Skip to main content

tv   Market Makers  Bloomberg  January 23, 2015 10:00am-12:01pm EST

10:00 am
>> live from that world economics forum in. votes, switzerland. this is "market makers" with erik schatzker in stephanie ruhle. >> we're live from the world economic forum in dabo swinney:. we need to take you back to new york for one moment. michael? >> for existing home sales, it
10:01 am
is not bad. we were expecting that much. existing home sales have been a problem for the past year or so. we have not gotten what we want to see. we are seeing a much better than we expected number for the month. single-family homes posted a fairly strong gain. the supply of the market dropped significantly, of course this is wintertime, 24.1 months to 5.1. prices will continue to rise. we'll over the $5 million mark. that is good news as well. this will set the stage for reasonable 2015 if we continue. pending home sales have suggested we will. we start off with good news. >> michael mckee in new york city with the latest on u.s. economic data. more coming to you from switzerland.
10:02 am
plus, a special guest. we'll be looking for that legacy of the late saudi king abdullah. and his nephew. we will talk about the legacy of his uncle, and stephanie, answering questions about the future of saudi oil policy. >> let's get your first to guests. he is the managing director and co-owner of the boston celtics. steve miller, the chairman of aig. here we are wrapping up the last couple of days in davos. when we are back in the u.s. everyone is feeling great about the economy. three days into davos what do you think the confidence is like?
10:03 am
>> the united states is doing well. it is separated by regions. the united states has fixed the banking crisis. our banks have been solid for two or three years, and you see that in the performance of stocks and companies. in europe it is more dicey. they have gone into quantitative easing. when you have 19 different countries, it is hard to get a common voluntary policy. this'll work in me short-term, but they have to make changes to make it work in the long term. >> do you believe the quantitative easing will cause of -- will stop a problem we have had for years. >> it is pushing on a string where the interest rates are low enough it is an impediment to investments. there is a lot of structural reform in europe that has to take place before businesses will want to make investments. >> are there cultural obstacles as well?
10:04 am
michael dell was here yesterday. i asked why don't you come to a place like . paguuca davos. he said one of his takeaways that europeans tended to worry a lot. do you think they worry more than americans. that americans are more optimistic and interested in taking risks and that is why the u.s. economy has come out of the hole faster? >> that is a --. europeans tend to be more cautious and are afraid of failure and less likely to take risks. that is a total generalization. >> would you come to davos to learn? >> to meet with investors and find out what is happening globally in terms of growth and
10:05 am
monetary policy. we have 1000 people. we have taken the consulting model. in today's world you need to understand the macro. what is going to happen with monetary policy? this is a hotbed of figuring that out. >> what michael dell was saying about coming here. it is once a year and you have an incredible dose of what people are thinking about, are worried about, and are hoping for. it changes so much from year-to-year. they're worried about geopolitical risks. that is overshadowing underlying good economic fundamentals. >> will it make you change course in any way? after these four days when you go home and make different decisions? >> i just came from a conference with a bunch of technology leaders talking about future. but came through was how much the younger people, the
10:06 am
employees of corporations care about the impact of who you work for on our society. it is about sustainability, environmental concerns -- >> to you by that? -- do you buy that? i hear it all the time but i still see kids becoming investment bankers and working 120 hours a week. >> you live in new york. i think the attitudes have changed. if we don't come across that way we will become irrelevant. >> a lot of talk about india. there is a little bit of a unity and all of the countries with the terror that has happened. the situation in france. i am optimistic that we will work together. to fight the terrorism. there is a renaissance in india.
10:07 am
the finance minister is here. they are pointing toward major reforms and it could be a great investment area. >> i need to take you back to new york for breaking news. i will take you to scarlet fu. >> box has begun trading at $20.20 a share. it is reaching a high during trading of 21 point 02. piercing the $21 level. this was a company that priced yesterday at $14 of piece. it is a sizable gain of 20%. excuse me. it is a 45% increase. this is a small float. 10% of the outstanding shares are trading in the open market. after hedge fund took a big side it is only a 9% float. i'll be speaking with box's ceo levy.
10:08 am
once again, the stock is trading at $20.80. quite a bit at its ipo and the high was $21.02. >> thank you, scarlet. let's go back to the steves. a number of people have expressed concern about the strength of the u.s. dollar. you are active. in your case at aig, in your case portfolio companies. are you concerned about the u.s. dollar? >> we cannot control that. i would be worrying. you cannot control it. we use techniques to hedge and borrow in currencies so we balance it out. the good news about private equity is we have a long-term is. we are not hostage to the today currency moves because we have a
10:09 am
five-10 year policy. >> are you hostage? >> the way corporations deal with it, is on your balance sheet you hedge it. so it doesn't kill you overnight. where you position your manufacturing, if you are a manufacturing business, you cannot change that overnight. you need to make sure you are well positioned and you cannot be too focused on a day today. >> what about the impact of american competitive goods and services in american dollars overseas? >> we have countervailing factors. energy cost. that is 30-40%. as the cost is going down you can still sell products overseas. if he gets too strong it will slow imports -- slow exports. >> what part of your business
10:10 am
are you most build up on this year? >> we have a great young squad. we really stepped back. we are in five or six areas of the economy. long trend terms and tech financial services and payments. as steve was saying the new generation, cell phones are ubiquitous. another 2 billion people having cell phones and being connected to the internet is a huge number that will change the way things are done. it will award companies that have global scale. >> steve, i would ask you a question. i know you have been thinking about it. metlife suing the u.s. government over its designation. aig was summarily designated. if they didn't sue. is that a great idea, or a crazy idea? >> i should not be commenting on
10:11 am
litigation and carried out by a competitor. i won't. we are comfortable with the fact we were designated and that the law was aimed at large institutions. we get a second set of eyes at aig on our case. it is a good housekeeping seal of approval. if the fed is ok with what we are doing in structuring our talents sheet we are fine. metlife doesn't see it that way. we will see how their litigation comes out. >> how much are the nets going to go for? >> the nba is fantastically managed and is a global game. there's a huge upside. i think the nets will go for a very large price. >> the two steves. steve miller and steve paguuca. it is great to have you with us. >> you are watching a special edition of "market makers" davos
10:12 am
edition. >> will be talking about oil and the legacy of king abdullah. stay with us. ♪
10:13 am
10:14 am
10:15 am
>> today the world is honoring the memory of saudi king abdullah who died yesterday after a decade on the throne. his successor is his younger brother. he will continue with the late king's policies. with us on the phone is another member of the royal family. hence please allow me to begin our conversation by expressing our condolences for your loss. i know how much you loved your late uncle. i can say on behalf of bloomberg, that we are sorry for your loss and to our deepest
10:16 am
condolences. >> i appreciate it. thank you. >> your uncle was a reformer. what can we expect from king salman. >>'s mission is not accomplished. they will continue his path. they have been with him for the past two or three years. everything he was doing, they were completely on board. king salman will continue on that path without any doubt. >> if they continue on the path,
10:17 am
what can we expect to see? >> on the political front, the economic front, and the social front there are challenges. they need to be faced head-on. i let these challenges, i believe the king and prince are up to it. do not get me wrong, we are not saying it is easy. especially with the pressure we have. that will put pressure on the saudi budget and our political growth. there is no doubt that the duties and responsibilities that king abdullah and his deputy will be facing. i think they are up to it. >> what you think they will do about oil prices? >> clearly, the price of oil reduced by 50%. it will affect saudi arabia. clearly, saudi arabia has areas.
10:18 am
i've been pushing the government for one year to redo, diversify and establish funds and it activate world funds. i think we are to hear voices of approval to activate that project. that is only one path that saudi arabia can take. there are many other paths that they could take. like encouraging tourism, and the -- and the exhortation of other minerals. there are many things that saudi arabia can do to fill the gap from the reduction of the price of oil. >> your royal highness, do you believe that king salman supports the decision not to cut oil prices? >> prince salman was sharing at
10:19 am
meetings that he approved that decision. king abdullah has been saying that for the past year. when the prince was sharing in the council to approve that decision. i assure you that this is a decision that they are on board with. >> is saudi arabia happy that oil is trading at $45 a barrel? >> there is no way that any country who depends on a commodity that 90% of the budget depends on it, can be happy. since the oil price has crashed so rapidly it is something we must face. it is inevitable. no, we are not happy, but it is something you must face head-on without any hesitation. >> if you're not happy, widely
10:20 am
bit this way? saudi arabia on its own taking over influencing a decision by opec to cut production. that could change the dynamics for oil instantly. why leave it at $45? >> what you said is not very correct. if saudi arabia reduces production by one million or 2 million barrels there could be a small spike in the price of oil. other companies who are desperate will fill the gap. in the medium to long-term the price at $45 will inevitably cause some oil rigs in that state and other places in the world to be an effective and uneconomical. the supply of oil at $45 will
10:21 am
impact us somehow. after that, the fact that china, india germany, and other countries will have economic growth come back and be higher than it is now. these two events will be less supply and more demands though cause the price to go up more. i don't say it will go 200 or above, but i don't think we'll ever see the price at $100 again. >> what you say we will not exceed 100 dollars? there are many countries including iran and russi, that depend on a price of oil closer to $100 or above $100 a barrel. >> remember that iran is not producing for capacity. the five countries plus one would pump more barrels into the
10:22 am
equation. there is another pressure on the supply. the price of $100 plus was a liberation and we will never see it again. the price of $45 or $50 may also be a liberation in the downward trend. i think the price will stabilize between these two. >> so is the decision to maintain opec production and effort to drive marginal production in the united states out of business? >> i don't think it is that explicit. i think the fact that we kept the protection where it is -- if we entered -- if we reduced production in saudi arabia or in other countries other countries would fill the gap. the logic behind that is, yes, some oil rigs and others that
10:23 am
are below the 45 dollars or $50 range would have to be stopped. on economical grounds. >> prince mohammed is now in line to become king of your country. what does that say about saudi arabia's direction? >> king salman has appointed today to be the third in command in saudi arabia. that shows that saudi arabia is in full force. in the old generation, to the third generation. there now the grandsons. i think this proves that saudi arabia is on track to have tranquility, stability.
10:24 am
it is a transition of power in the second generation, to the third generation. >> your royal highness, king ss -- king salman does he have the same passion for the advancement of women in saudi arabia? >> king abdullah, king salman and prince mohammed i know them very well. they are very passionate about it. >> with the exception of emotional distress, will there be any more impacts on the country? >> can you repeat the question? >> with the exception of the personal loss because of the death of the king, will there be any other impacts we should be aware of?
10:25 am
>> i think the transition was very smooth today. we have just buried king abdullah. one hour from here, we have -- we will be going to the royal court to pay our allegiance to king salman into the prince. the king dies, and then long live the king. the transition was very smooth. >> your royal highness when the succession moves to the next generation that you described, prints -- prince bin nayef?
10:26 am
>> we went saudi arabia to be very assimilated in the new world order. we still have some weaknesses that we have to work on. we will say the truth. we have to face political, economic, economic, and social questions. i think that saudi arabia is on track to work on all of these fronts. may with the new generation, and the younger generation, who the prince represents, i think the process can be sped up to our ideal situation. >> prince alwaeed thank you again and we extend our condolences. that was pricne alwaeed bin
10:27 am
talal. >> when we return the liberty global ceo. stay with us. ♪
10:28 am
10:29 am
10:30 am
>> i am scarlet fu at the breaking news desk. the shares were halted from trading in fedex when it fell to $177 and 10 sent. the company is reaffirming its outlook. it says the outlook is continued economic moderate growth. and moderate net benefits from the drop in fuel benefits. this is after ups came out and in the fourth quarter and said that it would not be up to snuff because of the underperformance of its domestic segment. that that expense meant a lower
10:31 am
revenue in profit for the fourth quarter because they wanted to get packages out on time. that it is halted from trading at last check. a check on box the data storage company. it is up high 71% with a high of $24.73. it was priced at $14 last night. we will be speaking with mr. levy and about 10 minutes on his company's decision to go public in the markets after a year of waiting for the right time. >> thank you. we are in switzerland at the world economic switzerland -- at the world economic forum. >> the world's largest international cable company has been gobbling companies left and right. liberty global appears to have its eye on content companies,
10:32 am
not just distributors. here is michael freeze -- michael michael fries. i wouldn't talk about the news we heard last night. in talks to buy o2. would you think? >> consolidation of european companies are inevitable. it is inevitable that it is happening in most cou ntries already. bt is acquiring everything everywhere. we have a pretty big 3 million mobile sub in the u.k.. it is a competitive market. >> does valuation apply to a deal like that, or any other consolidating play. what is it mean for your company? >> mobile stocks are saying and
10:33 am
uptake not because of the m&a activity, but because people think it is hit bottom in europe . it is easing off broadbent consumption on mobile devices, that is escalating. they see blue skies for mobile stocks and operations. the valuation doesn't mean much because we trade at a healthy multiple and a historic high one. and boss content offerings seem to mean a lot. what type of businesses are you interested in? >> we articulated for verticals. sports in core markets, and in some instances free to air broadcast networks to expand our reach. we looked at production companies. we own a company with discovery that makes reality television and scripted series. we were looking at over-the-top assets and programming. we are aggressively begin to
10:34 am
aversion -- we are aggressively moving into a version of netflix. preempting netflix by offering it for free. >> the need for cable consolidation to become global. what is that mean for you? >> we have built scale in europe . our network is in 15 million homes. we 7 million subscribe. our businesses need scale to compete with giants like google. >> do you see yourself competing with google? >> on a level. youtube is a huge part of our traffic. he went to an end date the way consumers need. we need to be bigger. that means bigger markets like europe, and potentially global. a global scale is hard to achieve in our case, not
10:35 am
impossible, but not easy. it starts with national reach. >> was he joking when he said liberty global might by comcast? >> he doesn't joke. he said, why not? we are growing business. i don't think he was serious that he never says never. >> from your perspective how healthy do you think the european economy is? >> our top five countries are doing better than average. we are fortunate to be in countries like the u.k., germany, switzerland, austria, belgium, and holland. we'll see it the way others do. people don't disconnect rod band. that's not the first thing. that piece of their income is important. connectivity is critical.
10:36 am
we are borrowing at very low rates. financing at three and three quarters. this monetary easing helps us as a corporate to borrow at low rates. >> where do you go next? if you can borrow so cheaply. if global consolidation is something that your boss is looking at? where do you go? >> 95% of our revenue and cash flow is in europe. we innovate by expanding our reach in certain countries and by getting into new businesses. b2b. we have a glowing mobile presence. we are expanding into new products. >> but not geographically? >> we are going to vote on a tracker to south america. we think creating a separate stock and watch us do it again
10:37 am
in latin america could be exciting. >> since you borrow at such cheap rates, which you say that those think we are in a credit bubble, you disagree? >> the rates don't look like they are going up. we are a good credit. people like our credit. i don't think we're in a credit bubble, but it is healthy to have access to capital. it is good for industry. that is one thing we are trying to achieve with this program. >> can you see a rationale at any point in the future to consolidate across the atlantic and combine them alone businesses in europe with the alone businesses in the united states? >> we r&a docs this moment in video. we are rolling out a similar video plat warm to comcast. we collaborate with comcast on a cloud-based user interface for
10:38 am
consumers. we need to have common standards and a common video interface to give consumers what they want. beautiful graphics, search and recommendation, personalization. there are benefits to cooperation across the atlantic especially in technology. >> mike, thank you for joining us. michael fries the ceo of liberty global. >> we will be coming back from world economic forum in davos, switzerland. we will be taking you back to new york. the cloud storage company just went public and you will hear from the ceo. ♪
10:39 am
10:40 am
10:41 am
>> welcome back to "market makers" live from the world economic forum in davos, switzerland. the ipo of box is soaring in the new york stock exchange. they started trading in the last
10:42 am
hour. they started at $14 a share more than the initial price range. box has been soaring and it needs to prove it will make money. and whether the increasingly competitive market in cloud computers -- we are with the ceo of box aaron levie in the new york stock exchange. >> 10 months, and your stock is higher than your latest round. you had plenty of naysayers. what do you say? >> we have obviously been building our business for the long-term. we started 10 years ago with a simple mission and we have been developing that mission. we are at a $225 million revenue run rate. we look and feel like a consumer
10:43 am
company and that feels confusing, but we sell to enterprises and help them manage their critical corporate information. whether it is life sciences, a hospital, a media company, or a financial services institution. we handle all of the compliance governance, and security issues. we also build products that make it easy to interact with. >> in 10 months that your financials have been public one sticking point is your cash burn rate. the marketing and sales have been a big expense. 9.4 billion dollars -- $9.4 million of cash burned every month. and do you see a profit? >> that is relative. the vast majority of our revenue is recurring subscriptions. we have visibility into what our future cash flow looks like. we make decisions on how aggressively do we want to spend to make sure we can compete for
10:44 am
new customers? the existing customers grow over time and they stay. we have to go and invest in building better technology and work with new customers. if you think about that the only way that you can work with a general electric or a toyota is if you can show up with a level of sophistication and scale that an ibm, microsoft, or emc will show up with. you have to invest ahead of the curve. that is why we are building a startup. we don't have all of those resources, so we had to build them. when we acquire a customer or begin a partnership that is a long-term relationship that we have where revenue continues to occur. >> do you see profitability at this stage in the game in the future? >> absolutely. >> competition has been a big factor. it has been an interesting couple of years with the google and microsoft coming into the fray and driving prices down.
10:45 am
how are you going to combat that ? what is your key strategy in making box more competitive? >> the companies you just mentioned have storage services they provide. what we sold is anything from storing content and building software that helps you manage secure, search, organize, and scale all of that information. three have an open platform that helps you develop on top of that . as the price of storage goes down over time, that is good for us. that is the base of our infrastructure and that improves the cost of goods sold and the infrastructure cost. we see the pricing pressure from amazon and others as a good thing for our business model. we differentiate the value on top of the storage. the software that goes into organizing and managing corporate data. >> one of the biggest topics at davos is cyber security. being a cloud provider to the
10:46 am
enterprise, but would happen to box if there was a cyber security breach? >> we have operational security, the security of our network, the security of our employees, all of those investments. it is important to realize that the legacy environment that most organizations have, where they have all of their files and critical data on servers on premise, all that has to happen is one breach and then you have access to all the data, we protect customers from those events. he put your data in box you have the monitoring and security controls that help you understand how the information is being used. this is why we are used at major hospitals and financial institutions because we are improving their security and aaron levie compliance in the industry. >> aaron levie aaron levie box
10:47 am
ceo and cofounder. >> thank you. live from the new york stock exchange for on the big day of their ipo. when we come back after the break music and the fight against the disease. we will be here in davos speaking with the ceo of the charity founded by bono. ♪
10:48 am
10:49 am
10:50 am
>> welcome back to "market makers." i'm stephanie ruhle with erik schatzker. the lifestyles of the rich and famous art on display in davos but how much are they really talking about how to solve poverty? michael elliott is the ceo of the one campaign, and organization started by bono in 2004.
10:51 am
you don't raise from the general public. is it because you can roll up to davos and say pull out your checkbooks? that has more impact than standing outside of a grocery store asking for pennies? >> i come to davos every year and i am so busy that it has never crossed my mind to do that. maybe it should. i'm scheduled and slammed from 7:00 a.m. until midnight. i never thought of that. we don't do any retail fundraising. to our supporters, to our individual supporters, we don't want money we want advice. >> but does that mean? >> we want a movement of people putting pressure on governments to hold them to account to with a promise to do to defeat poverty, preventable disease, nutrition, and increasing
10:52 am
happiness. there is a lot of conversation about that in davos because of sustainable depth elem -- because of sustainable development. in time magazine there was a article call the age of miracles detailing the astonishing progress we have made in the fight against poverty and preventable disease. we have half the number of kids who die before their fifth birthday. from 12 million plus two 6 million plus in 20 years. that is astonishing. now we want to continue the progress and make sure we eliminate poverty and preventable disease. >> i heard the same statistics in seattle from bill gates. yesterday his foundation released their letter. easy being too ambitious by saying that in 15 years the
10:53 am
living conditions of the world'poorest people can be improved more than any other time in history? >> his not being too ambitious. the next 15 years will be the best in human history in improving the lives of very poor people. it is ambitious, but is it doable? if we get the policies and the results, and we harness technology. bill is an unbelievable champion in the pace of innovation, new drugs, new seeds. if we harness that, we can do that. >> it appears that every ceo is saying they are moving because they want to be purpose-lead. they want to be socially responsible. are you seeing those ceos and companies getting behind your work? are you seeing a shift? >> that is a very interesting question.
10:54 am
you can tell i'm grappling on how to say no, not really. there's a huge opportunity for the business community for sustainable development goals. to really get the whole muscle of global capitalism behind the sustainable development goal. to make sure the resources are there and to make sure the financing resources are available, and to make sure that we can send technology. the fight is really talked up. so that it is even more impactful. there's an awful lot that the business community could do. next year i have to say to some of these guys, do you remember what you said last year? >> are there good actors? >> there are many good companies.
10:55 am
i'd only guy want to pick losers and winners on tv. but there are many great companies and many great individuals. one great individual that you will see a lot is paul taubman. a true leader on this issue. >> you have these voices behind you. you have raised a ton of money. what is the biggest challenge? >> that governments around the world are looking very tightly at budgets. if you say to yourself, how do we roll back age and get to a position where we can -- how do we roll back aids? and how to make to position will begin see the end of aids. you have governments prepare to write eight figure checks.
10:56 am
without that, without that kind of funding and the anti-retroviral drugs, we would not be able to roll back aids in the way we are doing. i need rich governments to step up and say, guys, our national budgets we are spending a fraction of our government budget -- >> into any governments consider themselves rich? >> norway? i should say to my norwegian friends there the most generous government in terms of its support of global health and anti-poverty initiatives. governments around the world are the time of austerity where they are looking tightly at budgets. we can appear to be more of a
10:57 am
luxury, but we are not. >> michael elliott the ceo of the one campaign. we will be back with more. ♪
10:58 am
10:59 am
11:00 am
>> live from the world economic forum in davos, switzerland this is a special edition of "market makers" with stephanie ruhle and erik schatzker. >> we are live in davos switzerland at world economic forum. >> earlier this morning erik caught up with jack lew. >> we started by talking about the state of the u.s. economy. >> with the market direction it is fine so far. the market seems to be convinced, as it should be.
11:01 am
that this will work. we have been able to design it in a way that brings many people on board. we are happy. >> we did speak with jack lew, but that was an ecb council member talking about the fact that in the wake of yesterday's historic decision by the european central bank to begin quantitative easing the ecb is not done. you can draw from that whatever inference you want. the market is drawing its own inferences and you can see it in the euro dollar trade. the important part, the important points to make that in the background is the reluctance of germany who operate with quantitative easing. yesterday mario draghi declared that quantitative easing is a legal instrument of monetary policy. an important win for draghi
11:02 am
against german opposition. now i guess people like ben feel emboldened that they can take the first step and continue down the road. quantitative easing will run until september at a rate of 60 billion euros a month. >> will it be enough without true structural changes? maybe this will be a positive for the market, but will be a positive for the european economy especially for the peripheral countries that really needed. >> you, it is a pleasure to be here. >> watching the ecb, what does it mean to you on the bank of mexico? >> what draghi said that europe was in a weak position. that they need monetary stimulus.
11:03 am
and that is why they are going to quantitative easing. >> how much more challenge -- challenging is it for people to manage monetary policy at a time when the developed world is deflating and prices are at zero or going down. we have oil at less than $50 a barrel. we have the challenge of a fed tightening coming this year. >> for us, we and we do follow very closely with the fed and the ecb does. the main impact comes from capital flows. quantitative easing we are receiving a lot of capital.
11:04 am
that is affecting our exchange rate and that is impacting inflation. we have to watch it carefully. we will probably get a similar, but more tame affect with the european central movement. >> so mexico will have to deal with capital inflow, again? >> probably. >> how does that make your job more difficult? >> the peso is strong. it looks very strong. we are in an inflation target. our target becomes easier. >> how has the price of oil impacted mexico? >> we took precautions. we are the only country that had exposure in the market. we had been doing it for the
11:05 am
past 15-17 years. this year, we fetched the exposure from the fiscal point of view. it is very unlikely that we will need to do any fiscal adjustments. the balance of payments going to fuel, we have our exports of oil are 12 percent or 13%. most of our exports are manufacturing. mexico is the fourth-largest exporter and producer of cars. we hope with the u.s. recovery and the low price of gas that there will be more demand for cars and our exports. so the u.s. will of helped mitigate the lower price of oil. >> the bank of mexico, at the moment is in a tightening
11:06 am
phase. the inflation print you got yesterday was lower than it. given what you are saying before about how the country is managing the low price of oil and what you expect in capital and close, will you need to change the direction of monetary policy? >> we will see. sometimes you have a very tight environment. certainly if the normalization goes on or starts in a way it lifts off, that may have some consequences. we will have to watch, but our monetary policies with respect to the u.s., which is our main trading partner and one of our closest relationships. >> you said the peso or remain under control. would you see it rebounding? >> you know we have also
11:07 am
undertaken important structural reforms. one in particular in the energy sector. that can be a huge generator of capital influx. if that being financial capital influx it will be in this sector. one tickets going -- wants it gets going, it will be executed and we could see more capital. and then the peso will strengthen more. >> mr. agustin carstens you ran for the job as the managing director of the imf. madama guard -- her term expires at the end of 2016. will you run again? >> it will allow a competitive
11:08 am
environment to get the position, i would do so. if the i for europe and the world bank for the u.s., if that can be eliminated -- >> and you believe that is an unwritten agreement? it sure has been in the past. >> do you think she has done a good job? >> yes. >> would you have done anything different? >> that is a difficult question. i think she has done pretty well with the circumstances. >> imf, is it as effective as it was under dominique? >> the imf has been facing difficult times.
11:09 am
more difficult times and difficult challenges. i think for a long time the imf thought the crisis was over. they were wrong, and we were all wrong that the prices which often advanced. >> so is the challenge to be effective as relevant? >> it is a very relevant organization. it is the only global institution that brings all the countries of the world together for financial issues and microeconomic issues. it is a good place to coordinate. i think we're in a world where more of the nation -- were more coordination is necessary.
11:10 am
i think that is the premier place to do that. >> thank you for your time. mexico central-bank's agustin carstens here with us at the world economic forum in davos, switzerland. >> the marriott ceo when we return. stay with us you are watching a special edition of "market makers".
11:11 am
11:12 am
11:13 am
>> first bloomberg. >> welcome back you are watching our live coverage from the world economic forum in davos, switzerland. we need to bring everyone up to speed. this is the bulletin. the top stories. alix steel is in new york. >> welcome back. >> i cannot wait to see you back in new york. mario draghi's $1.3 billion qe plan was a big surprise for investors. an executive board member says the bank may not be done.
11:14 am
he said it could be expanded if it does not have enough of an impact on inflation. here he is talking to francine lacqua. >> that is the mandate of the ecb, what we should achieve. having a perspective that perspective goes back to the percent in the terms. we will have to do more for longer. a revision of the program. it is open-ended. it is intended to last until september 2016, when we will reassess and see if it is enough. >> global stocks rallied on that headline. higher prices made it tough for this first time buyer to find houses. for all of 2014 existing home sales fell 3% from the year
11:15 am
before. shares of cloud storage company box is soaring. it has risen 70% this morning. it is the first ipo by a company that helps businesses store and access data on the web that is set up through on-site computers. shares of ups are getting hammered as much as 9%. the package carrier said that preliminary 20 or teen were lower than previously forecasted. u.s. blames a weak u.s. market and higher cost during the -- ups blames a week u.s. market and higher costs during the holidays. mcdonald's is cutting out menu items and adding customizable burger options to fight a sales. back to. >> a recovering u.s. economy is great news for the hotel
11:16 am
industry. we want to talk about that and more with on he sorensen -- with arnie sorensen -- with arne sorenson the ceo of marriott. >> europeans are hopeful. are you, when you look across the globe, where you most excited to be? >> the u.s. is very strong, it is home, and we have 75% of our business there. last year we signed 100,000 new hotel rooms, 100,400 to be versailles's. that is 650 hotels, 2 a day. >> you think the u.s. economy is picking? -- is kicking. >> i think it is strong and building strength. we'll have to see what happens with cheaper oil. >> what does that mean for your business? people fly more? >> people fly more.
11:17 am
we don't know if airliners will come down in price or if their profits will go up. what happens with cheaper oil for the economy as a whole? does a good people to spend more because they are no longer spending it on filling up their gas tank. i think the answer is yes. >> what about the plummeting price of the euro? >> it is positive and negative. i don't think it will amount to much. it will be cheaper for americans to come to europe and for the rest of the world to come to your. >> what about the europeans? >> it will be more expensive. those things offset each other. >> the hotel business got competitive, but now we are looking at china and is saying there may be a slowdown. what does that mean for you? >> our industry is better set up
11:18 am
at the most. the chinese are conducting a massive experiment. consumption includes travel. the chinese are trying to drive chinese people to travel. >> that works for you. >> 100 million on chinese trips leaving china. the chinese government once that number at 500 million. >> what about india? >> there is a sense of optimism. with the election. i think he has his hands full but he seems to be broadly supported and driven to make the place better and easier to do business with. i'm going to delhi tomorrow and trying to get a sense on the ground of the optimism in depth. we have 20 hotels there and 40 or 50 in the pipeline. india is a place where it tends to take longer to go from
11:19 am
assigned hotel contract to an opening. infrastructure challenges are significant and there's a bureaucracy element. at least the optimism is there. that is encouraging. >> are you thinking about cuba? >> i would love to be there. absolutely. >> is that a possibility? >> we are not permitted to be there yet. the steps the white house has taken does not allow us to get in there or talk about having hotel. >> do think others in the industry feel the same about cuba? >> i don't know. i was at a dinner the other night with u.s. bankers and they joked about whether or not there were significant banking opportunities in that country. it is a market. it is near the united states. >> i want to go there. you want to go there. >> i have never been to cuba.
11:20 am
from the travel perspective i think a lot of people thought that havana was once a great destination, wouldn't it be fun to go. >> can we talk about the wi-fi blocking? where do things stand? >> this is a frustrating story. it has been taken on a superficial level. therefore it sounds horrible. as of january 15, wife -- wi-fi is free to it either companies. you can join marriott rewards for anything. wi-fi is free if you want it for free. we are making progress to get what customers want, to not pay for wi-fi. we acquired a hotel not long ago. before we acquired it someone was jamming a wi-fi signal in a conference room which got us into hot water with the fcc.
11:21 am
we did ultimately discover it and stop it. there was a concern that in a conference room, say that bloomberg has a conference in one of her hotels. they have 1000 people. some of pulls up their wi-fi screen and it says bloomberg conference. if that was done not in a sponsored way, people could be at your conference logging on in putting passwords, other information, and have that taken from them. that is what this is about. >> so it was a security issue? >> it was a security issue. there are laws. we said to the fcc, this is what we are worried about. you tell less what we can do.
11:22 am
that gets translated into marriott is blocking wi-fi signals. everyone assumes that it is because we are trying to get you to pay. but we are giving it away. that makes it frustrating. cyber security is a big issue for everyone. in this instance it is about cyber security for our group customer than for marriott. our marriott employee is no not to log on to that site. they would use our own network for communications. whether it is wired or wireless. >> we have to talk about the geopolitical risks. every ceo is talking about what they fear most. for you, what is the biggest concern? >> in a risky world that national borders get heavier and taller. an event like in paris. a tragedy, not done by travelers but by residents, but nevertheless one of the first instincts is what can i do to keep people out. to make sure that anyone coming
11:23 am
in will not pose a risk. immediately, that means the borders are going up. that traveling is getting worse. that could implicate trade, and implicates travel. actually, we think we enhance security i have been countries share data. so that they can identify those few people that pose a risk and allow the rest of us to travel. people want to travel. it is unfortunate, but that is the kind of risk we are worried about. >> thank you for joining us. always a pleasure. especially when we get to talk in davos. the ceo and president of marriott, arne sorenson. >> stick around. ♪
11:24 am
11:25 am
11:26 am
11:27 am
>> coming up, greece on the brink. voters are ready to fold in a government close to anti-austerity measurements. ♪
11:28 am
11:29 am
11:30 am
>> live from the world economic forum in double, switzerland, this is a special edition of "market makers." >> welcome back to "market makers." >> we are live at the world economic forum in switzerland. >> the sun has set behind us. the european markets just closed. it's freezing here. stocks had a good day on this side of the pond. let's look at what is driving the rally. since we are here with our european compatriots, we drag them out here. >> francine lacqua is here. [indiscernible]
11:31 am
>> john, talk to us about these markets. >> mario draghi the last two days it is been crazy. the dax record highs. remarkable stuff. drops of 10, 20 basis points across the eurozone. the euro a big drop the last two days. it has been remarkable and historic, and off the back of a big ecb meeting yesterday. >> who did you speak with that is giving us reason to believe that the ecb may have more up its sleeve? >> i spoke to one of the executive board members. he mentioned it was unfair we already asking a year from now. he did remind us that it is january 2015 and he's talking about what the ecb can do and september 2016. i said if what you are planning doesn't work are you going to
11:32 am
put more firepower? he said yeah, we will have to do more. >> if we have not achieved what we want to achieve and what we should achieve because that is the mandate of the ecb, which is that inflation goes back to 2% we will have to do more or do it for longer. it's not a revision of the program. it is open ended. it is intended to last until september 16, and then we will recess. -- reassess. >> is saying let's see. >> they're both saying the same thing. that is really how the ecb has beaten expectations. the fact that they have not cap
11:33 am
the program you're hearing the word open-ended from two central-bank governments and one from the ecb -- >> why because that underlines the message they will do whatever it takes? >> i ask the italian banker if he said he will do whatever he takes and he said well, it's not that, but it is our job. >> and may actually deliver? -- can they actually deliver? he said they are talking about buying 60 billion euros a month. he said i'm having trouble buying $200 million in a day. even if it materializes, you will drive the places down to the point where it does become a pushing on a string issue. >> the argument is there. >> drives the prices up and the yields down. >> they are trying to drive the euro lower, and it's working.
11:34 am
>> people will migrate out of euros into dollars. >> it is an export story. spain, italy, france, they make stuff. if you devalue it becomes cheaper to sell. reading between the lines it would make sense. >> isn't the only story in europe right now we need to take -- it isn't the only story in europe right now. we need to take a look at greece. joe wiesenthal is in athens ahead of this weekend possible election. let's listen to what the current greek deputy prime minister says is at stake. >> the majority of the greek civil society accepts the idea of a european country and the euro as the common currency is something that is very friendly for the big majority of our
11:35 am
nation. >> there are concerns of the plan to write down debt. what is the opposition's defense? >> the point that he made there is absolutely correct, there's very little appetite to ultimately leave the eurozone. even cerise, which is viewed as a fairly radical party insists they want to stay in. the assumption is after the election assuming cerise a wins they will be able to manage negotiations manage an easing of greece's debt burden that does not result in greece leaving the eurozone. >> the question is how are the tensions going to play out -- if syriza turns to the rest of europe and says you got to give us more breathing room and runs into opposition from the voices
11:36 am
of a stereo, how does that play out -- of austerity, how does that play out? >> that is certainly a risk. it seems unlikely that greece will leave the eurozone. there could be -- greece doesn't have the money. people think there is a 20% chance. is all true -- there's also an interesting dynamic at play in the election. if syriza is forced to be in a coalition government with a smaller party, that could give syriza the pretext to ease off on the rhetoric little bit and that could open negotiations. >> voters will think the polls on sunday. you have been walking the streets. what are you actually hearing? >> clearly there is way more support for syriza and there was in 2012. i was also here then. there was much more fear back
11:37 am
then. the eurozone crisis was generally more intense. now it is frustration and fatigue and anger at the current government. a lot of people that would not have supported syriza three years ago will support them now because they want a change. >> you may know the francine lacqua and john farrell are sitting next to us. you have been talking to people about what would happen if syriza wins. >> the big thing is the election outcome. on the other hand, the big deal is the discussions over the bailout program. over the last couple of days i have spoken to the dutch finance minister, spanish economy minister, and they said the same thing. they're willing to make the debt burden more bearable. they're willing to expand maturities. are they still talking about that in athens right now, or has that dissipated somewhat? >> it is always a risk.
11:38 am
you never know how the negotiations would go in the event that syriza wins. i do think there is not that much fear of it at the moment. what you are saying there -- people believe that somehow something can be negotiated. obviously you heard from the germans. they say greece has to stick with what it previously agreed to. that is the rhetoric they will use before they negotiate. once the actual discussions begin, there is an expectation that an agreement can be reached. >> we are looking at the economy, but it is also political story. if they go to extreme, it puts in jeopardy spain and france over the next 18 months. >> francine, john, you will stay with us. we will have more from joe. he will be here all weekend long. "market makers" will be back in a moment her it i want you to see this. >> -- moment. i want you to see this. cold. >> you want me to feel sorry for
11:39 am
you? >> we care that much about you. that's cold. ♪
11:40 am
11:41 am
11:42 am
>> u.s. stocks are near their best levels of the session. this is intraday chart of the s&p 500 trade with open lower and basically never turn back. the low today was right here when the s&p was down about 10 points. the s&p 500. it's decline after the ecb executive board member told our francine lacqua that the ecb would extend qe if the impact on inflation is not sufficient. that would be down the road. these comments push the s&p 500 off its lows. the quote here was we will have to do more or do it for longer. we are now only down by four points. for the holiday shortened week the s&p 500 up almost 2% among the markets first weekly gain in 2015.
11:43 am
some of the big winners are twitter, up for a fifth straight day. netflix shares also at a three-month high. earnings earlier this week indicated in the company is doing well in its expansion plans overseas and in particular , investors like the projections about internet to growth -- international growth. coming up, eric and steph will share the best moments from the world economic forum. ♪
11:44 am
11:45 am
11:46 am
>> welcome back to "market makers." we are sad to report that it is time to wrap up our demos coverage this year. let's take a look at some of the highlights with the three members of our all-star european team. francine, let's start with you. >> we are sad, but we're happy to get out of the cold actually. had an amazing three days, thanks to mario draghi and the
11:47 am
historical qe being pumped in. today we had a great interview with the japan central bank. you have the ecb going one way. you have japan going one way. and the opposite direction, you have the u.k. and possibly the fed. i asked him whether that was problematic. he said no anything they can spur growth in europe will help his economy. let's have a listen. >> the action by the european central bank growth could be accelerated, both of them would beneficial for the economy. we welcome this action by the european central bank. >> 90% of people here thought it was a great idea that the ecb has done this. there's always a 10% that doesn't. that 10% generally has a german
11:48 am
accent. the bank boss leading the charge in terms of saying this is not a good idea, this isn't going to work. he was pretty clear in the fact that he thought this wasn't a good idea. >> a program that focuses on buying nonmarket [indiscernible] does not address the problem. it addresses an issue of market access and funding costs for sovereigns you can do many things. sovereigns don't fund small medium price enterprise either. >> we did overhear a banker look at him and say -- he was the favorite to replace the previous president of the ecb. they said had you been in charge, this would not have happened. >> even though so many people supported it and thought it was the right move, dated not necessarily think it's going to work. many people thought why hasn't it happened already. >> we are talking about the ecb.
11:49 am
my take away from davos has been the overwhelming consensus that the u.s. economy is standing alone and is going to outperform. when i listen to that panel, not everyone believes that not everyone thinks this is the year for the first federal rate hike since the financial crisis. >> what you do have coming from the american contingent is a little bit of moral authority, frankly. i wonder whether it rankles with the europeans. >> never. >> what were did you just use -- word did you just use? rankle. >> we heard some of that from steve schwarzman, david rubenstein. not overbearing, just this notion that the europeans are taking -- at the very least acting too late and possibly not bringing big enough guns. let's listen to jack lew, the
11:50 am
treasury secretary talking about what qe means. >> europe has been slower to pull all the levers into play. what we have been saying consistently is in europe you see all the levers as well. they need to use fiscal policy, monetary policy. they need to do structural reforms. in any country, overreliance on one tool puts more burden on it then it should have. all the levers have to be used. >> jack lew more or less saying the europeans need to get their act in order. >> every time he comes over here he basically comes over and says this is what you guys have got to do. i love doing this. i love this moment. i look back to ben bernanke he and the amount of money, $300 trillion. think about how many guys -- laws you guys have passed.
11:51 am
a lot of people in europe are talking about us printing money and doing the bond buying at the ecb. the german approach about how that would mean people lift off the pedal for reform is a real argument worth having, one worth having at the u.s. federal reserve and denver nike over the last four years has been the only game in town in the u.s. >> that is your take away? >> when they come over to europe and preach about how many changes europe needs to make they look at the u.s. and wonder -- [indiscernible] >> jonathan, you're right. the europeans did such a great job recapitalizing their banks. [indiscernible] >> that is what axl -- axel w eber's point is, that is what they did right, that is what the europeans have done wrong. forget about qe, it's all about the bank. >> the europeans have 19
11:52 am
countries with 19 governments. they don't agree. it's difficult. >> thank you so much. francine lacqua,, john farrell. >> thanks for watching "market makers," davos edition. ♪
11:53 am
11:54 am
>> louvered television is on the markets. let's check out how financial
11:55 am
markets are trading. they had settled down after the european central banks announcement yesterday, a full-blown $1600 a month of sovereign bond purchases to begin next month. you have the dow industrials off by 1/3 of 1%. euro extended its weakness earlier. oil erased its gain. the new king of saudi arabia said he will not change the country's oil policy. let's put it all together. joining me for today's actions inside is a derivatives strategist at mkm holdings. we got a bounce yesterday in asset prices but it has comp down today. >> -- calmed down today. >> it remains an anonymous. -- anonymous period for volatility.
11:56 am
even better euro stocks index, euro equities up 12% since the beginning of the year. if you look at v2x they are down from recent highs. current levels still a bit worrying. when you look across you mentioned the euro, pressure on the qe. really have to focus on the greek election this sunday. euro implied ball until it the above 12.5. we went to remain cautious into next week. >> you see a lot of caution lately. how do you think trading will look this afternoon heading into the greek elections? are people going to want to be short? >> potential you will see some hedges put on. a big move up yesterday. a down move, but arguably some stability. people want to put on a little bit of tail risk into next week. some of the biggest trades that went up today in vix was an opening buyer of february 14
11:57 am
puts. a big position betting that implied volatility is going to be lower over the next several weeks. >> we are seeing plenty of volatility in the package delivery companies. ubs shares are plunging, suffering their biggest decline in nine years -- ups shares are plunging, suffering their biggest decline in 9 years. you are saying you saw a lot of volume before this announcement came out. >> ups stock down as much as 10% on a fairly severe miss but leading up to this announcement the option markets seem to have had this one right. it was particularly steep relative to prior quarters. also, put call open interest had lifted over the recent weeks. positioning into this print was a more to senses. >> we saw activity and rival
11:58 am
fedex. >> fedez halted briefly -- fedex halted briefly. >> fedex has resumed trading but it is still down. $3.88. the company reports earnings on tuesday. it is down about 3%. what are you looking for? is this that hinged on results -- bet hinged on results? >> yahoo! will be about the structure of the company going forward. on one extreme, it will be distribution. and it is stake in yahoo! japan. if you add up those two stakes it is more than the market cap of yahoo! stocks right now. a lot of that dependent on the tax treatment of that distribution. what we want to do here is a short-term trader looking at next week's expiration. implied volatility is around
11:59 am
70%. we want to just take in some of that premium that is out there. we want to sell the -- >> 53 calls, right? >> we want to sell the 48 strike puts. it's a struggle. you are taking what equates to 3%. this will not be the final conclusion on what will happen with the structure of you who. you can pocket that 30%. >> it's a way to get you over the hump of results. jim stugger, thanks so much. ♪
12:00 pm
>> welcome to "money clip." i am pimm fox. here is the run down. in world, greeks get ready to vote. say goodbye to the abercrombie & fitch sixpack. the aging of the teen retailer that is coming up in shop. the goldman sachs chief executive is feeling pretty good about 2015, we think. haley barbour is talking politics. is make going to run, or not?


info Stream Only

Uploaded by TV Archive on