emily: it is noon in hong kong. i have an update of the top stories. north korea fired short-range projectiles and the ce hours after un security council passed new sanctions against pyongyang. gold,ill ban exports of titanium, rare earth and coal. a key source of hard currency. china gave its backing to the sanctions. the slowdown in china will top the agenda as leaders gather for the national people's conference. the nonfactor pmi for february was 51.2, signaling expansion but lower than january. nominal force for gdp growth of 4.25%.

shale pioneer and chesapeake energy cofounder aubrey mcclendon has been killed in a car crash in oklahoma city. a day after being charged with rigging bids for oil and gas. mcclendon denied with working and i do -- working with an unidentified rival to keep rates low. those are the headlines. 2400 journalists, 150 bureaus. let's take a look at the markets. hong kong and china lunch. here's how they were trading this morning. shanghai in the green. singapore, tokyo, and mumbai seeing, all in the green. 1.8%. back in half an hour. time for "bloomberg west." emily: i'm emily chang this is

, "bloomberg west." the battle for encryption intensifies. we speak to apple's attorney. yahoo! meets. pushing for a sale. we'll bring you the latest. can cable companies spend their more subscribers? the arms race for original content is officially on. the debate over privacy rages, first, from capitol hill to the rsa conference right here in san francisco, pitting individual privacy against national security, striking at the heart of the current debate. how much does encryption hinder law enforcement? joining me now in the studio former u.s. secretary of , homeland security, michael chertoff. also co-author of the usa patriot act. thank you. it's great to have you here on the show. first of all, look. apple has been very public about

its views on encryption. how much does apple compared to the rest of silicon valley? are all of these other tech companies taking as aggressive a stance? because it doesn't seem like they are. michael chertoff: a number of companies have filed briefs in support of apple in the case. apple is the first one that got caught up in the battle in a court context. apple has traditionally been focused more on security and encryption of data that it holds, rather than a business model that involves looking at the data and using it for marketing or other purposes. but i think basically all the , tech companies are in the same boat. it's not just a question of privacy that question of security. if you force people to create backdoors or duplicate keys, you are creating security vulnerabilities that are going to hurt innocent people. that is really what i think is the heart of this. emily: you have a new white paper out about the impact of encryption on law enforcement. what do you make of the argument

that phones can't become a warrant proof space in america? michael chertoff: law enforcement has a very important job to do. i was part of it for many years. they want to have as much of an opportunity to collect information as they can. but you know, our system in this country does put restrictions on law enforcement even when it means you lose a little bit of evidence. in this case there are many , tools that are available to law enforcement. including metadata. records of who calls who and who communicates with who, which are very helpful in identifying people that might be a threat. the issue here is whether the marginal benefit of handing -- handicapping and encryption for the fact that we are putting millions of innocent people at risk for criminals or foreign powers to get their data and misuse it. emily: is it? michael: in the long run, strategically, it is to the benefit of the people this -- of

this country to trust the internet. it is important to allow us to build more secure communications, better encryption, and reduce vulnerabilities so bad people don't get our stuff. emily: should there be any warrant proof devices? michael chertoff: it is not that they are legally warrant proof. if you want to design a system that is simply not accessible except by those who send and receive messages, i think there is real value in that. that may incidentally preventer -- prevent law enforcement from getting out information. the fact that we don't have a perpetual recording device in our houses that would make it easier for law enforcement, like in "1984," means we are balancing personal security and privacy against other issues. emily: i spoke with attorney general loretta lynch yesterday. explained what the government is asking apple to do. take a listen. loretta lynch: if there was a box of documents in someone's house that i could show a court

may have evidence of a crime and the lock on the door was such that i needed to help -- i needed help to get in, i needed someone to help me, essentially, so i could get in without the documents self-destructing that , is what we're asking apple to do. don't run in and get it for us. don't take that risk. don't pull them out yourselves. do what you did for years until about a year ago and help us with this particular matter. emily: is that how encryption really works? michael chertoff: the analogy is misplaced. this is not a case of, help us pick a particular lock. this is about building a master key that would open every lock. over thehing all country. and then, hold the key, recognizing that we have held,enced when a key is someone can steal it and use it to break into other people's houses. that is what the issue is. it is not a one-off. emily: you believe that is the only technical way to do this?

michael chertoff: there may be ways outside my engineering experience. in this case, i think the government is trying to prove a point. it is part of a larger debate whether we should promote innovation in the area of security and encryption. i think we have to. emily: cyrus vance the new york district attorney testified on capitol hill. on the side of the government. he had this to say. cyrus vance: criminals know that the ios operating system is warranted. thisnals understand that new operating system provides them with a cloak of secrecy, and they are, ladies and gentlemen, quite literally, laughing at us. emily: is that happening? reality is, even if you had a rule that requires all american companies to provide a backdoor, there are apps overseas that will be

impermeable. they are going to find ways to avoid the law enforcement. in the old days when we had wiretaps you know what criminals did? they walked out of the building and they walked around the block and they had their conversation out of earshot. this is an issue with law-enforcement always deals with. you don't have perfect visibility. but somehow we managed to make these cases again and again. we did it that way the old days and they can do it that way now. emily: today, google chairman eric schmidt was appointed head of a pentagon advisory board, which is interesting and almost seems contradictory, given the stance that google is supposedly taking in support of apple. what do you make of this? michael chertoff: it is actually very smart move. they do set up these advisory panels. there is a defense science board, a policy board. they bring in people with different experiences and different points of view. this is the same type of issue. you are bringing in people who understand modern technology and how it develops. you are getting the benefit of their expertise. i think that is a good way for the government keep the door open to the tech community.

emily: michael chertoff, former secretary of homeland security, thank you so much. now, facebook, the latest tech company under investigation in europe. german authorities say the social network may have abused its market dominance. forcing users to agree to its terms on how their data is used. amazon and google are already being investigated in europe. this is for anti-competitive behavior. german officials say they have been in touch with their european counterparts regarding this probe as well. i want to bring in sarah frier. sarah, what can you tell us? sarah: it is important to put this in context. facebook has had run-ins with privacy issues during the whole existence of the social network. the terms of service, whether it is facebook or apple or google, nobody reads through the whole thing. what the germans are saying here

is, by being a monopoly power here, and having the terms of service that people may not understand fully what happens to their data, it might be illegal. of course, facebook says , andthing is totally legal they are giving people options with their front -- with their privacy. but facebook give so much data to advertisers without the ,xplicit consent of their users and that is what worries german authorities. facebook has so many companies that have come under scrutiny in europe. this is facebook's year to be targeted. emily: talk about facebook's stance on encryption. i understand whatsapp messages are encrypted. mark zuckerberg has come out in support of apple. how far is facebook willing to go? are they willing to go as far as apple? sarah: i don't think your facebook account is quite like your iphone.

it is something where much of what you do is public, much of what you do is communications with another person. people are not storing documents on facebook. they are not doing much that is hidden. -- they are messaging, so that is part of it. it could be hidden, as it is in was able but facebook to cooperate with authorities on san bernardino with my -- without much of an issue. emily: sara, thank you. coming up, major internet companies from google to uber are lining up in support of apple's stance on encryption. when push comes to shove who is , going to go as far as tim cook has? we will ask the head of the internet association. our wide-ranging interview with apple attorney ted olson. why he believes this is a civil rights violation. ♪

emily: a story we are watching, reports out that yahoo! is taking a meeting next week with the activist investor pushing for a sale of the company. several reports say yahoo! is ready to discuss a deal. it is asking potential buyers to sign confidentiality agreements. we'll keep you up-to-date on all these developments as they arrive. turning back to the top story, the ongoing fight between apple and the u.s. government over encryption. yesterday we heard the two sides make their case before lawmakers on capitol hill. here's what to watch next. the tech community has until midnight on thursday to file amicus briefs on behalf of apple. on the 10th, the government's

response is due. apple has until five days later to respond to that. on march 22, the two sides finally have it out in a court hearing about whether or not apple must comply with the request to unlock the phone of one of the san bernardino shooters. by the way, apple is planning a major product unveiling this month. some are reporting it could be the day before the hearing. first, the amicus brief deadline. the internet association is one of several organizations backing apple. the group speaks for major tech heavyweights including google and uber and amazon. earlier today, i asked internet and show she asian ceo -- association's ceo, how united these companies are in support of apple. >> the principal for the internet industry is the you can't have the government compelling companies to create a vulnerability in their system. all these companies rely on strong encryption to protect their users.

to protect our infrastructure. and even protect our national security and allowing vulnerability that is being pushed for the government will -- pushed for by the government will make us all less safe and less secure. it is important that we stand up and make sure that encryption is maintained for the national security of our country. doly: yet, these companies vastly different things. if the government were asking it -- for data from pandora or netflix would not be a different story? >> every company has a bit of a different business model. the companies do work with law enforcement closely under the law. the key point is under the law. in this case the warrants that , were issued for apple were done so under a statute that was written in the 1700s that predates even the fourth amendment to our constitution. many legal experts don't think that was a legal way to go about the warrant, and it is compelling companies to write technology that would undermine

their own products, and their own services in a way that weakens protections for users. emily: you think they will be willing to go as far as tim cook? >> tim cook can defend apple. i'm speaking for internet companies. apple is not a member of our association. we see this as a conversation that is much broader than one iphone. the former director of the nsa and general hayden has been saying that encryption is a fundamental part of our national security. we have to remember that. by creating backdoor vulnerabilities in the system , which this would do and clearly would do going forward, makes us all less safe, and is something we need to make sure that we are voicing our concerns and making sure the right answer happens at the end of the day. emily: on the one hand you have , to tech companies distancing themselves from the government. the other, eric schmidt is now the chair of a pentagon advisory board.

that seems contradictory. what message does it send? >> i do not know if it is contradictory. but there needs to be a recognition of the important role tech companies play in our national security safety. and our law enforcement agencies do a terrific job keeping us safe and lay an important role in our society. both sides need to work together and have some appreciation for the role that each of them plays. it needs to be done under the law. we are seeing the beginning of a dialogue that i hope will get us to solutions rather than having knee-jerk reactions are having this solved by a warrant that came out from a 1700s statute that no longer applies. emily: it seems that google has -- may in particular be taking a different position. we have seen tweets from the ceo of google, his personal twitter, but we haven't seen anything from larry page or anything from the google blog. is google in a different position? >> i don't think so. the internet association is

filing an amicus brief on the side of apple and google's ceo had tweeted on the same side as apple and the rest of the internet industry. it is a very complicated issue. i think it is getting a little heated. it is not the case that every single executive needs to tweet about it. the positions of the internet companies have been clear and will continue to be clear. emily: i am told that android phones are easier to hack. plain and simple. does google plan on making its operating system is difficult to access as apple? >> security is essential. that is what you seal the internet companies, google included, coming out in favor of strong encryption, because it does protect users but also protect national security. there will be difference between what an iphone and an android look like, but the principle is the same. strong encryption to protect

infrastructure and our financial system and national security. emily: some social media companies have been asked to police themselves and take down accounts that could be linked to terrorists. is that fair? >> social media companies have gone above and beyond in helping law enforcement under the law. but also, they've taken the initiative to take down accounts that are terrorist related. they have been on the front lines of creating counter speech that has gone incredibly far in fighting back isis and terrorist organizations. they are partners and they are doing serious work to make sure terrorism is being fought around the world. michael beckerman, thank you. coming up netflix's massive , programming budget is setting off an arms race for cable giants. what investors stand to lose. ♪

emily: if you are a millennial, verizon and hearst may have something for you. the companies are striking a deal to develop content for smart phones. two channels will launch this spring. rated red.com will feature lifestyle content aimed at young people living in red states. seriously.tv is a comedy news network. the channels will be distributed across verizon's mobile network. financial terms were not disclosed. media companies have a new strategy to combat declining viewership at the tv networks. spend, spend, spend. years ago coming cable companies could keep viewers with reruns, but not anymore. netflix is spending nearly $5 billion to turn out original content. sparking a sort of arms race with the other media companies. here now to break it down our , bloomberg news media reporter , lucas shaw.

talk to us about the numbers we are seeing. lucas: that netflix numbers , which you saw there, was a most $5 billion. depends on how you quantify it. it was a little under $4 billion the year before that, and has gone up steadily over the past few years. that means that all of these customers have a lot more things to watch online. they are not as likely to watch reruns, they will not sit through hours of commercials on cable tv. what cable networks are doing is plot -- putting more money into original programming that they think will produce hits that will compete with netflix and hbo and all these other companies. it means their programming spending is going up as well, but not quite as dramatically as netflix. emily: who's winning? netflix is spending the most but are they seeing the most success? lucas: netflix's wedding in the -- is winning in that they have the most user growth by far. profitable,ot yet

or they are barely profitable. the report profits between zero and $200 million every year, whereas most media companies report profits in the billions. however, net licks's promise -- netflix has promised that it will eventually be profitable. the scary part is if they spend a lot of money to try and keep up, and the shows don't work, their profits will go down. emily: what kind of shows are they spending all his money on? is everybody trying to get their own "game of thrones"? lucas: a lot of people are trying to get their own game of thrones. time alone -- time warner brought in a guy named kevin reilly, whose job is to bring in edgy dramas. at viacom, that means spending money on kids programming for nickelodeon. it means trying to come up with that hit scripted show on nickelodeon or vh1 rather than just relying on reality tv. how to investors feel?

there is a lot of risk. if you invest a lot of money and it turns out to be a flop. lucas: investors are torn. they are mostly concern right now about what is happening with cable tv. if you look at what analysts are saying, they point out the increased spending as a risk, though one that will end up, that could pay off. it really depends on how investors feel about that. viacom, there is uncertainty because there is uncertainty about viacom. in the case of time warner is more mixed. shaw, entertainment reporter, thank you so much. up next my in-depth conversation , with apple attorney ted olson as he rolls up his sleeves for a long battle with the u.s. government. if you like bloomberg news check us out on the radio. listen on the bloomberg radio app and on sirius xm. " continues next. ♪

yvonne: it's 12:30 in hong kong. cut the outlook for -- 38 chinese state owned enterprises. that is a day after he lowered china's sovereign credit rating outlook. moody has highlighted the surging debt and questioned beijing's ability to and i perform. the political leadership gathers to approve a new five-year plan for the economy. the ac bilton and valet have agreed for payment in brazil. billion, whatn $1 is said to be brazil's worst environmental disaster. toxic sludge swamp to the mine,

killing 17 and polluting local waterways. the cleanup may talk -- may cost up to $6 billion. three of five missing hong kong booksellers are expected to be released on bail. city police say mainland officials announced that the three will be freed in the coming days. the disappearances, along with two other men, stoked years that beijing is eroding hong kong's semi-autonomous rule of law and system of civil liberty. those are the headlines. powered by 2400 journalists, one hundred 50 bureaus around the world. let's check in on the markets in the asia-pacific today. here is david. see, 124.71 isan the level right now for the regional edge mark. this is what asia looks like. every market except hong kong, down half of 1%. hong kong, massive session yesterday, to say the least. everything was up.

we are seeing weakness right now, especially in the travel and leisure space. i will break that down in a moment. first, another good day. three days of great -- gains. taking us back to levels eight weeks ago, two or three days into 2016. we are down about 5-6%. a clue of how sharp the losses were january 4 and fifth. that is how asia looks. consumer services, travel, and leisure, it is not only in hong kong, airlines in the region seeing lots of pressure right now. not go through each one, but suffice it to say the sector is seeing a lot of profit -- .resser -- presser japan to south korea, a lot of casinos in hong kong, currencies, the dollar weakness, and yen weakness. the southeast asian currencies are getting bit up. other markets, as well. weakness in the japanese yen, which is helping the session in tokyo.

kong.cus is on hong can we recover? we will find out after the session. the session reopens in less than 30 minutes. emily: turning our attention back to apple, the company's battle with the fbi is intensifying after apple's general counsel and the fbi director and -- appeared in front of a house committee to defend their argument whether apple should or shouldn't create a master key to unlock proprietary software. we spoke to the man, renowned lawyer ted olson is leading their defense. we asked him about congress's role in this ongoing battle. ted: congress should consider the alternatives. our elected representatives are put in that position in order to do that, to think about solutions to these difficult problems.

and that is what this debate was all about. the government does not have the authority to require apple to redesign its iphone to disable the characteristics that it put into the system, which is what the customers wanted. there is no legal authority for that now. one judge has already held that. so there has to be some discussion about how to solve this problem, but you cannot conscript a private company such as apple to do some to change -- do something to change its products. we have civil rights that prevent that sort of thing. emily: i spoke with loretta lynch yesterday who said the middle ground is the courts. let it be decided case-by-case basis, as it already is in the judicial system. under any circumstance, would that satisfy apple? ted: i'm amazed that she would say that. it would not solve anybody's problem. you might have one clerk going

one way, and another court going the other way. fbi director komi himself yesterday said this is a problem. he said it is one of the most difficult, or the most difficult, problem i have ever faced as fbi director. before that, he was deputy attorney general. this is something a congress needs to debate one way or the other. if you do it on a case-by-case basis, you will have different outcomes and different cases in different parts of the country. director komi says they have many other cases where they are trying to do this in federal court. the manhattan district attorney said he had 205 iphones he wanted into. you can imagine, multiply that by every jurisdiction in the country. a case-by-case solution is no way to go about this at all. i am amazed the attorney general would say that. emily: i spoke to security experts who say that they believe there are technical alternatives here, that don't involve building a master key to all of our iphones.

head of national security agency general keith alexander told me he does not by apple's argument that this is the only technical way. are there technical alternatives? well, there might be technical alternatives. in fact director komi yesterday wouldn asked whether he -- had consulted with other branches of government to solve this problem so they can force -- wouldn't force apple to redesign the product, and he said we have talked to everybody who will talk to us. what does that mean? has he consulted with the nsa? the national security agency, able to help but not willing? i don't know the answer to that question. the experts at apple which designed this iphone, say there is not another way to do this except to give the government what it wants, except to redesign the system to break down its security system, which is, what, hundreds of millions

of people have relied on when they bought the product to begin with. they are depending upon the security that apple built into the iphone. and the government wants to destroy that. if the government can figure out a way to get around the problem itself, without causing apple to redesign the iphone, well, that they should do something like that, and the government officials involved in this should be asked that question directly. question, iso my there a middle ground? it sounds like apple is saying there isn't. ted: there isn't a middle ground that i know of that requires apple to go to work for the government. we have a constitution, and the constitution doesn't allow the government to conscript private citizens to invent products or change the products they have invented, in order for the government to look into the product, or to cause the product to do what it wants. that is a very significant thing.

there may be ways, now, the government has considered issues like this in a statute called the community assistance to law enforcement act, and it specifically exempted companies like apple from having to do this sort of thing. congress might consider some of these things, but if you are asking bloomberg or fox or the wall street journal or apple to redesign their programs to supply assistance to law enforcement, the many factor are of a car or anyone, the government had -- doesn't have the power to do this. except in the most exigent circumstances and they have not displayed that this exists. we are talking about a system that would break down the phone -- not just in this case. the government has said it was about one phone. now, the director admits it is not about one phone. it is a precedent able use in other cases.

this is a very, very important point. once you cross that line, there is really no limiting principle that the government has articulated. emily: apple lawyer ted olson. we will hear more from olson on apple's legal strategy. why he believes the fbi's fight is a civil rights violation. next. ♪

emily: now back to apple's , impassioned battle with the fbi. we heard from apple's attorney ted olson today, and i asked him what he thinks congress needs to do next. ted: congress should do its job, which is to consider the various different alternatives and the thect on citizens, balance concerns of law enforcement, which we respect, apple has cooperated in every possible way with the government except for throwing out the design of the iphone and redesigning it. congress needs to consider what technological resources exist, what can be done by the government without conscripting private citizens to change the products they make, and things like that. there should be hearings, there should be expert testimony. they may have started yesterday, the testimony, not just from

irector calmly of the fbi, have the most in or miss respect for him. a tremendous public citizen. we are lucky to have him. but the testimony from him, have testimony from the head of the nsa and other security agencies. testimony from experts that worked on the private sector, and testimony from law enforcement. let's have this debate. the director has asked for this debate. the ceo of apple, tim cook, has asked for this debate. let's have that debate. i can't predict where it will go, what -- but we should have a discussion and see where it takes us. emily: attorney general lynch shot down the argument that this highlights the first and -- violates the first and fifth amendment. she says apple is not a target, we are not alleging they have done anything wrong. howdy respond? ted: apple has first amendment's -- wrist amendment rights. you are right, apple has not

done anything wrong. the director said apple has been helpful in this and every other investigation. they have gone as far as they can. but apple has a responsibility. when it is being asked to communicate with iphones oliver world,ld -- all over the that is a first amendment right. i am surprised that the attorney general, that she would suggest that people, only people that are accused of doing wrongdoing have first amendment rights. you have a first amendment right. no one is accused -- has accused you of doing anything wrong. me, too. apple has first amendment rights to protect its product, to avoid the government compulsion of what it should have to say to its products in order to change the design of those products. and it has the responsibility to protect the integrity of the right of privacy, of all of the people all over the world who have depended upon apple to protect the privacy that they

respect to these phones. you can imagine what a torrential government can do to individual privacy of individuals, who are wishing to communicate with one another, or their neighbor, in private. we are talking about the rights of apple to make sure that it's itone has the integrity that carefully built into it. so all of those our constitutional rights. everyone has civil rights in this country, not just accused people or accused -- who are accused of crime. that itsple is arguing responsibility to its customers is greater than any responsibility and has to the government. but there is another argument to be made, that apple may not even have an iphone if it did not benefit from the government's own investment in technology, everything from gps to the internet. what if the government made it a condition that, to benefit from all of that investment, apple would have to comply with

legitimate law enforcement requests? extreme about get this, but it reminds me of the 13th amendment. the united states government, that made it illegal to have slaves. obviously, that is an overstatement. i do not mean that literally. but the government cannot conscript private citizens. they can't say, in order for you to use technological information that might have been produced and put in the public domain by the government, you have to agree to work for the government? that just does not work. i do not know where that could possibly come from. emily: apple attorney ted olson there. i want to bring in our legal who has been covering this case. she joins us from new york. christie, during the congressional hearing yesterday, apple, when pressed, lawmakers couldn't get an answer on what they want congress to do.

were you satisfied with ted olson's answer about what congress, what they want congress to do? >> i think it is interesting that apple has reiterated this talking point over and over again, including in what ted olson said today, that congress should decide. i don't think that that means they will not be continuing to fight these battles in court. i think that means that they are trying to bolster their argument in court that the law as it exists today, the government is using, is not sufficient to compel apple to do what apple doesn't want it to do. as we heard from ted olson, apple does not think it should have to comply with this warrant. it is asserting strong civil liberties claims in saying that it should be forced to do something it thinks is wrong, it thinks damages its product. fundamentally here, what is an a 200-year-olds law that the government has used time and time again to compel compliance with warrants.

what apple said in court is that that law should not apply to this situation, should not apply to making it right and codes to get into phones. to me, that sort of sit -- fits in very well with the claim that congress needs to do this, congress needs to take this up. make apple dod what it doesn't want to do. emily: what about his response to the attorney general, saying he is amazed that she would suggest that this be settled on a case-by-case basis of the court? and been going so far as to say there is no middle ground? that thek that shows division here between the government and apple is still a very, a very big divide. a are not coming to any agreement anytime soon. when you are saying there is no middle ground, that suggests that there really isn't a chance to reach a compromise. as he highlighted and mentioned in his criticism of what attorney general lynch said, it is true that if you litigate

this in the courts on a case-by-case basis, you will have a lot of decisions that are different, and it could be either good or bad for apple or the government, depending on what happens. already, we have seen this happen and play out in the cases that a come before judges so far, the case in california involving the san bernardino shooters, the judge said apple needs to comply. in the case in brooklyn, new york, involving a drug dealer cost phone, the judge came out totally differently and this week came out with a 50 page ruling saying that apple should not have to comply. both of these are playing out at the magistrate judge level, magistrate judges deal with search warrant issues and discovery and the kind of low-level questions that aren't really precedent-setting. legal experts say these are not precedent-setting decisions, but they are persuading the public debate. we'll have to see how this plays out. emily: christie, i know you will continue to follow the story

aggressively. our legal reporter, christie, thank you so much. could apple's roadmap to driverless cars include fiat chrysler? the ceo calls himself an apple freak, and says he is interested in partnering with apple. in geneva, he said, i would assume we have the credibility to be one of the players they have looked at. there are parts of us that would be interesting for them. he said he understands apple's syntax and would work on apple's terms and has been exploring developing a car and maybe producing as early as 2020. on the funding board, the iterprise messaging service, is seeking an investment that would value it at up to $4 billion. if successful, the round would buck the trend amongst startups. and investing slump about 30% in the fourth quarter compared to the one before. they seem to be moving in the other direction, as of a funding round less than a year ago, it was valued at $2.8 billion.

coming up, loans may be running out of time. will foxconn be able to save the day for the troubled japanese electronic maker? tomorrow on bloomberg, the surveillance crew sets down with the czech national bank. more of "bloomberg west" next. ♪

emily: the clock is ticking for sharp. the electronics maker could face of potential cash crunch is bailout talks drag on with foxconn. the reps -- the rescue deal would inject billions in new capital into the struggling sharp, which has or $.5 billion in loans set to expire at the end of the month. managing editor of asia companies peter joins us live from tokyo. peter, first of all, tell us about the reasons for this cash squeeze. what is going on?

at -- >> as you say, sharp has ¥510 billion in loans and credit lines set to expire at the end of this month. this is the pressure that the company was under two conduct a deal. they were under pressure from companies that were looking at a buyout. now, sharp's board voted last week to proceed with the foxconn offer. in one of the more bizarre turns, foxconn said they were not ready to proceed with the deal. they had heard about new liabilities of the company and they wanted to get to the body -- the bottom of it before they pursue this. are set toans expire, and foxconn and sharp need to work out the final terms of the deal. sharp's banks are waiting. they can process the renewal of a new two, but they need to get a resolution by next week. emily: how much time to have to renew the loans?

>> it should be ok if they are able to reach final terms by next week. it should be enough time for the banks to process these renewals. the issue is, the companies are still quite far apart. people familiar with the matter have told us they are going through a list of more than ¥300 billion in liabilities, almost $3 billion. they are trying to sort out how they will manage those liabilities. foxconn is paying a premium for sharp, and they do not want to take on extra billions of dollars in liabilities at this point. they are trying to work through them and figure out if foxconn can avoid them. there is also the possibility that foxconn will adjust the terms of the deal they have already ordered. sharp's board voted on it. that would mean sharp's board could go back and have another vote on the foxconn offer nvidia would consider another offer. emily: what do you see as the timeline for this to play out?

>> it has to happen fast. we have been saying this for a while. it is one of the most is our takeover battles around. lastought we had a deal week. this has been going on for weeks. we think we will have a resolution in the next week. by the end of this month, they have to pick a direction or the credit lines will expire. emily: our asia managing news editor, peter alstom live from tokyo, thank you for weighing in. it is time to find out who is having the best day ever. the winner is donald trump. in case you are 1 -- donald drumpf. john oliver recently revealed that the donald trump family name is donald drumpf. donald drumpf is now getting more internet searches then marco rubio or ted cruz, any of the other candidates except for

the real donald trump. that does it for this edition of "bloomberg west." tomorrow, a breakdown of hp earnings coming out of for the bell. that is it for -- from san francisco. ♪

announcer: this program is a paid advertisement from the u.s. money reserve, a company not affiliated with the u.s. government or the u.s. mint. the markets for coins and bullion are unregulated. prices can rise or fall, so buying these items carries some risks.