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tv   Lunch Money  Bloomberg  February 21, 2014 7:00pm-8:01pm EST

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>> welcome to "lunch money." he will tie together the best stories. i am adam johnson. it's got to be the suit. u.s. speed skating gives under armour something to cheer about. top model citizen, there's more than meets the eye. we will meet the real-life lady of downton abbey. we will kick it off. it is a big development in the ukraine. >> after three months of
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conflict and 77 protesters killed. a deal has been reached. it will read turn the old constitution. it will also include a new government within 48 hours. >> the deal was brokered during all-night sessions with three european union foreign ministers. that is him cited the deal and surrounded by the opposition leaders. the deal includes presidential elections by december. on an up and it's people were not so sure. here is a bloomberg reporter on the ground. >> people are angry and skeptical. there was too much blood. at least they did not want to be
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seen as accepting this deal. they want more. they what his resignation. >> exactly. i have stand at the barricade. before the government, people can see building those barricades up. >> the opposition is still building up its barricades. our reporter says those in the east are also skeptical. >> they're very little credibility with the people of ukraine. they have violated and pushed hard by putin and the russian government.
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they are in a confrontational stance with the use force. the dilemma here is that ukraine is a badly divided entry. there are millions who want to see their country have a western orientation. there are millions who want to see the traditional ties to russia. the country really needs time and space and a civil dialogue and some peace to negotiate and argue these major philosophical divisions in the country. that is not with the government has given them in the last several months. >> recognize differences in the ukraine run deeper than a simple handshake. there was this scuffle in parliament early this morning. there is a deep divide in the ukraine. the west is pro-european, the west is pro-russia. >> this goes to the heart of the issue. what will russia become over the next decade or so?
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right now putin is embarking rush on some sort of a celtic -- not celtic and irrational imperial restoration. this is centered in moscow. it would be a restoration of the soviet union minus some european portions. >> russian president vladimir putin is behind the curtain. this is with trish regan earlier today. >> russia has been encouraging the ukrainian government to use force and crackdown. they have used financial leverage. the russians have been playing a very difficult game. they are playing for keeps. it is really a struggle between russia and the west for where the ukraine will lie. >> that brings up an editing
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point. we have had so many struggles. do you get a sense that this is reminiscent of another time in our history, the cold war? >> i think there are vestiges of it. putin was formed as a kgb officer in the cold war. he takes a zero-sum montana -- mentality to politics. if someone else wins, russia loses. putin wants them to not have an open relationship with europe. he thinks russia needs to have a wider sphere of influence. he went ukraine to be tightly linked to russia. it is a great battle for the future of this country. you are seeing it play out in the streets.
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one would hope this agreement old and a cease-fire can hold. >> this is lunch money on
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bloomberg television. we are streaming live on three businesses and three challenges. we will start with under armour. they are getting over a pr migraine. members of the u.s. speed
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skating team complained that the companies high-tech suits or contributing to their bad performance. no one on the team meddled. they were expected to intend metals. the company signed a deal extending its sponsorship of u.s. speed skating for eight more years. it was due to expire later this year. under armour will be the exclusive provider of competition suits. we spoke to the cos week, this is an important relationship. >> we have had this relationship since 2011. we have had a great relationship. i want this to be perceived as anything other than trying to figure out what we can help -- do to help our athletes when. >> another ceo is getting a
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payday. he took him $14 million in compensation. this is his first full year of running the company. that is a 25% pay raise. he seemed to have earned. citi's profits went up. >> we have gone through a significant transformation of our company. we have taken it back to its roots. these are the things that come with it and what we can do for our customers. when we look at the exit out of the asset management business, we shed things that did not fit with who we are and what we want to be. >> look at how his pay stacks up against other big bank chiefs. lloyd blankfein made $23 million. bank analyst mike mayo said to
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sell citigroup in 2007. it was a homerun. it plunged to $10. they told to buy it when corbett took over. he still says this is a buy. >> during the emerging market crisis of the 1990's, citicorp was it three times tangible book value. it is 90% lower than it was before the crisis. you have new management a little over a year ago. they are running the company less to be the next growth stock that did not blow up. all afternoon is not blow up. >> one threat to citigroup blowing up is volatile emerging markets. this could prove a big win for citigroup. >> they are guilty until proven innocent.
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emerging markets are down. citigroup stock is down. last decade, what did the stocks do? they doubled. citigroup was down 90%. they aren't all created equally. the cell was close to $500. >> that is pretty good. do you think he will try to scale back on emerging markets? >> that is great timing. consider where citigroup is a big. it is mexico, hong kong, singapore. they characterize hong kong and singapore as emerging markets. they are based in hong kong. that is a legacy, a bad legacy
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of the prior ceo. >> you like their exposure. what about the valuation? >> would you look at five prior crises, they have twice as much capital and one half to one third of the valuation. citigroup is going to hire quality customers. this could be their finest hour. >> recognize that local. it is herbalife. they been the target of activist investors. he has called it a pyramid scheme. the shares have climbed one hundred 57% since the end of 2012. his herbalife that has become the biggest loser of his investment firm.
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persian square capital has lost 49% on the herbalife investment. >> we focus on that was stock price it on any one day. the business of herbalife is telling the story with red letters. we want people to know what the issues are. we were forced out of the trade. we replaced the position with credit swaps. we keep going. this is not a trade. we're going to take this to the end of the earth. >> to the end of the earth. the company is still facing a lot of questions about its business in washington. >> executives will miss with staffers. it is not a specific committee or member. just staffers in general. we know from herbalife that they will be meeting with at least two executives from our life.
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they will be making their pitch as to why this business is legitimate. they will be hearing from the cfo. they will also be hearing from a managing director of herbalife north america. there'll be a representative from that group speaking. this is not the first time herbalife executives have sat down with staffers here on capitol hill. they met with senators back in january. >> the senator asked to address the compensation system. the survey results underscore its legitimacy and the value of the products. >>uver expensive oruber smart. there is a san francisco startup that is looking to reboot your commute. ♪ >> consumers love american
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cars. >> jim is looking for 10% sales growth in china. that is fantastic. it is started from a high bar. other companies are just getting their foot in the door like ford will see explosive growth over there. they will see what he percent, 40% growth. they're coming from a lower bar. gm has a great foothold. >> there is concern about the economy slowing in china. how does this affect a car company? >> if they only had seven
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percent growth, that would be a disappointment. there is still an exploding auto market over there. you if they have some slowdown and overall gdp, what pushes the growth is the burgeoning middle class. so many people for the first time can afford to buy a car. they're not going to buy a big cadillac. they can buy a malibu. >> financing for a lot of these very it. >> it will be whatever the chinese government decides it should be. >> uber is the cover of this week's the -- this is week. >> they've raised $300 million. it is growing everywhere. it will be in 100 cities by the
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spring. i guess here in san francisco, we are the nexus of these things. you have sidecar and lyft. i did not understand how quickly they can spread. group them -- groupon did not end up very well. uber seems to be growing with some discipline. >> here in new york, uber seems to be a product for the wealthy. the average dude on the street is not going to have an uber account. >> it was a town car service. it the strategy was always to go down market. different cities with different environments for regulation require different services. uber was disrupted by left and
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sidecar. they lowered prices. for a much like amazon, the idea is to get a lot of supply out there and then use it to lower prices. i agree, it can be more expensive than a cab. especially with the surge pricing where they jack up the rates. >> let's get beyond the controversy and talk about innovation. the san francisco startup is trying to electrify your commute. emily chang texas for a spin. >> from the front it looks like a normal electric scooter. from the side, it is anything but. a big hole in the middle of its frame means it has as much trunk space as a small car. >> it is a pickup truck on two wheels.
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>> he is the visionary behind lit motors. they of two prototypes in the ropes -- works. their other vehicle looks like something out of a sci-fi movie. it is part car, part motorcycle. it will cost 24,000 dollars. >> take the safety of a car and marry that with the efficiency of a motorcycle. >> it is electric, but at just $6,000, it is one fourth the price. >> car startups are tough. they take many years and money to get a car on the market. it -- they hope to get both vehicles into production this year.
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>> i'm developing a car for me. >> do that, he has designed -- teamed up with a design guru. >> i'm excited to really look at the complete package. how does this new vehicle become attractive to people who know and ride motorcycles and people who never have. >> kim and one of his engineers are working on the prototype. as traffic and gas prices make owning a car less desirable, list is ready for the fast lane. >> we are creating a new class of vehicle for any kind of short commute. >> emily chang, bloomberg, seven cisco. >> building a bridge between modeling and philanthropy.
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washington's nonpartisan number cruncher finds himself in a bad situation. ♪ >> this is lunch money on
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bloomberg television. we are streaming live on, your tablet and smart phone. i'm adam johnson. today's moving pictures -- video is the story. venezuela moving large demonstrations this weekend. as comes after a week of violence that has left six people dead and over 100 injured. it hits student protesters against the government. leaders of the opposition movement face jail in military prison. more than 200 copies of the diary of anne frank were vandalized in tokyo. the books had pages torn and in some cases ripped out
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completely. so far, 31 libraries in tokyo have reported damaged copies of the book about a young holocaust victim. police are investigating. beijing raises its air pollution numbers. children and the elderly were advised to stay indoors during the elevated alert. washington's nonpartisan scorekeeper finds itself in the middle of a very partisan fight. >> first it was the obamacare employment numbers, now it is the minimum wage numbers. has generated -- it has generated a lot of controversy. republicans are seizing on the job losses. then they say if you do that, you run the risk of 500,000 people losing their jobs. they also say, listen, it could be as few as zero. >> there is fodder for both sides. polls show that two thirds of americans support an increase in minimum wage. a former partner at bain capital disagrees.
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>> it is much more efficient to lift people out of poverty with an earned income tax credit. we transfer $31 billion in report. only $5 billion of it ends up with families in poverty. you're somewhat unaffected. you see your demand go down a bit. what ends up happening is you are taxing the customers at fast food restaurant to tend to be younger families. they will hand the money to workers. in the case of a single mother who works full-time, it is 65%-95%. we will pass down from the poor families to the richest part of the economy. it is skewed towards the richest people. >> the cbo report did not show that. i can see your logic on that. the cbo report actually showed a
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net transfer from rich to poor. a robin hood move. >> it shows a $31 billion transfer. it does not take taxes into consideration. throughout the report, they caution that they have not taken taxes into consideration. what i'm describing is just overlooked by the cbo report. only $5 billion and up in the pocket of families in poverty. 20% of it -- 30% and up in the richest households. >> businesses play a very big part here. gap is actually on board with this. walmart is considering it. here is the former chairman of the white house economic advisers. >> graduate increases over time do not have an adverse effect. i'm very comfortable with the range we have seen in the past. the president proposed raising it to nine dollars over two years, which would bring us back up to where we were in 1981. i was quite comfortable that that would have beneficial effects for low-income workers.
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companies be able to absorb it. >> here is an example of one city that raise the minimum wage. >> in san francisco you saw a shift in the composition of workers to hire skilled workers. you have a net reduction of 500,000 people in employment, a lot of what the walmarts and burger kings do is search to -- switch to a $10 an hour employee as opposed to a seven dollar an hour employee who was a single mother. the sensitivity for the least skilled workers is three times higher than it is for adults in general. >> you think it will wind up hurting -- >> the reason why you only get 500,000 reduction is a lot of those guys don't have jobs today. >> at the end of the day, it's all politics. obama is using this as a wedge issue heading into midterm elections. it is something he can bash
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republicans over the head with. it will probably not pass congress this year. even before the cbo report and now most deadly because of the cbo report and some of the details in here, this will always be a heavy lift. for democrats, it is still a political winner. >> coming up later on lunch money, the ambassador of goodwill. on helping victims of natural disasters. the real resident of downton abbey. she talks about the members of her family that have been immortalized by tv. that is next. ? >> this is lunch money on
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bloomberg television. i'm adam johnson. today in pop him a beauty come inside and out. she just made her seventh
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appearance in the sports illustrated swimsuit issue. she is also using her permission -- position to help victims of natural disasters around the world. >> it was a really incredible launchpad to be in si and become three-dimensional. in this progression, you are two-dimensional. in sports illustrated, it gives you dimension. it lets you know who you are as a human being. landing on a cover, you have a whole new world with many doors and windows open. it is a really amazing gift. my dream is to do work in philanthropy. >> when sports illustrated came to you for this issue and they said, we want you to participate, you had a business proposition for them. >> i had the business opposition
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-- proposition to be long-term partners. there has to be willingness from sports illustrated to do that. the editor was like, i want to do something meaningful. this year on the 50th anniversary, it was the perfect timing. it is a business proposition to really take -- make a partnership. they have been willing to support me while i was in the hospital. they had the launch of their new issue and had a party and i was in the hospital and they called me up and i spoke to someone on the speakerphone and they were raising funds to support victims of the 2004 tsunami. they were the first organization
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ever to support it. it is amazing to continue this relationship and now i'm making it official for si. we are so honored and we have many goals. we have many schools. through our partnership come it is not just about awareness. it is about taking action and really building those schools. anybody can answer to conflict and go to happy and enter the raffle. for five dollars, gives you an opportunity to be on the next sports illustrated cover photo shoot. it has never been open to the public. it is really amazing to help to rebuild schools. >> she also has a message for the critics who say that the
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swimsuit issue identifies women. -- objectifies women. >> every woman is born with a curse. we have to embrace it. being in sports illustrated, it makes you more powerful. it makes you feel empowered. we were on the cover, and is a whole other level. heidi klum became an amazing businesswoman. they are all very smart. to reach that level, you have to be a smart business woman. it empowers you. it gives you this tool to fill in with your skills and be uplifted. >> an interesting fact about
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her. her primary residence is in haiti. coming up on lunch money, robert murdoch buys a place in the sky. four floors. we found a basement in colorado that can survive a nuclear attack. we will take you there. ♪
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>> this is lunch money on bloomberg television. we are also streaming live on and your smart phone. we started 1 madison ave right here in new york city where rupert murdoch has just made a notable purchase. the news corp. chairman has agreed to buy a penthouse 60 stories up. and another full floor right below. he will have a wraparound
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terrace view of both rivers and downtown. total cost -- $57.3 million. slightly more expensive that a $400 million, the downtown happy home. home of the british tv series. this is not for sale. we did get to meet the lady of the house. she joins us on surveillance this morning. >> it has been an amazing ride. so lucky. it has become one of the most famous houses in england. we have had weddings, conferences, residences -- and it did turn -- an egyptian exhibition. >> you had a new york times bestseller -- your first book. you have a second one. this is about lady catherine who was the american who came over and inspired the character on the show. >> this was a love match. catherine was an american born in new york. she is descendent of a famous
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virginia family. the lee family. she stayed in williamsburg. she came over in 1922. >> part of the plot is how hard it is to keep the estate running and what they are doing to not sell it. talk about how that is echoing what is going on for you. >> it echoes what we all try to do, to not sell and work out different ways of making it. >> how much does it cost to run the estate for a year. >> there's the castle, the woodlands, this property. it is slightly bigger of the portfolio business. the castle itself is pretty expensive. the insurance alone would make
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you blink. >> we have such stereotypes of the so-called aristocracy of the united kingdom. if you had one message for americans about how you live and what we get wrong about it, what would you say? >> we work quite hard. >> it's a full day. who is the evil made? -- evil maid? do you have a mrs. o'brien? >> is there a thomas around somewhere? >> some people have been with us for over 50 years. quite lovely people. >> back to the u.s., there is a strange real estate listing that is appeared in yellowjacket. an 11 point $5 million super bunker that can withstand biological and nuclear attacks. here's what we found. >> we believe in being prepared. so that's why neighbors call me jacked up jerry.
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>> he lives a quiet road in yellowjacket, colorado. population, 183. in 2002, he bought a decommissioned at&t relay tower from the cold war era. he spent the last 12 years and roughly $7 million building it as the ultimate defense against just about anything. >> what we have here is solid concrete. we have a five foot slab, a monolithic door. the building will move, but stay intact. it would take a drone dropping a rocket to penetrate the facility. it will not be your local law enforcement people. the neighbors think i'm psycho
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or crazy. the law enforcement guys say, i know where i'm going when things meltdown. >> it's his history and working in risk assessment with nasa and the world trade center that taught him the first rule of safety. having a backup plan. that's why his home has four layers of redundant walls, six separate sources of power and a uv air filtration system. >> everything that comes in is burned with these lights here. you do not want to stare at them because they will burn your eyes. >> unlike most survival list, he wants more than just his family and his ultra-secure home. he won celebrity. his long-range goals for the facility, a five-star restaurant. >> on the very top of the deck there will be an all glass restaurant called fire in the sky which is a benihana type theme table in the middle. >> he seems positive about the
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future. there is one thing he still finds troubling. >> you're a long way away from a big mall. >> you better hope you have some entertainment in a nuclear bunker. this is today's mystery meat. >> ew. >> you're pretty strong. >> thank you, sara. i do try to exercise everyday. >> really? i think exercise is ew. >> exercise is not ew. ♪
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>> it is 56 past the hour. bloomberg television is on the markets. i'm olivia sterns. stocks ended near session lows. after the central bank indicated they are unlikely to
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slow the pace of stimulus cuts. flat, slightly down for the year to date. treasury yields coming down today. bonds rallying a little bit. at 2.7%. this after a report showed that existing home sales fell five percent. let's also take a look at some money movers. gold futures snapping a two-day losing streak. concerns about the strength of the economic recovery sent investors flocking. up almost 10% so far this year. what on the other hand fell for the first time in six days. last six weeks.
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it fell today on speculation that the recent run-up is not genocide -- justified. different story for natural gas. futures gain for the second straight week. another arctic blast is expected to hit the midwest next week and then move east. used to heat many homes in america. the cold and wet winter weather has been depleting inventories. it is time for the insight in action. adam johnson has a look. .> real simple if you have it, spend it. time for a little insight and action. look at corporate america. assets.a percentage of great piece of research. 4.8% cash. this is about as high as we have seen.
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the average, 3.7%. companies have a lot cash. that's important. the question is, how do they deployed? there is capital expenditures and research and development. most companies do that practically every year. year in and year out. where do you use the excess cash there are currently 199 companies that are buying back stock. 416 that pay dividends. look at acquisitions. a total of 912 acquisitions. that's a lot of acquisitions. why? they get rewarded in the stock market. take a look at this. buyers outperform. we think the team over a strategic research. they compare companies that have gone out and done acquisitions and compare their stock performance. look what happens. 20 days, 40 days come 60 days after the purchase is announced. up five percent versus the s&p
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500. it is counterintuitive. he go and spend a lot of money, you should be specialized -- should be penalized. no, you are growing. what about the big reveals we have seen over the past week? bio for slabs up 6.5%. facebook up 1.3%. comcast went down 2.5%. >> adam johnson. .
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