Mad Merger: Lunch Money (07/29)

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July 29 (Bloomberg) -- On today's "Lunch Money," super-charge the day, and devour all that's driving the markets: stocks, bonds, currencies, commodities, options. (Source: Bloomberg)

. . welcome to "lunch money." i'm adam johnson.

We have got the best business video anywhere.

Publicist omnicom building the largest media company in the business.

Bmw goes tired to tara with tesla over battery-powered cars.

And building planes entirely with robots.

Let the barnes supply over the debt ceiling divide.

If only super heroes ran washington.

Let's take it off with the new mad men.

These two are investments, in paris over the weekend, in india to merge their ad agencies.

They will create the biggest ad agency in the world.

We have already, each of us, at a story of partnering with media giants.

Google, facebook, aol.

Whenever the platform, we will be in a position to better partner with them and to bring value to our clients.

We will hear more from the two men at the top but, publicis and omnicom are not exactly big names, but here are some of their customers.

You start to get the picture, they cover virtually every company on the planet.

There is a sampling.

One more.

Proven hydration to help replace it with you sweat out.

I wonder what it would be like to be a fish ? ? i and " take my time and do it right.

Oops.

-- i am going to take my time and do it right.

When you need it most, we have got you under our wing.

It gave me access to my money.

Visa debit.

Now we know with these companies do.

Let's get real about this merger and is big business of advertising.

There are actually some skeptics out there.

Omnicom is about 200,000 people -- 200 people, and maybe this will make it to 400. the reality is, the cultural fit in this will be a challenge.

The hedge fund managers looking at it, the single biggest determinant is what is the underlying activity?

Mergers for products work.

For services, they fail constantly.

One man who is complementary was the competition, sir martin sorrell, founder of the number one ad firm, wpp.

He spoke with tom keene earlier this morning.

There is no such thing as a merger of equals.

There are only such things as acquisitions.

It is a question of who will run the company.

In those companies you have two contrasting styles.

A publicist who is highly centralized out of paris, omnicom, highly decentralized out of new york and florida.

It is a very different approach.

The new co- ceo's welcomed the critique.

Here they were on the floor of the new york stock exchange.

I would have been surprised or word of sir martin have nothing bad to say.

In that case, i would stop thinking, what is wrong with our operation?

I am pleased that he has found some criticism to make.

I thought he was going to send them a fruit basket myself.

We have heard from a number of people this is not exactly a merger of equals, but a merger of unequal.

Publicis represents 30% of the combined revenue but has 50% of the combined company.

When you look at the net income levels, you look at the equity value of each, they are.

We approach this -- they are 50/50. we approach this as equals and we have to do that to achieve our goals.

All of the metrics done by investment bankers and everyone else took into consideration the mind shareholders were entitled to.

It turns out the stars were perfectly aligned, and it comes out to 50/50. this critically important idea of gruel.

-- google.

Are you going to become digital companies, or will there always be a place for the creative type?

I do not want that romance to go away here.

Did you do this deal because of google and big data and all that?

The creative guys are not going away.

They are an important part of the portfolio companies that we have.

Big did it is also quite important.

Google sometimes is competitive with us, sometimes not.

Most of the time, collaborates with us.

We want to make certain we can give our people the tools so that the don draper of the future knows who to write a spot for.

Everything has to be combined, so we will have more science, more technology, and even more and more creative, emotional work.

On the idea of combination, what is your outlook for consolidation in the advertising industry, and would you look to do more deals?

When you look at the reaction of the stock market this morning, they think michael and all the rest should send us a basket of fruit.

This is showing clearly that the market believes in products consolidation.

They believe this is something that is going to happen.

The merger was considered a surprise to many, even some inside the company.

Some learn that they were coming together in a store that we ran on friday, but the deal was first hatched a few months ago at the world economic forum in davos, switzerland.

Coming up, a battle over the luxury electric car market.

Bmw verses tesla.

Which side are you on?

? this is "lunch money." we are also streaming on line, your tablet, and any windows blown out there.

Bmw getting into the electric car business, and barely gets i3 today for the first time with simultaneous events in new york, london, and hong kong.

This is their first elektra vehicle.

They have invested 600 million euros into production facilities.

The starting purchase price, 41,000 u.s. dollars, that is 27% more than the best selling based version of the 3 series.

However, you will have to wait until november.

How does this compare to the other options out there?

There is the global head of sales and marketing.

We decided to do this vehicle five years ago and we wanted to insure that you could still have assured driving pleasure with an electrical drive.

This is the first are made of fuld carbon fiber, plastic panels on the outside, great aerodynamics, and urban car designed for the city.

We believe it will change the game and.

Why?

It is the first car designed for progress in its environment.

Meaning urban.

Urban and electric drive.

We will give our customers the answer is that they have been seeking.

There are many anxieties, among them, charging.

In the u.k., there are about 6000 stations.

One thing we wanted to do was offer the customer and the chance to get their own charging station at home.

About 1,000 pounds here in the u.k., but a 75% grant from the government means you can have your own charging garage.

You can replicate this in other places as well.

We have invested in a company called charge of faster for we have some interesting ideas.

Some people selling their driveway during the day when they do not need it, and maybe you have a charge report for an electric car now.

Why would i spend $41,000 in the united states on a battered car with a range of looks than 160 kilometers, when i can buy a nice and comfortable off three series sedan with no battery restrictions for 27% less?

The i3 is within the same price range of the three series product.

There is a contest in charge of about 11 or 12 pounds a day.

In amsterdam, you can now part in a meter for nothing.

There are many cities that are moving into a zero emission environment.

Of course, we will continue to drive the diesel and petrol engines into a more sustainable position as well, but there is now in need across the world for zero emissions.

How many will use out?

Early days, but we aren't in this as in significant -- but we are in this as a significant role.

Plans for 2014? i hope it is successful, because it would develop the market place for us, but we will play a significant role.

They are up there and you are down here.

You are going to converge.

Can you compete with tesla?

Next year we will be making it a sports utility vehicle, very much a super sports car.

Next year, the real competition begins.

The i8 in one quarter -- corner, tesla in the other.

The question becomes, who will win?

? bmw going head-to-head with tesla in the luxury electric car market, but curiously, the bmw chairman said that he wants to test what to do well.

-- tesla to do well.

If tesla does well, that mean the market share is growing.

If the world market, 93,000 vehicles in 2012, and the expectation in 2013 is 150,000, it is part of the success of tesla and others.

So he says that bmw 's success is tied to tesla.

Listen to what elon musk says.

If you buy a model s with supercharging enabled, you will be able to travel anywhere across america for free.

He says you should be able to drive from new york to l 8 using this supercharger network.

From cars to plains, these jets may one day be entirely built by robots.

Boeing flexing its robotic muscles.

And ryanair 6 fuel efficiency.

That is all ahead in our travel section.

? boeing has been in the news of a lot lately, problems with the 787, but the 777 is one of the most popular in the world.

To keep up the man, they are increasing their rate of production to a record 100 planes per year.

So how are they handling the increase?

Rachel crane took a look at all of the automated operations.

Really a fundamental shift in wind and we're starting to produce our airplanes.

We have moved the production system forward to where it needs to be and you have to bring in the modern.

Boeing is taking some of the elbow greece out of finishing an airplane and is turning to robots.

They have invented an automated system that does everything from priming to cleaning to painting the wings.

I am ready to see the robots in action.

Let's go over to the booth and turn them on.

What is the secret sauce to these robots?

They will do the finish as faster and much more consistent than many of the painters collectively.

It is difficult to achieve when you are spraying gray for 4.5 hours.

They could work in the dark.

And they do not need bathroom breaks.

The robotics system has consolidated their painting facility from three-to -one.

And there are some high tech abrades.

We have a removable roof so that they are always working as much as possible.

There is another boost on the other side, and this same robot work on both wings.

So it goes on the tract, to the other side.

The real game in the weight- savings is with airlines.

It varies by fuel costs, but billions of dollars.

They also use several robotic drilling machines.

Right now, this technology is only being implemented with the 777's. will that change in the future?

It will change the way that we produce airplanes.

You will see some of these technologies being applied.

How much are you saving using the automated spring met ted and flex driller?

Will i ever be flying an airplane completely made by robots?

Probably within the next decade.

Amazing.

Nasa is big on robots.

The space agency who just celebrated its 55th anniversary tested how astronauts in space couldn't remotely operate from earth.

-- could remotely operate from earth.

Incredible stuff.

Nasa scientists are not just about robots.

They also care about plants, too.

This is video from a project that is meant to track for a synthesis from space.

When plants absorb sunlight, they admit it as some florissants.

Images from space revenue is excess carbon dioxide, so the agricultural industry taylor's that to optimize growing conditions.

The debt crisis is looming on the horizon, and partisan politics are certainly part of the picture.

Hear what both sides had to say.

And he has an excavated monastery underneath his home.

He is rooting for peace.

? it is 26 hours -- 26 past the hour, so that means it is on the markets.

Red across the stream.

Weaker pending home sales, weaker dallas fed manufacturing activity, and a weaker in asian markets.

Chinese companies having a hard time making money.

Other things to look at in the market, natural gas hitting its lowest level in 21 weeks.

Rockport traders but good for us.

No more 98-degree heat monster beverages in the red today after sales of the energy drink makers slowed in july.

On the flip side, cliffs natural resources.

They cited better than expected earnings.

That does it for on the markets.

"lunch money" will be back.

? this is "lunch money," streaming on bloomberg television, your ipad, iphone, and now windows phones.

After a weekend of the the protests, the egyptian government is warning its opponents.

Government officials say that security forces are determined to achieve stability after more than 70 people were killed in weekend battles with islamists who want mohamed mursi reinstated.

They are defying government threats led by the muslim brotherhood, calling for additional protests.

In italy, 30 people died when a bus plowed through a guard rail and plunged more than 100 feet down into a ravine.

The bus was traveling downhill on its way to naples when it crashed into a line of traffic and then through a guard rail.

The bus was returning to naples from a three-day trip.

Oil has begun washing up on a popular beach in thailand following a weekend pipeline leak.

It reached the shores in the gulf of thailand last night.

It is the fourth major oil spill in the country's history.

50 tons spilled into the sea from a pipeline operated by a subsidiary of the state-owned oil and gas company ptt.

This weekend marks the 60th anniversary of the korean armistice.

This is what the president had to say to the veterans in the audience.

You learned how short life can be.

Because of you, millions can keep on living in freedom and in peace.

Your lives are in inspiration , your service will never be forgotten.

You have the thanks of a grateful nation.

Your shining deeds will live, now and forever.

Remember those sacrifices, of course.

North korea celebrated in their own curious way, their own pomp and ceremony.

A massive military ceremony took place in the main square, fallen by the requisite dancing and salvatore performance.

All presided over by kim jong room.

Quite the event.

I wonder what it is like to clean up after that one.

Joe biden has been making the rounds, traveling throughout singapore and india speaking to business leaders.

His main focus was economic growth in the region.

Here is what he had to say about the chinese economy and impact of its slow down on the u.s. obviously, a slowing of growth, the second-largest economy in the world -- it would be like if our economy slowed, impacting the world.

Right now europe is coming out of the doldrums, japan is starting to grow more rapidly.

There is this story line that either there is a new cold war with china or a new g2. neither is true.

We see a china built up of competition and cooperation.

And healthy competition.

We are prepared and anxious to compete with china in the economic forum.

Washington is dealing with deja vu allthere is over again, time to raise the debt ceiling.

Here is what treasury secretary jack lew said on sunday talk shows.

The core of the economy is growing, and we need to do more, and the president has laid out a vision of what we need to do.

We have to get outside of the inside washington debate about who is winning and losing and talk about the challenges that middle-class families are dealing with.

We cannot cut our way to prosperity.

I think the right solution would be to get together and have a sensible set of alternatives to replace across-the-board cuts that were never meant to take effect.

It was meant to drive congress to do its work and adopt sensible policy.

The mere fact we are negotiating over the debt limit when it introduced the notion that there is somehow a question about whether or not we would pay our bills, protect the full faith and credit of the united states -- well, it is not ok again, time to raise to default.

Congress has to do its work.

Congress should not wait until the last minute.

They should raise the debt limit and take away any cloud of uncertainty about the ability of the united states to pay its bills.

That is what jack lew says.

What about the other side of the aisle?

It is time for the president to do work.

I would be interested in helping with anybody to fix the spending problem that has grown entirely out of control.

We will not raise the debt ceiling without real cuts in spending.

Simple as that.

We need significant cuts in spending if we are going to replace the sequester and extend the debt limit.

I believe the so-called boehner r ule is the right formula to get that done.

Also on the menu today, israeli and palestinian negotiators sit down for the first talks in three years.

One person particularly keen to see them succeed is the man that is said to be the richest in the palestinian authority.

Weule spent a day with him.

The mansion that al-masri built.

He is apologetic because peace talks may soon resume.

Close to the point of no return.

We have a window of six months and i hope we can do it.

Why only six months?

At their rate that mr.

Netanyahu's government is building, there would be nothing left.

We see this firsthand, and jewish settlements clearly under construction.

The road also reveals occupational hazards, checkpoints.

We want dignity.

Every time i go from a checkpoint, and stopped.

I am used a day with him.

To it.

I pretend i'm not interested.

45 minutes later, we arrived.

A longtime confidant of yasser arafat, is meeting for a briefing on priest talks.

First, a quick prayer at yasir arafat's tomb.

Al-masri's home is filled with art and artifacts.

An ottoman-era marriage chest.

For all of these echoes of the past of the wealthy made in the oil and gas industry, he is focused on the future.

He says independents must come before any other initiative, including john kerry's $4 billion plan to flounder the economy.

We need money.

I wish we stayed for and kept the land, rather than losing our land and dignity by being occupied by israeli forces for 60 years.

A few minutes later, he had to leave.

The king of jordan was waiting for him, and he could not wait.

The preliminary peace talks begin this evening in washington.

They last through tomorrow.

We have the latest from your's largest discount airline, ryanair.

The ceo will tell us why profits slumped and what he is doing to fix it.

And check this out.

That is phil mickelson ringing the bell at the new york stock exchange fresh off of his win of the british open.

? let's loosened it up.

There is still time this summer to book your last summer vacation.

The ceo of choice hotels international was on "in the loop" this morning, and this is what he had to say about the increasing rate of growth.

You have a steady increase in demand.

Financing is coming back, and as a result, developers are looking at an environment which they think is pretty positive, and they are looking at some positive years.

They are looking at opening hotels with the wind at their back.

Why be conscious of the top line?

You announced earnings last week.

Mostly because we are seeing people pull back on their forecasts.

July was up for the industry pretty well but people are looking at a steady growth, solid positive performance, but probably not as strong as people were first envisioning in the back half.

We are actually pretty bullish about where the year ends up, and where we go next year.

Where you rest your head to how you get there, ryanair reported earnings that mr.

Estimates.

The ceo spoke to us this morning.

-- missed estimates.

He is optimistic about handling the upcoming winter season.

We are on track, the average second quarter will rise.

We have seen some savings in fuel costs.

The regents also continued to perform strongly.

Overall, put together, we will see our guidance in the range of $5.70. we have enjoyed and fantastic summer in the uk, so people are out in the back garden rather than on the computers.

We saw a big rush post-olympics.

People decided to travel.

This year, we will have to wait and see.

So far it has been a little quieter than we would like.

We have had to do some discounting in fares.

If the weather continues to be good, you will continue to discount?

A lot of it is in the bag.

A lot of people have booked and dance at this time of the season, but some of those late bookings are the icing on the cake.

Last year, you idled planes in the winter, you will be doing even if your next year.

Is that still the plan?

At the moment, very high oil prices.

$110 a barrel.

We think it is more sensible to part some of our aircraft over the winter rather than apply them.

The more that you fly, the more you lose.

Right now we have very low fixed costs as a city with aircraft, staff can be furloughed.

We feel it is a better answer high oil prices and high airport charges.

Airlines like ryanair actually have to worry about fuel prices, but not super heroes.

They just fly.

We have our super hero awards.

Who wins and loses at the box office?

? i am so sorry.

I will never hurt you or anyone ever again.

Wolverine klong its way through the box office ranking.

An estimated $84 million this weekend.

That may sound like a lot of money but that fell short of other films from the x-men franchise.

That brings us to our lm top 5. enjoy.

Pajrker.

Where do we begin?

The mandarins must be stopped.

? hugh jackman striking at the box office, phil nicholson striking at the british open.

He rang the bell on friday, celebrating his partnership with exxon, talking about the science behind the game.

Understanding my lunch characteristics, that i come in on a steep angle of attack in part and backs bent, i have worked with the engineers to develop a club, my three would and driver, that impart a lot less spend.

-- spin.

Two critically shot that i played on sunday and then board through the air and reached the par-5 into that thick and heavy air.

The only way i could do that with to get these been rate of of the ball.

When the center of gravity moves back, the spending goes up.

We were able to develop clubs where the internal construction progressed spinning, optimizing my lunch characteristics, allow me to hit the two shots i needed to into the wind.

Never could have done it without this club.

What did you think happened at the british press is here and home?

You say -- you came so close.

What is the difference?

Losing is a big part of golf.

Using it as a motivator is every bit as important as a professional golfer.

A lot of people fail or have a loss and an ex -- it ends up affecting their future performance.

Of course, i was devastated because i wanted to win so bad, but winning the open championship is the greatest accomplishment of my career.

I overcame that loss previously, and i did not know if i could win this one.

I had to alter my game, learn just that i never grew up hitting, create a new style of play that was foreign to me.

To be able to accomplish that and overcome these obstacles to win the claret jug is the biggest, if and of my career.

When do you mean when you say you had to change?

I had to be much more conservative.

You cannot be in the bunkers.

I took my driver out completely.

I am used to hitting the ball high in the air with a lot of spin.

How cool is that?

Hearing phil mickelson talk about how he won the british open.

In the meantime, "bloomberg west." here is how the markets are trading right now.

Lower, lower.

That is what we're looking at across the board.

The s&p is off the lows of the session.

Was heading for its best monthly gain since october, but traders taking a bit of a breather.

Also a busy week with the fomc, the jobs data, and over 100 companies in the s&p reporting.

We are watching caterpillar.

Announcing a $1 billion accelerated stock buyback program from societe generale.

They are rebounding after being destroyed last week after reporting second quarter revenue fell.

Expedience -- expedia extending their losses from friday.

Apple has been hit hard but is recovering since reporting earnings.

If you want to play it, you may want to consider doing it through another name.

Joining us is our senior market analyst.

You have to love those derivatives plays.

What is your back door apple plan?

Crus.

They are a manufacturer of parts for iphones and so forth.

The stock has had a sharp decline, down 40% over the last 52 weeks, compared to apple.

Down only 23%. look for them to have a balance.

About $1 off of its lows right now.

$17.90. look for a play in march 2014. what is the potential breakout target?

Trading between $18 and $22 a share.

If you look at the lows in 2011, 2012, there is some solid support.

This will cause to $6.60. so the break-even is only 70 cents higher right now.

The break-even price is $18.60. it is the minute we position for the long term.

Look for -- if apple can break out of this 4.80 level, you will see a big recovery.

5.80 is the next target, looking at apple.

How long is this trade for?

A lot of options traders may make a mistake in their duration.

This gives you enough time to be right.

You have eight months or price development.

You have plenty of time for good things to happen.

From a bullish perspective, we had a jam with the earnings numbers, but it held above the yearly lows.

Looks like it is trying to form a bottom.

It has been correlated to apple.

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

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