Retail Retreat: Market Makers (08/15)

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Aug. 15 (Bloomberg) -- On today's "Market Makers," Erik Schatzker and Stephanie Ruhle use analysis, insights and A-list guests to help set up your daily market trades. (Source: Bloomberg)

4, 6 month, is now going forward , i feel the row flight to safety is going to be a bullish u.s. dollar triggered the u.s. dollar sold off a little bit last night they thought the dovish ppi data yesterday, but boom of the u.s. stock shot up this morning.

That only an increasing ppi inflation data, but also an increase in jobless claims.

It will not be and goal because of the tapering because -- but it is the u.s. dollar.

Quite the fight to save the of the dollar.

That is jason rotman.

Thank you so much good we're back on the market in 30 minutes.

"market makers" up next.

? retail retreat, walmart says shoppers are spending less.

Higher payroll taxes hurt profits.

What will the world's largest retailer due to to get americans to open their wallets?

Slashing jobs, network giant cisco lays off thousands.

Bye-bye baby, were raising a kid has never been more expensive.

Housing, feeding, and keeping junior healthy is driving and then in place and to all-time highs.

Welcome to "market makers." i am sara eisen.

And i'm scarlet fu peer and we are in for erik schatzker and stephanie ruhle.

The fed business outlook coming in weaker than excited, 9.3, versus the anticipated.

And the prior reading, not a good signal from the philadelphia region.

That is on the back of better jobless claims numbers, which is fueling the idea that the fed is on track to taper or setback stimulus.

We're looking at a 200 point decline on dow.

Listed to the newsfeed in the meantime.

Some of the top business stories from around the globe.

Crude oil hitting its highest price and form up in the wake of the violence in egypt.

More than 500 people were killed when security forces tried to break up sit in by muslim brotherhood supporters.

Jpmorgan is waiting for the other shoe to drop in the london whale case according to a person familiar with the matter.

The bank expects to be fined by authorities in both the u.s. and the uk.

Yesterday, criminal charges against former jpmorgan traders they may try to conceal your ethical going through job cuts.

-- conceal.

And a cisco going through job cuts.

About five percent of the work force.

Ceo john chambers has been trying to turn the company around, but fell outside the u.s. have been week.

What it comes to the top company news, you can call this an economic indicator of source.

World's biggest retailer releasing second-quarter results this morning.

Walmart shares down after a disappointing u.s. sales.

Also cutting its annual forecast for the next fiscal year.

What does it say about the company and the economy?

We have deirdre bolton here who has been covering the retail side of things.

It is a disappointment.

Really the take away here, if there is one thing to remember, as people are saying they are going to spend less, and then they actually are spending less.

Sometimes there is a disconnect, but in this case it is actually happening.

You just mentioned that higher payroll tax.

I just spoke with someone at walmart this morning and just said how did you see this shaking out, and the head of investor relations said in the first quarter, we just did not know, but now we see the effect, and at the intel, it is trickling down to the bottom line.

You have that higher payroll tax, and then for a lot of americans, not everybody who wants a job is working.

So that of course is affecting how much people spend.

Walmart seeing the results of that.

One bright spot there though is groceries.

They have this whole fresh initiative about one billion dollars in revenue during the quarter.

It seems like the produce is looking better and better.

That is a bright takeaway.

Earlier on "surveillance," scarlett and i were talking about the strategy of walmart, and how they returned to their low price, every day guarantee, how they are actually undercutting other retails when it comes to back to school.

And they certainly are.

We're going to show you how it stacks up your you will see where a basket of goods for walmart and back-to-school is worth about 30% less if you compare it to the other major competitors.

I spoke to them about that, and he said what is the strategy.

They said look, we are focused on being the lowest price retailer, and of story, and even if we take a hit on margins, we take a hit on margins.

I'm paraphrasing.

In essence, they are sticking to their strategy.

Or they are passing it on in making their suppliers feel it as well.

Before, there was an issue of products and selection, now it is all about pricing.

What about walmarts strategy abroad?

The one that everybody cares about is canada.

It is competing with target.

I asked the head of investor relations how concerned she was about competing with target had on head in canada, and she said honestly, not really, we have been there for 19 years, we are in every single province, target is there, but mostly in toronto, and the target also bought a previously bankrupt retailer.

It has put a target sample although stores, but there was a little but a transition as far as branding goes.

As far as walmart and canada, they feel pretty confident.

Is not just canada.

Walmart has been very focused abroad lately.

How are those sales panning out?

Internationally, it was one of these -- let's just say it is a neutral sticking point for this quarter.

Some are performing better than others.

They talked about particular strength in the uk, growth they are happy with and china -- and china.

Thank you so much, deirdre bolton, with the bases on walmart.

Byrd has been years as a leading retail concerted and currently serves as managing director.

He joins us this morning from phoenix.

It really comes down to the low income consumers struggling and therefore walmart is struggling, doesn't it to?

Both struggling given that, as walmart said, higher taxes, less disposable income, struggle for walmart, same-store sales, what deirdre just reported, walmart also with sam's com -- sam's club.

They fail to compete with cosco.

Walmart is having a tough time debating with target, too.

Is hard to move the needle on same-store sales.

What is the prescription for jumpstarting foot traffic beyond being aggressive on pricing?

Scarlet, beyond being aggressive is having stock in the source.

Walmart has caused -- cut staffing, spending, product, so whether we are going into stores in canada or california, you can find shelves stocks to buy product friday through sunday nights when walmarts doesn't 60% of their business.

Deirdre reported earlier walmart is focusing on produce.

Now you have sprouts and you also have whole foods going from hundreds of stores to thousands of stores.

Checkmate on produce.

And then you have kroger beating walmart on choice meat and other products, so kroger, costc o, sprouts, whole foods, they have the same problems with shoppers and higher taxes, but they are winning and walmart is losing.

The traditional competitors like some of the brick-and- mortar grocery stores, but there is the emerging threat of the online grocer, not to mention the online retailers are.

Is it really fighting against the traditional brick-and- mortar?

Sara, you are completely correct spirit one has been losing the war against amazon for 15 years.

Five different times, walmart has tried to get e-commerce getting five times.

It has failed the same way walmart has failed and in fashion.

Losing online, and as bloomberg reported, losing on land, shares are down 50%. walmart owns 51% of that african chain, and bloomberg also reported earlier that at significant amount of its share has been lost to -- in the uk the same way walmart is losing share to the hard discounters like alldi in the u.s. you mentioned costco, should we walmarts target middle income customers like target?

Scarlet, on the middle income consumers, walmart has been trying to target those consumers for 10 years, but then they run ads serving walmart meat, and one famous arizona steakhouse i asked one of the comanagers when they advertise they were serving walmart me what happened, and he said their customer accounts declined 10%, and 25% of the people ordered less stake.

So walmart is trying very hard and doing a lot of new things, but with the issues in terms of not enough labor in the stores, pressure from organized labor, pressure from the federal government, and the foreign corrupt practices act in addition to class-action lawsuits, it is like the old war and 80 line in "heaven can wait," the company is trying to do more rights, but it can lead the league in lawsuits and still have same-store sales.

20 sub about walmart, the walmart consumer, we get the higher payroll taxes, but look at some of the other signals we have got in the last 24 hours.

Macy's, somewhat disappointing for a retailer that has been doing very well.

Kohl's also coming in a bit light.

Is there something going on with the consumer at large, not just the lower income walmart customer?

Wechsler there is definitely -- there is definitely uncertainty.

Shoppers with higher student loans, are spending less than -- macy's and cold, consumers are being more cautious.

The national retail federation says people will spend $40 less on back to school this year versus this time last year.

So it is cause for concern going into the holidays, particularly for walmart.

Macy's will bounce back.

All right, bert flickinger , thank you for your perspective as we had back into the active school shopping season.

Burt is managing director of strategic resource group joining us from phoenix this morning.

I'm watching the markets, the dow is off more than 200 points at this hour.

S&p 500 down 1.44% . some disappointing economic data, at least that's in :00 a.m. on the philadelphia fed business outlook, a rating of 9.3 versus the consensus of 15. extra surprisingly strong report on initial jobless claims, which shows that americans -- fewer americans are filing unemployment claims, which that helps treasury yields even higher care and we're looking at two-year high for the 10-year treasury yield on this idea that the economy does not have enough for the fed to get out of the game.

Crude oil, francis, up for a sixth straight day.

The loudness game since april.

Coming up on "market makers," big job cuts at cisco.

John chambers pulling off a turnaround at the networking giant?

Disney is just days away from launching infinity, a new game that will take characters to exciting new places.

We will have more on "market makers." this is "market makers." i am sara eisen.

60 announced 4000 layoffs.

-- cisco announced 4000 layoffs.

This morning, and ceo john chambers talked with our betty liu, putting a spin.

We are bidding our editors, we're delivering to wall street exactly what we said we would do, we will continue to do that.

I could not be more comfortable with them.

By the way, the stock is showing that over the last six and 12 months.

The key take away from yesterday is where is he stopped two weeks from now, four weeks from now, one quarter from now you?

That was a ceo john chambers speaking earlier to "in the loop " betty liu.

We have michael from stamford, connecticut.

Job cuts and now look from cisco and last way for hours show that chambers' strategy of acquisitions is not paying off just yet.

Outlook is more concerning been job cuts.

The job cuts are being overplayed by the media.

This is a reallocation of resources, so they are laying off 4000 workers to hire back a different 3000 plus workers in different areas with different skill sets.

So this is really the headline for cutting jobs has really become its own monster in the press.

In terms of the outlook, the order with actually fine.

They beat the quarter, they did what they were supposed to do, just like john said.

The new orders in the quarter are forward-looking.

They did not get worse, but they did not get better than they should have.

They came in 4% year-over-year, fly with the previous quarter.

We thought they would excel 5% or 16%. -- or 6%. europe got better, federal got better, where they actually missed was in japan, china, brazil, russia.

Cisco is a very large global company operating in an uneven macro recovery.

And gorman really, things are a tiny bit softer, but the reaction today is an overreaction and a good buying opportunity not only in a cisco but in really any text stock -- any text stock that is down to the incident the the.

I like sienna.

It is down almost as much as cisco in sympathy.

Michael, no matter how you slice it, cisco is increasingly seen as an old tech company.

It has 56,000 employees.

It is not nearly as nimble as a some of the other tech companies out there.

Can it be breaking into new markets like computer servers and computers are and computer security -- and computer security?

The reason they have to do the rebalance with the employees and shed that 5% but added back in different growth areas -- i actually think the company has done a great job of responding to new technology challenges and to changing.

The threat from software to find networking is one perfect example.

A year ago, people thought this new technology was going to come along, remove the revenue and margin opportunity and in fact they responded with the best messaging and the best software defined networks charging out there in my opinion.

I think they are doing a good job of changing, and they are a very large company.

They have generated $4 billion in cash from operations, which is extremely impressive.

The other piece of john chambers' stratregy is acquisition.

By going to continue?

-- is that going to continue?

It really is.

Any growth they have coming putting acquisitions, they kind of view as organic growth because they paid for that through the m&a. they are not making many $5 billion plus deals.

They are making a lot of $200 million, $300 million, $1 billion bills which they can easily afford.

They contrast warm to moore's more sources -- they can transfer that to more services.

I'm not going to say i was disappointed with the results last night he guided than a new orders, but it is only a slight stumble, and i do not think it is the end of the bull market here for cisco or for the rest of the pack.

Quite some people see john chambers really struggling with this turnaround plan.

As you look ahead, what should chambers avoid doing?

I think people are more frustrated by his performance on the conference calls because a lot of the company management out there are just promotional and would have prevented this as saying, look, orders got a little bit better sequentially and year-over-year, they did not get worse, and we excite them to get better in the future and lead it at that.

But cisco actually tells you all the information they have.

They tell you what is going on in brazil, china, and all these places.

And he gets emotional and reacts to it.

It sounds on a conference call worse then things really are.

So i think he needs to be doing a good job and his quarterly behavior on the conference calls -- he has been doing that for many years.

It is probably not going to change.

Mike, i want to go back to the job point because you stress the fact that the media is overplaying it.

This is a company that in two years has fired more than 10,000 people, 10,500 since july, 2011. that is a huge amount of people to fire.

Do you expect that to continue?

The company still has 80,000 people, so let's put it in context.

Also, the overall job summer has not gone down by 10,000 in that time.

It has only gone down by a couple of thousand.

This is about a company that identifies the market transition and that changes its resource allocation to reflect that.

It is a hardware growth opportunity in the kind of legacy transport opportunity.

It is not what it once was, and it is to be more software and services oriented your dated to hire more people with those skill sets, and that is what is happening here.

This is a macro issue, not a company-specific issue.

Cisco is doing a fine job.

It is not an extreme growth company.

It will probably grow revenue at about 16% a year, grow earnings at about 8% a year.

You can expect to pay 12 to 13 times earnings for that.

Right now the stock is trading at 11 times.

Quite that has done 7.5% as we speak.

Michael genovese, thank you for joining us today in defense of john chambers, analyst covering be stocks with a buy rating on cisco.

Cisco is the worst performer in the dow and s&p 500. you can see the indices are lower by better than 1.2 five percent.

The s&p 500 round that such a low off by 23% at 1662. all stocks are falling within the s&p 500, only 10 stocks are gaining this morning.

It is selloff mode, and it has gone global with the major indices in europe all off significantly more than 1$. -- than 1%. assay with us.

We will find our billionaires are putting their money to work next on "market makers." quite the smart money portfolio -- we get a snapshot now for the firms run by people like dan love -- dan loeb, john buffett, are buying.

Su keenan has been digging through the filings.

The most interesting story she recovered from the last quarter -- gold.

Gold lost its luster clearly among many form managers who piled into goal in the last 12 years.

We saw george soros, dan loeb, and leon cooper man all cell -- leon cooperman all sell.

He says it it's for hedging capability, but again -- and very quickly with apple, did anyone pick up the stakes?

Yes, interestingly enough what we saw with apple what they love it, they hated it, we had ide shaw adding, they now have a $1.4 billion position.

Greenlight, david einhorn, had almost one billion position, and he kept that steady.

Others just like of their positions are to issa much, -- positions.

Thank you so much, su.

Equities are falling off.

S&p, dow, nasdaq all down more than 1%. tech heavy nasdaq getting hit it hit -- getting hit the hardest.

We will be right back on "market makers to go ?." let's take you straight now to martha's vineyard were the president is addressing the nation on egypt.

Just as amerco was and -- as amerco was inspired by the egyptians desire for change, as many does egyptian stood to the streets to demand dignity, freedom and economic opportunity.

As was said at the time, the change would not come quickly or easily, but we did align ourselves with a set of principles.

Nonviolence, a respect for universal rights, and a process for political and economic reform.

In doing so, we were guided by values, but also by interest because we believe nations are more stable and more successful when they are guided by those principles as well.

And that is why we are so concerned by recent events.

We appreciate the complexity of the situation.

While mohamed morsi was elected president in a democratic election, his government was not inclusive and did not respect the views of all egyptians.

We know that many egyptians, millions of egyptians, perhaps even a majority of the egyptians, were calling for a change in course, and while we do not believe that forces a way to resolve political differences, after the military's intervention several weeks ago, they remained a chance for reconciliation and an opportunity to pursue a democratic path.

Instead we have seen a more dangerous path taken.

Arbitrary arrests, a broad track down on mr.

Morsi's associations, and supporters, and now, tragically, the violence that has taken the lives of hundreds of people and wounded thousands more.

The united states strongly condemns the steps that have been taken right egypt's and from government and security forces.

We deplore violence against civilians.

We support universal rights essential to human dignity.

Including the right to peaceful protest.

We oppose the pursuit of martial law, which denies those rights to citizens under the principle that securities trump individual freedom or that might makes right.

Today, the united states extends its condolences to the family of those -- to the families of those who were killed and those who were wounded.

Given the depth of our partnership with egypt, our national security interests in this part of the world and our belief that engagement can support a transition back to a democratically-elected civilian government, we sustained our commitment to egypt and its people.

While we want to sustain our relationship with egypt, our traditional corporation cannot continue as -- traditional cool operation cannot continue as usual.

This morning, we notified the egyptian government that we're canceling our biannual joint military exercise, which was scheduled for next month.

Going forward, i have asked my national security team to assess the applications of the actions taken by the interim government, and further steps that we may take as necessary with respect to the u.s.-egyptian relationship.

Let me say that the egyptian people deserve better than what we have seen over the last several days.

To the egyptian people let me say the cycle of violence and exhalation -- an escalation needs to stop your we call on the egyptian authorities to respect the universal rights of the people.

We call on those who are protesting to do so peacefully.

And condemn the attacks that we have seen brought protesters, including on churches.

We believe that the state of emergency should be lifted, that a process of national reconciliation should begin, that all parties need to have a voice in egypt's future, that the rights of women and religious minorities need to be respected, and the commitments must be kept to pursue transport reforms to the constitution and democratic elections of a parliament and a president.

In pursuing that path will help egypt meet its democratic aspirations of its people while attracting the investment, to resume, and support.

File its on the other hand will only feed the cycle of polarization that isolate the egyptians from one another and from the world and that continues to hamper the opportunity for egypt's to get back on the path of economic growth.

Let me make one final point -- america cannot determine the future of egypt.

That is a task for the egyptian people.

We don't take sides with any particular party or political figure.

I know it is tempting inside of egypt to blame the united states or the west or some other outside actor for what has gone wrong.

We have been blamed by supporters of morsi, we have been blamed by the other side as if we are supporters of morsi.

That kind of approach will do nothing to help egyptians achieve the future that they deserve.

We want egypt to succeed.

We want a peaceful, democratic, ross birth egypt.

That is our interest.

-- prosperous egypt.

That is our interest.

To achieve that, the egyptians are going to have to do the work.

We recognize that change takes time, and that a process like this is never guaranteed.

There are examples in the recent history of countries that are transitioned out of a military government towards a democratic governments, and it did not always go in a straight line, and the process was not always smooth.

There are going to be false starts, there will be difficult days.

America's democratic journey took us through some mighty struggles to perfect our union.

From asia to the americas, we know that democratic transitions are measured not in months or even years, but sometimes in the generations.

So in the spirit of mutual interests and mutual respect, i want to be clear that america wants to be a partner in the egyptian people's pursuit of a better future, and we are guided by our national interests and is a long-standing relationship.

But our partnership must also advance the principles that we believe in.

And so many egyptians have sacrificed for these last several years, no matter what party or faction they belong to.

So america will work with all those in egypt and around the world to support a future of stability that rests on a foundation of justice and peace and dignity.

Thank you very much.

President obama, audio only, statement not given to us by video.

He is on vacation in martha's vineyards, step aside to address the violence we have been seeing in egypt.

A violent night overnight to reset that more than 500 people have died in egypt so far.

He strongly condemned the violence in egypt, saying the u.s. cannot continue its cooperation with egypt as planned, and in fact the move that he made it the united states canceling the joint military exercises with egypt, also leaving the door open for for their -- leaving the door open for further action of step to take for egypt.

He also said a pursuit of democracy in a state of emergency that has been proposed on egypt should be listed -- lifted.

The process of reconciliation should begin soon.

Those are the latest company -- comments from the president.

We saw how crude had spiked overnight following the violence in egypt.

A lot of concern over whether the supply of oil would be disrupted.

It has come down from those highs, but still high by .67% at $110.92. we do not take sides or something we heard from a reporter we checked in with on cairo.

That is very prevalent on the ground peer and we will continue to monitor any headlines for you out of egypt.

We will be right back on "market makers" on bloomberg television.

What happens when captain jack spero meets tanto gekko we will soon find out when some of your favorite disney characters come together to a gaming console near you.

If they will launch its disney infinity videogame.

We will head out to jon erlichman.

That was a trick question given that johnny depp played in both heard quite indeed.

-- in both.


And your household, you might be familiar with a game like skyline are from activision.

That is an example of what disney is trying to achieve.

You have got a real world in a digital world experience with infinity.

You can go get these collectibles, different characters from the various disney property, whether it is "pirates of the carribean" or the "cars" movie or "monsters inc.." you have to pay $75 for basically the game, but then there are these different ellipticals -- different collectibles that you can buy in stores.

Then the characters are there and you have all these different options of a player.

So different characters showing up on what would have been different, you know, backgrounds, kind of like the "surveillance" duo of scarlet fu and sara eisen on "market makers ." it opens up a big opportunity for disney.

They've spent a lot of money on this to sort of keep people laying the same game for a long period of time.

That with a nice way to related back to us, jon.

Has disney done something like this before you go is it a big deal?

It is.

There have been delays, they have spent a ton of money.

There are estimates that they could bring in box office like deterrence with this game.

When it comes to the question of the disney interactive business, which they still have not have a profitable year with that business, and the ceo bob iger is really hungry for that, that is really the focus for that.

Other divisions have done really well, that has always been the lighting one, the sore spot.

The hope is with this game, the internet a rocker thank you so much, jon erlichman, of "bloomberg west." you can see jon at 1:00 p.m. and 6 p.m. eastern.

We will stick with media.

That fight, that blacked out 3 million home, may open the door to nontraditional competitors like hulu and netflix.

Let's bring in a professor at harvard's kennedy school and the author of "big in boston." as we watched the battle royale play out between time warner cable and cbs, is the real winner going to be aereo?

There is no doubt that people want to watch their media on multiple devices in multiple places.

The more feature digital media companies make that harder to do, the more they get caught in disputes like this, the faster consumers are going to leave cutting the cord.

Are you suggesting that this is such a turnoff that it finally heightens the consumers' attention to the fact that there are alternatives and really lead to a paradigm shift in the way we view media?

Absolutely cured nielsen earlier this year said that census 2007, the number of households that have cut the cord, that have no tele- broadcast or cable television, they get all of their media off the internet, has doubled.

The trend is really clear, and the more that consumers have a hard time getting the media they want from traditional services -- sources, that is going to hasten their departure.

The departure is being moved along by a range of things from hardware, you know google has their new chrome cathode device out.

There is another realm of video devices coming out this fall.

It is all moving one direction.

The more that's traditional media companies put up barriers, the faster that is going to happen.

Nicco, let's go back to the google chrome cast for a moment.

Shouldn't this be taking off and really changing the length cap right now?

? m specht is one of the devices we will see over the next six to eight months.

Rumor has it that apple has one in the queue.

Calling it a videogame console is not an appropriate way of talking about it.

Google got in early on a very low price point with a very compelling offering.

When you look back at what time were cable and cbs are doing to each other, slamming each other on the press, everyone, are they aware that they are pushing customers for these alternative methods, watching television?

I think that if you are sitting at a traditional media company am at a traditional tv company, you feel like this is good, you're making money, your market position is strong, and yet all of those companies are a lot more fragile than they seem.

I don't think they are about to disappear, but the long-term trends, the next 10 years do not look like they are in their favor.

Anything that they do to encourage consumers to leave, any little barriers they put off, will accelerate this.

You market or had a study out last week that says that this year for the first time, americans will consume more media on digital devices then they will watching tv.

That is a powerful trend.

People watching more and more media on their devices, especially mobile devices, and tv is in a very small decline, but a clear decline.

Is it a big enough event that to also turn off the advertisers and follow the consumers to digital?

Advertisers are starting to do that already.

We had this report, facebook commission from nielsen that showed last month that americans spend more time on facebook than they do on anything goal television channel or show.

We should point out, nicco, that the cbs network ratings were just that, they did lose 4.7% of primetime audience in the first week of the blackout.

Still, very dominant, still high numbers, even their top-rated drama, "under the dome ," came out on top.

What we're talking about is a longer-term shift, and this might be a small mark.

Would you agree?

There is no danger in the next six to 12 months, but the numbers are clear that the directionality and the force of these trends is away from traditional television and cable.

Everything that the big traditional table -- cable and tv customers -- companies did that make it harder for customers is going to accelerate those numbers.

Thank you for joining us on this story.

Nicco mele, author of "end of big." estee lauder enjoying the glow of the spotlight today.

The cosmetics company reporting a rise in profit.

How exactly do you stay relevant in the beauty industry?

We have the cofounder and co-ceo of birch box, the company that sends makeup, nail polish, and other items to members each month for a subscription fee.

Products that people are so familiar with and so loyal to, that is where the innovation lies.

Wife -- reservation is also a big part of it.

The first box company monthly package, and we know the delight of opening something is a big part of what our subscribers love.

People want efficacy, that is something you are saying.

They want products that work.

It is a way for them to test things out.

They want products that work.

This is a way for them to sample new outlines.

Rich box -- birchbox is a monthly service.

You get a personalized box.

Grooming and livestock products for men at $20 a month.

We know a little bit about you, you do your profile, -- why would i do that and i just go into a department sort of my favorite beauty line, today, estee lauder, francis, reported 84% jump in profits.

We work with a lot of companies as well.

Think about all the work it takes to discover products.

Of course you know the brands you love, but what about what you don't low -- what you don't know?

Tens of thousands of beauty rocks are launched every single year.

How are you going to find what works for you if you don't have somebody to help you kind of cut through the clutter and curate what is out there you?

I keep hearing ever ready talk about bb cream.

It's at the latest innovation in moisturizing cream?

It is more than one thing.

Consumers love that and makeup.

It could be something that has a cheek and a lip property.

Eb cream is all about a little coverage and in care.

We have vitamins in beauty cream, antioxidants, so it is both.

You announced 400,000 monthly users -- over that.

We've also announced that our e- commerce business is a major part of the birchbox model, over 25% of the business.

What are you planning to do with his business, how are you going to grow?

Click the growth is coming from consumers and word-of-mouth.

We really focus on execution.

It is all about the little decisions.

Getting our consumers out there, over 400,000 who love birchbox, is helping us to continue to grow at very rapid speeds.

We were talking about how the subtraction fee for women is $10 a month, but $20 for men.

Theron as many product categories for men, but they still want monthly, so we have a lifestyle product, and it is not a consumer sample, aba tech exec three -- it could be a tech accessory.

There is more cost are to that lifestyle component -- what is in the men's box, and what kind of men do these birchbox deliveries?

With teenagers, parents of teenagers, men and women, and guides over the country.

One thing i want to point out, something estee lauder released, they said emerging markets were clearly -- were key to growth.

Are you going global with this?

We actually acquired a business a year ago.

We are in france, the uk, and spain.

Europe is a huge deal for our business right now.

We're looking at massive opportunity, e-commerce is a little bit newer there.

So establishing ourselves as a major e-commerce beauty company is a major opportunity.

How much can you innovate on a boisterous and cream or nail polish?

Writes quite a bit.

It is fun to see something even in a different package great all the different ways you can think about a product having multiple properties, you are seeing moisturizers that have toners, you are seeing exfoliate her in a face wash wipe -- they can't possibly deliver on everything.

Cracks i personally love trying the new things that are out there.

It is all about you and what will fit you.

Some people want an easy one step, some people are more than happy to do eight steps.

Is make up a consumer discretionary or staple?

Good question.

It is both.

Makeup is almost about this ally, -- this delight, but also efficacy.

It makes people feel better everything will they.

For us it is a staple for sure on television.


Thank you so much, katia beauchamp, cofounder and co-ceo of birchbox.

An instructive sentiment for mentored -- an instructive segment for men.

The dow down 215.3 or two we will be right back on "market makers e ." it is approaching 56 past the hour.

That means it is time for bloomberg to go on the market very quite a lot of right across the screen if you are looking at equity indexes right now.

The s&p 500 off by 24 points.

1.4% decline.

When you look at the breadth of the market, 13 stocks smaller for everyone that is higher on the new york stock exchange.

Industry groups are lower this morning.

Across the board.

A few movers to watch, comcast and time warner cable are said to form a joint venture to develop a new generation of set- top boxes, rdk management, both companies falling with the industry.

Kohl's earning and revenue were in line with analysts' estimates.

It cut its earnings forecast, but we still see it performed much better than the index.

Rights coming up on "market makers," roger mcnamee , cofounder of elevation.

Live from bloomberg headquarters in new york, this is "market makers." nightmare in egypt.

Hundreds are dead.

President obama canceled joint military exercises.

What will be the white house's next move?

Roger mcnamee talks about what is next for facebook and apple.

Check out this parade.

Nobody celebrates cars better than motown.

Welcome back to "market makers." i'm sara eisen.

We will keep you updated on the latest goings on in egypt, with the president just speaking.

We will get straight to the news feed.

Cisco ceo john chambers says he is confident his company is delivering what wall street's once -- street wants.

Chambers saying on bloomberg television that investors should look at where the stock is several weeks from now.

Confidence among homebuilders at the highest level since back in two thousand five.

Out from the national association of homebuilders.

The market is being supported by rising demand for new homes.

Call him the hidden billionaire, jonathan gray.

A low profile 43-year-old who runs the real estate business at blackstone group.

Blackstone has diversified into real estate.

The division gray runs is now the firm's largest.

He has more than $900 million worth in the stock.

President obama directed his staff to assess whether further steps are warranted in response to the egyptian military's violent crackdown on islamist protesters that has killed 500 people.

Our washington correspondent joins us now with all the latest details.

This really speaks to washington's lack, doesn't it?

There are a lot of questions about what we were going to hear from the president.

Would we be hearing concrete stuff, or more rhetoric such as what we heard from secretary of state john kerry yesterday?

The president did condemn the violence.

He canceled the military exercises that were scheduled for next month.

He did say, we are examining further steps.

He did not make any steps in terms of cutting military aid that united states provides to egypt.

Some lawmakers have been calling for it.

That would have been a much more serious step.

The president was very clear that the united states is reluctant to take sides.

They don't want to be seen as for or against ousted president mohamed morsi.

America cannot determine the future of egypt.

We don't take sides with any particular party or political figure.

I know it is tempting inside of egypt to blame the united states or the west or some other outside actor for what has gone wrong.

He also stopped short of calling this a coup.

If the president of the white house decides this was a military coup, that would cut off all military aid.

Let's bring in a policy analyst at the cato institute.

He joins us from washington as well.

When we hear what the president has announced, the cancellation of these joint military exercises, how important is that to the next move he could take?

This is too little, too late.

I consider it a shame that the administration has not moved towards calling this a coup.

I consider it regressive of the aid that flows in.

$1.2 billion annually directed to the military.

The cozier the u.s. government gets with the egyptian generals, the more it will validate the views of religious extremists.

[indiscernible] egypt has received a $70 billion in aid since independence.

The built- in military is egypt's biggest obstacle towards democracy.

Megan hughes still with us from washington.

It's a tough position for the obama administration.

Talk about the political pressure building around washington.

Other lawmakers trying to encourage president obama to cut off military aid.

Senator lindsey cain, john mccain went on the ground in egypt.

Senator mccain said, absolutely this is a coup, and congress may need to look at cutting aid.

Keep in mind the importance of cooperating with egypt.

These are things that the interim government has not fallen down on the job on.

The u.s. and the white house needing to weigh the pros and cons.

Would you address that, the further instability that could because as a result to egypt, in the middle east, the surrounding countries, and key for the markets, the oil nation with the important suez canal route?

I completely accept that point.

It is important to weigh the costs and benefits of this aid program that has been extended to egypt for decades.

I think the costs of supporting the egyptian military in the way the united states has done for the past decades is completely brougham -- blown out of proportion.

It's a matter of principle to recognize that what happened was a coup, and the u.s. is essentially complicit in funding a military regime.

That is simply not acceptable, in my opinion.

I'm curious what your position and your take is on the resignation we saw yesterday.

And what that means for the movement, the state of things right now.

He resigned as he could not buy into the military crackdown.

I'm not sure it will change anything in the immediate future of egypt.

The military regime hopes that the muslim brotherhood goes away.

But it is here to stay.

Violence is escalating.

The more violence we can expect from it, especially from the french segments of various extremist -- fringe segments of various extremists.

It commands support among certain segments of the population, because religion is an important thing in egypt.

The brotherhood has been an effective provider of public goods, education, and healthcare.

I don't see this conflict as going away anytime soon, or easily.

As the u.s. deliberates over what the next move should be, whether it should declare what happened as a coup and stop the aid, what organizations would you look to to set the tone?

Our other countries in the arab world going to come in and take a leadership role?

Egypt is the most populous arab country.

It needs to take care of its own problems.

I don't think the solution lies anywhere else but in egypt.

The prospects for egypt of getting out of this mess right now at no cost is pretty bleak.

If i were to draw a roadmap towards a better future for egypt, it would involve the secular's engaging with the muslim brotherhood and military ruling pushing its hold to power.

Thank you so much, dalibor rohac.

Also, megan hughes joining us from washington.

President barack obama canceling a scheduled joint military exercise with egypt after the bloodshed in egypt.

We will see it play out in the oil markets.

Geopolitical concerns await.

Coming up later on "market makers," roger mcnamee , founder of elevation partners.

? as egypt erupts in violence, there are major effects in geopolitics, also in the lifeblood of the global economy, oil.

The price of crude is up almost 10% since president morsi was forced out last month.

Give us a broader context of the oil price movements, alix steel.

How important is oil to egypt is the question.

Face value, each of reduce is 720,000 barrels a day.

That is a drop in the bucket in terms of the overall picture.

The real issue will be the suez canal.

Seven percent of oil seaborne trade goes through there, connecting the red sea and gulf of suez.

If that were disrupted, that would be catastrophic for the oil market.

You can't close it without support of the military.

If you close it, you deprive this country of much-needed revenue, which is part of what the unrest we saw -- is anyone talking about that prospect of closing?


why the rally in oil prices, in wti and brent?

Why would u.s. traded oil be rising?

They tend to move in lockstep sometimes.

The reason why brent is moving, mostly only about $2,, $3 -- it is something to do with libya.

Right now they are producing anywhere from 300,000 to 600,000 barrels a day.

They used to produce 1.6 million barrels a day.

They closed to export terminals early in the week.

-- two export terminals early in the week.

You are seeing similar things in iran, iraq, syria as well.

Libya is the focus of the tighter supply in brent.

Stick around, because were going to continue the conversation and dive further into what is becoming one of the top geopolitical and economic stories at the moment.

Joining us now is neil richardson, analyst at bloomberg government.

It provides insight on how government decisions affect business.

Alix just telling us that it depends on the military keeping it open.

Is there reason to believe that the suez canal could be shut down?

Not at this moment, scarlet.

The suez canal makes egypt a very important player in the global market.

It's not because they are a global producer.

Egypt has imported some of its energy needs.

It is consuming more than it is producing at this moment.

It's really because of the operations, the suez canal connecting the persian gulf to the countries of north america and europe.

If there was a threat to canal, it would increase the cost of shipping and the time it takes to get this valuable resource to the rest of the world.

Alix steel, when you see violence erupting, even if it's not a major oil producer, you think that a lot of the other world oil does come from the middle east.

It's more than one third, at least.

Funny three percent comes from the middle east region.

It's important to notice -- 23% comes from the middle east region.

It is important to notice that it is not infrastructure that is being attacked.

It is much easier to restart then be shutting down production altogether.

Right now it is about workers striking, not export terminals.

So maintenance issues in libya, and unrest in egypt.

What is going to happen if this unrest spreads to other parts of the middle east?

That is a key concern.

It is not that egypt is an important operator of this vulnerable and valuable artery of transport.

It is also the fear that this political risk, this instability in egypt could spill over to countries that are very important in energy production.

This was the threat that increased energy prices in 2011. that is the concern when you look at world markets, that this political thread in egypt would spill over to other countries that are energy producers in the middle east.

A lot for us to monitor.

Nela richardson, thank you for joining us.

And of course, alix steel, our reporter on the oil markets.

Coming up, the rolling works of art, thousands of cars that trace the history of detroit.

? this is "market makers." i'm sara eisen.

Customize it.

Create, buy, and sell personalized products online.

They're introducing their new platform that allows any individual with a design to create hundreds of products and sell them online through cafe press's market lace and community.

Bob marino is the ceo of cafe press.

This is more than women making bachelorette t-shirts for parties, right?

We appreciate those women.

The big grower this year is custom shower curtains.

This is about businesses that want to create a specific product, coming to you and customizing it.

How are you different than their previous options?

We make everything on demand.

These businesses do not have the risk of inventory.

We used our 3 million designers from around the globe to create products that celebrate these businesses.

What is the hottest seller right now?

The hottest seller in new york would be something about anthony weiner.

People getting customized shower curtains with anthony weiner on it?

Hopefully not.

Whatever is trending at the time, that's what would be hot.

You get a sense of what would be ordered based on social media trends?

That's right.

I got a lot of insight in what is going to be in the headlines just by the real-time nature of the product feed we get.

You can just see what people are ordering.

The trend in technology has been a shift to mobile.

How do you think about that in terms of your strategy?

We have seen mobile traffic continue to grow.

For us, mobile is linked to social.

So much of what we do is in social media.

People pick up their social media posts and things like that on a mobile platform.

For us, we are able to get into the conversation in a very germane way because of the unique content that people create themselves and want to share in social media.

What about your business overseas?

Are people from asia, from europe, the middle east ordering t-shirts and the like?

How do you get it to them in a timely way?

We have an ecosystem that has designers and consumers working together.

We have 3 million designers from all around the world.

They know what the people in their market will be interested in.

When it is ordered, we manufacture it.

We have a facility in the czech republic and australia.

Is a getting costlier for you to get out there to new members?

The cost of acquisition is going to go down.

The social sharing functions that it brings forward are free.

This is a unique opportunity for us to accelerate -- how many people are repeat customers, and how much growth is coming from brand-new users?

36% of our customers are repeat customers.

We are seeing that grow quarter over quarter.

It is a function of word-of- mouth, also the fact that we are so much more than the t-shirt and coffee cup company we were seven years ago.

We have over 500 different products in their.

There's more reasons to come back and buy from cafepress.

They do so much, bob marino from cafepress joining us.

I batista has had to give up control of one of his companies.

A private equity firm based in washington has agreed to buy new shares.

The firm e i g global energy partners, will be 21% below yesterday's closing.

Batista will be able to focus his attention on ogx.

It is time for bloomberg to go.

We need to start with the european markets.

Their ending in just a few moments.

Dekes closing down by three quarters of 1%. we are seeing lows of the day.

We are still looking at a pretty big selloff.

More than 1% decline in the s&p, dow.

A lot of action happening in bonds.

Treasury yields are rising to two-year highs.

This is all on the bet that the federal reserve might start cutting back its bond buying program as soon as next month.

Meetings shaping up to be very exciting.

It is a way that this a go data -- jobless claims coming in better than analysts estimated.

Coming up , one of the big names in tech investing, roger mcnamee talks about apple, facebook, and how twitter takes its next step.

We will take a trip down detroit's memory lane.

Thousands of classic ours -- ca rs.

? live from bloomberg headquarters, this is "market makers." results from the second quarter providing insight into how the business is changing.

Joining me is cristina alesci.

They are saying they will report earnings later today.

How important are these results?

Everybody knows it will be ugly.

Analysts are estimating earnings are going to come down by about half.

That is consistent with what we had seen with all pc makers, except lenovo.

It is driven by a drop in pc shipments, which has been out there for a while now.

Likely to drop even further in the second half of the year.

It was an 11% drop in the last quarter, and likely to deteriorate further.

If results are any worse than what analysts are estimating, you could have a strong argument for michael dell and silver lake to shareholders to take the money and run.

At the end of the day, all this could be moot.

The special committee changed the voting rules, and they locked up the vote because the extensions no longer worked against the deal.

They moved it up to today.

Any reason why?

The company said it was because of heightened interest in the company.

If there is heightened interest in the company and you are moving up the date, why are you canceling the analysts' call, and why are you not providing further forecasts for the year?

They're doing a bare-bones release today.

Analysts will be focusing on whether or not the deal will happen, whether or not carl icahn will have a chance in court tomorrow.

They're going to be in court tomorrow.

They don't even have to mention anything in the earnings release today about the outcome of that potential lawsuit.

The outcome of that lawsuit is not going to be borne out.

Likely if they had released next week, we would be talking about -- it's a delaware court, we should mention.

Women talk about what dell is doing, what is he going to say in the final day before icahn's court appearance tomorrow?

Is he still trying to garner support?


This provides more evidence of the fact that they are trying to get shareholders on their side.

If you see deteriorating sales and revenue figures, you are more likely to vote in favor of this eel.

It's very likely -- deal.

It's very likely that michael dell is still out there.

He did not talk to the shareholders.

He really needed that momentum and support from key shareholders.

We have seen some of them slip.

What are the rest of them going to do, is the question.

These voting rule changes really make it difficult for this deal to die.

We have been surprised many times on the deal.

Thank you so much, bloomberg deals reporter, cristina alesci.

Who better to talk tectonic shift in technology like roger mcnamee, cofounder and managing director of elevation partners.

Thanks for spending time with us this morning, from san francisco.

Let's start with dell.

Add -- as a technology investor, would you tell shareholders to go ahead and vote this deal, to take it private?

The way i look at dell today, i think that dell is a middling quality player in a dying industry.

Dell has been exceptional at distribution, marketing.

In a category that is shrinking, those are not useful skills.

They do have to rebuild what the company will do going forward.

The question is, do the public shareholders have an appetite for that?

I don't understand what silver lake and michael c in the company today.

-- see in the company today.

The pc industry is done.

Unless dell can reinvent itself with something else, the outlook is not right.

Where is the value and dell, whether on the technology or financial side?

Michael dell is an exceptional human being.

I have known him for a long time.

I was a cofounder of silver lake.

They are an exceptionally talented team.

They know financial engineering very well.

If the value is not in financial engineering, i don't see the value in the core business.

This is the kind of business i would be running away from.

Whether they are taken private or public, what is the future of dell, given the fact that you think the pc business is dead?

Dell has never been a technology innovator.

It is always been an assembler omits components coming from lots of suppliers.

-- of components coming from lots of suppliers.

That game doesn't work anymore.

We have moved onto tablets or smartphones.

If microsoft were to focus on skype and xbox and make handhelds and tablets, dell would have a really good shot.

Barring that, i don't see it.

Lenovo is doing just fine with pc's. it makes sense.

It is a highly fragmented industry.

The market share is consolidating into a small number of players, and a large number of no names who sell products with no profit.

Dell is stuck with an expensive brand and cost structure that is not competitive with lenovo.

Somebody has to win.

That's not dell.

It's not hp.

It's lenovo.

Let's talk about a company that also facing some questions, apple.

You have questions, the innovation machine that is apple.

Are you looking for the new product release to change your mind?

Of course.

I'm a customer.

The issue at apple is that they are hostage to a business model that worked really well during a. of very rapid expansion.

Smartphones are slowing down trite -- quite dramatically.

The opportunity for apple is to grow its market share decidedly.

I would love it if tim cook would get a great nights sleep, wake up in the morning and realize, i'm apple.

I can do what i want.

Right now it is a cheap stock.

I own it personally.

I'm a big believer in the stock because it is a great company.

But like dell, they have real issues.

You would never trade apple's position for dell's. apple is in a much better position.

You sound like carl icahn.

Were going to ask you about this new wave -- karl is right some of the time.

We will talk about this new wave of activism to hit silicon valley.

? welcome back to "market makers." i'm scarlet fu.

We continue our conversation with roger mcnamee.

We talked earlier about activist investors targeting silicon valley read -- valley.

Carl icahn pushing tim cook to return more cash to shareholders.

I went to read you something.

This idea of pushing app

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


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