Transcripts For BLOOMBERG In The Loop With Betty Liu 20140707

They have ended services that toow them to send money their families. It is all linked to a crackdown. We begin with another cross continent deal. Will payaniel medlin 3 billion in cash in their biggest takeover ever to acquire wild flavors. Hans nichols is more on this megadeal. They make capri sun. Wild flavors was started as a German Company and is now headquartered in switzerland. Downstream, some of their products include capri sun. As thethink of capri sun drink other kids got to drink because it has unhealthy artificial coloring and flavor in it. Lo and behold, this is part of a natural food company. This did turn into a bit of a bidding war. You saw a Japanese Company try to get involved. Some swedish private equity, as well. 65 is owned by the son of the founder. He takes a big chair. 35 was kkr. It is part of an overall story of go local, go healthy. Report a drinkt story unless it is vodka or beer. Because concession capri sun is so intertwined in my childhood. How does this position Archer Daniels . Cher it gives them a foothold in europe, or another foothold. We have seen a lot of m a activity in the last six months. Some of it is tax related. U. S. Companies looking for place to park cash to gobble up assets. This is not one of those. Adm were to take over this company and then hoard quarter it headquartered in luxembourg and filter their taxes through it, it would be analogous to pfizer and astrazeneca. This is not that. This is a company that wants more of a toehold in the Natural Market and the foods market. Hans nichols, thank you so much. It is a big week for the market. Watching murders mergers and acquisitions. Futures are poised to open lower. Kicks off the earnings season unofficially. Unemployment drops to the lowest level in six years. This causes speculation that the fed may raise rates earlier than expected. For more, we are joined by joe keeley who covers the markets for us. Last week, we were building up to the jobs report and unemployment numbers. Now we are back looking at earnings. Alcoa is the bellwether for how the economy is doing. Expectations for the second quarter. Theyre very high. Bad First Quarter with the bad weather. People are inspecting big things. We could see a pullback from the record levels we have. Are we at the Tipping Point . If we dont see blowout secondquarter results, does that mean it is time for a correction . Call it a not correction. People are getting back into the market. We have written about people coming back in and putting the market forward. Everything is sensitive to all of the event risk we have and all of the event risk we have right now is about the warnings. What are people looking for as far as warning signs . If we start seeing big bellwether Companies Come in under expectation. Thate fed hints at all they are not looking as much as at the economy as they are asset levels, maybe they can start looking at that as a reason to raise rates sooner than later. Would do you read into the Market Reaction to what was a positive jobs report on thursday. Went straightape down on wednesday and then i went back up. Expectations are so high. In order to move forward, it is going to have to be something. We saw some really good numbers and people got their head together and went into the weekend higher. Thank you so much. Joe ciolli a bloomberg news. Of bloomberg news. This hour. Shaking tennis player Novak Djokovic ended a run of three straight losses in major finals by beating Roger Federer in five sets to win wimbledon. The victory propelled djokovic back to the number one ranking. Earlier, he spoke to tom keene of bloomberg surveillance. This is the best quality tennis grand slam final i have ever been a part of, playing against Roger Federer. The great champion. He showed why he has been so dominant and successful and why he has 117 grand slam titles. Won 17 grand slam titles. I did not do much wrong. He kept it up. He took the match to the fifth set. In the fifth, it could have gone either way. I had many moments in the match when i could drop the concentration and allow him to win. I have a little pep talk with myself and try to encourage myself and find that inner strength and that carried me through to the triumph. To be that inner coach. Also moving and shaking, espn president john skipper. They have seen record viewership during the world cup. I sat down with him for an exclusive interview where he talked about the expectations he had surrounding this years games. We always think it is going to be like this. Of course, it is spectacular when it is like this. When it all works and people are paying attention and watching. Digital has been important for us for a long time. This is a big day off. For watch espn interdigital platforms. Preparation lot of into this, much more than you have in the past, is that right . Is, overall. Ly a lot of these games happened during the day, particularly on the west coast. After the 2010 world cup, we learned that people were watching. They will move their mobile devices use their mobile devices to watch the game. We put a lot of preparation to make sure you could watch the games on whatever device you have, wherever you are, and that it works, and that it looks good, and that the quality of the production is fabulous. Now you can watch a game on a little phone and it looks great. We will have much more from john skipper. We will tell you what espn has learned from its world cup coverage. Displaylockbusters staying power despite a performance at the box office. We are just getting started. Did you watch the games over the weekend . Argentina, brazil, netherlands, and germany are all advancing in the world cup. It meant another wild weekend watching soccer on espn. The espn president john skipper is extremely happy. Thisys that planning for years coverage started years ago, taking lessons from the 2010 world cup games in south africa. We applied a lot of lessons we learned in 2010 and we took it up several notches. The documentaries we did, all of the studio shows we did, the amount of international talent. We just decided everything that worked in 2010 will work better because of the time zone, because of brazil and how special it is for soccer, because more people are coming to soccer in this country. Our average Television Rating is up 39 , despite the fact that that is up that much, the digital viewing is through the roof. This is already the most streamed sporting event of all time. We are now 70 beyond the sochi olympics. We will be more than double the sochi a lump x olympics before this is all over. That was the high water mark. Over 3. 3 million for the u. S. Germany match. 3. 5 million for the u. S. Belgium match. But you capitalize on that . We are capitalizing on that. We are selling ads against those folks. He sold more . This is always the discussion. [laughter] the selling rating should be higher. This very aggressively. This means we are delivering. It did not go off without some glitches. As you know. I have checked out on twitter to see what some people have said well they were Live Streaming. Espn stream bad and getting worse. Can we start a kick start a campaign to buy espn more server time . We dont need more server time. I think it is remarkable that the problems have been tiny given the volumes. Im sure that tweet came from the u. S. Germany game where we had a small number of people have some issues with the technical. 99. 9 of people have had a very good experience. You log on the next game and i promise you it will look great to read great. We can handle an enormous volume of digital users. We have served an enormous number love videos during this. A lot ofurveyed participants during this. We can handle scale. You can say that you were wellprepared . As prepared as you would have ever been . Yes. Your research is correct. There were some tweaets. But it was tiny. Iressa been great on this. Can you keep this enthusiasm translating into other Live Streaming events . I dont think there was any doubt. This record will be broken. People are getting used to the idea that they can watch their live games on whatever device they have, wherever they are, under their control, and that is going to keep going on because the importance of watching sporting events live. The world cup race. You are not going to have them in 2018 or 2022. You will not have the rights. You really are a spoiler. [laughter] concentrating on what we have here. It is going to be a great event. Tocourse there will be some not having it, but that is the capitalist system. We will pertain you continue to participate. Does it make it bittersweet . No. It has been so fun and so great. All of our people are doing such a good job. Im just going to enjoy it right now. I dont think we need to be bittersweet about it. The want to bring in founder of College Sports tv which is now owned by cbssports. Chris, great to see you. Thanks for having me. What do you think has changed with soccer . Why this year . The whole sport has been invested in by mls. U. S. Soccer. They have invested hundreds of millions of dollars over the last generation. Now, with the Way Technology is shaping the world and allowing people to see soccer worldwide, the sport itself is lifted up. It is a growing sport. Just joking with john skipper about the serious fact that they will not have the world cup rights. That speaks to the bigger issue for espn. They have more competition now. Going into this space. They have cbssports. It shows a big the category of sports is. Espn is theif leading brand in sports and i dont think anybody would argue that they are not, the rising tide will lift all boats. The more investment that goes into sports and that is what is driving the paytv ecosystem in the Advertising Industry in the u. S. , the fact that more companies are investing in sports, that only helps espn. Does that mean that these sports rights and we saw the whole saga around the l. A. Dodgers, does that mean that the sports rights will continue to go up or we also at a Tipping Point where there will be more and more pushback . It is a marketbased economy. At some point, the market will sort out what everything should be valued at. I think in general, sports will continue to accelerate in value. Skipper said he was outbid basically. Very robustt is a business for sports rights. They are very unique and they are scarce intellectual property rights. Live. Sports is going to stay right at the center. , the streaming. Streaming is great. They are saying tons of people going online. Doesnt that eventually undermine what they are doing on cable . No. I think it may be the opposite. What john is referencing is just portability. Portability inside of the media ecosystem, especially with a Live Programming like sports, is really what is driving all of this growth. The Big Companies like disney and espn are working with distributors to create the tv everywhere product that you hear him referencing quite a bit, where you have to be an authenticated subscriber to Pay Television and order to get access. Does that mean that you can toll charge 5. 5 per month your cable Tv Subscriber . So far it has meant that and then some. Where do you think espn is going to take this world cup success, the streaming success . I think they have to continue to work with his two beaters. Distributors. About 50 of consumers know what tv everywhere is. Is that good or bad . They will say that that is a win. Not long ago, it was 10 or 15 . That it is know seamless and you can watch on any device what is the biggest obstacle . It is a marketing challenge. There is still friction and how the behind the scenes authentication works. The more the distributors and programmers can simplify it so that consumers know that they can watch what they want to watch when the want to watch it on whatever device, that will take a little bit of friction out of it and it will be much better over time. Thank you so much. Good to see you. Up, bill gross big bet. All in on low Interest Rates. He is betting 200 million of his own money on that call. The bulls are on the loose and pamplona. It is quite a boost for the economy despite the danger. In there watching loop. Live on Bloomberg Television. Good morning. I am betty liu. 600,000. That is how much the population of pamplona, spain can increase during the running of the bulls. Next monday. Until it has gone on for four centuries. 15 people have died in the running of the bulls since 1924. Thousands have been injured. Here is a look at our other top headlines. Archer daniels midland has made its biggest acquisition ever. It has acquired the maker of the capri sun juice string, wild flavors. Japan, they have issued an emergency warning for a typhoon. The storm is expected to come close to okinawa tomorrow. Not many people went to the movies this weekend. Ticket sales were down about 50 on the same time last year. However, the new transformers movie is still the Box Office Champ for the second week in a row. It brought in 36 million over the weekend. In second place, tammy brought in a little more than 21 million. Bloomberg television is on the markets. Matt miller has more. Is very exciting day to be looking at the markets with what happened last week before the holiday. Gold keeping our eyes on as it extends its decline off of the threemonth high after the unemployment rating dropped it. Joining me from princeton is ken hoffman. Strategistief market at the cme, bob iochino. Why are we seeing gold prices decline . Gold has been very interesting. It is stuck at 1300. It might go above 1300 briefly or below briefly. It has a dip and take between asian buyers. It never gets very low. Gold has been stuck here at 1300, waiting for a reason to break out of this range. Breaking out is going to look like down, right . Because the fed may move its Interest Rate increases forward. It is still a year off, but is that the case . I think the u. S. Is out of the game right now. I think you see china is reducing its dependence on financing. A lot of people bought gold to take advantage of high Interest Rates in china. Now the government is ending them. On the other side, you had the Singapore Exchange which is about to introduce gold trading for the first time. They expect that to be a really big deal and that will come out in september. You have a real push and pull. I just returned from asia. Everyone is talking about gold and a lot of traders moving into singapore and hong kong and shanghai. There was a lot of excitement about gold in asia. Is the u. S. Out of the game here, bob . On a couple of levels, i dont think it matters. I dont think it matters to fed policy. I think the economic conversation is going to continue. The fed is going to be behind the curve. I dont think that economic conversation is going to affect the fed. As you see the dollar strengthened, i think you will see gold suffer from that. You will see the breakout to the downside a lot of us are looking for. Having said that, kens range is dead on. As a trader, you can trade that range. You have to be very nimble. You have to sell rallies and be ready to get out. Not reverse that, but get out and look for the new range to be set. Youhat is a big catalysts look for . Any potential developments that could move us out of that range . Aren the upside, you looking at geopolitical risk. People forget the hurricane season. We have weather risk. If the weather continues to be absolutely nuts as it has been over the last couple of years, you just mentioned the typhoon warning in japan, china continues to possibly slow. Other than that, you are looking at a breakout economically. We have to start looking at the u. S. Possibly getting out of recovery mode, potentially moving into expansion mode. If that happens, dollar strengthens, gold falls. I want to get to the word of the week. Open outcry. Tell us what we think about that phrase in this new day and age of trading. Open outcry if you have ever seen the movie trading places is the people sitting on the Trading Floor yelling at the prices. Aree are very few pits that very active anymore. But it is really important. Often tradingare for their own books and theyre keeping the market in line. When this all goes electronic, a lot of people are worried that when these traits go electronic, you could see a lot more volatility in the market and people not stepping up to take his visions in the marketplace and that is the big fear and probably the big reason that open outcry has lasted as long as it has. Thanks to those people keeping that tradition alive. [laughter] thanks for joining us. We are on the markets again in 30 minutes. Matt, thank you so much. Lets stay in the markets. Pimcos bill gross has wagered almost 200 million of his own money on a bet that rates are going to stay low. With fridays surgeon payrolls many banks are going to make the bet that rates will rise. I want to bring in mary childs the covers pimco for us. This is another one of bill grosss wild calls . I think so. He is making this new neutral thesis very public. Other Central Banks will not have the ability to change course. This is a way to express that view. If you think that Interest Rates will stay where they are, that means the value is not going to plummet. Now, there is a discount between the Net Asset Value and where you can buy the shares. He is planning on that narrowing and being rewarded on waiting for that to happen. He is betting his own money. 200 million. Out of a guy who is worth 2 billion. Out of his own pocket . Out of his own pocket. He has had this bet on for a little while. For him,ot a new bat but he really has ramped it up lately. He added about 60 million in the past few months. What has been the reaction among his own investors, but also of Market Investors on this . People look at this pet and they say that this is a very levered bet. The reason it works is because of the leverage inherent. If you believe his theory, you say, yes, we have it. It is a homerun. If you are more skeptical, you may run into more risk than you want. In terms of their new neutral thesis, how is he playing that . It is an interesting thesis. We have heard a lot especially on bloomberg tv about different opinions. A lot of people dont buy into this theory. We have seen over the past five years that Central Banks are very aware of what markets are doing and any given cause of instability they react. They have a tight hold on the reins and others will bill gross is betting. Thank you so much. Mary childs on bill gross. Coming up, drive our wants to wants to blowr away the competition by turning the company into the starbucks of blow dries. We will be back. There is a new bar scene that women are not getting tired of. Up all bars are popping over the country and even the world. Celebrities are even setting up shop themselves. Dry bar is one chain that has been growing at a rapid pace. They have raised more than 50 million of capital to date. The cofounder and executive chairman joins me now from l. A. Great to see you bright and early in california. Thanks for having me. This 20e what million, what you plan on doing this. With this. We plan to keep investing in our business. We have 2200 employees. Opening about 1520 new stores per year. We are starting to explore international. A lot of womens hair to blow out there. [laughter] all women love to get their hair blonde. Blown. To all of your stories make money in the first year . They do. It is a highvolume business. It is low margin. We do depend on seeing quite a few women. They are all ready profitable. Talk to me about the margins. How much more profitable as this versus a traditional hair salon . Cut andse we dont color, it is very simple. We just have one service. Were just blow drying hair. We dont have the same equipment and chemicals. For us, it is just a 40 blowout and margins are pretty good. Our stores operate between 15 and 20 on average. What her hair salon margins . It is typically below 10 . Below 10 . Ok. Are you looking at franchising this or what . How do you look to expand . We started out with a few as franchised. But we have been controlled with companyowned growth to control the brand. I had read something in a forbes article where they had said that your ambitions are to become the starbucks of blow drying. Is that right . One on every corner . Not so much that. The demand is really remarkable. As a bald guy, i did not even understand. [laughter] what i have come to understand is how we make women feel on the confidence and happiness it brings. When we first started opening stores, we just had a better product and a Better Service at a better price. What has been really surprising is that the service has been introduced to summon the women who never before got a blowout. It has become more popular. They come up, they try our brand, they love it. Do my hair can nearly as well as a professional can. People who never got a blowout before it has been really exciting to us. Maybe because you are a bald guy, you are seeing competition from women with beautiful hair like Gwyneth Paltrow and other celebrities who are getting into this business. What do you make of that . It is flattering. We think it is growing the overall industry which is important. Stages. The beginning it can be a little frustrating, but at the end of the day, it takes a lot of work to run a business, especially upscale. We have 2200 stylists. The amount of work it takes to train, retain and keep those people at the top of their game, it is challenging and a lot of work. We welcome the competition. Thank you so much. Spoken like a true entrepreneur. Micah landau, the cofounder and executive chairman of dry bar michael landau, the cofounder and executive chairman of the dry bar. Uncover revealing details about the claims against herbalife. A car crash involving a tesla model s nds inflames. Why ceo elon musk wants to investigate. Over the weekend, a tesla model s exploded into flames after a highspeed chase and collision in l. A. Company is working with l. A. Police and fire officials investigating the incident, saying it wants to study the remains of the stolen vehicle. I want to bring in matt miller, who has driven a model s and done a lot of reporting on the company. This is interesting because he wants to look into the battery fire. Thats right. This is what tesla has said after each accident involving a model s that resulted in a fire. They dont want to jump to any conclusions. That is probably very smart. It should also be mentioned that there were a lot of injuries and a couple of fatalities. It was not just the tesla. It was a 100 mile per hour highspeed crash in the afternoon through los angeles. The police crash and then the tesla crashed later. Car also ran into a parked mercury and a honda civic that had five people in it. It was a disaster. That should be set first. Anytime you have a highspeed crash, if you had a pole at 100 miles per hour, it is going to be a serious problem for the car and its occupants. The car split in half. Half of it was wedged in between two walls of a synagogue. The other half went off and exploded into flames that were stories high. This is not just a little fire. When theset happens lithiumion batteries catch on fire. One of the local residents told a local television station they thought it was fireworks because it was on the fourth of july. Some other celebration or that someones box of fireworks had accidentally ignited. Obviously, it is a serious issue for tesla. They have had this problem with lithiumion batteries catching on fire in the past. They have issued fixes. They put another skid plate under the car. But if you hit something at 100 miles per hour, a lot of skid plates are not going to hold up, even if there are three of them. Which is what they have. I want to switch gears to another story. In mexico. Auto manufacturing is literally going gangbusters. This is interesting because of all of the stories we had about Car Companies think theyre going to invest money in mexico. Mexico has moved ahead of brazil in terms of production of vehicles. The last five months in a row. That is interesting because people thought brazil, they had the money on brazil for a few more years. It is just that mexico is exporting so many cars to the u. S. Eight out of 10 cars that are built in mexico are exported into this market and brazil does not really have that. Argentina and to those exports of fallen 28 . I will keep covering both stories for you. Thank you. For the network. For you. For you. We have heard time and time activistims from investor bill ackman that herbalife with the pyramid scheme. Carl icahn says the claims are without merit. The federal trade commission opened an investigation. Claim by 13 latinas say they were duped out of their life savings and that herbalife is to blame. Bloomberg took a closer look. We are headed to a community latinoun by a major advocacy group. They have come out very strongly against herbalife. That herbalife has taken advantage of latinos. Kind of people that bill ackman says are being taken advantage of. How are you . Im with bloomberg. Come in. How did you first learn about herbalife . [speaking spanish] what was the total amount you invested . Spanish]ing the more we talked, the more it became clear that they did not read the contracts or have a good understanding of the mechanism by which they would earn the money they thought they would earn. They thought it would be invested and they would double the money. One of the names the camp coming up with the godfather of herbalife in the area. He was their sponsor. We wanted to find them and talk to him and try to get his side of the story. Caesar had one of his nutrition stores. There are herbalife powders there on the windowsill. This used to be something related to herbalife. We wanted to talk to him and we tracked it him down and he met with us. Miguel cotto the run said he paid as much as 22,000 and could not sell the product. Is there truth . [speaking spanish] with her ever be a time when you would buy a large portion of product up front and then sell and a store or Nutrition Club . No. No, no, no. It became clear that what i was seeing in the trenches neared very closely to what we were saying at the top. With the battle between hedge fund managers. One side saying the company is clearly a fraud, a pyramid scheme, the other saying it is a legitimate business. After a left chicago, i wanted to delve deeper into the actual complaints filed with the attorney general to see if we could get a handle on what they spend. Put a 5,000 he says he spent. 25,000 he says he spent. These documents were heavily redacted. Proving that an operation is a pyramid can be very complex. The ftc will be looking at all of the evidence gathered. Is it design to send product to ultimate consumers . That can be a difficult line to draw. Will take a long time. Did he ever of questions going in . Like this is too good to be true . Is our beloved pyramid skin . No. Is herbalife a pyramid scheme . No. We will continue to follow the saga. Its stock has lost 16 so far this year. Merkel is not happy over a spy scandal involving the u. S. A spy scandal is straining relations between two longtime allies. This is a u. S. Intelligence community. A germanrecruited intelligence agent to pass along secrets. The man gave u. S. Agents hundreds of secret documents over a twoyear. Over a twoyear period. Angela merkel says that they run the risk of undermining trust between the u. S. And germany. She made her first Public Comments were traveling in china. Germany is already unhappy about nsa surveillance programs. It is 56 minutes past the hour. Bloomberg television is on the markets. Equity futures are lower. Some worries that given the job stated we may see Interest Rates rise. We are on the markets again in 30 minutes. Much more ahead, including the ongoing saga in reviving American Apparel. Investors want to keep lenders from calling in their loans. We are about 30 minutes away from the opening bell. You are in the loop. I am betty liu. The s p dow start the week at record highs. The jobs report on thursday. Theyre making the biggest acquisition yet. Billion fory 3 wild flavors. Among the products, capri sun. An earthquake has rocked mexico and south america. No immediate reports of damage or injuries. Operation penny pincher is one of the biggest investment fraud schemes ever mounted by the u. S. Government. The target . The corrupt world of penny stocks. It was the subject of the Martin Scorsese film laster, wolf of wall street. Fund,ting up a fake hedge they attracted executives from over a Dozen Companies ready and willing to participate in a kick that scheme. Federalus is former prosecutor doug burns. This sounds like it was an that the fbi scale launched the investigation. It was. They set up an entity in boston, office, business cards, etc. Theway this came to work way the scheme worked was interesting. They had middlemen who would find companies strapped for cash. They would find an executive. Whatever amount of money involved that the fake program was going to invest, there would kickback a 50 to the company. They have charged 22 and convicted 18. Are you surprised this is still going on . Particularly with all the trading . On insider just all the scrutiny the ftc and fbi is placing on traders . It is a good question. While theo remember Insider Trading track record has been impressive and they have lots of convictions, people like me have said Insider Trading is not the only crime on wall street and not necessarily the most serious. Penny stock fraud is a big area. I have been in a number of cases over the years. Andidea is to kick it up then trade mullions of shares making millions of dollars. That is the normal routine. I am not surprised they did it read i think you are making a good point, that you are not going to see this develop into a like theyear campaign Insider Trading one in new york. There is another interesting story out about bank of america and j. P. Morgan and how they have abandoned this practice or business of allowing immigrants to transfer money back to countries like mexico because they are worried about money laundering, drug trafficking. Is this one of several steps banks are taking because they are under scrutiny now . It is interesting. From my lens, this is becoming a hotbed area. Im in a number of cases involving check cashers, International Money dispensers. When you look at it from the standpoint of potential money laundering, International Narcotics trafficking, they are cracking down and banks will be charging higher fees and making it harder to do. Else, it isrything like a fishing metaphor. You get things you should be catching but may be getting legitimate people who want to send money back home, so it is a comp located issue. Thank you for joining us. Former federal prosecutor doug burns. Doant to turn more more of my interview with the man who has helped expand the popularity of soccer in the u. S. Espn has done this for soccer. Advocacyd some relative to espn that we ought to be getting behind a soccer. That has been my role. The talent and producers has been what has helped to grow the game here. I am proud of our company and what we have in able to do for the game. The worldwide media and sports is a cash machine for Parent Company walt disney. This success will only make espn bigger. Jon erlichman joining me with much more. Read valuations of espn upwards of 60 billion. That would be bigger than almost every other Media Company out there except maybe 20th century fox. They are big numbers. A lot of people talk about it being the crown jewel in the disney empire. Financials speak to that. The commercial sports business is largely fueled by espn and others. It is about 1 3 of the companys overall revenue. A lot of the profitability power comes from espn, advertising, and what they are able to charge paytv operators. They say look at everybody watching espn. They are watching the world cup. We will keep charging you a lot of money. They went on the ratings are great because they are able to satisfy advertisers. They are able to say to the Cable Companies who sometimes wonder about the high fees they are paying for sports channels to say this is what people want to watch. What about john skipper . Is he seen as a possible successor to bob iger . Name does not come up all the time in secession talks with disney. Tois more common for the cfo come up. But certainly there are a lot of reasons for skippers name to come up, because of the power is pn has and his general way which is a casual, charming approach. I think there is this need for espn to stay strong and relevant. He will be the first to say he is more concerned with espns staying relevant and innovative and to stay on top as opposed to concerns about going for the rights to future sporting events, etc. It is almost like he is in the best place he can be right now. Sitting pretty from this. Thank you, jon erlichman, our senior west coast correspondent. Shaking, former secretary of state hillary clinton. She appears to be setting herself up for a president to run by distancing herself from the president. Quentin is sounding a more pessimistic note about the economy than her former boss. Americanshe audience do not think the economy has recovered in a way that is helped them or their families. She has also suggested she would do more to try to strike deals with republicans. It is a delicate balancing act because she does not want to alienate obama supporters but does not want republicans to say shes running for what would be a third obama term. Coming up, is the market rally on its last legs . We will ask jack, joining me. Tech Companies Want Immigration Reform because they cannot find all the workers they need. We will have much more in a moment. Thursday we learned the u. S. Added almost 300,000 jobs in the jobless rate up to 6. 1 . Problem this masks a for Tech Companies, too few highly skilled in juniors and programmers. In juniors and programmers engineers and programmers. We talked about the struggle to fill tech jobs. A recent study by the Brookings Institute said it takes twice as long to fill a tech job as other jobs. What we are seeing in Silicon Valley am in new york, other hot tech spots across the country is taking three or four times as long as nontech jobs. Joining me is someone with a lot of expense in Building Technology companies and hiring. Scott is the founder, chairman, and ceo of keek holdings. It has generated a list of instagrams most fashionable users and helped customers find and purchase items women want in the photos. Great to see you this morning. Would you agree with jack it is three or four times harder in the tech world to hire . Yes. We have a big problem. Tech is leading the way. America is fantastic at it. Google and tesla both founded by immigrants. Regular Tech Companies need tech people. We are not turning out tech people or we turn them out and send them back. We have immigration and education issues. I think we have leadership issues. If i am at your company and recruiting, what is my problem . What is the difficulty . There is too few people in great demand. Each of our engineers is getting two to three job offers a week. We operate on that basis. We have to be great all the time as a company. You have to educate people, they go down and up. Treat people really well. Pay. It is pay. Pay is not the major thing for really good people. It is engaging them so they feel control. They feel special. They have a compost something. It is a lot of those things. They have accomplished something. It is free food. Little perks. You geto you make sure that person . Whats we work really hard. We work really hard. For someone who recruits a friend. If they are both here in six months, they both get the money. I hate to give away tips to competitors because we are all competing for a limited pool of amazing talent. We want the best engineers. Are you finding traditional ways you use to hire are out the door . Are you doing anything different aside from the finders fee . You get out there. You get the buzz. You get on television. Come work here. You need to be a better place. 20 years ago, we were still short on tech. After we went public, we had amazing office space. We had everyone on Wireless Computers before they were wireless. We had outdoor space. You do the things more special than your competitors. I think it comes to treating people with amazing respect. Have a bottoms up culture where you set the vision but say here is where we want to go, where can you take us . We do a friday afternoon hackathon where the engineers get to work on whatever they want to work on. It is one thing for scott to say this is where we want to go. It is another thing for the engineers to do it. Google used to do 20 . They dont do that anymore because they learned it was not efficient enough. In our case, it has to be at least tangentially related to our products. Maybe youre having a hard time finding talent because you are in a city where there are so Many Companies starting up. Everyone is trying to grab everybody else. Says why doesnt a company like yours move to detroit or nashville or cincinnati, which is where he went and toured a couple of weeks ago. I want to play steve cases argument for why we should be starting up other tech hubs. We are seeing startups all over the country. We decided to do this road trip through the heartland of america Deshaun Thomas on entrepreneurs and startups to attract more to shine a light on and on jupiters attract more attention and startups to attract more attention. It sounds good. I love steve. I have known him since preinternet. What he is doing is a great thing. For us, it is an interesting tradeoff. In Silicon Valley, they started venture capital. There have been two generations of companies where in new york there has been one. It started about 20 years ago. People in europe did not understand equity, risk, and the excitement of startups people in new york did not understand equity, risk, and the excitement of startups. Now they do. We are at about 60 . We dont have the funding of Silicon Valley. Silicon valley is a company town like detroit was. New york is diversified so you will not run into somebody at a Cocktail Party and say my kid is looking for a job as easily as in san francisco. We are a fashion company. You have to be in new york. New york is a great place. It is the best place to be. As we start to educate the next ineration, the 10yearolds, 10 years, they will be great programmers. In the next three or four years, we are in trouble. You can teach yourself. We have three. I used to interview people and ask when they wrote their first line of code. I thought they had to say 10 or 11 to make me happy. We have three that did not get into it until after college. They are great at it. You can teach yourself. That kind of talent, bottom line, you are saying he will not be able to find it in smaller cities . You can reeducate. If you do massive reeducation of the detroit workforce, which used to be one of americas great integration centers, that makes sense. 20s,ve to educate the 30s, and 40s. You can learn to code at 50s. The cofounder of keek. Com and about. Com. We will be back on in the loop. Heres a look at the top tech stories. Wearable technologies. Theyre looking at ways to develop messaging deliver that way. The problem is the limited display size. Provider iswifi filing for bankruptcy after admitting creating fictitious accounts. Wasam city researched gowex worthless. Larry page says the future of the workforce may be parttime. It is 26 past the hour. That means Bloomberg Television is on the markets. Matt miller has the latest before the open. Another record to close out the short week last week after a big jobs number that surprised many economists, investors as well. We see futures moving down from that this morning. Im assuming that every trader came to work today because a lot of people may have made it a fourday weekend. S p futures and dow futures down. Nasdaq down about. 2 . It will be interesting to see where we open. We are at record highs as far as equities are concerned. We are on the markets again in 30 minutes. Lets count down to the top 10 stories you need to know about today. Mike mckee joins in. Lets start with number 10. Firedite Radio Company one of its most prominent talkshow hosts last week. Irius cited his racially charged and hate filled remarks on twitter as the reason for terminating the shock jock. Number nine is apache. The oil and Gas Producers seeking a buyer for its stake in chevrons natural gas project in australia according to people familiar with the matter. Apache has announced 9. 8 billion of asset sales in the past year. Excuse me. I was playing candy crushed. King Digital Entertainment raised to overweight from neutral. A new 12 month price target, 28 a share. Expedia. 78 is agreed toa greeted by an australian Online Travel group. Expedia says it expects the deal to help expand the Customer Base in the asiapacific region. Number six is petsmart. The retailer is reviewing changes to the capital structure aiming to. Return more money to shareholders petsmart has been under pressure from partners to pursue strategic initiatives. Corinthian,ve is the for profit college. It is the subject of the department of educations toughest ever reginald regulatory action. Access to student aid put on hold putting the for profit on the path to failing. Number four is tesla motors. Over the weekend, a model s exploded in flames, split in half after a highspeed chase and collision in los angeles. The company is working with l. A. Police and fire officials investigating the incident saying it wants to study the remains of the stolen vehicle. Number three is go pro. Shares in the company were among the most traded in the u. S. , having doubled after an ipo less than two weeks ago. High levels of interest pushed stock up 16 last week, extending its gains since going public to 73 . A lot of money left on the table. Advanced two, gt technologies falling premarket after receiving notable downgrades from analysts receiving multiple downgrades from analysts. It is a major partner for the apple glass production. Buyhe company said it will wild flavors for 3 billion in cash. Among the products is capri sun. It marks adms biggest acquisition yet. Bogle, ained by jack prominent voice for the markets. He is the founder and former ceo of vanguard. He is the father of mutual funds. He joins me on the phone. Great to talk with you this morning. Good morning. How are you doing . Good. We are records. The jobs report looks better than expected. Do you think we should be at these levels . Yes, i think these are roughly fair levels for the market. Maybe a bit high. But you have to understand earnings and dividends have grown as fast as the market. Higher, onlyds are to the s p book higher than the 1. 8 in 2006. A decent average year. The price earnings multiples are high. I use about 20 times earnings based on reported earnings by the company that have already been achieved. Wall street, ever optimistic, uses 15 times earnings without the right of. Those are not cheap figures. They are not big danger signs. But they are not astronomical. Does that mean if you are not in the markets already that you would not but fresh money into it . I am a believer you should be always in the market as soon as you start investing in your retirement, in your early 20s. Getting in and out is not a profitable thing to do. You should have a plan, an idea of asset allocation. This is conventional but it works. Keep adding. If you are adding to stock positions, i would not stop and wait for it to get cheaper. I would not think it is going up and there is momentum, lets add extra. Just stick to your plan. Be prepared. The markets can always take a big drop. Corporate earnings could be trouble, who knows . It is a matter of betting longterm on Economic Outlook for the company and large corporations. What is your longterm Economic Outlook . You have a guy like bill gross putting in 200 million of his own money on the table saying Interest Rates will continue to stay low, that the economy does not look as good as people think. Ask guess you would have to him. I wish i had 200 million so i could with him. You agree with him . Actually, it is a matter of timing. Interest rates are going to go up. Everybody knows that. We just dont know when. They cannot stay at these levels for ever. It is a question of when. I would guess they would stay low for a few more years. Jack, you were interviewed recently on stage talking about Retirement Plans and defined pension plans. You mentioned you dont believe in mandates. What did you mean by that . What i meant was we have a diverse population, and you cannot have a mandate to save, for example, when some people cannot afford to save. One suggestion was there be mandatory amount of savings. I believe that was the question i was responding to. Mandatory amount of savings for people or funds . A mandatory percentage for each family, Something Like that. I dont think you can do that. We are all different. We all have different objectives and levels of wealth. We all have different prospects for the future. Most of us are working, but a lot of us are not. I dont think we need more farreaching, allencompassing rules. Te smallery and wri rules and you get into a bureaucratic mess. I think the system has to take responsibility. The Retirement Plan system has to take responsibly for improving itself person by person and company by company. Thank you for joining us, bogle. Gel, jack we will be back in two minutes on in the loop. American apparel is facing more fallout from firing the ceo and founder. One lender is threatening to call in a 10 million loan unless the retailer puts charney back at the helm. For more on the file, we are joined by matt townsend. Why are they planning to call the loan . They have this loan that has a stipulation that says if dov charney is not the ceo, the loan goes into default. It was triggered when the board suspended charney two weeks ago with the intent of firing in 30 days. To grant aglected waiver. Charney toshing for be back at the company at least shortterm to stabilize. They are worried about losing 10 million. It is an unsecured loan. If the company were to file for bankruptcy, this loan would potentially not get repaid at all. It is about getting their money while they can. They have this stipulation they can call it in if he is not the ceo. Lion capital can call it in if dov charney is not the ceo. What do the other investors want . What are they doing . A hedge fund recently became the largest investor in American Apparel, standard general based in new york. We are talking to the company and looking at ways to improve the finances and reshape the board. We learned over the weekend from sources one thing standard general is considering is funding the repayment of this loan to lion capital to avoid a big legal dispute. One aspects of the loan is if it defaults, it could cause other debt American Apparel has to go into default. Standard might come to the rescue and fund the repayment loan. American apparel has said they have the capital to pay off this loan. But that would weaken the liquidity which has been hurt in the past. The Company Raised capital earlier this year. This has to be done in the next few days . Yes. Line capital said they are considering calling the loan today, putting notice of acceleration. Right now this is up in the air. Potentially standard general and lion capital could work out a deal. The big story is lion capital would like dov charney back despite the allegations of misconduct. They are not convinced the board has proven their case for his ouster. Theres a lot to unfold. There are a lot of twists and turns to come. We could have standard general putting people on the board this week as they talk to American Apparel about how to move forward with the company. Thank you, matt townsend. You just saw shares are up 4. 5 already in trade. Look time for our weekly at the top stories on linkedin. Interesting to see a couple of stories about how to email, how to get peoples attention. It is the medium we all love to hate. We have a couple of stories from members on opposite ends of the spectrum. We have one who says you have to be targeted about what you send people because if you spam them, they will stop listening. Of irony is you only sort succeed the fifth to 12th outreach. On your fifth email . The other bad news is if you pester people in the wrong way, you turn them off. Needed a job in london. ,he moved from her native india could not get arrested in london. Metaphorically speaking. She decided she was going to focus on certain kinds of media by saying iter them am willing to do a job for you. It worked. She said it has worked every time. In the continents, people are going crazy in both directions. Is easy to be on either side of this because we all send emails and hate getting them, so we are conflicted about this. Everyone is or is tried to figure out what millenials think andillenials how to get them. An author who gives millenial advice has a candid point of view. His mother is turning 60. She is about to retire as a nurse. All kinds of awards, never a sick day, that kind of thing. She is not sure she will be able to retire in the manner to which she deserves. He is saying this is not going to work for us. In 40 years, we will be running things everything anyway. His basic point is we want to work as hard as you think we should. We want to work harder than you think we will. But it is not about the hours, it is about the impact. In the a lot of that engineering culture where people of Congress Things on their own terms where people accomplish things on their own terms. He says we dont want to wait until we are 55 to enjoy life. We want to enjoy life now. Jack bogle says the same thing. He mentioned in the talky particular that there should not be retirement ages, there should be no mandatory retirement ages any longer. It is an interesting notion that has impact on social policies and social security. The point is well taken. The old saying that youth is wasted on the young, it should not be wasted at all. You will be working to some extent in retirement so you might as well work it out now. Great to see you. Check out my linkedin page. Onwill return in two minutes in the loop. Time for the global outlook. There is confusion over allegations he german Intelligence Officer spied for the united states. Of the levelcation of distrust between berlin over washingtons intentions. Hans nichols joins us now. There is a leaning to the worst intentions by the germans. That is one way to put it. This puts Angela Merkel in a difficult spot. Shes in china now. Shes flying back. To give you a sense of how serious the allegations are, she rarely comments on issues abroad. She commented this morning. There is someone working for the federal security sources in germany, that they were a double agent and also working for the nsa. Two favorite parts of the story. He they found him was offered his services to the russians, and that is how they found him. The other way . The way he was transmitting data back to the states, although allegedly, through a fake weather app on his computer. I will check to see whether yours are real. You are welcome to check. This, andhe has said she said this in a very unusual way, what is the next step . Clarity for starters. They need to know exactly what happened. Was this actual classified data transmitted . The bigger issue is will this get too far in front of animal Angela Merkel . Will she have to summon outrage again . When her phone was tapped a year ago, merkel was slow to express outrage. That came back and hit her bi t her. Look to see how strongly she expresses outrage and what this does to talks. I know we talk a lot about trade. This is a serious issue that could put the freetrade pact on ice. Ourans nichols, international correspondent. Game are no world cup todays. That does not mean soccer fever has died down. They will battle it out this week for the final two spots in the tournament which leaves fans and bookies wondering how much the rankings mean, where is the championship truly anybodys to win . What are the odds now with these four teams . The odds are close for the first three teams, those were expected to be there. Brazil, germany, and argentina. They are all almost equally at 30 . The netherlands is in the back. They are statistically be surprising team. The weird thing is they were the team that finished second place last time, so everyone else was not expecting them to come back. That is what will make it interesting. The first three are more the common favorites for everybody. Germany and brazil are going to play against each other. What are the odds . Before their best players were going to be outcome of result had the best chance of winning, almost 60 . 5050 is almost exactly with the injuries and the other player that will not be able to be there. Isar is injured and silva out. Silva could come back for the finals. Now it is a 5050 shot. He was worth 10 Percentage Points in odds . He ist by himself because responsible for all most 40 of the total shots created by the team. He was the most important offensive player. Just that one player, without him they are at a disadvantage. They have a deep bench, but he is clearly their best guy. They seem like a dark horse. What are the odds of winning . About 20 . They are about the 15th ranked team. If you look at the numbers, they were not expected to be in there. They were worse off than england and portugal when we started three weeks ago. If you look at how people were predicting, only 1 thought they would win this thing. You have a real opportunity to win your brackets because you can take advantage of things others were not expecting. They are the wildcard. They have consistently done well in the past. This is something we might not think of statistically, but they do get it done time and time again. Thank you so much. That does it for today on in the loop. Tomorrow we will be joined by the cfo of imax to talk about transformers. It could be the ticket for the jumbo screens to dominate the chinese market. That is tomorrow right here on Bloomberg Television. It is 56 past the hour. That means Bloomberg Television is on the markets. I am matt miller. Lets look at where we are 30 minutes into the trading day. We hit new records on friday and pretty much every day the last couple of weeks in equities. Not a huge surprise to see us taking a bit of a breather. The s p 500 down about. 3 . The dow also down about. 3 . Still above 17,000 which we saw thursday. 4471. Sdaq down. 3 at lets take a look at where treasuries are trading. Today we have bonds. Take a look. The two year yield coming up to almost 2 . The 10year coming up about. 3 as well. We want to stick with bonds, which is why i bring up the quotes. Not huge movement. Investors flooded back to debt year. Hey abandoned last as fear mounted, rates would rapidly rise or at least get back to normal. Are they piling in at the wrong time . It is a question a lot of people, especially fund managers, have been asking themselves this year. What is going on . Why did everyone get this wrong last year . There is so much cash out there. People were nervous about the economic recovery in the First Quarter of the year, whether it was the weather or whatever people wanted to attribute the slowing of the economy to. There were signs we were not seeing the recovery people were expecting so people went to safe haven trades. You have Central Banks around the world continuing to stimulate the economy. What this meant for investors is they have funneled more cash into the classic total return since the First Quarter of 2013. And sayingming back we are buying into the yield story that yields will stay low for a long time. Is a still the case after the hadsday job numbers that we more additions . James fuller says he thinks it could be the First Quarter of next year and beyond. He is forecasting a rate increase out in 2016. It is pulling forward a bit. On the flipside, you have the International Monetary fund saying they might reduce their Global Growth forecast. I think that was almost politically motivated. Im going to put that out there, christine lagarde. I think there are a lot of motivations. I will not make any claims or insinuations. I think generally there is a lot of pressure to keep rates low as long as possible. Theres more concern about deflation and what happens if the economy does not recover. They are out of tools. If it does not recover with the stimulus, i think theres more concern about keeping rates lower longer even if there is concern on the fringes about asset bubbles. I think investors are coming back to high yield bond funds. Investmentgrade bond funds saw their second biggest inflow of the year. People are still piling in. Theyre going to investmentgrade bonds, high yield bonds. They have come back to some emerging market bonds. They have been going to global bond funds. We can continue having the central bank debate, but that is where the money is going. Thank you. We are on the markets again in 30 minutes. Live from bloomberg headquarters in new york, this is Market Makers with stephanie ruhle. How long this rally will last. Retail therapy. And maybe a solution in sight for struggling American Apparel. Ripped off or just static business . Intot say they were duped buying thousands of dollars of products they could not sell. A bloomberg investigation