SAC's Impact on Cohen's Fortune: In The Loop (7/26)

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July 26 (Bloomberg) -- On today's "In The Loop," Deirdre Bolton takes you from the day's breaking headlines straight through to the opening bell, speaking with the most influential guests and asking the smartest questions. It's not noise, it's news.

Insider trading.

Steve:'s is indicted with criminal charges, but it may mean little to his personal fortune.

Tales from their rich.

Brazil's son i keep batista -- eike batista loses his status.

And the charging stations are spreading to a starbucks near you as the ceo weighs in.

From bloomberg world headquarters in new york, this is "in the loop with betty liu." good morning, it is friday, july 26. we are live from bloomberg world headquarters.

I am deirdre bolton, inter-betty liu.

We have all the top stories covered for you today.

Su keenan is following the money trail, inside the insider trading investigation.

Julie hyman is watching starbucks after the company posted earnings last night.

Speaking of starbucks, a charging station may be coming to your local brewhouse.

The ceo of -- he will explain in a moment.

Sa c capital has criminal charges filed against it.

It is believed they will not stop until steve cohen is charged.

Su keenan, what signals are you hearing about?

First of all, this is an extraordinary charging document.

It uses powerful legal tools, buying the feds a lot more time to go after billionaire steven cohen, who is not mentioned anywhere by name in the criminal charges filed against the firm essay see -- sac.

Check it out -- "the sac focused on not discussing information too openly, rather than not seeking or trading on such information in the first place." here is how the u.s. attorney puts it.

The company reaps what it sows.

As alleged, sac seated itself with corrupt traders, corrupted by a culture that looked the other way despite red flags all the way around.

Encouraged a no holds barred pursuit of an edge that has literally carried it over the edge into corporate criminality.

Corporate criminality.

Sac released a statement saying they take it seriously, but the fbi says the only purpose was the -- the only purpose of their compliance department was to say they had a compliance department.

Ouch.

What are the specific criminal charges that the u.s. has laid out against sac capital?

They do reset the clock because while the government does not directly charged conspiracy by using securities fraud charges and creating a scheme of companies over the decade.

It achieves the same effect over 29th -- over 2009-2010 of profitability and a longer statute of limitations.

It seeks the forfeiture of what could be hundreds of millions of dollars in sac assets.

At a minimum, the government seems to want to shut cohen's down.

Now you have the feds surrounding sac.

If stephen cohen says something here, it will have great ways.

You have an interesting timing and strategy on the table.

The administrative charge may be pushed back to give the criminal charges time to play out.

What is the most likely scenario?

How much can things get worse for cohen himself?

It definitely can get worse.

The government points out eight former staffers have either been convicted of insider trading, charged with it or admitted guilt.

Fund manager richard lee pled guilty just this tuesday, and the government is using him as a cooperating witness.

This is an ongoing investigation into cohen as well as sac.

Su keenan with the latest on steve cohen and sac capital.

Moving and shaking this hour, nancy pelosi, the house minority leader, is sharing her opinion on the job openings of the federal reserve after calling both the front runners -- larry summers in junie yellen -- and janet yellin -- will qualify, she said it will have -- it will be great to have a woman lead the central bank.

She sat down with our washington editor at large al hunt.

Let me say that i think it would be great to have a woman, a first woman chairman of the fed, no question about it.

Janet yellin would be extremely talented, not just that she is a woman.

With more on gender politics, the fed and leadership, we bring in a can of its editor michael mckee, following the twists and turns.

What did you make of her comment?

They are quite interesting, especially in context of what is going on in the senate where they are taking the advise part of advise and consent seriously, if a letter signed by at least one third of the 54 democratic senators going to president obama saying he should pick danny yellin, and in part that is a tribute to her.

-- he should pick janet yellin, and in part that is a tribute to her.

Larry summers, getting a bit of a blowback on all the stories about his -- he is widely expected that he is widely respected as an economist, but a lot of people just don't like him.

Even though the janet yellin letter does not mention summers, it is clear, -- there is also perhaps gender politics because there is a whisper campaign going on earlier this week that -- saying she is too soft, code that she is a woman.

It suggests that something has shifted because you have this blowback owing on right now.

Washington has changed quite a bit over the last couple of years.

First of all, the letter was circulated by a man.

Take a look at the breakdown.

You have 20 women serving in the senate right now.

Compare that to fortune 500 companies.

Only 20 women are ceo's there, and none are one -- none are running wall street banks.

It seems the senate has put aside gender politics much more than wall street.

What does this mean about the role of women in leadership positions in general?

In some areas they are making a lot of our press, raking through glass ceilings.

In corporate america, a lot of -- breaking through glass ceilings.

In corporate america, it is taking a long time.

In some aspects of politics, it is turning out to be easier to do than in corporate america.

Michael mckee, thank you very much, joining me there.

Catch al hunt's entire sitdown with nancy pelosi, at 9:00 p.m. eastern time.

Starbucks reported after the bell, beating both revenue and profit estimates.

You have shares at a nearly five-year high.

Julie hyman is with me now.

Starbucks, what is it doing that continues to drive these results?

We hinted at it yesterday, deirdre.

It has to do with food.

The company is offering more food options.

Earlier this week it signed a deal to make yogurt under the dan and label.

-- under the dannon label.

Same-store sales in the u.s. were up nine percent, better than estimated globally.

Strong sales in china, and asia pacific in particular.

But really food has been phenomenal for us, according to chief financial officer troy alston.

He told leslie patent that in an interview.

It is going to be rolling out more offerings in more starbucks stores.

What about pricing?

Has starbucks been able to raise prices?

It has on some drinks in some u.s. stores.

Those will be the first price increases we have seen in two years.

On the flipside, the company cut dices for its tags coffees that it sells in grocery stores, i about 10% in may for the starbucks branded coffee.

It also caught -- it also cut prices for seattle's best brand package.

Thank you, julie, with the very latest on starbucks.

We have all been there before.

You are out and about, your cell phone dies, not a charger in state -- not a charger insight.

Powermad is a -- powermat think so.

Betty liu took a look.

Is the holy grail of the mobile device world we live in.

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

My phone has died!

And bank that is a fantasy that powermat is trying to make a reality with a little help from some friends.

Never be powerless.

How does it work?

When an enabled device is played -- is put on a power mat, it creates a magnetic field.

It is converted back into electricity, and that powers the phone.

It is the same technology that powers an electric toothbrush.

The goal is to create a new paradigm when it comes to how consumers choose -- how consumers juice up.

A year ago you had to connect with a cable.

Today consumers will just use the idea that they have energy storage and will expect to get power.

Like at a sporting event or a starbucks.

A powermat product.

Recently they got a presence in europe.

Powermat charging stations are still few and far between.

Powermat has been testing technologies and select starbucks cafes in boston and just announced it is expanding to locations in silicon valley.

We are joined by the ceo , joining us from boston, exclusively from london on the news.

Thanks very much for being with us.

You have just announce this partnership with starbucks.

How important is it for you?

What will this mean to the company's bottom line?

Good morning, everybody.

This morning we announced another step in the revolution.

We are installing surfaces that are smart surfaces in selected starbucks restaurants in silicon valley.

This is following the success of the pilot in the boston area, whereby we enable consumers with the ability of charging their phones when they visit a starbucks store.

It is very important to us because it is the first time whereby we are creating an ecosystem that will enable consumers to recharge their life not only threw coffee but also through keeping up their phones with a full battery.

Who do you consider your number one competitor?

There are, let's say, more mobile devices than a powermat.

Our approach is really a coalition.

They have partners with at&t, starbucks, and the like, and the goal is to create an infrastructure to provide the ability to get a charge within two blocks away.

Think about this scenario -- you are in the city and your phone is running out of battery.

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

It is just like wi-fi.

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

Ran, if you had to pick a partner after starbucks, what other kind of companies will you like to work with?

The idea of charging surfaces is really related to you have your devices, so you need to make sure those devices will be the right accessory.

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

The other side of this is surfaces.

You can think of hotel chains of sports arenas, coffee chains, practically every place consumers are using smartphones on the go.

Universities, schools, homes, and any other hospitality venues.

Ran, thank you for the time.

Congratulations on the starbucks partnership.

Ran poliakine.

Coming up, chairman and ceo mario buzzelli won the u.s. consumer.

On the stocks that he likes right now.

Mario gabelli on the stocks that he likes right now.

Staying with brazil, the m w has lost bragging rights -- bmw has lost bragging rights.

Which non-luxury carmaker is getting the pope around the streets of rio.

? "in the loop you are watching -- you are watching "in the loop pickup i'm deirdre bolton, info betty liu, to talk about the markets.

Everything from media to industrials to energy.

Verio gabelli is the chairman and ceo of gabelli funds.

Mario, great to see you.

Good market, very exciting.

An exciting friday morning.

So you have a deal with a gaming company.

Basically vivendi needed money.

They had bought blizzard, and what they did was they were able , willing to sell control of the company for a discount.

So codec put together a group, bought back shares, and the company bought back stock.

So you have taken the cap ounce of essentially, and the stock is reflecting that.

Since you are here, i have to ask you about this will stop cbs, time warner, cable spat.

What do you think of it?

We go back to the time that madison square garden was having a similar spat with time warner, and jeremy lynn hit a couple of baskets and that solves the issue.

I like how that is the recap, mario.

Do i want to pay for a bundled service is to mark the cable guys have a problem, and that is they are taking program out of the market, moving it up.

Cbs says i have quality program, a if you are paying money for seed -- it is a wonderful tug- of-war in the free market.

In case any of us were mistaken, content is king.

Content is king.

Yesterday, amazon cuts a deal.

They have to show video, so they go in and cut a deal with viacom.

Viacom had been cut by netflix -- dropped by netflix.

They got a deal from amazon, and google is coming in and doing interesting things.

How is this changing the way you invest in media?

Last year the government asset fund, our first mutual fund, the turnover was -- last year the government he -- the gabelli asset fund, our first mutual fund, the turnover.

We like rupert murdoch and that other company, fox.

Five comments $72. you have to own it.

-- viacom is $72. you have to own it.

Speaking of the pipes, john malone, what is going on?

That is a great point, deirdre.

We like the deal that was just done with co dec, activision, and you have smart people sitting down and figuring out how to solve problems.

John malone is an investment banker, understands taxes and tax structure.

He bought a piece of the structure from the firms that owned it.

Tom rutledge was there, a great jockey in the broadband area.

Rutledge and malone, consolidation is likely to help.

Time warner, cablevision, and charter, the menage a tr ois.

They are synergies because they can drive programming costs down and they have a window to do it because they compete against us, files, over the top, -- fios, over the top.

We are going to continue the conversation and take a quick break.

More with mario gabelli in a few minutes.

Also, beleaguered boeing cannot seem to catch a break.

The details of the latest crisis aboard one of the planes, next.

You are watching "in the loop ," live on bloomberg television, streaming on your phone, and at bloomberg.com.

I am deirdre bolton, in for, who is off today.

We want to get you caught up on what is going on.

Futures indicating a lower open.

Consumer confidence data comes out later this morning.

Names we are watching this morning -- zynga down premarket, the company coming out with earnings that missed analyst estimates.

It was abandoning its plan to enter online gambling, so that is making the stock take that big hit you see on your screen.

If you look at starbucks, the java giant up in premarket, beating estimates by two cents.

Revenue beating as well.

We are on the markets again, 30 minutes time, and we will give you an update.

Our bloomberg top headlines -- steve: not going to jail, -- steve cohen not going to jail, though his company up on unprecedented charges.

We will bring you all the latest headlines as they come in.

Boeing putting out another public relations fire, this over an oven warming food that overheated on an indian flight.

The overheating did not actually cause a fire.

The crew moved quickly to contain the smoke.

Jkr, run by henry kravitz, second-quarter profits falling 75%. the portfolio gaining over a year ago.

You can see there that they bought a lot in the uk, and that of course is contributed to this court's. in washington, we will shift gears.

, bill sack sounding off, saying japan -- tom bill vilsack -- he made comments in an interview with our chief washington correspondent, peter cook.

Also with us is the ceo of gabelli funds, mario gabelli.

Peter, what kinds of export restrictions are we talking about question mark are they using?

They are using and they have been easing.

South korea, japan, taiwan all imposing restrictions after mystery meat was discovered in oregon.

Right now only japan has a man in place.

Secretary bill vilsack says he hopes it will ease.

Tests confirmed that the the plants discovered in the unidentified organ field art genetically modified wheat tested by monsanto.

The wheat was never sold commercially, should not have been in that field.

The company has raised the possibility of sabotage, fueling international concerns about genetically modified crops in the u.s. it may be a circumstance that it may be difficult at the end of the day to pinpoint how this happened, but i think if we reassure our trading partners, it is an isolated incident and that they have the appropriate tests to conduct and we should see a resumption of full trade by all of our trade partners hopefully very soon.

U.s. exports $8 billion in we each year, so this is a big deal to american agriculture.

It could be a major sticking point in trade talks with europeans and asia pacific nations around the world.

There is another fight over a farm bill coming.

What did the secretary tell you?

Does he think a deal can get done?

You can tell he is frustrated.

There is a disagreement over food stamps.

House republicans have removed food stamps from the bill.

He is pushing lawmakers to come back to the negotiating table.

Thank you, peter cook.

To catch the full interview with tom vilsack tune into " capitol gains" right here on bloomberg television.

We will stay on the subject of feeding the world.

We are back with mario gabelli.

You own kraft foods, coke and pepsi.

Do you have an opinion on what is going on in washington, d.c., right now?

The american farmer, god bless them.

They come to work every day and have terrific productivity.

You have to be very careful.

Last year we thought we would have 14 billion bushels of corn.

We only came in with 10.8. the price of corn has come down.

That is the ingredient to help the world, but it is also important for the american consumer because it filters its way through a lot of things that we buy.

In our portfolio, we tend to buy companies that have differentiated product here at general mills -- products.

General mills, post and he'll shyer brands -- hilshiyer brands.

You are focusing on and products, not going for monsanto , which will always have the genetically modified cloud hanging over it.

Not necessarily.

They are creating drought- resistant seeds, which is important.

You cannot ignore monsanto or dupont, but at the same time, you would like to own john deere, that our focus is not only looking at campbell soup, and even a hot dog company.

Moving from food to energy, you mentioned john deere.

Hard not to go there without thinking of big tractors and how they guzzle gas.

Where are you investing?

Chief executive david cote was picked as executive of the year, and we saw a construction vehicle.

We cannot continue to spend $300 billion buying oil from places like venezuela, saudi arabia and the middle east, which is fragile.

Canada is our biggest supplier, right?

It does not matter.

We can become independent and hydraulic fracturing is working.

Bloomberg open -- bloomberg magazine says we are creating jobs because of the natural gas boom.

I like stocks like weatherford.

Jeff immelt of ge got into artificial lift.

I have a company yesterday, one oak, a utility company that spun off their distribution business.

National fueling gas is a loaded laggard.

The stock will be up 20 points in one day.

Numerous companies there, but a few different activities -- fracking concerns, natural gas, how it gets out of the ground -- what about average citizens worried about their water being poisoned?

How much investment risk does this represent?

The industry realizes that the initial practices in the southeast could not be used in the northeast, and they are doing a terrific job, but that does not mean you could not have a problem.

Sometimes you have a problem in terms of one well and casings and other things, but that is a risk element relative to the opportunities and the benefits.

Mario gabelli, always good to have your thoughts.

He will continue the conversation with us, thank goodness.

Very kind with your generous time.

When we come back, we will focus on amazon, and again into jeff bezos and his aides that on the online superstore.

-- and his a that on the online superstore.

We will take you inside the one- time brazilian billionaire eike batista's fall from his ivory tower coming up.

? bounced from the billionaire club, brazil's eike batista lost nearly 99% of his once $35 billion fortune.

It is a big blow for the man who just last year was the eighth richest in the world and often expressed aspirations for the top spot, passing the likes of carlos middle -- carlos slim.

By 2015? by 2015. i was telling him he should clean up his left, his right, and on the top because i will join him from one of those sides.

Matthew g miller and julie hyman join us.

Matthew, how did this happen?

You build up the huge commodities empire, take the companies public, promise investor there's is more gold than there actually is to be mind, and that is the story.

Eike batista is now in a freefall.

All six of his companies have plummeted and he has taken on debt.

Is there any hope for a way back for him?

Back to billionaire status, maybe.

People could i -- by the companies, but there is no way he is getting back to 35 alien dollars.

-- $35 billion.

Julie hyman?

He bet on commodities when it was not time to bet on commodities and he bet on his own country.

Part of it was luck.

Part of it was a misplaced strategy, but a perfect storm of different elements that have taken him down.

Eike batista was the face of brazilian capitalism for a long time.

He embraced that and investors bought in.

It is a shame timing wise because there is a lot of good buzz about brazil with the olympics and the world cup coming up, but it is hard to fly in, get a flight out, and people say the infrastructure is not there.

Some billionaires make money off of cement and other infrastructure problems they have to solve.

We found a hidden billionaire who is building the stadiums for the world cup, it eike batista was not involved.

Julie hyman, how does brazil stack up to the other emerging companies -- countries where the bric countries?

China is slowing down, brazil has had turnover, so people that are risk averse are steering away from that, and i hear more talk about frontier markets.

Africa.

Africa, vietnam, that seems to be the fashion, the hot -- buzzed about market.

Brazil falls into the category of the bric --the b ric markets.

Who else falls in?

We spoke about the flip-flop billionaire.

This is a family that built fortune off of highways and dams and she owned the flip-flops.

That was a diversified family.

The guy that does all of the deals with heinz, anheuser-busch -- those guys, still very rich.

Matthew g. miller, thank you.

Julie hyman, thank you.

As one billionaire licks his loans, another is never had it that are.

Mark zuckerberg is now worth nearly $19 billion , and he can thank the market.

Investors cheered on the stock, rallying 30% yesterday.

For more on zuckerberg's klein and eike batista's, fall , and to bloomberg.com/billionaires.

When we come back, building a force of engineers in the u.s. that might start at the toy store and we speak to one woman taking on the pink aisle, getting young girls a chance to ditch barbies and the engineering track.

Also, do not miss richard clara joining "street smart" as a guest host.

We are back in just a little minutes with more "in the loop." ? move over barbie.

There is a new toy in town, goldieblox, a construction set for girls six years old and up, catering to females.

Goldieblox was started by an engineer last year and a successful kickstart campaign and a video gone viral is why goldieblox is sold in the u.s. on amazon, toys r us and other stores.

Debra sterling, founder of goldieblox, is joining us.

This is really cool.

Thank you for joining us and bringing in the toys.

How did you go from being an engineer at stanford to saying that young girls need another choice of toys?

I love my engineering major, but there were not very many women and it seemed that all of my classmates grew up playing with erector sets, and those get kids interested in science, and i walked down the toy aisle and i realized they were geared towards boys, so i came up with something that would appeal to little girls.

Did you pick the softer colors?

I am sure you went through many iterations of design, but what kind of research went through this?

I met with neuroscientists, elementary school teachers, parents -- i read books on cognitive development, gender differences, and my big ha ha moment was that girls develop faster, so as you read along with goldilocks, you build as she builds.

It is true that when we talk about jobs and the mismatch between the american workforce and the jobs that exist -- they are programming jobs, engineering jobs, and it would be nice to think that more women would be in the field and have a chance to compete for those positions.

I hope so.

89% of the engineers are male, but it is critical to our country and it is fast-growing, and we need a female perspective, and those interests start when you are very young.

I know you had a successful kickstart her campaign.

Did you try to get traditional sources of funding?

I started with a seed round with friends and family to get the ball rolling, but then i went to crowd of funding to see if there was market demand for an engineering toy for girls, and i was told by veterans that girls just wanted dolls.

When we launched and raised 130 $5,000 in four days, i was blown away.

-- $135,000 in four days, i was blown away.

We get e-mails every day about girls building stuff, asking their moms if they are engineers.

It is incredibly fulfilling.

I'm a big fan of the creatures and the storybooks as well.

Debra sterling, founder and ceo of goldieblox, thank you for coming in.

We have a quick break.

When we come back, tesla has one less naysayer.

Also, the battle for the pope mobile -- the new process -- the new pontiff has chosen a more economical car.

We will tell you why he has pitched a luxury vehicle.

Stay "in the loop" for those details.

? it is time for this versus that -- a battle for bragging rights.

This is the pope mobile, a funny name for a very serious bulletproof vehicle during the pappas he of benedict the 16th.

The diamond mercedes-benz prevailed in the end.

That is pope francis.

He recently ditched the pope mobile for a no-frills ride, first a ford focus traveling in italy, and this week he opted for a fiat in brazil.

It was one of four cards -- cars went to the pope.

These cars offer little protection.

Brazilians were seen reaching through car windows as he moved slowly through traffic.

It is about 56 minutes past the hour.

U.s. futures are lower in the premarket.

Investors are digesting earnings and waiting for consumer confidence data later in the next hour.

One name moving in the premarket, expedia.

The stock is down more than 20%. $.64 a share earnings fall short of the $.81 estimate that analysts were forecasting.

More on the markets in 30 minutes.

Also, when we come back, a life without "homeland." for many people, that is depressing, but it might be the case if cbs and time warner do not reach a deal by monday, but it -- and we will bring you the details next.

? 30 minutes until the opening bell.

This is "in the loop" with betty liu.

The countdown begins right now.

Welcome back dear dime deirdre bolton in for betty liu.

Hedge fund sac charged with what the u.s. cause unprecedented insider trading.

For the moment, founder steven cohen is not facing criminal charges.

You can't blame this on rio.

One time brazilian billionaire eike baptista has been kicked off of the billionaires club.

How his that's when also wrong.

Monday, the deadline for time warner cable to reach an agreement with cbs on what it will for the content.

If they don't reach an agreement, time warner customers might have to live without some of the highly watched programming which has in some cases a cold following such as "homeland." adam johnson kicks off the blitz for his.

Looking at this pharmaceutical company.

Stock is down big.

The fda laced a partial hold on one of the drug for hepatitis c that is in a phase two trial.

It looks as though people receiving 200 milligrams of the drug -- are showing liver toxicity but the study will go forth for those receiving 100. expedia leading declines because of a second-quarter earnings miss.

Concerns of industry is headed for a slump because of of increased competition and weakness in europe.

I am watching kkr, the private equity firms a second- quarter profit fell 75%. more slowly than analysts were estimating.

After rising through the year, consumer confidence stalled in may.

If you look, it is actually down a little.

We get the latest reading later this hour.

In the meantime, we want to ask our economics editor mike mckee what is going wrong.

Are people just spending so much less they don't feel great about prospects?

It is the economy overall.

Second-quarter growth figures will be dismal, below one percent according to consensus.

Some people think we will actually see contraction.

The only good news is the stock market has so far been much higher.

That is sort of offsetting the gloomy economic news, which is one reason we do not expect a big equine in confidence today.

Yes prices are also coming down.

The -- neither are we expecting a big rise in sentiment.

This could be a big trading thing today, not much else for people to trade on.

The slow nature of the recovery is bothering people.

It has changed the way people think.

Expectations are not as high.

Speaking of expectations, what the consumers expect from the economy?

, if one survey is to believed, it might be nothing.

It is kind of a metaphor of where we are.

The recession officially ended in june of 2009, but a new mcclatchy marist poll shows the majority still think we are in recession.

54% think it never ended.

The majority also think the family income will not improve in the coming year, and even more believe there will be no improvement in the economy in 2014. , what is the reasoning behind these kinds of money quest -- numbers?

The most pessimistic of those who are making less.

We are all making less.

It has been an ongoing problem in the economy.

Corporate profits a record.

Ceo's he and wall streeters doing very well but the average person, income stagnant throughout the recovery.

No doubt we are in a recovery but you are not getting a raise and it is not making you feel good about the way things are going.

That is usually what works.

I will tell your boss.

Thanks.

Economics editor mike mckee with consumer confidence.

Kkr, the private equity firm said second-quarter profit fell 75%. holdings gaining less than a year -- than they did a year earlier.

Cristina alesci has the latest.

What stands out to you?

What stands out is -- the business is very much still tied to traditional buyouts.

As you know, that is a very cyclical business.

So, when their portfolio holdings don't increase as much as they did as the year before, they are definitely going to feel it.

That is what we saw this quarter.

Also what stands out is the portfolio holdings did not appreciate as much as their competitors.

If you look at blackstone and carlyle, their holdings both appreciated five percent or more.

Kkr at that point, nine percent.

It really hurt them this quarter.

I know there is a call later on.

What will listening for?

They will definitely highlight the positive, which is they raise a lot of capital.

We see it reflected through the results this morning.

It raised about $4 billion in private equity alone, which does not even count the public market side.

We will see that come through as a positive.

In general, when you talk about broadly the private equity landscape at this point, what all of these executives are going to have to answer questions about is the rate at which they are deep loin capital.

If you actually look at overall deal volume, it is down year- over-year because it is getting tougher and tougher to find investments.

And if we enter into an environment where interest rates actually increase, that may be more difficult and may present even a another hurdle for these guys.

Think you very much.

Cristina alesci with the very latest on kkr.

We have a break to take.

But when we the battle between cbs and time warner cable is continuing and it is putting big hit shows like "the big bang theory" in jeopardy and "homeland" as well.

The tales on the monday deadline.

And a product -- 10% of morocco positive -- morocco's economy is actually illegal.

Marijuana.

? you are watching "in the loop " live on bloomberg television, streaming on your tablet and bloomberg.com.

You can call it "homeland" in security, the deadline for time warner to reach an with cbs on what it will pay or the content.

If they can't come to an agreement, time warner cable customers may have to live with doubt showtime programs like "homeland" and network hits like "the big bang theory" in the summer stephen king production.

As far as who may blink first, we put the question to senior analyst jc blair -- jason blair.

Who will blink first in this game of chicken?

Programming costs are like college tuition.

They are totally out of control.

Time warner cable has got to do everything they can to back against these increasing costs.

The challenge is, the tv networks, being very aggressive with these rate increases, are basically making pay television unaffordable for a huge portion of the american population.

That is bad for the entire tv ecosystem.

Cbs has a very good leverage point.

In final season of "dexter," and "under the dome" an average of 12 million viewers per average audience.

If they go dark and "under the dark" columns on monday night, time warner will be overwhelmed with complaints that would effectively freeze their business.

We have seen other disputes.

Certainly not the first one.

It doesn't remind you of one you covered in the past?

Despite this dispute, but it's -- potential to lose tens of million dollars for both companies, but stocks are near all-time highs.

Our view is that the increasing pressure on distributors like time warner cable, comcast, dish network, is likely to drive a consolidation of the industry.

Who do you see as partnering up?

We think that john malone is not going away.

He's got effectively a 25% this -- position in charter.

We think that he joins together charter, time warner cable, and cable business -- cablevision.

It forces dish and directv to come together.

What kind of timing the you think?

Are sent is in terms of a special situation or event driven investment, we think something could happen strategically at time warner cable the next quarter or two.

What does it mean for the content providers for the creators writing these hits like dexter or homeland or under the dome?

I think it means you cannot extrapolate the current case of affiliate revenue growth for those companies at a high single aged rate.

If the industry consolidates into three major players, it will get easier for the distributors to push back on the television networks.

However, the value of content will continue to rise.

We just think it slows the pace of growth.

It slows the pace of that growth.

Do you see it playing a role?

We talk about the original content, for example, netflix is producing or amazon prime that we know just cutting kind of deal.

Does this factor in at all to the larger discussions or do you see them as two separate world?

Our view is netflix and amazon prime and the whatever intel is working on -- and apple -- a lot of players.

These are the next generation of television networks.

Investors tend to look at the success of netflix and say,wow, they can all get 30 million subscribers overnight.

But netflix had the benefit of very low cost content in terms of the disney and sony film releases verio early in the lifecycle.

-- very early on.

Netflix hit the ground running.

They did.

And amazon is an effective competitor because they give the product away free for prime subscribers.

Netflix is advertising its shows on the big four broadcast networks.

That is a scale advantage of that cbs and the networks have that that fit -- netflix does not have today.

The cross-promote shows and sustain the audience.

Before i let you go, i want to ask you what your take ofaero --areo.

We for my management.

. they said it is not just new york or do they are expanding.

We want to be in about a quarter of the country the next five years.

It possible?

I think the component that investors and media are not discussing about areo is that the dime size radio receiver is probably not capable of picking up all the signals they are broadcasting.

They are probably using it as an array, and i think it will start to come out and some of the court cases in discussions and it is another in the armor of aereo.

You are saying they are not as big a threat in the immediate scene as they are made out to be?

I think the local station that very well protected by the law of the land.

Jason -- jaiso n, thank you so much for your advert -- expertise.

When we come back, gold headed for the first annual drop in 13 years.

What jewelry purchases have to do with it.

Zynga opting out of the online gaming business in the u.s.. the stock is down 16%. we talk about strategically whether it is a big -- and the latest edition of "bloomberg businessweek" is out today -- available on the ipad and iphone.

We will be back with a little bit more on greece and its dwindling economy.

Act in just two minutes with "in the loop." ? you are watching "in the loop " live on bloomberg television, streaming on your phone and bloomberg.com.

We are about eight minutes away from the opening bell.

From bloomberg's world headquarters, time for the kind -- countdown blitz.

Olivia sterns, woody watching?

Gold.

The bowls are retreating.

Gold traders are the least bullish on the gold in weeks.

Jewelry makes up half of global demand for the yellow metal.

While boy on prices are up nearly eight percent this month gold is still on track for its first annual drop in 13 years.

Shares in apple -- apple's share of the global smartphone market fell to the lowest level in three years in the second quarter.

More consumers choosing and expect it -- inexpensive handsets from chinese makers.

Boeing.

The company trying to put out another public-relations fire.

After an oven on a dreamliner overheated during an air india flight.

Air india said the overeating -- overheating did not actually cause the fire.

Ana, the biggest operator of a 787 also said they found a damaged wire -- a tentative fire.

-- dented wire.

Anathey are sending it to honeywell for checking.

Boeing having the issues but not all of these parts are actually made by boeing.

This one in particular was made by honeywell.

And ana are still flying the plane.

Olivia sterns joining us with just some of the stories we are watching for you.

We are just a few minutes on the opening bell.

We will have the top 10 trades you will not want to miss.

Keep it here on "in the loop." ? you are "in the loop." i'm deirdre bolton infra betty liu.

26 minutes after the hour, which means bloomberg television is "on the markets." julie hyman has the latest on futures.

Looks like we could have a lower open.

In fact, the first weekly decline for the s&p 500 in about a month.

We have negative earnings news from tech giant amazon.

It also from the smaller tech companies on a relative basis like zynga and expedia showing big declines.

On top of all of that, consumer confidence, people are not terribly optimistic.

Thanks very much.

Counting you down to the open with the top 10, the only trade you need to know about today.

Julie is staying with us.

Also "streetsmarts'" adam johnson.

Cbs offering $6 billion buyback program to put cash back in shareholder pocket.

The shadow looming as it battles with time warner cable.

An impasse that may disrupt content and channel position.

Let's talk about kkr, the private equity firm facing an unforgiving market this morning after second-quarter profit dropped 75%. even though kkr's assets under management rose by $5 billion, by the end of the first quarter the portfolio generated fewer games than last year.

What have you done for me lately?

Halliburton.

Three years after the fact, halliburton will plead guilty for destroying text on cement work on the well that exploded in the gulf of mexico.

It is also facing federal regulators that began in antitrust probe.

Number seven, general motors.

Outselling toyota for the first time in six quarters, underscoring the resurgence of american automakers.

Investors rewarding the stock and it is trading up over $37 a share.

Tesla, everyone's favorite electric heart maker -- comic or and now it seems everyone's favorite stock.

Deutsche bank upgrades it from a hold to a buy.

Optimistic that tesla will be able to more than double within three to four years.

Number five, expedia.

Shares are going the opposite direction, plunging, after quarterly results fell short of analyst estimates.

Increased competition from orbitz, priceline, and trip advisor.

Also watching zynga.

The stock is lower in the premarket.

The game maker acting out a previous plans to break into the online ambling market.

The company even sending its own stock further lower by issuing a lower third-quarter guidance figure than it did, in fact, due to a typo it has since been corrected but not before the stock took a big hit.

Activision, free at last.

The video game maker is buying out most of's stake, ending five years of control by the french media and telecommunications company.

Transaction at a 10% discount to yesterday's closing price leaves activision an independent company.

Damon number two, starbucks.

The coffee chain stock is getting a buzz.

Food -- pushing earnings above estimates and also an increase in some drink prices, positioning itself as an affordable luxury.

Amazon.

The world largest online retailer reporting a surprising second-quarter net loss.

More money into warehouses and digital content.

The ceo just a those -- jeff bez os saying it will eventually lead to higher profits but the market is not reading it that way at least right now.

There is the opening bell.

We will take you out to chicago.

Michael is with us now from the chicago-based spectrum asset management.

Nice to have you with us.

What are you watching?

What is the most important element in today's trade for you?

I think a lot of it has to do with confidence.

In particular, looking at some of the movements in the market that are clearly retracement.

Impending pessimism in the market from a slowdown in china has really affected the industrial metals market, like copper.

It has shown up in the selloff in the australian dollar.

We have seen it in about a month -- at least a month.

The same regard, the whole incident -- emphasis on crude oil.

You start to see brent crude cheaper than wti and we start to widen back out.

Right now i think there was so much hasn't is some in the market -- pessimism in the market -- we are starting to see it right back.

When you talk about pessimism and confidence, we will get some numbers on consumer confidence in the next half hour.

How important will the numbers be on the market and what is the going into that report?

I think the sentiment, as mentioned, is not very good, and for those reasons.

I think these leases are going to be very important to see if there is going to be a confirmation or rejection from that.

Right now i think the market clearly in front of these numbers is overly pessimistic.

Other than the index market in stocks, you have to keep an eye on how the 10 year yield reacts.

Every time we get above the 2.50 or 2.55 level in the 10 year yield we start to believe it is either qe related or growth is showing back up.

But i think we are way ahead of ourselves in that regard.

We thank you very much.

Michael gurka from chicago, thank you for your thoughts.

We will turn the page from the trade to the call.

David joy is with us, market strategist for america rise.

He likes equities versus bonds.

He expects them to work higher overtime.

Keep in the year and target of 1654 the s&p. great to have you with us.

What do you think will drive the momentum and what will help the s&p 500 achieved the target?

I think the u.s. economy will accelerate a little bit faster the second half of the year.

Looking at 2.5% growth rate if we get it, would be twice as half as fast as the the first half.

My year end forecast is tempered to the extent i think the market has not fully adjusted to the prospect of a tapering of qe3. i think interest rates will push higher towards three percent in the 10 year and maybe higher.

I think it will keep a lid on equity markets.

Over time, even beyond year and as far -- sort of an arbitrary line and the sand, the value proposition -- proposition for equities is better than bonds.

You have been following the earnings stories.

Earnings overall and in technology in particular.

There is an interesting disconnect in technology.

Look at the overall numbers for tech.

We have seen tech earnings per share and sales beating the average analyst estimate at a higher rate than the overall s&p 500. but it doesn't feel that way, and certainly the nasdaq has not been trading that way.

We have had earnings misses, companies cutting forecast.

Amazon was an example on the larger.

Not to mention zynga and expedia which we talked about as well.

We had other companies like google and microsoft missing estimates.

Another scenario david has been looking at -- during earnings season we have seen the technology companies really not coming out with a stellar results by and large.

David, do you agree on that point?

Yes, i do.

I am expecting -- technology is going to improve and may be outpaced the broader market for the second half of the year.

But that is predicated on the assumption spending is going to accelerate.

What gives me confidence in that forecast is that the capital stock in the u.s. is old.

It needs to be refreshed.

Companies certainly have the wherewithal to finance that.

They are sitting on a lot of cash.

They are able to do it.

Need to do it.

But they certainly have not generated enough confidence to do it.

A.b. they are seeing a little bit of hard data that the economy is in fact improving before they loosen the purse strings.

But i expect it is going to happen.

Speaking of economies, you are looking at data coming out of the u.s. and china.

What did you pick up in the imperatives?

, bombshell announcement out of china.

-- bombshell announcement out of china.

They are saying stop producing so much stuff that's telling 1400 companies across 19 industries, shut down the excess capacity.

That is why all the metals are down.

Aluminum, copper.

What does it mean for equity investors?

In china, there is no secret there is overcapacity in a lot of the types of industries.

This is consistent with the new leadership attempt to rebalance the economy.

I think it is the right thing to do.

But i think it is also very telling that earlier in the week they announced at least a modest stimulus package because they recognize the economy is slowing maybe below their intended 7.5% target.

They don't want it to slip below 7.5 year-over-year.

They are mindful of that.

To me, that was an encouraging sign.

This announcement this morning to me is not so troublesome to the extent it is well understood and it is probably a necessary development.

David, thank you very much for your time and thought.

David joy.

Chief market strategist at america rise financial.

When we come back, marijuana is becoming a big business in morocco.

800,000 people in the country are living off of the crop, even if it is illegal.

We are going to give you more details on how it is contributing to the local economy, when we come back.

? the world largest online retailer reported a loss in the second quarter as operating offenses rose 23%. it is worth noting revenue did rise to 15.7 billion dollars.

I were senior west coast risk -- correspondent jon erlichman is with me -- our senior west coast correspondent jon erlichman is with us.

It seems like bezos just made some investments that showed up on the wrong side of the equation.

That is the best way to put it.

You scratch your head when you say they lost money when they generated war than 15.5 billion dollars in sales.

But that is how the business works.

They love generating lots of cash and funneling it into what they are doing.

A little more context.

You have seen the revenue story continued to explode at amazon.

In this same quarter four years ago, they generated about $6.5 billion in sales as they exploded into different businesses.

They continued to climb up to $15.7 billion.

One trend you can look at.

Where is the money coming from?

They are obviously in so many areas these days.

You just can't call amazon and online retailer because they are selling their own stuff them alike their own kindle devices, and they are also selling lots of content like netflix.

There is the operating margin story.

A measly 0.5%, and amazon is quite alright with that.

What the cfo said last night was, if we could maybe get our operating margins to the highest single-digit percentages, we would be cool with that.

The bottom line is, we are looking for businesses, whether it is online retailing, whether it is media people are buying, movies, tv, digital virgin -- digital versions, whether cloud services.

Something that generates a ton of cash, that can continue to fund the businesses and maybe help us fund a few other businesses.

Right now it is at the expense of profit.

It is hard to talk about amazon without talking about amazon prime.

We have been talking about amazon prime versus netflix.

What did you learn and what did you pick out?

Their video service is gaining traction.

They don't give us numbers the way netflix gives us numbers.

But the basic idea is, they offer prime which is basically free shipping if you pay a fee, and you get all sorts of perks with that, including the video.

So, they are basically creating a video service to appeal to people who will continue shopping with amazon as opposed to netflix, which is a standalone service.

But they did say in the quarter there are more people signing up for prime in part because of the video.

Thank you very much.

Jon erlichman joining us from l.a.. of course, catch all the latest on tech and media every weekday 1:00 p.m. and 6:00 p.m. right here on bloomberg television.

That to the broader markets, a macro view.

Not all areas of the economy are week.

The head of u.s. economics at renaissance macro research.

And our senior markets correspondent has of the chart of the day what is behind his reasoning.

Julie, where does he see, what does he see in, say, capital goods orders?

That is the area he is looking and as an area of strength and a good indicator of what is happening in the broader economy.

In particular, looking at the relationship between the s&p 500 capital goods index and a new order gauge compiled by the commerce department since 1992. both moving in tandem and both have been higher.

This particular index has more than tripled since the market bottom in march of 2000 nine, which is basically a doubling of what we have seen in the overall market.

This is a group that has outperformed.

He said it outperformed because activity has been doing well.

New orders for capital goods climbing nine percent last month to a record annual rate of almost $104 billion, and nondefense orders were also at a record, $69.5 billion pace.

He says it is only good sign.

What about the fact we have talked about -- what about the effects of the sequester and how it is leaking into other other parts of the economy?

He is saying, the group is doing fine sequester notwithstanding.

I mentioned nondefense orders and defense orders included, both have been doing well.

Also, he says the activity we have seen is not just the fed fueled.

This rise of capital goods orders as an indicator.

Senior markets correspondent julie hyman with the chart of the day.

Still ahead, greece winning a 2.5 billion euro loan.

But with unemployment above 26%, the future of greece's economy far from clear.

Challenges ahead when we come back.

Dig stars, big budgets.

Big flops.

Hollywood blockbusters may be a thing of the past.

With a few exceptions, mostly sequels.

When we come back.

? time for global outlook.

Greece is no longer stealing headlines, but life for the average citizen has not improved.

Economics editor mike mckee is back with me now to update us on the state of the greek economy.

For the average person there, nothing has changed.

Not a whole lot.

Unfortunately life continues to go down hill.

The cover of this week's "bloomberg businessweek." unemployment still growing.

At this point, up to 27%. economy is still shrinking.

In the last quarter, down by almost six percent.

They were under the most optimistic eu projections supposed to start growing and now it is put off until 2014. nobody knows if that is really going to happen.

The only good news is they happened to keep the reform program somewhat haltingly on track.

They are not making a whole lot of progress with the budget cuts they were supposed to make, especially cutting personnel from the federal government.

But the ee you just didn't agree on the latest -- the eu just agreed to $3 billion to tide them over and pay their bills.

How long can that last?

That is a question.

And there is a question of whether the rescue program will run out of money.

There is a big debate about it.

European officials say, no, but others say if you look at the books of greece, it will not be enough, especially if they do not grow the moving quickly.

You can eat -- get your greece fix in the latest edition of "bloomberg businessweek" on news -- newsstands, iphone, ipad, samsung device.

You can download the app for free.

In the southern hemisphere, morocco found a way to boost its economy, but it illegally.

At least 800,000 moroccans are living off of marijuana cultivation, with sales of around $10 billion.

Trouble is, the government is tracking down on the trade that sustained about 10% of the economy.

There is a lot going on in today's session.

Street mark -- "street smart smart" anchor adam johnson has the triple play.

Sac has to be at least top of the list.

Let me tell you something.

It is unbelievable what is happening over there.

Hard for us not part of that to fathom what it is like to go to work every day.

Eight people have been named.

Steven cohen, the founder, no criminal charges.

There are eight people who were either already indicted or currently investigated.

It is just an unbelievable story.

Stay tuned.

It seems to get thicker and more problematic every day.

Speaking of a hedge fund, a wall street decathlon?

They call it the decathlon.

Really more of a mile sprint.

Run as fast as you can around the track.

A wonderful, wonderful event.

Sponsored by rbc, royal bank of canada, and it is to raise money for cancer.

Anybody can do it.

Sign up.

A million dollars.

I checked the website.

$1,081,000 has been raised so far.

Bloomberg is number four in the rankings.

We put a lot of money.

M anybody running?

Yes, there are people from bloomberg running.

The wonderful opportunity to show your support for people with cancer.

Certainly a worthy cause.

Your weekend plans -- do not know if you are running, but you might be going to the movies.

But you have a guest about the summer blockbuster flops.

A lot of them.

The president of hollywood box office.com joins as every friday and we talk about the battles of the box office for the weekend.

"wolverine," hugh jackman's new film.

We will see the bucks the trend.

There have been expensive blowups.

On and on.

"pacific rim." all the blockbusters which were not blockbuster so much -- just got busted.

The only thing that seems to be charming to see my sequels.

They seem to be doing well.

"monsters university" and "despicable me " -- you can see my demographic.

I got talked into seeing "superman" and it was so cheesy.

No from me.

"street smart" anchor adam johnson joining me.

We have a quick break to take.

Back in just two minutes with more on "in the loop." ? that does do it for today on "in the loop." next week, the ceo of american electric power will be eddie's guest.

You don't want to miss that conversation and numerous other ceos coming your way.

In the meantime, 56 minutes past the hour and time for "on the markets." making economic news on consumer confidence.

University of michigan reuters consumer sentiment index coming in better than estimated by economists.

85 point one.

84 was the reading they were looking for, which would have been little change from the prior month and we are seeing a full point increase.

We talked earlier to michael gurka, a trader in chicago, and he said there was a lot of pessimism going into the report.

You might expect to see a positive reaction in the market.

Guess what?

It is not happening.

Check out the intraday chart of the s&p 500 and stocks overall -- not se

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

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