Transcripts For BLOOMBERG In The Loop With Betty Liu 20150417

Highest point nearly two and a half years. One strategist says that yields will keep rising if theres no rescue for the debt ridden country. European officials want tougher Economic Reforms before they will send a lot money. Is the worst day for greek bonds since the election victory by the leftwing party. The finance minister says that europe must be patient with a new administration. Will we are asking us what we are asking is for the sensible principle that we are a new government. We need to come to terms with our partners on larger forms that need to be institute tomorrow which we can do because you have Common Ground on this. Betty greece is facing payments of more than a billion dollars next month. It is a rare agreement between Congressional Republicans and president obama. Lawmakers finally have a copper on the sweeping trade policy. It would let the president goahead on a proposed partnership with 11 pacific nations. It is backed by republicans, but not the president s own party. Some democrats say that wedges would fall which is what fall and jobs would be lost. You can make the argument that a trade agreement like this would increase corporate profits. It probably will. You might even make the argument that it will improve gdp. Maybe it will. But if it does increase middleclass incomes, which to me is the greatest problem we now face in america which we did not in the 1990s, i cannot before such an agreement. Betty the white house says the Transpacific Partnership will protect american jobs while opening markets for u. S. Companies. The president says he will sign it if it clears congress. For the first time, an american is accused of training in syria for a terror attack here at the home front. Federal officials in ohio are charging this man. He had weapons and explosives and plan to attack police on military projects. He is a small native who became a u. S. Citizen last year. Analysts reading the fed tea leaves says they read hike a rate hike is less likely. They said it would not be his preference. Federal reserve Officials Say they want inflation to reach 2 before they make that move. And this morning, General Electric is out with First Quarter result that beat wall street enemas. They were a penny better than bloomberg estimates. They dropped 5 to 3 billion. The comely says that low oil prices have not helped but power unit sales were stronger. Those are your top headlines this morning. Ge becoming much more of a manufacturing company. Lets get back to the market meltdown. Global stock markets are seeing red and futures show wall street is heading for cia read. I hate to say that is a popular called this morning. Mike, youre not seeing red. You are always so sunny. Elicit the main suspect right now is china where the regulators came out and did two things. They are cracking down on Umbrella Trust which is a shadow Banking System way to borrow money and lever up on the stock market. The other thing is they are allowing Mutual Fund Managers to low out shares to future sellers. Betty you can say is a bubble there. Maybe this is the way that regulators try to slow that down a little bit. For obvious reasons, it is kind of spooking people here. It could be part of the debt. The greek yields is the soap opera that never ends. Betty yesterday we were talking about this. Some people reach for any reason to find out what is moving these stocks. These are all legitimate reasons here, but theres also the context here, mike, which is that we have hit a record of 32 days in u. S. Stocks. Itself like we are greedy selfish kids talking about no record and 32 days. It is the biggest gap between records in the market and about three years. It serves as a great anecdote to really describe the Market Sentiment right now which is churning or gyrating or whatever you want to call it. Not moving much in one direction. It is a deja vu from last year where we had weakening growth in the last quarter. Some poor economic reports. You dont know if you can blame it all on the weather or that is a convenient excuse for what is some problems with the economy. Some people are waiting that out and waiting for the Earnings Seasons to come in. Betty we will see with earnings. Mike, thank you so much. Mike reagan r bloomberg stocks editor. The ipo market is a little bit better. I came back to light after a trio of offerings all surging in their trading debut. A shot in the arm for an ipo market that was in desperate need of some momentum. We had a dry spell and ipos. Scarlet fu is joining me with how the ipo palouse a went. Scarlet it was a big day for the ipo market. For Companies Made their debut. Three of them are the notable ones. There was party city and they all traded great on the first day of trading. You can see there that they all priced at the upper end of their market range. Etsy opened at 31. Party city opened up at 21 . Virtu financial held against her there was a tiny smallmarket capital. For anyone keeping score, it also closed higher i almost 2 . Altogether, these Companies Raise more than 1 billion yesterday. They also all exercise this sufficient demand for the underwriters to sell more stocks. The big picture is that the ipo market was kind of like lester in the First Quarter. He had 91 new offerings announced worth more than 81 billion. Down 3 from the same time last year. Betty sunday ipos were delayed before some of the ipos were delayed before . Scarlet member the book in which he alleged that highfrequency traders crowd out the small investor and mutual funds. They shoved the ipo and came back later on. It turned out to be better. Look, we are at or near record highs. Party city initially try to go public in 2011, but then had to pull it sale as well because of the stock market slump. A sold the majority of their state to a private equity firm. This particular ipo did not unload its state. Theyre going to hold on. Betty what is so special about etsy . Scarlet it is a Plan B Corporation which meets environmental and social standards. Company like ben jerrys and tom shoes where you buy one shoe, they donate another. Companies with a social mission proceeds from their ipo will recruit the hundred thousand dollars include 300,000 to fund a nonprofit educating women and minorities on how to start their own business. Their clientele base is very dominated by women. Betty craps, right . Scarlet have you got your knit hat yet . Betty im not a big fan of that. [laughter] betty thank you, scarlet fu, our chief markets correspondent. Betty moving and shaking this mornings apple ceo tim cook. According to bloombergs new pay index, youve got to see this. It is the first daily ranking of the nations highestpaid executive. Cook has the best pay for performance rating of any ceo. Cook was awarded 65 million in compensation last year. Revenues climbed 69 under his tenure to 183 billion. His pay package also makes in the 17th highestpaid u. S. Executive. But guess who is at number one on our pay index . It is the go proceed ceo. He was awarded 24 million at the end of 2014. Another stock that we are watching this morning is american express. It missed wall streets estimates. The Company Ended the relationship with costco and others. Shares are down 2 in the market right now. Is the worst performer in the Dow Jones Industrial average. Elizabeth covers the company. What is it that our investors reacting to right now . It is all about revenue. The company set a goal of the years ago that revenue would increase at an 8 rate. It has been falling short of that for the past two years and that continued this quarter. Revenue fell short of expectations and fell and the quarter from the previous year. Part of what contributed a that is the strengthen u. S. Dollar which hurt profits abroad. Also some adjustments to the company as it shifts business away. Particularly with its relationship with costco. Betty speaking of that relationship with costco, have we seen fx of that loss yet . The cosco relationship is bigger in the u. S. Than in canada. But they started to see the loss of the canadian business. So far here in the u. S. , spending has not slowed with the u. S. Portfolio yet, but however, new acquisitions and less customers and fewer people are signing up for the card. That is what the company did say. The company said that more that is expected. The impact from the u. S. Portfolio is expected to drop. Betty is everything all that bad at american it expressed . American express . They be topline estimates. The good news is that expenses were better than expected. The total expenses fell in the quarter. Provisions were much less. The company said side less money to cover up timelines than what is expected. The topline number beat estimates. Betty elizabeth, thank you so much. Infighting among one of europes top automakers. We will tell you who volvo cited with next. Plus, the view from the 85th floor. Rising rent and limited options. Some firms may need to look up for office space. The regeneration gets an upgrade. We will discuss that next. Betty heres a look at our top stories this morning. Volkswagens Advisory Board group is diffusing a power struggle and backing the ceo. According to the leadership committee, the best possible ceo and housley groups. Our. They were looking at a construct contract extension from 2016 and beyond. Verizon fires tv customers will now be allowed to select certain groups of channels they want to watch. They can stop paying for channels but they dont want. Paid to providers tv providers are giving more options. A la carte is coming. It is not the force that is with us. If the high. The buildup at light speed so that some release of the new star wars sequel. Thought stocks like 1 . Meanwhile, theyre doing their part to promote the zone. The star wars droid r2d2. It will fly this fall. I love it. Those are your top stories for Lilly Pulitzer and the target team will dig into the numbers behind the partnership between the clothing retailer and the retailer itself. And imagine if you can get this view of manhattan for the price of 750 a month. That is the pitch from the Australian Company who has leased the entire floor of the World Trade Center. For 750, you can get all the amenities of a fullfledged office like wifi, kitchen conference room. It is all part of this trend in shared workplaces that is taking hold in cities like new york boston, d, san francisco, and elsewhere. Joining us is the chief operating officer. It is good to see this morning. You and i were joking during the commercial break. You have been doing shared workspaces since the 1970s. As when we started it in australia. Betty were we all sleep and now waking up to something that is different this time . Flexible workspaces becoming more of a trend and what people are looking for. Betty theyre are all these option printers out there. Entrepreneurs out there. Is more coming out of the word work would work. We were operating in australia and europe. Betty speaking of coming out of the woodwork, making a splash World Trade Center. Come on. That is a splash. What made you decide to lease this big . We are premium brand in this space. We go for premium buildings and the best cities and the best locations. We dont want to be everywhere. We want to be in the prime spot. That is where we position our business. We connect the altogether with a fantastic technology platform. When you join us and location, you get access to all those premium locations. We chose one World Trade Center because it is the most iconic building in the world. Betty how are you able to lease the space out . How are you able to do it . We have a range of systems which is as low as 150 a month. You can use the adjust and have meetings on a casual basis and someone will take your calls and gives you a really professional image. Its righ through to a fulltime office space for up to six people and you get a key and a locked office. Five and a half thousand dollars a month. 750 a month gives you a workspace that is dedicated to you and you will have every time you come in and gives you meeting space and those sorts of things. That is a little bit more like what people consider the trendy thing right now. Betty they have been on the cover of all these magazines. Adam newman, the cofounder, was on the program. They said they are tech company and not a property company. We served with these other Tech Companies. How do you view yourself . We are definitely a tech company. Betty are you really . 40 of our revenue is from technology services. We have been screaming that we are tech company from the rooftops as well. Betty down in sydney . Down in sydney is right. We happened have been building a global company. You can make fix calls in the world preview can sign on line to any office in minutes. This is why we consider ourselves a tech company. Not because we cater to Tech Companies. We have built for an amazing tech platform and were pretty proud of that as well as being in the best quarters in the world. Betty you went out to Tech Companies and they may know the longterm leases. May not be longterm leases. You may not have a tenant for 50 years but what you think of that risk . We buy long and so short. What mitigates the risk is that we are technology company. Its moves the real estate cycle. Betty how . What you mean . Is a constantly growing income screen stream instead of one that goes up and downs. If lines it out of it. Betty its good to see. He is the chief marketing officer of served car. How palm beach prepped is set to smothering target. The Lilly Pulitzer collection they be sunday. Will help target . You will find out next. Betty preppy is back. Fans of Lilly Pulitzer Designer Clothing lined up in bryant park yesterday waiting to shop the brands target collection a special oneday popup shop before the collection hit store on sunday. Lilly for target is the latest example of the retails giant muchhyped designer collaborations. Remember Isaac Mizrahi . Julie hyman was at the shops as well. She joins me now on this. Just to point out we were looking at video of the products on ebay. Some of those people waiting in line yesterday in the popup shop in new york immediately turn around and sold them. Betty crafty of them. You take some stuff up. I did pick stuff up. A lot of this is good marketing. You have this big pink lily for pulitzer target died. I got this so wrong sarong guard thing. Very beachy in the Lilly Pulitzer style. This is something that target has been doing for a while. They have been doing collaborations. Is the first 81 under the new ceo. They did a collaboration with toms, but this is the first designer one is really crating a lot of buzz as evidenced by that popup shop yesterday in new yorks bryant park. According to womens daily there were 500 people waiting in line to get in. By the time i got there, and had dwindled a bit because products had dwindled. If you went in there it was that some of it was resold on ebay. I think we have footage of what that popup shop look like. By the end of the day, you are seeing extra large, extra extralarge that was the all his stuff that was left. I actually only got this because a woman in line overheard me asking about scarves and said that you can have this because you can only buy five items at once and maybe this was her sixth item. Betty this might beat Isaac Mizrahi and the popup shop there. I think they are the longest running collaboration and they started way back in 1999. Then you have the more buzzy collaborations that happen with sony in 2011 which did very well for the company. There was phillip lim and zach pozen. And then last year joseph baltazar. It has been met with varying cases of success. Some have been edgy and the company had to mark some down. What analysts have said to me is that this is not material to our bottom line. Betty it generates the buzz. Is about branding and target is cool again. They have had various points in the history and it has subsided. Isa. In particular it is a. In period in particular where they had bad moves in their china get that cool back. A Lilly Pulitzer dresses around 200 for a shipped dress. The ascetic is paid beachy like this. A lot of floral prints. Lilly pulitzer who died a couple of years ago was known for having these amazing parties and targets first commercial showcases one of those parties. Youre talking about that kind of price point. Targets price point is anywhere from two dollars for like nail polish and iphone cases that are on the lower end of the spectrum. It does go up and up to around 200. Not for the dresses, but some of the excess theres. They also hired lounge chairs and deck chairs with the Lilly Pulitzer print. As we were leaving, we saw a couple of ladies shoving a bunch into the back of their cars. They hope to mac out max out their five item limit. Betty it is cheaper and more affordable, but still a little bit premium. Julie compared to some of targets merchandise. This was 20. Betty i think that is a great value. It looks awesome on you. Keep it. Thank you, julie hyman. We have breaking numbers on inflation cpi Consumer Prices up 0. 2 , a little lower than what economists estimated. Scarlet fu has more. Scarlet camer tamer than what you were looking at with expectations. The 0. 2 is consistent with what we saw in february. Yearoveryear, we saw prices drop 0. 1 . The Federal Reserve does not focus on the headline number. They focus on cpi excluding energy and food costs. Here, we have what economists were looking for, a gain of. 2 . I a yearoveryear basis, we see a pickup, again of on a yearoveryear basis, we see a pickup a gain of. 8 . Here are the mini futures. We were down before this. Taking a leg lower going back down again. It is not a huge reaction by any stretch of the imagination. The dollar index right now is bouncing around the unchanged level. It is a race against loss right now. The 10year yield is lower, but all flows of the session, 1. 8792 . I imagine that would be the same for the twoyear as well, as that tends to be more sensitive. That twoyear is more positive, 40 basis points, giving up earlier declines. Betty thank you, scarlet fu, formerly to those numbers and the reaction. A rare agreement between Congressional Republicans and the president lawmakers finally have a compromise on a sweeping trade policy that would let the president go ahead on a proposed harder ship with 11 pacific Nations Partnership with the 11 pacific nations. It is backed by republicans, but not the parties own company party. Senator schumer the middle class is hurting, all the evidence ive seen is that it hurts middleclass incomes, and i cannot before it in that regard. Betty the white house says it would protect american jobs and open business for american companies. It is a bad year for greek bonds. Yields are at their highest point in 2. 5 year. One analyst says they will keep rising until there is a rescue package. Greece is asking the for more time to repay. The imf managing director says that is not going to fly. Ms. Lagardere we have never had an advanced economy asking for that kind of thing, a delayed payment. I hope that is not the case for greece. Betty greece is facing payments of more than 1 billion next month. Apples do smart watches will not reach new smart watches will not be stores until june. The only way to get them before then will the online. They quietly remove the april 24 date on its website. Ceos from some of the worlds Biggest Companies see the time to act on Climate Change is now. The heads of 43 company sent an open letter to World Leaders asking them to set limits on fossil fuel emissions. The Corporate Leaders promised to move the copies toward functioning in a low carbon economy. A supply ship has made it to the International Space station, bringing the first espresso machine built for astronauts. It brought more than two tons of groceries and equipment. They are happy. The espresso machine is for an italian astronaut that has been having instant coffee since her Mission Began last year. Instant coffee. It is a rough return to action for the masters champion. Jordan spieth is 95th. He won the prestigious masters with a recordsetting score. It is rare for the masters champion to play the very next tournament. Keep on going. Those are your headlines this morning. Coming up forget are you ready for hillary, is hillary ready for hillary to point out . Has she learned from the mistakes of her 2008 campaign . Stay in the loop for more. Betty welcome back to in the loopp. I am betty liu. We are seeing global selling. Scarlet fu has a look at the early action. Scarlet beforethebell action, you mentioned early selling. Futures are coming down to revisit their lows. We see declines for the s p dow, and nasdaq futures. We will keep an eye on that. We knew coming into this earnings season that Energy Company results would be ugly. Analysts have cut estimates dramatically. Schlumberger delivered on that front, i suppose, reporting its lower lois First Quarter profit in three years. This was priced in. The focus for investors is how the company i just to this adjusts to this new reality. They plan to cut jobs. Oil Service Companies moved in reaction to all this. Transocean, for instance. Halliburton, in Different Directions they have been bouncing around in early trade. Oih the etf that tracks Oil Services Company has been moving in anticipation other companies will make similar moves. I want to move to american express, the worst performer on the Dow Jones Industrial average in 2015, and it is about to build on that because first corner results first First Quarter results were hurt. You had the First Quarter economy, and then a failure to renew branded card agreements with costco and jetblue. Industrials reported honeywell and ge. They tend to not be exciting because ge seems to always beat earnings by one penny or two pennies a share for the quarter that ended, and that was the case here. Cells missed analyst sales missed analyst estimates. Ge says it is on track to meet fullyear forecast for industrial earnings. Honeywell cut its forecast and it is lower in the early going off by. 8 . Betty thank you, scarlet fu at the breaking news desk on the early action. Speaking about action hillary 2016 hillary 2016, lets flip it, guys, and hillary 2016 right . It has been five days since she announced. Are you sick of it yet . Journalists have been hitting their keyboards with a flurry of headlines of how hillary 2016 will be different than 2008. One of those writers is josh green. He writes for Bloomberg Businessweek. How is one thing going to be different from 2008 . Josh she is trying to maintain the coalition that got obama elected twice. What is most interesting is the whole style of her campaign is different than last time around. She seems to be pushing against the notion that she is the inevitable nominee, that she is entitled to the nomination. That was basically her approach the last time around, and as we remember, it ended in disaster. Betty he did and in disaster and of course, no nomination. What about the juicy stuff the infighting in her campaign, people leaking emails, biting each other behind each others backs how will they change that this time . Josh this is what i wrote in Bloomberg Businessweek. The idea was she could do the job from day one. That was a jab at obamas experience. The irony is she actually proved to be a terrible chief executive. Her campaign devolved into back fighting, different strategies and the whole thing, sort of, collapsed. The big question this time around will be will click and be able to function as an effective executive for her own campaign or, when things get tough, will it, kind of, collapsed the way it did last time . That is one question she cannot answer yet. Betty did and she hired john podesta to stop that . Josh she has taken steps to indicate she gets what went wrong last time. She hired john podesta, a powerful, respected democrat as her campaign chairman, and veterans of the no drama Obama Campaign including her Campaign Manager robby mook. So far it has been smooth sailing. The only thing being written is what she encountered at chipotle. She is not encountered resistance. Betty do you give her credit for that, josh . She is the mostwatched and follow josh eating at chipotle . Betty for being an everyday american. Also, the element of surprise shes the most followed these days. Josh she has a new group of advisers. We understand social media. They know reporters like me are tired of hiring covering the Hillary Clinton campaign, are jaded. They need to do things to shakeup. The first five days are an example they can do this. We had this nationwide i not know what you want to call it, manhunt . To follow her around chipotle and her van. I guess that is better than writing about what her campaign is doing wrong. As i say you in the new edition of Bloomberg Businessweek we do not know if she fixed a problem until she runs into meaningful competition, and that might not happen until next summer when there is a republican nominee to go up against her. Betty josh, finally, how does she leverage bill . Josh that is a good question the biggest management question is how do you manage bill clinton. Nobody has been able to figure out a way to do it. He was a great help to president obama in 2012. You remember, he gave a wonderful speech at the charlotte convention. He was better than the obama speech. He was terrible last time around. He was bitter when she lost offended democrats, insulted obama. She needs to figure out a way to marshall him, put the good bill on the trail. Betty i love that. Good bill, bad bill. Josh green, Bloomberg Businessweek. His story is out in this weeks edition. The cover story appeared you have to read it. Coming up, the rich getting richer the wealthiest universities in the country, find out why endowments are soaring. That is coming up next. Plus, is this the end of the 500channel and 100 cable bill . Verizon fios letting you take your channels. Be sure you keep bloomberg tv though. Stay in the loop. Betty here is a look at our other top stories this morning. Chinese stock Index Futures falling as regulators clamp down on the use of shadow financing increasing the use of supply for shadow indexes. Contracting the hang seng lost nearly 4 , taking on stocks also around the world, including here in the u. S. A First Quarter beat for honeywell international. A rebound in commercial construction drove demand. Earnings per share rose to one dollar 41 cents. 104 21 and they also cut the 2015 forecast. The famed canadian circus Cirque Du Soleil is on the verge of being sold according to the wall street journal he says tpg is close to a deal. The new owners would expand global operations. Billionaire Richard Branson known for his bravado, revisits a hollywood classic. Check this out. The Virgin Group Founder in chicago at the grand opening of the virgin hotel decided to recreate this iconic scene from the 1986 film first dealers day off Ferris Buellers day off. Oh, yeah. Shake it. Coming up at 9 00 a. M. How oil boom man caps on turning into ghost towns. My conversation with the blaze pizza founder, and how the lebronbacked Company Wants to be the chipotle of pizza. The richest universities yard harvard, yell, stanford, are getting richer, while the poorest ones are getting poor. Harvards investment led the way it over 40 billion. Joining us now to discuss this is bloombergs Mike Mcdonald who wrote the story on this. Mike, why are the rich universities getting richer . Mike is there any real surprised to hear that harvard, stanford, are actually richer than you previously thought . Moodys has done something interesting. They have thrown in some other factors that actually boost the amount of wealth that these universities have. That is interesting. I do not think there is any great surprise there that they are a little richer than we thought of it what is really thing here is that they look at the growing disparity between the top 40 universities in the united states, and anybody else that they rate. And that is what they found. That is what is most troubling. That there is this growing disparity. That the wealth is increasingly concentrated among these top universities. Betty right, because they have the fundraising power. Right, mike . Mike they have fundraising. Yeah, they dominate. Moodys pointed out that in 2014, the top four universities collected 60 of the total gift. When you look at harvard last year, they collected 1. 2 billion in gifts. A record amount. Clearly, they are dominating there. They also pointed out something interesting. That these universities tend to be more aggressive in the sense that they have more of their money in the market. So, for instance, a Typical University would have more cash on hand. Whereas these universities because of their resources, are able to keep more of the money in the market, so over time they benefit. They make more money. You have money, you can make more money. Betty right, if you put your money to work, it will work for them. Harvard, yell, a few others are seeing their endowments balloon. What does that mean, michael, for the lowerrated universities and colleges . I mean, we hear about the troubles for liberal arts colleges. What happens to these schools . Mike and that is really what movies is really hanging out there for us to all ponder. Ok, so there is a growing divide between the richest and the poorest. Betty yeah. Mike we know that. Breyer is a great example. They had a small endowment seemed like a good school, yet they are going out of business. What movies is saying it is is it is not just the rich and the poor. It is everybody in the middle. What they are concerned about is the schools that used to be able to compete against the evil eats, they just do not have the resort the elites. They just do not have the resources. It talks about the divides in society. The growing middle class. How will they compete when they get richer and richer . Betty right, how can they afford a spirit to i, Mike Mcdonald. Back on in the loop with much more. Betty welcome back to in the loop. We are 30 minutes away from the opening bell. Futures indicate stocks moving lower at the open. The cost of living up in march for the Third Straight month. Gazing into the Federal Reserves crystal ball, some analysts think it is less likely that Interest Rates will rise in june. The head of the Alanna Fattah said an increase two months from now would not be his the atlanta fed said an increase to once from now would not be his preference. It is a rare agreement between Congressional Republicans and president obama lawmakers have a compromise on a sweeping trade policy that would let the president go ahead on a proposed partnership with the 11 pacific nations. It is backed by republicans, but not the president s own party. Some democrats say wages would fall and jobs would be lost. Senator schumer you could make the argument that it would increase corporate profits and rise gdp, but if it does not increase middle incomes, the best the greatest problem we face in america, i cannot before such an agreement. Betty the white house says it would protect american jobs all opening markets for u. S. Companies. The president says he will sign it if it clears congress. Debt ridden greece faces payments of nearly 1 billion next month, but there is no rescue inside. Yields on the greek bond are the highest and then since the leftleaning party took over in january. Your opinion officials want more reforms before they send out more bailout money. One economist tells bloomberg the countrys problems run much deeper than that. The europeans are mired in some kind of economics with no concept of change challenge. Betty International Space station has another earthly comfort. Yes, an espresso machine. The spacex supply rocket arrived with more than two tons of food and equipment, and it brought its first espresso machine made for astronauts and it is for an italian that has been drinking instant coffee since her Mission Began last year. What did she expect, she is in space . Those are your headlines. Lets cut you down with the top 10 headlines hitting our radar before the bell. Bloombergs carol massar and matt miller joining me this morning. All right, lets get started. Number 10 is panera. An area is on the rise. Shares of the bakery chain of 11 , boosting its stock buyback, and announcing plans to sell cafes to Franchise Fees franchises. I thought they were going to ride this fast casual trend. What is going on here . Carol it is a lot of bread. What a way to juice the buybacks. Matt i hope the franchisees can go a little bit toward making an era stores more comfortable. I actually really like the food. Betty i agree, they are not comfortable. Matt they are not comfortable settings. You need to have soft chairs. That is the comfort food that they serve. It is not a health food place. You need to be able to chill out there. Betty i agree. It is actually good food. It is really good food. Matt love it. Carol theres more competition more folks get into the fast casual space. Matt is this fast casual this is bet uber casual. Pajamas and socks. Betty disney up 1 yesterday. The reason, the new longer trailer of the latest Star Wars Film was released. Who is excited . I know Brendan Greeley is. The guy cannot shut up about it. On solo and his furry partner made an appearance for the movie will be on the big screen this christmas. Matt i am really excited, not as much of a nerd is my good friend brendan, when it comes to these things, or for the same reasons he is excited, i love Harrison Ford hans solo so much. I was struck Carrie Fisher will be into this will be in this. In the loop betty the hairstyle is not coming back. Neither is the bikini. Matt mark hamill, i have not seen him in 30 years. Betty this franchise has made 4 billion in its history. Carol that is the story. Betty 4 billion in its history, and it continues to attract new generations. Matt it probably has made more than 4 billion if you count everybody everything. Carol it is a disney store because they will take this franchise everywhere. Matt you can buy lego millennium falcon. It is like 2 million three Million Dollars per disfranchisement more than 4 billion. Carol sounds like some of who knows. Betty verizon breaking the bundle. Verizon fios subscribers will be able to stop paying for channels that are not want. Currently, they charge 90 a month for 500 channels. Paytv providers are facing pressure from copies like netflix and hulu to give more options. It is a big story, kind of under the radar, but we all said when carol a la carte. I want to pay for what i want to watch. Matt this is all i want to watch. For me, this is the biggest story of the day hands down. Betty because it affects you directly . Matt i can watch all of my show stuff on apple tv. I have netflix. On cable, all i want to watch is sports. This will enable me to only watch sports on cable. I predict this will end a lot of relationships, because my girlfriend will move out. Carol or she will pick up her mobile phone. Matt she will move out of the room when i am watching 24 hours of golf. Betty we are also getting to the point where we become channel agnostic. It is all about shows, not the channel. Number seven. Carol exactly. Betty the apple watch if you are looking to buy you will have to wait until june. While the watch goes on sale april 24 apple is producing many deliveries will not arrive until june or july. The Company Began taking pre orders on april 10. You think this is a way to generate more buzz . Carol you have to wonder if off the bat they did not make enough watches because they were not sure how many people would be interested. They took the april 24 off of the website. They are doing things so differently. It makes me wonder. Matt that is good. They are moving toward a future where you do not have a whole bunch of super stinky nerds waiting outside of the stores for three days with their backpacks. Carol what is wrong with that . Matt it makes this avenue look around us, and it is hard for me to go in and buy a charger. Carol it is free advertising because we cover the lines. Matt the future is online for the most part, and that is the way people are going to get these watches. Betty number 6 ge. In about a company that is really transform the last few years, earlier this morning it came out with First Quarter results that beat estimates. They beat sales Energy Equipment health. Jeffrey immelt said that u. S. Economy is getting every better every day. Carol it is the story from one week ago they got rid of ge capital. Selling off assets. He has transformed the company. Time will tell if the investments will pay off. Matt i was checking out there hclass gas turbine, the biggest, most powerful, most efficient gas turbine for powergen. It is massive. Betty what you mean you are checking it out . In your backyard . Matt i was researching for your program. They are making a lot more money selling this equipment than they have in the past, so i was thinking, what does it look like . I went and looked at the offerings. Exciting stuff. Betty they are focusing more on the manufacturing. And industrials. Back to their roots. Still to come, after the price plunge and massive layoffs oil industry mann camps. Matt, man camps. Matt yes. Betty they are turning into ghost towns. Matt what, really . Betty we will be back. Betty so we continue to count down to the opening bell. We are halfway through, and that means it is time for our deep dive into number five. Man camps turning into ghost town spirit when oil was trading at 100, drillers spent egg in drillers spent big in texas, idaho, colorado, serving ribeye and now it is chicken fried steak. These camps are dying off. The oil industry falters. David west the wrote this story from Bloomberg Businessweek. He joins us from houston. David, from ribeye, too chicken fried steak what else are we seeing how bad it is at these man camps . David they were nice at one point. The guys liked to be in there. One guy told me they had shrimp steak and lobster catered out nearby while they worked. It was a good time to keep them working, reductive and healthy, you had turnover where guys would go from one company to another, and companies fell felt we need to do this as a retention tool. You had nice stuff, directv accommodations, hundreds of channels right at their fingertips. They would lay back at their man camp rooms, a lot of nice perks. Someone from standardized, to pitching themselves as luxurious. Betty right. David you now see some of the man camps lose big time. One that is a ranch style getaway deal that converted itself says they are now at 10 occupancy, where as they were for once before. Betty . Wow david betty wow. David they have to lower their rates. They sound optimistic, this will not be too long, but i talked to an analyst yesterday and said the longer the oil market stays down, the more these costs cuts could be more structural and permanent than a dip down and bounce back up. Betty there is one company guys, lets bring up the stock chart on this. Scipio is an oilfield housing surprising supplier tied to these man camps. Look at the drop based on the decline in oil prices and essentially the emptying out of these camps, right . David exactly. They have talked about how they have to close some of their camps. They do not have a lot of camps in the u. S. In particular, but they have been feeling the pinch as well. They are not alone. I mean, you definitely see other man camps that are being mothballed and the chain going up to close them. The pushes for these workers to go into cheaper locations, or, even, take on the rent check themselves, where if in the past whereas in the past they were getting a per diem. Either the perdiem from the company is getting trimmed or cut entirely, but the shift is away from these man camps and two more rvstyle housing plain old lots, and the workers will read their own rv and move from job site to job site and be more mobile. Betty this will get worse. More will come to the cutting jobs. You were just on the call with slumber j. They have announced slumber j they announce more job cuts. Only what they said on the call . David they said they will lay off 11,000 more workers globally, on top of the 9008 already announced, and that was the biggest single job cut from anyone coming we have seen so far in the oil market downturn. Today, the call, they, sort of reiterated with a said. It is getting pushed out as what they said. It is getting pushed out as far as any kind of recovery, and a recovery will not be to the levels we have seen in the past anytime soon. So, it is, sort of, bracing for this to last a little bit longer. Betty david, thank you so much. David wethe of bloomberg on the decline of the man camps turning into ghost towns. Much more ahead. The volkswagen ceo and chairman lock in a power struggle, and it is proving tough to diffuse. Much more on that next. Betty lets get back to bringing you the most important stories you need to know before the bell. Bloombergs carol massar and matt miller joining me. Number 4 it pays to be king some see sweet executives are getting big paydays. According to the pay index, the first daily ranking of the highestpaid executives, apple ceo tim cook has the best payfourperformance rating of any ceo. He was awarded 65 million in compensation last year. Another executive making big bucks, guys, the server. Matt real money. Carol by the way, he is so cute. Betty the go pro ceo. Matt he is adorable. [laughter] you know what, he deserves that . Tim cook is underpaid at 65 million. Look at what he is given apple shareholders. He is greeted so much wealth. Carol go pro we have yet to see what he will return to shareholders. Time will tell. Tim cook has returned a lot of value in three years. Matt true, but woodman made the business. It is his. Carol can someone compete against him . Betty they have tried. Polaroid, and others, but so far yes the firsttomarket status. Matt it is beyond the camera. It is the content. Carol everyone is getting into media. Matt not as well as they are. Betty matt thinks he is cuter. Boardroom woes by the way this is to do with journalistic integrity. Volkswagen putting out boardroom fires. The board is diffusing a struggle by backing Ceo Martin Winterkorn who was at odds with the company chairman. Basically, Martin Winterkorn is the best possible ceo according to the Supervisory Board and has full support. What else is going on here . Matt what else would they say . I think the death of Ferdinand Piech has been widely exaggerated had the last time he did this, Supervisory Board also backed him and fired him a couple of months later. This guy is the most powerful automaking ceo in world history. He is ferdinands porches grandson. He pushed through the 917, which no one wanted to do, and it is now one of the greatest race cars of all time. When hes a something nasty about a ceo running volkswagen people listen. Carol the guy he wants to get rid of he is led the company to record profits. Matt guess what, subaru outsells volkswagen in america . Theyre not doing well. Betty 32 days the last time there was an alltime high for u. S. Stocks. The s p had averaged a day between highs. Equity indexes from asia to europe have climbed to multiyour highs in recent days. Today, however, not so much. All right, mike reagan put it well today. We have gone so greedy. We are used to these record highs in stocks and here we are, about one month without it, and we are feeling like, what is going on here. Carol it has also been three years since we have nothing a full 10 correction. What you expect there is a lot of even money still around. I think, you know, we get close to records, come back i do not know. Theres also concerns about weakness in the economy. You have those things battling one another. Matt never when the s p was 600 . That was four years ago. The dow was 6000. Give me a break. The stock market is kicking absolute but, no matter how you look at it. T this is not the kind of thing where you invest and one month later you should double your money. It is a longterm thing. Five years, youre good. Betty as we near the opening bell, well talk more about the markets. Lets get a check out where futures have settled after lots of concerns of what is going on overseas. Teachers have settled lower along with the rest of the world. Our top story in the opening bell our top story and the opening bell is next. Betty welcome back to in the loop bring you the most important stories you need to know. Carol massar and matt miller uris. Two official said a recent run of economic numbers makes them wary of raising Interest Rates too soon, reinforcing forecast that the fed will wait until september to tighten. The head of the atlanta fed Dennis Lockhart said an increase to months from now would not be his preference. Fed officials have said they want inflation to reach 2 before they make their move. You know carol you know before we got going, we were talking about this. Betty are you sick of it . Carol there is so much backandforth. I think we need to listen to Stanley Fischer. He is the vice chairman of the fed. His voice has a higher weight. He says things are going to pick up. That is one of the voices we should really Pay Attention to. Matt i have always thought this game of fed watching can be fun. It can also be kind of lame because it goes backandforth it is a datadependent thing. I really listen when they say that. Watch the data. What would you do . Having said that, you have the most dovish people in the world, and the most dovish organization ever, and all they want to do is promote stock Market Growth with their zero Interest Rate policy and did not care about inflating bubbles. They dont. That is the next guys problem. Betty if you look at the data does not seem like a june rate hike is on the table. Matt why, should we be a zero . Does it make sense to be at zero . The direction should not be up but it has to be somewhere above zero. Zero really question of people get in trouble at zero Interest Rates. Carol they want to do something, but they await about going to early and messing up all we have fixed after many years of easing policy. That is their concern. Betty there goes the bow. Perfect timing. I want to bring erik betty say that the fed will not have a height rate. I dont think it will at all. It should not be a zero Interest Rate. I agree with matt. Why are you continuing with zero Interest Rate gekko the next time you have a crisis, are you going to go negative . What you assume qualitative easing again. That is the problem with doing this over a long time. As matt said before, this has stimulated the stock market, but you dont have sustainable rapid economic growth. The never going to have it this way. Betty so what do they do then . Do they start raising rates . Komal i said two years ago they shouldve raised rates. Betty but one are they going to do . Komal their differences between what they should do and what i think they will do. Two years ago, i said that we should increase it. Betty i was Strong Enough to support a rate increase . Komal we are never Strong Enough to support it because of this wrong policy that is continually been through the seven years. You have to have a shot cap. As soon as you undergo shot, like two or three years ago, the shock wouldve been much less. Matt is an increase really going to make a difference to anyone besides stock investors . I get that it will shock the market but what we resume after that . Even a courtappointed or a half point, what is that going to do . Komal if they raise it, the market is going to have to start believe that. If you look at the history like in february 1994 which was a major surprise, it was the start of a significant chain of rate increases. Betty to be by when Stanley Fischer says that we are going to go from an easy Monetary Policy to an easy, easy, easy Monetary Policy . Komal i dont think we do. He is an important person, but so is bill guthridge. He was on last week. He was saying that Economic Data was weak and we needed to wait for rate increases. Todays messages for a different from the message one week ago. As the u. S. Economy changed so much in a week that you should change her pronouncements . I dont think so. I dont think that this is forward guidance. It is forward confusion. The markets would be better off without these contradictions. Betty and that all this, the dow is down. 163 points right now. The s p is lower by 13. What is going on . Komal the impact is that as you said earlier in the program, you had steps taken by chinese authorities that is the beginning. And greece with the Interest Rates surge in the last couple days is clearly going towards the default. They are being turned down by the ecb. They have been turned down by the imf this week. President obama shows his support, but that does not mean very much for the greeks. Matt surely markets are preparing for the reality that even if greece does not default and exit the eurozone and go to a deep recession and jag everyone else along with that, it is going to be a rough couple of months, maybe a rough couple of years as they have to go through some kind of capitulation and get out of there before germany is going to be willing to work with them. And that is not easy. Komal and you cannot get syriza out because they are a popular government. The problem is that if they give into the imf and ecb demands, they would not be popular after all. They would have less constituents in the party they would have to satisfy. Theres no easy way out. Ive been saying for a couple of years that greece is heading for a default. The sooner you do, rather than follow the european process of kicking the can down the road, get it done. Just like you said at about increasing rates, get it done. Both of those will be major shocks, but you might as well do it because theres no way to skip it. Betty thank you so much. It is great to say you. Thanks to matt miller and carol massar for joining me. Matt what a pleasure. Carol what a way to spend friday. Betty we will speak more about greece and economics. The professor weighs in that. We will have to see what yes to say. Betty despite a good amount of Economic Data this week, the market i has traded relatively sideways. I think overall we are seeing a selloff here in the markets. We are rebounding a little bit. Scarlet fu is joining me. We need a new perspective on this. Scarlet we did get perspectives of a record high earlier this week, but it looks like we will end the week lower. There are overarching themes holding us back. First among his greece. Will they exit the euro . Most people i talk to are convinced that this is the next step of greek poking back. Yields coming down and european stocks would reach a record high on wednesday are in slight retreat because it already rallied on the ecb saying it is want to stay with the qe program, but they are still not quite clear and certain on what is happening next and how it can go on. Then you have china and the questions on the stock market frenzy there. Betty is surprising to me how much that affects us here. Scarlet its a lot of money for cheaper homes. It is psychological to. Stocks continue to jump higher because of all this pentup demand. Now you have chinese regulators supposedly maddened banning margin trading businesses. What happens there . Then you have the u. S. Economic data and conflicting status from the fed on one liftoff should begin and when the First Quarter of this rough patch will pass. Betty i think it is all coming up and becoming the sin for a confusing market. The tendency is to sell. That is where you are biased towards. There are movers that you are watching. Scarlet amd is down big time early trading. This is after the ceo said it would be hard to tell whether the second half will be substantially better than the first half. He cited very low demand in eastern europe. He said that western europe is ok, but the overall market remains a challenge. This is not on like what we heard from intel in march. Intel did successfully lower analyst estimates and affect their expectations and ended up reporting a decent Earnings Report that showed a boost from chips sold at data centers. Nevertheless, you will see pressure from chip related companies. I will be watching that carefully. Betty scarlet, thank you so much. Scarlet is our chief markets correspondent. Let get some more perspective on greece. The country is facing payments of more than 1 billion next month. Theres still no rescue website. Bloomberg spoke with nora loewe knee. While both sides are playing hardball, and exit is limited. Greece is running out of money and they have payment due and restitution in the coming months. Im still of the view that the probability of a greek exit from the eurozone is limited. Both sides are playing hardball, but they are reaching an agreement on how to find it. Necessary reform is on the debt. Theres not going to be reduction for the time being. There may be an extension. Im still of the view that stepbystep they will reach a deal. Once the payments are due, they will come up with some kind of money to make sure the debt is being paid. This cycle will continue short of a great greek exit. Tom some people say the greek leadership know what theyre doing. These are people that push against consensus. These people are very concerned about what happens if greece unravels. Where do you stand on this . What happens of the Banking System of greece unravels . Nouriel some people believe that there is a greek contagion. Betty do you agree with that . Nouriel i think the risk of a contagion are there. I think those who believe that theres not going to be contagion are mistaken. There will be significant economic contagion and i think that is why both sides are an interest to avoid a greek accident from occurring. If you talk from people in rome and paris they would say that a greek exit from the eurozone would not be just an economic catastrophe, but it would be the beginning of the end of the eurozone and have geopolitical race applications. They commit. Russians are becoming more aggressive in the ukraine and the balkans. Is this a moment where you want to start destroying europe and the eurozone for something only 2 of the eurozone gdp has . Of course not. Eventually a copper mines were ok. A copper mise welker. Betty that was tom keene talking greece. A slamdunk and fast food. Basketball phenom lebron james accepted he is backing blaze pizza. Their president joins us in a moment. Betty heres a look at some of our top stories is money. A former financial regulator is joining Hillary Clintons president ial run. Gary gessler will become chief Financial Officer for the clinton campaign. He was a end big player behind the doddfrank refund shall financial reform law. A majority of americans that pod will be legal pot will be legal in the next decade. It will save 13 say it will happen in 20 years. Twice as percent say it will happen in 10 years. 17 say it will happen in five years. At 2 say it will never happen. Recreational marijuana use is now legal in four states. A shortterm game for a longterm gain approach. There were three straight years of falling profits. But she is telling charlie rose that is what must be done to increase shareholder value. Last year we divested 7 billion of businesses. They were also negative profits. It is all part of this if you keep moving to higher value, and that is not just in the shareholders mind, that is what we do for people. It continues to bring them the next thing. Keep moving their, you have to move out of some businesses and move into new businesses. Betty you can catch that full interview on bloomberg tonight at 7 p. M. Eastern time. Chipotle reigns supreme, but while they have cornered the burrito market, a company like blazes doing the same for pizza. Their sales are up for 50 less you. Founded in 2011, it gets you a customized pizza and less than 10 minutes and it back by celebrities like lebron james and maria shriver. Theyre looking to open up under the 60 restaurants this year alone. He spoke with the president and seat 00 the coo and how he explains to expand the brand. We have 40 Franchise Partners. You look at its one of these Franchise Partners opening franchises each year. We continue to do it. It is easy for us to open up 80 to 100 restaurants a year. Do the math and we will get to 500 restaurants by 2020 if not sooner. Betty pizza hut, dominoes, and papa johns makeup about 40 of the pizza market. The rest are all the momandpop pizza joints around the country. Where exactly is the opportunity for you here . Jim the huge opportunity for pizza is lunch. If i ask people around the country how often they have pizza for lunch, highquality art is not pizza for lunch, the answer is that they dont do it. They have burgers. They have sandwiches. They have burritos. Pizza, which is the secondlargest food category in the united states, really has not gone for lunch. What we have exploited thanks to rick and lisa and chef brad is to be able to create highquality art is not pizzas down the line and offer one price and you have your pizza and 180 seconds. That is the huge opportunity that exists today. Betty how are you able to do this . To you have an 800 degree plus of an . Do you have an 800 degree plus ofven . Jim exactly. And in three minutes, you have an incredible pizza. It tastes great and its right available to you immediately. And it needs customers need. Betty Everyone Wants to be chipotle. They cornered the burrito market. But they say themselves that they will be the chipotle of pizza. They have their locale that they are experimenting with. What is to say chipotle wont take their model and crush you guys with pizza . Jim theres nothing to stop them, but number one, we have a head start. Second, we have great Franchise Partners. We are at 64 and growing every year. We have learned a lot from chipotle. We can actually move faster than they can not only with real estate, but with moving people down the relevant down the line. Betty in terms of your growth rate, some people would say that maybe youre going too fast. What is the rush . Jim we have built great training and the ability to execute. When we look at Consumer Metrics from other firms that we use to see how the guest sees us, we have actually gotten better as we opened up 40 new restaurants. We believe we have permission to grow quickly. Betty that was art and our interview with the blaze pizza coo. That does it for today. We have an interview with the National Wildlife federation ceo. He joins us from louisiana to talk about how the gulf is recovering five d after the deepwater horizon disaster. Former public and center trent lot weighs in on the gop race 16 field and what does he think about hillary and 2016. Plus an airline that is ready to take off. We will speak with the ceo. That is all monday right here on Bloomberg Television. Scarlet it is 56 past the hour. That means Bloomberg Television is on the markets. Im scarlet fu. U. S. Equities ending the week with steep losses. The dow jones losing to 13 points. Some of that is due to concerns over what is happening in china. Almost up 25 as chinese regulators are banning trading. The dollar reverses its earlier decline. It is and of the week which means only one thing. It is etf friday. We post a question to the etf risk market. Last month, john vogel of vanguard warned of some dangers of the etf phenomenon. He discusses reality is an analyst for bloomberg news. You are here to defend etf. A little. I think some claims are legitimate. I think some are sensational headlines. The truth is where most people get their information. Goldman comes out in the report and they talk about rising correlations and etf. The headlines are that etfs are the tales widen the dog. Its not quite that dramatic. You can find evidence of concern. In terms of correlation, if you got to the sector space and look at less traded stocks like i why ours i why are and holds a good enough amount of boston properties. Its trading fx 10 to 15 of its daily volume. It is having effect on lesson with the name less liquid names. You do see a bit of a rising correlations. But when you step back in with the broad markets and take the s p 500 index the largest etf by far is 200 billion. It only owns 1 of the s p 500 stocks. It is a drop in the bucket. Im not sure how much affect this can really have. Etfs trade more than you think but they own a lot less than you think. In smaller sector space is coming can see a higher ownership level. Betty that is a good rule of thumb. What about this claim that etfs inspire over trading . Vogel seems to be antietf but i think he is antitrading. Etfs rebuilt back in 1993 to get more people to trade on the amex. The whole purpose was to trade and they trade a lot. The thing that he does not really say is that you can buy and hold an etf. You do not have to traded. A lot of people gravitate to etfs like to trade anyway. Theyre going to trade futures or whatever. My grandmother could own it and hold it for 10 years and the rate of the index. She is a happy cancer. Someone can hold it for 20 minutes and theyre happy. Etfs are interesting where retail can go longterm and a trader can go in and out quickly. The traders are what is cranking out the turnover. Scarlet how about the idea that bond etfs are the liquid mirage . What happens when everyone runs for the exits . This is legitimate i think. Especially in the junkbond space. The government is concerned about this. Its a big cost for the regulations come out and they try up liquidity on the bond index. You also have qb. Qb has spent regular people into highyielding debt. I agree. The thing that is important to note here is to jump on etfs hold 30 billion. They happen through some crisis. They do make it out. Is just a rough day or two. Scarlet we will see how many of those we have in the next couple months. Eric, thank you so much. Market makers is up next on Bloomberg Television. Live from bloomberg headquarters in new york. This is market makers, with Erik Schatzker and stephanie ruhle. Erik he spends more time in the surf than he does on wall street. Wait till you hear what the higher seed highest paid ceo and america is. Explaining the saudi strategy. Why they refuse to cut off oil prices by cutting production. Eureka. Youll see an innovation that change your life if you are like those who like a lot of calories for breakfast. Meet the creator of the krone. Happy friday