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tv   In the Loop With Betty Liu  Bloomberg  October 7, 2014 8:00am-10:01am EDT

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slim will join me right here for an exclusive interview. we will ask the second richest man in the world about a potential breakup of american movil -- of america movil. and, his undying love support of the clintons. as walt disney and time warner triple their contract payments to the nba, my exclusive interview with espn president dansk effort. -- john skipper. another sign of trouble in europe past biggest economy. juran -- german industrial production fell last month for the most since 2009. rio tinto has rejected a merger that would have saved the world's biggest mining company. plungedarter earnings at samsung, the world's largest
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smartphone maker. samsung losing ground to apple. and some some electronics posting the biggest drop in quarterly profit in almost five years. is as samsung struggled to maintain its leadership in the smartphone business. its other divisions are now putting these -- in the spotlight. the company announced yesterday it plans to build a $15 billion chip plant in south korea. for more on samsung's involving our guest joins me now. in mu of the smartphone sales, the chip business is doing well. >> it is. one of the things happening with chip sales and specifically memory is that you have a consolidated market. you have fewer suppliers. there is not much supply coming on line, and as a result prices are controlled. and demand is ok. lots of memory going into smartphones and tablets, and
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even the pc business. >> the good old pc business. exactly. they are not dead yet. fewer players control pricing, and so they are doing fine. as one business struggles with samsung, they are trying to pivot to the chip business. chipe they able to use the business to help the smartphone business? how much of a help could that be? >> there is some help, but memory is a relative commodity. whether you get it from samsung or micron, the prices are sort of market set. >> this comes at a time when ibm is looking to sell off its chipmaking. it has not been able to make that a profitable business. >> that is a great point. one of the great things happening in the chipmaking business is it is becoming more replicated and expensive. companies are figuring out if i businessskill in this
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-- if i cannot have skill in this business, i do not want to be in the business. one of the analog are saying if i cannot get on my own, i will farm it out. samsung is a foundry player. is the only company that has size and scale that is making its own shifts. >> thank you so much for joining us. of bloombergsan intelligence. with rio tinto would have created the largest mining company in the world. we join matt campbell in london. commodity prices have plunged, so why is glencore interested in rio tinto now? >> some commodity prices have slumped more than others. -- rio tintoan ir
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is an iron or company. iron or has and hammered this year. part of that is because of new supply, demand in china being sluggish. as a result, if you want a lot of iron ore for not too much money, rio tinto right now seems like a good bet. >> is there still a chance for a deal? >> absolutely. glencore is still laying the ground core -- the groundwork for some kind of transaction, but this is a long game. most shareholders are naming of the regulatory implication. whochief executive officer runs and controls glencore is a patient guy, so we should not expect anything tomorrow. but in the medium-term term, the story has a long way to go. >> matt campbell in london on glencore. and rio tinto. in washington, it is week two at him -- of hank greenberg's shareholder losses of aig.
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hank paulson took the stand yesterday saying, "when companies fail, shareholders bear the losses. that is just the way our system is supposed to work. the was in his defense of aig bailout. he is the first of three key players to testify today. it will be tim geithner and later the former fed chairman, ben bernanke. chief washington correspondent peter cook has more on the case, and my guest host for the hour, bloomberg contributor editor bill cohan. we were expecting hank paulson to be on the stand for eight hours. he was two hours and done. >> it was quick. that was the biggest surprise from his testimony. no real bombshells from hank paulson. we did learn that he challenged the notion that there was a last-minute financial lifeline being offered to aig by the chinese. paulson said that was not the case, it was not going to happen. he stuck to what he has said in
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public and even it is luck, that's the aig bailout was an awful moment, something he did not want to have to do, but was necessary to protect the u.s. economy. the crux of the issue in this case, he said the terms of the aig bailout were appropriate, given the moral hazard risk, even what had happened to the company. he defended the terms of the deal. i think tim geithner will have a harder time because he was much more intimately involved in the details of the agreement itself. >> where is geithner going to be mostgoing to vulnerable? >> as head of the new york fed, he was directly involved in the actual details. we have learned over the last couple of days that the interest rate that was set on this loan that was a personal decision by tim geithner to put
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a tough interest rate on that loan. one of the arguments they will make is it was too harsh, much harsher than other banks were receiving, banks receiving financial help from the government were receiving. that proves that the government went too far with aig. that is the argument hank and his lawyers are making. -- i can see you rolling your eyes a little bit. >> please tell me why this lawsuit exists. because he has the money and he can hire david boys -- there is no basis at all for the lawsuit. the only good thing about the lawsuit is it gets us to hear. hank paulson, tim geithner, ben bernanke, on the record. this has nothing to do with aig. aig got what it deserves. aig is lucky that it is alive today. it is alive today thanks to the federal payout -- thanks to the federal bailout. >> what is interesting is that
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greenberg from time to time says i do not believe the aig story has fully been told. >> i don't agree with that. about hankover story greenberg and aig. hank was going around saying what would happen if i was allowed to stay at aig. there would have been a private investor. >> to some degree he is right. if he had been allowed to stay successor did not understand what hank had told her that is the hypothetical. that martinains sullivan was at the helm, aig did go down, and they are lucky to be around at all. when you are in bankruptcy, shareholders get wiped out. benmosche,t from bob the last ceo before peter hancock, we talked a lot about
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the bailout in that moment in time. this is what he says about aig now. i want both of you to listen. >> i don't think another aig will happen. >> we will not see another energy crisis again? >> know, and i think we have been in this position for over two years. i don't think you will see a bank failure. i don't think you will see a securities industry failure like lehman right now. >> so you give a thumbs-up to the regulators? >> for getting the job done, but i give them a thumbs-down for being afraid to tell the public. >> do you think during the trial dowe heard from geithner -- you think during the trial we onl hear more from geithner the bailout? >> i would not expect that. david boies is too focused and too talented, that this is a backward looking event, as bill cohan has talked about.
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we'll hear about what happened 2008. you will not hear much prospect of a. without giving a whole lot of attention, you had president obama in the white house meeting with top financial regulators, talking about these very issues and urging the top regulators to stay focused on the issue of preventing another aig, another bailout in the future. it did not get a lot of attention. there was a meeting of the mines, if you will, at the white house. the president has not forgotten about what happened. at all.e has not overall, when you were listening to what benbow milkshake -- about what ben moshe -- thehey do not happen quite same way. in the 1980's, in the middle 1980's, from the junk bonds market, 2000 eight, it was in excess of the real estate market. there is always a different
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twist on what causes a financial crisis. the results are similar, unfortunately. there are always financial crises. you cannot prevent them. rhymes, it does not repeat. >> bill, you are staying with me industry. more on the peter cook, thanks so much, for reporting on the aig trial. you can catch my exclusive interview with bob benmosche. that's go to and search titans at the table. skipper.ident john he and turner broadcasting have agreed to a new deal to show nba games. it is three times what the network is paying now. still, no one believes espn will go broke showing the nba games.
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cable operators pay espn more than any other network. i asked john skipper whether the time would ever be spun out from disney. >> it categorically would not. everybody should remember that espn has been built after disney bought it. most of the platforms we have started started with disney cash and with disney resources. the brands are very complementary. it is all about content, integrity, adoption of technology. the viewers as fans. we don't have issues between the parent company and these -- >> bob, skipper is referring to his boss, bob iger.
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at the players need to see a big chunk of that change. plus, shaking up the mortgage industry, a new lender has already done it through student loans. can it do the same for real estate? may be a new way to get a mortgage. ♪
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>> we have coming up former ubs america cbl -- ceo robert wolf. we will get his take on the president's foreign policy, the new risk in this age of banking. carlos slim is joining us in about an hour. last week we learned ben bernanke -- he could not get a mortgage. now there might just be a solution for our central bank chief. a company called sophie -- called sofi wants to make loans to people who qualify using a different set of criteria than traditional lenders.
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afi was started by refinance trader and refinances based on what schools they are attending. now they are getting into the -- ande market california, my home state of new jersey, and the washington, d c, metro area. is joining me, and also bill cohan is staying with me. mike, are you going to loan to ben bernanke? >> i will absolutely loan to ben bernanke. , thenk the situation challenges in refinancing is symptomatic of the problems in the mortgage industry. credit cycles move from one side to the other. pre-crisis it was tell me what you make and it is good enough. post crisis, i will treat you like a money launder until you prove otherwise. we have gone too far to the other extreme in terms of credit creation. >> tell me the biggest
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difference tween what your criteria is versus a bank. doour traditional borrowers not have a huge asset position. a acronym henry, high earner, not rich yet. the reality, it has a lot of options financing those home. >> can you be a self-employed guy? >> are you looking for a mortgage, bill? >> well, if it is good enough for ben bernanke -- >> generally we take pay stubs. it is us as simple as that. have a payyou do not stub? >> if you can demonstrate you have income and that we can underwrite you against your think about a for
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traditional mortgage process today, you have to produce for years have passed returns, document every asset you have violated that is ridiculous in the context of getting a mortgage. i have done is, lower down payment, 10% down, no loan limits, and we need to document your income to your ability to repay. is it crowd funded? >> it is a combination. couple of big milestones in the capital markets in the last couple of years. in december of 2013, we did the first rated marketplace transaction. year, we did a 250 million dollar deal. that has opened up the institutional market for us, so we have a robust set of banks and repealed -- and retail capital. >> should the big banks be shaking in their boots with a guy like this, bill? >> yes, but they will not.
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this is sort of like what lending club is doing with the credit card industry. banksntry mediating general -- this intermediate -- ibanks generally is think this is an exciting area for growth in the banking sector, but, you know, not to be impolite, but they are very small companies and banks are became myths -- banks are behem oths, so they will not be worried about it but they should. in the grand scheme of banking, it is a very small number. we would like to do more mortgage origination on a dollar basis and student loans and refinancing. than theates are lower banks, right? that is how you are able to get -- >> they are not. they are on top of bank rates
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for traditional mortgages. it will look just like a rate that comes from wells fargo. where we are unique is we are the only ones offering a rate at 10% down. bill, you do not see the banks relaxing their lending standards, do you? >> mike is absolutely right. the pendulum swings. in 2006, 2 thousand seven, if you could breathe, you could get a mortgage. >> mike cannot get one, either. >> it is a huge opportunity for you with the banks being so inflexible. but the pendulum does swing. the question is, when it swings back, what happens to your business? >> guys, thank you so much. michael cagney, the chairman and ceo of sofi capital. the parent company of ce -- the -- plus, did amazon cut a deal in europe that barely shifts
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profits and avoid higher taxes? that is what regulators want to know about jeff bezos. ♪
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>> you are watching "in the loop " live on bloomberg television. good morning. i'm betty liu. here is a look at top headlines. a nurse in spain is the first case of ebola outside africa. contact ---old woman contracted the disease after treating a priest who died last month. suspicious cases are being monitored. time warner's turner broadcasting division is cutting 10% of its workforce. the job cuts are part of becoming a path water initiative to improve its performance.
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that was the drama earlier this summer. for possible tax trouble amazon. the european union opening an investigation into the company's tax practices in luxembourg. dealrobe focuses on a 2003 with the government and alleges most amazon profits made in the eu are recorded in luxembourg but are not taxed in luxembourg. interesting news on that front with amazon. it is 26 minutes past the hour, which means bloomberg television is "on the markets." investors are jittery on this tuesday, concerns about what is going on in the u.s. with the economy, but also the continued fighting in the middle east, and in particular in syria. we will stay on any news coming out from the political hotspots around the world. we are "on the markets" again in 30 minutes. call it the new age of being banking. wall street firms dealing with
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everything from cyber attacks to complicated regulatory rules. former homeland security chief says banks like jp morgan better be used to these hack attacks. >> there has been a definite significance he change in the attitude of the executives, and i think it is understandable. many understand there are a lot of electrons flowing around the world. there are always the ones on the bottom line. there is grand risk, reputational risk. there are so many points of entry into the system. you need to take a look at your digital infrastructure, and the cyber breaches not just as a technology problem. you need to look at it as a business risk. >> joining us now is robert of 32 advisors, also a great friend of the president. bill cohan stays with me. on the whole conversation about the new age of banking, who would have thought cyberattacks
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would be at the top of the list? >> first, it is an honor to be on with bill today. >> i hear you are a fan of his book. >> i am a fan. i got his book. over the weekend i called carlos barrera -- he said something , putting on ang little bit of my old ubs hat. what he said was very clearly kind of more or less a quote that banks seem just -- need to start in crafting their data and use digital identity for their clients, similar to what tom ridge just said. whole idea of password protection alone is not going to work against this whole cyber terrorism going on. then he started talking about how, you know, when i was running ubs, we kind of built our own fortress around the banks, like let's check our own castle, and we make sure that everybody -- that everything in and we make sure that
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everything inside is protected. >> you mean people doing things inside? >> you have to watch kind of both sides of the border now. the whole idea of digital security and digital identification inside and outside is very key. we used to have a thing in our firmware every time you move someone to a different unit, you want to make sure that you decommission what they have access to. the risk sheets. >> is that what gardening leave is all about? >> the fed used to have a two-week rule of mandatory see you could not -- so you could not cook the books. what is interesting is that, you know, we often forget to decommission everyone.
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it is a manual process, ok? it's a manual process. look at what happened with edward snowden. isn't that a prime example? a watershed event is when you have 78 million accounts broken into at jpmorgan chase at out of somebody's money is whipped out of those accounts, i think that will be major headlines and headaches for jpmorgan. >> it's interesting we still -- all of us -- here is our password. every day we have to give that out. >> after i read about jpmorgan -- tom ridge says this -- after i read about it, jpmorgan can be infiltrated like this and then all of these other banks can be infiltrated. after i read that story, i went
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and changed all my passwords on all of my accounts. >> is your money still there? >> it still there, thankfully. >> when your money is gone, then i don't know what happens. happy to see over the weekend the jpmorgan reached out to all their clients and reassure them -- and reassured them. rumor has it happened a few months ago so the question is -- what happened over the last 60 days? we are in a new territory. security, information technology, social media is driving everything we do every second of the day. >> we have been a new territory on regulations. the regulations are increasingly more complicated. we just heard the last few weeks about how goldman sachs and are changing their
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conflict of interest policies so that traders can no longer trade individual shares, at least they are looking at that, in their own account. when you look at something like that, are you glad you're out of the banking business? >> as you know, six years ago, i was there for that infamous lehman brothers weekend. i was one of the few executives called in that friday. we did not have the right tools than. the tools today are much better. whether you like every aspect of is hard towhich fathom something north of 10,000 pages. if you look at the principals and whether it is the systemic regulator or a derivative transparency or a living will for resolution authority, some of those things are incredibly needed. is, in a dynamic industry such as wall street community to be more principled than think you can put everything on a piece of paper. it's marked the places like
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goldman sachs and others are looking at conflict resolution. for myself, i have missed all the runs because i never invested in stocks because i/o is felt running the firm that i had information. the one time i did buy a stock, all of a sudden in asia, the stock went from x up fivefold and i could not sell it and it went down fivefold and you get your friends and family in and they ask what i should do and i said i don't know on the stock goes up and down and you can never say anything. in some ways, it you could save your on wall street, maybe you should not be investing in stocks as a broker/dealer. there's always information being passed around. if never know any given time the chinese wall is truly being protected. street,i work on wall there is a compliance function and people who knew what
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everybody in the firm was doing. you want to by berkshire hathaway commute call up and ask to buy shares and they checked the list and i say go ahead. system thatlike a works. i'm not sure what prompted the side goldman sachs. >> they came during the carmine seguerra tape. a restricted list is not the easiest way to do it. there are conversations that happen all the time. there are meetings that happen all the time. there are reports that are in draft spec go to final. >> it will certainly prevent insider trading. >> it's a smart move because they are forcing a neck strip barrier that has not been there. there is no downside to it. the salesman or trader cannot buy an individual stock, so what? >> they will not cry. they will make their mortgage payment.
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great to see you and thank you so much for joining us. you are staying. also, robert wolf will hang out with us for a little bit. >> you cannot get rid of us that easily. >> we also have the world second wealthiest man will be in the house and the studio. mexican telecom billionaire carlos slim will be with us. we will be back. ♪ ♪
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>> islamic state fighters are pushing further into kobani, battling kurdish fighters who have been defending the town for three weeks. the turkish president says the order town is about to fall to the militants. days ago, turkey said it would not let that happen. we're back with bill cohen and robert wolf.
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robert just returned from turkey on a trip where he met with the president. what did you do talk about? >> i went last week to poland and turkey with the president's export council led by secretary of commerce penny pritzker. you could say in one sense it's a u.s. ambassador trip on business development and there is always strategic diplomacy. i like to stay in my sandbox on the economy. we met with them as a group and his cabinet the day before the vote. most of our discussion had to do with business development and economics between the two countries and obviously getting trade and i== better investment. >> did that feel tenuous? >> it did not because we were wondering how we could work together to make things better. when you are in turkey, there is the sense that they are
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surrounded with a slowing europe russia with incredible sanctions that have been crippling them on the other side and then you have obviously the geopolitical risk of the middle east. ways, you have to feel for turkey in the sense that they came through on a boat that was aligned with the u.s. -- i came through on a vote and was aligned with the u.s.. some people say we need that and it's a gateway between europe and the middle east. obviously, it has been an interesting 24 hours for turkey ever since they made the announcement. robert, you are supportive of the president and you are close friend of him. you have talked about being a business leader and the using that platform as a diplomatic platform with various leaders around the world. the president has had his critics over the last several months saying he has taken his
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eye off the ball on islamic militants and various other issues in russia and elsewhere. i want to play for you what mitt romney said yesterday on our program. >> people are saying what i think is now pretty well understood by the american people which is the president isis, orwrite about about iraq, he was not right in syria, he was not right with regards to russia and those mistakes have cost us dearly. >> what do you say? >> right now, we are in a difficult situation geopolitically. there are stuff in southeast asia and obviously ukraine, we could go through the list. things are not going to happen overnight. >> did he take his eye off the ball? >> i would not say that. his eye is on the ball with respect to keeping our country safe 24/7. whether you think he could have handled it to friendly, mitt
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romney will say that even if he handled it perfectly. i think he said he did this wrong. i did not hear him say what he would do. it's easy to point fingers when you are on the seat that lost. it's incredibly difficult situation, i'm not a foreign policy person. i think thomas friedman had a very interesting op-ed a few weeks back when he talked about which different side to you choose. are you teaming with syria or complicated issue. as a father of two boys, i am not for boots on the ground and thus fighting every battle in us having military around the world. i think we have to pick our battles appropriately where they are protecting the united states first and foremost.
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i think it's a difficult situation but i think all of us can speak on tv and we don't know all the details. it's easy to point fingers this way. my recommendation is we should make sure we are rooting for the home team and figure out how to accentuate the good things we are doing. you can always point fingers and bring more hysteria to the american public but i don't think that's a benefit. need me to point figures at the president. you got liked the former defense secretary leon pana -- >> the last two because robert gates did as well. i don't know why this is happening. >> let's play what leon panetta said. >> these last two years, i think he kind of lost his way. ,t has been a mixed message little ambivalence to try to approach these issues and clarify what the role of this country is all about. >> do you think the president has lost his way? why would his defense secretary say the president has lost his way? you played golf with him and
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august -- in august. has he lost his way? >> i will not show any disrespect to leon panetta and david dachshund robert gates. we will not get into to he said/she said. you can always take one line in the book and say, oh my god. there are other parts of the book where he is giving the president accolades. and there are so it's where news gets sold them i will not get into the book aspect. >> is that why he's saying at? is he hass disagreements with what the president's decision-making. that is not surprising. most of them had disagreements when he went in after osama bin laden. most were against them going in and we applauded that. i think he will have some thompson the road and people will take different sides. it's hard for me or anyone else to assess. >> forgetting what he wrote in the book, you have been with the
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president recently. do you find you was engaged and focused on these issues? you will not talk about what you talked about but -- >the idea of being disengaged. >> i think it's ridiculous, ridiculous comment. this guy is thinking all day how we are -- how we can be protected in the united states. bush and office are obama and office, i always have a respect for that office. i may not agree with every decision but i always feel their hearts are involved -- are invested in making sure of the best decision for the united states preventing those comments are absurd. >> stay with me because there is a lot on the agenda today. >> i'd like to talk about the economy. >> we will get to that. thank you for staying with us. in two minutes
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on "in the loop." ♪
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toamazon is one step closer nationwide same-day delivery and will launch its fresh grocery business in new york as early as this month. other companies are spitting up their same-day deliveries as well. one example is a company instanterlane bringing gratification to san francisco with a pilot program called will deliverwhich clothing to you within one hour. we are joined by the founder and ceo of ever lane. that great to see you this morning. it seems like there are big players like amazon and others who are doing this same day under an hour type of service. how will you compete with these guys? productse all-around
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so we have our own line direct to consumers and the much lower price than you would get through traditional retail because we mark up very low. we have seen our customers really want convenience. in san francisco, there are probably 5-10 different services offering one-hour delivery. we are really trying to push that boundary of convenience. coming up on >> delivery of what? food, fresh juice delivered in under one hour, sometimes 15 minutes. the whole world is moving toward you at the center and everything coming to you. we are trying to push that barrier. >> what's so special about clothing? >> advocates trying to move people from the barrier of going into a store and going online. if you can get your clothes and 40 minutes, why would you leave your house and go to a store? even those things you need like a t-shirt comes to you. that's where the world is
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moving. >> how are you doing this and still making money? >> it turns out that shipping ng's from a distribution center in denver is not that much lower price than just having couriers in san francisco delivering in 40 minutes. the weight of shipping and all the postage, you don't realize these costs add up. we just have one person picks it up and delivers it to the individual in san francisco. >> this will only work in a high density area? >> that's right. >> you're not looking to expand in the midwest >>. >>we are very city centric so you can look at new york and san francisco eventually chicago. >> does that limit the growth of your company? >> it combines the one-hour delivery with regular delivery. it's always does blending those two and sink us to is want when. it might be a place in the midwest or were not getting one-hour delivery but new york will be all about getting things
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to the customers as fast as possible. >> thank you so much for joining us. coming up, we've got the big interview -- the world's second richest man, carlos slim, the billionaire with about $80 billion in his pocket. he will join me in the next hour to discuss the potential breakup of his company and more. ♪
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>> it's about 56 and is "on the markets pass the error which means we are "on the markets." machinery stocks are tumbling in the premarket. reduced profit forecast and a warning from bank of america. scarlet fu checks out what's going on with these decliners. adcvo came out with a profit warning cutting its forecast because of slower sales internationally and a stronger dollar.
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watch for this to be a theme this earnings season. stronger dollar reduces demand. separately, bank of america downgraded a couple of machinery stocks. fell in the them premarket setting a difficult emerging-market outlook and what called a hard landing. bank of america downgraded shares of caterpillar as well. we should note that bank of america says the machinery stocks group is oversold. it has certainly underperformed versus the s&p 500 but you want to be where of the eventual rally because of the stronger dollar and weak international sales. >> thank you so much. hour, he is the second richest person in the world, carlos slim will be right here in the studio live on "in the loop." it is another bloomberg television exclusive.
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john skipper, espn signs up for another contract with the nba. ♪
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>> we are about 30 minutes away from the opening bell. equity futures indicate stocks will open lower today, more signs from germany that europe's economy is slowing down. ¢'s earnings took it died with profits falling 60% last quarter. says it has rejected the glencore merger attempt, move that would have created the world's largest mining company. glencore has now reached out to rio tinto's largest shareholder. right breaking news out now -- the international monetary fund just released its world economic outlook. olivia sterns has a look at
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their headlines. come out and cut their outlook for global growth and mousey the global economy growing at a rate of 3.8% over the coming year. in july, they said it would grow at four percent so they are cutting it. and they cite the weaker euro, russia and brazil at and you have seen a buildup of week numbers coming out of europe and particularly germany which is opposed to be a locomotive of the european economy. german industrial production can at the lowest level in nearly five years. one of the main reasons is because the sanctions against russia are biting central europe. the imf is citing weaker euro area and weaker brazil and russia. >> thank you so much. who better to talk about global economic growth than robert wolf, the founder and ceo of 32 advisors, the former head of ubs america. you have traveled the world and
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you give speeches and talk to business leaders on the ground. you're just in europe. is this consistent with what you have seen? >> 3.8% seems high to me. germany atorecast 1.7%. >> it's on the verge of recession. >> it's incredibly interesting to me that they are still closer to 4. russia's being crippled right now especially once they started the bank sanctions. the ruble has gotten hammered and oil is down. forget germany, france, there is a hold battle going on between germany's austerity approach and mariota draghi's approach adams france wants to run a deficit. you will see the eurozone break from monetary and fiscal policy not that the euro will break but the different countries are going to have to protect what they need to do.
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you have had china slowing down. >> do you think we got blinders on? >> i think the u.s. is by far in the best shape. the rest of the world is struggling right now. in the last month, i have been in poland, turkey, germany, central america, and france and was recently in africa. andyone needs exports public/private partnerships and foreign investments per it is difficult around the globe. the u.s. feels restrung. christmas looks like it could come early for retailers. the national retail federation is making its 2014 holiday forecast. julie hyman has more on their outlook. it looks like we might be spending? >> they are looking at a 4.1% gain for november and december. that is above what we saw last year when the rate was 3.1% and
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it is above the 10 year average of 2.9%. the jobless rate go down to some extent but we are not seeing wages gain as economists would like. what will still be driving a lot of the sales during the holiday season will be promotions, bargains. that will be something people are looking for. that is something to keep in mind as we wait for these numbers. that, you surprised by that we could still see a healthy amount of spending? >> we still live in a consumer driven country. i think it's north of 70% and we are still the largest consumer. the holiday is a spirited time and am not surprised that people dig deeper to have a festive 30 days between things giving and christmas. it's a good thing in this country that that's a time when i go into our pockets more both philanthropic leaders well is
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what you do for friends and family. >> i think consumers who are not they're spending but venoco goodenough in their paychecks. that seems to be part of the problem for the white house. no question the president gave his economic speech last week. there is no question we are better off than we were five or six years ago every which way you slice it. wages have been stagnant and that is difficult. it's difficult because we have a growing middle-class. with a growing middle class, and wages stagnant, that does not feel good. >> we should mention that last year, they overshot their prediction. just because they say it will rise does not mean it well. we don't know what kind of winter we will have. that could put pressure on sales. maybe you do your shopping online.
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you also have to look at what people will be buying. a trend we have seen that could continue is that people are willing to spend on bigger ticket items. it's electronics and tablets and their phones. they might not be buying as much other things particularly apparel which is been suffering. >> or they are not eating out as much. >> when you think about wages, you have to also look at to other things, the underemployed numbers going down which is a two, theand number slack in the average hourly work week has gone to prerecession levels. to 32e who goes down hours is back working 35 but we still have a high rate of those not looking for work. >> we do. we still have more to do. >> and a lot of part-time workers who want to work full-time.
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thank you so much, julie hyman. a special thank you to my guest host because you stayed with me for an hour, robert. >> i love it. wolf, founder and ceo of 32 advisers, the former head of ubs america. coming up, another slam deck for espn, decade-long deal with the nba and we will have reaction from the president of the espn, john skipper. ♪
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>> espn scored another major victory. parent company disney and time warner renewed their contracts to carry nba games through the 2024 season for $24 billion. that will triple the payments to the league and guarantees the two media giants ratings gold. in an exclusive interview, i asked john skipper the espn president about the real
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economics behind the new deal. will consumers and up having to pay the hefty price? >> it's not about consumers paying more or less. we have long-term deals in effect with the distributors. we don't create a surcharge for the nba. we are always managing a portfolio of rights that brings value to distribute his and trying to add to it. that is how we look at this. we also don't look at this as a one-off purchase. we have demonstrated a long absorbing increasing rights costs and being disciplined about which rights we buy, using those rights to build new businesses, figure out new ways to reach consumers, adopts technology. that has worked for us and we expected to continue working for us. i have not gotten any new instructions yet other than the walt disney company was still like us to drive results for them.
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our intention is to do so and we believe we can do so in the context of this deal and all the other deals we have done. >> cable-tv subscribers already pay five dollars for espn. if you doubled these rights, do you think in the end, consumers would pay $10 for espn? they don't pay us anything. they pay for up bundle of pay tv services. distributors pay a something i don't know what the exact number is. the ecosystem absorb costs over time but this is not take affect until two more years. i see the first of the reports that tumors that -- that consumers will be paying for this 90 minutes from now. they won't. and itls are long-term
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is our intent to bring value to distributors. that way people stay in the pay television system. >> this is a nine year deal. we have seen the television landscape changed dramatically in the last nine years. partal is such a growing and part of this package you will be live streaming some of the games on over-the-top platforms. how confident that this nine year deal is really going to cover the changing digital landscape? >> we think that's the beauty of the deal. we have bet for a long time on live sports. it has done nothing but appreciate in value. there is no reason to think that will change. everything about sports being thing that anybody will watch like continues to grow and become more important.
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we think that will happen. upended the way rights negotiations work about 10 years ago where we said we are not buying television windows does. we are buying content. that content includes data and highlights and our ability to summarize gains in the ability to put games on digital platforms. this is among the most expensive deals -- extensive deals would have ever done. we want to grow new businesses and have consumers consume and the nba will allow us to observe the cost of this. >> you're not worried about cannibalizing your viewership if you offer more and more live streaming versus what you offer now? decided aphically, we long time ago we would not worry about new technologies cannibalizing old technologies and we would offer products across the aire of all technologies and new technologies. we would rather compete with ourselves and let somebody flank us in a new technology.
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we adopt new technology aggressively and get share and then we make money as those technologies flourish. >> it started to monetize digitally. >> the television model has been in place a long time. i was not around when it started. it looks like i might've been but i was not around when it started. we are already generating significant amounts of revenue on digital platforms with advertising. juster is are paying us for digital platforms so while it or int have the time value of the television models which we still participate in and is far from finished, we do believe this will develop and we would rather be at the front of it then catching up with
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somebody else. on john skipper and espn, let me bring in paul sweeney. he covers all things media. give us context on this. they paid triple what they paid earlier primarily because they've got no competitors on their heels? >> i think this really shocked the sports community which is hard to do these days. 50% rights come up, increases, 60% increases but to see a triple off of a smaller base was really extraordinary. thatghlights the value networks are putting on sports as they try to maintain their audience. little bit of a defensive play in my mind. for the first time in the history of the espn network, there is a viable cable competitor in the marketplace and that is fox sports1, rupert murdoch who has deep pockets and
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is willing to spend a long time to build a business. andsports was out there interested in this product as was nbc sports network. >> can they make the economics work here? >> i don't think so. and you think about sports programming, it is been a long time since a network would come out and say we make a lot of money on sports. they hope to more or less breakeven and the use it as a promotional vehicle to promote other parts of their schedule and other parts of their media empire. sports is critical to have to drive affiliate fee growth across their networks and drive is dumb on live television which is still attractive. the nfl andim about if there scandals took away from the rights. >> for years at espn, we have seen different leagues,
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different conferences, different heart issueshave whether they are physical or social. fans are pretty forgiving. we are confident we have a long-term deal with the nfl and i have not spent one minute regretting that deal or believing that wasn't threatened. we were confident that commission or go double move the league test that. >> do you believe that? things that people at the nfl are concerned about is long-term health wishes of their retired players. this could become a public relations challenge but also when you think of the litigation out there, it could be a real issue for the nfl and bikes tension, its broadcast partners. is arguably the most valuable sports franchise in the world. espn has really tight itself to it and has some other networks.
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for the best interest everyone for espn to be healthy for long-term. >> thank you for stopping by. coming up, we have carlos slim, the world's second richest man in the house. he will join me live in our studio for dechellis of interview. watch out for that. ♪
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>> moving and shaking this error, billionaire patrick drahi is trying to acquire pt portugal. it would have to split off from brazilian telecom company and voi may agree so it can raise
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money to make acquisitions of its own. it ownsing company or assets in portugal and he is worth more than $8 billion. another billion or will join us, carlos slim and just a few moments. ♪
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are "in theack, you loop." bloomberg television is "on the markets." we are lower on the markets. the imf is lowering their global growth forecast. they are ratcheting down there and expect tatian by a margin. they are retching down there and expect tatian's by a margin. tatian'se expect expectations. the mcdonald's scandal is
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taking a toll on its profit and therefore casting a lot of $157 million in japan. the fast food chain took chicken products of its menu in japan after the supplier mislabeled meat that expired. >> you don't want that. .umber nine is chimera there was emergency use of their antiviral drug to treat ebola patient. the company is working with regulators to set up criminal -- clinical trials of the drug. the shares have surged more than 100% this year. >> number eight is las vegas sands after deutsche bank downgraded them to a whole. the companies competitive advantages are easing says deutsche bank with a price target of six to five dollars per share which is falling in the premarket, down more than 20% so far this year.
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>> number seven, the european union opened an investigation trade practices and luxembourg as they focus on a deal with the government alleging that the company cut a deal to unfairly shift profits. and avoid higher taxes. >> it looks like investors are not too worried about the stock. >> they should be happy about it. it saves the company money. stock getting a pop this morning is rio tinto. this is after the company rejected a merger attempt from glencore which would have created the world's largest mining company. glencore has reached out to the rio tinto largest shareholder in a potential deal next year. glencore has said the talks are on ice the ticket would now that the deal has gone public, it's likely the price would go up.
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the ceo of glencore is not likely to overpay. and biteto sweep in rio tinto cheap because the price of iron ore is down 40% this year. >> sort of related, farm equipment, staying with commodities, agco cut its full-year profit forecast for the second time saying businesses have been hit by broad sales decline and currency fluctuation. the shares fell as much as 11% in early trading. >> always finding that link. number four is and gm --mgm who haven't upgraded to a buy. they have attractive valuation and there's an upside in las vegas is likely to outweigh any negative news. >> dunkin' brands is number three. jeffries is downgrading the stock saying there is no
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near-term catalyst for significant move in the stock. they also lower their price target to $47. >> number two is the container store which reported second-quarter earnings that matched estimates. shares tumbled to a record low on the news and they continue to crash in the premarket. >> number one is soda stream. fizzling sales are after sales fell short of estimates. daniel birnbaum is causing for change saying the company must alter its course and improve execution across the board. remember when they were flying high and saying they would cut into coca-cola and pepsi business? >> it was the scarlet johansson boost. shift focus to emerging markets following the imf down revision of growth projections. that theseerian says
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economies may have hit bumps but they're not at a dead-end yet. i want to bring in our global chief investment officer at credit suisse. we just had robert wolf on and he would disagree with mohamed el-erian. he is a little downbeat about the global economy. >> we are still in recovery but it's very sluggish globally overall which is not surprising. in the financial crisis aftermath years and typically recoveries are very slow. the u.s. is leading and europe is very slowly following and the emerging market world has become a different place after the fed talked about tapering. it's too early to become down beat. we have to get used to being patient on this growth and recovery cycle.
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then you will find opportunities to invest. >> specifically let's talk about brazil. the election is ongoing there and there have been some unexpected developments in terms of it being a more competitive race than had been expected. vet deskeen the boat above us to go up 50% this year. what are your predictions for the outcome of the race? could we on who wins, see a reald railing of the gains we have seen in stocks on the bovespa. >> we think that is likely if the incumbent president prevails. >> do you think she wells? >> that is very likely. relieved to see a real competitor to her but it is also the fact that the backdrop of the government for the last 12 years in brazil has been too slow to address the structural issues the entry has. infrastructure is a major issue.
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inflation and structural high inflation is a consequence, short-term high interest rates is slowing down the recovery and the economy overall. for us, it is too bumpier ride and we have been cautious for quite a while. we believe it is going to stay sluggish. >> during the world cup, when brazil lost in the final, the fact that they did so badly that it would bode poorly about twice stocks rallied. i want to talk about germany. are you german? >> i am danish but i live in switzerland. i have a mixed background. >> i am partly german. i'm word about germany, the numbers that came out are terrible. industrial production fell by the most in five years. factory orders fell by the most in five years. the economy shrank in the second quarter. a german recession now looks like a very real prospect which
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is supposed to be the growth engine of the european economy and sanctions are biting. why would you want to be in european equities in this environment? >> because a relative valuation, the u.s. is meaningfully more expensive than european stocks. also because of the cap on profit margins overall of european companies. it has a potential for the upside and lastly, we believe the global recovery is on track even though it is slow. germany is a strong export oriented company. >> has your call in equities fazed by russian sanctions? >> it has, indeed. most are surprised by how much the sentiment has been dented by the russian-ukraine crisis. it has been a process by which it is becoming increasingly painful and we hope there is a resolution to it soon which we believe will mean that european countries including the u.s. probably need to leave ukraine alone for a while.
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that overall should be a relief for europe. >> we will have carlos slim hair and a few moments. i know you are pretty neutral on mexican equities, is that right? is that partly due to the leverage with the u.s.? >> that's correct, we don't like the valuation of mexican equities. the stocks there have have become expensive. >> iq so much for joining us. -- thank you so much for joining us. will be joining us right here on "in the loop" to talk about business, charity, his latest meeting with mark zuckerberg of all people. are, it seems like there three things that are certain in life, death, taxes, and another restructuring at hewlett-packard. ♪
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the topis a look at tech stories -- quarterly earnings fell 60% of the world's largest maker of smartphones which is samsung. it is getting squeezed by apple and by competitors in china. that may prompt samsung to speed up its push into wearable devices and appliances that can indicate wirelessly. another big companies hit by a hacker this time it's at&t. the company says the employee gained unauthorized access to 1600 customers. the worker may have obtained social security and drivers license numbers. they will reverse any unauthorized charges. ibm is once again trying to get rid of its money moving chip manufacturing unit.
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the company has resumed talks a potential fire ibm is now willing to pay more to get rid of that unit. hp excited the stock market with its announcement yesterday that it will split the company into in order to stay competitive. it also announced plans to lay off another 5000 workers and millionther $600 extraordinary restructuring charge. that increases the size of the layoffs to 55,000 people in a restructuring of $4.7 billion in the numbers are getting astronomical. could they be in permanent state of restructuring? cory johnson has been all over this story. people may feel that maybe meg whitman did this too late. way back when meg whitman was
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at ebay, hb started restructuring. the was buried in excitement of the announcement yesterday on the stock or camus with the hopes that more value would be realized by two companies on the one company. she will remain at hewlett-packard through the end of this year and next year. when you look at this concert restructuring, this is a business that is constantly trying to remake itself and changing the metrics and changing the goalposts almost a recorder. -- almost every quarter. >> will this change the earnings outlook in the short-term? when the investors and analysts look at earnings, they get upset about the non-gap numbers. the gap numbers what matters. if you strip out the restructuring going back to 2005, the actual earnings were a lot less than the non- gaap earnings.
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it makes things look better. see isme, what you will the restructuring will have to stop so you can see with real businesses. it will be hard for them to have two new companies and continue to do restructuring. they have been taking restructuring charges all the way back to 2002. of extraordinary torges to me do not them -- me do not make the make sure ordinary at all. the actual earnings have been so much less because of this restructuring. it's a restructuring that seems to never end. hp ceo megthe whitman out yesterday putting a positive spin on this and how hp will be better now as two separate companies. let me play part of what she said for our viewers. >> we decided to build on the strengths we have and have the sioux companies go out of their own. the companies will be to fortune
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50 companies. imagine to fortune 50 companies inside hp. we have continuity of leadership, great customer focus, and those two companies have different competitors and cost structures and different businesses in many ways or we are excited. this is the next step in our turnaround journey. me.ut through that talk for few people know that meg whitman gets paid by the buzz word. not think continuity of management was important when she took over but she will be chairman of both companies. bothr as the strength of companies, there are certainly many things going right at hewlett-packard. revenues were flat this year and down last year and the year before and down two years before that. the company that is rapidly shrinking, it's exciting to say
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your in the fortune 50, you can call that strong but i call it a company's revenues and profits are shrinking, not strong. >> the other bigger storyline perhaps maybe that get used to this if you are a shareholder. changing and ceos will pivot and the shareholders have to adjust to this. i cannot think of a single other company of this scope where we have seen a dozen years of extraordinary restructuring charges. it's simply a unique thing in all the world technology let alone in all of corporate management. it's a very big company that has taken financial charges to make the eggs look at her. the core of her bonus is not based on earnings but on non-gaap earnings. the more restructuring they do, the more she can draw.
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>> thank you so much, that's interesting. andall the latest in tech media every weekday at 1:00 and 6:00 p.m. eastern time on "bloomberg west." carlos slim will be in the house , the second richest man in the world. he will join me right here. ♪
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that is today on "market makers that 10:00 a.m. eastern time. who is next to join the spinoff club? ebay did it and we are talking about hp but one name coming up is yum! brands.
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on possiblyas more splitting up this company ahead of earnings. >> it comes up every so often. the majority of its revenue from china, 55%. if you look at the stock of the last two years, it has been frustrating for shareholders who have washed to go nowhere. we have seen same-store sales tumble by doug -- by double digits. that is weighing on investors minds. >> what are analysts saying? sanford bernstein revisited the idea of a chinese spin up. they say a listing in shanghai or con con would reinforce the fact that they are it local chinese companies. they want to broaden the investor base. others who like the slower
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growth of a cash generating business that supports the dividend and a buyback. that would give them both something and perhaps boost the share price of the parts. in addition, it will line management incentive better or young management in china would be compensated exclusively for performance there. these is of the reasons outlined. self, 19 -- in 1997, yum! brands was spun off from pepsi. >> are investors of all this?oning >> structure i asked around to find out whether in a activist investors have been poking around but that has not been the case. jim tierney said the argument for a spinoff makes sense but he is not entirely convinced. yum! brands trades at 19 times earnings. he says the valuation does not
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scream break it up to create more value. he points out that the yum! brands fortune could be reversed if it debts all the china business to grow again. that's all it do to cure their ailments. he points out there is a new ceo coming in who is running taco bell and still is. inwill be the new ceo january and takes over from david novak who is retiring. david novak was instrumental in expanding yum! brands and china. not clear where greg creed stands as far as expanding the business. what about the third-quarter earnings preview? >> it is reporting earnings after the bell today in same-store sales will be paramount. they could not catch a break in 2013. they sought negative comps that whole year. to 2013, they are up about 12% of the question is whether they can build on that. they have done a lot operationally to improve efficiencies. butmargins should be better
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are they in a position to leverage of that? we will see. >> thank you so much. more on carlos slim helu will be joining us in just a few moments. stay tuned. ♪
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>> bloomberg television has had the privilege of interviewing bill gates a number of times this year. back in january, he told me by 2035, he believes we will have less than 10 impoverished countries around the world. he also outlined his desire for the world's wealthy to join the cause. >> when i was born, almost all countries report. of we are down to about1/4
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them so if we focus on it, we can make it exceptional in the next 20 years despite how bad we feel about what is not yet done. we have some approaches that work and the cynicism is holding us back. >> someone who is not a cynic and is trying to help the world is none of them carlos slim. he is a billionaire philanthropist whose telecom assets and mexico have allowed him to fund causes from better health care to run it -- poor women. founder of americamovil. also joining us is anthony schreiber, the founder of rest buddies to talk about their fresh efforts to employ those with intellectual and developmental disabilities. great to have you here. we were just talking a few moments ago and you two have been in partnership on best
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buddies for the last 12 years. how did you two meet? >> it's a long story but it's amazing he still my friend after 12 years. we met in mexico city. i was down there a couple of different projects and my purchase son-in-law. and i approached his son-in-law. it's been a great friendship. i met the president of the foundation and i like the program immediately. why did you like this program? about this program that hires people with disabilities? sometimes it's different. you have people with dyslexia and there are people who are upstanding because they have problems with something but they develop other abilities.
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there could be people blind or deaf. important that all people get involved in the society. you have hired people through this progress and that anthony schreiber founded? scholarships to some people with different abilities. direction oftive the college-bound people to get involved with the program. that's the way we have worked in the last few years. >> are there other companies you are targeting now to join in on your program? who has signed up? >> we have targeted every company. web veryo throw the
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large. we like the business benefits of a diverse workforce. with his leadership, i think other companies will follow and there is no limit to what we want to do. there is almost 5 million people with disabilities not employed in the united states. they need well-paying jobs are they can support and sustain themselves in the community. it's not only companies, also governments can hire people with different abilities. federal government, state government city governments -- it's important they are all involved. small and medium, everyone. >> this keeps with your philosophy in giving which is that you want to give to organizations that create jobs.
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people to giveer to organizations that fight disease or poverty but you want to create jobs, is that right? >> no, i think both things are very important. it's important to create and develop human capital. it is health and education but education is the main issue. when you have education and finish poverty with employment. it's the last solution. the problems of today are both. education and employment. educationnly academic but education for work. they can learn about different areas were work is available. . >> that's a big-ish oh in mexico? >> worldwide.


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