Are economic warfare. The eu has accused jpmorgan and other banks of colluding to rig interbank lending rates. Agricole weret also accused. Taking on the ipad. Microsoft is going to take on the ipad mini. Satya nadella expected to unveil a smaller version of the today with a qualcomm processor. Cory johnson is in new york. If you fail to make an ipad killer, try to make an ipad mini killer . Go small or go home. Microsoft has failed in the marketplace with the surface. The push of a push of a push and are trying to the corporate deals and big sales in a large institution. They are spending a fortune on marketing and getting this out there in the public eye. They are getting Product Placement and every possible tv show they can get it into. To make it seem like people are using it but in reality people are not. Fundamentally is it not a good product . One of the things we see havening is market leaders this experience with certain apps and they want to stay with them. The product has not been as good as the ipass. I would not be surprised if microsoft catches up. Their funds are fantastic but they have not caught on in the u. S. Do they need to do more marketing . What is it that they have to do . A recognize that the biggest change has been a movement away from the desktop to mobile. That is continuing. There is a generation of people who will never really used desktop computers. Microsoft recognizes how important this is and i is why they keep coming out. Having to make their own device because they cannot get a partner. Aware has done well . The places it has done well are nowhere. Really . They have had some Corporate Sales and a couple companies. They have not really gain market share in any geography or any region. I think one of the signal moments was when they decided to put Microsoft Office into ios. They were losing so many users. It is not a very big business for microsoft. What this really is about is making sure the rest of microsoft stays relevant. But they have an offering so the other stuff they do in the cloud and the Enterprise Computing has a foothold. Thank you so much. Great to see you here in new york. Stay with me. Another story i know you will definitely chime in on. Moving and shaking this hour, the founder and ceo of gopro, the maker of Action Sports cameras. They are going public. Daredevils from bikers, used the cameras to take videos. Companyr, woodmans almost doubled sales. They plan to position itself as a Media Company. Woodman founded the company a decade ago and has 49 of the voting power. He does not control the company. Have you met him . I have never met him. I met him at the facebook conference two years ago. He is really sharp and focused on what his business is and how his business works. I did not look at the filing last night but when i talk a year ago they were doing over 200 50 million in annual revenue and i suspect it is more now. Being a Media Company, when i metat a certain building i some of the gopro people. They were not there selling their product, they were there to take video for a company. They were basically creating content for another company. They want to create that content and get that business. The whole world of extreme sports is something they are so wedded into. It leads into other places and they have a shot. The way we consume media is changing so much. We have not been able to confirm that google is talking to another business. Is that gaming . Videogames who want to broadcast their own video game play. It is something that is watched by tens of millions of people. If you are not one of the people you would not know it has exists. Gopro is the same way, in a certain community. We will see more of that. Cory johnson from our bloomberg west editor at large. Russia facing fellow from the westict in crimea as the putin puts sanctions on putins country as the west put sanctions on putins country. Dmitri medvedev sat down with Ryan Chilcote in a bloomberg exclusive. He spoke about the visa and mastercard relationship with russian banks. A great number of our people are used to using foreign Payment Systems, mainly visa and mastercard but also american express. Other Electronic Payment Systems are also widely used. Let me speak about what happened. I will not be focusing on the sanctions and political decisions. We shall consider that an act of parliament or god in anglosaxon law. Ordinary holder of an international bankcard. To be more besides, a russian card issued by a foreign payment system. There are 200 million cards of this type in the country. I do not have a relationship with a foreign state. I have a relationship with the bank that issued my card. It never occurred to me that my payment is dependent on the political stance of a foreign state. I would like to know that in accordance with law, visa and violated client to trust of the Payment Systems. If i am a lawyer, i would have spent my time and effort to take this Payment Systems to court. Thatent you concerned visa and mastercard, as you said were just following orders, in a sense, from the treasury and the u. S. . They could leave the russian market. Like to reiterate that we do not want visa and mastercard to leave russia. Our cooperation has been quite productive. However, i believe that before taking such decisions those companies should have thought about the fact that such actions , responding in such an awkward er to a request for more on this exclusive interview with the russian Prime Minister, Ryan Chilcote joins me now from moscow. Congratulations on getting that exclusive with him. What was your big take away overall from the interview . My big take away was when the Prime Minister said that the current standoff with the west and the u. S. Could lead to another cold war. Those are pretty strong words. We have heard other people characterize the conflict in that way but from that to come from the government is really notable. Considering that Dmitri Medvedev was the president of russia and now Prime Minister. Architect of the socalled reset of russianamerican relations after president bush left office. There is a lot invested in his relationship with president obama. To talk about the idea of another cold war and the idea that, for example not even in the darkest hours of the cuban theile crisis did either u. S. Or the soviet union imposed sanctions against one anothers officials. I found that striking that he sees a real similarity between what is going on now and the battle days of the soviet union. It is remarkable. Weve raised a point about his relationship. President obama has been urging ceos to stay away from russia to stop doing business there. And did he have anything to say about that . He does not like it. He thought that his point was a reminded him of leonid brezhnev, the leader of the whoet union for a period, did things like that and try to politicize trade. He says it is a dead and to Tell Companies to follow in certain ideology. He said it is regrettable that most ceos of u. S. Companies have elected to take the advice from the white house i would not be coming. But the deputy ceos will be there. He said the russians are not going to dramatize the situation and they will deal with whoever they can going forward. You so much. K Ryan Chilcote in moscow with the interview with the russian Prime Minister. Credit suisse is facing punishment from the u. S. The swiss lender pled guilty to helping americans evade taxes, paying 2. 6 billion dollars to end a threeyear probe. For more, jon ferro is in zurich. What are the consequences of this guilty plea . The consequences are twofold. Start with the politics. Scales the big investigators wanted. As for the business, that is the real unknown. One of the consequences of the lt fleet for the day today one of the consequences of the guilty plea for the day to day operations of Credit Suisse. Brady dougan says he does not see a Material Impact on the business. On the client side, that is the hangup. Do any of the clients have internal laws that prohibit them from doing business with an entity that has admitted guilt to a crime . You ask analysts that question and they do not have an answer. This has got a lot of uncertainty. It certainly does. What does this mean for the ceo brady dougan . If brady dougan is going to leave Credit Suisse we will know about it. I sat down within a month ago and asked the question, he batted it away. Going for the message from Credit Suisse is simple case closed, back to business. Outside of the bank the big debate in zurich today that has been for the last six months, could Credit Suisse management have handled this better . Why did ubs settle for less money . Why did ubs settle without a guilty plea . When you listen to the Justice Department and the u. S. Attorney general, it does not give Credit Suisse a ringing endorsement about how they conducted themselves throughout the investigation. Listen to eric holder, he has called this a wideranging conspiracy. Guess what . Expensive maybe, no one at Credit Suisse at the executive level numeral is happening. What happened to oversight . Thank you so much. More on the story. Jon ferro in zurich on Credit Suisse. Coming up, new laws and big deals. A company is now strategizing its peers in health care. Sync crime does not pay . What the real wolf of wall street gets paid for making speeches. An outstanding sum. Stay in the loop, we are just getting started. You are watching in the loop, live on Bloomberg Television. Streaming on your tablet, phone, and bloomberg. Com. Bloomberg is hosting a cfo conference. Looking at the changes in the boiler room. Companies looking to see your photos to fill the top photos. John mulligan was just named the interim ceo of target. There are some famous shakeups. From pepsico to time warner more. Darden, those boards elevating their ceos to the top. The chief Financial Officer of Consulting Firm pricewaterhousecoopers will be speaking at our conference. Great to see you. The role of the cfo changed . Maybe made it even more appropriate to look to that c sition to become the her of the company . The next leader of the company . It has changed. In the first 20 years of my career, the Business Models were not changing at all. Today, with rapid changing scarcity of and the Skilled Labor, we have operating all businessest that are changing. That is forcing the cfo to have a seat at the table with the ceo and really pushing the strategy if a Company Wants to grow. Are the cfo is usually at the forefront of this changing Business Models . Are, the Economic Impacts of those strategy decisions are being impacted by i. T. And talent scarcity. Cfos have to work on the economic changes that are happening because of those issues. I have one theory. We have seen companies have a tough time growing their top line revenue. It has become more important to control costs and to eat cap efficiencies. Maybe that is a reason why cfos are becoming bigger stars . The reality is as we move forward and we see growth of an economic imperative for all companies, what we are really looking at is how the Business Model is changing. Forceghly Skilled Labor that most of us experience is a huge part of what our total yes, hiring is big. Those costs are scarce because of the aging demographics, particularly in the u. S. And in the west. What we need to do is find different ways to both attract that Skilled Workforce and more importantly retain them in a longer term. Those costs involved with people costs are a real challenge and we need to look bad in terms of changing Value Propositions and working towards different models of using unSkilled Labor and Skilled Labor. The cfo is part of working that this is mild to make sure we have a sustainable profit going for. Break that down into regular language for me with a Value Proposition to attract talent. What does that mean . Lets talk about women, for example. Our workforce. The old Business Model for professional services was you joined and you worked hard and there was natural attrition over time and nobody was concerned because you only needed so many partners in an organization. Today, with the growth rates that we have an unlimited numbers of Skilled Laborers coming out of our schools because of our aging demographics in the western world, we want to retain many more of them in order to continue to grow as an organization. To do that we have to not only the market for compensation. Unfortunately, which we do not hontrol and is growing muc faster than revenue. What else can we do to retain women in the workforce . What do you do . We are investing much higher in technology to make the workforce mobile. That allows the workforce to be more flexible. Where they work, anytime, anywhere, anyplace. Putting a much more skilled is that a cost to a company . Is that aom home, cost . It is a cost in investing in technology. The benefit is that you keep employees longerterm and you can get rid of your real estate costs. We do not need to provide as much space for people purely to come to work. What we can do is provide connectivity spaces for people to work together. Thank you so much, carol cfo of Price Waterhouse coopers. Will be speaking at our bloomberg cfo conference. Coming up, your next emergency room visit could be faster and more high tech. The nations Hospital Business is changing. We will talk to one major player, the ceo of tenet healthcare. Plus, stop me if you have heard this. Ban in them mark cu another controversy involving pro basketball referees. Dipping returns in two minutes. You are watching in the loop, live on Bloomberg Television and streaming on your phone and bloomberg. Com. Heres a look at our top headlines. Home depot reported firstquarter earnings and revenue that missed estimates. Winter weather slowed the rebound in housing. The nations largest Home Improvement retailer optimistic about a turnaround, raising its fullyear earnings forecast. Forers 117 billion bid astrazeneca is likely to fail. U. K. Law prohibits the drugmaker from sweetening the offer after declaring it final. Astrazeneca rejected the offer, saying it undervalued it pipeline and presented a risk for shareholders. Sao paulo, brazil was hit by a rare hailstorm weeks before the world cup. They left behind a white coat resembling snow. At the time. Al the city regularly experiences hail in thunderstorms. 26 minutes past the hour, bloomberg is on the markets. Equity futures are pretty much unchanged as we head towards the open. One retailer, tjx just reported firstquarter results, . 64 a share, three cents shy of estimates. Lowering the top and fullyear profit forecast. On the markets again in 30 minutes. One stock that has been outperforming the Broader Market is tenet healthcare. Start of 9 since the this year. The company has been moving beyond hospital operations and diversifying to highermargin businesses. For more on the strategy and the shifting healthcare landscape, ceo Trevor Fetter is joining me. Great to see you. Great to be here. A few days ago you said the deal pipeline, the quality is the best you have ever seen. Big words. This is a very fragmented industry we are in. Largest players only control 1 to 2 of u. S. Hospitals. I cannot think of another industry that is as fragmented. There has been a slow trend over decades where notforprofit hospitals converge to investorowned status. Companies have gotten bigger and bigger. Were seeing a pipeline that is better and of Higher Quality than we have ever seen before. Higher quality by what benchmark . Successful hospitals. There have always been failing hospitals available to be purchased. Now some of the successful ones are wondering how they can survive without being part of a larger system. We have demonstrated over time that there are great economies of scale and great strategic reasons to be part of a larger organization. Me ast does that mean for a patient . Lex could you can expect Higher Quality care with less variation and expect better use of technology. What about pricing . Pricing does not make a difference. We typically are a lower price than our large competitors in the market. Part of that is because we are able to bring economies of scale and operate with lower costs. You made a big acquisition last year, vanguard. With acquisitions for now . There is likely not to be something of that scale. We continue to be active acquirers of other businesses, particularly in our outpatient sector and in our business to Business Services business, Conifer Health solutions. In terms of hospitals probably smaller acquisitions. Vanguard increased our size by 60 . Wow. You mentioned other businesses. Those are highermargin businesses. That is what you are seeking . They tend to be highermargin and faster growth of their are integral to the core Hospital Business. Where do you want to expand . We like the markets we are in but we are planning to expand to new england. In connecticut we have several hospitals in our acquisition pipeline and a partnership with yellnew haven health system. We are in a very attractive market in texas and plan to expand in texas. A number of markets throughout the u. S. The country is your landscape, wherever you see opportunity. It is a big country. It is. I read an article recently that you said look, i think Health Care Reform is working a lot better than it was from the beginning of the year. That is no surprise because you have been a very big proponent of obamas Health Care Reform. The hospital industry realized there was a problem of people lacking access to Quality Health care and being uninsured. This was one solution. There could have been others for enabling people to gain coverage. Since the beginning of the year we have been waiting for this for a long time, four years basically. We have seen a fairly pronounced trend in terms of increases in the volumes of patients that we have to have insurance. And a decrease in uninsured patients in the states that opted to expand medicaid. What about the people during the Health Care Exchange debacle . They said i lost my insurance or i am now paying 20 , 30 , or 40 more. That was a mess. A technological mess and something we did not anticipate as an industry. The people who are comparing one type of plant to another and saying that the price went up dramatically often are comparing apples to oranges. Because they are getting different plans . They are getting more comprehensive coverage, of course that would cost more. Just as if you were buying an auto policy that was more copperheads of. Lets say someone is going to leave their company and wants to sign onto a Health Care Exchange. As that person going to feel confident . Healthcare reform is really going to stay. We have several indications. One is the exchanges, the commercial insurance purchased over a Health Care Exchange. That has been very successful. You do not see that changing . There is a milestone we will see in june when Insurance Companies file their new right. If rates go up, that could imperil the strength of that market. If rates remain stable you will see even more activity in the fall when the next open enrollment. Period begins. What will determine that . We ended up with a vibrant market, a lead of competitors and some real innovation. In terms ofions features and consumer engagement. The networks were good. To the extent that you have those competitors and maybe some new ones coming back in the fall with new offerings, that creates a very compelling opportunity for people to purchase insurance. It has been pointed out that you have been an advocate of Health Care Reform. Someone very common is on your board, jeb bush. People say is he going to run for president . What is he like as a director . Has that issue ever, up . Ever come up . Fabulous director. He studies the issue and cares deeply about clinical quality and Patient Safety and the Value Proposition we have. He would prefer freemarket Solutions Rather than so much government interventions. A little different. We do not necessarily prefer government interventions, we wanted more covered individuals. And if this was the way to do it this was the way it was getting done. Many would argue there were other ways and the private sector could have played a more robust role in that. He is a fabulous director. He has been there since 2007. Seven years. Is his term coming up . , directors are c our reelected every year. The best Election Results he has had. They would love that, 99 . Trevor fetter, ceo of tenet healthcare. Coming up from billionaire to billionaire. John malone has sage advice for dishs Charlie Ergen. Giants. Next for the two gopro taking a plunge. Plans for an ipo. Stay in the loop for details on how it is diving in to stock action. Of how onea tale billionaire should have listened to another billionaire. John malone made remarks at the sun valley meeting of media titans that Charlie Ergen, who cofounded dish, should merge with directv. What an idea. Less than a year later, directv has been bought not by charlie. At t swooped in and acquire the satellite operator. Leaving charlie to take himself out of the running for any big deal, including trying to buy tmobile. Joining us now is paul sweeney and Jon Erlichman. Jon, you were at sun valley last year when john made those remarks. Did he have a few drinks . That is always the best time. I recall john malone talking big picture about the fact that these days the reason the consolidation makes sense is you are not just taking on another telco or cable company. You are taking on facebook or any large Online Player that has a global presence. We have got to be able to do these kinds of deals. He has all sorts of different players and deals can be good for him. Ergen ishink charlie someone who would have always been interested in doing a deal like this. There has always been hence of this happening, for a decade. Charlie was not at sun valley. Does he get invited . He gets invited but im not sure how often he shows up, that is not his crowd. You can argue that the list of ger partners is gradually actually very quickly shrinking. Charlie is not too concerned. The stock is hanging in there. Charlie has a couple things that are going to be attracted to partners at any time one is 14 million subscribers paying cash every month. A lot of cash flow. He has tremendous amounts of wireless spectrum. If you believe we are entering into a wireless spectrum crunch over the next five years to 10 years sounds like we are. He is in a good position that he has to monetize that spectrum. Is less about him acquiring someone now and more about someone acquiring him . At this stage it is. There are certain deals he could have driven and certain deals he pursued in the past that did not work. Deal for himral where he could have had some kind of driving force would have been the directv merger. Is offmentioned, directv the table. They are in a position of sitting back we are in a good position. We have spectrum and cash flow. Both of those assets are going to be valuable. Beyond figuring out the future, the guy likes a good deal. He likes a bargain and that is some of the things he does we sit here and we are trying to put the pieces together. They do all come together in an interesting way. Sometimes he does stuff because it is a good deal. That is his thing. He is a former professional poker player so he knows how to place bets. At 1. I read that he was someone caught at one point i read someone caught him counting cards. John malone at the time was preparing for some kind of bid for Time Warner Cable through charter during that meeting. One of the things i think has been said by people like malone the cost ofammers, your cable package. It has been climbing because the of the worldbss are able to commit more. In these blackout situations where broadcasters are able to say if you do not pay us more we will not make content available. Most programmers have won, that has forced players to cough up more money. Nobody feels sorry for the paytv players. That is one of the big motivating factors behind all these companies coming together. At tdirectv transaction, which a lot of investors are still questioning. Worse, at tr for made the decision to be in the paytv business. They have to get bigger and get leverage over programmers and they have to get leverage over technology investments. A way to do that is to buy a very large provider. By with at t have bought directv and dish . Thehey were saying we want cash flow of directv, directv is more profitable. Dividend and also potentially the wireless spectrum were going to bid for in 2015. Partially driven by the financial aspects of directv. They wanted the upside to the latin american paytv business directv has. It is a fantastic business. Directv has a strong position throughout latin american paytv. Hud has a history in latin america. That was one of the aspects. It is Charlie Ergen is a factor in that . Who wants to deal with Charlie Ergen . My light mike white might be more amenable. That is a fair point. It is going to be interesting to see what charlies next move is. Everybody is talking about his interest in tmobile. Not shied away from acknowledging his interests. He is going to be potentially leading the next transaction. Felt more to come. Thank you so much, Jon Erlichman, our bloomberg west coast correspondent. And to paul sweeney. The at tdirectv combination will be a hot topic facing fcc chairman tom wheeler on capitol hill this morning. He can expect a grilling over has just proposed new internet rules on Net Neutrality. Peter cook on the hill with more. It is going to be a challenging morning for wheeler but he seems to be used to it. Bracing for ae tough morning on capitol hill. He knows it is coming and he has offered a spirited defense of his actions at the sec over the last couple weeks. Expect nothing different today from tom wheeler when he testifies in front of the house energy and commerce subcommittee that has jurisdiction over the fcc. His first trip to this subcommittee and six months. He will hear about the idea of consolidation within the Media Industry and more specifically on his proposal for Net Neutrality. The possibility that the fcc might allow fast lane for contact. The same time, the sec might regulate Internet Service providers more aggressively. This is what the chairman of the full committee had to say after the announcement of the vote from the fcc. Fred upton said with so much at stake, chairman wheeler has ignored bipartisan calls for caution. We look forward to a spirited discussion on the commissions misguided vision of a heavily regulated internet. Both lawmakers will question wheeler today. In prepared testimony that was released in advance, wheeler goes line by line outlining what the fcc has been up to and offers a defense of his own and hisor the fcc policymaking skills. Specifically underlying all the work. Addition,n, come competition. Tom wheeler set to defend himself up here on capitol hill in front of what could be a hostile audience. What about what lawmakers are saying about at ts bid for directv . Lawmakers topect voice concerns but perhaps not so many to voice outright opposition. Congress has no say in the matter, it is up to the fcc and the Justice Department. I expect democrats and republicans to highlight concerns with this, as well as the comcasttime warner deal. Theres only so much wheeler can say. Ongoing review at the fcc for both of these. Peter cook, chief washington correspondent. We take you inside americas largest fish market and introduce you to the vet w dealing your sushi craving. The wolf of wall street has a new job. This one should not land him behind bars. Stay in the loop. It is time for bloombergs big number. 100 million, that is how much wolf of wall street author Jordan Belfort expects to pull in from a speaking tour. More than he ever made as a stockbroker. The enough to make good on 50 million he still owes investors. In jailspent 22 months for Money Laundering after defrauding investors out of more than 200 million. 100 million in speaking fees. Another big number for you, 4. 5 billion, that is how many pounds of seafood americans consume in a year. The Fulton Fish Market in the bronx is the size of seven football fields. The largest in the country. Bloomberg spoke with an 83yearold who had been putting in 14 hour days at the market for 70 years. I have been doing this for so long that i do not know any other way. Fulton fish market, the second largest fish market in the world. Herb is its kingfish. Your prices i will give you a deal. We service the white house, caterers. The marriot chain, the hilton chain, all the big chains. Chances are if you live on the east coast and youre eating fish, it probably came from here. Fulton is the size of seven football fields, processing 234 Million Pounds of fish a year. Of the markets 28 retailers, herbs operation is the largest. 6 30 at nightat and i do paperwork for four hours and i come down here. Me home, ir takes take a shower and a good to my wife. Is it a three years old and has been in the fish business for 70 years. 70 years. People ate fish because it was very cheap. Decade, alast combination of overfishing and government regulation has driven up costs and increased cap edition. Increased competition. It is very high because of restrictions and our government. Pressure on the fish population is at an alltime high. Annual saless were nearly 101 million. Today it is half that. Nearly 120 million. Today is half that. Im a very good salesman, i never lose a customer. Never. Coming up, remember back in 2000 six when Dallas Mavericks owner mark cuban was so upset with a referee in the nba finals . He was mad enough to contact the fbi. A big medical marijuana vote in new york state as the state Senates Health committee looks at improving its use. We talked to somebody who stands to benefit from that. In the loop returns in two minutes. That, justversus what the nba needs another essential scandal. Fines,ban has paid comp y for laining about referees. Mad as heer been so was in 2006 when his team lost to the miami heat. A former fbi agent said cuban consulted with him. Suing the nbanew was not good business. What does cuban say about his talks with the fbi . I dont remember. Equity futures on change right now. Earnings coming out this morning. Home depot and tjx. On the markets again in 30 minutes. Coming up, j. Crew expanding. What major european city they are scouting. We are 30 minutes away from the opening bell. You are in the loop. I am betty liu. The market is coming off one of the strongest trading days of the year. A tough quarter for tj maxx and marshalls. Tjx president profit and sales that missed posted rabbits and cells that missed wall street estimates. It has been merger mania. We will talk to one of the countries top dealmakers. And in extreme sports camera maker has filed to go public, choosing to list its stock on the nasdaq. It has expanded beyond the adrenaline junkie crowded initially attracted. A reporter whoy covers this world for us. You had a chance to go to the filing. Great. Numbers look 87 growth in net income as well as revenue. Intoyou break it down quarterly numbers, you see a decline in the First Quarter, it is a decline in revenue due to product delays. A little more weakness in the First Quarter compared to annually, but overall, decent numbers come a profitable company. Strong on the fundamental side. Wantingdo they mean by to be seen as a Media Company . To diversifya need their revenue stream some more. They see some competition from apple and google and they are saying that we need to find other ways to get these sales. A lot of people post their content, the videos from their , onto and skydiving youtube, and they get 20 million hits each. See that at that and they have potential to bring in advertising dollars. Why have they decided to go public now . They were doing a dual track process, meaning they were. Ooking for a potential buyer they were unable to find it so they are pursuing the ipo track. Some loans to repay, they have some debt that they repayo be able to use to these lenders. It is important for them to go public despite some of the rocking as we are seeing in the ipo market. What we know about the founders . He is 38, i think it said in the filing. A young, younger guy cory johnson is a fan of his. He is a cool guy. He came up with this with a couple dollars in his pocket and it has blossomed into a 1 billion company. When are we going to see it list . They filed confidentially due to their under 1 billion in sales, meaning they have at least 21 days before they can start their roadshow. We should see some action their ba action there in june is not early july. Leslie picker, who covers the ipo market for bloomberg news. Julie hyman has been looking into this story for us. This is all in relation to the data breach . It actually has more to do with problems target canada is happening having on its own. Much like the core target operations in the u. S. , it comes on top of an already troubled operation. Worse. Canada is even it used to be the target shoppers from canada would have to go across the border. They like to shop at target. There was a lot of traffic going in that direction. Target said, well, we might as well open some canadian stores. They did that then saw backlash from consumers who did not like the prices at canadian stores. We saw canadian competitors undercutting those prices. It is one of the reasons that some analysts cited as at least one contributing to Rick Steinhoff full cost approach are as ceo of target the company overall. We are seeing the president of the canadian operations step down immediately. He will be replaced by the Senior Vice President in charge of merchandising operations. You are seeing an internal promotion not someone from outside the company, but someone who was already inside target canada taking on that role. In terms of how troubled it has been, it lost 941 million last year before interest and taxes. It was a hit to targets overall on top of the problems it has seen in the u. S. Because of the breach. You, senior markets correspondent julie hyman. Moving and shaking this hour, j. Crew ceo mickey drexler. He is in hong kong to open the chains first stores in asia. He is hoping to expand into europe. He told bloomberg he will head to paris in a few weeks to search for potential store locations there. He talks about how adding stores leads to more shoppers online. We have a quite large internet business. U. K. ,e opened in the Online Business dramatically increased. Important spike and also, we have shops from ,ens and womens shop here lane crawford. That is helped that business. Another company we are watching is Credit Suisse. After fitting guilty to becoming the First Global Bank in more than a decade to admit to a crime in a u. S. Courtroom. On thistingly joins us story. This is a clear shift in how the Justice Department reads these cases. Treats these cases. Without question, the Justice Department and attorney general eric holder have been stung by criticism not only from capitol hill but from all areas out pleas froming guilty banks and not sending executives to jail for their roles in the financial crisis. The Justice Department has made a conscious effort over the last 6 two 8 months to figure out a way to preserve reforms to this point and get that guilty plea. The shift is clear and it is a shift we need to watch for in cases ahead. The Justice Department officials ive spoken with say that Credit Suisse right now is the roadmap. This is the way it will go from here on out, and other firms that are facing legal trouble in the future should know that this is the type of assess the Justice Department will pursue going forward. One is Credit Suisse done to ensure investors and clients that they wont flee when all of this came down . Extensive work, and it was also on the migratory side. Regulatory side. They cited assons to why they did not pursue firms to this point is that getting a guilty plea from the bank would force the firm to collapse. Credit suisse was very clear on a Conference Call that they were reassuring clients throughout this entire process. Another in, an important distinction from the past guilty , Credit Suisse was not indicted. They pled guilty, through their hands up and said you got us, we are pleading guilty and are here to accept our mission our punishment. Justice Department Officials reiterate this to me regularly Bank Regulators were involved every step of the way. The Federal Reserve was involved with this as well. They did extensive work in the scenes to clear the way so that they would not be massive damage to the firm after this we yesterday. After this plea yesterday. Coming up, new york city has vending machines for everything. Soon it could even have pot vending machines. We will talk to the ceo of a company that reduces those machines. Onnell happy meals mcdonalds happy meals are coming under attack in social media. We will tell you what parents are so upset about now. China has halted the dialogue and threatened further catelli after the u. S. Indicted officials for allegedly pressured further retaliation after the u. S. Indicted officials for allegedly stealing trade secrets. What is the u. S. Hoping to accomplish here, exactly . That is a good question. One of the things they are not hoping to a cobblers is to get these guys in a u. S. Courtroom. Not hoping to accomplish is to get these guys in the u. S. Courtroom. What this is more likely about is to create a public record, a document in a court that has a body of evidence that the u. S. Has been electing in some cases for years about how this espionage, specifically chinese espionage, against u. S. Companies work. They want to make a decision between the kind of spying the nsa does and the kind of spying china does, which is targeting copies, targeting their technology, and handing that two that theympanies so can better compete. They say that is outside the bounds, and a totally different approach to this. Could china respond by further indicting nsa hackers . They could. It will be interesting to see what china possibly move is full chinas next move is. This has been a chess game for years. A series of speeches in 2012, 2013, by Senior Administration officials to really call out the chinese for this. They were getting ready to do a very high level rollout of the strategy, which may have included these indictments the year ago. That is one of the stuff from Edward Snowden dropped. The conversation suddenly changed and it sucked all the oxygen out of the room. It looks as if the u. S. Wants to change the conversation back to chinese cyber espionage. Is there any chance that the u. S. Could bring these Chinese Military officials into a u. S. Courtroom ac . Almost no chance come unless these officials decided they wanted to take the risk and travel outside china. In all likelihood that is not going to happen, and china is not going to hand them over anymore than the u. S. Would hand over hackers working for the nsa on officially sanctioned National Security missions. Those Chinese Companies are were listed, werent named, and they benefited from the trade secrets . What happens to those companies . It has always been a little bit of a question what china does with all this information that it steals. We know for a long time that they have been targeting u. S. Companies. The question is what they do with it. They laid out step by step the way that this information has been handed over to Chinese Companies, and in one case, a Chinese Steel Company hired these Chinese Military hackers on the side to help them build a database to store the stolen information. The indication is that these are coconspirators to a criminal act, and yet these are companies that do business internationally. That is what the question is in terms of the next step in what happens to these Chinese Companies. Coming up, egaming platforms attract people who watch other people live video games, and now google wants a piece of the action. Someone who has done deals with a number of Different Companies throughout his career disney, ge, walgreens, and many more. Here is the top tech stories on our bloomberg west radar. Twitter is working on ways to ramp up user growth, which has slowed in the First Quarter. Mcdonalds has a new happy meal character and it is generating emotions in some children that are anything but happy. It has arms and eyes coming out of the top of its head and a wide mouth full of large teeth. It was intended to promote healthy food for kids, but given the feedback from social media, it is caused terror and concern and parents. A multibilliondollar spending plan is to reduce spending declines in some markets. Vodafone declined in early trade. And the deal would give a boost to the youtube site giving to 5hs platform for million active users. I want to bring in Jon Erlichman is in the big apple for us. This is a company where you basically watch other people play videogames . Thats what you do, betty. What am i missing . Days before this story broke i was talking to a hollywood executive about twitch, and he was talking about how his kids used to watch cartoon network, now what they do is play videogames and spend hours watch other people play videogames. This is becoming a huge Media Business opportunity. It is as simple as that. There is massive interest in that. In the case of twitch, they are streaming this content and people are interested in it and it doesnt cost a lot to build this massive network, because it is not like putting a show on network television. All of a sudden they can see interest of players like youtube because of anybody knows that having a network where you can put cheap stuff, video, up quickly im acting like i am startled, but it reminds me of my own kids, who love minecraft. Instead of watching the movie titanic, they had me watch a minecraft version of the movie titanic. People can laugh about this story no, its actually serious. If you think about the fact that warner bros. Owns a big piece of a gaming platform, and a disney bought a Company Called maker studios, which is lots of youtube different channels that come together to create a network, so you can see what the next generation is curious about and interested in watching, i dont think this trend is knowing away going away. If you can build a subscription model around this, if you can get somebody to pay, i dont know, five dollars, 10 dollars a month, it is like you have created a new cable channel. There is a lot at the Olin Hollywood who are thinking about this, who are moving away from just youtube and now moving to, hey, can we stream all sorts of stuff and get people to pay for it . Gamers get paid a lot of money. Might be too late for us. [laughter] awaye just a few minutes from the opening bell on we have the top 10 trades you dont want to miss right after this break. Welcome back. You are in the loop. I am betty liu. Bloomberg television is on the markets, and scarlet fu has more. Emergingmarket stocks are under pressure as well because of declines in indonesia and thailand. Otherwise, it is pretty quiet. We should note that the aussie after is weaker Australian Reserve bank minutes showed it would likely create Interest Rates at a record low. The euro is under similar pressure because of expectations that European Central bank will add to stimulus. Lots to look forward to from the central bank in the coming days and weeks. We will be back on the markets in 30 minutes. Scarlet, thank you. Lets count down the top 10, the only traits you need to know about. Scarlett stays with me and a julie hyman joins us. The billiondollar pursuit of astrazeneca is likely to fail because it u. K. Takeover laws prohibit a u. S. Company from sweetening its offer after it declared its final. Largestr nine, canadas gas producer, up 30 since the ceo took over last year and his makeover is going faster than planned. The former bp executive is liquids to oil and gas with an influx of north american supply. Number eight is carnival. It is adding a flight to australia. Carnival said that australian crew passenger numbers have increased 130 in the past 5 years. Organ stanley upgraded carnival shares, saying caribbean prices have Morgan Stanley upgraded carnival ships, saying caribbean prices have bottomed. Seven, pushing out its Top Executive in the country, it has announced once to name a nonexecutive chair to oversee the effort. Lostts Canadian Business money before interest and taxes last year. Number six, urban outfitters. Profits missed analyst estimates. Urban outfitters say that they are very cautious about the current quarter. Number five, twitter. Acquire early talks to musicrelated startups. Mentioned. Has been it has struggled to add new users to its service as quickly as it once did. Depot, the homeimprovement retailer posting thirdquarter profits that trailed wall street estimates. Samestore sales rose 2. 6 , whereas analysts forecast a 5 gain. Shares fell in early trade, but they have rebounded. Number three, aero flex. Toaerospace company agreed buy them for 10. 50 a share. This deal is expected to close around the third quarter. Eroflex surging on the news. Golf Equipment Sales have continued to fall, defying Company Expectations were modest improvements. Number one, staples. It slipped more than 10 in early trade after forecasting secondquarter profits below wall street estimates. It also posted a 43 decline in firstquarter earnings and it plans to close 225 stores in order to trim costs. They are in costcutting mode. It is been a while the year for m a, with Companies Making billiondollarplus deals in the last few weeks alone. If you listen to wall street cost top dealmaker wall streets top dealmaker when i interviewed him in the fall, you wouldve seen all of this coming. You are going to see more m a than what we see historically. Advisedxt guest has deals on a number of major countries, including disney, ge, walmart, motorola. Have listened to jimmy and said yes. I agreed with the with jimmy. We had a healthy debate on bloomberg as to whether that would be true of the Financial Sector and i said no, i dont, but on the strategic side, i do agree with him. This is a strong m a market for strategic deals. None of the big banner deals are headline deals. They are strategic. Why not financial . We are still in a mode where the present companies has been bid up substantially with cheap capital. That has not been a reflection of confidence. It has been a reflection of lack of growth will stop with nowhere last year, funds heavily rotated out of the fixed income sector and into equities. That is why we saw the big runup of 28 in equities. That makes it tough for private equities to pay premiums. By contrast, if you look at these deals, they really are about Corporate Strategy and they often, all most all of them, involve the use of equity. Swapping stocks that have been bid up, but for corporate comcast, time warner, astrazeneca if pfizer was able to pull that off and they would have stock in the mix walgreens this is all because, as you say these companies are pushing for global recovery. A much better m a environment than we have seen in years. The big corporate strategic deals, and which ones are positioning for growth in the new markets in the u. S. It has to do with telecom and media and in europe that has to do with crown jewels. Have heard jimmy say this throughout her years at this time around he is absolutely correct, that this is the year for big deals. What were all these ceos who were chomping at the bit to make strategic deals waiting for . The stars have to be aligned for these very large deals to take place. One, take an easy walgreens. You work on walgreens, right . Not on that particular matter. In that case, if i had, i would not be able to talk about this. But walgreens as an option and there is talk in the market that it would be good if they did that. If they did they would be presumably waiting for the right moment. It aintpfizer the right moment for astrazeneca, that is clear. It a lot of things have to fall into place for these large corporate eels. He clearly has an opinion on this. Market . A sellers the m a market is a corporate strategist market. It is about how you position Large Companies for what you think would be recovery for real this time. In the u. S. , the big banner deals are about communications and seemed to be about Television Comcast buying out time warner. But it is not only television. It is about Public Policy about how we reach consumers with multiple bundled services and where this really lance is in congress over Net Neutrality because the fcc has been unable to arbitrate the dispute. Where do you see that stoppage in deals . Tough slogging in the mobile market if you are paying with cash. You have a mismatch between buyers and sellers why is that . The price of companies and equities have been bid up, as i said earlier. If you dont have a portfolio business or some other synergisticrelated company to bring to the table, different market. Speaking with a ceo who said that for him in the health care industry, he has seen the quality of deals get much better. I agree with that. We see fundamental change in how we deliver services to the consumer and we have to take massive costs out of the system that has layer upon layer of costs and we are using technology and whether you like it or not, obama care is a Public Policy instrument to change how we do that. You will see highquality strategic deals designed to play in a new sector. Marshall, great to see you. Great to be with you as always, that he. Betty. A medicalta approves Marijuana Law and we speak to the ceo of a company that is trying to patent a marijuana tracking system. In a new study out of england gives ecigarette Companies Something to be hopeful about. Maybe they are not quite as bad as regulars have been saying. State in the loop the senate Health Committee could vote today on legislation to allow medical marijuana in new york state. New york would become the 23rd state to legalize the drug for approved,e if it is following minnesota, who passed this law last week. Company this is betting machines for dispensing medical and Recreational Marijuana reduces of vending machines for dispensing medical immigration will marijuana produces vending machines for dispensing medical and Recreational Marijuana. So much as happened within our own company as well as the whole industry. Growth is terrific all the way around. We were blown away that minnesota passed that was a complete shocker. Why were you blown away by that . Politicalrom the spectrum, whether you are democrat or republican now, there is such overwhelming support that even the staunchest opposition is coming around and seeing the light, and almost every state is looking to put something on the books. It is only a matter of time before the country will legalize marijuana . We know for a fact that it is a matter of time. We are beyond the point of no return and we know for a fact since the president s administration, the department of justice, they have come up with guidelines to include our industry into mainstream society. And draftingting policy now. They will probably england sometime in 2015 are beyond. They will probably implement it sometime in 2015 or beyond. Perceived leader in this industry and we are about Safety Security and Legal Compliance and transparency and we feel it is a responsibility to help guide the industry in the right direction. Politics plays a part of it. Politics plays a huge part of it. There are stories out there since pot has been legalized of people who have been charged with a crime for instance. They think they are abiding by the laws, but Law Enforcement has a different interpretation of how to enforce those laws. Where peoplestates have been charged criminally for violating, even though they have a doctors note, several examples of that. That, the do with user that how do you deal with that, how do you sort that out . We are at an infantile stage in our industry and once the feds start reconciling the difference between the federal and state laws come everybody is going to get on the same page. Those things will sort itself out. You are applying for a patent for a marijuana tracking system. What is this about . Ok, it is not that we are applying for it. We apply for eight years ago. We applied for eight years ago. This will be a highly regulated industry so that the oversight at the federal or state level needs to start at the scene on the way through to the patient. You need to be able to see that in real time, digitally, and sometimes on video. We have been awarded the biggest patent in our industry, which is the tracking of seed to patient technology. How is that going to look . It is basically software, and intellectual property type that we are Filing International patents for. We are very excited. It sounds awfully costly. How will you be able to do this and mutual the costs. And control the costs . Not onlyaffordable, the technology, but affordable for each state to implement. The states would find it affordable and it is part of the system they are mandating in the legislation and in the rules and regulations. It is natural for the system. Of pect rick, the ceo Bruce Bedrick ceo of medbox. Thailand hospira mayor has asked the military to avoid violence after 6 months of political turmoil. So far no curfew has been set. The english soccer squad Manchester United has named the Netherlands National team coach to be the next head coach. It is hoping to bounce back from a rare poor performance this season. He has signed to a numeral threeyear contract. Ecigarette smokers are more likely to succeed than those who use patches or gum to stop smoking. Due to be published tomorrow in the british journal of addiction british journal addiction. Film possible kicks off tomorrow in france and Russia Companies are showcasing their products fashion companys are showcasing their products. Does it boost sales . It is the Opening Night of festival, andm a isywood actress zoe saldan looking fabulous. But she is not here to promote a movie. She is here as an investor for foreal paris ambassador loreal paris. By looking beautiful and having that exposure reach the loreal. T is proof of makeup is all about excitement. Cyril is Loreal Paris International director and he describes cannes as the most important marketing event for his brand after the olympics. Jumpedhina dropped 30 in the weeks after the festival. It is amazing media exposure. Other sponsors include carmakers and jewelers. Brands are hoping to share a piece of the glamour and cash in on their success. Angus bennett , bloomberg. Moving , many areonto greece talking about whether they could fall out of the euro zone. I thought they were just finally getting out. Europeans are going to the polls to elect a new European Parliament and they will be voting for people candidates in greece. The 2 parties that control the government have seen their popularity drop significantly because Economic Conditions are pretty bad their bank pretty bad there. There is a feeling that if they get a very small share of the vote they might have to drop out of the governing coalition, which sets up the question is the single Party New Democracy . Charge enough if they dont, the government might fall and they need to hold new elections and there was a possibility that one of the extreme groups, even the Neonazi Party could get a significant number of seats, and the dealsvalidate they have for their loans in the european community. We have seen great bond yields, which had come down significantly, starting to rise again. Were seeing that reflected a little bit with bond yields and other european peripheral countries. I thought they sold it for 4, 5 . Havee bond market so far some faith that they will get through this. The big reason is that at this point they are believing mario draghi and the idea that they will step in to save them if necessary. What about the people . Are they more content now . They are Getting Better among not all that better. Unemployment is still over 25 there. And in italy we are seeing unemployment rise. You could see a populist backlash and that raises the question of where they go from here. That does it for today on in the loop. Keep it here on Bloomberg Television. A famous short seller will be on market makers. Tomorrow at loop 8 00 a. M. Eastern. Is 56 minutes past the hour and that means Bloomberg Television is on the markets. I am scarlet fu. Au have u. S. Stocks faltering bit here with the s p losing. Lmost 7 points this is the first decline in 3 days. If you look at the other Asset Classes and the emerging markets are down by one third of one percent, under some pressure particularly in indonesia and india. The latest minutes from the reserve bank of australia show that the central bank is likely Interest Rates at their record low right now. That removes some demand for the currency. There is speculation that the European Central bank will add to stimulus and its next meeting. Lets talk about small caps. The 2000 index is settling down after an almost 10 correction from its peak in early march. And joining me with a closer look at the sector, mike reagan. After 2consolidating days of games. How much have they recovered from the tumble earlier this year . They are down about four year. T to 5 for the this is a sector that really tends to have a freak out like this every year. Leopold grew, there was a chart from them that showed the average peak to trough for russell is about 2 going back to when it started in the 1970s. Small caps did not get off to a big start for the year. A crunch yet this getting there. It got all the headlines as well. Is all caps more attractive from a valuations perspective . They are trading at about 55 times earnings, and the average since 2010 is about 42 times. Looking forward a projected earnings, there are 25 times earnings. That is a big gap between trailing it is about 30 points, the highest since 2010. Expect smallcap earnings to basically doubled this year. The First Quarter they underperformed and trailed estimates by about 7 . Largecap stocks are not expected to grow anywhere near that level of earnings. Sam stovall from s p expects downward revisions in the earnings forecast and we have centers went over the last few weeks. It will be interesting if those come down even further. Is anything that suggests the trend in smallcaps is over . Russell 2000 is still making lower lows and lower highs. If you draw lines above and below the chart, it is still pointing downward. What is interesting to me is that yesterday was active back gains, and that is about as much as it has been able to handle in the last month. It has not had a threeday gain since april, almost a month. It will be interesting to do if we get that Third Straight game, the first time in a month, maybe showing there was more support than a 2day snapback rally. The elusive 2day gain. We are on the markets again in 30 minutes. Live from bloomberg headquarters in new york, this with erik makers, schatzker and stephanie ruhle. Guilty Credit Suisse agrees to a fine
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