Transcripts For BLOOMBERG In The Loop With Betty Liu 20150423

The Justice Department would have to stop the deal in court. One analyst tells us it is hard to say anything is 100 dead but this is in the 99 category. Oil company, more than 2 billion. The revolution came in newly audited results. The decadelong scandal cover bribes kickbacks, and rocked politics seven Percentage Points higher without the drag of the big bucks for more than half of facebook revenues overseas. The chief operating officer says the Companies Finding new ways to target mobile users. We believe video will play significant role 75 we believe mobile video will become more important to marketers overtime. Betty 4 billion times a day most of the time on mold. Now google is jumping into the mobile phone game. Executive leaders may face pressure. Customers will get credit for unused data. Cannot match verizon and at t in terms of coverage. It is a closed system right now. Those are your top headlines at this moment. Breaking news. A record fine paid by germanss biggest Bank Deutsche Bank 2. 5 billion over the rigging of libor rates. More on this break it headlines breaking headlines. Scarlet seven employees will be fired as well to settle u. K. Investigations in the banks role in an appealing libor. Six of those employees are in london and one is in frankfurt. None are named but one is the mansion the managing director. This is a record, the biggest yet in the scandal. Just yesterday, the bank said it would set aside another 1. 6 billion. The numbers keep growing. Pumps are not entirely over because it is still mired in investigation foreignexchange and assetbacked securities. More headlines to come in the coming days and months. Betty i want to bring in our bloomberg team. Michael moore, also on the high finance beat. Lisa lets start with you. 2. 5 billion, which is a record third how does this step up to what we have seen by others in the impact of Deutsche Bank. Lisa the previous largest fine was ubs. It comes to deutsche on top of 7. 5 in legal costs. Numbers are large. Government does this week focus on resenting and delivering and the siding on a new strategic review. A radical shift in terms of its footprint and considering it might even decide to exit Consumer Banking entirely. Betty this will have an impact. Another victory for benjamin here who has been after these banks for market manipulation. Now a 2. 5 billion dollar fine. How will this affect operations . Im talking about some of the foreign banks operating in the u. S. Michael we have seen as for the last few years. Regulators especially international banks, where perhaps it is a little bit politically easier. Betty has it had a Chilling Effect at all on them here . Michael it is unclear how much of that is from the pressure and how much is just from the cost of richard returns are not great. We saw the First Quarter pick up a little bit. But there are a lot of things in play here, whether the Regulatory Environment or the business environment. Betty lisa, what about is this it for them . Scarlet alluded that there would be much more to the story. They reached a settlement or what more do we have here for Deutsche Bank . Bank . Lisa scarlet some of the press speculated on the focus of that report the role that the management may or may not have played. The coceo of Deutsche Bank this is very much in him pop in his part of the institution. That is due over the next few weeks. On top of that, theyre focusing on this review that will set the new course for the bank which will potentially see us stepping away from the banking model to focus more on the investment bank. Paradoxically. Betty all right, lisa. Thank you so much. Also michael. One of our big company stories of the day, General Motors reporting firstquarter results and missed estimates by . 11. You see the stock is down in the premarket. Trouble overseas. Matt miller is life with the General Motors ceo, chuck stevens. Matt chuck, thank you for joining us. Lets get the myth out of the way. About half of it comes from the south American Business here the other half comes from a tax rate higher than analysts modeled. None of that should be a surprise. Why did analysts get it wrong . Chuck i cannot speak it up at what i would say is, overall, we had a very solid first order and we were spot on versus consensus across the world with the exception of south american and perhaps deterioration in brazil and how quickly that manifested itself. We were at best really pleased about the results in north america. Seventh straight quarter of margin expansion. Overall, we are very much on plan to meet our objectives for the year, to improve margins on aggregate across the business. Matt i think the margin improvement is impressive at the least. Let me get out of the way the stock question. Another company today i will not name beat earnings estimates because it is not taking lumps it will inevitably have to appear you are taking your lumps in Going Forward and yet the market does not appreciate seven quarters in a row of improving north american margins. How is the market getting this wrong . Check we need to continue to put the results on the board quarter after quarter. This team is focused on doing what we say we will do. First quarter is another example. We will have to continue to execute toward our 2016 objectives. Profitability in europe and continued strength in china. We do that and put the track record on the board, i think it will flow through from an investor perspective. Matt 8. 8 percent was your margin here. That was 1. 1 , better than a year ago. Europe is doing better than expected. Will we see you coming in early with the profit there and 10 margins . Chuck we committed to 10 in 2016 and that if the plan where executing two. We continue day in and day out to look at ways to drive efficiency and the business. That is certainly the objective were marching to right now. No change from that perspective. Matt one reason you are doing so well, selling trucks and suvs, suburban and escalade sales almost doubled compared to last year. Gas price is helping you out obviously. Do you expect the tail end to continue . Chuck we are pleased about the strength of pickups, suvss, as well as a midsized chuck. We are excited about continued strength in those projects as we enter fundamentally replacing the entire chevrolet Passenger Car portfolio of the next 12 to 18 months. We will go from strength to strength and we view that as a positive from driving our margin mansion in north america. Matt what do you expect Going Forward from the midsized trucks . Cause one out there, no offense. Hailed as a real breakthrough in the american truck market that others were not brave enough to make that step. Chuck this is very supportive of the midsized truck when i was cfo in north america. It was a risk the one that had paid off. If you look at results so far, transaction prices above three 5,000. The segment share, 31 . Very low diversion rates. It is still early days, but thus far, this is a home run for us. We will take advantage of it. We have added the third shift in our facility and think this will be a big opportunity Going Forward. Matt should we be concerned about the loss of business in russia . Does the market really matter anymore . Chuck from a Management Team perspective, we are about driving and maximizing shareholder value and making sure we invest in the places that will drive longterm returns. As we look at the russian market, challenges today and when it could recover, it just was not a good return on investment. We do not think market will recover anytime soon. It would have taken a significant amount of investment in russia for us to fix that investment model and felt that would be better invested elsewhere. Matt thank you so much for joining us. Betty, back to you. Betty all right. Good to know. Coming up, traders arrest as many arresters. Mark cuban i thought put it best in this interview. He said, if a guy in his underwear twominute delay markets, anybody can pair well put it we will hear from one congressman, a former wall street banker himself. We will be back. Betty a british trader accused of helping cause the 2010 flash crash. A london court says he will be free want to post more than 7 million in bail. U. S. Authorities say he manipulated the markets to help cause a crash in 2010 which wiped out more than 1 trillion in value in stock spare the list is expanding its executive team as it gears up to challenge over. He was previously working at google and facebook and whatsapp. Will handle Brand Marketing after a decade at nike. Uber has a valuation of 40 billion. The rivalry continues. Those are top stories this mime. We will hear from congressman jim heim. How regulators handled the traitor. Big toy for hours in the tech world. Ebay, facebook, reported yesterday after the close. And microsoft. Joining us now is paul sweeney, who covers these companies. Lets run through them. Facebook, the big takeaways. Numbers were pretty good. A lot of companies other revenue a little below expectations. Underlying fundamentals were strong. User metrics were strong. And issue the investor investors continued focus on was the percentage of revenue from mobile users. That came in at 73 of total war total revenue. They continue to manage migration from the desktop pretty well. Ebay came in with strong numbers. Results tend to be volatile quarter to quarter but they came in with strong results and beat up on the top and bottom lines. Investors really focusing on the split of ebay and paypal, its payments business. A little more color on the timing and they now tied it down to the Third Quarter. A little greater clock greater clarity on the timing will help. Betty better numbers from ebay say to people that they can survive without paypal. Paypal remains very strong. A little stability on the market business was positively received on the market. Come after the close today, i think investors expect very good numbers here from google. This is a company that executed well on mobile, search, and displayed. And now youtube. I think investors want to see a little more visibility and disclosure on youtube because investors really appreciate the growth of online video. Youtube is the dominant player there. They want to get a sense of how well google is monetizing youtube. It could be a positive story Going Forward. And a cool announcement, it continues expansion into mobile. It highlights their believes in mobile and how that is a big driver of mobile going forth. They did the acquisition a couple of years ago. With android, they have the marketplace, and they are getting to the conductivity side of business. We will see how big they want to get in the business. Betty right and how useful this will be compared to the other carriers. Amazon, the cloud. Their core business has been strong pair you talk about jeff asus. You will get strong growth and a lot of expense growth. This Company Continues to invest aggressively into their company. You do not get a lot of marginal profits. N. B. , what are some of the new businesses . Betty they will reveal numbers on the cloud and we will hear delivery drones. Class of and they are a big media player. To investing in content. Microsoft could have a little more of a challenging quarter. The streets are only looking for modest topline growth here. Betty thank you so much, paul. Great to see you cared running through those earnings for us. Emily chang said down with the facebook coo sheridan Sheryl Sandberg and Richard Branson for an exclusive conversation on how they balance work and family. A fascinating conversation 30 will see that tomorrow. Betty you are watching in the loop. It took authorities five years to track down this loan british trader allegedly involved in a 2010 flash crash all involved with an outside whistleblower. It raises new concerns about how a Single Person can bring the worlds the u. S. Market to their knees and managed to slip past the eyes of regulators to enjoy me now is a Goldman Sachs banker turned lawmaker, a longtime advocate of stricter financial oversight. He just put together a bill to ban insider trading. Democrat from connecticut joining me. Thank you so much for being back on our program. I am curious given your background and special knowledge of the market and how they work, when you heard about what he did from his home in london to the markets, what did you think . There if he does things that are shocking about it. One guy sitting in the suburbs of london could do this or significantly contribute to the meltdown of the market in 2010 then there is the fact of the root or we all said, wait a minute, what went wrong, i read that report and said, wait a minute. Something is missing here. He does disturbing things, which pointed to up the need to make sure those markets do not behave in ways where one motivated individual could cause so much traffic. Betty in particular, questions are being raised, where were the regulators . They were there and then they were not. What are you going to do to make these regulators more accountable . He spent a lot of time thinking about our regulators and you think about where they have been and where theyre going. Doddfrank proposed enormous obligations, not just new market but writing all kinds of roles. Theyre doing what they used to do and do pretty well. We look for patterns that suggest insider trading. When youre talking about new more evolved and more innovative markets when youre talking about sophisticated things like layering, when you are talking about unsophisticated things that are not particularly obvious, the s p still has a long way to go. International coordination. These are people who work hard and do their job. They tend to be too many lawyers and not enough traders who actually spent 20 years in the margins. I think there is a lot we could do. We interviewed the chairman a few weeks ago. It is not as if they were not aware of all the misconduct. It is knowledge they were unaware so where do you think the breakdown was and does there need to be some sort of investigation here on this . You are right they had indications. The Law Enforcement had talked to this individual can there is a famous response he gave about what they should kiss. Obviously, you know, it is worth knowing why do they then not complete the circle. What im really interested in what are the structural changes we could make. These market changes are evolving very rapidly and we are trying to monitor them with an apparatus at best 10 years old and we have the technological capability. I see this on my intelligence committees. When we want to watch something carefully or look at it with a lot of data or follow something complex, we can do that. It is a question of pointing resources and technology at it. Betty is it the type of talent were talking about, a number of people. It is better coordination internationally. I suspect our various regulators are on the world do not talk enough. Is better technology. The markets have changed radically. It is making sure it looks Something Like trade. It will involve resources and it is mission focused. Doddfrank did tremendous things but it also pointed the sec in a whole lot of directions that really had nothing to do with the problems that occurred in 2008. It is mission focused as well. One example, making sure these guys are out in front upper family complicated high technology, very rapidly moving markets, it is arguably a better focus for market stability stuff than some, on the margin. It also pointed the fcc in some areas not likely to ever create the market or Systemic Risk we are worried about. Betty thank you so much. Great to see you, as always. Jim himes of connecticut congressman from connecticut democrat. Initial jobless claims are coming in, 295,000 at we picked up a little bit. Our correspondent, scarlet fu, has more the news desk. Scarlet this is little change from the prior week, or me got 294,000 31 not say Much Movement there. But as you mentioned, it is a myth because congress was looking at a decline. This was a little higher than 283,000 as well. This latest report according to bloomberg intelligence, the corresponding time is linked to the april survey. It has that link for the Employment Survey they use for the monthly jobs report. It is still the seventh straight week a claim came below 78,000. Betty ok. Thank you so much. A look at other top story this morning. Analyst telling Bloomberg News he thinks the comcast and Time Warner Cable deal is 99 dead. We learned staffers at the federal Communications Commission oppose a print a plan. Lawyers already taking a dim view of the plan. Merging the companies would hurt consumers. The doj would have to stop the deal in court. Breaking news from germany a few moments ago. Deutsche bank order to pay 2. 5 billion on both sides of the atlantic. The ranking employees also must be fired. Regulators, traders that germanyss biggest bank. Allegations are part of a wider investigation of libor. The biggest yet fine in the scandal of about one dozen companies. Those are your top headlines this morning. Another one of our top stories facing within 2 billion in charges to the Corruption Scandal that shut off its access to bond market sees jobs. Reporting thirdquarter results. For five months. Much more on this here in a way, is this good news . It is good news because we got this out of the way. We finally have a price tag at least. Betty what is next for the company . Julia they now have a lot of other issues. The highest debt in their industry. A weak currency. They need to revise their investment plan. So many issues more to involve now. Betty what about the issue coming back to the bond market . Are they going to do that anytime soon . Julia they do not seem to be considering the u. S. Market. They will try to test market they have not kept in a while so maybe even the brazilian local market. They still have not given a detail on that. They said the financing needs are covered and they will see what they will do for 2016. Betty it is a big story that affected markets all around the world are julia, thank you so much. Still to come, who will win the battle for big money in 2016 . Republican hopefuls are courting donors this weekend. Plus, Bloomberg Politics has an exclusive interview with House Speaker john boehner with on with all due respect. Betty it is a meeting of the republicans in las vegas this weekend. Republican george coalition where money and politics collide. President george w. Bush, they will all be in attendance. Does this money really mean you win a seat in washington . Julie joins us now or she just wrote a piece on edisons is not so stellar track record when it comes to acting candidates i. E. Mitt romney. Walk us to the numbers. Julie that is we looked at his record of who he has invested in in the past couple of election cycles. I have to say it is not very good. No better than a coin toss. He put money behind 36 candidates through the super pacs supporting them. His results are pretty much 5050. He has invested in half winners and half losers. What is really interesting is 99 of the millions of dollars he has pumped into races has gone toward losers. His money is really not delivering the types of results he would like. Betty is mitt romney his biggest loss . Julie he was, but we remember Newt Gingrich as well. Addison was very fond of that speaker of the house. Before he backed mitt romney to a huge extent more than 20 million to a campaign that went nowhere. Betty what about the issues what are the big issues he cares about . Julie israel is front and center for him he demands of candidates that he supports they are strong on israel and supportive of israel. It just so happens that is a huge topic right now. I expect it to be an exciting weekend in terms of lots of talk of foreign policy. Israel specifically. Beyond those issues, he cares about gaming and unions. Betty he has not been that successful in Online Gaming either. Julie that is states look to legalize it. Betty sheldon likes to keep it close to his tech to his chest, but do we know who he wants to back this time around . Julie a lot of implications he is particularly interested in marco rubio. I wrote about how the two of them have similar backgrounds. American success stories. They worked their way up from nothing from Humble Beginnings there i think senator rubios narrative really appears to appeal to mr. Adelson in that way. That is something i will watch carefully to see if he does pull down Sheldon Adelsons support. Betty thank you julie. Be sure to catch a big interview tonight in politics with House Speaker john boehner, an exclusive interview coming up. I believe he will also be at this las vegas event. A 45 billion acquisition of Time Warner Cable may be teetering on the brink of collapse. It is 99 dead. Staffers join lawyers at the Justice Department. Regulators say it would mean higher prices and hurt consumers, apparently. Alex sherman is here with more. The tide has turned. What is it about doing a hearing that mystical say, hey, the deal is dead . Alex simply the length of it. He cannot remember anyone ever going to the process of going through one of these hearings. They take so long. All of the dirty laundry that may be comcast is not really want aired out there in public washington and also, when rich and i were talking, he pointed out comcast needs customers. If youre going to fight washington, representing consumers, you come across as the bad guy. It may be spiraling away from comcast. Invested a lot of time and a lot of money. This thing is not quite dead yet. But i do not think theyre looking for a deal. Betty a lot of our coverage has been the, the deal is dead. 14 months ago, we all thought it would happen. The argument for a deal is what . Alex in many ways, comcast product is better than Time Warner Cable. If i were living in an area for im warner cable and got comcast is dead it is not necessarily that i got a worse experience. I mightve gotten a better experience the other main argument is they do not compete and do not overlap. Betty thank you so much or great seal. You have done stellar reports on this. Much more is ahead. Stay with us. Betty the growing list of republican contenders in the 2016 president ial nomination according to the wall street journal, the former hewlettpackard ceo will formally declare her campaign on may 4. Making a bid for more freedom. According to usa today attorneys want him to leave his hospital and join the outside world. Hughes 25 when he wounded Ronald Reagan in 1981. He was found not guilty by reason of insanity. Such a moment in america. A popular u. K. Television channel wants more young people to vote so it is pulling the plug on the programming schedule. Part of Public Service broadcasts. No popular u. S. Comedies like the big bang. And how i met your mother. It is part of a campaign to get less than half of them voted in the last election. That is a good idea. Maybe we should do that here. Those are the top stories this morning. And the daily headline coming out of china are puzzling or a lot of people. It todays weak manufacturing numbers. Traders welcoming todays of default. At the same time, chinas smart money stealing explosive rallies. That market money is flooding the Global Market for prime real estate. A forum hosted by the china General Chamber of commerce right here. We tackled a title wave of money flowing out of china. You have funds that include the cic. They are looking to invest a lot of money. Theyre looking to invest around the world. Then you have Insurance Companies that would buy all the hotels, Office Buildings and theyre looking for 3, 4, 5 current yield plus some unspecified amount of appreciation. That is the institutional side. Then you have developers and some of them are partners. All of these developers are coming here. They are looking to learn the business. They may or may not eat lunch. Some of them said they would welcome competition. There is a lot anywhere. You could be competitors or you could be friends. It is really hard to generalize when youre asking what types of capital. When you talk about the institutions, it may be different than Wealth Management companies. Even within those institutions theyll do Different Things and are all started to come here. One is the opportunistic arm of it, one might be the dead arm of it, and other might be getting a seven to 8 yield. We see all of them started to come here now. Some of them even act in the same project together. One of their biggest challenges, a favorite story of individuals coming up, he wanted to buy an office building. We get the first property, he gets out and stands at the curb. A 1980s constructive construction building and he does this. Gets back in the car. Clients inside waiting for you. But we have a market that is largely 50 years old or older and they come to new york and they see these buildings unlike this one. I would crawl over glass to get steve to part with it. This is what they want but this is what we have for sale. Many are investing in new Development Projects because then they could get the type of prod products they want longterm. When you take development companies, they like knowing it is by central park. They could understand if it were on wall street. They want something they could identify with and then export back home. I would also like to ask socalled chinese money, particularly the retail side. You have to look at the fact that even though it is about the economy slowing down, the areas and it is getting wider, of middleclass and High Net Worth more and more sophisticated. It will be not enough for them to offer a place for the kids. They have to have more and more serious allocation. For a lot of funds we raised in china, saving a lot. And we asked about it. It has been through up and downs particularly where the stock market sometimes plays an important role. But they know they have to diversify their portfolio. Betty that was william of shanghai. The vice chairman cofounder of sin. Capital so a lot on Chinese Investment here in the u. S. Still to come, the 800,000 plane ticket. Was it worth it and who was it . Stay in the loop. Betty betting on chinese credit. A foothold in china . Also, six flags is still losing money. How will they harness the financial roller coaster . I will speak to ceo Jim Reid Anderson in just a moment. Betty welcome back to in the loop. We are starting mans best we are 30 minutes away from the opening bell. Futures indicate stocks will open lower. The comcast Time Warner Cable deal has new enemies in washington. Staffers at the fcc oppose the plan. Lawyers at the doj were already taking a dim view of the takeover. Regulators say merging the nations two biggest operators would hurt consumers. The Justice Department have to stop the deal in court. One analyst calls this in the 99 category. Georgia banks ordered 2. 5 billion to settle investigations on both sides of the atlantic. U. S. And british regulators have traded. Allegations are part of a wider investigation of live the finest the biggest yet. I doesnt come in is a party paid more than 6 billion to settle the claims. Rizzos Corruption Scandal is costing more than 2 billion. The decadelong scandal rocked the countrys politics and cost the ceo her job. It was a mess. Add another to the growing list of candidates. She announced her Campaign Online on may 4. Our bid will not be the only one launching that week. Mike huckabee is also planning to join the race. I want to count you down to the open with the top tech headlines. Olivia sterns and matt miller join me. Let us start with number 10. In china, visa and mastercard both climbed nearly 4 yesterday on the news that chinas government indicated it plans to end the monopoly. It is set to take away in june. Olivia this is a big deal for visa and mastercard on principle going from nothing to something. That is a huge move. It has shaken up the monopoly of union pay in china, which is enormous. They control one third of Global Financial card clearing. Betty controlling one third of anything in china will make you bit. Olivia in the world. Matt it is a big deal but it is also part of a whole lot of market moves china is making. Free market moves they are making to try to help boost the economy. I think this is an important piece getting rid of monopolies of moving your country to a freer market. It is the right direction for china and for visa and mastercard. It is a great opportunity for them financially. Betty to even get a fraction of that business, they would be sitting pretty happy. Number 9 the biggest provider of food and beer at u. S. Stadiums is spending big bucks to fly the ceo around. 800,000. That rice the largest among americas top executives. Matt thats it . Olivia i dont think that is a lot of money. If you spend your entire year traveling matt i am sure he is going to every single awesome sporting event. He probably has one of the coolest jobs in the country. You will fly to everything all the time. I was thinking that is it . A hundred thousand dollars is all it costs to fight him around . Secondly i am thinking maybe this is the only company that has been completely honest about how much it costs to fly their ceo around. Betty the argument is credible that it would be yes it sounds more shareholder friendly to fly commercial but at the same time flying private cuts down waiting time and trouble time. It is more time you can focus on your business. Olivia it doesnt sound like a lot. Matt flying private is the only way to go. Olivia unless you are an autoexec. Betty shares of facebook are down in the premarket. Sales rose in the First Quarter by 42 but they could have been seven Percentage Points higher without the drag of the greenback. When that half of facebooks revenue is from overseas. They continue to kill it on mobile. Olivia shares are down in the premarket which is extraordinary. Betty it is a rare miss for facebook. Olivia 55 underlying growth for a company this big is still unbelievable. Matt they just came public a couple of years ago, but it is the only missed so far. Olivia the for some to have missed an average high since 2012. That is unbelievable. Matt for sure. This story will be shifting from an earnings story to a more revenue gross story. I should give credit for someone tweeting that out earlier but it makes a lot of sense. It makes sense for the company as well. They are driving. Betty ignore him. Matt i follow kramer on twitter, not the other kramer. Betty that is what you get your insight . Matt no but he made a good insight. Olivia get outta here. Matt a hundred thousand people on whatsapp and 700,000 people 800 million. They are really pushing the revenue envelope. They want to boost revenue and earnings can come later. Number 7 betty more social media for number seven. A selective social media index surging 15 with linkedin and facebook posting gains four times larger than that of the s p. Social media is driving us now. Olivia a little bit, maybe in the last couple of months. Biotech has been driving the last 12 months. A lot of important differences about structure of the nasdaq today versus 2000. While still two or three times larger than the s p they are a fraction of what they were in 2000. Matt we were looking at 200 or maybe for a brief moment a lot higher than 200. Betty is anybody worried about a tech bubble . Olivia the fed is. Matt the fed definitely is. Betty a british man accused of helping cause the 2010 flash crash may be delivered to the u. S. Sooner. He was in Court Wednesday trying to fight extradition. According to our story past record history shows it is rare to be extradited. Olivia very rare. Matt very rare not to be. Olivia yes. The strategy is go to the ecuadorian embassy. Matt that could be dangerous to your physical wellbeing. I dont understand how people are taking this seriously. We really will blame the whole flash crash on some day trader sitting in his underwear at his parents house . Seriously . Other highfrequency traders were not spoofing . No one else was putting out orders that they planned on canceling and then they canceled them en masse . That is what they do. It is ridiculous. Olivia betty and i were not doing it. Matt you were also not highfrequency traders. We will blame this guy . He is the scapegoat we have chosen . Give me a break. Betty theme parks. We are getting ready for spring and summer. Six flags reporting a 70 million loss yesterday despite a 13 growth in park attendance. The ceo will be joining us on how he intends to get six flags back. We will be back. Betty we continue to count on to the opening bell and we are halfway through so it is time for 80 back. We are diving into six flags. First what a revenue rose 16 anchored by a growth in park attendance. Despite the growth, there was a loss of 70 million for the quarter. Sorry a 13 growth in attendance. How will they capitalize on this growth and revenue . Joining me now is the chairman and ceo jim reidanderson. Great to see you this morning. I am the mother of 210yearolds of two 10yearold boys and they love these theme parks. Going into the season, you will see a lot more attendance so what are you seeing right now . Jim it is good to be back on the show. We have had a phenomenal run and we anticipate that will continue. We just completed our fifth record year. The First Quarter, even with the loss, was another record for the company. You have to put into perspective that this is the smallest quarter of the year for not only us but all the other regional themepark companies. Specifically our active pass base grew by 53 to an alltime high which was very well to the coming season. Betty where are you seeing most of the attendance . Where are you seeing the most growth . Jim we are seeing growth in every single park. Only a handful of parks were opened in the First Quarter and they are all opening up as we speak but the growth is coming everywhere. That translates as you described in the First Quarter 216 Revenue Growth to 16 Revenue Growth. Our cash amount is up 28 . We have averaged over 20 over the last few years. It is happening everywhere and in every park and it translates to very strong earnings and cash flow. Betty so it is happening in a most every park, but what about spendingwise . Our people spending as much as they were before . Jim over the last five years we have had increases every year in spending. Our total per cap on it and admissions basis in other words how much they pay to get into the park are up about 6 on a Constant Currency basis. In park with record high attendance, we have seen flat per capita spending but our total spend in the park is up 8 . We are seeing really strong record level spending. Betty the stronger dollar, has that hurt your International Business at all . Jim yes it has. We spoke to this on our call yesterday. There is an effect because mexico is one of our strongest parts in the First Quarter. Even that did not offset all the strong gains we have had. We had our 18th record quarter as a result. Betty some people might not be aware but six flags we are five years out so how will you get back into the black . What is the growth plan . Jim i have to correct you because the loss you are describing is First Quarter only which represents less than 5 of our overall year. If you think about it, it is winter. Theme parks are not really open apart from a handful of them. We do not report losses. We had our fifth record year in a row last year. Our ebitda is close to 450 million a year in our cash generated is well over 200 million, 250 million. On a per share basis we generate 2. 78 in cash so we are profitable. We are a strong cash generator, and we pay a dividend of . 52 per share per quarter which is well over 4 . We are driving growth in our share price. It is up sevenfold since we emerged from bankruptcy. We have one of the highest payouts in terms of dividends. For me, six flags is the right way to play the north american consumer. Very strong growth. The outlook for us will continue to be strong. Betty thank you so much. Jim reidanderson the chairman and ceo of six flags. Thanks for joining me. Was the American Apparel ceo fired because he would not sell the company . That is the allegation in a new lawsuit. It details on that and much more ahead. Betty lets get back to bringing you the most support in stories before the bell. Olivia and matt joining me. Number 4 caterpillar earnings. Forecasted profit that topped wall street estimates. North american sales improved. It rose to 181 from 144. Shares are up 3 . Matt if the Company Raised its outlook as well, that is probably the most important as well saying it will earn five dollars instead of 4. 75. Still not as much as last year. The facts are that the orders for Energy Agreement which makes up 13 of caterpillars revenue are not falling as much as people expected. You guys on surveillance this morning had someone who covers this. People put orders not based on todays price. Betty on the future, right. Olivia the woman we had on this morning said we are not going to see an impact if there is an impact from energy until later on in the year. Matt people think caterpillars business is 15 but it is 13 . Betty number 3 American Apparels latest lawsuit, the founder of the fashion brand was fired because he did not go along with the plan to sell the retailer. There is a battle for control of American Apparel. Shares are down over the past five years. What a downfall for the company. Matt do girls go here . Olivia no. There is a store here. Every time i walk past it, there is a huge sale sign. Matt it had a great advertising and marketing campaign. Olivia very provocative. Betty and controversial. Olivia what is being alleged is the cfo a sickly organized the cfo basically organized the ouster. Matt if you are a visionary but your behavior is sometimes on the edge olivia you should get out of the way so shareholders can make money . Matt it is easy to make a case against you. You can ignore those things while you are creating value for shareholders but when you want that guy out of the way, it is easy to get that guide to go and say he was doing this wrong. Betty number 2 the comcast and Time Warner Cable deal. It is easy to get fired up about this. It is gaining opposition, most recently staff at the fcc opposing its plan. Doj already had a dim view of the proposal. Looks like the hearing that the fcc is proposing is kind of olivia it is a duck note. Death note. Nobody outside of philadelphia thanks it is done. Matt it is interesting that they are trying to say this will not hurt consumers. It will definitely not help consumers but they have to prove it will not hurt consumers. Betty why not . Olivia netflix opposed the deal because they said if these two large Cable Companies merge, they will have more power to charge consumers more. Matt twpoo companies with Horrible Customer Service come together and offer you what . Betty hold on a second. A year ago, everyone said the markets will not overlap and a stronger cable operator might be better. This was the argument before. Better for the consumer. Opening bell is next. Betty welcome back. Matt miller and Olivia Sterns joining me. Number 1 the much talked about september rate increase. The Federal Reserve will probably raise rates in september. The californiabased bond fund capitalized on the discrepancy by cutting olivia the fed funds future he does not match up. Matt Institutional Investors or fixed income investors are not prepare for a september rate increase . It is april right now. Get prepared. If you are worried there will be a september rate increase, you have six months. Betty some are not sure it will not happen. Olivia pimco says it will happen in september and this is where you will see the ideological diversions between bill gross and epimco. Matt pimco is more prepared for a hawkish move than the market is. Most of the smartest people in the market i have talked to say if there is any rate increase this year, it will be 12. 5 basis points. Essentially nothing. Betty not 25 basis points. Matt like nothing. Like not happening this year. Betty why bother . I want to bring in jim beyond nco who is sticking with his guns and saying the fed will not raise rates this year. Matt oh he agrees . Good. Betty go ahead. I think what you talked about with pimco is the big issue right now as far as the fed. The market is pricing Something Different than what the fed is saying to us right now. Matt are you saying september . I think the fed wants to raise rates one or two times this year. I think the market will say you will move probably one at the most and maybe not at all this year. There is the difference right now. The market is a lot more doveio sh. As long as the dues of urgent as long as the diversions continues, i think Financial Stability is a critical thing for the fed. That want to raise rates when the market is not ready for it and watch something adverse happen. Matt you dont think it is data dependent . Jim lets be honest, data dependent means whatever you want it to mean. You want to not move i can give you a set of data. You want to move, i can give you a set of data. It means whatever they wanted to mean. Betty are you not using data to make your case that the fed will not move . Jim the data i am using is that the fed is pricing Something Different. Yellen said it was a sobering fact that the market does not agree with the fed. They take that very seriously i think. That is the biggest stumbling block they have. Every speech the fed gives right now is to try to convince the market. Right now, the market is going to other way. It continues to fall in yields as the fed continues to say they would like to move in the summer or fall. Olivia what is your take on earnings . This is the biggest week of earnings in the whole quarter. Nearly 80 of companies are on the bottom line. What is your take on earnings . Is a Strong Enough to move the s p and other like hire. To move the s p higher . Jim there are no earnings growth, we are just arguing what negative number will have a minus sign in front of it. You can just start yelling seconds before a Company Reports and he will be right 80 of the time. When you factor in all of that they look at other things like revenues. 35 of companies be there revenue line and that is not good at all. They look at guidance and most of the companies are telling us it will still be a struggle for the rest of the year. Those are the worrisome things. I do think earnings numbers or anything to get excited about. What the market is hoping for is the fed will not move and stimulus works. Youre getting it out of china and europe and japan. Betty dont you have a 0 return on stocks this year . If the fed does not move, does that change . Jim no i think the zero is predicated on the fed not moving. Bad earnings will meet easy fed policy and they cancel each other out. You are up 1 right now on the dow for the year anyway. Where we are now is where we will end the year. If the fed were to move, i would probably turn a little bit more bearish because the upset i am looking for because the second and Third Quarter estimates are for second yearoveryear growth. Yearoveryear negative growth. Olivia you are saying if pimco is right and the fed hikes rates, we will see the s p fall for 2015 . Jim if you ask any manager in the abstract when is a good time to sell stocks, they will say when the fed is raising rates and there is no growth. That is what would happen this year. Olivia if you go back, data shows the stocks tend to rise. Jim this is a different type of cycle because we are now at zero and have quantitative easing. This is not the traditional rate hike cycle now. Matt why would the fed raise rates into that . Jim that is why i said if you ask people in the abstract that negative earnings means the economy is not doing that good and companies are not doing that good. The fed is raising rates and that is more restrictive. That is a double when me and bad news for stocks. Normally we raise rates because earnings are blooming and the economy is booming. We do not have that right now. Matt can i just ask that earnings may be down yearoveryear and the economy is not booming but it is still growing. Does it look like we should be a zero Interest Rates . If you were the fed it, would you say we need to get off the zero market be danged . Jim i have been talking about what i think the fed will do. If you asked me what they should do, they should raise rates. All of this easy policy works backwards to some extent in that it restricts a lot of people. It makes them unsure about the economy. I know a lot of officials disagree with that but i am not on the fed and they are not speaking in those terms. They are trying to massage the situation. Betty why even bother trading because you think the market is rigged anyway . Matt she is asking if i think highfrequency traders are spoofing constantly anyway and the answer is yes i do think they are. I am sure you agree with this. Olivia betty is pointing out that matt believes and a lot of conspiracy theories. Jim you are right that a lot of computer algorithms are dominating the market. When a piece of data comes out on the market moves wildly, that is computer algorithms reading headlines and reacting off of it. We have a lot of that and the marketplace that we did not have a few years ago. Betty jim, thank you. Great to see you. Things to matt miller and Olivia Sterns. Always a pleasure. Olivia are we your favorite . Betty you are. Still to come a smooth start to the year for american airlines. Can they keep increasing capacity . Gary kelly joins us after the break. While some are speaking out against comcast and time warner table, senator al franken has been a longtime opponent of the deal, a lone wolf at one point. We will hear from him coming up. Betty Southwest Airlines reported a smooth 2015 take off this morning. Profits in the first quitter be austria estimates. 453 million. The shares are up 1 right now in trade. We are joined by the Ceo Gary Kelly at the Company Headquarters in dallas. Great to see you as always every quarter here. I know you mentioned the demand was strong across the board, so where are you seeing the most demand right now . Gary we are now coasttocoast and beyond the borders of the u. S. We have a very expensive route system. We have seen strong demand, especially to mystically. We are just Getting Started with our near International Markets. I want to highlight the dallas expansion in particular. We increased our fire activity by 50 or will have by the summer. A lot of strength there for sure. It has been a really good run for southwest and we are proud of our people. Betty what you take out some of the promotional pricing out of dallas . Gary i never talk about our future pricing moves. I am proud of the fact that southwest is the lowfare leader in america with no bag fees or change fees on a generous frequentflier program. We will continue to offer great value to our customers. Betty what about oil prices . You talked about how you hedged your oil prices and are trying to unwind some of those hedges as you have seen oil prices fall. You are on the hook for more than 1 billion through 2018 so how are you faring with unwinding some of those hedges . In the face of possibly prices rebounding from here. Gary we want to make sure we have adequate insurance in place to protect against that kind of an event. No one knows what direction oil prices will take from here. Theres certainly a lot of effort underway to cut back on supplies, cut back on drilling and Push Oil Prices up. We will need to be sure we protect against that. We have been working really hard to manage our hedging program so it doesnt cost us any more money than is absolutely necessary. Now we will refocus our attention on relay ring some insurance and protecting against rising prices. Betty will it still cost you about 1 billion . Gary that is just the current mark to market. Depends on where market prices are in the future. If history is a guide, it will be less than that. At this point, i dont know. I dont know where oil prices will be. If that number turns out to be the case, we will have saved billions of dollars in jet fuel costs. It simply means Energy Prices are much lower than we thought a year ago. Betty i know you are just Getting Started internationally but there are lots of issues overseas. In particular, there is a big fight as i am sure you are aware between u. S. Airlines and others in the gulf carriers. We had the air at thalia the air italia ceo on taking issue with what the u. S. Carriers are doing. I want you to listen to what he said about this. As the advertising said, where is the beef . Where are the numbers and facts . I cannot figure other airlines but i need to look at real numbers. I have total respect but until i see hard evidence to me, that speculation. Betty what is your take on this . Gary i dont have one yet. As you said, we do not have a law of skin in that game. Our international is focused on near International Markets that we fly with k boeing 737. I think all of us are interested in fair trade and fair competition. I am interested to learn what the facts are. Until then, i have no further comment about it. Betty we will have to leave it there. Thank you so much. Gary kelly of Southwest Airlines, the ceo on their earnings day. Let me go to scarlet fu with breaking news. Scarlet the white house says two hostages were killed in a u. S. Antiterrorism raid. This took place back in january. The hostages were american and italian. Two americans were killed in separate operations. The ratesy took place between the border of afghanistan. The president will be delivering a statement at 10 00 a. M. On the subject on this accidental hostage killing. We will bring you those details when it occurs. The headline is the antiterror raid back and generate accidentally killed two hostages in january. Betty we will be back in two minutes on in the loop. Betty moments ago from the white house we just got a statement from the press secretary detailing an operation in january that resulted in the killing of two hostages, one american. The president declassified this information. It was dr. Weinstein who is the american who was killed. The other was an italian. I want to bring in senator al franken who was booked on the program initially to talk about Time Warner Cable and comcast. We will get to that in a moment but i have to ask you about this latest news, this disclosure by the white house about this information of the accidental killing of this u. S. Hostage. It raises the question whether these operations are in fact worth the risk. Senator al franken i just heard about this as i was standing here and my first reaction is my sympathyies goes to the family of the hostages killed. It is tremendously tragic and sad. Any time you do an operation to try to free hostages, there is a danger that the rescue attempts will not work or that the People Holding hostages will kill the hostages. I know nothing about this other than what i heard a couple of minutes ago on your programming. Betty we are just briefing you literally in real time here. Senator al franken i understand that. Betty the president is disclosing this now. What do you make of the timing of the president s disclosure here . Senator al franken i am really uncertain what to think about it. I will listen to what he has to say when he is on in a little bit. Betty he will be speaking at 10 00 a. M. Let us which over to the topic at hand on the Business Front which is comcast and Time Warner Cable. I mentioned as other that you have been a lone wolf here in opposing this merger. Now it seems like the tide has shifted. You have also gotten some more support from your colleagues as well on the hill. What do you think changed . Senator al franken i think as people have looked at this including the fcc and department of justice, it has become more and more clear that as far as the doj concerns this is anticompetitive. It is not in the public interest. This is the number one Cable Tv Company comcast buying the number two Cable Tv Company Time Warner Cable. It is the number one internet Broadband Company buying the number three broadbent company. Between them, they have had this one company would have 57 of the internet broadband in the country. That is too much power in one company. When need more competition, not less. I think the doj and fcc are coming to my point of view. Betty senator, hang on one second and i know we have taken up a little time with other breaking news by what you back after the break to talk about the breaking news. We will be back. Betty that is a shot of the white house with the president will be speaking at 10 00 a. M. About the new disclosure just moments ago that a counterterrorism operation in january resulted in the death of two hostages, one american and one italian. He will be detailing more about the operations. Also disclosed is the killing of two americans who are linked to al qaeda. That was also disclosed. The president speaking at 10 00 a. M. We are back with senator al franken. He has been one of the most vocal critics of the comcast and Time Warner Cable merger. I dont know if anyone has posed this question to you before, but is there anything that could be done that comcast can do to make you amenable to a merger . To make you say this could go through . Senator al franken i dont think so. Unless they divest a tremendous amount of something in this. In terms of conditions i dont think the fcc nor the doj have the resources to force conditions as we have seen in some of the past violations. Betty the you believe this will have a big Chilling Effect on other megamergers . Is up that partly one of your motivations here . It seems as if in business, bigger is better. As part of this also to say we will not let all of this go through . Senator al franken bigger is not better if you have one Company Controlling 57 of the Broadband Internet and the country. That is anticompetitive and that means high prices and lower choice for consumers. And if possible, were service from comcast. Comcast and Time Warner Cable have the distention of being the worst and secondworst in terms of Customer Service as rated either customers of all appropriations and the country. Betty this field we havent gotten any decision handed down so let us say that if this deal does go through, what would you do . Senator al franken i would be extremely unhappy. I have been against this since the day it was announced. I think when this was announced about 14 months ago, it was considered something of a fait accompli. It has been moving in a direction where the regulators see this is anticompetitive and not the public interest. I would be surprised if this were approved. I would be very disappointed. Betty senator, thank you so much for joining us. One of the big critics of the comcast and Time Warner Cable merger. Back onto the big news that just broke a few moments ago by the white house the disclosure of the killing of two hostages in a counterterrorism operation. The president will be speaking in just a few moments. We will stay on top of that news here on bloomberg television. Erik good morning everybody on this thursday in new york city. You are watching market makers. Let us start the hour with some breaking news. New home sales just out a moment ago. A disappointment and a bit of a reversal from yesterday surprise