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tv   Market Makers  Bloomberg  September 8, 2014 10:00am-12:01pm EDT

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them live from bloomberg headquarters in new york this is "market makers ." >> a new bill would penalize dozens of inversion deals. cook, a day. the iphone makes its debut tomorrow. system and payment wearable house device.
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will show you how microbreweries can tap into a bigger market. good monday morning. i am erik schatzker. >> i am stephanie ruhle. how was your weekend? , it was great. -- >> it was great. shopping at the union square green market and then i cooked it all. >> i went to fairway for the first time ever and i loved it. >> what's not to love about fairway? coming out of ikea anything is possible. time to move on. newsfeed,ime for the top business stories from around the world. easy money may last longer than you think. and driving one of the longest economic expansions on record.
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this expansion will last as long as a decade, we are told. the reason is monetary stimulus. has agreed to buy ge's appliance business. it means electrolux and whirlpool will dominate the american appliance market. general electric ceo has been getting rid of the less profitable units so he can focus on high-margin industries like aviation. the richest college in america just got a richard. -- just got richer. they received a donation from the foundation up to hong kong developers. money will go to the public health school. one of the donors got his graduate degrees at harvard. war over corporate tax inversions is becoming a lot more serious. senator chuck schumer has a bill that would impose new costs on
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companies that move their headquarters overseas. it would apply to any firm that has done it since 1994. gois probably not going to anywhere but jack lew says he is working on other ways to make inversions less attractive. let's bring in our chief washington correspondent peter cook. first explain what chuck schumer is thinking. you are going to have to go back to 1994, how does that even get implemented? >> he is talking about making it retroactive to 1990 four. there have been more than 70 inversion deals in that. of time -- in that period of time. they kept most of their operations here and he thinks from democratsrt and republicans -- this would be punitive. tyco did this in 1997.
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congress want to push for an overhaul of the corporate tax code. he knows it is a sensitive topic politically right now. he is trying to tap into that ahead of the midterm elections. the bigger threat is coming from the treasury department. theylew said this morning will make a decision on what they're going to do in the near future. >> what are you expecting? >> i am expecting it will be limited. isir tools in the toolbox not as expensive as congress will do. it will make it less economically attractive. they will limit the ability to have deductions that you can use as you move debt overseas. interest deduction to may be able to accumulate in the u.s.. they may limit that. they haven't decided on one single fix. his message this morning is we if congressthis
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comes up with a bipartisan deal to do just that. possible to reach back all the way to 1994 to penalize companies for can write >> congress the laws. they can retroactively go back in time. george bush did it in 2004 with an anti-inversion piece of legislation. it doesn't mean it will not face him sort of legal challenge and it is not complicated. but it is certainly possible. the political options are limited but if he gets it to the floor he get some opportunity to discuss it among democrats who support this maneuver before the midterm election, or are a lot of politics involved. >> if it is such a long shot why would chuck schumer devotes these resources to it? doesn't that seem in poor taste? loves to put republicans
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on the spot and ask if they support this, do they support these companies doing this overseas. there are a lot of republicans who don't like this. it will be hard to say no to this legislation that has this populist appeal. you cannot just fix this one sliver of corporate tax code, you need to do the broader fix. up that is the republican argued -- that is the republican argument. schumer's approach may be politically appealing in the short term, particularly to immigrants who like to embarrass republicans. >> isn't there a bit of coppin state a calculus here for chuck schumer? some of his biggest constituents on wall street are making some big investment banking fees and advising on these aversion -- on these inversion deals and every time we ask these bankers about them they say we have no problem advising a company to do what's best for shareholders and we haven't seen anywhere close to the end of them. >> it is a sensitive topic
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because of that. these banks aren't the ones inverting themselves. it is not necessarily his hometown team that is doing this. they may be advising on these deals. chuck schumer is someone the business community talks to. he is a political player in congress. that is why we have not seen the final details of this legislation. there are going to be a lot of companies on this list who will talk to chuck schumer and tell him he is making a mistake. peter cook, thank you for the latest. i know somebody from new jersey who likes to make fun of a comedian. >> just 10 days from now great britain may not be so great anymore. for the first time voters in scotland are leaning toward a yes vote for independence on september 18. it is a referendum with enormous implications. let's ask danny blanchflower
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fhat it would mean i scotland were to split. he is professor at smith college and conjure beating editor here at bloomberg. -- at dartmouth college and contributing editor here at bloomberg. what is the cq? -- what does this say to you? kulaks i spoke to the person in charge of the no campaign. he was worried that the poll for the independence was so big. prices inen share banks down. uwe don't know what this would mean. it is a cataclysmic poll. maybe people will have to show a scottish passport.
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i can understand the opposition from within scotland. --tland is very row europe very pro-europe. they are pro-immigration. in some sense you can understand it. this would be a monumental descent in. i don't think it is going to go there. the labour party and everyone else is pulling out all the costs. j.k. rowling is engaged in the debate. the scots want this? is this a political or economic issue? >> i think it is both. betainly the scots appear to much more to the left then david cameron's government. story, thegreat --st minister in scotland there were two pandas and he says there are more pandas in
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scotland than there are two worst. -- then there are tourists. we have seen a collapse in people's living spam. n. living spa hurtingave really been from policies they did not vote for. this is amazing. >> why did david cameron not see this coming? >> that is the big question. first of all he agreed to this vote that talks about what should the vote be. on onee going to vote simple question, do you want an independent scotland? yes or no? if the answer to that is yes david cameron is done. it is even a constitutional crisis the rest of the u.k.. there is an election inmate that
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includes scottish vote. this is a huge constitutional crisis that looks like a major mistake on the part of david cameron. i think he did not think it was going to happen. there was a big debate and apparently david cameron didn't even watch it. i assume he won't survive if the vote is yes. the scots understand what independence means? andked that as a canadian watching the issue of separatism from quebec my entire life. it came awfully close. >> i don't think they do in the sense that so much would have to be negotiated. there is a huge debate about those scotland get to keep the pound?
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if not, what do they do? what about mortgages that were denominated in pounds from english banks? i think the answer is people don't know. bey assume it will all negotiated. and i think there is a fundamental hatred for the policies being conducted by this that, despite the fact some of the most distinguished previous politicians -- a chancellor during the great -- theon -- a scot answer is they don't know the deal has been negotiated. the u.k., nuclear weapons are stored in scotland. scottish oil, we wouldn't know who would own it. such a strong feeling against what is happening in westminster -- the polls are now
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neck and neck. >> it may be time to rebuild adrian's wall. danny blanchflower with us. always good to see you. it is tim cook sturman -- it is tim cook's turn to be in the spotlight. we will see if any of their new products are real game changers. >> racism and basketball back in the headlines this year and an an nbaill be selling team. ♪
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>> tomorrow is one of the biggest days of tim cook's career. the apple ceo plans to introduce the first major brand-new product center placing steve jobs three years ago. we expect them to unveiled a new mobile payment system along with a wearable device to monitor your health.
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olivia sterns has been looking into these projects. mill isow the rumor pretty large around apple. we expect them to reveal a mobile payment system where you pay by tapping your iphone. done bighat apple has deals with all the big credit card companies and banks. nobody has been able to get that critical mass to really make mobile payments stick and work. >> what is so special? >> they have a itunes so they have 800 million users and their card info on file. >> i use it less and less. am spotify now.
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-- i use spotify now. >> this is a time when retailers generally are in the midst of upbringing their system. cap to pay, tap for transactions. of remember the security feature. iphones have the touch id sensor, potentially making these transactions more important. we all truck out that six or 800 bucks for a new phone. it is not an apple move? >> apple is forcing the card issuers to beat a little bit of the fee. $800 million per year,
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something up to 1.5 billion dollars. this is a company that generates $180 billion per year. it is about driving gadget sales. >> it is not about the money directly from this. it is making another reason why you need to have their stuff. to iphonesit tomorrow, a small and large screen. possibly something to replace this. >> the applications could be much broader than these health applications. you look into the market for are thewearables, they two most popular of these devices. >> that is quite a look. >> that is a real thing.
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supermodel in the world now getting into the fitness apparel game. if you look at the existing market -- let's bring it back. you have the type america is talking about that is called complex accessories. we have smart accessories like the galaxy gear watch that do allow third-party apps. that is what the iwatch will be. then you have smart wearables like the google glass. in terms of how well they have done -- >> you end up with what you are looking for. it was that simple everybody would do that. ofyou look at the adoption these types of devices it feels like it is diehard fitness. the adoption falls off very quickly.
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a lot of people aren't even using it anymore. the problem is can it tell you what to do? you have your fitness tracker on but if you haven't met your fitness goals does it help you achieve those goals? >> there are some sort of holes because it is very early in this >> i guess apple might be third-generation. >> it is a different type of device. a lot of the watches are clunky. itse obviously is known for design so you could have something that is more attractive. >> instead of phones we are going bigger. it is the reverse of the zoo lender -- every phone that is coming out is bigger. metalk at the piece of
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half the men on this planet to lug around on their wrist. they have choices and yet they are not going for smaller. >> big and clunky don't necessarily have to go together. something can still be big and elegant. >> we had an apple hack in the news last week. remember the cloud hack. they say it was not a hack of the system itself. it wasn't like the apple system was actually breached. of >> does that matter? it was such a massive issue. doesn't matter since the damage has been done? excepted say they there is going to be a certain
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level of security breach. they know you can wipe a phone. aey are willing to except little bit of levels of security for consumer experience. >> giving us the latest coming out of apple. >> what the next generation of an da's needs to know. we have a wall street veteran with his own class schedule.
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>> we will hear from a billionaire investor about why he bought the new jersey devils hockey team. it eric may be shown -- may sharing his waffle recipe.
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>> helping craft brewers compete with the buzz of the world. -- we wille sure look at a firm who is making sure small beer makers don't go flat. ♪
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>> live from bloomberg headquarters in new york, this is market makers with erik schatzker and stephanie ruhle. >> it is market makers here on bloomberg television. >> time to turn to a little bit of sports. findingris is known for and turning around undervalued companies. he has lately been trying to do it with sports teams. he is the owner of the philadelphia 76ers and the new jersey devils. up with him at bloomberg's business of sports summit. i asked him why he wanted to own a hockey team.
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>> i think that sports has been a win-win for me. it has allowed me to hang around athletes. it has given me a vehicle to win. it has also been a great investment. place like new york and l.a.. 76ers, you look at the you are a state-of-the-art facility in camden. that is a big-ticket. in newark you are helping renovate a hotel. these are big expensive projects. >> this is what i do in my day job.
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i evaluate investments. i try to create long-term value. i try to add onto great franchises like the sixers and the devil. in some cases you're building something that is high quality up and down. we are trying to build a world-class franchise. world-class players and coaches. -- y in the long run >> you to the previous owners out of $200 million worth of debt. why are you so confident you can turn it around. >> what do we do? we buy great franchises.
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and then we breathe life into these businesses. story, -- malone andoses andrew tony belt. the fourth largest market in america. is a little devils winningest franchises to an -- franchises. 2000 plus fortune-under country -- 2000 plus fortune 500 companies in new york.
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we have turned the sixers around financially. and the devils aren't your only investment. the center is a bigger investment in how difficult is that to manage? >> the center is one of the newest arenas in america. it is a different audience. it fits right near the new york area. you are able to ask 7 million people in new jersey and a lot of the companies there. place to attract high quality acts. we are making progress today. -- certainly i think it is a franchise. newark is on the off swing.
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a lot of focus on making newark a better place. it is all good. i think it is a great asset. >> who do you want to perform at >> as a fan i want to raise the stanley cup high above my head. was my very special interview with the owner of the philadelphia 76ers and the new jersey devils. he is cofounder of the apollo group josh harris, i spoke down -- i sat down with him last week over in another scandal in the nba. owner will sell his controlling interest in the nba's franchise after admitting that he sent a racially insensitive e-mail about hawks fans just two years ago.
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let's bring in's fourth reporter scott -- let's bring in our sports reporter. >> this is about a player evaluation where a general manager used some charge language in his evaluation of a player. the hawks conducted investigation into that which uncovered the owner's e-mail and decided toas out he just get out. >> he has a controlling interest in the hawks. the means he has minority partners. the question i have and bankers have -- i was on the phone with a number of bankers who want to bid on the team with some clients.
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who is handling the sale, the nba or the hawks? >> not clear yet. use -- he have right of refusal?first >> does he have that kind of money? >> we don't know. he could probably put a group together that does. of his minority partners -- if all of his minority partners want to step up and buy the franchise with the valuation they can agree to, it can be a private deal. but if levinsohn wants to maximize -- >> if you want to it the most you can you hold onto it. i don't think he saw this coming right now. >> this happened years ago. theoretically how many weeks might he have known about this? >> he did know for a while.
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>> over the course of that amount of time you could reach out to a number of rich guys. >> then why not just sell the team without the public embarrassment of why? reached a double-team, i am moving onto something else. route -- a deal to sell the team. with the reason for the sale in a press release. quiet heted to keep it could have just said i am stepping down. we haven't heard about it. you would think so. it would be hard to come up with a reason with why he is just now selling. maybe it was bound to come out
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anyway. m unfortunate that the stories keep on coming out. let's hope this is the last week here about something like this. on marketup here makers, getting your money's worth from the nba. we have a wall street investor telling grads with a really need to know. ♪
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>> investment banking may not be the ticket to millions it was before the financial crisis. that is not stopped graduates from lining up for jobs at wharton stanley. -- at morgan stanley. bearing that heavy responsibility is our guest, a former executive at morgan stanley and lehman brothers who became a stop that a top rank at the lowest -- who became a top-ranked analyst.
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rather, it is a heavy responsibility indeed. what is the single most important thing for mbas today to know about wall street? >> the world has changed. you are having a debate on this. the issue is the decisions on wall street will be made as much in the board room as it will in washington dc. you have to know the corridors of power in washington dc. affect awould that 28-year-old coming out of business school? they are still taking car services to get their traders. i am not arguing their lives will be wonderful. they will have a hard enough time keeping a houseplants alive . >> good mbas looking five years
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out -- >> he is going to be saying i have to know where the business is going. the business will be determined by what the regulators let them do. that does not mean the entrepreneurialism is gone. are training wheels that haven't been there before. >> maybe it will make for a better wall street. >> i suspect it will. probably not as much fun to write about or to watch. >> teaching a course on managing financial institutions, these kids see themselves as the next lloyd blankfein, the next jamie dimon. what do they need to know about political power? the odd things about the street is it is blind. -- it is blind to washington. it certainly was leading into the crisis. a smalle issue is that i
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group of people that can cross over between, that is a rare group. they know how washington works and how trading and investment banking work. you go down to d.c., their motivation is power. you go to new york among the motivation is commercial. motivationork, the is commercial. the regulatory world is affecting where the commercial world can go. the sea,ding understanding the fed, understanding the sec, understanding the initiatives that are going on and capitol hill -- >> do mbas understand what these jobs are or is it a thirst for hot -- for money and power? >> you do not go to mba school because you want to run a charity.
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what you have in terms of the mbas is -- let's face it, they are going through the first year. it is finance, accounting, beginnings of strategy. as you go into the second year, that is where you take your electives. that is where you begin to specialize. my courses to teach the graduate students what are the economic drivers of wall street. >> money? >> not really. to the extent the bottom line is the economic driver. your second year in business school, hasn't your faith already been sealed? you signed on the dotted line and you know what you're doing in nine months. >> it is not a random event that my classes taught in fall -- my class is taught in fall. out youime you come
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know whether you want to be a money market player, a fed funds trader, or fed funds high yields. trading wasng ago ascendant. now banking is ascendant again. all three quarters of the revenue is coming out of the trading business. now it is less than 50%. is that the way it is going to be forever or is that going to change again? >> i have to get academic year. if you look at global capital assets, total capital, that exists in the world. there is a good correlation with gdp. you get a pretty good forecast. it says global acids are going to grow 5% to 6% annually. -- global assets are going to grow 5% to 6% annually. we are in a period where the
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market is adjusting to new regulations. nobody knows how to run a business. they are all working desperately. speaking last week and at the class i said one of the things your generation is going to have to determine, you are going to have to figure out how to run a trading business that is taking less capital and generating a return over the cost. >> hasn't wall street had to reinvent itself many times? traders ago high-yield were saying how am i going to make money ever again? wall street eatery invents itself time and again. -- wall street reinvents itself time and again. this happens over and over again. arguing wall street is going away? 6% is a pretty good growth rate.
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right now we are in a transition. anyone pulling anybody new into the industry? you see boutiques coming into the industry but do you see any giant foreign banks moving into the industry? >> you cannot afford an and 78 and went to chevron -- you came out of warden in 78 and went to chevron. where would you go today? >> i would going to trading. you learn trading at a bank and from there you decide what you are going to do. do i go to the hedge fund or switchover? >> good luck. >> we need to come out of the class.
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coming up, the beer is cold and the industry is hot. easier for making it smaller bigger makers to take on the big guys. ♪
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>> demand for craft beers keeps growing here in america and the brewers face some familiar challenges. namely production and distribution. one company wants to help them expand. the wayne stanford reports. >> from ancient times to prohibition to happy hour, beer has always been a cornerstone of social gathering. today it is an industry dominated by a few big companies. is disruptingwth the industry. sales were upbeer 17% while overall beer sales declined 2%.
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the brewers association hopes to reach 20% in six years. >> reaching that cold means reaching -- means the 3000 brewers in the u.s. would need to ramp up production and distribution. building the capacity brings more risk for small brewers who do not enjoy the same economies. as ceo of brewpub, a new company creating a unique partnership that selects craft brewers to increase output. brewing business services platform. prewitt how does it get to a consumer? we have all the services available. >> brew hub offers a long-term
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partnership. they focus on what is important, their craft. >> i love developing new products. i hate building breweries. >> with their help they could add another 20,000 barrels to their output in the next year alone. family have always been chasing capacity. we have been in perpetual expansion mode almost since we began. >> i assume you are's -- you are paying some premium. limiting very much your exposure. >> those risks can include taking on debt and the distraction that comes from burning a complicated brewery. they are building a network of five u.s. breweries.
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>> in beer freshness matters. closeness, proximity to the end consumer is very important. >> the first opened outside tampa last week and a second will be built in st. louis. the home of the largest brewer. state-of-the-art ruing equipment and the power of scale and collaboration, it is how they want to take craft beer to the next level. summary asked him if his fear is it will be worse, he said no my fear is it will be better. >> a belly full of beer and belly full of laughs from the wayne stanford. >> talk about a really cool idea. m it makes a ton of sense. -- >> it makes a ton of sense. >> not a beer drinker.
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vodka.tito's coming up, shaking up the runway. ♪
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>> live from bloomberg headquarters in new york, this is "market makers". road.baba hit the the e-commerce giant begins selling itself, customers and investors who may want a peek at will what -- at what will likely be investors ipo. billion with even less leg room for passengers. >> turning fashion upside down, a new york fashion week has never seen anything like these entrepreneurs. welcome back.
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i am stephanie ruhle. >> i'm erik schatzker. 11:00 here in new york city. >> and exciting hour ahead of us. fashion, alibaba, ryanair. a lot to cover. the top business stories from around the world. . shakeup the rental car company ceo has officially stepped down. financial results have been reported. shares are up as much as 4% on the news. the first shows for time, a majority of voters from scotland support breaking away from the united kingdom. the news sends it down the lowest level in more than a year. general motors is joining the race to get a self driving car on the road. gm will begin selling with an
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automated driving system. it is designed without the driver holding the wheel or stepping on the pedal. extraordinary. river, the from time way to go. we're moving from driverless cars. >> get ready for the big cell. alibaba starts its sales pitch on friday. the price range on what is likely to be the biggest ipo in history. with us to talk about it, a senior analyst from chicago and a professor of finance from the university of florida. welcome to all of -- i would like to begin with you. from an investor's point of view, what does alibaba have to prove or does the company sell its self? >> i think they will just sell themselves. and we look at the valuation being talked about, even at the
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high end of the current range, it is extremely attractive to us. the second quarter of fiscal year 15 -- close to a billion u.s. dollars. about $20 billion of cash they will have. a route 18.5 times. we look at the chinese peers, they are trading around for a five times. we think the valuation is attractive. that will sell itself. >> so long as they do not always -- do not raise the target price, you do not care so much about all the governance issues and transparency into some of as theusinesses, so long valuation is attractive enough? >> it will be the key for us. it art of the huge scale he has, we are comfortable with transparency. we have been investing in china
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for 12 years now. it is one of the cleaner stories we have seen, even though there are issues with the partnership structure and some of the other transparency issues. the based businesses are simple to understand. we think the valuation at these levels is extremely attractive. >> do they have to sell themselves? or is the market so hot right now, when you look at how other tech companies have done, is the roadshow going to be anything except checking the box? pricingis a deal where is relatively conservative. it will be easy to sell. they are not being incredibly aggressive. other chinese companies are valued at a discount because of corporate governance issues. there is such a large business here, it is already
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very profitable. the valuation ratios are not that difficult to justify. easy to sell. question is raised a good point. you covered ali baba for years. these problems of transparency but if you put it in the context of other countries, -- >> this is business as usual. i think ali baba looks good. the premium you will be paying is jack. you are buying into his vision. he wants to transform the chinese company and take it on to a global sphere. >> could one make an argument that if you like amazon, you should love alibaba? >> i think so. isthink the ali baba model superior to the amazon model. there are questions, have they ever made money and generated cash? you look at ali baba's model,
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where they have taken out an they have model and all the merchants in china buying -- vying for product placement. that allows them to continually raise price and allows them to generate huge margins. if you look at amazon, we are always taking a cut of every sale. that is a low margin business, capital intensive. it does not generate a lot of cash. on the flipside, ali baba is generating a huge amount of cash. you should love alibaba because the model is that far better. compete in looks to china, and they are looking to go into non-core assets, specifically gaming as well as entertainment. what do you think of this strategy? it because in the china market place, those are huge, under cap markets. a great foot rent in china. seen games on players
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and other platforms. it has been underserved by state-run influences. we think ali baba could really open up the market, a huge untapped potential. we think it could be a huge market for ali baba going forward. >> you studied for years in florida. how unusual is it to see in an ipo filing what jack wrote in the latest filing on friday? customers first and employees second and shareholders third. i can see investors who hear this for the first time may find this a bit hard to understand. >> the reality is the u.s. is at a forefront of having executives treat shareholders first.
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into many countries, shareholders are treated as an art -- as an afterthought. this is largely making it explicit. on the other hand, if you do not have the business that consumers want to use, shareholders are not going to get the benefit. >> what should potential investors look at? other chinese companies or technology companies? in one regard, ali baba is be able to have a lot of business outside of china. it is a huge market. sales arehe than ebay.y bigger there are big businesses in accounting and mark --dy has got a big
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in a big andshare growing market. >> is not the first time he said he would prioritize markets at number three. what is interesting and the reason he put it out there in the latest amendments on friday, is because he is trying to manage expectations for american investors. he will not go quarter to quarter giving you guidance and expectations. he will manage his company for the long term and not the short-term. questions for american investors. your way around and most people do not. how big of an adjustment is it for american shareholders to understand china? >> a good question. i do not know it is difficult if you understand this is the largest e-commerce market in the world.
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it has significant retail or lack of retail present. it essentially allowed ali baba to become the walmart of china in places that are the fastest-growing tier three and tier five. , itpoint worth mentioning means he will make acquisitions shareholders will not like or will not understand, when the acquisition is done. this is very similar to what facebook has done when they made acquisitions in the past. howle have complained about high the prices are. we will see the same thing with alibaba. if you're buying his vision, you buy him. meanwhile, facebook is killing it. , everyone sat here has said, this is the worst disaster they have seen. facebook and the beginning, you look like a hero. the road, wheng
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facebook was buying instagram, what people bought at the prices mark zuckerberg was buying, look what they have become. the same thing will happen with alibaba. jack will make acquisitions .eople do not like at the time over time, we will see an extreme visionary and an extreme entrepreneur that will deliver returns. >> if you are an american investor, your allocations is 10, maybe 20% at the most. most of these guys are already plugged in. the question for these portfolio managers, do they sell out? spoken to managers who said they had to make a room for the ipo. you cannot miss the ipo because ali baba is what defines the ipo in china. >> given the fact that investors will have to make a decision,
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whether to buy into the ipo or sell to chinese holdings, do you see any risk that this could go the way of the facebook ipo debacle or as avery -- everyone , the underwriters to ali baba itself, when all the lessons they need to know? >> of course, there is a risk something unanticipated could happen. at the valuation in 160 billion dollar range, it will probably be raised to a bit about that, it is not so aggressive and evaluation that there is a lot of short-term downside. the price-earnings ratio at is not ridiculous. the company has very good gross margins. there is relatively little downside here in the short run.
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in the long run, no one can predict the future. the corporate governance uncertainty is there. the company could be fabulously successful. who knows when and if dividends will ever get paid out? one did not necessarily have to do with the company. it was around the technicalities . there is that fever, excitement, enthusiasm around this deal. how do they prepare and manage for that? the retail investor trying to get those trays through. >> the only thing we can hope is they have learned from the issues that took lays in the facebook ipo and they have been preparing for this for some time. much morecreate a smooth fashion. >> i would not be surprise if some of the executives are accompanying them on the roadshow. you know goldman sachs and the other bankers will be there. there is probably a
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representative from the team there. >> i believe tom will be there. this is a big show for him. his first eel. we will see how that goes. >> thank you. thank you all. a great roundtable conversation. >> bloomberg will have extensive coverage of the ali baba ipo over the next two weeks, including a special documentary airing tonight with never before seen footage of the early days of a company, and exclusive interviews with jack and his executive team. take a look. >> my friend said, this is the internet. you can find whatever through the internet. i say, really? i searched the word beer, a simple word. i do not know i care it american beer, gemini beer, and no .hinese there
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no china. can we make and, homepage and see the result? the translation agency the homepage, and ugly looking on. --00, i received fight eve five e-mails. i was so excited. >> tune into that documentary p.m. eastern00 here on bloomberg television. monday night football, forget about it. >> coming up, but they squeeze. billionne is buying 22 dollars, the playmaker to cram an even more seats. you will hear from the ceo of ryanair. >> plus, not only changing the way designers to business. this is "market makers" on bloomberg television. we are digital.
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of course, streaming on your apple tv and amazon fire. stay with us. ♪
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ryanairiscount pioneer is buying 200 jets for boeing. the narrowbody 737's are more fuel-efficient. the most comfortable flying experience. >> i do not know where you get this from. not true? seats, eightve 197
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extra seats. there will be -- >> to read and debt -- redesign the interior. >> we can fly another eight feet -- another eight seats on another flight heard in a full year, we generate about $1 million per aircraft. 20% more fuel-efficient as well. persuaderd was it to boeing to do this? >> i've been pushing them for 10 years to put the extra seats on board. this will be a game changing aircraft.
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>> and talk to you personally watching and. delays with eight 380's and a 77's, the carriers have ordered for the next three years. ryanair is the biggest airline in europe, to get some aircraft and do really low fares across the atlantic, europe to the u.s.. >> you have been a boeing only airline up till now. would you go to airbus if you could get them long-haul jets? >> we could evaluate both. >> they have the capacity to satisfy your demand, if they did, would you be willing to -- >> sure. it would not be ryanair but a
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sister company. ryanairtart off with a customer base in europe, 86 main passengers all over europe. we are europe's biggest airline. you could see $10 fares across the atlantic. >> what is your biggest issue? is it unions? -biggest issue we have is getting enough aircraft to satisfy customer demand all over europe. at the moment is deal directly with the pilots and cabin crew. we negotiate with them directly, they get more pay and we get more productivity. all of our pilots are very happy. they are locked into fixed pay increases for the next five years. negotiate pay cuts and job cuts. is there an opportunity that ryanair is not captioning it -- capturing it?
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>> there is. we have grown as the largest airline by being cheap and cheerful. between 7% of our passengers are traveling on business. we have launched a business product. you pay a $40 premium and you have fast tracked to airport security. carry-on. bag no fees. >> and that is enough. to start a need business only airline? >> those days are over. >> is that because corporations no longer want to be spending? >> to be fair, most business executives do not want to be stuck in business lounges and airports. they want to go straight to security, get on the plane, and go. heard anyone complain about being a nice lounge. >> most business lounges you are
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and pretzels,nuts it is not a very nice experience. what they want to do is get to airports quickly and go, but not be ripped off for $400 per ticket. to northou come america, what plane do you take? >> came in on united through newark and avoided business lounges, showed up, got on, right here. >>. will argue for jfk and newark. question if k is a nightmare. we are off to seattle where we take the 180 new aircraft, flying -- flying back tuesday night. choice but to list prices when it comes to the value of this order. how much less than $22 billion was it? >> significantly less, but we're pretty -- we are paying a premium over.
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but the premium is more than justified by the fact it is worth more than $1 million. >> i quite honestly have absolutely no idea where you start. >> i cannot go there. it is all confidential. list price is completely nonsense. it is a nonsensical figure. you're buying at these kinds of volumes. we are paying your very significant discount way below lists. >> how much below? >> again. boeing would say -- i'm saying too much. thinking to ourselves, before the show, knowing you're coming on, what you might think of what is happening across the irish sea in england. >> i thought about kate middleton being pregnant.
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some irish guy coming in today. >> jennifer ryan is not on today. >> let do you think it means? >> i think it does not make any difference where scott -- we are scotland's largest airline. whether they are both independent, people still travel to scotland. it would be difficult for the u.k. economy and there would be certain adjustments made, like everything else. get overs would just it and move on. >> how would you vote? >> i do not have a vote. if you look at the extraordinary success of independence in the success of independence in the last 100 years, we are just emerging from a crisis. we have a particularly bad voting record. it is a matter for everybody
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else. >> as far as ireland itself is concerned, things seem to be turning around quickly. how do you feel? less a lot of optimism is going back in island. they have done a lot of stuff, and we're set for three or four years of growth. >> thank you. ceo of ryanair. ♪
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>> welcome back. i am excited for the next segment. fashion week is underway. we are taking a look at some of the companies trying to shake up the industry to change the way we shop. we are joined by three entrepreneurs trying to do just that. designed. story. you the
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the kickstarter for designers you decide your demand. then we have shauna, who has launched on high life, which brings hard to find items from around the globe right to your doorstep. welcome. a very busy week, fashion week is upon us. tell us what it is in the fashion industry they're getting wrong? >> it was a lot for us about promoting designers, who are excited to have stories told. people love knowing stories behind the things they buy. it treats intimacy and gives meaning to a transaction that otherwise would not be there. you feel a sense of early adoption in discovering a young designer, the sense of discovery that you're the first to know about somebody before everyone else. dependence onhuge large retailers in the industry still.
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even though consumers are front and center in terms of the way inngs are sold, they are not terms of the way things are produced. the decision to produce this to still made by retail buyers. introducing efficiencies in the system as a result. >> on the buyers in the industry the experts question mark wednesday are and they will still be around. we believe customers want to have a say as well. i will get that validated on our site by placing an order off of the runway or from the show room at the same time as traditional retail buyers do. if others do the same and we reached the minimum numbers required, we will go into production and they will get their piece. >> about four years ago. we have been talking a lot about amazon and alibaba today. they are large and help mass then's -- mass brands reach consumer. there are hundreds of thousands of independent designers all over the world who really need the tools and services.
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how do we create a platform to bring them so they can tell their story and reach consumers directly online? >> similar to an fcc has done with craft? >> yes, but we are in a marketplace for more luxury. things are not necessarily handmade. >> listening to each other say these things, do you think you share a philosophy about fashion? >> i think so. there is a lot about discovery of new designers not out there necessarily yet. that is a big one. it is about making the customer front and center and giving them access. >> all three of you are about access. it makes me wonder, if you are successful, does it mean taking share away from more established players were other emerging players in fashion? work you can make fashion more accessible and grow the market? off-lineve retailers
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and it is a very inefficient distribution system. when you put the power of the hands of the consumer and have them directly interact with the brand, we can over time provide better service and better pricing for the consumer. >> it seems luxury designers are doing some of that. we're seeing designers partner with h&m, target, kohl's. you are going upstream and against what they are doing. >> we see a huge opportunity in the market that exists. on the luxury side of things, it is all about prestige. an assumption about what the quality is. trend driven pieces at argan prices. we are seeing an increased interest in consumers and quality, craftsmanship, and an understanding of production giving them a willingness to spend a little bit more than they would on fashion, but less than they would on luxury. something that is a quality piece that will last longer. >> i was going to go back to the
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first question. i think we will potentially be helping retailers. we are collecting data that is important about what is resonating with the community of whatustomers as opposed to the buyer is going to be projected to sell. we do not necessarily think we will replace them. we will help them in making their decisions. >> will all this rock the establishment in terms of magazine editors? four years ago, the editors of the likes of volk made all the decisions. you look at 23-year-old bloggers, they have got as big of a following as the big magazines do. >> that is key. what is important is the media companies and magazines are asrting to look at commerce additional student income. advertising is no longer the most effective way to monetize as we think about scaling the system. that is important again because you are bringing the consumers. they have the power. the internet really allows them
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to demonstrate that power directly to drive demand. >> to you think we could start to see some of the luxury brands advertising on sites like yours, rather than on big-time magazines? >> i think the point about markets was interesting. from --ell some things for the luxury designers and have a bigger market than amazon , and we can tell their story. i think the margins you will see coming from different retailers is based on how much the retailer is doing for the brand. >> is that for -- a way for us to understand what is going on in fashion? do you care? >> not so much. a >> i guess. but what we're trying to do is give customers the voice here. that is what it is about. same world as kick starter is, giving consumers the voice in what gets produced, it is the same as fashion. >> given the power consumers
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have today, is there as much influence as six years ago? >> as consumers, as much as we are still looking at celebrities , we still need trendsetters to tell us what is in and out, and what are things to try out. a lot of innovation is popping out before they identify it. if you're talking about thistart her, i pointed to . we discovered it because it was one of the most well-funded projects on kickstart her. it was completely driven by consumers and became a bestseller on our website. trends are starting to emerge directly from consumers. >> you operate a platform that is very much like kickstart her, the difference being that instead of a skull, people are signing up for a fashion item. >> yes. it is similar to kickstart her. it is a little different in that there is a design aesthetic that
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designers are more powerful with. it is still a fairly traditional industry and they want to be around other companies similar to theirs. >> the barriers of entry are so much lower? six years ago, is a new desire to want to be in markets, they had to produce enough rots to go to 15 stores. they just did not have the money to do it to request that is right and it speaks to the question of margins. if you start out as a designer now come it takes you hours to shop online. what is the point of going to the market and giving them the cut of your sales? the point is the platform. they have a reputation and an audience who already knows about them. markets is carrying the designer, then the designer must be good. only have toigners produce a small amount to get them in. >> yes. that comes back to manufacturing and it depends on where you're manufacturing your items you request a critical question. technology made it possible for each of you to do what you're doing.
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much of al is not manufacturing base in the country when it comes to fashion and apparel. on fridayis was here telling us she cannot make shoes in america does the expertise she requires is still in captivity. do you face these challenges question my >> designers do, yes. that is the key. are actuallyers just as dependent on retailers at the smaller emerging designers. part of the problem. the pieces they have in showrooms do not all get produced. spend moneythey they have invested in prototype billets list. >> who should be worried about you? who are you disrupting? >> in some ways, department stores. in many ways, we team up with them. they have the scale. a lot of what you do is very interesting. there is less waste when you are buying directly with the consumer, versus right now. you are buying the
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inventory, 60% of it does not sell through. >> t.j. maxx, that is who you are hurting your there you go. >> i think you are right. it is t.j. maxx and target. i really think the more you tell the story of how the pieces are being manufactured and you talk about what it means to make something in the united versus in china, you will see a consumer shift and you are already in it toward conscientious consumers who want to buy pieces made in the united states made with ethically and environmentally responsible production methods. that should be the concern of the lower and retailers right now you're it this is made here in new york -- now. this is made here in new york. >> congratulations and thank you so much. xiaomi may, the ceo of a highlife. >> coming up." , paying the price. a former employee learns how much time he will spend behind
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bars. the most lucrative insider trading scandal ever. >> stay with us here at -- us. ♪
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>> the former portfolio manager faces and sing and was convicted over committing the most lucrative insider trading scheme ever. providing information on his former boss. steve cohen. sheila has been covering the case since its very outset. of person time is he facing? >> my personal guest is seven or eight years. the government is pushing for something much longer. they would love to see 10 years plus. >> how is it mark, could get the same, similar, or even a longer
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prison sentence than 11 years? >> this is something a little bit controversial. the sentences for insider trading have been getting longer. they are really closely tied to profits gained by illegal trades. as the industry has exploded, and as a culture of winner take all bets have taken hold, the profits have become really huge. it is alleged to have earned profits of $275 million. that is the biggest chunk of money they have ever charged insider trading request any money left for him to flip? where he can say, i have got something for you. do we still have a moment? >> a lot of conspiracy theories flying all summer. becourse, there could always
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last deals. >> he know who -- no longer has last-minute deals. >> he is done. he may make one attempt, but it is finished. no one really expected his case to go to trial. he had all the characteristics of a good cooperator. a huge amount of evidence against him. three young children, a beautiful life, a happy family. >> slide is the beauty of his life factor into this? >> it doesn't. moments assume for the at the state of storytelling, he does have really solid information against steve:, for whom the government has been able to charge and convict. what kind of crazy cove has someone been willing -- living under? keyou are asking the
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question at the heart of this whole thing. everyone involved has been baffled by the unwillingness to cooperate. fired him. they assume he would not have any loyalty. they did not treat him well in the end. he has a lovely family, separated from them for a long time. why would he not operate? we do not know. family will be financially secure for the next 20 years. does this mean steve will be clear? if he gets sentenced, it is over. he is in the clear. they will smoltz said -- smoke cigars and hang out. >> i believe it is over. he has an outstanding case which has not been resolved. you got to do with that. >> that is a civil case. >> a civil case. to shut down his hedge fund, reorganize it and turn it into a family office. it is remarkable. he wrote a check from us $2
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billion to resolve different aspects of the cases. it has not made any dent in his life at all. >> when you have got that much money, it does not make a difference. >> it is possible it did not have anything to give. >> my favorite s.a.t. story this weekend. arrested for reckless driving in dirt roads. >> sheila, thank you. lovely to see you. in two shortck minutes. stick around. ♪
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>> that'll do it for us today. >> it was a great day. >> it was a good day. >> a good monday. >> tomorrow, a great tuesday. weekems we do not go without learning another company has been attacked. how to protect your company with
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willman, michael chertoff be here. >> we will be back in just a moment. >> see you tomorrow. ♪
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>> it is 56 minutes past the
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hour. bloomberg television is on the markets. i am matt miller. a look first off here to see where we're moving today. currency has been the top story. we are seeing movement down on the dow and the s&p and nasdaq, really unchanged there. european markets a little more interesting today than markets in scotland. we talked about energy stocks. yahoo! rising, giving the nasdaq a boost, joining me a derivatives strategist with an km holdings. goingtalk about what is on with european markets and u.s. equity markets and under currents. it is kind of interesting to see
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a fall in the euro. not a lot of volatility. historical lows. ,he theme for us this year major central banks. to bestow more volatility, rate cuts, the beginning qe, what we're saying is we applied volatility of the euro, the u.s. dollar, at 6%. very low historically. higher volatility across currencies. >> you say if you look at the calendar historically, october is when you see higher volatility. do you think we could be moving
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up in that case? let's exactly. we are still pretty bullish. volatility could lay low. for volatility historically in mid-october, you combine that .ith what could actually happen in 2014, you put the hedge in place. >> is it similar to your s&p call question mark -- call? >> foot spreads above. >> you also have a trade for us on yahoo!. i mentioned yahoo!, not that it matters that much, rallying today and holding the nasdaq up. maybe alibaba is the reason behind that? >> it is one we talked about here several times this year. yahoo! intimate 30's, basically valuing near zero. we still like it here into the alley. the ipo expected probably next
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week. three unknown valuation. alibaba will trade afterwards. there could be substantial upside on a valuation basis. three, tax treatment of the 75% stake yahoo! has, that it will retain after the ipo. we want to buy 47. that is how we want to trade along. >> if you take a step back and look at the overall market, you are still bullish on market prices but still bullish on volatility. >> at the same time, imagine that. we will continue to be a low volatility world number of years. if you look at 2013 in june july, we have above 20, a lift across volatility and other asset classes. dislocations, given what is happening among central banks, is something we could be likely in the months of head -- on -- the months ahead.
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inwe're on the markets again 30 minutes. "money clip" is up next. ♪
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>> welcome to "money clip ." i am olivia sterns, in for adam johnson caret alibaba is set to be the largest ipo in u.s. history, but that is only a small part of the story of how huge the company really is. a mega kitchen makeover. s.iverless car apple rumors ahead of tomorrow'


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