Driving force -- general motors reports earning, we will talk china growth, and gross trouble in detroit.
Social pop-up appeared we are watching facebook as ceo mark zuckerberg's big bet on mobile advertising paid off.
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? from bloomberg world headquarters in new york, this is "in the loop" with betty liu.
It is thursday, july 20 five.
We're live from bloomberg would -- world headquarters.
You are "in the loop," and i am betty liu.
Dominic chu is in the newsroom with the latest on gm reporting a beat in the last quarter.
Just this last hour, we're going to talk to the company's cfo as well in a moment.
Senior markets correspondent julie hyman have the details and strategy that is brewing at starbucks at of its earnings after the close.
And president of bob -- presiden barack obama refocuses efforts on the economy.
We will talk to miami janis, the president of the committee for responsible budget.
We will have much more in a moment.
Let's kick it off with dom.
The good news keeps rolling in.
Despite the fact that detroit is having meniscal problems, take a look at what is happening.
$.84 a share.
That beats the average analysts' estimates of $.77 a share.
In terms of rep that -- revenue, beating the average analysts' estimates of 38.6 billion dollars.
With gm, the story is about reinventing itself post bankruptcy.
The stock is moving higher.
Thanks to 18 either new or refresh models coming this year for gm, they're looking to spur is that sales.
Think traditional names like a new cohort -- a new corvette, a new apollo, a new silverado.
The ceo saying gm's performance in the u.s. and china are very strong.
Some other comments, gm making comments to reporters just this morning also saying that gm says china continues to perform strongly.
Also that it is not updating really any of their seasonally- adjusted sales rates.
Also saying that they does the immaterial impact -- they don't see a material impact from the bankruptcy.
They look to improve their european results.
Overall for gm, a very strong story again with what is happening and because it is new models, they're trying to drive sales, and that all-important china market, that will be really key for what is happening with gm.
Very key for gm.
Thank you, dom.
Dominic chu with a break down of those gm results.
Gm is the only automaker -- head officials were in court yesterday winning round one in their fight to file chapter nine bigger too.
Economics editor mike mckee have the rig -- have the real deal.
Gm is headquartered in the renaissance center.
That is one of the problems for detroit the city.
At the automakers moved out, so did the autoworkers.
And the jobs.
They took the tax base with them.
That has been a real problem there.
As revenue fell, services were cut.
Seriously cutting the amount going into pensions for retired city workers.
Some 20,000 still getting payments but only 7000 are contributing to those pension funds.
Detroit has not made up the difference.
What the employee unions were coming on with a prevention in the michigan constitution barring cuts to city and state employee pension funds.
They have got a state judge to rule but the city pulled the bankruptcy filing could not proceed.
It was unconstitutional.
Yesterday, the city beat back a challenge him away to the bankruptcy court, the federal bingo see judge ruled that the argument would be heard as part of the bankruptcy case.
A canal proceed.
What is that they for the pensioners?
The last big city to file stock and california, $4 billion, detroit owes almost all that much to his pensioners alone, about $3.5 billion.
Let alone paying off bondholders.
Before the filing committee city proposed cutting back on payments to julian dollars in -- of $2 billion in bonn payments.
They would have to make big cuts to bondholders and pensioners.
Mike, thank you so much.
Economics editor mike mckee on detroit.
Another company that is reporting earnings at southwest airlines.
Shares were higher by about 1% . the results were down 1.8% as expensive decline amid a drop in fuel costs.
The ceo joins us now.
Gary, great to have you back on "in the loop." tell us about traffic and was it meant you were seeing the biggest growth right now.
Good to be with you all this morning.
Yeah, actually our earnings, excluding special items, were up at an all-time record at 274 million dollars.
Right in line with wall street estimates at $.38. we have seen a soft patch be getting back in march.
We were off trend.
I would attribute that to a lower gdp growth as we are all very well aware of now with sequestration and tax increases.
The really nice thing is that as we get into july here, we have seen a nice pickup and a nice strange -- a nice change in trend.
I think that is what the stock must be reacting to this morning is the good news about those trends.
So we are up 3% on a unit revenue basis of our in july.
We are well hedged, fuel prices have been moving up some, but i think we have got that under control.
We are feeling pretty good.
We are having a pretty good year.
Greg gary, you were going into the second year of the -- gary, you are going into the second half of the year, and we're talking about and preparing for one lawmakers come back from recess in august, there will be another round of fighting over the budget and the debt ceiling.
Is that going to have an impact on growth and also on your business?
All great questions.
I think we are going to have to be mindful of that, and accordingly we will have to be cautious.
We did share this morning that our plans for the near future are to maintain our current capacity, see don't have plans to grow even in 2014 because of all of this economic uncertainty and all this political uncertainty.
Those are concerns.
We are trying to manage through that.
So far, we've got a record you're going.
I feel robot about what our people are doing.
Gary, one of the things you're managing through it the incident that happened earlier this week with one of your airplanes landing into laguardia, and the landing gear not functioning.
What so far have you found out exactly what happened there at laguardia?
First of all, our care and concern is for our customers and our crew.
I am very pleased and thankful that there were no serious injuries.
Our crew did a wonderful job, safely evacuating the airplane.
Our people and laguardia did a marvelous job of working through that situation, as did the first responders in new york.
So all of that went well.
The ntsb is leading this investigation.
I think we all know how this works.
We are in full support of that.
I can't really comment on anything about the situation beyond that.
Other than to say that we are anxious to complete the investigation, make sure it is very thorough, take any corrective action and ease to be made.
Have you reached out to the passengers of that flight?
Of course we have.
We have a number of employees that were on-site taking care of all of our customers, making sure that they had accommodations for the evening, transportation, obviously we were very sorry that we did not complete the flight as they want and as we want.
So any out-of-pocket expenses we have taken care of player -- care of.
All that has been done . making sure that we take care of our customers.
That is important.
They want to make sure they get all of their belongings from the flight.
Gary, the fact that this happened again on another boeing , albeit a different aircraft, not the dreamliner, for you at the ceo of an airline, does it raise more questions for you about the quality of the boeing aircraft that you are buying that you have an existence.
Of course not.
Air travel is extraordinarily safe, and history proves that.
Boeing is a fantastic company with a fantastic product, the 737 is the most popular aircraft model in the world.
It is much too early in premature to draw any kind of conclusions there about what the issue is.
We will be working through that in support of the ntsb.
Obviously make sure that we draw the right conclusions.
But it is way too premature to make any judgment about the airplane.
We have a great airplane.
Quite scary, thank you for joining us on that.
Terry kelly, the chairman, president, and ceo of southwest airlines joining us here on "in the loop." let's check in with the cfo of gm, daniel ammann joining us.
A be there for general motors, the automakers doing well because dan, we are seeing these levels of sales going back to where they were before the crisis or how we sustain that?
What are the segments that are working well for you, dan?
It is a very solid quarter for us overall as we look forward to the second half of the year.
It just gets more excited for general motors.
We are in the early stages of a lot of new product here in the and all around the world.
We are getting into the early phases of that.
We have got a lot of tailwind to come as we get our new vehicles into the marketplace and win over the customers.
Could this be the period, dan, where international rather than driving on your results and actually start adding on -- i'm talking about europe in particular.
We had a good improvement year-over-year in europe.
Obviously remains a very challenging economic environment . again, it is the same story there.
We are bringing in a lot of great new product of the market, new powertrains, great value for the customer, taking a lot of action on the cost side of the business to make sure that we can get the profitability in the current kind of environment.
But the macro environment in europe remains quite challenging.
We are making good progress despite that.
Quite given the momentum here, are you going to be adding jobs, capacity in your factory?
Obviously that will be if option of the macro economy.
Continue to do very well in the marketplace.
As i said, we're very very excited about the second half of the year.
And the opportunity that the new product portfolio will bring us there.
Let's talk quickly about what is going on in a detroit terror we were just discussing the bankruptcy that the city is going through right now.
Gm being one of the only three automakers left within the city of detroit.
You haven't gone through -- you haven't got through bangor to yourself, chrysler as well, do you feel any responsibly for what has happened in detroit?
What we're focused on at general motors is making sure that general motors is as successful as possible.
We do not really see any direct impact on the company as a result of what is going on with respect to the city of detroit.
Not an impact on your company, but what am i saying, the restructuring of gm went through, the closing of the factories in and around detroit, do you feel any responsibility that you may have also contributed to the demise of the city?
Well, what we are responsible for is making general motors as successful as possible and building great cars and trucks and went with our customers.
That is what we're focused on peer all right, dan.
On one more note, there is a story out on bloomberg, if that's what your seo, dan ackerson, and how he has put together a separate unit, albeit small, to focus on tesla.
How the electric car maker is disrupting the auto business.
What can you tell us about this unit, and what are you looking at when you take him to like tesla you -- when it comes to a company like tesla?
Would pick close attention to our -- we pay close attention to our competition, whether it is tesla, ford, volkswagen, whomever.
We spent a lot of time making sure we understand where they are and where they're going.
One of the big disruptions that they are creating in the auto business is actually directly selling to customers.
Is that something that gm will eventually go back to thinking about doing?
Look, we're focused on our business, we are focused on understanding where the competition is and what they are doing.
We're keeping a close eye on them, but we are making sure that we focus that general motors is as accessible as we can bp or greg's all right, dan, thank you.
Dan ammann, the cfo of general motors.
? moving and shaking this hour is another seo, facebook ceo mark zuckerberg.
His big bet on mobile software paying off.
Facebook biggest one big -- one- day gain yet.
The social network company posted earnings and revenue that beat estimates.
One big reason is mobile advertising.
It made up 41% of facebook but the revenue in its second- quarter verdict that is up from 30% in the first quarter.
Meanwhile, shares of facebook rose 21% and extended trading.
Coming up, where the jobs are.
What's mcdonald's ceo don thompson told me about starting on the bottom rung.
Also, president obama framed a budget battle.
Did his speech change anybody's mind?
Will ask the head of a government spending watchdog group.
In a company that can take the stress out of packing for a trip.
Of course, there is a catch.
You have got to spend a little bit of dough to do that.
Stay "in the loop p," we're just getting started this thursday morning.
President barack obama spoke yesterday about the recovery and for the u.s. economy.
As a country, we have recovered faster and gone further than most other advanced nations in the world.
With new american revolutions in energy, technology, manufacturing, healthcare.
We are actually voice to reverse the forces that batter the middle class for so long and start building an economy where everyone who works hard can get ahead.
Joining us now to talk more about the president of the speech yesterday thomas maya macguineas, the president -- yesterday, maya macguineas , head of the campaign to fix the debt.
She sell the speech to focus on the policy that can help the nation's capital challenges.
Maya, great to have you here in the studio.
He's a list that they clearly lost opportunity?
The focus on economic agenda for the middle-class is exactly what we wanted to be thinking about about, but what the president did not think about it is he skipped the hardest piece of this, which as we do have to deal with the nation's capital problem.
And the fiscal challenges.
Unless we do and until we do, we are not going to have a full economic recovery.
We're not not going to economic security, not enough growth.
I do not think a recovery will be strong enough.
Middle-class households are going to still suffer until the bigger, longer term challenges are put into place and dealt with.
The president has the bully pulpit to make that case for the country.
Talking about the easier pieces of the challenges and he left the really hard one on the sidelines.
The problem is that he did the nation about the country for the fiscal situation.
He did warn that's we would be an extremely dire consequences with the assertion that have not panned out.
-- with sequestration that have not panned out.
The economy continued to grow.
So we have a bit of a guinness face because of those those warnings.
Nobody is feeling the pinch.
The devs that have come down a little bit, but it is still really high.
It is in the right direction, but it is not going to last.
The urgency is not there.
The situation in washington is nobody does anything hard it must they feel like they have to.
And so that urgency have also been -- it is a myth for you as well.
It is much harder when you are try to educate the country.
We have tough choices we have to make in terms of healthcare programs and child progress in the tax code.
They will not easy, but the benefit is the stronger economy and the helping the middle class, helping strengthen a written sustained economy.
I think the president's position is the best to educate the country about those links.
I wish he had we have that into the speech.
I think it would have been very helpful in getting done some of the things we have to, especially this fall.
The debt ceiling is going to come up again, but he is not getting a lot of help either from ceo's. mcdonald's ceo don thompson joined us yesterday.
This is what is that about the impact or not impact of the payroll tax hike.
We never did a warning relative to payroll tax that mcdonald's peer and we basically said we did not know how it was going to play out.
Thus far relative to us, we have not seen a tremendous impact from payroll tax alone.
What we have seen is the informal eating out category is contracting.
So the problem is that actually companies are able to manage through whatever is coming out of washington so far.
That is making your job harder too.
Disabled americans we are going through trouble here.
One of the things this country does not do well is make hard choices on issues that are not staring us in the face with an immediate action forcing moment.
What we're hearing from ceo's is that things are improving right now.
There is no crisis this year.
But that they know the economy cannot take off in a way that it could.
These are ceo's of big companies and small businesses.
It is hard to rally americans though.
They are making the case we need to strengthen the u.s. economy but policies are pretty eagle to put tough choices off until tomorrow.
The sooner we make these choices the better it will be for the whole economy.
Maya, thank you for joining us, maya macguineas of the committee for a responsible federal budget.
Coming up, follow from the bankruptcy.
Investors concerned that there may be other detroit out there.
So there is a warning.
How the mighty have fallen -- now microsoft has decided to build apps for its once mortal enemy.
Stay with us.
You are "in the loop." you are watching "in the loop " live on bloomberg television, streaming on your tablet, your phone, and bloomberg.com.
Bloomberg television is on the markets.
Futures are down almost across the board here.
Some earnings we should highlight they came up this morning.
Jim second quarter profits beat analysts' estimates due to the high margin pickup sales.
Gm up $.84. colgate-palmolive also out this morning.
The company cut its year-end earnings.
Second-quarter earnings met estimates.
We are on the markets again in 30 minutes.
Here is a look at our bloomberg top headlines.
The face of fac capital hangs in the balance today as u.s. prosecutors plan to charge the hedge fund firm with insider trading.
Big banks, including goldman and deutsche bank, are watching very closely and may decide to cut ties with sac, one of wall street was the largest trading clients.
Apple may get help from an unlikely partner -- microsoft.
The company has decided to develop new apps for apple's i was platform.
-- apple's ios platform.
Sleeping with your enemy.
Southwest airlines earnings matched wall street estimates.
Expenses outweighed a drop in fuel costs.
Southwest recently expanded by acquiring airtran airways . the accident at laguardia is ongoing, as you heard from the ceo, gary kelly just a few moments ago.
We are just a few moments away from the latest government report on jobless claims.
I talked about unemployment in mike's was an interview with mcdonald's ceo don thompson.
Fast food restaurants have added jobs more than twice as fast as the u.s. average during economic recovery.
Thompson thompson says that won't change.
We're going to continue to provide entry-level jobs.
There was a time when we used to believe about one out of every 10 people had worked at a mcdonald's. when we can be that entry-level employer and we can provide the number of jobs we can at mcdonald's, and when we can help people to be able to have a viable income, we're going to continue to do that and we will provide opportunities so that a person can rise through the system and gain greater and gator -- and greater wealth.
Gracie can see more of our special inside mcdonald's covers on bloomberg.com or on our bloomberg tv plus ipad app.
Staying on the job.
We are awaiting the jobless claims numbers including durable goods.
Economics editor michael mckee will have the roadkill on on the numbers should also with us, blackrock's peter hayes with us next week debt riddled city of detroit as a goes through its bankruptcy.
Mike, as we await the jobless claims sommers, talk about why july might be different here.
Jobless claims sommers will not go away until he thought it because a lot of auto companies have retold plants during the month so they shut them down and the workers can go lame jobless claims, that is to pump up the numbers.
We also see it in the garment and a player oh -- and apparel industries.
This year, auto sales are good, so not all of the auto plants are shut down.
He sees the adjustments, the labor prices don't work either.
So the numbers are not going to really give us a true picture of where we are as long as they say in a range.
That is about as good as we can hope for.
As long as they stay within that range.
Mike, stay with me because we are awaiting those numbers.
Jobless claims expected to be out at 340,000 eared that would be where we have been over the last several months.
Continuing claims expected to come in at 3.2 million claims.
Durable goods as i mentioned will also be out as well for the month of june.
That is expected to rise 1.4%, including transportation, expected to be up by .5%. the numbers are out pretty much in line with what economists had estimated.
That is a slight rise that we salsa in the week before.
-- 34th -- 343 thousand is a slight rise them we saw the week before.
However, when you exclude transportation, pretty much unchanged here for june.
Mike, you are getting pretty much non-news anyway on jobless claims.
Durable goods a pretty big spike in the headline numbers.
We're getting a big spike, but you can see the number here.
31.4% in aircraft orders.
This is the boeing effect that we see quite often in the headline numbers.
It just cost so much to buy one of those airplanes that it really skews the orders figures.
That is why everybody looks at the expense.
Even that does not really tell us the true story because there is some government buying in there as well.
Go to capital goods orders x defense and x transportation.
It leaves out the things that are particularly volatile.
Look at this number -- not just a 0.7% gain for the month, but look at may.
That was originally reported at 1.1%. very good news overall for the economy going into the third quarter.
May not help a whole lot with what we see in the second quarter growth already excited to be bad.
But it does suggest that companies do not give up the ship yet.
They are still spending.
Jobless claims very quickly and that range, 343,000. we will worry about it when we get to august.
It is a range.
Thank you, m, economics editor mike mckee.
Staying on the economy, as we mentioned, destroyed bankers see filing is valid for now.
-- the detroit bankruptcy filing is valid for now.
And health lawsuits aiming to block detroit from getting protection from its creditors.
Is detroit bankruptcy eight unique case of a decline city that took on too much debt, or just the tip of a nice bird as other u.s. cities face unfunded pensions and billions of and bonds?
Analyst meredith whitney said "detroit was a decision last week to declare bankruptcy should not be regarded as a one- off in the u.s. municipal market, which is what the wind peddlers are now telling their clients.
The after shock will be staggering and detroit will set an important precedent.
-- port and presidents -- set important precedents." peter hayes joins us.
He is with blackrock.
With all due respect, meredith sang to her clients that this is not a big deal.
What are you saying?
I think what we're saying is you have to realize the size of municipal bond market.
It is a lot different than other fixed-income markets.
About 95 thousand different issuers out there, $3.8 trillion market.
To say that the market is broken is really not accurate.
You have to have a broad understanding that the majority of the market is very healthy.
We will start with where are the problems, and the problems are with weaker cities, weaker local governments, market, and the asset manager has been famous for question time.
Then you have to have to look at to do they have unfunded dungeons -- unfunded pensions , do they have municipal debt outstanding.
You have to be alert check all three of those boxes, and there are not a lot within the context of the market.
Who else is almost to that category of detroit?
The obvious ones, look at california, stockton, san bernardino, you have to look at certain areas of the country that have high in that it fixed costs or were once manufacturing base that have not retooled to service-based economies.
So there's some areas in the north east.
What makes unique a little different than other cities, even -- what makes detroit a little different than other cities are the fact that they do not have the same declining demographics that detroit does.
Detroit is going for a long-term demographic decline, losing two thirds of the ovulation in the last 50 years.
A roving tax base, high unemployment, cut services, it is a vicious cycle that we don't see in other areas.
But there are some cities, as he said, in the northeast, what philadelphia be one of them?
Philadelphia have a high pension problem, but they have a much more vibrant economy.
Much more stable economy.
The same could be said of chicago.
Chicago is important to the midwest, it is a gateway to the west and the east.
Their economy is strong, but they have a pension problem as well.
Both have debt outstanding.
You have to look at those.
But the extent of the problem is much different.
If i were to look at the tour, i would say you need to look closer to home within the state of michigan.
There are a few cities they're much smaller than detroit that are stretched your assertiveness and seems to have taken a hands- off approach -- stretched.
The state of michigan seems to have taken a hands-off approach.
The other side of the coin is harrisburg, pennsylvania, which is close to a solution without bankruptcy, the state of pennsylvania has been very proactive there.
What is means for detroit's chris valadez, potentially lack of access to the markets.
On a higher market note, what are you looking at, or what are you most worried about what detroit go through this bingo to?
That is a really good question because -- this bankruptcy?
That is a good question because emergency manager manager has identified general obligation bonds as being on equal footing with all unsecured debt.
With detroit, they have about $11.4 billion in unsecured debt spirit of that, only about $2 billion is actually debt.
The rest really relates to pensions.
The amount of debt they have outstanding in the context of the claims is small.
But the gl obligations, which are full faith and credit, whether they city, state, nation, we want to make sure you get paid.
That is what we're watching.
Where watching investors reaction.
A couple of years ago with 2010, we saw a big fund outflows.
I think there be more prudent here.
Sold at the wrong time, lost money peer where nothing evidence of that yet.
Peter hayes of blackrock on detroit.
Coming up, a much lighter topic.
All you need to get that perfect outfit is just a phone call and maybe an airplane.
Are bloomberg big number today is 350,000, that is the number of square feet google is added to its waterfront in san francisco.
It will increase their property by 25%. once finalized, it would be the biggest lease transaction the city has seen all year long.
And is saying in tech, ebay finding faster faster was to meet customer demand.
Later suzanne sure , -- its latest venture, ebay now, promises purchases in just under an hour.
We tried to different packages to find out how they do it.
-- we tracked two different packages.
Correct need something and needed now?
If you live in the bay area or the big apple, james or megan could be waiting to answer your call.
I just got an order for apple lightning usb cable.
Looks like i'm going to best buy.
Their shopping valets for ebay now, ebay's newest addition to the online marketplace.
It is an experiment in instant delivery using a mobile app.
Customers and sever the go, san jose, and new york can purchase select runs from nearby retailers, and in ebay now retailer delivers in under an hour.
We think about ebay local, certainly that take that connection of buyer and seller to the next level.
This week, ebay is expanding the now service for mobile to the desk top.
We know that working officials really like this service.
We fill almost half of our usage between a clock and 5:00 during the day.
We have made the retailers even more prominent . as ebay involves the now experience, the company hopes to expand its shopping base.
Ebay's dream is to be a competitor to amazon, to be a place where you go i need to buy something, i need to buy it on ebay.
It is focused on solving human rob is any need for convenience and immediacy.
Immediacy is not a new trend in e-commerce.
Both barnes & noble and amazon offer select so it may -- same- day delivery.
A costs five dollars.
It is unclear whether the venture will be profitable.
The researcher challenges are immense, the margins are very small, this is a really hard business to be in.
My guess is that they view this as a way to be on one of the trends as a way to bring in new customers.
Wax alternately we believe we can build a business that is profitable and great for retailers and ebay.
Ebay plans to launch now in chicago and dallas on the road to seeing the service benefiting the bottom line nationwide.
For those -- by the way, that is really cool, under an hour.
For those summering in the hamptons, have no fear if you accidentally let your bathing suit, designer dress, or juvenile.
You can order a new one and have it airdropped to your beach house right knife all.
Fashion website net-a-porter.com is offering same-day delivery service to shoppers in the hamptons.
The company teamed up with the standard hotels.
All orders placed by the clock a.m. will be jetted out that night for just a 25 dollars charge.
Alison loehnis is the president and joins us now from the uk.
You try to get away from all that royal baby news, is that it?
as a new yorker, i feel weird because i'm here and i would love to be there.
It is so exciting.
Quite how did you come up with this idea?
For us at net-a-porter, it is a born for us to beware our are her customer and spirit constantly brain storming how we can make it easier for the net- a-porter shopper.
We know that a lot of our customers in the tri-state area spend their summer out in long island, and the hamptons and we started to think how can we get her stuff, how quick take the sting out of that moment when you unpack and just as you say, you are like oh my gosh, i just have my bikini top, or i've forgotten my dress, we try to sell that for her.
And solving it by rote was not going to be the best solution because it anybody who has been there is from a year with accurate we partnered with standard air.
We are so excited about this.
We are first starting off in the hamptons.
The great thing for people vacationing throughout the country is that we have got a neck stay delivery option.
If for whatever reason you don't like it, we come and take it away.
It is free and easy.
Greg are you going make money off of this because it is just $25 that you're charging?
We are not taking revenue from the shipping itself.
We're looking at it as a service initiative, just improve the the service we offer our customers.
Were you getting a lot of calls, or were you seeing people say that oh my goodness, i wish you had same-day delivery or that i wish -- i had forgotten my things?
We were starting to get calls from customers, customers e- mailing can you deliver to a different address during the summer?
I know as a native new yorker, on a friday you want to get out of town and you will forget something.
This is all part of this big trend that online retailers are going into, which as, as we just talked about with ebay, ebay now, everybody wants to click it and get it at that moment.
Do you just feel that pressure from companies like amazon that are getting into the luxury fashion business?
It has been something important since they want your speed in an exit i did delivery service has been part of our dna.
With that, it is why i mentioned the returns because it is part of the deal of shopping on my.
-- shopping online.
If it does not work, you do not want is a painful.
For us, it is the click of the button, you up the phone, and we taken away, we exchange it.
Is amazon going to be a game changer for you guys?
Amazon will be a game changer for amazon.
We don't really operates -- we're both in the e-commerce, bully operate in quite a different -- space.
You're based in the uk, but your company's international.
Where -- what markets are you extended to?
At the u.s. is huge.
We have three warehouses -- london, new jersey, hong kong.
The u.s. is a vital market for us and one that we are growing rapidly.
The asia pacific region has been incredibly important to us, and that is why we decided to put roots on the ground to opening a distribution center there.
What is fastest-growing right now?
The u.s. and hong kong.
Alison, thank you for joining us.
Alison loehnis, the president of net-a-porter.com.
Still ahead, jetting an outfit to the hamptons, maybe getting a outfit through customs.
Also, do you have dreams of sipping tea with clean -- with queen elizabeth?
If you are an ambassador, you may be able to do that.
We warn you, it won't come cheap.
That is next on "in the loop." ? and washington, six months into president barack obama's second some of its top political people have been awarded the ambassadorship.
Caroline kennedy will represent the u.s. in japan.
Julianna goldman standing by.
This is interesting.
How much does it cost to get one of these lung assignments from the president?
It doesn't really come cheap.
That is what donors and people who have been lucky enough to get one of these plum foreign postings have found.
They have been picked to serve as ambassadors to italy, belgium, spain, and the london.
As the president took office, at least 25th of its current and nominated ambassadors were major democratic campaign donors, and together they give at least $13.6 million to him, the democratic party and congressional candidates.
This is all according to data that has been compiled by bloomberg.
Also, obama camp lane -- campaign disclosures show that donors turned ambassadors give an average of at least $523,000 to democratic candidates from 2000 eight to 2014. he mentions caroline kennedy.
Her nomination is different because she has been a different kind of supporter of the president.
Back in 2008, her early endorsement when she announce it here in washington alongside her uncle, the late senator ted kennedy, that came at a critical time in candidacy shortly after the south carolina primary that he won.
It went on to help them win in securing the democratic nomination.
Wife give us other examples of those who landed jobs in this way.
Matthew barton was obama's finance chair last year.
He has been assigned to the most prestigious position, the new ambassador to the court of st.
He raised at least 1.2 billion -- one point $2 million for the real expert for italy, he cap to john phillips, the washington lawyer.
He raised at least 500,000 for the reelect, and one of the perks of the job, they got a $5,000 bottle, one point $1 million wine cellar that is funded by contributions of american and italian winemakers.
Ambassadors also need to have deep pockets.
They only make a base salary of $179,000. but the parties and dinners that they have to throw at up, and according to one official, they can in up paying $1 million out of pocket.
It is a highlight cell.
Thank you, julianna goldman, our white house correspondent.
We return in two minutes on "in the loop." it is 56 minutes after the hour, which means bloomberg television is on the market spirit futures are many pretty much this morning.
Precious is europe and asia seem to be weighing on the market.
We should also point out that commodities are the second day of decline.
Treading the most in more than a month.
Crude oil is down.
Facebook up in the premarket after reporting sales and exceeded street estimates yesterday.
Mobile revenue a huge gain.
Stock up almost 30%. we are on the markets again in 30 minutes.
We will be back.
30 minutes to the opening bell.
This is "in the loop" with betty liu.
The countdown begins right now.
Orders rose more than forecast last month showing a pickup in demand that should help field manufacturing in the second half of the year.
Sac capital could face u.s. charges in an insider trading probe as early as today.
We're live at the courthouse courthouse in downtown manhattan awaiting word.
And watching facebook shares rising to new heights in a premarket as the company's mobile strategy paid off with ad sales surpassing its desktop revenue for the first time.
Finally it is paying off.
Let's get straight to the market desk for the countdown list.
Economics editor mike mckee kicks it off.
It has been a big date on the show.
Is this what a one-off or a harbinger?
We decided to ask bondholders.
They cannot make up their mind.
Detroit general obligation bonds returning in april 2008, trading as little as $.82 on the dollar.
Similar debt due in april of 20 -- april 2025 treading at 90 forces on the dollar, up from 91 earlier this week.
. i'm watching shares of under armour.
Performance of apparel and shoe company knocked it out of the parking look at their earnings in shares.
The past quarter save both beat analysts' estimates.
Under armour boost its revenue and operating income forecasted shares are rising on that.
Quite -- shares of product are falling.
-- potash are falling.
Production is plentiful, betty.
All right, guys, thank you.
It is the hottest parlor game from washington to wall street.
Who is going to leave the fed next year you?
Economics editor mike mckee says the real deal is that this story is bigger than both of them.
I can pretend to know what is on obama's mind.
Economists popular at the white house, yellin popular at the fed.
She would also be a glass ceiling fixed.
Everybody thought she was the favorite.
A gets collocated.
Politics aside, this is only one move in a very complicated policy chessboard.
The fed will be shorthanded next year.
Governor betsy duclos the term is up.
She is leaving at the end of august.
Governor jerome powell's term is up in january.
He could be rape appointed, but he is a republican, -- he could be reappointed, but he is republican, so that is not solid.
Number two at the treasury department, now add in bernanke's departure, he could stay on as chairman here determined that up until 2020, but nobody expected to do that.
All this is coming when they have to and they extraordinary monetary policies.
Worse, the fed has only had seven full governors for the past year.
They went five years without having a full staff because congress and the president could not get their acts they appeared what happens with all these openings is going to shape the fed for years to come.
Let's go back to politics for a moment.
Have aesthetics -- how does that affect the president's decision you go in washington, it is always about politics.
Sommers, as on for show as he is brilliant, winning confirmation it was not easy.
They will want to know why he supported getting rid of glass- steagall.
And of course what happened at harbor.
-- at harvard.
Suppose summers is appointed, suppose in the face of that snub janet yellen leaves.
What are you left with?
Three white guys.
All very capable, but for the country's first black president, the optics in oliver good.
There is a lot that has to go into this calculator.
Is is like the markets are not that gravy for -- that crazy for summers.
Nobody expects a decision for a couple of months yet.
It could be a lot of position shifting and some other names can come go into the mix.
Thank you, mike.
Economics editor mike mckee.
From washington back to company news, the corporate world, severance become as well-known for its package coffee and go through sores as it it is for coffee in its cafes.
Service that signed a deal with your giant the known -- danone.
Julie hyman is here to explain.
You can already get yogurt and starbucks are great you can, this would be more starbucks.
It would not have a starbucks name on it.
He was a evolution fresh and inspired by dannon.
Starbucks bought evolution fresh for $30 million.
This is an expansion of that grant to yogurt, we should mention it is going to be greek yogurt, that is a distinction that is important.
Which also mentioned the partnership with danone, the financial terms of that have not been disclosed.
It will be going into starbucks outlets and then into grocery stores.
Do we know why yogurt?
A couple of reasons.
Seo howard schultz has a strategy here where he wants to start offering more healthy fare . also, starbucks has been pushing more and more into the grocery store business.
And then why greek yogurt in particular gekko it has -- in particular you?
It hasn't taken the u.s. by storm.
It is 29% according to nielsen.
Another way to look at it is the 16 ounce unit sales over the past several years and the climate we have seen from 270 million back in 2011 to 870 9 million in 2013. we have seen a surge in demand for greek yogurt in particular, betty.
That is right.
So how big of a part of starbucks business is coming out of the grocery?
It is not the majority by far, but it is growing.
That is imported.
If you look at the percentage of overall sales that you are seeing from food service, that is the moniker that starbucks has given to this.
Again, it is not the majority, but over the past several years, we have seen a growing more in the 24% range then the single- digit range that we have seen at sales at these star trek outlet -- at the starbucks outlet growth.
Thank you, julie.
Julie hyman, markets correspondent on the starbucks.
Let's move over to tech and what is going on there.
We are focused on blackberry in today's turnaround trade because just moments ago we operating is that the company has fired 250 product testers in ontario near its headquarters.
Dominic chu has more.
The company actually said this was part of their turnaround.
Yeah, they commented in an e- mail saying this is part of their turnaround strategy.
Library is a company with no gas blackberry is a company with no secret that it has become one that has focused so much more on what is happening with the stock overall.
You can see here over the last year, blackberry is up about 33%. it is his eyes when her, but this is where are focusing because after their last earnings report, they really took a hit because they did not sell as many of their big z10 smartphones and their q10 keyboard models.
Product that library will be key for the turnaround.
255 -- 0 fired employees are part of this.
The ceo is making a push to get people to buy these new blackberry operating system products.
Whether it be the touchscreen model or the new model which is basically the touchscreen /keyboard model phone.
When it comes down to whether people will actually go and look at this, fourth and ninth of a formidable path ahead of him.
This first quarter, blackberry z10 model phone sold about one million less than what analysts thought they were going to sell.
People are not yet gravitating toward all those phones.
But still, 250 fired employees may nothing like a lot, but this is just another one of those steps that he has to take to turn the company around.
Thank you, dom.
Dominic chu, markets reporter.
Staying in mobile, facebook investors expecting to see a big profit.
Opening shares up more than 20% in the premarket.
More portly, -- more portly, mobile advertising revenue.
Also, the fast-growing fried chicken chain in the country is not the one with the kernel out front.
It is that one on your screen.
Stay with us, we will tell you more about bojangles.
You are "in the loop." facebook shares on a tear this morning ahead of the open training.
A little above 30% higher in the premarket.
Hot on the heels of the earnings feet.
Advertisers were alert to its mobile level.
Mobile middle -- mobile now makes up 40% of total ad revenue.
According to ceo mike zuckerberg, the number is on the rise.
The founder and ceo of spruce media.
His clients include mcdonald's in progressive insurance.
Senior west coast correspondent jon erlichman has been sifting through the numbers, and the reaction here, jon, on facebook.
What's changed is quarter to see the revenue for mobile coming in so huge?
I was reminded of a conversation that i had with mark zuckerberg not too long after the company went public when i said what is your biggest challenge right now, and he said very simply it is mobile.
That in itself does not tell you a lot.
This transition to mobile means you have got to come up with a product, in this case apps, that are going to be as compelling on your phone and tablet at they were on the all-encompassing pc experience or laptop experience that people enjoyed with facebook.
That is one part of it.
The advertising part is the second part.
I think people in a lot of ways over the last 12 months have heard about these changes.
You see these numbers, and maybe they breathe a sigh of relief.
Ok, it is all coming together for facebook.
at the same time, one of the most promising parts of facebook's mobile budgets instagram.
That does not have ads.
And mark zuckerberg saying there will be a right time.
You know, here is a service that has been around for less than three years.
I think mark zuckerberg and the people there look at the growth that it is enjoying, well over 100 million users now, and they say if you throw some ads in there is that going to change the experience?
What are we learning right now?
I spoke to the cofounder of instagram about this not too long ago.
I said wait a second, you have got celebrities and you have got marketers that are already kind of taking advantage and advertising themselves on instagram.
He said that is fine, that is great, we're learning a lot about that.
I think that is something to consider.
Jon, stay with me for a minute.
I want to bring and rob jewell, founder and ceo of spruce media, who helps companies advertise on facebook.
Rob, you must be encouraged by what you heard yesterday on facebook.
It is right in line with what we're seeing seeing from our clients and we actually saw an increase in spend on the popular ad unit, from q1 to q2. they're mobile ad products are -- went from zero a year ago and are really on fire right now.
I think you are seeing that reflect in the stock price.
What was the one thing that change for your clients to go onto the mobile platform for facebook?
The mobile app , which is the popular ad unit on mobile for facebook, has only been around for six months.
I think you saw that in the first quarter, they were still experiment thing -- still exterminating.
It second quarter, you start seeing that scale happened.
Jon, what is facebook thing in terms of continuing this momentum into the coming quarters?
At some point soon, just look at what they are saying every quarter, they will be able to say we get a bigger chunk of our advertising revenue from our mobile products than the pc products.
One analyst at piper jaffray overnight said he thinks that is going to happen in the fourth quarter.
That they will have a bigger chunk of their advertising revenue that is coming from mobile.
In a lot of ways that makes sense.
Facebook has a huge amount of influence and where those ad dollars are going.
Facebook would not be putting those ad dollars into the mobile product if it did not think people were going to -- what you are just talking about there, the advertiser gets the sheets back and says oh, i have got seven-time return on my investment.
So every small example of that make the advertisers happier.
That just plays into the larger story.
Rob, could you imagine what kind of other companies -- who has been on the sidelines watching all of this and saying wait a minute, this is really a big platform that we need to get on board here?
Who are we talking about?
I think we are -- i think facebook is a must buy at this point for all advertisers.
They are appealing for brand advertisers, direct response advertisers, e-commerce advertisers, local businesses.
If you are not on facebook right now, i think you are missing out because they have added product for everyone at this point.
What is most confusing or obligated about facebook -- or complicated about facebook advertising?
I think facebook has launched a slew of new ad products in the last 12 months.
10 plus major ad product releases.
I think there is a little confusion in the market on what is the strategy to take to be successful on facebook.
I think they're going into a little bit of a quiet period with the recent announcement of them simple finder ad products.
I think that will be good for the market because it allows them to adjust to what is out there right now.
There is a lot of success to be had from what they have already released.
Rob, to record rob jewell, founder and ceo of spruce media, helping companies like mcdonald's advertise on facebook and also of course our bloomberg senior west coast correspondent jon erlichman.
We will return in two minutes on "in the loop." you are watching "in the loop " live on bloomberg television, streaming on your tablet, your phone, and bloomberg.com.
We're about eight minutes from the opening bell.
It is time for the countdown blitz.
Senior market scores on a julie hyman is here.
Let's are with hulu.
Time warner cable taking a 25% stake in hulu.
They have been called off a lease for now.
No definitive plans to resume them according to a person with knowledge of the matter.
Time warner cable was among the suitors when owners called off the sale earlier this month.
And go daddy may sell shares to the public as early as next year.
The ceo tells bloomberg news that he is considering the move.
The company known of course for salacious super bowl commercials the contract to generate -- is on track to generate over a billion dollars in revenue.
Lulu lemon is turning attention from female yogis to wall street jocks.
Men's clothing is increasing at push toward the male demographic.
It is sponsoring the wall street to cap one.
-- wall street decathlon.
Trying to court wall street male shoppers more heavily.
It probably took care of that to your problem.
Men would be a little less tolerant of that issue third remember ceo christine day is leaving the chain in part because of all of the talk about quality control at lululemon.
Julie, thank you.
We are a few minutes away from the opening bell.
The top 10 traits you do not want to miss right after this break -- this break.
Even here on "in the loop." welcome back.
You are "in the loop." i am betty liu.
Lumbar television is on the markets.
Dominic chu with the latest on equitie futures.
S&p futures down about .4%. dow down 77 points.
We are still a nice popular with the nasdaq thanks to tech releases.
That is a big deal because when it comes to earnings season, it is about how much momentum you can build going into this.
Are people going to be more, or investors going to be more optimistic about the a companies are actually operating?
On the futures five, we're still covering near record highs for the overall stark market on the s&p 500. that just tells you what this particular kind of move, there are investors that are still a little bit wary with the tight rations with the market that record highs for the s&p 500. dom, stay with me because we are getting breaking news.
This is a story you and i have been following.
Steve cohen at sac has been indicted by a federal grand jury here in new york.
Again, steve cohen, the big hedge fund billion or has been indicted along with sac capital here it comes as part of a six- year insider-trading probe.
Dom, you have been following the story alongside us here.
This has been through a long journey for regulars and prosecutors to try to weave steve cohen into the investor trading inside his firm.
Is a big deal because when it comes to steve cohen, there has been so much made about whether or not the evidence can actually support many of these charges.
Remember, the sec had brought administrative action, not an actual suit or a charge against steve cohen.
It is completely different than what is happening right now.
When you do have any kind of a charge being brought forth in terms of federal grand jury is being involved.
That becomes a significant development here for steve cohen and sac capital.
We are coming up at least in terms of looking at the overall picture for these cases.
All about the data concerning dell, possible insider trades there, possibly other companies in the biotech it is repaired whether or not they actually have -- that is easier.
You get the impression from a legal analysts that they would not bring charges or these kinds of actions unless they really thought they had a case to make their, betty.
Just a reminder for our viewers, this is one of the biggest actions.
As you mentioned, since we saw prosecutors go after gupta and the insider-trading probe around him and how he was connected to roche pressure odd- numbered -- connected to raj.
He was convicted of insider trading.
This is really the biggest that we have seen in several years.
Significant in the sense also, as you are talking about, the trend that we have seen or this increase by prosecutors, by regulators to try to go after wall street bankers and go after hedge fund firms.
Again, like you said, because of all those things, but also because this is just the next step in a six-year campaign that federal prosecutors, the federal government has been bringing against insider-trading parts of the financial services industry.
They have been trying to bring this crackdown on these particular managers eared remember, you have mary jo white, they're looking to put a stamp on her time at least as the head of that particular unit.
That is going to be a big deal as well here.
As we're going through the opening bell at the new york stock exchange, su keenan, ready?
Ok, we have our reporter, su keenan, down at the courthouse.
We will get to her in a moment.
Let me bring in larry, a trader at the cme.
I want to get your reaction.
How significant -- because we talked about a part of the six- year investigation into the hedge fund firm, sac capital heard from a trader's take, launching insider-trading action, how does this resonate with you?
I like it.
We don't want to see anybody who is breaking the rules and who is trading illegally.
We want free markets that are traded traded the right way.
The best bit, the best offer, always rebel.
This is the way we do it at the cme group here.
Whenever we see something here, traders are happy.
They don't want to see people breaking the rules.
They want to see people that are breaking the rules get caught.
There was another case we talked about in our newsletter today and for some high frequency traders got caught for doing something is another good thing.
We want to see people following the rules, not breaking the rules.
There is plenty of opportunity and money to be made for traders to do that.
How much have you seen cases like this?
Bernie madoff, how much do you think it is like this have really kept retail investors on the sidelines here in the market?
It is a huge problem, to be honest.
It makes our industry, the industry as a whole look very bad when you have the bernie madedoffs of the world.
99.9% of the world involved in these markets it follow the rules and do the right thing and have the customers' best interest of mine.
We have the bad apple, it us a bad name and makes retail investors not trust investment ideas and not trust the people that are involved in investing.
That is a good thing at all, betty.
Not at all.
Larry, thank you.
By the way, just before i you go, on the markets themselves and what we saw with the reaction to the durable goods numbers, we're not going to much economic data for the rest of the session.
Where do you expect the markets to trade?
I think they can trade a little bit lower.
We had a huge move up these markets are certainly turning up.
When you get the 10-year note to hit those new highs that we saw today, i think these markets will take a little bit of a hit.
We will see some people getting on a long position and maybe putting a sure position, certainly overall the market will go higher.