tv In the Loop With Betty Liu Bloomberg August 26, 2014 8:00am-10:01am EDT
i am matt miller. of largest ever acquisition a restaurant chain. warren buffett is jumping in as well. the s&p at the top 2000 yesterday for a brief moment. could this momentum continue? an investor is not so sure, marc faber. and jay-z is teaming up with kevin durant to outbid out against nike. the sponsorship war is heating up. here is a look at our top headlines. a done deal. burger king you read to by tim horton's for $35 million. it will move to canada and take advantage of lower canadian tax rates. the u.s. has begun surveillance flights over syria. that can lead to airstrikes over islamic state militants.
plus telefonica should -- could raise funds for its rod ban unit , more than $10 billion. it has said to be coming up with its own offer. we will bring you all the details. i want to get back 12 main story, burger king's acquisition of tim hortons. buffett will get a preferred stake in the roughly $10 billion company. it appears to be a good move for buffet and burger king but what about for shareholders? erik schatzker joins me now. you could almost smell this happening yesterday because of the involvement of one of warren buffett's favorite private equity groups. >> the resilient billionaire who will have a 51% stake in the combined burger king and tim hortons.
i was going to say conspired. why would i say that? our nerd last year. you are right, you could almost smell this coming. let's talk about what it is buffett is doing. , he isn what we know now getting a $3 million preferred stake in the new company. what is that mean? they are senior to the company but junior to debt. because of the fact they are not debt,ior as unsecured they can command a higher dividend or yield. that is why buffett loves preferred equity, because it pays a yield. a has invested in the past in number of preferred deals. dow chemicals in 2008 when it acquired a special
chemical maker. goldman sachs, general electric, bank of america, and contributed equity financing for the last year. we do not know if this is convertible equity like the equity he got in the dow transaction, or if this is cumulative, professional preferred stock, which he got when he bought bank of america and general electric, for example. it is important, the distinction -- to station. that will tell us whether warren buffett is getting the kind of sweetheart he'll that berkshire so frequently seems to command. if that is the case, and this is what i really want to get to, pardon me, if buffett gets a sweetheart deal, what about everybody else? it is not about -- it is not like the heinz transaction. it is a situation where minority shareholders will continue to
exist. they will own 49% of the new burger king, tim hortons, whatever they choose to call it. they will wonder to themselves of buffett can get such a sweetheart deal, why can't i get the same terms? >> this is the point i wanted to make. normally, buffett does get a sweetheart deal because he is coming into a situation when no one else is willing to do it. distress situation. >> at goldman sachs, that appeared to be the case. a goode gave goldman seal of approval. >> tiffany's when they knew $200 million. kind of the lifeline, if you such which is why he gets a great deal. in this case, they do not appear to need him. >> we learned from many people there is plenty of our owing
power in tim hortons's balance sheet. they can go out and borrow against those assets. there is presumably borrowing room in the jpmorgan chase as well. outstanding question then becomes, if it were going to be overleveraged beyond $9 billion, where are you going to get supplemental financing? it is coming from warren buffett. could it have come from another source? a bridge loan idea and then take out the bridge loan with a rights offering? not this -- not the kind of itng typically done, but could have been highly favorable to minority she -- minority shareholders. know the terms of the preferred equity yet, but when his last time you saw buffett when the termsl
were not fair to him? >> the first thing i thought of when i heard warren buffett was getting involved is that he was basically on board with the tax play. it is the board's duty to try to get the best possible deal for its shareholders. you have got to argue the case when a company makes a tax in version move. what some people are saying is warren buffett, the man who has made a case that every american has a duty to pay taxes in the context of mitt romney and his 14% tax rate, what is he that wouldng a deal take tax revenue out of the hands of the irs? it is going to revenue canada, not the irs. it is not as if burger king is not going to pay taxes in america. of course it will. but at a
corporate holding company level, it will no longer play by uncle sam's rules. it will play by the canadian rules. overseas buffett will not be trapped.- if it is successful expanding internationally, that will become an issue over time there it is very interesting. we will continue to cover this throughout the day. it is so wonderful having a canadian on board. said angry messages when i tim hortons's coffee is mediocre. >> is a matter of taste. the donut issue is a different question altogether. are they better than dunkin' donuts? i would say yes but i would not say they are great doughnuts. if you want a great doughnuts,
go down to the eastside. >> krispy kreme if you are a regular american citizen or you live in london. thank you very much. you will see more in market makers starting at 10:00. overseas inain high -- between the ukraine and russia. the ukraine captured russian soldiers in its region. the bloody conflict between ukrainian groups and separatist. for more on whether a resolution us --ainable, hans, tell first of all, set it up for us. who are the actors here we should be watching? >> you should look at whether or not there will be a meeting and whether or not he and vladimir putin sit down for a separate, one-on-one meeting. there will be group meetings in the afternoon. a >> photo starting right now.
a the ground, there have been couple of important developments. the ukrainian officials and ukrainian government have released a videotape of what they say are these russian troops inside ukraine. at the same time, russia has a knowledge to they had 10 or maybe a dozen troops wander by accident in the ukrainian territory. those make a peace deal or initial peace talks very difficult. both sides are escalating. it is hard to see how you can de-escalate that in turn down some of that tension, especially when there is not a one-on-one meeting to be planned. >> what is the eu's role in toss? they have a delegation that will be participating. can we expect them to be active or can we just stay away from vladimir putin and hope for the best? be active.t to
they want to play a role unwinding the conflict there, at least having some sort of cease-fire. energye source is the component for the eu. the ukraine has not received from the-- natural gas eu. that is fine. you can see some weather is blowing up. there it in a couple of months, cold weather will sweep across and the natural gas issue will for westernlicated europe, which is why they want to help facilitate some sort of compromise. >> everyone is talking about this meeting. if it does not happen, what do we do? >> watch the schedule. if nothing else, today will give us clarity. if there is no one-on-one meeting, we are clearly back at
square one in terms of peace talks. nobody's thoughts are going on. you heard hints from chancellor merkel over the weekend about an additional round of sanctions. another may be ratcheting up of sanctions, especially if ukraine can make its case that russia is sending its troops into ukraine proper, which they apparently have video evidence on. the next step will be sanctions. we may not get progress today but apparently we will get clarity. >> all right. moving and shaking this hour, investor bill ackman, having one of his best years ever. a month ago, his three-hour attempt to expose herbalife as fraudulent had the opposite
effect. fallen 26%pany has on a disappointing earnings report and have boosted akerman's that on stock. yesterday, his firm in more than $200 on burger king alone. according to a person familiar, 30%man's fund is up about for the year, his best performance since 2009 in what would seem to be his most embarrassing year. coming up, the wealthiest terror group ever , that is how some are describing isis, we will see where the money comes from when we come back. plus, modern family takes home three wins. could the biggest winner be the emmy itself? we will see how much ad spending last night old and. -- pulled in. ♪
>> the u.s. has signaled it may indeed strike islamic state targets inside syria and if it does, and will not take approval from the searing government before hand. one reason for growing worries, unlike other terror groups, islam has a steady source of financing. how do they get the money? >> big answer is oil. they have been able to take over oil fields in iraq and syria. that is producing as much as $2 million a day in income. that is one of the reasons the islamic state poses such a big threat. it is something we have not seen before, the local revenue stream is allowing for them to pay for
their offensive operations in the region. they're able to produce 80,000 barrels a day right now. they are extracting only about half of that, the best estimate. they're also selling it, smuggling it, for between 25 and $60 per barrel. that is different from the hundred dollars or so price on the open market. they are underselling the market now, meaning that money in, and using it to big effect. a hard thing for the united states and other international powers trying to take them on, it is hard to sanction them because they are just not part of the traditional pathway for money at this point. incomethere other streams or is it all oil money? >> they are doing what a lot of other terror groups are doing in the past. a lot of extortion. they went straight after the central bank, and to cash out of their.
the big thing is kidnapping for ransom. it is something they have done with james foley. they asked for $130 million to try for his release. it did not happen. by some estimates, they already raised $10 million from other kidnapping exchanges. there are other revenue streams .ut oil is the big factor that is basically what we're looking at. >> it was reported they got over $1 billion in cash from banks. >> i have seen different tobers, but they have cash use and they are spending it to reinforce their own military operations. they're using that cash to some extent to foster social services in some of these communities. the main threat they're using against what they're taking over. they are providing some modest services. i would like to welcome harvard kennedy school professor
of international affairs, who joins us via skype. thank you for joining us. let me ask first about the fact we are running what seems to be recon missions in serious now in the military. does that mean it is not long before the military gets involved with airstrikes there as well? >> that is clearly the preparations being made, whether or not president obama will ultimately decide to ask and involvement into serious, it is a decision for the white house. another thing to bear in mind is airstrikes can really only have on a group like isis. there are a lot of ways for them to disperse and make it difficult for them to attack. the problem will not ultimately be solved by air power. >> which means, we have got to put boots on the ground and move ground forces into not only serious, but iraq as well? >> probably not.
you will remember we have 150,000 troops in iraq back at the height of american involvement, and we could not control iraq's internal politics. the idea we will go back in there and solve the government's problem is fanciful. to betely, this will have met by local actors, not by the united states or even europe. >> what about peter's points that they are incredibly well-funded? is there a way we could pull their funding out from under them, or at least slow it down? isis is wealthier than other terrorist organizations we have seen, but not wealthier than most government, especially most in the region. you hear numbers like $1 billion and it sounds enormous. thellion dollars is roughly size of the endowment of the kennedy school where i work, and nobody thinks the kennedy school is about to take over the world or anything like that.
it does make them more capable as a local actor but it does not mean it will turn them into the old soviet union or something like that. theet me ask you about hands we are currently in. what does the administration think about possible airstrikes in syria? would be a bigt step for the president, who is very studiously avoiding trying to get involved militarily in syria. there are a lot of complicating factors. would it ultimately benefit bashar assad? these are complicating factors. i agree with the professor, everything points to effect the u.s. is prepared to conduct airstrikes and the message from a lot of folks is, if you do not get involved in syria as well, you will allow the islamic state to spread even further. >> all right, peter cook, thank you.
>> you are watching bloomberg television live. i am matt miller in for betty liu. let me give you a look at top headlines for the day. a done deal. -- twoking agreed to by by canada's -- to buy canada's tim hortons. onzon is wrapping up its bet video games. the retailer agreed to pay $978 million for twitch. it has 55 million monthly users to discuss games and watch others play them live online.
buy falling of best in premarket trading. it reported second-quarter earnings that beat estimates, but revenue came up short because of weaker demand for cell phones. people are waiting, no doubt, for the iphone six. 26 minutes past the hour, bloomberg television is on the markets. let's take a look at future is here if -- as we pierced through the 2000 level on the s&p yesterday. we see futures rising. we came back down below it but did it at least for a moment there it i will talk more about that in just a moment with a special guest. dow futures are gaining as well, just as little. after finally eclipsing the march 2000 level. 14 years it took us to get back to nasdaq eyes. we are again seeing gains in the nasdaq futures today. i said, briefly
jumped above 2000 for the first time ever yesterday there it former pimco ceo writes in his latest op-ed, the biggest threat to the portfolios is the peace of mind investors may not be the stretched rices of equity and bond markets. instead, it may come from the foreign exchange market, that would may well be on the verge of exiting and historically unusual pace of low volatility. long quote, but hopefully mark five or was listening. we will ask him what he he thought of it right now. the managing director of investment firm and publisher of the gloom, boom, and doom report. a special guest from thailand. great to talk to you and thank you for joining us this morning. what do you think about mohammed's op-ed in the financial times saying the be lookingrket may to kick into high volatility here? >> we have relatively low
volatility in bonds and in and ies and in currencies think the next 6-12 months will be characterized by far more volatility. what we had until essentially early april were the euro strengths. since then, the euro has been --kening and then to july, now it is weakening. bond prices have continued to go up. is interesting that, at the present time, spanish government , 10 year bonds, yields less than u.s. treasuries, spanish bonds yield to -- 2.25%. yields 2.4%. >> why is that? do investors trust the spanish government more? to pay them back?
>> i believe all the markets are grossly mispriced. because some people say intervention, i say banks have manipulated to low levels. so you have this complacency in the marketplace. we are simply more than five years into the market and five expansion.economic the bull market began at 666 at the s&p with 2000. are not at interesting buying levels. can the market go up another 10%? it is possible but please keep in mind, since august 7 up until today, the s&p is up roughly 100 points. at this rate, in other words, one month, the s&p would be up in the next 12 months by 1200 points.
i do not think it is very likely. phase followedng by equal down curve. >> global markets, the fed in may be on the cusp of normalization as far as interest rates. but it looks like the european central bank and the japanese central bank may take a page out of ben bernanke's playbook and start doing real u.s. style qe. what do you think about that statement and what do you think the effect will be if it is true? >> i think it is entirely possible. i think it is even likely and at some have the day, contended all central bankers are money pranksters. the problem with easy monetary policy in the u.s. was that it essentially propelled the euro
to artificially high levels. the euro economy is not doing well. the euro zone economy is actually in recession and contracting. movements thate are very unpredictable. if you look at the performance of macro funds, macro hedge funds, this year, a lot of things do not make any sense. >> let me ask you. i have been speaking to you about this kind of stuff for 10 years and we always talk about gold and it is very interesting. i wonder what you think about digital gold. you mentioned central banks our money printers. that is certainly true. what do you think about bitcoin insofar as it is only going to be limited to i think 21 million, so it will not be like a paper fiat currency in the traditional sense in that it can be printed out of control. >> i know people who are very positive about bitcoin and i
think it is a great invention. i think it is a currency that has a lot of future. but there will be competing bitcoins. personally, when it comes to having to save some money into an asset, into cash that cannot be multiplied, i prefer the precious metals, gold, silver. but of course, you have to store it in the right place. i would not store it in the u.s.. >> a very good point there it but not on the internet either. >> not on the internet. safe boxis probably a in singapore or hong kong. things like this are probably safer than gold or things like this. >> got it. we really appreciate your time.
thank you so much, editor and publisher of the gloom, boom, and doom report. we have breaking economics news on durable goods. scarlet fu joins us to give us the numbers. >> big numbers here for the month of july for durable good orders. 23% inse 20.6%, almost the month of july, beating the consensus estimate of economists with a gain of eight percent. as comes after an increase of 2.7% for the month of june. there was a big airshow in the u.k. and so the increase reflects a demand for u.s. aircraft, commercial aircraft. there is a jump in booking for u.s. aircraft. a demand for automobiles plays into it as well. when you back out transportation, durable good orders fell 8/10 of one percent for the month of july. in terms of orders for nonmilitary capital goods, excluding aircraft, that also declined half of one percent. we really are seeing the effect
of booking for commercial aircraft and automobiles driving durable good numbers up to almost 23% increase for the month of july. in terms of impacts on markets, futures backed up a little bit. >> an amazing number. ex defense of 25%. that is pretty impressive. you can be sure the durable is going to number be one economic people will be talking about for sure all day today. >> when you back out defense, it is a drop of half of one percent. durable goods overall was an increase. >> thank you very much for that and we will continue to discuss this today. to come, bryan cranston's epic kiss with julia louis dreyfus stole the show last night. hard to look away.
louis joyce's, kissing the dude, bryan cranston, recently on this important show, breaking bad. he did play the dentist in seinfeld where he accused jerry of being an anti-dentite. in 2013.on 2014, is that an improvement? >> when all is said and done, the television businesses have really figured out over the last five or 10 years is that audiences fragment all over the television and screen. big live events like the super bowl, the oscars, the emmys, are places where big audiences aggregate and advertisers love them because they tend to watch the program live and advertisers will pay. these are becoming bigger and bigger for the networks.
on monday matter night? am i the only one? >> people were worried about that. not want it to conflict with football, the other big live event. >> the football season has not started yet. preseason football, the emmys is so important that it is trumped by preseason football and it does not even matter. that is putting things in perspective. will the stars get to the red carpet on time, a traffic jam. at the end of the day, it all worked out well. nbc and other networks fight tooth and nail to get to these events. >> it did not work well for netflix. hbo itself had 99 nominations and netflix have 31. they went home empty-handed. julia louis to write this won best actress for a commie. for veep. beyond that, it felt like a
disappointment for hbo and netflix. where netflixear would take something home for orange is the new black. >> only basing it on my personal experience, the only thing i ever watch is hbo, netflix, don'tme, on-demand, and i ever even consider watching normal television anymore. am i just an oddball? >> you are. we all know that. time, we have seen all the , all spending more and more money on original programming trying to up the game. cable are a broadcast or network -- if you think about it, a lot of
people are calling this the becausege of television there is so much content on there. you're seeing a list movie stars likeg to television matthew mcconaughey. >> 50 and, i saw. well at getting critical acclaim. in the last quarter, hbo fell behind netflix. dropped behind in numbers quarters ago. big push among people who do not necessarily want to sign up for $200 a month cable packages to get it so they can watch hbo go without having a cable package. u.s., hbo is the very aggressive about streaming hbo over the internet. you do not have to pay for the
package. excellent. thank you so much for that. call, you will stick around and we will talk about what is hot and what is not in the commercial break. coming up, if you had your heart broken by aereo, tivo hopes you fall in love with this latest device. more about the reinvented romeo. plus, a superman comic book that for $.10, itld -- sold for millions of dollars on ebay. you will not believe this. it makes no sense at all. ♪
compared to the $2.1 million somebody paid for a copy of the same comic book in 2011. wasoriginal cost in 1938 one dime. sticking with entertainment, it has been a lonely summer for fans of aereo. now tivo is swooping in to capture the hearts of cord cutters. for more, let's bring back paul sweeney of bloomberg intelligence. romeo sounds a lot like aereo, so i feel like they are courting disaster with the name already. >> this is a service it had before. this is really going for people who are really looking for the --r the air broadcasts and
broadcast signal. area had a strategy but unfortunately for aereo, the supreme court said it violated the broadcasters copyright. >> with area, you cap via -- their antenna at their house. with romeo, q keep it at your house? >> yes. antenna at thele box. you are making your own personal recording of a broadcast and so therefore, that is how they get around it. i think what tivo people said is the aereo experience, people really do want over the air television outside in their pay-tv package come earning over $85 a month these days. >> you can still only get three or four networks. >> that is right. for a lot of people, they just want broadcast networks and maybe they will stream and netflix or something like that.
they do not want to pay the big forle pay-tv package contests. >> essentially, this is a recording device you use for your noncable television at home. that is not as big of a deal as i thought it was. >> there is a way to get broadcast channels, high-definition quality out your window. >> welt -- well played. all right, thank you so much for joining us. if you have a terminal, i can only recommend checking it out here do get it on the web? >> no, it is on the terminal. up,o you have got to pay but you earned it. you deserve it. spoil yourself. amazon makes its biggest acquisition ever, spending nearly $1 billion, more if you consider acquisition. will this be a win for the online retailer looking to get
>> it is time for our weekly look at the top stories for linkedin. join me now, john abell. we got essentially what looked passenger.h of white that is with the kids are calling it these days. let's start out with the bottom. the dullest and most vitus -- most vital skill you need, without clicking the link, sleep is the dullest skill. >> thanks for not clicking. it is actually writing. writing skills are incredibly important. it tells people reading your can hear an argument. it also helps maybe the writer of my thoughts. if you're going around saying, let's do this and let's do this,
you are not a counselor and people will forget and you will choose to forget. i amng is essential. taiex good at writing, not good at sleeping, and i am not the ceo. >> coincidence? >> i do not know. take you for your job offer but no thanks. is the ability to pass on something, the ability to say no once in a while? >> has been a verb -- a recruit when he has been telling the readers what prospects do sometimes. they're not interested in the job. they also check you out, your company. they going to and search and say, you know what, i do not want to work for you after all. go through that process we have 12 interviews in four hours. >> even if you don't want the
job, you still complete the interview process and does you really learn a lot from the interview that maybe you could use in your next job interview. >> he learn from everything. certainly, halfway through the day, you just want to die. person actions is talking about, he calls him freddy krueger. and inrson seems normal, that story, that person got fired. he lost the top aspect and an employee. >> all right. successful employees. come to work late, drink too much at night. >> right. exactly. it is those things but the reverse. , if you're going to show up, actually do something. set the table for the rest of the day.
>> all right. advice from a man whose ability is unquestionable. john abell, senior editor at linkedin. bloomberg television is on the markets. take a look here. up across the board, piercing through s&p 2000 yesterday. briefly but we still did it. the dow futures are up as well. nasdaq futures also gaining a little bit more. stay with us for the opening bell in just about 34 minutes. plus, more on the story of the day. burger king agreed to buy canada's tim hortons $411.4 million, coming up in the loop. data.housing we will bring you headlines as they break and tell you how much your home is worth live on
>> we're 30 minutes from the opening bell. stocks will open just slightly higher but will it be enough for the s&p to go above the high-level and stay there for the close. burger king agreed to by canada's tim hortons for $11 billion. the fast food chain will take advantage of lower taxes in canada and improve its coffee in the meantime? best buy posted second-quarter earnings that beat estimates. best buy shares are down in the premarket because of that lower
revenue number. let's ring in starlet food for the numbers. >> below in the housing market continues here. 20 u.s. cities rose from a year ago. that was a slowdown compared to what we saw last month in may, and 9.3% increase. that was already the smallest increase in a year. --8.1% increase is yet a gun yet again a slowdown. 2/10 of onell percent. in may, cities dropped for the first time in two years. we know higher mortgage rates and stricter lending standards held back the market and we got evidence of that when new home sales had an unexpected drop.
in terms of impact on equities, we are the had durable good orders which caused equity futures to pull back a little bit. not much of a reaction here. futures are to open higher. we are still positive but the latest data on home price indexes, the slowdown in housing continues. >> thank you very much for that. our chief markets corresponded. for more, i want to bring in the turned thewho company into one of the largest homebuilders in the u.s. in his 16 year tender there. quite an achievement. provides intelligence unique real-time research and contacts en route industry needs as well as all the government factors that impact business. it is kind of my cliff notes for my job here as a financial news
broadcaster. what do you think of the housing market as we are seeing it now? it picks up with volatility as far as the recovery is concerned. >> it is a mix that. in terms of new home sales, we are up significantly over a year or two ago. at 10,000d out yearly. the most recent numbers were about 410 and 415,000. it is like a 33% increase. nowhere near the level of over one million new homes a year that we used to have a number of years ago. a lot of factors explain that, but i look at it as a mix bag. i am somewhat optimistic but there are a lot of things
holding back the sale of new houses. >> what do you make of yesterday's surprise drop of new home sales? always get volatility. you step back a little bit nec that really since the end of flat.ear, homes have been i think the market is really looking to drive to a higher level question --. have it possible sellers too much confidence in this market and therefore asking too much for their homes? in someis the case cases. some buyers do not want to go out there and put their house for sale knowing they will have to ultimately pay a higher
monthly payment. >> i also hear we are not building of new homes. i heard from a number of people to keep up with household creation over the next few years. doing need to increase our building or will people still be conservative? >> more more businesses, the big national homebuilders who have financing are going to get more and more market share. the capacity of builders big and small is much more significant than is shown in current deliveries. they are increases suffering is not insignificant. not think there is a supply bottleneck in the country. >> what do you think about that? we do not have enough supply to
keep up? >> you so that vacancies. vacancy rates in the u.s. have been really high. they started to trend back lower. out thatclear inventory, there is not much need. >> what do you think we see as far as homebuilders going forward? do they pause here or will they continue? is it their business to put up new houses? >> we're finally starting to add jobs in categories which should help us spur this information. it should start to push more people into homeownership. >> thank you so much for joining us back to the deal the morning, burger king is
acquiring tim hortons for over $11 million. berkshire hathaway has committed $3 billion of deferred equity financing in burger king's takeover. getting in on the deal. it is a good deal for burger king and his 34-year-old ceo. i repeat, 33-year-old ceo. what about tim hortons? to ask the question, what about their shareholders. for more on the deal and whether it makes sense, greg johnson. how amazing is it? we have seen this story before. is 33 and the cfo may be a year younger. >> the median age of customers, which is fine, still controlled by the folks in brazil. >> by three g. >> exactly.
they are a skilled set of folks. very capable people. tim hortons has a great team and a well-run organization. that is five percent of the market. goodink it is quite a combination, even before you get to the issue of tax aversion there it >> is it possible tim hortons faces a little backlash because of this? i joke about canada a lot because my dear friend erik schatzker comes from toronto. we get a lot of angry canadians writing in saying, not only do i find that funny, but i am unhappy about the fact our dear tim hortons started by a famed , isey payer test player taken over by this grotesque fast food chain. ease is a great franchise and we think it will remain one. the last thing we think will
happen is that burger king will somehow rebrand all of these stores to burger king with timmy somewhere down underneath. they will remain that. help bothen it will companies. it means coffee and breakfast. you look at the part of burger king. burger king's burger, it means lunch and maybe dinner but not breakfast. this is something burger king has struggled with for a long time. the tim hortons side, they have never really done all that well. they have done ok, and burger king would be a good combination. >> what you think about warren buffett? he said he wanted to work with them more. it seems he is offering a vote of confidence for the tax and version deal.
it makes sense to us but the white house expressed a little bit of anger on this sort of thing. >> from for the copeland of you, that is above my pay grade. from an economic point of view, we believe the deal has a great deal of merit before you get to the issue of tax aversion. >> before you take that into account, it is good business. >> absolutely. the two companies have come to matter he skills sets. tim hortons has a tremendous brand-name and great locations. when target came into canada, part of the problem was they came into second-tier real estate and meals -- meanwhile, timmy's has great locations. >> thank you for joining us. it is a deal we will talk about throughout the day. great to get your perspective. craig johnson. up, came on for amazon. it beat out google. how does the videogame service
>> yesterday, the acquisition of twitch interactive, $970 million plus more to retain some of the employees there. for more on the deal and what's which brings to a powerhouse like amazon, i want to bring in bloomberg west editor-at-large cory johnson very early in san francisco. thank you for joining us. editor inme, managing
the tech scene. an exciting deal, especially because we thought it was going to google and now amazon sort of pulls it out from under them. this from wall street's perspective? >> i have one number for you. 2.4 billion hours. that is how much time people spend watching videos of other people playing games. that is all you really need to know about the deal and why it is attracted to amazon. $970 million, not a lot of money for jeff is those, who demonstrated his willingness to spend a lot of money on investing for the future of amazon. not a lot of money. he is getting eyeballs, people who are engaged, who just want watch it. not lot of people who are -- involved. i recently spent some time
looking at sony's new video games. they are increasingly becoming closer to movie kind of entertainment. lost and version of this content. are 50 million people who log onto twitch every month. >> 55 million people in the the bite of $1 billion. 4.5 hours every month of users. that compares quite favorably to any cable network out there. it is better than almost all of them. at that level of engagement for 4.5 hours and then think about content costs. there is none. themselvesplayers offering for virtually nothing. they get a piece of that but they are volunteering content. there are thousands and thousands of content creators
and the most successful of them bubble up without the company and creator of the network figuring out what the next big hit will bp at we watch the emmys last night trying to figure out what the big hits will be. we watched netflix fail last night, of orange is the new black, house of cards, not getting a single new award. great and expensive effort to build the next content. twitch tv does not have to do that. the creator of the content become successful. an enormous number, a fantastic story of a great business on the radar. does amazonificance and jeff bezos have to take this away from google? >> amazon quietly has built an advertising business, over half $1 billion in revenue from last year. this gives them a plat warm. think of them not as some feature on the xbox. sense.ts to make
upper points out, the --ay to sell things >> google has artie got a platform. as you guys have alluded to, amazon is making a bigger push into gaming. they are trying to get people to kindle andn the other devices. they are definitely working on their own games. people crammed into arenas in korea to watch the games on jumbotron. imagine what that means for amazon to be able to grab that engagement. .> it is a hard sell
one thing that is happening is a leap of faith. i play video games all the times -- all the time. >> that is the point. it is not just teenagers anymore. people in the 20's and 30's. difficult demographic. young men spent a great deal of their disposable income. that is why you see the success of the nfl. >> cory johnson from bloombert west. i'm guessing cory did not even go to sleep last night. tom from bloomberg news. we will take a quick break and we will be back here. ♪
>> welcome back. i am matt miller, in for betty liu today on what could be an historic day for the stock market. it is 26 minutes past the hour. bloomberg television is on the markets. take a look at futures here. not a lot of jews. green arrows at least across the board. the dow and the nasdaq. look at that here in 1997. yesterday, we went through 2000 just briefly on the s&p. those are futures and that at the cash market. >> it would be historically closed above. we did have a historic day yesterday. but not historic enough for you.
>> that is right. historicto be a more day today. i have faith that could happen. let's get to the top 10 stocks you need to watch. they are the only stocks you need to watch today. .livia and julie obviously here goldman sachs is number 10. initiating coverage on the firm with a buy rating. goldman proxies -- goldman's learning prophecy -- goldman shares are flat year to date. >> number nine, digital. the recording companies out with a new device. a new version of its romeo dvr is aimed at people who do not have cable or satellite tv service. the device would record over the air broadcast as well as streaming networks. tivo hopes to record aereo, which was shut down by the spring court. a watchmakerht, reported second-quarter earnings revenue that missed analyst estimates. it did reaffirm its full-year forecast.
that is not helping the shares. number seven, tesla. shares of electric carmaker are getting a boost in the premarket after china said it is considering investing $15 billion to build charging facilities to spur demand for the electric vehicle. the policy will be announced soon according to people familiar with the matter. >> number six, shares of the biotech company are searching this morning. the cancer drug showed positive results. the company said eight patients were treated with the drug and were incomplete remission" others were in partial remission. >> a discount shoe retailer recorded better than estimated prophet. it also stepped up its forecast for the year. improving sales trends across all major categories. shares jumping more than 12% in the market. ins is a little bit unusual what we have heard from retail lately. >> all right here number four is
comcast. the company is now expecting its $45 billion asset of -- acquisition of time warner cable to be earlier next year. thought it would be finished by the end of this year. comcast said in the new filing of the updating timing is due to regulatory approvals. >> number four calm -- number three, it missed its forecast. analysts say it is still on target to start profit -- processing chicken in the first quarter of next year. >> olivia has been a vegetarian for 16 years. >> i believe it is mostly and a good company as opposed to an actual poultry. >> have you seen the film, barack? -- it is disturbing the way they process the chickens. i will eat them but it is disturbing. >> best buy, the world's largest electronics chain poses second
order -- second-quarter earnings. sales came up short because of weak demand for mobile phones. best buy shares are trading lower. >> number one stock of the day, you could have guessed it, burger king worldwide. opper of ainked a wh deal. >> hey hey. >> taking advantage of lower taxes and our neighbor up north. even warren buffett is getting in on this deal and the shares are up today. >> the question is whether they bring the chicken fries. >> do they have satisfries? >> they phased out the satisfr ies. >> that was a big fail. toppings the s&p 500 2000 is psychologically
satisfying, but that is about all. number,is a big round and we always make a point, those of us truly in the know, to say that this isn't very important, but it is to the general public. it is something you can wrap your head around, 2000 on the s&p. >> it is a psychologically satisfying number. you're looking at a market with large-cap space over 9% year to date and if you look at small-cap space, 2000, over 1100, and over 1%-plus small-cap. if you look at the offensive and dynamic you are seeing that there is a broad quality within equities, and i think that is indicative -- >> are you seeing the same kind of evaluations in the russell index? it is getting a little bit right, compared to historical norms.
double checking with olivia. thank you. are you seeing the same kinds of evaluations on the russell index? >> we look at where the economic cycle is coming globally as well as the u.s. we look at valuation, what you are talking about with sentiment. that gives us some confidence of where the market is. for a large number of months, u.s. stocks appliqué little price -- have looked a little pricey. we think of animals are there and sentiment is something -- we think the fundamentals are there and sentiment is something of an ally. we think it is going to be more of a stock bidding environment in bonds and stocks that you need to understand where you want to be. be in the market, but really do your research. >> i want to bring up one more point about valuations and it has to do with the relationship
between valuations and the yield curve. we have a chart that we have been looking at and we're are seeing sort of a convergence of these 2 things where we have been seeing the yield curve forow at the same time pe the s&p has been rising in rising and rising. whonalyst at wells fargo admittedly has been bearish on the market, among the most bearish on the street, says the fact that it continues bear out -- that it continues to narrow is going to be bad news -- valuations are going to come down but -- >> that is impressively wonky, jules. that is about as heady as i can handle at 9:30 in the morning on tuesday. wonky guy --w >> she is looking at the relationship between the 2 and she is not optimistic. >> you have fixed income and
equities, where is the dollar likely to go? with that the yields this low right now, not only the cost of money but the availability of money, that is looking less attractive versus other alternatives. investors are looking at where they can get a return on capital. i think what she is probably referring to, is there going to be a snapback. is there no way other than up, she might be asking. over the next six to 12 months yields are going to rise. not dramatically so. we do not think it is 1994 all over again, but we think that yields are going to creep up. >> but she is bearish, thinking that the s&p 500 is ending the year at 1850. >> one of the few bears. >> inconsistent with our forecasts as well. here.k right around >> i noticed that you recently
upgraded europe, which is an interesting move, given some of the recent data we have had coming out of europe. perspective, growth is grounded to a halt and inflation is at about a quarter of what ecb is looking for an unemployment is still in double digits. youth unemployment in spain, which matt knows well, is 50%. and valuations have really run up. average p/e is trading at 21. why is now the time to buy into europe? >> depends on the shorter-term timeframe versus the more immediate time frame. we think the cycle is stabilizing. there've come out of recession and it is a little hit and miss quarter by quarter within europe. central bank is going to have to get ready to get ready. they want to do their version of quantitative easing.they are about seven years
late and 3 trillion years shy of where the united states is that. -- has done. they are managing the details and the european central bank is addressing how to get into it. medium-term, that could have some benefit -- >> mario draghi has pledged to do whatever it takes. but without actually achieve? -- what would that actually achieve? yields on 10-year are below 1%. what would it do? will it spur lending? >> i don't think he is going to do a lot but he will do more than he has done. the issue with the european central bank is different from the u.s. for the united states, quantitative easing is relatively straightforward. it might be controversial but it is straightforward. the federal reserve is money and buys bonds. in europe, what do they buy and how did they get that money into
the system? you had a great story this morning on bloomberg.com looking on -- >> the assets. >> which are going to be liberated. that will create opportunities. >> if you look at -- if they go been bernanke style, dumping buckets of cash from helicopters from over there, that makes the euro weaker against the dollar. normal interest rate situation, which means not only will their assets be cheaper to u.s. buyers -- if foreign buffett is looking for stuff to buy out we can find is $3 billion at burger king and tim hortons, you might look over there for the one point $2 trillion on assets -- we recommend checking out that story at bloomberg.com as well -- but it also means their imports will be boosted good weekend by buy more and more of their stuff -- >> already their economy is not growing and the hiring is not that -- they're hiring has not picked up. that will not spur the economy.
>> there is opportunity in europe. you got to do your homework. level, but, first you have really got into your homework. we are looking at a multi-asset strategy as well. it needs to be a global strategy. how does your fit into that portfolio? >> a guy who was obviously done his homework. thanks very much. clearly you have a study session going as well -- >> i need to study a little more. >> olivia obviously schooling me on p/e. coming up, a sponsorship deal that could be a slamdunk for nba superstar kevin durant. do the shoes actually matter at all? ♪
five statues -- still? --netflix shows were shut out. telephonic a mate u -- may boost its offer for gvt. could top $10.5 billion. catch all the latest in tech and media every weekday at 1:00 and 6:00 p.m. eastern time only on "bloomberg west." it is a hot show, i'm telling you. doranand nba start kevin versus nike -- kevin durant versus nike. nation informed nike that he has a deal with under armour. it would more than double duran't's nike pay.
joining me with more on the story is the sports management professor at nyu tisch institute for sports management, media, and business, also the author of "52 weeks." thanks for joining us. under really putting the pressure on nike, but i'm guessing nike has enough money to top or meet the deal, and they have the right to do so in the contract, right? >> i think it is almost less about under armour putting pressure on nike then baa putting the pressure. caa --ion is part of >> the agency. >> an army of skilled negotiators backing roc nation wade away.wyane now they say you have 90% of the basketball sneaker market in you
have been dictating terms for a long time. they have made a game changer deal in the sneaker business. >> i wonder how much nike has to pay attention to. ok, maybe kevin durant goes to under armour,: i think of basketball shoes, i think of nike. -- reebok hasn tried. other companies have tried, but nike makes basketball shoes. can anyone really take a piece of that market? >> oh, absolutely. $4.5 billion sneaker market, one third of all athletic footwear. nike is plenty of room for to have a great is ms., and for other brands to have a great business. i don't think anything stays forever, let's just see what happens with a pristine athlete
brand like kevin durant and steph curry, who they sign the last year. >> how important our shoes when you are playing basketball? nike has had decades of experience and the greatest basketball players in the world helping them develop these shoes, and under armour makes boxer briefs. what do they know about making testable shoes -- making basketball shoes? >> under armour has tremendous street credibility in sports. that is where you see it first, on the pros, the top college players. i'm a think anyone doubts under armour's ability to make a great shoe at all. >> doesn't matter to kevin durant what sure he wears? dizzy care about the product, or is it all about the money for the -- does he care about the
product, or is it all about the money for the logo? >> i think he cares a great deal and he will make certain he is comfortable and performing at the level he needs to perform at . if not, they will change it. but yeah, it is ok. it is ok for kevin to rent to make as much money as he can while he is laying basketball. this is a business that i don't think anybody has a problem with that. >> no, absolutely not. thanks for joining us. professor of sports management at nyu. very interesting story, and he has a very interesting book out. definitely check this out. it seems like viewers cannot get enough of pro football, obviously. the nfl isn't giving it away for free, though. the league and directv are close to signing a deal for the sunday ticket package. the price would raise the cost up to 40% by 2022.
the pending merger of directv and at&t is contingent on the nfl contract being renewed. i thought it was great the other wast that the emmys ditched for a preseason football game on sunday. doesn't even matter for the season but we would rather watch that than the emmys. the u.s. is conducting surveillance in the country president obama vowed he would stay out of. will it lead to airstrikes in syria in the near future? definitely stable with us for that.
if they do meet it could be frosted. the benchmark micex index fell less than half a percentage point. thanan stocks were up more half a percent. we asked about the volatility. periods of volatility impact certain products. some volume there but we are looking for a recovery as well. investors like the bullish market and they don't enjoy being nervous for long period of times. >> the u.s. is setting the stage u.s. airstrikes against militants. we will continue to update you on headlines like that all day, those headlines specifically, in fact, if you stay with us on the
mario draghi giving risky assets in the. the yield on the spanish 10 year at a record low. in currencies, the yen is strengthening against most of its counterparts. against the dollar, the yen has snapped a six state losing streak. abovep 500 is 1.8 points 2000. we are now holding on to the 2000 level. dow industrials adding 43 points to 70,120. joining me to look at the parts of the markets that have not caught up is stocks editor michael reagan. there are segments of the market that have lagged behind, way beyond. >> most of the main industry groups have set new records. financials are sort of the outlier. 40% below -- >> 40% of low?
2007ey peaked in february and we all know what happened after that. rallyials and let the over the last five years but still, it gives you a sense of how much room -- >> how much damage was done. tech is about a third below its peak in 2000. those are sort of the 2 conspicuous groups. >> what about valuations? 2000o they stack up versus or 2007? to -- pace is stunning starting to vary with -- the last five years of the dot-com bull market in this 27%, so pretty similar.
but the valuations not in the same neighborhood. com bubble got above 30. tech, the valuation slightly more valued. that got way out of whack during bubble.com valuations are but the highest in three or four years for the s&p 500 but not really at the levels that in retrospect were so romanti -- so problematic. >> and we don't have glaring examples like pets.com. , there are some from the element -- >> there are some frothy elements, but from the macro level it does not reached that alarming state yet. >> we got over this mini correction in the markets. what are you hearing from people? >> in general people are pretty comfortable. it is an obvious up trend.
a lot of people were worried that there would be a correction. as far as economic growth, it looks pretty solid. earnings growth looks pretty solid. it gets you looking at the outliers. that is always a poibility. last time a geopolitical event caused the big bear market? iis rare for it to happen. it is pretty rare for it -- >> does not cost that much volatility. mike regan, thank u so much could will be back "on the markets" in 30 minutes.
>> live from bloomberg headquarters in new york, "market makers" with our chapter and stephanie ruhle. > -- with erik schatzker and stephanie ruhle. >> burger king buying tim en buffett helping to finance the deal. >> will a meeting between ukraine and russia do any good? >> you might say he has time on his hands. meet the last great american watch maker.