tv In the Loop With Betty Liu Bloomberg February 4, 2015 8:00am-10:01am EST
the opening bell. we start with nouriel roubini. his take on central-bank policy is going to be for almost nothing if we do not get demand up globally. one of the biggest power companies in the united states out with their earnings this morning. what the ceo sees in consumer demand and business demand and why their power plant is being delayed again to the tune of hundreds of millions of dollars. what does that mean for nuclear energy in the united states? a big takeover in the office supply business. staples has agreed to buy office depot in a deal valued at $6.3 billion. investors pushed for the deal. shares of disney up almost 4% of premarket trade. the movie "frozen post quote get some of the credit.
sales earnings that beat estimates part of that is because of parents buying frozen gifts for their kids. disney is preparing to come on with its first star wars movie this year. accompanying theme parks are ready to cash in. >> we have big plans. our engineers are hard at work drawing them up. i'm sure we will be ready to go doublet. it is safe to say, you will see more star wars at disney in the near future. >> disney also reported stronger growth in movies. unexpected good news for sony. the company is trimming estimates for a foot -- full-year loss by 26%. strong holiday sales of the playstation for gaming console. growing demand for the image sensors used by smartphone makers. sony is in the middle of a
restructuring that will focus on games, my natural services and content and getting over the hacking -- the hacking scandal from last year. a plane crashed into a river moment after takeoff. dashboard camera as you can see captured the scene moments before the crash. this dramatic video. 23 people were killed. more than 20 others are missing. the plane's fuselage is partially submerged in the river. china's central bank is trying to jump start an economy growing at its lowest rate since 1990. lenders must set aside as reserve to design more -- designed to put more liquidity. back in the u.s., a stock that is in focus is gm. the automaker reported earnings
above wall street estimates. boosted their dividends by six cents. delivering it strongest january sales gain in over seven years of over 18% in january. the stock is one of the most active now in the premarket trade. chuck stevens joins us now with more on the outlook of gm. matt miller is also joining me. chuck, much of what people say about auto sales for the last several months is whether cheap gas is juicing up the sales, particularly in trucks. how much longer do you expect that automakers will benefit of cheap gas? >> before i answer the question specifically about gas, looking at 2014, great results. a strong year from our operating performance perspective. led by north american and chinese markets.
we expect in the united states for this to be a tailwind as we go into 2015. we expect to take advantage of that as we head through the year. >> you mentioned china, which has been a huge market for gm. we had this news out at the chinese government continues to add more stimulus to the economy. how worried are you that there may be a downturn in china? >> we expect growth in the industry in 2015 but we are monitoring it closely. growth slowed at the tail end of 2000 14. overall, we expect the industry to be up at 5% and 8% in 2015. we want to take advantage of that with growing revenue and improve equity income. >> let me ask about business in the u.s.. we are seeing margins that were 8% at the beginning of the year. over 9% your the end of 2014. your goal is 10% in 2016.
is that going to come early? >> we are on the path to 10% margins. and you look at north america in 2014 and exclude the impact of recalls, margins were just under 9% for the year which is up 110 basis points. again, very much on path to 10% margins. >> the dividend you raised as well. a few investors i'm spoken to have noted a lack in dividend growth as the reason for the underperformance of the stock as compared to its peers. gm, down about 6% over the last 12 months. toyota is up 15%. is this going to give the stock the boost that a lot of analysts say it deserves? >> the announcement today is consistent with our stated objective of a strong dividend underpinned a strong business
performance. we announced it in conjunction with our 2014 earnings because of the underlying performance and our expectations that in 2015 we will see better overall profitability and better margins across the business. this is consistent with our stated objective of returning capital to shareholders to a growing dividend. >> earlier this week, we had ken feinberg on who is administering a victims compensation fund for gm. he noted that they so far had received 4100 claims. they paid out about 130 victims. they found 51 f's versus the 13th officially that gm has found. do you have a clear sense of what the ultimate payout and numbers will be on this compensation fund? >> at the end of the second quarter, we booked an estimate
of the potential obligation associated with this of $400 million. we're not changed our view. we still expect the overall cost of compensation to be in that range of $400 million. we did indicate that there could be reasonably a possible $200 million increase. also important to note that there is no cap on the program. our objective is to make sure we take care of those who were impacted by the ignition switch issue. we are leaving that administration of the program to ken feinberg. >> thank you for joining us. chuck stevens, cfo of general motors. and matt miller who covers the auto industry for us. another day another central-bank move. china has cut the amount of cash lenders must set aside as reserves. china's central-bank cut business rates last november for
the first time since 2012. the point fresh stimulus. i want to bring in a man who has a productive start to 2015. nouriel roubini has been to dollar rose, london, frank word -- frankfurt, and now on our set. what do you read into china's latest move? does this sideline the fiscal policies they put in place? >> the economy is slowing down bouncing from capital entitled see. labor-intensive growth. slow down is going to be sharp because the real estate markets is in a significant downturn. whatever that occurs, they get nervous. significant -- hundreds of billions of dollars out of china. >> this is one way to get it back in? >> one way of helping the liquidity of the domestic market because of the outflows.
4.5%. reduce the pressure of liquidity in the financial system. one form of monetizing, gradual. >> are they going to have to do more? is this one of several down the road? >> they might do more. the trouble is that if they want to stabilize debt, the economy is already -- the stocks doing what they are doing, every time there is a global -- growth slowdown more infrastructure financed by more easy money. they are dealing -- delaying. they get nervous when there is a growth slowdown rather than accepting rebalancing it. increase the debt to finance
more consumption front employment benefits -- for more unemployment benefits. in some senses, it is a policy mistake. >> what about the almost not possible? looking at their currency? >> they could. it could be time to weaken their currency -- >> by a lot. >> if they do it a lot there will be political problems in washington. the argument they make is that will be an appreciation of that and sharpening the u.s. dollar. the ecb has been weakening the yen and the euro. on a trade basis, currency is appreciating. on the other side, they haven't growing surplus. the economy is weakening. it will not let the currency appreciate significantly last year and therefore increasing is
a pet of. -- is competitive. the rustic growth is weak. >> -- domestic growth is weak. >> the dollar continues to rise. it has gone up 17% since july. it is incredible. is that pace going to continue? >> the dollar is going to be the only major currency that keeps appreciating. central banks in asia have followed the lead of the doj from china, taiwan korea, easing is going to lead other central banks to do monetary easing. we live in a world in which there is not enough domestic demand. weakening their currency. summary also's currency has to stronger. so far, the pressure is going on the u.s. dollar. yummy curry that is -- yummy
currency that is still -- the only currency that is still appreciating. differential in growth. >> it is going to get bigger. before we had to break, i want to get your take on the story out of russia. with the collapse of oil prices, russia, which normally never does this they cut the minimum price for a bottle of vodka 16% cheaper. this is according to the moscow times. authorities hope that by making that could cheaper people will be less lately to turn to illegal moonshine which has a higher alcohol content. just one of the fallouts from the ruble. >> it might be. domestic inflation is going to rise. get people drunk maybe they
>> 213,000 jobs. that is the number that just broke moments ago. scarlet fu has more. >> 10,000 less than what economists had anticipated. in prior months for december, we got an increase of 241,000. the adp survey was pretty close to the mark for the prior month to the non-farm tables number. this is the last opportunity for econ us and investors to refine their employment projections before that labor department report. the consensus for that number is an increase of 2000 -- 231000
for the month of january. u.s. stock index futures remain lower. u.s. yields moving to session high of 1.8231%. not much of an impact. >> thank you so much. it is 15 minutes past the hour. world news headlines this morning. jordan has executed two prisoners accused of -- convicted of terrorism related offenses. a highly disturbing video of a captured jordanian air force pilot being burned to death. that video sparked protests in jordan's capital today. executions are being seen as a response to the actions of the islamic state. new figures from the u.n. show more than 5000 people have been killed in ukraine since april last year. the rate of civilian deaths is accelerating the 220 people dying in the last three weeks of january.
esther day, three people or killed when a shell hit a hospital. the ceo of petrobras is to step down. she resigned along with five directors. the company has seen billions of dollars wiped from its market value as of march -- as a result of a corruption scandal. that is the latest world news. another update at 45 minutes past the hour. greece's new prime minister and finance minister are taking their demands on the road for a different approach to greece to top european officials. alexis tsipras strengthening ties well yanis varoufakis met mario draghi frankford. >> i had the opportunity to present to him our governments's
unwavering determination that it cannot be business as usual in greece. >> varoufakis says he is eager to meet germany's finance minister in berlin. my special guest host, nouriel roubini. solve this for us. what is going to happen in greece? >> the probability of a greek exit from the eurozone is low. first of all, the germans know if there was a greek exit, it would be disorderly. other banks would say, who is going to be next? it could be a disaster for the eurozone. if greece exits, it remains up in the arms of the russian bear. action becoming more aggressive in the baltics and ukraine. >> explain how that would happen? >> the greece have been -- closer to russia.
we're good relations with russia. the european union wants to increase sanctions on russia because of the aggression in ukraine. the greeks said, we might not join. the positive -- the result of the exit would not allow financial aid from russia. geopolitically, this is already having issues. >> guy hand wrote an editorial the other day where he said i think we should force greece's hand. i think he should pay up because the eurozone is stronger than it was a few years ago. if there was a greek exit, the eurozone would be able to handle it. >> i do not agree. the risk of contagion is as bad today as 2012. if anything, it is worse because in 2012 you have reformist
government. today it is greece. in france, le pen is rising. politically, things are worse. austerity reform fatigue because there is another recession. now there is also bailout fatigue where you have anti-euro parties from germany to netherlands to finland. political tension in the eurozone is much more compensated than two or three years ago. germany knows it. they will do whatever is necessary. the way they put it to me is greece's only 2% of the eurozone gdp. we are threats from terrorists russia, domestic problems for greece. we will have to find a role -- find a solution. >> we will have nouriel weigh in
>> you are watching "in the loop." good morning, i'm betty liu. shares of chipotle, down more than 6% in premarket trade. the food chain posted fourth-quarter sales that missed estimates. higher food costs floor down -- slow down earnings growth. toyota is expecting to earn more than $18 billion. that would be more than the combined earnings at gm and volkswagen. the maker of smuckers jam will be selling kibbles and bits.
dan smuckers agreed to buy big cart path brand. kibbles and bits, now mix and milk bone. closing the gap addressing income inequality has become a mantra for democrats. now, some republicans have taken up the cause as well. a new analysis by the economic policy institute shows that the 1% is not what you think it is. i want you guys to check this map out. it only takes $228,000 a year to be the upper crust in arkansas. that is the lowest in the united states. in california, raking in $438,000 is enough to get you in the 1%. if you are in connecticut the threshold is $678,000. that is how much you have to make to get to the upper echelon in the united states.
my special guest host, nouriel roubini with me because he has talked quite a bit about income inequality. what does that map tell you? >> the differences in average incomes in different parts of the country. in some parts of connecticut manhattan, with high home prices, it takes being a millionaire to be in the top 1%. >> if you earn when you earn in arkansas you feel poor if you live in new york city. >> you would. it is true. to be middle upper class it takes much higher in new york city than it does in arkansas. >> that underscores the complexity of finding a solution to income inequality. you talk a lot about this. you heard the president the other night in his budget try to
close that gap. what you think needs to happen in the next several years? a new presidential term to close the gap? are we headed in that direction? >> we have to understand the reason why there is rising inequality. a combination of factors. technological innovation has become capital intensive. eventually they are all going to replace blue-collar and even white-collar jobs. trade and globalization has led to -- low skill jobs. manufactured and -- manufacture and services are not tradable. the best rockstar athlete, you have a market of potentially
billions of consumers of your product and services. if you give away more the benefits of that localization. many different factors are leading to -- >> i would say that is how capitalism works. this is the way a free economy works. >> i've suggested the rising inequality is due to social and political in the ash instability. -- instability. you have to address it. the way to address it is to be education, skill training making sure that even those with disabilities can join. you cannot say nothing about it. i would rather tax the rich -- >> you would rather pay higher taxes? >> i would personally.
we are going to be in the situation where there is rising inequality, which detects those that are both lucky and deserving of having benefits. there is no other solution otherwise there will be social and political instability. >> jack lew was selling the budget to members of congress. i want you to listen to what he said about the budget. >> we have an economy that is growing on the whole on a much better rate than most of the developed world. we are seeing that it is not an economy where there is broad opportunity as it should be. i think the provisions in this edge it provide -- budget provide the first step to solving that. >> did it go some way toward resolving the income gap? >> there is a proposal that is controversial. i do not think this congress is going to pass it.
we intense the wealthy -- we can tax the wealthy slightly more. we're going to use it to provide tax relief to the working class and middle class. providing people with education. i think you need that, otherwise they will be lyrical backlash. even among republicans, -- the people are suffering. half of democrats and republicans say inequality is a problem. even a republican candidate will have to address income inequality. >> it is fashionable now to talk about inequality -- income inequality. jeff green, the billionaire, talking about income inequality after having flown in a private
-- a private jet. the people who talk about income inequality are the 1% that are part of the growing divide not just in the united states but around the world. >> income inequality was discussed by the top 0.01% in doubles. it is also being discussed by presidential candidates and becoming a social and political issue. in emerging markets. i think this is going to be one of the things of the presidential elections. not -- nominal minimum wages are not growing. people fear about their jobs. whether they will be outsourced replaced by technology. it is going to be one of the key issues of opportunity for america that any presidential candidate will have to address. >> you are hearing that already. nouriel roubini, much more
>> his kingdom holding was once -- he has cut his stake from almost 7% to now down to 1%. although our lead -- one of murdoch's strongest supporters. it's shares in his company have fallen 21% in the last year. a major turnaround in the price of oil. crude has been on its hair up 15% in the last few days. trading just above $15 and --
digging dollar -- $50 per barrel. energy companies are trading their treasured pipelines and plants to get some quick cash. joining us for more on oil's ups and downs, economist nouriel roubini. also, isaac r restoreth. this is another example of how show producers are becoming victims of the oil crash. they are selling their assets. >> they are looking for anything they can afford to spare that will give them cash. a lot of these companies were outspending their cash flow when oil prices were $100 or higher. now that we are half that, they are desperate to keep on drilling so they can keep increasing production. the money has to come from somewhere. >> nouriel, i know you mentioned
at. post that oil was going to come back to about $60 per barrel. do you think we have hit the bottom? >> most likely yes. reduction in production. everyone is going to invest. there will be some increase if prices are lower. it is in the fundamentals that suggest that an increase. in the could increase production by a million barrels a day. that could bring it up.
increased production from iraq or libya. i do not think those things are likely. i think that now the fundamentals would suggest gradually going higher. i would say -- >> the oil watchers have brought this out as a battle between opec and the show producers in the united states. there was a bloomberg poll that said who is going to blink first? who is going to move first? 49% -- i do not know if you guys are surprised by this. 49% of the people surveyed said that opec is going to blink first. that they will cut production before she'll producers scale back. -- shale producers scale back. >> i believe saudi arabia is not going to blink anytime soon. predatory pricing to keep supply high. prices low. you wipe out high marginal
costs. you over invest into your own capacity forced everyone else to under invest in capacity. in the short-term, you run down your reserves because of lower prices. slightly higher prices than today. i think it is irrational behavior. with $700 million of reserves the saudi can wait out everyone else for a while and make sure there is what they can achieve. there are some geopolitical benefit on the sidelines. their own enemies will be hurt by that behavior. >> they can wait it out. isaac, how long can shale producers waited out? >> we're seeing billions of dollars in spending cuts. the biggest reductions of rigs in history. that toll is being taken. i think that is what is behind the rallies in the last few days in oil.
investors wanted to see a supply response. >> they are seeing that. is there an investment opportunity? a buy signal anywhere? >> there might be in oil prices. if you believe they are gradually going to go higher. i would stress that in some of these energy companies, the spread has widened a lot. high defaults and losses giving default. that might be overshooting because many of these people will be able to sell assets to restructure and avoid the taking of the fault. maybe an opportunity to buy that stuff. >> we will see. nouriel, thank you for joining me this hour. isaac, thank you as well. we are less than an hour away from the opening bell.
scarlet fu is keeping an eye on big movers. >> we start with m&a. staples and office depot acted with its investor. a $6.3 billion marriage. the next set is to give -- the next step is to get -- a bridge loan from bank of america to fund the purchase of big heart pet brand. earning season in full swing. disney, higher on profit sales, treating abrupt -- trading above . that would make it a record high that would lend support to the dow jones industrial average. gm profit beat estimates of sales. kohl's announced its force -- fourth-quarter numbers. company raised the low end of its full earnings forecast. drug-related companies are some of the big decliners.
coming in with an outlook that failed to reach analyst estimates. myriad genetics, a disappointing forecast. gilead sciences, investors are looking past the first dividend for this biopharmaceutical company because discounts on hepatitis c drugs . >> one of the largest power suppliers in the u.s. reported profits as morning. we will hear from southern company next. staples has agreed to buy office depot. we will have the details on this merger. ♪
found dead last month. he accused the president and other officials in a plot to cover up the 1994 bombing of a jewish community center in when acai press. his death by gunshot was ruled a suicide by officials. a gunman in libya has seized control of an oil field. the militants are looking for an independent source of funds. libya remains in turmoil. in the u.k., politicians have voted to allow the creation of babies with dna from three parents. it will allow the use of a technique that uses dna from a third parent to prevent genetic diseases being passed from mother to child. mom, mom, dad.
dad, dad, mom. southern company reported earnings this month. sales beat expectations. just as important as investors are the details of budget and schedule overruns. the global plant is the country's first since the 1970's. a coal plant in mississippi with the latest in cold -- carbon capture technology. tom fanning is the chairman president and ceo of southern company. it is great to have you back on the program. it has been a while. >> it is great to be with you. happy new year. >> happy new year. i guess we can still say that going into 2015. the earnings and what you have
seen on demand. tell me what you are seeing from businesses. what is the business demand in the southeast? >> it is quite strong. the industrial classification -- if you think about three major segments, are driving better than expected growth for 2014. we think they will be sustained. the first deals with any businesses that benefit cheap energy. think about chemicals, pipelines . second would be automotive particularly strong. primary metals, high-end textiles. the third goes to housing. industries related to stone, clay glass etc.. >> it sounds great. you pretty much have delivered on your earnings. the big question for investors is what about your two projects that seem to continue to be delayed over and over?
and vocal, you announced another delay. $40 million. it'll cost you each month to the tune of $720 million. have you make of this delay? >> we believe that the delay, that the contractor is experiencing is for the account of the contractor. when that project was approved we thought there would be a 12% increase in rates. we are still able to say that even if we have a delay that is proposed by the contractors, which we dispute, we think the rate to customers will be impacted minimally. instead of a 12% price increase we think now because we brought over $2.3 billion of benefits to customers we think the price increase will only be between 6% and 8%. this delay by the contractors,
we do not know the details of it yet, but we believe customers will not be impacted. >> explain that to me. i know this is all happening as we speak but explain to me how southern company is able to absorb those costs. >> southern company will not absorb those costs. the contractors will. it has been con -- documented that the contractors have been having challenges with constructing the plant. those difficulties persist. there appears to be a financial dispute within the contractor group. we think that has some impact on the contractor delay in respect to the schedule. the delays are really for the account of the contractor, not for georgia power or our customers.
>> southern company, building this new nuclear power plant i want to underscore that this is groundbreaking. this was considered or is considered a beacon for nuclear energy in the united states. is there a worried that given these delays, that might kill the appetite for more nuclear energy in the u.s.? >> no. we are committed to building a quality and safe plant. my sense is when you consider the energy portfolio requirements of the united states, we remain committed to nuclear as an important solution in the nation's energy future. we think that this project -- remember, it was going to be 12 and noticed between six to eight. we are over $2 billion better for our customers. at the end of the day, we may look back on this and claim it as one of the great major
project successes in industrial history. >> the coal plant, that has also suffered delays. when is that going to be finished? >> we think in the spring of 2016. we pretty much through with construction. there are still expenditures we are experiencing. those are largely due to improvements we are seeing that will help the plant operate better once it goes in service. we are full speed ahead on startup activities now. so far the quality of the construction has been found to be excellent. we continue apace with those activities. >> thank you. great to see you again. tom fanning, chairman and ceo of southern company. we will be back. ♪
>> welcome back to "in the loop." a look at our top stories. teachers indicate stocks will be lower at the open. american companies added 213,000 workers last month. slightly less than expected. shares of disney, rising in premarket area net income rose 19% in the fourth quarter beating estimates. sales of products from the movie "frozen." free opening expenses at the shanghai theme park. shanghai's opening has been pushed back to next year.
bob geiger says it will be worth the wait. >> what we are building is tremendous. with star wars cannot wait to show this to more people. i think the world will be impressed with the size and quality of what we are building. >> iger made a reference to star wars. disney's first star wars film will be coming out this year. the chain has agreed to by office depot in a deal valued at $6.3 billion. star board had demanded that the two office-supply retailers pool their resources. they tried this deal before, can they do it again? less than 30 minutes -- list and 30 miles from here, a deadly accident involving a commuter train and suv.
the train slammed into the vehicle in the middle of rush hour in new york's westchester county. at least seven people were killed. authority's say the vehicle got stuck on the track when the safety gates came down. the ceo of petrobras is stepping down. maria foster has resigned along with five directors. the company has seen billions of dollars white from its market value as a result of a can -- as the result of a corruption scandal. we are under 30 minutes away from the start of trade. olivia sterns and alex sherman joining me this morning. number 10, john malone. tripadvisor could be right for the picking. john malone, the billionaire, structured the site like he is ready to make a deal.
what is the chance of this? >> he is always so created in his structures. he is the only guy that uses tracking stocks anymore. we saw a version of it recently with yahoo! and ali baba. if you are following that story, it is more or less exactly what he did here spin off a stake of a publicly traded company with the idea that down the road, the state -- the stake and larger company come together. in this case, malone spun off a controlling voting state with the idea that tripadvisor could come back a year or so and make sure that all the tax efficiencies are there and by the stake. >> maybe priceline or expedia could come back. >> anyone is free to make a bid. that way, perhaps malone could
create a bidding war and get a higher price. >> a group of professional caddies are suing the pga tour demanding that they be compensated for wearing those bids with advertisements on them during competition. advertising revenue from those bibs can be up to $50 million. >> i agree. the caddies are standing out there like sandwich for people. they should get a piece of it. like the fair that the athlete gets everything? >> they are walking billboards. >> they have got a job, they are being hired -- >> some of the caddies are actually pulling their names off the lawsuit. >> doesn't dispute to a larger issue? doesn't this speak to a larger
issue of caddies feeling like they are second-class citizens? they feel like -- they are not the stars but they feel even more that they're being treated like -- >> that is the caddies and caddy shack. they were not well treated people. >> you may have seen the avocados from mexico commercial during the super bowl. the ad does not tell you that a mexican drug cartel infiltrated the country's avocado industry and no controls the local trade from production to distribution. be careful where you get your avocados. >> if you google mexican avocado cartel, you would be shocked what actually turns up. the argument among activists is it is the equivalent of what diamonds in africa. you're getting blood avocados. there are troubled gangs in mexico that are extorting farmers.
>> california is arguing you should eat our california avocados. what i learned from this is americans eat four times as many avocados in 2014 and they did in just 2000. >> i believe that. it is the health craze. i cannot tell the difference. >> their creamier than others. >> i enjoyed that ad. >> harper lee, publishing her second novel. already, preorders for her book which will be out in july number one on amazon. the third most sold book right now, "to kill a mockingbird." >> harper lee actually wrote this book before she wrote "to kill a mockingbird." 50 years later somebody found
the manuscript and she is publishing it again. everybody wanted another book from harper lee at she faded into obscurity, she went back to monroeville, alabama. 50 years later, fans get the ultimate prequel. >> she was going to go down in history as being one of the few authors who wrote a legendary book -- i believe the u.k. at one point they consider that book more important than the bible. she was going to go down in history is written -- as having written that but one book. >> i do not think this will destroy his legend -- the legacy. >> jeff bezos is not the only one withdrawn dreams. jack ma is testing a similar drone delivery service in china.
it would give the country's commercial drone industry a boost. >> i read about this experiment. 450 volunteers signed up and drones flew across beijing and delivered them ginger tea packets the airmail. -- via airmail. the fcc will not let amazon test this mess decoy. -- this domestically. >> china's government might have a more hands-off approach. perhaps china will be the first to boom with drone shipments. i'm sure that is what amazon is looking at. we've not want alibaba to get ahead of us. >> maybe he is trying to mirror jeff bezos. this is another play that the two of them are doing side-by-side. speaking about apple and drones, apparently we have pictures of
filling a pledge to boost the value of its stock amid pressure from carl icahn. our next guest says it may have hit its peak. he is bill wyman, head of technology strategy research at evercore. bill, why do you say apple may have hit its peak? it has issued one of its best quarters ever. >> apple is a fantastic company in the middle of a great product cycle. i think the challenge is everyone knows that. everyone loves apple, i do too. i think the question goes to sustainability. how does it sustain that? i think the question is they probably can't over the next three or four quarters, but ultimately apple -- they probably can over the next three or four quarters.
>> intech -- in technology, it is hard to predict from a year from now. apple did not invent any new products, they just made their current products better. my could that not be enough to sustain momentum? >> think that is right. apple kind of rose and fell driven by the product cycle. they have just launched the iphone six, a massive quarter. we can expect continued upgrades from in install base of around 350 million. i think that sustains apple over the next three or four quarters. i think it will also pull in conversions from former android users who now have a choice of a large screen. i think the next couple quarters will continue to be very strong.
look out into the next year. markets are supposed to look forward in discount. i think the challenge is, what next? >> is there a cell signal on apple or just holding? >> i am a tech strategist so this is not a stock call. i think investors need to look forward and say you have a stock that is up 40%. sentiment is positive. a clear product cycle that is well understood. the challenge for apple is the math. there are few products that are as massive as a billion unit smart phone product. i think we have to look to apple pay. i think that is important in terms of sentiment and showing that it can grow. we have to look at apple watch. a new product category coming
something investors will be positive about. is this enough? that will be a challenge as we move through the year and investors start to look to the 2016 estimates. >> we looked at apple's revenue. from that one quarter alone, $74 billion. that is bigger than the entire year revenue of google amazon and microsoft combined. that is incredible. >> apple is awesome. you look at the numbers, they are mind blowing. it has a hardware driven product cycle. it is a magical thing. units times prices equals revenue. overall beating margin. that illustrates the strengths on the way up and the challenges on the way down. once the iphone six cycle kicks
in, it becomes so hard to match but it is an awesome thing when it is working. >> seems to be working so far. bill wiseman, head of technology strategy research at evercore. we will have the ceo of evercore joining us on "in the loop." coca-cola, betting big on milk. could a new premium line be the soda giant's next big billion-dollar franchise? ♪
clearly a concern. brent crude and west testis -- west texas intermediate are down today. gold advanced for the first time in three days after china announced it would cut its reserve ratio by 50 basis points reducing the amount of cash lenders must set aside as reserves. let's get back to bringing you the most important stories you need to know before the bell. olivia sterns and alec sherman joining me. coca-cola, trying something different. they are tried water, juices, coffee. what about this? milk. fair life milk. would you buy it? >> i would buy it. i also drink things like almond milk. i'm part of that weird alternative milk crowd.
people are tricking less and less soda. people are tricking less cows milk so it makes total sense. >> cope milk. -- coke milk yummy. >> would you feed it to your kids? >> i would. >> coca-cola is facing the same kind of problem you see with mcdonald's which is that type of food or drink is no longer healthy. people are much healthier. they need to find different ways to make money. >> that hits on a good point because i buy organic milk. coke is realizing they have to tap into -- >> when did we all become such snobs here? number three general motor shares are on the rise after the automaker reported a profit beat on him proved pickup sales. the cfo sees growth with china
-- growth in china. we are going to have our guest at the open who says it is a $2 billion market for gm and they do not get enough credit. the chinese market. gm does not get enough credit for sales in china. everyone is focused on the u.s. and what is going to happen. >> we thought the strength was all in the suvs in the fourth quarter. like pickup truck sales up 20%. incredible growth. >> it was all 20% plus. the price of oil. >> we talked about this on the show. is there a connection between lower gas prices and retail sales? in car sales i think there absolutely is. it is not simply that this excess money is going into your wallet there is a direct connection. gas prices are lower -- >> so shortsighted. >> chuck stephens said he thought lower gas prices would
benefit the company through the rest of the year. it is official, staples agreed to buy office depot in a deal valued at 6.3 -- is hard to be excited over people. -- over paper. >> the press release has this line about how the combined office depot and staples will face a diverse array of competition. which i think at this point is only amazon.com. >> this probably will get a strong look by regulators because it went down to two. now one. in the sense, there is no more competition. >> is my paper going to get more expensive after staples and office depot merge? >> probably not.
>> welcome back to "in the loop." olivia sterns and alex sherman joining me. our number one story, china, joining the global teasing wave. -- global easing wave. they cut the -- the cut it by 50 basis points. not flowing out of the country. this is another step that china has taken to keep their economy going. >> it was not that long ago that china was trying to do the opposite.
>> i believe this is the 14th central-bank rate cut since the start of the year. it is february 4. this is what a currency look like. this is competitive devaluation. >> they have not moved on their currency. nouriel roubini, i asked him could it be next? there is a possibility given that it is a zero-sum game in the world. everybody is devaluing their currency except for us. we are going the opposite direction. >> it has become a bastion of strength. something that is changed from a few years ago. >> i do not feel like a hero though. >> you are my hero. [laughter] >> ought to bring in david barstow.
david has worked in the firm's most high-profile distressed investments. a distressed left on the street. bullish on stocks, volatility as an active manager would say, is an opportunity. >> sure. if you are a long-term investor short-term volatility is an opportunity to buy. >> light you say you are the happy -- you're happy to be the last managing director on the street. a you a dinosaur? -hope not, but the debate has really shifted to pass his management. a lot of financial media talks about passive strategies all the time. they do not give the manager a chance. we have had a tough time in the last two years. qe has really helped prop up the market. now that at -- now that that is
over, we think we will have our advantage back. >> i take your point, but with all due respect, i am not sure it is the media putting the label on asset management. >> you guys are teaming up on me to start the interview. >> energy stocks. maybe people are betting now the supply is going to be cleared out. >> it was not getting back in. we are in and we are as alien and they bought more as we got cheaper third two high-quality companies, they have been be not . but they are great balance sheet. they will take advantage, we think, over what some of the weaker and poorly financed companies might struggle through if it extends for a time. i have no idea what will happen with the price of the commodity but we love those economies and
we continue to own them. >> you are also in gm. >> we are. months ago, people forget about how negative people thought about gm. with today's earnings announcement, and the good fortune of oil prices actually working for us in the sense that consumers are actually buying new cars, that is obvious here they are still not buying at levels historically. gm has a ways to go before they take full value. >> you have been in energy. you are looking a little more added. why isn't anyone else out there saying, this is the greatest opportunity we have had in years to get into energy. it is like the dumbest truth -- trade. it will go back up. >> you're talking about a commodity. that is for the real gamblers,
if you will. for investors like myself who care about fundamentals of business, you have to figure out what will go wrong before you find out what will go right. you have got to factor in your probability. that is why we look at good bounce she's. credit worthiness to us is the key. that differentiates us from a lot of competitors. >> tony james of lack stone group earlier this week in the past couple of days said they want to pile $10 billion in energy everywhere they can. >> those are private investors -- equity investors. 10 years from now, that would be a great trade. usa what i will do tomorrow or next quarter. that is a little tougher. >> ultimately, what you're saying is you are picking energy stocks independent of oil prices . >> that is right. we are lucky we started buying it for the price of the commodity started. we do that all the time with all of our investments.
>> you say gm is not getting enough credit for businesses in china. >> it is just starting. you mentioned that earlier that will build and build, we think and become an increasingly important part of the sales. >> what is your favorite pick for 2014? >> the whole portfolio. we -- we love wire house. it is a great company and a long-term investment in the housing company. you own a lot of things that will benefit at the normal rate. >> david, you do that date on china. >> there was a great story a couple of weeks ago. i do not know if you are following. he is combining its businesses and then splitting them up.
an important transaction for people to focus on. he is effectively the leading financial guy. it is a succession plan venture, but it will also help people like us understand those businesses, incredible value. why everyone is not running to buy that security, i do not know. we made a lot of money on it that it is still very cheap. >> some people call him the warren buffett of china. i think they're good friends, by the way. great to see you and thank you for stopping by, the ceo. still to come, stepping down. we'll have details on a resignation next. and scoops on investing in a
>> a ceo -- five directors also resigned. the board will meet friday to let new management. joining me now, alex this has been drama after drama. >> it really had an opportunity to rise above the corruption we have seen in brazil. 100 $27 billion, there is so much potential. it just sailed. to be clear, the outgoing president was not indicated any candles, nor have executives who resigned.
the question is, will that wind up coming back to haunt her. resist happens to have been the chairman in 2003 and 2010 when the corruption scandals were happening your mid-level executives a sickly colluding with construction companies to raise the price of what it would cost to build something. they got some money to get the project done. there is about five lawsuits also happening in the u.s.. one bonds and shareholder. i was talking to folks at the bergen television said, that could be way more than $100 in fines and then if they could prove they were doing these corruption scandals third evil are so upset in brazil. protesting inside the house was getting really ugly and a long way to go. >> so there is definitely more to come.
>> i would not want to take that company. >> thank you. we are about 15 minutes here from the trading session. scarlet fu, you have got reaction from the market. >> we will go around the globe. there is plenty to keep track of. we will start with the etf that tracks chinese stocks, higher right now by two sent after the government -- government is liquidity. yet another central bank easing monetary holocene. greek stocks retreating after a 26% surge which has seen inflows of $44 million so far this year. we know the greek government is on a big sales pitch across europe to change. it is kind of the good, bad and
so-so. chipotle down almost 8%. comparable sales grew but it missed the consensus of 16.5%. chipotle trades up 41 times for earning. only celebration, not deceleration. his knee trading at a record high, 9999 earlier today. third-quarter results beat analyst estimates for this quarter, earnings will be light. a quick mention a four-day win. i will have inventory numbers in the next hour. that will determine whether oil can stay on the rebound. >> scarlet, thank you very much. you've are pricing to pull a like a tech stock. today's remember is 58,000 which is how many jobs were created last year in silicon valley.
the group that ms. there is a downside. low-wage earners are being priced out of housing and income gap is largest in the united days there it it is all something to think about as we head into the jobs are work there it tomorrow, we will talk to the governor of a state now the lowest in six years. just where will the tech sector be creating jobs next? i will talk to a serial on the door and tech investor, peter diamandis. will artificial intelligence at or take away jobs in the u.s.? we will be back. ♪
53.4, a little bit of a pickup from the prior month. this is the final read for january, 54.2. some say 70% of the u.s. economy is now at 54.2, a little bit higher than what analysts had been looking for, a bit of from the prior reading. the real effect on financial markets. the 10 year yield still holding at 81 37%. >> thank you so much on the economic numbers. it used to be something you only saw in the movies. >> what does that look like to you, jarvis? >> intelligent machines have the ability to take for them they'll , like ironman's jarvis. investments soared last year up 20 fold in 2010. $309 million into artificial intelligence and i want to ring in peter diamandis, the author
of a new book in which he describes artificial intelligence as one of the technologies about to change the world. i am kind of old-school and it sounds scary to me. why is so much money being piled into this? >> the companies will crush it. they are all ai companies, all using data, data mining, machine learning ear the rate at which we are able to collect it out in the world and then use it to make decisions is exploding. you have heard of the internet of everything. 12 billion connected devices going to 50 billion with one trillion centers. anything you want, what time you want. bold was a book written for entrepreneurs to tell them, you have the ability now to go and do things that only the biggest companies and governments had 20 years ago. it is an amazing time to take on
the world's biggest problems. >> right that down. what would it cost to start a company now than it would have even five or 10 years ago? >> we talk about this in bold. in 2000, to start a tech company, it was a $5 million investment era that same company today is a 5 billion dollars investment, 1000 times cheaper. the number of people starting companies and trying things is exploding. the stat i love is 40%, which will be gone in 10 years. when i talk to fortune hundred ceo's, they're saying, you're either distracting yourself, or someone else will, because the rate of changes so fast you see that with companies huber, artificial intelligence, 3-d printing, and that -- and set it -- synthetic tools these are all available to the world, not just the wealthiest.
>> artificial intelligence, elon musk. at a talk he gave about a month ago, he spoke about some of the evil cc coming out of ai. >> we're very careful about artificial intelligence. if i had to guess at what our biggest x essential threat is, it is probably that. we are summoning a demon. you know the stories of the guy with a pentagram and the holy water and he is like yes, he is sure he can control a demon. it will work out. >> a little sensationalism there. i note you on, but i know world's top experts in artificial intelligence, and they are no where near as written. it is the most powerful technology we are bringing on. is it something that will be happening in the next three or more five years, i doubt it.
i do think every company, google face it, microsoft, all of these companies i am as well. ai is such a leverage in the trading world and the finance world in manipulating the data. option nor is, or sample ivm has opened up the ability to create application layers on top of lots and. they put $100 million into a venture fund. is you have got an idea, you can start to tinker with that. you do not have to be an expert, but you have to have a passion. we lay out how to, on the tech side, the notion that today, you have to go after moonshot, old thinking, you can go 10 times bigger while the western world is going bigger. it is there to help you.
>> ultimately, this will be additive for the economy. the general populace look at the technology it says, i am seeing jobs lost. >> we're are also seeing amazing job creation and stuff we have never seen or heard of before. we forget to yours of americans in the 1800s were farmers and those jobs were all gone in robotic. we now do things like the web, television, amazing things undiscovered and not created before. it will continue that way. >> great to see you and thank you for stopping by. the chairman and the co-author of bold, how to go big, create wealth, and impact the world. still to come, after a rough view months for sony, including a tibor attack, the company released limited quarterly earnings. we will be back.
sales of the playstation 4 for gaming console giving the company a boost. joining us now to discuss is cory johnson, bloomberg editor at large. this may be the sign of a turnaround for sony? question interesting quarter from a really big and compensated business. this is what a turnaround looks like. forget the failure of hewlett-packard and the struggles of ibm. you can change a standout -- a fan belt while the engine runs. but it is hard. you see very the changes they are making in this dinosaur of a business. let's look at the top line numbers. look at the sales numbers for the company. they are getting worse. they would sell a lot of unprofitable stuff to say in business. look at the sales numbers on an annual basis, the business is getting smaller and look of the profits for the business. they reported this is not the final result. they cannot get the final results of the pitchers unit until the end of march. the profits they are guiding us
towards our a little bit better than they have been. but the forecast suggests really big turnarounds. they're right down to small businesses and it is interesting to see the places that are happening. >> what is behind the better outlook? >> there are a bunch of things going on, not least of which is the selfie. sony cameras are not doing that well. they have gotten out of the pc business. but the selfie, they are selling the camera in front of the iphone. >> there you are with the selfie stec. >> they are selling the camera that is going into so many of the smartphones phones out there, they are getting a tremendous in a fit from that product and is doing well for sony. they fixed their tv business
was seems impossible because of the strong u.s. dollar, japanese television looked cheaper. they have 10% your of your growth and they're predicting even better going forward. add to that the cameras and smart phones and the business is suddenly doing well with what we knew about the playstation and so on. >> who knew our vanity would be that profitable. are you wearing the same suit as when you did that piece? >> i only have one. i am like i'm fine -- einstein, i go into the closet in the dark and pull out the same suit everyday. >> we need to get you a better budget. >> let's work on that. is people sit right behind you. [laughter] >> cory johnson bloomberg west editor-at-large. thank you on sony. all right. much more is ahead. tomorrow, the former kreisler and home depot's io -- home depot ceo is with us.
>> live from bloomberg headquarters in new york this is market makers with erik schatzker and stephanie ruhle. >> taking the temperature of the economy, gas prices are down, so why doesn't consumer spending and manufacturing pick up. >> oil comes to a halt and has many asking whether the market may have really hit bottom. >> ben carson takes his best shot. he weighs into the fight over measles and vaccinations. >> welcome. i am matt miller. >> mats only he did not like my glasses. >> i do come i can only see them from the side and not at the front, they look fantastic.