tv Market Makers Bloomberg May 8, 2014 10:00am-12:01pm EDT
at 2011 risk off levels. in,hank you for coming interesting subject. "on the markets" again in 30 minutes. "market makers" is next. ♪ >> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. cable consolidation, executives from comcast and time warner cable are back on capitol hill today. defending their planned merger a while talks between at&t and directv are heating up. >> einhorn's target, while a short seller is wrong about why his id company should be worth more and why he plans to keep growing at a rate investors find acceptable. the nfl draft starting tonight, why trading up almost
always is a dumb idea. you're watching "market makers" on bloomberg television. thursday in new york city, i am erik schatzker. >> i am stephanie ruhle. how do you feel? >> i feel great. >> i'm not sure how i feel. >> these are the top business stories from around the world. barclays will cut 7000 jobs in its investment bank, about one fourth of the total market. trying tonkins is reduce his dependence on fixed income, which has been its biggest source of revenue. a big jump in homes being sold for cash according to the tracks 43%according realty tracks, were all cash in the first quarter. mortgage lending has plummeted because rates have been rising and lending requirements have become stiffer. macdonald's best
month, same-store sales were up 1.2%. mcdonald's has been struggling to attract consumers because of growing competition like talk about -- like taco bell. there is a consumer confidence problem. show deal ora game no deal, top executives from comcast and time warner cable are back on capitol hill defending the proposed $45 billion merger. lawmakers are concerned about what the tie up would mean for prices. yang yang is monitoring the hearing. n arekind of receptio they getting? >> it is still early, about 30 minutes and. neutral reception. for the most part, the chairman of the house judiciary
subcommittee on antitrust said their role is not to approve deal or no deal, the time warner cable-comcast merger. instead, this is a public forum, will consumers be better off? take a listen. the structure and economics of the industry continue to rapidly change. the challenge for policymakers and antitrust regulators is to determine how the consumers' interest is best served and the evolving environment. that environment changing technological environment is something that time warner cable and comcast will try to strike today. the witness part of the panel underway now. for time warner cable and comcast, we have david cohen of comcast. and robert mark, ceo of time warner cable, representing the merger. they are here to really stress
three points. pro competition, proconsumer, and pro-public interest. the three p's. they actually submitted the same exact written testimony as they submitted last time around when they made their case before a senate committee last month. no major changes on that front. is thing they are stressing that there is no overlap of the geographical coverage of time warner cable or comcast. they say this is not an issue of competition. we will hear from those who are opposed from the merger, we have three groups. american cable association, the rural media group, and another group. each representing a different stakeholder in this today. an internet provider, a small media company, and then a rural
network. all stakeholders will be represented but lawmakers are really looking to see what this will mean for consumers. the big question they will have is will americans see their cable bills rise. they are not here to make any sort of approval for the deal at this point in time, the consensus seems to be that the deal will go for it. what it will look like is something still to be determined. the update. for tune into a "request" special, "comcast -- tune in to a "bloomberg west" special, "comcast everywhere." with senator al franken, opponent of the deal. and time warner cable threatened to shake up the internet and cable landscape, talk of another deal in media. at&t in talks to buy directv. jeff mccracken has more details.
that directv known or dish might be in play. >> bloomberg reported that. and it sounds like these negotiations are proceeding to the point where it is getting serious. the driver seat here. there's a good chance you will see at&t do a deal. the question is whether it ends up with a dish or directv. this that lot about is appealing. it has a lot of spectrum. i megahertz is the number have been told. that spectrum is worth somewhere between $12 billion and $1 billion. -- that iswhy a tub why they want to get into the tv business. >> it is a national world where
the phone companies and the cable companies and internet companies are together. we face the real possibility that in this calendar year we will have a comcast-time warner tol, the comcast sale charter, a sprint-software, and whatever, happened with dish and directv. how will al franken and the fcc handle it if all this comes together at once? what does it say about what is going on in this industry? does directv have -- i guess so many questions come to mind. at&t is interested in dish or directv. is charlie ergen, founder of dish, interested in at&t? >> hei is. this is a dance. two of these three will end up together and the other will be on the outside. >> there is no possibility dish
and directv could merge first? >> i do not want to rule anything out. >> purely speculative. the driver seat and they will pick one or the other. partially the question out there is from a regulatory standpoint, what will regulators allow. dish and directv tried to come together before and it was blocked. at&t could have done this years were at 40 and now shares are north of 80. they did a decision to go after t-mobile, regulators blocked it, now they are talking to directv at a heftier price. >> another eel, t-mobile-sprint. we heard from the ceo of ceo,che telekom, parent of he does not think regulators will let this happen. >> someone is negotiating
through the media. through the bloombergs and the journals and the ft's. >> i get it. when these tru -- sit down for talks, deutsche telekom got burned when they did a deal with at&t but they walked away with cash and spectrum. if they cannot get certainty it is going to get through regulatory approval upfront, they are going to want a lot of money up front -- a termination fee if the deal falls apart. 's preference is if it comes to a higher termination fee at a lower price or a higher price at a lower termination fee, i want option two. i will pay you more but i do not want a big termination fee. in some respects he feels it incentivize as regulators to block the deal. a high termination fee, great, put more money into t-mobile and
made them a stronger number three or number four. >> are regulators going to feel like they cannot have both go through? >> you have this dynamic where every once to draft behind the comcast deal. the thought is they cannot allow blockt to merge and then a merger with t-mobile. >> if they block time warner-comcast, you know what your fate will be. standpoint, it shows how one will cause or get other people thinking of another deal. we have been writing about at&t doing a deal, we were looking at vodafone in europe. not to roll out vodafone. they could do this deal. att's cfo has told us the
window of opportunity is narrowing. >> vodafone is a costly asset, even for someone the size of at&t. >> jeff mccracken with the latest on the changing landscape of media. >> we're talking investing in india. some say they are plenty of opportunities but plenty of pitfalls. two emerging-market fund managers. >> david einhorn told us why he is shorting the stock. you will hear from the ceo of why einhorn is wrong. this is "market makers" streaming on your smartphone, tablet, and amazon fire and apple tv. ♪
founder and chief investment officer of core investment presented on monday, it is all about india. the world's second most populous nation. is anotherand so india enthusiast, portfolio manager of a fund with $4 billion invested outside the u.s.. what is the appeal of india right now? why don't we start there. a lot of folks are watching who have heard about the tremendous prospect in india. no also there has been shortage of disappointments. why now? been aas always challenging environment. there is a host of companies. if you look at the number of listed businesses, 5000, more than you find -- >> 5000? >> more than any other market in the world. >> are they all small caps? zero tohey range from several billion market cap.
we can find options to do bottoms up research with them that. that is what we are excited about. doit is important to bottom-up research. you do not necessarily want to look at india as a macro story and just buy an index. >> it is a mix of the two, royce is a bottoms up stock picker, we are a long-term investor, buy and hold strategy. there is an appeal to the consumer story in india. you are looking at a rapidly growing population, a rapidly growing middle class. bea years, they are will more indians with disposable income than in america or the euro zone. currently the level of consumption per capita is $800 theyear versus 35,000 in u.s.. you have a totally unlettered consumer. household debt is at 10%.
mortgage penetration is at 12%. those are in the 80's and 90's here. savings rates are 30% of gdp versus 4% in the u.s. you have a long runway of growth. you look at penetration rates of consumer products, india wonder from zero mobile phones to 900 million mobile phones in a decade. the completely skipped landline infrastructure and went directly to mobile. it has huge implications for the economy. you now have less than 5% of indians with air-conditioning or a car, less than 15% have a washing machine or refrigerator. we look at businesses in travel or health care and see a long runway for growth. >> a growing middle class. you have a specific trade you like, what is it? >> we were honored to present, we talked about india's 900 million cell phones but only 19 90.ion smartphones --
exponential, we talked about a telecom towers business in india, it has a $7 billion market cap with 25% market share, it spun off about a year and a half ago. we think that business has gone from oversupply to every demand. there is an excess of demand but the market is not realizing that. that is an opportunity we think plays into some of the trends david mentioned but is driven by bottoms up research. it is cheap, people are not realizing -- there are good and bad businesses, this is an example of a business we think is going from good to great and we can buy it at an attractive price. >> is there an american analog? exact samen tower -- business. >> different stage. >> earlier stage of growth.
faster growth ahead. discountedicantly valuation. it is a new company for the markets and we think very positively about what management is doing. >> where you concerned about? concerns we would characterize as rearview mirror concerns -- competition building new towers, data stops, regulation -- >> capital-intensive business. >> it was overbuilt, now we think it is supply constrained. the regulators have done their first telecom option in february. a lot of the concerns have been dissipated and we can buy with a large margin of safety and own for many years. >> david, what do you like? >> just a minute, david's ensemble. office charts. -- off the charts. kedi have a wife who worde
in fashion. #ootd, outfit of the day. that areia, things connected to the consumer theme. i'll try to avoid stuff that has heavy ties to the government. the government is not very reliable, there is more opacity and potential corruption. stuff that is independent from thomasernment, i like cook india, a travel agency. >> a travel agency? >> i feel like that business could not be more dead. >> things are different in the emerging markets, less than 1% of indians travel outside the country. 5% of chinese. this is a brand in india that is trusted. they are doing more, they also do foreign exchange, a very profitable business. their brand comes from the
travel agency. that is one that we like. a pharmaceutical company, one of the things indians do better than anyone else is pharmaceutical production, more than half of arefda approved facilities in india. it is playing into primitives and -- it is playing into rheumatism and malaria exports. these are companies generating 20% returns on investment capital, important for us. growing at 20% per year. proven businesses. whoever wins the election, we have got the world's biggest election ever coming up here. mick would agree, we are trying to find companies that are going to operate well. >> how important is the election? >> the optimism is built in from a very low base, the last few years have been quite challenging. there is a triumph of democracy that democracy requires consensus.
when we invest we do not rely on ourcy changes to drive investment return. it took us eight months to set up an office in india and i grew up there. >> that says something. we find individual companies that operate regardless of the environment. >> terrific conversation. david and nitin. >> first time having nitin on. you outfit yourself with your look. coming up, athenahealth striking back. response tos ceo david einhorn, who is shorting the stock. ♪
>> welcome to "market makers." i am excited, erik was beaming about how good "on the markets" is about to be. hit it. >> talking about tesla. this is a company -- élan musk is changing the world. stock down about 4%. why? tesla's earnings reported and the model s delivered 6457 cars, up from 4900 80 euro but it was not enough. -- a year ago. but it was not enough. but what of the century, rates tesla a buy. "beat but not by as much as beat."pected them to these people -- the
>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> you are watching "market makers" on live or television. >> a big morning on "market makers," david einhorn's latest target is athenahealth. a company that provides outsourcing services to physician practices. einhorn says it is a tech company that has seen its shares too big, too fast. this is what he had to say. >> it is a good business with a good strategy and a good product
that is doing good things but its stock is at the wrong price. >> here to defend his company, athenahealth ceo jonathan bush. thank you for joining us. >> thank you for having me. >> walk us through your growth targets. in 2009 you said we could grow 30% a year and increase margins. somewhere it seems like the narrative changed. you said we need to take that money and reinvest in our product. why can't you keep growing, why the need to reinvest customer >> we believe we need to grow 30% a year and we can and should. to grow more than that it will be hard to build infrastructure and if you grow less you will not be able to build a network to be relevant. you have got to grow the margins of all products to make them scalable and reliable in a software service and a network company. our margins have improved in product.
when we add new products, those start at low margins and as we grow them and remove the work that is rotting the walls of go up.care, the margins >> what do you mean rotting the walls? >> you have been to the doctors office, the clipboard is still there and the phones and faxes. it is like the movie "brazil." the future where the internet never shows up. we have a business model that allows us to bring health care onto the internet, the health care clout, to eliminate that work. about david einhorn's criticism is he likes your company and he likes you as a ceo. >> like in the south when they say "bless your heart." >> he just thinks your stock is overpriced. >> you are a valuation guy. >> how do you defend valuation? do not.
i know we are worth $1000 a share as some poor in the future. it is up to david and others to decide -- >> you are $100 a share. >> how do you come up -- if you do not know valuation -- davidt i know, what missed is that he does not see what a software enabled service is. we are not an enterprise software company. we are not even a sas company, we are a software enabled service. we give out internet native software to our customers for free. then we use that software to deliver a series of complicated services. and then we start to realize this extraordinary network effect where the margins go up and up. >> can i interrupt -- why did your growth rate increase -- why didn't your growth rate
increase when you cared less about margins? have high gross margins but i want to put the money into r&d. what are you going to do, pay 40% taxes and stop growing? we need half of the doctors. doctors. of >> walk us through the network effect, an issue einhorn picked up on, he says it does not apply to athenahealth. are 52,000ere caregivers who in their office look at an ipad or laptop with athenanet. they are all connected to one software, one database. every time anyone gets a claim get to the analysts thee and build code into
network and no doctor ever gets that claim denied again. the margin associated with following up an appealing the insurance company turns into a new level of profit. wants to, a doctor send a patient to a laboratory. athena will build a connection to that laboratory and any doctor in the country who ever wants to send a patient who that laboratory is enacted like a new cable channel. margineates a huge arbitrage. what used to be a athena sending a fax becomes a real-time margin -- >> it is a beautiful idea. you had promised something else. you said net income was going to grow. >> i messed up. if i said net income is going to grow infinitely and then you see this opportunity basically, the big arbitrage for us is suddenly we have got lots of doctors,
half of our doctors work for hospital companies. those hospital companies are saying you must push this network in through our hospital. we do not want the cloud to happen outside the hospital and be stuck on enterprise software inside the hospital. they are asking us to serve them, let's double down on r&d. we can hire as many developers as we want, let's do it. >> do think that is why einhorn could say i like this company but what was promised is not what we are getting. >> he is a value guy, he likes apple now that jobs is dead, all they're going to be doing is driving up. steve is not going to be demanding a new product. he does not like amazon. i am not sure we need drones, maybe i am wrong. i am in that line of thinking, which is not his. and those who buy our stocks should not the bottom watching value investors. they should be people who dream
of a cloud for health care. >> don't you want value investors to understand your company? if i was the ceo of a company, i would not want this pie in the sky. investor whoan does bottoms up work. >> the investor is einhorn. >> i'm looking forward to the cage match between einhorn and morgan stanley. they are doing the pricing. >> you think morgan stanley is going to have a cage match against david einhorn? think morgan stanley's sell side research can match with david einhorn does? to be doing well financially. ollie am saying is i know that this health care cloud. it is not a pie in the sky. million exchanges a
week. >> has ea get inside hospitals, that is david -- how do you get inside hospitals? that is david's concern. >> we already have hospital nnounced we just a a new service. it is worth noting that the hospital chains, like the largest nonprofit catholic chain in the country, has chosen us for billing and set to doctors if you want to keep the enterprise software you can. six out of seven have switched to a athena even though they have new enterprise software. enterprise software is not a competitor, it is a previous era substitute. as the cloud rises, you throughout software. >> do you see a few networking
in a hospital alongside epic, for example? >> we are doing it today, a children's hospital in california, they are on the athena ipad. >> do you see yourself -- >> they can see everything in epic from athena. >> could you partner with other? -- with epic? >> absolutely, they do a good job. >> they have spent an awful lot of money trying to persuade hospitals to stick with the enterprise software solution and not to go -- how do you compete? >> the first thing the hospital thinks is must fill beds. piecel the doctors on a of software where it is impossible to send patients anywhere but us. her prize is perfect for that. theyey cannot do that,
want loyalty. now you have doctors on athena who are saying if you connect to you.a i will use now a hospital has a decision, are we going to try to be the ?uy who wins in a market >> you believe hospitals are going to have a harder time bringing doctors into the fold unless they are willing to connect with your software? you bet. the average hospital today is that to a $180,000 per doctor per year loss. that cannot last forever. even if it does, they are not going to be able to buy the other half of the doctors but they will want patients. >> how much does it cost for a doctor to use athena year. >> as we get your collections we get a bigger --
>> let's say i am dr. stephanie, what do i pay you? >> you are a solo, some sales guy says -- >> what does it cost me? >> 6% of collection plus a dollar every time you close a loophole -- >> give us a number. >> $30,000 a year. >> that feels like a big number. they are paying 40,000 today and losing about 6% of collection arguing with aet na. >> on that note, we are going to end. ofthat is the job athenahealth. >> we thought david einhorn was quirky. >> i am strange but i have found
plaxo -- pumpingone is not yet, the battle has no end in sight. senate democrats considered voting to force the administration to force keystone after years of delays. some of the big issues facing the energy industry. the light is a democrat from texas, former mayor of houston and served in the clinton administration. he is author of "america's fiscal constitution." how distressing is it that
keystone has become an issue that is being decided as a matter of politics and not on the merits. , it iseven good politics like someone taking a sledge try to a sledgehammer to kill a fly. we have a pipeline building boom it is a lot safer to transport petroleum by a pipeline that it is by rail or tanker. i am an environmentalist and i personally take these warnings -- >> an environmentalist, a democrat, and pro-keystone -- you are in the minority. bethat is what i find to strange, it is a safer way to transport petroleum then rail or tanker. petroleum asuse of a transportation fuel is things like fuel efficiency. it is not where the oil comes from. the oil is going to be supplied one way or another.
if you want to reduce the emissions from petroleum, which l fuelll for, have al economy standards and diesel economy standards. you do not do it by not building a pipeline. >> why is it getting lost in translation in d.c.? groups,environmental who i generally sympathize with, have gotten on a limb. >> there are some state governors with them. was sympathetic, if you have the mayor of a big isy, not in my back yard everywhere. take a look at canada, for example. in canada, the shortest route would be across british columbia. they will not allow that to happen. >> is it just a symbolic fight? >> yes. >> that is unfortunate. >> when we have so many important things we could be talking about in energy policy.
>> let's talk about that. you are a democrat. you advised energy companies as chairman of lazard. the energy industry is already looking with trepidation at the situation swirling around keystone. what about the new clean air rules we are likely to get from the obama administration by executive order in the next several weeks? what happened? going to increase demand for domestic natural gas. which has a smaller carbon footprint than coal. we will see continued displacement of coal and coal fed power plants, which will be good for the business. >> so that makes it a good thing? >> look, i do not think politics what black people think the war on coal is terrible --
it is a matter of science that there is more carbon atoms attached to coal than a methan e molecule. in the past, we have a legitimate concern about affordability. an that we have such abundant supply of natural gas, it makes sense economically. price,hat to say that natural gas is cheap. and environmental issues should trump economic interests like jobs? produceody will have to the energy supply. but in general in the u.s., we should not have industrial s we will use a dirtier fuel with long running costs because it will hurt jobs here rather than there. >> i would love to get your
thoughts on russia and ukraine. you say sanctions are not the way. >> limited sanctions. but we are not going to invade the ukraine. there is a lot of for the u.s. to make speeches. speeches do not affect foreign policy. there are a lot of problems and ukraine and putin has got himself in a pickle. >> all-white is chairman -- bill white, former mayor of houston and author of "america's fiscal constitution." >> we will tell you where teams should be looking when it comes to the nfl draft. ♪
i want to bring in mother's day. it is an event. scarlet fu is here to show us why so many teams are doing it wrong. int is how you want to bring mother's day. >> for some others, especially if you have a fantasy football team. >> no mothers in my house. nfl's first round draft picks get the most attention when it comes to performance in the first five seasons of a player's life. a white line tracks performance, compensation is yellow. both he gave the first round but taper off. are first round picks the most viable? richard of the university of and an academic from the university of pennsylvania looked at the surplus value, the difference between the two lines, which measures performance a draftee brings in
his first five years versus what he is paid. the sweet spot is in the second round. >> if you go for the superstar first-round pick, the rg iii and give up second round picks, do you know what a dangerous sport football is. they get injured wait more than basketball players or baseball players. upyou are better off giving a high pick and picking up four players and betting that one of those will possibly be a good bet versus that one player. and football is it more about quantity than quality, that is not the case and basketball. >> you gave the example of rg iii, let's look at what the redskins gave that to that rams. their first round pick this year, their first pick in 2013 and in 2012 their sixth and 39th pick. rg iii is a great player.
and injure. could they have gotten more by not giving up so much russian ? for ahelped me look couple names, bobby wagner was a second round pick in 2012, he helped the seahawks to a super bowl win. ash and jeffrey -- alshon jeffrey and eddie lacy, he made the pro bowl. >> that is an outlier. >> true, there have been first round flops. a player who only started 14 games in his career. >> that says as much about the scouting as anything. >> everyone relies on scouting and anecdotal's. off the charts.
>> live from murder headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> why the nba got it right and the other guys got it wrong. >> everyone is posting pictures. how companies can turn selfies into sales. >> replaced by a robot? welcome back to market makers. i'm stephanie ruhle. >> and i'm erik schatzker. we will fill you in on what's happening around the world.
there may be more consolidation in the paypal business. at&t is in talks to buy the satellite television company, directv. according to people familiar with the matter. likely to scrutinize any deal to find if there are antitrust issues. -- to build as past the new presidential helicopter. $1.2 billion. the team includes lockheed martin. the earlier program was canceled because of costs. taxpayers will get billions from fannie mae and freddie mac. they will pay the treasury more than $10 billion. the two companies are required to pay the government their profits for the time being. together, they have received 180 $7 billion in taxpayer aid. >> today on bloomberg, we are focused on that comcast deal.
it needs approval from regulators. that is requiring a huge and expensive lobbying effort. bloomberg west's cory johnson has taken a look at comcast government connections. >> in washington, there's lobbying and lobbying. between comcast and time warner cable is an exercise in lobbying. comcast has spent $18 million in lobbying. more than any other company. a lot of that money went straight into campaigns for politicians. $25,000 to harry reid. the real power of washington is often given.
is alsoof comcast cable the chairman of the national cable and television -- the and -- much of it going to the same politician that comcast contributed two. that made it a top five lobbyist in all of washington, d.c. president obama named him the chairman of the fcc. at thfor anyone at the fcc thinking about their next job, chairman is now the she left the fcc to go to comcast. whos one of 107 lobbyists
will ease all of comcast's and influence to encourage washington to pass this deal. gameat was like a dizzying of twister. cory is here with us now. who else as opposed to the steel? -- this deal? >> we have to focus on the business aspects here. it hundreds of businesses are opposed to this deal come including some of the biggest names in internet. this not just about cable tv and cable tv programs. this is about internet access and controlling 19 of the 20 largest cities. countries like amazon, netflix, these bigja, all of into companies opposed to this deal for fear of the power that comcast and time warner would yield. >> where is netflix on all of this? >> they are opposed to this deal as well. netflix has a special deal with comcast where comcast is
allowing netflix signals to go faster than competing signals hulu and amazon. think of the power that comcast will have. maybe you have a choice between amazon prime video, netflix and comcast expanded the and you want to watch a movie. you know comcast will download it faster without any buffering. that wouldhing prevent comcast from choosing owners and losers among all businesses on the internet. not just for video programming. for everything. that is the great concern here that a lot of businesses have. >> thank you so much for giving us an update. for everyone out there, be sure to tune in to a very special bloomberg west today. and lee chang and her team is going to have an in-depth look at what the comcast-time warner cable deal means for the cable industry. they will be joined by al
he's the king of gambling. >> the irony. maybe the hypocrisy as well. we are making rounds on the las vegas strip are for something like that. he has come out -- you know sheldon adelson. he is the republican donor who spent $100 million to try to put mitt romney into the white house in 2012. now he is putting that money to ban online gambling. he says it's a moral obligation he feels on his part because he says once gambling goes online, is going to exploit poor people. first --ay for you >> coming from the business, i want to make money from those who can afford it. i can't tell over the internet who is underage. i can't tell who has financial difficulties. is not gamingho
responsibly. i can't tell if money is being laundered. >> how much are you willing to spend to stop online gambling? >> whatever it takes. there is a lot of -- i know you are looking at me like, come on. there are business reasons why he does not want this to happen. he does not want them to stop going to his casinos. >> exactly. -- he's right.ay >> let's go. it doesn't happen ever. >> can tell over the internet
who is poor and who can afford to gamble. what efforts does the casino make to determine who is wealthy enough to pull the handle on a slot machine? >> come on, eric. >> like riverboat gambling, do you think that doesn't attract a bunch of poor folks? >> that he can answer that. there are guys in standing at the door of the casino saying, i'm sorry, you are too poor. >> underage, yes. we have all been to some of the casinos on the native american grounds. -- casinos in mississippi >> cleveland. incomee are a lot of low people who go to those casinos. atlantic city, we all know that. there is fallacy in what he says there. or pitfalls. it's also true that people who
would go online to gamble are likely also the poor. it could eventually lead to more high-end gambling. >> you probably don't have internet access. more into afall true gambling addiction if you are sitting there at home in front of a computer rather than trekking to a casino. i'm going to side with the billing error on this one. >> he can come out and say he is against online gimli because he makes most of his money overseas. 70% of his revenue comes from singapore. worthed about how he is $30 billion. worth comes from asia. this is a guy making money overseas. he can come out here in the u.s. and be against this market. >> he is not only outspoken against online gaming.
his outspoken about everything. how does he explain himself that way? >> let me have him explain that first. >> i tried to be honest when you asked me a question. -- i flunked to diplomacy 101. >> he is always outspoken. he controls las vegas. most of his net worth is in that company. he feels he can speak out and not be afraid that some activist shareholders will come in and try to oust him. we stand on top of a $30 million fortune, somebody is going to take you down. been able to fight them off. >> he does not feel as though he
needs to be diplomatic. >> he also took that opportunity to take a swipe at some of his competitors. he said, i am entrepreneurial because i take risks and i speak out. guys at thee other mgm and caesars are just worried ir stock options. he can't help himself. liu, thanks so much. an exclusive interview with sheldon adelson. such a treat for all of us. coming up, making money from all of those selfies? the company about that helps other companies do it. stay with us. you are watching "market makers." ♪
the century. i'm talking about instagram. acquired for just $1 billion. becould instagram actually the world's most powerful social media? that opens up an enormous opportunity for companies. let's bring in the cofounder and ceo of a company that helps brands such as coach and new balance monetize photos on platforms like instagram. it you know him as a marketing professor at nyu. good morning. you, scott, you are huge on instagram. >it's a unit of facebook. >> we have come out and said we believe this is going to be the most powerful social media
platform in the world within 24 months. >> within two years? >> you have the great visualization taking place on the web where people are moving to imagery. images 50 times faster than words. we are good at it. it speaks to us much faster. you see firms from facebook to google trying to replace words with images. instagram is the fastest-growing platform. it looks like we might have better conversion. >> what do you mean? >> the percentage of traffic you get from facebook does not convert at a high rate. it's low rate traffic. traffic the coming up instagram has a higher rate and people dubai. whereve these platforms it's a 15 second video. the entire complex is comfortable with it. this is literally the
hottest platform in the world. >> i love instagram but don't like facebook. how far we from looking at an image on instagram, being able to click and buy? >> you would have to ask instagram that question. linking pictures to commerce is fundamentally one of the ways that instagram has planned on monetizing. making that link possible -- people actually buy and want to buy from instagram. >> why couldn't facebook do that on its own? >> you have to establish the relationship with the brand. you have to understand what it is about pictures that make people buy. >> explain how it works. how would i interacted with it? >> you want to buy a pair of shoes and you would see a product you want to buy. everybody sees that same picture. what if i could offer you
instagram shots of the same shoes in context? real world settings. that does iswhat entice you to make that last minute decision and purchase. >> doesn't not matter that it could kill facebook? >> it's not going to kill facebook. it is their growth vehicle. facebook now has the largest community in the world and now they have a growth vehicle. facebook -- what was the killer app on facebook that took it from a fledgling to a skyrocket? photos. you could argue, if there was -- i can't stand people's mindless updates. their political rants on facebook. i hate them. >> it is nice to see pictures of kids. if you look at the power index of social media platforms, one axis would be mobile individual. the people taking these
photos who subsequently get ,onetized by instagram/facebook do they get consideration? is it just free content? >> they get the attribution by the brand. newle love brands -- balance comes to her instagram and says, we like your shot. can we use it on our website? >> that is cool. if you're a 19-year-old and new balance as, i love your shot, i want to make you a model. you would definitely say yes. >> if you are savvy, you would say, that's great, that's $10,000. >> we are in business because more people say yes and no. ultimately, it's about benefiting the community. up theds can bubble community and make the commerce experience more about community and less about the brand, there
is a positive affect. >> good as instagram hurt the most? >> by far, pinterest. pinterest broke our heart. they were the leader in visual web and have been blown by. loan off the road by instagram. >> i have never used pinterest. , ithe thing about facebook is the most nimble $10 billion company in the world. great engineering talent, did not have a mobile product two years ago. how does pinterest look any different than it did call months ago. they sat on their hands and watched the world blow by them. pinterest has blown it in my view. >> do you work for pinterest? >> we don't. it's a closed network. they don't allow third-party developers to build on top of that. the second aspect of interest is it's not a network of creators. the content is owned by the
brands already. instagram was born as a way of creating content. that is where we tap into. consumers wakeil up to this idea that things that being monetizedthe jo for cash and are getting nothing? >> they see it as a badge of honor. and theyp on the site see it as a badge of honor. -- the 99.9% of them think it's cool when they put it on their site. >> it was, take a selfie in the store and it will be on instagram. people love it. nobody was asking to get paid. >> that is giving away money. --you could already argue
instagram may already be the most powerful platform in the world. has 15 times the engagement rate of facebook. 15 times is makeable like, share a comment a piece of content at 25 times the engagement of twitter. you take community size on engagement, it's already the most powerful platform on the world. >> is twitter when more photo -- went more photo and video, could they be a competitor? >> you can't count him out. so far, it's not working. twitter has the least viable traffic of almost any platform. >> is that because of the delay? on instagram, it's all there for me. it's more enjoyable and instagram. >> sometimes you see the picks, sometimes you don't. >> do you think twitter could become a visual medium? >> it depends on how you are
>> live from bloomberg headquarters in york, this is "market makers" with erik schatzker and stephanie ruhle. >> welcome back. with continuing to dig in scott galloway. the digital ecosystem is littered with the bones of inpanies still mired conventional business models. there are some brands that are reinventing themselves and redefining categories. talk aboutck to those companies. the ones were killing and the ones getting killed. in the digital space, who is the grand pooh bah? >> in terms of social media platforms? >> in terms of digital in general.
-- what isng hero boring is sexy. the technology for companies is salesforce. gone uppen rates have in the last year because people are now opening their e-mail on their phone. for some reason, you are more apt to open an e-mail on your phone. it has an afterburner of effectiveness because of mobile. if the percent of e-mails are ed on mobile devices. -- 50% of females are opened up on mobile devices. the biggest winner around the transition to mobile this e-mail. other than apple, which soaks up
all of the profits. can they both keep it up? >> everyone says that in 20 -- in the long run, wead all dead. on the social side, the big winner is instagram. then we chat out of china. the first global brand to come out of china. a top 10 cap download. app download. >> could alibaba be the second? >> it looks like it. if you said there was a single company that could compete with amazon, alibaba could be that player. some interesting things about them. some are between a third and half of all shipments taking
place in china are inspired by some sort of transaction on alibaba. that is incredible. you can order uber on their platform. there is a lot to love about it. when you think about amazon's dominance in europe and the u.s. -- >> where is real value in ya alibaba?out >> they made the worst acquisition with tumbler. it has become a tracking stock. what they are right now, and incredible venture capitalist that made this smart investment in alibaba. the core business is in decline. when we talk about media online, there are only two big winners. facebook and google. two thirds of mobile advertising comes from either facebook or google. >> was going to happen six
months from now when ali baba is not part of yahoos portfolio? hoo!t impacts ya there are the big loser there. --y will have a tremendous it's hard to say. to amazon versus alibaba. let's say you're right and alibaba does decide to take on amazon directly. here in the u.s. or europe. market cap standpoint, take a life. from a revenue standpoint, it's a goliath. in an income standpoint, it's not. bezos has been able to keep the shareholders faithful by promising that they will make more money at some point. margins,a has 57% net
amazon can afford to whittle those way. it's more like an ebay business model. you zeroed in on the key asset. the key core confidence of amazon is the fact that they have the cheapest cost of capital for a longer amount of time than any company in modern history. it just bezos never gave investors the crack cocaine of profit. he has been feeding them a steady diet of methadone of big vision. he has access to capital at a cost no companies ever had before. he can build these unbelievably expensive warehouses and nobody can compete with them. >> is he the only ceo out there that is not giving into shareholder demands? >> what have they done? how fast theywant can get their package and how easy it is to exchange. all of these operation
features that only amazon can afford to build. they will be able to deliver 50% of everything we buy to 50% of households in the u.s. within four hours. >> and cheap. >> they are building warehouses right outside of major -- >> at the core of everything we buy. basically. >> just as you have a cable pipe into your house, it's the sole transmission vehicle for all the zeros and ones. amazon is trying to build the adam pipe into her house where everything you need, they will bring it to your house. it will start sending you stuff before you even ask for it. if they're in your house once a week, don't you start ordering everything from amazon? >> don't some people already do? i order a lot off amazon. i'm surprised. >> anything that is really hard and expensive to do, whether it's warehouses right outside of our house or figuring out the algorithms to send that stuff
>> welcome back. will you still have your job in 10 years or is it going to be done by a robot? technology is fast replacing every day tasks like driving, cleaning, making food and even manufacturing. assist says there is nothing to worry about. he is the cofounder of irobot and the chairman -- he is with us from boston this morning. galloway cohost, scott
, is still with us. many of us are familiar with the broadcast by wired magazine that 70% of all jobs will be done by robots in the next decade. is that not accurate? even if it is, why isn't it anything to worry about? >> it's a bit of scaremongering. -- talkedlk about about office computers, they said it would replace office workers. they're much more cognitive -- the personal computers do a lot of wishing stuff around and pushing information around. the robots that are around can do simple, repetitive sorts of tasks but can do the cognitive tasks or the dexterous tasks that a person can do.
it's going to be an integrated workforce with robots and people working together. futuristsre many saying that intelligence is coming to robots. whether it's one decade for an hour 15-20 years from now, there will be smarter machines that can supplant human beings in a way that is not possible today. >> absolutely. it will change over time. it's not going to change radically. 95% of the labor market in farming. but it's not happening overnight. hear that jobs are going to change. it's not the way it's going to happen. we are replacing the declining labor force in china by starting to bring manufacturing back to the u.s. , thehinese demographic -- this is an
opening for us to restructure our economy over time and become more s self-sufficient. >> the beginning of the 20th century, 40% of the labor from jobs got replaced by new jobs. the issue is not the question of -- of the level of destruction or erosion in middle-class jobs by technology -- are we replacing them fast enough? employment is going up. you're talking about amazon making 13 people for every 10 million of sales. are we finding other jobs for those 33 with the new industries being spawned by the organization? while unemployment is not going up, middle-class workers are being lowered. there are not as many of those middle-class jobs as there used to be. that is a real issue about middle-class jobs. on the other hand, i don't think
we can say robots are replacing -- can't say that robots are replacing those jobs. people don't want to do those jobs anymore. backing, 33% of all cleaners being bought our robotic backing cleaners. -- vacuum cleaners. people want to have those jobs done and people don't want to clean other people's houses. >> is that really the case? in spain, and implement is what it is, people wouldn't take jobs as house cleaners? >> the housecleaning used to be done by the spouses of south american construction workers. they all went back to south america and there was no one left who wanted to take those jobs. u.s.e the same in the there is a lot of low-end jobs
in agriculture and food t are nong tha longer being done because people in the u.s. don't want to do those jobs. >> because of the introduction of mechanization. it reduces the value of the job to the point where it's no longer economical. >> there are instances where he is right. the dirty and dangerous jobs that people don't want to do and robots are not really replacing, but -- not really supplanting, but replacing. that lauder is reporting somebody begins interacting with the app and convert the purchase at a greater rate. that means that person making $40,000 a year as a beauty associate at macy's is going way. of two is going one o places. dayapp developer or a $19 assembler in china.
the $40,000 job is going way. it's -- thereure, are areas that are being decimated. what is happening to the dispatch agents that we are not talking to any longer. the question is, can we replace these jobs fast enough? if you look at the labor statistics, the percentage of people working out of our total population is the lowest since women entered the workforce. >> i would like you to spend more time answering the question that scott asked. what kinds of jobs are being created by the companies that employ your technology? >> i think it's moving people up. they become supervisors of robots and train the robots and indirect with robots. they also do some of the tasks. the robots don't replaced the person. if somebody is packing boxes,
they are also doing inspections intrinsically. robots are not good at that. it is re-factoring who does what task. generally, people are becoming more of a supervisor of machines. which is what we have seen happen all throughout the investor revolution. people become more and more supervised with machines. is a new think this industrial revolution that we are going through right now? i think we are seeing a new industrial revolution. digital is coming into the factory floor. it is very slowly coming in. it is accelerating rather rapidly. right now, in the u.s. and japan, that is being used to absorb the loss of chinese labor as the chinese demographics change. actually seeing more
manufacturing being done in the u.s. and europe and shortening of supply chains. shortening of getting stuff out to the consumer. everyone demands much more responsive production of unique goods. it is changing the whole way we live and work and think about what we expect. you talk about amazon delivering things to people's doors in four hours. people expect a different sort of responsiveness from companies that they did not expect 10-20 i years ago. >> the chairman of re-think robotics and the cofounder of irobot. scott galloway of nyu. >> thank you so much. great to get your thoughts. we will be back with more in just a few. you are watching "market makers." ♪
we are taking a look at stocks trading higher on today's better than estimated jobless claims that is. claim status. seeings of what we are with the s and p 500, we have been pretty range bound lately but we are seeing this increased today. what are you getting in terms of a read on the options? interesting, last week we were seeing it coming in in anticipation of another rally. we are knocking on new hi doris. -- new, hi doris. have thataders reluctance to bid on this rally. what a lot of traders are seeing or doing is beginning to buy the stocks and buying have your. we're seeing a bigger downside skew in the s and p 500.
options markets typically decrease in volatility. in this case, they are betting on a big summer. that is something that you might want to take into consideration. >> it would be hard to be less volatile. that's the thing. as an old-school marketmaker, what we would do is sell the current month and by the further out month heard the vix is so low and volatility has been so low, traders can do nothing but buy it. when you see that skew in -- it, does leave you does leave you with a bit of concern. >> we have seen stocks continue to be had. -- are looking to you see further downside here.
?what is driving that >> it trades at a higher they are higher risk, lower market cap. i'm saying that as a general rule. if you look at the nasdaq composite, you see the sending -- lower highs, lower lows. i'mnasdaq's rally today -- looking for a selloff. i'm playing it with the cues. buying the quick spread. 93-87y, i buy the 97 -- quick spread. my goal is to see that stay below the 87 mark. given this technical trend, i think that is what we will see as the breakdown below that level. >> i know we have been seeing this momentum play. is there any catalyst that is going to be potentially driving this tech stock lower? the fundamentals are tough.
we saw earnings from tesla, which we will talk about later on. generalng more profit-taking from a lot of big tech companies. a lot of them have had great runs. this is more technical and a rotation into safer names if we do rollover. if that is why the nasdaq be picked first for that. >> let's get to tesla. a company that came out with earnings that initially looked good but piercing a selloff because there seems to be a battery supply problem. it's a problem of battery supply. the stock is down today. what are you looking at when comes to tesla? >> here's a company that needs to grow. in order to grow, they have to spend a lot of money. is, we arel here anticipating several to be built. billions of dollars in cost.
analysts and traders don't like that. the options markets don't like it either. the stock trades at 60% volatility. that means you can expect about 10% average daily standard deviation. that's a lot of volatility. the options markets looking in depth, i don't see one direction or the other. i see caution. that is the best way to play it if you are looking at tesla. >> rate to talk to you as always. we will be on the markets once again in 30 minutes. ♪