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tv   Market Makers  Bloomberg  December 26, 2013 10:00am-12:01pm EST

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looking for a place to sell if the market would spike up. that has not been the case. it is going higher. tough market to be sure. >> we will leave it there. we are on the market again in 30 minutes. ♪ >> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> mess up. brown let them down. >> seasons greetings. electronic cards are booming. with hereet a ceo stance on a paperless future. >> which is studios are making a push for oscar action. ." i am to "market makers scarlet fu. >> i am alix steel.
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are offe and erik today, no doubt eating the christmas food. >> we have cookies. >> we will have that during the break. american express is paying $70 million to settle claims it used deceptive marketing track this is -- practices. it will go to 300,000 customers who bought things like credit monitoring. --ular to say that the regulators say that the add-ons had hidden costs. first-class stamp will cost you $.49 starting january 26, so stock up. the increase is to save $1.8 billion a year off of the post losses. massive edward snowden says that government surveillance is worse than anything envisioned in george orwell's novel "1984."
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snowden is living in russia on temporary asylum. the message aired on london's channel four. the gift that keeps on giving. >> not for the government. >> for people who consider him a whistleblower, maybe. catching flak after failing to deliver packages in the u.s. by christmas day. the shipper is blaming nfl ends of packages that exceeded -- laming an avalanche of packages that exceeded its capacity. too good to be true. were ae the promises little bit ambitious year. ups had predicted it would ship 132 million packages in the week leading up to christmas. now it is saying that the demand exceeded that. it has tried to prepare for this, hiring 55,000 extra people , at least 23 extra jets, just
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about doubled its trucking fleet in order to get those packages and. we don't know the numbers as to how much more the demand was but it had to be pretty substantial. of it is ups not being able to meet the demand versus amazon not getting the package -- >> well, amazon has turned the tables and said this is not our fault. the problem was with ups. they have definitely thrown it ups under the bus and said we are not responsible for this. amazon says we will give you a $20 gift card if you don't get your stuff on time and we will refund shipping charges. kohl's is another retailer that said it suffered from this and says it will refund the price of the gifts that were brought -- that were bought. the retailers are trying to make this right. it is not clear what ups is doing. on ups.his focus
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fedex delivers packages as well. any insight as to whether they are affected? >> doesn't sound like they were. we would've heard about people complaining about stuff being delivered by fedex. ups has the lions share -- the fleet is bigger. more exposed to this. for what implications this is about all my shopping during the holiday season. much higher than was estimated. .78 billion what is it say about ups and its relationship with the client? >> this is why i did my christmas shopping in july. you get it when you want. >> you did your christmas shopping in july because you are insane. .> that is true however, i did not lose any of my gifts and i got it on time. santa came to my house.
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>> no missed deliveries for alix steel. julie hyman, thanks for that. >> target is dealing with fallout from the holiday season mishaps. the retailer could suffer long-term damage and its brand because of the holiday fail. experts say that the issue can be solved with simple changes to the credit cart system in the u.s. bloomberg businessweek 's josh greenstein has been reporting on the topic did i shop there on black friday and i bought stuff they're the last weekend and i was nervous but i did it anyway. >> sure. one thing the critical networks are saying and target is saying as well as that the customers will not take the hit for this. credit fraud is -- two thirds of it the networks take on themselves. very rarely do you have a fraudulent thing show up on your
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carter than actually have to pay card andw up on your actually have to pay it. >> what is the impetus for credit card companies and stores to actually fix the problem? >> credit card companies have a financial incentive that they are the ones who have to lose -- to have to foot the bill for .raud it seems like they have a big incentive to do so. you would think that they would want to work very aggressively toward some sort of solution. >> this happened with tjx back in 2007 and they did end up putting a big part of the bill and yet nothing changed. will be needed a bigger scale twitter is the problem -- what would be needed on a bigger stearate -- bigger scale to address the problem? uses the states magnetic strips on the back of the car -- thehis is technology from 1970's, essentially.
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>> most of the world has moved away from that. it makes it very easy to counterfeit your card. it is easy to make a fake card with a magnetic strip once you know the credit cart information you are trying to spoof. you can go into a store and use it. online it is a whole different game. what is interesting here is that in europe they made the move to better technology. what prompted that and why hasn't it happened in the u.s.? >> in europe, as i understand it, they went to a computer chip on the card could they originally went to that because the telecommunication system was so expensive it was a very expensive to bounce verification through the network. it was cheaper and we did not have that impetus at first. they went ahead and did it and if you look at credit cart fraud
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emma the united states is 35% of credit card transactions by volume and about half -- sense of the scales, 2014, will we see the shift starting to happen? >> there is a movement underway. merchants are required to have the ability to accept these cards by 2015. if they don't have that there is fraud in their system, they are held responsible. they will presumably be wanting to move to these new systems. there is skepticism about whether they will make the deadline. thoseld i ask for one of cards and get it or is this dependent on whether retailers accepted and could card issuers do it en masse? basically, it would be a credit cart that has a chip in it and he would wind up protecting the but we couldn't call our credit card companies and get it? >> the whole system has to move over. it is not something you can do as a customer individually.
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>> maybe in the future. >> it's expensive for copies to want to do it could >> for now. thanks for talking to us about this. we appreciate it. coming up, a 37% drop in the value of gold, my favorite topic , and predictions of continue to trouble in 2014 have investors fleeing. >> if you didn't get those christmas cards in the mail before the holidays, blame ups -- just kidding. a solution might save you are trip to the post office in 2014. the booming business of e-greeti ngs. we are on bloomberg television, streaming on your phone, tablet,, and watch all of our videos live and on-demand on apple tv. ♪
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>> it's had quite a run over the past decade. but then things went pretty wrong this year.
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2013 is the worst year for the metal in a generation, and a good question -- will we see a return to form in 2014 or will we see more pain? the senior vice president at rbc of management joins us by the phone. paint the picture for us here. what went so wrong for gold this year? >> a lot of things went wrong for gold this year. mainly went went wrong was the surge in the stock market. asset managers, fund managers tried to getworld in on a winning move, and the winners have been the stock market hands down. open interests in gold contracts , exactly november, say, of last year, or 410,000, and today they are 381,000. all of that open interest went
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into other well performing assets. gold is down 25% for the year. >> open interest, we are looking for those long positions. i want to bring in alan from trading advantage, joining us. from a trading perspective from a technical perspective, where is gold -- from a technical perspective, where is gold? >> we took it out by a dollar or so but we saw a bullish emergence. in the market, the volatility did not make new highs even though the gold made new lows. from the risk-reward standpoint, i'm loving it here. the king at options and the picture options for june to position for when this comes back, because it has fallen so far out of favor that there is a big opportunity here. demand forlook at gold, especially as we had in the 2014, are you expecting the lunar new year to stoke demand
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for the metal from china? >> yes, much more so from china than anywhere else. china has become a very important trader in gold. this shanghai exchanges trading gold. they are telling the trading hours to coincide with the comics trading hours so they can share liquidity. and also, more important, gold is sort of undervalued now while it may have been overvalued earlier. i agree with what i just heard, and i think that there is going to be a opportunity going forward next year for gold. up forhat enough to make the lack of demand from investors who, for instance, exchange products backed by gold? >> and india, because indian imports could be down 70% this quarter. india taxed gold tremendously. there are shops in india on
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strike against -- they are selling gold, but all these people decided simply to move their big business to dubai. dubai mercantile exchange has been doing risk business in gold -- brisk business in gold. the contract in mumbai a kilo contract and we think that is going to eventually take off in a better as india pares down its taxes. after all, the shops don't close . they sell sulfur. >> that affects -- they sell silver. >> that affects underlying imports. we saw in 1923 just a few years ago, what kind of upset are you expecting here? >> i am looking for gold to recover back at 1500 at minimum. gold is just now an asset class that people participate in. your guests talked about how the stockmarket has been the shining
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star, but people still want to have money in different asset classes to be positioned as a hedge. people are not going to forget about gold. 1300 is the near-term target. we were at 1420 just in august. at the numberok speculators heavily short. that is usually a positive contrarian sign that the easy money -- sorry, the small money is looking for this market to go back down. -- you sell now at 1200 and there's not a lot of downside left, in my opinion. >> i agree with him. i think he is right on. my team for the past 2 weeks has been to many pairs in the woods. ears in the woods. >> exactly. >> if there are too many bears in the woods, where would you look? >> i would look at copper. copper has been a great performer while gold was down 25
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and a little bit more percent, copper was down five percent for the year. copper is now in a backwardation. the nearby contract is much more expensive than the further out contract. it means prompt deliveries are inng to be needed very soon the first -- you have got a tremendous amount of reconstruction do in many parts tsunami's,d due bad weather, economic and political problems. copper will continue to be very interesting. copper warrants are closely held as well. refinancing deals in china and china continues to be a support for most medals in 2014. thanks so much, guys, talking about my favorite topic of the whole year, gold, just because
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i'm biased in kind of a nerd. oh, boy, i'm excited. ," coming up on "market makers a game of musical chairs is breaking out in the senate, with one key senator headed to perhaps beijing and several more could have a promotion. a a huged have impact on tax reform. one of the best of the year from the bloomberg photo team. that is from the consumer electronics show in january using 3-d glasses to make the ipad photo three-dimensional. no word on whether it works. ♪
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>> when it comes to investing, if you people are as widely respected and feared as nouriel roubini, also known as dr. doom. he predicted the 2008 financial crisis. if you are one of those who didn't listen, here is another shot. we asked him how he would invest $1000. here is what he said. upevery day you have to wake and make sense of the competition world -- make sense of the complicated world. i would prefer to be called dr. realist. i'm neither a pessimist nor an optimist. the financial meltdown and because of that i got the nickname. think it has got to global
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equities for too long and if they followed my advice, underweighted global equities, between march 2007 and march 2000 and we had the drop in global equities. right now there is a global economic recovery and you have to be a realist about what can go right and what can go wrong. you don't want to listen only to people that agree with you. more important to listen to people who disagree with you. make a special effort to listen to those who think that things are going to be much better, because that pushes me to think harder about whether my views are correct. read of all, you have to diversified and you have to put some of your money in the u.s. and some abroad. gradually, long-term interest is going to rise. the global recovery is going to occur you might -- so you might want to be marginally overweight
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in equities and underweight in emerging market equities. or positive signals are coming from japan, the united kingdom. maybe marginal overweight and global equities. >> he should have been all in on equities because look at what they have done so far this year. >> only marginally overweight. i didn't hear golden there. diversified -- that would be the key from dr. doom in 2014. >> as we approach 26 minutes past the hour, we will focus on equities as we look at "on the markets." the dow in the s&p 500, another record high once again. s&p up right 5 points. dow jones industrial average gaining 60 points. a bigger than expected drop in jobless claims is a catalyst for the gains. a lot of people say these are
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and the deer disruptions but still -- >> not enough for traders to jump out of any positions they might have. the last 5 days of the year tend to be good for stocks. >> dr. doom says to stay underweight in bonds and selloff in treasuries. the 10-year yield is the highest in more than three months. the yield curve between the two-year and 10 year is the highest since july 2011. people say that for the right reasons the economy is getting better. >> rather than for something that. not moving a much today, but if you take a look at the one-week turn, 20% in one week. the ipo is a $26. no real catalyst. it is one of those sexy stories of the last half of the year with traders getting in on that. looks to be the most overbought among u.s. stocks. when analyst came out with the analyst reports it was not like buy buy buy for everyone.
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>> how do you compete with the likes of facebook/ is nextg up, what for paperless post. ♪
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>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. send thank youto notes for all of those holiday gifts to a new year's eve bash, our next guest can help you. she is the cofounder of online imitation stationery company paperless post, a company that has revolutionized the evite market. she was named one of the most influential women in technology and joins us now. thank's for coming in. >> thanks for having me. >> give us a sense of how busy it was this christmas season.
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etings said that or more physical cards that you broke into a few years ago? >> this is the second year doing paper but e-greetings are two times. goht now you order, you online and you order the paper to come near house and you send it out from there. you can do a lot of things to make it easier like in your return address and basic ash like print your return address -- like print your return address and your envelopes. >> what is this distinction between paper by paperless post and these other companies that offer these cards? >> so for a long time we have had a really easy online tool, a really high-end design because we were only selling online
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invitations. we had to have something of a so good that people would use us online pay for it. that made us extremely obsessive about the customization tools and all of that. ui?hat is >> user interface -- >> clearly for someone like me. , which wed app created this year, and an iphone app of the work, lot which is very important for a paper online. it was really easy for a lot of our users. >> all we have heard about is how much consumers are struggling and now people don't have enough money to spend. what is the threshold for paying for post? >> so it's interesting -- i think the existence of online invitations and cards made paper indemand for
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addition to cards different. the threshold depends on what they are buying, and from holiday cards and wedding invitations, a higher threshold paying for paper because of the archival quality of paper and the importance of the event. for a kid's birthday party it is great to save $100 and send them online. >> what is the fastest area of growth? probably a day is big deal, too. is it weddings, 40 birthday parties? >> great question. we are doing analysis to really understand. i would say that the biggest area of growth is a general category of online, entertaining and thrown by adults. the important birthdays and kids birthdays, the things that happen all year round. you have a sign-up with facebook when i go to your website. what is your elation ship with the social media website? have a distant
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relationship with facebook and that we have the facebook login tomake it easier for people sign in. but we don't use it for the distribution of invitations because our invitations are mostly used for private parties. we don't have a very deep integration. >> do you see them as a competitor no.e don't, we see them as an important tool. >> a future partner, maybe? >> definitely. >> have a approach you about a partnership? >> we have a good relationship with them but we have only talked about potential partnerships. >> what is the end goal? to build the business you're to get bought out? toi don't think our plan is be bought out, although we are obviously open to various eventualities/. the plan was to take what we
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sending onlines invitations, and expanded to more categories and i went to paper as well. category ofwn this stationery of what that will be in the next century. talked about your designs and how it made her website distinctive. .ow you have exclusive cards what did you learn from these guys because initially you and your brother were the ones designing the cards. >> good question. what we learned is that we don't want to be the brand. we want to offer a breath of aesthetics. we want to on the platform. own the platform could it made sense to bring in other designers as well so that we could focus on sending and receiving. >> your number one test for 2014. >> to certify the experience on all platforms, to make it paper
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available, ipad, mobile web, to have the experience be easy no matter what device you are opening your invitations on. to make it easy for someone like me to use it. all right -- >> thank you so much. founder of paperless post and also paper by people this post. >> coming up next, farmers versus the oil industry. the argument over how much ethanol must be blended in the nations gasoline supply. ♪
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>> obama's decision to nominate montana senator max baucus to be ambassador to china
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would trigger a chain reaction in washington. it opens up opportunities for fellow democrats and changes the midterm election outlook. peter cook as you do explain why. -- is here to explain why. what is interesting is that baucus was already retiring. why is everybody so worked up about it? interesting in part because the timing here will create a ripple effect both in policy and politics. critical player in the u.s. senate and it comes to things like tax reform. he was leading the effort there. his departure pretty much puts a nail in the coffin for tax reform next year. it was going to be a heavy lift, so the bigger question becomes who replaces baucas and picks up the mantle of tax reform in the senate. the answer will be oregon senator ron wyden, chair of the energy committee right now. he will take over the more important and powerful finance
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committee job. all of those companies and interests who are lobbying max baucus the last two years will now aim to target at ron wyden. it is a big promotion of sorts for ron wyden, seismic shift in the u.s. senate. seat?t about his montana what happens there? all, something happening in the senate first, wyden moving from energy to finance, opening up the energy committee, and mary landrieu, she will take over -- basically musical chairs -- take over wyden's position on energy. huge boost in her profile as she is running for reelection. she is generally considered one of the most folder role democrats in the u.s. senate -- and one of the most of the most vulnerable democrats in the u.s. senate. departure means that the montana governor gets to name a temporary replacement and he happens to be a democrat so he is likely to put a democrat in that position and the person
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most likely to do that is the lieutenant governor john walsh, running to replace baucus already. if he gets in there early, he has an instant income and -- incumbent advantage over the republican challenger. it improves the democrats' chances of holding the montana seat and increases -- it is a master political stroke. the president gets his man in china and 2 senate seats more firmly in democratic hands. >> "game of thrones" inwashington. baucus' name in chinese translates to "coughing to death," which makes sense as he is heading to beijing. >> i'm not sure he knows exactly what it means. he was told by some of his colleagues that the biggest threat to his move to china will be his health. he is 71 or 72 years old, this
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was sort of a surprise. this is someone who has really been focused on trade and china .olicy, currency policy it will be interesting, the message he delivers there. he has been tough on the chinese at home. we will see how he does in beijing. >> packing some inhalers, there. >> does that mean that they are the same, "game of thrones"? >> i'm not sure if you'll get his head cut off. >> one of the biggest issues is the ethanol mandate. prices surged 270% between 2005 at 2012. retreateds have significantly since then. one worries that a change in the rules could send prices down even more. corn ethanol does the environmental protection agency make refiners blend into the gasoline supply next year? the next three months are really pivotal for farmers.
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give us a broad look at what is at stake here. >> it is true that in the past 10 years you have seen a real boom in commodity prices, farmland prices, all tied to increased use of ethanol. it is eating up 2/5 of the corn crop now. you saw dramatic ramp-up of production. that not only has plateaued, but the epa is looking at possibly cutting back a bit on the renewable fuels mandate. if the corn yields keep going up with the monsanto and dupont seed, there's not a market for this corn anymore. give us perspective on what kind of demand we are looking at. doesn't look at 12% less ethanol being mandated echo doesn't sound like that much. >> the argan is that the market is taking care of -- the argument is that the market is already taken care of the need for the guessing price -- gasoline to go cleaner. gasoline itself is gone down since the 2007 legislation that
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put the renewable fuel standard in place. you can only fit so much corn into gas tanks. the industry would like to go to a 15% blend rather than a 10% blend. very few blender pumps exist in the u.s. to do that. even though the epa has said that for vehicles ever because when you can do this, from a practical standpoint there is no more room to put ethanol into cars. if you don't find a new source you will not get it. subtle shift here. we are not losing ethanol demand altogether. but we are going to miss some form of growth that warren has that cornt that -- has felt over the past few years. talk about what will make. prices go down to see more use of livestock feed. -- court producers are escort producers are putting more hope in export markets. increased productivity in asia. foris that going to make up
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the rocket into menu had over the past 10 years? a lot of analysts are skeptical. >> which leads to the broader implications. not only are we looking at possible job losses in the ethanol community, but how do farmers buy stuff -- the seed, equipment, etc.? talk about the trickle-down. >> when you have trickle-down effect you have farmers with less money in their pockets. when the issues with agricultural economics is that the cure for my prices this high prices. high prices is high prices. if there is another record crop next year you will have a surplus overhang on the market. that leads to less money for the fertilizers and those seats. it ends up having less money in the farmers market. that is less money for the guy selling crop insurance. >> crude prices could cost a little bit less and those burgers at wendy's maybe, too. appreciate your time on the ethanol mandate and corn. >> coming up, another huge issue
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for 2014. the ultimate in l.a. accessories. it is all about timing and pitch perfect for the city. -- perfect publicity. ♪
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>> i watched a couple of movies over christmas, including part one and part 2 of "the hobbit" and got a toy with it. ring on top rings" of him. >> i'm a total middle earth geek and i saw it on your desk and it was the best thing i saw. >> "the hobbit" is going to be one of those academy award contender movies. >> you have the golden globes but it is really about the oscars. >> hollywood sends about $150 million a year to tradewinds these oscars.
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-- to try to win these oscars. to who has this winning down a strategy, science really, is harvey weinstein. spend a lot ofto money on the movies. that was an expensive movie to be made, "the hobbit," but the winners of the past 5 years did not cost a lot. "slum dog millionaire," "the around $50," all million to $90 million. "argo" was a bit of an outlier. that not eveng half the people in the theater saw "the king's speech." >> harvey weinstein us to keep a lid on the budget. building up buzz and he gets a lot of the movies from the festivals. he bought the rights to "over landings playbook" before it was
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even published as a book. >> i was not that impressed with the movie but it didn't really matter. rollout -- didc you see this? >> i did not. >> it was hard to find. andwant a strategic rollout you let the word-of-mouth buildup and then you go for broke and publicity. that is when they/the ads in the sp -- whenmonday they splash the ads in the trade mags. >> kind of like "anchorman 2." >> you won't be able to watch "grace of monaco." he delayed the release of it because he is a competitive season and it wasn't quite ready. season," about the
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killing of oscar grant by the oakland police -- >> not in the movie season right now. --not an uplifting film maybe it is come i didn't see it -- but they will review release that. and you can go with the deal standbys. ench, always gets nominated. >> older english actresses that are totally awesome like her aunt helen mirren, stick them in a movie and it will do well. >> what is your favorite movie this season? i rotate intoder bad movies. i have lost my flavor for actually good movies. it is pretty pathetic. >> on my to watch "american -- i want to watch "american hustle." i will go see it. it can be found on power lunch spots in dining rooms and i've never had it but i hear it is good, but it is not all created
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equal. this comes from japanese cows bred from specific genetics and race under strict guidelines. in american insurance mogul tasted his first 10 years ago and his level for the breed grew into a big business. now to find it you might have to travel to a tiny town of roanoke, indiana. .> it is expensive it is not only one of the greatest tasting meats in the world, but it is also the most expensive in the world. come on, big guy. they love their oats. what we do that is different -- there might be two or three other firms in america doing what we're doing -- we are raising it start to finish. here --lly breathe them m here, finish them
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here. it is the opposite of the american culture of commercial beef. commercial beef, the faster you can raise it, the bigger you can get in a short time -- i think this is all about time is her friend. raised naturally, no drugs, stress-free, humanely raised, and a special japanese diet. there is dried distillers grain, soy meal, minerals, cracked corn. it at a fine dining restaurant or casual dining restaurant, or resell it in our store -- or resell it in our store. you have to come to roanoke to get it. after college, drafted by the yankees, got hurt, worked in the office for a time for the owner george steinbrenner. i got into this business being a businessman with that kind of mentality. converting to a farmer, my brain works as a business person. the restaurant would buy the animal for me.
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the entire animal for $6,500. to $30,000 of revenue for the restaurant. if you do the numbers, 30,000 times 50 is 1,000,005. those are the economics of it. when you are in business and the quality game and you're trying to achieve something that is winning the world series or whatever, you're not driven financially. the endgame is to have something on a plate that is extraordinary where people come back and cannot wait to get there and tasted. beef, butver had that it looks really good. >> this is supposed to be 10 times better. >> i tend to get scared of the price but apparently it is worth it because it is so tender and the fat is good for you. >> and you don't have to eat that much could a little bit goes a long way. i like the fact that he is ex-yankee. >> of course you do. >> we will be back in two minutes. ♪
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>> live from bloomberg headquarters in new york, this is "market makers." failed season -- christmas is over but the bargains have just begun and we will find out how big the post season discounting will be. >> a former nsa security expert takes on credit court security and what he would do to make sure your information is safe every time you swipe. >> going to pieces -- what are you worth? off all your parts, the value of the human body. welcome to "market makers." that's a little grim.
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started withyou the newsfeed -- mcdonald's shuddered and employee resource website after it workers read on the website that a cheeseburger, fries, and drink are an unhealthy choice. they took it down from the site. general motors china donuts is about to end. they are set to sell more cars in china than ever before. it will be the first time in nine years that vw has taken the top spot in the booming china auto market. gnat sized insect is taking a bite out of the florida crop. it will be the smallest harvest since 1990. causesn citruscilit the citrus to drop off the trees early. >> that is not great news.
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as you probably know, retailers from macy's and michael kors port on the discounts in hopes of luring more shoppers into the stores. despite those discounts, fewer americans hit the mall. what will the retail sector be now that the holiday is over? greg johnson is the president of customer growth partners. what are retailers going to do over the next 11 months? is very important for retailers, wendy five percent of total sales during two months. there has been heavy level discounting this year but primarily in apparel. retailers went into the season apparel heavy and inventory heavy and because it is a fashion industry, you have to clear out the old merchandise. >> is it an inventory issue or a sales issue? butales are up this year retailers have to match supply
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and demand. we estimated that sales would be up about three percent and that's about right. that means inventory levels should be approximately the same level of increase. many people got things wrong, they over -- order. they overshot the runway and now they have to deal with it. >> is that the problem that they have to order that far in advance? >> smarter retailers shorten the time to order. some of them have longer lead times. isically, five or six months the interval. offm i going to get 90% when i hit the stores today after work? >> there are some places going up to 75%. read the fine print, it is up to -- -- the smartay is
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retailers are serving the people looking for the bargain but also bringing in fresh merchandise that is at full price. for that segment of the market, they are happy to do that and they will get those customers as well. >> what did we learn about the consumer this shopping season that we did not know before? >> the biggest thing is that consumers are still very challenged. there is a lot of stress out there and people are buying very close to need. that is one reason why it was a christmas lull early in december and then everybody ordered at the last minute for it that created some of the problems with the shippers. consumers are focused on the home right now. homeing housing related, furnishings, home improvement, had a good season. >> that is pent-up demand from a weaker housing market. i was talking about the $5,000 shannon at-bat. -- chanel bag. >> the biggest thing for
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retailers in luxury, it is always late in the season. typically, people don't buy luxury items until mid-december. you don't see a lot of luxury shoppers on black friday. you find that airing the last week or 10 days of the season. hard luxury like jewelry is the last four or five days of the season. if you're going to spend a lot of dough, like a five figure number on a piece of jewelry, you want it to go on next january's credit card rather than in december. >> that plans how you pay for the bill. you mentioned a couple of areas that beat out and apparel was one where we saw discounting. which segments of retail did so down numberss no to show? >> there were no huge sellouts in home,. the biggest sellouts or in a
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sector that is otherwise very challenging, consumer electronics. it will be about flat but the hottest products were the sony ps4 and xbox and they were hard to find and there were never on discount. -- whole sector of sound sound had its best year in over a decade whether it is sound bars, headphones, earbuds. >> was that because of limited supply? was it more demand than anticipated? >> the biggest reason behind the sound issue is the rise of a flat-panel tvs over the last 5-7 years. let panel tvs are properly good but they have lousy sound quality. the thin tvs, where do you put the sound? that's why the sound bars and so forth were so big this year. , withe mobility players
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headphones -- >> what was the power of online to still money away from brick and mortar? >> it was not stealing away -- amazon is a huge player. five one of the top retailers and has had a great season. most retailers, who doesn't have an online division? 13% all overut retail but the big news this year for the first time ever is is is not rising in double-digit rates. it will be about 9.7% growth which the first time since the creation of e-commerce. >> we want to point out headlines that came out at the top of the hour. there were delays with packages that ups ships. you be as set almost all the late packages are being delivered today and the ground shipments after december 11 actually had no guarantee. they declined to discuss the actual number of air shipments. will there be any repercussions on a company like ups or the retailers were people ordered
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because of these delay's? >> i cannot speak to ups. i don't follow that. if they said they don't guarantee anything after december 11, ok. for retailers, as long as they make good by the customer, they are ok. push like froma amazon to control the whole spectrum from the product to shipping at your door? >> it's entirely possible that amazon could vertically integrate downstream to the shipping and fulfillment part of it. they have their own distribution centers of they are not far away from it. to develop their own fleets, that is a much bigger challenge. you don't just a liver stuff with drones quite yet. for it to replicate its own fleet, it may be more efficient to contract out with ups or usps. >> it's amazing how much amazon pays for shipping overall. >> also the target breach that
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gave away 40 million data users. what will retailers do to combat cyber threats? >> they have to get better at it. it is not simply target. little credithe card in your pocket. in europe, they went to an embedded chip. the magnetic strip has been around for 30 years. is more advanced than us with the embedded chip and it is not perfect but it is more immune to external hacking. much, looking forward to at least 75% off. thank you, craig johnson. >> we will pick up where we left off -- a closer look at the target credit card scam. does the government have a role to play in preventing private sector hacks? >> and the future of digital media.
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we will have the ceo of take two entertainment and the former head of columbia music and bmg. this is "market makers," on bloomberg television, streaming on your phone, your tablet, and ourcan watch all of interviews on demand on apple tv. ♪
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>> time for some media headlines. authbank ceo is extorting deal to buy t mobile in the u.s. and is reportedly working on lining up financing of banks to purchase the deutsche telekom 67% share in the carrier. it would combine to mobile -- t mobile and sprint. says aly baba. they want to open a mobile phone operation in china. there is part of a two-year trial program and currently
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three state-run companies offer such services. china has an astounding 1.2 billion wireless users. a deal between sony and panasonic to build next generation oled televisions is done. their cooperative efforts will end on december 31 and the company said they could not go but tvs at the right cost. they will focus on 4k high definition screens. >> target is working with the department of justice and the secret service in tracking down the culprits of that massive data hack that compromise data on 40 million customers. how can the government prevent these dangerous breaches or should they? former headg in the of operations at the nsa and is now the ceo of a cybersecurity software company called ronin analytics. >> i was not surprised by the breach. these type of things happen pretty frequently. you earlier mentioned tj maxx in 2007 and 2011, sony was hit
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with a similar breach. it is not surprising. try was a hacker, i would to target retail companies during the christmas season. that's when most people will be shopping and you will have the most targets available. >> given that this is happened before, how can companies create an intelligence strategy instead of relying on data security? >> one of my clients in the financial sector says i don't want to be the best company in taking a punch in the face. i don't want to be rocky, i want to be bobby fischer. i want to be predictive about when these things will happen. first and foremost, you have to have a resiliency. if you get hacked because inevitably you will, you have to be able to take that hits and be able to move on from there quickly and mitigate what happened. second, you have to get to a point where you are predictive about this happening. in the example of the target it a breach, people at target
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should have been saying that during the christmas season after black friday, that is probably when we will be a target. we should take additional measures to secure our most important property, our private information. >> it seems like when banks take the responsibility for someone using my credit card, they refund my money. what will be the impetus for clothing retailers to care when the banks will bail them out? >> we had these perverse incentives in the market. i believe what will happen pretty soon as the insurance industry will come online and start to move companies in a direction and drive them toward security. i believe insurance companies will start to offer cyber insurance. lower premium, a companies are going to have to comply with a certain number of security standards or have intelligence-based programs to be predictive about their tax. >> let's bring the government and to all of this. what kind of role should they
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like? they have been largely reactive to this point. >> when i was in the army in iraq, we stabbed the term " this theight of the boom" after event occurs. investigation has its place. the secret service is helping investigate. that is akin to being the best at taking a punch in the face. bere the government should going is to be more predictive in nature but there are some problems there. there is privacy concerns and security concerns. companies are reluctant to give information to the government in order to have the government help them protect their infrastructure. edward snowdent leak, i think congress will be reluctant to pass any legislation that requires anymore privacy violations from the government. the government also does not want to give intelligence information to the private sector. we have something called sources and methods so when we collect
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information, we want to protect how we got that information and not lose that source. for example, we had a spy or some kind of resource in a country that was going to target us with a server -- with a cyber attack, and we give that information to the private sector, if that became public, you could compromise the somebody's life. are theer part of this data miners. their job is to collect as much information on us and our buying purchases as possible and they sell to their customers. there is a lot of information into that winds up leaking out on the web. what can we do about that part? >> what they taught us in high school, abstinence is the best policy. >> just use cash? >> exactly, if you are really that concerned about it, use cash. there are measures you can take to limit the data you have out there. you can limit social media accounts.
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it's really about protecting yourself. you have companies that are offering to factor identification which helps out a lot. stuff like that will help you be protected. >> you have a lot of companies and clients, what's the question they don't ask you that they should? >> many of them are not taking the step to say if i invest in a program that helps me out with cyber intelligence to be predictive, how can i use that to generate revenue? many companies see cybersecurity as another line item, another expense. but they should be thinking about it as an investment and how they get from managing the chaos of my cybersecurity and using those intelligence inities that i have invested a driving that to make intelligent decisions and drive revenue. >> what is the opportunity for a public/private partnership ? we have been talking about
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public-private partnerships for a long time. outlook not good, you can see it on his face. >> that's one of the reasons why i left the government, to take the skill sets i learned and give them to the private sector. a lot of what the government says is the private sector is out for itself. has certainly made strides to help through dhs and some executive legislation but things move at cyber speed and things change rapidly and the government is very slow to change laws and policies. >> maybe the companies will want to do it on their own. thank you so much stasio. . coming up, health caregov may be fixed but now comes the hard part, insuring millions of new customers in the new year so we will look at the challenges still ahead for obama care. >> take a look at this picture
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-- it is one of the best of the year from the bloomberg photo team, beautiful shot of a man driving past -- jogging past the u.s. capitol. the weather looks nice but it is called now. it looks beautiful in that picture. >> that must be frank underwood from "house of cards." ♪
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>> his fall from billionaire status was the first insult and now a key batista has lost control of his oil company. that is today's latin american report. his company was formerly known get a 90%d he will stake in the firm after converting debt. the deal will help position the company to emerge from bankruptcy. he still needs approval from
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other creditors in the courts, it would meet existing -- it would mean existing shareholders would get a 10% stake. creditors will see some long- term value in the company. it will run out of cash next week if the deal does not go through. that is today's latin american report. a lot at stake and a lot to watch next week for eike batista. >> what i fast fall from grace for this guy. he had some bold predictions about being the richest guy in the world within a certain amount of time. >> that's what happens when you drill and there is not a lot of oil. approaching 26 minutes past the hour so it's time for bloomberg to know "on the markets." equities, more record gains for the s&p 500 and the out. read -- the tao. a bigger than expected drop in jobless claims, nevermind that don'tnd of the numbers
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matter because they are disrupted by trends in people not working, people still looked at it as good news. they are bidding stocks higher. >> you look at the moving stronger, somuch extended from those averages. we are also watching t-mobile ellwood shares turning slightly negative and had been up earlier in the day. the word that softbank may make a bid for the wireless company next year, the nikkei is recording that the company is close to getting the necessary financing. are monitoring retail. ebay shares are sliding, the worst performer in the s&p 500. sales increased almost 10% between thanksgiving and december 22 which is not bad but growth is slowing significantly. last year, sales were up 21%. but i am note ebay
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their target customer. >> i don't like being beaten out at the last minute. >> we will hear from one of the key players in the digital revolution. stay tuned. ♪
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>> this is "market makers." welcome back to "market makers." we will take a look at the future of visual media, film, tv, video games. the expert was here on "market makers" not so long ago. prior to his current role, he was ceo of the mga entertainment and a former president of 20th century fox films. he spoke with eric and stephanie
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earlier this month and talked about how the business is changing. >> everything is moving to digital distribution and digital creation. entertainment is the biggest growth area in the entertainment business. that is not news but i say we are seeing this with the release of new platforms that we have clarity into interactive entertainment. >> do you think there is a need for more collaboration? no longer can any industry say we are the dominant players is now the consumers decide what they want. >> i think that's right. everyone is becoming their own network programmer. when people watch television shows them a more than ever before, people talk about television but people don't watch it at a network or at an appointed hour. they download the show on itunes or watch on net lex or hulu and we create our own program day. i create my own experience. >> interactive entertainment as
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it applies to gaming is pretty obvious. how is interactive entertainment going to change the shape of cable television or the film industry? >> the answer is maybe not so much. who have assumed the singularity of intellectual property residing in one place at one time through multiple outlets probably missed the point. we like being entertained in different ways. i'm not sure we need our music to match the motion picture we are watching this week and to match the video game we are playing. i think that dan actually be a mistake. >> why? >> i think people want quality and excitement and something different and they want a variety of experiences. disney did it great with " lion king" and some other titles but they have a unique field for taking intellectual property and exploiting it through multi-media. with few exceptions, the property stands alone. king" at "lion
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standout? >> these things always surprises but after the fact, it seems obvious. >> five years from now, this will entertainment is not going to be the same as it is today whether it's on video game platforms like the xbox or a tablet. or over the top or the film experience. you have to make some decisions because you are defining the strategy for your own company. what are you betting on? what do you think will change the shape of the industry and inspired the decisions we make as a result? my age but i think quality matters most. the shape of an individual expresses not change. i hit song is still a three- minute song, a movie is a story well told. ago, when you when i first spoke, we talked about
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the power of the tablet and how it would change everything and you are right and there were a lot of naysayers at that time. what do you see now, if anything, that portends as much change as the tablet has? >> what we are talking about is content versus distribution. the content changes at any given time but the form is probably pretty stable. it's a human experience. that does not change. what we are talking about is the underlying pipes which are changing in a big way and the nature of our consumption changing in a huge way. the biggest change is everything is digital and everything is mobile and everything is when you wanted. >> is there any chance for overdoing it on that front? my mother still looks for what is playing and drives her cell to a movie theater. aren't there some people who watch regular tv? >> is your mother not playing any games on her tablet? >> she does not play grand theft
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auto or "words with friends". >> we have to get her into the 21st century. with will have a chat urban interactive entertainment addresses all demographics. the biggest demographic for social gaming is largely female and at a much older age than one might expect. even video games, the median age is 37. >> nerd. >> we are not talking about teenagers in dark basements. >> just grown men in dark basements. >> they are now in the living room. >> what about visual technologies, 4k is being talked about now, how will that change things? video game grail for experiences when it feels and looks like live-action. what will we do when we have that ability? our sports games now, if you squint a little bit, they look like live-action. the action titles are dramatic title still look like very high quality animation with moments
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that are strikingly realistic. within 10 years, the video games will look like a motion picture and a motion picture can look like reality or error sense of reality. what we do with that remains to be seen. it is not clear that means all games will look that way. ick.that wasstrauss zeln >> are you a big gamer? >> not grand theft auto. >> i like beatles rock band. you get the whole band. you can be all of them at the same time. i like the guitar. i play it weird. i really dig it. >> take a picture of that and tweeted. >> obamacare has facebook ton of challenges including one from our next guest. we were here from -- we will hear from a top republican strategist. if you missed any of our interviews, you can watch them on apple tv.
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it's a brand-new express featuring live streaming tv. ♪
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has passed but there are many more to come for americans signing up for health insurance on the individual market. we are talking about the fate of obamacare after january 1. where is it going in the new year's? we will kick it off with peter top and lonnie chen, a hollis e advisor to the mitt romney campaign. -- a top policy adviser to the mitt romney campaign. what are the other key dates after january 1? >> january 1 is arguably the most important because that is when americans who enrolled through the obamacare exchange actually get to see their
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coverage kick in. it will be a real test if it works properly. there is a risk for more glitches and the possibility the obama administration hopes to showcase more success stories. the next deadline that matters is january 10 when a lot of americans who got into this late signed up for coverage. they will have to pay their first premiums and there could be some sticker shock. insurance companies give them until january 10 and the big one is march 31 when open and roman ends. -- open and romans and's. -- open enrollment ends. >> they need 7 million people enrolled by then. lonnie, what are you looking for in 2014? 2014 could be an even worse year for obama care than 2013.
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one reason is that sticker shock could happen. people will pay more for health care. a lot of people will not be able to see the doctors they are used to seeing and that cannot be good. the last thing is medicare. one thing that people did not cover this year is that obama and cuts theicare medicare advantage with 14 million seniors are on today. those three things could make obamacare worse in 2014. >> isn't part of this is that people are not accustomed to change? you hear the complaining and concerns but once things roll out and it is not as terrible as peoples were stoked, things may come down. surely, there are parts of obama care that are valid and worthy. >> i think that's what the obama administration hopes. erin mine, a lot of what people like about obamacare has been in effect for years. what they did was to push the politically tougher stuff off until this year.
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settlingome of this is pains but the reality is, it's still bad holocene i think people will still have problems going into 2014. is the administration under promising in the hopes of overdelivering in 2014? >> i don't think they are under promising anything at this point. they have under delivered and they are worried about meeting millionics, the 7 projected by the cbo at the end of march 31 will be critically important and the break down of who is within that group and how many younger people are involved. they are encouraged by what they've seen the past couple of days. the two main people who visited monday is a new record and they had so much activity into tuesday. they have relaxed in the enrollment deadline. and they days in a row are allowing some people to appeal by telephone.
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in the systemet successfully but they still want coverage and they will try to get those people accommodated. they want to boost these numbers heading into the new year. i don't think they can overpromise to much right now. they need to meet the metrics they have set. >> 35-40,000,000 americans would be affected by this portion of the affordable care act. what would you suggest would be the best way to offer people coverage? can we amend what is already out there or do we need to start from scratch? >> the biggest mistake that the obamacare crafters made as they failed to focus on health care costs. if we are going to expand coverage, the first thing we have to do is lower costs. that comes through things like allowing the sale of health insurance plans across state lines, real medical liability reform, and provisions that will ensure that people who have pre- existing coverage exclusions can get them but not really driving up minions for everybody else which is what obamacare does. that got to focus on cost first.
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>> can you lower cost without lowering benefits? >> i think you can give people a choice. you can say you can have low- cost lands which will come with fewer benefits but that should be a choice. >> didn't we already have that? had thatunately, they that millions of americans now cannot get access to that kind of plan because obamacare has prohibited it. >> they did not have access to begin with. they were uninsured. they did not have any plan. >> there is no question that there are many americans who need access to affordable coverage. i don't think obamacare gets them there. you've got a lot of people who are younger who are healthy. those are the people who are not going to sign up for obamacare because they will have to pay even more because of the law. if we are going to expand coverage, we've got to lower costs and that's the best way to do it. also, those costs are
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starting to come down. there's a big debate as to what role if any obamacare has played in that. if it's not obamacare, what is bringing the cost curve down? doesn't that play to the administration's benefit even if it is not obamacare driving it? >> it's not obama care, some of it is some recessionary effect we are seeing from the economy having slowed down. the reality of what you are seeing to drive down the cost is that insurers on the private side are beginning to tighten or networks. they are beginning to do things like say you can only see certain doctors. they are also saying you have to pay more in copayments. those sorts of things are increasing the consumers interest in saving money. those of the kind of things that are driving down health care costs, certainly not obama care. >> all of this is before the 2014 midterm elections. thank you so much. next, your greatest
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asset might just be your body. the booming business of body parts. ♪
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>> did you rack up a lot of credit card debt? here is one way it paid off, so your body parts print it is a lucrative trend. we found out what parts will earn the biggest payday. ♪
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♪ ♪ >> lever, 37 thousand dollars, you cannot give it all away. >> hair is doable. >> i would do air. the other stuff is dicey. i had to think about it. if you are in a crunch and need to make payments, it's not a bad way to do it without getting into more debt. >> they make movies about people
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donating their kidney but not donating their hair. we will be back with "on the markets" in a couple of minutes. ♪
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>> coming up tomorrow, larry haverty will be here. >> twitter is up 20% in the last
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week. >> we are not sure what is driving us because the company has not said anything. we will see what happens the beginning of 2014? >> you will not be here, unfortunately. >> you will be here and that will be exciting but it was great to join you today. a very belated christmas everybody. happy early new year. havebilbo, gollum and the ring. bloomberg television is "on the markets." >> it's time for today's options inside. ibm has been a dog on the dow. one trader says he is bearish on big blue. earnings are out next month and he joins us with his strategy. supperdown three percent at this year compared to the overall debt which is up about 25%. you think it is overbought, why?
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>> without confusing everybody, longer term i like ibm. their recent acquisition of aspera and other things they are doing is there. up untilar-term, january options expiration, i see a bearish pattern. when you look at the charts, i see a dissenting handle and we are at the top of the channel and i think we are about to turn down. into the end of the year, i think there will be bullish support. into 2014, i don't know if ibm is going to crash or fall but i don't think it will get above 190. that is my best with this trade. >> you are a short term bear. what exactly is your options strategy? >> this is the real key -- ibm reports earnings on january 21. options expiration i believe is on january 18. i am selling the january regular expiration.
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this will expire before the earnings report and i am selling the $1.90 call and biting though $1.95 call. of the trade is $4.50 for it i will make about 11% of my money. the key is the fact that statistically speaking ibm only has about a five percent shot of getting through that 195 mark. i have about an 83% chance that i will be able to make my money on this trade. based on the technicals, that seems to be the likely outcome. risky. sounds pretty you stand to lose more money than you could make. yes, whenever i do these traits, i get those questions. the way to think about is this -- if you bought a $4.50 stock and it went up to five dollars -- that's a good return. that is the return perspective. from the risk perspective, think about it that the 200 day moving average is below 190.
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ibm has not been above that in many months and i don't think it will crack that before the earnings report. statistics are on my side and volatility is on my side which should remain low until earnings. the trade gives me that statistical probability. watching theosely technicals. are there any technicals that you could see that would make you want to bail from this trade? >what if the market goes up 10%? has had a low correlation to the broader markets i am not so concerned about the broader market. my main concern is news. acquisition, we got that run and i think it will be tremendous for them in the long run. i don't think technically it will move the stock higher. above thecomes back 50 day moving average, you might want to be more cautious and monitor the trade. this looks like a good statistical winner aaron there are risks. >> thank you so much. this is what is happening on the
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equity markets, stocks are rising and the s&p and dow are extending their records on december 26, boxing day. expected better than data on unemployment jobless claims, falling more than forecast. let's check what is happening with treasuries. the yield on the 10-year note are heading three percent early today for the first time since september. we will be back again on the markets in 30 minutes. "lunch money" is next. ♪
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>> welcome to "lunch money to get where we tied together the best interviews and video in business news. let's take a look at the menu today. seasons greetings from president obama, and the man who took on the president's intel machine. the best of list, straight from the launchpad. a decade behind bars. to pay street, he had back millions. we will hear from the man who supervised liquidation. how top execs kickback from building lego models to building -


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