tv In the Loop With Betty Liu Bloomberg March 4, 2015 8:00am-10:01am EST
roger altman, joining me on why he is still a big believer in the u.s. economic recovery. his take on economic sanctions in russia. they will work. he says be patient. if you are a frequent flyer, you will like this. new york airport, undergoing a makeover that might make you -- it will make me want to stay at the airport. the guys behind the redesign david rockwell and rich black stein. here's a look at our top stories. will the supreme court overturned a pillar of obamacare? the justices will hear a challenge to the affordable care act. the issue, federal subsidies. states that do not have their own health insurance exchanges. coverage for some 8 million people is at stake. a ruling is expected i june.
benjamin netanyahu's speech not only left president obama on moved, he did not even see it. the prime minister asked lawmakers to stop negotiations with iran. the white house says there will be no change in talks aimed at stopping iran from building nuclear weapons. homeland security gets the money it needs to stay open with no strings attached. the house passed the department budget yesterday and send it to the president to sign. only 75 republicans voted for the bill. new details about how hillary clinton controlled her e-mail as secretary of state. the associated press reports she used a private server. that gave her total control over
access to her message archive. federal rules call for all official e-mail to be preserved. opening statements are scheduled this morning in the boston marathon bombing trial. prosecutors are seeking the death penalty for dzhokhar tsarnaev. his lawyers say his older brother planned the attack. he was killed during the ensuing manhunt. three people were killed and 260 others were injured. the jurors include a former intern at an organization focused on muslim relations. those are top headlines. i want to get scarlet fu. scarlet: citigroup has reached a 10 year deal with mastercard. this means the bank will shift more of its consumer business to mastercard over the next decade but it does not prevent it from issuing code branded commercial credit cards on other networks.
earlier this week, costco announced it had reached an agreement to co-brand cards with citigroup and visa. it seems consumers do not make that much of a distinction between visa and mastercard since it is rare for any merchant to accept one and not the other. for banks like citigroup credit cards are becoming more important source of revenue as they have to comply with regulations on the investment banking side and on higher fees related to credit card payments. this fee that they collect from credit card companies and the payment networks has become more important. betty: more news on consumer cards. a 10 year deal with mastercard. back to our top story. the supreme court will hear the second major case targeting president obama's health care law today in washington. arguments are set for 10:00 a.m. eastern time. a ruling could have major
implications on 7.5 million low and middle income americans who rely on subsidies to afford private health care. greg store joins us now. explain both sides because not all of us have been on this case as you. >> this is a case about four words and a statute. the words are established by the state. who gets tax credits. challengers say that means only if you buy insurance on a state run exchange. that is about 16 exchanges. the administration says you have to look at the broader purpose of the statute and it makes clear that the subsidies are available nationwide. betty: what is at stake? >> really, the core of the law. if the subsidies get knocked out in 36 states -- i should say, it
is possible that if the court says no nationwide subsidies, congress could come back and change the law. states could set up their own exchanges. barring that, you could see insurance markets collapse does no longer would people be able to afford insurance. only the sickest people would keep buying policies and that would cause rates to spiral upward. betty: there is a lot at stake, clearly. you are going to be looking for what in the oral arguments? >> everyone will be focused on john roberts. when the course -- when the court took his case up, he provided the pivotal boat. -- the pivotal boat. vote. everyone will be watching him to see if he might agree with the administration a second time. betty: something we will be watching and covering intensely this morning.
oral arguments start at 10:00 a.m. it is the biggest question in the financial markets right now, when will the fed move? bill gross says june. david rosenberg says wait until next year. this week's job data will give us more clues. we will get the adp employment report which will provide the signal on wage trends ahead of friday's job data. the fed, releasing its beige book. there is a lot for economist to be clenching over this morning. car over to donna -- carl, going to sort it out for us. are we going to see a lot of negative news because of the winter? >> there are two angles we have to focus on. one is the ongoing absence of wage pressures in the economy. yellin highlighted that in her
testimony before congress. the page book has his did -- has hinted we are starting to see wage inflation and shortage of skilled labor. the easiest way to have workers show up is to offer higher rate of compensation. we have been seeing that in the beige book. we will look for broader evidence of that an actual evidence that employers are raising wages. betty: could you point to walmart and others who have come out with a lot of press, saying they are raising wages? >> we are getting close to the level of unemployment where we strode -- we should start to see wage pressures. we are not there yet but we should be by midyear. betty: there is a variety -- a
number of fed speakers that will be speaking this week. they have already spoken, some of them. what comments are you going to be listening out for? >> it is all going to boil down to labour market development. the wage story we mentioned. the other point we will be looking for in the beige book and the fed commentary is negative implications for the economy from a stronger dollar. the last fed statement look at international developments. the real question here is the export component of the economy, while small, has been a contributor to growth in this economic cycle. that is being threatened by this appreciation in the dollar on trade weighted terms as well as major trading competitors like japan and europe. with the strengthening of the dollar that is a significant headwind.
betty: it has been in lightning to hear that that talk about that. we just showed some of the people who will be speaking today and tomorrow. charlie evans, richard fisher esther george. who do you like to pay attention to? >> fisher is retiring so his comments are likely to be a farewell speech. evans is in the weight told next year to raise rates camp. esther george, somewhat hawkish. she will give some insight intoonomy. williams is closest to janet yellen. somewhat of a moderate on the committee. betty: you would pay attention to him? >> he has been holding to that midyear timeline. -- tightening timeline. betty: this is a big job. karl, thank you for joining us.
♪ betty: moving and shaking this m morning, cornell detailed plans on how he will improve the business as a retailer which includes job cuts. the focus, debtor merchandise -- better merchandise. making changes like pulling out a candidate in january and refocusing target on key categories of merchandise. he said special attention will be spent to improving target's babies kids and grocery sections. smaller locations to cater to the urban dweller. target aims to cut $2 billion in the next two years, including about $500 million this year. that means, job cuts.
betty: here is a look at top stories. we begin in ukraine where there are at least two deaths following an explosion at a coal mine. 47 others are reportedly trapped. the mine is in a war zone. rescue workers say rebels near donetsk are blocking them from the site. world bank of scotland -- royal bank of scotland, racing for job cuts. more than two thirds of the units workforce. reportedly part of a plan to shrink the securities unit and
focus on the u.k. consumers markets. many of the cuts will be in the u.s. and asia. headaches on the horizon for probate judges in alabama today. they will have to decide whether to issue marriage licenses to gay couples. the state supreme court set a same-sex marriage ban is legal but a federal court disagrees. that means the probate judges are caught between two rulings. a federal court is criticizing police in the missouri city where an unarmed black teen was shot last summer. the justice department says black people in ferguson are unfairly targeted. , citing petty charges. officials say they are reviewing those rules. britain news -- breaking news on the job front. the adp payroll is out -- payroll report is out. scarlet fu at the breaking news desk with more.
scarlet: generally speaking, bloomberg intelligence -- this is the lead up of a couple of days of jobs numbers. we of jobless claims and challenger job cuts tomorrow. on friday, we get the monthly job report from the labor department where the consensus right now is for an increase of 235,000 jobs. and for the unemployment rate to decline to 5.6%. that read on 80 plea in that or adp employment change, 212,000. betty: thank you. scarlet fu at the breaking news desk. i want to bring in a friend of the program, roger altman
founder and executive of evercore who has long said on this program that the economic recovery is going to surprise people. you still feel that way. i have not been surprised yet. roger: it depends on your expectations. my point earlier was i thought the more likely surprise was on the upside rather than the downside. i think most of that is manifesting itself. we are on a solid track which everybody should be pleased with. we would like it to be more spectacular. i would not describe it as spectacular. we are creating jobs at a 250,000 rate. a solid rate. it is not a record rate but it is solid. it looks as though the united states is going to grow around 3% in real terms this year. betty: is it going to get any
better? roger: what we are starting to see now is some wage growth. historically, wage growth takes a long time to show up because the labor markets have to tighten. labor markets now are much better than they have been. if you look at the u six rate scarlet just talked about a 5.6% rate. to me, it is a more thorough rate than the unemployment rate because it counts people who would like to have a job at have stopped looking, people who are working part-time who would like to work full-time. labor markets are tight enough for wages to begin to move up. not a lot, but some. most important thing that we want to see, and i think it will be seen, is continuation of wage gains. we have a long way to go because
we have come through 10 years of falling median household income. this is the greatest challenge facing this country. betty: it hits people close to home. roger: trying to turn around the weakness in living standards. betty: for you, is your business as good as ever? roger: our industry -- if you do find that in our case it is mergers and acquisitions and equity financing those lines of business are solid. it is evident in the reports from all the publicly owned firms, including us. betty: you are hiring? roger: we have been hiring for years. we are just celebrating this month, our 20th anniversary. we have had continued expansion over those 20 years.
on the other hand, we started from a small place and it is easier for us to expand. we have about 1250 people. as different from goldman sachs or jpmorgan who have 200,000, whatever the numbers are. we are hiring steadily but we have been for years. betty: if everything is so good -- i read a headline, $2.1 trillion of profit made is now part over sesaas. is now the time to bring that money back? roger: it would be a good thing if we could make a deal. that would require congress to offer corporations and attractive asus for returning -- basis for returning that cash. not every last dollar of it
would be returned because some of it -- betty: but some. roger: it is difficult in this environment because interest rates are so low. corporations can borrow at such low rates that if you say, would you repatriate that cash at a 10% tax rate a lot of corporations would say, i could borrow at 3% so that is not attractive. it is a difficult deal to make in an environment where interest lights -- interest rates are as low as they are. betty: stay with me. we have more to talk about. roger altman, the founder of evercore. coming up, a mine explosion in eastern ukraine. it happened in our -- in a rebel controlled area three of russian officials are facing sanctions as president obama extends visa bans.
betty: you are watching "in the loop." good morning. i'm betty liu. a deadly explosion at a coal mine in eastern ukraine. a reported 47 people missing and two people dead. the blast happened in a rebel held area of donetsk. ukraine says it is ready to assist in the rescue effort but it is not permitted to send workers on its own initiative. ryan chilcote is at the site. he joins us over the phone. there has been conflicting reports about the number of those dead, injured missing. what is happening on the ground? >> it appears one individual has
been confirmed dead for sure. they are concerned about the fate of 32 more miners. they don't have access to them. that does not bode well but they do not want to confirm them dead until they have gotten to them to be absolutely certain. it underscores the danger of these minds. the mines in this part of the world were already some of the most dangerous. with the conflict that is been going on, they only got more dangerous. what you have is shells in the past have been hitting electric stations. damaging ventilation systems floating mines because the pumps are not working. at the end of the day, these mines are a source of livelihood for a lot of people. betty: as you point out, this is another example of the
complications that arise from the conflict in russia and ukraine. economically speaking, tell me about life for these minoerers. >> the average salary is about $90 a month. i was at one mine where, even that money, they are not getting. as of the conflict a lot of the railroads have been blown up and there is effectively a blockade on the western side of his region between this area and the rest of ukraine. they have nowhere to sell their coal right now. because the mind cannot sell its coal, it is not paying the minoerers. the last time they got paid was december. he only got 40% of their $90 per month paycheck. it is a very economic crisis. they even have a legal mines
with a mine on the side in old abandoned mines. i visited one of those. there is nowhere to sell the coal. betty: thank you for joining us. president obama says his sanctions on russian officials and others involved in the crisis in eastern ukraine. he is prolonging those sanctions. for another year. roger altman has argued those sanctions are working. an op ed last month, he wrote, there is a point at which a currency or banking collapse will prevent any major nation from functioning. roger is back with me. you sent me an e-mail noting that you had written this op ed. the position i thought was interesting because a lot of people are questioning whether the sanctions are working. is there a breaking point in russia?
roger: a lot of people misunderstand how weak russia is. russia is a relatively small country by population standards. its population is declining. it's like expectancy is declining. i could give you other measures but fundamentally, it is a weak country, not a strong country. it has a nuclear arsenal and a large military, but it is fundamentally weak. these sanctions and the aversion of capital markets to russia have produced tremendous additional weakness. russia's currency is falling. it's banking system is shaky. it's larger corporations have extensive debts informed -- in foreign currencies.
russia is on the edge. betty: putin continues to enjoy high popularity ratings in his country. he was not afraid when he was in minsk during the cease-fire negotiations dealing with the u.s. and germany and france. he is not shaken by this at all. roger: you are right. he apparently has a view that the russian people have a long history of suffering and that is a potentially unlimited capacity for suffering. russia is not north korea. a completely isolated country from the point of view of global finance. its currency is traded globally. it's corporations borrow globally and it is otherwise integrated into the global financial system. there is a point at which russia theoretically would have to seek concessions.
that point could be a banking collapse. i say there could be. it is not inconceivable if we were to tighten sanctions further in europe were to sign on to that, that they could force russia to bend. betty: as an american business ceo or an american investor, why do i care? russia is a relatively small market compared to other countries. i know why we should care but i want to ask the question. roger: from an investor's point of view, you should care because of the geopolitical risk overlay. whether the situation, which over the past few months has been the focus of markets from time to time, could get to the point of being seen as
destabilizing. at the moment, if we look at the level of the s&p 500 or the level of interest rates markets are at a goldilocks like environment. right now, there is no economic threat posed by the ukraine crisis. it is a sad situation in human terms. a lot of different levels. in terms of -- from an investor's point of view, i do not think this poses a serious threat. if the prices -- if the crisis were to flare up again, and there should be renewed fighting and increased tensions, it will become the focus of investors. betty: roger, great to see you this morning. roger altman of evercore. here's is a look at other top
stories. health insurance for 8 million people at stake today at the supreme court. the justices will hear a challenge to obamacare. the plaintiffs say those who bought policies on healthcare.gov should not get subsidies. that would include 34 people in states that did not set of exchanges. the hearing starts at 10:00 a.m. white house will keep pressing for a nuclear deal with iran. the israeli prime minister says cutting a deal with iran would in danger his country. the administration says he offered nothing new and that there would be no change to talks. new details about how hillary clinton controlled her e-mail as secretary of state. the associated press reports she used a private server. that gave her total control over access to her message archive.
federal rules call for all official e-mails to be preserved. a guilty plea from a former cia director could keep him out of prison. david betray us admitted to a missed -- david petraeus. prosecutors want to find him $40000 and put him on probation for two years. a move by india's central-bank. days ago, the government agreed to let the central bank target inflation. never bet against the house was not true last month in macau. it was the worst monthly decline ever on the island off the coast of china. those are your top headlines. the battle for teen spenders. apple and abercrombie moving in
betty: less than an hour away from the start of trading. jobs numbers softer than what economists expended -- expected. scarlet: bank of america downgraded alcoa. the news -- the new price target is $17. warehouse rule changes at the london metals exchange. keep in mind that alcoa has outperformed the s&p 500 by about 15 percentage points over the past 12 months. teen retailers are in focus because of earnings. abercrombie & fitch headed to its 10th decline.
is down 40% over last year. the company also warned that the first half will remain challenging because of strong dollar -- the strong dollar limits spending by tourists. they are also still looking for a new ceo. american eagle, the other direction as analyst were looking for a drop in comparable sales. unchanged, herbal sales from the previous year. first-quarter profit, the outlook is topping analyst estimates. extending its advance we have seen over the last couple of weeks. it is approaching the $12 level which would mark highest level for this year. it is about subscriber growth at tivo. betty: thank you so much. after delaying the release of its spending plan, exxon has
just announced the cap x budget for the year ahead. it is kind of ugly, down more than 11% this year. alix steel is at the nyc. give us the details on their spending plan. >> production is growing but the capex is coming down. the first production growth since 2011. the company expects progression -- production growth of about 3% next year. the company is paring back on costs. the question is, what are they going to cut? exploration? long-term projects? short-term drilling? the ceo saying they will make a
reliable and growing dividend. betty: what about exxon coping with low and volatile oil prices? >> i want to get details throughout the conference. exxon needs $85 oil in order to meet its capex and dividend plans. we have seen exxon come out to the debt market and raise about $8 billion. like i said earlier, the dividend is the lifeblood for these oil stocks. they have an issue growing production. the reason you oh them is best owned them is for the dividend. -- own them is for the dividend. betty: what can we expect in terms of m&a? >> they do not have a lot of
shale assets. about 90,000 acres in the eagle for shale. will they wind up trying to diversify? or more offshore drilling? where do they see the growth being? jpmorgan saying exxon has a solid allen's sheet. they -- balance sheet. they will be able to make acquisitions. exxon has about $5 billion in cash and cash equivalents. betty: alix steel head of the analysts. newark airport goes high-tech with a redesign, complete with 6000 ipads. we have all those details plus more bad news for banks. profits plunge. details on those numbers, next. ♪
betty: homeland security, getting the money it needs to stay in operation. the house passed the department budget yesterday and send it off to the president. only 75 republicans voted for the bill. the gop wanted to link the funds to a rollback of the president's executive orders on immigration. new details about how hillary clinton controlled her e-mail when she was secretary of state. she used a private computer server with a homebrew address register to her family home outside of new york city. that gave her total control over access to her messages. federal rules call for all official e-mails to be preserved and they were not. royal bank of scotland bracing for job cuts. as many as 14,000 investment banking jobs by 2019. it is reportedly part of a plan to shrink the securities unit
and focused on the u.k. consumer market. many of the cuts will be in the united states and asia. a 30% drop -- the bank says pretax profit was $4.2 billion. analysts expected 5.6 billion. shares rallied, rising nearly 4% in london trade. opening statements are scheduled in the boston marathon bombing trial. prosecutors are seeking the death penalty for dzhokhar tsarnaev. lawyers say his older brother planned the entire bombing. he was killed during the ensuing manhunt. three people were killed and 260 others were wounded in the bombing. the jurors and alternates include a house painter and a former intern for an organization focused on muslim relations. those are top headlines this
morning. do you hate to fly -- do hate to wait at the airport? i do it a lot at newark airport. imagine our delight to hear about renovations. the focus is going to be on food and technology. there will be 55 new restaurants and bars. every diner seat will be equipped with an ipad. it comes with a hefty price tag $120 million. why spend all this money on new work airport? -- newark airport? david rockwell and rick blacks teen is the founder of -- rick blacksstien.
being in an airport is one of the more miserable experiences of anybody's life on the road. tell me about -- why go through this redesign? >> the airport part of the experience is such an important part of your travel day. i was at a great restaurant last night and i looked around and had some great food and great environment. there are customers inside of the airport also. we say, why not create a unique environment so you can enjoy yourself? shop, dine and make that part of your travel to get through security, a fun part of your travel. travel is a lifestyle, not a commodity. betty: you were responsible for jetblue and jfk that is a great terminal. how are you borrowing that into
new work? david: what makes a great project for us is a client with a big idea. they had a big idea about energizing the terminal. the other thing is about invention. everything you said about how humorless and dreary, and airport is your introduction to the city. that is your hello or goodbye. betty: you want to make it good. david: it was a chance to reinvent every part of the experience and use design as a way to make it a more enjoyable place and make circulation clearer because things do not look the same. betty: what you mean? david: one of the things about airports is if people make a left or right, in most cases, it looks the same. by creating destinations one of the most impactful parts is when you come to security, rick
had the idea to take the wall that faces the airfield in manhattan and put the lounge there. it looks at hotels as a paradigm and says, when you come through, even if you're only to spend five minutes, you have a place where you feel like you know where you are. almost like in a town you recognize where you are by a clock tower. betty: let's show more of these pictures. a dumpling bar, a roman numeral house -- a ramen noodle house. david: we were looking at parks. rick was interested in our work with your. -- with theater. if you get something in the morning and something in the afternoon, why is it the same food? that led to looking at theater
airports, parks as inspirations for what will make this an enjoyable place to be. betty: how are you going to recoup the cost of $120 million to spend? rick we will spend $120 million. everybody getting on the plane -- our spend is 50% higher. when we deliver a great experience, we infuse it with technology. it makes you feel good and comfortable to spend money. our spends are high with street pricing. we recoup our investment and make a nice profit. betty: how long will it take before you are in the black? rick: we are in a long-term deal with united. we will transition all the construction over the next 18
months. betty: united gets involved or do they leave it up to you two? rick: united is focused on customer experience. david had 35 designers working with us. united said, we will not tell you what to do. they had the opportunity to infuse what changes they like. we met with them many times to learn what they were trying to accomplish. betty: i am happy if an airline does not get involved in the design. thank you so much. we will be back in two minutes. ♪
betty: welcome back. we are 30 minutes away from the opening bell and here's a look at our top stories. futures indicate stocks will open lower. the growth of payroll last month fell short of estimates. the weather had something to do with it. will the supreme court overturn a pillar of obamacare? the issue was federal. people say people should not get those subsidies. a ruling is expected by june arguments stop. antenna clock a.m. --
arguments start at 10:00 a.m. much of a netanyahu asked america to stop negotiation with iran. obama was too busy to watch. homeland security gets the money it needs to stay open. this time with no strings attached. only 75 republicans voted for it. they wanted the length of funds and also to stop obama's immigration policy. open statements are scheduled in the boston marathon bombing trial. prosecutors are seeking the death penalty for tsarnaev. his older brother was killed during the ensuing manhunt. three people were killed and 250 others were wounded in the bombing. the 12 jurors and alternates are all white.
those are your top headlines this morning. we are under 30 minutes away from the start of trading. i want you count -- i want to cut you down. alex sherman and joe wiesenthal joining me this morning. let us start with number 10. we go to overseas with shares of alibaba hitting the lowest since going public last of summer -- last september. alibaba sales growth maybe slowing down. they are facing ongoing issues with the chinese government for allegedly lack of oversight of its website. basically not doing enough on corruption. >> it is where the stock fell because sometimes you think a rival is a good result.
i think it is the capacity and lack of transparency and corruption stuff that probably is this longer-term -- >>betty: what about lack of understanding? >> also j.d. topsails to which it makes it unclear what is going on. alibaba has a number of small problems. taiwan has asked it to leave. it is going through various issues with buyers faking sales in order to boost other sales. people higher up on the website have been manufacturing these fake sales that leads to credibility problems. alibaba is enormous and it will get bigger. these things are like small potatoes to me. betty: number 9 -- is wall street ironing eying the millenial's inheritance? targeting the potential financials of this generation working hard to crack the coke with cartoonish marketing slides.
as a non-millenial here -- >> i don't think i am one either. >> i am on the border. betty: $30 trillion. millenial'ss are a mystery to anyone not in that generation. they have a wide approach for gathering social information and social media. they look to multiple sources for financial advice. >> i always think anything there is marketing to a millenial there are a lot of statements made that they do this and that but it seems hard to separate millenial behavior from the realities of the economy over the last several years and the horrible job market. to make sense for companies to think about how new generations would get information and advice but i suspect we will be learning more. >> if you are calling millenials a 20 year group then you are
likening it to a 16-year-old. the entire idea of doing this seems just meaningless. betty: i agree. >> the idea of big inheritance money coming is an interest in phenomenon. betty: number 8 -- vanguard group of blackrock getting one third of their investment seeking more time with boards. wait a second. that's vince vaughn. it is a story about how vince vaughn has partnered with fox and getty images to create silly business photos that we thankfully do not use here. it is all for a movie called unfinished business. it will be out in theaters on friday. >> i saw a headline for the story and so something like vince vaughn and stock photos. i thought it would be photos of the stock market. their art stock stock photos --
there are stock stock photos. i think every time the photos are used except for an rare situations, they should be banned. i want to purge them from the internet. betty: cheryl is on a serious move to get some of these stock photos updated because they think they portray women and outdated ways. number 7 -- there is a food fight cooking up in washington with lobbyists banning to fight for your right to eat pizza. pizza has become a target now lumped in with french fries and soda as new standards for school lunches emerge. my kids it pizza at school and they love it. >> how many calories in a slice? i had to look it up because i didn't know. one slice of pepperoni has 700
calories. >> two slices of cheese is more than a cheeseburger or something like that. >> it is surprising and interesting that there is a pizza lobby. than you think about it and it is a total -- and it makes total sense. given the vilification of soda and chips and sugar and everything else, it makes sense that they want to say pizza. betty: it is a kid's choice also. it is a popular food. 700 plus calories, i had no idea. number 6 -- and bc universal going to try to win back the court to launch an online paid video streaming service that focuses on comedy. wall street journal says the channel will include nbc programs like saturday night live along with original series. who is not launching a streaming
service at this point? >> everyone with a cable monday they wish it could be à la carte where you could get what you want. instead, media companies are fighting against the outlook art model because it makes a much money from the current model. we have seen pbs do it and now nbc has a comedy package. expect this to keep going where every current station will give you something else if you want to on the side. it will not straight up be the network. >> if you were to try to put together a package that was some comedy and movies and sports you would basically have a monthly bill that comes close to what you already have. betty: my question is how good is that going to be on the streaming sites? >> cbs' product is not good nfl football. betty: that face continues its
betty: we continue our countdown to the opening bell and we are halfway through. number 5 -- on the hands of the house of cards launch no foot is looking to make a splash and next year's oscars. they acquired a high profile movie for crows to dust for close to $12 million. it will be streamed simultaneously while being in theaters. it is in the concerns over an unlikely competitor. popcorn time has been growing
like crazy and is starting to get notice on wall street. i want to bring in david, a former executive with a any networks -- a&e networks. how funny that you are called up cornflakes and this is called popcorn time? >> they had launched another site and we went after them for trademark infringement. shortly thereafter, they shut down the site and switched their domain name two and i/o. these guys will bounce around a little bit. we will look at more trademark infringement opportunities against them. betty: it is hard when they move out of your borders. >> it is also hard if they don't want to make money. they are just anarchists. betty: it is a band of twentysomething on people who come in and out and i allow you
to stream pirated content. they provide you the method to do that. netflix mentioned them in a january letter to shareholders. i want to read you the quote. piracy continues to be one of our biggest competitors. popcorn time's sharp rise is sobering. >> it is free content. people don't have to pay for it. you can go to popcorn time and find netflix's original releases for free. there are no ads or anything. i think it puts a dent into netflix's earnings but it is problematic down the road. most of the consumers watch netflix on television or whatever device to have a streaming on. the web is one of their least watched areas but it is alarming
because companies like popcorn time can put this up. you will see content from house of cards to guys holding a handheld camera in theaters. betty: literally filming the movie. we have a montage of what this website looks like. it looks pretty good. you are not going to readddit. it looks like a movie streaming site and it kind of looks like netflix. >> it does. it has the same icon and it is very sophisticated and very well done. this is stealing. this is piracy. it is against the law. anyone who does watch it is subject to federal law. they have done a nice job. the problem here is they are not trying to make money. they just wanted out to the consumer. betty: that i want to make
money, so why are netflix going after them. why aren't movie studios going after them more? >> they are. it is hard to track these guys down. not like i conserve papers to them. i have to find where they are in a foreign country. you need the jurisdiction and a way to find them. betty: they are good. what can movie studios do? short of trying to take legal action which seems very difficult. >> as the world wide web and video streaming content matures there will be certain laws and ids will be able to hold these sites down. in the meantime, there is no dvd screener out. they are sending things through links on the web and securing
their content with more sophisticated models. you look at playstation and they will not allow sites like this up. betty: thank you so much for joining us. they've shannon, the executive vice president of popcornflix.com. 14000 jobs in the investment banking division. americas top tech companies are raking it in an stashing all away overseas. not in the indian ocean but overseas. we will be back. ♪
weisenthal sure join me. number 4 -- job cuts keep coming. another round of elimination. as many as 14,000 investment banking jobs will be cut by 2019. that is more than two thirds of the unit's workforce. every week we are reading about thousands of jobs being cut. >> for people that live around new york if you are driving on 95 you see that big rbs building. half of the trading unit will be cut. we were just talking about you get big sellers on wall street but the job security is becoming a real factor that has to make people coming out of college are thinking of getting into this industry to do a double take. betty: absolutely. >> it is the big story of the secular decline and the
combination of the crisis plus all the ensuing regulation. there doesn't seem to be any stop to how much all of these banks -- betty: it used to be cool to be on wall street. it is not so cool anymore. number 3 -- speaking of being hated or having cozy relations with wall street, janet yellen answer the critics in congress who say the fed is too cozy with the banks it regulates. last night she said she wants to ensure that regulators are not afraid to confront the financial industry saying it is important that anyone serving the fed feels safe speaking up when they have concerns about bias to the industry and that those concerns be addressed. i can hear the cackles in the halls of congress at that statement. >> obviously, the u.s. recovery compared to others around the world is not that bad. lately, the economy has been better. the ongoing idea that the fed has tilted the playing field in favor of austria against workers
, that persists strongly. it makes sense for her to come out and try to put some daylight between the fed and financials. >> it is basically the issue we were just talking about. the idea that wall street is the bad guy and the fed has partnered in some sort of stockholm syndrome where they have partnered with the enemies. betty: number 2 -- new data shows the tech industry is taking advantage of a corporate tax code. a of the biggest tech updates include microsoft, apple, google stockpiled six to $9 billion in profits overseas in the last year alone. that accounts for a fifth of the money companies are holding outside of the u.s.. some patriots would say that is un-american to see that much money overseas. they should bring up back here to the u.s. >> there has been this ongoing
theme that the u.s. would close some of these loopholes in order to bring the money back so we can build our own infrastructure or put it to highways and roads and so forth. there needs to be an incentive for these companies to do that. tech companies in particular can do this easily because unlike an oil company that has a physical oil rig a tech company can just put a patent in a country and that money can be in that country. >> it is legitimate to criticize companies, but also the tax code is screwed up. there is much criticism in d.c. for not fixing this issue. betty: judging by what is happening in d.c. in the last week, i do think we will get any relief on that front. of us get a quick check on where futures have settled. equity futures are slightly lower. a little softer than estimated. the opening bell is next. ♪
betty: welcome back. alex sherman and joe weisenthal still with me. our number one story is oil. saudi arabia increasing the pricing terms for oil sold to asia by the most in three years. three months after it said it would defend market share against rising market share. the strategy is showing some signs of working. what do you make of this move? >> when anything craters and then it goes up and looks like it is the biggest in xml to time -- in x amount of time.
it shows the demand in asia is growing. >> it is an interesting economic story. a few months ago the talk was the u.s. is the only strong economy. now we have good data out of europe for several days in a row. it is clear that economy is bouncing back a little bit. this is a sign that in asia demand is starting to grow. maybe the u.s. will not be the only economy doing well. betty: maybe not. maybe that demand means the first signs of that. >> exactly. betty: i want to bring in pat dorsey, the chief investment strategist at sanibel captiva. is as i'm heading overseas to make my money. why do you hate as here? -- us here? >> i am just a hater. what it is is the u.s. -- the
economic data has been better here. equity valuations are not extreme but are not cheap. the nice thing about europe for now as you have a lot of european companies that are domiciled there but they largely export. the results are not tied to european economy. betty: in europe, you are looking at what other markets overseas? >> europe always has a lot of good exporters. south africa has a lot of wonderful businesses. people talk about south africa and they think mining and bad politics. both of which are true, but there are a lot of wonderful businesses there because the economic environment is so or so you have to learn how to budget well and run a business well. generally speaking, businesses with a disconnect -- you get a
better opportunity. one of our larger holdings and one of the things we are interested in is psg group in south africa. it owns a large bank and education company down there as well as the largest financial advisory firm. it was up 40% over the last year despite fairly awful macro. you have a pharmaceutical company which gets most of its business outside of south africa. there are several international for profit hospitals they get a lot of their business outside of the country. requires doing a little digging. >> what are some other countries you think are interesting that investors here are not thinking about or are not looking for opportunities? >> certainly, i think germany because of the week fund right
now. europe in general is a wonderful place to dig around because people see weak european data which has gotten stronger recently. when you have copies like aerospace exporters that make spare parts during a 38% or 40% margin it is a wonderful place to be right now. betty: it is all wonderful and we are playing the violins and cheering in europe. what about here in the u.s.? is oil in place for opportunity for you? >> i think it is an interesting place to park around. anyone who tells you they can predict one oil will bottom is lying through their teeth because very few people saw this. betty: doesn't stop anyone from trying. >> no.
there are a lot of wonderful businesses with great economics. there is an asset light business which helps people get more out of each reservoir so you can increase the extraction rate to get a lot more money for the oil company. they have a lot of great engineers with 30% returns on capital's and stocks were down over the past few months. i have a strong competitive position, much stronger than halliburton which is more asset heavy. even though the economics of digging stuff out of the ground and selling it at a price you don't determine are generally bad, there are service companies that surround the oil industry they get dragged down with everybody else that are really interesting. >> there is a logistics company you are interested in. it sounds like a warren buffett investment to me because it is boring. what is the company? >> this one is called xpl
logistics run by brad jacobs. they are a non-asset-based logistics company. they don't own trucks are both airplanes. they connect folk. they can service the whole spectrum. they can broker trucks. they can put your truck on the back of a rail car. they can deliver your freight from best buy. they can do expedited which is my summary line is about to shut down if i don't get these parts in six hours. they are the only company out there right now that can offer a large fortune 100 company. of services. management has strong organic growth running north of 30%. it is a couple treated by very interesting story in an industry that is large and very fragmented.
betty: i agree that it sounds like a warren buffett company. he has sounded off on some policies. is a make a difference to you if we raise rates in june or waits on that year? >> i couldn't care. i think trying to based year your investment decisions is like basing one oil will bottom -- you just don't know. predicting it beyond three or four days out, who knows. betty: great to see you this morning. >> good to see you. betty: thanks to alex sherman and joe weisenthal for staying with me. chicago's willis tower is up for sale. the owners of the 110 story skyscraper have hired brokers.
the tower is the second tallest in the u.s. it could fetch around $1.5 billion. it was last sold in 2004 for almost a hundred $50 million -- almost $850 million. we will keep you updated on the early movers just moments after the opening bell. one stock we have been watching is abercrombie & fitch. their struggle supplies a new ceo to step in the shoes of my jefferies. more next. ♪
at the market. >> early action right now is to is moving on the downside. we had a blockbuster february for equities and a record-setting monday but since then it has been lower. let us show you what is going on overseas because in europe it is a waiting game for the european central bank and mario draghi. banks including standard chartered are rising. they say it they don't plan to raise capital. the euro on an 11 year low. we get a read on u.s. services in just about 20 minutes which i will bring to you when it crosses. the indian rupee weakening. the ruby losing is most in about one month tracking the decline.
let us get individual names. a gun maker trading at an eight month high. i don't want to use a pun but it is firing on all cylinders because it boosted sales and profit outlook. last quarter numbers also improved. here is a name in that sector. the home goods online merchant is having his best day in about five months up 19%. it is losing money but losing less money than at the same time last year. revenue this quarter will go up more than 30% as estimated by analysts. betty: looks like the trends impressing the investors. another retail company that we are watching this morning's abercrombie & fitch. the retailer just a part of their earnings showing sales
were down 10% in the fourth quarter. the outlook remains challenging. the even have to sell their jet to raise money. this comes after the abrupt departure of mike jeffries in december with no signs yet of who will succeed the flamboyant ceo. poonam joins us now. sales are down 10%, more than wall street expected. >> fourth-quarter is the most important quarter for retailers and to have sales down again 10%, their sales have an down since q1 so it has been sometime. about crummy and fish down 9% -- abercrombie & fitch down 9%. betty: several quarters of
decline here since 2012. what do they need to do to turn this around? >> you know what they were known for. there were known for their models and logos and their smell and black windows. no longer is that relevant to that customer. they want value and fashion but fashion at a price. abercrombie has to cut their prices and that's what makes it difficult. they are introducing new products next false we have to see if that works. until then, no sign that sales will recover. betty: do we know what the new product will look like? >> it has to be lower-priced and less logo. betty: what about a successor? mike jeffries has been gone for some time. who will replace him? >> whoever it is we'll have a
challenge. they are not walking into an easy recovery so that would have a long recovery. sales are down 10%. you have a long way to recovery and they have to address the issue. it is an issue across the teen retail space whether it is aeropostale or urban outfitters they are all struggling. betty: it is not just abercrombie, but they are feeling it worse. >> exactly. betty: i know we have names of people that have been discussed as successors. they are all within abercrombie as well. jonathan ramsden is one of them. the names out there right now is there any lead contender? >> as far as i know, i haven't heard of anyone more probable. the search is still underway from what they said recently. it may take them time because you have to get the right person
in there. getting the right person is key and you don't want to rush that. betty: on a final note, we were talking about this with several retailers. how does this affect abercrombie? >> it will affect every retailer because shipments will be delayed. we are in march. windows should be set with spring product but they are not. we still have winter in many storefront windows. until the spring products role in sales will be lousy and that will hurt first quarter sales. betty: that is for all the retailers. thank you so much for joining us. today's bloomberg big number is 9.8 billion. that is the number of coffee capsules ckeurig sold last year. the man who founded the company is not happy about the success. he said he felt bad about his
creation. his concern about the impact of all those cups on the environment is why. they are recyclable, but the inventor now says he drinks his coffee the old-fashioned way, through a coffee filter. once again, obamacare back before the supreme court. why it might depend on four little words. stay "in the loop." ♪
betty: once again obamacare is back before the supreme court thanks to four controversial words "established by the state or." 16 states employ their own insurance exchanges. with me know to discuss this is erik schatzker who will be diving deep into this issue. erik: i don't know what established i the state is supposed to mean. do you? this is the issue. it is so hard to know. fundamentally, this is an argument over a judicial philosophy known as constructionism practiced most prominently by anthony scalia. the notion that laws should be interpreted only as written as opposed to interpreted in the context of what they were intended to mean.
in other words, one congress passed the affordable care act did in intend to bar people? that is the issue here. if the state did not establish its own health care exchange and allow the government to run it for them through healthcare.gov with the residents of those states supposed to receive subsidies if eligible or not? if they don't receive the subsidies or if the supreme court rules they are ineligible for subsidies on the basis of these four words, the affordable care act effectively collapses in on itself because it no longer receives the federal subsidy. insurance premiums will go up in healthy the people will not see the point of paying for them. it will be too expensive for the health insurers to ensure the sick people. the whole system falls apart. betty: it collapses.
erik: will have one of the six attorneys general who have sided with the plaintiffs in this case for individuals to challenge the affordable care act. we are going to find out why the attorney general from west virginia feel so passionately about it. there are all kinds of issues being raised. was it known in west virginia that this was an issue? the attorney general maintains it was. the governor was a democrat but he maintains it wasn't. betty: west virginia does not have a state insurance exchange. erik: has unusual partnership. insurance in that state is provided through healthcare.gov but with the support of the state. it is an unusual situation. betty: thank you so much. great to see you. erik schatzker of "market makers ." total return fund's low but they are still moving billions of dollars. we will be back.
mary joins us. is it going to eventually get better? >> i think so. the trajectory is going in the right direction. they knew they would have a lot of lumpy outflows in the beginning of the year as the institutional clients and their decision-making processes flow through. they were expecting this month to be better next month will be bad and then they are hoping it goes up. betty: the funds have lost how much money? >> since bill left, about $100 billion which is incredible. since the peak, it is almost 60% of what it once was since 2013. betty: the demographics, who is pulling out and what did they look like? >> you're mostly looking at the slow-moving retirement accounts and pension funds and insurance companies.
they go to committees and talk about it and the use consultants to help them choose what they want to do. that money tends to be stickier and you see a slower time to see through. betty: it is a long decision but once they do it, they do it. is a justified? is there an underperformance going on that justifies this outflow of $100 billion? >> the fund has done quite well since bill left. the new managers are working hard to prove they can do it with the same infrastructure that bill set up. most of the people who were helping run the fund are still there. their point is stay with us. the performance has underscore that. they have done well. they had a strong february. it has been impressive. people are talking about how much of that is a treatable to having a smaller sized fund to work within the market if you are no longer outside the entire market, you have agility.
this is something where being smaller is an advantage. betty: how is he doing over at janice? >> he was in the 44th percentile last time i checked. he is in the middle of the pack. i am sure that is driving him insane. betty: he is still a must watch. how much time will investors give him before they say maybe he has lost his touch? >> you said the other day he will only stick around for two or three or four years. if i am an investor, the question for me is why would i give money if i would just have to reevaluate in maybe two years. that is not great for his investment pitch. he lives his life day-to-day on basis points. betty: every child's, thank you
-- mary childs thank you. >> euro is breaking below the one level. we got service industry data that showed us weaker than expected reads. we will get the read on u.s. services in about one minute. the dollar strengthening and the euro is weakening. betty: thank you. we will be back with much more on "in the loop." an bloomberg television. ♪
>> live, from bloomberg world headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. erik: the fate of obama care for the second time in three years is up to the supreme court. this time the decision could come down to a few words. stephanie: shares of alibaba are now at a post-ip load. -- ipo low. erik: it will take more to convince teenagers that abercrombie is hot again.