tv In the Loop With Betty Liu Bloomberg March 3, 2015 8:00am-10:01am EST
stocks are hitting fresh highs. the nasdaq above 5000 for the first time in 15 years. we have a great line of guests. days after the vote on net neutrality, tom wheeler joins us to defend his decision live from the mobile world congress. why it is it feeling like 2007 all over again in the hotel world? that is a good thing by the way. david lichtenstein joins us. it takes a lot of moxie to do it. here is a look at our top stories. benjamin netanyahu may reveal details today about the nuclear talks with iran. he will address a joint session of congress less than three hours from now. he wants u.s. lawmakers to stop any deal that offers come to iran saying it would threaten israeli security. he is appearing at the invitation of house speaker john boehner who did not consult with the white house. netanyahu denies he is making
his shaky relationship with the president even worse. >> what is not the purpose of that speech is it is not intended to show any disrespect to president obama or the esteemed office he holds. i have great respect for both. betty: president obama tells that while he doesn't see i die with netanyahu on iran, the differences are not personal -- while he doesn't see eye to eye that yahoo! on iran, the differences are not personal. hillary clinton conducted business with her own personal e-mail which would break rules. she has turned over thousands of cases to authority already. russian officer is being remembered today. he was gunned down friday.
he was one of the most outspoken critics of environmental -- of vladimir putin. the bank is facing a currency rigging probe and citing a $1.25 billion for a possible settlement. >> and provide for what we can reasonably estimate at this time and that is what we can reasonably estimate. i cannot say that will be the end of the foreign exchange provision because the discussions are still ongoing with a number of the authorities. betty: in the next two years the bank may save up to $8 billion in legal costs because of the conduct. those are your top headlines on this tuesday morning. another top headline's chrysler is out with their sales for the u.s. in the month of february. of 5% -- up 5.6%. >> analysts were looking for somewhere in the neighborhood of
a point on percent but this is a 5.6% increase probably because of the winter weather dampening sales overall. chrysler brand vehicles increased 13%. we are still waiting for gm and ford to come out with their numbers. analysts are looking for gains of just under 6% for each of those companies. if you look at how chrysler shares are performing in the premarket, they are down 1.8% in early trading. we will continue to keep an eye on all the moves for you. betty: thank you so much. chrysler shares down about 2% on the back of those numbers. scarlet fu. like miley cyrus says, it is a party in the usa. the nasdaq is making history again closing above 5000 points for the first time in 15 years. on the same day the smp and dow finished the day at record highs. where we start the day, i want to bring in mike reagan who
likes a good party, particularly when it has some zeros behind it. >> i am a miley fan myself. betty: what is driving this here? >> if you are looking at the nasdaq everyone wants to compare it to 15 years ago. it is such a dramatically different index than it was then. 5000 stocks in the index thanen. only about 2500 now. m&a or break of c listings have had an impact. stocks that are in it now are of such a different variety. they are about twice as big as they were in the bubble heyday because there is half as many stocks and it. -- anditn it. apple makes up a good part of the nasdaq.
betty: interesting you mention apple because the number one stock back in 2000 on the nasdaq was microsoft. that is number two now. apple is the biggest one now. >> by far and away it is 10% of the index. it takes a bigger part in the nasdaq than the s&p 500. close to about 40% weighting closer to 60 back in the bubble day. it is a little more diversified. betty: that is important because valuations. they are much tamer today than they were in 2000. >> absolutely. nasdaq is about 32 times earnings compared to a peak of about 170 times earnings. the cash on companies' balance sheets this tremendous.
the have about $1.7 trillion worth of cash, about 18% of the market cap. whether it is by backs of dividends or whatever, that is a strong underpinning. betty: and a safety net. if hell breaks loose, they have something to turn to. what is driving the record highs? >> confidence in the economy. it is an interesting time now because we are looking at the kleins in earnings in this quarter and the second quarter so the question is can these valuations continue to expand and out outpaced the earnings? betty: thank you so much mike reagan a bloomberg news -- of bloomberg news. moving and shaking this hour is the new mcdonald's ceo.
stephen easterbrook is just a day into his job and his turnaround strategy is making waves in the market. the share price topped 100 dollars yesterday for mcdonald's, its highest rating price since july of last year. at one point, it was the highest gainer on the dow. looks like investors are giving him a vote of confidence on his first day on the job. israeli prime minister benjamin netanyahu was speak to the joint session of congress this morning. he is speaking without the blessing of the white house. he plans to challenge the administration's push for a nuclear deal with iran. peter cook has more on this. what will he tell congress in his speech this morning, peter? >> he will lay out the case against this iran nuclear deal that is still being negotiated at this hour by john kerry. he will make the case that this
deal is not only not in the united states and dress or israel's interest and opposes a threat to his country. he will walk through some specifics of what israel sees is deficient in this deal. he touched on some of those topics yesterday. >> as prime minister of israel, i have a moral obligation to speak up in the face of these dangers while there is still time to overcome. -- two over avert them. >> he said the speech is not looking to feel the partisan rank here in washington or disrespect the president. it wasn't blessed are the white house but it does add to the partisan rank here and that is why some will not be attending the speech on capitol hill. betty: the white house offered a
pre-bottle to this? >> they did. they say there are still some substantial disagreements on the merits of these new talks and what can ultimately be achieved. there is a big gap between the two. he said he did not treat this as a personal problem between he and netanyahu but there are differences in how they are negotiating. he left it to his national security advisor to provide the same reassurance that the u.s. will not put israel's safety at risk. >> i want to be very clear. a bad deal is worse than no deal. [applause] if that is the choice, there will be no deal. >> that is where it stands as the prime minister but paris for his speech here at 11:00 a.m. eastern time. the president will not be watching.
he will be occupied with other things including a phone call with other world leaders to talk about ukraine at 11:30 a.m. betty: thank you. we will have live coverage of benjamin netanyahu's address. that will be at 11:00 a.m. eastern time. still ahead, back on the nasdaq fetching 5000. we have to ask this question, is it time to be afraid? to be very afraid of nasdaq 5000? subprime lenders selling one main financial for more than $4 billion in cash. we will to you what is behind that sale up next. ♪
2020. greece asked for help last year but the request was put on hold during the country's elections and bailout. the world's largest electronics chain is cutting cost efforts. best buy will offer a special dividend of $.51 a share. it will increase by 21%. it be estimates but fell short this quarter. one main financial was bought for four and a quarter billion dollars in cash -- $4.25 billion
in cash. blackberry is taking another stab at winning back the smart phone market. the introduced its five inch leap device in barcelona today. the touchscreen device will set you back two hundred $75 and will be sold by european carriers in april. the canadian company plans another device with a sliding keyboard later this year. lots of people still like that blackboard keyboard -- but very keyboard -- blackberry keyboard. the economist intelligence unit says singapore beat out paris and oslo and sydney as the most extensive city. wine and domestic health is included in the study. an influx of foreigners contributed.
new york city is now 22nd. i would have thought it would be in the top 10. back on tech, the nasdaq is back big. according to this chart, it's a low debt indicates shares have more room to run. the lowest among the nine industries in the s&p means they don't have to pay down debt and they can return all of that money if they wanted to to their shareholders. someone who knows a lot about the industry is no wyman -- is bill wyman. he joins us now from washington. bill, what do you make of that? is that the right way to look at this that they practically have no debt soaked stocks have room to run? >> it is an important part of the puzzle. not only do they have no debt
but they have massive amounts of cash. that cash is being generated by record profits and that is the biggest difference between now and 2000. tech margins in 2014 were record highs at 22%. that is generating record profits and cash and record cash returns. there were turned over $200 billion just in the last year to investors. this is an important part of what is driving the tech rise. betty: it is hugely important. the numbers seems two point in one direction which is up and in the green. can you be the dumbest investor in the world and still make money in tech? >> tech is not a place for tourists. it is a difficult place because as soon as you think you figured it out, it changes. there is a lot of secular disruption in tech. the market hasn't been willing to place a high valuation on tech because it believes those
profits are not sustainable. for example, despite all the cash and profit, tech is basically at or even less than the broader market multiple. betty: it is. i want you to bring this up because we just showed a chart here of the difference between the tech shares in the nasdaq now and back in 2000. the p/e ratio despite all of these hot tech companies is just at 20 right now. in 2000, it was that -- it was at 194. that is incredible. >> that's right. it's been 15 years of earnings growth and 15 years of the rating versus the broader averages. i think tech is set up quite well. the most important thing which we haven't talked about is innovation. back in 2000, apple was 0.5% of
the s&p. google was zero. now apple is 20 and since google didn't exist it's 10% today is a trick question. a lot depends on smartphones. they didn't exist back then. tech always comes back to innovation. betty: mark zuckerberg was in high school back in 2000. that is another thing to think about. apple -- bring those companies backup. apple was 10% and the nasdaq. microsoft, google amazon, and facebook are the top five. it wasn't like it was something else dominating the nasdaq in 2000. it was microsoft, cisco, intel, oracle, and sun microsystems. those stocks are still here.
those companies are still here. >> all except sun. they talked about the four horsemen of the internet. these were by and large infrastructure companies. the idea was you will sell the picks and shovels to the minors. when the miners went home, there were no more picks and shovels to sell. they restructured and are much more stable. i call them mature tech. the topline revenue growth is not what it was, but the flipside of that is margins are much higher and cash flow is much higher. for a lot of investors, that will offer increasingly attractive value. betty: there are many stocks in the nasdaq that are not tech. one stock in particular the has had one of the best run ups is monster beverage. that is up from 2000 by about over 53% -- over 1000% returns.
i don't want to mislead viewers that it is about technology shares bringing the nasdaq up. >> that's right. the broader point here is going back to innovation. if we were to have the same conversation tenures from now you would find a lot of companies that are not tech companies. they are not selling computer or storage. technology is deeply embedded in the way they run their businesses. there is a perennial debate about amazon. going forward, you will see a lot of tech enabled companies that people don't really think of as tech. betty: right. thank you bill. much more ahead. tech may be holding the party but the hotel sector wants to crash it.
betty: you're watching "in the loop" live. good morning. the nasdaq might be remaining everybody of 2000, but for people in the hotel industry, it is looking a lot like 2007 and that is a good thing. according to a hospitality research firm, revenue made her room is now at $103 across the top 25 u.s. markets. that is way above the $88 we saw in 2007. in new york city, revenue per average room is at $223,000 double -- $223, double the national average.
joining us, a moxie brand is being brought to the united states. david lichtenstein is the chairman founder of light stone group. because this is a european brand that marriott sells, the moxie group in europe. for those of us that don't know or understand is bring, what is special about moxy that you want to bring it to the u.s.? >> it is for the millenial's, mobile, travelers, hip, young happening. it is very style friendly but also affordable. it is unique. betty: is this a new trend in hotels? >> particularly for urban areas because most hotels will build for outside of the u.s.. it is a little bit like when you bring them into a very expensive urban area in new york it is a bit like trying to build a
mansion in new york city. if you want to build on affordable hotel room, inc. is challenging -- it gets challenging. you try to get here in january and february and it will kill your dollar. the idea is how do we create a good experience that is affordable? >>you shrink the hotel room. when you come to new york city it you really want to get out. betty: are people accepting? when you come to new york you accept the fact your room will be really small. >> small is relevant. when you are flying first class if they give you six inches on either side, you feel like wow. when you are in new york city, you want to see times square or you want to go to the village. the idea is to get out of your room. you want a great bed, fantastic shower, lots of water.
>> i want free wi-fi and a lot of outlets. >> we also have a great 24 hour activated space lobby. people want to see other beautiful and fun people. people who come to new york walk , talk, and think faster. by tricking the room, you can make that high design affordable. betty: we were showing the average revenues per room. as a hotel developer, how do you get the revenue up? >> new york does it naturally. betty: not just new york. elsewhere. >> london has 100,000 hotel rooms. new york city has 100,000 hotel rooms. according to the london visitors bureau, the 16 million visitors to new york city a year pale in
comparison to 56 million visitors a year in new york city. if you build it, they will come. moxy will just go to the highly urban areas like seattle, san francisco, miami, london. it is not for -- betty: it is not motel 6. i get it. on average, though, when you get out of new york city and san francisco and los angeles and miami, how do you bring the revenue up? >> right now, it is not taking much of an effort because after the great recession, banks stopped lending for hotel construction. occupancy this year will be up 25%. construction and new supplies up 5%. doesn't take a genius to realize 25% increase in occupancy and 5% increase in construction --
there will be a gap there. occupancy today in the hotel industry across the united states is at 65%, which is the highest it has ever been since the hotel index has been in place. betty: sounds like we are certainly traveling more and staying more places. you still want to stay in a hotel room. thank you so much for joining us david. here's is a look at our other top stories this morning. investors are partying like it is 2000. nasdaq is up over 5000 points for the first time in five years. dow jones and s&p will start trading at all time highs. in less than three hours, benjamin let now who -- benjamin netanyahu will tell his side of the story to congress. he will reveal details when he talks to a joint meeting of congress.
he says negotiating with iran could compromise israel's security. >> as prime minister of israel, i have a moral obligation to speak up in the face of these dangers while there is still time to avert them. betty: president obama said his relationship with israel is still strong despite the disagreement with iran. the ball is back in the house of representative's court in the budget fight. homeland security could be forced into a partial shutdown at the end of the week if there is no deal on funding. iraq is getting some support in the fight against isis militants. a u.s. official says iran is supplying heavy weapons in the battle to reclaim tikrit. the assault on saddam hussein's
hometown is now in its second day. five people have reportedly rejected settlements with gm over faulty ignition switches. those cases involved lower level compensation claims. gm set aside $600 million for victims of the switches which were blamed for at least 57 that's. -- 57 deaths. a chinese version of snl is in the works. a chinese committee that runs video sites is in the conversation. those are the headlines this morning. much more ahead. time to place your bet. what is moving? we are looking at casino stocks. find out what we have uncovered about oil holdings. that is next. ♪
betty: we are less than an hour away now from the start of trade on this tuesday morning. i want to go back to our breaking news desk. >> an upgrade from j.p. morgan with a higher price target of $58. j.p. morgan expects citigroup will have its 2015 capital plan approved. also, analysts mentioned a credit card agreement between visa and costco will add to revenue growth and return on assets. that stock up by half a percent. this is on release that the latest macau gaining revenue --
of course, you have the chinese president's anticorruption campaign keeping things the way. soviet figures came in better than estimated. keep in mind all of these names have fallen between 23% to 43%. speaking of casinos, all 4% of its revenue from the united's date states stumbling for one casino group. betty: thank you so much. scarlet fu. russian sanctions. exxon mobil expanded its russian oil holdings last year even as the united states and eu force the company to shut down drilling in the arctic. exxon went from having 11.4
million acres in russia to now nearly 64 million. alix steel joins us now with more. what does this mean that they have expanded? >> huge shout out to carol who broke the news on this part. they are not actually drilling. they just but the lease so at some point they might be able to drill. 64 million acres is enormous. this is all underwater. the company added to drilling rights and a couple of seas. if you take a look at the major explanation areas, the u.s. is its next biggest with 14.6 million acres. 64 million is an enormous number. keep in mind is still gets 40% of its revenue from the u.s. this could be a big bet on the future. betty: how is it possible they
were able to grab so much? >> loyola prices and sanctions. the price must have been competitive. the sanctions only prohibit actual drilling. you can build pipelines. you can do seismic activity and geographical exploration and you can have leasing rights. this is a workaround of the sanctions. exxon has had to wind down licenses and activities in the arctic sea, black sea. that was a loss of about one billion. this is a totally separate thing so it is an interesting dynamic of what you can and can't do. betty: if you can drill, what is the point? >> they are desperate. for the production hit a 15 year low. in 2007, they were producing 4.1 billion barrels of oil a day.
in 2016, 4 .1 billion. that means they are not going production. it is relatively flat. you need to grow that production as an oil producer. russia has some of the biggest oil and gas reserves in the world. exxon last year was really hit with some production rate failures. there were drilling and a lot of holes but the holes were dry so they were not getting the oil they needed. their cash costs per barrel to get the oil is also rising. this is a long-term bet. it could take as much as five to 10 years. you have to think 30 or 40 or 50 years out. maybe they think the sanctions will not be that bad for that long. betty: they are making this long-term bet and believing the sections hurt now but they are not looking at sanctions 30 or 40 years from now. >> they are committing for these decades and they think sections
will not last a long time. i was talking to someone a bloomberg industries who said they need oil today. they don't need oil in 10 years. they need it right now. betty: thank you so much. a big discovery here. exxon mobil from alix steel. getting excited about net neutrality? tom wheeler may have won the ballot of -- may have won the battle but the war rages on. he joins us live from barcelona. blackberry takes another leap into the smartphone arc market debuting a new touchscreen device. will you buy it? we will be back. ♪
it is currently facing a rigging probe. >> what we can reasonably estimate at this time is i cannot completely say that will be the end of the four nations provision because the discussions are still going on with a number of authorities. betty: the bank may face up to a billion dollars in legal costs because of tax misconduct. new questions about hillary clinton's online correspondence. she conducted government business with our own personal e-mail account. that would break federal rules. her aides did not save her e-mails. she has turned over thousands of pages to authorities. lumbar liquidators is now rated a buy according to an analyst. a 60 minute segment aired sunday took the company to task saying
laminate flooring made in china falls short of health and safety standards. the stock plunged 25% on monday due to the report. lane win is considering her next move after her ouster from windsor resorts. elaine wynn calls for removal extra ordinarily disappointing. blackberry takes another stab at regaining smartphone market share. it introduced the five inch leap device in barcelona. the touchscreen device will set you back $275. it will be sold by european carriers in april. another device with a sliding keyboard will be released this year. much of the focus of the annual conference will be on one
critical issue that affects everybody -- net neutrality. tom wheeler will take center stage and deliver a keynote address following last week's landmark vote in the u.s. on tougher internet regulations. the big question everyone is asking is how will these new rules impact the rest of the world? brad stone is there now with chairman tom wheeler. >> thank you betty. last week you approved some new network neutrality regulations. here you are in the belly of the beast. how has the reception been? >> i think they are my former friends. no, i think the most interesting thing is at how everyone is anxious about what the rules are about and how we structured them in such a way that they are built on the mobile model.
we build them around what has worked for the last 22 years in terms of regulating the wireless industry in the united states so we can make sure that was adequate investments that would continue to come as a result of the fact that there is no rate regulation and no terrifying in those traditional kinds of monopoly regulation you heard so much about during the debate. the feeling i am getting here is people are saying they understand it better. sprint has said they support it. t-mobile has said they will continue investing under this. google fiber has said even though they are now entitled to common carriers, they will continue to investigate the small wireless carriers. on and on there has been a list of people who have said the more we get past the rhetoric and the
more we get to what really is going on here, perhaps this is something we can make work. >> will the road ahead be that easy? should we expect litigation similar to what we saw with the 2010 proposal? >> the big dogs have promised they will litigate. everybody talks about this 317 page order. the rules take up eight pages. the other 3009 pages are the explanation which is talking to the court because we know that the big dogs will take us to court. >> i'm interested in your personal journey to net neutrality. you were a lobbyist for the cable and telecom industry. what was the epiphany for you at the fcc that brought about last week's ruling? >> it was long before that. i have been a proponent of open
networks before net neutrality was ever invented as a term. a former chip that started half a dozen companies and a former venture capitalist who understood the importance of open internet and access to networks. i walked into this job being a strong opponent of open networks. >> did the public statement by the obama administration last november play a role in the new rule? >> we had been going through a long process. i propose in february a set of rules that took a slightly different approach using section 706 but also as a question of should we use title two? and that. from may to the middle of the summer, i met with a bunch of consumers and innovators and
investors that said there is a real problem in the approach you are looking at. the test was the term commercial reasonableness. -- reasonables. they said if this means what is reasonable for the isp's and network operators, that would be a mistake. i said ok, i get it. let us start going back to the old test of what is just and reasonable. the way you get to that is you use title two of the communications act. then you say how do i not bring along all of the excess baggage of this traditional monopoly style regulation? we pattern that on what worked for the wireless industry. for 22 years, the wireless industry has been regulated as a common carrier under title two with a list of things that were left out of the all regulation.
they have invested $300 billion. >> you recently had a spectrum auction. everybody is screaming about how dish won in that auction. >> we bid under the rules established in 2006. for the upcoming auction that we have for spectrum that will take next year, we opened a rulemaking long before tacit question of what should be the new rules for these kind of designated entities. that is a proceeding under way right now and will be concluded and will guide what we do in the auction next year. >> thank you very much for joining us. betty, back to you. betty: thank you so much, brad. much more ahead. colorado wins big on legalizing
>> welcome back to in the loop. we are 30 minutes away from the opening bell. this is a look at our top stories. futures say stocks will dip at the opening. there is a possible currency rating settlement for taking a huge charge. nasdaq investigators are partying like it's 2000. the index is above 5000 points for the first time in 15 years. the dow jones and the s&p start trading at all-time highs. benjamin netanyahu may reveal talks about the -- details about
the talks with iran. he wants lawmakers to stop any deal that offers compromises to iran. he says it threatens israeli security. he is appearing at the invitation of house speaker john boehner. >> what is not the purpose of that speech my speech is not intended to show any disrespect to president obama or the esteemed office that he holds. of i have great respect for both. >> president obama tells reuters that while he does not see eye to eye on iran, their differences are not personal. new questions about hillary clinton's correspondences secretary of state. she conducted government business with her personal e-mail account. that would rake federal rules. they did not save her e-mails, a federal requirement. she has turned over thousands of pages to authorities.
the russian opposition leader is being laid to rest today. he was gunned down friday within sight of the kremlin. he was an outspoken critic of president vladimir putin. those are your top headlines this morning. we are under 30 months from the start of trade. we want the top 10 headlines. alix steel is joining us. barry riddle is joining us. let's start. number 10 is number one for the second year in a row. singapore maintains its global ranking as the most expensive city beating paris and zurich. transportation costs are three times more. it is the most expensive city globally. i ain't going there. to buy clothes and singapore. >> meat imports in singapore are
up 300%. that leads me to believe that the reason why is that have to import a lot of their stuff. >> it's an island nation and they import a lot of things. it's cleaner. the roads are nicer. mass transit is better. internet and cell phone is better. you pay more, you get a lot. >> i agree. have you been before? you? it looks like it's clean and beautiful. it's almost too nice. >> you are a new yorker. >> give me some trash and i will feel at home. number nine, local banks. a committee says that they are shortly liquidity needed for another financial crisis.
the committee on banking supervision says global banks are $341 billion short. they would have a shortfall year. give this a bunch of hubbub? is this something that is a cause for worry? >> what you need to provide is cash and bonds. does this create something in the treasury market why prices have unable to rise despite the fed move? >> there has been an underlying thing in the market. this is including the baby boom as they are becoming more conservative as they age and have a more conservative portfolio. when equities rally, rebalancing means that they sell equities and by bonds. that has been a source of the
relentless bid. there is an underlying bid for stocks and bonds. >> bond assets are considering part of the capital rate in europe. >> look at it from the bank perspective. the more they have in reserve the more they have for emergency reserves and they are less profitable. we want banks to be profitable or safe? there is something in the middle. >> saturday night live is heading to china after 40 years. they will start a chinese version with the search and video website. >> how is it possible when you have them not being able to air the big bang theory? >> is not going to be the american snl. it's going to be the ma -- chinese version. >> the whole point is to mark. >> it's difficult to do satire
in a nation with a morals board. >> is it going to bpr then it? >> essentially the quote was the commonest party ha citizens about what they would like and what policies are. here is the quote. this is from the communications of the university of china. they want to engage the audience because past forms of reaching are no longer suitable. >> they can open a twitter account. >> i don't know that s&l is the answer for that. moving on to number seven, google has confirmed a new plan to offer wireless service. they will have solar powered planes to bring wireless web access to unconnected areas across the globe.
this builds on their android operating system. >> i love everything that google does. i am a mac guy, but anytime google comes to town, you get faster and better and cheaper bandwidth. if they want to launch a bunch of drones or satellites or whatever and set up low-cost internet for the rest of the world-- > it's all to sell ads. >> of course. >> it's cheaper. >> it's the choice if you don't have internet or you haven't at low cost with ads or it most of the world's will take cheap access with ads as opposed to nothing. >> number six supersized frozen meals are defined and industry
trend. >> he doesn't eat hungry man. that is a lie. >> they are outpacing their competitors like lean cuisine. their sales are up 25% over the last five years. if you want to eat like a man, you will buy hungry man. >> this spoke to me in terms of knowing what your core business is. you commit and do that. lean cuisine or healthy choice has seen fallout. we know we are bad for you, we know you are thousand calories. >> clearly. i agree with you. if you are going to buy a big mac don't i a diet coke. admit the fact you are buying a big mac. >> we're not tail and we are not greek yogurt. do you want to go the trend or stick with core business? >> i was it i hop over the
he is our bloomberg view columnist. barry, let's go through your three ways we will never be like warren buffett. number one is value investing is hard. >> you were buying things that are out of favor. you are looking at doing a deep dive into the balance sheet to figure out what this company is really worth. this is what the market says it's worth, you have to be skilled enough to say that the market is wrong and i have a good outing tackle he what the company is worth, even if i am buying it and it gets cheaper and cheaper. you have to have the belief in your philosophy that i am right and everybody is wrong. >> it's more than that. it is a set of skills that only buffet well, there are other investors out there, what else is it? >> discipline. you have to have the emotional discipline to not give in. i use the example of the late
1990's. value investing was out of favor. here we are with the nasdaq at thousand 15 years later. the nasdaq was up in the 90's. you have to have the discipline to say what i am doing is long-term and it will work. i am not going to hop onto the latest trend. that is difficult. most people simply can't do that. a new shiny object comes along. we are not talking about a couple of months. we are talking about 96 97, 98, 99. how many people are going to keep with something that stick up the joint in four years. we have heard that buffet is a dinosaur and he's lost it. >> that extreme discipline. the third thing that you mentioned sets them apart from everybody else is he is very
very, very long term. >> he has only slight exaggeration as forever. he looks at investing not so much as buying stocks as buying companies as if they are private even when they are wells fargo or coca-cola. he thinks in terms of decades. most people are thinking in terms of weeks and months forget years. fewer people think in years than you would imagine. he says this is what i am going to do for the next century. forget that he is in his 80's. he is planning on holding a purchase unless there is a change in the is this or he discovers something that he did not understand before. it's rare for them to kick something out of the portfolio. >> he has the cash to be able to sit there for decades.
he does make mistakes. >> everybody does. >> one of them was the 400 billion -- 400 -- four in $40 million. in the world of business, bad news surfaces serially. you see a cockroach in your kitchen, you meet his relatives as the days go by. >> there is never won a cockroach. there are usually more. two separate buffet from everyone else, how many people look at themselves in the mirror and say here is what i got wrong last year. this is what i believed that was false. this is what i thought but it didn't. warren buffett, radel io of bridgewater there are not a lot of people willing to step up to the plate. we do our me a culpas every year.
we say this is what we were incorrect about. nobody was to admit they were wrong. he does it as publicly as you can imagine. >> people appreciate that. it makes him human. >> he is on uncle warren. he is held to a different standard because he is a lovable teddy bear. >> we have some breaking news on the auto front. >> we have numbers from ford. they were down 2% when they were looking for a gain of 5.8%. chrysler is reporting again of 6%. analysts were looking for something larger. when you break it down in terms of the brand, lincoln was down 7.5%. trucks increased 4% read that is a sign of lower gas prices taking hold.
there are some other headlines about ford adjusting car prices in russia along with other carmakers. this is because of the ruble weakness. they are seeing 2015 as a critical year. they are looking for revenue growth in europe. we are keeping an eye and all of these headlines as they report their february sales. we will have more in just a minute. ♪
you can see the stock plunged me 5% yesterday. analysts raised the rating to neutral. >> they are saying 60 minutes did not provide a complete picture of the issue. he did not talk with the testing methods used. it was not as thorough as you claimed. >> it was pretty brutal. i watched it sunday night. he is a better value investor then a short seller. he seems to have found a smoking gun. >> he says the stock will go down to zero. >> he is not an objective party. he is betting it will go lower. this is an ongoing concern. i don't know if they go to zero. >> greece is getting another boost. the european banks say they will provide funding to the cash
strapped country through 2020. this was put on hold during the elections and bailout negotiations. i read that story and said who? they are going after anybody to get money. >> they need to repay the imf by march. they really need to dig deep to find that money. they can go with cash they have left over. they could delay some payments. that is significant. >> this shows you the problem of being part of a monetary union without having control of your own currency. if they were to leave the eu, they had to fake their way in they could issue more currency or debt and print their way out of this. >> they could do all of those things if they were still alive bad that time. the conditions for them are so
devastating. >> tear off the band-aid and get it over with. >> american consumers are being more cautious with their income. people are spending, but they are saving. we just saw two disappointing car sales numbers. they are not spending money on cars. >> the weather is awful. >> the higher profit higher-margin vehicles are doing well. who wants to buy a car in this mess? >> it's a great time to buy a car. >> you get a deal. >> the stabilization we have seen in energy prices suggests the peak of it will pass through. we are past that area. hopefully that will stabilize. >> people are using their money to buy food, to pay down their
>> welcome back to in the loop. we are bringing you the most important stories you need to know. barry riddle and alix steel are joining me. we were tweeting during the break. we are talking about number one the nasdaq closing above 5000 points for the first time in 15 years. the s&p and dow hit records. these tech companies have more room to grow. they don't need to pay down their loans. they can give that money to shareholders. >> they have been buying back stock in raising dividends. they've been looking around at acquisitions. we have not seen that many blockbusters.
we saw a semiconductor merger last week. they are much more reasonably priced today than they were 15 years ago. >> i have to give tom keene a shout out. we are significantly below what the high should be. >> the last refuge of scoundrels is inflation adjusting everything. earnings go up and prices go up here it --. it's a wash. i don't pay attention. >> fighting words for tom keene. >> the bell is about to rain. scarlet fu is joining us. we have got some breaking car sale numbers. stay on the market. i love this piece that you wrote. he wrote this funny piece about human behavior and the market. you said this bull market is
entering one of its most dangerous phases because the ability to turn macro concerns into an intelligent investment has alluded humanity for as long as i can remember. why are you so down on the ability of people to predict? >> they are really bad at it. we look at some of the smartest hedge funds they have been stinking up the joint. we saw $4 billion in outflows from one fund. another fund closed. >> if the pros can't do it, forget about the average person. >> we have been hearing about greece leaving the euro for three years. first it's greece and then is the ukraine. ukraine is going to destroy it. one after another after another.
most of these big macro events don't mean a lot to sales and profitability of companies. that is what drives stock prices. >> hang on. scarlet, you have jim numbers. >> along with the rest of the carmakers, they are reporting disappointing sales. an increase of 4.2%, an analyst for looking for 5.9 percent. chrysler had a smaller increase in anticipated. maybe the falling gas prices did not push people to the showroom to buy more cars. they did prompt people to buy more gas guzzling cars, but not cars overall. >> it's just going to affect the mix. we see that in higher-margin suv's. gm makes a lot and ford makes a
lot more on an f150 than they do on a small car. >> that is going to hurt the euro. that pushes the dollar higher. that does impact companies especially the tech center. microsoft says they are having issues. >> it is fairly quickly reflected in prices. we see it in the sales numbers of companies and that gets reflected in their earnings. if you think the average person or a professional can game -- this is what happens and how much of it hasn't shown up in the bottom line, that is challenging to figure out. we see it in the performance of these macro funds that can't seem to identify a trend and get ahead of it and make money on it. >> how do you get ahead?
what are the elements? one of the indicators that you use to say i call a market top or bottom? >> we try not to play the game of taking a top and a market. we look at indicators that suggest when things get very pricey, when sentiment becomes in's -- absurdly frothy. markets are friendly reasonably priced depending on which market you want to look at. merrill lynch put out the favorite indicator. that was enterprise value over even. that is not bad. >> mention the metric that people are using. remember in 2000 people were looking at the price to earnings ratio. what replace that as a frothy indicator? >> normalized earnings and
discounted cash flow show stocks at 22% undervalued. we warned in our most recent note, avoid cherry picking the indicator that reaches the conclusion you want area --. they show stocks is undervalued. if you look at trailer earnings, we look at things as i see. we see stocks as very pricey. instead of just cherry picking what we want, certain research departments will show a full spread of 16 indicators. they show the market to be fairly valued. not crazy cheap, but not crazy expensive when you look at it relative to its long-term history. >> tell that to people like bill burke. >> sometimes they get it right and sometimes they get it wrong.
the average investor and most professionals it's something they have not developed the skill in doing. >> is there something most interesting to you? >> the u.s. is valued in your -- europe is cheaper. emerging markets are the cheapest of all. i expect emerging markets will suffer more pain. you may look silly before you look smart five years or not. >> barry, great to see you this morning. you are a treasure trove of information. thank you to alix steel and a scarlet fu. we are all over the market this morning. we will look at best buy, they are making deals with flowing sales. otto numbers will keep climbing.
trading is just underway in new york. we are getting back to scarlet fu. the indexes are lower this morning. >> it's not surprising with the records yesterday. we are keeping an eye on the nasdaq. it is moving farther away from the next milestone, which would be topping the all-time record high. current levels are 1.1% shy of that record. it took about 15 months to get from 4000 5000. -- 4000 to 5000. let's move on to some group movers.
we will start with some retail names. best buy is reporting. they have a mixed fourth quarter. revenue is missing. best buy announced a plan to repurchase $1 billion worth of shares over the next three years. gap is trading at a one-month high. they have a $48 price target. they are increasing inventory levels. they could have a breakout 2015. pvh was dropped because of a cold february pushing out and earnings recovery. let's go on to steelmakers. ak steel and u.s. steel are cut to neutral. they are no longer buys. the steel market will be altered because of the strong u.s. dollar. you've got lower freight rates and lower raw material prices.
those are down 1% in the early going. we are awaiting economic data in about five minutes. we are looking for numbers at 9:45 a.m. >> the top three are shaking off freezing temperatures last month. it crushed sales. chrysler, ford, gm reported the misses. sergio marchionne is still confident sales will climb even if the fed raise rates in the coming months. this is what he said. the environment is strong enough that i think it will withstand even a rate hike. it's like dreamland. we are joined i keith not in in detroit. is this some wishful thinking? >> we are headed for another
good year of auto sales. there was a heck up last month. it was weather related. it was tough in the northeast in particular, a tough weather month with record low temperatures and record snowfall. that hurt auto sales. >> i thought these were going to be easy this month. >> we had a horrible winter last year as well. old man winter is taking its toll on auto sales. >> it has done that twice in a row. it seems that there is an underlying trend that lighter vehicle sales are not growing as strong as some of the suv's and others. are we getting into big sales for light vehicles? >> i don't know if we are in peak yet. i know the escalade over at cadillac doubled its sales. the navigator doubled its sales.
they make tons of money off those vehicles. they love selling those. the f series, they saw sales decline last month. ford is trying to get up to full production with that a limited body the occult. -- aluminum bodied the ecole. -- vehicle. >> what about loans? there are some stats about how people when they are buying cars are taking out loans for longer-term, six years or more. traditionally people have gotten in three to five year loans. >> you are seeing an extension of the auto loan to buy the monthly payment. they want a reasonable monthly payment. the price of cars has gone up considerably as cars and technology. people are going to six and seven euros loans. >> is any of that going to be
derailed with rising interest rate? >> they should go up gradually. for now, they are very low. that is part of what is fueling the growth and out of sales. that and low gas sales, that is why you are seeing good suv sales. >> at the geneva auto show, this quote by the aston martin ceo caught our attention about how he wants to attract people to his car. >> we see ourselves attracting a particular type of customer. we know what kind of people drive aston martins. we want to extend an appeal to asians, south americans, middle eastern's. >> it's anybody talking more about that? appealing to women drivers?
>> women make up half of the auto market. they are an important part of the market. there is more growth potential in some of those asian markets. aston martin sells cars that are over $300,000. we have seen it greater growth in its supercars than we have in mainstream cars. the rich are getting richer and they want new wheels. >> keith, thank you so much for joining us. we've got some breaking news on the economy. we have new york numbers. scarlet fu has them. >> conditions in new york city we have a read of 63.1. this is a date increase from the previous month. despite the talk of winter weather, it hasn't stopped business conditions in new york city with the index reading going up to 63.1 from 44.5.
>> whether or not to audit the that is the biggest debates in washington. they are extensively audited. their monetary policy decisions -- rand paul should it become law would facilitate harassment. today, the banking committee will meet to discuss. i want to bring in erik schatzker. >> you know there is going to be
a lively debate between republicans and democrats on the banking committee. they are going to hear from john taylor and allen met sir. we decided to convene a debate of our own and represent both sides of the audit the fed discussion. the cato institute thinks it should be audited along the lines of the rand paul bill. the brookings institution is taking the other side. it is a divisive issue for good reason. would it be as effective if it were audited? if it were subjected to more congressional oversight? the bill that senator paul has proposed as others have noticed, it is subject to an audit by the general accounting office. it is not an audit of its programs. >> it raises some questions.
there is enough second guessing already. what is this going to do? >> again, it depends on which side you take. if you take the side of the skeptic, people like janet yellen were compelled to talk about this last week, it would affect political -- politicization. they could debate the reports produced by policy decisions. they could call witnesses from the fed and put pressure on that officials, which they don't have to deal with. if you take the cato institute side or the side of other libertarians, it has too much independence. they would say it is a creature of congress and should be
accountable to congress in a way that it's not. >> it presumes that there is something nefarious going on behind closed doors. i am looking forward to hearing that debate. erik schatzker of market makers on the question of whether to audit the fed. the retail industry is playing one big game of musical chairs. we will discuss the ceo shake up next. ♪
dhs funding. the house will vote as soon as today on a clean funding bill. they will fully fund the agency through the end of september. they will not include any of the immigration language. this is a capitulation from boehner. this will anger conservatives. he is saying this is the best thing to do right now for the country. we will see that vote as soon as today. this is a risk for john boehner. he is counting on votes from some republicans and a lot of democrats. he is risking the ire of conservatives. >> thank you, peter cook. in recent months, retailers have been played a big game of his occult chairs. many have said goodbye to their old ceos. many are on the lookout for one.
julie hyman is here with us. why has there been so much turnover? >> they are struggling. there has been a sea change within the industry. they are moving away from the merchant princes. they were running companies who would determine everything at the company. they are looking for his replacement at abercrombie & fitch. there have been other companies like target and gap. express is owned by francesca. there is a long list of these companies that have gotten new ceos. >> who is most likely to see a good turnaround? >> where will we see them make a difference?
target and gap are the two most cited where the new leaders are starting to make changes and will turn things around. brian cornell is the new ceo at target. he is making moves to do other things. the cap ceo is from the web side. he is from the innovation business within cap. he is unique. that trend within retail, not necessarily promoting the merchants but looking to other businesses for future leaders. >> anybody out there who is just too big? >> there were not that many listed. if anybody it's jcpenney. there are two things that make a retail brown unsalvageable. -- brand unsalvageable.
one is the cash. the other is if it's been taken down market in its distribution. if you have devalued the brand too much. most of these don't fall into those categories. >> i thought there was a good print campaign for jcpenney. >> julie hyman, thank you so much. that does it for today. tomorrow, roger altman. ♪
>> live from bloomberg headquarters in new york this is market makers with erik schatzker and stephanie ruhle. erik: audit the fed. critics call it a critical idea. stephanie: the latest of the brave. that is what was boris meant solve was called. erik: prime minister nine yahoo! goes to capitol hill -- primus or