Rise and Fall of Giants: Lunch Money (07/26)

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July 26 (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 " on bloomberg television.

I am adam johnson.

Let's take a look at the menu today.

In billionaires, steve cohen is in crosshairs and mark zuckerberg comes out on top.

In our media dish, change at the top of time warner cable.

As for time warner customers, no blackout yet.

In politics, it is obama versus boehner and a preview of what to watch this weekend.

We have extremes for you, and we mean it.

And mcdonald's is beefing up their breakfast menu.

Let's kick it off with billionaires.

The rise and fall of giants.

When the day started yesterday, three billionaires were on the index of richest people in the world.

Today, one of them is out, another is rising, and a third, let's just say his future is a big question.

That guy, steve cohen, the founder of a hedge fund, number 121 on the bloomberg index.

His firm is facing several criminal charges of wire fraud as well as securities fraud.

The feds allege sac has been running an insider trading scheme for more than a decade, wreaking -- reaping hundreds of millions of dollars of illegal profits.

This is the account of a firm with zero tolerance for low returns but seemingly tremendous co tolerance for being market cheaters.

No financial services firm has ever survived a criminal indictment in the u.s., and observers don't think that is about to change.

The indictment is itself a death penalty.

This company cannot exist as a company that takes in institutional investments.

Can it exist as a family office sometime in the future?

Yes, it can.

Steve cohen was not charged in the indictment.

He was charged with failing to supervise managers who themselves engaged in insider trading, but if the feds move against the company, steve cohen the billionaire has a lot to lose.

He has a lot of real estate, huge greenwich estate, an apartment at one beacon place here in new york -- just above this building.

Yes, and he has a tremendous art collection.

And didn't he buy art from steve wynn after he settled with the sec?

He was actually scheduled to buy at a couple of years ago, but then steve wynn asked them he tore it and it had to be fixed.

There has to be a nexis shown between the crime and the robbery.

Example would be, i do a crime, i get a million dollars,, i get a painting.

If they can show that, they can take the painting.

Where he gets a little more complicated is where i get a million dollars in a crime and buy a painting for $4 million, and use a million dollars from the crime.

There is a whole body of jurisprudence which you cannot address in a couple of minutes having to deal with co-mingling funds.

If you mingle funds from a crime with other funds, can you take it all?

That is the key.

Same with the various estates and properties he owns?

Yes, this happens all the time.

I am involved in a case now where there is a question of whether the home is related to the crime or separate.

Again, there is a nexis.

So, steve cohen and his company facing troubles.

Brazil's berry billionaire is facing some troubles of his own.

His wealth has deteriorated to just $200 million, knocking him off the billionaires list.

I gave batista -- eike batista has lost 99% of his fortune, and was previously number eight on the list of the world's richest men.

>he spoke to us back in march of 2011. a year later in march, 2012, his net worth peaked at $34.5 billion.

A month after that, he set down with bloomberg again and indicated to stephanie ruhle he may have exaggerated a little with his initial goal of being the richest man in the world.

You seem to be very goal oriented.

If you were number 4, 5, six, that would still be a massive achievement.

The rating agency put brazil in the same level as nigeria.

Today, it is better than germany.

We lost two generations.

I want to spend money on hospitals, universities.

All right, he revised his goal a little, world's richest by 2016. maybe he saw his recent declines as a minor setback.

Well, it would have taken him until 2024 to be the world's richest according to analysis we did at the time, but let's get back for a moment.

Who is batista, and how did all of this come about?

To tease to showed up at a time -- the t- batista showed up at a time when brazil was the apple of investors eyes.

He was going to build and integrated empire.

He raised a lot of cash in the equity markets, but he also raised a lot of debt, and when these companies did not start producing as fast and as much as he said they were going to, he basically had to find a way to pay back that debt.

Is it him or just a confluence of bad timing?

Partly him.

He made big promises for his companies.

He said his oil company was going to be as big as the state oil company.

He said his mining company was going to be the biggest in the world.

He is the son of a bigshot politician, right?

He is the son of a former mining and energy minister.

So he grew up with a lot of advantages.

He grew up going back and forth between brazil and germany.

Was this just arrogance run amok or did he have a real plan?

He hired the best people in the business.

He hired a lot of talent.

He had some of the best people in the market.

The fact is that a lot of people bet on him.

A lot of people thought it was a credible plan at the time, not just talk investors, but brazil's state development bank , which lent his company 5 million dollars.

A lot of people bought into it at the time.

So, it took about a year for batista to lose about $34 billion.


Meanwhile, aargh zuckerberg knows what it is like to -- mark zuckerberg knows what it is like to win lose billions of dollars.

Facebook's strong earnings report on wednesday pushed facebook shares up 29%, ballooning his net worth by $3.8 billion.

When we come back, amazon and ebay locked in a battle to sell you stuff.

The latest salvo, next on "lunch money." and remember this?

A freight handler tossing boxes into a jet in china.

Apparently people do not learn from others mistakes.

This is new video of a fedex employee in manhattan.

Hope your box was not one of those.

Come on, guys.

This is the age of camera phones.

This is the internet.

We see what you're doing.

Nice toss.

? a surprise loss for amazon.

The world's largest retailer reporting a second-quarter loss.

Amazon has been spending a lot of money on warehouses and digital content.

Into 2012 it more than doubled what it spent in 2011, and spinach or is rising this year.

Jeff beazer says this will lead to -- it's spending is rising this year.

Jeff beazer those the ceo says this will lead to more revenue down the road.

Need something and needed now?

If you live in in the bay area or the big apple, ebay could be waiting to answer your call.

Shopping valets are the newest addition to the online marketplace.

Using mobile app customers in san francisco and new york, and ebay valet delivers your goods in under an hour.

It takes the connection of buyer and seller to the next level.

This week, ebay is expanding the service from mobile to the desk top.

Over half of our usage is between 9:00 -5:00 during the day.

As ebay eve alt the experience, the company hopes to -- heevolves the experience, the company hopes to expand.

It is solving the need for convenience and immediacy.

Immediacy is not a new trend in e-commerce.

A delivery for ebay now will cost just five dollars.

It is still unclear whether the venture will be profitable.

The margins are very small.

This is a really hard business to be in.

My guess is they will use this as a way to be innovative and bring in new customers.

Ultimately, it will be profitable for both ebay and the retailers.

Ebay plans to launch now in chicago and dallas.


Well, you may be able to get one of these things today from amazon or ebay, the power mat, a smart phone charger that does not require you to have an actual cord.

It is made by duracell.

We are going to hear from the ceo in a minute, but first, let's explain how this thing actually works.

No more wires, chargers, or the pesky issue of a dead phone.

My phone has died.

This is the fantasy power matt is trying to make a reality, with a little help from some friends.

How does it work?

It takes electricity and converts it into a magnetic field.

The phone converts it back into electricity, powering the phone.

It is the same kind of technology used to power an electronic toothbrush.

It also uses magnetic induction.

The goal is to create an entirely new paradigm when it comes to how consumers use stuff.

You expect to connect to cable.

Today, you expect to buy a device with wi-fi . they should expect to get power.

Like at a sporting event or a starbucks.

Recently, power matt partnered with power kids, giving them a presence in europe.

Except stations are still few and far between.

Can it ever be as ubiquitous as a gas station?

The biggest obstacle for the industry is awareness.

Research estimates that wireless charging devices will grow from 20 million this year to 100 million by 2015. that was betty liu.

Deirdre bolton spoke with the powermad ceo.

-- power mat ceo.

We are enabling consumers to recharge their life not only threw coffee but by charging their -- not only through coffee but by charging their phones.

We have our nursed -- partners with duracell, starbucks, at&t and the like.

The idea is to create an infrastructure to provide the ability to get a charge within two blocks away.

Think of the scenario of going into the city and your phone is running out of battery.

You know the two blocks away you can get into a coffee shop, place the phone on the surface, and while having your coffee, your battery will be filled up.

It is just like wi-fi.

We believe that the usability of this service will be something the consumer will appreciate and it will become part of our own daily life.

If you had to pick an ideal next partner after starbucks, what other companies would you like to work with?

You have your device, so you need to make sure you have the right accessory.

We provide excellent cases that not only can charge wirelessly but also provide you extra battery.

The other side is surfaces.

Hotel chains, sports arenas, coffee chains, practically every place where consumers are using their smartphones.

Universities, schools, homes, any hospitality venue.

Time warner cable and cbs college timeout in their ongoing dispute, plus, -- call a time out in their ongoing his spewed.

That is next.

? in our media dish, can't we all just get along?

If cbs and time warner can not strike an agreement by monday, cbs programs will go black for 3 million time warner customers.

Basically , i, the consumer, what do i want to pay for?

Do i want a la carte?

Do i want to pay for bundled service?

Les mendes at cbs is saying, i have quality rogue rimming.

If you going to pay for -- quality programming.

If you're going to pay for espn, we have better programming.

Yesterday, time warner announced change at the top of the company.

The ceo will be stepping down.

The president and coo will be stepping in.

Here is what the ceo had to say about his retirement.

Staying with broadcast news, the uk's largest broadcaster, beside b-sky- b, beat estimates this morning.

We have a really strong year ahead in 2014. some of the areas such as mobile devices and on-demand are really strongly growing trends.

We have a strong base of tv customers.

About a a third of them take broadband.

That means we have two thirds to push into two try to sell more broadband.

The good news is we are cheaper than competitors.

We offer good quality of service.

And our prices are often half the price of others.

Today on the markets we are taking a look at a declining stock market.

Earnings are weighing on the markets and all three of the major averages are lower.

We will have more on the markets in 30 minutes.

? this is "lunch money" on bloomberg television, and streaming live on bloomberg.com, your tablet and phone.

Here are some of the pictures grabbing headlines right now.

The driver of the train that derailed and crashed in spain has been detained.

He is being held in the hospital where he was being treated.

Reports say the train was traveling three times faster than the speed limit when it rounded a curve and are railed.

The crash killed 80 people.

Others remain in critical condition.

In washington, u.s. park police say someone splattered green paint at the lincoln memorial overnight, an apparent act of vandalism.

The paint was discovered on the statue itself as well as the pedestal nearby.

The memorial was temporarily closed to allow for cleanup.

Hugh jackson is back in theaters as the wolverine today.

It marks the sixth time in the last 13 years he has played the clawed superhero from x-men.

Do you like 3-d echo guess what?

You are in luck.

Buy your tickets now.

Wednesday, president obama spoke at knox college and then a day later, house speaker boehner hit the ball right back.

We have the best of both for you right here on "lunch money." it is obama versus boehner.

Enough of political posturing.

The speech was also result.

Our businesses have created 7.2 million new jobs.

Under the president's leadership, the country has fallen into the new normal of slow growth, high unemployment and stagnant wages.

I sincerely believe there are members of both parties that sincerely understand what is at stake, and i will welcome ideas from anybody.

The president says he wants ideas.

Here they are.

We will not allow the student loan rates to double.

This is a victory for our party.

That actually shores up the social security system for years.

40% of those who are here without documents came here legally.

How do we fix the legal immigration system, one so that it is more fair, and also so that it is one weekend and enforce?

Healthcare cost are slowing down, but a lot of working families have not seen those savings yet.

Obama care, my view, is driving up the cost of health insurance and denying people access to quality care, and it is killing jobs in america.

We have folks who have insisted on leaving in place a meat cleaver called the sequester.

We have spent more than we have brought in for 50 of the last 55 years.

I hope somebody is willing to actually talk about it.

A weather is perfect.

Whoever was in charge of that, good job.

Minority leader nancy pelosi is optimistic about one thing, the immigration bill.

I think the path the senate laid out in terms of legalization will eventually get through.

It is a hard test.

It is not an easy path, but it is a path.

If the senate bill came before the house right now, would it pass?

I believe it would.

Here is what she had to say when she was asked who should take over the fed?

I think it would be great to have a woman, no question about it.

You can watch the full interview with minority leader nancy pelosi on "political capital" over the weekend.

Coming up, the extreme camps you won't want to miss out on this summer.

This is cool stuff.

? in travel, expedia reported earnings today.

Not so good.

The pain began last night and it is still ugly.

Take a look at that, dropping as much as 25% today.

Expedia, by the way, describes his quarter as challenging.

We would agree.

European airlines reported earnings overnight.

Air france's ceo joined bloomberg earlier today.

He talked about managing cost.

The solid restructuring plan is a driver of the improvement in our performance.

We reduced our unit costs by more than two percent , and accelerated the reduction in unit costs.

Where do you want to go on vacation?

You have to check out this new travel site with inside tips on where to eat, shop and visit all over the world.

In san francisco, the company is teaming up with some of technologies biggest names.

The ceo gave emily chang a peek at how peak works.

Peek sells online excursion tickets, boat rides, museum tickets.

The company also invites global a-list spu ers to share their perfect itinerary.

The ceo took me along for her own ideal day.

Stop one, the ferry building.

Ok, so you cannot start a perfect day in san francisco without some coffee, right?


We are in the right place.

What exactly is peak?

Are you trying to replace travel guides?

We're not trying to replace them.

We are trying to to make places more visible.

Nice to meet you.

Nice to meet you.

I am hungry.

Ready to get some pizza?


let's go.

I had always wanted to take a pizza class, but never knew how to find a good one.

Staffers work with locals and travel experts to find hidden gems.

They take a 20% cut on each sale.

Travel is a crowded field these days.

Peek 's model seems to be resonating with local businesses.

How long have you guys been up?

Over a year.

People take our classes, tell their friends, and it is great.

The company has secured investments from bigwigs like eric schmidt.

Back in class, lunch is ready.

Way to go, emily.

You can catch all of families to her of san francisco with p eek's ceo online.

Just go to bloomberg.com.

Summer is almost over, but we are talking about extreme camps.

You need to check this out.

Jet camp.

I like that.

Starbucks versus mcdonald's versus dunkin' brands.

The breakfast wars are coming up next.

? this is "lunch money" on bloomberg television and streaming live on your tablet, phone, bloomberg.com and any windows phone out there.

I am adam johnson.

We are talking about wildcard breakfast wars.

Starbucks is trying to sell greek yogurt in cafes and supermarkets.

Mcdonald is also getting in on the breakfast action.

They are selling breakfast after midnight.

Munchies, anyone?

The food is paying off.

Starbucks beat estimates.

It is up five percent today versus yesterday's close.

And don't count out dunkin donuts.

They are already knee deep in the breakfast work trenches.

Our same-store sales we felt were very good.

Dunkin' donuts was up four percent.

Baskin-robbins was up 1.6%. we felt very good about those numbers.

We opened 53 stores on the dunkin side.

We opened five stores on the baskin side.

We feel very good about the u.s.. we feel very good about both businesses.

Tell us about the expansion plans you have for dunkin' brands.

Where are you going to be opening new stores?

Basically, even though everyone talks about california and we have some exciting news this morning that we signed quattro new franchisees in california over time, that won't -- we signed for new franchisees in california over time, that won't happen, realistically, in till 2015, we think.

We have said we are at the high end of our range.

It is going very well.

Most of the growth will come east of the mississippi, about 70% in our core areas.

Most of the rest will be split between what we call our established and emerging areas, host of which is in the midwest and south of the country.

-- wondering if you can describe for people royalty payments versus payments from franchisees for rent and things like that.

Basically, in the u.s., when we set up a franchise, the franchisee pays a fee for opening up the store.

The royalties are basically a percent of the sales they have called systemwide sales.

We get a royalty, which in the u.s., our standard rate is five point nine percent, a good royalty, a competitive royalty towards the -- 5 .9%, a good royalty, a competitive royalty towards the higher end of the scale.

In some stores, we own the real estate.

From that, we take real estate fees, and that is on a percentage basis as well.

We have systemwide sales which are about $9 billion annually.

Royalty fees come to somewhere around $700 million.

We are a large company when it comes to sales and a small company when it comes to royalties.

We are all about driving franchise possibilities, driving success, and if we do that well, we will grow more stores and hence more royalties and fees.

What about new products, seasonal products?

I know you have introduced some products related to the birth of the baby boy of the duke and duchess of cambridge in england.

That is exciting.

This is the royal munchkin.

You can buy it at all dunkin in the u.s. it is a cake doughnut with pink sprinkles.

On the baskin-robbins side, we had a special baby shower cake.

Mcdonald's ceo is introducing new products too.

Betty liu had an hour-long sitdown with mr.


When he talks about food, it is kind of special.

We have to continue to appeal to customers.

That is why you are seeing a quite a light breakfast, new chicken entrees, great fresh vegetables and produce.

Smoothies, we introduced a while ago.

We have to remind customers that we have real fruit smoothies.

You mean the beef is 100% real beef?


The chicken is whole breast meat chicken.

Two all beef patties, lettuce, pickles, onions on a sesame seed bun.

It is all real food, fresh food.

I like it when the lettuce comes out of the top of the rap.

-- wrap.

? while it is time for on the markets.

Here is how markets are trending.

Let's start with stocks.

We are seeing a declining market today.

Some of the earnings news weighing on the markets.

Zynga and amazon were disappointing versus what analysts expected on the earnings front.

Crude oil has been falling on speculation that china plans to cut excess manufacturing capacity.

China ordered more than 1400 companies and 19 industries to cut excess and a fracture in capacity this year.

Oil is heading for its first drop a month.

Copper getting hit i the same concerns as china is the largest copper consumer.

Let's turn to options.

We are focusing on pharma.

Both merck and pfizer set to report next week.

Are there way for options to take advantage of any potential moves?

Joining us is jim, a derivatives strategist.

Thanks for coming in to talk about this.

The pharmaceutical industry and stocks are not very volatile.

They do not move a lot.

When you are anticipating earnings, how do you play that?

What do you do?

Just to your point, it is worth noting that typically into earnings, term structure is particularly downward sloping.

So, to put it another way, the options market does not anticipate options volatility for pharma companies like it does for many other companies.

Exactly right.

The uncertainty around typical earnings comes up volatility in the near term.

Pharma companies typically move around percent on earnings.

That is what gets cut into the options market, so there is more volatility in the future priced in.

Quick so what do you do going into merck and pfizer?

Both report on the 30th.

Pfizer, 4s, is a neutral -- for us, is a neutral rated stock.

They did spin off some of their annual health business.

There is some uncertainty around what those numbers look like.

Our expectation is there will be some currency headwinds, and you do see that in the options market.

If you look at the put skew, it is steeper than in prior quarters.

That suggests that the options market does see a little more uncertainty in these numbers.

Merck is the flip of that.

In there, call skew is steeper.

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


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