Bank Earnings on Parade: In The Loop (07/15)

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July 15 (Bloomberg) -- On today's "In The Loop," Betty Liu takes you from the day's breaking headlines straight through to the opening bell, speaking with the most influential guests and asking the smartest questions. It's not noise, it's news. (Source: Bloomberg)

The bank earnings continues.

Early news for citigroup and michael corbat are positive.

A sweet comeback.

Seven months after hostess went belly up, twinkies are back and so are the workers who make them.

The element of suspense.

J.k. rowling takes a page from steve thinking's labor for -- king's playbook.

This is "in the loop with betty liu"." good morning.

We're live from bloomberg world headquarters.

I am betty liu.

More earnings from citigroup.

It looks like in coming in at one dollar and $.25. the estimate on was for one dollar and $.18 -- $1.18. give us some of the highlights initially that pique your interest.

Earnings per share, the headline is$1.34. when you back out the dba, we get an earnings per share of $1.25. it is higher than the same time a year ago.

On the revenue side, $20 billion in adjusted revenue, higher than the average analyst estimate.

Down from the same time last quarter.

In terms of reserve relief that they have decided to relieve because loans back, 780 $4 million released in the quarter.

Higher than what analysts have been looking for.

This is an example of some of the non-operating rockets.

Investors do not like to see it because it does not show you anything about operation.

It can be good for the bottom line.

They posted better-than-expected first-quarter.

In terms of citigroup holdings, it is a bad one but they are trying to hold down.

There was some accounting adjustment benefit as well.

Looking at accounting adjustment benefit, for hundred $77 million, double what analysts had been looking for.

-- $477 million, double what analysts had been looking for.

Wells fargo is the barometer for mortgage banking.

Citigroup is your barometer for international markets.

The fact that of late it is starting to trim down that presents under the new ceo michael corbett at.

Going through some of those citigroup numbers.

We mentioned the stock in the premarket.

Bankers are going to be watching closely.

Ben bernanke will explain the that plane for interest rates and.

We went to see what we are likely to hear.

Everybody will be watching this.

Will the fed cut back on its bond by?

Many different views on wall street.

Many different views on the wall street.

Jim bullitt of st.

Louis is often seen as the center of the fed.

She suggested he is still not ready to commit -- he suggested he is still not ready to commit.

There are differing opinions.

There is more adapted to come in here.

We will have to see.

One thing i have been concerned about is very low inflation in the u.s.. it is running right around 1%. that is a very low level in the past that has caused us to take action in the other direction and becoming more aggressive.

I would at least like to see inflation picked up a little bit or get some kind of reassurance that we could see a path toward target.

The rise did not impress him.

It is not always translate into consumer inflation.

He wants to see the pci rising as well.

He's also worried about gdp because it it is running very slow since 2 and 3 began.

We have a key indicator of this at 8:30 a.m. this morning.

It is forecast to be higher.

In the upside would be welcome.

-- any upside will be welcome.

Thank you.

For more on what this new environment means to banks, i want to bring and the chairman and ceo of bankunited.

-- bring in the chairman and ceo of bankunited.

One branch is around the corner from here.

Look.

Clearly, the uncertainty for banks going forward is going to be when the fed will move on tapering.

How are you per pairing for that?

Most of them preparing this for some time on a low by low basis.

It is fun to speculate as to what the different board members are saying and what we think may happening.

The truth is it will be dictated by the economy.

The chairman keep saying the same thing.

Inflation picks up then they will ask off.

Do you think he is being confusing?

No.

i think he has been saying the same thing all along.

We're listening to him and a confusing way.

We tend to take some of the stuff too literally.

I think he is trying to explain.

He is pretty consistent.

I do not see any change.

If the economy strengthens we will back off.

Likes it the that -- if the fed starts tapering, will that wreak havoc on bank balance sheets?

Conventional banks who have a good deposit base and make loans in an area where there is growth, that could improve net interest margins of long-term rates go up gradually as a result of the economy improving.

We will see some better performance.

Why did we see jpmorgan on friday talk about the margins?

They seemed quite uncertain about them.

The second half will probably be flat.

The five largest banks are in different businesses.

They are living off a different type of banking structure.

They are not in the business of making loans to small business people.

That is not their principal business.

It is much more difficult for jamie to speculate as to where his net interest margin will go.

A very different from your operation.

You are expanding.

You are also expanding in florida.

Is that right?

You are expanding headquarters in miami.

South florida , particularly in the miami area, is experiencing a remarkable comeback.

We are seeing it in numbers of our loan growth.

They are roughly double what they thought they would be at this time last year.

We are expending quite aggressively.

If you see higher interest rates, isn't that going to crimp some of the loan demand?

It depends on if the market stays healthy.

If it damages credit we could be in for another credit cycle.

If you see things go from zero to 5% or 6%), that could slow down the growth of the economy.

The fed will temper their attitude toward rates and we will see a very gradual increase which is good.

Leverage ratios which we were talking about last week, the u.s. proposing minimums higher than what we see, those do not affect your bank.

You have worked with some of the big banks are capital one.

Give me a sense of whether or not you think it is fair.

I think the regulators are on the right track here in they are putting out more capital against riskier businesses.

The large institutions have riskier business.

It is nice for us.

There are competitors.

This probably is a logical step toward a safer banking system.

Larger banks to engage in other activities that are viewed as a worth more are risky and hold a higher level of capital in the long run it is better than the industry.

Is a going to leave those of banks not issuing dividends or holding back on share buyback?

I do not think so.

If the economy continues to improve and they have to put up with this, i think the benefit they will get from an improving economy far outweighs having to keep another 1% or 2%. you are expanding in florida or new york.

Where do you see the next hot pockets of growth?

Quite frankly, we're going to spend our time here for the next couple of years.

Manhattan is growing organically very quickly.

Miami as well.

We are not envisioning filling in between the concentrate on these local markets.

Are you going to open new branches?

We will open a couple more over the next year or two but not aggressively.

Electronic have changed banking permanently.

You do not see lines in branches anymore.

It is a different business.

It is great to see you.

Thank you for stopping by.

The chairman and ceo of bankunited, john konas.

? the former goldman sachs banker who called himself fabulous fab.

There are claims he misled investors.

It has to do with the latter lysed debt obligation.

It was linked to home mortgages.

Oldman has admitted they paid a record $500 million as a settlement.

He said he never misled anybody and that those who lost money or sophisticated investors who had guessed wrong and they should absorb the losses.

We have a great program ahead.

It is just what going did not need, another incident involving a troubled 787. we will have the latest.

The return of american classic seven-month affidavit were -- seven-month after they were pulled from the store shelves.

The man who led hostess to the bankruptcy will be here talking about the future of the branch.

J.k. rowling returned to the top of the bestseller list.

Stay "in the loop" ." we're just getting started this monday.

"in the loop with betty liu" will be right back.

? there is a very important issue everyone is watching this morning.

It is the return of the twinkie.

Bill gross tweeting out " twinkies are back on monday and bond ares are too>" >" we took a look at some of the most interesting facts about the comeback snacks.

It quacksquacks 50 million hitting shelves today marking the nationwide return.

Stores like walmart and outward sense could not wait.

They started selling boxes as early as friday.

This is the man to lead host is out of and he made the decision to liquidate the company and then sell it to private equity investors.

He is the former chairman and ceo, but still involved with the company.

It is great to see you.

Are you a little bit less stressed out now?

I would say that is probably true.

Quacks have you tasted these new twinkies?

I have not yet.

Quacks they cannot just go to their walmart?

What is different this time around?

Any time you restart a business from a zero star, that is a difficult proposition.

I think be team we started with had a very good plan about how they wanted to ramp back up production in the planet they purchased.

I think they have done an excellent job in the market.

That is what these projects needed.

They need a kickstart.

What did they do differently in marketing?

Quacks almost everything differently.

We had no money to spend for almost a decade on either capital expenditures or marking.

-- marketing.

If you look at the manners on the relaunch and what they have done in los angeles, it is well thought out.

Twinkie is such a well-known brands.

Did it mean marketing behind it?

I think it did.

It is a once-in-a-lifetime opportunity.

We were selling the brand.

That is what we were selling.

Not very often can you relaunch a 70-year-old brand and generate excitement.

What they have done make sense.

Tell me about the workers.

Who was coming back?

What happened?

Quacks they reopened a subset of all the plant we haved.

I do not know what they have done inside the plant.

I'm sure they want to modernize.

They are basically back up again.

The ones that they purchased.

In georgia or something?

Illinois.

There were several.

I think they've re-root.

Whether they rehired former or new workers is probably a mix.

There was a lot about how between keys are made a little bit different and how 10% will be frozen.

Is that part of the change?

This new management you are talking about inking differently?

We were working on extending the shelf life prior to selling the brand.

Those things make sense.

They go more toward how you distribute and what market you can distribute into.

It broadens the base of customers.

Other than that, you're talking about the same project.

-- product.

Where are the new markets?

Quacks you would like to see them show up in dollar stores.

We were already largely in big locks grocery stores, walmart, costco.

There are other segment you would like to get in.

That is interesting.

We looked on ebay to see how much they were selling for when they were not on the shelves.

Somewhere a little bit astronomical.

We looked on friday it was like a box was $10. that is three times more than it normally would be sold for.

I am sure the anticipation of it coming back lowered the price.

On prices, do you expect much to change?

I doubt it.

That is all part of their marketing plan and their approach.

They are running a business.

They want to make a profit.

The heyday of the ebay excitement will fall.

Someday get to thousands of dollars.

On that weekend, yes.

Thank you for joining as.

The former chairman and ceo of hostess brand, managing partner of kobe partners.

Coming up, jcpenney goes back to school.

A struggling retailers new strategy and is chance of succeeding.

Edward snowden may end up in south america.

The question is exactly when that would happen.

Stay "in the loop" for more.

? you are watching "in the loop" live.

Good morning.

It is 26 minutes after the hour.

Bloomberg television is on the market.

All eyes are ahead of retail sales.

Huge or is advanced after gdp grew 7.5%. the dollar advancing against the yen or other currencies.

The euro and the 10 year benchmark is trading around 2.6%. they reached 2.75% last week, the highest level since august 2000 11. citigroup reported earnings this hour.

The 42% rise in estimate.

We are on the market again in 30 minutes.

In the meantime, here is a look at our top headlines.

Uk regulators do not know the cause of a 787 fire sparked at heathrow.

Boeing stocks already suffered the biggest drop in two years.

Goldman sachs will ione faces sec trials today.

Your member him as the man accused of cheating investors during the 2008 financial crisis.

He claims he never misled investors.

George zimmerman's verdict may not be final.

A controversial acquitted of the man found not guilty of the murderer of trayvon martin has sparked calls for new federal civil rights constitution.

Washington is still on edge edward snowden wise.

He remains -- remains in the lounge of a moscow airport.

Asking for asylum in russia while awaiting safe passage to latin america.

We are going to have more on that story in a moment.

In the meantime, in a few moments we will get retail sales numbers.

We are going to be digging into these economic numbers as we're trying to see what the fed's lance are with monetary policy.

Against retail sales expected to come in at 0.8%. it is higher than what we saw in the prior months.

Retail sales are expected to be up by about .5%. alsoutos and gas very volatile.

We have been watching empire manufacturing.

That will be out at 8:30 a.m. is expected to have a reading of five.

That would be a slight decline from what we saw in the prior months.

Getting back to edward snowden and the story about where he is going to end up next, i want to bring in hans nichols who has more on edward snowden.

He may have another card to play.

He told the guardian that essentially he has of the instruction manual for how the nsa is listening and on these intercepts, just what they can do.

It is the blueprint of how and why and what they are doing.

It is incredibly valuable.

He took the documents with him.

He said he wanted to ensure that he could have a case for asylum.

This follows the friday appearance he had with human rights groups in russia.

We still believe them to be in that transit area in moscow.

He claims he made a moral decision and that he has no regrets.

Individual citizens have the duty to violate domestic laws to prevent crimes against peace and humanity from occurring.

Accordingly, i did what i believed right and began a campaign to a dress -- to address what i witness.

-- witnessed.

The primary request is for travel documents so he can have some sort of resolution.

What about the levers that the u.s. has?

Republicans criticize the president.

They said he has no leverage.

We did see a readout of a call that the president had with his counterparts in russia that came late friday evening.

They talked about the snowden case.

They talked about the importance of u.s./russia relationships.

The president also talked about security measures for the upcoming games in so she.

It is a reminder that there are things that the u.s. has.

Is a bit of a hint that they have this and they may be willing to withhold.

Thank you.

Onto the breaking economic numbers.

Let's start with advanced retail sales coming in worse than it.

A gain of 0.4%. excluding autos and gas , actual retail sales fell 0.1%. the expectation was for a rise of zero point four percent.

Manufacturing came in above estimates.

9.46 is where the index is reading.

Others are reading a five.

You have some mixed economic news.

Definitely mixed and not something that will push the fed any closer to starting to taper.

It is not the report they wanted to see.

He wanted something that would use to gdp.

We're not seeing that.

They are still at a very low level.

They are not accelerating.

We like to watch the retail.

That is what goes into gdp.

It is weaker than we have seen for a wild.

The main number was revised.

Not a particularly good report here.

We did see some strength in housing and autos.

Furniture sale starting to pick up.

Building materials fell.

We are not seeing the amount of sales we saw because of hurricane sandy rebuilding . electronics also way down.

That must be a concern to people who buy shares of things like apple and samsung.

What i like to watch, eating and drinking establishment of fall.

That is not good news.

That is discretionary income.

If that is falling, it is not telling you that people have the confidence to keep spending.

The empire number comes in better than expected.

We will take that for what it is worth.

The biggest problem is it does not translate into what happens in the national isam . interesting that we are not eating out as much.

Thank you.

Might look less they with the consumer.

J.c. penney makes its goes for a comeback under the new ceo.

It will be very narrative.

Deirdre bolton is here with the new strategy.

How is jcpenney going to get these customers during this critical back-to-school season?

They said it is like the super bowl for them.

If they do not knock it out of the park, they are going to have a tough season.

One legacy decision from the former ceo ron johnson, the apple wonder kid, he also did some things that do not work.

One of the things were that employees do not have to be in uniform.

He created a lots of confusion from customers about he was working there and he was, where they could pay.

Mike ullman says employees are now going to be easier to spot.

We are back -- for back to school we will have a red lanyards.

If you look at the general strategy, this shop and a box strategy has really paid off.

I sat down with eddie schumacher.

She is a general merchandising manager of the children apparels division at jcpenney.

We talked about how her division will contribute to the bottom line.

Customers have been coming in since we launched online.

They have photos of the items they are excited about.

They have been coming in and asking for them.

I think we will see some important traffic.

Do you think they will be able to drive back-to-school traffic?

I do.

I think it is a great new story.

You're out there talking about it right now.

You hear her say that she does inc.

That -- hear her say that she does think it can contribute to the bottom line.

As for the recent change in leadership, i asked her how she is feeling with him at the helm.

The difference for me is feeling the energy to work with such an accomplished ceo.

He is thin asset -- he is fantastic with all her people within jcpenney that respond to his leadership.

He has been back since april.

You can see jp -- jcpenney up.

More importantly, customers are coming back or at least the declines are decreasing.

That is a step in the right direction.

That is right.

Losing less is better than losing everything.

Talk about a troubled company.

Bowling has been here or.

-- bowling has -- boeing has been here before.

There's is not any magic involved this time by just some trickery.

J.k. rowling makes the top to the best of the -- to the top of the bestseller list once again in a bit of a different way.

Stay tuned for more details on that.

Last week's fire at the airport is not appear to be related to the battery system not function.

This is according to a uk regulator.

Alix steel joins us now for more.

Cracks they did quite a big one.

The stock is up in a pre-market.

It wiped out about 4 billion from the market cap on friday.

It could take as long as a week to find the problem.

Government agencies and ethiopian airlines will be helping regulators.

It explained extensive he damaged in the upper fuselage.

Far from the batteries location on the plane.

At is the good news.

The bad news is it does not mean it is an easy fix.

It is one more strike against the 787. an aerospace analyst says it highlights that there are still plenty of other ways for the plane to get injured and potentially open other systems to review.

This fire is just the latest on an ever-growing list of issues.

United airlines was artie had celine -- canceling flights as four times as often as the rest of the fleet.

The result is that these new jets remain prone to these breakdowns.

What does that mean for the bottom line?

The 787 is really important.

They had delivered 66 dime winners but had a backlog of over 800 planes.

-- dreamliner is a but had a backlog of over 800 planes.

It represents three percent of the backlog.

It could represent $30 billion in nominal earnings over time.

It is critical that companies still want the plane.

Two things that will help them.

Ask the county.

The plane has a 20% boost in fuel economy.

These are 30 year decisions that airlines are making.

If the uk examines and clears the plane, it could to really restore confidence and make this an isolated component issue.

Thank you.

Alix steel, our market reporter.

I want to talk more about this issue with the former ceo of american airlines.

When something like this happens, even if it is a minor mishap on this new jet, what do the airline ceos start to think?

They were read.

-- the worry . -- they worry.

Every new airplane will have a series of problems.

This one has been a bit more serious than most of them.

Because it is a very large financial commitment from the airline's point of view in because all of the airlines have a planned the usage of this airplane bar in the future, they have the commitments.

Everybody is hoping that this is simply the kind of introductory problems that airlines typically have.

It is nerve-racking for the public to hear about these problems.

At what point do ceos start to inc.

I know we have commitments for these dreamliner's but maybe we want to scale back?

I do not think that is going to happen.

Unless this turns into a much more serious problem than it is likely to be.

I do not think it will affect the long-range planning of the airlines.

If it were to turn into a serious problem, there would be big problems for boeing and the airlines.

We already just had a serious problem.

What do we mean?

What we mean is something where they cannot easily identify the nature of the problem and cannot readily fix it.

I think that is very unlikely.

Why do you think, for what you have read and know, this dreamliner having so many problems already?

It is quite an usual to see a new jet with this many problems.

Not so much.

If you go back years ago to the 747, they have quite a long series of difficulties of this kind.

The problem is this airplane does really break new ground in a variety of areas.

They are stretching the technology to do everything they can to increase the range, decreasing utilization and decrease the weight.

As a flyer, would you be nervous?

Not me.

I have great confidence in building -- boing and the faa.

They all know a serious accident would to be something they simply do not want to have or take responsibility for.

Everybody is being very careful and cautious.

Very conservative on her . thank you.

We will continue to monitor the story.

Coming up, after all that talk about who was going to buy hulu, the owners had taken it off the auction block again.

We'll take a look at what is next for the company.

? the owners of hulu have taken the service off the auction block again.

What gives?

I want to bring in edmond to covers hulu and all things media.

We are talking about disney and 21st century fox.

They said on friday we have decided to cancel the sale.

Why again?

Is the second time it has happened.

They were significant bits.

It was not a matter of price.

They want to change the philosophy.

Right now there is a free version were you can catch up on shows a few days after or you can pay and watch them the same day.

They want to move away from the free model and what they call an authentication module.

Why would they cancel the sale?

One of the bidders was directv.

If they want to turn it into an application model, if you pay for cable and prove that you do so we will let you watch things a day or two after.

If directv gets a hold of it, it is likely there competitors will want to buy into that solution.

With these owners have still have a stake if they sold off too low?

The idea is they would get rid of it altogether.

Things shifted.

They want to hold onto it as a way way to seize the direction of where tv is going -- they want to hold onto it as a way to seize the direction direction tv is going.

It is a cheap alternative to cable.

It has fox and disney scared.

That is where they get all their money.

Did they burn any bridges?

This is the second time they have done this.

When at&t was in the lead , when they be a little bit annoyed?

Yes.

They're definitely annoyed.

The fact that there has been so much interest shows you that they cannot buy hulu and they might go look at something else or build something else.

It is a growing market.

You cannot ignore it.

Interesting.

Picking of at&t, -- speaking of at&t, they are adding airwaves and millions of new customers.

A big surprise from j.k. rowling.

She's back in the top of the bestsellers list.

Wait until you hear how she did it.

Nobody knew that she would be on top of the list.

We will be back next.

? today we are looking at mr.

Writer's guide to selling books.

This is the billionaire opera behind the harry potter franchise.

Last year she released her first book for adults.

In april a crime novel came out to rave reviews.

Over the weekend, the world learned that jakey roling use that as a pen name.

Since then that novel has shot up to the top of amazon.com's bestseller lists.

Even her publisher do not know that she was behind the book until now.

That is deep thinking who may have taught her a thing or two about the element of suspense.

-- steenve king who may have taught her a thing or two about the element of suspense.

He was only allowed to publish one book a year.

He published under a pen name and they enjoyed success under multiple bestsellers adapted for the big and small screen.

J.k. rowling is a proven billionaire.

Reports of king's will range from $200 millionto $400 million.

It is 56 minutes after the hour.

A bloomberg television is on the market today.

Equity futures are still up.

There was an increase of 0.4%. that was slightly lower than what economists had estimated . citigroup posing a 42% increase in second-quarter profits.

The bank is up right now in the premarket almost 3%. in the world of commodities, crude futures reached a 15-month high.

We are on the market again and just about 30 minutes.

As we just discussed, hulu is no longer for sale.

They have been taken off the auction block.

We are going to hear directly from the ceo of one of hulu's owners.

It is exclusive.

Stay "in the loop"." ? . 30 minutes to the opening bell.

This is "in the loop" with betty liu.

The countdown begins right now.

Welcome back.

Citigroup posting a 42% increase in second quarter profit, eating estimates.

-- beating estimates.

Retail sales rising less than projected as demand cools in the building and restaurant industries.

A second-quarter slowdown in the u.s. economy.

Bankers and investors will be watching ben bernanke closely as he heads to capitol hill to explain the fed's plans for interest rates.

More details in a few moments.

Let's get straight to the markets desk for the countdown.

Alix steel kicks it off.

Watching shares of tesla, a winner in the premarket.

Its price target was increased.

They say it could take at least 5% market share by 2020. i am watching sprint.

They announced plans for a data plan that guarantees unlimited calls, text, and data for the life of the service and an attempt to capture market share from verizon and at&t. the company is getting aggressive on the heels of the catch injection a got as part of a $21.6 billion deal with japanese giant softbank.

I am looking at a rug maker that -- eight drugmaker that roche was having potential transaction shares.

They are raising this morning.

Analysts putting a potential deal value for alexi on -- alexion up to 200 $38 a share.

Thank you.

Fed officials continue to seek out possibly dialing back on the bond buying program we know as qe3. michael mckee has had two interviews with the fed bank president.

This is always a fun thing, i suppose, anyway, for a journalist to move the markets.

Maybe not for investors.

One impression you get is the minutes left us with the idea that the fed is divided.

They had to confirm that.

They are all over the lot the terms of where they are going go next.

They have not figured it out.

Some of them have very strong views about what the fed should be doing.

Charles plosser is one of those.

He does not vote this year.

But if he did, he would perhaps put himself in the most hawkish camp.

Here is what he said.

Look, rates are very, very, very, very low and have been for four years.

The challenge we face is that that prolonged casas of keeping rates very low has the potential to lead to also it's of unintended consequences.

Not just on main street before financial markets.

We have to be very careful not to instill in financial markets either a misallocation of capital or a financial risk that may come home to bite as later and cause further destruction down the road.

As that started to happen?

We do not know for sure.

It is hard to say.

Looking for evidence of financial instability draws analyses to an iceberg.

You only see what is above the water, and that is only a small portion of what made the there.

You cannot see everything.

We have to be very careful.

It makes it interesting because even though we get these retail sales numbers that are disappointing today, that might suggest they would hold off.

He suggests others are feeling the same way as him, that the risks are still too great and qe is not helping when you get these kind of numbers and it is better not to do it.

Be a little more conservative then . thank you.

Overall, economic data is mixed.

Fed officials were just looking at capital spending and corporate confidence.

They might be encouraged.

I want to bring in julie hyman.

Companies seem to be shrugging off sequestration and all these global growth risks we keep hearing about.

There is at least some improvement in this area.

Economists have been looking for this.

It is an area that had been lagging.

Confidence was sort of lagging.

Here are a couple measures per orders for capital goods excluding aircraft and military equipment one point five percent in may, the third consecutive increase.

You can look at corporate confidence.

Ceo's more optimistic about the economy than they have been.

That is based on the business roundtables quarterly outlook index which rose to the highest we have seen in a year.

So the actual spending and what they are saying and telling the various surveyors is more positive.

Spending on information technology up 4% this year.

That compares with the numeral percent last year.

That is according to a -- and that compares with 2% last year.

That is according to a survey.

Tell us some of the companies boosting their spending.

There are various examples in different sectors.

Retail, we have family dollar which is opening 500 new stores this year.

It operates only in the u.s. rite aid is remodeling 400 locations in fiscal 2014. and you can look to fedex, planning to spend about $4 billion on capital goods.

We are talking facilities and aircraft.

These examples show that these companies -- i mean, we are talking about 500 new family dollar stores.

That is confidence on the part of that company that the customers will come in and spend their money at those stores.

Thank you, julie hyman.

Moving and shaking this morning in autos is the general motors' ceo.

He is making a big bet on vehicles that will be able to connect 4g wireless networks.

Gm will even have its own app store.

He is turning cars and trucks into four-wheeled smartphones.

A consumer units is eventually the carmaker can monitor a car as vital signs and remind the owner when it is time for maintenance.

Oh, good, you get a reminder on that.

Also moving and shaking in the auto world, another ceo, the nissan chief.

Nissan taking a trip down memory lane with the revival of an old brand.

The automaker is resurrecting datsun after killing it more than three decades ago.

It is part of their planned to grab market share in emerging markets.

Bloomberg caught up with the unveiling of the first model in india.

Our strategy is to be present everywhere.

We are a global brand.

We have to be present in all the markets and make sure we are addressing the markets and the cars that these markets want.

That is why datsun is coming back with products that are tailored to the high-growth market.

Another mover and shaker this morning is the twinkie.

That is right, after seven long months, the american classic is returning to shelves.

Just this last hour, hostess brand' former ceo was discussing the iconic return.

I think it is a once-in-a- lifetime type of opportunity.

We were selling those brands and that is what we were selling.

Not very often can you relaunch a 70-year-old brand and generate excitement around that.

What they have done makes a lot of sense.

For more, i i want to head out to atlanta and check in with our reporter who covers the food and beverage world for us.

Did you check to see if your supermarket nearby had twinkies yet?

Actually, i went to a kroger are they had yet to bid up the twinkies, but they had the space carved out.

I went to a walmart as well where they had the display out on the floor friday, a few days early.

You had more luck than me.

I went out searching for them over the weekend.

Aside from us looking out or twinkies, the new owners are thinking smarter.

They have some marketing power that they want to put behind twinkies.

Is that going to make a difference for this brand?

Yeah, i mean, if you think about it, you rarely heard about twinkies anymore.

Convenience stores, which were their major channel, a were about $50,000 at convenience stores.

-- they were at about 50,000 convenience stores.

Now they will be at about 110 thousand convenience stores.

So i brand you probably do not think much about anymore and lets you are one those hard-core folks chasing twinkies and the announcement was made, you will start to see them and a lot more places.

Meaning where?

Greg was talking about you may start seeing them and dollar stores, for instance.

They are expanding their channels.

Convenience stores and also branching out to other outlets.

They are clearly going to try to capitalize on this opportunity.

A lot of folks who might have forgotten about twinkies, once they were taken away, they remembered them and remembered them from their childhood.

They are going to capitalize on that.

Making sure you will be able to find it easier.

Stay with me for a moment, because i want to bring this other story that is in your wheelhouse, talking about pepsico.

Viewers might remember jay-z split with the brooklyn nets several weeks ago so he can start his own sports representation company.

The first deal has been signed.

New york yankees' second baseman has a deal with the world's largest snack food maker, pepsico.

This deal comes through, and we should mention that jay-z's wife has a partnership with pepsico as well.

This story is fine, but it also shows how aggressive pepsico, a company you cover closely, is getting in signing on big names to market its products.

The name of the game right now for pepsico and its major competitor coca-cola is to really attract youth.

Youth are tricking the mainline, so there is a lot less these days.

-- youth are drinking the mainline.

It is like the way social media folks operate, they catch them and places like music and entertainment where they are attention and try to get in there organically.

Has it work for them so far?

They are attracting them to some of their non-carb brands.

They are getting them to drink some of their soft drinks, but they are still on the decline.

Basically, they're doing everything they can through social media and entertainment to try to pull in these youths early so hopefully they stay with the brand for a little bit.

But they are not necessarily trying to get them into the sugary sodas -- they're trying to get them into their full portfolio.

Thank you for joining me from atlanta.

Still ahead, hulu not for sale anymore.

Do not miss our exclusive interview with one of hulu's owners, disney ceo bob iger.

Plus, hong kong is giving las vegas a run for its money.

We will tell you what is behind some big bets on horses in the city.

Stay "in the loop here: --." ? there is another player in the battle for and with.

At&t purchasing leap wireless.

-- another player in the battle for bandwidth.

We ask what spectrum is.

Let's get the breakdown.

Spectrum is one of the most important parts of your digital life that you probably know next to nothing about.

What is it?

Spectrums are electromagnetic waves visible to the naked eye that allow us to transmit things that video, audio, and data.

Your cell phone, radio, and trap -- and tablet streaming that movie for netflix are all using spectrum.

Spectrum is like real estate, real estate with foil underneath it.

The federal government regulates spectrum and auctions part of spectrum often large companies like at&t and verizon or smaller companies.

Like real estate, spectrum is all about location, location, location.

That is because not all spectrum is created equal.

Some frequencies are much better for things like cell phone service and wi-fi.

So companies do two things.

One, they try to hoard the spectrum they already have.

Two, they always tried to get more spectrum, either through government auction or by buying it from other companies.

This is causing people to worry that we are rapidly approaching haec spectrum, and if the government does not auction off more of the spectrum it already has, get ready for a lot more dropped calls and sloppy video streams.

Hello?

Hello?

Can you hear me?

Can you hear me here?

But while the government does have a lot of unused spectrum, so do a lot of companies.

They stockpile it to keep it out of the hands of competitors.

Furthermore, newer wireless networks and smarter devices can use spectrum more efficiently.

We can drill for more oil, but we can also build more fuel- efficient cars.

If the government locates spectrum more generously and the industry is able to make devices and networks that are more spectrum-efficient, there should be plenty of milkshakes to go around.

We all know how that feels when you cannot hear our calls.

At&t's purchase of leap wireless will give the second largest wireless carrier 5 million new customers and more airwaves.

Let's bring in cristina alesci on this.

This is interesting.

What is next?

Could we see a bidding war?

The shares are reacting like that.

This ties back to spectrum and the need for more and more of it from each of the players out there.

You know what, not surprising to see another bidding war in telecom.

We have had plenty this year.

Basically, at&t paying 88% may not be enough, because what analysts are saying is that t- mobile might come in and make a bid.

We're hearing that potentially t-mobile was bidding privately with at&t before this deal was announced for lea p and now they may reenter the bidding process.

Remember that t-mobile actually had a lot of prepaid subscribers through its acquisition of metro pcs, so it would not be a surprise to see it.

Very busy in the telecom world.

Thank you, cristina alesci.

Back in two minutes.

? we are about eight minutes way from the opening bell, and it is time for the countdown with alix steel.

Let's start with the vicks.

Bets on the fix about stock volatility falling average their highest level in almost two years.

That is as the index fell 16% last week.

Continued said easing and economic data means that puts rating on the vix is getting called by 73%. bp might have to open its wallet some more to pay for damages from the oil spill.

Payout in claims by businesses is almost $250,000 apiece, total average of $70,000. microsoft price of tablet cut by as much as 30%, $349 here it had to compete with google's android and apple's ipad.

Will it work?

Microsoft will only fill about 9 million this year versus 180 million of the tablets.

Thank you.

We are a few minutes away from the opening bell.

We have the top 10 trades you will not want to miss.

? welcome back.

You are "in the loop" with betty liu.

26 minutes after the hour, which means bloomberg television's on the markets.

Julie hyman has the latest on futures.

Futures are indicating a higher open this morning.

Mixed economic data appeared on the downside, retail sales in june rose only .4 -- rosalie .4%. but really, the empire manufacturing number.

Manufacturing in the new york area up almost 9.5% versus the forecast of only a reading of 5% . that is helping to bolster futures.

On the other side, look at the treasury market.

The 10-year treasury yield has come down.

Looks like want investors are paying more attention and giving more weight to that retail sales report.

Thank you.

I want to countdown to today's opening bell with the top 10 trades you do not want to miss.

Julie hyman stays with us and michael mckee is joining us.

These are the only trades you need to know about today, starting with number 10 and j.b. hunt transport services.

Reporting a one cent earnings miss in the second quarter as it shrinks the size of its truck fleet.

Missing estimates by $20 million.

Number nine, sprint, launching a new unlimited plan that is guaranteed for the life of the service.

That is to pull customers away from at&t and for eisen.

Investors are driving sprint shares higher in the premarket.

Never eight, -- number eight is alexion.

The world's largest maker of cancer medicine roche -- alexion as one drug only.

It can cost patients up to $400,000 a year.

Number seven is hewlett- packard.

Shares in the green in premarket trade after meg whitman announced three new members will join the board with her.

The company aiming to re- energize its pc segment to compete against the novo, its biggest rival -- against lenovo.

Number six, yahoo!

Yahoo!

Has bought 16 startups.

It is leading usweb searches.

Number five is ups.

The delivery service has hit headwinds.

The company cut its full-year earnings by hands and that was followed by downgrades.

Number four, tech.

Dell --they say the proposed valuation does not make any sense when compared to hp.

The committee says it is willing to talk with carl icahn, who canceled their meeting last week.

Lots going on.

Number three, knowing shares on a downward spiral.

-- boeing shares on a downward spiral.

It is still unclear whether shares will recover.

Regulators have no answers about why a fire occurred.

Number two, leap wireless.

At&t paying a premium for the mobile services company, offering $15 a share, cash in exchange for more pay-as-you-go customers as well as more spectrum.

88% more than its last closing stock price.

Look for those leap shares to gain today.

Moving onto banks.

Number one, citigroup posting a 42% increase in second-quarter profit this morning.

This beat analyst estimates by a long shot.

[bell rings] joining us now from chicago at the cme is todd horwitz, founder of average joe auctions website.

You say this is an idiots market?

I am saying that the trade is lunacy and the irrational exuberance is very characteristic of 2008, 1999, 1987. we are going up for absolutely no reason.

The news does not support what is going on.

Look at stocks like ibm, ups, and intel.

They're not participating.

Those are key bellwethers that should be putting up a warning to all investors then maybe you should slow down, that we are going up on lunacy.

As cosmo kramer said from seinfeld, it is to be -- kooky talk.

Do people really think there's any question left about whether the fed starts to taper in september?

The fed continues to stay involved.

That is why we're going up.

We're creating another bubble here.

I think what is happening with the fed is they realize they cannot taper that quake and they cannot get out that fast because they created this monster.

Right now, they are in.

I do not know if it will be september or january, but true unemployment is over 16%. the economic data has not been good enough to support the move.

We keep having to lower company- expected earnings.

Thank you for joining us.

Todd horwitz.

Now that you're caught up , time for the call.

With me is steve brown, senior portfolio manager at american century investments, who manages the one $.6 billion american century real estate fund.

His call, stocks are already pricing in higher interest rates.

Julie hyman and michael mckee are staying with me as well.

Steve, reits to gay beating on all this talk about tapering by the fed -- reits took a beating.

The reits peaked mid-may.

Then they had the tapering talk . they bounced back from then.

The 10-year at 2.75% or 3% is priced into the market.

Improving gdp, jobs, and income, and real estate fundamentals should do well.

Ok, julie hyman has been looking closer into the state of reits.

We have seen reads -- reits selloff a lot.

There is an index looking at north america.

It is down 8% this year.

Even worse is they move in mortgage reits.

Because the move up was so sharp and took not just bond traders but reits managers off guard as well, some traders have said some of these companies have to sell off mortgage securities in order to keep their capital at appropriate levels.

We have seen those mortgage reits selloff even worse.

Legs is that in there yet you would avoid?

-- is that an area you would avoid?

If rates go up, then the share would decline.

All investors are listening closely to what ben bernanke is going to say next.

Mike, you have been following the fed, interest rates, and ben bernanke's speech later this week.

The big question coming out of the ben bernanke testimony on capitol hill and his press conference after the last fed meeting was, how soon are they going to start cutting back?

You saw some losses there.

Let me pose a rather impolite question here that you might get from somebody at the fed.

You put on a reit tra de earlier in the year and then lost money when there was all this generation and rates went up.

You also say the economy is not strong enough to support reits and lest we had the fed in there.

Are you not investing on fundamentals or you just gambling on the rates?

What we expect is that the fed's policy will be there and tell they see concrete evidence of the economy recovering on its own.

We have seen the jobs market put up 190,000 jobs a month.

That was sort of enough evidence for the fed to begin the tapering talk.

They said they are not tired of accommodation, but they're saying that the economy is starting to be strong enough to be independent of the fed's support.

It is a good thing here it as appointment drops below 7% and gdp comes back to 3% and we see and come drive, too.

If we have a period of improving incomes and gdp, that is good for the fundamentals.

The question is, have you been enjoying success basically just because of the fed?

Right, we have tried to empathize two things.

We have benefited from the rates, yes.

Two, we have great real estate fundamentals in the u.s. back to the credit picture, yes, we have higher rates him about we still have a very good credit picture, meaning credit is available.

There has been no cutback in credit, it just costs a little more.

All right, thank you for joining us.

Steve brown of american century investments.

Coming up, the ceo of disney bob iger talks about why hulu is no longer for sale.

And want to know the secret to success?

You are not alone.

It is one of the top trending stories on linkedin this week.

We will reveal that secret to you.

? time for a look of the top trending stories on linkedin.

Dan, you always bring such interesting stories.

Number one is a story from tam brown about secrets for success.

-- from tim brown.

He says if you want to be successful, you have to give other people credit.

He comes from a creative shop.

He says when you are at a creative agency, you're used to people saying i am the most creative person here, taking full credit.

He says that is not how it works and you have to give other people credit.

At some point, you're going to get stuck.

If you are stuck, nobody is going to help you out if this isan i-only shop.

Sound like he might be talking from personal experience.

Sounds like it.

Sounds like they had to do a lot to make sure people understand this.

Related to this, which is interesting, is a story about getting fired.

That is right.

The headline is just it fired.

He says if you are at a large company and you are not doing things that are going to get you fired, it then you are doing it wrong.

You need to be pushing the limits and jumping on projects before anyone tells you to.

If someone says you make a plan for how we're going to sell something, he says do not just make a plan, go go out and sell it yourself.

Is he trying to say that if you did not get fired at one point in your career, you're not doing your job?

That is right, you're being way too conservative.

And if you get fired, leave me a comment, because i'm always looking for great people to higher -- to hire.

That is kind of funny.

A strange concept.

And attend marketing rules for the next 10 years -- and the canon marketing rules.

Marketing is an organization that is really order-takers.

The head of the content marketing organization institute says that in the future, everyone will be creating content.

That is how you define yourself as a market organization.

You need someone that monitors all the different channels where your stuff shows up.

You need to have an analytics person.

You need to organize itself much more like a newsroom.

An executive editor and managing an measure.

Very interesting.

Thank you for joining us, as always.

A reminder, check out my linkedin page.

Onto our bloomberg west radar and what is happening and tact.

A bidding battle for hulu is over, coming to an abrupt end on friday.

Hulu is no longer for sale.

Even with that news, bloomberg learn that time warner cable could soon invest in this business.

Jon erlichman spoke to disney ceo bob iger about this decision.

What did he say about whether or not this soap opera really is over with?

He tried to make it pretty definitive.

There could still be some twists and turns.

The key part of the story was that the owners of hulu, including disney and 21st century fox and nbc universal, are now making this long-term commitment which is highlighted with them investing 750 million dollars in the business.

Remember, when this whole sale process started, it was in part because the because the owners were not exactly sure how they felt long-term.

Some people were big supporters.

Others were not so sure.

Here is more of that exclusive bloomberg video of bob iger.

Throughout the process we continued to give consideration to strategic value of hulu and to its potential in terms of just investment value long-term.

And the interest of news corp.

And disney galvanized during the process about that.

We'll timidly concluded that even though we it's a very compelling offers on the table, the future of hulu was right.

-- was bright.

Those compelling offers included one from directv and another from at&t. if all of this was the case, why would hulu owners be considering time warner cable as a potential investor?

I think there is a potential partnership value that comes on both sides.

From time warner cable's perspective, even from during the sale process when people talk about why directv would be interested, in some ways it is a hedge against people maybe not signing up for cable or satellite service but still wanting streaming or something you can add to their packages.

From the content owners perspective, the likes of disney and 21st century fox, they want to know that there is a healthy market for their content and potentially having a partner like time warner cable could help in that process longer- term.

We will see how it plays out.

Thank you, jon erlichman.

By the way the way, get more on hulu and all things tech today at 1:00 p.m. and 6:00 p.m. on "bloomberg west." horse bet ting has become a multibillion-dollar dollar business in hong kong.

And he calls himself fabulous fab, but he is probably feeling anything but fab as he goes on trial today.

? 3d is not dead yet, not even close considering that imax is about to open new screens.

The expansion is an attempt to capitalize on rising entertainment spending by the chinese middle class.

China is the second-largest movie market in the world and may even surpass north america as the government eases restrictions on foreign movies.

Imax is open for red carpet payoff.

Bringing hollywood to asia, no small feat.

Find out how the ceo plans to succeed.

He will be on "bloomberg west" later today.

Hong kong might not be home to legal casinos, but that's on horse races are set to exceed las vegas casino gaming revenues for a second straight year -- bets on horse races.

How much money is this bringing in in hong kong?

For the fiscal year ending in june, horse race totals were at $12 million.

An average of $144 million per meeting.

This total is about 20% more than nevada's combined take.

Last year was the first time in a decade that hong kong's horse bets exceeded waivers.

It remains the most popular sport in hong kong today.

What about gambling revenue in macau?

It is a different story.

The chart shows a steady climb.

The turning point came in 2006 when macau overtook the las vegas strip as a casino hub.

That is when the government open a gambling to more than just a monopoly in macau, to other casinos as well.

That is when macau gambling suppressed hong kong's horse rate bets.

The hong kong jockey club is working hard now to lure back some of the money.

The goal is to win back a third of the 3.3 billion dollars that hong kong residents wager in macau.

Some ways are to allow revenue- sharing agreements and looking into ways that allow people outside of hong kong to place bets on hong kong's horse races online.

Thank you, scarlet fu.

There is a lot happening in today's session back in the u.s. adam johnson is here with today's triple play.

You have to be watching financials today.

Citi reported better earnings this morning.

That comes on the heels of last week jpmorgan and wells fargo.

Each bank had its own story.

Bottom line, they are all up.

We have goldman sachs tomorrow.

I think we have a theme here.

Three in a row.

Talk about wall street banker fabrice tourre.

Unbelievable, fabulous fab -- never put in an e-mail what you do not want to read on the new york times or hear about on bloomberg.

He said i am creating all intricate financial -- we do not even know what to call them.

But all these very coppel kitted trades.

He said i do not even understand some of them.

-- all of these very complicated trades.

He says i do not even understand some of them, but i am making a lot of money.

He he is a young guy.

He was under 30 years old.

28 when that happened.

You are launching a revamped "lunch money." we're taking all the best video and the best interviews over the past 24 hours and stringing them together to help you see things you had not seen before.

Telling stories.

And just because john boehner said this, now i understand why representative cole is saying that -- oh, now i see why ceo's are responding the way they are.

Helping to connect the dots.

Thank you, adam johnson.

It is not noise, it is news.

We are back in two.

Live on bloomberg television and streaming on your phone and bloomberg.com.

? that does it for today on "in the loop." tomorrow, i will have a guest joining me on his campaign against the keystone pipeline and what success he has had so far.

That is tomorrow on bloomberg television.

It is about a.d. six minutes after the hour -- it is about 56 minutes after the hour.

Julie hyman joins us with more.

Not much movement when you look at stocks today.

A little bit of a decline across the board.

Really, it has been mixed here as we look at the overall market.

Some declines based on retail sales coming in weaker than estimated.

Not being overbalanced by the empire manufacturing number that eat

This text has been automatically generated. It may not be 100% accurate.

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