tv In the Loop With Betty Liu Bloomberg November 4, 2014 8:00am-10:01am EST
and i am betty liu. it is polling day around the country. a big day in washington as we await the midterm election result. all the races you need to keep an eye on with a great set of guests. ceo ron feinstein joining me. staying in washington, the u.s. budget deficit is at its lowest level since 2008. we will catch up with the former office manager and budget orszag. peter of heat in recent days, including questions of how to deal with the threat of ebola. i caught up with arnold donald. first, a look at our top story this morning. voters are deciding today with congress will look like for the next two years. question is in the
senate. it is right now too close to call. here is republican senator rand paul. >> we know this election will send a clear-cut message with the republican way and the way we will create jobs in this country. expensivele, the most midterm election in history. the money has been rolling in. $3.7 billion. you can watch for coverage of tonight's election results. we will kickoff at 5:00 p.m. eastern time with a special one-hour of "with all due respect." alibaba down 1% in free market trading. despite beating estimates in its first earnings report as a public company. increased shopping in china has led to more spending by advertisers. before today, alibaba's shares had risen 50% since september.
investigating since its foreign currency dealing. faces inquiries from regulators in the u.k. and elsewhere. jpmorgan will set aside another $1.3 billion to handle possible losses in the case. the group -- the incredibly shrinking budget deficit. $483 billion at the end of september. that is 2.8% of gdp, the lowest it has been as 2008 at its peak years ago. up more than 10% of gdp. the deficit will get smaller willyear, and then it begin to expand again in 2016, the in time for presidential election. we have not seen oil this low in three years. tradedxas intermediate
below $76 at one point today. that is before saudi arabia cut the price it charges u.s. customers. only oh is down 20% this year. maybe the decline in oil the economy isu not recovering, as all the bullish analyst think. collects back to the top corporate story this morning, alibaba out with better than estimated results. they came out and everything" here looking at the numbers uniqueves provides research. paul, your big take on alibaba?
>> a 50% gain in your ipo isis. that is what we have got here. slightly better than expectations. the growth in total transaction. the mobile business was of thousand percent in revenue. a key metric we see. consumers in a lot of transactions are going over the mobile devices. big internet companies have to be there and alibaba shows good numbers there. click selective a they position alibaba four, paul? china inlly capture terms of e-commerce. investors feel very comfortable about that. a tremendously long runway. and manufacturing
economy shifts to a consumer economy. less clear is outside of china. they're making some investments and set up an investment shop in silicon valley to take a look at technologies taking shape here. question is how much capital to they want to invest in markets outside of the u.s. that will challenge them over the next several quarters. in china, where they know where the market and their growth is. >> were there any parts of the on profit margins? question to the margins over the .ast quarter profit margins are well above their peers in the marketplace such as amazon and ebay. they are trading down simply companiesike a lot of trying to tackle a fast growing
market, they're making sure they have for long-term growth opportunities. investors by and large will be accepting of eroding profit margins. quarter afterhat quarter and year after year on amazon. >> thank you so much, paul sweeney of liver television. the topic of the day for everyone. mitch mcconnell is the candidate with the most riding. if he can win his own race for reelection. the hometown of louisville, kentucky, with the latest. how is the mcconnell team feeling? >> they are feeling confident. they think this location will be a victory party.
the senate majority leader had -- something still needs to fall into place for him . republicans need a net team of 16 in the republican senate. a spirited democratic challenge for him, trying to make the case that his years of experience will be a liability. crisscrossing the state, below $20 million at every stop. here he is speaking yesterday in louisville. >> victory is in the air and we will bring it home tomorrow night. after six years of borrowing and spending and taxing and
regulations, these need to be stopped and it starts tomorrow night. >> they are feeling confident. the most recent polls have mcconnell at an advantage. >> what does grimes say? what is her closing argument? the same, that he is the guardian of gridlock in that mcconnell is the reason for dysfunction in these eight. she has challenged the central notion that that promotion would be a net plus. >> has not left this state better off here at kentuckians are ready for someone who will fight for them, not someone fought -- but and paid for by the millionaires and billionaires. >> an intense campaign and a lot
of money in the campaign. probably $60 million, one of the most expensive in the country. trouble andet into has and she had a hard time recovering from her refusal to say whether she would vote for obama again? central touch point in the campaign. the attorney general jack conway does not believe that was really an issue. it will come down to these two candidates. there needs to be a new generation of leadership here. you will notice is a tight race. >> election results, we will kick things off at 5:00 p.m. eastern time and our election all nighter through midnight.
of coffee,eed a lot i think. results, -- ihe want to bring in mark. i also want to bring in my very special guest host this hour. a well-known democrat on wall street and a fundraiser for the democrats. what did the results mean for the market? >> you're looking at what is traditionally the best quarter for stocks. about twice the average gain. on top ofe midterms it, and the average gain is 8%.
the firstin of 8% in quarter. those are the strongest the problem is, not many data points to back it up. , you areright there only working 25 did it twice. every time you throw another variable, you're looking at small data points. that says just that said, midterms generally. >> if you are able, you might be resting comfortably. if we see a gop controlled congress, and a democratic in fact that will be good for the market, because it means there will be no good game changing measures in the past.
us to make sure we are have -- we have no game changers. we have had that essentially for the last two years. if we continue with a congress divided, the republican house democratic senate, relatively little happens in washington over the next two years. the thing we do not know is what happens when we have a democrat or republican house and senate and causes the republicans to take a little more responsibility for helping to .ake it happen >> a bullish scenario for markets and the economy. >> i think the economy is what will ultimately jive the markets
over the next couple years here compromise things on corporate tax, tax reform, immigration reform, energy policy, trade policy. those are the things democrats and republicans in the majority, the two of them together, seem to be willing to support. those are relatively positive for the market. >> impasse on certain areas of the market. immigration on technology, corporate tax reform on the energy sector. what is going to be the biggest impact? >> the question on everyone's mind is when the fed will raise interest rates. that is independent of politics. historic and unprecedented
that ishave seen, basically a thing on the back of investors minds. so far for this quarter, it is look pretty good. economic data going forward looks good. three and a half percent growth in the first quarter. >> and look at our budget deficit, the smallest in six years. >> that should keep rates slow. it appears to be steady as she goes. there is always something to worry about. more of theo be same that we have seen. >> thank you so much. staying with me throughout the hour as my guest host. theng up, what is on agenda? we will talk with the former senate leader. plus, ebola throws a scare into the travel industry. we will here exclusively from the ceo of carnival foods.
>> i want to bring back my special guest host this hour, ralph schlosstein. economist at hyman's research and trading firm beefed-up evercore partners equity research area and also the capital market business and hopes to attract. great to see you and it is good to have you back on the story. you were with us when you first announced the acquisition. you are close on the transaction. been thehat has impact? ? support thing is it allows us to serve our clients on all the issues they consider strategic, m&a, their strategy, and equities. utah to any seo and that he does think they are most concerned about are their strategy and the m&a transactions, and their stock.
we are in a position where we can be highly relevant to our clients on both issues. we are quite excited about this. you are able to retain the people at isi? >> we kept all but one analyst said we want to keep. and we are still working on him. all of the distribution sales and trading people as well. we are in a strong position. the size ofation all the large firms, and our intellectual content, and than all ofstronger them. since we announced the deal, and institutional investor came out with their annual research isi alone, without our analysts, moved from number 10 to number five, the first time an independent firm has been in the top five since doj
with their in 2000. >> talk to me about the environment. i know october has been a slow month. $232 billion worth of deals. a little less than what we have seen on average through the years. pacific, elliott dropping their bid for t-mobile. no dealeen kind of a for october. what is going on? >> we have to step back and look at the bigger picture. volume ofk at activity this year, the dollar volume of activity year to date versus last year is up a little bit over 50%. is thatresting thing the number of transactions is up low single digits, to, 3%. volume has been largely $5 billion.
deals last year versus this year, the increase is exact the same as the increase in total volume. it is all in big deals. the environment is good. .laintiff it i think that is true of most if not all of our competitors. >> do you think it had a dampening effect? >> on a handful of transactions, some of which were announced and some of which were going to be. think the administration accomplished what it was hoping to accomplish. you have not heard any out via of republicans or democrats in the senate that would suggest there is a broadcast of and census. >> a couple of german luxury carmakers are out in front.
>> you are watching "in the loop" live on bloomberg television. good morning. a look at our top company news. bmw beat estimates boosted by strong sales of its s five suv. the company reiterated its .orecast the automaker fails to match its pace of sales growth. softbank cut its full-year profit forecast by 10%. the wireless carrier blamed widening losses that's it, which
it acquired last year. in announced yesterday it was for theabout 2000 jobs 11th straight quarter. taylor swift sold her music to spotify. the streaming service as being a part of declining album sales area it also put together a playlist called "what to play while taylor swift is way. on track to be the biggest album sales since 2002. 26 minutes past the hour. bloomberg television is on the market. equity futures slightly lower. investors, the public, washington lawmakers, washington insiders and outsiders, we're all watching what will happen at the polls. you can see there is a little hesitancy of turnout. we are on the markets again in
30 minutes. the midterm elections are finally here and the other looking good for look and. it is not clear whether they will capture enough seats to take control of the senate veered we have got a roundtable now. i am joined by republican strategist ron christie who worked on detainee's staff and is a staff assistant to president george w. bush. hostwith me is my guest for the hour, the president and ceo of of the core and a prominent democrat on wall street. i will toss it out to you. how confident do you feel? >> pretty confident. republicans have a lot to be confident about. i think the democrats have stalled. the key races a lot of folks are looking at, republicans seem to be gaining momentum rather than losing it. democrats, is there able to stumble across the finish line and hold onto the senate, that would be a big win for them. it seems unlikely they will do well tonight. >> it almost seems this is the
election democrats could have one. if you look at the numbers, the stock market has gone up. adding 200,000 jobs. the budget deficit shrunk to its lowest level in six years. why could the democrats not get any momentum from that? questar two things going on. first of all, it is not a countrywide election in the senate. it is 36 individual races. aese races happen to set up little bit better for republicans than democrats. there are more red state races this year and they are particularly a high number of races where there were formally democrats in red states. those would be hard for the democrats to keep. in 2016.ally switches a stiff breeze in the face regardless of the economy. the second thing is, the
democratic party, notwithstanding all the good things you just outlined that have happened in the economy, do not seem to be benefiting as much as i would say they should. yes. if you look at the recent polls out, and we have got one in particular, an abc news poll that shows 46% of americans believe that the president actually understands their plight. americans 54% of think the president is completely out of touch with the american public. >> that is right. if you look at some statistics you were just mentioning a few moments ago, that this patient rate is 2.7%. a lot of people who want to find a job cannot find one. prices aregnize the going up and they do not feel as confident with the economy image not feel democrats have done as good a job and i think that is
what these goals are. >> i do not agree with that. electorate. the problem run to strive is very real. we had a recovery that has been quite strong inequity values and the markets. a recovery has in quite strong in housing values, the broad not touched populace to the extent a recovery of this scale normally would. of people a number who are underemployed, working part-time or jobs below their skill level, and number two, that for the lower paid jobs in our society, they have not benefited. >> is in the president's job to close that gap? >> some of those things are not easy to do. effective in my view our
broader globalization issues, the importance of technology in the work list, and the widening gap in the compensation for highly skilled versus less skilled label -- labor. the president has tried to have some policies to assist that entity is not seem to be a lot of resonance for that in the congress. >> here is where we agree. if you look in the present processes approval rating after the election, 54%. make sure thewill middle-class trying to get ahead have an opportunity and those were not middle-class, get a city. approval ratings are in the 40's is the middle-class voters and those underemployed do not feel in this environment, they have been able -- some a democrats are in trouble is that republicans have tied the democratic candidate to the president eric >> what race are you most interested in? what is the one you are really watching? >> i'm looking at iowa.
i am looking at what harry reid said the other day, and i think it is right. if republicans have a good night tonight and we pick up iowa, that is very well. that is what i'm looking at. >> i agree with that in terms of an interesting race to watch. you have got to like georgia. he does really attractive a really terrific candidate going in a very tough but changing state from a democratic perspective. it is also interesting because i think there is a reasonable probability it will not be decided tonight. >> right. midnight, will we even know the final results? are we talking about a runoff? >> i think a runoff. georgia, you have to get 60% of the vote to win out right. i do not see either republicans .r them getting that mark
we are also likely to have a runoff in louisiana, a state where the current senator is in a battle with her public and opponent. louisiana and georgia will keep us up later tonight and even into next month. will thosetion is, two runoffs, which we both believe are highly likely, will they determine the outcome? >> all right. thank you so much. ron and ross staying with me. watch bloomberg television for coverage of tonight's election results. we will kick things off with a special one-hour of "all due respect." then our extended coverage of the results starts at 7:00. mark leading our election all nighter at midnight. but likely just said,, lee two runoff elections to watch way into the
morning. breaking news on trade downs. the deficit actually expanding slightly in the month of september. julie hyman has more. 7.6%, to be a exact. it is higher than economists predicted. august had been in the lowest level in seven months. deftly not showing improvement there. also, the deficit at a four-month high. the most ining by february. this reflects a couple of things. demand from europe, latin america, and japan among them. and with the declining price in oil, that affects the numbers. imports steady. in thethe weak spots report, michael mckee pointing out to me, the x word of civilian airliners by boeing. that could be an area to watch. you.ank
>> $483 billion, the size of the .udget deficit the sharpest turnaround in the government fiscal position in almost five decades. the budget deficit makes up 2.8% of gdp, the lowest level since 2008. more than 10% of gdp, only five years ago. it is supposed to go lower next year, but there is growing will be tired of austerity measures here and we will take the cap off spending and start to spend more. for more, i want to bring in the
beam debt bloomberg few columnists, the ceo and president office of management and budget under obama, now chairman at citigroup. also still with us is ralph , the ceo of ever corporate you have written so many art those about the incredible shrinking budget deficit and no one is talking about it. it is not a bestseller in the election. >> yesterday partly reflects what you are just talking about, that the economy is actually recovering. whichr thing it reflects, is very important for our long-term fiscal future is that medicare spending in particular has decelerated dramatically, something my bloomberg view columns have been talking about for now three years. a very big slowdown, which has a huge effect, whether or not the medicare slowdown continues will
what our fiscal future over the long-term looks like. >> ralph, do you agree? >> i really a great. i do not think there will be a real, significant change in discretionary spending in the budget, a shrinking portion of anyway, regardless how this election turns out. >> do you think the deficit will shrink or at some point, the party will end here? economy inas the nominal terms is growing more rapidly than spending, somewhat the budgete cake, deficit should continue to shrink until the impact of demographic changes, the changing age of the population, and entitlements start to grow gdp,rapidly than nominal and that will put pressure in the other direction, somewhat offset by the point peter made
about medicare spending. >> you hit the noun the head when you said, whether it continues or not. i think for the public, maybe the news of it shrinking is not the front page story right now. but if it does start to turn around, what could happen at that point? >> official projections assume it does turn around. i want to pause and realize what a big deal it is. in the fiscal year that just ended, the numbers you are referring to, medicare spending for beneficiary in inflation adjusted terms is lower. it actually felt. yearevel fell in fiscal 2014 relative to fiscal year 2014. by historicalmaly standards. official projections assume it does not continue. if it does not continue, then we are back on the track that basically every editorial page
in the country talks about, that we have a big, long-term fiscal gap. is it were to continue, all those scary projections will not turn out to be true, and our fiscal trajectory will turn out a lot better than what is baked into the official numbers. >> do you think a republican-controlled congress and the white house will be able to come together on fiscal issues in the next two years? >> there are two dimensions to that. thats the downside risk, one of the reasons why the economy is recovering is we have had a year or more, no drama on the fiscal front out of washington. there is the unfortunate possibility that we have the debt limit coming up again next , we will probably have some spending bills coming up next spring. there is a possibility of another round of drama over debt limit cliffs and what have you. that would be very unfortunate.
.> i see you nodding your head >> i completely agree with that. course.omy is on a good not aggressive growth, but consistent growth that will create enough jobs to actually gradually bring the reported unemployment rate down. honestly,hing, quite that could interact that in the misbehaviors is a by our politicians in washington. there are obviously threats from overseas as well. >> all right. great to see you and thank you so much for joining us as morning. and peter, thank you for joining us as well. peter is our bloomberg view columnists and director. coming up, my exclusive interview with the ceo of carnival. what he has to say about the threat of various actors out of their control, including ebola. the industry is facing as we head into the
>> a big day in washington so far. ebola. president obama will receive an update on containment of ebola later this afternoon. travel restrictions remain high on the agenda. on that note, the carnival ceo to ask him recently about the scare. he started with a case of a hospital worker who self quarantine himself over worries she was exposed to the deadly virus. >> she never had any symptoms. when she got back, they took a it tosample, air jetted austin for a diagnosis. by the time the ship arrived at court, they confirmed there was
no virus in her blood. no one was ever exposed to anything. shed self isolated herself. self warranty and. ,nd we of course supported that to be in compliance with cdc's changed rules, which occurred while she was on the show. and she had nothing. she did not have anything to her she was constantly being monitored. of how thingsmple really are handled. if something had happened, we would've handled that. not have been exposed to people and we would have known before she ever showed any symptoms and exposed anyone else, that her temperature was being slightly elevated, and we would have managed that. the reality is, that did not happen, thank goodness there it that is why the cdc said she could travel there it was a minimal risk to begin with. she works in a blood lab.
addeavy sound event had to additional health-care workers or change the kinds of doctors you have on board? >> we have public health experts , and we have positions on every show. -- on every ship. we have clinics and full hospitals. then, of course, we watch where the shifts -- the ships sail. depending on the geography. wheelies have various authorities of whatever area we are in so again, safety, security, comfort, health, are paramount. it is a standard. we monitor that very carefully. more, i want to bring in justin, who covers the company for bloomberg businessweek.
by all accounts, do they handle this stairwell? like they did. in the largerssue scheme. cruise ships are set up to really control viruses at all times. viruses are the most difficult problems the industry has. they needed to really focus on that, every ship, and containing this is really a lot of the same procedures. >> this has been an ugly year, ugly months of the cruise industry. off the italian coast, now you have got ebola. about, what has been the most challenging part of his job so far, and he said, it has in dealing with media coverage. listen to what he said about that. >> the biggest challenge for me has been all the media. we started out with some disruptions that i came in after and we spent a lot of time at the media trying to help the .edia get around it
>> but it has also been their own fault as well. respond tolow to some of the crises. >> they were slow. you had live cable coverage pre-much nonstop, the cruise seen around the world there that really affected it. it affected everybody because people said, why would i want to do that? nothing about that was fun for me. it really is the media and the headlines and the negativity that he has had to do with. discounting is the number one issue the cruise industry is trying to deal with and get rid of their it >> he said, that era of heavily discounting is going to end. will he make good on that promise? is he will try. the royal caribbean told investors they're determined to get rid of last-minute discounting because it causes so
much anxiety and irritation for people who bought early and paid more. not only that, financially, it just does not work for them. the economics are just not there. cruise hadbe, every to be full. i think the industry will now say, maybe that is not the case. >> it seems to suggest they could sell with 10% less people, 10% less than full, and it would still be manageable. >> right. -- if they now cannot now, i think they will work toward that. bites.ng up, austerity the casino industry, it plunges as gamblers cut back on spending. high rollers head to vegas. we will see.
>> bloomberg television is on the markets on this voting day. we are at or near our record highs for the year. trade numbers came in. the deficit group slightly in the month of september, not enough to be a game changer at all for investor sentiment. on the markets again in just 40 minutes, half an hour late from the opening bell. congress, it is said, is the worst he has seen in 39 years of politics and 50 years of watching washington. what isask trent lott his answer. better than estimated earnings came out this morning. joe tsai is joining us.
>> welcome back. we're 30 minutes away from the opening bell. top stories this morning. he and the down joe -- dow jones industrial average at all-time highs. of for trying because slowing demand. voters decide today what congress will look like in the next two years. the new york times says there is a 70% chance that will happen. ae washington post calls it
near certainty. one of the republican senators in a tight race. mitch mcconnell of kentucky. >> we will bring victory home tomorrow night. after six years, these people need to be stopped and it starts tomorrow night. >> a special edition of all due respect and we may stay on all night long. an all nighter. another big bank is the investigator foreign-exchange practices. cooperating with the got -- with the justice department's investigation. regulators in the u.k. and elsewhere. 1.2 billion dollars. magic formula,he bringing in more shoppers and more ad revenue.
alibaba's first earnings report since september. the company reported more shopping traffic in china. 15% since the mega-ipo. 30 minutes away from the start of trade or the discount you down from top headlines. joining us is matt miller and julie hyman. have you voted yet? .> tonight >> are you voting? let's of course. >> consumers are able to get walt disney movie at on the android devices. avenues ors more where and how his mood is obese teen. we will continue to watch "frozen." press more often, i listen to the soundtrack.
it is interesting. for the first time i know of, and he will be able to list something you bought on itunes is anroid device, if i and choice device. device -- if i use an android device. >> aren't you sort of an iphone family? ? to operating devices. i wonder how much use that will get their it >> bloomberg provides employees with android devices and we personally all have iphones. if you want to listen to it on your bloomberg -- >> it gives you more flexibility and more chances to make money. warner bros.. oniety reporting layoffs film and television studios
starting today could cut approximately 1000 jobs locally as part of a companywide belt-tightening. that is about 10% of their workforce. warner bros. had a hard time with putting out any hot movies. that was high production, but very low volume of sales. >> who said we need to make "jersey boy" on film? >> if you got laid off by time warner right now, would you blame rupert murdoch? time warner, under pressure to perform. >> you to do now on the head. i think in the next year, they will have to really show shareholders he made the right decision here in rejecting that from rupert murdoch.
i want to make sure they need that number -- those numbers. make goodit does not movies. >> rate, more job cuts. jobs for an 2000 11th straight quarter. that is also a problem that other carriers as well. cable operators are also cutting jobs. >> they're all cutting prices. sprint, at&t, and verizon. the difference is the other carriers, it is working and they're gaining subscribers there there is in there margins squeezed as they are at sprint, but sprint is not picking up its customers as a result. >> i did not even know sprint was still around. is there something else besides for rising and at&t? >> t-mobile. >> i guess the kids use these things.
when i was younger, i would owe his go with number 3, 4, 5, and six. when you get older, i think you have had enough of this body service. >> all of them are offering you deals now. it is not as though the underdog is the only one offering deals so that is why you go with it. >> our rolls-royce is cutting their headcount by 600, since you cover the car industry. >> interesting. bmw owned that brand. i do not know if you mean the car maker or the engine maker. >> it was like it is the but we will get clarification on that. number seven, taylor swift and spotify. the artist told her catalog from spotify services. talker she nor her team about that decision. i cannot seem to get away from
the song. it is all over the place. >> it is fantastic, actually. an amazing song. >> it comes after her latest album, 1989, debuted. >> is starts with one of the worst tracks ever. "welcome to new york" is one of the worst new york songs ever. i love taylor swift. however, a business executive, she is not. if you read her op-ed in the wall street journal from this past summer, it is entertaining, but probably not on. she is really concerned about streaming and she thinks there is a future for just the album, like a record. >> she may not need streaming. she is selling all these outcomes. but a lot of smaller article -- smaller artists do need it. casino revenue plunging by the most since monthly records in 2005.
this is after china's crusade of rooting out russian. do not forget the chinese millionaires and billionaires justnder a crackdown, not against corruption, but overall displays of wealth, essentially. itself a sign in and of that there is corruption going on. this is all part of the movement . >> you hit the nail on the head. if you made tons of money previously, you'd go and buy a now, people are watching and you have to find other ways to spend your ill gotten gains here it >> it will keep going until mid next year. we did see a decline overall in revenue this year at 1% for the casino, the first decline since they started taking records. it has been a huge moneymaker. now that it is turning down a little bit, las vegas is improving.
>> we continue to countdown down to the opening bell. rolls-royce cutting 2100 jobs. the engine maker of the company, not the carmaker. that is just a clarification. it sounds like matt was right. alibaba, the e-commerce john and -- giant out. emily chang has an interview with the company's ice chairman and founder. emily? >> this is alibaba's first earnings report as a public
company. job alibaba joining me right now. thank you for joining us. look good, but a lot of fixation on global monetization and margins. talk about how you expect to see the numbers grow over the next year. where would you like to see that? >> it is nice to be on the show and thank you for having me. on the mobile monetization question, we just reported our mobile revenues have increased over 10 times on a year-to-year basis. if you look the monetization it has been tracking very well over the last few quarters and we fill very good about mobile monetization because on the user side, we are doing very well. at september, our total monthly active users were
217 million monthly active users. on a 12 month basis, for the 12 weths ending in september, did $95 billion on mobile. that is very exciting to us and the reason it is all happening is every user that comes to use our app, that accesses our app through a mobile device, has strong commercial intent and that helped us to convert these users into real purchasers of products and services on our platform. as a result, the merchants on our platform are happy and ,llocating more budget to us and that is why our monetization rate is going up. >> you have been known as alibaba's chief dealmaker from the very beginning going all the way back to softbank. deal making
strategy for us. what geographies and what kinds of companies are most important to you? >> when we look at acquisitions we take a very, long-term, strategic approach. report on a one-off basis a particular investment or acquisition may not make a lot of sense. when you look at is on a have beenbasis, we able to make it very strategic approach to these types of deals. there are several criteria we to make investments in acquisitions. we always want to add more users . any acquisition that helps us to create that, we are very interested in. we acquired the number one mobile browser in china with
over 200 million monthly active , and this has been a tremendous addition to our business. use, our criterion we partnership, especially the joint venture on logistics front, to cover in terms of delivery of large goods items like refrigerators and air conditioners and, that will be the type of investment that will be interesting to us. finally, we are always interested in investments and partnering with people who will expand our product and service categories because our long-term vision is to gain more wallet share of the is area we now have over 300 million active buyers, 300 million chinese consumers,
that are making purchases on our platform. anything that adds to their --duct and service >> what about paypal now that ebay is that enough? closely think the transaction will not happen until next year. what we're focused on is the china market. the payment market online in china is still relatively on penetrated. a lot of focus is put on the financial company, an affiliate company of hours. they own alibaba and supply all foronline payment options our online marketplace. we are focused on growing in china and also growing
additional financial services off those payment accounts. >> you have got english platforms in countries like brazil and russia. which approach is more important for you? laid out step by step for us. -- lay it out step by step for us. >> global expansion is important to us. from a cross-border standpoint, always with a lake in china. what that means is if there are or many fashion based in china that want to sell overseas, they can do business on our express platform. we areother direction,
getting a lot of interest from retailers all over the world tot want to sell into china access every 300 million chinese consumers and so on our global platform. an example of that is costco, which recently set up a vote -- a virtual store. when you think about a company think about warehouses in the membership club. they basically throughout all of those rules when they entered the china market. their first foray into china is to set up a virtual store, and they have been very happy with results because chinese consumers are buying things they otherwise would not have access to. because of examples like that, we have zero coming on our few mobile plus one and because of examples like that, you know, we're getting a lot of interest from
retailers and brands around the world. >> your cofounder and 10 code expressed interest in a partnership last week. we know they met. how did that meeting go and what does an apple in alibaba >> appleip look like? is a great company and they make rate products. they obviously make these great , and they are selling very well in china and they want to do something in the area of payment with their mobile devices. largest online payment business in china. a fourth, when he think about apple and ourselves, there are a lot of areas we can have discussions on. we look forward to having further discussions with them about potential partnership.
>> welcome back to "in the loop." matt miller and julie hyman are joining me. interview and we skipped member for to go to number two because there was nothing more to say about alibaba. our number one story today is election day. it was 4, 3, 2, one, all rolled up together. >> this is going to be a big one possibly for the markets. republicans need six seats to say -- to take senate control and they are in good shape if you believe the polls. we have had some strategist who
have set up we see a gop controlled congress and the president for the next two years that this will be good because that means there will not be obamacare passing through our world that -- or there will not be anything major that can hurt the economy. >> there is nothing major on the radar. i don't see how this will be a big one. nothing will change. we have gridlock now on we will have more gridlock after tonight. none of the big issues can be swayed by this election. ebola and isis, none of this will be affected by this election. most people don't know anyone running of this election. the people and the issues don't matter -- >> you don't have a fiscal cliff this time, for example and there is no big threat that is hanging over the economy. >> there will not be a government shutdown. say, you may see some more top remise per the
thinking goes that if the republicans become leaders in both houses -- >> you're such an optimist. >> that they will exhibit more leadership. that they will exhibit more leadership. >> i applaud that. >> there goes the opening bell. it looks like you are a big giant person conducting a puppet show. >> there you are. >> is that angela merkel ringing the opening bell? -- wek to the economy talked about the u.s. deficit shrinking to the lowest level -- the budget deficit. not the trade deficit. in nobodyce 2008 seems to be really hearing this news. opening markets have rallied despite all this news on the budget deficit -- or the deficits ranking. treasuries have not responded either. is there nothing that will get investors juiced about what is
going on in government? i want to bring in the investment strategist at bessemer trust. -- that is been happening last several years, why isn't that affecting the markets? >> this has been happening for quite some time. not too long ago, the deficit of u.s. was roughly 10% of gdp. five years ago and now we were up 2.8%. . we have seen the deficit in them year after year and that belt-tightening has had a negative impact on economic growth. given where we are at these current levels, i think it is reasonable to assume that you may start to see that deficit rise over the next couple of years. hasn't this shrunk because of economic growth? >> you've had some economic growth but also belt-tightening. there have been painful battles in washington over the past few years over the expiration of
bush tax cuts and sequestration. all of these things have had an impact on economic growth in a brought the deficit down to these current levels. >> congress does not have to do any of the physical work if the fed believes its balance sheet up to $5 billion. monetary policy is taking the baton. >> with the fed saying we will take a step back and sit on the sidelines, his fiscal policy going to step in? >> the fed has been saying that already. whether you talk about the current fed voters are former fed governors, they have been insisting for quite some time that fiscal policy needs to come in here, at least then talking about it has not made it so. share theow if you
optimism that if we see republicans in office -- >> why are you picking on me? >> it is important because if you look at the previous example of what happened after we had the government shutdown in 1996, congress and the president actually did work together under bill clinton. ism isptimist well-founded. >> you've got numbers on the government shutdown? >> yes, i looked at the shutdown from last year. thinkondering what you stocks will do if we get more gridlock after tonight. if you look at the last government shutdown, stocks just kept going up through september into the shutdown and october we have a 16 day schottenheimer ended up 1000 points above where we were two months before on the s&p 500. it's not necessarily bad for markets. >> i will side with betty on this. it's a glass half-full situation. it ultimately depends on however
thing plays out over the next couple of years. let's assume for a moment that the republican party takes control of congress. has said hesident wants to work with the gop get these things done. yearally in the 30 presidential cycle, markets tend to do better. every single cycle over the last years and you tend to see a pop in that word year. -- that word year. year.ird >> thank you for joining us. coming up, gridlock or compromised? what will the next two years bring in washington and we will ask republican senator trent has advice for the possible senate majority leader, mitch mcconnell. ♪
further into the u.s. market. it unveiled a new payment service called e-pass which will let chinese shoppers buy products directly on u.s. retail websites. erik schatzker is in las vegas at the money 2020 conference and spoke with the alley pay president. tell us the highlights of the conversation? lee and he isming responsible for all of -- for all of the ali pay business outside china. as you are explaining, what they are doing in america has to do with connecting chinese consumers to the websites of american retailers. if you are a chinese consumer and you want to buy from macy's, go to the alipay website and it takes it from the order all the way through to the delivery to your front door that includes
foreign exchange, logistics, etc. i asked him how big a market opportunity that represents. >> with a huge market and it's still growing. have is $40e billion some years ago. it still growing very fast. i think $200 billion in 2017. now,o years from potentially, $200 billion which is not small change. >> his focus for the future? dowhat else does alley pay -- ali pay do? infrastructure, consumers to merchants. goy really need our help to
through china and the website. it is about building a global infrastructure so that we can service companies worldwide. i would describe his response to my question as a little bit cagey. he does not want to show his cards and i asked him if they are going to compete with the likes of apple or google or credit card companies and he said we want to work with everybody. i find it difficult to believe that you can work with everybody and make everybody happy but you never know. >> as you say, hedging his bet and being cagey. thank you so much. it is the big question this election day -- will the republicans take the senate and if so, is it the kiss of death for political progress or could spur fresh cooperation and compromise? former senator trent lott is the republican of mississippi and knows what it takes to get work
done and to find compromise in when the white house and houses of congress are at odds. he joins us this morning and was senate majority leader under bush and clinton. you knew quite a bit about copper mines. do you believe if the republicans take control of the senate that in fact we could see more issues push through that we have not seen in the last six years? >> i certainly hope we take the majority in the senate. it looks like that could happen and mitch mcconnell will be the majority leader. you can get things done when you've got divided government. you have an opportunity the way we did when we had republicans controlling the house and senate and president bill clinton was in the white house. the same is true when george bush was president in 2000 and 2001 he had a democratic congress. they passed significant tax reform legislation and past no child left behind. the record is clear over the last 20 years that you can get things done. i believe republicans will have this opportunity to have to come
out of the gate fast. i am convinced that mitch mcconnell will try to find ways to get things done on budget and taxes and energy. there are a number of areas where bipartisan achievement is possible. compromise is not a dirty word. if you look at up in webster's dictionary, it probably says the art of legislating. you don't get everything you want. >> may be to the republican party it is. >> i was in conservative and an before these people were born. we did welfare reform when clinton was president and balanced the budget. we passed safe drinking water and raised military personnel pay impasse telecommunications laws. what about that is not positive for america? it's time people in washington, both the president and the congress say wait a minute, we have made our stamens and appeals were based but now we will get some things done for our country. it can be done.
it will take leadership. i believe mitch mcconnell realizes this is one date last -- one big last chance to get positive things done for our country. >> if you were to give advice to mitch mcconnell and by tomorrow he is the senate majority leader, what would be the advice he would give him? i am in the stands but he is in the arena and i know him well. we served together in leadership in the congress for many years. i believe he knows he's got to act i think budget will be right at the top, getting further control in spending and taxes that energy legislation is something that could be done and immigration reform. there is a litany of things that could be bipartisan and what they achieve. >> i know you lobbied on behalf of medtronic and other companies to roll back some of these inversion rules that have come out from treasury. if you see a makeup that is
favorable to the gop, could you see some of those inversions rollback? >> no, i don't think that's the problem. the problem is our tax structure. our corporate tax rate is the highest of any country, any developed country in the world. it does not make sense to not lower the rate to more -- to a more acceptable level and i hope it will get down in the 20's. it can be done and you would have to close some loopholes. it will take leadership but i believe we have the right man in place in the house and the senate to get that done. when you look at orrin hatch and ron wyden, i think they are two men that can work together and leave the finance committee to produce a bill that would be good for the country and stop the need to have an version. >> senator, thank you so much. much more on the election as bloomberg allah takes managing editors join me next. ♪
trent lott say that he is confident the republicans will take control of the senate and that we will be speaking to a senate majority leader named mitch mcconnell. for a rundown of some of the most interesting races to watch, not just the one in his home state of kentucky, we are joined by bloomberg politics managing editor john heilemann and mark halperin who will be doing an all nighter tonight. in the midwestff on some of the most interesting races you're watching. joni ernst in iowa, what a race that has been to watch. >> it has been a very close race and one we paid attention to for a long time. was projected that generators times a seven-point lead. -- that joni ernst has a seven-point lead. -- a greatave a gate candidate and we will watch that closely tonight. >> is she the taylor swift of
the gop? >> the last person who made that comparison got in a lot of trouble. >> the easiest path to victory of republicans will be where? >> three states a will pick up her sure, montana and south dakota and west virginia. we've got our senate tracker to show you they need six total. republicans are still worried about winning in kansas and worried about georgia but they need to win three of the remaining democratic house seats beyond those three i mentioned in order to get the majority. right now, you have to say the odds favor them because there is lots of places even of democrats hold a new hampshire north carolina, there are still places like iowa and colorado and louisiana and arkansas and alaska and colorado where republicans could pick up the final three. >> we spoke with ron christie, the republican strategist who says we will not really know the results until possibly tomorrow or later because there will be runoff elections.
what is your view? >> it is likely. the two races in georgia and louisiana everyone assumes will go to runoffs. there is a possibility one of the two candidates in georgia might get to 50% tonight. is aouisiana race three-way race where it is less likely for anybody to get to 50. if republicans run the table and take new hampshire and north carolina and then march to the west that we could have a final answer by the end of tonight. >> what are you most interested in watching? you guys have covered so many elections33. ? >> i meant to the message and what -- been rather with the results are. i will watch the speeches tonight particularly the winning candidates and what they talk about. will they talk about policy or changing washington? from thefew specifics candidates including the ones doing well. see ife interesting to
anybody tries to seize the moment and frame how they want washington to change and what ideas they care about. i will be looking at those but these governors races where we have focus on the senate because that's the big story with big governors races in places like florida and wisconsin. we will focus on that as well and i will look at them personally. >> any indication of who is more confident by the parties being books tonight? >> republicans are more confident based on the trajectory of most of the races. >> thank you both so much. remember to watch bloomberg television for coverage of tonight's election results. we will kick things off at 5 p.m. eastern time and then stick around with mark and john through a possible election all nighter anti-tomorrow morning. time for our global outlook. airline -- emirate
airline says the fifa contract proposal did not meet expectations. european commission has cut its growth forecast for the region. 8/10 of one percent for this year and the new forecast calls for growth in europe to be weaker than the ecb predicted. that does it for today on "in the loop. indications.t we will digest all the election results tomorrow at 8:00 a.m. eastern time right here on "in the loop." ♪
amount and the nasdaq is now nearly 10. we are seeing the dow gained but really very slightly. one of the things we have been watching that has been weighing on equities is oil. on the one hand, there is a perception it will help consumer spending but on the other hand, it has been a big weight on energy stocks. oil fell below $80 per barrel yesterday and energy stocks are down about 1.7% in today's session. that is something we will continue to watch closely. suggests that stocks tend to rally after midterm elections. why does that happen and will it happen this time? we have been talking about this over the past several days. wellrically, stocks do after midterm elections. why is that? for one thing, first quarter
so generally positive times for stocks. oververage s&p 500 gain is four percent in the fourth quarter going back to 1950. right there you start almost double the average quarterly gain. the first quarter after midterms are generally positive as well. the average gain of about eight percent and midterm years in the fourth quarter and then in the first quarter after. that is the best combination historically of the election cycle. down bynote breaks it either a republican-controlled congress or democratic-controlled congress and the results are close. republican-controlled congress and a democratic president has been followed by an average calendar your gain of about 15%. and theyit congress democratic-controlled president, it's about 13%. >> is meant more the idea that gridlock either way to matter
who was in charge tends to be better for markets? the conventional wisdom is that investors do not like change even when the change is perhaps positive, changes to disrupt it. >> that's right, no one will have any big agenda items which would cause a massive shift in sentiment. >> also, history is one thing and reality is another in terms of this time. what is the outlook for this particular election? >> many of the strategists happeningo anything after midterms because the data points are few and far to come by. if you look at the instances of a democratic president and a republican-controlled congress, there is only about eight years when that is happened since 1950. no one wants to base any investment model on something with eight data points. if you look desperate -- if you
look at a split congress and a democratic controlled arbors, that is even less. will they suggest stocks do after midterms, it's difficult to put too much stock and too much faith into these historical data points because there is not enough of them. >> thank you so much. the conclusion is thomastbd. thank you very much. -- the conclusion is tbd, "market makers" is next.
>> live from bloomberg headquarters in new york, this is "market makers." america decides -- what will congress look like the next two years? we will see what i republican-controlled senate would needs -- would mean. apple pay and a bunch of retailers. after they it's all found new momentum was smart phones and tablets and we will talk with the ceo mindy grossman. welcome to "market makers." >> we are in today for eric and stephanie.