Transcripts For BLOOMBERG In The Loop With Betty Liu 20140617

Ignitionrelated. You hit aied that if pothole, fairly common, or your knee bombs the key knee bumps the knee, it could switch your car off. Andering the power brakes power steering useless. It is a different switch but the same engineer designed it. That is why they have recelle 3. 16called these million vehicles, a total of recalls to more than 20 million so far this year today. That is more than two years of gm sales, and more than all of the u. S. Auto sales. We are hoping for about 16. 1 million sales for every company in this country this year. It is something gm has to get out of the way before mary barra testifies. They want to take a kitchen sink approach and make every recall possible. They will try to get him in, fix them. They have not made a dent in the first almost 2. 5 million cars they recall. They will start working before she goes in to get questioned so she can say we are doing as much as we can. Has been facing lawmakers and the press. She has been facing shareholders. What more is going to be asked of mary barra . I am not sure anything more will be asked. It is what more she will answer. When this first arose, she did not know much about it. Maybe she was being counseled not to know. You could see a change in mary barras character from the first few times she faced questions until now. She was clearly being counseled and being told what to say, being coach. She was new to the position and had just found out about the problem. Now she seems to be more sure of her self, more confident. Divulging a lot of information. S will be disappointed with that. She will be giving the details of the report. Almost certainly none of the members of congress have read it all themselves. Click thank you, matt miller on gm recalls. Shaking, bill and Hillary Clinton both support and estate tax to keep the u. S. From being dominated by inherited wealth. They do not want to pay it all themselves. The clintons are using Financial Strategies that help the wealthy shield some of their estate. They have established a trust and have shifted their new york home into it. That could save them hundreds of thousands of dollars in estate taxes. Hillary clinton drew attention to the couples finances saying were debra after leaving the white house. Broke afterdead leaving the white house. Whont to bring in david, worked on president obamas race and managed his campaign. You read the story on the s use of legal Financial Strategies. Some would say this seems hypocritical. I think it makes the case for tax reform. Thosell have to answer questions. My suggestion would be to say this is why we need tax reform. Simpler, fairer reform on the corporate and individual side. These are legal, most people will use them. It makes a compelling case for tax reform. This all the time from Hillary Clinton made comments about estate taxes with Warren Buffett at her side. Warren buffett takes advantage of the very same tax policies that he is criticizing. That tax reform is changed, i am going to continue to use some of these advantages. Doesnt that strike you as hypocritical . I do not. I think that there are shades of this. There is the most aggressive, right up to the line. Some things met romney utilized bothered voters in 2012. Says is an argument that you should not utilize any of these legal instruments if you are going to criticize it, exactly. It is a more compelling to say this is the law. They will have financial help, accounting help. We need tax reform that is more simple. This is what makes the president ial campaign hard. It is an obstacle course. Every day you will be pressed not just on your position but on your personal approach and behaviors. Hillary clinton going to have to be more transparent about her financial situation . The lesson of 2012 it caused mitt romney great problems. Not just what he did, is what he tried to shield. Is alwaysansparency the best recourse in a president ial campaign. Or else you will be consumed by questions and people will believe the worst. You have no option but to be as transparent as you can. Or else it will be filled in by your opponents and the press. What could they be hiding . The 2012e referring to campaign when democrats were asking mitt romney to disclose more of his tax returns beyond 2011 . It was the tax returns, which offshore havens he was utilizing. The situation around him leaving bank capital. It a period of weeks, consumed the campaign and prevented them from talking about what they wanted to talk about. Every question that is going to be asked, you have to prepare an answer and understand you might things youpress for are not comfortable discussing. Hillary clinton will be a strong candidate. On the republican side, it is not just how strong you are on paper, it is how you can transact the campaign. Becoming harder and harder every year. , romneys Mitt Romney Campaign said he was only going to disclose what is required. He disclose what was required of any candidate running for president. Hillary clinton is asked to give more Financial Information than what is required, is she going to do that . Question ofon the tax returns. There is no requirement to release her tax returns. There was a political tradition to do so with the parties. That is the standard. Rand paul,nton, marco rubio will have to make a decision about what kind of taxes to release. There is a standard. If they fall short of that, they will face hard questions. Did she make a political gaffe when she said she was dead broke coming out of the white house . We are not even in spring training of the 2016 campaign. None of this is going to matter in the spring of 2016. This is a learning period. The next morning, she understood it was not the answer she would have liked to get them corrected it. When you make a mistake, you are going to make a mistake running for president was that in a state was that a mistake . She said it was inartful. Her answer the next day was that they have been blessed. Talking about the fact that she and her husband have the ability to make personal money and raise money for a foundation that is doing a lot of good. Accurate . Oke, is that they left the white house with millions of dollars of legal bills that had but they have the potential to make money quickly. That is not the situation most americans face who are going through financial hardship. She recognized, did not dig in and defend the answer and the next day said let me clear up what i meant. Bloomberg contributor david forffe, former adviser president barack obama. A plain old alice off the ball. A plain old vanilla soccer ball . This is a power source. The whiskey that wants to be a challenge to jack daniels. Stay in the loop. You are watching in the loop. A look at our top headlines. Making it easier for you to comparison shop. Walmart and other retailers reached an agreement with the new York Attorney general to provide unit pricing online. Costco, walgreens, and cvs will put you prices on their webbased platforms within nine months. Interfered with a contract between macys and Martha Stewart when it cut a deal to sell home goods. A judge made the ruling yesterday, ending a 2. 5 year legal battle. The judge said jcpenney should not be punished. Need regulation, the message from 100 scientists who wrote a letter to the world health organization. Saying the organization should support marketing regulations and efficacy data requirements and protection for bystanders from secondhand vapor. Ecigarettes causing new issues. Back in washington as the u. S. Weighs military options in iraq. Fighters from al qaeda Breakaway Group clashed with iraqi forces 35 miles north of baghdad. I am joined by paul brouemmer, president ial paul bremmer, president ial envoy to iraq during the bush administration. Phil mattingly as well. Let me start with you on these trips. The president informed congress he sent 275 troops to iraq. They are being sent almost entirely for protection reasons with the u. S. Embassy in baghdad. The president also met with his Security Team to start weighing options. Heres what is on the table. Airstrikes are something the administration has opened the door to. Drone operations are something they are looking at. Another possibility is a limited number of special operators entering the country. A key point we have been told, u. S. Officials saying the operators would not be used for combat but they are essential if any type of road operation is to occur. U. S. Forces will need to be on the ground for targeting and intelligence purposes. Lots of action but no concrete moves. Ambassador, you say that we need boots on the ground. Yes. Thatally along the lines were just describe isis, it has been moving very fast, it has some weaknesses. There are not many of them, they number in the thousands. They are lightly armed and they are unpopular. You cannot go around executing prisoners of war and be popular for very long. Wo military objectives. Stop the southward movement of the isis. Air strikes onre their lines of communication. Secondly, help the iraqis retake the city, which will require drone attacks. You cannot do either without good intelligence. You will have to have intelligence collectors, special forces of some kind, fire control people on the ground. I think we should insist that we get a status of forces agreement for the servicemen. What size of an operation are we talking about . That i would leave to the military planners. The important thing is to get moving. Time is wasting. The president made his speech on friday. Ests there it is now tuesday morning. Phil, no appetite. Out a few years ago, there is no appetite among americans to go back to iraq. No. No appetite for americans to have troops pretty much anywhere. An issue the Obama Administration is having a difficult time with. They have citing pulling out of iraq as one of their primary foreignpolicy agreements for the last 2. 5 years. This First Campaign was run on getting out of iraq. Theyre faced with a complex and very fastmoving issue. It has thrown them for a loop. They have a lot of options on the table, but how quickly they move. They are staring at this situation and saying i cannot believe we are dealing with iraq. Ambassador, you are saying isis is vulnerable. Are they well funded . They are wellorganized, there are not many of them. They have owner abilities in their lines of communication living back to syria. They have pinched a lot of money from the banks in mosul. Ourpresident identified major interests on friday when he said it is not in our interest that this terrorist group should gain a foothold in the heart of the middle east. This is not afghanistan behind mounds mountains. This is in the heart of historic arab middle east with a lot of money. The idea of isis getting control majorq should be a problem for america. That is the interest we have to focus on. Explain more about how they are funded, and ambassador. To takehave been able over a lot of the eastern part of syria. Theyre getting funds from some elements of the gulf states, as al qaeda did. Al qaedatype organization. They are so extreme al qaeda has declared they are not part of us. They are funded more or less as al qaeda has been funded. Phil, and the possibility on the financial side to weaken this group . Difficulty the u. S. Treasury has been effective on the sanctions regime, antiterrorist sanctions going back to the bush administration. This group is largely rating banks raiding banks. Pulling millions of dollars out of banks with each town they move through. That limits what the u. S. Can do on that front. Phil mattingly, our white house correspondent. Also to ambassador paul bremer, former envoy to iraq. Cashing in on the world cup. Winners in brazil that have nothing to do with soccer. A Court Case Involving Martha Stewart may be coming to an end. Are watching in the loop. Live on bloomberg television, streaming on your phone and bloomberg. Com. Almost 26 minutes past the hour, bloomberg is on the markets. Slightly higher. Lots of data in a few moments, including cpi, a measure of inflation for the month of may. Expected to be up by. 2 . Expectedtarts at 8 30, to decline by almost 4 . Building permits will be out. On the markets again in 30 minutes. In a dramatic move, usa 5 ofted ghana 21 on day the world cup with goals in the opening and closing minutes of the game. Inside the world cup and the billions spent on stadiums, hotels, and airport upgrades. Protests have erupted as brazilians claim more money should have been poured into Affordable Housing, schools, and hospitals. There is a class of investor that is happy to leverage the new reality in brazil. Real estate investors are buying, modernizing, and hotelsing apartments, offices and data centers. Tom schapiro joins us, the founder and president of gtis partners. Half of your business is in brazil . We have invested almost 1. 5 billion in brazil. You are doubling down . Things havelly, changed dramatically. We do not see a good scenario for 2015. A lot of capital has exited brazil. We believe brazil is short term going to be rough and longterm the fundamentals are strongly in place. We investedons still exist. Which are . Very young population, the average age is 27. 5 years. 45 of theg to population at working age. Brazil produces iron ore, soy, top 10t is becoming a oil producer. A dramatic shift in the population out of poverty. Theears ago, 55 percent of population was impoverished. That is down to 25 . Judging from what you have seen on the news out of brazil, that is not enough. When people have more, they want more. Once you leave poverty and you become part of the middle class, you want a car and a house. Understandable. Brazils going through Structural Reforms with a lot going on. Result brazil went through the financial crisis beautifully, but given the fed tapering and the commodity downcycle, china slowing down, that has affected brazil. They havetion, 6 , raised Interest Rates to 11 . The currency has come down. That has made the emerging middle class feel like they have been left behind in the growth story, which is why you are seeing protests. And there complains that there is a lack of Affordable Housing. Is there . Absolutely, there is a housing shortage. We build a ton of Affordable Housing. We have built about 15,000 units. One of the best opportunities is in the Affordable Housing sector. We are more nervous in the middle income sector. Why did supply diminish on the affordable end . It hasid not diminish, gotten left behind. They need to build 15 Million Units at of a population of 35 Million People. Brazil has always been behind from a real estate perspective. This is a fastgrowing economy. 7 gdp growth, a lot to catch up. We have been in this tremendous cycle with tremendous growth through the whole downcycle. One bad quarter. I remember. We have sailed through. Given the tapering, the commodities cycle, china slowdown and government policy issues, things have gotten tough. 2015 is going to be a tough year for brazil. Why we think it is a great time to invest, if you believe in the longterm fundamentals of a ,lace in capital starts to flee it is a great time to invest because the liquidity price is down. We can be a liquidity provider to the market. Is it hard to do business in brazil . It is complicated. Why do you do it . The margins are worth it. How do they compare to the u. S. . Pointsto 500 basis overall. Our portfolio leverage is only 2 in brazil. We generate highmargins. A Typical Office or industrial building, 16 on cost per cap rate. Any majort of market. 100150 basea point spread. Housing starts, 6. 5 decline in Housing Starts for may. Down more thans expected, off by 6. 4 . Inflation month on month a little higher than expected, up almost. 5 . Core cpi also coming in a little tighter. Mike mckee is standing by with more on the breaking news. Arenflation numbers interesting, that is one of the feds pillars. Looking to see inflation go up. They are not following cpi. Well for morede inflation. Is this the inflation you want . The push was in energy, up. 9 in cpi. They strip that and look at the rate, the core influenced by a bigger than expected rise in services. Up. 4 this month. You will pay more at the dry cleaner and things like that. Housing was up. 3 . Some inflation working its way into the economy on a yearoveryear basis. 2. 1 cpi. Housing is a key to growth, this is a little bit of a disappointment because it is not as much as expected. A decline was forecast and we are still in the more than one million range, just barely. Suggests housing has not dropped off a cliff. Maybe a bit of payback from what we saw last month with a 14 increase. Most of the drop was in multifamily, that increased 30 last month. Not a bad report on Housing Starts. Youheadline not as great as would think, something to keep an eye on with inflation. There anything here that causes you concern . No. We view that we have been under producing for a long period of time. We have a population of 86 Million People entering the workforce that need housing. We have been producing households 1. 2 million households a year for 40 years. That is coming back. We see a Housing Market that has not recovered and amazing affordability and credit coming back in. This is going to change monthtomonth. It is more a regional story the national. Tremendous opportunity and have invested over 1 billion in the u. S. Housing market over the past couple years. Thank you so much for joining gtisom shapiro of partners. Harnessing the energy used to kick a soccer ball as a way to keep the lights on. Check under the hood of formula one racing. They might be ready to put the brakes on their partnership with f1. Stay in the loop. You are watching in the loop. Musk for tesla and elon in the fight to sell directly in new jersey after being blocked by a state Motor Vehicle commission. That includes members of Chris Christies cabinet. The state assembly has approved a bill that would allow sales directly from the manufacturer. It will head to the state and it before crossing kristis desk. Chris christie has said he would not bypass the legal process. Head to bloomberg. Com tv to watch our special ops for more information on the statebystate fight you on elon musk is waging. Facingmpanies are changes. Always new ways of doing business and building your brand. One new study looks into how these changes are impacting the marketing world. Namely, the role of the cmo. The finding looks like the end of that job. Joining me with more is erich joachimsthaler, founder and ceo of vivaldi partners. He is also the author of hidden in plain sight how to find and execute your companys nextday growth strategy. Cmos are like dinosaurs. The way we know them is disappearing. Why . Changing,iness is value is changing. It is moving from running operations to connecting with consumers. The change is being caused by digital disruption. Most importantly, changes in consumer behavior. How consumers adopt new technologies. That causes the cmo of yesteryear to be obsolete. What is the cmo of old . The cmo would have control of all the channels and touch points and ways of reaching the consumer. Today, that control has moved to the consumer. The consumer is the boss. They are in charge because of social media . Social media has empowered them, mobile phones. They are controlling the access to their wallet and their Information Available for marketers. That inld think, erich, this day and age when you have so many messages and consumers demanding more, you would need the cmo even more. You need a different one. The new one is what . A cmo that faces different challenges. Challenges of data, a data revolution. A tsunami of new data he has to deal with. Had very few data that would come on a monthly basis. The new cmo has to love data. Is there Something Else . The new cmo needs to learn how to understand consumers without doing marketing research. Consumers today do not answer surveys or want to participate in surveys. When have you last participated in a survey . I hate service. You have an interesting way of comparing the companies of yesteryear to the companys of now. You say companies managed before her like american football teams. Companies are managed like how a european soccer team is managed. Very simple. It is onen football, person, the quarterback, that makes the play and those that and is the prinicpal. Principal. Is the in european football, everyone plays different roles. Plan,rican football, you evaluate, and then you execute the play. Then you stop the clock. Stop and go. In european football, soccer, you play all the time. You change the play while it is happening. Justu are not assigned to one position, you play across the field. You are not executing a single task. You have to multitask. And that is what Companies Need to be like. Thank you for joining me. Erich joachimsthaler, founder and ceo of vivaldi partners. Also the author of hidden in plain sight. The worlds most valuable stamp getting ready to go on the Auction Block at sothebys. You will not believe how much it is expected to sell for. While teams compete in brazil, people in other parts of the world are playing soccer to keep the lights on. The ceo of the company that found a way to harness energy. Kicking a soccer ball into powering a lightbulb. We will have more in a moment. 20 million, that is how much the worlds rarest stamp could fetch at auction. Centritish guiana one magenta was issued in 1856. It features an image of a sailing ship. It could be the worlds most the moststamp and expensive object ever made by weight. One potential bidder is pimco founder bill gross, who happens to be a stamp collector. Donna usa 1, but facesa 2 tough odds of advancing out of what is called a group of death. That was a huge deal. Before the day started, the u. S. Had a 26 chance of getting out of that group. Theyse they beat ghana, got a 50 chance. All of a sudden they have a double, a 5050 chance of getting out. Before the day started it looks like they did not have a shot. What does that mean . They got the easiest game. The games are going to get harder. A 39 ana game they had chance of winning. The portugal game, they have a 23 chance of winning. Germany, 10 . They took care of the easy game, if they have not won they really wouldve had no shot. It just gets harder. They improved their percentage without doing anything. Because portugal last the first game, the u. S. s chances went from 26 to 30 because portugal did so badly and lost by 4 goals. The tiebreaker comes down to goal differential. The u. S. Could get a neck strap the u. S. Could get an extra 4 chance by doing nothing. How important is the next match . If they lose portugal, they let portugal back into the standings. If they get a tie, they get a , whatever happens against germany does not matter. Youthing about germany, want germany to blow everybody out because germany is the class of the group. You dont want them giving points to the other team. You want them to kill the other teams like they did the portugal. That is the ideal situation, that they win by 4, not by 1. Chemi of bloomberg news. To find out the latest on the soccer parliament, had to bloomberg. Com rio. Could doll those kicks some good for people in need . Thats the idea behind a social company, unchartecd play uncharted play. Doubles as a light source. I sat down with founder and ceo jessica masters ahead of her trip to brazil. 30 minutes of play can give you over three hours of led light. Three hours. Show me. Bulb and go ahead and see the opening there. Stick it in. Oh, ok. Thats it. There really is light. Yes. Wanted to invent best you wanted to invent this why . Nigeriaual citizen of and the u. S. I am in nigeria quite a bit. I experienced an extreme lack of access to electricity. It was not socioeconomic, it was infrastructure. Are you trying to adapt this to not just light . It depends on the sport and the extent to which we can get as much power out of it. This balkan power this ball can power lamps, speakers. We are working on it to get a charge on things like ipads and laptops. We are excited about our jump rope. 15 minutes of jumping rope can give you a 50 charge on your cell phone. How are you partnering with toyota in brazil . Arehe exciting thing we partnering with toyota to do is to bring our impact curriculum duringchildren of rio the world cup games. The idea is while the world is looking at brazil and very excited, what could happen if we could take all this passion and excitement and energy and translate it into real power . We are there with two goals to get our hands dirty and work in communities that are going to be experiencing issues with infrastructural stress being placed on the country. They are expecting rolling blackouts and we plan on being there with our socckets and providing power. Are you giving away balls . We are bringing several dozen with us. Dont tell the airport. Thats a lot of baggage fees. Were going to be going, working with different organizations and cleaning up soccer fields. Teaching the children held the ball works and what it means to be an inventor. Cool. Starbucks outdoing itself with the latest employee per. Helping to ease the cost of Higher Education. The whiskey shortage spurring a war between jamison and jack taylors. Details can ask. More on the bidding war over alstom. Siemens and mitsubishi have offered to buy the Energy Assets of the company. Their offer values the business at more than 19 billion. Caroline connan caught up with inemens Ceo Joe Kaeser paris. Heres what he had to say about what he calls his companys superior offer. The feeling is the president is a good listener. He has been listening to siemens and he knows the facts. I am sure he appreciates the socially, industrial he, strategically and financially superior. 56 minutes past the hour, bloomberg is on the markets. Declining over the last several days. Continuing those declines after Housing Starts came in a little worse than expected as well as building permits. Cpi inching a little higher than what economists had estimated. On the markets again in 30 minutes. Coming up, partly inspired by Michael Lewis flash was, at the conducts an investigation into highfrequency trading on wall street. Bill de blasio was whistling dixie when he made a bet on the new york rangers to win the stanley cup. Now singing a different tune. Stay in the loop. From theutes away opening bell. You are in the loop. Stocks willcates open lower. Builders broke ground on more the a million homes for second month in a row, the pace was less than full cast than forecast. A Senate Committee wants to know if highfrequency trading harms investors. A victory in new jersey for tesla. The state assembly approved a bill that allows consumers buy electric cars from the manufacturer. The bill goes to the state senate. From the to the u. S. International monetary fund. Your economy will grow more slowly than forecast, so the fed should keep Interest Rates lower for longer. Mike mckee joins us now. The fed meets today. Will they pay any attention to the imf report . No. Lower for longer, doesnt that sound like what janet yellen has already been saying . The imf has a history of telling people what they are already planning to do. Earlier this year, they told the ecb you should be cutting rates. Mario draghi was asked about Christine Lagardes comments and he had a sarcastic response. Saying he thinks the imf has been extremely generous in suggesting what they should do. And they were really thankful for that. But the viewpoint of the governing council were different. Sounds that way. Does the imf know what they are talking about . Tell me. Not according to a lot of people who look at their track record. The bank in sweden looked at the forecasting records and felt that they were not good. The imf looked at its own record. While they are not ms. Cearley biased, they consistently do not perform better or worse while they are not necessarily biased, they consistently do not perform better or worse. They have been overly optimistic and times of recession. Is not going to listen to the imf, what will influence them, if anything, during this meeting . What might have an influence is the latest cpi numbers we got today. It suggested inflation might be building from the bottom up. Take out the big rise in energy and food and you had a rise in services. People look to that, what is the biggest expense at Service Industry companies . Compensation. You have to pay workers more. If that is what is happening, you will start to see the inflation they have been looking for. They will not do anything this week. Maybe towards the end of the year they were there will be discussion about whether the fed is getting behind the curve if we keep getting these kinds of numbers. Thank you, mike mckee. In washington, executives from the New York Stock Exchange are among a group of brokers being questioned by the Senate Subcommittee on investigation on highspeed trading practices. The hearing will examine conflicts of interest in equity markets that threatened to damage investors and a red odefidence and er confidence. I want to bring in kerry hughes. Nd megan what is the basis for this hearing . This is the latest saga in has sweptga that through wall street. Starting with the new York Attorney general investigating the technology and services that are the backbone of how hft runs. We had the fbi and the sec proposing some regulatory changes to the landscape. Today, we have the senate hearing. This particular committee has been pretty tough on wall street. They recently held a hearing for Credit Suisse and have held hearings over the whale. This is in their purview and something that would be of interest. They are looking at basically the relationship between exchanges, brokers, and traders. To gets paid and who pays do a trade. Is it hurting retail investors, is a transparent . Is it legal . I dont think they are asking if it is legal. I think they are asking if it is fair to the market and there is enough transparency. Wassame vein the sec looking at with regulatory changes, is it transparent enough . To lead do we need more light in hft, considered a dark practice. It does not have a good reputation. Who is going to be at the hearing . That arefferent panels going to be getting underway in half an hour. Of the most one highprofile proponents of more katsayuma. Y, brad the lead character in Michael Lewis flash boys. He uncovered rbs, a lot of hft practices. He will be with an academic researcher Whose Research backed up these claims. Then we will hear a different panel representing the exchanges and the brokers. Executives from the new york tdma or trade, and vanguard. The executive from vanguard has this is overstated. Sharp conflicts of opinion here as far as how wide ranging this goes and how much this impacts the markets. Should any of us be disturbed that lawmakers are using a bestseller as a reason to hold a hearing . It is a conversation that needs to happen. It is really just adding more voices to it and trying to open up and get the American Public to question what is going on. It exposes it to the sunlight. On a final note, could there be regulatory changes that come out of this . As far as the book, i talked to chairman levin. He said the chairman has read the book and that is part of the reason for the hearing. This was on his radar well before. Crash got a lot of people more involved in highfrequency trading on capitol hill. The question as far as what this means in terms of regulation is something to look out for him but we hear from lawmakers today. As keri mentioned, we have a number of investigations going on. The sec making proposals. Hear fromt of what we the lawmakers is going to be whether they are getting behind those proposals and whether that will be enough. Thank you for joining us, megan hughes in washington and keri of bloomberg news. Missing and shaking this hour. New york city mayor bill de blasio. Last night on jimmy kimmel live, he paid off a bet on the stanley cup playoffs. Led de blasio to sing i love l. A. From the west side to the east side everybody the sun is shining i left i love l. A. More energy for starbucks employees. The coffee chain offering to pay for its employees to go to college. This could be the end of the road for a Longstanding Partnership between ferrari and formula one. Details ahead. Are watching in the loop, live on bloomberg television, streaming on your tablet and bloomberg. Com. Starbucks has offered workers a new perk, a shot at a Online College degree. The coffee chain is partnering with Arizona State university to offer Tuition Reimbursement to its 135 thousand u. S. Employees, in anusual benefit industry where Higher Education is sometimes out of reach. David bergeron is a former advisor in the u. S. Department of education and now works at the center of american progress. Preface this by saying that there are companies who pay for their workers Higher Education tuition. That is not unusual. What is more unusual . The key here is that starbucks is making commitments to its employees, getting a degree from a college that has a great reputation, Arizona State university. Really trying to make sure that they address the inequities in educational experiences for their employees. Who often have not had a shot at a college education. It sounds as if starbucks is not going to require, as we have seen other companies do, require employees to stay at the company after completing a degree. Right. They are direct about this. They are providing this as an opportunity for employees to get majorege degree in any offered online by Arizona State university. So they are not tying it to the performance of their company and employees on the job. That is very different from what we see typically employers providing. What do you make of the partnership with Arizona State . Arizona State University is an institute that has been fostering innovation, working hard to deliver highquality programs through its online at as low a cost as possible. Now they are able to touch an byn greater opportunity entering into this partnership with a Great Company like starbucks. Is a going to pressure others to follow suit . Any employee or that is drawing from the same labor market is going to have to consider how they can match or provide a similar benefit for their employees. If they do not, they will have trouble recruiting and retaining employees. Thatclearly is something is on the minds of every employer in our economy. Why should private companies be responsible for paying College Tuition for their and pulleys . College tuition for their and pulleys College Tuition for their employees . Havedont know that they an obligation. Starbucks is doing it for their own reasons to retain employees. They are making a statement about their views on equity in the u. S. Raise theey want to Educational Attainment of our society, grow our economy, and improve lives by providing education. They feel that as part of their Corporate Mission and goal. But, that is right, david. Privates it mean when enterprise has to make a stand and help their own employees in a Higher Education system that is overpriced in many respects . And is graduating students that cannot pay their loans back and are getting no help from government. It is a misstatement to say that they are getting no help from the government. The federal government is every year40 billion to low income and firstgeneration students. They are providing Student Loans 120are totaling billion or more per year and generous repayment plans. Ist starbucks is doing saying they do not want to see their employees have to take on those loans. They would prefer that their employees benefit from the federal or they would have to work two jobs to pay the loan back. A concern. Y, that is under the pay as you work repayment plan, which has been implemented by the Obama Administration, their repayment obligations on federal Student Loans are capped at 10 of the stationary income. Of discretionary income. You do not need to take on two jobs. It is something we would prefer people not to do, we would like in theirto be engaged communities. That is the breathing room that this starbucks approach is going to provide. Vicevid bergeron, president of post secondary education at the center for american progress. An internet Safety Research group investigating credit card thefts makes a surprising find. Details next. Hackers are selling stolen credit card data through free videos on youtube. Google is failing to block these videos as legitimate ads are running next to them. According to a report from the digital citizens alliance. Chris covers National Security and technology in washington and joins us with details. Tell us what is going on. The report is straightforward. It is welcome to the wild wild west. Hackers are able to get their hands on stolen card information and need to sell it. One of the venues is youtube, they lay videos and put down contact information. People can get in touch with them to buy credit card data and go out and make purchases. Why hasnt google put a stop to this . It has a process in place to screen the videos and take down videos that violate their guidelines. Clearly, this report shows they are not doing enough. Theyroup behind it says are going to start to work with advertisers on youtube to put pressure on google. In a lot of cases, these videos are running next to legitimate advertisement. In one case, there was a video running next to an ad for target. Oh, man. They suffered one of the worst breaches in history. Tell me how many videos are we talking about here . The Alliance Says they found hundreds of videos. It is not hard to go on youtube and search for a stolen credit for or finding credit cards that were. Type in search terms and a lot of videos come up. This is part of the underground economy that allows hackers to operate a drive. Thank you for joining us, chris on this stunning report about videos on youtube. A few minutes from the opening bell. We have got the top 10 traits you do not want to miss. Keep it here on in the loop care cup. You are in the loop. 26 minutes past the hour, bloomberg is on the markets. Scarlet fu has your trade before the open. Futures took a leg down and turned negative after the 8 30 economic reports that showed disappointing Housing Starts and signs of inflation. The cost of living increased more than estimated. As the Federal Reserve begins a two date policy meeting. Treasuries reacted to the news that pressers are heating up, the two year yield up to 48 basis points. Ninemonth high. The 10 year yield is higher come a 2. 63 . The dollar strengthening, the dxy at 80. 63. On the markets again in 30 minutes. Lets count down to the top 10 with the only trades you need to know about. Julie hyman joins in. Number 10, sony. The companys playstation 4 the xbox one, extending a lead for a fifth month. Microsoft started selling a lower priced version of its gaming device to match the 399 dollar price of the playstation 4. At t will be the carrier for amazons new smart phone, expected to be unveiled tomorrow. This is according to the wall street journal. At t provides Wireless Service to the candle the reader. Newitigroup purchased headquarters in hong kong, making it the largest ever Office Acquisition and the city. The 21 Floor Office Building will become citigroups new city enter. Solar city, the Company Whose agrees tos elon musk, acquire a Solar Technology and manufacturing company. Solar city plans to open a plant in new york. Terms of the deal were not disclosed. Its first Energy Contract from the pentagon since the lifting of government sanctions imposed after the deepwater horizon disaster. The 43 million natural gas deal was the first contract in almost 18 months. Siemens, joining with Mitsubishi Heavy Industries for alstoms energy. Trumping an offer from ge. Siemens said the joint bid values alstoms Energy Assets at 14. 2 billion euros. A little higher for siemens. Four, nuance communications, the maker of speech recognition fiveare rose the most in years after reports it is considering a sale. Taz talk to pr nuance has talked to potential buyers including samsung. Hired citibank as an advisor, expecting to receive takeover offers. Shire conducts most of its business in u. S. But is based in ireland for tax purposes. The companys proposed merger with sabine oil and gas is still on track, despite news yesterday that a loan fell through. Shares surging, recovering from the 18 drop yesterday. Has added 3otors million vehicles to its recall list, bringing the total to up 20 million recalls. Gm in may had its best month of auto sales since august 2008. The call, i want to bring in the managing director and principal, who manages 3. 5 billion. While investors are nervous about growing violence in iraq and the middle east, those tensions are driving up energy prices, which will help those refining stocks. Buy Marathon Petroleum and valero. Why . Explain. Right now, oil prices are sold in two areas, wti, u. S. , and brent. The difference between those two is getting wider because the pressure in the middle east is having oil prices go up in the middle east. Here we have an abundance of oil, our prices on wti, the disparity will increase. The reason you want to own refiners, we are allowed to export refined product. The zone, which we can send to europe and south america. That falls to the bottom line of the refiner. As pressure goes on brent to go higher. Wti stays level. The difference will get better and better. Wti might go up but you are looking at the delta. These companies are based on the gulf of mexico, right next to ports they ship that. Good companies with solid down sheets, cash flow, and growing dividends. Julie is looking at the risks for refiners. Many of them have performed very well. Valero up double other energy stocks. Marathon petroleum has not been quite as well. Youou look at the spread were referring to between wti a wident, we could see and if we continue to see oil prices go up as a result of iraq. If you look at the spread, it has been wider. You could of captured more profit from that gap, that spread, six months ago, then you are right now. Im curious about the further capacity for it to widen, especially when you have had a stock like valero performed so well. Buthe spread has come down over time that is going to widen again as we get more oil coming and externaling pressure. Valero and marathon still trade they aremes earnings, still cheap and you are expecting doubledigit growth for earnings. Investors are scared of these companies because they are so capitalintensive. There are no new refineries being built, especially not in europe. The demand is just increasing and you have a limited amount of supply. As that happens, your margins increased. About stocks moved by headlines, General Motors every day. Scarlet has a recap of recent headlines. Added another 3 million vehicles to its list of recalls, bringing the number of cars to 20 million in north america. The cost for all the recalls, 2 billion. Mary barra will be returning to capitol hill tomorrow. We should mention that consumers are not avoiding gm. Domestic sales rose 13 in may 285,000. Best levels of the they have seen in five years. This is the news on the prenew ceo. For other reasons it is international and it has chinese and european growth. In europe you have a long runway for them to grow with a good Balance Sheet and 3. 5 dividend yield, which gives you support on the stop. For instance, fienberg looking at the Victims Compensation fund. There is a shortterm overhang on whether they will penetrate the shields and see if the bankruptcy defense can hold on. Gm overtime is going to look forward and that is what investors are looking at. What is the future for this company . The past has issues but what is the future value of that cash flow . Why gm . We like ford, gm is cheaper and has a better upside. Ford, you still have 11. 4 11. 4 years old. The average american car. People are still going to buy cars. Look at it globally and they will capture a lot of share. Thank you, managing director at douglas t lane. Macys and jcpenney have been battling it out over Martha Stewarts home goods line. Now we can say we have a winner in that battle. And formula one metta go together. New rules threaten to damage the relationship. Details of straight ahead. A 2. 5 year brawl between macys, jcpenney, and Martha Stewart living is over. A new York Supreme Court justice says jcpenney interfered with macys deal to sell the brand. Julie hyman deals us with more. Finally over, macys has won . Macys gets vindicated but it is not clear whether they are going to get any punitive damages. The judge in the case says jcpenney has been punishe d enough. He says their strategy was a failure. Determination of the Strategic Alliance with mslo underscored how illconceived it was, to the point where it placed jcp on the verge of collapse. Perhaps they have been punished enough for the other strategy and we all know what has happened with jcpenney over the last several years after ron johnson took over. He wanted to have stores w ithin a store anchored by Martha Stewart living products. That failed. He said it was clear that jcp was in the wrong. He says the facts underscore how over the top the efforts were in jcps pursuit of mslo. The evidence compels me to find out that they were in the wrong. There was an ethical and legal breach in the situation. What happens now . Are happy but the judge declined to rule on any damages, he kicked back to an independent committee to figure out whether jcp will have to pay any monetary amount to macys in this case. Sound like this is not the means. It by any it is not the very end, we have the conclusion. Both stores for the moment still carry the products. Jcpenneys relationship with Martha Stewart will be more brief than that of macys. If you look at how the two companies have done, certainly the Martha Stewart partnership did not give jcpenney any sort of edge. The company has really been struggling. In its most recent quarter it did see a rebound in sales. We will see if that continues. Macys has remained an out performer on a relative basis when it comes to other retailers. Thank you so much, julie hyman, our senior markets correspondent. He is a look at the Top Technology stories. Parts toans to sell smart watchmakers. The Worlds Largest watchmaker says it will not make its own smart watch right now. The ceo says his company has all the technology it needs to make one, but is waiting to do so until there is more demand. Its firstl unveil foray into the Smartphone Market tomorrow at an event in seattle. Seven years after the iphone, jeff bezos will announce a handset capable of pushing access to its online store. The device is anticipated to feature 3d viewing capabilities that do not require glasses. Alibabas fourthquarter Revenue Growth slowed and Profit Margins slowed as they spent more on marketing to attract smartphone users. The first revision to the ipo prospectus shows increase of 39 , compared to a growth rate of 71 a year ago. Tech and median every weekday at 1 00 and 6 00 eastern on bloomberg west. Cars and, ferrari formula one have gone handinhand. The same relationship could come to a screeching halt. Ferrari threatening to leave f1 over raising rules and a potential sale of the race to liberty global. John malone. Matt miller joins us with this real life m a telenovela. It is a fascinating story, a very soap operaish line. First, you have the names alone. The chairman of ferrari is good enough for a telenovella. Di montezemolo. Donald mckenzie, they own the majority of formula one. John malone, the darth vader of cable from liberty media. They are in thi together. They are in this together. John malone is a dressed down, midwest kind of guy. He is not that you dont like the darth vader moniker . He is not the personality usually want. Most gloriousthe and successful racing team in formula one history. They had the most famous and respected drivers in the 1950s. Of course. Umacher, and of course, formula one is the most important racing league in the universe. It is huge names. Formula one is dependent on ferrari. Lately, the chairman has been saying we do not like the way things are going. We do not like the rules, you cannot develop your engines during the season. They do not like fuel limitations, they are trying to green. Is we do not like limitations on tires and brakes. We could raise in a different league. When this guy talks, formula one listens. Why is formula one making changes . They want to be more technologically advanced and greener, trying to play to younger fans. Younger kids do not seem to care about cars, be they green or 12 cylinder. Bernie ecclestone made what ferrari thinks of as a poor decision and not getting involved with social media, google and apple. Another thing ferrari wants, they want formula one to get with it as far as the modernity of communications. Where would ferrari go . Waved a flagiver at the mazda race over the weekend. I said to a lot of reporters am going to race endurance racing after i am done with f1. He said i have spoken to luca di montezemolo about endurance and we are looking into it. Withsaid in an interview the wall street journal last week there is no way we can do both. Formula one is in negotiations to sell. They want as much money as they can. 8ey are looking at an billion valuation, there is about a 1 billion gap between they want and what malone wants to give. In order to use this leverage, cbc and called ecclestone to a meeting. So much drama. Matt miller, our auto expert. You might need a drink after hearing this battle between for ari between ferrari and f1. Jameson has a well known role model. Wants to beson, it seeing globally as a brand that is as big as jack daniels. Expanding its distillery and hopes to double sales by 2020. It has been name checked by popular songs by the gaga and rihanna. That is jack daniels, so beloved by Frank Sinatra that he was supposedly buried with a bottle. Jameson hopes to be the next jack but has a long way to go. Last year, consumers bought three times as much jack daniels as jameson. There you go, now you know. And unbelievable find within a painting by pablo picasso. Noticed itever before. Experts are trying to figure out what it is. We will tell you about it when we return. Time for global outlook. Siemens and mitsubishi have made an offer to buy the Energy Assets of alstom, valuing the business at more than 19 billion. A 17week after ge made billion offer for a unit. A hidden painting has been discovered under one of public houses first masterpieces. Using advances and infrared imagery, scientists discovered a bow tied manwith his face resting on his hand beneath picassos the blue room. Who is this man . Wow. Continues incup brazil, bloomberg looked at the strategies players use when it comes to taking corner kicks. A professional player from new yorks red bulls. When taking a corner kick, you factor in a few things. The way the opponent defense, where the keeper is standing, and where you want to put the ball. I like to put the ball in the middle of the half circle for the corner kick. I usually look at my target, i take a few steps back and position myself like between 45 degrees and 90 degrees angle. When you approach it, the swing of your foot can curve the ball towards the goalkeeper, which is what you want. Teams usually put a defender of the first post and a defender on the second post. As a caretaker, avoid the car and the first post, they are usually the guys to clear the ball out and at a counter on you. When you curve the ball in, the ball puts him in an awkward position. Your attackers attacking the ball will have an advantage. Trying to score. In rare cases, you see the kick taker score. It has happened, very gifted players do that. When it does, is magical. [applause] that is a for us on in the loop. Joining, Richard Hytner us to talk about his work. How he used it to get ahead. Thet is 56 minutes past hour, bloomberg is on the markets. Diane skvarla fin. 30 minutes into the start of u. S. Trading. You really do not see action in equities. A mixed picture for the s p and dow, nasdaq up by. 25 . A in 30 numbers showed Housing Starts and inflation. Reaction in treasuries that indoors that endures. Prices fell and yields are rising, the two year yield at the highest in nine months. The 10 year at two point 65 . The dollar is strengthening, dollar index at 8. 62. For more, i am joined by michael, he joins me from the cme. The data shows we have some inflation, even as janet yellen metric of risk pools. The bond market is focusing on inflation. Clearly the markets have looked to inflation for some time. Statistically, they have been disappointed time and time again. One of the things that caught my eye is the significance of how the u. K. And the u. S. Are so different on the date where numbers came out those on inflation and in housing. They went in two different direction. The boe chief, carney, spoke last week about being hawkish and higher rates earlier. For those reasons, i think the fed might follow the same vernacular. Could tomorrow that they see higher rates. By no means is it going to happen because there is too much slack in the labor market. Starting to see that with housing where it is that, the markets are preempting selloffs, only to watch it rise as we go into the third quarter. To you think there is a rethink in terms of what the fed might say tomorrow with regards to being more hawkish . Absolutely. What the fed is starting to do is rethinking how they are going to tackle the situation that continues to grow him on continues to drum on. There can be so not benzylic Quantitative Solutions because they eventually have to walk away from the medicine. There are ways the market will preempt those decisions and you are seeing it work its way out in a, the vix, and b, crude oil and gold. Is the lack of volatility temporary and we will see a spike in the coming weeks . I think so. I would not be surprised if that happens with a global current, everyone is focused with iraq. Are one thingions but when you Start Talking about large flows of oil being halted or not, that is the precursor where you through the affectsench in and it other markets. I think the u. S. Dollar is your first premise on how thats going to work against some of the major g7 currencies. What do you see as the biggest risk to the equity bull market now . It would be a fundamental fall down in what would be housing implement. Housing employment. Everyone is going to believe employment is picking up. If that falls down, we have a problem. Usthank you, michael joining from the cme. On the markets again in 30 minutes. Market makers is up next. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Killed, that is what critics of highfrequency trading say about investors getting the shaft. American Companies Like higheric are escaping taxes through clever and monday deals. M a deals. Fans may be going crazy over the world cup at home, but in brazil, it is a pretty easy ticket. It is getting awfully humid out there. We are comfortable inside. Im Erik Schatzker. Im alix steel in for stephanie. Im dreading the