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tv   In the Loop With Betty Liu  Bloomberg  July 17, 2014 8:00am-10:01am EDT

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will be talking to us. so much to talk to him about, including derek jeter. mary bauer heads to the hill again today, the ranking republican on the fed committee will be drilling her. at our topook headlines this morning. turning up the heat on russia. they expand the sanction on the conflict in the ukraine. russia'st round targets -- microsoft prepares one of the biggest rounds in job cut history. there are reports the cuts are bigger than five years ago. stanley, the bank had a smaller drop in income trading .evenue, pretty much in line
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for more, i want to bring in stephanie ruhle. tell me what is out for you? >> i am broking hearted. i'm standing you're thinking you're talking about me. clearly, morgan stanley is having a big morning. trading revenues and fixed .ncome are less than expected big drop. not as well as they did last year were last quarter. it is better than we thought from citibank, 12% down. it was only eight percent. he is optimizing his trading assets. in this environment, they are chugging on. james forman has a consulting background and not a banking
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background. he beefed up his management business, banking did well, equities are outperforming goldman. morgan stanley was in the gold room and they are making a comeback. class of all the major wall street firms being reported, what's your big take away? >> slow and steady there it anyone who thinks they will have a booming and amazing year, it is not happening or it when morgan stanley performs any look at the numbers, it is somewhat surprising, the revenue numbers are just not that big. >> thank you so much. we will have a fantastic show for you coming up. is backral motors ceo on the hill this morning. delays wants to examine in recalling vehicles that led
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to the 13 deaths. you know she has been on the hill many times already. and anton belugas about those recalls will also be testifying. matt miller is on the hill today. what is going to be different? >> i can say first of all without a doubt that lacks accounting and gm's culture deftly led to the problems. it worseion is, is than that? she will be testifying with her lawyer. anton, the investigator they hired, will be on a panel with them, israel -- as well as roger o'neill. congress will -- will want to
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ask a number of questions. ken feinberg will be in a separate panel after that and that will focus on compensation. is, they will want to know why only compensate victims in 2.7 calls. the first yesterday, we got a full-page ad in the new york times that shows a single key warning trimers not an eighthey file -- of an ounce could mean life or death when you're driving a car there it they will also want to ask delphi about parts to make for gm and why it didn't do summing about it, if it did. o'neill has not apparently 'soperated with anton valukas report.
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of questions here. it should take about three or four hours and hopefully we will get to talk to mary barra a little bit. try thank you so much. i want to broaden the conversation now and bring in our bloomberg contributing editor, who as consulted with many over the years. geoff hazel it, and senator dean heller, on the subcommittee who will be questioning mary barra in a few hours. senator, let me start with you. already fromuch mary barra. little steel want to ask her today? >> there are a number of questions i think need to be raised. you know rod o neal will come in. those are questions, they built the part, made the part, just in and we need to find
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what they knew and when they knew it and how much they contributed to the number of deaths we saw over the last 10 years. >> look kind of action are we talking about? >> we will raise the question. feel theyk gm if they had any responsibility. 10 yearsust 10 years they would not allow these airbags to deploy and once they figured it out, it took another nine years after that for the recall. think about that. 10 years. if it is not incompetence, it is stupidity in the process. this is it. >> mary barra admitted fault within gm for this in action. mary barra herself
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and what her big risk is today? >> i think she is doing a really good job. we aresaying, accountable and not responsible. a lot more to be decided here with the legal system. it is not over here we will see a lot more. to see someone step up and say, we are .ccountable over the years, they have cut and cut and taken all of these people who normally see this and did not have the stuff put back in. are surprised republicans not phony and president obama and asking him. there is a culpability that goes around across the whole system and i think she is doing a really good job. >> here is the problem i have with the report. they will tell you gm themselves, they have no idea how their cars work.
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why would you buy a vehicle from upperaker if their management will say they do not even know how their own cars work and that is why it took 10 years to get to this position? they have killed dozens of people. they have recalled almost 30 million cars. their own upper management says they do not know how their cars work. how do you sell a vehicle today, regardless whether you are mary barra or anyone else in upper management, when you tell the auditors you do not know how your own car works. it raises a lot of questions. >> i think she knows how the car works. she helped design a lot of those cards. i have met them and done shows on them as well. i think they know it they are doing. a lot of parts go into these cards. the legal system has not figured it out yet. >> hang on. i totally disagree. if it takes you 10 years to figure out how i part was made
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and what the problem is that killed dozens of people, why are we where we are today if they knew how the car sort? let's let me just pay for you, we did an interview with ken feinberg a few weeks ago, just shortly after he announced the victim compensation fund. let me play feel what can feinberg said to us about how these funds were. >> g.m. delegated to me without any ambiguity here, full discretion to evaluate is to -- each individual claim and make a determination. the program should kick in, as gm demanded, around august 1. >> ok. we know can feinberg has been open that he is getting paid by gm to administer the fund. do you believe it will be independent?
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>> i would hope so. i think those are the kinds of questions that need to be raised by the hearing. how independent could be if he is being compensated by gm itself and there are people on his staff also being compensated by gm. the question you're asking needs to be raised by the committee today to ensure we do not have a conflict and those that are responsible are held responsible and these victims are compensated. >> lets you think about can feinberg and his unlimited amount of money he has to pay the victims? >> i tend to believe people have good credibility and will do the right thing. that is what most to want to do. he said he will be held independent, he will be and we will judge. to go with what the senator said, an obvious sympathizer for business. for a moment.n thank you for joining us, a ranking republican on the subcommittee for consumer
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sessions and product safety, and matt miller, who will be with us all day long. breaking news now. we mentioned microsoft will be cutting jobs. cutting 18,000 jobs, up to 18,000 in the deepest cut in the company's history. olivia sterns of mark. we knew the new ceo of microsoft was planning to cut jobs. the rumors would be -- were that it would be around 6000 jobs. three times as many as they were expecting to be cut. in april bought nokia for $7 billion. intois part of the push mobile and cloud. they are cutting 18,000 jobs, well above rumors on the street from a jobs microsoft was going to cut, part of streamlining the nokia business, the deepest job cuts we have seen in microsoft in its four-year history. >> this is huge.
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>> 18,000 jobs, like the size of the city i am from. here is the boss taking control. he took control over the nokia assets, he is starting to step in and say, this is where i will go, and he is saying, we do not need these people. it is a mature business. a lot of people will retire and it is a way to move some of the higher paid people out. biggest way to take out costs in the business is always people, without question eric >> your first line item you look at when cutting costs. to your point, microsoft has been experimenting on some a different product lines that you imagine during the steve homer era, there was a lot of those up here. >> exactly. what happens when you start to buy the business and look at the synergies, where are the overlaps and accounting? that is what we're starting to see here as well. ,> thank you so much. coming up
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what does murdoch's big takeover mean for time warner sales? what is a mean for jeff himself. we will take you out to the ballgame today. the former new york yankees manager will be with us. ♪
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>> the big news, saying they will cut up to $18,000 -- jobs. -- 18,000 jobs. the cloud, which will be a big part of microsoft'strategy going forward. they also mentioned they will see pretax charges from this restructuring between 1.1 and 1.6 oh yen dollars for the company. the big headline is that microsoft will be cutting up to 18,000 jobs. we will see a follow -- we will follow this breaking story.
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a story that broke yesterday was rupert murdoch looking for a new his multimedia empire and he is hoping time warner is the perfect fit. time warner has rejected 21st century fosse's initial bid of 27 million. murdoch said he will be willing to pay more to become the owner of hbo, turner, cnn, warner bros., and a whole lot more, owning everything you watch. damage control internally after confirming yes, he rejected rupert murdoch aussies did in an unusual move. he released a video statement to bloomberg employees. did greatcken who reporting yesterday on behind the scenes of how the betweention turned out jeff and chase carey, rupert murdoch's deputy. let me start with you on this.
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that was interesting to see just time to and give face his employees. to that tell you? >> he will fight on this, spent a lot of time working with not only his employees that working with his shareholders and a strategy of why they will be better off with a strategic plan laid out over the next five years, how that will create more value for shareholders and employees. has a tough road ahead of him because rupert murdoch is not going away. fight a strong fight. >> this might cost him his job. >> it was clear in the back and forth. and sat down and there was later a letter from rupert murdoch to address some of the concerns raised about what happens with cnn, what the future will look like.
8:19 am how it was we would like you to be part of the company going forward, but it was clear he would not be the ceo. management will be the key issue. of thel is in the court shareholders, the institutional investors, the blackrock and the fidelity and people like that who own the chunks of corporate america. >> jeff has been good for shareholders. they made a lot of money with him. >> i think the strategy has been straightforward. let's focus on high-value businesses and ecosystem and that is content production so they have the number one movie studio, number one television production studio, and let's focus on the cable network is this, a great business. , halohed everything else most notably. at the same time, they have been returning cash to shareholders in buyback and the combination
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has been a great combination for shareholders. the wholeu mentioned context of this, media consolidation and how this might to directv and at&t and possibly this. >> a phrase people need to get comfortable with for the net -- for the rest of this year is a knockout effect. buyast does a big deal to time warner cable. that leaves at&t to say, maybe we ought to be doing something, so they go to directv there it down the road, we will have t-mobile and sprint. that gets rupert thinking, the distribution guys are getting together and the content people need to as well. you look and say, ok, how is discovery doing the world, etc., and it seems especially in the space, one deal begets another deal. >> right, and you have to chase that trend. >> just the idea that there are new possibilities and things to
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look at. >> rupert murdoch, is he leaving plate for his successor, whether it be james murdoch, where he is saying, i will give you this company that will be big as it is with all the pieces in place, and you just keep it on track? cuts i think so. if he were to get this transaction done, it would be of extraordinary dealmaking. this is transformational transactions for five and they're able to get it done. at 83 years old, all the shareholders are thinking about secession. he has been working with three children on and off about bringing them into the country, with more responsibility. if you are a shareholder, you have to be comfortable with that. >> more on the news of microsoft making the biggest job cuts in history.
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18,000 jobs. we will be back. ♪
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>> you are watching "in the loop live" on them or television. former television is on the markets. equity futures are slightly lower. bank earnings continue, including morgan stanley coming in better than expected fixed income trade, as we saw with goldman sachs and others in city -- citigroup is coming in better than expected. big news that microsoft is cutting up to 18,000 jobs. the ceo says that will be about 14% of the workforce.
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1.12 1.6 billion dollars in restructuring costs. i want to bring in a fellow ceo, the former crisler and home depot ceo of and now the chairman of accelerate. of course, these are people being laid off, but you say this is a good move by microsoft. >> yes. three things. none of us are happy when we hear about job reduction or people losing their job. think microsoft will stand out in early notification and will work on severance packages. third, this shows really courageous leadership. have beent investors concerned about making microsoft a little leaner and reducing some of the bureaucracy, increasing the beat of decisions . unfortunate for the
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affected employees, but a good move for the organization overall. >> a bold move for a relatively new ceo still. you have experienced this yourself. knowing that the company will be happy to know 18,000 of their colleagues will be out the door. how does he handle this to make sure he has still got the morale, he has still got the support within the company, when he is making such a bold move like this? >> he has to over communicate a logic on this. he has to treat each individual with dignity and respect and make gutwrenching decisions and show how the benefit will improve the overall financial ability toity and move forward with new andvation, new ideas,
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really strengthen the financial position of microsoft overall. >> the investment community, his shareholders, about where he wants to leave microsoft next? >> one thing is his actions are matching his words. he talked about making it a leaner and less your credit company. i think this is a bold move, peru's positive -- proof positive that he intends to do it he said. very painful, a gutwrenching decision. having gone through this myself, it is never easy. it is necessary many times to maintain the financial strength and agility, the ability for microsoft to give it going forward. >> just on a final note, what advice do you give nelson mandela? .> stay strong
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it takes courage. you cannot over communicate the logic on why you're doing this. make sure microsoft will treat every employee with dignity and respect, help them reengage for new opportunities and new employment. >> thank you so much. the former ceo both at crisler and home depot. here's a look at our top headlines this morning. the recall of jeep suv faster than expected. gas tanks that can ask load in real -- rear collision. at the current pace, repairs could take five years. it now says it will have enough parts by next march. a data breach may be hitting sales at ebay. sales were reported that fell short of estimates. ebay asked users in may to change their password because hackers gained access.
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$450 million to settle claims that help fixed prices of electronics that averts a trial set to begin this month. a judge ruled apple was behind the price involving five major publishers. ares a: 30, which means we waiting economic numbers, including jobless claims. the numbers are out now. let me start with housing because we all want to know what is going on with housing. the monthusing starts of june. that is well below the forecast of 1.0 2 million housing starts. that means a loss of 9.3%, a decline. also, building permits coming in undershooting estimates at 963,000 building permits. jobless claims, 300-2000. those numbers are continuing to fall been hovering around the 300,000 level. mike mckee with much more on these numbers. >> it is a surprise.
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we were thinking we would get a rebound yesterday. the homebuilders association said their optimism index rose significantly on the month. know why these numbers do not square. why are they not building more houses? why are they not taking out more permits? building permits as well were lower. we only added it hundred 90 3000 runways, which goes back to january, the last time we saw something this low. we were blaming it on the weather then. weather is not that bad now. both single and multifamily housing took a hit. this'll be a tough one to explain, but it does not bode and for the overall economy it does not suggest we will add a lot of construction workers for the june payroll report. the other number out there, the jobless claims number, a real surprise. this is the time of year we would expect it to go up as auto
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and other manufacturers default. a real surprise. we may see the rise in the washington state figures as microsoft lays off a couple of thousand workers there. >> that is right. thank you, mike. our economics editor. turns out joe torre is a hall of famer off the field as well. we will talk with a former yankees manager in just a few minutes. stay tuned. ♪
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classic customer tried to cancel his comcast service and it turned into an interrogation. this is comcast, who does not like to lose customers. ryan explains he is changing to another service and the customer service representative tries to talk him out of it. he would not process the request and kept pressing until he was given a good reason.
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that is a recording of the torturous phone call. the 18 minute ordeal. we are the number one provider of internet and tv service in the entire country, why is it you do not want to have the number one rated internet service, the number one rated tv service available? s we are switching providers, can you please go to the next customer? to state.ning please go to the next customer so we can cancel our service area >> ok. mean, i am just trying to figure out what it is about comcast service that you are not liking and that you do not want to keep. >> we have all been there before. the man did not change his mind. apologized for this and said it was very embarrassing to hear this very coming up, what baseballe to manage
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superstar derek jeter. we will talk to one of the newest members of the hall of fame. the former yankees legendary manager, joe torre. ♪
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>> joe torre among the many superstars in that ad in the mike's -- the tribute. joe is the man who manages the future hall of famer for the first 12 years of his career. he joins us now and he will be inducted into the hall of fame for his legendary run managing the new york yankees in four
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world series titles. great to have you here this morning. >> thank you for having us. a gorgeous day out here. suffice it looks beautiful behind you. you have done many interviews over the years. you said you got emotional about this is one of the greatest partnerships you ever had and there will be a huge void to fill. is he, to you, the greatest yankee of all time? >> obviously, i was not around when babe ruth and lou gehrig were here and joe dimaggio, but in theirnly belongs classic, what he has meant to the organization. jeter,as not for derek that big ball part would not have been billed because of what they brought to the table and
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really what they brought to the fans. >> who could possibly fill his shoes right now? do not think it's fair to ask anybody to do that. based on the fact he is not only an extraordinaire player and leader, but a man of great character, a great role model for our kids. that is really what is important to me. older, you realize whether you like it or not, youngsters are looking at you. the youngsters that look at derek jeter are the ones that are watching somebody in a way that teaches them how to act. >> he will be inducted into the hall of fame. what does that mean to you? >> i never gave a lot of thought to it. you dream about it once in a while and you do it you doing hope the time comes where somebody recognizes you for what
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they feel is worth going to the hall of fame. to conceive ofme trying to put into words based on the fact that when i start talking about the hall of fame, start thinking about all the players i've played against and with that are there that i always felt were a level above everybody else. it is quite humbling. storiedur long and career, you have also tried to give back. you have your foundation safe at home where you try to provide a safe place for kids in abusive environments. why is that important to you? >> i grew up in that type of environment. my dad abuse my mom. he did not physically abuse me but i did not realize the fears and the nervousness growing up as a kid, and going into my professional life, it was really connected to what was grew -- going on as i was growing up.
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when we came to new york, my charity should we get involved with and i said, how about to miss -- domestic violence, which caught her off guard a bit. it was her idea in my older daughter's idea to do it through education. we named safe rooms after my mom, margaret, and we are trying to end the cycle of domestic violence and do our part. we cannot do it alone. it is a call to action. we need people not only to give us money to understand how important the issue is but it is important to all of us. >> no one wants to be raised in , but does environment you think that is partly what drove you to your success? , because found out initially, i would not share
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with anybody what was going on in my home, and i went to therapy, believe it or not, the year before, a few months before i took over the yankees job. it was a revelation for me to realize i was not born with certain insecurities, which i was sort of ashamed of. it was caused by what i was witnessing. so yes, i think it helped me with people ended opened me up to talk about it. when someonehocked they recognized come out and talk about some of the shortcomings in their lives. it is important. >> people look at unc and see someone who they believe has done every a right. -- that brings me to openly gay athletes. you recently signed on where you
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said, you support major league baseball and creating an open for athletes to come out of the closet. we have seen the nfl, the nba, high profile athletes coming out. do you think major league forball is 100% ready openly gay athletes? >> baseball is a game of life. what we do in society is what we are required to do in baseball. we certainly need to accept who has the ability to play baseball or work in the baseball environment and if they have certain preferences that have not been acceptable before, it is past time to have people understand that if people have an ability to do something, whatever their personal preferences are, it should not really enter into it. >> do you think it is a matter
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of time, a year or so, before we see a high-profile player come out? >> you know, it could be. we have had players in the past who are too embarrassed to come out. beane, hired billy because he was embarrassed to share with teammates or friends that he was gay. baseball is a game of life. society, we are finally opening up our arms to a lot of prejudices that existed. cut hang on. we will be back with the former legendary manager of the new york yankees. much more ahead in a moment. ♪
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>> we are back in two. guys i was in minnesota for the all-star game and i didn't watch it. -- i did watch it. lot of soccerl there. when you get on the big stage like the world cup, it is amazing even though you don't watch soccer on a regular basis, when country versus country goes at it, gets passionate. the reason why it brings up is i know you managed the world live classic and you're trying to get more viewers. these take anything from the success of the world cup and
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say, i will try to apply this to baseball in other countries? like mexico, europe, somewhere else? >> it has to catch on. world cup has been around for a long time, the world baseball classic, just a handful of times we played come every three or four years, four years now. that come in baseball, people oh is associated players with teams, and then all the sudden it is an all-star team and a baseball classic. a throw for me because you do not realize how much of an impact wearing a jersey with usa across the front does for you. i had retired from managing, it really got the blood rushing last year when i was able to do that. to talk about the nfl
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and the nba. the nfl by far is the king when it comes to broadcasting rights. , the nba comes in third. how do you get those rights up? more viewers, younger viewers? he talked about his getting into baseball. how do you get them to watch more baseball? >> it is our job with major to create anll interest for the youngsters. there is no question we are all football fans and we all like to watch the game that is exciting once a week. it is the game of life. >> it is a clutch of our game. kids have add these days. >> do not say that.
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it is just around three hours. please do not. butwill get me in trouble the commissioners. there are so many things to look at. a point in our society with impacts, hard hits, dunk shots, all that stuff gets attention. in baseball, there are other things to admire in baseball. your earlier point, the only way we can get youngsters to appreciate that is to pay attention earlier on in their lives and create places for them to play and get interested in all the nuances in the game. it is a fun game to play. that youngsters are the future of all of our games and we need to do our part. you have diehard fans and strong opinions and your players
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do as well. there has been controversy around instant replay and how it is being applied to baseball games. criticism address the that it is distracting from the game and prolonging in many ways some of these baseball games? , it isant replay airs only increasing the game about a minute and a half and a minute and 15 seconds. is not hard for me to believe there is criticism out there. that goes on everywhere. there is always somebody pointing a finger wondering who we should blame for this that or the other thing. . think it is working very well we hope to have it work better as we go along and get more comfortable with it. a lot of technology cries out. for the most part, all the managers are happy with it.
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i leave you, i have got to ask you this question. everyone wants to know what is joe torre in the next step? >> i do not think that is realistic. anything the owners want me to do that they think i can help with, it has been my professional life and i am willing to do whatever it would take -- i really do not envision that. i would like to stay in the game in the capacity i am in. i am hands-on with the players general managers and managers. i would like to believe i could help. >> thank you. he will always be a part of the game. of torre, the former manager the new york yankees. we will be back in two minutes.
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>> here is what we are working on. the dow jones starts its day at a record high there it stossel open lower, microsoft announcing the biggest job cuts in history. , a majorbs restructuring. morgan stanley reporting second-quarter earnings that beat estimates. revenue from fixed income trading fell less than what analysts expected, a common team among the major trading firms on wall street. microsoft is limiting -- is eliminating 14%, the largest
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round of job cuts in history. joining is the former microsoft executive, now the cofounder of the investing sites. i know you look through the memo to find out what he is thinking a mess after these job cuts. what do you read from his memo? classic couple things were hinted at in his memo. the memo was all about productivity and platform in the new clout first and mobile first model. the take away is that there is a deemphasis on hardware. i think the impact of these layoffs, two thirds is not related to the position, which is kind of hinted when the deal went down. it is largely expected. the other third is likely to
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come in from the leo -- realignment strategy. -- it is a difficult time for microsoft employees. innovation,tform what will that look like? >> you started to see some of it with office available on the ipad. if you believe in mobile first, look at the distribution. there will be innovation, not necessarily a microsoft only platform. you have seen the first step in that direction with office being available on the ipad. it did happen. he has made pretty bold moves. >> you hit the now on the head with the next question. were these some ideas tossed
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around during the steve ballmer area and it just could not get himself did not want to take microsoft in that direction? >> it would be fair to say a lot of the prior philosophy when it came to innovation was around innovative immigration. on immigration. it is declared in the memo, let's focus on innovation first and then figure out these scenarios across platforms that happened to be on the microsoft platform. marked change from when i was there and a good change for the company. >> thank you for joining us. -- the ceo of motif investment. to washington as the u.s. ratchets up the pressure, president obama imposing tough
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new sanctions on russia's biggest companies over vladimir putin's failure to de-escalate the crisis in the you can -- in the ukraine. the obama ministration point man, david:. peter? >> thank you. i am joined by secretary cohen. thank you for joining us today. . busy time for you we have seen the russian stock market drop. do these new sanctions have any intended effect? >> the purpose is to not have a we-day hit here the purpose have been pursuing over the course of the russian activity in the ukraine is to make clear to president clinton and the people around him that there will be increasing costs over time if they do not de-escalate the situation in the ukraine. daily market moves are not what we are focused on. we are focused on making clear to president clinton and the
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people around him they have a betweenoice to make increased costs and sanctions presser or de-escalating in ukraine. >> we have had others make that prediction. >> we have seen the imf changes prediction from two percent growth to -- 2.2% and cited the possibility of recession. i will not project what will happen to the russian economy but i will say as we continue to increase the sanctions pressure, and we have the capability of if theing it more russians do not change their approach, the broad impact on the russian economy is something that could be seen. >> why these particular two thankslash mark and two energy companies. why them? had these hit in a broadscale way. thanks.ssed two
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in the financial sector, and major firms in the energy sector. the message, i think, is very clear and that we are prepared in a calibrated and thoughtful way to increase the pressure in a broadscale way. >> are the europeans asking you not to go after guest prompt itself? thee are talking about pressure. how we approach it and how the europeans approach it is quite similar. we are going about this is the way we think is the most effective way. gap in what has been done. the u.s. has arguably been tougher so far.
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until those two are joined up, is it fair to say the sanctions will not have the most rheumatic affect question mark >> we want can.rk as closely as we it is not essential to work in the exact same way. what is important is we are all in the same direction. we are trying to harmonize what we are doing. a clear message to the russian government is that the u.s. and europe are unified in our view about what the russians are doing is not a affable. business. you have a lot of u.s. banks providing the financing that is now off limits with companies. >> there are important principle that stake here and when we designed the sanctions, we are sensitive to the needs of u.s. business and global economy. >>
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all right. the treasury under cinque -- undersecretary. you in send it back to new york. >> david cone was just joining him. coming up tom we will have more on microsoft aussies lance to cut off 18,000 jobs and how many of them are caches is of the deal. at why soill look many people are leaving the suburbs and going back to the city. ♪
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>> real estate is a constant topic, particularly alter high and sales in new york city, making those headlines. a good 92% of homes sold in the big apple change hands for less
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than $2 million. that does not get you a whole lot here in new york city. vice chairman and ceo is willing the new york village, selling at or above the $2 million market. is that right? 120hat is correct. apartments, but mostly new yorkers. 70% of our buyers are new yorkers. we have a unique product mix, different buildings connected by infrastructure that has amenities that they want. just- it shows, it is not them. question 90's and middle easterners who are coming in and buying these 60 or 70 million-dollar penthouses. does that bother you? >> it does not. it is good. it is an important part of the
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market. it is new day out, yorkers buying their homes in brooklyn and queens and manhattan, staten island, it is that 15,000 transactions are done. 92% are below $2 million. 200 thousand, $2 million. a lot of activity in the marketplace. it is the millennium's that are driving the market for young people who want to be in the city. the shared economy, the collaborative economy, the entrepreneurial economy. amount ofing h menace people coming in. find thenies want to employees who are motivated and driven and they're all in new york city. that is what is attracting companies like google to expand, cooper and all these great companies exploding. changes between
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$2 million and under and $2 million and above. what you can on afford and where you want to be. you're seeing a tremendous amount of renovation. we're doing right now with inventory and shortage. you're seeing products come onto the market. >> some of that will be coming from jeff and steve. let me play for you what jeff said about the demand in new york city. >> our products will be less expensive than that and not competing with those buildings. those are speculative. bringing capital and all of that. what we find is the majority of hours our domestic. i think we will have a lot of
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.eople moving i do not think we are competing in the market and i do not think that will fuel our development. >> it is like you guys talked at of time. >> but it is true, whether it is hudson yards or brooklyn or seen 10,000 to 60,000 living in lower manhattan requests do you think people will travel out west? all the way to western new york and western manhattan? >> they will go wherever they can find the best value in the product they are looking for. have 250,000 feet coming up next year. sherman is activity. we are talking to companies in lower manhattan, possible developers in other boroughs and -- in the city. a lot of developers are changing the way they look at the city
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from 10 or 15 years ago. where the action is, all of a sudden, whether it is chelsea or the westside, 80,000 feet there. it is all going on in a positive way. >> people saying people will move to the left side. 50% from the village itself. >> great to see you. thank you so much. the vice chairman and ceo. bill will join me on my radio program later today at noon. be sure to tune in on bloomberg york. 11:00 a.m. he new coming up, this week, bloomberg businessweek just out with new nasdaq in the 2010 hacking attack and what russian
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hackers plan to do with the information they stole. ♪
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>> watch microsoft shares. announced this morning plans for 18,000 jobs, 14% of its workforce. i want to bring in cory johnson. gone througheally too much of the nokia angle because it seems to thirds of the cuts will come from the division. what does that tell you about this unit? >> they talked about really big cuts for making $600 million they could take out of the business. people are going to lose
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their jobs and that is a difficult thing for at least 18,000 families. i know a lot of people who work at microsoft. it bums me out a little bit. things we interesting talk about is a macro sense of what is going on at microsoft and the way the companies being changed. he has been getting his stamp on things. i met on that side of the organization. the site has some beneficial and helpful direction and the ability to sell the things they want to sell and offer their customers what they want to offer. of oldase offering things. it has been a successful effort to begin with the enterprise and reorganize the company around this cloud-based software to service offering in a way to
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sell it once that was microsoft windows and microsoft office. press how do you think shareholders will react to this? >> let's go much bigger and go macro. when we talk about what is going isin our economy, microsoft up against a lot of new competitors, companies like facebook, google. these are companies that do not have the same size staff microsoft's traditional competitors have had. the company's with much smaller employees and allow more revenue per employee. microsoft is up against that at a cost business. --n google and apple, it is
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you can kind of see them re-architecting themselves to against those new competitors. >> thank you so much. cory johnson, our editor at large and the opening bell is next. microsoft shares are trading higher. ♪
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>> welcome back. it is 26 minutes past the hour. over television is on the markets. olivia sterns has the latest on futures right up to the open. >> hey there. drifting lower -- futures are drifting lower after the dow jones closed at a record high. intel was up nine percent. the 15th record high close for the dow so far in 2014. this morning, the sentiment has turned a little bit more negative. this is after we had some unexpectedly bad housing starts. housing starts are falling to a nine-month low this morning. sentiment from abroad coming in a little bit negative after the u.s. imposed that latest round of sanctions on russia.
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a little of that is passing over to the u.s. questec you. let's count down to the open with a top 10. these are the only trays you need to know about. julie hyman chosen as well. number 10, blackstone. jumped 89%, beating analyst estimates. blackstone said rising markets helped boost the value of holdings during the quarter and that it started collecting profits, its biggest buyout fund. >> number nine is autonation. higher costs weighed on the company's quarterly profits, which missed analyst estimates. they did post a 12% jump in earnings, noting a strong spring selling season. shares are now falling in the free market. >> number eight, another earnings report from baker hughes. this time, the company delivered better than estimated prophet helped by a pickup in drilling activity in north america. it expected increased activity for the rest of the year. >> you want to watch general
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motors at number seven, the largest u.s. automaker. the ceo is set to testify in front of a senate subcommittee in just about 30 minutes. this is the fourth time in as many tom -- in as many months she faces this for the slow recall of millions of cars with faulty ignition switches. >> number six, kansas -- the maker of those tiny thumb drives posted profit margins and sales forecasts that fell short of some analyst estimates. as much as yesterday 10% after hours on that news. they were continuing to slices -- slide this morning on the market. ebay. third-quarter sales that fell short of estimates. in may, the company asked to change passwords because hackers had gained access to log in information. our favorite subject, in brands, taco bell posted second-quarter profit. net trails some analyst estimates.
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chain,to a pizza hut facing deep discounting from rivals like dominoes. >> number three, mattel. bad news for barbie. thetal maker says -- toymaker says sales of the iconic doll fell, following a 14% drop in the previous quarter. it's other product line, fisher-price, posted a drop in sales. the kids are all on electronic devices. >> number two is morgan stanley. a wall street bank's quarterly earnings more than doubled, beating estimates, less than analysts had estimated. morgan stanley says the investment revenue jumped 33%, the biggest increase among its peers. >> at number one, microsoft. the company is eliminating 14% of its workforce in the next year. the biggest in the company's history. microsoft says nokia towns for 12,500 of those 18,000 cuts.
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about two thirds will come from the nokia division. now to the call on the markets. i want to bring in michael, the chief investment officer. his call, he thinks stagnation it is the dreaded word that investors do not want to hear. why do you think stagflation will be on investors' minds? >> it could be an item because we are seeing increasing inflation in the last couple of months. , coupled witht the fact that we have the way fear -- we have to wait for q2 gdp, if we do not get a good print on the q2 gdp, something in the vicinity of 3%, stagflation will filter in. what will that do to the stock market? >> it is not good for the stock market because we are expecting growth will be more robust in
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the second half of the year. the stock market ride on liquidity coming from the fed and the central banks in general here it eventually earnings will have to accelerate and improve the prices of stocks. happening, in a stagflation environment that could be difficult. >> this is why you say all this talk about -- is there a bubble here in these markets? you say that might be overblown. >> i think the chart tells most of the story. this is the s&p 500 over the past years, up 45%. the s&p has gone 33 straight months without a 10% loss. that is the longest stretch since 2003. the s&p nearly at 2000. 500re up 193% on the s&p since the bull market began in march, 2009. 18 s&p valuations trades it
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times profit, the highest level since 2010. bloomberg did a global poll of subscribers and here is what they found. 61 percent of respondents said u.s. equities are currently in a bubble or on the verge of a bubble. 70% said junk rated bonds are in a bubble or close to one. 40% -- this is interesting -- still say despite the paranoia that a bubble is building, the u.s. still offers one of the best opportunities. there are a lot of questions whether or not u.s. equities are the right asset class to be in. are in al, 60% we bubble region. so.e don't think we think valuation is stretched based on history. if you look at where both inflation and interest rates are, p/e ratios are below the average based on those two criteria. the key thing is that bull
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markets do not die because of stretch valuations. they died because you are on the precipice of recession. we are nowhere near that right now. >> you also mentioned that a lot of people have missed this rally that we have seen since the recession. julie, you have been looking at fund flows and where retail investors are putting their money. >> we have seen a pretty consistent increase in the number of investors, putting money into equity funds or etf. if you look at the numbers over the past 12 months, you have seen $100 billion pouring into these types of funds. the prior 12mes months. over the past six months, it has been up and down, but the net inflows have been $100 billion. we have seen the up trend climbed steadily. i have a similar chart to what olivia was looking at in terms of the climb we have seen since a market bottom that we talked about in march, 2009.
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it has been through late in the game in this rally, retail investors have gotten on board. that is another reason that some institutional investors are concerned that when these retail folks get in traditionally, that has been a sign that the bull market is getting tired. >> they have been participating, but is that too late? >> yes, you want to watch out for retail coming into the party late, which is what they usually do. if you look at the long-term great rotation out of the stocks is in its infancy period right now compared to historical standards. while we had a significant increase as far as cash flows into equities generically, it is not anywhere near the peaks going back four or five years ago. >> michael mullaney, the chief investment officer at fiduciary trust. coming up, rupert murdoch's bold plan to take over time warner. a former time warner ceo gives
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his take. we will be talking with jerry levin. ♪
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theesterday we learned of $75 billion bid that rupert madech's 21st century fox for time warner, turned down by the board. i want to go to our senior west coast correspondent jon erlichman. we have had a chance to speak with some of the major players around this wheel. the possible deal that has now been rejected. are trying toe stay in touch with the people directly involved in the negotiations. the sense i am getting is that both sides are gearing up for what could be a fairly long battle. on some fronts i do not think that is a surprise. if you think of the last time
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rupert murdoch went after something, very publicly, that he really wanted to get in dow jones, that is not a deal that happened overnight. i think it is no secret that fox.really love these time warner assets, they really would love to add them to the fox empire. i think they are concerned on some fronts about what the actual price of these assets are, and certainly after a little bit of mud that was thrown on the public, day one of this story unfolding, it does not seem like it will be an easy target for fox, and fox is not interested in what they would see as being overpaying. so here we are. >> so here we are. do we know what the next move is ? >> i was trying to get a sense on whether we will she -- we will seek shareholder outrage.
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wanting toust about engage with fox. there does not seem to be a strong interest on time warner's front in opening a process to bids right now. maybe that is in part because some potential bidders are tied up in washington in comcast and at&t, who are busy with other deals right now. i think performance will be a key thing to watch, and that is not something that is easy to watch day by day. what i mean by that is time warner made the argument when they said this is something we are not pursuing, to say our performance has been great, thank you very much, and look at our stock rice performance. there are parts of the time warner empire that could see better performance, including the cable networks. that is where we see some of the upside on that deal. >> senior west coast correspondent jon erlichman. let's stay on the subject of the time warner, possible time warner-21st century fox merger.
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jerry levin is joining me now, the former chairman and ceo of time warner. famously, the ceo of the united company after its colossal merger with aol. thank you so much for joining me on the phone. i know that -- and you know very well that people are called for a long time, the time warner-aol merger as perhaps the worst merger deal better in corporate america -- the worst merger deal ever in corporate america. what do you think? >> i don't know. isst of all, i think it exciting technically not only because of the marquee assets of both companies but also the -- rupert, media mogul, and astute financial
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who grewconservative up in the culture of hbo. my own view is that while all this is exciting, it is somewhat reminiscent -- i will say it and aol.-- time warner it is a watershed announcement that change is coming. change isr of fact, still taking place in the form of digital disruption. while it may make sense to put these wonderful assets together, which i am not sure is really going to happen, what really makes more sense to me is to figure out in this world who has the digital platform that is going to reach the consumer and provide the financial base to make good programming. howlso calls into question
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do you define these companies. what business is google inc., apple, amazon. i am involved in the health care the businessd, and itself is being transformed by digital technology as well. in fact, it is not just about big pharma and insurance companies and doctors. apple and about google. >> i agree with you, but a lot technology and that disruption and what that means -- jerry, where do you see the biggest problems coming up from this combination? one of the big problems with time warner and aol is a cultural clash. where do you see the clash here in a time warner-21st century --
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>> i think there is a similar issue, not just because of the historical problems with culture clash at time warner and aol. we have very different auspices in terms of -- and i have great respect for rupert and the murdoch family. but the way that company is run is diametrically opposed to the historic culture of hbo, the turner networks, and warner bros., each having its own distinct historic culture. i do think that could be a problem. one of the ironies here is that -- fox orther company time warner -- could be managed in a more interesting, forward-looking way by one of the digital players. i am not suggesting that google
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is going to come in and make an offer. entrepreneurship, their creativity in stealing the moonshot -- provide they are already in the business anyhow -- is an example of maybe the creative process needs to be more aligned with those companies that are delivering content to mobile consumers. just as an aside, where does news come from these days? facebookm linkedin and -- >> that's right. we are using our phones more in many ways before we use the television or the newspaper. or anywhere else to get our news. >> so i think this is changing our definition of what a company
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is. it is not just about we are in the period where conglomerates do not work and there is disaggregation. what is the core mission? , it something is digital can tell stories, provide communication. nations doclassic not apply anymore. >> i have to ask you this. i want to put this in context. taglineou to answer the that is always put on the , which isarner merger that it was the worst deal in history. how do you feel about that, that it was a legacy that you are a key player in? >> the way i would answer that, betty, is that ultimately with the crash of the market and unfortunate clash of corporate
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cultures, there was underlying it a notion that persists to this day -- and i am not justifying it. it did not work. it was meant to be a watershed transaction. strategy waslying that in order for what we now call a legacy media company to really advance in the new internet age, you needed to put those capacities together and have what we will call the new entrepreneurship, which is being recognized at that time on the stock market and today is being recognized by with a lot ofet failures in between. >> that is exactly right. you might have been ahead of your time and maybe the timing was off there because now you
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are seeing this merger. your say new and old, digital print and television. >> what you're seeing is the disruption of all the existing forces. it started with music and it has reached into every corner. i think that is the underlying the potential offer. where do you go in this new age? here it is 14 years later and people are still trying to answer that question, except we have a lot of new companies on the playing field, and some that have readopted like amazon and apple. maybe they are going to lead the way in the future, and it will not just be the five movie companies. >> we will have to leave it here. jerry levin, the former chairman warner, whoime
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oversaw the aol-time warner merger. back in two minutes on "in the loop." ♪
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>> time for the global outlook. nissan wants to be in the fast lane when it comes to self driving cars. said by the sun is ceo to have them. >> by the end of 22 -- by the end of 2016, the sun is rain to market a traffic jam pilot in bringing tosan is market a traffic jam pilot. >> that does it for today on "in the loop." in a few minutes, stay on bloomberg because mary barra will be testifying on the recall of gm vehicles for the faulty ignition switches. she will be joined by ken feinberg and anton the lucas. that does it for us on "in the
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loop." stay with us. ♪
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>> it is 56 past the hour, which means bloomberg television is "on the markets." we will show you where stocks are trading right now. equities lower this morning after the dow closed after an express record high yesterday. far 15th record close so for 2014. we got some disappointments -- unexpectedlys fell, hitting a nine-month low this morning. also watching gold. on u.s.l is rising
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sanctions with russia. this yeare rebounded over 8% after gold lost a quarter of its value last year. staying with gold, we are looking at how to fit the fix. that is the century-old houses of fixing the gold price. now it is in need of a makeover. and any minute -- an independent administrator could be brought in, and that could mean changes to the benchmark. for more on the changes in pricing, i want to bring in bloomberg industries can hoffman. thanks for joining us. first off, the word fix does not inspire much confidence. when theare over rothschilds set the price in their own banks. >> thanks, olivia. the fix is really a bad name for
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something in terms of pricing, but what the fix is, it is twice a day, all the big buyers and sellers of gold -- essential banks, producers, big banks who have huge amounts of gold to buy and sell -- get together and try to figure out what the price of gold is. they cannot really go to any exchange around the world because there is not the lucrative. ins is where liquidity lies terms of pricing gold globally. it is really important that you for bringinghanism the buyers and sellers together. it is a 100-year-old process and is in need of updating. >> i hear you saying there is not a lot of acquitted the -- of liquidity in the market, but do you only need one gold price? >> you do. done, i need to have a contract with a jewelry company. how do i price that price of gold?
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traditionally, the biggest exchange for buying and selling gold is in london. we will price it off of that. as the economy has gotten more complex and trading has gotten more complex, it has been a downfall for the fix because now you have $5 trillion per month in contracts being priced off this fix. that has led to manipulation. that has led to barclays having a $44 million fines or somebody said can the fix just be a few cents lower because i have a contract that might pay off $3.5 million if the price closes here today. that has led to a can of worms where people are saying the fix has outgrown its purpose. how can we updated? it?how can we update >> quickly, are there any alternatives to the fix? >> right now there is not. the singapore stock exchange is coming out with a big contract,
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but right now the main purpose is for people to up date the fix, naked electronic and as fair as possible. hoffman joining us from bloomberg industries. "market makers" with stephanie ruhle and erik schatzker is coming up next. ♪ >> live from bloomberg headquarters in new york is "market makers." >> microsoft goes on a crash diet. the ceo is cutting as many as 18,000 jobs, the most in company history. >> treasury secretary jack lew calls on corporate america to quit moving overseas in search of lower taxes. we will talk about it with president bush's former chief economist. to ease thea tries pain of a record drought by imposing fines on water wasters. you are watching "market makers


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