tv Money Moves With Deirdre Bolton Bloomberg December 23, 2013 2:00pm-3:01pm EST
was seen as the better managed company before at joseph a bank. >> all right, our senior market correspondent on the men's wearhouse offered to buy joseph a bank. we will be back with more on the " startsand "money moves now. ♪ >> welcome to "money moves," where we focus on alternative assets. i am alix steel come in for deirdre bolton. on in hedge funds, private equity, real estate, and more, and today, it is a feel- good story, helping people climb out of poverty, the benefits of micro-financing. that speaking to a company is providing over 5 million people around the world with access to credit and banking
services. i will also show you my favorite holiday out of the season. i cry every time i see it. television anday ads are analyzed. with aing on big pharma drug for attention deficit hyper activity disorder. all of that on this addition of "money moves." and the junk market is soaring this year, exceeding its reviews 2008 peak, and a big surge in demand have a lot to do with expectations about the dead. su keenan has the story. these loans made to risky companies, is that what we are looking at here? >> the real idea behind this, given tousually
companies rated below investment grade. 2013 turned out to be a banner year. we are seeing unprecedented demand, due in part to the expectation of rising interest rates ahead. it shattered the previous 2008 record worthies by billions, and it was fueled by borrowing that did not include typical lender productions, and what is new this year is the investor demand. they were the biggest losers in the idea income and that the fed would start unwinding its bond buyer made them big winners. inflows, people piling into mutual funds to buy junk loans. according to banc of america, the assets grew to 85% this year. jump, also a big accounting for over 200 billion dollars in loans.
these do not include maintenance requirements. finally, we sought even speculative companies step up issuance of this type of debt to pay shareholder dividends. there is a lot of that going on. >> a big surge in demand, for sure, but there does have to be something here. i would think more junk loans the underwriting process is not that regulated. what are the underwriter saying about this? >> they are starting to say a lot. the worst deals are often made in the best of times. that is a phrase you often see. remain low, ever more aggressive transactions, which are what we are seeing, become the seeds of the next default cycle, and regulators are already concerned about deteriorating underwriting practices, and they are asking banks to avoid originating loans that could be considered
criticized or debt that would have deficiencies. they identified that 42% of leveraged loans fit into this category. >> ok. bottom line, will this surge in demand continue? >> we have seen the market increased to a never seen before size. there is a lot of benefits and a lot of caution out there. as wes is especially expect the fed to taper next year. su keenan, thank you. a big day for president obama's obamacare, people signing up for plans that kick in january 1. julianna goldman joins me now. up.ident obama just signed is that real? what plan did he choose? >> it is very real. the white house came out and said that the president over the weekend in rolled in his namesake plan, obamacare, and they say he signed up through the d.c. exchange, like many
other members of congress are doing, and that he picked a bronze plan. he is paying under $400 per month, but they will not say how much he is paying or what insurer he signed up through, and they will not even tell us what his experience was like, whether he ran into any of the problems that plagued the website. house is out saying like many americans, 85% or so, the president receives his health care through his employer, and he will still be getting his health care through the u.s. military, but he wanted to show solidarity with americans who are signing up and trying to show that the website is open for business, and the way to encourage other americans to sign up so that they can have insurance starting january 1. >> i am guessing he did not get a subsidy. a you know, again, it is bronze plan, so it is largely
symbolic, and that is what we are going for here. >> talking about the deadline, we are hearing it is pushed back by one day. what is the idea to get coverage by january 1? in, and itetly snuck adds to the confusion, but the white house is confirming that the deadline to enroll for a health plan if you want to get covered by january 1, starting january 1, it has been delayed until midnight tomorrow, so it 11:59, december 24 is the last you can get in there, but the white house said they did it because they were expecting a surge of people coming to the website, and they wanted to make sure that everybody wanted to have coverage by january can. >> thank you so much. our bloomberg white house correspondent, julianna goldman. coming up, a nonprofit organization that is using micro-financing in the
developing world provides more than 21 million loans valued at nearly $6 billion, and the ceo of opportunity international joins us right after the break, and a look at the most effective advertising campaigns of the holiday season with a ceo and looking and a startup to take on the pharmaceutical industry with an innovative drugs. all of that ahead, when "money moves" returns. ♪
>> welcome back to "money moves" on bloomberg television, streaming all day on your phone, online, at bloomberg.com. helping people get out of poverty. we all think about helping people every day, but opportunity international actually does it, and they do it through micro-financing. international is a nonprofit helping people in 22
countries with access to money. carra, joins uses now. welcome to "money moves," vicki. good to have you. how do you pick your recipients? >> good to be with you and on bloomberg. the way we pick our recipients, we have about 3 million people involved, and 91% our women -- are women, and we select them as they come to us, and we take a model based on what they are doing, what their plans are for the future. if they qualify based on hours and it's and based on the standards of the group, because whether they make their loan or not is based on whether the group succeeds or fails. but they can use that money and loaning it to other people. it looks like you have about 2.8
million active loans right now. how do you ensure that you get paid back was to mark >> we actually do not have a problem with payment. 98% of the loans that we offer people are repaid, so that money continues to cycle within opportunity international, and we have a savings program. we have insurance for the poor, and the biggest thing we do that is different from other organizations is we provide training to make sure it is not just about loans or savings or insurance. tois about training people know how to create businesses. >> that is an excellent point, because it is very difficult to lift people out of poverty. what do you see is the biggest problem there? >> i think one of the biggest issues facing our world today, both in the united states and in the developing world, is the creation of jobs, and opportunity international has created 10 million jobs since we started in 1971.
we have a goal for ourselves to create 10 million additional jobs by 2020, so a total of 20 million jobs by 2020. that moves people out of poverty, jobs. >> at will be an amazing result. endthese jobs that people up creating jobs, or they end up expanding? the people you give the money to? >> it is a combination. we have had many people who have taken out five, 6, 7, eight loans, and they are creating jobs in their communities, and they are hiring 10 to 20 people, a big effort of agriculture across africa, and it is job creation and then creating stronger, healthier communities. >> what are some of the issues in making sure the money actually goes to where you think it is going and where it should be going? >> some of the issues are, we have wonderful, major donors,
and we also have a big push going on right now with corporations. a large relationship with caterpillar. they donated and invested, i should say better, close to 20 million dollars of opportunity this year, and so making sure that donors direct where they wanted their funds to go. half went to africa. half went to asia, including india, the philippines, and china, but to assure that we are really focused on what the donor needs are and then to make sure it goes to wear would be the biggest focus for us. >> on the ground, what kind of experiences have you had with local corruption? >> you know, when you are dealing with some of the entries we are dealing with, you have to do with corruption, but we have a very strong system. work, 99%ple actually our local, and they report right
in with the central banks in all of the countries we deal with, and we have committees that watch that kind of thing, so i am not saying it does not happen, but i am saying we deal with it and deal with the effectively. the potential of these microloans to disrupt traditional avenues of need. i think of social security and medicare. >> though, you know, when you look at the countries we are serving, they do not have social security. they do not have a safety net. they really do not have anything, so back to jobs. we see time and again a job started with a loan of $180, and that is a lot of money when you are looking at countries like india, the philippines, china. all of the countries i mentioned in africa. it is really the boost to get people started, so there is no concept of safety net in these countries. >> there are enough, and 20
with me, peter. i will tell you the one that made me cry. it is the apple advertisement, and he wanted to make a video about his family on his iphone, and the whole family cried, and i also cried. explain to me why this was so popular? >> it was not the top of the list, but it did well with moms, not so much with younger men, and it is really about the emotion. there is not enough information to tell you what phone and he is using. it was simply telling a story, and it drew some people in. it is a 92nd ad, so it is a long one, and many people do not stick with it -- it is a 90-sec ond ad. who buys aut someone product based on an ad? i did not go buy an iphone based on this.
>> right, but you might consider it next time. it is about connecting at a deeper level, and you are creating that connection with viewers that goes beyond just that by it now, and we see this with the holiday ads, not just the one day sale. it is about creating that emotional connection. >> overall looking at the holiday season, it seemed that the ad volume was down, and commercials may have been more subtle. what does that tell you about the environment? >> close to 400 individual ads were actually holiday team across 120 brands, and we are still trying to push that holiday theme. i think some of the vigor brands are connecting with the emotion, like apple did. samsung did it with humor. walmart did it, really connecting emotionally with viewers, so i think they are starting to get it is not about pushing a product on people.
it is about a way to connect. >> duracell, also. the is the one that failed most in your opinion? >> the one that failed the most? there were many. we are only looking at the top list. wound upks like we losing peter. we are trying to get him back, the ceo of a metrics company, and we have been talking about successful holiday ads and what they need up meeting for consumers and the companies that make them, and in the meantime, we want to update you on where the markets are trading. the s&p is trading around the highs of the session, and the dow is also searching, 73 points this ispoint, and extending the all-time highs. we have apple moving, and the international monetary fund also indicated it might raise its
outlook for the economy, and these are helping to propel stocks higher. houseg to the fast rising prices in israel, the imf is warning that they could see a sharp correction ahead. we want to go to elliott gotkine with all of those details. on the best-known tel aviv boulevard, what will soon be the tallest residential tower there and probably the most expensive. in thistments residence, some with private pools, start at $1.5 million. prices a few years ago which would have been unthinkable. rose 55%, faster than norway, switzerland, and every other member of the oecd. economy, a lack of supply, and low interest rates. bute is rising in tel aviv, many people find themselves priced out of the market. a would love for prices to come
down, and in that sense, they are not alone. also want cheaper homes. showing me around the $50 million penthouse, he said the current situation helps no one. >> rising prices in the short- term may be good for some but in the long term is bad for everyone. prices going up, hard to get an apartment, and even for developers, and land prices are increasing at a steady state, and after a certain point, it becomes risky to buy new land and to go into construction. >> he may soon get his wish. goldman sachs says they are the most likely oecd country to see a housing crash, but the minister does not see that happening. >> it is way, way too expensive. supply ofure that the new houses or new construction will enable us to be more
helpful through the whole process. >> the israeli governments have failed to build enough homes. interest rates may fall further to boost the economy and weaken the shekel, giving the housing boom in another left. >> we will have more on israel of the show when we talked to this ceo of alcoa, and that is coming up after the break. in the meantime, it is 26 past the hour, and that means we are on the markets, and julie hyman is here. another record high? >> another record high for the s&p and a dow, and a 14 year high for the nasdaq. nonetheless, getting a lift. a couple of different factors. first, you have the imf saying it is going to raise its forecast. it was not specific. forecast ofy had a
2.6% gdp growth next year, and we did have christine lagarde saying over the weekend that she was even more optimistic in part because of the progress made in washington in terms of budget talks. also helping matters, apple officially inking the deal with china mobile. the best-performing of the three major averages, and then finally we are heading into the santa claus rally, which is the last week or so of the year. of other markets, let's take a look at the dollar. it is dropping against most of the major currencies today, so that is the flip side of the dollar falling after having quite a rally. ame profit taking, and take look at natural gas. as we all know in new york, it is warmer than it has been regularly. isthe flip side, there colder weather in the forecast, and you can see a bit of a recovery.
♪ wheres is "money moves," we focus on innovative, alternative investments. i am alix steel in for deirdre bolton. worth about $4 billion per year, one industry is dominated by the likes of shire pharmaceuticals, novartis, eli lilly, and johnson and johnson, and one startup is looking to disrupt the market with an innovative, new treatment. our bloomberg reporter elliott gotkine spoke with the company's ceo. >> first and foremost, this is a
non-stimulant drug category, so it will not be under the restraints that things like ritalin or adderall are. it acts very fast, and we recently released clinical news that said the first day you take it, unlike the others, which take about two months to start working, it also appears to have a safety profile that is vastly improved than the existing treatments. effects.side >> exactly. >> and what side effects does it have? >> it has a very, very clean safety profile in clinical trials. we have seen low-grade nausea, which happens the first or two when you take it, but it does away. we are not seeing some of the major side effects that we see with other drugs. >> when will we see it? what is your best case scenario? >> we are hoping for adult adhd, we will have it on the market by the end of 2015.
for pediatric adhd, we are looking at about a six-month lag, and we are also developing it for additional applications. >> so there are three trials to go. >> correct. we have started the screening process for patients for the phase three trial, and we will be dosing patients very early in 2014 in the phase three trial. the pediatric trials are going to start around the second quarter of 2014. >> the trials cost a lot of money. he raised .5 million dollars, and another 38 million dollars. can you categorically say you do not need any more money until after those trials? >> absolutely. adh trials are fairly large trials, but they are fairly cheap. it is a short time, about six weeks apiece, so we are categorically not requiring any additional financing for the approval of our adhd drugs for
adults or other. approved, oneget of the dangers with drugs, and there is always that risk. tests store quick, adhd have had it at the phase two level. major errors or the major failures were at the phase two level. that has shown efficacy in phase two has gone on to produce that in a phase three trial, followed by a approval, so we are hoping that is our situation also. believepeople do not adhd even exists, that it is just people, young people, in particular, who perhaps ms. ba or act like children, and also people being prescribed, or whether it is in israel or others, people use it as a stimulant, and colleagues in class are taking it, so they are at a disadvantage. how do you handle those types of
criticisms that have been leveled at traditional drugs being used to treat adhd? >> the answer is in your question. our drug is in a class of its own. there is a negative criticism with a potential of overuse, for misuse, and even things like addiction for stimulants like adderall or ritalin or others. negative abuse potential in preclinical models, and we believe it would be a safer choice for patients, once it is approved. >> one of your investors is and do youvestor, have realistic hopes that one day you will kind of aspire to be of that kind of size? what is your ambition? >> our ambition is to carry forward with execution. we are a small company, very
nimble, and we are focused on just growing the expertise and the scale to deliver all of the way through fda approval. we do not have a grandiose plan to become a multibillion dollar, commercial operation. having said that, we think we have a real opportunity to grow and be a significant player, and time will tell. toso the ambition would be be gobbled up, then? >> historically, that is what happens. there have been strategic deals happening in this space, and i would think this is a realistic and possible scenario. >> what timeframe? >> we have made a conscious choice not to engage in that thought process or a formal russ this until after the end of the phase three process. we believe the company's value will reflect what could be of value, and at this point, we really want to take it on ourselves to prove in phase three that this drug is all that
we think it is. >> and another question, as with many tech companies, would you ever consider a listing? >> i do not want to rule anything out. our market is in the u.s., and our largest investor base is in the u.s., and our management is primarily us-based. the nasdaq has been a very warm and appreciative audience to our story, and that is why we went there and raised the money that we raised. tel aviv is great. it is my home. again, we are not ruling anything out, but it is not in the cards in the immediate future. toelliott gotkine talking the ceo. well, we had some christmas gremlins that cost some technical difficulties with our guest in san francisco, and thanks for sticking around. we appreciate it. we were in the process of talking about the worst ads out there this holiday season. what were them -- they? >> kmart, kind of a jittery ads
with family members caught in some kind of a spinning move. people did not like them. people did not respond to them and found them annoying, and also santa. eight percent of all down advertisements included santa. those santa as really did not connect that well. but it is interesting that you mentioned santa, because one of santaorite non-ad ads had , and it went viral on youtube. customers at one airport got to whatto santa and tell them they wanted, and when they got to the location, they actually got the gift, a gain, a shocker. i cried. what is the new frontier for advertising, because they did not have to pay for any ad time? a very long story, about five minutes, but are the 2 million hits on youtube. it did not air here in the united states. of these experimental type
treatments, again, it is all about connecting emotionally with people, proving they are not just an airline, not just low fares, about giving back, and that is what consumers are responding to. >> a rotation out of a regular tv ad into something more mobile and viral going forward? >> i think tv is that forced exposure. you want to reach that big audience. whether you are choosing to watch them is. a lot of people are not viewing those. you will see both continued to grow. >> all right, fair enough. the question is, which ones will make me cry next lester mark peter, thank you, talking about holiday ads. coming up next, the sec has picked its next investment targets, and we will tell you what it is after this break. "money moves back in two. ♪
target, exchange traded notes. you might know they come with risk, but that is not good enough for the security and exchange commission. the way banks close -- disclose risk could change, so to look at what that means for the whole industry, let's bring in the expert, a managing partner. ok, first off, what is this, and explain it in non-jargon on -- terms question mark >> it is a way of getting into one of the asset classes that is difficult for some investors to gain access to, and the way you do it, you buy a note that is issued by a bank, but instead of the typical interest rate aim and you would receive in principle, your return is tied to the return of a particular asset or strategy. >> does that mean that you do not own the securities, but you basically owns some of the risk of the bank is to mark you are leveraged to the debt of the bank? >> yes. this is an incredibly, incredibly important point that people often miss.
you are lending to the bank, and regardless of what asked that you are investing in, if the bank cannot pay, they cannot pay. we have a graph. >> energy, gold, and food. i am on with those. >> you like those. >> walked me through them. >> the most common types are commodities, food and gold, as you just said, currencies, emerging markets, and other kinds of strategies, like master limited partnerships, and you can get into other kinds of trend following. these are strategies that people want to be in or need to be in to hedge out things, but they are not so easy to get into, so you can do this by going through an etn. the node, and then it pays a return on those derivatives through to the investor. >> these holdings have increased
this year all of the way to $22 billion. that implies to me that investors are looking at this. the sec and others nervous about? >> there are several things that they are nervous about, but have are notes that really no ascertainable value, so like a mutual fund has a nasa -- nav, and everybody knows what it is, and you can rely on it. the bank, which is also the issuer of the security, a bit of a conflict, is putting its own price on it, saying, this is what it is worth, so what the sec and others are worried about is the opaque this -- opaque ness. costs of going to be compliance, but as an investor, you want to have faith, because you want to compare apples to apples.
you buying too much? are you selling for too little? you want to have an understanding of what the value is, so i do not think this is a case of excess regulation. the rules around the pricing of these needs to be clear. >> how liquid is it? >> it is reasonably liquid, but you cannot get fooled into thinking it is like a regular bond. crisis, like you had in 2000 and eight, the bids tend to dry up, and then it gets ugly. again, you have got the credit exposure to the bank, regardless of what asset class the note is. >> all right, you are sticking around, and we are talking about one of those asset classes, and we are talking about gold, the outlook for 2014, after a disastrous year, when we come back. ♪
in 32 its worst loss years, investors dumping gold at a record pace, and hedge funds abandoning their bullish bets, so what happens next is a question for us. su keenan is joining me for our roundtable. some research notes in the last couple of weeks talking about where gold is going to go in 2014, but give us a picture of how bad gold got in 2013. >> it went into a bear market, and then the hedge funds, even though they were staunchly bullish, there was a record dumping of gold by investors, and now we have is gold poised for the first annual loss in years, falling 37% from its peak, and the question is, where does it go? are saying we will continue to see gold grind lower in 2014. >> so, bob, would you buy gold
now? but i think the question is in a literal sense what you just asked, where is it going to go, and where has it gone? where, physically, did that gold go? it came out, and where did it go, and so, it went to china is the short answer. >> imports into china. to comed is not going back onto the market, so the question is, what is going to happen? you only have about 800 or so left in the etf, and there were a lot of short that. up you getting yourself set for a short squeeze in gold? that is an interesting question. >> however, when you take a look at india, regardless of the etf investors that you are bringing in, they are losing out on buying all of that gold, so china has to make up for that. , can they do it? >> china can do it, of course, because they are positioning themselves as a worldwide
currency, and having gold reserves is a key issue. demand versus the paper demand. we are seeing a lot of paper demand going away from gold, but physical demand has not disappeared. going tos right, switzerland, jim, whom we know, just came back, and he is telling me that gold is all moving to china right now in physical format. the paper -- paper trades are all going short, you are right, and in his opinion, that is set up for a short squeeze. >> it will remain a safe haven if you have the fed doing what it has done, and does inflation come back into the picture? does gold become exceedingly bullish in 2014? >> you have to imagine in some point, all the liquidity that has been put into the monetary system turns into something other than superlow interest rates, so, yes, you do think gold will have another day in the sun as inflation eventually
returns. >> let me ask you. somebody offers you a bar of gold or a bar of silver, what would you take right now? >> i would take gold. >> you would take gold? would you wait longer? >> i would wait longer, but there are some entry points, and that is because everybody else is negative on it, and that is time to go positive. $800, $900, so i am wondering if we will see that. it should be better. >> it should be better. this. going higher is a big negative for gold. >> yes. this is a once in a 100 year thing we have had, and it will come back. >> all right, su keenan, bob, we appreciate your take on gold. up next, we talk about the markets and where they are trading. that is next, after the break. ♪
>> well, that does it for "money moves," and we will be back. in the meantime, merry christmas, happy holidays, and have a wonderful tuesday and wednesday of your holidays, and it is 56 minutes past the hour, and that means bloomberg is on the market. julie hyman. >> we are seeing a rally in the dow, the s&p, and the nasdaq, the nasdaq at a 13-year high, and all of them have had, of course, a very strong year. as we get ready to close out that year, let's take a look at the companies with the best and worst brand loyalty.
how the customers feel, some consumer companies in particular, can give us an opportunity about whether or not they are a good investment. ruining us is a founder of a consulting firm. doing research, looking at the best and worst brands. so how is this helpful was to mark when you look at brand loyalty, do you see this? >> over the medium to long term, we absolutely do, and we find customers who are loyal happen to be making them more profitable. they do not have to rely as much on price or discounts and promotions. it causes a lot of customer returns, so in the longer term, it leads to greater performance. >> a lot this holiday season. without a lot of a do, panera is one of those that has the best customer loyalty. people are not christmas shopping there, but they are going there when they are shopping, doing their shopping,
to eat. what is it that panera does that gets people loyal to the brand? >> the research we did for our a customer loyalty juggernaut, and the way they have done it is by making a lot of connections in their community. you have not seen them on television am a competing with price, but they are going to the communities, connecting with local charities, offering leftover bread every day for fundraising and things like that, so it is a local relationship with consumers it brings people back, and it does not cost a lot to bring people back. >> and it is growing faster than other companies in the industry. >> absolutely, they powered right through the recession, same-store sales up, while other struggling. i expect them to bounce back and continue to power upward. >> toyota is one you looked at. because we had such a hard time
with brand loyalty over the past years, having a lot of pr missteps, it is interesting. >> we learned a lesson in a very painful way. qualitynown as the high car manufacturer, had a tremendous downfall with the recall on accelerators, and then to add injury to insult, there was also the tsunami in japan, and over the past two years, they have painstakingly crawled back and are at the top of our list again with consumer loyalty. >> and on the balance sheet. lemon,to talk about lulu and it is really interesting it is on the top of your list and not the bottom. we just have about 20 seconds left. if you could be short. >> normally, this kind of bad press would kill someone's company. same-store sales are up, and that is a sign of resilient
customer loyalty. still going with them. >> chris malone, the highest brand loyalty companies in 2013, and if the past is any indication, the stock should go to outperform. let's take a look at the markets ahead, and we will have more on the markets, and "street smart" is next. ♪ >> we have stocks climbing after the imf raises its outlook for the u.s. at these levels, it would mark the 10th best year for the s&p going back to 1928. i love that bit of trivia. welcome to the most important hour of the session. we have 59 minutes until the closing bell. the consumer looks like it is alive and well. well, spendingd more than we make. >> retailers want your