tv In the Loop With Betty Liu Bloomberg August 5, 2014 8:00am-10:01am EDT
what is going on in the c suite hosteg rayburn is my guest this hour. he will give his take. activist and president of the rainbow push coalition, jesse jackson will be "in the loop." bes he think ceos should paid on how diverse they make their workforce? our coverage of the u.s.-africa summit continues throughout the day including highlights of an interview with penny pritzker and mike bloomberg. in washington, president obama is ready to announce $14 billion in commitments from u.s. businesses to africa, part of the shift from usaid to u.s. investment. the commitment comes as president obama hosts a summit of several dozen african leaders. more trouble for general motors
-- prosecutors want to know more about the general motors subprime auto loans. gm is cooperating. says russia now has 45,000 troops and hundreds of tanks on its border. the ukraine says they are making gains against russian official. front, the corporate coach investors waiting for a sign of a turnaround and they have a glimmer of hope. ae handbag maker reported smaller drop than expected, but michael kors is still eating coach's lunch. julie hyman, what is coach doing right? >> they hired a new designer almost one year ago and the
reception from the fashion press has been pretty good. it is not clear if customers will buy it. that will come in the next couple of months. coach did post a drop in comparable sales of 17%, but 21% was predicted. 7%, butrevenue was down again, not as bad as predicted. for many dominant years and sort of rested on its laurels. >> the designs were getting kind of tired. >> that is part of the issue and always a risk when you are talking about a fashion company, whether it is accessories, clothing, or what have you. that is part of the issue for coach. investors are waiting to see if improvement will be coming in the coming quarters. are rapidly gaining steam. >> yes, it has been a growth
story for the last couple of years and yesterday it came out with numbers and topped estimates that continue to show 43%, revenue growth, up however they pointed to a shrinking of margins. points -- 50asis basis points in the coming year. they had to discount to get out -- product out the door. ors insists they are not aggressively discounting merchandise, but analysts have come out with notes for weeks saying their discounting. kors will continue to invest in its international business which cost money and will affect the market. playis market that both in, what would you call it? guess,rational luxury, i and coach created that market
$200 toandbag that is $1500. if you go back, women only had two handbags. coach created a niche. they might have gotten tired openede designs, and outlets. a lot of critics said that made it to common, you can buy it at an outlet cheaper. you know that. kors might be running into the same risk. it has to be aware of that pitfall. >> keep that exclusive aura around it. new yorkers got a scare yesterday when it was reported a patient admitted to a local hospital might have the ebola virus. he is now listed in good condition and health officials are telling residents they
should not be worried about contracting the disease stw americans being treated for -- americans as two being treated for ebola in atlanta are on the men's thanks to acm. yang yang joins us. at this is no vaccine time and normally money patients are given fluids, blood transfusions, and antibiotics with the hope the immune system can fight off the virus, but 900 a death toll of nearly out this latest outbreak, the measures are far from effective. we may now have a breakthrough because at the request of the u.s. charity that works with the two infected americans, dr. kent bol,tley and nancy write experimentalued in
serum. by saneing developed diego-based zmapp. until now, they had in a little-known company with only nine employees. a little more known now. >> we mentioned early on that the serum has not been tested on humans, so how were they able to use it in these cases? >> this was a case of desperate times, and desperate measures. desperate to save their workers, samaritan purse, the company they work for, reached out. the u.s. has very strict drug approvet the usda can drugs under what is known as the
clause.onate use they were informed of the risk and had to give their consent. again, never tested on humans until now, and the drugmaker has made it clear that any decision to use the drug is the .hysicians call, not theirs >> why do we not have an approved treatment? is it an issue of funding? >> it definitely is. pharmaceutical companies -- there is no appeal to an ebola vaccine, to tell you the truth, and that is a challenge. drugmakers have had these potential vaccines and treatments in the works, but not enough funding to get to the trial phase. the drug being used on those in atlanta has not been tested in -- until now. in the last few years, there has been a little more funding with
about $43 million spent on ebola research last year. we are making some headwinds. still not enough for av stream is to get to the clinical trial stage. we are still a few years off from an approved treatment, betty. >> thank you for that report. yang yang in washington. now, for the u.s.-africa summit in washington, i want to dig eager into president obama's have $14 billion bill to africa. hans nichols joins us. there are a lot of deals in the offing. where will those investments be? >> they will be the route sub-saharan africa. 90 organizations are represented , almost 50 heads of state, and behind me deals are being done. here is how the white house made the $14 billion sound like an eye-popping number. heading into this, they had
talked about $900 million, and 1400 they offer that up to billion. $14 billion. in comparison, when china and africa had a summit, $20 billion with the number. one of the things we are hearing on the sidelines is africa is a of the u.s.s ahead when it comes to investing in china. >> the price tag continues to go up. what about ghana? >> this it's to the core of the governance problem. they have a debt they cannot handle and they have asked for an imf assistance project, but it gets to the core of return on investment in africa. if investors cannot be guaranteed that these countries will be governed properly, the
investment will dry up. another sideline conversation is what is being done to combat corruption, being done to ensure good governance, transparency. -- hanse nichols nichols, thank you. hans nichols in washington. hour, and shaking this billionaire entrepreneur elon musk. .ell, he is looking for a site he has found a site for another part of his business, with his spacex building a commercial texas.ad in florida, georgia, and puerto rico also competed for the site. inn musk founded spacex 2002. texas says the brownsville facility will create 300 jobs
and inject $85 million into the economy. coming up, searching for diversity in silicon valley -- we will talk with jesse jackson who has called on tech companies to be more open about their employment numbers. and bernie ecclestone has found a way to end a bribery trial. what is he doing? he is offering to write a big check. ♪
settle a corruption case. bernie ecclestone has been on trial since april on allegations that he bribed a former risk he did notensure oppose the sale. settlementestone's would raise the chances that he could still remain at the helm of formula one, which is what he is best known for. if you are a large corporation and employer in the united states you probably feel like you can depend on republican party support, they have been friendly to business, but as of last week, not as much. gop senator chuck grassley last claimsfended the false act, commonly known as the whistle blown act, that protects sources that reveal fraud on the
part of government contractor. with me to look about -- look at this issue is paul barrett who writes about this in "bloomberg and greg rayburn, founder of kobi partners, and former chairman and ceo of hostess brands. greg, great to see you. paul as well. for those that do not know the ca, tell us how it works. it allows the government to go after companies that are ripping off the government. in the 1980's it was adjusted so that individuals could sue on behalf of taxpayers and recover themselves a portion of any judgment or settlement if fraud is found. we have a lot of fraud in this country. it is a big country, big government, $72 billion a year
estimated in fraud and abuse. this andave noticed have migrated to this field and are bringing an increasing number of losses. that has prompted big business to try to push back and ask congress to rein in the law, and as you said earlier, senator grassley is, you and turn, pushing back. >> so, why is he pushing back? >> he has been a big advocate of ,histleblowers and anti-fraud and it is a good illustration of how our normal partisan spectrum does not always line up with the standard political assumptions that we have. in this case, big is this's -- big business's biggest opponent is a conservative from iowa. >> it make sense with his background. greg, how do you feel about this? >> you might automatically think i would be a big business guy. >> automatically i would think that. >> i have no issue with the
whistleblower act. this is our money. you are talking about taxpayer money. they have recovered $46 billion to this act. do they catch it all? no. again, it is specific to taxpayer money, i have no issue. >> are not cases of abuse? will you not see that? >> you will have, in this country, unless there is serious toward reform or something along those lines, you will always have potential fraud. you even see that in the activist community with bill ackman and herbalife. whether there is something there or not, i would rather err on the side of having the mechanism therefore someone to report and recover -- there for someone to report and recover and you have to live with the inefficiencies. these are only government
contractors, right? >> that is right. this relates to people doing business with the government. >> does this have any effect on companies that do not do business with government, but realize there are these lawsuits on the horizon? >> the outlet for that -- there was a story this week and i cannot remember the company, but a whistleblower had gone through the internal reporting mechanisms to correct what they thought was an accurate financial reporting, and their outlet was to go to the sec. the sec could bring action and deal with that. so, you know, outside of the government companies, there are other mechanisms people can go through, but first, i think they are supposed to go internally through the board or other compliance procedures. >> right. so, that digs into the other issue, which is our companies able of policing themselves?
>> that is what the chamber of commerce, in lobbying for new amendments to the false claims act is saying -- they are same companies that set up the compliance program should be given a break. potential penalties should be reduced, and whistleblowers should be required to first complained to the company before they go out and find a lawyer and sue. . -- the problem with that -- >> look at what that day with gm . >> exactly, and the problem is human nature. in any organization, the guy complaining that we are not doing things right will end up with a bull's-eye on his back and might find himself fired, if not worse. thisis the theory behind law. you basically created a conflict of power here between the bay corporation and the small individual, who can file a lawsuit and not fear he will be retaliated against. >> is it possible in a big even encourageto
people to come out and say i believe something wrong is happening at this company? >> sure. you can foster any kind of culture and top-down, and it has to be top-down, starting with the ceo and driven down. when you say big company, the problem is big companies are made of human beings, and there is the problem. measures,ve all the and like you said, look at gm, they had that issue and that people go that were reporting the issue. whistleblower act serves a good purpose and a good role because of that. >> but it certainly is not the antidote to everything, as we know. paul, great to have you here. paul barrett, thank you. greg rayburn will stay with us. the founder of kobi partners. banking on africa -- financial institutions are among those totalg up to $14 billion
>> first. bloomberg. >> you are watching "in the loop ," live on bloomberg television and streaming on your phone, tablet, and on bloomberg.com. good morning. i am betty liu. here is a look at the top headlines this morning. israel has pulled all troops out of the gaza strip as a 72-hour truce is underway, saying it completed the mission to destroy tunnels used to stage attacks. tiger beat analyst estimates on surging suv sales, posting record profits of second quarter as u.s. sales up to make up for shrinking demand in japan. bmw sales up 23% in china. isa today" publisher gannett
splitting and two, focus on -- focusing on broadcast and digital services and bill -- spin off the publishing arm. 41.8agreed to buy cars.com million dollars. that is one of the corporate stories we are watching this hour. it is 26 minutes past the hour. bloomberg tv is on the markets. equity futures are lower after the brief respite that we saw yesterday. investors are jittery about where we are in the markets, whether we are two highly valued and should be in the middle of some sort of correction. we have economic numbers this morning, including the iso and ismices, all important -- services, all important to see where the consumer is headed these days. president obama plans to announce that the u.s. companies have committed to investing $40 million in china. --ndard chartered -- 40 2
$14 billion in africa. standard chartered is committed to $3 billion. hans nichols is standing by with standard chartered's diana layfield, ceo of standard chartered. >> i am joined by diana layfield. what has changed in the last 12 months because you made an initial big investment, and now you will make another one? >> at over $2 billion, we were over 20% of the private sector commitment, and we discovered that our pipeline project was working more swiftly than we hoped for even and now was a time to double the commitment and last week we announced a $5 billion renewed commitment. >> give me a sense of the deals
taking place on the sidelines here? >> i think people are talking about obvious intercompany tieups, large investment opportunities, and broader partnerships around imports, exports, but also financing of hotels, power projects, and large structural infrastructure. , anyich allows me to ask private exits you're working on this year for standard chartered? talk about. i can >> give me a number. >> one or two, we do not have enormous quantity of private equity investments in africa, but they are very attractive, and we are continuing to invest rather than selling up. >> more investments and investment. >> absolutely. >> when you look at china's investment, is the u.s. late to the game? >> lake would be harsh. the u.s. is one of the later players, and there is reasons
remotenessiven the geographically, but i do now believe it is time to step up and engage with africa and it is a fantastic time to do that. >> let's talk about your businesses -- how are you coming in ethiopia? will you be opening up their sin? >> -- soon? >> ethiopia county does not allow foreign banks, but we are watching the situation carefully. about enthusiastic ethiopia and the ethiopian opportunity. we do not think that will transpire in the next couple of years, a we will continue to do what we can. we do do business with ethiopia from our side. and the key is -- >> that is awfully loud here. i do not know if you -- if that is president obama. i know you fly by helicopter. people might not have been able
to hear -- ethiopia, a couple of years out before you think you are there. click second that is right, ethiopia will do this on a gradual basis, but it is an extremely exciting company will continue to watch the space. >> what about mozambique? >> we have progressed conversations with authorities and in due course we hope to open a full banking presence. >> you have staff across the continent. have you had to evacuate or take precautionary measures because of the ebola virus? >> no, we have not -- sorry, we have taken some precautionary measures, as you would expect, making sure health and security procedures are exactly what we want them to be. the majority of our staff in west africa and all of our businesses are local. evacuation does not make sense, but we are also very conscience of safety. >> i hope you and your staff and everyone stays safe and healthy.
with that, i will send it back to you. my takeaway, more investments than exits, that could be the takeaway of the summit. >> thank you, hans nichols, with diana layfield, ceo of standard investments.frica i want to bring in a bloomberg intelligence analyst who covers banks in the middle east and africa, and still with me is rayburn.ners' greg -- take onr tank on banking in africa because as we just heard from the ceo, certainly there will be challenges operating in the continent. what is the big risk in banking? >> sure. we have to look at south africa, 20 years from apartheid, but some of the social problems are there. we have seen mining strikes, steel strikes, which caused a
one quarter gdp retraction. what we talk about in the u.s. and europe, the aspect of terrorism. at this point, it has only been confined to liberia, but if you look at nigeria, we have problems with boko haram. it is seemingly scaring investors in investments coming into the company. ceoseg, you hear about the say they will invest in total, along with everyone else, $14 billion in these markets, and some of it is pr. how do you know it will not be good money? it will not potentially turn into good money turns into bad money? >> this is a growth story, so first and foremost, what you see in africa in the emerging markets and the sub-saharan companies is rapid growth,
creation of a middle-class, the potential for an upper-middle-class, and a growth rate that could outpace china over the next three decades in terms of working age people. that is where investors want to be. i do not think a lot of this is for show now. i think investors that are really working -- i know investors that are really working hard to put money to work in africa and that was a prime target for them. coalescing.s. is around this now, but money has been going in. whatld ask kapilan pillai he sees on the banking side. >> what do you think, kapilan pillai? iswith the world bank says accurate as a whole will need $50 billion for energy projects. the surplus? up we need more banks to come in and build up the infrastructure. withe places like nigeria
power and agriculture reform, but more finances needed. the imf is saying africa as a whole will achieve 6% growth rate in 2018. in europe, it is 1.4%, and even eastern europe, with excellent returns, it is only up 2.5% in 2018. >> what is the biggest risk -- what is the biggest thing that affects a company operating in africa? is it corruption, kapilan pillai ? coming from message the white house, certainly from president obama, it is corruption and how we can solve these problems. we have seen it at the top level. in nigeria the bank governor left, alleging that $50 billion of oil revenue had gone missing. we have seen problems in south
africa. those issues need to be cleared up before investors have a lot more confidence in africa. >> kapilan pillai, thank you for and join us. also, my guest house, greg rayborn, who will stay with me throughout the hour ahead there is much more to come, including a conversation between bloomberg lp founder mike bloomberg and penny pritzker, plus jesse jackson is asking companies to disclose data on their workforce . many of them did. what does he think of their results? i will ask him when he joins me "in the loop." ♪
to start their day. 7:00ugs, it takes place at a.m., only on weekday mornings before you had to work. anstarted in new york as experiment, but it has caught on quickly and they are planning events in berlin, amsterdam, and tel aviv. we are back with our guest host greg rayburn. could you see yourself doing that? requiredy, coffee is when i wake up, but i will tell you this, i could do that before ar.o rudy -- booty b [laughter] >> there could be worse ways to wake up in the morning. we have reports about silicon valley and how diverse their workforces are. why are these companies divulging information now, because according to jesse jackson, you cannot speak what you do not know or realize.
june, he wrote a letter to asking valley leaders them to publish the data they submit to the equal opportunity commission. meerend jesse jackson joins and greg rayburn stays with us as well. great to see you back on "in the loop this morning. >> good morning. >> tummy first of all, how you mel about the rate -- tell first of all, how you feel about the report? were you surprised by the results? yes, 30% black, down to the employment, 2% black, 2% this is rather racial segregation, and there should be
hearings in the valley because these companies get tax breaks. they get -- they do government business. >> reverend -- segregation is a hot one word. -- but in word. do you think the ceos and management teams are purposely trying not to hire minorities and women? >> all i can go on is the they over index on purchase -- purchasing their products, and when it comes to employment -- it is not just having skills. tech. the jobs are not they are legal, marketing, advertising, a range of services, but you look at these very low unemployment records, and there have been no plan for goals, targets, and timetables, so profits are soaring, but disparity of bounds.
gives me yourg, take. >> there will be a natural friction because when you look at how management teams and boards of directors get compensated and incentivized, they are incentivized to hire the best and rightist, whatever they think it is, -- brightest, whatever they think it is, which should be without consideration of race or ethnicity. i look at the data, and it struck me that ebay was more diverse, and i am wondering what reverend jackson inks about this, but i am wondering if it is because they are a much more mature company. from my perspective as a ceo, what you learn through experience is building the best team does not generally result in a homogeneous team. building the best team requires balance, diversity, different skill sets that blend, and coaches will tell you the same thing -- any coach will tell you the same thing, i do not need
all of the same person. companyhink because a might be more mature they might have had more time to assemble a team and that is why it is more diverse? >> if they are more expensive the top, they are more likely to understand that. >> ebay does not have a network in american or latino on the andd nor in the c suite black, and 2%d 3% latino. arounds a cap -- problem looking at the best talent. blacks and latinos represent market, money, talent, and growth. inclusion must be intentional. it cannot be a byproduct. at >> -- byproduct. ceo come to you saying that i am trying to hire as diverse of the team as i can, but i'm also looking for the best people and sometimes it does result in us hiring more
whites, more men because they are the ones with the best skills right now? >> well that mythology must we destroyed because it is simply not the truth. there is no job in silicon valley and african-american toilet in a cannot hold. -- an african-american or a latino can not hold. david drummond with google is an afghan american. given an opportunity -- african-american. given an opportunity, there is nothing we cannot do, but as a matter of fact i questioned legality. will conductoc hearings. talent,are looking for we can find the talent for them. greg, i hate to think about
trying to regulate something like this, but is there something that can be done to incentivize ceos to think more about adversity front and center, maybe forcing them to link diversity to their salaries, compensation? >> it is possible, but there is also a skills gap here, and while i appreciate reverend view, steveint of jobs, before he passed away, said he did not build manufacturing facilities to support apple in the united states because it was a huge shortage of engineers. but i can also come into play. you have to have -- that can also come into play. the companies require certain skill sets like any other company. a smart ceo would think about adversity and looking at it from the board-level down. >> but they need to find the people that will build the companies. >> betty liu. betty liu? >> they have to find a skill
set, but anything that will take effect in a culture has to be top-down. >> reverend? >> we went to the facebook board meeting, and the only engineer in the room was mark. erskine bowles is not an engineer. ignoreve been able to the best talent in the marketplace. baseball did the same thing. they tend to build these companies downtown and in suburbs and they have turned their back on their markets. when they use all of the best talent -- they are spending more workers from asia. they try to bring and 85,000 more workers from abroad now, but they are cheaper talent, not better talent. -- reverend, do you think, have you proposed the ceos link their pay to diversity
? use thee seen companies incentive, but right now they are looking -- losing a lot of ground. when they say they cannot find the talent, there is simply not true. there are blacks and latinos qualified to be on boards and in c suite and there is no job people of color cannot hold. they are bringing in more workers from abroad and paying them cheaper salaries. >> that is a point, right? we're not talking about people just with engineering skills, but what about managers and people at the top-level? >> let me address one of those points he just mentioned because again, if you are importing talent, you are importing diversity. i am not sure what the point is because it is certainly not for a lower cost because if you are
hiring phd's, you will pay market, and everybody wants them and there is huge competition for this type of talent. so, i think, again, you will see differences based on how mature companies are, how they view it from the top down. >> greg, thank you. make foreign talent commencement with american trauma -- talent. we will have two away trade or no trade. we need to have a fair, equitable relationship. jackson jackson, thank you for joining us, and also thank you to greg rayburn, for staying with me through the hour, the former ceo of hostess brands and now head of kobi partners. as the president continues executive -- considers executive action on immigration, we will look at holding centers for my grandchildren.
>> the government plans to shut the temporary shelters it set up for housing children caught crossing the border alone, and the reason is fewer children are being taught. fish -- the shelters were set up in oklahoma and texas where they come through, and chicago mayor rahm emanuel has offered to and i1000 of the children talked to them exclusively yesterday on "in the loop." >> the goal we have is to make sure every child in every neighborhood has the participation in the skills necessary to join the middle class. as they get educated, there is anthat thousand a mayor, alderman, an entrepreneur, a newscaster, someone that will achieve what we want as the american dream, and my bet is it is not one of them, it is many of them. >> coming up, federal prosecutors are asking questions about the gm finance unit.
it is 56 minutes past the hour. bloomberg tv is on the markets. futures are slightly lower on this tuesday. we have earnings that have come out -- coach and kors, and also ism services data is out at 10:00 a.m. eastern time, and that will likely dictate the direction of the markets. we are on the markets again in 30 minutes. coming up, another potential problem for gm -- not the government is casting and i on the automaker's financing practices. plus, disney reports their earnings after the bell. we will take a look at some of the big deals made under ceo bob iger and the revolutionary technology being utilized at its theme parks. you are watching "in the loop,"
we are about 30 minutes away from the opening bell on this tuesday morning. you are "in the loop." i am betty liu. here is what we are working on -- investors are looking to get new figures on factory orders in just about one hour and also the ism index. gm is being investigated on federal auto loans. gm is cooperating. we will look at how disney ceo bob iger made deals that an disney into the world's biggest entertainment company and offered some of the biggest block authors of the last few --
blockbusters of the last few years. president obama will announce that the u.s. companies will invest $14 billion in africa as part of a summit taking place in washington. international correspondent hans nichols is with us with more. what is on the agenda today? that will get specific on $14 billion in investments -- what sectors will it go for? a lot of it will be for electrification, but where? you have the possibility for wind power in western africa, solar off of uganda, hydro and solar in uganda -- what will be digging down to throughout the day is specifically where these investments will be going, which countries, where are the promises, prospects, and also, betty, where are the problems? questions,tability security questions, and overlaying all of this, governance questions, can african leaders convinced
investors that their investment will be secure. betty? >> i understand right now, our former mayor, mike bloomberg, and of course the owner of bloomberg lp, mike bloomberg, is on stage, opening the proceedings. >> he is opening the proceedings, trying to set the tone, i do not know if we will have a quick listen if that is the quick plan. >> we are going to listen for you, and we will bring any development on stage, and i know you're coming back with an interview from the summit. hans nichols, tower international correspondent in washington. in the meantime, general motors just cannot catch a break -- the car company is under investigation, but this time doj prosecutors are focused on the gm financing unit amid concerns that subprime lending is feeling strong auto sales. att millernews' m
joins us with more on this. again here? >> we should be clear that the justice department has not expressed -- has expressed concerns and frankly, it is clear that subprime lending is boosting auto sales. that is not necessarily a bad thing in itself, but the question is how they are conducting the subprime auto lending. it is not illegal to lend money to someone who does not have an 800 credit score, and all the makers do it in some fashion. "the new york times" had a great piece about the fact that subprime lending makes up one quarter of u.s. car sales. --that is a great point there is nothing illegal about it, but it only raises red flags when there is abuse found. >> you are 100% correct, and, frankly, it is a good thing in a lot of cases. people in america need cars to get to jobs.
we have some of the worst public transportation systems in the western world, so you have to drive to most places if you want to get to your job, so if your credit is bad, that does not help you any. it is better if you have auto lenders that are giving you a chance, especially these lenders. gm, by the way, finances the biggest of these auto-old lenders. the department of justice is looking into this. chrysler has said the department of justice is not looking into its lending. ford has not given us any comment on whether or not it has been subpoenaed. you can watch or more of these to roll out. the department of justice has successful with subprime lending fraud prosecution on the mortgage side of things and they may start to go after it on the car side as well. >> matt, do i so much. matt miller, covering gm. -- thank you so much. matt miller, covering gm. disney will report results today.
they have already done a bunch of deals that have transformed entertainment. jon erlichman is in l.a. with that story. disney's success in films has been getting a lot of attention, but the theme parks have actually gotten much bigger for disney. >> i think you could look at somebody different parts of the disney empire, betty. there will be a lot of focus on the parks business with a lot of buzz that there has been more spending over the last year at their various parks. they are definitely culturally important to the company, and financially they are tremendously important. this is a business that might generate between $3.5 billion and $4 billion in revenue and this year alone profitability of at least $1 billion. they have spent a lot of money renovating parks like walt disney world, and the focus is now shifting to shanghai. when that park opens it will be a huge moment in the history of the company.
>> we are alluding to how 21st century foxx murdoch is going after the time warner and disney has made some of the biggest deals in right now they are reaping the rewards of their biggest deals. >> deals, acquisitions, they change companies, and we have seen that in the case of disney. if you look at her kisses like -- if you look at businesses like pixar, acquiring lucas films, add those up and spending at the parks like we were talking about, you are talking about some of the big drivers of what is happening financially in all parts of the business that we will be talking about later today outside of say, something like espn. >> what are we likely to see with these results today? show?s espn going to >> it is always worth talking about because despite the
efforts at the parks, the film business, the acquisitions that they have done, the media network's business, and espn is a huge part of that, represents s of thest to two-third whole business, so as espn goes, so does disney. you highlighted the film industry, and "guardians of the galaxy" had a big weekend for them, and another film will be influential, "captain america," and people keep talking about "frozen," and the success of that film at the box office and in product. >> all of the movies my kids love. thank you so much. jon erlichman. keep watching bloomberg television because jon erlichman will interview disney ceo bob iger at 4:30 p.m. new york time. do not miss that interview. still to come, online shopping has no borders but doing business around the world as
>> there are some major u.s. retailers reporting earnings this week. we heard from michael kors, coach this morning, ralph lorenz tomorrow, and as they plan to expand, one company is looking borderfree,alled helping macy's, saks, sears, and others sell and ship products overseas. they reported that her than expected results with e-commerce revenue up 34%. now exclusively on "in the loop." you help companies expand internationally, ship their products, and online as well. i imagine, with so much talk
about hacking and credit card accounts being stolen, do you work with them on that front? >> actually, part of the role we play is the merchant of record. we are accepting credit card information from the consumer, and we are responsible for securing that information, much like the retailers themselves. as such, we aren't shorted narrowly careful and we do continuous upgrades and tests. it is getting increasingly challenge -- challenging up there. >> challenging because hackers are becoming more sophisticated? >> they try harder and there is more of them. are morenews is there technology tools available and you have to be vigilant, you cannot stop, just continually assuming the fraudsters will get better at it. >> when the scandal came out last year, people said retailers were behind protecting their data. when you talk to a client, do
you find the same thing? >> i would not say that we have a view into that. within the transaction flow, we are accepting processing information and we are responsible for securing it. i was having one's system is generally very strong, but the backdoor leftas a by a contractor. >> it is a case-by-case basis. >> yes, you have to stay on top of it. >> went on hot market retailers want to get into that you are helping them with? >> we see great growth in asia. south korea is a standout market. kong,ore, hung -- hong doing really well. >> why south korea? >> i think the economy is doing very well. i think there is a little bit of a social shift in terms of people interested in shopping.
we did a research tour in south korea where they described shopping as a sport in korea. >> ashley, in parts of asia shopping is a sport. you can definitely see that. >> that is right. >> in terms of helping them shipped products, you bring costs down by how much? >> we are able to achieve an effective logistics scale because of the size of our business, and any one of our customers working on our platform is able to leverage this global business that we are productspping a lot of across oceans. we are able to take advantage of the cost advantage that we have. the first time they ship internationally would be the first time they ship internationally, so they do not have the experience. >> you bring the cost down by how much? >> in terms of shipping, we can achieve 20% to 25% lower
out-of-the-box. >> some of the new companies you are signing on? >> this quarter, we signed rue la la, we have been working jacobs, and bed bath and beyond will be launching as well. it is a good mix of good products and brands. >> michael, thank you. michael desimone, the ceo of borderfree. coming up, as african leaders stream into washington for the u.s.-africa summit, we discussed the role of the white house and helping -- in helping the african economy thrive. ♪
>> in washington, u.s. secretary of commerce penny pritzker is speaking to business and political leaders right now with the u.s.-africa leaders summit. for more on efforts to work with africa, hans nichols is back with us in washington with rumored television contributor and former senior -- with rumored television contributor and former senior advisor to bloombergberg -- television contributor and former senior advisor to president obama, david plum. on this notu focus being taken over by the ebola conversation? >> it is a very question. you have to minimize the threat that it really poses, and reach out as aggressively as you can not just to the washington press corps, but around the country. africa will be such a story of the next century, it will be a big economic story.
the announcement of the additional private sector investment will drive coverage, and to fan out and be as president -- present as you can. >> when you talk about investments, we are talking about $14 billion -- an eye-popping number -- is that getting through that this is the place for investment? what's this cannot just be a conference. it is a big -- >> this cannot just be a conference. it is a big number. african leaders are hungry for american involvement. they are looking for investment, but more than that -- we have a lot of other assets in terms of innovation, entrepreneurship, governance, all the things we bring, but it cannot just be lectures. be realve to deliverables and investment has to be consistent and clear. >> in your conversations on the china question, have they asked what is taking so long? >> there is a little bit of
that, and china will be involved with an important role, but that is more of a patron relationship. we have an opportunity to have more of a partnership. investment is happening, but we bring more to the table. hereat else is happening with the sideline conversations? >> growth israel. 6 -- growth is real good six of israel -- growth is real. it will have an effect on the economy, education, governance, and the takeaway away is there is a lot of need. infrastructure need. technology needs. there is a story of growth, but that has to be back in -- back and up. may have at obama new chief of staff and will we
see your financial disclosures anytime soon? >> he has a great chief of staff. >> so we will never get to see your financial disclosures. >> no. >> i will never know how many side deals you cut. >> that is a great way to put it. about a plouffe talking long-term partnership. thank you. >> good job on pressing him, trying to get those financials. hans nichols, our friend -- our international correspondent with david plouffe. we will have more including the interview with penny pritzker and mike bloomberg. we are a few moments away from the opening out. we have the top 10 stocks you do not want to miss right after this break. ♪
>> first. bloomberg. >> welcome back. you are "in the loop." i am betty liu. it is 26 minutes past the hour. bloomberg tv is on the markets. futuresthe latest on right before the opening bell, the final moment he for the open. -- before the open. equity futures are lower, keeping the trend we saw last week where there was volatile trade but also lots of selling going on because investors are worried whether we may be here at the peak in the markets. we are on the markets again in 30 minutes. that's countdown to the open with the top 10 -- the only stories you need to know about today.
julie hyman and scarlet fu joining in this morning. let's start with number 10, linkedin, pain $6 billion in 350id wages and benefits to current and former employees according to the labor department. foundrnment investigation the company violated parts of the fair labor act. pandora,mber nine, with shares rising in the premarket, and they could expand programming beyond music to include sports and talk radio. thisre also hoping that as becomes available in cars, it will attract listeners. toyota tumbling in the premarket -- target tumbling in the premarket. incoming ceo, the has a big job ahead of him when it comes to target and trying to turn the business around.
the data breaches the least of their worries. caremark,seven, cvs the nation's largest provider of prescription drugs reported estimates that -- earnings that were higher than estimated. they also raise the earnings forecast for the year. depot.er six, office they posted earnings in line with expectations and raised its outlook. they still expect to close 165 stores in the u.s. this year and at least 400 locations by the end of 2016. the consolidation continues. areetail me not -- shares tumbling after they missed analyst estimates. 49% also reported a increase in expenses, offsetting a 37% gain in revenue. >> number four, aig. bob benmosche a ending his
tenure on a high note. it is the insurer's final earnings report under bob benmosche, who steps down next month. >> he has shepherded this through a difficult period and a turnaround. >> he was able to restructure the company when so many others failed. >> and not give in to the board. , splittinge, gannett into two. they will focus on broadcast and digital businesses and spin off its publishing operations. the company is also buying full ownership of cars.com. .> number two, coach a glimmer of hope, with fourth-quarter profit that topped analyst estimates. sales down only 17%. coach shares rose, but before today, the stock has slumped
39%. >> i have to say, i have not gone to one in a long time. >> is usually packed with tourists. >> that is right. number one, disney -- analysts expect the third period --third quarter will benefit from world cup ratings and "frozen circle we will have interview with bob iger at 3:30 p.m. eastern time. there goes the opening bell. ll, youare still a bu have been happy with stock buybacks. apple has led the way with up to $18 billion in share buybacks, but so far equity companies have bought back 211 billion dollars in shares. i want to bring in a portfolio manager at steeple necklace -- steeple necklace, and you have been quite bullish.
you like the stock buyback? >> they are ok, but we are getting to a point with regard to valuation were buybacks and many companies just do not make sense anymore. >> does it become like financial engineering? >> it is more than financial engineering. the multiple is way too high. let's look at where the market is. if forward-looking multiple, 15 and a half times. you're looking at revenue growth within the s&p 500 of roughly 3%. we believe the market probably it overnd 5% to 6% in the course of the next five to six months, but valuations are not cheap and you want to be more cautious, move up the quality spectrum, move your portfolio from more volatile stocks. more about to ask
valuations. i was looking at the trailing p /e for the s&p 500, on a trailing basis, about 17.5, and it is a far cry below where we ise in, say, 1999, but it sort of in the middle. i am curious for you, where the sweet spot would be in valuation -- where is the tipping point where it becomes overvalued? what does overvalued mean to you? way.e pendulum swings both i would be concerned if the multiple got to 18 times forward-looking -- you have to look at profitability. right now, profit margins are at an all-time high. it is two standard deviations above its norm. if that is what is normalized, that would be somewhat disruptive to the overall earnings picture and the overall market. that is somewhat of a concern. at this point, you have earnings growth and economic growth that
has been moving along quite nicely. we would be somewhat overweight equities. we are not raging bulls by no measure. >> i do not know if there are any raging those right now. >> the reason you have that, if you look at peripheral that, there is a bubble right now. if anyone overseas thanks the sovereign market -- thinks the sovereign market is cheap, they have to have their head checked. any kind of correction -- you up 14,-- portugal went 15 basis points, and the market went down 1%. he started getting correction there, you could have a direction here in the equity market. we all know that. onyou have to put emphasis stock picking an individual companies, and one company you like as pepsico, and if you compared to coca-cola, it is now at a premium which is a significant reversal from it does count as recently as may of
2012. is pepsi doing enough to stave calls ton peltz's break off the company? >> i own both of them. to answer your question, eventually i think the beverage business will be broken off and there will be a spinoff. pepsi is target on about $106. the multiple is roughly as forward-looking as 19 times. it is trading more or less now in historical range. we believe there will be cost savings even if you do not get the split and the divestiture. consensus estimates are somewhat low when they will be competing over the next level. >> that is interesting. you do believe there should be a split. >> sure. >> and you think pepsi ?anagement is wrong, then >> i absolutely believe pepsi management is wrong and valuation would increase significantly if they split the company. cost efficiencies -- i do not
really see that in the cards, and i believe over the course of months, the 18, 24 corporate advocates will win out on this. it will be a slow, methodical process, but it will happen. >> so, this is as good as it gets for ingenuity and -- .ngenuity and pepsi >> i think so. you get another three or four quarters of cost savings and eventually they will get their way. >> what about the more existential question -- as an investor you are not always asking these questions, but "is this week" had a cover -- oniness week" had a cover coke talking about the soft drink business dying because of concerns of health. are they doing enough when your core product is in a tricky position? >> revenue growth for pepsi in
aggregate should be roughly -- the 2% and 4% valuation at this point, it looks again is trading at a discount. are they doing enough? of course they can do more. will they do enough? we will have to see. as a value investor, this companies consistently growing, consistently profitable, well-capitalized, so why not? >> maybe that is why coke is not trading at as high of a premium. it does not have the snack business. >> also the break up potential. >> the back of potential will drive the stock growth, and you also have earnings support. coca-cola has been struggling, do we believe as well that will be a turnaround. we think it will take longer. >> that has to be the magic to live -- magic bullet. companies are looking for the magic will -- >> sorry to cut you off, it is a
consumer staple, and this one fits the bill. dividend growth will be between 12% and 15% and it is trading of about 2.9%. you for stopping by. >> thank you for having me. >> chad morganlander, scarlet fu, julie hyman. coming up, penny pritzker and bloomberg lp founder mike bloomberg were just on stage, and they will be together speaking about the emergent afghan economy and the business opportunities that could await african investors -- economy and the business opportunities that could await american investors with hans nichols in just a moment. ♪
and he began by asking penny pritzker about one issue weighing on u.s. business, whether the u.s. export/import inc. will be reauthorize. >> i think we will be successful on capitol hill because every district in this country has a company that is selling something around the world, where if it is not there product /im financing,g ex they have a product that is getting the financing. should they get the funding at the reauthorization does not happen? >> i have to focus right now i'm getting a thrill. if something does not happen, you cannot have a plan b for everything. in this case, i think any is 100% right. when people start to think about it, it is not a political thing. this is something every other country does. if we are going to be competitive, we have to do it. if you think we should not do it and you get all of the countries to stop, we will have a level
playing field. we will not have as much business, because this is a catalyst and it gives people the ability to buy now and pay later, but it is the competitive aspect that i worry about. >> when we talk about growth, infrastructure is one of them. gen olson of the $2 billion today. announced that the $2 billion today. they sell trains. on the structure, roads, cities, where are the opportunities? >> i lead a trade mission to ghana and nigeria a few months ago and there are enormous opportunities. a company from north carolina is helping the gun on electric company getting the most -- get the most out of their great -- how do they make it a smart grid, do the most to get electricity out of their infrastructure? there is a much opportunity in terms of power, electricity, technology, solar.
what does the president know and why has he been pushing power africa? you need power in order for your economy to continue to grow and africa is under-powered everywhere you look at it, i do not care how you analyze it. they need hundreds of billions of dollars of into structure, particularly power, and you will hear -- the president will announce not only deals but a greater intention around power. >> obviously power is important, and so our roads, getting to and from places. when you look at cities, mr. mayor, what cities are investing the right way? you mentioned nigeria, it is a tough town to get across. .hey can take an entire day >> there are clearly not enough roads for a lot of places in the road, including some of the cities. it is tough to get around some american cities, and that impedes the ability to get to a place for education, medical care, commerce, and that sort of thing. one of things you have to look at is technology is different
today. you do not have to have the same infrastructure that you used to have to have. today, 50% of the people in africa have a smart phone. they did not run telephone lines all over the country. that. not have to do there are satellite communications, cellular communications. the same ring as true for commerce. there is air today, which he did not have before. recently in south africa, cape town, johannesburg -- they are thriving, bustling cities. do they have people that need help? absolutely. so do we in our country. we have to take care of our poor and they have to take care of theirs, and sometimes we can help each other, but when you look at the streets you say wait a second, these cities can be competitive. >> when you talk about the trends coming together, big cities, the potential for finance -- when you look at finance for investment vehicles, are they going to be the new
asia? what is the next hong kong in africa? >> i think it will take a while. >> a generation? >> i do not know if it is a generation. 20 years. that goes pretty quickly. there are stock exchanges all throughout africa. they trade derivatives. there is also financing that will let you have different risk profiles, payment profiles, cash flow profiles -- this day and age things are happening much more rapidly. >> mike bloomberg and penny pritzker. you can catch all of the u.s.-africa business forum, including a panel being lead right now by former president bill clinton on our live event channel and luba.com/tv. -- bloomberg.com/tv. on a completely different note shortageis a cemetery around the world and that is causes through the roof. we will show you the burial
>> time now for the global outlook. a 72-hour truce has begun in gaza and israel says all of its troops have pulled out. hamas has signed on to the cease-fire. fatal explosion at a gm auto had led to a nationwide safety overhaul. the campaign will target factories that use potentially flammable cereals. last week's explosion killed 75 people and it has been blamed on a shortage of equipment to remove metal dust. egypt lance to reduce overcrowding -- plans to reduce overcrowding at the suez canal, digging a new channel parallel to the canal for a cost of $8.2 billion. it will reduce maximum waiting time from 11 hours to just three hours. here is one freaky story -- can
you afford to die? the cost of disposing the dead is becoming a huge dilemma for people across the world. a bloomberg reporter shelby holliday is here with the details. what kind of costs are we talking about? >> it is crazy. in rome, a standard grade could set you back $32,000, beijing, so prices are really steep, and it is hitting us in the u.s.. we reached out to greenwood cemetery in brooklyn where a plot of about six hundredths -- 600 square feet can cost you $320,000 and the president tells us why. >> we could put graves all over the place, but we have no intention of doing that. we are running low on available land, we plan on keeping the landscape as beautiful as it is
now, and that necessitates increases in prices. itwe crunch the numbers, and can cost -- when we are talking square feet, it costs $423 a square foot in that cemetery. in the neighborhood bordering the cemetery, $430. so, it literally cost seven more dollars for a place to live in brooklyn than it does a place to die. >> that is incredible. are there alternatives? >> there are. cremation is becoming more popular. that could be a couple hundred dollars, but it is much cheaper. if you look at other cities around the world, in asia they are putting bodies and high-rises, involved. in japan, they are using smart cards to recall ashes. >> this is getting gruesome. >> you can also freeze-dried bodies, the new greenway of cremation. it is disgusting, you don't want to think about it, but the cost is steep and it is a financial
burden. >> it is, and you want to be respectful. it is something we do not want to think about. >> i will say the death care industry is a $17 billion industry in the u.s. according to some reports. >> thank you for bringing us that story. shelby holliday of bloomberg. that does it for today on "in the loop." tomorrow, media heavyweights joining me, bob wright and tim armstrong. plus, what is it like to spend a week homeless? that is -- that is what republican candidate for governor in california neel kashkari did recently and he will be joining us. ♪
and this is even as european stocks continue to rise, at least through this morning session thanks to better-than-expected results from bmw and credit suisse. we should also look at topper prices. they are lining ahead of factory orders in the united states and the services economy, the ism manufacturing not -- nonmanufacturing number. treasuries are higher -- the two-year yield with a little less demand of the safety of government debt as atrios takes effect as -- as a truce takes place in gaza. everyneration watching step in the equity market, millenial's. they have gotten a bad rap for being entitled, not working hard, but they might be more focused on the future. 20-some things have started saving for their retirement a xot earlier than john -- gen
or baby boomers. victoria stillwell joins us. what were you most surprised to learn when you return reporting on these savings by millenials? >> it goes against the narratives that you hear about millenials -- they are not working, not saving, who knows all happened to them in the future, but i was surprised, 71% of millennial's that are offered or similar plans are participating and contribute in salary,g of 8% of their showing us that they are thinking about their future and planning accordingly. >> that seems at odds with what many of them say -- they are risk-averse, graduated into a terrible job market, sell the financial crisis, what it did to their parents savings, and they do not trust banks and would rather keep money in cash. does,does, it definitely and what we are finding as 401(k)s are keeping them invested in equities in a
responsible, diverse five way. howuard released a report america saves every year and of the defined attribution plans tracked by them are offered by them, for one day-type -- 401(k)-type plans, glenn hills have 81 percent waited in equities, and that is a lot more than you would expect based on surveys. it is not showing up in their retirement plans. >> the money is actually going to equities. given that the millennial's are saving, and often times inequities, what are the ripple effects for the broader economy? you are, well, anytime saving, you will reduce your spending a little bit. while there might be some short-term hit to consumer spending, probably nothing hugely significant. there will be some reduction in spending, but when you have more saving, you have more investment, and when you have more investment, that will generate growth, so long-term
this is a good story. >> they are saving more -- what about their debt load? did you learn anything about how much debt they have versus earlier generations? >> as we all know, this generation has a ton of student loans and they will be working that that down for years to come in the future. given the conditions, they are not racking up a lot of home ,hat, a lot of credit card debt so they are aggressively paying down this debt compared to generation x, which had a lot of those other types of debt. >> pictorial stillwell, very informative, this report -- victoria stillwell, very informative, millenial's are much more invested than you think. we'll be back --we are on the markets again in 30 minutes. it is 26 minutes past the hour. bloomberg tv is on the markets. " is next.makers ♪