tv In the Loop With Betty Liu Bloomberg June 13, 2014 8:00am-10:01am EDT
joining me here in new york. he is a banker and political player. and we will be joined by his secretary -- r to venture.own at top headlines. oil is surging on concerns that iraq may be on the verge of civil war. oil is heading for its biggest weekly gain so far this year. hillary clinton's popularity keeps following. 52% of americans view the former secretary of state favorably. that is down from 70% just a year-and-a-half ago. and the u.s. government will start selling bitcoin. prompt -- the new prompt of bitcoin prices to fall to seven percent.
militants who have slept through the north are now getting close to the capital of baghdad. iraq is getting closer to civil war. what does this mean for companies that operate their? there are companies that do business in iraq. >> overwhelmingly it is in oil sector. reserves ofven oil 100 50 billion barrels, almost as much as 100 27 cubic feet of natural gas and has quadrupled production by 2017. the that has attracted the big oil companies. they have been operating in the country since 2011 in northern iraq, which is basically self ruled. of it is considered an easier place to do business because a corporation can own the entire project and projects are actually transferable. three quarters of the oil is actually in the south. it is about 90% of exports.
-- iraqtinued contributed profitable production. >> what has happened to their business since the outbreak of the violence? >> short term, not a lot but longer term there is ramifications. there are reports that a pipeline exports are under militants control. there are questions about a refinery there. security continues to deteriorate, foreign oil companies will probably leave. also any plans to pump more oil in the north will be put on hold. keep in mind seven operators may get skittish. as we get closer to civil war, but is the one thing that has wrecked output all across the middle east since the arab spring in 2000 11.
>> there is no shortage of turmoil. what is appealing about being their? >> why bother being there at all? it is one of the fastest-growing economies. iraq is trying to be more business friendly. foreign companies developing residential real estate can actually own the land. in asanks are coming well. citibank built its first office in 2013. charter is opening two branches. there is also a very big need in tech and defense. that is as the country has to close the gap and those capabilities after the u.s. pulled out. >> in addition to the violence iraq is still seen as the eighth most corrupt country in the world.
>> thank you so much. alix steel there on the business impact and the growing turmoil in iraq. of back in the u.s. we have breaking news on the corporate front. priceline is buying opentable for almost $3 billion. scarlet fu has more on this breaking news. paying 2.6e is billion dollars in cash for opentable. that is the restaurant management reserve system that is available to people in cities. of this is an all cash transaction. the deal will close by the third quarter. management will continue to operate this business. priceline is buying it for $2.6 billion. $103 per share in cash. premium.about a 46% this will be through a tender offer and will close in the third quarter. the two companies will hold a
conference call to discuss details. we are already seeing the ripple effect through the market. shares of yelp and groupon are gaining in the premarket. >> in washington, former first lady is on a book tour, which has all the hallmarks of a test run. she has yet to announce her candidacy. to latest national poll, popularity is sliding. giuliana, what is happening here . why is this? >> hillary clinton enters the political fray. her numbers are sliding. this is a rating of her popularity, her likability among american people. they are at 56% then.
they are atof 2012 70%. when it comes time to matching her up against potential republican candidates, she still beats them, including chris christie. the margin is getting smaller. back in march she was beating -- inchristie 45% to 38% march it was 52% to 39%. now it is just 45% to 38%. this has always been a problem with her. the concern among democrats is what hurt her in 2008 was walking into the democratic primary. what these numbers are showing is if she declares -- she's going to have to fight for this. absolutely, being the person
to lose this race is not always the best position. your white house correspondent julianna goldman. >> moving and shaking this hour, new jersey's republican governor chris christie is still isn't saying whether he will run for president but on tonight's show christie allowed himself to be drawn into a conversation about it. do have a question for you, i want to ask you. hypothetically, you run for grade hypothetically hillary clinton runs for president. youthetically do you think can beat her? >> hypothetically? you that. -- you bet. me this hour to talk about politics and also markets and investing is jim reynolds, a friend of our program,
cofounder, chairman, and ceo of investment bank move capital. also prominent democrats and early adviser to president obama. great to see you. let's focus a little bit on hillary clinton. beit dangerous for her to the candidate who seemingly the races her to lose -- is hers to lose? >> she had this are a of invincibility about her, carrying herself like she was invincible. at that time i think her next closest competitor may have been 50 points behind. it was incredibly lopsided. i don't think she will make those mistakes again. if you go back and look at some of the things that happened -- the most popular she will be is before you are announced. up she is doing her book to her. they are thinking about their experience with her in the past.
are a of invincibility start showing some vulnerability. senator barack obama just outworked her. down to iowa, he worked those. >> she admits that. >> he won every caucus state, which she decided not to work. >> she said it was a wake-up call. she realized she needed to get on the ball. once that momentum began it was too late. what i think she has to do now is she is putting off announcing -- she hasn't announced yet. when she does announced she is going to have to run -- and i am seeing signs of a well aggressive organized and disciplined campaign. people are starting to get outrage from people. you are staying -- you are starting to see vestiges of an organization.
they're starting to coalesce around it. really a strong outreach. i think iowa is going to come in to play. >> don't discount the republicans. we spoke a few days ago. he is a republican running for governor in california, facing an uphill battle. i want you to listen to what he said about the republican party. >> the party is big enough for everybody. it is big enough for the establishment. there is room for everyone and a role for everyone to make a contribution. i don't want to take too much away from one loss and one congressional seat. i think the bigger message is if the republicans are united in focusing on changing washington, on changing president obama's agenda to a more growth oriented agenda, all republicans will be successful. >> you and i have talked
multiple times. is the view that that the republican party is going to have to have to ever nationalhat's win a election again. unfortunately that few will not did you through public and aliamentary -- through republican primary. if you espouse those views, unless the leadership of the republican party -- which they're trying to move closer to the center -- you don't get the republican primary. those are the views for a national election. agree. stay with me, we will talk more about politics and business as well. jim reynolds, ceo of loop capital. coming up, the best world cup defenders may be off the soccer field. we would take you behind the how brazil compares for rides and terrorist attacks.
>> you're watching in the loop live, streaming on your tablet phone and bloomberg.com. investors have been confounded by what is going on in the bond markets. prospects and interest rate hike's, it has made traditional bond market models. one economist expresses his surprise this way. >> there is massive movement toward the fixed income that are of above the cyclical nature what we have. we are living in an economic
environment, lower inflation, democrat tech, factors that argue for lower interest rates. i think this is going to be the new reality in the bond market. >> jim reynolds is back with me. i guest host this morning, also joining us is our economic editor mike mckee. what is going on here? >> i think the bond market right now is sort of responding to what is being reflected in the economy. we have lackluster economic growth. is a little over three. areil sales, consumer, you seeing moderate growth but nothing exciting. >> at the same time equity markets are rallying, hitting records. >> the bond and equity market have become divorced you. equities are pricing in at much lower discount rates.
there is no inflation out there that people can see in the long run. have a very good situation as long as earnings hole up in your forecast going forward. some of the of that external factors that are happening out there, the fed is buying what most of the treasury and then you have the ecb which promise to do whatever it takes. it's peripheral country rates have been coming down. if you can get the same meet yield on a u.s. treasury, which is completely safe, why would you buy another treasury? a lot going on. >> how is that affecting business? >> if you look at it to 55, 10 year, it three -- a 30 or 40 year, i think what you are also seeing is a cyclical shift in the wake investors view how they use their money.
2008,k coming out of where they lost so much principle in the equities market, it is preferable and desirable to have an allocation to bonds, even if it is added to an and half or three percent yield. obviously these levels and the low volatility is wreaking havoc on the street. we have seen tens of thousands fixed income this space. we have talked every quarter over the last year about what is happening with trading and trading revenues. this quarter is going to be down again. and apparatus for bond trading that sort of .eflects bond secondary trading of that generally reflects a lot more activity, high yield, wider spreads.
a market whereis there is low volatility, very and atturnover, lackluster market in terms of trading and a very overpriced infrastructure. >> the problem going forward for are goingrest rates to rise. we are going to have that debate this fall. if they are not going to rise very far it does not solve the problems. you may not get a lot of volatility. you may not get a lot of turnover. >> this is temporary. is temporary for this low level of interest rates. there is no doubt. virtually the consensus forecast is for higher rates. i think virtually the consensus forecast is a yield north of three percent for the 10 year by the end of this year roughly. i don't know what your colleges. >> bond investors are always -- you can always predict higher
rates. statistically that has been shown. thatople were looking for three percent rate, now they may be backing off a little bit. been theists have worst forecasters right behind weather forecasters. >> we still trust both of them. i don't know why they are still employed. >> they make us look better. >> we still seek out your opinion. even when you're wrong 90% of the time. i think in the bond markets you're going to continue to see firms trying to find out what their apparatus is. if you are going to see a movement toward greater electronic bond trading, which we have never had before. they were always an over-the-counter market. it is cheaper. you utilize fewer bodies. costs aret seven-figure bond sales.
it basically won't be needed. >> you move to electronic trading, a lot of bonds aren't treated very much. you don't know what the price is going to be. you don't necessarily have a good price from an electronic system. >> i think that is what all of it won't move. a big chunk of it has started moving electronically. that will eliminate the need for folks in this business. >> stay with me. thanks too much to economics editor mike mckee. we will be joined by another economic power player. also nowadays lance armstrong's biggest enemies are dressed in pinstripes. stay in the loop.
>> you're watching in the loop live on bloomberg television, streaming on your phone, and bloomberg.com. it is 26 minutes past the hour, which means bloomberg television is on the markets. equity futures are mixed right now. some nervousness here in the markets among investors who are not only worried about valuation but they are also -- there are also concerns about some of the overseas.ng particularly iraq, growing violence there as insurgents in iraq burying cities and are advancing onto the capital of baghdad.
we're keeping our eyes on oil. isde is readying -- crude heading for its biggest weekly jump. you are watching a live shot of secretary of state john kerry speaking in london at a news conference about the state of iraq. south aming has spread aware an estimated three quarters of iraq's output comes from. you can go online if you want to hear what secretary kerry has to say about the situation. --celine buying a restaurant $103 per shares, talk about valuation. take a look at opentable and a couple other dining integrated internet stocks,
surging on this acquisition. we are on the markets again in 30 minutes. we have a chicago by this morning on in the loop. jim reynolds, ceo of loop capital, is my guest. i want to add in a voice this morning who is also synonymous jamiehe chicago business, pritzker is cofounder of the pritzker group, the private investment firm. he was also the cochair of hillary clinton's 2008 presidential campaign, pitting him against his sister, who championed president obama. it great to have you join us this morning. >> thank you so much. >> before we get into politics, because i know jim always says why do you talk about politics? let's talk about business. you hear about the skyhigh valuations. over here at a $2 million.
where are you putting your money? certainly be careful. the valuations are full all-around. us we are trying to use the fact that we have a private terry -- a proprietary capital base to acquire companies or invest in companies where there is a need for capital investment over long term. that may keep some investors out and therefore keep valuations rational for us. if we can see a return of a 20 -- it won't recognize itself over a five-year. advantageng to take of it. >> i know you are looking -- you say you are looking for long term. maybe you're looking for some of the other companies that silicon valley is hot on. what are you happy with?
x? want that traditional 20 >> we have two sides of our house. the long-term investing is typically on the private capital side of our house. we actture capital side, very much like other venture capital firms except we have tremendous amount of flexibility. we don't have any lps. in terms of the type of companies that we are investing in, we think that there is a tremendous opportunity in sort of apply technology still. in some old-line industries that have not yet realized the potential online. on that is digital manufacturing. that is a big trend for investment. i think we are going to be able to take it vantage of that.
we are focused on other industries, like facilities, maintenance. >> you lost me. i want to hear about the next hot app. buber -- ben be the uber -- --beatin we invested in a company that trends -- that is transforming the way we do analytics. that industry has not been revolutionized yet. i think it is on the front end of that. >> i would like to stay with the venture party. how is the weather of chicago? >> better than where you are when i leave here i'm going to get soaking wet.
hopefully i will see you up there. >> come home to the good weather in chicago. you are two of the leaders on the vanguard of ringing young and talking togo the business community. what was it that got you excited about tech. what was the motivating factor for you then? >> 1871, which is some of you may know is the year of the aicago fire, also set off years of great entrepreneurship development in all of united states. hubreated this digital mainly because there was a rising tide in chicago. so many fortune
500 companies in and around is ano and illinois, it opportunity for so many companies that are focused on enterprise to base themselves in chicago. we put them together in one hub and it has transformed the viewership. >> we are getting breaking news now about producer prices. the inflation numbers are out. ppi coming in down 0.2%. rise ofey calls for the 1/10 of one percent. -- coreppi coming in ppi coming in down 0.1%. all of these people calling for inflation in this economy, we are just not seeing that in these wholesale numbers. if i can pivot away from chicago the business and
-- you guys are very clear fund raisers and supporters of the democratic party. on the flip side you have the koch brothers, who have been on the other side. it is called the sons of wichita. one of the points he was making in this book is sort of the character access the nation -- character assassination that has hit their business. it has made it harder for them to hire people. i want to play a part of what the author said yesterday. >> you see harry reid on the senate floor denouncing the koch brothers. don'tof senate democrats affect against the koch brothers in the midterm elections. this may have the effect that there is this meme they are evil
. >> as businessmen, can you the size with the koch brothers are going through? becausesonally can't when you make a statement like they have made, that they are truly going to change the face of the republican start -- of what the republican party stands for, the issues they espouse, and you do that to that extent, you have taken business and brought it on par with politics. they did it themselves. normally businessmen supported both parties or had people in other organizations, this is a very new phenomenon about these packs racing this amount of money. i would think they would expect it. >> would you weigh in on this? clear, any extreme positions people take in a very tolic way who also happen have a public business of people
know, i think it tends to attract very negative attention it happens that the coax have been at the forefront for a number of years now that everybody knows their name and for people who don't like what they stand for, it is going to affect maybe weather people do business with them. i do think there's a way to stand up and be heard on political issues and have it's not become integral to how you do business or who you do business with. i think keeping the sharp edges off, very important. it is inappropriate in my view to go out in the political arena really cutting the position and then go back and say by our products. they have to be careful. >> how do you tread lightly? greathink jb is making a
point. business has always supported the candidates of choice. you pretty much know a lot of the wall street brokerage firms that was always there but you did not make this aggressive statement to raise these obscene amounts of money to virtually almost ensure that you're going to buy elections, which has been proven not to work on the national level. we are not all democrats and my family, so maybe there is an advantage for that. on mccain and romney's committees. >> that is a fine point. joining us.r jamie pritzker of the pritzker group. upnow you guys will meet back in chicago. jim is staying with me as my guest host. coming up, john malone wants to get into the auto racing
speaking about the growing violence in iraq. obama is moving rapidly to decide on a response to iraq -- the situation. he calls it a wake-up call for the leaders there on the ground. also says the u.s. has discussed military options for iraq. if you want to listen in on what secretary of state john kerry is saying about this, you can click event channel.
meantime, jim, before i let you go, on a later note i want to talk to you about sports. that is your second love. the ceo ofterday to .eoples corporation he talks about how he nearly bid for the clippers. i want you to hear what he said. >> looked at the return on investment donald sterling is going to make for horrible behavior. for $12t that team million and he is selling it for $2 billion, kicking and screaming all the way. what a great return on your money.
i think it gives him personal enjoyment and satisfaction and a way to channel his sense of competitiveness. and made it one of the greatest companies in the world. he loves basketball. hughes now retired from microsoft. why not? certainly it is more fun than owning a picasso. >> you are a big basketball fan. do you think this is good for the nba? >> that is very interesting. i think it has been good for the owners. that 2 billion for the clippers, prior to going into that the valuation was around $1 billion or less. was $1.6 billion.
it was reasonably close. i think the owners are feeling really good. when i talked to those guys i loved it. i think it has brought the fans together because i was at the clippers game tonight -- clippers game in l.a. at the milken conference. >> you are there the night sterling was kicked out of the nba. >> that is the night the decision was made to kick him out. we had seen magic johnson. the clippers game in that game, i have never seen a basketball crowd like that ever. 90% of the fans had shorts on that said we won. -- had his on that said we won. "noon -- new owner needed," need
not apply. i think it has been a cleansing process for a lot of folks in the nba. you know quite a few of these sport team owners, whether it is basketball or football or baseball. do you think it has been a wake-up call for them and maybe yaakov -- oftion caution? >> i think it sent a message to everyone that this type of behavior that is for public enjoyment, public entertainment, with a diversified work crew, none of that behavior will be tolerated. it would feel better if you were a player, if you are a coach, assistant, or a fan.
sterling is still going to make out like a bad pass. >> aged take his money and go away. >> his wife had the good idea. >> listen to the women. much for joining us this morning. jim reynolds, the founder and chairman of new capital. after more than a year of appropriations for the world cup, kickoff in brazil. we take a look at how the military prepares for all the threats to the game. and a new billionaire. we will have the details on the player and the winning strategy.
world cup in brazil has a fight on its hands. not against croatia. wonbrazilian national team the score yesterday. the fight is over. the money that was spent on the world cup and not spent on social programs and are to -- erikthe brazilians schatzker went to see how brazil's army and police prepared for violence at the world cup. >> these soldiers are preparing for an unusual battle, on the soccer field. resume is hosting the world cup for the first time in 64 years and the country is not taking any chances. >> palo silvio will be keeping the peace here.
his troops have been training for more than a year to confront any number of scenarios. ondy foreigners bent destroying property, angry protesters, anarchists, hostage takers, even terrorists. brazil wants to avoid a repeat of last year's confederation cup won a series of rallies turned into debbie riots. -- into deadly riots.
rio is used to hosting big events, like this visited in july 2013. of the security challenge is all new. so much that the equipment is used to gather intelligence. like any big city, announced as center, it is getting a major upgrade for the world cup. $45 million of special funding from everything from state-of-the-art video to mobile surveillance units. season -- manasseh even has an app to make contact with the closest cop spirit of the army is ready to roll in.
>> the challenge has just begun and it won't end with the world cup final of 2013. the olympics in rio are just two years away. >> erik schatzker joins us now with much more on security. you see what the army has done to prepare. a dispute over one particular call by the ref. outside the stadium it was expected -- there were demonstrations in as many as 10 brazilian cities. mistreatedo able to 500 to 1000 people. police used tear gas, rubber ,ullets, percussion grenades
these are meant to back people away from certain areas. it was are ready getting violent. getting violent. you have the appearance of the black bloc. force requires people to be somewhat organized. bloc isess the black the big threat. this could turn a peaceful it to menstruation -- peaceful demonstration to something more chaotic. not where you typical brazilian would do. as the army and police explain themselves may find in a situation where there are several thousand, maybe even tens of thousands of protesters staging a peaceful demonstration. , startsk blocs shows up to bite thing on fire best to
light things on fire, and it gets out of control. out is what the army is most afraid of. a year ago you had millions of brazilians demonstrating against the confederation cup. >> that makes a lot of sense. somethings like obviously the military has to keep a close eye on. soccer fans are passionate about their team. lose, is therens going to be more danger of riots on the street? >> i will tell you what. if brazil faces off in the final, which is the game many people predict, i would be most scared for the argentine national -- how do they get out? that is a legitimate question. cuts to the mixed opinions in brazil.
the mixed feelings really is -- mixed feelings brazilians have. they want to protest the world cup. there is no better way of protesting then by donning the shirt of your arch enemy. i'm not suggesting there were thousands or tens of thousands of brazilians doing it. if the brazilian team loses and it does not win the world cup, they are the favorites. there will be a sense of national upset. when it was much more nationalist fervor -- probably not. .an hank you so much past the hour,s which means bloomberg television
is on the market. piece of breaking news about priceline buying opentable. also lots of concerns overseas on the growing violence in iraq. we are on the markets again in 30 minutes. -- he has j.crew's made a boatload of money since becoming ceo in 2003. the brand is becoming stale and the eyes of consumers. can they turn the ship around? finale for game of thrones is sunday night. we speak with the director about the difficulty of filming with thousands of actors over several continents. ask him however one involved in the show keep such good secrets. we are watching in the loop live on bloomberg television.
>> we're 30 minutes away from the opening bell. you are "in the loop." i am betty liu. the s&p fell by the most in three weeks. the fighting in iraq has oil prices higher. islary clinton's popularity slipping. a bloomberg national poll says 52% of americans view the former secretary of state favorably. that is down from 70% just a year and a half ago. mickey jack slurve has done pretty well for himself a j.crew since investing $11 million of his own money since he became ceo. he has accrued about $83 million.
j. crew continues to struggle. it faces new competition from companies offering similar brands for less money. some are wondering whether he will be able to revive j. crew. how was the company's performance for the last two quarters? >> they have not been great the last two quarters. they have seen sales slip from where they were. they were doing really, really well for a while there. they were the king of the kings. like most of retail, they have seen that shrank come which is particularly bad for them because they were said to be considering an ipo. changedf the fortunes so quickly? only a few years ago, mickey drexler was considered one of the best ceos out there and j. crew could do no wrong. it was on the cutting edge of fashion. >> iesco considered one of the best of the best for most of the people i talked with.
most apparel retailers are struggling. with j. crew, they are losing the younger customer. most of the people in the 20's say, the basics are just too expensive for me. gap. get that at zara and that is what they are facing. >> what about plans for a sale of j. crew? tv ini said on bloomberg hong kong last month, he said there are no immediate plans for a sale. sales figures will make it tough for a buyer to pay a premium. >> mickey drexler is a fascinating figure in fashion. n j. crew.ep an eye o moving and shaking this hour, cable tv mogul john malone. discovery communications wants
to buy a 47% stake in formula one. malone's company values formula one edit billion dollars less less lest $1 billion than the company. is fun, right? to be a formula one owner. if you're a fan of "game of thrones," you will probably be busy. the fourth season is set to wrap up. given all the buzz, we want to know how the show protects its plot secrets. jon erlichman is in los angeles with that story. any spoilers for us? gosh.my i fear death by swords. [laughter] i got nothing, i got nothing but a. -- i got nothing, betty.
it has quickly become one of the biggest shows in the history of hbo. it is right up there with "the sopranos." "sopranos" call it with swords. huge social media buzz. has allowedhbo go the show to flourish. technology has helped the show. additionally, with a show like this, you ask the question, how do they keep the secrets from getting out? especially at a time when you have netflix on the rise. the binge viewing you see with their original shows. in the case of hbo, there is this anticipation that builds every week. and yet, they are able to keep it so secret. we spoke to one of the directors of hbo, they need several directors for hbo. it is such a big production. everybody who makes
the show loves the show so much that they are very dedicated to it. it is a labor of love and they are very careful and tightlipped. it goes both ways. i fund that most people do not want to know. i want to have the surprises the show is bringing them. well it sounds like you want to know. [laughter] >> i do want to know. however, in the meantime, we talked about this earlier this another program, "oranges the new black." how does hbo prevent piracy? their program is pirated to the tune of 1.2 million downloads. >> it is pretty incredible. the answer is to a certain extent, they don't. there is a lot of social media appetite to discuss the show. inevitably, some people who did not have access to the show will try to get access. saidthe years, they have that in their opinion, it ends
up balancing out. for all the people who end up trying to get it illegally, they are able to get new subscriptions because of the buzz surrounding the show. a great story about working on the program, in europe, they were filming, and he had the entire season on his computer and he got hacked. he immediately had to take it off and put it on the drive because alternatively, we would not be talking about the season four finale. we would already know what had happened. >> it would be out there on social media. are you an "game of thrones" fan? >> i'm a casual observer. blood and sex are hard to ignore. right? >> [laughter] thank you so much. you have got to be a fan. you have got to be a staunch fan of these things. come on. [laughter] jon erlichman, our senior west coast port -- correspondent. you can catch the full interview
turbine shafts. i want to bring in our auto expert matt miller. power possible loss of something more serious issue because that is the issue that is linked to 13 deaths and the cobalt and the saturn ion and the pontiac g six. it is safe to say that gm is incredibly sensitive about this issue now. any slight inkling of a problem leads to an immediate recall. mary barra is very aggressive on recalls. >> a loss of power does not sound small. >> it does not sound so good. i have driven a lot of camaros in the last couple of years and i have never had any concerns about safety in them. >> except when you're driving. >> exactly. [laughter] whenever i am behind the wheel it is a real problem, whatever card is. it is definitely not as serious a problem as the cobalt issue. she and her team have looked
deep, deep into every single car they make, every single problem they have had come every single accident report, and they have not found anything else like the cobalt issue. this is probably just aggressive safety measures. >> stay with me. gm has already recalled about 2.6 million cars for the ignition switch defects. they are being investigated by attorneys general in nine states. launching a program to compensate crash victims. they tapped the former czar ken feinberg to manage the fund. methey have delegated to full discretion to a value eight each individual claim and make a determination and pay the claims that are eligible. ast program should take in
gm has demanded around august 1. theoining us now is managing partner at hagan berman law firm in seattle. he was a plaintiff attorney in the toyota recall case. he has won record settlements a big big -- against big oil and big tobacco. this is all speculation right now. in your view, could it be, we are talking almost 3 million , couldn't this become an astronomical number and that gm is going to have to pay? >> based on my experience in the toyota case, i think this will equal or exceed the toyota case. there recovered $1.6 billion. it is going to be higher. >> it sounds that way. me throughim a walk the toyota case is the same and also a little bit different than
what is going on at gm. >> it is very similar. you just did a segment on "game of thrones." i would call these the game of concealment. the carstories, companies knew internally they had safety issues and they buried them and they only started disclosing when things copy on their control. the parallels are absolutely striking. out with anme internal report. is that not good enough? >> the internal report is just a start. don't forget, it was commissioned by gm, gm paid the lawyer, and the lawyer picks off a lot of low hanging fruit. there are a lot of other questions to be asked. >> it was an incredibly narrow focus in that report. he kind of had blinders on, in a sense. i think it is apparent, gm is basically willing to pay almost anything at this point to get it behind them.
they have said, you tell us how big a check to cut, kenneth feinberg, and we will sign it and move on. government penalties and fines and criminal issues, do you think that that is going to solve the issue of the deaths related to this? >> gm is not paying all claims. about thely talking personal injury and loss of life claims, not the economic issues. is aver ken feinberg finds serious injury or loss of life related to this, he is going to say, you have to pay these people this amount. general motors surely is just going to do that, right? >> it remains to be seen. here is an issue. i have a lot of clients who have come to me and they believe they have the exact same fact pattern.
they have the exact same fact pattern of a small car ignition pattern. they have damage. it was three or four years ago the car is gone, the forensic evidence is gone but a going to pay those people? i think there is going to be a big fight over that. >> should those people be paid? >> i think they should. who bears the burden? gm or the unknown victim who did not know enough because of the concealment to save the car? the court is going to order the gm is stopped from asserting a lack of physical evidence with respect to those claims. but it got mr. feinberg is going to pay those. >> did that happen in the toyota case? >> it did not happen in the toyota case. the accidents in the toyota case, most were so bad, the people did save the car and they did sue. the issue of unintended acceleration has been around for a long time.
lawyers know to look for it. this issue was hidden. no one knew to look for it. the lawyer cannot find anything wrong with the car. >> how many cases are you aware of, what can we be talking about here? if it is potentially hundreds, then that is enough, if you throw in punitive damages, to easily bankrupt the company, right? >> i don't think we are talking about a bankruptcy situation here. gm is worth hundreds of billions of dollars. but they will wind up paying between you billion dollars and $4 billion to get out of this. >> thank you so much for joining on this. and also to our bloomberg auto expert, matt miller. we will return in tubing minutes. ♪
>> now you will be able to get airline and restaurant registrations from one company. correspondedrkets julie hyman has been listening in on the conference call, getting details of this deal. am i right about that or is this a fair price? >> it is a big premium. $103 per share. opentable.uying it doesn't seem like speculation without here at all. at all.ut here that is a true 46% premium. this is a deal that make sense for us, the executive said. we are addressing same consumers. the traveler is the diner, particularly traveling to a different city. looking to a reservation for a restaurant. this could be a good synergy for us.
they call it an adjacent market. again, the same business but in an adjacent market. is that you see more competitors come into the market. opentable seems to be far and .way the market leader you are talking about 15 million diners per month who use this. that is still a small fraction of the people who go out to eat. finer looking at mostly dining establishments. if you could is banned -- expand to the casual dining in the street, you even have a larger addressable market. >> thank you so much. have the top 10 trades.
>> welcome back. your "in the loop." bloomberg television is on the markets. latest onerro has the futures right before the open. a little bit of a turnaround. >> may be. futures are higher by about an inch. i would not get too excited. you have had a down day across european equity markets. you look at iraq and to get a little bit of concern. how can a french militant group takes a second biggest city in the country? what is that mean for baghdad? what is that mean for various institutions meant to provide stability? a look at mark carney's speech. a rate hike at the bank of england could be higher. what does that mean for the fed
next week? if the bank of england can change language that rapidly, will they do that down in d.c. as well? on the s&p 500, three days of losses. happy friday. >> thank you. markets reporter jonathan ferro. let's count down to the open with the top 10. these are the only trades you need to know about. john stays. julie hyman joins me. tesla.10, the electric carmaker offering its patent to any company that wants to build vehicles. opening up its patent. elon musk said that inventions on electric cars will be free for anybody to use in good faith. cracks disney -- >> disney expects global sales on its infinity videogame to reach $1 billion.
>> morgan stanley is at number eight. organ family sold its independent wealth business in mumbai. number seven. facing a lawsuit claiming the company violated customers privacy rights for marketing purposes by accessing their external e-mail accounts and downloading their contact addresses. this company is trying to buy the botox maker. it is now worth less than when it attempted. valeant offered a bit and it was rejected. >> number five, general motors. it did what it does well, another recalls.
500,000 current generation chevy camaro's. the ignition system is unrelated to those used in the vehicles included in the ignition switch recall. >> number four is twitter. the biggest executive exits and the company went public last year. in the meantime, the stock has fallen more than 40% so far this year. >> intel. raising second-quarter revenue forecasts. intel attributed the higher forecast to improving business demand. >> at number two, the fiber-optic network specialist whipped up quarter profit well below estimates, hiking -- citing higher capital expenditures in china. shares fell more than 20%. watch this oneo
stock. opentable. the restaurant reservation site is being acquired by priceline for $2.6 billion. the online travel giant offered $103 per share. it is a 46% premium to their closing price yesterday. paying up for opentable. i want to bring in michael architecte chief adjust for jones trading. he says equity markets are in the danger zone. the economy is going to grow less than expected. too much complacency in the markets. why are you so bearish? notlthough valuations are as bad, the behavior is very similar. participate in the want to move stocks, not because they think the investment opportunity is that great. when you were chasing and buying just to be there, it usually does not end well. >> where do you find 2.5% growth?
>> we have been growing that way since 2010. we have had a terrible q1. everyone was expecting a big bounce back into two. you will not see -- in q2. the government has been going through structural shift. the jobs market is improving. compare to past recoveries it is very anemic. when people count on the u.s. doing three percent or four percent gdp -- >> you don't believe it? >> the only years we have done that our 2004 and 2005. to think we are going to get that now -- if you look at main street, the perfect example is new home sales that have only recovered to the previous recession lows and now they are turning down again. it is not a great environment out there. >> i want to dig a little bit deeper into this whole issue of complacency that you were talking about.
looking know you are into complacency as reflected in the vix. >> that is how a lot of people measure it. it is a measure of volatility in the market. .t tends to be backward looking it has been very, very low. you are looking at the yellow, that is the vix, and the white line is the s&p 500. volatility has been quite low for some time. even as we see stocks climb and climb and climb. complainings been about complacency, the market is so boring. however,ok at history, and you look at charts like that it is not super clear low volatility and high complacency automatically is negative for stocks. -- >> iwith that 100% agree with that 100%. you want to buy the stock market when the vix is high.
when it is low, it just shows you it is not an optimal mode -- optimum time to put money to work. there are only a few episodes per year or every couple of years when the fix is high. we have had this environment of 2006, 2007. we have liquidity in the market due to the fed. that was a sell signal for a lot of people. >> when the vix initially spikes, that is when people start getting out of positions. >> you think that is a buying opportunity? >> when it has, for a couple of weeks or months, then it becomes a buying opportunity. >> i know you do not like the homebuilders because you are bearish on the economy or it is
slower than what people expect. you are looking at homebuilders, john. >> your explanation makes sense. and i look at these markets a look at the homebuilders track on the s&p 500, we have already traded lower. i ask you on a guy that is short, as that ship sailed? do you think we can go lower? >> the homebuilders are interesting. they are doing half the revenues they were doing back in 2005, 2006, 2007. the thing i am watching every week is the new mortgage purchase applications. only new homes that are slowing down. it is existing home sales. when we talk about this economy performing, heading back to a 3% level, we still have a relatively weak housing market and new home sales are declining year over year from very low levels. that is not a good sign. >> where is it week? -- weak?
all property is local. the cities,k at prices are going through the roof. >> that is a liquidity issue. people are paying up for quality. there, when we talk about wealth inequality, they are paying up for premium property. >> you say they are skewing the numbers. >> prices were up by 10% or 15%. is not a main street recovery. it is not the whole economy moving forward together. that is just the one percent out there. >> thank you so much for joining us. michael rourke, the chief market strategist for jones trading. megming up, how does whitman keep managing to get bigger and bigger bonuses as her company bleeds money and she cuts jobs? we will talk to a marketing executive about advertising at
>> here is a look at the top tech stories. intel benefiting from corporations upgrading the computer systems. the company raised revenue forecast for the second quarter and sit annual sales would increase for the first time in two years. it comes at an important time for an industry that has seen years of decline. the u.s. government will start selling bitcoins it received from the silk road marketplace. linkedin will face a lawsuit that claims the company violated
customer privacy rights when it accessed their external e-mail accounts and downloaded contact addresses. pursuers can continue to damages from using thousands of e-mail addresses. the ruling follows a similar decision on the google privacy case. that is a big deal. hewlett-packard ceo meg whitman keeps restructuring the company, laying off more and more employees, while her bonus has grown. cory johnson has an interesting look at restructuring and layoffs boost executive pay. has announcedkard restructuring. it could all help ceo meg whitman. a restructuring cost estimate balloonedbillion has to $4.1 billion. that is half $1 billion more. .nd 20,000 layoffs
structuring is the cost of building a business. you hire someone to build it. maybe someone -- it is awesome. so you shut on the project come you lay off the dumb one. that is business, right? only the company restructures, it suggests the shutting them of the project and the laying off. that is how the accounting works. sales go up. restructuring goes down here. that is the bottom line. the non-gap profit is unaffected. the more costs of the company have moved from here down to hear, the bigger the adjusted profit. then there's the bonus question. in the last three years, meg whitman has received $50 million
hewlett-packard. hewlett-packard has seen met -- and net profits fall. restructuring will cost 50,000 people their jobs. you wonder, how does a company seeking to cut cost raise bonuses? buried in hp is a lot to note. a quarter of for annual -- the bottom line is not the definition. meg whitman can move from here and done to hear and the bigger the non-gap profit and the bonus. the bigger the layoffs, the bigger meg whitman can cash in. until the businesses revived, with every restructuring, it
improves the structure of the ceo's pay package. now -- >> joining me now with more on this, cory johnson. how has hp responded? have they responded? they came back with a response. they defend their bonus program. they said, our compensation program is based on numerous factors. defining earnings in the bottom , what is the bottom line indeed? hp has paid restructuring charges every one of the last 20 four quarters going back although the way to the first haveer of 2008 read they been restructuring and restructuring through many ceos,
including every ceo -- quarter under meg whitman. >> what is her base salary? ing verys been sound generous at one dollar. $50has been taking over million. i imagine you may not be on her christmas card list after that report. >> perhaps not. wager that the 50,000 people being laid off from hewlett-packard and not make her feel good either. >> thank you so much. you can catch cory johnson and all the latest in tech and media only on "bloomberg west." ♪
hour aboutrlier this the violence in iraq and the possibility of providing assistance there as its northern cities are being overrun by militants. >> we have already taken some immediate steps, including providing enhanced aerial surveillance support to assist the iraqis in this fight. we have also ramped up shipments of military aid to iraq since the beginning of the year. we have continued to ramp up therts over the course of last months, leading up to the events of the last week. we have also expanded our training programs, both inside iraq and in jordan. >> john kerry also said that he and the ministration -- administration are laser focused on dealing with the crisis at hand.
the focus is always to build the iraqi government's sustainability. ♪ >> staying overseas come the kicked off yesterday. the battle between advertisers has already been well under way for many months and many more americans than ever are expect to tune in. u.s. soccer fans are also pretty brand loyalty raid 45% ran -- plan to buy merchandise. 62% pay attention to the brands that sponsor them. is the ceo of ogilvy new york. great to see you. >> good morning. majorl me about the other events, the olympics, for instance, how big is this core brand, how sticky is that for brands to be in the world cup?
>> this year is the greatest show on earth for brands , inared to four years ago terms of viewership in south africa. already today, brands are saying social activity surpass what happened four years ago. >> it was not as popular. how are the brands exactly is in social media? >> a couple of key ways. to keep the activity going. it is a month long i today. the brand has to keep itself relevant and engaged with its consumers and target them for months. social activation is a great way of doing that. it allows brands who are not sponsoring to take advantage. if a brand pays as much money to sponsor the world cup, they have to differentiate themselves from other brands who go online and take advantage of non-sponsoring. >> what about the issue of the negative side to all of this. >> the protests on the streets.
the social unrest. >> and also the racism that some of the players have encountered. showing the ugly side of brazil. be a veryot to dangerous territory for advertisers and brands. through these issues any time to get close to a country, social unrest, and they have got to hope for the best, prepare for the worst. sitting every brand is there with plan b, plan c, plan d and what to do. [applause] -- [laughter] >> there is an emerging middle class for what brands have to say. it is an opportunity for brands to matter and take a role to help. >> the risk is there, but the reward is bigger. >> it is what you do with it and how you engage. >> in the u.s., we are not huge soccer fans. your children are.
but we are not big soccer fans. you are not getting a u.s. market when you're advertising the world cup. are seeing 43% more of engagement in terms of investment in the u.s.. the time zone works for brands this year. as i look at the world cup for brands, we see greater anticipation -- participation. i think will be a big year for the world cup. >> thank you so much. the ceo of ogilvy and mather new york. on monday, i am talking to entrepreneurs who have changed the game. golf shot tracking software the that puts real-time data that the pros get into the hands of everyday, average players. i will be talking to the inventor of the soccer ball that is bring light to developing countries. with the ballplay
it is 56 minutes past the armor, bloomberg tv is on the markets. i'm jonathan ferro. up to speed with where equity markets are trading right now. look at it on the week, the s&p 500 is about to snap three straight weeks of gains. the consumer confidence out a little bit later. outhe bond market, check treasuries. treasuries lower, yields higher. 2.16% is your yield on the 10
year. mark carney signals a rate hike with the bank of england that might be sooner than you expect. is this a good time to be buying is this a good time to be selling? we get mixed messages from two major investment firms. .oining me now who is making the calls? who is right, who's wrong? >> it is hard to say who is right and who is wrong. fund, the biggest bond manager in the world, they have been increasing their holdings of government debt. their bond fund holding to 50% last month. that is the highest level since 2010. at the same time, western asset management company is selling treasuries, particularly the middle maturity bonds. you are talking 5-7 years.
what is going on here? i tend to -- how can two very smart bond firms be on the opposite side of this trade? >> where does the opinion why on this? >> you have two schools of thought. one idea is that we are in a new neutral. the slowing to have growth for a while. we will not see much by way of rate increases. there is so much cash being created by all of the central banks that it has to go somewhere. investors have to get some real rate of return. intoe are funneling back government debt. the u.s. looks pretty good compared to say the spanish and greek debt. france. look at the yields around the world. they are all coming down. relatively speaking, in the u.s., you're getting compensated more. at the same time, the yields a really low. 2.6% down from three percent last year, at the end of last year.
down from a decade average of what does this mean for the next few months. these guys will have different times to ride it. i think when you have such divergent opinions, that probably means volatility. if you have people on both sides of a trade, that probably means that the yields are going to stay in a certain range for a while. you are going to have people who see an opportunity when yields go up to buy. you will see other people seeing an opportunity when yields go down to sell. met carney, surprise surprise, we might get rate hikes sooner than we expect. did the fed surprise us? >> that is the concern. that is why some people are selling. if the fed does say economic data showing strengthening, we are concerned about frothing us in certain markets, we're going to hike as soon as the end of this year, that could definitely
be a catalyst. >> central banks are telling you rates will stay low and rates will be gradual. thank you. we are on the markets. i am jonathan ferro. "market makers" is up next. ♪ >> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> christ line gobbled up opentable. -- $2.6l pay 2.6 million for the online restaurant reservation service. surge as islamic rebels edged closer to baghdad. president obama says no military options are off the table except sending in ground troops. >> pay for play. a landmark trial to be a game changer. college athletes get more than just a scholarship. this