Transcripts For BLOOMBERG In The Loop With Betty Liu 20150416

It is better than the consensus estimate of 1. 39. Revenue up 19. 8 billion dollars pretty much in line with what the bank had been expected to report. Net interest margin for the bank was the same as in the Fourth Quarter. Analysts were looking for a slight improvement, that did not happen. The same as previous the previous quarter. Consistent with what wells fargo had reported as well. Equity markets revenue 873 million. The bank had indicated that trading would be down mid to Single Digits yearoveryear. Betty thank you so much. I want to bring you some more top stories we are following this point in Vladimir Putin tackles the issues. Defending his handling of the nations problems today during the National Call in show on national television. Russias economy has been stunted by low oil prices. Putin says russias Financial Sector is driving. Vladimir putin despite the volatility of Financial Markets russias banks have been developing and growing well. On the whole, are banks and assets have grown to 77 trillion rubles. For the first time, these assets are larger than russias gdp. Betty the timing of the show coincided with the ruble rally. Russias currency dropped 46 against the dollar last year. Millions raised in the initial round of Public Offerings set to start trading today. Shares of the highspeed Trading Company hit the nasdaq today. The ipo raising 267 million. Party city with valuations that neared 2 billion. Moments ago, Goldman Sachs posted strong firstquarter earnings. The banks net revenue topped estimates by 1 billion. Goldman stock open this morning about 200. The first time this is happened since the height of the financial crisis seven years ago. A gyro copter landing in washington raising new questions about security. A florida postal workers flew through restricted airspace yesterday and landed on the capitol lawn. Doug hughes brought letters for congressional members. Charges against him are pending. Mario draghi gets attacked and now you have a copter on the lawn of the white house. What the heck . Shares of blackstone on the rise, up 3 after the Company Posted another blockbuster quarter. Jumping 99 as assets swelled past 300 billion for the first time. Much of blackstones clout lies in its real estate business. Less than a week ago, we heard that the firm flexed its muscles again when it teamed up with wells fargo to buy 23 billion in property from ge. With us now is blackstone cofounder and ceo thomas Steve Schwarzman. Also, erik schatzker. Cofounder and ceo, Steve Schwarzman. You guys are on a roll. You are an earnings machine. Youve got assets at 300 billion. Can you keep this pace going . Steve weve been keeping her momentum going for a long time. Earnings have been compounding at 46 . In the latest quarter, we raised 30 billion of new money for our products. That is more money than any alternative manager of the than ourselves has raised for entire year. We are in a simple business. We have been in it for 30 years. Our job is to earn high returns with very low risk. We have been compounding around 10 . If we can do Something Like that over a 30 year period in a world of low Interest Rates come if you, you can use that type of return. That is the business we are in, doing it with safety. Betty what is the fundraising environment like right now . Steve for us, pretty remarkable. We are the only firm of our type in the world. Our stockmarket value is six times what the other competitors are. When institutions are looking for different types of products because errors have all performed well that showers have all performed well, they go to us. They need these high returns to pay their pensioners or to keep their endowments growing. We have become a required course for these institutions. Ours have all performed well they go to us. We become a mandatory stock. Erik size begets size . You been growing at the equivalent of a tpg. 30 billion a quarter. You are raising more money over the course of 12 months. How sustainable is that . Steve i dont think we can keep raising 30 billion a quarter. Erik why not . Steve we cannot deploy the amount of money that you would have we have 311 billion right now. This year, weve invested 26 billion. The firm keeps growing at a really good as we grow we invest more and more money. If we are in the same return, our earnings keep going up. Betty is there a point where the size becomes a challenge . Does it get to a point where you have so much money that it gets harder and harder to deploy that . Erik its not on an aggregate b basis. Steve a fair question. I been asked that question since 1992. The reason it turns out to be wrong, we are not just trying to take what strategy and building it so big it can do anything. We are not in the magellan kind of business. When we see something interesting, we create a new pool of capital to do that. We grow only when we see a terrific opportunity for our customers. Only if we can attract somebody who is a 10 out of 10 to run that business and only if going into that business creates intellectual capital that we can use to make our existing businesses stronger. Our model can be expanded geographically come expanded in terms of different Asset Classes come expanded in terms of different parts of the capital structure. Every year, each of our bid groups big groups presents three expansion ideas. We pick one. And we do that. We only pick it if it has great returns for our investors. We have european lending, for example. Erik thats where your focus is . Steve four gs so as well, for energy. For gso as well, for energy. In real estate, its european real estate which we have been the largest ursa juror purchaser in the world. Each of our businesses doesnt have to invest at all. We are like a Basketball Team. Without a 24second clock. We dont have to shoot. We dont have to be invested. We wait for an easy shot. We keep passing the ball around and go for a layup. We only have to do 10 to 12 investments a year to invest our money. If you cannot come up with 10 decent ids with 200 people something is wrong. These and ideas with 200 people, something is wrong. 10 decent ids with 200 people, something is wrong. Betty heres a look at our top stories this morning. We begin with germanys finance minister ruling out any more concessions for greece. Its up to the greek government to commit to reforms so it can unlock more bailout money. The deadline is approaching. Here he is with brendan greeley. Wolfgang the program has been extended twice it now runs through june 30. The solution must be found by june 30. Brendan your deadline is the 30th of june. Wolfgang that is the deadline of the program. Betty greece is running out of money and there is no end in sight. Ecb policymakers in washington today, where of their limits. Mario draghi repeated a call for reform measures. Aware of their limits. The imf singled out the eurozone in an assessment of Growth Potential across the world. Those are your top stories this morning. Lets get back to our conversation with Steve Schwarzman. Erik schatzker joining me as well. We did not get a lot to talk about your real estate portion. You entered this megadeal with ge. Given that there is always a cycle here with property, what can we gleam on your outlook . Steve you can be a buyer and a seller. At the same time, and do well doing both. The reason for that is when we buy properties, we have a reason for buying them. We are not buying a market. We have a saying john gray who runs our business popularized by it, fix it, sell it. We buy them, do something to that property and write put in bees, new facilities. In lobbies new facilities and then sell it. On the buy side, supply and demand of properties in terms of do construction is under control. Right now, we dont have in the United States and europe there arent that many cranes. Betty that means you are not getting bargain prices. Steve you dont get the same price as you got at the bottom of the financial crisis, for sure. That doesnt mean that you cant make money. We are compensated at the moment by exceptionally low Interest Rates. Real estate is a business that does use borrowed funds and the cost of money so low, that is an advantage. Erik you have so much to be happy about it your investors have to be pretty happy. I wonder if there is one thing that frustrates you come up valuation. You are the most profitable moneymanagement firm in the world. What is one dollar of blackstone earnings worth half as much as one dollar of black rock earnings . You trade at 11 times, they trade at 20 times. Steve there is something wrong with the picture. We are a relatively new asset class and people have some fear that if we sell things we will never invest in anything ever again that will make money. That this is a onetime operation erik thats why you trade at this discount. Steve thats what it is. The track record for 30 years we have been producing returns of approximately 1000 basis points over the stock market. In the last year despite all the sales we did, our accrued profits that arent realized yet is higher. We have not cleaned out we put more cookies in the cookie jar. Erik what do you do about it continuing to do what you do what do you do about it . Continuing to do what you do will produce results. Still, there is this valuation divide. Is there one to be some kind of convergence between the traditional guys whose Business Model is running out of room and the alternative guys like yourself . Steve one of the ways to do that is come and see the two of you and talk about it. The world will recognize that we have a really differentiated model. We are more like a branded company. We are more like that and we dominate our market. We are more like an apple, a google a boeing. We have customers who need us just like those companies do. Betty you are like a tim cook . Steve not exactly liked him. We are not as big. In our secure, we are certainly big. We have grown at 46 . In our sector, we are certainly big. Our reference are the Great Companies in the world. We look at them, what do they have . To have great products customers. Its the same with us. They are all growing. We are growing because our customers erik larry think recognizes this. Larry fink recognizes this. Blackrock wants to be in real estate, infrastructure. Do you worry about that . Steve i worry about everything. You cant be a good ceo or even an adequate one if you dont worry about everything. Larry is smart to do that. There are boats around a business like ours. Moats around a business like ours. We are trading at roughly 56 times the value. Betty thank you so much for joining us. Steve schwarzman ceo of blackstone. We will be back with jack lew. Betty you are watching in the loop. Good morning. Im betty liu. The Obama Administration has been dealing with International Fallout from u. S. Allies joining asias new International Investment Bank Something the u. S. Has opposed. Officials are saying that they will work in partnership with the chinese lead band bank. Something peter cook spoke more about with jack lew. Jack we have sent to china and other countries, its important to make sure that you do it right. That you have Good Governance in place, you avoid having problems with either the social impact, Environmental Impact or Economic Impact of the project. I was quite encouraged by the conversations ive had in beijing the chinese have heard that message and their focused on having a process in place where their initial projects meet the high standard. Weve been cleared to china and to the International Financial institutions that we look forward to being able to collaborate, working with the asia infrastructure bank. We made the offer to the chinese, we will work bilaterally. Can this get to a place where it is accomplishing the goal that we both share of having good, Sustainable Investment in infrastructure . We have not closed any options for the future. As they launch the new bank how do they make sure it operates in a way that enhances the Economic Opportunities in the areas where they are investing . What can we and the International Financial institutions do to make sure that is done in an effective way. Im hopeful that we can be successful working together. Good investments and solid projects. Thats a good thing. We have never discouraged participation in that kind of investment. Its important to do it right. We want to be partners in helping china and the partners they have achieved that goal. Peter the iran negotiations among norse possibility among your responsibilities. The white house says the president is willing to sign this legislation. Its clear that you guys dont love this legislation. Is there a risk that this could unwind these negotiations gekko jack the president has made it clear many times that he thinks it is important that congress not take action that has the effect of disrupting negotiations while they are still underway and working towards conclusion. Yesterday, the white house indicated that the president was prepared to sign the compromise that had been developed. It addressed the most significant concerns the administration had raised, both in terms of conditions and certification and schedule. Thats an important set of changes. We look forward to working with the congress and we go back to resume the negotiations. The goal is to have a good, solid agreement that achieves the result of making sure that iran cannot get nuclear weapons. We believe the framework is a very important step in the direction of getting there, but there is work to do between now and june 30 to complete it. That is the task ahead of us. Betty that was jack lew speaking to peter cook. We will have much more from that interview throughout the day. We are awaiting some breaking news right now on housing and jobless claims. Housing starts expected to come in at over one million. This is for the month of march 1. 0 4 million Housing Starts expected to have begun. That rise would have been about 16 . On Building Permits, 1. 0 8 Million Building permits expected to have been granted for the month of march. A decline of 1. 9 come a step back from the gains we saw in the prior month. Initial jobless claims expected at 280,000 claims. Well see if that number six below that key 300,000 level. And we will see if it will have an impact overall in the market reaction. The numbers are out. Housing starts, and undershot. Scarlett has more other breaking numbers. Scarlet it is a real miss. Analysts were looking at an increase of 16 . We have an increase of 6 . This is an increase of february. It was revised to be less of a drop. In terms of the actual net numbers, 926,000 Housing Starts. We are looking at at least one million. This is a slight increase from the february number of what under shoot. Building permits among over month is a drop of 5. 7 . Economists are looking at much a bigger. For overall Building Permits number at 1. 03 million. The jobless claims coming in. A disappointing read in we want the numbers to go down. Here you have 294,000 people filing for unemployment benefits. The consensus we had was 280,000. This is higher than the previous week. You are looking at features, not much movement. Declines of 0. 3 . Looking at the dollar index gdy. It is less. The 10 year yield comes down. It was lower already but near session lows. And i am going to pull up the two year yield as well. It tends to be much more sensitive. That has come to session lows at 48. 59 at the moment. Betty thank you. Scarlet noted jobless claims picking of slightly. Our top stories. President the fee is his policies. The question during his call in show, russias economy has been stunted by low oil prices. President putin defending his policies. He said he does not expect them to be lifted anytime soon. President clinton sanctions are political issue and we should not expect them to be lifted soon. It is a strategic issue for our western partners and not much to do with ukraine anymore. Betty the rubel is the bestperforming currency this year. It is 46 of against the dollar. It is a party in the public markets. Companies raising millions in a round of ipos area shares of a Trading Company hit the nasdaq etsy and craft as a 1. 7 billion company. As i said, it is a party. Making a public debut is party city. You go there for balloons and carts and other stuff. Ipl is expected to raise more than 370 million. A senate panel will take of changes in a doddfrank a lot. Law. One said regulations would be looked at. And the Federal Reserve will be considered. Nationwide protest remaining raises for lowwage workers were peaceful. Mcdonalds locked its doors to stop a crowd from pouring in. The threeyearold fight for 15 is gotten together by a union. Target has agreed to pay millions of dollars for a target breach. The breach exposed payment personal data of tunes of millions. Tens of millions of dollars. Those your top headlines this morning. Coming gobbled we will be speaking to our reporter. The three Companies Gearing up to trade including etsy including the site for vintage goods. Coming up, we will speak to our reporter. Betty welcome back to in the loop. I am betty liu. Scarlet fu looking at some of the action ahead of the opening bell. We had economic numbers. I know youre looking at some of the big banks. Scarlet we have to look at the banks. Goldman sachs moving higher in their premarket. Not a big move even as it poses a big steep in earnings. More than any other bank, they rely on securities for revenue and profit. It posted the first increase in five years. Different story at citigroup. A 10 drop in they were aggressive on cost cutting. Still at 10. 9 billion. The First Quarter office profits toppled estimates. I also want to bring your attention to panera. Surging in the premarket. That is a massive increase considering last year it completed 150 million in purchases. And they have a constructive dialogue. The nature of the discussions were not disclosed. And it may attract other buyers for it might be the beginning of this story. And Philip Morris the largest publicly traded tobacco company, firstquarter profits beat analystss demand. Sales volume was better than expected. It has to deal with a stronger dollar. All of its operations are out of the u. S. And they seem to have weathered it. Betty thank you. Scarlet fu there. It will be a big day for ipos with etsy and virtu and party city. Etsy raced to 106 and 70 million. Pricing shares at the top of the range. Raising 267 million. I am not a big etsy sand. I am not a huge handmade craft person. But why so high in pricing . Report of a is the big question. They were coming out at a big premium. Report Bank Reporter why so high in pricing and thats a big question . One of the answers ive been given is the idea of scarcity and will not see many tech ipo s there have been 7, about 1 3 of what we saw last year. Consumers want to growth. Other people are looking at this and saying etsy has a good chance of getting acquired. If we buy any premium and now is they ebay takes it over, we could get a premium on top of the premium. That is pure speculation. Betty it sells i. E. That is at the list of that could acquire etsy. Leslie mainly because it plans to spin off paypal. Paypal has been the source of growth for ebay. They can look at and see that has a similar model etsy thats a similar model. And they can see that as one way forward. Betty lets talk about virtu it will be trading in the nasdaq. They delay their ipo, was there hubbub around Michael Lewis markets are rigged . Leslie bank leslie it did not take a long time to get done. Michael lewis may be partly to blame. When they initially decided to debut it was a year ago. That was when his book was released. He said it was part of a market rigging. He is trying to sell to the same Fund Managers for you timing on their part. A year later, things are looking much brighter for virtu and they benefit from some volatility we have seen in commodities and affects and could benefit in the future if and when the fed raises rates. Their timing is spot on at this time around. We were able to price at the highend of the range and we will see what happens. Betty it has died down. Leslie it has. [laughter] betty party city is also going to be trading. You are going to be following that very closely. Leslie picker bloomberg reported. Watch her interview today on Bloomberg Television with the parties citys ceo at 12 30 p. M. Eastern. Our big number. Netflix is soaring the subscriber base. When will music cool streaming music streaming get its netflix moment . We will explain. Betty a look at our top stories. Steve wynn said there is fun to be had at macau even though it is going for a tough time. It was put at overweight by barclays. Steve told charlie it is worth the trip. Steve people come to have fun and excitement. It has an intrinsic excitement. You get on an airplane as i do want someone and fly 6000 miles to macau a get off a you are home again. Mcdonalds, Ralph Lauren Stores colonel sanders. Betty wynns exwife is getting a boost to her bid to stay on the board. A judge is shielded General Motors from billions of dollars from claims. They cannot be sued for lawsuits before the automator automaker entered bankruptcy. Some said they do not get a chance to sue because they covered up defects. Nearly a ton of baby food is being recalled because of pieces of broken glass. Beach and not issued the beechnut issued the recall. One slight injury was reported. Those era top headlines. Those are your top headlines. Coming up we will speak to britains previous foreign minister. Todays bloomberg big number is 62 million. Global subscribers to netflix. Thus streaming service jumped by 2. 3 million in the First Quarter of the year while International Accounts rose. It is been credited with original program like house of cards with kevin spacey and orange is the new black. They will extend to asia. Speaking of streaming, are we heading the next flicks moment netflix moment in music . Digital music outpaced that of physical figures. Music fans across the world spent 6. 8 5 billion in downloads and honest im online streaming. 6. 85 billion in downloads an online streaming. Ceo anthony bay joins us. Great to see you. I borrow the phrase from you. The netflix moment for music. What does it mean to you . Anthony bay as you have seen by the remarkable success of netflix, we have reached a point where a lot of people know about netflix and understand the idea and value of netflix. People have embraced that all around the world. Betty it is like a of their viewing . Anthony bay everybody was a tv at home will have it. That same thing has not happened in music. In essence, the Value Proposition is better. Access to more music and more constant content as a percentage free it can download a like netflix. The main part of the population does not understand. Betty is there a confusion about what you can get, right . On each service . And jayz coming out with his own Music Streaming Service and said i will put exclusive on this au come to mine and you come to mine. Anthony bay the Biggest Issue is confusion. The first is understanding the idea. If you tell somebody you can how have all of the songs on itunes for one flat rate. Most people would be surprised. Sign me up. That is the Value Proposition of streaming music whether from rdio or another service and eventually out. The biggest challenge is most people do not understand. Theres a certain amount of difference between exclusives. Not clear how it will work out. For the most part, it is not good for fans. Betty why not . Anthony bay the idea people will sign a two various services to get certain songs will slow down. It is hard to get people to understand the value of 10 a month. Every so by that artist is on this. Song by that artist is on this. Betty how do you get over this hump . Some is controlled by the artist . Anthony bay some by the label. Theres been a lot of press. Taylor swift is on rdio. Her issue was not picking a streaming service. That issue was the idea of free ondemand music. The bigger issue is not so much at the moment whether there are exclusives are not or whether or not people should be able to get anything they want. Betty will you get rid of the free music . Anthony bay we have different free music. It was different from spotify. Betty what is different . Anthony bay it is like pandora. It is radio. What is different from pandora style and rdio style is that you pick a station, i can make a taylor swift station. We program the music. If you go to pandora, you make a station and they pick of the songs. That is a new form of radio. The idea of radio is you pick the station and not the tone. It does not take away from sales. If i set what to listen to this right now, why would i buy it . Betty what is the proposition on saying i will pick rdio today . How to get that leader listener . Anthony bay a great question. In the end, i used to work at amazon. Jeff bezos says it best, you have to start with the customer and work backwards. Work on delivering the last Customer Experience in terms of the design of the product and to the content that you make available. Betty that is what then . Anthony bay; we win pretty much on product design. A lot of our designers are from apple. We win awards for that. Betty and hunting, great to see you. Anthony bay rdio ceo. We will be back. Betty jpmorgan, wells fargo and citi reported earnings today. Betty welcome back to in the loop. The top stories. Futures indicate stocks will open lower. Jobless claims below the 300,000. Home construction rose less than forecast. Below the one million annualized rate expected. President Vladimir Putin defense has policy. He fielded questions during his call in show. He is being criticized by the u. S. And israel for selling air defense missiles to iran. He said it will bring peace to the middle east. The ruble is the worlds bestperforming currency. Germanys finance minister is rolling got any more concessions for greece. Wolfgang schaeuble telling bloomberg it is up to the greek government. He reminded greece at the deadline is approaching. Here he is with brendan greeley. Wolfgang schaeuble the program has been extended twice and runs through june 30. In greece wants to avail is self of the funds, the solution must be found by june 30. Brandon your deadline is the june the 30th . Wolfgang schaeuble thats the deadline of the program. Betty greases running out of money. A leadership question at the top of the european largest automaker. Volkswagen ceo will appear before a supervisor were bored about dust Supervisory Board in front of the Supervisory Board about his future. Warren buffett competing for even more space atop your hot dogs. Hieinz is the top catchup seller. Now bringing mustard to the market. We are under 30 minutes away from the start of trade. I want to count you down. Hey, guys. Lets start with number 10. Netflix. Almost anybody with a broadband connection should have netflix right . In early trade, earnings came out after the bell. Subscriber levels are phenomenal. It rose more than expected. Sales were up 24 with original shows such as house of cards. Reporter after earnings the stock jumped and i looked for old stories netflix being in a bubble. I found them in 2011 and 2011 when the stock price was a fraction of what it was. Theyre executing so well in everybody wants it. The original programming is working. Betty their earnings are still reporter debbie downer. Betty he is looking at the numbers. Thats what he pays attention to. How much is netflix spending for content is a question. We have an idea of how much, will it be a problem . The dollar hit them hard. Because all the strength of the dollar, they saw a earnings per share cut almost in half. That is an issue. Betty it is. Number nine. Ipo balloons a. Bring your party hats. Party city, the largest seller of party goods joins etsy and virtu of going public. They have raised a combined 950 million dollars. Julie ipos are back to some degree. Theres been a bit of a slump in this year. Joe none of these are gigantic companies. Companies are going public before they got a massive. I am excited. Betty does anybody go to etsy . Julie not really. It is a b corporation. It means various environmental models. 200,000 will go toward etsy. Org that will help women and minorities start business. It is interesting to see is a new wave company focusing on things i social responsibility. Better bet on that note, number eight. Move over china, japan is the top foreign holder of 40 u. S. Debt. It shows you, it is interesting. Japan narrowly edged out china. Both countries hold roughly 1 trillion of u. S. Debt. Joe probably does not have huge ramifications for the u. S. But it is interesting because the story has been china well will own the u. S. Now you do not hear it for you are not the biggest holders a treasury. A debunked the narrative. There were many during the crisis. Betty that is one of them. It is really just in the vix. It does not tell you anything that will happen but a signpost of something of a competitive standing between the countries. Betty number seven, monetary risk at an alltime high of according to the worlds Biggest Wealth Fund or. Funder. 890 billion fund saying it is a risk. They were seeing profits from quantitative easing and buying spanish bonds. I am trying to figure it out. How do you bet of quantitative easing by buying spanish bonds . Joe in recent years and lately, theres been so much of the idea that Monetary Policy is the preeminent driver of decisions for all about what the boj our boe is going to do. What are the what the fed is going to do. In europe, the peripheral bonds. A lot of people thought everything was priced in. There have been huge movements. Julie and when he talks about it being a potential risk. At be in and of the day, probably more of a longterm risk. There is that predictability. Betty number six. Ben bernanke has a new gig. He is going to analyze Global Economic issues for citadel. It is a fund founded like hitting griffin. Is this one step closer for ben bernanke joining wall street . Its a fund founded by ken griffin. Joe it sounds like a way for him to get money without him being much bigger issues. Some people are going to be bothered by the revolving door issue. Julie look, he had a hard how long was he at the fed . 8 years. Now,he is reaping some of those rewards. Julie he has got to make a living. Betty does he have a book out . Joe later this year. Something about courage. Betty get to these nice gigs. Citi reported earnings. Called big banks are beating the street. That is up next. That a bank we contain you take down the breaking cabell. The deep dive. Betty we continue to count down the breaking cabell. Goldman sachs posted strong firstquarter results. Net profit topped estimates by 1 billion. It was 10 higher than forecast three citigroup posted a boost in profits after cutting cost cutting to weather the storm. Joining us now is paul miller. Great to see you. A phrase in your notes i thought was that some did a really well about Bank Earnings was ok is the new excellent, right . Paul miller the banks are reporting ok numbers. You saw goldman had a strong trading the number. It has a lot of volatility. They pays for loan growth. Because of the 10 year yield curve is flat, you are not getting good as is coming under pressure. You are getting ok loan growth. It is ok. You are right. Thats the new excellent. Betty does it mean the banks deserve their discount to the Broader Market . Paul miller well, a lot of the banks are not earning their cost of capital. Unless, you will get a discount to the market. You look at bank of america, a lot of people cannot get out of the way. It cannot earn is cost of capital. You have some banks we really like, usb, wells, they are not trading at a discount but really high. You have to earn your cost of capital out there if you want to trade in line with the market. Betty is is something out of their hands with regulation . Paul miller regulation have, in a hard, you are right. The crisis are still able to get the midteens and they were close to 20 before the crisis. Banks riding with economy that were are now looking at sub 10 . Those banks have to find a way to cut costs to get into the system and get rid of the regulatory cause. The smalley you are, the smaller you are, under a lot of pressure. Betty because of the pressure the Banking Committee will be considering some changes possibly perhaps to doddfrank. They know it seems that lawmakers are aware on the smaller regional banks are getting hit. Is there anything on the front you would be pricing in some of these regional banks . Paul miller there is discussion about the ccard being raised in anybody in 50 billion is included. It is a lot of money. Jpmorgan, kind of gets lost in and around there. We think it will go up to 250 billion which will exclude everybody but the top six. A lot of these people who put the systems into place, the upfront cost of 80 million 100 million will probably go down. We invest some of these costs are overwhelming and it will be relax. Some of it is priced in. Some is not. Zion have an efficient the rate north of 70. We think getting out of that c card test could help. Betty where is the sweet spot . Paul miller we think it is the pnc spot. You are not too big but you are big enough to get that cost not to be that the material. 250 million in size. If they may will change us maybe it is closer to 50 billion. Betty with Interest Rates on about to rise and it looks like september is what people are saying and the fed will move. Does it changes our earnings outlook for any of the banks . Paul miller one of the things you saw this quarter was banks pushing out expectations when it rates would rise. We have been saying if it happens at all at the very end of the year. It pulls on the whole expansion of that margin which is from the big loan the book. We believe rates will stay lower than what people think. We do not think the economy especially the Housing Market is in a the mood. You need rate hikes for some of these names to work. Until, it doesnt work. Bank of america would do good when you raise rates. Dead paul miller good betty paul miller. Thank you. A private equity doubles profits. 300 billion. We spoke with steve schwartzman. We will have more. Betty back to breaking you the most important news. Julie and joe joining me. We were speaking with paul miller about the banking system. Doddfrank is number four. The u. S. Senate Banking Committee plans to look at legislation. It is even talking about costly outlays of according to the Hacking Community chair. Banking community chair. Julie i think its one of the most controversial pieces of legislation, if not to the banking community. Not surprisingly they would try and revise it. It is interesting their revised on the small and mediumsized banks. I feel like the largest is banks have been the most vocal about the issues and they have experience associate with the doddfrank. Joe i am not surprised the small and mediumsized banks would get more sympathy. They will keep active this for years and i doubt there will be germanic change. They will try to chip away. Betty Blackstone Private Equity firm had a big bump in earnings formed by Steve Schwarzman saw firstquarter earnings jump 99 . Erik schatzker and i spoke to him earlier about his playbook. Steve schwarzman we are like a Basketball Team without a 24 second clock. We do not have to shoot. We do not have to be invested. We wait for an easy shot. We keep passing the ball and go for layups. In private equity, we only have to do 1012 investments a year. Betty he makes it sound so easy. Julie i know. Betty we can sit on our big pile of cash for he sells i Warren Buffett a little bit. Their big bet is real estate. Energy h something we did not get a big chance to talk about. Joe absolutely. They keep talking about the idea of not black stone necessarily but opportunities for deals and energy. We will see if it happens. Betty speaking of energy, oil the commodity rise is no crude joke. Near the highest this year amid speculation of a slowdown in the u. S. Shell will. Is that Wishful Thinking . Julie one of the prices go up, you will see production come back on line. I was speaking to an analyst who said it there are lot of wells on the verge of completion. When prices go back up, they will get completed quickly to get us apply online for you joe it is funny how people are telling stories about how the price is moving. After the iran deal, people were talking about a down side. It a shot up. Betty you are saying everybody is reaching . Joe yeah. The price moves a people looks for the story to explain. Betty i agree with you. It is a traders market. Nobody can quite make sense. Joe not to say it is not true but there are all types of prospectors. When the market moves, we focus on the thing that explains it. Betty the equities market. As we do with the opening bell where futures have settled. Equity futures are slightly lower. Our top story is next. Betty welcome back to in the loop. Joe weisenthal and julie hyman adjoining may. Number one, president obama is gaining in economic popularity. 49 of those surveyed approve of the job he is doing. 46 disapprove. Up from the numbers in december. 49 . It is about time, right . Joe is says a lot about the state of the economy and state of the consumer. There is spreading about q1 slow down on of the day. Consumer confidence numbers, comfort numbers, numbers like this is doing quite well. I put a lot of stock in dell. People are doing better. Betty whole it is the best news for it is not barack obama but Hillary Clinton. If people feel good about the job he has done then that increases betty it raises a question because not much has changed in the past 12 months or so per what took so long . Julie i would argue you have seen an acceleration of improvement. You are finally getting, and leaves you are getting these Companies Making wage announcements which translates. A few big companies. That is the thing joe several wage pressure yesterday. Numbers do not look that hot yet. Something well not say in a while, pressure is building. And the indicators are way better than a year ago. Betty the stocks are starting to trade. Troy, you are positive right now about not only the economy has moved into slightly higher gear. Labor market and wage gains have been there. Energy collapsed. All in all, the u. S. Economy is in much better footing. The fiscal drag and 2013 is turning into stimulus this year. We kind of call it 2. 6 of 3 this year, which will lead to some better revenue. Companies are fighting the Dollar Strength in the shortterm. Corporate earnings should start to improve the next few quarters. How about the housing numbers we got this morning . Even though weve all been saying how great consumers are feeling, they still havent necessarily been spending. We havent seen a big uptick in spending. That is reflected in the housing numbers as well. You had the 20042006 complete mobile and complete collapse. Bubble and complete collapse. Owning a home a note be the best way to build wealth anymore and maybe we can rent for longer. The whole system it has changed. It will take a lot longer than people expect for the Housing Market to come back. On top of that, tight lending standards. The agencies those who oversees them, are starting to loosen. The good news is, as consumers have become much more conservative, that means the Growth Numbers in the shortterm will be weaker but over the long term, much more sustainable recovery. 1. 5 in the First Quarter is better than the contraction and the last First Quarter. Most likely this year, a little bit below 3 range and things will keep plodding along equities will gain 5 to 10 , Housing Market will be up 3 to 5 . That is better than excesses building in the system that will then lead to destabilization. Betty do you see the excesses . Not right now. Cash yields, nothing. Equities are not cheap. Theyre getting marginally rich but there is no bubble in equities or high yields. This is the environment where investors are going to have to accept lower returns but hopefully, they will be much more sustainable over the long term. Is there is anything that could happen that would cause you to get bearish on equities . The realistic risk, other than terrorist or things you cant predict, further strengthening of the dollar. People have adjusted earnings estimate to a stronger dollar we have seen. Most are expecting that trend to flatten out. If we get another 10 , 15 percent, 20 move in the dollar, all bets are off. We dont see a correction being caused by the imminent fed hikes because theyre going to go extremely slow. Lets say they hike in the Fourth Quarter were even the third, that might cause a risk off, but not an outright correction. Betty you said the did you like that turn . Betty you believe they have been vindicated . That is a strong term but many have been very bullish on european equities for the past couple of years, particularly going into last year, based on hope, in our opinion. They really werent that cheap. Qe has worked its magic. The cyclical recoveries is gaining a little traction in europe. European equities, if you are hedged to the european weakness have done rather well. Theyve actually outperformed u. S. Equities in the past years. From our standpoint, going forward, youre finally going to see a resurgence of m a activity in europe. It is been 6, 7 years since you have seen any. Youre starting to see crossborder deals. Betty look what happened with tokyo. And fedex said the announcement the other day. Yet the chinese step in. You had the chinese step in. That type of corporate activity tends to like equity rallies. You have seen this big beta move. People are feeling comfortable. Were going to grow a 75 basis points. Now time to get busy as Management Teams to do a creative transaction. As your Management Team and your investment team, where are you looking for those opportunities . Where is that m a going to happen . Were still focused on u. S. M a. That started 16, 18 months ago. Theres a lot of expectation as ge disposes of their Financial Service arm. It is clear and present right now in the u. S. We are just seeing it get started in europe. That will be the point of Additional Capital for us. Were called it with riskfree as zero with this deal, m a activity, managers have a fighting chance to make high civil digits, maybe low teens if things really go right. Betty thank you so much tory. Troy. Thank you to Joe Weisenthal and julie hyman for joining me. Coming up, greece and china. What is on the agenda at the imf Spring Meeting . We will check in with tom keene at the meeting this morning im all ahead of his big interview that he has with Christine Lagarde. Stay with us. Betty the imf Spring Meetings are taking place in washington. Tom keene is there now. Sitting down with some of the biggest names in financial policymaking. Including the imf chief Christine Lagarde. We will check in with him about half an hour. , another World Bank President just wrapped up some remarks. What are the Biggest Issues being talked about . Tom what is so fascinating is the back story. These are meetings about a new mediocre, improvement to a new reality. What is really front and center here is the terrific tension between those gloomy and those traumatically more optimistic. You see that more no more than at harvard where very optimistic about how we come out of this problem into better growth. Another say, no, i will address that with madame la garden the next hour. Betty i know you will be addressing a lot with Christine Lagarde. Tell me, what is on the top of your mind when it comes in your conversation with her . What are you going to want to tackle the most . Tom front and center are the spreads widening out in greece the new tension within greece. The new mediocre, and to get an update on that. She calls it, where do we stand right now . I have to ask her, where do we stand in 2015 on a Global Recovery . Betty the imf, they released their forecast just the other day. It really didnt change much in the global forecast. Here in the u. S. , it seems like americans are feeling a little bit better about the economy, right . Is there sort of a growing divide or gap or even more so between how the u. S. Is headed and where the rest of the economy is . Tom that is a very, very important question. The inequality or the great divide occurring between the recovery haves and the recovery havenots. What we can say for certain is every interview suggest the u. S. Is leading the way with some assistance from other developed nations. There are other nations really on the cusp of improvement including a greater europe. But the question is the emerging markets. They have been hammered by the lower commodity prices. The imf goes to the lima, peru october meetings, you wonder where peru, were the philippines, and where, say, indonesia will be come october . Betty tom keene live at the imf meeting. Be sure to catch his full interview with Christine Lagarde coming up in the next half hour on market bankers. Market makers. Scarlet fu within. Scully having its best day in three months. 56 since the last earnings report. The company streaming video customers have now topped 61 million worldwide. Have some perspective. Never lick subscribers count is honest netflix subscribers count is all must the same as comcast and time warner combined. I want to move on to flash memory chipmaker, having its worst a since march 26 when it fell 18 after it cut its firstquarter revenue and earnings forecast. The Company Continues to slide in trading today because the Second Quarter outlook is not much better. You can see this is the red line, the Second Quarter earnings per share estimate according to analysts estimates that we have compiled. The white line is the share price. This leg lower this was three weeks ago. This is when analysts took down their Second Quarter earnings per share. Following this later report it is fall and more. You could argue the share price has further room to decline given how much lower earningspershare estimates are. In terms of what analysts are saying in response to this outlook, theyre saying the company has very specific problems to the company that go beyond the industry and faces multiple issues. It is an awful turn of events. Those are the words from morgan stanley. And touching above its record closing high for its best day since february, the largest u. S. Health insurer boosting its further forecast. It provides technology and consulting and also manages its pharmacy benefits. That is a little bit separate from its Health Insurance primary business. Betty thank you. Still to come, britains former first lady. Weighing in on u. S. Politics and her friendship with Hillary Clinton. Much more straight ahead. Betty after declaring shes running for president , Hillary Clinton has hit the campaign trail hard. She spent the last few days and i would meeting voters and passing out policy ideas. We are joined now by the founder of International Law firm on the a strategy, womens advocate group. Someone who is known killer clinton for 20 years. Your husband and her husband the ministrations overlapped at the same time. You know Hillary Clinton well. You called her a mentor. What do you make of her declaring that she is running for president . I was thrilled when she declared in 2008 an equally thrilled she is declaring again. It is such an exciting time for women all over the world to see the foremost country in the world has the confidence to stand up and say, yes, we can elect a woman. Betty it is about time right . It is about time. Betty you have exchanged emails with her . Absolutely. As you say hillary is an old friend of mine. She was a mentor to me into his first lady and my husband became prime minister. We have been great friends ever since. Betty what do think is going to be her biggest challenge . I think it is very difficult when you look at the way she has built up it seems to me this is a woman ready to be president. Betty she certainly has all the qualifications. She spoke out so far on the shortlist campaign trail, so far, about womens issues as well, something i know youre very a very big passion for you. I want to play for you part of what she said about the progress for women in the workplace. I think it is fair to say that as you look across the country the deck is still stacked in favor of those already at the top. Theres something wrong with that. Theres something wrong when ceos make 300 times more than the typical worker. Theres something wrong when American Workers keep getting more productive, as they have, and as i just saw a few minutes ago, very possible because education and skills training, but that productivity is not matched in their paycheck. Betty so that is not just a gender problem but the inequality issue. That is something youre working on as well as. I see whether it is women on boards or inequalities generally, as all part of the 21st century concept that businesses are global citizens and therefore, that to be good corporate citizens. And what we call business and human rights. Our business is socially responsible to their employees, in relation to the environment . What impact do they have in their supply chain . It seems to me that today, those businesses that get ahead are the ones that are thinking longterm and thinking about how they can present themselves as good corporate citizens. Betty do you find we are behind the rest of the world in that respect . It is interesting. The economist just the other month published a report and they asked a large number of global businesses did they think human rights is something they should be concerned with . As the economist said, 10 years ago probably said, that is something for government. It is true percent of the respondents of that survey said, yes, we understand 83 of the respondents of that survey said, yes. I think that is to do with globalization. It is to do with the fact that today in the world, what happens in someplace doesnt stay hidden. It can become your just someone with a video on their mobile phone away from something going wrong. Betty for instance, there was a lot made and has been a lot made about various Companies Retailers in the u. S. , child labor laws overseas postup even apple, for instance, getting attacked for not being vigilant enough looking at Labor Conditions in their own plants. How do you do you feel the bigger the company is, the more advanced it is, the more of a pass they get with violations like that . And how do you try to change that . I think businesses have to be ahead of the pack. Youre either going to hide and hope nothing goes wrong, or youre actually proactive and engages a, how do we avoid these risks . Even a company like apple, as you say, can have a big problem suddenly in relation to the reputation. If you could avoided in the first place, that is so much better than trying to fix it once the cat is out of the bag. This is why were seeing with the yuan Guiding Principles about businesses and human rights, an idea that comes from fish first of all, understanding what the possibilities are and then first of all can understanding what theyre responsible these are. And then not just a funny thing, an optional extra, but part of the dna of a company. We understand why it is important to be good to your employees. So you attract the right stuff, so people feel, your customers feel good about buying your products. Betty thank you so much. Betty party city raised about three and 70 million in its ipo. 370 million in its ipo. Now faring around 2 billion. Who knew bolins fair that much balloons for that much . The most interesting thing i found is 1 4 of all the revenue party city brings in relies on one holiday. Do you want to guess which one that might be . Betty valentines day . No, it is actually halloween. Imagine 2. 2 billion of revenue last year from 2014. Half 1 billion in costume sales alone. That is interesting but also scary. If theres an economic downturn or even a rainout, that can severely disrupt party citys revenue. Betty break down the revenue. How do they make money . 25 goes from costumes for halloween. About another 25 actually, 24 , from table where. If we buy stuff or birthday parties or something, we buy the cutlery, the paper and plastic. The third thing that comes down to is the balloons and the pinatas. I found out that hangout is actually do come from mexico not made here or china. Betty they actually come from mexico. Im surprised the balloons come third. Helium is a part of their revenue as well as. It is interesting talking about helium because not Many Companies are reliant on helium to determine the revenues. You were talking about the lens. In a large part of the revenue does come from metallic balloon sales. Between 2011 and 2012, there was a difference of about 2. 5 million less youre on year because of a lack of supply in helium. The twin 2013 and 2014, the helium supply came back and they had a pop no pun intended a 5. 59 higher. Betty where are the ipo proceeds going . Some is going to do with management termination fee. But the rest of it is Going Service their debt. The debt before this was about 2. 1 billion. That is quite a lot. It will drive down a little bit to 1. 9 billion. Betty thank you for joining us. Now i know more about by the way, i go there all the time. Anyone who is a parent you have to go. Betty thank you so much. Be sure to stay with bloomberg. That does it for today on in the loop. Tomorrow, a pizza chain backed by lebron james. Why it will become the chipotle of the pizza world. That is tomorrow at 8 00 a. M. Erik is netflix worth 900 a share . One Analyst Thinks so, doubling his price target. Stephanie a full plate for the imf. The prospect of higher Interest Rates in the u. S. , we will be speaking to the imf managing director Christine Lagarde. Erik next goal is to get you physically fit. That is what the maker of those fitness has in store. Good morning, it is market makers. Imac schatzker. Stephanie i am stephanie ruhle. I do care about physical fitness, but as you know fitness trackers are sort of my my nightstand is a graveyard of trackers. Erik me to. Stephanie maybe this will help us get our groove back. Breaking Economic News to get to. The philly fed index is out