tv Bloomberg Go Bloomberg December 21, 2015 7:00am-10:01am EST
can we will take a look at some of the best and worst deals of 2015. stephanie: welcome to "bloomberg ." we are having a very big monday. i'm stephanie ruhle. david: i am david westin. bloomberg intelligence covering oil, and we have bob eiger coming up at 8:00. did you see it? i saw it. stephanie: there is no one better. bob eiger running a victory lap around star wars. i will tell you how big star wars is. it is bigger than santa. i was online with my children yesterday to see santa claus, and they said forget about it. they left the line and they went to the movie. that is pretty big. david: we bought the tickets
three days in advance, when 20 minutes before, and all the seats were full. stephanie: santa comes but once a year, and star wars will be playing for a really long time. my children when with star wars over santa. >> did they get dressed up? stephanie: they did not. david, in case you did not hear, i will say over and over, has a full head to toe darth vader costume. david: i did not wear it to the theater yesterday. first word, vonnie quinn. authorities in belgium today say five people are being detained in connection to the paris attacks. police in brussels conducted raids for two dates. that for two days. 130 people were linked to boldin. made an emergency
landing yesterday in kenya after a fake bomb was found in the bathroom on an airliner. the airline ceo says security has been tightened worldwide since the paris attacks last month. authorities in china say a man may pile of construction have triggered a huge landslide. construction waste. newly three dozen buildings in the city of shenzhen. you can get more on these stories at bloomberg.com. the markets now with matt miller. matt: we see gains in futures right now. the s&p evening contract up 18 points. the dow jones of hundred 28 point stocks are coming off their worst two-day drop in three months. rebound today, and we have
seen it in europe as well. take a look at my terminal. i am going to show you what is going on this month. in december we saw more than a 3% drop in stock, and the reason, you can see i have broken this done by industry group. energy, materials, industrial stocks. it is a commodities sector drop grr on yourr are -- terminal. utilities had a tiny little gain for the month of december, so it has been a rough month. take a look at oil, speaking of commodities that were down. crude fell to the lowest level we have seen since 2009. down 1% on the third of fraud handle, 34-37. low, fell to an 11 year the lowest level since july of 2004. brent is what the world uses outside of the u.s. as a
benchmark for oil. the spread is getting tighter between brent and crude. disney.o talk to you on disney had a big drop on friday, fell almost 4% after rich greenfield downgraded the stock, saying the gains from star wars will not out way the losses at espn. hard to believe, with $500 million in box office receipts internationally over the weekend. this is part one of a three-part series. you have to buy the toys, ride the rides. in any case, disney is bouncing back after that big ox office weekend, up almost 2%. back toe will get disney with bob eiger, but first, matt talked about the pain in oil this morning. vincent piazza is with us. godman sachs said oil might to $20 a barrel. now it does not look quite so implausible. vincent: when you think about the wide demand-supply
imbalances we're seeing, it is not just crude, it is throughout the refined product segment. in the u.s., crude balances, crude inventories, 36 of -- 36% above five-year balances. that would likely continue to persist into 2016, and as we get into maintenance season in the springtime, the demand will likely decline. it is going to be a tough first half of 2016. stephanie: if we are having a tough 2016, all the factors you are giving us, there are no signs of a turnaround. is there any argument to go along here? vincent: the other couple of things that could come, if you have one, you have less hedging for producers in 2016. you could have a coming to jesus moment in 2016. what you also have his capital markets. they have been the lifeblood of
this industry. they have fueled the np hospira and whether or not that turns around and 2016 remains to be the hedgingose two, and liquidity, our main drivers that could provide clarity into 2016. david: the question is, can the supply, offline fast enough to give any support oil prices? >> there is so it's out there floating in the sea somewhere on some tanker, that in order to get it all work through the istem and get the oil that stored to wait for higher prices, we have a long time to get through that. one question i have is, at one point does this become the benefit to the economy yeah cap right now it has been a complete negative. you have emerging markets suffering in a massive way. companiesnergy suffering a world of hurt. you have all these consumers --
what about europe? europe should be benefiting from this. why haven't they? vincent: significantly, year-over-year and relative 2014 as well, we have not seen it that much. it could be a situation where the consumer itself is trying to repair its own balance sheet in say that incremental savings. stephanie: what we have not seen yet is a great reveal -- a great deal of restructuring. talking to bruce richards, coal powder of marathon -- >> we think the default rate for energy cubbies in the next three years will approach 30%. rate fornk the default energy companies in the next three years will approach 30%.
as high as one third of these companies will be forced into restructuring. as it relates to the wti we saw this morning, it is going lower. why is it going lower? because of opec, and what did not get agreed to at the last meeting. and this glut of supply. that expect traces lower prices. you will see back in 2008, in december, wti intraday was 32.40. i think we will test that level, high certainty, and i think we will probably pierce that level going into the 20 30's. stephanie: there is going to be a buying opportunity. when will that begin? starting to see that acceleration into the healing process. assets in weaker hands moving to stronger hands in 2016. it is really a function of the
capital markets, and will they be open to these impious to give them a fighting chance to get through 2016. stephanie: what do you mean when you say out of weaker hand tended to stronger hands? vincent: those that are stronger levered. lisa: there were a lot of funds that came out and they said, energy, it is a great bet. what happened. -- what happened? it was a horrible year. 20%, 30%, more in some cases. a lot of these firms have not been in a position to buy, if they wanted to, if they saw opportunity. the question is, when will they see the real opportunities, the ones that have cash? and figuring out which countries have lasting power, could they be a real winner because they gain market share? there is financial sponsor
appetite to penetrate this space. there is a lot of liquidity out there waiting for that opportunity to jump in. up until now, valuations were not there to participate. does bloomberg have to tell us? matt: this is the shaded areas, opec output. obviously rising substantially here in white, where you see the drop in brent coming down to 36.32. another thing is, if you look at oil over the last 30 years -- take a longer-term look at oil, and he gives you some perspective, starting in 1985. we are around $20 a barrel. in 2004, we finally took off. it looks like we are almost returning -- reverting to the norm here. stephanie: if you think about it, when you mentioned dry powder, we talked about the numbers we saw out of jefferies, one of those firms known for andg strong in distress
energy specifically. the fact that jefferies has -- five nowt there their positions and they did it toward the end of the first quarter -- the end of the third quarter, they took a big hit then. prices have only gone one direction -- further south. now they are positioned with dry powder. so you could have looked ugly september october, but if you were sitting in cash today and prices were going down, you could have a strong 2016 in energy. lisa: this is one argument for why banks having smaller balance sheets is a benefit. they are in a better position to and make money in place that are more distressed. he has had investors with him for so long he does not feel pressure to employ his money because he has that wing
on him. if you were a bank six years ago and you bought all of these positions waiting to roll out of them, you have to get out. today you have investors sitting, waiting for first quarter, third quarter of next year. are sitting here with wider imbalances. it is not just on the crude side. it is also on natural gas as well. similar dynamics in terms of the and balances -- in terms of the imbalances that are present. stephanie: we have to take a break. i like the direction oil is going in. vincent piazza, thank you. lisa, we are not letting you go yet. we get to talk about football this weekend. the giants receiver, superstar, quite the dancer and unbelievable hands this guy has. he's in a lot of heat this ,orning, odell beckham, jr. after an unsportsmanlike punch
against carolina defender josh norman. it happened during game last night on sunday night football. norman describes the punch to his helmet as a ridiculous act. he will likely get a hefty fine, but should he be suspended? cam newton, who i think is one fashion plate and handsome devil, of the carolina panthers, he threw for five touchdowns. i want to say they won 38-35. david: he could hurt his hands. is illegal and it is wrong. what are you doing? how will you catch balls? stephanie: i do not want to hear or see any more punching. return, being at a crossroads. after voters headed to the polls this weekend. we're live to madrid with the results. ♪
vonnie: welcome back to "bloomberg ." toshiba has forecast a -- a record loss in the record of an accounting scandal. it also plans on cuts to its businesses including televisions, businesses -- including televisions, personal computers, and home appliances. u.s.onic is acquiring refrigeration system maker hu for $1.5 billion. a problem has emerged in the marijuana business. it is one of the nations most power-hungry industries. the 24-hour demand of ingrown -- indoor growing sites are
unraveling gains. now to global go. spain is at a crossroads today after voters headed to the polls yesterday. 's people's party lost a third of its lawmakers, even though it beat out the mostlists to take the votes in the parliamentary reelection. it leaves things very much up in the air, and we turn to tom mackenzie, live in madrid. tell us what happened and how the markets are reacting as a result today. tom: absolutely. as you touched on, this was billed as one of the most uncertain elections in recent spanish history. since the return to democracy in 1978 has there been so much uncertainty around the election. the leading party, the popular party of the prime minister did get the largest number of seats,
but they lost a majority. they will form some kind of are unsureut they whether they will be able to do that. period of horse trading as a political party to form some kind of government, and the markets are nervous. they were rather sanguine about .his leading up to the election the markets selling off more than 2%. and the bonds as well, selling off yields, spiking this morning. a lot uncertainty over what goes forward, what happens next. david: for those of us over here, it looked like voters were say we do not like the establishment parties, either the socialists or the people's party. what is the cause of the discontent? the economy is growing well, isn't it? tom: absolutely. the unemployment number has been coming off, but it is still very
around 48% for those under the age of 25. two crucial factors that fed corruption swirling around the party of prime minister mariano rajoy. no doubt they have taken some significant amount of support away from him. the socialists are still mired by their handling of the economy here prior to the crisis, so both of the main parties losing a significant timeout to support these upstarts. now there are close to 70 seats in the parliament behind me. both big economic challenges for whichever party goes ahead, and now we are looking at a time line, january 13, when lawmakers have to gather and they have two months --
stephanie: welcome back. you are watching "bloomberg ceo of imagesthe pharmaceuticals company was arrested. so here, completely loving the story. can this company recover, or really, what did they look like before he showed up? >> this is complicated because he is arrested for what he did with his previous company. some of the factors were the same -- buying up drug companies and then hiking prices, which
made the public upset and prosecutors as well. so now petrelli has resigned and someone else is in charge. 70 hill they part of martin's cap? : from there, i think the next thing is, are they going to change their strategy? a lot of things that upset them so much was a lot hiking the prices. some things are getting a little bit better for them, but it is hard to say how you recover from this. if you look at other companies in the situation, like btg in brazil, the head of the company is out on bail rating -- out on bail awaiting resolution on his case. stephanie: does touring even if they had a board, where were people?
he demonstrated his true colors. so where was the oversight? was nobody looking at the sky and saying why is he running this place? it is a private company. touring is private. he is the basis for this company. it has the potential to survive, but so much is unknown right now. who will take control? how is it going to be run and what will they do with their strategy? david: beyond that, do we know the fundamentals of the company? are they making money? stephanie: they have drugs that are valuable, sure. comes down to, who wants to work with this kind of guy? who is ok by him hiking prices? really, like, is there nobody else running this company? and let's say they do have some
valuable drugs. can they effectively distribute them and be an appropriate face, given the fact that they are willing for him to be the mouthpiece? david: what is the legal matter? winnie: it is not usually a legal matter. some people insist they are going to hang on until they are found guilty. otherwise they are locking in, and that happens, honestly. are the regulations like a medicare or medicaid? stephanie: if you are a private company, you might not have a board. winnie: this is a small private company. this other company is a more interesting one. he is not the ceo there, and the stocks fell sharply on what had occurred. now they have to regroup as well. but it really does throw into
question the strategy of these drug price hikes. how are these companies going to manage themselves going forward, and can they survive? stephanie: the public company is the same business model, correct? thank you so much. winnie o'kelly, thank you for joining us. up next, high-yield markets reading signs of relief, but our investors out of the woods yet? we will have more when we return. you are watching "bloomberg ." ♪
so your business can get back to business. sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. to discover the best shows friends together and movies with xfinity's winter watchlist. later on, we'll conspire ♪ ♪ as we dream by the fire ♪ a beautiful sight, we're happy tonight ♪ ♪ watching in a winter watchlist land, ♪ ♪ watching in a winter watchlist land! ♪ xfinity's winter watchlist. watch now with xfinity on demand- your home for the best entertainment this holiday season. david: welcome back to we have a man>," with fast commentary all on his
own. every day. stephanie: he maybe the new ceo of turing pharmaceuticals. [laughter] vonnie: five suspects are being held today in connection with the paris attacks. but the most wanted fugitive is not with them. police conducted raids yesterday that lasted five hours. is still being held. marquez is enrique facing terrorism counts. he could get 35 years in prison. authorities say he can legally theht the firearms for couple in the san bernardino shooting. a woman who drove her car into a crowd in las vegas did it intentionally. the pedestrians were mowed down
on the las vegas strip. --icials say the woman was a was in her 20's. a three-year-old who was in the car was unharmed. you can get more on these stories at bloomberg.com. david: we are turning to the must-read. i think this is a must-read. tom: there are a lot of mathematics underneath, but it gets right to it on the volatility. the question for next year is not about whether volatility will be more frequent or more violent, the challenge will be monitoring carefully the tipping points for various market segments along with related price overshoots and class contagion. thatifference here is --nd based years versus stephanie: come again?
of: there is a whole bunch mathematics. john henry was iconic at trend-based work a number of years ago. we have tipping points, the back-and-forth, and it is much harder not to lose money in a tipping point environment. david: the thing that i found interesting was that it pulls together things that we talk about like reduced commodity prices and problems with emerging markets. things like low global growth and central bank intervention, and put them together and says we will continue to have volatility. tom: that's the way it is every day. we have the clear overlay of the central bank. it has dampened growth, i don't see anyone looking for us to break away. >> one potential upside is that investors can feel confident taking on leverage positions or
making risks, because once you hit the tipping point, you get knocked out. tom: that is a good point. the way you do leverage is that i am right, add-on, i am right, add-on. and that takes a trend. ,nd if we are away from trends then we are having much greater difficulty in not losing money. talk aboutwhen you trend, the one thing that is out of the market is momentum. when you talk to high-yield investors, they say great. they are not going to buy bonds across the board like they do when the market is rising. this is the point when those who did deals, who were super levered, this is when you will see them drop like a stone. >> at it won't be across the
board. people are saying it is case-by-case. investors who the may be forced to sell. catharsis, inbout one of the areas where i have seen true catharsis in high heels. i have not seen what on the streets in commodities. there is no catharsis in oil at this time. we did a chart on surveillance earlier which is remarkably elegant and well contained. there is no drift. it is a beautiful non-cathartic charge. david: to be specific, are you looking for balance sheet revisions? tom: that is an important question, i don't know which is the horse or the cart. what i know is that i can't spell catharsis. [laughter] tom: but the balance sheet thing, i have heard it is the third week of may, i have june
2. stephanie: i want to stay focused on high yields. we are a little over a week out from the high-yield selloff. many people said it was the warning sign of the next financial crisis and now we are seeing the markets stabilize. digom's point, when you into these companies, into the areas like the high-yield market and you are looking at companies that aren't managed well, you do see a follow-up in the equity market. it will not be across the board but the more holes we see in high-yield, he more problems we could see in securitized projects. and that is what is going to play out over the next few weeks. correlations, but i was just that there is so much money out there, maybe this time is different. stephanie: think about high yield outflows. just because there is money out there doesn't mean it needs to
be in the asset class. >> i would argue that money managers i have talked with, institutions have been going in. this is still a low yield environment. look over in europe, yields are negative. if people can get a percent-9% yields, they will invest. but it will be specific. the white is the volume of what is being traded up eating -- being traded. the blue is the money flow, in and out over time, but this is cumulative. there is a lot there still, even out,$395 million taken $250 million taken out. to me, the question is, is there a tipping point for the high-yield market? is there a particular investor
or counterparty that is levered who is going to blow up and cause that? without that, it seems unlikely. tom: the one blunt intimate away from lisa's point is the wall of money. stephanie: as it relates to 3rd avenue, people thought 3rd avenue going down was a sign of the market going down. and now we see it is the liquidity and asset class being mismatched. you had a high-yield mutual fund invested in private triples the companies offering liquidity. that is your problem. lisa: that is the perfect way of summing up what they did.
they want absolute liquidity. they offered daily liquidity. they had to disclose the holding. , when theydge funds they were getting withdrawn, could target them and bury them. manager,e a hedge fund why would you buy bonds that is being sold at $.30 on the dollar if you know that 3rd avenue has to sell another $3 million of them and no one wants to buy them. in lisa's piece, i took an interesting point away. to some degree there are structural changes, including not using leverage in this market. it limits the contagion. tom: i would say as a general statement that is true. the real question for the -- that about contagion waits to be seen. i have noticed through all of the awesome and into the non-winter in new york, a total
lack of catharsis. oil this morning is absolutely extraordinary. stephanie: what you are going to see is distrust in the system. distrust in managers. no doubt there will be lobbies falling out of the third management -- the 3rd avenue market. this hurts the whole industry. did, remember who invested in mutual funds? clearly people didn't realize what they were getting into. that: there may have been actors, there were people who didn't tell me that they were bad actors. lisa: this also puts the pressure on the fcc to regulate more closely mutual funds that invest in less liquid assets. providing more information. stephanie: there has to be some kind of regulatory oversight. it doesn't just show up when the market falls out of bed. david: tom, what do you think
about this? will we have new disclosure requirements? tom: i think it is true and important that this was in a mutual fund, that distinction hasn't been made enough. , there has took be more carnage at some point and i would still look front and center at oil or currency moves. oil is game changing. lisa: there was a great story on friday about a mutual fund which is very similar in composition to 3rd avenue. stephanie: people don't necessarily realize that mark has both the two and 20 model and the -- those are two different things. lisa: he came out and said, listen. we moved 45% of our assets into cash after 3rd avenue.
we are prepared and we will not be the same. , let'sing up the chart see if we can look at this. this is the oil over the last 10 minutes. that is extraordinary, and extraordinary threat. early trading here. i can't convey how fragile oil is. stephanie: and bear in mind that beat thenby -- he did golden state warriors. and hillary clinton is doing 's holidayl so mark season isn't totally destroyed. lisa: i feel better. lisa, you are going to stay with us. still ahead, the best and worst deals of 2015. i hope we have a business fail over the hour because there was
vonnie: welcome back to "bloomberg ." shares are climbing in the premarket after -- people familiar with the matter say they are offering to buy 70% of the agenda with an option to require -- to acquire the remaining. company lyf ist planning to raise new funds. couldts say that money charge uber. at $2.5 billion
when it announced a previous round in march. a court hearing is set for today will consider whether sumner redstone should undergo a mental evaluation. that a courtys ordered evaluation of the 92-year-old is unnecessary. he controls cbs and viacom. we are looking at the best and the worst deals of 2015. it is a record deal. bloomberg news editor, jeff mccracken. that stood out was charter going after time warner cable. comcast was going to buy time warner cable. regulators got in the way.
charter was there literally the day comcast walked away and they started negotiating. they had a deal done by the end of may. the other one was -- it took years and years, there were only 800 different banks so the sun had to negotiate with thanks and stakeholders. we broke the deal in may as it got done in october. the so loved it. -- visa loved it. stephanie: give us a bad one. >> the health insurance deals. i think regulators are going to have issues with these deals. -- the fourargest largest health insurance companies have merged into two. ago,t blocked a few weeks i think you will see those get
pushed next year and either get locked or see things to make them less valuable. depot got and office completely blown up by regulators. they said it was unacceptable. we are seeing this with halliburton. -- there was a lot of noise about it. it looks like it will fall apart. the market does not like it. dealsnie: are there any that will fall apart because they cannot get the financing done? >> i think so. it has gotten tougher recently. a lot of the deals we saw this year had a lot of stock. to see dealsng where the financing is a bit more risky and i think yes, we will see them come unstuck next year. also, some of the banks we speak to are saying there as to what
they can do. 9 th -- lisa: the big ones or the small ones? >> both. deals that have higher leverage on it, we have started to hear that those guys are at capacity and aren't able to lend as much as they were. lt's-cablevision deal was leverage. is there any risks to that? >> no, i think it is just that the last couple of weeks, there are deals that will be delayed. it will take a wild to syndicate . stephanie: where is the mismatch in terms of m&a and compensation? banks are at capacity, especially in energy.
you have bankers who have worked around the clock in health care and here it is. they want to get paid the big dollars, do the banks have the ability to pay them? >> yes, they do. jpmorgan, morgan stanley, they will pay people what they expect to get. the issues will be if you are at some of the banks that haven't been successful or a european bank. those are the ones that will have the issues. stephanie: some of those banks have said that they are not paying. >> for the banks, we saw it earlier. the cost of not paying your talent is high. boutique banks have taken a lot of the best bankers. it is prominent at the big banks that they need to hold on to their moneymakers. now more than ever. those boutiques, you
control your own destiny. there is a lot less risk than i firm.- then a if companies need to be lend money, if they need more than the advisory, the boutiques can't play. >> a lot of times you will see -- egg balance sheet come in center field is the one who everyone wants to work for. they pay very well. for the willing to push final dollar in a way that only goldman sachs does. next year, what is left? are they going to be more speculative? now, are writing aps right wondering if this is as good as it gets. one thing we are likely to see galway next year is the kind of large deals. the megadeals.
valuedave been 17 deals at $20 billion or above. so it has been very special. we will see fewer of those because there aren't that many left to do. but we will see a lot of midmarket deals and that is what drives volume. in a good market you have a huge number of midsize deals. we will continue to see a lot of that. david: energy? >> oil and gas. stephanie: without a doubt. >> the balance sheet is starting to weigh. the guys at exxon are waiting to grab and pals these guys who are now pretty cheap. stephanie: it is those little guys who are needing to be honest about what they are worth. they can't survive.
is misst runner up columbia. 2015 is miss philippines. [laughter] minute,e: for just a i'm going to defend steve harvey. because every single time and watch a pageant i am confused at the final moment when they do the first runner up. runner up? and especially because it isn't called second place. it does add an element of surprise. david: the expression on her face as it dons on her that she is not the right one. what are you telling me? usa whoe: it was miss looks at her and says it's you, it is you.
crown and remove the put it on someone else's head. professional athletes safe second place is the absolute worse. in second to ang whole different level of awful. david: i hate to be cynical, but more people will watch it at year because of this. ifphanie: yes, i'm not sure steve harvey will be the guy at the microphone. maybe he is because all press is good press. there you go. we comeat happens when back? the one and the only bob iger. ♪
and the future of the company. tim cook says americans shouldn't have to choose between privacy and security. ♪ stephanie: welcome to the second hour of "bloomberg ." it is about to be a big one. welcome back. david: i want to welcome a special guest, he is the ceo president and chairman of disney, bob iger. we have to start with star wars. how big is it? is it bigger than you thought it would be? robert: yes. it's bigger than we thought it would be yesterday.
yesterday morning we came up with estimates for the weekend at $238 million domestic and over $500 million globally. it up stronger than we anticipated. so it is more likely to be in million domestically and even higher internationally. we expect the total for the weekend could be $528 million and china has yet to open. that is an incredible weekend. stephanie: put that in perspective. what it could do for the business strategy. with those numbers, that equals more than 50% of what the studio will take in all year. is this going to change what you want to do next year? robert: no. in for 2016.is particularly on the movie side, we have most of the films have
finished today and are in editing. so it doesn't change things that much. what it does is it sets the great franchise up for far more valued creation over a longer. of time -- a longer amount of time. david: this is more than just a movie. there are a lot of what boxes that have been sold. had experience with this before. take us through the revenue stream. when does it hit going out? incremental or spinoffs? robert: star wars is more than a movie. touched upon franchises of the company -- star wars, i have said a number of times, it is probably the most valuable or most important mythology created in our time. and while it was introduced by ,eorge lucas in 1977 as a movie
it was always bigger than that. games andbooks and all sorts of consumer products. and themepark attractions. so when we acquired lucas in 2012, well we knew that the most important thing that we had to do was to make good films, starting with this one, it was always going to represent for the company more than just the movie. so as we look ahead, there is a lot of activity that is star wars related at the company. including themepark lands and many other plans. a pressure was on taking the reins from george lucas but you are changing the narrative. the fact that many of us think of this as a boy franchise, that is changing. with a central character based around a woman who may or may not be the daughter of luke
skywalker -- if you want to tell us, we would love to know -- what are you trying to change? robert: the first thing i'm not going to do is spoiled the experience for anyone. to this set today as disciplined as possible. i will not reference anything. what i will say is that jj abrams and the writers of the fine film created new characters and one of them is a woman. i'm not giving anything away. and she is very much a central character in the film which is fantastic because it does open up star wars to a broader audience and what we actually have been seeing since the movie isned on thursday night word-of-mouth, particularly among women and young people, it has been extraordinary. so it has been more diverse even as the weekend progressed. heard more and
more about the story itself, they and up wanting to see the film themselves. one of theult is -- reasons why we see the results as high as they are is because of that. david: i used to work for you. i know how disciplined and thoughtful the walt disney corporation is. sense ofive us some what the franchise means for the walt disney company in the out years. three years out, five years out? and how material is that? robert: we are a big company. something of this size does have materiality, but how big, i can't say. but after the force awakens, we intend to make film eight and phil nine. the eight film will start filming in january. we have a director for phil nine -- film nine.
so including this, there are more star wars films in the works. that is a lot of activity. two big themepark lands, one in california and one in florida. and in all likelihood, there our otherans at locations. it is a huge business, with merchandise. it always was one of the largest , if not the largest, in terms of consumer products. and it is larger than what we even estimated. we have a strong programming licensing games. television -- we have plans for more. i can't estimate. with such aay that high quality first film, it bodes extremely well for not
just what is ahead creatively but also commercially. david: can you give us any sense relative to the two other major acquisitions you have made? you did pixar and marvel. and they both share some similarities with this. and generate great content they have huge franchises. is this bigger? how does it compare in size? robert: it is about the same size as marvel as a price acquisition. in value today, it isn't something that we break out so i can't say. but they do have a lot of things in common. it starts with great storytelling. that is the heart of the company. going all the way back to 1923 when it was founded by walt disney and his brother. it is about storytelling. that creates value. so at pixar we had some of the best storytellers and marvel we
had characters and stories. jones, by the way, which will be coming, we have more great stories. there isworld where far more content or intellectual property or choice, great stories still hold their value. they actually stand out given all of the choice that people have. stephanie: given the power of those franchises, how hard will it be going forward to green light big budget projects that aren't franchises? robert: we will have a blend. stephanie: i did love inside out. a great example. it is important to create fresh stories. either fresh stories for existing franchises or stories that are tied to anything that exists today. inside out is a great example. there is nothing better than a
great original story. we will continue to do that. but it isier important for us to do that as a company and for the creative people who work for us to continue to do. stephanie: it is a risk and a challenge to take the reins from a creative genius like george lucas whose audience has extraordinarily high standards. that was a risk. i can look at it as a risk, i looked at it as a responsibility. it was a heavy burden in that regard because you are taking something that is the crown jewel of storytelling. hands, thatt in our puts a huge burden or responsibility on us, not only to honor the legacy but also the fans around the world that have such a love for star wars. on, wewhen we had ceos like to take a look at how their
stock has done. charted the stock performance since you took over in october 2005 and i have graft walt disney stock in white versus the s&p and consumer discretionary stock. inyou reinvest all dividends the two indexes and the stock, disney has outperformed the s&p since 2005. not a bad track record. if you look at the stock year to date, you are still up about 15% gp.t now, equity, it has come down substantially from the august high of 120%. david: we had talk about august and september.
because the stock to come down significantly and it was tied to espn and possible loss of subscribers. stephanie: espn still crushes it. by the way. tied to comments that we made when we announced earnings in august. when we talked about the television ecosystem and in multi channel television universe and specifically talked about the fact that we had seen sub losses ort i described as moderate relatively small in nature. but just the fact that i talked about it in a candid way created a fair amount of concern. and obviously it has an impact on the stock prices. stephanie: do you think the concern is less about the power and strength of espn?
because they are clearly on top and it doesn't look like they will change for the foreseeable future. but in terms of programming and the power of live events, we have said that this is the thing that everyone cares about. so could the response be about how it will affect all of those below you who are in a more affordable position? robert: that is interesting. i thought it was an overreaction to what we said. but we have no control over that. it is clear that television is experiencing some disruptive impact lord noses what saying disruptive forces will have. but there is so much more competition. so many choices for how people to spend their money and time. that puts pressure on television. but to be great and of great value, the user experience must be great. if youn to believe that
are in a market that is being disruptive -- is being disrupted, you want the best product that is out there in a disruptive market. we believe we have that at the company, including espn. if you are in a market that is changing, you would rather have a strong hand. so what's better than espn in that regard? the value of live tv is really important. thatriginal programming espn has, the brand value and the allegiance from fans -- that and itly important positions espn extremely well even in a market that is being disrupted. so we feel that long-term they will be just fine. but we refuse to have our head in the sand. about what we are seeing in the marketplace.
others may be seeing things differently but we believe there is disruption going on and there is more ahead and mirror spending a fair a lot of time to make sure we are well adjusted for that market. espn is something of great value. that he saidtes disruptive forces -- he is selling you on the force awakens. [laughter] david: there are many who believe that the cable business is reaching maturity. it grew through the 1990's. and even though it isn't falling apart, the growth potential is limited for it. ,nd for a company like disney what can you do to replace that growth? assuming that you need to replace it? robert: i think it is obvious that it is a business that is relatively mature. a multichannel television business. so you are not going to see
growth in households that is anything close to what the business experience over the last decade or two decades. there are still some price increases that can and will be taken certainly by the best channels in my opinion. but it will not grow anything close. by the way, we continue to think we will see some growth. but it won't grow at the rate that we saw in the past. as a company, we are diversified. the investments we make in china are a great example. shanghai disneyland opens in 2016. we have grown the studio business significantly. talking about star wars, marvel and pixar. the impact of that across the rest of the businesses is also profound. consumer products are a great example. are not grow surprised at all in terms of opportunity even though we are definitely seeing more moderate growth in espn.
david: so you believe whatever modicum -- whatever moderation of growth you have, you will be able to replace. robert: we don't give guidance, but we are bullish on the growth prospects with the disney company. because of the franchises with the brand and the global footprint and the fact that we are seeing development in market that are creating opportunities. china is a great example. wars and thet star numbers earlier, but china doesn't open until january 9. help they could china be in terms of star wars? robert: it is the number two movie market in the world. , sooner thane one everyone anticipates. that is a huge opportunity. , ats you look at the world
the star wars franchise or our movie business, there is a market to be addressed that exist before. it creates a growth opportunity for us than we are positioned to take advantage of. david: how important is direct to consumer in espn's future? robert: we believe in the multichannel model. we believe that it is not only not going away, but the predictions about its demise are overstated. that said, we talked about growth being limited in many respects, or more limited than before. we think at some point, if the business model would fall apart, there are opportunities to go direct to consumer. in our case, with espn and the disney brand, and possibly with pixar and marvel and also with star wars. stephanie: you said earlier the best channels. do you think there is too much
but the people we speak to on the ground, they are bullish. they have watched the transformation. do you agree? robert: i do. we are bullish in china. we believe that the chinese consumer is still spending and the chinese consumer represents a great market for our company. we are building shanghai disneyland. it will open sometime in the spring. we will announce an opening date sometime after the first of the year. and we believe that we are bringing a product that is high-quality and is unique to that market and that the chinese will -- it will be in demand among chinese consumers. there been any sort of slowdown? have you tempered the optimism in any way? robert: no we haven't. our business profile is largely consumer products and motion pictures.
businesses of those have showed any sign of slowing down since all of the news has come out about the chinese economy. you are dealing with a huge population base. shanghai, forat instance, and put a disneyland there, you have access to a huge population base. hundreds of millions of people. be able to travel to shanghai disneyland within 3.5 hours. really quite a large consumer base. we are bullish. david: there must be challenges to doing business at scale in china. of capitalt sort investment, what are the special challenges? robert: there are challenges. anywhere in the world where you try to build something that large, you will have challenges. in china, we have had a number
of challenges. in bringing the product to market. what we are building is unique. the structures that we build our complex. they are not just buildings, but they are shows and rides. and there aren't that many examples in chinese construction industry for building things that are this complex. so that has been the biggest challenge, getting it right. because what we are building is so complex. and we feel very good about where we are today and we will open in east ring. and the rest will be history. stephanie: the magic band technology, the seamless pay, that was a big investment. will we see that in shanghai? robert: what you will see in aanghai is a part that for technological perspective is more advanced. it will show up in the attractions themselves but also in commerce or transactions.
the consumer will be able to buy their tickets and use their mobile devices in far more advanced and compelling ways than in any other place from a themepark perspective. david: friday was a big day because of the premier of star wars. there was something else that happened that affected the stock prices. and analyst came out with the report involving some spec to schism -- some skepticism. i wonder what your reaction to that report has been? robert: i was curious and suspicious about the timing. if anyone wanted headlines, the time to do it was the morning after star wars opened in the united states. the analyst that came up with that report has been wrong about us on a number of occasions. --one would have to question if he has been wrong so often before, how valid were his comments? by the way --
robert: he is entitled to his opinions. changed and we have nothing to update since our last filing or earnings call regarding espn. so again, he is entitled to his opinions. specificaddress one point. you have long-term commitments and you have the variable cost of -- going down. and that you are caught in a squeeze. robert: we made a decision to license those products that you refer to, nfl, major league baseball, the college football championships -- for one main reason. that is to serve the espn fan well and to essentially perpetuate a competitive advantage that espn has and to
support the strength of the brand and the consumer composition that it makes. so we haven't second-guessed that at all. our cable fees are going up for subscribers but as i said, we have lost some subscribers, we believe we will continue to drive growth from espn. it just won't be at the race that we saw before. stephanie: take us to the terminal. : you guys were talking about theme parks. espn andknows that media networks make a lot of money here. the blue is studio production. theme parks in yellow make so much more money. star wars will be a huge bill, i know you have the rights coming out. but i wonder how much gas prices have to do with it, putting money in consumers pockets? seen much haven't
correlation between oil prices or gasoline prices and themepark visitation. high, a lot of people were bearish about us if they were worried the consumer because go to the parks people have less discretionary income to spend but we didn't see a correlation there. wenow that gas is cheaper, have not seen a reverse correlation. there is nothing bad about gas prices being low. it is a blend. people fly, people drive. we haven't seen a correlation. what about something else that might keep a lot of parks. security. people are more and more concert today about bringing their families to places of interest where there are large amounts of
people. how do you address this issue? robert: we take security very seriously. it isn't just the safety and well-being of our guests, it is the safety and well-being of our cast members and employees. so we have taken a number of steps. i prefer not to be specific. but we've taken a number of steps over the last decade and more recently to increase safety and security at our parks it is a world that is more threatened than it has ever been. david: how much are you affected by the strong dollar? robert: we haven't seen that much of an effect in terms of a strong dollar of her -- dollar other than we have currency exchange issues that affect our bottom line globally. but the person who wants to visit the united states, or to go to a themepark, particularly,
orlando, they are not holding back because of the value of their currency versus the value of the dollar. we haven't seen that. stephanie: you mentioned earlier about an industry, television, being disrupted. extraordinary ceos have to be disrupting themselves. as you look to your business line, you're 2016 outlook, what business do you feel needs to be disruptive and you need to be focused on? the word disruption, i know i used it earlier as it related to television -- we happen to believe that we happen -- that we need to continue to innovate. what we create, how we create it. how we distribute it. the world is dynamic and it is a marketplace that is changing more rapidly than i have ever seen in my career.
with that comes at a man to look at things differently. we are better off disrupting ourselves in being disrupted, but making the decision as to when to do that, it takes time and you have to be very thoughtful about that, particularly as it relates to the tv business. stephanie: many big companies are being disrupted by technology upstarts. massive business, it's very difficult to move -- i don't want to say titanic, but a tanker. how do you stay relevant and ahead of the game? i look at the financial industry and how they are being hit. robert: that's a good question. when i got this job in 2005 i actually focused on three major strategic priorities. one of them we talked about a lot, intellectual property, high-quality branded storytelling that gave birth to the acquisition of pixar, marvel, and lucasfilm.
because of a consumer behavioral change, embrace it, use it, the third priority is growing globally. shanghai, disneyland, china, that's a great example of that. it's important to view technology as an opportunity. you cannot will it away. it away of the world. and it is changing the behavior of consumers. there are so many different directions you can look at. it's created more competition, for instance. the big projects that you are excited about? technology, theme parks, movies. what are you excited about? absorb and trying to appreciate this little film we just released. [laughter]
priority as at company is shanghai disneyland, but we have a very strong movie slate. on the disney front, on the pixar front we have a sequel to , and at marvel we have captain america three, civil war. we've got a number of great films coming out. alice in wonderland member two. we've got a lot going on in the tv universe. espn will continue to move itself forward. shanghai disneyland, for me, looms the largest. a you beenlix -- i'm an early adopter. but he is in wearing an apple watch. especiallysually do,
because i'm on the apple board, but i didn't grab this morning. and oversight. talk about netflix. are they a friend or a foe? >> they have been an aggressive buyer of our product and in our case we sell three types of product. beenll programs that have on abc, as a for instance. not in season, but past seasons. we make original programming for them. we are producing them and they are buying some fantastic marvel series. the latest one was called jessica jones, or a.k.a. jessica jones. and they are the output for our movie product, starting with next year. they have been great to us as a buyer. which is interesting, because we talk a lot about disruption and competition, but where technology comes in is the birth
of new platforms, which some may view as competitive, and in some cases they are, but they can be additive in terms of business. for the walteen disney company. long-term we believe that they will continue to be aggressive , competing with us because time is finite and if you are spending time using netflix it might be time they are not spending on our other channels, but it could be that time on spending netflix consuming our product, which isn't necessarily a bad thing. i say that we look at them carefully in the sense that we want to see where things settle down in terms of the competitive nature of the relationship. and maybe midterm they are more friends than foe because they are a great customer of what we make. stephanie: looking at the
pipeline, is there a disney apple collaboration coming? tim cook has been feeling like -- as been outspoken about feeling the tv experience could be much better. one of the most important things that needs to be done is demand for a better consumer experience. this might sound like a blatant commercial for apple, but the apple tv box and interface it provides is the best user experience i've seen ever for television users. that is actually as an intellectual property or content creator, great news for us in terms of cooperation and collaboration. we have got a great relationship is a company with apple and be fully expect that to continue. >> take us into the future for bob i or. >> nfl? >> after shanghai.
robert: i will be chairman through 2018. i don't expect that will change. i have been trying to move to nfl games to los angeles. the raiders and the chargers. i think that would be great for the nfl to bring a team back to los angeles. i think it would be great for los angeles to have a team. i'm working on that as kind of on the side, so to speak. stephanie: does that mean that there is a future for you with the nfl? if the league determines that these two teams can move on with some involvement, but i don't expected it to be full-time. right now i am fully committed to and concentrating on the walt disney company, which as you cited earlier is large and complex that many moving arts.
the board. minian see it again on the contracts, the dow jones is up 119. in mind that this is after the biggest two-day climb we have seen in three months. obviously the fed raise rates on wednesday and oil went into a freefall. those two things combined really drove us down. take a look at energy, nymex crude coming down this morning to 3450. spread, look, getting tighter and tighter. natural gas on the other hand, on the way up. just a couple of weeks ago we saw it at two, so it has come down substantially. natural gas looking at the chart long-term is down into the right . take a look at my terminal right now. oil versus opec production.
opec production continues to go up. a supply glut, not about demand, still climbing but not climbing as steeply. metals had that a problem. we had seen metal stocks come down substantially in subset -- in september. it looks like the commodities are a little bit split today. david? david: thank you very matt. we just had over half an hour with bob i go. i really want to get your thoughts. you are watching. what was your take away and the main point? tom: it sets of the franchise for many years, not just in the theaters. 8, 9, plus the derivative reactions, it sets up
merchandise, television, for this bet that they made several years ago on the lucasfilm's, it looks like it will pay out long-term for the shareholders. david: right off the bat, this thing is fresh in the box office. they are ready for the next one already. paul: and the one after that. david: let's take a look at what bob had to say about his reaction to the numbers. robert: they go than big, bigger than we thought it would be yesterday morning. we haday morning estimates for the weekend at fivemillion domestic, hundred million dollars total global box office. yesterday stronger than we anticipated. so, it's more likely to be in the 247 range domestically, higher international. we expect the total global take
could be in the neighborhood of $528 million. china has yet to open. that's an incredible weekend. >> they made some news there with new numbers on star wars. it's a great story for them. he admittedtime that we should not expect the same rate of growth coming out of espn going forward. >> driven primarily by slower , as bob mentioned, that .pooks the market as bob pointed out, this is a very diverse company with growth on the parks and resorts side of the business. for investors, had why forecast the growth given the cord cutting we are seeing. 45 first -- robert: 45%
comes -- paul: 45% comes from the operating company. >> espn will continue to be a cloud over the aspects of this is the. he pointed out, that big researcher point, he made the point that it's not a coincidence that it came out the day after the opening of star wars. stephanie: i still argue, and you know better than me, i won't call the situation over espn a cloud or even a dark cloud. it is still the best of its asset class in a product that people desire. would die to have espn. >> but if you're not buying the package of channels they are a part of, i will not buy yes in. aey are still suffering from loss of subscribers overall. there's a shift, there's a trend . there's a generation of people that are not going to buy the whole package. my life would in
travel miles and miles to find a redskins game on, no matter where it is. people will follow great content and if they have it, no one wants to watch set game tomorrow. >> that's what they need to do, continue to separate themselves licensingtink agreements, which are expensive, by the way, and other programming that you can only get on espn. gameson't want the same that your husband will go miles for by subscribing directly to the nfl. he loves the countdown on sundays. take a look at what bob had to say to us. robert: first of all, i thought it was an overreaction to what we had said. the market is the market and we certainly have very little control over that. television is certainly experiencing disrupting forces.
it's clear that that's happening. there is so much more competition for people's choices and how they spend their leisure time. >> the issue is, is it growing as fast as it was and how do you replace the growth? >> they were clear, the challenge for disney is to i think adapt programming to the direct market at some point, tapping the growth of the digital market that tom was referencing. people will pay for the bundle, but for those that won't, how do i reach them with this great content? tom, you are staying with us. we are turning to our friend matt miller. matt: we are focused on the fed this morning. ,ank of america, merrill lynch joining us now. michael hansen, we know it was last week, but we saw the
fallout on thursday and friday. the equity markets, is that because of the fed increase? or more because of the drop in oil? like it's the fact that the new post-fed has been less encouraging. a drop in oil, worries like credit. the fed did a great job of making itself non-news. by the time we had the rate hike it was not that big a surprise. year, butme back next they're worried about other things like oil, we talked about that earlier. are the markets may be worried about the trajectory of the rate rises that we will be looking at in 2016? >> i think there is a bit of a gap there. the last time that i checked, the market is looking at more than two hikes for next year.
is three,ase realizing that we split the difference it basically comes down to whether the forecasts are met or not. they are not that optimistic, though the market seems to think they are. i would not be surprised if we get more rate hikes next year. , but if0 chance inflation is a slow to pick up , that could stay the fed a little bit. >> the market has been absolutely obsessed with this rate hike and with fed policy over the last few months now. i don't know how many times i have accessed w.a.r. pmi terminal, but it is getting to the point where we dream about it. will be be able to get away from that in 2016 and focus on earnings and spending? will we be able to focus on other things other than the fed?
>> i think yes, but at the same time as we get closer to the march meeting you will be accessing that function on your terminal more frequently. there are a lot of questions about the pace going forward. the market will extrapolate heavily from the second meeting. people are out there on the one and done camp, those people will have to reevaluate if and when next year. matt: thank you so much for joining us this morning, michael. more coming up after the break. ♪
properties. an unmannedet for rocket from six months ago, land with one they profits as leo -- reusable as airplanes. good business, ever lane known in the fashion industry for its bold commitment to radical transparency. the online retailer offering socially conscious shoppers michael pressman. a darling with millennial's who care so much about how the products are made. couple that with a detailed retail environment where consumers are demanding sales,
discounts, and low prices. how do you marry those? >> i just lost you. to lovee: people seem ever lane in terms of good business model, but retailers are struggling because consumers are demanding discounting. >> absolutely. ever lane started with a basic concept, retailers having overpriced their goods for a long time. the idea was that we would tell people what it would cost to make. telling people how much fabric really is in it line with where the world is going and knowing where your product comes from. >> some compare it to you american apparel, producing right here in l.a., you will see it and they suffered. >> absolutely. for us it's the next concept.
we produce globally, but whatever we do, i think about it more like whole foods. we are producing around the world, working with factories, always going in and checking to make sure that the people are treated well and transparent through the supply chain. it really is a forward thinking idea of where the next generation is going. this idea that everyone wants to whether coffee is from, where their food is from. fear, my concern, how do you manage that if we are facing an economic downturn? a couple ofere are things that allow the supply chain to be flexible. we are online only. thinking about this traditional -- the traditional retailers, they are stuck in this old model and then they always have to bring in new products to change everything. at ever lane we don't have those kinds of issues.
we don't have an online store or collections. if things aren't selling they can sit on the site for a bit. they don't really face the same crutches of a fiscal retailer, always asking for discounts. we got have to give those because we are completely transparent. people know that they are paying a 2.5 markup, where in traditional retail everyone assumes you are paying more of a markup. that's really the big difference between us and them. that collection driven is something we just undo. we have got a couple of pop-ups here and there, but we're really focused on online right now area we don't even ship internationally and there was huge demand around the world. we have got so much opportunity online right now. >> who is that consumer?
even that high-end luxury consumer seems to be buying into your model. >> our consumer is very urban focused and with that nowhere your product comes from, it's a who's interested in making the world a better place. los angeles, d.c., it's all along the coast, we are starting to permeate inwards. >> will you be twice as big next year? say that again? >> twice as big next year? >> yup, big plans for next year, a lot of growth, we are excited to see what happens. >> michael, thank you so much. ♪
coanchor, who looks fantastic today. brendan: my wife dressed me. we just spent 10 minutes in the out, room seeking demographics later in the hour, but first we are going to vonnie quinn. held inthe man being connection with a fake bomb is a retired police officer on an air france flight. today when detained he disembarked after the plane finally reached paris. five suspects are being held today in belgium in connection with one of the most wanted fugitives still among them. the other gunmen in the attack lives in central brussels. after five hours his whereabouts were unknown.
man who led the soccer world governing body for seven years, thinning the president for eight years. fever is facing corruption with officials facing criminal charges. sepp blatter is appealing. you can get more on these and other breaking stories 24 hours today. >> the dow jones mini contracts are up 120 three points. coming off the low, a two-month low, the biggest drop in months. stocks really rebounding today. even though energy continues to fall lower. take a look at crude oil right now, down 1% at 34:35.
already it's down pretty low. energy is going to be holding down today. disney, rebounding once again. they were down almost 4% after they downgraded on friday, but we just had a great interview with bob eiger who said that worldwide revenue for star wars was going to be more than half $1 billion. that will be a record for star wars. probably the first of many that we will see. disney back -- bouncing back up in the premarket. see what it does when the market opens. pep boys, there's been it bit of a bidding war between bridgestone and carl icahn. coming back now, the 1650 bid for pep boys, he already owns a decent stake in the company. say that they think is offer is superior to the bridgestone offer, which was agreed on in october, i think. carl icahn, taking the lead here.
bridgestone will be the next of either hand. either way, brendan, you look fantastic today. you just put on a suit in that's it? brendan: and like a big boy tied. not a clip on. matt: nice. brendan: down to the three stories that matter, none of which being my suit, speculation that suppliers from the middle east and u.s. will exacerbate a glut on market share. u.s., drillers putting the most back to work since july on friday. here's what struck me, right? focused on cost, that's happening in the middle east, a new development. going higher on
brent, there is pressure on producers, even in those areas where it's cheap. i think the real issue is that this is causing a big problem throughout capital markets hitting a high-yield, creating equity market volatility yield picking up without banks reserving for losses on these energy related. if oil stays at these levels, we will have that as well. >> none of this seems like new information. why are we plumbing new debt without new information? >> what we haven't seen is normally oil prices are falling along with the dollar, which has moved higher. that's another side to watch. >> i wonder if part of the problem is that there isn't news. everybody waits for something to happen and they are not seeing anything.
>> the bottom line is it's a futures market, they have the ability to think -- where will we be in six months to a year? back into the 40's. the market thinks that this will recover back up north, which i think is probably the right call , but right now it doesn't feel like it. >> the second story right now? has a the prime minister limited option. spanish government bonds fell pushing the 10 year yield to a five-week high. we got up this morning to the government threat in spain that cause a lot of uncertainty that we thought was on its way to recovery. >> they probably are. was notas looking for where to go with spanish yields, which blew out this morning, but are we seeing this as a larger european problem? they have not.
as it's a spanish problem and not a euro problem or something broader, i think the market can get over this weekly and we are not seeing contagion on the storyline. >> these new populist parties keep coming in new flavors, but the same thing is always true, center-right and centerleft parties in europe that held control are no longer as restrained as they used to be. increasingly you are seeing the center-right and centerleft forming a coalition, which is in what used to happen. grand coalitions from parties on the far right and left being so disgusted but with what was going on. >> isn't it when you have a weaker economy that this is a broader global issue playing out? >> to david's point, i feel like you can look at what's happening and impose structural reform. what they never calculated for inrs to five years ago
europe is that ultimately a population can only take so much in austerity before gets angry. >> it so uncertain, but the two parties coming up didn't exist a short time ago. citizens, i mean. in spanish. >> are we getting inside politics? inms of general investments spain in the last year? those people have been happy with that. >> i think that there is a number of questions. first, this is a more right and left wing extreme politics in being facedthing going forward, the answer is yes . will we see headlines from time to time? yes. point, then we have to get to matt. are looking at governments that really pleased investors in the last year. portugal, poland. they have fallen.
please in the same as the population. >> what does bloomberg have to tell us? >> i want to point out how important the market sees this. i pulled up a whole bunch across asia. you can see that spain has the highest cumulative movement index. shows a seriously the market is taking this. spanish recovery has been impressive. if some crazy coalition gets that could beof for naught. >> you don't see other european countries way up there, at least as of now. >> these kinds of political actions have the potential to spread. named the being
newest british finance minister on friday. investors do not seem convinced that he can turn it around. stocks closing down 3%. right now stocks are little changed. if you think about the corruption and the problems , it's hard tord say that changing one person job -- don't forget, you got the ceo -- i'm not sure if he is out on the jail of point, but arrested. >> i would have flipped the story and made this the second one. spain is ultimately a stable and underlying environment compared to brazil, where putting aside the politics you have over 10% inflation in an economy that's contracting severely with commodity prices tumbling, basically taking the four out from their underlying economy,
with governance problems not only in brazil but in south america, causing problems. this really is a much less stable type of situation. >> this movement is not about barbosa himself. and highlyonfident respected finance minister before. it's a sign that this is not going to happen. austerity going forward isn't going to work. you have a government incapable of reining in spending. the central bank down has an even harder job. >> that is what matters the markets now. >> that might matter to markets, but this is what matters to me. saturday night, paul mccartney on "saturday night live" with bruce springsteen singing a rendition of "santa claus is coming to town.", new royalty,
tina fey and amy poehler were hosting the show. the east street band also debuted meet me in the city in their first snl performance in 13 years. fey,ning combination, tina bruce springsteen. paul mccartney. >> you cannot get better. stephanie: this was like -- christmas came early. when we come back we will take a look at when we were up and down in premarket trading. stick around. ♪
vonnie: welcome back to "bloomberg ." and crude, touching an 11 year low, the global supply glut is not going away anytime soon. buyers keep buying for market it could get even worse. at a meeting earlier this month. to sheila receiving a record loss in the current fiscal year after the aftermath of an accounting scandal. businesses, some 6800 workers will be let go in indonesia. >> we have a number of upgrades
to talk about today. from $10 to $14, the new price target is 14 lower than the street consensus, updating the stock to a market perform. take a look at apple stock settling a dispute with ericsson and now apple is going .o pay royalties technological partnerships, they put out a big announcement today. iphone sales flat year-over-year, watch apple in the market today. finally, raised to a top pick at rbc.
the theme park has been a great is this for them, a solid business for the industry overall. disney is within making a huge commitment and i have heard him say that this is as big as opening up disney world 40 years ago in orlando. a huge step for disney and china. >> no one can milk the value of these types of things like disney. it's not even just the box office, it's the 10 other things that we are thinking about that they will do to monetize does. stephanie: even going back to star wars, when you think about the first time there was ever consumer product type to a media company, it was star wars. classic for such a new phenomenon at the time, they
weren't even prepared. the toys were ready when the demand his. i'm lori -- the worry -- i'm interested in the idea of not just like a movie that is needed several years ago, but buying a universe. this is what they did with the marble universe. i went to see star wars and there was a trailer for another marvel movie. -- how vast what is can just get? once you buy a property like that, how many ancillary movies? stephanie: it's a far-off galaxy, man, you already answered your question. [laughter] >> think about all the marvel characters they have already mind. stephanie: are they seeing diminishing returns? -- would like to give you like me to give you the numbers? [laughter] their bigisney is that. bob mentioned that he's been working on this deal since 1999. robert: it is bigger than that.
bigger than we thought it would be yesterday, as a matter of fact. sunday, yesterday, winding up stronger than we anticipated. it is more likely to be in the 247 range domestically, even higher international. we expect the total -- total global pick for the weekend could be in the neighborhood of $528 million. david: what are the big projects you are excited about? technology, theme parks, movies? robert: i'm trying to absorb this little film. [laughter] appreciate it a little bit. but the biggest priority for us is shanghai disneyland, as a company. but we have a very strong movie slate on the disney front, on
the pixar front. we have a sequel to captain america at marvel. "civil war," by the way. filmser of great disney coming out with a remake of "the jungle book," and "alice in ." there areo." --2 a lot of priorities, as a company. certainly for me, shanghai disneyland looms the largest. about august, september, stock did come down significantly and in most people's reporting it was tied to espn and a possible loss of subscribers. i thought it was over reaction to what we had said,
but the market is the market and it's clear that television is dispute -- experiencing some disruptive forces, should we say? lord knows. but it's clear that that's happening. there is so much more competition, choice for people's time. that is putting pressure on television to be great, obviously, and to be a great value. the price to value relationship has to the great and the user experience has to be great. if you are in a market that is being disrupted obviously you want the best out there in the disrupted market. including, obviously, espn. if you are in a market that haveing, you would rather a strong hand. i said -- what's better than espn in that regard?
the value is really important. the licensed sports that espn has, the brand of value, the , that's really important in these decisions, even in a market that is being disruptive. we feel that in the long term we will be just fine but we refuse to have our head in the sand or be pollyanna-ish about what we see in the marketplace. we believe that there is disruption going on ahead. we are spending a fair amount of time on the market. obviously, espn is, we believe, something of great value in this or -- this disruptive world. >> the big problem has been concerns about that, but disney
still rules the roost. we been on here with dve nn. i have grafted their operating -- this issus discovery, in yellow. amc network. 21st century. comcast. disney still has a much higher and is stillenue climbing, obviously, more than their cable competitors. revenue, yes. >> what i took away from that is that he has a lot of tools in his toolbox with a big challenge. >> yes, as is their biggest profit generator. you could argue that they have , but i thinkose that what the bulls will tell you is that this is a riverside showingwith segment extraordinary growth. all street tends not to put multiple on the film business.
it's hit driven. look attep back and their pixar, marvel, star wars properties, they have five years of film slate a sickly set to go and investors are starting to discount that cash flow stream better than typically. >> five years of films left to go? [laughter] if youre: what happens new project is a big budget deal, you have no shot getting it done? else, often.ewhere no time to get on disney schedule. other movies are getting done, but it's a crowded schedule and a high bar. you have to get a movie they will think will be star wars or marvel. stephanie: good luck with that. ♪
when you're on hold, your business is on hold. that's why comcast business doesn't leave you there. when you call, a small business expert will answer you in about 30 seconds. no annoying hold music. just a real person, real fast. whenever you need them. so your business can get back to business. sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. stephanie: might be the right morning to call it a comeback. you are watching bloomberg . 20 seconds away from the market open. a big selloff friday but futures
are already up big. green across the board. this could be the day that investors start to say, is it a buying opportunity? they have to to shut down their books in less than two weeks. nasdaq, nyse open for business. business never closes in the distressed market. they are open all day, all night. this chart illustrates for you, the third worst pullback in 35 years. on the 2008 crisis. we need to find out what is causing it. how long will it last and is now the time to buy? let's bring in victor khosla. his company strategizes in distress. jonathan golovin is still with us.
victor, is this a time to be sitting on dry powder waiting to buy? victor: we have started to buy. starting 10 days ago, we started to make investments, very selectively. you do need dry powder to do it, obviously, and the investments we are making are really outside energy, natural resources. stephanie: so what are they? victor: buying and debt on toll roads in spain, liquidation of large austrian banks. stephanie: are these high-yield public bonds? victor: high-yield corporate bonds. brendan: [no audio] stephanie: how long is your investment time horizon? victor: three years. nothing in the distressed market is liquid. especially over the last month.
this market is very ill liquid. stephanie: you started buying 10 days ago, are you buying on the heels of 3rd avenue liquidating? victor: yes, we are. is this a distressed energy pullback or a pullback altogether? victor: in our view, we are in a liquidity air pocket. high-yield has a lot of hot money in it. 25% of the high-yield business is high-yield mutual funds and etf's. it used to be 12% five years ago. at the same point in time, liquidity providers, the investment banks have a lot less capital. when you get into a market where people want to redeem, you get this kind of discontinuous price behavior. gradual trading markets all the time. somebody wantske
to sell, where is the clearing back in 2008,e: that is how it was going down. goingof trading desks through an entire portfolio, what do you want to buy? or is it simply sell side traders saying i have this to sell. victor: it is somewhere in the middle. --t you have today perspective. you have high-yield spreads. this is not 2002 where they are 1000 over, 2008, where they are over. 2008 would be to misplaced. a little bit like 2011 where you had the european system in crises. >> talk about the performance of underlying debt. our companies making payments?
then you have to separate that from the energy sector, other parts of the market. which is a liquidity problem versus an underlying business problem? stephanie: we think the commodity businesses, oil and gas, if you are competing with china [inaudible] hard to predict when you have stability, when you have a turnaround. once you are out of those businesses, looking at classic industrial manufacturing businesses, which makes stuff in the u.s. and europe, you look at toll roads in europe, all those businesses have little to do with the stuff that is troubled. become soselloff has much broader, it is affecting those kinds of investments, too. that is where most of the opportunity lies. >> is that an etf owner selling
the yields, throwing the baby out with the bathwater because of the lack of liquidity, and everything sells off, or is there something else behind the contagion? victor: a few underlying trends which were already there. european banks are bigger and bigger sellers. they are late selling. we think they sold 100 $50 billion in distressed paper in 2015. now mary that trend with what just happened with a selloff in energy and commodities and how it's gotten much broader with this liquidity air pocket. those two things come together, and that is what is giving rise to this opportunity. stephanie: we have some news to break. matt? that martinearing shkreli has been terminated as the ceo -- stephanie: was he ceo or was he on the board? the headline from
november, desperate pharmaceutical company hits rock bottom, names martin shkreli as ceo. he served all of one month. david: this is a publicly traded company. matt: they did, they halted the shares after the news came out. it is a penny stock. it is worth $50 million after that. stephanie: also a board member resigning from his position. it seems like people do not want to touch this toxic situation. matt: there was a hip-hop journal that had an interview with him the other week. stephanie: off of his acquisition with the wu-tang album. matt: he sort of threatened rza that he and the other albanians
would get back at him. stephanie: a lot of this points to the fact, is this someone that ask with any possible risk management or mature decision-making process? more than anything, he wants to be a producer. you just got back from europe. stephanie has a question of the morning -- we were talking about spanish politics. but does it matter to an investor? when you look at the populace and moving around europe, does it matter to you? does, in a way. i'd like to step back from the daily spanish political news. in our view, over the next five years, there are these cracks, fissures running through europe. whether it is catalonia, there is another one every year or two. europe is very unstable. .here will be a new one
when you have politics, when you have economics that do not go hand in hand the way to eu is set up, it gives rise to these kinds of bricks. david: they never fully integrated, which makes them inherently less stable. victor co.'s luck, thank you for being with us. khosla, thank you for being with us. matt, what happening in the markets? up .75%. dow is two monthets had hit lows on friday. this is a little bit of a rebound. , it wasook at the imap pretty exciting. we saw a breakdown of the industry sectors on the s&p. a brief moment, we saw a red
piece of the pie, energy. it is really the only energy sector that is. financials are gaining, i.t. -- nine out of 10 are up. energy is the only one slightly down. about 1%.down ever closer to a 33 handle on oil. 2%,t crude moving down $36.16. we have not seen wti this low since 2009. brent crude since 2004. natural gas up 5%, but from a very low level, off of a 16-year low. take a look at metals, up across the board. gold rising 1%. because of the weak dollar. silver gaining as well as copper. take a look at disney, everyone talking about -- hopefully no
spoilers at the water cooler -- the new star wars movie. a rough day in trading on as the but now up 1.3% company brings in half a billion in revenue. abigail doolittle is at the nasdaq with more on apple and ericsson. abigail: shares of ericsson are popping this morning after it was announced that he communications company and apple have settled a legal dispute over mobilephone patents. the companies reached a seven-year deal under which apple will pay ericsson royalty agreements. happening,ation perhaps removal of this overhang issue, which will help ericsson move back toward your eyes. apple is also moving higher in the context of what been a difficult december. the stock was down 10% through friday amid weak demand for the iphone, but tim cook was on "60 minutes" last night, and perhaps
he was accused of rating public companies to [indiscernible] couldts say the money boost evaluations of uber's rivals. indicatelings did not [indiscernible] pat bowlers says ford is determined that an offer from carl icahn is better than a competing bid from bridgestone. both want to buy pet or to take advantage of strength in the u.s. auto parts industry. bridgestone is to make another proposal by wednesday. that is your bloomberg business flash. have some breaking
news. lindsey graham has suspended his campaign for president. i just took a look, he was at 1%. the question was when were the established candidates going to back out of the race? not a huge surprise. anyone who has been following the race, he has not been on the main stage debate for a while. the question is when the other establishment candidates bow out. stephanie: where do his votes go? bush?n: jeb we have a presidential election next year. jonathan golub is here, but you are not here to talk about that. two or three central-bank moves in the last several weeks. they basically all wanted to do the same thing. we don't know when we will need to he's in the future, so let's hang back now, keep our powder dry. we may need tools in the new
year future. what do you see as the downside risk that these three are worried about? jonathan: the first question is does any of this matter? we don't believe in communist central planning but we believe central banks, through optimizing its perfect monetary policy, can push economic activity forward. i'm not sure that is as true as we think it is. if zero rates are not helping, getting back to something that is a long-term normal, which is what the fed is beginning to do, is probably healthy. is risk when the fed moves that the dollar gets strong, and that is destabilizing for the economy, pushing commodity prices lower. eu andu saw out of the they kept in japan, the dollar from getting too strong and perhaps gave janet yellen some room to read allies
policy. aboutn: if we are talking underlying developments, everything that we have been focusing on, as you say, is whistling past the graveyard. what is the underlying macro dynamic we should be paying attention to? jonathan: demographics. we have this assumption from when we grew up that the world will have more and more people, and therefore, we will run out of resources. in reality, people are having fewer babies, more retirees. the size of workforce growth is slowing. that is waiting on economic activity. we also had an interesting thing happen in the 1960's, women flooded into the labor market which boosted economic activity. the whole process is done. it's women want a job in the labor market, they largely have one. therefore, that surge forward is not continuing. --athan: in the u.s.
brendan: two completely different stories. what is the difference between the developed and the developing world? jonathan: obviously a difference in that the developing world is younger, but their birth rates are falling the same way they are in the developed world. brazil right now has a birth belowf 1.9, which is replacement. we think we are going to get all these immigrants coming from places with lots of babies, moving to the developed world, but that's only true if they continue to have high fertility rates. david: demographics being so important, what does this say about india, what does this say about the refugees flooding into europe? aboutan: if you think investment, you want to be where the growth will naturally be.
india is really the center of population growth and economic potential. so is sub-saharan africa. i know you are rolling your eyes because those areas have not emerged, but that is where the growth is. stephanie: without a doubt, growth opportunities, but you need to pair that with your growth horizon. that is where investors get themselves boxed. there will be great growth on a toll road in spain. i'm not saying specifically victor khosla but then from 3rd avenue, but it is those kinds of ideas. espn, where are they going to grow? in spainsay toll roads and sub-saharan africa, people get excited. it is more about liquidity and the timeline. immigrants around the world are more likely to go to the united states, u.k., other english speaking centers. if you are a scientist or cap
driver in sao paulo, there is a good chance you speak english. the english-speaking world is more likely to attract those high quality immigrants, as opposed to other areas. i dig to differ on the cab driver in sao paulo. matt has something. matt: watching for oil and dropping lower and lower. lowest levels since february 12, 2009. just another leg down this morning. we have been seeing this pattern . mornings are tough basically, for the oil markets, at least in new york time. right now we are looking at $ 34.04. is this having a positive effect on the u.s. economy, do i have more money in my pocket to see the new star wars movie or take a trip to disney, or am i just
too bummed out that my uncle lost his job at an oil well in north dakota? which way is it falling? jonathan: no way to look at this other than lower oil prices are a headwind for the market. there are a variety of reasons. victor is looking at the high-yield market, which is obviously under stress because companies cannot survive with lower oil prices and are losing money. have ledat banks that to energy and industrial companies, material companies, that are part of that ecosystem. they have a hard time when oil is lower. it's also a sign for many the level of economic growth in the u.s. and around the world, and that is read by executives as a problem and is likely to lead them to pull back. i would like to say that we are all saving at the pumpkins bending money, but from
what we have been seeing since the movie opened on thursday night in the u.s. is word-of-mouth, particularly among women and young people has been extraordinary. the audience has gotten more diverse as the weekend progressed. in a world where there is far more content or intellectual property, much more choice, great stories still hold their value and actually stand out given all the choice that people have. isis clear that television experiencing some disruptive forces. there is so much more competition, so much more choice theyeople's time, how muc spend their leisure time. something ofpn is great value, even in this disruptive world. stephanie: how big could china be? twort: it is the number movie market in the world, will be number one in a few years,
sooner than everyone anticipates. we are bullish on china. the chinese customer represents great market for our company. we are building shanghai disneyland. stephanie: we have to take a look at the stock. bob was speaking, the stock was up, but a turnaround. matt: the stock is now turned negative. i thought it was interesting. i pulled up the social velocity monitor. on social media, a lot of people are saying sell the news. i will say, by the movie, big time. our thanks to jonathan golub. ♪
from bloomberg world headquarters in new york, good morning. here is what we're watching this hour. spain's prime minister mariano rajoy wins the election but loses his majority. spanish stocks and bonds are falling as more uncertainty looms. global oil prices continue to tumble. it burned now reaching to -- brent reaching and 11-year low. we get box office results for "star wars: the force awakens." out of this world are the numbers. an exclusive interview with disney chairman and ceo bob iger on a successful star wars, and what is next for 2016. we have some breaking news on the housing market. let's go to the markets desk.