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tv   Market Makers  Bloomberg  September 3, 2014 10:00am-12:01pm EDT

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>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> a new prescription for success at cvs changing their name and stops selling tobacco a month of head of schedule. >> getting the jump on apple -- samsung rolls out a smart watch and a tablet days before the new iphone is officially unveiled. >> the company that asks why should guys have all the fun? it's targeting women with its video games. makers," good morning. >> i don't have time for video
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games in my life. president obama is in a study of his morning on his way to a nato summit that will focus on the confrontation with russia. the meeting comes after a day of confusion in ukraine as the government there announced a cease-fire with russia backed insurgents and the east but the separatists said there was no deal and the government seems to retract his earlier statement. here is president obama this morning -- in fact, russia is financingo stop , in many casesg joining of russian troops activities in ukraine and is series about a political settlement, that is something we all hope for. i have said consistently our strong,ce is a productive, cooperative russia. >> what is really going on?
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our chief washington correspondent peter cook is with us in new york and ryan chilcote is on the phone from wales, the site of the nato summit. help me dissect this. what is going on? >> there was quite a bit of confusion this morning. president ukrainian said we've got a permanent cease-fire agreed upon the russians said no, we have agreed to steps toward a cease-fire. right now, the russian president announced his own peace plan. he outlined it today on a trip .o mongolia his plan calls for the progression rebels to end their offense of an ukrainian military to get out of the cities east of the country. it's a seven-point plan so it is not easy and nothing about this conflict has been easy and nothing has actually flowed in a linear fashion. it is progress in a way and it
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certainly a little bit clear than the confusion we had this morning. in.eter, weigh >> i think you're in the president's voice the skepticism and whether vladimir putin can deliver on this plan. >> the timing is suspicious. >> you've got the president of united states in estonia effectively sending a huge symbolic mission to the -- message to the russia that we are defending the baltic states and he is headed to this meeting and wales with nato members where the ideas to foster unity have a rapid reaction force of nato member states that could respond if russia went beyond ukraine. i think the mood within the administration that was highly skeptical that this is something real. if it is, that's a good step. ryan, why don't we perceive any of that skepticism and the statements from that ukrainian president? >> he seems to be optimistic.
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this is a statement he put out on his website so is difficult to read between the lines. sure, the timing of this is highly suspect. it's not just because president obama is in estonia or because of the nato summit which kicks off tomorrow but also because the eu has been working with united states to impose new sanctions and they have the self-imposed deadline of friday. this is kind of a down to the wire, 11th hour, move that some within nato will see as an effort by the russian president to throw stardust into their eyes. and word of sanctions. some of the nato countries in eu countries might be a little bit nervous going ahead with sanctions right now for fear of punishing president putin when maybe he is going to do something constructive. we should definitely be --
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suspicious of the timing but this will go down to the wire. the russian president said his peace plan will be discussed in belarus on friday by the contact group and the germans have already told us anonymously that if the contact group says this is a peace plan that they are supportive of, we actually could see the sanctions put on hold. >> do you want to weigh in? in thate got to factor president obama was hoping to deliver a coherent message at the nato summit and you have the issue of the islamic states in the middle east taking attention away from nato members. there are a lot of factors in play. the president has to juggle all of these and he wants to deliver a unified message and did not talk about the cease-fire and estonia short time ago. he will meet with u.s. troops and wants to send the russians a very strong message right now about nato unity and u.s.
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interest in ukraine going forward. again, wait and see and trust but verify. >> we will be checking back in with you later in the hour. thank you both. >>cvs has officially quit tobacco. cigarettes, cigars and chew and snuff are all disappearing from the shelves of 7700 cvs pharmacies which is costly. they expect to lose some $2 billion in annual revenue but the ceo says it's for the sake isyour health and cvs starting a quit smoking campaign and changing its name to cvs health. we go to the new york stock exchange and the ceo of cvs., given the fact that you are changing your name to cvs health - back in february when you announced the plan to stop selling tobacco, you said it was the right thing to do. us want to including
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know if the right thing to do ultimately includes ceasing to sell other " unhealthy things" like sugary drinks or beer, the kind of thing. , chips, aell products bar of candy in those night cannot be compared to a pack of cigarettes. the talk to a nutritionist or dietitian, they will tell you those products taken in moderation or the occasional use have not been proven to cause medical problems. the same cannot be said about tobacco. there is no amount of tobacco that can be considered safe. >> and the last year, they have compared sugar to be the new nicotine with halloween around the corner, what is the nutritional benefit of sugary candy? we are not talking red wine. >> those products taken in moderation or the occasional use
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-- it's very difficult to compare those products to a pack of tobacco where there is no amount of tobacco use that can be considered safe. >> it's a fair question inasmuch as you are trying to position your company as something other than a pharmacy. you are trying to position your self further up the health-care food chain. you have minute linux and you are a pharmacy benefits manager. you want people to think of cbs as a healthy alternative to other pharmacies. it makes sense. it's the same kind of disconnect you have when you go to the hospital and there is a vending machine there with garbage, stuff that is not good for you. >> there are many things we do to help people on their path to better health. you mentioned our in-store medical clinics that are seeing people, about 50% of the patients are on nights and weekends. the fact that we are helping patients every day stay adherent to their protrusion medications
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and many other products and services that we are offering our clients, >> what is this renaming campaign going to cost you? >> we are going to be talking about the fact that we announced back in february that walking away from the tobacco category will cost $2 billion in revenue. we changed our corporate name to meant abovehich is are more than 7700c vs pharmacies. you will see some advertisements in the broadcast media and in print. talking more about the benefits of cvs health. >> i assume you expect a hike in sales revenues, what number? >> we announced on our second
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quarter earnings call that we have been awarded over $5 billion in new business in this current selling season. we know that people are looking at is more as a health-care company and the innovative products and services we are bringing to market are resonating for our clients and their members. >> specifically as it concerns your minute clinics, the walk-in services, how much of an opportunity is there for cvs to displace other, more established health-care providers because the cost of health care is going up? inflation in health care may have slowed but it still continues to be a more defensive. >> we do not see the role of our minute clinics as replacing the primary care physician. we see it as being complementary to the primary care medical home. businessf of our occurs on nights and weekends. we think we are moving business out of the emergency room into
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our clinics at a much lower cost. >> what about the rest of the health-care ecosystem? how else might cvs participate? thanre more diversified your competitors but beyond walk-in clinics and firms a benefits and drugstore sales, what can you do? >> i think you are seeing the evolving role of pharmacists a nurse practitioners changing. they are the most accessible health care professionals in our health care system. they are providing services such as immunizations. than 24,000 pharmacists are doing some terrific things to help people get on and say on their prescribed medications. about half of all americans today suffer from one or more chronic diseases whether it is hypertension or diabetes and asthma. our hot pharmacists are doing a terrific job helping those health.o better -- our pharmacists are doing a
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terrific job helping those people onto better health. >> cvs has been an american-centered company. >> would purchase a pharmacy chain about 15 months ago in brazil. it was our first entry overseas. we said we didn't have the experience operating international and we wanted to understand and gain the learning. it has been a year and it's been a terrific experience so far. there is more to come on our international plans. chief rivals, walgreens, has come under a lot of criticism for confounding expectations i comes to tax policy. they had an opportunity to do an inversion and chose not to and the stock has been hammered. if anybody can use an inversion, it's cvs. of pay a corporate tax rate 39%. what is your position on inversion? needr position is we comprehensive corporate tax reform and have been talking about that for the last several years. we will continue to talk about that.
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concerned that tax inversions perhaps may further erode the tax base. >> have you considered an inversion as a means? it would require buying a fairly large drugstore company somewhere overseas 20 benefits. have you thought about it? >> we have not contemplated that is a strategy. our focus is on comprehensive tax reform. we believe that will allow us to accelerate investments and in turn promote job and economic growth. do to bringyou comprehensive tax reform to america? congress is not doing anything about it. drum continue to beat that in terms of the need in with some as well as special interest groups that have a common view of
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comprehensive reform. >> with thank you very much and good to see you this morning. larry merlo. that, by the way. >> the name change? >> and i like no cigarettes in the store. i like that cigarettes don't have the place in this world for my kids as they did when i was growing up. my kids hardly know what they are. i like that. time for the news feed. samsung may be trying to steal apple's thunder. six days before the new iphone was unveiled, samsung is rolling out its own the products. one of them is a galaxy note smartphone with a wraparound screen that extends beyond the front of the device. new jersey governor chris lawyer'sis becoming a best friend. his administration has spent more than $50 million on outside lawyers in the last two years
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largely because of the george washington bridge traffic scandal. has named the new head of corporate banking and securities for north america. he is tom humphrey who spent two decades at lehman brothers where he ran fixed income currencies and commodities sales. he is replacing jeff mayer who was named chairman of first key holdings in real estate finance company. there you go, a big hire. these kind of hires are what makes someone a people inside thanks so frustrated. when the big job comes up at these banks, they don't promote from within and bring somebody from the outside. we have talked before about the degree to which deutsche bank and other firms do a good job of managing the human resource side. they develop people's careers to the point where they are the right person for the job, he or she.
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or whether they need to go outside. >> i would like to see more of and less of the >> we've got all the numbers on august auto sales next. >> life in the slow lane -- we will take you to a state where there is always traffic jam on the information superhighway. ♪
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>> welcome back to "market makers." a great august for chrysler with sales last month jumping a whopping 20% and they say this could be the best year for the industry since 2006. gm, ford and toyota released their numbers today under -- and our matt miller has been coming through the reports. >> the best year since 2001. i had to read it a few times before i actually believed it was true. forecasting 17.4%
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u.s. vehicle sales this year -- sorry, 17.4 million vehicle sales which includes medium and heavy-duty trucks. normally, when people forecast something like this analysts talk about cars and light trucks. at that medium to heavy duty trucks normally account for 200,000 sales. and sayake those out take out 300,000, that still a pretty amazing feat because analysts are only looking for 16.6 million cars to be sold this year. they have a very optimistic outlook and the reason is they are doing so well. 53 consecutive months of sales gains because of the jeeps you are looking at. chrysler sales were up 20% to the best of any major automaker. toyota just came out with a gain of six point something. are up 49% in august and chrysler's ram truck
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sales are up 39%. >> what's the rationale behind this? >> americans are feeling more comfortable about lying big suvs and trucks again. the redneck in us is coming back. >> there is no redneck in me. >> there is a lot of redneck in may. the best thing as banks are willing to loan more money to rednecks than they were ever before. car loans are easier to get that at any time in history. i think that includes 2007 and 2008. >> is that a good thing? in 2005 we said it was great. eight, what were those people buying houses they cannot afford? >> i am not making a value judgment. i am excited about the superlatives. whenjust an exciting time we can say that more than 70 million cars are being sold. time for an exciting mortgage brokers in 2005. >> why are these trends not
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playing to the favor of gm? >> gm did not start from as low a bar is chrysler. for did not start as low. agreed too marchioni by chrysler, it would have been left for dead had fiat not come in and picked it up. >> wears equilibrium? is chrysler back to where theoretically should be? >> i mean -- i think sergio has done a great job of revamping the chrysler lineup. he has done an especially good job of improving the quality of jeeps which were always popular vehicles but the quality had fallen so low that nobody wanted them anymore. the same is true of chrysler's. he has done a great job of selling a product to the demographic that wants to buy chrysler's. frankly, he is having a better time with chrysler and jeep and ram than he is with fiat and alfa romeo.
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he still has not released the alfa romeo 4-seater. >> you are so enthused today. >> i love this industry. >> i know it. is and sergiomarchioni magical character in the auto industry. now that alan mulally has gone, he is it for sure. >> the italian-canadian that he is. "market makers" will be back in a couple of moments. . >> what's better than an italian-canadian? ♪
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>> coming up, earnings at jefferies group rose almost sevenfold in the past quarter and we will see what this says about the prospects for wall street's bigger firms. >> plus, it is not all about call of duty and the latest grand theft auto -- we will show
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you the video game company that is not targeting ladies. you are watching "market makers ," we got more after the break. ♪
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>> live from bloomberg headquarters in new york, this is "market makers." it's 10:30 a.m. in new york city. >> it's time for one of our favorite topics, banking. jeffries is out early with third-quarter earnings and the wall street firm scored big. investment banking revenues soared and so did sales in trading. is this a sign of what to expect from the other bigger wall street firms? is it too early to declare that banking is back? here to answer the question is the managing directordevin ryan.
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you don't specifically cover jeffries but when you saw these numbers, or you blown out of the water? where on earth does is coming from? >> it was definitely a good result from jeffries. it cannot take away from it. you look at what drove it, investment banking is saying great data across the board. m&a is up 50% and equity issue is -- issuances up 40%. the area that was surprising was the resilience in sales and that's what people are focused on. that's a positive three through -- read through. >> the ceo of jeffries wants us to believe there are certain things about jeffries that are different that are special. it focuses on health care. it focuses on technology. it's a bank that was not bailed out by the fed. to what degree do those make the results from jeffrey's idiosyncratic or do they speak to a cyclical rebound and wall street? >> i think you have to separate
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the businesses. think we are clearly starting to see the rebound. challenging and the news from jeffries is more of a function of the month so we saw and they are on a different schedule when they report. it's too early to declare a cyclical recovery in sales and trading but it's still a good result in trading. have all the same regulatory constraints that some of the other banks do. >> what difference does that make? >> i think it makes a difference on the margin. i think the results we are seeing from jeffries are a little bit of a proxy from what i am tracking in industry data. i would not say this is an aberration. >> it would not surprise you if we were to see sales and trading revenue double at goldman sachs or citigroup? a i think you have to take step back and look at the context of what happened last year at them. it was a good quarter last
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year's are was incredibly low. a good quarter for them and the larger banks, september is critical. it's always the critical month of the quarter. it's the same this year but the one thing i would highlight is we have not had the blowup so far coarser to date in trading that we had over the last couple of years. last year you had the big spike in interest rate so you saw a number of companies take some marks from that. september is still critical. >> when i look at the numbers from the big banks, the first thing that stands out as litigation reserves. we don't see that number coming from jefferies. that because they get protected under lucadia? >> it's a function of their business makes and how they have committed capital over time. they have not had some of the same regulatory and legal issues the rest of the group as. that's good news for them. >> of the other firms, specifically the ones you cover, in the best
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position for notch is the third quarter but the next six to 12 months? >> we went back and looked and over the last 10 years, the capital market space has increased seven of the 10 years in the last four months of the year. decent september will lead to what i think is a quarter that is in-line with expectations for capital market space and i could set the stage for a year-end rally in the group are it goldman sachs and morgan stanley have the most exposure on a large cap side to the trends we're speaking to. >> goldman sachs and morgan stanley are capital markets machines. as we see the new deals come to market, goldman sachs and morgan stanley and jpmorgan, for these boutique firms that did well over the last few years because they had lower overhead, what does it mean? >> banking is a relationship business. the boutique firms have benefited from an extended lull
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in the environment so they have been able to make relationships with a number of corporations. as we pull out of the downturn, they are participating. i think this is a positive for some of the boutiques as well to the extent we see further positive trends and m&a? >> do you think they will try to get sucked up by the big guys? are they trying to sell themselves? >> it's always a one-off basis so i cannot generalize. it's a people business. it's tough to consolidate people very often. it's not our view that you will see a lot of consolidation of smaller and large firms and there is a lot of overlap so it would have to be the perfect match. >> several times over the course of the conversation, you used the word "cyclical." there has been a debate as to whether the downturn in investment banking and sales and trading was cyclical or structural. is this time different?
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can you tell him what you begin to see what the earnings power of these firms is relative to return on equity? >> from the investment banking perspective, in our view, it is definitely cyclical and we are starting to see that as investment egging bottoms and revenues are starting to come back. is hard tocome, it deny there is secular elements that are at play here and will constrain these firms for the next cycle we get into. roe going to be for goldman sachs in the next cycle? >> that's a great question. if you look at where they are now, they are at 11% and have been there over the past temple of years. we may end up this year in a similar spot. i think there is upside from a cyclical perspective but i don't believe we aren't necessarily getting back to 20% on average as in the prior cycles. opinion, populist
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banking is the public enemy number one. what happens at the end of this year with these investment bankers crush it and when traders want to get paid 2006-style. can they get paid that kind of money again if the revenue is there? >> it's a fine line on the con side --comp side. >> it has been easier because they have not been making that much money. >> they have been able to pay their top talent myth figured out a way to be creative around that. if people produce this year, they are also going to get the benefit of that. >> the days are back when guys at banks get paid 5 million or 10 my and dollars per year? from a revenue and roe perspective, we are in a not a great environment. >> top produces will get paid an average salary -- what happens further down? the average salary for the director or the vp is less than
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it used to be and will remain that way? if you have great , thetment egging results best investment bankers will be compensated. with respect to trading, those businesses are low roe businesses and that will negatively impact of the end of your breaks. >> happy days are here again, guys. >> sort of. >> we will see but thank you for joining us. he is the managing director at jmp securities. >> when we come back, ultrahigh speed broadband, forget about it. we will take you to a state where happy if they can get online at all. ♪
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>> this is "market makers." ofbeing online is the future business, what future does a business happen but cannot get online? billion-dollar question in the state of maine where internet services the worst in the nation. michael mckee went there looking for answers. >> welcome back to the 20th century. in this ever more digital world where every megabit counts, and the need for speed, beautiful bucolic maine is slow. internet service here is among the slowest in the nation with download speeds just 40% of what's available in other cities. is trying to build a state-of-the-art dental practice and high-speed internet line runs outside his office but it would cost him tens of thousands of dollars to connect. >> rural areas are always left
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out in the cold. we are kind of used to that. the fact is that it's a place to grow and we cannot row without, activity. >> suppose you want to download this story. in new york with download speeds near 150 megabits per second come you could have the whole video in less than eight seconds. in maine, download speeds are closer to nine megabits per second. if you are watching in maine, and no ahead and wait for it to load. i will catch up. readily available broadband is more than issue of convenience. studies rectally link new business growth to faster internet speeds. it comes as no surprise that maine's economy ranks among the nation's lowest. forbes magazine rated men the worst in the nation to do business for the past four consecutive years and the big problem is a small dispersed rural population and the lack of investment in the private sector. big providers like for eisen and google who are expanding naturally -- nationally, have
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not made to maine. high-speed internet exists in the state and local providers will not make it available. it costs too much to construct the so-called last mile fiber connections to homes and businesses. >> it's not that private finance is not going to rural maine to build high-speed networks. they have some nefarious hidden motive is not the reason. you cannot make any money doing it. >> business leaders there say business that's say government has to step up. they set examples like chattanooga, tennessee where the municipally funded high-speed network built in 2010 helps to track new tech firms, entrepreneurs, and investors. the town of rockport, maine wants to try something similar. rockport partnered with local provider gwi and the state to fund and build a one gigabit service to businesses and residences. also taptowns will local tax dollars and state
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coffers to build last mile connections on their own and lease them back to service providers. >> we will hope that the market flights would do it if they could do it. they likely will not do it on their own. they will not take that risk and yet it's essential to our growth and development. rockport is a small town effort but the hope is that as broadband effort expands, so will the maine economy. >> michael mckee is with us now. how much greater could the great state of maine be if they had these high-speed internet connections? >> there is not a specific number you can put on it. the broadband association says about richard percent of all new jobs are connected to broadband services. theyto people there and are concerned and businesses do not locate there. businesses that are there developed a large and of internet presence but want to move out and the spinoffs they get at the university of maine from technology to not want to locate there because they cannot
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get the service and grow. >> what are the alternatives? if you live in maine anyone high-speed -- >> you either pay up or move to one of these towns were the local governments are getting involved and doing the last mile service. >> is that the future >> that may be but that's part of the debate. right to have high-speed internet in a way that the government should get involved? you back -- you go back to the movement thatal started in the 1940's that brought electricity to rural governments -- rural areas. >> they do many things to attract people there. companies t,he isp's don't really want this to happen. >> because i want you to pay up? >> they want you to pay up a mechanic in a money doing it. if the city's put in the last
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mile fiber, the city zone that fiber. fibercities on that and they have no control over it. >> great story, thank you for bringing it to us. >> did you have lobster when you're there? >> maybe a couple. >> there you go. up, targeting the forgotten demographic in the videogame industry and i'm not talking about canadians, i am talking about women. ♪
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>> welcome back to "market makers." irls are on the rise because they are the largest demographic in the gaming industry. let's turn to the ceo of capinator, a company that publishes its own mobile games.
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is this all about the candy crushed craze? when i am standing in line at the grocery store or go onto facebook, all the women in my life are asking me to play candy crushed? >> i think that's a great point. it goes beyond candy crush. as the market grows, women engage with games. is currently the largest demographic in terms of folks playing mobile games. is one example and the new car -- and game is popular -- and the new kim kardashian name is popular. >> what changed the game for women? 10 years ago, i don't know any women who were playing "halo?" android devices have really changed the game, so to speak. you have folks playing games in their living room or when they have a few spare moments. whiche also seeing games
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are quick fix games which is what we are focused on at capinator. spend of -- said of folks playing minutes on games, they spend more time. there are 32nd chunks of gameplay. 0-second chunks of gameplay. >> what games are most successful with the female audience? \ >> it's a fairly broad range. you have games like candy crush and when you look at casino like slot games, they do well within the female demographic. >> why? >> it resonates. a lot of the casino players in the real money casinos are females in that demographic is now moved to mobile. they are sitting in their living rooms playing slot machines. it's a market that monetizes it well in terms of purchases.
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and revenue. . >> what is the best monetization model? atking and theok stuff that we focus on, it's an area that is more difficult to crack than advertising. with advertising, you can ask -- you can display them at an you will earn a certain amount. the scale of opportunities are much larger than with advertising. >> what is the biggest challenge you face right now? women are more interested in the gaming phase so how will you capture more? the mobile gaming market is competitive in many companies compete with each other to capture the demographic. i think it's about introducing more innovative types of gameplay, like having a polished game and interface levels that cater to that demographic. >> what is the average amount of time a woman is playing a game versus a man? spend morege, women
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amount of time playing mobile games and spend more money. the percentages about 30-40%. >> they play for longer periods of time or more often? >> both. 20-30% of playing time and monetization. >> what have you found is the most successful strategy for marketing your product? there are so many games. a fairly large number of games get an outside amount that an outsize amount of attention. how do you stand out? >> we have achieved critical mass with driver games and simulations so use the network to cross promote. our marketing cost is lower than many other companies out there. makeimportant thing to sure the core metrics are right
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before you spend money in user acquisition because there is so much competition. themselvesoviders like google and amazon control a lot of that. storeou go to the app homepage, that will drive a lot of volume. >> which platform has give you the most success? amazon.leplay and and >> do you feel the need to part with a celebrity? you can see the massive success of thekardashian game, do you want to partner with the celebrity? >> we are working on a video poker at where we are working that we're looking at celebrities. leo?n affleck and >> but they're all men. >> that they are men that women like. >> exactly if you go to the female demographic, you want to appeal to them. >> i'm not talking about a guy in his basement that -- playing
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dungeons & dragons. >> exactly, the celebrity branding element is a way to differentiate a project. -- a product. the product would not stick out from the other different products that compete. game is a perv example. >> from a marketing standpoint, you know the demographics, who are the dream partners for you in creating a new game? we have looked at a few different brands. we are in discussions with some of those brands print on the casino site, brands like james bond. there are a few different brands re-think resonate but it depends on the type of game you're looking at. game hte kardashians, they resume. -- they resume. >> thank you so much.
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>> we are back in two minutes. ♪
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>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. samsung goes big. it rolls out a smart phone with a wraparound screen and a new smart watch. will these take the shine off next week's new iphone. >> the next corporate cyber attack. experts say it's not a matter of if, it's a matter of when, and throwing money at the problem may not be enough. >> do we really need another premium paid tv channel? the ceo marc a greenberg will tell us why. welcome back to "market makers."
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lots to cover in this hour. let's get you to the newsfeed, the top business stories from around the world. president obama is sending an official message to russia. the president said nato would come to the aid of estonia, latvia and lithuania in the event of russian aggression. ukraine said earlier today it had reached a cease-fire with russia. russia says that is not so, but president vladimir putin has offered his own peace plan. and what is in a name? forget the mobile wallet app backed by at&t, verizon and t-mobile. the isis mobile wallet is changing its name during the violent islamic group known as isis has been dominating headlines last month. the company says it plans to change -- plan to change the name two months ago . chrysler sales rose over 20%. than 1%.up less
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analysts forecasted a decline. general motors sales were worse than expected, down more than 1%. >> doesn't it seem like every time apple is ready to make a big product announcement, samsung comes out a few days earlier trying to steal apple's thunder? that is what is happening in new york today. samsung executives are in new york to announce the new products. cory johnson is live at the event. if there is any big news, what was it? >> there isn't. here is the note 4, one of the products they introduced. they introduced a phone. has a bevel on the side. are thinking that is exciting, how much does it cost, you cannot find out. you are, what carrier will carry this -- they did not say.
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when will it be out? sometime this year. the most important specifics not available. in the room underneath, they are showing off a samsung watch, a virtual reality thing. none of these products are available right now. no prices mentioned, not even a release date for these products. answeruse they can't some very basic questions, does it seem silly at all that they would have this race to beat apple? all about this is getting excitement around products and trying to steal market share before the market is even there. we have read reports that apple will announce and iwatch-type device, but not available until next year.
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it may hold off a new fit bit product. , it is an event for analysts and journalists and not consumers. be 3, 4 was a time may years ago when a samsung product announcement did feel exciting. why doesn't it feel exciting any longer? why is it that there is so much anticipation for apple's new iphone and none, it seems, for samsung's new phone or tablet or whatever the case may be? reasons isone of the that the biggest thing to happen is the introduction of the phone. seven years ago, the first iphone comes out. sales of that device were a small fraction of what the newest phones are selling. the initial dropping of the device was the amazing thing. i spent some time fully around with their samsung watch
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devices. is a cool looking device, that dick tracy kind of feel about it. >> you just dated yourself right there, cory johnson. dick tracy. >> i didn't know dick tracy personally. i know of him. >> i'm just saying, even the fact that you knew of him. you just dated yourself too, girl. >> i was referencing that madonna-warren beatty movie. erik: me out. -- erik calling me out. >> that was cory johnson, not getting particularly excited about the samsung products. a platform innovation company, connecting different users
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together. his clients include google and disney. that try to answer question again. what is it that samsung is doing wrong? not only do they not make as much money on their phones, they are having trouble maintaining the momentum that they once had as apple's archrival in the business. >> when you look at samsung versus an apple, it's very difficult to compare the two because apple is really a platform business where they own phones but they also the software which is facilitating that connection between developers and consumers. samsung is a linear business. they have been selling a lot of their hardware. the don't actually own platform business. they are a component of the ecosystem rather than being an owner. >> was that apple's secret genius?
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they made us believe they were a consumer device company. remember the beauty of design, ease of use? genius is in the software. that is really how they have asserted their dominance in a way. >> [indiscernible] it is google who snookered samsung. >> that's a very good point. with apple, the software doesn't matter unless you build a great first product. apple will never get to the point where they get developers making apps for apple software unless they make a really awesome phone and sell millions of those first year and a half. if samsung were beat -- were to be successful with the new watch, they have to sell iflions of those watches they're going to get developers
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interested in developing. that's very difficult. >> you worked with pre-launched samsung and galaxy gear before. does it seem premature to be putting these new products out before we can get our hands on them? there is a lot of posturing that goes on in the industry. there's a lot of money at stake here. seem asdoesn't want to if it is playing second fiddle to apple. they still want to be top of mind. we are talking about them today. >> that's true. >> however, there isn't much more meat after that. there isn't much more action you can then take if you want to go by it -- buy it. >> putting yourself out there and not being able to deliver, isn't there a potential downside that you should have stayed quiet until you had the product to begin with? >> uh, yes. >> you get out in front with what? >> are you going to want to talk about them when they officially launch?
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maybe the interest will be more tapered because they have started to announce things prematurely. thatw it has become clear the platform companies, the apples and googles rama google play store, where all the intelligence resides and the power resides, the ability to use the data you harvest from consumer transactions and plain old actions. what does that mean for a samsung? >> that means they are in a position which is highly commoditized. a lot of people can go and make hardware for smartphones. there are probably 10 other oem's in a position. >> they have become the dell or the hp of the mobile phone world. >> it's hard. they have to continue to innovate with hardware. that is an extremely difficult position to be in.
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i give them credit that they are trying to move in this direction. they are trying to launch software in an operating system contained within this new watch of theirs. it is a very difficult path to go down, particularly the utility you may get out of a standalone watch. is that really going to sell millions of watches? it's going to be tough. >> i remember when samsung had its own operating system and it wasn't so great. i remember symbian. and where's that? gone, right? lob had a great quote when nokia was really tanking. he said, we were not just to be to buy products or phones. we were beat by an entire ecosystem. they had this burning platform speech of his, this memo that leaked. he said, we are being defeated by an ecosystem here. it's not just one phone.
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come at them with a whole ecosystem that is on apple or google's android. samsung goes down this fast, that is what they have to do is engender their own ecosystem with a watch as the central focal point. >> what kind of undertaking is that? >> that is an undertaking that you can count on one hand the number of companies that have successfully transitioned from hardware. >> a partnership with jay-z ain't going to make that happen. consumer's point of view, we want more than two platforms. we want more than iowa son android. who will be there for us? facebook is looking at this. amazon would probably be a great example of someone who has taken android, branched it and made it their own. the fire and their new phone --
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we have heard a lot about that. they are a great example of someone who spent years and hundreds of millions of dollars. they have had to make their own google maps because they can't use google maps from android. that alone meant they had to license all the map data from nokia. totally cheap. >> i will give them credit for trying. that's great. people should be trying to move in that direction. i'm giving them an a for effort. i'm not going to hate on nike for trying out the [indiscernible] >> they are winning at everything else. alex, so good to have you on. of applico.ed, ceo >> coming up, home depot will
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not be the last big company targeted by hackers. we will see if corporate america really is prepared. >> the upstart channel that is competing in the premium tv world. you are watching "market makers ." we are digital. to see all of our stories and interviews at, on your tablet with the bloomberg plus tv app. ♪
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run a company, a cyber attack is not a matter of if. it's a matter of when. home depot and j.p. morgan are some of the latest victims. if every ceo knows why it is coming, why are they hackers succeeding? hasn't anyone learned from the target debacle? questions, his
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practice focuses on cyber security and global security. brian, what do you detect in the corporate world? is it a lack of will, a lack of expense -- >> lack of understanding? >> perhaps a lack of understanding, or the fact that the hackers are so much better than anything anybody can respond to? >> it's the latter at this point. we have seen with directors and officers and cio's -- there is plenty of attention being paid to the cyber threat at this point. cyber defense is about a step or two behind at this point. you have to consider how cheap it is to conduct these cyber attacks. two dollars an hour to conduct a distributed denial -- >> excuse me, two dollars an hour? >> to take down a website, like the banks had last year. by way of comparison, i can't get my daughters to clean their room at two dollars an hour, but i can take down a significant
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website. you can buy one of these is zero dollars a day vulnerabilities. there is a dark internet out there with a cyber arms market where if you have a paypal account and credit card account, you can buy anything at this point. why isn't it simple to create a proactive defense system against these threats? really good some systems out there. fire i has what they call it detonation chamber which is pretty sophisticated. it looks to see whether e-mail attachments and web traffic is performing in an aberrant way. the problem is there are multiple vectors into any company. it might just -- it might not just be e-mails or web traffic. it could be individual
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components. there's a whole trade in counterfeit parts, lots of which come with malware preloaded onto it here you have insiders who stick a usb drive into a computer. that usb drive may have come loaded with malware as well. hackers are very sophisticated and the reality is they're going to make an enormous profit on what they do. they live in essentially no fear of repercussions. they're not going to be prosecuted for the most part and the u.s. government has shown so far to be relatively toothless in taking actions against nationstates who conduct these attacks. >> if a cyber attack is inevitable, isn't more a question of how the company responds once it realizes it is been attacked? target had no idea what had happened and it took days for target to understand the magnitude of the attack it had sustained, whereas apple recently -- it appears as though apple was able to get to the
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bottom of this photograph scandal very quickly and make a that its definitively own programming and software wasn't at fault. >> that's right. we often forget that perfection is impossible when it comes to cyber security. have anpanies enterprise risk manager, but you don't have an enterprise risk eliminator. you cannot eliminate risk. cyber criminals are going to find a way in. tos the job of the companies the officers, etc. to look and do a good threat and risk analysis and determine what can we realistically stop and what can't we realistically stop and how do we allocate our resources? if we can't stop a nationstate attack which no bank, no retailer will be able to do -- the nsa can't stop china and russia from getting into their systems, so why would your average retailer be able to stop that? iny need to look and say,
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those circumstances we know we will deploy defenses, but there's a likelihood they will get in, how quickly can we detect it and how quickly can we respond? mandy and says it is 229 days cyber attackime a successfully penetrates a system to when it is discovered by a company. that is a window that needs to close dramatically. >> more than half a year before companies figure out they have been hacked? >> that's right. part of it is due to the sophistication of the malware. one of the statistics i was told recently is 70% of the malware out there at this point is used once only. because manyially of these companies are not properly staffed? they did not consider themselves technology companies three years ago. there is that element of it. we are seeing in the last 18 to 24 months, companies waking up
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to the cyber threat or you are starting to see more investment. they could be doing outsourcing for managed security services, moving systems to the cloud. they have to be careful about that. that is one of the things i have written about in "the wall street journal," talking about how when these companies signed contracts with outside cyber security vendors, they need to not allow loose language. they need to assign specific responsibilities for outside security vendors so everyone knows what their role and responsibility is and if something bad happens, there is somebody who can say you are at fault versus years and years of litigation. >> how our insurance companies to this increase in breaches? did you say loose language? that never bodes well for an insurance policy. >> insurance companies have an interesting response. the global capacity for cyber insurance is not that big, $300 million max, and there are $4
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billion or so total in insurance available worldwide for cyber related losses. questions,insurance i turned to people who i consider to be smart and knowledgeable about this, experts like my colleagues. they will tell you that lots of cyber insurance companies will tell you a cyber policy but it is the wild west right now, and is lots of exclusions. you can't rely only on insurance in the circumstances. >> shocking, you can rely on insurance. >> brian finch, of pillsbury. ♪
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>> coming up, is not just
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another cable channel. and video on demand all at once. we are going to be speaking with the ceo mark greenberg. ♪
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>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. to "marketback makers." i'm stephanie ruhle. >> i'm erik schatzker. it's a crowded world out there. is there room for another premium cable channel? fives been around for years and recently secured more national distribution. unlike some of the others, it is relying on mobile platforms for growth. the president and ceo mark greenberg is here, as well as alex sherman. mark, welcome. viewers know lots about
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showtime, cinemax, hbo. not to mention netflix perhaps. they don't know as much about your channel. >> netflix is a customer of ours. towas created and launched read this october will be our fifth anniversary. it's a joint venture of paramount pictures, lions gate and mgm. we have all the first-run movies that come from these studios. like all other paid networks, we are commercial free, uncut and unedited. the streetess to studios libraries. we curate those in on our digital platform we have a linear network, on demand as well as the digital platform. we have 3000 additional movies above and beyond what is on the linear network. >> these are huge numbers. are we being offered too much? i regularly complain about my time warner cable. last week i had to write tv for
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a week and it seemed i had unlimited channels but they did not show me anything. itdirectv for a week and seemed i had unlimited channels but they did not show me anything. >> for what we do at epix, we are not going to say you have to watch everything on the tv set. we are on 450 different devices. we think those become consumer choices and we can't dictate where and how and who and what you want to see. mosteality of it is the consumers watch 12 channels religiously. we live in a 200 channel environment. for us, that becomes the real question of how we get on that consideration set. >> the consideration of those 12 channels? >> the ones that each consumer wants to see. we know that high-profile movies like "hunger games stick out stillworld war z," have
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become the zeitgeist of consumers. jeff bucher is made a comment recently, for all the great original series and programming on hbo, almost 80% of hbo's viewership are movies. do you think there are too many channels out there in the sense that maybe it hinders your business a little bit? we have bills rise, heard from pay tv executives saying, there are too many channels and we need to start nixing some of them. do you feel like in your worldview which there were fewer because maybe then all these pay tv operators would carry epix? few that aren to a left. we get a distribution deal with time warner cable and bright house and at&t in the last few months. today we are available in 54 million households. we feel pretty positive about where we are going. is that a challenge? sure. we have been in business for
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five years and we achieve profitability way faster than hbo or even showtime, for that matter. we turned profitable within our first year of being on the air. on an economic level we feel pretty good. the question you asked is an interesting one, how do you choose. many years ago i testified down at the fcc. it was an interesting day. really was, cap consumers pick what channels they want? if you look at the best programs and networks out there in the last two decades, you would say it is hbo, that they are only in 29 million households. imagine and espn. espn is only watched by 25% of the country and has a very high license fee. can the economically survive -- if there barrier to entry is subscription like hbo, hundreds of millions of dollars in transaction costs to generate new subscribers. bloomberg tv, if everyone had to
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ay for it, you would have marketing department that would have to aggressively do direct response marketing to generate new subscribers because people make decisions, are you in that 12? people don't understand how difficult it is to get carriage. why is it that you have not yet -- you pointed out that bright house and at&t -- but why is it so much harder to get in with comcast or direct tv? long flight. we have not seen as many entrants come into the game. i started hbo in 1981. in 1981, hbo was in the 4.5 million households and available to about 30 million. capacity has opened up, i think there was a land grab that went on many program networks.
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has allowed the fulfillment of 200 channels. i think stephanie asked the right questions, are they the right channel for people will want to see. those are all legitimate questions that are there. for us, we feel comfortable where our position is at the moment. we feel good about our success. we have created incremental cash flow for all of our clients. we are delivering compelling program. we are probably one of the lead companies on tv everywhere. being up to 450 devices, i was fascinated three years ago, we were the first network to be on the xbox connect. we did a million and a half downloads in 10 days. a deal cut with time warner cable. you don't with comcast. comcast is trying to buy time warner cable. where do you fit in that merger scenario? >> consolidation has gone on in
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this business since the day i started in 1981. national accounts had 25 national account msl's. you can't find 25 cable companies anymore. what happens? 1993, satellite becomes a platform. cable operators consolidated. when we started, there used to be four satellite providers. there are two. there used to be a point when the r-box -- there were seven. now there are two. of almost anything that happens in a capitalistic economy will have a certain level of new startups, new evolutions, consolidations. the fourth platform is digital. it is netflix, amazon, hulu, doing various different components of that, creating another competitive landscape, all providing different types of retail. >> comcast still controls your internet pipe. that is an interesting
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question. mvpdthe fcc has called the -- what his facilities-based versus non-facilities-based. in the next five years we will see it be an irrelevant term. what you will is whether someone can deliver a signal or internet signal or something we have not yet known. i think those are all just transportation methods. the benefit for the cable companies and telcos is that they are a multidimensional business today. >> is it a good thing for the industry, consolidation? you have notion, choice. it is going to be the evolution. there used to be 25 mso's. today we are down to five or six. you will see certain efficiencies that come in. it will spur new competition.
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it will spur that they can't sit there and keep the world wide web or it it will have to have access to everyone to instill that competition. been doing this since 1981. competition has made the cable companies better. they have launched more channels and hd. satellite added more hd. when the telcos came along 10 , they added more on-demand programming and that allowed everyone to respond. >> mark, thank you very much. ceo and president of epix, and bloomberg proskauer chairman. congress is back from its summer vacation. get ready for gridlock, budget fights, and the inevitable talk about a shut down. ♪
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>> breaking news here for you. ready made off's son, andrew, has died. we discussed confirmation. there was word circulating for some time that madoff's last remaining son -- his other son committed suicide -- had died. >> lost the battle with cancer, i believe. >> is that the cause? ok. pardon me. details are just coming in. developmentlatest out of the madoff story. andrew madoff has died. >> labor day is behind us. your summer vacation is over and every two years, it's time for americans to start to think about the election. are setr, republicans to keep control of the house, and they like their odds.
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likely they could be winning the senate to. peter cook is back with us for more. have democrats already lost the senate? >> no. the odds are not in their favor. i know you are laser focused on control of the senate right now. >> laser. >> the odds were always in republicans' favor. to playing field played their advantages. they need to win a net of six seats to control the senate. democrats have run some really good races in places they were not expected to. georgia. has run until recently a very good campaign. you also have kay hagan in north carolina. the race people should watch most closely, north carolina. if republicans win back the senate, what does it mean for
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obama's next few years? >> welcome to gridlock. >> presidential veto city. >> the outlook is not very good for anyone who wants to see substantial legislation passed. it will not happen with that kind of environment. subdued be a very two-year period in which nothing gets done. there is one sliver of opportunity when you talk to folks in washington. maybe corporate tax reform could start to move. it might be easier for president obama to negotiate with a fully republican congress as opposed to ones where the democrats control the senate right now. >> voter turnout for the midterms is always low relative to the presidential election years. >> that make sense. >> of course. but with public opinion, with congress at an all-time low, and
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congress likely to do nothing between now and november 5, what does that say for the turnout this year? >> it is a concern on the part of democrats and republicans. these individual senate races -- you may not be getting bombarded as people are in places like west virginia. there may be more interest in no state races than you might see here in the new york area. concern rightig now and a couple wildcards to watch. the president has been talking about maybe some executive action on immigration. why? maybe to fire up the hispanic pace ford emoc -- pace for democrats. the white house is debating right now whether to do something and more importantly, when to do it. the other risk we talked about, the threat of a shut down. >> is that for real? >> it's a remote possibility.
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a real possibility in the sense that they have to come back, they have to agree on a spending plan by the end of september. >> so congress needs to come up with a new spending plan, agree upon one by the end of this month? >> yes. >> help me. >> it is arguably in republicans interest to cut a deal and take that off the table as a political issue. a lot of republicans feel strongly about what that deal should look like. is --sounds like there maybe i'm reading too much into your remarks, but it sounds like there is room for a divide within the republican party at the worst possible time, heading into the election that they so badly want to win. this tandem discussion about immigration. if the president takes action on immigration, there are some republicans who are saying we should withhold a spending plan so the president agrees to take that off the table. you could have the two issues combined. then we have the thermonuclear discussion in washington.
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it is at least a threat. p>> peter, great to have you here. ♪
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>> welcome back to "market makers." friend adam johnson just did his rendition of "brickhouse." what is coming up on "money clip"? datame of the brickhouse they came out this morning, the strongest pmi data in the world. both in ireland as well as the u.k. this is a big deal. he got my attention because both numbers were over 60. above 50 is breakeven. here in the u.s. it is 58. for all the talk in rebound in the u.s. economy, they are doing better overseas. >> insight in action, my favorite part of "money clip." >> i would've preferred it if
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you are planning to sing "brickhouse" on "money clip" today. " coming"market makers up after this short break. ♪
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>> that will wrap us up for today. there is no way you want to miss
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tomorrow. i will be a bloomberg's sports summit. adam silver, nba commissioner. you know him by carmelo anthony of the new york knicks. and randy levine. i was at a yankee game last night. i'm going to make him answer to why the team was looking the way they did against the sox. huge day on bloomberg tomorrow. >> right now it is 56 minutes past the hour. here is senior markets correspondent julie hyman. >> the s&p 500 hitting another all-time high as global stocks a cease-fires for between russia and ukraine. joining me for days options insight is a derivatives strategist at baycrest partners. if you look at the major averages, we are not necessarily seeing a lot of decisiveness. the s&p earlier hit a high but now it is down a few points. what are we seeing options wise? decisiveness being
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expressed through the options market? >> not really. this is a low-volume environment. is around 12, which isn't surprising. i think everybody is just taking a look at their books and setting up for the next big event, which is september 15 when the fomc starts. >> payroll is coming out on friday as well. >> we have had multiple instances of those without much action in the markets. you see there is some activity that is concentrated in individual sect or's. sectors. -- other thans that, at a macro level we are not seeing much positioning, even with pfizer trading off of the highs. individuallk about stocks. as i'm looking at the most active option, intel is up near the top of the list and it is
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trading near a 10-year high. what are we seeing here as it gets up to those types of levels? >> we are seeing activity in the calls, september expiration, 36 strike calls appear to be sold around 70,000 times. it appears to me when the stock had the momentum on the way up around a month and a half ago, a lot of investors bought those calls. sustained rally. instead, the stock sort of settled down at this current level. what they are doing is cutting their losses and getting rid of those options, those call options they bought earlier. we are seeing a lot of closing sale -- what appeared to be closing sales. >> not necessarily betting this run will continue? >> no, they're taking those bets off because the stock did not as itue to pull higher
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was about a month and a half ago. >> i want to talk about other individual stocks coming out , theearnings tomorrow mining company. i want you to lay out your trade and then we can get into it. it is a more pessimistic trade in terms of how joy global is going to go. >> my trade in joy global is to buy the january expiration, 62 and a half, 55 foot spread for under two dollars. in its reward, not a great risk reward. the issue with joy global, any of the mining equipment makers, is that the customers they supply to is coming down. analysts said expectations
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for joy global have not come off as much. morning peoplew will get a better sign for what is going on in the business. at the same time, there has been a little bit of a floor under the stock because there has been m&a speculation. >> that's right. has a tendency to run up eight or 9% pretty would be very difficult to show it. >> anshul agarwal, thank you very much. we will be on the markets again in 30 minutes. ♪
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>> welcome to "money clip." i'm adam johnson. here's today's rundown. from the largest u.s. bank to home depot credit cards to new photos on apple's icloud. why companies are losing the war against hackers. samsung tries to front run apple with its own product list. does this actually work? the state of maine has the slowest internet problem you could possibly come across. it has the fiber, but it can't connect. next week is fashion week here


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