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tv   Market Makers  Bloomberg  June 23, 2015 8:00am-10:01am EDT

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olivia: good morning. i am olivia sterns. matt: and i am matt miller. eric -- erik schatzker and little -- and stephanie are off. olivia: big company news this morning. we will see how likely a fiat takeover is. matt: doug mcmillon will be here for an extended interview with olivia p it i'm looking forward to this. the company is in the mists of a lot of news and not just business news, but cultural and social news. olivia: walmart saying they will take off their shelves all merchandise of confederal fly -- confederate flags. matt: time for your top stories. eurozone leaders agreed greece is finally getting serious about striking a deal.
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can the prime minister finish the job? they have given him until tomorrow to end the standoff of bailout funds bears submitted a new plan addresses pension reforms and fiscal targets. the president of the european union says it is the first real proposal he has seen in weeks. >> the prime minister has a short of of greece's services doing the work constructively. as the last hour has shown, we can see it is fully committed to finding a solution. matt: both sides are arguing over the fine print. he will have to convince skeptical members of his own party who pledged to and austerity. also a showdown in the u.s. senate today over president obama's trade agenda. the president needs at least 60 votes to advance fax track -- fast-track legislation. republicans restructure the trade package you that has led
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to a second senate vote. olivia: storms have read havoc on the midwest. a tornado touched down in a small town south of chicago. seven people have been injured here tornado watches are up right now and parts of indiana and michigan. oracle is going all in on the cloud. two dozen new platform and infrastructure services. the chairman says clients can move all of their applications out of the data center and into the oracle cloud. his sites are set on a rival. >> our primary competitor in infrastructure as a service is they are not only a bookstore anymore. our primary competitor in this space used to be ibm. now of our old competitors, the only one we still see is microsoft.
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olivia: they are not just a bookstore anymore. he was not always this enthusiastic about the cloud. he had told people that cloud was a fad. four-game suspension for the scandal or the new england quarterback will be making his case in front of the commissioner, roger goodell. those are your top headlines at this hour. matt: what do you think? what is your take on the patriots? they constantly get caught cheating and are they just always cheating? it is like they are always cheating but still allowed to compete in the nfl because they are such a big draw. but they are continually cheating. olivia: he said his balls are perfect.
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matt: let's talk about the eu again. it is now all up to greece to make a deal. the greece prime minister hoping to win over support at home for his plan ending the default standoff with creditors. guy johnson is in athens. tsipras seems to be getting serious but maybe not making his compatriots at home so happy. >> that is the gate now. he is back here and try to figure out what kind of a nose count he has a month his own party. the plank could be a problem for him. people are talking about -- we will be watching this story very carefully over the next few days. we could get a vote sunday and monday and tuesday pair we'll see exactly what comes out of brussels. now we get a euro zone meeting
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wednesday night. greek politics could be one of the biggest stumbling blocks we're watching right now. it is about the economics of this story a little bit more. matt: what do you think is far as the situation for the average man on the street. you have been there for a few days and spent a lot of time and at previously. are people just lined up at atm machines and getting everything out of banks that they can? they needed three in less than a week. >> we have heard it slow down a little bit. the way it works, play for hours, you go to the bank. a lot of orders were placed this weekend. we understand some of those orders got canceled. people are taking a more sanguine view of the situation. there are plenty of stumbling
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blocks here. this is not a done deal, as they say there you have got greek politics, european politics. you can see this poll -- thrown out by politics. plenty of business to travel before we get back on a stable platform. matt: guy johnson will stick with us and cover the story. olivia: we are not calling it a bank run it a bank job. matt: you cannot call it a run. that is worse than slander. olivia: greece is having an impact today on the markets pair the five stories you need to know about the euro calling for other day guess the dollar amid speculation monetary policies will keep diversion, weakening the single currency. even if greece reaches a debt deal with creditors. the euro is trading around 111. you will recall about six weeks ago, one of five.
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they see parity by the end of the year because there is nothing changing the course of diversion spared everybody's expecting the fed to raise rates. matt: not enough money to meet the demands the matter what they are. the ecb has to continue list will then slow into other banks. olivia: and do not forget we have a lot of positives. stronger than expected previously owned u.s. home sales numbers. some dollar strength yesterday. matt: pimco has got a call for the bond markets. investors may risk falling into liquidity traps as they look to boost yields. the search for yield is causing investors to buy riskier and less frequently traded bonds which may be hard to sell quickly. the same old story.
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we have been seeing a ramp up and up and up. you have got to go further out the yield -- the curve to get any kind of yield. a lot of times, people are doing things almost as crazy as buying greek debt. last week, no greek debt trading. it is a huge bet here it is like red 21. last time i saw hans -- olivia: i want to get out to julie hyman. julie: darden's earnings numbers are being overshadowed by news that it is splitting off about 430 to transfer into publicly traded real estate investment trends. this is part of the agreement it made when that company got board seats. as for blackberry, a loss of five cents per share. the stock is up 8% in trading.
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revenue from software jumped to $137 million last quarter. the ceos moving closer to his goal of reaching $500 million by march of 2016. it should get him close to the goal. and our guests in the noon hour we can query him a little bit more about whether he will meet that goal of further software. matt: they're very successful doing that with automotive spirit successful doing that with what is now a niche product , government workers and a few bankers. olivia: president obama and erik schatzker are the only two holdouts. number four. matt: a yearly a lynn china. china rallied in late trading
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today helping the benchmark index to its biggest rebound in 80 years. the positive index rose 2.2%. 312 point recovery bigger than any since june of 2007. something to take away from this story, 2.2% is their biggest rebound in eight years? 2.2%? is this a controlled economy? olivia: 852% in the past 12 months. that is bananas. matt: two point 2%, the biggest in eight years. if you look at the s&p, we eclipsed that a number of times. olivia: one of the big reasons as there is a record amount of march -- of debt put to work in chinese equities. you're seeing that selling off. matt: i understand why they are rising. i am just saying that is not a
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big leap. olivia: number five. facebook has now managed to overtake walmart in terms of market share. it has a market cap of 238 nine dollars as of yesterday's is close to walmart, the world's's biggest company has a market cap of $234 billion. that is amazing. last year, facebook reported a revenue of roughly $12.5 million. walmart, let's call it $.5 trillion. it says something about how optimism of technology runs well ahead of economic reality. matt: it is amazing walmart makes more money and profit than facebook earns in revenue. what was the statistic about how many people use facebook? one in five people? fewer people use walmart, right?
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olivia: the company is enormous. optimism over technology and valuations of rising economic reality. everybody better tune in at 9:00 a.m. this morning. matt: an interesting interview and we will spend time on that. coming up, hanging in the balance. there is a deadline for greece. we will talk about what potential outlines mean with david morgan with david kelly. ♪
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matt: coming up, jordan spieth will discuss his win and his second major of the year in this, the worst year he is legally allowed to order a beer at a bar. 1:00 p.m. on our bloomberg market day. he can drink any wins two
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majors. you know? he probably does not drink very much. olivia: of course not. he is very focused. time now for our top stories. shares of blackberry rise in the premarket this morning. revenues more than doubled in software paired betting that the company'suture will no longer be the smart phones that once were the market leaders. blackberry counts on selling software that lets companies manage employees'mobile devices. in the u.s. and they're in jackson, mississippi. jackson renting $1200 per month. 23% more than a year ago. a double-digit rate in bigger cities such as san jose and denver. clearly, whoever did that study has not spent much time in tribeca. and the chain that start -- charges $10 per month when
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public or the company says it is the largest operator of fitness centers in the u.s. planet fitness has over 1000 locations and more than 7 million members. those are your top stories. matt: greece has 48 hour's to bring a deal to the finish line at what will reforms mean for investors and europe? david kelly is here with us. we were wondering this morning about the most important issues here and i was thinking, what does it look like if greece leaves in the euro. i feel like it will be a chub fate. classic think the biggest issue is people will be missing what is going on while everyone is watching greece. this morning, the index for the eurozone area is highest since 2011. they are benefiting from the
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weaker euro. matt: they are stringing greece along, keeping them sidelined while they deal with ireland and spain. david: well -- >> and that is the key. ecb took them off. a couple things he said there would rather talk about, why do you say the euro is undervalued? saying we would see parity by the year-end? david: the united states runs a significant trade deficit and the eurozone is running a significant surplus. the surpluses and deficits were based on where the euro was a year ago. now you could say a year ago the dollar was too high and the euro was too low here that is certainly the case now. olivia: fundamentally, mario draghi is still making money -- >> i realize on a day-to-day
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basis, traders will leave their money where they get the highest interest rate but if you look at over the last 20 years the gap in short-term interest rates have not done a very good job dictating where the euro-dollar will go. as an economist in the long run, you have to buy their stuff. the fundamentals in the long run will actually put the dollar down against the euro. matt: this goldman sachs is predicting parity by years end, the think that a short-term outlook and you are looking at longer-term? david: i am. when i invest in europe, i like to invest in a european fund unhedged. i know over the course of three or four or five years as the expansion grows and profits go up, not only do i think you will see good earnings growth in the euro, but i think it will also recover with the recovering economy. olivia: plus, cheap oil. david: we spent 1.6% of our gdp
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on furlan oriole -- for an oral -- foreign oil. matt: you talk about the rate of increase is. you say three or 4% by the end of 2017, but the odds still seem stacked in favor of an economy overheating rather than over cooling. seems hard to believe. david: we talk about this as being not too hot and not too cold economy. it is an economy not capable of growing that fast. in the last 10 years, it is pretty much where it is today to it we established 1.4% gdp growth care that is our new potential growth.
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if we get growth up to 2.5, that is actually about 1% faster than our attentional growth rate. we are going faster in the long run. matt: hang on a second pair we will keep you here. we will take a quick commercial break here. olivia? olivia: much more to come. we will talk to the ceo of the largest retailer in the world. ♪
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there is hope in the market that we could in fact get a deal over greece. matt: i wonder when we will stop calling it many. we used to call them that but they just stop trading the big so now they are just s&p futures. yes, they are many, but we can just call them futures. olivia: futures are in the green. matt: i rather call them futures. olivia: i'm glad you are happy.
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we are back with david kelly. last week, and we did hear from janet yellen. what stood out for you? david: she seemed very pleased to say that the members of the committee of four meetings, four rate hikes with eight meetings and five rate hikes. so basically, they will skip a meeting all the way up. she has been told a slow lift off rate, but to me, that is super slow. i also find it hard to believe -- matt: that they will really find the data to drive those increases. she seems to me giving the explicit message that they are data dependent and the implicit promise they will raise rates this year, come hell or high water. olivia: home sales very strong.
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david: the issue is, if you think about our geriatric economy and the ability to grow fast, if we do 2.5% growth, we will see wage growth. we are already seeing wage growth or acceleration wages. we will see a fall in the unemployment rate. the problem is we are at zero. the promises, three years out. it seems to me it is very late to get going. matt: are they looking at different data? olivia and i would look at the economy and say there is different data. david: i do not think they recognize there is a structural problem slowing down. part of it -- there are other things. there is a huge growth in the number of americans with felony convictions. that has exploded in the last t
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does decades. think about what this means. they get knocked out of the labor market and do not come back. we have got a real problem and also a problem with productivity. we're not doing capital spending. encouraged to actually invest in the types of equipment and technology that would make workers more productive. i do not think they are focused on supply-side problem or the lack of supply-side potentially. matt: why would they not see that and have you written them a note? david: it is hard to see the potential growing. we can find another worker to do this job. we have got 5.4 million unsold jobs in america right now because we cannot find workers to fill those jobs. olivia: i have seen a lot of economists over blackrock putting out a couple good notes. it is not a problem in the
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united states -- david: some is measured because we're moving toward the economy, the other thing we have got to do is immigration reform. we are running into a brick wall here. we need to get more immigrants. matt: these things fall slightly outside the fed purview. olivia: i was going to say how about raising rates, or should i say lower rates. many say incentivizing the buyback and engineering. david: what we have got, an era of tight regulation and easy money it we have got to easy up a little bit -- ease up a little bit. we are not actually growing the good things in the economy like productivity and we are encouraging everybody to invest
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in easy liquid financial assets which do not add to the productivity of the economy. olivia: churning out employers. david: if you can stand the work, it pays well. matt: thank you. pleasure to have you here. we have taking economic news. the value of new orders received in may. vonnie quinn at the breaking news desk has numbers for us. vonnie: it be a contraction than we are looking for down from the headline number falling death following a 1.5% decline in april. we need to look at the core number for the air show is in june and none of that is included in the years. the core number is coming in on consensus. it does follow a purpose -- revised number downward 5.3% another indication the first quarter was not so --
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nondefense x air, that is coming in slightly shy of four cents or the consensus there was for a gain of 5% third we are not seem too much market reaction. once again goods coming in on consensus and capital goods just shy. olivia: thank you so much. when i think durable goods, i think matt miller. you are a guy who like to buy motorcycles. is that the measure for durable goods? vonnie: that came out wrong. i met your refrigerators. matt: always good to keep an eye
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and herbal goods. top stories, why don't we? olivia: greece's new economic proposals do show the country is finally getting serious about a deal. the prime minister has to ensure his own government will get back into agreements. the thomist it calls for higher taxes. everybody is worried this would be a political crisis. the talks around nuclear programs -- iranian officials say differences between the two sides are still unresolved and a deal by the end of the month may not be possible. lawmakers have said they have not -- the u.s. said that is a deal breaker. matt: uber may be getting a food -- a boost. toss to buy over bonds that can be converted into shares of the company. a sign that uber may be getting
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close to going public. the company said china is its top priority for growth. the parent of the olive garden will split off about 450 properties and transfer them to a -- an investor -- it plans to sell 75 restaurants and will use the money to retire about $1 billion of debt. more on this story is coming up and those are your top stories for this morning. chances are, you have heard speculation. gm had an unwanted suitor. it's the outgoing hostile to get a bigger piece of the automotive option? we will separate fact from fiction. ♪
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matt: if you hold -- 5:36 a.m.
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in san francisco, we are looking at a picture from the other side of the country where the sun is just coming up. olivia: they wake up really early. matt: because they have to keep up with new york because everything goes on our schedule. grateful dead this upcoming weekend and i will be there for both shows. my secular producer bought me tickets. if you hold auto stocks chances are you're focused on gm and fiat. fiat making a hostile takeover for gm, believe it or not. wall street banks cited as either driving the advance or blocking the assault. before you put money to work you will want to hear from david who has got his ear from the ground. he joins us from detroit. thank you for getting up early.
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let me first of all ask about the way this would work. is it possible fiat chrysler could somehow engineer a reverse takeover of general motors? >> it would be difficult to do. that have to find someone who put the money and buy gm shares or get a bunch of investors on their side by a big stake in the company and essentially pushed together with fiat chrysler so the ceo can then take the whole thing over. it were -- it would require deep pockets and it would be pretty difficult to construct. matt: nonetheless, it appears both sides have hired banks paired banks are working for them all the time, but i saw reports last week general motors
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has test specifically with defending them in this kind of takeover. >> let's not get too carried away. they have been with gm forever. carl icahn bought a piece of the company going back to 2000. the two banks were hired just in case he would at tate. he ended up not doing it and sold his shares in 2000. morgan stanley had always been the house bank and goldman has old -- often than a partner. the two banks were hired earlier this year when harry will than kaman to educate -- advocate for a share buyback which they eventually got. it was why they were hired in the first waste. while they were working on the project that involved hairy that is one marchione's e-mail came in. she matt -- they kept them on the arm if you will. publicly agitating for gm to consider this and pressuring
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shareholders to pressure gm to consider this. they figured ok, let's just keep the banks around until he walks away and all thing blows over. kind of standing by, if you will. olivia: also very outspoken about the need for consolidation of the industry. he is always talking about how much overcapacity there is and that they need to cut it will kind of consolidation are they looking for? >> he wants a few different things. he thinks companies waste too much money, transitions and advanced technology like hybrid arts. he thinks they should merge up and spread massive cost over a lot more sales volume. he does not say that the plants should be cut. if you do not consolidate, it will get rid of excess capacity cheap in europe. arguably, the excess capacity as his 30 even in the u.s. were
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chrysler offers the biggest discount on its cars they have got excess capacity here. matt: is there any other target he could go after it gm is out of the way? click cs, primarily, a european automaker and one of the smaller ones, they have been struggling and are in recovery mode right now. that would probably be his fallback option if he cannot get a done deal with gm. matt: thanks for joining us. i get a lot of tips from david. olivia: thank you. next up, what will be done to snack the next big win? we will take you to our arts reporter about the rivalry between these two storied auction house. ♪
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matt: coming up on an interview you do not want to miss taking the helm, that company. olivia: that is not correct. he has been there for 16 months. matt: fortunately, olivia will do this interview herself. olivia: and she actually knows about the company. matt: that is why we assigned it to her. olivia: perhaps nothing is hotter right now than fine art. this sculpture sold for $131 million. almost $42 million at sotheby's.
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meanwhile, this other painting sold for a record-breaking $180 million. given the numbers at the upcoming auctions this week in london, the stakes could not be higher. i want to bring in bloomberg's aren't reporter, following the developments closely. tell us about the rivalry and how it has been shaping up. matt: starting in 18th century. >> it goes back quite a while. matt: they were colluding in the past. they were. to jail for 10 months for that. olivia: how did they pull out ahead? katya: they're taking a lot more risks. they put together a meta-auction where the because i you just mentioned acted like an anchor
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to draw on all these other amazing warhol's. they jammed all of their sales into one week, a strategic move and sold 1.7 alien dollars worth of art, heralded all of the world. he stuck to his traditional schedule. almost half. and so kristi has emerged as a clear winner. olivia: $1.7 billion. matt: amazing is in the eye of the beholder. secondly a point i was making earlier off-camera, you do not know how much the profit margins are. kristi sells $1.7 billion of art , southern these selfless and half of that in weeks, but they are making 10% of their public company or christie's is a privately held company.
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we do not know how much they're paying for that art. katya: exactly. christie's is very big on currency especially this season. go into sales, more than half of the material -- the guaranteed sellers just to get -- olivia: that is not necessarily profitable to them. they sold a picasso, certainly -- matt: we can talk about -- it was reportedly bought for $90 million. they already guaranteed 103. even after taxes and fees came to an hundred one, they had to make it up, and this was different than the chariot. they lost $2 million on that sale alone. katya: and they still lost money
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on that. matt: nobody will believe how much it went for. katya: almost $60 million. they also did not make any money on it. probably did make some money on that. the seller was peter. olivia: important point. katya: this money does not go to artists at all. it goes to collectors. matt: for the most part. that was the most ever paid -- katya: a price, auction house because it has to give up so much to the seller to get that to begin with. that is where -- and sellers
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really know this. olivia: it is a great story. we're surprised how little leverage the auction house actually has. never had a similar -- seminar on defamation. don't go away. much more on market makers including -- matt: even more changes at a restaurant after losing the proxy battle, the company is now spinning off the loveliest stage that houses the olive garden restaurant. ♪
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matt: it is almost 9:00 p.m. in hong kong p or the sun has long gone down over that bustling metropolis. the lights are not very bright. new york is a lot brighter. again, for new york.
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restaurants planning to split off 430 of its properties in a deal coming after garden lost its property fight with a firm last year and is operating under new management. garden owns more than 7% in trading. here with the story we saw this coming but it has been a long and fascinating drama. >> said is right. there was a 300 page powerpoint presentation. they promised to do this and now here they are trying to squeeze some value out of the real estate. it is about 500 places where they own the land in the building. it is the land that is most valuable. 500 or so are the ones they own. 430 another 75 p or they say with the proceeds, they could pay down a billion dollars in debt. matt: why do it like that
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instead of selling the mall off? is a huge operation to sell that much property. request that is right. they are saying this will help them. they avoided rent to this point not having to pay rent. we will have to see how they manage those costs. matt: how is the business doing otherwise? we talk about doing something with the breadsticks. trying to also redesigned the restaurant and make it a more palatable experience? what was wrong with it to begin with? >> all of garden had fallen on hard times out of touch with consumers off trend. so far, so good. this quarter was up in same-store sales. the numbers all of garden starting to group up and the feeling is once this is behind them, they will focus on execution and we will see if they could turn olive garden around. matt: we see also read last are
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their holdings, capitol hill. >> they are out of red lobster at this point. 840 all are -- are all of garden. the big want to watch his olive garden. it is more than half of their restaurants. matt: i'm sure it is lovely these days. thank you for joining us on the olive garden and darden. we will be speaking with the chief executive and largest employer in the u.s., doug macmillan --david kelly doug mcmillon -- doug mcmillon. stick with us for that here on bloomberg television. if you have to leave your tv, do not worry. you can stream us on your mobile device. ♪
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announcer: live from bloomberg headquarters in new york. this is "market makers," with erik schatzker and stephanie ruhle. matt: you're watching "market makers." erik schatzker and stephanie ruhle are off today. we both fill in for them. .co doug mcmillon is going to -- walmart ceo doug mcmillon is going to join us. let me give you a look at stories we are following this morning. a signed that demand for american-made manufactured goods are stabilizing. bookings for nonmilitary capital goods other than aircraft were up 4/10 of a percent.
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orders for all durable goods fell 1.8%. that reflects a drop in the volatile aircraft category. the prime minister of greece has until tomorrow to get the deal done. leaders say greece is getting serious about reforming its economy. they want to see a breakthrough by tomorrow. alexis tsipras offered a plan that addresses pensions and taxes. german chancellor angela merkel calls it a step forward. pimm: all participants -- translator: all participants of the discussions said we would like greece to stay in the eurozone. what greece put forward today is progress but within our discussions we also noticed there is a lot of work that needs to be done and we are running out of time and therefore we have to concentrate on this work. matt: citrus -- tsipras faces a battle in athens. he has to convince his government to breach his party's
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pledge. senators in the u.s. are counting on a coalition to pass president obama's trade agenda again. the president needs at least 60 votes to advance fast track legislation. republicans restructured the package so it can win approval in the house that has led to this second senate vote. investors like what they see of the new blackberry. shares are rising in the premarket. smart phone sales fell last quarter but revenue from software more than doubled. john chen is betting that the company's future will no longer be smart phones. blackberry counts on selling software that lets companies managed their employees' mobile devices. we will speak with john chen as well. we have breaking news and i want to go to vonnie quinn. vonnie: two and a half -- $2.5 billion deal. 3m is going to buy a company called capital safety from kkr.
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capital safety founded back in 1998 manufactures things like harnesses and lanyards. 3m, and enterprise value of $2.5 billion. 3m says it is assuming debt of about $3.7 billion. it will hurt a price per share basis by four cents. matt: there is a much bigger company will focus on right now. olivia sterns joins us with the ceo of walmart. olivia: thank you so much. i'm pleased to be joined by doug mcmillon, the ceo of walmart stores. i want to start with the news. walmart took this decision to stop selling any merchandise with the confederate flag. why was at the right move? doug: first of all, our hearts and prayers go out to the
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victims and their families and all the people of charleston. we do not want to sell anything that offends people. i was surprised we carry some of these items through our marketplace, third-party sellers online. when we saw that they were out there, we decided to discontinue. olivia: the move appears to be part of a growing trend of walmart really sticking its neck out on social issues, trying to do the right thing. i'm thinking about what happened earlier this year with the governor of arkansas. a lot of people credit you personally for going to him and criticizing the religious freedom law for getting them to amended. why is walmart trying to do the right thing and is a good for business? doug: we are a retailer, a merchant. that is our business but we look for places to make a positive difference. there is such a thing as a double bottom line. whether it is the wage increase or what we do with environmental sustainability to limit waste
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, all those things are aimed at running a better business and doing good things for the world. olivia: you have a fabulous personal story. your been there for over 20 years. i believe you got your start as a high school student in the summer in a warehouse. you are arguably the most prepared person for this job sam walton ran the company himself. you have been in the top job for 16 months. you look back, is you -- is there anything you think you were not prepared for? doug: yes. some of the social decisions. we try to keep it simple and run it walmart like a small. it seems like every day there some sort of surprise. we've got a great team to work with. we are sincere about trying to use the company's platform in a way to do good. our core mission is to save people money so they can live better. we think that is an important purpose to have in life but we also employ a lot of people and we want to have great jobs. we want use the policies of the
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company to create a more sustainable supply chain and all of those things are good business. olivia: 2.2 million people third-largest employer in the world. that is incredible. perhaps the biggest news under your tenure, your decision to raise the minimum-wage for employees $10 an hour next year. doug: it is not just the starting wage rate but the system we are trying to put together, the environment we want to create. what we decided is that it was time for us to take our starting wage rate up. we did it to nine dollars this year and $10 next year. we moved up other rates for department managers and others that work in the company because you want to create this opportunity. the webby put together wages -- the way we put together wages how we approach scheduling that people can do with any to do with their lives all of those things are intended to create opportunity for people. olivia: are you starting to see this investment in service pay off? doug: our customers are
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noticing. we watch customer scores closely . associates are more engaged. they are happy and we need them to be happy because we want customers to be happy. olivia: when i was in bentonville, fantastic place, i also learned about how you are focused on the broader turnaround. you are investing in service and focusing on trying to fix merchandise and reduce shrink. how is a turnaround with u.s. stores? doug: we're making progress. we have room to improve on in stock and other areas and we are seeing those improvements happen. customers are noticing. we are also trying to invest in e-commerce in a way that makes the stores more attractive to customers and helps them find items, helps them have access to a broader assortment whether they are in the store or shopping at home on a tablet. we are changing the way you shop at walmart. olivia: other parts of the turnaround strategy were you
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were frustrated with the pace? doug: so many stores. more than 11,000 around the world. more than 4000 here. so many involved that we still have stores that have room to improve. we're try to put a sense of urgency behind that and i'm proud to say our associates and managers are making progress. olivia: all this investment in the employees and customer experience is weighing on the share price. what do you think investors are missing? doug: i think we need to do what is necessary to have a great business. the investments we are making in e-commerce and people sometimes have different payback periods. in the short-term, i think investments at the store level will pay off. as it relates to the e-commerce investment, some of those can help us in the short to midterm and others for the long-term to create a situation with a company can win in the future. investments in the supply chain, for example to make sure we can move goods however customers want to shop. if they want to order something
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online and have it at home, they can do that. if you can order it online and have it picked up in the parking lot. today you can come in the store and pick it up. we're trying to change the way customers shop and serve them not only with low prices but help them save time becausy. olivia: i saw one of those experiments. not necessarily applicable to manhattan but perhaps great if you live in arkansas. you also told employees, think of yourself as han solo to take on the evil empire of bureaucracy. do not think of the competition as target or cosco, think of it as bureaucracy. what did you mean? doug: a big company has it. getting decisions made with speed, thinking and an entrepreneurial way, being creative we have the opportunity with the resources we have to invent things were customers. our cost -- our competition is doing that. our competitors are getting better and the best competitors are really getting better. we have to keep up and stay
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ahead where we can. olivia: does that a challenge for you to bring fresh ideas when you have been at the company for 22 years? doug: i work around a creative group of people and we are generating lots of new ideas. we have more ideas right now that we can execute. we are trying to stay focused. olivia: what is your read on the u.s. consumer? doug: that her. i think post threat -- better. i think post crisis, people got more conservative. debt levels are down 16% since the peak. the fact that they feel confident enough to buy a new vehicle is encouraging for us. it is help all that fuel prices are relatively low. olivia: what have you noticed about the changes in what americans are spending on in last five years? doug: our business in apparel and home has been stronger. i think we have great merchandise and a great team but it is good to see nonfood sales that stronger and we are seeing that in our business. olivia: i cannot believe i saw a
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tank top for a dollar. doug: they look good. olivia: it looks great. it was also made in china which brings me to the tpp. it is not with china but it is on the table. the president is pushing for fast-track authority. what would approval me from walmart's business? doug: we are supportive of the tpp. we already export american goods into china and there is a great demand in china for products. the set of agreements that do not include china create opportunities in japan where we sell american. the japanese consumers are really responding positively to usd approved beef. i think that is great. olivia: talk to me about e-commerce because that is where everybody seems to be most excited. if anybody can take on amazon
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it is going to be walmart. how do you do that? doug: we have to use the assets we have today. the technology we have and build new capabilities. the competitive dimensions have been redefined. value and price are redefined relative to how they are communicated to customers in the past. prices are only going to get lower overtime. assortment has been broadened. access to how you take delivery over a product has changed and the experience has changed. it is not about how you are treated in the store but the experience on the mobile app. it is digitally or through brick-and-mortar assets, we are working hard to serve customers. olivia: your rolled out the shipping pass experiment. it looks like a product that could compete with amazon prime. amazon subsidizes prime heavily. they do so with fees from third-party merchants. they are willing to eat that cost. how do you think about your
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appetite the cost of subsidizing shipping? doug: we have been investing in infrastructure with some for film and centers, several of which will open between now and christmas. as capabilities come online we will be able to provide customers more alternatives as it relates to shipping. we do not want customers to have to think about where they want to shop. we want to have a broad assortment, all services available including shipping. that is what this is about. olivia: take me around the world. how is walmart doing internationally? if you just look at walmart's international business that would still be one of the biggest companies in the world. it's hard to talk generally but tell me what markets are thriving. doug: our businesses in canada and mexico are some of our bigger businesses. they are doing great. a big business in the u.k. and our team is continuing to innovate. china is important for the longer-term. today we have over 400 stores there and we have an interest in
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e-commerce company in shanghai. no learning how to bring digital and physical together in china as we do here. that is going to be important for us long-term. we also have several markets in latin america including five central american countries. we are in 28 countries. we just opened our first store in kenya so we are in sub-saharan africa with a good-sized business. olivia: talk to me about china for a second. the store traffic numbers for the last quarter in china were disappointing. what are you doing to drive traffic? doug: as it relates to hypermarkets, we are growing our market share. the average ticket matters and our store improvements are paying off. e-commerce is the big story in china. the growth in e-commerce is phenomenal so i'm glad we got an asset to learn more about this. olivia: do you think of alibaba as a more for middle opponent --
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a more formidable opponent than amazon? doug: all of the above. i got to go on customer deliveries to apartments, taking items they ordered on our mobile app and all of those competitors are out there. it is fun to watch. customers are going to win, not only in china but in the u.s. as competition works in their favor. olivia: i want to ask you about health care. i believe you have 17 in-store clinics in the works. talk to me about the opportunity you see for walmart in health care. doug: health and wellness is a big business for walmart. in the u.s. it is more than a $30 billion business. it is growing and very important going forward. the four dollar generic program was continued to evolve. for sam's club, we have five generic prescription but are free of charge as long as you are a member. we're continuing to innovate because we want to be able to serve customers in new ways.
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pharmacy will be important, optical is important. we attest with hearing. clinics are coming along. it is about a solution for customers. we to continue to invest and learn as the health care space changes to make sure we continue to lead. olivia: you have spent 22 years with walmart, doing everything from working in a warehouse to u.s. stores to running walmart internationally to running sam club. why have you decided to stay at walmart? doug: i have loved walmart from the beginning. the retail business is challenging and it changes and is very competitive. it is attractive to me and many other people. when you are going to school, sometimes you do not realize how fun retail is but what you get in it, it gets in your blood. olivia: doug mcmillon, we really appreciate it. walmart president and ceo. market makers will be right
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back. ♪
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matt: all right. a few of the greatest city of the world, the capital of finance and life in general. new york city at 9:20. julie hyman has the analyst action you need to know ahead of the opening bell. julie: i will start with a call on the airlines are morgan stanley. a holistic call on the industry which has not performed well this year. the one-year chart for these but they have come down for the year to date. pulled back into a bear market even though they were up over the past year. over five years we have seen a
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climb in the airlines. with this recent underperformance analysts question whether the run that we have seen and the declines we have seen which one of these is the market getting right. morgan stanley says the industry structurally has changed and is better positioned to weather any kind of downturns even though there has been concern lately about capacity expansion and pressure on pricing. in terms of where they shake out for the individual airlines they are looking at particular favorite airlines at delta united as well as alaska air and you are seeing the stocks are up in the premarket in terms of equal weight. they're looking at american as well as jetblue. they say jetblue has had a great run. there are underweight including southwest, hawaiian and virgin airlines. mixed trade on these this morning. interesting that everyone has felt the need to weigh in on the airline sector. matt: the airlines have not done
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as poorly as utilities. they had been down year to date. down over the last 12 months. one of the worst performers. why upgrade that sector now? julie: bernstein upgrading the utilities. we have seen big declines for the year to date as utilities have been the worst performing sector in the s&p 500 in part because of concerns about higher interest rates. matt: the white line there. julie: the philadelphia utilities index. fallen by about 10%. why is bernstein coming out in upgrading the group? one of the things they're looking at his valuations and what you're looking at is the s&p 500 forward price-to-earnings ratio estimated -- based on estimated earnings versus that philadelphia utility index. as we continue to see the s&p valuations climb around 18 and a forward basis the utilities
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price-to-earnings ratio has been pulling back. that is one of the things that bernstein is looking at. coincidently, wells fargo is also saying now's the time to look at dividends. these are a few of those she is mentioning. transocean iron mountain which is a frontier communications -- and frontier communities and. olivia: year to date, utilities down 12%. matt: health care has done well. olivia: lots more to come including an interview with aol ceo tim armstrong. ♪
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olivia: we are a few minutes away from the opening bell in the u.s. here are the things you should be looking at today. i want to bring in tracy alloway who joins us now.
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tracy: european stocks are up. european bonds are up. guess what's down. the euro. we have had this massive market optimism about greece striking a deal with eu leaders. the euro starts weakening against major global currencies down about 1% against the u.s. dollar. there is a theory that greece is out of the way that investors can read focus on one of the big trends of global financial markets, the ecb going one way and the u.s., the federal reserve, going the other way. olivia: a fundamental backdrop of policy convergence which makes sense because why all these calls for parity came out. tracy: it is still weird to see the euro weakening when things are going pretty well. matt: things are not going pretty well are they? greece may be able to get by for another couple of weeks or months but in the long run, they are still -- in the
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short-term there are serious problems. olivia: today cost move in the euro is a story of dollar strength. we have strong sales of existing homes. yesterday was the best. the housing market scenes on track. -- seems on track. tracy: remember, the euro is weakening against a bunch of major currencies. over to china. chinese stocks ended up rallying today. a huge rebound. i want to show you something in china that did not rebound. these are shares of wind play, a hong kong listed: porter. they sell about -- a hong kong listed coal importer. talk to get new capital failed and the company has defaulted on a dollar-denominated debt. why do we care about this?
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chinese companies have been borrowing like there is no tomorrow in the u.s. dollar debt market and there are worries about cracks in that market happening and we have had two chinese issuers defaulting. matt: that was a penny stock. it does not look like it had more than one transaction trading in the last week. one person selling. in five days. tracy: things don't look good. olivia: the chinese market is heavily levered. a large amount of margin debt with which these stocks are being bought. are you telling us a lot of that debt is being financed in dollars? tracy: i have written some statistics. em corporate debt now accounts for 18% of all u.s. dollar denominated corporate debt so when you think about u.s. dollar corporate bonds, a big chunk of that now comes from emerging market countries, including china. olivia: that is interesting.
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consider the fact we are seeing companies like coca-cola doing euro denominated hans. -- euro denominated bonds. tracy: we have new data out today saying we might be in for an el niño event on par with 1997 and 1998's record-breaking weather. why do we care as market people? we care because el niño means we either get too little or too much rain in certain places which impacts farming, crops inflation, monetary policy and ultimately ends up impacting markets. matt: it comes through california? tracy: africa's mostly in the pacific. it is usually -- i think it is mostly in the pacific. places like thailand, vietnam farming accounts for something like 30% of employment. matt: i have to admit not
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knowing what any of the colors represent except for the black. the big el niño came through california first and that is an area of the country that could use a little rain. tracy: investors, watch out for the weather. olivia: commodity traders losing sleep. tracy, thank you very much. matt: julie has got a look at some of the biggest movers at the open. a minute 15 seconds into the trade. julie: giving and i on my terminal as we see stocks up about 10th of a percent across-the-board. we are getting closer to closing records for the major averages. keeping and i on those today. let's take a look at darden restaurants. shares up better than 5% after the company came out with earnings. earnings were better than estimated. a stock is trading at an all-time high.
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it's best percentage gain since december of 2013. it is spinning off restaurants 430, into a separately traded real estate trust. this is a trend we have seen and restaurants and retailer consumer facing companies. this is something start value put in motion -- star board value put in motion. essentially committing a coup at the company. we have seen shares right in this -- rise in this latest plan. blackberry's loss was wider than estimated. it looks like the shares have turned lower. earlier, they were trading higher on progress in software sales which more than doubled in the last quarter. it looks like the loss is winning out. also taking a look at at&t this morning. ubs and barclays upgraded the stock. they're optimistic about the directv deal. ubs is saying the market is
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under appreciating the value of that deal for at&t. olivia: thank you so much. aol goes off-line. verizon has closed on its $4.4 billion deal to buy the tech company. tim armstrong will stay on to run aol as a wholly-owned unit of verizon. in the weeks since the companies announced their merger there has been lots of speculation around how they will work together. here to give us clarity is betty liu who is joined by tim armstrong and marty wallin. betty: thank you so much. tim, marty great to have you here on our program. first question to you tim what do we read into the fact that you are going to be reporting in two marty -- to marnie and not the ceo of verizon? tim: one of the things that was
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impressive for the aol team was the fact that marnie is leading an area which is essentially the new business area for verizon. from the standpoint of aol, the best thing we can do is connect directly into verizon where it will be most powerful for consumers, partners and advertisers. marnie and i have worked closely together for years, predating aol. i think number one is the most natural place for us to sit in verizon and number two is the most impactful. the guy spent -- i think i got to spend two days at marnie's leadership conference. i was enthusiastic about the deal. one plus one will be a lot more than two, maybe three or five. i told this to marnie, i'm hoping it is 10. we are excited to be there and our job is to make verizon and
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the whole team as successful as we can. betty: i notice in the press release the digital media service part of verizon is going to report to tim. why did you shrug sure that way and will there be overlap? marnie: about a year ago verizon formed a new organization for the purpose of driving revenue diversity in the future and transforming what verizon would look like in the next five to 10 years. we have been assembling a number of assets and made a number of acquisitions. digital media service is made up of acquisitions we got along the way. it was part of a bigger vision about how we could be a global technology company that connects creators, advertisers and publishers with premium content and great digital experiences for consumers. that vision led us to aol and so putting all of those assets together and putting that under tim makes a lot of sense if we are driving toward this vision of having this number one global media technology company. betty: also, verizon has talked
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about this over the top product offering you are going to be unveiling sometime later this year. tell me how the content -- is a well content going to be on this over the top platform and how to the two combined excel repair process? marni: part of this is make sure we deliver premium experiences to consumers. content is a huge part of making that happen. in our over the top product having all of the best content whether it is live, on demand or emerging. all of the content a low brings will be part of that so we are excited about half post, that west tech crunch. all of those premium content. betty: they will be on that platform. marni: yes. betty: i know you just renewed a four year contract with barry on a huffington -- with arianna
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huffington. will you spin off of the content? tim: content has allowed us to go into significant markets, video, global news. if you look at where the world is going by 2020 there will be $40 billion of extra spending on mobile and $40 billion on video. there is really only a few properties the size of techcrunch and huff post. we bring the best of all those platforms, the best of content. from a unique standpoint we have been able to raise at prices and get global distribution. a lot of that is because the content businesses -- you have the combined companies with our technology platforms content and attacking markets that will be an $80 billion to $100 billion opportunity of the next
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four years or so. we have plans to integrate and push that forward. our team is excited meaning all the people at verizon. this is a big opportunity and a big day for us. betty: aol going off-line as a public company. i have watched you over the years build this tremendous asset. this platform for a a well which is one of the reasons why verizon is so excited to merge with the company. i'm looking at the numbers. e marketer says aol share global online at business is still 0.75% last year. google at 31% and facebook at 7.9%. that is quite a lead. how do you catch up? how do you differentiate yourself? tim: that is exactly why this deal is such a powerful deal. the fact of the matter is our
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assets and platforms are much more powerful than our market share right now and connecting with verizon will turbocharge us. i would be surprised in the next three years if we do not end up being in the top three market share holders in this base -- in this space. there are added assets that are coming. ott and other things. this will be a much expanded business overtime. i have spent 10 years at google and have a lot of respect for them. they have been great partners with us but nobody owns the future and assets we are putting together today are about the future and if you think about mobile, mobile is a platform shift the same size the internet was except he will add 2 billion more people and you will add hundreds of billions of dollars of revenue. this is probably the best asset combo to go after. marni and the team have a big vision and that is why a lot of people are excited about this deal. betty: how exactly is aol
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turbocharging verizon's ad offerings? marni: we have the oil in the ground in we need the rig to bring it up. we believe that all of their capabilities -- the talent in this organization is unbelievable and that is one of the things we spend a lot of time to make sure we got to know the talent. that helps to accelerate. it is putting assets together. great at tech capabilities that tim has assembled. the connection with mobile consumers is how we do this. it makes sense because it gives us a way to monetize above our access network which is what we are striving to do. we think we have got the vision and we think we can make this happen. betty: marni walden and tim armstrong. thank you guys. olivia: thanks for that great interview. don't go away, a lot more to come on market makers. coming up, an end to the
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standoff -- matt: an end to the standoff in greece. olivia: our next guest says reaching the deal is the easy part. we will be speaking to bash is alexis -- is alexis superstorm to lose his job -- is alexis superstorm lose his job? ♪
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matt: greece may be closer to striking a debt deal. our next guest says reaching a deal is the hard part and the real work begins when those reforms are put into place. joining us now is nicholas economides, and economic professor at nyu stern school of business. he also advises the greek government. which side? i hear the greek government is fractional. nicholas: i have advised the greek government, not the present one. matt: can you explain to the
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many americans who do not know how to pronounce the prime minister's name. ? nicholas: tsipras. matt: how will he do when he tries to get this deal through? nicholas: he has a majority of the about 20 in the parliament and his coalition. probably more than 20 will defect. other parties are going to vote for the deal but not having enough majority in the parliament for himself means that he needs to resign. olivia: he could lose his job. nicholas: yes. there might be a different coalition of government with him as prime minister. the president cannot survive if he loses the majority. matt: is he willing to push this through? possibly destroying the majority of his party in parliament for the good of the country? nicholas: i think that was the choice he made yesterday. it is clear this is the way he
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is going. i am not sure how exactly it will be presented. of course having something extra like the icing on the cake from the european union might help him push through. for example, if he manages to achieve a debt restructuring, that will help him a lot. olivia: you heard francois hollande saying -- talking about extending maturities. they are saying you have to agree to all the stuff that same time technology the fact that -- acknowledging that whatever they are agreeing to is unsustainable. you have to agree to these measures but we recognize that no matter what it inevitable that we will give you a third bailout. nicholas: when greece is in a position that it needs money it needs money this year and in the future. olivia: the planned their asking greek to -- brief to agree to nobody thinks is sustainable. nicholas: greece would collapse
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otherwise. a better solution than anything else. we can go to the next step which would be another program. olivia: they're asking greece to live up to the terms of the second bailout. many people will say there is no chance greece can survive under those terms. there will need to be a restructuring. nicholas: reese was doing pretty well in the spring of 2000 -- greece was doing pretty well in the spring of 2014. growth and every thing was balanced. there were these elections that threw off the whole thing. the present government got elected, promising everything to everybody and now it cannot deliver. i do not think the previous problem was unsustainable it just did not have a chance to be completed. matt: in that case, is the reason for optimism? if tsipras falls on his sword and pretense -- and presents a good deal. nicholas: that would be a
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scenario in which more capable people would take over and things could go a bit further in terms of growth, employment and so on. in terms of balancing the budget, the present program will do that but greece also needs growth and employment otherwise it won't be able to pay off its debt in the future. matt: excellent take to get from you. thank you so much. nicholas economides from the nyu stern school of business. the unicorn in silicon valley that you never heard about. how one company climbed to an $865 million valuation. ♪
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olivia: it is 6:51 a.m. on the west coast. you're looking at a beautiful morning on the golden gate bridge. we are talking about what is happening in silicon valley.
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start ups are born and killed in silicon valley and there are those that become the mythical so-called unicorn. with recent funding of six the $5 million mixed panel -- mixed panel is closing in. suhail doshi joins us now from san francisco. great to see you here on market makers this morning. why don't you explain what your company does? suhail: basically what we do is we measured the actions people take inside mobile applications. for example, that might be someone uploading a photo to instagram or taking a picture on snapchat playing a song on spotify. we check all those actions and we help companies make says of those data. matt: are all those companies your customers? suhail: not all of them. matt: uber is a customer of
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yours right? i use it a lot, for not only the car service but also to messenger things. maybe we could use it this summer for taking a helicopter to the hamptons. what would you track as far as my activity on it uber app? suhail: we would help them understand how often people will take a ride but we might also help them understand how some other users are using power user features. maybe they want to know whether you actually type in your home address and your work address to make that easier and more convenient for you to get from point a to point b. or maybe they want to know whether you actually split a fair with your friends and find out if you are taking uber's with your friends. all those things they might measure help them understand how to make uber a better application for you. olivia: give us more practical
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examples. what insights have you gleaned from these 50 billion data points? suhail: another company we might work for our company's like that e fitbit and jawbone. we might help them understand how the battery in their vice -- in their device might decay. how long does that battery actually last, not just on your first use but maybe after six months of using the device? we want to help people understand the battery is not doing as well as they hoped or maybe it is doing better and that is how they might be able to make that the next set of hardware they make for consumers. matt: we talk about 50 billion data points, a huge number. i did not think it's easy to get your head around that. in relation to your valuation, what does that mean to you? how much is each of these data points worth or do you not think of it that way? suhail: we do not think of it
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exactly that way. the way we think about 50 billion data points with respect to how the company is growing is, it is twofold. on one of the spectrum we see -- on one end of the spectrum will we see every data point we track as a testament to in tracking and measuring, it shows that the world thinks it is more important than tracking traditional metrics page views or downloads. the second part is that our business is only successful if the businesses we support and companies we work with our successful. if they are able to grow their user base and they are getting people to use their applications, we are successful too. matt:olivia: suhail doshi joining us now from california. this is something you have got to see. matt: something i watched five times already. olivia: a cap emerged -- a cat emerged midflight.
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stayed on the plane possible wing until landing -- the plane's wing until landing. matt: sue hale can talk about all the things -- suhail can talk about all the things mixpanel can do for the world, but this is why we have the world wide web. last night, it served its purpose for me. olivia: that does it for "market makers." have a great day. ♪
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>> welcome to "market day." thanks for joining us. >> existing home sales are at
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the highest levels in six years at we will find out if new homes are selling at a similarly fast -- matt: how long greece's creditors say they have to reach a bailout deal. everyone seems more optimistic today than they have been in months. may be some good will come out of this. betty: we are looking at why so many food companies are using healthier ingredients. ♪ betty: good morning. i'm betty liu. matt: i am matt miller joining her today. betty: new homes data is outer julie hyman is in the newsroom with the headlines. julie:


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