink this. Cory then after the other suitor walked away, they were like, there were problems of this problem business . We arent paying that. The other suitors already gone. You clear the competition out, and then you faint as if you wont do the deal. You have them so scared that they might be stuck with their creditors. Sharp isnt in a bad financial situation; they have gone through to japanesestyle financial prop ups in the last cory hes bag. Sorry, we lost you. Yeah. So foxconn feints and says, gosh maybe we wont even do this deal. Everybody is nervous, and then they say, look, we will do it at ¥88 per share, and people breathe a sigh of relief, because foxconn scared them into thinking there might not be a deal. Cory sharp is an important company, not just historically, but they have put so much money into new plans for lcds, that they were really at a loss when the chinese economy slowed down, yes . Yeah. They built all these panel plants and solar panel plants. The timing couldnt be worse. But sharp is a real gem in japan. Sharp as one of the innovative japanese companies. Not be will copy and make it cheaper company. They were Technology Leaders and still are, and the brands beloved in japan. Is a toptier brand. This is a very humbling experience, a difficult experience, and a new experience, because the old japanese troika, who traditionally love each other, usually they hold together and keep japanese things japanese. This now goes to a taiwanese company. Its the first for a Major Electronics company in japan, and its a bit of a shock. Cory finally, i wonder what you think foxconns ambitions are with sharp. What do you think they want . They want to expand their margins. They are a screwdriver shop; they put together pieces of the iphones and turn them into an iphone using really cheap labor. That cheap labor is becoming more expensive; their margins are getting squeezed. They need to get into higher value things like screens that sharp is so good at. Foxconn has got to move from being low margin to highvalue, highermargin, and sharp gives them both a brand but also a product. The screens are very expensive. Give them a product to get margins they want to see. Cory interesting stuff. Eric gordon. University of michigan, thanks a lot. Fidelity took a look at private holdings in Technology Last month and didnt like what it saw. The company cut the value of its dropbox, zenefits market down marked down 38 . It wasnt all bad news. Others liked it more. Snapchat was marked up. By 62 . Up next, teslas most important product unveiling ever. Everything we know, coming up next. Cory thursday could be the most important day ever for tesla. They are lifting the curtain on the highly anticipated model 3. It is the everymans tesla cheaper electric car. Tom randall has preview of the model 3 preview. Tesla is going to avail of the model tom this is the big one. Three. The car that elon musk says will take electric cars mainstream. Here is what we know. Were expecting something similar to the 70,000 model s, but with fewer bells and whistles. It should be about 20 smaller, and there is no word on whether it will have the distinctive oval brand. The model 3 will start at 35,000, but thats before government incentives, which in the u. S. Could bring it below 30,000. Thats an extremely Competitive Price for the entrylevel luxury market they will compete in. It is promising 200 miles per charge, but might give more for a larger battery. They are designing a whole new battery architecture to make it cheaper and easier to build. Elon musk predicts that in the 1015 years, on new cars will be able to drive themselves. Therefore you can expect the model 3 will probably have some autonomous driving, even if drivers have to pay extra to activate it. If you want to get your hands on a model 3, you will have to get in line. They will start taking deposits on march 31, but the first deliveries will come until the end of next year. Cory we hear with more about the tesla, head to. Had to bloomberg. Were joined by ramy inocencio. Ramy today we saw a rally, call it a yellen twoday dove rally. The s p 500, dow, and nasdaq all of on the order of about half a percent. The highest since the end of last year or early this year. Fed fundss are no pricing in a 50 chance of a hike, no earlier than this coming december. A lot of change happening with what traders are envisioning. Hop into my bloomberg. I want to show you the performance of the nasdaq, so far year to date, and i want to direct your attention to this green box here. The nasdaq for this month is up by 6. 83 . We are definitely pairing the losses we saw from the cross equities, down 7. 8 in january. The last time we had a good Market Performance for the nasdaq was back in october, 2015. Five months since we have seen a good rally. Lets take a look at whats happening with some individual stocks right now. First off to the nasdaqs top two. Apple rising, up by nearly 1. 8 , rallying to a threemonth high after an upgrade. They are also increasing their 12 month price target by 10. They say sales growth is up 18 in the past year. Microsoft up by 6 10 of 1 after the microsoft build conference with the ceo. There is an interesting split that is happening; elsewhere shares and amazon shares are both up, with amazon saying that Home Services rose every month by about 20 since last year. This includes Services Like home gutter cleaning, tv wall mounting, and repairs. On the flipside, facebook and netflix are going the other way. Facebook is down by 1. 25 . They did hit a record high on tuesday so we could be seeing some profit taking their, but netflix is down by nearly 2 , basically getting some heat from the fcc, saying that because netflix has admitted it is throttling streaming speeds, its filings should be reexamined. Before i send it back to you, i want to head over to asia, to japan and the land of the rising sun, because the companies Sun Corporation is in focus. In the past two days it has risen by 12 , and we are talking about this because they are at the center of whats happening with the apple and fbi. Suncorp owns the israeli Data Extraction Company that has been implicated in unlocking the iphone of the San Bernardino terrorist. But what is sun corp . Its the owner of something called pachinko. Its what you can see on the screen its the equivalent of a pinball machine in japan, but they can gamble and earn money. Thats what sun corp is all about. That is why shares have been rallying over the past few weeks. Cory we will dig into that deeper. Thank you very much. A look at our top stories. They are flirting with the bull market. Reporter well company has gains on china. Only eight shares gauged. They are plunging 19 . Are unable to make a reasonable calculation of how recall. Toccata auto 24 billionsta mated dollars for the price for the comprehensive callback for the deflator. Bites a recovering quite a in a recession in tokyo. Attempts to stem they want a repeat of the trading halts. The chaos wiped out 5 trillion of market value. They are thinking about adding mainland stocks to their benchmark. Lets have a look at this market action. Weve tokyo back on screen. Here is heidi. We are going to go out of this quarter with quite a bang as we go to regional markets in asia. The start of the quarter, the start of the year, we are seeing some strong gains across the rest of the region. Take a look at sydney. They have brushed off losses in crude with gains in energy and refiners. Region, theound the stronger yen. It is stronger for another day. Have had some strong gains in the past few sessions. Elsewhere around the region a little bit patchy. In hong kong they give up a quarter of 1 . Chineseshares listed in shares are listed for a bull market if they will gain these gains. 1 . Ghai is up about 4 10 of we have some moves on the fx front as well. There driven by the weekend dollar stories. Bestsian seeing its quarterly performance and 43 years. Well continues to recover. This is asias only net oil exporter. The koreanh high for won. The competition has been heating up in the music business. It is just the beginning of their market condition. Can we hope to fuel international growth. We sat down with their c. E. O. And asked about the current prospects for public offering. We decided at the time that the market wasnt there. Wasnt right. Some conditions were complicated. And we always have other options. We just finalized our funding privately. We raised 100 million euros. And we keep all the options open at this stage, no rush. Reporter when you talk about the options not being there, is it because its difficult to get funding on the markets, because markets are volatileor you saw something uglier . Guest i think there were two issues at that time, a, the markets started to get very volatile, obviously. Tech Companies Like us always need good market support in the first place. Second thing, there was just a few months after the apple launch, the impact coming there, and s