that could include a $2.5 billion settlement, a substantial amount of money for credit suisse, as well as a guilty plea from the parent company. this would be a sea change in the way the justice department has dealt with big -- banks. one of the conversations we have don having is what will this to the bank, and how will that affect the bank, hurt future business, impact revenue? >> this is unchartered territory, right, if they were to agree to criminal charges? >> it is. if they go for the parent whatny, it is a turn from the justice department has done where they could charge the subsidiary, which typically shields the broader company from collateral damage. >> what is next once they saw this? >> we have a lot of people to go . we will see what happens to a bank if a parent company plead guilty and is find, and if the justice department will go after other banks and similar cases. much, keriu so geiger. fcc chairman tom wheeler's proposal to regulate internet traffic has cleared its first pozo, and the lobbying fight begins. peter cook has more on the fallout from wednesday's decision. we talked right after the announcement was made, he eked out approval for this, but there will be more fire from all sides, right? >> there is someone in tom wheeler's plan for everyone to issue a and it will titanic battle. the future of the internet is at stake. we have protesters complaining about the plan before it was approved. a lot of the more it it would mean fast lanes for some internet traffic, slower lanes for others. wheeler pushed back, trying to satisfy critics saying the plan is trying to maintain an open internet, and he talked about a hypothetical -- what might happen under circumstances. take a listen. >> if the network operator slowed the speed below that which the consumer bought, it would be commercially unreasonable, and therefore prohibited. if a network operator block access to lawful content, it would violate our no-blocking rule and be commercially unreasonable, and therefore doubly prohibited. >> but the wheeler plan right now does not necessarily prevent some sort of paid privatization going forward and that has activist, public interest groups, upset. convinced it remains insufficient to guarantee a truly open and neutral internet. this will be the summer of net neutrality. this is a taste of what is to come. >> for the broadband providers, they are not actually celebrating either. >> that is right because within the plan is a separate proposal, an alternative pathway, that would reclassify as telecom services. we heard from at&t, verizon, comcast, similar statements, and top is the statement from a at&t official. they are worried about the alternative. they want to make sure wheeler and his colleagues at the ftc do not choose that route -- fcc do not choose that route. >> thank you, peter cook. &a have had lots of m activity, and darden just announced they will be selling red lobster to golden gate capital for $2.1 billion. they are signed the red lobster chain. and other fast-casual chains have been struggling as fewer customers going to their restaurants. they are selling this to a private equity firm for $2.1 billion, just announcing that woman to go. -- announcing that moments ago. unveiled its new fall lineup including the final season of "two and a half men." last -- lesspoke to moonves. >> they are really excited about thursday night football. he felt it was worth it. we did get a chance to clear up some rumors that were out there, such as who might be taking over late show echo -- show." one of the names that had come up was joel mchale, and part of d was that it surfaces nves wifen, les moo tweeted out a photo of the three of them. neil patrick harris is another name that had surfaced. >> he said something about this. >> he did. risk, when he told howard stern that he then offered the -- neil patrick harris, when he told howard stern that he had been offered the job, that was not the truth. >> we asked him what were the possibilities -- do you want to come to a new series, we knew letterman might be open, 12:30 might be open, late-night. it was a general topic. per se.ot offered it we would love to have him back in the family in any way he wants to do it. >> let me ask about "the late late show." >> there are no conversations underway. joel mchale is a wonderful talent. we would love to have him in some way but there was no discussion about 12:30 a.m. areo. also talked about >> here is what he had to say. --we obviously think areo aereo is illegal. like we say, it costs a lot for the nfl, to produce "the big bang theory," and they are basically taking our signal and selling it to consumers. when they do this with comcast or time warner cable, they pay us. >> is also pursuing putting network online -- putting his network online. trish regan, thank you so much. .> any time, betty >> trish regan, thank you. ceoking, uber's travis lakalnick. it has been rolled out in 115 cities around the world. such as red cap i thanthan 10 -- are less $10 million. someone who has billions in his pocket is billionaire warren buffett, adding big -- betting big on verizon growth. a $530 million stake. the company trimmed its stake in general motors. i want to bring in noah brier. do we know who made this decision? >> we do not know, and that is always the mystery when berkshire puts out these filings -- we get a list of the stocks, the size of the state, and not much more. >> why would this make sense? >> there are a couple of things. we spoke with some analysts and they pleaded a deal with vodafone. they are now the sole owner of verizon wireless. for of it is there is room growth in the u.s. for mobile phones even though most people here, or a lot of people here already have smartphones. >> you cannot imagine that warren buffett will be making a like this. it is out of his purview. >> the telltale sign is the size of the position, $530 million. what warren buffett has been saying is he really focuses on the largest investments, the multibillion-dollar deals, whereas his deputies have smaller portfolios. for them, it is more reasonable to be taking a $500 million position. >> one of their big bats paid off with -- big bats paid off ts paid off with directv para >> it has certainly done quite well for them. ?> what about general motors >> they trimmed it by about 25%. obviously, everyone is aware of the recall issues gm is having. we'll have to see what happens with that position. >> noah, thank you for joining us. "--ng up, and media like print media, like "the new york times" could use some buzz. we will look at how they can compete. eliot spitzer is back in the news. this time there is not even a hint of scandal. stay in the loop -- stay "in the loop." we're just getting started on this friday. ♪ >> all, the irony -- yesterday, buzz feet obtained an internal -- buzz feed obtained an internal report on "the new york times" outlining how the company likeing beat by companies buzz feed. how do digital shards that were -- sites that were once shunned becomes all the hottest companies around? guest hostring in a for the hour, and angel investor nowelf, jay samit, who is leading a crowd funding company involved in real estate. great to see you. >> good morning. great to see you again. >> we will get to all of your other jobs in a moment, but on digital content being so hot, how did "the new york times" miss the boat? >> i think it happened one year ago. they were in newspapers, radio came along, they did not go into radio. television camera along, they did not go into television. theyis the big mistake -- are making money, why move forward. it is the kodak examples. they had digital cameras, all on film. was made has doneyork times" the same thing, get the last dollar in the market that you own. >> is it too late to build a solid digital strategy? >> not at all. any start up in the world wishes they had the brand equity that "the new york times" as. they could go into many different areas but they have to go into a different commitment area that has not been seen. look how bloomberg went from a little boxed into every medium. you are sharing information where the consumer was. >> that is right, a shameless plug for bloomberg. "hy doesn't "the new york times or one of these big companies go ahead and buy one of these sites? >> they should have, and they should have done it early on. this is the music industry. too many said they were selling around things that shipped on trucks rather than entertainment. feed,panies like buzz the intent post," -- huffington post," you could not make money. >> a tough thing is when the market catches up. look at jeff bezos. it's a $1 billion of investment before amazon became a global dominant source. luckily we live in a society where there is access to the risk capital and the rewards are astronomical. >> what you think has changed, what changed so that now that it is profitable? >> this here is the first time that online advertising beat television advertising. that is a huge shift. where did all of that growth in online advertising conference, print. print has eviscerated. >> essentially given that up. >> exactly. >> speaking of lofty valuations, we just have the story on uber. >> i just add a column in "the wall street journal." there is always an imbalance and you are making a bet on how it will end up. people bet a lot of money that napster was going to change the world, and they were wiped out because they were wrong. here, it is a different era in --t is an employee, except subcontractor, the workforce, and the crowd -- the idea of a data and the cloud is changing every model. uber, every time i leave i say it is too easy. there has to be a catch. >> the catch is the pricing model. it is not the same price every time. ?> isn't there a regulation >> at this point, it is roulette, you are having no idea what you will be charged. -- $3 billion.s you are in the music business. -- hats offto jimmy to jimmy. he did a magnificent job. ats figured out how to get into cars. nobody else figured out how to get into cars the way they did. now you have a way to bring services into that hardware that already has relationship with carmakers. this is an exciting, dynamic space, especially five years out with self-driven cars. what will you be doing when you do not have any -- have to drive? you will be listening. >> does it make sense for apple? >> it was a smart move, the type of move that says we are not the only cool brand anymore. >> stay with me. jay samit, my guest host, executive chairman of reality mogul. jcpenney soaring. finally, the retailer has good news to report. plus, l.a. clippers owner donald sterling fights back, won't shut up, and the nba could be in a legal battle with him. ♪ >> first. bloomberg. >> you are watching "in the loop ," live on bloomberg television and streaming on your phone, tablet, and on bloomberg.com. good morning. i am betty liu. here are our top headlines. jcpenney is reporting its first quarterly sales gain in three years. they are still losing money, but reported a narrower an estimated loss in the first quarter and bolstered finances with a larger credit line. chesapeake energy announced this morning they are pushing ahead with a spinoff of its oil fields services business as a part of the plan to repair its balance sheet and cut high spending programs put in place by the cofounder and former ceo. darden restaurants is selling its read lots their brands to golden gate capital for $2.1 billion. it will do a new share about $700program of million, trying to shore up its balance sheet, and sell off some under-performing assets. now, it is 26 minutes past the hour. bloomberg tv is on the markets. a littletures are just bit lower. we are awaiting more economic data this morning, including housing starts and you lean permits, -- building permits, always key indicators of where the property market is going. we are on the markets again in 30 minutes. as we await the housing data, i want to bring back our guest host, jay samit, who is now turning his attention to real estate as chairman of the property crowd founding company reality mogul. i bumped into you at milken. he said i started this new company. you are a serial entrepreneur. what is this company about? >> commercial real estate is an $11 trillion asset class that has no liquidity, and the average investors never had access to the deals that the big boys in wall street do, so why not crowd people who want to buy a building? we have 20,000 investors that have signed up, all accredited. >> on which side? realtymogul.com. >> they say i want to put x amount of money in? >> or they pick a particular property. we recently funded the hard rock hotel in palm springs. it makes real estate investing actually fun. >> so, how do you qualify to become an investor? >> under sec rules and the jobs act, you either have to have $1 million in assets other than your home or make $200,000 a year. >> so, you pick the properties that you want -- they are already out there. >> somebody else's trying to buy a property and they need capital, a large real estate company trying to buy another store, housing, senior housing, and say they needed $3.5 million. we do the underwriting, check out the deal, who the sponsor was, put it on the platform, and six hours later, they have the money. >> who does the due diligence on it? >> we have an underwriting department. we are about diligence and transparency. you can see the transactions, attended webinar, take control, just the way e*trade changed the way you were able to buy stocks from their homes. >> how is this different than buying a reit? reit, you do not get the appreciation, one of the huge advantages of buying real estate and then you have costs that are not transparent. our investors are paying less than it was two percent for assets under management, so there's not a lot of load, and more return to the individual investor. >> is it liquid? can they pull their money out at any time? >> under fcc guidelines, you have to keep your money in for a year -- sec guidelines, you have to keep your money in for a year, but in the future, imagine a secondary market where it is no different than the new york stock exchange. >> did you put your money, or out of this, now? >> two onto turnovers came to me, and it was the best idea i have heard in 10 years. >> they set up -- they said we want to crowd fun real estate? >> they said why is real estate done the same way for 1000 years with no transparency. you could go to the biggest real estate family in new york and find out the cost of equity, and they could not tell you, but you could go on ebay and see the price of the 1988 tickle me elm o. >> some of these developers that are looking for funding, why would they go to a crowd funding mechanism if they could just get the money from a bank? >> banks take longer, often charge more, and they often do not play in tertiary and secondary markets. so, for the small real estate guy, the guy that only has 100 million in assets under management, as is probably the easiest, and quickest way. we are an outsourced capital markets arm with no overhead cost to them. >> a very interesting concept, but hang on. we are news on the property markets. housing starts much better than expected -- 1.1 million, essentially. that is again about 13%. building permits rising by about 8%. mike, should we be pleased by these numbers? >> well, we should be pleased when you consider what the expectation was. we thought housing starts would be up 3.6% amid a big rebound from where we have been, and instead you still get a 13% rise year a lot of this probably has to do with the weather, builders that could not build during the winter months, now putting stuff into the ground, but it shows something interesting. the others have more confidence than they were expressing the other day in their own survey. this is apartment construction. apartment construction is very volatile, up 39.6%, after being down 11% the prior month. upgle-family starts are 8.3%. this is really a multi-family apartment story, but on the other hand we have seen more people move into that area, fewer people buying houses. it is good in the sense that it puts more people to work, daddy. >> it certainly does, thank you, -- it -- to work, betty. >> it certainly does, thank you, mike. will you expand into that? >> it is one of our asset classes. it is a huge category. people are delaying marriage, family, and that means longer years in apartments, and there is a shortage, and apartment values are going up. >> would you ever go into something like single-family homes, for instance? >> we are trying to be as conservative as possible. centers haveopping to have 13 or 10 and apartment buildings have to be greater than 50 units. --mike, i know you have more mike is not there, in fact. ok. you are looking into residential as well? >> multi-family is a huge sector as well as substance of the senior family, and student housing is a big category. >> i hear student housing is about to bloom. >> it is amazing in different areas. the new york market has cap rate compression, but in other parts of the u.s. -- we have been deals and 27 states -- are still showing some length. >> what is -- lift. >> what is the biggest risk that you see, interest rates, demand? >> there is risk with all investment. the good thing about real estate investment is that timeshares most risk. if you hold long enough, it times to do well. my biggest fear is others not following regulations, jumping in. if you remember in the early days of e-commerce for people were afraid to put credit cards online because of a few bad apples. samit, realityay mogul, staying with me for the hour. speaking of real estate, a big score for former attorney general and your governor eliot spitzer. he sold a property his family owns in manhattan, with a price tag of $144 million, -- $147 million, more than estimated. the spitzer family has owned the house since the 1980's. we will be back on." --"in the loop." ♪ -- marketrkets where where consumers are not hitting physical stores to shop and many are on the hunt for a new ceo, -- westfield is trying to change the way you shop. cory johnson got an inside look. >> this is was shopping at the mall usually looks like, but this is what it could look like in the future. >> it is like a tablet at home, but they are seven-feet tall. >> westfield this testing these new digital storefronts. >> it is like window shopping, a chance to explore, learn about what is available, really get engaged with the content, and from their visit the merchants. >> the displays look like mirrors until you get close, and that is when the technology kicks in. a high-resolution display, check. touchscreen technology, check. real-time updates. >> am i going to the window shop and seeing what products are available, we want to give the shopper larger-than-life opportunities. >> it is the brainchild across the industry to integrate digital stores. >> our big challenges to grab the attention of shoppers. people are time-start. we want to get their attention and provide the most useful detail possible. >> yet another way to shop and get your clothing. we are back with my guest house, jay samit. being real estate, now you know a lot about malls and how people shop and how to get traffic. what you think of that idea? >> the out of home experience has to compete with the online experience. show room in, where people go to stores and buy online is killing big boxes. why,ave to give a reason innovate. >> does that make sense to you? >> i think it is trying to find a reason why. it is a novelty, not a compelling answer. well had not been aware as -- we had an entrepreneur on who were sot retailers different, and these days i go to stores because i want the experience. experience is more important than the merchandise because the merchandise i can get online. if i go to the physical store, there is an experience that i need. would you agree? >> when you look at who has done the balance well, even though i am not a customer, victoria's secret -- you go there because you get sized, and then you could buy the intimate apparel online and you have that relationship. they figured out how to do the blind. other stores are still -- blend. other stores are still struggling with the match. it has to be better than doing it online. >> recommend it has to be better than doing it online, but does online have to do it better, because i find that it is intimidating there. >> online is getting so good at anticipating your needs. we all saw the story of target knowing somebody was pregnant before the family did. >> wait, what story was that? >> target was able to profile by your shopping habits that somebody was pregnant before the father knew. -- whenused properly, used properly, the data actually helps you because it brings you the things that you want, and websites are getting better at bringing you the things that you have to have. >> in your tastes, i guess. hang on. we will talk much more with jay samit, the second chairman of reality mogul, because we will be talking about work smart. coming up, clippers owner donald sterling could defy the nba in what is shaping up to be a at all right now. more petering more -- more details in today's this versus that. ♪ >> we are back with jay samit, who i had the opportunity to interview for my book, "work smart, what ceos say you need to get ahead." i know you are working on your cannot wait to read it, but one of things that stuck out to me that you said when we were interviewing you said "if you work for me for a year and you do not make a mistake, i will fire you. cap >> in a start up -- fire you." in a start up, it is about finding out what works and what does not, and if you are so afraid to make a change and try things, your startup will fail. it takes a special type of person. >> do you want everybody to be like that, or only key people? >> everybody, because everybody has an impact that a start up. i mean, everybody is betting the company every day because you have such a small staff doing a lot of things, and it is those risks that you take that uncovers the things that would not have been obvious to the outside. >> so, how do you tell people >>ngs -- this question mark i was interviewing a candidate last night here in new york for reality mogul, very bright, but he worked at a big financial institution where if you make mistakes, life is over. >> you are done. >> i had to explain that line, and my other one, which is a really good start up, the chairman works for you. you work for me, i work for you. you have to tell me what you need to do your job, i get it for you, and you should be good, but if you do not tell us what you need, how do we solve for it? it is a different relationship, empowering every person to grab as much land and go as fast as possible. we have a young ceo in this company, i do not think she sleeps. she is nonstop. i got e-mails at 3:00 a.m. last night, and she was surprised an answer right away, but that is what it takes. >> i was speaking to a venture capitalist a little while ago, and he said something interesting -- i want my entrepreneurs to be megalomaniacs, i want them to feel like they can do anything encounter the world. i want them to have huge egos. it might be obnoxious in another company, but it is good if you are starting your own. >> the odds of success are less than 1%. you really have to believe when you are going to battle that you are the 1%. >> that you're the next mark zuckerberg. >> if you do not, you will be enough life. that is what it takes to be successful -- eaten alive. that is what it takes to be successful. >> the other thing that you said that struck me is if you have a great idea, you should try to kill it. >> absolutely, the idea of protect it, nurture it, help it grow like butterflies -- it is a crock. you want to figure out why your idea sucks, kill it. if you cannot kill it, then you will know when it goes to the marketplace that it will work. >> love it. jay samit, great to see you. chairman ofxecutive reality mogul, and coming up, we know that virginia is for lovers. we will see if this really translates into tourism. shareholders-- attack compensation. stay "in the loop" for that story. ♪ >> state budgets are stretched and tourist dollars are vital. one key component, a slogan, but we are not sure the new cornhusker campaign, visit reallya, "visit nice" makes you want to go there. we looked at which states do it better, and to the taxpayer-funded marketing counterweights, are they worth it? newo you part -- heart york? rt d.c., but one thing we can agree on is everything that happens in vegas stays in vegas. marketing is key to all of the states. heard "virginia is for lovers? how about "don't mess with texas?." >> where are you, you are in california. delaware, its slogan is "it is good to be first," which is ironic, as he came in last in travel spending in 2012. 50 state tourism offices have spent more than $350 million on marketing and promotion in 2012, no small number, but significantly less than the more than $75 billion spent by the top 50 national advertisers. with limited funds and fiscal problems around the country, how does a state stand out? a good slogan does not hurt. texas, new york, and nevada are all in the top five. worst three states, revenue wise, they have slogans, too, but maybe they are in need of a revamped. or unnaturaltural wonders are the primary reasons it will pack their bags for a visit, but just like pepsi, nike, and mcdonald's, marketing dollars payoff, and if that fails, free advertising from in hollywood is not her. >> crabcakes and football, that is what maryland does. >> phil mattingly joins us from washington. each state continued -- contributes to the overall u.s. tourism industry, so how does the entire country rank? >> in the wake of the financial recession in tough times, the u.s. is still doing quite well on the tourism side. last quarter, they pulled in $1.5 trillion in door is a money. two, wee rank number are behind france, which some would find offensive, but when you put it together, u.s. is still a major primary destination for tourists around the world. >> what about a formula -- is there one singular formalities tourism offices the neck? -- minnick? >> on average, the median about $6.5ent is million, not a ton of cash, but a good amount of money to get stuff done. one of the testing ideas that has come out actually happens in california. they do a public/private thing with a nonprofit called visit california that works in tandem with their state tourism office. that group -- we have seen the commercials, they bring in celebrities, they run them through the country, and internationally. the target mexico, europe. you see rob lowe a lot. they are doing a youtube push. there is not one tried and true method, but the public/private thing has been very effective for the state of california. >> thank you, phil mattingly, in washington for us. great piece. today's businesses that might be no surprise -- it looks at the la clippers owner donald sterling is not going quietly in the fight with pro basketball. this is the nba, which banned sterling for life. the league began a process of forcing him to sell the clippers, and it is up to the owners to make the decision. that is donald sterling, a billionaire who is no stranger to lawsuits. according to "towards -- sports according to "sports illustrated," he thinks that he should not be punished, and he may sue the nba for violating his rights to due process. this story is likely to go on for quite some time. and, it is 56 minutes past the hour. bloomberg tv is on the markets. equity futures are coming back a little bit. they are still slightly lower. housing starts came in much, much better than expected, and also, building permits are up about 8%. both good numbers on housing this morning. coming up, one car service looking to be separating itself from the pack. talkingwhat we are about, seeking to join the $10 billion club. the horse world will be watching at the preakness stakes in baltimore. does california chrome have what it takes to be the first triple crown winner in three decades? you are watching "in the loop," live on bloomberg television and streaming on your phone, tablet, and on bloomberg.com. ♪ >> we are about 30 minutes away from this opening bell on this friday, you are "in the loop." i am betty liu. here is a we are working on. major indexes have fallen for two days in a row. another dealer the drug making industry, abbott labs buying pharma for $2.9 billion. it is a showdown, coke versus pepsi once again. the two are squaring off over drink dispensers in restaurants and theaters. uber is in talks to raise financing in a round that could value the company at more than $10 billion, which would triple the valuation from 3.5 billion last year. serena covers the tech beat. uber has already raised about $3 billion? >> so far, they raised $300 million. in this round they want to raise a bit less than $1 billion, and i have been told the valuation can be more than 10 billion. if that happens, they would join a small class of private tech companies that are worth 10 b&b,on, and those are air dropbox. in ifis a nice club to be you can get it. why does the company need this new money? >> unlike many tech companies that these days are very nimble thanks to mobile and cloud technologies, uber has huge operations. they are now in 150 cities worldwide, and whenever they open in a new city they need an office for logistic support because they have drivers. that means a lot of money to grow. plus, they need coverage, insurance for liabilities, and each car needs a $1 billion -- liability insurance. that is a lot of costs, and they have a lot of competition coming, and then taxi drivers worldwide are really against them. >> they hate uber. >> oh, yeah. [laughter] >> i have seen it on the streets, the competition between the two. what about the fights with the taxidrivers and the regulators? londonlast to join about taxi drivers. we have reported that 10,000 will protest in london and we have seen protests like that all over the world like in paris, berlin, and in france, even, the president intervened. courts,, a lot of globally, are intervening in favor of uber, and regulators, ultimately, are trying to, you know, close the gap. i personally think that ultimately this is an innovation that is bringing more options in the market. users are embracing it. it will be hard to stop it. ,> all right, it sounds like it i mean, the train has left the station. thank you so much, serena saitto . serena saitto of bloomberg news. moving and shaking this hour, kentucky derby in her california chrome,r california going for the second leg of the triple crown tomorrow in the preakness stakes. three tofive--- favorite. chrome, california's mother cost 8000 dollars and his mother -- father cost just 2500. no horse has the triple crown in 35 years. in an annual meeting at oppose theearly 80% current compensation for its co-ceos that made a combined 49 point $5 million lecture, basically $55 million. million last year, basically $50 million. how does this compare to other of co-ceos, terms they are making a lot more than the next company that has a pair of co-ceos in the russell 3000, and we crunch the data to find american financial group. are making $20 million, less than one of the chipotle ceo's. when it comes to companies ceo's, theyevenue, are making between $8 million and $12 million. they are really ahead of the pack. >> they are. what does chipotle say or have they said anything about why they think their ceos deserve the pay question my quick they tie it to performance, and they have a point. pay? >> make tied to performance, and they have a point. it does not really matter if votingshareholders are against it. >> right, if your shareholders are angry. have a racist before, or is it the first time we have heard about this? this before,raised or is it the first time we have heard this? >> this is the first time that it has happened. >> the first time it has been all right for them. >> thank you so much. >> thank you. >> coke versus pepsi -- the soda giants are stepping up the competition for your business with hundreds of flavors at your fingertips. we will give from the vice president of coca-cola's street style unit on this growing application. we will be back. ♪ >> deutsche bank is leading -- leaving las vegas, selling its casino to blackstone 41.7 $3 billion in cash, ending a six-year, money-losing venture in casino development. speaking of casinos, las vegas sands sheldon adelson talk to me last week in a recent sitdown interview. >> is gaining is a form of entertainment, let it be that, not a form of trying to win money and be the house, it is as i said -- beat the house, he does as i said, we do not build the palace is on the players winnings. we can only build them on the losing's. is that onaverages casinos, the players have to lose over time, so why are we enticing people to do that? >> that is a question sheldon adelson should ask himself. for more on my exclusive video, headed to bloomberg.com/tv, or get to your tablet for the full interview. blackstone seems happy to take its place. place.sche bank's cristina alesci has been looking into this. when they leave las vegas, are they leaving with any winnings? >> no. they are leaving with the sense that they finally managed to sell the property. >> get out. >> at a good price. it seems like a good deal for blackstone because if you look at where other hotel/casino stocks are trading on a backward-looking basis, it is a little bit more expensive, but cosmopolitan has actually been growing the top line, and last year was a record year in terms of revenue, and also, as far as go, go, you could -- comps you could argue that casinos like mgm have a lower mix while the cosmopolitan is a pure, in him play on the strip. >> we had the ceo of penn gaming earlier this week said they looked at the property and it is icy, but they would love to be on the strip. >> everybody wants to be on the strip because you have seen attendance to las vegas go up and up, and that is a long-term trend, since 1995 we have seen attendance go up, and on the strip it has been outstanding for the premium players, and not because of the gambling because we have reached a mature market in terms of gambling. >> gambling has actually slowed down there. >> very much so. it is on the other parts, the clubs, the restaurants, it is going at a good pace, and the margins on that business are incredible. if you look at the cosmopolitan revenue stream, only 20% comes from gambling, and the rest comes from entertainment and lodging, and actually. >> what will blackstone do with this? >> it is very interesting. in terms of operation, i am not sure they will change that much, but from a balance sheet and operating financial spectrum, they have no debt -- perspective, they have no debt. that is a big hindrance, gone. then you have the fact that vegas it can use to attract people, and the diverse revenue stream -- i think they will play it out, right it, it and sell it to the highest bidder in a couple of years. propertiesre to see put up for sale like this? >> it is sort of like a remnant of the financial crisis in a way, right? >> yeah. >> the developer did not have that ledney to finish to deutsche bank holding on longer than they wanted to. many likeere are not this available, and there are not many that could cut the check. blackstone has a $13 billion fund that they need to deploy. they were one of the few bidders that could come to the table and say we have this, all equity, all cash. they will probably leverage it at some point, but right now is a big check, and it is all cash. >> cristina alesci, thank you. coming up, pepsico has an answer to the coke freestyle machine. will it give them an edge over their enemy in the soft drink market? donald sterling goes all in against the nba -- speaking of enemies -- the disgraced team owner is refusing to pay the $2.5 million fine. he is actually a current owner still. he is threatening to sue the league. we will be back with much more. ♪ >> ok. there is a live shot right outside our offices in new york city, looking a little bit brighter after a gloomy morning, and it is looking a little brighter, i would say, in equity markets after some pretty good economic numbers that came out this morning. i am going to get to that in a weent, but first -- no, it go -- equity futures, as i mentioned, we paired our losses. we are now actually in the green. housing starts are at 1.1 million, building permits, up about 8% had both of those pieces of news where bullish for the market and for investors, and that means that in bond markets we saw some of those yields decline as buying happened -- excuse me, as some of those -- some of those yields were up as selling happened. you can see that 10-year yield. here is a look at the top tech stories on our bloomberg west radar. the blackberry director will step down from the comedies from one year after his -- the company's board one year after he was named. his reasons for leaving are not clear. pinterest raised $200 million in a funding round, giving the -- $5up a $500 billion billion valuation. pinterest said this in an e-mail statement yesterday. , $10 billion. rackspace is exploring ways to expand the business after amazon cut prices at a faster pace than expected. whenever they hire a bank, you know what comes next. catch the latest in media and tech everyday at 1:00 p.m. and 6:00 p.m. eastern time on "bloomberg west." unveiled cotana, which .s just like apple's siri sam grobart does the hard analysis to find out which is cooler. >> by now, you heard a lot about siri from apple. microsoft came out with its own, and they are not yet scarlett johansson in the movie "her," but they are getting close, making me want to find out which one i would want to hang out with. do you like me? what a question. of course i am your friend. >> oh. like me? >> while i set aside some space for opinions, this one did not make the cut. >> that is not cool. >> tell me a joke. >> the past, present, and future walk into a bar, it was tense. >> can you sing me a song? >> i would rather not. >> can you sing me a song? >> here is one i know -- ♪ should old acquaintance be forgot i never thought upon ♪ >> have you heard of siri? >> of all of the questions you could have asked. ana?ave you heard of cort i am not sure i get it, but it is funny. >> are you ok, siri? >> i cannot answer that. >> i cannot answer that either. you're talking crazy. i have to tell you, after my extensive scientific research, it all came down to one thing, is huge.to me, that that is a closer. that is why i'm sticking with na.an -- corta >> i did not know you could ask so many questions. freestyle versus fire -- have you heard of them? we'll hear from the vice president of coca-cola's freestyle unit. we are just a few minutes away from the opening bell. stay "in the loop." ♪ >> first. bloomberg. welcome back. you are "in the loop." i am betty liu. it is 26 minutes past the hour. bloomberg tv is on the markets. scarlet fu has the latest on futures right before the open. aret looks like futures modestly higher, taking a shot up off of the latest housing numbers. housing starts coming in much stronger than economists anticipated, jumping in the month of april. treasuries are falling for the first time in four days with yields higher at 2.51%, coming off of the low of two point 18%. -- 2.18%. gold is climbing up. we should note a weaker dollar, stronger rupee. that is because of the victory of the opposition party in india. he and his allies won by the widest margin in 30 years. we on the markets again in 30 minutes. >> scarlet fu, thank you. i want to get on to "the call" on the markets. small cap stocks have been on a steady decline -- look at this chart -- since early this year. is to runuest's call away from smaller cats. barbara reinhard, chief investment officer. it seems like some have heeded your call. >> all caps have been under pressure for three reasons -- valuations are extended. is starting toed dry up. implied earnings have fallen from the moment percent last year down to just 3%, and the yield curve has flattened since the beginning of the year, and the flattened yield curve, even though it is still steep by circle measures, portends a decline for small pets. quick someone say that if you see small caps decline like this, we might be headed for a bear market. would you agree? >> we would not. the big thing you want watching the overall equities are credit spreads, by far and away one of the biggest lead indicators to weakness in the equity market, and we see a lot of strain for credit spread. >> let's talk about some sectors. telecoms -- scarlett has the bullish case on telecom stocks. >> consider the latest headline -- the fcc's proposed internet fast lanes. at&t and verizon would see sales increase if they alarm -- they are allowed to charge more to customers. prospect ofe the mergers and positions. at&t is close to making a bid for directv. sprint is convinced they could convince regulators of the benefits of merging with t-mobile. >> is that an argument to be in it, or would you say no? >> that is an argument for telcos, but we do not see it that way. they do well when the market is rolled over and you see economic weakness. >> why is that? >> they seem to be more defensive, more like a steady .ddie plays, like utilities >> consumer discretionary is another area that we are focused on -- i know you are focused on it as well. alix steel has the case on consumer discretionary stocks. >> this comes courtesy of the chief market strategist of oppenheimer speaking on "in the loop," earlier this week and, he is bullish. listen. >> the consumer will be back for small luxuries, think jack-in-the-box, and on the higher end, kidneys. shouldobal basis, that look good. we also have to say, when you think of consumer's cautionary, it is still a home depot kind of life, renovate. >> he did go on to say the first half is typically slower for consumer discretionary, but he does expect a pick up in the back half of this year. >> you say, barbara? >> they are interesting. we find better relative opportunities in i.t. and health care. the consumer should benefit from lower treasury rates we have seen and the new potential wave of mortgage refinancing, but a lot of that is already priced in, so we like i.t. and health care instead. >> you know, one of things that is very interesting, you study the markets, you can really make sense of what is going on, but for a lot of people, even your average investor, the economic data has been so confusing. one minute, one day, it is terrible. the next day it is great, like today it was housing. the next day it is awful again. how do you interpret the data? >> you have to look at a couple of key indicators that really are very good leading indicators for what it's going to happen in the equity markets. while housing starts -- is great to see them have such a nice top this month, they are extremely volatile, so we do not give them a tremendous amount of weight when we look at the overall picture. we look at mortgage rates instead. you have to know what to look at and that a small subset consistently. >> barbara, always great to see you. barbara reinhard, the chief investment officer at credit suisse private bank on "the call." a fresh battle is starting minnesota waters. -- in the soda wars. startingspire on the heels of the coca-cola freestyle machines. coca-cola is introducing new smaller dispensers meant for places like office rate rooms. interview, -- in my exclusive interview, indra nooyi was optimistic. accepting it is just the beginning of major growth. -- >> is just the beginning of major growth. what we have done with all of our new innovation in food service, and what they are tested with consumers is creating so much excitement, betty, that i think n.l. asked -- i think in the next five years food service will be one of the greatest growth opportunities. >> and it sounds like it is already. more from the other guys, presidentann and vice of the coca-cola freestyle machines. i have seen the machines around. they look really cool. some of the analysts we have talked to say look, they have not proven they really drive traffic into the restaurants where they are. how do you prove that? correct hey, -- >> hey, betty. thank you for having us. we are excited to be launching three new platforms. our customers told us they want the same freestyle experience of engagement, large numbers of , and a and a variety connected device that allows them to have new content for different size outlets and restaurants all over the world. we are launching three new platforms that will need more of those needs across the globe. in terms of the growth we have seen for customers, customers see a growth in traffic and beverage incidents through coca-cola freestyle, anywhere 6% growth in traffic. >> some have said -- i looked at the applico -- pepsico spire machine, and it is much smaller than the freestyle machine. it's part of the palm of the bigger machines were too expensive? >> we believe the first freestyle machine is the right size. it has the right volume for our quick service restaurants in the u.s.. those customers, again, they are seeing growth through coca-cola freestyle. people love the choice, the engagement. inare launching right now, mixing apps, that allow them to say that, pour the drink, and share on facebook. the first customers that were early adopters of coca-cola seestyle are continuing to growth because we are able, through our connected device, to deliver new and exciting content to the platform. they have will say more than 1000 flavor combinations on their machines, and coca-cola has much less. >> on coca-cola freestyle, a large dispenser, we have over 100 unique flavors and choices available to consumers. 70 low-calorie, no-calorie choices, 90 caffeine-free choices, and 80 choices you cannot get anywhere else other than coca-cola freestyle. the new platforms that we are launching today -- one will have over 35 choices, and the other two will have over 80 choices. these are configured where we want the right amount of choice for the right restaurant. >> is mcdonald's participating, because they are one of your biggest food partners. >> they are a very important partner to the coca-cola company. they are testing coca-cola freestyle and we continue to work with them on meeting their needs. >> do you know, did they not do it before because of the size of these machines and the cost or what was -- it would seem that they would likely be one of your first partners to test these machines out. >> well, we respect all of our customers decisions, and we will not talk specifically about any of them today, but we are testing with mcdonald's, and we look forward to continuing to meet their needs as a partner. >> jennifer, you mentioned the flavor combinations, and i mentioned pepsico will have over 1000. could you come at some point, almost too many combinations? i have heard complaints that sometimes it takes too long because people are playing around with the machine so much because there are so many combinations. is it almost at a point where you have to much? >> our consumer research says people love freestyle, the amount of choices, the connectivity, the engagement factor, and the fact that we are able to bring them unique choices and content -- we think we have it at the right size for these new platforms, as well as the original coca-cola freestyle dispenser. >> jennifer, thank you for joining us on this news. , general manager of coca-cola freestyle. betty.k you, >> next, donald sterling, not going away quietly, how is fighting against the nba, and what he perceives as unfair treatment against him. we just a few minutes into the session. stay "in the loop." ♪ >> donald sterling is a billionaire that almost certainly has a lawyer or two on his speed dial, so it is not a shock that he is ready to go to war against the nba. scott chasse neck is here for more on the story. is anyone surprised? >> the best predictor of future behavior is past behavior. let's get this straight. he sued the nba when he wanted to move from san diego to l.a. them every time he fires a coach, he does not pay the coach and litigates how much he will settle for. everyone expected this would be decided by the court, and not him walking away from the franchise that he has owned for 30 years. >> does he have any chance? >> according to every attorney i have spoken with, he has a chance to delay the process, not to keep the ownership. his best shot is go to the california statute of franchises -- can he repair the franchise so the league would not have to take it away? that is his best shot, but repairing, coaches would not stay, players would not go there -- sponsors would flee, how do you repair that? >> what happened in the meantime? we are applying rational thought to donald sterling. i have dealt with him, talked to him, and there is almost no recognition of where his team was, when it was a laughing stock, you can not apply rationality. he loves the team. he loves the notoriety of being the clippers owner. he will fight. that is the way he does it. >> in the meantime, all the people that have been named as possible buyers, they have to stand aside until the legal battle is over? >> i could give you four other credible groups who have had discussions with the nba that are putting together partners who want no part of this process until somebody tells them the team is for you. >> they are frozen. they do not want to do anything. >> they do not want to get their names out there, entertain the thought of owning the team, until something is for sale. we are not at that point yet. >> how is the team doing? >> they were just eliminated last night from the playoffs. they are an exciting team with young chris paul, blake griffin. having unusual is, but they were bounced yesterday by the funder. -- funder and kevin durant. >> the longest that the longer this goes on, would not undermine the value of the team? >> no, it is based on the fundamentals, local tv, national tv, advertisements, season tickets -- things like that. you saw some sponsors flee. some came back immediately after adams overtook action. from the business -- adam silver talk action. it will be based on the business, not temporary diminution in value because of a sponsor flee. i was donald sterling, not the team itself. >> all right, scott, so much more to come. -- >> more toome come. >> coming up, india's opposition party wins. the winner, said to be good for business. he can he revive the economy? ♪ >> time for the global outlook -- ukraine's presidential election is scheduled for may 26, and there have been threats of punishment for russia if it is undermined. ?illow marks, what is at stake >> there are quite a few issues at stake for the selection in the ukraine. essentially, the economy over there is in deep trouble. the central bank themselves have said they would need more money than initially expected, and they will have to use the money to shore up many aspects of the company, and there is political turmoil. large portions are not really under central government control. there have been sporadic outbreaks of violence. they will try to look to restore some of those issues. >> the priorities of a new president, what will they be, willem marx? >> quite a long list. the economy will be one of those issues. negotiating to try to fix up the economy -- they will be trying to deal with russia, of course. the table. issues on they need to resolve what is going on with crimea. they will be dealing with separatists trying to figure out how they can find an agreement with them that involves russia, and keep both parties happy. of course, there is big disagreements over the pricing of gas and delivery as well. >> how important is this issue that you just mentioned? >> it is something i will be detailto ask in more next week when i'm over there, the russia says from now on, as of early-june, they want to ukraine paying for the gas up front, and ukraine says they do not know if they're comfortable, especially at the price they are offering, and economists say ukraine does not have a leg to stand on when you compare their relationship between the countries elsewhere in the world . it is absolutely crucial. heavy manufacturing relies on it. of course, there is the issue of energy security. there is a meeting in moscow at the moment that ukraine, pointedly, has not turned up to, and is focused on energy security for the entire region. >> willem marx, thank you. in india, the opposition bloc led by narenda modi swept to power with the biggest election when in 30 years. the hard it is governed india for most of the last 30 years conceded defeat this morning. it is a sea change. we are joined from mumbai with the latest pair what can you tell us about -- latest. what can you tell us about narenda modi? >> it is a landslide victory. it has not been seen in over three decades. a large part of the wind is credited to narenda modi, a man who rose to chief minister for about 13 years now. all the seats required, a complete majority is 272, and they are at 326, well above the has wonmark, and that him the right to stay claim to the majority support. alliance has spoken nationally with congratulatory messages, and they are coming early. them right from the morning when the first figures of the exit polls started coming out. the first word from narenda modi came out interestingly on twitter. he has made use of twitter very facebook, andnd the first word from twitter was .hat india has won he also did address a rally a short while earlier were he spoke about what he would take forward, particularly the reforms. two things will be washed clearly as far as narenda modi. one is the economy, and how is able to kickstart the economy. for the past couple of quarters, it has been on a downturn. and see going to watch how he will kickstart that at the national level, that he. -- betty. >> it sound like he has embraced social media and rally the troops, so to speak. how are the markets reacting, and how are they likely to continue to react going into next week? >> well, it was not just euphoria on the streets with his party workers, but also in the market. monday, we saw some initial informal exit polls, and that drove a huge uprising the markets. morning, it rallied about 6000. it is the first time ever, and is driven to my clearly, by the kind of euphoria that a decisive government can bring in. has dealt with increasing manufacturing, bringing in more investment. he is likely to moment that at the center, and that has led to this huge euphoria in the markets, and also from different leaders in india saying that a clear majority will be very useful as far as kickstarting sentiment goes. , thank youjayaseelan so much. sunanda jayaseelan, in india for us, with bloomberg. that does it for "in the loop." have a great weekend. hopefully a bright and sunny weekend. next.e markets" is ♪ >> it is 56 minutes past the hour. bloomberg tv is on the markets. i am scarlet fu. we are 30 minutes into the start of trading, and we just got a read on consumer confidence from the university of michigan -- an unexpected drop to 81.8. the confidence index was expected to rise, and we are seeing stocks coming under a little bit of pressure. they are already weaker, the can for some direction, and now they are down to a decline -- it is not a large decline, but a almost nonetheless of 2.5 points on the s&p 500. the dow losing a point at the moment. there was a jump in housing starts for the month of april, upping treasuries turn around a little bit. treasury prices are lower, so yields are up, 2.51%. the euro stronger against the dollar, but just barely. it had been under some pressure under speculation the ecb would take steps soon to add stimulus to the economy. we should note as well that the indian rupee is stronger as well after the election victory by the opposition artie there. a more on the markets and whether you should be buying on the dip, we are joined from the cme. push off to ators risk-off environment. what is the biggest driver in investors taking some risk off of the table here? >> i think, actually, it is not fundamental. it is actually more technical in nature, which this market has been proceeding for almost six months. for those reasons i do not want to get into a huge huff, or focus that this is the high in the market and this is where you start to liquidate, but there was a lot of premise going into the markets for the month of may that this could be it, and we start to see a tipping point, and fundamentally right now, even with the numbers you just released, they are rather mixed. >> they are rather mixed. i would back to a world where all of the asset classes are correlated given what we saw this week? >> there is always a divergence between what we look at here in chicago, as an example between precious and industrial metals. i am not surprised that the movements we have seen in silver and gold, but more importantly, maybe the driver in copper from a global perspective has been a little bit perplexing because technically i go back to the 292-level in copper, and it looked attractive. we have had well over a 10% move now in that industrial commodity. it is why i start looking to copper to see if it is starting to show us a shift in market sentiment, and i do not think it is there just yet, it is why i still think they are buying opportunities in equities. copper, whatn to are you looking for as a leading indicator, as a canary in the coal mine? >> i would be remiss if i do not mention the jobs number, but there is not a lot of faith in the number because of the labor participation rate. for that reason, i go back to the 10-year yield. for these reasons, i think we have put in a bottom here at the 249-level. the fed has not really just painted themselves in a corner, but they kind of have a blindfold on because it is just another rick in the wall right now for the markets if we do not succeed yields go back up because the mullahs can only go so far, and you just mentioned the ecb again, looking for those type of quandaries to be solved. >> and, of course, economist survey by bloomberg still look at an end of 10.3%. michael gurka from chicago. we are on the markets again in 30 minutes. >> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. a plea.ng credit suisse on the verge of in theg to plead guilty -- case and it would also have to pay $2.5 billion. >> shares of struggling jcpenney sore after three years of falling sales. shoppers are finally bond there. >> derby winner california chrome may revive interest in the sport of force racing after he goes after the second leg of racing's triple crown. you are watching "market makers" here on a friday in new york city. 10:00 in the morning. i'm erik schatzker. >> i'm julie hyman in for stephanie ruhle who i think is going to be catching some horse racing over the weekend. >> indeed. >> looking forward to hearing ab

Related Keywords

New York , United States , Moscow , Moskva , Russia , Nevada , Texas , Berkshire , Kentucky , Delaware , Minnesota , California , San Diego , Virginia , Michigan , Washington , District Of Columbia , London , City Of , United Kingdom , Ukraine , Mexico , India , Mumbai , Maharashtra , Nebraska , Hollywood , Maryland , France , Paris , Rhôalpes , Berlin , Germany , Chicago , Illinois , Baltimore , American , Chris Paul , Indra Nooyi , Warren Buffett , Blake Griffin , Willem Marx , Jeff Bezos , Jennifer Mann , Cory Johnson , Joel Mchale , Julie Chen Les Moonves , Trish Regan , Neil Patrick Harris , Jay Samit , Scarlett Johansson , Tom Wheeler , Las Vegas , Peter Cook , Keri Geiger , Phil Mattingly , Sheldon Adelson , Eliot Spitzer , Julie Hyman , Betty Liu , Barbara Reinhard , Noah Brier ,