What’s Next for Apple: In The Loop (07/23)

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July 23 (Bloomberg) -- On today's "In The Loop," Betty Liu 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. (Source: Bloomberg)

Why he wants to be new york's best mayor.

Bon appetit.

It is a cookoff between magazine giants.

Executives from both way in.

Phoning it in.

Apples are earnings are at hand.

We will crack the code of what is next for the tech heavyweights.

From bloomberg world headquarters, this is "in the loop" with betty liu.

Good morning.

We're live from bloomberg world headquarters.

. we have all the top stories.

Dominic chu is tracking qps earnings.

They lower their outlook earlier this month.

Julie hyman is watching radioshack.

They are reporting a loss in the last hour.

Scarlet fu is continuing the earnings parade.

A company shocked investors when they try to regain the missed estimates.

In washington, peter cook watching fannie mae and freddie mac as a deal to shut this down.

Let's go into the newsroom with dominic chu.

Quacks like you said, there was no real surprise on the ups story.

They set a dollar 13 per share earnings.

They announced this morning when dollar $.13 per share earnings.

That met the prior guidance.

Revenue is a slight miss.

You get second-quarter quarter revenues coming in at 13.5 billion dollars.

The final was $13.6 billion.

They'd do sayee 13% year over year.

As it comes to the segment rate down, they have three big divisions, domestic package delivery.

A .42 billion dollars in terms of revenue.

$8.3 billion was the average analyst estimate.

On the international package side, three $.1 billion comes in a little bit better than the average analyst estimate.

$2.2 billion versus estimates or this.

It is always about the forecasts for companies, especially great companies like ups.

They cite the a justice -- adjusted eps will be between or dollars and $.65 -- 4.65 and 4.85. no more overnight packages.

We want to do second day or it heard air, maybe ground transportation.

Also a slowing u.s. industrial economy.

That is as well.

One of the things we keep don we got reaffirmation was this.

They said results were below our expectations as a rebuttal -- result of a slight missing international packages.

We are focused on the long-term strategy and adapting to changing market conditions.

This is going to happen at 830 a.m. they're going to go on the record about what is going to happen with a new strategy.

The interesting part is whether or not they're going to have any more commentary on what exactly it'll take for for ups to turn things around.

One of the competitors is going through this cost-cutting program to get their businesses more in line with the kind of demand there is.

A slowing asian economy, all of these things will weigh in on these all over the world.

What it really comes down to for a company like ups is whether or not they will be able to continue that momentum, show that signs of strain.

These are global -- signs of strength.

They are global bellwethers.

A huge 1, 830 a.m. eastern.

That is when the headlines will hit.

We will be watching those very healthy -- very closely.

Radioshack is continuing to struggle judging by the result that came up.

Julie hyman has been tracking those numbers.

The recent troubles, how do they look ? there are a few bright spots.

A loss of 53 cents, $.25 of a loss is what they had been anticipating.

This was part of the plan, a tragedy said this was designed to move through a variety promotional vehicles.

He said he knew this would have an effect on the gross margin that would identify opportunities to align this going or words.

The shares are rising by 7.5%. they reported the first same- store sales growth since 2010. they show gains of about a 10th of one percent.

Certainly this is the largest gain that it has seen in quite some time.

They increase sales for the sixth consecutive quarter in the high-margin signature platform.

There has been a lot of talk about the company hiring outside investment in visors -- advisers.

Tell us more about how it is trying to turn itself around.

Those are part of it.

There is a longer-term strategy that they have embarked upon through partnerships with beats by jury m-- "beats by dre" as well as a partnership with in- store radio shacks with as many as 4000 college bookstores.

The question is will the company have enough time for these turnaround efforts to really bear fruit?

Will it have enough cash on hand?

They also talked about the cash position.

It ended with total liquidity of a hundred $18 million -- $818 million dollars.

We are getting breaking news on the tech front.

The big routing giant cisco is going to buy another company.

They have been on a binge buying sourcefire for $2.7 billion.

They are buying it for 2.7 billion dollars.

The stock is marginally higher in the premarket and reaction to this news.

Also is be ebay ceo john donahoe.

He pays paypal -- the tebow unit shows online sales of goods between companies were almost tripled to 307 billion dollars over the next five years.

They are planning to grab a share.

This is the biggest online marketplace.

Donahoe has been seeking overseas growth by adding staff in emerging markets.

China is one of the big markets.

The chinese are some of the biggest shoppers for american goods.

Let's stay online.

Netflix added fewer new subscribers than wall street estimate of for the second quarter.

It sends it t the stock south.

Investors show continued concern over keeping content costs down.

I want to bring in scarlet.

You have been watching netflix literally.

Is this a sustainable model?

That is a key question, especially reed hastings made the mission that contact cost may continue rising this -- is a mission that contact cost may continue rising this year.

There's the idea that spending on programming will attract more people signing up for netflix.

The annual budget on content right now is about $2 billion.

Netflix spends about 5% of that on original program.

When netflix is not make its numbers, the circle turns into a vicious cycle.

That is what we are seeing this morning.

Netflix own program, that hogs the headlines.

Content deals are also key to retaining subscribers.

What about some of the latest deals?

Original programs help attract new subscribers.

The studio content is a must- have component.

Recently netflix aimed to get exclusive theatrical content from disney and dreamworks.

Reed hastings mentioned on the conference call that they did let a broad content deal with in tv network expire.

The bottom-line is that the stock has risen so much on it high-profile successes and even though half it increased five percent, the growth numbers are perhaps not strong enough to justify that stock performance in meaning to lot of questions about spending.

Thank you.

In washington, a bill to wind down fannie mae and freddie mac.

The legislation from house financial services who have scaled back the government's role in the housing surgery medically.

Peter cook has more from the future.

This is the first shot in this space with the fight over fannie and freddie.

That is right.

It may not be the last shot.

The first legislation on the future of fannie and freddie to face a vote in congress.

That is why it is being watched so closely today.

They agreed that fannie and freddie need be bailout.

Lawmakers disagree on what that should look like and how big a role the government should be playing in the future.

Since the bailout, they have only gotten bigger.

There rockets guarantee more than half of the outstanding loans in the u.s.. it is time to get taxpayers off the hook.

If you do not get rid of the permanent, everyday government guarantee, i fear all you have done is what fannie mae and freddie mac in the witness protection is program, given a facelift, give them new names.

They are released on an unsuspecting public.

Once again, we will have a boom/ bust cycle.

We need a sustainable housing policy again.

Today his committee will take up his legislation to wind down the sponsorship within five years and replace them with a market utility that would limit any government utility and turn much of this over to the private sector there.

This is being offered by bob warner.

They would shut this down as well but maintain a government guarantee in a time of crisis.

They are trying to get out ahead of the curve.

They would perhaps get on the house floor.

What does the white house say?

What is their preference?

We are waiting for them to offer up their own plan.

Not gotten that yet.

It is clear that the bipartisan approaches the preference.

This will require more work and we're going to have to scrutinize.

That reflects the principles the administration has laid out.

It is the kind of direction we have to go.

How quickly do we start moving?

What happens if there are proud -- problems in the housing recovery?

Right thank you for joining us on that.

Coming up, the of being a successful entrepreneur.

Now he is a bigger longshot.

He turns to politics right here in new york.

If you go by ad sales, no one is in better shape in the publisher of vogue and vanity fair.

Investors may not have much to cheer about when apple gives a report later today.

We're just getting started on this tuesday morning.

"in the loop" with betty liu will be right back.

? you are watching "in the loop" live.

The mayoral race for new york city is heating up.

Hopeful's are like anthony weiner.

The latest is jack kittery who helped build a job search website answers on the advisory council of google.

He announced his candidacy as an independent last week.

He joins us now.

It is great to have you here.

Why pick yourself through this torture?

What new york is the greatest city on earth.

The grant came to this country.

They build the american gene.

Anybody can do that.

I want to make sure we keep that trust verity going i want to track capital to new york.

Are you going to do that?

We have had a great success in downtown oakland.

I want to bring it to all five valleys.

I well known in the archer parole -- entrepreneurial area.

3000 jobs right in the heart of new york city.

They want access to new york city markets.

They what -- want access to our financial services market.

What attracted them to berkeley and queens as well.

Everyone says that.

They want to bring jobs into the city.

People will look at you and say what is your background on fighting crime?

I'm the only one that combines these aspects.

And entrepreneurial background and combines it with 15 years of public service, hitting the core issues of education and economic development.

Key to a lot of families is education.

We have to transform this to help kids for the jobs of today and tomorrow, making sure they have the problem solving skills.

That is really critical right now, to transform the school system.

There is a lot of wealth in the technology community.

Are you surprised that given the amount of wealth there are more people by qqq are trying to get into politics?

It is a tough job.

With 15 years of public service background, i have the knowledge and experience in dealing with government.

In 2005 i worked with city council to change the law in new york city.

That is why you see all the hybrids around.

I worked 15 years on the allotted red laws.

I had that experience.

Someone coming in now with have difficulty.

You are lay in the game.

It is perfect timing.

The voters have seen everything out there.

They have said we want a new choice.

We do not want machine politics.

Other candidates want to bring as back to machine politics.

I want to take us forward.

That is why i am running as an independent spirit are you using your own money?

A combination.

To demonstrate we have widespread reports support.

We're the first campaign ever to use crowd funding to actually find it.

Does that resonate with the person in brooklyn or queens?

I do not know.

I come from brooklyn.

I grew up in kings highway near coney island.

That is what i am concerned about.

I am concerned about taking the economic activity we see.

We have to spread this out.

There is a lot of criticism that people in the tech community do not really know how to play the politics.

They are not very good at lobbying in washington.

They're not even good with this immigration debate.

They have not come together with one voice.

Is that a good criticism.

We have a lot of folks involved in schools.

Fred wilson is an example.

He helped build a new academy.

A lot of tech people are getting very involved locally and in the community, really investing in all five boroughs.

It is a very exciting time.


it is going to be a very interesting race.

Thank you so much for joining us.

Jack hidary, the new nyc mayoral candidate.

What congress may not be enthusiastic about getting a tax rate.

You will need both hands to pick up the september issues of "bobo" by visiting.

There are --" vogue " magazine.

A look inside mcdonald's. i will be giving an in-depth look at the world's largest fast food chain.

? you are watching "in the loop" live.

It is 26 minutes after the hour.

It means bloomberg television is on the markets.

We are seeing green after china's premier pledged economic growth of 7% overnight.

Yield on the 10 year up to 2.52%. one name we are watching is cisco.

They agreed to by sourcefire for 2.7 billion dollars a share which is about a 29% premium to yesterday's close.

The deal is expected to close.

Currently cisco shares are trading down in the market.

We are on the market again in 30 minutes.

Here is a look at our top headlines.

Officials are looking into a another emergency incident involving a boeing jets.

A gear collapsed on southwest airline.

Planes have an abrupt landing which cost a reported injuries among the 150 eight people on board.

Celebrations continue in england as prince william and his wife welcomed the joy of their first born child and heir.

This was given only to the birth of this today.

Domino's second quarter has a revenue of $9 million higher than wall street forecasts.

This was benefiting as they spent a record amid eating out.

If you are craving more on the quarterly results in what is ahead, pastor at doyle -- patrick doyle joins us tomorrow.

Turning to the midwest, detroit is hardly the only american city staggering under mountains of debt.

How many others will follow detroit into bankruptcy?

Mike mckee has the real deal on the debt outlook.

Dominic chu has a check on bonds and why they may be trading in and out rages bargain.

Let's start with you.

A lot has been said about the debt laden cities.

That case could set an important precedent.

A wave of bankruptcy filings will not be one of them.

Detroit does have 11 point $8 billion of unsecured debt.

They have not set a number.

It hopes to use bankruptcy to cut those obligations.

That is already provoking core challenges.

It prohibits cuts to public programs.

It trumps that regulation.

If it wins, it could set the stage for other strategies to follow.

The center for public policy areas have more than $217 billion in unfunded pension and liabilities.

This was funded just 24% of its obligations.

They are not going to file chapter nine.

Trustee cannot do it.

Only 12 states allow for them to do this.

They do not have that option.

A wave of bankruptcy might make for a scary.

But it cannot happen.

This is qualitatively different as well.

Not only because of the size of the debt but the brett adth.

City is not the victim of the downturn that years of corruption and mismanagement.

This is the only industry it had, carmaking.

All this will be closely watched.

We will be watching this very closely.



Let's stay -- thank you . let's say with detroit.

The bankruptcy filing has taken its toll on the muni bond market.

There always seems to be some opportunity.

With muni bonds versus traditional bonds, muni bonds have tax-free aspects.

The interest that you make on does not get tax.

Interest rates on certain municipal bond fund are tax-free are often lower than treasury yields.

Here is what i want to show you.

This is our charge of the day.

In the white line are what you see as yield across multiple maturities for muni bonds.

In the yellow, that is the yield for similar treasury bonds.

Normally this should be below treasury.

You do not have as much in terms of the overall yields.

Investors are pricing in a situation where you can get more yields and more interest on your tax-free securities given the current situation.

Compare this to treasuries , it is unfair, isn't it?

You have this.

There is no doubt.

If you talk about detroit, there are still risks there.

There are municipalities.

David over at cumberland advisors points this out.

He says the current processes -- prices of me bonds only make sense of the repeal the tax laws in the u.s.. he also says the highest rated me borrowers are almost as creditworthy as the treasury.

He said history is on the buyer side.

He says muni bond borrowers that have a high credit ratings deserve those a good credit ratings and those interest rates.

This could be a good opportunity.

We will see out the legs out.

Thank you.

It is time for this versus that.

Two old rivals face off , general motors and ford.

This is chevy, one of gm's brand.

Goldman sachs brought it on the conviction buy list.

They project shares may rise 22% in the next year to $45. they may pay a dividend by the end of the year.

Florida may report second- quarter earnings rose 23 -- 23%. ford's profit margins are higher than gm.

The gap may still close.

General motors may have the upper hand.

It plans to refresh 90% while ford will replace fewer than half of the lineup.

Stay in the loop for all things autos.

Dan will take us behind the wheels of a company orderly results.

That is thursday at 8:00 a.m. only on bloomberg television.

Saying with autos, nobody else in the carpal will be driving an suv quite like this one or pay as much for that.

Report on the demise and may have been greatly exaggerated.

Wait until you hear how many ads "vogue" sold.

? this is the biggest september in five years.

The fashion bible led the way for the company with its notorious september issue, leading the way with 665 ad pages.

That is for issues in a row of growth.

You need two hands to carry that magazine.


this is the president of the conde nast media group.

It is great to have you here.

Thank you so much for having me.

We talk about about models getting slim but your magazine gets factor in factor.

We want to hear that every single month when it hits the table.

It is a confluence of factors . we are blessed with a portfolio celebrating media frenzy that continue to attract influential consumers.

Then you look at our intimate the business.

They are doing really way.

Luxury advertisers see the u.s. market.

Are they the ones using this growth?

What we continue to do well with luxury fashion.

They are leading.

They continue to invest.

They see it as a stable market.

They see growth on the economic situation.

I think they have reinvested the money here in the u.s. september is a pretty important month for magazine publishers a terms of advertising.

It is like a benchmark month.

You want that wind at your back.

Is there any sense that because advertising was both dick in september that it might take away from other months?

I doubt.

We're sick a broad-based rebound.

Our automotive business for the aging companies over 30% growth in the first half.

We are seeing the tech companies really investing some companies.

The food business is up double digits.

He mean food titles.

Food advertising is up over 20%. it is driven by the re- imagination of bon appetit under adam rappaport.

What about the advertising money going into digital?

How are you splitting that?

What i was about to say is that the print numbers do not tell the whole story.

We are a multi-lap for media company.

We are seeing this across all the forms.

If you look at our business five years ago, we are reaching about 69 million consumers.

If you look at this today, 65 million.

These rants resonate in every single platform.

We have a new division.

You were talking about the re-imagination of bon appetit.

We talked with the ceo of the corporation.

They do ladies home journal.

They're also launching recipes.

This is a big plays.

If it is time sensitive information, meaning if you did not read this week it is outdated next week, i think those have a much more challenging time going forward.

But we tend to create is the life stage, you have a child or you do not.

Seasonal, it is the holidays or you do not.

If you do not think that this week or next month, the information is still relevant.

Do you agree with that?


There is such a big passion for food these days, for living life.

They are launching all recipes which will compete with some of your cooking titles.

We also have a curious -- epicurious.com.

This space is getting crowded.

I think there's enough room for all all of us.

We all have a different angle on how we approach it.

We are very focused on the top of the triangle consumer, really going after influentials.

I think there is enough space for all of us to get our fair share.

He also mentioned that he was going to be meeting all day with the postmaster general.

Post his rate -- posted -- postage rates are a key part.

Use a non-magazines and subscription cards.

Are you as well going to meet with the postmaster general?

Are you having dialogue?


Not my part of the business but in our organization we meet not just when a year but we have continual dialogue with the postmaster general.

Very involved in those same conversations.

Is it an uncertain part of the business?

Our expectation is that postal rates will probably rise along with the consumer price index.

We do not expect any major height to that.

You mention some of the titles that are doing well.

What are the titles that are still struggling or that you would like to see an improvement?

I think we have had great success.

13 of our brands up.

Five of them are up the jeweled -- double digits.

We have the re-imagination of lucky magazine coming in september which is absolutely beautiful.

How are at doing for them?

They are up slightly.

You will see an amazing change in the mix of advertising and that magazine.

It has one of the highest household incomes across our house.

It is reaching influential consumers that do spend on fashion and luxury.

That is important for advertisers.

They do so much.

Coming up, home sweet home.

Members of congress may have a vested interest in the debate over ending a mortgage deduction for a second home.

Money is not enough to get to a table at the best restaurant in the world.

You will need patience as well.

We will tell you how much any moment.

? in washington, one of the most controversial proposals does away with a mortgage interest rate inductions.

It is estimated to cost $72 billion in revenue in 2014. it is a darling of the real estate industry and precious to homeowners.

What about doing away with the deduction only for second homes?

Megan hughes joins us with the details.

Why not?

What is stopping this?

Rex it would certainly impact far fewer homeowners.

Let me tell you who it would impact, members of congress.

Bloomberg went through the data and the you look at just the members of the congressional tax-writing committees there eight times more likely than the general public to have a second mortgage, more than 40% percent of those members have them.

These are folks who are in the upper echelon of americans in terms of income and assets and being well to do.

Their perspective when they are looking at things like mortgage on a second home or tax breaks for the well-off will be different from someone who's barely making ends meet.

They also split time between districts in dc.

Disposed between $150,000 and 200 thousand dollars.

Sander levin owes $405,000. the question is do the homes, their position?

On gersten levan did argue in favor of the april hearing.

He argued many in his district have second homes.

Cutting that break is something that is even being talked about among them.

You may remember mitt romney listed that as a deduction that could be eliminated.

Senator max baucus has said that he would like all suggestions from his committee on what they cut by this friday.

To be fair, they both have said that at this point everything is on the table as they considered the first rewrite of the tax code since 86. cutting this would bring in billions of dollars to the government.

It is hard to say exactly.

They do not require taxpayers to break down their mortgage interest by first home and second home.

The nonpartisan tax policy center does offer a rough estimate.

This could bring in about a billion dollars a year in revenue.

The entire deduction the summer in the ballpark at $72 billion.

Thank you.

This morning the big number is 3000. that is a request to get a reservation at the restaurant rate at the best in the world . that would be in spain.

Once you make it out the year- long waiting list you will spend about $216 a head for the dinner.

It only has 50 seats but there are 30 chefs in the kitchen.

3000. just wait.

In the meantime , mcdonald's is not require reservations but they do have some limits.

A woman in manchester england found that over the weekend when she tried to write her horse through a mcdonald's drive- through.

Mcdonald said no way.

She rode that horse into the restaurant.

According to the bbc, the animal use the floor for a bathroom.

What do you think not about that incident but just about the fast food giant in general?

Tweet me any of your questions.

Let me know what you would ask the ceo don thompson.

We are going to your question straight to the source when i am in chicago talking exclusively with the ceo.

Over television is inside mcdonald's all day tomorrow.

First, why kate and williams royal baby may be a blessed event to the british economy as much as other evidence.

To with this.

You are "in the loop"." ? it is 56 minutes past the hour.

It means bloomberg television is on the market.

Let's take a look at some of the companies.

Lockheed martin is beating analyst estimates.

Radioshack saw a second quarter loss of $.53 a share.

The estimate had been rented five cents a share.

Wendy's beat estimates and announced they will boost the dividend to five cents a share.

In the premarket, where on the markets again in 30 minutes.

Apple reporting after the close.

It may not be pretty.

Revenue might be flat.

And profit may have dropped more than 20%. we will have a preview in a moment.

Stay "in the loop"." ? 30 minutes till the opening bell -- this is "in the loop." the countdown begins right now.

Welcome back.

We start with the cyber security deal news.

Cisco agrees to acquire source of fire to help safeguard its systems for $2.7 billion.

And a bloomberg survey shows that federal reserve chairman ben bernanke could trim the fed's monthly bond buying program to $65 billion from the current pace of $85 billion as soon as september.

If we will have more on that server in a moment.

We want you to be sure to stay "in the loop" moral." we will kick off our mcdonald's coverage tomorrow.

At 9:00. i will be joined by the ceo, but don thompson for the entire hour.

We will be live in chicago talking about the companies earnings and history on major issues surrounding the global expansion of mcdonald's. the sure to tweet me any questions.

Let's go straight to our market desk for the countdown.

I am watching netflix.

The best performer this year, some of the air coming out of the stocks after they reported earnings that missed forecast.

There is little room for error for the ceo read hastings.

I am keeping an eye on the u.s. oil benchmark.

It crossed the global benchmark brent last week.

Now it is dropping back.

Blamed weaker than forecast economic data suggesting lower demand and teachers are declining as much as 1.1% in new york trading, losing the most in more than a week.

Goldman sachs says this will continue.

I will give one that is on the plus side and that is texas instruments.

It came out after the close yesterday with a range of profit and sales that leaves the room to beat analysts' estimates.

It is still somewhat reliance on pc chips, they are getting into a variety of different devices.

The demand there is steadyily increasing.

Apple is said to announce earnings today after the belgrade has been challenging times for c.e. au tim cook with speculation that the company may introduce different versions of its i found.

It may look upon -- it may work on content deals.

Let's go to cory johnson.

It has been a rough year for apple and the share price.

Where does it stand now?

We have to divorce the idea of share price and what is going on in the business.

Over the course of the last year, the stock is down considerably and lost markets mojo.

Over the course of the last five years, it is a spectacular rise.

Remember where we were in 2008. apple is continuing to fire on many cylinders.

Under tim cook, there have been some really important changes with the way the business is run and what they are willing to accept in terms of profit and the way their pricing goods.

You can see that in operating margins.

The margins for apple i think show a significant and important change in what they are trying to do.

The companiesy had a near-death experience 15 years ago and would not set ag -- accept anything less than a 30% operating margin.

They have been trying to lower prices and boosting content inside of iphones.

There has been cameras and beenchiops everything else.

I think that represents a significant change in the philosophy at apple where they are willing to accept a little bit of margin.

What about the new products?

Will that help arrest their slide in operating margins?

I don't expect a lot of that from the conference call today but we may have some clues.

Tim cook has given a few close.

Not least of which is this growing category of not just the ipad and iphone but the growing category of fitness wear bows.

There is a lot of indications.

They've got more than 100 people at apple working on a fitness wear ball and we have seen patent drawings that suggest something like a pedometer or i phone controller.

There may be even a heart rate monitor to be worn on the wrist.

These drawings are really cool.

They indicate a new kind of device coming from apple, the likes of which, there are clues on the market.

There is the upband, the fitbit, but this looks like something more robust.

That is very interesting.

What is going to be most important for apple?

Will be the iphone, the ipad or the mac?

It is all about the iphone.

The ipad growth has been spectacular than the market share has grown substantially but the five phone numbers -- they have sold 85 million iphones in half a year.

The market share has been pretty solid.

Android has had a great run but the iphone is taking most of the profits from the business.

Would you rather sell more to make glass or sell less to make more?

They are making a lot of money on iphones.

They are shipping record numbers of iphones.

If we look for kind of numbers they have to indicate the last phase of the iphone 5. they will probably have a new phone released late this year.

Thank you.

He will have much more on the apple results after the bell today on "bloomberg west." ashton kutscher dunigan.

He is close to getting a $10 million deal to endorse lenovo computers.

He has been the face of nikon cameras since 2009. there is word that the relationship may be falling apart because of his demands to double his multimillion dollar salary.

He is, the highest-paid actor on tv for this said, "to 0.5 man." a shift in solar technology from stadiums and results from homes to the u.s., in regard to -- architects are integrating solar into building material.

From the start instead of attacking them onto homes as an afterthought.

Julie hyman is back with more.

How big of a market is this for solar?

It is big and growing and being driven by architects.

There are famous ones involved.

It is also going into a very prominent buildings like the stadiums being used in the world cup in 2014 in brazil.

This is something getting bigger.

It could actually grow to $7.5 billion by 2015 from $2.1 billion today.

If you break it down, you are talking about solar glass as part of the $4.2 billion wall of solar sales and solar tiles and shingles and about $1.5 billion.

They are different components that would go into the structure of a building or a residence.

Give me the challenges to integrating solar technology into these buildings?

From a design perspective, you have to figure out how the cabling will get their and the technical of installing this and the different weights to maintain the solar panels.

There is also the cost.

These products are still at least 10% more expensive than traditional solar panels.

Is much cheaper to install a conventional solar panel on a roof.

There are design issues as well as cost issues.

We talked before -- you are talking about adding those features into building materials that there is also the solar panel market.

Some people attack on afterwards.

This is building and photovoltaics.

The solar panel prices have fallen by 90% since 2008. we have seen a number of companies go into bankruptcy but as demand increases and as you see these new products, these companies could charge a premium for the products and it could help some of them and we could see perhaps fewer bankruptcies in going forward.

Thank you.

Let's turn to the markets.

It is the all consuming question from traders to realtors to car dealers -- when will the fed begin cutting back its bond buying program?

That will send interest rates higher.

Michael mckee is here with the answer.

Bloomberg survey of the people like bond buyers and economists and the consensus is see you in september.

Ben bernanke will explain the new tapering program.

A sizable minority see it taking longer.

It is up from 44% last month even after all ben bernanke's explanations the last few weeks.

The median forecast is a mess -- an initial cut of $10 billion each for mortgage and treasury purchases.

When debates in this and bring qe a complete halt?

A majority see that by the middle of next year.

1/4 of the respondents say it will take longer.

There will be seven meetings between now and the end of june, 2014. they don't have to do 20 at a time.

They could very the pace of purchases.

51% say that that policy is too tight right now.

-- is too easy right now.

They think it is the right thing to do.

Thank you.

Coming up, going head-to-head with the too big to fail banks.

We will talk with the warriors fighting for tougher regulations.

Also, the most expensive as you become aware of the best on luxury brands to jump-start sales with a bigger car.

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

The sec is pursuing steve cohen for not managing his staff well enough.

Jab answer line was to wind down fannie mae and freddie mac.

--you jeff penciling wants to wind down fannie mae and freddie mac.

Are we on track to get the financial system back to reform?

With me now is a warrior for regulating institutions that brought about the financial crisis despite being up against billions in banking dollars.

Dennis kelleher joining us.

You'll look like -- you don't look like a guy looking for a fight in washington.

We have former senator freddie ted kaufman to is a proponent performer -- for tighter regulations and he believes it will take another crisis for anything to change on reform and you say that's not true.

Good morning, ted is a terrific guy and was a terrific warrior when he was in the senate fighting for financial reform.

Let's hope he is wrong, that another financial crisis will not be necessary before the appropriate, very strong regulations need to be put in place.

The dodd-frank financial reform law provided regulators with the tools they need to protect main street from wall street recklessness.

Will the regulators do it and will there be the political will and political leadership from the white house, the treasury secretary and others to make it happen?

That is the issue now.

It is front and center and very important that they step up.

Now is the time to prove people who think it cannot be done wrong and get it done.

This is what the senator said to us yesterday.

Is a proponent performer -- if you look at it, it is an unfair fight.

On the volcker amendment, a colleague of mine did a study on the volcker amendment.

92% of the contacts to the regulatory agencies are either wall street banks or lawyers or people representing wall street banks and 3% were consumers and unions which is very uneven.

He says it is not a fair fight.

His rights, it is not.

Better markets was largely the other 8%. there is no question that wall street is using its own limited resources to fight financial reform to it and use all its allies including some very strong political allies in congress especially the house to got and we can finance reform.

He is right but yet there is still a lot to do and a lot of people fighting for the right thing.

The fdic has done a terrific job as well as the cftc past cross border regulations in spite of unprecedented attacks from wall street and european allies.

We also have treasury secretary jack lew who has said lot about doing the dodd-frank legislation by the end of the year.

He was talking that there seems to be read some right moves and some correct talk but he said there are regulations that have yet to be written that are just sitting there among the regulatory agencies.

They are not even touching them yet.

In fairness, they're not just sitting there.

The regulators are trying to get the job done.

Unfortunately, they have to do it in the face of this unprecedented attack from wall street, its lawyers, and lobbyists that is nonstop.

That is what has delayed these rules.

Five years after the crash, three years after a financial reform, these rules should be in place and they are not because wall street is going after them not just in the regulatory process by trying to repeal dodd-frank piece by piece in the house and by litigating and filing cases against the agencies.

Notwithstanding, i think it is wrong to say that we should back off and wait for the next financial crisis.

The last financial crisis cost the american people more than $12.80 trillion.

We have massive deficits not because of reckless spending but because the damage done to this economy by wall street.

We have created unprecedented fed policy and zero interest rates and qe policy because of trying to repair the damage.

Let's hope we are not waiting for the next financial crisis, for sure.

Thank you for joining us.

Coming up, magazine giants do get out on the newsstands.

? the arch deluxe -- did you try any of these mcdonald's menu flops?

Let me know what you would ask the ceo, don thompson, a mcdonald's when we talk to him tomorrow explosively.

Bloomberg tv will be inside macdonalds all day tomorrow.

? welcome back.

Let's take a look -- we are "on the market." we are all over the markets.

Look at stock futures because we will have into what looks like a modest green open for stocks.

The s&p futures are closing up just about 3 points and the dow futures are about 40 and the nasdaq up about 4.25 points.

We are still hovering around those of record highs.

Today could be another record high.

We shall see.

Let's count down to the opening bell at the top 10 -- the only trades you need to know about today.

Let's start with number 10, biopharma, it is up over its 16% after it announced successful phase two trials of a new treatment.

The company is seeking partners for the development of the drug.

Let's talk a big deal intact.

Cisco is the tech giant investing in cyber security to buy a company called sourcefire.

They have agreed to buy $2.7 billion for the company.

On the security desk telecommunications line, verizon -- it is boosting its fios broadband spain to 500 megabits per second which is faster than its competitor.

It is not just a need for speed.

Rising -- verizon is marketing as aggressively.

At no.

7 is texas instruments, the world's largest analog chip maker that has found revenue streams outside of a dying pc market for the company raised its forecast for third quarter sales and profits and is seeing demand for chips rise.

#6 is radioshack.

It has kicked off what it calls a long-term turnaround after reporting second quarter sales well above analysts' estimates but the company announced losses widened and confirmed the hiring of peter j. solomon and company as advisor.

#5 is a boeing.

Shares are getting some turbulence after another emergency landing affected a boeing 737 atmel york's la gori airport last night operated by southwest airlines.

It had a crash landing after a nose gear collapse in 38 passengers.

I'm going to be flying out of their in a moment.

Number four, netflix beat earnings estimates and sales -- some pre-market trading and jitters for not signing up as many subscribers.

It is trading 245 times higher than its earnings #3 is dupont for the market responded positively to earnings that beat estimates and news that the company is considering a sale of his performance chemical.

The ceo is shifting dupont away from traditional chemicals toward higher-margin businesses like food, energy, and security.

Number two is ups where profits fell 4% last quarter from a. year shippers switched from the most expensive services like next day air to cheaper services like two-day air.

Ubs had lowered its full forecast earlier this year.

At no.

1 is apple.

All eyes are on the world's largest company which is reporting earnings after the bell this afternoon.

Smart phone demand is slowing as the market closes in on saturation.

Joining us now from chicago at the c m eight is the owner of kanai capital management.

We have been talking about this debate over the fed and when they are going to taper back on qe.

Michael mckee told us that a survey said it is likely september.

Are you buying that?

Absolutely not is it possible that we see some kind of tapering?

Let's watch the fed language we have been hearing.

It is based on if this happens and that happens.

I don't see it.

But that cannot afford to have interest rates go up.

They will do everything in their power to keep interest rates low because they are getting exactly what they want and that is an increase in housing prices.

We've got to leave it there but thank you for joining us.

I want to stay on the tech theme and smart phones.

Nokia is unveiling a new smart phone today.

The device is cheaper than previous models at less than $300 and has a bigger screen.

Nokia has been striving to take back market share from apple and samsung but is this cheaper phone going to be enough?

What do we know about this new phone?

This is just the latest effort for the ceo of nokia to get things going.

This is a company that is trying to turn itself around.

It is in a hyper-competitive market.

They are doing this because they have a lot of products that may be some of them don't compete as well with what other products are being offered by apple and samsung.

This new nokia lumia 625 will have a number of different features, a 4.7 inch screen, slightly bigger than some older models, 84 g wireless access so it can go to the wireless networks around a row and it will cost $290. the reason why it is important because they are trying to key in on certain markets.

For nokia, it may not be about the high end.

Want to attack faster growth areas like latin america, africa, asia where those cheaper for smart bombs can lure more customers and.

That is the real key for nokia.

Nokia used to be this giant and smart phones.

Where does it right now?

This is a company that is fighting a battle on numerous fronts.

We took one competitor, apple.

It is not necessarily the biggest in certain markets but they -- but in the third quarter, they sold about 37.4 million smart phones compared to nokia in the second quarter which sold 7.4 million.

It gives you an idea of the sized dass.

-- the size gap.

Investors need to see signs of life.

Over the last five years, this is a stock that used to be $28 per share and now it is about $4 per share.

We have lost 85% of this companies market value.

The ceo has to show that these new products can get that growth going and turn that stocks are around.

That is incredible, 85% decline.

Thank you.

That brings us to the call.

I want to bring in bill wyman.

His call is that yes, the smart phone boom has ended and the demand for high-end smart phones is also out dying.

The nokia story illustrates what you are talking about.

That's right, growth has shifted to the low end.

For example, in china which is the largest smart phone market, 50-60% of the handsets sold there are under $100 u.s. un subsidized if you can imagine smart phone maker is trying to sell phones for a $600 will increasingly be challenged by this shift in the marketplace.

They will not be able to do that at the price.

. julie is looking at the penetration of markets?

This speaks to the issue that bill is talking about.

In the u.s., we sought smart phone penetration rise to 61% of the u.s. population using smart phones.

China, it is higher at about 2/3. if you look at other markets like india, like russia -- india, 80% of the market has non-smart phone mobile phones and a figure in russia is 51%. the majority are not using smart phones.

One would imagine that there still is pretty good room for growth there.

The question is, will they be using the fancier smart phones or the lower end smart phones?

Given that there is a smart phone gap in the emerging markets, will they just go for the low end or is there opportunity for the higher end smart phones?

I think the opportunity in the market structure is really toward the lower end.

Unit growth will stay quite high.

It will be north of 30% this year.

Average prices will come down.

Penetration rates are lower in emerging markets but the average prices are much lower in those markets.

These are markets that are mostly dominated by android which runs between $60--- 60-80% share which is hard to differentiate.

You are looking at a lower end consumer.

Even in countries that have relatively large middle-class, and a global basis, we are now over 50% of handsets sold on a global basis which are smart phones.

We are going after the less attractive second half.

Given your view, you are pretty pessimistic about the apple -- the future of apple?

Apple is a great company but trees do not grow to the sky.

2/3 of the profit came from smart phones.

When you look outside smart phones, they either have to go down market like we have been talking about and that is widely expected.

I expect them to have some success there but that implies lower margins for apple.

Or they have to go into the smaller markets, things like gaming or related consuming markets or they have to go into areas where they don't have core expertise our competence, like content and video and apps.

The point i'm trying to drive home his is a structural shift in the market.

Thank you for joining us.

Coming up, the magazine business, print is still in the above.

Executives from publishing powerhouses tell us why they are going into -- why they are publishing more prints magazines.

? here is a look at the top stories.

Mickie rosen is leaving yobbo.

-- yahoo!

Texas investor mr.

Ray's third quarter forecast even as pc sales continued their longest slump on record.

It is funding revenue streams elsewhere.

-- finding revenue streams elsewhere.

Telefinico will become the biggest supplier in the european market.

Conde nast announced its biggest september in five years.

In ad slases vogel at the way with the notorious september issue and weighed in with 665 advertising pages marking four issues in a row of growth.

The president of conde nast media group and cheap revenue officer says it is no surprise that the magazine industry is getting stronger.

We are seeing a broad base rebound.

Our automotive business from detroit, from the asian companies in europe, over 30% growth in the first half.

We are seeing the tech companies really investing some money, about 35% and then it food, our food business is up doubled -- up double -- up double digits.

Food advertising is up over 20%. john in me now to talk about the industry is the scarlet fu talks to the ceo of a competitor who publishes many titles, meredith.

Lou talked about how their various companies that are coming back and buying advertising.

He is talking about fashion, food companies, automobile companies.

He said they are coming back.

What was interesting is the fact that the u.s. has seen a destable market . it had to -- and had to happen after the ramp up that had carried people are in the mood to spend again and we will start reaching out to these consumers, he said.

When you are not a time sensitive publication, when you talk about fashion or beauty, it is seasonal.

It does not depend on last week's headline.

You have a longer shelf life.

Readers like flipping through the pages of those type of magazines to get ideas that inspired them.

There is a value to be had and it is not just a boat.

Conde nast announced several popular titles like the food magazine.

That is getting a he did of a, said tuesday.

-- that is getting heat it up, so to speak.

They talk about the postal service.

When i spoke with the ceo of meredith asked him about his biggest headache any said it was not the economy.

This time around, it is the post office.

That is the survivability of the post office.

Will they shut down saturday service?

Our postal rates going to go up because that's how they get the physical magazine to their customers.

We're very concerned about the postal service and the challenges the postal service is going through it being more financially viable.

All day next wednesday, i will be with the postmaster general in d.c. so we hope congress gets behind postal reform because, obviously, the post office's a big part of our delivery mechanism.

That is one of our real war is going forward.

There are now worried about the federal reserve or the economy.

They are worried about the price of stamps.

Thank you.

We will return in two minutes on "in the loop." ? we all dream of being born into royalty and yesterday, that dream came true for one lucky baby.

Your parents don't have to wear crowns for you to be pampered like a king or queen.

We take a look at some of the world's other is luckiest babies.

? ? ? ? ? ? ? that would be a perk, the throne one day.

That brings us to our global outlook.

Michael mckee is asking whether we will see a bump of another kind to the british economy.

This is a question that is unique to britain with its tradition of royal events.

The back to the wedding of will and take in everybody watched that worldwide and then you had the queen's jubilee and lots of people come to england and people bought all kinds of souvenirs and consumed quantities of alcohol.

This might be a little different.

It might be more restrained.

The queen's loyal subjects should spend about $375 million or so celebrated the little prince which includes $133 million on parties and party supplies.

No doubt, many people want to pick up this morning's renamed "the son." we are talking about a total spending less than 1% of the british economy.

There is also this boost to confidence?

Absolutely, britain is big on may -- has been on a role that may make it happen to spend.

Andy murray won wimbledon and you have chris frume winning the tour de france.

Babies helps.

The u.k. is forecast to have a sixth successive year with more than 700,000 births which is the most since 1972 was the tail end of the 1960's baby boom.

That will be great for baby products makers.

That is good news for the british economy.

More bretz, more productivity, more contributions to the economy.

What other factors?

These events give everyone a day off and subtracts from economic growth.

The other thing contributing is betting on to the baby's birth date and name.

You thought i said bedding.

Thank you for that.

There is even more goods for britain's upper class.

Volkswagen has given the green light for its ultra-luxury bentley brands to build the world's priciest suv's. the new model will be $270,000 and bentley plans to spend more than $1.2 billion developing the suv.

The car is designed to appeal to wealthy consumers in emerging markets.

Volkswagen said that production will create 1000 new jobs within the u.k. we will return in a few minutes.

? fast food nation -- if you could talk to ceo of mcdonald's, don thompson, tweet your questions and i will pose your questions to the man himself.

We will have an exclusive interview with the ceo all day tomorrow on bloomberg television.

It is 56 minutes into the hour which means bloomberg television is "on the markets." ." let's take a look at stocks.

We are seeing what looks to be maybe another push toward record highs in the s&p 500. we are flat right now they're the dow jones is up about 40 points and the nasdaq is down marginally.

We have apple earnings coming out after the bell.

On the treasury side, the notes are moving up.

People are selling off some of the safety of government bonds.

On the currency side, the euro is pretty much flat against the u.s. dollar.

The dollar-yen is hovering around a significant $100 level.

Moving on to commodities, crude oil is down about 6/10 of 1% and silver futures are giving back big gains from yesterday.

Gold futures are $1,330. speaking of futures, we are talking about vix futures.

In this country, volatility is driven by micro and macro things.

Let's turn to charlie manhoff who has more on what the vix environment is.

It measures volatility but we knew it did.

Why is now an important time to focus on this?

The vix is important surrounding the recent announcements by the fed and the uncertainty going forward.

On july -- on june 22, they said they were going to possibly tapir should things continue to improve.

As a result, the vix popped and we're looking at vix futures at all-time lows.

Let's take a look at one of these charts.

The vix has not spiked relatively speaking.

The yellow line is the vix curve, what it looked like a month ago versus today.

It is just lower.

This kind of represents that lower volatility stock trading

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


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