Mad men merger, publicists and on the con, coming together to create a powerhouse advertising company.
Huge robots are helping boeing ramp up production and cut costs.
And electric avenue, electric cars for the city.
And long trips.
The chairman of b&w cit -- tells us why it is your ticket to ride.
? good morning, everyone.
It is monday, july 29. we are live up from bloomberg world headquarters.
You are "in the loop." hans nichols is watching the president as the battle for the next fed chairman heats up.
We are getting their reactions to the fed rates and we have how the deals will likely shakeout.
Julie hyman is looking at the wave that banks have been writing for growth since the crisis.
First, you can call it merger monday, a merger of equals as it is being called is creating the world's biggest advertising agency.
Publicists and omnicom have agreed to merge.
The merger will give the agency more clout to negotiate better rates for clients and deposes the previous leader.
Earlier the founder spoke to "to bloomberg surveillance." it is a merger of equals, rather at a merger of and on -- merger of on =. i am told that this is equal in terms of profitability, the french company being a better run company, but it does not make much sense.
Mean while there is word of another acquisition in retail, operating canada's largest grocery -- treasury store.
Stay with bloomberg for the latest on both of these fail -- both of these deals.
First, let's head washington, where president obama has narrowed down his choices for the next fed share to some extraordinarily qualified candidates, but do not look for that decision until september.
Larry summers, and the fed vice chair.
Hans nichols joins us now for more on this story.
Do one of these candidates really have an edge over the other?
It depends on what you think of as an edge.
You'd have to say that the advantage goes to yellen.
But close this to the present -- president?
The advantage -- closeness to the president?
The close this goes to dr.
The president gave him suspenders at his going away party, sort of conveying just how the president thinks about larry summers, this combination of exasperation and acceptance.
That also means the good and bad.
Remember, he was passed over for the fed in 2009 when the president decided to reappoint ben bernanke.
At that point summers called the chief of staff and had a list of requests.
Not demands, but i spoke to rohm emmanuel about this.
He said it was not a negotiation.
Here is what we know from current and former officials.
He wanted a seat at the cabinet table in the cabinet room.
He wanted to be around the table.
He also wanted to play golf with the president.
He also wanted an e-mail access with obama, which is so coveted inside the west wing.
He wanted an invite to the 730 meeting.
He wanted a car with driver service.
Here is what he got, but he got cabinet status.
He wound up playing golf with the president.
730 meeting access, he got it, but he rarely showed up on time.
The chauffeured car, he did not get that portal to portal service.
They ran out of those.
Secret service protection?
They made a determination that he was not worthy of that.
Predictably in this dispute orr debate, there is a gender element.
Nancy pelosi weighed in on that.
Thank you very much, hans nichols.
Wall street is also one fed watch, tempering its outlook for mergers and acquisitions as ceo's tried to stay nimble.
Alix steel has been bringing as these numbers.
He would not know it from the news flow this morning with hudson bay buying sacks, but in the first half of the year, companies announced $988 billion in takeovers, down 4% from last year.
It is not so much a change in the scene but a change in timing.
Fed bond buying has been a big part in the rally, which is leaving some ceo's worried that a big downward can happen when things tabor in september, leading to the question of what the truth, stable value is of companies up for grabs.
Let me just ask you, you get all of these ceo's perhaps worrying about what these deals mean for them.
What is the sense, the outlook of whether we will see more in the pipeline?
This is where you can really see advisory banks in their future.
The trickle-down it's pretty interesting.
It is actually at the 1.4% in the first half of the year, but that is the transaction from the end of 2012 slowing down.
Remember, companies were rushing to get these jobs done before the tax codes changed.
They made over $3 billion in combined advisory revenue.
They even saw revenue climbing 39%. it all sounds good, but the to your question is not going to last.
Mark shaffer says that the pace may never return to the level we saw before the recession.
The real worry is that they will not keep making these big bets in the near future gatt as uncertainty continues.
Thank you put that report, alix steel.
No uncertainty here, big banks may be poised to reclaim their position as the market's biggest industry for the first time since the financial crisis.
Julie hyman joins us right now.
What is really driving this financial upside?
In a word?
Many of these firms are growing earnings more quickly than the now largest groups in the s&p 500, which are technology.
Financials now comprise about 6.8% of the s&p 500. they are rapidly gaining.
Remember, financials told the top spot in 2008. it does indeed have a lot to do with earnings.
Even look at various large companies in the s&p 500 and you can see the earnings growth that we have seen from goldman sachs, morgan stanley, citigroup and jpmorgan.
The key is that many of them have been growing revenue at a time when we are not seeing a lot of that among the companies reporting this season.
Lots of companies missing sales estimates.
The six biggest u.s. banks increase their revenue for the first time in four years, contrast that with microsoft, google, and intel, of which have been disappointing in terms of analysts' estimates.
Well, it is good to see that.
A lot of this was because of mortgage growth, refinancing.
What is driving these revenues?
That is a lot of it.
There is an upswing for mortgage growth with a downswing for personal computer use.
You might ask, what does it matter if the banks are larger in s&p as opposed to technology?
You might think yourself that this means banks are going to really fuel future growth and you will see a pickup in the s&p 500. however, if you are a bear, you will point out history.
That when financials were on top in 2008, it was not good for the market.
Also wanted to point out that if you take out the financials, you have a contraction in earnings estimated at 1.2%. really, it is interesting the degree to which the numbers are being buoyed by the financial group.
Thank you very much.
Moving and shaking at this hour, joe biden in the u.s. economy.
Joe biden is traveling to singapore, where bloomberg television asked him if the chinese slowdown could derail the u.s. recovery.
Quite obviously the slowing of growth of the second-largest economy in the world is just like if our economy slowed, it would impact the world.
Right now europe is coming out of the doldrums.
Japan is starting to grow more rapidly.
China is of course the biggest trading partner of the u.s. after canada.
To catch the entire interview, had to bloomberg.com/tv.
Even now stream it on your tablet, your iphone, and now any windows phone as well.
We have the ceo of one of the come -- one of the country's biggest utilities.
Also, roadside motels, comfort inn, economy lodge, owner's choice has a warning to take the sign off.
Worried that your electric car may end up on the side of the road with a dead battery?
We have something to relieve your fears.
We are just getting started on this monday morning.
? ? all right, certainly it is a busy merger monday.
Hudson bay, the canadian retail is acquiring saks.
We want to get straight to our deals reporter.
Cristina, why do folks think that this deal makes sense?
Listen, hudson bay is a big department store operator in canada, obviously they want to get bigger and they already own some board in taylors in the u.s.. -- lord and taylor's in the u.s. they are working to combine the company and operate 324, a huge deal for hudson bay, really putting them on the map when it comes to retailing outside canada.
To put this in perspective, many people say that the $16 per share price is a great price for saks.
As we have reported, they have been trying to shop for price some time and it seems like the ceo and advisers have done a great job trying to get this very high premium.
We will have to crunch some numbers, but on the face that looks like a good deal for shareholders.
Now we have seen this, might be seen more retail deals in the pipeline?
That is a big question mark over at neiman-marcus.
That company, the question will be, how will this fail?
How will this potentially impact neeman?
There were possible discussions a month ago about a merger between the companies.
That seems to be on the back burner.
It could help people get a higher by it -- valuation.
Let's stay in retail.
David einhorn of green knight said that he was no longer shorting j.c. penney.
Until friday, shares were down.
They burned through cash just three months ago.
With me now to discuss signs that the company has turned a corner, contributing editor.
Thank you for coming in.
It is a good sign that he is out of this position, for a long time he has been down and j.c. penney, but they are trying to come back.
He was thrown out before and replaced with ron johnson when some of the key shareholders wanted him.
The only way, if you look at this, is up, right?
But ron johnson did with so counterintuitive to the way that a j.c. penney shoppers thanks.
Even we do not know some of the things he did.
He tried to yum -- he tried to run it like a genius mark.
He took all of the quirks out, put them in casual clothes, gave them mobile devices to ring up the things.
Customers could not find people to check out.
They took the cash registers out.
They were used to getting the merchandise at the cash register.
He was trying to fight tradition.
There is a certain loyalty among certain brands.
J.c. penney was one of them?
They are accustomed to seeing sales, promotions, bowing to the cash registers.
Where are you going to put the stuff you are buying if they do not have bags.
Most importantly, they were accustomed to sales, right?
And everything else, he eliminated it and went back to this one price for its all kind of thing.
Is he getting it right now?
I think he is starting to.
Let's see what happens after the back-to-school sessions.
That is the real test for retail.
Back-to-school has always been a big thing for retailers with office and school products.
Isn't one of the challenges here that the company is in a no-man's land?
It is not alter high-end, but it is not wal-mart.
It is in this in between space that is tough to target?
That is what we are seeing with some of the mergers that we saw.
The haves and have-nots.
Frankly, the bottom used to be the tried and true, sears, j.c. penney, coles, macy's, they seem to be doing a fantastic job, then you have that no man's land.
That is where j.c. penney is?
Are they doing enough in terms of reinvigorating themselves?
I even forgot kmart.
We do not even mention it anymore.
I think they have come back to their roots and he is trying to do that, get back to the core of doing what is right for the customer.
They just weren't doing that for a long time.
The store inside the store?
That was a great idea.
There are folks that cannot get some for us, like folks in new york city, people in south dakota cannot get.
I think that is a cool thing.
Just like sears has got to break out and bring back those brands.
Trying to move to relax and chanel at sears?
I still do not flipping get that.
Bringing back some of those core brands that people liked.
That is what they trusted j.c. penney for.
Stafford was the brand that i grew up with in terms of my made years, before i made it bigger, i would go there to get my shirts and suits, those kinds of things.
So, david einhorn is out, a good sign for the stock.
Only way is up?
The stock is already up and starting to rise.
It is not over yet.
He has got to drive sales.
I said it earlier, james cash penney was the founder.
He would want cash.
I would love to see him -- he has got to live in those stores.
You wonder what it means?
It is important, if it were my business i would be living in a cot in the back of the store and you are starting to see him do those things.
Ron johnson commuted back and forth to his home in the bay area.
Those were signs that he was not committed.
At least they know what they are getting, whether they like it or not.
We wish him luck, thank you for being here today, jeff.
Staying in retail, a gm has announced that it is finally going to sell its clothing on line in the u.s.. it has been online for 15 years, believe it or not, and americans have had to fend for themselves for $12.90 zebra print ballet flats.
It has caused them to lose market share to one of their rivals, who began selling on line in 2011. since then the american market has grown 44%. pent-up demand it pays off.
Still ahead, the high cost of cleaner energy.
We will talk to the ceo of one of the biggest power producers in the country.
And it was almost like winning the lottery, the woman who fought equifax over a faulty credit report and one millions.
? ? all right, you are watching "in the loop." it is 26 minutes after the hour.
With me is on the markets for you.
Take a look at this, ahead of the housing sales reports out later this morning, some of the names we are watching include the down after the downgrade would on nikon merging with publicists.
On the markets again for you in 30 minutes.
Stay tuned for that.
In the meantime, here is a look at our top headlines.
Swooping in to buy the farming giant for $8.6 billion.
Gaining access to its low 12.5% corporate tax rate.
Manufactured by honeywell international after the devices work linked to the fire in heathrow airport this month.
Their largest operator must provide inspection data.
Hedge funds have been -- have bet on a rally after speculation of a curb in stimulus.
In the opposite camp, goldman sachs, saying that the rally will reverse.
President obama is after a mission -- on a mission to cut carbon dioxide emissions by 2020. last month he ordered the epa to come up with new regulations to make that happen.
American electric power says that the industry is already on track to meet the president's carbon reduction goals with additional rules coming up the cost to the economy.
Nick, but into the show.
Walk me through what has been done and what you believe enough has been done.
A couple of things occurred.
The first, the epa, moving forward rules relative to mercury, originally they thought only 10 gigawatts of coal firing capacity would be retiring in this country, but in fact it will be 60 to 70 by 2015, 2016. you will have the benefit of that in the future.
The other aspect of that is natural gas.
Natural gas has become abundant and there has certainly been higher utilization.
The end result of that has been the industry with reduce carbon emissions by 16%. remember the requirements?
It was 17% by 2020 and we are already achieving those types of bills.
What is your biggest concern with what the president is doing?
Like the greenhouse gas requirements, if they are particularly onerous, it will impact the coal-fired fleet.
If we -- especially if we have to retire that capacity.
What kind of negative effect of that have on the economy?
Had he been able to quantify that in any way?
Industrials have already been released in american electric power's footprint.
They were off 17%. it is very tenuous right now in the industrial and manufacturing sector.
In industrial and manufacturing it depends on lower electricity rates.
You can see the increases from 11% to 25%, which is not good for manufacturing.
The me just ask you, warren buffett said that we are transitioning away from coal used in the u.s. in this country.
How do you see the future for coal-fired electricity?
I think that coal-fired electricity is not known to be as dominant as it has been in the past, but it will certainly be a large portion of the mets that we have to supply energy needs in this country for the next several decades, which is something that think we have been able to take advantage of with natural gas, renewals, the other talks available to us today, we need to have a broad brush of everything available to us.
What could the government be doing to help encourage and intimate the natural gas industry right now.
Clearly we need to be able to further define and develop these resources.
Natural gas has not really been prevalent in our territory in the eastern footprint for a period of time.
Now it is becoming very advantageous, very available, a benefit from a cost perspective and environmental perspective.
What would you say?
What would your prescription be from a policy standpoint to make sure that this industry starts to flourish?
I think we need an energy policy that focuses on development of those resources, development the pipeline capability, putting transmissions in place.
Right of way is need to be dealt with.
We need to make sure we can move forward mid developing an infrastructure from that standpoint and allow the resources to get developed.
Before i let you go, i have to ask you about last week's earnings.
You came in one penny short on the revenue side against estimates.
There was timing related to associated expense and regulatory cases.
Also, the economy itself continues to be tenuous, which is something we have not seen an amount of growth in, the service territory, serving 11 states in the u.s., it is pretty important that we are able to see some growth for the future.
Is your sense of the economy improving at all?
Or is it still uncertain?
I think it is still uncertain.
Industrials and manufacturing are clearly off right now.
That is a matter of the foundation that provides for commercial and residential loans.
Commercials are off slightly, residential has remained flat.
The industrial and manufacturing center needs to continue to prosper in a consistent fashion so that our load can follow.
It makes sense, they all power each other.
Nick eakins, thank you so much for joining us this morning.
Right now you are looking at a live shot of the bmw team as they get ready to reveal the german automaker's chance to take on tesla.
It is no longer just a concept.
We are going to hear from them at 9:00 a.m. eastern.
We are actually going to see the car.
Stay "in the loop." ?. good morning, everyone.
Influence her is a website about the things we use every day, but the point is not just to guide shoppers.
A partner with consumer product makers to feed information back to them, where customers shop, live, and how old they are.
Elizabeth, thank you for coming in this morning.
What we through how this works.
It is how it sounds.
It is an influential community online.
They are social media savvy consumers.
They like to share their opinions.
It is a place where they can come to talk about their products.
What do they get out of it?
Members join, we have a great relationship with them right now.
We have influence there is in all different areas.
We know how many kids they have.
They might rate a stroller?
Other mothers go on there to look at it?
The beautiful thing is if you share a lot of information about yourself, you could be rewarded.
They do a lot of programs where they send free products to people that can be tested.
The review it with their all.
All of this information goes back to the brand itself?
Not only are they sharing opinions on their own network?
I will talk about it on my own network.
Maybe make a video about it.
But i will also take a survey.
Are the brands paint you for this information?
We work with brands.
We do not charge consumers at all.
If you are the type of person who is social media savvy, you can get free products to try.
The brands care about this, they want to reach the exact consumer they want.
We have 600 datapoint that everyone.
It could be anything.
We know where they shop for rush rhees and how much money they spend.
How do you know that?
They take surveys, they constantly share information.
We also have reviews about everything.
Through that we are also collecting a lot of data.
When did you start the business?
We came up with the idea in 2010 and did some test programs to see if this was something consumers would want to be a part of.
2011, now you already have 400,000 users.
We have not spent any money and advertising.
When you are doing programs about influences, the point is to talk about the products you know.
If you are an influence there, you found out about it through another one.
Of the one hand we are influential marketing.
We do social media marketing as well.
There are companies that scour the internet to find out how many followers that have.
What they do not have the ability to do is get those 600 data points.
On top of that, you are getting this great content.
We tell them all sorts of things.
We tell them why people like their products or do not.
Sometimes maybe it is pricing products in different ways, packaged in different ways.
I think that brands might use it for future marketing.
You have got 400,000 users right now.
How accurate do you feel the sampling is?
We do programs outside sampling.
Sampling is a huge part of our business.
We do fund programs, we run programs outside of that.
It might be settled -- centered around the brand where you get free advice.
You get to talk about celebrity chefs.
Other perks as well.
This is what keeps members really excited.
It is also a way to reward our most active members.
Really interesting stuff, we will have to check it out.
Thank you for having me.
Coming up on the billionaire watch, carlos slim is taking aim at the telecom market.
They have ended their standstill agreement with kpmg, clearing the way for them to buy more.
They would be required to bid for all the shares.
Slowing sales from the continents telecom industry is leading to consolidation.
For more on this story all you have to do is had to bloomberg .com/billionaires'. bmw has unveiled its new electric car.
We will show you plenty as we talk to the ceo of the company.
? ? bmw unveiled the i three just moments ago.
How does this compare?
? and it was the tesla that encourages the bmw chairman to enter the electric car market.
You would be surprised, the success of tesla is very encouraging for us.
Electric maintenance is rolling.
If you see the growth markets in 2012, the expectation in the year 2013 is around [indiscernible] and as well the success of tesla and other manufacturers.
We have more from the interview with the chairman of bmw, really interesting that they are seeing this as an opportunity right now.
One of the big driver is is emission standards in europe, who said that they looked ahead to the limits and they have to get ahead of the game, beat the competition and start developing ahead of time for these new emissions standards.
But this is a market that they feel they can compete in?
They think the numbers are looking promising.
They are looking to add in some extras.
If you worry about the range of these cars, you can borrow in suv for a few weeks each year.
They have a sales force that will come to give you a sales -- a test drive from your house.
If i were to buy one of their vehicles and i said i liked going away a couple of weekends each year, they will lend me and suv for the weekend?
It is the running around the city for the day.
Going to work, they need that long drive upstate.
They will say -- here is the next five, the next three.
Any word on pricing?
Probably between $40,000.50000 dollars.
They are not setting a target for the first 12 months.
What do they think the market could be like?
They are looking to compete with tesla in the u.s.. they are launching its simultaneously with beijing.
You know we have some more sounds from the interview.
Let's listen to some other things he had to say.
I mean, we are a company that is always able to look into the future and then you have to do such a project, yes?
If you are not able to start or to go in such a direction , nothing will be available for the year 2025. he says it is a brave step but that those are steps you need to take.
You foresee additional car companies going into this market?
You have got one of the big three in germany, audi, an amount 2014 the other major player, mercedes, is looking to introduce an electric car as well.
It allows them to said they are a gering car company.
The wave of the future, i guess, electric cars?
I like the promise for the weekend.
Thank you so much.
Thank you for that interview.
Coming up, everyone, maybe you cannot fight city hall, but you can do battle with credit reporting agencies.
This woman $1 million.
Later on, intel and the slump in personal computer sales.
How they that are going to replace the revenue.
You will hear from the cfo only on bloomberg west.
Right after this.
? ? ? ? ? ok, everyone.
Time for today and this vs.
That, this woman would not take no for an answer from one of the biggest credit reporting firms.
The district court has just ruled in favor of julie miller, who spent two years trying to get equifax to fix major mistake on her credit report.
She says she contacted them eight times in two years to fix the report.
When she was unsuccessful, she went to court and a jury in portland just awarded her $8.6 million.
That is equifax, which has a big public relations problem.
21% of the consumers that took the time to review their credit reports found errors.
Equifax is likely to appeal the jury's decision.
56 minutes after the hour, meaning that [indiscernible] bloomberg.com -- meaning that the bloomberg tv has house number is ready for you later this morning.
Names that we are watching ahead of the open?
Whole foods is also down after cantor fitzgerald's downgraded that stock after seeing a bit of a pop in their pending merger with their french publicist.
Coming up, the megamerger in the advertising business.
How did they team up to create the world's largest advertising agency?
Streaming on your tablet and bonds bloomberg.com, i will see you back here after this.
? 30 minutes to the opening bell.
This is "in the loop" betty liu.
The countdown begins right now.
Welcome back to "in the loop." i'm trish regan.
More on those stories in just a moment.
A bold bet from the ceo of bmw's speaking to bloomberg about the new i-3 electric car and how they plan to stem consumer fees by offering suv's for long trips.
Because that would joe biden in singapore where he told a slowing growth in china would not derail the u.s. economic recovery.
Going to the markets desk for the countdown blitz.
Cristina alesci kicking it off.
I am watching shares of hertz.
They reaffirmed cold-year outlook.
The news is not calling investors were selling off the head of the open.
Am watching shares of barnes and noble.
The company saying it does not maintain an effective internal controls over financials as of april 27. they now say it will redesign the reconciliation process as a result.
No surprise, shares are falling in pre-market trade.
I am watching shares of wynn resorts.
It made almost 3% more in macau, but slightly weaker.
It will pay a quarterly dividend of $1 per share.
Merger monday is upon us.
Huge deal for wall street to digest.
Publicist and on the con had joined the largest advertising company.
Cristina alesci has been tracking the major moves.
These are already big firms.
Why do they need to get bigger right now?
That is an excellent question.
This merger will create an advertising giant with $23 billion in revenue, trumping the historic number one out there.
That generates $11 billion in revenue.
Traditional advertising agencies are really feeling pressure from non-traditional players that are using lots of analytics and technology to target consumers.
What they're hoping is by getting bigger, they will have greater access to data and information that will help them compete better.
The question is in light of the technological development is consolidation really the answer?
Wpp, the larger rival, its founder speaking out today.
He had harsh words for the merger.
Take a listen.
It is a merger of equals.
Actually a merger of money equals.
Look at the revenue.
They are equal in terms of profitability.
The french company's -- the french company is a better-run company.
It does not make much sense.
That is one major complication for the deal, the synergies that will come out of it.
One of the things the company said is they will not have to fire creative types that generate the synergies, but a lot of questions being raised on how they will accomplish that goal.
You run into conflicts, the bigger you get.
Any reason to believe the deal might give block?
Anytime you talk about combining a number 2 and no.
3 in the industry it will not make regulators happy.
That will be a big hurdle.
You mentioned the other one, some companies do not want to work with an agency that works with rivals.
Thank you come cristina alesci.
Olivia stearns has more on a deal in the drug making space.
-- and you, cristina alesci.
Thank you , cristina alesci.
Peridot makes over-the- counter medicine and some generic drugs.
They play -- pay roughly 30% in taxes.
We have elan that has been a target of several suitors.
Merging these companies will allow them to dominate the ira's tax base.
The company says the acquisition will result in more than $150 million of expense and tax savings.
I reached out to a couple of strategist.
One said the deal is more of an allocation story.
Perrigo is pretty good at that.
There will pick $15.60 in cash and stock for the american depository receipts.
That is an 11% premium from last friday.
It is also $1 more per share a bed or royalty parma first offered for elan this year earlier.
The only decided to put themselves up after being approached by royalty.
Since then, there have been others that have considered buying.
Today perrigo emerging as the winner for $8.5 billion.
Moving and shaking this hour, we have the amazon c.e.o. cumming jeff bezos adding 5000 jobs in the united states to meet new demand.
It's all part of his plan to open centers full of products, closer to consumers.
Designed to speed up delivery and reduce shipping costs.
This led to a surprise net loss in the second quarter.
From one big personality to two others.
Bill ackman and carl icahn have been publicly duking it out over herbalife.
ackman started it out when he said he really did not much use -- mr.
Icahn started it all out when he said he really did not have much use for mr.
There is a company behind the drama and has been chugging along.
Earnings today after the close.
Julie hyman covers the maker of nutritional supplements.
This has been quite a fascinating story.
Walk us through what the company has been doing in the midst of the drum up here yeama.
Trying to keep a very low profile.
It has not been speaking out much.
The auditor resigned for reasons that did not have to do with herbalife itself.
An insider-trading scandal going on.
What we want to hear today?
Investors and analysts want to hear if there will be in nomenclature change.
This is in response to one of the comments made in the fire storm here.
Perhaps there is a little bit of confusion about who is consuming our products, these nutritional supplements, and who is selling the products.
What is the difference between distributor and consumer?
A multi-level marketing company in which no one buys products for use directly for use from the company.
Distributors buy it and directly resell it.
The complaints that ackman has made is there is ultimately no end users.
Distributors are getting more distributors lined up.
The company has said we want to make this more transparent.
It has not actually made a change.
One of the biggest bulls has been tim ramey.
Even he said the process is long over due and was expected last quarter.
We heard from another analyst on friday, tom graves, who thinks the name change will be positive for the company.
We think the blurring between distributor and customer is something that people will increasingly be focused on.
It may build confidence that the customer base and customer demand is healthier than some people might have otherwise feared.
We think there is still questions remaining about the sustainability of the business model and the need to attract new customers to replace people who have moved away from herbalife products.
He laid out what could be a positive but the questions that still remain around the company.
This is the inability of the business model if they do not get new customers.
The preferred customers or some name like that, they're basically distributors because they're getting a discount.
They buy directly from the company in order to get a discount.
They are consuming it all for themselves?
That is at least the theory.
Up to 70% might not be reselling but again, buying from the company.
There has been a lot of concern that all of this money come a very active business and venezuela and has cash on the books in venezuela that cannot get out of the country for obvious political reasons.
We will see it that comes up as well.
-- see if that comes up as well.
We will see this afternoon.
Still ahead, the merger on the big bang theory -- the nerds of "the big bang theory" caught in a very heated battle.
Some of your favorite shows could be off the air.
We will talk to the ceo of choice hotels for what he sees for roadside lodging.
Stay "in the loop." we head towards the opening bell on wall street.
We are back in two.
? major media companies are in focus this week with earnings coming from congress has come a direct dp -- coming from comcast and directv.
A deal must be reached by the end of business today, otherwise time warner cable customers may have to live without showtime programs like "homeland" and "ncis." joining me now is the ceo of a company who helps manage how content is consumed.
Welcome to the show.
What do you think will happen here?
I want to get straight to the cbs and time warner situation, which has become hot stakes.
We may not see some shows as of late this afternoon.
Historically when this has happened before they have always come to a conclusion.
I am hoping they will come to a conclusion.
Essentially a game of poker.
Have you ever gone to a turkish bazaar?
There is haggling process.
That is what we are going through right now.
Do you ever see this get to the 11th hour and then beyond?
That might happen.
In this case, the fees they are negotiating have been over the past several years.
They have not had these historically.
These are fees the company said pay broadcasters.
The number will go up to 6 billion in the next five years.
Still a relatively new phenomenon.
As the broadcasters are going up for renewal, they are negotiating the process.
They want more money.
On the one hand you have cbs with really good programming.
They also have showtime, a premium network.
On the other hand, time warner cable with 12 million subscribers.
They are both pretty strong partners, or in this case, opponents.
This helps for negotiating.
Let's talk a little bit about the earnings picture.
As i mentioned earlier, comcast, a direct to become a viacom all coming out with earnings.
-- directv, viacom all coming out with earnings.
Earnings have all gone up.
From a stock perspective, the market is doing much better.
The average consumption time people are spending on media went from 622 minutes in 2009 to 699 minutes in 2012. more people are watching more content on more platforms, which ultimately result in better modernization, which leads to better stock prices.
About the advertisement prices?
Are we seeing enough of a pick up there or isn't a company such a tenuous bought it is not significant enough?
It has been mixed.
Some cases better than before, and in some cases, not.
Personally, unfortunately i cannot comment on specific names.
Look at the big broadcasters, cbs, fox -- because they have the content behind them?
Thank you for joining us.
One of the highest- paid executives is being reassigned.
Looking at what is behind that move.
? you are watchingi we are about eight minutes from the opening bell.
-- you are watching "in the loop." time for the countdown blitz.
Starting with gold and silver.
We are looking at the ratio between them.
And it is at a three-year high of almost 67 ounces of silver.
Could be worth $70 by the end of the year according to u.b.s.. demand is soaking up the access -- failing to soak up the cheaper metal.
Are range of planes -- a range of planes for honeywell.
We end with a management shake- up at apple.
Bob mansfield stepping down as technology cheap to work on special projects.
Really a story demand went from one of the highest-paid executives last year to someone no longer on the executive team.
You have to look at this in context as well.
Can apple come up with break through new products to jump- start growth?
Revenue increased less than 1 percent last quarter.
The founder of creative strategies and technologies consulting firm said it would take someone like him to really bring out a new product in a timely fashion.
Any word on on the pay cut?
85 million common no word on the pay cut.
Also no role on whether someone will take over his position.
That position was created basically just for him.
Just minutes away from the opening bell.
-- thank you.
The top-10 trade to do not want to miss.
Keep it here.
Back with the opening trade next.
? welcome back, everyone.
You are "in the loop." 26 minutes after the hour, which means bloomberg is on the markets for you.
Alix steele has the trade before the opening bell.
It looks like futures closed lower.
Could be a signal the s&p might pare its biggest monthly gain since october 2011. a lot of mixed signals from the markets.
Asia got really ugly.
U.s. futures stuck right in the middle.
A very busy week lined up.
Maybe traders hesitant to take on big positions ahead of that.
Today the 10-day home sales data.
Also, manufacturing activity for the dallas region.
Later in the week, jobs friday.
The fomc meeting and 130 companies will report earnings.
S&p neutral for now.
Countdown to the open with the top 10. the only trade you need to know about today.
Alix steele and julie hyman.
Starting with number 10, hertz.
The company came in just a fraction under analysts' estimates.
The confirmed the full-year revenue view.
This is not calling investors who are driving shares down ahead of the open.
They may sell over 6 billion in stocks, looking to plug holes in the cash flow.
The bank has not confirmed the sale.
Checking out wynn at no.
8. feeling the heat after the link -- will word gambling pushed profits lower.
Operations in moscow have fallen in the past two months as investors weigh the risk of economic warning signals from china.
Bill ackman takes it to million-dollar people -- paper loss on the chin.
2% of the short positions.
They will release earnings today after the bell.
The company diversified and is pumped up shares.
Big news for the biggest internet retailer.
Adding more than 5000 full-time jobs to keep up with demand for product.
This will help staff the five new facilities.
Number four, dell.
14.75 per share and not a penny more according to michael dell.
This is the latest attempt silver lake and dell have made to salvage the takeover plans.
Shareholders are scheduled to vote on this august 2. the countdown is on.
3, time warner cable entering the last day of negotiations with cbs.
Threat to black out the channel if it doesn't raise programming fees.
This could all end very soon.
They do not call it murder monday for nothing.
Elon being bought by perrigo for an 11% premium.
Hudson bay shopping in the luxury i'll come up buying sex for $16 per share.
-- luxury aisle.
A total of 320 stores in north america.
-- hudson bay shopping in the luxury aisle buying up saks.
Joining us on this is paul horowitz.
Futures have been under pressure all morning.
Concern about asia.
Will any of this be alleviated as we go through the day?
I think it will be a real quiet week.
First, wednesday the fomc meeting and jobs at the end of the week.
I think everyone is really waiting and on edge as they wait for ben bernanke and crew to decide when they will taper.
Hopefully they will make a meeting -- decision.
Say we're going to do this.
I think the markets will be pretty quiet waiting, because every move we have had over the past six or seven weeks has been based on what the fed has said.
Futures can go up and down.
1700 and upside one other data point coming to us this morning.
Pending home sales.
Housing has been a strong point, but there have been a few tanks and armor recently.
What is the buzz about that report and other reports coming up?
-- but there have been if a few chinks in the armor.
Unless there is a major shock, which i do not expect, i think housing will be where it is expected, and i do not the market will focus on what is happening with housing.
I think it will look more at the jobs report an earnings number.
I think that is more of the focus of the market.
Thought your wits, thank you for your perspective.
From the trade, to the call.
-- todd horwitz.
Do you think people are feeling better, given the upside we have seen this year?
I think the moves we have had about confidence running through the market, running through the stock market and three.
Increase in the stock price multiple.
You do not pay a poor earnings unless you have confidence in the future.
They have run through the gold market.
They have run through junk bonds.
There reached recovery about a month ago.
The greece 10-year bonds have had a 40 handle on the not too long ago.
Now they are about 10%. now we're seeing running through domestic bond market, taking the 10-year up to on its way at 3%. confidence has even gone so strong that the federal reserve is admitting things are looking a little better and could pull back.
That is something.
We like all the confidence.
I know you have been looking at corporate it rigid corporate confidence.
What are you seeing?
-- i know you have been looking at corporate confidence.
A lot of companies still using dividends -- cash for dividends and buybacks and not necessarily capex.
Talk to richard cleared up.
He is looking at the recovery in equipment and stocks.
-- we talked to richard clarida.
The blue line showing it is still lagging.
We of not see thehave not seen the bounceback we have seen in the past.
> companies investing in infrastructure or people.
We have not seen that as much.
How does that factor into your investing confidence?
I think that is right.
I see the corporate hesitancy as i talk to ceos.
I believe one of the things we're doing in the next six months, we will debunk the fed myth that this is nothing but a sugar high and the stock market will fall into itself as soon as the fed backs away.
I think it will take the rest of the year to figure that out.
I really believe if the fed starts to back away, the confidence will build in the private sector.
I believe a lot of ceos are still wondering what does the fed know that we do not?
They act so nervous and panicked.
I think if they start to show greater confidence, that will go over to the corporate side as well.
I do suspect we will see better investment spending.
One of the reasons i like technology.
I know you want to see the leadership coming from the top, starting with the fed.
Going to commodities.
What can we expect?
If the fed tapirs, so might the dollar increase as well.
To strengthen the u.s. dollar.
There is a strong inverse correlation between the dollar and the s&p commodities index.
They are converging here together in 2013. the question is, what happens to commodities with the stronger dollar?
What did you think, a stronger dollar, does that mean bad news for commodity prices?
Think if the dollar strengthens, it will mean weaker commodity prices.
I happen to believe want the dollar will weaken a little bit in the second half, maybe even perversely, but certainly unexpectedly.
Most people think when the fed starts tapering that that means strong dollar.
I did not buy that.
I think the excess bank reserves have not had much effect on the dollar, and even if the fed starts to taper, i think the dollar will not respond to that.
I expect weaker dollar, little better yen in your rope, which are starting to see revivals in their economies, which i think will put a bit into the foreign currencies.
If the dollar weakens, i think we will be surprised, commodities will do better in the second half.
Jim paulsen, chief investment strategist at wells capital management.
Boeing's 777 one of the most popular in the world.
How do they keep up with the demand?
A look at the manufacturing line.
What motivates entrepreneurs like richard branson?
Find out in just moments.
Just a few minutes into this session.
Stay "in the loop." i will be right back with you just after this.
? one-stop we're watching this morning, boeing.
-- one stock.
777 is one of the most popular models in the world.
To keep pace with production, they have to use robots.
We went inside the company to figure out how.
Really a fundamental shift in the way we're starting to produce our airplanes.
The moves to move it forward to where we needed to be, we started bringing in modern tools.
Boeing is taking some of the elbow grease out of finishing an airplane and turn into robots.
They have invented an automated system that does everything from priming to cleaning to painting the wings.
Let's turn them on.
Resetting the doors now.
What is the secret sauce?
They do the finishes much faster and much more consistent in the painters collectively.
-- than the painters collectively.
The robots are ok with it.
They do not get hypnotized.
They can work in the dark.
The robotic system has consolidated the painting system from 3-1. the new system has high-tech upgrades.
They are always working as much as possible.
There is another booth on the other side and the same robot's works on both wings.
-- same robot works on both wings.
The real gain is with the airlines.
Pounds over 20 years.
Boeing's push toward automation include several robotic drilling machines.
Right now the technology is only being implemented with tough 777. -- with the 777. do you see that changing in the future?
You will see some of these technologies being applied.
How much are you saving using automated spray method?
10, 20, 30% improvement, depending on the technology.
My ever going to be flying in an airplane completely made by robots?
The answer is yes.
Probably within 10 years.
How about that?
The next decade we could fly in airplanes made entirely by air bought -- made entirely by robots.
Time for the weekly look at linkedin top headlines.
Joining us is the senior editor.
Everyone was talking about the post, what inspires your influence jurors?
Last week we lost a really great series, what inspires you?
We want to know is it a quote.
You were one of the influences that contributoed.
Another post that was really widely shared was richard branson.
He talks about how the only surrounds himself with what he calls game changing people.
People who do not have limits on how they think.
He talked about virgin galactic.
No limit on how big you can imagine.
Has told me that himself, who you have around you is so critical.
Part of his goal is whenever he is launching a new idea, to find immediately the person that can take it to the next level.
He is never threatened by that.
He only wants the people that will advance the idea is more and more.
It is something that is inspirational for him.
I was really interested in how many people talk about people being their influence their peer did you talk about your mother.
-- you did talk about your mother.
She was a journalist herself.
There was a responsibility as a journalist that went with that.
Something that i learned from a very young age and something that i take with me every single day when i come to work, know when this job does carry a certain responsibility.
Who were some of the big influence search?
Shane snow had a certain type of a cheaper.
He starts out by saying i never really like superman, he wins too much.
Ursla burns who has overcome great shots in childhood.
Plenty of others with rough backgrounds.
He basically says it reminds him no matter how rough he thinks he has it, someone has always had it worse in still accomplish great things.
That can be very inspirational.
Thank you very much.
You can go on to linkedin and follow these great influence sirs.
I will see you there.
Back with much more on the market after this.
? in today's global outlook, where are the strongest markets for hotels?
Choice hotels international building new ones all across the globe.
Economic issue -- weakness remains an issue for other brands.
Stephen joyce is president and ceo of choice.
Thank you for coming in.
Walk us through what is going on in your industry right now.
In your business, what you are seeing.
Mostly good news.
A rapidly-expanding portfolio of hotels.
Three licensing -- the relicensing fees are up.
Rev par is growing.
It was a little choppy, weaker in june.
If you look at industry data for july, a pretty strong.
People are backing off a little bit on economic forecasts for the back end of the year, but most people calling for a strong 2014. we really like where we are in the business.
Supply growth is slow, so that is good for existing hotels.
We are expanding.
Doing a lot in technology.
We are seeing shortly a new mobile booking device that will make it easier to book from your personal device.
What is driving the growth you are seeing?
We have an increase in demand that has been pretty steady over the past couple of years.
Financing is coming back, and as a result, developers looking at an environment that the bank is pretty positive.
They are looking into a 2014- 2015 that will be pretty positive for the industry.
Wide b conscious about the top line?
-- why be conscious about the top line?
Most we because we're seeing people pull back on the forecast.
July up for the industry pretty well but in general, people looking at steady growth.
Solid performance, but probably not as strong as people were first envisioning it at the back half.
We are pretty bullish about where the year ends up and where we go next year.
It people are booking your hotel rooms come in means the economy is picking up overall.
-- if people are booking your hotel rooms, it means the economy is picking up overall.
Stephen joyce, choice hotels.
Thank you for joining us.
A lot happening in today's session.
Adam johnson is joining us right now with a look at what to watch for in today's triple play.
With home sales.
-- let me start with home sales.
Month over month, a decline of 1%. the 1% decline is a big deal.
Last week pulte and d.r. horton said sales were down.
That could be a problem.
Merger and acquisitions not slowing.
Three big deals.
Hudson bay buying saks.
$35 billion to company.
The largest advertisement agency.
The size of viacom for an example.
Wilbur ross will be on the show with us today.
With all of these deals, i am sure he has a thing or two to say about that.
Always a good man to have on the show.
We will see you in.
? -- adam.
That does it for "in the loop." adam and i will see you this afternoon.
We are on the markets for you.
Alix steele joins us right now.
Let's take a look at how markets are trading right now in early trading.
The nasdaq relatively flat.
The s&p and down about -- down about 0.2%. there are some names we want to highlight quickly for you.
The first up is omnicom, seeing a bit of a pop after announcing a deal to join with the france publicist.
Perrigo down after announcing they plan to buy elan.
Time now for today's futures in focus.
Hedge funds have raised wagers on a gold rally according to s&p -- cftc data.
Joining us to discuss sterling future, ken hoffman.
Really great to have you here on this confusing cold day.
Gold up well over $1,300. what do you expect to happen with athe fomc meeting?
I do not think we will see a big change over what we saw earlier this month.
So i have a little concerned about how important this will be.
The gold market has been negative.
We will be stagnant.
Friday we have the non-4 in peril number.
If we see anything at all to make this market nervous, we will go lower.
-- i do we have non friday we hae ve tehhe non- foreign payroll number.
People forgot these companies would have a supply response.
Seeing a big write-off and capital expenditures, mines being closed.
There is a supply response that people did not think about.
A lot of the gold will be cut out of the market.
Miners pared back reduction.
How quickly will we feel that on the market?
It looks like they're coming back really quick.
The numbers are already seeing profitability from cash costs being cut more than half a year ago -- more than half from a year ago.
They are losing money at this point in time.
They have been very quick just as they were in 2009. during the same thing all over again.
You just heard about supply response.