Transcripts For BLOOMBERG Market Makers 20150508

Friday. You are watching Market Makers. Olivia i am Olivia Sterns in for Stephanie Ruhle. Erik we have some breaking economic news. Mike mckee is in the newsroom. Mike wholesale inventories up 1 10 of 1 . The forecast was for a 3 10 gain and this is why it matters. The Commerce Department assumed a big gain and inventories when it calculated gdp. This suggests we did not get it. The ford strike represented a lot of delayed imports coming in and they should come in wholesale inventories. They are not, and that may mean gdp in the First Quarter was even lower than we thought. The good news, they are set to build inventories and we may see accelerated not only imports but manufacturing. It is a number worth watching. It does tell us where the economy is. Olivia michael mckee, thank you so much. The labor market bounced back last month, adding 223,000 jobs in the month of april. The jobless rate falling by 1 10 of 1 to 5. 4 , the lowest level in seven years. All this after a march jobs report that was even worse than previously estimated. Only 85,000 jobs were added in the month of march, the fewest since 2012. British Prime Minister David Cameron has a new challenge now that he has won reelection. His conservative party unexpectedly won a majority in parliament and the Scottish National party swept nearly every seat in parliament. Just a couple of hours ago cameron talked about unity and we will govern as a nation of one nation, when United Kingdom. From north to south, from east to west and indeed it means rebalancing our economy, building that northern powerhouse. Olivia it was a crushing defeat for camerons rival ed miliband. He quit. I take absolute and total responsibility for the results and i defeat the selection. I am so sorry for all of those colleagues who lost their seat. Olivia the liberal Democratic Party was also crushed. Their leader also resigned. His party had been part of the the Worlds Largest maker of agrochemicals has rejected a 45 billion takeover offer. It says the value it says that offer undervalues the company. Monsanto dominates the market for genetically modified crops like corn and soybeans. It would be the biggest ever acquisition of the European Company by u. S. Rival. Nike tells congress when it comes to the asian trade deal, just do it. If congress oks the deal, the company will increase manufacturing in the u. S. And create housings of jobs. President obama will visit nike headquarters near portland, oregon, and in a few minutes stephanie will sit down to talk with the ceo of nike. Erik feeling some demand for treasuries but not enough to reverse the selloff. Lead manager of the blackrock total return fund, and our economics editor michael mckee. Rick 223,000 jobs and Unemployment Rate of 5. 4 . What does it change about the economic picture and the fed rate hike . Rick it was just under where estimates were so i do not think it really changes a lot. The construction number was pretty good and that gives you a pretty good sense for the construction side. The one number that i think was a little bit disappointing was the average Hourly Earnings, we expected that to be a little bit higher. You are seeing it in terms of what companies are doing, from the donalds to ikea. Erik he can get is understating Wage Inflation . Rick i do. Part of why it is so hard to create 250,000, 300,000 jobs is that olivia what do you think matters more to janet yellen the average hourly workers rick we think the eci is a better gauge in terms of what we are seeing. A lot of the aggregate data you get is not always perfect so we study what companies are doing. Almost across the board, Big Companies that have increased their base pay so we do think you are seeing wage pressure would gives them a chance to move. A mix of jobs that were created, because somewhere higherpaying and somewhere lower paying. We did see an increase in construction jobs that we saw a decrease in jobs in the mining and mining support areas, which is fracking, oil cutbacks, and those are extremely high paying jobs. Olivia construction jobs are nowhere near the near where they were in 2005 in 2006. The story has been more improvement, Wage Inflation for high income earners. Is that all changing since companies are bumping minimum pay . We can see in you to see it at the highend and at the low end, but at the middle it is missing. How do you create those jobs when the repetitive nonskilled jobs that can be replaced by automation go away . Erik lets look at treasuries in the context of what has happened over the past few weeks. The yield curve has sloped upward. There was a point where you thought the fed might hike as early as march, did not happen. Now the consensus is around september but it makes me wonder if you were wellpositioned for this. I do not need to show it to you. You know what the yield curve looks like. Dramatically since april 17, which is the bottom line. We have a fair amount of duration. I think the fed has a window to move. I think they had a window to move in march. Global growth is slower than it has been and it will be slower than it was a generation ago. It will continue to stay down because the demographics and people studying nominal data, it will be softer. I think we are talking about creating a 3 gdp over a fourthquarter basis. It is pretty good in a world that cannot create that much growth. When youre creating this much employment, you have created more jobs in the past two years than the prior 13 combined. Olivia that is truly an impressive amount of jobs created. What we are asking, you are at blackrock, how are you position for this backup in rates that we have seen the past few months . We are running a moderate short. I think it is hard to run a significant short duration or predicting higher rate dynamic because we live in a world of extraordinarily low rate globally, and the demand from overseas is so intense. We are predicting higher rates. We are positioned moderately but you cannot run a very significant short given the global demand. Erik are the odds greater that the 10 year rate will go back down to two or bump up to 220 . We think rates will drift higher from where they are. Your people talk about extremes of where we are going. You have a dynamic, the demand is tremendous but the data would suggest a fed liftoff. We think the inclination is to drift higher in rate. There is no impetus for that but to be the case. Olivia nothing is fundamentally changed. Eric you are speaking to mike at nova grass. Erik he thinks we are in the middle of a bond bear market. I would say rates are going to drift higher. Two things, demographics change the demand is tremendous and you are not creating enough fixed income relative to what you have historically. Erik can we pull up the bund chart . Olivia . 05, now it is back up and point 60. Erik that is a violent move. Olivia he say that is people getting out of a crowded trade . Im not certain i would say they have a tremendously crowded trade. Yields in europe are tremendously low. We have seen some pickup in inflation that is cost him reduction in terms of positioning but to move to the levels we are at today, b unds were crazy high today. Erik where on the curve . Shortterm . We are moderately short on the backend of the curve. Olivia you got in on time and did not miss it like ill growth. Bill gross. He said we are working with old numbers and they did have a little problem with treasuries but not with bunds. The treasury side did not work out as well but he did get in on the bund. We are seeing in europe the same thing that we saw in the United States, that you get the majority of fact in yields on an announcement of qe. Once it starts yields start to back up again. Erik thank you. Folks, if you had not noticed, he has a snazzy new watch. Olivia with a big white rubber band. Still to come here on Market Makers a tech file a tech company that has filed for an ipo but it is already making money. Erik nike is promising to make more shoes here in america but there is a pretty big if attached to that. Stephanie ruhle will be talking to nike Ceo Mark Parker, and interview you do not want to mess. Olivia time to bring you uptodate on the top stories of the morning. Attorney general Loretta Lynch says she is opening a civil rights investigation into the Baltimore Police Department Six Police Officers were charged in the death of freddie gray which sparked riots. The labor market showed new life after a disappointing march employers adding 223,000 jobs for april just shy of analyst estimates. The job rate fell 1 10 of 1 the lowest level in seven years. For once a Silver Lining in sales, at mcdonalds global sales fell again but the drop was not as bad as expected. In the u. S. , sales fell more than 2 . That matched analyst estimates. The ceo has unleashed has released a plan. Uber has joined the bidding for gnocchi a nokias map business. It has an 80 market share for built in car navigation. Uber is competing with german carmakers including bmw and mercedesbenz. In just a few minutes, Stephanie Ruhle talk about the asian trade deal and a lot more at the ceo of nike. Fitbit files for an ipo. Erik the maker of fitness tracking risk dans filed ipo documents with the fcc last night and fitbit is already making money. Bloomberg west editor at large, cory johnson. I will be honest with you, im not delighted by that we can talk about that later. Fitbit is a remarkably profitable company. Cory i flipped out when these numbers came out yesterday. I cannot believe these numbers. I profiled these guys about four years ago, maybe three years ago, and it was a couple guys literally two guys and a room full of engineers and i think they had a parttime pr person. Since then, this has become a giant business. They are doing more than 1 billion. 745 million in revenues last year alone, selling these little plastic things that people are sticking on their hips. Massively profitable. Gross margins of about 48 . Profit margins adjusting Profit Margins of about 28 , same as go broke. Go pro. Erik go pro has an adjusted ebitda of about 28 to olivia they are spending a lot less money on r d then go pro is. Erik garmin has a similar business. Cory garmin is a similar business. It is based in kansas city so we do not think of it as one of the leading Tech Companies in the world but it is so. Garmin has had a similar business of hundred 50 million in fitness wearables. These guys are so much bigger. It has 62 market share of these devices. Olivia right at this moment apple watches launching. Samsung has a new smart watch. This is the moment when fitbit is about to face a whole bunch of competition. Cory these guys have faced a few overtime. They mentioned in the s1 filing olivia theyre one of the most Power Companies in the world. Cory they mention adidas and under armour that they do not mention my nike. When people describe these fitness trackers, people say is that your fitbit . No, it is the competitors version. They do not even know what they plan to do with the proceeds of this ipo. How Many Companies say they know what they will do with the proceeds when it actually goes to the bank . They do not even say it is for general corporate purposes. Olivia apple and samsung are about to take them on headtohead. Cory i think they have done remarkably well. Maybe its true, the market gets bigger as these new interest get in. The advantages that apple and samsung have. Erik thank you, sir, cory johnson. Olivia still to, on Market Makers stephanie talks to nike ceo mike parker about trade, sports, and the competition. Olivia president obama is on the west coast, promoting trade. A major deal will create as many as 10,000 jobs right here in the u. S. In just a few minutes we will hear from Ceo Mark Parker standing by at nike headquarters with Stephanie Ruhle. Lets bring in our chief washington correspondent. He joins us with a bit of a preview of the tpp. The president has to get the fasttrack authority, t thepa. How hard is it going to be for him to get the votes he needs . Right now it is losing it is proving to be a difficult lift but not impossible. This trip to oregon is a chance for the president to highlight the benefits of a transposition a transposition oregon is the state that has benefited from imports. This story that nike now is planning to bring jobs back to the u. S. If this deal moves forward is just one way the president can confront his critics by pointing to what some would say the poster child of globalization gone wrong. The fact that nike would be bringing jobs back the president hopes could make the case why this deal is not nafta and in the peoples interest. Erik there are plenty of opportunities for the president in the past and yes taken advantage, where he has been able to highlight his support. This is controversial to be sure. By picking nike he is going directly at the criticism. It surprised a lot of democrats that he would go to nike because of all the jobs that nike has moved overseas. The fact that he can try to turn that on its head the white house thinks will be to his benefit. It is a big stage for nike and they will open themselves up to criticism but i look forward to what mark worker has to say about the jobs coming back. 10000 jobs is a big commitment. Olivia 10,000 jobs is indeed a big commitment. Erik coming up, nike Ceo Mark Parker talking about the trade deal. Live from bloomberg headquarters in new york this is Market Makers with Erik Schatzker and Stephanie Ruhle. Erik good morning once again, youre watching Market Makers. Im Erik Schatzker. Olivia im elizabeth im Olivia Sterns. Erik my partner is in oregon for a big interview at the shoe giant nike. Stephanie thank you so much eric. Here we are in beaverton this morning. President obama is here. We are talking about this trade agreement and there are protesters in portland right now who do not want to see this happen. So what does this mean to you . Mark we produce shoes all over the world but mainly the Asian Pacific region. It is important for us to be part of this conversation. It is an honor to have the president with us today to talk about trade. A really important topic for nike. Nike was the company that was born and succeeded aced on the ability to trade globally. This is an important topic. We feel it is critical for the United States to have a 21st entry trade agreement in place. We feel that for nike it actually gives us the opportunity to create jobs. Create jobs because of savings that we think, we anticipate will be part of the tpp. Stephanie the critics say you make a shoe in vietnam and you sell it here for 320 . People feel like you are making a whole lot of money in the middle. Mark the numbers on the shoes in terms of what they cost to make, they are a lot higher than what most people report. The value that we put in shoes is through the technology that goes into making those products advanced technology, the components the athletes that we work with that give us the insights that drive the innovation. There is a lot of factors that go into creating Innovative Products. Stephanie do people want to pay for that . You are in a position where it is a race to the bottom. People are living in a walmart amazon world but they want minimum wage raised. How do you marry the two . Stephanie nike is not a company that is born out of creating products at discounted rates for mass consumption. We are trying to create premium Innovative Products that push the envelope for performance. We have the opportunity for that technology to trickle down to be more accessible in terms of price point shoes that are more open to the broader consuming population. But for us it is a matter of pushing that innovation envelope. Like i said, there is a lot of factors that go into that here stephanie would it make life easier if you manufactured here . Originally you manufactured in new england. Mark i think there is advantages to making product here and what we want to do is make advanced manufacturing to the state where it is viable, where it makes sense from a bottomline standpoint. We are trying to create more choice for consumers, pushing our customers personalization agenda. These are all advantages to having sourcing more local. Stephanie how prohibitive are the tariffs now for you . Mark they are a equated they are antiquated. They were created in the 30s during the great russian the great depression. They are generally 10 times what they are on other Consumer Products on average. It is an advantage to us if we can get a break on the tariffs in terms of a modern as i said 21st century trade agreement we can take those funds and leverage them to create modern manufacturing in the United States. Stephanie if this trade agreement does not go through, these 10,000 jobs that you think you will create, what happens . Mark the savings that we will see from the tariff reductions hopefully will actually help to accelerate the advanced Manufacturing Development work that we are doing here in the United States. I think it will make possible that we will create manufacturing in the states. Right now, it is cost prohibitive but we need to develop the technologies which we are committed to. It is a longer timeframe so this was actually shorten the time frame and allow us to put those technologies in place to ramp up manufacturing. Stephanie you say that the terrorists are antiquated. Is it outdated that nike continues to get beat up by this drama of politicians or activists saying, your labor practices or inappropriate overseas . That was an issue you faced in the 1990s but since then it seems you cleaned up your game and are not getting credit for it. Mark we have made a massive commitment to improving working conditions in our contract factories. Around the world, and i am very proud of the progress we have made. In many cases we are a case study in terms of how a company can come in and make tremendous headway in that area. Again, i am proud of that progress. I continue to see opportunities to make improvements. I do not think we are there. Im not sure we will ever be where we really want to be completely. This is all about transparency cooperation, collaboration with others. Stephanie are these politicians like ernie sanders, or they misinformed . Mark i think there is this perceptions and dated views of nike in this area. I point you to the harvard and stanford case studies that have been put out recently. That will give you a good idea of much of the progress we have made. Stephanie when we talk about innovation in technology, that is very much nikes brand. When he decided to get out of the hardware game, what did you know . You have a very close relationship with tim cook. You know about tech. What is that telling us . Mark i think the wearables market will continue to grow. The apple iwatch is the first big step for them in many ways. We are just seeing the potential that the wearables represent. We expect to be there, not making hard goods being part of that experience being on those devices and connecting to those consumers throughout development through app development. Our goal is to create a seamless connection to consumers through commerce and digital sport experiences. Stephanie isnt that what under armour is doing . With three acquisitions they have made, they have 130 Million People in their Digital Ecosystem and one might say they leapfrogged you. Mark we are committed to this space. I feel good about our position right now. We have record numbers of new members of our Digital Community happening every week. That continues to grow. The apps continue to be developed. The relationships and partnerships with not just apple but others continue to be developed. I am very bullish. This is not just about tracking and sensing. This is about the complete experience that the consumer has with nike through many different aspects. Stephanie when i think about the Nike Community i think about your extraordinary premier athlete. Does that continue to be the best way for mikey to bet . 492 bet . Kevin durant, that is the athlete to get but that is a really risky bet that you will just that on athlete. Mark it is about the relationship we have with athletes. That relationship gives us the insight that drives innovation and represents the brand to consumers in sports around the world. That is important to us. It has always been an important part of our model as a company. Im proud of the athletes we have, the success they have had. They continue to be very motivated by the relationships that we have with the athletes. They are incredibly inspiring. Stephanie is a risk because if tiger woods does not win, does that mean nike loses . Mark no, not necessarily. Winning and losing is part of sports. Not every athlete is going to win every time and that is fine that is what makes it interesting. If you had one athlete dominate completely all the time i do not think it would be quite as interesting. Stephanie a lot of people are talking about the nba contract in terms of apparel. Adidas stepped out saying it did not help them sell shoes. Why do you think that is interesting . Nike could be stepping in. Wide does that makes the why does that make sense for you . Mark the has a lot to do with the relationship. I am incredibly excited about all our relationships, not just with the athletes but with the leagues and governing bodies of sports. We have opportunities to innovate and as you have seen many times, and will going forward, our ability to innovate and bring something new to the game is there. That is what motivates us, what drives us. Stephanie what is the most exciting thing happening at nike now . Mark i am an innovation geek. I love sneakers i love shoes, i love products, apparel. That is what really ultimately drives nike, is the innovation that we put into our products and the relationships that we have with those athletes and consumers so that is what gets me excited. Stephanie does that mean i will see president obama walking in here with error obamas in about an hour with air obamas in about an hour . Mark we have a gift for president obama, a oneofakind parachute that we made here. Stephanie made in the United States . Mark here on campus. I cannot describe it other than to say it is red white and blue, it is very american, and it will blow your socks off. Stephanie Erik Schatzker, mark is about to kick it with president obama. Erik that is nike Ceo Mark Parker. We will continue talking about the sneaker business with someone who runs a Smaller Company vans president kevin bailey. Olivia do online marketers need to know everything about you . There may be a way to keep everyone happy. Erik you are watching Market Makers. Im Erik Schatzker with Olivia Sterns. The labor market bounced back in april. Employers in america at a 223,000 jobs, in line with what economists have forecast. Jobless rates dropped to 5. 4 the lowest since spring of 2008. The march jobs report was worse than originally estimated. One former chairman of the White House Council of economic advisers told bloomberg there was plenty to like and dislike. The wage data are disappointing. I put more of my weight on consumer cost index but i would like to see this measure rise. I believe we can breathe a sigh of relief that march was mainly an anomaly. Erik one more problem, the share of working age people working a job or looking for one is still at a 38 year low. People familiar with the matter say blue crest is facing 2. 7 billion in redemptions. Blue crest has had lackluster redemptions the past two years and is now managing one third of the asset it had. William foley is executive chairman of Fidelity National the largest title insurer in the United States. He made 105 million last year, 43 million of that was in cash. Shares of Fidelity National are up. Fallout from that surprising British Election results, what does David Camerons reelection mean for the u. K. , europe, and the u. S. . Monde sans of gets the cold shoulder, the company that sells 2 billion dollars of sneakers a year and stays under the radar we will stop we will talk with the president of vans. Olivia do we still need an anonymous web . It is a customer Identity Management platform that allows you to log into websites using your social media. You could have customization so marketers can have your information. With us from San Francisco is patricks failure. Patrick, thank you so much for joining us. Explain how this actually works. We work with Large Consumer facing brands, retailers. Folks like nike abc. We take these anonymous visitors going to their site and turn into registered, known customers. Better emails and better marketing in general. Erik what if i want to remain anonymous . What if i do not want nike or whoever to know who i am . Patrick more importantly you have that option but what we find is most Consumers Want a personalized, customized experience. Theyre spending their time on facebook. They are spending their time on new applications like airbnb. Or trip advisor. We actually believe that consumers do want that customization and personalization. Third two options for brands provide that, relying on data brokers and buying data on you without you knowing. We think that is the backward way to do it because consumers have no control and there are privacy concerns. Instead, we are working to allow consumers to self identify, to opt in to providing information which we think is the better way forward. Olivia am i going to have to voluntarily take the initiative to sign up or du do the plumbing in the back office of the website . I go to cnn. Com and they are a client of yours so i just go to cnn. Patrick we are just doing the act and infrastructure, if you well. The relationship is between the consumer and the brand. Gigya is enabling that relationship. We are operating on behalf of the customer and that relationship is between the consumer and the brand. Erik patrick, what does a client of yours, say nbc pay gigya for your service . It is really hard to do because the space is moving very quickly. We have things like social login, you can log in with the social credential. Instead, we are building a platform that makes it much easier to implement. We are charging our clients a license fee to use the Technology Based on the number of consumers they half. Olivia what will gigya look like in five years . Do you go compete against paypal or do you do what apple pay does and use the existing Credit Card Companies . Patrick i think one of the interesting things is the cornerstone for self identify as registration. You have a username and password, the bane of mankind. The number one helped question is the forgotten password. Theres a lot of innovation happening there. The next step is being able to use things like i o metrics, for example using your phone and apple pay do not have to create a username and password from scratch. You can use your thumb print and pay in two clicks. We believe that will be a really good thing for consumers everywhere and also for brands because it will be easier to salvage that relationship. Olivia patrick salyer, ceo of gigya. I do like paying with apple pay with my tom. Mythumb. Julie welcome back to Market Makers. Lets take a quick check on action on wall street. If you look at the major averages, we do have a rally after the jobs report this morning. The read seems to be the job growth is robust enough to show the economy is on track but not so robust the fed needs to be aggressive in raising rates. The s p is up the most in about a month. Health care, Materials Technology leaving the game and it is a broadbased rally with all 10 Industry Groups on the rise. Take a look at the 10 year as well. You can see that perspective reflected in what we are seeing in the 10 year where we are seeing the yield fall closer to 2. 1 . In terms of individual movers one of the best performers the s p 500 is microchip. It announced it is buying mi crel. Microchips Earnings Results also beat estimates. Take a look at a company that is trading for the first time today, bojangles. Following the talk of the chi potleification. There are nine in new york city. The shares are doing very well. They raise 147. 3 million from the ipo selling shares at 19 apiece. Have you guys ever been to bojangles . Olivia i love bojangles. Julie how do you know about bojangles . Olivia i have definitely never been to bojangles. Erik coming up, the Sneaker Company that will never hire tiger woods and does not pay athletes to endorse its shoes. We are talking about vans. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and Stephanie Ruhle. Olivia voters get british Prime Minister a second term and gives the conservative party and unexpected majority in parliament. Erik thieves of a deal. Monsanto has offered 45 million force and junta. Singenta. Syntentas response, not even close. Olivia you will not see these sneakers in the playoffs. We will talk to the president of van sneakers. Erik good morning, everybody. This is Market Makers. We being this hour with some news. These are some of the top stories you should be following. The u. S. Labor market might be back on track. Employers added 222,000 jobs in april. A number slightly lower than the 228000 median estimate in our poll. The Unemployment Rate dropped from 5. 4 after the government said only 85,000 jobs were added in march, a revision down from its previous estimate. British Prime Minister David Cameron has an ambitious agenda for his second term in office. His conservative party unexpectedly won a majority last night. Cameron spoke of his plans. Primus or camera Prime Minister cameron helping 30 minute people 30 Million People, creating millions more jobs that give people the chance of a better future. And yes, we will deliver that referendum on a future in europe. Erik the Election Results were a crushing defeat for the leader of the Labour Party Ed miliband. He said he will resign. So did the leader of the liberal democrats. Nick clegg says he is stepping down. Salses are still falling for mcdonalds. If there is any good news for new ceo easterbrook, this is it they are not falling as fast as expected. They were down. 6 in april. Mcdonalds u. S. Sales were down as well. Not as much as in march. Easterbrook unveiled a restructuring plan. The Justice Department has opened a civil rights investigation into the Baltimore Police department. Attorney general Loretta Lynch has agreed to grant a request from baltimores mayor following the death of a black man in police custody. freddie gray s death triggered riots in baltimore. Six officers have been charged in his death. The war has taken its toll on ukraines president in more ways than one. Poroshenko was a billionaire when he was elected last year. Now not so mauuch. The war has hurt his chocolate empire. He now has a fortune of 4720 million. Russia was his biggest export armarket. Mars is breaking with Big Food Companies and supporting regulators calls for new labeling requirements on sugar content. Mars is backing calls to limit sugar in their diets. Olivia more on the stunning Election Results out of the u. K. David cameron sweeping to victory, a crushing win to keep the Prime Ministers job for another five years. Lets bring in Francine Lacqua. And our friend danny a professor at Dartmouth College and a former policymaker at the bank of the. Fran, the bank of england. Two days ago, we were trying to figure out what would happen if we had a Hung Parliament. Here comes David Cameron sweeping to a majority. Francine it seems incredible what we have been through in the last 24 hours. I would make two arguments. First of all, because the polls were so close, because the tories and labour were neck in neck, it is not on conceivable that this is one of the reasons the conservatives ended up winning it. Something called the shaky pen. When you are undecided, you go for the people in power because you have not had such a bad deal in the last five years. The other one is thttat there might be a fundamental flaw with the way polls are conducted because a lot of experts have been saying there is a stigma attached to to voting conservative. Erik now that cameron has been reelected, or the conservatives have a majority and cameron remains leader, what does that mean for the british economy . You have been a critic of george osbornes, some of his policies. No fan of austerity. Britain experimented with it. What does the future look like . Danny obviously, this is a surprise. Nobody really expected it. It asked the has taken some of the uncertainty away that was surrounded the outcome that was coming. We talked about the possibility of a Hung Parliament and five weeks trying to sort out a government. That uncertainty is gone. I think the biggest uncertainty is the fact you just heard of aare going to have a referendum around europe. Theyve actually announced more austerity. The question is whether we believe the words about more austerity which when they did it last time destroyed ouu tput. Or if we believe there acti their actions. Really the question is what action are we going to see and how are they going to deal with the scottish question, which you have not talked about. There is obviously an issue about trying to keep the United Kingdom united. Olivia it is ironic how the conservative victory could mean that they are the party that enabled england to actually get smaller. Francine, the referendum seems to be the key domestic issue going forward. The key issue for business because if brittain chooses to leave the European Union, that would have consequences for the economy. What would the referendum mean for British Business . Francine the key of the referendum is when they call it for. We understand it is by 2017. Businesses everything to lose in 2017 because it means we have two years of uncertainty. However, if he calls the referendum to sin, it means that a, it does not give too soon it means that it does not give David Cameron enough time to negotiate with his new partners and does not give them enough time to have a campaign in this country on why the uk should stay within the eu. I think that is crucial is when the referendum would be called for. Erik given the fact that there is this uncertainty over a referendum on staying part of the European Union, given the fact the scottish question is now once again open, what explains the rally in the pound . Backup to 1. 55 today. Francine we were expecting a lot of uncertainty in the last three weeks. The markets focus on something shortterm. They only started pricing in the Scottish Referendum a few weeks before. Messy coalition talks. Two leaders that wouldve contested it. The fact that it is an outright tory majority win means we will not have anything that is why this pound is in the news. Olivia lets bring it back to the u. K. Economy. We have seen shares and builders and banks and insurers are spiking on todays news. It seems business congratulating David Cameron on his return to downing street. What would you say is the overall temperature of the labor market in england. Unemployment is at 5. 6 . It seems so productivity is a big problem. Danny productivity has been a major problem and real wage growth has been really low. The assumptions and virtually all of the models, including the governments model, is this productivity puzzle gets fixed. And that is in a way that the claim that David Cameron made we are going to raise status of living, depends upon. But we have no clue why suddenly productivity would increase. We had data and the u. S. Showing productivity falling. So it may well be that all the forecast and all the hope that government has are driven on a prayer that we really dont see this productivity miracle taking off, and the government does not have any plans to improve it. It is hoping it suddenly gets fixed. It think thats unlikely we should be mindful this has been the slowest recovery in historical record since the south sea bubble. The claim has been made this is a competent government, but we are going to see whether they can deliver. My suspicion is growth is going to come to the downside, and that is going to give them a big problem. Erik francine, now that cameron no longer has to look to nick clegg to form a coalition, who might end up in the cabinet, who might occupy the most important seats . Fraincncine at the moment we are hearing from insiders, nothing is confirmed. We can only speculate. We understand possibly that the chancellor of the a checker the chancellor of the exchequer this may change if we have a cabinet reach 0 reshuffle. David cameron need someone to negotiate with the eu. That negotiator in chief will be the one appointment we will watch out for. The other thing is that i do not think this majority government may be more stable than the coalition. In many ways it will be less stable because David Cameron still has within his party people that are very euroskeptic the backbenchers. Not having a coalition may not mean that this is a very stable government when it comes to european issues. Erik what does it mean that the u. K. Independence party has virtually no representation and the local democrats the liberal democrats are down to 10 seats. Francine when you look at the overall votes, it is 10 . Rupert murdoch said, David Cameron this is a warning sign. The cousin has only on because it has only one seat. That is something that he will have at the back of his mind at all times. Olivia that is an interesting point that may the coalition would have made it easier for cameron to stay in your. They do so much, Francine Lacqu a. Our thanks to professor danny blanchflower. An incredible result there. There is only one tory left north of adrians hadirarians wall. Erik stay here for a special report on the British Election. Coming up, swiss based syngenta says nein to a 40 million offer from monsanto. Olivia its friday. That means it is time for the yearbook game. Who is thiis . Hes a professor. He graduated from Southfield High School in 1963. I dont know. What do think . Tweet us your guesses. Erik got a guess . Erik i think i might have a guess, yes. Olivia really . I dont know. Erik take a look at this rally we have got going on in u. S. Stocks. Rising up and uop throughout the morning. We opened up half a percentage higher than the close. We are 1. 5 higher on the dow. 262 points added to the dow jones. After that jobs number that came in in line with estimates and also, after the u. K. Collections showed a decided victory for the conservatives. The s p 500 gaining 1. 3 . The nasdaq 1. 25 higher. Take a look at 10year treasury yields moving lower as people buy the pacquiao10year. Why . Average Hourly Earnings did not rise as much as expected. That may give the fed more reason to remain dovish. Take a look at monster beverage. Its worst day in 2. 5 years. A drop of 10 , the lowest level since february of 2006. The reason is monster had First Quarter adjusted eps of 62 c ents. Olivia time now to bring you uptodate on the top business stories of the morning. The labor market bouncing back, employee is adding 223,000 jobs in the month of april. That was slightly less than economists estimated, and the jobless rate fell to 5. 4 . Construction and health care were among the industries that accelerated the pace of hiring last month. Wage growth slowed in april, increasing by just 0. 1 . And he used to run one of the biggest hedge funds, now investors in blue Crest Capital have asked to pull more than half of the assets from the firms fun. Blue crest is facing 2. 7 billion in redemption. It is had last look to has had lackluster returns. And in sports, say anything you want to tom brady but do not tell the new england quarterback his super bowl win was tainted by the controversy over his to deflated balls. An investigation found that brady probably knew i cannot do it. Erik call them footballs. Olivia brady was asked what he thought about the probe. Tom brady i commented on it yesterday, and it has only been 30 hours, so i have not had time to digest it. When i do, i will be sure to show you how i feel about it. And everybody else. Olivia brady could end up getting suspended and the patriots may face a huge fine. Still tom come, more on the april jobs report is the economy back in gear after a lackluster First Quarter . It is a celebrity free sneaker wear company. We will talk to the president of vans. Erik it would be the biggest ever acquisition of a European Company by american rival. The deal should it happen, would be in the agricultural business. Monsanto offered 45 million billion dollars for gigya. For syngenta. Ed, the market is pricing in a higher bid for syngenta. When they rejected this offer the stock popped. What is the likelihood syngenta is going to command a higher offer. Logically monsanto is the right buyer. Previously, they wanted to do it. In this market the opening offer is rarely the final price. Erik what is it my fantasies in syngenta what is it monsanto sees in syngenta . Ed monsanto tried to do the deal a year ago. It is wanted to do it for a long time. To come back, strategically what syngenta represents is this monsanto is the World Biggest producer. Syngenta produces you huge number of the chemicals and testings that go into producing these seeds. By bringing them t together, you have vertical integration which would save man sent out montsanto 1. 2 billion. Olivia isnt monsanto opening itself up to ed monsanta has a huge seed business. Syngenta has a not insignificant business. The idea would be they would have to digest that very quickly. Two things. The buy universe is very big and flush with cash. You have the asf. Possibly a platform acquisition. So, they could do that divestiture quite easily. Yes, they would have antitrust, but even more than that monsanto is a despised company. Consumers hate it, farmers hate it. For syngenta it is a bit more amorphous than antitrust. There is this whole other thing are the governments going to block it . Olivia people love to hate on santa. Monsanto. Ed monsanto is trying to get gm labeling off of food. Erik how much of an appetite might monsanto shareholders half for a higher big than offered bid than offered . Syngenta is now trading at a premium on monsanto. Monsanto is going to have to pay above and the on. It is going to be a diluted deal. Ed i think there will be appetite for them to go slightly higher. The premium they offered was 35 of the close. I guess they could go above that. A lot of what determines the shareholder appetite is the inversion. If they do huge savings over a long time. Erik of course, theyre going to spin the synergy story along the way. Ed no dbooubt. Olivia thank you so much on monsantos bid for syngenta. Coming up after the break, the yearbook game. Erik may know who has that cheeky smile. Olivia coming up on Market Makers a check to how markets are responding to David Camerons huge win in the uk. Erik here is the man. He is now professor. He graduated from Southfield High School in 1963. That means you have got to guess. Tweet us. Were looking for added value, not just the name. Ers with Erik Schatzker and Stephanie Ruhle. Erik you are watching Market Makers on friday. Olivia european markets have just closed for the day. A busy session with a surprise election victory. And David Camerons conservative party coming out of the uk. Caroline investors very happy with David Camerons big win. Caroline a bit of euphoria for David Cameron, and euphoria for the markets as well. Stocks driving higher because of majority of the conservative government means the u. K. Is easier to govern but also theyre a centerright party, more business from a, lower taxation, lower regulation. That is sending banks and Energy Stocks higher in the builders higher because many feeling you can be able to buy housing more easily with the conservative government. Stock markets showing euphoria. But also, the british pound doing pretty wealthy throughout. Against the euro. Check this out. Up to the highest in 3. 5 years against the euro surging up against the dollar as well. Borrowing costs are down for the gilltsts. Why David Cameron and the conservatives pop a few champagne cokes maybe english sparkling wine some Money Managers betting on uk assets. Olivia of course, we were worried about whether there would be a referendum. I you seeing Market Reaction about the prospect are you seeing any Market Reaction, concern about britains you should in the britains future in the European Union . Caroline once everyone starts to digest what this means for the eu. David cameron promising that referendum by 2017. Ps to persuade the electorate that he can do enough, renegotiate the terms enough to make us still stay. To show off why trading is easier. He has got to convince us of that. But also the word United Kingdom coming into question. The other big winner was the nationalist in scotland. They 156 out of they won 56 out of 59 seats. Up with a referendum on scotland leaving the United Kingdom. So, i think come monday, a lot of people will be reassessing whether or not the u. K. Is still a buy. We have moodys saying the eu question is going to add to risk when it comes to debt markets. Olivia they do so much, caroline hyde. Plenty of bankers feeling a sense of relief at David Camerons return, meaning their bonuses are safe. Erik a rally in european stocks, and a rally here as well. The s p 500 is off to its best day since the middle of march, and it may have something to do with the jobs report. 223,000 jobs were created in april, a bounce back from what was a surprisingly weak march report. Our chief u. S. Economist is here for a closer look. There was a revision to february as well. If if you added up, february march april, does the jobs picture look that much better . You take the headline increase of 223, subtract 39,000, and the real peril number was 184,00 below consensus. That is why you see the Market Reaction treasury yields off a little bit and stocks rallying on hopes that maybe the fed goes later. Erik lower for longer. Olivia it has been in on even. How broadbased were the job gains . Carl in the service sector, you saw construction bouncing back after what was probably the weather story in march. But we also sell lingering problems in the Manufacturing Sector. Manufacturing hiring just 1000 over the last two months. Hours worked slips. Over time declined as well. So the Manufacturing Sector very clearly working, trying to work off this inventory accumulation that happened in the First Quarter, but it hints that that weakness is going to weigh on activity into q. 2. While a weak q. 1 looks like what we saw last year, the q2 rebound is going to mean much shallower than the search we saw erik so much for those flickers of Wage Inflation. We had to put the question to jason the chairman of the council of economic advisers. Here is what he had to say. Jason we have seen wage growth over the last 2. 5 years in excess of inflation. Consumers are able to spend more. So have seen a general pick up over the last year in consumer spending. But there is no debate whatsoever that we can and should do even better. Erik so, rick reader of blackrock, who is an investor but thinks carefully about the economy, finds the Wage Inflation number a little bit perplexing, because there are other signs of Wage Inflation that would suggest we would see more in the jobs report. Why the disconnect . Carl Economic Data never moves vertically together. That may be what we are starting to see in the divergence. Also, there is an issue of commissions and bonus payments getting paid and the First Quarter. That shows up in things like eci. It does not show up in the average Hourly Earnings statement. That my display in some of the divergence. Olivia eci is more of a mean an average Hourly Earnings is more of a meeting. Carl of a median. Carl it is just going to get that hourly not bonuses and commission. The moral of the story eci showed signs of life. A modest acceleration. But the other metrics are not picking up. So the wage pressures are not there yet and they should not be because we are not at the neutral level of unemployment. Erik you are answering the question i was just about to raise. Illl phrase it different. There is less flack in the labor industry. We hear there are parts of the market where there is no slack leftg at all. Carl we are getting closer to that point. Grinding down towards 5. . If you look at the u6 Unemployment Rate, it is still elevated. It moved in the right direction but not by enough. So this is the key what might be happening as we get closer to full employment, we should start to see more evidence of wage pressures. That is what is going to bring those marginal participants back into the labor force. It is the promise of a better paycheck. We are starting to get there. So 2015 is going to be the real year to test that he says heard and janet yellen believes hold the pedal to the metal and lets see what we can do about dissipation. Erik nice analysis what we can do about participation. Olivia still to come, in tthe sneaker race, van is picking up the pace. Who the olivia the 21 billion sneaker industry is dominated by the heavyweights nike and adidas. There is one brand you might call the little brand that could van. They had 22 consecutive quarters of doubledigit growth. The company has grown into a 2 billion venture by focusing on the line ofs. By focusing on millenials. Kevin bailey is in los angeles. He joins us now. Thank you for joining us. How does a 50yearold company that i associate with california surfers and skaters suddenly grow by double digits in todays day and age . Kevin we are happy and lucky to grow at the pace we have. Skateboarding and surfing is the seed at the core of the brand. We have been able to ride that. It is getting to that seed is that helps us get to next. Olivia you have barely changed with the product is. The best selling shoe is the authentic. You have barely moves the price. I recognize there is a new vans. They retail for 60. But your competitor nike we spoke to that ceo in the show. He is charging 150 bucks. Why dont you raise prices . Kevin one of the founding elements of the brand was about providing quality footwear additive horrible price and going direct to the consumer. In our eyes when we think about our consumer and what is important to them, it is about how they use our product to deifine their style. What influences them is they go through that beautiful messy time of the ir lives of figuring out what parts of art what music, and their individual sense of style finds themselves as they define themselves as individuals. We do not have to go after price points to do that. Erik how do bvans sales breakdown by demographic . Kevin by demographic we do not look at it directly that we. Vans is a psychographic been a demographic. Our products, much of it is unisex in style. It to itself across male and female. Very interesting how they choose their tastes. We focus more on geographic rose when we think about how the brand is going to grow. And about people who want to express themselves and individuality for the product they choose, the activities they choose, and through their endeavors in art and music. Olivia competitors attaching their brands to superstar Sport Celebrities has been an Effective Marketing strategy. Why dont you get vans name on kelly slater of tony hawk . Kevin we have athletes that help them perform better. They help us create the best product we can put in the marketplace. At the same time, we have been lucky enough to have long relationships with artists, celebrities, musicians, and designers who connect to the brand and a much more organic way. They see the brand is something that connect to rather it is through their youth or their interest. That helps us because it is authentic and organic. Olivia and you do not pay the. Pay them. Erik i dont see the nike flynet as a competitor, really to the vans shoe. Who are your competitors . Is it skechers, the adidas samba . The chuck taylor . What do people buy if they are not buy vans . Kevin anything that competes for the teen wallet. Whether it be footwear or apparel. We have a larger purpose and is. There is a large range of competitors, whether it be footwear or the large athletic brand that has more recently entered the Action Sports base. Space. Olivia the president is in oregon today at nike headquarters were the ceo of nike says the new transpacific trade deal would help them create jobs. One impact with the tpp have on your business . Would you be able to create more jobs in the u. S. . Kevin i do not know about that because that is a little bit of speculation if it gets done. We would take it very seriously as the trade deals change and look for those opportunities to see how that would affect us as a company and see what we would do related to this changes should they happen. Erik i want to know how you keep, how2 vans remain such a relevant brand with the young kids my 12yearold daughter wears the vans leather slipon. If i asked her what she wanted it she would say, i like it or my friends have got it. How do you communicate with those kids . And the next generation and the one after that . Olivia hopefully she will get you to wear them, too. More importantly, it is the way we go about it is to our platformss. We have one platform calledvans va ns custom culture, about encouraging High Schoolers to participate in the arts. We are in our sixth years. We have donated 400,000 to art education. Things like the wraparp tour is accessible. Those activities connect our consumers with our brand in ways that are meaningful to them at the right time of their life. Olivia they say imitation is the highest form of flattery and a lot of brands imitating your vans slipon. Erik allr right. Thank you, indeed. Breaking news out of the u. K. David cameron is not the only man keeping his job. So is chancellor of the at checker george osborne. The chancellor of the exchequer. The tories won a convincing victory in yesterdays election and will control the majority of the seats in Parliament Without needing a coalition partner. Leucadia national bet on online currency. Leucadia may more than triple the money it spent fxcm almost failed after the swiss bank allowed the franc to trade freely. One of espns most influential figures is leaving espn. Bill simmons build a personal empire at espn and was given its own website. Last year, espn suspended simmons for three weeks when he called Roger Goodell a liar. Olivia it is time for the yearbook game. Here he is. One last look. A professor who graduated from soft high school in michigan in 1963. That is all we know. Erik he is so much more distinguished than being a professor. Olivia he looks like a like a lanky teenager. Who is this professor . Erik it is friday, everybody. Time to play the yearbook game. We asked you who this man is. A professor who graduated from Southfield High School in michigan, class of 1963. Olivia who is he . Erik it is of course but schiller, the winner of the nobel prize in economics. Look at the resemblance. Olivia yeah, bob schiller, if youre watching. Erik he guessed. The shiller p. E. Index states that equities are overvalued. The shiller p. E. Is ratio shows the cyclical adjusted. Case and bob shiller developed the caseshiller home price. A for effort. Olivia very good. I have fun today. Erik we will do this again. Olivia is carving out a new home at 10 00. Market makers moving to 8 00 a. M. Olivia, i will be joining you at 10 00. Olivia i may consider getting a fitbit because tracking my sleep might not be so depressing. Erik i will work on that this we get. Next up on bloomberg, special report out of london on the u. K. Election. George osborne just reappointed chancellor of the exchequer. David cameron, another term as Prime Minister. Francine lacqua in two minuetes. Matt it is time for bloomberg on the market. Midway through the trading day, we have the continue rally of u. S. Stocks. The Dow Jones Industrial average up 1. 5 , gaining 278 point. The s p up 1. 4 at 21. 17. Rising up to a high there a record high. The nasdaq up at 5,013. Very interesting look at the s p. As the jobs number impressed on some levels. The unemployment number did at 5. 4 the uk election. Im here with hes an equities derivatives strategy. I want to ask you about the market in general. This has more to do with our jobs number than the u. K. Election, but we rise in sympathy with what is going on in europe. At the same time, we continue to believe the market has the legs to go higher. Of course, 30 cent spike in volatility and a coalition between the stock market and the bond markets stocks and bonds were selling off together sharply and start to rise back up together. We think this is not going to last and fadeaway. Matt you think stocks will continue to rise but bonds will come down . Anshul slowly. Yes there is a bit in the bond market for sure. That is in sharp reaction to the steep selloff. And well continue to see that normalize stabilize but a bit lower over time. Matt if the fed continues to hold in the status position and pushes out longer and longer until we get liftoff . Anshul if the scenario changes it is a different thing altogether but the numbers suggest there will be some sort of wage pressure coming into market which means the fed will have to act. Overall, the Economic Data numbers are ok. They are not great, but at the same time, they are good and bad mixed together. Matt this is options insight. You have an interesting trade on rack space. Talk about the company. Anshul a Web Hosting Company that has got a lot of business. All the analyst love it. Mentioned positively on salt yesterday, in a conference yesterday. Matt a partnership with amazon. Its opened deals with microsoft anshul all of that is true and analysts love it. But i would like to bring the bill of caution. Contrarian that i am. You have to understand that a big chunk of the business is somewhat commoditized. If you have entrants like amazon coming in, they are going to drive the margin to really low levels. Wher it wille be difficult for people to sustain the levels. At the same time, and the stock you are paying an awful lot at the current level. Matt 69 times earnings, what a bargain. Anshul a lot of growth is embedded in the stock. I would like to bring the bell of caution, and i would like to play by buying a spread ahead of earnings monday. Next week, i would like to buy the 48. 5 foot spread from anywhere from 1. 10 to 1. 40. Matt going out on a limb. Thanks for joining us. You are watching bloomberg politics. We are coming to you from bloombergs European Headquarters in london. Nigel these are the headlines on this momentous day for british politics. The conservatives have swept the victory clinching it, david