Dell Bid Battle: Street Smart (07/24)

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July 24 (Bloomberg) -- On today's "Street Smart," Trish Regan and Adam Johnson find your last trade of today and first trade for tomorrow. (Source: Bloomberg)

Matters what is in the pipeline.

They have got four drugs that they are going to bring, a broad spectrum diabetes drug, and also a big bet on alzheimer's. i know that you did speak about what is happening with the affordable care act.

Just paraphrase for us some of the things that he told you.

He is an interesting guy to talk to, because he used to be the head of pharma, and what he said is he has basically already felt the brunt of this.

The guy that knows a lot about the affordable care act.

Olivia sterns, thank you.

That does it for us, and we will be back in 30 minutes with market checks, but in the meanwhile, keep it right here i'm bloomberg television because "street smart" starts right now.

The dow bidding battle, pushing back as michael dell increases its offer for the company he founded.

10 cents more may not be enough to take the pc maker private, and what drove the phenomenal quarter for ford?

One of the top executives takes us under the hoods.

It was obviously a very, very strong quarter.

Plus, friend or foe?

Facebook reports earnings after the close, and it is all about the mobile money.

From bloomberg world headquarters in new york, this is "street smart with trish regan and adam johnson." welcome, everyone, to the most important hour, 59 minutes until the closing bell, and we are looking at your last trade of the day and your first trade for tomorrow.

Manufacturing data, all dragging stocks lower right now, if anadam.

-- right now, adam.

Let's show you the dow industrial average, the first chart of our big picture, the three charts you need to see right now to paint the picture of the day.

There is the dow jones, down, admittedly not a lot, one quarter of 1%, so people taking these numbers in stride.

We are close to all-time highs.

And moving on to the 10-year, we had new home sales that were stronger, and we also had the purchasing managers' index, pmi, which was also stronger.

If and there is the idea that the fed is not going to keep buying forever.

2.59% on the 10-year, and look at that, oil is down.

We are producing a lot of oil, thanks, because it cost $96 to fill up last week.

You must have done it on -- in manhattan?

Yes, i did, and i did it with high octane.

My fault.

Let's get to the three stocks you need to be watching.

Julie hyman with the big three.

Wow let's start with technology, shall we?

Apple is a big part of that.

Apple is definitely one of our big three, earnings per share beating estimates.

They did fall from one year earlier, sales of slightly, but really, the key is the-shipments coming in ahead of analysts' estimates and reassuring investors that at least for now apple retains some of its leadership in the smartphone category, even if they might see some margin compression if it does end up offering a lower- cost-down the road.

Gains of spot% or 6% through the day.

Also, electronic arts leading things higher today, the stock near a five-year high.

The stock posted a loss, but in the loss, it was lower than expected.

Shares are up more than 8%. broadcom, speaking of tech, this is at the bottom of the s&p 500. the chipmaker making it revenue forecast that trailed analysts' estimates, and it relies heavily on smartphones, as well, but it is not necessarily getting the newest contract for the newest technology.

They are trying to do that, but it may hurt them in this quarter, as well.

Trish?

Thank you very much.

To our top story, the dell bidding battle, michael dell and silverlake, now offering $13.75 per share, a boost of 10 cents from their previous bid, and what they call their best and final offer.

They also looked to change the voting procedure, so that those who do not bode are not treated as part of a voting pool, as they currently are under the merger.

That would make it easier for them to achieve majority.

Carl icahn says the company is being run like a banana republic and points specifically to this attempt to change the voting rolls.

And i quote, the one stockholder protection is the requirement that the majority of the non michael dell shares approve the deal, and the special committee has now been asked to gut the provision to essentially rendered in meaningless, and in return, michael dell, silverlake have offered to increase the deal by 0.73% or 10 cents.

Cristina alesci is live outside in round rock, texas, and what do you think?

Are we going to see anything better than 10 cents a of michael dell and silverlake?

I know they would like least $14 per share.

Well, patricia, what it comes down to is they need at least $14 per share to go ahead and consider changing the voting rolls, a demand that michael dell and silverlake made earlier today, but we just got some more headlines, and that is michael dell and soberly are extending the offer they put on the table to august 2. remember, they said they were going to expire at 6:00 p.m. tonight, and now, they are extending it, which could mean that the two sides are in a negotiation mode to come to terms with one another, but at the end of the day, this issue of changing the voting rights is really what is holding things back right now.

If the special committee goes ahead and agree to something like this, carl icahn is right.

It does diminish shareholder protection, the very protections that the special committee were talking about on how this whole process was ron fairly, and this is one of the provisions that was supposed to prove that out, and now, we are seeing that it could be on the table, trish, which is a real stain if they accept that.

At this point, we know the special committee is in no mood to accept any kind of change on the voting terms until, of course, the share price or the proposal that there are making, up to about $40 per share, which would put that relatively on par with a proposal from carl icahn.

Thank you very much for all of that reporting.

If we have got a terrific round table that we want to bring in, our panel of experts.

A partner who is a mergers ann arbor traunch specialist, and also a bloomberg editor, good to have all of you guys here.

-- a partner who is a mergers and acquisitions specialist, and also a bloomberg editor.

You do not have to worry for them on the majority of the vote.

Is that an attempt to deal with all of the retail investors?

Yes.

It is a fair point.

I do not want to repeat what you said in the intro, but dell is essentially saying, did these 27% guys out, potentially extend the record date, and in exchange, i will give you this 10 cents, which is a 10 cent increase, curtis say of -- courtesy of a.j.'s mom.

That is not a lot.

It is not a lot.

Remember, carl icahn, he said appraisal right.

Who is the talking to prove he is talking to these guys.

How does that compare to what it was for the annual meeting?

I just looked at it earlier today.

When you look at the 2002 annual meeting, it was 14%, but it increased 13% in this deal alone, so what that tells me is that appraisal right of carl icahn, you do not have to oppose.

Just do not vote.

You can get more.

Now, he wants to change that.

How can they do that?

There is a merger agreement.

Can you change that after you have said this is how it is going to be?

That is how they say they are going to amend it.

You are getting paid for it.

You are getting paid 10 cents, and the issue for the special committee, is that enough?

Can that be done?

We think it can be done legally, and i think the special committee thinks it can be done legally.

Doesn't have to be done in a court?

No.

they can come together and make whatever decision they want.

10 cents is 10 cents, but $150 million.

In this takeover, it is still a minute amount.

I still think what we are seeing, it is not over until the fat lady sings.

She is not singing, but she is warming up in the background.

If they allow this vote, things have changed, it is a done deal.

It means he has won.

It is finished.

It is kaput.

Do not look at it as 10 cents.

I think there are looking at it like it is the overall deal.

Do we take the cash now or go for something that carl icahn might deliver later?

Michael dell said this offer, 10 cents, was best, final, and it was terminating -- they had said there was the best and final before.

Now it turns out it was not best.

It was not final, and it is not turning -- terminating at 6:00. there is another side of the corn if there is a smaller boat.

The same people are going to oppose it, and they are going to ask for appraisal rights and called it a done deal.

This is starting to seem like being -- the gore-bush recount.

The current shareholders, who may vote for this under the carl icahn plant, is that enough to actually stop the deal from moving forward, that 27% block?

No, the deal will be completed, but they will be in delaware, trying to get fair value for their shares, and that is a risk.

A risk for both sides.

The committee said when carl icahn came out with the appraisal rights, if enough people ask for a result, that will kill the deal.

It is not entirely about the appraisal rights, but it is largely about the appraisal rights in concert with the retail investor.

Let's keep in mind that there is still a group -- i said this last week when i with your -- they are in a room, making phone calls.

They can still get something.

That can still happen.

Do you think they may try to postpone this bodes even more?

You need to have an annual shareholder meeting, and they have not had one in about one year's time.

Some point, shareholders could force a meeting, and the boat would then -- not only the vote, actorish, so, august 2 is the key date.

It is august 3, they can change the record date.

The annual meeting.

Not only the transaction, but carl icahn wants that annual meeting.

You can have a double win.

You vote this down, per carl icahn, vote this down, and vote for his directors.

I want to share something from you about this poker term the i will tell you more about, but i got a chance to speak to jim chanos, and he says this is actually looking a lot like a poker game in and of itself.

Listen to what he had to say.

I think the dell situation currently is the closest thing we have to a high-stakes poker game.

You have got michael dell and silver lake and carl icahn, two players with some big pots, some chips in front of them.

I certainly am paying close attention.

As to who wins this bank.

He covered his short positions.

I have been saying that for months.

I do not know if this is a deal worth doing.

To read the carl icahn tweet to michael, all would be swell if michael and the board bid farewell.

I am looking for the take the icon bit and go straight to hell.

He is going to say, "after dell, do not dwell." kind of a slap in the face.

This is where the big boys are playing.

This is what we like to see.

It is great drama.

It is great television.

I would like to be in that boardroom, because i have been in these fights before.

The deal ultimately gets done, bottom line.

I think it is very close to getting done.

We still not seen the final, final, final, this is my real final, so i think there is more to come.

Thank you, to our whole team.

All right, where is the growth?

Insight is next for you.

Plus, from texas, find out what a famed short seller had to say when he sat down at the poker table.

We have got more, after this.

Europe is finally, finally showing signs of growth.

Time for some insight and action.

Let me show you we're talking about.

We got a key piece of information, the purchasing managers' index coming out of your.

Again, it is not huge.

50.1. above 50 is expansion, below 50 is a contraction.

It came in at 50.1. it has been two years since we have seen growth, than it has been difficult to find growth anywhere in the country.

China, they, too, are 50.1. china is going down.

A similar story in mexico and brazil.

Here in the united states, we are 50.9. do you get the picture?

Growth is hard to find.

As such, we decided to take that and find out who the leaders are.

As it turned out, there are not many of them.

I am showing six, and i am giving you the tickers because you probably have not heard of these before.

You are seeing earnings growth of 24% at aberti telecom.

Andritz paper, and the industrial rolls royce, the guys that make the engines, and technip, which is construction.

This is what is especially interesting.

The stocks among these are doing better than the s&p 500, up 23.6%. if you think you cannot find growth in europe, you are actually wrong.

We found 24 companies, and, again, they are outperforming the u.s.. instead of posting to twitter, i am going to tell you to go somewhere else.

Bloomberg.com/insight andaction.

You can actually find growth.

Thank you for that, adam.

I am wondering if these predictions are as accurate.

The market closed within four points, yes, making him the most accurate strategists and all of 2012, the chief strategist at jpmorgan, but he may not be getting ready to wager just yet.

Welcome back.

Tom, i know you are a u.s. strategist, but your firm and your colleagues over there are looking at europe, as well.

You saw what he had to say, a really interesting trend, with economic news is improving slightly compared to where it has been.

Where do you put money right now?

Yes, i think it makes sense to buy stocks that have european exposure, or if your viewers can actually buy european stocks, it makes sense.

There is credit easing.

Finally, we are seeing the economy's exit recession.

After 2008, you could have gotten in, and you would have been doing well.

What we have seen since those dark days.

When you look at europe, are they at a point where they are starting to turn those dark days over, and there is an opportunity, similar to what we saw here?

As you know, some countries really taking a hard.

Some have held up better.

I think for the most part, it is early days.

Markets have been awful for the last couple of years.

And, by the way, the economics prize index, where you add up all of the data, plus one, - 1, that is starting to add up.

It is leading, in terms of doing better.

All right, we have got more with tom, coming up.

And jim participated at our poker tournament the other night, and you can find out what he revealed about his most recent short position, coming up next.

Then, ford motor company is winning big with a small-car strategy.

Adam's interview with the ceo is coming up on "street smart." adam and i will be right back.

Ok, with today's global outlook, adam, i thought i could give you a sneak peek, it was pretty cool.

Atlantic city the other night, and we had a terrific group of folks, investors, there around the table, one of them being the story short seller jim chanos, and i had a chance to ask him about one of his recent short positions, a caterpillar.

Take a listen.

They are highly dependent on the super cycle in commodities that we see ending, and they derive half of their earnings from the mining sector.

They basically doubled up that exposure by buying another a few years ago, a mining company and equipment maker, and cat will suffer when the global commodities supersubtle winds down, and i think it will wind down in a fairly major way.

An interview on monday night, and it turned out pretty well for mr.

Chanos, because they posted profit that trailed analysts' estimates.

That poker show, that is going to be coming to you in a number of months, and we will be back with you with more "street smart." we focus on facebook, reporting earnings after the bell.

The potential it is way bigger than your friends list.

Some things you need to know about facebook.

One of the most mind blowing things about facebook is how many people use it.

At the end of march, more than 1.1 billion people were actively using the site every month, and the estimate that number may climb by more than 50 million users in the past month alone.

They have helped facebook generate $1.60 billion in the second quarter.

But compare that to google, with sales north of $11 billion, and even so, the face of revenue grew likely 37% last year.

That is stronger growth and global an even stronger than its own business months ago.

Most of the revenue comes from advertising, and facebook has been actively moving customers to advertisements on products.

38 percent said of the second- quarter advertising sales were allocated to fund and tablets, up from the first quarter, and keep in mind instagram, 22 million people actively using it when they were bought, and it sort to nearly 100 million by this spring.

Of the question is, will the facebook earnings be as picture- perfect, shall we say, as the instagram growing user base?

And we have more on what you just heard.

Strategy, and mark sebastian with your trade.

Jon erlichman, a really interesting fact that you shared with us there.

Tell us about more of the mobile strategy, because that is an opportunity for this company to make money on.

It is a big, yes.

Everybody is using their smartphones for services like facebook, and that number will likely climb again when we see the results.

The overall story, trish, is that facebook has figured that out.

You remember that mathematics problem you were doing in high school, and you do not get it, and you do not get it, and then you get it.

This is not a story of being happy with the performance, more a story of facebook finding a way to deliver relevant advertisements, and people are clicking on the advertisements and purchasing things because they see these advertisements that are so great, tied through facebook.

How can facebook monetize this opportunity it have?

The fact that it knows so much about all of us, knows what we like, knows what our friends like.

Have they sort of got it, as he alludes to?

I think they are getting better at it.

It goes from the top down, that they are increasingly having a better appreciation for appetizers, but the real story, and i do not think it is appreciated by investors, how the different segments of advertisers that they are trying to reach are finding the advertising products to sell to them.

The small business store is a big one for them.

I guess that a lot of this is coming from the small advertisers, not the big brands.

Why?

Is a big market.

Advertisers that spend $10,000 per year.

Amazing.

Yes, and that is not fully understood by the investment community.

Certainly between $1,000 to $2,000 per year is being spent by small businesses on facebook, and that number has doubled year over year.

If you can get that number up, where you can grow the number, that keeps the growth going for quite awhile.

Good point.

Mark sebastian, what do you think right now with this company, especially with the earnings announcement?

Are you treating?

It is trading actively.

How many profiles for prince george have been created in the last six hours?

100,000. a lot.

We have not seen that big bidding up of facebook.

We have not seen it really sell off.

Am i looking ahead of its announcement?

It is a great company, but i do not think a lot is going to happen with this earnings report.

We are seeing them selling it at the money, the straddle, down today.

Expected movement has fallen all day.

It is piggybacking on that approach.

I like a 24, 26, 26.5, 28.5 iron butterfly.

What i am betting is that facebook is going to stay in a 5% range of its current price, and i am protecting myself in case it does have some sort of outline move.

All right, jon erlichman, you looked what he wanted to get in there at some point, so i will turn the floor to you.

I was thrown away by the iron butterfly.

Yes.

Yes.

Here is what i am going to say.

Here are a couple of quick statistics.

North of 35%. that is big.

That is really impressive.

At the same time, their expenses are growing dramatically, maybe even more than that.

That is something to keep in mind.

To build the business, that is something that trickled down to the bottom line and margins, and people care about that.

That is one of the short-term issues for facebook.

And before we say goodbye, are they doing enough on the mobile side?

On the expenses, there is a huge difference between their margin and the blago margin.

With google, they have ongoing margin erosion, where as with facebook, these are 1-offs.

Watch the expenses.

Thanks to the whole gang.

Good to have you here.

All right, we are still getting over that iron butterfly, but coming up, the ford motor company cfo.

Detroit may be in trouble.

The american automakers, they are trucking korea and the best deal on the street.

We will tell you what is in today's chart attack.

Fourth came out with earnings this morning, and the automaker beat estimates and also raised its full-year profit estimates.

Earlier, i had a chance to sit down with the company's cfo, chief financial officer, bob shanks.

We saw improvement and momentum across every part of the business.

We are freshening our outlook.

It gave us the confidence to improve the financial guidance that we talked about today.

Yes, and small cars were a big part of the story, 22% of sales, and that is higher than in the past how you make money on cars that you are selling between $16,000 to $23,000 apiece?

You have to get as much scale on the volume that you possibly can and leverage that.

That is why we are expanding with the same lineup, and we are going into as many markets as we can around the world to really leverage that volume and get as much scale out of it that you can, and that is what is happening, going through to the bottom line.

Bob, where are those opportunities going to be?

We are seeing a lot of growth in sales and revenue.

Expanded portfolio.

Give more consumers what they want.

If we get more out of each unit that we sell, whispering in the brand, and then with the cost structure we talked about, again, figuring out how to truly leverage the scale that we are building.

With other efficiencies, i think that is where the opportunities are.

I saw a ford tractor coming down in new york city yesterday.

Ice of surprised me.

That is a beast of a car.

What is that like?

There are very, very healthy margins.

The vehicle is doing so well here, but it is also doing well in china.

-- my that is what i think is so special about what we are doing.

We are seeing a great response, for example, in china to the edge and the explorer.

The guise of a there would just like to get more of them.

3000 new jobs is the number that was put out in the conference call today that you are trying to fill.

What kinds of jobs, and where are they?

The ones we talked about yesterday, 3000 in total, 800 in criminal, compared to what we talked about not too long ago actually.

Professional technical positions.

Product development.

I.t.. also, southeast michigan.

Also places in north america where we will put those people.

It is just part of the overall growth story at ford.

What is also about that, adam, we are really a high-tech business.

There is a lot in these vehicles that is software related, pc, and sector.

It is a different game now.

It sounds like these jobs are fairly educated, high paying.

What is the responsibility, or is there a responsibility of ford from a legacy point of you to detroit and the local economy?

The thing that is kind of interesting about all of that is that i think we can relate very much to what the city is going to be going through.

We went through poughkeepsie r stock with a massive restructuring in north america.

We know it takes time.

You have to take the first step, and that was has occurred in detroit.

It does not happen overnight, but we have confidence that with all of the government officials involved at the state and city level, they will do the right thing, and it is an important story, not only for the city and state but for the region and the community and us as part of all of that, so i think it is great that we're starting the journey to address the issues of detroit.

That was before the cfo, bob shanks, and with the equity strategist, you grew up in michigan.

I did not know that, you grew up in michigan.

Yes, the motor city.

If you look at car sales over the 18 months, what about the forecast and what it means for investors?

I think it speaks to demand, because they have been down for so long.

I think maybe one of the surprises is that people are setting their targets too low.

Annualized automotive sales.

All right, that is one of those wall street acronyms.

I think most people are thinking 16, 17 is where the automotive sales will peak.

In the u.s.. i think it is quite possible, especially if there is construction recovery, for it to go higher.

Million units per year that would be an all-time high?

Yes.

Seriously.

You might be right.

That includes trucks.

All right, very much, good to have your perspective from jpmorgan.

All right, coming up, stocks or bonds?

What is on the street?

Our close your nose.

Plus, an inside look at mcdonald's. the c.e.o. shares his secrets in greeting us, shall we say, for success.

It is a bloomberg exclusive, and it is coming up in the next hour.

Trish and i will be right back.

Time for a chart attack, which hopefully will make you smarter and some money.

Jpmorgan.

I know you like stocks.

Seriously, talk us to -- three of evaluations.

I look at the forward p/e. and i think a lot of debate right now is what should teh p/e be?

This is a new era, where people do not like stocks.

We think stocks should trade relative to other instruments.

Let's bring in the camera and show everybody the ratio for the s&p 500. real plain vanilla stock.

The first thing i notice, tom, this has been sideways or about 3.5 years, really.

That is right.

A lot of movement in the markets for the last 2.5 years has been all because of earnings growth.

Earnings are going up, but is sideways -- p/e is sideways.

People are paying more.

People have been taking money out of the stock market, and it has been hurt by inflation and expectations, and that is why.

You think it can rise in the next coming months?

People willing to pay less?

I think we will be surprised how much in the next years or even six months.

You also made the jump to comparing the stock p/e ratio, something people do, creating a bond ratio, price versus evil.

A ratio for bonds.

That is right.

We like to look at corporate bonds.

This is a company that is either paying an interest coupon or paying dividends, so we should really value this very similarly.

Investors are not.

They are actually valuing bonds at a higher multiple.

Ok, let's show everybody what we are talking about.

We have got the jpmorgan index in yellow.

It is essentially price versus yield, and there is the high yield in blue.

So stocks are significantly cheaper than bonds.

That is your point.

If we were to stretch this chart out to 1980, we would be saying something is wrong today, because for the last 40 years, they always traded to bonds.

2009, stocks got cheaper than bonds.

That relationship has not reverted back to normal.

And, of course, that is what happens when you have the fed rate down.

A few seconds.

Do you think there will be an argument that stocks will come in more than bonds because people are willing to pay?

I actually think bond yields are valued fairly well, versus default rates.

Stocks remain super cheap.

That is why we are seeing record buybacks.

They realize they are cheap.

Understood.

All right, thanks.

"surveillance" today, and the clothes is next on "street smart." and coming up, a take on the commander and chief of's latest economic speech.

We will also ask how bad it is to be beaten by bloomberg reporter in tennis.

That is coming up on "street smart." if you missed everything that happened during today's session, don't worry.

We are getting you caught up on the only stocks you need to know about.

Number 10, facebook.

This is the revenues of $1.6 million.

We have instant analysis coming up on facebook.

Northrop grumman up nearly two percent.

The maker of global hawk surveillance drones are raising their profit forecasts.

They are making money in spite of those budget cuts.

They say that this will boost sales and profit during the second quarter.

This happened despite of the sequestration.

You love your planes.

The stock is down about one percent as the company prepares to release their third quarter results.

Customers are using smart phones and tablets increasingly to pay bills.

Hanes brands agreed to by a lingerie maker for $175 million.

The purchase should boost earnings per share in the first year.

Las vegas sands down nearly two percent.

This is coming out right after the bell.

Investors focusing on macau.

We will bring those results as soon as they cross . number five, boeing.

The stock is down almost 1%. they lowered the dreamliner production costs, they have fallen off of the earnings forecast for their full year.

The shares closed at a record.

They are at 40% for the year.

They are going into the earnings session.

The stock is a record $420 billion.

They will be looking to fill those orders.

Despite those headlines with the 787, the fact is that people are voting with their feet.

Let's watch another important stock share of the day.

It happens to be dell.

It is pretty much in flat line right now.

They are offering 13 i'll or $.75 a share.

There also asking to change the voting procedures.

This makes it easier for michael dell and silverlake to get there job done . they are sick and $14 a share.

The drama lives on.

Pepsico the mud down a fraction.

Even though they posted second- quarter profit that topped the estimates.

This helped to lift revenue for the food division.

Volume also rose.

Number two is forward.

They are raising their forecast after the second earnings topped estimates.

Their surging demand.

You hear the bell.

This brings us to our number one stock of the day.

This is the steepest loss in the dow.

The company is posting profit that trailed estimates for the third straight order.

This is commodity man from emerging markets.

He is shorting caterpillar.

Let's take a look at this market.

This is closing lower on the dow.

The s&p is down by about six points.

If you look at the one standout, it happens to be technology perhaps in part because of the strong apple sales.

We have all the latest breaking earnings data.

We have jon erlichman covering facebook, julie hyman with las vegas sands, and dominic chu.

First, it is time for a round up of the markets.

Our market reporters are set and ready to go.

We saw the slowdown in stocks.

Strength in technology has done a lot for apple.

Also electronic arts doing well.

Otherwise, they declines today, particularly in utilities.

We will talk about this more in a moment.

You have the high dividend yields.

Utilities, homebuilders also falling today on the perception of those yields going up hurting the housing market.

There is a big run in stocks for the s&p 500. we had a streak in which 12 of 13 sessions are higher.

This pushed valuations up to their highest since about may of 2010. we have seen a positive upward momentum.

We have upward momentum.

We have seen some short-term upward momentum when it comes to treasury yields.

There is the interest rates that are tied to them, the yields are rising.

The reason we are highlighting this is because today, the u.s. government sold dirty $5 billion worth of five-year treasury securities at a yield of about one point one percent.

There was weaker than average demand for those treasury bonds.

The bid to cover ratio was about 2.46 versus 2.8. this means $2.46 worth of bids for every treasury bond dollar at auction.

You look at the 10- year and the 30-year, you are seeing the action happening there.

The long bonds creeping higher as well.

Tomorrow, we are checking out what is happening with the next bond auction of the week which is for seven-year notes, $39 billion will be for sale.

Of course, we have weekly jobless claims data and another catalyst, if you will.

That is the round up there treasuries.

Thank you so much.

We have some breaking news here . we want to get to las vegas sands numbers.

Pretty much across the board here, these numbers are worse than analysts had anticipated.

Earnings per share coming in for $.68. the revenue coming in slightly short of estimates.

This is coming in higher than estimates.

This is on the sales and the earnings aside.

In the statement here, we hear the touting of the macau revenue, the revenue, the biggest chunk of the business, as i mentioned.

Revenue last year accounting for 58% of las vegas sands sounds sales.

If there is disappointment here , it is likely from the largest business.

We will have to continue to look through here and see what is going on.

They do see the property, the revenue was higher than a year ago, about $895 million versus 649 earlier.

We have seen a little disappointment on a couple of fronts.

The shares not doing much of anything in the after hours.

Investors are trying to figure out where the shortfall may have come from.

Let's get two more on this market.

Let's get straight to our street fighters.

We have our closer with us in new york.

We had a great housing data, the best new home sales we have seen in five years.

Is this all about concerns about the global economy and what that means for us back at home?

One of the issues that was in the news today is detroit and their bankruptcy, and then your own survey about the president's approval and disapproval.

Both of those brought these markets out.

They were trading on very thin volumes right now.

There is hardly anybody trading in these markets.

We are just watching this.

We had a good positive.

It will be hiring 3000 people, engineers.

These markets, they got close to 1700 on the s&p. it is not want to seem to break that.

Do you blame cat?

There is so much complacency.

There's not not much volume except for stocks that are right in the news with earnings.

The volume is so bad, it is like watching paint dry.

Caterpillar was somewhat disappointing but it has been in the news a little while.

I think maybe we are starting to see some complacency.

Earnings have come out for the good.

We have come close to that of 1700. we are not far off.

We are taking a little rest here.

The market might be taking a rest at the earnings are not.

Earnings for facebook.

Jon erlichman, you know this story inside and out.

What can you tell us?

On the top line, the revenue number did exceed analyst estimates.

On the earnings side, that are then estimated numbers.

We talked earlier about how this company is figuring out in a better way how to bring in the advertising dollars.

The revenue from advertising which was roughly $1.6 billion.

The percentage of their total revenue that is coming from advertising has done up a little bit from the first quarter of.

They are very dependent on that but their payments business was tied very closely to zynga.

The total number of people that are using facebook on a monthly active basis, up to 1.15 billion.

The costs that you have to keep an eye on with this company.

They talk about expenses, costs and expenses being north of $1.2 billion.

This is share base complicate --competition.

It goes into the number of things like infrastructure and headcount.

You have brian leezer who said that those numbers are expected now, but in a year from now you don't want these to continue to climb.

Is this company showing revenue performance?

The answer is yes.

There is the revenue coming from mobile.

The second quarter, it was 40 one percent of the total advertising.

30%, 41%. facebook has a lot of control over where those dollars are going.

This is a facebook control number.

As you point out , 1.1 billion users.

Facebook is the third biggest country in the world.

We have more earnings out from fisa right now.

Let's talk about visa.

We have an earnings and a sales beta.

The third quarter eps coming out at $1.88. in terms of sales, 3 billion dollars versus about $2.9 billion estimate.

Those third quarter sales were up 17% from the same time last year.

The total data processing union -- revenue, about $3 billion.

They added a $1.5 billion stock buyback program.

We have seen the forecasts been affirmed overall.

They have reaffirmed their outlook.

Jesus sees fiscal year 2014 net revenue growth in the low double-digit range.

What we are seeing, i'm earnings beat, a sales beta.

They set a new stock buyback and have reaffirmed their forecast for both sales and earnings growth.

The the shares seeming to react positively.

Thank you so much.

Final thoughts from tom lee.

You called it before.

We are still in able ocean environment.

I think this is the bull market that has many years left or several years left.

The good news in the second quarter, in the second half, analysts will start to raise money.

You should be willing to pay a higher multiple.

More growth.

This is better stock prices.

But you think this takes the wind out of the sales?

It is definitely a headwind.

We had a huge test when discussions about this,, the bond market takes it hard but the equity market is held in great.

You have been steadfast in your bullishness for a couple of years.

I know you have taken heat.

You have been dead right.

Are people finally coming around and saying, we are with you?

Some do.

I would be worried if people did because it means that everyone is bullish.

Is it hard?

I am here, everybody else is there.

It is very nerve-racking.

This makes us do a lot of extra work.

We always double check our numbers.

So far so good, it is like a classic bull market.

Inc.

You for being here.

That is the close, everyone.

The game of odds and payouts based on the odds.

We have the worlds smartest hedge fund managers together to play poker and get profits.

Alan krueger, the chairman of the council of economic advisers, analyzes the president's economic speech.

Interesting ad placement.

Having it your way . it is all part of today's weird wall street.

Stay tuned for your first trade tomorrow, all coming up when continues.

So, the cat is out of the back.

I did host a secret tournament monday night with some of the biggest titans and is set -- it was for charity.

I asked about the parallels between a smart investment strategy and killer poker moves.

David einhorn is a wall street legend and poker aficionado.

Here's what he had to say.

Winning at poker is certainly a balance of strategy and luck, is that what can happen?

What's what can happen in a tournament is anything -- what can happen any tournament is anything.

It is pretty random.

. over time, as you invest in lots and lots of stocks over time, i think that's guilt dominates and the same is true.

Eventually, the better players will come out on top . if you are at it long enough, skill is what matters.

In other words, it is not a game of chance.

There is an element of chance obviously in both.

If you play long enough or if you trade long enough, eventually your skill set really does make a difference.

David einhorn is known for picking companies apart forensically.

Forensically , we have seen reports.

Effectively, he came out and called china's bluff.

He must be able to read people really well.

Like in investing, poker you deal with incomplete information.

It is a game of odds and payouts based on the odds.

I think the really closest analogy i can give, with china, i think the edge that we have is that the whole world was focused on a number that was sort of meaningless to investment.

That means the gdp figures.

Everybody still basically is obsessed with that number yet it has met nothing for returns in the markets.

I think going into it we saw it from a slightly different perspective than others.

We are pushing the analogy a little bit.

What is it like betting against china?

What's it is never easy.

I have been doing this for 30 years.

This is never an easy place to make money.

That is why people don't do it.

If you pick your spots, you have the information correct.

It is like high-stakes poker.

Just like high-stakes poker.

I spoke to steve kuhn . this is a guy that did really really well shorting sub time prime.

I asked him about this in the face of the home sale numbers.

We have seen a little bit of slowdown in the growth of the housing prices, housing prices have been in a lot better position.

That means that defaults will be lower and that the housing market is much stronger.

There is value to find there.

What our team focuses on is finding bonds within that market.

There is deep analysis by doing our homework and we can find bonds that we have an edge.

We still have confidence that that is a trade that we can use to make money for our investors.

I cannot tell you who won.

What amazes me is that i listen to these numbers guys speak . getting these guys in one room is incredible.

You managed to do it.

Thanks.

It was a lot of back-and-forth, a lot of phone calls.

A lot of time convincing them that it was a fun thing to do.

They all love poker, it is all for charity.

The money is going to a really good place.

They were happy to get together and do this thing.

You can see more from this secret tournament on our special broadcast.

It is coming up, "poker night on wall street." it is coming to bloomberg television in august.

Way to go, trish regan.

Thank you, adam johnson.

Coming up, we will be talking to one of the few and the proud on the street who recommends buying blackberry's battered stock.

President obama's top economist , alan krueger.

His take on the president's speech.

He is joining us.

He is our guest coming right up.

Time for the next big trade.

He said to sell when everyone loved it.

He said that a is for android when no one had heard of it.

He predicted a whole new galaxy.

This year, he likes blackberry.

He is exiting scheme -- ed zabitsky.

It is not what everyone thinks about with blackberry.

You think that this value is in the instant message service.

Let's talk about that.

Thank you for having me.

Blackberry is morphing into a social communications company.

It is really were social meets communications like instant messaging, voice over ip, and video.

It is the merger of the two.

This is an emerging category.

They still have the hardware business.

I tell you what, forgive me, we have to take a very quick commercial break.

We want you to stay with us so you can continue explaining why to buy blackberry.

We are back with our next big trade.

You say that blackberry has some real value as an instant messaging service that could be standalone.

Explain what that means.

What it means is that that apps are moving cross-platform.

It does not mean who's ecosystem it is moving forward.

It will matter, those relationships you have with the web 2.0 companies.

Blackberry is morphing into one of those companies.

They know that the hardware business is in trouble.

Blackberry's business is in trouble.

There are over 180 million shares in a company with 520 million or so.

All this company has to do is divide itself into two pieces.

It has to divide itself and the shorts would be forced to deliver immediately and would have no way of covering.

It is a very dangerous environment to be short.

Can you see a scenario where on my iphone i have blackberry instant messaging or an android phone?

Can you imagine that sort of scenario?

No doubt.

There are so many blackberry users who have shifted over to ios.

Many of them say the same thing.

If only i could have bbm back and still have my iphone.

A definitely want to have both of them.

Why can't they just spin that off?

The only reasons people say to buy this right now is because it gets acquired by somebody else.

Maybe acquired for something like the blackberry messenger.

We take a worship case scenario on the -- a worst-case scenario on the hardware side.

Migrating out of the handset business will be about $2 billion.

We have a tangible book value.

Then you are getting the existing businesses basically for free.

You met all this out and this thing is worth 4 billion.

Does that affect how you get to the price target?

Yes, this is some of the parts analysis.

There are little over over 500 million shares.

This is about $20 per share.

You hated apple when nobody else did.

You called the right move on android, now you are saying to buy blackberry.

Ed zabitsky, thank you for the perspective coming down from toronto.

My pleasure.

Mcdonald's takes training its employees pretty seriously in the summer so that it created hamburg university over 50 years ago.

Betty liu found out what it takes to get that diploma.

What mcdonald's serves up is actually a product of years of research . hamburger representatives -- university.

We have got to have some talent.

I'm going to put my money into talent.

It is a unique curriculum.

This weeklong program puts its students through the paces in a way that no other company does.

Who have to have to work on your procedures.

On average, each restaurant brings in about $2.6 million.

What is your goal?

What's my goal is to become an owner operator someday.

They are paying their dues in the kitchen before hanging up the apron and becoming a ceo.

That means that people like this professor could be training the next ceo.

They have to think that your picture.

A lot of time we get bogged down in the day-to-day details.

It is really diagnosing the situation and making it better.

@is a skill taught in the classes which gives students 20 seconds to conquer 36 scenarios.

Anything that we will do here, they will run into.

Whether it is a customer that gets involved, or something burning in the kitchen.

You need that real feeling of what it feels like.

In the moment.

Anybody who thinks that this is just a week off of work, think again.

This that's you real college credit recognized by the american council on education.

-- this gets you real college credit.

Betty liu is at mcdonald's headquarters.

Any golden arches there around you?

No, you would expect to have ronald mcdonald's jump out at you from the bushes.

The company sells fun but it is all about business.

The reason why is that in the u.s., you have been struggling to find growth.

Chicken, beef , beverages, also breakfast.

I talked to the ceo earlier today and it is simple.

It is about making good food that looks good as well.

You eat with your eyes first.

Before you ever taste a sandwich, you see it.

You want to make sure that the physical assets are contemporary.

We maintain our core values.

There was the turning point for the company.

Last year, the ceo said that he felt like the menu lacked energy.

You could say that the sort of sluggish growth has become an opportunity to innovate for the company.

How many french fries have you had?

Probably more than i have had in the last six months.

One of the players at the poker table , he told me that he has a meal every single day at mcdonald's. really?

Did he tell you what he eats?

He said all kinds of different things but he really likes fries in the afternoon.

The fries are delicious.

He goes there every day him and he will bring his reading, he sits down, and it has become a daily tradition.

A timeout to out to think about making money.

President obama is pushing for economic change in washington.

We will be joined momentarily by one of the top advisers.

Her fester alan krueger.

-- professor alan krueger.

President obama spoke earlier at knox college in illinois and outlined his five cornerstones to building up the middle class.

Investing in infrastructure, keeping america competitive through education, encouraging homeownership, securing retirement, focusing on healthcare.

He says there is something standing in the way of his plans.

With this endless parade of distractions and political posturing and phony scandals, washington has taken its eye off of the ball.

I'm here to say that this needs to stop.

How do we get through that gridlock.

Alan krueger is joining us.

Is this coming down to political bickering?

The stress that the middle class was dealing with for decades was laid bare in 2000 eight.

Those problems will not be solved overnight.

It is important that we laid the wondrous downs for the thriving middle class.

Everybody wants to do that.

How come we are not seeing more get done?

We had to clear the rubble from the financial crisis.

Here is where we are in the recovery.

I laid out a vision for a rising middle class when i came eight years ago.

The need to make rye grass in that vision.

They will pull every lever they have which includes congress, which will make additional proposals for congress.

He is also going to use executive authority.

There will be the initiative where we will be able to connect all of the schools in america to the high-speed internet.

He will also use his team cleaning power.

The they will also have the ceos and enlisted their support.

Here is the thing , that is a much longer-term plan.

We have got to get people to work.

We are getting people back to work.

As we pointed out in a speech about job growth.

It is not feel that way.

He doesn't get credit for it.

Why is that?

The people went through h paramedics.

For the financial crisis.

We have regained 7.2 million private-sector jobs.

We are digging our way out of the mess.

How do we reduce the rising murder inequality and provide more opportunities.

In 2014, when the president , the fear is that small businesses are not going to add those extra employees.

The fear is that this will take a bite out of job growth.

We have seen health care costs grow at their slowest rate in 15 years.

The fact we are bending the cost curve means that it will be more affordable for employers to provide health insurance.

If you look at the industries which have the lowest coverage, they are growing strongly.

Who are the names for the most -- the names talk about the most to replace ben bernanke at the fed?

I cannot talk about that.

How about alan krueger?

I will tell you when the president makes the decision to announce.

How did it feel to get beat by a couple of bloomberg reporters last week?

It hurt, but they played well.

Let's listen in on the game.

This is nearly four years working for the president.

The most disappointing.

We are now 1-1. we beat them a year ago.

The next time you get the inside scoop, you have to tell them first.

Alan krueger, and glad to have you.

Shares of eli lilly finishing up 3% after a strong second- quarter earnings.

Olivia sterns was at the headquarters in indianapolis.

We have seen a beat on the top and bottom line.

They guided higher for their earnings.

This is really impressive.

This company is about to fall off.

They are about to lose their patent for cymbalta, one of their best selling drugs.

Right now, more than ever, what is in the pipeline matters.

What is in the pipeline?

The good news is that they're hoping to go to -- there are a lot of promising molecules.

She knows her beat.

We focus on diabetes, we focus on alzheimer's. they're hoping to regain their leadership position in that category.

Remember, eli lilly has the heritage.

The other focus is alzheimer's. did they give any clues about the upcoming drugs?

Actually, it is a lottery investment.

They have been working on this for 25 years.

They have poured billions of dollars into it.

When do you think we are going to have something that actually works?

When you get into the large studies, they tend to be more expensive in the earlier stage research.

This is from lots of new knowledge, new learning about alzheimer's. the next 10 years, lily and our industry will begin to close in on alzheimer's. the big promising molecule, they are in the lead among the big pharma.

Thank you for bringing us that exclusive interview.

We will be taking a very big rake.

We will see one of the site -- a very big break.

That is fit for us here today.

Thank you for joining us.

We will be joined by candace browning.

She runs all of the research at bank of america, merrill lynch.

Arguably one of the highest- ranking women on wall street.

We are looking forward to it.

Have a good evening, pimm fox coming up next.

Let's go go straight to on the markets.

? it is 56 minutes past the hour.

Here's how we ended a day in terms of the overall stock market.

The s&p 500 down 6.4% . the nasdaq premium/although you could say we we might see some movement to the upside.

Here are the important names and we are watching after the bell.

Of coarse facebook -- of course, facebook surging in the aftermarket.

More on that later on in this particular hour.

Visa also beat estimates and vegas sands is trading in the after-hours.

What are the top five things that keep is this leaders up at night?

588 ceo's were surveyed in here to join us and speak about what they found is hank watkins, president of lloyd's america.

I got a say, there are a plethora of things that keep s a chief executive, the cfo up at night.

Tell us what you found over the course of the past years -- two years.

We have surveyed 588 c-suite exitecutives from five regions of the world.

Across 19 industries.

We asked them over 50 different types of risks we presented and categories from business to market to regulation to natural hazards and environmental.

What keeps you up at night?

Across the board, high taxation was the number one issue.

,. the number one global issue.

The thing that may keeps them up at night is taxes.

And which way they are going.

They are going in one direction because so few governments have money and where they are looking for it are the people who are making things and selling things and buying things.

Some of the emerging threats that was interesting was cyber- security.

For five years ago we you could hardly find it.

Pick a company and they have all been breached.

The big issue there is it is not just anymore who is out for gain.

It is the people who have political or i are -- or ideological aims.

Because of that ist is the number two risk on among american ceo's

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

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