Skip to main content

tv   In the Loop With Betty Liu  Bloomberg  May 27, 2014 8:00am-10:01am EDT

8:00 am
," and ih "in the loop am betty liu. we are starting with baseball -- should ben bernanke be the new commissioner? we will discuss that with leo hindery. lots to talk about with leo. here is a look at the top headlines. china is hiring a later shot in the dispute over ciber as --. the chinese government -- espionage. the chinese government is urging companies to dump their ibm servers. wilshire is in the midst of trying to acquire pinnacle foods. last friday, the s&p closed over 1990 for the first time ever.
8:01 am
in ukraine, billionaire petro poroshenko is celebrating his victory in elections after more than 50% of ukrainians tabbed him to head the next government. ryan chilcote is in kiev. this is extremely important vote. what we know about the new president? >> good morning, betty. what we know is he is worth by our estimate about $1 billion. his claim to fame is making and selling chocolate. good businessf sense and political sense. he was a politician as well. he was the foreign minister under a former president and the minister under the former president viktor yanukovych, who we heard a lot
8:02 am
about at the end of december. he was the first and only billionaire, oligarch, if you will, to join the protesters in calling for viktor yanukovych to step down. this guy has thrived in a variety of environments. president putin, and he thinks he is someone that he can deal with. clearly, with the conflict between the ukraine and russia, that will be challenging. >> there is also an increase, and unrest, since the elections, ryan? >> that is right. he made it very clear he plans to unite ukrainians, and the first thing he did, even though he is not the commander-in-chief just yet, just the president elect, but sign off on a ratcheting up of operations in the east of the country, which
8:03 am
is interesting because the kremlin warned them not to do that. the ukrainians have not just ground troops, but they have warplanes, helicopter gun ships, and they have been fighting rebels in the east of the country very actively, reporting that they have killed dozens of rebels just today, in addition to taking back a regional air force -- airport that the separatists took yesterday. he is showing he will not roll over in this conflict and not let this happen in the east of the country take that part of the country either. >> ryan, thank you. you will have so much more for us from kiev. ryan chilcote. pfizer pulls the plug on making another for astrazeneca, losing out on a major overseas tax break in the process. but give other companies are lining up to consider the same move. there is no sign congress plans
8:04 am
to stop companies from doing that. peter cook has more. this deal is dead. pfizer saving taxes by moving headquarters overseas, but a tax break continues to live on. >> the inversion break lives on, no clear sign congress will move anytime soon. one of the selling points of the pfizer-national zeneca deal was the tax advantage, that they could take over a smaller foreign company, and effectively and operations overseas reduce the u.s. tax burden, even on earnings here in the united states. that was controversial, and it was a selling point for the company, the shareholders, as to why the deal made sense. the deal blew up, but it was not because the tax break. the tax break is still here. 14 companies have announced or completed their plans to use the
8:05 am
inversion tax break since 2012, and there are a number of other companies considering it even after the outcry over the pfizer-astrazeneca deal. >> isn't their opposition? >> there is bipartisan opposition, but not bipartisan action. your two top democrats in the u.s. senate that would forward, ron wyden and carl levin, both of them are outraged by the proposal, saying he needs to stop, and they plan to introduce havelation that would blocked the pfizer deal had it moved forward, but there is no republican cosponsorship for their efforts. proposal on the table that would require the shareholders would need to control 50% of the shares. 20%, now, the limit is which is why so many of the deals go through. it would have prevented any company that effectively had the
8:06 am
ceo text as a foreign company, something a lot of multinationals would certainly fight. there is no indication of bipartisan support for the carl levin approach. republicans are talking about doing full, comprehensive corporate tax reform, and short of that, they will not support this one-off deal to deal with inversion. >> thank you, peter cook. as the exclusive television partner, bloomberg is bringing from thenterviews deutsche bank global financial services investor conference happening right here in new york. stephanie ruhle is there with societe generale ceo fred oudea. >> thank you. welcome to new york. barclays is pulling out of many
8:07 am
businesses while deutsche bank had a capital raise, they are hiring, expanding, where does that leave you? barclays is focusing on more of a societe generale model. they are trying to maintain the whole thing in a sustainable way. you say strong retail, you are closing 30 to 40 retail branches this year. why? -- impactingpacted business. it is digital technology. not go to branches for meetings. with digital services. >> how do you foresee spending the 4 billion euros you have available to your private or consumer bank?
8:08 am
>> first of all, we will generate 13 billion euros of capital, 4 billion for organic growth, and all businesses will grow. of course, some that are than others. french retail will not grow that waykly, and in the same capital markets will not grow too quickly. retail activities in emerging markets will grow at a much higher pace. then we will spend $5 billion for the dividend, and we have a growth of $4 billion if is higher. >> when you talk about emerging market growth, is this russia and africa where you seem so enthusiastic question mark >> -- enthusiastic? >> you are absolutely right. it is central and eastern europe, and africa. africa will grow the most in the next 40 years. of course, it is a projected growth. .here is potential
8:09 am
also in central and eastern europe and in russia there are better perspectives. >> what about the risk of investing in russia? concern ofout the the rule of law. >> we had good experience in doing business in russia on a daily basis, and secondly, of course we want to grow, limiting the risk. what i mean by this in particular is it is it his self-funded development. as you can see, russia is relatively small. exposure, not so big, but we see many customers going to russia to invest, from europe in particular. >> you do not have concerns where this is a country that could change the rules at any moment, so even if you are here today, tomorrow, vladimir putin could say new game?
8:10 am
can i talk about this crisis? i think vladimir has been more rational than people have talked about. they have not crossed a red line. there is a strong link between europe and russia, and there is no then if it, no interest, for someone like vladimir putin to change the rules for a bank like societe generale. we are there, relatively focused, and we think we can do good business. >> you said one of the keys is having happy bankers. how do you have happy bankers -- those that are for -- born and bred on red meat and capitalism in a country with a social president. >> first of all, societe generale is beyond france. after six years of crises i want my people to be happy to deal with her clients. i want people to be proud of
8:11 am
and be motivated by the atmosphere in societe generale. it is a challenge. i must say we are doing pretty well. >> atmosphere -- we are not talking about working at condé nast. a good atmosphere is being able .o pay huge bonuses >> no, no, no. it cannot just be that. of course, you need talent, but beyond that you need people motivated by what they do, and i think that is the case in societe generale. maybe it is more like this in europe, but i must say it works like this in societe generale and i think it is a recipe for success going forward. >> you do not feel that your bankers are motivated by their bonuses? >> of course, everyone is motivated by renumeration, but it cannot just be renumeration.
8:12 am
we need to build a different culture, and i think it works like this in societe generale. soon do you think european banks are from being under one supervisor, the ecb? >> it is a reality. we are moving into this transition. the first of november, one regulator, will supervise the top 130 banks. it is a done deal. >> do you think it will deal with cross-border consolidation? be frank, so sure, to because there are so many in presidents -- impedance to become bigger. , thank you for joining me this morning. >> a pleasure. >> betty liu, back in the
8:13 am
studio. >> thank you. miss hera.m., do not exclusive intuitive deutsche bank co-ceo anshu jain. moving and shaking this hour, ibm's ceo jeannie were many. she has to deal with the company falling sales, and i'll bloomberg has learned that china is pushing banks to remove high-end servers made by ibm and replacing them with a chinese brand. all of this has to do with the where theng dispute u.s. has accused chinese military officers of stealing secrets from american companies. virginia rometty has enough problems there. sales fell 20% in china without these new issues. coming up, at&t's big takeover of directv could still be fumbled away at it all has to do with pro football. dr. dre, and the $3 billion foul
8:14 am
whyh rant -- that might be we have not heard anything about apple and dr. dre's beat. stay "in the loop." we're just getting started on this tuesday. ♪
8:15 am
8:16 am
8:17 am
>> well, it has been weeks since we heard apple might i -- by -- beats, but could it be dr. dre's fault? it all has to do with his video in which they say dr. dre will become the first hip-hop planet. -- billionaire. >> the forbes list just change. they need to update. >> the first billionaire right here from the -- west coast. >> joining me for more is leo hindery, managing partner of intermedia partners, and also
8:18 am
the top executive at the yankees yes network. great to see you. >> happy holidays, belatedly. >> luckily i got to get a little bit of son this weekend. >> you look great. you look great. >> so do you care what you think about this vehicle -- video? do you think that is why we did not hear anything? >> apple is a company that is so proud of its image, and there are two extraordinary things going on. it is buying technology, when it has never done that. it invents technology. i think it stuns a lot of us that they would pay $3 billion for headphones. >> it did not make sense to you? >> it certainly does not move the apple needle. the image problem is something you have to be cognizant of. who represents you going forward
8:19 am
is at the forefront of your mind, and this young man might not be the idea apple -- ideal apple spokesman on this appliance, this headphone appliance. >> when it first came out, everyone said dr. dre is edgy, cool, it is why he is who he is. edgy and cool as dr. dre, but is he edgy and cool as an apple spokesperson and an apple image? its goodudience as alone. they are aggressive, young people, appealing to a certain audience, and are antithetical to other parts of the audience. i think the deal will go forward. i think they will reign him in a little bit. the video is not helpful for the apple image and that is paramount in their minds. >> speaking about deals, what you think about directv and at&t
8:20 am
? >> the transaction is inevitable. once time warner cable and comcast came together, as i said to you, it excited a lot of down the transactions road involving google and facebook, for example, directv and dish networks, as another example, and here in new york viacom and tw these are all in play. of us is i have never seen a macro deal, and this is a big deal, contingent on an action involving a third party outside of their control, which is the nfl. i would've thought that if it was so integral to their strategy, to what they were trying to get done, they would've initiated discussions with the nfl and locked adela before. >> -- locked the deal of before. >> why didn't they do that?
8:21 am
>> i am not sure they were advised. at&t, and directv, because it is contingent on their side. the package started in 1994 and $25 million a year. it is now $1 billion a year and what you have said to roger goodell at the nfl is what number do we get it again? why not $1.4 billion, $2 billion? it is a deal contingent on an uncontrollable third party, a commercial third-party. >> it seems risky. >> is good for good health. -- four roger goodell. monday because the negotiations fell into his hands. >> leo hindery is staying with us. coming up up, why the koch brothers are going head-to-head with republicans in michigan.
8:22 am
a battle for detroit. plenty of space in this skyscraper if you want to move your business. we will talk about the problems that one world trade center. ♪
8:23 am
8:24 am
8:25 am
>> first. bloomberg. >> you are watching "in the loop ," live on bloomberg television and streaming on your phone, tablet, and on i am betty liu. here is a look at the headlines -- china wants banks to replace servers from ibm with those made in china. an ipo is planned for your own next. -- euro next. they operate the amsterdam and paris exchanges. the one worldrk, trade center skyscraper is cutting its asking rent by 10%.
8:26 am
released justeen months before its official opening. no private office 10 has signed a lease in almost three years. it is 26 minutes past the hour. bloomberg tv is on the markets. correspondent scarlet fu has more. >> thank you so much, betty. it is time for futures in focus -- brent crude contracts are trading at a four-day low after the ukrainian elections where vowed tooshenko has wipe out the separatists. for more on the commodities, i am joined by dan baker. , why is the ukrainian election moving oil prices more? >> derek dooley will things going on, and most of what is going on is in this country
8:27 am
where there is an increase in supplies, where we are rushing into cushing and the gulf coast. that is doing is forcing crude prices here in the united states toward global prices, so instead of having a global price that is reacting immediately to geopolitical issues, for example, in the ukraine, instead you have a domestic price that is acting strongly and starting to catch up to the global prices, which is still very strong. >> nymex crude is now at a five-week i am the moment. michael, how are you trading oil? at weekly charts because it makes such a difference, i see a double 98 and is the same thing i saw in 2008. if we can stay within a tight
8:28 am
range it looks to me like a bull flag. there will be an upside and i've seen a 10% move already and that is one of the reasons we are targeting 106, 108, and they were no man's land not that long ago. >> oil futures are put in dollars per barrel, but each contract controls about 1000 barrels. that means if you buy at $100 -- 104, and it 100 six, michael would have made a profit of $2000. dan, what do you think of the forecast? >> i think michael is right. the risk is to the upside and because of the flood of crude into the gulf coast, it is bringing domestic prices back to the global price, and the magnetic pole will get the spread common, and we will see
8:29 am
prices here at wti go closer to the 2010 price. >> barclays put out aoil volatility will remain a record low because of the supply. tame volatility look like to you when it comes to oil? tight range where prices trade, but that does not mean prices cannot trend, in fact they have been trending higher. libyan supply is getting cut. we still have a lot of interesting developments with the petro poroshenko elections in europe. the new russia-china gas deal, all of this plays in. we hear future traders talk about the life of the contract. can you explain what they mean? >> this is the differentiator between stocks and commodities. you have monthly
8:30 am
contracts, and when the month is up, the contract is over, so you have to be aware of that. once it is over, you have to get out. dan and michael, thank you for joining us. betty, we will send it back over to you. >> thank you so much, scarlet fu, on the markets. we have breaking news on durable goods. michael mckee has those numbers for me. >> i am taking a look, and it looks like a reasonable number. durable goods orders on the month rise by .8%, and the forecast was 8.7 declined. what is interesting is there -- .7 declined. history of a climb in the first quarter. we have been waiting for companies to start adding to their capital spending.
8:31 am
we do watch capital goods, nondefense, a long way of saying a business proxy, that was down 1.2% on the month, but up 4.9% on a three-month annualized basis, an increase from the prior month. all in all, it looks good. we are moving in the right direction. shipments were down .4%. somethinging to be that is not good necessarily for the first quarter, and should suggest that if we see more reduction they rise. >> we just need consistency in good economic numbers. >> when you look for consistency, you are not going to durable goods because they are very volatile, but markets will have to love this overall. >> stay with me, mike. the city of detroit is inching closer to exiting bankruptcy. there will be a vote in the
8:32 am
state senate as early as this week. however, a conservative political group backed by billionaire brothers charles koch and ed coke is not making things easy. my next guest is the person leading the charge, scott iserstom, and still with us leo hindery, a prominent democrat, and economics editor michael mckee. scott, why are you opposed to this aid? >> it does not help pensioners. the city is sitting on billions in assets. this is a huge problem for the country. over $4 trillion in pension liability. this is not just about taxpayers in michigan. it is for the country, and it could set a precedent. it is not really right when
8:33 am
city's commitments of calories are sitting on billions of dollars of assets. >> what assets do they have? >> the detroit institute of art, airports, parking garages, over $1 billion in property. >> so sell those assets? >> sell the assets, provide for pensioners. >> if you sell the assets, like the water system, you do not have the revenue coming in for the future, so how do you make it sustainable? >> you cannot enable bad behavior. they have had bad behavior spending. capital >> and because the state can't -- that revenue sharing, so they have a role. >> the fact is detroit gets three times more revenue sharing per capita than any other city in the state. the governor just signed a consent agreement a year-and-a-half ago that is
8:34 am
hundred $20 million subsidy to the city of the trade over the next 30 years. this point sayt to the city of detroit you should go bankrupt when you know what that means is that ?ensioners get nothing >> they can sell some of their assets. they have one painting that could fetch $200 million. that is more than a hundred $95 million they're looking for from taxpayers. >> christie's did not value it that i. -- that high. [laughter] >> there is a dance between pensioners and obligations and a troubled city. a lot of us are concerned, when you some useful assets into the private sector, every experience we have had is very bad for the user community. it has become very regressive. when you sell water and bridges and through ways, invariably you find that the user fees rise to the detriment of the middle
8:35 am
class, the lower middle class. it becomes very regressive. i do not envy anyone trying to detroit, but the pensioners are going to have to give something back, as everyone will. >> michigan has the fifth highest tax on gasoline in the country, and the legislatures passing a plan to give us the highest tax. we are enabling bad behavior. >> $200 million is a blink of an i in the future of the trade. >> and they have billions of dollars in assets. >> these are assets that are regressive to the user community. >> these are about wall street versus main street values. they have been engaging in bad behavior. stadium thishockey year.
8:36 am
>> that is water under the bridge. >> the mayor had 38 staffers making six figures, giving a tax break for a new hockey stadium to a billionaire family. >> it makes no sense at all. >> it makes no sense. it is not some a city in bankruptcy. they have to change their behavior. with sounds like this is bipartisan support, a republican-controlled legislature, the republican governor, they are in agreement on this aid to the city. so, there is bipartisan support here. the public supports it. >> the public does not support it, when you use the word public opposes it. >> when you use the word bailout, they oppose it. is the word. when you do not use it, they
8:37 am
supported. isyou have to go or mike going -- is there a perfect settlement? there will never be a perfect settlement. is there a fair settlement, there seems to be in a bipartisan sense that it is fairly received. >> a few army or any corporation went into bankruptcy, they would goe to -- you or me had to into bankruptcy, you would have to sell assets. we are enabling bad behavior. >> bay behavior to who? what are you worried about? >> city council members are engaging in personal behavior. a mayor has 38 staff members making six figures, and a city that gave a $285 million aid package to build a new hockey stadium. does this sound like a city in bankruptcy? they are not changing behavior.
8:38 am
>> but to sell their bridges, roads, municipal assets, as it stands alone, is a bad decision on behalf of the consumers and citizens? >> would you rather have a painting on the wall or a pension near putting food on the table? >> is not a tax increase because the money comes from tobacco settlement bonds, so it is a settlement agreed to by the government. >> they change that at the last minute and they will take it out of the rainy day fund and they will raise the gas tax. it is a shell game with a dollars and in the end it will be a tax increase for working .amilies in michigan >> i mentioned early on that americans for prosperity, a lot of people know it is backed by the koch brothers, what if the legislature and the government ?pprove this bill will there be ramifications for those politicians, i.e. campaign money, to them? >> we do not get involved in
8:39 am
campaigns. we cannot tell people who to vote for. we do a lot of education, and will make sure voters are educated. >> basically said you would try to defeat anyone that voted for this? >> i never said defeat, we would educate. >> that is a legally comment. americans for prosperity is a highly politicized organization, you have to acknowledge that. >> we stand on the issues. >> the issues as you see them. >> economic liberty and limited government. >> what do the koch brothers get out of this? do they get out of the city of detroit? >> the koch brothers are not involved in >> but they aren't -- but they are funding this? much of your funding comes from the koch brothers?
8:40 am
>> i cannot tell you. i raise the money in michigan, and they have stuck -- shutdown sectors for not raising money. we passed the test. , thank yougerstrom for joining us on this. also, michael mckee. leo hindery is staying with us because coming up, a move that could be a grand slam or a foul ball, what ben bernanke would do if he becomes the next commissioner of baseball. ♪
8:41 am
8:42 am
8:43 am
>> it is time for today's bloomberg big number, $111 million -- that is how much "x -men -- days of future past" weekend,on opening while "godzilla" garnered over 39 million dollars. the memorial day weekend is routinely ranked among the
8:44 am
biggest of the year for hollywood. summertime -- another favorite summary event is baseball. lastly, major commissioner bud selig moves closer to the end of his tenure, announcing the formation of a seven-person search committee who must find a successor before he retires in january, 2015, and names floated around include disney ceo biker, but what about former fed chairman ben bernanke? leo hindery, and week" writerss peter, who wrote the piece. >> it is true that he is interested. the day he left office he bud selignoticed that
8:45 am
would be retiring. >> you think he put his hat in the ring. >> i think he could be coaxed into the job. >> is a big baseball fan. >> he is a huge fan of the nationals. jayson werth tips his hat to ben bernanke when he comes on the field. he is a huge baseball fan. >> this is one of the most adjusting jobs that will be filled over the next year. >> yeah. >> and it is not anything like ben bernanke has been accustomed to. bud selig has been a consummate commissioner in everyone's estimation, and the next commissioner will have to get his feet wet, so to speak. >> what about any economist in that job? >> what about a guy that is never reported to a board of 26 owners? bob iger would be an excellent
8:46 am
choice. fred seems to be a choice. >> i will mention one other giamatti, not the kind of person you would think would be involved in baseball, he died in office, and he negotiated pete rouse's withdrawal from the sport. >> peter, you mention in your piece, there are five issues bernanke would have to tackle. >> number one, he certainly knows about steroids, after injecting them into the u.s. economy. [laughter] >> that hurts. on the [laughter] is an issue.
8:47 am
>> it is an issue facing baseball, tv viewers are getting older. >> what should be a concern is games are interminably long. pitchers get on the mound, get off of the mountain, and again is a half hour too long on television. that said, there are no use playing baseball like we did when we were growing up, peter twins orlf, and your more likely play football. >> they are swimmers. >> they are not playing little league. that is a concern. the number of african-american be a concern.ould more than half our latin fires coming up from the caribbean. it has to react to a set of changing demographics. >> what is interesting is the nba has the youngest television viewers, an nfl ranks right behind baseball, which i assume
8:48 am
the nfl has a pretty good mix, actually. >> that is a perfect example of ben bernanke, himself, an older gentleman, he has some good years of life left in him, but he is from the generation from which baseball was the classic american sport, and that is changing. >> you know why would throw in the mix is chase carey, who is running news corp. video operations. he is a great baseball fan. >> and you know he will not stick around. >> he will not stick around murdoch forever. to bringhey will have some youth into this one way or another, and he would be a great way. when stewart for joining us, peter coy, and leo hindery will stay with us. everything is bigger in texas, including the next election,
8:49 am
where wendy davis could help turn the red state blue. dropouts turned billionaires -- a story we hear over and over again, but it is far from reality. why college still rules. how much you will earn in your lifetime. stay "in the loop." ♪
8:50 am
8:51 am
8:52 am
>> well, in washington, not since jimmy carter has a democratic candidate for president won texas, and now there is a can. push now -- there is now a considerate push. i'm joined by white house correspondent phil mattingly, and leo hindery, a southern democrat. day in primary runoff the state, and republicans will be in the spotlight. democrats are paying close attention. tell us how they are trying to turn the state purple. >> the interesting thing about texas is how much of the public
8:53 am
partyized on the tea has gone the texas other way. you have to party politicians able to knock off republicans, and that is important for democrats. a group called battleground texas and other democratic organizations have moved into the state to start pressing for future elections, not even necessarily 2016, but maybe 2020. the belief is that they can bump up the turnout in the hispanic tabulation, especially as tea party politicians go against things like immigration reform, turn theeve they could entire state blue. >> we are talking about historically low hispanic voter turnout in that state, right? >> that is right. the hispanic population the state is about 38%, and moving up quickly, and turnout was about 22%.
8:54 am
that is a massive difference. if turnout reached national levels, while president obama still would not have come anywhere near winning in 2008 or 2012, the numbers start to shrink, as the hispanic population grows, and that growth is not expected to stop soon, and that could turn into democratic favor. >> do the democrats have any chance this year of moving the needle? >> i think phil mattingly is right. the evolution of the state -- much of the hispanic population of texas are recent immigrants, not accustomed to voting, which explains the low turnout. in california, they are much more accustomed to voting, florida, much more accustomed, here in new york, as an example -- what has happened in texas is the news to me and excitement of the balance of the state. phil mattingly is right. the hispanic voter begins to rise and turnout ratios that match other parts of the nation,
8:55 am
that will be a big change. it will not turn the state blue, but it will certainly change it purple. what will not happen is the congressional districts have been so gerrymandered that they are likely to stay republican for the long term, but statewide laces, and electoral college rates for the presidency in 2016 or 2020, you could be optimistic about texas coming into the purple column. >> isn't wendy davis complicating matters? >> it is interesting. i mentioned battleground texas. it is run by the 2010 field director. they went into the state earlier. before wendy davis became famous for her efforts to push back on an abortion bill on the senate floor. >> the 11th-hour push kerry >> exactly. they have flexibility that is not tied to a candidate.
8:56 am
they work the long game. wendy davis does not have that opportunity going for her. she needs results immediately. what they basically have had to do is connect together, and the concern from battleground texa'' perspective is that sets back long-term goals trying to help her in the near term. >> it is hard to talk about hispanics when one of the rising politicians is a white woman. >> that is right. bettertro brothers are for this. wendy davis will not be successful, likely, but the castro brothers, with julian castro becoming hud secretary is significant. >> leo, great to see you. leo hindery, of intermedia partners, my guest post,. phil mattingly, our white house correspondent. we will return in two minutes.
8:57 am
8:58 am
8:59 am
9:00 am
>> or 30 minutes away from the opening bell, and you are in the loop. banks want them to get rid of their ibm servers and use chinese servers as well. futures indicate that stocks will be higher at the open. we are getting some new numbers out on the housing recovery. our economic editor has those
9:01 am
for us. >> we have seen home prices decline, and the rate of increase of decline has picked up a little bit over the month of march. one .2% gain for a single easy -- for a seasonally adjusted gain. that brings the annual rate of increase to 12.4%. not as much of some of the big names that we saw over the last couple of years but we did see a slump in home price increases during the winter months, and that has now started to pick up again. that is good news. when you look at the cities that saw the big increase over the last year, it is exactly as you would spec. las vegas at the top of the list lullaby san francisco, san diego, and then it looks like the very tip of detroit. we do not know where that comes from, but that is good news. hopefully this means that people will see price increases will put their homes on the market, and we will see inventory and
9:02 am
sales and greece going into the rest of the spring selling season. >> thank you. two big m&a deals as we head toward the open. pfizer abandoning its efforts to buy astrazeneca. the deal is not completely dead, we will find out if anything will happen i. for all the latest on m&a we want to go to our deals reporter in london. dead is this pfizer-highest was that a good deal -- astrazeneca deal? >> it is dead for now, and it come back -- could come back in six months. these are some strict rules that avoidbout, designed to these endless takeover battles.
9:03 am
this is certainly dormant for now, but i do not think anyone thinks it is dead. >> what will be the obstacles if this deal comes back? remains antally this very tough transition to execute. astrazeneca did not want this deal, it bought back the hard. we also saw a quite negative response from the u.k. politicians, concerns about dobbs, about research and development, pfizer's record in asked acquisitions. all of that remains the case. it would be hard to do a hostile deal in the pharmaceutical. siemens?bout ge and where do they stand on bidding? >> we hill in a bit of a question timeframe on that.
9:04 am
its case to be public and the politicians. this is all about getting the french government to support ge's deal. frenchelement within the government that tried to get the siemens two big counter offer. ge has a bit of an uphill battle but they are still ahead of are the one who has the agreement of the target company. >> as this takes longer, does the environment get better or worse for ge or siemens? >> i do not think it is getting any better. we had over the weekend what one right politician described as an earthquake in the european elections. that indicates a lots of the populace, concern about the economy, concern about jobs, the
9:05 am
national front is a populist party. that has francois hollande concerns, as he should be, about forg seen to be sticking up french industry. was never government benign for ge, and it is now getting more difficult as time caps on -- goes on. >> thank you. moving and shaking this hour, new jersey governor chris christie is counting on online gambling to help fill the gaps in his budget. there is a problem. in april the business had its first monthly revenue decline. earn $180would million, that was the prediction, and they will be
9:06 am
earning only $12 million in reality. as we head into the summer driving season gas prices are on a lot of people's minds. they seem to be on lawmakers mines as well -- minds as well. there may be a hike in the gas tax. matt miller has been looking into this issue for us. though summer, -- our summer road trips going to be more expensive? >> they may be in the future. right now we are seeing relatives ability that should be surprising. over the last three years, if you take a look at the average nwide, we see it around $3.64. that is unusual compared to the swings that we saw in 2007,
9:07 am
2008, and 2009. may nottional average be that key to look at because there's such a big swing in the states. see prices up over four dollars in the most expensive states, the ones that are not connected, hawaii and alaska, they are very expensive. and then california is very expensive, it takes a lot of money to get the refined gas out there from the states with the refineries are located. you can see the cheapest gas, oklahoma, louisiana, you have gas close to three dollars a gallon. they are near those highs and lows that we have seen over the past 10 years. gas a lot. tax this if you live in california or tose other states, they add the gallon at about a rate of
9:08 am
$.60. this will go into how much it cost states to borrow money. we only have about $38 million in income from these taxes. the sales are precariously looking that compares to $51 billion in income from gas taxes about 10 years ago. it is becoming really important, and people are talking about raising the gas tax. missouri,king at michigan, and delaware that have issues on the ballot. reason we are seeing tax revenues decline are why? cars are more efficient? >> cars are a lot more fuel-efficient. if you look over the past 25 years since the café standards,
9:09 am
you can see cars with an average fuel economy of 13, 14 miles were gallon up to about 24 miles or gallon now. people are doing a lot of other things. over the last few years bicycle used for commuting has risen by 60%. 55%ashington dc, commuters, take public transportation rather than drive. d.c. isn half, and expecting that number to climb to 70% by 2025. people are finding alternative ways to travel, and i will continue to drive my pickup truck. >> i do not doubt. thank you. coming up, it is dairy queen gurt.s frozen yo ♪
9:10 am
9:11 am
9:12 am
9:13 am
>> you're watching "in the loop ," live on bbg television and streaming on your phone, tablet, and at is owned by which berkshire hathaway is opening its first store in manhattan, seeking a foothold in a crowded frozen yogurt market. cristina alesci has been looking into this. >> such a hard job. also joining us, the ceo of a chain.your bircgurt dqot of people want to see in the new york city market. they have finally done this. why at this timing?
9:14 am
>> maybe because warren buffett could not in a blizzard -- get a blizzard. margins on this business, when it first started heating up in the city were excellent when there wasn't too much pricing competition. now a lot of the competition as knocked down margin for all of these layers, so the question is, to your point, why do we need another one? of a a little bit different model, because it does offer things outside of ice cream. it is softserve ice cream, not frozen yogurt. this is a marker for dairy queen. anna has not had that much domestically, the growth has been internationally. dairys just to say that
9:15 am
queen is still around, healthy, and we are creating a flagship location in the city. >> there is more of a focus on the fast food chain, but are you all thatd of all -- at they are here? anytime there is a competitor, we have to see what they are doing. but this is a different product. >> but it is the same customer? >> it is, and it is not. it is more of a lifestyle product. we will coming in with her yoga mat, bringing kids to grab a treat. ith the dq grill and chill, they are going for the fast food market. >> would you go to fast food? >> we want to be the best at what we do, which is frozen yogurt. we are looking at other
9:16 am
options, but right now we are focusing on our premium product. >> is the market getting tighter because of all of these companies coming up? >> part of franchising is to lower our cost. by growing in terms of unit we are able to lower our prices. outgs like rent, which is of our control, is a challenge. >> one thing in your notes that you sent me, you said you do not think that the new york city market is saturated. we seen some real entrenchment from some of your competitors like the mary and red mango -- pink berry and red mango that had stores close? >> that is a good question. i think the level of support we storese to support our is more than what is coming from the west coast. our focus has always been on
9:17 am
strong operations, and flavor innovation. our marketing strategy is always going to be the new york city brand first, and then being able to expand out of there. as far as saturation goes, we look at the suburban markets. city swelling in the mediillions throughout the day, we have not read saturation. >> who is your biggest competitor? >> the ones you have named, the other softserve frozen your products -- yogurt products. >> my problem is that i do not see the difference, to me they are all the same. how do you differentiate? >> try our super fudge brownie. >> if you're the only one that has that flavor, it seems like all of the same topics and
9:18 am
toppings and concepts. >> i think being the first self-serve yogurt has its advantage is, but we need to continue to focus on research and development, but we believe we have superior flavor, and that is what helps us in the long run. >> as i'm older, i cannot have as much. >> 1200 calories. [laughter] >> thank you for joining us. you might getood, your chicken, sausage, and cake mix from the same company. ♪
9:19 am
9:20 am
9:21 am
9:22 am
>> we're looking at top tech stories. twitter likely to offset slower growth with faster growth in asia. in number of twitter users asia may grow by 34% this year, that is compared with 12% growth in the u.s.. fight withed in a publisher hatchet over new e-books and how they should be priced. they're working to get a bigger cut of those proceeds. the boxo contest at office as the new x-men stopped "godzilla." and finished far behind in second place, at $39 million. headlinesof our tech on "bloomberg west."
9:23 am
keep it here on "in the loop." ♪
9:24 am
9:25 am
9:26 am
>> welcome back. it is 26 minutes past the hour which means the bloomberg television is on the markets. have the latest on futures right before the open. >> it looks like the s&p 500 is set to extend its record high open.s, higher into the the case schiller home price index confirms a slowing in the home price growth, but it is still higher than what congress was looking for. the euro is a bit weaker, little changed at your yesterday --
9:27 am
after yesterday. the central bank is ready to act in its next meeting. we are in the markets once again in 30 minutes. >> looked out onto the open with the top 10 traits you need to know about today. number 10, apple, the smartphone giant ready to be preparing a software platform for its iphone that will control home appliances. >> number nine is ice, internet intercontinentalexchange -- intercontinentalexchange. after an $11omes billion purchase. one of 11m retails
9:28 am
mpanies that fell short and paid rectus is -- in pay practices. hey are reporting earnings this week. they came in slightly above wall street estimates, autozone says that was driven by slightly stronger sales in brazil and mexico. from baidu hold, -- ld, it is working on new products in the next year. naming former home depot
9:29 am
executive as the executive vice president. intercontinental hotels group going to comment on the report -- declined to comment on the report. >> frontline noted that it will not pay a dividend this quarter. >> at number two, pfizer, the drugmaker ended at six months for astrazeneca. the deal could be revived in three months if astrazeneca invites talks. shireber one is hell branscum of the shares surged up to the meat reduce or -- producer jbs offered to buy the company.
9:30 am
intoll dive deeper the proposed deal in a few moments. but first, to our exclusive story. the chinese government pushing serverso remove ibm and replace them with chinese brands. chinese retaliating over u.s. spying claims. >> this is a clear escalation on the part of the chinese days after the u.s. tested department and identify chinese military hacking for allegedly into the computers of u.s. companies and stealing secrets. according to four people familiar with the matter the chinese government is reviewing whether domestic banks reliance on high-end servers from ibm optimizes the country's financial security. agencies, including the bank of china and the ministry of finance are
9:31 am
asking banks to remove the ibm servers and replace them with a local branch as part of a trial. i financial times report said china ordered state owned businesses to cut ties with u.s. consulting firms. this latest escalation comes as a big blow to ibm, already the company says its china sales felt woody percent in the first quarter, and it's earnings call said they see a good opportunity over the long term. that outlook is likely taking a no response from ibm for comments yet. as winning, or having a gain here? >> should the review show a threat, analysts will use any excuse to promote its domestic brands.
9:32 am
already in usere by the local chinese savings bank company. the government plans to expand that trial to other banks and industry companies. the research estimates that purchases of i.t. products in china will rise 11% this year to alienen dollars -- 125 $125 billion. y's pride playing defense this morning. our senior markets correspondent julie hyman has more. what is the argument pilgrims
9:33 am
has to abandon the acquisition? >> they are offering $45 a share for the company, and if you add on the debt they are assuming you get 64 -- $6.4 billion as the full value of this deal. they paint $12.4 billion in , and one could argue it is more complementary than the hell shire-nickel combination -- llshire i -pinnacle merger. if you look at the history of jbs, it had been on a takeover
9:34 am
spree, and then took a break. this could be represented as ripping up once again -- ramping up once again. jbs saying there are no regulatory issues for shire and from the hill perspective, there have been some resistance from the investor base. pey were saying it was aying a high price for mediocre set of assets. we were facing resistance on that side, and we have not heard from other shareholders yet. the deal just came out this morning. share risege the $45 to be high enough, then they are going to encourage the company to abandon its bid for pinnacle. >> thank you.
9:35 am
coming up, we're going to head back to the deutsche bank global financial investor conference. do not miss our exclusive interview with anshu jain. ♪
9:36 am
9:37 am
9:38 am
>> welcome back. as the exclusive television partner, we are bringing you top interviews from the deutsche bank global financial investor conference. market makers anchor 70 role is back and joined now -- stephanie now bys back enjoying -.l >> you are responsible for 190 m&a transactions. what do you expect for this year? even more. why?
9:39 am
>> we are up over 80% from last year. marginally driven by the biggest the big dealss, everybody is reading about. >> does the sophomore companies excited -- this have more e companies excited? able to take those cost savings and transfer it the acquiring company. starting see audio's to slough off? >> not really. despite some recent moderation in the ipo market, it is just some rationality coming into the marketplace. we do not see the market getting we get all. we have about 53 billion that flow into equity funds into this year as well. deal is coming, and you're one of the bankers
9:40 am
involved. does it seem like the argan has the appetite to absorb these major deals -- market has the appetite to absorb these major deals? >> absolutely. we priced above the range and traded up 10% in the aftermarket. it is a good example of the type of activity we are seeing in the marketplace. we are seeing huge inflows into equities, what does that mean for fixed income of four high yield, has a contact fixed income, for high yield, has that capped out? >> interesting question. we have seen an advancement in investment grade and noninvestment grade debt. in terms of new issue activity because there's not that much left to do. >> are we concerned that there is a debt bubble in those markets? >investors are willing to take really tight spreads.
9:41 am
are you concerned we are in 2006 territory? being done in a rational way, but investors are much more savvy than they were back then. they have learned their lesson. this is what the market will bear, and it is a very exciting and deep market right now. >> are ceos being more savvy than ever? advise ceos and companies around the world. how concerned are they about activist banging on their door? >> they are concerned, because it is a legitimate asset class. there's about $100 billion in asset funds right now. annual 28% compound growth rate from 2008. they are here tuesday and need to be taken seriously. need to be and taken seriously.
9:42 am
quincy do not think it is getting a bit frothy? wethe end of the day should get corporate america more credit for knowing how to run their businesses? do they know how to run all of these different industries? >> corporations know how to run their business as. activism is short-term and orientation, to show up, ruffle your saber and hope for a pop in the share price. that is not helpful, but that is not what we're talking about. activist that are longer term in nature, that try to be constructive, they have tended to generate some positive impact on corporate governance. it does not have to be people ese companies in the short term. greg says the threat of activism cause them to tighten their gains and manage in a smarter way? does, and you're seeing this play out in the m&a marketplace. it used to be that ceo confidence was sufficient to drive m&a.
9:43 am
now awful, but not sufficient. helpful, but not sufficient. we need core competencies. in those transactions, people are arguing that somum of hrte the parts is greater than the whole. the other way it is playing out the industry consolidations transactions we making earlier. they taking a lot of cost out of the business, and shareholders are or to capitalize on those. >> new issues being done with more rationale, or the threat of activism causing companies to
9:44 am
behave in a more mindful manner. it is the best day to be a shareholder? to be aways a good time long-term shareholder, as history has proven, but the answer to that is yes. we saw a very favorable environment. economic growth is relatively low, but people do not ascribe the whole lot of risk to that. there's a lot of cap mobile available to for companies to do the kind of thing they want to do to grow their businesses. we are quite sanguine about the prospect of being a shareholder for the long-term. >> thank you for joining me. >> my pleasure. >> thank you. we will see you again in the we do not because want you to miss our exclusive interview with anshu jain. ♪
9:45 am
9:46 am
9:47 am
>> time now for the global outlook. residentewly elected
9:48 am
has a lot on his plate. including a resolution in energy supplies. mar we have a report on the long-standing war in gas prices. a new president will face several serious challenges, including the contentious gas dispute with russia. blackmail. >> it took over the state-owned gascompany, which takes from russian gas companies which has doubled its prices. greg what is it like to have conversations with them about price? >> it is not constructive. >> the politics of gas for both
9:49 am
of the state-controlled gas entities, the state of being storage facilities. these are all consequences of a shared soviet past. >> the arms fighting may be taking place hundreds of miles in the east, but here in the west the economic and political dispute is raging. it is focused on gas pipelines like these that are so crucial to the european energy needs. pumped one billion cubic meters of gas into ukraine last and it pays billions for those domestic gas needs. that is where higher prices will hurt natural gas. bills are ine united states dollars, while pay.ential consumers
9:50 am that is not russia's problem says the prime minister in russia. expect to receive the repayment of the debt that has accumulated over the time from the greedy and -- from the ukrainians and their respective companies. >> unless you crank and persuade russia to drop it ars prices. efficient levers that you can use on the consumer, which is highly dependent on the pipeline . >> the real issue is simple -- >> [indiscernible] they have no choice but to
9:51 am
deal with and buy from the gas pump. >> great reporting there. this one site have a stronger argument over the other? >> good question. delinquent inen its payments over the last year and a half, so like a landlord russia says it wants its payments on time. prices, anding the some people say that is unfair, and part of that is because the reduction is to allow them no longer exists because of crimea. one or the other afford to lose the relationship? afford to russia can bypass ukraine.
9:52 am
this south stream that would avoid ukraine altogether. >> that does it for today on "in the loop." tomorrow i will take you to hong kong, where shopping is a serious sport and luxury retail is booming. is now the world's most expensive street in terms of , overtakingprices 5th avenue in the last couple of years. i will tell you all of that tomorrow. ♪
9:53 am
9:54 am
9:55 am
thet is 56 minutes past hour, which means that bloomberg television is the only markets. u.s. markets have resumed trading after a three-day weekend and stocks are higher in the first three minutes of trade.
9:56 am
high.p 500 at a new one thing we have not mentioned yet, treasuries and they have winners thisrise year, but some have begun to doing well they are t for real. >> we are seeing jump bonds rally as well. that does not match, because typically of people are going into the safest bet, they would not also go into the riskier bet. usually you see jump bonds move with small-cap stocks. smaller companies close to
9:57 am
default. if people want to bet on the market accelerating, they would bonds. jump o that thee means blood complet -- people have complete faith in central-bank stimulus. ecb now saying that come june 5 they're going to announce some stimulus measure. you have japan embarking on the next phase of abenomics, and globally you have a lot of stimulus. basically the central banks globally are saying we are more concerned about deflation and about low growth rumbly and we are about anything else -- globally then we are about anything else.
9:58 am
economy is note accelerating than these companies would not be able to pay their debts off that much better because they are not able to raise as much revenue. >> there is a lot of thinking through this we have to do. in terms ofis mean a selloff in the near future, does it increase the odds of that? >> it is unlikely that people are seeing the catalyst for a huge selloff in the next month or two months. three-month, six-month command may be, if people start to get complacent and start to love our up and start to engage in riskier behavior and by riskier debt. you might see some cracks tideing in this rising phenomenon. >> there's not a lot a conviction in the current rally. bonds are-income, seeing as a safe haven, treasuries are doing better than investment grade, and investment grade is doing better than job bonds.- jump
9:59 am
>> people are uncomfortable, they are not relying on fundamentals, they're not able to rely on the work that has given them rewards. to thent to move on mortal life cycle so we can return to our investing. yet there's a lot of concern what happens when they do? >> we will be checking in with you in the near-term about what this catalyst may or may not be. we are on the markets again in 30 minutes, "market makers" is next. ♪
10:00 am
>> live from bloomberg headquarters in new york, this is market makers. >> cyber spying followed, china urges domestic angst to dump their ibm servers and use chinese computers instead. how do you say fed up in germany? ? deutsche bank investors want to know when this will end.


info Stream Only

Uploaded by TV Archive on