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tv   In the Loop With Betty Liu  Bloomberg  October 31, 2014 8:00am-10:01am EDT

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how social media sites are fighting to keep their users engaged and buying. kevin ryan joining me. he's the founder and chairman of a billion dollar flash sale site, gilt. he's going to weigh in on that. he is my guest host this hour. we're going to look at how digital and cable television ads are joining forces to give you out to vote. according to our guest, digital ad spending has jumped 1,800% in this campaign cycle. we'll have him in a few moments. but first, here's a look at our top stories this morning. a sneak attack overnight in markets. japan expanding its monetary policy and gave a worldwide boost to markets. the bank of japan unexpectedly increased the amount of money it's pumping into the system. that sent stocks surging in japan and in europe. the nikkei 225 hit its highest level in seven years. here in the u.s., futures are surging as well. the dow industrials already have erased their losses for this month.
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futures indicate the s&p likely to open above 2,000 today. the move comes after projections show the country is likely to miss its 2% inflation target. wal-mart getting a jump on the holiday shopping season. the world's biggest retailer cutting prices on more than 20,000 items tomorrow. wal-mart also plans to open more checkout lines during peak times, and it may match in-store prices with online competitors, but you have to ask for that. the change trying to reverse six straight quarters of stagnant sales in the united states. a familiar story, another management shakeup. twitter names a new head of product, fifth in five years. already this year, the c.e.o. has replaced his c.f.o. and ousted the chief operating officer. earlier this week, he spoke about his management team on "bloomberg west." >> management team has grown and evolved and changed over time, and i think that is always the case.
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i love the team we have in place. we've developed all sorts of tremendous leaders across the company. >> twitter says that user growth slowed in the third quarter. new legal problems for citi group. there's a criminal investigation into the foreign exchange business. the bank putting aside another $600 million for legal expenses. that forces citi to restate their quarter earnings. citi says it's cooperating with criminal and antitrust probes. it's also facing inquiries from regulators in the u.s., the u.k., and in switzerland. and in pro basketball, the new york knicks ruined the big homecoming for lebron james. king james hit only five of 15 shots and made eight turnovers as the knicks won 95-90. well, it was lebron's first game since returning it his hometown team after last season. he called it an emotional evening. >> i just try to stay focus and maintain, you know, the focus as much as i could, and obviously it was a special
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night for not only myself, but for everybody, and i'm glad -- it was great, but i'm also glad it's over. >> much more to come from king james. meantime, the steve ballmer era has gotten underway in l.a. the clippers won their first game for their new owner, beating oklahoma city. and now back to our top story. global markets rallying after japan's central bank surprised the markets. they increased their target for monetary stimulus. we have more now to put all of this in context. we had thought that japan was going to be doing something, right? the timing it was just a surprise here. >> yes, trick or treat! this was a treat to global markets, as you say. the nikkei saw its highest level since november 2007. you see the way the european markets are trading. they're up as well. if you look at s&p futures, also headed to gains, perhaps a record for the s&p index. this was good news. what does the bank of japan do? number one is the fact that they boosted the pace of their monetary base to 80 trillion
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yen on an annual basis. previous to that it was up 60 trillion to 70 trillion yen. number two, they removed their two-year inflation target of 2%. that's also very important. you couple this with the fact that you have japan's pension fund, which is the largest in the world, saying that they're going boost their allocation for japanese equities from 12% to 25%, and also the fact that they're going to boost their foreign equities from 12% to 25%. that just made the markets go crazy. they love this kind of news. that's really, really help informal terms of thinking what japan needs to do as they get out of this deflationary mindset and as they look to boost the economy, because it's really taken a hit since april. >> i was going say, this is kind of a mixed bag actually, because they're doing this for a very sort of -- not so great reason, which is that japan is having a hard time hitting their inflation targets. the economy is having a hard time with liftoff. the bank of japan has to come in. i mean, based on that, that's
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not great news at all. >> if you think about what's happened over the past couple of months, on april 1 they implemented a new sales tax hike. they increased the consumption tax for those individuals from 5% to 8%. the months after that, the economy really took a hit in terms of not only internal consumption, but also for those outside as well. and so to kind of counter that, that's why they're doing what they're doing. now, goldman sachs said in a note this morning that they're looking to preempt another deflationary environment, but they're also looking to set the stage for an other sales tax hike that could happen any time between october and december of next year. they're trying to lay the ground work now so that the economy is strong enough to withstand the fact that perhaps they're going to see not that many people going out and consuming. >> isn't it interesting, right, me i can't, that japan is going one way with stimulus, and we have just ended our q.e. program. here in the u.s., we're going in opposite directions. barclays saying in a note also
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this morning that don't think this didn't happen for a reason. it's perhaps strategic, and as a result, you saw the way the yen was trading, plunging , a six-year low. that's a huge, huge deal, weakening against the u.s. dollar. >> mia, thank you so much. on the corporate headlines -- new products helped linkedin during the third quarter. however, their current forecast for the quarter fell short of estimates because a slowdown in its job recruiting business. they follow earnings from twitter and facebook this week, and for more, let's get to "bloomberg west" editor, cory johnson, in san francisco, up early for us. we're celebrating the giants and their win in the world series. >> oh, hey! today is the big celebration, got a big ticker tape parade scheduled today for the giants. the celebration continues. we celebrated at linkedin, too. we wondered if this would be the third domino. we had twitter and facebook both show us a slowdown in user growth. linkedin showing us something different, however. the user growth numbers actually accelerating.
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i don't know if it's, you know, apples and oranges here. yes, they're all social media companies, but yes, they're all three big companies, and i'm three still growing. but linked showing an acceleration in membership growth, which was a little bit better, and indeed, looked a little bit better for a while now than those two other social media companies out there. you look at the total audience, you see linkedin is bigger than twitter, a little bit, much smaller than facebook. but again, the growth in linkedin business is now doing better, at least in the last quarter. >> and who would have thought? i know after the earnings came out, you tweeted out about linkedin's china business and how it is becoming the second largest business or market for linkedin, no surprise, they started their chinese language version of linkedin this year. cory, you know i sat down with jeff last month, where he talked about the business in china. i want to play for you, cory, a part of that conversation.
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>> to do so means complying with chinese law, and at times that means doing things that we're not comfortable with. and where we had to compromise on some of our values. we think that the value that can be created in china is worth doing business there. >> and they've had to abide by censorship laws, rules in china. but it looks like, at least from linkedin's business perspective, it was the right move. >> yeah, certainly in terms of user growth, what they said in the conference call that they're do, the only place where they're adding more users than china is in the u.s. so this brand-new market for them is growing like wildfire for them, and they're also making it an interesting shift here, where there was a big emphasis in the subscription business, power linkedin users to buy up a lot of subscriptions, and they're deemphasizing that, and yes, they're still guiding numbers the next coming years.
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i know what that says, open the door, letting lots more people in, helping the subscription business and the result is real benefits from the places where they're allowing people into the service. >> all right, well, you can see the share price is up already over 6% in the premarket. cory, thank you so much for joining us. cory johnson, editor at large at "bloomberg west." for more on linkedin's slowing user growth, but also what's going on on the tech scene, i want to bring in our guest host for this hour, a entrepreneur who created multibillion dollar companies, doubleclick, and, of course, gilt groupe, where he currently serves as chairman. he's also the founder of business insiders. he joins us as my guest host. great to see enthuse morning. perfect. after a week of all these results from twitter, facebook, linkedin, it's not just user growth, but engage the. how do you get them to stay on
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longer and shop off of your website? in your view, who's really getting it right, and what's the next big challenge? >> i think this is the thing that facebook has the slowest user growth, but yet they're still monetizing incredibly well. they're executing very, very well. it's not just about user growth. twitter is rap on how different is twitter today from four years ago? for most consumers, it's not that different. >> and it's kind of difficult to use. >> yeah, and we can see -- that's why they've had so many products, i don't think they really figured that out yet. >> well, i mean, just from you on the sidelines looking at what they're doing, i mean, are there really products that can be added on to a platform like twitter? >> yeah, any time any company has searches in any form that can be linked to a product, that is really valuable so. if you know on twitter that you just got engaged or you're thinking of buying a car or you're commenting on a new armani suit, that's information
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that can be used to target you. facebook does a really, really good job of that, and it works for many e-commerce companies. he have a company called zola, and we use facebook. it's a wedding registry. we can find people who just gotten gauged. twitter doesn't have the same range of products that facebook has yet. >> how about at gilt? you're finding your users -- you have very loyal customers. but you also have a lot of competitors. it seems to me, at least the younger consumers, they're quite fickle. there's not a lot of brand loyalty going on. what are you finding at gilt? >> what you find is, over time, loyalty sets in a little bit, and people switch less. the first couple of months they'll switch. after a while they do settle in. customers are surprisingly local. but we're always trying to get new customers, so we are advertising on facebook and other social media and google, and it still works today. with still get a payback, and that drives a lot of growth. >> what's most effect sniff is it facebook? has facebook been the most effect enough driving traffic to gilt? >> in the last couple of years,
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share of market, more has gone to facebook than to google in terms of growth. before that, more was on google. but both are very effective. they both work. >> all right. ok, kevin, stay with me. we're going to talk a lot more about gilt, but also about politics here in new york and around the country. ♪ >> moving and shaking this hour, nick woodman, shares of the action sports camera maker, up as much as 20% in the premarket. it was the first quarter as a publicly traded company, and it forecast fourth quarter revenue that smashed estimates. the company says it's feeling terrific about business on all fronts. you might be if you're skydiving, too. go pro stock had fallen almost 30% from its high in september. he developed the go pro cameras for surfers, bikers, and skydivers. he also has a booming youtube channel with over 2.4 million subscribers, all to be monetized. coming up -- the san francisco giants had plenty to celebrate
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after the world series, as you heard from cory, but tv executives, ah, not so much. we're going to tell you why. plus wal-mart trying to jump-start sales here in the u.s.. a price cut always a good start, at least for consumers. ♪
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>> the holiday shopping season starting early at wal-mart. the company announced it will cut prices on 20,000 items starting tomorrow to get a jump on competitors. julie hyman has been following the roll backs here, also with us is my guest host for the hour, who certainly knows this area very well. he's kevin ryan, the founder and chairman of billion dollar flash sale site, gilt groupe. first off on wal-mart, boy, they're saying we're not going to lose this shopping season. >> they're not messing around. they're saying that their customers view things holiday by holiday, like many of us do. so when halloween is over, apparently they're going to
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skip right over thanksgiving and just look straight till christmas and that a lot of people are getting this done early, particularly people who don't necessarily have a huge budget, that they are going to sort of do it strategically and judiciously throughout the holiday season. so to that end, that's why they're cutting prices on 20,000 items. they give some examples of some of the stuff they're cutting prices on, and in some cases we're talking about relatively deep discounts. sony 48-inch tv, they're offering for $348. so that's a $100 discount. a barbie dream house, they're offering for $120. it was about $149. so those are just a couple of examples. >> and they're going to also match online prices, right? >> well, so, there's a little bit of a caveat here. they already have what they call their savings catcher, which is an app where if competitors in the region, bricks and mortar competitors, are offering lower prices, they will match those n. certain markets, they are now going to be testing online price
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matching on markets, including atlanta and charlotte and dallas, and they reminded me that store managers for a long time have had the discretion. in other words, if you say amazon is giving me a lower price, you can go to the store field goal manager, and the store manager can decide -- >> which, by the way, any person in this country would have already known this. you get a lot of people going in with their flyers. so wal-mart is saying this is kind of a policy now. all right, or at least a testing policy. kevin, what do you think about this with wal-mart? >> i think the challenge for wal-mart, the big challenge is their consumers are suffering in the united states. that makes it hard. the second big fundamental challenge is that they've never executed online as well as amazon. so every year that amazon grows by another $20 billion, that's another knife cut into wal-mart's long-term fundamental strategy, and i don't think they turn that around. >> but there's -- isn't there a caveat there? amazon is now hitting this, you know, where the rubber meets
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the road, where investor are saying you can't discount as much anymore. you have to stop losing so much money in order to get, you know, customers on to your site. >> so yes and no. the stock price of amazon is probably four times what it was three years ago, so stock prices are doing fine. it did come back in the last quarter, and it's down. but fundamentally that company is doing very well. they are investing, and they're so formidable and so dominant in e-commerce is every other company is still petrified of them. >> well, interestingly enough, it's funny getting this sort of online retailers' perspective on wal-mart, because within the retail world, wall mart's online business is seen as more of a success story, just in terms of how much they've grown it over the past several years. they've also invested quite a lot of resources in it, to the point that some analysts are complaining about their spending on e-commerce, that they have put a lot into that. >> i think they got a slow start, because they weren't the
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first one to shop online or have smartphones, but now they do, so now they have to really catch up or it's going to be a problem five years from now, 10 years from now, when amazon can deliver things to your house faster. >> kevin, what about new trends in online shopping? some people say that the groupon model that they created is kind of going away, that it's dying. would you agree? >> no. they had 24% growth in new customers year over year, so is that going away? that's a big, big number. you get less focus on it, but the business is still doing billions and billions of revenue just in five years. it's still quite extraordinary. it's doing well. it's hard for them to make money, and they do probably more things than they should, but the core business is better than you think. >> how about flash sales, though? some have argue that had other online retailers are move away from that, it's not as appealing as it once was. you guys are at the forefront of that. >> you see the success so far of either somebody like zulily,
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wayfair, so these are companies with multibillion dollar valuations and are doing incredibly well with very substantial growth. we're seeing growth at 50% year over year. so those are the companies we've seen so far. they're doing billions of dollars in revenue in europe. >> so it's not going away. >> the sector is doing great. >> i'm also curious about online shopping, the biggest basket you look at and the most broadest sense. when you look at penetration, it's still only about 6% of overall retail sales, which is always a number that surprises me given the rapid growth. what do you think the penetration is going to be, in what period of time? >> i think what we're going see is just steady growth, steady share of market, as online continues to solve each one of the tiny points that there was resistance on. so does it deliver to your house? can you return it? can you see the pictures on the screen very well? >> all right. kevin, stay with mefment my guest host for this hour, kevin ryan of gilt groupe. thank you to julie hyman. much more ahead.
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earnings fall short at starbucks. maybe the delivery service could give the coffee chain a jolt. ♪
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>> you are watching "in the loop" live on bloomberg television and streaming mobile and good morning. i'm betty liu. here's a look at our bloomberg top headlines. sine posting a narrower than estimated second quarter loss. demand for its playstation 4 game console and image sensors limited the impact of a writedown at its smartphone business. sony main tapes its forecast for full-year net loss of $2 billion. anheuser-busch's third quarter profit came up short. they said weakness in the u.s., russia, and ukraine weighed on sales. budweiser maker said this is a one-off performance and "is not reflected of expected future trends for business." yes, we are still going to drink our beer.
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we're still going to drink our coffee. starbucks' fourth quarter revenue grows 10% from a year ago, but fell short of wall street estimates. the world's biggest coffee chain has been introducing new food and drinks to draw customers in later in the day as it struggles to compete for the breakfast crowd. the company announcing it would add delivery in select markets in the second half of 2015. now you can get even more lazy and just sit on your butts and just get the coffee delivered to you. it is 6 minutes past the hour, which means we're on the markets. equity futures, as i mentioned, are surging. the b.o.j. giving a huge lift to the markets after they expanded their monetary policy program, adding more money into the system in order to stoke inflation in japan. we're on the markets again in 30 minutes. in fact, first on the income spending, it's going to be out in just a few moments. the government's all-important jobs report is exactly one week away, and more eyes than ever before will be on those numbers now that the fed has decided to end their q.e. program. one industry that has seen incredible employment growth is
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technology, especially here in new york city, which has added close to 50% more tech-related jobs than since 2009 than any other sector. joining us now with more is someone who's been credited as helping fuel this boom here in the tech industry, gilt groupe founder and chairman, kevin ryan, also the creator of double click and business insider. kevin, we keep hearing about this. there's a story just a few days ago about one company, i believe it was urban compass, that signed a lease for 25,000 square-foot space, and they realized, oh, crap, we actually need to double that size because we're growing so fast. what's going on here? >> it could not be going better in new york city. what you're seeing is new york city is becoming the home to many sub sectors of the internet, sometimes much larger, than online media, dominated by new york companies. fashion, a lot of new york fashion-based companies. now you're starting to see hard-core technology companies as well. so we have very, very smart, you know, young entrepreneurs in the city, and so it's booming.
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we're in the second and third generation. silicon valley is in its sent or eighth generation of entrepreneurs. >> so it's just beginning? >> i think there's a chance it will get bigger than silicon valley. >> really? that means there's a big skills gap. j.p. morgan out with a report, like about a month ago, saying that it takes about a month to fill any job now in the healthcare or i.t. sector. so how big of a problem is that going to be? >> it's a big problem. we had a meeting among some of the banks, some of the people from the white house yesterday, talking about this issue, because we need more job training. universities need to do a better job of having more practical skills. the general assemblies are doing a great job, starting to train people in nonacademic environment, and companies themselves are having to do t. the real problem is we can't get visas for people who want to come to new york city, and so hopefully the federal government will solve that at some point. but we have a skill shortage, due to the fact that we have so much success. you can't just increase the number of jobs like that without having a problem. >> speaking of surks as i
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mentioned, your company -- speaking of success, as i mentioned, your company is valued over a billion dollars. there was a report out saying we've got 60-plus tech companies around the country that are worth over a billion dollars. everyone is wondering, with gilt sbrupee, kevin, once you get over the billion dollar market, what's your exit? are you going to sell yourself to another company or go up snip >> well, i should -- you should look at alibaba, which waited 20 years to go public, and it went pretty well for them. it's not a race to go public first. you focus every day on just building a good company that's large and profitable. that's hard enough as it is. at some point, if those things work, then you either decide to do public or someone buys it or you just have a very profitable private company. >> if i might tie that back to the whole, you know, recruiting employee, for instance, being a publicly traded firm, having publicly traded shares, allowing your employees who have been with you from the start, let's say, to basically sell their shares, isn't that kind of the appeal as well of
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going public? >> oh, sure. look, there are pros and cons of going public. one of them is your investors and your employees can sell their shares. you do want to think about that. now, there is a second market, so we've had a lot of employees that have sold shares privately in the meantime. i think that's going continue to develop over time. but we do want to think about that. on the other hand, when you're a public about that. on the other hand, it can be harmful for employee morale as well. >> breaking news on the economy. worse than expected for the month of september, down 0.2%. have much more from pec, and we're watching where inflationary expectations are.
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as you say, breaking news regarding the pulse of the u.s. consumer. this report provides the hardest and clearest in asians on the u.s. consumer -- conditions on the u.s. consumer. income growth was expected to hold steady. in terms of personal spending, this is coming in at -2% of the prior month. it goes in line with the disappointed real tale theater -- disappointing retail figures resolve the previous month. >> thank you. , with just days toe jus go until the election, we will see campaign ads over the weekend. the best that the worst of the election reason. plus, a look at the big business
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of halloween. it is scary how much is actually spent on this holiday. stay "in the loop." ♪
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>> remember that? in honor of halloween and the 10 year anniversary of the film, they are re-releasing the horror flick. it is a good example of how horror franchises never seem to die. i hear you throw fantastic
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halloween parties. these films are very cheap to make, which is why they make so much money. >> it is incredible. take the franchise of saul, it has grossed nearly hind hundred it has dollars -- saw, grossed nearly $900 million. to the producer of the saw franchise, and here's what he had to say about the economics of four films. >> you just look at annabelle that just came out. the movie was made for approximately $6 million. they have already crossed the $200 million worldwide average. conjuring was made for under $20 million. our first assault was made for last wasn, the made for $15 million. it does cost that much. cheap,d and gore come
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but there are a few key ingredients. the title of the film is the stark we do not need egg stars. he could also turn these big ries into franchise. think about how many nightmare are --lustrate theire nightmare on else street there street there are. they actually created some stars. i think about jamie lee curtis, and how she became a bona fide movie star from those horror flicks. a question of whether we are going to see more. if it is so cheap, why do we not seen the lord these poor frames -- more of these horror films ? teenage audience loves
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them. that is why they are working. they we are going to continue to see them. will see many more incarnations because they do not hinge on major stars, so you would do not have to worry about getting the same actors, and because actors age, and you do not need them, you can keep churning them out. >> do they run the gamut? a lot ofare independent shops. of horror have a lot films, as do the weinstein brothers. >> do you have a favorite horror film? horrernot a bibig
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fan. horrormost successful film is simply jaws. who now swims in the ocean without worrying? that movie was truly transformational on the horror front. >> and it put steven spielberg on the map. >> now you see major stars going rror because that is where the money is. you through a fantastic halloween party every year. what is up with that? >> that is something i have done for a long time. we have had up to 900 people. we consider the whole green party to really bear holiday -- our whole halloween party to really be the holiday
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party. costumes are required. the e-mail you sent did not go to our producer, but can you take your phone out and show on camera -- i want to show who kevin was at the party. was phil robertson of duck dynasty. it was very fun. the party went on very late. >> i love it. thank you for joining us.
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politics.king with a big win for major league baseball. ♪
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>> in this midterm election, americans have had to endure 3 million political ads. our washington correspondent peter cook has been trolling through these spots into memorable. the messost i have some favorites but i've not gone through all of them to be sure, but there is one that gains out pretty has been a favorite sense of first aired last summer. it was the first ad for joni
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ernst, the republican senate candidate in iowa. it introduced her to voters and the nation. ani grow castrating hogs on iowa farm, but when i get to washington, i will know how to cut pork. this ad, early in the campaign season really introduced her to the voters in an unusual way. do not be surprised if you see more of that going forward. >> what were the worst ads? first ae show you that was pretty memorable as well. her task was to distance herself takepresident obama and to aim at mitch mcconnell. >> i am not barack obama.
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i am done, i disagree with him. mitch, that is not how you hold a gun. >> again, that dad did catch some attention down in kentucky. it helped to distance herself from barack obama. what about one that did not work quite as well? davis, running for governor. the democratic the game at her opponent who was paralyzed from the waist down and uses a wheelchair. she challenged him for not doing enough. greg>gree fell abbott. work, probably
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did more harm than good. you for bringing us the highlights of this campaign so far. peter cook, our washington correspondent. these midterms are likely to go down as he most expensive in history. with me as mark liberman, the president and ceo of the nation's largest independent cable advertising company. and kevin ryan also stays with me. mark, digital and buying was of 1800% in this campaign cycle. >> and started from a small base. and it is being driven by data. we saw some great creative as some bad creative ads. >> what is your favorite ad? >> the hog castration. [laughter] great for entertainment value. but we have a saying in the advertisement--
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business. the data is the new creative. what is driving the dollars and the ad placement, it is data. is data on the internet site able to do more targeted advertising. and that is now being applied to the cable tv side as well. >> how is that? box datave set-top that can now be matched with voter registration basis preview can make smarter media viewing decisions. >> no surprise. beenrats have generally more tech savvy. silicon valley is usually democratic. it would would make sense that obama did wipe the floor in
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2012. >> that was not the case 20 years ago. 20 years ago, direct mail, republicans did a better job. it has really swung back here. that fundamentally changed, and what is interesting is that the technology changed in tv, but when changed online was the cost. you can regulate data and targeted to cheaper than you can before. that allows you to do things and could not do before. you could do a technologically, but could not do it cost wise. could do all of this targeting, and you can do it by spending .01 and getting you a specific ad. the impact is five times because your not wasting it. effective in getting people onto vote in the polls? >> as they say, you run to the base command during the open you converge to the middle. that ability, has that ability to do better targeting. it is up 75% since the last
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midterm election. ability tobeing the actually target in a much more effective way, like you see on the internet. but really the beauty of cable and television, it is the most engaging platform. the sight, sound, emotion of what we are seeing right now is the best way to get out the messages. >> it raises the issue of whether younger consumers who are on twitter or facebook, are they going to tolerate a whole flood of political ads come cycle? the data andok at see if it is working. and for both republicans and democrats it is absolutely working. watching a video is still more powerful. you're going to move online, but it is harder to not see the ads on video online then it is on tv where you can record it and not look at it.
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it does not lie you the flexibility to be able to skip over the ads. >> you're noticing that as well. once it is becoming more popular online, but the proof point on television being the most you shouldatform, television. in terms of saturation can be could now make smarter media buying. you do not have to over saturate in a household. you can get the right ad, the right time, to the right voter, as you can effects that result. 4, itw that in will explode in 2016. >> are you worried this election? >> absolutely. looking at the results state-by-state, the democrats have six states were obama lost by 14%.
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right now you are betting that republicans take control of the senate and pick up some seats in the house. >> you have talked about being a political candidate. for anything.ning but i do like to be involved. >> probably not the next five years. >> technology issues are becoming more important for every aspect of the government. why 2016 you will see that explosion, because the republicans will want to take it be anso there will increase in tv advertising from 2014 to 2016. >> thank you for joining us.
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we will he back in two minutes on in the loop. ♪
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today's bloomberg number is 52 million. that is the number of people to thrilling andthat of the game series. it was the second most-watched since the 2004 world series. from ahip was down 8% year ago. bloomberg television is on the markets. have a fire lit under them given what happened in japan. the bank of japan coming in with more stimulus to stoke inflation. still to come, a deep dive into this morning's better than estimated earnings from two oil giants. we will be back in a moment.
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>> welcome back to "in the loop ." here is a look at our top stories this morning. futures indicate stocks will open much higher. stocks around the world rising today. consumer spending unexpectedly dropped in september as income grows as of the slowest pace of the year. but that did not stop people from buying equities, as the bank of japan boosted his stimulus. it is concerned it will not be able to reach its inflation target, so it added even more money into the system. it is trimming and its lowest level in almost seven years. -- trading at its lowest level
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in almost seven years. apan, thenot just j whole monetary authority all over the world are each trying to cheapen their own currency. it is a race to cheapen currencies everywhere. i am not sure that is the best thing to do in the long run. ismeanwhile, though dollar up against all major currencies. shares of exxon mobil leptin the premarket -- lept in the premarket. earnings also better than expected at chevron. the stocks and oil prices will not have any long-term impact. today the president is in providence, rhode island. he was big about women and the
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economy and a roundtable discussion at the college about th. you down to the open with the top 10 headlines hitting our radar be or the bell on this friday. market reporter matt miller and olivia sterns join me. this is a fun one, at number 10, boomer. uber. it seems like parents are using the ridesharing service as a carpooling tool. they are using it to transport their children from school back to home. yet another way to use this app. >> it is a taxi service. they are not putting multiple kids in the back. >> they might be. >> but this is fantastic because
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you can track where they are on the app. shuddle,n use who uses trained childcare , if you do not feel comfortable with uber. >> they are working on something called uber family. they will have perseids in the car, so if you're a working mom, it is better than trying to get a car seat into the car. emerging earlyn winter as the new york city --
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early winner of the new york city marathon. it really is giving hotels a literal run for their money. i think this is fascinating because obviously the new york state attorney general is investigating airbnb on the one hand. on the other hand the new york city marathon is promoting airbnb as the number one place to stay. it was the first thing that shows up on the website. that is a little bit at odds. >> it is at odds. and that means that traditional sponsors like other hotel operators are up in arms over airbnb. we will see how this stands out. maybe are coming -- they are
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becoming a legitimate corporation. lenovo not getting complacent third place. they say they want to become the leader in the smartphone device. they want to go after samsung and apple. >> i don't know about that. will they be able to do that? >> they will be able to go against xiaomi, saying it is the third biggest after samsung and apple. it would not be the third biggest if you look today. after lenovo finished it purchase of motor role of nobility, it would have 8%, and xiaomi would only have had 3% of
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the total global smartphone market. >> that is paid. big. to be seennot want as just this asian company that end phones,lower they want to be a higher end product. they want to work in the motorola brand. starbucks, posting quarterly revenues that missed estimates. they are also exploring in some cities, delivery of your starbucks to your office, maybe even your home. the breakfast wars have gotten even worse. grace i do not know if starbucks is about coffee, as about a morning sugar fix. adonald's is introducing
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white chocolate latte. sugary donuts sells products. and with starbucks everyone comes out with sugary lattes, these juices, all of these things that they sell. i am a tea guy, but if you just ffee, whylar cop would you go to starbucks? >> that is right. >> pre-lim chestnut lattes -- raline chestnut lattes. >> they will be introducing another cronut.
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will be cutting prices on 20,000 items tomorrow to get a jumpstart on competitors for the season. i am after halloween seeing stuff for christmas. this is ridiculous. >> they can try every trick kind of strategy they want. if they would just treat their employees well, that would do a world of good. >> what happens when you go into walmart? and see empty shelves, nobody around to help me. they are trying to turn that around. but the idea of cutting health and if it's for 30,000 employees, it seems to fly in the face of what should be doing. sixhey have also had straight quarters of stagnant sales growth. notou think people are going into the stores because of
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the way they are treating their employees? >> i do not like going into stores with unhappy employees. >> the point you made about is interesting. and the dollar stores are undercutting them on price. they are promising to price match in store. that will be a big deal. we continue the countdown. and linkedin with better than estimated results. ♪
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>> it is time for our deep dive. number five, oil. it has been about a month for a bear market.
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this reflects the earnings from some of the biggest oil-produciners. for a look at what is driving down the price of oil and low it can go is the editor of the report which analyzes the oil market. it has been a wild. hile. pricesople say that the we are at now is really game changing. at what point does this become a new reality in the world market? >> i am not sure about new reality. we have to appreciate how we got here at this point. demand is certainly suspect. starte to go back to the of the summer, because what was the real concern? the advances made by isis, and the threat that that made to iraqi production been we also had libyan production, which was knell. nil.
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it turns out we got through that, and the iraqi production never went missing, and more important the libyan production is now up to 800,000 barrels a day. we are now at the weakest demand for refineries. e are in maintenance season. look at the earrings for chevron , we are seeing margins that are -- so if we look at the earnings for chevron and exxon mobil, we are seeing margins that are fantastic. the downdraft in oil prices was not felt until this month. so we not would you see this reflected until the q4 earnings. given thoselower, factors, and non-fact is, how
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could they go? >> i do not think they could go lower, this is the sweet spot for the consumer. last night we got news that conoco phillips linked and now they are pulling back production. this is self-correcting at a time when demand is going to pick up. it is going to come back online over the next 4, 5, 6 weeks. >> what about opec? opec rightat with now is we have to ask ourselves is this 1989, when all of these countries had to reduce oil for the sake of having some kind of money? venezuelaint today,
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is treated $.57 on the dollar. they have to produce, or they're going to default on their loans. dids this 2001, where we see some cohesion, and they pulled product back to the market? top in mind, demand is going start to soar, especially when you look at yield. the biggest concern, is the yorkation in new harbor, where we see gasoline stock at two your lows right now. >> before we go. came changing with these prices at these levels is prices. shale boom, with this low, do we have to reassess the production here in the u.s.? barrel.t $80 a
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we are looking at some of the real marginal delays that might threaten, but we are not looking at any real danger as far as the , unless we get sustained prices below the $70 level. several dollars away from threatening the bottom line. >> thank you. coming up, a huge unexpected legal cost for citigroup. the bank had to pay this earnings season. ♪
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>> welcome back. we will get back to bring you the most important stories you
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need to know about before the bell. number four, citigroup. facing a u.s. criminal probe. his, a $600ed t million legal charge. million dollars, they're getting off cheap. jpmorgan put away a billion dollars, deutsche bank has put citigroup --ion, this is nothing compared to them. avis jumpeit is chump change. we thought the mortgage settlements were going to be huge, $41 billion. but for citigroup and i think the biggest trouble might be the fact that this is the second time this year they have had to restate profits. it is interesting that with
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citigroup, you can track that to some of the other banks like jpmorgan or bank of america or where it seems like in the third-quarter results they have ready much, as big as those numbers are, finally putting away their legacy. >> it is a shakedown obviously. we all know that. >> they were one of the worst hit. >> twitter naming a new head of product. musical chairs at twitter. look at all of the twitter turnover. >> head of consumer engineering, vp of engineering, what is going on? timeey are having a hard figuring out how to monetize their users. what new products they can bring on to ticket vintage of what .any of us see as a newsfeed
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>> they need to hire someone from facebook. >> what is interesting is that is the consumer product side that has changed the most. i have not yet seen, as someone who uses twitter for most of my day, i have not seen any products out there. what am i being sold? click link to > i would buy it. >> kevin ryan was saying that facebook has slow user growth, but they are engaging a whole lot more. that is the same thing that linkedin, our number two, is doing. they have project in fourth-quarter results that are short estimates because linkedin is going to the transition where they have a social media platform into a job recruiting
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tool, and now they want to be more things to more people. they want to be an interval part of the sales force and a company, marketing, communications professionals, that is what they are trying to do. and the the same time they're trained to move overseas to big markets like china. >> it is just a jobs recruiting tool. is it really anything else? linkedin is wonderful for what they do for job recruiters, but when you talk on the user's ipo people do not know why they to the userdin -- side, people do not know why they are on linkedin. >> there are so many different dimensions to user engagement. interject -- you're going to see all big tech companies miss for the quarter
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forecast. they learned from apple. underpromise, over deliver. >> we're on the markets with equity futures surging after that doj move. ♪
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>> welcome back to "in the loop ." matt miller and olivia sterns joining me. to talk about this move by the bank of japan. i mean that in all the biggest ways. boj.s a huge move by the they increased their target for monetary stimulus, they're adding much more money into the system. this is something that economists word pushing for what -- were pushing for. >> what is happening in both
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policyand japan, is inertia. they should be going into qe, and they're not going to do it until next year. the bank of japan should be doing it on top of what already done. >> and it is what they did. people have been saying this for quite sometime, and this is finally the boj delivering it. >> currency manipulation? , it affects the currency, but the same in relation -- >> that could be slander. this is what central banks around the world are doing. it is currency manipulation . you watch how japan's neighbors react. it is interesting to see what the asian neighbors say.
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great do you think this will mark another round of a currency war? phrase usedard that wise on bloomberg television two used twice00 a.m. -- on bloomberg television today since 7:00 a.m. of japanese 60% eadinghich i was r one analyst as saying clearly kitchen sink territory. >> as the stock market opens, we have the chief investment officer at pimco standing by. you e-mailed us early this morning and said that this is huge news coming out from the bank of japan. >> this is big. basically you have an economy
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that is growing less than 1% in terms of growth. inflation is only one point 2%. the bank of japan wants to go all in. this is open-ended qe until they get 2% inflation. they are increasing annual purchases by $30 trillion. this is a big move. very bold. >> is this the future of developed economies? is it happened growth and unlimited qe until the entire global system collapses? it is a great the reality is that with debt debts high, government levels high, monetary policy is the only option. and so you're going to see these central banks all over the world know more all in then you think because monetary policy is really the only game in town right now. >> julian roberts said because all of the fed banks have their
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punch bowls out of the markets are getting drunk on liquidity. . we have tried desperately to keep our bonds low, and so is everybody else. so we have a big bubble brought on by bond yields eating so ridiculously low. >> one of the advocates its of what are the -- implications for that for your strategy? if you look at central banks, the bank of japan is now 57% of gdp. the ecb is only 25%, the fed is only 21%. the balance sheet grow, they buy government bonds suppress those yields, and it forces investors into outer perimeter asset classes. it is actually very bullish for credit, alleged for equities. i think that the currency is the release mechanism. basically you have for the first
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time in four or five years monetary and economic policy diverging between the u.s., europe, and japan. it is very bullish for the dollar. growth i have to ask you about treasuries. to sees been interesting is we just got personal spending numbers out this morning, and they were worse than estimated. what is interesting is to see this pattern in treasuries, this reaction to numbers like this. they are more react to negative numbers than may have been to positive ones. a perfectt not be example, because we had all that money coming out from japan. but generally speaking that has been the case. treasury investors have been much more skeptical about these u.s. recoveries. why do you think that is? >> i think that is because the treasury market is competing with assets all over the world could we are in a global market for bonds. the reality is that inflation globally is coming down. there are deflationary concerns and zero -- in europe.
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as they monetize that debt, as eurobond yields fall because of weak growth, treasury yields a stay low as well. and in the u.s. we are only getting 1.5% inflation. so the reality is these yields reflect a global economy of low inflation. that, andring considering the global deleveraging that we have been talking about. do you really expect the fed to raise rates in the middle of 2015, or is it going to be the middle of 2020, or 2025? >> we think this will be pushed out longer. we think they will delay. when theyis simple, go, they're going to be slow, and when they ended is going to be a much lower rates whe than what we've seen in the past and
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that will allow the private sector to heal. to tollows private sector heal, and risk asset positive. >> we are not going to get that 17 stairstep rate hike that we got a decade ago. >> thank you so much. , the s&pof stocks , beyond their12 record closing level. here we are in a major rally, thanks to japan. coming up, imagine getting a first-class flight to dubai for just $90. how to travel like a rock star without paying like one. ♪
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>> attention road warriors. gas prices are under three dollars nationwide, which means will haveconsumers more cash to burn in the coming months preview may see more people take to the skies again in the middle of the holiday season. joining us now from miami is brian kelly, the former wall street recruiter who has logged so many miles he knows exactly how to game the industry. he once flew first class for $90.
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pointnow the editor and site.r a travel >> showers and caviar. that was just by leveraging their partner. quite you just had enough points to be able to do that? >> one credit card sign-up bonus, and a little bit of spending. >> what is a trend we are going to see? we're going into november, we're going to be booking our tickets. when do we need to book, and who should we be booking with? >> there's no crystal ball. it really very's by route. kayak has crunched big data, and two toestic routes, four weeks is the sweet spot. international flights start to
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spike about four weeks prior to departure. i would book that right now, because if you wait until the last minute you can get slammed on airfare. now, but ifright you did not get your tickets, you say that it is not a bad idea to wait until the very last minute? >> a lot of time they will think you are a is this traveler, and the corporate will be paying for it. flyer milesrequent for cheap tickets. if you see huge airfares, always double check and see if you can use your miles. >> speaking of miles. i cannot keep track of all of these different programs. is what i am airwaysca and u.s. , delta are all changing as well
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as united. in terms of how they are merging, they are keeping their mileage point system. what would be your advice? >> united and delta announced that they are going to start awarding flyer miles east on what you spend, which is bad if you like buying the cheapest airfare brady. earn a lot less mild but what american came out with says that you will get miles on the amount you fly, which is great for international flyers in coach. i think they did that because they've seen over the last couple of months that a lot of flyers are not happy with these new changes. if you're not happy with the american and united, you might look at others. >> is it easier for companies like delta and united to switch that?
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is it easier than having to merge the deed of mileage -- the two mileage programs? >> it is a challenge, but if they wanted to switch, this would have been the time to do it. rip the band-aid off. certainly any option is open down the road, but i think they're doing this to differentiate themselves, like ,e are with the premium product domestic first-class, and other areas. >> you fly business and first class, and you lose the jet lou class they have. n flight with a -- jetblue has an awesome
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product, private suites for a much cheaper price. n for alle know coaches really cranking up the first-class product. would have to give the edge to america, but all of the carriers on the transcontinental routes have excellent products. >> thank you so much. let's get you caught up but other top tech stories on our bloomberg west radar this morning. the biggest loser may be sony. the company reported a quarterly loss that was seven times bigger than a year ago. than 1.5 billion, which sadly trails samsung and apple.
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quarterly profits that missed wall street estimates for groupon began by offering daily deals by e-mail, and a notice becoming a full-scale e-commerce site. they would rather find partners for its businesses that sell to them. we will let you be the judge, who should play with steve wozniak in a new movie -- play the entrepreneur steve wozniak in a new movie about steve jobs. catch all the latest only on bloomberg west. stocks are rallying this morning. has been a wild week in markets.
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we have a look at what has in this month. -- been this month. >> i will start by saying that seth rogen as steve wozniak is a great idea. himthe interplay between and christian bale would be a fantastic idea. amazing if you think where we have an and where we are now. we just pointed out the s&p 500 is on track to close at a record high. certainly some of that has to do with what we heard out of japan this morning. push, extra monetary stimulus. but it is important to point out that today's the very last day of the month. it is like a football game. down byr team was
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five touchdowns, that is what it felt like in the middle of october. and now you have come back hallway, and now the bank of japan is pushing the ball over the touchdown line for the victory. and unbelievable month. nothing else happened. policy wise. except for the ecb, nothing out of the fed, a regional fed governor, and that is it. solid coming from behind. we were down 10%, and then we had a series of moves that pushed us higher. and then this just kind of tip the ball. but it raises the other question, now we have to focus on what is going on in japan. they would up with these measures in place if they felt -- >> the estimates suggest that a japanese inflation is only about 1% if you strip out some of the
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distortions. for people like a, this is still , this is still a crisis britain ma. ify have questions about they need to go into the second phase of the plan. oil remains stuck below $80 a barrel. goldman sachs with a very controversial but perhaps clairvoyant report earlier this week, saying that while next year is going to sink to $70 a barrel on the second quarter of 2015. this is what i want to suggest -- a lot of this has to do with gas. gas andyou price barrels of oil equivalent? gas upon a time, oil and
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traded in lockstep. it is the oil market that could correct, and we could be trading at $24 a barrel. ♪
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>> the army has seized control in burkina faso, and the president has resigned. thousands of protesters have taken to the streets. they will appoint a new head of state before restoring the constitution a year. russia has agreed to restore natural gas deliveries to ukraine just as the weather starts to turn cold. the guest was turned off last june. the cremeans -- the russian said that the ukrainians owed $5 million. that is it for this week on "in the loop."
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next week we have a lineup of is leaders. ♪
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>> it is 56 minutes past the hour which means that bloomberg television is on the markets. 30 minutes into the trading day, let's get you caught up on were stocks are currently trading this is for the record books because u.s. benchmarks are closing on an all-time high. little bit below the 23rd 2013 level we were looking for. japan increased the pace of inflation, and moved
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the to your target -- the two target. look at gold, and losing its luster. reaction, for market this was a surprise move on the markets liked it. >> they like it so far. resistancet have any of the 2011 record level, now they're trailing right below it. winky to watch if it has enough momentum to stay above it -- it will be key to watch to see if it has enough momentum to stay above it. the yearly growth has been good. >> consumer spending numbers disappointing records and is not all roses. but a good gdp number yesterday, better than
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expected. we are going into this with a momentum. of a r >> where can we go from here? >> is the question everyone is asking themselves now. for analyst and median estimate for the end of the year were 110, and we are 112 today p we have already exceeded that for the issue now is whether we see a consolidation around that level, and and the your flat or slightly lower, or whether we see the dollar and yen moving even higher. i think a lot of analysts are taking a look at our forecast and the view but whether they want to adjust to reflect the latest stimulus. is not onlyovements because of the bank of japan, but because of the pension fund which is the largest of the their allocation to
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about half of their portfolio saying they are done with the sleepy nature of japanese bonds. >> absolutely. some slowing out of japan as result, and that will favor the dollar. so we should see the yen weakened on the back of that. it will give the dollar a lift today. inwe are seeing a divergence terms of these policies per the u.s. just ended quantitative easing. -- negative and is depen and the bank of japan is extending theirs. they knew that this was going to happen in the united states. >> they knew that the dollar strengthens a bit of a concern going into the earnings season. there have been cases where companies have said that transitionscurrency affect earnings, but as a wholesale have an up and growth has been better than expected. importants been an
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currency because of all markets looking for riskier assets. the stock market is going to like it. >> cyb we're on the markets again in 30 minutes. ♪ this is "market makers." for the record looks on wall street, the s&p 500 climbing back above its record close. acob up and gives markets kickstart. -- bank of japan gives markets a kickstart. >> who wins and who loses when oil falls below. >> the seven-year-old entrepreneur has come up with an invention that will get you right where you eat. good ay


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