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tv   Taking Stock With Pimm Fox  Bloomberg  September 26, 2014 5:00pm-6:01pm EDT

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>> this is "taking stock" for friday, september 26. i am pimm fox. today's theme is shock. the u.k. and prime minister dane cameron enter the fight against islamic state could be royal air thee sent to join
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airstrikes in iraq. a fire in chicago since the shockwaves throughout the entire aircraft control system. what this means for business. all of that and more over the next hour. >> another recall out of detroit. the automaker says it is recalling 850,000 cars in north america, setting up potential issues. blackberry says it has sold 200,000 of its latest smartphone. the new product sold out in six hours on blackberry's website and in 10 hours on amazon. and nike stock surging big time today to a record high after it's well cut marketing campaign
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rose revenue. >> thank you. the top ofoned at the broadcast, a big surprise from the world of mutual funds and finance. bond king bill gross has left him cope. that is the firm he cofounded more than four decades ago. he is headed to janus capital. the move comes after the sec says he is being investigated for the total return. legend today mutual fund us. vocal spoke to been a lot of sniping out there, his leadership has been challenged. i'm sure the sec investigation, and we do not know anything about the circumstances, all on ably take their toll
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man who made in spite of his name and fortune may be easily hurt. we can all be easily heard. maybe he woke up one morning and said i do not need anymore of this. i cannot read his mind, but that is a reasonable scenario. >> now let's get some more insight on bill gross. joining me from fort lauderdale, is a managing director. also joining us is the rest of our panel. mark. to begin with you have known him for quite a while. what was your reaction this morning jack ? >> i was absolutely stunned. i was shocked. bill, personally,
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and i can tell you and all of my dealings with him for many years , he is an honorable, ethical, standup guy. i can absolutely say that without any question. >> what would believe you to lead you believe that this is anything other than his own desire? could someone have really wanted him out from the firm that he helped to found? >> there are so many rumors it is hard to know what the truth is. he must have felt under some kind of distress or pressure, and knowing bill the way i do i would have said that he would have said that is enough and would have left. guys -- lots of right bright guys there at pimco, so ir must have been some
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real chafing to cause him to move. >> you wrote a cover story about bill gross for bloomberg businessweek. what did you learn? >> it was evident when i spent time with him for a few months, that he was quite unhappy and frustrated. there was a lot of tension internally that was weighing on him. he was being distracted from invest thing, which is the thing he loves to do. tough time with a lot of scrutiny and gossipy press coverage. he felt very personally stunned by this. he was battling a lot of problems that founders of successful companies find, that he was a great investor that was so successful that he suddenly found himself in charge of running a enormous in
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organization. management is something he does not want to do or is particularly good at. startedpoint there use to be some friction. >> what can you tell us about bill gross personally? has been a noted stamp collector, once owned the world's most valuable stamp. he is a practitioner of yoga. he founded this firm 40 years ago. simple guy, from his own description. he is an introvert. a social guy who likes to go out in the evenings. he gets up extremely early on , and he is in front of his screen all day, and he likes to go home and just spend time with his wife and watch the daily show in what ever and look out at the ocean to bed early.
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a straightforward fellow. i think he has been really rattled by all of this tension. this is not something he is very well-equipped to deal with. >> there are financial implications here. the performance of the pimco total return bond fund has come under a criticism. what does this mean for the investors in pimco funds? >> the news today, regardless of the regions behind it, it stands true that it was a huge shock. we saw treasury yields rise, we saw spreads widen -- >> a decline in the value of the shares of the parent of emco. pimco. 16 months of outflows, it has been a tough time in the
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bond market, and he has been open about that. but it is true that that was adding to the managerial pressure and personal pressure that he was coming under it pimco. how investors may or may not be choosing where to allocate their capital. to they go for a specific fund, or do they look for managers that they believe in the long-term they can trust and they can rely on? that isnk the answer to both. it is certainly the larger firms such as blackrock, and so forth that have a great amount of stability. comfortable putting their money there. if you jeweled on further, you want to put your money with a --y seasoned recessional professional who knows how to manage it all kinds of markets. bill gross represents that. i think you will end up with some money that is going to leave pimco to go with him.
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the net result is that pimco will see some further out lows of gas -- outflows of cash, and it could be difficult for their parent to accept that reality. in thomas to bring your tim of ernestine. what could you say of the potential outflow? theyviously estimate anywhere between 10% and 30% outflows. and although we see in direct impacts, and ideally they are underlying investmes
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nts, this is a young stock buy. >> what about size? when you manage a very large fund, you can do many great things but it does not move the needle. what about that aspect of this? >> it becomes difficult to manage a large fund, and it becomes more difficult we also have pressure of managerial responsibilities and overseeing six deputy cios. i spent the day's begin with analysts and many of them say it is no question there will be outflows from pimco. maybe they will be able to cut loose from the whole bill gross socko with el-erian that has been weighing on them. these are smart guys and they could bounce back.
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by going to janus capital group he joins a company that is , they own 20%. move is odd in the sense that his own net worth is equal to if not greater than the value of janus group. >> it is a bit odd when you look at it that way, but his respect perspective is someone who wanted to get out. this is his life, this is his obsession. interests,outside and he still has a lot of energy and is very intelligent. he will continue investing. away.not planning to fade and perhaps, this was a necessary break.
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they knew what was going to happen eventually. he is 72 menu eventually going to be gone. maybe it did not happen in the most orderly fashion, but after some turmoil things may start to settle out for both of them. when it comes to financial careers? >> he is a very bright guy. i agree with your panel member he will not retire at any time soon. of the financial markets, it is europe session, it is your life, it is europe session. -- your obsession, your life, your career. i hope the guys at pimco will also go on with their new chapter with bill's departure.
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>> thank you for joining me. coming up, david cameron is taking the u.k. into the fight against islamic state. plan to fly anywhere, you might want to rethink that idea. thousands of travelers are stranded thanks to a fire at a chicago air traffic facility. ♪
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>> this is taking stock on bloomberg. is preparingngdom to launch airstrikes against islamic state militants in iraq after the u.k. parliament voted overwhelmingly in favor of the action.
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they should be prepared for a long fight. >> this will be a mission that will take not just months, but years. but we have to be prepared for that commitment. >> united kingdom joins the broadest u.s. and arab coalition since the gulf war. will this offensive he enough to dismantle and degrade islamic state? give us your take on this latest vote the u.k. parliament. what effect will that have in syria and iraq? >> i think it makes a lot of stents from a domestic political standpoint. regarding the effect it will have on syria and iraq. in the short-term, the airstrikes and the other things that the british may provide may
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not prove to be a decisive advantage. creatingt something abo it into a decisive low. blow. by being part of the coalition, they are able to help with intelligence and logistics. britain has a lot of experience in the region. so this prior knowledge and their capabilities will be an asset. only does britain have experience in the region, so does the united states. what makes them think they will do a better job this time? >> i think the stakes are higher than they ever have been. especially for the united kingdom, even more so than the united days. havee united kingdom, they more population in a smaller
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area. larger muslim population in a smaller area than the united states. not integrated into the mainstream as much as in the united is days. the stakes are very high. several thousand are passport middle easthe that have the intent to come back. common ally with the border with syria and iraq, and there is an air base in turkey. the u.k.a reason that is involved, so they can launch from cyprus and turkey? -- instead of turkey? >> i had not thought of it that
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way. turkey has been absent to this coalition due to its own domestic situation. s on the other side of the syrian border are buying the fuel that is being sold off of somewhatthey are supporting them. so turkey is outside of this fight so far. but with britain joining the coalition, there may be more opportunities to increase on allies pressure that the united states has not been able to get to join the coalition. i think that the fact that britain is now part of the coalition may increase the chances that additional allies will join in the future. >> what is the likelihood that in a year from now we have an independent kurdish state? >> a very good question.
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the kurds are only going to continue to, it is in their interest to fight against islamic state. but in the sense that the united states is relying on them for ground attack, eventually there is going to be increased pressure on the united states to hope recognized the kurds for their efforts. the primary thing if they want their own sovereignty. the chances are higher now than they have in in the past several years since operation iraqi freedom. at the same time, if the kurdish state was recognized, that would set in motion a domino effect that would have fx on our relationship with turkey and iran. a lot of people do not want a kurdish state. input.k you for your coming up, a gridlock at one of
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the busiest airports or a fire in an aircraft control based -- after a fire in an aircraft control based. e. same show, new time, 5:30 p.m. on bloomberg. ♪
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>> this is "taking stock" on bloomberg. i am pimm fox. if you plan to fly this weekend you may want to reconsider. thousands of travelers are currently stranded around the country after a contractor started a fire at a chicago air traffic control center. joining me now is the chief executive flight aware. what do you know about this specific incident?
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around 6:00 a.m. today, after the faa announced that they were not going to allow any departures or arrivals from the entire airspace that this facility controlled, which is more than just the chicago area. it was mostly right at airports, but it impact did a tremendous amount of flights. canceled to were and from chicago o'hare and chicago midway. the bigger impact so far has been how to compensate for the airspace that is used for overflights. flights from new york to denver that would overfly the airspace. the faa has had to work with all of nearby control facilities to can pick up the slack and how they can communicate all of these routing changes.
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thousands ofting flights, and tens of thousands of flights that are indirectly of affected as well. >> thank you. ♪
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>> this is "taking stock" for friday, september 26. i am pimm fox. a look at market making headlines we go to carol massar. inthe u.s. economy spend it the second quarter at the fastest rate since 2011. -- expanded in the second quarter at the fastest rate since 2011.
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and corn futures falling to a --e-year low as congress >> more on agriculture. growht continuing to gripornia would -- california with burn scars and burned forests. abouts the update california and what can we expect for lemon prices? >> you are seeing a real contrast between the situation aboutarol was talking with low commodities in the midwest with california.
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you have the king fire raging in the sierra which is eating under control, but you are starting to see the first reverberations in food prices. are a great example. they go up 36% in the last year. you see no and insight to that. we are in a dry season in california anyway, and a lot of this forecast is not encouraging. that is the snowpack down, and not a lot of hope for replenishment. >> i wanted to do a little further east from california, because i want to get your take on a region that has been hit like drought last year, and it just rebounded. wyoming? >> it gives you a little bit of when thecalifornia rain does fall. the soil has an ability to
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replenish itself. wyoming saw some really serious drought problems but has been rebounding. you at our forest conditions for the crops. wyoming is cattle and drop country, it is not fruit and vegetables like california. >> i'm wondering about the access to money for farmers and in a place like wyoming. will they have the money to replenish their herds? >> look at the farm bill that congress passed last day very. one of the first think that was of limited was livestock disaster help programs. they can apply for aid through that. there are some crop insurance programs that deal with forage. into the food inflation story. it takes a couple of years to build back a herd to the part
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where you're selling to the market again. >> it does not seem like it takes a lot of time to work through the system when we talk about jenna newman aboute -- when we talk genetically modified crops. what is this telling us? figures department of agriculture gave us a too far. they concluded a year-long investigation from oregon, about a genetically modified a farmers field. there is non-commercially anilable, so they were doing investigation. they have concluded that there was no risk to the food supply, but they still do not know where heat week came from -- w came from. they have found some in montana on a field there. that was a smaller plots, and
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they were near test sites were genetically modified wheat between 2000 and 2003. if you're looking at global markets and trade partners that are concerned about the u.s. food supply in what is in the exports, it is something the market will be watching. >> thank you for your connections. let's turn our attention to an activist investor and a yahoo! stakeholder. they want the company to explore a combination to unlock value. yahoo! should cut losses and in its display ad business, aol.iscuss a deal with
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brian, god who just issued a statement. what did they say about star board value? relatively not super aggressive, but definitely address the issue at hand statement out. they said we care about shareholder value, we care about our investors, they reference we will talk to the investors. and then they stood by the plan they have been putting in place since 2012. our products are better, we have brought back shares. they did address with a surprising headline. that there any coincidence this comes but a week after alibaba went public? >> no. a lot of people were expecting this. it laid bare what yo yahoo! is about.
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they sold some shares, and now we can value what did it really is in the markets. now know that yahoo! will have some sort of timeline of shelling the shares -- selling the shares, so what is that going to be and what is the track record here? they have created a whole another set of questions. put the focus on yahoo! and not on these early great stakes ahead of al obama -- they had in alibaba. >> did they have any sophisticated defenses against these activist shareholders? shareholders can be very creative, some people have described them as not the most aggressive letter that they put out, but at least it could have had more salty language.
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yahoo! has already put out a statement and we will see what happens from here. a new shareholder activist almost every day almost. this is going to be another big one to watch. going to be introducing any salty food at ,ahoo! because starboard values the same activist investors that are pushing for a change and board switch and darden -- at darden. maybe a corporate cafeteria at yahoo!? >> we will have to say. ee. >> thank you. up, jason harper is seating up to compete in the ferrari challenge. ♪
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>> this is "taking stock" for friday, september 26. i am pimm fox. they have been creating wrong since 1865. that makes it one of america's oldest family-owned and operated businesses spanning six generations. the sixthn with generation to discuss the rum. >> we're trying to elevated to a higher level. frome a blend of aged rums
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three to five years old, and ilter theharcoal f color out to make it clear. and we aged for three to five years. aged and jerry cast, and it in cherry casks, and add that in. the category leader in the white segement,ment -- rum the pricing has never gone up. the category leaders have not really raised it up. vodka, people will pay $30 for a bottle. with tequila, you
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have a variety of different types and price points. you have a variety of brands under your distillery umbrella. calledleading brand is don q. is a brand we have in making since 1935. that is the number one selling brand in puerto rico. it outsells the leading brand on the u.s. by a large margin. >> 1935? so how did this all happen? how did you and your family become part of this industry? >> my great great great anddfather came from spain set up a little operation. are inextricably linked.
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you always find a rum distillery right next to an old sugar m ill. sugarcane is cut down, and you squeeze it, and if you're in the business of making sure you're trying to extract as much sugar from the sugarcane juice as possible. what is left over, that is molasses. molasses is relieved the waste product from the sugar making process. after sometime, you have to do something else with it, so we started to make rum with it. ironically, in the 1970's sugar production disappeared in puerto rico. we could not compete with lower waged origins and subsidize sugar my corn syrup, etc.. i saw the demise of the
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sugarcane in my life, and then it has been very sad. but we continued to import the molasses. that decision to keep going and to use the distillery and use that knowledge is a springboard to turn yourself into a multinational corporation, that is not a decision you just make overnight. >> it was a big decision. getting out of sugar was actually dramatic for the family. a family business, we felt like we failed. there were a lot of issues that did not help us. but thankfully we had the rum brand that we had been growing for a while. luckily we had that going on. special ition to the market are bringing to now, you have flavored rum. umbrella we donq
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have flavors. a blackbeard spiced those of the majority of our friends -- are the majority of our brands. we have a hotel and a real estate operation and puerto rico -- in puerto rico. we are deeply ingrained in the economy. we invest our money there, we employ over 900 people between our hotel and our rum operation. next year we turn 150 years old. we will be releasing a special onlyon, 25 year old rum, 1000 injured 55 bottles, because that is the year we were founded 65 bottles.
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up, we get our first account of what it is like to compete in the ferrari challenge. are startups earning through their cash to quickly -- burning through their cash too quickly? >♪
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stock. is taking have you ever dreamed of driving a ferrari at the watkins glen racetrack? jason harper does not dream about this stuff, he gets to do it. he was part of the ferrari
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challenge and he is here to talk about it and show us. welcome to do. you. give us the details. he got it up to 130 miles pro r. er hour. that is eight races a year gentleman like alfred get to do. it is super competitive. core race series. it was my first ever real race. thed not do in scooters, i went hard in the racecar and did not crash. >> that was a key point for you. you describe in the article about how you would around the track and you could see people spending out and -- >> people push hard.
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we guys are driving hard. >> it is competitive. the top 10 guys are out there, and it is a real mix of talent. >> the brakes. >> you have not experienced g's until you cram down on these breaks. speed, andgoing top they slam on the brakes, and then you think you will fly off. and you are fine, you go through, you go out the other side. >> what makes a good racecar driver? >> consistency is key. approach the whole process of a race weekend with a process wher. communicate to the crew chief so
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you can make changes. the cars are equal, the only difference a suspension set the. and then push yourself as hard as you can push. the ferrari in challenge since 1998. i have done the last of program pro cup series. >> what about your physical condition to do this? >> i got out every time feeling like i had taken a shower. it is mentally fatiguing, and the races themselves are 35 minutes. you qualify, and whoever qualifies most quickly starts first. it is a really hard day. i was sore for days afterwards. you started in the
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little bit of the middle of the pack. and then that right-hand curve takes you down. >> the star is always the most dangerous part of the race, because everyone is excited everyone is bunched together. beforee cars spun out me. i had to get out on the grass and drive around. then i had to fight through traffic. got a little adrenaline going past someone. passing, i drive on tracks all the time, and it is learning by rote, and racing was like having the music come on for the first time. wheeln you get behind the your heart is pounding. in his 160 beats per minute, 110 plus degrees in the car. everything else goes away,
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it is just pure instint. it is one of the most your emotional's parents is you can one of the most pure emotional experiences you can ever have. >> what does he need to do to get him to the checkered flag? >> speed time. >> what does it cost to do this? >> a lot. >> they are driving their own cars? >> it they do not have insurance. they basically self-insure. if you damage it you pay to fix your own. $350,000 -- the cars are 350 thousand dollars. it is a lot of time to do it, and these are busy businessman. >> i think you can do it.
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>> i want more. >> thank you for taking stock. good night. ♪
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>> i'm emily chang. our highly valued startups spending the cash to quickly? a german company cloning american businesses like airbnb on groupon has doubled the size


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