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

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another twist in the federal investigation as to whether currency traders manipulated the rates. sec is looking at whether the rig rates for options -- were for options and etf's. the fed, the justice department, and the cftc are all investigating currency trades. headlineto the next coming in china, the index of the country's biggest stocks hit a five-year low. the index fell three percent after reports showed an on its back the drop in exports. chinese exports fell 18% in february. analysts had forecast an increase. nine countries are trying to figure out what happened to the missing malaysian jetliner. large debris off of vietnam. they say fuel found in the water were from a ship and not an airplane. to trap -- two passengers
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traveled on stolen passports perdomo to bring in richard falkenrath who served as national security adviser under george w. bush and currency a fellow at the council on foreign relations. richard, you dealt with several incidences like this as well. what is your inclination, you got instinct? an act of terrorism? >> 50-50. very unusual for airplanes to catastrophically blow up in the middle of flight when they are at altitude but it is also unusual for them to be attacked by terrorists. inre's very little evidence the public domain. it looks like it could really go either way. >> what is alarming is these two individuals were able to travel on stolen passports. has ports that were reported stolen even two years ago. >> if these facts are right, and it sounds like they are, it was a huge failure on the part of the airline and the aviation authority in a while a lump or. it cannot be happening -- inco .ell alone for --kuala lumpur
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sounds like an idiosyncratic glitch. >> is at the airport or airline responsible? >> it could be the airlines, the airport, or the custom authorities who control your exit. any number of those places could check against the database and find out whether the passport you declared as your own was in fact reported lost or stolen a year ago. >> what is happening right now in this investigation? walk me through. >> it is a huge and complex investigation. into anot yet coalesced single investigation. probably many going on simultaneously. it is a different type of investigation whether it is an air accident or terrorism. the front agencies involved, political implications, techniques. right now both will proceed in parallel with partial court nation. then there is a multinational dimension. there will be a lot of different government agencies involved.
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these agencies do not share information particularly well. i have no doubt that on the inside of this investigation, if you can even find the inside, there will be a lot of complaining about the cooperation one agency gives another. >> until we figure it out, richard, how can an airplane completely disappear from the radar? what has to be either -- >> a catastrophic explosion at altitude that disrupts the systems immediately. most other series incidents, the pilots still have power and there is still radio communication with air traffic control. it is extremely unusual for one to suddenly disappear. that requires something catastrophic to happen in the air. >> like air france. >> air france, it was also a very remote area. this is less remote. these things happen from time to time but they are extremely rare. >> richard falkenrath, our bloomberg contributing editor. russian forces have advanced into crimea with about 20,000
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troops in the region confronting a small ukrainian force. for more on the tensions i want to bring in ryan chilcote joining us from london. putin has been defending the crimean referendum that may be voted on next week. could this be russia's preparation for securing crimea after the vote? they want crimea to come back to russia. >> it certainly could be. if you look at the russian actions, they are consolidating control over crimea. in military speak, three things. setting up their supply lines -- they just took a ferry crossing on the west side of the strait, just three miles there from russia proper. the russians could bring anything they wanted into crimea unfettered. and they are neutralizing the threat. going after ukrainian servicemen, either blockading the bases or taking over the basis. we saw it overnight with russian or so taking a missile base. and just in the couple of -- last couple of hours taking over
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a ukrainian military hospital in crimea. finally, they are delineating their front lines, getting the front lines ready in case any more threats arise. effectively, there is now a border between crimea -- or i should say ukraine proper and crimea which is in the process of being severed off because the russian forces there i digging in and setting up minefields. it appears they are not just there until the referendum is scheduled to happen on sunday. it looks like they are in for the long haul. >> ryan chilcote in london with the latest on ukraine. in washington, president obama will host the new ukrainian prime minister wednesday at the white house. a sign of solidarity with the new government. republicans would like the administration to send a stronger message to russia. they have been saying all along. our chief washington correspondent peter cook has more. is the administration prepared to turn up the heat on putin? >> they are prepared to do that
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but have not pulled the trigger yet. over the weekend we heard more tough talk but no significant steps forward with regard to sanctions. we heard the deputy national security adviser speaking on the sunday talk shows, saying the united states is not going to recognize the referendum that ryan talked about in crimea, and the u.s. is prepared to tighten the economic news around russia if vladimir putin does not back down. >> we have seen russian markets going down, the ruble going down and investors sitting on the fence. so wes is paying a price. the question is whether they will take an off ramp -- so russia is paying a price. the question is whether they will take an off ramp. there is a way out that could take into account russia's interest and concern but maintains ukrainian sovereignty. >> in the meantime, you have congress still working on getting the current -- president more authority for greater sanctions down the road. watch for the senate to act as weak. theho is on
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administration's sanctions hit list? >> they are not saying publicly who is on the hit list but we have some clues as to who they would target directly. we know the administration imposed visa bans -- proposed visa bans on a list of people and the second, asset freezes. treasury asked banks to keep an eye on assets of former ukrainian officials, including former president viktor yanukovych and his two sons, who are suspected of looting the country. up would be other ukrainian officials suspected of playing a role in the recent violence at independence square. and russians seen as spearheading vladimir putin's move into crimea. himself but putin that would be unlikely to be something immediate, that would more likely be longer way off any real indication that
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diplomacy is dead at this point. right now the administration does not believe diplomacy is dead. billion of have $160 russian assets in foreign banks so there is a lot for the administration to target if they want to make the move. >> peter cook, our chief washington correspondent. now, moving and shaking this morning, new york city mayor pay forblasio wants to preschool educational programs by raising an extra $350 million in income taxes on the rich. but he could raise eight times as much by revamping new york's property tax laws. we'll estate taxes are new york's biggest source of revenue and the current system, critics say, undervalues slinky condos -- swanky condos. chairman condos sold for $88 million but valued at the city at only 2.8 million.
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his property taxes according to statements amounted to less than $60,000. a spokeswoman says de blasio is open to studying changes to the system. for more, i was a bring in the real estate development firm related companies and the man behind the time warner center and a development on the west side of new york. that is incredible to me. when i saw those numbers, sandy while selling his apartment for $88 million but valued at only 2.8 -- is something wrong? >> there is definitely an inactivity -- in equity -- inequity. tremendous all commercial -- on drivingu up the rent andndertax and single-family homes but what
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needs to happen is a shift and a reallocation of taxes between commercial buildings and single-family. so, yes, the park avenue apartments, central park west -- >> still getting tax subsidies -- >> they are still getting tax subsidies and there needs to be a reallocation from commercial rental buildings back to the single-family and co-ops and condos. >> what would it take to do that in this convoluted -- >> the mayor can actually do it. i think what you are suggesting is the mayor might do that and keep or raise $4 billion in the process. i don't think that is what is going to happen -- i hope not. >> what do you mean? >> what really needs to happen is a reallocation from the rental buildings, commercial buildings, to the single-family buildings and re-e quitize? what in heck -- could happen is rental building should come down and single-family should, and
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individual co-ops and condos going up. some of the individual consequences of high rentals on the rental buildings are high rental rates, lack of new construction because it makes it more difficult to build, and the loss of affordable housing units. some rental buildings have significant amounts of affordable housing. to the extent of real estate taxes are so high, owners, would ultimately a force to push out the affordable units and bring in -- >> is this only a manhattan issue? i am wondering why this is partly why you are hearing so many people talking about why they are leaving manhattan and moving into the baros in brooklyn and queens? a new yorkthis is city issue. single-family throughout the baros -- all single families are cap at the same rate, relatively low, versus commercial buildings so this is an entire new york city issue. >> in your view, it it may not -- it may not increase the net tax revenue the city would collect but is this issue --
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essentially is a creating such a disparity it is causing people who are looking for housing here in new york city to say i am going to go elsewhere, go to connecticut, new jersey, elsewhere? >> there is a great opportunity to buy single-family homes in s and even in manhattan as opposed to the buildings as opposed to the tax inequality. so people are making decisions based on the tax rate even if they don't know that is the reason why they are making the decision, but that is leading to differential pricing between the two products. >> are you seeing an impact on demand for your units that you are selling at hudson? >> to give you a sense on the rental buildings, we are taxed, or the owner of a rental building is taxed -- roughly, doing the math, 33% of every dollar rent that is paid goes toward real estate taxes. 50% of the net bottom-line. it is a tremendous tax. >> you are going to stay with me through the half hour.
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reallso his fight with a estate investment trust called commonwealth him and the father and son who run it. not everyone has given up on the idea for extending benefits -- of extending benefits for the unemployed. on the seasonned finale of "true detective" last night? go it watched it on hbo is probably is still a mystery. and a news conference under way in the malaysian capital and we will bring you updates of headlines on that as we continue to watch the developments. ♪
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>> you are watching "in the loop " live on bloomberg television, streaming on your tablet, phone, and guest host for this half-hour, jeff blau from the real estate
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giant related companies that recently purchased office space for time warner center manhattan for 1.3 billion dollars and is part of the deal time warner will be acquiring more than one million square feet of space and the related hudson yards project. the development people are calling a city within a city. it really is quite remarkable. one of these days i need to get out the hudson yards. the -- how game changing it is time warner relocating to hudson yards. >> hudson yards is 28 acres of land we control on the westside of manhattan. hudson yards we believe will truly be the new center of new york city. new transportation with the new stops, sixne, three minutes from grand central station. >> how is that going? >> i have ridden on the train, and it should open this year. >> back to the question, time warner is one of your anchor tenants. >> time warner is our partner at time warner center in new york city.
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we recently purchased their office space back from them, in partnership with two commonwealth fund. we then committed -- they then committed to go to hudson yards brady they will stay in place while we build the building at hudson yards and then they will anchor our second office tower. the second office tower will be 2.6 million square feet, the third tallest building in new york city. >> what did it take to convince them to move over there? lot, did not take a actually. we are seeing tremendous interest from corporate tenants. two main reasons. one, the buildings are super efficient. there is a new trend in real estate in new york city, and corporate tenants aren't -- are densifying. you and bloomberg are one of the most dense tenants. to 120 -- 100 and
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five square feet per employee and some years ago were as high feet per employee like time warner. time warner decided to consolidate the different divisions in one location and redo their office space so they will be more in-line with the new norms, probably 200 square feet per employee. reason one -- why people are moving is to create the efficiency and cost savings on new real estate. the other reason is, everyone is out for the talent race. everyone is looking for talent. so a company like bloomberg and time warner, you need to compete for talent. they want to create an environment, that is a live, work, play environment. there. live west chelsea is one of the strongest residential neighborhoods in the city. that is where talent wants to be today. the combination of new office buildings, the retail that will be there, great residential neighborhoods. >> new talent, young, and not
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old folks like us. [laughter] direct from new jersey. >> always selling your buildings. warner center, the original space, what will become of that? >> time warner will stay in place for the next five years. we believe that we are going to reposition time warner to be one of the great buildings on central park, similar to, you might say gm building or nine west 57th street. two of the most high-end buildings in the city today. time warner center has the exact same views as those buildings and it is a much newer building with all the amenities and restaurants that we believe will compete effectively. theyople look at it than think time warner center. it is known as that. it will lose its name? name when lose the time warner moves out. we don't have a tenant yet to replace it, so it is unclear exactly what the new name will be. but there is a branding opportunity for someone to come in.
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>> what kind of tenant are you looking for? looking for something as big as time warner or looking to spice it up -- slice it up a little bit? tenant officea -- space, which is never been offered to the public because time warner was our partner from the beginning. i believe it will attract multi-tenant occupancy once time warner moves out. >> we will talk to you more about, as a mention, the other fight jeff blau -- or a battle jeff blau -- it is a fight, i did not want to say bringing time warner to hudson yards was a fight -- but a battle with a father-son team who run a reit called commonwealth. and philly fed president charles plosser talk about the latest economic data and whether that will lead the fed to rethink tapering. and they call it the euro-copter but it is made in the usa, right here. more on that in a moment.
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>> you are watching "in the loop " live on bloomberg television and streaming on your phone and i'm betty liu. 26 minutes past the hour which means bloomberg is on the market. scarlet fu has your check on how we are trading quite a bit lower. >> a lot of red on the screen. futures pointing to a lower open. remember, the s&p 500 closing at a record high last week.
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emerging markets stocks down almost one percent after china reported an unexpected decline in february exports. chinese stocks actually at a five-year low. copper lower as well. in london, and an eight-month low but right now in new york, down 1.5%. concerns about the export decline plus chinese yuan depreciation fueling demand copper from china demand will fall off. 3-d systems, the 3-d printer maker falling in the premarket high four percent to 15% -- $15 a share, being predicted. jetblue ended its partnership with american airlines, ending the reciprocal frequent flyer program. , -- aep an eye on jdl j.p. morgan conference early this morning. >> we are back with jeff blau.
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he was on our program about a year ago talking about a battle he is waging against a father-son team that runs that ownsth reit, office properties around the world. that fight is moving toward a resolution with a shareholder vote slated or 10 days from now to oust the board of trustees. billionaire sam zell joined in this fight with jeff and will take over as chairman if the vote is successful. jeff blau back with us. like success. the stock, for instance, has gone up quite a bit since he entered the fray. >> remember, we got involved about a year ago. >> you talk about it on our program. >> the very first week. you asked back then whether we suddenly became activist shareholders. the answer is, no. this is not really something we do but what we saw as an opportunity. we saw undervalued real estate within a corporate structure that did not make any sense to us.
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we started buying stock about about 27d today it is $.50 and really what we saw was real estate that the stop was valuing at $15 a share and we thought it would -- should be between $35-$40 a share. how is it possible in very efficient markets? what we saw was inefficient external management structure run by the family dimension. essentiallyrmr getting fees from transactions that commonwealth was doing. the external manager of the pool of assets known as commonwealth reit and they is privately --mr owned by the family. they have charged over $400 million in the years prior to us getting involved, in management and operation fees, to run, and wealth. at the same time the stock at commonwealth was down 68%.
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there is not a lot of incentive or strategic alignment between the way the management and when he operates and the performance. >> of this vote so far, you need to get the third of the shareholders to vote in favor of ousting the board of trustees, correct? >> correct. we started a consent solicitation process almost a year ago. the family has challenged us every step of the way, trying to change legislation in maryland him and trying to change the own bylaws. ultimately we went to an arbitration process and set all the things they were doing were not legal. we won the process. the arbiters agreed and they set up ground rules for which we can go through a new consent solicitation process. >> the family put out press releases -- basically the argument is, look, it has been a difficult environment to manage office properties. what they are saying is you are not giving them a chance, you are just pressuring them to raise the share price when they have -- they say they have been trying to operate it and it has
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been a difficult environment -- for office properties. >> they have been running this reit for about 30 years. 1997 until now, they are up similar between flat and seven percent. if you look at sam zell's performance, for example, 550 %. there is a consent solicitation process and shareholders can choose whether they want sam zell to run it or that family to rent. >> how did you decide to work ?ogether sam zell. >> we have been gathering our position and sam called us up and said -- actually i think he wound up in a dispute with the family in a transaction or some landholdings they had in hawaii. research onid some them and ran across the stories about what we were doing and really said there is something wrong, when he read about the governance that is in place.
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he called us up and said, is there anything i can do to help? we said, you should buy some stock and then vote whatever way you think is appropriate. >> by some stock in commonwealth. >> by some stock in commonwealth, right. we called him back and asked, why don't you join our team or be our proposed chairman if we were to win the fight, and he called back and said, he is actually very busy, but this is so important to him -- proper governance and really his role as a leader in the reit industry that he has to do this, he views this as an opportunity to a change and fix the governance practices. >> how come you don't want any management part of this reit? oure did this in opportunity funds, the holder of the stock today. job is to- that funds buy inefficiently priced real estate think it is stabilized. on the management side we have not been running public
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companies. we have our hands full with hudson yard so we were looking at this as an investment more than a growth platform for us to run in the future. we don't have an intention of running the company and sam was interested. >> you said a few times you want to be clear that you are not becoming an activist investor. but it sure smells like it, right? are buying stock in a company that you believe is undervalued. you are trying to oust management. you are bringing on -- you are nominating your own slate of directors and managers. it sure sounds like you are being an activist investor. >> certainly in this case i guess it is true, but if you look -- if you are looking for a theme you will not see be covering activist investments. really we look for ms. priced real estate and every time there is ms. price real estate there is a hurdle you have to jump through -- we look formispr
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mispriced real estate. we have to go through consent solicitation and removal of a board in this case. it is the only way you can find estate.d real >> are there other examples of something like commonwealth in the reit world? >> there are about seven externally advised reits and five are run by the portnoy family. >> doesn't mean you have more work to do? >> we are focused on commonwealth. ok. jeff, great to talk with you. i give so much for stopping by this monday morning. jeff blau, the ceo of related companies. on the heels of friday's jobs report ,maine's senator calling for congress to immediately pass an extension of emergency unemployment benefits. mohamed el-erian's departure from pimco raising new questions about cofounder bill gross. ♪
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>> there is a quick look at top
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headlines. mohamed el-erian's exit from pimco raising new questions about bill gross and the firm he cofounded more than four decades ago. allegations of phone surveillance and painted a picture of the gross as an autocratic leader. clients have been pulling money out of the company's largest bond fund for 10 straight months. european central bank officials are not happy with the recent strength of the euro. governing council member said in an interview with bloomberg this morning that the euro has risen 6.5% against the dollar in the past year, which is hurt demand for european exports. in an interview with manus cranny, federal reserve bank of philadelphia president charles plosser said recent positive economic data is not enough to change the pace of the tapering. be a little bit humble about how much we can indicate how we are going to behave in the future.
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because things change and people change their minds and things happen. i think commitments are important. i would like us to begin moving toward a description of our reaction function. data, weng of economic found out friday that the u.s. created 175 thousand jobs last month, better than expected. but despite the uptick, one problem persists -- the continued growth in the long term unemployed. congress has failed to re-extend jobless benefits to them, a move heavily criticized by the white house. >> this does not change where i think the economy was compared to when benefits were first expiring and we said when they were first expiring we needed to extend them and congress needed to act and it was crucial both for the economy and for the family to receive the benefits. that is true today. ort -- month to month there is a lot of fluctuation so this report does not tell us we fundamentally change the labor market situation. >> with me, the lawmaker also
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supports the step, senator angus king from maine who is passing through new york. great to have you in the studio. >> a pleasure to see you on the way to washington. you believe we should re- extended jobless benefits but it seems like the issue is pretty much dead right now in congress. >> i don't think so. it keeps coming back. let me tell you why, the numbers 175,000y, you mentioned new jobs but the bad news was 200-3000 fell into the category of long-term unemployment -- 203,000. in the past congress has automatically extended the benefits and they are not extended forever. but these are real honest to goodness people out there who have no other options. it we ought to just get done. >> how do you revive this issue? >> we ought to find something -- the term in washington is paid for. everything has to be paid for. i don't object, but from -- but the problem is the democrats -- i am in the middle trying to
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broker -- >> good luck. [laughter] >> every now and then we win one, but they keep putting "pay but thethe table republicans are saying, that is not quite right and we want to do something else. there is a bit of goalpost moving. but i think this week there may be a shot. remember, it became within one vote a week or two ago. >> why this week i'm a what could change? >> i know there are a lot of discussions going on. and i know there are republicans who feel that we've really got to do something about this. and i think they are starting to hear from people. i hear from people from maine, just heartbreaking stories. people who work for 30 years, have long work histories and through no fault of their own they just can't find anything. and this is the difference between being able to pay the rent or stating in your car. quick speaking about pay for, though, this is -- >> speaking of paid for, this is when congress is weighing aid to ukraine.
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all those issues need to be funded. how do you get jobless benefits to the forefront? >> as i say, you've got to find some offsets. for instance, we passed a big farm bill about a month ago. within that "farmville" was about $20 billion in cuts over the next 10 years. therehin that farm bill, with about $20 billion in cuts over the next 10 years. the money for the ukraine they are talking about, as i understand it, is already in the state department budget. it is what is called reprogramming -- >> it is not one or the other or not borrowing. >> i don't believe so. we just got to figure this out. >> speaking about figuring out how to pay for things, we saw the white house released their budget and immediately the republicans criticized. >> that was a surprise. >> they said, look -- >> and i bet the democrats defended it. >> hey, you know how washington works. they said, look, there wasn't enough cuts or even limits to
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entitlement spending. in fact, senator ron johnson was on our program and he said two thirds of spending in the budget was untouched. i want you to listen to part of what senator johnson said to us last week. >> what congress should do right now is take the budget agreement, we should go through a very thoughtful process of appropriations where we start prioritizing the spending. that is what has to happen. we have not passed an appropriations bill in the senate in two years, which highlights the dysfunction of senator harry reid's senate. >> should senator reed be doing a better job here? >> i am a little surprised. i know ron well. we passed a major appropriations bill about a month ago. i assume he was in the chamber when it went through. the appropriations committee, that is exactly what we are going to do. with the paul ryan -- i am saying that he -- patty murray -- >> it wasn't me. >> a came up with a budget number that not only for this
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year but for next year, and the appropriations committee will go through. but ron is right, though, two thirds of the budget is what is called mandatory spending -- social security, medicare, medicaid, those types of programs. and we do have to look at those programs. >> but there were no big major changes. >> but, you know, the president put some major changes in the budget last year and the republicans didn't bite. i think he figured, why am i taking this pain from the democratic the other side is not going to meet me on some of this? >> what is the area of compromise question that you are an independent. what is the area of compromise that would satisfy both? we got to look at the tax code and what are called tax expenditures. and i believe we got to use some money generated there for deficit reduction. the problem i am worried about is interest rates. right now we are no -- we owe $17 trillion. interest rate goes up one point,
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$170 billion out the door for nothing. we are at abnormally low interest rates. in a dream world of two percent interest rates. >> hiking interest rates -- >> and the market hiking interest rates. i think interest rates are going to have to go back up and if they go back up to historical levels of hyper sent were six percent -- five percent or six percent all the money will go to interest and we will not be able to spend on defense or pell grants or national parks. it is going to be a catastrophe. and this is where i differ from my democratic friends -- we got to focus on this problem and really do something about deficit reduction. spending, iatory think, has to be part of the discussion. but everybody has got to come to the table. >> do your eyes glaze over when you talk -- do their eyes glaze over when you talk about deficit reduction now? >> they do but i am the one saying you can forget about this because it will impinge on
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everybody's priorities. if it goes back to six percent, betty, the interest payments would be over a trillion dollars a year. that is the size of the whole budget we just passed. >> i don't think anybody is thinking six percent. they think the economy is still sluggish enough that the rates will stay low. i am not saying it is the right thing. >> it will not go to six percent overnight but it was in 200 and i remember the year 2000. can't wait until that happens and then everybody is going to say, what happened, we can support any of the programs. as i say, it is going to be defense. and earlier you were talking about cuts to defense and the problems that that entails this particular moment. the same thing with domestic spending. >> senator kaine, great to have you here. thanks so much. good to hear a reasoned voice, someone wants to find a solution for both sides. senator angus king from maine. shares of chiquita have more than double the last 12 months. we will peel back the layers to see what is driving the stock
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higher. it may be called the eurocopter but it is made right here in good old usa. we will go inside a u.s. factory that is building european helicopters. they "in the loop." -- stay "in the loop." ♪
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>> it is time for today's bloomberg big number, $496 billion, the president's proposed budget for the military and good news for sikorsky that makes the black hawk helicopter. despite a budget that limits military spending for -- to pre-world war ii levels the pentagon will buy more those helicopters nexus coherent in last year. the budget asks for 79 blackhawks with the possibility of 28 more compared to the 70 orders for -- for the current fiscal year. a new bloomberg series made in america looks at global companies that used to manufacture right here in the u.s. and why. -- first in the series, your eurocopter, a french-german
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company that opened a facility in mississippi backing 2004. >> i came to work for eurocopter because i like the product. i have been flying for about 31 years and flew a lot of different models, and i like the responsiveness, i like the power. it is the largest in the united states in terms of sales. we sell more of these than the other models. >> are a global manufacturer and we market and sell aircraft globally. the advantage for the u.s. market is it is the largest helicopter market in the world. aving this facility here is tremendous advantage to get to know your customer, be close to your customer. are the largest helicopter
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provided to the department of homeland security. we provide aircraft to border patrol, we provided to the u.s. coast guard. -star is also used in the tourism industry and electronic newsgathering. eurocopter is a french-german company. we started to invest in this mississippi plant before we got any government -- a showcase of investment in the u.s. a couple of years later we won the army contract. in our columbus, mississippi, plant you see a basic airplane like you see here and then we move into avionics where all the wiring and electrical components are installed in the aircraft. the engines are one of the most expensive parts of the aircraft. the engines are provided to us
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by a vendor from texas. we are now moving into our area, whererigging we actually installed the final flight control hardware. then we move into flight operations. >> we love mississippi. mississippi is a great state to do business for us. we have low cost of power and energy here. workforce. and we don't have a whole lot of pressure from our competitors in this state. it is a great partnership. eurocopter was recently rebranded to airbus helicopters. very cool. some auto sellers in ohio not so happy with elon musk. is his automaker breaking state franchise rules? more on that story in a moment. ♪
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>> it is 56 minutes past the
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hour, which means bloomberg television is on the markets. equity futures indicating a lower open this monday after the record run we saw friday. the jobs report coming in better than expected. keep an eye on ebay shares today. carl icahn, another note to the ceoders, saying cost stockholders more than $4 billion. carl icahn said they sold skype too early and if they waited another year and a half the price would have been $4 million more. we are on the market again in 30 minutes. coming up, urban outfitters report earnings. will the retailer be on the discount rack? details when we return. chiquita joins forces with an iris company to create the worlds biggest banana company, worth about a cool billion dollars -- chiquita joins forces with an irish company. ay "in the loop." ♪
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>> we are 30 minutes away from the opening bell. you are "in the loop." i am betty liu. toe countries are trying find out what happened to that missing airliner. search planes report seeing a metal the pre--- debris off the coast of vietnam. the chinese government reports that exports fell 18% last month. its grip consolidating on the crimea region in ukraine. toers in crimea will vote break away from ukraine to join russia. last quarter was a tough one for
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most retailers. one hot trend has been out everybody else. urban outfitters is trying to appeal to fitness fanatics. julie hyman got a new without walls concept. i don't think of urban outfitters as activewear. how does it look? >> it is actually kind of cool stuff i have to say. one person summed it up when she said what might make urban different. she said it is differentiated. it is eccentric and quirky. funkier.ittle it is not being carried in very many stores. it is only in five of the urban new york.e of them in i took a look at the stuff. what is interesting is that is is like lulu where it yoga.d on
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there are different sections. it has a running and fitness section. it has a younger section. it has some hiking apparel. .t has some surf it has a surf section with board shorts. it is trying to appeal to the fitness and outdoors consumer. >> i am wearing my yoga pants to go to the mall. it that is the new trend. they have dubbed this "ath leisure." the women in the class are wearing their workout clothes. they do their spin class. they shower and put on other workout close. this is where we are now. the analysts i spoke to said to gets room for urban
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into an increasingly crowded market. spot ofget the sweet that quirky customer they are trying to appeal to. >> the earnings are coming out after the bell. is this going to help them turn ?round question >> not yet. they are only in a few stores. this is still very small. it is not going to move the needle. you could see this being and a committed concept. urban outfitters owns free people. those are a committed concepts therein they broke out into their own stores. eventually, you could see it become something like that. he challenge for the urban is getting thed fashion him right again. they have had some fashion missteps. having a very
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fashion conscious consumers. the people i spoke to said they are in the process of getting it there. today, the numbers will be indicative of how far they are long and that process. last quarter was tough for a lot of retailers. we did see evidence with that with urban as well. >> julie hyman, thank you so much. chiquita is merging with an form thed firm to world's biggest banana promoter. olivia has more on this deal. names? up with these >> bananas is where the money is. if you look what chiquita has been doing, they have been jettisoning some of their less profitable businesses. they want to be in bananas where there is more money. they are only getting about $3
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billion in a banana sales. get about $6 billion in banana sales. it will produce about $40 million in annual synergy. they will be based in ireland. with the taxes thomas they will save money through that. this'll make them eager and help them compete with dole and dell monte. they will be able to compete in europe. this is a milestone transaction for the company. >> how are investors reacting? >> shares of both companies are rising. chiquita is rising in the premarket. surging tompany is about $526 million. that is a good idea that investors like it. an investor said the deal is make good -- and will
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sense going forward. stockill be an all transaction. shares of both companies are rising. analysts so far seem to like the deal. sterns, ourolivia market reporter. moving and shaking this hour, who isifornia physicist or isn't the father of bitcoin. newsweek said he is the creator of the digital currency. he denied that. he said the magazine had misunderstood him. it coin enthusiasts have their own way of showing support. they have donated $28,000 in bitcoins. than $1 worth more
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billion. reaction to the unmasking of the bitcoin creator has been very interesting. jon erlichman was at his house last week. did you chase them down? hanging around. i was ready to chase. if need be. that is why people feel sympathy for him. let us assume for a second he is not the creator of bitcoin. this is a pretty wild five or six days for him to have the media following him around. on top of that, there have been the curiosity surrounding who the creator of bitcoin is. you would assume, although we did not see them outside his house, there are people who have a lot of questions for him and behind -- besides the media questions being raised. it is hard not to think of the financial factors. it is true that people have
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created fortunes because of bitcoin. we told the stories of people who have had financial pain. >> we are showing you knocking on the door. you are so polite. with your microphone in hand. [laughter] were you talking to them through the door? >> no. we do not know if he was there friday we were there from very early in the morning to late in the afternoon. if i were him i would have gone to a hotel. maybe somebody would donate bitcoins so i could go to a hotel. we do not have a resolution to the story. you have newsweek standing by their story. argument convincing when he spoke to the ap. >> they are raising money for him and support. it are they -- what are they raising money for? >> we are getting the sense that
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there is a feeling of 70 toward him. feeling of 70 toward him. let us figure out if this is something who is the creator of bitcoin. he is saying he is not. his life is being disrupted a little bit. we have a few chapters to go in this story. you have newsweek who is standing by its side. he probably does not want to say anymore. he spent two hours with the associated press to but his story on the table. pieces ofpersonal information about him that are correct, but he says he is not the guy. his fundamental argument as to why he is not the father a bitcoin? >> there are a few factors.
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one is that he is saying he had other jobs at the time when it coin was being created. rests on thetory comment that he had through his front door with the ap reporter. he hascally said that moved on and he is not talking about that anymore. it implied that he had created bitcoin and was no longer involved. when he clarified, he said he was talking about his career in general and having jobs that were sensitive. he was not allowed to talk about them. that is why people potentially knock on his door like me. [laughter] reporter,the intrepid you look good doing it. one area braces for a supreme court battle. details are next. an internet pioneer.
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what does aol founder think of the evolution of the industry, ofluding facebook's purchase whatsapp. stay "in the loop e." ♪
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>> here is looking the top tech stories. the ukrainian president is heading to washington. he plans to outline the advantages of an advanced network that could deliver speedy internet across the country. andaid holdings is buying econ reserve. they will build stronger competitors to alibaba. they will pay $215 million in cash. this is worth five percent of the company after it completes an ipo. of streaming television
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has been shut down in salt lake city and denver. havev stations in utah filed suit against a streaming service. the supreme court will decide its legality next month. >> many of the tech entrepreneurs are in austin, texas for the sxsw conference. with steve'spoke acquisition of -- opinion of facebook's acquisition of whatsapp. >> it was not an all cash deal ver. they think we will give 10% of our company to do that. we are not wanted to be in 70 else's orbit. we don't want it to grow up and compete against this. is a companyve, it
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with 450 million active users. broadercompete on a scale, there is significant revenue. will it be worth $19 billion? it will take five years to figure that out. i understand the facebook logic in deciding that was the right move. >> what is the big risk to facebook? what are the big challenges us to ma? >> had you bring these companies together imagine it in a more integrated way? when microsoft was acquiring companies they required them to move to seattle to be in one place. you see this with facebook and instagram and amazon buying that zappos.
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they want to keep that core team together they went to be entrepreneurial. it is the right model to push them together. you might lose some of that innervation -- innovation. >> the four horsemen and technology are facebook, apple, you will, and amazon and that is not going to change for a long time. timeframends on the frame. they are great companies. calling them the four horsemen is fair. he is a very smart guy. eventually, things will shift. one of those countries will make a mistake or some new company will emerge. catch all the latest in tech and media every weekday from sxsw. this is only on bloomberg west. samsung jumped into a streaming music service.
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you have to have a samsung phone if you want to hear any of it. elan musk is being sued in ohio. we will have much more on that fight with the auto dealers in a moment. ♪
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"in the loop"hing live on bloomberg television, streaming on your tablet, and at elon musk has been selling cars directly to consumers rather than automakers. we will have more on that story in a moment. we will be back in two minutes on "in the loop." ♪
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>> welcome back. you are "in the loop." i am betty liu. we are on the markets. scarlet fu has futures right before the bell. >> with no economic data to takingf, futures are their cues from overseas. china had an unexpected plunge in a february exports, plunging 18%. down 1.4%.res are the export drop plessy depreciation in the japanese yen will hurt china for copper. we will back on the market again in 30 minutes. >> these are the top 10 traits
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you need to know about. 10, dreamworks animation. this is the studio behind "shrek" and "mr. peabody and sherman." the movie still lost out on the top slot in north american theaters. the warner bros. action movie "300: rise of an empire." " was number one. . introduce a new sandwich. they are going to have an alternate flour. number eight is fuel cell energy. will report after today's close. they will continue to rally on fuel cells and clean up battery fuels. we have seen a big rally in
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these stocks recently. seven, the chinese online fashion retailer is jumping on a seven percent last week. are up since going public last year. they use the same business model as tj maxx. their sales will double. number six, united rental. this is the world's largest rental company. 800 million dollars. -- $800 million. number five is bed bath and beyond. they have four quarter sales earnings below the forecast. like everybody else, they said it was deceptive whether that was to blame. that will affect earnings i six percent. -- by six percent. number four is mcdonald's.
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trailed theales last six months. number three is at&t. they have cut mobile phone for the circuit -- second time in two months. this came a day after t-mobile said it will double the amount of data. chiquita brands. they are going to merge with an irish food company. they will create the world's biggest banana company. revenue is 4.6 billion dollars. number one is boeing. the 777 jet has disappeared. boeing the same day announced it found hairline cracks in the wings of 32 dreamliner 787 planes under construction. i want to get back to julie hyman who has some breaking news. talk about this and
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now it is confirmed. they are filing for chapter 11 bankruptcy protection. this is a pizza chain that has many restaurants. it is the second time in three ro has >> i had no idea they had more than 800 locations. thank you to julie hyman. the bell has rung on this monday. the trading week has begun. it is now time for the call. he is the cofounder of the spoke investment group. people are getting more culpable owning stock in that will push the nasdaq to a new high this year. that is a pretty bold call. what do you mean by investors getting more comfortable with stocks. >> you get more hesitant when something bad happens. the last 12 years of seen it to bear markets and 50% drops in the s&p 500. now we have gotten to the point
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where the market has a great year last year and very little volatility. and investors are doing well for five years. investors are coming back in slowly. attitude ofthis -- shoot first and ask questions later. we are seeing things like the ukraine, there was a little bit of a selloff. then >> it came back. there is -- there is a the same fear. they did not participate in the rally last year. >> a lot of people set out with clients. people showing more interest. the complacence is not here. we switched from an attractively valued market. this year, we think the ship is and peopleme in
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overly gun shy will be more comfortable. of how thes the case nasdaq can get to another high. >> i want to point we are versus the record high which was reached more than a decade ago. we are still 14% below that level if you look at a closing basis. there you have the longer term chart of the nasdaq. the stocks are all down this year. au can wonder if you can see significant rally in the nasdaq without an actual participation from an amazon. it is not really happening yet. can you? the nasdaq is outperforming all the major averages this year. when you look back at years were we have seen a 25% plus gain in the nasdaq, the following year it has been up an average of more than 17% at some point.
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>> what if apple lags? >> if you look at stocks like intel, that has been lagging. apple did lag last year. it was only up five percent last year but it is up 30% this year. it would be nice and that would make it a lot easier to get that rally. >> it would be nice, but not necessary. said you want you to avoid emerging markets this year. scarlet has been looking at some of those. >> let's start with the contract of china trading at five-year , the lowording to abn a valuation on chinese stock is a big positive. the booming middle class in india means consumer companies in that country are good at long-term bets. >> is there an opportunity there? >> every time there is a bad
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economic data point out of china, people worry that this is bad for the u.s. market. if you look at that chart, they have been moving in opposite markets for the last five years. we would like to focus on the u.s. market and more developed economies. as interest rise, and they will rise someday, that will be negative for the emerging markets. >> thank you for stopping by, paul. >> thank you for having me. -- we are focusing focusing on tesla. elon musk is selling cars directly to customers and avoiding dealerships. the are suing saying that situation avoids state law. autos been fighting dealers. we visited him last year. we talked with the same issue.
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is there something coming to a head now. we have seen him and the other dealerships fight. forhis is going to carry on a while. the dealers a been fighting this for 75 years and they will not give up. it is so important to their model that they cannot let anyone do it. they come out against it. has been more successful than other people. talked to one ahead of the dealership lobby in texas. he said one of the things that is missing in this fight between the two is auto dealerships do contribute to job growth. they do invest in their local community. he is saying that will be missing if we start seeing companies like tesla sell directly to customers. tesla is arguing the
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opposite. they say we invest and bring jobs. .hey have 50 sales centers they say we do the same thing with our locations. the difference is we directly control them rather than them being franchised. the dealers like their independence. they like to have the gate between them and the factory. it is a controlled they have. if tesla does not need it, what is to stop general motors? >> let me tell you what elon musk said to me last summer about these auto dealers. they carrye idea is out the will of the people. they are not doing that. car dealers have such control. >> who is winning? is it the auto dealers or is it elon musk? >> it is still up in the air. he does have location selling cars and they are fighting him. he is holding his own.
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he is a billionaire. fight.n even you have to wait and see how it stacks up. one big concern that he has is regular car dealers that deal with conventional gasoline engines do not know how to sell an electric car. maybe they don't want to. 100ou're going to spend thousand dollars, buy a porsche. >> last week we had the gentleman from auto dealer, he said that he would welcome it. >> in his case it is not as big of an issue. tradition toyear fight tooth and nail. them is af millionaire with support in their local community. it is that kind of fight every time the issue comes up. >> jeff green, thank you so much. samsung is jumping into the digital radio market.
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if you own a galaxy, you can get it. can it compete with pandora? you'll find out. stay "in the loop err." ♪
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>> did you know digital radio ads have increased 25% since 2013? it is supposed to increase even more this year. samsung has said they will get into the digital music game. this is exquisitely for galaxy devices. if you own a galaxy, you get it. is this a good move for samsung? joining us is the director of music. also, jon erlichman is with us. he is a legend. everybody is getting into radio
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streaming. what is so different with this? >> it is not free. they're going to see if it works. it is called milk and we hope it does not spoil. >> others are ad free. >> those you have to pay for. beats,g about spotify or you have to pay for that as well. >> to expect samsung will go into ad sponsored music question ?a >> they have said that they will but they have not announced or when they will. >> what is so unusual about this? >> i am cheap. i hate to pay for these services. i prefer the free radio versions. difference is the user interface. they are using another service
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as the backbone for where the music is coming from. like ael that if it is spinning wheel, you can use your finger and scroll around to see the genre. they are talking about if you are listening to a certain type of music it might play a little bit of a song automatically to entice you to listen. as i said, i will use the radio version of spotify. i will use pandora on my iphone. i will use the service that apple has. the key to keep people properlyd is if they place the ads. as soon as you hear an ad, it is possible that you just leave. that is why they want to leave the ads out for now. -- givethey went to get people another reason to buy one of their devices. incentive.ere is no
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if their incentive is we just want to get people to buy galaxy phones. that is the real purpose. is my opinion as well. they are utilizing music and content to create a lifestyle brand. they have been successful with their marketing. think about allen at the oscars. they have been -- think about at the oscars. there is an argument that artists should not participate in streaming. they are getting screwed. they get slivers of pennies. they can negotiate better deals and they have a rights management people that are doing that. they can handle it in a unique way and set up a way where people can make money. >> you mentioned the other services that you use. galaxy phone,
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can't to use other radio streaming services on that phone? you don't have to use milk. clarify that samsung has been in the subscription business already. they are taking the next step because everybody else has. that byl probably hope having the app for now, you have to download it through google , maybe that gives you one less reason to download something like pandora or spotify. it will be difficult because there are so many players. just before this when we were talking about the fact that beatz is getting into the streaming service. everybody is battling for each other's times. >> with all these companies
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battling, will the be some sort of can -- consolidation? >> i deftly think a company like player. an important they have trent resin or -- res nor involved. it has gone up in the u.k.. it is come up in sweden. it is the most prominent way that he will get their music. it is ripe for consolidation, that is for sure. >> thank you so much to him at. it is good to see you again. thank you to jon erlichman. thank you, john. search --rch for the missing malaysian jet continues. the plane disappeared three days ago. ."ay "in the loop erri ♪
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>> time now for the global
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outlook. jet may have been discovered this morning. spotted large debris off the coast of vietnam with the plane is presumed to have crashed. malaysia says that fuel found in the water came from a ship and not an airplane. export dataces and from china over the weekend has spooked financial markets very this has raised questions of a threat to the global economy. mike mckee looked at the numbers in the global outlook. you are not very worried. >> if you look at the markets, you might be. you could call it the china syndrome. our kitchen asia plunged overnight. across asia plunged overnight. , alix steel spent a lot
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of time with copper last week, here is what happened. china reported a big drop in exports. 18.1%. we thought it would be an increase. that started the ball rolling. then they got a series of disappointing data points. the consumer price index raised less than they thought. this inflation is taking hold their. this was down two percent. credit growth fell 63% in the month of february. this is what is happening. this is the chinese new year effect. if you went back a year ago, we will be talking about the same day,. maybe not on this but that is the problem. the new year shifts every year. you cannot seasonally adjust for it. you have these big swings very people export a lot of stuff in january to get ahead of the chinese new year. the country stops -- shuts down for a week.
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we get back to normal in the following month. at this point, people are just reacting to a pattern. >> what happens next? growth slowdown any way leaving out the seasonal affect? the goals are for a strong and steady growth this year. you can see with the premier said this month, they want to have 7.5% growth. they want consumer prices to rise. they are not getting that at this point. they will have to have a lot to move forward. >> mike, thank you so much for that economics editor mike mckee on china's economic growth. we will talk about everything from renting store space for warren buffett. that is tomorrow at 8:00 eastern time. on the markets is next. ♪
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>> it is 56 minutes past the hour, that means that we are on the markets. old futures -- gold futures stabilized after following on friday. -- falling on friday. hoffman joins us from
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princeton university. ken, let us start. to stabilize ag little bit here. when you look at what is going on, you have been talking about gold falling so much last year. it fell 28% and recovered in 2014. move? you read the is it a correction to what we have seen on friday? >> it seems as if the ukrainian crisis boosted gold a week or so ago. is itrrent consensus called down for the time being. gold pullback a little bit. you continue to have gold in range for almost six or seven months.
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everybody is trying to figure out if the bears are going to talk about taper and the bulls will talk about asian demand. >> larry, let us bring you in. you are not impressed with the gold rally. what is your trade? >> right now, i would be short futures. i would pick a spot at 1338. i would look for a hard by back around 1280. i think ken brought up some good points. people were trapped in this volatile trading range. on the upside, i would be at 1360.ut really hard i am willing to lose $220 to make $580 in the short term. this is while we are trapped in this volatile tro it -- trading range. know howose who do not futures work, the price of gold is quoted in dollars. dollars perare in
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ounce. you have to buy it back. that is a profit. since the entire contract is for 100 ounces, you would make $5,200 for every contract you but at this level. there is a lot of lingo. one key thing that you should six -- ticks. that is the minimum amount that the gold can move. it is about $.10 per ounce. you then need to take into account the 100 ounces. and terms of a minimum move, it is $10 per ounce. the $10 peru to contract minimum move. >> are you factoring and the data coming out of china? these
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in the unexpected lunches exports? >> china gold stocks are very high. saw friendly by in april through june last year. asthe stocks are as high they are, i cannot see it repeating. the normalization of monetary policy is not going to shake at any time soon. >> thank you so much. can hoffman at princeton university. think of her join us. we are on the markets once again in 30 minutes. "market makers" is up next. ♪
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>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> phone fight. at&t and t-mobile are in a price war. you could be the old met winner. >> tarnished legacy? from poor returns to a public this with his former ceo, is taken a serious beating. >> website on the fast track. the owner of wants


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