? this is "talking stock" for wednesday, july 31. i am pimm fox.
We will focus on the value of a brand in music, dining, and what is next for the federal reserve.
The we will introduce you to sony arcade which is making brands significant.
We will have a side of profit for investors.
How to keep a family business buzzing into the fourth generation.
I will introduce you to the palm restaurant group.
All of that and more over the next hour.
For a look at individual companies, let's go to my radio cohost, carol massar.
Cbs second-quarter profit rose 11%. they beat analyst estimates for earnings.
A reminder that cbs and time warner cable are locked in a fee dispute.
Negotiations are ongoing as they try to beat the deadline.
Dreamworks reports a 75% surge in profit.
The film has taken in 580 $4 million worldwide and only costs 135 million to make.
Whole foods posted their quarter revenue that trailed analyst estimates.
They cited increased competition in the natural food businesses.
Those are some of your top stories at this hour.
At their latest meeting in washington, the fed policymakers have decided to continue buying $85 billion worth of bonds a month.
They raise some concerns about slow economic growth and flagging inflation.
Peter cook has got more details from the release of this meeting.
Not much talk of tapering in today's statement, was there?
Anyone hoping for some guidance on when they might scaling back their bond buying program might have been disappointed.
There was no new clues, no less conference from chairman bernanke.
The fed is standing pat in signaling the new risk.
The fed modified their language on the statement and that economic activity expanded at a modest pace.
A slight downgrade from the moderate pace mentioned in the june statement.
They reported growth was only 1.7% which was better than forecast.
Ben bernanke and his colleagues also expressing new worries about inflation running too low.
The committee recognized that inflation persistently below its 2% objective could be risk to the economic performance.
Be preferred inflation gauge at 1%. the message to markets, slower growth and lower inflation could convince the fed to keep the bond buying program around but their forecast is for both to pick up.
Ira jersey thinks the fed is on track to take its foot off of the gas pedal.
The fed has not taken the idea of a september taper off of the table at all.
The chair man certainly wants to see more data before we get there and you will get that.
The additional data includes two job reports between now and the next fed meeting.
The vote is not unanimous.
Esther george dissenting to this fed statement.
She is worried about inflation and imbalance.
Everyone in washington seems lipid more concerned about who is going to replace ben bernanke than they are the details of the minutes.
Tell us more.
That is the feeling up on capitol hill.
President obama going up to meet with house and senate democrats and they came up with the houston the kratz first of all.
He was asked by one of his democratic colleagues about larry summers . -- they came up with house democrats first of all.
He said this has become a parlor game.
He said i have not made a decision, i is not even started the process of making the decision.
He transitioned into the defense of larry summers.
He said i'm doing this because if somebody talks smack about you, i was stand up for you.
The president offering defense of larry summers but not giving a hint as to who he might pick.
Now, a new name thrown into the mix, the former fed vice chairman over at the brookings institution.
His name coming up in the conversation.
Somebody that the president has mentioned.
Perhaps weeks away from a decision.
Peter cook, our correspondent.
I want to bring in the cofounder and chief executive of first up runcible capital management.
Bill rhodes, the senior vice- chairman and the current chairman and vice president of william chairman global advisors.
Those are hard numbers that we can actually understand.
Those are sales figures.
We look at the figures that the federal reserve look set to gauge the strength of the economy, is it accurate.
They are hedging their that.
They are on the line for september tapering.
Gosh-- they are hedging their bet.
Some of the governors have gotten upset that inflation was not given its due time.
Of course, i think that they kind of narrowed this down a little bit.
I think that they will still do this in september.
Going back to your point about the numbers.
The numbers that they are relying on.
The payrolls could be anywhere plus or minus 150,000. the markets move, everybody is looking at this thing.
There is a high degree that that this could have been 150,000 more or less.
On the basis of that where you have data that has high degrees of uncertainty and yet the federal reserve is trying to give you transparency.
What they will base it on is highly uncertain.
You have to assume the projected policy of the federal reserve will be highly uncertain.
People need to understand transparency does not equal certainty.
When you're dealing with an economy where you're going with a transition, you have lots of data that conflicts.
You have some that gives you the impression that we are strengthening, the next day it is weakening.
That is typical of an economy in transition.
You have tremendous economic data volatility.
The fed will do that which means you will have student body left one day, student body right the next day.
It was all over the place.
People try to understand what they meant to say.
Do these people have the ben bernanke's mobile phone numbers?
I think he has gotten very careful and conservative after some of the statements that were made in the past.
Of course, it was on bloomberg, as you know, that the president made his comment that he was not going to be around in a few months time, which i don't think help the situation at all either.
Who will replace ben bernanke or become at least the next chief of the fed fed?
Works you will see other names thrown in because is has become very divisive.
Now, they are bringing phil: back in and maybe we will see roger ferguson.
They will keep it back in the conversation.
Is this what they call a trial balloon?
They just float these names and see what happens in the marketplace and see what sticks?
I don't pay attention to these names but with respect to who they should consider, when they made the decision of ben bernanke, we were in a world where monetary policy was using the traditional means of monetary policy.
Now we know we have unconditional mechanisms being used.
The question you have to ask yourself is should you use a conventional federal reserve chairman who was used to using traditional policies of monetary policy?
Is that the right person to choose today and you know the person going forward is going to have to transition from a position that they have unprecedented policies.
Maybe they should hire someone outside, maybe i'm investment manager.
You joke, but that is something they need to consider.
What worries me the most is treasury and the fed have demonstrated a propensity to be very concerned about p and l. well, policy and pml don't mix.
-- pnl don't mix.
We can withdraw policy without having to sell and we can hold the securities without taking losses.
When i have a traitor coming and saying that the mark to market losses will not come until we hold it until maturity.
Within a nanosecond, that person is on the street and fired.
The mark to market never becomes reality, that would be concerning to me about the person who would be managing this three point $5 trillion portfolio for you and me, the taxpayer.
This will be very important because if they don't handle this thing right, we will be getting into another bubble.
We have the experience of coming out of the tech problem and getting ourselves right into the great recession.
There is really no roadmap of any country that has had to unwind $3.8 trillion worth of funds that the next head of the fed will have to do.
If it is not done correctly, this affects the world.
Can you stay?
We will have william rhodes and more with doug dachille.
I will be speaking with the chief executive of agco.
We will talk about farming equipment, the economy.
They have had another stellar quarter.
We will talk about how they plan to rake in profits.
We will talk about the u.s. and global echo alter industry.
? ? let's turn to the growing demand for farm equipment, agriculture production.
Shares of coal rising after the company beat estimates.
-- shares of agco rising after the company beat estimates.
We have their chief executive, martin richenhagen.
We also have with us doug dachille and william rhodes.
Martin richenhagen , good to have you with us on "talking stock." give us detail on your company's performance and the type of formic women that you sell.
Actually, we sell all kinds of farm equipment.
We are a multi-level company.
We are different from other manufacturers.
We have very famous brands like massey ferguson, challenger.
We do all of the farm acquitted for caterpillar dealers globally.
And we have the former volvo chemical division.
We are able to offer everything a farmer needs.
Movies today also announced that it is investment-grade.
We are having a good day today . one of the reasons i wanted you to stay around, you have been a banker for many years.
You have had clients and customers all over the world.
In a case like agco , how does a banker participate in the growth of a company like this?
If you are a smart banker and you know the risks involved, then you should figure out a way to support them with credit.
The key here is management.
Good management deserves good credit.
Are you deserving of good credit?
Tell me about the past.
Have you been able to get the banks to loan you some more money?
Actually, i took a quite conservative approach.
At the time i joined , it was at 60%. then, we were down to zero after the financial crisis.
Is this the guy that we should have a savings bank in germany?
Then, the financial crisis came and all of a sudden i became a hero.
We have to chase that a little bit.
We have no problem at all to get the support from thanks, not because of the management.
Mainly because of our performance.
We have a very good partner with a dutch bank.
The only aaa rated bank in the world.
I wonder if he could be working at the federal reserve.
His company might not need financing.
Does his company give financing to his customers that need to buy the equipment?
Who does that?
Does the bank do that or does the company finance their customer purchases?
We are partially in the banking business.
Together, with a joint venture partner, we have a bank that we do all of the retail needs for our company globally.
We are not the only ones.
All of the big manufacturers are doing similar things.
We have to refinance.
Do you think that martin richenhagen would be a good candidate for the federal reserve?
He is in banking.
Good management is what counts.
Good management brings good performance.
And he has a pulse on one of the key components of inflation, full food prices.
I am too honest for that job.
You have a win-win strategy and a bunch of good banks behind you.
I want to thank you very much, agco chief executive martin richenhagen joining us from atlanta.
My thanks to doug dachille and william rhodes.
Coming up next, carol massar will have an inside look into the grocery store chain whole foods and we found out how they maintain a fresh approach to business.
? whole foods market said their profits increase by more than 20% thanks to an increase in sales.
For more on the business behind big grocer, carol massar got a behind-the-scenes look at whole foods.
This company is going back to his local roots and its really natural roots more so.
We spent a day with someone who checks out food entrepreneurs to see if they are whole foods worthy.
I am a local forager for whole foods market.
She is one of 12 forgers who works with hundreds of suppliers.
15%-30% of the products are local.
Out of their effort to get back to their roots.
It means going back to the farm and eat enough.
Questioned get to sample a lot but sample the best of regional foods.
-- you get to sample a lot, but also the best of regional foods.
This is truly the cleanest dairy farm you will ever see.
Yes they are cared for, they are brushed, they are washed.
They make yogurt, cheese and milk.
They just started making weekly deliveries to a whole foods store.
They want to see if they can do more.
What are you looking for?
Once i am looking at food safety, processing, and how they separate each stage.
Polity is important in how the food is made.
How important is price point?
We look at what is their wholesale price and how can we work with them on that.
We can take a hit on the margins so we're moving more local product.
It helps them to grow.
One local business is westport agriculture in connecticut which traces its roots back to a local business started in 1857. they delivered tens of thousands of oysters and clams to whole foods each year.
This is a natural nursery for young oysters.
How long does it take to get an oyster off of the boat into a whole foods?
24 hours to connecticut and 30 62 new jersey, long island.
One product comes from a north-based chocolatier.
Whole foods is 10% of his business.
They are making everything by hand.
It is amazing.
How do you choose?
You're not buying the crazy crazy stuff.
Families want caramels and things that their kids would try whereas in the city you will have a customer that will be really excited about the pine needle traffic truffle.
What makes this whole foods worthy?
The care come a the ingredients, the craft, and the fact you have not compromised that.
I am passionate about food but also i get to be working with these people that are so incredibly knowledgeable about what it is they make and helping them reach their new audience by selling to whole foods.
What was the best food you got to try?
I have to say that having all of that chocolate.
It was everywhere and we just cap nonstop sampling it.
A lot of people are sampling cold foods.
Thank you very much, carol massar.
It is 26 minutes past the hour.
The s&p 500 is unchanged.
The dow jones industrial average loses 21 points, the nasdaq gains a quarter of one percent.
Comcast shares are rising five percent.
They posted profit that topped analyst estimates.
Coming up, the business of making brands cool.
I will talk to the head of sony's ad agency.
? ? this is "talking stock" on bloomberg.
Now for a look at the headlines, let's go to mark crumpton.
Following a two-day meeting in washington, the fed announced its decision to maintain its monthly $85 billion bond buying program.
The question for ben bernanke, when will employment gains be sufficient to warrant tapering bond mind?
The balance sheet has swelled.
Jury deliberations are underway for the trial of the former goldman sachs vice president.
The sec says he is liable for fraud in his role in security that caused a billion dollars of losses for goldman clients.
In an e-mail statement, president obama announced he will appoint a federal reserve governor sarah raskin is deputy treasury secretary.
The move will make her the highest-ranking's female in the history of the treasury department.
Coming up, i will speak with john taylor on today's fed statement and what to expect from friday's jobs report.
That is on "bottom line", bloomberg television, 7 p.m. eastern.
The electronic cigarette market could be worth about a billion dollars a year.
One company that is leading the charge, it enjoyed kings.
Investors have already invested in the company.
Olivia sterns sat down with the chief executive.
What did you learn about the direction of this market and is this more than just a fad?
This is much more than a fad.
He will tell you it is his goal to make the traditional combustion cigarette completely obsolete.
If you can steal any market share from the u.s. cigarette industry, you are in for a windfall.
The market is currently worth about a billion dollars but that could double in the next three years to more than $2 billion.
What is really interesting about them is that what i was told us that he is not marketing this as an alternative to smoking.
What he is hoping is that he can turn smoking these cigarettes into a trend in and of itself.
Our goal is to make this a product that is not just as good as cigarettes but better than a cigarette.
I want our customers and users people like bruno mars and sean parker, that is the way i want our customers to feel.
They are part of a trend.
There will be some pretty lofty ambitions but he told me, look what happened when the filtered cigarette hit the market.
Everyone thought it was fake and artificial and masculine but then the marlboro man came along and help them market it.
Then, filtered the gress took more than half of the market share.
That is what he thinks he can do.
He thinks the company will make tens of billions of dollars in the next 5-10 years.
Some huge ambitions, but with names like sean parker and bruno mars onboard, that will help the marketing campaign.
Thank you very much, olivia sterns.
Njoy teamed up with sony creative group to come up with a national campaign.
The hound her -- the founder adam owett joins me now.
Let's talk about brands for just a moment.
We hear about the concept about of what a brand could be or is not.
How do you define the brand?
I think a brand is a feeling, an emotion, a connection.
A brand can speak for a whole company.
It can be a musician , an artist.
You are a brand.
It can be an actual product.
The most important thing about a brand's ambitions is that it connects on a very deep level.
This is with this target and consumers.
The reason i am mentioning this is because you have experience in the music industry and i'm wondering how that world can teach the rest of us about building brands.
That is a good question.
A little bit about my background.
I actually was in conventional advertising.
I was a director for a global ad agency.
When i was hired by sony music to rebuild their internal agency and really get it set for what was happening, which was at this point was the end of the 90's. everything was changing.
I thought i had a lot to teach the music company about marketing and connecting with consumers.
Also i had to unlearn a tremendous amount.
Artists are brands as well.
They are brands that talk back to you.
They connect in a really unique way with their onions.
Those are also their consumers.
It has really informed of the way that changed the brands.
-- they connect in a really unique way with their fans.
They are creating a deep connection with their target so that they are not just thinking about the purchase and finding that one or two or three, but they become advocates for the brand.
Tell us what you're doing about arcade.
Give me an example of how this works.
One product that we work with for two years for coca- cola is a brand called fanta.
With phantom, they had -- with fanta they had an interesting opportunity.
The product was becoming all- natural.
That is big news in the soda area.
I don't know if you remember these great looking models who lip-synched to a track, they were these campy great commercials.
This was plastic, they were not real.
This was intentional.
When we won that business, we took them and we actually cast them and created a real girl group that had real personalities.
They had facebook pages, a were featured on the website, they were on mtv programming.
They were on tv commercials, cinema commercials.
They became real.
The only cast three of them and then we sent out a search to find the fourth.
In this way we connected with all of the girls out there.
What we did is we created this digital platform where they had to submit.
There were men that applied, they were welcome.
They did not win.
We went up to this process of selecting the fourth.
They've been socialized to this.
Of these candidates were given a social media kit to get people to vote for them.
In that way, we connected with the target just as we do with when we promote music and other forms of entertainment by really getting down to what is important.
Tell me about what you're doing with bob dylan.
With bob dylan, who lives at the the pleasure of working with a couple of times -- who i have had the pleasure of working with a couple of times, one thing i am proud of is a couple of music videos we have done for him.
One in particular was a video.
He had this release, it was a great album.
You can imagine that there is so much content out there that is so phenomenal that people are not exactly waiting for the second album.
You have to create interest and bring in the younger and more diverse group.
People that did not grow up with him.
We had a video with him.
We presented it to him and his management.
Ultimately, the treatment he selected was a video where he is not even in it, which is pretty radical.
A video that he is not even in?
He is not in it.
We feature scarlett johansson.
A great looking movie star.
It is a beautiful love song about a man who falls in love with a woman that he is going to be with until the day he dies.
What we did is we actually shot it.
A lot of people don't think there is a strategy behind these videos but this shows you are dead.
Scarlett johansson is being filmed by somebody who appears to be bob dylan.
We shot it with real aa cameras.
A great erector did it.
We have got to leave it there but i want to thank you very much for joining us.
-- a great director did it.
We have to leave it there but i want to thank you for joining us.
Adam owett, arcade group.
Some new menu options at denny's. they are trying to woo diners.
The chief executive joins me next.
The home of the original grand slam, it has swung and missed a little bit.
They reported sales that fell seven percent from last year.
The chief executive says that the chain is in full revitalization mode.
John miller joins me now.
Lied to have you with us.
Let's talk about your plan.
Sales declined about seven percent year-over-year.
The sales are down and company operations are up.
They are actually positive where the quarter.
That includes the franchise quarter?
That includes those and we sold some quarter to quarter.
So, that dollar amount was flat last year.
Bear in mind we lost the revenue from the franchise sales.
We collected the fee when we sell those restaurants.
Actually, we have guided to the higher end of our overall margins.
Positive for the quarter.
We have got it for our third consecutive year in a row.
This is an overall momentum.
What you're hearing from other full-service operators is discontinued choppiness where some markets are strong, where there is more employment recovery, particularly in the working-class, consumer and where markets are behind the pre-recession levels.
A lot of people that go to denny's don't have a lot of extra money to spend.
How do you compete on price when it seems that so many restaurant groups are competing on who has the price?
We have our value menu which trades in neighborhoods where the time is tougher and employment is a little bit higher.
We have added to that menu to strengthen that.
But the same time, for those more prosperous environments, we are adding to the more premium side of the menu and it is catching on as well.
What about revamping the stores and giving denny's a new look?
There is no question, 16 are sent of our system.
These are on the current scheme and that means 40% are not.
We are remodeling our restaurants, but 70% will be remodeled.
57 franchise locations year to date.
Consumers really like the changes.
What about the cost of doing this?
Are you changing the footprint?
We try to gain where we can but overall it is just freshened up.
What about the cost of ingredients?
2% is the inflation.
I would say we are pretty good shape.
It is in pretty good shape.
What is your favorite meal?
It has to be the new the new beer battered fried haddock.
This is back to our diner heritage when we had more of a reputation as being a diner.
This is eight dollars including beverage.
It is very good.
Is this part of the strategy.
You want people to think of denny's as a diner location?
You might not be out on your local denny's on a tuesday night.
There might be better options.
You don't think about breakfast and dinner on a tuesday school night.
A pot roast, meatballs, a fried fish ladder.
This has broadened the way that people think about denny's. this is the result so far.
Where'd you want to expand?
We have 400 and california, five states making up about half of the system.
We have a new incentive for franchisees to take on where they are underdeveloped.
He opened one in mexico, we have not opened one in years.
Our international revitalization is taking off.
We have it new in puerto rico.
I want to thank you for joining us.
The president and the chief executive of denny's. coming up for nearly 90 years, this has been an iconic mainstay of the culinary tradition.
I will take you inside the kitchen and tell you what it takes to become part of their tradition.
That is next.
Keeping the family business going has unique challenges.
I will tell you how the national restaurant group the palm has kept its business profitable through four generations.
They have 20 locations and roughly 1500 employees.
To learn more, i visited the palm tribeca for lunch.
My great grandfather started it in 1926 with his buddy.
To a telling guys came over around 1913, 1916 and decided to get into the restaurant business.
When they applied for the business license, the guys at the license office.
They were nervous to say that they wanted it.
They were in the palm of tribeca.
This is in the shadow of the freedom tower.
It was important for it as a new york joint to be part of the rebuild after nine 11. -- after 9/11. businesses needed to get back in the game, let's rebuild downtown.
We were happy that we could do that.
The square footage.
We know we are at about 5500 square feet at the tribeca palm.
You do about 300 meals a day.
So , there are 300 covers.
How do you decide?
What is a good day and what is not a good day?
You open the door and you don't know what will happen.
You look at your year and you know in the fourth quarter of the year it will be busy.
October, november, december.
People are going out and celebrating.
July, august, you will swing down.
It will be a busy january.
The event planners that goldman sachs, american express.
We have a loyalty program at the palm.
We were the first program to start a loyalty program.
This is the original address of the first palm.
We now have a proximally over 100,000 members in that group that we can speak to that are loyalists.
-- we have approximately over 100,000 members.
They are instrumental in keeping our business as healthy as we can be.
We all should offer them special meals, great wine selection.
They are responsible for 43% of sales.
This is like the first social media list.
Putting the caricatures on the walls, how did that start?
It is something that is quirky.
It started in the 30's. the original one was the newspaper.
A lot of the artists would come in.
It was the post-great depression.
My great grandfather and his partner a lot of them to draw on the wall in lieu of paying for their meals.
That was it.
It was that kind of joint.
To get your face on the wall you have to be a great person, a special customer.
We did not do this by random coincidence.
We are sitting here because i have something that we need to show you.
I would like to show you that we have put your caricature on our wall.
In the corner.
Yes, in the corner.
Here you are.
Thank you very much.
It is lovely.
You have given me more hair than i deserve.
And you have removed the wrinkles.
This is your booth.
I like that i am next to mike tyson.
I feel safer already.
My thanks to bruce, the junior of the palm.
It is 56 minutes past the hour.
It is time for on the markets.
The s&p 500 is basically unchanged.
The dow jones loses 21 points.
The nasdaq gained one quarter of one percent.
Shares of air products rising by about 3%. though ackerman is closing a nearly 10% stake in the industrial gas producer.
That does it for us.
This text has been automatically generated. It may not be 100% accurate.