Promising to create 1000 jobs if the countries leaders back his offer, support his offer for the company. For more on this thread, we are joined by International Correspondent hans nichols. Jeffrey immelt is turning on the charm in france, right . I do not know if you will be served when he sits down in a cafe in paris, but he is doing a the frenchnvincing government this might be in their interest. It has dominated news here and discussion. One of the reasons his bid might be improved is he has made this promise for 1000 jobs, 1000 industrial jobs, betty. You have to look at this in the context of the recent european elections. President aland president Francois Hollandes party was obliterated. They need a victory. They need to show progress. The jobs in the ge takeover of the Energy Business could be a way to show progress. There will because be backlash because of an American Company coming in, but a colleague of mine went into a small town where the happens to and he talked to all of the workers, and provide there was ge pays better than alstom. Jobs,means better paying this could be something president Francois Hollande could accept. Where is Jeffrey Immelt willing to bend and what is his bottom line . What ge really wants is the steam turbine business. He is willing to get rid of some of the wind power, hydropower aspect. Ge is not interested in the rail signaling, trains communicating with one another, basically. The problem with the steam turbine industry, and that part of the country company, is that part of the Company Makes parts of nuclear reactors, and when the you get to the National Security issue of the french state, there have been questions raised about having an american for ouraching parts nuclear making parts for our nuclear industry. That is one potential hangup. Hours,rall, the last 14 16 hours, it has been good for general election. If he did not charm all of the assembly members, he certainly won a few over. His meeting with Francois Hollande seems to have gone well. You will see what kind of tables in the city gets when he sits down at a bistro on the left bank. Thank you, hans nichols. Six years into office, president obama will outline a result of u. S. Foreign policy, spelling out his vision for the use of American Power to the graduates of the u. S. Military academy at west point. Peter cook has more on this. Is this a chance for the president to respond to his critics . It absolutely is a chance for the president to respond to his critics who have been vocal and critical of his handling of russia with the ukraine, critical of china, and perhaps, most loudly, for his policy toward syria and what is going on there with the civil war. He will have a chance to spell out his own views on u. S. Foreign policy in the use of force, following his announcement yesterday on what will happen in afghanistan, announcing that at the end of this year 9800 u. S. Troops will remain in afghanistan, perhaps more than some of his buttocks on the left his critics on the left would like, but by 2016, when his term is wrapping up, they will almost all begun. New chapter in American Foreign policy will allow us to the resourcesof saved by ending these wars to respond more nimbly to the changing threat of terrorism while addressing a broader set of priorities around the globe. Again, in a speech today at west point, the president will talk more about the other tools at his disposal in terms of affecting Foreign Policy a broad , u. S. Foreign policy they include diplomacy and economic pressure as well. The president will not stop away entirely from the use of force. He will, for example, talk about finally providing more military support, training for the rebels in syria, and we also heard from secretary of state john kerry a five billion dollar antiterrorist fund that can be used to fight terrorists around the world in cooperation with other countries. What about the president defending his plans in afghanistan, peter . He is already hearing it from critics who were negative on the policies going into the speech, and now even more negative. Lindsey graham, john mccain, kelly ayotte, they have been particularly critical of his handling afghanistan, and they say he has offered the taliban a clear timetable. They say the president wanted to end the wars he inherited, the words and not and because politicians say so. His decision on afghanistan will fuel the growing perception that america is unwilling, and distracted, unreliable to lead. To recommend peter cook. You can watch the commencement speech at west point at 10 00 a. M. Eastern time on our live event channel at bloomberg. Com tv. The first graduating class of officers will be listening. With low marks reports. Shall we play a game . Wargames made 30 years ago, a young computer hacker comes close to starting a nuclear war. America is looking to hire a tech savvy teenagers to work for the u. S. Military, and some of these cadets are potential players. They bringand what could be a great strength. So, i one of the oldest among and most orthodox institutions, they are learning to think in very unorthodox ways. The approach were thinking is more focused on the education, more on the underlying principles that will teach them how to think and solve problems. Cyber attacks on u. S. If the church are sort 1700 between 2009 and 2011, and in the midst of that blitz, the pentagon established a special group to defend america online. General cheap cap general Keith Alexander was placed in charge of this new Cyber Command, initially coaching personnel from other Service Branches instead of developing its own raw recruits. It is about to change. This year, west point seniors will be allowed to join Cyber Command as newly graduated officers. I want to see what i can do for the army as far as applying my expertise. The west point hacking club, which competes at contest against schools like m. I. T. Means they cant compete with the best computer scientists of their age. I am as tech savvy as anyone my age. I see a future where there will be cyber Space Operations and physical in cyberSpace Operations that intersect at various points in time. The nextgeneration of Army Officers will still fight wars with machine guns, but some will also use mouse clicks. M joins me now. How exactly are they being trained in cyber warfare . Marathoning a lot of techniques, understanding with essentially, they are learning a lot of techniques, what the tools beilable are, and it will lawyers, historians, experts in the technology, a cross disciplinary and approach to teach the young cadets to decide what the army will do Going Forward when it comes to what they are allowed to operate inside of. How does this fit into the broader strategy strategy beyond this club at west point . You have cyber strategy, of course, the u. S. Government is not shifted by what it does militarily. The u. S. Government has indicted the chinese individuals, and some say the u. S. Has been just as involved hacking into chinese companies. Outside the militarys sphere there is a lot going on between countries like the u. S. And china. Actually is a lot going on there. Of this program, when did it start, how old is it . There has been something to do with this intelligence at west point for decades now. They have done good against other schools. Ok. , willem marx. Uch moving and shaking, sergey brin, who has unveiled the google selfguided car. Driving car. The first top speed will be just 25 miles an hour. 200y plan to build 100 to test vehicles. By 2035, there will be close to 12 million selfdriving on the road, according to one estimate, but there is still 20 of work to be done on that front. Harry potter author j. K. Rowling is one of the alist writers paying the price for the fight between amazon and hatchet. We will also take you down one of the most expensive street in the world. You will need to bring your credit card, maybe even your American Express platinum card. Ey stay in the loop were just Getting Started on this wednesday. First. Bloomberg. You are watching in the loop , live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. As we have been reporting, amazon. Com is refusing to take booksn orders by published by hatchet book group. Amazon has been known to rub publishers the wrong way. We are joined by robin warner, a former of the shirt turned managing director with a management boutique bank, where she handles deals involving amazon and publishers. So, tell me what is going on behind the scenes . This is really a pretty epic at all, and what it really boils down to is what it always boils down to, money and control of the marketplace. Just to give you a little bit of whatround, 20 years ago, kept us up at night was the big bad demons of barnes noble, which was a bookstore and also doing publishing. Several years ago, a new form of books came out, electronic books, on a digital reader, it was not going anywhere, nothing was happening, but then barnes noble started advertising their nook. But apple had the ipad . Really going anywhere. It is nowhere where it is today. Barnes noble started advertising the nook and amazon said we would do a huge amount of advertising behind the candle, so between those companies, apple, barnes noble, and amazon, they created the ebook space and it became viable part of the market. Correct you would think publishers will you would think publishers would be happy about that, right . They should be. Ok. I should not say that. It has been reported that hachettes revenue is onethird ebooks. Here comes the fight where they are not happy amazon, who wants to be the number one consumer location for everybody, ebooks. To discount apple and publishers have an agreement called agency pricing, and what that means is the publisher sets the price of the ebook. The publisher gets 70 of the ebook price and apple gets 30 . Well, it appears that amazon says we want a discount to ebooks, sell we want a different split. They want more than 30 . They want more than 30 , and amazon is getting a lot of pressure that they have to increase their margins, so you might say 70 for the publisher, that is crazy. Although ebooks are usually priced lower than hardbacks and paperbacks, is that right . That is right, but they have great cost in doing the books editors, paying for marketing it is not really as robust as you think it is. This is going to be a Material Change in the marketplace depending on what happens. Amazon and the publishers are not going to easily give in, particularly hachette, who is now fighting the battle. We are all speculating on what the terms that would make both sides happy. What you think amazon one . If they want more than 30 , what would they want . I would not even guess. It is not just a discount, but it is also how they treat the authors because author royalties are affected as well. There is a lot of negotiating going on at a lot of levels, but this is probably the second watershed moment happening with amazon. The first being the digital readers . The first was we will not go into it right now, but the big loss of lawsuit. Lawsuit. The big do you think amazon will pull this with other publishers . Absolutely. In the end, what does it mean for consumers, us who buy books . Does it mean anything . Amazon is always about the consumer, the first priority, so the consumer will end up with a larger discount on ebooks. That is good. Some of the press might be affecting some of the consumers. First of all, it is amazing how much press is vilifying amazon. 90 is vilifying amazon. Click the big, bad retailer. 95 to 98 is vilifying amazon. The big, bad retailer. The big, bad retailer. Why isnt amazon getting into publishing . They are in publishing. They have a big romance line. As a matter of fact, i sold him a small Education Publishing starting business. They have had some fits and starts, but they are in publishing. When not in a big but not in a big way, why not just own the entire line, upstream and downstream . It is expensive to do that. It is not their business model, but theyre definitely publishing. Robin warner, thank you for joining me on the fight between amazon and hachette. Going up, it is a place to if you want to burn through your inheritance, or whatever money you have around, the most expensive street in the world, and Johnny Football is once again in the headlines, and once again it is for nothing having to do with football. In the loop is back in two minutes. First. Bloomberg. You are watching in the loop , live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. Good morning, i am betty liu. It is 26 minutes past the hour. Bloomberg tv is on the markets. Activity is a big driver on the markets including ges bid for alstom and valiant putting in a new bid. S p futures are up slightly, and so is the dow. Were are on the markets again in 30 minutes. Chief Financial Officer warns secondquarter profit could be down as much as 25 from one year ago, saying it feels like participants are sitting on the sidelines. No doubt. Toll brothers quarterly profit more than doubled, saying they pricesre homes at higher in the second quarter, and they are optimistic about the future saint significant expansion saints in expansion key californian and texan markets will be a major source of growth. 11 billion price tag what has been spent has already happened. Expect protests when the world cup kicks off on june 12 in sao paulo. Staying overseas, hong kong is now home to the most expensive real estate in the world. I recently took a tour of russell street in hong kongs busiest and most expensive shopping area, to see what a few Million Dollars will buy you in real estate, and i have to tell you, it is not much. Stores,g is a maze of shops piled on top of shops, piled on top of shops. To help me pore through all of this is this guy. Good to see you. Hi, betty. Shelley go shopping . Please. It is my favorite sport. Rolex, they are all here, and the landlords collect some of the highest rent in the world. We are in front of a store that just sold for 23 million u. S. Dollars. Is that a record . I think it is the most Expensive Store per square foot in the world today. How much would this get for rent . It is on the market for about a month. And they have to make 10,000 a month and a. Aj. A day . Yes. Russell street has transformed. The street is dotted with highfashion stores and jewelry shops. Russell street top new yorks fifth avenue is the most expensive in the world, but paying skyhigh rent is no problem for the luxury retailers here. It is very strong. Correct Louis Vuitton has Louis Vuitton has six freestanding stores in hong kong. Would combined market, i not be surprised if those are the types of numbers. No wonder they want to come here. As a brand, it is a great place to be. Shopping, shopping, shopping. For more on why it is worth paying up to build a store on the worlds most expensive street, i want to bring in a property player whose clients include luxury retailers like cartier and giorgio money giorgio armani, all of which are staples on russell street and on fifth avenue. Faith hope consolo, chairman of douglas elliman. Great to see you. Do you think that fifth avenue will once again replace russell street . , fifth avenue is the leader and we are about to open more flagships. Ralph lauren has taken over them the old disney space at 55th street, and that will be 30,000 feet. He is doing another mansiontype store and his restaurant. Dalentino has taken over on 53r and we will have a fourlevel emporium, and the story goes on and on, the luxury retailers mixed with the cheap chic fast fashion the numbers keep going up. Lets compare the numbers here in manhattan versus the numbers in hong kong. They are slightly lower. About 4000. We are at about 3500 and climbing. I think the newest deals will come in and exceed the 4000 a foot level. Have you been on that street in hong kong . Yes, i have. Do you believe a majority of those stores make money . A lot of them do, but there are others that are just the face of the brand. You need to have a global presence, and that is what hong kong has become in asia, and new york, which is the fashion capital of the world, and the shopping capital, is the same. If you are not on the street, in the face, and madison avenue comes on the back of that, for a brand, you have no position in the marketplace. Really . You have to have that real estate. It is like advertising, a billboard. For many, it is. For the jewelers that have been there for a long time, apple, they have their flagship, and they do thousands and thousands eightfoot unit sales. This is not what i understand we were standing in front of that camera store. I mean, it sold for 23 million. I still could not get how you can make money selling cameras. I still cannot get that. Can you . They supported in other ways. One of the way . I know. You have the internet, and you have the behind the scenes sales. Even though there is a lot of traffic and stores, people say they do not see anyone in georgia armani, but they have one or two sales, and they deliver to clients. 8,000,the sales are 10,000, 15,000 a foot. We were capturing how much you have to make her day to be profitable, Something Like per day to be profitable, Something Like 10,000 per day on that tiny piece of land. How muchavenue would you have to make today . In many stores, it would be upwards of 100,000 a day. 100,000 a day . Betty. S only numbers, [laughter] rolex atn and buy a 75,000, it does not mean anything, you know . I do not want to belittle the numbers, but it is amazing, they expand. They have madison avenue, fifth overlap, the stores and they build bigger and better flagships. At me tell you, when h m came here, they had several hundred stores in europe, but when they came to new york they build of000 feet on the corner fifth and 51st, and that put them on the map. They get the attention of wall street, of every Shopping Center developer in the world to be in their location, so while they make it is a stamp of credibility . It is a magnet, a stamp of credibility it means these are my neighbors. It is like living in the best neighborhood. You have made it. You have made it, i am here, here to be dealt with, just as good as your label or your brand. H m is a great example 75,000they do not sell rolexes, but 15 shirts or 30 shirts, so how do they make it is volume. It is lots of volume, constant. They had to do the escalators. They are moving south to 40th street to south southeast corner, and the store size is increasing. Top shop, from london, which had come into the market in Lower Broadway in soho a few years ago is now taking a flagship on 49th street. But it is all moving a little lower . It is moving lower customer it is moving south, i do not want to save it is moving lower . It is moving south. I do not want to say it is expanding, but we are running out of sight space. There is no true, pure luxury shopper. They could be wearing a chanel handbag with nike sneakers, a diamond necklace, and something from h m, the five dollars skirt. I mean it sounds unbelievable, but it is true. I can totally see that. So, when you bring clients over, lets say a luxury retailer says faith, i want to have a place on fifth avenue or madison avenue. Walk me through what you do with them . First, i educate them on the market. They really want to know what can be. It is not always the availability in the market. Sometimes we have to do what we call Musical Chairs and move the tenants around to accommodate them, but i educate them on the cost. It is not just leasing the space. It is building a store in new york, which costs so much more. It is operating a store, so we have to educate them on the markets. Sometimes they say i want to be on fifth avenue and they visit that market, but maybe there is Nothing Available at that moment so they open on madison avenue nma expand over. It is not just the numbers. Some want to be on the east side of the street versus the west. I say who is your ideal neighbor i want to be next door to jimmy choo no, it is all association. Think about the best shopping malls in the world. It is about the tenant mix and the synergy. Who orchestrates that, retailers themselves . We talk to them a lot, but you would be surprised, all of the retailers not only talk to each other, but everyone else knows what everyone else is doing in sales. I say if you want to talk about the traffic, you can stand here, but talk to your retailers. They will give them the numbers . Do, andimes they sometimes they do not, but you would be surprised what those managers share. A glass of wine at a neighboring hotel. Over a glass of champagne in new york . Thank you, faith hope consolo, head of Douglas Ellimans retail team. A sea suiteport on shakeup. The former Treasury Department official will replace the cofounder joseph perella. Parella will continue an active role as chairman. As anmpany that started online shoe retailer has changed the way we shop online and it is threatening to change the way we search for jobs after i highly publicized and after a highly publicized trip to since his Johnny Football get some advice from someone who was recently in the same shoes. It is time for todays bloombergs big number, 18. 6 Million Dollars, how much wages were paid in brooklyn, growing at a rate of 18. 9 versus 10. 6 for the rest of the city. Manufacturing jobs in brooklyn grew for the first time in decades. They still face problems of wages considered modest by new york city standards. It is not easy to make an impact in the retail world, but that is one zap those did zap those zappos did. The company may now be making its mark on how Companies Hire people. Carol massar has more on this. They are saying goodbye to online job postings . They are shaking things up, and changing the way people hunt for jobs. Job are say no more online postings. If you want to work at zappos, what you have to do is join their social network, zappos insider, and you becoming zappos insider, and you get access to information at the company, finding out different teams to whether it is the marketing or technology can, and information about the people on those teams, a, what it isq like to work at zappos, what a typical day is like, and those interested can post their own questions. And the thinking behind a strategy . There is always a thought behind the process. Is aboutized it developing a relationship with prospective employees. 31,000looked at about job applicants last year and after looking at them they only hired about 1. 5 . They essentially rejected 30,000 applicants, and even some of those that accepted were excepted were not a great fit. They also thought that by doing this, developing a relationship with the company, providing transparency about the company, that if they have a job that opens up, they already have a possible pool of applicants that are out there, that no things about the company, and they can probably fill that job pretty quickly. That is what i asked. They relocated their headquarters to las vegas. It could be a tough job market, and they say could be a challenge to fill positions, so this could help. Mrs. A reflection this is a reflection of the founders philosophy. He is a wild guy. He was embarking on a plan to revitalize downtown vegas, spending hundreds of millions of dollars to revitalize the area. He hired a whole team, brought in a team of experts, and they are working on health care, education, small business, startups. Idea,ask, is this tonys because he is such a visionary, but it is a different type of company. He they have no titles. Have a hierarchy authority. One more thing i want to say, in the process they are doing, they are going to push content at people. If you are interested in working start to, they will send you stuff about that came that relates to positions that team that relates to positions in the area. Very interesting. Thank you so much, carol massar, chief National Correspondent eric keeping your correspondent. Theing your employee is subject of this versus that. It could be a big topic for Johnny Football. What happens in vegas does not always stay there. His johnny manziel, who won the nickname Johnny Football. He took a chance with a break from Training Camp to blossom steam in vegas, blow off some steam in vegas. He took some hammering. That is brady quinn. He was drafted by cleveland. He said a number cleveland is a they wantr town and their players to be hardworking and not run to vegas when they have a break. Manziel said he spent part of the weekend studying the playbook hardware, he did not say . Where . He did not say. Port said the president plan new reports that the president s plan could cost half 1 trillion. Well, in washington, a preemptive strike on tighter rules against Climate Change the worlds business lobby is a gift business lobby warns it could cost consumers billions of dollars a year. Megan hughes has more on this. What we know so far about the cost . The numbers are all over the place, and keep in mind the Obama Administration still does not have this released. The plan is opposed to come out monday, five days a way, so this strike. Emptive the chamber of commerce looked at what the epa could do. If it is an ambitious plan to cut Carbon Emissions by 40 by 2030, the report estimates it could cost the u. S. Economy 50 billion a year, which would mean 224,000 jobs lost, and force ofe than onethird coalfired capacity to close by 2030, and they say the hardest hit areas will be the southeast and the midwest because of the fuel mix, and is important to point out the chamber is not taken a position for or against this epa proposal. A member, it is not out yet, but the chamber of commerce will be talking about this, getting more commentary, some dire warnings, and we expect that at 10 00 a. M. Correct epa has not released the epa has not released their numbers yet, so where did they get the numbers . They got this from a report the white house has been looking at were consulting. The report was first released in late2012, updated last year, and it estimates a cut in, pollution by 2020. The chamber extent that for a decade. A big contrast it actually estimates a savings of 21 itson to 53 billion, so regulation included damages avoided from Climate Change, so it is a stark contrast, we are hearing from the nrdc and the chamber of commerce. C forecasted tapering off, aile the chamber forecast increase. Thank you so much, megan hughes, in washington for us on Climate Change. We will be back in two minutes on in the loop. Said tapering has had an odd impact on financial markets. You think . Bond yields have actually falling, and the drop in yields have some wondering if Equity Investors have the u. S. Economic outlook wrong. Are they missing something . Michael mckeeor is here with what the real deal is, what mr. Bond is telling us, who can we trust . What you would expect the opposite you would expect the opposite, but you have been talking about record equity prices, and look what has happened to bonds, and actually down again today. The drop is not what you would expect. You could think of three reasons why this might happen first, investors might see a recession ahead, the economy falling off. That is a worstcase scenario. Almost as bad, and acceleration in inflation, and also the possibility of a flight to safety, or half because of the ukraine. If you look at these things one by one, none of them have happened. The economy was lousy in the winter, so when you look at the broad data, it measures whether the data is coming in better or worse than expected, and you can see it better than expected overall these days. Once again, inflation, wall street is not worried about it right now, at least not according to Inflation Expectation measures. You can see they are pretty flat. If people were worried about what was going on in the ukraine, it would show up in credit default swap prices. Has been falling steadily. Is there an answer . It has been called a broken tail light syndrome as the notcit sinks, the fed is tapering as fast as treasury is. The fedpoint last year, was buying 63 of what treasury was issuing. This year, 91 so far. While. Wow. Thank you, economics editor michael mckee. It is 56 minutes past the hour. Bloomberg tv is on the markets. Equity futures speaking about how Equity Investors are behaving they are mixed right now after hitting records after records the last few weeks. We will see if we had another today. We are on the markets again in 30 minutes. The new battleground for google and apple may hit really close to home. We will look at the race to connect your life and your home, bus wrapper . 50 opening pitch at Wrigley Field has some wondering if he was in the club before the game. And that was not a strike. We are about 30 minutes away from the opening bell. Your in the loop, and i am betty liu. Here is what we are the working on. S p set another record. Facebook is asking european antitrust authorities to review its 19 billion takeover, allowing facebook to avoid antitrust probes in individual countries in the eu. A new ceo for Perla Weinberg partners. He is a former Treasury Department official, bob steele, who was former ceo of colby a bank. Valeant pharmaceuticals has raised its unsolicited takeover offer for allergan, boosting its offer by 10 a share after the original bid was rejected by the company. For more on this reup offer, i am joined by deals reporter cristina alesci. Tell us the strategy here. Clearly, valeant is trying to put pressure on shareholders by sweetening the bid, and if you look at how much the bid has come up, it is at 166 a share, versus about 162 a share, a significant 152 a share. Valeant had to do something because the where they were trading above the asking price anyway. Another portion of this that sweetens the deal for allergan shareholders is this contingent value right, which is basically upside in an experimental drug. You have to read the fine print in these kinds of things to dig in and see just what allergans shareholders will have the rights to and under what specific guidelines, so that is a tricky thing to value. We will have to see how the stock price really reacts when the shares start trading today. Bill valeant and bill ackman be successful here . Tough to say. They are removing the obstacles, the things that could get in the way of a deal, for example, selling the rights to a Skincare Company that you have presented antitrust risks. They are trying to remove obstacles. The problem here is what allergan is telling shareholders about valeant, and they are really trash talking the company, saying they are overvaluing their organic growth targets, and also saying the company has no experience selling and global product, so there is going to be a bit of the war of words here, betty, before this is all said and done. Has allergan responded at all . Yesterday, they came out with a strongly worded statement saying basically that valiant is not a company that is performing well, Pacific League pointing out two prior acquisitions they say have not performed well, basically calling the company out, really on creating shareholder value. Cristina alesci, thank you so much. Cristina alesci, our deals reporter. This hour,shaking this guy hiphop star 50 cent , who should probably stick to his day job, because watch this made atpening pitch 50 the new york mets. He could laugh about it. Number 50ring the jersey with the last name jackson because his real name is curtis jackson. He was born not far from the mets citi field. No word if he will take another stab at the patch. That was not a strike. Likely not itching again. Loudmouth ceo a nightclub culture we are talking about Abercrombie Fitch, but the retailer wants to change the page and get wholesome teenagers back into the store. Lindsay andd by Senior Market correspondent julie hyman. Set the stage about what is going on here . Well, richard jeffries, an analyst at people nicholas summed it up. He says we question whether the, crombie brand remains relevant the, Crombie Dashti in the immaturity and fitch brand he iss relevant and questioning if the Abercrombie Fitch brand remains relevant. Has it lost the customers that have gotten older . They have not changed to remain relevant to todays teenagers. The question is who is the audience right now, and i know lindsay has been talking about what they have been trying to do to improve that because comparable sales have been falling for quarter after quarter after quarter because of this lack of relevance. Right, they are not targeting the consumer correctly. What did jeffries say to you . They are adding the color black, which they had never done before, making changes to their stores. They are trying to reach out to the millenial customer, and the question is will it work. Who is the millenial customer, someone that might not spend as much time in the mall as you or i did, they like to hang out online, shop from their phones. They want a more unique look. They do not want logos. They defined what was cool, and that was emblazoned on everything you were wearing. Has jeffries and i needed the customers, investors . Alienated the customers, investors . That, fors some of saying he wanted only the cool, store, not even implying that, but saying that out loud. Size mpany is not making are not ase cuts much of a muscle tshirt, for example, so they are little more forgiving to some of the customers, and he has taken a step that, in part because of the pressure from shareholders like engaged capital. Shareholder. Er the there will be new ceos for hollister and other brands. Somees he recognize that of his comments before had hurt the companys brand . It is hard to say. We did not talk about that, but he does realize it is time to start thinking about the future, maybe a future after him at the company, saying that succession planning is really important to him, working on that with the board, and that is that the posturing you have seen from him before, so it does sound like he is aware that he wants the company to succeed before he leaves it. He is 69 years old at this point. Is he really . Yes. You also think about it, is a 69yearold in touch with what a millenial wants. Who is exactly eating their lunch . H m, forever 21, the fast fashion players. Nobody in teen land is doing well. I have heard about the struggles. Is that just because millenials are buying more online, or not going to the malls is that just an overall problem . That is the play a part of it, and it is also brand perception. What was cool before is not necessarily cool now, and i want a unique look, something that is more inclusive, i want to be my own person, and those brands have not spoken for that in the past. Thank you for joining us, lindsey rupp, of bloomberg news, and also julie hyman, our Senior Market correspondent. , the fight over building a connected universe around your home, sweet home. Stay in the loop, as we head to the open. Well, apple might be trying to do to your home what it has already gone for the rest of your connected life, planning to announce a new Software Platform that would turn your iphone into a Remote Control for life, security systems, and other Household Appliances among all according to the Financial Times following googles acquisition of net labs and the samsung debut of the smart home devices. We are joined by martin plane, the chairman and ceo of control for, provider of automation and control systems for the connected home. We keep hearing about the connected home. What exactly what is the biggest challenge what exactly is the biggest challenge to this . . Challenge to this . We focus on making Payment Services more accessible and lighting more conservation present. The hardest part is understanding how Consumers Want to live in the connected environment and providing a solution that is easy, accessible, and solves the problem the family needs. First off, does a family need a connected home . Well, all of our lives are connected. Everything with a battery or a power cord will be on a network, so why not make them Work Together rather than colliding with one another. That is what we do, bring it together to behave as an orchestra rather than an instrument. Isnt the biggest challenge right now that there are so many different interfaces dealing with three or four different things, Remote Control devices, phone, so many interfaces that you cannot keep track of and it to be defeats the purpose of seamlessness. We have gone through multiple remotes on your table tom tabletop. Which drives me nuts. The average home has six to 10 connected devices, soon it will be 20, and i chaotic environment needs to be and that chaotic environment needs to be homogenized. That is all we do, focus listeners on a bringing the connected home to families. What do people want the most to be connected . There is a lot of interest in connected entertainment, multi room audio, theater, lots of interest in security, safety, and monitoring, and lighting is going from a big transformation through incandescent to led, which means programmable lighting, and that is coming. Onyou are away, you can turn and off your lights, arm your house, or not are made, everything done remotely. When you arm your house in a way mode, the temperature drops, the lights are turned off, your shades might be lowered. There is automation of polling devices together for the benefit of the family. What about security, security meaning as you put more what about security, security meaning as you put more password,n in one what about hacking, people saying your private information . These are high priorities. We publish best practices to our dealers, and we inform homeowners on how they should have their home configured from a digital standpoint to make them as secure as possible. It is things that we have to be careful about, and controlled for is constantly focused on that, and making things better and better. Do you work with google in any of these other companies . We work with hundreds of companies, and we work very well with the Google Android ecosystem, as well as the apple ios and os 10 ecosystems. Our software is writing on all of those running on all of those devices. Here is the problem, and heres what we read about people have webcam is, hidden cameras, and if you are more connected, you can turn them on whenever you want, but there might become an issue of spying, on yourng the webcams nanny, or anyone else in your home, and someone grabbing the piece of content and putting it out somewhere. How do you prevent that . Companies have been deferred approaches to digital security. We run everything through our control in a secure, constricted way, as well as to our cloud services, so we take this seriously. We do not have open ports to the open internet, so it a little more difficult to crack into these systems if the vendors are really diligent about security, which we are. Martin, thank you for joining us. Martin plaehn, the chairman and ceo of control4. Still ahead, facebook plays offense and goes after european approval for its deal before it is clear the u. S. We will explain what exactly is going on here. First. Bloomberg. Facebook is seeking European Union antitrust approval for its plan to buy whatsapp in what can become an unexpected twist to the 19 million deal already approved here in the u. S. For more on that story, we are joined by Olivia Sterns in london. What exactly is the concern in europe . The concern is a bit twofold. The first concern is the size. Whatsapp has more than five million active users, so if whatsapp is suddenly a formidable player in the telecom sector, that means more competition for the likes of , all of these big european networks, so they have been lobbying to get involved with the deal. The other issue is privacy. Privacy has a very different culture here in europe. They are a lot more concerned about big tech companies, theres a lot more suspicion about them. There is a concern about facebook, who already knows who you are friends with, your photos and status updates, what they could do if you have that personal information about everything you are saying with your friends, but it is, you are right, a bit of a surprise because it is already gotten approval from u. S. Regulators and because facebook here has volunteered to go to the eu antitrust authorities. It is not the european regulators coming to them and want to see your books. Google has also had runins with european regulators. What is the latest between google and that you . The eu . You have the right to be forgotten, which sounds pretty nice. If you find a link on the internet that is old and no longer relevant, you can contact have it taken to down, the right to be forgotten, but if you are doing business, and there was massive there was bad press about them, that is different. There is a lot of suspicion about what bit Technology Companies are doing with his personal data, and you saw in the eu parliamentary elections this past weekend. It is a rallying point, something politicians bring up in their stump speeches. Right now, you are same politicians come that the settlement that google just reached with eu regulators. Olivia sterns in london, thank you so much. We are just a few minutes from the opening bell on this wednesday. We have the top 10 trades you do not want to miss right after this break. Keep it right here on in the loop. First. Bloomberg. Welcome back. You are in the loop. I am betty liu. It is 26 minutes past the hour. Bloomberg tv is on the markets. Alix steel has more on futures right before the open. Well, that he, not a lot happening in the futures market. Pretty much flat across the board. Remember, the s p closed at a record, building at a fourday rally. Tomorrowconomic data with firstquarter gdp readings and jobless claims. If you look at the 30year bond yield, it is headed for if it monthly advance in terms of prices, the longest winning streak since 2006. You have that low inflation, as data, oreaker economic mixed Economic Data here in the u. S. , sort of a good recipe for treasuries. We are on the markets again in 30 minutes. Betty . Olivia, thank you. Excuse me, alix. She is going to hit me. These are the only trades you need to know about today. Number 10, mcdonalds. They are returning 18 billion dollars to 20 billion to shareholders by 2016. The announcement was made at the investors meeting today. It will come through dividends and Share Repurchase is representing a 10 to 20 increase over the amount of cash return between 2011 and 2013. Kevin pressure lately with a lot of issues. At number nine is the worlds biggest drilling company, saying they have seen increased inquiries in recent weeks even though Oil Exporters are slowing down spending. At number eight, work day, with revenue surging more than customers estimated as more companies subscribe to its Human Resource service. Seven, ge. R ceo jeff and mouth appeared before french politician saying his 17 billion did for eltham Energy Assets would protect jobs. Ge would create 1000 jobs if the leaders back his offer, said a person familiar with the matter. Six, general motors, who could be poised for more recalls as investigators look at the tensile flaws onto million vehicles that remain on following 14 million that have been recalled so far. Kors number five, michael whose total revenue was up 54 . Watches at their locations in u. S. And europe. At number four, valeant raising its offer for allergan, with the original author at 45. 7 billion. Systems. Ber three, cd pd theincrease the printer maker shares. Brothers,er two, toll saying that fiscal profit doubled as they sold more homes at higher prices. The average selling price rose 22 in the quarter, and deliveries were up 36 . Retail, and dsw is your number one stock. Shares plunged 23 after this, we kevin its earnings outlook for the year, posting firstquarter results before lower than all the outlooks, retail environment weight on sales during the first period. It has been a tough quarter. I want to bring in michael mullaney. Call, dont paul dont pile on any more u. S. Stocks. First off, why do city markets are not in bubble territory . Moser half the size we saw back in 2000. Extended see any valuations based on bubble territory. Youre not crazy about buying more u. S. Stocks . We are not adding to positions. We are leery of a couple of things. The vix index is low. That is one reason we are staying towards the sidelines. Set out, at least for the summer. Energy is one of the stocks. Here, overake a look the past year, there has been optimism. One thing that has helped move the stocks is the exports. Improved byve been the department of energy. That equates to 9 billion cubic feet a day of export opacity. Properties facing this thesis. Facilities can take four years plus to build. Ou need Capital Expenditures because it is so expensive, many might have to have forward agreement. Could it be too early of a play . The u. S. Becomes the net supplier to energy. Probably an area that needs to see some up left right now. Bulls longterm, secular on the space. U. S. , do not buy if you look at the forward pe of the u. S. , as well as the index, ite emerging at 15. 6. There is not a huge difference between all of these various valuations. You have to look at where in the cycle the markets are. An unexpected rise in the number of folks who were unemployed. Do you want a market where the fed or central bank is goosing growth, but the growth is not as one at where growth is on the upswing and you have the growth to replace it . We think the European Central bank is behind the curve. If you look at the growth of their balance sheet, it has been miniscule. Emerging markets are cheap on a relative base, based on historical averages. Even though it is roughly 13 times versus our 16, it is relatively low. We think emerging markets are the least expensive from a valuation standpoint. Thank you for joining us. Coming up, bitcoin maybe not me may not be mainstream now, but they may be one step away from taking on major industries. We are a few minutes into the session. Stay in the loop. The top tech stories. A challenge to industries. Has doubled in less than three months. Currency will eventually challenge industries that account for about 20 of u. S. Gdp. Publicly for spoke the First Time Since replacing Steve Ballmer in a february. He will focus less on tablets, computers, and hardware and more in places where the company can lead. A new skype product will translate web conference conversations in realtime. Google is seeking to spread the new automotive technology. Google has added its technology to other vehicles and plans to test the prototypes with drivers this year. The latest in tech media at 1 00 p. M. On bloomberg west. When you think of hackers, you think of people punching in, taking a lunch break, and sitting at their desk . Majorg is a major into u. S. Corporations was like another day at the office. It looks like a day at the office. Some of the Security Companies long lunch break. Things drift off until about 5 00 or 6 00 at night. How difference did it different is this from what nsa hackers would be doing . Has its own set of cyber spies and hackers. Ofy operate on the same kind routine. They operate on a 24hour schedule. There is an operation schedule at fort meade in maryland. It is staffed 24 hours a day. It operates around particular operations the nsa is doing. If there is a crisis in ukraine or russia, you may see more i to be coming out of there. It is a regular job. They go to it and do it on a day by day basis. What else do we know about the Chinese Military hackers . There is a lot of stuff that groups have managed to collect through social media. There are facebook posts and blog posts and social media accounts. They blog diaries by some of these hackers. They describe some monday and, they describe some dane andnd mun grueling conditions. It does sound mundane. Thank you for joining us. Meantime, Edward Snowden sat down for his first interview. Snowden lives in russia, where he fled after revealing the secrets about the nsa possible asked surveillance program. Nbc how he was trained. The u. S. Tends to get more and better intelligence out of computers than they do out of people. A spy in the as traditional sense of the word. I lived and worked undercover, overseas, pretending to work in a job that i am not. I was even assigned a name that was not mine. Overseas, the latest news on the development in the region and what life is like in crimea. Time for the global outlook. The new pledge to deal with separatist as fighting intensifies. 40 people were killed and 30 more were injured in one of the deadliest clashes ukraine has seen since the crisis began. Ryan chilcote caught up with ukraines foreign minister. He blamed russia for intervening. Stop financingll and supporting these people in eastern europe, the extremist groups, it would be easy and fast to restore order. Ryan also traveled to crimea and it gave us this look at what life is like post annexation. Trouble with crimea is getting there. A twomile body of water separates it from russia. The roads, which go through ukraine, are all but closed. The only way is to take this boat. Until, russia builds a bridge that it is planning on building, that spans the distance. This is a domestic crossing, as far as theyre concerned. Since russia annexed this area, havea ends crimeans been stuck. They are not allowing men between the ages of 18 and 60 into ukraine. They call us terrorists. And foreign banks have closed. Prices are quoted first in ukrainian money with russian rubles in small print. Doing business is not easy and potentially illegal. Golden arches and much more stand deserted. Tourists face obstacles. I could have come here without a visa, but now that it is under moscows control, not anymore. The Muslim Minority gathering was banned. Newest Tourist Destination is breathtaking. Ukraine has cut the water supply and further inland, they are expecting drought. Ns say it is a price worth paying. Kiev. N joins us from how much is the annexation going to cost russia . They expect to spend 48 billion. That is the same amount the russians spent on sochi. It is a region of about 2 million people. Come july 1, they will be getting at least double, and in some cases triple. And theirtate workers salaries will be raised to the same level that people doing the same kind of work elsewhere in russia get great teachers, doctors, they will get saint paid the same in crimea as they are paid in the far east of russia. Then, you have the banks. One bank, when they pulled out, they to be deposited ors money with them. Is russian government reimbursing those people through its deposit Insurance Scheme to 20,000 perup to depositor. You have all of the infrastructure, the bridge that i mention, it will cost billions. You have the Economic Cost of the isolation of russia. Ofn, you have the threat more sanctions with russia itself. Annexation is not going to come cheap. Water the plants that russia has to make crimea and economically viable place. Theyre trying to make it a las vegas. A place him like what rush is. Is going to put the money into it. I have some sad news to share. My angelou has died. She was 86. Confirmedme agent that she died in her home. No immediate cause has been determined. I am alix steel. 30 minutes into the trading day. Lets get caught up on where stocks are heading. Not a lot of movement. Slightly negative territory. A record high yesterday after a fourday rally. It is a wait and see mode for stocks. Investors are not taking on a huge amount of positions. With stocks trading at record has been falling, closing below 15 for the last 28 days. Many traders are betting that volatility is about to increase. At why me for a look they are paring for market turbulence and how they are positioning themselves is callie. What are they saying now . While we see the markets climbing, traders are saying i do not know if this tranquility will last. Want to buy the calls to protect against the potential downside. Shift, whatsee this does that say about where the s p might be heading . Since the vix and s p 500 trade inversely about 80 of the time, that could suggest the market is in store for a couple of percent pullback. Why would they think that . All of the ukraine geopolitical tensions, ecodata, missing estimates every day. Earnings, we went through another earnings season and we have another one coming up in july that could cause a pullback. Shocked it was under 12. For we see the vix under 15 so long, is there something that winds up happening . Theres a study that has been out and it has said it the vix stays below 15 for about a month, we see a 20 spike in the next three months. Theyre saying, yet it has been too low for too long. Why not protect against the spike that could be happening . Do traders say this is different . They seem to be on guard. The market is hitting new highs. Air. E also getting thin we are coming into the summer months, which tend to be more volatile. People go on vacation. Ofy move in verse about 80 the time. Is there a correlation how quickly they moved with each other . Not that i have noticed. If we do see a spike in the vix, that makes people nervous. They rotate out of stocks and all of that. Does anything give investors confidence . Every day we are seeing the market go up. Better than expected this past season. We may see a rebound in july. Economic growth could be perceived as positive, but chugging along. There are positives. We are seeing a little bit more buy. Makers is up next
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