Banks in greece may soon be facing the European Central bank reportedly looking at limiting emergency liquidity assistance. Proposals that would raise the discounts imposed on collateral securities when the bank of greece makes loans. The steps will be taken if greece does not reform its economy to get bailout money. A former ecb president says the rest of europe is waiting for greece to act. We have to be realistic. It all depends on the maturing of the position of the greek government. If it wants to deliver growth and jobs which is the main goal of that government it has to produce a recovery program. Betty european ministers are scheduled to meet on friday. The banks said a key measure of financial strength fell in the First Quarter. It may need to boost capital. The ceo. In the businesses where we are focused, we are doing well. The credit business, which was more difficult for the industry in the quarter, emerging markets, those are businesses that are power alleys for us and we do well. The same thing in a goodies. I think we have a strong the same thing in equities. Performing well for shareholders. I think we are in the businesses we have targeted, i think we are doing well. Betty details are expected today about a new test for breast and ovarian cancer. The Genetic Screening would look for cancer risks far ahead of mammograms and other traditional tests. A startup called says the test would cost 249. 90 lower than tests on the market now. Women could be screened for 17 genes that predict cancer risk. Teva Pharmaceuticals Says the company will make an unsolicited bid for mylan. Mylan has turned down prior offers from the company. The companies are leaders in the generic drugs sector. Shares of under armour are down in the free market after a Sales Forecast missed estimates. The company predicted revenues of about 3. 7 billion. Under armour received a revenue jump of 27 this year but that would be its reduced best its weakest since 2009. Google changing things up. The company is offering its search out the rhythm so that starting today websites that are mobile friendly will rank higher in searches. This is big for a lot of companies that have a web presence. What is the impact for these companies . For more i am joined by Corey Johnson in san francisco. Why is google making the changes now . Cory google has been at this for a long time. They regularly shuffle search results to show the things they think are the most relevant. It is an interesting challenge they have which is wanting to provide relevant search results, and boost their own businesses. And wanted to figure out if people are clicking. The most clicks are the things people want the most. As people have been going more and more toward mobile search they have been favoring mobile search results more greatly. The change today was announced back in february and they have warned people about this coming saying, we are to continue to tweak results. If you cannot get on board by the state in april will have time to fix it. Mobile focused results. These are not searches done on the desktop. Probably sometime this year we will reach a point where there are more searches done on phones than on the desktops. Google is going to always search their results toward those in favor. Of the platform there on the most. Betty theyre just keeping up with the times. What is the impact on some of the Small Businesses . Cory the interesting role of google. A lot of Big Companies are going to be surprised by this. A lot of Small Companies as well. I think those companies are already suffering because of the shift we have seen toward mobiles. They did not have mobile family sites. They were not getting mobile clicks anyway. I think it also highlights the role that google has in the Global Economy. We saw with the eu, their investigation of google was about the way google controls the places where people do other kinds of business, whether to shopping for stuff, plane tickets or whatever. These changes today reflect that. Betty thank you so much. Corey johnson, bloomberg west editor at large. Corey will be live all day from the security conference in san fran talking with top executives including the Vice President of ibm security. Be sure to tune in for that interview 2 30 p. M. The Software Giant prosperous quarter revenue coming in at the Software Giants firstquarter revenue coming in. Cloud Services Taking hold. It seems ibm still a small part of their entire business. Shares of about half a percent. I want to bring in on a rod for the core business it is still declining. The Cloud Business did wrap up quite nicely. As did the analyst six as did the analytics business. It is making up for some of the loss but it is going to take a long time. Betty is what to take years. A great interview a few days ago. She talked about the changing business. The change under ibm underneath her. I want to play for you part of what she said to charlie. Last year, we divested 7 businesses. They were also negative profit. Value that is not just in a shareholders mind, that is what we do for people. It continues to bring them the next thing. If you keep moving there, you have to move out of some businesses and moving to new businesses. Betty how they going to streamline some more . Anurag the core business has a deflationary pressure. People want to pay for higher value services, analytics and cloud. To turn the ship around to focus everything on those areas, it is gone to take some time. That is the strategy. It is gone to take some time. Betty that you so much. Thank you so much. A battle of the titans today over trade. Tom donahue will make the case for a bipartisan bill giving the president fasttrack authority on trade. On the other side of this Richard Trumka. The venue is the Senate Finance Committee Hearing room. Peter cook has a preview of this battle of the titans. What are we going to hear from donahue to make his case and that from trumka . Peter these warhorses of washington have done battle in the past. They have also collaborated on immigration infrastructure. It is a bridge too far for these two lobbyists. Tom donahue is going to make the case on behalf of big business in washington. That trade Promotion Authority for the trade for the president is critical. To america past economic future. On the other side Richard Trumka. He is go to make the case that these deals may be good for american corporations but theyre not good for american workers. But there is not enough in these deals to boost the wages of american workers. Hes going to raise questions about Labor Protections as well in these deals. Your heard arguments from both these gentlemen. They will do it sidebyside in the committee. Betty could this hearing affect the outcome of votes . Peter there are some tough decisions that will be coming up in the next few days. Theres is a chance this hearing could sway voices. Watch how Richard Trumka appeals to democrats not to back their president , not to give him trade authority. If you get any hint of democrats on the Senate Finance committee who might be waffling might be deciding that they cannot support the president on this issue, that would be a big deal. It is the headcount that matters to some extent. Yet the Senate Finance Committee Voting on this proposal tomorrow. We will see the results after this hearing tomorrow. Betty thank you so much. Be sure to catch peters interview with paul ryan. All the action, right here on in the loop. Professor of finance Jeremy Siegel weighs in on whether tech needs to hit a perfect earnings score to keep this bull market running. Betty heres a look at our top stories. Egypts first Mohamed Morsi sentenced to 20 years in prison. The military ousted him more than two years ago. A jury will now decide whether the convicted Boston Marathon bomber lives or dies. The penalty phase of the trial is underway today. Lawyers for Dzhokhar Tsarnaev are expected to argue their client was under the influence of his brother who died in that shootout with police. One of those wounded in the attack ran the final three miles of yesterdays Boston Marathon. There is life after bad things that happen here. If i could be someones inspiration, that is what i want to do. Betty rebecca says next year she hopes to run all 26. 2 miles. Bold Bloomberg News with its first pulitzer prize. The columbia a huge congrats to zachary mitre. Those are your top stories. Coming up, we have an inside look at chipotles pork sanders. What it means for your next order. Property player gary barnett on his high end real estate praise. It is earnings central. Almost a third of the s p 500 Companies Report this week. Some of the biggest are in tech. Ibm, yahoo , ebay, facebook, google amazon on the list goes on. Tech is under pressure to report almost perfect profit. Bloomberg cap collated the need to deliver some 300 20s 320 billion dollars in profit this year. I would to bring in Jeremy Siegel. Who has said over and over again on this program that we would see doubt 20,000 by the end of this year that we would see dow 20,000 by the end of this year. Does that depend on a perfect tech score . Prof siegel anything that is selling for a high price earnings ratio, 25, 30 or higher, you need to be perfection to keep your stock going. I dont think we need perfection for the market to continue to go. We are selling around 18 times earnings. The First Quarter has been terrible in terms of gdp. We are going to get gdp about 1 . 18 times the First Quarter earnings combined with extremely low Interest Rates which are not going to rise that much this year we dont need perfection for that to get to doubt 20,000 by the end of the year doubt 20,000 by the end of the year. We need for Economic Growth to improve for the dollar not to continue to soar in the markets. We are looking for stability in the oil price and a rising productivity. Betty here is someone who might be on the other side of this. David einhorn 20 sent this letter out to his investors and he said he is worried about how First Quarter earnings have shaped up so far. He says it looks like we might be down 5 he says this level of earning degradation poses a risk to market trading. What about that level of fear . Prof siegel a lot of the earnings the earnings shortfall by the rising dollar 46 of the sales of the s p 500 are sales outside the united states. We have had a 20 increase in the price of the dollar over the last six months. That is huge headwind that are coming. We will probably still feel a little bit of that in the second quarter. 1 gdp growth likely negative productivity growth. That is not typical of the economy. That is also putting pressure on those earnings. The Oil Price Collapse has devastated the earnings of the Multinational Oil company. These are one off events. I am pleased how earnings have come in this First Quarter. I think we got about in 80 rate on this First Quarter earnings given these headwinds. I do not think that that means the next three quarters are going to continue to have those headwinds strike our earnings. Betty its an asterisk for you . Prof siegel exactly. I can stand another 5 rise in the dollar. That is about it. If it continues to soar the fed will have to give some sort of communication. We were not be we will not be as aggressive as you think because the rest of the world as we are the only central bank around that is even thinking of raising Interest Rates right now and all the money is flowing into our bonds and capital. That is difficult for our firms that are internationally oriented. Betty if i read between the lines of what you have been saying we had bill dudley here yesterday. He expressed confidence that the economy is going to improve. First quarter, kind of hard but it is going to get better. It sounds at your saying that we may not get an Interest Rate rise this year . Prof siegel i think the probability is yes. The market is putting a little over 5050 on september. Fed funds at 25 to 50 basis points which is a one and done situation is not going to scare me. I dont think its going to scare investors. That longterm Interest Rate is more important for investors than the shortterm Interest Rate. It looks like that 10 year bond is going to be around 2 , likely this year and maybe well into next year. That is not scary for investors. Betty great to see you as always. Professor Jeremy Siegel at the Wharton School at the university of pennsylvania. We will be back in two minutes. Betty you are watching in the loop. Im betty liu. Chipotle halted sales of pork at hundreds of its restaurants. What makes chipotles pork so special . Julie hyman traveled to iowa to find out. Julie imagine a pig farm. You probably picture a scene like this. At aldermen farm in new providence, iowa, youll see pigs in pasture, beating from troughs maybe some chickens alongside scratching in the dirt and a big red barn. Summertime you have a sow laying there nursing her picks nursing her pigs. Julie a network of farms spread across iowa and pennsylvania. The vast majority of pig farms in the u. S. Look more like this. Sows live inside alternating between pens for gestation and giving birth. Both have guards to prevent pigs from fighting with each other. Once the pigs are weaned their fattened up. In contrast, farms like all the land must conform to a list of regulations. Among them, pigs must be raised on pasture or embedded pens. Gestation crates are prohibited and nyman will only by pigs that have never been given antibiotics. It is done the oldfashioned way for the oldfashioned flavor. It is more expensive. The animals grow slower. Julie that limits production to 1200 pigs they year versus brenneman which raises 600,000 to sell tyson foods. Individual sows are less productive. If we did the nyman ranchstyle, we would produce a good 30 to 40 less every day of the week. We wont even feed our own country, let alone export. Julie the conventional industry dwarfs more natural methods but clients like whole foods and shake shack are growing quickly. As fast as we recruit additional farms, thats how fast we sell it. The demand has outstripped supply for the last three years. Julie nyman expands 18 to 20 18 to 20 annually. Given its rules, that may be as fast as it can grow. Betty julie joins us now with more on this. Very interesting. Dont know if i had an idea of what that pork farm was going to be. Julie most people never go to a pig farm. Betty what is the status of the lights pork supply . Chipotles spoke supply . Julie youre seen signs of some of the restaurants saying that they are out of carney does because of this issue. You see the supply issues not just with pork but with so much a political other products. At times it is substituted chicken that is not antibiotic free. It is also had supply issues with other products like avocados. When you are growing at the pace chipotle does, this is something youre going to come up against. The company has said this pork issue is going to cost it 2 million in charge this quarter. Luckily for a lay pork four chipotle pork only accounts for about 6 of sales. Betty what about the cost involved in raising pigs . How much money are we talking about . Julie if you look at the commodity price of lean halt right now, it is around 75 a hog. Down from 100 in the wintertime. The prices have come down a little bit. Niman says it pays a premium to Commodity Prices but will not tell us how much that premium is. In terms of input cost, feed is the biggest input cost. Corn prices have come down. In terms of capital cost, it is hard to measure that against each other. Both of the farms we went to the farmers had been in business for some time so they built their barns and other facilities a while ago. One would think the input cost at a place like brenneman, it the facility there you have all those pens. It is temperature controlled. You have those kinds of costs to contend with. It was surprisingly clean. The waste falls below. They clean up the pens on a regular basis. Also because the air is filtered in this facility, it does not smell quite as bad as you would expect. Betty julie, thank you so much. Julie hyman on chipotle and the pork supply. Thanks in greece may soon be facing new restrictions. The European Central bank is reporting limiting emergency liquidity assistance. Sources say the steps will be taken if greece does not perform its economy to get a lot money. The chairman of the council of economic advisers thanks spoke with bloomberg about this. I dont think its an experiment we want to run. I do not think we want to know the answer to that question. If they dont rate greek institutions do not find a path forward, it would be a risk that the Global Economy should not want to take just as things are starting to work. We are getting out of that crisis. We dont want to see what would happen. Betty european ministers are scheduled to meet in latvia to discuss the debt crisis. Hillary clinton is on the defensive. She was asked about a claim that she traded favorable treatment from the state department to win foreign donations for her familys foundation. The former secretary of state wrote it off to politics. We are back in two the political season therefore we will be subjected to all sorts of distraction and attack. I am ready for that. I think it is worth noting the republicans seem to be talking only about me. I do not know what they would talk about if i was not in the race. Betty the allegations from her new book from a new book by peter schweitzer. A profit of a dollar 34 a share three cents better than estimated by analysts surveyed by bloomberg. Dupont is facing a challenge from mountain health. Plans to break up the company. It is a new world this morning for businesses under Google Search rankings. All mobile Google Searches will favor sites that are mobile friendly. That could lead to changes in how websites are ranked and hurt smaller businesses. That do not have mobile from the sites. Bird flu is discovered on an iowa farm with more than 5 million chickens. The u. S. Department of agriculture found the virus. It means the hands must be destroyed the hens must be destroyed. I will produces about 1 5 of the nations bigs. Eggs. It takes a village or maybe just the help of a billionaire. We will hear from a childrens tv producer who is working with Warren Buffett to mold young minds around money. Happy birthday your majesty. The queen of england is 89 today and she got a 41 gun royal salute. She may get a more prince williams second child is due at the end of this week. Betty we are less than an hour to the start of trading. I want to get back to our breaking news desk. Some of the early action including under armour. Scarlet the most actively traded stock by value in the premarket with 37 million of shares changing hands. Usually apple is right at the top but under armour has taken the lead. Yesterday, closed at a record high. Im concerned that growth is slowing after its forecast that sales will grow trailed analyst estimates. Within that Earnings Report today the company said that sales from apparel will gain 21 in the First Quarter. That is that green rectangle here. A dramatic drop from the previous quarters. In the First Quarter of last year, under armour posted growth of at least 30 . That slow down is what investors are concerned about. Under armour trades and 80 times estimated earnings. Nike trades at 28 times estimated earnings. There is quite a bit of difference to make up. Harley davidson motorcycles shipments this year will know mother grove 4 to 6 but instead only 2 to 4 . Competitive discounting in the u. S. Harley davidson says theyre going to reduce the cost to match demand better. Betty thank you. Scarlet fu at the breaking news desk. A new breed of Television Viewers babies. Move over couch potatoes, here comes the rise of crib potatoes. One channel is focusing programming on children as young as six months. Despite Health Warnings children ages two to four are clocking in more than 25 minutes per week according to nielsen. How big of a market are we looking at when it comes to kids and now babies . Joining us is andy heyward, the ceo of Genius Brands international, the cup a is behind many programs and videos including the baby genius brand. Music videos, products geared toward babies. He is in any awardwinning producer of Childrens Television shows. Great to see you. Several things to talk about. Things that you have been immersed in this market for so many years what do you make of this refocusing on a childrens programming . Netflix has its own separate kids channel online. What you make of this . Andy kids have always been an important sector in media. A are huge consumers. They are early adopters of every new technology. You see a two euro today, chances are you see a twoyearold today, chances are they are fluent on devices. They know all of the new technologies and we Program Positive value content for kids of that age. Betty what does that mean . Break that down. Andy the essence of our company is what we call content with the purpose. It is not just to entertain, it is also to enrich. When we have content for toddlers, they are learning colors shapes, numbers, all done through music. There is an enrichment in it as well. As we go older for other brands kids are learning lessons in positive values such as Financial Literacy. We have a series coming up called Thomas Edisons secret lab about teaching kids science through entertainment. Betty i know some of these programs are broadcast in classrooms because there is a big educational component. How big of a market are we talking about . Andy the two to 11yearold market is about 35 million kids in the united states. The under twoyearold market im not sure how many that is. Betty 35 million, that is very sizable. The secret Millionaires Club that you have with Warren Buffett, i know it started off as a show but you are now going into products. Youre launching in september . Andy the products will be out in september. Everything we do starts with entertainment. The entertainment promote the brand and creates awareness. Back beyond digital platforms broadcast platforms, games, any number of ways. The awareness stimulates the appetite for the products. The products can be books, music, video games, figures betty how involved is buffet in the products . Andy we propose doing something that promoted Financial Literacy for kids. He saw it as a valuable, if i can say legacy item. Warren helped us create the curriculum, the lessons the kids learn. He gives notes. He does his own voices and every cartoon. He has been hands on from the beginning. Betty we will have to get an update when you launch these products. Thank you for joining us. Ceo of Genius Brands international. Gary barnett of Extell Development talks exclusively with us about building the tallest residential skyscraper in the northern hemisphere. What he is talking about maybe a 200 million penthouse. Willie nelson says he bought so much pot he is starting his own brand. Willies reserve. Betty more news on teva and mylan. Scarlet this has been speculated upon for a while. We have been reporting that the two were in discussion. Teva looking to buy mylan for 82 a share in cash and stock. That would represent a 21 premium to the last close. This is a 50 50 cash offer stock. Mylan said it had studied the possibility of a combination with teva and is committed to a standalone strategy. It was unusual for mylan to respond to report that teva was exploring the takeover offer. It wanted to be clear it was not interested in such an offer. Teva proposing to by mylan for 82 a share for cash and stock. This deal can be completed by the end of the year of 2015. Adding to its adjusted earnings per share approaching 30 by year three. It sees it as accretive to its own earnings. This proposal would not be subject to a financing condition. Cash and stock offer to buy mylan for 82 a share. We will keep you posted on other developments. You can see that teva and mylan shares both moving higher on this. Betty very interesting that they are both moving higher. Scarlet fu at the breaking news desk. He wouldnt it be nice to spend 91 million . Bill ackman and a group of investors bought the second most expensive apartment at the 157 tower, home to the most expensive condo sale in the city. Who is the guy sells is who gets billionaires these homes were fun . Gary barnett joins us now. The founder and president of Extell Development. Great to see you. So much to talk now. Are these prices sustainable . Lets take new york city because that is where you play, where you do your business. These price tags are a enormous but are we heading an oversupply problem . Gary a lot more they are pretty unique. I do not take it is oversupply. I think we have a deep pool of buyers. Bill purchased a 90 million unit. Betty he called it the mona lisa of apartments . Gary it is very special. Betty the Winter Garden apartment. He also said he never intended to move into it. Gary if you are worth a few billion dollars you can afford to have a good time. Betty he buys it for fun with an investor group. Does that signal any kind of frothing this in the market . Gary i dont think so. He is the kind of buyer who wants to buy something real. Hes going to do a beautiful job of reconfiguring it and one day he will make some profit on it. When it is for fun, eventually he expects to make profit. Betty foreign buyers, i was looking through some numbers. According to Miller Samuel 200 30 of luxury condos sold in new york city highend luxury condos sold in new york city are bought by foreigners. Are they going to be hit by the stronger u. S. Dollar . Gary maybe the under 5 Million Units that some of the foreigners are buying will say we will sell it and take it back to our home. It is a very high level of wealth which we are talking about. A lot of those people are international businessman. Most of them are thinking in terms of dollars anyhow. If they think it is a good buy in dollars, they will buy in dollars. I think they are capable of continuing to buy. A lot of these people are not buying with mortgages. I do not think the dollars going to hit home at the highend. Betty what the dollar continues to rise . Gary i think the dollar rising is maybe more of a threat from an Overall Economic point. Were great stock markets around the world. Interest rates are down to nothing. A purchase in real estate makes a lot of sense now because of the low Interest Rates. If the dollar goes down and we see Interest Rates rise, that might affect it a little bit. The whole world wants a piece of new york city right now. It is good times. Betty the one 57 tower sticks out. Gary is a beautiful building. Betty i dont mean any offense. You are also building another big one the most from tower the minority from tower. You sold the penthouse for hundred . 5 million. Give me the price tag . Gary we have Something Special at the top of the building. Betty are we going to break the 200 million mark year . Gary i think we could see Something Special in new york city that would break 200 million. Betty is that sustainable at that point . Gary it is unique oneofakind. The rest of it will be in line pricing. I think we see the newest building, 220 Central Park South is breaking records as well. I think there will be winners and losers. Overall, a good demand for new york real estate. Betty are you looking outside of new york city . Gary we have built elsewhere but we are really focused. I think it is one of the best markets of the world. Betty gary great to see you. Gary barnett founder and president of Extell Development. We will be back in two minutes. Betty still to come, time to ditch the gold bars. We will have more after the break. Ening bell. Here is a look at our top stories. Interest indicate stocks will open higher. Wall street looking at reports from three dow components today. And bailout deal is expected by the end of this month. Local governments must transfer funds to the central bank. It is expected to bring in more than 1. 5 billion. A former ecb president says europe is waiting for dead written for debtwrridden greece. We have the wait for the maturing of the government to understand that in any case if it wants to deliver jobs which is the main goal of that government, it has to produced recovery program. Betty european ministers are scheduled to meet credit. To meet friday. A ceo says the bank is investing adjusting well to market factors. The measures we took in the First Quarter to counter the changes in switzerland where you had a significant reduction in Interest Rates to negative territory, the changes have been effective. We continue together very healthy net new assets. We had 17 billion in total in the First Quarter which is a good strong total. Betty egypts first civilian leaders headed to risen. He was sentenced to 20 years behind bars for making a connection to the killing of protesters in 2012. The military ousted him nearly two years ago. The Muslim Brotherhood good was elected after longtime leader hosni mubarak. And and excellence of new test for breast and ovarian cancers. The Genetic Screening would look far ahead of mammograms and other traditional ways to detect breast cancer. The company says the test will cost 249. Women will be tested up to 17 genes. A drug sector deal that would be the biggest in the industry. 82 in cash in stocks for arrival for its rival. Mylan has turned down prior offers. In the past hour, bloomberg west teaming up with a major critic our company to make rides cheaper for his cardholders. Cardholders will now get 20 of their goober very returned as credit to pay off credit card statements. In National Terms of the deal are not disclosed in the goal is to attract new customers to both. Those are your top headlines. Another reason to take gooberuber. Bloombergs matt miller and Joe Weisenthal joining me this morning. Move over gold. I am feeling good. According to larry fink, gold has lost its luster. There are other mechanisms in which you can store well. This is perfect timing. We just had gary barnett saying they are buying 100 million paintings more than 100 million condos. Matt if we are talking about things in that price level, i dont think a lot of people can play is the problem. That may be true but that cuts out 99. 9 of the global population. Joe i dont know if it is sure that real estate will keep going up but there is an interesting phenomenon here. Matt real estate never loses value. Joe except when it crashes. There is a phenomenon where people are in countries and theyre worried about maybe their money getting seized or taxed aggressively a look at real estate places like new york and vancouver and see strong Property Rights and strong stability. Even if it falls, it will still be there. Betty number 9 ge discussing dsouza parts of his finance business including a 74 billion u. S. Marshall unit u. S. Commercial unit. Two weeks ago ge said it would sell the bulk of its lending unit. I spoke with some of the people familiar with what is going on with ge. These be huge huge sales. Joe that is the story that ge announced it will try to get back to being an industrial company. Matt i started this job in germany in 2000 covering siemens. At the time, they were trying to go back to their core. These conglomerates get bigger and get back to their roots. It is a cycle you see over and over again. It is a huge device teacher huge divestiture here. It will be a big metamorphosis. Betty we had jack welsh the guy who built ge on this morning and now he is dismantling the house that jack built. Number 8 earnings the gradation poses a risk to stock markets that are already trading at high levels. Ges decision to restructure ge capital will result in a 16 billion aftertax charge that would drain 5 to 7 from s p quarterly earnings. Matt that is massive. Betty huge. If you are able, you might want to say that is a oneoff item and things are still in good shape. Matt historically valuations are high right now and it seems they depend on earnings staying strong. Matt i havent seen that anywhere also historically a turnaround painted like with david einhorn. They are down 5 and it will get worse. That 16 billion is aftertax and it will be a drain of 5 to 7 of equity earnings alone. Alone. Even without that youre looking at a drop of more than 5 this year. Betty if you are able or berries to the data differently. Jeremy siegel he says what happen in the First Quarter and what is happening in the First Quarter is a oneoff. It is absorbing the big rise in the dollar. Matt and the oil crash. Betty that has happened already so let us move on. Number 7 crafting a better mac cheese. One of the foods i grew up with. Matt everyone did. Betty the Company Announced original craft mac cheese 10 longer be made with artificial preservatives or synthetic dollars. They will replace that glowing orange with something else. Matt itll be interesting to see what the new color is. Betty white . Pale yellow . Matt they have 78 of this market. I was reading about the Historical Development of kraft macaroni and cheese. Jim craft developed a way to keep cheese out longer. It is a cheap food that did not need things in it that lasted 10 months on the shelf and became a huge hit. Into world war ii when it was rationing then you could not get me, it made even more of a hit. We all grew up with it. Joe i had someone i was younger my yes. Betty now it is all about healthy foods. You dont want to admit you are eating that. Not cool at all. Number 6 hillary clinton. Is she cool again . She is likely months away from offering tax and policy proposals but she hinted she once to get tougher on traders. She said she plans to take a hard look at what is being done in the trading world which is trading for the sake of trading. Matt what is interesting is i took a quote from her Small Business roundtable here where she says if it is just playing back and forth in a global marketplace to get 1 10 of 1 advantage, maybe we cannot let that go on because that kind of behavior is at the root of the economic problems we remember from 2008. It makes me worry she doesnt remember why we had the whole economic crisis in 2008. Had nothing to do with traders. People were borrowing money and taking out loans they could not afford. There were counting on real estate always going up, an investment that never falls. Betty these are politics here. Come on. Joe they will be interesting to see how much he is held to account for the fact that so much wall street regulation happened under her husbands administration. Will she directly rebuke what happened in the late 1990s . Betty so much a call her out on that. Much more ahead. Under armour missing on its earnings as revenues were below estimates. We will take a look at how they were bidding big on certain athletes. We will be back. Betty we continue to count down to the opening bell and we are halfway through so it is time for a deep dive. We are diving into number five. It is under armour we are talking about. Theyre battling nike in a sneaker war. Under armour sales of more than doubled since 2011. It is looking to bolster market share by trying to sponsor more teams and athletes including Jordan Spieth, who won the masters last week. That is all you heard about one Jordan Spieth won is a under armour is big on the sky and it is paying off big on this guy and it is paying off. It is a mixed bag. They be a rise in operating and sales income but it fell short of what the market expected. There is a lot of noise in q1. We have Foreign Exchange issues so i the underlying trends are still strong. You mentioned Jordan Spieth and winning the tournament was great for under armour. The brand got a lot of Primetime Exposure which is great for them. At the same time, a give them a platform to show their golf products which is the key for a company that doesnt make golf equipment. Betty and is not associated with golf. Chen they focus on the apparel side. Just a couple of weeks ago, they came out with their first golf shoe that sold out immediately. It is nice to have a logo on tv but it is nicer when you move the product. Betty that is one area for them but basketball sneakers is another area. Best of all apparel and stickers. That is one that nike dominates. Nike has 90 . That is incredible. How does under armour get into that . Chen the biggest asset for them right now is steph curry. They just came out with his first vessel signature shoe a couple of months ago. It really depends how it will do in the playoffs. If he goes all the way it is m. V. P. , they have a big opportunity to sell a lot more shoes. At the same time they have to meet the demands because if you go online now to try to find a pair of sneakers a steph curry unless you are a sigh 14 are a size 14, you cant. Betty is that benefit under armour when they see these products sold out . Chen definitely. The business is about inspiring people to be winners. Someone or might it may yesterday of the gatorade commercial be like mike. Be like Jordan Spieth or be like steph. When people see them be successful, they go out and grab the shoes and apparel. Betty all of that sounds great and it is great publicity for under armour, but when you start actually seeing that buzz reflected in the earning report, when you see that . Chen you see the cells right away but for the best must choose for example. It is a longerterm thing. In Jordan Spieth goes up and went to the majors like people predicted, profit is about 100 million. If he wins more, that means it will become much bigger in the coming years. Betty thank you so much. Good to see you. Much more ahead. I we about to see the biggest a big pharma deal of the year . It is in generics. A deal for 82 a share. That news broke in the last 15 minutes. The rate rise rate. The fed plans to go slow and steady. Betty lets get back to bringing you the most support and stories you need to know before the bell. Matt miller and Joe Weisenthal joining me. Number 4 it may be a huge takeover tuesday at least for the drug industry. And big takeover in generics. In the last 20 minutes teva propose to buy mylan. Props for getting the scoop over the weekend. Mylan has turned down previous offers from the company. Who wants to chime in on this . Joe and other drug Company Buying another drug company . Matt i am having a hard time keepingmatt track of all the drug deals this year. s other headlines these are the headlines. They are all huge. Joe health care is a huge sector. This isnt really surprising. Bloomberg of the story over the weekend that it is confirmation of a scoop. Betty there you go. We will continue to see these deals. Will kind of drug deals were you seeing in college, matt . Number 3 the china conundrum. In the first trading day, the shanghai composite index climbed to a sevenyear high. A chinese power transformer maker could become the First Company to default in the market after fighting big uncertainty about its ability to make an interest payment. What we are seeing is companies i dont know if two stories make a trend but big chinese competitive now defaulted or are about to default on their bonds. Joe people have seen these coming for a while and there is perhaps a view that there will be controlled it defaults so not just mass waves of defaults. There will be a redline somewhere. Perhaps the chinese regulators what investors to see that there is going to be some pain. Matt at first blush i thought this would be horrible for the market because they are at a sevenyear high. Then when you look at the mechanics of free market and capitalist free market, this is what has to happen. It is great they are allowing the private company to go but they are allowing a state owned company to default. That is leading the market work. Betty that is leading the market work letting the market work. Number 2 ibm profits topped estimates. It was helped by the sales of its new mainframe and Cloud Computer services. Income dropped 2. 3 a year earlier from a year earlier. I dont know if anyone can get excited about big blue. They are trying to get into new businesses. Joe she is up there was 76 of S P Companies for beating analyst estimates which were lowered almost 10 by the way. Joe once again, we talked about this will be a backorder for earnings. We are seeing a string of beats once again. Although things are down, they are up. Matt how do you reconcile the fact that analysts lowball these companies constantly. Every quarter since i was a kid the majority of companies are beats. Joe i dont know the answer to that question. Companies like to make sure expectations are lower. Betty as we near the opening bell, a quick check on where futures have settled. We saw a big rebound yesterday and we continue the gains. Our top story is next. Betty welcome back to in the loop. Matt miller and Joe Weisenthal joining me as we head to the open. Our number one story every day we are talking about the fed. Janet yellen and her colleagues have stressed in recent speeches that Monetary Policy will remain unusually easy as they begin to tighten for the first year and a must a decade. Matt earlier in the year there was a lot of discussion about whether it will be june or september the day of the first right hike. At the last fed meeting they lowered their longterm expectations or mediumterm expectations about where rates would go. Since then, they have been emphasizing the point over and over again that dont worry about when we will hike, just remember we will not hike too fast. Matt it might not be this year. It could only be 12. 5 basins points basis points. Betty they keep saying data dependent. Matt that makes sense. That should be data dependent. They shouldnt be making a forecast and feeling the need to stick to it because they promised the markets something. Betty i agree. Matt if you do it, do it right. Betty as opposed to doing it wrong. Matt if you do this Monetary Policy centralbank thing, you should try to stick to the data because you are trying to create growth. Betty let us bring in someone who knows a lot about this. Mohammed now the chief economist at elians at allianz. Matt says it is good they are doing this but some say this is a mistake that the fed is data dependent. They have to bring in more factors when it comes to Monetary Policy or they will find a big mistake by raising rates too early. There are so many issues here. Which data . Betty exactly. And how clear is that data . Is a third issue there is a third issue. The fed does not want to obsess about the data of they left off but they want us to look at a shallow path. At some point it will take us beyond that. Not only is the path going to be shallow but the terminal level will be much lower than what has been in history. The fed is trying and the sounds contradictory to remain unusually easy while it titans. While its tightens. Matt do you think they will be able to successfully execute the experiment . What are the risks that could go wrong . Mohamed the biggest risk is that they are too successful. I mean they are very successful in boosting up asset prices. They continue to decouple asset prices from the fundamentals and they dont get the support from fiscal policy to validate the asset prices. The biggest risk is a may be too successful in a narrow sense and unsuccessful in a bigger sense. That has already happened, hasnt it . They have decoupled asset prices from the real economy and they have been very successful in Getting Congress to rely 100 on the fed for running the economy and not paying attention to the Balance Sheet at all. Mohamed and that is the big problem. That success helps others become more complacent. It is typical. You see it here and you see it happening in europe with the ecb having gone full in on its qe. They are worried about that. They cannot vocalize it too much. They are worried about it. Betty i know you are very active on twitter. We have been following some of the tweets. You often sweet right after a big market event. I want to call up guys can we pull up that tweet where it was a chart about the financial bubble. At the highest level since the 1860s. What does that tell you . Mohamed its as if there is only one policy instrument that is in play right now and that policy instrument can only operate due to Financial Markets or what they call the financial asset channel. Therefore it has to cause a bubble in order to have any hope of triggering an economic response. That is the reality we are in. Interestingly we were in the same reality in 2006 and 2007 but it was the private markets doing it. Now it is the Central Banks doing it. At a slightly different but i think the biggest concern, especially for those who are parents betty that is even worse that the Central Banks are behind it. Mohamed worse and not worse. The big advantage is you cannot force a liquidation of a centralbank. You cannot force a centralbank to delilever. It is not as dangerous as 2006 but it is far away. As the fed have a conundrum here in the possible bubble of the u. S. Dollar . If it raises rates the dollar gets stronger and that decouples the real economy from asset prices because the men and women working on things they want to sell overseas will not be able to make their wages. Mohamed you are absolutely right. We also have divergent Monetary Policy. We have the fed slowly taking his foot off the accelerator and we have the ecb that has its foot all the way down and shows no sign of wanting to take it off. If anything, they will try to turbocharge the accelerator in order to minimize the contagion from greece. Only one market will react to try to reconcile that and that is the Foreign Exchange market. Other policy instruments that should be used are not being used. The prospects are getting stronger and why dont understand and the three of you have a better view is taken hedge is that they can hedge. Top companies can do more exchange hedge where this will protect them in the longterm. Betty that i read an article recently that you have most of your money in cash . Is that right . Mohamed what i have done is barneveld my exposure. If you question what is the most exposed a part of the market it is where everyone has been pushed into by Central Banks. That is the most heavily trafficked part of the market. It is the public market. It is public equities and bonds. In reaction to that, people including me have been barbelling, taking some of the exposure back into cash and taking some of the exposure into higher risk less liquid less public exposure. It is harder for the central bank to push people in. Think of it as bar belling in order to minimize. Betty stay with me. We will talk much more and go overseas talking about their markets. In the meantime, thanks to Joe Weisenthal and matt miller for joining me. Thank you very much. It has been a pleasure. Betty as always. You might want to Pay Attention to asian equities. We will to you why that is in a moment. Betty todays bloomberg big number is 25 million. That is how much a flawless 100 carat diamond ring may make when it is auctioned off here in new york. It is an internally flawless diamond. Only five other flawless diamonds over 100 carats have been sold at auction. It was mined in south africa and weighed over 200 carats before it was cut. The record price for any diamond was 46 million diamond was 46 million for an emerald cut diamond. Michael currently predicted chinas decision to cut reserve requirements for lenders says it is in your best interest to stop overlooking asian stocks. I think people have been surprised at the ease of making money outside of the u. S. Even parts of the world like asia which people have been negative about, that should be replaced every. That should be a great place to be. Betty the surged more than 12 this year when measured in u. S. Dollars but some investors remain skeptical about the ability of these markets to live up to the valuations. Staying with me is mohamed . Would you agree that maybe now is the time of reckoning for u. S. And Foreign Investors to look asian stocks or is it too late . Mohamed we have to understand what is going on. The major theme in the equity market for years has been the central bank trade. Whenever you have seen one centralbank be more stimulative than the other, you ought to respect expect higher prices and weaker currency. Is started with the u. S. In 2010 and went on to japan. It then went on to the ecb. China has been the latest to join the most intuitive. This 100 basis points cut is the largest since 2008 to put it in context. If you believe in Central Banks continuing to be committed and effective, more uncertain, then this makes sense but it is a classic centralbank trade has rewarded Equity Investors and currency investors as well. Betty has this move in asia and particularly we are talking about chinese shares has a surprised you the pace of it . Mohamed the rebound in china has. What is interesting is to see how the authorities are torn. On one hand, they want to stimulate the economy. On the other hand, they are worried about a bubble because of the equity market has been responding. To have been trying to strike that balance. It is a very hard balance to strike. The advantage china has is they are less open. They have more flexibility to pursue contradictory objectives as absurd as that sounds. When you are in a closed economy, you have a lot more degrees of freedom. Betty because he can do what you want and control the outcome. Finally on china, we were talking about this default of the chinese Property Developer but the bonds in default by the chinese power company. Are these worrying signs or paradoxically is it a good thing that the chinese are letting these Companies Default . Mohamed i would take the latter. It is a good thing because they are willing to let the market impose discipline. If the objective is trying to control excessive risktaking, why is it not as risky as somewhere else . They can contain the contagion. I see it as another step china is taking two more market discipline. They have the Balance Sheet to be able to contain the contagion. Betty i read your column yesterday and loved it on greece. You talked about are we now heading to a grexit . He said there is a 45 chance we may see some sort of messy compromise. There is a 10 chance we will see a meaningful breakthrough. Now a 45 chance that greece might actually exit the euro. How did you come to that conclusion . Mohamed that is a big change. In the past, it was a question of grexit versus model through and hopefully make it. Now there is a real chance of an accident. Why mean by accident is that greece ends of exiting not because someone makes a formal decision but rather because it is pushed out. That happen in argentina into the set in 2001. Why is it happening . They are losing the structural holders of the paper. Bloomberg has ran millions of stories on this. Such a there is a big banks subsidiaries a big banks abroad are saying. The ecb is getting more nervous about the emergency liquidity assistance. There is less liquidity getting sucked out of the system. I think you already saw they put their hands on the local governments and the next issue will be ious. At some point the faults will occur. Unless greece and its creditors change course, we are headed to an accident which increases the probability of exit. I do not believe that greece cant exit and stay in the eurozone. Some do. I dont. Betty we will have to leave it there by great to see you as always. Our bloomberg columnist and chief economic advisor. We will be back in two minutes on in the loop. Betty trading just under way and i am looking at my boards here. I want to get back to scarlet fu. Cinders out from hewlettpackard. Scarlet snap fish no terms were disclosed here as hp sells it. It is part of them shedding businesses. Hp ink was so personal computers and printers to businesses and consumers and is run by someone else. Let us move on to some bigger m a. Teva has made a hostile bid for mylan to unite the Big Companies. Teva is offering 82 a share in cash and stocks. Mylan is trading below the 82 pricing offer. Antitrust issues have been addressed saying teva has studied the aspect and they are confident they can figure out what assets to sell structure the deal. Mylan wants to stay independent. There is also shake shack. The stock is up 26 in the last two weeks. In case anyone here is from california shake shack is encroaching on in and out burger territory and will open its first location intel on you, specifically first location in california, specifically los angeles. Betty all my god oh my god. More reason to eat burgers. That is breaking news. Todays anniversary of morris law, the observation that one of intels cofounders made that says the Computing Power of an integrated circuit or chip would double every year since its invention. It was predicted this trend would continue for the for seeable future. With us now to remind us of the anniversary is Erik Schatzker will be sitting down with intels futurist. Erik we will be talking about the future of moores law and here is why. Dont you love your iphone and how thin it is and how powerful it is . That you marvel at the slenderness of the brandnew apple laptop . If that is going to continue moores law has to continue. The Processing Power of integrated circuits or computer chips has to keep doubling every two years or so if we are to live in a future of thinner and more powerful and less powerhungry devices. The power that moores lorentz into is there are physical limits. Intel believes it can extend moores law for another 10 years. We dont face any problems in the near future. It is about the width of adtomstoms. Electrons need to move through this and if it is too narrow there will be no competition taking place. Researchers at places like intel and ibm are looking into alternative tech ologies technologies. Things are happening right now like grafting for example which is a layer of pure graphite oneatom thick. I am excited as you can tell. Betty i think it is fascinating. I read about that. How you commercialize that . Betty erik tough stuff. Betty we will be back. Betty back to one of our top stories this morning. The changes to Google Search algorithms will take into account how mobile friendly a website is. It is a refection of the incredibly fast growth of mobile search. Mobile search users will meet pc search users in three years. We do most of our searches on mobile phones. How big of a deal is this . I think it will be a big deal. Google makes changes to its algorithms fairly quickly. There are winners and losers when google does that. This is noteworthy because i think it is really making a commitment to mobile and mobile searches. The fact that consumers are using more and more time on mobile devices interacting with google and sourcing the researchers through mobile devices more than 13 stop more than through desktops. They want to make sure google is more relevant to these mobile user so websites around the world have to make sure the websites have a good mobile angle to them and they will actually come up and show up well on the search results. There will be winners and losers. Some of the smaller momandpop websites might be a little bit at risk. Betty may be but the cost of having a website are coming down. Having a mobile website doesnt cost that much extra to tailor your content to the mobile platform. Is anyone really going to cry out and say this is unfair . Paul there are certain websites and website designers that have taken a mobile first approach over the last couple of years. That will probably end up servicing the best on the Google Search results and new algorithm. Those websites that have not done that, have not made the investment on the back and maybe a little bit slow to adapt. The new search on rhythm disadvantages search on rhythm disadvantages them. Betty with us have an impact on other browsers . Does this change the game at all . Paul i think so. Google with their 75 market share searches in the u. S. And over 85 globally drive the bus here. Have always been on the cutting edge of search algorithms. Others tend to follow. This is a reflection of what is happening on the internet. Whether it is ecommerce or media, it is all going mobile. If you do not have a mobile strategy, you will be left behind. Betty you are out of luck. Yahoo is reporting today. What will we hear . Paul the street applauded Marissa Mayer and her Management Team for officially monetizing part of the asian investments. That is arguably behind yahoo . Now the pressure will build even more on mercer mayer and her Management Team to operate the basics of the business and that means growing the top line revenue. Yahoo does not historically have a strong mobile strategy presents. That has hurt their ability. Betty they havent been mobile for a while now. Great to see you. Thank you so much. Much more ahead. Have some great interviews tomorrow. Just a cigarette sounds off on the real places of inequality around the world. He has a new book out. We will speak with paul ryan. That is all tomorrow at 8 00 a. M. Market makerslife from bloomberg headquarters in new york this is Market Makers with Erik Schatzker and stephanie ruhle. Stephanie is really Pharmaceutical Company teva i say 40 billion unsolicited offer for mylan. Erik 50 years ago, moores law forecasted the capacity of computer chips but with physics get in the way . Stephanie they call her the queen of r b. Mary j. Blige tells me what it is like to break into a new
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