tv In the Loop With Betty Liu Bloomberg October 1, 2014 8:00am-10:01am EDT
it is wednesday, october 1. we are live from bloomberg world headquarters. you are "in the loop." i am betty liu. i cannot believe it is october. the dollar.ighs on we will bring you coverage with and later, michael holland, who just came back from china. are activist investors on a winning streak? we will dig deeper. really --empire state realty trust. -- one year after taking them public, how is life changed and how -- why he would not rent to a company like uber.
doctors are headed to texas, looking for anyone who might have come into contact with -- with the first person diagnosed with ebola in the u.s.. pro-democracy protesters jeered leaders. the tests are -- the protests are in their 60 day demanding free elections. mary barraors ceo will lay out her strategy with investment -- investors and analysts. gm has been hampered by record recalls so far this year. industry, the auto chrysler numbers are out for the month of september. scarlet fu has more on the sales, up about 19%. >> up about 19%. an consensus was for
increase of 16%, so this is a better than estimated increase for chrysler. previous to this announcement, analysts had been looking for general motors to post the highest increase, 18%. ford is expected to show a 2.4% drop. we're still waiting for gm and ford numbers. reiterate, chrysler reporting u.s. auto sales for the month of september coming in with an increase of 19%, higher than what analysts had been looking for. >> we will be waiting for the auto numbers. thank you, scarlet fu. one of the deadliest diseases on earth hitting u.s. shores yesterday. officials say they are confident the ebola virus will not spread. >> it is certainly possible that someone who had contact with this individual -- a family member, or another individual, could develop ebola in the
coming weeks, there is no doubt in my mind that we will stop it here. >> washington correspondent peter cook joins me now with more. the cdc director seems very confident about that. why is that? >> he does seem confident. he is confident for two reasons -- the public infrastructure is excellent. it is prepared for the situation. dallas is a big city with an excellent public health system. this is a hospital trained for this scenario. they had discussed this one week earlier. the other big reason, the individual himself came into contact with, according to the cdc, just a handful of people after he showed symptoms and that is significant because he came to the notice states from liberia on the 19th, arrived in dallas, 20th, and did not show symptoms until the 24th.
it is from that point forward that there are concerns he might have exposed someone to the virus, so it is a limited period of time. >> peter, why wasn't he isolated when he first went into the hospital? >> that is one of the big question marks in all of this. he went in on the 26, walked into the emergency room, complaining of not feeling well. based on what the hospital set news conference, nobody asked him if he had come from west africa. he did not have clear signs of ebola. he came back two days later in an ambulance. it is one of the question marks here. dr. say it could have looked like the flu or another virus, certainly not ebola in the initial stage. case, hereabout that in new york, you get nervous
enough, but what about in dallas? what is a situation that? >> is a huge concern, but you do not get a sense of any real hysteria. that is one reason the cdc director was strong in his comments, trying to contain concerns about a panic and one reason why people in dallas might have a better bradley, --g, cap kent bradley came down with the disease, he was treated and released. it is from the dallas area and the story was covered slowly. dallas hasse of that a better sense of what the issues are. >> thank you very much for that. peter cook, our washington correspondent. moving and shaking this hour, hedge fund manager bill ackman. one of the funds he manages
raised $2.7 billion in amsterdam. thanund's market cap, more $6 billion. one of the advantages bill ackman has in taking this public is he has a source of capital that is not at the whim of investment, but other factors. pershing capital has $14 billion in assets. citigroup will review its contract after goldman sachs barred seven employees from trading individual stocks and bonds. erik schatzker is here now with more. interesting timing -- why these banks are reviewing these policies now. >> betty, it is because of the secret goldman tapes. don't you love the way that sounds? the secret goldman tapes.
, as oneay rice tapes investor said. >> they have turned a spotlight on the contracts and found them to be wanting. they reviewed a controversial role in a merger and concluded that goldman really did not have a conflict of interest policy in place. one goldman partner who worked on the deal owned $340,000 of kinder morgan stock. analyst claimed she was fired after coming to the conclusion, being pressured to change and refusing. npr, were made public by and goldman drew a bright line, bahrain investment bankers from investmentbarring bankers from trading individual stocks.
see are required to approval to buy or sell other stocks. >> you know what i am surprised by -- there were not stricter policies in the first place where bankers could buy and sell individual stocks. once that openly are in conflict that arer own -- ones openly in conflict with their own business. >> you and me both. if you talk to people like lloyd blankfein, you are led to believe that working on wall street is like giving your life to the church. if it were rarely about working for the client -- were really about working for the client, every bank would have these bright policies about not being able to own individual stocks and bonds. a conflict of interest. the whole point is to prevent employees from doing things for personal benefit that injure the company or its clients.
now, that sounds great, unless, of course, you are the banker, and you are thinking about your economic opportunity. why should my employer deny me the economic opportunity of being able to sell stocks, bonds, or derivatives? the point is banks, having gone to the financial crisis, have sustained image damage and need to do rehabilitation. it sounds like a great idea to me. >> absolutely. thank you. certainly an ongoing story. up, he looked at the markets to the prism of doom, gloom, dr. marc faber. we will talk to him. mary barra wants to change the storyline -- instead of talking about recalls, she wants you to check out gm's plan for the future.
>> joining us from zürich is someone that has been warning of . demise in the u.s. economy he is of course, none other than mark farber, the editor and publisher of the "gloom, doom, and boom" report. we might be jittery, but i have to say, market have gone in the complete opposite direction of what you called for almost one year ago. what gives, marc? [laughter] well, we have to clarify the statement. i was expecting a correction for .ow, two years
we have gone up in a straight line since october, 2011 to hear. we -- here. we did not have more than a 10% correction. this year has been irregular. some indices like the s&p are up a modest 6%. the russell 2000 is down 4%. 50% of the shares on nasdaq are down 20% or more from their recent highs. like --we had market had markets like the philippines, indonesia, india, pakistan, thailand, they are all 28%. clean 20% and >> right. >> so when people tell me the s&p is a great place to be, i have to laugh because the emerging market in asia at least have done fantastically well.
>> relatively speaking, yes, they have not performed as well as some of those of the markets you are talking about, marc. [laughter] >> and by the way, last fall i was interviewed and i said treasury notes yielding 3% would be an interesting investment, to that yield has fallen 2.5%, and the dollar has been strong, so i do not know what you are complaining about? what do you mean that you do not know what i'm complaining about? >> you make it sound like i was wrong about everything i projected. >> hang on. adpave breaking news -- jobs at port of spain the u.s.
added 213,000 jobs in september. saying the report u.s. added to it thousand jobs in september leading up to the friday jobs report. that thesaid before economy, you believe, is sliding. the global economy is sliding into a recession, and we have not seen that. we have seen you come down. we have not seen gold rally to the points that you have mentioned before, marc. peoplei always said that should own physical gold and store it outside of the united states. this is an insurance policy that will pay off one time big in the future. i do not know when. i do not care when. it is a safe investment. it is insurance and part of a
total portfolio that consists of cash, realonds, estate, and precious metals. number two, concerning the global economy, i was talking in particular about the emerging economies and the chinese economy, and i was saying one year ago already that in my view the chinese economy has slowed .own to a gross rate of 4% recently, the economic statistics that were released -- electricity consumption down year on year. railroad tracks it down year on year. the shanghai government reported industrial production down year on year. exports down year on year. the other asian economies to which i travel are mostly flat, no more growth. there is one country i went to recently that is a boom town. it is cambodia. that is a boom town because it
has become a huge laundry shop. >> and you are saying, of course, the shine taken off of the market in china in light of these hong kong protests, but i want to get back to the u.s. market here, which you just said a few moments ago, we have not gone that correction in the u.s. market that you were looking for. >> yes. . >> that it has underperformed the market overseas, but it is still in the fifth year of a run.run -- bull at some point, do you expect that will end as you predicted in november? [laughter] >> yes, that is correct. i think that most people have not made that much money in u.s. stocks this year. some hedge funds have made some money, and others have lost some money. it has been, for many hedge
funds, a difficult environment. usually, when you have u.s. dollar strength, it means it is a sign or a symptom of tightening global economy -- liquidity, which is not been particularly good for u.s. stocks. if i look around the world, u.s. stocks are very pricey compared to other stocks around the world. navy they will go up a little more like in 1987 -- maybe they will go up a little more like in 1987 or march, 2000, but in general, if you take the view of years youeven to 10 will make more money in the american economy, but all markets are vulnerable. all of them. wasou said that facebook pricey, twitter, tesla -- in fact, they have not been good shorts. they all, with the exception of twitter, have risen even more, to record highs.
>> yes. correct. you are right. [laughter] >> so, what happened there? >> do you think they are better value now that they are up? at the time i thought they were already overpriced. if we had this interview in march, 2000, and you would tell december 1999 you said tech stocks were expensive and here they are up another 30%. i would tell you yes, they are up another 30% and they will drop 70%. >> what are the investors missing? >> i recommend to you as a friend go and buy facebook and .pple and netflix and twitter >> and then i will lose my shirt, is that what you are saying? see howhen you will
>> you are watching "in the loop " live on bloomberg television and streaming on mobile and bloomberg.com. i am betty liu. the u.s. dollar rally continues. the greenback extending its longest winning streak in more than two years, rising against all of its major peers on that speculation the improving economy will give the fed more reasons to raise rates. elizabeth murdoch is leaving her father's company for the second time in her career. she is expected to step down from the shine group, the television production business
she founded and sold to 20th century fox. her departure will come after shine merges with core media. the company is behind "the brother" and "american idol." t hasl news site reddi raised money that they will use for staffing and to expand mobile and advertising out. and it is 26 minutes past the hour. bloomberg tv is on the markets. equity futures, you can see, are lower, takenghtly down a bit by the continuing selloff you are seeing overseas, particularly in asia given the protests pro-democracy in hong kong that is railed the chinese leadership. we are on the markets again in 30 minutes. back here in the u.s., u.s. automakers are in focus. september sales numbers just out
from chrysler in the meeting expectation -- beating expectations. ford and gm will be out in the next hour. the big three have been focused on breathing new life into their brand. especially barra is under pressure to shift gears. much of her time with the automaker has been embroiled in the faulty switch scandal and since taking the helm shares have fallen nearly 20%. mary barra is looking to change the conversation with a new multi-year plan she is expected running. later this we are joined by michelle krebs, senior analyst at auto trader.com. are,lle, first off, people kind of, giving mary a hard time because they feel like she has not laid out a strategy and she has not acting fast enough on gm . will we see anything change today? >> well, i think so, and i hope some. i think we should see a tougher
mary barra. she has been dealing with this retail crisis since she started, and now we need to see her focus on the business now and going forward. i think we need to see her draws, lines in the sand in terms of accountability for people inside of the company. >> what will those lines in the ?and look like >> well, you north america, we have had these "we will get to a certain margin" by a vague date. we need hard numbers. there has been vague reference as to when europe will turn around. we need to see some firmness in those dates. they have changed their strategy a lot there, so they need to be clear what that strategy is. >> yes. >> we need to see what they are going to do -- russia is a mess. south america is challenged. we need to see what gm is going
to do in those places as well. the other thing i think she will talk about probably is cadillac and a long-term strategy because dabse have been dibs and coming out the last few weeks about cadillac. >> there have been. i know there are changes with cadillac. we had a screenshot with mary barra and some of things you mentioned about the profit margin and i did not hear you mention this, $39 billion they have in cash and what they will do about that. what will they do about all of that money that they have? >> well, i do not know, personally, but i think we should get some detail on that. you know, how much do the shareholders get? how much it goes to investment in the product? those are the kinds of things we need definition on today. >> the profit margins -- we have heard gm, have we not, say they plan to achieve a 10% pretax profit margin?
michelle, is part of the vagueness that they are not outlining clearly how they will get to that 10% margin? >> how they're going to get there, when they are going to get there -- it has just been a little fuzzy. i think there needs to be some firmness so that there is a goal they get to and we can be assured that they get to it. >> on the recalls, you know, michelle, we spoke to ken feinberg, who is administering the victims compensation fund on these faulty ignition switch problems on these gm cars. i want to play for you, michelle, what he said so far about his relationship with gm and how this process is going. >> i am finding that legitimate claims, claims where people have a legitimate right to file and to spend compensation, those claimants and their lawyers are very effective in gathering
together the circumstantial evidence needed to demonstrate a link between the defect in the ignition switch and the accident resulting in death or physical injury. -- >> and, of course, we're still early in this process, michelle, but do you think it has been a big distraction for mary barra and her managers? >> oh, undoubtedly. this is not how she was going to start her tenure as ceo. yes, it has been a distraction, but there may be some good that comes out of it because, again, there are lines in the sand of what they will accept in terms of safety. clear, made that pretty that that is a priority for every employee. so, if anything good comes out of a bad situation, that should be it. a distraction to the point that maybe that is why
they have not acted as quickly as shareholders would have liked? which is why the stock is down 20%? >> that is it that we still do not know. there is a -- that is it. we still do not know. there is a fuzziness to the numbers and we should get clarity on that today. i hope that is what we will get. >> we will get that in about two hours time. thank you, michelle krebs with auto trader.com. victoryhn scored a big when ebay announced they will spin off paypal. we will look at how influential activist investors have been this year. and one year after its ipo, we will check in on the reit that most the historic empire state building among its properties, and check out how they do it at the empire state really for halloween. callwho are you going to >> ghostbusters
>> well, it has been about one year since the iconic empire state building was basically sold off to the public in a reit put together by the malkin family. they have gone through renovation to attract more companies and become more energy efficient. a few months ago i took an exclusive tour of the new york city landmark that you cannot buy tickets for. it is one of the world's most famous skyscrapers, soaring 103 stories above midtown manhattan. the empire state doping is a staple of the new york city skyline and a building in transition. ceore state realty trust anthony malkin has put one half of a billion dollars into energy improvement, all to make this a high-tech hub for companies like
a clothing distributor. >> i said to the head of the operation, you are offending me if you will not come and look at the building. they came, they looked, and they really liked it. usa is your largest tenant here? >> they are our largest in the portfolio. >> famous to tourists for its sweeping views of manhattan, it is what most people never see that is transforming the new york city landmark. >> when we did the insulation is part of the energy efficiency, the energy efficient elevators, the energy efficient lighting and everything else, will be realized as we did not have to do all of those things. we have plenty of power and the building. we will retrofit instead of replacing. and what do we end up with -- some of the stuff is 50, 60, 70
years old. the original 1931 steam station. we will now go to the 103 four, the true the bpi treatment -- vip treatment. >> tommy what life has been like after the ipo? >> wonderful. it is much more simple. >> the biggest lessons learned? anything. take on if you plan, have patience and stamina. how do you feel being up here, tony? >> i feel like i probably have about 80 e-mails on my blackberry since we have been walking around that i really need to get to. [laughter] >> king of the mountain. that is how you feel when you're up there on the empire state building. it is actually one year from the ipo and anthony malkin joins us to talk about life after the ipo. is it really simpler?
>> much more simple. a lot of effort goes into action rather than effort going into in action. >> what has been the biggest thing since you and i have been walking up those stairs, the biggest thing we were working on -- you were working on your portfolio? >> we have 2.3 million square feet left to vacate, redevelop, and we set higher rent. we reported 35 .5% market to market new leases. we have re-still -- resale redevelopment in a portfolio and we continue to rollout energy efficient spaces for attendance and that is a big attraction for folks coming in, driving higher rent for us. theony, did going public, publicity around it, and just the attention, did it help bring tenants into your property, not just the empire state building, but others, just because it
became that much more public? >> i would like to think so. we have seen fantastic new tenant. the robinson foundation took a full four at one grand central place. macy's. these are all new tenants since the last time we spoke. ofse are all terrific mixes tech,rofitable advertising, media and internet tenants, profitable ones, and and successful traditional companies. we like the mix and increase visibility has helped the portfolio. >> when you say high burn rate companies -- when you think about eager tech companies like -- bigger tech companies like uber and buzz feed getting these huge valuations -- we had the alexandria real estate ceo who
just did a deal with uber to develop a project in san francisco, a 15-year lease essentially they will be joining in on. i want to play for you, tony, what he said about why he went with a company called -- with .he company of uber >> if you take a poll of how many people use them in most of the cities, you would be blown away. >> would you have rented out to a uber? >> at this point, probably not. it is very volatile. to be concerned about new york city or stuttgart, or someone saying no, uber is not allowed to be used in our markets. i do not really care about the valuation. >> that does not bother you. >> that does not bother me. it is the ongoing nature. placesinesses to which we
our fundamental, deeply developed, and have long-term visibility that we can see clearly. >> have you turned away some of these companies? >> a lot. we have not turned away uber, they have not come to us, but our attitude is if they succeed, that is great, but we will not take the risk. >> there is a lot of competition, you know, of course, in the office rental market here in manhattan. rental prices on average around your area, they are lower than what you are seeing on the hudson yards area, let's say, the westside, and lower in the google area with the tech startups. they are paying a premium to be in those spots. on the one hand, you are more affordable, and on the other hand people say maybe that is not where the talent is going right now. come to our buildings because they say there are opportunities to attract and retain the best tenants.
35% market to market over fully , we feel we leases are still bringing our portfolio to the market. they are modernized for the 21st century -- energy-efficient, new elevators, new windows, digital optic fiber to each floor, not just to the basement and than. copper through the building. we feel -- copper or the building -- through the building. we feel people are realizing this. we like our positioning. we like what we can do when we capture these great tenants. >> when i went to visit you -- of course i have visited the empire state building so many times, but you do have to get through all of these tourists. if you have an office space there, how do you make sure you keep that quality for the tenants, and they are not wrangling with the taurus or the superheroes harassing parents and children?
>> the tenants and their visitors have a choice of any entrance, but exclusively, the street entrances are solely for tenants, and within the lobby the 3030 and 34th street lobbies are for tourists. the city council -- we have andy came and dan -- andy and dan working on a costume character, and the aggressive ticket vendor legislation respectively. any to be addressed and it is not just around us. it is a runtime square, rockefeller center. >> it seems to have gotten worse, right? >> i think this city council needs to address it, and i applied -- applaud them for looking at this. >> there are three elbows. 's.-- elmo
>> that is one thing combo when they are doing greco-roman wrestling, you really do not want it. [laughter] >> thank you for stopping by one year after the ipo. tony malkin. the ftc deals another blow to the nfl as a sex the -- as it sacks the blackout rule. chrysler i went better than expected numbers. onll waiting on the numbers gm and ford. in speaking about automobiles, and go to bloomberg.com and look at this sexy $7 million man cave of cars. -- $67 million man cave of cars. ♪
>> and it is official now -- the fcc has eliminated a 40-year-old federal role in forcing television blackout of nfl games when stadiums do not sell out. it is another blow to a league already grappling with low stadium attendance and the fallout from recent issues including domestic violence. the struggle to get fans to that games was something we touched upon with an nfl roundtable -- with the miami dolphins owner stephen ross, the jacksonville jaguars president, and a former ceo at mci worldwide wade in. >> the television networks do a good job of presenting the game, and it is so easy to watch it at home with all of the high-definition televisions, the screens, and all the information that they give. >> right. >> so, as an owner, we have to figure out ways to make the experience that are at the
stadium, and today, in miami, we are renovating the stadium, really making it a new stadium, giving us the convenience, and incorporating the technology that people want today. >> i saw a headline -- "better food options at sun life --stadium." >> bringing food to your seats, we owe it to them. >> there is a cystic that i saw four people under -- statistic 25t i saw that people under years old, they are watching the television with a device in their hand. they are on facebook, twitter, commenting on what is happening during the course of the game. thatwant to be able to do in the stadium as well but we do not have the technological bandwidth yet to do this. >> i want to bring in mark.
you were the ceo of my life stadium, right? >> i was. the issue of having fans leaving the stadium to go at home to watch the games, every league is dealing with that. it is incumbent upon us that we give fans a compelling reason to leave their living room and go to the game. >> right. what is a compelling reason? >> you have to give them a unique and distinctly different bank than what they can have been home and in the process make sure they do not make too many sacrifices. are fantasynfl fans football players, so you have to make sure they are connected. we have made a huge investment in terms of video boards, so we will be able to provide fans with the type of information. we will be able to give multiple replays that only you can currently get at home. so, it takes investment in
stadiums, and a real commitment as well. >> do not forget, there is nothing like being there -- it is exciting at home, but when you are at a game, caught up in the spirit, the feeling of what is going on, it is an exhilarating feeling. >> it is, but dealing with the traffic, the long bathroom lines -- >> these are the type of things that we are looking to enhance the experience so that it is much more enjoyable. >> yeah. >> i think people are taking it seriously, renovating stadiums, and a lot of money has been spent on stadiums, certainly incorporating technology into those stadiums. >> and that is how they're going to try to get you into those stadiums. coming up, another technology company is looking to go public. how the telephone maker is pricing. shares worth more than the swedish economy -- do you think there was a mistake, perhaps? we will have more. ♪
>> today's bloomberg bid number is $617 billion -- that is the amount of stock orders canceled in japan today, amounting to more than the size of sweden's economy. a trading error is blamed. one of the owners was for more than half of the outstanding shares of the biggest automaker in the world, toyota. other stocks included sony. maybe a set finger -- that problem. a fat finger a warning there. it is 56 minutes past the hour. bloomberg tv is on the markets. are slightlys lower coming off of the lows that we saw overnight and the adp report came in, the private payrolls report, a little better than expected. 213,000 jobs created last month. we are on the markets again in 30 minutes. coming up in the next hour, big pharma takes on ebola.
>> well we are about 30 minutes from the opening bell today. you are "in the loop." i am betty liu. futures indicate stocks will open lower. a new report says companies ined 213,000 workers september, the adp report, beating analyst estimates. from therose 19% beating estimate with the big sellers the ram pickup and that jeep cherokee. companiesl ackman's has raised $6 million in amsterdam.
as the u.s. confirms its first case of the deadly ebola virus, a man who traveled from liberia two weeks ago was admitted to the texas health presbyterian hospital in dallas sunday and is now being treated in isolation, as we learned yesterday. chief markets correspondent scarlet fu joins us now for a look at which pharma companies are active in this fight against ebola. >> and active could be a wide range of definitions, they could be leading the development of a drug, or could be involved in the territory. kmr -- a tiny company with a market cap of less than $500 million. it surged yesterday it is up big in premarket trading. i found it was interesting that in spite of around the first
time a case of ebola was aroundd in -- it right the first time a case was reported in march. >> there is an analyst report out. >> yes, rbc capital markets was talking about it. they met with management, and they pointed out that the treatment had been used on a handful of patients, but they do not have to supply on hand for a trial right away. few months.ed a so, what he is saying is that a clinical trial could start maybe later this year. data could come in 2015. may be some form of fda approval could come in 2015, to monetize this they would need a u.s. stockpile order -- a big order. they show that a recurring order could add five dollars to $10 a share. that is one thing to keep in mind. >> that is a big factor to keep in mind.
what about some of the other companies? >> there is a $61 million market cap company, again, a small company already in the works on working on something. all of these names are higher in the premarket trading. i was looking at the most actively traded stocks in the premarket, and a lot of companies, therapeutic, fire pharmaceuticals, they are at the tail end. you get the sense people are jumping on it first and waiting to see what happens later on. >> thank you, scarlet fu. we are starting to get an idea of what oracle might look like post-larry ellison. cory johnson sat down with the on the record, but off-camera interview. cory johnson joins us from san francisco. what did you learn from oracle's new chief? >> she is hilarious.
she talked about the customer-centric notion of oracle, and i will admit that i steered the conversation in this direction, but i wanted to know about her acquisitions because hundredoverseen about a acquisitions from peoplesoft all the way to micro. we talked about the christ -- price discipline. they look for a hole in the product line and they go out and did on things they -- did on things they think are worth filling the whole. .- hole they can always walk away from the deal, and that gives them the ability to be price-sensitive and not overpay for acquisitions. >> we mentioned acquisitions, acquisitions, for but what else did she say to put it in context of the overall strategy for acquisitions at oracle?
>> you talked about other companies are doing, and it was funny. she said the name -- the day she was named co-ceo, this is a woman in charge of one of the biggest companies ever. she achieved this incredible milestone. she is getting phone calls and e-mails of congratulations. her father called her to tell her how proud he is. she sat down in her car, and she thought the best thing that happened was sap bought the software company concur. it was one of the most expensive deals in the history of bira.are, 200 times e that was almost the best thing that happened. maybe tomorrow they will buy dairy queen. >> undisciplined strategy is what i am hearing she thinks of
others. ok. what kind of relationship that she had with the co-ceo mark hurd? >> i will be asking mark heard that same question. for have been copresidents quite a while now, and they have had deleted roles. the company has taken great pains to make sure things stay the same. mark hurd is overseeing product, sales. he the outward-focused diet the company. safra catz continues to do the roles of the chief financial officer as well as manage legal issues, and mergers and acquisitions, as i mentioned. in the case of mark hurd, he has a lot on his plate, not the least of which because the company is going through a dramatic change here. they are going from is licensed software model where they would go out and sell huge chunks of software for very big checks to perpetual licenses, where customers pay on demand.
that is an enormous change for the business model because they're not taking the money upfront. there taking it over time. it is also a big change for the sales staff because they need to be in sus -- incentivize not to commission, but the dribs and drabs. we will talk to mark hurd today on "bloomberg west air co. >> -- "bloomberg west." >> thank you, cory johnson. should you can't just interview with mark hurd later today on "bloomberg west -- be sure to catch his interview with mark hurd later today on bloomberg west. staying with activism, there are calls for microsoft to break up. where do the calls stand not a and now that the ceo is making his own changes? stay "in the loop." ♪
>> well, activist investor carl icahn got his wish when ebay announced they would spin off the paypal business. ebay was not the only company under activist pressure to break up. one company that has resisted the call is microsoft. julie hyman is here. one year ago we were hearing a lot of talk about breaking up. what about now? lot init has subsided a large part due to the changes -- steve ballmer retiring, satya nadella taking over in february, and a couple of quirks help the microsoft numbers improve that do not have allowed to do with either man. we have seen a little bit of improvement, or not as bad numbers coming from the consumer pc market, and then the other is for service and support for certain microsoft operating systems, so those are healthy now. satya nadella has also been
refocusing the strategy of microsoft. he has this so-called cloud-first, mobile-first strategy, where he is emphasizing those offerings and pulling microsoft and to the present day, one could argue, and it will have argued for --nning off xbox or ning, bing.ng off xbox or i was speaking to an analyst who ind satya nadella wants xbox the center of people's homes to that when we move forward into the internet of things, the device will be central and have that capability in the future. t? what about valueac they were proposing the breakup. >> they got two people on the
board, and that victory has meant that some of these calls have subsided. satya nadella's performance also -- shares have it up over the past year or so after being stagnant and flatlining for the prior decade. so, that is quieted some of the calls as well. microsoft did raise its dividend a little more than a typically would have. it is very difficult to know what they might be pushing for from the inside, but we know that externally we are not hearing as much of that breakup chatter. >> thank you, julie hyman. staying on the subject of breaking up companies, yesterday's announcement about ebay and paypal is an announcement of how many activists can buy -- an example of how activists can buy pieces of a company and then push to break it up. is that all they can do? there are high-profile activist that push for the opposite. we are joined by ken squire.
great to see you. >> thank you for having me back. >> i was trying to think of examples because you only hear of thehe carl icahns world saying let's break this company up. havehe strategists often other strategies, often combining companies. with yahoo!, clearly the main tot of the strategy is separate the alibaba and yahoo! japan parts so they do not have to pay $17 million in taxes. burger king, which bill ackman owns a big piece in -- it is acquiring tim hortons, which incidentally used to be part of wendy's and bill ackman, at that point was successful in breaking which was successful for tim hortons and wendy's, but now it is a different strategy.
growortons has to internationally and burger king has expertise in international franchising and in the situation they would be better off together. >> people talk about carl icahn so much. he is kind of the poster child of the activist investor. ken, since you know these guys star boardlk about -- they were called the yorkshire terrier of the activist world. small guys with a lot of bark. >> they've been doing this a long time. jeff smith is the key guy. he is extremely smart, very good at what he does. they have been doing it for a while. >> what was the biggest success? quicksand had tons of successes. aol, -- >> may have had tons of successes. aol, for example.
the sox have been amazing. >> are you surprised they are taking on bigger targets? >> it is easier these days to take on bigger targets, even in a situation like yahoo! where they have clearly lesson 5%. it is easy -- alas then 5 -- because they clearly have a less than 5%. harvard was a professor, robert kaplan, who joined "surveillance" this morning and he gave the reason as to why it seems that the activist investor is the new rockstar in the investment world. this is what he said. >> when you look at the rise of exchange-traded funds, it is harder for hedge funds to outperform the market. i think activism is a new form of investing that so far, by and large, has outperformed, and i think as money managers look for ways to differentiate
themselves, i think activism is here to stay and will probably grow, mainly because it is hard to outperform the equity market, and that is the predominant challenge. >> would you agree? >> i think he is 100% right on all aspects of what he said. it is very difficult to out-perform. activists are not only finding under-valued stocks, but they're the catalyst to close the gap. they are not rely on the markets to raise the value. they are going out there and being the catalyst. and he is right, that is what you need to outperform on a consistent basis. >> you mentioned wendy's. someone associated with wendy's is nelson peltz, who has been an dollart investor after tree. how would you rate his performance?
>> he is an excellent investor, still on the board at wendy's. he is on the board of family dollar -- or he has somebody on the board of family dollar -- one of his partners. that is been a huge success. we will see what happens with dupont, pepsi, and some of the larger ones, but he is the top tier. >> when you go to his office, he has wendy's napkins for you. thank you for joining us, ken squire. coming up, it looks like there will be peace between two companies that are the biggest in their business -- amazon and disney close to settling the dispute. plus, teenaged vampires on their way to facebook. the social networking company teaming up with the makers of the "twilight" movies. have you seen them? we will be back. ♪
>> welcome back. you are "in the loop." i am betty liu. it is 26 minutes past the hour. bloomberg tv is on the markets. in fact, here is a final look at futures right before the opening bell. futures are lower at this point after even the adp numbers came in better than expected, all leading up to the jobs report, of course, on friday. we are on the markets again in 30 minutes. let's count down to the open with the top 10 -- the only stories you need to know about today. scarlet fu and julie hyman joined me. let's start with number 10 and orbitz worldwide. upgraded.as
they have an 18-month price target of $9.50 per share. >> number nine is apple, shifting the focus from iphones to ipads by adding a new gold-colored tablet here the shares have fallen -- tablet. the shares have fallen. iphone, but you put a case on it. >> you are not supposed to. living on the edge. -- americant, the airlines group. that is after the confirmation in thefirst ebola case u.s.. none of the major u.s. carriers fly to liberia.
>> drugmakers are rising -- drugmakers are rising on the report. treat one ofing to the deadliest diseases. kmara.e speaking about te >> will keep an eye on that. number six, general mills. they plan to cut approximately 600 to 800 jobs. they said the job cuts will take place mostly in the u.s.. general mills foresees annual cost savings of up to $150 million party next fiscal year. >> at number five, at american apparel, dov charney might be back, but not as a ceo. the board that ousted him almost four months ago in a public feud is thinking about giving him some sort of new role. --number four, angie's list
shares are surging on news that the company has hired bankers to explore strategic options including a sale. according to "the financial times" angie's list has held talks with potential buyers but might decide not to pursue a deal after all. numberking of deals, three, ebay -- shares falling after a pair of downgrades from jpmorgan and wedbush. the best-performing s&p 500 yesterday, the biggest one-day gain in more than two years. people say that ebay itself is may be in play. >> number two, general motors -- all eyes on the auto giant today. gm is hosting an investor meeting where ceo mary barra is expected to unveil new multi-year financial plans. the company is also expected to release september auto sales numbers in just a few minutes. >> and this is unusual -- we are not looking at a stock for number one. we are looking at the greenback, the dollar, extending its longest winning streak in more than two years, climbing to highs, coming on
speculation that the improving economy will give the fed more reason to raise interest rates. as stocks are opining on this wednesday morning, i want to bring in michael holland, manager of the hall and balanced fund and also the china fund. i know you recently came back from china. we will talk about that in a moment, what is going on in that part of the world, but here, in the u.s., you say this bull market, this five-year bull run will continue because the fed is going to keep supporting this market. the numbers we got out overnight from asia and from europe are all weaker. inflation that you have a situation where mario draghi is going to have an easier road to maneuver now. maybe we should do more. all of these comments have been supported. central banks have given us the
easiest bull market in a lifetime. including reduced volatility because of qe. give the money supply -- the bank said we want asset prices to go up because that's all we can do. politicians are screwed up. proved bears wrong. morning. earlier this he said he was defending his call because he expected stocks to be down this year. he said, look, relatively speaking, the west market -- the u.s. market is relative underperformers when you're looking at these merging -- emerging market economies. >> i'm pretty pleased with my us home. -- one of the most important things has been reduced volatility because of qe . in addition to being supportive
of prices, you reduced volatility. that is ending now. you're getting more volatility. it's been so easy for the last 5-6 years. >> there is a certain companies struggling. ford just came out with their light vehicle sales in september. down 2.7%. fields, you mark would not be surprised by these numbers. >> he's like the football coach drumming down expectations. chrysler came out a few minutes ago. a little bit better. have 16.4 million. that's a big comeback. >> we will wait for gm numbers which are due out any minute now. >> i want to talk about exxon.
if you look at a 10 year chart of exxon mobil, it has trailed behind its peers. exxon has given plenty of free cash flow to shareholders. yet, perhaps it needs to do something more. look at a position targets like bp -- acquisition targets like bp. >> they are the quintessential long-range management -- they've been doing it for so many years. they really don't care about this quarter or today. there tried to figure out, what will be going on in russia or ukraine 25 years from now? the stock has been crummy. >> should they buy bp? >> bp is a mess. ebay -- talking about ebay has been a crummy company in terms of its management over the last few years. bp is also.
it's a troubled company. >> should they buy something? >> they bought xto energy and work. -- and that did not work. they may be making zillions of dollars per unit. they probably will. that will be my bet. you mention ebay and paypal. now that they are going to be splitting up, a lot of people have talked about potential acquisitions. them.unster is one of not the case, is but it does make them more attractive. we believe separating the companies makes them more attractive as potential takeover candidates. one would think that paypal would be the more attractive. >> oh, yeah. [laughter] from a google 2-wooto and
alibaba coming in. are you awaiting that spinoff? >> it's highlighting were apple is today with its new apple pay. this apple pay thing is enormous. whether apple chooses to buy paypal -- they may or may not. the four of us can walk in and go, here's my finger, about. -- i'm out. google knows -- i think paypal is something that won't be a year or two from now. >> he is up on all the latest
i want to bring in michael collins. he just returned from hong kong about one week ago. were things percolating at the time? >> yes. with people in the know -- i've been going over there for 25 years. these people were much different. they've had many demonstrations. they've always coordinated with the people in authority. >> there nothing new in hong kong. these people are saying there is something different about this one. this one is serious. we don't know where this one is going to go. both sides have very strong positions. nation, two systems is being tested here. the history of what's been going on in china for the last 25
years, the government will figure it out. it might be a long time and messy. in the meantime, it's going to be good for places like singapore and other places where people come from hong kong. >> hong kong during the handover contributed 16% of the gdp to china. now, it's more like two or 3%. the city itself has become much less significant to china. it is still a place where companies go to list publicly. they don't do that on the chinese exchanges. the chinese government is likely to prevail over the occupied central movement in hong kong. probably be it will inclined to slow certain economic reforms for now.
you heard a chinese leadership say this as well. what are we going to see? some prettyn with aggressive, tough things. he will slow -- he said yesterday he would. he spoke to the celebration of the anniversary. he is already doing this. he's slowing down the reforms. the history of the people who run the country is that they do meet these things with strength, but also intelligence and discretion. they will get through this, but it's going to be a little messier than anything we've seen before. about securities in hong kong, even their you first dual system where shanghai and hong kong linkup. youn investor in hong kong, can buy up to $3 million worth
of chinese shares. even that is corroding. >> very significant. >> hong kong shares have actually been dropping and shanghai shares have been increasing by 3% and 7% respectively. >> i know you run your china fund in hong kong. thank you so much for joining us. always great to speak with you. tune in on friday. he will be joining us for job stay. we have a great show line up for you. the founder of aol and tom michaud will be in the loop with me on friday. ♪
the sale from $2 billion or do something on the radar of stephanie ruhle who joins us now. what is going to change here for bill ackman? >> just going to be richer. we knew this was going to happen for quite some time. they were initially going to raise $2 billion. 2.7 upped it to billion dollars. it's amazing. bill ackman is such a controversial guy. so many people said he gets it wrong and he stands alone, but he stands alone and if you look at his track record, this guy wins. wheneal is not going to -- you take the market cap of this one fund, it's going to be $6.3 billion. total assets under management, bill is creeping up on $20 billion. he is in the universe of alan howard.
>> it seems like he is rodney dangerfield. he gets no respect anymore. deal, separating fromshese -- whe tim hortons and burger king. >> he gets no respect. this time last year was the robin hood conference. i sat down with bill ackman there and said to him, bill, you chief standing alone on the other side of the trade. what are you going to do? he said, i'm going to wait until the end of the earth because this stock is going to zero. the tide is starting to turn. i also had a chance last year to sit down with david and we are
sitting down again today. he told us exclusively, he saw the bond bubble going to burst. what he thinks about galen, draghi and equity valuations. >> he really got it right when he said don't fight the fed. he timed that very well. and my neighbor in new jersey -- >> is what else he is. a minority owner of an nfl team. what does he think about roger goodell? >> sounds like a great show. thank you so much. here's a look at the other top tech stories on our bloomberg west radar. the studio behind the twilight film will hold a contest. facebook will show the films.
five full-length twilight movies. the war is almost over between his knee and amazon. -- disney and amazon. they're close to settling a two-month dispute. several upcoming disney movies were back on the amazon site. as we kick off the trading day, here is one man who may be a bit nervous this morning. the ceo of the online king of home furnishings, wayfarer. set for its public debut on the new york stock exchange under the symbol w. wayfair.ore about >> they're looking to raise $300 million. they may not be so much of a home name. it used to be 240 different websites. different home furnishing good websites. they combined those and want to
make it more of a household name, no pun intended. >> can they take on amazon? they compete in one of the few areas that amazon really can't. what amazon does is they warehouse their goods and then ship them. expensive. especially when you look at something like furniture where you have couches and coffee tables and bookshelves. amazon sticks with books. sticks with the furniture because they don't house of those goods. they put them -- they have relationships with 7000 suppliers and those suppliers are the ones that hold the inventory and ship them. it's more like a marketplace. >> this ipo means what? >> e-commerce is huge. -- e-commerce is
really hot right now. one investor was saying despite the s&p 500 declining 1.9%, this company is an e-commerce debut right now. >> it defies the weakness. thank you so much. that does it for today. program, dutch tomorrow on the program, how ,t's -- tomorrow on the program another big interview from the paris auto show. ♪
for the month of september. it is 56 minute past the era. bloomberg television is on the markets. let's look at the board. we can show you that the s&p 500 , dow and nasdaq in the red. points.off by 114 outside of equities into fixed the yield and 91 basis points. a lot of people finding u.s. treasuries attractive relative to germany. prices keep rising and yields keep coming down. of course, the stronger dollar has a lot to do with that as well. .he index climbing once again a two-year high for the dollar versus the euro. -- ¥110bove 110 earlier and then treated.
to september,bye which is historically the worst month for stocks and look ahead to the fourth quarter, let's look at what historically has been the case. we are joined by the chief equity strategist at standard & poor's. how did this compare with september historically? >> this one turned out fairly .imilarly i thought it would be a bizarro month or an opposite of what we typically see. not to form, it ended up disappointing by ending down by the end of the month. forhat does that mean october? we tend to think of october asking this terrible month for equities. the reason is because five of the last 10 bear markets ended in october. october tends to be a recovery
month. it ranks number six going back to world war ii. in average performance october is better than the average for all 12 months. obviously, we have the end of year rally in november and december. >> how does that change with the midterm elections? >> october is the best month followed by 2.5% in november and 2% in december. >> talk about the fundamental factors. don't fight the fed. what's beyond that? >> we are seeing an improvement in the economy overall. it is positive. more optimism versus global economic growth. we are still seeing earnings that are expected to be improving third quarter. results are going to start next week. expectations are for growth of close to 7%. that's the bottom line. 7% growth and snp capital iq
estimates usually end up being bested by three percentage points. topline growth about 5%. still seeing an improvement in top line not as strong as bottom line. >> and better than gdp. what about all caps? -- small caps? the selloff could be -- >> they won't necessarily drag them down by themselves. the s&p small caps represents only 3% of the broad 1500. i agree, the valuations are trading at a 50% premium to the s&p. normally, they trade at a 25% premium. risingn't do well in a dollar environment, traditionally. we find the larger caps are the investment of choice for overseas investors. >> take you so much. we will be back in the markets -- on the markets in 30 minutes.