30 minutes away from the june jobs report.
Is the economy still speaking of speed -- picking up speed?
Samsung comes up short.
The world's biggest maker of smartphone mrs.
Two american burger chains duke it out in london.
Mcdonald's goes after 10 adults in the healthy eaters.
-- goes after young adult and the battle of healthy eaters.
It is friday, july 5, we are live from bloomberg world headquarters, i am betty liu.
Team coverage of jobs in the other top stories we are watching, dominic chu telling us how traders are positioning themselves for the numbers and how they will likely react when those numbers come out.
Michael mckee looking at how the numbers are not as important for investors.
A deals reporter has the latest in the bidding showdown over hulu as the deadline looms today.
First, m and the real deal on a number that has taken on a new meaning.
It is not what the data is saying but what fed officials say about the data that matters which leaves a whole lot of room for investor interpretation.
Here is what the consensus forecast says.
The difference would be lost government jobs.
That is the wildcard given the sequester.
If unemployment drops, is it because more people were looking for work or more people gave up looking for work?
That will matter to the fed . how big is the sequester affect and is it almost over?
Weaker job growth, does it mean corporate america is losing faith in economic expansion or is it a statistical quirk?
In june, since the year 2000, the highest initial for june jobs only 146,000. economists think it is a problem with living teachers and students from work to school, and vacation, etc.
Double check on that as we say all the time, higher would be reassuring.
It is about the income equivalent of another 200,000 jobs, which then brings them into the picture.
Anything around 100 65,000 keeps the labor market on pace to reach that seven percent unemployment level by 2014. anything faster likely moves up the timetable, which in a weird way, could bring its own complications because markets would price and higher rates that would push again the idea of the economy strengthening and the fed starting to taper.
The next fed meeting is july 31. could we see any tapering or talk about it?
Or is no news conference after that one.
You would think of the fed starts something like that, ben bernanke is going to want to explain it.
He will want to broadcast it.
Thank you, mike mckee.
Investors are positioning themselves ahead of the unemployed but report.
-- unemployment report.
Let's talk about what is happening.
Decisions for an hour in the green.
Take a look at the average s&p 500 over the last two years on jobs day.
It is important because on average, when we get a better- than-expected report, we see some movement overall.
When it comes to the best- performing sectors on positive surprises, it is consumer discretionary, industrial, and consumer staples which are the single best-performing in terms of the overall picture on jobs day.
The worst performing are tech, financials, and industrials.
They tend to perform the best on a negative surprise for jobs.
What it comes down to is looking at the cyclical sector heirs like tech, like financials, like industrials that really do perform that much more to the downside.
On average, the s&p 500 is a down day on jobs day over the last two years.
But when days there are negative surprises for jobs, it is even more exacerbated, down nearly eight percent overall taj down nearly a percent overall.
Dom chu at the touch screen.
Hedge fund billionaire steve cohen, according to the wall street journal, he will not face criminal insider trading charges.
He dodged a bowl it.
Prosecutors have included they do not enough evidence to charge the founder of the hedge fund.
He could still face civil claims from the sec in march his firm agreed to pay record $616 million to settle insider trading cases.
The firm neither admitted nor denied any wrongdoing.
The deadline to submit bids for hulu is tonight.
The first round of bidding to do seven suitors, this time there may be fewer.
Christina, tell us the process as the deadline looms.
We are definitely going to see the number go down in the terms of strong bids tonight.
The gentle names have fallen by the race side -- by the wayside, such as yahoo.
But you have some pretty deep pockets still in the game, time warner directv, names that could produce some pretty stellar bids tonight.
Let's put this into perspective.
It has been a pretty complicated and messy process.
Part of it stems from the fact the owners of hulu will still have a very strong relationship with whoever the buyer is.
The two big owners, news corporation and disney, will have a large say in the company even after it is sold because they are providing the content for hulu.
Does create a messy situation,, and one which we have to see how the bids come in.
Content is king now , original content, so why can't hulu ride this media m&a? part stems from the fact news corp.
And disney really have a lot of disagreement on the strategic future of hulu, whether they should allow other content providers to put stuff on hulu and provide more shows and premium content on hulu.
Another part is, the premiums out of the business is still not producing a profit.
That is the one that charges $7.99 because that content is more expensive to buy.
That is still not profitable.
To be honest, there is the executives that have been leaving hulu which makes things more complicated as well.
Bottom line, who could likely be the winner?
When you're talking about a billion dollars, you have to look at the bidders with the most amount of cash available, and that is direct tv.
It need something to hedge against the declining pay-tv revenue it is thing.
Time warner, a lot of cash.
Peter chernin, also a lot of cash.
The problem with time warner and directv, hulu would be getting the broadcasters who own hulu, would be getting deeper and deeper in bed with the very people they're negotiating with on a daily basis on the number of other things.
So they may not want to give -- hulu may know to give those guys additional leverage.
Coming up, economist david rosenberg said the fed is right in warning the markets about future tapering.
Also, the upcoming jobs report.
What will the white house say about jobs yet that we will talk to the chairman of the white house council of economic advisors alan krueger, the outgoing chairman.
We are about 20 minutes away from the june jobs report read stay "in the loop." ? you are watching "in the loop." as we have been discussing, the biggest news of this morning is the june employment report.
How many jobs to the u.s. create last month?
Is the recovery dependable?
Will be fed start tapering from the qe program?
With the chief economist david rosenberg joining us, says says the job creation outside the range of 150,000 -- 180,000 is likely to move markets.
Great to have you back, particularly on jobs day.
Where do you stand?
Consensuses 165,000. i am taking my life in my hands before the number comes out, that i venture to say looking at the information, probably the number is going to surprise to the high five.
If the edge mark consensuses 165, i think we could beat that considering what adp did, 188. we already know the consumer confidence indices, no matter which one you look at, reached almost six-year highs in the month of june.
It certainly wasn't because people open their monthly statements and saw their stock portfolio and treasure portfolio and decided to become bullion.
I think a lot of it is the assessment of the labor markets improved.
David, you had near record car sales numbers.
Housing data is still firming.
All of that tells you the jobs market is churning and doing well and perhaps we may accelerate into the end of this year?
It would not surprise me.
These are still fairly moderate employment numbers for this stage of the cycle.
It if you're talking about the second derivative, are we improving?
I sense is we are improving.
What caught my eye, and this will come down to the fed, how will the economy has done in view of the really dramatic fiscal squeeze we had this year.
We never had a cliff, but we certainly had a very steep hill.
Economic growth is not robust, but benchmark against where i thought we would be at this stage late last year, it has outpaced my expectations.
What caught my eye, you mentioned the auto sector.
Auto production schedules are firming.
Even with all the malaise overseas, the emerging markets, economy slowing down dramatically on of the recession in europe on billing, what stuck out in the adp number was the fact employment actually did not go down.
That will be interesting to see , factor employment and factory overtime hours.
There will be certain key sectors and manufacturing will be a key one to watch where job growth is.
Taken together, the question remains, what does that mean for the fed?
If we get a number on the higher side, say above 180,000, what implications does that half are fed policy?
The fed has been very clear.
They're being accused of miscommunication, but they have been very clear that policy is going to be data-dependent.
Either way, it always is.
They have lifted the bar quite significantly.
We would have to see gdp growth of at least three percent in q3 and q4 to ratify their views.
The labor market clearly is a key ingredient in economic outlook.
Then they will be geared toward tapering off.
Do you think that could start as early as when?
I think it could start as early as the fourth quarter . i think it is important for people to realize that with the deficit coming down, and with the cbo's projections coming down, that means the new issuance of treasury securities is going to be a lot lower than what we had thought earlier.
The reality is if the fed does not taper, it means they're going to be absorbing any of the greater share of new bond issuance.
If they don't taper, the reality is the economy accelerates, they're going to be engaged in a passive easing of monetary policy.
Tapering off is not tightening policy.
I want to talk to bit about the bond markets.
We did see this sort of increased volatility, so to speak, in the past several weeks.
Some are saying, we have not quite observe the impact, even though rates seem to be stabilizing.
People see how they have done.
You might see people pulling back, consumers pulling back, as they get a bit scared from these losses.
Is that on your radar?
I think that is a little overrated.
When you go back to 1994 for example, where we had the mother of all fed tightening circles, bond yields shot up dramatically.
It did not exactly cause the economy to go into reversal.
When we had bond yields go up in say 1996, the economy did not go into reversal.
In 2000 3, 2004 where bond yields moved up ahead of the fed, mortgage rates followed suit, we did not go into reversal.
Look, no question we have had significant back up in bond yields over the course of the past couple of months.
I don't expect that will be sustained.
I think the bond market is oversold.
It will probably settle into range over the near-term.
Put it in perspective, the yield on the 10-year of note, the worst recession in 10 years -- 70 years, 10%. we are below that level.
We are ratcheting up from ultralow microscopic levels a couple of months ago, but the overall level of interest rates is certainly not an impediment to the economy right now.
David, i know you will stay with me through the jobs numbers.
I want to get a quick check as we are approaching the jobs numbers.
Dominic chu has the market check read it seems markets agree with david that week perhaps the best surprise of the upside.
That is how the stars are lining up, green across the board for those futures.
All near session highs.
One interesting point is well, they rose umber was talking about 10-year yields.
Optimism about a jobs number and those 10-year yields because yields are going higher.
People are selling off or safety of the government bonds, pushing yields up six basis points to 2.57%. we are also seeing a little bit of optimism about the jobs number in the gold market.
Gold futures are down over eight percent -- over a percent.
A bidder is a better jobs number.
All of that really is playing into this idea that what is -- whatever the fed is going to do with tapering, cutting back on asset purchases, will have a big impact on the marketplace.
We are watching those futures for sure.
In a moment, the industry really cooking when it comes to job creation, the restaurant business.
That is where the jobs are.
Plus, the june jobs report in about 10 minutes time.
? today at noon, join in for my radio program.
Joshua shapiro at 12:00 p.m. eastern time.
Just a few moments away from jobs.
We have been on the lookout for where the jobs are.
One area where growth is booming, restaurants.
There are nearly one lead and restaurants in the u.s. and business is cooking.
The s&p restaurant index is up over percent this year, meeting their broader index by two who percent -- is up over 12% this year, beating their broader index by two percent.
About 14,000 jobs were added in may alone.
Why is it growing so fast?
And americans are consuming.
Americans spend $1.8 billion a day at restaurants.
The industry gets 47% of every food dollar spent.
An increase of 25% since 1955. 45% at of adults a restaurants aren't essential part of the restaurant -- lifestyle.
The average household spent $2600 in dining and 2011. there is no such thing as just a waitress.
Restaurants and he was employed 13.1 million people, equal to 10% of the american workforce.
Stay with us.
Less than five minutes away from the june jobs report.
You are "in the loop." ? you are watching "in the loop." our top headlines, egypt bracing for more protests after the ouster of president morsi.
The brotherhood is responding by calling for nationwide demonstrations.
Bolivia has set up the global manhunt for edward snowden after president evo morales'flight was diverted when the fugitive was thought to be on board.
He is threatening to close the u.s. embassy.
Presidents from latin america are demanding an apology from the u.s.. samsung being punished in the markets after fails fell short of expectation.
$400 million chunk out of second-quarter results pointing more analysts to downgrade profit forecast for the smartphone maker.
The jobs numbers are just seconds away.
Joining us, david rosenberg and bob bauer kaunda chief global economist at principal global investor.
Our kids reporter dominic chu standing by with the investor, the market reaction.
Mike mckee will have the real deal on the economy.
Washington correspondent megan hughes is live at the labor department with those numbers.
100 65,000 jobs are expected to have been created in the month of june.
The unemployment rate at 7.5%. one hundred 95,000 jobs were added to the u.s. economy in june.
Beating economist estimates of 165,000. a big revision for the month of may, 195,000 jobs added in may, originally reported as 175,000. big additions, big gains were made to leisure and hospitality.
If you break down the june numbers, 202 thousand private sector jobs were added to the economy.
The big loser continues to be at the government level, 7000 total government jobs lost, the biggest losers at the state level.
Take a look at some of those they gained.
Leisure and hospitality, up 75,000 jobs.
A professional business services, 53,000. retail, 37,000 jobs added to the economy in june.
Health care, 20,000. financial activities, 17,000. i mention the main number, big revision, 195,000 jobs added in may as well as june.
The unemployment rate for both month stays at seven point six percent.
The number of unemployed, 11.8 million.
That is head -- held steady since february.
Long-term unemployed, pretty much unchanged, 4.3 million.
One thing i wanted to point out, the people working part-time for economic reasons, that went up 322,000 to 8.2 million, maybe one of the first places we are seeing the sequester impact.
Thank you so much.
I was watching the markets, remember, volume is then, but we did see a spike after the numbers.
Maybe a point or two to the upside for smp, but we were hovering near session highs.
14 points to the upside down.
Still near session highs, but not astrometric of a move on that beat for jobs.
Where you see a massive move, at least in the grand scheme of things, is on the treasury side.
Yields for the tenure up to 2.63%. now they are up 13 basis points.
As you can see, a sharp move the upside for those yields.
People selling off u.s. government notes and really just pushing up treasury yields to 2.63%. on the currency side, watch what is happening to the dollar, though euro is weaker compared to the dollar.
A sharp drop in euros versus the u.s. dollar.
One more check on commodities, crude oil still up about eight percent -- about a percent.
I want to bring in mike who is been going through the numbers as well.
I am staring at the 70,000 net revision of added jobs in april and may, that is pretty significant.
There was a speech last year where he was said they're not looking at any one month, but the totality of how the data have come together over the previous several months and missed just shows you the economy has been stronger for longer than they thought, which adds momentum to the idea of a september tapering.
You will see that priced into the markets today and a lot based on this revision.
The unemployment rate,, it stays the same, but the particular patient rate, the number of people who have been actively looking for work and getting jobs goes up by 1/10. that is also what the fed wants to see.
Really strong hourly earnings tells you people are able to continue spending.
They have the funding to get out there and spend.
That is going to matter to the fed as well.
Take a look at the breakdown of jobs.
And tristan, manufacturing jobs fall a little bit, but manufacturing hours work rise, so they may be feeling pressure that will bring manufacturing higher back as well.
We see a smaller than expected drop perhaps in government jobs , maybe the sequester not going to hit as hard as people thought.
We will have to rethink job predictions going into the months ahead.
Overall, very strong report and plays exactly into into the hands of those who see an early tapering.
It is a strong report, indeed.
I want to bring in our economist, bob bauer at principal global investors and chief economist david rosenberg.
Bob, these numbers we were talking about, pretty strong.
Does that mean tapering is sooner rather than later?
We think tapering probably will start in september.
This was a positive jobs report.
It fits nicely with our idea that we will have schaumburg growth in the second half.
-- that we will have stronger growth in the second half read it fits with the housing construction, consumer demand.
This is just another evidence of a stronger economy.
David, you on the money.
You said you had the feeling from all of the numbers ahead of the jobs numbers that we would get a surprise to the upside.
Is this more than what you had estimated?
The old saying, you're only as good as your last call.
Maybe i should not say anything.
It was about in line with what i thought we would see.
You tack on the upward revisions and i think bob is right, this is a firm report.
Mike mckee mentioned hourly average warnings.
The work week was flat.
And you take a look at what i call work related paid, when i take a look at the income coming out of the number of it because it is not always just about jobs.
What is the income for the working class that came out of this number, but .4% month-to- month, the best since february.
Take a look at the year-over- year.
It is pretty decent purchasing power.
I think this will feed well into consumer spending as we move through the summer months.
Do you think this pushes the fed to go in the direction and lower their threshold to 5.5 on the theory you might get 6.5% unemployment little faster than you want?
We got a richly -- don't think this number -- we got originally we would see 6.5% probably late summer next year, but if the participation rate is going to rise along with faster job growth, i think the fed will keep it at 6.5%. david?
I would tend to agree with that.
This number did not tell you they have to go to five .5%. i think there is enough evidence to suggest nehru or the full unemployment employment rate probably in the cycle where there was no real capital deepening the business sector that waiting to get to 5.5%, talking about wanting to build into newer and higher inflationary cycle we will have to deal with in the future, that sort of policy the way to 5.5%, to me, that is the danger zone.
The fed brought this policy in december.
It had the tail risk of a fiscal cliff.
We did not get a fiscal cliff, we got a fiscal hill, and we are moving through it very nicely.
We have a monetary policy that is geared for stabilization.
Simply put, we don't have it.
We have an economy going moderately.
Tank you for staying with us through the numbers.
Bob bauer staying with us.
What will the white house have to say about the jobs report?
In a few moments, we will talk with the chairman of president obama's council of economic advisers, alan krueger joins us.
What of the most important additions to mcdonald's menu in years.
Why the mcw rap may be the key to attracting young consumers.
? the jobs report coming in better than expected, 195,000 jobs created in june, 70,000 added for april and may together.
Turning this is robert our from principal global investors.
Dominic chu keeping his eye on how futures are trading.
Washington correspondent megan hughes is live at the labor department.
You have been going through these numbers in the report, several pages still to go through.
Long-term unemployment and the changes going on there.
That is an indicator we talk so much about, the problem of long-term unemployment.
The report looks at people who have been out of work or than 27 weeks.
That number around 4.3 million workers, the number unchanged.
We look at the average duration of unemployment and the median duration of unemployment, both of those numbers down from june compared to may.
Positive indicators there.
Let me bring back bob.
One of the things that markets tend to focus on in the public is this jobless rate, which is still stuck at this stubborn 7.5%, seven point six percent.
I know we talked about a decline coming and what that indicates for the fed, but how long are we going to be stuck around this level given that we are seeing acceleration in the number of added jobs?
I think it depends on the participation rate.
You mentioned in the last segment it kicked up by point one.
That is a good thing.
That means people are beginning to have called it's in the job market and are starting to come back and looking for a job.
People who may have been discouraged before.
In some sense, the fact we are having good job growth and maybe not a fast declining unemployment rate, that actually might be a positive thing.
Crocs do you think we pretty much have seen the jobs impact of sequestration, or is there more to come?
No, we have seen all this a question that may come up with.
I just don't think there will be anything following up on this . i think the effect of sequestration is not nearly as big as what people had said.
I might point out, take off on one thing david rosenberg had mentioned, the fed focusing on unemployment is almost a mistake in some sense in that unemployment is the most lagging of all lagging indicators.
Monetary policy leaves the economy by 12, 18, to 24 months.
In some sense, making a decision on military policy with a lagging indicator can get you in some hot water -- on monetary policy with a lagging indicator can get you in some hot water.
Thank you, bob bauer.
Staying in washington, on a different issue, hard court tesla fans are writing to the white house and they want elon musk to win the war against car dealers around the country.
Will the electric carmakers get its way?
He is to tennis matches away from once-in-a-lifetime payday.
How andy murray will cash in big time if he can win wimbledon.
? let's switch gears to talk about tesla who has been trying to sell its cars directly to consumers online or through its stores, bypassing franchise dealerships.
A white house petition to allow them this approach just got the 100,000 signatures required to trigger a response from the president.
I want to bring in our detroit euro chief.
Does the federal government have any authority over the states on how they manage car dealerships and auto sales?
This is a states rights issue and the dealers are very strong in the states and that is where the issue will be played out.
It is kind of symbolic.
It is more of a publicity stunt.
For tesla, that is kind of important.
This did not originate from tesla itself.
This was a tesla owner?
Tesla probably find that helpful, but not necessarily useful in the bigger sense.
There are about 17,000 dealers in this country and they're basically million years, they have a lot of local power.
They are very wary, even when the smallest tesla, of direct sales.
We know there are several states who have already banned teslas from being sold.
Texas is very vocal, north carolina, virginia.
So far, does tesla seemed to be on the losing side or are they making some traction?
It stalled out in new york.
There was legislation pending that did not go anywhere.
One of the mm it's was adjusted to specifically exempt tesla from this band.
-- one of the amendments was adjusted to specifically exempt tesla from this ban.
Franchise laws are intended to take advantage of their dealers without protection.
This is really a concern that if tesla can do this, then general motors or ford or someone they can jump in and that would be a problem for the steelers.
Do they really want to?
Do they really want to sell directly to consumers?
There have been attempts in the past to do it.
No last 10 years, there have been attempts.
-- during the last 10 years, there have been attempts.
This is their livelihood.
If you cut the dealers out, they don't really have any power other than these franchise agreements.
Thank you for joining us.
Coming up, two big names in the burger market opening their doors in london to compete.
Record-breaking day for another traditional american food, hot dogs.
Joey chestnut won his seventh straight hotdog eating contest on new york's coney island.
In 10 minutes he said a record of scarfing down 69 hot dogs and the buns.
I hear the secret is to make sure the you dip them in water so they slide down your throat.
That is what happened july 4 on coney island.
? $75 million, that is how much andy murray may earn a year for becoming a bloomberg's and champion.
The uk has been waiting for 77 years to win this image match.
We will see if he wins on july 7. five guys and shake shack are opening their first restaurants in the uk this week.
Jessica howard went to check out the robbery that is cooking a broad.
Welcome to burger school.
Training day at five guys in london's guardian.
We are fanatical about the two things we do, hamburger and fries.
We try to do them really good.
He opened the first five guys in 1986. there are 1200 now.
It is america's fastest growing restaurant chain.
This is his first foray abroad.
Convinced by charles dunston and his deputy.
He brought me over here screaming and kicking.
I was afraid to go overseas.
They convinced us they would be good partners.
Down the road, another big name in american burgers opens today, shake shack.
We are used to five guys as great neighbors.
The fact we are both coming to this great city at the same time is a coincidence.
Not quite fast food, not quite fine dining.
The segment is worth an estimated $2 billion in the u.s. london is already sizzling with success for local chains.
Is there room for two more?
We're not really worried about what other people are doing,, but we want to take care of our guest and team every day.
There are enough people in london to fill great restaurants.
I'm getting hungry for a burger.
Check out the latest edition of titans at the table.
I asked mario to make a meal out of hot dogs.
Dishing with me on their industry on bloomberg.com/tv.
Coming up, samsung surprise.
The world's biggest maker of smartphones missing earnings estimates.
Equity futures are higher this morning after the better-than- expected june jobs report.
The country adding 195,000 jobs in the month of june.
Unemployment rate held steady steady at 7.6%. samsung posted earnings that missed estimates this morning.
The wireless wars march on.
Let's get straight to the market for the countdown blitz.
Let's talk about tesla.
Those shares are higher in the free market after the company said he received hundreds of orders for electric vehicles in hong kong.
More optimism that that model "s" will grow internationally.
I have my eyes on hulu.
Bids for the company might come in later this evening.
We might see directv, and guggenheim digital, maybe even time warner that make final bits . we could see a price tag of $1 billion.
The question was, what did the data say about the fed tapering?
The data tap the 10-year note on the shoulder and said, the taper is on.
Rising more than 12 basis points now.
They're pricing in the idea of the fed getting out of the market.
Stay with me.
We just talked about the country adding 195,000 jobs.
Equity futures rallying on this news.
Economic senator mike mckee staying with me.
Megan hughes, let's look at the winners and losers in this jobs report.
A lot of the usual suspects.
190 5000 jobs added.
Let's talk about who the winners are.
-- 195,000 jobs added.
Let's talk about who the winners are.
We until -- some of the losers, no big surprise.
One of them, the government.
Before you point fingers at the sequester, take a look at the breakdown.
The federal government lost 5000 jobs that it was at the state level that 15,000 jobs were lost.
That was made up for by the local level, which added 13,000. the biggest hit was at the state level.
The other big loser can -- loser, you continue to see manufacturing.
Let me bring mike into this conversation.
Mike, you were mentioning about the backup in yields on the 10- year.
I wonder if investors will look at that wake up on monday morning and say, we have to sell the equity market.
You never know how they're going to interpret it.
The economy is getting stronger.
We saw that big increase in earnings.
Maybe people are going to go out and spend more on that will bring corporate earnings up and make your stocks worth more.
The hard thing to figure out is where the stock market goes.
The bond market will be marching towards the idea of a taper.
Is the idea of a taper now sooner?
It can't be super -- sooner than -- a lot of people were pricing in september.
You figure ben bernanke wants to announce something at the press conference.
All the people who are betting on december probably move that forward to september.
Probably don't get bond yields much higher than they are today, between now and then.
We definitely had that move back up to the territory that says it is coming.
Mike mckee on the job.
Talking about jobs, we are talking about one job in particular.
The new sick -- ceo of zynga.
Zynga gave a compensation valued at $50 million, including a $1 million salary for my $5 million signing bonus and $25 million in restricted stocks.
He's getting paid no matter what.
Sticking with the world of technology, the world's biggest smart phone maker is in focus for investors all over the world.
Samsung reporting its latest quarterly earnings in south korea.
The results were disappointing.
A lot of this has to do with the disappointment over the new galaxy s4 models.
Getting the newest technology is key for these smart phone makers.
They launch that galaxy s4 with a lot of fanfare back in april.
The bigger screen, software upgrades were supposed to propel samsung past apple, especially in the u.s. market.
A series of that -- sales of that handset fell short.
The electronics giant said that operating profits came at 9.5 trillion korean one -- yuan.
That fell shy of the 10 trillion yuan advertised.
That put shares lower.
They sell nearly four percent or finished near their session lows.
The country faces potential target price cuts.
That led to a 13% drop in the stock.
The shares are now just around their lows of 2013. the hypercompetitive smartphone market is taking a toll on samsung, apple, and all the big players.
What's behind all of the analyst's skipped alyssum?
The fund manager at kgb asset management in sales said that the market positive point needs to be lowered -- seoul said that they market's viewpoint needs to be lowered.
Basically, growth in smartphones maybe slowing until the next tech breakthrough.
Samsung is not the only smart phone maker in focus.
Htc from taiwan as well.
It is taiwan's biggest smart phone maker.
The htc one is not gaining as much sales traction as analysts thought.
Profits fell short of estimates.
They are down 83% from where they were at the same time last year.
Htc fell to ninth place in global smartphone market shares.
Just another sign of those wireless wars taking their toll on every manufacturer.
So interesting to see how quickly a winner can turn into a loser or a loser turns into a winner.
Thank you so much.
Markets reporter dominic chu.
I want to turn to the airline industry.
We are flying a lot this summer.
Get ready for more fees.
Carol massar joins us now.
Were going to see more fees and may be different kinds now?
If you've ever suspected that airlines are charging you more while giving you less, you're probably right.
Airlines in the u.s. are searching for new sources of revenue and are getting pretty clever.
Check out american airlines.
They are offering a $68 round- trip package on top of your airfare that gives customers one free checked bag and priority boarding . american also often cost -- offering costlier packages.
Other airlines out there, including united -- annual subscriptions for hundreds of dollars for premium services for extra legroom in coach and free checked baggage.
The idea here is to supplement airfare revenue.
The department of transportation has found the ticket prices only account for 70% of what consumers end up paying.
The rest of money comes from these fees and service charges.
I never trust my ticket price anymore.
Tell me how much these fees add to the revenue for the airlines.
It's a lot.
In 2012 , u.s. airlines revenue came from fees associated with checked bags -- 96.2%. this is real money, folks.
When adjusted for inflation, domestic fares have declined by 15% since 2000. if these so-called ancillary resources were included in, the decline would only have been 10%. i think you all are wondering what is going to come next.
Expect airlines to get even more creative, finding those extra dollars anywhere they can.
Let's hope they don't start charging for pretzels.
I think some of them already do, don't they?
I think they do, and then i say i don't want them anyway . thank you, carol.
Our chief national correspondent, carol massar.
We're going to document the june jobs report with the chairman of president obama's castle -- discuss the june jobs report with the chairman of president obama's cabinet.
Mcdonald's plans to attract millennial's back to the golden arches.
? you're watching "in the loop" live on bloomberg television and streaming on your tablet, your phone, and bloomberg.com.
With stocks that respond to this june jobs data rallying, it's time for the call.
With me is matt mccormick, who helps manage 9.5 million dollars.
Statement shock when they open their statements?
Matt, we are seeing this huge back up on yields based on this jobs report.
You expect the losses to be even bigger going ahead?
Yes, i think so.
When you look at the 10-year going up to 271, for a long time people have only enjoyed a bull market in bonds.
I think when they see this a ration -- erosion to their principles, they're going to be surprised.
I think it's something that investors have not really understood the implications of.
The implications meaning, that then they're going to start jumping into equity markets?
I hope so.
I think when you look at the situation with higher interest rates, a lot of people -- no matter how much the financial industry has tried to educate him -- them, they believe they can lose money in bonds.
And they can.
There's been a lot of correlation in the past two bond performance and equity performance.
When you see that higher rising interest rates , and people open up their statements to say, i have lost money, i think it could cause potential -- the potential to call their divisors and say, get me out of here.
They can stay in cash and they can support their lifestyle.
I think they could achieve what bernanke wants, which is going into higher risk assets.
Matt, just stay with me.
I know dom is looking at buying into dividend stocks.
It's interesting because we talk about bonds and the selloff there.
Rising interest rates mean those bonds are losing value.
But bonds are also losing value.
We are talking about those high dividend payers, sectors like utilities, telecommunications, even tech to a certain degree.
You have intel and microsoft.
When it comes down to is not all of these stocks are created equal.
This may signal a shift that people cannot just invest in dividend payers all below -- alo ne all of a sudden.
Maybe they have to look at individual stocks and not just buying sectors strictly because of evidence -- dividend characteristics.
Bonds and stocks are very similar.
Would you agree, matt?
I agree with dom.
When you look utilities and telecoms, they have have stretch payouts or evaluations and little high.
We should be very selective on those industries.
I like tech in this environment.
You have low-power -- low payout ratios.
We like intel, we like microsoft, qualcomm.
These companies have the ability to increase their dividends.
Not just have big yields.
Your play on an intel or microsoft is primarily on their dividend payout?
Not their payout, but their dividend yield and the ability to increase it.
If you look at qualcomm, they just increased the dividend 40%. they have the ability to pay that dividend now and in the future may maintain it.
When you look at this environment for the remaining part of the year, i think it's going to be pretty choppy.
People will pay a premium for earnings growth, dividend growth, stability.
I think i would rather be in a company that is allowing me to have my cake and eat it too.
Thank you, matt mccormick.
Talk about losing money, john paulson is moving other people's money.
The billionaire posted declining returns in june.
What is the damage exactly?
It is the summer for sequels.
The top-selling film heading into july 4 weekend.
? you're watching "in the loop" live on bloomberg television and streaming on your tablet, your phone, and bloomberg.com.
We are eight minutes away from the opening bell.
Futures are higher after a better than estimated jobs report.
It is time for the countdown blitz.
Let's start with the beleaguered paulson.
He did not have the best of june's, at least when it comes to fund performance.
He will gain in certain parts of the market, but not for john paulson's main fund strategy.
His credit opportunities, merger arbitrage are among those that fell in performance last month.
The best-performing movie on july 3, "despicable me 2." universal is owned by comcast.
"the lone ranger" took in $9.7 million on opening day.
Speaking of media, there is a battle between comcast and time warner cable, but not for the reasons you might think.
It has to do with l.a. center dwight howard.
He's a free agent and may be skipping town.
Time warner cable has the lakers channel in l.a.. these cable operators pay up for these regional sports channels.
R.s.n., those letters will be huge for cable going forward.
The more content they own , the more the likes of directv or dish network will pay for that particular piece of content.
That is why it is big.
We're a few minutes away from the opening bell.
Futures have closed higher.
We have got the top 10 traits you won't want to miss right after this break.
? welcome back.
The opening bell is moments away.
Our market team is ready to take us through the bell.
It is time for the top 10, the only trades you need to know about today.
Starting with number 10, lulu lemon.
Chairman and founder dennis wilson tries to sell his stake in the company.
Number nine is going to be blackberry.
Facing sanctions in indonesia after an outage left users unable to access its messaging services.
The sanctions may hinder the efforts to increase market share in indonesia, which it relies on for 10% of its subscriber base.
Number eight is dell.
Michael dell getting more ammunition in his bid to take the company private grade the committee in charge of weighing bids for dell releasing a note -- private.
The committee in charge of weighing bids for dell releasing a note about unrealistic multiples.
Sounding the alarm on germany's largest bank, deutsche bank.
Regulators passed new leverage requirements for european banks.
Number six is yahoo.
Ceo marissa mayer continuing her shopping spree.
$70 million for a software maker to help yahoo organize its messaging and mail services.
Number five, offshore driller seadrill.
It expands its fleet and undergoes high paced expansion.
Number four, zynga.
Shares of the online game maker continued their climb this morning.
Optimism , zynga able to capture its new ceo by offering him compensation topping $50 million.
Number three is tesla.
The electric carmaker said to receive hundreds of orders for its new model "s" sedan, enough to double the amount of electric cars on the road in hong kong.
Shares jumped over 2%. number two, alcoa.
The aluminum producer.
Investors preparing for the unofficial kickoff of earnings season.
Surging aluminum production in china.
Number one, samsung.
Sales on the smartphone fell short.
Despite expectation of the bigger screen and new software, could go head-to-head with apple's iphone, the market is nearing saturation.
Joining us from chicago, spectrum asset management.
Michael, you are seeing this huge reaction in the bond market to the jobs report.
Better than estimated.
It has got people saying, the fed is likely to start tapering as soon as september.
Why are we seeing such big reaction in the stock market?
It has a lot to do with anticipation.
The anticipation in the bond market at the end of may was that things could pick up and we could see -- the fact we are almost at two and three quarters is mind-boggling.
This market for years could not wait to price into at least higher yields.
We are getting that.
We had this premise that it's going to be on this bull run in the stock market.
There is a little less appetite.
There is two things we have been watching this week.
One of the being the bond yields.
The other one, how crude oil has been trading in verse two metal.
-- inverse to metal.
How the spreads have widened unbelievably.
The spread is normally $.22 to $.30. it is now $1.19. we were talking about the futures trade.
We saw session highs even before the jobs number came out.
Then in the 15 or 20 minutes before the opening bell, we saw future start to tail off a little bit.
How much optimism is there in this jobs number powering the stock market higher, given the fact we are seeing that kind of slowing momentum, at least in the early part of the session?
I think there is actually not as much euphoric optimism.
More subdued optimism.
It is a lot more patient.
For the first time in a while, these numbers are strong enough or in advance of confirming strong enough to keep the fed at bay in regards to where their decisions are being priced uncertain economic indicators.
This is coming right into the wheelhouse of the chairman.
I think that is very positive for the u.s. economy.
We are starting earnings season next week.
How important is earning season going to be for the markets this time?
It's always important.
Right now i would believe that if you get confirmations in a lot of these earnings, that we just hit expectations.
They'll be taken -- they'll be taken positively from a global perspective.
Thank you, michael.
Up next, the white house reacting to today's jobs report.
We will hear from the chairman of president obama's economic council.
Mcdonald's younger consumers, are they loving it?
New menu items such as the mcwrap.
? we are seven minutes into the trading session.
Stocks are rallying.
Pretty much a holiday session . most people are off on this day, except for us.
Industrials, health care, financials are leading the market.
As stocks, treasuries and the u.s. dollar react, i want to get the white house reaction to the numbers.
The chairman of president barack obama's council, alan krueger.
Great to see you again . some people look at these numbers and say, this is great.
We had 70,000 net ads over april and may.
But can we continue this momentum, particularly if the fed is starting to think about taking back its monetary easing?
I think if you step back, what we see is over the last 40 months we have added 7.2 million jobs.
The recovery has faced lots of headwinds.
That's why the president has kept his offer to the congress on the budget and is pursuing ways to strengthen job growth and economic growth.
You are leaving, going back to princeton to teach.
What are the policies of the white house really needs to work on to continue that jobs creation, or is it time to step back and let the markets work for themselves?
We are moving in the right direction, but we have a ways to go because the recession was so deep.
We lost almost 9 million jobs as a result of the recession.
Over the last 40 months we have added 2.7 million in the private sector.
Build more roads and bridges, raise our competitiveness, invest in our future , allowing universal preschool education -- the kinds of things will allow more letters into the middle class.
-- ladders into the middle class.
The president remains focused on putting were people back to work.
-- more people back to work.
He wants the bill the foundation for an economy that is growing from the middle out -- build the foundation for an economy that is growing from the middle out.
What has been the biggest driver?
If you just step back, when the president came back to office, we were losing 800,000 jobs.
He took immediate action , restructure the auto industry.
The auto industry is bounding back, 15.9 million sales in june.
We took a lot of efforts in the housing market.
You can see that the steps that the president has taken are leading the way in this recovery and he wants to build on that progress.
Our jobs the reason why the white house decided last week to delay obama's healthcare reforms for businesses by a year?
The administration was very clear on what led to that decision.
Treasury put out a statement saying that we talk to businesses about implementing requirements for the aca.
The vast majority of large businesses are in compliance.
It is a complex law.
We listen to businesses and we responded area we took their concerns seriously and we want to take -- responded.
We took their concerns seriously and we want to take the time to do it right.
But some businesses said, it was a cloud hanging over the jobs market.
Look, i can't figure out my hiring plan if i don't know what the cost of this health care reform is really going to be, for example.
If you look at the jobs numbers, there is no sign that that was slowing things down.
Industries that have lower health insurance coverage have been growing more strongly.
We are just making sure that the affordable care act works the way it is supposed to.
It is slowing the rate of growth of health insurance costs.
Alan krueger, chairman of the white house council of economic advisors.
Thank you for joining us.
Coming up, diamonds may be forever.
A billionaire steps down from one of his key companies.
More on his battle.
? egypt's new point of military government.
A national demonstration against it.
Mohammed morsi was forced out.
Over in germany, workers have declined for a second month straight.
Orders dropped 1.3% since april.
Economists say it is a sign of the eurozone struggling to emerge from recession taking a toll on your apostle largest economy.
-- on europe's largest economy.
Diamond miners walking off the job.
The country's mining industry is weakening.
Staying overseas on our billionaires watch, he's taking more steps to save his crumbling commodities empire.
His latest move, cut jobs and one of his mines.
He was worth $34 billion about a year ago.
His wealth has plummeted more than 90% to less than $3 billion . for more on the story and for the latest on the world's riches, head to bloomberg.com /billionaires.
And coming up, the mcwrap.
? we have food on our mind this morning.
Meet the mcwrap, a 10 inch tortilla wrapped around chicken, cucumbers, and cheese topped off with dressing.
While you might be able to make this at home but mcdonald's is hoping you will be too lazy.
Dominic chu joins us with more on the mcwrap.
It is key.
It is one of the most important additions to the menu in years.
Back in march, an internal memo that mcdonald's addressing the struggle to appeal to those 18- year-olds to 32-year-old.
The rap is really their solution.
It took two years to develop and it is made to order.
It is a bold bet, since the mcdonald's dollar menu is historically the main attraction at the company.
One of the reasons for this new push, this new item, is slowing u.s. sales.
Mcdonald's is also oversaturated its menu.
It has added 60 items since 2007. some of those being big flops, such as mcpizza, mcsalad.
I can't remember the last time i saw one of those things.
It's interesting it -- interest ing.
Are they losing the millennial's? they are still the ones to beat.
They have $2.8 million per revenue restaurant.
-- per restaurant in revenue.
They serve 69 million people a day.
They grow over 2% last year.
But the mcwrap shines a light on the struggling u.s. market.
Other chains, such as chipotle -- all of these food chains have a huge competitive pressure being put on mcdonald's. the interesting part about this -- you and i will eat various types of food.
It may not be as healthy as you think.
Mcwraps are great if you have grilled chicken.
As soon as you start throwing in crispy chicken, it probably doesn't make it that much more healthy.
It's more than a big mac?
If you put the crispy chicken mcwrap up against the big mac in certain calories, it comes out a bit more with the dressing.
It depends on how you dress them and how you the sandwiches together.
With the big mac and quarter pounder, they have been traditional.
We are in the generation with mcdonald's is served burgers and fries.
Now they need to appeal to a wider audience.
It is one more step in trying to appeal to that 18-32 year old demographic.
At least there is vegetables here to read you can read more about the mcwrap in bloomberg businessweek and on your tablet.
A quick check on how equities are trading right now.
We have seen this rally.
We are back up to our highs of the session.
The dow up 84 points right now after the economy added 195,000 jobs, over 200,000 in private payrolls.
We will have more on the markets in our triple play.
Don't forget to check out my facebook page for a behind-the- scenes look and to check out interviews you may have missed on our show.
? . we are about 30 minutes into trading session and stocks are rallying after better-than- expected jobs read for.
Everybody is watching jobs.
The number better-than- expected, 195,000. the average hourly earnings is also up the most since july 2011 in terms of year-over-year number.
There is more discouraged workers as well, meaning those folks who want full-time employment, all they can find is part-time.
Banks are also waiting for the all clear.
They have to file their mid-