tv Market Makers Bloomberg June 8, 2015 8:00am-10:01am EDT
this is "market makers." i'm stephanie ruhle. erik: i'm and schatzker. there is new leadership at deutsche bank. world leaders are meeting in germany at the g7 summit. stephanie: we are talking to some of the leading venture capitalists at the great summit. it is also happy ocean day. erik: filet of fish anybody? mcdonald's has its latest sales. here is vonnie quinn with the breaking news. vonnie: it is the last monthly seals we are going to see. down three points at -- 3%. the estimate was to be down 9%. in terms of individual breakouts, japan's sales were around 2.2%. a terrible performance in japan, partially currency related. europe sales were up 2.2%. much better in europe. not so great in the u.s. and
really terrible in japan for now. erik: thank you very much. mcdonald's stores sales. the last report will get from the company. let us start with the top story. shares of deutsche bank surging in early trading. germany's largest bank will have a new ceo after it's too coexecutive summative resignations. john krein will be taking over the company plagued by billions of dollars in legal costs and deep questions about strategy. that brings to an end three years as the bank co-chief executive officer. georgia bank shares posted the worst performance among global universal banks. he leaves at the end of the month and fitch and is staying until next may. german chancellor angela merkel expects to send a united signal on ukraine.
she and president obama drink beer and ate sausages in germany where the g7 is being help you they agreed on sanctions against russia unless vladimir putin honors a peace deal. stephanie: struggling retailer sears posted a narrower first-quarter loss in the first quarter of this year. the chain was helped by hedge fund manager eddie lampert's strategy of selling off assets like land and clothing business. he is the ceo and largest shareholder. he is now setting up a real state investment trust, and will buy sears stores locations in lease them back. alibaba chairman is coming to america to look for more revenue. he will be right here in new york city and in chicago later this week taking china's middle-class as a growth opportunity for u.s. businesses and his e-commerce company.
he is trying to raise to 50%. that is pretty ambitious. in the mva finals i hope you watched it. it was a nailbiter. lebron james and his title of king james, scoring 39 points to lead the cleveland cavaliers to a 95-93 overtime win over the golden state warriors. the best-of-seven series is now tied at one game each. cleveland forced the mba's most valuable player in stephen curry to miss all but five of his shots. game three is tomorrow night in cleveland. if you go beyond lebron or stephen curry, i don't know anybody else on either team. erik: cap me with you on that one. we have more breaking news. let us you back out to vonnie quinn. cecil financial continues its consolidation. vonnie: is going to buy barclays investment american unit.
it is going to take over barclays and wells investment management and the amicus. we will bring you more details as we get them as they continue to come in. it is good news in the u.s. and once again, it is confirmation of how barclays is changing at structures. we will see how deutsche bank will do. stephanie: thank you. this is staying to the agenda that we have seen over the last two years of acquiring more businesses. but in terms of barclays, the surprise is from so many other banks. that wealth management business is where they put more resources and add more employees. it is interesting to see barclays go in another direction. erik: a middle-market roll up shot. they bought kbw. they brought the capital and the
partners and stearns ag and leach. stephanie: this is their mo. the haven't asset value where they are. they need to diverse five and bring in more businesses they're going to justify that valuation. we're going to move on. besides covering that, we have the top five things you need to pay attention to erik:. erik: number 1 -- the g-7 summit is taking place today. they are calling for a final resolution that has put grease on the brink of the fall. word today that the g7 is going to demand a solution by june 14. they are also talking about russia and keeping up those sanctions. it was once the g-8. it is now the g7 because they kicked russia out over ukraine. we may get something out of german chancellor angela merkel on deutsche bank. that would be interesting. stephanie: that would be interesting. we know that she was sharing a beer with president obama. i'm going to give you number
two. i'm talking instability. turkeys lire tumbled to an all-time low and stocks plunged after election denied the party a majority government for the first time since 2002. one could say, how big of a deal is the turkish lira? it just speaks to the fact that global instability has markets rattled. when you see the lira drop to lowest values it has been, it makes people uncomfortable. erik: they're dealing with opposition parties this is something that you cannot afford to ignore because turkey sits on the border of syria. isis is an issue out there. that is understating the case. furthermore, the influence of the kurds helps to defeat everyone's party or cost in the elections. stephanie: the geopolitical instability has people rattle. let us go to number three and julie hyman has got it in the
newsroom. julie: china's exports fall in may, down 2.8% earlier. that is according to the customs administration and beijing. it is a little bit of the situation that we have seen here in the u.s. with the markets on that sort of dismal economic news. the shanghai composite actually rose to a seven-year high, up 2.2%. why? people are looking for stimulus from the chinese government and the central bank. erik: number four is that calper s plans to cut ties to reduce fees. that is according to "the wall street journal." that is what we see from real money institutional managers. in a world of zero returns, just giving away too much in the way of fees. they have to cut it back and strike the special deals. new jersey has been doing a lot of that in an effort to try to give pensioners as much of they
possibly can. stephanie: san diego as well. i'm going to give you number five. apple is kicking off their annual developers conference today in san francisco. the tech mammoth will injured as a revamped streaming music service according to people familiar with these plans. it could be obvious to itunes and a new world with apple and streaming music could i do not know of people miss it. i don't think it has the brand authority anymore. erik: i think apple will kill. stephanie: i'm saying the name of itunes. erik: we will have tons of wwdc coverage all day long. stephanie: last talk about a stock i know pretty well. we are watching deutsche bank. shares are up almost 6%. that is the most that we have seen in almost two years as investors are welcoming and management overhaul at germany's biggest bank. john krein will be the next ceo
replacing the man who will step down at the end of the month. this is a massive abrupt change. the old ceo -- maybe he will stay on for another year or so. erik: he may join his co-ceo and then he will be the ceo went fitch and sets down in may. stephanie: i want to bring in the executive editor from london. what you make of this massive shakeup? deutsche bank held its financial conference talking about the future of the banking industry. hans: good morning from london. we are one of the investors who said that we thought at the agm that we wanted a supervisory board to look at the composition of the management board. we welcome the resignations of these mr. spit we thank them but we also think of was
necessary to make a fresh start at the top of the management. stephanie: why? what was so wrong with the two of them? hans: there are three key issues. one was delivery on the strategy of 2015 plus. q targets were not met. there were questions about investigations and litigations. you remember the recent settlement of 2.5 billion u.s. dollars. last but not least, there was also skepticism among investors about a program that the management board was driving. that was related to the long tenure of these two gentlemen at deutsche bank in the investment bank. erik: culture explains so much about what has gone right at some point and subsequently gone wrong at deutsche bank. there seems to be this overwhelming desire to change the culture. can actually compost that -- a
college that -- a accomplish that? hans-christoph: he has been on the supervisory board as you earlier. he is an outsider. he has the banking experience from ubs of course. he has joined the deutsche bank supervisory board on the auditing committee and now on the other side. he is free from any connection. it is a legacy issue that has caused problems to deutsche bank over the last three years. stephanie: will he need to bring in more outsiders? two levels below him, you have that mafia born and bred under his leadership. hans-christoph: these are investors that they should really -- investors that --
issues that investors should really concentrate on. it is really a decision to take for john cryan for who they employ and if it is something that they should get involved in. erik: share with us some insight as to what went on behind the scenes. because a stephanie pointed out, it was only days ago that jain was speaking here in new york city. now he is gone. what explains his sudden departure? hans-christoph: i think a series of events. you have the end of april the big libel settlement which was really some reports about regulators in the u.k. and also the u.s.. that was a 2.5 u.s. billion dollar fine. they expressed a deep concerns
about the performance of the management board. 40% voted against the management board. i think that had a real impact on the thinking of andrew jane. erik: do you think there's a possibility that angela merkel played a role here? hans-christoph: that is something i'm not aware of and do not intend to speculate on these issues. stephanie: sorry. do you think that we could see more departures and were you surprised at all? the stock is up 6%. couldn't they say, wide and we do this a few years ago if investors one of this? hans-christoph: i think you need to give ceos a chance to deliver. the most recent was introduced in september 2012. there was a peroiod of time where
they had a chance. it didn't work out. that was certainly one of the reasons why the changes are taking place and that there was shareholder discontent. in addition, you have a libel settlements. bring all these together really culminated in the changes that we have now seen. stephanie: thank you so much. he is the executive director. i'm a deutsche bank alumni. i spent nine years. some may people were talking about it yesterday. the overall sentiment was that people were surprised given all the problems that deutsche bank has had and that he was running the bank before, during, and after while the libel happen. many people said they were surprised it didn't happen sooner. erik: when we come back, world leaders are meeting in germany at the g7. we will talk about the latest issues topping the agenda. ♪
stephanie: you are looking at a beautiful scene in bavaria. wiener schnitzel and beer all around. world leaders are meeting and i would say they are enjoying themselves. more on that in just a few. i'm here in york's escape best in new york city -- i'm here in new york city with my partner erik schatzker. let's get to the top stories. apple top the world with itunes and out at once to top the world with its streaming service. their developers conference begins today in san francisco. apple will go head-to-head with the industry leader, spotify. in china, trade figures came in we could than expected once again p they fell for the third month in a row. that is the biggest appliance --
decline in three months. there is speculation that china will have to increase monetary stimulus to keep the economy growing at the 7% target. and melissa mccarthy's "five" was the big winner at the box office. the 20 century fox espionage comedy took over $30 million over the weekend. that was slightly lower than estimates. meanwhile, get ready for a blockbuster. universal's "jurassic world" is expected to bring in $100 million the first weekend. those are your top headlines. i'm going to guess that "jurassic world" cost a lot more than melissa mccarthy's movie. erik: world leaders are meeting together in germany today. dominating these discussions -- greece's debt dilemma. bloomberg tom nichols is an vulvar io with more. -- in bavaria with more.
has there been any progress? tom: progress in the sense of clarity. he was in berlin today. the greek finance minister was meeting with his german counterpart. the line right now is that they are same the creditors, all of the european institutions that he oh so much money to, he says that creditors are sabotaging talks. it is yet another indication that talks here have gone south. you heard it happened over the weekend. there was a great champion of the prime minister of greece and now he is saying that he is lost some confidence to be a straight player and a fair and honest broker. this morning crucially you have the finance minister from france talking about how a greek exit would not actually be that big of a "drama." up to this point, it is only the germans who have been able to speculate on it and downplay the
likelihood of next -- and exit. they have been saying that if you like the deal, it is not a good indication. erik: is it a sign that european creditors are moving on to the inevitable? if they refuse to negotiate, give something up an exit and possibly defaults are inevitable? tom: they will move on until they give it one last shot june 14, the new deadline. when i talk to you tomorrow, i will have a new date for you. erik: stay with bloomberg television for more live coverage of the g7 summit. as the obama will be speaking at 10:00 eastern. we will bring that live. stephanie: still to come, what john cryan's selection means for
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stephanie: welcome back julie: oils recovery from a six year low in january is stalling bow. overall, amid speculation that a global glut will persist. we had an opec meeting to discuss what was going on with production and production was unchanged. let us talk with todd horwitz. he is talking about what is going on from the cme. i believe we are talking to todd
horwitz. we had that opec meeting. yes, oil did have a big game on friday, but overall on the weeks we had the breaking of a big winnings streak for oil. what happens here given that in action at the opec meeting. ? todd: we had the slowdown down into the 40's. $60 seems to be a pretty key level, but i really think that $55 is a much better number i think that you can see by the way the oil stocks are rallying higher that they are continuing to move higher and we are going to need oil. opec is a non-factor in my opinion. we have had a lot of pressures on the oil space, including recommendations for goldman sachs, citigroup jpmorgan,
saying that oil was going much slower, yet we continue to hold and it has gone higher. a little bit of selling pressure of the last couple of days is not an issue in my mind. i think oil is a nice buy in this area. using 55 as a great level to hold up the support. if you look at the bigger picture, you have every reason in the world to believe that oil should be much lower than it is a stronger dollar. opec involved in iran putting more oil on the market. in the end, the united states is becoming more self-sufficient and we are not as subject to outside news from other areas as we used to be with oil numbers. julie: given all that, are you hedging that position at all? indeed at some point, the fundamentals could catch up given the supply demand c a question and all the negative from the likes of goldman sachs.
the former head researcher said that oil would go between 50 and 60 or 40 and 50. given all that, do you protect yourself a little bit? todd: i think i'm going to protect myself of their level of 55. i'm going to say that the trade is not going to work. there are ways that would normally hedge about this and take a much bigger position and in my long-term portfolio, i would use options to hedge the future. at this point, i think we are going back up into the mid-60's and maybe 70's. i think the days of $100 oil are probably targeting a $70 target. i think oil at $50 is really a pretty good by based on the information that you just nicely put out. there's no reason to be negative on the market. we are seeing the market not breakdown. julie: we will see if it remains in that resilience. that was todd horwitz talking before that meeting of opec on friday. erik: let's take a moment now to
look at the events that will drive markets today. at 10:00 this morning, president obama will be speaking from the g7 summit in germany. we haven't talking already about greece, for example. there are also questions about russia and nuclear talks with iran. bloomberg would carry the president's remarks live. this is an opportunity for us to hear from angela merkel in advance. but it's also an opportunity to get the president's perspective on how things are evolving, particularly rich show. -- with russia. america does not have a lot to do with the greek conversation. either your there consistently or you're not there. just parachuting in every three or four months -- i do not know whether that couple shows much. stephanie: tim cook is giving the keynote at the worldwide
developers conference. apple could announce a music streaming service. we will check with our reporter on the scene in the next hour. it's the apple ecosystem. i know you're not an apple guy. erik: i'm not an iphone guide. in every other way, i am an apple guy. stephanie: you could change your tune if they get there streaming service. they spent a town of money to buy dr. dre's needs. what are they going to do next? spotify is the leader. erik: is it better to be impressive? -- it had better be impressive. they don't usually make a big splash. jay-z's was impressive. apple had better be more impressive than that. jay-z was able to get artists as equity partners. what does that mean for apple?
where they could really take it to spotify and the others is on the beatles. itunes has the beatles and nobody else does. there are some other artists that refused to participate. stephanie: the issue that jay-z's company faces is he's gone in the model of bringing in other artists as equity partners. that is how he runs his business. when you offer that to 16 artists, the goal is to bring dozens, hundreds, thousands. you can't keep cutting that pie. erik: what about the other artists? they are tomorrow's as men's. stephanie: that's going to happen at 1:00. i am excited. in the next hour, we will sit down with the ceo of fusion. they sponsored project i did on
ocean conservation in the middle of the pacific ocean. there i am. we're going to talk to him about creating content that is about impact. this network is geared toward millenia's -- millenial's. that is what they want. a little bit of yoga and hanging out. it is serious business. erik: we will take a look at the man who has been tasked to fix germany's biggest bank. john cryan is the incoming ceo to deutsche bank. a stick around. ♪
shane, that is an incredible beard. tell us about john cryan. shane: he brings a lot of experience into the situation. he is on the supervisory board. he is from a with the strategy that is going on and how to execute it. the execution is going to be important. that is what everybody will be looking at. he went to ubs as the ceo in it 2008. they were taking massive losses in the subprime mortgage market collapsing. when he left three years later the bank was profitable again. he has turnaround experience and knows how to crunch the numbers and get things done. erik: one thing that we have not had an opportunity to talk about this morning is his history at ubs. i know he has won lots of
plaudits for his role as cfo. he was an investment banker for years before that. i remember what ubs was like in the mid to thousands. it was not different than deutsche bank. they were breaking rules all over the place. they had to be bailed out by the swiss government. it was a disaster. shane: investors are frustrated nobody is sure where the strategy is going to go with the bank or how they will pick up profitability. this is somebody who has a track record of being able to crunch the numbers and get things done. he is somebody who was involved in massive job cuts starting in 2000 eight through 2010 at ubs. stephanie: those skills don't align with the culture change they want. a cultural leader is not one whose experience crunching
numbers and cutting jobs. shane: that's true. it's a new face. that's what a lot of investors have said. it's not impossible. -- it's just not possible. they have management at the top level prior to the crisis. they are still running the bank. if you want to bring a cultural change through and make it look credible, you have to have a new face. that is what john cryan is doing. he is the new face. erik: will he continue the strategy that was put in place by anshu jain and juergen fitschen? shane: he was well aware of the strategy. he has experience with cutting back the investment bank. they have not said what they plan on cutting back.
erik: the business of wine is booming. u.s. consumption continues to rise as more americans say no thanks to beer. there are winners and losers. some of the big currency moves over the last couple of years have helped to explain why. antonio is a profound wine critic. he happens to be a former banker. you know a few things about business. welcome. stephanie: we thought people
drank wine because they lost so much money. guest: consumption of wine was strong in 2008 and 2009. that tells us about what wine can do. erik: let's talk about what's hot and what's not in the world of wine. guest: let's start at the top. the good stuff. the top is the signature italian wine. it's the most loved wine in america. the market winds of done it really well right now. i think italian wines in general have done really well. we were talking before about formal dining purses more informal dining. people love the mediterranean diet. we are more ingredient driven with our cooking. italian wines speak to that criticism need.
-- quintessential need. stephanie: people don't like to eat in restaurants where they feel like everyone's bill is being paid with a corporate card. they don't like well lit places. they don't like a somalia standing over them for a four hour conversation about the oak and 10 in taste and their wine. -- tannen taste in their wine. erik: most of the ones country is sold to women. stephanie: i think it's about a lifestyle vibe that is changing. nothing is formal anymore. guest: you ask what is not hot. one of the areas that i think is struggling right now is ordo. -- bordeaux. there is a disconnect with the values of aristocratic and formal ways of living that are in sync with today. erik: that is a big change.
they had three vintages of the century in the last decade. guest: quite a few. they were all terrific. there is a disconnect. you want a story. stephanie: there is no life experience five. guest: they represent classics. they never go out of style. they have to reconnect with the consumer so you are more passionate. erik: this is -- you know better than me. it's fun to invest in wine that functions more as an investment than a drinkable commodity. does that explain the story of a bordeaux? guest: of course that is a big part of the lie backs. they will compare to how previous vintages of done and have the opening price of vintages like 2009 and 2010 are
so high and nobody else can make a margin. there is only one way that can go. stephanie: alternative investments have become chic. people look for different ways to invest money as they are searching for yields. is there a real investment here? i think people say i will take it if it's not going to work. guest: you can do well, but you can also hurt yourself. you need professional expertise, just like trading stocks or bonds. you may get lucky. if you really want to invest in wine, you have to be armed with the same tools that any disciplined investor uses in any other asset class. stephanie: what is the most viable thing to know? guest: by whole cases. never open a bottle. if you take a bob -- 12 bottle case if you drink one bottle then you destroy half the value of the case.
a standard bottle is 750 any magnum is 1.5 liters. by large formats. these assets the bleat and there are few or of them overtime. you want to store your wine professionally. you want to take your holding costs. people don't ever think about how long it costs to store this one all of these years. erik: we are going to view -- have you in the morning. guest: this is a standard go to wine. you can buy it at any vintage. this is on the left of the screen. it's another richer, riper style. this is a more structured fresher style. erik: what if i like napa? guest: why does not have to be expensive. you can look at something like behringer. that is on the last -- left. erik: i like your middle choice,
ridge. guest: why does not have to be expensive. look at the appalachians that are right next to others. that is on the border with napa valley. that separates napa from sonoma. you go for value. rich is known for their montebello. this is their junior montebello. erik: i said it. we've got to run. it's always a pressure treated he runs than us -- venice media. check it out. stephanie: our tech companies facing too high valuations? we will get some of those answers. i have a feeling they are probably drinking some great wine tonight as well. ♪
we are here in new york city. many eyes are on apple in san francisco. out in montauk, there is a tech summit. betty liu is live at the event with two partner cofounders. betty: that's right. thank you. we are in beautiful montauk. it's only going to be 100 people over here. we are going to have a conference like this rid he is the partner --. thank you for joining me. it was not hard to get me out here either. one of the big things that people talk about here in tack are the valuations. -- tack -- tech are the valuations. are they getting too frothy? are you worried about this? guest: i will take the first
one. i think there is a dichotomy that we talk about between the public and private market. the public market valuations are rational. as an equity investor who puts money to work in the market, i am not concerned about public stocks. as a business putting money to work in these private companies some of them are really highly valued. venture is a small business. even small influence can do valuations. we are being very patient and cautious about it. betty: are you investing less? guest: not necessarily. we are investing smaller amounts. we are being careful. as a business practice, it is our point of view that we want to get into the best companies
almost regardless of the initial valuation and we will be patient and wait and there will be an opportunity to double down in the future. betty: however you? -- how about you? guest: i think they have crept up the most. that seems to be the area where valuations have crept up the most. we are in the earliest stage of financing. while there are certainly some sectors that seem to be particularly inflated and maybe some geographies, the markets that we are investing in it really are continuing to see valuations that for the most part are rational. betty: they seem rational. the exit strategy, the ipo market has been down for a while. guest: not necessarily. there are all ways strategic
requirements. 90% of the public's we invest in our acquired in an m&a transaction. companies are always looking for innovation. if they are not innovating themselves, they will be looking for acquisitions. betty: there is a great piece. it was in business insider. too many entrepreneurs are feeling the pressure from investors to project unsustainable growth rates and revenue because without them, investors will not keep feeding the beast. they are also your fault as well. guest: thank you, alan. the flip side of that is we look at what companies can become. our business is this black box. what can this company become if things go to plan?
there feels to be so much opportunity right now. we are seeing it in her own portfolio. the numbers are astounding. what you start growing revenues, you've got this great distribution on the mobile phone and great distribution on the desktop. those platforms were not around five or 10 years ago. guest: they are accessible to companies who have raised relatively little capital. we might get blown away. a startup company essentially has the same technology processing cloud computing as a major company. they are able to test marketing platforms. betty: thank you so much. thank you so much for joining me. i am going to toss it back to you. stephanie: that was our own betty liu. she is in montauk with a lot
>> live from bloomberg in new york, this is "market makers." erik: good morning. you're watching the second hour of "market makers." stephanie: i had this hour, deutsche bank changes in apple announces. erik: let's have a look of the -- at the top stories. stephanie: angela merkel expects russia to get a united signal on ukraine. does letterman couldn't really care? she is speaking life right now. they drank. and eight sausages yesterday at a resort in bavaria.
they agreed that sanctions against russia will not be eased unless russia honors a peace deal in ukraine. present obama will have a news conference at the g7. you can watch that at 10:00 right here on bloomberg television. the new ceo of deutsche tank will be taking over a lender plagued by billions in legal costs and questions about their ongoing strategy. former ubs cfo john cryan has been named to run deutsche bank. he will replace anshu jain and juergen fitschen. >> he is a traditional banker. he is a very careful and considered man. he was asked to step in and tv cfo at ubs during the darkest time for them. a lot of technical stuff had to be dealt with. he did it bit by bit. i think that is what he is
thinking about right now. stephanie: shares are surging in europe today. the last three years, the stock has the worst performance among its global peers. shareholders are happy that he is out the door. erik: steve will's is buying barclays. barclays had 180 financial advisors in america and they managed to $6 billion worth of assets. this deal is scheduled to be completed in november. global sales of mcdonald's are still falling. for now, they are dropping less than expected. that could be a sign of progress under the new ceo. sales dropped .3%. analysts were looking for a .9% decline. that is where they are this morning.
let's talk about sears. they are a struggling retailer and they had a smaller loss in the first quarter. there is a strategy of selling off assets like lands end. they are setting up a real estate fund and will buy store locations and then lease them back to the company. those are your top headlines for the time being. stephanie: deutsche bank is just the latest of europe's biggest banks to undergo a major leadership shakeup. what will this do to reshape the tanking system? let's ask christine harper. we have not seen her in ages. it's like bringing back an all-star. what is going on at deutsche bank? what are they going to do in terms of management? after he leaves, the stock is doing better. guest: he sees what the markets
are telling it. he is happy to see a change. i guess the chairman said, the decision to step down is putting the interest of the bank ahead of their own. they are agreeing to do what is best for deutsche bank and give it over to someone else who investors hope will be able to follow through on executing some of these cost cuts. maybe they were not so convinced that anshu jain would be able to follow through. erik: banking is a human capital business. john cryan is going to make some changes. stephanie: everyone in management. guest: we have a story out about two people that you remember. stephanie: he has had his entire career. he drank from the fountain of aj. guest: he joined 20 years ago
and they have been working side by side. those are people that we are hearing from sources are very much people to watch whether they stick around or not. we have not gotten a comment from them. stephanie: they ran the race globally. guest: they run asset management and that is an incredibly important role for the bank. those are important businesses. another thing to add at this time is you have leaders of these big european banks who come from different backgrounds. they are all leaving just as we are starting to worry about the fed raising rates. it will be interesting to see how these insurance executives or investment anchors are running these big global banks when the rate change happens. erik: what kind of choice is john cryan going to have to
make? will he do what he did with ubs? they pulled in the investment bank and expanded in private wealth management. credit suites is about to do the same thing. guest: in some ways, that was more obvious. that a -- they had a huge wealth management business. that is not an option. they are fixed income. that is what you get when -- they are the goldman sachs of europe. people think that they are better at doing it and because they are regulated in the u.s. and don't have some of the european regulations. how does he turn this into something that will be acceptable to investors? he begins with following through on some of the cost cuts and shedding assess -- assets. then what do you have? you have a fixed income trading house. stephanie: when you hear that he wants to change a cultural
perspective. let's look at how that gets done. when you look at a firm like morgan stanley, there are people who have worked their for dozens of years. deutsche bank a place for you have had people who have been there for two or three years and they are out the door. the majority of people who a been there for a long time have been there under anshu jain. even though the board is excited, how did he really make a change? guest: that is going to be a huge challenge. he does not want to get rid of all the talent in the fixed income department. one thing investors will have to watch is how is he going to do that? he does not want to let the best people leave. stephanie: is the talent really still there? they stopped trading derivatives. if you look at who they were in the heyday, i can't even think of anybody who works there. guest: they had a very good quarter and that was driven by fixed income as well.
i think you would point to that and say look, the bank needs us. they need that business. you need to make sure that the people who are there keep making it happen. i don't know if that is all on colin or his deputies are it --. stephanie: now the stock is up. guest: he is helping others i guess. stephanie: a pleasure. the queen has graced our set today. erik: apple is set to reveal a streaming music service area what else do they have up their sleeves question mark we are live from san francisco next. ♪
spotify and pandora. what else can we expect to see from apple. we are joined by adam. he is outside the center in san francisco. what do we think the music service is going to look like? adam: it's going to be a stitched together service that they have. they have the itunes service. they bought eats music. it's going to be the kind of thing where you pay $10 a month and you can listen to as much music as you want. the question is if they are going to do anything that is particularly different than what is already available. they are coming late to the market. there are a lot of questions about what is going to be the differentiator. stephanie: they have never been a copycat. if they are going to get in this game, they are going to get in it apple style?
adam: there is intended to be a big marketing budget around it. they will get the name artist to come out. they have done a lot of things with you to over the years. they will have some artists to help push it. jay-z just rolled up his new streaming service with every artist imaginable. that has not gotten anywhere as well. it's a very competitive market. it will be something they will have to scratch and claw out. erik: music is going to get the lion's share of media attention. software is the big ticket at this event? adam: it's not a big part of their overall business anymore. they are going to give these software tools to developers to be making apps for the watch. being able to have some good applications on the watch is going to be key to its long-term
success. they need to be able to build different tools that you have on an iphone that you can have on the watch. stephanie: i don't know. my husband has a watch. he answered the phone yesterday on his watch. it was lame. erik: dick tracy. stephanie: nerdy. erik: the conference is happening today. when we come back, drought is leaving the ski industry high and dry. we will look at what they are doing to deal with a lack of snow. ♪
has lost his head to consolidate power. voters failed to give him an absolute majority in parliament. that could lead to weeks of bargaining over a coalition government or another election may have to be held. she is on the verge of a $12 billion deal. we are reporting that ge could sell half of its private equity lending arm to canada's pension board. ge is trying to unload assets worth $200 billion from its capital unit. a pair of daring productions took top honors on broadway's biggest night. picked as best new play was the curious incident of the dog in the nighttime, about a boy with autism. the best two musical was fun home. broadway had a record-setting
season, posting a $1.3 billion. that is a big number. those are your top headlines of the hour. erik: they'll resort just reported earnings. that was a tough ski season for america. they'll's revenue fell short of estimate and traffic was down. they were hit by a low snowfall. these are challenging times for the ski business. few know that better than rusty gregory. he is the chairman of the mountain resorts. he is here from los angeles. i know you are enjoying the summer weather in l.a.. that is the kind of whether you had all winter in mammoth. how do you prepare as a ceo or the 2015 season? rusty: it's good to be with you.
it's difficult to prepare. you wait for what mother nature offers us and do the best we can. we variable out expenses and hope for as much visitation as possible. erik: what does that mean when you were talking about expenses? rusty: the trick shot is having your cost structure in a manner that is commiserate with the revenue you are bringing in. we have had to reduce cost structure significant in california. that impacts ski resorts in small rural towns. we are cutting operating expenses to match the visitation revenue of the day. it's a very hands-on business. stephanie: do you worsen the experience? lift tickets have gotten so expensive at premier resorts. people are experiencing -- expecting a luxury experience. what does that do to people on the mountain? rusty: it's about putting people
on the front lines here in the guests don't notice. the skiing experience has gone down because of the reformation of season passes. if you are willing to commit to skiing, the price or day is quite a bit less expensive than it used to be. erik: you have a partnership with some other resorts that offer not the same thing that the epic pass offers. it's similar. rusty: we are part of the mountain coalition. these are the big mountains and the west. if i bypasses to one of those resorts, we get benefits at the other resorts. we think it's a great competitive author -- offer. erik: do you worry about the drought and the inconsistent
snowfall in colorado and the northern rockies in montana and idaho. will there be a generation of kids who will not see great snow and not end up being avid skiers as adults? rusty: i worry all the time. there has always been a volatility in the weather. global climate change is a big topic of discussion these days. years of bad snow, lack of snow tend to be followed by years of good snow. el niño is back in california. we are hopeful that we have a big year. stephanie: is there pressure to change the season pass pricing? for people knowing that el niño is here, we will come for less money? guest: our season pass sales
were down this year. it was gratifying considering that we had record draws in california. this was the driest year on record. our passes held up well. we have loyal customers. it's good to be next to 22 million residents. erik: i am hoping for a big snowfall this coming season. i will be back at there to see it. he is the king of the mountain. stephanie: for people who skied in colorado, at least they didn't smoke weed this year. deutsche bank is soaring. we will break down the market movers coming up next. ♪
the u.s. tracy is here. what is moving markets this morning? deutsche back? -- deutsche bank? guest: there is trouble in turkey. it looks like the ruling party failed to win a majority. that means they are heading for coalition. what is the one thing that investors don't like? they don't like uncertainty. we are seeing the turkish currency the klein and the talks -- stocks tank. they are on their 11th day of losses, the longest losing streak and 24 years. erik: what happened in turkey is not necessarily a sign of things to come. it's an excuse for investors in emerging markets to reevaluate. guest: a lot of guys are talking
about the jobs data on friday. it looks like we are in for that interest rate rise and maybe that takes the edge off the emerging market stocks and bonds. they have been primary beneficiaries of low interest rates. number two has got to be german markets. german markets are also softer this morning. we have the dax down. it is 10% from its record high. people are talking about the equity markets following what is happening in the bond market. there was a massive rally in german bonds. erik: this perplexes me. if they are selling off, surely that is an indication for the ecb to pump more liquidity into the market to ease more aggressively than it has before. that is what the expectation
would have been here. guest: you are right. that has been the dynamic in previous months and years. we are not seen it this time. that makes me think that maybe it's different this time. erik: we're doomed. stephanie: number three. guest: it has to be deutsche bank. everybody is talking about what the big management shakeup will mean for the future of the bank and investment banking in general. we had a loss of ceos leaving banks. they are all leaving. it seems like a lot of the big risk takers on wall street used to be a big banks are not there anymore. maybe this is the era of big bond trading is over. stephanie: so many people over the last two years of
complemented the first at morgan stanley to lead out of the fixed income businesses and say private wealth is where it's at. he came from a consulting background. he can look at 3000 feet above. erik: it is such a lost opportunity for deutsche bank. i cannot wait to see what john cryan says about the firm strategy. with ubs, the list goes on europe has lost its banking and trading tight germany's deutsche bank had the opportunity to be that one european champion and you could say that the kind of screwed it up and now this guy john cryan has to decide, is that a mantle we want to reach for or do we want a more conservative future. stephanie: do not forget about
hsbc. erik: you heard the opening bell. let us take a look at what is moving in america. julie hyman has the stocks you need to keep an eye on. julie: we saw the second straight weekly decline for the s&p 500 last week so we will see if those continue. i do want to point out individual movers. we have been pointing out sears the losses are narrowing and the shares are up 2%. they are trying to spin off assets as well as create a real estate investment trust, a reit two on the stores and the property -- they will lease those properties from the rate. sales are down 11%, 7% at sears and 14 and a half percent at kmart.
we saw a rebound in the casinos stocks on friday. they are down again. an analyst at wells fargo cut his juice -- his june gaming estimate and talked about macau in particular so these shares are trading down. corning is trading higher, the making -- the maker of glass rising. we see this growth in demand for those four k tvs, and corning could capitalize on that demand as it makes the glass. erik: julie, thank you. great beers are not just back they could be bigger than full -- bigger than before. brad rogoff is with us. why might these rate concerns be bigger now?
brad: if we look back to the taper tantrum, we saw a big impact on credit spreads and what rates did for about three months. as yields went lower overtime we saw that really dissipate and credit was able to tighten back a lot we actually feel like we are a lot closer to when the fed could be moving. erik: why hasn't it been priced in? it is not like nobody knew this was going to happen. the only question was whether it would be june -- and that is off the table -- or september, or sometime in 2016. brad: it has been a big move in rates. we were at 3% the beginning of last year so it is not unprecedented levels that we are going to. the reason has not been priced in. it is just a speed that the fed will move at.
maybe it does not have quite the shock impact as if they move quickly. stephanie: people love to say liquidity is an issue, people cannot get anything done. tell us what it is really like. brad: let's not pretend liquidity is what it was, but it is also not terrible in the stuff that does trade. it is a little bit bifurcated. one of the positives right now is you are seeing so much new issue. that weighs on spreads in the market but the flipside, new issue trades a lot. they are up 75% this year and that is the stuff you can trade around if you want to trade. you have to be smarter about it but there is stuff you can trade. erik: when i last saw just done mike he raised -- jeff dunlop he
raised an interesting question. we are just finishing a 30 year bull market in bonds and inevitably we will head in the other direction, and he said we have never seen how high-yield performs because it has not existed long enough to survive a bond bear market. brad: could not agree with you more on that. you cannot go back and tell people with that data was because the late 1980's is really when high-yield market became something like it is today, so you do not have that data. you look at analysis of shorter time. when rates went higher. the evidence is pretty good for high-yield. for every basis point higher spreads went lower. pretty much one for one. obviously if we had a 300 basis point move in interest rates it
would be hard for high-yield spreads to go down to 100 basis point. i do not think that will happen. you actually see that high-yield is the best performing asset class right now. high-yield saw three and a quarter percent. stephanie: how scared or investors right now? brad: if the fears are around rates, i think they are not that scared because rates will go higher in a decent economic environment. we have soft gdp numbers in the first quarter but the unemployment report was quite strong last week. for credit, a 2% gdp environment, that is just fine. i would be more scared if we were fearing more default rates falling off. erik: do you feel better about ingress meant -- investment-grade were
high-yield? brad: i think it depends on what type of investor you are. if you are just looking for total return, because of the installation of rate, it will be high-yield. erik: thank you very much. stephanie: more on the markets ahead. we are also going to be talking about the ocean on world ocean day. isaac lee joins us to talk about his latest documentary and i hit the high seas. adrian groner, here is his take on why you should get behind the cause. >> you realize the financial benefit is greater if we can serve our environment that if we exploit it. let's think like business people. we are on bloomberg. let's think like business people and conserve our resources so that we have them to generate funds into the foreseeable
♪ stephanie: welcome back to "market makers. today is world ocean's day and i have a chance to take a very deep dive into ocean conservationist. it premieres tonight at 10:30 on fusion. with us is fusion ceo isaac lee. you did not get to go to coco i went with me. take a look at what we discovered. >> you took my place. >> i am the environmental correspondent for fusion. i partnered with sylvia earle and her nonprofit to pull together a team of scientists for an expedition to coco island. we had one common goal, to raise awareness of the shark
populations around the world. stephanie: world ocean's day. typically when we think about content for young people, they think sexy, they wild they are not necessarily thinking a conservation project. why go in this direction? isaac: they care about the world, a want to be part of the solution. we have had sharks for more than 450 million years and now we are about to lose them. people are killing 100 million sharks a year. we are only having statistics that people have accident with sharks around 10 to 15 a year. i think that there is an overwhelming unnecessary fear predictably irrational, about sharks.
and our response to it, it is damaging the oceans and damaging the possibility to have a healthy ecosystem. stephanie: what is your ultimate goal, to raise awareness, to get viewers, a call to action? isaac: we understand that the way to do it is with content that matters, that is meaningful. erik: do you feel that by getting behind this message you are taking anything akin to a political stance? isaac: no. this is not about politics and millenials are not about politics. erik: saving the world's ocean is about politics. it requires leadership. everybody can make decisions on a daily basis that affect the quality of the ocean but if we are going to do something meaningful, it requires action by government. isaac: the most important ones are the ones who sit here every
day. they can help with acidification of the ocean. they are the ones behind the super pac's. they can make change happen business leaders are responsible for climate change, for oceans. stephanie: after doing this trip, i do not think you come home from a trip like this and say, i need to become an activist. adrian grenier who did the trip with us, i sat down with him and ask what is your biggest take away? >> i do not each rep anymore because of all of the by catch. there is 10 times the amount of useless death of other wildlife in the ocean when you eat shrimp. if you have a plate of shrimp, the whole table would be full of by catch or indiscriminate killing of starfish and rays and coral.
it is an entirely inefficient way to catch shrimp. stephanie: i actually think impact travel is going to be the next niche out of the multitrillion dollar travel business. they can go to cabo or they can go a mile -- north and see a whale migration. isaac: we are trying to tackle the issues that matter to the audience. we are doing at their experiences. we are in multi platform company. when we do an expedition might this one we produce a documentary, content for fine instagram. we are sometimes reversing the pipeline, starting on snapchat, creating an audience and then taking it to television. it is very interesting. erik: i like that idea.
stephanie: you also would like this kind of content. erik: yes. i'm not a hard sell. stephanie: we will be sitting down again with fusion ceo isaac lee. this channel has a new late-night star and he hails from the youtube world. will it be enough to get millenials to tune in? they are clicking, you will find out if they are watching. ♪
down. based on some commentary from paypal but we are actually looking at go pro behind me. those chairs are trading at a five-month high. i think we have ebay as well hopefully -- no, we do not. let's have a look at tesla instead. we have some analysts commentary from robert w baird. he is saying there is a lot of skepticism over the introduction of the model x suv. he says it is unwarranted and he expects a third quarter launch for that vehicle. barnes and noble, those shares are trading at a three-month high after baron says the stock could rise percent over the next 12 months as we see the spinoff of the company's business separation from college bookstores. stephanie: fusion ceo isaac lee
and talking millenials. isaac, what is the thought behind this? can a you tube star make his way to the median screen? isaac: it is the second screen for this generation. stephanie: you consider tv to be the second screen? isaac: i do not but the audience does. stephanie: do advertisers? isaac: advertisers will have to migrate to their. we have documentaries that you are not going to watch on your mobile. you have ducky series, you have one hour specials. there is a place for television. you love to watch "game of thrones" there but to find news or watch a two minute video, it is all mobile unit stephanie: assuming your thesis is correct,
how long until we actually see this play out? when will we see this vision, this idea to materialize? isaac: i do not know. i am not an expert. i can tell you we are creating content to reach the audience where they live. we are not expecting them to come where we are. we are moving from stickiness to spread ability. erik: how would you rate fusion's performance so far? isaac: we are learning how to call dutch crawl. we are very young. i think the people we have are as good as it can get. fusion is its people. we are very young. for the moment in life that we are in, it is a pretty smart baby. erik: talk to us about the challenge of building viewers -- viewership -- stephanie: i like that, a pretty smart they be.
erik: what challenges have you encountered? isaac: i think the most important thing to understand is that our mandate is not to be successful very quickly. we have really healthy parent companies that are expecting us to innovate, to create content in a different way, to use technology as an amplifier to understand about audience development. to use social media as a very effective tool and to have teams producing content in different shapes and forms. erik: fusion is a petri dish? isaac: to make, it is, and people are allowed to fail and failure is part of the experience and of the experiment. of course, it is a business and we need to be successful and we are accountable, and we manage it with frugality and responsibility.
yes, have to experiment. if not, we will be repeating what everyone has done and i do not think that is what we should do. stephanie: do you have a view on buzz feed or vice? isaac: they are incredibly successful companies. i think the world of them. i think the technology that they have built behind buzz feed is great. vice is incredibly cool. who does not think vice is cool? i think vice was created in 1994. i think buzz feed has seven or eight years. fusion's digital side was launched in february and the cable channel was launched in october 2013. we have to give it some time. by the fact that we are young and that we are learning, i am
incredibly happy that we have been able to attract that level of talent and what they have done so far, and plans that they have for the future are outstanding. stephanie: do you want to do sponsored contact? isaac: yes. it is all about disclosure and transparency. erik: the model effectively, the device has created a something that everybody should be following? stephanie: given how successful they are. isaac: i do not know what everybody should be doing. there is not one formula to be successful. you need to move away from lower cpms you need to move away from advertising as we see it today, and encompass a brand and a product that gives them more than just empty impressions. stephanie: what is the number one thing you have learned so far in the fusion endeavor?
isaac: balance is the only thing that matters. stephanie: i'm so glad you asked me to be part of your project in costa rica. isaac, thank you so much. will you be watching "shark land" tonight? isaac: of course. stephanie: thank you. erik: that is going to do it for "market makers." more interviews coming tomorrow including kpmg's incoming ceo. stephanie: see you tomorrow. ♪
discussion. in just a few minutes, president obama will give his take. we have live coverage coming up. ♪ scarlet: good morning, i am scarlet fu. erik: i am erik schatzker. we are waiting for the president. the negotiations over and iranian nuclear treaty and perhaps the rapidly growing field of people who want to succeed the president in the white house, we will take you there live. scarlet: let's take a look at what else is making news here it we begin with the new ceo of deutsche bank who will be taking over a lender played by billions of legal costs. former ubs ceo john krein ha