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tv   Market Makers  Bloomberg  April 20, 2015 10:00am-12:01pm EDT

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>> this is market makers with erik schatzker and stephanie ruhle. stephanie: comcast and time warner cable meet with the justice department to save the deal. erik: we will see why activist investors may target starwood.
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stephanie: elon musk almost sold the electric car company to the internet giant. it is monday morning here on market makers. i'm stephanie ruhle. matt: erik schatzker is upstairs moderating a panel was some of the worlds top bankers. stephanie: you were on my seat on friday. matt: it was quite comfortable. stephanie: i was interviewing the one and only mary j. blige. matt: i'm going to kick it off with the tough stories we are following you at home in china the government has taken another step to try to start the economy you it cut the amount of money leonard should set aside before the start of the financial crisis.
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today -- last week china reported its lowest economic growth in six years. a chinese stocks were down anyway today after regulators moved to cut the leverage trading levels there. once the fourth two steps back. the greek bond selloff is renewing this morning. it is in its seventh day with interest-rate yields in greek, three-year notes hitting a all-time high of 27%. the deadline to present an economic reform package appears to have been pushed off. european finance ministers will not sign up on more bailout funds agree that bailout funds for greece. -- sign-up on more bailout funds for greece until one is presented. >> there have been policies that have been very hard. the solution to the greek
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situation lies in greece. it needs to be pros by the greek authorities. matt: prime minister has balked at measures. people familiar with the matter say the two companies will meet with the justice department on wednesday. lawyers for the justice department's antitrust decision are recommending to block the deal. they say a merger would hurt consumers. shares of morgan stanley are rising. adjusted revenue was the highest in five years. morgan stanley reported increases in equity trading. james gordon has been shrinking the fixed income unit. he has been relying on trading stocks and will get visors to make his money. universal sets furious seven has become the fastest picture to gross $1 billion worldwide.
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it is the seventh highest grossing movie of all time and only has been out for re-weeks. it could signal a record year for the global box office. new movies in the avengers, jurassic park, terminator, and star wars franchises are still to come. some people love to hate is making a comeback, we are talking about tim tebow. the former patriots player has signed a one-year contract with the philadelphia eagles. he hasn't played in a nfl game since 2012. he had a lot of credits because he completed such a low percentage of his passes. i'm not sure that is the only reason he had a lot of critics are you -- critics. there are some quarterbacks i hate a lot more than tim tebow. stephanie: i don't know if you have seen fast and furious seven, but all of those films
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that were listed, i is the love them all. erik: i'm not really in -- that they cannot into the superhero thing. the spandex costume thing. -- matt: i'm not really into the superhero thing. the spandex costume thing. stephanie: more on the comcast time warner merger story. he's the man ditching -- he is the managing partner -- along with bloomberg's own alex sherman. he helped rake the story last week. alex you helped break the story's so give us the deal -- break the story so give us the details.
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alex: the story we broke on friday antitrust lawyers for the doj are leaning toward recommending the doj block the deal. this is a bit of a surprise. even people who are bearish thought it had a 50-50 chance of going through. we are finally getting the first leak in a process that has gone over a year that signals what the g -- what the doj's thinking. if comcast would walk away from the deal rather than pursuing it. stephanie: what are the ramifications? john: we see a series of interactions that are interlinked. charter was made larger. that is connected to this system because it was a stock transaction. you have an at&t directv detail pending. i am optimistic somehow they
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will find a way through, because there are in a lot of pieces of this. it is -- there are a lot of things that aren't being talked about. stephanie: like what? john: luck net neutrality. this is the obama administration hunger games. at the end they have a piece of legislation and a piece of regulation they walked past. it may be turned over in the courts. there is able -- there is a whole bunch of stuff right now happening that gives them leverage to say, you want this deal done, you have to come my way. stephanie: it is not about competitive advantage, doing the right thing or the consumer? john: the cable industry grew up over decades. we now have a couple of pipes to your house. does this transaction altar that in any way you go you wake up one day and you have 85% of the flights going into one town and pricing goes up, that what happened organically and cable. i don't think anything they are
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talking about here to rectify or solve the problem is going to change that competitive dynamic. if you make them sell chicago, does it change competitively your consumer experience? i think it's a lot of other bigger things we don't see. matt: i have had francis with time warner cable. it's pretty awful. i don't understand how combining with comcast would be any kind of benefit for the consumer. what is the argument that the consumer would win out to? alex: if it is no worse, then potentially you could say there's no real detriment. matt: what do you think about net neutrality? alex: i agree. i think it is comcast ownership of broadband pipe. you're going to get your tv over the internet. broadband video are be one in the same product.
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john: the digital world wanted to be delivered that way. those types have been there a long time. hundreds lien's of dollars have been spent on that type to your house. matt: i'm in the process of canceling my cable because i get everything over the internet on my apple tv box. even a love of sports leagues are now available on my apple tv box. net is there. -- netflix is there. stephanie: aren't we overstating all the hipsters that are cutting the cord? my mother what is more television than you do. they are going to turn their tv on with an old-fashioned remote and get their cable the same old way. alex: it internet tv does take
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over, which i think it will, then i think comcast and other cable providers will be evil to offer a bundle of channels over the internet so you can choose from apple sony, verizon, at&t comcast. all of these players giving you a bundle of tv. a lot of competitors. that means the margins come down. comcast can stop their exclusivity pod bang theoretically call test could take some nbc content exclusive to their bundle. where everyone is offering internet tv and comcast owns nbc, maybe you buy a comcast package when they take it exclusive and not offered to any of the different competitors that are out there.
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john: hundreds of millions of dollars of comcast money build the pipe. we would like to price all content equally, whether it is amazon prime a hulu movie, all this heavy stuff. how far will comcast bend to accommodate regulatory imposition that can get costly in the long term? john: do you pull back and say i want to do these other deals maybe you want to do this content globally? maybe i better save some of my bullets and do that one. john: you want to worry. stephanie: to you think comcast regrets buying nbc? if you think about all the
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headaches you have got yourself into in the last three years, they want to -- john: 100% no. alex: comcast's heads in this new world where they can take and see theoretically exclusively. they are well. maybe they are upset about nbc news. stephanie: if you are roberts and see all the settings with nbc, they don't need it. john: think of when charter bought bright house. boost to families controlled not only charter for discovery. i still believe in the end the deal gets done. matt: we have you on record, the deal will get done.
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bloomberg news, alex sherman who blow -- who broke the story on friday. we will watch the exciting drama play out. stephanie: and when we return the tesla model s came close to having another nameplate on it. and why starwood is bringing up the back of the pack.
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stephanie ruhle halliburton -- stephanie: halliburton posted a cutback but it was smaller than analyst estimates. customers of the oil service company is expected to cut spending by 35%.
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west texas intermediate was trading below $56 this morning. it was supposed be a $35 billion takeover and investor is suing nordstrom over its use of corporate pilots and service groups. the family claims they pay cut-rate prices. the suit claims it cost nordstrom millions of dollars. nordstrom calls these claims baseless. jeb bush has a slight lead over potential republican rivals. hillary clinton is way ahead of the democratic race. the floor -- the former florida governor leads at 17%. scott walker is next to 12% followed by rand paul and marco rubio.
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hillary clinton way out in front with 69%. joe biden is at 11%. those were the top stories of the hour. coming up in 10 minutes, unsung hero, the cabinet secretary who may be the key to selling the iran deal to a skeptical congress. also wonder if there was room for an activist investor. and where it all began. takes it to the bar where the location tracking came to life. matt: tesla shares have exploded higher since the company reported its first profit two years ago. the model s has won most of the industry major awards. here's something we didn't know.
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tesla had been on the verge of bankruptcy right before that and was hoping to find a safe year in google. tesla spacex, and the quest for a fantastic future. this is really fascinating stuff. i was unaware the cars were coming out with glitches, sales were being closed. his top generals were kind of freaking out and had a run to larry page for a little bit of health -- little bit of help. >> it was a good car in a lot of ways. the early buyers were these early adopters and the door handles were flaky and the windshields were going right. buyers were put off and deciding whether they were going to
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change their preorders into actual purchases. matt: was google going to buy it outright? was musk going to stay on? ashlee: elong went to larry page and said i don't know if we are going to make it. can you lend us a lifeline and they had a handshake deal. elon would stay on as the ceo of the company for at least eight years or until the company was able to produce its third-generation with a more mainstream $35000 car. the limb -- elon wanted to make sure they came to market. stephanie: what is the relationship between the two now? ashlee: google has so much autonomous technology. it is kind of funny because there has been flirtations.
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i think elon likes to have some independence and larry likes to have it going on. matt: you asked larry about this. we are far from a car company. google does have its own projects in development. what is the likelihood that it does end up competing? ashlee: google went down this different road focusing on the car they have put out so far this little smart car looking thing. i don't think it would compete with where tesla is right now. google seems to be more hesitant about becoming a mainstream carmaker. stephanie: how sensitive is elon musk?
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ashlee: i think he is a pretty forceful character. he is a very truthful forthcoming guy. he tends to have a clear view on things. not everybody shares that view. you can usually count on it being accurate. people might have a different take on how things play out. stephanie: it was his idea that people who think it was his idea to baby, it wasn't. he was the first investor. ashlee: they were struggling to find any funding. no one wanted to fund an electric carmaker. elon had been thinking about doing electric cars since his college days. now when these guys came along he was the only one who stepped up to put money with them.
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stephanie: and where are they now? ashlee: they sued each other in courts and came to a settlement. they have a long-running dispute. martin and mark that really wealthy from tesla. the relationship is very tense to this day. matt: be sure to check out his new book for a fantastic future that is due out next month.
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stephanie: he may be the white house's secret weapon on the
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iranian deal. we will hear from the cabinet secretary. matt: you don't need a computer lab to come up with a killer act. we will take you were foursquare was born.
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stephanie ruhle welcome back to market makers. it is 10:30 in new york city. matt: i'm here for a half-hour. eric is upstairs moderating an important panel. i'm matt miller. stephanie: how about the bulletin? cure of the top business stories of the morning. it has a big dish has been a big quarter for morgan stanley.
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adjusted revenue was the highest in more than five years. equity trading and brokerage revenue was up to you james gordon has been shrinking the fixed income unit and counting more on stock trading and advising wealthy investors. shares are up. the new york fed president says he is relatively confident the fed will raise interest rates this year. he is not positive. dudley spoke at an event here. fed policymakers have been split over whether to raise rates in june or september. take a look. >> the unemployment rate is too high. because the economic outlook is certain i can't tell you when normalization will occur.
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stephanie: the stronger dollar could reduce growth by more than half a percentage point. in an opinion article in the new york times the iranian people have shown their resolve by choosing to engage with dignity. he says it is time for the united states and its allies to choose between confrontation and confirmation. general motors is opening up its wallet to win sales in china. joint ventures with chinese auto firms plans to invest a total of $16 billion over the next five years. the company called shanghai gm is aiming for a market share of more than 10% by 2020.
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ford toyota, vw are among the automakers expanding capacity in china. mf global -- there is a huge difference between the imf and mf global. former ms global ceo -- former mf global ceo plans to start a hedge fund. it would start with his personal wealth and a handful of other investors. he has capped a low profile since mf global, a man -- a commodity broker that went bankrupt in 2011, is still an -- is still under investigation for his role. corzine is also a former chairman of goldman sachs and as governor of new jersey. -- of goldman sachs and former governor of new jersey.
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matt: so he is still under investigation. stephanie: remember when i said he was going to start a hedge fund with his own money. he doesn't have steve cohen's money. i'm sure he has rich friends and he can get money from them. at a time when we are really seeing -- when we are only seeing hedge funds get bigger will go the way of jon corzine? matt: a lot of people lost their shirts on the incorrect see. stephanie: all those employees who were hung out to dry. remember the person in the back office that jon corzine pointed the finger at specifically, give me a break. i don't think he is going to look to her. matt: we are 60 minutes and the u.s. trading day. let's go to the breaking news desk where scarlet fu is taking a look at all of the action. scarlet: up 200 points after
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plunging almost 280 points on friday. ibm is the best performer in the dow industrials this morning after reporting earnings after the close. and they have four-day rally from 1052108, a lot of anticipation for greece and its ability to fund itself. try to help global equity selloff by a changing or tightening up the market -- tightening up the margins. over the weekend they cut the amount of cash banks need to hold as a reserve. the fx side recovering a bit from 4.2% drop on friday. what you will see his shanghai finished lower by 70 points. didn't get that much of a boost from the reduction in china. they were still responding to the change in margin lending rules.
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if you look at how shanghai has done this year, it has been a steady move up 30% in 2015, the third best performer in the world. we are still a ways away from the record high reached in 2008. stephanie: i think scarlet looks especially fantastic today. moving on activists may be getting ready to check into starwood hotels. starwood owns high-end hotel chains. its stock is one of the worst performing in the industry handed to searching or a new ceo. analysts say it is a recipe for investors to start pushing for more drive action -- more genetic action. -- more dramatic action.
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on a are is a waste of space in my inbox. i can never figure them out. >> it is like the stars are aligning. their ceo left bradley in -- left abruptly in february. they also have this growth issue. everything is coming together and all signs point to activist. they have the entire west end hotel the wood they need are these cost limits. matt: that is the point, we don't use our starwood points. tara: i wouldn't consider a w a high-end hotel. matt: why are they doing well? tara: they are great bands --
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great brands. everybody coming out of the recession, families wanting to go to vacation staying at lower cost hotels. the marriott serves the whole spectrum. they need to look a little bit more like them. they can merge with nih chief. m&a would be a perfect solution. stephanie: is he internal? tara: it is unclear if he is a deal maker or a permanent placement to right the ship. investors think this is a perfect axis candidate. the one that everybody has their eye on is not a large investor but it's senator.
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there are merger speculations and activist speculations. everyone has their eye on them. whether it is a deal or activist pressures that ends in m&a. it makes a whole lot of sense. matt and i get to work with the smartest people. what is your handle? tara: -- stephanie: want to know what is happening in m&a space? speak to this one. matt: we look on his big with the energy secretary. stay with us for an interview you're not going to want to miss.
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matt: banks in china now have another $200 billion to spend and the governor says that will boost the economy. the most since the global economic crisis. last week china reported its economy grew at the slowest pace in six years. shares of morgan stanley are up. the bank's first-quarter profit beat estimates. it was of the most in five years. james gorman has been shrinking morgan stanley's fixed income businesses. now relying on more stock trading and sizing wealthy investors. kim jong on has done is it again -- has done it again. he has climbed the highest mountain according to media. he reportedly climbed that mountain along with hundreds of
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fighter pilots and communist party officials. those are your top stories. the innovator who came up with the idea of foursquare it all started in a bar. how did they do, by -- did they do? banking analyst is with us for the full hour. we will talk with the ec's antitrust chief. stephanie: i want to get back to iran. secretary of state john kerry led the negotiations on the u.s. side, but he had a very important partner in the energy sector. he is a nuclear physicist, so his expertise came in very happily -- very happily. please tell us the highlights. peter: he is a highly trained
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physicist. he has a whole host of responsibilities and did lend a helping hand to john kerry, a technical helping hand. what he told us is he is still optimistic pretty confident at the end of june they will have a final agreement in place with the iranians to prevent a iranians from obtaining a nuclear weapon are building it place a one-year time pod bang for that. -- time period for that. what he told me is is it is going to take him some time. here what he had to say. ernest: down to 300 kilograms from 10,000 of enriched uranium. they have to remove thousands offend -- thousand of centrifuges and the
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infrastructure. i would say six months or so. to me it looks to be about the minimum it would require to execute all those steps. peter: an important time frame. six months is the minimum. the iranians could meet their own requirements. it would be their earliest opportunity in that respect in terms of easing u.s. sanctions in iran. perhaps that is one of the stumbling blocks moving forward. there is this legislation coming out of congress that the president has reluctantly sort of blessed. congress will have a say on this deal at the end of the day. it will be a window of opportunity for congress to weigh in. there is the possibility skeptics will not be convinced on this deal. the white house says they can live with this language.
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they say it is enough to move forward if they get a deal by july 4 -- by july 1. stephanie: inc. you so much. our own chief washington correspondent peter cook. a matt: we will see how dennis crowley first came up with the idea for foursquare. ♪
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matt: we are taking some of the world's top innovators back to the time of their original innovation and today it is foursquare cofounder dennis crowley. we interviewed him at the magician, the bar where his location tracking app was born dennis: -- was born. dennis: there are a lot of serendipitous moments waiting for you. you have to know where to look for those things. a lot of people need help finding it. we created the software that draws your attention to the most interesting thing in the neighborhood and in the city. there are 200 bars within a 10 minute walk of any direction.
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we have all our friends on these place on a wednesday friday saturday sunday. have you make software that allows you to see through walls and see around corners and know where everyone is all the time? so i developed this tool that allows you to check and places. the etiquette was check into central park, check into this cafe. let your friends know where you are so if you happen to be in the neighborhood they can swing by. the very early check-in product was called watch ball. dodgeball was a thing we stumbled into. we built it and it worked really well. used to live a block this way and down this way.
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this was the epicenter of where my friends would meet up. this is where a lot of the chickens would lead to. these two seats appear with some of the best people watching in the city. one of your friends would come in and check in here. suddenly two people would be here and then there would be 20 people here. a lot of my friends were still using dodgeball. if it goes away we will build another one. that is what we set to do with foursquare. the creation of foursquare was very deliberate. we want to be able to do these amazing things. we can help you find pre-much and it -- pretty much whatever you need.
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rank them by popularity, places of things i would like. a lot of advice from locals about what are the best things to experience here. whether it is check in here or a photo here. the company and products can get very smart very quickly about where all the best things in the world are talked away. that is the norm now. we are competing with all these big established players. it is a real honor to compete with those companies.
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about 50 million people every month. i never imagined these ideas we talked about has turned into something that tens of millions of people use all around the world. that is inspiring to me. stephanie: when i sit in a bar i'm thinking what am i going to have to drink, not let me create this community. i'm impressed. matt: they probably had more time on their hands. that is why it is the eureka seek -- the eureka series. they probably didn't foresee it has a huge business at first. i feel like the original software seems kind of cooler. at foursquare you are alerting
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advertisers to where you are shopping. with dodgeball is like a smaller, more elite inner circle. stephanie: i do like this idea especially if i was single and living in an urban center. when i see the random foursquare posts on facebook those men have checked in to jfk. who cares? matt: a gives you an idea where to go out if you are in the lower east side, wherever you are hanging out. i saw a couple of pretty impressive dudes standing out there. i've -- i see mike mayo over there, i see erik schatzker. stephanie: he has fired coming out of his ears.
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market makers will be back. erica showing up.
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announcer: live from bloomberg headquarters in new york. this is "market makers," with erik schatzker in stephanie ruhle. stephanie: welcome to the second hour of "market makers." i'm stephanie ruhle. erik: i'm erik schatzker. we begin by screening through some of this video. cars of the future. stephanie: we are also going to talk google and the issues they are facing around regulation specifically in europe. we are also talking big banks. we are seeing a slight turn generating more profits. we have brought on someone
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special for the entire hour. the man who considers himself the analyst activist when it comes to banking. erik: mike mayo is with us once again. you will be with us for the whole hour. mike: thank you for having me. erik: morgan stanley reported this morning a bit of -- i do not know if i would call it a triumphant moment for james gorman but he has brought morgan stanley to a place where it has not been since the financial crisis earning a double-digit return on equity. stephanie: he deserves extra credit. before any other bank ceos, he was the one who said i'm going to lean out of sales and trading and i'm going to lean into private wealth. here you go, it seems to be working out. mike: james gorman got the memo from regulators. this is 18 years in waiting. this goes back to 1997 with the dean witter acquisition.
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2009, the acquisition of smith barney and now 2015, first quarter, a record margin in the wealth management business. everybody was beating up james gorman four years ago where he upgraded the stock. people said, why are you going with this company. james gorman has had the vision erik:. today is to -- today is the day to celebrate white shoes and white sox? stephanie: you gave james gorman credit partially because his background is a consultant? if you look at firms like deutsche bank, firms that are run by people who come from the fixed income markets who are so wedded to that sales and trading community, maybe they cannot see the forest for the trees and james gorman comes in and says, let's look at this whole picture. mike: you know the adage about consultants is they know how to advise the running of the business but they cannot run a business. i'm not generalizing for all mackenzie consultants. in the case of james gorman, he
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is gotten right people in place to show the best year-over-year growth in capital markets. they're tied with goldman sachs. they did not dial-up risk from the fourth quarter area the value at risk stayed the same as in the fourth quarter. they are heading on all cylinders and they have more expenses leaving to come best expense savings to come. erik: we have a chart showing morgan stanley plus trading revenue. we do not have it. my apologies. you know what it shows. i would explain to everybody else. morgan stanley sales and trading revenue is something like $4.2 billion. it is above what we are getting from bank of america and it is kind of in line with what we are seeing from citigroup and jpmorgan. is that to say, given the point you just made an morgan stanley keeping the risk it is taken that is higher-quality revenue? mike: absolutely.
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i would take a dollar revenues today at morgan stanley than six or seven years ago any day. it is not without dialing up var . there got not all sorts of risky products. this is -- on a risk adjustment bases come at some of the best revenues morgan stanley has had. stephanie: take us back to last week. we had bank of america, jp morgan. you were at those meetings. mike: i would call this four weddings and a funeral. directionally. very strong results out of jpmorgan citigroup, oldman sachs and now morgan stanley. bank of america was the one bank to fall short. erik: for a bank of their size they are well behind hundreds of millions of dollars behind
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jpmorgan in terms of sales and trading revenue and behind morgan stanley and goldman sachs which are smaller firms. not that long ago they used to be competitive. mike: this is where i think vision and strategy makes the difference. if you look at the annual report bankamerica -- bank of america talks about a lot of good things they've done in the past. james gorman says i'm not going to write about the past, i want to talk about the next five years. you see in this quarter, trading is much better at morgan stanley. the wealth management margin at morgan stanley increased. it declined it bank of america and they have a lot more earnings levers ahead which james gorman talks about in the ceo letter. they are held accountable to those targets. that's what we like to see as opposed to bankamerica with a don't have one public financial metric with a timeline that investors can hold them accountable to. stephanie: if you're going to
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give james gorman and a brian moynihan gets a? mike: morgan stanley has gone from a great of d up to b. jpmorgan has been a student that became a d+ student. they're getting better -- became a b plus student. the highest quality banks are still jpmorgan and goldman sachs. of the problem kids, morgan stanley has moved up the most. erik: most improved. stephanie: where is citibank? mike: citigroup was a d-student moving up to the b minus range. the difference between morgan stanley, citigroup and bank of america is that morgan stanley
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and citigroup have publicly disclosed targets that the world can hold them accountable to. inc. america does not have one publicly disclosed target that investors can hold them accountable to. that was the root cause of the financial crisis. management's not being held accountable. the fact that we still have that condition persist eight years after the financial crisis is wrong. erik: before we beat up on bank of america citigroup for a moment and back to the conversation about trading. people used to accuse morgan stanley of having an insignificant fixed income business because of the choice gorman made to downsize risk related assets. citigroup is generating a hundred $75 million a quarter in revenue -- $875 million a quarter in revenue. doesn't that make citigroup irrelevant? mike: is the glass half-full or half-empty?
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stephanie: you brought your own mug? not in our house. try again. [laughter] mike: is the glass full or half empty at citigroup? at least half-full between our international consumer, the processing business. the other side, which is maybe half-empty, i am not sure their capital market -- it is not best in class. i think that is still a work in progress and that is one of the questions i will be asking about when i go to the annual meeting of cedar group -- of citigroup. i give mike corbett the benefit of the doubt. i think he is an operator. they have clear financial targets. contract to meet those targets this year. -- they are on track to meet those targets last year. -- this year. they give grades. by their own scorecard, they
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performed miserably last year. i think they are back on track. i would say mike corbett is on a tighter leash i think he will succeed. stephanie: i appreciate their own scorecard. this is not a bank that is saying, why has the ceo been made chairman. i feel like mike corbett is overly transparent. just a month ago when it was in question that they could fail stress tests, he said if they do, fire me. mike: that is what we want to see. we want to see the banking industry hold its own accountable. if the industry does not do that, who was good to fill that void? stephanie: you? mike: washington d.c. along with activists. erik: we will get back to a conversation about bank of america. mike mayo is here for us -- here with us for the hour. stephanie: today, he is our guest host. we have a lot more to cover. european antitrust regulators have a big game in their sites.
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last week, they went after google. we will be telling you about their latest target. erik: who needs a driver? it seems like everyone in the cars of the future will be happy. ♪
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stephanie: it is time to bring you up-to-date on top stories of the morning. new york fed president bill dudley says he is confident the fed will raise rates this year but he is not positive. dudley spoke at an event at bloomberg's headquarters this morning. policy makers have been split over whether to raise rates in june or later this year. dudley said the economy is not where policymakers would like it to be. >> the unemployment rate is still too high and the inflation rate to low. because the economic outlook is
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uncertain, i cannot tell you when normalization will occur. the timing is data dependent so we will have to see what unfolds. stephanie: dudley also said there are some downside risks saying the stronger dollar could reduce growth by more than half a percentage point. it may be a sign of growing desperation. in greece, the greek government has issued a decree that forces local governments to transfer all caps balances to the central bank. the move could raise more than $2 billion greece could use to pay bills such as the payment owed to the imf next month. the boston marathon is underway for those of you sitting back watching tv and doing zero exercise. some 30,000 runners will be out there trying to run if not finishing the 26 mile race. it ends up in downtown boston. the weather is chilly and rainy.
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it was two years ago when terrorist bombs exploded at the finish line, killing three people. coming up what do investors really want from the nation's biggest banks? mike mayo is a man who can answer this question. he is going to tell us what to look for. no driver am a no problem. -- no driver, no problem. the promise of a driverless car. erik: the eu filed an antitrust complaint against google. we should see a filing on wednesday. regulators have been investigating sales of russian gas. that makes this a busy month for margrethe vestager. we will speak about google but margrethe, what can you tell us about gas from? margrethe: i cannot comment on
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this point in time because no decision has been taken yet. erik: can we speak more generally about what the eu has been looking at? margrethe: what we are looking at is if customers are getting best prices or if a dominant company is using its strength to get different prices for different customers. of course, we would like to look into that because it means a lot for a country if it pays more for -- stephanie: how hard is it for you together this information for a russian company? margrethe: one of the things i find promising is that this is a commercial company. it does it business as other businesses. it is in the markets.
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it is a competitive market. it is a market where gas problem -- gazprom is dominant. erik: i'm curious to know in the spectrum of antitrust investigations is gazprom more challenging target then google is? margrethe: i have one major challenge in these cases. that is to comfort people. it is a question of the facts, interpretation of facts evidence we can produce and that there is no politics. erik: those who would say an antitrust investigation against gazprom is payback for what russia is doing in ukraine you say what? margrethe: no. unequivocally. erik: clearly it will be
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interpreted that way in certain quarters. margrethe: i think that is the risk you take when you take action is that people will interpret it and they will make conspiracy theories and do all kinds of things. for me it is important that any case can stand up in court. court does not like opinions or emotions. they want facts. stephanie: what are the facts against google? it is hard for me to get my head around it. the united states has not had an issue. google's does know an extraordinary amount of information about us. i voluntarily give it to google because i love it, use it. margrethe: basically, i do the same thing. my daughters do the same thing. we like the company, we like the product. what we are aiming at from a european point of view is that it has this very strong position when it comes to search. if that position is used to give
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google services a favorable treatment, so you do not get the answer you want, you get google shopping. systematically, every time you do a search, we have a problem. that's what we have lined up in our review. stephanie: when i do a google search today, versus three years ago, i have to do a lot of scrolling down before i get to what i think is an unbiased -- erik: google has such extraordinary market share in europe. google is still the dominant search provider in america but being is here and yahoo! is here. google accounts for 95% of search traffic in europe? margrethe: in a number of countries, more than 90%. it is a very dominant position. it is a de facto monopoly. that is why it is earned. erik: would you be bringing this case against google if it's
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market share numbers were more like what they are here? margrethe: that is very hard to answer because then you would look at the conduct. it is the conduct we are aiming at, not the business. erik: there it effectively has a monopoly. margrethe: i think that is very much due to the fact that they are -- that there is small competition here. mike: the next cfo of google is the current ceo of morgan stanley. i asked ruth a question on the earnings call saying what do you think about that regulation and she said for the last five years morgan stanley generally has agreed there are needed changes and she wanted to go along. if she becomes cfo of google and says i want to get along with the regulators what would you advise her to do? margrethe: i don't think i am in
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any position to give them advice. i think they have other people to do that. i think for any business the basic advice is to go by the book, be competitive but be competitive on the merits and then attract customers because you have a great product and you are innovative. stephanie: could the takeaway b hate the game not the player. ? we take a snapshot at google and maybe say they have an unfair advantage or they have gotten outside so it is time to change regulations. they are not necessarily violated anything in the past the regulation was not robust enough. margrethe: i think the regulation is very robust because it is proven itself over the course of time. you find only so many variations of human behavior. misuse of a dominant position.
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we have seen that before in history due to very strong enforcement and strong regulation. erik: what would it take for google to settle this matter today? margrethe: i would not know that and they were not have to. google has now almost 10 weeks -- erik: if they were to make a settlement office -- a settlement offer, what would be satisfactory? margrethe: i would like to see competition to flourish to make sure -- erik: they would have to agree to do something. stephanie: that is down the line. right now, what you want google to do? margrethe: not to give preferential treatment to one of their own services if that is proven. also to let others show their innovative prowess. what they can offer to customers. erik: would there be a financial penalty in addition? margrethe: what we are going for is the effect. what we are interested in is
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customers getting the best possible product and to have an innovative marketplace. erik: the investigation you are pursuing over android, would you consider that more serious, more challenging than the one you have over google shopping? margrethe: it is very complicated. we launched an in-depth investigation and we do that with an open mind because even though we have strong -- we should look at the market and how things work before we make up our minds. erik: thank you very much. margrethe: a pleasure to be here. erik: competition commissioner for the european union. margrethe vestager. stephanie: one impressive woman. ♪
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erik: who wins and who loses if the driverless car becomes a reality? we will talk about it with the former gm technology executive who is now working with google. ♪
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announcer: live from bloomberg headquarters in new york. this is "market makers," with erik schatzker in stephanie ruhle. stephanie: welcome back to "market makers." i'm stephanie ruhle. erik: i'm erik schatzker. if you were to look overseas you would see the markets are closing for the day. let's take you back to the breaking news desk with scarlet fu. scarlet: the stocks a country index in europe, recovering from last year's selloff. we have got a broad advance with 18 out of 19 industry groups climbing area dealing group not participating are the more
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defensive food and beverage companies. optimism that china's latest efforts to stimulate its economy by cutting the bank's reserve ratio requirements would lead to increased demand for fuel and metals. that is a big catalyst for the game today. the athens stock exchange index, modest losses of 1/10 of 1%. the finance ministers of the european union will be meeting in locked you on friday to determine whether -- in latvia on friday. let's move on to gazprom. it is go to get an antitrust complaint of the european union as soon as wednesday. this is part of a two year investigation into gas pricing. this is all according to an eu official. that stock is up 3% right now and local trading.
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i wanted to mention what happened in asia overnight. last week's selloff because chinese regulators tightened some rules on marginal lending. over the weekend, they removed some of the sting from that by cutting the bank's reserve ratio requirements. expected to be one of many moves to stimulate the economy. down 1.6%. trading near its highest levels since 2008 read the hang seng index also losing. stephanie: our own chief markets correspondent, scarlet fu. mike mayo from clf a america is back with us. he's here for the full hour. i want to talk about some of these annual investor meetings the banks are holding. let's start with bankamerica. you kind of feel like they have underperformed after year we saw brian moynihan.
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any money raising her hand saying, why is this happening -- anybody raising their hand saying, why is this happening? mike: that is a key question i will ask on may 6 in charlotte. the ceo last week said they missed their targets and two dozen 14. -- in 2014. bank of america had issue with stress tests and they had a capital restatement. why does the ceo get promoted to also have the chairman role? what they do somebody who works at bank of america, they missed their targets, by the way you get promoted. erik: in your view, he does not deserve to be chairman? mike: why could they not have had an interim chairman for a couple of years until they work through some of their issues? stephanie: do you have someone in line -- someone in mind? mike: i think there are a lot of people on the sidelines. both the process of deciding who was going to be the chairman.
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-- what was the process of deciding who was going to be chairman? citigroup still has a chairman and ceo but bank of america sought to it that we will promote the ceo even after last year was a bad year. erik: does he still deserve to be ceo? mike: the ceo has done better than i expected for the past four or five years, especially with resolving legal issues. having said that, the person who helped to reserved -- helped to resolve issues, the right person , i think the jury is out. i do not think he deserves to be chairman this soon. stephanie: did they need to give this to them for clinical reasons -- for political reasons? for brian to maintain his senior position, did they have to give in this job, otherwise it kind of light -- kind of like, isn't, defect though boss -- the de
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facto boss? mike: let's have investors take ownership of their companies. if investors do not take ownership for the companies they own on behalf of other people who else will? it is in the entire industry's best interest that bankamerica has more transparency. erik: one of the problems i foresee is getting other investors on board. it is not like there is an issue . the case around jamie dimon and the question as to whether he deserved to continue becoming chairman had to do with his performance. most specifically with the london wales trading debacle. he managed to keep his job as chairman came up in two annual meetings in a row. the likelihood he will be booted out of the jobless skinny at the moment. there is no catalytic issue. mike: you crawl before you walk.
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i'm going to shift gears. bank of new york last year you could've said the same thing. nine have two activists, very public. you have one activist with a board position the first time in history a major bank has had an activist on its board. if it could happen at bank of new york it can happen elsewhere. we are not on the verge of some sort of toppling over the current ceo or anything like that but i think it is important to raise awareness at a time when the political and regulatory market looks to control the banks because the industry did not control itself during the crisis. either we collectively do it or others will do it for us. stephanie: why aren't more investors as outspoken as you are? why do they sit back? mike: i think we talk to as many of the largest shareholders of these banks other than the companies themselves.
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the scenes, a lot of large investors are speaking up. there is momentum -- stephanie: more than ever now? mike: absolutely. i've heard it from more bankamerica shareholders. we are losing some patients. i got e-mails after being on your show last week saying brian moynihan in a chairman role, we are not so sure about that. stephanie: did the e-mails also say they like watching the show? totally. they said we love that show. erik: mike mayo. cars of the future. you may not need that drivers license. ♪
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erik: imagine a car that drops you off and then goes to pick some but he else up nearby and it does not park and has no driver. larry burns' driverless cars --
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larry burns says driver was cars are the future. i just gave everyone a sketch of the future. fill in some of the gaps. larry: we have been working hard for the last 10 years on a technology that lets the car drive itself. no human at all. that sets up a world where you can design the car under the assumption that you do not need a driver. that takes us to a point where you take a lot of parts off the car, put some parts on to drive it. it puts us in a world where we get the crash out of the automobile transportation system. erik: you believe that? larry: i do. the technology has progressed dramatically since 2007 timeframe. stephanie: once these cars are allowed on the road what is it going to be like when driverless cars are interfacing with cars being driven by humans? larry: much like what we see today. his car will be safer than a human driven car. people are not very good
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drivers. 1.2 million accidents -- collisions worldwide. the idea is to have sensors and computer processors that do the driving tests better than what human can do. erik: what about the implications for the automotive industry? if you have a car that does not need a driver in theory it could be driving around all the time. if that is the case, in theory we would not need as many cars. is that what's going to happen? larry: you'll need to move a lot of cars the miles people need to travel. the car will be used up faster. a shared car would have 80,000 miles in your put on it versus your car maybe 12,000. the car may not be what it is today because it would be designed without the steering wheel, without the brake pedals and the gauges. a lot of what it auto industry makes money is these differentiated products.
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erik: what does that mean for ford and general motors? larry: i think all of those companies need to be asking a couple of questions. is this technology real? i have to believe it is. i think proven in three to five years. if it happens, what does it mean to us? it could be a world where people are buying trips in experiences and not cars. stephanie: what does it mean for the insurance industry? larry: imagine waking up one day and realizing cars aren't crashing or they do bump into each other some of the crashes are not severe. i think the industry needs to be thinking about assurance as well as insurance. erik: why don't you jump in, mike? mike: who wins? who should be covering this space? stephanie: consumers.
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mike: among the companies. larry: a lot of people are not well served by automobiles. you can tailor the design of the car now for most of the trips that you take. wire we running around in these 4000 pound machines when we could be in 1000 pound ones? society wins. the real winners are the ones you know how to do this and the brands that can deliver those services. mike: our auto analyst thinks it is the auto suppliers that win, perhaps the googles and apples more than traditional automakers. larry: i believe if you are not developing this technology i'm talking about really a car that does all of the driving. auto companies are doing a nice job with cd features -- with
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safety features. that all of drew -- that all assumes the driver is safe. i believe the companies that can prove a car is driverless change the game because we are tethered to that car. a medium income person at $25 in our going 25 miles an hour, a dollar a mile. erik: what about the kind of company that many people see on the vanguard of auto technology today? tesla. larry: a beautiful product. erik: do they survive in this world? larry: they are moving fast toward their own driverless system. i think you're going to see some players teaming up down the road. they're going to have some great technology. i think there will be possibilities for that future. stephanie: what kind of partnerships? larry: if you have the
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capability of driving a car driverless, would you want to carry all of the structural cost of building automobiles? is that where the sweet spot is going to be? i think you want to look at return on assets. those questions remain to be answered. i think will be interesting disruption in business models. erik: what's a more transformative force? the driverless car or the car without an internal combustion engine? larry: the driverless car. it sets up an opportunity to get the mass out of the car. when you burn that gasoline 75% is lost as heat. you weigh 100 50 pounds, that car weighs 3000 pounds. only 1% of that energy is going to you. you can get the mass out of the system. that makes the batteries more practical. the problem with the battery is the car, not the battery. erik: thank you very much for
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sharing your vision with us. larry burns, former head of r&d for general motors. now a consultant for companies like google. stephanie: time to bring you up-to-date on top stories of the morning. shares of morgan stanley are up today. the bank posted first-quarter earnings that beat analyst estimates and adjusted revenue was the highest in more than four years. equity trading and brokerage revenue jumped. morgan stanley ceo james gorman has been relying more on trading stocks and advising wealthy investors. there is a new favorite in the british election. ireland's largest bookmaker now says labor's ed miliband is they were to be the next prime minister. it is the first time he has been favored since last october. the election is may 7. there is a report that former mf
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global ceo jon corzine have discussed plans to start a hedge fund. my head exploded in the last hour when i first heard this. the wall street journal said the fund will start with corzine's personal wealth. he would bring on investors as well. corzine has kept a low profile. he may still face a civil trial in the case. corzine is also a former chairman of goldman sachs and was the governor -- erik: how crazy is it? mike: i have an answer. global was partly a hedge fund and that was its undoing. stephanie: are you kidding me with that? more thoughts with mike when we return. ♪
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stephanie: who better to get final thoughts with the mike mayo? our guest host for the hour. i want to go back to this jon corzine because we only had a moment. what you think about the fact former mf global chief, potentially launching a hedge fund? mike: the key to relaxing the regulatory burden on the banking industry is to improve the perception of the industry. jon corzine starting up a hedge fund does not help to alleviate pressure. we need to police our own in the financial industry so we should not be welcoming back -- with open arms. erik: what does jon corzine and a hedge fund have to do with j.p. morgan? jpmorgan and goldman sachs cannot even be in hedge fund business. stephanie: the public perception is why people hate wall street. mike: the bank industry made a lot of problems during the
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financial crisis. there are many chefs in the kitchen. i bring -- i blame the federal preserve. those who made problems thank you but no thank you. stephanie: work on your golf game, not your trading game. that is it for "market makers yuriko we will see you tomorrow. ♪
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scarlet: bloomberg television is on the markets. stocks in the u.s. and europe
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recovering from steep losses on friday with the dow and s&p recording business gains of them -- biggest gains of the month. the exchange traded fund -- the euro weaker for the first time in five sessions. leaders getting ready to negotiate with greece friday. joining me, jim stricker. we are seeing some volatility if you look at the triple digit point moves in the dow on friday and today. when you look at vicks, 12.97. jim: an impressive day in u.s. equities, recovering much of the losses from last friday. we are back down to this 13 level 12.5 to 13 has been a very tough level to penetrate to the downside since december. if he gets back down below that 12.5 level, fairly significant because we would be looking for
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11 10 handle. we do not think that is the most likely outcome. we did the floor is stable. scarlet: if you look at the chart it shows you we have been bouncing off that 12.5 point since the start of april. how would you contract best contrast the cash market versus futures? you noticed there's something not quite aligned. jim: a couple risk factors we are pointing to do have clients have a more balanced risk assessment. the market feels complacent right now. the spread between the three-month future and spot vicks is up around a level that historically vote -- bodes poorly in the short-term for the s&p 500. if you look at versus the s&p index, it is highly correlated. we are looking for more of a balanced risk assessment from clients. the other thing i would point to is the spread between spot vicks
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and global currency volatility is near its widest over a long course of time. currency volatility is -- suggests u.s. equities relatively complacent relative to other asset classes. scarlet: a lot of things that are flashing red for investors. jim: at least yellow. scarlet: let's get to your trade right now. the stock has been stuck in the mud for pandora. it does report earnings on thursday. you're not playing off of that. jim: the big catalyst does not come until later in the year. the copyright board will come out with music licensing rates for the next several years. that is several months down the road. scarlet: we will get a sense of what pandora's expenses will look like. jim: analysts expect stocks to grind up. catalysts could be better usage
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numbers. spotify did another funding round a couple years ago the value of that company is a most twice a pandora even the revenue is a little bit higher. there are other factors that could help out. you want to go out to june, there's a solid floor. we want to turn run it by applying one strike call. you put money in your pocket doing that. it is for a credit so stock moves up shortly. otherwise, you get longer lower. nice long directional exposure over the next several months. scarlet: jim strube are joining us this morning. ♪
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jim: welcome to -- pimm: welcome to "money clip." new york federal reserve president bill dudley speaks at our headquarters. his outlook for the economy is coming up. the story of how tesla almost became part of google. in politics, trent lott speaks about the 2016 republican field of candidates. we will show you the robots taking over the global workforce. it is fo


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