Transcripts For BLOOMBERG In The Loop With Betty Liu 20150327

Stores to actually buy the product. The ceo jeff sears is joining me in just a few moments, cooking on the stove. Heres a look at our top stories this morning. Investigators searching for the cause of the german wings crash, now focusing on the purpose of personal life of the planes copilot. Police found a sick note in his apartment suggesting he suffered from mental illness. It is believed that he purposely and the plane into amount side taking 129 other people with him to death. They want to know about the copilots emotional state. We have five investigators searched the apartment for clues and why the pilot did the deed. Betty the airline is setting up an assistance aid. Grieving relatives held a religious service near the crash site at the french else. In egyptian Officials Saying an invasion of yemen is in the planning stages. Regional allies are bombing shiite rebels in yemen. The rebels are backed by iran. Egypt and saudi arabia want to send in troops. They want to send Strike Forces with the ok of the arab league. Fights are led to be a war that between iran and saudi arabia. It is driven from the palace by the rebels and fled. The rebels are storming south in a bid to secure their hold on the country. Related to that new forecast light oil analyst showing the wild unpredictability of the oil market. Some barrels going for 90 and other cf 58 price tag. Those analysts were just one dollar part. Oil is off by nearly 2 in the u. S. Despite the escalating battle in yemen to the center of the world oil supplies. Such volatility in those markets. Weakness in china. Its model as fell by nearly 50 last month. The Research Firm said tesla imported 63 luxury cars to china in february. That is 53 more than january, but down from hundreds per month during last years Fourth Quarters. In an interview with the state own chinese media, ceo elon musk says he was misled by the end demands for tesla. A major breaking news story in washington senator harry reid is not going to seek reelection. The nevada democrat confirmed early reports in a video statement. Yes been Senate Majority leader since 2005. Yes been recovering from injuries suffered since exercising in his home. He has done and not going to stand for reelection. Those are your top headlines. Back to the german wings charge and investigation. Investigators receive material that the copilot was suffering from a mental illness. Richard white joins us now from frankfurt with much more on this. Richard, what can you tell us about these medical documents and the sick notes that were found at his house . Richard here is a little bit of a disclaimer. Ive been sitting and waiting for a few minutes. In those minutes the information broke. I have a little no peace. It mentioned mental illness. This is something that dusseldorf prosecutors have release. It shows we need to be very careful with somebody who claim they knew and what investigators are officially releasing. Yes, you are right in saying that we have found a sick note a torn up sick note that shows that he was in a medical treatment and we believe that may have been for medical reasons. Of course, we all want and answer and plausible isolation for why something that is so unthinkable happened and with also that explanation, a guy who is possibly in medical treatment may be for Something Like depression may had problems with his girlfriend those are other reports out there, but unconfirmed from prosecutors feared that would fit the bill. Betty i would agree with you. Information is all over the place. One piece of news is are tracked it, then another. Is retracted, that another. What do we really know officially about Andreas Lubitz . Richard he has been working for one of the half years and started a career. The guys at the sounds that are really young. And sit in the cockpit in the early 20s. He was a bit earlier altar. They may have been a break in his education. It may have been medical treatment. The pieces of proposal are slowly coming together. We have already known that he started medication in 2008 and did not completed until 2008. This education does not last more than about a year. There were probably some issues in that time and news from the prosecutor that we just got may help to explain those gaps in his cv for treatment relations to mental illness. That may explain why he did not complete his courses on time and it may provide a clue for why he may have done what prosecutors at the stage think he has done. Betty voluntarily crash that airplane. Thank you so much. Richard white, our Bloomberg News reported in frankfurt. You will return to the conflict in yemen and the impact on Global Markets. The saudi Led Bombing Campaign is elevating the risks of an obstruction in oil supplies. Yemens neighbor, saudi arabia is one of the worlds busiest shipping lanes. Elliott joins us now. First off tell us about this quarter. How important is the oil trade because it is going to affect the markets . Elliott we have seen oil prices come down a little bit today after the large gains over the past few days. As far as yemen is concerned their number 39 and. 2 of global production. You care about it for two reasons. They support saudi arabia and what is the fourth biggest chip point in the world. We are talking about the gateway which roughly translates to the gateway of anguish or tears because of the emotion that it used to induce to see men trying to go through that part of the world. We have about four defense of global trade. We are talking about 3. 8 Million Barrels of oil a day. A lot coming from the Arabian Peninsula going up the the straight and the suez canal and onto europe. In terms of global trade, we are talking about 7 of maritime trade. Betty given that, what protection is there gekko military protection, to protect the ships in the gulf of aden . Elliott we know that the coalition is blockading the port of aden specifically. But in that area, and we have not heard about it recently, there has been a lot of piracy over the years. At that, the European Naval forces there. They have five ships and one plane deployed in that area off the horn of africa. Theres also the combined Maritime Forces which cooperate with them. In fact, they had somebody in saudi arabia to talk about strengthening their ties in the fields of counterterrorism and piracy. It would not be inconceivable to think that there might be some kind of intelligence sharing. So far, shipping not being disrupted in that area. Betty thank you so much elliott. Turning back on the corporate front. Blackberry is reporting corporate earnings. They sought a surprise fourthquarter profit after increasing the average price of their smartphones. Shares have dropped 14 in the last month. They are now up as you can see almost 4 in the free market. John butler food covers blackberry for me is joining me now. John, are you satisfied with these results like investors are . John i am mixed on the results. They beat on the bottom line. That is the good news. They did a very good job with cost control, but they missed on the top line. They missed in the Device Division was which surprised me because they came out with the blackberry classic in the blackberry passport handsets in december. Their fiscal Quarter Ended in february and they had a full quarter to really work with those devices. That tells me that they didnt do as well as we had hoped. Betty john chen is speaking right now and they have this call going on. Yes saying that the early reports of classic sales are promising. That is one headline coming up. Also, many resellers are picking up their software products. Talk to me john about distribution. John distribution is key for headsets because you are selling them through retail. It is very tough to sell a handset over the web here in the u. S. I do not know why. John chen said that because we cannot get online sales going. It really is about point of sale. It is a high touch business, i think. People really want to touch and feel and learn about it from a salesperson. Betty particularly the blackberries. John getting that distribution is absolutely key. The more you sell, the better off you are. Betty thank you for seeing me this morning. John butler on about blackberry. We speak to the ceo of convert text. They have just done a survey on attitudes toward street in practice. Best speedy practice. And those attitudes are getting better. Full details coming up next. Betty here is a look at our top stories this morning. The u. S. Senate has adjourned up as our following an all nighter. They pushed through a budget plan at 3 30 a. M. This morning. They passed a budget measure on a partyline for. Best partyline vote. It is expected to be a long battle between congress and president over the budget. Leon coopermans mind billiondollar hedge fund has drawn the interest of the federal government. That is what the billionaire told his clients in a letter this week. Cooperman says that firm was subpoenaed by the u. S. Attorneys office in new jersey. It is at an early stage. No one at the firm has been accused of any wrongdoing. U. S. Derivatives regulators in a possible fight with its own workers. Documents show that the commodity futures Trading Division spending more than 40,000 on labor lawyers. This comes after labor workers joined a union and are in current negotiations. As a pivotal time for the agency who is transformed by the 2010 dodd frank act. Questions anre lingering this morning about an explosion at a new york apartment building. A fire nearly wrecked another one. Faulty works may be to blame here. Just an hour before it happened Utility Company inspectors determined that plumbing and gas work there was deficient. Those are your top stories this morning. Still to come perched ceo jeff sears joins us on the copies interactive retail shows room. Showroom. Were going to have a final fourthquarter read on the economy. Fourthquarter gdp numbers are going to be right out at 8 30 a. M. I was exactly one year ago today, Michael Lucas should shook wall street and grab the attention of main street as well. His book focused on the high training. Louis is back on the speaking circuit this week where he maintained that very little has changed. Every new Technology Read some faster traitor. Up until recently, an argument could be made that it was good. Essentially making markets more efficient i making it faster. Going from microseconds to milliseconds, it is not clear if it helps anybody could if it helps anybody. Betty according to a new survey, many people thought like michael lewis. That has now gone down to 57 . What exactly has changed. We are joined by eric goal mouth who conducted that survey. Good to have you this morning. What has changed here . Eric i think a couple changed a couple things have changed here. Volatility is very moderate right now. We have seen a lot of Price Movement lately, but it is in the teens and it is very calm. Markets have gone up. If you are out of the markets, you must have missed 12 return on the s p 500. Theyre working in functioning and people are starting to think. Maybe it is not quite as bad. Betty just because something devastating has happened like a flash crash, does that mean that the markets are not rigged . Eric i would want to separate what i call technical resiliency to what is speculation about the market being rigged. Those are two different discussions. Theres rated concerned about greater concern about technical resiliency. And theres more now than it was. The question about rigging is that people are not sure that that is really true. I think there are definitely Market Structure concerns that people want to adjust. That is having to deal with latency arbitrage and market data and all those things. The house might not be on fire here. Betty we talk to joes elusiv to have written a lot and he said that the speed is not the problem and the structure in the markets appeared to be unfair. I want you to listen to what he said about that. It is been a fragmented market for years. To connect those, that is what the speed advantages come into play. Getting more more distorted . Our point has always been that it is not real liquidity. That is fragmented liquidity. Betty so are the markets distorted . Eric i think they are fragmented. I agree 100 with joe that markets are fragmented. Liquidity is spread out over many venues. The problem is more extreme than that. There are 50 plus pulls out there as well. There is a whole web of pools of liquidity. What people learn to do in one of the changes that they have made in the last years how is my order being handled . That is really the biggest change coming from our survey results over one year over the other. Ok, we are concerned about all these issues in the marketplace and the fragmentation and the information leaks what do we do about it . What theyve done is put the pressure on the brokers and firms like ours to say where is my order going . How are you handling this . Where are you finding liquidity . Betty i know you on the sec advisory planning. Is one of the proposals to make sht firms register with finra . Is that going to adjust this . Eric it is not going to make them register as sht firms, but to track regulators. Some of it is in place already. The rest will be put into place soon. It is to keep them to stitch back the activity in the marketplace to make sure it is not being manipulative if there is an investigation. Im not so sure that is really going to change much. I think the big issue that is going to come up what are we going to do about maker tate . They want to talk about it at this committee and it has been in the news for a while. I think people might want to adjust that fit what do we do about order types . I think those are the issues that will be tackled. Betty great to see you. Thank you so much for stopping by. He would back we will be back in two minutes. Betty youre watching in the loop. Good morning. I am betty liu. We meet another california bright idea on the east coast good let me tell you about this one. This is a company that is poised to do what appliances did like apple did for smartphones. Check out this where you can operate over 30 operable showerheads. It is all about the try before you buy concert. The latest store is the first on the east coast here that will open in my home state of new jersey. The ceo Jeffrey Sears joins us this morning. He was recently near named disruptor of the year by the National Retail federation. It is great to have you here this morning. Why is this concept so different and why hasnt anybody thought about it before . Jeffrey it is a privilege to be here. I cannot speak to why no one has thought of it before, but our view is can we go to the market and disrupt it completely and give the power back to the consumers so they can dream and play with the product and stripe before they buy it and make a great decision on how to have inspired moments in their lives with their family and friends. Betty why appliances . We can only say that ovens can only get so sexy. But what was it about appliances that you said, you know what . Im looking at that and it needs to be disrupted. Jeffery if you think about appliances and you think about love and, right . You can pick about it that way think about it that way or think about it as the thing that makes the view full Chocolate Chip Cookie that smears the babys face that your grandma takes a picture of an half of the rest of your life. It is by the moments. It is about your home. As about living. It is about living. We are so connected to the food network and theres no real connection physically to actually learn and use the product. Betty this whole concept, while very interesting and i would love to be able to go into a store to check out the products myself. It must cost more because you have to have a good show rooms. What are your margins compared to a sears or home depot or lowes where they just know that stuff on the showroom floor and pack it in as tightly as possible . Jeffery if theres one thing that i would like everyone to take away today is three things. One is that we want people to be inspired when they come to the showroom. We have been invited to these luxury centers with support from the Manufacturing Committee and it allows us to have our prices to be the same as anybody else. Betty youre saying garden state called you. Jeffery westfield. Betty westfield, which owns garden state, called you and said come to the showroom. Jeffery it is just a privilege to be there. If you have these ability to us if you have the ability to inspire the customer and empower them. The thing that you do not see is that we install all the appliances that we show and we stand with the customer to the service and warranty. So they are never left alone. Betty do you charge higher prices . Jeffery no, we do not. Most of our products are upi products. It is the investment and financial model. The community allied with our partners allow the inspiration to be free. Betty do you find that you are converting more businesses to sales that other source than other stores because of this concept . Jeffery yes and i can tell you why. When you look at stores, the topography is not the same as walking to the door. It is just a gigantic dissatisfaction machine, meaning that you walk in and you think that you really like what your house looks like and then you start thinking, maybe not. That creates want and desire. That starts the process of dreaming. Betty does that mean that your digital side of the business is not as important because you are, in fact, relying on your customer getting physically into your store versus going online . Jeffery i think we look at the purchases positively. We have done it in reverse. When you come and visit our stores and experience the klein this the kindness and caring of our people, you will see the brickandmortar piece. This year, were getting ready to launch our Fourth Quarter digital strategy, which i cannot speak a lot about but it will be equally important and beautiful as the stores. The experience is different. Betty thank you so much for joining me. Jeffrey sears, the ceo of the retailer pirch. We are just getting breaking gdp numbers. These are final revisions here. 2. 2 is the revised slightly lower on the top number here. Scarlet fu you have some the breaking news. Scarlet the final estimate for the gdps shows no change from a prior estimate. 2. 2 percent growth in the final three months of 2014. Personal consumption rates up a little bit here to 4. 4 . This is personal spending. The prior read was for 4. 2 growth. We are seeing more Consumer Spending. When inflation gauge is unchanged at 0. 1 . The headline numbers show a little bit of a slowdown in that it was expected to pick up, but it is unchanged from the prior read. In terms of Market Reaction u. S. Futures is not doing much. They were lower modestly and remain with the same level. The doctor dollar taking a little bit lower. The 10 year yield is in session right now. It is at 1. 9702 . The two year yield also ticks lower. It is yielding 59 basis points. Betty thank you so much for reviewing those gdp numbers. Heres a look at our other top stories this morning. U. S. Is reportedly thinking of letting iran keep running a secret underground nuclear facility. In return, the u. S. Wants iran to limit centrifuged at other iranian sites. John kerry sf for another round of negotiations. Back in washington, republicans are still criticizing the process. It is unacceptable that we negotiating a bad nuclear deal and at the same time, turning a blind eye to iranian aggression. Whether it be in lebanon or damascus or baghdad. Betty western Officials Say that the u. S. Offered would still for bid iran from research that could lead to an atomic bomb. Negotiators set tuesday for a deadline, but that is selfimposed. The actual deadline is june 30. Egyptian Officials Say that a yemen innovation is in the planning stages. Saudi arabia and regional allies are bombing yemen. Egypt and saudi arabia want to send troops and are expected to get the ok on the arab league tomorrow. Fights between iran and saudi arabia. Yemens president is taking refuge in saudi arabia. He was driven from his palace by rebels. The rebels are storming south in a bid to secure their hold on the country. Dow chemical is merging one of its unions. The deal is worth 5 billion. Dow shareholders will get a 50. 5 stake. The merger involves most of dallas chlorine business. Dallas trying to sell is less profitable businesses. Nasa scott kelly aims to make spaceflight history went he rides a rocket. He is scheduled to stay in space for the hundred 42 days. That is twice as long as any u. S. Astronaut asked had has stayed in space. He will be joined by two other ash dropped. A german prosecutor is saying that no suicide note was found at the home of entrees lube is anrdea lubitz. Prosecutors did say they found a torn up sick note. Prosecutors believe he intentionally aimed the plane into the French Mountains earlier this week. At a berlin News Conference today, and interior Ministry Spokesman says is there was no sign of terrorism. Those are your top headlines this morning for staying on that news about the german wings crash, new details about the Mental Health of the pilot and pilot standards do they need to be changed around the world go we will be discussing that next. Betty big news out of washington in the last hour. Senate democratic leader harry be says he will not seek reelection and will retire at the end of his term. Peter cook has been covering harry reid closely for years and has more on the major decision from the senates top democrat. This has been expected, has it not . Peter not exactly and i will tell you why. Harry reid suffered the injury on new years day. A very dear build heading injury to his eye and face and a lot of people at that point said this has got to be the opportunity for harry reid to finally retire. He is 75 years old and has been in the fight in washington for three decades. He insisted publicly that he had every intention of running for reelection. He said that every press conference, but now, it is not a total surprise. He looked at the situation and said the injury is not the reason for making the decision but realizes he is up for a tough reelection fight. Heres some of the video statement that he made to supporters. We have to make sure that the democrats take control the senate again. I feel it is inappropriate for me to soak up all the resources on me when i can be devoting resources to the caucus. That is what i intend to do. Peter ever the boxer that he was in his youth, he still insists that he couldve won reelection, but he wants to focus his remaining time on getting things done. He may be paving the way for someone to take over but not just in nevada, but the top job for democrats in the senate. Betty he looks pretty beat up in that video too. Who is going to replace him and take up the mantle and democratic leadership . Peter this has been the battle and waiting for years now. The two deputies to harry reid and two good friends. Yup chuck schumer, the democratic senator from new york, and it urban from illinois. These two have a lot of support within the democratic caucus. It remains to be seen how this will play out. It is going to be a knockdown, drag down at all between two good friends. Betty thank you so much. Returning to the tragic german wings plane crash. Investors found a sick note declaring the copilot unfit to work including on the day of the crash, leaving many to question how he was able to pass all the medical test and have the qualifications to fly the plane alone and whether current Airline Standards need to be revisited. We are joined by john rose and it is great to have you back this morning. I have to read tell this anecdote that we learned about from our bloomberg stories. One of our bloomberg reporters was on an air berlin flight and this person heard the pilot come on then and compensate i know all of you on board are nervous but i want to let you know that i have two pilots here in the cockpit and i will do so for the remainder of the flight, even though im not required to do that. You have got to imagine that everybody who is boarding a flight is wondering about this. Should they not make the standard across the board . John i think that is something that is going to happen globally. It is kind of a unique scenario where you have certain parts of the world that do not require two people in the cockpit at all times. We have already seen a number of aaron air carriers changes policy overnight and we will see it low go global. We see clients asking not to fly on carriers that only require one person in the cockpit. Betty the bottom line is that even if you have two people or more in the cockpit, there are just some things that you cannot prevent. Beyond having multiple people at all times in the cockpit, what could be done or should be done afterwards to try to prevent Something Like this from happening ever again . John a few of the things that have to be looked at a lot more closely have to do with the psychological evaluation of the pilot. Should there be continuous Insider Threat monitoring activities of the pilots because they arent trusted with the safety of the passengers and the passengers have no control of the situation . They are asking that individuals he continued to be monitored for Insider Threats. As he invents are unfolding right now, he potentially suffered from depression and that couldve been something triggered and found out by the airlines so they can pull him out of service. Betty how would they have found out though . John if you are monitoring the individual, your monitoring their social media, medical visits, anything potentially making them unfit to fly. They monitor health already. We know that pilots do not fly the severe medical conditions like Blood Pressure issues. That is why they have annual physicals. The psychological component of the pilots also need to be monitored continually. Betty they are already monitored, arent they . John no, not at all. In fact, the International Organization has said that they do not find a psychological evaluation is useful because they only do it at the time of the initial screening or once of year. The individuals psychological profile contains very rapidly and what appears to be depression. Betty we are going to leave it there. John rose. Thank you for joining us. Much more ahead. It is not just about deepfried chicken, the ceo of popeyes talks about getting the market share from mcdonalds and burger king. That is the loop. Betty here is a look at our top stories this morning. Federal reserve officials want to know if another risk of a financial crisis is because of shadow banking. Fewer rules than banks. They include money market mutual funds. Many borrowers are turning their because of tighter regulations. The federal reserves vice chairman is offering words of warning. Stanley fischer has prepared remarks in frankfurt. More work is needed to reduce risks and shortterm funding markets. The also says that things are looking up for the nonbank financial industry, which he thinks let looks less moldable. President Goodluck Jonathan hopes to remain at the nations home. He has governed nigerias country. This years campaigns have been dominated by a slowing economy and the war against islamic militants. Those are the top stories this morning. In the next hour, you will scott kernan is my guest post. Plus, tom lee is with us on his bullish as np party at s and p target. And america has gone chicken crazy. To giants are cashing in. Burger king announced that it is bringing back chicken fries, a cold item that has appeared sporadically on its menu. Earlier this month, mcdonalds brought back chicken selects after cutting the item in 2013. Will this paltry revival lead to a price war for chicken . I sat down with popeyes ceo cheryl back calder the calendar cheryl bachelder. Cheryl popeyes is blessed to have two great proteins. We have butterfly shrimp and things like that. Do i worry about it . I think it is exciting to have the most popular protein. Our food is flavored with louisiana spices and it stands apart from any other chicken that you can buy on the marketplace. Right now, we have been growing our brand with a lot of innovation around lunch and stocking our parts with a lot of good products, like temperature. Some amazing flavors like beer can chicken. Innovation at lunch and dinner is in our focus. Betty it seems like everybody is jumping into breakfast. Talk about just unveiled their breed of taco bell just unveiled their perrigo tocco sandwich. Burrito taco sandwich. Cheryl it will be a while before we jump and so there. Weevil take a while before jumping into that opportunity. The us it makes a restaurant before seven, which is good for the guests and challenging for staff. Betty on wages, there has been a lot of talk about the pressure on wages. Are you ready to boost wages . Cheryl that is one of the myths and our industry. We already pay minimum wage and virtually every restaurant and we have to pay wages to have great how it in a restaurant. I think it naturally corrects itself over time. It is really not the wage that people live on. It is the starting wage when theyre working part time in school, or just coming into their very first job. People forget that 25 of americans start their first job in a restaurant. It is a great starting point. We quickly want out the you reach her goals, including your compensation goals. Betty i know that you just published a book and you talk a lot about leadership and the subtitle is about how to drive superior results by serving others. Speaking about serving others, you serve to shareholders as well. You can to the company in 2007 with a market cap of 288 million and now it is a one at 1. 4 billion for the stock price is 60. What is the key ingredient of making a turnaround happened . Cheryl the key ingredient is the success of our franchise owners. That is the group of people that have the most at stake at our proposition. It is not us or our shareholders or board of directors. The franchise owners and best in our buildings, people, and talent. We measure our success by their success. Sales are up 30 and profits are up 40 . Market share is up to the present. They built 200 new restaurants because of the return. The shareholder did benefit, but our focus has been on giving our franchisees the best business possible. There have been many books written about serving others. It is a Strategy First of. Performance. I wanted to write a case study about how to do it. This is a howto book and what to do differently than other leaders. We chose a very brave ambition and focused on that. We measured everything that moves. We are very performancebased and the result is that we care for people well and we performed superior to all of our competitors. Betty is it harder to run popeyes now than it was in 2007 . Cheryl the beginning of a turnaround in my opinion is always an exciting time. We had a lot of fun to make a strategy to turn around the company. We are making a bold strategy for the next stage of our growth. We want to double in size in the u. S. And growth accidentally internationally. We will do that by investing in our people. Our next strategic platform is all around the Employee Experience of our managers and our crew. Betty that was popeyes ceo cheryl box elder. We return in two minutes. Betty much more ahead. Americans ditched a diet of pepsi. It knocks the calabrese calorie free coke. The most important stories you need to know before the opening bell. Betty welcome back to in the loop. We are 30 minutes away from the opening bell. Futures indicate stocks will open slightly lower this morning. A new revision to grow somatic product, gdp numbers show an annual pace of 2. 2 in the Fourth Quarter. That revised slightly lower. A german prosecutor is saying that no suicide note was found at the home of Andreas Lubitz. They found a torn up sick note an indication of the pilot was suffering from some sort of illness. Investigators want to know about the copilots emotional state. We have with five investigators searched the apartment for clues and other indications as to why the pilot could have done the deed. Betty at a berlin News Conference, the interior minister said there is no sign of terrorism. Officials are saying a yemen invasion is in the planning stages. Plans from saudi arabia are bombing shiite rebels. Egypt and saudi arabia want to send in troops. Their plan to form a strikeforce is expected to get the ok by the arab league tomorrow. The fighting is turning into a proxy war between iran and saudi arabia. Yemens president is now taking refuge. He was driven from his palace by the rebels. The rebels are storming south in a bid to ensure their hold on the country. Major political news out today in washington. Senator harry reid is not going to seek reelection next year. He is served as Senate Democrats since 2005. He suffered eye and facial injuries in january in his nevada home. He said he decided to step aside after thinking it over during his recovery. Still you can see very injured from that moment. And kentucky is still perfect. The wildcats beat West Virginia by 39 points in the ncaa tournament. They are unbeaten and 37 games this season. Kentucky advances to the round eight. Theyll be joined by notre dame wisconsin, and arizona all winners last night. Four more games are on tap. Can they keep that winning streak . Those are your top headlines. We will cap you down to the open with the top 10 headlines hitting our radar before the bell this morning. Senior markets correspondent julie hyman joining me and scott kurnit, the founder and ceo of Keep Holdings. Scott, great to see you, and you, julie, as well. Lets start with number 10 for stop i do not know for debate rings pepsi for breakfast, but diet coke falling, guys i do not know if anybody drinks pepsi for breakfast or diet coke but because he is the number two soda brand in the u. S. Last year. Americans continued to move away from diet soft drinks. I do not think it is because people are getting more unhealthy in their choices but they are turning from diet soda to things like water, right . Julie what is interesting is the fake sweeteners are considered unhealthy, even though the fda says it is ok, there is research that pulls it into western, so then you see this movement away from it. Scott it is interesting because caffeinated drink star up, so i do not know if that is a good thing. The sugar coke is up a little bit, so coke still hasnt up over pepsi by a nice still has it up over pepsi by nice margin. If you lose one brand for another, it is probably ok. Betty you can imagine that people are like if im going to go, i will just all the way and drink the fullcolor he drink the full calorie. Scott i have had diet coke for breakfast. Betty diet coke and pizza scott . At number nine, dreamworks new movie home. It debuts in theaters today. Wall street is expressing concerns that this movie is going to be a flop. It has got a purple alien as it s star. Some say it could pull and 31 million in its Opening Weekend which might not be bad. I would not call that a flop. Julie i was reading the New York Times review of it, which was pretty positive, although apparently if you look on rotten tomatoes, it has more negative reviews. But it looks ok to me, and i think there is some concern about a going up against maybe avengers, but it is really a different audience. You will take the younger kids to this movie then you went to see the avengers are. Scott dreamworks said they produce for netflix as well, but unlike your business, where you are on every day it might go up, it might go down, but it is not a catastrophic situation and that is true in most situations. Betty it definitely will not help with you, scott. Scott thank you. In movies, you make one or two. Betty and people wonder whether or not he has lost his midas touch. Scott i would still bet on him. He is a rallyier. Betty staying in media the on my News Organization vice expanding its partnership with the paytv service hbo, will produce daily newscasts on hbo now. Vice will increase productions to 35 episodes annually over the next four years. Have you seen any of the episodes on hbo . They are pretty good. They are not ratings juggernauts but they do a respectable i think 2. 8 million or Something Like that. People were wondering when is vice going to get its own vaguely tv channel . Big league tv channel . Scott they get it with at this deal, so as hbo goes over the top, vice gets i think a channel in the over the top system, but more interesting, i think, here we are, we have television it has been around forever. How can someone break into this category . I think it is exciting. We will continue to see it. For me, i remember when murdoch started the fox network, and i was like how can you start a new network after three exist . It is a lesson that incumbents are at risk. Betty and theyre are going after the millenial audience. Julie the question is how are they going to disrupt content . What will this daily newscast look like . That is what im curious to see. Betty number seven, and an interview with a chinese news agency, ceo elon musk that the company was misled to believe demand was extreme lehigh in china because people ordered cars in the canceled the orders. He plans to localize production in the country and maintain its commitment to the country for studying believe elon musk or do you think it is an excuse for why they did so really there so poorly there . Julie in theory, it makes sense. If you are a speculator, just as you would buy a hot ipo to unload it quickly, maybe you would buy a tesla to unloaded quickly. It is if you cannot pay for it when you get your order. In theory it makes sense. Scott i do not think so. If you see the speculators are biting your cars you should get nervous and you should force them to put up more upfront or whatever, so i think you have to be responsible for your own business. Betty right. And you wonder what happened here. How did so many people just suddenly have a change of heart . Or was this fake demand . What was the purpose for fake demand . Scott the Biggest Issue with tesla is fear of losing your chart on the way, and to build that it is not only an amazing car or charging system i mean, the disruption betty but it is not scott but in china i would not know the Chinese Market for any car other than electric car. Betty number six, amazon, the ecommerce giant has increasingly high end and highmargin fashion in the last couple of years. There are now reports that it is in talks for a luxury could tour coutoure si couture site. Scott jeff has been trying to do could tour couture four years. If you ask what amazon looks like it feels like a costco, and it is fantastical stuff you do not sell these things sidebyside. He has opened diapers, he runs them separately, and he will absolutely run this separately. He wants to own everything in commerce, and maybe he will someday. Julie i agree with scott. You have to keep this separate. Amazon the clothing business generally we wait amazon is organized, i still think even know i am a big amazon customer, it is hard to find things. Betty it is. Julie if you are going to create this premier shopping site, it is not make sense to exist betty escott said with diapers and shoes. It is a case that has gripped Silicon Valley and corporate america, we asked scott to weigh in on what the trial means for the tech community. We will be back. Betty we continue to count down the opening bell. We are now halfway through, which means it is time for our deep dive. Number five, something Silicon Valley has been transferred has been transfixed on, the ellen pao discrimination case. She is suing Kleiner Perkins Caulfield Byers where she works saying she was wrongly denied a promotion and retaliated against her complaining to her boss ises about gender discrimination. Investors say pao was failed and looking for a big payout. I want to bring in my guest, scott kurnit, knows a lot of the players in Silicon Valley. Scott, i have to say, how many hours have you been distracted by watching and reading this trial . Scott everyone the west coast is transfixed by it, i think on the east coast we are happy to read something about at the end of the day. It is a big deal. I think it is good for women. Only 6 of venture capitalists are women. Happy market is women. Half of the market is women full stop half of the consumer market. If you are a venture capitalist you are in it to make money. Everyone in capital is in it to make money. And john doerr, who has been the greatest central capitalist of the last two decades, has been her biggest advocate all the way through. Her advocate as we have seen in the testimony, and i think more importantly if you are a venture capitalist and you want to make money you want about other voice at the table. Anything, the logic would say to me i want to make money, women are good for business, she is really smart, i want her to succeed, maybe she has him personality issues because we have seen that come out in the testimony, but i think for me the simplest view is they may have made some missteps, but fundamentally they want women to succeed. She may not be the most brilliant queen of the internet for morgan stanley. It is not like they wanted powerful, important, successful women in the firm. Betty and there were certainly some dings against her, as you heard throughout the trial. If she wins and she gets through 16 million, is that still good for Silicon Valley . Scott i think so. All venture firms are going to go here and say wait a minute, only 6 of the women of the people are women. People see the facebook movie and think i want to do that. Every venture firm wants to have women partners. They will not be bias and say i want women just for women. You have to be great. She is a harvard lawyer, Harvard Business school i think. It is also a unique partnership. Every deal needs to get voted on by every partner, and every partner who brings it in has to sell it to the rest of the partners, and if you do not have a chemistry and i see in the testimony that that chemistry probably was not as good as it should be partnerships need everybody to get along. Betty i want to just bring up one quote, one part of her testimony during the trial that i thought was interesting because what she said was that she should be credited for bringing twitter to kleiner, and in fact she was ignored and not given that credit. So she said i spent time with jack dorsey, and i thought we should look into that more meaning twitter, i tried to bring it into matt murphys attention, matt murphy said yes, but the team was not business might it. I read that and i thought ok, but that happens all the time. It is not because she was a woman but because maybe she did not have the ear of certain partners, maybe it was the wrong timing. You can get into nuances like that. Scott it is very nuanced. It is hard to say what a jury would do. I have a bias, which i can say because i will never be selected for a jury, which is if you do not settle your partners outside of legal system, i have a bias or that. What was it about her personality that was not able to convince her partner to do that deal done. Vcs do nurture deals, but then they have to convince their partners. Betty they should have just settled, right . 16 million scott what this brings to the rest of america is oh, my god there is so much money in venture capitalists, maybe i should do that. Betty we will back in two minutes on in the loop. Scarlet i am scarlet fu at the breaking news desk. We have breaking news from lufthansa. They will drop a they will adopt a twoperson role for the cockpit. The copilot appears to have locked out of the main pilot before he steered the plane down a mild into a mountainside. Lufthansa now adopting that two person role for the cockpit. Also, a new Group Safety Pilot to report to the ceo, a group that will overlook safety among the pilots. We will continue to look through these headlines, but again this is in response to the Germanwings Flight crash earlier this week. Betty scarlet fu at the breaking news desk on lufthansa. I want to get back to bring you the most important stories before the bell. Bloombergs julie hyman and Keep Holdings scott kurnit. Reclaiming the title at dish network. In the past, he has expressed adding to the business with sling tv rather than being disruptive. He wants to improve tv advertising, especially if advertising if competition heats up. If charlie had been at the helm of this, im sorry to say, he did not step for a far. It is interesting that he has come back, and as a founder coming back to reclaim his title. Scott is your founder in the corner . Did you bring him on . Betty yes, we brought him back too. Scott i suspect it was disruptive around here, but he is back. Charlie is a visionary, he is scrappy. He started selling dish out of his trunk. He spent 50 billion on spectrum, and no one is quite sure how he is going to use it. People say satellites are a problem and they are not mobile, and ironically i need to step on the land, i need to be able to get to your iphones and your ipads. He is one of the more interesting and colorful ceos. Betty i agree, and this sling tv, we will see how that goes. Carnivals results coming out, earnings well above estimates but the cruise liner cut the top end of its fiscal 2015 profit forecast will stop the report comes after carnival now plans to boost its fleet at a addin g 9 new ships. I do not know if you have been on a cruise recently. Julie i know you have been on a cruise recently because we saw footage of you. [laughter] betty that is arnold arnold, the ceo of carnival, on one of the cruise ships. Julie he has got some moves betty they have to give this new image of a cruise line industry were after a year we see the noro virus and the poop crews and dont forget the sinking of the custer concordia. Costa concordia. Scott dont you have to be 65 and older to want to go on a cruise . [laughter] if youre young playing shuffleboard and swimming at a pool or whatever, it does not seem that appealing to me, but i think of the population ages, i think julie sorry, go ahead. Betty nobody wants to hear that you are a business for old people. Scott old people spend money. Betty they do. Julie this current generation that is aging to that demographic will find ait less appealing. Betty looking into the darker corners of shadow banking. More borrowers are seeking funding and the tighter regulation. This is about peertopeer lending, too. You will go to these alternatives including peertopeer lenders. Scott if youre going to fail, fail small. Peertopeer lending is failing at the lowest level. The banks have gotten bigger and bigger. When i hear shadow banking, i just get aired. Get scared. Betty i know. We will be back. Betty welcome back to in the loop. Lets get back to the most important stories you need to know before the bell. Julie hyman and Keep Holdings founder and ceo scott kurnit. We have got to talk about oil. Oil plunged. It had many people scratching their heads. Forecasters veiling to predict it would be cut by more than half. It means eight years on the direction of brent crude. It used to be that they were a dollar part on these forecasts. Now they are tens of dollars apart. Julie the high forecast is 80 higher. Betty incredible. Nobody can figure out where oil is going to go. Scott if you think about how complicated it is going to be, when you think about oh, shale we can do that then you think about stores capability, there is not enough storage. We would like to keep our rigs going, but we cannot store it, so we put on the market. In saudi arabia actually does not control prices because theyre not able to sell it and theyre able to keep it at 50 a barrel versus 80 a barrel. I am the one who says we probably do not need the analysts at all we would probably save money. [laughter] betty it is a big problem for the banks, it is a prom for companies. Julie who are trying to hedge and figure out what their costs are going to be. If you cannot get an accurate forecast, is a problem. Scott do i need an electric car . Betty elon musk, we need more charging stations. Scott, great to see you this morning. Scott kurnit of Keep Holdings soreness through the opening bell, and as stocks begin to trade, i want to bring in tom lee now, cofounder of fundstrat global advisors. Staying with me is julie hyman and mike reagan will be joining us in a few moments, but so much focus has been on how much the dollar has eroded, so much to be the first we have seen in five years or six years. You actually say there could be some surprises on the upside with oil. Mike tom that is right for some that is right. Energy earnings are down year over year. That is the big hit that has taken place. I do think we have only seen one side of this cut, which is oil cut on the top right in activity, but no company has said there is a margin benefit and no consumer says, i have that money. Betty why is that, by the way . Tom we had some conversations last week with some managing teams, and one of the most interesting was a Building Products company that said they are waiting to see where oil settles, because of oils stabilizes here, it is a big margin story because they are a Huge Consumer of every commodity. A lot of petrochemicals. It is a big margin story. So i think of oils stabilizes here, a lot of countries will have profit supplies full stop if the oil bounces, then the activity story comes back. I think there is a Positive Side coming. Julie on the other hand, can you argue that even if Companies Get the benefit in margins, they do not have the Pricing Power to sort of capture the gap between i mean, if you look at what we are seeing with consumer inflation tom julie julie we have not seen a lot of ability to raise the upside. Tom you have to raise price. Left last year u. S. Corporate spent 1 trillion on energy, according to the iaa, so if oil prices are down, that is not 1 trillion this year. Where does that savings go . We know it will be shareholders or consumers. Both are posited to the economy. Mike it looks like it is not just the First Quarter, it looks like we will see earnings to client for the next three earnings decline for the next three quarters. Our estimates to low, do you think, or what is going on there . Otom it is an interesting i would not call it a battleground, but it is an interesting emergence because the markets believe the s p as long energy, so if oil prices are down, is that for s p. One, i think the economy is short oil, so lower oil is good for the s p. We are four times more long housings and we are energy. Seven times more people employed in howling in housing, housing is four times energy as far as gdp, and if you increase housing from 200 50,000 from now, which we are only at a million and we should be at 1. 5 million, really we should care more about what is happening with housing, and that has been good data actually. Betty you think this year could be the year that housing breaks out . Tom yes. If you look at the builders, they have been stuck in conjunction for three years, and housing has been stuck at 1,000,004 seven years. Jobs have been stuck at one million for seven years, and we have been talking about the fight go cores resetting and banks resetting. I think this is the sustained sign of life. Mike it big homebuilder was saying we are really focused on rentals because as you said, the credit is still not in place yet. The mortgages are so hard to get for a lot of people. Do multiple Family Housing starts do they have a little bit less of a positive impact . Tom yes we have got great stats in our latest report. A singlefamily start creates three fulltime jobs. The dollar impact is 100 is 110,000 so there is a lot more bang for the buck on singlefamily, but multifamily as well. Julie do you buy banks . What do you do . Tom we have looked at past cycles. Builders are great data, they are just hard to go through the cycle, but they are directly correlated to start. If you do not go to 1. 5 million the builders are going to falter. Mike do you feel confident . Is it a valuation story . Tom i think we will have an earnings revision story around housing, and i think we will have definite expansion. Remember, we have had 10 months routinely in the last six years, so i would not write off the market just because we are flat for the first three months. But yeah, financials are great consumer cyclicals are really the best way to play housing. Betty all right, tom, great to see you. Tom lee, managing partner at fundstrat global advisors, and mike regan in julie hyman. We will dive further into carnival, First Quarter and just him out, and their huge expansion plan. Plus blackberry just reported their surprising fourthquarter profit. How the smartphone maker is cutting costs. We are just a few moments in the session. Stay in the loop. Betty trading just underway for supper want to get back to our chief markets correspondent scarlet fu. I know you are watching blackberry. Scarlet it had its best day, sales did fall in the third quarter, so that is not driving the profit, and said we have cost cuts and a average higher price for each smartphone that is sold. Blackberry has seen a huge demise because of its Global Market share of smartphones now less than 1 a far cry from its glory days. Dow chemicals selling half of its oldest business, that would be chlorine two olin to olin. This is all part of the dow ceos target of 8. 5 billion of the less profitable business to focus on highermargin assets like plastics as well as dramatically as genetically modified corn beef not together, obviously, but separate. And finish line, a retailer that has benefited tremendously from yoga pants and hoodies worn by people to run errands. Fourthquarter sales topped analysts estimates. And gamestop, the videogame retailer betty hang on, before you go on scarlet, you just talked about my weekend wear. [laughter] scarlet i kne iw it. We are all guilty of it. Do you play video games . Your boys probably do. Betty i cannot get them off the video games. Scarlet but they probably play minecraft. Not on their xbox. Used game revenue declined, so gamestop is trying to evolve into a Holding Company for different store concept. They have already won Court Approval to buy 163 radioshack locations. They want to make more acquisitions and sell things like apple products and at t wireless plans so that they can divers a fight from their current core business of used games, which people do not use anymore. Betty no, they dont, but my boys like asking. That is the classic plan. Scarlet the only hardware their need they need is their phone, and that is it. Betty my phone. [laughter] scarlet fu, thank you so much. Carnival has reported earnings per share, beating estimates by . 10. The sagas of over 5 on this news. They have nine new ships for delivery by 2022. Expansion is the watchword for many in the industry. I have a new titans at the table, cruising at the high seas, did you see it . Two ceos mentioned china. Here is richard fang of royal caribbean. Richard the demographic change of china going into the growth of the middleclass is one of the biggest single demographic explosions in history. One of the big graphic ships that we have gone through as the baby boomer generation. It has been enormous, and that bubble has dictated our urban industry. What happens in china make that look insignificant. Betty bloombergs Justin Bachman, who follows the cruise industry joins me now. Is that going to be a holy grail that i heard from Arnold Donald and richard fain that china is the next big thing . Justin china is the next big thing, and they are moving over there. It is the next big thing, and they see it as a link campus because they can to this industry pretty much however they want. There is no history of cruising in thailand, so you have got a new product with a huge population. Betty you raise a good point, hearing carnival say that they will have nine new ships over the next decade. How many of those do you think will actually be in china . Justin i would not be surprised if four or five of those go to china. They want to have brandnew ships over there, just like the competitor, royal caribbean, is doing now. A second brandnew ship is going into china. It is not just the quantum but the second quantum ship as well as to the chinese definitely want to the new product will sub they do not want an older ship that sailed north america. Betty right, they want all the bells and whistles. There could be no better place for the chinese than a cruise ship. I was there, i went on the honorable i went on the carnival, i went on the quantum. I hate to stereotype so i can do this. They love shopping, eating gambling, and that is about it. If you go on a ship, that is what you get, right . Justin right, that is what you get, and they also love traveling internationally, so the cruise liners are going to say, if you want to go to europe, book a cruise, we will give you an all in one trip. So yeah it definitely betty and by the way, only 700,000 chinese have actually cruise. Justin yes, a very small number. Betty back here in the u. S. I mean, scott kurnit was just saying this earlier, if you are 65 you would have been on a cruise. If youre under 65 i mean, who has gone on a cruise . Are they recovering at all . Are they recovering from the crises . Justin they are definitely recovering, you see carnivals earnings talking about better pricing and better earnings. What will happen with all of these brandnew ships with the amenities, it is a way to sell whatever he thought about the old ship, just come on the new ship and see what we can do now. It is not like what you think. Betty it is not your grandmothers cruise ship. Just in battling stereotypes is a huge job. Betty Justin Bachman of Bloomberg News, and if you missed last nights titans at the table cruising behind these, you can watch online at bloomberg. Com. So be sure to click online and watch the program. Coming up overseas, only two teams matter australia versus new zealand. We will set the stage to the big finale of the cricket world cup. That is next on in the loop. Betty an update for march madness fans, the sweet 16 continues, ebays ceo john donahoe a lead with 107 point in second place 105 points, jimmy dunne. In the celebrity standings that are bloomberg terminal, youre very loan your very own in the loop anchor, i am in seventh place, tom keene is behind me. The rest of the world is gearing up for the cricket world cup. 14 teams faceoff during six weeks of matches, but now only two remain. Austria beat india to a dance to the final against cohost of new zealand. The action gets underway on sunday in melbourne. For more, i want to bring in bloombergs Sports Reporter chris elster. Breakdown for us just how huge cricket is worldwide because nobody here follows it. Chris i would not say nobody. Cricket is becoming a bigger sport on the east coast because of various immigration things. Betty right. Chris it is a huge sport in india, bangladesh, and australia and is the one, obviously, in new losing in new england, where it was founded, where it was first played, it is still a huge summer sport. We are about billions of people, where the true global team sports behind basketball and soccer i would say. Betty so give us a sense of the action on sunday. How did we get here what teams fell along the way . Chris as you said, we had 14 teams at the start of this, and most of the ones that we thought were going to advance did. The big news was england, who upset they were out before the quarterfinals, which was a bit of an upset. We have had some boring matches and some really exciting matches. The semifinal between south africa and new zealand came down to basically the next to last ball. It could have gone either way. There is some really good action and we are hoping that sunday we see something very competitive. Earlier in the tournament, new zealand beat australia, but it was in new zealand. New zealand had not played a match. They have won all their matches will stop of not played a match outside of new zealand. This will be in australia and it will be a big ask. Betty who is the favorite to win on sunday . Chris australia because it is in melbourne. There will be time of crazy there will be a ton of crazy aussies there going crazy. It will be a huge day in australia and new zealand. Betty oh, my goodness. Chris buy beer stock. Betty i was going to say beer all around. The growth in cricket, though, where is a growing the fastest . Chris well, it has always been a big sport. Indias national sport. That whole region cannot get enough. It is growing in the middle east even. They have moved the headquarters to the middle east. It is big in new zealand and the sri lanka and australia, it is big in england. You even get the west indies. It is still a really big sport in the caribbean. Betty all right, chris, thank you so much for educating us here on cricket. Chris elser, the bloomberg Sports Reporter. That does it for in the loop today. On monday, john paul doria, we will discuss his next big adventure. How he is adding to his empire. That is monday. Have a great weekend. We will see you back here. Scarlet it is 56 at the hour and that means bloomberg is back on the markets. I am scarlet fu. Stocks are rebounding from four days of losses. The final readout fourthquarter gdp shows Consumer Spending is stronger than anticipated and rove growth. Even so, the headline here was the economy grew at a slower than expected rate. That is partly why treasuries are higher pushing yields lower, the 10year at 1. 96 , the dollar slightly weaker, heading for a second straight week of decline. We have reached the final trading day of the week tgif and etf friday. Bleeding edge of companies with a futuristic edge. Here is a look at new age etfs with bloombergs senior etf. A futuristic edge, if you will. If you try to capture a part of a theme, they are called somatic etfs, and the ishares technologies that etf launched is another way for companies to try to do something new and number two, it is seated with 560 million will stop makes it one of the largest seed Capital Investments of all time. To put that into perspective, there are 54 launches this year. That one is the largest already at i have hundred 60 million. What happened is an advisor, edelman financial, got together with morningstar and blackrock and said our clients like this theme called transformative tech, and could you guys build something . You see this more and more where a client will come to the etf issue and have a need, and the response is with an etf, so this one put some rules into play across all industries so for companies that are transferring their industry, everything from their oh science to robotics to 3d printing. Scarlet let me interrupt you for a second. It sounds like people can be vcs. Eric correct. That is a great way to look at it. There have been a few of these cases, ishares worked with the u. N. Two, with a carbon etf just for them. It is like an anchor tenant. You have one that is already providing 150 million, so already it is profitable, so it is called the spoke etf, but anybody can use them. Scarlet when did they come out . The last month or the last five months eric the spokes have been coming out, so that is a different trend. Another sample is robo, robo stocks Global Robotics and automation etf which came out, and this one tracks a lot of companies designed by a robotics is in there, which Means Nothing in the marketplace, and it has got 112 million was up that is a german is around that is a tremendous amount of grassroots assets. Scarlet who are the buyers of these etfs . Eric etfs have half their assets as institutional and half are retail. A lot of times whether you think this is gimmicky or not, there are clients come investors who like themes. They like the theme of robotics. They like the theme for informative textile stop another example of one that came out last year is hack, the Cyber Security etf. This one has got 500 million, and some of these companies are not captured by big mainstream etfs, so these kind of give you an edge. If there is not much overlap, there is a valid case to be made that hey, we are going to go into these areas that you might not have exposure to and satisfy your need for a theme. Scarlet fascinating stuff. Eric balchunas thank you so much, a senior etf analyst at bloomberg. We have got much more coverage of the markets here on bloomberg television. Market makers is up next. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Matt welcome to Market Makers. Lisa im lisa abramowicz. Matt Consumer Confidence data is out. Julie hyman has the headlines. Julie a reading of 93. It does all caps off the best quarter since does still all