Transcripts For BLOOMBERG Market Makers 20240622

Only the second, since the end of the fiveweek shutdown brought on by the debt crisis. Bank shares were pushed to the downward trading limit yesterday of 30 . One analyst said the bailout will not work if greek banks do not bounce back. The greek Banking System is key to getting them back. They have to recapitalize the major banks quickly and they have major problems with their nonperforming. Once you get the greek banks of an lending, there is no hope for the plan to succeed. Erik in the bleak financial picture, the Central Bank Says almost 1. 3 billion has flowed academic countries bank since reopened two weeks ago. Scheier is making an offer in hopes of creating a Biotech Company focused on rare diseases. The price of the about the billion dollars and scheier says that represents premium of 36 and values the target company at more than 45 a share. No deal on the horizon right now and shire it spun off from baxter and they are not talking about the proposal. John cleary is in singapore following Josh John Kerry is in singapore to overcome differences. The Transpacific Partnership would help the people of all nations and serves as a model for responsible Global Industry and commerce. Every participant would have to comply with Court International labor and environmental standards. Every participant would have to refrain from using underage workers, unsafe work laces. Every participant would have to richard that state owned companies are competing fairly with ones that are privately owned. And every participant will have to fight trade related bribery and corruption, ensure free and open digital trade and safeguard intellectual property. Erik john kerrys comments come after trade ministers failed to close final gaps and seal that the court. Stephanie at no raising four years earning forecast after closing secondquarter profit that the analyst expectations. The company said they added members in the Government Insurance program. Aetna agreed to by humana for about 35 million of land to expand in medicare. Aetna shares are up 28 and is then nationss number three Health Insurer by enrollment. The British Government raises 3. 3 billion stocks by selling i rbs shares at a discount. The first sales is the royal bank of scotland got the royal largest bank sale seven years ago. Seven years ago, really . Seven . Taxpayers Still Holding nearly three quarters. 75 of the shares and the government is trying to revive investor interest in the stock. Those are your top headlines. Can you believe the crisis was seven years ago . Erik some days it seems like yesterday. We will get you started with the five things you need to know this morning. Stephanie i will give you numero uno twitter. That bertie not find so high. Levels at the lowest since the ipo yesterday. Down 6 at the close. Investors Bloomberg Talk to now say it is being considered as a takeover target for potential acquirers like google. I said this last week when you were not here, i honestly think it is a refresher refreshing to see jack dorsey and anthony in there call and be honest. Honest about how they see the outlook. You and i talk all the time about the smoking mirrors and the dance we see around earnings reports, so maybe this does make them a takeover target. Maybe this gives people a chance to fundamentally look at this company. Erik at least they are getting on with business. Stephanie they are. I wonder why they have all these problems and jack acknowledges the problems but he has dick sitting on the board. Erik thats another conversation. Pharmaceuticals shire making an unsolicited altered to buy back for about 30 million in stock and that would create a Biotech Company focused on rare diseases. Baxalta is not cooperating and investors do not like what this means for shire. Shire is a stock that another company wanted to buy and that deal fell apart because the United States changed rules on tax and version, so the question ever since then has been, what is shire going to do . Shires Stock Plunged when the audi transaction disappear but it has since rebounded. It has since rebounded to above that price but trading down this morning. It shows us that after 340 billion this year, more to come. Stephanie 340 billion and from goldman sachs, they said a few weeks ago they think the possibility for m a in that space is endless. Erik number three. We will take you out to julie hyman. Julie i am on earnings watch again, media earnings in particular and entertainment to be more specific. Disney reports after the bell that the shares have done. Well this year. Shares have rallied 30 of trading, if not at thing close to a record. Interested to hear latest thoughts on is pain availability over the top services. We will also be looking about any kind of forecast related to the coming Star Wars Film coming out in december. We are looking at dreamworks another film house to watch. They had good numbers from the latest but overall, they have been struggling to find hit movies. They have been looking to diapers by the business. At 30 gain in disney is only about 7 for dreamworks. Erik is it true that dreamworks last week it was shrek . Julie it depends on what they is because home did relatively well. Shrek may be thing they are most known for. Erik thank you. Stephanie i will take you to london for number four. A london jury convicted tom hayes yesterday of rate manipulation. British fraud investigators said he break the london interbank offered rate at least two more Interest Rates and in british courts within the next year. Bloomberg spoke with the fraud officer on the ruling. The significance in here is that the verdict shows that the jury recanted and bankers are subject to exactly the same standards of honesty and dishonesty as the rest of us. Stephanie i love when they say you know what . This trader may have a social disorder, he needs this special treatment, that special treatment. Erik 14 years of special treatment. Stephanie that is true. He is a special individual. When i sat amongst traders at all sorts of disorders, all that mattered is that they were up money. Erik they call this guide the ringmaster, right, but lets not forget there was a ring. He wrote all these interdealer brokers to manipulate prices and they are going to face trial too. Stephanie as they should. Erik number five, a tale of the automakers once again, but this time in china. The m. W. P. Said slowing sales in china may force it to revise the forecast this year and toyota, which happened to post a record quarterly profit, also warned of tough Market Conditions in china. Matt miller is back. Stephanie he was our onset photographer. Erik you said you looked over the weekend for the prospect of beginning auto sales and here we have bmw and toyota telling us you are right. Vonnie its matt its important to mention that china reported a sales drop of 3. 2 in the last month and that is the first time we have seen the multisales drop in two years. They have not had an annual drop since 1998. It is not the number of cars sold. The problem is the pressure on margins. Toyota warned of it today and bmw has warned for quite some time. If you take a look at the biggest luxury carmakers, the m w audi, and Mercedes Bmws margins in the Second Quarter are taking a big head. They are really affected by china because china is bmws biggest market in the world, so margins down a. 4 and you can see mercedes and audi at 10 or more. The real problem and you are hearing others complain about competition and the costcutting. Bloomberg news talk to a ford dealer in shanghai couple days ago who said i cannot keep prices up. Customers are coming in and demanding cuts, almost like america. Erik had it in that much of a different situation in china with the automaker charging whatever it wanted. Matt especially for luxury. Stephanie but the consumer was not under the pressure. Matt especially the luxury consumer. One of the interesting and anecdotal stories was that a lot of car buyers in the beginning of the year would be car buyers and decided to put out the purchase of a car and invest in stock instead, so they probably will not be coming back in the second half to buy a new seven series. This is a problem for bmw, aside from china, the seven series has not been revamped that the sale in Second Quarter fell 27 . This is their big, flagship model that completes competes at the as class. They are going to revamp the seven series this year, so i think people are putting the purchase off. The two series, my favorite of all the bmws, and the many obviously, a lower margin car. Stephanie i know we have to take a break. Those are the top five. I needed to zoom in on these to come ive got top two. Lets look at what eric is wearing today. So smart. You cannot feel the texture, but amazing. He has just got this actual chic happening. Now lets turn to matt miller. Erik, look at this. Matt why . My doing it wrong . Stephanie no you have gone out of your leg today. The windowpane consummated with the tight and shirt are you going somewhere tonight . Matt no, i just bought, they called me up this morning and asked of i could come on with stephanie and erik. Erik im going out to dinner with my wife. Stephanie there you go i hope anybody knows who wants to take me out to dinner to deliver the best. Coming up, terms summer surge. His dinner like not much for me. Donald trump shows that when it comes to the republican president ial brace, it is him and everybody else. We will give you the latest bloombergs Politics National cold. National poll. Erik coming up later today, puerto ricos sole member of congress pedro will be on to discuss medical status and the economic crisis after the commonwealth first on develops. Coming up at 5 00 p. M. Eastern time. Stephanie for now, a check on this mornings top headlines. Firefighters in Northern California are trying to stand their ground this morning against a Massive Wildfire the blaze jumps and has grown to nearly 100 square miles. At least 13,000 people have been ordered to evacuate and it has destroyed about 200 homes. Crews are getting help from lower temperatures and higher humidity. Officials in New Hampshire are trying to determine why the night of circus son turned deadly. Two people were killed and 22 hurt yesterday evening with a huge tent collapsed in the town of manchester. The storm packing hail and 60 mile per hour wind hit just as the show was beginning. As erik would like to say adidas had the eye on this summers biggest stinker free agent. Espn says the company is offering james harden a 13 year deal worth 200 million. The Houston Rockets star had a nike deal but it just expired. Now nike must max the deal or loosen. Hardin was runnerup for the nbas most valuable player last season. Those are your top headlines. Remember, it was last fall when nike and everybody else wanted kevin durant to but more than 300 for his shoe. I did not see him as m. V. P. , but james harden you got to love that beard. Erik right now, time for the morning brief. Agenda items you will want to put on your calendar. The Senate Armed Services committee holding a hearing on the iran nuclear deal. It is in session while the house is on summer break. Stephanie between 5 00 and 7 00 p. M. Tonight, amplify snacks makers of the Skinny Pop Popcorn is expected to price and buy cap 00 p. M. Today, the cutoff for the first gop president ial debate. On thursday and it takes place. Only those who make it to the top 10 of the five most recent National Polls as a 5 00 p. M. This evening will be in the debate shown during prime time on fox. Erik well, stephanie, bloombergs politics just released its own National Poll of republicans. Selzer and company did the survey. Ann selzer is here with us now. We have seen a number of polls come out. Ann execution of polls. Erik more or less what you found. The numbers are always different but tell us what your survey found. Ann it was then specifically to be an influence in terms of the fox debate. They set up a criterion that National Postal be the deciding factor in terms of this. Erik to determine which 10 could possibly or 11 participants, would be in the fox one. Ann exactly, we have 17 candidates and 100 Percentage Points with donald trump at the top, overwhelmingly same he is the first choice to be the nominee. Everybody else clumped together and a lot just a point or two apart. Erik thats a huge lead, is it not . Ann he is clapping the field. Stephanie give us an idea of who participates in the polls. If i sat at a party in new york city and i said, donald trump is crazy, there is no way he is ahead, give us an idea participants. Ann registered republican or lean toward republican. The thing i think which has taken the political world by surprise is the grassroots favorability and some of the traction that people have for donald trump. Tobler politics did a focus group in New Hampshire last week and one of the surprising things they said he is one of us. There are ways in which he represents the American Dream american success at the best and that is what he is running on. It is appearing in the way that people think he might be able to be the one who could break through the politics and get stuff done. Stephanie he can get people excited. The overall message of, i believe in american capitalism i defined the American Dream, yes, that gets people revved up but how about when you dig one level below that . Can a candidate like donald trump actually become the true frontrunner . Ann we have seen interesting things happen and we have seen interesting candidates out of the mainstream take the lead and hold it for a while. I think this is an exciting moment to see whether he can hold it. Erik money is going to play. Ann money is going to play a role here and some of the candidates might have trouble. You might see candidates start to drop off. One of the things he has got to figure out and looks like it is starting to change, a majority of people feel unfavorable toward him and the trick is, can you be a winner and turn off . Even within the republican party, he is a rising influence, so there is a pull out of New Hampshire yesterday that showed he is right side up on the favorability numbers and he is starting to turn that ship a little bit, which i think that is positive news for him. Who knows how long he can sustain it. Stephanie he is getting all the media attention, it is what donald trump is best that. Who was surely be focused on . Ann he is taking that away from jeb bush and Chris Christie, interestingly enough, and scott walker. I think Chris Christie is interesting because people just want a fighter, they just want someone who will cut through the standard, political way that people talk. And be an authentic person. I think this is the summer of authenticity. Erik what is the margin of error . Ann plus or minus four points. Erik 21 10 , even if you factor in the era, donald trump is still the lead. Stephanie tbyte so much. And selzer, ann sleltzer. We will be back with more. Get excited for the 1989 world tour with exclusive behind the scenes footage all of taylor swifts music videos interviews, and more. Xfinity is the destination for all things taylor swift. Stephanie welcome back. I am stephanie will with a partner Erik Schatzker. Tell us millenials you would think have it made but there is one thing this generation of 1834 euros is unlikely to have much of an that is money. Time to pity the other ones. Steve ratner inks so. He is here. Steve, make the case, why should we feel bad for millenials . Steve it is simply data. This is the best educated, 22 have gone to college. If you go back to 1980, only 50 of the 1834yearold went to college. If you look at what they make and every succeeding generation has made more than the one before until now. This group is making about 34,000 dollars down from 37,000 that people of a similar age made in 2000. The numbers, in terms of earnings, speak for themselves but that is the beginning of their problems. Stephanie just two years ago, i did the college tour with them talking about College Students about entitlement reform and if they really need to care about it because it would affect the future. I do not want to say it is like they did not care but it was not a priority. Steve i think that they would have to live with the burden of Social Security and medicare and they would have to pay for mine and not have the money to pay for their own. That is really far out there and probably hard for them to process. The other stuff happening in the here and now, for example student debt. College tuition has gone up 230 4 over the last 20 some odd years compared to 26. The result is stephanie i want to pull this charter. Millenials mired in debt, massive. Steve 20s that shows how much College Tuition has gone up above inflation but if you have the other chart which shows their debt levels, 71 of millenials today graduate with debt versus 46 20 is ago. Average debt is 35,000 compared to 50,000 from inflation. Erik how do we fix that . Steve well, you have to figure out who is to blame. Who was to blame is my generation, the baby boomers. My parents were part of the greatest generation and i think we may be the most selfish generation and that we have not been willing to pay for anything he gets we run up budget deficits and that is part of our College Tuition sevcon up so much. Part of why millenials cannot afford to buy houses Home Ownership has dropped and we have not funded entitlements from my generation, so i think you can mostly be blame the policy makers who have been in charge for the last 20 years who failed to put in place policies that would solve this. Of course we had a financial crisis, globalization, technological change, stephanie hold on, is that because you said that hasnt taken place, poor policymaking over the last 20 years, is that because these millenials word two years old, five years old, nine years old and they do not vote and their parents are not thinking about that . It is Senior Citizens who go out and vote. Steve that is true but in other generations, people have said to themselves, ive got my kids coming policymakers, weve got to make sure we take care of them, leave them a fiscally sound policy, leave them a Strong Economy and that has not been happening. We left them a really, really weak situation. Erik what do you say to the people who would look at data you present and say 20092013 is the period after the worst economic crisis this country has faced in more than 70 years and so income levels, even on a real basis, are going to be depressed, and then they pull up a chart like on my screen showing unemployment between 25 2534yearolds would some people would lineals with called millenials and there is 30 basis point difference. Steve sure, but if you go back in history, you find that millenials are doing worse relative to the same age to people in the past. The cost index wind up by 0. 2 percent last quarter. The smallest increase in the history of recording this. Remember Something Else which is that it has been well studied by economist that if you start off lower on income level, you do not really catch up. You may catch up partway but you never make up all your lost ground. By the end of your career, you have lower earnings than people of your own age when they started their careers 20 years earlier or 30 years earlier. Stephanie now we have learned what needs to be done now we have learned. What needs to be done . Steve policies in washington that are long lacking. You are shaking your head but also we going to do . Stephanie is it too late the millennials are already 34 years old . Steve i dont mean to sound depressing, but for some of them, it is too late. They are in jobs that will not realize their full any potential but that does not mean we should not fix it for those coming along that a long necks. Erik take the student loan. Steve we let these kids leave college with these huge amounts of debt and this is where im with Elizabeth Warren we should be doing something about student debt levels and Interest Rates we charge the children. Stephanie should they get the same charge banks get . Erik doesnt it go back to the tuition levels . The only way to deal this reflects all tuitions, but isnt the only way to deal and im not proposing this but isnt the only way to deal with tuition levels but to subsidize College Tuition . Steve thats a complicated question. There are those who think the policy of funding this money to students exacerbates the tuition problem because you give colleges all this money and the colleges charge more and the students have all the debt, so they dont mind the tuition increases. Stephanie they have no idea what is to come. Steve cohen there is an arms race on college, college campuses. Everyone has to have better student centers, the nist center, housing, and they have to rationalize all of that. How . Stephanie who cares with a Fitness Center looks like. Erik a lot of students do. Stephanie today they do. Thank you so much. Steve nice to see you. Stephanie Steve Rattner here to help in the millennials. Erik coming up who are the winners and losers of the president s energy plan . Stocks drop on coal. Stephanie welcome back. I am Stephanie Ruhle Erik Schatzker. Analysts had a full night to pick through president obamas sweeping Clean Power Plan unveiled yesterday. They. 4 billion policy aims to cut Carbon Emissions by 32 by the year 2030 and there will be winners and with winners losers. Bloomberg is asking who was the loser and the july fitness challenge is here to tell us who they are. Lets start with the losers, im sorry you did not win. We have another 30 days. First off to the losers, coal producers obviously going to be the biggest losers. Stephanie they have not found their beat in quite some time. They havent and it has been falling since 2008. Since then, it has gone from 45 from power dissolution down to 30 or so. You are looking at some of the biggest losers year to date and that includes Consol Energy Peabody Energy alliance, down 86 . We were talking about losing pretty much the entire stock price in the year to date here. In addition to coal producers, coal reliance electricity generators are set to lose, Companies Like American Electric power, duke power company, and these are not as bad erik and our ig down 17 . Thats right and they are not as bad as coproducers because of that first occasion. They also look to other forms of fuel. Looking at the winners, we are talking about maybe Renewable Energy but one interesting thing, it is not just for nobles but natural Gas Producers. You can think of it as a scale. Not so much coal versus natural gas but coal, natural gas and Renewable Energy. Some of them of the chesapeake and southwestern energy. These are the market shares here right now of the entire natural gas apparatus. Erik from what i understand though, there was an initial proposal and this final version of the president s plan puts less of an emphasis on gas then the draft proposal did. That is some of the Gas Producers, printed particularly those in the shell patch, like purcell is for example in new york state or more in pennsylvania because new york has banned fracking but they are upset because there is not an emphasis on gas because it admits half as much carbon as cold. 50 60 in fact. I spoke with a Bloomberg Analyst from washington and he said father will be a loss in terms of the marsalis in call, there will be again because natural gas is found in the marsalis region. It will be interesting to see how it plays out. This will be going up through 2022 and we wonder who the winners and losers are through 2030, so this is a longterm horizon. Stephanie you have broken down what this means we will bring in a trader and investor. Erik that would be rob hummel that would be rob thummel. Your firm has billions invested in energy, what do you make of the president plant and how does it in that affect your Investment Decisions . Rob you hit the nail on the head with your analysis earlier. The demand for wind and solar power is going to rise with the president plan announced yesterday. It also represents opportunities in the natural gas sector as well. Erik ok, lets begin with actual gas and we will get to wind and solar. Within natural gas, who are the winners and losers . Who is most faced by the proposal . Rob when you look at natural gas, it is not it is an elegant solution to reducing Carbon Emissions. It is cheaper from a price perspective and gas is abundant. We have made a lot of strides and this is a hidden gem in the u. S. Energy sector. We have made strides in developing natural gas in the northeast and there is a lot of natural gas that has been produced. Producers like range resources which are large natural Gas Producers in the marcellus shale will be producing a lot of that natural gas for years to come. It also benefits infrastructure companies. You need infrastructure to move natural gas from the marcellus shale to other companies in the country. Erik do you see a scenario in which Natural Gas Prices will rise because that has been the big problem for a lot of these natural Gas Producers the depressed gas price. If we were to look at the range chart the stock has been hammered. I wonder whether there is more of an opportunity, perhaps, in some of the natural gas, fire producers like alpine or dynegy who have upset excess capacity in the plants they operate. Brock we think rob we think there are opportunities from the producers to infrastructure and pipelines. As well as who consumes it like a cal poly. From a producer perspective, it comes down to the cost to produce and the range in particular has some of the lowest cost to produce natural gas in the country. Or potentially in the world, so that is why the marcellus shale is such a critical asset for the u. S. In total because of that low production cost and that is really creating an opportunity for lots of Companies Across the chain. Ramy and got a question regarding investors when you think investors could see money coming back to them if they ante up into these sectors . Rob well, from our perspective longerterm the demand for natural gas is just going to begin to rise. We are going to export natural gas very soon with the l g facility and it will be operational near the end of the year. Also, it gradually rises as power plants are retired over the next several years, so the demand for natural gas is on the rise and expected to rise. You should see positive improvements on the stock prices of Companies Like range resources. Stephanie all right, ive got dry powder, i want to invest specifically where today . Rob there are a lot of opportunities. At toward this, at toward us we are all the way until the end consumer of oil and gas. With regards to president obamas Clean Energy Plan a really good place for this is solar and wind producers. Stephanie one more time . Rob they are report to ask yield cos. They owned a collection of wind and solar assets, so Companies Like energy yield and Energy Partners have been spun out the larger utilities and they captured that the development of wind and solar power across the u. S. Expect the demand for solar and wind power to really increase dramatically because of this plan. Erik one of the big problems with wind and solar is the fact that they produce power, not necessarily when people want it. Is the best opportunity in renewable and Storage Technology . Rob that is probably earlier stage. What we are seeing in the wind and solar sector is historically renewables have not been competitive from a cost perspective relative to natural gas and coal. We have seen a dramatic change wind and the cost to produce solar dropped hermetically, so the cost to produce power from wind has dropped 50 and the cost to reduce solar has dropped 70 . Now, the wind and solar power cost are much more competitive on a global scale relative to coal and natural gas. The next step in the development of the nobles, in particular wind and solar, is what you are talking about. The ability to store electricity that is generated from power that is produced via the wind or solar land plants. Erik rob thummel is managing director at tortoise. Stephanie coming up, Small Businesses are not looking to bank their capital anymore. We will find out how one online marketplace is tasting Small Business i matching with lenders. We will have that next. Erik if you are a Small Business, try getting a loan from a bank these days. That is white Small Businesses are turning to alternative lenders for financing. One company helped them navigate the landscape is bizfind. Date next them to all my marketplaces. Steve is here this morning. How does it work . Steve it is an online marketplace where they can receive realtime automated offers from up to 35 different lenders. Erik i heard it described as progressive, the insurance marketplace. Is it like that . Steve it is, and we are one of the funding companies. Like progressive, we put our offers in a transparent way right next to our competitors and funding partners. Stephanie where is the safety net . When i hear things like this well, Small Businesses can come and it is automated, it gives me pangs of the crisis in terms of how honest are these Small Business people being. How much can it really do . Steve we underwrite and that the customers carefully. We have been in business since 2005 and we weathered 2008 and 2009bi possession and came out finezfi strong. Finance companies can pull to make a good handle. Erik so the lenders can make an offer but they have an opportunity to do Due Diligence on the creditor . Steve it is based on selfreported data in line stephanie but thats what makes me nervous, selfreported. Steve just to get the offer. It is the funding is subject to underwriting by the individuals. Erik lets talk about bizfi. We know a little bit about Funding Service on deck and some of the other companies that are in the business of nonbank lending to Small Business, where do you get your capital . Steve from a variety of sources. We have hedge funds and private equity firms that provide this and we are in the early stages of our first institutional equity raise. We have never raised equity before from any institution and we are going through that process now. Stephanie what do you mean . Thanks lending to you to do this . Steve correct. Stephanie do you run the risk that banks will get wise and stop lending and get back in the business their cells themselves . Steve that is a risk that there are so many lenders that trust our track record. We have done 28,000 transactions that banks are comfortable lending us stephanie im not saying they are not comfortable lending you money but the more successful you come, the bank could look and say i need a new revenue stream and i will do it myself. Stve that is possible but i dont think thanks really cant approve a loan in 45 seconds and fund within two hours and these are often nonrecourse, noncollateralized loan, and it is a different business. Stephanie i guess my fear is should alone ever be approved and 45 seconds . That does not feel good to me. What is the benefit of 45 seconds . Steve it is speed, transparency and the likelihood of success for the Business Owner. A Business Owner can come in in a matter of moments and find out if you will get funded or not. He does not have to wait three or four weeks. Stephanie im not asking well enough. Erik, do you know what im saying . Erik no, but thats ok. You me, why would the banks not go back stephanie no, why does one need it to be that quick . One would think for it to really be a safe process erik i dont want to speak for steve, but from what i understand, Small Business lending is not nearly as consecrated at some of the stuff thanks do. Some of the financing thanks to our complicated. Maybe you could reduce the business of Small Business lending as it were to something simpler and more systematic. Steve that is right. And the data has come so far. For a Business Owner, if he has a water main break in front of his store great opportunity to buy more inventory and do something quickly, he would like the opportunity to find out in a day or two days whether he will qualify. Stephanie you probably have an interesting perspective on the u. S. Economy because you see these Small Businesses every day. What do you think of it . Steve our businesses is year over year are ahead of last year. Small business provides around 50 of the jobs in the country and our Business Owners are taking money, not like 2007 and 2008 when they were being defensive, but now it is for expansion. Erik what kinds of requirements you demand of your borrowers . Steve take statements which we can pull in an automated man or merchant processing statements, tax returns, and a handful erik you can keep a pretty close eye on them. Steve we can monitor their Bank Statements every day if they give us access, so we can see if their deposits or revenues are going up or down. Stephanie but thats voluntary. They do not have to give you access. Steve if they want to borrow money, then have to give us access. Stephanie want to go public . Steve we do, but we will sort that out with our private equity when we choose. Stephanie when would you like to . Steve next 12 to 18 months. Stephanie good luck. Cant wait to see come back. Erik thank you. Stephanie futures are pointing to a slow open as the dow tries to avoid a fourth consecutive drop day. Our senior markets correspondent julie hyman is willing these markets to go higher. She walked in wearing green. Julie our first mover is higher coach. We talked about coach yesterday because jpmorgan had downgraded it to, but it came out better than estimated. Earnings exceeded analyst asked him its. Analyst estimates. They fell by 19 but not as big a dross as anticipated and a slowing drop, smaller drop dead what we have seen. The company does say the new product the new company is coming out with a new product that is resonating with consumers, so those shares hitting a lift. Cbs is another we are watching. Initially it looked good and the earnings cannot ahead, however retail sales are up 2. 2 in the quarter and that is a slow down from 2. 9 in the First Quarter of the year. It looks like folks are focusing on that as well as a forecast that although it is coming up on the lower end, it is coming down on the upper end. That is something helping to send those shares lower by about 2 . Finally, alcoa. This caught my eye because with all of the negative sentiment on commodities right now, all code is being upgraded to a buy from the neutral over at ubs. Analysts saying the company has transformed since kleinfeld became the ceo and the stock is down more than 40 since the hyatt 2014. Analysts also pointing out that the companys assets are now concentrated more in the midor downstream business, in other words, the Manufacturing Business rather than the producing of overall aluminum business and he said that is good news for the companies moved forward as well. Stephanie time for one of my favorite moments on the show. Erik, are you ready . Erik are you talking about picture this . Stephanie i am we will bring you the most compelling pictures over the last day or so. Look at that boy. Erik massive limbs of ash and steam two miles into the sky according to mexican authorities. Volcanic activity does not go to nearby communities, sunopta back to ration thus far. Stephanie it is extraordinary. You know i say this about the ocean, but there is nothing more unbelievably beautiful or amazing than our own planet earth. Okeydokey, an australian daredevil how about this . No regard for safety Robbie Madison took his usual stunt to the next level over the weekend. The way to an aussie went he served on a motorbike. He used a modified dirtbike with skis attached to the tires and took nearly two years of training to turn it into reality. There you have it. It cannot collect waterskiing, but it is surfing big race in australia and i love that last shot where you saw guys on long boards the hind. This is amazing. Erik all right, folks. Stephanie what do you think . Erik im not the motorcycle rider but i would die to try that. Stephanie coming up on Market Makers, the one and only bank analyst mike mayo. Announcer this is Market Makers with Erik Schatzker and Stephanie Ruhle. Erik good morning, welcome back. I am Erik Schatzker. Stephanie i am Stephanie Ruhle. We are setting up for disney and dreamworks after the bill today. Erik bank of america has some bad governance problems. Stephanie one could argue that he might be the superhero erik he is the activist analyst. Stephanie before we get to mike mayo mark mayo polls show donald trump leading with a wide margin heading into the partys first televised debate this week. He is backed by 21 of those surveyed. Jeb bush is second with 10 . Scott walker is in third with 8 . The survey polled 500 voters who identified being republican. Even though we are a long way from the election. The candidates are watching the polls closely. The first televised debate is this thursday, and only the top 10 in the most recent surveys will get into the prime time event. That could push rick perry and bobby jindal into an earlier less visible event. Shire is making an unsolicited offer to buy baxalta. The price about 30 billion. It represents a premium of 36 a value stock at over 45 a share. There is new deal on the horizon right now. Erik puerto ricos debt crisis is escalating. One of the agencies has defaulted for the first time. They paid less than 1 million bill rhodes talked about the debt crisis earlier. They dont get some of the benefits. There is a law that caps their medicaid. 60 of the population is on medicare so if you compare it to a state like oklahoma and you look at what they are getting, it basically isnt fair. That is why they should have another referendum. Erik puerto rico is set to propose a plan by september 1. The governor hasnt said which bondholders they be affected. Coming up puerto ricos sole member of Congress Joins us to discuss the economic crisis at 12 30. This will be a busy day for barack obama. Filled with meetings, and it is also his 54th birthday. Stephanie happy birthday president obama. Erik when he took office, he became the fifth youngest president to take office. He doesnt look young any longer. Stephanie does that make him a leo . I want to say, talking about donald trump, do you think people feel strongly in a positive way is because he they know what he represents . Erik more people feel strongly in a negative way than those who feel strongly in a positive way. Stephanie but at least you know when i think about what do they represent what do they care about, i would have the easiest time explaining donald trump rather than anyone else. Erik really . Stephanie easier than rubio, rick perry, bobby jindal. Erik i just dont know what donald trump stands for. Stephanie i dont either, but i know it better than the other candidates. Shares slumped yesterday. They are lowest shares since they went public with the ipo. They are down. 5 . 5 in preopening trading. With us now to break this down, i havent seen you in quite some time, but sherman. Did you get a haircut . Stephanie i didnt. Twitter, what do you think . It has been down quite a bit over the past week. The interesting thing with the management on the Earnings Call came out and slammed their own company. It was perhaps a kitchen sink quarter. They threw everything in and said here is what we are doing wrong. The user growth isnt growing as fast as it could should be as it should be. There are some investors that my colleague and i spoke to who say maybe they are slamming the stock to push the price down to make it more appealing to a potential acquirer or at least get the discussion moving. Because google or facebook may be interested, that at the current value. Stephanie do you think would know to lead the charge . He was a banker for years and years. He was the head of the d. O. T. Group at goldman sachs. There is no indication that twitter is actually for sale. This is speculation. It would be pure speculation for a future transaction to take place. But there are a number of people close to the company who have acknowledged that they think twitter is overvalued at its current Public Market valuation. In order to be interesting for facebook or google, not that it is overvalued in general. Whatsapp was about 22 billion. There may even be regulatory concerns. They would control the social media market. But google and facebook are the obvious candidates to buy twitter. There is no indication that they want to sell at this stage. Stephanie great to see you. Alex sherman, we havent seen him in a while. Erik when we come back, bank of america is under fire. One of wall streets top Bank Analysts is calling them out. Mike mayo. Erik you are watching Market Makers, i am Erik Schatzker. With my partner, Stephanie Ruhle. I topped analyst has a bone to pick with bank of america. Last week, they urged share makers that monahan be allowed to be shareholder and but mark mayo mike mayo is here to tell us what is wrong. Where do i go where do i begin . You have a faulty process. This document is the own best evidence white think that America Needs more independent oversight, not less. Erik this is the data that they used to support the notion that writing should be chairman and ceo. Mike exactly. Sometimes they will show one year, two years, five years depending on the statistic. Since october 1, all of a sudden, that is the relevant criteria. Is bank of america on the lunar calendar . We have never seen someone measure from october 1. That is just one example from cherry picking data. Bank of america described the ceo possibilities as unparalleled. On paralyzed on paralyzed insight. Move over jamie dimon. Move over lloyd banks i Lloyd Blankfein and. As if his skills are unparalleled. Stephanie would you work there . Mike i would certainly work there. But this is beyond Brian Moynihan. Even if Brian Moynihan is the superheroes they imply they have a major governance issue. You need better oversight at the company. That means either changing the Governance Committee erik your issue isnt with Brian Moynihan necessarily, he is taken the stock price to almost 18 today. He has gotten rid of tens of thousands of employees. It is with the board, right . Mike it is the worst Corporate Governance since citigroup. How they fixed the governance issue is up to them. Make changes at the top, have an independent chairman that this needs to be fixed. I think the new lead director, they are saying they dont need to have a separate chairman from the ceo. But this new lead director stephanie who is this guy . Mike they say he has experience. Regulatory experience. It comes from running hospitals not banks. It is very misleading. The other thing that is offensive to shareholders, the new lead independent director in the 14 a says that bank of america conducted a thorough process when they recombined the ceo and chairman position last october. That is incredible. What took place here in 2009, the shareholders voted to separate the ceo and chairman. Then, they waved a magic wand and said, lets recombined them. Was that a thoughtful process . No. Erik why is this happening . Is it because the board truly believes that Brian Moynihan needs to be both ceo and chairman . Mike most of ceo and chairman stephanie many people said it was one of the things he wanted so he could be in the varsity club. Mike their returns are still towards the bottom. They were one of the biggest failures in the financial crisis, so during they are in the citigroup club. Citigroup still has those positions separate. During the independent during the financial crisis, it may have helped to have a pair of independent eyes of the top. Stephanie i dont want to ever run a business that mike covers. The passion. Mike mayo. Erik when we come back, espn struggles. Will did he make it available in overthetop services . Stephanie welcome back to Market Makers, i am Stephanie Ruhle. Disney is reporting earnings after the bill today. Stock is up nearly 30 this year. The cash cow it espn, is off the game. They have been losing viewers. I want to bring in senior media analyst paul sweeney. Espn, off its game . Paul investors they have become accustomed to this being a driver of growth. Arguably, the sense of it being a big growth story for disney those days are over. It is still a cash cow, it is facing headwinds people are cutting cords. Viewers arent signing up for big packages. Stephanie is not a curse on their success . Is that a curse on their success . Paul they have all of the best programming, they are i far, the most valuable Cable Network in the marketplace. They charge a multiple on a monthly basis, relative to anything else. The question is now, where did they get their growth . They are thinking about going direct to consumers, similar to what we have seen hbo do. All of the success we have seen with netflix, that has proven that consumers will pay for direct content over the internet. So espn is thinking about their model. Erik was distributing via dishes a mistake . Paul i dont think so. The skinny tv packages a threshold on subscribers. If they become too successful, espn can pull their content off. They are cannibalizing their core distributors. They are playing it very conservatively while they experiment with these skinny packages. As they should. They want to protect their core distribution franchise. That is where they make all of their money. Yet they have to recognize that there consumers are getting their information from other places. Erik how directly do you think bob iger is going to direct this issue . Paul he is going to Start Talking about it. We have seen so much success with Netflix Stephanie no time. Dreamworks, i have to add. Paul we are waiting for next year with kung fu panda three. Erik stephanie welcome back, i am Stephanie Ruhle. Erik i am Erik Schatzker. Stephanie we are a few minutes away from the opening bell. Tracy alloway is here with the three things you need to be looking at. Also joining us is jonathan hurdle. Welcome, welcome back. Tracy lets talk about greek stocks. We saw the drop yesterday in the Athens Stock Exchange. We have the greek etf that has been trading while the Athens Stock Exchange was closed. It felt about 70 . About 17 . So we have all of this discussion about etf, this one did pretty well. Stephanie in terms of this being down so much, you were there. Cant we attribute some of it to investors saying, i have been locked out of this market for how many weeks . Erik five weeks. Stephanie i just want to get out of this market. I want to take my money and put it under my mattress. Could this be another sign that the Greek Economy is failing . We had signs all along. Then, arbitrage to cold. Stephanie one of the reasons we are seeing so much selling could have less to do with the Greek Economy and more to do with those saying, the door is open, let me guess my toys and get out of here. I think the greek market is a distraction. If we look at emerging markets around the world, the greek flow over creates values that are more attractive in the United States. We arent worried about the greek market as much as the ramification of the greek market. Tracy lets talk about leverage loans. One of the Great Success stories but in markets, not so much anymore. Why . We have the leverage loan guide which tells lenders that they shouldnt do loans we have Cash Rich Companies that are feeding out the big buyout firms when it comes to acquisitions. We have home depot, it was said to be a feed out for its acquisition of interline. There arent many leveraged buyouts happening. Erik john. Does it matter if a deal is seven times lever or six times levered . John it will flow through to create a lower return. Erik that is a of turns of leverage. John they will use leverage and they need to know how to do it. But the banking market in general is still trying to recover from the crisis. It is interesting when you get the government involved how slow things are. See you have a Business Finance company that is stepping in to make loans where banks wont, so the market is responding. Banks arent making the loans they used to make. A lot of it has to do with regulation. What is the purpose of a bank . It is to make good loans. Stephanie we forgot that. John so if banks wont do it company then other companies will step in. Stephanie we forgot that a bank can step in and trade up a storm and not have the downside. How about number three . Tracy number three. Saudi stocks, you would think they would be suffering given the big selloff in oil but they are doing reasonably well. They are down 4 , compare that to stocks in brazil, where they are down 10 , russia, a lot of other countries are doing worse than saudi arabia. The vast majority of the stocks are in the hands of local investors. And the local investors are feeling pretty good. Erik you mentioned emerging markets earlier. Do you like saudi stocks now . John it is not a mainstream emerging market. When you think about the world we think about doing the best with what you can. 6 develop market 8 real returns in emerging markets. But we would rather go to countries like korea and by hyundai. If you go into the oil patch, that is a separate issue. So how do we find opportunities in the market . We find this location. When you see a 6 return in dividend from Royal Dutch Shell while you are waiting for them to pick this. Tracy we sow rumblings over the weekend about trouble in Dubai Saudi Arabia has just issued bonds again, is that on the radar for you . John it isnt on the radar. We are more expert at handling sovereign debt crisis crazies than we have ever been. The real 800 pound gorilla in the room is low Interest Rates. It remains at a 220 it is not high enough for me to invest in as an investor. So everything has to be equities. Where do i put my money . In equities. So that is the picture today. That is the cards that we have to play with. Erik thank you very much. Tracy galloway, thank you. Stephanie now, we take you to julie hyman for a look at what stocks are on the mood. On the move. How are the markets doing . Julie no streamers here or when it comes to apple. The stock is falling for the fifth straight session. Down 1. 5 . Take a look at the year to date in apple. This is the 200 day moving average, yesterday, we fell below it we are deeply below it now. It went 471 sessions without falling below that. And the green line you see is the correction that we have now seen in apple shares. This is back on february 23 when it was at record. Since then, it is down 10 . So because of its importance to the markets, this is something that a lot folks are watching closely. Lets talk about the big deal potential deal. Shire is making an unsolicited bid for baxalta. To create a rare disease drug powerhouse. You can see, we are seeing a big increase. One of the things shire is saying is that if you we acquire you, you will get a better tax rate. And sprint is no longer the number three in terms of subscribers, that goes to tmobile. But the shares are higher by 8 . That is because they saw some user growth and its even is better than what analysts expected. Erik i want to go back to apple. Do i remember in previous summers when everyone started to get gloomy about apples timeline about how the new iphone wouldnt wow everybody, and whatever else it had up its sleeve, or like a revised operating system and then apple bows everybody. And the stock revised itself. Julie is true. I havent seen as pessimistic commentary as i have seen previously. We are talking about a correction. We are not talking about a bear market. It is still one of the most widely held stocks out there. Erik it didnt happen in 2013 or 2012. Julie, thank you. That chart on my screen was apple. Stephanie it seems that the sec is interested in the business over at simcoe. We will have that and more when we return. You are watching Market Makers on bloomberg television. Wow, a beautiful shot. Erik welcome back, you are watching Market Makers. Stephanie was here a moment ago, matt miller has stepped in. I will kick it off with david ive worn, he said Investment Capital dropped in july, and the losses were broadbased. Earnings were affected by lower than expected computer demand, as well as manufacturing issues when we began migrating capacity to mobile and other components. The result surprised the market and led to lower stock price. Having reviewed our basis, we still expect current trough earnings to be higher than in the past, and peak earnings to be higher in the future. Erik they said it was the worst month since 2008. The company agreed today to buy ipc health care. It represents a 30 premium. Team health says it will expand disability to hospitals. And United Airlines is joining delta in banning big Game Trophies as freight. United says it is prohibiting the transportation of trophies such as rhinos, and water buffaloes. Those are some of your top stories. Erik the sec has sent a wells notice to pimco. Pimco says regulators are recommending the it says its conduct has been appropriate. Is here to talk more about this. We need to clear up two things. First of all, what a wells notice means. And what it is that the sec says pimco did wrong. They have been there for years, poking around. The funds were created for momandpop investors. Erik this is back in the ill gross days . Exactly. They did well over years and they wanted to give them that access because it wouldnt make them a lot of of money through the etf. After it it was tracking these same strategy, but why was it doing three times as well . So the sec poked around, some attention was drawn to it, and what they appear to be looking at is the way they were marking some of the securities. So if you buy something that is an off the run bond not a lot of liquidity and it it might trade at a discount. And the Accounting Service that you use to price your bond wont account for that. Really, you have a weird bond. Not taking into account that it would be more illiquid security. They dont trade the same way. Matt pimco says the wells provides us with our opportunity to demonstrate to the sec staff why our conduct was appropriate. What is the process . This is the kind of i dont want to say shots fired, but they are saying there is going to be action. There is enough evidence from their investigation to say that there has been some wrongdoing. Pimco responds, saying that what they are doing is fine. It is whatever Pricing Service they are doing, they are using. Theres a lot of philosophy about whether or not this was wrong. Erik will this affect a number of different etfs . There is some question matt there probably is some implication it definitely does. It is a little nerveracking for some people in the same spot. Erik a very interesting story that will probably have some ramifications. Matt thank you very much. Julie hyman is back to tell us more. Julie i am going to mention apple because Howard Silverblatt just emails me and pointed out that since every 23, the s p is down. 55 . If you take down if you take out the decline of apple, it would have been 1 10 of a percent. If you look at the index, it is down 1. 6 in that time. And you have mgm . Julie im going to mention those two. Oo. It was interesting. We were just talking about this a few minutes ago. Erik lets say that was for nots benefit matts benefit. Julie mgm, the stock is up 2. 4 . The company is giving some of its china numbers. Down 37 yearoveryear. So, so atzoetis they are higher than what was anticipated. Coming in ahead on estimates. Erik all right, julie, thank you for the update. Matt i am shocked, revenue is down 30 yearoveryear. Erik look at gambling revenue in macau. We will be talking about cars, self driving cars, after the break. Matt and the possibility of hackers. They say if you cant beat them, join them, and in his latest article, Ed Niedermayer agrees. He says, detroit should put hackers behind the wheel. He joins us now. What exactly do you mean by this . You dont want to put anonymous behind the wheel of chrysler jeeps . No, absolutely not, but what we found out in the past couple of weeks is that this allows anybody to hack into these vehicles. What the Software Industry does is invite Hacking Community the Hacking Community which doesnt integrate the best or b tatian among the public, and what the Software Industry has found is that they must foster a relationship with hackers to find full abilities and get to them and fix them before black cats find them and do ill with them. Is that what banks to, for example . Yeah it is my understanding that anyone who takes security seriously does some version of this. Thanks, apps, Tech Companies you name it. So white hat hackers are the good guys, blatt black hat hackers are up to no good. Im not sure if we want to draw such a black and white distinction. In any case, there is a big hacking conference i was surprised to learn that forward i. T. Guys were going to. I wouldnt assume that and eric, you are right because it is hard to draw a distinction between black and white hackers. The key to understanding this is that there is going to be financial incentives for people to hack into vehicles just like there are four people to hack into anything. The question is jb the financials only exist in the black market for evildoers . Or are there legitimate financial incentives that the companies are putting out there to encourage people to turn over these vulnerabilities to the companies so they can fix them . That is the key to developing. We dont need to rely on people who happen to be wearing a white hat. I think for a very low cost relative to the cost of problems associated with the hacking folder abilities and as well as having the engineers write the code, it is a financially smart way of dealing with the problem. Just to wrap up what happened with the cheap hack, i talked to some people from ford and general motors, and they both said that while the have different Security Systems in place, neither one seemed to want to fully commit saying that this couldnt happen to one of our cars. So basically, it could happen along any number of brands. Yes, that is one of the issues that allows the Software Industry to have a better philosophy towards these issues. There is an acceptance in that world about an understanding of a hackable computer. The Auto Industry knows that. That is why they wont tell you it cant happen here. Automakers need to own the fact that there is no on hackable car. They need to deal with these as fast as they can. Thank you so much for joining us, edward niedermayer. I will be back after this break, folks. Good morning. 10 00 in new york city and 11 00 in tokyo. Mark you are watching bloomberg market day. A new bloomberg poll shows donald trump with double the support of his closest rival. Erik disney has an espn problem. Revenue may have peaked but more and more customers cutting the core when they learn about bob igers plans for the Sports Network when he reports earnings after the closing bell. Bill gates farm accused of selling quality onions and calling them the dahlia. Vadallia. Olivia good morning, everybody. I am olivia sterns. June factory orders are out. Julie hyman and it is for the numbers. Julie factory orders in line with an increase of 1. 8 in june. That is higher than the 1 reading that was recorded the prior month