It includes diane hendrix. The chairwoman and owner of abc supply. Darlene jordan. Executive director of the j r jordan family. Betsy mccoy. Former new york lieutenant governor. Brook rollins, president and c. E. O. Of texas Public Policy foundation. There has been no claim of responsibility following twin bombings in thailand leaving one person dead and 20 others injured. The explosions occurred in a popular seaside resort. Global news, 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Loomberg west is next. Emily this is bloomberg west. Coming up, a millennium milestone. In the market, all three major u. S. Indices closing at record highs. This is the first time this century. We will break down the historic day. Diversification at alibaba is starting to pay off. We will hear from the companys cofounder about its push into cloud and media streaming. And a new connection unveiled between dnc hacks and those targeting george soros and a fourstar nato general. To name a few. First to our lead, for the First Time Since 1999, the s p 500, the dow jones industrial, and the nasdaq rose simultaneously closing at records high. All three benchmarks advancing off surprisinglyrosy earnings reports. Alibaba leading the comeback. A surge in Cloud Computing ervices. Joining me to discuss, cory johnson. It is interesting, revenue rising. The biggest jump since the ipo while at the same time profits dropped considerably. Cory it is a Great Big Business growing at a rapid pace. Growth is slowing down in the there are signs of weakness if you want to look for those things. Sales are there. They are breaking out more than they have in the past. Ultimately, Gross Margins jumped out at me. They are in decline yearoveryear. For a bunch of quarters in a row here. That is disconcerting. They want to be more rofitable. Emily what about user growth in particular because there is so much skepticism about the chinese consumer. How is that impacting alibaba . Cory is this about a slowdown in the chinese economy or the aw of large numbers . Both numbers are up but both are growing at a slow pace. They are pushing the boundaries of how much they can grow. You can see in the numbers the growth just isnt there the way it was in the early days. Emily as you mentioned, they broke out revenues differently this time. They have been investigated. They are making different kinds f financial disclosures. What more did we learn that we did not know last time . Cory they only broke out in two different metrics. Analysts would like to have seen a lot more information especially about the shipping platform. There has been an investigation. They admitted a few weeks ago maybe a month ago, june butno new data about that. It is an area of concern. We do not know where the investigation is going but it is ongoing by the sec. It is a mystery. 47 of this unit. We dont know how theyre accounting for it and how it affects their regular results. No update from the company. Emily i did speak with joe tsai about that so we will hear shortly his answer to how that investigation is going. Is there anything else of concern or bright spots worth oting . Cory a lot of the numbers are slowing down though it is still growing and it is still massively big. We still do not have a sense of what is happening internationally for alibaba yet and whether that growth will help them or if it remains a chinese company. Emily jack ma has said he wants to get to 50 of revenue from international and 50 from china. Thank you so much. I did speak with alibaba cofounder and executive vice chair, joe tsai after the Company Reported earnings. I asked him about the m a strategy and if there are any megadeals in the cards. Joe if you look at our core operations, 2. 5 billion of operating income in our core business that operating income is growing at 38 year on year. If you look at our eps, it is growing at 33 growth. It is robust. We did consolidate the operations of two of these elements and even despite consolidating these losses, we generating 61 operatingmargin in our commerce business. It means that we have the uxury and the resources to invest very aggressively into new businesses like Digital Entertainment and our new innovation initiatives such as internet cars. We feel very comfortable with our margins. We feel that we have a lot of resources and cash flow to invest in new growth. Emily speaking of yahoo , going through a sale of its core business. Has yahoo discussed with alibaba what it plans to do ith the shares it holds . Joe what they need to do is they need to figure out what to do with the alibaba shares. They could also do nothing. But we are going to be fairly reactive when it comes to that. We will leave it to the yahoo board to decide what they want to do with the alibaba hares. The important thing for your viewers to know is that if yahoo sold, yahoo would incur a huge tax liability. That doesnt solve the problem even if we are invited to acquire the shares of what they call the remain co because we wouldnt be able to cancel hose shares legally. And we end up inheriting that big tax liability. It will be a very difficult question for us. Emily alibaba has been very acquisitive in the past, more than 24 billion in deals in the last year. Microsoft, linked in, softbank. How open is alibaba to really big deals . Joe when you have 61 operating margin in your business, youll have to think about how to smartly use that extra cash flow, that margin, to invest for future growth. When it comes to our m a strategy, we will be very disciplined about it. We have set ourselves several important criteria including growth in our user base, improving our customer experience, and also expanding in our categories. If you look at the large acquisition and investments we have made over the last year, they all fall very consistently into those principles. E acquired yoku because we wanted to get into Digital Entertainment. We partnered and invested with the Largest Electronics retailer in china because we want to execute with them and on the channel strategy to own the Electronics Retail space in china. These are examples of acquisitions that we have done. We are open to large deals. We are open to small deals. The important thing is that they stay consistent with our m a principles. Emily you guys made a big investment in a Company Called quick see to be paid over two funding rounds. According to reports, alibaba stopped paying. What happened there and how do other Companies Know that youre not going to do this to them . Oe we have actually fully paid our investment into that company. The fact is, by far, we are the largest capital provider to that company to the tune of over one hundred Million Dollars and we have paid on time. We have fully paid up. I think what you have seen is a report regarding a contract where there is some technology that the company was supposed to develop for us and the fact of the matter is, for the china market, it is a very different market and for the kind of products the company was trying to develop, it was very ifficult to gain traction. But, by no means, was there any kind of dispute. We have a very Good Relationship with that company. We are supporting the entrepreneurs that are running that business and that is the approach we take when we invest in market in the u. S. We want to back entrepreneurs. Emily joe tsai, alibaba cofounder and executive vice chairman. Coming up, new details suggest a massive hack on the Democratic Party is bigger than we originally thought. We will head to washington for more on that report next. This is bloomberg. Emily turning to Cyber Security and some big developments related to recent statesponsored hacks. He fbi has high confidence that the russian government hacked u. S. Democratic party groups. The findings have not been made ublic yet. High confidence is a phrase that intelligence agencies use to signal near certainty. Nancy pelosi called it electronic watergate. Bloomberg is the first to report a connection between these hackings and a handful of other hacks including that of a ourstar nato general. We have the details. Reat reporting, michael. What exactly did you learn. Michael it looks like the investigators probed the dnc hack. They are coming across earlier iterations where the same Russian Hackers had taken information and tried to introduce it into the debate in the u. S. Seed media stories with it. They had found a certain website. It went up in june. Before the Wikileaks Dump of emails. Before 2. 0 which tried to feed some of the information to the media. It showed that they had hacked a number of other targets including a top u. S. Fourstar general who had been involved, he was the chief military commander of nato, involved some hacks with the soros philanthropy. The open society foundation. They had gotten into an internal Network Communication for soros. They put out all of this information onto that website. Even though it claims to be a site developed by american activists,all of the information tends to be associated with some sort of Russian Foreign policy interest. They did an effective job seeding that out to the military. They ad a facebook and twitter account. They did have one story on the fourstar general in talking to colin powell and his complaints about the Obama Administration. An early iteration of these hacks. It suggests these guys have a lot of material and more is to come. Emily one thing you point out is that if russia is behind this, it is clear that Russian Hackers are not just trying to influence the election but trying to get secret information about the Obama Administration policy. How does this compare to patterns we have seen from Russian Hackers in the past . Is this more egregious or invasive than what we have seen before . Michael the Russian Hackers involved in this are associated with russian intelligence agencies. This is probably what they do for their day job all the time. They are probably trying to collect information all the time. Where they crossed into New Territory is they decided to take information that they have hacked from these accounts and figure out ways to make it public and influence the debate, influence the u. S. President ial election in november. It is called an information operation. We have never seen anything at this scale or where the stakes like the u. S. President ial election were at risk. Theyve crossed into New Territory in a big way. Emily because of this happening so publicly, what are the diplomatic implications . We are in the middle of a heated president ial election and any action might depend on the results of that election but beyond that, what is russia saying publicly about what we are finding here . Michael russia is denying any role in it. Wikileaks, which received this giant trove of dnc emails, and posted it on their site in this very convenient searchable form which generated a lot of these stories, Julian Assange has also said there is no evidence that russia was behind that leak. In a strange twist, wikileaks put out a 20,000 dollar reward earlier this week for information leading to the suspect in the death of a dnc staffer who was killed tragically here in washington who was walking home from a night out one night and was shot three times. The implication seems to be that wikileaks was suggesting that the emails didnt come from russia at all but came from perhaps this killed dnc staffer which has another twist implying that the democrats were possibly trying to get rid of this guy as a result. None of that seems to be substantiated by evidence. All of the evidence about the hack points directly to russia. The fbi has high confidence that this is a russian hack. I think the evidence is in that direction. Emily it remains to be seen if we will see more information leaked out as a result of this. Michael rielly, thank you so much for that update. How deep an impact has brexit already had on lending in the u. K. We will hear from the biggest start up of lending when we return. This is bloomberg. Emily biggest decision to leave the eu is making it harder for the p2p lending business to attract investors. Funding circle says one part of the transition will not be as hard. The Company Holds individual licenses in each of the eu countries it operates in. It is more prepared to weather regulatory changes. We sat down with meekings. James it is a platform so people can lend money directly to businesses across the world. The Eu Referendum has some mpact on that. I think for us as a business, we are extremely well capitalized. We are in a good position to weather a timeframe of economic uncertainty. More businesses are coming to us who previously would have gone to the banks as a result of the Eu Referendum. It is fresh. There could be a greater need for alternatives such as our latform. Adam brexit has thrown that into some uncertainty. Are you thinking of moving your base of operation . To be able to maintain access to that market . James Funding Circle we have offices across europe including london and berlin as our main centers. Those give us access. In terms of the actual regulations, we have to abide by the regulations in every country we are in. We do not run it as a passport or our activity. The Eu Referendum result does not make a difference to how we behave in different countries. Adam since you have launched in 2010, the Global Economy has been relatively strong. How will that change if the conomy swings . You have had a low number of defaults. Are you forecasting there will be more defaults . James no one takes more seriously than us. It is paramount to us. Clearly, we have only been in business since 2010 but the businesses that we lend to have been around longer. They are an average of eight years old. Clearly, we can model what happens to those businesses vertime. In our Credit Assessment process,we look at macro drivers like unemployment. And we assign businesses with different wristbands. Those classifications may change and the models may change as you enter a timeframe of economic uncertainty. Adam lending club and other piertopier network has gone through a period of time. The stocks have collapsed after internal controls. How does it affect your business . Does it change what you rely on to fund the loans youre making . James it has been a challenging year. For all business. We have worries about the chinese economy and the lending culture challenges. And the referendum. At the lending club our challenges are isolated. In the u. K. , we have a dedicated framework. For us, we are seeing Institutional Investors being more aware and asking us more questions about our risk framework which is quite right. They have been reassured with the answers we get them. Adam it was reported last week that one of your chicago investors, a u. S. Fund, and a hicago investor says the results were coming in below expectations. A Morgan Stanley report showed that some other funds were seeing some trigger losses. The market depends on using technology to mitigate risk and minimize these sorts of things why has this not worked . James every large investor in our u. S. Business has earned a return of 7 which is in line with our expectations. We want to be clear on that. In the u. K. , we are giving returns of over 7 as well. When you compare those to other investments at the moment, we think it is an attractive asset class and in line with expectations. Some of the comments are not quite right. We are here to correct those. Adam are you seeing a change in behavior . Are you having a harder time drawing in investors as a result of the different challenges that you are talking about which might include the banks or the hedge fund . Is there still a strong appetite for this Investment Vehicle . James we have got multiple types of investors queuing up at the door. What has happened is that as we are going through the Eu Referendum, we have to have frameworks and the time to get these investors on board is taking longer. Emily that was Funding Circle founder and director James Meekings with adam. Coming up, with more drones comes more accidents. We are learning about the growing need for drone insurance. With an on demand industry veteran next. This is bloomberg. The hang seng index is poised to rise for a second week surging 14 in the past month the biggest gainer among major benchmarks. Earlier the s p, dow, and nasdaq all closed with records for the First Time Since 1999 helped by a bounce in crude prices. Chinas recent economic stablization faltered in july as factory output and retail sales and investment all slowed. Industrial production rose 6 from a year earlier. Retail sales increased. All three readings fell short of economists estimates. Japan takes another step to reestablishing its Nuclear Industries switching on the reactor under new safety rules enacted after the fukushima disaster. The company is expecting power to flow from the facility in three days. Court challenges threaten the reactor operations in other cities. Shikoku is leading gains today among asian utilities. Global news 24 hours a day fired by more than 2500 journalists and analysts. This is bloomberg. Back to the markets now. Coming back after a mountain day and after the lunch break as well. How are things looking . A fresh edge. We are seeing pretty strong g