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tv   In the Loop With Betty Liu  Bloomberg  February 17, 2015 8:00am-10:01am EST

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with us, greek-american billionaire john catsimatidis the red apple group chairman. he weighs in on the european standoff with greece. derek jeter. i talked to the former yankees legend about his bid to become a media mogul and business titan. here is a look at our top stories. germany's commerzbank says there is a 50% chance that greece will leave the eurozone. here is greece's finance minister. >> in the history of the european union, nothing good has ever come out of ultimatums.
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we proceed from crisis to crisis and this is how we prove it. i have no doubt that in the next few days and he notion of an ultimatum is going to be withdrawn. >> terms of a bailout are too tough according to the greek government. the current agreement expires at the end of this month. in texas, a federal judge has temporarily halted president obama's executive orders on illegal immigration. texas and 25 other states sued the federal government. the justice department will appeal. proposed rules from the faa would permit small businesses to use drones. flights would not be allowed out of sight of the operator.
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a train derailment in west virginia has led the government to declare a state of emergency. the train was carrying more than 100 tankers of oil. up to 15 of the tankers burst into flames and one ended up in a river. that caused to water treatment plants to shut down. apple may decide to go head-to-head with tesla. apple has put a few hundred employees to work on a circuit of project to develop an electric car. the project could still be abandoned. three years ago, the company said they talked about building a car before they came out with an iphone. greece is edging closer to a euro exit. constant calls -- hans nichols
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joins us with what looks like a more dire situation. >> last night, talks broke up early, they broke up quickly. it was over this issue of whether greece is going to do any sort of modification to stay in the current bailout program. greece wants to leave it and renegotiate something for the long time. the greek finance minister said he was offered a deal that was quickly withdrawn and yet he may be the most optimistic man in all of brussels. >> the next step is the responsible step. europe will continue to deliberate in order to enhance the chances that we actually achieve a very good outcome for the average european. we know how to deliberate in
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such a way to create a very good solution, and honorable solution out of initial disagreements. >> we were waiting for any sort of sign the talks of restarted. all the finance ministers are in brussels, but they are on a different agenda today. there is still a prospect that talks could be restarted but the dutch finance minister is saying that it is up to greece to formally request an extension . greece wants better terms. >> before we get to restarting the talks, how did they break down so thoroughly? >> what we had is that there was a document that was given to mr. verifone kiss -- to the greek finance minister, not to all the finance leaders. what we are seeing is maybe a
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little split between all the finance ministers and the official institutions in the european union. if there is a split and that could bode well for greece because they may be able to exploit that. the message has been unity up until this point. they want to have one common point to ask greece to stay in their bailout program and continue reforming their economy. greece is not bluffing. they insist that this is an in humanitarian program and that they have an obligation to exit. >> we mentioned there are private economists who are ratcheting expectations that we will see in a sit from the euro by greece. what about the finance ministers themselves? do they call that hogwash? >> i do know if they use
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hogwash, but they may use a more elegant french version of that. what you get from the finance ministers is that there will be away, but they do not quite know the way. there is some optimism here. even though when you look at it technically it is very difficult to see how an agreement comes together if one side does not radically change their opinion. if one side does change their opinion, everyone is going to have to face their voters. that is true of the greek government and everyone of the new finance ministers here. democracy is at play. principles are at play. the cost is at play. the cost -- the clock is ticking. >> hans nichols in brussels. i want to bring in my guest host for the hour, greek-american billionaire john catsimatidis. he is the founder and chairman of red apple group.
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he also owns the "hellenic times." this is clearly a story that hits close to home for you and your heritage. how do you feel about seeing greece plastered all over the headlines? >> the greeks get very emotional. [laughter] >> they are romantic people. >> they are very emotional about this. it goes back to world war ii about how one greek battalion stopped six german battalions and then they go on and say they never gave us reparations they gave it to the jewish people. >> they always feel like standard dogs. >> even though this government is a new government, the greek people are behind them. >> are you behind them? >> and my behind them? i am an american.
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i am behind the greek people as a whole. i think it comes down to negotiation. i believe they are going to work it out. they cannot afford to start breaking up the eurozone. if greece breaks away, portugal and spain will be the day after. they have to work it out. i think it is just negotiation. if you jump up and down enough, they believe you are serious. >> when push comes to shove both sides hopefully will eventually come down to some sort of agreement. being that you are a slightly more interested party than others, when you hear the comments from economists who are saying, now the chances of an exit from the euro at 50%, would you say that that momentum is right? that the trend is going up toward possibly an exit? >> i think they are going to
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bluff it that way. i don't think they are going to get out. i was in key biscayne a couple weeks ago at a jpmorgan conference and one gentleman said, we don't think greece -- we haven't taken greece seriously out of 90 out of the past 100 years. they will come back. >> it gives some people pause. can the fed raise interest rates with greece on fire. china is facing slow demand. >> i don't think they will raise interest rates as long as president obama is president. we are still dropping rates all over the world.
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we are not doing that well. maybe the europeans are doing worse than us. it does not mean we are doing well. i don't see interest rates going up. i have spoken to a lot of republicans. republicans feel that the right thing to do is trend up. >> are they saying that the fed is politicized? >> nobody wants to think that. but it is a presidential appointment and when the new president is in and the fed chairman looks like my term is up in two years i better go with the trend. it is not supposed to be
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politicized, but it is more so than not. >> we will talk more about that in a moment. john catsimatidis. we are going to dive into politics and the energy business. moving and shaking this hour. derek jeter has earned over $400 million from salary and endorsements. now, the five-time world series champion is investing his own money to become a major figure in the business world. i caught up with him this weekend in new york to hear about what the latest endeavor is all about. >> i have spent an entire career working in new york and dealing with the media. let's be clear, the media has helped shape my career. i want to have a platform for athletes, so that they can speak directly to the fans in their own words. first-person point of view
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unfiltered, unbiased. i think it is something that is needed. >> we are going to have much more of my interview with derek jeter coming up. i asked him if he wants to buy his own sports team. we will tell you what he had to say. the u.s. drilling frenzy is fizzing -- fizzling. that is next. ♪
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>> let's take a look at world news headlines. in ukraine, there are reports of new fighting despite the cease-fire deal that was made last week. pro-russian rebels have claimed partial control of a town that is part of a strategic rail junction. they say dozens of ukrainian soldiers have surrendered in the area. the central bank has cut its main interest rate in indonesia
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for the first time in three years. the unexpected move comes as economic school in the area -- economics cool in the area. five days of carnivale have come to an end in brazil. carnival attracts tourists from all over the world. that is the latest world news. we are going to have another updated 45 minutes past the hour. an energy industry in distress. 98 rigs dropped. the total number of oil rigs is down 32%. this new data comes as oil producers worked to limit the fallout from the collapse in oil prices, down almost 50%. still with me is billionaire
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john catsimatidis the founder and chairman of red apple group, which is a conglomerate with interests in real estate grocery stores, and energy. i know your most valuable asset is united refinery. you also owns several gas stations around the area. how are you dealing with $50 oil? >> we are dealing with it well. we have our own pipeline that goes into canada and we get crude oil from canada. >> all of it directly through the pipeline? >> 95% of it. we are doing rather ok. to have that kind of drop in for us to say we are doing ok, that is not bad. the saudi's are playing games. they have made a decision that they are going to drop it down to sell it. they are going to make other people pay for it.
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what happens is when new people want to drill new holes and they want to borrow money from the banks, when oil was $100 a barrel, the banks would lend the money. now they are thinking about it twice. that is the doubt that the saudis want to put in everyone's mind. >> they have to think about trolling other holes twice. -- they have to think about drilling other holes twice. >> meanwhile, to ron is suffering. -- tehran is suffering. angela merkel and obama said they're going to go in ukraine and putin said that they are going to arm iran to go after saudi arabia.
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that is horrible. >> that is speculation at this point. >> the next day, they announced a so-called cease-fire. they are still shooting bullets. >> it has only taken a day. so we are going to see. >> i hope so. merkel and obama would say hail to the sanctions, this is working, we are cornering teabag into doing what we need to do. >> meanwhile tehran and yemen are right on the border of saudi arabia. >> that is true. i want to get back to oil. are you still able on oil -- a bull pon oil? >> i think we are going to see
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$85, $95 oil. saudi arabia needs $100 oil to balance their own budget. >> what is that price target based on? >> i'm 31 years in the oil business. i have seen it go up, i have seen it go down. betty liu, i am more right than wrong. >> you have been, yes. i think it is a game being played -- >> i think it is a game being played by somebody. >> are you going to do anything different with your oil business at all? >> we are going to keep less inventory. we can always hedge, too. >> we will see right? it has been a crazy year on oil. >> it is a game being played.
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>> do you think it will affect the fed's decision-making? >> you have low interest rates. you have cheap gasoline for the consumers. i think the consumers are doing well. >> may be at my delay them from the -- raising interest rates. >> i don't think they're going up. >> john catsimatidis is staying with me. jeb bush has his eyes on the white house. i will find out what john thought of jeb bush. plus there is going to be a new ceo at the helm of the sheraton and w hotel brands. ♪
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>> you are watching "in the loop." here is a look at our top company news. there is a new leader in smartphone sales and sign a -- china. xiamoomi overtook samsung last year. change at the top of starwood hotels, which owns the w and sheraton brands. the starwood director will take the job. a record-breaking weekend for that movie, "50 shades of grey."
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the universal pictures erotic film took in $94 million over the weekend and set records for valentine's day, presidents' day weekend, and a february debut. "50 shades of grey." [laughter] congress is off this week him about republican presidential hopefuls are hitting the trail. rand paul hits the trail. jeb bush flies to chicago. on friday, ted cruz is going to be in jacksonville. still with me is billionaire john catsimatidis the founder and chairman of red apple group. john has been a big political donor to various candidates. you attended this $100,000 per play dinner last week. -- per plate dinner. >> jeb is a very smart guy. he knows the issues.
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he is married to a hispanic, which will get them the hispanic vote, i believe. >> come on. mary the hispanic and get the hispanic vote. >> obama got 98% of the black vote. >> that is a lot more than just marry a hispanic and get the hispanic vote. >> i think he is in the number one position right now. i think scott walker is in the number two position. it is a horse race. jeb has the name recognition. any other candidate has to spend twice the money to get national name recognition. >> i am looking for a resounding "i love jeb." is that high you can away from that dinner? >> i think he is the leader. a lot of hw bush's supporters
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and bush 43 supporters are going to come with him because they were always bush supporters. i'm going to wait and see. i believe in talking with everybody. we have our own radio show on sunday mornings that we do talk to everybody. >> not entirely made up your mind, but you are impressed. >> i am impressed. >> chris christie is someone you had supported before. >> i donated a couple years ago. >> chris christie was that an event in new hampshire and he said this. "there is only one chris christie, everybody, and this is it." >> i believe chris christie. i was impressed. the most dishonest political state in the union was new jersey and i was impressed with chris christie cleaning it up.
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because of that impression, i was donating to him. i'm not sure it is going to work on a national basis, but we will have to wait and see. on a national basis i think the american people are looking for somebody more on issues, rather than being brash. >> rather than going in there and trying to be the bull in the china shop. i am so curious because you are a clinton supporter, you are great friends with bill clinton. he writes on your plane all the time. you have hundreds of pictures of you and bill and hillary. >> bill clinton was one of the best presidents we ever had. he had common sense. the most important thing is to have common sense and that is what i do believe in. we will see what happens with hillary clinton. i do believe there is a struggle and the democratic party. whose party is it? is it barack obama's party or is that the clintons party? >> when you say struggle, what
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concerns you most about hillary clinton? >> that the current government, with barack obama will do everything possible to not help hillary. >> the ultra-left-wing liberal faction of the democratic party that is what you are talking about? >> i am concerned about that. the clintons are smart people and capable people. i would have bet $1 million that when barack hussein obama ran for the primary against hillary that it was impossible for barack hussein obama. >> hold on. we are getting economic numbers. empire manufacturing. a look at the numbers. >> this is below the january reading, as well as below estimates. we are coming in a 7.78 lower than january, which was almost at 10. this is the first to read we are going to get on how the industrial landscape is shaping up for february.
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keep in mind that the empire i sm is not well courtney did with other regional i sm's and the national isn. -- ism. new orders came in at 1.2. not a lot of future demand we are seeing. inventories also declining by -2. inventories are rising. is this a longer-term problem? prices paid it is an interesting thing coming out. it is up 14. it is more than january. it is paying more for the product. within the details, there is a little bit of? . overall, the empire manufacturing data is coming in and missing. >> thank you so much. back with john for some final thoughts. when you mention hillary,
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hillary clinton as a woman and could be our first woman president. it does not necessarily mean she will get all the female vote but what do you think is her economic message going to be in order to grab the middle? >> i think first she has to win the democratic primary. one of my staff members who is from iowa called his friend in iowa who is the democratic chairman of iowa and if the election was held today he said that our lady friend from massachusetts, elizabeth warren. is that scary? >> that is the obama faction. >> that is the obama faction. we need somebody who loves america and somebody that the rest of the world will respect as an american president. >> what about the gop side? what about jeb bush like romney in 2012 getting pulled in by
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the tea party conservatives the neocons in the gop party? what about that risk? >> there is always a risk and i think he has a lot more common sense than that. >> what in his economic message did you like? what do you think his economic message is? >> i think his economic message is that he wants to get america back on track again. he wants to repatriate the trillions of dollars overseas and bring it to the united states and create jobs. i don't understand why we are not creating tens of thousands of jobs as a pipeline. tens of thousands of jobs with repatriating the money. why are we letting the fortune 200 invest overseas? >> is that your biggest economic issue, john? >> we are hurting our country because we are not spending the money here.
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american corporations are scared of taxes. they are scared of various regulations, obamacare, etc. you know what happens? they spend the money elsewhere. >> what about obama's proposal in his budget about taxing some of the large corporations, taxing some of the wealthy to invest in the united states? take some of that wealth and invested in jobs in the u.s. to create better infrastructure here to grow the economy. what is wrong with that? >> there is nothing wrong with that, but when was the last time you heard of american corporations believing what washington says. credibility gap. there is a credibility gap the twin what washington is saying and what they are doing. -- between what washington is saying and what they are doing. >> what do you mean by that? >> i believe they are saying one thing and doing a different thing. we want to create jobs.
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they are not doing it. >> but we are creating jobs. >> not enough. >> not as much as what some economists are saying we should be. thank you so much, john. inside ibm's turnaround. can a new data system helped turn around and 11 quarters of sales decline? we will be back. ♪
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>> one very big stock we are watching his ibm. the software giant is coming off of a big year. ibm is in the midst of a transformation with new initiatives like cloud computing that have not grown fast enough. joining us now is the man tasked with turning around ibm's data
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servers and storage business that announced plans to invest more than $1 billion over five years into this marketplace. the senior vice president of ibm systems. great to see you, tom. let's talk about this product you have just launched. ibm spectrum storage. what is this about? >> the storage market is always growing, in terms of capacity. there is so much data being produced. it is also a very inefficient market. typically, storage devices are only filled to 30% or 40%. we want to change the inefficiencies of storage. our spectrum storyline changes that game, changes that economic game. >> as you have noted when you are talking about this new product, you could reduce cost by 90% for businesses. how do you do that?
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>> when you think about all the inefficiencies. flash storage, you can fill it up to 90% or 100%. you don't want everything waiting. you don't want your guys looking at the terminals and waiting for the data. you never want to be an environment where you have that much latency. you want to make sure the data is always available. you can either do that by overfilling. just put everything there and underfill at by 30% or 40% or you can do it and intelligent ways and by putting the intelligence into the software layers, you can use the storage wherever it is and get the data to the right place when you need it. the stuff that i don't need all the time you can archive. >> you can move it around easily. >> and without labor. get the software to be smart enough to do it without you. >> isn't this something that
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facebook is experimenting with as well. aren't there other big companies doing the same thing? >> there are companies that are experimenting, but most do not really want to be investing like i am. yes, we build for those companies, but we also build for most companies out there. their strength is not i.t. it may be deploying technology, but they don't want to be building it. one of our good examples as netflix. netflix is a great use of spectrum accelerators. netflix relies on xib and they were able to make dramatic savings. they are a big customer. >> just outlined the story right? you are in a turnaround mode.
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the big thing for investors is hearing about products like this and knowing that ibm is moving into storage and cloud computing and software. is that going to be enough to offset what seems to be a systemic decline in hardware for ibm? >> the transformation that you mentioned is absolutely essential. i spent the last 18 months and this role doing a lot of transformational things. we have divested of our commodity servers and of our electronics manufacturing business which was subscale. it was unsustainable. we have a great partnership with global boundaries. we are investing in a new mainframe. we are changing our marketplace. it is an open ecosystem. what we announced in december
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now has nearly 100 members. 14 are in china. it is a great interest in china, people being able to do their own indigenous development. >> i know you are a longtime ibm executive. it is great that you are the change agent. you have been in this role for 18 months. tell me how ibm is going to look 18 months from now. >> i think what you will see from my specific unit is that we really have gotten rid of the things that were really a drag on our growth and we are investing in the things that we think can be growth potentials for us. we are in a good place there. >> in 18 months, do you think you will have proven it? >> yes. the other thing i would say is that our growth around cloud and
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big data analytics and what we are doing with security, these are always good growth engines. what i need to do is not shrink and then let the rest of the company grow. >> will you divest more? >> we don't comment on divestments but we divest low-margin businesses and we have done that. >> thank you so much for joining me. the senior vice president of ibm systems. >> thank you. >> we have less than an hour of -- until the start of trading. i want to get back to our breaking news desk where alix steel is keeping and i on recent filings -- an eye on recent filings. >> they only represent long-term and not short. let's start with dan loeb and third point. he amassed a new steak and the largest refiner by market value by 5 million shares.
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the portfolio increased 27%. he said he is seeing value in energy related names. switching to david tepper selling craze. sold almost all the shares of the spider spy. they cut exposure to u.s. stocks by about 40%. this one came out this morning. 21 million share stake in halliburton for value act. they have an activist stake in baker hughes. halliburton is buying baker hughes. by mid-january, the increased to 22 million. back to you. >> still to come what do blake
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griffin, russell wilson, danica patrick, and kobe bryant have in common? they are all helping derek jeter in his newest business venture. i will tell you more in my new interview with the captain after the break. ♪
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>> egypt once a you and resolution for international action against islamic state in libya. this is in response to a video showing 21 coptic christians being beheaded by islamic state. surveillance and hacking tools were embedded in the hard drives of network targeted in russia iran, pakistan, and china.
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the real estate recovery looks to have stalled in china. housing prices were down 5.1% year on year in january. this is despite the easing of property controls last year in the country. that is the latest world news. shifting to sports, what does a baseball legend do once his playing days are over? for derek jeter it is about giving fellow pros and new way to express themselves. i spoke to him about launching the players tribune and how will will be different from other media platforms. here he is. >> i spent an entire career working in new york and dealing with the media and the media has helped shape my career. but i want to do have a platform for athletes, so that they can speak directly to the fans in their own words first-person point of view, unfiltered unbiased.
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i think it is something that is needed. i have spoken with athletes from all different sports and they are excited about it and that excites me. >> how involved are you going to be? >> whether it is meeting with different companies, i have enjoyed being behind the scenes and getting an opportunity to meet some partners strategic art nurse to help us out. >> are you involved in recruiting some of the players? >> i have talked to some of the players. i would not call it recruitment. players want to do this. they want to talk. players have all kinds of interests. we want to give them the tools to develop the content that they want to share with their fans. that is what excites me. >> i was looking through the players tribune. there are so many great articles.
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i think about it and i say, there is social media, there is twitter, facebook, instagram linkedin, other avenues to say those same things. why would they come to the players tribune? >> it is almost like a longform twitter. i don't have a twitter account. it is kind of hard to say an entire message or story or point of view in that little amount of space. athletes are always going to continue to do that. we are giving them tools to develop, produce, curate anything that they want. athletes love it. this day and age athletes like sharing everything with the world. it is fun for us. >> we will have more with el capitan in the next hour. over the weekend, it was wayne's
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world and a whole lot more. "saturday night live" celebrated its 40th birthday. thanks for the memories. we will be back. ♪
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>> 23 million people watched "saturday night live" 40th anniversary special. it brought together many of the people we love and who got their big break on "saturday night live." >> ♪ you know that you can't hold it inside and that's when you break ♪ >> yeah. sing it. a challenge for tesla. apple is secretly trying to develop its own electric car.
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we will have much more after the break. ♪
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>> welcome back to "in the loop." futures indicate stocks will be litter changed at the open. a drop in factory activity in new york state. time is running out for greece. european finance ministers say there will be no more talks on financial support unless greece asks for the current bailout program to be extended. there are concerns that greece may exit from the euro. >> europe will do the thing. it will pull a good agreement, and honorable agreement out of
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what seems to be an impasse. we did it last winter and we will do it again now. >> the current bailout agreement ends at the end of this month. the ukrainian cease-fire is being ignored in one part of the country. pro-russian rebels have been attacking a key railroad junction with thousands of ukrainian troops are holed up. both sides were expected to begin pulling back weapons from the front line. a federal judge in texas has temporarily haunted president obama's actions on illegal immigration. texas and 25 other states had sued to block the presidential action. the justice department will appeal the ruling. the new parents of burger king posted a gain. restaurant brands international was created when burger king bought the canadian coffee and doughnut chain tim hortons. tim hortons posted a 4% gain.
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a rare gain in the fast food industry. we are under 30 minutes from the start of the trade. let's count you done with the top headlines before the bell. julie hyman and and bob emery join me. let's start with number 10. we just spoke with the ibm senior vice president for their software and services division. ibm is committing to spend $1 billion to develop its software portfolio over the next five years. the tech giant's been trying to entice customers with new products. 11 quarters of declining revenue . incredible. >> it feels a little bit like let's throw a lot at wall and see what sticks. in addition to all of that declining revenue, the stock is down about 12% over the past year at a time when other tech companies have been doing much better. for a lot of time, ibm's stock
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is been stuck in a range and it fell off in the past six months or so. >> it seems like everyone from hp to facebook to others are going into storage and cloud computing and data computing. >> ibm seems to be one step behind everybody forever. now they are going to come roaring back, right? and the internet is a fad and there is no snow on the ground. [laughter] >> he said, check us out in 18 months. we will see of these initiatives payoff. investors are worried. the stock is down 12%, as you noted. investors are yanking $6.8 billion from the biggest exchange traded fund. does anybody smelly bubble? >> we keep saying that people have a short attention span and a short memory. this memory is a really bad one. it goes back almost 15 years.
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maybe people are learning, maybe people actually remember how bad it was back then. >> if you are talking about the bubble, we look at the valuations and we are nowhere near where we were at that time. if you look at the fundamentals 45% of the companies on the nasdaq have trailed estimates. that is a much higher percentage than we see in the broader s&p 500. that usually averages two thirds of companies beating estimates. this is really poor performance. >> when you look at the nasdaq, it is apple and then it is the rest of them. thinking about apple, we have seen iphones, ipads, iwatch is, what about an eye car? -- icar? is apple ready for the challenges that come with the auto industry? could you imagine apple making cars? >> do we really think apple is
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going to make a car? there are some money contributions they could be making to the technology of a car. by the way, they were going to keep a secret. it was the worst kept secret. maybe they were just putting their foot in the water. they have $178 billion burning a hole in their pocket. a but this was a way to get into the auto industry without actually building an auto. >> they have not said that they are definitely building a car. this is all just sort of exploratory. we are all not wearing google glass right now. you get tech companies that have cash and some desire to do these creative projects exploring this stuff. it does not mean we are all going to be driving apple cars. >> may be for tech companies starting a car is like owning a sports team. it is a prestigious thing. they have the money lying around.
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activist investor each partner management has said that they want the ceo removed immediately from temper sealy. >> this story puts you to sleep. [laughter] >> this is just yet another example that activist investors have many companies on their radar and now they are going after beds. i think you can pretty easily argue that there was a lot of nepotism in corporate america in terms of relationships between boards and companies. >> there is a lot of, there is not a lot of fire in the belly and a lot of complacency. that was the word i was looking for. there is a lot of room for activists to try to make changes. >> almost half of the companies on nasdaq 100 where earnings
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trailed estimates. these guys are all under pressure. men and women, by the way. that is not the only executive shakeup. there will be a new ceo at starwood hotels & resorts. the president, ceo, and director will re-sign. the starwood director will be named on an interim basis as the ceo. they need to now find their next ceo. >> this is another underperformer. this is a time when lodging and travel is starting to pick back up in a decided fashion. if you are not performing well and that kind of environment then probably the company directors are looking to the future for the next couple years which are going to be strong growth years and travel. >> i stay motel 6 or i just can't by the side of the road. [laughter] i have kids to put through
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school. i can't be going to a fancy place like starwood. >> don't you like your curved shower rods though? [laughter] i will leave the lid up for you. [laughter] >> everything should be symmetrical and straight especially in the shower. [laughter] >> business travel is coming back come a travel is doing well, you would think starwood would not want to be missing the money. executive changes don't stop there. we will discuss airlines. robbie hayes took over yesterday. stay "in the loop." ♪
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>> we continue to count down to the opening bell. it is time for our deep dive to number five. jetblue, the airline's new ceo robin hayes took over yesterday.
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shares for jetblue are up by nearly double from last year. after resisting for years, jetblue will begin charging fees to check luggage for the first time for some customers. customers will eventually see less legroom as the airline plans to add more seats in each flight. will the ceo be a but to increase profit without destroying the culture that has made the airline? some loyal jetblue customers are already saying, the culture is being destroyed just by putting in these baggage fees. how big of a gamble is this? >> the baggage fees are pretty small and the whole scheme of things, primarily because other airlines already chargeback fees and most customers really want see them. if you are a true blue member you will not have a high bag fee.
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>> the cheap tickets. >> and that is not a typical. most airlines have some tiered level of who pays for bags and who does not. >> bring up the chart that we have. the different editions that were announced. we have the baggage fees the more seats equals less legroom. the new partnership with barclays, the apple pay, the new charter flights to cuba. what is the most important out of that? >> i think the bag fees are important. as far as the seats and the less legroom, you will not notice the difference. it is one inch. that is it. one inch. that is the difference in the legroom. they are still going to have more legroom than all of their competitors. if you go back to jetblue in the
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year 2000 when they first started, they did have more seats on the aircraft. they took seats out when they started flying the aircraft to did not have the range to go with the last 12 seats, so they could not sell them. the faa has a role that says one flight attendant for every 50 seats. even though they could not sell those seats, they still had to have the extra flight attendant. so they removed the seats. the average passenger will not notice that loss of one inch. >> we just showed how this is not just jetblue. bring them back up again. i want to see how much legroom we are losing. this infuriates me. air canada has the most. i am only flying air canada now. 36 inches of legroom. on the far right is spirit airlines, which has the least. at least jetblue has 34 inches, i believe.
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>> if you look at american and united, they are at 32 inches. jetblue still has 32 -- still has more legroom. our issue with jetblue had really more to do with the fact that their customers want the extra legroom and yet their customers are not willing to pay for extra legroom. our attitude is, fine, if you want to have the extra then you need to pay for it. almost every other airline charges for it why shouldn't jetblue? why should jetblue just give it away? in the name of great customer service? i think they deliver a fabulous product to their customers, i just think their customers should pay for it. >> what is going to add the most bottom line? >> it is the bag fees.
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they will be a to raise the first class fee. they are still below with the big guys charge. you guys did a preview a couple of months ago. >> we did, actually. it looked interesting. i would fly for sure. the price is wonderful. robin is now in charge, as of yesterday. his big first order of business is going to be what? >> to start to deliver on a lot of the things that they promised. all of the things that we just chatted about. it is a great opportunity for him. i don't think use going to change the culture of the airline. i think he has the support of the board. that is very clear. i will think anything dramatic is changing. i think these are small changes that add up to a dramatic difference but jetblue is going
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to continue to be the great little airline that it has always been. it has the opportunity to connect to international flights in new york. he just really needs to deliver on the promises and he needs to make sure that on days like today when it is snowing in boston and new york that the airline flies as on-time as possible. >> thank you so much. >> thanks for having me. >> much more ahead on the airspace. the faa is that with proposed rules for drones. will you be able to have your pizza delivered by air? we will find out. ♪
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>> let's take a look at our global markets.
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the euro strengthened today. european stocks are holding steady. oil is looking better, as well though down. it is about $60 per barrel. that is on news that opec ministers are expecting confidence in the market rebound. u.s. drillers idled more than 500 rigs in the past 10 weeks. i want to get back to bringing you the most important stories before the bell. bob emery and julie hyman are joining me this morning. on to number four. thousands of businesses could receive clearance to fly drones after these proposed rules from the faa. flights would not be allowed out of the side of the operator and they cannot be used for pizza delivery or other products. amazon is already trying to do it along with dominoes. it would need to be out of sight
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if they were going to do those things. >> that rule precludes it. >> unless you want to deliver from the kitchen to the bedroom. >> this is a rule that says it is ok to do the remote control helicopter. it is not really a drone if it is still in your site. >> it is a toy. >> apparently there are a lot of manned flights to do surveying and other things that can be dangerous for the operators, so this way, if you are doing some kind of surveying and you can still see the plane, that is going to be allowed. >> if i could straight a note of paranoia. >> please do. >> we have seen the nsa do things with our information that maybe they were not authorized to do. what is to stop the government from spying on us with drones? it is really scary to me. >> what is to stop our neighbors
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from spying on us with drones? >> a federal judge in texas threw a wrench in president obama's executive actions on illegal immigrants. texas and 25 other states have sued to block the president's actions and the doj is going to appeal the ruling. >> i was reading about this this morning on and even if the obama administration ultimately gets this going and manages to enact the role, part of the problem is signing people up, signing undocumented immigrants up. when you have this back and forth and uncertainty about a rule actually going through, it becomes more difficult because undocumented immigrants don't feel the confidence that the role will stay in effect, so they are less likely to do it. it is a behavioral problem. >> it is a great point. >> conservatives are always
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saying they don't want one person to set policy, and yet there is this one conservative judge in brownsville texas who is saying, we want texas to be able to tell the federal government. >> get them out of our state. greece is one step closer to exiting the eurozone after talks with european creditors collapsed yesterday. who thinks greece is really going to exit the euro? >> what do we expect the greek government to do? imagine ted cruz being elected president and then saying, obama care is fantastic, let's keep going. these guys were elected to do something. the voters would rebel if they did something different. >> at the same time, do the voters want to exit the euro? they want their cake and they want to eat it, too. is it just going to go back and forth and back and forth and then at the last moment they
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will come together? >> that is what negotiations are, right? >> as we near the opening bell let's get a check on where futures are settling. they are settling mixed as we are near a record high. ♪
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betty: welcome back to "in the loop." bringing you the most important stories before the bell. we've come to our number one story. we talked oil, what about gold. gained for a third day. the longest run in almost six weeks as euro area finance ministers met an impasse over greece's financing. after two years of losses. julie: we are a month and a half in. i don't know if that a whole year makes. it depends on how much the
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turmoil continues and how worried people are. betty: you are kind of a bear. bob: a perma-bear. i only see the glass as half anti-. i'm not that concerned. he kind of turmoil going on right now in the financial markets is nothing compared to even a couple years ago. we are kind of making big stuff out of greece and about ukraine. what kind of -- i am very u.s.-centric. what is it going to matter to the consumer here? to the corporations here in the u.s. betty: as long as it does not matter, why are you going to go into gold. we're in a deflationary threat environment. maybe that makes the case not to go into gold. bob: the thing i am concerned about, gas prices have been creeping up. i like them below. betty: $2.09 yesterday.
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i want to bring in peter. chief market strategist and global head of equity derivatives. he's also a bear. not a perma-bear. one of the lowest s&p forecasts of 2015. 0 to 5% lower this year, why? peter: i do not think we have seen commodities behave the way we saw in 2014 without a cause that is more than just supply related. if it were just oil that had fallen and price, one could make the argument that there was oversupply vis-a-vis shale fracking, etc. you look at copper aluminum nickel, industrial commodities they are also swooning. it's difficult to ignore and make a supply-side argument for oil when you have other
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commodities confirming beta's inflationary trend you are seeing in oil. copper -- confirming the dis-inflationary trend you are seeing in oil. copper is one i like. it tells you about china. copper is a cause i currency -- copper is a quasi-currency in china used as collateral. if the price of copper falls it will fall more because there are margin calls on collateral. betty: that describes the macro environment and slowing demand around the world. how does that translate into a lower u.s. stock market? peter: through the u.s. dollar is the first mechanism. the u.s. stock market moves lower because of the corporate default cycle. i do not see that as evolving quickly this year. we will see the beginnings through energy, energy high your default 15% to 20% -- we will
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see the beginnings through energy. energy high yield default. primarily we will see pressure on large-cap earnings through a stronger dollar. that's the first step in lower equities. betty: how sustained is that going to be? a lot of the stronger dollar was felt in the fourth quarter because of the sharpness of the moves and the magnitude. even though, if you look at consensus, there is consensus we will see dollar strength it is not going to be the same sharpness and magnitude. won't companies be adjusting? peter: i agree. the severity of the move is the most important consideration. if you are the cfo of a company, whoever is responsible for hedging. you have already seen a big move.
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do you hedge down? hedging is very expensive. companies are not going to adjust. you are in a quandary. you've already seen the big move. do you hedge now when it is most expensive to hedge? probably not. they will feel whatever move in the dollar we see from here on out. when you are a big conglomerate it is hard to hedge the dollar. you are hedging businesses, many of which are different. bob: what about oil, u.s. price at about $50. and i going to be paying more at the pump? peter: i do not think anyone has a real idea. there is persistent oversupply largely because starting in 2008 we started to produce more oil here. that said, in the near we have been thinking there was going to be a basing occurring. when the wti curb goes into contango you can sell a future you can rent a large crude carrier and store oil offshore.
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that creates a bid for spot oil. that began to happen a month to six weeks ago. that might be a near-term floor. that is an inventory restocking dynamic rather than a fundamental dynamic. from the fundamental supply-demand-side, we are bearish on global demand and we think it is going to take longer to take supply off-line than most people think, i think oil could go into the $30's. julie: to circle back to consumer demand in the u.s. if you look at lower oil prices and lower gasoline prices, aren't you going to have a u.s. economy that is extremely reliant on consumer spending that is going to manage to be strong? peter: i agree with bob. the one place you can hide is a little counterintuitive. the consumer has nice tailwinds. the net benefit of lower oil prices.
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there is the net benefit, it is a detriment to capex and jobs but net net to the consumer it is a benefit. lending standards and proof, money is available to the consumer. growth is strong enough for the consumer to be sustained through 2015. betty: ok, aren't those the same factors that would help mitigate corporate defaults you are talking about? peter: that is why i am only modestly bearish. if i did not think there was a mitigating factor i would be more bearish. the risks are building but the consumer in the u.s. is going to be the major offset. bob: i will mark you down for oil in the $30's. peter: it eventually goes higher if supply is taken out. betty: thank you so much, peter. chief market strategist and
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global head of equity derivatives at cantor fitzgerald. thanks to bob and julie. is it all hype? a new electric car pushing apple close to new highs. port problems on the west coast for retailers. why cargo ships are sitting idle. that's a live shot. what is going on and how that is hurting the retail industry. we are a few minutes into the session. ♪
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betty: trading is just underway. about 10 minutes into the session. we look to be lower. we will get back to alix steel. we were just speaking about energy shares. alix: energy shares slightly lower. value act adding shares of
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halliburton last quarter. has about 15 million shares of baker hughes, increasing them. activist investors pushing for a merger. halliburton supposedly buying baker hughes in a 35 lean dollar deal. transition off by 1%. some pain. cutting into dividends, getting a new ceo. the current chairman will be new ceo. the world's largest oil services company. losing business but getting paid less for the business it keeps. another reason you are seeing pressure. a retail roundup. barclays initiating coverage of macy's as underweight. seeing some pressure on shares. nordstrom cutting the stock to underweight. basically blaming margins. the company will be spending more on its on the channel ventures -- its omni channel
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ventures. a down day but take a look at apple. barely up there. $ hitting a new high of127.89, -- hitting a new high of $12 7.89. zillow missing estimates despite a revenue beat. it is supposed to be buying trulia and says it will close in february. fourth-quarter revenue was up 58% and that is why you are seeing a pop. betty: thank you, alix steel. cargo ships at west coast ports are sitting idle. goods's stock as labor disputes intensify. the battle is set on a contract dispute between the dock workers union and terminal operators. it could have costs, with
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predictions upwards of $7 billion this year. shelby holliday took a tour at the port of l.a. >> this is the breakwater. >> these are all ships? >> all ships. 25 to 30 there. >> being on the water gives you perspective on how much stuff is sitting on the ships that are going virtually nowhere. one 40-foot shipping container can hold 130 thousand pieces of clothing, 60,000 toys, 3600 electronics or 15,000 auto parts. they have hundreds of containers. >> that is a bulker. it is going to get congested. >> once an agreement is reached between the dock workers port operators, it is not like the ships can rush and get
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unloaded. it will take months for the traffic to return to normal. betty: shelby joins me from long beach. your reports showed a of product sitting on barges in the ocean. who among retailers is going to be hardest hit? shelby: any industry that does trade with asia via cargo ship is feeling the effects. just to give you an idea of top imports suspended at sea -- furniture, apparel, auto parts, electronics, footwear. we are seeing ripple effects across the u.s. economy. the retail industry says a shutdown of west coast ports would cost $2 billion a day. automakers are taking a hit. honda saying they are cutting u.s. output because they cannot get auto parts they need. it is not just about imports, it is about exports. the u.s. agriculture industry is losing $39 to 40 million dollars
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a week because farmers cannot get fresh meat out to their top markets in asia. if you look at the bigger picture, these 29 ports from seattle to san diego handle 40% of containerized cargo, 12.5% of gdp. that is why president obama has sent his labor secretary. people are hopeful he can help negotiate. betty: certainly this is a big deal for the economy. what about a resolution? what are people saying/ shelby: i spoke to a professor at berkeley who studies unions. he says the fact that political pressure has been stepped up makes him believed it could be days instead of weeks. we are seeing urgency on the ground. the ship behind me was on the water for a month and was just pulled in because the crew ran out of food. there is pressure from the industry. it appears that both sides are
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saying in agreement is close but they are caught on an issue surrounding arbitration. that is what everyone is helpful for labor secretary thomas perez to help negotiate. betty: until a deal is reached what happens to all the cargo? shelby: good question. some smaller ships have options. they could go to canada or mexico or through the panama canal to the east coast. some ships are too big to go through the panama canal. they are stuck here. it is like a game of chess. they are waiting to make the next move. hopefully their move is before their competitors. companies can transport cargo via air but that costs 15 times to 20 times more than by sea. it is costing companies a lot of money to deal with. betty: thank you so much, shelby holliday from long beach california on the port dispute. speaking about being bearish
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watching a noted short seller for his latest pick. it's a european company. stay "in the loop." ♪
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betty: welcome back to "in the loop" in new york city. more snow as a system sweeps from oklahoma to d.c. and up the east coast. this is groundhog day over and over. on top of freezing temperatures in the east with many states seeing temperatures with single digits and windchills below zero. these pictures from niagara falls shall at all. a magical icy coating. tourists still determined to flock to the destination. they are on ice skating rinks. it is warm in here. carson block is the director of
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research at muddy waters research. he's going to join "market makers" to discuss a european company. the one he says is his latest stock pick. with me now is erik schatzker. is he a bear? erik: we cannot say. you are going to find out at 11:00 when carson block joins us on "market makers." it is warm in here and we are going to heat it up more. carson block has a way of making headlines. remember sign a forest -- remember sinoforest in 2011. carson block rocketed to financial samefame. that stock went to zero, as did a number of others. nq mobile, he has drawn a lot of
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criticism for this call. the stock is still kicking but it is down 85% since he recommended investors short nq mobile. today, carson block will be with me and stephanie to talk about a european company. we have not had cars and talk about a european company. his first overseas adventure towards europe. he has been in china. i do not know what his position is just yet, nor do i know what the company is. betty: you will find out. is it a self for filling prophecy, carson block says this is a stock that is going to go down to zero? erik: good point. for a while it was. he seemed to have a midas touch. everything he recommended you short ended up going down until it did make people a pile of money if they listened. since 2011, since the sino-fo
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rest call, his record is more mixed. he came out with a call about a year and a half ago, american tower, that has gone against his call. he is still waging his research battle against american tower. new oriental education has not really paid off. there are a number of others which i will not call losers. i will put them in the undecided category like olam international, a singaporean company that was kind of bailed out by a state backed entity in singapore. there was focus media, which was acquired by carlyle. betty: swtill tbd on the performances. erik: it makes his latest call that much more interesting. betty: thank you so much, erik schatzker of "market makers." back with more on my derek jeter interview and who he might want to buy. ♪
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betty: for decades to come, little leaguers will pretend to be derek jeter in their backyards. jeter served as the new york yankees captain for a decade. he was a 14 time all-star and won five world series. will be retired shortstop be able to duplicate success on the
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field in the business world? derek jeter: this has been a fun off-season where i do not have to get up in the morning. physically, i am retired. betty: physically. how hard was it mentally? derek jeter: it was not. people have asked me that and it is something i have known. it just felt right. the time was right. mentally i feel great. betty: you are only 40 years old. derek jeter: thank you. only. betty: 40 is the new 20. derek jeter: when you are an athlete they say you are old at 30. betty: do you feel like you have been preparing for the moment where you are going to take the money you made and invest it and grow it? derek jeter: people make an assumption that you retire and you jump into the business world. there is a lot of things i have learned along the way, in marketing, endorsement deals
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investments, there are things that you learn. there is a lot of things in business that i have learned. it is not like i am just jumping into it. i am just more involved. betty: what is the biggest thing you have learned? derek jeter: in business patience. i'm coming from a career where it is instant gratification. i have also learned what i do not know. i try to learn from people that are much smarter. betty: have you turned to any billionaires or entrepreneurs or ceos for advice? derek jeter: of course. i have learned quite a bit from a lot of the people i have met. betty: like who? derek jeter: indra nooyi the ceo of pepsi. she brought me to davos, thrust me into the business scene.
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michael jordan is like a big brother to me. someone who has some similarities in terms of the sports world and going into team ownership, which one day i would like to do. betty: how close are you to making a decision on that? derek jeter: i do not know enough about it to jump in. my biggest fear in life is being unprepared. i make sure i am fully prepared before i would do something like that. betty: 12 months from now we will not see derek jeter, team owner. derek jeter: you've got some money? betty: i might need to get some for you -- from you. if you were to own a team, would it be a baseball team? derek jeter: i do not know enough about the other sports to own a team. i like to call the shots and i like to know what i am doing. i will stick with what i know. betty: derek jeter, by the way
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we got a comment from indra no oyi. she said "derek jeter is a joy to work with." there you go. spring training, around the corner. the yankees' star pitcher might have some competition from me. showed me how to throw a fastball. that is coming up later in the week. ♪
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>> live from bloomberg headquarters in new york, this is "market makers." with erik schatzker and stephanie ruhle. erik: time is running out for greece. european finance ministers say no more talks of financial aid unless greece agrees to extend the bailout program. stephanie: where are investing. erik: changing the world of fashion with a laptop. a blogger whose influence might rival in a winter -- rival anna wintour.


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