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We should get ready for more of the same in the u. S. A few days of triple digit declines and we will have more in the future. This is what the true normal market is like. There is a cliche for good reason. It is true people keep valuations. In syria, the Turkish Border, Islamic States. Has pushed further into the city. Meanwhile, leon panetta says the u. S. Needs to look at islamic as a real threat. I view this, charlie, as a continuum of 9 11. I think when you look at the broad sweep of terrorism, isis is another piece to that. Attackingntent on this country as well. We have to view this in the larger context. We will bring you more from that interview as well. Federer product federal prosecutors, currency rate rigging. That is according to people familiar with the investigation who declined to be identified. Several firms, including one here in the u. S. Prosecutors are looking into allegations that traders share data. A merger could create a new worldwide leader in the Auto Industry. One of the few people in the business to pull off a successful merger so far. He plans to list the shares monday and will step down after the end of the second fiveyear plan, a ways off in 2018. Finally, in baseball, st. Louis is going to the National Championship for the fourth year in a low. A three run homer gave a the dodgers. Over the cardinals will face the san who beat thents, Washington Nationals 32. Also three games to one. Of the biggest names in european politics. Angela merkel will attempt to tackle the entrenched problem for the region growth and jobs. Jon ferro is in london and joins us now. Are their chances . Frame the debate and give us a story here. Let me frame the debate for you. You have Germanys Angela Merkel turning up with a six cent Unemployment Rate since unification in germany. That is a record low. And you have the italian Prime Minister staring down and Unemployment Rate of 12 . Market. He labor soe heard that word reform many times, what does it even mean anymore . Some of the obstacles right now, you exposeig ones yourself to labor market regulations. 95 are 10 employees or fewer. No incentive to grow and it becomes a structural issue. There is very little the European Central bank can do unless they start doing things on the structural side. That will be a big debate with all these big leaders. The Economic Data out of germany has been really bad. Has angela pressure merkel been under . That is the other part of the debate. The biggest drop since 2009. No one here in europe is sensationalizing this, but it is a cause for concern. Germany really is on the brink of recession. We could get another one. This is the other side of the debate. You have pressure on Angela Merkel to change her approach there you are looking at the equity market in the u. S. Opening any minute now. But look at the bond market. You have got yields in germany on tenure money. Is exactly the same as japan. Guess what everyone is asking the germans why are you balancing the books when you can borrow money so cheaply and you should be stimulating your own economy . Now, germany is accounting for one third of eurozone gd the. When they get in trouble, you know it is a cause for concern. John in london, thank you so much for that. Lets come back here to washington for a moment. Tim geithner said a failure of aig may have caused mass panic. The former unit new york fed chief testified yesterday about a bailout in the company. Play outeithner will defense today. He is expected to return for a second day of testimony in the trial. For more, lets go to peter cook. You are inside the courtroom. What is the lawyer theyre trying to get that he needs two days to do . It is interesting he has been on the stand and has been very deliberate with Timothy Geithner, asking him the same question sometimes i throw or five different ways. Trying to get more details surrounding the terms of the aig bailout. Timothy geithner at times has been cooperative, but his memory has not served him well on some of the specifics. Through the course of the testimony, he has defended the bailout, that there would have been mass panic on out global scale had the government not stepped in. He walked through some detail in the actual moment where he broke governmentat the will help you out, but this is a deal were basically take it or leave it. It is interesting to see Timothy Geithner on the stage. Not nervous, but not the most cooperative witness. He was asked about hank greenberg, the reason by the lawsuit. He was the largest shareholder. Timothy geithner said he had a complicated regard and he paused for two or three seconds before he weighed in with that answer. Has he been a reluctant witness in general . He has not been reluctant but not the most cooperative. For someone who is an intimate heyer in these negotiations, helped set the Interest Rate on the loan itself. He helped set the term or it. A lot of these were directly a result of Timothy Geithners actions. Along with others. But he was one of the key players. He has not remembered everything. To a large extent, he backed up the governments case and in areas where david is trying to wentthe government overboard to punish aig and specifically not to give shareholders a chance to vote on the deal, Timothy Geithner again has not recalled every single aspect of those negotiations. Thank you. Peter will keep us posted throughout. Tomorrow, we have not as exciting a guess and then thursday, we have ben bernanke. Tomorrow. Nanke he will be with us tomorrow. Thank you very much, peter cook in washington. Lets go back overseas. Southeastshes in turkey. The limited response to Islamic State militants who are threatening to take down the town just across the syrian border. It is war and the town is on the verge of falling to the jihadist group, which would hand over a key military victory to the Islamic State. However, turkey has done nothing about it. Joining me is a former u. S. Ambassador who also served as deputy senior white house adviser under president carter. You do not look at day over 30. How is that possible . A turkish politician making a comment about how this key city is about to fall, when the country has not only not done anything about it, but is pushing back the citys residents into the hands of isis. The turks have tanks they could have brought in and a whole army. They joined the coalition a couple of days ago. 160,000 bey let stuck between the barbed wire fence of the Turkish Border and isiss sorts. They have done nothing to relieve the siege of it. I am convinced more importantly that the United States has been in cahoots with the turks in not doing enough to keep the falling. It will be the biggest victory isis will have achieved if it falls. For a moment about the possibility. You are a fairly wellconnected man in washington. Haveu have any evidence, you confirmed this in any way . This is all circumstantial evidence right now. Have beenhe kurds pleading for weeks for more military equipment. There have been relatively few area aerial attacks feared it is only in the last couple of days we began to see any concerted effort to take out the heavy military equipment. And yet, at the same time, the United States has been silent about the turks not moving into do more, first of all for refugees to cross the border, and to do more to compel isis. An oped i believe yesterday and you asked the turkson, why would the drive the kurds back into the hands of isis who will do nothing. Why doesnt the u. S. , and bomb the isis strongholds more seriously in order to stop this massacre of the Kurdish People . There fellow travelers. That is exactly what is going on. What apparently happened is the United States has more or less let turkey dictate the terms by which it will join the coalition. One of the terms they have demanded is they have looked mas seen the syrian kurds as perhaps supporters of the kkk, and they said, we are not going to do anything. These forces off because they are our enemies. The president of turkey was quoted over the weekend by saying, there is no difference between isis and those people who support the kkk. I wonder what president obama thinks about that. We have leon panetta talking to thesis is a threat u. S. , and if we let them succeed , it only makes them stronger. Exactly. This is why i raised the red flag. What is going on here . Where were the cruise next the missiles . Out theres were right in the open. Network Television Anchors were standing there showing all of these tanks out in the middle of these hills. There could have been far more help. It smacks of a could a conspiracy in the wake of what turkey is unwilling to do. Thank you for joining us. Ambassador. I encourage you to check out his oped. Want you to get caught up on some breaking news. Earnings season is kicking off. Out with earnings. It reported a firstquarter ongoing loss. An estimated loss of . 24 per share. It seems in line. Is that the case . 27 was the estimate and . 24 was the published loss there. Coming up, we will stick with corporate news. They say breaking up is hard to do. Why are so many Tech Companies doing it . The latest case exploring a split there in a number of others over the past week. Take a look at the blood moon. I saw it on my way to work. The second lunar total eclipse this year. Stay with us. The latest company to explore a breakup. Joinoftware company would another Large Tech Company or others that are trying to make their businesses more focused and nimble over the last week. Separating its businesses into it with me now is the former ceo of paypal and now the ceo of a management firm. I looked at your website. With yourreakup broker. Also with us is the senior markets correspondent reporting on these breakouts in the last couple of days. Have been talking about it and now we look at another possibility. Crescent sells Security Software virus program. It is looking to split up into a data storage company. Is interesting is if you look at how share prices react, it is up, not as big a reaction as you might expect. Over the past five years, it has trailed behind and has a total return of 46 in the past five years, versus more than doubling for the s p 500 companies. What is different now is it has a new ceo. Interim ceo replaced steve bennett. Both are assessors both predecessors made it clear they were not willing to do that. The current ceo is supposed to unveil a new Strategic Plan over the next 30 days. Speaking of these executives, i get the idea that a lot of times executives do not want to do breakouts for their own personal reasons and that it would be more often than not in the interest of the shareholder to actually do it. I think that is the case. Ceo, it is almost like cutting your arm off. Yes, it is very difficult for established management teams without outside pressure to go ahead and split up. She is going to stay chairman chairwoman while she runs the services unit. The latter piece, i would think, is a mistake. If you will split a company, the reason for doing it is their own separate momentum and if you are going to do it, do it all. Ive got to ask you about paypal since you used to run the company. John donahoe made a lot of arguments for keeping paypal and a lot of people agreed with him come important analysts and investors. At the end of the day, he did what carl icahn did a year ago. What do you think about that . There is reason on both sides. If you are ebay and paypal is such an important part of profits and momentum, it is tough. If you are paypal, it is exactly the right thing to do. It is interesting. You pointed out hb as a contender for the split. Emc also exploring its own split. It is said to have expressed interest in the past. Even as the companys breakup, theyre looking to buy each other. I wonder what that says about valuations of Tech Companies. Valuations are reasonably high and no were near the nosebleed heights we saw in 1999 and 2000. But the big ones are not terribly mispriced. They are trading not on revenues. Scarlet, thank you so much for joining us. I know we will see you later in the program. The ceostick with me, of paypal. Mike is my guest cohost for the hour. Coming up, the Kim Kardashian bubble. The gaming project takes a dramatic hit. You are watching in the loop. I am matt miller, in for betty liu. Here is a look at Bloomberg Top headlines. Amazon appears before the Supreme Court. Requiredy workers are to make sure they are not stealing that process, it takes as much as 25 minutes and they are not paid for their time. Not allowed to leave the building, but not getting paid anymore. Fullyear profit forecast is cut. Hurtbell said the latest its sales fared earnings per share will rise to extensive 1 . Their chip f their sales out of china. The kardashians may be losing some of their appeal with gamers. The games online ranking fell and in the last month, dropped from 162 to about 89 according to a researcher. Who is playing that game . I will explore that question throughout the program. Teachers take a look here. Were looking at green arrows as the rest of the worlds equity market dies down. Dow futures up 13 14 points. We will continue to cover the markets for you in 30 minutes. Today, jcpenney is hosting wall street analyst to discuss the state of retailers. Some we have gone so far it include the jcpenney ceo. Monitoring the meeting and she covers jcpenney like a hawk and has for years. Is our guest host, the founder and ceo of firm personal capital. Tell us first about what is going on with jcpenney. Hosting analyst meetings previously. Things were going terribly. Things are going in little less terribly now. Today, the ceo said in july, jcpenney had the same number of customer as it did in 2011. That was his mission. He stepped in post ron johnson to try to repair some of the damage done. It was basically a rebuilding, at least getting to the same preron johnson. At least he has made significant progress in doing that. He said the mission of jcpenney to be the preferred choice for the categories they offer. They are aimed at the budgets conscious shopper. Having national brands, having private label brands, and he talks about several growth initiatives, including the revamped home department. Towels, sheets, pillows . Also bigger things for the home. Furniture as well. Growth. Talked about in what it calls the central core, it will continue to do that and will have other forgs in the center footwear, assessors, and other types of beauty. The other growth for them is the big buzzword among all retailers , on the channel. That does not just mean online. It is the integration of online with the brickandmortar experience. Good place. E a you were dead that your entire career. Think about jcpenney . Everyone has sort of studied this story a little bit taking a crack at what they should do wrong and right. What about the omni channel business at jcpenney . I am not sure, but what i do physicalhe move from distribution to virtual distribution, it is happening across every industry. On the channel is a difficult thing to pull off well because you essentially have got the cost basis of doing Business Online and on retail. It is hard to pull off. But i think it is essential. If you look at what is happening with growth rates, the growth rates of online purchasing of even items you would otherwise get at retail, 4060 per year. Areoffline purchases relatively flat. You have to figure out a strategy to integrate. Something like home furnishes, that is a business that does well on mine. I would not have expected it. It is not just about having an online presence. So many retailers now have instore pickup. That has been very successful for many retailers. It is about that and when you are in the store being able to look on your device and getting information about the products you are looking at. It is not just how we traditionally think of, jcpenney has to a half have a website. It is about interconnectivity. Some retailers have done quite a good job. You look at macys. It is usually held up as an example of a retailer that has done quite well. Walmart has even done pretty well in the online space and has been very successful with instore pickup. Although we think of it as a middleoftheroad retailer, to me, macys was more of a luxury by. Obviously, is down on the lower tiers. Jcpenney was a middleclass retailer and they have been squeezed so hard. A lot of it, i think, has to do with the fact there is no more savings, and the middleclass itself has been squeezed so hard. You think about the savings rate obvious and because of your current is this area if you look at that over the last 50 years, it used to be double digits until 80s and never made it back. Savings is a huge problem in this country. Today, it is 2 , the savings rate of families in the country. At the same time, we have moved from pensions to the u. K. Putting retirement from companies to the shoulders of individuals and we forgot to tell people how to do it. Today more than 40 of the households in this country have zero retirement savings. Another 40 have less than one years worth of salaries. Now you get to be 65 and you have got to support yourself and your family for maybe another 45 years. How will you do that . The deficit we have in the country in terms of funding future retirement needs is huge. 10s estimated as high as trillion. Classes part of the problem that the lower four are just not getting paid a real wage . It is. In fact, recent news, families today earn less on an adjusted basis, less than they did 15 years ago. That is the First Time Since the depression of that has been true. And there has also been increasing income gap. The middleclass is not making economic progress. Problems with the savings rate and that is a huge problem for jcpenney. Even mike will have a difficult time. Thank you very much for that. To talkl stay with me more about his business as well. The former ceo will also weigh in on the interesting strategies. And will theyg it gain an edge over paypal . Also, successfully merged crisler. So far, has been successful. He will sell shares of the New York Stock Exchange on monday. Now calling for more consolidation in the Auto Industry. Stay with us. You may be surprised which digital wallace consumers are familiar with. Paypal, but amazon payments and itunes also ranked high. So did starbucks and dunkin donuts. But will apple pay disrupt this order . Bill is still with me. I noticed you have an iphone. I am an apple fan boy. Doing so many great things for such a long time. What about the company . Are they going to lose out to apple like every other industry . I do not think so. Remember, they are in two different businesses originally. Paypal is online and apple pay is offline. Isnt paypal shifting into that business as well . I recently received my debit card in the mail. I find myself using paypal at home depot when i am standing in line. Yes. When they get into the debit card or credit card business, they are doing the same thing any other distributor of the credit card us or whomever. Revenuegreat ancillary service for them, but they do not bring anything special to the party. Where there are special is online. Apple pay, you think, will then pick up steam. Do notlike right now i need any more of these online pay systems. And what fan of apple they have done with apple pay. It is well designed and well engineered. But it will take a long time for this to have a serious impact. We are not talking about the online world. Were talking about physical commerce. The first thing we have to do is repopulate the terminals across the country. That will take years. When it is done, wont it be possible to use m almost any Payment System . I am thinking about your website, where you can control your investments and organize your savings and checking accounts. You can work with your 401 k . Why cant you also develop a way for me to use my money through personal finance on the phone . What course you could very were using the phone for is, as we are a personal finance manager and we bring your information from all Financial Institutions into one place. You can see what you have got and what you owe. We can also see research with leading behavioral economists in the country. Fascinating. And people download our mobile app so they are now carrying around in their pockets something to tell them how much they have and how much they are spending, what happens is average spending for the family goes down by 15 . That is an incredible result. People use it. I remember there used to be i signed up one week and then never used it five years ago. Sure. You have to use it. Weight,e trying to lose you need a scale. Imagine if you could bring your scale to every meal and you could just step on and say, 165, guess i will have a salad today. It is the same thing. You are bringing your financial scale with you and then you think about it before you make a purchase. By 15 an reduce spending for families, that is incredible as a reduction in the savings rates. To have you. The former ceo of paypal and into a joining us for the hour. Coming up, Walmart Health care cuts reopen the debate over obamacare. We will take stock of the u. S. Healthcare system with the ceo of universal health services. Definitely stay with us for that. Fascinating conversation. After therts earnings bell tonight, marking the unofficial start of earnings season. Why cant what can investors expect . So, obviously walmart is looking to cut costs. Every company is looking to cut costs. Isr said walmart said it contending with half a billion in health care costs. , we have seen a similar move. Seen similar moves by trader joes, home depots, target. Companies actually offer them to parttime employees. Uncommon move. The employer mandate, we could see the move and we could see more announcements by a lot of other retailers and other companies. What does this mean for obama care . It seems like a ruthless and by walmart. Move this is only affecting 30,000 employees. It is not the first time for parttime workers. What this means for obama is we could see a lot more employees headed to public exchanges. A lot more in the public and state exchanges. For everyone,good but another thing we have seen a lot of his Companies Looking for private exchanges and this Consumer Directed Health plan where they are essentially giving the point the employees a stipend. A National Business group on Health Survey found companies. As he a 6. 5 rise we could see more people on private exchanges. Thank you for that. That is what obama care is doing seeking cuts are doing health care. What is obamacare doing for hospitals . Nations largest operators. Thank you for joining us. It is the oneyear anniversary of the rollout of the Affordable Care act. How is that affecting your business . We have seen positive aspects and, hopefully, this will be even better because everyone is ready with navigators. They will help people get insurance on exchanges. We are looking for an additional 6 Million People and it has been a positive, no question. It has to be. I was struck in reading the story of the liberian people a patient in dallas. His healthcare cost are over 1000 an hour. We can talk in a moment about the rising cost of health care. This guys obviously uninsured hiswill not able to flip half a Million Dollar bill by the time he gets better and gets out of the hospital. The United States has two ebola patients. It is nothing impact in the hospital. Hang on one second. We will come back and talk more about the rising costs of health care and also what youre doing at your business, the secondbiggest Hospital Service in the country. Stay with us and we are back in two does minutes. Two minutes. We are back, one of the nations is largest hospital operators. Yesterday, we got a disappointing outlook for the european economy from the imf. And yet, you are expanding over there in the u. K. You just made your first acquisition and Mental Health services. Why do you see the move as growing your top and bottom line . Well, we bought an Excellent Company with excellent management. There is an opportunity to consolidate. We are very excited about it. We were selected and there were three or four bidders and they picked us based on our reputation and the fact we can bring a lot of efficiencies to them. We are very happy. We just closed it about a week ago. Do you see globally the same Health Rising cost for care that we see in this country . Is it a global phenomenon or something we cannot get a handle on here . At the moment, i am only concerned about the United States and the u. K. U. K. In the National Health to bringre working some patients more and more to private hospitals. What was underlying our acquisition. We are excited about it. We have done really well here as well. An excellent staff. We have been included in the s p 500 and we have also just learned the under the other day that jpmorgan tracks what they call historical extreme winters, a company from the outset, to date. Are included in that very select list. A lot of good things have it happening to the company. Of oureased for all 66,000 employees across the country. He founded the company in 1978 and you got 66,000 employees around the u. S. What do you think about the rising cost of health care considering your experience in the last 30 years. Costs have risen but health care has also gotten a lot better. We have had a lot of technological improvements. At the moment, i think there are many ways of reducing costs and i think the government is looking at some of that and so are we. Treat people in the appropriate setting at inefficient rate and we have been doing that. Us, the you for joining cd the ceo of universal health services. Youre welcome. Moving and shaking this hour, vladimiris resident, putin, just celebrated his 62nd birthday by taking a day off in the siberian wilderness. Central bank is currently intervening for the ,hird day, trying to shore up the russian public cannot seem to get enough of Vladimir Putin. The russian leader was compared to hercules in this art exhibit which has drawn big caught. Ig crowds in moscow iphone covers and sweatshirts that are selling out. The were in ukraine may be west,lar with us in the but Vladimir Putin has never been more popular with his own people. A polling firm says his Approval Rating has risen from 65 in january to 84 in august. Minutes after56 the hour. Bloomberg television is on the market. Trade look at the futures as european and asian stocks fell or are falling. Upsee gaining futures here 2 10 of 1 and the dow futures adding 14 points. Adding 1 10 of 1 . Some pretty negative news yesterday from the imf and a real strengthening dollar, which may be a concern going into earnings season, and yet, it looks like futures futures traders are optimistic. Up, amazon employees get their day in court and they say the retail giant is forcing them to work extra hours without pay. Stay in the loop. Here is a look at the top headlines in this morning. Yesterday, the imf warned that stocks are getting frothy. You do have frothy and social media. In thetainly have frothy biotech area. You have the antithesis of that in the largecap Tech Companies. Is interesting to see this is what a normal market looks like. You get pockets of over and under valuation. Investors waiting to hear from the fed today. The central bank is releasing minutes from last months policy meeting. We will bring you those headlines as soon as we get them. Ruble fell 14 against the dollar in the fourth quarter. Central bank has spent 30 billion by the end of the year in order to slow the decline. These that are splitting themselves up may be joined. It may split into two companies. One sells security programs and the other focuses on data storage. An announcement may be a few weeks away. Air france may take a hit from the worst strike in its history where it the airline estimates the twoweek long walk out may cut 630 million off of its quarterly earnings. And valiant pharmaceuticals plans to raise its takeover bid for allergen in december according to a person familiar with the matter. Big closed face Shareholder Meeting where some of its directors may be removed. It is teaming up with investor bill akerman on this one. It will be his third offer. It was Tim Geithners term in the chair. The former press secretary shed little light on bailout loans. He entered another a number of other questions by saying, i do not recall. A ceo is entering the final lap of his tenure. The architect of the merger plans to step down after the process wraps up in 2018. Crisler automobiles set to trade on the New York Stock Exchange for the first Time Beginning monday. For more, thank you so much for joining us. The longestserving ceo of any european automaker. You could call him quite triplingl, shipping revenue and earnings. For sure. Time for him to think about the future. Withl day for an interview lumber businessman. And said, iopen will leave my post as ceo. It is time to give my role to a young manager. He also said more than one manager might take it. He is known for answering every question. Newlso said there might be marriages in the Auto Industry and he said, we may take a look and participate and he said, it from day one. E rising why we saw shares this morning. L saw you, we were both in detroit when sergio was outlining his plan. It will be his second year at i am not sure what kind of grade you give him in his first fiveyear plan. What will he do this time . How do you think he will do . This is his third plan. I think it is a critical plan because he is very good in a financial aspect here this is all about models. Enough show he is good all around the world. She the expansion is crucial. May be he will sell one million sheets this year. It was like they are set. That would be a record. Thank you so much. I am jealous of this guys job. Breaking news. International Monetary Fund out with his Global Financial report. Y lets go to scarlet fu with details. The main take away is the imf says some banks are still not able to support Economic Growth because theyre not profitable enough. The imf says benefits of low Interest Rates by a Federal Reserve is felt unevenly in the u. S. In europe, Corporate Investment is still stood still sluggish good imf says 60 of european banks cannot deliver credit growth of more than 5 compared the 35 for banks across developed world. The imf warns of liquidity risk. The Fund Management history has become more concentrated as well. One stat i found interesting is 80 of assets at the biggest banks have a return on equity that does not cover the cost of capital required by shareholders. That is concerning six years after the financial crisis. Thank you for that. The latest on the imf. Erik schatzker is our man for all things banks. He joins us now out of his program, which starts in 54 minutes. Yesterday, you and i spoke with learned about his biggest concerns. Christine lagarde today is talking. We just got this report. What is your take . The report is put together by a gentleman who oversees monetary and financial markets. Stability. We will be speaking to him on Market Makers. Scarlet was just talking about imf conclusions with banks. The problem is there is not an easy solution. Supervisors, and we are talking about regulators, need to facilitate a structural regulation that would allow profitability without taking excessive risks that support the economy through lending it easy to say and impossible to do. How will these banks adjust their Business Models in an environment where an economic climate like europe, where there is very little demand for credit to begin with, how can you become more profitable . You charge more. With the current Capital Markets these banks have to live under. That is one point out like to make. Speaking of the problem in europe, that is what olivia was home yesterday. His biggest concern for risks Going Forward is tepid growth there. Christine lagarde speaking at a conference in washington and saying her concerns are longterm subpar growth as well and that really labor reforms are the answer in the euro area. There is no question the reform is critical to the european economy. What is happening in the meantime is the Central Banks ofe no choice in the absence fiscal and labor form. In the absence. Congressional mandates like the one the fed faces to promote job growth. As a result, you have a situation in which, according to the imf, we face the potential. Theyre very careful to say this kind of thing, for excessive risk taking. Imf says in this report policies have facilitated greater financial risk taking. This has resulted in asset price appreciation, and record low areas,ity in many reaching levels that indicate diversions from fundamentals. If you were to look up in a dictionary the definition of a financial bubble, you might find something just like that. What is important here is whether it the janet yellen or the imf increasingly regulators or people in a position of financial supervision, they are calling the markets we see today frothy. Their say on the one hand to central bankers, pay attention, that you do not blow up bubbles. On the other hand, theyre saying to leaders that you need to make structural changes to facilitate more growth. Vague knowledge Central Banks have little choice. What they then say is match macro prudential policies need to be put in place to prove to prevent the kinds of risks or at least safeguard. No one is really certain because we have never been a will to do that before, that macro policies will work in that regard. Stay with me for more on those policies. Erik schatzker. Up next, workers take amazon to court. Them millions of dollars in back wages because amazon was not letting the employees out of the building but had stopped a them. Does that make sense . Stay with us here. Classic cold morning in october. Blue skies and clouds. Is like a painting. Lets look at more serious issues. Amazon workers are taking the online retailer to court and they say the security screenings are subjected to are on company time and they should be paid for it, since they are not allowed to leave work. Greg is that the Supreme Court in d. C. Spencer is out and san francisco. Let me kick it off with you. Does it make sense they should not be paid Companies Holding them to his own building . That is what the Supreme Court will decide and the arguments from the employees and attorneys that they should be paid. Wonder how amazon says it does not want to pay them, since theyre not letting them leave. Showszon said their data the time people spend online is minimal. And it is also arguing there is also some technicality about whether they were temporary employees employed by a thirdparty form firm, and who has liability to pay them. Question as interesting. As little sense as it makes, it is an Argument Companies have been having for decades, before the great depression. I heard you liken this to butchers who have to sharpen their knives before work. Should they get paid for that . The Supreme Court will have to do the case again. Right. Courts have said that is so integral to the actual job, that a worker should be paid for that. Courts have also set other things, like walking from your car, minimal. The fair labor standards act and a law looking at the statutory and figuring out which side of the line they fall on. Any idea which way they will go . I guess i made it clear it teams like if you will not let me leave your building, you should still be paying me, otherwise, i want to go right now. That is a policy argument. That may work very well in congress. These courts will look at a statute and when they do, they have gone both ways. A case involving having to put on safety gear and the time spent walking to your gear andr dawning that they said that is compensable. There was another case laster of was noton clothing that really safety gear. Because of the different division, no. So this may not be an ideological case workers say these security lines are sometimes 25 minutes long and i forantee once they get paid that time, the lines will get shorter. Thank you so much. Coming up, twitter is taking on over userovernment surveillance. Very interesting there it jcpenney opening up to analysts for the First Time Since 2012. 2012 seems like it was only yesterday but it was two years ago. The struggling retailer comet has been a long time for them. Stay with us. The customers wanted. And they are trying to bring these people back. They do have customers. If you look at their sales, they have been improving, partly because what they were comparing against is so low. Their houses rebound. If you look at what we have seen from sales numbers, there has been rebound. Sort of what today is about to 2015. Out they do their financial counters a little bit differently. I gotiscal calendar, here. Rather than a calendar you and i use. His today seems to be about emphasizing that rebound has taken hold and how the retailer will move forward. Example, about 500 jcpenney stores, perfumer and cosmetics company. This is the only Department Store that has won in the store. Theyre touting this as an area of growth, in the high single digits, he says. Jcpenney is poised to expand it beyond that 500 stores. He is also touting disney. Frozen obviously. I love that movie. Of course you do. I would not say this is a theyre sayingt the turnaround is well entrenched. They will live. Thank you. We are a few minutes away from the opening bell. The top 10 traits you do not want to miss. Keep it right here. Welcome. It is 26 minutes past the hour. Bloomberg television is on the market. Equities,bs in global we do not see a bad day for the s p today. Futures have been diminishing see thatns and you can on the dow, they finally turned around to a loss. Up just 13 points a few minutes ago. Nasdaq futures also gaining about 81 hundredths of 1 . The crude trade has been fascinating, holding well under 90. We are now looking at what the new analyst are talking about, the new support could be 80 per barrel. Not good news for the russians as they try and stabilize their currency. Lets count down now to the open, with the top 10. These are the only stories you need to know about. Scarlet fu joins me here. With theck it off mobile and the share is rising in the premarket. Benchmarks upgraded the stock to buy and hold outside in the Third Quarter from the Kim Kardashian hollywood game. Its downloading rank. It is definitely on my phone. He need my fingerprint to get in there. Number nine. Yum brands. Kfc, and of km staff the cut. The company said earnings per share will rise this year, down from a previous forecast of growth. Go pro. Shares of the wireless camera maker is falling after it was downgraded to neutral overweight. It says little additional up side. It has surged almost 300 since its ipo. Profit thatquarter topped analyst estimates. Rose 13 from a year ago. Shares are rising from the premarket and up 12 in the past year. Lets talk about twitter. The site is taking the government to court and is suing the u. S. For the right to disclose more detailed information for government surveillance of its users. Number five, at t, even after directv had 18 million subscribers in latin america. They are still hungry for more acquisitions in the region. The billion dollars takeover marks the first push outside the u. S. In more than a decade. Number four, valiant is upping its antifor allergen. It plans to raise its takeover bid according to a person familiar with the manner the matter who declined to be identified. It could be sooner if a rival emerges from allergen shareholders. Lets take a look at number three, the world houses Largest Company that issued 2014 forecasts that pretty much trailed analyst estimates. Falling grain prices are leaving farmers with less money to spend. Number two is a Security Software company lori a breakup according to people with knowledge of the matter. Advanced talks following in the footsteps of hp any day. It could come in a few weeks as Michael Brown unveils the strategy. Ibm has been doing it for a long time. Bell, jcpenney, the retailer, is number one. Hosting wall street analysts since 2012. The ceo said his own department revamped and expansion into fashion items will be a key growth key growth as stocks start trading, i want to bring in steve would. He says you have to watch europe. European stocks fell the lowest level in eight weeks. Heard some markets are frothy from the imf yesterday. Even with these losses, they are still frothy . We will be private sector analysis. Those are Public Sector analyses. Are you downing Public Sector analyses . It depends on the market and the sector. It right now is in a situation where its in a recessionary environment. Germany is right on the edge. What that means is, from a gearing ratio perspective, the European Central bank is going to have to ride to the rescue and do their version of a monitor to be using and get very aggressive quantitative easing and get very aggressive. There are going to be winners and losers. This could be a benefit that the doctors arrive to the er and europe is going to get some muchneeded help. The euro will continue to weaken. They want that to happen. That will be a big theme this earnings season. Earnings estimates have been one of the largest downward revisions in the last few years. Every 5 rise in the dollar versus a euro is a one dollar drop in fullyear s p earnings. The volatility we are seeing in the market, we have not had a dramatic selloff in 20 months. That is part of it. The stretching of valuations in u. S. Equities. We are getting these crosscurrents where the bank of england stuttered a little bit. They were going to go first in terms of raising rates. We are seeing this unexpected move in the dollar where you they are going to be in new york today. The europeans are going to do something similar. It is the pace of the dollar that is leading to some of this volatility. Let me ask about a dramatic selloff. The stock is up now. 10 is what would be in that contraction. You and i have been talking about this year but we saw stretched incks terms of valuations. 40 return in smallcap stock in the u. S. In 2013 on top of a good 2012. The valuations were not there. There could be more volatility and some stretch valuations, not terribly surprising. Thats why we like multiexit strategies looking globally. Lets look at emerging market space. If you are an investor, you get returns on the emerging market index, flat compared to the s p. What is the case to be made for those looking to get into that space . Flat in 2014 is better than 2013. Not as good as previous years. Driven by china. The chinese of fact. Chinese affect. It such a broad label that it might not have much of a meaning anymore. There is such diversity. Brazil versus mexico. China versus the philippines. You have to do your homework. Not just and other category. You really have to do your homework. , you havearkets, yes a medium to longer term horizon. There are going to be some challenges in the shortterm. What do you think about brazil . The elections are going to for a very chop disciplined, very longterm investor, brazil provides some opportunity. Yet to tread lightly and be careful. We have colombia and mexico. There are other macro environments with better opportunity. Brazil looks weak. 0. 3 from the imap. From the imf. The slowest of the developing nations. Currency flipped on its head from the brazilian perspective. Is there an economy we are not talking enough about . Frontier markets are where people are going to have to a 510 years down the line. The correlation goes up. When australia was developing, it developed and moved to europe and the United States. Those diversification benefits become vietnam . Right . Africa, nigeria is a name that comes up a lot. Looking into developing asia. There is a lot of good names. Liquidity, political stability, getting your money out. Make sense. Thanks for joining us. The russell 1000 up about 50 this year. Up come on other earnings season is upon us after costco posted fourthquarter profit that top analyst estimates. Alcoa and our cola a nontraditional approach to its results. The Technology Famous for beating humans on jeopardy is being taught which is. Is is peeling will being taught new languages. Watson is bilingual. Thirdquarter earnings season is underway with cosco already coming in strong this morning. 1. 58. Ill cola is out after the bell and we will be here to tell you whether the company beat or fell short of consensus. Alcoa is out after the bell. Michael mckee tells us that is the wrong way to look at it. This is a convention that has developed. Does a company meet expectations . If so, the stock goes up. Could go down if it goes the other way. Thats not how people who know what they are doing think of earnings. Lets pick a random company here. Call it mapped company. Their natures by tell you nothing about what the future price of a stock should be. They are backwards looking. They are what happened the last three months. Not whats coming up in the next six months. In the second quarter, 68 of the s p 500 Companies Beat expectations. Thats not because it was a great quarter. Its because they always do you have to go back to 1998 to find a quarter when fewer than half erated im wondering if thats because analysts are somehow in cahoots with companies. If they are massaging their numbers. I would. Thirdquarter earnings have come down. This is where they think they are going to be. The white line is the s p 500. Thewant to look at how forecasts matchup against the actual numbers. They dont really match at all. Second, Companies Manage their earnings releases. There is no universally recognized accounting standards for earnings are to companies can premuch do what they want. They can move the revenue forward or in a prior one, they can shift costs from one to another and the lower the amount reserved for losses. Cost as classify restructuring. All kinds of things to make the bottom line look better. I would absolutely do that. Tech companies do that a lot. Lenovo will lower expectations. Apple always comes out with a disappointing outlook when it beats earnings. Andhey guide analysts down then come out better and the stock gets a pop. Its nice to have a single number, but its not what you want to trade on. You want to look at the revenue numbers. The top line. Unthe unmet sizable the massage double. Unmassageable. The income of what do you think about this . Ian, what do you think about this . Aren general, if you luating a stock, you youre are going to want to set your expectations low. Thats why they dont put the numbers in print. How do you then get around that . Do you always assume that analysts are kind of lowballing the reality . You assume one way or another, yes. They will usually have their analysts earnings estimates really high. Do. Eneral, companies has a reale analysis. The have a better handle and consensus built on the by side. It looks like it kicked off the well. We are talking about costco. Better than the estimate of 1. 52. Everybody beats all the time. But costco is one of these companies in a sweet spot for retailers. I would say not everybody beats all the time. 76 . It depends on what you look at. If youre looking earnings coming yes. Looking at revenues, not quite so much. Thats how people are manufacturing earnings through corporate buybacks and recapitalization based on the rates and buying back stock. But youre not seeing the big Revenue Growth and thats what we are looking forward to the next quarter as well. The earnings estimates have gone from 9 at the beginning of the quarter to down around 5 and Revenue Growth is even less and this is all related to the fact that there is not a lot of growth out there, especially in the multinationals with the dollar and the weakness around the globe. At the end of the day, they may the its largely the result of whats causing this. You cant massage the revenue numbers as well as you can eps. Cial engineering with what else are you focused on besides just looking at revenue numbers . Things. Nk theres two you are going to get a look at the dollar and how much its really urging people. Its a known unknown. When Companies Reported last quarter, the dollar euro was around 135 and now its around 126. There has been a move thats going to hurt companies with oversee exposure. You will get a look into the companies that were sport with exposure to the consumer are going to talk not just guidance, but qualitatively about what the youre going to get some look into 2015 initial guidance. A lot of companies will provide that this quarter and you will find out how realistic expectations are for next year. Remembering the street is still modeling 4 Revenue Growth yearoveryear. Thanks so much. Watch the dollar. Watch Holiday Spending and guidance into 2015. Thanks also to mike mckee. Still ahead, hockeys analytics awakening. More nhl teams are embracing big data and it could transform the game as we know it. Here in new york, we genuinely care. , beginningfaces off at season today. Hockey is the latest sport to move to big data. Decades after bill james shook , the nhl is experiencing its own analytics awakening. Scarlet fu has more on this. Hiring these wonky numbers guys. The hard a professional poker player hired a professional poker player. Other clubs have done the same thing. This is not always in concert with the coaches who are opposed to this datadriven approach. Of course not. And just like moneyball. They have all brought in jonah hill and they are shaking things up. Need whats important for big data in hockey . You will hear new buzzwords come up. Instead of goals and assists, the corsi rating measures total shot attempts. The onbase percentage of hockey. Youll hear about the fenwick rating. These are not new ideas. Their correlating with time on the ice. What it means for line choices, special teams, quality shift. Problem solving realtime rather than end of the season when they make the playoffs. You mentioned that this could affect hockey fighting. Teams will be mining all the data to determine whether fighting is effective in helping teams when. Look at the finals of last season. The la kings all four lines were skilled. All four lines skilled, their top scores in every line. L like youngs finished the la kings. Than hockey more and baseball than anybody in the entire newsroom, including mark crumpton. That does it for in the loop it appeared tomorrow, planes trains and automobiles. Elon musks big reveal. It is 56 past the hour. Bloomberg television is on the markets. We are 30 minutes into the start of the trading day. U. S. Stocks fluctuating before the release of the minutes from the meeting this afternoon. The dow industrials, little change after yesterdays selloff. Low concerns about valuations of share prices. Of. 3 . Less demand for oil. Cutting into the European Equity markets and commodities. The 10 year yield, little change at 2. 4 . Sticking with treasuries, american banks are loading up on Government Debt. Commercial lenders increasing their holdings with unprecedented 1. 99 trillion. Ast month t Suzanne Walker joins me with more. Lets start with the basics. Why are these banks filling up on Government Debt . Because they have excess cash on hand to have seen record deposits this year. It lending that money out . They are lending. Theyve been lending more than they did before the crisis. Was 7. 7n to him trillion. Far strength of what happened citigroup,rica,ank most banks are compliant. Does this suggest they are cautious as the data seems to indicate the u. S. Is the best growing economy . The u. S. Is doing very well relatively. The imf cut the forecast for growth. Because of that europe is heading into a recession and japan is using. Even though the u. S. Is doing very well, other countries around the world are not doing that well. Theyre worried that may in fact pull down the u. S. Even though its expected to grow 3 . We will be back on the markets once again in 30 minutes. Market makers is up next. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Splitting up in silicon valley. A bona fide trend. The latest tech company to consider breaking itself into two. Banksing from the central from the imf. Good morning, everybody. Welcome to Market Makers. Stephanie is on assignment. You will see her in the next hour. We begin with the bulletin. The top stories in finance at this hour. Lets start with the imf. Using Central Bank Money has pumped up asset prices so much they may once again threaten the financial system. The imf points to specific vulnerabilities. I

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