tv In the Loop With Betty Liu Bloomberg December 27, 2013 8:00am-10:01am EST
the 2013 shopping season was their best ever. soldix items per second or . the online retailer also added one million customers to the , addingrime program enough customers to deliver one gift to every household in america and they probably did. twitter shares are continuing to in, a 63% jump since the ipo november. blogging site has not released financial results as a publicly traded company, so what is behind the surge? president barack obama signed two important bills into law last night while on vacation. one is the budget deal crafted by paul ryan and patty murray,
and the other cracked down on sexual assault in the military. julie hyman is digging into the discounts that have run far and wide, but not all retailers are playing ball. olivia sterns is following the headache for many of these stores, with the return season beginning. julie hyman, who resisted the pressure to cut prices? >> consumers are coming to expect that. case we havee base seen across the retail spectrum. some retailers at the high-end who think they can preserve brand equity keep prices at relatively elevated levels. lemonked about -- lulu held prices. is a teenage retailer
that introduces a number of products to see what will be successful. finally, anthropology, which is owned by urban outfitters, an upscale brand, where people are not so much buying gifts, but buying stuff for themselves. now, the advantage of this strategy is obvious -- you preserve operating margin. one retailer that has discounted less, not resisted entirely, hasn't michael kors with margins of 30%. margins are also elevated. the buckle, urban outfitters and express as well. margins is the benefit. what about the risk? >> people do not shop at your
stores because they can get discounts at the store next door. that could present a risk to l othermon, where competitors have come in. uncle courses holding steady. -- michael kors is holding steady. down slightly. we will see how this strategy bears out because they are in the minority. >> they are indeed in the minority because people are walking away with huge discounted items. where do we go from here? stocks have been rallying, which is unusual because all we have been hearing is negative. is at newtail index
highs on anticipation that things will turn around in the new year, the economy is getting better, and the fed is finally yet if you look at the patterns, there is no guarantee. toconsumers are getting used permanent lower prices, that could be more problematic for retailers on a longer-term basis . we will know more as the numbers roll in. >> we will see the numbers crunched. julie hyman, thank you. maybe you did the thing people do during the season, get the gift, return it, and then go buy something else. the return season is kicking off. >> in particular the online return season and a couple of things are driving that. more generous shipping policies. returns,ping, free that used to be rare, and when there is no financial penalty,
you are more likely to hit check out. also, there are deep discounts that consumers are expecting. 50% is the entry level discount, which is more likely to have you make a splurge or a rash decision. it really hits the fashion apparel, retailers, shoe companies the worst with 30% of goods being returned. home goods, toys, it is only about 10%. it will be worse for that ppos.com. -- za women are more likely to return goods than men. edex expects to see a 20%
increase -- 28% increase with their smartpost shipping policy. x becauseood for fede they will charge you either way. look at what is happening with amazon -- they will eat the charge for the gifts that did not arrive for christmas. is rolling out new products like mobile barcodes which will make it easier for returns. >> thank you olivia sterns. -- 1.3urn to washington million americans will see unemployment benefits and go away tomorrow and the debate over extending those benefits will be the first legislative battle of 2014. peter cook has the latest.
what are the prospects for a deal? >> they are not bad. benefits like this give you an weeks of benefits. it has been extended before. there is a bipartisan effort to extend them, and even house speaker john weiner says he is open to extending them -- john toner says he is open extending them. democrats say it is still an emergency with unemployment at 7% and there is no need to find an offset. steny hoyer was back on the floor here in washington yesterday saying this is the wrong time to leave 1.3 million americans in the cold. speaker,umber, mr.
will increase by 73,000 people on average every week that we continue to block extensions. that is both a moral outrage and another congressionally inflicted blow to our economy and it is unprecedented whenever unemployment levels have been as they are today. >> republicans say the emergency over, and it is time to scale back the program to the traditional 26 weeks or something closer to that. at a minimum, they are insisting that it has to be paid for. low hanging fruit was used in a budget deal, so they need to find a way to come up with the money. --what if there is no deal what will be the impact the economy? >> the 1.3 million people who have benefits ending saturday, that is money not going into the economy.
some have said that hit to the %conomy could be as much as 0.4 to 2014 gdp. in implement rate could come down by 25% -- the unemployment .5% could go down by because people might be taking lower paying jobs after holding out for something better. and people could stop looking altogether. that will bring the number down and that will impact the fed. >> the irony is the jobless rate could fall. >> and the situation is worse. >> exactly. who makes the next move? >> the senate is planning to hold the first vote on january 6 when they return. for. now, it is not paid that is the big issue. >> peter cook, thank you. it is the time of the year, wall
street analysts are making their forecast for the markets in the year ahead, and we put them on television to talk about it. michael mckee has the real deal. accommodating? -- more comedy? >> it is the time of year that we love predictions. when you look at what was predicted last year, you have to laugh. but the stock pickers forecast of the s&p 500, and where it is today. we have a few days left, but look how far off they are. the median forecast within this miss ofrecast was a 17.5%. not to be totally unfair to stock pickers, what about stock
analysts? for three quarters ahead. this is what they thought earnings per share would average for the s&p 500, and here is what they turned out to be. analysts were no better. you probably do not necessarily want to take their advice. >> it is amazing when you match up the estimates and the outcome. what about economists, the people you fraternize with? >> we looked at them as well. to be fair, they are just as .umb in projecting the future here is what they thought growth was and here is what growth actually was. pickinge no better at the future then stock prognosticators. >> it makes you wonder why anybody listens to anyone. >> people have studied this. the more you are counted as an
export -- expert, the more likely you are to be wrong because you get locked into a forecast and you believe your own methods of analyzing things. the other is nobody could tell what could happen. our summary things that could happen in 12 months. one otherve a good -- thing is that anything could happen in 12 months. mckee, thank you. a fair and balanced report. economics editor michael mckee. do you want somebody to blame for the sponsored advertisements popping up and flooding your twitter feed? we have them. joins us. izea and, elon musk reaches for the sky. we take you inside the
of izea. great to have you back on the program. you have bold predictions. number one is about bitcoin. we wrapped up the series on 12 days of it going. you think next year new york city will have its first bitcoin atm. >> absolutely. bitcoin is huge and there are opportunities for entrepreneurs to get into the space. you will see the first bitcoin atm in new york city. the first one in vancouver did one million dollars in transactions in the first month. bitcoinse accumulating , but there is no easy way to get the money back out. so many financial transactions happening, it is a great opportunity for an
entrepreneur. >> this is also because you mine bitcoin. >> i do. i have a rig at home. i am basically cracking code all day long. i am accumulating bitcoins and i think they will continue to appreciate in value. there is a huge opportunity. >> have you made money on bitcoin so far? >> i have, i have. >> how much? can you say? >> i do not like to talk about .he exact number it is still relatively small, but this is about the longer- term view. you have a currency that is finite. you have more and more retailers that are accepting bitcoin. , whiche overstock.com just made their big announcement about being able to accept
bitcoin next year. i think you'll see more people getting on board, looking to take advantage of opportunities with bitcoin. >> you have other predictions that i want to get through. this is interesting -- cable operators and companies like -- àwill go to have a card la carte programming. this one i thought was interesting -- the last two predictions. but clicks, you expect them to reach an all-time and there has been so much content that this is already happening. too much display advertising and major publishers are having a difficult time monetizing it does the market is flooded. there is too much of it.
sociale going to sponsorships, what is being called native advertising. "the new york times" said they would do sponsored posts on the website. sponsoredshift to content -- in many ways, we are seeing it. oh. advertising on television started with soap operas. we are seeing it go. go. advertising started with soap operas. increasedave competition with sponsorship overtime, but what is unique about sponsorship is it is specifically matched with who the brand is, what the product is, who the client is, and
everything is unique. in some ways, you have insulation in the sponsorship space. bador me, it is a less space. people do not like the advertisements, but i would not say that's monster ships are so well integrated that people do not find them annoying -- so wellhips are integrated that people do not find them annoying. >> it is all about how it is done and how it is executed. sponsorship just like you see bad television commercials. it is up to the publishers were -- orlebrity in some case the celebrity in some cases to make sure they are aligning themselves with something they
can get behind and tell a story about because nobody likes bad advertising. >> based on that, one of your predictions is twitter will hit $80 a share. that is not far off. that might be the first quarter. [laughter] >> i made a prediction on the 11th, and i said it would hit $60 a share, and here we are today in the low-70's. i think you will see resistance at the 80-dollar-mark, but .eople are excited it is a remarkable platform with a high level of engagement in my opinion they are just started to scratch the surface of what they will do from a revenue generation standpoint. ,> ted murphy, ceo of izea thank you. coming up, is t-mobile for sale -- we have the latest on reports
>> first. bloomberg. >> you are watching "in the loop ," live on bloomberg television and streaming on your phone, tablet, and on bloomberg.com. good morning. i am betty liu. bloomberg television is on the market. equity futures are just a little bit higher. no economic data today. yesterday's jobless claims were better than expected. it is the only fuel you have to propel the gains higher. we are on the markets again in 30 minutes. here are the top headlines. audi is taking on bmw to become the number one luxury carmaker.
they plan to invest $30 billion over the next four years. they want to sell 2 million cars and sport utility vehicles annually. phil falcone took no pay from his company for three years, and time,making up for lost eligible for a bonus for $20 million. he also gets a base salary and an individual bonus of as much as $750,000. travelers got a christmas gift from delta airlines. they said they will honor tickets sold online for incorrect prices. ticket to hawaii sold for $6.90. bader not know how many tickets were sold or what the financial -- they do not know how many tickets were sold or what the financial impact will be.
toth dakota is a place of 2 --s with home which -- being the home of two of the poorest counties in america, and there is also a place where many billionaires are putting the money. do not even have to put their money there. all they have to do is say their trust is a south dakota trust and they get the benefits of south dakota law, which helped him avoid state income taxes in their home state if they live in a state like new york, and also federal state and gift taxes. >> they only have to register the trust -- there has to be a physical address in south dakota? >> radcom and for some of these companies it means rent -- right, and for some of the companies it is just buying a
small little office or renting a small little office that no one ever goes to. >> who are some of these companies? >> they include the pritzker family. >> if this is such an easy thing to do, why are more not doing it? or is it becoming a big thing? >> the amount of money in south dakota trust companies has 120 $1 billion, so a lot of people are doing this. is it a recent change of law? >> federal law changed that made the south dakota loophole more effective and that is part of the reason for the run-up. >> how did you find out about this, zach mider? >> somebody mentioned to me, and
i looked into it and found out that it was right. >> when you went to visit sioux falls, where local residents aware of this, is it a source of controversy? >> from the state perspective, it is only positive. moneyet a little bit of and a few jobs, and they figure it is better than no jobs, so they might as well do it. the people that pay the price are ultimately other states and the federal government. >>) losing out on the revenue. -- right, losing out on the revenue. describe what they are like. >> there is an old five and dime store that has been converted, and on the first floor there are offices that represents these wealthy families. for the most part, these offices time, but most of the there are names on the door and a directory. if you call, somebody answers
the phone somewhere else. and in the address allows them to claim residency for the trust. >> you might have given a few other people some ideas. -- thank you, zach mider. staying with real estate, in manhattan, the managers of the empire state building are being sued claiming that it took investigators for a $400 million ride. move would drive up the value of 17 other buildings. the realty trust went public on october 1, selling 71.5 million shares for $13 each. verizon and at&t might welcome the sale of t- mobile to sprint. regulators might not be as eager to approve the sale.
>> you are watching "in the loop ," live on bloomberg television and streaming on your phone, tablet, and on bloomberg.com. are suggestings is eyeing t-mobile, but is the company for sale, and will regulators allow this to go through? we are joined by jennifer fritchey. speculation.uch do you think a deal is being put together for t-mobile? >> i think this is something they wanted for a long time and
part of the plan is for these two, number three and number four to come together. where there is smoke, there is fire. >> will this get past regulators? >> it is an uphill battle for sure. i do not think it will be as hard as the at&t battle was. here, i think verizon and at&t would stop out-of-the-way and welcome consolidation? -- consolidation. >> why? >> t-mobile has been disruptive with their reemergence. they are the most aggressive price are. the consolidation and the moving of the most disruptive price there is a good thing for the industry. >> some would say it smacks of desperation. aggressive ineen
pricing at the expense of margin. >> absolutely. not have continued to add subscriber gains, but you are right, it has not materialized in their cash flow and margins have continued to really lag at&t and verizon. >> deutsche telekom, which still has a significant stake in t- mobile, do you get the sense they want to unload t-mobile? >> yes. that has been part of their plan. they have invested in the network, but it has been an arms length relationship. they diluted themselves to the most recent offering which was to buy more spectrum. the next move is the question. i think germany would prefer to distance themselves from the u.s. at this point. >> what you think the founder and ceo of softbank wants to do?
know, i do not think he came here to lose money. what is behind the black curtain with sprint is yet to be seen. i think it will be a disruptive service. they will not be disruptive on price, per se, but on this deed. speed.r, we were -- on remember, we were both on clearwire, which is under the sprint umbrella, and that is a secret weapon because it will allow them to offer much more competitive fees than wireline networks are providing. over and overmer, again, as proven they will move to a structurally better product, even at a higher price point. >> they will pay the price to get a higher speed because we consume so much better. >> that is right.
it is not a near-term fix. i do not think the fourth quarter will show much. and -- it is14 that in 2014 and 2015 that will drive this higher. >> final note, jennifer deal,che, if there were a what would they have to give up? >> where at&t and verizon will fight them is with spectrum. with clearwire, sprint, legacy spectrum, what t-mobile brings to the table, they will have more spectrum than at&t and verizon will, and that offers a loophole. if this has a chance of approval, they will have to did best some of that spectrum, probably from important markets. >> thank you, jennifer fritzsche
the star. >> one million, you what -- one minute, you are up one million on soybeans. >> everybody knows that "trading americans a classic comedy, but it is the best movie made about american business. comediesot think about about american business that have been that successful. >> when you first got the script, did you understand what at a financial level? >> i live downtown. i understood enough about it. low, sell high. fear, that is the other guys problem. do not understand the call and response system. when i learned about it, eddie murphy and i became infected with their enthusiasm and adrenaline.
in the end, we are shouting it out. we were trying to replicate that theory and frenzy in that setting. >> that setting is entirely replaced by computers. >> oberg terminals. -- bloomberg terminals. >> exactly. exodus complex at the end. i wonder if you could describe to me in plain english why your character and eddie murphy's character when and why the dukes lose. short in orange juice futures and we got information about what they were doing. >> do not worry if the price starts going up. >> we worked the other side of the trade and screw up their short. >> as they were trying to corner the market. >> you really have to know what
you are doing to play in the market. vox looking good, -- >> looking good, billy ray cyrus >> feeling ray, -- daily rate -- billy . >> feeling good, lois. as how much money the new keanu reeves flick and the number, is not nearly big enough for universal, the worst performance for a $150 billion movie in all of 2013. universal wrote down some of the costs prior to the current quarter. universal is set to take third in the overall box office behind warner bros. and disney. disney did not come out that well with "the lone ranger." fu was -- is joining
us. i was rooting for keanu reeves. >> this film was made for a -- audience. >> we will see how it lays out. he does not look like he aged that much. keanu reeves obsession, the on say -- i am also obsessed with her. album onsed her itunes. target was annoyed and now amazon is as well. >> amazon and target are choosing not to sell the physical version. amazon carries the digital version, but they are not giving it a prime real estate. you have to do a search for it. billboard magazine even said considering further reprisals against sony music and
columbia. .arget is not happy they take it personally because last time beyoncé released a studio album they work carefully with her to promote it. the government not do that well. this time around, when they had the opportunity to sell the album a week later, they said no. you could look at it as a threat to other artists who choose to go the way of beyoncé in the future. >> how do you think this will play out? when beyoncé does her traditional album release, they will have to go down that road, but beyoncé is a huge "forbes"rself, with made $92estimating she million. she is one of the best-selling female artist. perhaps target is shooting itself in the foot. four sellere number
of albums in the united states. after the -- apple, amazon, and walmart are the top three. >> walmart is still selling. >> they took a different approach. they sold at the first opportunity and were reworded by beyoncé who showed up at a walmart store and handed out gift cards. she said thank you to everyone for showing up. chose to deliver it to the customers as soon as they could. >> some people think this could usher in others to do this as well? >> but not everybody has the ability of beyoncé to sell across the board. jay-z is one of them, and he chose to go his own way with samsung. down lot of people can go
this road. it is something people are monitoring carefully, untraditional ways of selling their album, taking people by surprise and leading the marketing takeover. >> the marketing is the news that they create. scarlet fu, thank you. it was a record holiday season for amazon with customers buying cyberems every second on monday. we will have a breakdown of the online giant's holiday sales. mcdonald's is pulling its resource website after getting critics for their tips including telling employees to take vacations when they cannot afford it. we will have more of the blunders. stay "in the loop." ♪
>> first. bloomberg. -- it is a lieut shot of 2 -- alive shot of two russian cosmonauts installing a pair of cameras. it will add to the space station's ability to observe earth. they have been out there about 90 minutes. elon musk's commercial space company spacex reached for the sky developing the grasshopper rocket allowing the space vehicle to take off and land vertically, making it one of the few reusable rockets and we got a look at the earth shattering capabilities. ♪
no economic data today, but there is one thing to watch, the expiration of unemployment benefits. how will that play out in the next few days? that could affect how investors trade. we're on the markets again in 30 minutes. president obama might have signed the budget deal, but that does not mean the government will not shut down next year. we have the five big myths. "game of thrones" takes the , but of the highest rated that is not all good news for hbo. we'll tell you about the bright side of the legal down -- downloads. you are watching "in e liven g mbvision and reaming your phonlet, and on bloomberg.com. ♪
>> 30 minutes to the opening bell, this is "in the loop" with betty liu. the countdown begins right now. >> welcome back. twitter shares are continuing to slide. the stock is up since the november ipo. they are trading at triple the offer price. they see this as a catalyst and the rise of the stock. the holidays were the best ever for amazon. more than 36 million items were ordered on monday. they also added one million customers today amazon prime program. that was a record setting number. a merger in the jet industry.
forhcraft is being bought $4 billion. that is after announcing bankruptcy earlier this year. despite christmas delivery woes, amazon had a record-setting season. they added one million prime member start -- members. with thean joins us j-roll down of these record numbers. this press release is pretty interesting. >> was interesting also is the staff that they did not give. we know how many orders there were on cyber monday. we know how many prime members they added in december. we do not know how the total holiday season once. the company does not tell us. it will only say was record-setting. they give a lot of individual stats, but nothing that shows us that this was the best ever holiday season. presumably, we will get the numbers as they continue to go through them.
what they do give up our a number of granular little fun facts and tidbits. for example, they tell us that 1000 per minute xbox one and ps for consuls were so old at the peak of sales. looms was spot to stretch around the earth. and we know that they sold enough hot wheels to go around the daytona race track. we have all of these little tidbits. whales also know the people were shopping on mobile. it is very specific what they are telling us. more than half of the customers did shop using a mobile device. cybern thanksgiving and monday, very specific windows of time. than fiveordered more toys per second from a mobile device. this gives us a snapshot here. it is by no means a
comprehensive picture of what was going on. it is sort of the little window into part of what was going on at amazon. >> a choice snapshot. what about the research firms? what do they say? >> some of the data is sort of chopped up. we have numbers that are desktop sales only. that is a big caveat. we are seeing some migration to mobile here. change in the% holiday season through december 22. 10% increase, i should say. on thanksgiving day itself, that was 21%. overall, you all these peaks of activity. overall company increase was 10%. the final online shopping week was completer of -- considerably shot there -- considerably softer. that is different than we have seen in years past.
had this sort of crunched holiday season. you did not have as much time because of the late thanksgiving. the anticipation was that you would see this sort of full-court press of shopping the whole time. that does not seem to have been what happened. you saw a slowdown that last week. >> julie, thank you so much. interesting to see what the numbers tell us. senior markets correspondent, julie hyman. let's turn to mcdonald's and a big oh. they are telling customers not to eat fast food. recommending selling unopened presents on ebay to raise money. a series of mistakes that they have made over the last several months. they have taken down their employee resource website, called the mcresource website. they quietly put this down over the christmas holiday. >> it was on wednesday.
when you are better known for high-profile gaffes than getting real content, that is a big problem. that has really played to mcdonald's website. a string of public embarrassment. they are actually created by a help company. they do not control the actual content. the goal is to help workers, but it ends up insulting them. food intoo break pieces to feel more full. it was a last straw. they are saying they will be back soon. a combination of factors has led to a reevaluation and they have taken down the website. the link has a relevant or outdated information. the traded unwarranted and -- scrutiny. they did not recommend not to eat fast food, just to make more
informed choices. >> when they stay out of context, could one of those the that this website was not just for their workers, but also for executives that work for corporate mcdonald's? >> it is definitely possible. they employ 3.9 million minimum-wage workers. they are the biggest chunk in the country. the majority of the people on the site are probably going to be the workers. they obviously do not have an au pair. perhaps they make more money on two jobs. mcdonald's can't even afford to keep one worker salary full. they need to have two jobs to make it work. the sisters do another series of issues that we have heard from mcdonald's. the broader issues they cannot seem to make their sales numbers. sales are down 8/10 of one percent. at .24%.are coming in that is less than half of their other peers.
it is not just mcdonald's, it is the broad, quick service restaurant. this is a huge issue that they have struggled to overcome. they do not have a new product. what happened to the mighty wing? they're having a hard time getting traction. >> they are not the only ones. they're the biggest of them all. and saidid a survey that they are the rest of the least. >> thank you so much. moving and shaking this hour, 1.5gm ceo is recalling million buicks and chevys. this is due to defective fuel pump brackets that could crack. in some cases, they could cause fuel leaks. this is one of the biggest
recalls to date for any automaker in china. the bracket should be easy to fix, the recall is a black eye for gm. they just slipped to number two in china behind a volkswagen. coming up, there is new budget agreement. what does this mean for washington and the country? we will separate fact from fiction. thrones" was number one on a very important list this year. ♪
>> you are watching "in the loop." we are streaming live on your phone, tablet, and bloomberg.com. the u.s. is heading into a new calendar year. there is little risk of another government shutdown. we should be relaxed. maybe washington will not interfere as much in our affairs. not so much if you listen to stand, who has served as a staffer. he is the national director at corbis communications.
you say that there are five big mistakes -- myths. the biggest of all is that this budget is going to prevent another government shutdown. you say no way. >> it does not prevent it. it makes it less likely. shutdowns are based on appropriations being enacted in time. now, we have a clock running again. tin 15th is the deadline. there will still be fights over appropriations. inconceivable. probably unlikely, but not inconceivable, that a budget could -- that a shutdown could occur. we could have another cliffhanger ending. -- earlierlast year this year when we went to the government shutdown, you had people like mitch mcconnell come out and say would not have one again. you do not believe that? >> mitch mcconnell may be the
republican leader, but he is not in charge of the senate. it is not clear that he is in charge of the republican caucus. yes, i think that the mainstream republicans and non-tea party wing would prefer not to have a shutdown. that does not mean it will not happen. it is not a rational process. number two is that congress has now passed a budget. the first one in years. why is that a myth? >> this bill did not deal with the whole budget. it just don't with the appropriations. that is one third of spending. it did not deal with medicare or medicaid or social security. it did not deal with taxes or the national debt. this is a small slice of the budget. plus, there is no budget resolution. they passed out last year, but they were on able to agree on a compromise. withis why we ended up this relatively insignificant budget deal. >> insignificant, although some
say that this was significant. -- usher in and year out of bipartisanship. different from what we have seen. you say that is myth number three. >> thank you for asking that question. this was an insignificant deal in terms of the impact on the deficit. it is not a harbinger of bipartisanship to come. the only reason they were able to get a deal is that they did not deal with anything controversial. there is nothing that happened here that would make you think they could get together on immigration or tax reform. all of the big issues will still be out there. they could still be bought out in a hyper partisan lay. there is nothing that should give anyone an error of partnership -- the idea that partisanship is over. saidere is nothing to be that paul ryan and patty murray were able to craft this together? two months is a relatively
short. of time. they did nothing with the deficit. they are taking great credit for reducing the deficit. remember that that is $23 billion over 10 years. that is not even a round number. point 005%. there -- there is not going to be another budget related crisis. you say that that is another myth. >> remember that right after this deal was adopted, paul ryan -- mitch mcconnell both said the white house said they would not negotiate on the debt ceiling. that will be sometime around the middle of march. republicans say they will demand some additional changes. probably spending.
the democrats will not give them. there is a potential crisis in front of us. >> that make sense than on myth number five. you say that there has been no significant change in fiscal policy. said, thest percentage of the total spending did nothing. it did not reduce the deficit. this is the deal that benefited congress. not the economy. it made it less likely that we would get a cut -- shutdown. they made them able to say that we came up with the deal. shouldn't everyone be proud of us? you should not be proud of people who should be making deals. they are doing what they were supposed to be doing from the beginning. note, this past budget debate did seem to shed some light on republican leadership. unwired john boehner is going to go and how he will stand up to tea party.
ryan -- and help paul ryan has put himself forward as leading the charge. they have shed more light on the republicans. it mayare right, demonstrate that there is a more open warfare. as opposed to behind the scenes warfare in the republican party. this was a perfect storm for john boehner. he knew he had the votes. he had democratic votes. he may not have that. he will probably not have that coalition again. you have seen him backpedaling on the debt ceiling. there are a lot of people who may have to bend over backwards to make sure the tea party will support them or at least not oppose them. i do not see this as the end of the d party. they will be around and just as strong until 2014 and 2016 as they were in 2012. >> thank you so much. happy new year to you. financial communications for
awarded an operating license. this comes as chinese officials look to open up the mobile market. that is the world's largest. thrones"er's "game of was the most pirated television show on air. were 5.9 million illegal downloads of the show. also topped the list. the latest every weekday at 1:00 and 6:00, only on "bloomberg west." "in the loop" returns in two minutes with the opening bell. ♪
>> welcome that. >> it is 26 past the hour, which means we are "on the markets." our markets reporter alix steel has the latest. goes here.s she futures are indicating an up. the open is flat. relative optimism. the last five days tend to be relatively positive. not a lot of volume. not a lot of movement. the trend is still on the upside. where we are seeing a lot of movement is on the 10 year yield. we are reaching a two-year high. the euro is also at a two-year high. the british pound is that a two-year high versus the dollar.
stronger currencies overseas. stronger yields here in the u.s. we are on the market again in 30 minutes. >> that's countdown to the open with the top 10. these are the only traits you need to know about. julie hyman is joining in. number 10 is herbalife. the target was raised to $90. analysts maintain that they are outperforming. there shares are up more than 130%. >> number nine is 3-d systems. a 52-week high. stock is up 150%. >> number eight is general motors. recallnese partner will cars due to a problem that could lead to fuel leaks. this is one of the biggest recalls. >> number seven is microsoft. chinese mobile phone makers are worried about their purchase of nokia.
they have asked regulators to make sure that the deal will not result in higher patent these poor wireless technology. number six is toll brothers. the ceo is telling -- selling shares. he is selling 50,000 shares. they are up 12% this year. they're the best performer. in their group. number five is disney. they are building a hotel on the island nation of hong kong. yearyland hit 92% in the 2012. no timetable has been set. >> number four is apple. the tech giant is seeking to ban sales of samsung electronics products. they were not issued in california. they're no longer on the market. a judge asked to bar the sale of tabletsn -- of samsung
that infringe on apple's patent. >> number three is a merger. beechcraft 41ing $.4 billion. this will help them to boost their propeller driven planes. >> number two is amazon. they said that this would be the best holiday season ever. more than 36 million items were ordered on cyber monday alone. amazon also added one million customers to its prime program. we talked about enough rainbow looms to go around the globe. >> number one is twitter. a broke their own record. shares are on a tear. they have surged more than 20% just this week. it was just last month that they have their ipo. cut their shares to underperform from neutral. joining me is the owner of can i
capital. we'reeople are saying going to continue the rally into next week. you have a warning to investors on what? >> i am warning investors on bonds. nobody seems to be talking about the fact that the 10 year bond yield just ticked over three percent. this is a big deal. if you want to do rail a stock rally, if you want to derail this turnaround in economic growth, have rates go up. simple as that. investors have to be having an eye on rates. that could absolutely change the game. the bubble does not exist in equities. the bubble is in the global debt market. especially in japan. what i find troublesome is that a lot of investors think that as long as a country can print its own currency, it will not have problems. it will not have higher yields. nothing could be further from the truth.
a bond is an iou. if you weaken the currency, that encourages me to not hold up bond to maturity. i will sell them off and drive rates up. that whole idea that a sovereign nation can defend itself from a bond crisis because it has its own currency -- that is not historically accurate and it is nonsense. you look same time, if at bond yields as a potential risk, we are talking about a gradual increase. we saw a more disruptive to the stock market and make, when you saw a violent move up in rates, but this is a pretty orderly step up in rates. it is not taking anyone by surprise. -- let's look at the outcome of that. i canoes that mean? deliver mortgage bankers right now who are saying that the number of calls they are getting for refinancing and people wanting to look at new homes has
low down. why it is rate sensitive. this real estate. raisingy calling this of minor alarm bells. when i see it firsthand, that tells me that part of my hypothesis is true. we need to keep an eye on that and be careful. >> thank you so much. the owner of kenai capital. craig, thering in managing director and global head of equity research at aba dimensions. he is looking for laggards with improving fundamentals. we have seen several companies come out with earning reports. they look like they are deteriorating. you say there is opportunity here. >> that is right. think about thanksgiving. while we are still not in the best -- sales growth environment, things are getting a little better.
these are stocks that have been in stock price and economic performance. >> and overall? so there are a couple of stocks to put in that category. one is baker hughes. alix steel is digging in. >> they had a pretty awesome run. up by 35%. it is an oil services company. they may be getting more business from fracking and deepwater drilling, but the issue comes with pricing. will they be able to keep their margins? you also have exploration and production companies cutting back on their budget. there being more efficient. will they be able to keep up this kind of growth that we have seen? >> what are the improving fundamentals? is that itare seeing is not as bad as it was one year ago.
we are starting to see -- with an hour framework, the most important observation we can positiven incremental inflection. we're saying that for baker hughes. companies like halliburton are far better in terms of economic performance. baker hughes has been the dog of the -- four years. it is really cheap. market is starting to matter again for the first time in a while. since 2011, 2000 12, and part of this year, the value did not matter. >> you are saying that that is so cheap that that is where you'll get the best return? >> you want to look for value. and you want to improve on fundamentals. they have been cheap for a while. you need to see the shift. when you look for a change and
you look in investment capital, the balance sheet involved is small. growthovement in sales does not have to be incredible, just small improvements. >> to get to that inflection point. >> to get the scale out of their assets. valuation and improving fundamentals is another description that you applied to intel. julie, tell us what is going on with intel. >> they have had a decent year. they are up in line with the markets. semiconductors have had a very good year. in part, because of the supply and demand picture. that intel is up about 25% year to date. the semiconductor index has risen by 38%. it has actually underperformed more broadly. they are undergoing a strategic change. it came out last year and said that sales would be little changed in 2014.
stocks dropped. they also said they would focus more on designing chips that clients want, rather than what intel wants them to one. they also let other chipmakers makes chips at factories. it seems like 2014 will really be a transitional year for intel as it starts to make these changes. >> would you agree, craig? >> i would. intel is a unique company. they are a complete anomaly within semiconductors. it is not just driven by supply and demand. we have seen i get better over the last year. they have huge secular issues. if you think about the mega tech stocks that have had secular problems, usually it does not end well. they cut back and try to improve what they can. the market sees through and slows down. for intel, they have taken an aggressive approach. they have put a ton into r&d
programs. they have become a better producer. we are starting to see -- we have seen a signal over four years. we think the stock could be very powerful. >> thank you so much. global head of equity research at eva dimensions. coming up, a battle for german much rate. to toppleing tends the competition. stay "in the loop." ♪
scott covers twitter at smc capital. because theymoney need to make their goals or what? >> that is a lot of what is going on. the way we refer to it is really favorable supply and demand circumstances. you reference one of the contributors to that. that is fund managers chasing data. that is these high volatility stocks. they provide increased opportunity for alpha. you also have these folks who are sitting on big paper capital gains. they do not necessarily want to sell at the end of the year. their tax bills are going to come much sooner than if they waited a week. that is the beginning of the process. we see a number of other factors as well. >> before i get to my other question, what are the other factors? that, thereon to
really are not a lot of shares of twitter available for purchase right now. we see about 700 to 800 million shares outstanding. point 5 million shares were supposed to be sold in the context of the ipo. that is a very small percentage. 23 million of those shares have been shorted. there is really not a lot to choose from. that is driving the supply down. >> that make sense. things could change. as we come into the new year, people are looking at twitter. maybe it hits $80 by then. maybe they should sell. >> that is one of the reasons that we have been sticking with ourselves on the stock. a lot of what has gone on over the last couple of weeks is really hard to explain rationally. we think that reality is going
to become more obvious as next week in the new year began. that ition to the things referenced, you have the company reporting earnings probably late january or early february. you have a lot of exploration taking place. companies, at other you often see secondary offerings around that timetable as well. we see the potential for a number of negative impacts to manifest themselves. the valuation seems stretched. it seems excessive. now it seems like something far beyond those two things. we think that investors would be kind of well-suited to sell this stock. >> we will see how it pans out. thank you. the head of equity research at s&p capital. coming up come out he looks to speed ahead of bmw. details on the other side of the
>> timeout for the global outlook. audi is looking to replace bmw has the largest maker of luxury cars. they plan to invest over $30 billion from 2018 to develop new models and technology. they are now selling cars annually. matt miller is joining us now with more. it is really interesting because i have seen more and more audis on the road. they have really pushed further into the u.s. market. >> there has been a huge resurgence in the last decade. they have met their targets early. sell 1.5 million vehicles annually by 2015. they have already done than 2013. if anything, i hear complaints
that they are made to well and they are too easy to drive. holdss where bmw kind of its ultimate driving machine brand as being a drivers car. i'm assuming that some people like the fact that it is easy to write. jamie, do we know how they will deploy $30 million? thatey have indicated they're are planning to invest more in electric drive and other powertrain. they have built up their model line where they have lines that match up with the big volume bmw and mercedes cars. they are more spurted to drive than the mercedes. they are notnt, all the way to bmw. they're a lot easier to use on the interior. the i drive controls had a rocky introduction a decade or so ago.
that has been an obstacle for bmw. audi has a very smart system. >> i think you would agree that the i drive has improved substantially. i think that system is now amazing. at first, it was absolutely confusing. i want to also -- we have some pictures of the audi concept cars. they rival the sexiness of the i-8. -- concept isnt an incredible design. >> is that it? concept.s the quattro it made their reputation as a sports car maker in the 80's. there is a new concept that kind of looks like a ferrari boxer. i think that the sexiest thing on wheels -- hopefully they make it. they kind of on the market as the sexy sport cars. they have the sexiest electric car out there as well.
this is the direction that all carmakers are going. >> will will bmw deal? be launching 25 new models this year and next year. i feel like bmw already has the market on model proliferation. there is a model for everything. there are six different versions of each one of those models. i do not know if you have done any work on this, but it feels like they are making too many cars to me. bmw definitely has the challenge of being the incumbent. they do not want to give anything up. they are trying to preserve their ground and their leadership. audi is coming after them and they're trying to find spots where they can pick things off and be a little easier to drive. they're trying to fit only the sweetest niches. with bmw, that is the main brand of the company. with audi, they have a sweet spot in the massive portfolio
that is volkswagen. they are premium. they are not that much different than the old slackens except that they are just nice enough to charge more and make enough money. aboutks like in will sell $100 billion to beat out toyota and general motors. they have a plethora of brands. --how does >> 60 different cars to choose from. >> how does audis price compared to bmw's? >> jamie, take this one. >> a little bit lower. still a premium for bmws. the brand has some magic. i remember being at an analyst presentation. the best loyalty was to bmws. she said i do not know what they are feeding them. the guy next to her said they are feeding them bmws.
if you have one, that is what you want again. >> jamie, thank you so much. elite betters in our detroit zero. and that miller. "12 years aseas, slave" has apologized for -- the posterster has been removed. that does it for this week on "in the loop." we are on the markets next. have a great weekend. ♪
is 56 past the hour, which means we are on the markets. i am alix steel. we're 30 minutes into the trading day. let's get you caught up and see how the markets are doing. it is green across the screen. the s&p 500 is writing higher to all-time highs. only three more trading days left in the air. the last five days tend to be positive. keep in mind that volume is probably very light because of the holiday shortened trading week. now it is time for futures and focus. oil forces is -- where the action is. topping $100 per barrel for the first time in months. where are we going from here?
alan harry is journey me with his forecast. did you see this coming? >> i actually thought it would get to $100, but come on. i was surprised it pulled through. >> what was the catalyst here? >> i think it is and if year. we have people long on the marketplace. $100 is in easy reach. what happens from here is very interesting. doesn't settle above $100? 100.56 is what i'm looking for. if it settles above, we have more upside. if not, off we come. >> fundamentally, the inventory on the u.s. gulf coast is taxed toward the end of the year. is it possible that part of the run up is depleting inventories and moving them off shore and making them into products, but it is not underlying demand? >> we will have to have a lot more cold winter to keep that
idea of supply out of the market. i do not think we have a cold enough winter coming up in the next 3-6 weeks to justify the move though we have made. >> where's the downside then? thef it does go back below $100 level, we have a long way down. we could see $96 first. in the next year, if we do not have a cold winter, we see $89. there is an oversupplied market for 2014. >> is your strategy to be selling here? >> yes. i have been selling for 90 9.5. i will sell all the way up to $100.50. isit seems like one theme what continues overseas. in libya interior and sudan. it does not necessarily affect wti, but it can impact the price. what do you see in 2014? >> a lot of the suppliers that were out of the market or could
not get the supply, they are coming back in 2014. i think that libya gets up to full production. iran looks like it may get production if they keep going along. i think that we have iraq back to full production. we have a lot of big suppliers coming into the market that were not there in 2013. >> fair enough. i just want to turn to natural gas. do we see five dollars and what happens then? >> i do not think we see five dollars, but we will rally. i think we will get a cold enough part of the winter in the next three weeks to get natural rally once again. $4.77 ore get to $4.87. >> more constructive on natural gas short-term. take advantage of the recent increase. take you so much and we appreciate your insight. we are on the markets again in 30 minutes. market makers is up next.
♪ >> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. all a twitter. shares have taken flight. we talked to an investor who says twitter should not be flying so high. they say great album. retailers say she gave them the shaft. ordinary man gets 18 of professional bodyguards. what it is like to have your own detail. welcome to "market makers," i am scarlet fu. haveam olivia sterns, we so much great stuff. figuring out what is going on with twitter. come on we will be talking with the onset and introducing you to the best honey and america. >>