Transcripts For BLOOMBERG In The Loop With Betty Liu 20140214

And after the comcast time warner deal yesterday another merger has just been announced. A purchase. Joseph a bank will buy the eddie bauer brand. The deal comes after joseph a bank flirted with a merger with mens wearhouse. Why are we so obsessed with using the word merger . I think joseph a banks i think i want to flirt with that. Cristina alesci is here now. You talk about mens wearhouse, joseph a bank. Forust to make clear viewers what i am talking about, because it is part of the bloomberg way, there is no such thing as a merger. It is one the company acquiring another. Was it a good purchase . No, investors are reacting pretty negatively. Shares in the premarket were dropping for joseph a bank. It looks a little bit confusing. Bankmonths ago joseph a made an aggressive quasioffer. Now they are going into a completely different business, the casual down market. I didnt know eddie bauer still existed. It was not a publicly traded company. They got the listed when it was taken private got delisted when it was taken private. A banks is leaving itself out. We can back away with this deal with eddie bauer if someone comes in and tries to bias for a price we would be willing to sell out. It is giving itself an out. Obviously this supports the toument that this is a play gain leverage against the mens wearhouse side of the equation. Also it is trying to message to investors it is not confused because it said on the lower end of the release they have been flirting with eddie bauer since 2002 2012, sorry. Investors dont believe them. I also want to point out that we often have fun at the expense of joseph a banks. Is wall street kids, newcomers stretch themselves. Im sure i had some. I wish i could get people aware of food. Thank you for giving us an update. Now it is time for a story that really resonates with my partner. The annual swimsuit edition of Sports Illustrated hit stands next week. To say it is hot is a gross understatement. They are featuring a familiar face, barbie. The mattel doll will get a five page spread. The caption, the doll that started it all. Them up it is not the cover of the new Sports Illustrated issue is its . Them on the cover will be featuring brazilian booty. Shibley show the jimmy kimmel reveal last night . Should we show the jimmy kimmel reveal last night . Bigger point here about the barbie story is that this is such a head scratcher. Why are you advertising a toy for little girls in a magazine . It is so much better than the barbie cover. Demo why are you advertising a toy for little girls in an advert that in a magazine for teenage boys . Magazine for teenage boys . With a set is barbie has been losing relevancy and she has to compete with ipad, with pop music. Girls idolize katy perry. That is what resonates. They think mattel has made a smart strategic decision to reposition barbie as a fashion icon and popculture brand. Lets see what sally had to say. Sallie krawcheck on barbies unapologetic campaign. Its awful, right . I dont even know what to say. I remember looking at my barbie and looking at my mother and looking back at my barbie and saying, whats wrong with her . I was five or six. It is a terrible message. I can remember as i put corvette thinking my mom cannot fit in this. This draws the line in the are in the sand. If you are a bad parent you by your children a barbie. Work ed to barbie is already turning mothers off so the mothers are not going to buy it. That is why you have unapologetic. Madonna has a whole song, im not sorry. Whips and chains. What is she talking about . This was a deliberate strategy. Attel had a meeting the number of times unapologetic has mentioned has surged. If the goal was to get people talking it sells. I think they are in for a world of trouble. Rich handler is one of the founders of barbie. And saidut a tweet barbie has always represented that a woman has choices. Ages dontughout the exactly match up with the barbie we now see. A lot of brand executives think relatively the new barbie is quite taste full because she is not in a string this string bikini. If creator of barbie you have a daughter which are now not by your daughter is barbie . , this would not turn me off of buying barbie in any way. Im not saying my daughter wants it. By your daughter a barbie and her her oath sort give both Sports Illustrated covers. Im going to say it is hot. Not six. M those are three gorgeous women. Good for them. Them up that is true. Thank you for joining us. It is valentines day. Happy valentines day. Let me move on to the bitcoin story. Road, 2. 0. The online black market which was shut down several months ago by the fed, this is the reincarnation of that. It is not the same site and there have been a number of different sites where you can buy coke or get hookers. Apparently the website has been hacked. Saysis what the founders in let me explain to you how this works. Road 2. 0unning silk and you want to buy an illegal has won tostephanie sell, you give me a bitcoin, stephanie you give her the barbie and when you verify that your barbie is totally illegal i passed the bitcoin onto you. I am holding the escrow. , he isis guy has said holding a 2. 7 million in escrow. He said peace, im out of here. He said he has been hacked. I am not walking away with the money myself, someone stole it. My take away is someone probably split the money like the last guys who ran the website. Some bad eggs. There are is some drug dealers after this dude. We are going to be back with more. We have a lot to cover. We are going inside the mine death inside the mind inside the mind of howard marks. Youre watching in the loop live on Bloomberg Television. Every possible device. Is howard marks, chairman of Oaktree Capital management. Lets take a look at how his work has become a crucial tool for achieving success. Nearly half a century howard marks has been one of the true scholars of finance. He began his professional career at citigroup, assuming vice chiefent before becoming branching officer. He found Oaktree Capital management, a firm focused on alternative investing, contrarian bets, and highyield credits. Oaktree raised 11 billion to buy distressed assets, which were ripe for the picking. Oaktree rise to 30 since two and 12. Oaktree memos have become required reading all over wall street with Warren Buffett describing it as a rarity. Howard marks is in the loop. What a treat for us. In your latest letter to investors, you say in short it make sense to and make sense most games arent as easy as they used to be. What does that mean . My lucky day came in 1978. I started that banks yield fund. There was a rule against highyield bonds. Are0 of the people prevented from buying something, it may be cheap. Do not understand highyield bonds or think they were respectable. Name, junk. , the point is nowadays anybody understands everything. You take out your browser and google it. Everybody will still do everything. Nobody ever says we can make some money at it but it is not respectable. About andknows understands everything. It is just harder to find the free lunch. It brings up an interesting point that you showed us the oped for the new york times. I thought that was stephanie who locked that in. The point is there is no such thing as an unacceptable investment. There are 8000 hedge funds, most of them pride themselves on their flexibility. Should they do anything . Should hedge funds and investors stick to their knitting . , every investor makes their own choice. You can know everything about a few things or a little bit about a lot of things. I think the former is better. You say there are two big risks that you could face be at everybody faces two big risks. The first one is the risk of losing money. The second is the risk of missing opportunity. To aen i dont want to go park and miss it, suddenly it was great. It is terribly corrosive for somebody to have to sit there and watch other people make money. Eventually most people quit. They say they are going to do it. You have to balance these things. Dont want to miss out so i am going to do it modestly. That makes a lot of sense. It is not which managers to met managers to invest with. It is about being aggressive in this point in time. If you get that right the other stuff will work out. Oaktree was up 65 so i think youre getting the aggressive the aggressiveness of it. The problem isnt that they have it is that they have just plain fear. Our approach to investing is it inherently emphasizes risk control. People say risk control is great because it keeps you from losing money when the market goes down. Risk control is great for another reason, it permits you to be fully invested. It will fare pretty well if things go badly. You can be fully invested and not miss out. 2012, the market surprised people by doing as well as it did. We were fully invested in our portfolios in risk control securities, which allowed us to participate. You, in looking around the world, when i think of a distressed investor i think of elliott. Of are not that kind distressed investor. Virtually all of what we do is corporate debt or assets. Our reason is there are lots of ways to make money. There are ways to make money i dont believe in. There are also people who do a great job at it. Corporate debte investing. You can do it reliably. You can analyze a company and figure out whether it can pay its debts. There is no recourse if you dont . , that is right. You do invest internationally. You are a globetrotter. Very much so. My partner has been running our distress phones for over for over 25 years. We know how it is going to go. He is a great strategic chess player. And figure outad what a piece of that is going to be worth. You cant tell that in a political setting. Charter is one of your top 10 holdings. Charter and time warner, that does not seem to be the case. Would you say john malone is the loser here . He didnt win Time Warner Cable. He didnt win yesterday. Everyone makes sports analogies. The differences with a football game, at 3 00 you know who one. With the investment business, you turn it on at noon and you know who won five years later or 10 years later. The person with the highest score one and a football game. Just because comcast won the deal doesnt mean this was a great investment. There is a right price and a wrong price. You can overpay. One of the things that drives me crazy is in the industry, it drags on our business. Buying is not success. Buying and making money is success. We are going to cover more. Welcome black welcome back to Bloomberg Television. I am Stephanie Ruhle joined by matt miller. 26 minutes after the hour, that means we are on the market. We will take a quick look at futures here. Very little change in the futures market. The s p is a tiny little green arrow there. Nasdaq futures up 1 10 of one percent. It was such a horrible start to 2014. We have had the best fourday rally in over a year. Look at individual movers here, twitter, we are keeping our eyes on shares of the microblogging site as insiders get their first chance to sell the stocks. They will increase the number of shares eligible for trading by about 12 . It will also increase the number of robberies in california. Is taking a hit in the premarket after joseph a it will buyced eddie bauer. Investors immediately take mens wearhouse as the loser and joseph a bank as the winner because joseph a bank made the acquisition. Howard marks is a style star. I wont let you connect him to joseph a bank. Olympics,e you to the disappointing results from the american speed skating team. They were designed specifically for the olympic games. Lockheed was involved in the design. Critics say there could be a andgn flaw creating drag holding racers back. Under armour is not buying the excuse. They say it is the most scientifically advanced and Gregory Baxley and rigorously tested suit and a multitude of factors determine success. This is a big setback not just for the olympians but for kevin. This was going to be a great opportunity to make a big footprint. Thehe end of all this, suits were delivered in the beginning of january. They tested them in salt lake, in italy. I spoke to kevin a few weeks ago. More than half our revenues will come from outside the country. We have a tremendous amount of running room. I think we are going to tell a great story to the world. One of the issues could be altered to. You are performing and playing at a completely different to suit that different altitude. A lot of speedskating events are held at high altitudes. Do they have a special polymer that makes you faster . Why not just wear a speedo . Maybe as a gift for viewers. You are pretty aerodynamic. I dont want to watch that race. It is going to take more than to get you out of the doghouse if your spouse catches you. His motto is life is short. Welcome back. Day, in valentines case you werent paying attention. We are going to be speaking with top players in the industry of love. What we are talking about isnt so conventional. Tomorrow if valentines day doesnt going to plan, hundreds of thousands will turn to our next guest. Im almost afraid to movie on the same set with you. To be on the same set as you. Site with aating huge caveat. It is for people who are already in relationships but looking to pursue something on the side. It is for cheaters. Are married but your enthusiastic about having affairs . I am an entrepreneur. When i saw a huge percentage of people werent truly single on dating sites and there was an alternative path, i thought to build something. Which you invest . At a price. A market for everything or was there him when i saw that data it was really compelling. We all know affairs happen. By how manyown away people will come to a service like ours. That is what it has become. I just learned this this morning, the day after valentines day for a Cheating Website is like black friday. , itf you have expectations is not the first time it has felt hollow. This is the second time it has felt hollow. You can do a lot of things that people may say is healthier. You may also find a lover. What is healthier than sex . There is romance in a. How you cash in on the fact that tomorrow everybody is logging in . All of our revenues are 100 subscriptionbased read it is not that you actually give as a Monthly Subscription and get as as manyes and messages as you want. You pay per message. Women want to be an object of desire it again. For that day we have more women than men. Are you surprised by this . I am from a different era than the three of you. I didnt get the memo. As a guy who uses technology to do a number of things, you worried about the paper trail. Do have to use a fake email address . In his digital lipstick. Is there a way to do it anonymously . Is there a bitcoin version . Is meetingect affair someone and not being discovered. Everything is about the discretionary part of it. When he finished on a traditional dating site, youre taking your profile to circulation. We will recall every message you ever sent. Thinking it through. Do you have meet and greets . , we do not. Platform. Ntroductory have you been subpoenaed in any divorces . , thankfully we have woken up to the reality that people can divorce for a host of reasons. Infidelity is a symptom, it is not the cause. More. Y get divorced before we read these facts we know this to be true. We need to ask howard what he thinks. What neighborhood has the most infidelity . Staten island. Demott that is a great answer and probably true. The kind of infidelity that uses the internet to make it happen, you know that is happening in tribeca. Affluentvery well with communities. We did incredibly well in tough economic times. When people need their mom need their partner the most i cant believe Brooklyn Heights is on there. Just because someone has an affair doesnt mean they arent good people. I dont care if it is president s, famous entertainers, it just means they are struggling with monogamy. You are saying monogamy is a choice. It doesnt mean you are a bad person. It is a manmade construct. It is not in our dna. Im going to publicly disagree with you. On yourre cheating wife, you are a bad person. The reason it is this successful is because women have radically changed in the back in the past decade. Do you think it is now socially acceptable if you are a cheater . Honey, if you are watching, i am not involved. There is no price anymore. I think we are all complex. Lots of people who are good people in many ways and do bad things. There are people who are bad in other ways. Maybe it doesnt make you a bad person but it is definitely the wrong thing to do if you are having an affair with someone else. We are not behind closed doors. Isl we hear all the time members want to cherish their economic situation. Their children, their family. They dont want to leave all that. There are four of us, you are the only unmarried one. The reason is because i take marriage very seriously. What is your Growth Strategy . You are making it happen, there is a market for it. It is hard to build a universal product. Your parents have to be involved in economics and so. Infidelity is pretty global. Even in a culture where it is prohibited by law people do it. Really is no marketplace we cant see ourselves expanding into. Matus gave me a clean note. Someone just message me and said if you are cheating on your wife you cant be trusted. I will disagree with that. I think that is a historically bad notion. Do you know who people like . Bill clinton. He is the ceo of ashley madison. Com. We have a lot more with howard marks. We want to know what he is thinking about. Stay with us. Welcome back to in the loop. Our guest host for the hour, howard marks. We have five burning questions. I dont know if we can beat what we just did. You in youray movie . I think robin williams. I have been told i look like michael douglas. When i had a beard and robin had appeared, i think we were dead ringers. I was going to go george clooney. What is your favorite place to be . I like to relax in a place called mallorca. A lot of germans there. When was the last time you have been . June. We urge we are free june this year. What about regrets . Your biggest investment mistake . Not being john paulson. John paulson had the biggest trade in history. Got famous making a billion off the weakness. Funds existed 10 years before that trade. You have been chugging along since 1995. Do you want to have just one extraordinary hits . Who is your favorite . My favorite howard is howard marks. Youll get your europes biggest drug smuggler. He is my age within a few months. The main difference is he is welsh. He is better education better educated. He did seven years inside hard time. You look him up and invited him over . Mine hefriend of put us together. Nice guy . Nice guy. Did you get a picture together . No. He wrote a book and autograph it for me. Last question, what is your vice . Moving from one house to another and decorating and furnishing them. I love living in a beautiful environment. That is my creative outlet. You do the design yourself . , i work with a fellow named michael smith. He is the white house decorator at the moment. Friend and we have worked together for over 20 years. If he were to say to you, howard, would you come to the white house . What would you say to obama . I would say what everyone said in the first campaign, he is a great communicator. I think we can communicate better. His casehink he makes strongly enough. Hes not doing it well anymore. I think since he took office i wouldve liked to see him saying, here is what is going on in the country with the financial crisis. Here is why the banks are important. I would like to be on tv saying when congress refuses to raise the debt ceiling it is not about paying money, its about spending bills. I would like him out there on that. The latter may have said the former doesnt win votes. The question is whether you hear something about other than just votes. We will be back with final thoughts. Stay with us. I am Stephanie Ruhle here with matt miller. It is great to have you here, howard. Bob benmosche is going to join betty in the loop in the next hour. Listen to what he has to say about her char hathaway. About berkshire hathaway. Last time i looked geico was an insurance company. If you look at ge capital. Is important though . , look at the amount of reassurance that is written. If the Reinsurance Companies are not able to live up to their contracts and guarantees, there is some exposure he has taken on. The point is if in fact they can live up to their ability to provide the reinsurance that are contracted for, that could infect a fact Warren Buffett is a big fan of yours. There are two places to be in investing, either on the offense or defense of. On the offense of or defense of. Or defensive. Central banks have reduced rates so low that it is hard to make money in the future. In order to do so, many people have moved up the risk curve to try to take on riskier investments than they historically have to get the returns they need. Get a fixo be able to from a treasury. I think when people move out the risk curve, they leave their caution behind. The markets have done well, the memory of the crisis has faded. People are willing to do riskier things than they were in recent past. That means we have to be more cautious. My favorite quote is from mort from Warren Buffett. That means when i look around at the opportunities and risks things are not so good. Prices are not so low that it is time to be aggressive. Not so bad,is prices are not so high that it is time to be totally defensive. In 2019 people will look back. Will they say i wish i was more cautious in 2013 or more aggressive . That is the choice we have to make. Think most people will say i wish i had been more cautious. I will air on the side of cautious. Happy valentines day. It has been great, a fantastic week. Betty is up next on in the loop. Tune in for todays morning lunch brief. Sponsored by columbia management. Business, it may seem onedimensional. At Bentley University we see business as it really is, a universal language. When it is guided by ethics the opening bell, this is in the loop with betty lou. The countdown begins right now. Welcome back. We are 30 minutes away from the opening bell. Equity futures are still heading for a second weekly gain. A worse week for the airlines since hurricane sandy. More than 14,000 flights were grounded. Boston could get more snow by tomorrow. Boost iners get a big the increase in the dividend and a 1 million buyback. Moments Bob Benmosche i will explain. We are in the thick of the winter season. Decision to force republicans into a tough vote over the debt ceiling is causing political pain for some of them back home. Peter cook has more. There has been some fallout. All that was needed is a simple up or down vote. Republicans could have been spared a tough vote a tough vote politically. At least five republicans need to join democrats. The debt ceiling increase is going to avoid the senate and a potential crisis. Many of them knew it was the only real option to avoid a crisis. To the tense situation on the floor where Mitch Mcconnell try to convince a handful of moderate republicans to vote yes. In the end they were forced to vote yes and all 12 did. They got other members to join them, giving them a little bit of political cover but the damage is still done. Those running for reelection feel the heat back home. Corker is not happy crews forced him into that vote. Is mcconnell the one feeling the most pain . , he is feeling the most pain. He is an arguably the toughest reelection fight. Hes facing a team Party Republican who just immediately hammered him after that vote was cast. Map of and is the republican challenger. A blank check to president obama. Effectively saying it was mcconnells fault that the republicans caved. Super pack is taking a Mitch Mcconnell as well. They already released a web ad challenging over the debt ceiling votes. Mcconnell is likely to win the republican primary in kentucky. All of this could could could cause damage to his challenges. This whole situation may soften him up. What about senator cruz . As he expressed any regrets . , none so far. He issued a statement saying he did the right thing. There are too many members of congress who think they can fool people and will forget about next week. Remember. The people ted cruz not making a whole lot of friends. Thank you so much. Is a quick look at the top company news. Fightingbank has been a merger with mens wearhouse and announced it is buying eddie bauer. Joseph a bank will pay 825 million in cash. Deals s the another miss for john malone after being supported from buying Time Warner Cable. Sales advanced 71 a year ago. Liberty has spent almost 50 billion to consolidate europes cable. Watchers, those shares shed 20 after hours last night. 2014 earnings well below wall street estimates. Weight watchers is facing increased competition. It announced plans to resize its business. We are a little bit of set that up it upsets. Starbucks tom cinnabon, copy sellers are struggling to control their costs while keeping customers happy with the latest spiced latte. We talked about how she manages those costs. Setting up it supply chain infrastructure is key. We opened almost 100 cinnabon locations in almost three years in russia. Gained two pounds looking at those. Coffee prices have soared 30 this year. Alix steel joins us now. I know you love food but what about coffee . Thatwant to get a go since go get a cinnabon right now. I want to go get a cinnabon right now. Onlynies likes starbucks by the fancy beans. Starbucks arctic haze a price of two dollars per pound. It wants to supply for this year. For Companies Like dunkin donuts. When does margins become a problem . It is about next year. Now is when they are going to think about when they want to buy. Companies may have wanted to more quarters of that protection before taking those prices up. Yourices continue to climb will see a spike in the last six weeks. Copies may have to Start Talking about raising prices. They are very competitive. It could be an orderly industry increase. 16 ee prices are about below the fiveyear average. What about price hikes . This throughook at the coffee industry and set for a . 10 increase in green coffee bean prices per pound is about a two cent increase all across the board in manufacture and Retail Prices in the current quarter. The problem is one that crop in brazil really hurts the fruits. That could mean in other that crop last year rather crop next year. Bad crop next year. We have seen Companies Like starbucks invest in resource. The company spent about 600 tos 600 to experiment with coffeeht ease copy varieties. Thank you so much. Alix steel. Moving and shaking this hour, the ladies of the 2014 Sports Illustrated swimsuit issue are whose backsides graces the cover of the magazines 50th anniversary edition. They appear last met at Jimmy Kimmel Live for the host officially unveiled the cover. It was a particularly special occasion for lily aldridge, who her first time the cover, her first time being featured in the magazine. Out. Enmosche speaks and Tim Armstrong came under attack last week when he announced plans to scale back the companys 401 k program. It is not the only company trying to change up retirement plans. Stay in the loop. Them a a profit of almost 2 billion. The insurance giant also announced a three percent cut in their global workforce. Ceo Bob Benmosche what was behind all of that. We havething more than to continually manage the efficiency and productivity of our government. We spent a lot of time working to move people to lowercost locations. We have a wonderful relationship with kansas. We are moving people out of some higher cost cities and some offshore as well. When you do that you bring the first wave of people to those locations, keeping the older people in their jobs until we are ready to make a smooth transition. Part of this is nothing more than dealing with the jobs that have been going on in parallel. To be able to empower our people more. Some of it is just to make sure our employees are empowered and dont have many places to go to get a decision. That is what our clients want. They want an entrepreneurial and powered culture. We need to restore that make sure people are comfortable they can get a decision from the person they first come in contact with. In which unit do you see the see delayiering . We are looking across the company and asking people to give some thought to its ifing for example is you see more than five people it is too much. When you have people who are financial functional people, it is getting too much. Pointt to get to the where we have a lot of authority at the local level. It is just the thought of how we improve the decisionmaking. You increase the dividend and you have this share i that program. Is that because there is nothing out there for you to really put your cash to work . Demo right now there is nothing there this week. It also says we have stress test the company to the best of our ability. Are looking at can we handle a significant downturn in the economy . When we look at all that we have had not only a good quarter but a good year. Were looking at the amount of cash we have for contingency. For now we are comfortable. We want to provide more dividend and buyback for the large shareholders. Youre saying there are no acquisitions you foresee bringing into the fold . Demo we are constantly looking at acquisitions. We dont see anything in terms of stress testing or anything on the horizon that says we need to be concerned about it at this point in time. Defined it handbills it hampers to return being labeled a systemically Financial Institution the echo, it will have an effect over time depending on what the regulations are. We are looking at running our business is the right way. Come out weulations will take a look at what is required and we may have a new normal. We dont know that yet. I dont know if i can say we will or wont. What is important is we run this company prudently now. Aig ceo. A very unsettling alarm about cyber attacks. We will tell you about that and a moment. Tim armstrong ignited a controversy when he proposed changes to the companys 401 k program. He eventually backed down from all of this. Plenty of his peers have pressed on. Plane talking about this where companies are contributing basically one time per year. You dont get the interest you could have accrued throughout the year. Companies are cutting back. I want to take you through some of them. Armstrong really got hammered for this. Jpmorgan chase is one of them. It started delaying matches back in 2009. These are some of the changes that include sort of deferral type changes. Then a lot of these changes were made during the financial crisis or just afterwards. Hp lowered its match during the crisis from six percent to four percent. Caesars reinstated in 2012 but only with a max contribution of 450. That is how much the company would match. We have seen some of the contributions get squeezed. Match 15 ofnly the first 1000. We look at health care, we look at options. Them at that was a presentation issue. On the flipside, this could actually benefit employees. The market could go down. Nonetheless, if you look at the numbers right now, this the longerterm shift from 401 k s to pensions, which had to contribute to. People are only going to end up with 4800 per year with 401 k balances. We will be back with the opening bell. The top traits you dont want to miss. Welcome back, youre in the loop. It is 26 minutes past the hour which means Bloomberg Television is on the markets. As you can see futures are barely budging. We have new numbers on u. S. Industrial production. About 3 10 ofl one percent in january. The number was still well within the range of forecasts. We are waiting for some data on consumer confidence. It has been a rocky year. For ourow on track second week of weekly gains in the equity market. The markets have rebounded and we are down one percent. Thank you so much and we are on the markets again in 30 minutes. Se are the only trains only trades you need to learn about today. Makerrlds largest soup is heating up after reporting a jump in quarterly prop it quarterly profit. At number nine it is truly a it is trulia. Spend approximately 45 million on a new campaign that will target Company Target Customers Using mobile devices. Petroleum will separate into a specific company. It will be the biggest acreage holder in the state. Aig, thirdquarter profit the estimates and raised its dividend by 25 and issued a 1 billion Share Buyback program. It will also eliminate three percent of its workforce, 1500 jobs. Efforts to of their become more efficient and reduce management layers. Number six is Natural Resources surging after the Company Posted fourthquarter earnings that beat analyst estimates. It also expects accelerated Economic Growth in the u. S. And continued expansion in china. Healthholdings supplements, reporting fourthquarter results that missed analysts. Gmc also issuing disappointing guidance for the year. Number four it is comcast, the cable giant still being bugged after its 45 billion agreement to buy Time Warner Cable. Comcast faces a review by the Justice Department and by the fcc to determine whether the deal is in the public interest. Fourthquarter profit rose 10 from last year but the resorts the result still fell short of analyst estimates. The direct to consumer channel. Weight watchers international, the diet Company Closing a 40 drop in fourthquarter earnings. Membership sales continued to decline. Weight watchers also issuing a dismal profit for the year. Joseph a bank, the mens retailer says it will buy the for 825er rant million. The coalition will create substantial opportunity for growth and synergy. Back to the comcast news , all last year Time Warner Cable was in a tugofwar. The company had two small and audience only to be brought back last month. We are joined now with more perspective on this acquisition. Also with us is bloomberg contributing editor and all things media and tech, thompson. I was reading through some of your reactions to this deal. You have heard some rumblings yesterday from programmers. When you have tom when you have comcast and time warner get tableer you have a bigger operator, this is going to be bad for the programmers. You dont agree . What i think this deal does is it bounces the imbalance of power in the industry. We were a Company Without any leverage and a market where the only thing that matters is your leverage. We were still able to be successful and that is something the independents that works face. They were all kicked off of Time Warner Cable. We were and we got back on. Been many other independent networks that have been able to find a way since a way to succeed in the current market. What is really driving this deal is you have a regulatory structure which is now old enough to legally buy alcohol and even marijuana in certain states. What happened is the balance of power shifted weight away from the Cable Operators to the programmers. That has driven a significant rise in prices and particularly in the cost of programming. It was one of the main reasons Time Warner Cable went into plain text into play and comcast is now buying it. I am not sure going from the number one distributor the comcast is today to the number one largest distributor at 30 million homes, other than certainly lowing the prices certainly lowering the prices the time warner is paying, it is not clear how much they will be able to lower the growth of programming costs thereafter. Would you agree with this . On the programming side, programming makes it more likely does it make it more likely channels will be shut down . Does it me does it make it will last . This maybe a little bit more. Companies give us broadband and cable tv. This is where there is a total and complete an absolute disaster. Realcountry has a broadband problem. We are way behind the rest of the world. We innovate slowly and we do it badly because he got all the laws wrong. We have basically duopolys, the. Onopolies you take a Cable Company and combine it with two of the largest and you end up with an even more giant company that has less incentive to innovate. You have some giant companies called at t, verizon, sprint, tmobile. Project n on the on the broadband game. The current broadband providers, they have innovated tremendously. Agree iscompletely that the regulatory structure has not been adequate in the past. If you want to place the blame , late at the fcc and congress. The opportunity here is for the Obama Administration to do by negotiation what them and congress has been able to do by regulation and law, which is to protect consumers by getting who is getting an exemplary Corporate Citizen over the years, they have been in a power position as the largest distributor for content for 12 years. What i am hearing is that maybe this is not as bad as not that bad for consumers. To chat point, the price the Time Warner Cable customers might pay would be less. There might be a little bit of a decrease in a decrease in the amount these companies charge will probably vote down and there will be some downward pressure on that side of the business. There will continue to be upward pressure on the broadband side of the business. There is some competition. Basically these guys have monopolies in most areas. That has only become more entrenched now. I completely agree, what needs to happen is the fcc, the to figure outneed how to get more competition. How do we get that . The way that was tried initially, it is very hard for another company. How do you get more companies into that space . Will was tried 18 years ago was license have to yet the license your pipes. You could try Something Like that again. Otheruld try to boost types of broadband access. Thank you so much. Going to be talking about netflix. Coming up, capitol hill and many others. Return of that netflix hit house of cards. Gps as he is worried about a cyber attack and theres not nearly enough security in place to stop one. Were just a few minutes in the session. Frank underwood is back. Netflix released house of cards season two. Our White House Correspondent stayed up to watch with his dog. You are the only one doing this. Did you guys have nothing to do in the middle of the night . Prepared if ie come on in the loop and i had to make sure i got at least one episode in. With a couple of capitol hill staffers. Government was closed until 10 a. M. This morning. A couple of more hours to catch up on episodes. Lawmakers are very interested in this. We took a camera to capitol hill to ask them before they left for the weekend. The only unrealistic thing about this show is a democrat could represent south carolina. It is great acting. I think kevin spacey makes it look a lot more exciting than it actually is. It will be interesting to see what they do with it. None of us are quite that interesting. I am one of the few living americans who hasnt watched it. Lawmakers, staff, reporters, everyone lending to binge watch to get through the 12 or 13 episodes. That is what netflix wants you to do. Does the president think about the series . He has been very clear, he is a fan. He actually wished he could be as effective as Frank Underwood in some of his policies. He and his official twitter please noeeted out, spoilers. He has a trip to california this weekend where he has a meeting with the king of jordan. He has a couple of days with nothing spaghetti. Nothing scheduled. I wouldnt be surprised if he is caught up by the time he gets back to washington. The lawmakersing how realistic it is. How realistic is the show . I wouldnt say it is that realistic. There are elements that are fairly accurate. And a lot of the main characters did a lot of work with lawmakers in d. C. Whipurrent House Majority Kevin Mccarthy became good friends with kevin spacey. They try to bring them some realism. Keep in mind it is all fictional. Quick spoiler cuppa spoiler, keep an ear out towards the end of the season. Julianna goldman has a role in it. Eye on,g to keep an some bloomberg cameos later on in the season. I want to wait for yours for your cameo. Im not that big time yet. Nick has been listening. Are you a fan . I kind of like house of cards. I just which just wish representatives would get together and pass bills as opposed to kill each other. You can always have wishes. Side, this is a really big deal for netflix. It has been transformative in several ways. It totally turned the story about netflix. Six months after netflix has their quick stir disaster. It has created a new way for netflix to make money. That is very important as we think about the world that is fewer and fewer providing broadband access. They dont make as much money on this at the cbs does. Not even close. Comcast charges you on remote per month. Cardscast made house of they would charge you 700 per month. You never know. Ray to see you. Have a great weekend. Gps has become a staple in our lives. The Navigation System could be more vulnerable to sabotage than ever before. Politicians arent knowing that risk. Stay with us. Global positioning systems are in everything from car navigation to bank control. It is terrifying when the inventor of the Technology Says hes concerned about a hacking attack and if it happens we are utterly unprepared. Joining us is former White House Security advisor richard falkenrath. Gps has been around a long time. Why this morning now . Our alliance has increased a medically. It goes back to the 70s. It was originally a military technology. The Clinton Administration made it available for civilian access. Part of this point is this old architecture from the 1970s is so manyical to different systems that they have become an independent system of systems. Tell me how a scenario would play out. He calls a catastrophic. There are a number of ways they could go wrong. The most catastrophic is a cyber attack in the Ground Control stations. They send a signal every day all day that we used to position everything. The control stations, about one we lose the functionality of the entire system. The big risk is the catastrophic what can we do to prepare . Theyre trying to modernize the system. There is a Program Underway and the department of defense. There are two other Global Positioning systems. The russians have one, the European Union has one. We can correlate groundbased transitions for a higher level of redundancy for critical applications and set of just relying on this one. Right now if you rely on just gps you are done. Most cell phones have a gps receiver. In the case of the iphone to use wifi signals to find out where you are and get a more precise picture. If gps were to go down they could still get a sense of where you are. Are we talking about our own gps systems in our cars . Could that become a gateway . Not really. Signals satellites send and four of them have to hit receivers. The thing you have to worry about is gone control stations. There are four radars and islands all around the oceans and equator basically. If any of those were the go down for an extended. Of time and the attack were to propagate throughout the system, that is where you have a real problem. A huge warning. Thank you so much for joining us. Lets end on a lighter note, valentines day can conjure up some mixed emotions. Can agreemany of us on is it is the time to buy candy. It is going to be a sweet valentines day for candy makers. Candy sales will rise to over 1 billion. The National Confectioners Association Says chocolate makes up about 75 of the total. Weekendbe back next with leo hindery to see what he thinks about consolidation, the purchase between comcast and Time Warner Cable. Stephen joyce is joining us as well. Have a great valentines and we will see you on tuesday. Which means Bloomberg Television is on the markets. What did you call the markets. Lets get you caught up on the markets. The index coming in at 81. 2, that is slightly what is slightly better than expected. The fed said industrial productions fell by about 3 10 of one percent in january. It was well within the range. We did get a disappointing number on manufacturing, showing that manufacturing production dropped by about 8 10 of one percent. That is the biggest drop since may 2009. Is down by about a quarter to 3 10 of one percent. Onto commodities, gold is trading above 1300 per ounce. Flocking to the safe haven investment following disappointing retail sales. Gold is on where heading, i want to bring in larry levin, the president of trading advantage. Larry, it looks like gold is finally reaching its 200 day moving average. We have been sitting above the hundred day moving average. This is the best week we have had since august. Certainly getting peoples attention. An awful lot of people are getting stuck in short positions as we have been down. Last year was a terrible year for gold, down about 20 . Why do you think the sentiment has shifted so much . I think it has a lot to do with the stock Market Sentiment shifting. We have so much stimulus there. They are finally starting to take that away. It is really a yang yang opposite of what you will get with the stock market. It has fallen about 56 . Can see the gold rallying at almost the same ratio. What really is driving the gold trade right now . Am i think it is the central banks. The news traded in. Key lly did the finally get the tapering. I think thats what it stems from. We havent gotten the real higher interest rates. Certainly it is what was expected. It has a lot to do with white gold rallied at 1320 today. About physical demands . Customers were taking advantage. How much does physical demands drive up the prices . I think that is a big part of it. Everyone wants to buy gold today. In theputting them retirement accounts, there is an awful lot of people taking the money they have whether from a past job or Something Like that. Maybe not necessarily taking delivery but certainly having that gold. There is some risk when people do that. Thank you smudge for joining us. Happy valentines day to you. We would back on the markets in 30 minutes. Market makers is up next. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and Stephanie Ruhle. From the office to the great outdoors, joseph a bank says its buying eddie bauer. Defending the big deal, comcast takes heat from the consumer groups after agreeing to buy time or cable. Of cards. Al house netflix launches season two of its clinical thriller. We will see what lawmakers in washington say