I am erik schatzker. For am alix steel in stephanie ruhle. It feels like a wednesday. We are just getting started. It is time for the news feed. Richard kander is consolidating his pipeline empire. The pipeline so make it easier to grow. Viral content has gotten a 50 million investment. According to the New York Times 850 values buzz feed at million dollars. If it is famous for its lists like 15 things that can improve any day. They are branching out into video. The Parent Company of Bloomberg News is an investor. John kerry has pulled support for iraqi Prime Minister mailiki. He is not among the top three candidates that iraqis want to the next Prime Minister. Is the turkish strongman who test the limits of democracy as Prime Minister. Now he has a firmer grip on power. He won the first president ial election of this weekend. The victory promises change for turkey and parts of europe as well. Hans nichols is in istanbul. Let me start by asking you this question, why are people drawing comparisons between him and Vladimir Putin . Towhat he has promised is consolidate our in the presidency. This has been a ceremonial position. He wants to make it a powerful position. This concerns investors. Lets focus on two. If this move to concentrate power in the presidency going to risk the independence of the central bank . Will he press the central bank to lower rates instead of what Inflation Expectations should be increased . We have already seen the lira react. The longerterm question gets to this food in question. Is he trying to centralize power in a way that is too authoritative and will scare off investors in the long run . He will need to rewrite the constitution. He needs a super majority in the parliament. If you extrapolate the votes that he won today, he simply does not have the votes. Elections take on added significance. The question is will there be a strong and viable challenger in his own party, to challenge him on this power grab . Will he find the votes are just increases percentage . As you said, he will be closer putin. And run into opposition for efforts to create a new turkey, a secular turkey that looks to the west. How does his election change the way he manages the country . What is likely to happen inside turkey . With his relations abroad, if he tries to combine the head of state and head of government there might be a more unified voice. That takes on significant with the middle east and what is happening in israel and the palestinian territories. Turkey has moved toward the palestinian position in a way away from its traditional relationship with israel. Ofyou look at his goal consolidating power in the next couple of months, that is still an open question. Will he be able to make these changes and constitutional changes . Will they lead to real power . The turkish ibaka see still have their say. They still may way animus. There is going to be a year of turbulence. And that time. It you are going to see the currency depreciate. You will see inflation spike. Growth inee slower part because of what is happening domestically. Dont forget, the top three and iraq are russia are at the top of that list. Russia is a big market for them. You could see how you could shave off a percentage point from the gdp. Talking about iraq, they are trying to expand a pipeline into turkey. They are making them more independent. What is the odds that turkey would go for that . The reality is that they like anything that gives the more transferor costs and more transit costs. If you look at the baseline economy, because of these costs from oil and natural gas and you there arerism, tourist boats all around us here, you have growth of 2. 5 . That would be the envy of northern europe. Hans nichols is straddling the line between the middle east and europe. Does that make it a safer bet for investors . What about other geopolitical hots pots. He joins us now from los angeles. It is great to have you here. You say bad countries are good for investing. What qualifies as a bad country . It doesnt have to be a bad country. Countries also happen to be the bad countries. The worst news flow and the worst gdp and the worst geopolitical headlines often correlate highly with the most miserable and cheapest for a reason. They have been punished a lot. Those of the markets we look to invest in. Usually, that is a great place to invest. When you see the turkey off,sh currency selling does that increase the appeal to you . We have a long time. Portfolio that we run, it balances once a year. Much of the news flow and week. O week has very little impact when you have that deep value, greece and russia and brazil, it is how the performance is going to be three or five years from now. These effects may show up. We dont look at it on a attoday basis here in what point does a bad news equal bad news . The russian stock market is fantastically cheap. They may have a recession. Companies are having a hard time getting any financing that this point. The challenge is you can never predict the future. Russia has been among the best performing countries in our fund along with brazil. Really cheap values are in europe. That is the challenge. You are buying these miserable countries, you dont want them to go down more. One of the ways we like to do it is diversification. We are looking at 11 countries out of a possible 45. It is too dangerous to pick one like greece or russia. One of the ways you could try to avoid getting hurt. How big of a role does geopolitical analysis play in your investments . Very little. Analysis,tandpoint of everything we do is clientbased. Quantbased. Everything has to be a 10,000 foot view of why are we invest in this country. Many of the variables that correlate to valuations. They correlate with really terrible gdps. Things look best. The u. S. Has a fiveyear bull market. This is one of the most expensive countries in the world. We expect the u. S. To have much lower returns. This is where things look better than europe. Considering that you are taking on a lot of risk, do you feel like you need to get paid . How important is that to you to offset the risk . We hope we are getting paid. The interesting thing is to think about risk. A potentialsk as margin of safety. If you look at expensive they have a fiveyear chance of loss. Muchhance of loss is larger. 50 or 60 . Losing it feels less risky to be buying of the u. S. And these other countries. Years,are looking out 10 it is less risky to buy cheap stocks. Has beenlobal value trading since the middle of march. Over time, how should it perform against the organ stanley world index . That is the global standard for investing. We expected to out perform by 4 year. We are very concentrated. There will be years when it does worse in years where it does better. The good news is most of the world is really cheap. We think it is a great time to be investing in foreign markets. If you are american, most dont realize that from a global index standpoint, half of your assets need to be abroad. We have a home country bias. In every country people invest about 80 of their assets in their own country. Looking from a global value standpoint, this is a good time when the u. S. Is one of the more expensive markets. This fund could easily do doubledigit returns Going Forward for the next five years. Thank you so much. Up, amazon is getting a lot of heat for blocking preorders of some books. How the company is striking back. Russia has started an ambitious royal oil drilling product with an american company. Amazon is taking on a bigger foe. Your order ofring captain america. Julie hyman is here. The big foe is disney. What do these two want from each other . Amazon wantslike what it has wanted in all of the situations. They want to discount the a biggerore and or get piece of the sales. This affects things like the captain america movie or the latest muppets movie. We are not seen it affect the digital sales. It is just affecting the dvd sales. For now. It is using this negotiating tactic. They use this against warner bros. And time warner caved area to we dont know if this will be successful. The fight is getting more and more public. Davidas talking to stretched her. Aazon purports itself to be customer friendly place. If you go there and you cant get what you want, that is the opposite of their mission statement. In a short pain for longterm gain. The strategy is to make everything is cheap as possible. David also covers walmart, so he knows that part of the strategy. Betty liu talked to an author who is representing this off as united group of 900 riders who want to put pressure on amazon for holding authors hostage. This is what she said. Everybody who makes a product should have the right to price that product where they can make a profit. Is simple ifing it you go by those terms. Douglas preston is responsible for leading the charge in the New York Times. He said that his presales across the board for a hard copy were a quarter of all sales. He is a wellknown author. If you get routed off that list. That accordings to its research if you cut the 9. 99,f an ebook to there is a 75 boost in sales. They are not showing the data behind that. She claims that if you are shopping for a book, youre not shopping on price. If i am looking for a piece of the store go fiction and something pops up that says moby i amis priced at 9. 99, not going to make that purchase. Maybe you would. That was her argument. A bookshop is not a price shop. We will have a lot more on this. One thing for bezos to go headtohead with the Worlds Largest entertainment company. How will bob iger respond . Gentlemen, welcome. What should bob iger do . I think he has an incentive to see that this is resolved as soon as possible. You are talking about the winter filmer as the number one of the Domestic Box Office this year. I do the wall street is counting on this home video release to be andrt of the Fourth Quarter into the next fiscal year. Become an important retailer. Disney needs to diverge othere consumers to sites. With the release date for this dvd still several weeks ahead, i think they have an incentive to resolve this. I think so. The dvd business is not what it used to be. It is still important. It is still a 9 billion a year business. Resolutions to get a like warner bros. Did. They can afford to hold out a little bit and get the best deal they can. What is happening for the studios is the digital distribution is becoming the growth driver for home video sales. I think therell be a resolution. How did it get to this point . Have there been months of close door negotiations and now amazon is playing this card . Have a discussion to the point that they do this right away . They have been under pressure in the last few quarters to get a profit margin for its investors. They grow the revenue 23 percent and yet there is little to no profit to show for it. When you look at their cost structure, one of the things they look at is the cost of media products. They are looking in all areas to try and improve their products profits. Their spend is a drop in the bucket for amazon. Is primarily motivated by market share. In the near term they are willing to compromise anything take ache away from away anything from being a lowcost provider. Some armeeing in twisting tactics during im surprised they are reduced to this. They have been successful with warner bros. This is the largest studio in hollywood. It will be interesting to see how far they will take these tactics. You just pointed out that they had success with warner bros. , why are you surprised . Why not extend to disney and other studios as well . That this isses hasng at a time when amazon been aggressively investing in its own prime video content. Era where you cannot have the friend amis relationships. Mies relationship. Amazon has gone too far. Having said that, things are inevitable. I think both sides will come to a resolution. Disney has 1000 titles. Are in business to a fair extent. I dont see why they would want to jeopardize that. Who has the most leverage . Disney made that streaming agreement with netflix. Cant they just go elsewhere . Do they have the leverage . In five years a we different. Hasy will amazon still leverage. They are the number one eat taylor. R. Etaile it is going to be in a potent component of the next quarters numbers. Is just a sus writing the next chapter in the clay is jeff playbook bezos writing the next chapter in the playbook . He may well be writing the next chapter. In the been prevalent Cable Television world. This may well be a new kind of paradigm in the streaming world where you have physical sales declining and companies are trying to mitigate the streaming. Declineoffice is on after two record years. Gives somet also leverage to amazon because disney is under pressure to be deliverer on the on the home video side. This will be a High Percentage of box office. The streaming dynamics make this more complicated. Point, it is a drag. It is a drag for most of the people concerned. It is a drag for the consumer because they cannot get what they want. How often are we going to have to put up with this kind of thing . At least you can go to barnes noble or walmart. I love captain america. Thingsoften do these come up . We have seen the Cable Companies and the broadcast markets. How many times as fox or cbs gone dark . As more of this gets distributed over different platforms, more agreements have to be negotiated. They will come up freakily overtime. You will see more and more of this. The question becomes who has the leverage in any particular negotiation . It is the content owner. In this particular case it looks like the distributor. They are the leading distributor of the physical dvd business. That is going away. We have seen in the digital realm, the content creators have the leverage. Paul sweeney, thank you. Thank you so much. Coming up we didnt talk about the markets. We have run out of time. With the continuing battle between distributors and content companies. We will talk about another side of the media equation. Sprints new ceo is starting today. What kind of change will he bring to americas thirdlargest wireless carrier. Sometimes it feels like it is in dead last. The price for this rare blue moon diamond. I actually held this thing. If you have to ask, you cant afford it. Maybe this is an early Christmas Present . We will be right back. Live from bloomberg headquarters in new york, this with erikmakers schatzker and stephanie ruhle. Good morning. I am erik schatzker. I am alix steel in for stephanie ruhle. Happy monday. This is the first day for sprints new ceo. This is an awfully tough job ahead. They want to turn this into a viable competitor. Verizon and at t have bigger and better networks. Tmobiles ceo is the master of mac marketing. Here in new york, john butler covers the Tech Companies for bloomberg. That is the big question on everyones mind. He has proven himself to be a terrific entrepreneur. He has grown a bright star from zero to 10. 5 billion. It is not the telecom business. He is an unknown. Of there is a . In investors minds. A doubt that he can do it. Sprint needs fresh blood and new energy to take them to the next level. The challenge was up in the technology in the network and upgrading the network. The new challenges marketing. Sprint data plans are more expensive and they offer less data and where is the opportunity for sprint to do Something Different . The opportunity is going after tmobile and at t. They have admitted that they have plans in the oven. It is just a matter of which plans and which strategies they will take. Can they go after at t and verizon and go after their plans . Can they go directly after tmobile . Is of the problems right now that their plan is complex. It is a group by effort. To explain it to the mainstream audience, it is tough. The choice ofake going up against at t and verizon directly or tmobile. Which direction do you go with . He doesnt have the network to compete with verizon yet. There is a lot of buildup to do with the structure that they acquired. This is been going in slow motion during this protracted dance with tmobile. Do you try to compete on price with tmobile . That is only going to erode your margins and to be a war of attrition between the two. There are two things here. One, the network has to go. It will depend on how much he wants to accelerate the network buildout. The jewel of their differentiation is speed. They have been touting that sense 2010. There has been the potential. Will they accelerate that . Givehey accelerate that to the speed the attention they have been talking about . Tmobile has taken share from sprint. Can he stop the bleeding . Willf the key points is they do it in the quarter four . It depends. When the iphone six comes out, capturing that is going to be an industry event. Big, going to be a momentous event for tmobile and an opportunity. That is the time where they have to get new plans out to the public so that people can understand the differentiation. That is a lot of have to. Who is in charge . I think it is going to be a partnership. Ed is what drove the choice. They have a relationship that goes back a couple of years. That relationship is based on Mutual Respect as entrepreneurs. They both built companies. There has to be a deadline somewhere. This is a marathon and not a sprint. Sprint to keep it keep it simple. They ought to go out there and realize they are in a commodity game. Wireless is a commodity business. Keep the plan simple. Bring in your self. Look at how tmobile has been able to grow since they became hot pink. Tmobile has been appealing to people on the basis of price and these rebates that it offers. They are not appealing on the strength of the network. Now that sprint no longer has the opportunity to create efficiencies by combining the two networks, wouldnt they be better off selling sprint . Im not sure dish can figure it out in the same way. If you look at what they did in gigahertzy took 2. 5 spectrum like sprint has and they built a network where they took at time of share from the incumbents. This is a man who knows. Build out have to that network at a time when their strongest competitor was undercutting them on price . Im not sure about that. That is the reality. They have to spend a boatload of money to make the most of that clearwire spectrum while at the same time compete on the bottom end. They are done with all of that. They are well into their upgrade at this point. They are in the final innings. Those technological hurdles are largely done at this point. The challenge becomes marketing. Feeding that perception of and no