Transcripts For BLOOMBERG In The Loop With Betty Liu 20140519

This is a major escalation by the Justice Department. Without question. It is something officials have been hinting at for the last couple of months, maybe even as much as a year. The head of the division has said there are a number of prosecutors dedicated to looking at economic espionage. Everyone tiptoes around, whether or not it is china, everyone has assumed that is the case. This is a big deal. It covers as many as five individuals with connections to the Chinese Military. The first of its kind against a Foreign Government. These are for economic espionage and an official i spoke with is saying it is Household Companies you and i would be very aware of. You will see the attorney general, out as well as officials from the Justice Department. In terms of the relationship between china and the u. S. , the treasury secretary is just over in china last week area and you have a Strategic Dialogue going on between the countries. Ciber is one of the issues where the governments have major differences. Help relationst at all. We will see more on the reaction after the 10 00 a. M. Press conference. Storyg to our other top this hour, at t 48 billion takeover of directv. Alesci has been digging into the nuts and bolts of the transaction. Tell us what this means for the industry. They are trying to get their head around how to survive in a world where you have declining demand for voice and paid tv services. It is tough to see how that addresses that over the long term, because, fundamentally, people want to watch more and more video mobile he. It does allow mobily. To bundlelow them services and match it with a paytv product. From that standpoint, it helps them with the bundling. Maybe they really need to be in the game. Is that what some people are saying . Some analysts are saying they have run out of ideas. Lets put this into context. At t needs the cash flow. They have to support the . 40 dividend per quarter. This allows them about two point 6 billion of cash flow, at least that is what direct is throwing off right now. Plus, you have leverage with the content providers. You have another 28 million subscribers combined. That is going to give you a lot of leverage to bring down some of the content costs, which by the way, for directv, are pretty high. If you look at both satellite providers both erect and dish, they have both direct tv and , the deal will be to get the programming costs down. Down. Y are both this sets the deal part. You have seen both of the inquirer and target price go up. Investors are not crazy about this. Maybe there is some concern being crazytors not about this. At t tryrs ago, when to buy tmobile, they had to pay 3 billion breakup fee because regulators were saying they would not approve the deal. There is no reverse breakup fee. Off onans they will sign the deal or directv was too desperate to get the deal done. That is entirely possible. Thank you so much. 15 unless she our deals reporter. She raises a question. Alesci, she is our deals reporter. She raises a good question. Question, are there enough people in the sec and Justice Department to review these two deals. It complicates the comcast time warner deal. At the end of the day, despite the cry, the bid is getting air. The lobbyists i talked to expect this deal will win approval. Probably with some tough conditions. You have to look at the footprint for these two companies. They compete in one particular area. There is overlap. They have a 5. 7 million customers. They compete directly. At t has anticipated some of this and is making an offer to the government in this deal with directv, three separate items in the deal that are noteworthy. At t is committing to abide by the current Net Neutrality world rules that have been in place. Theres no obligation for them to do that. Comcast is the only one obligated to meet those requirements. They are also offering to expand Broadband Access to 15 million customer locations, particularly rural locations. That will be pleasing to folks in congress. There also offering to bid in a spectrum auction. It is a big number. There are some conditions to that. The government wants big bidding in that auction. That is another move at t is taking to try to sweeten the deal. To have anyoing effect on the comcast Time Warner Cable merger . Youll have a lot of public advocacy groups saying the bigger getting bigger. At the end of the day, it may help the chances for the comcast time warner deal. Someone else is getting bigger, but we need to be able to compete. It could be justification for comcast time warner. In pault to bring sweeney. I saw you nod your head when peter said it might help the merger. Is going to say, our central argument here is the broadband business, the paytv business, the telephone telecommunication business, theyre all consolidating and will look like each other. We need scale because of the innovation. The Capital Spending continues to go up. Are fighting in trying to compete against the overthetop, internet enabled broadband. We need the capital and the scale. We need to get bigger in the face of this new technology, i. E. , the internet. Does at t buying directv makes sense to you . It does. Many of its investors would have preferred of buying dish. They would have gone a lot of the valueless wireless spectrum that dish has amassed. That may be more valuable for at t, but the rationale for buying directv today is you get a tremendous amount of cash flow from their domestic paytv fund the which can dividend. You get the latin american business, which is a great growth story. Be one ofgen seems to the last people standing at the dance. Verizon may have to think about some type of transaction. Mentioned they would be interested in talking to sprint. Was adamant on the n attractivee are a company. We have paytv in the u. S. Will they be putting up a for sale sign . He said we are in a great position. Some point, somebody is going to have to go to them. Thank you. Moving and shaking this hour, Jill Abramson. We will hear from her for the First Time Since she was very publicly hired last week. She is giving the commencement address at wake forest university. Her supporters say she was fired for being aggressive and tough. Those are traits often upraised le workers. Abramsons speech begins at 9 20 a. M. Eastern time. You can watch it on our live tv td. Nel, bloomberg. Com v. Ryanair sought first profit decline in five years. Fares keep falling below single digits, which means the carriers putting more into making the Customer Experience better. Great to see you in the studio. What happened . Great news for customers. Fares fell in the second half of the year. Are up, forward bookings are soccer. I think we will grow more strongly coming forward. We started taking delivery of our new 180 boeing 737. I thought demand was coming back. Demand will always come back if your prices are falling. It is probably a reflection of the european economy. As we moveain signs through summer. I think it is looking good. Pricing for the first half looks reasonably strong. Our guidance is for a significant rise in profits this year. Based on fair increases . Quick some more services to , for bookingsts are so strong. How much can you raise prices . We do not want to raise prices. Our load factors have picked up by 2 percentage points. We expect that to go through the summer. We are already at 83 load factor. That will be a strong performance. Havent you been moving from smaller airports . Closing down some 200 plus routes in smaller airports . Of we are moving in some of the more primary airports. The primary airports are coming to us. You look at the ones in portugal, greece, italy, they are saying, come here, were worried about our flag curious. They will go bust our flag carriers. They will either go bust what do you offer . Whenwer fares and growth their flag carriers will have to restructure and cut routes and traffic. Switch. Lf was a they closed one airport in warsaw for runway repairs. Were moving back again. Does that mean you will be getting into more Business Class, the higherpaying passengers . Moving me product of market. We are europes number one airline. Like a lot of retailers, we want to move midmarket. Were are going after families, we are rolling out a family plan at the end of june. Will you do a Business Class . Not a Business Class, but fast track to board the plane first and off the plane first. They dont want Business Class, they dont want to be stuck on airports use. Queues. You said you would never be at heathrow or Charles De Gaulle in paris. How can you service the Business Class . To go to chooses heathrow. It is a nightmare. You have to. Not really. In progress airport husband. We will serve a lot of the main city airports, but we will avoid hubs, you losest so many flights per day per aircraft. The ones who are not connecting on to want to avoid Charles De Gaulle and heathrow and they are switching to ryanair. You will never be at those airports . Never. Michael oleary, the ceo of ryanair. Where target shopper will target shoppers stay loyal . Plus, we will take you inside the room where starbucks determines whether coffee is good enough to drink. It is like tasting the best wine. It is a lot of fun. We will be back. Achieves 60bank million shares sold, raising 11 billion. Hans nichols spoke with Deutsche Bank about the sale. To get one step ahead and preposition ourselves with a buffer. That would put us in a strong position. Was why 8d question billion . There is no science to that. We started with a ratio of 9. 5. Hans joins us now. I must be talking about banks. When you look at Deutsche Banks argument, it is essentially one of timing. There will be new changes in europe later this summer. That could be litigation costs. He doesnt quite know what those litigation costs are going to be, how big they are going to be, or the impact it will have on the bank. Listen to what he had to say about it. Bank continuehe to do business with banks that face a criminal play . That is a hypothetical question. We expect theme, to plead guilty in the coming days. Will Deutsche Bank do work with Credit Suisse if it pleads guilty . A hypothetical question, hard for me to answer without knowing all the facts. Got my sound bite scramble. That was the one i wanted to end with. There are so many unknowns out there about what could happen in terms of systemic risk. Basic takeaway, they think they can be a global player, they have a once in a generation operation, fewer competitors, but they want to be an investment bank. You have seen that entire section be hammered. They are regrouping and will have more capital. The question is, can they weather the storm. One knows with the litigation costs are going to be. What did he say about a potential criminal indictment for Credit Suisse . This is the question i was trying to get out and i try to force him to answer the question. Would they continue to do business if Credit Suisse gets a guilty plea. He hid behind me i will not answer any hypotheticals. Onsaid it depends a lot circumstance. The context behind this is important. Hans nichols in frankfurt. Coming up, we will see if target shoppers are happy with the store after a big date of reach. Lust, it was a monster weekend for plus, it was a monster weekend for godzilla. You are watching in the loop. I am betty liu. Ge is seeking partners on its 70 billion bid for alstom. 17 billion bid for alstom. Campbell soup reported better than estimated thirdquarter earnings. It now expects sales to grow above three percent, down from a previous range of four percent to five percent. Godzilla towered over the competition. The remake took in 93 million in north america. Warners produced by bros. Bloomberg television is on the markets. Scarlet fu has more. It is time for futures and focus. Copper futures rallied more than two percent last week. That is the most since march. Joining me with a look at where copper prices are heading and how you can make money off the. Etal, greg binder greg, lets start with you. What is likely to move the price of copper. Correlation with other commodities, part of the risk on, risk off with other Asset Classes . The theme seems to be housing. If you look in the u. S. , last week we had better than expected Housing Starts in april. Lower yields for more affordable mortgages. 40 of the demand comes from china. China isng market in anything but stable. The central bank is rushed requesting lenders restrict on mortgage lending. The, combined with technical picture, which is still bearish, we have had a 10 but until in march, you get over 320 a pound, i do not think there will be any significant momentum buying coming its coming into this market. How are you trading copper . I think some of the weaker numbers we saw in prior months were due to supply concerns. It was not supply coming to the market. There was demand with a low interest rate. There are lower Interest Rates now. The numbers will be surprising to the upside. The weather has broken, but it takes time to get them to break a grounding get contracts in place. I think demand will rise. China has been stockpiling copper. I think they will continue to do that. Think you will see stimulus measures that will help that. Production has been increasing and copper. We want to be low on copper here. What is your specific trade . We want to buy copper, look forward to get to three dollars 89 cents, possibly four dollars. You are only looking at a risk and you are pretty much a 31 on reward to risk. I am comfortable taking that trade. The risk sidem first. We will want to buy copper, looking for 3. 89. If you buy copper at around 3. 18 per pound, it goes up to 3. 89, you have made it profit of . 71 per pound. The profit for the entire tree is really 17,500. When i look at where copper has been trading, it has not hit the 389 price since december 2012. You have a weak momentum picture. On what i said and maybe argue for his position, price in copper is weak and repricing gold is coming off of a relative low compared to gold. That could be an interesting. We want to get to our word of everyone knows what volatility means, but what does that mean in the world of commodities . Commodities are highly leveraged. Higher volatility, higher risk. Theres also high reward. A major theme in the markets is low volatility. Buys,es, currencies, everything is trading at a very low volatility level. In thecould be a canary coal mine. We are seeing an uptick in volatility. With the n breaking. Going look poised as under percent. Thank you. We are on the markets in 30 minutes. You, scarlet. Target reports earnings this wednesday. A big question looms should they recover from last Holiday Season toss a massive data breach . A new poll gives the retailer a little bit of good news. Just seven percent of people said they would reduce theres ending at the store they are their spending. Does this surprise you . No. Most people know the company will take care of it. Victim ofl been a credit fraud at one point. When that happens, the Company Takes care of it. You say, i did not have that charge and they say ok. You really do not see it directly hitting your pocketbook. Overall, it does. There were other surprising findings in this poll. How confident are you in target keeping your credit and debit safe. 15 or somewhat confident. It is fairly evenly split between the different measures. They were asked if it mattered that target got rid of the ceo. 84 said it made no difference. A difference to the company. They got rid of the ceo and the cfo moved up. They have were members taking over the chairman responsibilities. Cio Technology Person who came in from out time. The only person that is really there is the ceo, who has a new job. Aboutjust got headlines steinhoff. He is staying on as advisor to target through the end of august. He gave some of his pay details out. 13 million. Earn that is half of what he earned the prior year, but he does not have to get back and hands retirement benefits. Back. Ought to give more it cost hundred Million Dollars for this mistake. Is a problem with a lot of these companies. They need to get down on the floor. And articlethrough that came from an employee on gawker. Fire this employee wrote in to gawker and said the entire team except the cmo needs to go. Everyone was homegrown and targetized. The response of jeff jones, cmo of target. A said i have gone through range of emotions. Difficult, the speaking with honesty is a gift. He is one of the best cmos. He is a good guy. Sometimes you need outside eyes looking in. Especially when you have been a homegrown business. A good move. Tell you when you have rogue employees sending out emails to a log . The culture isnt respected, or it has gone on for too long. This will force them to change. It is a big breach with a big cost. Leading cash. T be this came at the worst time. The breach is a big problem, but that is not the only reason steinhoff will win. Keeping up,t been they have been choppy, online needs to get better. Freshness, they said they have lost that cachet. You can get a lot of things at target. Coming up, money is not everything. When it might be the right time to say goodbye to your highpaying job. We will be back in a moment. It is time for a look at the top articles trending on linkedin. Here is john abel. A lot of Great Stories this week. Including one from one of your engineers. He was a google guy and google people kind of do not leave google a lot. A few years ago, he was making a ton of money, have a lot of unvested stock, unhappy. No one was paying attention to him. He was saying this was the future and they were saying whatever. What does an engineer do . He made a spreadsheet and realize what his income would be in the following year and he looked at it and said that is not enough for me to stay. On huged his back stacks of google dollars and did very well. He did a start up and join the linkedin. You can close the door on yourself and another door will open. Do we know how much you left on the table . He did not reveal that. You can imagine what an engineer at google makes a lot of my. Adam grants, one of your writers said an email about this might be rude. All kind of done these things. If you are dealing with a stranger, none of these things are correct. If you have gotten this email, please email back to me . First you are asking, did you get this. Meetings, ior quick want to talk to you about this. Tothe person is kind enough acknowledge you, sending tons of theml, asking to introduce to somebody else, a hidden agenda, back off. It is amazing when you are behind in email how different you might be interacting with somebody. It does reek of desperation sometimes. Things match up to the data points. Quick your number one story as truth hurts. The ceo of target, going going. Ods rough an employee wrote a letter and jeff jones, who was signaled out singled out as one of the people that should say, wrote a memo to staff and then publish it. It was a very heartfelt headline tells it all kind of letter. The culture needs change, but it is very important to hear these things, we wish that people would say these to us directly, but however we hear them, it matters. Choseyou surprised he linkedin to do this on . Absolutely not. It was a pleasant surprise. Had you known . I did not. Speak toreat way to your staff, anyone interested in the company, all of the employees that follow you, it is a great way to communicate and deal with a crisis. People want that authentic voice. They want someone to be honest. Forget about the platform. The voice was pitch perfect. Thank you. John abel, the Senior Editor at linkedin. We will take you inside the starbucks testing room. Behind every successful ceo, there is a team of assistance. Why shouldnt you have one . Now you can. We will hear from a ceo of a startup that will set you up with your own virtual assistant. Stay in the loop. There is a lab in starbucks where their coffee batches will have to go before heading to stores. Sam grobart went to take a look inside. Deep inside the starbucks headquarters there is a small lab filled with rows of glasses and coffee beans. This is the cupping room. Leslie is one of the tasters. It is like a spider monkey is in here. People will say, is that a bird . Is we first thing we do are going to evaluate the green. Were are going to roast the coffee. We will pour water into the cup. We will let it sit for three minutes, we are going to skim the top of it and were going to taste the coffee. Body, looking at acidity, flavor, and complexity. This coffee has a nice acidity. It is very cleansing. What happens if you get a sample and it is not good. We do not take it. Coffee is an agricultural product. Stuff happens. Tasterming a starbucks seems difficult, but leslie assures us it is not hard. Anyone can taste coffee. You just have to be in it all the time. We are in herek tasting and calibrating our palates with one another. About coffee if you do not share it with someone. As far as quality . It is delicious. End of the day, it is a love of coffee. After 8 30 a. M. It is time for your second cup of coffee. If you are a caffeine junkie and the new york area, there is an app for you. It is a prepaid application that gives members discounts on their coffee. You testmarketed this in israel. A year agohed about in a testmarketed to see if this works. Judging by this newsroom, we drink a lot of coffee. Pay 45 a month and you get unlimited cups of coffee. That will get you the basic, american classic brood. Drinker, youfancy will get the basics. How do you keep people from and theyffee is on the buy 100 cups of coffee on this 45 a month . Much like the unlimited metro card you can only swipe 20 minutes. With us, you can only get a cup every 30 minutes. That takes the point of coming with your friend and wading your line waiting in line. We have found it is not an issue. The model is simple. We sell these plans and we pay the coffee shops per cup. We ask for a small discount on for bringing the traffic in. That is where our profit comes from. To pay it, i going go back to this fee of 45. At some point, you will lose money. If you have someone that buys a couple of cups a day. Besides the unlimited plan, we have a set number of cups you can buy. With chem, there is some risk, but it is a risk we are assuming. The coffee shops have nothing to worry about. You pay the coffee shop. To join inee shops is a nobrainer. They only have to give a small discount when a customer walks in the door. Company, it is probably only able to work in big cities. You cannot do this in a suburb. We could. We see a need for cups. Bigger cities is where we will start. We do not see any limit to extending to rural areas. Starbucks is who we have our eye on. Coming up, a failed electronic car company is getting a second chance. The chinese billionaire that wants to become the next elon musk. Legend thatck became a greatgrandfather. We are just getting started. Stay in the loop. A chinese billionaire plans to take on elon musk. This is elon musk. He just started selling his electric cars in china. He said eventually china will his out the u. S. As potential market. This billionaire wants to challenge mosque on his home turf. He plans to build electric cars in the u. S. And eventually in china. The hybrid model was placed praise for its design but blasted for its technical flaws. E says money is no object he said he will burn as much money as it takes to succeed. Bloomberg television is on the markets. Watch as at t shark shares. At t is a buying directv for almost 46 billion. We are on the markets again in 30 minutes. Alan patricof joins me. We will talk about the state of print media. Watching in the loop. We are about 30 minutes away from the opening bell. You are loop bank. You are in the loop. A confounding market. The Justice Department will charge several Chinese Military officers with online spine on american companies. We will learn more at a News Conference in just about an hour. At t is adding satellite tv to its phone, wireless, and broadband services. They have agreed to by direct tv for more than 40 Million Dollars. 48 billion. Questions about the power structure at the gray lady. Alix steel has been looking into this issue. Residel of the power with the chairman . 100 . Owned by the new urn that is in t owned by the sulzberger family. Heres how works. The company went public in the late 1960s, but the family kept power through a two tear structure. You have class a shares, anyone can buy them, but they have restricted voting rights. Sulzberger trust controls 80 of these Class B Shares. 70 of theer select board. That is about nine seats. They run the company. They approve acquisition, they issue dividends. Alas a owners can choose the rest. They will always be a minority. A can be controversial. In media, you want to control the product. You want to control the editorial integrity. Some shareholders hate this structure. It leads to lower profits and share price. You have to go back to 2007. The secondlargest shareholder tried for over a year to eliminate the class b structure. Toy got class b shareholders 43 of their vote. In the end, a complete bust. Morgan stanley dumped its entire stake after owning them for 11 years. You could say they failed in their investment . Structure is so rigid they did not have a choice. The 90 of Class B Shares are held by an eight member family trust. They have an economic interest in the company. The rest are owned by family members and a few employees. Carlos is not shares scared off by this structure. He did buy an eight percent stake. There is a possibility he could raise the state. At the end of the day, he will never get control of the company. I wonder if he wants that. Times highlights how a strong brand name and credibility can mean little as more and more are competing with the for the privilege of bringing you the news. Is alex patricof. Know you have buddy media and several other Companies Like that. The Washington Post and New York Times and wall street journal and all of these guys have these big brand names. Why cant they capture that in the Digital World . It is hard to turn a battleship. It has been a very difficult challenge to Arthur Sulzberger times staff. They have been shifting into the Digital World and it takes time. You have an installed base that is very difficult to maybe the control and ownership is part of the problem. That kind of control was designed for Media Companies to protect editorial integrity. That has been adopted, as you just said, by google and facebook. I find it less rationale for i dont know. You do not like that . I do not like that. I think Mark Zuckerberg is doing a great job and deserves to stay. He will keep his position and keep the company. Perhaps will come when he should be viable to shareholder changes. There seeing it concept is getting by. Could not getou on the New York Stock Exchange if you had two classes. I think they now allow you look at alibaba. Withe media side, Huffington Post being sold to aol and all of these other digital news sites. They had no brand and now they are valued at three or four hundred Million Dollars. At one point, guys like you did not want to touch these sites. What happen . Any things to do with animals is a hot topic. Several hundred Million Dollars . It has only been out about six months. It is growing. Buzz feed is only a couple of years old. Up were the upworthy. It is much easier to start from nothing than to take this battleship and change it. Eventually it will drive down the ad rates. Isnt that going to happen . I think it depends on what the readership is. Everyone gets a different audience. Peopleare paying for that actually do something and it is not just cost per thousand, but rather cost per click, cost per action. The Advertising Industry is getting tougher and they want to see an active audience. They will see more and more of that. Who knows what publications will rise out of that as successes. We will talk more. No one moves and shakes like mick jagger. It may be hard to believe that the Rolling Stone is now a greatgrandfather. His granddaughter just gave birth to a baby girl. He is 70 years old and has seven children, four grandchildren, and by the way, he is still touring. He may be living proof that the stones got it wrong with the lyrics from one of its first hits it doesnt have to be a drag getting old. Social media is changing the way we live and work. How many millennials spend online time and what they are doing. 1080. That is the big number. How many minutes per day the average millenials spends with different types of media. The number includes all types, even if they are on simultaneously, like your laptop smartphone. Traditional media takes up about 30 of their time. Minutes accounts to about 18 hours a day. Stay on the subject of how millenials are changing the way we all get contact content. Do you use ofns the same time . Dont ask me. Computer and iphone. I do multitasking. I try to enforce a rule in our office which is no cell phones while we are having meetings. It is so offensive. Broadly,e so particularly in the Venture Capital industry. We do it here. People hate it. People are doing a presentation, trying to get you to raise money and everybody is looking this way. What is more important . They are tweeting during a meeting. As i said before, what is happening more and more is that the advertising, that is the biggest source, unfortunately it is not subscriptions. There are subscriptions and the Game Companies are getting subscriptions. There are other people who are selling something. The advertisers are getting smarter and smarter who are to buy people taking action, buying something on that ecommerce site rather than just looking at it. We invested in a company which is linking to other sites after you go onto a site. It has a tremendous multiplier. To go on that ability an article and click on it and by that article it is important for ecommerce people. The other thing you have to remember, i was with my grand daughter the other day and she says facebook is gone. None of us use facebook anymore. What we are doing a snapchat. We do the new version of snapchat. By the way, not everybody is leaving facebook. In new york are always onto the new new thing. That is not the first time i have heard that. , whostagram and snapchat knows what it will be in six months or a year. You. Ank alan patricof, the founding and managing director. Mary miller talks to us about the conference she is kicking off, where she will speak with Money Management executives with risk to the Financial System. Shown the door and she will give the commencement address at wake Jill Abramson is shown the door and she will give the commencement address at wake. The Financial Stability Oversight Council will examine the Asset Management industry. They are holding an allday conference that will include officials from pimco, fidelity, blackrock, and other hedge funds. Merriam alarm will be catching mary miller will be kicking things off. Undersecretaryby miller. Thank you for being here. I know you have a big day planned. Explain to me how Asset Managers fit into the whole risk to the financial picture. That is the question we are trying to answer. That financiale stability oversight cancel, 15 financial regulators have a charge to surveillance the entire financial landscape. We need to look at everything and determine if there are risks that are not adequately monitored, and if there are, we need to figure out the remedies. It is the question we will explore today with Asset Managers, academics, and other stakeholders. Say there is no way an asset manager, despite their size, pose the same kind of risk as a bank does. And asset manager could pose that and how . Recognizemportant to the different Business Models in the financial sector. A bank and insurance company, and asset manager, they are all different. Are these companies built, what sorts of activities did they engage in and do those activities present risk to the broader Financial System . There is not any other entity that is looking at the question. Each regulator is looking at their individual piece of the puzzle, but this is a broader issue that the doddfrank legislation charge the fstop with taking on. Could you decide no one poses a risk, so none of them could be designated . That is an option. There are a range of remedies. We have to determine are there risks . If there are, what are the remedies . Is it presented by an individual firm, the industry, or by certain activities that Asset Managers engage in. The first up is to figure out if there are risks we need to be concerned with. Where do they reside and what is the right response. There could be middle ground between the current ground legislation. That would entail something in between . That is an outcome. There is no predetermined outcome. No judgments have been made. This is a public exercise to put all of the parties together and talk about it. We have heard that you are looking for pretext to designate these guys. Your message back to the ndustry absolutely not the case. Someone described it as fairly wonky. I will take that. I want a substantive conversation. Managementl risk factors that firms engagement, pretty operational things. In doing that, we can send a message that we are engaged in a serious and analytical way in looking at this industry. Are you satisfied that the fcc can handle this job . The Financial Stability avenue s not the that is the fstop mandate. An allday conference at the treasury. We will send it back to you. Thank you. Peter cook, our chief washington correspondent. We will be back in a few moments. Welcome back. You are in the loop. I am betty liu. We are on the markets. Scarlet fu has your take. Futures are down. They have been down through most of the overnight session. Very little has changed in momentum. We see it overseas as well. European stocks are under a bit of pressure. The 10 year yield is declining 2. 5 . That is about the lowest in six months. Highlight. Ted to above 1300. It is at 1301. India maypeculation ease control on gold imports. They are the number two consumer of gold after china. Topets count down to the 10. These are the only trade you need to know about. Alix steel joins us. Number 10, solar city. Musks shares are lower now. They are resisting the adoption of Battery Storage while musk says he sees a need for many giga factories to supply storage devices to solarcity. Avon products. Trading is higher this morning. Company is moving into brazil with fellow makeup giant, cody. Netflix. Shares are pulling back slightly from fridays rally, following the fccs decision for internet fast lanes. Soup are of campbell lower ahead of the bell after revenue came in below forecasts. Grow three percent. That was down from about four percent to five percent. Are in recovery after taking a beat down on friday when it fell as much as 48 . Investors are not pleased with its new tv deal. Carnival. Shares of the cruise ship operator are lower ahead of the bell. They doing more business in china, being the first global cruise company, the industrys fastestgrowing market. Ryanair. They saw its first profit decline in five years. Michael oleary was in the loop with me and expect to return to profitability by chasing business passengers. Go go. The Company Behind inflight wifi service. They purchased additional shares last week. Its purchase of directv. The deal gives at t a satellitetv provider to go along with its phone, wireless, and broadband services. Are slightlyt lower and directv is flat. Number one, pfizer, trading slightly higher after astrazeneca rejected its suppose it final offer of 117 billion. Over a deallemate that would create the Worlds Largest drugmaker. Dont missl astrazenecas chairman. Be sure to tune in for that. That we have been following all morning long in washington. The u. S. Justice department will announce the first criminal charges against members of a Foreign Government for Phil Mattingly joins us. This is a big move by the Justice Department. It really is. It can be traced back into 2012. When it comes to cyber issues, the u. S. And china have tipped the around each other. Suggested that it is going on. We are always wary about pointing to china, even though that is what they were erecting their complaints to. The Justice Department started a cyber unit that combined their National Security side and their intellectual property side. They brought in 100 prosecutors to start working on targeting state actors for espionage. That has grown over the last two years. We had that report back in 2013 the specifically figured people who were freeing up the up opportunity to talk about this. Willing tore more point to china. The Obama Administration is point of their concerns with china. Prosecutors have been working on these charges. Five individuals are going to be charged at this press conference today. What do we know about them . Is wet i have been told dont know the exact companies they have been targeting. We are expecting them to be u. S. Companies that are household names. It will be revealed in the documents with these charges are in sealed at 10 00. To have connections to the Peoples Liberation army. Thatur member that report caused a huge stir, the Chinese Government said it was untrue. They criticized the u. S. Government for pointing to it. They looked at a unit in the Peoples Liberation army as being responsible for a large number of companies being attacked. Youre going to see individuals are the target. This is been building for the last couple of years. Youre going to be some of the effort in that come to correction today. Could they see jail time . Very unlikely. It is clear that this is much a is the indictment as it expectation that they will ever be brought to the United States in see the inside of an american courtroom. See think youre going to the chinese willingly send people over that of been directly involved with their government. Is theyder point here have been working behind the scenes with chinese officials there in the Obama Administration trying to clarify that economic espionage and National Security espionage, make sure it is for National Security issues. Leave economic espionage out of it. The u. S. Officials have become frustrated enough that behind the scenes it is not working anymore. They are taking this to the forefront and the result is charges today. We talked about this the last couple of hours, this is a major escalation. I cannot imagine that is going to be a very healthy dialogue between the two. I can imagine that at all. It is going to be very tense. So mattingly is in washington. Makers atmarket 10 00 for the News Conference about these criminal charges against those five individuals. Coming up, facebook cashes out a day after the second anniversary of the ipo. We will tell you the huge number that comprise their stock rewards. Ceo in talk to virtual just a few minutes. Stay in the loop. It has been two years since facebook went public. Since then, insiders have added 7 billion to their pockets by selling off their shares. For more on the billionaires the company has made and how they are using their cash holdings, i am joined by our billionaires team. Put that into context for us. It is a very small number. They have garnered so much wealth over the last two years. Stock is up over 50 . It his made six billionaires. Zuckerberg has a network net worth of over 26 billion. 30 years old. Who are the billionaires . Sheryl sandberg. Sean parker. D wuornos severin he has never sold a share since the ipo. Eter teel has sold he has sold out most of his holdings. Than 1 garnered more billion. It is less than 10 of the shares that are outstanding. It is pretty small compared to the rest. Exactly. Zuckerberg holds his shares. He has control over this company . He has majority control over the shares. He has more than 50 . Deals. Lows them to do. E can buy himself he does not need a board to approve deals. One of shareholders are not happy . He can basically do whatever he wants. It is his creation. He has cofounders, but he is firmly in control of the entire thing. It is his company. Hasou mentioned peter teel sold out, have the rest held onto their shares . Zuckerberg had to pay 2 billion in back taxes at the ipo. He still has 1. 4 billion in cash. Goldman sold 500 million. Than 1 billion. That is about it. Thank you so much for that report. For more on this index, check out bloomberg. Com. These are the top tech stories. This wouldve in part of a strategy for wireless data. Yahoo japan decided to make things cooperate while they operate separately. To squash their intellectual property wars against each other. Are droppingts lawsuits against one another. They will work one another to reform patent law. Are dealingsmissed with patent law. Called we firm is at the app store. Itunes it has more than 1000 positive reviews. You never know what is going to drop people. Did you ever wish you had someone in your life who did take care of those mundane tasks that you dont want to do yourself . This is a service that connects the overworked with their own highly trained personal assistance. And ceo of founder virtual. Of these kinds of virtual assistance before. T . W was yours differen relationshipn the between the client and the assistant. We hire stayathome moms. We hire people with disabilities that stay at home. We connect them with a busy entrepreneur or a busy Small Business owner. They act as a personal assistant. A book talked about this in india and how popular it is. 100 a month for a certain number of hours. You are charging 199 a month. What do you get with that . You get eight hours of service and you work with your assistant and they can do everything from book your travel and manager calendar. My assistant does all of my travel and research for anything like an interview like this. If we want to move the business in another direction. Why are you more expensive than india . It is supporting jobs in the United States. The quality is different. It is something that i could get kind a lot more. What about the privacy aspect . It is one thing to let somebody do things for you, the what when you about we get into Financial Information . Signr employees agreements. Our clients decide if they want to share credit card information or passwords. We have thirdparty software that keeps everything compliant and makes everything a secure. Who is using your service . We have several thousand clients. They are mostly entrepreneurs and smallbusiness owners. They are busy professionals, sometimes working parents. I could see that. There is a limit. People are not there physically. There is a limit to what they can do. Is that what you accept . We partner up with Companies Like Home Cleaning Services or Running Services or flower delivery or even a cooking service. Are busy andnts have not had time to go grocery shopping, we have a partner that can handle that. We have a cleaning service that will take care of your house. How did you come up with the idea . I have been using virtual assistants. That sparked my interest. Studentsome college and i love the aspect of creating jobs. I love delegating myself. Like an awesome industry to break in and try to disrupt in a meaningful way. Thank you so much. Since the six years transactions were made public. The trek from rome to paris has come to an abrupt halt. We will have much more in a moment. It is time now for global outlook. Ordered putin has troops back to base. After are to return finishing exercises. Besian Prime Minister will sitting down with bloomberg for an exclusive interview. That is to marlowe. Be sure to stay tuned for that. In switzerland voters have rejected the highest minimum wage. The proposal was for workers to be paid 22 francs, or 22 per hour during three quarters of the voters rejected that plan. The former french trader was taken into custody i French Police after prosecutors say he did not turn himself in and was a fugitive. He is facing prison time for a banking loss. He met with pope francis earlier this year and went on a walking track after that meeting. He went from rome to paris. This a be the first bank in more than a decade to admit to a crime in the United States. We have more on the story. Ed, what should we be watching for your . Would be a guilty plea to conspiracy charges and a 2. 5 billion fine. This is the first time anybody has pleaded guilty in over a decade. The firm will not have to disclose the names of the u. S. Account holders under the terms of the agreement with the prosecutors. They will only have about 220,000 names they had been looking for. These are american to have abated taxes. Potentially, this is very serious. Prosecutorss are careful to lay down the this runway. The revocation of the u. S. Banking license is not going to happen. Are they going to lose pensions or other clients . They cant do business with a criminal enterprise. And push off the credit line for borrowing . It looks as though people are being very careful about this. The people we have spoken to say it is still there. What do we know about why they were singled out quite as . The Justice Department has been under pressure to show that they can prosecute a bank. They have not really singled out Credit Suisse. It just happened that way. They settled much earlier in this process. They have changed the management already. Banks going to see other in similar situations look as though they are being singled out by sanction violations in iran, cuba, and sued on sudan. They will face fines as well. Ed evans thomas thank you very much. That does it for us today on in the loop. We will see how people are adapting to the new healthcare landscape. 8 00 a. M. Eastern time. On the markets is next. It is 56 minutes past the hour. Up we are on the markets. I am scarlet fu. We are 30 minutes into the start of trading. The scene is weakness. 500 had its first backtoback losses since january. They are struggling to get above the unchained line. The nasdaq is gaining slightly. There is no Economic Data on the calendar. The momentum overseas is to the downside as well. European stocks are falling at the moment. They are losing almost one point. They are moving above 1300 an ounce. Indian elections are possibly. Asing gold influx they are the number two consumer of gold after china. In terms of treasuries, you have to look at how they have gone well despite expectations were people who had anticipated it to be a losing year for treasury investors. Not everyone is convinced what they are seeing is what is going to hold. Lisa bravo whats joins us. Lisa brahma whats joins us. They thought treasuries would selloff in yields would rise. The fed will carry the monthly bond the purchase. That will send yields higher. Prices will be lower. That has not happened. Yields on 10 year private 10 a benchmark. Es are this is the lowest in more than six months. This is against what everybody thought. A lot of hedge funds were betting on volatility and they have lost. They hate this rally. Are they scaling back . How are they position themselves . Are betting against treasuries. The consensus is that yields are going to rise. Now is not necessarily a time to pile on because this has been the trade so far this year. I do not see the catalyst for what would make yields drive. I think a lot of people are saying the same thing. This is cycling back into treasuries. A lot of Central Banks globally are holding onto treasuries and not selling any time soon. Or they are not signaling that. Where is the pressure coming from . There is another point. People are getting older. Toy want more conservatively position their cash. They dont want in a higher beta investment. They want the security of a coupon payment. Adding to this is the European Central back saying that they may start a Quantitative Easing Program of their own. You have yields dropping over in perhapspeople say that there is a better economy in the in and it states. There is more security and securities the look as bad. Funds hedge fund a lot of Hedge Fund People have made bad comments about the economy. What did we learn . Now as of the time to pile in. We missed it, but this is the time you have to be bearish. You have economist forecast its a yields will rise from 2. 5 up to 3. 25 by the end of the year. They are sticking with that. This is the consensus. This is not necessarily the time to pile in. We will see how this all plays out. For joining us from bloomberg news. We are back on the markets again in 30 minutes. Market makers is next. Live from bloomberg headquarters in new york, this is market makers. The u. S. Justice department accuses the Chinese Military of an organized Cyber Espionage attack against western companies. Eric holder will