Transcripts For BLOOMBERG Street Smart With Trish Regan And Adam Johnson 20140410

Momentum bailed. Tech stocks tumble. Pimcos bill gross will tell us all how to play it. He opens up to me about the future of his firm for the First Time Since Mohammed Ali Arian foster karcher. Ebay and icahn. Carl icahn is coming up. Has plenty to say about john donahoe, the ceo of ebay, and whether hes really ready to back off on his paypal spinoff plan. All that and more coming up for you on street smart. A massive selloff on the way. Of one points, loss point eight percent on the nasdaq rather, the s p. Nasdaq seeing the brunt of the loss, down almost three percent. Olivia sterns is watching the market for us right now. He tech selloff is back. All these stocks that were the biggest winners of 2013, today they are the ones selling off the most. These big internet companies, google, amazon, facebook all down three percent, four percent, five percent. Look at that. Its a perfect rally and selloff. All the gains from yesterday wiped out. Buybook was raised to a earlier today. Another sector that is really seeing losses today, the nasdaq biotech index. Sectorck leading the lower is a lexicon pharmaceuticals, those shares down more than seven percent. All the gains from yesterday wiped off today. Overall 18 loss since speaking earlier this year. Almost a bear market overall for biotech. I have write a, shares r iteaid, shares popped today. They came out with earnings that the analysts estimates. They said their Sales Forecast would come in ahead of expectations. Shares bucking the overall trend of the market and seeing a bit of a pop. Run itswoday rally has course. The tech selloff picks up. Investors are moving away from highflying momentum names in turn for value. Joining me right now with more on the selloff, bill gross, pimcos founder and chief investment officer. Bill, welcome. Its a good day to have you here. We are watching this major selloff on the nasdaq and big losses there on the dow and s p, this flight to quality as we see people move into the bond market. Is this something that you think could last . It is probably not a oneday thing. I dont think you can blame it on the u. S. Economy. We had jobless claims this morning close to cyclical lows. We are forecasting two percent to three percent economy. Related. Earnings related toly more outside the u. S. , to the potential for china to slow down in terms of their growth. And for the potential of japan to perhaps move back into a recession, based upon their increase in taxes over the past few weeks. It is a global influence, but certainly not centered within the u. S. At the moment. How is what the fed is doing or not doing affecting all of this . The expectation is that janet yellen and company will leave a rates low for the foreseeable future, but theyre continuing on with the paper program. Should that give Equity Investors reason for pause . The fed has influenced ,arkets for the past five years for a long time. Downhat qe is being phased and markets expect the fed to be done and over with it i the end of november, that is something in terms of potential tightening. The fed dismisses the fact that the taper is a tightening. Probably is equivalent to Something Like 100 basis points of hikes in terms of the fed funds. At 25 basis remain points. We are at the beginning of a tightening cycle. Its important to analyze exactly where they fed well be in terms of its neutral policy rating. Mean, where will they basis . A longer term where will fed funds stop if they begin to rise as the market is forecasting in june of 2015 . Pimco views it differently than the market. The market and other fed participants view a nominal poli cy rate of 4 at some point out there in the distant future as something that the economy could accept. We think it is much lower, and that places the emphasis on risk assets such as stocks that can benefit low interestrate environment can continue on . For how long . Not forever. The fed funds raised have to increase at some point. My guess is as good as any at mid2015. If the scope of that increase, will that increase behave like it has in the past, by 25 basis points, by 150 basis points per year. We do not think that is the pace that the fed will all finally decide on because that is the pace that is too much for the u. S. Economy. It is dependent upon cheap leverage and we think the fed basically stops at two percent as opposed to four percent, which fed participants indicated with their famous blue dots in the last month. What is the ata on that two percent . Eta on that two percent . If we begin in mid2015, there are perhaps 100 basis points a year. Mid2017. At that point, we will know more. We will know whether or not inflation is at two percent, plus or minus, whether growth is at two percent plus or minus, and whether that is the normalized policy rate. We think the participants in terms of the famous lou dots blue dots are looking to the past. The past was indicative of a, economy that was less levered. The future is indicative of a deal every type of economy that cannot really stand high real Interest Rates or high nominal rates. We think stocks are attractive at these levels. Two percent by mid2017. Theres a cover article coming out on you tomorrow in business week magazine. It looks at the behindthescenes drama of what was going on with you and mohamed ali. Alerien. There was talk of all kinds of drama. Do you think the media that that right . How would you characterize how you were treated by the media at that time . I think this whole past two months has been silly. Breaking news, gross gets mad once in a while. Not quite Lindsay Lohan or Chris Christie types of headlines. The Critical Link in terms of what you talk about and what the article talks about was, mohamed leaves because gross gets mad sometimes . The answer is no. Mohamed has not spoken up, and thats a mystery to us, and an extreme disappointment. We move on. We have a new structure and new deputy cio structure that we think is even better than what we had in the past. Any sense of why he did not speak up . Does this get at some of the issues that you guys were dealing with internally . Think so. Ont its a mystery to us. He simply said he was not the man to take the company forward. He constantly repeated that without explaining it. He did not say that he did not have the qualifications. He did not say he had lost interest. He simply said he was not the person. Thats a mystery. The additional mystery is the fact that he has not spoken up. I would say, come on, mohamed. Tell us why. The furor over the past few months really are quite exaggerated. Its not indicative of what this company is, what this company was, and what this company will be in terms of our future structure. But how does that make you feel, knowing this is a guy you work alongside and was a trusted partner, your cocio, the idea that he leaves and doesnt say anything . Quite an extremely disappointed. I thought i knew him better. Pimco and the executive committee hired him twice. 1990s. Him in the late he was working with various markets. We hired him again to do the orcio and ceo about six seven years ago. We hired him to be my successor. Does that make me mad . Yes, that makes me mad. Does that make me disillusioned . Not really. Have a future that is probably now better than what we had in the past. We have an Investment Committee that is stocked with market it is equity,er corporate bonds, diversified income. These are people with morningstar manager of the year awards. This is a different type of , thaty that is inclusive hopefully gross response to in ands of allowing discussion allowing potential this agreement Going Forward so that when you come up with our famous alpha generation for portfolios Going Forward. Give me one chance here to mention something. We have an ad coming up. It basically talks about the total return plan and says, 25 years, 31 billion. Over the last 25 years, the total returns in addition to market rewards has rewarded investors by 31 billion, over 1 billion a year in terms of extra returns. Thats the foundation of this company, and thats the foundation of where were Going Forward. I will be here for a long time. We have a new structure in terms of the Investment Committee and our deputy cios. We have a new ceo. The company is Going Forward. You want to move forward. I understand. At some point, we all retire. You will retire someday. What happens to pimco, the firm that you started in 1971, the firm that you have built what happens when you do retire . Hope it ispoint, i some point in the distant future. Hes 80 years old and still plugging away. If dan foss can do it, i can do it. In the meantime, were developing talent. We have deputy cios. There are six of them, and additional people that can fill the slots Going Forward. Its not quite a combination of jamie dimon, but its something where we are developing talent for the future. It is gross and deputy cios and the whole staff of pimco that basically works from the tops down and works from the bottoms up and produces alpha in terms of the total return fund it, comes in at 1 billion per year in terms of extra rewards. They say you are tough to work for, tough to work with. You mentioned in this article that some people have referred to you as a dictator. Why is there that perception of you . To give you an honest answer. I think that came from disillusioned ex pimco people, pimco people that have been ander retired or laid off, thats their personal impression. Whats my impression, what is the author plus impression of this article in terms of the bloomberg story coming out i think a leader has to be forceful at times, has to be dynamic at times. To allow for inclusiveness, allow for discussion to promote and elevate the best ideas. Have i done that in the past . Perhaps not perfectly. I would point to the pimco record. If i had not done it in the past, if we had not done it right in the past for the past 35 years, where would chew trillion dollars 2 trillion have come from . Axe can bes with an critical of may, but were going to do better Going Forward. Tell me about the relationship you had with mohamed. Do you think it was a mistake to put so much emphasis on one other person . You now have six different deputies. Does it help to diversify the Management Structure . I think it does Going Forward. There was a point when i was 63 or 64. My ex ceo Bill Thompson was 63 or 64. We thought it was our duty to write a will, find our successors Going Forward. Thats the obligation of all leaders, cios and ceos. Business, im still around for six years, im still talking too fast i have some life left in may. Was it too early to bring in one person . It probably was. To have a platform of six or more in terms of potential successors . I would say thats a better plan. Will these be the guys traveling for you, talking to clients . Thats a lot of what mohamed did, right . He did it, and he did it well. He was a frequent traveler, 30 was0 of his time traveling. He visited with important clients on a global basis. Ceo should do, and he did that very well. Needs to be more at home as opposed to out there on a global basis. That was the role i fulfilled and the role that hopefully we will focus on Going Forward, stayathome to manage alpha, promote results as opposed to constant circling the globe and promoting other things. Seendont know if you have the title of this article. Its very much tongueincheek. Theres a picture of you, its a quote from you am i really such a jerk . I know you are not a jerk. We all know you are not a jerk. Thisou have got to fight perception right now, in part because of what happened. Is there anything you would change in terms of how this unfolded . Of course. I spoke in the article to the fact that Something Like this over the past two or three months causes one or should cause one to reexamine yourself , the Michael Jackson man in the mirror in this particular case. Are you the person you thought you were, or are you the person that others thought you were . What is your answer to that . For the most part, im the person i thought i was. That inwilling to say this environment, in this new dcios,on, with our that its important to be less of a strong leader and then more of an inclusive type of leader. I look in the mirror, and i like my hair. Its nice and thick. Can it be changed . Can it be a different style . Of course it can. Thats what im trying to do. What would you change about yourself, besides your hair . [laughter] it a littleaper bit. It is true that at certain points, i have raised my voice. Is that a bad thing . Its not all of the time. Quite frankly, you dont get a pearl unless you have a grain of sand within that oyster. A little bit of sand, a little bit of temper, a little bit of noise, a think its incumbent upon a leader to promote that. But its not a lot. Im examining myself from that standpoint. Bill gross, we certainly appreciate you joining us here today. I hope you are there for a very long time. Thank you, trish. Pimco founder and chief investment officer. You can read that fall article on newsstands tomorrow in business week. Coming up next, he even and ebay and carl icahn. Does icahn think hes getting enough in return . Just want to check the markets. The nasdaq gaining hit hard here, more than three percent. You have got investors bailing on those big momentum names right now. Quick look at the dow here. We are off one point, nearly six percent. Markets really getting hit hard right now as we head into the final halfhour of trading. A leak in the very Encryption Software meant to keep us safe from hackers has sent the internet abuzz and has companies racing to shore up their websites. Security firm responsible for exposing one of chinas hackers by units has released a new report on the 2014 cyber threat to escape landscape. Year thanter off this we were last, or not . The takeaway, modestly improved. The analysis derived from its own cases and hundreds of clients was compiled before we learned of the heart bleed bug. The findings speak to the cyber challenges, made all the more evident by recent discoveries like heart bleed. Organizations are discovering compromises surer than before. Out in are still hanging victims networks, a whopping 229 days last year, before they were discovered. Organizations are still having a hard time detecting when they have been compromised. In 2013, only a third of companies discovered they had been breached on their own. One thing that has not changed, Financial Services still the top industry targeted. Threats to media and entertainment picked up last year. That theicture was list of targets has increased and the Playing Field has grown. Cyber threats are playing a bigger role in conflict right now. Theyre not just financial anymore as for his motives, right . Right. Is term political hacktivism about smaller groups getting political influence. Chemes are not that sophisticated. We see a lot of phishing emails with links to malware. They infiltrated more than 40 organizations last year. Mandy and warns that any company, especially media can become political collateral in these hack attacks. Individuals are probably most responsible with phishing scams. Any findings on that front . One thing that was interesting was that 44 of phishing phshing emails impersonating her i. T. Department. Wednesdays are a good day to be alert. Thank you so much. We will continue watching this major selloff in tech. We will be back. We first saw toyotas concept car at the auto show and now it has arrived in washington to be introduced. Leota invited members of congress and Phil Mattingly to take iroad for a test drive. Heres what he found. Part motorcycle, part golf cart, part futuristic podmobile, this car was enough to pull a handful of u. S. Lawmakers away from the business of legislating for a test drive. Why . Mytoyota has a big plant in district in southwest indiana and princeton and i wanted to see what the iroad can do. I think theres opportunity for it. I was fascinated with it. Caraybe iroad, the concept that they debuted at the geneva auto show. It is powered by lithiumion battery, giving it 30 miles per charge. It tops out at 28 miles per hour. It is not yet approved for u. S. Roads. It is being pitched as the perfect car for city dwellers. We see these cars fitting into a Transportation Network that can be shared between users and play a role between mass transportation. Why washington . When you have a new technology and you are considering whether to take it to u. S. Roads, might as well show it off to the nations decisionmakers . Uses a set of Onboard Computers to counterbalance centrifugal force when the vehicle turns. We are testing to see what public reaction is and what people think of this, is there a market for such a vehicle in the united states. How did the show go over . Compared to some floor debates, android hearings way more exciting. Wow. Thats slick. Phil mattingly joining me right now from washington, and matt miller writer with me on set in the studio. Is this Company Really trying to curry favor with lawmakers . I kind of need it right now they kind of need it right now. No question about it. It works both ways. You heard from the congressman, theres a kod a manufacturer in his district. What you see from lawmakers is they are lobbying these companies to try to bring jobs into their district. It works both ways. Everybody gets to have fun too. Miller, 6 million vehicles being recalled. This is almost triple the size of what we are seeing for gm. What is at stake for this company right now . They also recalled 7 million vehicles last year and 10 million in 2010. General motors has also recalled about 7 million this year. They all recall they both these two companies recall the most cars this year. General motors has a record of all time. To segue for a moment, all these recalls nausea recalls does it have to do with the legal implication . When mary barra came into her job as ceo, and she decided to do all the recalls she could as soon as possible, which is probably the best decision on her part. Toyota, seeing what happened to her and after they got their find a month ago, decided to do the same. Theyre getting the recalls outoftheway as quickly as they can, and thats what you want as a consumer and investor for them to do. Its probably unrelated to this iroad car, which looks pretty andome and experimental progressive. Im really excited that toyota is finally doing Something Like this. It has been so long since they have taken real chances and done Something Different and exciting. This is definitely both of those things, and i hope that they come forward with the production version of this car. How does it drive . What do you think . It looks like youre having fun. Definitely had a good time. I was a little bit nervous. I live in the city and dont drive my car that much. This thing turns from the back. I was wary going into the first or second turn. Fast. U acclimate very it is so smooth. As you pick up speed, you literally leaned down with the car. I think my main concern was that the backwoods swing out back would swing out. This is the real deal. My main goal would be to get the back to swing out. [laughter] it looks like it will handle more like a motorcycle they car, which is for me a much better handling and driving experience. It is a rearwheel drive. Im guessing theyre driving it with a chain or belt in the back. It is so cool and i wish carmakers would do more outofthebox thinking and do more things like this. They seem like they are on their way. Toyota wants to take sportier and take more chances. Thank you so much, matt and phil. Coming up, we are in a deep selloff right now for technology. The nasdaq down more than three percent. We will be back with more on these markets, and what is fueling this, and will he continue. We are minutes from the close and we are in the midst of a massive selloff of technology again. The nasdaq down more than three percent right now. It has climbed slightly off the lows of the session. Take a look at that today charge and you can see how rough it has been. Here with more on what is behind this move, we have Michael Reagan and brian blair. From the pits, jim or mellie. What are you seeing there in chicago . Are people getting nervous . Think this momentum will last to the downside. We are looking at a massive selloff. What will be the worst day of the year for specs. This morning we had jobless claims come in at the best level we have seen in several years here. The economy might not be that bad. Momentum in those tech stocks is what is driving the selloff today. If this was a panic selloff, we would see a move higher in the vick and in gold. We are seeing muted reactions in those indices. We have been watching this move out of momentum plays. What is behind this . Thenvestors not think economy and therefore earnings will support if valuations . In 2013 weart of it. Had a 36 increase in the nasdaq. A lot of the big cap names were up 50 to 100 . As we end the First Quarter and head into earnings, there is concern about growth rate and the back half of the year. I think investors will not want to wait and see what Company Management teams are saying about what the back half of the year looks like. Pcsross the tech area, are still weak. There are areas that are question marks. Investors are waiting to see what management teams are saying about the outlook. Does it last, this nervousness . Its very alarming when you have a selloff like this without a single news catalyst. You had disappointing chinese trade data. There are about three different stories on ukraine and russia. No one is pointing to any single news event trade its a continuation of this rotation we have seen. Maybe its a good thing. Its not like there is an actual event you can hang your hat on. We have had four quarters of solid growth for these tech names. Not just 3d printing names, but if you look at yelp yelp went up 300 last year. To give a little bit of a pullback. Three percent decline is not substantial when you look at the overall performance. You look at the overall performance in the nasdaq. We are 20 off the highs we set back in 2000. We had seen quite a run up, up 30 plus just last year. Were those kinds of returns unrealistic. I dont know if they were unrealistic. High names trade at valuations. Everything is trading at high valuation right now. We are still relatively close to alltime highs. If this was a panic mode here, if we were going to a bear market, we would see a bigger reaction in the vix. We were up 20 handles yesterday through relatively thin volume. Its easy to take those traders out. Todays move might be exaggerated because of that. There was no news catalyst today that could have sparked this. One of the things we talked about, our rosenblatt securities customers today, was to take a look at the companies that are in the best position to benefit from the back half of the year. A significant product cycle across smartphones and wearable products. Doings a number of areas well in china. Were trying to get investors to line up a basket and look at important names that are doing well. Names like yelp, that have pulled back 30 , solid business models, and have great opportunity as you look ahead three or four months here in months. You see a little bit of a buying opportunity . This is a buying opportunity. We are going to talk more about this selloff. Dont go anywhere. We will be right back. Here with more on what is behind that big selloff, brian blair and jim or mellie. Jim, what are traders saying down there . Did they anticipate Something Like this coming as we watched the nasdaq struggle . We are surprised we are down as much as we are right now. I think an investor with a longer time horizon can look at the price action this week and say it is very choppy and difficult to read. This market is really struggling to find direction. Once we get into the full swing of this earning cycle and get a good look at the economy, we will find some direction. The price action over the last couple of days is not indicative of a panic selloff or a big turn to a bear market. This, a column in saying it seems as though there is a party going on in Silicon Valley that is ever so slightly reminiscent of the year 2000. Im not talking about the nasdaq overall, im talking specific pockets of tech. Have some things gotten too [indiscernible] . You hear the word bubble now more than you did. Selective bubbles or small bubbles. Some companies are trading at outlandish earnings. It is tech, and we all know that you dont base your valuations entirely off of earnings. A lot of these companies valued at 15 times forward earnings multiples are still growing 30 . That is reasonable. You also have companies that are lasting through the selloff. Qualcomm is up in the last several months. Some of the best position companies in tech are surviving this. Companies like yelp that are in more emerging sectors that are really being challenged, that is where investors are not willing to pay in multiples right now. In the social networking sphere . It is alarmist to bring up 2000. Inwere looking at 80 drops the nasdaq, a 50 drop in the s p 500. To think of 2000, what we saw back then. Why is it that people are getting pushed so far out . Do you blame it all on the Federal Reserve . I think you have to. Treasuries are not paying anything. I read one, from an investor and it said, last year the s p 500 was up 30 . Investors thought they were smart again. All that matters is we will hear from the big cat tech companies. I used to say you can tell the direction of the tech market by what microsoft and ibm said about the rest of the year. I would add in intel and apple and maybe a couple of other Companies Like amazon. Once we hear what they say about the june quarter and the whole of the year, and any comments they make about the back half of the year, that is what will decide the direction of tech equities. We will probably see volatility between now and then. Investors will wait to see what those Companies Say about the direction. Im a fraction of a percent. Up a fraction of a percent. Tough word to use. 2000 is a tough comparison to make. In terms of some pockets of the tech space, look at facebook tom a paying 19 billion for whatsapp that is where you hear the word bubble used. Facebook. Oculus boubght oculus. These valuations are outlandish. Facebook does not have as outlandish valuations, but what are they, playing with monopoly money . They are playing with their own market cap because they have currency. This is really not like 2000. I was on wall street at the time and remember. Valuations are still reasonable right now. You still have a lot of these companies that are trading multiples below 30. Tell me about apple. Apple is trading about 12x. The back half of the year started in june, from june or september, we will see a massive product cycle from them. It will change investor sentiment. We have not seen a new product from them for four years. The iwatch . That will be one of several things we see from them. Whats your overall sentiment for tech . Has been a really interesting distinction people have been making this week. It is old tech versus new tech lately. As an old guy, im heartened by that. Is that a legitimate way it is. That is why i gave the example of 3d printing. There is expectations of what it can do three or four years from now. Those companies three or four months ago were trading at high multiples. Thats future tech and new tech. Qualcomm legacy names, surviving this right now. We are coming up on tax season. April 15 is looming. If you did well last year and got stocks up 100 , why wouldnt you take them off right now . Stocks selling as we head into the close. The top 10 stocks you need to know about today. It is time for your top 10. 10, allied financial. It debuted in trading. Allied was rescued by the u. S. Receivedt in 2008 and a buy. Number nine is riteaid, up nine percent, which posted 2015 Sales Forecasted that topped analysts estimates. The Company Expects 2015 revenue to be 26. 5 billion. Apple, down one percent. The chief designer given even more authority over the look of apples products. As leads of Software Design is set to retire. Seven, adt. The Company Plans to spin off its auto dealer services, causing the s p to downgrade adts rating to aa. Adt plans to use 700 million for repurchasing shares. Hewlettpackard is number six, up one percent. Hewlettpackard allegedly violated the foreign corrupt practices act by making improper payments to government officials to win public contracts and russia, poland, and mexico. I hope it made more than 108 million. Number five, Family Dollar, down 3. 5 today. They will conduct a review to improve its businesses. The Company Faces increasing retail competition. They are cutting an unspecified number of jobs. This will be about 4. 5 of their total stores. Announcedd jcpenney they will be Closing Stores as well. You know who is the biggest shareholder in Family Dollar . John bolton. Four, trip advisor, down nearly seven percent. Just another example of the selloff and momentum names. We have been seeing throughout the day here that looks familiar. Doesnt it . Did you write about that recently . Thats a nice little plug. I wrote about it in a column for usa today. Number three, at t up one percent. At t planning to expand its fiberoptic network service. The wireless carrier will challenge google fiber and Time Warner Cable for customers. Anyone who can get google fiber would surely take it over anything else. It is about 100 times faster. Yes. Only like seven people can get it. Two, Abercrombie Fitch down four percent. Hiring comes amid pressure from activist investors who want a shakeup in management. Number one stock of the day, ebay. Down more than three percent. Carl icahn and ebay have called a truce, ending a fourmonth argument over whether or not to spin off paypal. Ebay will bring in an independent director to its board and in return, carl i spoke with carl icahn just a short time ago and we will be bringing you excerpts from that interview in just a few minutes. Verse, lets get to this market. Here we are at the close of trading, closing a little off the lows of the sessions. More than 3 . The nasdaq suffering through the biggest fall weve seen since november of 2011. A lot of vague momentum names with Companies Like amazon, netflix, google all trading down more than numeral foo or numeral four percent. The s p off more than 2 . A pretty brutal day all the way around. Brian blair still here with us. Run through the sectors that got hit hardest. Lex a big selloff in these momentum names youve been talking about. Internet stocks in social media and biotech sought biotech stocks. Thats the biggest drop for that index in a couple of years. Than 3 . 00, down more doing aand utilities little better. A huge selloff erasing the rally and it feels like a big jump in the fix as well with a bunch of money going into etfs coming out of tech etfs and going into. Nergy etfs brian thinks this is potentially shortlived and a buying opportunity. I think as we start to hear from microsoft, ibm and apple about what they see for june, the overall outlook for the year is what will put a floor in this market if we dont see it tomorrow. If we dont see competence in growth rates, given the performance of the last five quarters, there are some money to be taken off the table and it makes sense, but if the management teams can instill some confidence in the next two weeks, we will see things pick up quite a bit intent. We keep talking about valuations will stop the nasdaq overall was trading at 35 times reported earnings. Its not surprising there is a big rotation out of growth and valuation that you would see the nasdaq selling off. A lot of Company Still trading at 10 or 15 times forward earnings. But some of the 3d Printing Companies are trading at every high multiples, so it is a heavy mix. We still have a lot of the best decisions name intact going 15 or 20 still trading at low multiples. Are going to leave it there and move on to the roundup. And olivia joining us today and a special appearance by our Bloomberg Businessweek reporter. Olivia is starting off for us. But we are talking banks and they are making big bucks on Overdraft Fees according to an animal study done by the pew terrible trust. Or disclosures about possible penalties and fees, consumers billion in32 Overdraft Fees. Was 35. N penalty q did a survey that found policies and disclosures cover 65 of checking deposits and 44 of the what happened to overdraft . The people who are overdrawing you would think are the people who dont have a lot of money. It feels like some of these tactics are preying on people who dont have money already, exacerbating their problems. Believe me, i paid my fair share of Overdraft Fees. You know when you are writing a check you cannot cover it. For the most part, you do. One of the things they do is reorder the checks will stop i get that and its unfair, but when i write a check i cant cover, i know im doing it. Person you want to give overdraft protection to im going to overdraw my account. We had a colleague who had a birthday the other day. Charge five dollars for 10, but dont kill them with 40 charges. It seems like too steep a penalty. Fees that and the atm i have an atm in my building that charges five dollars. That makes me more angry than Overdraft Fees will stop this is what i think is interesting you has come up with a list practices and a simple form banks can fill out saying these are what are conditions are and more banks are voluntarily doing that. Comedy people get a chance to look at the various ways the bank can charge you . Thats hard for consumers to stomach. You were doing this for disclosure agreements on tech embodies. When i buy an apple product, i want the same thing as well. They are not going to give you 10 pages of disclosures. Theyre going to give you 40 50 stop lets move on to burger king. They may be sneaking into a new market, expanding into crimea. The burger king ceo says we are planning to end in crimea but i cannot say when exactly it will happen or how many outlets the company will have there. It may be in 10 years. Apparently mcdonalds shut down and moved operations out of crimea. Why do russian citizens not like eating they are saying manufacturing issues are the reason which means logistical supply issues. There are too many people in crimea. If they cant get them, burger king will supply them. It other than mcdonalds. Mcdonalds is going to have the same problems in supplying crimea. If mcdonalds couldnt build a bridge, maybe russia could do it. I think they have 200 or so stores. 200 or so if they can jump on a market with 2 million people, they are going to do it. I hope they get wendys over there. I feel like democracy would flourish more. Arbys ave to have that route. The communists can have all of the arbys. I just want to ship them all over there. Anybody still have a blackberry . Nice keyboard. Its so retro. I lost mine and you have not yet. You have got on record saying i dont believe you have one in your pocket. Were talking about like very because the ceo is giving himself two years to overhaul the smartphone maker and offset withning handset demands software that connects computers to all manner of machines from cars to heart monitors. He took over as ceo in november and is stepping up blackberrys reliance on business customers instead of the smartphones that make the company famous. Interview, he said i do not have a plan to get rid of the handsets. I have a plan to not be dependent on handsets. That is how will be a good idea. To ahat was a response real mistake you made saying he would be responsive youd be willing to shut off the hardware unit if that was possible. I dont think hes doing anyone a service. Its not a Great Software company. You probably have it still because of the keyboard. This is a strategy that has been very popular. Someone yesterday who said were are going all software. We will do hardware where we can make margin but for the most part, we are switching to all software. Bought . S what he qnx. The new blackberries have not been selling. To suggest he can coast on that software which has been totally dumped by consumers that enterprise does not want is not a great way to lay out your future plan. My favorite line from this article came after the quote we just read he said all i need to do is replace the handset revenue in this company will be very different will stop all i need to do is get Scarlett Johansson to marry me and then i will be married to Scarlett Johansson. Lex i know i married already. What if your wife is watching . What shes working right now. You would get in so much trouble. I would never Say Something im not eventhe attracted to Scarlett Johansson at all. Ive been here long enough to see that happen. But it is a wrecking ball. Of sweden had just lucked out with a six hour working day. According to a report from the Atlantic Thomas a swedish city called gothenburg is considering a yearlong trial that would allow for a control group of workers to only work six hours a day as opposed to the traditional eight. Who would not want to work six hours a day . Sometimes i work a 12 hour day. Its a free country. This was tested back in 1930 by kelloggs, the serial magnet. He tried this out and took acree workers and had the more a solid six and saved money. The bottom line is six hours straight with no break is brutal. I think the swedes are going to give you a break. Its all about efficiency. Luxembourg, they get in there and get the job done. Around the world, people spend time on social networks and theres not as much productivity. Among the longest hours worked is why the greeks. I think the relationship between hours worked and productivity and quality of life is pretty complex. Did you see what the french did . French unions said you have to turn off your phone. If you are french and work at dougal or face book or Price Waterhouse code verse i love it. Do you want the government telling you to tell off your phone . I wanted government telling my boss not to call me. Not one for Government Intervention in this country but in france, they are all about Government Intervention. It would be nice to know youre not going to get other by your boss at 10 00 or 11 00. Thats why its not great to start a business in france. I would be happy to work there. I would be happy to not are there. Areoming up next, we talking about for the first time in 2012, apple is spending up early and dollars on advertising in that kind of spending will continue with that latest. Find out who is joining the apple roster. Later on, Stephen Colbert or will be taking the reins of latenight tv on cbs will stop we will tell you how rival networks might respond. Another white guy. Campaign, samsung found its way into the oscars with Ellen Degeneres and the white house with david ortiz. Apple is now set to add for digital ad agencies in order to compete with samsungs unique marketing efforts. Alexandra perella is the ad age reporter who broke the story. Still with me is brian blair. Apple is basically saying we better start getting our act together on the digital ad front, otherwise we are running a risk samsung is going to become more popular . Its not immediately clear why they have hired these digital agencies, but what is clear is they are making some moves in the Digital Marketing space. Is they haveclear samsung marketing and that became clear in emails that went public this week. Tell me about those emails it was between the chief marketing officer at apple and his longtime creative agency. In those emails, he basically called out the agency for not reducing campaigns that were as innovative. It has also landed them in a little trouble, using the president with a bit ortiz, thats not allowed and they had to scale back on that. Ellen degeneres it feels sort of passe at this point. But it is thing peoples attention and samsung has been masterful at getting the old globes attention to look at their phones. They had an added number of years ago that made fun of people who wait in line for iphone that it changed the perception of the product and helped units skyrocket. How would you characterize the Samsung Galaxy . That single ad made people feel like it wasnt cool to wait for an apple rod, to be called an apple fan boy. They showed off a lot of cool features of the samsung product and weve seen two and a half years of very strong unit sales, but especially the galaxy product will stop what could apple possibly do to fight back right now . Rex apple really needs to up its risks it should be taking. If you look at samsung and what it is doing in the social media chief online, samsungs marketing officer makes decisions on the fly and is not afraid to go out and make a lastminute decision. I believe he said he told me that interview recently that he made the decision to make a donation after the Samsung Selfie during the office that morning in the shower and they just did it. They need a large screen phone. Thats what we will see the iphone six will be a large screen and thats why samsung is the number one Global Smartphone seller. Appleent the opposite of making things small and now apple is going to follow them in september. A large screen i know you have a samsung phone. Lex i have both. This is the new Samsung Galaxy phone that comes out tomorrow. Last year, they sold 60 Million Units in the First Six Months and this comes out tomorrow. They have actually taken a much more simplified approach to this phone. Its waterproof stop you can put in three feet of water for 30 minutes. Theyve built them some waterproof tape abilities and protection of the inside and had done some great stuff with the camera. But this is going to be all over the place. We will see the Global Market flooded with this starting tomorrow. Rex a nice treeview to get from you. Whos going to win this ultimately . I think longerterm, its going to be apple. They have an ecosystem thats going to be more important over time. Android is the winner right now because they went with lowercost smartphones. Places like china and india are on android and i think apple longerterm is the best. Good to have you here today. Coming up, we are talking about the comedy scene Avon Letterman is out, stephen cole there is him. The viewers from jimmy kimmel and jimmy fallon . Later on, kiss will be inducted into the rock n roll hall of fame. Find out why the band wont the performing or even be in makeup be in makeup. Competition of mobile Money Services in the developing world is pretty fierce and the way to a consumers heart can easily be misdiagnosed will stop its not so much the technology thats having as having an actual physical presence. What are you talking about . There has been a lot of Competition Among mobile providers to provide mobile Money Services in the developing world. The most something the most famous example is safari. Now an Indian Company has been doing much the same thing in africa. By vodafone and taking it into romania. Usingat is it somebody safari, is actually doing . What they are doing is they are going to a vendor, and actual shack and giving them cash. That cash give you credit on the system and you can send that anywhere else in kenya. What has been used for traditionally is sending remittance from nairobi back into rural kenya. What i had assumed it was going to be the job of mobile carrier anywhere in the developing world and they were all going to be competing with each other. Noticing is there are other Companies Getting in on this as well. , you really need to have an actual point of presence, an actual store. So in mexico, there is a baker, the biggest baker in the world. They supply to about 700 housing momandpop doors all over mexico. Partneredhave done is with a Technology Company out of south africa and visa and they built these units and they bring these units out on the bread truck and teach the stores how to use them. They install them in the store can chop up their mobile phone cards and pay bills. What do they get in exchange . Itit is valuable because allows you to get a percentage and keep all the accounts. Stores, theremall is competition from bigbox stores and all of these Little Stores were challenged by big ox stores that could do things like offering bill pay services as well. Of of the sudden, the value that small store in the neighborhood is you can do any number of things that that store. They couldnt sell bread and staples as cheaply but now theres another thing they can offer. What is fascinating to me is breadhis store that sells and starch has an interest in becoming and it becoming a mobile payments firm. What about the mobile companies themselves . Are they trying to innovate in this space . They are trying and mexico is an excellent example because carlos slim owns most of that market. Where you find the innovation happening is very competitive markets like india where companies will do anything to hold onto the customer. It sounds like almost anything can be a bank. Any business can be a bank. Any organization thats got a lot of points of presence where people can go, give up cash, and then use the service can be a bank. The competition is wide open. Thank you very much. Ebay and carl icahn are making a deal and karl is dropping his proposal to separate paypal from ebay. What does he think he is getting enough in return . Highlights from my interview coming up next. Ebay and carl icahn are calling a truce. Ebay agreed to add a new board member and give carl icahn and confidential access to the company. Icon in return has withdrawn his demand for a paypal spinoff. John donahoe calls it a win win for investors. What carl icahn has done is seen the potential and opportunity in our company and is becoming a longterm shareholder which i think is a win win. Dave dorman is coming on as an independent director, an independent record director i respect and carl respects. The good addition to our board and one that i think will allow us to execute on the enormous opportunities in front of us. Early thiswith carl afternoon and asked him what on him change his mind. He was so adamant against this board. Heres what he had to say. We talked to a lot of shareholders and some of them are pretty intelligent guys. Some of these are institutions that have lived with these companies for a number of years. A lot of them dont want to see its put up for the following reason. A very strong feeling that at this point in time, wise put up . Its sort of antiintuitive to a shortterm investor. We are not shortterm investors. Ive cap stuff seven or eight years. The reason they dont want to do it is they feel paypal will be taken away from them. Some big inquirer will come in and pay a premium and they are not interested. This thing has so much potential. Notink frankly im speaking for john donahoe. With had some great conversations, but he has that same thought, that this company is really cheap now and when you really dig into it, i came around to that inking as opposed to saying lets spinoff. Now. Ont have to do it i believe the question is not if its going to be done, but when. If you know you were not going to win, why are you going to fight the war . Did you know you are not going to win because the institutional shareholders were there . What you that the chairman voting against us. A few of these large institutional shareholders, im not going to say who, have a great belief in this company and i dont think they are going to vote for me. I mightve won a seat on the board but i would not have won the purgatory. Thise would not have one one western mark i want to make it clear i dont say i would not have won a seat on the strongly i doeel not believe i could have one anyway. Its easy to change her mind on that, but i really did change my mind. The company will be spun off eventually. I still believe it should be. But i dont think there is a rush to do it. Are you going to stay in the stock until it gets spun off . I dont talk about my future commitments, but i do stay long time and companies and i think this company is greatly undervalued. Ive said that about the other companies i meant. I believe apple is undervalued and herbalife is undervalued. I think this company is very undervalued, so i dont talk about positions but i think you can deduce from that im not going to be selling it. In fact, i might be buying. Buying ebay . Im not going to tell you what im doing right now. David dorman is the independent director that has been named to the board. How did he become involved here . Lex ive said this before and i will repeat it. I was having a conversation with jimmy lee who comes up occasionally to the office. We had a plan for a long time, just talking about some other business will stop he brought up the fact that she said john is a startguy, why dont you talking . I would love to talk but goldman never reached out. You dont like to make the first move in these rings. Andme call and he called up john said great. Lets discuss it. Idea, why with this dont you put a third guy on . You pick them and we will decide if we like them. Me. Did not appeal to there you go. Very candid moment talking about the ebay paypal spinoff. Sounds like hes there for now and would still like to see paypal eventually be spun off. Coming up, we are going to talk about chocolate, caramel, coconut. What makes the highest grossing candy bar . We will tell you next. Also tonight, the rock n roll hall of fame is turning up the volume with the induction of kiss, nevada him at hall and oates. Nirvana, and hall and oates. Time now for the scene, where popring you the scene of and rock culture. Tonight, brooklyn becomes the rock n roll capital. They will be inducted into the rock n roll hall of fame tonight, but some of them are not exactly thrilled about the honor. Here to ask lane is Vice President of programming for in 50choice available million households. Sounds like kisses rather mad. Why . Kiss is upset because the entire lineage of the band is not being inducted into the rock n roll hall of fame. The original members. How many are there originally . Groupmembers made up the over various times, but only the four original members are being inducted. Simmons, overene that time, others have been inducted into the rock n roll hall of fame that have had more members will stop you have had metallica, the grateful dead, and others that have had the entire group inducted but not kiss, for some reason. Upthey are trying to stand for their peeps, saying put all of the sin or no deal . They are artists, and they are a band number regardless of the members. Kiss not need the hall of fame . I do know when anyone performs on the rock n roll hall of fame award show, you see increase in their sales the weeks following the actual award. But so this is real money youre talking about. Passing this up will cost them . I dont think they look at it that way. I know they are celebrating their 40th anniversary and may have a massive tour planned where they are going to go out. They have a rabid fan base that loves to see them live in concert. They practically wrote the book on how to merchandise things, everything from tshirts to lunch boxes, they have had a brilliant career. They are obviously one of the greatest rock n roll bands of all times and deserve the accolades, but it tough. And they are artists. Lets talk about some of the other artists being inducted tonight. Nirvana. The iconic brand. I would say nirvana is absolutely iconic. Changed the direction of music in the 90s, commercializing the grub the grunge movement. Kurt cobain has that rock n roll folklore. Who is going to step in for him and his performance question our i understand they are supposed to be performing with joan jett. Not sure who is going to cover his part but a well served induction. Linda ronstadt . There is one for you. But im excited to see that will stop bonnie raitt will be part of the trio of artists who will be performing. Linda will not be on hand. New duet album. But you get inducted into the hall of fame and you are busy . I think in her case, she actually had some Health Concerns that make it not possible to attend. Who is going to play her music . Isi know that on the rate performing. I want to say carly simon is performing, but they put a nice trio of artists that represent the diversity of her sound from her country rock roots to her pop roots, they will have the entire spectrum. What are some of these older artists doing in an environment where record sales no longer matter, so to speak . And youre being paid by downloads. Continue to gain revenue . Is it touring . Touring is a huge part of it. When you have an opportunity like the rock n roll hall of fame or the grammys come its a huge opportunity to reinvigorate your brand. With the grammys this year, Stevie Wonder acai 1037 increase on sales. Do they really get that much from it . Isnt it the Record Company getting the bulk of that money question are absolutely the Record Company benefits from the control that they have but the artists ability to go back out and tour if they want to do so, once you get your face back in the public, thats the key. 40th anniversary for kiss. From what i read, they will huge stagehuge tour, show with lots of fun surprises. , generationoved after generation. Im excited and proud and this is a welldeserved honor. They they are refusing, wont be inducted. Maybe next year . Accept thee going to award. Theyre not going to perform. I believe they are not going to dress up in the makeup. But then thats no good at all. Im curious to see them without the makeup. Lets talk about comedy. On a day when the market is a bit of a mess, it doesnt hurt to have a little, really. Yet cbs giving us this announcement today, saying that stephen cole bear will replace David Letterman when he retires next year stephen cole bear will replace David Letterman when he retires next year. Was lots of chatter last week as this news came forward that letterman was stepping down and in fact, we might see a woman in the latenight spot. That didnt happen. Is that because at the end of the day, the demo is just to mail . Thats hard to say. The ceo of cbs spoke to bloomberg today and said he would be interested in having a woman in the role of the late late show because there are all of these moving parts tied to the latenight franchise. Speak to something important, which is this did come together relatively quickly. All of a sudden, cbs which avoids the big endless months of questions with a seamless transition. You have to think it was how bubbly preengineered. Maybe im a little cynical but they managed to keep it quiet. A lot of people are saying he has had his eye on this and has been interested in his contract expiration alliance with that of letterman, so maybe he was positioning himself to be an available talent at the right time. Bloombergdez spoke to news today and said we wanted him and we made it happen quickly. Indeed, that is the case and they were clear the negotiations did not technically begin before letterman said he was leaving and letterman himself said im going to make an announcement on the show tonight and move on. Is just the reality you look at lettermans age, what hes accomplished, and we are seeing this new generation of latenight folks take over. May be a woman in the late latenight spot . Who might be up for that . I take a lot of people are talking about chelsea handler. There are some great female comics that started to come up tina fey or amy poehler. Ucl sorts of places where people can pop up, for sure. We will be watching to see you gets it. Thank you very much. Coming up, youve got a favorite candy bar, right . We will indulge, cities beat in the worlds best selling confections after the break. The worlds best selling candy bar you learn something new everyday. Snickers named after a horse. See you back here tomorrow for more street smart. Is 56 has the hour, which means Bloomberg Television is on the market. Im cristina alesci. Lets get you caught up on how stocks ended today. Afterell across the board two days of gains. Investors sold off shares of companies that had the largest gains last year. The nasdaq dropped the most since november 2011 with biotech shares taking the brunt of the selloff. Vix,stocks falling, the often referred to as wall streets fear gauge, was on the rise today. Investors were buying protection against further declines. Winning me now with more on the vix is mark sebastian, director of trading at swan wealth advisors. You are not calling this a selloff. You are saying its something else. What is it . I think weve been going through a bit of a time correction. Theme correction is where market sits or eases a little lower while time passes, allowing the market to figure itself out. That being said, if you look at the s p and the nasdaq, they are trading at pe of 17 and 20 respectively. The reason were seeing this selloff is the market is basically telling companies that its time to prove it. You had multiple years to say theres a growth story ahead. Now that the fed is removing itself from the picture, its time for the Growth Stocks to step up and prove it and deliver earnings. One thing we have been taking note of is the fact the spread between the volatility of the nasdaq and the olive utility we are seeing in the s p is the widest it has been in maybe five years. What does that mean for the u. S. Market . Nothing good. Vix and thek at the nasdaq and the vix of the those two are much more u. S. Centric and growth centric. The s p is more of a world in that. When you see the volatility trading at such a huge ring him to the s p 500, i think the market is really worried about momentum stocks and Growth Stocks. Companies prove it, you will see the volatility extremely elevated. How do you play this kind of market . Swan, the approach we take is a hedge equity approach. We grow up we go out and buy puts. With the vix relatively low, but index showing that market is really scared right now, we can buy insurance, which is a longerterm option to protect the thing case the shortterm volatility indexes right. We are taking his long puts come along equity that allows you to capture as much upside and still have some defined risk and protection against the market really dropping in having some sort of type of event. 8 thank you so much. Were looking forward to having you back on. Taking stock with him fox is next. This is taking stock for thursday, april 10, 2014. I am pimm fox. Is selling, plain and simple. U. S. Stocks tom lane. A lot of selling going on. The nasdaq composite index falling the most since 2011. We have a discussion around the selloff in just a moment. Plus the chicago cubs looking to sell a minority ownership stake to renovate. Wrigleyc home field. I will s t