Transcripts For BLOOMBERG Market Makers 20140128

Was it an apology . Tom perkins response to the outrage of comparing treatment of the one percent to the jews of nazi germany. He says he is sorry, sort of. This is Market Makers in new york city. Legend. Erkins is now a more than just for that for venture capital. Are the top business stories from around the world. Shares of apple are falling right now. Theyre down as much as 8. 7 . Estimates,s missed dashing investor hopes for a turnaround quarter. The Company Forecast revenue for this quarter may drop. I would be the first Quarterly Sales decline since 2003. Ford reported earnings and posted record soffits in asia for 2013. At series pickups remain a huge seller in the u. S. The focus compact drove sales in china. The first female ceo of a global automaker will be the guest of the first lady at tonights state of the union. Dairy bar will join Michelle Obama mary borrow will join a Michelle Obama mary barra will join rachelle obama. Conquer and divide, that is charters latest strategy in its quest for Time Warner Cable. We are asking the question, is it a good idea . Joining us is media tech capital managing partner and the first publisher of Rolling Stone magazine, we will need to talk about led zeppelin and the beatles. Erik schatzker was dogging on them. Not the beatles, i was dogging on Paul Mccartney. You are on it. Were you dogging on his dancing at the grammys . Dogging on the whole Paul Mccartney singing. Let somebody else having this let someone else have the limelight. John malone, what do you think of this . I think charter is pleased with this development, the idea that if they can get a deal done, they can then turn around and sell new england, new york, and north carolina. It gives them a lot of cash, which will help them increase their cash component of a deal that they can get done which is a little light right now. , a it takes comcast potential rival bidder, out of the mix. That may bring the shareholder asking prices down a little bit when they know that comcast is not going to be a player. Is this a straight move on comcasts part . It is not necessarily a shrewd move. What they are waiting to have dropped is cablevision. After they get those chunks of Time Warner Cable subscribers they are going to go after cablevision and have a wonderful on new england from boston to washington pathway. Thisy is it playing out way . Why the charter have to make an offer on its own for Time Warner Cable . It wasnt easy. They dont have enough money. It wasnt easy to put together the debt. Why couldnt john malone get the Roberts Family in a room together . A lot of this has to do with regulatory. The idea of doing this backend l allows regulators regulators look at the Time Warner Cable deal first and when bet neil is done there will a separate deal between charter and comcast. If comcast were to make some sort of joint bid with charter, i think regulators would jump in and give us a hard look, particularly because comcast bought abc a few years ago. They have some constraints on what they can do. There are some Net Neutrality constraints and as comcast gets bigger, more subscribers under their umbrella, regulators may jump in and say i dont know if we want to give this company so much power. Theoretically down the road they have the ability to take some content exclusive. This idea that maybe one company owns all these content and subscribers could rub regulators the wrong way. The deal is not done. It is just a matter of time. This deal is months away from happening. Im the next step is going to be january 30 when Time Warner Cable reports their earnings. It could be a down trend and give charter a lot of new enthusiasm. Lost 180,000able video subscribers in 2013. Areter has been saying they dysfunctional, they are the worst managed Cable Company in the country. That may be confirmed with their earnings report. It is still going to take a proxy fight. Theirre going to announce board of directors sometime in the next two or three weeks. They will probably lose the first fight but there will be another one a few months later. Are are looking like they going to prevail. Alex has been on top of the story but theres is one thing nobody has mentioned. There is one thing nobody has mentioned. Theaero this is the eo case that goes before the supreme court. It will hit billions of dollars of retransmission fees the Cable Companies are getting. The will have an impact on earnings and the value of Time Warner Cable. Moving to the positive side, the Cable Companies will no longer have to pay. Remember what happened this summer with cbs and time warner , a black up the cost time warner all those video subscribers. Presumably it would have a similar effect on charter and comcast. It then becomes a question of whether the cash and share of reflect thetio premiums. This is been a situation where all three Cable Companies went up. Time warner cable, comcast, and charter. The bid may be more likely now. On the flipside charter may not have to pay quite as much. And comcast gets good assets for their strategy to try to link up the northeast corridor. New work city does new york city customers would no longer have Time Warner Cable. New york city customers would no longer have Time Warner Cable. What happened yet so they got a sense of what they are asking for. What happened yet go what happened . Them at they got a sense of what they are asking for. We will see if the two sides are able to get something going. Rob marcus is a new ceo and broaden a brandnew management team. At runningnt a shot this thing. I spoke with rob marcus and he said he is willing to sell the company if the price is right. Angry for some of the comments. It was his own line quips that he said if the deal is right he is willing to sell. If he loses his seat, how much does he get paid . Over 60 million. He is in a good spot. One of the things he told me was he will walk away. He will find another job. Maybe he doesnt need one. He is a very smart guy. Deals inne a lot of his previous life in time warner inc. He is the right guy to get to do this. Charter has probably the best manager in the cable industry. From an operational standpoint. You have very powerful and very willful guys. Is part of the reason tom alone back to charter. He has a lot of faith in that company. Key the thing that that shareholders have to factor in. How much will Time Warner Cable be after a few quarters . Is that is their god. Guy. At is their did a great job at cablevision, pushing that company up to the point where their penetration was very high. Time warner cable argued that vision is not in a very good position right now. Carters argument is because he did such a good job over seven years, he hit their maximum point, their maximum penetration level and now the only place to go is flat or down. How long is markets going to since january 1 of this year. You and i sat here and talked about jamie dimon and his compensation, is it too much . Rob marcus would get paid 50 million if the company sells. Why dont people have an issue with that . I think everyone should have an issue with every change of control. If it amounts to 50 million because it is a conflict of interest with the shareholders. It is the ceo and shareholders job and Board Structure get the most value for shareholders. Boardsrds and ward hostag job to get the most value for shareholders. Them assuming this happens, is re going to be is upward this uproar over jamie dimon . This is a lot more dough for a lot less work. Selling Time Warner Cable and getting the right price is rob marcuss point. There is a reason bank phyllis these and vilification has been on bank ceos. Media ceos are seen as providing entertainment. Is cool. I dont know. Thank you all. That was a great conversation. We even got to talk about some rock stars. President obama prepares to Tell Congress he is willing to go it alone. That story is next. It will be it was the interview that lift up twitter last night. Emily chang spoke exclusively with tom perkins about those comments comparing an attack on the rich to the holocaust. We will highlight those comments in a minute. All abouttch interviews streaming live and on demand on apple tv. Them a president obama is hoping for a reset tonight. Peter cookrespondent has more on his strategy from capitol hill. To talkhe is going about the things he believes he can to without congress approving it. What is everyone make of it . Is his we are hearing own advisers, some of those outside groups that have been supporting have been using the executive authority. We have seen some concrete examples of that. Hes going to ask federal contractors to raise to . 10 per hour. That is a far cry from getting it across the country, which is his real goal here. Expect the democrats president to move forward and take an aggressive tone. We have heard from House Speaker john boehner that there is a constitution. The republicans are not going to allow the president to trample all over them. They dont like the idea of a president working on his own around them. Those big items have to go to congress. Them are republicans are accusing him of trying to became. Are accusingcans him of trying to became. How valid is that point . Not the first president to use his executive authority to try to get things done and he wont be the last president. The president has to go through congress for meijer ticket items. The risk here is that even in trying to be more aggressive, trying to act on his own, he poisons the well and makes things harder to get done on a bipartisan basis. There is risk for this in the president and even some pushback from democrats who question whether this is the right strategy for this president. He may throw out and all of branch to republicans. An oll of branch live branch to republicans. There are some agreements that income inequality is a problem in washington. Mattingly is at the white house right now. Lets talk about the abiding line. This issue is in the air in part because of a phenomenal interview that our colleague, emily chang, did with tom perkins of denture capitalist. Of the venture capitalists. Lets say the air is rife with that much more tension. Absolutely. It was a fascinating interview on a number of different levels. From a policy side of things, if you want to see this split between republicans and democrats, the split between ideologies, all you have to do is listen to last night. Rich do what the rich do, which is get richer. Along the way they bring everyone else with them when the system is working. Lies the biggest flip between republicans and democrats. Democrats want policy proposals from the federal level that they believe will directly engage to raise the poverty level, to raise the income raise the lower class up. Completely are against that way of doing things. They want states to handle the money. They want the tight races all ships type the tide raises all ships. Even when we have an issue that everyone agrees is a major problem, i dont think everyone has an answer i dont think anyone has an answer we can all agree on. From a federal standpoint, is the only way republicans see true dealing with this by tax reform, perhaps lowering the rate but broadening the base . Reform is aax primary area where this can be addressed. Marco rubio was the first republican to come out with concrete proposals. He had two interesting ones. He wanted to get rid of the income tax credits. He wanted a federal wage enhancement, a payment for for lowerwage people, to make income jobs more viable. The idea of streamlining all the programs on the federal level, combining that money and handing it out to the states so the states can better tailor how they addressed this issue. No doubt about it, democrats feel like a federal government needs more of a role. I dont think youre going to find anybody who comes to the table and say we agree on this. Unanimity in short supply. He sure to tune its up to tune in tonight for special coverage be sure to tune in tonight for special coverage of the state of the union. We are going to be joined by al hunt, giving us a look ahead at what we can expect tonight. Talk aboutgoing to this very expensive watch. You can buy it for the price of a for robbery or maybe a little bit less. We will tell you why it is in the news today. That is coming up next on Market Makers. We are approaching 26 past the hour. We are about to take you on the markets. I go to wall street with what is happening with u. S. Stocks. It is an update after three down days. One of the factors driving the market higher. We also have Consumer Confidence rising more than economists expected and coming close to almost five years. This is Consumer Confidence as measured by the conference board. We are going to get the announcement tomorrow. We will see more tapering of quantitative easing. Questions after the selloff of the emerging markets. Apparently the many ipads i bought did not make a difference to the holiday sales of their iphones. And revenue may also fall. This will be the first Quarterly Sales decline since 2003. Has apple lost its mojo . You desired apple products, what is there to desire now . I want a story from apple, did we get one . No we didnt. If you did not see our exclusive perkins, youh tom will when we come back. On the rich toks the holocaust, that is what this guy did. Absurd to demonize the doingor being rich and what the rich do, which is get richer by creating opportunity for others. Live from new live from bloomberg headquarters in new york, this is Market Makers. Welcome back to Market Makers. Venture capitalists tom perkins defends his letter comparing the occupy movement to the persecution of jews during the holocaust. Emily chang got an exclusive sitdown with tom perkins himself and he told her he apologizes for some of the language he used but certainly not the message. This interview is absolutely incredible. I stood of expected a grumpy old man who is going to stick to the few things he wanted to say. Criticism. E open to he did not apologize for the message. That is why i wrote the letter. I believe we have to be careful we do not demonize anybody. And we certainly do not demonize the most creative part of our society. 30,000n people put in concentration camps, what were you going for . Jews are only one percent of the german population. Most germans have never met a jew. And yet hitler was able to demonize them. It was one of the earlier manifestations but there were others before. We know about the evil of the holocaust. My point is that when you start to use hatred against the minority it can get out of control. I think that was my thought. Now as a messenger i have been thoroughly killed by everybody, at least read the message. Perkins said they were shocked by the words you used and do not agree. How do you respond to what they said . Do you understand why there has been that kind of backlash . Yes. Was not all my letter about Kleiner Perkins at all. They did not need to say anything but they chose to throw me under the bus. I did not like that. They said they were shocked. Guy said feel like the look, dont go swimming. You dont understand the warning. I was presenting a warning. I dont think they got that. Secondly they made a point of not having them involved for some years. Think as i have distanced there hasm the firm been a corresponding decline in the firm. I wont go further than that. In away i missed them. I hope they miss me. Youll very the hatchet over this one. You mentioned your friend, eugene kleiner. He fled austria, fled hitler. Do you think he would have agreed with you . I think he would have. I was not talking about the nazis. I was talking about the persecution of a minority. Kleiner always distrusted a those sorts of trends in american politics. Not in connection with antisemitism but just in general. Thoroughly would have understood my message and approved of it. You have conservatives calling you the leading a hole in the state. It wasnt a very nice word. He doesnt know me and i dont know him. Entitled tok he is his opinion. If he knew me, perhaps. Americathe 99 across should Pay Attention to politics , follow where it is going, read the newspapers, dont try to get everything over twitter and facebook. It is not there. Worry about the future. Right now i think america faces a very troubled future. I sometimes feel that we have gone past the point of no return. Do you feel their frustration . Absolutely. Of course i do. I have members of my own family that are living in trailer parks. Of course i do. Ofyou were called the king Silicon Valley at one point. How would you describe yourself . Certainly have enough air against to be royal. Enoughair against ai arrogance to be royal. I think i have accomplished a lot. If i had to do it again i dont know what i would change. I am at peace with myself. The fact that everybody now hates me is just part of the game. I am sorry about that but that is not what i meant to do. What is the real hot button here . Is it his message . Whow a number of people supported his actual message on twitter last night. Im it is the fact he roped in it is the fact he roped in the holocaust and not tease, that is a button he should not have touched. On bothseen people sides. Here in Silicon Valley i have gotten the vast majority of tweets and emails that think he is off the mark. There are people defending them. Nobody is saying this is an issue that needs to be disc that does not need to be discussed. There is this divide in Silicon Valley that seems to be more pronounced than ever. You have people earning buses in effigy. There are a lot of people out there who are very unhappy, people who feel like they have been pushed out of the city they live in by people who do not actually work here. New. Is also not and if you look back 120 years if you look back 120 years, they were hated. This backlash is not something new. It is certainly not new. This is a new twist on an old debate. I think the fact he brought in the holocaust metaphor, that he used that as an analogy really struck a nerve that is always dangerous territory. While he regretted the words he used he did not regret saying that he believes that there is this divide and society. Have discredited him is the fact that he talked about his watch, which could buy a sixpack of rolexes. I did not prompt him on that. He product he brought that up himself. He wanted to clarify he is not a billionaire, he is just a multimillionaire. Collect fancy cars, he has an underwater airplane. Divorcedim if he is from reality and he said no. What became clear to me is he is describing his reality. Maybe it is not the reality that the 99 live on fish live in. 99 live in. What isan otter an underwater airplane . It is submersible. Richard branson has one. It is a fancy toy. Leave you with a sense that he is actually doing any serious thinking about this . Has he studied the economics . Has he tried to establish whether there is any evidence of the trickle down economics . Or is it the kneejerk response of a man who feels persecuted . Think he certainly has given this some thought. He wrote an letter to the antidefamation league. Richer, that is an argument that has been around for a long time. The problem is in San Francisco the jobs have gone to the most educated people. Those people have gotten shut out in enqueue so much. Shut out. Thank you. I urge you to head to bloomberg. Com, head to your tablet and check it out, emily did a masterful job. Shares of apple are taking a dive today. The company did not sell as many iphones over the holidays as expect it. That story is next on Market Makers. Have you had a look at what is happening to shares of apple today . They are tanking. Apple reported earnings last night. Iphone sales were disappointing. Cory johnson is here to talk more about what it is the people dont like about apple. I have had it with the apple puns. Youre not drinking the apple cider anymore . There we go. Bring it on. I think iphone sales are the issue here. The numbers were better than the analysts figured out. The Gross Margins were also better. One of the reason Gross Margins are better is the iphone five s sold better than expected and the five c was worse than expected. Tom perkins there is a great point. Them a cheap iphone does not sell. The problem was it wasnt cheap enough. You see for apple as a struggle is they want to be in the bottom percent. They are content for new market share. The small part of the market may be percent of the profits. They always say it is a niche player in their dna and the world of macintosh is. This is just a small player that one that iphone became the dominant product, they did not change their strategy to be highend and high margin. I feel like we trusted steve jobs, whether we knew what he was going to do, he had a sense of vision and priority. I think the product they are it ist with a now the world of market cap. What do you want from these guys . Isnt that crazy . These phones the ipad air sold better than most people predicted it would. It has been a huge hit. The macintosh had a better coder than expected. The interesting thing is they did not just in just indent the mac. Just invent the mac. The market is not feeling it on apple but cory johnson certainly is. When we come back the private equity firm finds a way to cash in on legalized weed. That story is next. Youre watching bloomberg television. It comes as no surprise, it is high time for marijuana related businesses. Line up. Have begun to Privateer Holding is a private equity firm focused on those acquisitions. We sat down with brendan kennedy. Founder and ceo and we got a chance to see what he thinks about this industry and how things are relating to them. We started with polling data. We looked at gallup polls that has been run every year since 1972, when nixon declared a war on drugs. Atstarted looking information from the bea from bothea to size the markets in the u. S. And internationally. We went to cannabis groves in 20 states in the u. S. We went to medical dispensaries in california. Growers and people who were making cannabis infused anducts as well as doctors dispensaries. But oldfashioned boots on the ground research. But it waseau orough but oldfashioned boots on the ground research. A zero revenue. The company has broken even and will be profitable in the next two to three months. Of we have created an International Version where about 20 of our traffic is international. That is an investment that is paying off. We have also launched a canadian subsidiary that would have a license from the federal government of canada to produce, process, and package. Will any of these companies be taken public . You think acceptance is going to get to the point where a company can actually be publicly traded . The end of prohibition is inevitable and the legalization is inevitable. We size to between 40 and 50 billion. That 40 billion to 50 billion. Are your investors locked up that long . They are. Leftnvestors come from the and the right. They are liberal progressive democrats. Room therethem in a wont be any issue other than this one. That prohibition should end for different reasons. They are united in that belief. They are looking for a social. Eturn believe that an exit will take place either when our companies go public or they are acquired by a fortune 500 company. There is a common united objective. Impossible to do businesses and banks and interact with them . Thinking in this industry is nearly impossible. Had we pitched our objectives in our Business Strategy to about 18 banks. We have been kicked out from two large banks very unceremoniously. It is a challenge. Not only is it a challenge for us but we dont do anything that is in violation of any local laws. It is also an issue for our employees. Employees, oneal as recently as two weeks ago who had his personal Checking Account closed by chase because he was receiving direct deposits from one of our subsidiaries, which is an information website that provides information to cannibal patients around the u. S. Terminatedgan chase his account and cited the reason as receiving money from medical marijuana practice . That is exactly right. Comfortable. E is talk to us about the biggest risk you to anticipate. The biggest risk we see is from the federal government. Bureaucrats and politicians are always the last one to accept change. We are now in a position where 58 of americans believe legalization should take place. There have been some very unfortunate comments in the past few days. We see rollback of legalization to be a difficult and other on the part of individual states. That was brendan kennedy, he is the ceo of private holding. He has been in this for a few years. Fact he has employees they are simply not going to do businesses with you anymore. That is a big deal. In order to keep those investors they have to be patient. Pulling off. Ts is they were smoking weed they will be more patient. They sayome back you get what you pay for, is that the case for super bowl advertisers . We willtalking of be talking with the editor of adage. Welcome back to live from bloomberg headquarters in new york, this is Market Makers. Got itsdent alone strategy. He will act without lawmakers if needed to get his agenda back on track. A quarters never had quite like this one. Record profit in north america. We will talk to the chief Financial Officer. What with the super bowl we without budweisers clydesdales . We will see whether advertisers really get their moneys worth. To a very special hour of Market Makers. Here ng with us right we thought davos was big. Chump change compared to what we have. The incomparable al hunt. State of the Union Address. Who better to have butter on Bloomberg News columnist, Political Capital guru harry truman used to say he wanted a one armed economist. He was sick of having his economic advisers say on the one hand and on the other hand. This will be a bit of a one hand and other hand. He will say the state of the union is getting better, but it has to get a lot better. Executive actions are small ball. You cannot do much there. He will lay down markers on income any quality, but also seek accommodation. I do not think it will be a defining speech. It is an important speech, nevertheless. How . This is one of the rare times that there is a semishared experience. Address 33nt gets to Million People on television and so many more online and social media. It does matter. There are very few Television Events that attract as big of an audience. Next to the super bowl. It is a real opportunity. Are that many people really paying attention . Are that many people setting themselves down in front of the television screen, tuning into social media, whatever the case may be because they really care that much about what the president has to say on this one night a year . They are interested, but they are not passionately concerned. I think year by year by year, more dispassionate. Did they used to be more . Half the audience that bill clinton had. We can get the twitter cliff notes . You did not have the cable outlets. ,ou did not also have facebook twitter. All of that. It has changed. It still is an opportunity. I do not think the president s job Approval Rating is going to change much. First, the country is polarized. I do not think you can change people with one speech. You can play a role in setting the agenda, setting the discussion. For the next couple of months. If we were to rewind the clock to the state of the union last year and in the state of the union before that, how much does the president s agenda did he get done . Had 41 proposals and last years state of the union. Two were passed. It was not exactly a banner year. I think he will do a little bit better this year. I think there is a chance that the immigration could pants. Im glad you mentioned that. Why . Because theyre in some movement on the other side of the aisle. We talk to eric cantor when we were in switzerland. Lets plan excerpt of this conversation. What the position of what cantor is taking. I have always said this. Any kind of Immigration Reform has got to be first, the implementation of law at the border, the implementation of the laws at the interior. I am a huge advocate for our kids act. If you have kids brought to our country by their parents unbeknownst to them, how in the world can you turn your back on them . At least we out to be start able to start their. That was House Majority leader of eric cantor on friday in switzerland. Didone thing that cantor not say there, but he kind of said as we pushed him for more on immigration is this idea that maybe republicans are not prepared to give Illegal Immigrants citizenship, but they might be prepared to give them some kind of noncitizen ship status. Noncitizenship status. That is a fascinating question. That is the fault line in this whole debate. Republicans will give it to kids. The socalled dreamers. And obama will not accept something that just gives legalization without any citizenship. The republicans will not go the full route the way the set is senate did. He have to find an in between. If you can tweak the system of the 10about half million undocumented have a pathway to citizenship, the democrats will buy off. Without doing that, it will be hard to the democrats support. John boehner and eric cantor at need democrat support. What can the president say to bridge the divide . Has he said anything that gives you a sense that he wants to bridge the divide . I think they really wanted bill. They want an accomplishment. Two out of 41 this year. If you get immigration this year, it would be difficult to say that it was not a major achievement. Lets say there is a bill. Who wins more . This is something the president has to have in mind. Pregunta. Citizens tend to vote more democratic. To the extent that the republicans have alienated the , iino and Asian Community think they alleviate a problem they have. It may be one of those winwin sere. Wins here. N win i think tone is really important. Al hunt, the optimist. Not saying it is going to get done. Dont forget, the right wing of the party dont do it, speaker banner. Boehner. Love to usedents ordinary americans to show off their policies and how those policies will affect these real people. President obama has highlighted dozens of workingclass americans. Julianna goldman decided to check in on some of these people to see how they have done after the spotlight moved on. Take a look. Six months after president obama signed the Affordable Care a home togned that talk about one new provision that would help them. Paul is a hemophiliac and his medical bills to prevent life threatening bleeds could reach 1 million per year. The issue of lifetime limits. That is not going to be the rule anymore. Today, paul jokes about being the poster child, but says he was happy to help. Disclosing my medical condition publicly made me feel confident that it was the right thing to do for the gaps the law was going to cover. He was worried he might have to rely on obamacare if he loses his job. When i looked on different exchanges, there are still a lot of unknowns. He is concerned he may not be able to see the same specialist or get the medications he is used to taking. A lot of providers might not even carry it because it is too expensive. Lets look at the housing record. During the crisis, nevada led the nation in foreclosures. That brought obama to the reno home in may of 20 well. The killers were underwater kellers were underwater. The savings kept them in their home in the house is now worth what they originally paid. But obama still has not gotten congress to expand the program to help more underwater families. What about the president s job record . In february 2009, he paid a visit to the unofficial unemployment capital of the u. S. Elkhart, indiana. Just four laid off months before, introduced the president. Too many people in our se way of life is at risk. The Unemployment Rate has dropped to 7. 6 in november. At 67, and has found work. Every morning he leaves his house at four clock a. M. , driving his pickup truck to the local Grocery Store to stock shelves. From there, he is off to another job to the local bakery. He ends each day at about 8 00 p. M. After cleaning a local Medical Clinic and office building. Even though the glory days are a thing of the past, he feels fortunate. I will say, i am living the dream. Five years ago, i cannot find a job, now i have three. Asked ed what he thought of the state of the union and he said it is fair. That really tells you why the president is zeroing in on this theme of of income inequality. Many of the people with whom i said boat said that they have seen the recovery helping big banks, corporate america, but they have not seen an increase in wages in their home. Highlighting personal stories its not something that is new for president obama. President s have been using this tool for years and years. Real people who are sitting in the first ladys box. House Speaker John Boehner is hosting people as well. To highlightories who stands to gain or benefit from the fights that are happening here in the nations capital. Good for you for holding the white house staff accountable and checking in on these people that they have used to showcase the president s policies over the years. Julianna goldman. Dont forget to tune in tonight for special coverage of the state of the Union Address right here on bloomberg television. Bloomberg. Com from your tablet, you can find this anywhere. We need to take a break from politics because we have breaking news on apple. Carl icahn says he sees this as a buying opportunity. Scarlet fu has more. Carl icahn is back in the mix . He just tweeted out that he bought 500 million more apple shares 500 million more apple shares. He has been agitating and pressing the ceo tim cook on increasing the companys buyback program. This tweet said that my buying seems to be going neck and neck with apples buyback program, but hope that they win that race. In terms of share price reaction, not much of one. Shares are still down on the day. The Company Reported sales of iphones of 51 million in the quarter yesterday that missed analyst estimates. The Sales Outlook was also a little bit lighter than what had been anticipated. Carl icahn, who has been pushing apple to buy back shares, has purchased another 500 million of apple shares. Thank you. We will have more on that throughout the hour. Everybody loves it when carl icahn is tweeting. Though i do not think it is carl himself. That is just my personal view. One we come back, the lineup is also for the super bowl. But the team lineup, we are talking about the advertisers who will be ponying up 4 million for each 32nd spot. That story is coming up. I will find out if al hunt likes the seahawks are the broncos. Welcome back. Absolutely Everybody Knows the super bowl is not just about the game, it is also about the advertising. For a whopping 4 million for 30 seconds of airtime that is it companies have to ask the question, is it worth it . We will bring in an expert in the ad world. Abby, we are talking about who is going to win, seahawks, broncos . Are the real winners the advertisers . It might be easier to predict who will win the Football Game than who will when the advertising game during the super bowl. There are very, very few events on television that can generate an audience nothing that generates an audience north of a hundred Million People all watching at the same time, watching live, and watching not just for the game, but also for the commercial break. Could one make an argument this is all just type . Hype . At the end of the day, i am not sure i watch the ads. Absolutely. If youre spending 4 million, you want to make sure that you are hyping the fact that these are the best ads of the year. You want to make sure people shush their friends during the game. Folks forget that this is a business. How do you determine just how does the industry decide that the 4 million was worth it . We do see advertisers trying to milk as much out of it as they can. Volkswagen was one of the first marketers to release their spots early in order to generate the buzz on social media. Genius move. We have seen a lot of marketers copy it. This is the first year we are seeing marketers release teaser spots, ads for the ads in the game. They are really going all out. How do we know this i watch the ads, i take breaks on extra points. I love the ads. I do not drink budweiser her. What do you drink . I junk wine. Drink wine. The coke ads have been terrific. Do they work . For all the money . That is the 4 million question this year. It is hard to determine. They do work for certain types of advertising. Ofdo work talk a lot advertisers who need to generate broad awareness all at once. There are great opportunities. You do not get anything else like that today on television. They work for some of these big advertisers who owned the game and become synonymous with it. Budweiser, for example. The clydesdales. You want the ads to stand out and be entertaining and you want people to love them. You also in want people to associate them with your product. How do you create an ad that does both . You have this fabulous ad from last year. Also, one of the most effective ads of the game. What add to people remember . Do they remember the brand that was being marketed . That is how you going to do terminate whether the ad was successful . By the highly unscientific subjective responses . There really is not a way for budweiser to know. Whether the ad generate additional sales. To isolated to that specific ad at that specific moment in time. To do see is the opportunity use this big game to launch a new campaign, that sort of thing. And you look back into it some modeling it is hard to isolated. To the ad agencies jack up what they charge . These are highly produced ads. That was not cheap, i guarantee you. It was not cheap to produce. But those ad agencies, do they check their rates twice as much knowing and a super bowl time . They better not. Budweiser is a client all your long. They are still very expensive to produce. The 4 million is just the price of entry. Is budweiser stuck at this point . They know that they will have to drop the dough. If they are not there, it is almost much worse than spending the money and not generating the additional sales. If they are not there, the competitor will be there. I remember a few years ago, spot i think pepsi dropped out one year. Suddenly, the most prime real estate in the game that first spot right after kickoff was up for grabs. Hyundai snuck into that spot and launched their Quality Assurance program. The super bowl was the platform from which they launched a campaign of a program that really fueled hyundai to some really incredible sales. Let me ask you a tangential question. Is a marketing, dream or a marketing nightmare . A marketing dream. Absolutely. He is clever. He knows exactly what he is doing. I love him. Me to. Peyton manning versus richard sherman, what a great storyline. He is suddenly on everybodys list. How often do we end up talking about a defensive back . In pop culture and in marketing . How about social media . Look at what oreo did. They spent no money but got all the bang. Is there an argument to be made on social media . Oreo was in the game last year, for the first time. They did spend a significant amount to be in the game. The thing everybody remembers was not the game or the ad in the game, but the tweets. It was retweeted about 16,000 you when they tweeted could still done in the dark. Nk in the dark. How do we respond more quickly to events that are happening in your realtime. . They set themselves up to do this in big event select the super bowl. We will be right back with more. Thank you for joining us. This woman knows ads. 32 years and counting. That is a long fords f series vehicle has been the best selling vehicle in the united states. Strategy for Immigration Reform. Some conservatives are saying do not do it. We will be speaking with some of the top ranking republicans in the house. Live from bloomberg headquarters in new york, this is Market Makers. Welcome back. Tonight is the state of the union. It is like washingtons super bowl. We are psyched to have al hunt your. Here. Lets talk about Chris Christie for a moment. Hillary clinton. They will be watching. But seven look ahead. What do you make of the current Chris Christie situation . People we sawess stand up for him work in druckenmiller he has been hurt, badly hurt. What his great appeal was that he can win. He was a guy who was authentic and he can win. Use of the poll today down 10 points. I am not sure if i know of actual wrongdoing. It is politics as usual in new jersey. Why do you say it is going to go on . You have a democratic legislature. They wanted to go on. It drags out. I think it has clearly been hurt. Is it irreparable . No. But is more it is more than just a crossing blow. Is it possible that he might find himself in a jamie dimon like situation . Where it becomes so over the top and apparently political the people begin to feel sorry for the guy and think that he is civic them of some kind of political persecution . That happened to bill clinton if you remember. A much better analogy. I think it will be hard. He looked like a bully. The problem you had anyway, even before all this, does jersey travel to the midwest . I sure hope so. Sure the style will work in wisconsin or in minnesota. I think jersey is universal. [laughter] no, it does not even make it to new york. Lets let politics alone for a moment. We need to talk about automakers. The comeback continues for ford. 50e the credit to the f1 pickup and the ford focus. The cfo with us from dearborn, michigan. Thank you for taking time out for bloomberg television. Ford said this morning, reiterating the cost of bringing up 23 new models is going to eat into earnings. By how much . To his, what we guided profits of 7 billion or 8 billion that would compare with a . 6 billion that we billionn 2013 8. 6 that we arent earned in 2013. That expensive to rollout a new models that it would cut your profits by a fifth . You are at the lowend of the range. Have possible because we got so many different products that we are launching this year. We are tripling the number of launches in north america. Importantly, it includes the allnew f series. They can have that effect. We will have 13 changeover down weeks at our dearborn and kansas city plants as we prepare for the launch in the Fourth Quarter this year. What happens then . It sets us up for more growth in 2015. Getting is what i was too. What happens when those costs begin to roll off . Do you recover all of the lost earnings . We expect, as we go out of 2014, we view it as a Building Block year, into 2015, that it is setting us up for greater financial results, but also greater topline growth. Not just in north america, but around the world. 0. Lets talk about the f150 you have made a Huge Investment in aluminum. Hopeful that buyers will like it. It has a lot to do with gasoline prices. If you prices remain soft, will your buyers be prepared to step up and offset the development and materials cost . 150 to beect the f very competitive in terms of cost to buyers once we introduce that. It will offer greater capability , it is smarter, it is tougher. Absolutely we expect that consumers will respond positively. It is not about aluminum, it is about a truck that is far superior to the one we have today which is the leader in the segment. We are very confident that we will see a positive result from consumers. I want to ask you about lincoln. Why does it seem as though that brand revitalization is taking so long to gain traction . Because it takes a long time when you are building a brand. It can take two or three product cycles to do it right in terms of building a great foundation, product, brand dna, communications, and so forth. We have done a lot of of research looking at others who are successful today, looking at the journeys they have been on. We are applying that to the journey were on with lincoln. It is not a one or twoyear journey. It is going to be a 1, 2, or three product cycle journey. We feel positive as we launch later this year into china. One must question. Alan mulally recently put speculation to rest that he might leave for microsoft. Im sure that feels good. You think there is a chance that he stays past the end of the year . I think alan has been very clear in terms of what his plans are. I would not have anything to add to that. Thank you very much. The chief Financial Officer of ford motor company. Thank you, bob, for your time. , we will talkbama about him next. He said he will bypass congress if necessary to bypass push his agenda. We will be speaking with the chairman of the republican policy committee. And we are joined by the one, the only al hunt. We are talking about the state of the union. The president of the nation will address all of us this evening. We want to welcome congressman james lankford, a republican from oklahoma. He is planning a run for the u. S. Senate this year. Congressman, thank you for taking time out. What could the president say this evening that would isourage you that he prepared to bridge the divide between republicans and democrats and get something done on an issue like immigration . What i am concerned is is that he is going to step in and say i have got a phone, a pen he is going to say i am going to skip congress, skip the constitutional structure. He could say, we disagree on a lot of things. You to list out a hundred issues. There are probably 40 of them we do agree on. What do we just work on those 40 rather than yelling at each other on the 60 things we disagree on . We still have a lot of issues with high school visas. The president continues to step in and say we will only do the things we agree on if you do some of the things that you do not like that i do. I dont think we will get there. President ppens if the does what you fear he is going to do, which is outlined steps through which you might take an end run around congress on some issues . What does that do to the climate of partnership or lack thereof in washington . It continues to diminish his leadership. It says i am playing to my base politically. We are at a day and a time right now, fiscally, economically, the growth of the nation, job development, wages, all of those things the whole nation is on tod, saying im not going invest more or advance more because i do not know what the president is going to do, what changes he is going to make, what he is going to do through executive orders. That instability is bad for business, bad for governments for the future, it is better for where we are had headed as a presidency. We were designed to have a stable economy and a stable government. The federal government had a limited role. That is not so anymore. If he continues to press into that, it further destabilizes our economy. Al hunt here. Are you on board with the leadership come with john boehner and others, on immigration were you would create a pathway to citizenship for the socalled dreamers and legalization for all of the other alt. Undocumented . Whatam waiting to see speaker boehners proposal is. He is scheduled to bring a proposal to the congress this week. We have heard different comments. None of us have seen the proposal, even at the leadership table. I look forward to taking a look at it. I think we should lean into Immigration Reform. This is an issue that has gone on 30 years unresolved. It is about time to resolve it. What happens if you do support Something Like what al outlined . If you were to run for tom coburns seat in the senate, would you not expose yourself to attack further up on the right that youre soft on immigration . This idea that if it is not citizenship, you are giving undocumenteds an opportunity to stay in america . That is the nature of every republican primary. Every primary is about who is the most conservative and who is pushing each other back and forth. I have been one to step out and say we have got to lead on immigration. Im not for amnesty. I do not think it is the right path. I do not think it honors the people who have gone through the right path. Im not going to step on 11 Million People who are here and say, all of your out. That is not right. That is not who we are either. There is a rule of law that should be honored. We have got to find a process to be able to establish that. Lets talk debt ceiling. What is your response to treasury secretary jack lew . Lew set things out there all the time. He has given a date that we already know. He has talked about extraordinary measures. This is one of the major ax specs we will push on during the actual conference itself. The Republican Leadership is putting this aside for this week. We cannot just raise the debt ceiling without also talking about a plan of how do we get out of debt . If this is just about give us more money and we will continue to spend it and there is no plan, that is not going to help our economy. We have got to have a reasonable plan. You cannot get there in a year, but you can in several years. I am pushing for reasonable ways to get out of the debt ceiling fight. You ran as a conservative. You have voted conservatively. The four you got to congress, you were in the Southern Baptist leadership position. And yet, already, in your home state of oklahoma, people are saying that he is really not a true conservative. Wasnt that Say Something about the fringe element of the Republican Party that is bigger than one might suspect . You have a group of people that have a very loud microphone. They are putting the word out there. That is not the bulk of all of oklahomans by far. Oklahoma is a very conservative state. I am a very conservative person. There are some within the Republican Party that want a harsher tone. That is not who i am. Most of our arguments are not about policy, they are about tempo and tone. They want to do things faster. I would like to do things faster. I would rather get a plan and have steps to get to that plan to start executing that plan than rather trying to get it all at once. Some of these issues are big. We are dealing with a senate that completely disagrees with us and a white house that completely disagrees with us. We need steps to make progress. Bee tone my tone will more reserved. I do not think i have to yell at someone to tell them i am a conservative. , when iteing said comes to the republican primaries for the senate seat in oklahoma, you are just going to stick with what you believe. You are telling us that you are not going to be dragged in any way for the right, no matter how loud and tell this role the attacks get from what al just described as a fringe element of the Republican Party . What i am going to do is be who i am. I came as one person three years ago to congress. I plan to leave as that same person whenever that is they got asks me to leave. I am going to stay that same person i have always been. This house and the senate need leadership, not some and yelling louder than someone else. We have got to resolve those issues based on the facts and based on ideas. I am very concerned when conservatives are defined by volume, rather than ideas. Conservative principles or set of principles that will help every family and every place, every ethnicity, rich poor, whatever it may be. The principals matter. It does not matter the volume that are yelled as principles. At the principals do work, i did not have to yell. I can actually get to work and we will actually win this. One step at a time. What did you think of your neighboring state arizona where the Republican State Committee censured john mccain for being too liberal on issues like immigration . Every state committee is going to do it. Arizona is a little farther to the west. We have a little new mexico in the way. It is a big issue. Every party is going to look at their own people. Every group is going to be able to a valuate what they agree or disagree with. The big issue at the end of the day is elections and leadership. Want to come into leadership, once you actually engage on what is happening here in washington dc, you can choose to listen to every single voice and choose to follow one or the other or you can say, this is what i was elected to do, this is why represent, this is what i will go after try to fix. There was a big difference between trying to solve problems. A lot of the conversation here in washington dc is about talking about the problems instead of solving it. We need to find common ground. We need to find an issue i disagree with this, you disagree with this, lets do something rather than just sit here and yell at each other and did nothing. Thank you very much for your time, congressman. Cumbersome and james lankford, representative from oklahoma, running for tom coburns seat in oklahoma senate. Insisting he will not be dragged further to the right or into a shouting match. I am not familiar at being effective without shouting. New jersey. [laughter] how much do you buy what he just said . I think he represents the bona fide conservatives, as opposed to what i call the french. Can bona fide conservative when . He can, but he will have a hard time. Will be a formidable candidate out there. His background is so conservative. I mean, he was with the Southern Baptist is that because it is such a conservative state . It is that. Tom coburn, the fellow he is trying to replace, is a devout conservative who has shown maverick tendencies and been willing to break with conservative orthodoxy. That could work to the detriment of langford lankford. Coburn came in and proved himself to be a bit more for privatized. Lankford andat think he will be the same. They doubt he will hold the line. And yet senator coburn is enormously popular in oklahoma. It hurts you in the primary, but it helps you in the general. I have to get your thoughts. Tom perkins came out with aggressive thoughts this weekend. Comparing income 80 quality to the holocaust. What is your take . Politicians are people in public life. People should not mention or draw analogies to the holocaust or slavery. It is a guaranteed loser. It was a dumb comment. Perkinsan anyone tom is a legend in Silicon Valley. He is a capable man. He is a legend again. After what Steve Schwarzman went to with his comparisons, how could anybody be so blind to this . It is extraordinary. It was not like it was a spontaneous pop off. This was a letter. I gather it was carefully considered. It shows he is totally out of touch. Is it an argument . I dont think you can group them all together. There are some in the 1 warren buffett, michael bloomberg. A lot of people consider it to be a highly hypocritical conversation because, yes, it is true that the people on the far end of the 1 can do the most about income inequality, but just talking about it does not a whole lot done. It is bad for business and economic climate. Federal reserve chairmeb have been talking about income inequality. It is an economic and Business Climate erie it sitting in d. C. , did you think it was hypocritical in davivos . I was just so mesmerized by your performance over there. [applause] you can come back any time. You need to tune in tonight for our special coverage of the state of the Union Address right here on bloomberg television. Up, and Options Strategy for general electric. Bloomberg goes on the markets. That will do it for today for Market Makers. Greg fleming will be here tomorrow. Greg needed a piece of the action. The hour. T is 56 past bloomberg tv is taking you on the markets. Here is olivia sterns. We are diving straight into derivatives. It is time for options inside. Were looking at a strategy for ge. Beenng me now is alan not knuckman. Why are you bullish on ge . For distressng stocks. The dow has been done 4 . It is a big, big boy. The index has been down. The ge stock has been down 11 . 11 in less than a month. That is a huge dip. From a risk, reward standpoint you can look for to hold on a weekly basis. Thehe main reason for selloff is because after the earnings came out, we heard from jeff and while imlet and he failed to meet the forecast of profit margin and i drove the selloff. Is that correct . Think was technically driven. The stock it traded between 20 and wendy five a yearanda half. 25 for a yearandahalf. I want to lean on the 25. People are more concerned about global volatility or market volatility, ge is not something that will go away. It is a big multinational here. It is a conservative play, but it gets back up to the 28 level again, it targets another three dollars of that. Why not just buy the stock . Why do you think you will get a better payday from playing the risk reward were a shoe . Ratio . It is the january 2000 1620 june oruary 16 2016 20 call. Your maximum risk is the 600 you pay for the option. You have almost 24 years for ge to move up . 40 or more to be profitable. Full years for ge to move up . 40 or more to be profitable. It is going to give you a much truer payoff. Ift is going to happen is there is only a modest move in ge over the next two years, it will still be profitable. If you buy the money option, you were subjected to time decay and they could all evaporate if it is not above your strike point out expiration. Why not buy a call that is closer to the strike . That is part of it. I want to have a balance of risk and reward. If it moves up to the 31 level, this option should gain an double and tell you. I do not have to risk a whole lot by buying at 600. Risking 300 dollars with two years of time, good things to happen, and a company that is in a strong overall trend and i believe in the macro environment being bullish for the longterm. For january 20 call on ge. Thank you for joining us. It is Alan Knuckman joining us. The s p rallying after selling off for the past three days. It fell about 3. 5 over the past three days. We got some worse than expected durable goods. We also did get some Consumer Confidence numbers this morning coming in a little bit better than expected. We will be back again on the markets and 30 my 30 minutes. Lunch money is up next. Welcome to lunch money where we tied together the biggest stories in news and business. I am adam johnson. Watchesfare and rolex is a bloomberg exclusive. Wait until you hear it. There is one company that knocked the cover off the ball for investors and then ran for the exits. We will tell you which it is. In media, we have the triple play, comcast,