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tv   Market Makers  Bloomberg  January 26, 2015 10:00am-12:01pm EST

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an air in greece. greeks vote no on austerity. the days of creditors demanding more budget cuts are over. >> who will break out of the pack? >> the footfalls were deflated. -- the football's were deflated. as the same thing happen to tom brady's image? >> we are back in new york city. >> it feels good. >> you have to be tired. >> i am hired. >> this is going to make the show entertaining. we are here to deliver you the most important news. the top global business stories of the day. greece on a collision course with the euro area neighbors
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that came to its rescue. greek voters were unhappy with the year of job cuts and tightening that followed the bailout. the prime minister elect made it clear what his top priority would be. >> the verdict beat -- and beyond any doubt. the bailout agreements of austerity and disaster. >> it forced negotiators to -- the bailout. this makes no sense to me. mattel says the chairman has resigned.
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hillary clinton may begin her campaign for president in april. her husband may be involved. part of the strategy she has already approved a preliminary budget and several top level hires. it is never a good thing when forecasters are talking about a storm of historic proportions. that is what is supposed to hit and area from new york to boston. a blizzard may dump up to three feet of snow by tomorrow. airlines have canceled flights. new york city officials are telling residents to stay home it -- to stay home today and
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tomorrow. >> of more on the greek reelection and what they mean for the euro zone. let me begin with this. the newly elected prime minister says the number one objective is for greece to regain dignity. what does that mean? >> greece feels like it is being humiliated in recent years. not just by the economic downturn, the by the fact that every few months out side observers come in, measuring greece on whether it is living up to commitments or not.
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>> what does this mean? how do they have a power to renegotiate anything. >> i do not think they have a lot of negotiating power. the tactic is going to be threatening nonpayment on the public to that and loans they have. that is an aggressive move. they want to move all the debt maturities forward. the lie thing that is brought to the table is he is not part of the establishment, so he can take on the forces which make
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tax collection and corruption a serious problem in greece. the sensor they can buy and to him and regain revenue collection strategies that have failed, that is the one thing he can may be throw at it, but it will be a tough negotiation. >> you wrote this morning that confrontation is in the cards. what happens if greece defaults on its debt? >> i do not think they will stop payment on the private sector stuff. they will go after the stuff that was not and look to renegotiate terms on the loans.
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i think it is a storm in greece but not for the rest of europe. it will be one of the toughest negotiations we have seen in europe. there are hardliners that do not want to see fiscal discipline broken and folks are sick of it. it will be an aggressive set of moves. i do not see how this ends peacefully. there will be a lot of drama. the spillovers could come with spain and the elections. it is a historic moment here. i think it will be a wake-up call for the rest of europe. whether it wakes them up or not, i am not convinced. >> how come the market has had a
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muted reaction? >> i think it has been clear for a while that -- is going to win. polls have shown them ahead. there is a lot of complacency. negotiations are going to be difficult. if you talked to most people they say they will find a way to solve it. there is an assumption of rationality. somehow, they do not know it will be the assumption. >> if there is some kind of adverse outcome, what are the chances that the -- act upon it.
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the unemployment figures are hideous, but they have been making progress. >> one of the things we talked about is euro qe, the buying of government bonds is very powerful and will put stimulus back into the non-greek parts of europe. what mario draghi did makes it a little easier to mess with greece. this story is offset by the qe process. this move was historic and i think it will be the bigger driver of asset prices. you are seeing that this morning. the dax is trading well.
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it was barely a blip in government bonds. the power of qe is going to assert its self. the domino effect you are describing is going to be a second fiddle affect as greece goes through this negotiation. greece would like to say a few do this to us you're going to hurt other people. qe might get in the way of that. >> 10 we speak about this neo-nazi party that came in third? >> it is a big embarrassment for a lot of people in this country that the third-biggest party was explicitly fascist. there was a fear that because they came in third, there could have been a scenario in which if
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they had not been able to form a government, they have this farcical situation where a party whose leader is in prison is given a shot to form a government. it did not come to that, but it is an embarrassment. this is what happens when a country is pushed to the economic breaking point. there seems to be a pattern when you crash a country it creates a breeding ground for extremist ideologies. >> do you want to comment? >> the party formed from an anti-immigration view. greece is on the border. you have a lot of aryans and people coming through the turkish border. you combine that with depression and joe is right. you have a radical splintering. there is a far right in greece and you just pushed it to a
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place that is very dark. it is a sad thing to see, but what we have really seen as the rise of the other side of the radical left. for the first time ever, they are in charge. >> we will be looking to you for more advice on the matter. you will see him coming into the frame, joe weisenthal, in athens. >> we have more to cover on "market makers." shareholders raising objections to executive pay. ♪ plus, the golden boy who has been tarnished. whether the case of the deflated football will hurt tom brady's image. ♪
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>> larry ellison pays himself a lot of money. when you add it up, the numbers are staggering. shareholders have been complaining about his compensation for ages. katherine jackson is a senior advisors for responsible investing. what is the problem at oracle? >> the problem is board accountability. it doesn't seem the board is responding to shareholder needs and concerns. >> do you think larry has the board in his back pocket? >> we have not been able to
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ascertain that. it causes you to ask the question. we are looking for answers. >> our interests as two non-insider shareholders are at greater risk when the evidence of shareholders -- we believe this to be the case at oracle were the founders 26% of the outstanding shares. how is it that oracle is putting their interest before your interests? >> starting with compensation it is typically viewed as a window to the board room how are they responding to the meet with others? the vote at oracle has failed.
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that is a significant vote result. if they had are addressed the issue voters would have voted in favor of compensation. >> you write that one of the things you would like to see happen is oracle to adopt a compensation structure that shareholders can support. what does that look like at oracle? >> it is different for a lot of different people. it is a quantum issue from the outset. it is a step in the right direction, but we are trying to be -- of the board. it is the board's job to figure this atout. >> let's look backwards.
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$400 million over the past five years based on the way stock has performed over that time based on how they have performed, what should larry have been paid over the last five years? >> less. i do not have a number for you. it is not a question of quantifying it outright. the concern is the board is not representing our interests at this moment. what will they do? what will they do when a material issue comes forward? >> want me through that will more time. >> you don't often hear them discuss compensation in their report. you will hear the view that this
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is not a material issue to the company's performance. take that as it is. there are other issues we are questioning. if the board is not demonstrating their accountability and independence to the shareholders today, how will they demonstrate that in the future? >> between pg g.m. and real pen, -- and railpenn -- >> we are not in the minority. we are in the majority. >> collectively, you are in the majority. why not get a larger group together. and -- has raised issues about corporate governance.
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why not get chris to sign your letter? >> we have worked with other investors. the reason we did not get them to cosign this letter is because we have a strong message. we have been trying to talk to the board since 2010. it has been ourselves and real pen investments doing that. we have not received a response. that is why we chose to write this letter. >> the other question that anyone can and should raise, why not just sell the stock? there are other things you could choose from. among them, better performing stocks. >> it is not off the table.
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it is something we are talking about. for us and pgm, the truth is, we do not only invest to divest. we prefer to engage constructively with the board members. we are doing what we consider to be our responsibility and should we reach a point where we feel we can no longer do anything else, absolutely they will consider divestment. >> thank you. >> i like it. >> that is what the capital market is about. >> over time, corporate ceos gained so much power and popularity that people have a tendency to stand down. i appreciate it.
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when we return -- a lesson in economics. the collapse of oil prices is not just about too much supply. we will have that when we return. stay with us and stay warm. ♪
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>> welcome back. a check on the financial markets. the dow industrial making the smallest point move, down just 48 points at the moment. it's move over to greece where the stock indexes giving back some of its seven poor -- 7.4% rally. euro versus the dollar and versus the yen. caching and son -- catching --
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cashing in on some short bets. less than an hour of trading already more than a full day average in the past month. generac surged to record highs after hurricane sandy. mattel reports earnings on friday but announced sales slumped for a sixth straight quarter. the stock is down by 1%. the stock was flat versus the 18% gain annually. d.r. horton a big winner. it is helping to list of their home citigroup calling the results robust.
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coming up on "market makers." anticipation on the biggest snowstorm ever. we will have the latest forecast after this. ♪
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>> live, from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> i want to point out this show is very special during the commercial breaks. we need a camera. it hurts me. >> oil has plunged by more than half. it has stabilized around $45 a barrel. the opec secretary-general sees
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a scenario where crude prices surge to $200. -- doesn't think we will ever see $100 per barrel again. >> more important than oil prices, welcome back, alix steel. we are thrilled to have you back. >> it is good to be back. >> i have been dying to talk about oil. what is fascinating to me the secretary-general is from libya and is saying $200 a burial -- $200 a barrel. there is some kind of internal struggle within opec.
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they're going to want to put pressures on the likes of iran. >> you are such a nerd. didn't imports hit a record high in december? >> in terms of supply and demand. china has been the huge supporter of oil, no matter how low or high it goes. that is no longer the case. imports hit a high but that was to refill the petroleum demand. and that is a complete shift in china and the oil community. >> if chinese demand is not materialize and there is no shakeout, this is what of dula has to say to francine lacqua.
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>> might go to 20 or 25. i think it will stay where it is now and maybe the mix will be clear. we will know exactly how this affects supply. >> not to 25. we may not know for several months where it stabilizes. >> that was a punt to me. >> has and that been this entire case? >> no. the money that was spent was already going to be spent. u.s. production is the highest it has been.
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he said he would be willing to talk to non-opec producers. >> that is crazy. oil is the collection of independent countries. >> he is reaching outside the conference on. russia is in a recession. they have their own problems. they need to sell us cheap as they can to get market share because they are in a recession. >> what will low prices do? those who say they spur demand can there be more demand? >> if you look at china, yes.
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you want to stockpile on lower prices. it is not that oil prices dropped one dollar therefore your expenditure goes up. it is not that simple. you have fuel efficiency. people have bought better cars that don't need as much oil. that is a structure will change. that is not going anywhere. it is not just cars. it is commercial use, power and storage. that is something even i projects will continue through 2016 and that will not change of oil prices are five dollars. >> thank you. >> when we return, one step closer to a run for the white house. chris christie is one of the republicans who showed up in iowa over the weekend. we will find out who else was
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there. stay with us. ♪
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>> welcome back. eight republican presidential hopefuls gathered in iowa over the weekend. they spoke at a conference organized by steve king. mark halperin was there, speaking to many of them. he joins us with his special cohost. campbell, welcome to bloomberg tv. >> i am happy to be here. >> it was a big weekend, not just in iowa, but in california. the koch brothers had an event in which three would be candidates spoke. >> what did you learn about the
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2016 race over the weekend? >> people want to follow that was scott walker even if he is not lovable enough to be the nominee. when i checked twitter, people were declaring he was the republican nominee because he had given a speech that was slightly more enthusiastic. expectations were pretty low going in. everyone had been talking about how he does not have that much charisma. >> it is not who does the best, but it is who improved their position. people like ted cruz did well. i thought governor chris christie did well. they were expected as guys who
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had been out on the national stage. carly also exceeded people's expectations. the thing i noticed, was popular when the activist wing of a party, people were in the arena. they were taking on unions, budgets. people who are not currently in office fighting. >> that room felt like the far white rain -- the far right wing. this is ultimately the challenge. who is giving more of an optimistic view? who has a plan.
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who is presenting a vision? >> optimism is important. ted cruz is going to make a push in iowa and as well as nationally. he came up with a more optimistic speech. just a negative posture person. i think he had a better weekend than most people realize. >> talk about the appearance of --. >> you had rand paul and rubio skipping iowa. there is disagreement on foreign
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policy. on the economy, rubio is impressing people with a more detailed and developed sense of working class and middle class issues. that is where people like christie and brush -- and bush ann romney, if they run, or they will have to be strong. even chris christie cup month it seems like not as new way product. >> ultimately, rand paul has a constituency. he believes you cannot be the republican nominee when you say things like let's give president obama more room to negotiate. >> you cannot think about it as
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one-dimensional or two-dimensional. there is a lot going on. >> a whole year ahead of it. >> a whole year ahead. we will talk more about this and look at some video tape from what happened over the weekend. >> smarter and more interesting than john? thank you. campbell brown, welcome to "market makers." everyone watching will tune in at 5:00 p.m. >> coming up --
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>> he does not like my humor. >> i do, but sometimes it is time to move on. we are going to talk about the man great at passing the ball but is he great at passing the buck? will it affect his image? ♪
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>> a blizzard of historic proportions due to drop as much as three feet of snow by tomorrow. build a blog zero said it could be the worst storm to hit the big apple. thousands of flights have been canceled. they are fell -- they are telling many to stay home because transportation may be curtailed later this afternoon. let's turn to molly for the latest. i have heard many forecast. what kind of snowfall are you looking at right now? >> some snow making its way into new york city.
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what we will see happen is the snow rates increased throughout the afternoon and into the overnight. anywhere between two to three inches per hour falling. this will halt traffic. we are forecasting 12 to 24 inches between here in new york city. the bull's-eye is going to be the west area of boston, where the darker shaded blue is. we are not measuring snowfall in inches. we are going to be measuring it in feet. >> as it moves closer to the target area, is it easier to predict how much snow is likely to see? >> as we -- the storm system is going to be intensifying in the atlantic ocean as we go throughout the overnight hours. as it gets closer, we will see the snow rates increase and for now, this is what we are looking
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at in the new york city area. tonight is when the worst of it will be. starting tonight not only are we worried about snow, but powerful wind and drifting snow. >> thank you. that is molly cochran with accuweather. >> no answers about the fleet -- deflate gate. investigators have not talked to tom brady. instead of talking about the patriots and the seahawks, everyone is focused on the physics of football. i want to bring in pat. he is in l.a. this morning. i want to talk or the impact on tom brady's image. we are talking about the all-american foot wall playing superstar. is all of this going to get --
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it is killing me that that is who he represents. >> he is such a mega stud, he can endorse anything. is this going to kill his reputation? >> the impact will be minimal. at the end of the day, you have a situation where i believe he is earning about $4 million a year in endorsements. he is not peyton manning. there will be some companies that will not go after him because there may be some questions. you heard troy a common heavily doubt tom brady's word. it could impact cam -- it could impact him, but he will not lose everything. >> if you are troy aikman, this is a great excuse for you to get back in the headlines. i was not thinking about troy aikman a week ago. our other athletes going to use
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the situation? >> being one of the main commentators from fox, he has all the attention he needs. at the end of the day, he does have a good image. that will carry more weight and it is not as though if more suspicions come forward they are not going to cut tom brady but i think there might be some companies that might be hesitant to make him a new spokesperson because of this. >> apart from the companies on the friends that may be hesitant to make him a spokesperson, is their impact from the scandal at all? is it going to stop people from turning on the super bowl? if anything, more will turn on the super bowl. >> there is no way to know for sure. we cannot turn back time. you will see people watching
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this game. it will be a fantastic matchup. you have a couple different history making things going on. can tom brady and bill belichick win their fourth super bowl or can seattle win back to back? you have a compelling storyline. >> there is no argument that tom brady could lose fan base over this. ravens fans were wearing ray rice jerseys after we saw a video of him punching his wife in the face. >> you have to put things in perspective. i do not think tom brady will see a huge drop in his q rating. i will say that if there are suspicions that linger, they have to think about the characteristics of their athlete endorsers. i don't think's or under armour will drop tom brady and gisele will not drop brady. there are some companies that
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may not want him as an endorser. >> roger goodell has not had the banner year that tom brady has had. what could it mean for him? >> he has been silent on this. number one, the league has to do their due diligence. the nfl players association will not have the player speak to the nfl until the super bowl is over. they need to have representation present. the other thing that is not making him look good as he has a close relationship with the patriots owner. there was a picture of the two of them at one of their homes. the lack of perceived impartiality does not help the commissioner. >> hang on. they are all homeboys. roger works for the owner. should this surprise us that all? he is only going to be public and transparent to the degree that the owners believe he needs to be.
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if they do not, he is not going to go up against them, why should he? >> part of it is, you do not want to rush the judgment. you want to do your due diligence. there are some that i have spoken to they get to see this relationship. i think that is something that may be influencing the delay. >> wait a minute. in roger goodell's defense, you think there is an argument to be made because he is that her friends or has a closer relationship with bob, that would affect him looking the other way. he will not screw his career because he is friends with bob. >> you can argue he's screwed his career with the incidents earlier this year. >> he is not going to do it again this year. he is on high alert.
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>> you have relationships. there are office politics and some relationships are stronger than others that made it take decisions. -- that may dictate decisions. >> for the time being, he has overcome the ray rice and adrian peterson scandals, what is it i am curious to know you are looking into the future and asking yourself how will this affect roger goodell's career post nfl or the next contract? >> it has sullied his reputation with the players and probably with some of the owners. he is still in position, if the majority of owners had issues with him he would be out. >> we have to leave it there but i have to ask could this affect tom brady winning m.v.p. of the gain? >> absolutely not.
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>> the whole thing works. we will be back. ♪
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x live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> investors sure love the profits. we will be speaking with the ceo of the most successful cut-rate airlines, spirit airlines. >> two to three feet of snow. you can imagine what travel is going to be like. >> and a shakeup at mattel. the replaces its ceo. what is the problem you go people are just not quite -- buying barbie dolls the way they used to.
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welcome to the second hour of "market makers." i'm stephanie ruhle. >> and i'm erik schatzker. snow has been falling. >> i'm not worried. >> for the record, stephanie is not that worried. let's look at the top stories this hour. it's the bulletin. we are seeing a deal that would create the second-largest packaging company. it is a transaction valued at 8.4 billion dollars. the new government in greece is on a collision course with the eurozone. an historic victory for the anti-austerity party. he has now to renegotiate the terms of greece's bailout. at this income, they need creditors to come up with more financial aid. his billionaire steve cohen trying to manage money for outside clients? according to those familiar with
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the executive, he may ask for a ban on outside money for two to three years. : shutdown sac capital advisors last year after that oral charges of insider trading. american sniper dominated the box office for the second weekend in a row. a month after its release, american sniper has grossed $200 million in north america. and if you live anywhere north of boston, this is what destiny is worried about. go home and plan to stay there for a little while. a blizzard that forecasters call life-threatening has dumped -- will dump two to three feet across northeast. >> and uber just announced an emergence -- if an emergency is declared, it will cap its surge pricing. i have an opinion about this.
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i want to know what yours is. >> i know i want to know yours first. >> they are caving to communism. i mean socialism, i got that one wrong stop -- i got that one wrong. it is based on supply and demand. if there is a snowstorm out drivers don't want to leave their homes in queens or brooklyn, or new jersey. if i want a private wide -- private ride and not with my way to the subway, why should they cap pricing? they are getting their heads kicked in by the media. greg it is only the media who is responsible for criticizing uber -- >> it is only the media who is possible for criticizing uber? it's a pr strategy. >> i don't think they should do it. >> then talk to the drivers. >> people use uber like them. they should not have to do this. there is a snowstorm out. there are many people who will
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suddenly want right. this is their opportunity to make more money. just like when it rained outside -- hold on. when it's pouring rain outside and suddenly guys show up on a street corner and they are selling me -- when it's pouring rain and guys are selling me crappy umbrellas for $35, that is supply and demand. they break before i get home that is how it works if i want my here to stay dry. >> i don't think we are arguing here. the ceo of uber can do whatever he wants. he has made the decision this is in the best interest of his company and his growing base of shareholders, all of them private. >> i guess that is my point. >> hootie you have the problem with? let's figure this out -- who do you have a problem with? let's figure this out. >> googler is pushing against the grain. not afraid of regulators and
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criticism. -- uber is pushing against the grain. not afraid of regulators and criticism. and suddenly, i'm going to be a nice guy today because i want to like me. who cares who likes you? flex starting to -- >> starting today, stephanie will use that pink mustache. what i will use whoever gives me a ride home. -- >> i will use whoever gives me a ride home. >> should we change the topic at a >> -- change the topic? >> i guess so. then both on-site the ceo of spirit airlines. he could not make it to the big apple. he joins us from fort lauderdale. lucky, lucky boy. let's talk about how this blizzard will affect your business. how many flights have you canceled? >> we have canceled 22 flights so far. which is a little less than some
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others, but we are obviously watching the storm really closely. we have a product called the weather buster, which allows people to change fights with no penalty. >> hang on a second. the approach you are taking to dealing with adverse weather like the approach -- like the one that is about to hit the northeast is informed by, what good judgment, or the jetblue debacle of a few years ago? >> no, by good judgment. we want to be saved all the time, obviously. we talk about safety all the -- always at spirit. but at the thing time, we understand that weather can affect operations and can affect airport operations. we want every flight to run safely. however, we will cancel if we need to if we do not believe we can operate within reasonable on time and with safety. and we will try to do it in advance so we can notify
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customers, so they are not stuck in an airport. >> why couldn't you get here? were you planning on taking spirit? >> i could have gotten there last night but the challenge was getting out later this afternoon. you will see that a number of airlines have canceled a lot of flights in the airport this afternoon. getting out of new york is the problem. that is the reason we decided to do this remotely, and i appreciate you doing it this way. >> were kind of impact do storms have on an airline like spirit? >> it depends on how many flights get canceled. in general, it should not be that big an issue for spirit only in that a relatively small percentage of our flights operate in the northeast. we have big operations in south florida, dallas, las vegas caribbean and such. it will affect our flights in
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new york, boston, pittsburgh montreal, places like that. but as a percentage, it's not that large. it's a couple days storm, we will cancel some flights, but it will not be a huge impact on our overall p&l stop -- he and dell -- on our overall p&l. >> do airlines have insurance for these kind of events? >> it's very hard to get insurance for these kind of events. it's something that airlines just deal with. unfortunately -- and fortunately, customer seem to understand during these times. more often than not, if the airline's proactive and comedic it well, the customers do not say "the airline messed me up -- if the airline is proactive and communicates well, the customers do not say "the airline messed me up here." >> how much money are you
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missing at go put it into dollars for me. >> we run around a 19% operating margin right now. maybe 10% of our flights go in and out of new york. in terms of dollars, it will not be that huge for us. for the quarter, we will be able to mitigate that with other things. a lot of other travel will still end up happening. maybe flights a week from now will be more full than they might have been. we will not act after the over top -- we will not know until long after this is over. >> but spirit airlines generally is operating in favorable conditions, are they not? press yes, demand is -- are they not? >> yes, demand is strong right now. and in part because of favorable
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energy prices. >> talk about energy prices in particular. as oil drops how much do your earnings increase in sense -- cents per shery ahn: >> -- do your earnings increase in cents per share? >> what happens is, to get prices have -- up based on supply and demand, it's not a cost-based thing. it is demand based. you guys talking about uber made that point really well. during peak times, or when the supply demand is in the airline favor, we will see the benefit of the price go through for the airline's bottom line.
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but in the weak demand times, price drives the marginal cost more. and consumers save some money by being able to travel for lower rates not because the airline just wants to be good guys. i'm not suggesting that. but it is in the economic interest of the airline to fill a seat and that means lower prices may have to be done. >> what you done about pricing since oil prices began dropping let's say, in july. they were at $100 in july. i know you by jeff -- you buy jet fullel. how much have you been cutting your ticket costs? >> we have not cut any fares directly related to lower fuel. but we have found in order to keep our planes full, we needed to discount a little bit more because across the industry people are able to make money
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filling more seats when the oil price is lower. you want to make money selling that ticket. >> i always thought they raise prices when all prices go up. you don't? >> generally, the industry does try to pass through the prices. >> hold on. if the industry raises the prices of the ticket when all prices go up, why wouldn't industry lower the prices of the tickets when oil prices go down? >> i think that is happening. >> not really. >> but it is a supply-demand thing. when there is a lot of demand for travel just like you guys projected there would be a lot of demand for uber today, why can't the prices be up? you made that point. in peak times, the fact that will prices are low is going to help the airline's p&l.
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in weaker demand times, that will drive the marginal cost. that means there will be lower prices for consumers in those offbeat times because it will be better to be full with a lower price than to have an empty seat. i saying it's a bad decision. -- i'm not saying it's a bad decision. i'm saying you can afford to fill more seats at lower prices when fuel prices are lower. >> were not trying to torture you, but the supply and demand thing only seems to work in an environment of declining oil prices. in 2008, airlines were imposing a fuel surcharge and it had nothing to do with supply and demand. >> but the ability to actually sell that price was still function of supply and demand. the airline. we try to raise prices as oil prices increase to reflect that. that doesn't mean that they
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demand -- that the demand curve at that point will be something at that new price. just because fares go of, that doesn't mean there are not other fares going down or staying flat at the same time. overall, spirit's average fare is about $85. five years ago it was about a hundred dollars stop -- about $100. in our lowest year was around $79. if you think about a to point out -- 2.5 hour flight which is our average flight, we try to give consumers the best deal possible, but we try to keep our costs really low. the different between spirit and most of our competition is that we can make good margins on low fares. we do not just sell them to fill otherwise empty seats. >> we will take a quick commercial break. >> when we return we have heard then tell us about the industry.
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what about his airline, spirit? we will be speaking about the airline that people love to hate. >> that is so not nice. ♪
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>> we are back. i'm erik schatzker with stephanie ruhle's. consumers may hate spirit, but they fly anyway. all of cart style has changed the industry model --a la carte has changed the industry model. we are back with the ceo. if there is one thing you want spiritually known for, is it price or something else? >> it is price, price price. customers over malini say that when they decide which airline to lie, price is the number one thing -- customers overwhelmingly say that when they decide which airline to fly, price is the number one thing they look at.
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at spirit, what we want to be known for is the lowest total price to get where you want to go. that starts with a really low base fare. and then a bunch of options. you decide which of those are important and only get those that you value. >> then why go to the effort of doing this huge customer survey to see exactly what they like and don't like is at the end of the day you deduce it's all about price? for me, i don't care of you are going to need blank large -- playing cards and a blanket. i just want a cheaper ticket. >> that's right. not too long ago, the general consumer view were that airlines were a homogenous product and every airline was the same post of a cheaper price did not necessarily mean a cheaper product. but like everything we buy, whether cars or restaurants there are different experiences. customers love low fares.
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sometimes if they are not expecting what spirit is, they get surprised at the fact that we put more seats on our planes, or our seats don't recline or some of the things that we do that allow us to offer those really low fares. we want to be transparent about the business model, too. >> how far away are you from charging people to use the bathroom on the plane? >> we will never charge people to use the bathroom, because the basic idea is committed necessary for your flight, it's included in the base to get. if it is possible for you to avoid the fee by changing the behavior, then we will create a separate charge and lower the ticket price. in my world, i don't see how you can make the bathroom and optional thing. but [laughter] -- >> [laughter] that is a really good rationale. "in my world, that's not really an option." >> how long -- how has spirit
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affected its competitors ability to compete in this world? we seem to be in the post bankruptcy era. an airline bankruptcy every 10 years is behind us. would you agree? >> it deftly has changed a lot. in 2008 the industry lost on most $10 billion. in 2012 the industry made about 4%, but the average fuel price in 2012 was higher than in 20 -- in 2008. the difference is consolidation. eight plus carriers became for carriers with the consolidation of delta-northwest, then united-continental and now u.s. airways. it has resulted in less competition and higher fares for consumers. for the industry for the first time in a long time, really since deregulation the industry is able to regularly charge
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fares that covers the cost of capital. what that has meant for spirit is it has created more growth opportunity for us. we can offer really low fares and it has given us more growth opportunity. we can fly one, maybe two flights a day in a bunch of markets, charge a lower fare doing our kind of business model and a lot of people who still want to travel for cheap that are willing to make some compromises have the ability to do that. >> are we going to see more consolidation? and if so, what kind of role will spirit play? >> consolidation, whether there is more is questionable. you have four really large carriers in the u.s. that collectively sell almost 80% of all of the seats. then you have low-cost carriers like spirit and allegiant that are doing their thing in the middle. -- that are doing their thing. and those in the middle, i think
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the question is what happens to those. jetblue, the middle sized carriers. but i don't think for spirit, it will affect our play. we have an interesting and important niche and consolidation will only help it. >> under no circumstance you are not for sale? >> well, i mean guy everybody is for sale at the right price. if our shareholders are offered a huge premium, what can we do? but our view is that natural growth of our company is the best way to get shareholder return to our shareholders. that is something we are clearly focused on. >> thank you. >> a price for everything. >> we look forward to having you here as a guest host when you can make it to new york city when the weather is a bit at her for -- bit better. >> we will be back in just a moment. ♪
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>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> welcome back. i'm stephanie ruhle. >> and i'm erik schatzker. it's snowing outside, but we need to turn our attention to what is happening in europe. the greek election has come and gone. investors are kind of nonplussed about it. scarlet fu will wrap up the financial markets as they close out the trading day. >> over in greece, trading ended about an hour ago. the asc index is a standout.
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banks leaving the drop there. you can see her radius and national bank of greece -- you can see piraeus and national bank of greece are leading that. you see the rest of europe rallying. that means risky equities like -- risky assets like equities rising. in germany, business confidence rose for a third month. and the ftse, one of the laggards in terms of the percentage side of the game. yet it's still at a four-month high when you look at the ftse 100. let's move on to currencies, because the euro is stronger. but this is after dramatic depreciation in the last couple of weeks against the dollar and the yen and other currencies. the euro versus the yen, member
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it had lost as much as 10% since early december -- remember, it had lost as much as 10% since early december. coming back now to 133. the dow is off some. a pretty small move right now. the new york stock exchange says it plans to operate on a normal schedule. cigna recommending the bond market remain open. not looking for an early close there. the 10 year moving up a little bit. and oil is pretty much flat after the cartel said it's open to talks with outside producers. that may mean shale producers. and connecticut malloy has declared a state of emergency for that state and has imposed a travel ban of 10:00 p.m.
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if you live in connecticut, get home and do not drive. >> moving on, this year's holiday season did not do much to rescue mattel. the struggling toymaker today replaced it chairman and ceo after the company sales slump extended to five quarters and holiday earnings fell far below estimates. can a new ceo give mattel a fresh start? julie hyman has been following the story. is this simply nobody wants to buy barbie and g.i. joe anymore? >> that is part of the problem. you have the executive changes in its market, and then you have execution issues at mattel is self. the generally who is coming in as ceo is just an interim ceo. he has been on the board since 1996 and has worked for several consumer companies, including pepsi. he will just be there for a little while. you have changes in the
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inventory business where many kids are playing electronic games and not with actual toys. you have a rise in competitors like lego, which has grown enormously and has become enormously popular. but you also have the problems with mattel is self. it has not innovated. 20 comes to barbie, yes, that goes in cycles but -- when it comes to barbie, yes, barbie goes in cycles but critics have said mattel has not updated it the way they needed to. >> do you agree with that? >> i am not a consumer of that toy. >> you have two daughters. i grew up with barbie, the corvette the ski house, the whole thing. have your daughters cared about having barbie's? but don't recall him ever talking about rvs. >> did they want dolls of any kind? >> not at this point. they are a little too old. at one time, american girl
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dolls. >> that is a high-priced doll. and there are other dolls of that type. >> what does losing disney mean for them? >> it will be terrible. but you cannot blame this season on the losing of the frozen licenses. that will hurt them going forward. >> you can blame the stock price . >> yes but not the revenue loss of the company has seen. a 6% decline in revenue this holiday season was not because of a lack of cells -- sales of elsa and frozen merchandise. and the ceo had been there since the beginning of 2012, so he oversaw this deceleration the company's business. it has to do with product innovation, merchandising of other products as well and bigger change. i should mention, leave rod, i -- leapfrog, another toymaker came out with a bigger forecast.
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maybe there are also some broader issues in the toy business. >> i get hasbro was working from a position of strength right? when they were acquiring dreamworks maybe. whatever chart you look at whether sales growth chart, or stock chart, hasbro has been taking sales. >> yes, although toys overall have been sagging in the past decade or so. i did see one analyst this morning saying between leapfrog and mattel, you want to be cautious going into hasbro earnings as well. >> thanks, jewels. bloombergs julie hyman. we don't talk about toys often enough. when we come back, there is not much of a calm before the storm. we will take you to new york city's central park. ♪
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this is scarlet fu at the breaking news desk. i just want to reiterate normal trading hours not just for today, but tomorrow as well. this is for all nyse group exchanges. it will be open today and tomorrow. governor cuomo will hold a news conference at noon. bill de blasio the mayor of new york city, will be holding a news conference at 12:45 p.m. and the governor of connecticut will hold a news conference at
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2:00 p.m. he has also imposed a travel ban starting at 9:00 p.m. so that utility crews can get to where they need to get to and clear the roads. >> as much as two feet of snow here in new york city and possibly more in areas north such as boston. i see some snow in central park on the ground, but not too bad thus far. >> that is right. it looks pretty picturesque out here. stand out here for a while and you will start to feel it. all of this ready snow will change rather rapidly in the next few hours. a massive dump is heading our way, and accompanying that blizzard force winds that will cause whiteout conditions. >> we have been hearing from accuweather and other places about how much snow may end up in new york city. what is the latest you are hearing? >> we can expect up to two feet
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out here. different models are predicting different mounts -- amounts. i know the number to be to have a new record in new york city for this time of year would be 27 inches. i don't not about you, eric, but i'm willing to let the record books have this. >> 27 inches would be the record. when did new york city last have that much snow? >> that was in 2003. we've also had other storms in 2006 and 2010. it is january. snow comes. that is not unexpected. what is going to be problematic is not just the amount of snow we are getting but the combination with the extreme wind. that is what will cause a lot of problems this evening and tomorrow. >> people certainly need to be
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careful of the wind. i could not agree with you more this is january and snow comes. i wish people would just deal with it. >> spoken like a true canadian. >> may be. they were all that way in minnesota, wisconsin, and in wyoming and montana. and some parts of the pacific northwest. >> are you saying that in places like wyoming and montana -- >> let's not forget michigan. >> assuming uber were as prevalent in those towns as it is here, i just want to go back for a moment because it relates to the weather. i have gotten a bit of a beat down in the twitter spear. i clearly voiced my opinion that i do not think urban -- uber should have to cap search pricing. if they have to cap search pricing, then should new york city cap told? -- tolls?
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>> i looked into it. i believe they're doing it because of an agreement they made with the new york city mayor a year ago. he is bound by agreement. if there is an emergency declared, he has to cap surge pricing. but what i would like to know did he cave a year ago just after new year's eve when the whole world was complaining that the override on new year's eve cost upwards of $200? guess what, that is when uber says clearly, are you willing to pay for surge pricing? did travis make this agreement last year because he was under so much pressure and getting such a beat down about crybabies on new year's eve? i'm going to be a crybaby tomorrow when i cannot get home from work. >> for this to be a consequence we would have to rewrite history.
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it's a little more complicated. >> i guess people are saying this is uber's attempt at long-term brand strategy. why do they need that? it will work if there is a snowstorm or a hailstorm or a sunny day. there is a car that will show up at my house. >> there is a woman sitting beside me that cares a whole lot about googler. >> no,, i don't. there is a woman sitting beside you that cares a lot about getting to work and convenience. >> is pretty convenient to take the subway. >> you don't ever take the subway. i don't. >> four blocks from the subway. >> is time to go to commercial. >> president obama is in india. he says there is a breakthrough. what do the ceos want? they are ready to read the fine print. ♪
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but big steps are being taken in india, both literally and iteratively. the prime minister broke protocol when he personally met president obama on the tarmac. the two meet -- the two leaders discussed a breakthrough on nuclear. why is this a breakthrough? >> first of all, i think "breakthrough" is probably strong. they are calling it a break because they recognize it has been a major roadblock between the u.s. any idea in the past eight to 10 years. what happened was this. the prime minister of india has pledged that everybody in india will have access to electricity by 2019. there are currently millions that do not have that. they're trying to remedy that through nuclear energy capacity. u.s. companies are absolutely necessary for that. there are two prime issues that have blocked that. one is liability issues.
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companies and suppliers would be held liable if there some kind of accident. his u.s. companies are wary of that. -- obviously, u.s. companies are wary of that. they have made progress on those issues. the big companies, westinghouse electric and ge, they need to verify before moving forward, but positive steps. >> y do you think the president needs to be there? -- why do you think the president needs to be there? >> first off the relationship between the leaders is legitimate. they actually like each other, and there are not a lot of foreign leaders that the president will he gets along with. i think the recognition that the two get along well, and it was a big thing that he participated in the parade today. but economically strategically, and the region from a foreign policy perspective, india is
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essential. and there is recognition that the relationship has not been as good as it should be. and the president is doing something about this. there is a sense in the white house that this is a very big step forward. >> on the subject of civilian nuclear generation -- nuclear power generation, do we have a sense of which companies will benefit the most check request westinghouse electric is probably number one. ge is probably number two. -- will benefit the most? >> westinghouse electric is probably number one. ge is probably number two. india is basically saying to try to solve this problem, they will create some type of insurance pool to pay out to cover the liability issue. that pool right now, officials are telling us is about $120 million. think about the major incident in for good sheila in japan, back -- in fukushima japan
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that cost about $2 billion so far. the insurance pool is a good idea but the size of it does not seem like it's going to hit what they actually need. >> and it seems like the ceos will want to know a little more. phil mattingly, thank you very much. we will be back in two minutes. ♪
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>> that is going to be it for a not so snowy yet market makers. >> tomorrow, it's probably going
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to be a snowy "market makers," and we will be talking about advertisers. what do they get for $4.5 million? that is what it costs for advertising during the super bowl. >> seriously, if you two makes it work with their super bowl halftime show -- youtube makes it work with their super bowl halftime show, it is going to rock advertisers. that is it for "market makers" for today. thank you for watching. >> i believe it is time for on the markets. >> we will send you to the newsroom. x we are approaching 56 after the hour, and investors seem to be shrugging off the election of the anti-austerity party in greece. the focus is really on the weather and how things are going to come to a standstill in a couple of hours with the blizzard expected to hit the
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northeast. this is the smallest point move so far this year. in fact, the dow has only swung 121 point intraday so far. the 10 year yield at one point a 3%. -- 1.83 percent. nymex crude stabilizing up a quarter of a percent at 45.70. let's bring in derivatives. not a lot going on in equities. the victim has come down a little bit. -- the victim has come down on bit yak -- the vix has come down a bit. >> as you said europe's equivalent of the vi has come in
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as well. x there's still plenty of reason to be cautious even with these events past. >> what kind of volatility would you looking at? >> one-month volatility with the recent highs. a broad global measure of risk gsi, that am two, is facing highs. there is encouragement through these events with the bulletproof hedging of recent years. there is room for it to come back in its environment. >> gotcha. we are looking at the busiest earnings week this week. microsoft is down about 2%. it is reporting earnings after the closing bell. what kind of reporting do you see from microsoft? >> microsoft is not particularly interested in earnings.
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it is just about what is priced in what -- right now. total options interest is now at a 12 year low. and with the stock having done relatively well, trades almost 15 times as full-year earnings. not a ton of interest. >> and you've got a tray for us on facebook. they don't report earnings until wednesday after the close. what is your strategy? >> they buy universals all the way out into june. the stock is in the 70 to 80 range along way back to last year. ross anderson covers it for us. we got almost a high on the street a price target of $105. again cannot looking at the june, we want to use a 67.5/87.5 risk reversal. you turn around and use that to fund the 87.5. and the payoff on that stock is
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about $.30. it gives you nice exposure. >> why do you want to go all the way out to june? >> we don't want to be to cute about earnings. but given 35% in the stock, we don't want to be short-term. we think earnings is a nice catalyst to get the stock moving. >> this is a long-term fundamental move. >> exactly. >> jim, thank you so much. that does it for on the market. "money clip" is next. ♪
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welcome to money clip where we bring together the best stories and important people in business news. in politics, the battle for power increased. now for the real fight. greece versus europe. there is a merger of box and package makers. around the world, president obama and the indian prime minister came together in a hug. today's innovation story, the new space race is going where no internet service provi


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