tv In the Loop With Betty Liu Bloomberg May 1, 2015 8:00am-10:01am EDT
we have a great show ahead for you this morning and of course we're talking about musk -- about elon musk's announcement, unveiling batteries for homes and businesses saying his goal is to fundamentally change the way the world uses energy. what does it mean for his company's valuation? stocks are up 1.5% in the premarket. getting your body in shape for the summer. nutrisystem ceo dawn zier is beating rival weight watchers. but what about the competition from online apps and this woman? do you know her? she is the social media phenom on instagram, essentially taking the fitness world by storm, going straight after millenials. how do nutrisystem and weight watchers and they all complet -- compete? the police report on the freddie gray case is now in the hands of
prosecutors and are only sketchy details about why the man died in the hands of officers. a baltimore tv station says the autopsy shows injuries like those suffered in a car crash. annex to stop was made that was not reported. the city was mostly quiet overnight. a third night of curfew was ordered after protests over the death led to writing on monday. last night police in riot gear led protesters out of an intersection with a pharmacy that burned down earlier in the week. the police have said they will keep investigating the case even though the state attorney now has the report. >> this does not mean the investigation is over. if new evidence is found, we will follow it. if new direction is given by the state's attorney, we will follow through with the investigation. betty: anger about the gray case is spreading beyond baltimore. protesters in philadelphia c
lashed with officers. the death toll in udall is now at 5200. six days after the devastating earthquake, nearly 14,000 were injured. the u.n. says 1600 homes were damaged. 2 million people need food and medicine and shelter. authorities say international aid cannot arrive fast enough. the family of each person killed will be given $1000 and 400 more for funeral costs. you on his latest venture could revolutionize how homes and businesses use energy. the tesla motors founder unveiled his batteries yesterday, designed to capture electricity generated by solar panels and service backups during power outages. he says the goal is pollution-free energy. he is promising delivery starting late this summer.
prices start at $3000. many investors are defriending linked in. shares plunging after it posted results. its quarterly revenues fell short of estimates for the first time. linkedin is also forecasting that second-quarter sales will miss projections. they would be $50 million short of expectations. now that there is 2 democratic presidential candidates, one of the hopefuls says he will be listening closely. speaking to bloomberg on "with all due respect," senator ted cruz says he looks for to hearing hillary clinton and bernie sanders, a self described socialist. senator cruz: clinton's policies and of being close to bernie sanders and it will be interesting to see if she agrees
with policies he describes as socialist and whether those are good policies for the country. betty: cruz is predicting that the gop will win a majority of the spanish boat -- the hispanic vote in 2016. we are waiting for chrysler to release numbers. i want to bring in our resident auto expert, matt miller. one interesting trend is that truck purchases are doing well but car sales, not so much. matt: everything is doing ok, it is just that truck sales are doing so much better that they are releasing -- truck sales have been car sales for 24 consecutive months. that is how good low gas prices are. and the fact that trucks are now even more fuel-efficient than ever. it is evident at ford that car sales are not doing as great because they had to fire 700 workers who build their focus
and compact cars. when f1 50 gets 26 miles per gallon on the highway, who needs to buy a compact car? betty: we all want more room. matt: well, this work focuses is a very different for focus than the kind they would normally build in wayne, michigan. super hyped up version. but unless you are building compact cars, this is win-win. betty: what are we going to hear? april sales, ford and gm as well. matt: we should hear very good numbers and especially for 40 will be a benefit because they had declining sales and dollar amounts and unit sales that are pretty much even because they are switching over to the new f1 50. now we look at a 6.1% gain,
according to the median estimate for four. at chrysler, 7.5% gain. for the u.s. automakers, if you still consider chrysler one of those come april will be a strong month for car sales. betty: technically, they are not. mat: well, the factory workers are all in michigan, just that it is an italian company based in amsterdam. how the figure out what that is? betty: taxes. matt miller, thank you so much from our resident auto expert. matt will be back with me for the president of aston martin. oh yeah. how are they trying to hook new buyers, like me, maybe? tesla now wants to be in your
home. last night in california, ceo elon musk unveiled 2 new storage batteries part of tesla energy a business and a brand that he says good eclipses electric cars. one is for consumers and the other is for utilities and companies. elon musk: this will be a great solution for people in remote arts of the world where the electricity is extremely intermittent or expensive. you can take the tesla powerwall in a can scale globally. betty: shareholders seem to like this. shares have been climbing ever since she hinted about the project in twitter -- on twitter in march. here to talk about the plans and pressure is david guerrero. is this really a breakthrough technology that he is talking about? david: 20 has done effectively is get the batteries to have longer lives and be efficient. he wants to move into this other
sector. other companies have been trying to do this. i was looking at a company and the numbers are at $605 million. it is projected to be a $21 billion market. there is a lot of room for growth here. betty: it absolutely correct. others could follow suit. people ask this question every time he comes out with something. why? why do you think he is doing these batteries? david: there are people with solar panels on the roof and a lot of people have battery systems to capture electricity. if you wanted these on your roof to harness the power yourself, taking advantage of lower rates, that is what he is looking at. on a bigger scale, utilities have all these resources bringing in alternative energy. wind and solar and geothermal in the future.
they want to be able to hold that when they are not reducing it from geothermal. betty: tell me how it is going to work, though. david: he says that by august is will be installed and they will install the battery in her garage and they can install via the internet and if there is any trouble i can work on it there. betty: so tesla is going to install it for you. david: they have partners to do that. betty: and they will monitor how it operates. is the cost going to be -- let's say you get the 10-kilowatt hour version, is it going to be $3500? david: you have to buy the inverter as well. aside from that, being a technician to install it in your home. betty: we will see. thank you so much david gura of
betty: there is a look at our top stories. prudential is putting mike wells in the ceo effective june 1. as the head of the london-based prudential unit since 2010, he is taking over as the new ceo at credit suisse. printed -- it has no relation to the new jersey-based credential, jesse you know. maybe ships are escorting commercial ships at -- navy ships are scoring u.s. commercial ships to the strait
of hormuz. it is to make sure they face no interference from iran. it is being adopted in response to what question views as provocative iranian behavior. -- washington views as provocative iranian behavior. president obama is choosing his adopted hometown is the site of his residential library. the university of chicago has identified two sites near the obama family home. an announcement is expected within weeks. roger goodell: with the first pick in the 2015 nfl draft, the tampa bay buccaneers select jameis winston. florida state. betty: and the top pick in this year's nfl draft won't be leaving the state of florida. heisman trophy-winning cornerback jameis winston will be joining the buccaneers instantly becoming the face of a franchise that has missed the class for seven straight seasons and has not won a postseason game since 2002. he led florida state to a national title 2 years ago.
the draft goes on tomorrow. those are your top stories. coming up on "in the loop" will you be going to see "the avengers" this weekend or going to the kentucky derby? more on the much-anticipated blockbuster movie and the bourbon business in kentucky. he is described as the missing piece of our energy future. tesla ceo elon musk finally unveiled his big bet, the tesla battery to power homes and businesses. i want to get more with dean frankel, an analyst who covers energy stories. and the chief technology officer at private equity group new world capital, who used to work in several divisions including pioneering the fuel cell technology. dean, since you are here with me, some questions you have
around this battery business right? dean: yeah absolutely. there was an interesting product announced, the powerwall and the larger utility commercial systems. but there are notable missing players in there. we saw a lot of preferred partnerships across the value chain. notably missing is solar city. this not the first foray into storage for tesla. they have done this before with 430 systems going through solicited. -- through solicited. betty: you say they have got it quietly through solarcity? why is that important? dean: when you look at what happened in the solar industry cheap hardware, people got good at selling systems, and financing to the end customer. both of those last two pieces are missing. we have cheap hardware from tesla and tesla is making -- good at making the packs but you
have to have the converters and someone to install it and someone who knows what they are doing -- betty: in your view it will cost more than the $3500 price tag? dean: it certainly will. betty: i want to bring lou into the conversation because you said this is a solution that has no problem. lou: yeah, specifically regarding residential, i think that is correct. betty: what do you mean? explain. lou: for the vast majority of us, the grid is reliable and cheap and the economic value to the customer and how it improves your daily life is just not there. in connecticut, for example, one of my partners is always complaining about losing power in snowstorms. a several-hour battery storage system wouldn't help. it wouldn't put power into it in the wintertime and it would not last long enough to ride through. for most people it is not an issue.
it is a core technology that is not money-saving or problem-solving. betty: but i don't want to underplay the benefit of using this when you have a blackout aura brownout -- or a brownout because of snowstorms, but more and more homes become solar powered, or when powered. isn't that going to create demand for this kind of storage? lou: well, it depends on how we progress our utilities. we have quietly changed over much more to natural gas than the renewables. the utility response to that has been a quiet, and homeowners have not been involved at all. it is not clear that the utilities need the homeowners to play along, and the rate structures don't encourage them to. california is trying to encourage this. there may be a market there but it is not clear who the customer will be and why they are buying these things. betty: that is on the
residential side. dean, is there a bigger business on the commercial side? dean: he did hit on a few key points there. the business models are not there for storage. but we are seeing some initial applications that are driving the product demand. one example could be demand management. this is very geographically limited. you can reduce the amount every month you are going from the perspective, and that is something that elon touched upon last night. we build the electric grid to meet the hottest day of the year, the 3:00 p.m. july day. that is a really inefficient system. batteries have a way, particularly from a distributed perspective, as small as a powerwall and as large as the gigawatt storage that elon was talking about. that has the opportunity to reduce the amount of investment
in electric overall to build more flexibly. betty: getting a little bit away in the time we have from the actual technology -- we can talk about the business model and where it will be most beneficial . what about for the company itself? lou, you weigh in on this but how big a deal could this before tesla? lou: even if there is fairly small penetration in the storage market, if they don't sell very many in terms of changing the great, i think it could be quite significant for the company. one of the reasons they're doing this is the factory that is hypothesized doesn't really benefit. they don't get the money savings unless they use the factory as much as possible. being able to make sure they can crank out batteries weather for cars or something else, will drive costs down. i think the intention is to make sure they are using the new factories they will build. betty: we will have to leave it there.
great to see you, dean frankel of lux research. we need to break away -- thinking about cars, chrysler sales are up 5.8%. scarlet fu has the details. scarlet: it is less than what analysts were anticipating. in terms of the breakdown of the different brands, i'm looking at the chrysler brand, 26%, while the dodge brand is down 16%. despite all the discussion about more people moving over to light trucks and suvs as opposed to cars, car sales are up 29% while truck sales are down 1% in april. once again, fiat/chrysler reporting a smaller than expected gain to 127 -- 180,027 units. betty: much more ahead, including more on the
betty: you are watching "in the loop" live on bloomberg television. good morning. i am betty liu. for four straight weekends -- starting today there was a new unstoppable franchise in town. "avengers: age of ultron" is certain to be number one after taking in millions overseas. that, by the way, does not include china. it kicks off a record summer for hollywood and will generate massive dividends for disney's marvel studio.
always a lot of testosterone during the summer months, guys. by all accounts, this weekend, since you are the box office guy, it is going to break records. >> i definitely think it is going to break records. the first "avengers" is the third highest grossing movie of all-time. "furious 7" is the fourth. how fast is it going to make $1 billion? betty: tiffany a $1 billion movie? -- definitely a $1 billion movie? erik: it has got to have $1,000,000,005 to get there. betty: when does it give you in china? erik: "furious 7" is the highest grossing movie in china's history. betty: it is on a roll. this is insanity for disney? >> they bought the marvel
company several years ago after buying pixar. it has added -- tremendous. they have had hit after hit aft er hit. this one we are talking about $1,005,000,000 for the first installment. this might do $2 million globally. betty: i was looking at where disney is. disney in terms of box office receives is just behind fox and warner bros.. this something like this -- erik: disney will have the two biggest movies of this year. " star wars: the force awakens" is another big franchise. disney, marvel, the disney princesses. disney owns you right now. betty: disney owns my kids. they are the parents.
paul: and they are creating family entertainment that is just as satisfying for adults. i grew up with "star wars" and i can't wait for the new movie and my kids can't wait, too. betty: does this signal a hot summer blockbuster season? erik: i think so. i think it is going to be a great, record-breaking summer. all of the movies i have advanced buzz on a tremendous. "trainwreck" is a big, restoring am -- a big comity starring amy schumer. pixar's first original film since " brave." "mad max: fury road" i hear is very good. betty: what about "minions"? paul: that is another coming out for the kids and this is supposed to be a record summer.
hollywood needs it. we had a couple of soft years. last year was particularly disappointing in terms of box office receipts. this is the year that theater owners of a big media moguls and hollywood, everybody hopes 20 15 at 2016 to be the figure for hollywood but this is the year then used to pull the movie business out of the doldrums. betty: even though we are talking about $2 billion for a movie like this, how much goes back to the studio? what are we talking about in terms of earnings? these movies are not cheap to make either. erik: "avengers" is north of $200 million. betty: we are obviously not talking $1 billion. paul: typically about half the box office goes to the theater. the result the ancillary revenue streams with home entertainment
-- there is all the ancillary revenue streams with home entertainment. if you have a franchise like all the marvel franchises, they pay residual money back to disney every single day. betty: does this push everybody to the tentpole films? because the bar is getting higher and higher, right? you are not a success unless you hit that $1 billion mark. paul: if you're going to greenlight in hollywood a $200 million hollywood franchise movie, and has to play around the world, china, so that kind of leaves the duty cheeks to really focus on these big franchises. "bloomberg businessweek yeah -- erik: yeah, look at "age of ultron." really good opening and south korea, and china of course is becoming a force to be reckoned with. betty: i do notice that in these big action movies there is
clearly some sort of play to the asian audience, right? you see that it characters. is the movie industry kind of moving in that direction? and also, by the way, chinese investors coming into fund hollywood films, right? erik: you see it all over from the "transformers" movies to the "avengers" movies, shooting in asia, well-known actors and actresses in the movie. you definitely see where the potential is and they are exploring it, but not taking too much away and trying to balance it out pretty well. betty: i am available, by the way, for the next action film. [laughter] thank you so much, paul sweeney of bloomberg intelligence erik davis of fandango, thank you so much for joining us. there are other top stories. the police report on freddie gray's is now in the hands of the prosecutors.
a baltimore tv stations that's gray's autopsy shows injuries like those suffered from car crash victims. the officers made an extra stop that was not reported before. the city was mostly quiet overnight, a third night of a curfew was ordered after protests of gray's death led to writing on monday. >> we will get justice for freddie gray will stop believe you me we will get justice, and we are going to do it because we will work together. if with the nation watching three black women at three different levels cannot get justice and healing for this community, you tell me where we are going to get in our country. [applause] betty: anger about the great case -- gray case is sparking clashes. protesters set up a line near a highway. in philadelphia. nepal -- the network reports
that the family of each person killed will be given money for funeral costs. 6200 people. international aid cannot arrive fast enough. thousands of people are still missing, nearly 14,000 were injured. the un 600,000 homes were damaged or destroyed. a new reading this morning on britain's economy shows a sign of weakness. growth slowed last night. the purchasing managers index fell to a seven-month low. economists say stronger british pound hurt exports. it comes less than a week before britain's general election. tomorrow night in vegas, the $300 million men will climb into the ring, that is manny pacquiao and floyd mayweather, they square off. the match was six years in the making. mayweather is two years older
than pacquiao but he is the underdog. pacquiao says he likes that. pacquiao: it gives me determination for the fight, and to prove something in the fight. i love it. betty: give you something to fight for. watching the bout on paper view will cost you $99. those are your top headlines this morning. much more ahead. fresh off earnings, we will ask the ceo of nutrisystem how the company plans to maintain its weight in the increasing digital world coming up next. ♪
betty: ok, we are less than an hour until the start of trading on this friday. i want to get back to our breaking news desk where chief market correspondent scarlet fu is taking a look at the early action, including the big energy names, chevron. chevron reported about five minutes ago, and just like exxon
mobil before it, a big heat from chevron in the first quarter, which goes to show how much analysts had brought down there estimates. earnings per share was $1.37 almost half of what it learned the same time last year, but much higher than analysts were anticipateding. .8% right now. for companies who have reported so far this earnings season, s&p growth is as if up about 3%. the consensus estimate is that they will decline by about 3% overall when all is said and done. we are waiting for energy companies to come in with more results. the energy sector on its own is expected to post a declines of 65%. you got in mind as we go through all these results. speaking of energy, let's move on to alternative energy. firstsolar is dropping the premarket, although the company had warned it would likely post
lower revenue and losses in the first quarter because trying to keep energy projects and spin them off rather than selling them outright. nevertheless, the company's outlook also trails analysts' estimates. there trying to give investors on the positive to focus on with the results saying that it will make solar panels for caterpillar to sell to dealers in asia, latin america, and africa. no word on what prospects that might lead to. finally, linkedin, the most actively traded company stock valued in the premarket, about $90 million a share changing hands, more than double the amount of money moving through say, apple's shares. it was the below what analysts had anticipated because of the strong dollar. linkedin has consistently beaten estimates but it failed to do that this time around. take a look at this call him right here. all the green over here is the surprise function, quantifies the extent to which linkedin has
topped revenue estimates in the previous quarter. it just keeps going down. this red at the top what this past quarter when linked and reported sales that were basically in line, down .1%. betty: i was going to say no wonder the stock is taking such a hit. scarlet to why so much for going through those numbers for us. scarlet fu at the breaking news another company where watching a little bit of a better time been linked in, nutrisystem. the weight loss company reported first-quarter revenues a big beat compared to analysts' expectations. can the company keep the sales up and the pounds off of the younger generation? nutrisystem's ceo dawn zier is joining me. great to see you. dawn: great to be here. betty: when you look at the
stock price, you are handily beating in terms of investor return your rival weight watchers. how do you keep that momentum up? dawn: it is a lot about innovation. we feel our product is matched to where the consumer is today and where it is moving too. we focus a lot of innovation whether that is science, development, distribution. betty: ok and innovation online right? weight watchers have mentioned they are seeing a lot of competition from online ads. you know, digitally, other websites and others that are sort of getting into this industry. are you feeling the heat of that competition, too? dawn: we view technology, all the apps, the wearables, as a complement to our product. we are looking for a holistic solution where we can work together and code this. we have a very strong app that
connects us to the high-tech that is out there today. apple, health kick, all of that. betty: apple watch? dawn: we can connect to it, yes. betty: what about myfitnesspal that got bought by under armour? they are becoming a big force. dawn: we believe that it is a combination of things, so technology alone we do not think necessarily help you lose weight. it helped keep you on track but it is more of a holistic solution that includes food, support technology. again, people lose weight so my different ways, and we find that out solutions, which are very structured, help people who are tried a lot of times to lose weight and have failed. we help them be successful through a structured program that combines new technology. betty: you mean versus a myfitnesspal, where you have to input the data yourself. dawn: yeah, it is hard to know how many calories you are eating.
all of my exercise, i want 100% credit, but sometimes i leave out the little food, so with a structured program, it is easier to manage. betty: so you are really controlling it for the consumer. dawn: and teaching them at the same time so they learn about portion size and see what they can eat. betty: i brought this woman earlier. i know it nutrisystem you have celebrity endorsement, so some of the people have endorsed nutrisystem, bring up the three people in the past who have endorsed nutrisystem, we are talking about dan marino, marie osmond, melissa joan hart. marie osmond, by the way, has always been a part of nutrisystem. she has been a very big part of your brand. you bring up in this day of age for millenials, someone like kayla in australia, who has something like 2 million instagram followers, her posts
get hundreds of thousands of likes and retweets for stop she is building a multimillion dollar impact -- empire. she is now a fitness brand around the world. that is just based on social media. how do you compete with that? dawn: again it comes down to understanding who your audience is and how you can relate to them. betty: she is a younger audience. dawn: she is a younger audience so we look for different celebrities that will attract a different demographic. other celebrities, we are working with them, talking to them. marie and dan are key celebrities, they have lost the weight kept it off for seven years, eight years, which is important. betty: are you trying to recruit target younger -- dawn: our sweet spot really is the 30 to 45-year-old female and men also because most weight loss programs to not appeal to men, but we found with our program -- 25% of our customers are men, and that is often men
betty: here's a look at our top stories is morning. alibaba withdrawing a job advertisement in the wake of criticism. ads seeking candidates with the physical characteristics of a popular japanese porn actress. the company apologizes and says the ad was a failed attempt at humorous marketing. yeah, a big failure. fail. in louisville, kentucky, the 141st kentucky derby is
tomorrow and the favorite is american pharaoh. if he wins, it will be from afar. he is starting the race on the outside. those are your top story this morning. more on the kentucky derby. another staple while you are watching the race, a meant gel int julep. i spoke with makers mark chairman bill samuels about why the derby makes eggs business -- makes big business for the kentucky derby. bill: we try to keep up. people come to kentucky, it is no longer just to see the horserace and to socialize but to go on the bourbon trail, to visit the distilleries to taste the bourbon, so we spike up the employment at the distillery. it is the biggest true date we have, and we have some huge once during the year. civeo how do you -- betty: how do you make the
perfect mint julep? bill: is not possible to do it one at a time, you have to do it by the batch, see you have to anticipate usage. the second thing is you have to take the mint the spearmint, young, tender spearmint, you have to take the time to take it off the stock because that is where all of the acids are. take it in the leaves, millions of them it seems like, two, 3, 4 hours, it is a huge pain in the rare in, but it is essential. take a nice, clean t-shirt that you have washed and make mint extract with that fresh mint so that when you start you start with three liquids, simple syrup, good bourbon, and mint extract that you have made. betty: that you have personally made. ok. bill: and you start with the simple syrup, it is about 6-8-1 and then the mint, whiskey, you
added to taste. betty: is there a bourbon shortage? bill: we will say one thing, and that is that demand surprised us. they picked up at about twice the rate that we expected. it really started about 5, 6 years ago, and we have all expanded operations. it is expensive cash flow wise but we -- add t makers, we can tolerate growth of up to 10% a year, and we have been managing that rate or 40 years so it is just the opposite from -- we do not deal well with fads in this industry. we do well with long sustainable trends, and as makers, we have sustained about 10% growth over the last 41 years, and that is available going forward. the problem is the international market has now picked up on
bourbon, you are starting to see it on the top shelf of the wonderful watering holes around the world. that was not a dissipated. -- that was not anticipated. we do not have the greatest marketing skills in the world. we are pretty good at listening and when people start telling us they would like to have some makers, if we hear it enough, we will figure it away to get distribution worked out. so most of our international business has come as a result. we still hand dip every single bottle in the waxed that mom developed. it is very personal, it is third much of grass, and we think because there are so much authenticity and craft and heritage that this will stretch out for a long period unlike some of the trends people like to jump on and jump off. betty: what goes into making makers mark whiskey? what is the process? bill: corn, it is better for the water in the grain come from the
same soil, so local grain is better, limestone water is essential, that is why it is all in the same place. limestone water, no ferrous oxide, and then you have small grains. most use rye, we use wheat, and then you have your malted barley for the enzyme generation. then you distillate, then you put it in an american oak barrel that has been charged for a minimum of four years, but really it reaches balance in a six years to seven years. then you try to sell it. betty: well now you know. you want your mint julep? that was makers mark chairman emeritus bill samuels jr. and designs on outer space. we will tell you all about that when we come back. ♪
betty: welcome back to "in the loop." we are 30 minutes away from the opening bell. stocks will open higher. wall street waiting for new readings on construction spending and consumer sentiment. both are due out in an hour. activists nationwide are planning more marches to show concerns about the freddie gray case in baltimore. mostly quiet during the third straight overnight curfew. prosecutors have a police report on why great guy. however -- on why gray died after his arrest two weeks ago. >> this does not mean that the
issue is over. if new direction is given by the state's attorney, we will open a it and we will follow through with the investigation. betty: the commissioner admits that officers with gray made an extra stop that was not previously reported. authorities in nepal say international it cannot arrive fast enough. now more than 6200 people thousands are still missing, the uss 600,000 homes were destroyed or damaged. these first and who died in the quick will begin in $1000 plus $400 more for funeral cost. will they be the swing vote? speaking on bloomberg on "with all due respect," texas editor ted cruz say the majority of voters will choose the gop because democrats abandoned
them. senator cruz: the hispanic community has been hammered. the rich are doing great under the obama economy, but the most vulnerable young people hispanic african american single moms, their lives have gotten harder and harder and harder. betty: cruz says he is looking forward to the democratic i play between hillary clinton and newly declared candidate bernie sanders. and the boxing world will crowd a welterweight champ on saturday, while two boxers will become richer no matter who winners bastad manny pacquiao and floyd mayweather say they are ready to crawl into the ring. pacquiao tells bloomberg's "street smart" it is not just about the money. pacquiao: the money is part of this event but my focus is to how i can win the fight and how i can perform for the people. you know, how i can make them
happy, and bring honor in the country betty:. all right, -- in the country. betty: all right, but it is a lot of money for stop watching them fight will cost $99 for you. let's get you down to the open with the top tech headlines hitting a radar before the bell. bloomberg's olivia sterns and bob joining me. number 10 -- linkedin. olivia: wow. betty: yes, olivia, what a mess. the professional networking site missed wall street expectations. it is the first time scarlet showed us i thought really well how they have beaten in the past their record, first time a missed. nobody expected this. no wonder the stock is down so much. olivia: no wonder.
a little bit of the air came out of the stock. they have been on such a tear. you really have seen brisk off across the board across the week. biotech down for the week, but jeff weiner in the pink. bob: this makes me nervous because it shows how stock investors are skittish. i'm going to my notes here. revenue for marketing was 38% revenue from services for companies to recruit was 36% stock went down 21%. it seems like an overreaction. betty: right, you are saying parts of the business -- bob: they're not growing as fast -- olivia: i think maybe the run off was an overreaction. betty: maybe you both -- bob: we are both right. betty: new jersey, there is already a big winner. $83 million at the louisville, kentucky track, not bad for
about two minutes of race trying. human beings are so bizarre. we spend so much money, we get all excited, and before it takes even one moment to sip your mint julep, the race is over. bob: this is the great thing about the kentucky derby, i can set at home in new jersey in my underwear -- not that i'm going to, i will probably be fully clothed. [laughter] i can turn on the tv and see these beautiful animals race. this is maybe the one of its of the year -- i do not want to hear about who is making what. i just want to enjoy the beautiful animals run. american flair pharaoh, beautiful gait and moub tahij from dubai, with a different kind of gait. this is all from david papadopoulos. betty:olivia: there are four horses
in this weekend's race that are undefeated. bob: and there might be for defeated. betty: we will be glued to our tv sets this weekend, fully closed, by the way, at number eight. the big fight, saturday night floyd mayweather takes on manny pacquiao in vegas. the arena seats almost 17,000 boxing fans barely 1000 tickets were sold, brokers might be asking $100,000. olivia: what happens if it goes to rounds? [laughter] betty: they say will not be a knockout because they are too old. bob: one of them might fall down. [laughter] olivia: i would take a punch from a 150 pound guy for $100 million. just saying. bob: i do not want to bigger but anyway. olivia: harry reid had to ask the mayor of las vegas to get
the french ambassador tickets but he is not going himself because he thinks it is, you know -- betty: i could have gotten an "crappy" ticket. i had no idea they were reselling for $100,000. i should have taken it. bob: just say yes, betty. olivia: you got the ticket from corporate hospitality, i assure sure. not someone who pay for it. bob: what the rest of us feel it, the .001% that can get into the fight. betty: number 7 -- tesla ceo elon musk introduced a line of batteries into homes and businesses reminding consumers that tesla has the entire infrastructure of the will. this guy is a billionaire. he is no electric carmaker -- this man wants to change the world. bob: remember when manny
pacquiao said it is not only about the money? elon musk was to transform the way we use energy in the wall. olivia: -- in the world. olivia: i guess it operates as a storage device. nobody could figure out how to store energy. they can generated, they just do not know how to store it. bob: you can put in your basement, your living room. olivia: it comes in several candy colors. bob: you are going to get one of those, are you? olivia: in my apartment in manhattan, which is probably not big enough to fit one of these are probably does not get enough solar energy. betty: number 6 -- speaking about another billionaire, jeff bezos, who also wants to rule the world, the founder and ceo of amazon, he is also the founder of blue ridge in, which launched atits for successful flight yesterday, it wants to give commercial flights
to those who want to experience weightlessness. bob: to quote "big bang theory," i think jeff bezos is one lap away from being a super villain. [laughter] betty: he laughs like one, too. olivia: is ait hubris? is he jealous of branson and musk? what we know about spacex is they can't get the expulsion part to come back to ground safely. bob: so they can recycle it, and that would cut costs. betty: who are all these people lining up to want to experience space? bob: it is strange to have it become its entertainment thing. i want to go up in space for a minute. i want a trampoline. betty: as bob said, it is the .001%. will buffett repeat his song?
betty: we continue our countdown to the opening bell. we are now halfway through, which means we it is time for our deep dive. at number five bank -- at number 5 -- berkshire hathaway. ceo warren buffett calls it the woodstock for capitalists. he attended the coca-cola shareholders meeting earlier this week, and he did this. warren buffett: ♪ i would like to teach the world to sing in perfect harmony i would like to buy the world a coke and keep it company ♪ betty: taking me back to matt
holliday. what else can we expect this weekend in omaha? joining us from omaha is lawrence cunningham, a professor of law at george washington university, and author of "berkshire beyond buffett." might we see some big sales for your book? prof. cunningham: warren picks books to sell at the meeting, and he picked "book sure beyond buffet." warren buffett is the eric clapton of business. a rock star who makes difficult things look easy. betty: indeed. there will be lots of questions. what happens all the time, someone will ask him about succession the older he gets, the more the questions arise. so, you know, this time, people
are going to look more closely lawrence, as greatg able. matt seems to be out of favor given the trouble that buffett singled out in the letter, right? prof. cunningham: maybe so but 20 or so i would worry about a berkshire without buffet because it was primarily his investment vehicle, today it is a well managed business organization, so he is playing this out very well. the company will be well off with or without him, with or without those three people you mentioned or any others. the headwinds are not unique to that company. that industry is having some trouble, and matt rose is a very capable manager. if they are having trouble this year, they will work through it. betty: clearly matt rose is a
strong operator. that is why buffett brought him on board. some names that might come up jenny remedy -- ginny remiti of ibm. an investment that has not gone well so far. what you think he will say about that? prof. cunningham: minority investments will be there from ibm and coke and others, which is a nice tribute to the company. i was on earlier this year talking about the ibm struggle. it seems to be a setback rather than a permanent problem, and berkshire has made money off the ibm stock because ibm has been repurchasing its shares, so it has been positive even if the company is struggling. the thought is that the company has a deep history and some very good product plans. i do not think that is the
number one problem or challenge at berkshire nowadays. betty: all right, we have to leave it here, thank you so much, lawrence cunningham, the author of "berkshire beyond buffet." joining us from omaha. sales results of 5.4%. scarlet fu has more on those numbers. scarlet: 5.4% is lighter than what analysts had been anticipated. ford u.s. sales up 5% in april in terms of suv sales. it looks to be a record. again, shy of what analysts had anticipated. consistent with what chrysler pointed, five point 8%, less than anticipated, projected for 7.6%. nissan reported april sales as well earlier in the hour, posted at 5.7% increase much less than what analysts were looking at, a 9% rise. the next carmaker that will be announcing their april sales
betty: let's get back to bring you the most important stories before the bell. bloomberg's olivia sterns and bob irvry joining me -- and bob ivry joining me. number 4 -- walmart -- walmart will relocate the regional staff from its 4500 locations around the u.s. to its corporate headquarters in bentonville, arkansas to reduce costs. they also want more control over their operations. is this like a red lack here guys? olivia: i think cutting the
sales forecast earlier this year is a big red flag. doug is trying to improve efficiency, keep on cutting costs, so remember he is also going to eliminate a layer of management, he is going to give workers more money. he is hoping to resent july's employees and will give him more control. bob: i like the cutting out the layer of management, but i am nervous about bringing the executives to the home office because that makes them less responsive to the customer. the closer the executives get to the customer, be more responsive they can be, so hey, they are cutting costs, but at what price? betty: like you say, take them out of the field, there is that risk. number 3 -- who is going to the movies this weekend? olivia: "avengers"! betty: "asiage of ultron" according to boxoffice.com, it
could surpass the record set by its predecessor, "the avengers." bob: olivia is one of the avengers. she has superpowers. olivia: what is my superpower? all: she is a newswoman by day, but at night -- olivia: it is the pantheon of the superheroes. this is the sequel. bob: you have a favorite, though, don't you? olivia: robert downey junior. bob: me too! ironman. betty: me too. betty:ob: really? a sweep for downey jr. olivia: by the and of next week, analysts say could bring in $500 million. betty: the guy at san diego said it could be a $1.5 billion movie easily. bob: my question is what happens to "paul blart"?
he is the real superhero. betty: number 2 -- want to be a force to reckon with an italian baking? say -- with in banking? say you are italian or spanish. all of the leaders have been from italy or spain. they all name new banking leadership from those two countries. bob: yeah, but where they go to school? olivia: in the u.s. and u.k. bob: exactly! is it the same old stuff except they have an accent? olivia: using more of the german any french employees went to school at home? bob: i don't know. olivia: what they are saying is that the at the spanish are little bit better at the softer side of business will stop after the hard negotiations, during lunch, they know how to warm up people a lot better. bob: it is a load of malarkey to me. olivia: i think it is pretty accurate. bob: really? sharks with soft teeth?
' need to know before the bell. number one, is this flash crash case on regulators. there are exchanges monitoring these illicit trays. cme has suspended to traders for manipulating trading. they were arrested in london lastly placing trade orders they had no intention of executing. they are now barred from trading on the cme for 60 days. bob: three people are doing
this? they are driving up the prices? olivia: only the ones we know about. you talk to traders and they say the guy is not responsible. who knows? it's an area where you start to worry that the regulators might be -- might not be as sophisticated technologically as the guys doing trading. bob: bob: i don't think there is any doubt. t since 2007 when the whole thing almost collapsed before doing weird things. betty: on top of all this, is there $2 trillion of retail money that has yet to be put to merck -- put to work in the market? none of this is going to encourage any of that money to come in. bob: yes, but it doesn't seem to slow the inflow. you would think that the ordinary mom and pop retail investor the game is fixed.
apparently, it's just business as usual. olivia: mom-and-pop investors have been putting aside money. they have missed out on the enormous equity rally. betty: it has not stopped the rally. bob: they will come in just as the price starts going down. betty: exactly. stocks are getting ready to start trading. let's bring in mohamed el-erian and former ceo of pimco. great to see you on this friday. having judged what you saw in the economic numbers and what the fed said in their statement where do you think we will be with interest rates?
mohamed: the fed is keeping all their cards until june. the path will be extremely shallow. third, the destination will be lower than we have seen in the past. we are looking at the loosest tightening cycle in the history in the modern history of the federal reserve. betty: standby for a moment because we have breaking news on general motors april sales coming up. scarlett: general motors broke the streak of automobiles posting gains that trailed estimates for the month of april. april sales were 5.9% which is higher than the consensus estimate of 5.3%. in terms of the brands chevy sales were up 3.4% while cadillac sales were up 14%. gmc trucks were up 20%. view it was down 5.2%.
-- buick was down 5.2%. ford reported a 5.4 percent gain and chrysler posted a 5.8 percent advance and nissan posted eight 5.7% advance. betty: a slight beat there for gm. this will be the loosest tightening cycle at least the beginning of a cycle, we will see for the fed. what does that mean for treasuries and the equity market? stephanie:scarlett:mohamed: yesterday's jobs numbers were strong. whether it is jobless claims are employment costs, the u.s. economy is not as bad as many people think now. in terms of what happens to
interest rates in the u.s., you have to ask about europe. europe will determine our interest rates further out on the curb. as long as europe remains depressed, as long as the ecb has its but all the way down on the stimulus pedal, the interest rates there are not going to go up in a huge way. i see our interest rates relatively well behaved even when the fed moves. olivia: what happened to the bund this week? that 10 year we thought would hit zero and now it's up .2 many came out and said everyone's crazy, they need a short german that that the move is extraordinary. what drove it? mohamed: i think people woke up that there is a limit how low you can take interest rates before you get a buyers strike. i am stunned there are people willing to buy so much fixed
impacted negative nominal yields. i understand the argument that they can go more negative but give me a break it there is a limit to that. what you've got is a wake-up call that yes, you can have ultra low yields for a while but they should not the two low and they should not go to negative. up to the nine-year point of the german curve it was negative and people woke up and there has been a buyers strike. mohamed:olivia: how about the move in the euro? what about the money supply numbers? does it look like banks in europe are lending again question mark mohamed: the euro is a relative price. it measures two things. you have lower expectations in the u.s. and higher expectations of european growth. that realigned a little bit the relativity's of monetary policy. i don't think that will last.
it's a relative price so it moves when either of these two things move. both of these things have moved in the last two weeks. betty: everyone keeps wondering when the next price will happen. i keep getting warned by bond traders that there is a liquidity crisis that's brewing in the fixed income market. in your last column, you alluded to that. i want to read a quotation from that column. you said you to regulatory and market forces, the risk absorption capabilities of broker-dealers are likely to fourth -- to fall short of what investors believe are necessary and have been used to. essentially, there is no liquidity in the fixed income market you might be led to believe, right? mohamed: that's absolutely right and is the most underappreciated risk right now. there has been a fundamental structural change. in the old days, the broker-dealers were big relative
to the end-users who were small. now, the broker-dealers have been shrunk and the end-users have gotten large. when the paradigm changes and the end-users want to reposition themselves, there isn't enough risk absorption. you get sharp price movements and market dysfunction. i have been worried about this. i call this the delusion of liquidity but it's not just me. jamie dimon wrote about it in his letter which had and investors worrying and regulators worrying but nothing is being done so that something investors have to realize. the answer is to make sure you are getting compensated for the liquidity risk you are taking. bob: quick question about the new york jets -- you have a unique perspective because you spent time in southern california and you are a jets fan. what you think of their number one pick question mark mohamed: i think it's a great pick on the defensive line. i worry less about the jets
defense than the offense. it's a great pick and will make the defense once again the thing that will carry this team but we need of bit of offense. we need to score a little bit. bob: that's what rex ryan did is over stacking the defense in the draft. mohamed: it's what i call active inertia. you want to do something different but you'd keep doing more of the same. the jets have really been concentrating and getting their defense -- the defense makes people like me proud. it just that we need to also score points. bob: i predict them to go to the super bowl this year. mohamed: i will take the other side of that. betty: leave it to bob to ask the most important question of the day. thank you so much for joining as, mohamed el-erian bloomberg's new columnist. and olivia sterns joining me. much more ahead. we got auto sales all morning.
betty: a mixed bag of results so far for april auto sales. gm reported an auto sales are out and looks like automakers will need to dial-up deals. they want a piece of the consumer market that is what aston martin is doing this morning. they announced in a lance with allied financial to make its cars more acceptable -- more accessible and affordable. joining us is julian jenkins, the president of aston martin and america and also with me is our aston martin lover matt miller. you are announcing this new
program across all of your models. what are we talking about with numbers in terms of expanding the purchases? this is exciting and we know the importance of listening to the ownership in the u.s. market. with this alliance we are today with allied financial, this is the first opportunity that customers will have certainly for purchasing and aston martin through a manufacturer backed program. this is for the first time being on the consideration list for those customers buying a luxury sports car. what we are hoping is to drive more retail opportunities through our 37 strong network. betty: you are such an exclusive ultra luxury rand, could it jeopardize that image? julian: it will remain
exclusive. we are looking to broaden our appeal and are attempting to broaden our position that we can appeal to in terms of the audience that is there. this is an added dimension to the brand. customers today often find their financing through dealers and this is a means by doing it through a manufacturer-backed programs through convenience and the confidence. matt: 55% of luxury drivers lease their cars. i'm pretty sure everyone cross shops porsche carrera with an aston martin vantage. porsche sells 187,000 cars per year and you guys only do 4000. does this give you room to grow this number a lot?
julian: the u.s. market is the largest market for aston martin. in terms of that 55 percent, that's what our dealers are telling us and a number of them have multi-franchise luxury brands as well. it's also our own market analysis britt it may not all the incremental but there is an opportunity for us to grow and we are confident and excited for that opportunity. matt: you got another cash injection yesterday. you're getting another $300 million in change to build the d bx which is a small crossover sports car. will you do that in the u.s.? julian: this is early days in that project and that $300 million goes over the amount we are investing in the next days. it's exciting times for us and we will try to establish where
the most opportune places are in terms of the car but our focus is really in terms of driving our business and increasing the business and the opportunities that something like the new leasing program will afford. to put that in perspective, if we look at it across our models if it is a typical lease that someone is looking for on a 36 month with a 10% down on a v-8, that would be around $1300 per month. our more extreme sports car is about $1900. for the four-door, that's about $2300 per month. it's very competitive in the segment. matt:the v-8 sports model is one of the best models i have ever driven. the connection to the road is on bitten -- is unbeaten. i have not driven the v-12 but i
betty: more breaking news on dan loeb of third point -- scarlet fu has more. scarlett: they sent out the first quarter letter to investors. within the letter, he talks about his views for the overall market saying they are finding opportunity on stocks in the u.s. specifically to the united states, he says he remains constructive on the u.s. and economic data should improve.
a june rate type is unlikely. you're looking at shares of llama -- yum. the firm holds a significant stake in yum brands. they began their position in the first quarter on the view that yum is in the early stages of turning the page on its troubled china business. he explains why the company is in a position to change its fortunes in china. he also began a position in debin energy so we see a move in that stock. it should be dev equity. dvn. we will pull this up. if you look at how the price there is moving, it is up about 4/10 of 1% so not as large again as yum. but third point is beginning a position and that energy company saying he sees value there. overall, the take away from the download letter to investors as they are finding opportunities
in stock in the u.s. and japan and notably in devin energy and yum! brands. betty: xl group made an offer of $4 billion. it's one of the many mergers we have seen in the insurance industry. joining us is mike who is the ceo of xl group. you say there will be more consolidation? mike: i think so, there are number of pressures in the sector. there is a thirst for new capability so i think they'll there will be more. betty: are you looking for more acquisitions? mike: we just want to get this one right and now begins the hard work of becoming one company in serving our clients and seeing what else we can do to make a difference. betty: you said you're not a high-stakes gambler. mike: i'm not. betty: now is the time to take risk? mike: this is a changing sector. with globalization is part of the client needs in a number of
transformative things going on. i believe there will be more change and we will be willing to adapt to errors or is required to win. betty: there have been several others who have pursued their own acquisitions. in terms of after you have consolidated, you have -- you are collecting your insurance premiums and you are reinvesting what you are collecting, where do you find the returns? mike: we are regulated have all to on what we can investments of the bulk is in safe instruments like government-backed credits. we also find that we can get a little into the equity markets and some illiquid items. like some of the distressed debt from the last crisis. there are pockets of things where we can find but we are generally constricted. we will focus on savor things for our clients. betty: where is the biggest opportunity right now? mike: in terms of investment
portfolio, it would be illiquid. we can take longer dated stuff because we are not sellers. as long as we keep the core unsafe instruments, we can take longer dated items. one of the problems has been not enough funding for big, big infrastructure project. one of the challenges to the global regulators is to change the capital rules for insurers for the most logical holders of such risk. betty: one of the biggest players in the insurance industry is warren buffett and berkshire hathaway. they had their shareholders meeting over the weekend. since you are in the same industry, what are you curious to hear about warren buffett? mike: they run a fabulous organization. i always listen very carefully. there is a lot of room for all of us to be successful in our sector. for some of us, being independent as we are and
growing, we can really do more and more unique things. i find us more at the cutting edge innovations. our clients risks are changing so fast. betty: what is the newest area? mike: ciber is what everyone is talking about. we are at the earliest phase of how it will be addressed. there is new energy. we can accelerate the penetration of energy through new insurance products specifically tailored for that sector. there is a lot that can be done. think o'
that means on a friday, we will talk about how active managers have long struggled to chaim -- to find a home in the etf world but some new ones have made strong starts. even with the seller performance, it can be hard for them to attract assets. or to put it into perspective is our resident etf expert and analyst. it's not typical to find an actively managed etf, is it? eric: there is over 100 of them but they barely have assets. you don't really hear of them. there are some actively managed etf's in there. the good thing about them versus mutual funds is there is barely any capital gains. they've got no loads but they are tax efficient. mutual funds have loads and distribution feeds which means you get kicked that's you -- you get kickbacks if you sell them. part of the problem with the assets that's part of the
reason they are great. you don't have a lot of the extra fees in there. there has been a few stellar performers. one example is the value shares etfd. . they are putting the most hated stocks and goes to the bargain basement and tries to take the best quality of those. the key thing is they are making concentrated that's, only 40 stocks in here. if you have an active manager, you may want them to be more bold. you have 40 value stocks and they are going into energy and that has created a 7% outperformance versus 2% or 3% for the s&p 500. you're talking genuine alpha year to date. 79 basis points was high compared to a vanguard fund but equivalent to an active mutual fund. scarlett: there is hard value and i'm sure there is one for growth? eric: the arcwebx.o is up 12%.
the tech center etf is up as well. they are very bold and concentrated. they are picking companies that are moving from hardware to software to cloud computing, very innovative. people love these stocks. you have tech names but they have no sector constraints. they are into tesla netflix and amazon. the p/e is 80 in this. active should be able to outperform in any environment. you have value but the fees are 95 basis points. the alpha is there. scarlett: you have to pick up but you get the performance. thank you so much. our senior etf analyst. "market makers" is up next.
makers. stephanie: my partner is back. we have been on the road. erik: bill gross, amazing. i have never been a new part beach and never saw bill gross at pimco where he used to be and he is one building over at janus. stephanie: could he see pimco people in the parking lot? erik: for sure. stephanie: it's like a jets versus sharks showdown. erik: it would not be too hard to figure out who they were. it's sunny california and it's not like new york. it's an empty parking lot. stephanie: we have to go to breaking is but i have to ask -- how amazing would it be to have that kind of job and make that go and live in newport beach? we do have to get to breaking news. michael mckee is in the