Asiana aftermath -- as the investigation centers on the pilot and training, the heat lifts off of boeing and the highly used 777 model.
Stanley mcchrystal exclusively "in the loop" as the white house ways an early exit from afghanistan.
And, the big bet on the $100,000 gtr.
From bloomberg world headquarters in new york, you are "in the loop" with betty liu.
It is tuesday, july 9. you are "in the loop." i am betty liu.
Peter cook is watching the ntsb investigation into asiana flight 214, whether the crash landing was due to a pilot in training or a faulty boeing triple seven.
Stanley mcchrystal is "in the loop" to talk about his call to young americans to go into public service as the white house signals they might pull troops out of afghanistan earlier than expected.
Dominic chu is watching the wireless wars -- what blackberry leadership is expected to share at the annual meeting.
Expect a lot of questions to blackberry leadership.
Boeing might be off the hook as federal investigators do not have a definitive cause for saturday's crash but they remain focused on the flight speed.
Peter cook, so far, no mechanical errors?
Nothing has been uncovered so far -- no specific mechanical problems or other major issues that would explain the crash, but they are hoping for more answers with interviews with the crew.
Two were questioned monday.
Two others will be questioned today.
All were experienced pilots.
One had more than 12,000 hours in the cockpit.
The other had over $9,000 in a cockpit, but just 40 in a boeing 777. when we interview those crewmembers, we will get more details about their activities, work, training, who was flying, who was in command -- we will be looking to correlate all of that information with what we are finding on the cockpit voice recorder.
Again, they showed normal operations until the final moments of the flight, when the crew realized they were coming into slow and try to increase the throttle, but by that time it was too late.
What about the issue of the drop in speed?
Should it have been noticed sooner?
With conditions so good, why did they not notice it sooner?
The flight data recorder reveals that 1600 feet a disengaged -- they disengaged, and by the time the heat 500 feet, 34 seconds from impact, it was at 134 knots.
When it hit the ground, the speed was 106 knots.
Veteran pilots say the plane should have been easy to land at that point.
How could they get the airplane me know normal glidepath and let it slow to the point that it was literally stalling and just about to fall out of the sky?
Why did the pilots not notice sooner?
Were instruments giving them problems question mark where they distracted?
These are problems ntsb investigators hope to get answers to.
Peter cook, thank you.
On the corporate front about we have been following the supermarket sweep -- several smaller players could be up for grabs and now we have a multibillion-dollar deal to report, but it was not from the private equity world.
It was from kroger, the world's largest grocery store chain, agreeing to buy harris theater for $2.5 billion in cash.
I want to bring in cristina alesci on the phone.
We were talking about this, that it was private equity players that would grab the company.
A big surprise.
Another big surprise is kroger usually does not by other brands.
They do not have banner stores, operations under different names.
From an expansion strategy standpoint, it makes sense.
Kroger operates in the middle market and harris teeter caters to the higher and.
It makes sense from a growth standpoint, and kroger said in the release that they will keep the harris teeter name so we could see a new strategy.
$2.5 billion -- what do you make of the price?
Is that a high premium?
As you said in the introduction, it is a strategic buyer paying a financial buyer asked price, which you know will always be lower.
They would have some synergies . it appears that it was a decent price, not too expensive or too cheap, but we have to do some analytics around that.
This kind of deal would probably not be able to get done if interest rates were to rise.
The company is using debt to finance the transaction.
Kroger said in the release that they plan to pay down the debt over the next 18-to-20 months . it looks like the companies are looking to take advantage of interest rates now.
Cristina alesci, lots to consider there.
Cristina alesci, our deals reporter, thank you.
Moving and shaking this hour, leonard riggio, the largest shareholder of barnes & noble.
The ceo resigned yesterday after the company reported a quarterly loss two weeks ago.
Riggio has a history of spinning off units.
Watch for more moves.
In february, riggio said he planned to make an offer for 680 stores and the website.
The company has also created a digital media division that could be spun off and they announced they would stop making their own tablet, the nook.
It is another big day for blackberry.
Ceo thurston hines will face questions about what the future holds after the disappointing earnings report last quarter.
The stock sunk after that report.
Dominic chu has the details on the wireless wars.
Sales are not looking good, everything is looking down.
Lacked very as its work -- blackberry has its work cut out for it and it is about how many products they could sell.
Last quarter, they were down 13% in sales, and it was less than half of the number they sold before the service outage in 2011. market share fell to less than 3% last quarter, putting them in the same realm of nokia and sony, well below apple and samsung.
When it comes to the operating system, sales have been flat for the last five years, and the apple ios and the google android have been higher.
That is the negative story.
What about the positives?
There are some pros.
Positive possibilities -- blackberry is selling more handsets with the new 10 operating system.
2.7 million were sold the last quarter, more than one million than the quarter before.
Investors want to know how robust sales will be of the new model, which is the new model keyboard that was to appeal to the core and loyal customers.
The company is sitting on $2.7 billion of cash, and their building a smaller market in entry-level phones, which will be key.
There is also strategic components of the value of their patents.
John butler sites not just the patents, but the server networks and subscriber base already entrenched.
Investors will be listening for that at the shareholders meeting later this morning.
We will have the details.
Last year they pinned their hopes and dreams on blackberry 10 and investors will want to know why that did not pan out the way they thought it would.
Investors will want to know why that did not turn around blackberry.
Thank you, dominic chu.
Stanley mcchrystal will be joining me exclusively in a moment to talk about washington heavy hitters manning together to push for civilian services as the white house weighs an exit from afghanistan.
We will also talk about the elements in egypt.
We will look at the nissan big move -- how the ceo is doubling down on the automaker's future on both of the spectrum.
We will also take you inside chipotle to give you the dish on the unconventional recipe for burrito success.
Stay "in the loop." we are just getting started on this tuesday morning.
"in the loop" with betty liu will be right back.
As we heard this morning, presiden barack obama mice eat up the withdrawal of u.s. troops from afghanistan, moving to a zero option that would mean no military involvement after next year.
The united states has been talking with afghan officials about keeping a small force their but a complete exit has gone from a worst-case scenario to an alternative under serious consideration.
I want to bring in retired four- star general stanley mcchrystal, the architect of the most recent strategy in afghanistan for his take.
Thank you for joining us on "in the loop." all indications are the relationship between the united states and afghanistan is deteriorating, particularly with president hamid karzai.
Is zero tolerance and action we should take?
There has been more cooperation between afghans at every level than headlines sometimes show, but the real calculation is what is the united states strategic interest?
We have been episodically involved for the last 50 or 60 years in afghanistan.
We need to figure out what would be the result with no american presence in the region and those strategic interests need to drive us.
There are moral interests and feelings as well, but our ability to figure out what is best for american policy should be key.
What would be the outcome if we had no presence in afghanistan?
What i found when i entered afghanistan as the commander in 2009, the biggest short was competent and i think the competence has increased and i know the capability has increased.
I am optimistic there is a great opportunity to establish a stable afghanistan right now.
I believe the afghans need the sense of a reliable partner in the united states and other when -- western nations.
That conference must be buttressed by the idea that we are there for them.
We know the reason why the relationship between president obama and the president of afghanistan has gone south is partly because of the u.s. beginning peace talks with the taliban in qatar, and given that development and how they feel about it, should we continue those talks -- should we be in those talks?
I think it is necessary to go into negotiations with the taliban, but this is afghanistan's future that we are talking about so the government of afghanistan has to be a major player in the outcome because they will live with that and we cannot diminish their role.
Let me switch to what is going on in egypt.
In the united states, we provide egypt aid.
Much of that goes toward the military in egypt.
Do you support what happened there?
I support the idea that egypt is moving to a democracy.
The road will have twists and turns and it is not going as straight as some people would like it to be.
What we need to do is help egypt take a long-term view on how they will get a truly pluralistic government that represents all of the different interests, not just one or the other.
It is also necessary that we all remember egypt has tremendous economic problems right now, so under the surface of the political upheaval are some economic realities that will face any regime and we need to be prepared to help egypt or it could be a propellant for more problems.
We should not hold a -- aide?
? -- aide?
I think we should remain a partner with egypt.
Was a military coup?
I would not characterize it one way or another.
There was a revision by part of the group that had overthrown president hosni mubarak.
The secular group, they came to a conclusion president mohamed morsi was going in a direction they were not comfortable with and decided to act dared the military -- act.
The military's role, you could say, was to stop the violence, but i will not come out one way or the other.
How familiar are you with the leadership there?
I have met some of them.
I am not familiar with their thinking now and i would not claim to know their current calculations.
I want to quickly turned to the franklin project, something that came out of the aspen institute.
You are basically encouraging young americans to go into public service.
You had something like over 500,000 applicants for 82,000 jobs.
Why do you see such a big response?
Well, we have a bipartisan group of people looking for -- pushing for the idea of volunteer national service which would be voluntary, but expected for young people to leave high school or college and the idea would be they do one year of full-time work and be paid a living stipend, but the real objective is to increase our opportunities to give -- increase our opportunities to give to people of need.
The goal is to work in healthcare, education, conservation, the military, and to imbue in people a sense of renewed linkage to their country -- a sense of renewed responsibility to the nation and a responsibility to each other.
How do you make sure it is all americans that participate and not just those on the wealthier side of the scale?
It is a great question and you have to provide opportunities with funding.
If somebody does not have the opportunity to support themselves, you have to have enough funding so that we can give them full time opportunities for the time of service.
That could allow us to mix young people.
People from east los angeles could be working with teams from scarsdale and that could bridge gaps that are very important.
General, thank you for joining us here exclusively on "in the loop." general stanley mcchrystal.
We'll return in two minutes on "in the loop." ? still ahead, furloughed workers are running away from the pain of unpaid pentagon leave, and they made light of the matter in a fun run but we will talk to mike turner about how long it will be before the u.s. feels the pinch of sea quest ration.
We will take -- sequestration.
We will take you inside of chipotle.
And the nissan top wheels, the gtr, is it a car you want to use to drive the kids to school?
Stay "in the loop." ? first.
You are watching "in the loop" live on bloomberg television, streaming on your phone and on bloomberg.com.
In egypt, the interim president is pushing ahead the timeline for new elections with the fatal shooting of islamist threatening.
Shooting broke out.
The ceo of shell has been named.
Van berurden will face troubles with the budget.
Alcoa had second-quarter earnings that the estimates.
There was a better than expected performance.
All of that means that equity futures are starting the day higher.
Dominic chu is with me with more on the markets.
S&p futures are up 6 points , .4%. the dow jones is up 37 and the nasdaq is up .3%. on the treasury side of things, 10-year u.s. governing -- government notes are yielding 2.6%. on the currency side, the euro is one .2853, just a little weaker.
Dollar-yen, solidly above the 100 yen per dollar mark.
On commodities, crude oil is above $100, $102.66. overall, the gold trade, watching it today, has been just off of the session highs.
We will see if there is momentum toward the opening bell for stocks and commodities as well.
Stuart, dominic chu.
-- q what -- thank you, dominic chu.
It is time for this versus that,on commodities, crude oil is above $100, $102.66. and today we are talking about a tortilla or, if you will.
This is mcdonald's. the latest hit is the premium mcwrap, a trend they might have been slow to sell off on.
They sold off their tortilla subsidiary in 2006. that is chipotle.
Mcdonald's has called the mcwrap as -- the subway bus there, referring to the chain that has more stores than mcdonald's. steve ells created a new kind of fast food, fast, casual, featuring fresh ingredients created before your eyes.
Carol massar took a look inside of chipotle with the key executives at the mexican food chain.
Chipotle is known for serving fast, quality mexican food.
But, making a television show?
We are shooting a web series.
I do not want to know more about that, i want to know more about you.
They have to spin the most egregious parts of agriculture in a positive way.
It is part of the nontraditional marketing play.
We do not do the same advertising everybody else does.
We do not talk about the limited time only menu item.
A new kind of fast food, fastwe have all of these other times two tall -- tell the story.
The main menu has hardly changed since the first store opened 20 years ago.
There are so many different combinations and flavors it is not about a new item.
@people pressured you to do a breakfast or anything?
We signed a lease in an airport, and part of the stipulation is that we do breakfast.
We do a new frittata that is part of the breakfast burrito, bowl or talk of and it is delicious -- tocco and it is delicious.
Will you expand that?
It is always a possibility.
What can i get started for you?
One new item, the vegan feeling.
-- feeling -- feeling.
There are a lot of vegans and vegetarians that are asking for this sort of thing.
Will one new menu item be enough to bring in customers?
Chipotle is sticking to its strategy.
The most important marketing we do will be what you experience when you come into the restaurant.
You love what you.
-- what you eat.
Joining me now is carol massar.
Tell us more about chipotle and what sets them apart.
They are unusual.
People talk about a culture and they have it.
I spent the day with co-ceos steve ells and monty moran.
They do surprise visits to various restaurants and they interview everyone on the team to see how the restaurant is run.
They believe it it is well run and there's good interaction with customers it will help to grow their business.
There are people that enough against the company.
Well known short sellers, including jeffrey gun lock and david einhorn.
Jeff has said that gourmet burritos is an oxymoron.
When people go to chipotle , it is not like mcdonald's, where 60% of their customers are drive.
-- drive through.
It is the idea of a fast casual.
It is a little more expensive.
It is a different experience.
There are other short sellers that are worried.
The guys at chipotle are not worried.
They feel that good food -- food with integrity, it is enough to keep customers coming back.
They have been on a roll.
Watch the "insight chipotle " special tonight at 9:30 p.m. on bloomberg television and streaming on your ipad and bloomberg.com.
Hundreds of workers will have to take unpaid time off and we will talk a key republican on the house committee on that.
And, we have seen more than 50 billion dollars of media deals.
What will happen at sun valley?
Will any deals get it.
? washington is dealing with many issues but still on edward snowden watch as the world questions where he will end up.
No answers, but venezuela received their asylum request yesterday and said he is allowed to come to the country.
Hans nichols, "the guardian" has released more excerpts of their interview with edward snowden.
They were taken from an interview in june and they do not appear to have deterred venezuela's attention to grant asylum.
They came out on monday afternoon in the u.s., and in venezuela on monday evening the president said edward snowden will have to decide when he flies here if he wants to fly here.
Both venezuela and nicaragua have confirmed they have received asylum requests.
Edward snowden has almost previewed his argument that he will be accused of committing crimes and attention we face the death penalty . have a listen.
Betty, i thought we had a soundbite lined up.
These interviews, though dated, they will make it more difficult for edward snowden to fly from moscow to venezuela, but you clearly see venezuela not being pressured by strong comments out of the state department.
They seem to be on track to grant asylum.
Their relationship with the united states is not great, so they will do this anyway.
Thank you, hans nichols.
Joining me is republican congressman mike turner, who sits on the house armed services committee.
Thank you for being back here on "in the loop." as you just heard, it is a complicated story that you are familiar with on edward snowden and the offer of asylum.
What can congress do to prevent movement of edward snowden and bring him back to the united states?
This is an issue of needing leadership from the president.
The president made statements politicizing national security, saying that the types of rogue rams conducted to pursue -- programs conducted to pursue terrorists were wrong, and now he has embraced the programs and has not given the country a great understanding of what threat snowden represents or the justification for the programs.
Hans nichols tried to play one piece of the interview.
We have part of that where he talks about some of the data that is being monitored among americans.
This is what he said.
Companies like google, facebook, apple, microsoft -- they get together with the nsa and provide direct access to the back ends of the systems you use to communicate, store data, put things on the cloud, and even to send birthday wishes and keep a record of your life.
All of these companies give data to the nsa.
What will you do about that?
It is troubling.
The president needs to make the case about what is going on in these programs, how they are limited so that we know the american public has protections, but at the same time, the essential nature of these programs.
The president has a lot of explaining to do, and in the leadership crisis we see out of the white house he has been absent in justifying the programs and representing the threat that edward snowden represents.
Before we get to the furloughs in the pentagon, which are affecting your state and many others, we just talked to general stanley mcchrystal on egypt and this is what he said about what the u.s. position should be.
Egypt has tremendous economic problems right now.
Under the surface of the political upheaval that you see are some economic realities that will face any regime and we need to be prepared to help egypt, or that could be a propellant for more problems.
Are you prepared to do that?
Again, we have a situation with the president having vocally led the efforts for the removal of hosni mubarak, the ushering in of the muslim brotherhood, has not articulated the position of the united states.
In your position, was it a military coup?
The elements are there but the questions are was there a military coup, and does it rise to the level requiring aide to be pulled.
There are certainly some additional information s that we need as indicative decision to whether or not aide continues.
Tell me about the furloughs going on.
They started at the pentagon yesterday.
How will they affect your state?
Taxing my community, over 10,000 -- in my community, over 10,000 people are being furloughed.
We had testimony saying these cuts are so drastic that the united states would be unable to conduct military operations.
While the president is busy working on immigration, people are losing jobs, national security is being weakened and the country is at risk.
Thank you for joining us this morning, congressman mike turner of ohio.
We will be back in two minutes on "in the loop." ? our bloomberg big number is $64 billion -- the dollar amount of media deals so far this year, marking the fastest pace for media since 2008. dealmaking is a big part of the sun valley conference that starts this week.
It is where the union of time warner and aol was hatched as well as the disney purchase of abc.
One media deal that is pending, the takeover of hulu.
At&t, directv, yahoo!
And guggenheim digital are among the suitors.
We are joined by jessica , and it is the return of hulu, because they have try to put themselves up for sale before, and this time, the lead contenders, why does it make sense?
It is interesting because at&t is trying to expand beyond dsl, beyond being a provider of wire services into a more full- service subscriber and video provider.
They have seen competitors do the same thing.
Absolutely, and they want to distinguish enough to be competitive, and the way to do that is provide content and subscription.
This will be a game changer for at&t? absolutely, depending on what they do with it.
It is a start to say they want a big presence in content.
What would be the change to hulu?
Hulu would have to start negotiating big content deals and the competing with netflix and it would be integrated with at&t at home and u-verse and be part of your network yet accessing television instead of through cable.
It is less transformational for directv, is that right?
I believe so.
Directv does not own the cable provider space.
For directv, it seems that it would be an additional subscriber option -- you add 4 million subscribers.
Maybe it is a way to take a competitor out?
Take a competitor out, expand offerings to your existing base and maybe make more money off of them, but it does not change your business model or make you that much more prepared for the future.
You are still looking for content.
Jessica naeve, the price tag that is rumored, does that sound right to you?
Is hard to value hulu because it is based on deals that have not taken place.
They have exclusive access to next day tv from three cable operators, but once the transaction takes place, the value is not clear.
Competition is what rings the price tag -- brings the price tag.
Barnes & noble has gone through management changes.
Leonard riggio might be spinning off the digital unit.
Barnes & noble is struggling with whether he wants to be a retail bookstore, a technology company, or an e-commerce company.
They cannot be all of them.
I think it should be leveraging its place in the education market -- it has almost half of its ebita coming from education , and that is an area that needs to be taken in.
The retail footprint.
It probably needs to be right sized, but there should be something they do with bricks and mortar stores that is better than what amazon does online.
Jessica naeve , thank you for joining us.
Stay "in the loop" for full coverage of the sun valley conference leading up to friday when i will talk to tim armstrong and sarah martin sorrell all starting -- sir martin sorrell starting at 8:00 a.m. eastern time.
The sun is trying to market its lightning-fast gtr as an everyday car.
Sam grobart took the gtr out for it's been.
-- out for a spin.
? carmakers have been making super-cars for decades but only recently have started to try to sell them as daily drivers.
I wanted to check out the nissan gtr.
In a car like this, you get a lot of convenience.
It is comfortable in a car that can go from zero to 60 in 2.9 seconds, which is ridiculous.
I do not know where you could use that power.
If i lived in wyoming, but i do not.
I live in new jersey.
The attraction was easy performance, you did not need to be a highly skilled driver to take advantage.
I have used it to take my kids around, run errands.
This is pretty good.
I cannot imagine i would use it in that way.
Nissan makes about 1000 of these a year, a small fraction of the overall 5 million they make.
You might be wondering why they bother.
The answer is simple.
Maybe it persuades you to take the nissan ultima instead of the honda accord.
The entertainment features you would expect to find on a pricey car are here.
It has a really nice bose sound system.
There is navigation.
A backup camera to see what is behind me like i am in a mini van.
This is my acceleration performance in real time.
As far as performances concerned, it is every bit the equal and in some cases superior, 28 porsche -- to a porsche 911 turbo.
In a weird way, this car is a bargain.
Will have much more on nissan in the next hour of "in the loop." ceo carlos ghosn going back to the future with the old datsun.
Blackberry dialed the wrong number.
We will see what comes out of the shareholders meeting in canada.
Billionaire carlos slim just poured $40 million into a music app, shazam.
The company ceo talks about the big investment at 1:00 p.m. eastern time today only on " coburg west." we will return in two minutes.
? 30 minutes to the opening bell -- this is "in the loop" with betty liu.
The countdown begins now.
Welcome back, you are." --"in the loop." equity futures are higher.
Alcoa reported better than expected earnings and we're continuing to watch investigation into asiana flight 214 and what blame could be laid on boeing.
Kroger is buying up southern brand harris teeter for $2.5 billion.
Let's get to the markets desk for the countdown blitz.
Dominic chu kicks it off.
Let's talk about harris teeter.
It is only a one percent in him to the last -- 1% premium to the last close but harris teeter shares are up more than 30% since they started talking about strategic alternatives.
I am looking at alcoa.
They beat estimates, but shares are down because they continue to see strength on the engineered product site, the stuff they make in aluminum that they sell to aerospace.
The primary business is still suffering and posted a loss.
I have my eye on dell after a small, but influential shareholder seems to be supporting carl icahn's proposal, challenging michael dell's takeover efforts.
We could see a real battle up until the july 18 shareholder vote.
Federal investigators continue their hunt for answers into the crash of asiana flight to 14 as the focus appears to shift away -- asiana flight 214 as the focus appears to shift away from boeing.
Peter cook has more details.
What are the investigators likely to asked -- likely to be asking the pilot?
What was happening in the cockpit -- we do not have 100% certainty that all four were in the cockpit at the time of the crash.
That would be standard practice.
We do not know that for sure.
We want to know what was happening in the cockpit at the time of the crash, who was in controls.
We understand the pilot in training with just 43 hours of experience on the 777 was in control.
He had never flown the plane into san francisco international but he had flown a 747 several times, soviet experience, just not on the -- so he had experience, just not on that airplane.
What was going on in the cockpit, where their malfunctions -- those are questions they had for the pilots.
They spoke to two of them yesterday.
The asiana ceo himself korea will make his -- from south korea will make his way to san francisco.
He has offered apologies.
The ceo is on the way to san francisco.
He spoke in korea before he left for the flight.
I am very sorry for causing a great amount of shock due to this unintentional accident.
I will do my best to resolve this as soon as possible.
He has already met with the parents of the victims, the two chinese girls that died in the crash.
Questions for asiana have to do with liability.
The company says it is too soon to talk about lawsuits, but that will be something they will have to contend with.
You could imagine there will be plenty of lawsuits.
Peter cook, thank you.
The ceo of barnes & noble is being kicked out, which could open the door for a breakup of the books retailer.
Julie hyman joins us.
We were talking about the struggles of the chain with the tablet, the retail stores.
After three years as ceo, william lynch, did he really have a chance?
Eight did not seem like the upper management -- it did not seem like the upper management had patients, and the writing was on the wall when barnes & noble announced they would stop manufacturing the nook themselves, outsourcing the color version to an outside manufacturer, and even then, spinoff talk was heating up.
William lynch reported that losses cap mounting at the barnes & noble announced they would stop manufacturing the nook unit.
He was more responsible for that unit, trying to make that work.
In the end, it faced too much competition.
Going into the holiday season, he had high hopes, but it is facing more and more competition from the candle and various devices.
The nook was not holding its own in reporting dismal numbers.
Now, he is out.
The gentleman who is in was the chief financial officer at barnes & noble and the view is since he has had experience spinning off units and other companies, notably cablevision, he would be the guy to oversee that kind of effort.
Tell us what a breakup could look like.
Here is what you have now.
You have the nook unit in you also have -- unit.
You also have the college bookstore business, which is still generating a lot of cash, and then the retail business.
Leonard riggio, the executive chairman and founder of barnes & noble, in february made an offer for the retail business and this could open the door for him to proceed more aggressively, but what is not clear is who would buy the nook business.
There was talk microsoft was interested, but there has been no progression on that front and microsoft has not stepped forward.
Thank you, julie hyman.
It appears the battle over dell is nearing its final round.
Founder michael dell has 10 days left until the shareholders vote and as of today, 1/5 of shares are held by investors that oppose the proposed buyout.
Let's bring in deals reporter cristina alesci.
You have been following this story all along.
Where do we stand?
Michael dell got a big boost yesterday from isn.
The shareholder advisory firm came out in support of the proposal to take out the entire company, but today we are hearing from a small but influential shareholder, yasmin management, which is making the same points as carl icahn.
In some cases they have overpaid for acquisitions, and just when they are about to produce value for shareholders, michael dell and silverlake are taking it private.
They are depriving shareholders of the upside that carl icahn keeps talking about.
We do see a small shareholder base and not so small if you add up some of the other holders that have been opposed.
It is about 20%, not enough to get the deal done and block the michael dell did.
Is there a chance that when we come to the shareholders vote we might not see a deal in the end?
It will be very difficult.
Before the ruling that helped michael dell earn some of the shareholders that had not been vocal, we really thought that carl icahn had the upper hand because if you look at the math, he could vote his shares while michael dell cannot, but iss swung things in michael dell's camp.
It looks like a really pretty hard hard for carl icahn to block that, but he will spend time blogging shareholders to -- lobbying shareholders to focus on the long-term picture -- it is still profitable, still has the same earnings projections it hadn't since the deal got started and he is urging shareholders to sit tight and hold out for a better price.
Iss says for the short term guys, your money and run because it will be a while before carl icahn can execute his plan.
Take it and run.
Thank you, risking a lashing.
This morning's -- risking a lashing.
This morning's -- cristina alesci.
This morning mover and shaker is the ceo of sirius xm.
They raise their full-year guidance for subscribers.
The company was helped by stronger auto sales.
Meyer became permanent ceo in april.
He replaced longtime senior executive who quit after clashing with john malone.
Malone's liberty media gain control of sirius xm earlier this year.
We will tell you what to expect at the annual shareholders eating from blackberry -- meeting at blackberry.
There is also a shift from oracle to tesla.
What will that do for the stock?
We will have much more on that as "in the loop" heads toward the opening bell.
You are watching "in the loop" live on bloomberg television and streaming on your phone, tablet and on bloomberg.com.
Lots of news this morning.
Kroger buying harris teeter, the ceo out at barnes & noble and that brings us to the call.
With us now is david call -- david kelly, who says interest rates are in the wrong place for this economy.
Dominic chu joins us as well.
David, do you think rates should be higher because economic growth is doing better than what some economists are saying?
It is not just the data.
This american economy is a tortoise moving forward.
The labor market is gradually tightening.
We are seeing the unemployment rate gradually come down.
If the economy is normalizing, long rates will normalize and real interest rates need to be 1%-of1.5% higher than they are now.
You are saying that we should be at 3% on the 10-year note?
More than that, 3.5% to 4.5%. you also believe the earnings season will surprise on the upside.
Dominic chu, you are looking at the earnings season.
There is optimism.
L: the estimates, -- alcoa beat estimates, so that could be a good sign.
I want to show you something interesting, something that is perhaps more bearish on earnings season -- the ratio of the number of companies coming out with negative preannounced earnings versus positive preannounced earnings.
It is up to 6.8, nearly 7 companies negatively announcing earnings.
That means a lot more companies are trying to manage down expectations for earnings season.
I could be something to watch for -- maybe these companies are preparing us for negative news going forward.
David, what do you make of that?
I think most companies will surprise to the upside.
I think they dampen down expectations so that they can beat them, but having said that, the dollar is higher year-over- year, a sluggish economy -- it does not help.
I think over the next two years operating earnings will go up above 5%, which should support a stock market, particularly if multiples are moving up.
This is not a great season but we think the second half of the year growth will pick up in the united states and around the world.
It is not that we are that optimistic about the economy, but as the federal reserve feels the need to push out of quantitative easing it will push long rates higher.
We were speaking with an analyst yesterday who said they thought they would see better profit margin but they do not understand how that is happening as revenue across the board is slowing down for most companies.
How is that happening?
Revenue is rising, just slowly.
You expected to rise up the pace of nominal gdp here in the united states and around the world.
Revenue is going up slowly.
Margins are held at relatively high levels because of low wage growth and interest rates.
I feel ok about margins.
Generally, at this stage, be on the few years of expansion, earnings girl at the same pace as revenue.
Margins do not collapse or expand.
That will be the next message until the next recession.
One of the silver linings of the expansion is a could be a long expansion.
They have a long way to run because we are not at full employment or normal levels of housing starts or vehicle sales.
It could be a long expansion and expect earnings to grow at the same pace as revenue.
David kelly, on the call, thank you.
Ford against general motors in one battle for a title they do not want to win, the title of stolen -- most stolen car.
? you are watching "in the loop" live on bloomberg television, streaming on your phone and bloomberg.com.
It is time for the countdown blitz.
Futures are higher.
Julie hyman, let's start with the fdic.
Exterran holdings their final vote on basel three capital -- they are holding their final vote on basel three capital ratios.
Leverage ratios could be set at 5% or 6%. britain is handing over administration of libor to the operator of the new york stock exchange.
Nyse euronext will replace the administrator, following the scandal of the rate rating -- rigging.
The ford f- 250 heavy-duty pickup is a coveted vehicle for thieves.
For the first time since 2003, the cadillac escalade is not the biggest target.
This is according to the highway loss data institute.
We know trucks are in demand, but i thought they usually steel the -- the accord, the camry.
Papal that apart.
It is -- they pull that apart.
It is harder to do with the escalade.
It is new technology that makes it harder to steer.
Better than the club.
Teachers have closed higher.
We have the -- futures have closed higher.
We are the top 10 trade you do not want to miss.
Keep it here on "in the loop." ? first.
You are "in the loop." i am betty liu.
The markets team is ready to take you through the bell.
It is time for the top 10 trades you need to know about starting with number 10, applied materials, the world's largest semiconductor equipment maker is expecting industry spending to pick up as demand for mobile devices drives.
The recent target for recent months is to hunt -- $2.50 a share for the end of the year.
Ibm is set to open in the red after getting downgraded to neutral from buy at goldman sachs.
Number eight, intuitive surgical.
Shares are punching in premarket trading -- plunging in premarket trading.
They were downgraded after seminary sales results missed -- preliminary sales results missed estimates and they are facing lawsuits.
Number seven, sirius xm boosting forecast for subscriber additions, predicting 1.5 million people will sign up for services, low sleep in cars.
-- mostly in cars.
Number six is pandora , having increased their active user base to 71.1 million users in june, 30% higher than the same time this year.
Earlier, they introduced harsher restrictions on free accounts in an effort to get more paying customers.
Number five, alcoa.
They beat estimates by one penny driven by orders for aerospace parts but the primary metals business reported a loss of $32 million.
Number four is tesla.
They are added to the nasdaq 100 index.
Tesla closed trading with a market cap of 14.5 billion dollars, 250% higher than the beginning of this year.
Number three is kroger, the largest u.s. grocery chain, expanding with a purchase of harris teeter.
The acquisition, which kroger is paying a 30% premium for, will help them expand in the u.s.. number two is blackberry.
They hold their shareholder meeting and executives will face investors who have seen a 20% loss in the stock since the beginning of the year.
Number one, a story we have been following all morning long, barnes & noble.
There moving closer to breaking up after ceo william lynch resigned.
Chairman leonard riggio said he planned to make an offer for the stores and website.
Join us is trey knippa.
You are taking money off the table on housing.
You bet i am.
Housing is not going up as near and as fast as they should be.
I am not getting short housing or liquidating the entire portfolio.
What are we talking about, homebuilders you are taking your money off of the table on or housing-related stocks?
Asked i am talking about -- i'm talking about property.
I want to light and the load on that part of my portfolio.
I do not think there is a lot of upside.
You are selling your home -- i do not understand.
I have always liked rental real estate, productive assets as part of a portfolio.
I like crude oil, oil wells, gas wells.
I like those productive assets.
I think real estate might have a tougher time moving forward.
I just want to let the load in that sector.
Here are interesting headlines just crossing.
The imf is cutting its global growth forecast to 3.1%. a previously said 3.3%. u.s. growth is also down to 3.1% from 3.3%. there has to be concerned that things are not growing white as fast.
Tres knippa, is that the case for why you would want to own treasuries even though 10-year yields are around 2.6%. i want no part of that trade.
That is one reason i want to light not on housing.
I have good contacts in the mortgage business.
Mortgage applications have been called.
People are waiting for mortgage rates to go down.
They are foolish.
They should lock in these rates.
By the way, the imf is wrong.
Those global growth numbers are still too high.
Tres knippa, if you do not think things will be worse in terms of growth, why would you not want treasuries -- if you do not have fear of inflation or growth, you want to own treasuries, right?
I understand the trade, but i think treasuries are reward- free risks.
What if you have markets were treasuries actually decline even though the central bank continues to buy them?
That is why you are trying to say should i buy treasuries, because bernanke will buy more, but a lot of markets have slow growth and i would not touch those bonds with a 10 foot pole, europe and japan specifically.
Thank you, tres knippa.
Next, optimism for banks and the u.s. economy.
Lending is up and we will tell you what it means for the banking industry and the ache picture.
And -- and the big picture.
We will be back on "in the loop ." ? we are seven minutes into the trading session.
Stocks are rallying.
The dow and the s&p are higher.
Materials, industrials and energy are leading the s&p higher.
We are watching blackberry closely.
The smartphone maker is not looking too smart these days.
There was week reception for its recent 10 class models.
If they hosting their shareholder's meeting in waterloo, ontario.
They will discuss turnaround measures yet again.
The head of research and senior technology analyst at bg financial has been accelerating blackberry shares, so i know where you stand, but for the meeting, what will be the big question?
What shareholders want to know is should we stay the course and will we get a turnaround?
It is still in the early days of the launch cycle for the 10 platform.
While there are so many things going wrong, in the last year they have done a fair number of positive things.
The phones are decent.
Maybe they are priced to expensively.
They have done a good job of ripping cost down.
They have increased cast -- cash distribution.
The stock was up for the year until the latest quarterly earnings report.
If you look at 52 weeks, it is up even though it is down year to date.
That is why you do not expect big fireworks?
Investors are generally ok with them?
I do not think this is the forum to announce major changes, nor do i expect people that want to own this to be questioning the strategy at this juncture, but one year from now, it will be a completely different story.
One year from now, the 10 did not get traction, the high-end market rolled over and we assisted -- what could torsten heinze, the ceo, have up is sleeve?
Sell more models, more phones.
Sell more 10's question so -- 10's? sell more 10's. 70 million people are still using blackberry.
Make sure they get the first.
-- make sure they get the 10's in their hands.
Let's say in the next 52 weeks they do not get more traction, and it might be sooner than 52 weeks, but at what point do we talk about rig up?
-- break up?
Toward the end of the year, it comes back to the cash and we have to give management points for increasing the cash position.
You would give a company points for increasing their cash position?
If you have cash on your balance sheet, you have that much more to live.
With $3 billion in cash, the value of your company is $5 billion.
A little more attractive.
Who could buy blackberry?
Rocks most people -- most people from a strategic angle have taken a look.
Who would want another platform?
You are can eating against google -- you are competing against apple and google.
If there is a buyer, you will not pay a massive premium.
A private equity player, perhaps?
But even if you are a strategic player, you are waiting to see if the 10 platform does not get traction.
Colin gillis, thank you.
What is old is new again -- nissan brings back the datsun and invest big in emerging markets.
You think coaching nfl team would be enough, but not for new york jets coach rex ryan.
He ran with the bulls.
You are watching "in the loop "in the loop --"in the loop live on bloomberg television and streaming on your phone, tablet and on bloomberg.com.
? well, it is back to the future for nissan motors, trying to attract younger drivers in emerging markets by resurrecting the datsun.
Ceo carlos ghosn is counting on outdated technology and bargain technology -- bargain prices to get consumers behind the wheel.
Jamie butters, why are they going back to an old brand to bring young consumers on?
It seems like a strange play because datsun has a fair amount of brand equity where a lot of us have fond memories of the 280 z and now they are taking the ran to emerging markets where it does not mean anything.
He does not want to bring the nissan brand down too much.
The main car is the all,, a $20,000 car, which is middle-of- the-road, but would be a big push -- big price in other markets.
Why not create a new brand, why go back to datsun?
Parks because they have it, and internally -- because they have it, and internally you can be a rallying cry.
It has us talking about it, so tell us, who is nissan trying to beat at the low-end of the market in india and indonesia?
There are different players.
Suzuki is the dominant player in india.
He still have lotta in russia.
Tell your that is expanding a brand.
Renault and nissan are both owned by carlos ghosn.
A lot of times these companies take regular models, sell old versions, or strip out technology and sell versions of global cars.
Carlos ghosn is going with creating their own brand, giving them unique vehicles.
How important is this for carlos ghosn?
You know, this is one of his guest bets.
Bringing back the datsun , if it fails, it could be a black eye.
Along with the electric car push he has made with the leaf, these are the defining moves.
As he likes to point out, he is the only global auto ceo that came from an emerging market himself, growing up in brazil.
He feels he has a handle on the market, a competitive edge, and we will see how it turns out.
Thank you for joining us, jamie butters of bloomberg news.
Staying overseas, the coach of the new york jets has gone running with the bulls.
Rex ryan lined up with more than 3000 others to run with the bulls.
They ran about half of a mile in front of six bulls scheduled to fight in the bullring.
It is an event that occasionally results in injury and death.
It has gone on for centuries.
Ernest hemingway made it famous in his book "the sun also rises pickup -- rises." the bank is lending you it years and is cash -- we will tell you what the pickup means for the global economy.
Michael kors, trying to appeal to mothers and daughters.
Stay "in the loop." ? surviving retail trends means knowing when to change strategy and some retailers are capturing a trend -- boomer mothers shopping with millennial daughters.
The percentage of these women is up 9%. michael cores is all over that, -- michael cores is all over that.
Analysts say it is a win-win because the mother is more inclined to spend more on the daughter while the daughter is helping the mother with her style, trying to stay young.
Turning to the bigger picture, we see more signs and forgetting picture for the -- bigger -- better for the u.s. economy, looking at the financial sector.
Dominic chu, this has to do with lending it committee.
-- lending activity.
Lending activity is starting to rise, and that is why investors look at bank stats to see if there is a belief the recovery is actually happening.
The chart of the day, what you're looking at is two lines.
The yellow represents how much in loans the banks are making, and the white line shows how much in treasury bonds the banks are holding.
The yellow line is rising, more banks are making more loans and the white line is falling, meaning bank start cutting holdings of government debt.
In the first six month s of the year, they cut their government debt holdings for the first time since 2007, and lending is at the highest since 2008. one inc.'s take on more risks, -- when banks take on more risks, it could be be a sign of more optimism.
We see signs of life in the bank stocks as well.
Quite check out this out -- check out this outperformance.
It is about the financials overall.
With regional banks, investors have more faith in the u.s. economy and they start to lend more, which has helped to propel stocks.
If you thought s&p financials did well, check out the regional banks like as ions, keycorp.
They are a big -- up big and the thinking is they would you better than the banks like jpmorgan.
Thank you, dominic chu.
Coming up, more on the banks in our triple play in for a behind the scenes look at the show, visit my facebook page at facebook.com/betty in the loop.
? we are about 30 minutes into the trading session this tuesday and it means adam johnson is joining you today for our triple play.
Stocks are rallying.
In just a few minutes we will have blackberry, the shareholders meeting, starting.
I would be very curious about what they say.
The doc is down 20% year to date.
The third year of losses.
The 10 has been a disaster.
How can they possibly get people excited?
Maybe we will get a provocative headline.
The bible three of court on banks --basel ii accords.