Perkins. Christine lagarde is under investigation for negligence in france when she was the french finance minister. Many around the world are astonished by that latest adult development. The s p will kick off today at a new high but that is just a part of the story. Rallies in brazil and japan helped push the value of Global Equities to its own record, 66 trillion sloshing around the global market. Trillionmore than 2 in value since august 7. The markets correspondent scarlet fu has more. 1000e index first reached in 1998. It took 16 years. It was last below 1000 has recently as september, 2009. From that point of view, it has taken almost five years to go from 1000 back to 2000 and now it has closed above it. I was looking at the movers and you have cyclical groups leading nine from 2009 until until now. After stocks are up 125 percent. Industrials gaining 120 . These are Industry Groups that have doubled in value since that period. I was speaking with liz and sanders she says the significance of the s p at 2000 round numbers matter psychologically, but to institutional investors, not as much. They do matter at a key technical level family reached that when we talked 1920. The key focus is on the dow industrials and what they will be looking ahead to is not the dow and a new record button nasdaq topping its previous high of 5000 back from the dotcom days. That will have people saying wow. Certainly a lot of reflection. Thank you, scarlet fu. I want to bring in bob dell, a chief equity strategist who joins us from princeton, new jersey. Bob, you say 2000 and mental milestone, but it is an important one, isnt it . Turn a newke when we decade it is a milestone, but we are the same as we were yesterday. 2000 is exactly the triple of from when the bull market began. Stocks have tripled in the last five and a half years. They have tripled in the last fiveandahalf years, so, bob, what brings us the next 1000 . It will be earnings and Economic Growth from here. A lot of the move from 666 to 2000 was earnings, some was ee. Continued good news and that is what we will get. You have mentioned that among all of the still wild card is the fed. Why is that, bob . The fed is no question has been the focal point for this economic expansion. First of all, rescuing us from almost going out of business, if you will, to the reflation problem of getting us on our feet, and everyone is focused on the withdrawal of the fed. Engineered i say pe by the fed, loosely, is going up the big story going toward. It is Economic Growth and earnings. Why is it the wildcard Going Forward, bob . I think the fed and janet yellen have broadcast clearly what they plan to do in the next 18 to 24 months. The focus of investigators investors was where is the comma , the capital letter what month will they raise Interest Rates . I agree with you that the the details iso pretty much in place, and that is good news. That the fed is not normalizing rates in the future means the economy is doing better. You say wilden card, is that enough to derail the fiveyear bull run . Know, the fed is our friend, not our enemy at all. They will only become an enemy when they raise rates to fight inflation, and we are nowhere near that level. What else could help derail or what could derail this rally, bob . . We know the last few months has had, if you will, this on thebetween earnings good side, and geopolitics and slow growth overseas on the concerning side. It is that side of the ledger are there more geopolitical issues, do things heat up . Sanctions in europe, what does that mean for growth . Europe is pretty weak, japan is not strong either. We need better. You. B doll, thank what could derail stocks . Maybe a tech bubble . I do not know. It is a big day for snapchat. They are said to be nearing a new round of funding that will value the company at 10 billion, nearly three times what facebook offered to pay for the company last year. I want to bring in bloomberg editor tom giles. Are we in a tech bubble all of those questions. As you said, it makes no money, so why do people want it . First of all, it is a popular way of communication for young people. These sites, the facebooks of the world, they want to tap into how teens are keeping in touch, sharing information, photos. What you see with someone like kleiner perkins, they are looking at what kind of valuation they could have in the future. You think 10 billion is a lot. Facebook 819 billion for their deal a few months ago. They are looking forward and saying they will keep getting users and the attention of the next generation of Internet Users that some buyer will want to get down the road, possibly more than 19 billion. That is what they are looking at. Yes, maybe somebody will find a way to get marketing messages embedded into these photos. Maybe not. What is important is getting the attention of the next generation. That is crucial. It is all about the millennials. We have to fix your microphone. There is some crackling going on. Well be back with tom giles, Technology Correspondent for bloomberg intelligence. Republicans are confident they will hold onto the house in the midterm elections but Speaker John Boehner might not be as happy as you think. Some of his biggest critics within the republican ranks are headed back to washington and they might be bringing reinforcements. Peter cook has more. I thought the tea party was supposed to take a hit in this election. That is how it has played out in the senate, but in the house, midterm elections could turn the republican conference further to the right, and it will raise question about John Boehners grasp on the speakers gavel. 10 of the 12 house members that did not support John Boehners election as speaker are cruising to reelection, and the other two decided to run for the senate. The Group Includes three lawmakers specifically targeted by business groups like the chamber of commerce for defeat and that includes tim huelskamp, justin amash, and walter jones. They all won their primaries and look safe in the general election. The bad news for john boehner the antijohn boehner chorus next year will be even bigger. There are almost one dozen new republicans on their way to victory in november that have set on the campaign trail that they will not support or at least at this point will not commit to back john boehner and that includes gary palmer, and alabama and georgia talkshow host jody hice. He could still win support from the rest of the conference, continue on as speaker, but his job already is like herding cats , and it looks like there will be a few more cats for him to deal with. Expects to said he be the speaker, and one thing he has done to shore up support is republican. To every when will be the test . Assuming the democrats do not when the house, and nobody expects that to happen, it will testand april, and the big will be a vote on the debt ceiling later on in the spring. Thank you, peter cook. Coming up staying with politics, rahm emanuel focusing on big data balancing the citys need for information on concerns about privacy. Cutbacks and consolidation that is a reality for many in the telecom world. We will talk to the ceo of Alcatel Lucent exclusively in a moment. You are watching in the loop , live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. Ever since he took the helm in early2013, alcatellucent ceo Michel Combes has been trying to revive the Telecom Giant by selling assets and cutting jobs. Cuts innced 10,000 job october. As the industry consolidates, few giants remain. Cisco, announced 6000 more layoffs. To get a state of the industry, i want to bring in Michel Combes live from paris. Thank you for joining us this morning. First off, on the layoffs, where are you in the state of costcutting . Are you looking for any more job cuts here . So, first, good morning to all of you. I am you, as you just said at the University Close to paris where our french Prime Minister has just arrived in order to announce an important speech around how to restore trust and confidence in french economy. Ok. I get where you are, but just to answer my question are you looking given that the industry seems to be consolidating, cisco cutting jobs again, where are you on the costcutting spectrum . Are you looking at further layoffs . Sorry, my answer was not precise because it was very loud when you asked your first question. As you know, i started a planned 12 months ago that was about restructuring, refinancing the company. After 18 months in this process i can say today that this first stage of this plan has been implemented, meaning the company t. ,clearly refocused on i. Cloud, and altra broadband access. Have been able to implement strong restructuring with more than 10,000 layoffs within the company, and in terms of refinancing, we have been able to refinance 2 billion in debt, and raise 2 billion in equity. It is the right time for me to start the second step of the shift plan, which is now about innovation, transformation, and about growth in order to make sure alcatellucent will renew with profitable growth and become one of the Major Technology leaders on a worldwide basis. Well, on the growth side, where do you see spending . I know in the u. S. Verizon and your biggestof customers and they spent quite a bit in the first half of the year, but that appears to be slowing down. Where is that growth going to be coming from, michel . That the u. S. Ht has been a nice Growth Engine for alcatellucent in the past few months. I have no doubt that it will continue. As the competition is, as we say, picking up in the u. S. , with sprint, and of course at t and verizon will continue to invest. That is for the u. S. Of course, alcatellucent can also deliver products to cable operators, web players, and larger enterprise segments. That is where we are trying to extract additional growth. If i go outside of the u. S. , asia is also booming with very strong investments, many led by china, japan, korea, where we have a strong presence. Then, remains europe. As you know, investment in europe is quite weak right now, not only in france, but europe as a whole. One of my reasons for the presence at the university today is to plea for additional investment in infrastructure which is critical to relaunch the growth of the economy in europe. That,hel, speaking of asking for investment in france when austerity is being put in place and there is a revolt, how will you ask for that when there are austerity measures being put in place . That is where we have to find the right balance between austerity measures, which are needed, because we spend too much. We have to reduce this burden. On the other side, of course, we have to make sure we invest properly in the right areas. So, that is one. I guess there is probably today, and understanding that investing in Digital Infrastructure is needed, and europe and france has to reignite investments in Digital Infrastructure. It is not only about money. It is also about regulation, how to favor consolidation of Service Providers in order to make sure they are Strong Enough to invest, as is the case in the u. S. There are four major telcos in the u. S. Where we have 120 in europe. Such a fragmentation is not the right way to invest in information infrastructure. There is a lot they can be done in france and europe in order to reignite that, and i am confident that the new government sector will embrace this need. , addressed michel the china question what are you doing in relation to wah way . Competitor, my only answer as far as alcatellucent is concerned is to be competitive here at i have to innovate more. I have to hit competitive. I have to innovate more. I have to have the right cost structure. I am competing with them around the world and i should defeat them with my own means, meaning i should be best in class and that is what im trying to achieve with alcatellucent. Ok. More costnovation, reduction, and that will allow me to be best in class. Michel, thank you. Michel combes, the paris. Lucent ceo from we will talk to the chief economist at the zillow in a moment. First. Bloomberg. You are watching in the loop , live on Bloomberg Television and streaming on your phone and bloomberg. Com. Good morning. I am betty liu. The Obama Administration is trying to line up allies for possible military action against the islamic front in syria. Among those that might sign on, the u. K. , turkey. Standard general is in talks with radioshack about raising money and staving off bankruptcy according to people familiar with the matter. Radioshack has lost money for nine straight quarters. A flight with American Airlines censures of orbits down by the most in three months. They have sold shares in a discussion dispute over new contracts. Prices from u. S. Airways as well. In the meantime, it is 26 minutes past the hour. Bloomberg tv is on the markets. We have been making a big fuss over s p 2000. Right now, s p futures are unchanged. Can fiveyear stock market will run continue bull run continue . That has been a big question today and has been for this year. We are on the markets again in 30 minutes. As home pricing gains hit the brakes, rents across the country are climbing and approaching record highs, but there is one exception. The Nations Capital a glut of construction has rent on the decline. Leasing costs fell in the Second Quarter compared with the National Average gains of 3. 3 . It is a big disparity. The decline is making the washington, d. C. , metro area the worst rental market for landlords, but good for renters. Joinsumphries from zillow us now. This goes to your point that housing markets are getting more localized. That is right. 20052006, they were all going down, but009, going now local is coming back with a vengeance. You have to understand the dynamics what is happening in cleveland is different than vegas. Do you know what is happening in the sea d. C. . Why is this happening . We tend to focus on the affordability of homeownership. It is getting harder to rent. Markets, rent of is unaffordable, even though 90 are affordable for purchases. We have had households forming that has been primarily renting households, not owning households, and that is created rental demand. There is not enough supply to service the demand. Prices have been going up. In the bay area we see doubledigit rates spikes in terms of rent. How does that affect if you have unaffordable rental units, how does that eventually affect home prices . That is a great question. People think they are separate markets. They are not. They are related. Rightharder for renters now to stimulate savings for a down payment in order to become a buyer later and that creates problems down the road on the purchase side of the marketplace. Would you see that biggest problem now, what cities . Were both rent and purchases are unaffordable california markets. San diego, l. A. , San Francisco, san jose, they are most out of whack in terms of rent that is unaffordable and purchase prices that are unaffordable. When both sides of that equation are unaffordable by historical standards, usually that is an indication there is not enough housing supply in the market and we need to build more housing units. Ok, so we need to build more housing units, not what some others are saying, we need to stop building the units because we might be headed toward a housing bubble . That is right. A bubble would be if you saw purchase prices out of whack compared to rent. Have you seen that anywhere . We do not. Y, broadly at the u. S. Level, homes and never been more affordable. Not even here in manhattan . Manhattan is always unique. Right. Even San Francisco. Generally, incomes in manhattan and San Francisco are very high as well. Typically, people spend about third of their mortgage of their income on their mortgage, and now they are about one spending fourth. As rates go back to normal, youll be spending more of your income on the mortgage. Rent is no bargain in San Francisco either. There is basically nowhere to hide from high housing costs in the bay area. Bottom line, then, stan, we e gotten housing data caseshiller numbers not great by any measure where do housing prices go from here, the bottom line . . Here, bottom line . Slowing, and it is actually a Welcome Development because if it is not slowly briskly inflating a housing bubble in some markets. Arent we still way below the 2008 peak . Schiller index, we are still about 10 off of the peak levels, but the issue is those eight levels were unsustainable and we had a housing correction for a reason. Ok. I do not think we should be in a hurry to get to the peak levels. Ok, so basically we will continue to rise, just not as much as we have seen in the last several years. But that is right. On the that is right. On the zillow index, we think we will grow at half the pace of the last year which would be a welcome slowdown to give markets a breather while incomes catch up. You so much. K stan humphries, the chief economist at zillow. Staying on cities, one on one with chicago mayor rahm emanuel his latest project causing controversy. And is there room for a bigger ipad . Preparing for the largest ever. Details on that. Stay in the loop. Well, the city of chicago is betting big on big data. Mayor rahm emanuel has given the greenlight to a project that would install metal sensors on traffic post to collect data on air quality and weather, but it has privacy groups concerned. Iting the managing editor bloomberg tv managing editor sam grobart explains. Chicago might be the second city, but it is the first to launch a permanent infrastructure to collect big data. This network of sensors will measure temperature, humidity, light, sound, and cell phone signals, all from these metal fixtures on lampposts on the famed Michigan Avenue and other locations. It is being dubbed chicagos array of things. The city of chicago is quite large. A lake. Retched across we will have precise temperature data which will help us do things like salt the streets more effectively depending on where temperatures are very. Cities always had the data. I am not sure they always used it to figure out how to govern better. The first 30 will be installed in the fall with the plan for 500 over the next two to three years. We understood we could do something on a proactive racist than a aces rather than a reactive basis. Because the city was concerned about its architecture, it was important that we put up something that is aesthetically pleasing. Comprised is actually of commercially available components. We wanted to make sure we did not create something that was not sustainable or, frankly, repeatable by other cities, so the Technology Components inside can be purchased essentially offtheshelf. The goal is to make chicago a cleaner, more efficient, safer place to live. Analyzing time, place, other trends in crime to know the tactics and where to put police officers. Sometimes the record of government trying to work with technology healthcare. Gov is not always sterling. Sure. How do you make sure you do not wind up in a situation like that . Fair enough. We set the requirements, but we are allowing experts to produce the technology. The city is setting the stage for innovation and getting out of the way. But the new hightech sensing system has privacy watchdogs concerned. The data will be open to the public and the software and the hardware will be open sourced, too, so developers and watchdogs will have access to the information, what is the citys take on concerns about privacy and an amenity . To balance those. Chicago has historically had a bent in holding back information. Bloomberg Bloomberg Sam grobarts joins us. Is it a good enough response about policy concerns . The rhetoric might be lacking, but their actions reflect the right way forward. They are making sure that not only the Data Collected is opensource, so everyone can see what is being collected, they are also making the process of developing the Technology Open source so everyone can peek in, see the code being developed, the projects underway, and if they have problems, they can raise concerns. What about the data . How else can they use this data this data . Exit will be a couple of different kinds on noise cap it will be a couple of different kinds. It will be on temperature, noise, signals. Not identifying who is who, but if there is a mobile device, it is probably a person. So, there is an ability to detect pedestrian traffic and density, which could be helpful to the city as it delivers services more efficiently. Do we know if other cities are doing the same thing . Right now chicago is in the lead with this project and they have been working with the city, academic universities institutions, and private Industries Like motorola that are all combining to develop this program. Because i know in new york id use the data as well to save cost they are trying to use big data as well to save costs. Cities have been collecting data for quite some time, as you heard mayor rahm emanuel talk about. You have this program collecting Additional Data in a new way in hopes that that might open up new solutions the city was not aware of. We know rahm emanuel likes to be the lead on many things and in particular he wants the city to be seen as a tech startup place. Yes. A place of innovation. Totally. You guys talk about that as well. Absolutely. Attract moreng to startups, keep them in the area, bring them to the area. They are excited that motorola, which used to be 90 miles away, have moved. They want to see more of that. They have a lot of great academic institutions in chicago, but also going out to wisconsin, michigan, ohio, and why cant we not be a place by the way, with a one. Iving that is that is onethird of San Francisco. They need a start up success that is bigger than groupon. They still like to milk groupon. I do not think you should be talking about groupon. I do not either. I thought you might enjoy this tweet yesterday. Everybody saw this congratulations from one Vice President to another. He sent this after julia louis emmy for herhe portrayal of a fictional Vice President. Congratulations to a fellow veep with a great sense of humor and a good friend. Us responded that she has been promoted. And by the way. So i might. I love that show. If hed rahm emanuel or house ofp cards, and he came down on the house of cards side, but he said above them all his favorite is orange is the new black. I am enjoying that, but they emmys, dissed at the netflix did, but did. But hope quote breaking bad , whichbreaking bad won a lot of people say oh success to networks. Gambling in new jersey. Or casinos will be opening up. That story is next. Well, with one casino in Atlantic City shutting its doors and another three schedule to follow suit, businesses are jumping at the opportunity to build up gaming outside of the jersey shore town. Right now, new jersey gambling is only limited to ac, but legislatures are considering other parts of the state. One proposal by the Meadowlands Chamber of commerce put a vision together of several gambling meccas in new jersey. Herewith a closer look at those plans here with a closer look at those plans, the ceo of meadowlands commerce, and our gaming expert, who has been frequently on our program, brian c. Miller of lubricant college and. Of bloomberg intelligence. Jim, we were showing the renderings of your proposal around the meadowlands complex, the Sports Complex. How much will this cost . We estimate that it will be between 1. 5 billion and 2 billion in total investment if all components are built. Private and public . It could be a combination of both. Assistancee public would be necessary to incentivize the private sector to take the project on. A and Atlantic City is having hard time getting anyone to go there, why would they go to the meadowlands . Plan is adding components to the Sports Complex that are not there now. It is about a vision of creating a sustainable economy through the year 2040. It is not just about gaming. We want a convention center. Hotels, shopping . Hotel properties. We want to link the components. The jets and the giants built an outstanding stadium. There is a Retail Entertainment complex being built. Put those together, and we think it makes great sense. Does it make sense . It does. It is by no means a done deal. The biggest problem Atlantic City had is they were not diversified. It was all casinos. What the meadowlands would bring his first a proximity to a Large Population center that has money, manhattan, and it is not just gaming. S,u have sports, convention hotels. Is an transportation to and from the youre going to be an transportation to and from new york going to be an issue . Servicerun a limited right now, and you have to stop in hoboken, or i believe, see caucus. What they need to do is a direct service, so there would need to be additional spending there if they did that. Had triedother group to do this, building this American Dream complex around the meadowlands. It went into bankruptcy twice. I remember going to the meadowlands during the super at thend everyone looked ski slope and said that is the one that got bankrupt and never made it to fruition. Listen, i appreciate the skeptic is the skepticism, the right now there is building for the American Dream where they will build a waterpark. Some 10 years later. I think we will see a potential opening as soon as the fall of 2016 or the spring of 20 17th. Another big interest is politics. You have unions and politicians. They do not want the competition. In order for Something Like this to happen you have to get them on board. What is the play to entice them . Good point. New jersey is tough politics, but if we take a strong Business Case for why this can work, we believe political leaders will come around to understanding. We have lost valuable time in waiting to expand gaming outside of Atlantic City. We also want a strong Atlantic City. What is happening because of the convenience market, people are not driving to Atlantic City for the convenience. Millions drive through the meadowlands to get someplace else for convenience gaming. My parents did it, driving to mount airy in pennsylvania. About time,talks time is an issue because new jersey has been around for 30 years, if not more, and you seek expansion in new york. Seevidual casinos expansion in new york, two casinos two hours from new york city. There is a crucial time element to this as well. Absolutely. We believe that the legislature puts it on the ballot to expand gaming outside of Atlantic City it will pass by a wide margin in new jersey area where new jersey. What are the chances of that . We have to get into the politics. We had the legislators in. We told them about the urgency. I think they got that message. He will contain the conversation. Again, make the Business Case for why this is good for the meadowlands and new jersey. Do you know what new jersey voters think about this . You look,nds on where but the majority on the whole are ok with gambling. It has been in the state for a long time. The expansion is more complicated. Dicey. Chris christie is now open. Steve sweeney is willing to listen. I think they realize the model, the status quo is broken and i have to do something different. Exactly. Miller, thank you. ,nd, lee kunhee, jim kirkos thank you. Harvard alumni angry with their alma mater and samsungs succession lands. Stay in the loop. E stay in the loop todays bloomberg big number is 133 million that is how much the harvard endowment payout and salaries, bonuses, and benefits last year, and that has one group of alum outrage. Members of the class of 1969 have written to complain, pointing out that compensation has more than doubled at harvards investment arm in the last three years, and in the meantime total employment is up just 19 . Harvards has the biggest University Endowment and the world at 33 billion but it 33 billion dollars but it is not recovered from the financial crisis where it fell 27 . It is still trying to make up for big losses. In the meantime they should have invested in stocks, right . It is 56 minutes past the hour. Bloomberg tv is on the markets. Huge bulle been on a run. We hit s p 2000 yesterday. Where will the markets go today . It looks like they are unchanged so far. We are on the markets again in 30 minutes. Coming up, is bigger better . Apple hopes so when it comes to ipads. We are about 30 minutes away from the opening bell. In the loop you are in the loop. I am betty liu. Heres what we are working on equity futures look to be little change. We rose above 2000 on the s p 500 for the first time yesterday. Company hiked prices on expensive hearings and rings. Smith wesson down. They cut its forecast because on sold guns are piling up that dealers. In the meantime, we have breaking news on ali baba. They are out with their junes earnings report, posting earnings of . 84 on revenue of 2. 5 million. Cory johnson excuse me that is two point 5 billion. I thought that was a typo. Bloombergn, our west editoratlarge joins us with more. We were expecting this filing. What is your take . I have been doing some math. Alibaba is a Free Cash Flow creating business. Over a yeare grown basis of 46 . They get ready to ipo sometime in the next month. 46 over yearoveryear Revenue Growth is quite possible. It shows you the business model. We are just in the numbers in the last minute or so so i will go through and look for the funkiness that we see with other when they reported ipo trying to sell a lot of stock to the public. On the headline numbers, this is the kind of deal, in this kind of market, that could be the biggest ipo ever. Forget technology. It could be the largest Stock Offering in the history of the public markets. It is a big deal. To come with the quarter that is so strong, certainly fueled by not just a good, strong business in china, but also a lot of other acquisitions and other things they are throwing together as they get ready to do an ipo a big, strong business, that is growing fast. It seems like every few days or so you see alibaba popup and a headline when it comes to a tech company, with alibaba being the latest in snapchat, for instance. They were possibly involved in financing snapchat, right . Certainly that was out there. It has not happened. We learned overnight about a new investment in snapchat, or late yesterday afternoon here on the west coast. One of the things about alibaba is it is one of the businesses in china sanctioned by the chinese government. When they make an investment in a u. S. Company, they are putting it under a sanctioned under a law allowing those businesses to move into china and do business where others are not allowed. For example, google, facebook or the businesses that have not been allowed to dwell in china, as well as big businesses like cisco and do well in china, as well as big businesses like cisco, which are battling against incumbent players. Alibaba, as an investment ebony, brings with it not just cash, but the ability to grow faster in places where other businesses are not are forbidden to grow at all. What you make of the valuation of snapchat at 10 billion . It seems patently ridiculous, a Company Without revenue getting a valuation mike that, and im not about to defend it. What i will say is 10 years ago we were looking at a newly Public Company called google that had only gathered revenues three or four years before hand but had been a successful Search Engine for about five years before that point. There are certainly opportunities for snapchat to be something. It is used in terrific volume. If you look at some of the ways we can measure the success of snapchat, internet traffic you see traffic reports and i have been tweeting about this, we have seen statistics about the level of traffic generated by snapchat. It is among the top 15 sites in all of the internet. So, it is really up there with Companies Like facebook, instagram which is now part of facebook, of course. Yes. Youtube, netflix it is generating enormous amounts of traffic. I should also mention swift tv, the Company Acquired by amazon. That is why you see so much attention being paid to the likes of snapchat. What about the apple front and this whole 13inch screen apple ipad . How big of a deal is that . Do we need one that size . 12. 9 inches that is a 33 increase in the size of the ipad from the nineinch or nine and someinch ipad that is the standard. What we are starting to see is apple has the capacity to do a lot of Different Things and offer different sizes that they did not have before. You know the saying, go big or go home. That is what apple is doing here. Go big or go home, we will see if that works, thank you. Cory johnson, our bloomberg west editoratlarge. Tiffanys might drop that little blue box. They could bring in a huge makeover. We will be back. Well, as we mentioned, tiffany recording another strong quarter. Sales are up 21 over the past year, and after a couple of c suite changes and a new design director the first woman in the 177year history, can they shine even brighter . I want to bring in the founder and ceo the luxury institute, who advises toptier brands and they have worked with tiffany as well as cartier. Welcome. Thank you. They beat estimates, sales are up in the u. S. Margins are higher. Verytremely well a wellmanaged brand. It is amazing to see them grow where china has slowed down, and the u. S. Has been more tepid. They are outperforming many other luxury brands. I looked at their sales numbers. Sales are up in the u. S. About 8 , but in europe and japan europe down 8 and japan down 13 . What do they do to turn that around . The slowdown in china has affected europe china sleep, and europe sneezed and europe got a cold. 70 of the Flagship Store in paris or london is driven by tourism. So, that is a big problem for europe right now because its own local economy is not producing as much. Japan, they bought a lobby for and now they slow down. I think will smooth out nicely before the end of the year and ethically will see growth. At is up with this what is up with this woman, myncesca who is she much she is a Creative Genius, . Nown to be accessed she she is a Creative Genius, known to be successful with other brands. Like who . She has worked with museums. She has done a lot of brought work with jewelry and art. Ceo wanted to wait a long time because they wanted to find someone that had the values. She is a Creative Genius and she is a steward of the brand. It is not about her. It is about the customer, the brand. So far, one of her, schmitz has been this t collection. Her topless mens has been this t collection. Accomplishments has been this t collection. A it has a chance to be classic for the long term. It is not just a seasonal collection. It is something that will be a classic higher price points bracelets could cost a thousand or more . Versus the hundreds of the lowerthousands . Correct. They are trying to elevate the brand. Other brands have flattened out because they are too ubiquitous. Tiffany is trying to strategically go up market, keep affordable luxury, but go up a market to increase margins, and make sure they remain a true luxury brand. Will she be the most hated woman in she gets rid of those little blue boxes . I do not think she will get rid of the blue box. I think she will be interpreted. What does that mean . You can do a different take on the blue box. I do not think she will change that. It is iconic. Change the color . Asked the color, or not use it it is too much of a signal. It is so attached to tiffanys. Milton pedraza, thank you for joining us. Switching gears, but staying in some of the toprated carriers are going above and beyond for luxury passengers. Has been digging into the story. To are the Airlines Catering the ultrarich . Especially on the long haul that carry flights from new york to tokyo or abu dhabi to london. In order to attract the super wealthy passengers, airlines are rolling out features like we have never seen before to attract the paying customers. For example, there are small little luxuries like leather desks and egyptian cotton seed on british airways. We also see emirates test a bedroom concept, and then in december, the rollout of a threebedroom suite with a living room, a bedroom, a shower, a outlet, a concierge, a personal chef these airlines are going to Great Lengths to attract the super familiar passengers. Premier passengers. What is the strategy why they proliferating . It is just it as the rest of us are in luggage class, firstclass passengers are getting more space and luxury upfront. There is a market for this luxury travel. There are private jet. G 650 has aam threeyear waiting list. Passengers are willing to pay a lot for these luxury services. These commercial airlines are doing a really good job of making firstclass almost feel like a private jet experience. You have a limousine, a concierge, your luggage goes right to the airplane you barely ever see, and in some cases you never see people flying coach. The resistor Energy Behind capturing this wealthy market, airlines are also trying to there is a strategy behind capturing this wealthy market. The rest of us. We are slopping around like cargo in economy. City in these tight, little seats. Shelby holliday, thank you. Staying with airlines take a look at this a mile high ghost town for Malaysia Airlines waitings of abandoned areas are emerging on social media. It is not just the photos. One bbc journalist tweeted i can arrived inmother kuala lumpur in one peas after flying malaysia airport airlines, but the plane was so empty she had three seats to herself. The airline itself and from the downing of flight 317 and the disappearance of mh 70. They are offering incentives. Coming up, china counting on a big surge of popularity for electric cars. We will see if the demand is really there. With juneina, alibaba earnings ahead of the september ipo. We will bring you the new details. Cory johnson beginning to the sec filing. Stay in the loop. Well, china is considering a 16 billion investment in infrastructure for electric cars as pollution in major cities is growing out of control. With this chicken and egg approach payoff for the Company Country . Matt miller has been the cap demand in china for electric vehicles. It is big, right, that . It is not as big as it is here, keep in mind the auto market in china is growing at a faster pace. China puts the carriage before the horse, as they say. I actually took a look at how much this is in relation to the revenue, and if you look back at teslas revenue since their inception and really 2007, through this year, even taking in mind the most bullish forecast, it is still more than twice as much as tesla has ever sold. So, i thought that was very interesting. We were expecting tesla to sell almost 4 billion in cars this year or get 4 billion in revenue. They got 2 billion in revenue last year. This would work those numbers and maybe help them sell more cars. What is interesting, though, teslas stock did not really do so well yesterday on this news. That is because tesla is not the biggest carmaker, electric car seller in china. Competitors over there actually rose in shanghai because of this news. 37 of the market for electric, plugin vehicles. Green cars. The market there they want to come into the u. S. Costs about half as much as a tesla. That is why they are stronger there. The market is not as big. 20,500ve sold about green cars they say in the first half. In the u. S. , through july, pluginn hybrids electric cars, i should say. Huge share of the electriconly market, but if you look at all of the green car sales in the u. S. , tesla has sold about 30,000 units career through now in the u. S. Right. Of the model s, whereas the chevy volt has sold 65,000 and the spark has sold what is the is a structure like . Do they have many charging stations . Not nearly as many as we do. We have about 6000 here for public use. There are more for any use. China is not there yet. Theyre hoping this will affect the chicken and the egg argument is exactly what this is, they hoping it will spur the electric market and help it grow strongly. It is a bigger country to drive through. It is a large country, a very big place with so many people and great food. [laughter] you, matt miller. We are a few minutes away from the opening out. We have the top 10 trades you do not want to miss right after this break. Keep it here on in the loop. First. Bloomberg. Maxwell comeback. If you are in the loop welcome back. You are in the loop. I am betty liu. It is 26 minutes past the hour. Bloomberg tv is on the markets. Are looking to open slightly higher. We have been flatlining after we reached s p 2000. The big question is can we continue on to s p 3000 we will debate that in a moment. We are on the markets again in 30 minutes. Ets count down to the open julie hyman and alix steel join me this morning. Lets start with number 10 facebook. The social media giant downgraded from neutral to buy at Jana Montgomery scott. Facebook shares are all in the premarket but are up more than 90 over the last year. Number nine, mankind the Biopharmaceutical Companies was rated a new buy at jefferies. Mankind shares are up more than 3. 5 in the premarket and have surged more than 35 so far this year. Kind of a cool name. I would pay attention. Number eight, my motherinlaws favorite retailer, cheetos. Hey chicos they fell short on revenue and sales are down as a result. Surge in the premarket michaels. Offeredt estimates and an upbeat forecast. My grandmothers favorite store. Tivo. Six is they beat analyst estimates by a penny they gaining subscribers. They also plan to buy that 350 million worth of stock, but the wellaker forecast profit below analyst estimates, which is sending shares lower in the premarket. Number five, Time Warner Cable customers across the u. S. Will up to no Internet Access this morning and took to vent their frustrations. How did they take to twitter . I guess mobile devices. Service has largely been restored. They are in a study investigating the source of the problem. It shows how addicted we are. I love how people wake up, and something kisses them off and the first thing they do is go on twitter. I will tell everybody. Let it out. Because you know if you call Time Warner Cable on the phone, youre not going to get through for a very long time. Very true. A sad story with radioshack, but they could be getting a lifeline. There are talks to raise cash and stave off bankruptcy. Radioshack has lost money for nine straight quarters. Their stores are pretty sad. Number three, smith wesson the company putting its fullyear Sales Forecast because unsold guns are piling up at me dealers. They say sluggish demand will have an impact in the Second Quarter. It is surprising because when you hear the antigun rally wrapup expectations that triggers gun sales. Handgun sales are still going ok. It is the long guns, assault rifles, etc. , that was particularly weak. You have number two . Express results came in above wall street estimates. They also raise the fullyear forecast and express Profit Margins are improving amid a difficult environment. Shares are searching on that news. The number one is something we can all identify with tiffanys, the luxury jewelry retailer Second Quarter profit shares are shining, so to speak, in the premarket. They have introduced this to jewelry higher luxury line. I dont know if you saw the tea collection yet. It is much more expensive. Up maybes are going because gold and silver prices are going down. Just saying. There was the opening bell. The s p trading off at a new high. Lets talk a little bit about how were going to get higher. I want to point out this chart we put together. He says basically any advance beyond 2000 is going to have to shearme relatively high prices and yesterday we showed at 1. 7ght here, highest six. The sales he says are really going to have to jump to keep stock prices going up above that level. For more, i want to bring in the chief Market Strategist for oppenheimer asset management. What you make of these sales ratios and the other measurements . Say, i think this is part of parcel of what we of been expecting for quite a while. Very often, since we have been 2009, march since nine, it has a was been a question of how are we going to do it . The job is getting done and it is accommodation of what the Federal Reserve has done, concerted efforts by Central Banks around the world, in, nation with industry which is working with technology, algorithms, robotics, and labor. Which is very corporate of the terms of the cost of labor. Moderate levels. Things like outsourcing and reshoring as well. All of this in play, enabling companies to be profitable and to bump up that sales ratio we would expect Going Forward. If you look at the landscape now, youre seeing the central bank diverge in terms of what the policies might be from the ucb to the bank of japan to the u. S. Federal reserve, which raises the question, are investors prepared for the better be the first one to really withdraw when he see the Balance Sheet of the fat and the s p run up together, theyre pretty much in tandem. Might we see some increase volatility . I think we will see increased follow chile, and i think one of the reasons volatility nothing one reason is, simply thetime you change components of the equation and you start moving forward, there will be dislocations that occur. I think the momentum is positive and i think will make it relatively smoothly than what might be expected. Increase in volatility, very natural. I think the offset is, inflation remains very well in check. The real issue in europe is concerns with deflation. In the u. S. , disinflation remains an issue. There are pockets of it everywhere. You see more of a risk of that than inflationary pressures . Yes, i do. I think the big thing Going Forward here is to recognize that much of the jostling that we saw 30 something years ago when i got into this business as Interest Rates came down, well see jostling on the way up as Interest Rates normalize again. But the rx expectations will be inflation will remain in check and primarily because labor is your major component to make inflation stick. You can have Commodity Prices jump. You could have dislocations relative to geopolitical problems. Disrupt the supply chain. But to make prices stick, higher prices stick for long, you need wages to cooperate. You dont have this labor pricing. I want to get to one of your kicks. This company has seen six is to sales growth. That is apple. We have been talking about it not just today with this promise of a larger tablet, but also yesterday when best buy came out and said for the full year it will see sluggish sales growth. Did not call out the iphone 6 by name, but the ceo did sort of hint at the idea that maybe the iphone 6 dement isnt going to be as high as anticipated because everybody are he has a phone. And in many cases, pretty late edition phones. Theyre happy with them. Exactly. Do you think that is a risk for apple at this point . I think invariably risk lies alle, besides opportunity times, but in this case, i love funny feeling that larger screen , whether it is going to be on the iphone in a few weeks or if it is going to be in the ipad in a few months, i think it is a big thing. Generationally, it falls in a sweet spot for us baby boomers. I cant wait. I will actually graduate from a blackberry to apple iphone within the next couple of months. By necessity. You are still on a blackberry . Yes, maam. The bigger question of the day why is he still on a blackberry . I asked that, too. Thanks so much, john. Great to see you. Cheap management strategist at chiefeimer management strategist at oppenheimer. Prosecutors in france investigating imf managing director christine lagarde. She is not planning to quit her job over it. We will have many more details in a few moments. We have some breaking news and chiquita, the board reaffirming the 13 share offer is inadequate. In a letter to shareholders, the company reiterated they vote in favor of the offer to buy irelands spice, which would create the worlds biggest banana supplier. Much more to come on this front. Another piece of m a activity. Another top story, good news for alibaba. Chinas Biggest Ecommerce Company saying profit nearly tripled in the First Quarter to just shy of 2 billion. Advertisers boost spending on the Online Platforms mall. I want to get more perspective on the numbers from cory johnson. He has been digging into the filing, grabbing some highlights from the alibaba report. Our bloomberg contributing editor on the phone from san diego. Hall, let me start with you and your take on these numbers. Theyre very impressive numbers. I guess my difficulty in trying to read too much into this yet dealsething like 25, 30 underneath all of this in terms of acquisitions, Something Like 16 billion over the last 1. 5 to two years. Going through the filing and looking at it, one of my favorite things to search for is look for one time whether it is want to expenses or onetime games, and it popped up like 30 times. How much ofxactly this weekend annualized versus how much of this is driven by these recent transactions is really difficult right now. Is this organic or bought growth . Filing is a complicated for the fact the reporting not in u. S. Dollars in Exchange Rate a report Exchange Rate on a for 2014. Sis theres going to be a lot of untangling to do. I will also know the user growth slowed down a little bit on a sequential basis and quarterly basis. But the numbers it is china. The numbers are huge. There talking about active buyers. 279 million active buyers in the quarter, people actually using the platform to purchase things. That is up 9 quarter over quarter. Is slowing down. That was 40 growth which get away to 10 growth 14 growth which gave way to 10 growth, then 9 . , two point, im looking at our bloomberg story. Take out 29 deals worth 16 billion by alibaba. Andything from finance soccer to Media Entertainment and taxi booking services. People who buy into this ipo, do they know what they are buying into . Almost no chance of that being the case. You simply cant, given the byzantine structure in terms of not just the number of acquisitions, but the actual legal structure of the organization with respect to variable interest entities and what have you. This is an exceedingly conflicts Corporate Structure made more complex by the recent see of so much of the structure coming together through acquisitions. Im still going through some of the filing. I actually think raised if you exclude some of these onetime items, looks like the Profit Margins compressed a little bit and the most recent quarter. The fact is difficult that is to untangle, it is remarkable. I know corey is great at untangling these numbers. Give me your take. Azure going through it, what else will you be looking for in these alibaba results . The way im built my model, i am doing it in r b and then translating to u. S. Dollars, which is not accurate because the currency fluctuate so much. Out, as they add these businesses, it is hard to see what the core business is doing. It is different than the vie structure, the chinese law supposedly requires, but fundamentally, when you look at what happens when companies go back, it is hard for shareholders to make ranges at a Corporate Board level when the companies in the u. S. And the shareholders get one vote for each share. That is that the case and ali baba where shareholders want even have that much control. Control. Quotes on they can pray. Faith will help. We have to leave it there. Cory johnson and Paul Kedrosky on alibabas latest firings filings. Coming up, some new budget numbers from the congressional budget office. The question is, will we see the numbers that reflect a shrinking debt or is it widening as you hear all of these people talk about, these panicked people about the budget crisis here in the u. S. . Erik schatzker is your with me covering that story in Market Makers. We will get the latest update on federal finances in about 20 minutes time from the congressional budget office. Peter cook will bring us the breaking news. You are right, we are trying to figure out whether the budget deficit is widening or shrinking. Lately, it has been shrinking. It is no more near the 1. 4 trillion we saw in 2009 or from 20092012. However, it is going to grow. The question is, how quickly . Likelement programs medicare and medicaid and Social Security are going to cause the budget to balloon in the years ahead. The problem is that in the near term, the shrinking budget deficit, you may not get much mulligan it is now, but the shrieking budget della to visit relative to where we take the heat off commerce to do something about it and that is what we will be discussing with kent conrad, the former democratic senator from north dakota, member of the gang of six who famously try to negotiate a grand bargain with john boehner. We know that failed. How much on the forefront it was that the deficit was going to grow grow out of control. Now we come to this where her that anybody talks about this anymore. The irony is that 500 billion is still a great till of money, just a lot less than 1. 5 trillion. Theyre going to be to Start Talking about it soon. We make it 500 billion this fiscal year and 500 billion there about next fiscal year. The updates to those timbers are coming from the cdo at 10 00. But what happens after fiscal 2015 . Those are the Big Questions congress eventually is going to have to tackle. Better for us if they tackle them now. The likelihood of that, very slim. I agree. Thank you, exide skirt. Still ahead, an Investigation Underway into imf managing director christine lagarde. Shes holding a meeting in washington to explain the situation. It is time for the global outlook. Christine lagarde is under investigation, accused of negligence in a case that dates back to her time as french finance minister. Hans nichols in berlin with the latest. First, explain the actual charge against her. What is going on . This is a formal charge of negligence. It is day two, political scandal in france in 2007, 2008, and arbitration at the time between basically a french tycoon and one of his banks. It all stems out of that 20072 thousand eight case. At the time, she was finance minister to then president sarkozy. It stems from that. We should really note she is denying these charges and heres a statement from her, quite strong from madame lagarde who announced the charges. She said her lawyer could not immediately be reached for comment. One thing about this charge, even though it is simple negligence, it basically means prosecutors in france think they may have enough of a case to potentially bring charges against her. Carries a fine of 15,000 euros and potentially a year in prison. Even though it is small, simple negligence, there is a real fine and cost attached to it. She authority said she will not step down from the imf. This . Re any president for her chief of staff or one of her safety its is now the ceo of orange, the telecom company. He has also been placed under formal investigation. Also notchard is stepping down from his role as ceo of orange. While the he actually has gotten a second term from his board. Christine lagarde will have to make her case to her board and we will see how successful she is. Thank you so much, hunt snuggles, our International Hans nichols, our international correspondent. That does it for in the loop. You wait to get your eyes on the new 2015 mustang . That is tomorrow morning at 8 00 here on in the loop. We are on the markets. I am matt miller. Take a look at where we are 30 minutes into the trading day. We have gained i dont know if you would call them gains. A slight green arrow on the arrow on dow and red the unchanged s p, nasdaq down slightly. We are just slightly under the 2000 level, though technically, maybe unimportant, seems to be a bit of resistance there. Look at treasuries. We have a bit of a mixed trade. It looks like were now looking at yields falling on the twoyear as well is the 10. Investors who think they can diversify by buying a mix of stocks and bonds may want to think again. While the Asset Classes have generally moved in opposite direction since 2000, that may be changing and it means they may pose both gain and lose at the same time together. To explain this new theory is lisa abramowicz. What is going on here . These are supposed to be negatively and inversely correlated. Initially people thought bonds would gain in times of turmoil and stocks would lose. In 2008 when the world was just gave u. S. Ing, bonds 40 versus 30 plunge in the s p 500. These Asset Classes are now moving together for the past couple of quarters. Becauseought that was one market is wrong and the other market is right. We are asking investors, is the bond market smarter and typically people think of that way and it is showing there are real problems, for example, in geopolitics or is the stock market smarter shrugging these off and continuing to run . In income analyst for over 20 years has a different theory. He says it is not one is right and one is wrong, but both are responding to the stimulus that has been ongoing. It is both generating Economic Growth which is positive for stocks, suppressing yields on bonds. What could cause rates to rise . He said inflation. We dont see it right now. Theres not a high degree of inflation. The ends the expectation of inflation is not high. If it picks up, it is good for stock and bonds. If you ever up at spike increases, people are not going to be as excited to buy things. It will slow the economy. At the same time, the fed finishing up its tv policy would start raising Interest Rates to fight the inflation. This is the theory Going Forward that stocks and bonds could basically both the hurt by rising rates. Sort of of the capital what you wish for. The Federal Reserve has been prolonging the stimulus efforts to sort of spur inflation and get the economy going. The issue is, if inflation does pick up it doesnt have to pick up that much. It could be 2. 5 or 3 . That could significantly to real stock and bonds rallies. Stocks and bonds rally. This is sort of something to keep an i on if people think they can hedge their stock bets with their bond bets. You thought being a fixed income reporter was going to be boring, and it is so exciting. Cool. Is Market Makers is next. Incredibly shrinking deficit. Will it change the budget debate in washington . We will be asking former senator kent conrad. Denim is losing market workoutb skill pants. Going online to find the perfect mate. Good morning, it is wednesday here in new york city. Youre watching Market Makers