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tv   Bloomberg Markets  Bloomberg  July 23, 2015 12:00pm-1:01pm EDT

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betty: a new shakeup at bank of america. et: cigna set to buy anthem. betty: let's begin with a look at the markets. they are still in the red after two days of declines. some of the big decliners based on earnings.
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3m and caterpillar both lowe's companies disappointing. thee is lots of worry about global economy and both 3m and caterpillar are benchmarks for where the world is heading. nymex crude, you can see it is trading below that $50 per barrel level. it is entering a bear market. it has lost 50% in the last six weeks. see a broader selloff in the bloomberg commodity index. let's get a check on the bond markets. u.s. stocks coming down a little bit. you do see some buying and treasuries. over the last two weeks, the short term has been
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underperforming long-term treasuries. let's move onto currencies. what you are seeing is some dollar weakness. the dollar fell against the yen. the real story is in emerging market currencies. here is a look at the berlin royale -- the brazilian the fewest: americans in 40 years filed for unemployment benefits last week. jobless claims fell to 255,000. obama administration sales pitch on capitol hill.
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lawmakers on both sides told them this is a tough sell. years tok you two negotiate this agreement. in viennau two months to get to the final details. we are on day four of our review of 60 days. i have not reached a conclusion. >> mr. secretary, i'm sorry. not unlike a hotel guest that leaves only way they hotel bathrobe on its back, i believe you have been fleeced. scarlet: the u.s. and five other .orld powers stripped the deal congress expected to vote on the plan in september. an icon in the world of business journalism getting a new owner. billion, is about $1.3
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including the ft property in london. nara: this was announced a little earlier today. publisher, tose about $1.3group for billion, payable in cash. deal is expected to close to rene full-court press the fourth quarter of this year in it does not include the ft group's london group or a 50% stake in the economist. the largestsically independent business media group in asia. it has been working in cooperation with the ft to produce special reports on
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japan. bloomberg actually broke the story earlier in the week that there were talks going on about the sale of the ft. names that came up was axel springer. pearsonhe end, it was who made the deal. he said we reached an inflection point in global media with a move towards mobile and digital. the right time to find a new home for ft. what he emphasized was that the ft really needs to be part of an organization where everything was focused on journalism. pearson vary much focused on education at the moment. drovet was largely what this decision to sell it to make nikkei.make a -- to
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thank you so much for joining us. ceo briank of america is shaking up his executive branch. the relationship between moynahan and thompson have deteriorated. they battled over where to make investments to boost revenue. president obama will head to kenya and then the first sitting president to visit ethiopia. at the white house yesterday, the president signed a bill that will let some african companies to sell goods in america duty-free. >> i think the visit to kenya is
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extremely important. they will address the security issues. from an economic point of view, from a private sector point of view, the most important inc. is that the president both inspires isng not -- applicant thing that the president both inspires young entrepreneurs, prosperity without barriers. betty: president obama has a $7 theirn 10 to increase electricity access. those are your top stories at noon. scarlet: dow chemical, the largest u.s. chemical company by revenue, beat analyst estimates with record profits because of lower energy costs. betty: earlier this morning, i spoke to the chairman and resident in ceo about how helpful cheap oil is. >> for us, it is going to a gas matters.that
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three quarters ago, we have people thinking that equity price corrected because they follow oil would be bad for us. a competitives advantage in places like europe. but on the demand side, and our operating rates in places like europe is in the 90% range. that is because demand is picking up as low oil prices go into the economy. vary true in europe and now really happening in the united states. a took a. while here. the savings rate went up to 8%. the consumer is finally spending those bonuses. we get lower input costs. we have the natural gas advantage in the u.s. and in the middle east. and we get demand. that is how margins are expanding because we can manage that expansion against healthy demand. seems a perfect storm for the company for lower prices
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, truly lower plastics prices. >> the oil price drop year on year is roughly 42%. the lower plastics prices is about 15%. you can see the expansion there. the inputs are going down way faster than the price of the output. because we have less of a commodity mix, we aren't the plastics company we were five years ago. we have sold most of our commodities plastics. price atrophy is not as dramatic as the input atrophy. that is margin management against healthy demand. we are going where growth is, not just in plastics, but all of our diversified units. this is where a structurally hedged portfolio changes the edge of our company. this quarter, plastics and put thomas materials [indiscernible]
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-- hummed last quarter. betty: speaking about your portfolio, there is a lot of's about monsanto and -- a lot of buyingout monsanto [indiscernible] they say the phone is ringing off the hook from companies who want to buy those assets. are you interested in buying them? >> as you all know, we are a top five player in agora sciences -- grisizes. we don't have the seed channel. we have the trades. if you like the dna that feeds the seeds, we are a vary strong
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trait developer. we have been investors in ag, but organic investors. we have been growing in r&d. this is a console and -- if this is a consolidation that makes sense for our shareholders, we will be at the table no matter what. we will always look at a better deal for our shareholders. betty: but are you actively looking at these assets? i don't think anybody can be active right now because of the nature of what is going on between those two principal players. of course, we are watching and understanding what is really going on in the press and in reports like this. but out there somewhere, there could be an opportunity. as i said, we will be at the table. asset,this is a vary hot the seed business. was andrew leveri
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despite his accent, his heritage is greek. you wouldn't know it from his last name. in 2013, he was one of six select did to be on greek postage stamps. i asked him about what he thought about the situation. -- situation with the bailout plan. he said it is not perfect. it is a painful. but this is the first time we have seen a first world country living under third world conditions and it is going to be really hard to watch that. scarlet: i think it is interesting that he is one of six people does distinguish to greeks. you know what is missing? there are no women here. betty: right.
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still ahead, we will be speaking with bob right field. scarlet: concerns about the recent software and tech related news at the manger exchanges. ♪
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betty: let's get a check on how the markets are trading.
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ramy: gopro first up. so becausercent or the camera maker is pushing into china. gopro says it will develop a chinese language interface. it is no surprise that china is one of gopro's top 10 markets. they see a 30% pop your to date down one and 2%. reported q2 earnings that were only in line with estimates at a profit of $.84 a share. revenue did come in a bit better, $18.7 billion. under armour is actually hitting a record high today. it is now trading 7.5%. it had been higher earlier today.
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analysts had expected five cents a share. the share price has seen an riseng footie 2% -- a 42% year to date. only forour right now the 1.5% year-to-year. 41.5%ke is -- year-to-year. at 19%. is under armour still has a long way to go. the market cap is only about 20 billion. nike is still at 98 billion, five times as much. betty: now a look at the top
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stories at this hour. hollywood is getting bad reviews. makingopean union is antitrust complaint against a disney at five other studios. accused of illegally limiting access to their pay-tv content. secretary asked carter is on an unannounced trip to iraq right now -- asked carter -- secretary ash carter is on an unannounced or two iraq right now. iraq visit since taking office in february. scarlet: a russian capsule docked smoothly at the international space station. the capsule was launched late yesterday from kazakhstan. the mission was the later must two months.
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we know it was alexander graham bell who invented the telephone. but it lindsey graham who shows us how to destroy it. outld trump told -- dave graham's gave out phone number earlier this month. ofn a variety o videos that show you how -- what would happen if you put your phone in a blender -- scarlet: a's may be 14 out of 16. it is a crowded field. he is try to be a youtube sensation. betty: coming up in the next half hour, much more ahead. we are going to get more on the shakeup at bank of america.
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scarlet: we are going to take a look at what is driving merger mania. anthem is set to buy cigna. ♪
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betty: this is the bloomberg market day with scarlet fu. scarlet: let's get to the shakeup at bank of america. bruce thompson is out.
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he is leaving the firm. betty: thompson was once considered a successor to brian monahan. -- the problems at bank of america don't only lie with thompson. >> i think the oversight issues at bank of america have been the worst at a bank since citigroup. donewas this issue today by the board? issues with the fed two of the last three years. they had a $4 billion regulatory capital misstatement. in 105 pages of the proxy this year, the board needs to be held marketable. tom: gerard cassidy has enthusiasm about bank of america
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as a value that could become more like diamond, more like stump? >> i disagree vehemently because i don't believe they have proper oversight at the board level and at the top of the firm. there is not the right town set at the top. there is inconsistent financial metrics. there is not one forward-looking financial target. as investors, we need something to hold management a cannibal to. there are not enough financial metrics to say this is what they are trying to achieve in this specific time frame. : wasn't about confidence or a difference in strategy? the press release from bank of america reads like someone at the kremlin. there is a lot of shared responsibility. in charge of strategy. they had issues with the stress
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test. they had a capital misstatement. they have in -- they have had inconsistent financial metrics. that falls on the cfo. falls to the ceo in the board. and it seems like one more person is being shot while those above are being protected. tom: i want to cut some slack for mr. moynihan. is he still picking up the pieces for mr. lewis? that., but was good over yes, it was a mess. yes, he had a lot to clean up. but we are after the four-year period of that. i'm not sure the changes yesterday are enough. cfo, how does he work with mr. moynihan? >> carefully. betty: that was mike mayo, bank analyst. never shies away. scarlet: barry vocal about change -- very vocal about
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change. whose strange for thompson to step down because he is only 15 years old. betty: moynihan is consolidating power. a few years ago, he was one of the few ceos who is not chairman of the board. and there was talk about how long he would last. i think mike mayo is somewhat correct in his assessment saying let's move on. you cannot use the crotch of the financial crisis forever. ok, we say goodbye to you. we have much more ahead, including m&a mania. ♪
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betty: welcome back to the bloomberg market day. i am betty liu. here are the top stories making headlines this hour. general motors says you have not seen nothing yet. they easily beat wall street estimates. americans flocked to gm light trucks. sales were stronger in china. the chief financial officer tells us this sets the stage for the next 12 months. >> our growth has been driven by strong performance in north america and china, and we expect that iscontinue, and underpinning expectations that the second half of the year will be better than the first half. betty: gm broke even in europe last year. ford is looking to shake things up in contract talks with the uaw. ford workers have the most general -- generous contracts dating back to 2009 because they
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did not seek bankruptcy protection like chrysler and gm. if you ever wanted to make a ferrari purchase -- here is an affordable way. the automaker is planning an ipo. no word on the share price, but it is sure to be cheaper than one of their cars. models start at $180,000. the u.s. men's soccer team blew a chance to defend its gold cup title, upset by jamaica 2-1. they have not lost at home to a caribbean team in 46 years. what happened? coming up in the next half hour, workersars of protests, at fast food chains in new york have a ruling that would raise their wage to $15 an hour. we look at a turnaround plan for levi's -- can the iconic american gene brand fight back
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against competitors and consumers who love wearing yoga pants? it has been a busy morning in the m&a market. is. health insurer anthem close to finalizing negotiations , creating the largest health insurance company in the united states. it is the latest news in what has been a record year for m&a with over $1 trillion in deals in the first six months along. here to talk about what is next is a man that is the making deals for one of the world's biggest tanks for three decades -- banks for three decades. j.p. and jeffs well, mccracken. any and ayou ask
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banker if it will continue, they will say yes, and it will get that are. give me the truth. are starved organic growth. they are trading at high multiples and the multiples expect growth to continue, but look at their own business plans and the economic recovery being modest. they struggle and feel pressure to act and create growth. good synergistic deals that will add to the topline and the bottom line -- that has been the nature of the m&a market, which is up 40% year-to-date versus last year. betty: why do they seem to be consummated in stash concentrated in certain industries -- we see media, health insurance, and a little bit of industrial. why? chris: lester it was health care and tech. when we look at all of the sectors, they are all almost
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10%. that is a healthy sign that it has expanded out, and one other thing we are seeing is they are looking at their portfolio, saying cannot figure out what is non-core and better off in someone else's hands rather than my own. maybe i should announce strategic alternatives, a spinoff, a sale. it is a great time to be a seller. i'm looking at my business to go into that direction. compare theuld you m&a run we have been on -- going back to the second half of 2014, well over a year -- how would you create -- compare the volume versus the previous big year, 2007? it seems like that was more about lbo >> first. bloomberg. -- lbo's and thinks it did not work out. --is: there are big themes the stock market valuation is not quite so rich, so a private
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equity buyer can put a premium on the table for shareholders and big lbo's are being announced at about one-third -- announced. lbo-driven.ird were north america's volume is about twice europe and the private equity part of the business is 20%, and most of that is selling existing portfolios as opposed to going private. i described the market as much andthier, corporate driven buyers are using a mix of cash and stock. corporate driven, deserving ceos and boards are doing this out of conference, or are they insecure, wondering where growth will come from? one, they're comfortable in their own business because they have cut costs, cash flows are piling up.
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on one hand they have a lot of confidence they could weather the storm of an unforeseen bump. they are worried about growth. the two of those together have made them both to say i can afford to do this m&a deal, even if i'm taking on some risk. i have built up enough cushion and my balance sheet is secure enough that i can have a level of confidence, sleep well at night, but i have to announce a deal that is highly synergistic, i have to be detail-oriented and have to make sure the price that i am paying -- somewhere in this market it has been high -- i'd better able to support that price and premium with good synergy in a story i'm telling my shareholders. betty: i look at the apple results from earlier this week and cannot help but notice that have gone past the $200 billion-mark in cash. appleare companies like that have a lot of money. what are they waiting for? chris: we are spending our time with that question.
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what is the definition of excess cash -- do i return it, do i invested to grow, what is my core business? the hard part is i may know i want to grow, but it is at a price that i think is too expensive. get rid of the cash and raise the money when it is available, or strike the balance of drive balanceddry powder and m&a? it is case-sensitive specific, and apple and others are doing with that right now. jeff: i want to bring up a sale to lockheed martin. lockheed martin announced they were buying something and they were looking to spin out some big divisions. we saw that with dan r. do you think we will see more of that, grow and shrink at the same time? chris: first, united technologies identified them. then they go and execute that.
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they announced the deal, sell it to his strategic buyer, strategic price, use the proceeds for share buybacks, invest in m&a and growth. that is one part of the story we are saying. optimize the portfolio. a good time to be a seller. on the lockheed side, i have a good returner of capital to his -- they have been a good returner of capital to shareholders. at the same time, they're telling shareholders i am going to divest some businesses i have identified as non-core. so, i am shrinking on one hand, but growing on the other with excess cash flow. it is topical and i think it is a nice story equity investors want to hear -- a good use of capital, but you are not empire-building. i'm wondering if -- you know, the recent volatility we have seen in stock markets, not just here, but china, for instance, and also what happened does any of that, could any of that derail this
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merger fever that we are saying? chris: so, a volatile market is a dampening effect on m&a and confidence, so any time you're thinking of buying and selling a business, you look at the stock price. if it has wild swings, you have to rethink. any external event, geopolitical crisis, and generally people hit the pause button on what they were considering. however, as i said before, companies have a lot of cushion. they might say i will model in a down 10% on this business, another double-dip recession on some part of the world, and can i still generate good results in a financially strong way? most of them say i feel good about my ability to stretch because of that cushion. of course, anything that creates volatility the marketplace could have a dampening effect. right now, not enough. i want to circle back to
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one of the deals you bought a transaction, at cross-border deal, and we have seen a lot of u.s. into europe. when you look at what is on the list, do you see a lot of cross-border deals? chris: absolutely. 40% of dollar-bound mna is up. cross quarter, 50%. we have seen it pick up. it is mostly in developed asia into europe and north america now into europe. china. we had chem a great synergistic deal. the nikkei, japan, and to the u.k.. why europe is so interesting right now -- people have looked at europe and said it feels too risky and pricey. that was six months ago. people look at europe and say there is more upside than downside.
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the valuation is making sense, and i have i can put to work in a smart way overseas. i think those flows will continue. the cross-border part of the business it is to grow. people like they can buy into europe at a lower cost. chris: before exchange rate helped earlier in the year. we helped fedex. one of the elements, a business that was strategic for them to expand globally was the dollar. it helped him think about how to value the business at that moment at -- and time. we go, is there one area, one industry that you are surprised has not seen as much activity as you would have thought? chris: you know, one of the other things, in 2007, there was a lot of mna in commodity-driven sectors. that has not been the case. that will still say -- stay a sector that has more time to stabilize. i have been watching that one.
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betty: you have your team ready. industrials has been new or. shrink and grow -- that is been a big pickup and i will continue around the industrial area. betty: chris, thank you so much for joining me. joining us --chris ventresca. --nk you as well to amend a &a managing editor jeff mccracken. later we will talk about the concerns about if exchanges can come under a cyber attack. that is at 1:00 p.m. right here on bloomberg television. ♪
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betty: welcome back to the bloomberg market day. i am betty liu. let's get to ring me a sense who is standing by with market stories. it is red. ramy: we are now in the lows of the day. negative data outweighing the positive. consumer confidence did hit a five-year low blog jobless claims fell to the lowest back to november in 1973. the dow is down by .5%. the s&p is also down by nearly as much. looking into the bloomberg terminal, we can see that nearly all -- nine of the 10 sectors in mode.p are in loss utilities and materials are leading those lower.
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we are talking about gas and electricity company's been the main reason there. information technology just barely holding onto the green. dollar asing at the well as some commodities, we're nearing three-month high that, but we see a pause in the rally. right now it is down with a loss of about $.42, coming in at 97.18 or so. also looking at commodities, oil is trading lower today, extending into a two-day decline from yesterday. it is now trading at nearly $48.67 a barrel, the lowest level since march 31. also looking at gold. it has been on a 10-day losing streak. it turns out it is its longest since 1996. today -- it was earlier, trying to stop that. at lowe's weding have not seen since march, 2010.
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a fed rate rise, putting to analysts, will decrease absent -- appetite for gold, and we could see prices as low as $800 an ounce. betty: it seems like the gold bowls have been flushed out. short gold, itto seems. not making that recommendation. thank you very much. now, a look at the top stories this afternoon. software -- southwest airline stocks are getting air beneath their wings. shares are trading higher after a record profit in the second quarter. southwest shares had been down 17%. southwest earnings rose 31%. southwest is flying more passengers and paying less for fuel, as you just saw. energy prices tumbling. under armour is on a winning streak, partly because some of
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their high-profile athletes are as well. mcdonald's ceo protects the burger chain will start growing again in six months. investors can use the optimism after a lackluster quarter. same-store sales dropped 2%, the seventh quarterly decline. easterbrook took over in march and promised a turnaround. that is a look at your top stories this hour. speaking of mcdonald's, fast food workers in new york have won a victory in higher wages, the fight for $15. following several years of protests, a panel is recommending the minimum wage for employees of fast food restaurants to be raised to $15 an hour. wages will be raised faster in new york state and the rest of the -- new york city than the rest of the state to a comedy for higher cost of living. workers still qualified for food stamps and welfare benefits.
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dunkin' brands say the news might lead to higher prices for consumers. one of the arguments from the companies as to why the wages should stay the same. mark crumpton joining me now for this conversation. this has been one of the big, big debates in the u.s.. mark: this is a fight that has been going on for years. fast food workers are saying, for the most part, they could barely afford to live on the wages they made. they could barely afford to go inside some of the fast food chains where they work and buy a meal for their family. betty: right, they cannot even afford to leave there. mark: the current minimum wage in new york state is a dollar $.75 an hour. with the proposed increase expected to go into effect, it would represent a raise of more than 70%. take that into account -- just look at that. we work in new york city, live in new york city -- you know how expensive it is to do both here. betty: absolutely.
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mark: $15 an hour -- i do not know if it will dramatically change the fortunes of a lot of people, but it is better than a dollar $.75. $ absent -- betty: it absolutely will help, but those i guess that say it could be a job killer, eventually. high, raise it to companies cannot afford to hire as many employees. when you talk about living wage, number, mcdonald's got into trouble a few years ago where they put the financial tool planning kit out there, and automatically assume that if you are working those wages you might actually have to have two of those jobs to survive. mark: i read a story in "the washington post" a man who worked at mcdonald's on the north side and had to work at
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another mcdonald's to make and meat. a victory for fast food workers. you and i will be interviewing bob greifeld coming up. betty: that is right, the nasdaq ceo. they reported results is money. a lot of issues to talk about. mark, i will see what the top of the hour. mark: yes, you will. betty: much more ahead. we'll tell you how the iconic jean maker levi strauss is battling to win over. ♪
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strauss made the first blue jeans in 1873, strengthening pants for those still mining for riches in the california gold rush. since then, they have survived the civil war, the great depression, and two world wars, but the new enemy might prove too daunting for the
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163-year-old company. that is right, it is the yoga pants. here with the story is tim higgins who wrote the "business week" cover story. it is a great story, and it is one of those stories you read and say, of course, this has been happening. phenomenon that everyone -- every woman has been wearing yoga pants when she is out of the office. so, exactly how much has been dented levi's shares? the women's denim industry really started to see the effects two years ago. last year, jean sales for women were about 8% and levi's was feeling it with their u.s. business. now, their men's business is doing great. they have 25% of the market globally for men's jeans, but the women's is where they have struggled. they have long struggled to grow women's business, and yoga pants have not helped in
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recent years. betty: what are they trying to do about that? tim: yoga pants have essentially been replacing genes in day to them ine, and you see grocery stores, coffee shops all around the country, and that used to be the realm of genes. they got into the dna of what goes into the jeans, try to make them fit better, but keep the essence of denim so they still look like jeans when you put them on. that is the key. this is levi jeans. they did not want to make yoga jeans. betty: i have seen yoga jeans on the internet, and they're not pretty. tim: they're not pretty in real life either. betty: not at all. how did levi miss this whole thing -- at one point, could they have gone into yoga pants? tim: yoga pants is not the business they want to be in.
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they redid their women's line about five years ago, putting a lot of effort into simplifying the effort of finding the perfect pair of jeans. as you know, it is competition, hard to find. it is like finding gold. they cap with a pattern system, they came uptry -- with a pattern system and it would be easy to try it on. as the athletic pants movement became more popular, they found themselves with a fit of genes they were not able to put softer material into. they had to go back to the drawing board so they can be more flexible going forward. is a much. think tim higgins, bloomberg news. you can check out his bloomberg businessweek cover story online. we will be back with bob greifeld of the nasdaq. ♪
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10:00 a.m. in san francisco, 1:00 p.m. in new york, and 1:00 a.m. in hong kong. mark: this is the bloomberg
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markets day. the u.s. dollar retreats, but oil is on the verge of slipping into a bear market. from commodities to computer glitches, nasdaq ceo bob greifeld has plenty on his plate to deal with. we will ask him about these issues and much more when he joins us in a few moments. --mark: luber gets the green light, but a debate as it becomes the green light over inequality. betty: good afternoon. i am betty liu. mark: i am mark crumpton. thank you for joining us. let's begin with a look at wall street on this thursday afternoon. sluggish international markets are damp rain earnings that u.s. industrial giants and you see the affected is having on ma


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