Loeb Leaves Yahoo: Street Smart (07/22)

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July 22 (Bloomberg) -- On today's "Street Smart," Trish Regan and Adam Johnson find your last trade of today and first trade for tomorrow. (Source: Bloomberg)

We were moving to the downside.

We could not break through the yes side?

Exactly.

Moving to the downside.

That is where we saw the prices close at about 367. most active puts today -- quick that means there are speculators betting on a price decline or april hedging on a price decline in natural gas, right?

Exactly.

Talk about move to the downside.

Matthew, taylor, thank you.

Bloomberg on the markets, every half.

We will see you right here in half an hour.

Meanwhile, street start -- street smart starts right now.

Dan loeb leaves yahoo.

The activist investor jumps overboard with $1 billion in tell.

Did he see an opportunity or a sinking ship?

And the man behind one of the world's largest marketing company's shares his secret for winning the ad sales gain.

Plus, netflix.

The house of cards.

Can the online video company rail content strategy carry it through earnings season?

From bloomberg headquarters in new york, this is "street smart" with trish regan and adam johnson.

Welcome to be most important hour of the session.

He are scouring the markets for your last trade of the day and your first trade tomorrow.

I am joined by julie hyman in the house.

Trish regan is on assignment.

Over the past few weeks it has just been straight up, up, and away.

The s&p 500 at another intraday high as well as closing higher.

Not a heck of a lot, but one quarter of one percent is enough.

Everyone waiting on the royal baby.

And those housing numbers -- time for the big picture.

Let's see what is happening.

Take a look at the dow jones industrial average.

We are at and near seven points side to side all day.

What i really want to highlight are the existing home sales.

Look at what is happening with the homebuilders, and you can see this is down -- it is kind of funny.

It says we are down 540%, but no, we are down two percent.

Also, some weakness in the dollar.

Indeed.

And we are talking a lot about earnings.

Let's get to the big three stocks.

Dominic chu has that 4s today.

That's -- for us today.

The world because the restaurant chain, mcdonald's, shares down 2.5%, hovering around the session lows after their profits came out below analyst estimates.

They see tough times ahead because of economic conditions around the world.

Another earnings story -- profits did not come in as well as people expected, but good news for hasbro.

They posted the third straight game in sales they have had and are up again.

When we talk about board games, everyone is playing them on ipad these days, but there are people out there who like to buy monopoly, the board it self.

And we will finish up with earnings that have not come out yet.

Netflix.

Earnings after the close today.

Those shares near session lows, down two percent so far.

This is a volatile earnings report.

They are already pricing and.

Netflix is one to watch at the closing bell, guys.

Now to our top story.

Dan lo is selling 40 million shares back to yahoo, less than two percent of the company.

If you remember, he helped ignite the change in yahoo by leading the proxy fight that landed marissa mayer in the corner office.

For more we are joined by our closer, michael roth, chairman and ceo of interpublic group and our senior west coast correspondent jon erlichman.

Michael rock, did i say your name incorrectly?

I do not believe so.

I'm glad i did not.

What does this mean for a company like yahoo, when a guy who basically brought in the ceo says i'm leaving?

When you have overhang, which is always an issue when you have a public company and a certain amount of turnarounds.

It focuses on what it should be, and that is the fundamental analysis of the earnings.

When marissa mayer came in, the company could go to be a traditional media company or a technology empathy.

By bringing in someone like her, it is leaning towards technology.

That is where the company is driving.

And the vision, speaking as a marketing guru?

The first thing she had to do was create a stable environment.

I think she has done that.

She has got through recruiting.

She has stabilized people from leaving the company and there is a rally around where she is heading.

Now she has to start delivering the results and the ad industry is not for the faint of heart.

She has some work to do, especially in the search capability in the add exchange environment.

Ryan leezer, research, how is she doing?

They have articulated a great product roadmap.

We have not heard a great corporate strategy roadmap.

And that is important.

It's a big problem.

I am curious, to get back to loeb's move, does this indicate anything?

Does this just mean this guy wanted to cash out and make some money?

It looks like he made $165 million to the share sale.

Is he just trying to collect, or is it a statement that shares may be will not go a lot higher?

They definitely had a good run and it undervalued, clearly undervalued.

But now we are at a point where alibaba is the primary driver of growth as well as yahoo japan.

Those are probably not reflected properly in the business value.

Some estimates are north of $100 billion.

Hours are about $90 billion.

You can argue money is being taken off the table.

Brian, this is michael here.

How are you?

Fine.

Certainly yahoo has not been known for their strength in the add exchange, so what do you think about the automated exchange in the future?

Yes, it has been a weakness for them.

The dominant players are google and you got nexis and you hear about the big player from the agency side -- when it comes to yahoo, they are an afterthought at best.

Despite in one of the dominant layers circa 2007 in media.

Jon, that may get your take on marissa mayer.

You've got to people -- a lot of the activists are seen as a thorn, where in this case the activist really wanted to get someone who could right the ship and do all those fundamental things you want do.

I think the storyline has a lot to do with the fact that the yahoo stock price has done incredibly well.

If you are in investor, and you have more than doubled your money, what do you do?

His decision between yahoo and dan loeb on buying these stocks, a team over a couple of days.

Setting the record straight, they thought this plan out over a long time.

Dan knew he was going to sell.

He open that door.

But marissa mayer still has a lot to do on all sorts of stuff.

You guys were talking about the add exchange.

I think from the fundamental perspective, ironically, you got someone who is a big champion of marissa mayer and her fundamental up roach of where she is going -- fundamental approach of where she is going.

I think it has more to do with the value of the asian assets.

Considering that marissa mayer is at a point where she was pushed for -- more recently did he have a lot of input and now does his absence from the board mean a big change in terms of strategy?

The answer is yes.

I think what is interesting about this story is you have two powerful personalities in dan loeb and marissa mayer.

The feedback we get is it would make for very interesting ordering discussions.

Dan loeb is known for straight talk.

Marissa mayer is used to people saying yes.

The opportunity for marissa mayer inside the boardroom is maybe she does not have to do those long debates with dan loeb, but she is still going to want or members who can offer those same direct questions to keep the company on course.

But she will have a lot of influence over what that new board will look like.

It is going to change dramatically.

You talk about where it hopes to be and where it is going -- brian wies er, you talk about ali baba and yahoo is going to monetize part of that.

They really have to articulate what the future is?

-- they really have to articulate what the future is.

It is not clear to outside observers that they have a vision.

Hey, it is your pay search.

You have a defective monopoly.

Yes, you continue the growth, because you have a monopoly.

The advertisers have so much choice in so many places.

At the end of the day, just saying you've got a better product is not enough.

If you were sitting down with marissa mayer right now, what would you tell her?

She has the vision and the talent in her core management team to deliver on that vision.

Thank you for your perspective.

Jon erlichman, i know we will be talking to you later.

We will talk about winning the global advertising game.

We will be right back.

? our clues are today -- are closer today is a marketing mobile.

He is the chairman and ceo of interpublic a company that represents more than 4000 clients.

Among them, pfizer and coca- cola.

You have grown nearly three percent internationally and social media has been a big part of that.

We think of the u.s. as being so social media addicted, if i can say, but other countries, the penetration is actually much higher?

First of all, we are in the communications business.

We have to help our clients get the message across.

If you look at the charts , you will see that twitter is a higher percentage in a lot of these companies that countries other than the united states because the restrictions on tba -- on tv and other media.

You have to be on the leading edge of social media for those consumers.

Look at that.

20% of the u.s. population whereas in saudi arabia it is 51%. indonesia 49%. these numbers are staggering.

Frankly that is how we add value to our alliance.

Someone has to make sense out of this fragmented media environment.

How would you do that.

Here in the u.s., there seems to be a certain skepticism about brands.

What do you find in a place like saudi arabia or indonesia as far as how you talk to the consumer over social media?

The most important thing is communicating on a basis of relevancy.

In the middle of this important communication, you would put an extraneous pop-up in there, and they right away will paying no attention -- and you annoy people.

You become a vigilante consumers, if you will.

You want to be relevant to what are looking for.

Add value.

And you have to be trustworthy.

So, you have to be able to put messaging up there that is reliable.

Want to do that, the whole relationship between the consumer and brand, if you will, the comes real and once you have that type of relationship your loyalty is stronger.

It what we have to do is use that big idea and develop content to work with the consumer and our clients.

At the same time because of the engagement and the relationship between brands and customers, you have to also be very careful, right?

Everybody knows about it because of social media.

In your business, do you find yourself troubleshooting when your clients did not heed your device or something goes wrong?

How do you handle that kind of situation?

We have a group in our pr business or example that manages social media sites.

We have one of the world's largest pr organizations and over 300 professionals monitoring social media sites to make sure that something does not go amok in terms of that.

There is nothing more damaging than creating a horrible situation on a social media site, because as they get as they can build brands they can destroy brands.

Yes.

Michael, inc.

Is so much.

You are going to stick around with us for the remainder of the hour.

In the meantime, adam is standing by at the touch screen.

Jules, oil is trading up $108. time for insight and action.

Refining made simple.

Refining 101. it's real simple.

Refiners i oil on the open market or through contracts.

They run it through the refinery and faced intense heat and pressure to break it down to diesel fuel, gasoline, jet fuel.

Real simple stuff.

The fact is, oil is going up is faster than profit.

Of the profit margin at the refiners has been squeezed and you can that very clearly over the past year.

Those profit margins got up to about $40 you can see back in february and march.

Look where they are now.

$20. absolutely getting squeezed.

Remember, at the pump, they do not necessarily want to raise prices.

They are still making money, but it is getting a lot harder out there.

The earnings year-over-year are down.

Look at that.

Again, year-over-year earnings down anywhere from 12% to 24%. here is the catch.

Earnings are down, and yet look at the stocks.

The stocks are up.

Marathon.

Earnings down 13%, but the stock is up 10%. phillips is down 12%, but earnings are up eight percent.

What is going on here?

Everybody thinks this is as bad as it gets, but you know what?

Maybe not.

This is the problem and therein lies the opportunity.

If you are coming in to buy these refiners inking it will turn around, don't. they are lousy.

When we come back we will be talking about halliburton.

They are doing pretty well.

They came out with earnings this morning.

We'll be right back.

? halliburton, the world's largest fracking company is expanding its share to about $5 billion.

Dom chu is here with more on global outlook.

Dom, you have to talk about the cash flow.

It is a global outlook story, because when it comes to halliburton, yes they are the weakest fracking company in the world.

-- the biggest fracking company in the world.

Sales rose in europe, asia -- $2.6 billion.

All of that growth is coming not necessarily from the u.s., but outside.

They can expand the buyback to $5 billion because they can generate so much cash flow for the operations.

They are doing well outside the u.s. the irony is that in the u.s. because there has been such a boom in fracking, or hydraulic fracturing, there is too much equipment around in that seems like a relatively escort halliburton.

Also the onshore rig, the process by which they processed the natural gas and oil that is out there -- the rig count went down from the same time last year and the prices of fracking, hydraulic rupturing to release natural gas from shale deposits, that also slipped and is expected by many analysts to keep sliding.

The growth is key not just because halliburton is producing less money overall, but it is a growth area that can generate more consistent capital.

It may be that we have too much oil given the amount of infrastructure and not enough hype line to move things around.

But it is not just about the u.s. europe, africa, asia, all doing pretty well for halliburton.

Doing pretty well.

Coming up, old hollywood versus netflix.

We will show you how you can play it.

? netflix rocks the emmys last week capturing an astounding 14 nominations.

They are also a wall street darling, commanding the top spot in the s&p 500. we decided to look at second warner earnings -- second- quarter warning's -- second- quarter earnings.

What is it?

Your absolute, unquestioning loyalty.

Kevin spacey plays a very ambitious politician.

Reed hastings, the founder and ceo of netflix is an ambitious guy, too, after building a dvd by mail business that is at least make blockbuster.

He saw a future in streaming video.

And it is working.

Netflix predicted it could end the second quarter with more than 30 million streaming subscribers in the os, that hastings wants more.

At he predicts the services on the way to 90 million.

Compare that to hbo and cinemax with a combined the one million u.s. subscribers.

What hastings wants is for people to think of netflix like they do hbo, its own tv network.

That is where the shows comment.

But house of cards and arrested development do not come cheap.

So the strategy is to add more subscribers and use that money to create more in the-worthy -- emmy-worthy content.

Things are about to move very quickly.

There are potential pitfalls.

Among them, the possibility competitors could catch up and do it better.

Negative free cash flow and a long-term increase in paid subscribers.

Is the strategy of formula for success or a future on a house of cards?

Let's ask our panel.

Jon erlichman with the story.

Jon, you put together a great primer for us.

This company seems to be more thing.

Is it going?

I think it is about being there first, right?

It is about scale and less about rough at ability.

You almost think about amazon and building for the future so you can put a lot of businesses out of business and keep those profit margins razor thin.

When you think about netflix morning to be like hbo one of the primary differences is eight dollars a month is not the same business model for hbo.

So, hbo has been incredibly profitable.

But we're watching a nice nice new battle taking place, people being able to buy a standalone service like netflix, hbo having to battle back and make its service available on a bunch of different platforms.

Absolutely amazon is out there and hulu is out there, but the netflix numbers are very large.

Growth is so key.

And we have seen a ton of those earnings of or hundred percent this year.

And yet, they are not where they were in 2011. what gets earnings back frankly to where they are -- where they were?

It will not matter for the next 12 to 18 months.

If they wanted to increase earnings, they easily could hear it but i think the strategy is to grow and invest back into the business.

We are not really focused on the earnings.

We're really focused on the domestic net streaming adds.

Now we have to talk about creating content and distributing content.

Ultimately which is more important for this company?

I think distributing content will be important for this company more than anything else.

What they have to figure out in the next quarter is whether or not this content is actually boosting the subscriber base or not.

So far that is unclear.

You have been injured viewing.

You have house of cards available.

You might see a spike.

A week after that, you may not see the same subscribers or not.

The same thing with arrested development or oranges the new black or hemlock grove.

Are they getting a boost?

On the other hand, if it does not create a boost in subscribers, it is questionable.

Talking about the advertising community, is the binge viewing acceptable for advertisers?

Well, i think you have a player with hulu which has advertising and a paid subscription.

I think they are cool with it.

I think interviewing is the new reality right now.

The nice thing for netflix's they do not really care about what the advertisers think because people are just buying a subscription.

That is what net flicks wants.

They have house of cards and a billion other things.

Hopefully you will not stop paying that eight dollars a month.

You have 45 seconds.

What is your trade on net flicks?

I really want to sell volatility, which is so expensive right now.

So much premium.

There is a trade out there were even if the stock is down, i do not lose money and i am protected by a 20% move.

If you buy the 295, you are protected all the way up to 325. i am protected to $325. i am short premium there.

Volatility comes in, i can win that way.

I can also win on direction.

Understood.

And jon erlichman, i know we will talk to you later in the show.

Thanks, guys.

We have breaking news for you . it is a boy.

The royal family has welcomed its new air, eight ounces, six ounces.

The royal baby has finally been born after a long wait.

So, it is indeed a boy.

Coming up next, we will be switching gears from the royal baby -- steve: in the crosshairs.

We look at the investigation into saic capital and what it means for the future of that firm.

Plus, chart attack.

All right here on street smart.

Stay tuned.

? well, it's a little like john dillinger entering a bank with the submachine game and charging him with illegal parking.

At that is out the sec is described as charging steve cohen with insider trading.

Why the lesser charge?

That is the key point.

It is not the business.

They will be fighting a lesser battle with the government.

They did not formally charge him with insider trading, opting to file an administrative action against him, accusing him of failing to supervise employees properly.

Basically it is the sec's saying you are not a good enough office.

They will use this non--court related action.

The sec claims that cohen should have known that his employees including matthew mark, and michael steinberg, were doing insider trading.

They will have a harder time charging him with an hour). the sac says that he will these charges vigorously.

We spoke earlier to a former federal prosecutor and he told us why he believed they did not bring a criminal or civil charge.

They know that the ace is weak.

Without that, they know that bringing the civil action in district court -- that why they had done this.

I guess week is the legal term.

You see so many hedge fund managers do this in the last couple of years.

They are pretty big family office.

60% under management.

At it is either at his supervision or his employees.

Still a lot of money.

At they can shut him down.

They just can't really shut him down.

A lot of angles.

The message for the rest of wall street -- the sac is under new management.

Our chief washington correspondent peter cook has more on this from the chairman of the sec.

How much of this is the sec's saying there is a new sheriff in town?

That is certainly part of it.

When she was nominated to be the sec chairman, they said, you do not want to mess with mary jo.

Now wall street is finding out why.

They are putting words into actions by charging steve: with failing to supervise those portfolios and rejecting an $18 million settlement deal worked out with the harbinger founder and her own sec backers.

She has taken on some very big fish here.

She is also taking on risk.

She is very, very capable.

Very good lawyer.

Very tough.

And you know, she is going to bush the case in a very, you know, competent manner.

This following years of criticism.

That the sec is willing to settle cases rather than take them to trial.

The cohe n case will change that.

This could mean more cases will go to trial and it will significantly give you a sense of the change in tone as she took over as chairman.

Any downside in this tough new new sheriff in town approach?

The downside is a lot of these cases, if they do go to trial, they have to win against some very good lawyers.

You are only as tough as your record shows.

By going to trial, she is really forcing them to win at trial.

And michael roth, you are chairman and ceo of one of the largest advertising agencies in the world.

When you look at all of these players and how they position themselves, what are your impressions?

It is a branding issue.

It is the strength of your brand.

I think from sac capital 's perspective, failure to supervise, that is a complaint issue.

In my former life, i was involved in a financial services company.

Invariably failure to supervise leads to find.

-- leads to fines.

But they are going forward to try to get him to not manage other people's money and you need a pretty take urgent to overcome that.

From a branding point of view, this does not help, and tommy people will be keeping -- taking money out of ac capital?

-- sac capital?

Does the new sheriff in town approach improve mary jo white's brand?

Absolutely.

I think that is what this is all about.

We are going to push the enforcement rules to make sure the consumer knows there is someone watching out over these issues.

And i -- i happened to comment some of the fact that they did not criminalize this, i agree, it is a week case on failure to supervise.

But nevertheless it will make a lot of headlines and affect the brand.

And she has got to do something.

All right, michael roth, the two have you with us today.

All right, chief washington correspondent peter cook, thanks for joining us in washington.

And of course dom chu, you will be back in seven minutes.

All right, coming up, all about the ladies.

Looking at that -- that is today's chart attack.

? . . breaking news in case you have missed it.

Indeed it is a boy.

So, we announced it -- they announced its over there in the uk.

That was the formal method of announcement, and ease all placed outside kensington palace that would bring the happy news to the expectant nation.

A boy who weighs eight pounds, six ounces.

Hmm.

Is that correct?

They waited a while to make the announcement.

Ok, it is time for chart attack.

Our closers says it is all about the ladies.

Michael roth is act to discuss exactly what he means by that.

Women make most are choosing decisions in households.

When you represent a global iconic brands like oreos or chevrolet , you have to be able to communicate with the marketplace.

If you do not represent the marketplace, it's difficult to make sure -- remember i was talking about relevant the and making it important or trustworthy to the consumer.

In our industry historically if you watch "mad men," you see bright men and female did not play an important role.

A number of years ago it became clear to us in our industry we had to do something about that to make sure that we should represent the marketplace.

So you are hiring more women ? exactly.

30% of my board is female and i think there are only a few companies in the s&p 500 that have female representation of that size on the board.

52% of our general managers are female.

That is an increase of 15%. it is important to do that.

Michael, thank you so much.

The mcdonald's to netflix or top 10 next.

? if you missed everything that happened today, do not worry, we are about to get you caught up on the only stocks you need to know, time for the top 10. mcdonald's falling 3%, a favorite of mine, not a favorite for the market, profit and revenue trailing analyst estimates.

Economic weakness was warned to hurt results for the end of the year.

The ability to raise prices in the u.s.. sign of the time.

No.

9, federal mobile, jumping 30% after returning to profits in the second quarter for lower cost rotations by 2016. number eight?

My all modern, u.b.s., shares are up and beating analysts' estimates.

They are also saying that they are close to a financial crisis settlement over u.s. mortgage- backed bonds.

Texas instruments are up one fraction after second quarter results coming out after the bell, estimating profits of 41 cents per share on revenues.

Stay tuned again, numbers coming out after the bell.

#6, hasbro, the toy maker shows gains in an ipad world.

Monopoly, rising 19% in the second quarter.

Analog, the third straight sales gain from the same time one year earlier.

Six flags, down 1.5%. the mes and part earnings short of analysts' estimates.

The company investigates a fatal accident on a roller coaster at one of its theme parks.

Adam, you know that company intimately, do you not?

I have been in touch with the company.

They run such a tight operation in terms of security, it is almost unfathomable that this could happen.

There are reports that the safety device deadlock and yet somehow this woman tragically came out of the roller coaster.

They are investigating every possible scenario.

The ceo is in crisis mode, stay tuned.

Six flags is as upset by this.

Halliburton, down 2%, the world's largest provider of fracking services.

The company is expanding its share buyback plan.

Google, up over climax, saying that they will be acquiring an interest in the microchip maker.

Himax made the chip that allowed for google glass.

What a freaky, freaky kind of -- i love it.

I would wear them.

I would try to wear them.

No.

2 is netflix, down 1%. the company is going to inform investors how well the expansion of original programming is working out.

Keep it here for full coverage of those results, moments away.

There is the closing bell, bringing up the number one, down 4%. the billionaire investor, scott thompson, leaving the board in selling back two-thirds of the division in the efforts to revamp the web portal.

You just heard the closing bell.

Markets closed close to the flat line, the dow industrials are up only about 2 points right at the bottom of the screen.

And yet the s&p managed to -- yet here we are with a record for the s&p-500. two weeks with only one down day.

Some like to, looking at these closing numbers?

Let's start with the s&p 500, up 3.4 points.

As these trades settle out, the dow jones perhaps not as much of a game.

The nasdaq meeting the advance at 3600. looking at it internally , things settling out, five sectors were up, five were down, kind of what to expect.

Even higher, financials were up 7/10 of 1%. the worst performing sector today, energy.

Not halliburton, they're not helping things out on the energy front there.

Overall, guys, not much yet.

You can call it a record for stocks, but it is not much more than that.

A whole lot of nothing, but right now on netflix earnings are coming out at 49%. it looks like the guidance is roughly in line.

Something like 30 that the v-6, you could -- 30% to 56%. you could drive a truck through that.

They said nearly 30 million, which was sort of the baseline.

It is possible that there may be some disappointment with not quite meeting that.

8 million international members, can they replicate what they did in the united states?

Obviously the stock price is reflecting the initial reaction right now in a choppy trade.

They have certainly been growing abroad.

Jon erlichman, you know this company as well as any of us.

What can you tell us about these earnings?

We talked about it early on.

Analysts in this case do not look at the earnings as much as the growth, and the growth comes from adding subscribers.

Some were expecting more, even for their second quarter estimates on how many subscribers that would have in the average states.

Somewhere in the ballpark of a total of 29.4 million.

Looks like the total number, as you guys were just talking about, 29.8. a big number, but netflix itself had estimated that it would be close to 30 million, with momentum in the third quarter.

Giving guidance around 30.9 million.

You can look at this two ways.

They are saying that the subscriber numbers are continuing to grow domestically into the third quarter, with others who were may be getting jazzed by the netflix story.

It is important to talk about the national strategy, because earlier we highlighted the profitability issue short-term, spending so much internationally that they went over what people were looking for with the numbers that they have internationally, given the guide between 7.3 and 7.9 million.

They were talking about total members being 7.7 5 million, falling into the guidance they were given.

That number is going to jump into the third quarter.

8.6 5 million.

Those numbers are doubling of short-term, internationally.

The profitability story in the u.s. seems to be improving.

That would make sense.

That is where the whole idea of scale comes in for this business.

House of cards, it is the same whether you have a million more subscribers.

Jon erlichman, thank you for making it easy for us to understand exactly what is happening.

Michael, as they look at the numbers, what jumps out at me is dvd subscribers that are down.

This business is in transition.

Where are they going and how do they articulate that?

Clearly, the issue is content.

The objective is to increase the subscriber base based on content that you can only get from netflix.

The cost of the content they are delivering means they have to raise a lot of subscribers, which is the issue.

If you are netflix and you just got these and denominations, do you put that out there?

Around these nominations to bring people in?

Whenever you have a sales, you have to increase advertisers.

They should call you, correct?

Absolutely.

They want to capitalize on it and show that they can have that kind of strength and pull on the subscriber base.

Michael, we are going to bring in more that drove today's trading.

Jim in chicago, joining us from the rainbow, the ceo of mcilvaine.

David, looking at today's session, i counted 13 sessions and only one of them has been lower.

How long can the momentum take us higher?

A great question, we need to press higher.

The dow jones, the s&p, it appears that things might be petering out in little bit.

In terms of the market today, are we all in?

Mutual-fund managers are at a low level, the largest inflow into equity funds, the largest since june of 2008. margin levels at record highs, indicators to us that maybe it is time to go the other direction, cautious in this environment.

The fed came out and said that it was all in.

But they made that clear, they are not going there.

Jim, your take?

May be momentum is petering out a little bit at these levels.

Recent lows at the end of june, market momentum is straight up here, not necessarily something i can step in front of.

If you do think that there is some downside, last time i was on the program volatility levels are depressed from where they were last time.

Meaning two things, that they are complacent, and whichever of those things that you believe does not matter, it tells you that projection is cheaper that was before.

You can go out there to purchase cheaper protection.

It seems like you agree that maybe we are getting a copy, but the question is is there a catalyst that makes this go down?

The big technology has not been positive.

David, are you watching for anything on the horizon that could be the step -- the spark that creates a downturn?

When the context is right, it does not matter what the trader is.

Very unexpected things, it is a question of what is the context and how easily it can be triggered, which is almost irrelevant compared to the broader context.

You have seen a couple of things, that there is an indication that the fed will continue to print and be aggressive on that end.

The last indication we have from the fed is that it will continue for a long period time, it kind of reversal from the june meeting where gold took another round on the downside and since then we have seen the reverse, where the dollar is weakening, considerably.

Gold and silver had a fantastic day, not sure what it is or that it matters, the context is subtle.

A fair point.

Jim, how much of the time you guys are in chicago and focus on the fed given the waffling going back and forth that we just pointed out?

I do not want to focus too much on the fed here, they are trying to give us more on the future of monetary policies, they let themselves escape.

I do not want to be that too hard, but i do want to follow momentum.

Understood.

Guys, thanks as always.

That is your clothes.

We have the first trades for tomorrow.

We have a look at "street smart ," coming up.

Built to last, not to buy.

Robert shiller says that owning a home is not virtuous.

He is here with more housing market morals.

The rise of the robots.

New machines making waves in the u.s. military.

Will they introduce you to applets'? plus, of rocking grandma and a royal baby watch, part of today's of bleared wall street.

-- weird wall street.

? this is "street smart," on the number of television.

Do not listen to the naysayers, there is the money to be made in, imagine this, magazines.

Vogue is putting out its second largest september issue ever.

The ceo of "better homes and gardens" is launching a physical magazine based on their popular allrecipes website.

They talked about why it makes sense from an ad sales perspective.

Food is the largest category and we are obviously ingrained with the advertisers, extremely excited about allrecipes, but we are only able to reach it in a digital format, historically.

This extension makes sense as well.

Let's talk to someone who represents a lot of advertisers.

What do you think?

When you look at magazines, there are still a lot that exist in print form.

What is the appeal that still exists?

There is no question that with the rise of digital, print is decreasing.

When meredith is doing here is sticking niche -- a niche and this is what the market is asking for.

It is a bold move.

It is targeted to their users.

I am sure that they did some market research in terms of whether their market is receptive to this print product, but it is again going against the curve.

I wonder about ad rates across the medium.

The other day we heard from google, the shift to mobile, not because they were not participating, but they were not able to command the level that you would get on the laptop web, for example.

How does it compare across magazines?

That is what the digital space is, mobil is clearly the critical component.

That is one of the yahoo challenges going forward.

It is one of the things that everyone is looking to crack.

Until we figure out how to monetize the space, then we will start seeing that.

The issue is that it fits in your hand, said the advertisement by definition is going to be small, right?

One of the big challenges in our business is you have to come up with a big idea the transmits across the media.

Whether it is television, print, or mobile.

That is when confusion helps us.

We have to be able to respond to that command.

When you sit down with a new client, it used to be because he watched madman with those storyboards, they talked about advertisements in magazines, but is it an overall strategy?

This is your whole campaign, twitter, facebook, television and radio, etc.? absolutely.

It is reaching across all the offerings.

Whether it be social media, media, now it is a front seat, where the action takes place.

We call it an integrated offering.

It has to have digital media, social media.

We have to bring those resources together to meet the objectives of the client.

What percentage is being allocated to digital media and social media?

It is growing at a 30% rate, gaining a lot of traction, it is an important piece of the offering and has a long ways to go.

What types of advertisers are still more interested in print, the magazine, kind of what you would imagine?

More traditional advertisers?

Business to business users print.

It is the exact market you're looking for.

Users are looking for that market.

Clearly, the reference is another important luxury brand, female, print lends itself to that market.

You feel like it is not just about the actual -- we spoke to this earlier, but when we talk about a fashion spread, it was not necessarily about selling you the specific clovis, it was about creating brand identity.

It is the relationship that we talked about before.

You use the relationship with different vehicles to get the message out.

What do you think is the most effective medium right now?

Well, obviously, depending on the measurement, network is still very important.

Network?

Trichet -- traditional media, cable, and mobil, the key factors.

Is there anything that will exist as you look into your crystal ball?

One of those mediums that will no longer be relevant?

What is interesting is the battle right now in terms of network and streaming into is going to be providing content.

All you have to do is look into the newspapers to see the battle going on between cbs and time warner.

Are we all going to be skipping the advertisements?

Never skip the advertisements.

But certainly, that will be the battle in the future.

Michael, thank you for talking to us.

Ceo of interpublic, we appreciate it.

Thank you, michael.

Coming up, smooth sailing for the shipping sector?

Which companies could be coming out on top if they recover after your next big trade?

Get this, a grandma who can rock out.

She is good.

We will show you her skills coming up in weird wall street.

[applause] ? ? time for the next big trade, we bring you the big calls on wall street and the people behind them.

Bigger is not always better.

All for a large food carriers have been struggling to make money as they move oil around the world, but profitability on these and has been moving in tandem.

Here to explain with a few stock picks, then nolan.

Thank you for being here.

Why the difference?

There is a real structural shift taking place in the tanker market right now.

There are new refineries being built in places like saudi arabia.

Now they are refining it domestically, exporting the refined product on a different kind of tanker.

The other side of that equation is the united states, as we continue to find new shale oil, importing less crude oil.

It is illegal to export crude from the united states, where you can export those products.

We are now a major exporter of refined products.

It does not matter where you are in the world, less crude is being moved and it is a completely different trade and structural shift.

We have less than one minute left.

Can you give us your top pick allowing investors to capitalize on this?

Absolutely.

They are exclusively product tanker players in the market.

They're the most leveraged names to play outside the cycle.

Especially in the fall as you get extra seasonal demand.

Thank you for coming on, we appreciate the perspective.

June has not been a good month for housing data.

What if there is a crack in the foundation?

Next, on "street smart." ? ? welcome back to street smart.

In adam johnson, with the bloomberg top headlines.

You can see that where markets finished, they were up today.

Previously owned homes sales dropped unexpectedly in june, hurt by a lack of supply and rising mortgage rates.

Purchases fell to an annual rate of 5 million.

Netflix just released the second quarter results beating analysts' estimates with a revenue coming just in line, reporting dvd contributions down 19% from last year as people shifted from dvd possible to everything online.

-- dvd's to everything online.

Got to talk about this, the duchess of cambridge has given birth to a boy, bern -- born earlier today in central london, weighing in at a healthy 8 lbs.

6 ounces.

He will be the third in line for the british throne after prince charles and his father, william.

For more news everywhere you go, download our bloomberg plus app.

Speaking of music and headlines, we have a quick headline from texas instruments, coming out before cast in the third quarter.

At the midpoint above 51 cents, fourth quarter revenue will be 3.09 to $3.5 billion.

The point of that is, in little bit, but lo and above as well.

The $3.2 million analysts anticipated.

This is the third quarter forecast coming to us from texas instruments.

We will bring you any other headlines from that report.

Housing has seen better days, or months, for that matter.

It all started with starts, which fell 10% last month.

Paine spread to permits, and as we were talking about today, existing home sales slumped by 1.2%. so, where is this so-called recovery coming from?

Bolstering the u.s. economy being a cure for our ills?

Robert shiller, the co creator of the case-shiller index, with chris, managing director of tokyo mitsubishi.

Gentlemen, thank you for joining us.

Chris, so far this is one month that we have seen of this data, but the data has been so uniformly negative.

Why is this happening?

It started with housing starts and it came down quite a bit.

Now we are a number thousand something and the trend does not look good.

This was one of the rainiest months for june that we had had.

We think it was due to that, but today's number was something else in the end.

The slump today in existing home sales, condos, and single-family homes, it is probably less than you think.

Especially if you look at what is going on with single-family home sales, they are much better, 4.5 million annual rate of sales, and for the first four months of the year they were much weaker.

We are actually doing pretty good if you look at the last two months.

One of the phenomenon that we are seeing that is different than in the past, when we knew that rates were going to go up, you tended to see a pop in the housing market, because people wanted to get locked in.

That has not happened as much this time.

Why do you think that is?

They just shot up a lot.

Look at it.

Right after the fed announced qe3, mortgage rates hit a record low, close to 3%. it happened too quickly?

It is a meteoric rise in mortgage rates.

People react in one of two ways.

One, i missed it.

Mortgage rates are up over 1% from where they were at the end of last year.

If they are going to do that for 30 years, that is a big hit.

Some people must be feeling a lot of regret for buying now and not doing it six months ago.

Professor, do you think they take the next step and choose not to buy?

Good question, good question.

There seems to be an incipient trend towards renting.

Which has been going on since the financial crisis.

I wish i could predict what people are saying.

Look, we are still upbeat on home prices.

I do not think they are low, but the general public thinks they are low, and as long as they are not cowed by these mortgage rates, it could reduce mortgage prices for some time.

I am curious, you say you do not think they are low, you are a man in a good position to say that, why do you not think they are low right now?

Well, if you correct for inflation, they are kind of back where they were five, 10 years ago.

Except in some cities, life -- like las vegas, phoenix, they overshot, but generally they look similar.

But we know that people think they are low because the michigan consumer sentiment people ask them about reasons for buying and really it has never been so strong before in the michigan data, people really think that prices are low.

I think they are really just reacting to how much prices have fallen.

I am curious also, looking at past housing recovery is, how much have we seen a steady uptrend and how much have we seen one, too, or three months look like this?

Is it typical to have these fits and starts?

Probably not this much, coming from the 1 million annual rate.

I guess it is due to these technical factors.

Based on the population growing year after year, we have not built many homes for five years or six years, you would think that home construction should be more like 1.2, 1.3, 1.4 million.

Give us some time.

You can find housing starts coming down to 4.5% in the does not look good.

The fed chairman says that they are watching it in housing.

If he says they are watching it, maybe we should be watching that sector.

The correlation between household formation and creation of new homes, i know you have done a lot of work on that.

Can you tell us where they are in that relationship?

It was up before the whole crisis, around 2006 and 2007, now it is down to something like 65%. a huge change.

It might be because of temporary reactions to the turmoil.

There is more than that, meaning i am not so confident in the long run on home prices.

There may be a major change in the estimation on the importance of owning a home.

A paradigm shift because of what is happening.

Thank you both very much, gentlemen.

Coming up, rose soldiers, becoming a reality.

Believe it or not, we will explain, next.

And who won best costume at this year's college con -- this year's comic con.

We will be right back.

? ? welcome to the robot revolution, heating up thanks to a company called boston dynamics, which made waves a few months ago with its humanoid robots.

Turns out that he got a new brother called atlas.

Over 6 feet tall, over 300 pounds, the robot revolution has a name.

Atlas.

The newest creation from boston dynamics, atlas is an evolutionary step up from its brother, pet man.

He was created to test nuclear fallout.

With 28 hydraulic joints, the robot is designed to use human tools and climb using hands and feet.

They hope to use him as a super soldier in the military.

Dark but challenge seven teams of scientists and engineers -- darpa challenged seven teams of scientists and engineers to outfit him.

They already have the hardware, it is time to come up with the software that can make him a truly formidable force.

Their deadline is december.

The prize for the winning team?

$2 million.

We should point out that teams competing for that prized represented nasa, as well as universities like virginia tech and carnegie-mellon.

Fantasy becomes reality.

I love it.

The private and public sectors, competing for this thing, to find out who can make the best robot.

Climbing stairs, bouncing on 1 foot, he does not go down.

Amazing.

Still, i find humans more amazing.

They are more chiming -- more charming.

Bringing me to my next story, the royal baby is here.

The prince and his wife have given birth to a baby boy.

We have a look at what the arrival of the next heir in britain is doing for the british isles.

It is not just produce another successor to the throne, it adds another $375 million to the economy according to the sector for retail research.

For british business is it is nothing short of a royal opportunity.

You did everything from royal baby biscuits, which you can customize herself for just $60 per 10, or $4 per cookie, to royal baby books, which curiously hit the shelves just in time.

To everything else under the sun, from the royal baby plate to the royal baby mug and, of course, the royal pajamas.

But why stop at buying something royal when you can let your child live like a royal and come to the hotel to build yourself a nursery -- to stay at the nursery suite.

Everything that they could possibly need for $3,500 per night, including a roil caught, crowned in a coronet, made by the same company that designed prince william and prince harry's universities -- university -- nurseries.

Businesses may take in $100 million on booze alone.

This one has the good fortune of having cape milton's riedl title in their name.

They even name the beverage in its honor.

Now, if you find this talk about the royal birds to be nauseating, we might have just the present for you.

This royal baby drink can be yours for more than the -- this royal baby sick bag can be yours for just a little bit less than the pint.

I do that even know how to react to that last part.

Of course, you lived in the u.k. for quite a while.

How important is this to the british economy?

A huge year, this has been tremendous for britain.

The diamond jubilee, the olympics, but a look at how the numbers stack up.

The royal baby bomb will bring in $400 million to the british economy, about half as much as the wedding brought in, nearly half as much as the economists in our office pointed out, probably less to put on.

Cost of the courtship aside, probably more bang for your buck.

[laughter] it may not cost the economy as much, but harry, father of the responsibilities, it certainly is costly.

Taking his two weeks of maternity leave from the royal forces as he spends his nights in the hospital with katharine, where we are told it costs $7,500 per night.

Really?

I think the royal family can afford it.

You never know.

Pimm fox, can you top that?

I could try.

But no, today we are talking about the numbers of netflix.

Emmy nominations for series like house of cards, with today's earnings report i will speak to one of the founders of netflix, he is watching their initial public offering from back in 2002. he is with a new company called quarterly.co, we will speak to him about netflix and much more, coming up on "taking stock." ? ? time for weird wall street, where the bazaar is business as usual.

Can your grandmother rock out bela in her day, yes.

Well, i have another one for you, she regularly shows offer stuff at a drum shop, it went viral, getting more than 1 million views in just two days.

I like to stick twirling.

She started the first all girls banned in the 1970's, but was forced into early retirement when the band broke up in 1990. she has obviously not lost a step.

Good old mary is a proud mary.

Got another one for you, brian cranston dressed up as his breaking bad character, complete with a heisenberg mask, and no one knew.

He walked the floors of the convention center and the blended right in with the crowd.

I like it.

As a self-described nerd, i should go to comic con one of these days.

Let's do it.

That is it today in open -- "street smart." ? ? 56 minutes past the hour, time for bloomberg on the markets.

Let's see how we closed the day for stocks.

Green across the board, flat for the s&p 5 fund did in the dow jones.

Of about 2/10 of 1%. on the bond markets we have yields moving just a bit higher on the two-year note, unchanged for the u.s. government note.

Commodities, taking a look at that as well, silver futures up 5.5% of crude oil down by two.

If you take a look at the currency markets, i want to give an honorable mention to the pound sterling to celebrate the new arrival of that baby boy.

It is up against the u.s. dollar.

Speaking of currency, let's call it ben bernanke flip-flop.

Speculation on tapering of monetary stimulus is on hold for now.

How do you play it?

Joining us now is the president of legal advisers, he is going to tell us of about his socks and how when it comes to what is happening with the dollar, it has got to be stimulus all over the place.

But why the u.s. dollar?

And why is it so much in focus?

I am surprised that so -- no one has to run around the term flip-flop.

But i will say it right now, i have seen a major flip-flop from bernanke over the last 30 days.

June, he was talking about potential capering in september, where half of the members of the fomc preferred that this year, as the minutes showed.

All of a sudden powers that be, the u.s. dollar is retreating against the euro, the pound, etc.. at this point but home data underwhelming today, i kind of like the dollar continuing a short-term downtrend with the yen and the's to have a short term covering.

This is interesting, those are typically not pairs that you see going up in tandem together, it is something that carries the's yen.

Let's talk about that, i am curious about it, you have a whole government policy about trying to weaken your currency to spur an economic growth, how can you fight the bank of japan and win?

There are two types of trading, trans-colony trading and my idea about the yen leans towards the latter at this point.

Really, the yen is the worst performing foreign currency against the u.s. dollar this year.

Not second worse, not middle-of- the-road, but the worst.

At this point it is an interesting conundrum or paradox that the yen is down where it is, get the recent

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

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