Transcripts For BLOOMBERG In The Loop With Betty Liu 2014091

Are rising after the fed indicated it wont raise rates. We are going to learn later today whether alibaba will be the biggest ever ipo. Pricing tonight and they start trading tomorrow. Bayer has from decided to focus on his crop chemicals unit. Their ending years of speculation as to what they would do with the unit. But to stay, or to go . That is the question. Voters in scotland will provide that answer. The 307yearold union with the u. K. Will come down to a ballot. We cant give you all results to avoid swaying voters that we can check in on the state. Nna edwards has more when should we start to see results . Were here on carlton hill looking over the city of edinburgh. We expect to get the early results around 2 00 a. M. Local time 9 00 in the evening for you in new york. That wont be the end of things at all. Some of the smaller constituencies will be reporting first. Likely to hear from the western isle councils. Small inhabited areas will be giving us their results first. We might get those results versed in gaelic and not english. That could be interesting for international watchers. Not expected to hear from the large cities until 5 00 a. M. And then by 8 00 a. M. Things could be further. All the way through our morning, in the middle of your night we will be getting those results coming through. Im told there will be a party starting at 5 00 a. M. In glasgow in george square. Anybody who likes a party that might be the place to go. We have no idea who will be partying just yet. Anna edwards will get those results later tonight. Investors anxiously awaiting alibabas final offer price. For the next 24 hours, can you take it . To bring in my guest host for this halfhour, you already heard from him, sir Martin Sorrell the founder and ceo of wptur. One of the largest ad firms. Martin, you are much more than that. Give me your opinion on alibaba. Is this going to be the most important ipo . On a alibaba we tend to miss it. Here in america maybe we dont like the idea of the chinese catching up. Alibaba is symbolic of chinas more than their mergers. It is a technology path. We used to say that the chinese steel many of us, we is to say that about the japanese, hong kong or south koreans. If they do at the beginning, they catch up. What youre seeing it alibaba is that they have effectively cut up to america. It will go through 200 billion in market caps. Same size as facebook. This is one of the worlds leaders. I got this morning an email about what the distributors of the internet were doing, and samsung and china going into india, indonesia and brazil. Arrival in the recognition by america, remember they couldve floated this on the Hong Kong Exchange but didnt do it. They chose the u. S. Which is at a smart move. Smart why . It positions them. Look at the value of the publicity. Here we are on bloomberg in , not about scotland but alibaba. Would not have been a local story but less dominant. This makes people sit up and take notice. Say they areill smaller and revenue size but more profitable. What are you doing to improve the profitability of amazon . Amazon a profitable model of what the chinese do that we dont do . Im glad you brought the chinese up. We have these five myths that the general public thinks about alibaba. , is jack the next jeff of china . He is. He is the Mark Zuckerberg of china and the larry page all rolled into one . The interesting thing of the chinese models is they are not focus. We had various ceos and the alibaba team, you notice they are broadly spread. They are not narrowly defined as a social media or profile media or ecommerce, very broad area broad. Alibaba since then has been investing in all of them yes exactly, so some other myths. Alibaba will be the most important stock to hit the market. Myth or reality . It is not the most important but probably one of the most important. Im buying stock tomorrow for my grandkids. I will bite eight shares. . Ust eight western mark that is a lucky number in china. We will be back with sir Martin Sorrell in a moment. Bayer. The big news from they announced a retreat from the chemicals industry with plans to list its plastics unit as a separate company. It will be focus towards Life Sciences businesses. Joined now by the bayer ceo. Thank you for joining us. I know it is taken a year or more to make the decision to finally list the plastics unit, what was the big issue. Not really an issue, but when you have a portfolio it is important to know where you see the future and where you have the best opportunities. Our Life Sciences businesses have developed very well in the past years. We have put very good drugs on the market and in crop science we have had good success with organic growth. Some petitions from merkel and pc, and our Consumer Care business recently. Life science is now 90 of our profit. Material science is such a different model from live science that we decided now is a good time to split the company. And to focus investors on your life science investigation operation. What are you going to do with the proceeds . That is not the first goal because as i mentioned we have acquired we are in the process of acquiring a business for which we paid more than 14 billion recently. We have some debt on the Balance Sheet. You know Life Sciences is a consolidating market place and we would like to continue to participate. That is not the major goal to raise money, the major goal is that we think material science is better off as its own successful independent company with an ability to have access to capital on its own. We are confident that it will be a good tentacle company, the fourth largest in europe. It is important within the company to make sure that you focus on what you really believe your strengths are and both bayer and material science separately can do that. What are you going to be calling the companies . Bayer is still the same, so as i mentioned 70 of our sales are and Life Sciences, so that will continue. We dont know what we will call our material science business yet but im sure i will get 20 of suggestions uncreative names in the next few days. You should ask social media what they want. He will giverrell you good ideas. He knows something about that. He knows a thing or two. Thank you so much. Moving and shaking this hour. Amazon halfhour founder is declaring war on fellow billionaire elon musk. They will develop engines for united launch alliance. A joint venture. Rockets use engines. Elon musk is fighting with the alliance. Wants the government to put those engines up for bid instead of handing them to the alliance. There is no love lost between the two. Coming up, nfl sponsors are turning up the heat. One ceo shows a vote of confidence in commissioner Roger Goodell. Trackings Health Software has come up with a bug. Welcome back to in the loop. I am betty liu. Coming up, michael bloomberg, Warren Buffett and the governor of michigan. Right here. Power, the nfls top sponsors turn up the heat on the league over its handling of recent scandals. Pepsicos ceo said in an email statement yesterday, i am deeply disturbed that the repugnant behavior of a few players and the nfls acknowledged mishandling is casting a cloud over the integrity of the league and the reputation of the majority of players who have dedicated their lives to a career they love. Staying on with their partnership with the nfl. Sir Martin Sorrell acworth me again. Again that was a warmup act. This is the real conversation . Nontalking about the panel. Nfl, the ceo is coming out saying this is the worst behavior, the nfl shouldve done more earlier. Too little, too late . Reactive to be fair. Reactive rather than proactive. There is a chance for some of the sponsors to get out ahead of the wave on this, but this is a reaction. The statement is very strong. I agree wholeheartedly. You are seeing it from other sponsors as well. Those that hesitated earlier on clearly we are seeing the response quite rightly too unacceptable behavior. We have seen these things in other sports as well. If you went back in time to the ioc, the olympic committee. They changed the behavior. He changed it. That was report and now the new president from germany is very strong. Theochi he condemned antigay and the position taken by the russian government hes a leader. Putin andtiated with got changes. He was strong in the summits. Similar challenges are faced. We see on the board of formula one, similar ripples, more like soon on these. What are you going to do . Push for change. Its a very good question. The answer is you have to push for change. There is another very interesting phenomena, its not just about sponsors responding is about ownership. Look at the l. A. Clippers in basketball and you see the same thing. , lessge in the generation moresinglesex club and libertarian here is my question. The team owners so far, he said i dont think Roger Goodell he has done a good job you think hes done a good job . Historically. But i think Roger Goodell is a Strong Enough leader to see that there has to be change. Including himself . To himself iation think he is Strong Enough to retain his position as long as he is not implicated in the events that he didnt lie. They did not commit a falsehood. I think he will survive that, i think what will happen is he will survive because he changed the behavior of the leak, of the owners, of the players which has grown under his leadership so he has to take lame for that. We all have to take responsibility but that doesnt mean you cant respond proactively rather than reactively to these changes and deal with them. On the sponsorship side, nike told suspended their partnership with Adrian Peterson, radisson as well. Sponsors havell to do better Due Diligence when it comes to hiring athletes to represent their brand question mark brand . Go back to tiger woods. Celebrity endorsement and sports sponsorship there are dangers. Im sure they do a high degree of Due Diligence. You never going to eradicate it. Therell always be missteps. The key issue is how you react to them. We discussed how quickly people would be reacting, it seems they reacted more when they were forced. The other big issue is that the nfl is probably one of the strongest franchises in the world. It is trying to span out around the world in many forms. It is the strength of the franchise. Someone said to me it was amazing how many women were wearing ray rice shirts and Adrian Peterson at the next home game. It is extraordinary. The nfl is trying to appeal more to women. You cant have this kind of unacceptable behavior at the same time theres not going to be real change until dollars. Intel people vote with their feet and dollars are going i think you are starting to see that. When sponsors to pull out, when they do make the strong statements we have heard from pepsi and others, it is going to change. Roger goodell is a Strong Enough leader to understand. Stay with a we have a lot more. Can we talk about scotland . No. We have a lot more coming up. We may get another discovery channel, this has nothing to do with sharks. Plus a highpowered handle discussion from motor city. Youre watching in the loop live on Bloomberg Television. Our headlines. At Australian Police boarded a terror attack. Detained in the nations largest ever antiterror operation. Militants planned to abduct and behead a member of the public in an attempt to shock and horrifying the public. Discovery communications is seeking to buy control of the network from his ardor hasbro. Discovery was to rename the Network Discovery family to attract a wider audience. Apple discovered a bug in its new software. It delayed the release of its Health Tracking software, a main feature of the new operating system. Apple says the tools will be available later this month. 26 minutes past the hour which means Bloomberg Television is on the market. Equity futures a talk show touch higher. I came out again and reiterated that considerable time frame when it comes to keeping Interest Rates low. We are on the markets again in 30 minutes. Back with sir Martin Sorrell the founder and ceo. I know youve been giving me a hard time saying i want to talk about scotland im dressed in blue specifically the reason why is that our broadcast rules in the u. K. Say you cannot have coverage that can be seen as influencing voting on the date of polling that is why we have to silence you. Democracy at work. Lets get down to business and talk advertising. , cbs, les moonves, theyre going to plus seven on their ratings. Live programming theroup and which is Worlds Largest media buying operation. Dominic proctor who runs group m they took it and came out forcefully and said plus seven is the way to go. Which measures viewership not just lust three days after transmission but seven days. It is catching all this tablet, mobile viewership. Critically important to networks and clients. Thats right because it is a recognition that people are watching programming not only live but a concession yesterday, one of our people who is a keen arsenal follower was watching on his tablet, they played arsenal in the middle of the session. Life has changed. I heres whats interesting, was talking with one of the cable tv executives yesterday who said, i feel like all of us are Walking Around with sort of stunned looks on our faces that our viewership ratings are all in tandem going down and these eyeballs are moving to digital but we dont know how to value these digital numbers are some of them even for real . There is this whole shift another thing we have led the way on, the online media buying operation, we i online media for clients, we said we are not going to use those open exchanges where there are incidences of fraudulent audiences. We are going to private exchanges where to answer the cable executives question, we are more certain that these audiences are genuine. Seven, private exchanges, online media, with all good due respect to google and doubleclick, they what people dont understand is that google is a competitor to bloomberg, not to evp. It is a media owner because they generate content . Theyre trying to drive traffic but theyre not curating content advertising revenues. I agree with your cable bigutive, but we have a audience measurement business both online and offline. We are expanding. But martin, what about that whole ad agency in that model of being squeezed possibly we are squeezed all the time. N investor,ou are a which is a wise move where foster content is a way for advertisers to get to that audience. They are hiring Companies Like bryce. Yearsinvested in them 3. 5 ago, now they are 2. 5 billion. Rupert murdoch and fidelity came in a high valuations. Media rightsd in capital, which distributed house of cards through netflix. We made a series of investments in indigenous media. Or four major film producers both offline and online. The answer to your question is we have to embrace this, and they could be eating the advertising agencies lunch at this point. 2000, of our revenues is 40 years ago it was zero. I could say half of our revenues have changed in the last 14 years, and we have built on these trends, whether we are talking about china becoming technologically more important than alibaba or we are talking about the success that shane and his colleagues have had. Thank you very much. Is oh is entertaining. Stir Martin Sorrell, founder and ceo of wpp. We had breaking news on jobless claims, 200 80,000, pretty low numbers, good news on the jobs front. Also Housing Starts coming in a little bit below economists estimates. Scarlet fu at the breaking news desk has all of those numbers. I will pick up where you left off, Housing Starts, the biggest slide since april 2013. In terms of the actual annual weight we are looking at for the month of august, below one million, 956,000 for the month of august form a sevenyear high the prior month. Overall when comes to these housings darts numbers, what we see is that you like what stronger than had been first reported, and august was weaker than what economists had been looking for. Inless claims, yes, we came below 300,000, which is a good thing for the labor market. 00 is a0,0 twomonth low. In terms of the effect on the market, not much move. Futures pretty much holding where they were before, betty. All right, scarlet, thank you so much. Scarlet fu at our breaking news desk. Coming up, stay with us, mike bloomberg, Warren Buffett, lloyd blankfein, and michigan Governor Rick Snyder joining us live from detroit. You cannot afford to miss this allstar panel. Stay in the loop. Welcome back to in the loop. I am betty liu. Goldman sachs Small Business initiative are celebrating the graduates of recent Business Leaders to come out of the program and a 20 Million Investment aimed at unlocking growth and job creation in michigan. Throughout the program, the businesses in the area have received greater access to education, financial capital, and the Board Services to help grow their own companies. For more on all of this and what has accomplished, i want to hit it over to my colleague Market Makers anchor Erik Schatzker into troy alongside some pretty notable guests, erik. Indeed, betty, thank you very much. I feel like i am sitting next to a modernday Martin Sorrell<\/a> the founder and ceo of wptur. One of the largest ad firms. Martin, you are much more than that. Give me your opinion on alibaba. Is this going to be the most important ipo . On a alibaba we tend to miss it. Here in america maybe we dont like the idea of the chinese catching up. Alibaba is symbolic of chinas more than their mergers. It is a technology path. We used to say that the chinese steel many of us, we is to say that about the japanese, hong kong or south koreans. If they do at the beginning, they catch up. What youre seeing it alibaba is that they have effectively cut up to america. It will go through 200 billion in market caps. Same size as facebook. This is one of the worlds leaders. I got this morning an email about what the distributors of the internet were doing, and samsung and china going into india, indonesia and brazil. Arrival in the recognition by america, remember they couldve floated this on the Hong Kong Exchange<\/a> but didnt do it. They chose the u. S. Which is at a smart move. Smart why . It positions them. Look at the value of the publicity. Here we are on bloomberg in , not about scotland but alibaba. Would not have been a local story but less dominant. This makes people sit up and take notice. Say they areill smaller and revenue size but more profitable. What are you doing to improve the profitability of amazon . Amazon a profitable model of what the chinese do that we dont do . Im glad you brought the chinese up. We have these five myths that the general public thinks about alibaba. , is jack the next jeff of china . He is. He is the Mark Zuckerberg<\/a> of china and the larry page all rolled into one . The interesting thing of the chinese models is they are not focus. We had various ceos and the alibaba team, you notice they are broadly spread. They are not narrowly defined as a social media or profile media or ecommerce, very broad area broad. Alibaba since then has been investing in all of them yes exactly, so some other myths. Alibaba will be the most important stock to hit the market. Myth or reality . It is not the most important but probably one of the most important. Im buying stock tomorrow for my grandkids. I will bite eight shares. . Ust eight western mark that is a lucky number in china. We will be back with sir Martin Sorrell<\/a> in a moment. Bayer. The big news from they announced a retreat from the chemicals industry with plans to list its plastics unit as a separate company. It will be focus towards Life Sciences<\/a> businesses. Joined now by the bayer ceo. Thank you for joining us. I know it is taken a year or more to make the decision to finally list the plastics unit, what was the big issue. Not really an issue, but when you have a portfolio it is important to know where you see the future and where you have the best opportunities. Our Life Sciences<\/a> businesses have developed very well in the past years. We have put very good drugs on the market and in crop science we have had good success with organic growth. Some petitions from merkel and pc, and our Consumer Care<\/a> business recently. Life science is now 90 of our profit. Material science is such a different model from live science that we decided now is a good time to split the company. And to focus investors on your life science investigation operation. What are you going to do with the proceeds . That is not the first goal because as i mentioned we have acquired we are in the process of acquiring a business for which we paid more than 14 billion recently. We have some debt on the Balance Sheet<\/a>. You know Life Sciences<\/a> is a consolidating market place and we would like to continue to participate. That is not the major goal to raise money, the major goal is that we think material science is better off as its own successful independent company with an ability to have access to capital on its own. We are confident that it will be a good tentacle company, the fourth largest in europe. It is important within the company to make sure that you focus on what you really believe your strengths are and both bayer and material science separately can do that. What are you going to be calling the companies . Bayer is still the same, so as i mentioned 70 of our sales are and Life Sciences<\/a>, so that will continue. We dont know what we will call our material science business yet but im sure i will get 20 of suggestions uncreative names in the next few days. You should ask social media what they want. He will giverrell you good ideas. He knows something about that. He knows a thing or two. Thank you so much. Moving and shaking this hour. Amazon halfhour founder is declaring war on fellow billionaire elon musk. They will develop engines for united launch alliance. A joint venture. Rockets use engines. Elon musk is fighting with the alliance. Wants the government to put those engines up for bid instead of handing them to the alliance. There is no love lost between the two. Coming up, nfl sponsors are turning up the heat. One ceo shows a vote of confidence in commissioner Roger Goodell<\/a>. Trackings Health Software<\/a> has come up with a bug. Welcome back to in the loop. I am betty liu. Coming up, michael bloomberg, Warren Buffett<\/a> and the governor of michigan. Right here. Power, the nfls top sponsors turn up the heat on the league over its handling of recent scandals. Pepsicos ceo said in an email statement yesterday, i am deeply disturbed that the repugnant behavior of a few players and the nfls acknowledged mishandling is casting a cloud over the integrity of the league and the reputation of the majority of players who have dedicated their lives to a career they love. Staying on with their partnership with the nfl. Sir Martin Sorrell<\/a> acworth me again. Again that was a warmup act. This is the real conversation . Nontalking about the panel. Nfl, the ceo is coming out saying this is the worst behavior, the nfl shouldve done more earlier. Too little, too late . Reactive to be fair. Reactive rather than proactive. There is a chance for some of the sponsors to get out ahead of the wave on this, but this is a reaction. The statement is very strong. I agree wholeheartedly. You are seeing it from other sponsors as well. Those that hesitated earlier on clearly we are seeing the response quite rightly too unacceptable behavior. We have seen these things in other sports as well. If you went back in time to the ioc, the olympic committee. They changed the behavior. He changed it. That was report and now the new president from germany is very strong. Theochi he condemned antigay and the position taken by the russian government hes a leader. Putin andtiated with got changes. He was strong in the summits. Similar challenges are faced. We see on the board of formula one, similar ripples, more like soon on these. What are you going to do . Push for change. Its a very good question. The answer is you have to push for change. There is another very interesting phenomena, its not just about sponsors responding is about ownership. Look at the l. A. Clippers in basketball and you see the same thing. , lessge in the generation moresinglesex club and libertarian here is my question. The team owners so far, he said i dont think Roger Goodell<\/a> he has done a good job you think hes done a good job . Historically. But i think Roger Goodell<\/a> is a Strong Enough<\/a> leader to see that there has to be change. Including himself . To himself iation think he is Strong Enough<\/a> to retain his position as long as he is not implicated in the events that he didnt lie. They did not commit a falsehood. I think he will survive that, i think what will happen is he will survive because he changed the behavior of the leak, of the owners, of the players which has grown under his leadership so he has to take lame for that. We all have to take responsibility but that doesnt mean you cant respond proactively rather than reactively to these changes and deal with them. On the sponsorship side, nike told suspended their partnership with Adrian Peterson<\/a>, radisson as well. Sponsors havell to do better Due Diligence<\/a> when it comes to hiring athletes to represent their brand question mark brand . Go back to tiger woods. Celebrity endorsement and sports sponsorship there are dangers. Im sure they do a high degree of Due Diligence<\/a>. You never going to eradicate it. Therell always be missteps. The key issue is how you react to them. We discussed how quickly people would be reacting, it seems they reacted more when they were forced. The other big issue is that the nfl is probably one of the strongest franchises in the world. It is trying to span out around the world in many forms. It is the strength of the franchise. Someone said to me it was amazing how many women were wearing ray rice shirts and Adrian Peterson<\/a> at the next home game. It is extraordinary. The nfl is trying to appeal more to women. You cant have this kind of unacceptable behavior at the same time theres not going to be real change until dollars. Intel people vote with their feet and dollars are going i think you are starting to see that. When sponsors to pull out, when they do make the strong statements we have heard from pepsi and others, it is going to change. Roger goodell is a Strong Enough<\/a> leader to understand. Stay with a we have a lot more. Can we talk about scotland . No. We have a lot more coming up. We may get another discovery channel, this has nothing to do with sharks. Plus a highpowered handle discussion from motor city. Youre watching in the loop live on Bloomberg Television<\/a>. Our headlines. At Australian Police<\/a> boarded a terror attack. Detained in the nations largest ever antiterror operation. Militants planned to abduct and behead a member of the public in an attempt to shock and horrifying the public. Discovery communications is seeking to buy control of the network from his ardor hasbro. Discovery was to rename the Network Discovery<\/a> family to attract a wider audience. Apple discovered a bug in its new software. It delayed the release of its Health Tracking<\/a> software, a main feature of the new operating system. Apple says the tools will be available later this month. 26 minutes past the hour which means Bloomberg Television<\/a> is on the market. Equity futures a talk show touch higher. I came out again and reiterated that considerable time frame when it comes to keeping Interest Rates<\/a> low. We are on the markets again in 30 minutes. Back with sir Martin Sorrell<\/a> the founder and ceo. I know youve been giving me a hard time saying i want to talk about scotland im dressed in blue specifically the reason why is that our broadcast rules in the u. K. Say you cannot have coverage that can be seen as influencing voting on the date of polling that is why we have to silence you. Democracy at work. Lets get down to business and talk advertising. , cbs, les moonves, theyre going to plus seven on their ratings. Live programming theroup and which is Worlds Largest<\/a> media buying operation. Dominic proctor who runs group m they took it and came out forcefully and said plus seven is the way to go. Which measures viewership not just lust three days after transmission but seven days. It is catching all this tablet, mobile viewership. Critically important to networks and clients. Thats right because it is a recognition that people are watching programming not only live but a concession yesterday, one of our people who is a keen arsenal follower was watching on his tablet, they played arsenal in the middle of the session. Life has changed. I heres whats interesting, was talking with one of the cable tv executives yesterday who said, i feel like all of us are Walking Around<\/a> with sort of stunned looks on our faces that our viewership ratings are all in tandem going down and these eyeballs are moving to digital but we dont know how to value these digital numbers are some of them even for real . There is this whole shift another thing we have led the way on, the online media buying operation, we i online media for clients, we said we are not going to use those open exchanges where there are incidences of fraudulent audiences. We are going to private exchanges where to answer the cable executives question, we are more certain that these audiences are genuine. Seven, private exchanges, online media, with all good due respect to google and doubleclick, they what people dont understand is that google is a competitor to bloomberg, not to evp. It is a media owner because they generate content . Theyre trying to drive traffic but theyre not curating content advertising revenues. I agree with your cable bigutive, but we have a audience measurement business both online and offline. We are expanding. But martin, what about that whole ad agency in that model of being squeezed possibly we are squeezed all the time. N investor,ou are a which is a wise move where foster content is a way for advertisers to get to that audience. They are hiring Companies Like<\/a> bryce. Yearsinvested in them 3. 5 ago, now they are 2. 5 billion. Rupert murdoch and fidelity came in a high valuations. Media rightsd in capital, which distributed house of cards through netflix. We made a series of investments in indigenous media. Or four major film producers both offline and online. The answer to your question is we have to embrace this, and they could be eating the advertising agencies lunch at this point. 2000, of our revenues is 40 years ago it was zero. I could say half of our revenues have changed in the last 14 years, and we have built on these trends, whether we are talking about china becoming technologically more important than alibaba or we are talking about the success that shane and his colleagues have had. Thank you very much. Is oh is entertaining. Stir Martin Sorrell<\/a>, founder and ceo of wpp. We had breaking news on jobless claims, 200 80,000, pretty low numbers, good news on the jobs front. Also Housing Starts<\/a> coming in a little bit below economists estimates. Scarlet fu at the breaking news desk has all of those numbers. I will pick up where you left off, Housing Starts<\/a>, the biggest slide since april 2013. In terms of the actual annual weight we are looking at for the month of august, below one million, 956,000 for the month of august form a sevenyear high the prior month. Overall when comes to these housings darts numbers, what we see is that you like what stronger than had been first reported, and august was weaker than what economists had been looking for. Inless claims, yes, we came below 300,000, which is a good thing for the labor market. 00 is a0,0 twomonth low. In terms of the effect on the market, not much move. Futures pretty much holding where they were before, betty. All right, scarlet, thank you so much. Scarlet fu at our breaking news desk. Coming up, stay with us, mike bloomberg, Warren Buffett<\/a>, lloyd blankfein, and michigan Governor Rick Snyder<\/a> joining us live from detroit. You cannot afford to miss this allstar panel. Stay in the loop. Welcome back to in the loop. I am betty liu. Goldman sachs Small Business<\/a> initiative are celebrating the graduates of recent Business Leaders<\/a> to come out of the program and a 20 Million Investment<\/a> aimed at unlocking growth and job creation in michigan. Throughout the program, the businesses in the area have received greater access to education, financial capital, and the Board Services<\/a> to help grow their own companies. For more on all of this and what has accomplished, i want to hit it over to my colleague Market Makers<\/a> anchor Erik Schatzker<\/a> into troy alongside some pretty notable guests, erik. Indeed, betty, thank you very much. I feel like i am sitting next to a modernday Mount Rushmore<\/a> gazing up. [laughter] isr here to my right, betty, Warren Buffett<\/a>. Next to him, lloyd blankfein, the chief executive of Goldman Sachs<\/a>. Next to him, a man whom i know recognize, our boss, mike bloomberg. And we are delighted to have the governor of michigan, rick snyder here with us as well. Congratulations, by the way, 10,000 Small Business<\/a>es, another graduation here in detroit. Governor, given everything that detroit has been through, that the state of michigan has been a role, how important can programs like 10,000 Small Business<\/a>es play here . They absolutely play an important role. It is really an accelerator if you look at it. One of the Big Questions<\/a> and i started Small Business<\/a>es. I am from a family of Small Business<\/a>es. The challenges you faced to get to the next level, and that is why i love this program. It has been excited to see. It gives him the resources, the mentorship, potentially the Capital Support<\/a> to say take off, and from a perspective as a governor, more and better jobs is my top priority, and our role is not to create those jobs. I tell people the government does not create those jobs. We create the environment and let Free Enterprise<\/a> work, so this program sets up the environment is a go, accelerate, because if you look where job creation comes, it comes largely from small and mediumsize businesses. , i know how important this is to you. Be on your them to advisory council. What is it that Small Business<\/a>es in america need most . The governor said they need their conditions. They have the energy, they have the idea, they have a founders passion, but timing matters, and the context and the cycle matters. Leadership matters. On a specificel, level, sometimes they need confidence, they need advice, they need preparation, they need a kind of business education. They need to plan. At the end of the day, probably the most important thing is confidence. Confidence more than anything else, and this Program Helps<\/a> to thatthat lend confidence. It helps, and we are doing very little. We are moving people who are at greatifes edge of success and we are providing very little, but does very little is sometimes decisive. For his apple, in the last part of this program, almost a term paper, the Small Business<\/a> people have to produce a Business Plan<\/a>. They do not necessarily have that. Some of the people from this program took their business banks, anded into got financing based on a Business Plan<\/a> that we did not create their Business Plan<\/a>, we help them hone their Business Plan<\/a>, but that little push over the edge is going to define the success of their business and whether or not they go out and hire 10 more people in the coming two years. Mike, if lloyd is right, and surely he is, the success of Small Business<\/a> will be great for the city of detroit, but i am wondering to myself you have just concluded 12 years as mayor of new york city. What did you learn at city hall that you think could make a difference here in detroit . Have businesses create jobs for the workforce the skill sets that are available. We all want to have jobs, jobs, jobs, but the people that are sitting there wanting to have the dignity of being in charge of their own destiny and be selfsufficient they need the kind of jobs that they can learn processes for. They are not going to go back to school and start over. They can learn some skill sets, but fundamentally they have got to work with what they have. What did they have . They have drive, they have moxie, they have belief, and they want opportunity, and being selfsufficient and being in charge of your own life is just one of the most exhilarating things. I met the other day a guy whose daughter happens to work for me. He is a plumber. He started off as a plumber, he has built a business, he has six plumbers working for him. Avenue golfer. He said you know, i did not come from a world with a fancy education and lots of contacts and people that would get me an internship and that sort of thing. I just did it the oldfashioned way, and i remember i am sure these guys to the same thing fingers letters looking for a summer job, looking for a job after school because i had to work all during college and during high school. It was the best time in my company was when i had to get in there early and feed the goldfish and i put on the coffee so when people came in, they would have it, and i swept the floor, and today, unfortunately, the businesses are so successful you do not have that opportunity. You are a little bit away from it. Works war an warren, that is the opportunity that people dream about. What is the reality, what does the world look like from the eyes of an investor . The city from an eyes of an investment. Has it become distressed . Part is getting a cleaner slate, and it is important that they get through the bankruptcy in relatively prompt order, and it looks like they are doing that to me. They need a fresh slate of financially, and they are getting it. What is really important is to have vibrant Headquarters Companies<\/a> and now developing a Small Business<\/a> who knows what comes out of that . We bought three businesses that were started with less than 10,000 at berkshire and we pay forle in the billions it. That is where jobs come from, that is where prosperity comes from. Last night, we went to mccullers and they had worked out the plan with 10,000 Small Business<\/a>es, they went to the bank and borrowed 500,000, and they will be adding people and adding customers, and they will do it here in detroit. My friend dan gilbert, who is committed to detroit, with loans, he will add thousands and thousands of employees over the next 10 years. You cannot stop him. And you have got some great Headquarters Companies<\/a> here, so detroit is going to do something. When i got out of school and started in the workforce in the middle 1970s, new york city had been written off. You could not walk down the streets. A third of the Police Department<\/a> had been laid off. It is hard to it is lost in the memory of man how bad it was and what a poor prognosis it was Going Forward<\/a> for new york city. It speaks for itself, again, you could talk about the energy of the community, people are attracted to live there, the secular leadership we have had over the intervening decades, had new york city as the greatest city in the world. Detroit also at one point was clearly one of the great cities of the world. Was the richest city per capita in the United States<\/a>. They know how to do it here. It has got the geography, it has got the bones, so i do not see any reason why it would not come back. It is already going on. That is the important part that many people do not realize outside of detroit or michigan that it has been coming back for some years in terms of the midtown, downtown. There have been nearly 10,000 jobs that have moved into the city or been created here. Billions of investment. And it is really coming back because of the private sector. Penske, thereoger are a lot of people that have made huge investments in detroit, and it is working. Young professionals have run out of housing in detroit. Youre seeing housing come back because there is no place for Young Professionals<\/a> to live now. Detroit is one of the hot cities in the country. The challenge is it a still fragile, you do not take it for granted. The other one is we cannot forget the neighborhoods, and that is why in particular i get excited. We were at that pickle place yesterday. Downtown, andn many businesses arent. We do see the neighborhoods come back by offering Job Opportunities<\/a> for people who have not really had them. In the end, business is about people. If i were a loan officer before a look at the Balance Sheet<\/a>, i would say i want to talk to the person who once belonged, and do i believe in him, do i believe he will get through those tough times when things do not go well . Is he on a stucco will he always look at the glass being is he honest . Will he always look at the glass being half full . Fancyo not have education, some do not speak and was for a while, some of her background we say hey, he could not possibly run a business. You have got to get them to move to detroit. If you get them to move to detroit, they can go and do it. What is government do . Making the streets safe, getting some housing, and in advertising that this is the place where it is challenging young people. Young people want to go to places where they can make a difference, and the governor, and he has got a new mayor who fresh air, of and they are doing exactly like that. Its has become what the village was and what brooklyn is right now, in brooklyn is a good example. There are places in brooklyn where a house can cost you a couple Million Dollar<\/a>s, and 20 years ago, we have rights in the street. No one wanted to live there. We soon have signs on the outside of cars no radio inside. We do not have it anymore. Why . Go look on a subway at 11 30 at night and you will see people in ball gowns. You got into the good part of the cycle, and that is the governor and the Mayors Challenge<\/a> here. It looks like they are doing it. There are a lot of other cities here they do not have as enlightened a mayor or as an lighted a governor and nobodys getting that process going. In a few hours we will graduate over 60 people who were working 50 hours to 60 hours in already, businesses many of whom were raising families, and at the same time, they had the gumption thao signup for this course that will take more hours out of their week. Those people will succeed. They have got it in them. They have the passion and the ambition. Now they have got the tools and they will succeed. Othere seen it places and we will see it in space in detroit. You watch this class graduate the fun part will be watching the next five years and 10 years because these people anend up being mentors for other people. You create that Critical Mass<\/a> of Small Business<\/a> people, people who know how to be entrepreneurs. This was the entrepreneur ial capital of the world. Autos, all the different fields were created here. We sort of lost that spirit, but we are getting it back now with great assistance from Goldman Sachs<\/a> and other people. We learned to over the years, this is our third city, just under 4000 graduates of the program, and we learned a lot, too. One of the things we learned is that these people go to School Together<\/a> and network with each other big surprise. We should have thought of it, but i tell you that is one of the most vibrant things. You leave this program and somebody has a business on tech support, some but he has a plumbing is this. Your plumber called a guy in techsupport and get that kind of network that really belong to the elite in the city. And now it has been a little bit democratized because the small historically took place in the rotary or the chamber of commerce and it is providing that kind of a network, too. Governor, you know as well as anybody how much gridlock is holding back progress. How much faster could the economy gre be growing . How much better could the economy be doing if congress would do more . If you look at what we are doing in michigan versus washington, i color relentless positive action. I do not believe in fighting or blaming anyone. What would happen in washington if everyone agreed not to blame anyone or not to fight with anyone . A whole lot would get done. It is working in michigan. We were ranked 41st back in 2008 4 entrepreneurship climate. Are is 2013 stats, but we sixth. We have come 40 places almost in just a few years. You can do it when you solve problems. It is all about problemsolving. You also need a Financial Sector<\/a> that has an interest in making investments and not just doing traditional syndications of big loans. Just think about Goldman Sachs<\/a>, one of the Top Investment<\/a> banking firms in business for a thousand years, and here they are with Small Business<\/a>es, and are theyhat on earth doing Small Business<\/a>es because they are not likely to be big customers and do the kind of business that an alibaba what, but the bottom line is Goldman Sachs<\/a> would succeed if they are good corporate citizens, and they have to do that around a world everyplace they do business. It would be able to attract better people if the people who come to work for goldman feel it is not just about making money but they can make money and have a great career but also help society. That is what people want to do. And who knows, goldman may very well find the banking business coming out of some two guys in a garage that started a company. That is the way General Motors<\/a> started. I will to you something else, too. You go into business of your professional life because you a living, you want a career, but you also have to have an effort behind it. People go into pharmaceutical because they want to cure diseases. We go into what we go into because we believe in markets, we believe in entrepreneurship. If youre Goldman Sachs<\/a> because we are so big, the numbers are so large, you lose the human scale of things sometimes. What we love about this is we get to do the same things we do on a large level, you know, we finance progress, and we do it on a human level where we can clures, the mc who have a pickle factory come as opposed to long numbers on pages, and that is why people in our company love doing this. Are there enough banks in america that they can still do the kinds of things that goldman is doing here, warren . There is still such a lively debate over who should be held responsible for the financial crisis, which took a huge toll on the state of michigan. The federal government believes that banks need to be held accountable, they need to feel the pain, but the more pain they feel, the less they can do. All they have to do is look andhe feds Balance Sheet<\/a> look at 3 trillion of bank balance is being held at the fed and earning. 2 5 . The banks want to get money out. Banksamiliar with a few making Small Business<\/a> loans. A bank makes its money by lending money. They do not make it by handing over. 25 to the fed. If you want people responsible, as the governor pointed out in washington, lets hold washington responsible. He truth of the matter is what youss of had any past, if you are not willing to take risks, you will not build the houses we need, you will now start the businesses we need, you will not solve the social problems that are sitting there begging for solutions and for capital. We just cannot go and live in the past and worry about blaming. What i think we should do is yes, you want to make sure that one company cannot bring down the economy or maybe 10 companies cannot bring down the economy, but to not encourage risktakers, you will not have solutions to our educational problems, to our crime problems. All of the things this is our future, and it is a cheap shot to be able to go after the banks and clearly some of the banks have done things that were wrong and they should be held accountable. Nobody really disagrees with that. The bottom line is if you take away their ability and willingness to take risks, it is main street that suffers, not wall street. Do you worry about that, governor . Yes. What i was going to mention is we are top lining that. You have experts here that is well stated. That is the issue. What we are also recognizing its we have a comp Luminary Program<\/a> to help with the customer site. I have started businesses. One of the great things you need is that first customer or the next customer to create your business, so we created is this connect, which we run at the state, but we do not put deals on the table at all. We get companies talking to one another. I call it the Good Neighbor<\/a> policy. You wonder does it work . Generated over 2 billion of incremental sales in the state of michigan in just the last three years. That is roughly 10,000 adjustable jobs in our state. I really think the Small Companies<\/a> that are in michigan here are a bunch of proposals. Come bit on a contract that you would never of had a chance to get a contract with one of the big automakers. That complements this. That creates a whole ecosystem of mentorship and entrepreneurs, and that is the environment we are seeing come together in michigan, which is truly exciting. Lloyd, if the federal government could get out, what would make the most sense, what would help the economy create the most jobs . ,mmigration reform, tax reform what would be at a top of the list . The predicate of your question is we just came through an incredible trauma. We are in a position to talk about accelerating growth, but it is not a foregone conclusion that we wouldve had growth again if people had gone off the rail. People in government acted courageously in that they interpreted their response ability very, very broadly. And aof the regulations lot of the things that were impediments to some extent were in demand by people who got hurt in the trauma and what to make sure that it did not happen again. Not shockingly, the pendulum has probably gone a little too far and has to readjust. It is easy to take shots. From this point forward, get rid. F redundant regulation we still have to continue making the adjustment, heal the economy, you give all of that to the fed, you definitely have to get yourself into a situation where you can actually legislate. Pick three great areas of legislation to support the economy. Infrastructure spending, immigration are the right things to do. Warren, is lloyd wright . Has the spaniel and is lloyd right . Has the pendulum swung too far . What youve seen since the Third Quarter<\/a> of 2009 is you have seen the economy come back it has not suffered since any time in my adult lifetime. People talk about the previous recession they came back and such and such. This was on like that. You had 59 people in the United States<\/a> with mortgages on their you had 50 Million People<\/a> in the United States<\/a> with mortgages on their houses and probably 30 million underwater. That is a different a spirits than any recession we have had. American people were scared, and we have come back compare us to europe, compare us to the rest of the world. America always comes back and it is coming back this time. And it came back from two people from goldman, hank paulson and bob steel, and a bunch of others who came to washington and people were trying to revive history. They saved america. People with no confidence, falling apart, it was like jpmorgan were on the floor of the Stock Exchange<\/a> and buy 100 100 shares toy not mean anything, it was the fact that he was willing to do it and we stood up and we defended them. Detroit was one of the beneficiaries. The Automobile Industry<\/a> was like the Mortgage Business<\/a> and the banks in big trouble, and we did what we should have done. Suck it up, dont look to the past. What can we do for the future . How tos the state of the economy feel right now . The fed just yesterday ratcheted back its expectations for 2016. I think the economy is in very good shape. There is a lot of optimism. The danger is overheating and low Interest Rates<\/a> tend to inflate the value of physical assets and stocks and create the economy that is not tolerable. We have to do summing about that. In the end, low Interest Rates<\/a> i do not think creates of that many jobs. It is the confidence that comes out of seeing other things go on , but it is working collaboratively and collectively are the skills that you have to learn in school. Just last week, we had the idf, the Intelligent Transport System<\/a> World Congress<\/a> right here in detroit, which is all about the autonomous and connected vehicle world, world of the future for mobility interest rotation. 10,000 people, 60 countries represented presented to show that the center of that is here. Of opportunities. Get back to manufacturing, making products, but then making them smarter with great engineering if you want to look at the highest applications of i. T. Going on out there, go to a vehicle. People underestimate that. One thing we need to encourage recognizeeople to that making things is still a good thing. You could be at the forefront of the most exciting technologies in the world, and that is a great Employment Opportunity<\/a> for engineers also be skilled trade. If you are on the production floor today, you are a skilled person, and we have a shortage in this country. I view that as a top priority moving forward in the future is to lead the country and helping make the Skilled Trades<\/a> grow in michigan because it will be a competitive economic advantage. Just a matter of adding water and it grows. At the end of the day, 70 will have to listen to the story, do an analysis, give them money, and hope you get it back. Take a risk in other words, and some people you say yes to and some people you say no to, and sometimes you bite your fingernails to the nub and it all works out. That is also what the Financial System<\/a> does because this all sounds great, but everything sounds great. Not everything warrants financing. You have to make those decisions and guess what . Sometimes you get it right and sometimes you get it wrong. Do you share mikes concern for the distorted impound of you are famously cautious when it comes to hightech, but there is so much faith in the promise of technology. Some might even say blind faith. Almostre going to sell. 7 million cars this year that was down at nine and a fraction. That is enormous. 35,000 that is a lot of money. America will come back. It has always come back. I frankly think it has done better than i might have expected for all of 2009. The country was paralyzed for a couple of months. We were having a meltdown. Yet because of the actions of a too. I would add bernanke, they got the country moving again. They got the locomotive back on the tracks. It started from a dead start, but it has moved a long way and it continues to move. If you look back at the historical record, what would you like in this time to in American History<\/a> . The poster depression era . What could we be on the cu sp of . We are on the cusp of continuous growth. Weve had 60 months of growth and it will keep going. I got out of graduate school in 1978. Big malaise in the country. High unemployment, high on inflation as a thing time. We were soulsearching. Invaderan, the russians afghanistan, real malaise, and everybody is writing off the United States<\/a>, and we ride on the ferris will in the bull market and nobody even knew it. Wille germans and japanese totally eat our lunch and all we will do is have hair cuts and eat our hamburgers. [laughter] the same thing is true. People worry about china. China has got its own problems. China is a great market for us to sell to. We want them to give us products that we cannot manufacture or prices we cannot impede with. That is great. But china is not going to own the world. The only enemy we have is ourselves. We just have to go out there and do it and not worry about others. There are always competitors, and you have to use technology, and every industry has a Disruptive Technology<\/a> coming along with that, but to sit there and say that america is over and our best days are past us just is not realistic. N, is it something that you want to continue to enjoy in your position at Berkshire Hathaway<\/a> . Mike here just came back to run his copy on a daytoday basis. Lloyd, Goldman Sachs<\/a> neither goldman or sachs is coming back. [laughter] that is fair. Do you see a day when you are no longer doing the daytoday thing at berkshire . I cannot see that day. Im having more fun in my job then i ever have before. I get to do what i love everyday with people i love. It gets more interesting all the time. Tomorrow is going to be exciting. Look at this guy on the left. He obviously likes the job, and that is why he is so good at it. That is why he is enthusiastic. He looks at the bright side. The past is history. You cannot do anything about it. But if the rest of this country had governors as good as the governor of michigan, we would be a lot better off, and the same thing i think will be true for the mayor of detroit. He looks like he has got his act together and he understands what is needed. When i talked to him, he could not be more optimistic and you walk away saying hey, maybe he can actually do it. Everybody really loves to troy. Everybody has written off detroit, and we cannot do that. What a great conversation, what a rare opportunity. You all. Ike to thank the governor of michigan, rick snyder, mike bloomberg, Warren Buffett<\/a>, lloyd lang fine, betty lloyd blankfein, betty, from detroit, back to you. Erik schatzker of Market Makers<\/a>, great panel. Lets get back to some big news we are watching of course. Alibaba and the ipo. The Company Expected<\/a> to price shares after the close today. What could be the largest ipo ever. The stock debut raising some questions. Is there room in the market for all the other mobile payment services, if alipay, for instance, grows . And will they outgrow google and facebook . My guest houses michael wolf, former yahoo board member, now the managing director of activate, a tech and Strategy Consulting<\/a> firm. Also with me is hour bloomberg reporter mia. And martinr alibaba, sorrells was saying yesterday, it is such a conglomerate now. There are major ones to focus on coming you have been doing a lot of reporting on that. Payments, online video messaging. Some of the most interesting ones would be alipay of course, which is the Worlds Largest<\/a> online payments, no longer under the alibaba umbrella. It is now under small and micro financial services. If this country goes public, alibaba has the opportunity to get 37. 5 percent of all ipo proceeds, but the bigger question here is just the upside potential. 51 of chinas 1. 8 trillion yuan market that is really important to think about where alipay is positioned to grow because there is a lot of competition, for example, t as well. Ncen michael, chime in here. What do Silicon Valley<\/a> think about alibaba . Silicon valley respects alibaba, and especially since Silicon Valley<\/a> companies have not succeeded in china. I was in china last week and there is no google. It is hard to even get to google on the internet, but Silicon Valley<\/a> does not really worry about alibaba competing here. Tore ali baba is going compete is for acquisitions, and is very aggressively buying companies. A just invested in tango, a messaging app. It is investing more broadly. It has opened its own sites, 11 main, which is sort of a mini tabao. It is going to have to work hard to maintain its position. Tencent this is tony mas company. The other ma. And they have the largest messaging system in china, so i alibaba is going to have to do a lot more. It is a huge threat to weibo, a company that alibaba has a 30 stake in. Goodnt has done a really job about integrating commerce onto the platform, something that for example alibaba has not been able to really do with weibo, the idea that you should be able to have an integration of all these products all in one place. That is something that tencent has done really well at the end of the day. Tencent has also already been in the payments business. Sort of the First Virtual<\/a> currency in china, something that people know very well. Also, nobody is talking about jd. Com, which is a huge competitor, 40 Million Dollar<\/a> market cap. Would you say they are like the amazon of china . The number two player in china. Amazon are more like where alibaba is more like ebay. Again, there are some differences. Like ebay, ebay has paypal, alibaba has alipay, but he can parent since stop there but the comparisons stop there. 10 forget, tencent has a stake in jd. Com. This is obviously a very integrated but also complicated market. I think the bottom line, michael, the point that you make is a very big point, which is they do have a lot of work in their own market, and in fact it is not just alibaba sailing along in china. They have the strong competitors nipping at its heels, so maybe it is overblown this whole idea that they are going to use these proceeds and try to blast into the u. S. Market. I have been seeking to, alibaba is not in a position looking to just acquire profit centers. They want to acquire audiences. That is what they are doing it with their investment in a Company Similar<\/a> to youtube. Thats what theyre doing with weibo. That is what they are doing overall. They know that they cannot replicate ecommerce platforms in the United States<\/a> because the infrastructure already exists buy productso through brickandmortar. We are way ahead of them. They can do the social commerce, and that is where there is room to grow. They do not have the competition amazon does because there is not the brickandmortar infrastructure in china like there is here. Puts and takes on what they can be able to a cobblers Going Forward<\/a>. And there is a lot of growth in the tier three and tier five cities where alibaba came in and offered an offer that had never existed before. They created something out of thin air. There are no shopping malls, etc. I am not sure that i agree with that upside. There are more shopping malls in the tier one and tier two cities. Thank you so much, guys, mia saini, and of course michael wolf will be staying with us, our guest host for the hour. We will ask the cofounder of priceline about his experience taking his company public. We will be back. As alibaba is set for its public debut, i want to bring in priceline cofounder jeff hoffman, who helped launch the company all the way through its ipo, and is the author of the seven provenle principles to grow your business and get your life back. Is theth as of course guest host for the hour, former yahoo board member, michael wolf of activate. Jeff, you have been through this whole public prices. Process. What is it like . I think the biggest thing is the distraction. Obviously you were doing that to raise money on the public markets. At the time that priceline went public, that is one moment in history that will never be repeated. The company was like 11 months in operation before the ipo. Companies do not do that anymore. It is very distracting. You spend at least half a year if not more working on things relating to the filing and the ipo and analysts and media while you are trying to run and grow a business. Ipo is not a business strategy. It is a big distraction. People want to get their lives back after the ipo. It is a big distraction, absolutely, when you are already distracted enough or occupied enough trying to run the business day today. Michael, are you surprised at the demand this ipo has had so far . All, people forget that there was already a big internet ipo in china, which is tencent, roughly 147 billion in market cap today. Surprised by it because people view it as a way of buying into a Market Participation<\/a> in another way. That is true. Jeff, speaking about priceline, there is so much consolidation going on in Online Travel<\/a> industry. You have seen airlines fighting with travel websites, you see travel websites themselves merging. What is your take on where priceline is positioned here . First, to your comment about consolidation, the problem with consolidation is the consumer never wins that game. The last choices you have the less choices you have, the less flights, consumers are not win, but it is happening anyway because it is logical from the viewpoint of some of the suppliers. Pricelines market come if you think about the Business Model<\/a>, there are two models, merchant pricing, expedia, really what everybody does, which is you are selling pretty much the rack rate every buddy has access to. Then there is what they call the opec pricing model, which for priceline the opaque pricing model, which means you are making the spread. Any merchant model you are getting a transaction fee or a ue,mission, but in the opaq name your price model, you get the difference between what a consumer is want to pay for a room and what you can get that room from the supplier. That is a profitable model. You think ultimately having more transference in the market has been good for the businesses . It has been great for consumers right, mike . When you start off, the most important thing in these businesses is the user. If it is great for the user, ultimately businesses are going to find a way to make money. If there are too many businesses that start with what is good for the Business Model<\/a> and then later on consider the consumer. Just quickly, what is your big principle in getting your life back. It is designing your business from day one so it is not built around you. Ok, then you can actually have a life. Thank you so much, jeff, for joining us. Jeff hoffman, the priceline cofounder, and also my cohost michael wolf, the founder of activate. Tonight on bloomberg west, how chinas booming market could be more business for alibaba. That is tonight. Do not miss to special two special programs. At 9 00 p. M. , crocodile in the then bloomberg west to go we are a few moments away from the opening bell. Equity futures are slightly rallying ahead of the bell. We are back to the top 10 stories you do not want to miss right after this break. Welcome back. You are in the loop. I am betty liu. It is 26 past the hour, which means bloomberg is on the markets. Ats is the final look futures right before the open. Equity futures are slightly higher. We had economic numbers this morning coming in a little better than estimated. Also, housing goes dipping more than estimated, down about 14 for august. Not such good news on that front. On the markets again in 30 minutes. Lets cut down to the lets count on to the open. Scarlet fu and adam johnson joint me this morning. Lets start with number 10 and herman miller, the furniture maker up 12 then year ago even absorbs costs. Comfortable those ergonomic chairs. I love those. I do not like the ones they just showed, though. Citigroup9 kohls. Citing an improved product mix as well as the Customer Improvement Program<\/a> Customer Loyalty<\/a> program. Lets talk about yelp, number page 450,000 to settle in ftc lawsuit. Regulators accuse the company from collecting names and email addresses from children without parental consent. Number 7 activist investor Nelson Phelps<\/a> stirring the pot again. He pushes for a breakup of a company criticizing it is failing the earnings target and destroying shareholder value. He wants dupont to disclose its operations from other more cyclical operations. Number 6 conagra beat analysts estimates. A maker of chef boyardee saysirmed its forecast costcutting efforts are working. Coming in at number 5 u. S. Steel soaring. Creditor protection canceled more than 800 million of capital investment. U. S. Steel is working to modernize the company and restore probability of five years of losses. Hard to believe it has been that long. It is hard to believe. Number 4 sony, the playstation maker wants to create the netflix of video games. What about that . A monthly fee and you get videogames. Recurring revenue stream . Where is matt miller when you need him. He would be jumping up and down. He is actually very good at videogames. I played him i do not even know it to call it, call of duty i guess. He destroyed me. He would never get him out of the house. 2. 1 billioncted a loss as the plans to turn the Game Division<\/a> as they turn that to off at the losses in the mobile offset. Scarlet . Importsr 3 pier 1 lowering its fullyear forecast saying that stops traffic as well as the costs associated with online sales. I cannot remember the last time i walked into a pier 1. Maybe that is the problem. That is exactly the problem. Sort of like radioshack. Regulars just approved the pharmaceutical companys new erectile dysfunction drug, the fastest to gain fda approval, taking just 15 minutes to kick in. Are surging on the news. Betty, i guess timing is everything. All right, number 1 rite aid, the drugstore chains Second Quarter<\/a> earnings more than tripled. They said lower reimbursement rates eat into profits, and then there was of course the opening bell as markets start trading. Chairman bring in the and ceo of injury stats associated. Martin, great to see you. I know you are a value investor. You would be a little skeptical of this highflying alibaba ipo. I know you do not like this whole structure, the variable entity. It does not give much power to shareholders. If there is a problem, they will have to sue in chinese court, which might be a little difficult, so it has got great enthusiasm. It is obvious the a wonderful company, but it is not fit in. Given the zeitgeist and if this was oversubscribed by day two, does that even matter . I do not play stocks on that i looking at value, ill is look for buying a stock at . 50. I do not like to participate with this tremendous widespread enthusiasm. You do not like the hype . Exactly. There is hype and everyone is chasing the growth story as well, and this comes as investors actively seek out risk. Investors have almost gone into the loving phase when they are trying to get some kind of return, trying to get a yield. How does that affect your ability to find a value . It is still out there. It is more difficult. The market is up a lot, as you know, but there are pockets of opportunity in areas out of favor. One of the areas we have been biting into lately that has been out of favor is housing. Realty,he stocks is which is down 18 this year. It has been a pause in the housing recovery, but i think we will see a long, continuous recovery in housing but at a slow pace. Investors weres overenthusiastic about housing. They thought there would be a in housingceleration recovery. Instead it is slow but steady. Movingices and sales are up. For a while, the homebuilders were just skyrocketing, martin. That is correct. You pick one we like, glenn r, up 5 yesterday with the earnings up 17 above the forecast. Exactly. We had above consensus numbers, and they beat ours. When a company has exhilarating and is reasonably valuing, for new home sales, or favorite is linanar. As plunging more than 40 , below that one million annual rate. Those of the kind of bumpy statistics we are going to get. Up 22 . Month exactly. And if you look year to date, construction is up 8 . It is led by housing, singlefamily home construction, apartment construction, so the trend is up. It is slocum made his gradual and rocky. And rocky. I will tell you what does not have duration these days is gold. If you look at a oneyear chart of gold, my question to you, martin, is this about lack of inflation or lack of prudence among investors who are embracing risk . Ofi think there is a lack inflation. We have got a situation where inflation is subdued and Commodity Prices<\/a> are down. I is not an environment where am interested in gold at all. In fact, most commodities. The reverse of that is there are opportunities that come out of that. Commodity prices down, take fuel, it just few prices have come down. Big beneficiary to the airlines. I still love american airlines. Havent the airlines done so well already that the easy money is a win . We have doubled our money already in american. We talked on your program when it was u. S. Air, then emerged with american. What has happened, and what i think we have continued to see and why i think there are a lot of legs to the story is that this industry has gone from a horror show to an industry that is really prosperous. Three players have 80 of the u. S. Airline market. American, delta, and united. American has the biggest growth trajectory ahead of it because of the savings and synergies american,erger with which was very poorly managed, and you take this great management from u. S. Air bothd parker, ceo, running companies. Ask exactly. And doug parker and his team have done this before. A wellmanaged company taking over the poorly managed whale. He is doing it for the second round. It will well exceed wall street estimates. I think to scarlets point, when she is saying the easy money has been made, it has all been kind of price and already, right . They have got a majority of the market. What is the upside . I think the upside is beating earnings and cash flow estimates. As they do that and pay down debt, the next step in the story, like what happened with delta, is share buybacks and dividends. This company is going from, you know, bankruptcy into asurrection into becoming more accepted name. Even though the stock is up a lot, and again we are up 100 since we bought it as u. S. Air last year, i look at the earnings explosion and the multiple valuations spread between american and other airlines and other Industrial Companies<\/a> part of the key to this thing, betty, is pull back as you know, martin, i was taking a flight about a month ago. Every single seat was taken. Wow. Every single seat on an airplane that holds 85 people. That is the whole thing. Where were you headed . This was as i was coming back from mobile, alabama. Actually, i was in mobile, and i flew out of montgomery, montgomery to atlanta, 85 seats, everything was taken. All right. Well, martin, great to see you. Thank you so much. Martin sass, chairman and ceo of mds s. M. D. Sass. You never know where adam johnson is going to be. All the fans in mobile, alabama. When football season is over. The tide, the tide. Thanks so much as well, scarlet fu. Coming up, amazon looking for some line of businesses that can boost their market. Tablet may be the answer. Meanwhile, you can call amazons rocket man. Jeff bezos teaming up with some of the Biggest Aerospace<\/a> companies. Stay in the loop. Here is a look at the talk , google wants europe to reconsider its policies. News corp. Ceo Robert Thompson<\/a> says google exploits its market situation to cycle competition. Iszon billionaire jeff bezos teaming up with boeing and lockheed to build rocket engines. Right now, the two aerospace bezos will help develop the new engines. First launch is set for 2019. Meantime, amazon introduced five new kindle tablets, one is the kids. For amazon promises to replace it even if it is broken. It is part of his investment in new businesses and expanding those businesses. Amazon cannot with a smart phone this year and is pouring more money into cloud. Catch all of the latest in tech every weekday at 1 00 and 6 00 p. M. Eastern time only on bloomberg west, and we are back with our guest host for this hour. Michael wolf, former yahoo board member and activate founder who has already ordered us you have ordered your iphone 6 plus . Already. It is a much bigger phone and will be much easier to use. Will you get it, by the way . Knows . Hopefully soon. Olivia sterns is joining us as well. Were talking about apple because Bloomberg Businessweek<\/a> on their cover story this week did an interview with the ceo, apples ceo tim cook. Tim appears to be on a roll. He launched the iphone 6s and the apple watch, and they announced they will have a whole well. Neup of ipads as michael, is tim cook now on a roll here . I think tim cook has recognized that apple needs to keep introducing new products. Over 40 of their revenue comes from the iphone, and they need to do everything they can to increase their presence in their ecosystem, but the jury is out of what is what of what will happen with the apple watch. It is an exciting announcement. Everyone was hoping to get one and see them, but the devices over 300, and it is not subsidized. Your iphone, your carrier pays a lot of money and a big piece of it whereas the iphone is a separate device. It only works in conjunction with the iphone, which is subsidized, so by proxy at sort of is. You think the apple watch can eventually drive sales of the iphone . It is yet to be seen, and i think we will see a lot more devices that are on the body itself, part of what a quantified self, and some of them will be ambient devices, devices you do not have to look at but they will be monitoring your health. Do not expect this is going to be the category killer. It is interesting you mentioned the apple watch. Its unlike you are buying the iphone 6 plus. It does not sound like you are buying the apple watch. I will get 1 just because you are curious . In rose gold . I think the one with the rubber strap. [laughter] their chief designer was interviewed for this cover story as well and one of the quotes that he gave to our reporter was speaking about the apple watch it is probably one of the most difficult projects i have ever worked on. Is takinglike apple in many ways their own future on a device like the apple watch. Stakingbt they are their future on it. I think what they are trying to do is have an entry into the marketplace and have one that is usable and people can he is different, but but michael, what if they fail . It does not make a difference. They could keep iterating. He same way they can ship new operating systems. They can come out with a new one. I mean come other nextwave of ipads continues to be better than their last, so it is not a win or lose situation. There are a lot of people who are die hard apple fans that are going to want to have one of these on their wrist. Ask what are you giving up . If you are buying the iphone 6 plus, what are you giving up . You personally. Definitely the iphone 5. And also the ipad mini. You do not need any longer because the phone gets close to that same size. Michael might be getting rid of those. Olivia, you were talking about the graveyard of phones. Exactly, what are you going to do with that iphone 5 . I am probably going to give it to something else. Ask ok, if you did not want to do that, would you not know that there is a huge side industry that has popped up of helping phones come up with a second lease on life you could say. Companies like gazelle, their entire Business Model<\/a> is about reselling phones too big box retailers, best buy, walmart, or you can take the phone back to apple. We look at how much money you could get, michael, if you wanted to upgrade. Say you havent iphone 5 with 16 gigs, you get 385 from amazon. It is going to be a gift card. The next best deal is apple, over 200, again a gift card to upgrade. If you just want the cold, hard cash, you should go to usell. It is interesting that this whole site industry has popped up and apple might like it because it helps them clear their merchandise and drum up demand. I have a drawer of old phones. You could be making money off of them. I will give them to you. Ask more important it keeps you in apples ecosystem. You will be buying apps, music, videos. What they have even done that is smarter is they do not make the old devices obsolete. They allow you to upgrade the operating system on the device, so if you have an iphone that is a couple of years old, it has got a lot of the same features for the most part as one you will buy today. That is the point. That is why the funds have a huge second life in emerging countries and it helps them keep a market share when they are losing market share to android phones in the emerging world. There is another story interesting here. We do not talk about apple payments here. As apple gets into payments, listen to this, guys. Costco will stop accepting American Express<\/a> cards that there are canadian is is is next year. The largest u. S. Warehouse club chain made the announcement on its website yesterday and amex is currently the only credit card accepted at those stores. U. S. Stores will still accept amex. What do you think, michael . From are way far away point where people will be paying with their cell phones. You can already do it in japan, though. The phonesare using with their chips in them, and a lot of money next couple of years will go into what is called sin tech, whether it is bitcoin and others. This requires a change in peoples behavior, and consumers do not change their behavior very quickly. Credit cards still offer a bunch of services, so if we just went to business payments, yes, a lot of people are going to use it. If you look at in terms of all of the other services that you get, there are a lot of people that will stick with their credit card. May be the Credit Card Companies<\/a> will stay around, but the credit card itself it sounds like people have some doubts, particularly in light of all these hacking scandals, using credit card numbers and how secure they are. Yeah, what is the point of carrying around plastic . Apple pay will still be fromcted and it keeps you desensitizing your 1980s magnetic strip. We will see a lot of innovation around this space. There is an Application Device<\/a> called coin that will store all of your cards, and we will see a lot of different places and given, by the way, this dominant share of andrew android devices, do not be surprised if you see a number of people offering payment, and apple for the moment has blocked the opportunity for other companies to use its devices as a payment device. I read that square is going to be trying to develop a compatibility with apple pay. Will requiree, it another addon to your device. We will see what happens here and what apple allows and what square is able to do. Are right, michael, thank you so much for joining us this hour. Michael wolf of activate in our guest host for the hour. And of course olivia sterns, our markets reporter. We will be back in two minutes on in the loop. Time now for the global outlook. The house of representatives have approved president obamas rebels. Train and equip lawmakers made it clear they do not want u. S. Troops involved in a war. And ecb president mario draghi trying to stave off banks only borrowed 106 billion, below all predictions in a bloomberg survey. We will be back in two minutes on in the loop. It is 56 past the hour, which means bloomberg is on the markets. I am scarlet fu. We are 30 minutes into the start of u. S. Trading and it is a set celebration with the s p 500 up. 33 . Interest rates will continue to stay low for an considerable time. Currency to the market, the pound is stronger than the dollar. The stoxx decide whether to break. Remember, the pound had tumbled at the start of the month to 1. 61. It has certainly come back from those levels, but we will monitor those movements. Overall you are in stocks overall european stocks getting back to equities, one big theme has been buybacks. Companies from apple to ibm and microsoft are repurchasing their own shares at the fastest clip since before the financial crisis. Joining me now with a look at what is fueling these buybacks is Bloomberg News<\/a> in stocks editor mike reagan. Give me numbers. For the first have of the year, 338 billion of shares purchased, which would make it the most since the bull market. The reasons for it are obvious. Stock in big the marketplace. And shares are at such a scrutinize number that any time you reduce the share count, you will lower the number and stock purchases do not like that. Ae downside, and there was note this month that was interesting, the downside is you are sort of sacrificing future growth bys ending too much money on buybacks. Right. Sure you can buy back your shares or you can do r d, m a, capital spending, so the more you buybacks, the more you are sacrificing future growth, so there is some concern that at some point investors will be looking more toward growth than just buybacks. Tell me about the research that looks at how buybacks are affecting stock prices. So far, the stoxx or companies that have repurchase their sales and since a chart, the last bull market peak of 2007, it is up about 67 , almost triple the s p 500, so the outperformance is obvious. Earlier this year, its darted under performing a little bit. It was trailing s p by about half. It is back up to outperforming by a couple of percentage points. A lot of strategists wondering at one point you get confident in the market, saying i want to invest my money in growth and m a asreinvest in the company opposed to artificially boosting your share. Exactly. You mentioned this as well, the limited supply of stock as a share, the shares outstanding shrink because you are buying back shares. What kind of effect does that have on the market overall given that so many people say there is no alternative that equities and the share base is shrinking . It certainly has an effect on share. S per the markets put it out at two dollars per share. If the s p 500 earnings are about 120 per share now, it is a noticeable bump to the earnings per share, so that is obvious the big part of the markets performance has been based on buybacks. We will see how it turns out. For now, the buybacks are doing better than the general market. Mike regan with the latest on equity markets. Bloomberg is back on the markets in 30 minutes. Market makers is up next. Live from bloomberg headquarters in new york, this is Market Makers<\/a>, with Erik Schatzker<\/a> and stephanie ruhle. Scotlands biggest decision in more than three centuries. Voters are deciding whether to stay united with Great Britain<\/a> or go at it alone. Billions of dollars at stake. Eric holder is looking for a few good men and women. The attorney general once more while streeters to blow the whistle on wrongdoing. And will donald trump go all in again . May i up the busted Atlantic City<\/a> casinos he once owned. Welcome to Market Makers<\/a>. 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