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tv   In the Loop With Betty Liu  Bloomberg  January 6, 2015 8:00am-10:01am EST

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down below $50 per barrel and stock futures are in the green rebounding from the selloff yesterday. we have two powerhouse guest posts in the loop. one of america's most expert's turnaround experts, greg rayburn. why he thinks republicans me are a ands there's a chances to try to fall back into bankruptcy. jim reynolds will walk us through the opening bell, the veteran wall street banker and former adviser to president obama gives us his take on another year of mega mergers and whether jpmorgan really should be broken up. first coming here's a look at our top stories -- a fourth straight day of losses for oil. west texas intermediate fell
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more than 3% today and crashed through the $50 per barrel mark and has been trading under $49. european stock markets are mixed a day after the selloff in asian markets were lower at the close and equity futures are on the rebound. in europe, the economy has hit another speed bump. growth slowed in the fourth quarter which bolsters of those in the european central bank and they say they should add more stimulus. there is where that verizon has approached aol to some combination. the two companies have had discussions about a potential acquisition or joint venture. meanwhile, dish network has come out with a plan for viewers who do not want to pay all that money to cable tv channels and their cable providers. $20 per month, they are offering plain tv with a dozen channels to be streamed on the internet and among them is espn cnn, and tnt. the ceo of sony has made his first public comment on the
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cyber attack. he spoke at the consumer electronics show in las vegas. >> they were, the victim of one of the most vicious and malicious cyberattacks we have known certainly in recent history. i have to say that i'm very proud of all of the employees and certainly the partners we worked with as well who stood up against some of the extortionist efforts of the criminals that attacked sony pictures and its employees. >> he did not mention who the u.s. has blamed for the cyber attack. the launch of the elon musk falcon nine rocket was scrubbed at cape canaveral but it may launch on friday. he is trying to make history and says technology will guide the booster part of the rocket with a soft landing on an unmanned ship in the atlantic, a barge.
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rocket boosters normally burn up during reentry to the atmosphere but he wants to recycle them which is better for the environment and everybody else. . w oil continues to dropti is trading below $50 per barrel and equity futures are on the rebound pointing to a higher open. i want to bring in mike reagan. does this follow a pattern? we have had five losing streaks over the last 12 months. every time we have had a losing streak, we rebound so is this just a pattern? >> last year there were five dips of at least 4% in the s&p 500. there were rapid rebounds after each one for the last one in december was four or five days and the market gained it all back again. each what makes people nervous. we have not gone -- we have not had a 10% in the s&p 500 since the fall of 2011 after the u.s. credit rating was downgraded. that long of a stretch without a
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10% retreat makes some people nervous. jonathan galt at rbc said stretches like that are not unprecedented. in 1990-1997, the market went without a creation and 2003-2007 without a correction so it's not uncharted. every strategist or investor i've heard is expecting more volatility this year. v don't be surprised toi see the spike over 30 this year. xthis has not been seen since 2011 so everyone is braced for some very aggressive dips this year. >> you woke up yesterday morning to strategist saying we will see a 9% rally in the stock market and then that gets answered with a 2% dip in the market. is this about oil or greece. >> greece as part of it if you look at the european markets yesterday. much of the u.s. and banks were
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in the lead. that is showing concern about greece. in the u.s., oil is probably the main focus for most investors. it reminds me of a great line that laszlo birinyi had during the financial crisis -- he said everyone is waiting for the other shoe to drop so this market is like a centipede. that is the case with oil, this is a major capital markets event. it will be good for the economy in the long call with consumer spending but you have to worry about some sort of disruption in an oil-producing countries. we have seen dividend cuts and capital raising efforts by some of the smaller energy companies. there is more shoes to drop before the end of this run. >> we've got the job report on friday -- >> january is very busy. economists expect 220 8000 jobs to be added which is on trend with which we have seen in the past year. they expect the jobless rate -- the unemployment rate to go down to 5.7%. many economists will be looking
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deep into the report to see about energy sector jobs which are high-paying jobs, higher than the average wage. there could be pressure on wages there from the employment report. >> thank you so much. let's dig deeper into these problems in oil but also in europe. the euro has been falling over the neck several weeks and is at its lowest level in nearly nine years. let me bring in jacob kierkegaard. i want to bring in my guest is for this hour, greg rayburn managing partner and turnaround expert k atobi partners. i know you have a new gig at floral water. jacob, you got this interesting theory or speculation about what exactly is going on with greece which started with the whole der spiegel report. you said it was a strategic leak? >> yes the entire uncertainty
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about greece and the election is you have two competing narratives. you have a narrative of fear and the narrative of anger among the electorate. if it's anger that prevails, the opposition almost certainly win. if it is fear and potentially greek swing voters might worry about what might happen in the future, i would predict the other side wins. what the anonymous german government sources are trying to do is essentially to foment a crisis sentiment in the market and create mayhem before the election on january 25 so they get the election result they want. >> those rascally germans -- is that going to work? you saw the route in the market and the euro tanking after that report. >> so far, so good -- it is bad news for greece in a
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way that the ecb is also likely to begin quantitative easing at some point in the coming months. what will not include greek assets. we are likely to see much cross-border contagion. as long as this is really a greece meltdown only, it's really playing into their hands. >> greg are you worried about another contagion moment from europe? >> not from grace. -- not from greece. there is headline risk in the market overall with greece but i don't see an exit by greece as a contagion problem for the euro. i don't think it's nearly as much of a problem as slowing growth in other countries that are operating with the euro like italy and spain. it's glacial. with greece you have an interesting cultural problem in all of these countries in terms
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of reforms. is really exacerbated increase. it's a huge cultural shift and it's very hard to do that even when you have a crisis. you might say we have to do it now but if you wait to that point it is very difficult to make a cultural change and have those reforms that. >> bottom line this is a sideshow -- i don't want to minimize the greek issues but this is a sideshow as u.s. investors look at this. >> yes. >> are you worried about the market here? >> im because i don't really see the fundamentals improving the way that people have been reporting over the last couple of months. buy the dip has been a great strategy for 2014 but am not sure that's a great strategy for right now. i don't see the fundamentals improving that much.
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i think you're going to get to a situation -- we already are -- low interest rates won't matter. this is the problem -- the fed will keep rates artificially low and it's killing the middle class whatever middle classes left. that is a huge advantage for the wealthy people but it is not good for the general economy to continue to artificially do that. >> although americans are feeling pretty confident right now. we'll get more into that -- back on europe, you just heard greg as an observer in the u.s. talking about very little chance of greece becoming a bigger contagion. what is the chance of greece exiting the euro? >> i think it's very low. the main reason for that is that despite all these rumors, the reality is that the vast majority of greeks -- the latest
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poll suggests 75% -- they want to stay in the euro. i think it's because they correctly realize that if greece drops out, the situation is going to get much worse. this means that a populist government cannot simply go against a large popular majority on such an important issue. there is no government possible in greece, in my opinion, that will take greece out of the euro willingly and you cannot kick them out and even the germans do not want to do that. no, there will be no exit. >> thank you so much. greg rayburn is my guest house this hour. the first day of the new congress is not opening with a show of unity. a small but noisy group of house conservatives plan to oppose john boehner's bid to service as speaker for a third term and will vote later today. chief washington correspondent
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peter cook as much more. how is this anti--boehner caucus, is a growing? >> the best headcount we have is that the have at least 12 members who plan to vote against john boehner. that number could rise to as high as 20. the magic number for john boehner is 29. if he can avoid that it will stay on a single ballot and he will prevail as speaker of the house. at at someone republicans really want our focus and the nations focus to be on all the things they plan to do now that they have control of the house and senate, we will see what this vote tally is. it's a distraction and embarrassment. it's not the way they want to kick things off. >> when they get past this, it sounds like john boehner will likely get past of this. what is the first big vote on the agenda for congress? >> even before the new year
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began, it is the keystone pipeline. you will have the introduction of legislation to authorize the keystone pipeline in the senate today and news conference is planned with a vote in the house perhaps later this week on friday. this is legislation that will authorize the keystone pipeline and will challenge president obama to veto this legislation. right now, it looks like they have the 60 votes they need to get a pass in the senate which they did not have less time around but probably not the 67 to override a presidential veto. it's an early showdown between the white house and republicans. >> the president will also try to steal some of us bought light by going on a road show on wednesday. >> that's right at a time when republicans really have a megaphone and have control and a lot of attention, the president is hitting the road. is going to do try to talk about the recovery of the auto sector and go to phoenix to talk about his efforts to reach out and help on homeowners who are still
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struggling. he is also going to tennessee to talk about education and manufacturing initiatives, the things he is trying to do on his own without help of the republican congress. you'll see this president try to show he is still just as relevant today with republicans in control. we will see how much of the spotlight he steals. >> thank you so much. coming up, dish network wants to help you unbundle. we will see if this is a game changer in the pay television world. who will be the first automaker out with a self driving car? we will be back. ♪
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>> is this a game changing move by dish network? they planned to launch a $20 per month streaming tv service called sling tv targeting younger consumers who are reluctant to play -- pay for a
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typical cable-television subscription. paul sweeney is with us to discuss this. greg rayburn is my guest host for this hour. i want to show you this picture of good joe clayton, the dish network ceo, yesterday. he is the head of the marching band drumming up excitement over sling tv. will it live up to the hype? >> i think it's a pretty big deal. one of the issues for media investors is the fact that the tv bundle that the cable companies have relied upon for decades is starting to fray on the edges. we saw hbo a month or so ago decide to go direct to consumers with the internet and cbs the same day made a similar announcement and now we've got this -- dish coming up with a skinny tv package. it's 20 channels at a lower price point. they are targeting millenial's
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that say don't already subscribed to pay tv service. this suggests that it is not a cannibalization issue. many investors are concerned. >> it's really about espn, that's a big deal. >> you have to have something to anchor this product. you have to have a big channel and they have espn. will there be demand for this skinny pay tv package? if so, who are the incremental subscribers? >> greg and i are not core members because we are certain age group but what do you do? >> i think i might be. i'm the only person in my home that watches a regular sized to tv. all my kids watch on their devices. they have four years. you start to realize that the cable bill you pay for every
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month -- >> are you getting frustrated with thing that money? >> it's a lot of if i'm the only one using it. he only way they would use it is if they would use the carrier to get espn. what dishes doing is makes sense. they run the risk of losing millenial's in the same way mcdonald's has lost millenial's to chipotle. you can see the damage it is doing. >> this is a big risk. how do the broadcasters and cable operators respond? >> it's a key issue for them because they live by this bundle. it's not necessarily just their video service. it is a competitive exam -- advantage to have the bundle for these cable carriers like comcast and time warner. three products bundled together have value in the cable companies have suggested that
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subscribers they are losing her necessarily the triple play subscribers but the folks who subscribe perhaps to the video service. are they actually going to lose the triple play bundle customers? those are the most viable ones. if they lose the subscribers, then they are in trouble. >> one article i read had younger customers saying i don't understand the triple play. they understandhulu great to see you, thank you so much. much more ahead. samsung is looking to the future as it was to dominate the internet of things but it's a new day on that hell and congress has an ambitious agenda. former secretary of commerce
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carlos gutierrez will join us to talk about the big issues that the republican-led congress will be tackling first. ♪
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ah, got it. these wifi hotspots we get with our xfinity internet service are all over the place. hey you can stop looking. i found one. see? what do you think a wifi hotspot smells like? i'm thinking roast beef.
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want to get lunch? get the fastest wifi hotspots and more coverage on the go than any other provider. xfinity, the future of awesome. >> you are watching "in the loop." good morning, i'm betty liu. morgan stanley is trying to reassure clients after an in-house data break. one customer said he stole data from wealth management customers but morgan stanley says there is no effort -- there is no evidence that any client lost money. you'll probably see a salt driving car on the road within five years but it will not be made by ford. the ceo of ford said they are focusing on less expensive
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features that help with driving and we will hear from him later this morning at 10:30 a.m. eastern time. samsung will focus on the growing business of smart cars and smart connected homes. the biggest maker of televisions says all products will be internet ready within five years. their earnings on smart phones have been squeezed by apple and cheaper chinese devices. we can just sit there and all your machines will do everything for you. bloomberg television is on the market. equity futures have now turned slightly lower. we were not able to hold onto the rebound we saw earlier this morning. dragging down futures is oil prices. they continue to drop for a fourth straight day in a row. oil prices are down about 10% from a week ago and they are lower again today, the low $50 per barrel. we are on the markets again in 30 minutes.
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congress is back in session today with a vote on the controversial accell pipeline seems to be the first thing -- on the controversial keystone xl pipeline seems to be the first thing on their agenda. john boehner must survive his leadership for his own party today. let me bring in former secretary of congress carlos gutierrez. still at me as greg rayburn. -- still with me is greg rayburn. congress is back but snow is slowing things down this morning. we can see snow at the white house finally. >> what tends to happen is the city like congress gets a little paralyzed. >> any excuse to be paralyzed? is that what you are saying? >> we have to assume it will be better. divided government usually
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yields better results. we hope that today will be a start of getting things done actually getting bills passed and getting budgets passed and doing the work of the congress the way it should be. >> but john boehner is facing this challenge from a group of a rowdy republicans. do you think he will survive? >> i think he will do fine. john boehner has been an extraordinary leader. he has led that chamber, that house through some very difficult times. he has been able to keep the party together. there may be 20 republicans are want to take him down. i not sure they will get to a second vote. i think this is a challenge as there is from time to time but i believe that speaker boehner will keep his job. >> betty mentioned that the open i refer to the republican party as a freaking mess.
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i agree with what you are saying about john boehner and him surviving this but it also is a clear example of the kind of circus he has been having to deal with for the past several years. do you see it that way? >> that's a great point. >> this is a clear example that at a time when you don't need this kind of thing going on and you need to unite as a party this is going on. >> it's interesting but we are always reading paul's about the american people being centered either center right or somewhere in the center but you have these folks who are extreme right trying to pull the party in that direction. clearly, that is not where the country is and that's not where the party should go. we don't want pendulum politics. we need to go extreme left or extreme right? what these members of congress are doing is challenging john boehner on extreme right issues
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which i think is a mistake for the party, for the country. i agree with you, it's been too divided and there are certain logical, simple things the party stands for like lower taxes and less government intervention and growth and prosperity and free enterprise. those are the things we should be focused on and not social issues that divide the party in the country. >> it is not -- yes, it's a group of outliers and they don't represent what the americans want but at the same time, they are making republicans look bad. does that have real-world consequences for republicans going into 2016? >> you are right in the sense that one very loud voice -- people assume that person is speaking for the party and it's not so.
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these 24 making a big ruckus are getting a lot of play. what tends to happen is that has a spillover effect for the gop brand. i don't believe those 20 folks represent what the gop is and where the gop is going. hopefully, this will be one of those battles that further defines that the gop is a center right and not extreme right. >> part of me says i have been hearing this quite a bit from moderate republicans. they cannot get rid of this faction of the republican party. it has continued. >> i think that's true but you go forward into 2016, if that part of the party, whatever you want to call them, tea party or whatever, whoever is pulling
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that far right will be sent home. >> but will they dragged the remodel it republicans down with them? >> they very well could. based on the presidency we have had, this is a golden opportunity for republicans if they can get their act together to get a great candidate to come through. i don't think this country wants a bush-clinton redo. i don't think the majority of the country wants anything like that. it got to get centered around policies that matter. >> emigration, tax reform -- >> push that forward. >> you are right, it is about leadership. 2016 will define a lot. i don't believe you will find that you have to go to the extreme right to get nominated. if that happens again, we are in deep trouble. >> i would agree. >> on the agenda for the president which is of interest to you is the mexican president
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will be meeting with president obama and the vice president later this morning. what do you think they should be pushing for? >> i think it's a great thing they are meeting. mexico is not just a neighbor but an incredibly important economic partner and security partner. i'm sure they will be talking about the pressure, the domestic pressure that the president of mexico has. in terms of some of the violence in mexico. there has been allegations in mexico about the administration. at the same time, there is so much opportunity in mexico. the president of mexico once all kinds of reform and that will help it will take time to kick in. right now, the economy is a bit soft before the reforms command. generally speaking, this is a good time for mexico and the
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president should be talking about how we make nafta stronger , how do we integrate the supply chains better and how do we cut -- how do we become her competitive? >> what about cuba? >> what about cuba? in terms of getting competitive, i think they've got a lot of things to do before they can even talk about competitiveness. marxism and leninism and competitive is an do not go together. >> thank you so much for joining us. the former secretary chair of commerce. here is more on the snow in washington -- the national weather service is updating the forecast for washington predicting 2-4 inches. many schools are delayed or canceled. it looks more than 2-4 inches. much more ahead --
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as congress is getting back to work we will hear from the longtime supporter of the president that the chairman and ceo jim reynolds will be joining me as the next guest host. once deemed a crybaby by his longtime rival carl icahn, bill ackman is no cry baby anymore. a look at his winning bet in 2014 stay "in the loop." ♪
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>> 2000 14 was a horrendous year for hedge funds on average. they returned just 2% last year. many of them shut down yet a few funds managed to find some gems along the way. we have the annual ranking of the best performing hedge funds. this man was on top, activist investor bill ackman whose fund pershing square return nearly 33% next to winning bets on
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allergan and canadian pacific railroad. katrina brooker wrote the cover story on bill ackman and spent time with him. greg rayburn is staying with me through this hour as my guest host. you've got -- you got to know bill ackman. first, his winning strategy -- allergan was a big play? >> it was one of the most interesting stories of 2014. there was so much, on both sides. -- there was so much drama on both sides. i think he played it in such an amazing way. you felt like it was a battle of two equals. they both ended up winning in the end and that was the strangest twist. in november when allergan escaped the bid to get married a toctivis - >> as if this story was not
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confusing enough. >>bill ackman himself kind of push things to the edge, didn't he? >> i think it was a very provocative feel from the start. the analysts that i talked to were shocked at how the deal came about. there were all these questions about pershing square and valley and and how they bought up shares -- and a valiant and how they bought up shares and it suddenly hit wall street as a total surprise. one analyst wrote a report asking how this could be legal. that initial bid was legal. there have been questions -- there is a class-action suit pending. >> the story goes on and it's the gift that keeps on giving. >> for reporters especially. >> greg, it points to the larger
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issue that bill ackman represents this breed of activist investors. every ceo in this country is got to be worried about a bill ackman type going to their company. >> i think he did the right thing in that scenario. he is killing it now. i think ceos really shouldn't be worried and boards should not be worried. they should be doing the right things for their shareholders. where i draw the line and activism in general is time frame. i am not as supportive of someone who will come in and make change and then bail out three months later or six months later. dan loeb at yahoo! for example -- if the point of the activism is done within a long-term timeframe even though people are trying to make money now, i don't think there's anything
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wrong with that. i think it is probably better for stocks and companies and better for boards to be challenged that way. >> that seems to be the bill ackman strategy. it was a losing bet for jcpenney but he stuck with it. >> until last year. >> it's not about him trying to make a big buck necessarily. >> when i spoke to him, his strategy is long-term and i think that's how he makes of himself. probably his critics would say otherwise. if you are an individual shareholder and i think that's probably how some of us have to think about it, i don't know it's a bad thing to have people like bill ackman out there agitating points that certain boards or ceos need to make changes. but i agree with you about the long-term timeframe.
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also, it gets complicated when you look at companies that are good companies and strong companies that have been delivering to their shareholders. >> and they still are the subject of activist investors -- >> i think that's why allergan became so controversial. >> but he was right. it goes back to that it is a good thing. every activist investor will have the stakes. it's no different than venture capital. venture capitalists do 10 and hope to survive. your ratio better be better as an activist investor but you will still have mistakes which can happen to anyone. he had the trade wrong on herbalife and carl icahn had the trade right. he may be right long-term. again >> that's ongoing as well. >> you spent some time with bill
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ackman. is he down to earth? >> he is an entertaining guy. he is complicated and has a lot of ideas. what was interesting is before meeting him i talked to a lot of people about him. you go in expecting one thing -- >> and you come out with something else? >> more complicated -- i think he really believes -- in my story i quote him as saying that he sees himself as one of the good guys one of the guys fighting on behalf of the shareholders. his critics feel the opposite. he's one of these interesting characters where people feel strongly about him one way or another. i think he has this ability to
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get people talking about subjects like activism which is important. >> he is one of these people who carries a lot of heat around him. whatever he says or does, people are going to latch onto it. thank you so much katrina brooker. greg rayburn will stay with me as my guest house than you can read the full story on bill ackman in the february issue of "bloomberg markets" magazine. motor city is revving up for a turnaround -- from, can they rebound? ♪
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>> the new year marked a new start for detroit that spent the last two years digging themselves out of a crippling financial hole. a financial emergency was declared on the city in early march 2013 and eight months later, it became the largest u.s. city to enter bankruptcy.
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foundation and state funding were secured in january of last year as part of a grand bargain almost $1 billion, helping to try to emerge from bankruptcy this past december. fueling the recovery were the big three automakers who reported strong december sales and are on track to reach 17 million cars in 2015. for more on the turn on, i am joined by the restructuring expert greg rayburn. we both first met when you were turning around hostess and how difficult that was. what marks do you give detroit in the turnaround? >> i think it's difficult. the process detroit went through and the players involved did all the things that they needed to do and could do to have an emerge. that process is one where creditors take pain things get reset and you lower that bar and reset it. >> creditors and pensioners and
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labor unions -- >> the projections that were the foundation of that exit line are probably pretty rosy. as far as i'm concerned, i hope detroit turns back into a fantastic city but i'm not sure they will get the revenues the tax revenues and other things that they need. >> why are you doubtful? >> i think there are pockets of investment going on there. people who want to invest in detroit but i don't think it's very big. i don't think it's very widespread. when you point to auto sales for example again, i see a red herring. subprime lending in automobiles is hot. it is up alarmingly. how does it make sense to do a subprime loan to someone with bad credit and have them pay seven years for a car? that is insane. >> you say a raft of default?
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>> if subprime is the basis it has not shown up yet and i don't think the delinquencies have kicked in but going back to what i said earlier where i don't see the fundamentals -- interest rates can be low low interest rates don't matter if you don't have a job and does not matter if you are underemployed. it does not matter if you are underwater on your home. i don't see any of those three things moving in a huge way. >> the bankruptcy plan is $1.7 billion, 900 million dollars comes from restructuring their debt but this is what people have a problem with. 483 million dollars from new revenue. $358 million from cost savings -- those two areas are what the skeptics including people in detroit talk about where you get that.
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you have savings and strong unions and you have obligations. you have the new revenue side but where is the new revenue going to come from when the property market is not recovered? >> you are exactly right. in the chapter 11 world coming might see a chapter 22 and a chapter nine world it's a possibility. revenues may not materialize but you either go back to a process like that are you have to go back but it's on most impossible to make that deal. >> thank you for joining the asthma guest host this hour, greg rayburn. floral water, you are now the ceo. >> it is a vitamin water that actually has vitamins and note sugar and no sodium. it has antioxidants. it also has fiber. it's the only water with fiber. >> its fiber water? >> it's available on amazon, a
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great product. >> the health kick trend. >> the right product at the right time. >> so great to see you. we will be back in two minutes on "in the loop." ♪
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>> it is 50 says minutes past the hour which means bloomberg television is on the markets. equity futures are trading pretty much flat. they turned lower a few moments ago but we are pretty much unchanged right now. there was a big selloff yesterday. we are on the markets again in 30 minutes. coming up, it in the wake of too big to fail, will jpmorgan be better off split up? goldman sachs says so and we will talk to chairman and ceo jim reynolds on his take. dish network announces a streaming television service call the sling tv. you are watching "in the loop,"
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live on bloomberg television. ♪
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>> welcome back to "in the loop," 30 minutes away from the opening bell. futures indicate stocks will open slightly lower in the s&p 500 is coming up its worst lost since october and stocks are down 2% yesterday. the price of oil is taking another dive today. west texas intermediate dropped more than 3% and broke through the $50 per barrel level. at one point, it was trading under $49 and a report tomorrow is expected to show that oil stockpiles have risen and that will put more pressure on prices. dish network is targeting customers you don't want to pay for more expensive television packages by announcing sling tv
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a dozen channels that will stream on the internet and the cost is $20 per month. they are trying to compete with cheaper internet-based services like netflix. ford will not be the first one on the road with a self driving car according to the ceo mark fields who says you will probably see one of those cars within five years. he says it will not be the focus of ford but he says fortis focusing on less expensive features that help with driving. we will hear from mark fields later this morning at 10:30 a.m. eastern time right here on "market makers." thomas gilbert has been charged with the murder of his father. thomas gilbert junior staged the shooting death of his father to make it look like suicide. thomas gilbert senior founded a small hedge fund that focuses on biotech and health care. we are under 30 minutes away from the start of trade so let's count you down to the open with the top 10 headlines.
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joining the is olivia turns and jim reynolds, the founder, chairman, and ceo of luke capital. >> i cannot imagine a better way to start the new year. this is the highlight of my year. it has to go down from here. >> let's make it go up. number 10 on our radar is mega ipos where 2014 saw offerings of over $1 billion. is that going to extend into 2015? most of the big companies acquired by private equity before the financial crisis have already been offered. we have seen a lot of these deals already. they have been tested in 2014. >> i am on the fence about this. there is still not a lot of big ones that can get done.
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airbnb, snapchat and we are seeing these companies go from nothing to over $1 billion in a month. vacancy $1 billion the way we used to get to $2 million in the old days. it's possible you will see more of this. one thing that mitigates against it is the fact that they can raise capital without going public which makes it interesting. >> how to the valuations compare back to 1999? companies going public back in the 90's were barely off the block. >> they had no revenues and no business models and quite often, they had nothing but a business plan but they got funded. they came and went very quickly. >> one survivor and thrive or at number nine is hedge fund manager bill ackman. his in-your-face activism
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approach yielded 32.8% return at pershing square. allergan was a bold and clever move. even carl icahn had to give him props. >> he figured out a way to do heads i win and tails you lose. a year ago, he was being ridiculed because he handpicked the ceo of jcpenney and that looked like a flop. herbalife shares were soaring and they have turned around and now he is back on top of the world. >> when you deal with an investor like this who makes really big bats bets, he will have some big losers but he will have bigger winners. he's got the latitude with his investors to stay with big positions. he did not how to get out of herbalife. he is still in it because his investors stay with him. he does his homework. i love the way he manages money.
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>> his portfolio is pretty concentrated. he's got less than a dozen or so companies in his portfolio. number eight is congress back in session. house speaker john boehner is playing a little defense in his bid for a third stint as speaker of the house. congressman louis gomer to and ted yoho of florida are trying to challenge them. there needs to be 29 republicans to vote him out. it does not sound like that will happen. john boehner is having another hard time trying to herd the cattle. >> this is a non-issue. the tea party has to do something because they cannot go quietly. theywill go and the republican party -- >> you think it's a nonissue? >> does he deserve to lose his job because he could not heard those cats? >> i nothing anybody can handle the tea party. they will be the tea party --
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i think they reside in the republican camp because that's really reside. i don't think they speak for the republican party. >>. they underscore the image of the republicans? asn the party ofo? >> that's a negative image but i don't think that's the image we will see going forward. i think we will see a more center right. >> speaking of images -- number seven, president obama breaking tradition and applying a new strategy -- he is heading out on a three day roadshow to drum up support for housing. you talk to any republican or a lot of americans and they don't feel like they have participated in this economy. why does he have to go on a roadshow to talk to americans question mark >> i don't know what americans you're talking to. consumer confidence is at an all-time high and job creation is better than decades. >> look at the market. >> the stock market is an
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all-time high and it just rates are at an all-time low and folks are getting hired. i think this is a fabulous time for him to be out talking about it. the way he is starting in michigan at an auto company who were the republicans -- the republicans did not want him to bail out -- ford did not take any but it's an incredible success story. it's about time he played more offense. >> it's smart messaging. he will get follow-ups on main street america but john boehner will be painted into a box once again on capitol hill. >> why let the republicans have all the fun? number six ismunis. they fund water systems, schools, roads -- it's up 15% from last year. it's a sea change after five years of austerity. even detroit, they have taken
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care of their problems and their structural issues are behind them and now they are back. >> detroit is back and you wrote them off for dead a year or two ago. >> i thought meredith whitney wrote them off. >> meredith made the call. i think i said on this show that grandma and grandpa don't sell your communities. they missed that don't sell yourmunis and many did. the last quarter she did that mmuni redemptions were off the chart. the muynni market continues to be a safe market for long-term growth. it's a nonissue. continue to invest in munis - grandma and grandpa. >> coming up, jpmorgan, we will tell you i goldman sachs is
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calling for a breakup of the bank. stay "in the loop." ♪
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>> number five-wall street banks have been sending off calls to break up shareholders and industry vets like the former citigroup ceo. the topic is front and center yet again as goldman sachs says jpmorgan could unlock value by splitting itself into pieces. the move will reverse much of what jamie dimon has done since taking over jpmorgan in 2006. the firm has grown to become america's biggest lender, making nearly $17 billion in the first nine months of 2014. let me bring back jim reynolds chairman and ceo of luke capital through the hour. what do you make of this concept? jpmorgan broken up? >> i think it's nice of goldman
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sachs to advise jpmorgan on how to run a breakup. it's one of their main competitors. this is an example -- normally, when you look at combinations of businesses that have combinations of businesses this size and you can look at the different businesses and see how they are valued or what the multiples are if they were stand-alone businesses, the math usually works out to a stand-alone business. this one is very different. jamie dimon said it in rebuttal to this. this, i believe, is a business t wherehe whole is greater than the sum of its parts. i think a lot of the businesses within jpmorgan that the analysts point out in this note are the size they are and have the success they do because of
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the synergies they have working together within jpmorgan. >> the reasoning by the analysts is that the regulatory environment has changed. it has made it so it's much more difficult to operate as a big lender. you have much more of the regulatory eye and heat on you with a bank of that size. >> you do but if you spun off into an investment bank come you still have an incredibly regulatory mountain. you cannot get away from regulation just because you breakup. just because you are smaller -- each one will be regulated separately. i think that should not be the main story. which entity is where the shareholders gain the most? that's what i would look at.
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when you write something this big, you don't write it in a note. he wrote it in a note. what he needed to do was to write a research report so we could see what his assumptions are. and the basis under which he made the recommendation. >> you dismiss this -- >> it's just a note. i don't agree with it. i think you would have to really understand how those businesses and why they are profitable to make the conclusions he came to. >> we are close to the bank earnings season. we were talking about wall street yesterday. one analyst said the extra volatility you are seeing will not necessarily be a good thing for bank profits. let me play with one analyst said -- >> you hear about the banks all set for rising adjust rates. 18 months ago, interest rates rose and the results were poor. whether it's because their clients held act because they were short term held positions
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come you don't know, but you have to be careful about what you read on page 52, note 10 paragraph three. bear market and bank are bad words together. >> do you agree? >> i rarely read page 52 paragraph 3 -- somebody generally reads that for me. >> most people don't. >> i really don't agree. i feel so disagreeable today. we need volatility back in the markets. 13, 14 p were justeriods where things went just one way and volatility went down and the stock market went up or do i come from a trading background and trading profits not good. you will not ever have good trading profits when you don't have volatility. you need movement. for the trading markets like fixed income of investment
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banks, you have to have volatility. >> when you have the volatility when speculation was that interest rates would rise, that was not good for the markets. >> we had a month where i got caught off guard and many others did you getting in june when a statement was made in the market dropped like a rock. it caught everybody by surprise. everybody was offside in that trade. trading desks lost a significant amount of money but this is different. we are getting straight talk from the fed. janet yellen's fabulous because she really communicates very well with the markets. she talks about her intentions and talks about the factors that have to be present in order for the fed to make a movement. we need interest rates to go up for banks. that interest margin is getting squished. they are not making any money. the assets they have in the money market fund, they cannot charge fees on because there is no yielded there. we cannot trade because we got no volatility. >> jim reynolds, chairman and
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ceo of luke capital, we will be back in two minutes with the countdown. ♪
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>> welcome back to "in the loop." joining me today is olivia sterns and back with us is our guest host jim reynolds. let's get to it -- number 4 -- mark fields is predicting the jobless cars will be on the road in five years but he will not be making them for ford. we will hear from him later at 10:30 a.m. on "market makers." >> mercedes recently showed something that looked like an
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autonomous car as well. i don't doubt that technology is there but i wonder if we have the regulation in place to make this happen. >> i wonder what a police officer does if you are in a driverless car and you are speeding. who did they give the ticket to? is it the car or the driver? >> driving in new jersey i wish the drivers were in driverless cars. >> if we don't have an even playing field for laws about airbags, how will we get on the same page with driverless cars? >> i will be a buye but for some members of my familyr, they can use them. >> number three is dish network unveiling its own streaming television service called sling tv. the service will cut costs to $20 per month. you are a big sports fan.
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they have espn. how did they get them to go on their platform? that was holding back people from cutting support. >> if you are going to offer any specialized channels -- i like this because i only watch three or four channels, mostly sports and bloomberg. you have to have spores. spoke -- you have to have sports. >> i hate to say it but if i lived alone, i would not be watching sports. i would happily pay less just to get netflix or sitcoms. >> i don't need the sports. you are clearly in the 1% minority. the other folks in your family are right, they watched sports. whether it's nfl. that is a big move. >> in the last five years, tv has gone from being a mainstay to now on cool to watch. >> totally a la cart.
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>> number two, bill gross said the federal reserve will not raise rates until later this year if at all. anybody agree with this? look at the way oil prices has gone and the euro, why would the fed raise rates now? >> there are a couple of factors present to that warrant a couple of months ago. what impact will oil have uncertain economies? what is that going to do in terms of economic expansion in some of those economies? what latitude will that give the fed? i think oil is throwing a monkey wrench into the quagmire of the feds mix of looking at inflation and employment. he makes a good point and it's good to start looking at it now and talking about it now.
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although i think the majority of prognosticators [indiscernible] >> it's good to have a big voice echoing some of the outliers. we are nearing the opening bell and futures have settled unchanged. ♪
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>> welcome back, let's get back to bringing you the most important stories you need to know before the bell. i have olivia sterns in my guest host jim reynolds. onto our number one story -- it's got to be oil which continues to slide for a fourth straight day. wti is trading below $50 per barrel. there is speculation that crude inventories will expand which will exacerbate the supply and mean lower oil. it is getting to the point where nobody knows the bottom. >> it's incredible, we have not seen will come down this much
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since 2008 which was in response to the global financial crisis. do you think this is warranted after mark >> i think there is a statement being made. we sort of developed a threat to the oil-producing countries when we started producing the amount of oil be did and started moving toward energy independence which we are. i think opec, russia -- the major oil-producing nations are making the statement that they are not going to curtail supply. they are going to protect their market share and they will continue to produce oil. the other producers that operate on less significant scale and that are anticipating investing more in the production just abandoned that. it might just work. >> judging by the stocks of these oil producers -- >> there is a lot of pain out there. >> let me bring in david joy, the cheap market strategist at
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america prize a --t ameriprise financial. he is calling for $22.50 on the s&p 500 is up 8% from here. as i said earlier you woke up in the morning and strategists are calling for 9% including you. you are answered with a >> i admit that we are not starting out on such great footing. we still think the u.s. economy is one to be growing at a sustainable 3% pace for the year. this decline in energy prices is a net positive for the economy especially consumers. we are not looking for any multiple expansions. we think that as a backdrop that can produce earnings growth of somewhere close to 8%. >> tracking earnings growth essentially.
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>> exactly. for those companies that have a domestic focus we think the backdrop looks pretty good. >> let me fire a question at you. one often thinking about the last few days as we have seen this drop in oil. below levels we thought we would see. there is a point where it works well for the consumer. then you get to the point where for those exporting companies -- i will tie oil in with the dollar, if i may. those exporting companies -- we start to see different sorts of problems when we see little oil, high dollar. what do you think in terms of your car on the marketplace that have the effect on the dollar is going to have on their ability to continue to grow and impact earnings? >> you raise a good point.
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look at the u.s. economy as a hiring coming 15% of it is dependent upon export. if you discount the impact of the dollar on that portion of our economic performance, it leaves you with a sizable portion that can do quite well. it keeps inflation low. it may be a little too low for the fed's liking. but inflation is a huge support for the consumer. that is 80% of the economy. >> will the fed raise rates this year? >> not because they want to slow the economy down, but because 3% growth will not be consistent with the zero overnight rate and they walk to further this process of normalization and get us back to a real rate of interest, a positive rate of interest at some point, 2-3
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years down the road. they need to keep the ball moving forward. they started with the end of qe by the end of the year, the overnight rate will be at 1%. >> who are we going to end up exporting to? one of the key catalysts, these headlines out of germany sang angela merkel may be willing to let greece lead the euro -- saying angela merkel may be willing to let greece leave the euro. is this something that can be contained or will you see it spillover into the broader market? >> i think it will be contained. my reading of what angela merkel said and some comments out of france as well, it sounds like posturing ahead of a possible negative outcome for the election on the 25th.
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the party that would prefer it to aggregate their debt or negotiate it away. the us setting the stage for some tough negotiations. -- setting the stage for some tough negotiations. i think they will launch qe and that triggers a nice relief rally in eurozone equities. >> we believe that there. -- will leave it there. olivia sterns, thanks a lot. staying on the markets. many wall street strategists betting on another year. not everybody is so optimistic. the lowest s&p you and target on the streets. ♪
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>> oil slides for a fourth
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straight day. trading below $50 a barrel. for more on the oil market, from chicago is the founder and principal of energy consultantt -- you are on with us -- were on with us when we and said we could see oil below $50 a barrel. >> we did call for crude oil to break 50 and we are at 49. there will be continued weakness in the crude oil market. we see the demand side of the picture continuing to be week with europe deemed lackluster and japan and russia in recession. the demand side does not look good at all and we see further weakness in the crude oil markets for the next 9-12
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months. >> when does opec which is out of the picture for now -- when do they get back in here? >> the next opec meeting is june. it is a long way to june. a lot could happen in the marketplace between now and june. what we will see between now and then is a smaller opec numbe member continuing to call for decreases in production. last week come on. came out and announced they want a lower production output -- last week, algeria came out and announced they want a lower production output. there is precedent for them to cut. >> one thing i have wondered about and i wonder what your view was -- typically, we see
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price action like this with prices going lower, we see the supply adjustment take place. they produce less oil. here opec and the oil-producing nations have been very vocal about the fact that they are not going to cut supply. they are going to continue to produce. what you think about that strategy? do you think it is a strategy that is more focused on curtailing other producers? u.s. production of oil from moving forward with that? >> this is an interesting strategy. when you look at come historically speaking, saudi arabia has functioned as the swing producer within the opec organization. they are the only ones that he can increase or decrease production as the market dictates.
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now, we have a whole new world order in the energy markets. russia, the u.s. saudi arabia. we have a lot of competition in the market. a lot of downward pressure put on price because of the increase in supply. opec has been very vocal about not wanting to cut production. we will see it that lasts. the last downturn was in 2009. they did cut production to 30 million barrels per day. time will tell as we get closer to june if anything happens in the market double cause them to move further towards cutting. >> is there a level fourr opec? >> i don't have my crystal ball.
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if we have crude oil prices in the low 40's, i could easily see them stepping in. the last time, they stepped in crude oil prices got down to $33 per barrel in 2008. the last time they cut production. we will see where the market goes and how they behave between now and june. >> at least i got some sort of target out of you. jim reynolds, thank you very much. my guest host. we will be back in a few minutes. ♪
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>> some breaking economic news.
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the market pmi, 53.5 is the reading here. slightly below the prior reading. final numbers for the month of december. on the services outside, 53.3. that is also a bit below what was the prior reading both of those numbers slightly softer from prior reported numbers. some self driving technology it's all about the consumer electronics show in vegas this week. brad stone caught up with the founder of one we'll to talk about the tech behind its hover board-skateboard product. >> it's similar to skateboarding in some ways but has more in common with snowboarding, wake boarding and surfing.
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a new kind of digitally enabled ports port. >> you were a principal designer. why did you leave to start onewheel? >> it was a dream job. but i had this idea. like any inventor, i was working on it in my garage, in my basement. we got the first prototype working and it was pretty cool. put it on the back burner for little while, brought it back and it kept recurring. it makes people smile. >> this thing is getting attention. people are walking by and looking at it. how does it work? >> inside, there is a powerful motor in the middle of the wheel. there is a motor in the middle.
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it's not really that hard because it has sensors and now the rhythms that help it balance. the writer leads forward to go, back to slow down. >> an important week for you guys. your backers are getting the one ewheel. tell us what 2050 looks like for you. -- 2015 looks like for you. >> we are building the product in san jose, california. instead of having to fly overseas to work on that, we can work on it locally in california. our manufacturing is fully online. our kickstarter backers have already gotten their boards. have a long list of preorders we're working through. after that, selling and retail. >> how do you make it easy to
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use and something that the hard-core borders will love to right -- boarders would love to ride? >> you can start on classic which is tiled back, gives you more help. once you get the hang of it, you can slide it to extreme. maximum speed and acceleration. >> i would love to try it out. >> let's go. there you go. >> that looks like fun.
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brad stone in vegas. one of the many gadgets. how much did that cost? >> $1500. that does not include the medical bills. that will come down. it's an interesting gadget. there's a lot of weird here this year. >> what is the weirdest? >> ces is always about the tvs. they desperately want you to replace that flat-panel tv from 10 years ago. this year, it's about super ultra high-definition. samsung announced nine different models. curves is a big theme this year. lg announced a new curved phone
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which hugs your face. the strange, lots of drones wearable devices that track health. he saw a nap connected -- an cap connected toothbrush. -- app connected toothbrush. >> a lot of buzz about over-the-top internet television. this must be a moment where this is a cord cutters dream at ces. >> we will see. dish announced this new over-the-top service. you don't need a cable or satellite subscription. $20 is a lot and these things add up and you are suddenly
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paying the same amount as your cable bill. another is the automated car. for sadie's talking about a car with seats that swivel -- mercedes. in five years, luxury cars will have automated features. >> we will watch that, for sure. brad stone live in las vegas at the ces show. that does it for today. tomorrow come and meet the man behind uber's new headquarters in san francisco. we discussed the growing demand for property in america's innovation hub. this tomorrow -- that is tomorrow right here on bloomberg television. ♪
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>> it is 56 past the hour. bloomberg television is on the markets. we have 30 minutes into the start of the west trading day and u.s. stocks right now bouncing back. the nasdaq barely higher. s&p 500 coming off a four-day losing streak.
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let's show you what's going on with oil prices. nymex crude dipping below $48. still trading just below $50. we continue to monitor the weakness there. treasuries rising. the yield on the tenure falling as low as 1.957%. the last time was mid-october. the yen is it seeing some strength here come heading for its biggest two-day advance. monitoring the euro which is trading near a nine-year low. joining me now is rachel evans who covers the market for us. we had the head of equity derivative strategy at ubs on this morning discussing the correlation of the different asset classes. he noted a correlation between the euro and oil prices.
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to what extent do you look at other asset classes? >> very much. the dollar side of that equation is being impacted by the oil weakening. it seems to favor the u.s. economy. >> a lot of issues within europe to focus on. what's going on in greece with the upcoming elections. a lot of analysts reducing their forecast for where the euro will be . >> that's the next big measure point people will be watching for. we do have a lot of key event risks coming through in greece. elections in greece. going back to the problems a few
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years ago. >> everyone -- angela merkel said she could see greece leaving the euro. it doesn't seem to because into much of a fuss. is that shortsighted? >> it is a little bit. the new year holiday was shrugged off as europeans it's all political perspective -- people are looking at that picture. with the backdrop of deflation and slow growth in europe, maybe this political uncertainty could be a problem. >> we have the ecb decision january 22. mario draghi will launch full-scale qe? >> that seems to be what people are hoping for. we will have to wait and see. >> thank you so much.
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we are on the markets once again in 30 minutes. ♪ >> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> investors call a timeout.
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a timeout. little changed after four days of losses. >> a tale of two automakers. the other had a record year in the luxury market. speaking with the ceos of ford and rolls-royce. >> may be verizon wants to hear those immortal words "you've got mail pickup talking to aol about an acquisition. -- you've>> eric has been telling jokes. which means we are going to have a good one. first, we have to get to the newsroom because we have breaking economic news. one of the first data points of the year is out. michael mckee is in the newsroom with the real deal. >>


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