Skip to main content

tv   In the Loop With Betty Liu  Bloomberg  October 28, 2014 8:00am-10:01am EDT

8:00 am
a view from the top, a ceo powerhouse lineup on the current state of the american consumer. we will get housing ahead of those 9:00 a.m. eastern case schiller numbers, ara hovnanian. and then how is the autonation faring? me,michael jackson joins and we will be rounding out the show with the hotel and services industry, airbnb disrupting hotels, as usual among and choice hotels ceo steve joyce might have some choice words on airbnb. he will be joining us and i like a.m., but first, here they look at our top story this morning, president obama has a czar, butr, an ebola right now the response is anything but coordinator. the governor of new york and new jersey have their own policy on dealing with ebola. they have mandatory quarantines in place. the federal housing
8:01 am
authority has enforce its own rules. anybody will have to submit to a local health check. guidelines, we are engaging a series of discussions with a state on local governments. we find that state, health departments generally do follow cdc guidelines. if they wish to be more stringent than what cdc recommends, that is within their authority and the system of government that we have, but we believe these are based on science. >> however, this morning, new jersey governor chris christie called the new cdc guidelines "and incredibly confusing." quarter,econd straight biggest drugmaker has lowered sales forecast the popular arthritis drug celebrex will soon be facing generic competition. earnings beat estimates and staying with earnings, wow, shares of twitter down as much as 12% in the premarket. twitter reporting another quarter of slowing growth.
8:02 am
the company also lost more money than expected ceo dick costolo said adding members of his number one priority and will make twitter easier to use and plans to entice visitors with exclusive hollywood content. meanwhile, shares of ubs are rising in europe today. the largest bank in switzerland set aside almost $2 billion for litigation expenses. the money will be used to settle investigations into alleged rigging of currency markets. ubs ceo sergio armani talked with lumber television. >> we're making progress towards a revolution of these -- resolution of these matters, although we are not controlling the financials, we are in a position to have better estimates about how to address officials. >> the legal card for ubs posting third-quarter earnings that missed wall street estimates, and it is the day,
8:03 am
the fed about to call it >> on that six-year-long quantitative easing program. policymakers see a today meagan -- a two-day meeting today, and all of that bond buying has expanded the fed's balance sheet from less than a trillion dollars to now $4.5 trillion. another spinoff may be in the works or a split. madison square garden announcing it is considering a plan to split into two companies. one would house the sports team and cable networks and the other its concert and entertainment business. joining us now with a look at what is behind yet another split in the corporate world is bloomberg news managing editor ,or global m&a jeff mccracken and most prized much of the started with an activist investor. >> right. j a p, had been pressing to look at shareholder value.
8:04 am
you have a split and spin of the end result, and some of the impact of the sports franchise value has been expanding. when steve balmer paid $2 billion for the clippers, that is on was four times as much as nba that's as any nba franchise had sold four. msghat put pressure on the board. >> so he said hey, i will sell now. >> exactly, in the clippers go for $2 billion. granted, they have a nice team now, but they have never onwion an in be a championship, but the knicks are a hallmark nba. e franchise in the >> nelson pelts, surprise, is a part of this, although not in a hostile way. according to sources, jim dolan had approached him and said help me out, would you join my board, so nelson just issued a statement to us here. he will be joining the board
8:05 am
along with scott sperling and dick parsons will be reappointed. he said "it is very simple -- msg's leadership want to do what is right for the shareholders." he is putting it that it will be a very smooth transition here. >> i spoke to some people around the deal and one of them had joked that nelson peltz is the phil jackson for the shareholder immunity. he assures and cons everybody that everything will be ok. when you have someone like j a p pressing forstors ways to get rid of the dolan discounts, people fell at discovery should trade at a much higher value. someone like nelson peltz brings immediate credibility. it could be carl or someone like that. shareholders no -- >> he is a heavyweight -- >> exactly. he will lift up the shareholder value. eventually nelson will own some
8:06 am
shares as a board member. he brings a lot of credibility to in sg and the dolan family. msg.ently -- to --a barely there are no apparently there are no plans to sell. >> time warner being sold to comcast, once these businesses break into, perhaps the msg cable ads become a target for somebody. the real estate assets if you will, which will be msg proper, that business could be turned into a wreath and then you can roll up the real estate side. one because a target and one becomes an acquirer. it is all tbd because we do not know the shareholder structure down the road, but they definitely become easier targets. >> all right, jeff, thank you so much, jeff mccracken as we mentioned of bloomberg news, a
8:07 am
global editor for him in a here. let's get back to those tech earnings online twitter taking a tumble in the premarket as we mentioned, now down almost 14%. third quarter user growth slowed and losses widened. mark zuckerberg and company are getting ready to release their latest results after the bell. will facebook wow investors again with its ability to monetize mobile? i want to bring in paul sweeney, the director of north american research for bloomberg intelligence. he covers all things tech. . paul, it is user growth that has really sort of hung over twitter despite the fact that they are really growing their revenue. >> they really are. they posted really strong topline growth, and their fourth quarter from a general perspective was in line, but these are stories driven by user growth. investors are saying the valuations we are being asked to pay for the sox suggests that these copies will continue to grow significant lead into the future, and the primary metric
8:08 am
for future growth is the growth of my user base that i can attract advertisers and maybe even e-commerce and things like what we saw at twitter last night was things like user growth has actually peaked a little bit. the ceo came on the call and said that is job one, reigniting the user growth. two quarters in a row where it seems the user growth might have peaked a little bit and that is obviously causing concern for shareholders. >> why is it peaking? unlike facebook a over 1.3um com, billion users, twitter is more of a niche medium. it pales versus facebook. there is a concern that twitter has not really been embraced by mainstream america, for example. >> other than people like us. >> exactly. has clearedarly that hurdle with one point 3
8:09 am
billion users. they have shown that they can monetize and transition their business model from desktop to mobile, and that is probably one of the key metrics we will see with the facebook earnings -- how much of their mobile business contribute to their growth? big focus for the investor community. what are the other metrics that will be very key? >> for facebook, one of the issues is what are some of the new revenue enhancement opportunities that they have? they have ingrained video into the newsweek. -- news feed. are advertisers embracing that? it appears that they are. the trick is to integrate advertising in a way that it is not really alienate your users because social is such an and a lot of these have to walk a fine line, monetizing the user base and not alienating them. >> there is news that youtube might start a paid subscription service as part of their own
8:10 am
platform, so they are all try to find different ways to grab revenue outside of the traditional, as you say, just ads, ads, ads. much, paul you so sweeney of bloomberg intelligence. catch ceo of twitter dick costolo at 12:30 p.m. today and also facebook's coo sheryl sandberg joining "bloomberg west." are not spreading the latest like, bp today announcing quarterly profit that beat estimates and underlaying entries and refining margins improved. other industry leaders claim they will make ample profits despite the longest streak of consecutive monthly decline since 2009. is lower oil here to stay? chief market scores one is scarlet fu have in watching the
8:11 am
dynamics and oil today and hey, it is purple day. >> that is right. talking what this new oil order and how the u.s. is a swing mass, reducing its price forecast for oil. wti and brent -- officially saying there is no real panic among the big oil ceo when they were ordered results was quoted as saying i know it is between $80 and $100 come out sector will be fine, that is the perfect area for oil prices to sit. fallsrlet, what if oil further? becomene point does it on economical for oil companies to continue drilling? you will probably see a slowdown in spending, a budget freeze perhaps. up to 150 drilling rigs will be shut down in the u.s.
8:12 am
u.s.tein says one third of shale formations lose money when crude is below $80 a barrel. deutsche bank says budget cuts will be limited because if u.s. trailers and exploration companies will be de-risking their efforts, they will shift their rigs from costlier and more experimental prospects. investorking with an who has bet big on these refiners. he estimates at the break even point for the stock and sha le formation is probably $50 when it comes to wti, but he said it would have to stay there before you see companies shutting off their valves and he does not think that is likely because there is so much for extend costs that oil would really need to stay at that level. it could go down to that level, but it won't necessarily stay there for that long, bet ty. much, scarleto fu, our chief markets
8:13 am
correspondent. this hour,shaking tesla motors a ceo elon musk. shares of tesla fell 6% of the close after the "wall street shares" said that declined twice 6%, though that -- declined 26%, but only was u.s. sales. meanwhile, musk is offering new lease terms, a new lease offer will lower monthly payments by up to 25%. musk says this -- unhappy customers can return their leased car within 90 days and they will have no further obligation. there you go. coming up, breaking new ground. we will talk real estate with ceo of one of the nation's biggest homebuilders, hovnanian enterprises. the bailout enters a new phase. the government gets to make its case.
8:14 am
8:15 am
8:16 am
8:17 am
>> housing is in focus today with the latest monthly report from case-shiller coming out in just an hours time. the recovery remains pretty choppy. pending home sales in the u.s. rose less than forecast last month signifying that they will probably plateau toward the end of the year. joining us with the current state of housing, ara hovnanian, chairman and ceo of hovnanian enterprises, the largest homebuilder in new jersey and around the country. ara, great to see you. when is this going to end? we just want to see what we saw years ago. >> it has been surprising. everybody thought 2014 frank we would be a more robust year and it is turning out to be -- demographic certainly point to that that it has not happened just yet. >> why is that?
8:18 am
>> that is a good question. rates are good, jobs are good, confidence is generally very good, so it is really hard to understand, and it is not as though they are renting a lot of homes instead because we looked at total housing starts, and they are way below projected average. >> what are people doing? are they sort of hanging around? >> children are staying at home much longer than is normal right now. are teamingeholds up and rooming up longer than they normally would dot but that can only go on for so long. then people feel better and they will unbundle, if you will come and that is when the housing market should kick into high year. would think in anticipation of rates rising by the middle of next year that people who could buy a home who have the money and are seeing that low rates have bottomed out that they would start flooding the market. are we going to see that at all? >> it makes total sense, and i think those that don't are going
8:19 am
to look back to years from now and prices will be up, rates will be up and they will say i miss that opportunity. >> and you think the public -- they have gotten burned. >> honestly, there are a lot of theories, but nobody understands what is causing the hesitation at the moment. mind you, it is a much better housing market than it was a couple of years ago. it just has not kicked into high gear yet. even though you would expect it to based on demographics, jobs, and rates. >> how are you even managing your business? are you holding back on some inventory? how is that affecting you? beingare obviously cautious of everyone has to be in this time. none the less, we are buying new properties all around the country in every market. the market is still good, it is just not normal yet. it is not back to its normal pace in terms of sales per month. it is not back to its normal price appreciation.
8:20 am
>> are their pockets in the united states where you are seeing closer to normal than elsewhere? >> absolutely. texas, both houston and dallas, are not just normal, they are very strong. >> is that because of jobs growth? related to the oil industry, obviously. the other place we are seeing great strength is in the silicon valley area. line that is also related to jobs growth. townhouses, condominiums there, we have not opened yet, but our competitors are just selling out and sales have been phenomenal. i would say those are the two particular hotspots. the other place that is surprisingly strong a southeast florida, palm beach, broward county. that has been surprisingly strong. >> that is driven by what exactly? >> first of all, there is not a lot of land. you have the ocean on one side, everglades on the other, but these buyers -- there are a lot of european buyers, brazilian
8:21 am
buyers and that marketplace, so that is adding demand to a limited supply. >> we have been reading some statistics where miami, for instance, is really becoming the sort of top-tier city for international money the way paris is or london -- , absolutely. >> miami ranked right behind new york here in the u.s., which i find interesting. i also want to talk about the foreclosure market and how that is essentially being flooded out in various regions around the u.s. we will be back with ara hovnanian on the housing market, but much more ahead including china wanted to make the trains run on time in your country. we will talk about these steps chinese train makers are taking to be more competitive. and ceo tim cook says apple's apple pay looks fantastic ♪
8:22 am
8:23 am
8:24 am
8:25 am
>> you are watching "in the loop " live on bloomberg television and streaming on mobile and bloomberg.com. good morning. i am betty liu. t-mobile raising its subscriber forecast after adding more customers than estimated in the third quarter. the nation's fourth-largest wireless carrier challenging rivals with cheaper plans, but the discounts are coming at a cost of dot t-mobile reported a loss of $.12 in the quarter, widening from five cents a year ago. china planning a merger of its two largest train makers in hopes of winning more contracts abroad. this is according to government officials involved in the transaction.
8:26 am
china competing aggressively for overseas rail projects. for a awarded china's cnr deal to supply trains for a subway system in a first deal of its kind for a chinese company in the united states. apple's ceo tim cook said more than one million credit cards were activated on the apple pay service within 72 hours of its debut last week making it the largest mobile payment offering despite the potential growth of the service. cook said iphone sales will still make up most of apple's profits for the next three years to five years. it is still about the iphone 4 apple. and it is for a six-month that the hour, which means bloomberg television is on the markets. s&p futures you can see our higher this morning as we head toward the open. we have got a slew of economic numbers. will be out. case-shiller numbers are out a 9 a.m. we are on the markets again in 30 minutes. the strength of the housing recovery varies state this is really interesting, one
8:27 am
factor that could be a play is politics. according to a new study, the in a 53% of blue states in america were better off compared to 78% in red states a dotted line why is that? let's dig in a little bit further into the foreclosure and housing market. ara hovnanian is joining me enterprises.nanian i do not think you have done data gathering like this either, but if we were to conjecture why, it might be because democratic reference states intervened more in the housing market. they were more active in putting through foreclosure cases that may be that is why you are seeing some of these blue states recover better in housing. does that sound like a plausible theory? >> in the short-term, i think the markets that flushed through foreclosures more quickly recovered more quickly. it was painful, but they recovered more quickly. but i don't think that is the
8:28 am
story today. i think all of that is behind. i do not think foreclosures are affecting the normal housing market. >> you believe that we have pretty much taken care of our foreclosure situation? yes. obviously, foreclosures are a little higher than normal -- >> they are not impacting housing prices. >> i don't think so. >> in new jersey, the statistics continue to points that new jersey still has the highest foreclosure rates. our home state, ara, what is going on there? >> it is a judicial process in new jersey, so it took much longer. foreclosures did not begin their until very late in the cycle, but they have begun. that is just flushing through. i do not think there is anything other than the timing issue. >> ok, so there is no resurgence at all -- itso, it is hitting foreclosure bubble just like other markets today, but it is just hitting later because it
8:29 am
started later because of a long process. >> you mentioned earlier about some of the areas that are seeing pockets of recovery, thinking about miami, for instance. one trend that appears to be happening in the housing market and also among homebuilders is this move toward urban areas, that in fact traditional homebuilders like yours who in areassuburbia or where you can build more single family homes, isn't there a trend now where you are building more luxury condos? >> there is a trend toward urbanism, and we have done in our past a lot of revitalization. we are about to start right here in western new york overlooking the hudson river a 14-story luxury condominium holding in the springtime. there is deftly interest. we are doing it in downtown chicago, we're about to start a new urban townhouse community. the young buyers absolutely are
8:30 am
attracted to that style of living versus driving an hour and a half to get a white picket fence. i think there is going to be a market for both. >> isn't there more competition, though? these are markets where you had developers who were well clenched in the residential space. >> there is competition everywhere -- suburban buildings, urban buildings as well. it is just a matter of making your way through and getting the right buyer to the market. >> the upper end of the market, i know entry-level buyers are stuck here at about 30% of the housing market, and it is growing, but it is still a flood. on the higher end, the uber luxury. >> we just opened a community outside of washington, d.c. it is our highest end, very modern housing. it is definitely much more successful than the normal housing in that marketplace. $1.5 million.bout
8:31 am
>> who are the buyers? >> not we expected. generally speaking, 30's and mid 40's. they're working some way related to technology. there is a semi-tech defense-related corridor in virginia outside the washington market. there are definitely buyers musicand some in the industry as well. >> do they want anything different than what the $300,000 to $500,000 buyer wants? >> the house overall is different, again, very contemporary. >> ara, good to see you, thanks for stopping by, ara hovnanian, ceo of hovnanian enterprises. durable goods down 1.43%. this is certainly much worse than what economists had estimated, including durable goods orders down about .2%.
8:32 am
i want to get to scarlet at the breaking news desk with more of these numbers. >> this is an unexpected decline, betty. demand for machinery and computers and particular are slumping. dropped 1.3% one economist's were looking for an increase of half of 1%. the prior month we saw a decrease of 18.4%. durable goods orders were excited to increase .1% on instead they fell .2%. in terms of market reaction, futures lower, they are still positive, but they did take up lower yields on the 10-year and the two-year came down as well. the dollar if you look at the dollar index, lower at $85.42. the next data coming out of the case schiller home pricing index at the top of the next hour. >> we will break that of course, scarlet. rests up, the prosecution
8:33 am
in the aig trial. now the government will get a chance to defend its 2000 eight bailout of the insurance giant. plus, unlocking the true value of the new york knicks and the rangers. will the breakup of the madison square garden be the answer to that? stay "in the loop." ♪
8:34 am
8:35 am
8:36 am
an for this past month, attorney on behalf of hank greenberg has argued on behalf of aig, the biggest bailout was unfair to aig shareholders like greenberg, including others. the government gets the chance to respond to him. chief washington correspondent peter cook, has he been able to make his case so far? >> it has been really interesting to watch in the court. in the court of public opinion,
8:37 am
joketrial is more of a than anything else online you have had "the daily show" take aim at david boies. the bailouts davis cup a, there is no doubt about it, but what did david -- and the bailouts save this company, there is no doubt about it, but when david boies said is that the terms of the bailout were not fair to the shareholders and he has raised legal questions about the terms of the deal itself. he hascally, betty, been able to rest questions about whether a not the federal reserve had the legal authority to take an equity position in any company, much less aig. that is a central legal question in this case and the second thing david boies has done is raise questions about whether the terms of the arrangement were extortion or in his words, basically the same time aig was receiving this $85 billion bailout, banks on wall street were getting loans from the federal reserve at rates no interestan 4% aig's
8:38 am
rate on this loan, 14%, so he has been able to raise some questions about the terms of the deal over the course of the last three weeks, and we have heard of course the government witnesses and his witnesses, hank paulson, ben bernanke, jim tim geithner rolled her eyes and certainly very skeptical of the claims boies is making. >> i imagine that if the last place any of them want to be. peter, the government gets to make their case. what can we expect from them? >> we will hear the central argument that the fact that the shareholders are here in court is again almost a joke. in the words of one of the government attorneys here, they did not like the size of the lifeboat. they wanted a bigger, plus or lifeboat. these lawyers are going to make the case, listen, aig was on the ropes, the economy was on the rocks, the federal reserve has asked ordinary powers in times
8:39 am
of crisis to help out, and that is what happened in this case, and the fact that the shareholders do not appreciate it is really not an issue for this court, so we will hear from the government, attorneys make the case for probably about the next two weeks, then we will perhaps get closing arguments. the final outcome of this case is still some time away. >> the final outcome still some time away, peter, but is this case -- lets the greenburg loses -- headed for an appeal no matter what? >> it seems pretty likely, betty. everything done inside the courtroom has been to protect the rights of both sides to appeal. the vision is that this case u.s. ultimately had to the supreme court, but we will have to see how it plays out here. things to calm on the government's witness list is hank greenberg. you so much. k peter cook, our chief washington correspondent as we mentioned outside the courthouse in washington where that trail is taking place. speaking of aig, former ceo ben
8:40 am
moshe, who stepped down a few months ago, will pen a new book about turning around the insurance company. come in he spoke with me at our titan that the table conference where he is spending part of his retirement on his the memoir will be called " my fight to pay back america congo and it is slated to be published in late 2015 or early 2016. in our sit down, i asked bob in benmosche about some of the dealings that went down with the government. >> you did a lot of things -- can i name some of them? you said you had bigger balls than the government. >> that was in a private meeting. let me give you the context. you have to have context. we were about seven people or eight people, so i know who leaked it because he did another leak about a month later --
8:41 am
aig?thin >> within aig, who had a self interest in his position, and ok. everybody has self interests. he got into an argument with me and said you can't say these things and demand of us the performance you are demanding because we have the government to deal with, and the government is setting the rules and regulations. i said no, they are not. we are setting the rules and regulations. we are going to run this company, and i'm not worried about it. they can come after us. i said i know they can come after us. i know they think they have a lot of balls star the fact is, i not worried about the size of mine, and i will tell you the government is going to tell me how to run is coming -- i will tell you how to run this company because that is what they hard before as the ceo. >> you can watch more the exclusive interview and sit down with bob benmosche on our titan that the table special at bloomberg.com/tv or on your btv+
8:42 am
mobile app. linked in is already doing it, now i will be speaking to the ceo of glass store about recruiting young technology talent in the u.s. and abroad. how much to you have to pay these people to come to your company? one of their top clients is twitter. ceo dick costolo will be on bloomberg tv today d. do not miss it. we will be back. ♪
8:43 am
8:44 am
8:45 am
>> more recruiters and hiring firms are targeting younger workers. contacted high school students. i sat down with the company's ceo, jeff weiner, about those efforts to reach the youth.
8:46 am
>> younger members, starting with college students, is one of our fastest-growing segments and demographics. below that, we have just started to roll out products and services designed for people who are not yet in college, but we are helping them select which college they want to apply to and ultimately attend. by virtue of starting to think about their career path. >> those just getting out of mostge are entering the optimistic jobs market in nearly six years according to a new study by class store -- by glassdoor, a new company that allows employees to write reviews of their employers and to exchange views on different copies. robert hohman joining me now, the cofounder and ceo. robert, this is interesting. the highest confidence in jobs in six years. what exactly is behind that that you found in your survey? >> what we are seeing is that 47% of employees right now are saying that if they lost their job, they could find another
8:47 am
one within six months. that is the absolute highest we have seen it since the recession. that is a lot of confidence right now. >> what is behind that? we just saw stocks take 10% a few weeks ago. >> we asked people on glassdoor about a business outlook for their company. we also see that improving. people in the trenches are saying the outlook for companies is looking good. 44% of people are also expecting a raise within the next six months, so that is probably a little higher than reality will deliver, but none the less reflects this optimism from the folks in the trenches. in,peaking about linked they recently came out, they have been gathering more data listout with a survey or a really of what their members are saying are the best places to work, robert. no surprise you have got companies like google making list, apple, that microsoft, unilever, and
8:48 am
facebook. does that jive essentially with what you are seeing on your website? announcedhat linkedin was the most in demand workplaces. collect is they employees' choice awards for companies, so this is literally the people who are working every day at the company voting with their reviews and their surveys on how their company is doing and how their ceo is doing within a company, but generally yes. those companies are amazing places to work, but we do see some discrepancies for sure >> where are the discrepancies, robert? can you say ? >> off the top of my head i can't. you can be a company that is in demand but that is different from an amazing place to work. in fact, demand has as much ado
8:49 am
about what the company is doing in terms of hiring or in terms of spending on recruiting almost more to do with that then it has to do with how it treats its employees, how it is providing employees with career opportunities, and really those are very different things. so we focus on the latter because we think that is really imported for a just are to be able to make a decision on where they are going to work. >> robert coming a couple of hours we will be sticking with the ceo of twitter, dick costolo, and the company no doubt is under pressure. -- given that if you have worked with twitter as one of your clients, are you seeing any kind of drop off at all or fewer people choosing to work at twitter because they are seeing negative press? because they are worried about growth prospects at the company? >> no, we haven't. it is truly an amazing place to work. if you look at reviews, people feel extremely committed to the
8:50 am
mission. they still feel like there early in the monetization curve that there is tremendous confidence in dick in leading the company, so no. i think this is as much as anything the outside street looking in but is not reflective of the confidence in the halls there. >> robert, much of the appeal of your company is going to be the transparency, right? the honesty by which the reviews are made, the people who log on and say i like working at x company, but i don't like x number of things about this company and so forth. i know you are expanding, you're going into europe and possibly asia. do you think that you will be able to achieve that same level of transparency in other countries? here in america we share everything. >> it is fascinating -- we just launched in france last week. it marks the fifth country outside of the united states
8:51 am
that glassdoor is live in and the first non-english language yes, they are sharing as much as the u.s. we are looking at the data coming in, and there is a lot of speculation that europeans would be more concerned about privacy or would share less. we are not seeing it. reviews are flowing in at the same rate, the same length, and very in tremendous detail. before we launched to france is we had tens of thousands of reviews on french companies posted by french citizens in english. so this need for transparency, to help people decide where to go to work and how to negotiate a salary really does cross borders, so we are bullish that as we were led around the world, this will serve a need. >> all right, robert, thanks so much for joining us. robert hohman, cofounder and ceo of the career site glassdoor. coming up, have time to kill? how about binge viewing mentor election ads back-to-back without sleeping? it turns out it would take quite
8:52 am
some time. we have a big number after the break. ♪
8:53 am
8:54 am
8:55 am
92,830, that is the
8:56 am
amount of time you would need in seconds to watch all of the congressional as that have run in a 2014 campaign. in other words, that big number an amounts to 434 days. for than 1.2 million ads house and senate candidates have run on local television, and if you live in north carolina, you probably have seen more ads than anybody else. there have been more than 90,000 commercials aired for north carolina senate race, one of the hottest around with tom tillis trying to unseat incumbents kay hagan. and onto the markets. 56 minutes past the hour, which means bloomberg television is on the market star equity futures slightly higher toward the open. as you know, case-shiller is going to be out in a few moments. we will get another read-only housing recovery. we are on the markets again in 30 minutes and coming up,
8:57 am
another read on the economy. consumers autonation, the ceo joins us in just a few moments. ♪
8:58 am
8:59 am
9:00 am
>> welcome back to "in the loop ." the s&p case schiller home price index numbers are out. down .1 percent. the-shiller measures largest 20 metropolitan areas and how housing is doing in those areas. scarlet fu has more from the breaking news desk. we are looking at a continued deceleration in home price gains . home prices in 20 u.s. cities rose 5.6% in august, a slowdown from 6.8 percent, smaller than what economists were looking at.
9:01 am
inionally, prices rose 5.1% august. also a slowdown from 5.6% in july. from one to go, prices increased 0.2%, a recovery from the previous month. increases, .8% from the previous month. also gains of half a percent for dallas and denver and las vegas. we did see declines in san francisco, charlotte, and san diego. not much impact on equity index futures. they continue to hold right now. a huge impact but the same story we have been seeing in the housing market. thank you. here is a look at our other top stories this morning. futures indicating stocks will be higher at the open. surprise economic data this morning. orders for durable goods
9:02 am
unexpectedly fell. demand for machinery and computers slumped. in the meantime, the federal government says one thing about ebola and the states are saying another. the cdc is coming out with thatlines for patients would require them to be examined by local health officials. for the governors of new york and new jersey, that is not good enough. chris christie was on "the today show." newest guidance, from my perspective, is incredibly confusing. what is the difference from someone considered to be high risk? you do not want them at public gatherings and you want to work from home. that sounds like quarantine to me. >> the biggest drugmaker in the u.s. has quite a sales forecast again. facer will soon
9:03 am
competition from generic drugs. they did beat wall street estimates. shares of twitter down as much as 14% in premarket. they have hit a speed bump when it comes to adding more users. growth has slowed down for a dozen quarters in a row. costolo says adding users is his number one priority. he says he wants to build the world's biggest daily audience. twitter would have to quadruple its audience to match facebook. we are 30 minutes away from the beginning of trade. let's take a look at our top trades. julie hyman is joining us. scarlet fu is also with us. this is interesting, google may be considering offering a paid subscription model for youtube. this is from comments of a
9:04 am
google executive who spoke at a conference yesterday. she said it is not just about generating ads on their content, but what about premium content? it seems like there is a limitless amount of content is out there. >> i don't know how much of it is premium. this brought up a couple of questions for me. onn you have a lot of apps your phone, you frequently have pay and opt out. the second question is, you will increasingly see this a la carte model. how much room is there for the different services, how much will a you tube cost if it starts something like this? >> are we going to start seeing you tube-sponsored television programs?
9:05 am
amazon, we are all mothers. in listing mothers to tell us what the hot holiday toys are. some mothers who wrote reviews on amazon, essentially those were taken by the company and pulled together to produce this top 50 list. you sign on to the facebook moms group, you like the group. in this case, they did offer a gift card in order to review. they did not necessarily make it clear what they were going to do with the information. then they made the list as a result of that. it should be noted that anytime you get something for free, there is a catch to it. what is intriguing to me is amazon now has an inventory of 1000 toys and games to prepare
9:06 am
for the holidays. as a mother, amazon is overwhelming. if i try to search for something, it is really difficult. if there is a tool, this could be helpful. >> tim cook and jack ma, it was ce between the two. they were both on stage and asked the question, would you want to work with each other? jack says i love apple, i admire tim cook. tim said that, he has done a great job with alibaba. could we see a merger between the two in their businesses? >> a lot of people wonder that especially after ebay split up with paypal. with steve jobs around, would this have ever gone forward? he would have been closed up two other partnerships. >> he probably would have hated jack ma. apple pay could learn a few
9:07 am
lessons from alipay. it is accepted at 250,000 merchants right now. cbs and write and walmart will not be accepting apple pay. has 190 million active users. billionaires,out especially in asia, softbank will invest in any indian ee retailer. that will compete with amazon in india. he is also leading a $210 million investment in a competitor to uber. what is the name of that indian company? >> snap deal. >> i believe it was one of the
9:08 am
most highly valued start up airbnb.s since i did not realize it was the indian version of amazon. >> softbank has taken such an interesting approach. 1300 tech companies. put the money out there, see what works. india is a logical place to do it. the internet penetration there is much lower, about 243 million users in the country. 630 million is the number in china. and a lot of that is on mobile. >> softbank is increasingly a vc fund. >> he has all that money from alibaba. oiler six is the price of and its effects on autos. regular gasoline is about three dollars a gallon in the u.s. those cruising around in luxury declines seen smaller
9:09 am
because of the shale oil boom. scarlet, you know a little bit about the story. howveryone talking about this is changing the dynamics of the oil market overall. goldman sachs downgraded the price reductions for wti and brent. so youe in new jersey, have seen the price of oil come down. if you are paying premium gas, it is just over three dollars. but regular is now below three dollars. apparently, shale oil drilling is helping to lower the price of regular gasoline. >> it is easier to turn shale oil into lower grades of gasoline than it is higher grades, which is why you have the differential. >> what does this mean for it elon musk in the future of tesla cars. coming up, our countdown continues with autonation ceo
9:10 am
michael jackson. ♪
9:11 am
9:12 am
9:13 am
>> we are counting down to the opening bell. it is time to our deep dive into autonation, the largest new and used auto retailer in the u.s. with operations in 15 states. they just reported earnings, beating expectations, expanding their share buyback program. ceo michael jackson is with us this morning. great to see you. good morning. we had an absolutely brilliant quarter. all-time record, best ever. $.90 earnings per share, a 20% increase over prior year, improving all aspects of the business. oil prices,f, lower lower gas prices. do you expect that to be a catalyst? changes the mix.
9:14 am
gasoline prices do not impact the total number of vehicles sold but it definitely impact the types of vehicles that people buy. despite the fact that people say fuel efficiency is their number one issue when they buy a vehicle, i tell you, when gas prices go down, we see an immediate shift toward larger, faster vehicles, particularly trucks. as an industry, we have been mandated to sell fuel efficiency over the next 10 cans and lower gas prices lead to a big disconnect between the technology that is going into their vehicles to improve efficiency and the impact of that on cost. cheap gasoline pulls the rug out from underneath the justification from those higher prices. long-term it would be an issue but near-term it is good for the economy. too off thet
9:15 am
reservation, but is not just fuel-efficient cars, but what about electric cars as well? >> if you look at all of the hybrids and electric cars, they are stuck at less than 4% of the marketplace after a decade with all manufacturers having .nvested heavily offerings have multiplied by a factor of 10 but it is still less than 4.5% of the marketplace. this is a combination of internal combustion continuing to improve. they significantly improved fuel economy, lighter weight materials. hybrids and electrics are still on the most expensive longest range, andof the they are stuck at less than 4%. good news for elon musk,
9:16 am
who i know that you like. well, i admire him as an engineer. i think he is very entrepreneurial. of course, i would admire the company more if it was not so from thet dependent subsidies to buy the cars, for the plant. impressive ifre it was not a government-subsidized entity. >> you have a new competitor in this sphere which is warren buffett. how do you feel about warren buffett getting into the auto dealership game? welcome him into the retail mobile industry. certainly good to have confirmingor
9:17 am
everything i have been saying about this space. bill gates owns about 15% of our company. i am not totally surprised to see him enter this space. i would say welcome. tuyl is about half of our size, so when you say "close" -- i am sure this is the beginning of the story and not the end. it is great to welcome someone to autoren buffett retailer. great to have him. >> maybe he will give you a call for some advice. mike jackson, chairman and ceo of autonation. our countdown to the opening bell continues next. ♪
9:18 am
9:19 am
9:20 am
9:21 am
>> welcome back to "in the loop ." julie hyman and scarlet fu are joining me. full-yearncreased its subscriber forecast after adding more customers in the third quarter than analysts estimated. we will hear from the companies outspoken ceo john legere later today. you never know what will be coming out of his mouth. >> you know that he will be wearing a pink shirt. >> he talked about them becoming the un-carrier. verizon, at&t, and sprint missing, in large part because t-mobile is stealing some market share. >> even though they raise their subscriber forecast, its losses widened from five cents to $.12.
9:22 am
he says we are not necessarily the cheapest anymore because he has pushed down the competitors prices so much. the first mover in many ways in this market to bring down prices. now everyone is suffering and he is gaining market share. the question is whether deutsche telekom will subsidize this. will they allow him to continue this into the future? twitter reported another quarter of decelerating user growth, putting pressure on dick costolo. we will hear from him at 12:30 p.m. the future is what investors want to know about. will he be able to drive that user growth? >> engagement is a big issue. monetization they have figured out but engagement is not paying off. they are coming out with a toolkit. we talked about it this morning. it is a toolkit for developers to build apps and other things.
9:23 am
>> we will see if it makes a difference to you and me. >> we live in a bubble sometimes as journalists because we are so engaged, we are not the typical user. your relatives may not use twitter at all and may not even care about it. people who are already on twitter are using it more, they are looking at it more, but this goes back to the fundamental question of twitter, is it just a niche product? rangers fans, knicks fans, nelson peltz will be joining the board. he gave us a statement this morning saying it is simple. msg leadership wants to do what is right for the shareholders. the plan is to split the company and return capital to the shareholders.
9:24 am
>> it is funny because the new are seen asolans being so intractable in terms of control of his company, so it seems that there would be a fight before a move like this. >> they want to unlock the value of the knicks after the ballmer paid $1 million for the clippers. the idea that you can isolate that value and -- >> and real estate value on the flip side. >> as you say, the knicks are a better team than the clippers ever were. bloomberg television is on the markets. let's get a check on where futures have settled. slightly higher.
9:25 am
rash of economic numbers this morning including case-shiller. pretty much in line of what wall street economists had expected. ♪
9:26 am
9:27 am
9:28 am
>> welcome back to "in the loop ." scarlet fu and julie hyman are with me this morning. fed,ve to talk about the beginning their two-day policy meeting after six weeks of volatility in the global markets. we will start to see if any of that volatility has changed the offensive mind at all about ending qe. what about interest rates? >> whether they give any theance, and then there is question of whether investors will believe them. there was a story out on bloomberg talking about
9:29 am
economist projections, fed guidance, and then what the market is reading into it. the interpretation may be a little different. you are talking about the span of a quarter or two. fed presidentis was telling michael mckee you right after the volatility that maybe there is reason for the fed to pause on its qe. >> which now seems premature. >> but the jawboning is interesting because the fed seems to be moving the goalposts depending on market conditions. volatility has only just begun. a lot of people expected to stick around. still quite volatile, but after the route that we saw several weeks ago, it seems like the consensus is the fed is going to finally end this qe. a new era for us. we are on the path. start trading on this
9:30 am
tuesday morning and fresh off of the case schiller home price index was. i want to bring in ryan jacobson, the cheap portfolio strategist at wells fargo. going along with this whole fed theme, you say do not fear the qe clip. cliff. this are approaching project of time where people are perhaps concerned about what will happen to the equity markets once the fed stops adding to its balance sheets. i don't think it is anything we have to fear. the fed will continue to invest proceeds from the treasuries in mortgage backed securities. they will still be able to play whack a mole with parts of the yield curve if they see it get unruly. they will also keep their forward guidance very accommodative. it is not something that investors need to be hearing too much. >> today we had some economic
9:31 am
numbers. durable goods came in worse than expected. unexpected decline. , year onler numbers year, pretty much in line with estimates. month on month, a bigger decline and inspected. it still seems that the numbers are pretty choppy. that is right. i think that bears watching, what happens with this economic data going forward. if you think about the argument for continuing qe or stopping it, any of the recent data does that make a strong argument for continuing it. if you look at the conditions that created this, it was much worse than what we are facing now. orders, that is important to watch. it was a lot weaker than i was expecting. if you look at the core component of it, that was particularly weak, but the markets are taking it in stride because people are looking through the september data and
9:32 am
thinking about what are things looking like in october td on november, and if we think -- to november, if we think the european banks are making it through their stress tests? that could be a big time for the global economy. seems a little premature to say that the stress tests are done and now the eurozone is turning the corner. the banks are only a symptom of the problem. the main problem lies with the economy and the governments in the eurozone itself, no? >> i don't know if it is a symptom of the problem or an indicator of the deep structural problems within the eurozone. they are all intertwined. the banks, because of the regulatory pressure they have been facing, have been reluctant to expand their lending to nonfinancial corporations and not to governments. if you look at the data as far as year on year for eurozone ,oans, they were down 1.2%
9:33 am
1.5%, but going from august to september, it was beginning to turn up. banks play an important role in promoting some of the economic growth. when they are constricting their balance sheet, it is hard to have strong, robust growth. >> we have seen oil prices tumble. goldman sachs cutting its target and wti. how much of a tailwind will that be for the u.s. consumer and economy? >> it depends on where you live. plains,re in the great where a lot of jobs are created because of the fracking revolution, it could be a headwind. lower prices mean wage gains going forward, or the expansion of the consumer base through job creation, will not be as great as what it was. overall, it will be very supportive. still a smallre
9:34 am
percentage of the u.s. consumer spending. it does matter on the margin but it is not a game changer necessarily. to ask you about this trend than we have been talking splitting up to enhance shareholder value. in many cases you see the shares rise. for several years we saw companies cut costs. that was the way that they would boost their bottom line. ofthis just another era companies saying, crap, there is not a lot of topline growth, let's just split up, see the stock rise, and then go home? companies,with some if they think about their existing corporate structure not being accommodated to future growth. what we have seen so far is it has been positive. they essentially want to separate off the slow-growing part to the fast hard and give investors greg or opportunities. if you want to the cash flows,
9:35 am
you can invest in the slower part. if you want faster, you can invest in the faster part. this goes back to queens to $178 in manhattan. so where does this leave hotel companies? ,oining us now is stephen joyce ceo of choice hotels. operates 6000 properties in over 35 countries around the world. great to see you this morning. how do you feel about airbnb? >> we actually think it's an interesting idea. they have some very smart people there. their ceo is an excellent hotel person. they will have to do some of the things that we all have to do. they will have to pay taxes, have to worry about life safety. a lot of what they are doing we do not have an interest in. our customers are not interested in a couch or sharing a room.
9:36 am
they want to know that it will be a clean, comfortable, safe stay. their function today is in overflows. when cities are booked and prices are really high, people look at them as an option. >> but it is not just overflow. they are looking at it on a price basis. >> they are, but usually when they cannot find a room at what they view as a reasonable price. we are not seeing any impact from the business yet but we believe -- we wish we had thought of it. we have gone into the vacation rental business. we are working with rental management companies. it is an easy step to say, let's work with certain consumers who have the product that our consumers want and facilitate it. make some money at the same time. we think it's an interesting space. new,ve this kind of collaborative industry, the sharing economy. we think that has real
9:37 am
implications for us and we are trying to take advantage of it. i get that you welcome the new competitor and this innovation, but they are eventually going to be enough -- if they continue to grow at this page and if they are still deemed legal. aknow in some states there is tack on them. they will begin eating into hotel space, start eating into the rooms that you rent out. >> there is a possibility they could become a competitor in our space, clearly. the issue will always be what product are they providing and it will be typical traveler take on what could be a very different experience from what they are accustomed to? the reality is, millenials are very comfortable doing different things, so clearly that will -- termsake over in 2017 in of overall spending in the travel business.
9:38 am
they will be an overall factor. we think we are in as good of a position, or even better come to compete along those lines. we think it is a pretty interesting idea and we may pursue it. >> competing means what in your own hotel? what are you providing even more to your hotel customers because you are seeing more competition? >> first of all, we represent the 99%. our already about value. free wi-fi, parking, breakfast in almost all of our hotels. we are already known as a very strong value product. -- showing thene customer that we can give them consistent experiences across different products. the good news of what is happening today, we topped off times square with a nice hotel, which will be upscale, but we also have some love travel centers and their places, which
9:39 am
will be in the lower to moderate tear -- tier. we have lots of different products around the country. we have some boutiques that give people that experience. a lot of people do not want the cookie-cutter hotel. we have those in long island, several in number rose, queens, brooklyn. lots of different travel experiences we are providing. >> certainly something to the point that you are making. once you know the hotel that you are booking, you know what you are getting. sometimes with airbnb, you do not quite know, no matter how accurate the reviews are. about a year ago you talked about skype touch and this cloud-based software that you had contracted in your hotels and to others as well. it is helping hotels become much more efficient in booking, moving customers through. how is that doing? >> extraordinarily well.
9:40 am
about one year ago we launched it with the full-court press. we are in a scenario now where we have signed up lots of individual hotels, which we thought we would. looking at over a thousand hotel chains. we are one of the preferred vendors for that. we are also talking to several other large hotel company brands that are looking at that as their potential technology platform. our pipeline is interesting. already in 6000 hotels. we are talking to 20,000 hotels where we think we have a shot at landing it. it is not making money yet, so we are talking to the analysts that follow us and they want to know. we said we probably need one more quarter to figure out the revenue side and then we will be able to give you when we think we can be profitable.
9:41 am
because it is cloud-based, it is secure around credit cards, creates a lot of different things that in a sas-based environment, where most people are, we are trying to help others out and make a little money. >> great to see you, steve joyce, ceo of choice hotels international. shares of twitter are down 13% after third quarter user growth slowed and losses widened at the company. the pressure is now on even more to dick costolo to see that he can attract more advertisers. emily chang is with us from san francisco for her take on the latest results. i know you will be speaking with dick costolo later this afternoon. yes, the pressure has always been on dick costolo, and they're there -- then there is this obsession going on with monthly active users not growing
9:42 am
as fast as wall street would like. the question is, is this the number two focus on? is theirays that this priority, but they also want to think about it all that see tweets on televisions, in a newspaper. they want us to think of those people as users even if they are not logged in. so how do they measure those users? how do they serve as to those users? when you look at the revenue story, it is not that. revenue fromoubled advertisements, but q4 guidance was a little light. that would suggest that user growth in the coming quarter is not going to be that great. also wondering whether this is a seasonal company, whether they need offense like the world cup and the oscars to bump up the numbers on a quarterly basis, or whether they can see that growth quarter to quarter. up --enue is growing going up, so is user growth the
9:43 am
number that we should be paying attention to? questioned the yesterday. he said yes, it is still our number one priority but it is not the only measure of users. we are also looking at what he calls eccentric circles, different cohorts of users. the people who are seeing tweets in the media, through third-party developers. twitter is making a big push to third-party developers but the question remains, how do they serve as to these users and how do they measure these users? we do not know how many there are. i will be speaking with dick costolo this morning about all of these questions and how he plans to account for these non- -logged in users. management has changed over quite a bit. how he plans to set a new tone. >> thank you, emily chang. still ahead, ubs has set aside $2 billion for legal expenses.
9:44 am
how they plan to spend the money, that is next. ♪
9:45 am
9:46 am
9:47 am
for the global outlook. shares of ubs rising after they set aside $2 billion for legal costs. we spoke with their ceo. >> we have always been fairly addressingour industry litigations, affecting profitability. return morent to than 50% of profit attributable to shareholders, if we have a ratio of 13%, and a stress ratio percentage of 10% intact. does it for today. tomorrow we will have nouriel roubini joining me as guest host. hear his take on the fed, market
9:48 am
volatility, and europe. ♪
9:49 am
9:50 am
thet is 56 minutes past hour and that means bloomberg television is on the market. we are 30 minutes into the start of this trading day. here is how the markets are trading. stocks rising right now with the dow up by 62 points, the s&p gaining half of 1%. fed begins their policy
9:51 am
meeting today. announcement tomorrow. an unexpected drop in durable goods orders and a drop in home prices from two months ago. in europe, stocks are advancing for the first time in three days. one notable gainer is ubs on notion that has turned the corner on legal costs. oil prices are now back down below the $81 level. the u.s. 10 year moving up at 2.2 currently. , investorsth bonds are responding to volatility by piling back into the shortest term debt. but are the securities really the safest? lisa, who covers the debt market for us. for a while, front and rates were rising because of expectations the fed would raise interest rates, -- that has not been taken off the table, but lots of questions.
9:52 am
>> bond traders say they are not quite so sure that the fed is in a hike rate. the thought was the middle part of next year they would begin to hike. people are pushing back expectations. intoe will be piling back shorter-term bonds saying they will not raise rates that soon. oil prices are falling 14% since september. they are -- there are definitely some fundamental signs the global economy is slowing down. >> how significant has this really been? >> since the beginning of -year debt has3 gained about 1.4%, but for this kind of debt, it is quite a bit. it is the biggest monthly gain since 2011. you saw a huge reversal in the , dropping pretty rapidly on october 15.
9:53 am
a lot of people coming in. focusinge biggest eds on $2 billion worth of deposits that day. people were saying we need a safe haven, we are willing to park our money here. we do not think the fed will hike rates soon. >> what about on the long and? >> people are finding safety there as well. all kinds of government debt. the beaumont flexibility. what you hear from bond investors is this sense of uncertainty. in times of uncertainty there is cash and shorter-term debt which is considered a cash-like instrument, more liquid, which you can get into more quickly. >> that is the advantage of getting in. what is the drawback other than not getting much return? >> if inflation goes up, you get a negative real return. there could also be a significant amount of volatility in short-term rates because of when the fed will hike rates.
9:54 am
people could be getting it wrong and underestimating how long the fed will hike rates. >> what are the pricing targets in terms of fomc tomorrow? >> people are pushing back their expectations into next year. >> maybe we'll get some inkling on that. they have been very vague in their wording. thank you. we will be back on the markets once again in 30 minutes. next withkers" is erik schatzker and stephanie ruhle. ♪
9:55 am
>> live from bloomberg headquarters in new york, this kers" with erik schatzker and stephanie ruhle. >> a slamdunk. madison square garden wants to separate to take advantage of record prices for sports. >> wal-mart thomases to buy an extra quarter trillion dollars worth. upwill see if they're living for their pledge. high-end haunted houses. how to scare the devil out of people for fun and profit

60 Views

info Stream Only

Uploaded by TV Archive on