Transcripts For BLOOMBERG In The Loop With Betty Liu 20140612

Will be out in a half hour, a much has been made about the dependence on ecommerce. They still have a lot to do on improving the experience. Julie hyman has more on this. Part of the problem is a lot like what we do in the stores we are browsing online. Except we do it at a higher rate. Forrester research put out a report looking he looking at the name reason why people abandon their ecart. They say shipping and handling is too high. Theyre just not ready to purchase for whatever reason. I spoke to a Retail Consulting group yesterday, and there are a lot of reasons your online, cries,ne rings, the baby whatever it may be, and you do not get back to it. Also, 22 wanted to compare prices. Saysee something, and you maybe i can get it cheaper somewhere else. Piecee of that shipping we have seen an increase in the number of transactions that offer free shipping. Amazon has been aggressive on that front and set the standard. Other ecommerce sites have followed suit. In terms of why people are shopping online, part of it is fast shipping, getting it quickly. A lot of them are picking it up in the store, even if they are buying online. Theyre also looking for deals they cannot get in the stores. It is also difficult to distinguish between online and offline. It is, and that is something that is positive from the retailers point of view, this channelhannel omni retail. We are seeing Research Done on mobile phones or other devices, and then not purchases made no matter where, either in the store or again online. It is this integrated experience. The folks i talked to say it needs to be more integrated, specifically when it comes to selection. What you get online has to be the same thing you get in the store. There has the more uniformity when it has to do with collections. Thanks sent. That makes sense. For retail sales, what are we looking at . We are looking at an increase. 10 after only a increase, which was a disappointing number following march. Entum in it did not materialize in april and there was a lot of head scratching over that. There are some hopes that it will come back. One thing that might be positive, we got revolving credit numbers. They are more dated. This is essentially credit card spending. We saw a big rebound in that number in the month of april and economists are saying is that a oneoff, or will we see a continuation of that trend . We will continue to watch what these things indicate for each other in terms of credit card spending and retail sales. Thank you, julie hyman. Washington, the aftershocks from eric cantors stunning primary defeat are being felt. House republicans will pick his replacement as majority leader and the campaigning is underway. Peter cook, who is in the running, who has the edge . The politicking has begun in always, closeddoor meetings. The three names getting the most attention House Majority leader Kevin Mccarthy, his close ally who is number three in the republican leadership. He is the House Majority with. You also have jeb hensarling, a fiscal conservative who chairs the House Financial Services committee. He is not always seen eye to eye with wall street in the position. The other option is pete sessions, chair of the rules committee, and he helped republicans in 2010 gain so many seats in the congressional election. Right now, the edge goes to Kevin Mccarthy, in part because eric cantor has given him his endorsement. I do not know who will actually be running. I can tell you my dear friend and colleague Kevin Mccarthy decides to run he would make he would make an outstanding leader and i would be back in with my full support. Willic cantors backing help, in part because it is just a weeklong race. Kevin mccarthy has more infrastructure, easier for him to mount a quicker campaign. It is not a sure thing. That er, it is just remember, it is just an appetizer. The real fight will happen after the election. Whereby john boehner and his job . Is it safe, peter what about john boehner and his job . Is it safe, peter . It is safe for now. After the election, boehner could face a challenge. One thing to watch his jeb hensarling. If he does not run against Kevin Mccarthy, keep an eye out if he mounts a campaign against john boehner. Eric cantor was known as being friendly to big business. What is the Business Impact so far . We have seen bowling bowing falling. You have other piece of which is some doubt in some doubt. There are also concerns about highway funding. Eric cantor had the idea of ending Postal Service on saturdays and using the money for a shortterm patch. The biggest one of all, Immigration Reform. Eric cantor was not a supporter of comprehensive reform but he was open to discussing aspects of Immigration Reform and that is effectively over. For foreigne visas workers. Peter cook, thank you. Join me for more is a real estate entrepreneur and political activist. Eebles is vice chairman of the board of Congressional Black Caucus and he was an active fundraiser for president barack and president bill clinton when he was governor of arkansas. Great to see you. Great to see you. Thank you for having a. How do you see the fallout . Offhe tea party is talking conservative republicans. They will pushing republicans to democratic party. Which republicans . The tea party is hijacking the Republican Party and he will be the beginning of their and in the majority of the house. It will take some time. Maybe another election cycle or two. The tea party is out of step with most of the country. They reflect a group of people that are afraid of where the country is going and they are trying to slow down progress. You see it in immigration, for example. Well, immigration would be the one issue. Democrat, but i cannot imagine you would be happy to see eric cantor go, someone who want a republican side was willing to work on immigration. I am not happy to see him go, per se, but ultimately, this will damage the Republican Party and help the Republican Party determine what kind of party they want to be in the future. They lost charlie kissed, who is now running as a democrat to unseat a republican in florida. There is a runoff. These are republicans fighting each other. The Republican Party we as democrats are sitting back and thinking this is a great opportunity for a clintontype of democrat. Clinton was a much more conservative democrat, especially on Fiscal Affairs. I was at a party recently with some folks who had donated a lot of money to the Obama Campaign and they said to me i believe in the president when he first ran, but im disappointed now with what he has not done in his term. He could have done immigration early on when he knew he had the votes and he did not do it. . Hat do you say to that actually, they are misinformed. The president , before he was sworn into office for his first term, the Republican Party decided their goal would be to instruct any kind of change that he would bring about and they would try to defeat him for a second term. So, he walked in the door with extreme gridlocked and a party whose sole mission was he got health care through. He got health care through with some significant compromise and there was a major issue for the country. The reality is governing today is far different than when bill clinton was president or Ronald Reagan was president , who i think was one of our most transformational president s. The company the country was different and there was much more of a spirit of bipartisanship. Back when clinton was president , early in his term, democrats lost the congress, and he was able to be very effective. That is what will came up to say, you know what, i need to step in the middle and negotiate. Yes, but he got elected by being a conservative democrat when it comes to Fiscal Affairs and progressive when it comes to social and domestic affairs, and frankly that is where the country is. It has to be the middle. With me. Es, stay well talk much more business and politics as well with don peebles. Moving and shaking this hour, new york rangers goalie henrik lundqvist. He made 40 saves last night to keep the rangers alive in the stanley cup finals. They now trail in the bestofseven series 31. Henrik lundqvist is considered one of the best goalies in hockey, the only goalie in nhl history to win at least 30 games in each of his first seven seasons. Now they will try to beat the odds and win three games in her road to take the stanley cup, and you will not only would it will be like in new york if that happens. Coming up up, the accidental marketing gimmick the european protests against uber might actually help the car sharing service. Play like a pro as the u. S. Open gets underway, we have tips from one of the greatest golfers ever. Stay in the loop. We are just Getting Started on this thursday. You are watching in the loop , live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. The worlds altra wealthy now holds more than 5 trillion in real estate and they are chasing luxury properties, spurring bidding wars and higher prices. We spoke to one such developer, don peebles of the peebles corp. Just signed another contract to develop land in d. C. , right . Tommy about that. We are right . Right. , you about that. Tell me about that. Hotel in building a the mount vernon area. A Boutique Hotel with Hotel Services for residents as well. This is how you have gotten an edge over other property developers. Peopleinto cities that are not focused in, and i do not want is a second tier because i come from philadelphia, but philadelphia or las vegas as opposed to new york or l. A. What we do differently as we have a heavy focus on private Public Partnerships and we do that nationally. We become local developers in these tertiary markets and primary markets. We focus our efforts, a big part of our product is obtained through Public Private partnership. We did on publicly owned land and we do that in washington, d. C. , philadelphia, new york city, and other parts of the country. Are you finding bidding wars here, not just for the land, but once you develop . Look, prices of land for luxury audits for highend condos, the rise for land has tripled in the last 2. 5 years or so. Tripled . Tripled. That means you could have bought the former drake hotel site at park avenue and 57th, you could have walked that property in 2008 for about 300 a square buildable area. Today on the market it would be 1500 to 2000 a foot of buildable area and you can see oft that does to the price the finished product as well. That is happening in manhattan. Does that price someone like you out because you say wait a minute, i will not make the returns that i could make in other cities . It does not price us out, but it is not what we do. We focus on getting in earlier. We have walked in manhattan already. We are feeling good about our property. We are converting the building on leonard street to luxury condos. We made our that. We bought that building a couple of years ago. And you can go elsewhere now. Exactly. And were are still looking for opportunities in new york city, but we are not competing for 1500 to 2000 a square foot. What do rich people want, what do they want to buy . Quality of life. We all want quality. We all do, those that have willing toeans are pay for it. They are defined in increments. There is someone that is a 5 million buyer and they want their home the way they want it, in the most desirable luxury lifestyle they can afford. Someone who will buy 10 million will want something different. And you get to 20 million 30 million, i would say milliong over 20 dollars in new york city would go quicker than something at 5 million. Are you seeing turnover are we talking just days . Absolutely. You see headline pricing at 10,000, 12 thousand dollars a square foot, and there is a migration. Many in the Upper East Side are upper west time side, moving downtown. Qualityoflife. Higher heard prices on the Upper East Side have gone down. They are stagnant. Premier buildings on park avenue, fifth avenue, they are still doing very well. It is the buildings on the Upper East Side, the runofthemill luxury apartment buildings, those units that are not having the same escalation in prices because there is not as much of a demand. The demand is downtown and the trophy locations overlooking the park. If you were competing with several other properties, lets say in miami, for instance, what would get them to go to a peebles corp. Property . We have a great building we are working on, a luxury building that has private pools, 12 to 25foot ceilings. The homes themselves are estate in the sky. They are all full floor or duplexes. And they all have pools. Pools, many have home theaters, stateoftheart electronics, unparalleled Services Including a garage within a garage, fourcar parking. If i lived there, i may never leave. [laughter] don peebles, stay with us. We will be asking him about the sale of the l. A. Clippers. He looked into buying the team. Plus, inside the secret world of the Koch Brothers. We talked to the author of a revealing new book. Stay in the loop. First. Bloomberg. ,ou are watching in the loop live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. Good morning. I am betty liu. It is 26 minutes past the hour. Bloomberg tv is on the markets. About five minutes we will get some economic numbers. Everys claims are out thursday, and also retail Sales Numbers for the month of may expected to rebound to a gain of. 6 . Watch the retail Sales Numbers. Very important for investors and where the economy is going. Futures right now are mixed. We are on the markets again in 30 minutes. We are back with Real Estate Investor don peebles, chairman and ceo of peebles corp. , the company he founded. There is another area where you are also well known, sports. Eldiness and sports m together so well. You considered buying the l. A. Clippers at one point . I did, but as a business investment, expecting to make money while i owned it, and the price being paid now, it is more like buying a great masterpiece, a rembrandt, a picasso, except you get to interact with it and enjoy it, but you will make money one day when you sell it. Look at the return on investment that Donald Sterling is going to make for horrible behavior. He bought the team for 12 million. He is selling it for 2 billion and he is kicking and screaming along the way. He is still going to sue. Instead of saying thank you very much, take the 2 billion and call it a day. What a great return on your money. Is Steve Ballmer going to get a good return . It is a qualityoflife purchase. Many times sports teams or nba franchises are quietly qualityoflife purchases. It gives him away to channel his sense of competitiveness. Obviously he is an extremely competitive person. He ran microsoft and made it one of the greatest companies in the world than you do not do that without being competitive. He loves basketball and he is now retired from microsoft. Why not . Why not . He can afford it, and it is more fun than owning a picasso. When he was at microsoft people said microsoft was not cool, Steve Ballmer is not cool, but now with the clippers he is cool . Absolutely, he is cool. The average person does not know who the ceo of microsoft was. I know bill gates, but they do not know the coo of the company. This will give him an opportunity to be much more of a global, worn american comingout party. How much were you willing to pay for it . Under 1 billion. Ok. We thought there was no way that team could make economic sense and anything north of 1 billion in without the right price was 700 million to 900 million, and when the numbers got to 1. 5 billion, it did not make sense. There were other bidders that said lets combine forces, but nobody could get to that number because it is a lifestyle purchase, and maybe one day when i finish doing all the stuff that im doing, my son is running this company, i can go have some fun, either a sports team or alex. You almost ran for d. C. Mayor. I did. I have to get to Donald Sterling. He is about to sue the nba. Is he a racist . Do not no caps on his comments were horrible and when i heard the recordings, also, it sounded to me that he frankly is not well. His behavior and speech was not animated. He did not think anyone was listening. There was no reason for him to be tentative. Did you know him, by the way . Looks no. No. The clippers have always in the basement. They made better draft decisions and they got chris paul, who should have been a los angeles laker, and the mba canceled that trade. I think he is not well. Certainly, that kind of speaking is detrimental and it gives you insight into how he thinks. Also, it highlights a bigger issue for the mba. The nba. At 90 off you look the players, they are africanamerican, and we have 1 the league has one africanamerican owner, one, and one female with jerry buss family, his son and daughter owned the lakers. The responsibility of the nba to reach out . Optically, it presents challenges for them and this is become an issue they wanted to close out right away. The reality is these players are creating significant value. It is not Donald Sterling the created the 2 billion business. It is chris paul. It is blake griffin. It is that team of players. You are saying he created the wealth on the back of successful africanamerican athletes . These guys are multimillionaires, they are wellpaid, but the reality is here is a question i have always wondered about this. When all of this came out, everybody said they knew Donald Sterling was a racist and discriminated against people, so why didnt anyone in the Business Community say anything . Why didnt any of the African American groups that took his money ever say anything about that . Most likely nobody knew . Who knew who Donald Sterling was a month and a half ago . Very few people knew who he was. In the country, but people knew him. He was not even a visible nba owner. Micky arison sin of the miami heat is much more visible. Jerry buss is a visible owner. Or you had here was a person who was under the radar. What you had here was a person under the reader. Radar. Only intimate friends would know his behavior. He was not outwardly being a racist, from what i understood. He supported community groups. Today racism looks different. It is not out in the open because it is unacceptable socially, so it is quiet. His behavior was quiet. Also, i do not want to get too cynical here, but maybe some of those issues are overlooked when it comes to someone who is, you know, very wealthy, who has a lot of money to put around. Absolutely. Someone told me once a friend who will remain nameless, a billionaire who was a little wild eat only when you have 2 million and you act weird you are crazy. When you have 2 billion and you act crazy you are eccentric. You are a genius. [laughter] thank you for joining me, don eebles, ceo of peebles corp. 3 , a littlep under what economists forecast of. 6 . Not good numbers. Jobless claims at 317,000. Scarlet fu has been digging through the numbers. What is going on here . , the retail sales number,. 3 that is half of what analysts were looking for, expecting. 6 . The rub or the good news is the ,revious months, aprils numbers were revised higher, the headline number if you back out autos, gas, and building materials. Was revised higher to a gain of. 2 after coming in negative originally. These are important because they are used to calculate gdp. We know the Second Quarter was supposed to be a bounce back from the first quarter, which was fairly dismal. In terms of input rises, import prices, they rose one 10th of one percent. Slower than what economists were looking for and the prior months drop was bigger than anticipated, a decline of 15 , the biggest drop since november. Jobless claims worse than anticipated 317,000 last week. The lower the number, the better, and economists were looking for 310,000. In terms of Economic Data having an impact on the market, futures were little changed before the numbers were released, and they are now pointing down. You saw a leg down in future, but they are much they are very much in the unchanged zone. The yield on the 10year also att negative, currently 2. 672 . Colorful, thank you. Here are the top headlines this morning scarlet fu, thank you. Here are the top headlines. On the opening day of the world cup, workers at the Rio De Janeiro airport are going on strike, seeking a better work conditions and a new collective bargaining agreement. Sony, already a big winner in this years world cup, the company says, Listen Television sales jumped 30 . It is the biggest sales increase for the company in two years. They are on track to make their first half in more than a decade. The founder of lululemon voted against the reelection of the man who succeeded him as the companies chairman. Chip wilson said the companys board has been too concerned with shortterm results and despite wilsons 26 stake in the company, Michael Casey was reelected at the annual meeting. Coming up, they are one of the most influential dynasties of our era, the Koch Brothers. We have a behind the scenes look at their money, power, and their influence aaron influence. It is time for the bloomberg big number. That 850 , the percentage uber subscribers increased on the same day that black cab drivers in london staged a protest that brought part of the city to a complete standstill. Uber to be regulated like everyone else. Uber use the spotlight to announce they would have their own blackheads in london. Black cabs in london. London is ready to uber. Are posterothers child for extreme conservatives and the bane of mainstream republican fundraisers, possibly. To counter that, there is a lot Action National campaign called koch from the heart. The heartlandd in and has expanded to nearly every state and that means more than 60,000 american jobs. Home on what is behind the image that we all think we know about the Koch Brothers, i want to bring in the author of sons of wichita, which chronicles that gavekoch family rise to the political powerhouse that we know today. Dan, great to see you. The story line on the Koch Brothers is they are evil, corporate titans trying to destroy america. That is the liberal view of them. It is not that way, right . There is a lot of nuance here. What interested me in writing this book was the demonization of these brothers, these cartoon robber barons pulling the strings behind every conservative cause, and the reality of who they are is much more fascinating than that. This is a family on par with the rockefellers and the carnegies in terms of their impact and influence on american culture, good and bad. What is the most interesting thing you found out about them . The relationship between the four brothers. The to get out to against two for more than 20 years in what has to be the most brutal family history. Describe that. Essentially, there was an effort in the 1980s to take control of the board of koch industries. It was being run by charles and david. Fred was part of the company. The eldest brothers try to take over over a variety of concerns. This led to protracted litigation. Charles koch who we just shall we had wrote anharles koch oped and he said far from trying to rig the system i have spent decades opposing cronyism and all illegal favors including mandates, subsidies, and protective tariffs. You wonder why, why would he speak out now, and is part of the reason is they are finding a hard time doing business given this view of them . I think you see senator harry reid on the senate floor denouncing the Koch Brothers as unamerican and a lot of Senate Democrats are effectively running against the Koch Brothers in the midterm elections. This might be having an effect, the meme that they are evil, out to line their pockets. This might impact their ability to recruit talent to the company. That might be behind this ad campaign. Not a lot of people know about koch industries. And they prefer to keep it that way for many years. That is right, but now they are going out publicly. Charles koch said they employ 60,000 people. People work their for unions. Was anything surprising that you industriesbout koch themselves . When you come back to that corporate welfare idea, charles for the against welfare poor, and at the same time he was saying to the Business Community that you cannot seek subsidies from the government, handouts, and at the same time rail against social safety nets and things of that nature. Koch runs according to charles libertarian values from top to bottom. Free enterprise. He has tried to create a freemarket microcosm and it is fascinating to the set that he is been able to do that. Mention the recruiting problems, i know they have had some personnel changes. They change the communication director, for instance, but do we know that they are really having a hard time hiring because of all of this . I think the new Communications Guru that they brought in mention the recruiting and retention of talent as one of the reasons behind this ad campaign. I think this is a reflection of the kind letter kinder, antler koch, because they had hard, aggressive image in the media. They really hit back hard against reporters that cover them in a way they did not like parrot clocks and not helped by the fact that they do not do a lot of press. They are not out there. Clocks theyre very selective not helped by the fact they do not do a lot of press. They are not out there. They are very selective. Dan schulman thomas thank you. Next him a the world cup, whether it will be a win for the host country despite lots of issues. Oh, yeah. All eyes are on real as the host nation, brazil, faces off against croatia, but who will win . We are joined with the bloomberg sports projection. What do the numbers tell you about todays game . The numbers come from internal analytics. The same things we do for business and finance we can apply to the world cup, and all the soccer analyst say brazil is by far the favorite. 70 chance of winning. There is only a 6 chance corporation to get a win. It is a little biased to start the tournament. No surprise given the makeup of the team. Likelyy goals is brazil to win by . The most likely outcome is a worsen, but if they do than that, you might think of that as good for croatia, they did better than expectations, but there is a 20 chance of brazil winning by four goals, which means they are playing better than even a they will be they will beers doing. What about her chances in the group . There is a 90 chance they will walk out of that group. Croatia and mexico is battling for that. If croatia were to get out of here with a tie, that is a huge deal because it would help them get that second spot. We will see if the numbers pan out there thank you handout. Thank you, eric chemi. To get the latest on the soccer pool, had to bloomberg. Com rio. In many of the poorest countries in the world life is made difficult by the lack of electricity, and some girls at harvard realize in most of those countries they play with this, a soccer ball. A light went on and they created a company. We will have that for you in a moment. Professional golfers in a most 1000 amateurs will hit the link said north Carolinas Pinehurst at the u. S. Open starting today. Ahead of the open, bloomberg had the chance to talk to one of the greatest in the game, gary player, who has won the career get grand slam. Tips. Re his top im able to give you some tips because i have been a professional golfer for 60 years and i have traveled more miles than any human being ever. Ng. F is putti do not tell me how far you hit the ball. If you are the best from 100 yards in, you will be a winner. Now, learn to keep your head still. Do not go moving, do not be a peeping tom. The movie the moment you hit your head it goes wide and outside of the line. Number one. Number two, watch your email , the most magnificent golf swing. Watch jason bay. Good balance is important. Third, speed. I train my body to have speed. As a young person, you have to have, and every shot requires speed. The first 20 years of the toughest. Good luck. [laughter] i have to remember all of that. The bestknown celebrity chefs. President obama has eaten there. It is easy to drop more than 200 for dinner. Loud has five other places in his empire. That is a lawsuit filed by three of his waiters who say he pockets the tips from private events at his restaurants and forces them to do nontipped works such as cleaning out bathrooms. He settled a second lawsuit with dozens of employees who also claimed they were stiffed when it came to getting their tips. All right, when it is it is 56 minutes past the hour. Bloomberg tv is on the markets. Mixed befores were the economic numbers, and now they are little bit well lowered it is retail Sales Numbers came in worse than expected, basically no change, flap in the month of may for core retail sales. Also, jobless claims picked up slightly. We are on the markets again in 30 minutes. In a pricing battle with the studio behind the lego movie. Thomas amazon gets its way, it could be very difficult for you to get the film when it comes out on dvd. Nope, not everything is awesome. We are 30 minutes away from the opening bell. You are in the loop. I am betty liu. On. Is what we are working features indicate stocks will open lower. A fiveday rally came to an end yesterday. Americans took a break from shopping. Retail sales were lower than expected and revised figures show april was higher than reported. A service to compete with spotify and pandora has not reached an agreement with universal. We will talk about amazon in a moment. During his 15 years in office, eric cantor raked in cash from wall street donors. Now that he is on his way out, what do they have to show for their investment . Our washington correspondent megan hughes has been looking into that. Help wallic cantor street in the Business Community when it came to policies they wanted to push through . We talked about his potential openness for Immigration Reform and a lot of businesses did support that, but lets put that aside. He has been an advocate for business on a number of issues things Like Fighting the dodd frank rowles, the Consumer Financial protection bureau, to raising the debt limit. He started on the Financial Services committee. From goldmancohen sachs proving himself as an eric cantor fan. He was going to do about sticky issues for the publicans, democrats. He was willing to create a to create trying compromise understanding that he could not get everything done, but he was trying to move forward and create progress. And make no mistake, it was a twoway friendship. Over the course of his career, eric cantor got 2. 9 Million Dollars over the securities and investment sector. In totalon dollars came from finance, insurance, and real estate. His total fundraising in 15 years, 31. 7 million. Those industries, big contributors. Top contributors, dominion resource is, maguire was, altra treo, goldman sachs, and goldman sachs. He is second to john maynard for bringing in cash from financials john boehner for bringing in cash from financials. He was business minded and his staff was as well. The companies that gave eric cantor money, what did they get in return . We are talking about big policy issues here. Frank,ntioned, dodd financial reform was one of them. That is true of a lot of republicans fighting some of those roles. Look at the debt ceiling votes. Eric cantor helped to broker the deal they and the standoff to end the standoff. He joined with democrats to get that passed. That is something that big business and ceos wanted, a deal, certainty. Small government, Tea Party Groups want the republicans to fight for more concessions like they did in 2011. That will be an issue looming over Financial Markets again mid2015. Victor in the primary, criticized eric cantor for compromise, so it raises questions going forward. Is there anything else . A long list. He worked with democrats on revising the export import bank. Then he has to be renewed. It will call into question whether there will be support for that. He would not support republicanbacked reform because it would mean higher rates for private equity managers. Smaller measures. Two years ago he defeated part the stcock stcok stock act. Megan hughes, thank you. We might have regained all of the 8. 7 million jobs lost in the recession and americans might be increasingly optimistic about their lives, but the latest Bloomberg National poll finds people are not confident about the direction of this country. Bloomberg News White House correspondent Margaret Colin joins us with more. Aboutans are most unhappy what, exactly . Good morning, betty. It is interesting because one of the most interesting findings of the poll goes to the question of what theyre happy about, unhappy about, and 55 say their own career and Financial Outlook is better and Getting Better, but only half of the number, 26 think the country is working in a better direction economically. The electionyear twist what are people talking about at their own kitchen table, it is a little different. It is not their own experiences they are worried about, but the broader picture of the country. How will that impact the midterm elections . For republicans, there really is a window, but it is not to talk about what people are experiencing in their own lives. The economy is the top concern headed into the midterm elections. More than 25 say it is the top concern. Health care and income trajectory is behind. Immigration is a hot button issue among the partisan basis, but it is only a top issue for 6 of the electorate overall. Really, this economy message may resonate and the trick for republicans is to talk, in general, about the ambiguous, what is the direction of the Company Country fear, and for obama, the opposite, reassure on behalf of the democrats that the issue is how are you doing in your own life, is in your own life Getting Better . You mentioned health care. What about obamacare and what our poll find out found out . That is right, obamacare is a mixed bag. It is not all terrible news at all. Inever, on obamacare, four 10 people still do not like it. They still oppose obamacare, the what is interesting is once upon a time there was a really strong desire for repeal on obamacare, and you do not see that so much anymore. Youd republicans, couple of years ago, twothirds of republicans were advocating a full repeal, and now it is just 66 . Six in 10 people throughout the country say there is no real intent to the health care at all, but still, you will not see democrats in tight races running on these issues because it is a divisive, generally unpopular issue they have to explain their way out of. Margaret, thank you so much. Thank you. Margaret our bloomberg tells correspondent, Margaret Talev White House Correspondent Margaret Talev. Scott the newly is moving and shaking this hour. He will be toting the bag for his son maverick who plays golf for stanford. Golfercnealy is a good himself and he has been known to save a buck or two by fishing golf balls out of water hazards. Maverick just teed off. We do not know he will be playing against his father. Coming up, a battle is brewing in the virtual gaming industry were on the equipment change in the way you play. Amazon seems like they are fighting with everyone lately. The newest enemy, warner bros. We will tell you why the online retailer is taking on the movie giant. Stay in the loop. Some breaking news out of Silicon Valley the twitter coo has just resigned. The Company Announcing that, and they say they will not replace him in the coo role but he will continue to be an advisor to the ceo. I rowghaniitter coo al will leave his role, he will continue to advise the costello. We are watching amazon, embroiled in another feud, this time with warner bros. , refusing to take street orders for titles such as the lego movie. I want to turn to a former executive with a and d net works and now serves as executive Vice President of Screen Media Ventures, a Film Institution company that works with amazon, and also with us, bloomberg aul sweeney. P publishers. T amazon has been a company where investors have recognized and not worry about topline, it is all about margins. That strategy is coming under pressure by shareholders that they want to see profitability. One of the areas amazon is looking at is content cost. With publishing and now with warner bros. , amazon is trying to take a tougher stance with content partners. You make of this tougher stance . It is not surprising. Amazon has increase their revenue. Their profit, right. Their profit. The prophet is one sent her dollar, i understand. Is a typical dispute. It is not that big of a deal. They are only holding back reorders preorders for the lego movie. It has been going on since the dawn of time. When hbo started, they had their dispute. It is cleared up now, and this will be the same thing. Perhaps amazon feels they can do Something Like this because they have gotten big enough the media and content to do this . On the publishing side they are the dominant player there, and on the video and even in the music side, it is getting increasingly competitive. On the video side, there are a lot more streaming players in addition to netflix, hulu, and amazon prime, and google and apple are getting into the business. Amazon is out there saying we are big, we are large, and we can drive pricing in this marketplace. We are walmart, deal with us like that. Exactly. It is interesting, there are other walmarts out there. Best buy has cinema now. You can get reorders with a click of the button. With walmart, they could change and say we will put you in the back of the store. The consumer would be upset. How is a good test for strong amazon and their video business is because one click away i can go to best buy. What about original content question mcdavid, that is up your alley. How is amazon doing in original content . Theyre not making as big of a splash. Theyy not question the why not . They are not as competitive. Netflix has been able to blow them away. They fumbled through this. Amazon prime is a great service. Adding music will be a boom, but they are fighting universal music on this. The original content is just not as compelling as what netflix has done. Why is that question what is happening there . Amazon why is that . What is happening there . Amazon is not a media company. Amazon prime members spend two times the average customer would amazon is nodding customer. Is not a media company. Doesnt cost too much . Chops too not have the get into original content. Netflix has made a huge investment. Several billion dollars in original content. There is no reason amazon cannot do it, but it is not their core focus. It is growing pains. You have to remember netflix try to do this with a Company Called red envelope doing original movie productions. That failed miserably. It is a growing pain. Growing pains. Hbo, the first and 10 series was not that compelling and then it took them how many years to come up with the sopranos, and other things. Showtime, same thing. Finally they have hit on their hands. Netflix has done well with original content, orange is the new black, and house of cards, but the fight they have brewing with verizon, blame it on the isp, do not blame it on us how significant is that . I find it interesting because they just signed this deal with verizon to get their servers. I think they are unhappy with the deal. With what they are paying . Or the service they are getting from verizon and this is the way to warn verizon, fix your servers, give us better service, or this is what will happen. They are not doing it to comcast. They got a nice deal with comcast. They did, but they got a nice deal with verizon. The timing is interesting. I think they are testing the waters. It is interesting that netflix has gotten big enough or they are telling comcast and verizon what to do. Right. Thank you, guys. David fannon, Screen Media Ventures and also, paul sweeney of bloomberg industries. I mentioned the twitter coo stepping down. Our senior west coast correspondent jon erlichman, give us some background. One of the stories people ise looked at with twitter after the highprofile splashy ipo, what is going on with the growth story . The user base is nowhere near the user base of facebook despite the fact that they have a Large Business that has been growing relatively speaking. You are talking about somebody here who was a central figure in a story of how we are going to grow the business with a great track record, time and pixar. Time at pixar. They had seen the departure of their previous head of the product side, kind of leading the growth strategy. With concerns from analysts, there has been pressure to deliver on that front for twitter, and we see is them hire someone named daniel graf from forle, who was well known his role in the growth of google maps. Remember that was the fiasco with apple maps and google having the opportunity there. Scenes, gotnd the some credit for that, so twitter brought him in to be the new lead on products, and at the end of the day, twitter feels like what are we talking about when we are talking about products someone that could make the User Experience that much better, so , get more people exiting using the service, and b , get people using the service for a longer time. You have two people whose job is to lead growth. Who is doing it . Ali rowghani has been there for four years. Maybe he decided it is time to move on. I do not know if this signals you will have someone step into the role of coo. Titles in these companies, may we read too much into that. It sounds like no, they do not want to have another coo. That is fair to assume. It is not like one is leaving and we have to find another. They found a new person who is there to lead their product strategy, and the challenge for twitter right now, i think, is they want to grow, key people on she platform for longer period of time. How do we do that . What does that mean for ali rowghani . I want to switch gears. Virtual reality gaming you were at the e3 gaming convention. It is all the rage. The headset garnering a lot of attention. It is pt incredible. When you think about virtual pretty incredible. And you think about Virtual Reality gaming, you think about firstperson. You put on the headset. You can see the things in front of you. You play the firstperson shooter games. What is interesting is i played a third person game, kind of like playing sonic the hedgehog as a kid, but experiencing the to traditional Gaming Experience in a threethe environment where you can look around you and there is a different world. , a facebook acquired oculus lot of people wondered if they would move away from gaining to pursue a bigtime opportunity of communication. Here is what we asked the oculus ceo. We are focused on the game market. A lot of people think it will go into communications and these other areas and now oculus as part of facebook and they will not be focusing on gaining as much. That is really not true. The foundation is built on a game engine, a 3d scene that you have to render in real time at an incredibly high frame rate which is what Game Developers do best. I would not say the whole industry is on board with this so far. Box phil spencer, and they are not pursuing this just yet, but a lot of people are refusing to say no because if this takes off they do not want to look stupid. A lot of big game directors are thinking about this. We spoke to the head of ea, and they are toying with this as well. Jon erlichman, thank you. We are a few minutes away from the opening bell. We have the top 10 trades you do not want to miss. Keep it here on in the loop. Help in the loop. First. Bloomberg. Welcome back. You are in the loop. I am betty liu. It is 26 minutes past the hour. Bloomberg tv is on the markets. Our chief markets correspondent scarlet fu has the latest before the open. Wereat is right, futures little changed before the 8 30 a. M. Numbers came out, but they became decidedly lower. Retail sales were less than estimated, and jobless claims rose. That is not the direction we want to see them go, and all of this is evidence of the uneven momentum in the economic recovery. We have treasuries gaining. Yields on the 10year lower, 2. 63 , and the dollar is weakening by, lets call it. 10 . 1. 6 ,crude oil is up by which is about an eightmonth high. Fighting in iraq raising concerns about oil production. We are on the markets again in 30 minutes. Thank you, scarlet fu. 10s count down to the top with the only trade you need to talk about. Scarlet fu stays at the. Julie hyman joins as well. Number 10, sony. Electronic company said their sales jumped the most since 2012, driven by stronger Global Demand with the Winter Olympics and before the world cup soccer tournament in brazil. Number nine, blackstone group, forming a venture with 76 properties. They are also buying the red lobster chain from darden restaurants. Facebook,eight, adding new features that allow members to see why they get certain advertisements at their newsfeeds and change them or remove information from the file. Number seven, it and tell. They lost their intel. They lost their fight against an antitrust fine. The Eu Central Court rejected attempts to overturn the penalty for taking at the competitive measures against rival advanced micro devices. Number six, noble energy and consol energy, announcing they will form a partnership for natural gas pipeline operations in the marcella share. L. Marcella shall. Five, Scotts Miraclegro company which said whether her result for the second whether hurt results for the Second Quarter. Number four is aig, joining Oak Hill Capital Management to start a lender survey median size companies. Aig said in a joint statement that they have committed 1. 5 billion toward the venture. Number three, twitter. The chief operating officer of the microblogging site, ali rowghani, is resigning, the biggest departure since the company went public. The position will be unfilled and he will continue as a Strategic Advisor to the ceo. Number two, Restoration Hardware with tremendous growth tripling in the third quarter, first quarter. They are surging on the news hitting the highest level since the ipo in november, 2012. Number one, guys, lululemon, cutting the first fullyear forecast even as firstquarter earnings Beat Estimates. The founder and biggest shareholder lashed out at the board for being too focused on shortterm growth stock is gett. Now to the call of the markets, jeff presented, chief investment third core bank. Crozenick. Why are you alarmed . With regard to the equity call, we are still overweight. Markets a lot of complacency, and no more complacency than we see them in the inflation field. We think labor markets are theter because of longterm unemployed. Change the equation. Many will not get back into the market thomas a we have fewer available workers. Many will not get back into have fewer so we available workers. Then you have lagging factors like housing inflation. Measured by the fed in a survey of homeowners rent equivalent that lags house appreciation. We think in the next couple of quarters we could get an additional two points of inflation in that sector. In housing prices . Pricesing measured by cpi. So far we have absorbed that. It is starting to shift. If you look at last months p pi, we got a very surprising number. The markets have dismissed that. Looking at tomorrows number as well. You mentioned industrials, but you are pretty alternative on industrials. Pretty constructive. Julie, you have been looking at industrials. I have, and some of the reasons people have been shying away from industrials, it is indicative of what is going on more broadly, the world bank member cutting the forecast for global growth. Many industrials tend to be exposed internationally, not just here in the united states, although the world and did highlight the u. S. , as well as brics. Prices. Minoing cutting back on. Home prices have been slowing to some extent. Industrials, look at how the stocks have done here in the united states. They are up about 4. 5 year to date. That is an underperformance of the s p 500 overall. At the same time the price to earnings ratio is about a percentage point above where we see the s p 500 overall. Ok, so maybe not so good value there. It really depends with a broad sector. We have gone from Anna Connolly to where you want to be in the home market to differentiating returns. The modestysensitive plays like the minors, we think they build excess capacity. Miners, we think they build excess capacity. To some degree construction. Machinery is a big way. We see thai capacity that will lead to some Pricing Power for those companies. We see tight capacity. I want to go overseas, because you have a call on some of the countries. Japan is one of those. Scarlet, you have a bearish take on japanese stocks. That is right. Templeton Global Equities say you get a lower return for the discount. A chief Investment Officer said there are not enough individual companies that will compelling enough. Not madeerall has enough changes. Still paying hefty salaries and the boarding job cuts. The Auto Industry has five or six major players, when everyone else in the world, the industry has consolidated. The bottom line is more work needs to be done. Japan . By japans buy we would agree with that, but we think the market is underestimating the reforms moving forward. We think the jury is still out a little bit on japan, and we need to see the reforms bear fruit. That being said, we think they are moving in many ways in the right direction. We mostly want to argue with the naysayers who plead to geographic issues. They are getting old. Old,at is right, getting immigration. All of these things are dragging down growth. That is true, but it misses the point that japanese productivity is less than 70 u. S. Productivity. If you put reforms in there that can move the productivity needle it is not going up to u. S. Levels are those reasons, but if it makes headway, that is a big opportunity for japan. Whether that comes to fruition or not, the jury is still out but we think there are opportunities. Back to the u. S. Oncee inflation front, this rears its head as you are warning, what about for Bond Investors . Where do they go . To some degree, they have nowhere to go. That is the nature of the bear market bonds. We do think the declining yields, to some degree a retracement of the natural move after the rapid move last year. We think bond yield lows are probably in for the year. That does not mean you do not own bonds. For folio construction, you need to have bonds in the portfolio, but you have to be selective. We think restraining maturity in the six or seven year, a little bit of spread product but getting a little concerned about that as well. Thank you for joining us on the call. The chief investment strategist at fifth third bank. Coming up, while the rest of the world comes to play soccer, many of the brazil citizens are languishing in tent cities. We will show you firsthand the extent of the poverty in the huge country. A tale of two retailers this morning. Lulu lemon down huge. Hardware restoration up 17 . American consumers took arrest following a threemonth search and shopping that is underpinned in Economic Growth and possibly inflation. Julie hyman is here with me with more on the retailers. A good and a bad, right . About half may was of what economists were estimating. That is the bad. There is a lot of good here. The good is this is the fourth consecutive game for retail sales. The number that initially looked terrible in april, the only. 10 was revised higher 2. 5 . There is a lift of little bit of momentum and retail sales, which was what was expected. In terms of what people were buying in. Car sales going along pretty well. That is the improvement in the numbers. Furniture and building materials. A lot of concern about what was going on in the housing market, materials still doing well. What did not do well, consumer electronics. Department store showing a one percent decrease. That is an area struggling when you look at the overall retail environment. What about Restoration Hardware, why that is doing so well . It has seen their earnings just about tripled last order. Impressive growth. Part of the house to do with Revenue Growth we saw at the company. Revenue growth of 18 . Overall revenue up about 22 . Restoration hardware made the participating and what is going on in terms of people improving their home. If you feel better about the value of your house, you will put more into it. Spruce it up. Exactly. Lulu lemon is an interesting story. A new ceo late last year. Saying they are building a foundation for the future. They actually Beat Estimates last quarter but cut the forecast for the coming quarter in terms of sales growth. Are makingy improvements. There are a couple of big, glaring improvements they need to make. Supply chain, they need to improve the quality issues they have had. They have to win back customers who have been alienated from the brand. That is one of the other issues. The backdrop, a little bit of sideshow is the founder, chip a controversial figure, the one who said they just do not work for someones body, he is no longer on the board of the company. He actually voted against the current chairman and another board member. That happened yesterday. That is a little bit of distraction at the struggling time. Certainly a lot of drama at this company. Thank you so much. Julie hyman, senior markets correspondent on the retailers. Speaking of retailing, Restoration Hardware has surprised its customers and ups drivers. It began delivering the 2014 catalog this month, and it is gigantic. We wanted to see what ways less than the massive catalogs take a look. All right. Now you know. Coming up, bnp paribas under investigation by u. S. Authorities. There is already fallout. A Top Executive resigning. More when we return. Time now for a global outlook. Follow from the u. S. Investigation into bnp paribas. Is thech banks coo first to step down. Leaving at his own request. They may be fined up to 10 billion for violating u. S. Sanctions in iran and sudan. Haveazil, demonstrators hit the streets protesting against the money being spent on soccer instead of education and housing. The president of brazils to get soccer club says he has no problem with the protests up to a point. The president of one of brazils biggest soccer club says he is no problem with the protests up to a point. Believe it can be done without violence and without interfering with the event. It is a great event or brazil. For brazil. I think the organization and police are prepared to deal with. Id do not believe they will really affect the games. Have spent around 12 billion dollars to host the world cup, but the true price in the game may be hard to see. Just miles from the stadium, some brazilians are living the real story of what a world cup has cost them. Erik schatzker reports. Brazil spent 360 5 million to build this new stadium in sao paulo for the world cup. Million. But just two miles away, there is this. So tell me im a what is going on here . Foreign language] elana claims her rent doubled overnight from about 200 per month to 400. Elena. Too taking more ground. We will talk to an investor who remains bullish. The Top Executive at bnp paribas steps down in the midst of the u. S. Investigation. This is real sweat equity. Countrys most affluent. We will talk to the ceo of the ir