tv Bloomberg Bottom Line Bloomberg April 10, 2015 2:00pm-3:01pm EDT
mark: from bloomberg world headquarters in new york, i'm mark crumpton. this is "bottom line." to our viewers here in the united states and those it be joining us from around the world, welcome. we have a full coverage of the stocks and stories making headlines on this friday. shannon tells us how psychiatrists are failing the patients who need them the most. special coverage of california's
hydroelectric plants. peter cook previous president obama's face-to-face meeting with role castro -- raul castro. hillary clinton will make it official on sunday. she is running or president. a person familiar with the matter says mrs. clinton will make the announcement on video before heading to iowa and new hampshire. it does not look like she will face many competitors in the democratic primary which begins in february. jeffrey is still in favor of raising interest rates in june. recent soft figures on the economy will probably only be temporary. fed policymakers were split on when to start raising rates. that was before the weakest jobs report in a year came out last week. ge is selling up the bulk of its finance unit so it can refocus on its industrial business. it has agreed to sell $27
billion worth of real estate. most of that is going to blackstone and wells fargo. ge announced a share buyback of as much as $50 billion. >> this is an excellent time to sell financial assets. the performance demonstrates that our platforms may be worth more outside the company. mark: apple's first new gadget under tim cook debuted today in eight countries and hong kong. crowds in tokyo could not wait to get inside to see the new apple watch. it's not like they were walking home with one. apple is taking orders and will not ship for another two weeks. apple may sell one million watches this weekend. the company may sell 8 million during the current fiscal year and generate $4.4 billion in revenue.
if you have not bought a personal computer for a while, you are not alone. pc sales l 5% in the first quarter. -- fell 5% in the first quarter p.m. more and more consumers are turning to smart owns and tablets when they want to go online. note may take more steps to boost growth at its wireless network unit and improve its debt rating. the finnish company is selling its map business. luke them maps are used in four out of five car navigation systems. -- gnocchi anokia maps. the first meeting since the two leaders launched efforts to fall relations between the u.s. and cuba. peter cook has more on the summit of the americas and the ongoing talks between the two countries.
this will be their second conversation this week. peter: that is right. they will have this face-to-face meeting tomorrow. they had a phone call on wednesday before the president headed down to jamaica and then panama where they discussed the progress that has been made so far with the three rounds of talks trying to once again reestablished diplomatic relations between these two cold work adversaries -- cold war adversaries. more about this meeting between the presidents that will take place tomorrow. it is not publicly on the schedule yet. he says it is a chance for the two leaders to compare notes. >> the two leaders will be able to address and take stock in any discussion they have where we are in the process of normalization where we are in the discussions around the establishment of embassies. where we will continue to have differences.
peter: there do continue to be differences. this is a big moment for president obama and president castro. their first meeting since the announcement back in december that there would be this effort to restore the back relations. they have a lot to discuss. -- restore diplomatic relations. mark: one big obstacle in these talks has been the u.s. designation of cuba as a state sponsor of terrorism. is the president prepared to drop cuba from that list? peter: that has been a big question. the president has been asked about it. we know this much -- the president has received a recommendation from the state department and that recommendation is that cuba should be dropped because it no longer is actively supporting terrorist groups. that decision has to be made after cabinet agencies get a chance to weigh in.
the president is waiting to hear from all those agencies. everyone is hinting that this move is likely to take place. it could happen even at the summit or more likely in the days to follow in washington. it is a big step, a symbolic step for the cubans. it has been a physical obstacle in the course of negotiations. mark: peter cook, thank you. ted mccone is a senior fellow for the policy program at brookings. he joins me from washington. welcome back to "bottom line." ted: good afternoon. mark: is there diplomatic overtures -- they have dominated headlines. will those overtures be enough to open lines of communication between the u.s. and other countries in the region? ted: i think the process of
dialogue underway between u.s. and cuba is leading to all kinds of positive results for the united states going into this summit. president obama arrives in panama with a lot of wind on his back. not only because of the gesture towards cuba but also in terms of the breakthrough with iran. a demonstration to the rest of the region and the world that this president will lead boldly through presidential diplomacy and try to turn the page from some of the past problems we've had to a new policy of engagement and partnership and those are the kinds of teams that are important for this region. mark: as peter cook just mentioned, there have been reports that president obama a soon move cuba from the u.s. list of state sponsors of terrorism. what message would this send to american businesses? they have watched for decades. ted: it certainly has a symbolic impact to reassure the financial
community that cuba is no longer on this list and the red flag will no longer be raised every time they want to look at doing finance deals and cuba with a third party. practically speaking, it will not have that much effect because we still have a very comprehensive embargo in effect on cuba. congress holds the reins on that issue. in terms of u.s. businesses being suddenly able to do new business and cuba, we will not see that other than the exceptions to the embargo that we already know about in the areas of food and agriculture and medical products and telik medications. -- telecommunications. mark: last month, the united states placed sanctions against venezuelan officials. will this overshadow the summit?
ted: it created a problem that was not necessary in terms of the timing of this decision. it was not a surprise that the u.s. administration was going to move in this direction. congress has mandated it. the timing was unusual given the goodwill that was generated by the december 17 announcement on cuba. this brought back some of the old memories of u.s. intervention and sanctions, even though the sanctions themselves are very minor. in the last couple of days, we have seen the administration respond quickly with not only the hands that they will lift cuba off the terrorism list, but also an important visit by the senior envoy from the state department to meet with the president of venezuela to smooth over the problems they have had. the president will show up in panama and make a fuss.
he will make his point and have protections in hand. it will be a theater as these things tend to be. overall the general mood will be a positive one for president obama. mark: the chinese have invested heavily in the region, especially in the caribbean. is that why president obama stopped in jamaica on his way to the summit? ted: i don't see it so much directed ast china, although they have become much more of a player. i think it is more about venezuela. the caribbean countries are reliant on subsidies from venezuela for its energy imports and the idea is to promote u.s.
energy exports and we are in a better position to do that now. also, the idea of clean energy. secretary kerry is going to panama with a strong climate change agenda. we will see more of that in the coming days. mark: ted mccone joining us from washington. always a pleasure. thank you for your time. up next, another check of the friday top stories and the challenges of trading -- shannon has some alarming stories when bottom line continues in just a moment. ♪
mark: it's get to the top stories we are following on this friday. blackstone group on a real estate buying spree. the world's largest equity real estate investors spending more than $14 billion to buy general electric assets. most of those are opposite buildings in southern california, seattle and chicago. it's also buying ge assets in europe. in a separate deal, blackstone has agreed to buy excel trust or $2 billion. the gap's quarterly profit topped forecasts. the discount brand old navy was the key.
old navy's sales rose 11% in the fourth quarter. investors betting the proposed deal with intel is not dead yet. the chipmaker rejected intel's takeover offer. shares are up 5% since yesterday's opening bell. a sign all terror could be pressured into reconsidering. the imitation game brought to life the work of 1940's computer genius alan turing. -- a sign allltera. they will sell the notebook on monday come expecting to bring one million dollars per also for sale, a working enigma cipher machine the germans used to code their messages. coming up at 2:20 shannon with a special report on government insurance and what it means for treatment of the mentally ill.
shannon has been investigating the issue and she joins means to deal. what is going on here? why can't people find the treatment they need? shannon: doctors don't want to take insurance. if you have a lot of cash, you can find a doctor. insurance does not pay enough and they don't want to deal with hard cases. they don't want patients calling them in the middle of the night, patients who may be violent or require hospitalization multiple times. we talked to a family in long island. they had been desperately trying to get care for a mentally ill family member. it was a high-profile case in long island last year. he murdered his mother, decapitated her and then jumped in front of a commuter train on long island. his mother had been trying for months to get help for him. he was hearing voices. he had been to the er multiple
times. she could not get him a doctors appointment. he was in a treatment program left the treatment program. she was trying to find him a doctor to control his symptoms. she could not find it in time. his medications ran out and he murdered his mother and then killed himself. mark: this seems -- this is a tragedy within a tragedy. the doctors did not want to take the time, did not want the calls in the middle of the night. shannon: the doctors in private practice were not reimbursed for all that effort. were not paid a fair rate. there are market forces. they can fill their practices with enough easy patients and the hospitals and mental health clinics are supposed to be the safety net. doctors have a right to determine the kinds of patients
they specialize and insurance they take. those clinics and hospitals say they are so overstrained -- i spent time at one clinic in long island. they have seen cuts throughout new york state. other mental health clinics have closed. they are overwhelmed with patients. the family tried contacting them and they could not get them in. mark: how does the mental health industry differ from other specialty doctors? shannon: we have all heard of doctors who no longer take insurance. in the practice of psychiatry half of doctors take insurance either private insurance or medicare. mark: a very telling graphic. shannon: you can see part of the difference in pay because of the reimbursement levels. psychiatrists make half of what other specialists make. insurers reimburse them less. a psychiatrist in florida for an
office visit was paid $72. a primary care doctor in florida with the same insurer with the same time required was paid double that. that is coming from the insurers. the insurers and say their job is to get the best value for their members their patients. if they start paying more, that will be transferred into people's premiums and rates will go up. mark: was obamacare supposed to help? shannon: there is a provision requiring all insurers have to offer mental health services particularly in the plans sold on the exchange. because those insurers pay such a little amount no doctors want to take them. one mental health clinic i talked to said the health plans sold on the obamacare exchange pay 40% less than other private plants. those other plans this clinic already loses $20 on for every patient they see. mark: aren't there other safety
nets? shannon: these mental health clinics. funding for these programs fell by $4 billion. it started coming back in 2013. states started to recover from the economic low mustard and putting money back in and we had a lot of talk about mental health. 2014 those increases started to slow down. we are still at levels we were at before the recession. mark: are we seeing anything from state regulators? what are your options? shannon: some state regulators are trying. the new york attorney general has gone after a couple insurers that he says are putting additional excess of barriers for doctors of mental health services. requiring pre-authorizations being more likely to deny
claims. some states are trying -- california is doing investigations as well. for families, this family and long island they felt like they tried everything they could. patricia was an english professor. the uncle was a priest. he had connections in the faith community. a friend of the mothers who used to be a nurse practitioner tried as well. they still cannot get any help. when i ask this to doctors, they say there is the emergency room. a lot of people are going to fall through the cracks and end up in our prison system. mark: this story is on bloomberg.com.
[office phone chatter] [frogs croaking] you know what, let me call you back. what are you doing?! [scream] [frogs croaking] [yelling and screaming] it's back! xfinity watchathon week. the biggest week in television history. it's your all-access binge-watching pass to tv's hottest shows, free with xfinity on demand. xfinity watchathon week. now through april 12th. perfect for people who really love tv.
mark: welcome back to the second half-hour of "bottom line." thank you for staying with us. let's get you to the top stories we are following on this friday. a check of the price of crude oil. you see on your screen, crude finishing the day up 2%. olympic crew to for the week, up 4.8%. -- a look at crude trading for the week up 4.8%. four years of drought and record
low snowpack means there is little water to drive the states hydroelectric turbines. willem marx is back from a tour of the golden state this weekend joins me here in studio. how critical is hydropower to california? willem: you went back 50 years it was over half the power of the state. today it is 15%. they are expecting just half of that this year. they have managed to make up that shortfall with things like solar. gas is trading low, so they are able to pick that up a lot cheaper than normal. that is the way they have made up with the the shortfall. over the coming months as they generate hydro, they will not be filled up with snowmelt.
the snowpack is california's largest reservoir. this almost none of it this year, about 6% of the average. mark: what were the folks telling you? shannon: we spoke to a hydrologist -- willem: we spoke to a hydrologist. for their model, the data that came out is outside of the plot. the last serious drought was in 1997. they are now it's seeing conditions worse than they could imagine and they have no way to forecast the future demand in terms of water supply. mark: willem marx thank you so much. for more on the drop in california mark henwood joins me from sacramento. they build and operate hydropower facilities. welcome to "bottom line."
mark: thank you. mark: let me begin by asking your reaction to these mandatory restrictions ordered by jerry brown. what impact does this have on your business? mark: the restrictions have little impact on the hydro business because hydro is not consuming water. what happened last year when we had a similar circumstance, the water board permitted people to file exemption for hydro and we were able to continue to bring in using water. i would expect a similar situation this year. to the extent water is available hydro producers will be able to run it through their turbines. mark: we are only four months into 2015, what are the organizations telling you about how they've been acted by the drought -- impacted by the drought? mark: we deal with a number of irrigation districts.
the impacts are quite significant on that. each and every one of these districts, we deal with who do have hydropower production is in the process of planning for severe drought, controlling water consumption by their customers. tightening their belts and not spending any discretionary dollars because they will have little product to sell this year. it is a big issue with them. mark: if this drought continues and cheap solar power sources continue to come online, will we be looking at the beginning of the end of privately produced hydro power in the state of california? mark: i don't think it is going to be the end of private hydropower in the state. our company will ride through this we are a very conservative -- we are very conservative financially. most of the projects will be able to make it through a low cash flow period.
that said there are other forces at play which are affecting the economics. most notably, the power markets with lots of solar. the combination of a lot of solar power and very cheap natural gas is creating challenges on the power marketing side for some of the private hydro projects. when they are all contracts originated in the 1980's, some of them are getting -- having difficulty getting new contracts. the bulk of them should be all right but some may be in trouble. mark: you just alluded to some of those contracts. what does that mean at a time when the drought is impacting production? mark: what it means is, if you have one of the old contracts,
you are getting paid extremely low prices. a double hit on your project revenues with low water and low-power prices. if you come off your contract and successfully re-contract the power marketing problem is not so bad. where the problem is going to come is projects that have not yet come off their old contracts and they are having difficulty getting good new contracts with the prices. that's where we are seeing the problem. mark: prices for water are at record highs. prices for hydroelectric energy are falling. more than half of california's energy came from hydro at one time. are there incentives for people who want to invest in hydroelectric projects? mark: there really are no tax credits or special incentives
other than a couple of minor programs. hydropower projects have to make a go of it like a normal business transaction based on revenues and forecast production. right now, the market for power is saturated with wind and solar projects so hydro is competing against spot market prices which are once again driven down low by natural gas, which is quite a story. mark: droughts are not new to california. have you ever seen it this bad? mark: this year is shaping up to be the equivalent of 1977, which was extremely severe. i was a young person in 1977 in the farming business and i remember how severe that was. this year is looking a lot like that. it is a tough one. mark: mark henwood joining us from sacramento. thank you so much for your time.
mark: welcome back. we're getting word from the west attorney's office in boston that the penalty phase or the boston marathon bomber will begin on april 14. he was convicted wednesday of carrying out the biggest terrorist assault on u.s. soil since the september 11 attacks. a judge granted a request from his lawyers to have a recess to get the defense time to resolve logistical issues with potential witnesses. that bombing in 20 killed three people and wounded 260 others. renee hernandez is covering president obama and the summit of the americas in panama city. renee: good afternoon.
the big story from the summit of the americas in panama is the u.s.-cuba relationss and president obama's expected interaction with ronald castro. the president has arrived in panama city from jamaica. he will begin his activities this afternoon by joining the presidents of brazil, mexico and panama to talk investment opportunities in the region. on the diplomatic front, there are reports that president obama is close to a decision on whether to remove cuba from the list of sponsors of terrorism. an announcement about the opening of each -- the other big story here, the president of venezuela will use the summit to criticize the policy of the united states. mark: renee hernandez in panama
mark: coming up, scarlet fu has the friday edition of "off the charts." highlights of peter cook's interview with the former u.s. investor to italy -- ambassador to italy. we bring you on core, a look back at the most notable newsmakers from this past week on "bottom line." >> i think there is a key number. the key number of one has to focus on is 67. it takes 67 votes to override a presidential veto. if there is a bill that goes to the white house that gives congress an up or down bill, the president will be till it. i think you will get enough democrats to be sustained. >> the handshake between
president obama and roll castro -- raul castro will be a highlight of this. the president wanted to go as a celebratory tour where he would have the glory of being the president who started a process of normalization with cuba. in the meantime, he declared that venezuela is a national security threat to the u.s. now, that has become the issue. >> we have seen a very unusual period of weak investment. that comes with policy response. investment stays week. it's the overall weakness of economic activity abroad and at home that is why businesses are not spending and that is what is holding back long-term growth and this is a real problem we need to turn around. >> that's exactly what the fed
wants at this stage of the game because they are dependent and the data has turned in the opposite direction and has not given that additional improvements the fed wanted. it is important also that you are showing to hone in on the discussion of how they will raise rates and the gradualism that will accompany that. governor powell pointing out why we need to have a slower path on rates. mark: the 14th annual tribeca film festival will take place april 15 through the 26th in new york city. john patrick -- the company operates a number of tribeca businesses including the film festival and tribeca film. welcome to mark:." -- welcome to "bottom line." we are talking about geography.
what sets tribeca apart from sundance? john: we are focusing on the intersection of technology, film and storytelling. it is a whole new era now with filmmaking, having a whole role in the changing dynamics and we are pulling that altogether here in new york city. mark: the festival will include live performances. which artists will be there? talk to me about this combination of film and live performance and how that helps the overall experience. john: we are kicking off with a great film "live from new york." afterwords, ludicrous will be performing. we are combining film, music -- at&t is a great partner. they will be behind that and supporting us on that evening. then, we were going through mark: -- what about the business
of putting on a film festival? we have this age of social media industries and partnerships. john: filmmaking storytelling is playing a role for every company. more and more, we are finding interest from every industry. to come together with storytellers and be on the cutting edge of how those storytellers can help those brands and businesses advance. mark: is the intimacy of film festival's suffering because we have web streaming and on-demand? wars the goal to have people come to a live event -- john: we are focused on how that life experience can be enhanced and improved. a number of events infuse technology into the experience itself. average consumers can come to the film festival. tickets are available, you can come and attend these events. you will see where filmmaking is
heading. mark: what is the current state of the art house market? john: the market has been hit hard. there are still a lot of great phone spirit a lot of that has resulted in changing this to be schnider's. -- changing distribution patterns. we are embracing these new technologies and we think the live theater going experience can be terrific and the festival, you have that opportunity to interact with directors and actors and other audience members. mark: part of that interaction this year will be one-on-one conversations. john: we are going to have -- we have this great performance where we celebrate frank sinatra's 100th anniversary. tony bennett will perform. it will be filmed in 360 degrees. people will be able to go afterwards online to watch that
in 360. that will happen is spring studio, our noon downtown help. -- downtown hub. you can go on tribeca film.com to buy tickets for a day or the entire duration of the festival. mark: i have to ask, how does new york enhance the whole experience? john: it is home to so many great filmmakers. so many great artists we have the good fortune of celebrating. people here love it. people know how hard it is to get a ticket to go to the movies on friday night in new york city. mark: john patrick ceo of tribeca enterprises. the film festival taking place april 15-26 here in new york city. stay with us.
thank you for joining us. have a great weekend. i will see you on monday. ♪ scarlet: the rally in chinese stocks is off the charts and it's all because of a that brendan's chief investment officer and joins me now. you are firm manages uts. i want to start with how much money is flooding into chinese stocks. more than 1.1 million new trading accounts were opened for china's shares market. this is domestic investors. why now and why -- brandon: investors in china recognize the new leadership regime is very committed to a reform agenda. reforming state owned enterprises, privatizing them, mergers and acquisitions.
as an investor in china, your investment options are limited. you can go into the bank account which yields 5%, housing, which has slowed, gold which has performed poorly, wealth management products. those other potential investment alternatives have not done that well. the stock market is doing well and is pulling in more investors. scarlet: doing well for now. our next chart shows the leverage out there. from about 1.5% of gdp to 6% of gdp. is this a good snapshot of the level of speculation? brandon: we believe stocks in china are highly under owned. less than 5% of household net income. here in the u.s., we are three times that. ultimately come investors in china because of a seven year bull market have not own any stocks and are just now coming back into this market and we think there's a lot more upside potential he. scarlet: what level of
speculative activity can the stock market absorb? go back to 2007 it went up 540%. 2009 was a rough year. if you look at 2006-2007, only up 100% in the last year. this market could go much further. we are still 26% below the all-time high. scarlet: you have a lot of pent-up demand from mainland chinese investors. and foreign investors as well. brandon: it invests in over 300 stocks in china. the slice of china that was going to msci embassies come if it's at it, it's excluded today with an all embassies -- we know in june, there will be announcement that msci has been reviewing, 2% more of the
world's market capital go into china within msci emerging markets, $200 billion would have to come into this market with the inclusion of the onshore market. we own those of securities today in advance of the potential decision. mark: how do you value a market driven by liquidity and momentum? brandon: put yourself in the shoes of the chinese investor. your investment will go into housing, which is slowing, the bank account -- the start stock market looks good today and there's a lot of upside. ♪