Pickard. In san francisco, cory johnson. He has been digging deep into the filing. Also, gordon chang. Before we get started, i want to take a closer look at alibabas is this by the numbers. Business by the numbers. Leslie pickard is here with the details on my po. You have gone through the whole filing. What is different about this . Is a massive company. They talk about their ecosystem, maintaining their culture. Carehave taken a lot of and time to put this perspective together. They are trying to exemplify what this company is for american investors who do not use ali baba. They have taken a lot of care to lay out what their business is, how they monetize, and how they make money. Much are not sure how theyre going to raise. They have a billiondollar placeholder for now. Correct. The placeholders dont necessarily mean anything. Theyre just used for placeholder purposes. Market value right now, my estimate, it is at 168 billion. We are told by sources it should come out around that range. We will not know the exact price for another three months or so, at least. This process takes a long time. They have provisions with the ncc, they have a lot of planning to do. That stuff takes time. We cannot expect to see a final pricing for months. Do we know where the New York Stock Exchange or nasdaq . The jury is still out on that. They are telling me they want to focus on the perspective and get that out. With twitter, they do not list an exchange with which they were going to host their shares. We can expect to see that news come out potentially within the next month or so. Theyre holding final round interviews with the exchanges and then well make doesnt matter us and mark does it matter . The Business Models are the same at the New York Stock Exchange and the nasdaq. Yahoo ,ill say we have in which alibaba is invested in. They have Close Friends there. On the other side, theres the New York Stock Exchange, which will point to the twitter ipo and say look at the execution risk of that we can avoid. We had a solid performance with twitter. Thank you. Leslie pickard. She covers ipos for us at bloomberg news. Cori, you have been digging into this as well. Tell us the biggest risk factors. Is not just the structure that is strange, shareholders do not have a direct vote towards what the board will be or anything else. In the business, there are strange things buried on page 201. There is one sentence that talks pay business. It is not run by alibaba. It has a separate ownership group. There are little issues like thatthroughout this filing raise questions about how much shareholders are really controlling the business. They might enjoy that and good times, but in bad times, they will not have a lot of ability to make changes. It is such an amalgamation of these u. S. And Global Internet companies. It has pieces of ebay, paypal, pieces of amazon. It is like nothing we have anywhere else. And itpieces of twitter has its own business to business commerce aspect. I have spent a lot of time in the last 12 hours or so reading through this perspective. I cannot imagine how this business works. Thing itressive is profitable. These guys did 57 net margin last year. Just really incredible numbers. The likes of which you have probably never seen of the scale. Thank you, cory johnson. He is our bloomberg west editor at large. I want to bring in gordon chang. You can see where gordon stands on chinese companies. You have a lot of doubts about this ipo. Why . Foreign investors are not allowed to own alibaba. They have a complicated structure through the cayman islands. The Chinese Supreme Court has declared it to be illegal. Pay. Ard about ali ma used the illegality of the structure that he created to i pay away from the Alibaba Group into a company in which he owns 46 . The structure is illegal, but he is using it to his advantage. He set up a variable interest entity structure. Was he went to the Alibaba Group and said im pay. To take away ali he took that out of Alibaba Group and into a company which he owns 46 . Did that was that the variable interest entity structure was illegal. Yahoo on a portion of Alibaba Group. Quick you say he did that because i think he is being very sharp. Yahoo and softbank on a substantial portion of Alibaba Group. That is going to be a problem Going Forward. Are you calling him a control freak . Investors need to look at this carefully. We have seen were the Chinese Government has forced investment a Foreign Investors from sector in which they had no right to be. We are talking about investment risks. We may compensate you, we may not. That is going to be a big issue. I would like to see more of that. That is speculation. Foreign investors, if they are going to buy into alibaba, they will buy into the growth story. It is a growth story in china, is it not . It has 80 of the mobile market, where the growth is. There is another company out there which is a very good story. It will probably not carry the same valuation that alibaba will get. It is the social media player and china and it is easier for them to monetize and going to ecommerce than it is for alibaba. Right now, you have two internet giants invading the others turf. It is an easier path for . 10 than it is for alibaba. They have seen their stocks fall about 25 since march. You have consumption, which is stagnant and china. Retail sales number do not correlate with what were seeing in the chinese economy. Alibaba is a consumption story. Facehave been able to out consumption, question is whether they will be able to do that over the long run. It is unlikely. Mentioned tencent, alibaba is like an amazon and amazon is trying to go into social media it is like amazon going into social media. Nt, which is like twitter and facebook all rolled into one. Theyre trying to monetize that. You are saying it is easier the other way. T doing a lotcen better . They are starting on a lower base in terms of ecommerce. It does not get as much in the way of attention because it is listed in hong kong. When you look at all the other risks, i think it will be a difficult sell over the longterm. Great to see you. The author of the coming collapse of china. Aol surprises wall street with its firstquarter revenue. We will hear from Tim Armstrong in a moment. Boeing looks to the stars. It wants to build the next space shuttle. We will be back. Thisl reported earnings morning showing revenue hit 580 3 million, beating wall street estimates. It announced a purchase of convertero. Tim armstrong joins us now. It is always good to have a quarter when you can speak about an acquisition and growth. One thing i want to focus on is aol properties. The revenue they are is down about two percent. Tos that mean youre going continue to restructure some of the properties . You see is the Company Growing for the fifth consecutive quarter. When you dig into the financials, which you will find is that you have strong growth on the Platform Business and we took a number of restructuring charges and if you take those out, the brand group would have grown. Overall, the theme is growing very important markets. Administrative costs going down. If you take the charges out, the quarter was a strong worker. We are focused on where we are going to be over the next couple of years. We told investors we would regrow the company and we did that. The next set of objectives is how to make the company grow above market rates. We are focused on that execution. Much of that has to do with s you bought gravity, and now convertro. Are they increasing ad rates for aol . Pricing has been stable to increasing overall. It has had a substantial increased every year. To focus on isng we are filling out strategy pyramid. Really refurbishing the aol brand, those of the areas when you boil them down, it is building a great video experience, great programmatic experiences and building wonderful and delightful content experiences for consumers. Convertro fits where . Between the first two. It is an important theme for the future of the internet, the Advertising Industry and doing hundreds of billions of dollars over the next 10 years. Saw, youad you said see a billboard in units to a retail store, that billboard gets all the attribution value for the ad campaign. Let you go back into keyconsumers and the soundbite out of where the interbyte is going as exposure to conversion versus the last click to conversion. That may sound small, but it is as big as the Auto Industry going from horses to cars. This is about building the future of advertising. You cannot attract advertisers without good content. You have been going full force into original content. You unveiled 16 new shows. We spoke with nancy dubuque. She pointed out one concern about all the content coming online. It is not just skyrocketing cross costs that are being paid for content, but also for Production Companies and dont own axis. There is an appetite for content in general in the market. We see that with a lot of the deals that are being cut. Are you worried about content the skyrocketing cost of content . We were the earliest investors in content on this phase of the internet. We know what the cost structures are. You have the creation, the cure ration, the distribution and the monetization of content. They have separate economies attached to it. Higher see happening is Quality Content getting done at better efficiency over time. The mechanization of content is happening as well. What youre looking at is a much larger global scale distribution. Before we go, what do you think of the alibaba ipo . Really exciting. The internet has been a big impact. It, thehink about global economies, what i was growing up and you were growing up, they were a mystery to people. The fact that they are coming to the u. S. To do their ipo is about the full access of globalization. It is exciting, the prospect of countries coming together and the internet bringing them together. It is a game change moment for all of us. Great to see you. Coming up, from english teacher to billionaire. We have that story. We will look at the controversy involving the psalm of brunei. The sultan of brunei. You are watching in the loop. Live on Bloomberg Television. Good morning. I am betty liu. 286 Million Dollars that is how much a group of paintings sold for at a christies auction. The impressionist of modern art sale netted 80 more than last year. Canvas thats 20 million. Another sold for 22. 6 million. It is 26 minutes past the hour. We are on the markets. We are watching the alibaba ipo, months in the making. Equity futures are pointing to a higher open. We are in the midst of earnings season. Aol better than expected. As senti futures up about 3 10 of one percent. S p futures up about 3 10 of one percent. Canadas largest gas producer is buying shares. They will pay 3. 1 billion dollars to buy oil rich land in texas. Girls of oil barrels of oil. Bank thegest company which makes most of its profits in asia had muted consumer activity in april. Patrick said that running the company has become more difficult as ge and possible siemens pursue bids. They want to wrap up sales quickly. Nine Entertainment Industry related events. Two hotels are owned by the brunei sovereign wealth fund. It is over islamic criminal law. It is a story we brought you yesterday. Of aotel is part collection and bloomberg spoke with the ceo yesterday, who had this to say. The reason for being here is to support our employees through this situation. The right to make comments, but i ask them to direct their comments, if it is of a religious or political nature, which this is, the channels for communicating that are directly through the state department and the president of the united states. Not to boycott the Beverly Hills hotel, where they are going to affect the livelihoods of the 650 people that work for us. Case for keeping those events at the Beverly Hills hotel. Joining us more is peter firesign four more is peter firesign. Peter, great to see. What did they do . He has done everything that he could do. Gunshave thrown all of the of Public Relations at this. They have done a good job. Unfortunately, this is not spendable spinable. They will have to affect some other solution for the people that are making life difficult for them. Why has this erected now . But why has this erupted now . The sultan decided to do this at this point. I am sure he had a reason. He transitioned his country into full islamic law. Thinking about the Beverly Hills hotel when he is doing this. One has to ask the other question what was his interest in the Beverly Hills hotel in the first place . Interested in implementing sharia law and a man that was interested in owning a piece of the Beverly Hills hotel. Little deeper, it is hollywood that was built by jews. It is a fascinating dynamic. Hotels goodese moneymakers . Just looks at the superficial dynamics of the situation and asks questions. He was aware of every dynamic. There are many investments he could make. I dont know the answer. Anyone that thinks this is not a big deal has not looked on social media. Looked at the tweets about the situation. For instance, richard branson, founder of the virgin group, that nothe other day virgin employee will stay at the Dorchester Hotels until the sultan abides by basic human rights. Ellen degeneres talked about this. Was on the street yesterday with protesters, protesting this hotel. And the sultan. Point, is anybody else in danger here . Is this going to spread to anyone else . Or is this sort of contained . It depends on how this works out. I dont think that the people going after the sultan at the Beverly Hills hotel are going to branch out globally, but at the same time, the world is watching, and all kinds of people with specific interests are looking to see what is possible here. Do you think that the hotel is in danger of closing because of this . I think he has a few choices. One, he could sell the hotel. The sultan . The sultan. He could sell the hotel. One what hopefully he could find a buyer for the clippers at the same time. Or, he could dig in his heels and say that he is not going to be forced to sell this and they will keep it as a property for some other purpose. Or as we were talking about a moment ago, one wonders how deep the conviction about sharia law goes with the sultan, since it took him 70 years to do this. It will be interesting to see what happens. Can you imagine if he did put in a bid for the l. A. Clippers . In any case, peter, what about this to me, i feel like if you go to any property, to any investment, if you dig deep enough among the investors, arent you going to find something that offends you . That is a conflict of interest . This is a unique situation. An individual who implemented sharia law, like the sultan of brunei, is also the individual who owns the hotel. This is not the same thing as boycotting apartheid, south africa, where it where millions of people were hurt over the decades. Boil this down to a single person. It is that even like going after the russian oligarchs. This is a person who implemented the law. But i was talking about a sort of gray line, gray area here. Take alibaba, the topic of the moment. You could be an investor who is for human rights and say look , i wont buy into alibaba because i believe the chinese human rightsouts laws. I am saying that there is a kind of gray area here. There is no part of this that ofnot gray, but that kind conversation is interesting. If it has to do with alibaba, with patronage of a legendary hotel, this becomes part of the social conversation. Peter, ray to see you. Thank you so much. We will be back in two minutes on in the loop here. For the man who founded alibaba, is not quite a rags to riches story, but it is close. 15 per month, not bad those days for an english teacher in china, now worth about 13 billion. Who, exactly, is jack ross . Take a look. Taking the stage in front of thousands of employees, jack ma is not your average corporate chairman. He flunked his College Entrance exams twice. That might be the last time he set out to do something and failed. He is 49 years old and is trained as an english teacher. He learned the language by listening to voice of america and working as a tour guide. Since then, he started chinas first intro one of chinas first internet companies. Give himded people to 60,000, the beginning of what is now known as ali baba. Known for commerce, he has broadened the companys interests. Alibaba is involved in cloud computing, banking, and even has an online music service. His personal fortune is valued at 13 billion. An empire seems to be his motivation. He told charlie rose that if alibaba cannot surpass microsoft or walmart, he will regret it for the rest of his life. For more on the man in charge, i am joined by matt miller, editor at large for our numbered billionaires team. He looks pretty in tune. Such an empire builder. You cannot discount how big a deal object model how big a ma isack mock jack to ecommerce. There are more people shopping online in china than the countries on earth. 700 mutual 700 Million People shop online in china alone. His ambition she has some quirks and we can talk about company, heis really is one of the richest people in the world and to probably be in the top 10 soon. Weiss what are his quirks . With started the company 60,000 from 80 people, not that quirky. He went to school with jet li tom of the martial arts scholar. 70 of male in china is somehow related to ali baba. 70 of all packages. 70 . Fascinating. The quirkiest thing we found on the terminal . He conducts mass weddings for some of his employees every may. Really . He officiates . He officiates mass weddings for his employees. That is so weird. To be married by her boss. Thats right. We have to talk about the other side, perhaps he is a billionaire because he has good relations with the Chinese Government. Clearly. Clearly you cannot grow a size and scalee that ali baba has achieved without some sort of relationship with the Chinese Government. Obviously. So much. Nk you matt g miller. And our on jack ma billionaires list, go to bloomberg. Com billionaires. Easy enough to find. Tomorrow, my interview with the 11th richest man in the world, sheldon adelson. To infer that. Why one manager thinks that tesla should get out of the carmaking business. What does he think that elon musks company should be doing instead . We will tell you, after the break. Two minutes, do not go away. Bonds have been rising this past month on speculation that janet yellen will testify before congress today. David einhorn spoke about her exclusively yesterday with Stephanie Ruhle and Erik Schatzker on Bloomberg Television. The way that she is approaching problems conceptually is very good. I love that she has a better reason why rates should remain at zero in the economy. She has just gotten started. Peter cook is with us, the economic editor, mike mckee is with us. What should we expect from her in this testimony . Expect her to stray too far from the fed statement that we got last week. Hard to imagine she will be changing course in any dramatic way. We just had that friday jobs report, which was solid, the best we had seen since january of 2012. But there were more things on her dashboard these days, including the participation rate. A low we have not seen since 1978. I think that what we will hear from her is that the economy is starting to gain traction the way that we thought it would, but we will not see rates going up anytime soon. That is basically what you been hearing for the last few. , brady, the watch republican from texas, has been a big critic of the fed and quantitative easing. Are they ever surprised in these testimonies . They do, which is why they are going to be careful. Last year ben bernanke suggested that the fed might begin to taper. It set off a temper tantrum. We saw the damage that that did. Mortgage rates went up and existing points cratered, it has been a real problem. She is going to be very. Ircumstance circumspect here is an interesting curveball. Jeremy, the one of the departing fed governors, suggested the fed may be making a mistake. The markets tried to interpret and read between the lines. That is a problem with what happened last year, they said the fed should be more direct. They have been more circumspect as they go to qualitative easing. What does that mean . At this point various indicators. They do not tell you who is on the charts. You dont really know what those charts mean. There is a lot that the markets have to read into what the fed is doing. The governor suggest that maybe a you do that, there may be better result from the markets with less volatility than we saw in the last year. Peter, what is your relationship like with lawmakers now . Her relationship . Pretty good. As we know, she won confirmation in the u. S. Senate. She had a cordial reception on capitol hill and i think the same will continue today. Hard to be too critical of janet yellen at this point. She has not done anything so provocative as to inspire that kind of feeling from republicans. If anything she is moving more in the direction of the taper program, so i think she will get a warm reception. It will be interesting to see the question. She has not been asked the question that David Einhorn was asking yesterday. Why, at this point, do you continue with such low rate policies that dont help the economy . The critics make a good case on both sides, but she has not come out publicly to say why she thinks that. Mike, thank you so much. Mike mckee, peter cook on the hill, be sure to tune in for fullcolor. Full coverage of the janet yellen testimony. You can also watch it on our website. A potential multibilliondollar contract, inside the Company Announced a contract for every manned Space Mission. Plus, jeffrey kellogg, why does the bond manager think the tesla founder should bail on the car business . Makingoeing is known for airplanes, but they actually have a history in space travel. They have been a contractor with nasa for every manned Space Mission ever flown and they have another contract that could be worth billions, building americas next space shuttle. We have a look at the growing Space Exploration facilities. Boeing is known for airplanes , but they actually have a long history in space. Since the beginning of nasa, boeing has been a contractor on every manned Space Program, including building the parts for the International Space program. Boeing has been a part of it since day one. Nasa is hosting a competition for private enterprise to transport humans to the International Space station. Winning this contract would support dominance in the new space race. We see this as the next huge opportunity for boeing. How big do you expect the market to be . Just a very different Business Model with our Huge Development programs usually centered around commercial airplanes and military aircraft, where there is a lot of foundation and the business. Boeing hopes that those flights will be made in their new capsule. The weld lists design makes their craft stronger than traditional models. Astronauts will fly in this capsule . Right now the configured default is five. But it is up to seven. What about comfort . This is not the most comfortable thing i have been in. Absolutely not, but because of the tet because of the landings, we rough needed a design that would satisfy that. Chris ferguson piloted americas last shuttle. His new mission is to get sllings commercial boeing commercial Space Program off the ground. This is the simulator . This is our engineering simulator. How similar is it to an airplane . Boeing has been fighting these airplanes for decades. We were able to take the expertise and involve a lot of the people and make them a part of this right here. Do you think that this gives boeing a leg up over their competitors . I would like to think so. They were the first contractor to build a spaceship. Be sure to tune in to Bloomberg Television tonight as we take an indepth look at the next space race. Another name in the space race . Elon musk, all multitasking entrepreneur who is running three companies, he is in charge of spacex and his own lecture car company, tesla motors. Elon musk is already announced plans to build a gig a factory that makes batteries or electric cars. That is jeffrey dunlop, who says that what mosque should really do is cut a deal with his competitors. Tesla should quit making cars and start making batteries or all the other electric carmakers. He makes it clear that he likes tesla as a company and says he would rather own it then twitter and that there is a good chance that it will give investors a killer return, especially if they focus on battery making. 56 minutes past the hour, Bloomberg Television is on the markets. Equity makers are showing a higher open on this wednesday. Part of that has to do with earnings having a betterthanexpected opening for some companies. We will be on the markets again in 30 minutes. As we mentioned, alibaba delivers as many as 70 packages in china. How does the ecommerce giant really do it . Twitter and amazon have a new agreement that allowed twitter users to shop while they tweak, begging the question, why would anyone do that . You are watching in the loop. Fromu are 30 minutes away the opening bell. I am betty liu, you are in the loop. Investors are waiting to hear from the fed chair, janet yellen, and what she has to say and what she has to say in just about one hours time. Alibaba has turned out to file for the biggest ipo ever in the u. S. They may raise as much as one 2 billion. Shopping with the , what can you do with the new joint venture between twitter and amazon . More on that in a moment. One thing they did not tell us in the filing is which exchange they are going to list on. The nyse or the nasdaq . Julie hyman has gone through all the trouble, so who has the edge here . It is hard to say who has the edge, exactly. Both of these exchanges have their pros and cons. Analysts were hard bent to say one over the other, that has initially been the text listing place tech listing place, but we will get to that in a moment. I want to talk about why the exchanges care so much. When you look at the revenue nysedown, the owner of the , they are listing a very small part of the overall revenue stream. On a pro forma basis, the acquisition is recent. You are looking at a pro forma of 10 to 12 thomas similar to looking at the nasdaq. It is not a huge portion of their revenue. So, why do they compete so heavily . So much hubbub about it . Part of it has to do with cachet and the other services that they market to these companies. When you are having the initial Public Offering on the nyse or nasdaq, they say to you that we can offer you a listing or Investor Relations services or data services, so they try to sell to this bundle of services to these companies, but that is part of why they want to get the bigger ones as well. By the way, in the u. S. The fees that they pay for the listings have to do with the share count. The more shares they are selling, the more they will have to pay. That makes sense. How has each exchange changed recently . If you look at it, they are definitely getting more tech listingsthat they pay. The nasdaq, in terms of tech and. Nternet ipos, had fewer fastforward to 2012, through the First Quarter of this year, nasdaq,se more in the 21 billion, 45 on the nyse, about 9 billion, the nyse has linkedin, pandora, twitter being the most highprofile. Nasdaq had facebook, that is why the dollar figure is the biggest for the nasdaq, but as we know that did not go so well, so that has given at least more recently a bit of an edge to the nyse. It is difficult to say how this one will go. Julie, thank you so much. Alibaba may become the most valuable Internet Company after google, but its fortunes are intertwined with another major player, yahoo . They will likely sell a portion, giving it a hefty cash windfall. What will they do with all that money . Christina g has been looking into this. People have been buying into it because of yahoo , they have gotten those properties for free in that whole paradigm. What happened after the ipo . Yahoo will likely sell 40 of its stake. Depending on the valuation you something between 10 billion and 50 billion. We will see how much they pay out in taxes. But i think that early on a lot of shareholders really expected that money back from ali baba. Of course, that is not too much fun for a ceo to do. Wants to do more deals. Any ceo would want to do more deals. The real question goes back to your earlier point. The stock had a 141 runup in the last few years. A lot of that has to do with alibaba. When you talk about the peopleon for yahoo , the i talked to yesterday when looking at valuations between three dollars per share and seven dollars per share. Marissa mayer has something here, what is a going to be . Can we see a bigger acquisition coming out with that cash . We could. There is a clear direction towards social and mobile, towards making yahoo a real company. There has been a lot of chatter around pinterest and snapchat, companies that will not come cheap. But then again you have the cash files to do it. What she does with this cash will really, basically, determine the fate of yahoo . It will absolutely. Thank you so much, christina. Cristina alesci, our deals reporter. Moving and shaking at this hour, jeffrey done lock has been 90 has spent 97 of his years at bloomberg yesterday and he addicted that the fed would be stuck in a Stimulus Program known as quantitative easing for some time. He said that that would have an Interest Rate impact. As long as there is one dollar of quantify quantitative bond buying easing, sayingill be sequencing that the policy tool on Interest Rates has gone down to four or zero. You are not going to do that. Still,ertainly true, that we are perhaps a couple of years away from the potential for these Interest Rates to rise. Didom keene is with me, who the interview. Is that true . As long as there is one dollar and bond buying, you cannot raise rates . It is prodigious, spilling out of government. Whenever you Start Talking about greek letters and all of that, the idea is is wait. There are many others out there, it was a fascinating conversation and i urge anyone to see the entire 20 minute interview. It centers back to the central bank controlling the by market. Controlling Everything Else within the economy, front and center. He agree . That the fed buying program has lost effectiveness . We have not really discussed the immediate effectiveness, but and that idea is for the old numeral normal or Something Different . He calls it the new normal, a cacophony wrapped around a more dampened economy. At the Investment Conference on housing, he spoke a lot about whether the youth of america. Ould go out to rent or buy i think they will rent. It was tied into the economic analysis. How was he able to beat his peers . This guy has been up and down. Ousted, now back up again. He has a Great Respect for mr. Gross, there is an ebb and flow in the market. What he has trading three months out, nine years out, three years out, obviously it is about getting calls right. Much more it is about the interpretation of a macro deal, selling myself here, bloomberg surveillance every morning, he wants to develop his belief in the 35,000 foot view to give him confidence at the 5000 foot level when he is in the bond market. Else you took away from him . The art market. He goes to sothebys. He goes to christies. He likes to buy art. Our art market has been fantastic. Said that the piece above my couch was worth 128. You did . It was the frame. Tom surveillance . Keene. Bloomberg surveillance. Tom keene, thank you. A warning for banks, they could not be the target, more cyberattacks. Shopping, twitter and amazon, teaming up. Do you want to shop where you get your news and gossip . Stay in the loop. You are watching in the loop, live on Bloomberg Television. Amazon and twitter, as you heard yesterday, are joining forces, announcing a new feature that lets you shop directly from your twitter account. When amazon product links appear in a tweet, they can be added to their Online Shopping carts by replying with the of amazon cart. Shopnsumers really want to that way and not just as they do on twitter right now . Eating your news and their gossip . Mary alice, the founder of graham for good. Does this make sense to you . Absolutely. Pretty much every retailer out there is trying to leverage to sell clothes. People are scrambling and try to something to streamline the process and make it easy for people who do shop off of recommendations, which we do now more than ever before. They are actually shopping via influences. Onays socialites are not the Upper East Side with disposable income. Todays socialites of the next generation are social influencers who are helping brands to sell clothes. People go on twitter and other social media platforms and. Nspire buying the problem is, trying to figure out how to get it. This merger here has tech giants coming together to make it easy for you and it does streamline the process. It puts it right into the shopping process. You never have to go onto amazon. Com. The problem is and there is a big problem, as you said, social media is such a powerful conversation. Conversation, it breaks news. It is not so much about products. You think it could be a turnoff . Absolutely. I thought that this was funny it is like sitting down to dinner with the people you love the most and suddenly the doorbell rings and it is someone trying to sell you life insurance. It is literally an out right burst in on a social conversation. Maybe it is a little bit better, though, that an out right advertisement . But it is an advertisement. People are very savvy now. They want things that are authentic. They have to be creative in how they entice their consumers. They will be absolutely turned off. You mentioned some who are going directly to consumers now through social media. Calvin klein being one of them. Calvin klein created a very Successful Campaign this past my cousin. D historically it was one of the most Successful Campaigns for the brand. What was interesting was that they used global advertising. They asked 100 influencers from 20 countries, singers, actors, bloggers, to. They are all pictures uploaded. Site, ecommerce instagram had 500 million pictures uploaded in 24 hours. It is crazy, what is going on. Not that it isnt a better platform than Something Like this. You see it, you wanted. Malls, i believe that that is really the future. Digital malls where People Choose whether they can share it or buy it. They create their own. Another problem that i see with this, betty liu, i dont want everyone on my newsfeed to know what i am buying. In there,ut that everyone sees you want to get that diamond ring. How about something more embarrassing . The look latest workout equipment, i dont know. We tend to be secretive about how we spend our money. We will show it off, once we have it, but we dont want people to know what it costs. Everyone. Int. Mobile purchases are accounted for right now, over 15 of Online Retail sales. That is going to skyrocket. People are shopping on their phones. I dontsmart union but know if everyone is going to buy it. Thank you so much. Be back in two minutes on in the loop. Aol is reporting an eight percent climb in firstquarter revenue and increase in ad sales. At 100 Million Dollars, international combining its to create a company that is worth more than 7 billion in sales, the Company Selling coffee under a brand name. Groupon and its firstquarter losses deed analyst estimates for the forecast coming up short, transitioning from a daily deals site to an ecommerce retailer that can compete with the likes of amazon, for instance. Just a few minutes from the opening bell, we have the top 10 trays that you dont want to miss, right here on in the loop. Back. Come you are in the loop. I am betty liu. Bloomberg television is on the market. Are trying to grind their way higher, shaking off the worst yesterday, the most we had seen. Overnight it was an ugly session in asia, that does not seem to be spreading here in the u. S. In the First Quarter it is actually worth the estimated the janetsition into yellen testimony that starts like this. 1866, on the s p below their, more s p to the downside. We are on the markets again in 30 minutes. Thank you. Knownly trait you need to about today, alex, stay with me. Twitter, the microblogging site went into a freefall yesterday as early investors sold shares for the first time after a sixmonth lockup expired. The Stock Plunged 18 to an oh, wiping out 4 million in market value. They have been trying to introduce investor returns through higher price crude and cutting reliance on gas. Number eight, hsbc, the largest bank in the u. S. , following after asset sales closed or sold more than 60 businesses in 2011 to focus on markets to cut costs. Number seven is tesla motors, releasing firstquarter results after todays close. Seven cents per share, much less than last year, the results were hurt last quarter by falling government pollution credits. Number six, siemens, the industrial maker looking to counter the market and reporting earnings on this estimate. A sweeping reception in profits. Number 5, 2 digital, reporting firstquarter profits that eat analyst estimates. Its total revenues over 78 in the First Quarter of last year, there are. , they announced the purchase of aztec startups for 100 million. To acquisition will be key their video business, as well as program ad buying. Number three, groupon, forecasting secondquarter earnings that came in below estimates, overshadowing a surge in firstquarter sales that exceeded estimates. Sharesg in 2013, groupon went down 43 this year. Electronic arts, the videogame maker, fourthquarter profits beating analyst ,stimates for a new generation Electronic Arts announced a Share Repurchase program for may, 2016. Number one, whole foods market. Posting secondquarter profits to trailed analysts estimates. Slashing the forecast for the third time, citing a rapidly changing landscape, shares plunging as much as 18 in early trades. As if on cue, there is the opening bell. [opening bell] i want to bring in a strategist from jones trading. Is stillis that there time to be there. It is still a bearish market right now. Or is it the opposite view . Are we still in the throes of a old market right now . Let me play for you what he said. Continue to be under allocated in equities. If you look at the driver of markets, the cost for earnings, the past 17 quarters, no more positive surprises. So, you say to ignore that . I definitely do. We just had human gdp that fell flat. High, paying the alltime not meshing with financial markets, there is a divergence that people need to watch. Creating a selling opportunity it is time to be more defensive. Other than the fact that we have had a sixyear bull run, what is your case for being defensive . If you look at the Earnings Growth that we talked about, a lot of that is Financial Engineering with Companies Buying back stock. The u. S. Treasury has taken over over the past year, still 20 below those levels. Corporate profits are 30 higher. It is kind of a strings and mirrors approach that you have to be aware of. You have to be aware of these underlying drivers. A lot of it is fancy accounting. We all know that there is no real Revenue Growth out there. Mike, you like precious metals. Into that case . Year after year, if you take a look at the fiveyear chart, it looks relatively ugly, with inflation and improving the u. S. Economy and pulling back on the stimulus. A slow grind lower as investors are scarce. Taking a look at where investors are, they are responsible for the record high. Now holdings in april fell 1. 6 . That might be bearish regardless of how much physical gold china and india are buying, betty. That is a perfect example of a contrarian move. Investors have already sold their gold. You want to go in there before they come back in. Who is going to get them back in, though . They have been selling during the ukrainian crisis. Gold has had a twoyear bear market as people foreshadowed this low inflation environment. You can see disruptions in all kinds of commodities. Place to hide. Is now a good entry point . We are talking about defenses, right . We are getting pretty good deals. I am so glad that you guys are talking about timing. Yeartoyear utilities, not an excitingbe sector, but look at that, the s p is up only one percent. That is the second top performer. It has been a great run for utilities, looking forward to the expected earnings you will see that the earnings momentum in the First Quarter did appear to peter out. According to the Bloomberg Survey it will only come in at 4. 1 . Is this really the time to buy in . Given the run that they have had since january 1 . Utilities are a defensive place to rotate into if you need to hide and be invested in the market. That is the utility sector. We will keep a lid on treasury yields, i think you could be in utilities. Political risk, up taking here, providingn should be support for utilities or a personal higher. That is a good point, though, with everyone going into defenses is in that creating a lofty valuation . You are right. The reason i am so bullish is you have Consumer Staples trading at 18 times earnings. What you are seeing going on is investors selling growth names. In a lot of cases, highquality bluechip. Is a bearish sign, these people are buying blue chips not because they like the names, stories, and companies, but because they need to remain in the market. It is not for the right reasons that people are buying and it is a bearish sign for the market. Roark,ael or michael thank you so much. Coming up, alibaba, hiring a formal Media Executive with a big wallet and bigger ambitions. And new york governor andrew onmo announcing a new report Cyber Security. We will talk about the growing risk of a major attack on u. S. Banks. Are they prepared . We will wait just a few minutes. Stay in the loop. Well, we officially have what could become the largest ipo ever. Amazon of china, has everything. Online payments, music streaming, and ecommerce. To get to the bottom of what they do, we answer one big question, how do they use it . How do you use alibaba . While they do have subsidiaries focused on mobile payments and Online Shopping, they are originally dedicated to connecting businesses with other businesses. Let me show you. So many of todays Consumer Products are designed and built in china. What ali baba. Com does is connect those businesses around the world to those selfsame chinese manufacturers. Lets say you are a small american store. You go to the site and type in alarm clocks. What is different here is there is no by stag, meaning you have to haggle or bid. But to find an alarm clock you like, you can contact the seller directly or bid with a payment. Your payment, leaves an escrow account you can deposit money and. There is usually a minimum order size for economies of scale. Usually leaving the shipping margin lower for the buyer. As far as customs . That is entirely up to you. Ok, so that is how it works. As the company prepares for its ipo, they are leaning on a former liberty Media Executive to scout out investments in the u. S. Jon erlichman has been digging into this push to buy american companies. Who is helping him, john . A man who used to work for liberty media, he ran there is commerce operations for some time. If you go through the ipo prospectus, it is clear the company has been making acquisitions and will continue to make acquisitions. The u. S. Strategy has largely been to buy stakes in companies. Not unlike the folks at liberty media. Even before michael got there, they had require had acquired a stake in shop runner, a Young Company run by the former yahoo ceo, scotter yahoo thompson. Before they came they really ramped up their investments in lift, tango, the Company Behind that. First dibs is a commerce platform. This,ll see a lot more of alibaba and its name popping up alongside other venture capitalists buying stake in other related Technology Companies in the u. S. Will be see out right acquisitions . This is an important question. If you think about the strategy so far, buying stakes in Companies May be allows you to avoid the headaches that come without right acquisitions, the regulator questions, the government questions, and in the meantime you can learn a lot about different areas. This company is obviously interested in learning about the mobile platforms in the u. S. , and why not . At some point you would think that they would think heavily about doing something more significant. Trying to winy over u. S. Businesses . The other thing that stood out for me in the prospectus is not just that they are targeting american and american investors, it is american businesses. They have examples of how they can help cherry farmers to sell more cherries or for bakers to buy more accessories to tie to their small businesses. Or a Yoga Instructor who can purchase specialized yoga mats. There are the examples that people will talk about, big american businesses that use alibaba. Disney, apple, procter gamble, they all used it to create virtual storefronts. It is just as much about getting the word out to businesses in the u. S. About the power of what alibaba can be. , withn, thank you so much that info on the ambitions of alibaba in the u. S. Still ahead, new york is attempting to protect banks from the risks of growing cyberattacks. That is next. Time now for our global outlook. The financial resistant Financial System relies on safe banking. Andrew cuomo is stepping up his game, making sure that he secures himself against cyberattacks. Their systems are strong enough, they are tasked with getting this done and they join us now. They say they are prepared . Looks like a cyberattacks our everincreasing. We need to vote as regulators and in industry. Looked at 100 54 banks . The survey lasted for about a year. The largerpared than ones . 80 of them in upstate new york. That they are not trying hard, but they cannot spend the hundreds of millions of dollars that we are seeing spent. We have to do more work in ensuring that the Smaller Banks are adequately prepared. Sometimes it is the Smaller Banks that lead hackers into a larger system. What kind of attacks are they seeing right now . We see attacks to get peoples personal information. We see account takeovers. We see some activists using it to get into the Financial System and disrupt the Financial System itself. They have been thwarted so far . Otherwise we would be hearing about it. Attacks happen, the question is, how do you react to it . We can mitigate the impact. We have seen breaches that have led to problems. Otherm attacks, we saw types of attacks. But they are doing a pretty good job. Your office is going to do what, Going Forward . The heart of a bank examiner, we regulate. We really study everything we are doing. We have economists, examiners, looking at our books and records. We are going to add a component and do a targeted exam in each institution to get a handle on how they are doing with respect to Cyber Security. It will be a 300 60 degree view of all the Different Things they should be doing. A are you going to have different set of standards . Absolutely. What about banks without the resources to comply . We will help them with that. The exams are always tailored to taking a realistic view of the resources that each Bank Institution has. To the extent that an Institution Just cant do what we need them to do, we will have to come up with other solutions. You cannot put a bank out of business, but you can work with them to figure out better ways for them to protect themselves. How do you judge whether or not they are prepared or not . It is more than just throwing money at this. How do you figure that . We looked at a lot of different aspects. One is governments, frankly. Organization is worried about Cyber Security . Just your i. T. Department . Does someone in your see suite worry about this . When we see sophistication and what it can do to the system, we want to make sure for example there is serious governance. A great point. Have cybers start to security chiefs . Should there be a separate role in place . Some of them do. Some of the banks doing the best job do have Cyber Security people and that is their sole function. Again, smaller bank is less likely to do that. And upstate bank with 50 employees is less likely to do that. But there are a lot of Different Things they should be doing. They should be keeping up with emerging technologies. They should be sharing information. In our report we encouraged our different banks to join into an information sharing service out there so that they can share their experiences and anonymously learn what their competitors are experiencing, to get more prepared. Are other states doing this . Think the federal government is doing a lot of work in this area, on numerous levels. Right, benjamin. Thank you so much. The new york superintendent of Financial Services on thwarting cyberattacks in the system. Tomorrow we will have an exclusive interview with the always outspoken ceo, sheldon adelson. Do not forget, Janet Yellens testimony on the hill begins in just a few moments. Past the56 minutes hour, meaning that Bloomberg Television is on the markets. Up by fours p points, trying to recover the most in four weeks, the nasdaq is down by 16 points. In the First Quarter, it was down more than estimated at 1. 7 . To bonds, taking a look at the treasury market today, prices falling, yields are rising after Janet Yellens comments on the economy to congress. Over the past month it has been rising. Maccarthy at jefferies is expecting allen to be cautiously optimistic about the economic with inflation posing a risk to the economy, watching what she says about that, we will have complete coverage of testimony. They begin they will begin testifying in a few moments. So far this year we have seen a large advance on crop prices, drawing investors back to agricultural funds for the first time in years. A Elizabeth Campbell joins me now with a look at what is driving those crop prices higher. It seems like it is so whether driven as opposed to other commodities, which can be speculatively driven. Look at how high they are going. Prices on the standard and poors index, crops at more than 20 since the end of december. Are betting that the rally will continue. Their bullish fund fivefold since the end of december . Why the high side . Cropweather and prop prospects. I spoke to the chief officer at requiem trading and he said that with the growing pop growing mobile population, investors should really look at exposure in these types of commodities in their portfolios. It could just get even worse. El nino has a better than 50 chance of hitting more havoc. What does this mean for consumers . Will i pay more for my summer corn . Unfortunately the answer might be yes. Costs climbed to a high in march and it looks like u. S. Consumers might be facing the fastest food inflation since 2011 this year. ,igns are already emerging chipotle, mexican grill, kraft foods, citing increased commodity costs from port to dairy and coffee, eroding eroding Profit Margins and increasing the chances that restaurants will raise money prices and prices at the grocery store. Because it is when they lock in those costs. This year and might be ok, but once it is 2013 that is the issue. If you take a look at the entire crop world, what is the worst one that has the worst upside with weather . By far the biggest gainer has been the coffee market, prices are up 80 since the end of december since we saw the drought in brazil in the First Quarter, the top grower and exporter of coffee, the dry conditions just eroded crop prospects this year. Led by a 44 gain and hog futures. Thank you so much for the outlook on crop prices. Do not go anywhere, coming up, full coverage of the fed chair, Janet Yellens testimony. Good morning, everybody. Welcome to market makers. Im Erik Schatzker. Im Stephanie Ruhle. You are looking at capitol hill as the joint Economic Committee is about to hear testimony from janet yellen about the state of the economy. Her Opening Statement has just been released. My colleagues are poring over it right now. Peter cook has the headlines. The mes t