Matt i did not think about the kind of food. Olivia it got down to the final day without being late. Are you surprised . Matt i am surprised. Good job, 3g. Jello a deal but together by Warren Buffett and 3g. A merger between kraft foods and heinz, creating the thirdlargest food and Beverage Company in north america. Two years ago buffett and 3g acquired heinz. Kraft shareholders will get 49 of the stock plus a special dividend. The craft chairman talked about the advantages. This combination will generate substantial synergies which we currently expect to be about 1. 5 billion, as well as many revenue expansion opportunities domestically and abroad. Matt the heinz chairman talking about synergies. Shares of craft soaring as much as 35 . The company is getting bought. Two americans on the german plane that crashed in the1 french alps5. Germanwings says most of the 150 on board were german or spanish. On a flight from arson limited the plane was on a flight from barcelona to dusseldorf. Officials are saying the voice recorder is damage but should be usable. Durable goods orders unexpectedly fell in february for the third time in four months. Orders for goods fell 1. 4 , the previous month was revised lower. Demand for American Goods may be softening as the Global Economy slows down and a strong dollar makes them are expensive. Time is still running out for greece. The country has until monday to show how it will follow through on reform commitments if euros and finance ministers agree with the plan, greece would have access to 1 billion to help its Banking System. Three Officials Say greece has to convince the year is unable to meet it will meet demands for an economic overhaul. In yemen, the government is collapsing. The president has fled. Rebels have offered 100 thousand dollars for his capture and have captured the defense minister. They have taken an airbase where u. S. Troops advised yemen in its fight against al qaeda. Yemen has asked for the United Nations to intervene. Republican president ial candidate ted cruz took a few shots at his wifes employer. Heidi cruz is on unpaid leave from goldman sachs. Mark halperin asked cruz if he thought goldman was a positive or negative force on society. Cruz said some of both and partially blamed washington. Ted cruz my criticism with washington is they engage in crony capitalism, they give favors. I have been an opponent of crony capitalism. Taking on leaders in both parties. Big business if they are building a better mousetrap, great. It should not be government favoring. Matt now that his wife has taken leave, the cruz family will lose its companyprovided health insurance. He told cnn he expects to get coverage through obamacare. Olivia more on the megamerger. Can shea joins us from new jersey. Also with us, julie hyman looking at some of the details. 3g, the brazilian buyout kings, have a reputation for slashing costs. Are they going to cut fat. Matt we are going to have fun with puns. Olivia is it an american empire . Or about slashing costs. Julie Warren Buffett likes to eat processed foods. It appears to be, lipservice to the idea that it is both. The companies will be able to have 1. 5 billion in synergies, the corporatespeak they like to use. On the conference call, analysts were pressing them to say are these synergies just a regular kind of costcutting cutting you would get when you combine two Food Companies, backoffice operation and etc. Or is this 3g capital magic . They sort of hedged on that. They did not directly answer the question. Not clear what the merged company will look like. At the same time, they emphasized that this will be a company that will have growth. That will look internationally and particular to get that growth. When craft and when when kraft and mondelez split up, there was an agreement that kraft would not sell certain products in a certain market for a certain period of time. The new company is talking about aggressively expanding with kraftbranded products into the International Markets. Thats going to be an area of growth. There might be some questions about exactly how much that growth is olivia it is exciting, bringing the lead up to the emerging bringing velveeta cheese to the emerging markets. Ken, can 3g turn the company around . Or is this in a decline because nobody wants packaged foods, they went on the want almond milk . Ken this is cost cutting the 3g knowhow of supply chain management, and international growth. I would not dismiss the highly processed foods as being completely a lost opportunity. They generate about 80 of a supermarkets sales. They generate pretty good cash flows, particularly if you are a leader like kraft. Some of the backdrop is that emanate is alive and well some of the backdrop is that m a is alive and well because of slow growth and because consumers are gravitating towards healthy food. That is likely to continue in a low Interest Rate environment. Matt from our ivory tower in manhattan. Obviously and pronounce in america eats kraft macaroni and cheese as well as jello. Olivia sales have been declining. Matt go into any american kitchen and you will see kraft macaroni and cheese. In ohio, montana alabama and everywhere else besides new york and los angeles. Julie enough people are not buying it that you are seeing in the sales numbers. It brings up the question for heinz and 3g has it been seeing growth since 3g took the Company Private . That is something we are not sure about. It has touted success with expanding margins and cutting costs. It is not clear if 3g has managed to grow sales with matt maybe we will find out if they actually take this new company public. Ken, are you betting that kraft heinz will sell shares and go on the New York Stock Exchange . Ken maybe give it time to see if they can come through with a lot of the synergies they are promising. Most of the Analyst Community was looking at the top line, that is the challenge among growing Food Companies. Matt 28 billion is the revenue. They want to invest 10 billion into the company. Olivia last year, revenue was flat and earnings were down 62 . We do not know if it is going to be a public company, right . Ken it is indirectly as a part of Berkshire Hathaway. We can follow along, the company does file public 10ks. Hard to say whether it will issue stock. Julie it is actually quite confusing. Kraft shareholders will own 49 of the combined entity, 3g and Berkshire Hathaway will on 51 . Sounds like it will be some kind of reverse ipo for heinz through kraft, effectively. It does not explicitly say that. If you are a current shareholder in greece kraft in kraft and you will own 49 of kraftheinz you have to assume the company will be publicly owned. Nothing that has been said today has explicitly laid out that that is true or how that would work. Olivia im fascinated by the brazilian billionaire behind 3g. If you look at what they have done, burger king buying tim hortons. No suggested that heinz and kraft are going across the border. What they had done with heinz so far, they have cut 1000 out of 22,000 jobs and closed a couple plants. Does look like that is there m. M. Their m. O. Ed hammond said theres an expression at 3g people that are poor, smart and driven. They ruthlessly cut costs. Matt wow. I guess they are going to merge the headquarters. They are keeping two separate headquarters. Julie for now they will have headquarters in chicago and pittsburgh. When you point at how 3g does business, one of the analysts said they are telling the scale of the combined heinzkraft. And analyst said you had scale with kraft and mondelez, why is this better . John cahill, current ceo of kraft who will be an executive at the combined company indirectly said it is because, whether you are good at doing scale. The implication was 3g is better at scalet than the management at kraftmondelez. Olivia hes a recent arrival at kraft he has a background in private equity. That increased speculation that kraft would be on the auction block. Matt Warren Buffett was critical of kraft at the time. Olivia is campbells soup next . Ken i cannot answer that. These companies that produce shelfstaple foods need to watch the bottom line. There are a lot of people that think they can do better. Matt thanks so much, ken shea and julie hyman. Covering this olivia do your feed your children velveeta . Julie no. Matt why would you even ask . This is organic. Matt i think most of american families, i would guess that the lions share has a box of kraft macaroni cheese on the shelf. If you grew up in new york on park avenue, you eat annies or your blue soup kitchen. Julie tell him what kind of macaroni and cheese you have. Matt a terrible start to 2015 for American Express. Cancer not the ceo can express tough questions. Olivia they pay matt to see new cars and talk about them. Fords chief marketing officer talks about the commercials with matthew mcconaughey. Olivia welcome. Back to Market Makers. Germany says there is no evidence of foul play in the crash in the french alps. The investigation into the crash of the Germanwings Airbus has just begun. German interior Ministry Says there are no signs that a third party was involved. All 150 people on board were killed, two americans were among the passengers. The record terrain is making Recovery Efforts difficult. Another sign of strength in the Real Estate Market. Mortgage applications rising by 9. 5 last week after dropping the week before. Markets rates are at historic lows. Yesterday, new home sales hit a sevenyear high. A new twist in the most bitter rivalry in pro football. The new york jets have accused the patriots of tampering after the patriots owner said he would have loved to keep the quarterback who signed with the jets. Next falls games should be interesting. Still to come on Market Makers, shares of kraft pop at the open after a deal with heinz. We will see if it is having an impact on the market. Ford is rolling out new performance models. The hottest city for luxury hotels. Money is no object in london. Matt American Express parting ways with costco, which accounts for one in every 10 amex cards. A disappointing 20 14 profit. Cut thousands of jobs and entered a partnership with jetblue. Shares down 10 . Shareholders have a lot to talk about with ken chenault today. Elizabeth covers American Express and is with us from washington. Thanks for joining us. Do you think ken has a master plan . Is there going to be an answer to the horrible headlines . Elizabeth we will see. Today important for American Express and shareholders. The company has had a string of bad news recently. Ending a Big Partnership with costco and jetblue. They lost an antitrust case that could have consequences on their Business Model long term. Today is the day investors want to hear specifics. They want to hear how the company is going to overcome some recent setbacks specifically. They want some reassurance that the string of bad news is not indicative or a sign of bigger problems at the company. Olivia very nice color. Losing costco as such a stake music and as such a significant client, does that look like it will be a oneoff or does that signal bigger problems with other clients . Elizabeth one thing that surprised a lot of people about costco is how big a partnership that is for American Express. And what a big chunk of business that is. 20 of loans, 8 of spending, one out of every 10 cars at American Express is a costco card. The fact that that could disappear has rattled a lot of investors. It does speak to Competitive Pressures American Express is facing. Consumers are increasingly, they want the best rewards they can get on a credit card. That means banks are being very aggressive about pursuing relationships like the one with cosco. Matt it has got to concern shareholders as well that ken chenault and amex were not able to keep that relationship alive. Isnt Charlie Munger on the board of costco and one of the biggest shareholders in Berkshire Hathaway of amex . Elizabeth it has been described as a divorce. American express has said they were not able to reach costco as well, they were not able to reach economic terms. Some investors had said that that is a sign that American Express walked away from a deal that was not a good one for them. Others are raising questions, is this a bigger problem about their ability to retain other partnerships . That is something, theyre called Brand Strategy and the way in which they are going to approach partnerships moving forward, it is something investors want to hear about. Olivia ken chenault the ceo and chairman has been in place for a long time. Since the credential crisis since the financial crisis. Is his job safe . Elizabeth i have not heard anything as extreme as that. Today is an important date. This has really rattled particularly the loss of cost coke has costco has rattled the community. They are eager to hear more about how the company will offset this and where they see longterm opportunity for growth. Olivia the Business Model of American Express does take a bit of nerve, they do a similar thing to visa and Master Charge but insist on charging retailers a higher cut. In return, if they are now giving customers fewer benefits that has got to come under pressure. Elizabeth it is something the company has said is an important focus of bears expanding Merchant Acceptance in the u. S. They do typically charge a higher rate than the zen master card they are accepted at fewer places then visa and mastercard and are accepted at fewer places. They launched a program to get Small Businesses to accept American Express cards. That is something investors are going to be listened to. They want updates. Matt thanks for joining us. Talking about American Express. That meeting later on. Olivia a lovely shade of red. Thank you. Dont go away, Market Makers returns in two. Matt coming up, the rise of the 800 hotel room. Travelers demand luxury services. Olivia ford is in the fast lane. Matt checked out a new car. We will talk with fords chief marketing officer. Matt mechanical torque vectoring that has adjustable dampers from inside the car. Olivia i do not know what any of those things are. He is turning around lincoln with matthew mcconaughey. Matt stay with us. Matt welcome to Market Makers, i am matt miller and she is olivia sterns. Olivia in for erik and stephanie. Weekly crude inventory, lets get to scarlet fu. Scarlet a bigger than expected build in crude inventory. Up to our eyeballs in oil domestically. 8. 17 Million Barrels added in the past week. The consensus was for 4. 9 million. Larger than anticipated. In terms of the price on crude oil we are higher, we remain higher. About the 48 level. Taking a leg lower, paring some advances following the build of 8. 1 7 million in the week ending in march 20. The consensus was 4. 9 and the prior week we saw a build of 9. 6 million. The supply continues to accumulate. Matt thank you very much. I want to kick it off with the top stories. Warren buffett calls it his kind of transaction, putting together two worldclass organizations, brazilian buyout firm 3g has agreed to acquire kraft foods in partnership with Berkshire Hathaway. The companies will be merged, kraft shareholders receive a percentage of stock. Gamco cause of a smart deal. Mario mbuffett has not swallowed any dumb pills. Assume they have a good cash flow methodology and understand how to create value. Matt 3g and Warren Buffett are no stranger, they teamed up to buy heinz three years ago. This may be a sign that the slowdown in Global Growth is hurting american manufacturers orders for durable goods dropped. Bookings for products meant to last at least three years fell 1. 3 percent. Nonmilitary goods fell 46 month in a row. Mark zuckerberg hopes that Software Developers will buy what he is selling at facebook. Zuckerberg will rollout tools to help app makers reach the social network audience. Those apps give facebook more real estate for its more than one million advertisers. Zuckerberg previewed the conference on his facebook page. Mark zuckerberg we just finished practicing for tomorrow. Putting the place together. We will have 2500 developers here. Something like 35,000 developers are watching is online. Im really excited to talk about all the new things that we have been building to serve our community and build new mobile experiences to help you share and stay connected with the people you love and care about. Tune in tomorrow. Matt even a billionaire needs a good soundman. The name comes from the idea of spending 8 hours on passion products outside of your normal workday. A lineals millenials have started buying homes rising rents. Millenials made up 32 of home buyers last year, up from 28 in 2012. Apartment rents rose 5 and the Fourth Quarter from a year earlier. One of the few things jack niccklaus hes been awarded the president ial medal of freedom. Hes from ohio. Olivia wow. Still to come on Market Makers, ford in focus. Mat went to check out the new ford car we talk about a strategy with the chief marketing officer. Olivia two hours into the trading day. Scarlet fu is in the newsroom with a look at the movers scarlet durable goods disappointing. Transportation, capital goods nondefense orders versus shipments came in behind expectations. They were lighter than what economists anticipated. Seeing a retreat in u. S. Stock indexes. The nasdaq having its worst day in two weeks, 80 points away from matching its record highs. Moving in the opposite direction. The dollar weaker, 96. 89 for the dxy index, resulting in a higher oil price, up. 7 even with the higher than expected build in crude oil inventory. Tesla i know you cover every move in this. A downgrade from clsa. Andrews, the analyst, says there is nearterm risk because of lower margins. Tesla is positive over the longer term but they have downgraded the stock to an underperform with a price tag of 220. Merck trading at its highest level since early february on plans to buy back 10 billion in shares. The secondbest dow performer. We talked about how share buybacks has helped drive the bull market. That is the case for a company like merck. Olivia scarlet fu chief rockets correspondent. Matt tesla, the forward pe is 275. For ford cruz 10. There is the difference between how investors view this companies. I got a look at a ford the focus rs. The only one in this country, one of 12 Performance Vehicles ford is rolling out. Steve odell is fords executive Vice President of Global Marketing sales. 4 unveiled so far, the mustang gt350 ford gt, the new f150 raptor. Is this a push to change the companys image . Steve youve seen the bandwidth of the products ford can offer, from a fiesta in south america up to the 750. Matt i was looking at the truck coming out in may. Produced in ohio with a diesel engine. A huge range. You seem to be focused on the sporting aspect of the performance aspect why . Steve ford has a history of sporting. The company ignited by henry winning the race years ago. It is part of our dna. You were interested in the drift mode. Matt it can change the damping regulation, mechanical torque vectoring. Steve it allows you to over steer. Olivia is this a car for a ford fanatic like matt or does this draw new customers . Steve both. You can drive the rs on the road, you can take it on the track. The gt is for an enthusiast fairly limited production, 250 a year. We find it brings in new buyers a lot of luxury buyers consider it a luxury car. Matt ford wanted to buy ferrari way back when, when the deal fell through, they said we will make a car that can beat them. Ive heard ferrari is up for sale. Steve we are fine with our plan, thank you. Olivia talk about advertising how will fords budget look different in five years in the terms of online snapchat. Steve digital has grown. 15 years ago our spent in digital was below 10 around the world. It is closer to 45 now. You can spend on digital and a can be a last message. It has to be relevant. Communication has moved from interruption to involvement. We want to give people messages they want to share. In 4 or five years time we will stop talking about the connected customer because it will be like electricity, what everybody does. Olivia what is the most effective for Digital Engagement . Steve nothing is successful must you do it well. Digital is clearly the most effective if people pick it up olivia what is that . Matt more effective than tv . We have seen the lincoln ads, we really appreciate matthew mcconaughey. We were thinking as far as ford i only think about interacting with ford digitally or in magazines, print ads. I do not think about seeing ford commercials on television. Steve tv is important in markets like india. That is strong digital as well. In spain it skews heavily towards tv. A lot depends on the way to customers consume media. Olivia assuming you do the campaigns well, what is the most effective . Steve its a mix. I do not think you can pendulum away. Digital is growing. Olivia lets talk about matthew mcconaughey, the true detectivestyle lincoln commercials. Did you call what he houston . Woody harrelson . Steve we are delighted with what he is doing. Olivia what kind of turnaround have you seen in lincoln . Steve last year we saw the brand grow 16 in the u. S. , this year 12 , that is driven by new products. In china, weve only got nine or 10 dealerships and we aim to have 25 by the end of the year. We had a good plan but a long sustainable plan. I do not believe you push luxury. People pull luxury because they want it. That will be driven by products and communication. Matt you are the global chief marketing officer. China has got to be a focus because it is growing quickly for ford and lincoln. How do you want to put forth you have a blank canvas. Steve we sell 1. 1 Million Units last year. Mark fields announced our sixth plant yesterday. It is the biggest market, 25 Million Units last year with a growth rate of 7 , erring towards 30 . We have the right product mix. Very relevant to the consumers. When we launched lincoln and china it is a very strong brand. It has really no history other than they like the americana with the lincoln brand. Matt i will bring this. Cult. Full circle. How important is racing . Is the gt part of a new racing strategy . Steve is that a question . Matt the gt is heading to steve we had not commented on where it is going. It is fabulous. Do you think we should go racing . Matt do you plan on stepping up your racing involvement . You are getting performanceoriented. Steve we have racing oliver the world the rs will help us. You need to take a car out. Matt i look forward to driving those vehicles. Steve odell, chief marketing officer for ford. Olivia critical car. President obama is speaking at the white house. Talking about the fifth anniversary of the Affordable Care act. Watch that Conference Live at bloomberg. Com. Time to bring you up to date. The German Airline says two americans were on board the plane that crashed in the french alps yesterday. Most of the 150 people on board were german. The Germanwings Airbus nobody survived. Recovery crews are back at the site of the crash. The mountain territory is making work difficult. Investigators are examining the cockpit voice recorder. Greece will have access to money earmarked to aid its Banking System if greece shows by monday how it will follow through on promised economic reforms. All this according to officials involved. They say the deadline will be a test of whether greece can convince peers it is ready to reform the economy. In yemen, rebels have the government on the run. The Prime Minister has fled his palace with a 100,000 bounty on his head. Rebels have captured the defense minister and say that an airbase used by u. S. Advisors for drone attacks against al qaeda is in their possession. Those are your top stories. In 10 minutes, betting big on business travel. We take you to a place that is doubling down. Mark zuckerberg tells software designers, i want apps. The mystery in the alps. Few answers in the tragic plane crash. Still to come on Market Makers, luxury in london, Hotel Operators betting big on upscale travelers. Why its worth 800 a night. Matt the best hotel in the world. Olivia its up there. You do not want to miss it. Olivia london has become a habit for fivestar accommodations. The mabon hotel group operates three of londons most renowned hotels. With north america represented 40 of guests, could the stronger dollar create bigger demand for luxury in london . Lets ask the ceo of the Maybourne Hotel group. Nice to be introduced to somebody affiliated with these fabulous hotels. Matt olivia and i both lived in london. These are the most Luxurious Hotels in the city. Olivia a ton of fivestar hotels in london. Is there not a glut . Isnt there a big enough global elite that can afford to pay 800 a night . Good morning and thank you. In answer to your question the demand for london was very robust. We have seen an increase in luxury supply and the ultra luxury sector, over 126 since 2010. We have been able to maintain robust occupancy throughout the period. The demand is strong, the supply growth is equally strong. But there is a desire to be in london. It is 17 Million People it is a very vibrant place to be. Olivia who are the clients . We went in saying 40 of your business is north american travelers. Where else in the world are they coming from . Tourists or business travelers . We have a slightly higher percentage of business travelers probably 60 40 . London is one of those cities that has demand for both. Cities like paris and other cities like that can drive high occupancy. We have worked over the past seven or eight years to have a diversified geographic race. 88 of our business comes from 4 areas north america is our strongest market. One thing you have to understand as in our Business Model the loyalty spans generations. We have 60 of our business from north america, which is repeat business. You are not responding to shortterm movements, you are building over time. Matt one of the most visible groups of wealthy people in london are russians and arabs. Is it tough right now . Obviously russia has its problems and is sort of pulling wealthy people back. The arab world is fueled by oil money, which is becoming more difficult to come by are getting cheaper and cheaper. That comes back to my earlier point. If you do not depend on one market people need to travel and be in london. They need to be there on business or because a lot of travel into europe starts in london and is even finishing in london. I was having a conversation about that recently. As long as you do not take the easy way forward and you focus on some of the longterm and you look at building loyalty if there is a movement in one market you can compensate in another. As i said, demand remains strong. The average length of stay has moved up slightly from 2. 5 night to. 6 nights. Olivia what about extended stay . The arab market, you get a time of wealthy middle eastern clients who come to london to spend the summer. How big a portion of your business is that . It is not a large part of our business. As i said, it is all about balance. I think the trends are changing. People are coming and staying. For shorter visits and coming more often. Something which has changed over the past two years or three years in particular, we are only booking 50 of our business in the month for the month. You are seeing increasingly shorter lead times. Olivia more last minute. It is more frequent. Longterm stays are less the case. More frequent trips matt the dollar may be has something to do with that. I was shocked that you can get a room for 800. Seems like a great deal. Olivia that is less than i thought. Are you losing sleep over airbnb . I stay focused on one thing every day and that is having people who want to come back to our hotels. Olivia is airbnb a threat to fivestar hotels . It is still early. It is not something right now which is a threat to us. Matt unless the royal family is putting their places on Airbnb Olivia we are not allowed to take a discount but we appreciate you coming on. Thank you very much. Olivia the ceo of maybourne group. Matt Market Makers is going to take a break. We will be back in two. From Upscale Hotels to upscale pizza. Talking about cpk with the ceo. Live from bloomberg headquarters in new york this is Market Makers with Erik Schatzker and stephanie ruhle. Matt Mark Zuckerberg makes his pitch. He wants to strengthen ties to the developers that may be bringing the secret from our advertisers. Olivia will Warren Buffett worked up a merger. Matt pizza for the upper crust. California Pizza Kitchen attempts to go upscale. We will hear from the ceo. Welcome to Market Makers. I matt miller. Olivia and im olivia sterns. Let us start with the bulletin of top business stories. Warren buffett causes this is type of transaction, putting together to worldclass organizations. Kraft foods will merge with heinz in a deal with together by buffett. Craft shareholders will receive a combination of stock and cash. Investigators hope a damaged black box can help solve the mystery of the german plane crash. French Officials Say the voice recorder is still usable. They hope it will help them learn why the german plane plunged 38,000 feet into the else. All 150 people on board were killed. The oil just its getting bigger. After rising for the 11th week in a row the amount of oil being pumped in the u. S. Rose also. More signs that the Real Estate Market is heating up. Mortgage applications rose 9. 5 last week. New home sales rose to a sevenyear high. This is good news for the ceo of homebuilder. We spoke they spoke to bloomberg tv and was upbeat. Overall, it is a positive trend. Everyone is excited about one months data. What is accurate is the trend has been very positive. It is picking up steam. It is the springtime and that is the big Housing Market time. In general, the trends are positive. Olivia Mortgage Rates keep on falling. The 30 year fixed fell below 3. 6 . Republican president ial candidate ted cruz bit the hand that used to feed his wife. Heidi cruises now on unpaid leave from goldman sachs. Cruz was asked if he thought goldman was a positive or negative force for society. He said it is one of both and partly blamed nisi d. C. Washington gives favors to wall street and big business and that is why i have been a big outspoken opponent taking on leaders of both parties. I think of big business is building a bigger mouse trap that is great but it shouldnt be government favored. Olivia the best part is now that his wife has formally left goldman sachs, that family will lose her Company Provided health insurance. He told cnn he now expects to get his coverage through obamacare. Afghanistans president is now on capitol hill speaking to congress. He met with president obama yesterday and the president agreed not to reduce the number of u. S. Troops in afghanistan for the rest of the year. They want the troops to stay there to help counter attack the taliban. Matt taking center stage today is zuckerberg kicking off a conference in san francisco. He will unveil the latest tools and products designed to inhale to enhance its apps. Cory johnson is there. Let us bring in elizabeth, the head of product and strategy at sprinkler. Welcome and thanks for joining us. Let us get corey to lay it out for us first of all. How is fate . Cory we dont know what zuckerberg will talk about exactly in about two hours here in san francisco. We expect a couple of things for him to focus on and chief among them are advertising technologies and the way they are creating ways for advertisers to realize whether at are working and how they are doing. That will be a critical focus. Perhaps a focus on video because facebook has had a lot of acquisitions and that has been in recent quarterly conference calls. The will a lot of discussion about Facebook Messenger. The news we got a week ago about payments going into messenger is the beginning of a lot of things where we will look at Facebook Messenger which has 5 million users getting lots of services and to entice developers to develop on that platform. Matt most people only use Facebook Messenger because they have to. Some people delete the app as soon as they read the messages. Olivia you are also we will not discuss your facebook using habits but i will ask elizabeth what tools do advertisers want to see . What are the tools brands want . Elizabeth we are seeing a lot of clients who are looking to speak to the customers creating positive experiences on platforms like facebook. Being able to have more reach with the court around new ad units and video. That is what we will hear about today and tomorrow. As well as turning messenger into more of a platform whether it is for regular engagement are at. Matt from the people under 40 is a getting a huge pickup . Most people i know who are admittedly closer to my age do not like to have to have a separate app or messenger. It is very annoying. We already have iphone messaging or whats at or whats app. Elizabeth that might be another thing they tackle is how does the messenger app relate. I expect we will hear about that. In regards to whether or not it is a painful experience, i think facebook has been a phenomenal job of linking the two applications. When you have facebook and messenger on your phone, it very easily lets you navigate back and forth. Matt remember when he had messages inside your facebook app . That was a great job of linking. Cory matt the big picture here is that what is happened to the telecommunication carriers whether it is orange or at t and verizon or china mobile is that users are not using text messaging as much as they have in the past. The strongest growth driver was sms messaging. That is in decline. We have seen a huge growth of the other messaging apps. Let us know snapchat and their. That is where the growth is in the real world and it is shrinking in the mass messaging. They want to get able to develop apps so it becomes more of a platform that people are doing their messaging and dont want to go away from it as they have from text messaging. Olivia one other thing is they are talking to content publishers about getting their content on the Facebook Messenger platform which is very significant. If you are the New York Times you have a Business Model that is discretion based that is substitution based so how you overlay that with facebook . Elizabeth that is another exciting opportunity they are bringing to the table. I do think we are going to see more focused on providing more opportunities for those publishers to get advertising dollars. The rule of thumb right now is to get people to stay on facebook. Unless they want to message matt then they will have to hop on the other app. Cory this content thing could be proved to be one of the dumbest things in the history of dumb moves of publishing. The risk here is turning over all the keys to the kingdom to facebook. The New York Times a National Geographic and bus speed publishers who depend on advertising revenue are at risk here if they turn to facebook and say make sure you pay is a little. Facebook will control the revenue fate. It is undetermined this risk when they turn over the keys of the kingdom to facebook. Olivia i agree with you. We will see what they come out with today. Matt it is great for facebook but it is bad for people giving the keys away to their own kingdom. Olivia they lose all the information about user habits and what they are doing on their site. This does look a bit like what snapchat has already done teaming up with everyone from cnn to the daily mail to bring their content onto their own platform. Cory again, the idea is have a place where people are bringing information so people will state on that site and on that at for a lot more time and on that app for a lot more time. Facebook generated billions of dollars in advertising revenue. They have made up in terms of volume. It will be interesting to see what they roll out and the discussion about what that means for the publishers and can the publishers have any control over the business. Olivia so nice seeing you, but it is a shame that we are not chatting with you. Matt that was huge. Elizabeth it was unbelievable. Meerkat is basically mobile streaming. You had you stream and justin tv but this is directly connected to your twitter account so once you start streaming it sends a tweet out from your account saying this person is Live Streaming as someone who is following you can click on a link and see what you are saying. Matt it is live only. They cannot go back and see it later. Elizabeth that will be an issue later because you have all these loose links in your profile and feed and they go nowhere. We have had several requests to integrate. Matt maybe this will be the next thing facebook spends a millions on and then cannibalize is it with their own app. Elizabeth someone might build it for messenger. Olivia you are like Hillary Clinton where you cant have more than one app. Matt she didnt know it was possible whereas i have eight messenger apps on my phone. Olivia thanks to cory johnson live there at the Facebook Event and thanks to elizabeth the global head of product and strategy at sprinkler. Still to come, matt and i are not going away quite yet. Matt we have 48 minutes. Olivia we are heading to the french alps to the scene of the tragic crash of the german wings airbus. Our correspondent will be joining us from the scene. Matt california Pizza Kitchen is elevating a milestone by changing its image or attempting that change. We will hear from the chains ceo. Matt time now to bring you uptodate on the top stories of the morning. It is a deal put together by Warren Buffett and a resilient buyout for buyout firm. They put together a Common Mission of kraft food and highs creating the thirdlargest food and Beverage Company in america. Kraft shareholders will get 39 of the stock in the new company plus a special tax dividend of 16. 50. This may be a sign that the glow down slow down in Economic Growth bookings for products fell 1. 4 . Orders for nonmilitary goods other than aircraft fell for the sixmonth and about. In connecticut where adam lanza lived, the home has been torn down. The bank that on the house give it to the city of newtown, connecticut, several months ago. Olivia two americans were on that plane that crashed in the alps yesterday. Nobody survived. The search and recovery operation is now focused on finding evidence on why the ring went down why the plane went down. One of 25 recorders has been found but it is badly damaged. We are joined now by hans. What have you learned over the last 12 hours or so . Any progress in the recovery effort . Hans a few moments ago, authorities said they had not found the second black box. That was a report on twitter claiming the second black box had been found. French authorities are shooting that down. What we have in the last 12 hours is greater clarity of just how disastrous the crash was. Weve seen reports and photos and overviews with that altitude. You see the pitch of the slope and the mountain and the difficulty of how hard it is to recover any evidence or bodies if they are available. Lawmakers and members of parliament flew over the site and described total devastation and what looked like burnt airplane pieces. That suggests the impact was quite fast and the velocity was high when the plane impacted the mountain. That is another reason and another cause for concern as to why there was no radio contact. What happened those eight minutes when that plane dropped from 38,000 feet to 5000 feet. Matt what are the theories you are hearing . This morning come on various media stations, i heard a lot of people talking about the fact that there could have been a lack of oxygen in the cabin. Hans that is a theory that is quite common and has gained currency in the german press over the last four to six hours. We dont know anything until we actually have the two black boxes intact with all their data. The theory is a sudden loss of cabin pressure in the cockpit explains the potential that they did not responded to what we now know are three efforts are french air control to contact the cockpit. French air control initially is the one that sees the plane making an unauthorized dissent. They tried to contact the cockpit three times but there was radio silence. That is the theory that there was a potential sudden loss of pressure or blown windshield in the airplane. I caution on all of this that these are theories. These are theories coming from people who know a fair amount of aviation and air disasters but we dont know anything until we get the two black boxes and then we might not even know. If a good try now is on gathering the second black box and trying to piece together bits of the airplane and recovering the bodies so they can be returned to their loved ones. Olivia i know chancellor merkel and the french Prime Minister gathered near the crash site. Tell us about the International Cooperation taking place on the ground. Hans there is a great deal of collaboration. There have been officials from all three affected countries spain, france, and germany. Has been a constant stream of helicopters leaving from the staging area about 200 meters down that way and through the valley and up and over the mountains. The footage we have seen does not indicate it does indicate the crash happened to load the snow line. That has been causing the helicopter crews to repel down from the helicopters. They have a land route in. About 27 recovery workers established the land route. We now have maybe two point five or three hours of daylight left for the search to continue under retro light. Last night, they called it off when it got dark and we will see if we do the same tonight. Olivia thank you very much joining us from the site of the crash in the alps. Matt it is striking. The plane seems to completely have disintegrated. A lot of people are saying that is another sign the pilots were not doing anything at the controls. They did not try to veer away or slow down. The impact was so forceful that it knocked the plane into a million pieces. The only recognizable parts of the plane were only three or four pieces and they were as big as a small car. Olivia nobody is yet blaming the pilot and we dont want to speculate, but this is really a shocking crash. The first major crash in france in 15 years. The topselling single aisle plane in the world with a terrific Safety Network and the first crash of a lowcost carrier in europe. Matt we will take a quick break here and we will be back in just two minutes. Olivia still to come is treason catch up. Who wins and who loses in the megafood merger that was announced this morning. We will talk to one analyst of edward jones. Matt we will stay on food with a look at the kitchen in california with a recipe for success. It want to attract more upscale consumers to drink a lot more alcohol. Matt welcome to Market Makers. Olivia sterns and i are with you here on Market Makers. Olivia thats true. We are in for eric and stephanie today. Matt let us get back to the story of the day here at bloomberg. Warren buffett is teaming up once again with 3g to bring kraft foods and heinz to the same shelf. Our chief market correspondent scarlet fu joins us now to break down the deal structure. Scarlet i wanted to make it simple for everyone to understand. You have a heinz which was taken private by 3g and berkshire in 2013 and then you have craft, a slower growing and less exciting north america at snack focused business that split off from mondo lees. All of that combined plus capital will become the craft heinz company, a Public Trading Company with about worth about 100 billion. Matt what does each side in this deal . Kraft shareholders are getting 49 of the company. Scarlet buffet and 3g get a controlling 51 stake. Craft shareholders get 49 . Plus they get a special dividend of 16. 50 a share funded by the 10 billion kicked in by buffet and 3g. While they get a minority stake, they get the premium plus they get to retain their dividend plus they get to share in the synergy which is about 1. 5 billion annually by 2017. Maybe you cant quantify this one but the benefit of the company being owned by what many people would argue the two best investors of the world, 3g capital and Warren Buffett. Olivia what are people on the street saying . Scarlet at him and called a complex. I spoke with shot and he said this is not m a 101 this is advanced mergers. When you have a pe firm involved, it is usually to take a Company Private but what you have here instead is buffett and 3g taking heinz public by reversing kraft into heinz and will then use the deal to go public and control the new company. It is interesting that the company is called craft heinz kraftheinz. As for the debt am a heinz will refinance its highyield debt with investmentgrade debt piggybacking off of krafts Investment Grade rating. S p said the new company would have eight triple drating. Matt i will say craft heinz is a bid to appease the consumer because you dont care if you buy craft heinz ketchup beta1 of by heinz kraft macaroni and cheese. Scarlet i do think about necessarily. Matt kraft is the main course but heinz is on the side. Heinz will run the company and by the company and they will eventually shut down kraft headquarters. It is essentially heinz buying kraft. Scarlet kraft the so attractive they had to sweat up from mondo lees so you could argue both ways. Matt what an awful name. Who thought of that name. Olivia blame it on the consultants. For more on the merger, let us bring in brian. He is on the phone with us. He is a Senior Analyst at edward jones. Thank you forgetting on the call. What is the logic of the call . Are they trying to grow the business and turn around what has been a Business Structural decline of the packaged Foods Industry . Brian we know the trends of the u. S. Are against a lot of these middle of the Oil Companies such as heinz and kraft. The trend is to natural organics and protein. Kfraft plays on the protein side with cheese and oscar meyers by lot of it will be costcutting. That is what they did when they bought anheuserbusch. There was a ton of cost taken out. They havent shown the ability to grow revenues and earnings at the same time. They are great at cutting costs and growing earnings. It a mating the deficit will go to to cut costs. With that being said, i think there is an opportunity as craft gets some of these brands back from on belize from mondo lees that will be a great way to use heinz International Platform. Outside of that, and notes america in north america it will be a costcutting story. Olivia was this deal a surprise to you . Did you think kraft was right to be bought up because Warren Buffett was said he was in the business of hunting for elephants. Take a back to you and john cahill, the new ceo of kraft foods with a background and private equity. Did you expect this deal . Brian honestly no. I thought kraft would not be as interesting because it has no international exposure. Everything is north america. That is one of the key reasons that buffet and 3g mentioned they will go ahead and buy heinz when they did because of the International Platform and the Growth Potential and all of these emergency markets and International Markets. It is kind of shocking. Since cahill took over, i thought the potential for a deal had increased but i still questioned whether they would be interested in kraft foods and a business that is all in the u. S. It is basically in structural decline. It is interesting and surprised me. I was expecting that would look at the other Food Companies that would have more international exposure. Matt the only pr cliche moore used in one of these acquisitions than merger is the word synergy. There is no such thing as a merger. What about synergies . Can we see massive cost cuts through this cliche over the next two years . Brian definitely. I go back to imagine earlier with 3g capital having an outstanding track record of cutting costs. They did this at anheuserbusch. We saw them do this at heinz. They took it over in early 2013 and took the margins from 18 to 24 or 25 by 2014. These guys are very strategic cost cutters. They take a offices and executives. They will sit at tables together. There is doublesided printing. They go to major links. On the costcutting side, i am the most confident in their abilities they will hit 1. 5 billion. I am a little bit more hesitant to see the potential for Revenue Growth which is where i think it will be the most difficult part. Olivia thank you so much brian. It is true that 3g has a process called zero cost budgeting. Sources tell us you literally have to get approval for making a color print. Matt i am glad there will be no color printing. The paper you have to use is so expensive and bad for the economy. Coming up, it is the chain already has a global footprint. What is next for california Pizza Kitchen trying to change its image . Matt california Pizza Kitchen is celebrate its anniversary with a new look. Wiser changing its brand now . You spoke with the executive chairman and ceo of california Pizza Kitchen earlier this week. Cpk is a very unique concept and we felt like we needed to bring it relevant for today. Something that young people and younger foodies and more sophisticated foodies would be more attracted to so it is a more casual and fun environment and we try to make a general connection through hospitality with our servers. Upgrading the menu to have a wider band so we have a few new items like salmon and stake as well as very unique pieces. The Beverage Program has been upgraded as well. Our one program was completely upgraded and we have some unique specialty cocktails. What we like to call ourselves as in the polished casual space. Matt youre getting away from pizzas how do you communicate that to your customers . We are not getting away from pizza, we will make the use of an aim more focal point we will make the use of a pizza oven a focal point. It is still the heart of what we do. It is in our middle name. We think it is imperative that we show people how much we care about our food through pizza. Olivia chipotle is doing some thing similar going to the polished casual as you call it. Does that mean competition for you or is this a sign of this being a more attractive area of the market to be competing . The pizza category continues to grow and outpaces many categories. The past casual certainly has some effect on us but we have a full dining experience. We like to think in the polish casual segment, we really dont. If people want a unique dining experience, they can come to us versus get an airline with quick casual which is what they are doing. Matt how important is your location . I think of other restaurants in this space and they have high and locations but they also are involved in a law of shopping malls. Do you need to break away from that . Historically, many of our locations were in those fastgrowing malls. Today, we still think those have a place in our or folio. Our portfolio. We are looking to build more freestanding and Lifestyle Centers which is more relevant for today. It is changing and we will have a more balanced real estate portfolio. Olivia talk to me about your business abroad. You have a lot of businesses in the asia but nothing in europe or south america. Are you seeing the stronger dollar starting to bite into your bottom line . G. J. firstly, where we have grown is in asia and the middle east and the philippines. Markets like that. We will get into the european market, it is just a matter of time and finding the right. Orders one of the things and International Market is you still need to be focused and find the right partners to be able to support those partners. We will get there eventually. Today we are in 15 countries and we will soon be in 20 or 25 countries. Relative to the dollar, it does have an effect on our business. The dollar goes up and down so you need to weather the storm. We have a strong Business International and it continues to grow and our partners continue to grow with us. Long term, it is a great investment. Matt some other restaurant chains have been hit pretty hard by the higher price of food and higher input costs. G. J. with our mix of products yes of course we feel food inflation but we dont feel it to the same extent as some of our other competitors that are focused on one specific protein. We have such a variety that helps mitigate some of those costs. Matt my favorite protein is vodka. How are you doing in mixed beverage sales . G. Kj. we are focused on it and we have upgraded all of our Beverage Programs so we have great vodkas and great specialty cocktails. We have a great wine program now. We have a beer program that has been upgraded to be more specific and local to the markets. Olivia do you pay your employees minimum wage . G. J. of course we do. We pay significantly more than that in the back of the house and in the front of the house, we pay the tip wage in the tip wage states. Most of our employees in the front of the house are making much more than the minimum wage when youre at the tip program. You need to create an environment for your employees that they want to be in and you need to pay them appropriately and we feel like we are doing that. Olivia you need to raise the minimum wage nationally . G. J. that is an ongoing debate and i think people need to be paid appropriately for the work they do. From my government perspective i believe Less Government is better. At the end of the day, Companies Need to pay their employees and make a connection in a way that they can be successful. Matt that was the ceo of california Pizza Kitchen. Olivia time not to bring you uptodate on the top stories were tracking for you this morning. It is a merger of ketchup and macaroni and cheese. Kraft foods will merge with highs and ideal but together put together by Warren Buffett and 3g. Craft shareholders will get 49 . It will be the Third Largest food and Beverage Company in north america. Another week and another record for crude Oil Inventories in the u. S. The amount of oil being stored rose to the 11th week in a row. Production climbed to its highest level in more than three decades. In italy, the countrys highest court begets review murder convictions of an american amanda knox. She is now in seattle and a conviction would lead to a next edition five two and extradition fight. We will be back in just a moment. Stay with us. Matt i just wanted to briefly touch on what i think is the most interesting news story of the day. Mergers are key for Bloomberg News but there is a show called top gear on the bbc. 215 countries broadcasted and it has 350 Million Viewers and brings in half 1 billion worth of revenue a year. They have a very controversial old and seemingly tired host Jeremy Clarkson who goes on these racist olivia tirades. Matt recently, he punched a producer for not bringing him a steak on time. The bbc has finally said enough and they are not renewing his contract. That leads to many interesting questions about revenue and the direction for bbc. Hammond and may, has two cohosts said they will not do it without him so i guess that is the end of top gear. Or will they find someone to replace him . Could anyone do that job . It begs the question of what will Jeremy Clarkson do . Even know a lot of people have been offended by him over the years, a lot of people are huge fans and love him. Will he do a new show . Will he start his own network . Maybe he will just sit on his porch. Olivia that does it for Market Makers. Stay tuned for money clip. It is 26 past the hour, which means bloomberg is on the markets. Stocks falling for a Third Straight day and no one pays for the worst day in a week with the s p losing 7 10 of 1 . It is now more than 100 points away from matching that milestone. Joining me today is our equity of derivative why is bad news being seen as bad news . Bad news is being seen for the short. For the short time as bad news. Actions will still be strong going forward. I would say this is part of the periodic episodic spike in volatility we have seen in the past which professional traders are able to capitalize by selling that. Theres nothing much to be surprised about and i think this will be short lived. Scarlet there is a lot of focus on the dollar because it has reversed course. It is no longer strengthening everything will day and people are not talking about eurodollar parity anymore. To what extent is the drop in the dollar taking away attention from liquidity . Anshul that hasnt yet been an inflow from the Commodity Markets into the stocks. We saw about a month ago when the dollar was ranging higher, the volatility in the market. Now the dollar is easing off from its high. We are still seeing the markets are taking it reasonably in stride and todays policy of todays volatility is because of the number. The volume in trading is going to come from more news coming in. Right now, market is being driven by macro because the company news earnings have gone fast. We have a waiting period for the next cycle to come. The next big volume would be when the earnings start coming in. Scarlet speaking of earnings etc. Will be reporting earnings before the open tomorrow. The shares are flat on the year. What is your strategy on this company . Anshul my strategy is bullish. I wanted to buy and chip in the cost of it by selling the once that expired. It costs me very little around . 45 . 60 to put that trade on. The options are implying 4. 5 moves in the stock. It goes to 92 and i think stocks trading around 89 right now will provide me with the best reward. My ideal scenario would be that the weekly costs expire and the stock is trending higher and i will be left with a call option that will expire in a month and a half for a very cheap price. Scarlet that gives you more fox ability. To why so much for joining us. Thank you so much for joining us. Money clip is up next. Pimm welcome to money clip where we bring the best stories, interviews, and video all in your business news. Here is the rundown. It is a match made with condiments. Kraft and heinz be brought together an ideal brought by 3g capital and Warren Buffett. Is a texas twostep brought to you by ted cruz and governor perry. Oil tags are filling up fast and we will show you what happens if we run out of space. The big reveal as jaguar performs
comparemela.com © 2020. All Rights Reserved.