Transcripts For BLOOMBERG In The Loop With Betty Liu 20150505

Firstquarter profit almost doubled. Ubs earnings for Wealth Management rose 54 pure the Bank Restructured recently to focus on that unit. Ubs meanwhile says it is close on an investigation. Ubs might face a 1 billion fine. Claiming responsibility for the attack on antimuslim event in texas. The event showcased cartoons of mohammed. Many muslims feel that is blasphemous. Two were killed after they shot a guard. The fbi said it was investigating one of the suspects for nine years. The streets of baltimore are calm. One week after writing following the funeral of a black man who died. There were false reports that police shot a man. Troops are gradually withdrawing. President obama on David Letterman last night incidents in baltimore and elsewhere are starting a new conversation about racism in america. President obama a lot of things we have seen in ferguson, new york, and baltimore have been going on for a long time. We are more aware of it because if you see something on video, it is hard to deny. Communications have improved and that is a good thing. Betty the president said a handful people cause problems for the community and police everywhere. The death of David Goldberg, a Mexican Government official says he fell from a treadmill and suffered a head injury. The 47yearold ceo of surveymonkey was the husband of facebook chief operating officer sheryl sandberg. Those are your top headlines this morning. We getting earnings news out from disney, which had released their earnings the day after in relation to the goldberg passing. Disney coming out with their earnings 123, beating yet again. Scully scarlet fu has much more on the results. Scarlet you said it, one dollar 23 per share in terms of a debt adjusted earnings. That beats the consensus. It is higher than the most bullish estimate from analysts we surveyed to overall revenue 12. 68 alien dollars higher than 12 and a quarter billion dollars and an increase from the same time last year. If you look at the results of the different segments, parts of the resorts and consumer rodericks Interactive Media saw a miss in terms of their revenue. Other businesses, media networks, studio entertainment came out higher than anticipated. Capital markets said for disney this year, it will see comparisons because last year it had so many Box Office Successes that it might be a little lower than last year. We also have a lot of movies to look forward to such as avengers 2. Later, star wars here betty star wars. Betty scarlet fu at the breaking news desk at disney. On the opposite side, shares of sprint are dropping in the free market trade after the company beat wall street expectations. They just turned higher. Funny how that happens right when youre talking. Sprint also posting surprise gains, the second straight gains for the new ceo, who has focused on turning it around since he joined in august. The guy you heard earlier, he knows so much about telecom carriers. Sprint has been getting into lunch eating in tmobile . They have its sprint has in seating a lot of shares. The Network Quality was very poor. He came in and said, first things first, lets stabilize the ship. He is almost there, but not quite there. If you look deeply this cooler, they lost phone advertisements. Net additions or how many net people join the sprint last form, it is a combination of tablets low quality and low profit, and phone subscribers, which are high quality and high profit. They added a lot more tablets than phone subscribers. The net advertisements were positive. But i want to see those phone advertisements turn positive. That will tell me the ship has really turned. The other is what percent of subs are you losing. That was quite good this quarter. Betty on the to do list, what would you say is on it for the next two quarters . John first, stabilize the ship, then get out there and rebrand sprint. Tell people look, we have a better network. We are a price leader. They are getting there. They are in the process of upgrading the network. Once theyre are done, they will have a very good network, in my view, particularly for heavy data users. It is part of the rebranding. They expanded distribution with a radioshack deal. Betty that is interesting. The consumer touch points have not been that great. John the Sprint Stores are out there just like verizon and at t. They always sold the radioshack but it wasnt a store within a store. You could walk into a radioshack and never realize a sprint was there. Betty and now you will. John getting the store within a store, a branded storefront after you walk into the radioshack store. I think it is a great idea for them. Betty great to see you, john butler. David einhorn slammed the shale trailers at an Investor Conference in new york yesterday, saying the company had negative developed economics from which and aside from a few choice locations the they do not earn positive return. A few shale trailers declined before reclaiming their losses. Did not create the earthquake it usually does. Usually pretty scared of David Einhorn and what they have to say. For more, i want to bring in vincent and the Portfolio Manager who focuses as well. Why did it create a big earthquake in the market . I am not sure it charted new territory. The evaluations are elevated here they have an elevated. In terms of the cash flow that was criticized, this is a capital intensive is missed. You do not invest in cash flow. What you are really investing in is reserve growth, taking the resource and turning it into a reserve and replenishing those reserves as you reduce overtime. That is the main focus. Betty you are saying today that im is off . David einhorns focus is off . We like pioneer and their two holdings. Those particular names have some of the largest acreage positions in the most prolific oil basins. It is the Largest Oil Producer in the largest oilproducing basin in the u. S. They have been successful in extracting higher volumes of oil out of the basin. We think pioneer is really a core holding for longterm investors in the energy sector. Betty two einhorns point other than a few choice locations, there is not a potential for a positive return on these trailers. Driller. Rob increased volume to get out of each individual wealth. The hydraulic fracturing and the Technology Impacts it has had on the sector, we are really in the early stages. As we continue to see technology mature, we see more and more volumes of oil come out of each individual oil basin. Over the longer term, we see the benefits of that and these stocks will benefit from the improving technology. Vincent the Capital Spending has come on down. We have seen efficiency. We have seen the overall production and output continue to rise. Companies themselves are bringing down what they could control capx in order to become more efficient. It is still developing. Betty in other words, given the technology and other improvements theyre making they can make money at 65 versus 90. This is where we are heading. Vincent they are bringing down the overall cost structure in light of the decline in the overall price. Betty rob, since you have got money on the table, can eog make money with 65 oil . Rob yes, both are producers that could turn 65 into the new 90. It was just said in the press release that they expected Double Oil Production growth by double digits Oil Production growth at 55 oil. Betty thank you so much. Vincent and rob. Thank you so much. Much more ahead here the worldrenowned chef that has given us one of new yorkss most expensive than most exclusive restaurants. He is setting shops downtown. Details on what thomas is cooking up straight ahead. Betty here is a look at top stories this morning. Revenue, bad loan provisions dwindle. Pretax profit of 4 at 7 billion. Analysts expect 5. 8. Stewart has been cutting costs and selling businesses while selling billions to boost. Don perry on an unannounced visit to somalia. He is the first u. S. Secretary of state to visit the country. He wants to show support for the government as a fights notes and links to al qaeda. Hillary clinton is agreeing to appear for questioning on cap capitol hill are just one time she says. Her email practices as secretary of state. A house panel asked for separate sections on each subject. Police mourning the death of one of their own, a 25yearold died he does days after being shot in the head. The body was taken to the hospital. The suspect is now facing a murder charge. More with the sun nephew and has been of police officers. Those are your top stories this morning. Warren buffett said his lifes work will not be broken apart by activist investors once he is no longer at the helm. The billionaire spoke at the Berkshire Hathaway annual meeting saying, the market value of berkshire will be so great that even if all of the activist scott together they could not do much about it. Could you really be too big to active eyes, a new word we are inventing here. Joining me is greg rayburn. You have had your share of runins with activist investors. Can it be true that you could grow so big that you are going to be able to be blocked off, youre able to block activists in vectors investors . Greg im not sure that is possible to it i take the opposite side of warren buffett. He might if anybody could. In fact, yesterday at the conference, bill ackerman said that is one of the congo hombre ands pit of its thats making sense, then you are vulnerable. Betty right now, with activism being the latest, who is most vulnerable in your view . You do not need to name names but you know. Greg i think mcdonalds is the owner ball. Anytime you have activism has been around forever. We did not call it that, but there is always an argument about allocation. Before, you were always arguing about allocation of capital because that is the issue. What are you spending the money on. Activision can come in when they think management teams and boards are miss allocating capital and that could be from an operating standpoint, like mcdonalds, where it is really more about how you are running the business. It can also come in just because like an apple, because it is purely a Balance Sheet issue what are you returning, exactly. Betty you have so much money on your Balance Sheet, do something about it. There is a debate growing between the carl icahns of the world and larry thinks of the world. Carl icahn saying you need activism to basically kick the underperforming ceos is out of the room. Larry says hang on, too many ceos is, a kneejerk reaction. An investor want this and i will buy back my shares. Which side do you fall . Greg i am probably in the middle. They are not all the same thing. Not all activists are the same. I doubt apple would be distributing the kind of cash back to shareholders at the level they are now absent his getting involved in pushing that agenda. I think it made sense because apple is a solid company. If you look at a company like gm, and harry is a friend of mine, i like kerry but to me, it makes no sense because gm does not have its act together as a company. Im not sure it is one they could possibly keep. They have off have had all of the issues they have had in the past. Again, if it is just a shortterm issue and somebody is saying, i need some cash now betty how do you differentiate question they all say theyre in it for the longterm. Greg you can judge by the actions. The ones say that and theyre gone and you can see the ones were there there. Betty he has in the past gone in and left. They all have. Greg but again, it is what is your agenda. For mcdonalds, is it a Balance Sheet issue worn operating issue . There is a need in the market for activism but not the shortterm hit and run. Betty is it possible to have internal activism . Greg absolutely. In order to do that, you need a crisis. It is one thing for eighth the io or a board to say, we will be internal activists. Lester is a true price that the company sort of grass and gets, that will not likely have the same effect. Betty i agree it why rock the boat is everything seems to be working. Greg everyone seems to me to be on the page the same page. Betty stay with me. We will talk much more about mcdonalds and their turnaround plan that they revealed at this moment yesterday. We will be back in two minnis. Minutes. Betty youre watching live on bloomberg television. Unveiling a fresh turnaround strategy yesterday but investors were not loving what the fast food giant mcdonalds had to say. Right when he started speaking after the presentation, stocks went up and then again further into the day, but look at this slide. Pretty much consistent selling in the stock went down 1. 7 . What happened here . Why didnt the plan jews up investors . Susan, who covers mcdonalds here for us is joining us as well. You are here yesterday saying the same thing. Why did they not say anything about the menu . Susan they built up expectations that they would unveil something granted you expected you would see a new menu and instead, we got a new organizational chart. It is not very interesting for consumers and for investors, it was not really enough to know what would happen in the next six months year, and beyond. Greg i have done a lot of turnaround plans over 30 years. The problem is, you are exactly right it was not a turnaround. It was an internal restructuring. That is fine and maybe that makes sense, but it is a mistake to college turnaround plan and 2 something when your issue is lack of traffic and how you face up to estimates that was more of an Investor Presentation about internal realignments. Betty this is something you could have handled with a press release. Greg none of it was really newsworthy. Maybe do a blurb that says hey, we will realign this way. The issue for them is they have lost millennials and they are missing an entire generation because there is a shift in the way people eat and what they look for and that will continue. Betty im just curious and i hate to put you on the spot, but what would the one Game Changing and you would do it mcdonalds . Greg i would have done breakfast all day a decade ago. They kill it at breakfast. I know they are experimenting with that now, but how difficult and experiment is that . That is an easy one. Issue is, what are you serving . There is a complete lack of innovation. A ton of menu items but they do not innovate lay others innovate in terms of what they feature and what they present to consumers. Betty that is a great point. Susan, are they in the middle of an analysis paralysis on breakfast all day . If you are killing it in one category, you should just go all in. What is the problem stopping them from doing that . Susan that has been baffling from the outside to from the inside, they say they have 14,000 restaurants in the u. S. All designed in a specific way so that certain foods could be coast of certain times, often on the same space. It is a legit ago an operational issue for them but does not seem unsolvable. But i think leadership has been fairly timid in what they have been able to kind of introduce and also relations with the franchises, 90 of the restaurants. Relationships have not been great. I think mcdonalds, in their headquarters, they have been a little reluctant because it has not been good. Greg then they made it worse when they raised minimum wage at the corporate owned unit, they drove a bigger wedge between them and the franchisees. They really have internal cultural problems. U. S. What i would do. To me, the initial focus is not on investors. It cannot be your initial focus aired you have first got to look at what am i doing and how to win to my franchisees and it and employees, this is the endgame and here is where we are going. They have not the client defined that clearly. If you fix customer traffic and fix the menu, stocks will come. They have done it ass backwards. Lets realign and lets talk to investors, that does not do anything. Susan i felt there was an implicit recognition in the plan that the u. S. Is not really going to grow too much for them. Greg that is a mistake. There is growth in the sector. There are chains doing exceptionally well. Maybe the overall levels are kind of here. You can still take shares. Betty susan, thank you. Great, great to see you. The former ceo posted rants. Ok, breaking Economic News now. Trade balance numbers are out. Scarlet fu, you have got the data. Scarlet the trade balance widened to a six year high of 51. 4 billion. That is an import surge because the west coast ports resumed normal activity. The shutdown earlier led to a narrowing in february. The numbers here at 51. 4 billion, the trade deficit. We are looking for a widening of the trade deficit, but this is a lot bigger than what economists had anticipated care we will bring it on this surge in imports for all of this. One thing to keep in mind with trade deficit numbers is this report provides hard details the government had to estimate in their First Quarter gdp. It will all come back into the next revision of gdp for the First Quarter. In terms of the effect on the markets, u. S. Stock futures had a little bit lower, they were already down. Not much change in the direction within the range we have seen. The u. S. Dollar taking lower it is still higher marginally and the 10 year yield is not moving a whole lot, currently at 2. 31 . Betty thank you for that break down. Greek creditors have to compromise. The Financial Times says they were warned by the Monetary Fund their at it once creditors to write off large amounts of sovereign debt. If they do not, it might end its support for greece. The neighbors, Economic Reforms in greece before they send bailout money. The militant group made the claim in a radio announcement. Showcasing cartoons of mohammed. Many muslims feel two gunmen were killed on sunday after they shot a guard outside the show. Yes that it had been invest getting one of the suspects for nine years. My cut the bee will become the fifth official president ial candidate today. The former arkansas governor will make his announcement in the town were president clinton was born in hope, arkansas. Huckabee, a baptist minister, 18 states in the primary. A new fault by the wall street journal shows jeb bush among the top of republicans with 23 of the vote even though he has not announced yet. Undergoing surgery this week, he says he has injured his shoulder pack yell pacquaio. In new york. Among them, rihanna, who arrived in a yellow dress. It took three people to help carry the massive train. Plus, Sarah Jessica partner dress parker. Beyonce was the last guest to arrive and boy did she show it. A huge number of likes on instagram for those dresses. Those are your top headlines. That is what you need to know. Up ahead, pete ross linking up once again with a celebrated chef to enhance the cachet at the massive hudson yard. Taking what they learned at the Time Warner Center over to the west side. More on those plans. Betty we are under less than an hour before the start of the opening bell. A want to get back to the breaking news desk where scarlet fu has some of the early action ahead of the open, including disney again beating. It was already at a record high and it is set to build on that here the most actively traded company in the premarket with 54 million of shares changing hands. Analyst estimates were beaten coming and above the highest estimate thanks to higher ticket prices at Walt Disney World in florida and disneyland in california. Cable network, 9 because of espn. The company had not telegraphed that to the community. We know there were higher sports programming costs dragging you stand down. Netflix, a big upgrade from bank of america, going from underperformed straight up to buy. More than doubling his price target on netflix, seven hundred 22 per share. Last year at this time, netflix was trading at 314, poised to open at 557, 10 shy of the record high. Bank of america said netflix turning potential will increase because of a growing portfolio of aaa, or what he calls aaa original content. Think orange is the new black or house of cards. Betty all right. Over 10 years ago stephen ross and his Business Partner and a renowned chef cooked up a revolutionary concept that elevated the Retail Restaurant model. The Time Warner Center in new york it brought together the largest collection of stars under one roof. Today, rock and they are teaming up once again to curate the restaurant in. Another step in the plan to remake the area into one of the greatest shopping and dining districts in the world. I caught up with the treo for an interview. That restaurant is gorgeous. To talk about upping the ante. 30 years of putting the restaurant collections and selecting great chefs and Restaurants Stores in real estate projects, nothing has worked better than the real estate amongst the three of us sitting here. Right away, you say to yourself, nobody has more respect in the industry than thomas. What we really want to do is curate a collection of great chefs and restaurant tours. That is the way to start. That is what hudson yards will be all about. It is not michelin threestar. We have done all that. It is about very active, highenergy, great design restaurants. You come to hudson yards and there will be 12 selections to pick from. Thomas will be leading the group and we have another major announced in who make here in the next 30 days. Betty it sounds like you do not want to have a per se level. But why not . Isnt there a market for that there . Downtown is different than uptown. I think it is perceived that way. You are getting more than millennials downtown and the attraction of what you see downtown with tech and more casual lifestyle that they have. Betty you are basically saying they cannot afford it. No, no. Today, there was a loser at ms. Here. Totally more casual. You can see by the appearance when they go to work that life is that way. Betty in more casual atmosphere. Tell me a little bit about how it fits with the whole concept of hudson yards and where you are at their . It is really taking new york and what it will be in the 21st century and you can see where everything is moving towards. We are changing the center of gravity, which today, you might call it a rockefeller center. You will not want to come to new york city without visiting hudson yards. Betty im curious, chef, with you, when you think about, ok, a selection of restaurants at houston yards, with you start with . What is your Creative Process . I think about the cuisines. We want to be able to offer the individuals coming a Great Variety to choose from, but not just a Great Variety. A Great Variety of experience to choose from as well. Whether it is a quick and simple meal or something more elaborate where they can spend an hour and a half or two hours in the dining room, so they have the opportunity whether it is breakfast, lunch, and dinner, to enjoy riding experiences. Betty walk me through how this whole thing started, getting hudson yards. Was this a plan in the works for years, have you already thought about it for a while . It started 13 years ago when steve ross and i had dinner and i will never forget we were actually thomas had to excuse himself because he was in the middle of phone calls with competitors as they were negotiating for him to come to new york. It became clear we were competing among three projects, and he had to pick which partner he wanted to have and where he wanted to go. Fortunately for us, we got selected. Betty how did you convince him . The same way we convinced the inspiration for the project on columbia circle, it was so compelling the racing of the right time done by all the right people. It was a great fit. We were comfortable with each other and we believed we could make it work. We want to be best in no matter what we want to do. It is one vision we want to share. Betty how is the rollout going to be . Give me a sense of that. Everything opens together. Kind of like we did here at time warner. We have the First Office Building opening up in the spring of 2016. That will be followed by retail Residential Hotel and the large tower because it is so much bigger, will open up in the beginning of 19. Betty stay tuned because thomas ditches the suit and stetson to get down to the real business of running the best rated and expensive restaurant. That is up next. And much more ahead. Steve ross is also betting big on stocker, expanding his stocking tournament next year. How big will this be in the u. S. . Well talk about that a moment. \ betty here is a look at our top stories this morning. Earnings from Wealth Management rose 54 . The bank was restructured recently to focus on that unit. Ubs says it is host to a settlement with the Justice Department. Ubs might face a 1 billion fine. The Justice Department is joining and investigation into a week of confidential fed information in 2012. Janet yellen reveals the dojs involvement yesterday in a letter. The texas republican wants the name of officials. Their report on details of an internal fed policy debate is at the center of the probe. Those are the top headlines this morning. Soccer is the Fastest Growing sport in the u. S. It is practically tied with the nba. Take a look at that as the nations second favorite sport among millenials. Bloomberg businessweeks cover story delved into allegations of corruption, sports global governing body. The head of u. S. Soccer is so concerned about grass, he will not consider hitting the world cup until it is reform within the system. How can it become even more transparent and how could they stop the corruption . Were joined by the Vice President of the International Athletic body and the former head of fee fors independent ethics committee. Sebastian, thank you so much for joining us. We really appreciate it. It was a fascinating read by Bloomberg Businessweek on how difficult it is to get rid of it. You were ahead of the ethics committee. How do you get rid of grass . Life this is not uniquely exporting issue. You have a political party, a business, whatever area of activity. You clearly need transparency. The most in many stakeholders anybody has are the fans taking part in it. They ask tougher questions than they have ever been asked. It is important that all sports organizations, but all organizations understand that stakeholders are more demanding and live in a world where information is more accessible. In my own country, you have 60 million journalists because of the speed and ease with which you could consume content. Betty is it about transparency or is there more that could be done . Sebastian in large part transparency. Fairplay, and this is what were organizations need is it about, fairplay is not rooted solely on the field of way. You need to have structures in place to make sure the media and sponsors and people paying good money to come and watch your sport recognize that what they are watching is done with integrity. But that is no different than any other organization. If you have got anybody seen here as a ceo operating in the last 20 years, they will tell you theyre working in a completely different landscape. In 2000 around salt lake city, they had to redefine how it dealt with its bids, how it had constraints on its membership it is really important that for the fans of his sport to know that these points are not negotiable. Betty was entertainment, they are expanding in north america and they want to expand in the u. S. I did not know there were that many people. Sebastian it is one of the hidden stories that does not get reported often. If you look at the performance of the u. S. Soccer team in its international ranking, it is probably on balance at a highranking than english. I have got american nieces and nephews that play soccer more than basketball and more than other sports. Betty absolutely and i experienced that as well personally at my school. A lot of kids play soccer. How do you translate that into a professional session with it . Sebastian that is the challenge. Everyone who watched world cup some minds of people if you go to the other extreme grassroots, you cannot drive around the u. S. On a sunday morning without seeing a lot of kids playing soccer. As you said in the program it is a massively growing sport and the challenge has always been to create the professional tear in the middle. There is a massive potential to grow the sport. We are best in as a Soccer Agency in the world. That is why we think this marketplace is so exciting. Betty thank you for joining me on the expansion of soccer here in the u. S. Back in a few minutes here on in the loop. Betty welcome back. We are 30 minutes away from the opening bell. Computers indicate stocks will mostly be lower with the price of oil in new york about 60 a barrel for the first time in four months. Being told that they will have to compromise. They were warned by the international Monetary Fund, ins warned creditors to write out large amounts of debt. If they dont, the ins says they might and support for greek. For greece. Islamic state is claiming responsibility for an antimuslim show in texas. The group made it the claim on the radio announcement. In a dallas suburb, they showcased cartoons of mohammed. Two gunmen were killed. The fbi says they had been watching one of the suspects for nine years. Straight to baltimore the streets of baltimore are called. Our calm. Tense moments yesterday after reports that police had shot a man. National guard troops are gradually dispersing. President obama told David Letterman that incidents of baltimore are starting another conversation about racism in america. President obama we dont have to sort of accuse everybody of racism today to acknowledge that that is part of our past and if we want to get past that, then we have to make a little bit of a next her effort. I think the vast majority of americans are willing to do that if it is done well. Betty the president said that there are handful of officers who cause problems for the communities. A Memorial Service will be held in california today for a popular Silicon Valley executive. New details emerge about how he died. The Mexican Government official says David Goldberg fell from attorney miller at the Hotel Health Club and suffered a head injury. The 47yearold ceo was vacationing there with his wife. Goldberg was the head of facebook chief operating officer sheryl sandberg. Those are your top headlines. Breaking news right Animal Health drugmakers. Cutting jobs and facing pressures from none other than bill ackman. Chief markets correspondent scarlet fu with details on the job cuts. Scarlett bill ackman is the biggest shareholder and you know what that means. Pressure to reduce costs. Say they will reduce up to 2500 jobs over the next year and a half. They also said in the Earnings Conference Call that it will shut down or so and manufacturing locations and cut its geographical divisions in have to just two. They will revolt in a onetime charge of. 5 billion dollars and increased 17 operating profits by 200 million. You can see this doctor getting a boost in the premarket trade. Betty, i also wanted to mention that we are seeing teachers lower u. S. Dollar while treasuries moving higher. We told you earlier about the march deficit and how that widened to 51. 4 billion. A6 year high. Peter was insane because of this, and we have to credit was the resumption of normal port activity on the west coast, firstquarter gdp estimates will be revised lower and possibly sharper. That might be why you are seeing weakness in risky assets. Betty thank you. Scarlet fu always on top of breaking news. 30 minutes on the start of trades and lets count you down to the open with top 10 headlines. J margolis is the former ceo of cachet and former president of big brands like reebok and tommy hilfiger. Joining me is julie hyman, bloombergs reporter. Lets start with apple. One of our favorite subjects. After eight years, the tech giant, hallelujah is going to the Remote Control is doing to the Remote Control what they have done to phones and computers. When they unveiled a new tv box this summer, the Remote Control have a touchpad and also be slightly bigger than the current version. By the way, apple Retail Online Stores and they say the top paid u. S. Woman executive her paycheck 83 million. She worked at burberry. She did ok and did the right move. Julie shes got a stellar reputation in the industry and obvious apple is a retail business. As for apple tv, i dont know if they will revolutionize the remote if nobody has one. In other words, i dont know if you have apple tv or you j betty i dont have apple tv and the company does not release how many people do have it. You are skeptical . Julie you cant wait for the next big thing when it comes to apple tv. Betty Remote Control. I love the fact that they keep changing. A steve jobs had simplicity. We can the complex in the terms of how we handle these kinds of things. They need to take next. I think the watch is the same thing. Betty i would like to appleize a lot of products. Jay they have a wonderful design aesthetic. How they are doing it and making the changes steve jobs would be prodded some of these things that tim cook has put in place. Betty speaking about women and been paid. Number nine, not much has changed when it comes to who brings on the bacon in the household. According to the bureau of labor statistics, the number of female breadwinners actually dropped for a fourth year in 2014. It is back to a near two decade average. I was surprised by this. It had risen during the recession. Jay there was another report about job increases. Salary increases in america and production jobs were very low. And that is really more of the money is going to sail people, people getting the business rather than making the product. I wonder if they are tied together . Why are 500 women in the field in 250 stores, they worked hard and great and they got raises like everybody else. Im not sure i understand this one in terms of why it stalled. Julie unless it is men are coming back to work at a higher rate than women. It women can economically stay home with the kids, maybe they are choosing to do so. It is interesting to me because back in 2010, if you remember that they article in the atlantic about the end of men. Maybe that was a little too early . Betty number eight, staying in retail. Coach, the retailer completing the shoe company deal. It is part of their brand Transformation Strategy outlined earlier this year. They hope that adding brands like Stewart Wiseman will help her grip on the luxury market. No surprise they have been struggling. Coach has been undergoing it has been surprising how fast they fell. Jay read and the frankfurt leaving oversaturation in terms of Outlet Stores online, internationally, and they covered every category. Michael kors coming on as a strong competitor. I think they are realizing a designer brand is gone. Segmenting your business and thinking you have to expand. Betty wiseman jay he has been there a long time. This would seem to me to be a brand of how far can it really go and how the canopy relative to coachs size . I dont understand it totally. Betty for coach it was about a lifestyle brand. Julie you know, as jay says, it is hard to see what they really bring. Betty not recommending this but one of one Retail Investor says if you are looking for a short, and coach is the short and retail. Julie still . Betty number seven, if you work in sales you are not happy with takehome pay. Bls shows that compensation for privatesector workers has strengthened in the first day months of the year, but sales of jobs and cashiers represent almost one quarter of that growth. People in sales got nearly a 5 raise with two thirds of nonsale workers on average rates of less than 2. 3 . Jay everyone is trying to get the lowest possible prices. Selling online at 82 of the discount, where do you get price savings . Labor that is where you cheat. Worldwide labor markets is a competitive market. I think that we are now valuing getting the order versus producing. There needs to be some kind of change there. Betty how we squeezed down enough on price . Jay i think we keep squeezing down on price and look at the areas of where goods are coming from. Prices become such a big factor and this to me would be an indication of that. Julie look at all the big retailers raising salaries. Walmart, target, t. J. Maxx. Some of that is trickling into those numbers. Betty number six, if you are in the market for a lamborghini price is not a problem. The Italian Government is trying to incentivize the automaker to build a new Sport Utility vehicle in their own country. The government is said to be offering as much as 11 million in tax breaks and other benefits to ensure this lamborghini how do you pronounce it . Julie euros . Latin . I do know. I did the math and lamborghini says it could bring as many as 300 jobs not huge number. If you break that down, 1100 Million Dollars with tax picks about the hundred 70,000 in dollar terms, per person that they are hiring in tax breaks. Betty youve got to love europe. A lamborghini suv. Ok, so partly what that is about is about the regular lamborghini is not huge market in china because roads are not very good. I guess if you have a card that you are trying to drive it on a bad road. Jay range rover is on fire in china and i think that is the right car. Betty now i know what to get you for christmas. There you go much more on in the loop in two minutes. Betty we continue to count down until the opening bell. It is time for our deep dive into number five. David taking of they swing at shell producers. Speaking at the conference yesterday, he slammed them related to fracking saying it is ends expensive and a terrible investment. Streets man street smart anchor alex joins us now for more. Ok, what is next . Alex relatively, investors shrugged it off. We saw some of these Companies Call their way higher by the end of close. Expect on the companies he was talking about. He was talking about pioneer resources, eog, continental and concho. That those are basically the producers that rpo plays into shell, permian basin, eagle ford. He is not alone in being concerned about the valuations of these stocks. Barclays came out and said that these dnp kind of companies are discounting 95 oil prices. We are nowhere near that. The same, look, they are going to have to rerate to a lower alterable at could lead to a 50 decline in the share price if we dont see Oil Prices Start to rise. Betty who are the factors that are in strikers that are in the best position . Frackers in the best position . Alex overall, they dont have a lot of free clash cash flow and a significant amount of debt. Overall, these companies have about 23 billion in debt and a lot of it is not due until five years or beyond. About 10 billion is a do much later. If you take a look at what pioneer has done, they have been able to increase by 70 . In order to do that they had to have a sixfold surge in spending. Spend more to produce more. It leads to the question of why do you have these stocks to begin with . Dividends, no other reason. They say that you want these guys for their production. They are going to return money later and monetize their oil later and that is why you want them different for the cash flow. Betty how much troubles how much trouble are these Companies Really in . Alex it is really new. If you take a look at the chart, that is actually a positive for oil prices and oil companies. They are getting more productive. This shows their productivity in the balk is getting better. Making more, spending less, and making more for what they are producing. Cost reductions overall for the industry can be down as much as about 30 . Another inc. You can hedge at these prices. Petroleum is one of the stocks that einhorn attacked. Oil prices rally, he locked in production, a good sales price, and that is good. There is a thing called a frack log, drills that are was that are drilled but not completed. Bloomberg intelligence says there are about 4700 drilled uncompleted wells. They are waiting to be put online. The issue is the debt. They have a lot of debt. Overall, we have seen a big increase in the highyield energy sector. Betty thank you. Always a great analysis on the oil industry. Lets play it. We ran high case using last junes commodity curve and otherwise held betty ok, no. That is not elsa from frozen. There we go. Thank you. [let it go] betty the song from frozen. If you are a disney fan and investor, you will be happy with that movie. We will talk much more about disney earnings. [let it go] there are now just 13 minutes until the opening bell. Todays countdown is brought to you by invesco. Betty letsbetty get back to you bringing the important stories before the ball. J margolis isnt joining me. Julie hyman as well. Lets continue to number four. Disney and our attempt to play rosen frozen. Secondquarter profit that beat wall street estimates and boosted by strength at the parks and merchandising units even though they did not have a major blockbuster like frozen out in the period. Disney shares of 15 . Likely, it will go up again if history is right. There is no sell recommendations on is the. Julie bobs performance of this company, he came on in 2005 at ceo. The s and p is up 72 by comparison. That just kind of tells you. Jay he hasnt done an amazing job. It will be interesting him handing off. That is they conversation. He nailed it over the last couple of years from movies. Frozen is not just a movie. Betty all the merchandising and the second movie is coming. Jay and stores. They did it. Betty disney is killing of that mcdonalds is not. That is number three story. Mcdonalds unveiled a turnaround plan that left many investors hungry for more details. They presented corporate fixes, and you regional chart, cross cuts returning cash to shareholders. But everybody said, where is the menu . Jay if you go back to an Howard Schultz went back to starbucks and questioning why the founder is going back. The smell of coffee wasnt there and how the product was come producing. He has done an amazing job of going to a new level. Panera bread company. All the changes they have to make. Talking about where it comes from and mcdonalds talked about restructuring and did not even get to food. It is a Big International business and i understand the complexity of it. He hasnt the ceo has not set the bar in terms of we are going to make our Consumer Experience work. Betty when mcdonalds does try to make that direction, they introduce a horizontal chicken sandwich leaving the term to be declared dead. Julie i watched this presentation and it was very corporate. Betty i want to see the happiness, right . Number two, guys. Hedge fund manager david warning investors against fighting, not one but clocked offense. U. S. Japan, europe this was a man who said in 2010, dont fight the fed and stocks went up after that. He has been on it. He has been on. That said with recommendations on what to do with the information he was not very declarative. He said you should not be too long bonds or two short stocks and did not give a strong recommendation. Julie not like last time. Jay you had many people tell you dont fight the fed. Julie right. Betty dont fight the momentum. Absolutely true. Lets get a check on my futures have settled. We have settled slightly lower. Our top story and opening bell is next. Betty welcome back. Lets get back to menu the most important stories before the opening bell. Jay margolis, the former ceo of cachet. Long list of brands that he helped create. Julie hyman joining me as well. Number one, pimco losing its crown. Two years of client with draws and total work funds have crossed the title of the worlds biggest bond mutual fund. A little over a hundred 10 billion. Funds fell behind the index tracking vanguard total bond market which had 117 billion as of april 30. One for jack bogle. Julie the irony is that the pimco is doing better than the vanguard year to date. The three managers running the pimco fund have actually improved the system to an extent. They have the cash they have been 70 of the peers and vanguard has been 71 . In theory, if they continue with that performance and people are actually making Investment Choices raised on performance, they will be able to get some of that back. Betty but there is so much around passive or active investing. It depends also on the fees and if that performance is enough to get them out of the cheap index bonds. All right, that is the bill there. Not the opening bell but the delta say goodbye to jay. Thank you so much. Former ceo of cachet. Former president of reebok and tommy hilfiger. As we head toward the opening bell, i want to bring in our two players. Mike reagan are u. S. Stock editor is joining us and they call us. And nick. Today, nick nick, you say you come up with numbers that tell us a prince on jobs on friday both the above 200,000 . Nick good news is that tax receipts according to treasury are trending higher than over the last six months. We are looking at six percent to 10 versus 5 to 10 comps. It looks like the labor market is expanding and we can get back to that 200 number. Bad news is that 80 of the job growth over the last year is not educated workers and we are running out of those people. There are only about 400,000 unemployed College Educated workers that are left to get a job. Past that, we are talking about low levels of incentive for that group and perhaps we are running out of employable people. Betty why is that bad news . Nick that sucks up the entire 400,000 people left and you are looking at different kinds of workers you are trying to employ. It also goes back to the whole wealth inequality and how it has been asymmetrical over the past few years. 80 of the job growth in the last year has been for the College Educated, so i wonder when we see these riots in baltimore, is that part of the underlying background of that . Lack of opportunity for uneducated or less educated workers . Mike it certainly looks that way. Only about 45 of the workforce to 10 . Nick does that become a risk . Mike it feels like it makes it fragile. You want to have a stir a sturdy and durable recovery that helps everybody in baltimore. Betty well. Alright, maybe you can give us a Clear Investment strategy. Julie made that great point. David tepper says dont fight the feds. But when it actually came to julie dont pay too long bonds and dont be too short stock. He did not sort of betty we want an opinion nikck, what would you do . Nick youve got to believe in the u. S. Economy to believe in u. S. Stocks. We got growth in the second and Third Quarter and in that case as long as the dollar continues to weaken, you want to have large stocks. If you are worried about the dollar and see it strengthening they did really well earlier in the year but it is a matter of long stocks. An interesting thing i read in your report was the relationship between treasury yields and the dividend yield on the s p 500. Throughout history, the treasury yield has been twice the dividend yield of the s p 500 but the last decade or so that has not been the case. It is a onetoone ratio now. Is that a permanent shift or will it revert back to its mean . If it does, that sounds like a scary thing for the stock market Interest Rates bike higher. Spiked higher. Nick it feels like we are in an unusual situation that has to revert to longterm trends because ultimately, government bonds should yield more than stocks. They had that dividend yield or coupon to provide return which is stocks of capital gain as well. You are right. To see bond yields back up that quickly would be a disaster for stocks. Betty where should yields be then . Nick the government bond, 10 year bond, should yield twice with s p 500 does. 3. 8 . Julie as you say, it is about the speed, right . Velocity at which we get there and the fed, do you think, they have done a good job of telegraphing where we are going to go so that we will not see that rapid rise in rates . Nick i think the fed gets a good about for targeting stock levels but i think the couple relativity. That improves confidence. Yes, over the longterm, yields have to go up that it is probably over the next 10 years and not 10 months. Betty before we go, is that it . Nick mid caps are the overlooked part of this market. Able to get small cap and large cap at the midcaps are up most for the year. 4. 7 and hedged against this dollar exposure we worry about. Betty thank you for stopping by. Market strategist at opening bell and thanks to julie hyman and mike reagan as well. Much more ahead. Gambling, pendant National Gaming thats bake on sin city and makes its first four way onto the biggest strip. Dont miss our interview with the ceo, next. Plus, confessions of a top chef Thomas Keller has yet to spill all the beans on his brandnew restaurant for new york citys hudson yard. I am really a detailed kind of person and always looking at how the napkins are folded or how the silverware is polished or glasses shined, things like that. There he important. Very important. It gives you a sense of how the operators are paying attention to the details. Trading is getting underway on this tuesday. Back to our correspondent scarlet fu. Looks like we are mixed at the open. Scarlett whiskey out that started the morning off under pressure because of the sunken chinese stocks and threats from the imf to cut off funding for greece. Right now, we are mixed. A little changed with s p 500 and dow after two days of game. The dollar briefly raised their advance after the march trade deficit widened to a six year high because of a surge in imports. Economists say double lead to a downward division of the First Quarter gdp number which may even come in negative. Oil prices, they are up 2. 5 percent, more than 2. 5 after three days of trying and failing. Wti has broken above 60 a barrel bringing midmarch to 28 . From macro to micro. Lets talk about tetra. They began trading at a fivemonth high today and building on that of 2. 5 after they waited it and you buy for the electronic concerns of overload. The consumer surveys show there is ample pick up demand for tesla vehicles. A law falling by the most in the once before the Earnings Report on friday. Goldman sachs downgraded from neutral Trading Technologies say they may lose market share especially in a video to the likes of facebook. But as a feed and buzz feed also threatened to take a wells share. Currently trading at 11. 5 year high and building on that ever so slightly. Jpmorgan upgrade to neutral upgrade from neutral. Betty thank you so much scarlet fu. Another mover, the casino operator has been riding high and denouncing his tropicana Las Vegas Casino last week. The companys first foray onto the las vegas strip. In the 360 million deal penn will gain in three restaurants, a casino, and 1500 guest rooms. Tenant nationals penn nationals ceo joins us. Good to be here. Betty you have been wanting this for a long time. Not the property but to be on the strip. Why . We have one of the Largest Networks of regional casinos in the united states. We have a database of a million active customers that we know a good portion of them visit las vegas every two years. We just needed a place to send them. We have been looking for the right property at the right price at the right location and we have been very patient. Finally we reached an agreement with the private equity group of onyx that previously owned tropicana to purchase it for 360 Million Dollars. It will take is about five months or six months to get Regulatory Approval and we will close on the transaction and take the property over. They have done nice renovation over the last 3 00 to years improving casino space and rooms. You are getting a good asset at a great location. Betty what are you going to do to it . Tim put in our Marketing Systems and programs really connect all her properties with tropicana las vegas. We will do minor improvements to the facility and take time to look at how our customers react to the offering. We think down the road three years or four years, we will have to upgrade entertainment and restaurant. Betty we just talked about Thomas Keller. Tim we think down the road, we went to take our time and understand what the customer is looking for and understand how we are going to further improve it. Betty how long did it take . Tim we have been looking for seven years or eight years. We have looked at properties off the strip for sale. Betty you have a property off the strip. Tim karan we do, but im talking about off this trip by flamingo or tropicana. The customers want to be centrist report south strip where tropicana is and that is what we have been waiting for. We got it at 360 million. Betty were you worried youd have to pay too much because they know you wanted it . Tim we looked at other properties that started with a b and we thought this was 34 acres and a great location that gives us an opportunity to really monetize our database with acceptable product we can further improve on. It checked all the bosses be looking for. Betty how close did you come before . Tim not very close because price was too high or not the willing seller or location was not right. We never got betty to that point. Typical not to the point to announce. Betty how long to get the deal done . Tim we have been back and forth for seven or eight months. A good back and forth. We knew what we were getting and they were very good at giving us the information we needed to make this decision. Betty some numbers on vegas gambling, revenue gaming down 2 last year. Down 10 just in march alone. I hear what you are saying about wanting to bring people who are members of penn gaming over to the vegas strip but it seems that revenue is declining overall. Tim it is the decline of the asian play coming from china that really affects the highend businesses, the bellagio Caesars Palace betty you were a coming . Tim Anticorruption Campaign that the Chinese Government it is affecting the high and asian play in las vegas. That is a big part of the revenue decline in that market. I think you have a property in las vegas, you have to have a premier facility that has a lot of Convention Business or you have to have a database to feed customers coming in from your network of relationships that you have. That is a we are delivering to tropicana. Betty do you worry that because it has taken so long that others , first movers or a foothold in that market already that will be hard to kind of breakthrough . Tim we had 15 we have 1500 rooms and a database of 3 million customers. If you look at total over boards with caesars, they have over 20,000 rooms in the market and they are able to feed all of those rooms with their customers on their database, so we feel very comfortable giving the metrics i just described that we will be able to hit the mark. Betty you are opening up the markets on massachusetts on stock machines. That will open up at the end of june. What do you see in terms of that market . Tim good news is we were fortunate enough to be the first selected in massachusetts. We went to a referendum last november as an effort of citizens to repeal and we continued construction and one the boat 6040. We will open up on june 24, 30 miles south of boston with 200 1250 slot machines and a three year head start before the next competitors steve went, comes into the boston market. The thing with our 250 Million Investment we will get good returns. In the next year, we are opening up Hollywood Casino in california that will be in partnership with the Indian Tribes and of that and that will give us something to look forward to next year. We have tropicana hitting ramped up and i like the Development Pipeline with massachusetts, san diego, and las vegas. Betty all happening at the same time. Thank you so much. Tim thank you so much. Betty ceo of penn National Gaming. Stephanie ruhle caught up with bill ackman and David Einhorn, next. Betty moving and shaking this hour, the founder and ceo of hedge fund pacific go. The best paid Hedge Fund Managers in the u. S. Griffin made 1. 3 billion last year. Sit in thousand lack of funds returned 80 to investors. Overall, the top 25 25 Hedge Fund Managers less than the s p 500 index. Wall streets biggest name spent yesterday afternoon at the conference where they share their best ideas with a crowd of eager investors and they shared with Market Makers stephanie ruhle. She sat down with David Einhorn and bill ackman. She joins us to discuss the highlights. Stephanie without a doubt. Amazing that you are just mentioning how much these guys made last year, in the billions. It speaks to white public sentiment is so antiwall street specifically the hedge fund industry. People have a hard time getting their head around the fact that these men and women, for the most part men, have businesses that dont produce anything support any economies. What many people would say is a financial engineering, and gaining the system. What do they really hate . Things like short selling which people say are just meanspirited, there to make money and take companies down. Specifically, what i asked bill ackman about was what he was doing with herbalife. Bill i think shortselling is inherently healthy for markets and crowding fraud. It is not a great and productive use of time. Stephanie so i mean of course, bill ackman is going to say he thinks shortselling is healthy. Many people have said if you look at made off, if they had been a publicly traded company not dependent on regulators make realizing who and what he was they would not have been in that situation. Short sellers are like financial archaeologists. Betty yeah right because they yes, they are taking a short but they also feel like they are keeping Companies Honest. Stephanie keeping Companies Honest activists are coming in, shaking upwards of saying there is lazy management companies. I also spoke to David Einhorn. Betty someone who keeps you on this. Stephanie kate certainly does. He came after those frackers yesterday and not from the economic perspective. Financial perspective, he said they are just reinvesting all this money and we dont have the returns. David the result is 78 per share, less than half of the 172 with the stock trades. Pioneers are medically over valued, even if you assume it has 11 billion of resources. We seek a return to prior peak prices. The problem is that oil fracking is high costs. Betty there is mr. Einhorn going after pioneer and surprise, surprise. There stock has tumbled. Stephanie an number of people yesterday, i got to introduce david tupper, a win. Betty thank you so much. Stephanie ruhle of Market Makers. We will be back in two minutes with much more and chef Thomas Keller. Betty Thomas Keller has three michelin star restaurants under his belt and likely to garner even more accolades with his next restaurant crafted in partnership with the Real Estate Development Company Behind new york citys time warner sensors. Per se, one of the best and most expensive restaurants and dinner starts at 310 per person. Before you even get to the wind chef keller gave me a tour in his kitchen. Betty explain what is going on there . Chef keller what happens over here is they are going to do all the little bites you get at the beginning, the salads and the savory courses. On this site, you will have food like oysters things like the pasta, things like that. Next to him is the fish, and seafood preparation. The cost from that is the meet separation. Next to them is all the vegetables. Then of course, this is the savory food. Our executive sous chef will be on that side in an apron as well. He will orchestrate the entire menu. Behind you is pastry. That is the different stations throughout the kitchen. We are stuffing this with a moose garlic. Chef color that is the fish course for tonight. Betty do you model your kitchens about the same . Chef color chef keller that is not the permanent kitchen but that separates the kitchen. This kitchen is small enough for the original kitchen. Betty you keep an eye on the the kitchen . Chef keller we dont have to keep an eye on each other but we want a connection. The connection between the cultural connection between the two teams in the restaurant and understanding and knowing that there is a whole another team or 100 people across the country who are focused and committed in the same way that you are. That cultural connection is very important. Betty i am always curious you are a world renowned chef and people love to restaurants. I am curious, do you go to other restaurants . What is the first thing you notice when you go to another restaurant, what is the first thing you notice . Chef keller it is about the staff, how they call themselves and their pride and what they are doing. You can tell a lot about the restaurant with the site of the people in the restaurant. I am really a detailed kind of person. I am always looking at how the napkins are folded or how the sober is polished or how the classes are shined. Betty that tells you that tells you how good chef keller it gives you an idea of how to operate his are paying attention to the details. It is always about the details. Betty what do you order . Chef keller what if the chef wants to give me. I leave it up to them. Betty can you imagine having Thomas Keller taste your food . How nerveracking that might be. That does it for today on in the loop. Seeing green after the richest fight in boxing history. We will talk to the showtime ceo and the former chairman of efc and on how he helped the fourth change the tv landscape forever. That is tomorrow on in the loop. Live, from bloomberg headquarters, this is money makers with Erik Schatzker and stephanie ruhle. Stephanie changing of the guard. After two decades, cisco will have a new ceo. What the company is going to be like without John Chambers in charge. He find out by asking him. Erik and it is David Einhorn versus the factors. He calls it wasteful and a terrible investment. Stephanie welcome to the new fund, where the new content producers show off their programs. Welcome to money makers. I am stephanie ruhle