Inflation is going up. Expect a Quick Movement from the stopand the old plan to the reinvestment of materials is off of the table. Willare worried everyone overreact as if they wrote rate increase was imminent. They are just going to raise rates. Debate,e is a bit of a but the interest on excess reserves they will just leave the excess cash at the fed. They will taken cash from dealers, in exchange for lending securities from their portfolio, and keep them in trade. This is still a possibility. Thatare just going to let four dollars trillion 4 trillion rolloff. This is just one man, even though he is very influential. See when those fed minutes are released with further discussions they will have. Howelocity is the terms of fast you want to raise your rates, what are you hearing about that . Slower and lower than in the past. Slower,s going to be inflation is going to be lower and with the new regulations, you will need to raise rates as much. Rate,n keep the benchmark which is well below to be below the average level, it was around two percent. Speaking of the fed you will have janet yellen. They will get some extra help today. We have confirmation of Stanley Fischer to be the feds vicechairman. If they didnt do it today, theyll be going on vacation in the fed will have three members, less than before. The stupidity question continues because no votes are being planned for the other nominees. We just hope that they can get it done before the next fed meeting. They continue to discuss an exit strategy. Michael mckee, we will be keeping up with you throughout the morning. We you have earnings breaking right now, coming in at . 50 per share, lets go right to julie hyman with the latest. Mentioned ise you a 15 rock, and they are also cutting their earningspershare for the year and the second forward, and going target still remains quite cautious. Part of this still has to do with the data breach in which many of the customers had their information compromised and the company is now saying theyre unable to estimate future expenses related to the data breach in the First Quarter. Critical payments associated with the potential claims by the network for counterfeit and fraud losses. They are still trying to get their arms around this thing. But they continue to struggle. Recently, bloomberg did a poll on customers and said that the majority of them said that they were not going to change their shopping habits, and if you look at the comparable sales numbers, this is actually the bright spot in a report, it fell 3 10 of one percent but analysts were looking for a drop of 1. 1 . The profitke shortfall has more to do with expansions and markdowns that the company also said in their statement today, but actually in that is the stores not as bad as some were expecting. Thank you very much. We will have more on target throughout the hour. Netflix Ceo Reed Hastings launched the companys biggest expansion in almost three years. Online Video Service into germany and france this year, and he wants netflix to establish global dominance for the amazon prime instant video and three quarters of their customers are in the u. S. They are hoping to sign up almost one million customers overseas. At t plans to buy directv for nearly 49 million. The deal hinges on football. The nfl sunday ticket package ends this year. At t will call off the merger if this is not renewed. Christina, you and i might not watch a lot of football, but lets get this in perspective, how important is this deal . It is very important. There are 2 million subscribers, paying anywhere from 240 to 330 a piece for the service that lets you watch out of market games on sunday. What this means for the top line is the revenue generated is around 660 million based on the numbers that we have. But they do not officially break those numbers out. Because powerful consumers are willing to spend 1000 to get their football. Is, whyuestion really did they not just wait until the deal was done . Not only this, but leverage is actually on the side of the nfl now, because they can say, we can charge whatever we want, you need us to get the deal done. This was a bit of a head scratcher. But direct has been going for months they had talks with the nfl, moving forward at a pace that is positive, and we saw the nfl commissioner say the same thing. It seems like the expiration is at the end of the year, the nfl and directv are in talks moving forward, this does give them a lot of leverage. Leverage they dont really need at this point. I wonder what kind of similar deals we can look at, how much more directv will have to pay to renew. In 2000 levin it was interesting, there were networks are renegotiated their rates with the nfl, and this led to increases of 5060, even 70 in some cases. This could be a bigger number because there are so many other networks, that would like to have this package. The nfl has argued that they could go to google, and verizon had a product they offer on mobile for some nfl content. There is plenty of competition for this. Although we see those historic deals coming up at 60 or 70 we can even see a bigger number. Unbelievable. It is all about sports. Cristina alesci, thank you so much. They had two options for customers, you could pay 10 per month for a limited content, or get the service for free and see advertisements pop up. Spotify will announce that they have signed the 10th million and you canber, read that article online, right now. John. Re im joined by 10 million subscribers is a lot. But they dont benefit in the way that we think that they will. People are paying and they are making more money. They are sort of on the hamster wheel where you think that you are company and the more subscribers that you had that are paying to watch that content, the bigger your margins will get. But the way that royalties work is the more subscribers they get the more they actually have to pay in content costs, about 70 in royalties. And the contract is structured so that this doubles they double as well to keep that 70 . Because of that they have about 200 million songs since they were founded, you could see apple coming by down the road and they have a lot of deep pockets. What does this mean for spotify . It has not been confirmed and we are not absolutely sure what brokeed, but when that there was a certain perception that maybe it is better that if you are streaming, you are sort of off for a company that makes money other ways. They would be willing to lose the money and spotify eventually it turns out they will not. Spotify will buy this . They will absolutely not. The last time they raise money was last november which would make them expensive. They will be able to stand on their own but that is a lot of growing. They have sort of partnered those worsts one of carriers, they have parted with at t and verizon. Is this going to be a deal for them . A deal andhas made sprint was the deal they wanted to make, they have a discounted spotify subscription and hopefully that will drive the number of subscribers higher. Have been would better to do a deal with verizon. Sprint really needed music and never making a push and they and sawing a push, streaming music as a way to build their strategy. What is the growth strategy, to keep getting subscribers . What is the endgame . They are looking outside the United States. They are trying to grow other markets. A 30 cuttually have in revenue that they work with, so presumably if they get enough customers, they will turn a profit but that seems far off. Is a bigger overseas than in the u. S. . Spotify is easily the leader in every market for streaming, and or is a really big player as well on the radio, but if you look at the monthly subscriptions spotify is in a class of its own. Will solvency ever be an option for spotify . Option for them, they cant get that market overseas. The worstcase scenario is you have to find a way out with an acquisition or somewhere down the road, they would have to think about that. But they are very well capitalized. Thank you so much, we appreciate it. You can go online to read the entire story, this is a great read online right now. Still ahead, luxury on wheels. On hollywoodsde alist. Inter drink up right now but the future there may be a shortage of good whiskey. Stay with us, we are in the loop on this wednesday morning. Target is struggling to rebound from the hack attack and posted firstquarter analyst estimates and forecasts, and a bloomberg poll shows that shoppers are not scared to swipe their credit cards at the store, so what other issues are actually weighing on this company . Julie hyman jointly with the covers and also, dash the credit card industry for bloomberg news. Lets look at the numbers first. You have a disconnect between the sales and the profit numbers. ,ales in the First Quarter fell but this is not as bad as analysts had feared. And the First Quarter was a tough quarter for everyone. This is not uncommon but profit missed estimates, in the First Quarter and target is also coming out with a secondquarter forecast that is below estimates and cutting the fullyear forecast. This does seem to deal at least partly with repercussions of the data breach, and the company said in a statement they cannot estimatefer an exact of exactly how much is going to cost in the end. When you talk to analysts, do they think that the data breach is behind this . It is on top of so many other issues and when the ceo said he was leaving most of the people i spoke to said it is not about the reach. This is just the straw that broke the camels back. If you look at the list, yes, the data breach. Thehe Canadian Division and head of that division that took lace yesterday. The lack of freshness is something a lot of analysts talk about. This is not what customers are looking for and it also ties into the commerce game. And even though both have about the same percentage of their overall sales coming online, target is behind the game in terms of how things look and offering instore pickups, waited to do that with walmart and other competitors and they have to get that new, permanent ceo. Your expertise as well with target, migrating to chips this is something that they use a lot, in terms of credit cards. Can target accelerate in the u. S. . That is often used is a wakeup call. To upgrade card security to make the transition to chip technology. The reason the u. S. Has been slow to adapt to technology is cost. It has been slow for the banks and retailers with interesting technology, this is a huge task and there has not been a Business Case for going through that transition and now there is. They are looking at target and the fallout, with a reputation challenge for the company and what is the impact they have on management, saying i dont want to be the next target. Tell us how this actually works, how much they have to upgrade and how much this costs. At the end of the day, who is responsible . The cost estimates that we have seen, the cost for hardware for the new cards and the it would be the retailers, this has been estimated to be about 1011,000,000,000 dollars. This does not include software costs. But then you look at how target has costs of about half 1 billion. That is how big of a cost it is for the bank. Talking to analysts, they talk about the upgrade. Do we see that in the short term . I had not heard analysts talk about this as an essential problem. If i could ask the question when you get the cards with new technology, do you still have to have your old cards . How is this going to work . The bank will be reissuing the new cards with new technology. The chip is the central component but there is a new verification measure. There is a signature that customers are used to, where they pay something and sign their name, the other thing is interesting that entering the pin number. You can use the additional layer of security if your card is stolen. When they reissue the card, not every point of sale is going to have upgraded their system. Work,l this card still not an target but in walmart or something . That is why this is so complicated. This is such a huge undertaking. This is across the system and right now you hear about the deadlines and the reliability of the network, they have put this in place and october of next r, if you are the retailer where the issue does not have the technology, there is still a lot to do. Thank you so much, elizabeth. I really appreciate that. We will be back in just a few minutes. Good morning. You are watching in the loop. I am trish regan, and for betty liu. Here are the top headlines. Firstquarter profits topped analyst estimates. And the second largest u. S. Home retailer reported a 2. 4 rise in Quarterly Sales after the harsh winter weather. Fullyear earnings have exceeded estimates and the new ceo outlined his vision for the company. Them as abeen with chief executive since 2009. He took the helm this month, replacing who went to join apple. New york rangers fans will have to pay up to see their fan play team play the Montreal Canadiens tomorrow night. 601, aare as high as 15 increase from the start of the series. The rangers are just a few wins away just two wins away from a spot in the stanley cup finals. Lets take a quick look at futures. Futures are a bit kinder at higher after equities fell yesterday. The fed minutes will come out at 2 p. M. New york time today, we will be watching the market for be on the will markets again in 30 minutes. One stock we are watching this morning is bnp paribas, frances largest bank is being investigated for breaking u. S. Sanctions against doing business with iran and the sudan. U. S. Authorities are seeking nearly 5 billion and a guilty plea from bnp. Joining moore is terror joining me with more is terri geiger. This is one day after Credit Suisse pled guilty to tax evasion, they agreed to pay a 2. 3 billion fine, and this is the first time we have seen any criminal charges against the bank. Does this mean more sanctions . It could be the same for other banks and what is interesting about this, is that the superintendent of the new york banks the top ranking cop in new york state, he feels a little bit differently and has signaled in the past he wants to name individuals in this case, which is something that people you and i have talked to over the last several weeks you had this criminal indictment and the guilty plea, and yet nobody is actually personally coming. I dont know if we will see prosecutions for individuals in this case, we will see people named and shamed, that is a possibility but the other interesting thing is they may restrict bnp paribas from doing certain things in the u. S. For a set amount of time. Did not do that with Credit Suisse. That may cut into their revenue a little bit, maybe not nearly as much as the 5 billion fine, you wonder how political that this will get. John mccain came out and issued a statement basically criticizing the government for not going after these individuals. He said, how can you have this guilty plea and not one person is being faulted for. And now the government is trying to change that . I dont think we expect individual prosecutions on this case, not to the extent that the American Public wants to see this. They may not have a case for this. They could come out after but that is where the criticism comes from. They are criticized heavily for allowing the banks to be too big to fail. And now they deal with the banks that essentially seem to not not even a firm that they are too big to fail . They dont have their licenses and things like that, and they are not going far enough with these banks. Where do you draw the line . On the one hand, there are penalties involved and on the other hand, all this regulation is only going to wind up making an industry that is incredibly focused on this country, smaller. I wonder what the other banks are looking at and thinking about the United States . It is hard to be a Global International bank and not do business in the u. S. But you do think, how do i fit into this regulatory environment. You also might say, how do i better my compliance, and make better standards and protocols so we dont get into trouble like we see here at bnp paribas and Credit Suisse. There is some uncertainty because of they go after one bank, your than other find yourself saying, where am i in this process. Go back to 2008, bear stearns not saving lehman brothers. Thank you so much. Ill be talking with you, maybe at 3 00 on street smart. Perception a public change, burger king is trapping have it your way for the your way, and mcdonalds has a new creature and to get people to to get kids to eat more healthy food. For more on the rebranding, i am theby our editor chief marking officer at kodak. Mcdonalds is getting a lot of negative attention and feedback from social media. Is this too soon to call it a failure . It will take a while and mcdonalds is a big company. What is going on in the u. S. And other parts of the world, they like this. I cant think of a character as scary as the burger king king. He was scary. He was creepy, quite frankly. The intention is good because they want to get kids to eat less fries and more carrots. You go to mcdonalds because you go to mcdonalds. You arent going there for health food. No matter how many times you try to put a white brush on this, this is still the same color. That is what you are going for. That is the way that it is supposed to be. Aat is a good thing about brand problem burger king is trying to change that. This is called happy. Not a meal, you just want a happy. A lot of the kids who go they have some research and those kids are going there for the toy, and so whatever you put in that does not make a difference to them. Being that safer meal makes the parents feel better. The new slogan for burger king, be your way. A good model, be yourself, be your way. That is good, they have set them selves apart from mcdonalds. They say, have it your way and if you want a hamburger for breakfast, they will give it to you. I personally like the original chicken sandwich and i will go for that. We are talking about the fast food image, this is seen as bad for you. Mcdonalds,ing and there are plenty of salads on the menu, you can eat healthy if you want to, do they need to rebrand themselves at all . S mode take themselves there. A lot of parents will take their kids there. 56 of the business at mcdonalds is try but, because it is fast and if you want to get those carrot sticks or apple slices, do that, but no matter how many incentives we have where we tax them or ask them to do it, people want to get where they want to get what they want to get. It is very hard. You can encourage and educate people, but at the end of the day if they want fries theyll be able to get fries. Mcdonaldsou like fries better than wendys fries some people like that. Andou are a Salad Company you dont necessarily want a fast food image, but if you are a burger shop, that is what you are. I think step into this and be who you are. That is a great slogan. That is our bloomberg tv contributing editor. The congress is planning to spend big on the upcoming election, a move that would undercut the tea party. One of the brown liquors is consuming this. I will tell you more, coming up. Welcome back. It is time for bloombergs big number, we are talking about 50 billion. That is how much Congress Says that they will that is how backthey will spend two business from the candidates 50 million dollars. That is how much they said it will spend two back business ridley candidates. Businessfriendly candidates. This will be the main theme in the upcoming elections. That big business cash number helps a number of Establishment Republicans roll to victory in tuesdays primary. One of the big winners was Senate Majority leader Mitch Mcconnell. Our correspondent has more details on all of this. Super tuesday it was not so super for the tea party. It was not super for the d party tea party, or democrats as well. Republicans picked candidates have a better chance of winning in november and helping the gop take control of the u. S. Senate. They did this with a lot of help from business groups that spent big money trying to bolster their allies in congress. To avoid debtg ceiling shutdowns in the future. The biggest name on the ballot was Mitch Mcconnell, who overcame a serious challenge from businessman matt bevin and millions of negative ads from conservative super pacs to win the republican primary. 45 and a half years the powers that be in washington have treated the people of the state with contempt. Tonight, i have a simple message for all of them. Those days are numbered. Almost immediately, macconnell turned his attention to mcconnell turned his attention to grimes who is his opponent in the main election. Has done welles so far and spending here could reach 100 million when all is said and done. This is fascinating to watch, for sure. Lets look at the other standouts. Georgia, right there. Seven republicans are running to be the candidate in the senate, to replace saxby chambliss. It comes between david purdue, the former ceo of dollar general, and jack kingston. They will have to knock heads for another nine weeks before primary who the candidate is going to be and they will take on michelle n unn, the daughter of former senator sam nunn. She has raised a lot of money with the help of her father and this is another match up that we will watch, another chance for democrats to grab a seat that currently belongs to a republican. Some waythat there are republicans battling it out and there is a lot of concern in the party about the tea party, how much damage might they do to themselves along the way . We have seen these battles take shape in several places, but so far the establishment is up without doing too much damage. We have major party fights playing out but the Establishment Republicans are winning out, and the question is if they can turn their attention to democrats in what should be a positive environment for them, given the state of the economy and questions about the economy and problems with the president S Health Care law. This is the opportunity for the republicans and tuesday showed they have a chance to add to the numbers and congress. One other number that told us a lot was Eastern Idaho this is a very conservative state and we had an establishment republican, mike simpson, a john boehner with 2e was backed billion dollars 2 million from business groups, mike simpson was the winner, going away in idaho. Nobody a few years ago spent that kind of money in the state of ohio. That is the kind of tension in the Republican Party right now. The money that is being spent. Peter cook, thank you. Coming up, some of the bestknown alumni of the nfl are suing them, saying that the league overuse painkillers to keep them on the field. We will tell you more when in the loop continues. The nfl came under fire yesterday after news broke that a group of her tired players accused the league of using innkillers to mask injuries a culture of drug misuse. Is for litigation over the damage that former athletes have bring in for more i the professor of economics at western university, who joins me from l. A. Patrick, it is good to have you here. What are the similarities between this lawsuit and the lawsuit that we had, the concussion lawsuit where the nfl ended up settling for something around 775 million. The similarities will come to light because just in the concussion case, the questions were, what did the nfl know and when did they know this. The current claim is that the team doctors and other Team Personnel were knowingly giving tellinghad bills, not the players about the longterm repercussions of those pills, and whether this is truthful, this will come to light. How could they prove that . How could Something Like that be proven . You would have to rely on eyewitness accounts, players backing other players, that actually sell the team doctors give the players those and i think it might be harder to prove, frankly, than what we saw with the concussion lawsuit. In terms of the personal responsibility his is going to be something that factors in, why would a player be willing to take something just because the team doctor gave it to them . Exactly. I was going back and forth this morning, and i thought about the sunday whereen james woods was giving out drugs and not wanting to help players because they would not want to hurt the contract. The nfl will argue the point where there needs to be some responsibility, players should have known what they were taking but on the flipside, a lot of these players that played in the 70s and 80s it is not like today where you can go on the internet and see what the drug will do to you. A lot of times these drugs were administered in the heat of battle. Coaches want to get you right back out there. Are painkillers really the problem, is this the concern or the fact that they continue to play and therefore hurt their bodies because the painkillers to such a good job of masking the pain . All of the above. Nothey were given drugs and educated about the longterm if they mask their injuries and did not know the real consequences of the injuries, some players claim that they are playing on broken legs and did not know it. Thatlot of people thought 775 million is basically not that much in the nfl got off with a slap on the wrist, could this be much bigger . I think this could be considerably smaller. I hope that this is not an attempt at just a simple money grab because the one thing i fear, cynically speaking is that because theyre using these players because these players reaching for this much money, many of these players were in that lawsuit as well and lets hope it is not just a money grab. We are talking worstcase scenario, if it comes to that this could be 2550 of what the concussion settlement was. We will be watching this very closely of course. Andball is one tough sport i would not want my son playing it, and i would not want to play it myself. The founder and director of impact, thank you very much. Ever wonder where the alist ors are hanging out when they are shooting on location . At the mobile mansions of movie stars. And the day after Mitch Mcconnell wins the republican kentucky, we look at the newfound love of whiskey and how it is making life very difficult for people making bourbon in the bluegrass state. Acting in a film can mean long days of waiting around for hours, until the director calls action. So where do the stars go to relax and get into character during their downtime on movie sets . They chill out and luxury mobile home vehicles, that may be bigger than some new york city apartments. But dont call them trailers. They are mobile mansions. I am David Robinson and my company is king kong media corp. We provide transportation for the top stars in the world. Some of the movies that we have bradd on are inception, pitt, moneyball, and one with will smith in louisiana. Welcome to the 50 foot celebrity suite. This is our most extravagant vehicle that we have. 1. 5 bathrooms and seven televisions, 2 fireplaces and security systems. What you are looking at is a luxury home. The living room area incorporates a great ceiling and they dont much dont do much cooking in here, and we have a wine bar and a builtin subzero refrigerator. Right year we have one of the guest bathrooms. And this is one of the televisions as well. This is a customdesigned shower, with recycled glass that took artisans two weeks to put the shower in. This is a 50,000 shower. Here is the bathroom and the living room and the kitchen we have heated marble floors. This is designed to be more residential, and being in a trailer you can move furniture around and if he is going to put on a batman costume he will need all of that room. This is really a home away from home in between takes, while they are filming. An customers are looking for experience in the trailers, luxury and the interior of a corporate jet, a home away from home. Popularitye growing of whiskey may be bad for bourbon drinkers. This is the world whiskey market. Demand is up for bourbon, five percent from last year, but the premium brand the demand is rising at a 20 annual rate. You just cant make enough of the stuff. There are a couple of problems involved. You cant make bourbon overnight and even the cheaper brands are aged 24 years, and the highend whiskey stays in for eight years, to more than 20 years. And there is a shortage of the oak that is needed to make the barrels. The trade distillery, which bourbon says that they are distilling more than they have in 40 years. This is still not enough. Taking a look at we will actually move onto the markets right year for a quick futures check, a market that is looking higher here, on a day that janet yellen is going to be speaking. Futures are rebounding after equities fell for the first time in three days that we saw that selloff. Investors are waiting on the fed minutes, and we will be on the markets again for you in 30 minutes. Coming up, billionaire casino magnate Sheldon Adelson is working to reduce his role at the Las Vegas Sands. We will tell you exactly why. And the vehicle that looks and sounds like it came straight from the pages of an xmen book comic book. We will give you a look at this. Live on bloomberg tv, i am trish regan, and i will see you back here in 2. 30 minutes from the opening bell and you are watching in the loop. I am trish regan. Futures slightly higher ahead of the open. This fed will be releasing minutes from last months meeting. Target still trying to recover from the holiday data breach. The retailer posted a firstquarter profit that missed estimates. Target cut its annual forecast. A milestone for spotify. Paids reached 10 million subscribers. More than 40 million active users. Chinese online retailer jd. Com has filed for a u. S. Ipo, violating the company at nearly 20 5 billion 2. 2 times more than total sales last year. At the high range, that would a higher valuation than amazon even though it has yet to post a profit. I am joined by leslie, who covers ip ipos. What is happening with this company . It is a similar Business Model as amazon, the ecommerce model where they hold inventory and have warehouses. They are in charge of logistics. Processes, which is partially explaining the lack of profit like we have seen that amazon. The margins are slimmer than at alibaba . The difference at alibaba is they make their revenue based on advertising and marketing and they just run the platform. Their expenses lie in web management as opposed to logistics, they outsource those. Tell me about how investors are reacting to this one. This is the first one i have heard in a while where investors seem pretty pleased with what they have seen. A chinese ecommerce company, it is a big deal. It is scarce they are not floating as many shares relative to their market value as they could. Ofestors that get a piece this could see a pop on their first day of trading given the demand we are hearing about based on investors at the show. Alibaba listed in the u. S. , list in theed to u. S. Why does everybody want to list in the u. S. . There has been a flurry of chinese Ecommerce Companies coming to the u. S. To list. Two to thet is ability to do multiclass shares in the u. S. ,, internet common among Internet Companies which they cannot do in hong kong. We have seen strong stock market movements among Tech Companies despite the recent selloff. There was a very strong runup as well as the investor pool here that is so deep and strong. It is a very attractive market. Alibaba had gone public in hong kong and while back. It was not successful. That was not considered a success. Is there a sense that maybe the u. S. Will offer more appetite . Be aibaba is going to gigantic deal. The one when it listed in 2007 in hong kong, it was a subsidiary. For a 20 billion listing, that ,s what they are looking to do the u. S. Offers such a deep pool of investors. You have fidelity, t. Rowe price, all these savvy investors that can help purchase big blocks of that stock. It is going to be they will need it. Thank you very much. Lecture a, u. K. Label burberry is famous for its croslassic britishness. The new ceo is steering towards perfume and makeup in a big way. Olivia sterns is in london. She has been watching this. What is the thinking here behind this move . Let me say i have been in london for five days and i have only had to wear my raincoat for two of them. Looks like the british summer may be upon us even though we associate burberry with rain. This is christopher bailey, the new ceo after Angela Ahrendts the part of for apple. He is bringing beauty fragrance, skincare in house. On amazon. Com. He is getting more control over the product. Disbanding ely he is also widely expanding distribution. You think of other big fashion label names like dolce and obama gabbana, what they do with fragrance and cosmetics, they license it out to loreal or procter gamble. Christopher bailey wants to bring it inhouse. Not just on amazon. You were speaking about alibaba, they are selling in china. That is going to expand their reach. If theyere a risk are selling to the masses then they dilute the exclusivity of the banbrand . Anthey think they can create aspirational product . That is the balance burberry has to work to strike. We spoke to one analyst who said typically the conventional wisdom about people selling 40 lipgloss is when they make for trenchcoats, one day upwardly mobile people will aspire to buy the full priced item. She said it is actually about pushing product because margins are better on fragrance and skincare. It to sorn is you get many people and it becomes a monetized and perhaps you get the wrong fan base. Ge problemad an ima that Angela Ahrendts worked to clean up. Vy following a chav as we say in britain. It is like the cast of jersey shore showed up wearing your luxury item. I love that you brought the sun to london. We miss you here. Thanks. Moving and shaking this hour, Las Vegas Sands chairman and ceo Sharon Allison paring back authority Sheldon Adelson paring back authority. He would giveid up the ceo title if that is what it takes to attract the right cannabis. Adelson to attract the right candidates. Adelson is 81 years old. That is not what he told betty intervin exclusive ew. Chinese, japanese, wherever there are emerging market opportunities. That is my job to do that. I love it. I do not think im ever going to retire. What have you learned is you have gotten older . What have i learned . I have learned to seek advice moreother people and get than my own viewpoint on something. Transformer. A we have a look at the black truck, havelf helicopter. Stay in the loop, we are just getting started. Gm recall another 200,000 cars in the u. S. Today. That is on top of 2. 4 million vehicles recalled yesterday. The grand total for this year is nearly 14 million. The third recall this week for gm, representing a dramatic turnaround for the company that has been accused of ignoring recall issues. Edward,me for more is Bloomberg View contributor. There were no fatalities related to the last recall. Is mary barra trying to make a statement . Trying to get out ahead of additional problems question mark wast seemed like that happening last week. Last week was an effort to get as many of these vehicles off the road, fixed, and trying to put this behind them. I am actually surprised to see the recalls pick up again this week. It seems to me that the real problem for gm on the pr wise, is that this will not go away. It drags on. At a certain point they will have to start recalling vehicles so they can appear to be like every other company. What do you think the financial hit is going to be . We are talking about close to 2 billion, that is before criminal fines or civil liability issues. So many questions surrounding the civil liability situation. It is impossible to estimate there. This will be billions and billions more easily 5 billion total. Do you think that the old gm can be held responsible here, given that it did file for bankruptcy question m . I cannot answer that. I think the pr situation is such that even if they are not held legally liable, they will have some kind of Victim Compensation fund. Can feinberg is working on that. Something along those lines. From awhat it does Public Relations standpoint. When you think of a car, you want to think of safety. If you do not have that it can be damaging. Something else you recently wrote a Bloomberg View article on uber. Uber is angling for a valuation of more than 10 billion in talks with wall street. It raises the specter of teslastyle overenthusiasm. Avoid overvaluing these companies has everything to do with the Auto Industry. Are we in a situation where q new, qualified tech uasitech Auto Companies are looked up to favorably . Companies are important as a bridge from the current Auto Industry as we know it to the Auto Industry of the future. In which Autonomous Vehicles dynamicntroduce a new in the marketplace. Axis to mobility becomes more important than owning a car, which is the traditional model for the industry. That will be a huge transition. It is not one that the Auto Industry has incentive to leap into. There is not really a jeff bezos in the Auto Industry really ready to destroy the old business and create a new one. They play an Important Role in the short term. I think they will be successful, they offered er. It is they already are successful in the short term. It is the longterm that i worry about when you get to the evaluations. 2020 is going to be a challenge for these companies, who connect consumers with human drivers. Thank you very much for your perspective this morning. You can read all of eds views at bloomberg. Com view. To keeping an enormous chunk of change outside the u. S. For tax purposes. A lot of companies are doing this. How much money were talking about with google, next. We have some breaking news on ebay. Ebay asking users to change their passwords following a cyber attack. Scarlet fu has more on the story as it develops. Hasinancial and paypal data not been compromised. That is encrypted and stored separately. Ebay has reported a cyber attack and is asking users to change their passwords. Was database attack detected about two weeks ago. The database was compromised between late february and early march. They are working with Law Enforcement and Security Experts to figure out what to do. The headline here ebay asks users to change passwords. Thank you very much. U. S. Stocks have rallied back from a dip in april. Investorss eyes are peeled for proof that economies are as strong as they need to be to justify valuations. Our overseas markets better valued . Are theyirly fairly valued . I am joined by david kelly of j. P. Morgan funds and mike mckee. David, what is your sense of the health of u. S. Markets . Far the u. S. Market has been in a holding pattern. That is partly because of confusion about the bond market. It is also because of bad Economic Data and the First Quarter. The economy is definitely strengthening. Holding patterns do not last forever so you would still be a little overweight equities and underweight fixed income. Why is the bond market rallying . It is a broken signal, like a busted tail light. This is not about geopolitical worries because the vix is low. It is not about inflation worries, people expect inflation. It is not about the economy. And remember when you look at in terms of highfrequency, housing, autos, the economy is picking up. It is a mismatch between the bond market supply and demand. Issuing 500 billion worth of treasury last year compared to one . 5 trillion of treasuries two years ago. More than half the treasuries are owned by Central Banks here and abroad. There are a lot of Pension Funds buying bonds to match liabilities. People rebalancing portfolios. Most of the bond market is being tom and invite people who do not care about the price of the bond. Most of the bond market is being dominated by people who do not care about the price of the bond. For once, it is not the economy, stupid. Europewe safely say that is out of the woods . Yes. You did not say that convincingly. Of woods ints europe. In terms of the sovereign debt crisis, that is behind us. The ecb has made it clear they will not allow sovereign bond default and that is what they need to hear. Austerity is diminishing. There is residual angst in europe because of what they have been going through but they have had four quarters of solid growth that will push down unemployment. That will put a floor under inflation. The beauty of europe is it is in the first innings. An opportunity . Absolutely, i wish people would see this. We are in the later innings of an extension in the u. S. Almost a 12 unemployment rate. As it comes down that will mean earnings growth. European equities is the ecb going to be a player that the fed was for the u. S. Question mark some sort of qe . I think theyre being forced into it. I do not think the Federal Reserve has done that much to improve the economy and i dont think the ecb will. They will not achieve Stronger Economic growth. The economy itself is beginning to recover. We will be back with the open. Coming up next. Welcome back. You are in the loop. I am trish regan. 26 minutes after the hour, bloomberg is on the markets. Scarlet fu has the latest on futures before the bell. Futures have been climbing in the Early Morning hours. Waiting for the release of the minutes from the last Federal Reserve meeting. Seeing treasury yields move higher. The yield on the 10 year inching point 54 . Wo the british pound is strengthening after you cant retail sales Beat Estimates. Minutes from the bank of englands last meeting shows that the boe says arguments for rate increase our growing. Oil at a onemonth high because inventories are sliding in the u. S. That on the markets in 30 minutes. The top 10, the only trades you need to know about. Carlos who is sticking with me. Netflix, the online Video Service announcing its biggest expansion in three years. It produces house of cards, and will be available in germany, france, austria, belgium, and switzerland. Tash, Raymond James cutting the shares from market perform. He said he is moving onto the sidelines on potash until he sees improvement of the macro environment. Hormel, shares following in 2. 5 . Falling down hormel sees its fullyear profit at the low end of its prior projection. Tiffanys. Reporting firstquarter earnings with sales that topped estimates. The company is known for the. Ittle blue boxes tyson cant eat more chicken. The message from the company executive. Supplies will be tight because of a virus. Higher prices for pork and beef will increase demand for chicken. Owes topping estimates from a 2. 4 rise in sales. Shares following in the premarket after the company cut its fullyear forecast outlook for the First Quarter, they Beat Estimates by two cents a share. Petsmart will stop selling pet treats made in china because of continuing fears over their safety. Broke 10 minutes ago ebay asking users to change their passwords following a cyber attack. Appears to bet safe. The company said Financial Information is encrypted and stored separately. General motors, speaking of safety. Adding 218,000 small cars to its growing list of recalled vehicles. Chevroletcall covers cars from 2004 2 2008. Recall this 30th year. I am curious to what the final number is going to be. Number one stock of the day is target. The discount retailer announcing a 16 drop in firstquarter profit as last years data breach takes its toll. The companys earnings missed estimates but sales increased yearoveryear. Target also cutting its annual forecast. Here we are at the open. Looking at a slightly higher open on a day when we are expected to hear fed minutes. I want to get straight to the call and bring back a bit of j. P. Morgan funds. His call higher interest inevitable but the rise could be gentler. Financials,ase for tech, and Consumer Discretionary but against utilities, and telecom. Up and we should not be worried because the economy is going to be stronger . You have got to be positioned correctly in the bond market, do not be longduration or take leverage bets. From a lowrise level, the stock market shrugs that all. You dont think part of the improved economy is already baked in . The stock market is no longer cheap. Given low levels on cash, stocks are attractive relative to fixed income and cash. Onnings should rise about 5 6 per year. A little bit of earnings there. It is not a great outlook or double digits per year. On balance and overweight equities. Slow and steady climbing higher. Scarlet fu has been looking into a bullish case of investing in reits. The Real Estate Investment trust, the are the best performing stocks of two dozen Industry Groups this year. 2014, payback from missing out completely on last years rally. Bill dudley said the increase will be relatively slow, low rates will keep dividend pairs more attractive. The boost the group could boost defense after earnings are projected to rise 19 . What is your take . I think long rates will move up more slowly than people feel that they will still move faster than bill dudley thanks. Rising rates are not a Good Environment for reits. They are being used as an income substitute. I would be cautious. Cautious on fixed income as well. You have got to think about your overweight and underweight. Julie, we had disappointing retail numbers recently. As much as david is telling us economy is getting better, what are we seeing from the consumer . Consumer is still feeling pain. A lot of retail earnings reports. Target reporting profits that fell a little bit more than estimated. Costs not just from the breach but also from markdowns. These are companies that came out yesterday, year to date performance numbers. Urban outfitters, staples are struggling in terms of sales growth. And then there is the big one, walmart came out with a forecast that disappointed investors. You are looking at a year to date performance. A long way to go in retail. If you look at the stock performances, sort of a discounting mechanism. It looks like you can extrapolate investors are not just looking at right now. Theyre looking at the next six months to nine months and seeing trouble still for some of these retailers and trouble for demand coming from consumers. So much of what you are saying, the market moving higher, is based on the economy improving. Basedh of the economy is on the consumer. The consumer can be pretty fickle. Are we seeing an of evidence that the consumer, two thirds of the economy, is Strong Enough . The key thing is not the consumer but the consumers. The broad mass of middle and lower income consumers are still struggling. What we have seen in the last two years is a 16 trillion increase in wealth, most it is concentrated in the upper income households. It is not showing up and targets numbers or walmarts numbers. When we look at Consumer Spending in the second quarter, it looks like it will grow from between 3. 5 and 4 in real terms. Consumer spending is coming back and we think able get an assist from stronger Capital Spending and Less Government pullback. I hope you are right. David kelly of jpmorgan funds, thank you. Coming up, the half truck, half trapper humvee called black knight makes its Maiden Voyage over southern california. A sneak peek. A few minutes into the session here. Stay in the loop i will be right back. Heres a look at the top stories on our bloomberg west radar. Google keeping cash outside the acquisitions,ble the company said in a letter to regulators. They could be as large as 30 billion. Overseas competition is rising. This was filed with the sec yesterday. Lenovo recording a 25 jump in fourthquarter profit, riding the success of its desktop models and mobile devices. The income climbed to 158. 3 million, up from 103 6. 9 million a year earlier. Is workingaid it with chinas government to evaluate its wind is a operating system after the software was excluded from a Government Purchasing order. Maker said it was surprised to learn that windows 8 was shut out of the computers. Is a hard sell for Companies Like cisco, who rely on selling routers. The tech giant trying to make the router business more attractive. Cory johnson joins me from San Francisco with more on the turnaround for cisco. Why not. Sometimes peoples eyes glaze over when we talk about networking. Like Net Neutrality and uses of the internet that are so important like netflix it has people really thinking of the Different Things that are possible. Cisco is caught in an interesting time. Theyre doing a conference in San Francisco and gathering thousands of customers from all over the world. At a time when the very nature of the network is changing. It is becoming a lot smarter. As a is something known Software Designed network. The notion is that the changes that direct where traffic goes on the network happens in the middle, not on the edges. It is a new generation of equipment that lets people who run networks run them more efficiently and with more security. A limb cisco out on where they have to refocus their entire profit line. It starts to make things possible like gathering data for all sorts of stuff. Not just information on the cloud, a fog, as cisco likes to say, of all sorts of devices sending information to the cloud. Why is cisco focusing on the fog . It is a foggy day in San Francisco. It usually is. In particular today, i am missing the new york weather. Cisco recognizes if they can be in a place we are going from adding hundreds and thousands to hundreds of thousands of nodes on the internet where you have every last device a car, windmill, sending information up into the giant network cloud. Their router business can change from being essential for every business to something that is essential to everything. Is the router business . Cisco sounds like it is trying to focus more on Cloud Computing and fog and anything that is not that basic router business. Fundamentally this company has the router business. Growth has been difficult. They have had two consecutive quarters of revenue decline at a time when we keep seeing little signs that the economy is cranking along the cisco is not benefiting. And while spending a fortune on acquisitions. Revenues are still falling. They need to catch the shift in the structure of networking even companyiant grows. Cory johnson, sorry to have you back in foggy San Francisco. Thehave got to cover all technology stuff. You can catch cori every day for the latest in technology and media, weekdays at 1 00 p. M. And 6 00 p. M. Writer on bloomberg for bloomberg west. Helicopter. Have the black knight has big tires, andmotive suspension, suspense in the air. Ees test flight over southern california. Watch this. [rock music plays] coming up, people in europe can breathe a sigh of relief. They will soon be able to watch house of cards. Details on netflixs expansion. State in the loop, i will see you in two. Welcome back. Time for global outlook. Pressure reached a deal to supply natural gas to china. The accord, signed during a two to shanghai putin will allow gazprom to develop. As fields in eastern siberia joining me on the phone is Ryan Chilcote from st. Petersburg. Deal. S a pretty big how would you characterize the scope of this . Billion massive 400 is what we estimate and what gazprom estimates it might be worth over the next 30 years. Does not get much bigger than that. What are the politics here behind this . Gazprom, the Worlds Largest gas producer, sells almost all of its gas outside of russia to western europe. You have the western europeans and the eu saying they want to diversify away from russian imports. So the russians are saying fine, if you want to diversify, we have a place where we can diversify our exports. That the western europeans really do not have a viable alternative to russian moment. He certainly not for the next few years. What the russians would be selling to the chinese is not going to replace the need for the European Market for them. About 1 5 of the gas they are currently selling to the eu will go to china. The two countries the u. S. Worries about the most. They might in fact be russia and china. Are we effectively driving russia straight into chinas arms . I think so. To a certain extent, the russians recognize they are not the superpower that they were in the cold war era. Not economically speaking, they cannot compete with the u. S. China, the worlds secondlargest economy, as a really good way to balance or their interests. If they can get china in their corner, they think they can be pretty powerful. They do not see themselves as a superpower anymore but teams up with china they think they can really be spoilers when it comes to american supremacy. You so chilcote, thank much. Thank you for your reporting on this. A terrific interview with Dmitry Medvedev yesterday. We appreciate it. Netflix is expanding its global reach and its biggest expansion and almost three years. The Service Plans to make itself available in six European Countries including france and germany. Hans nichols joins me from berlin with more. Our people pretty excited now that they are going to be able to watch house of cards . It is american politics. No, it is translated into german and it is a couple seasons old. Kevin spaceys german is flawless. This is essentially if congress were passing this it would be called the decriminalizing Internet Activity in american correspondents based in berlin. So Many Americans, i am not admitting, but so Many Americans here try to get netflix. You can try i say try by going through a vpn, a virtual private network. Often times you are foiled and cant watch netflix. This will align what everyone thinks is a big market for and have aducts pricing system, a Payment System that works. When you look at what rate hasting whats to do, he wants at to 80 when you look what rate hastings wants to do, he wants 70 to 80 of revenues from outside the u. S. Germany, france, austria, belgium, switzerland, luxembourg. Lookig question when you at their total number of subscriptions, 46 million, state and right now it is 35 million. Clearly this is a u. S. Company. Will it take hold elsewhere . I know you spent some time in austria, is house of cards translated into [speaking german] i dont know. We will wait and find out. Very nice to see you all the way in berlin. You will be able to watch that without having to go through elaborate measures. Thank you so much. That does it for todays in the loop. Transcanadas ceo rob sterling will be joining me live on street smart, talking about the push to get the Keystone Pipeline approved. 3 00 p. M. Eastern. We also have the president of the United States making a morning. At 10 40 this we will have that for you live. It is 56 minutes past the hour, bloomberg is on the markets. I am scarlet fu. 30 minutes into the u. S. Trading day. A major index higher for the third time in four days. The dow industrials gaining 130 points right now, the s p at 1883. Investors waiting for the release of the minutes from the last fomc meeting to gauge the strength of the economy. The 10 year yield moving higher as well in advance of that, 2. 54 is the latest read. The pound is stronger this morning by. 25 after u. K. Retail sales Beat Estimates. Minutes from the bank of englands meeting showed that the bank of england said the argument in favor of an Interest Rate increase is growing among some policy members. Nymex crude is higher this morning as well on sliding inventories in the u. S. Back to equities. Unsure about whether the stock market has run out of steam or is taking a breathing . A clue might come from and at strange a clue might come from an Exchange Traded note tied to equities. Joining me is joe. This is the s p 500 vix Exchange Traded note. Ticker is vxx. It gives Equity Investors a way into the vix guage. Gauge is expected volatility that is baking in what the market is thinking. What is happening right now with this Exchange Traded note . Options traders are pulling off a short bets. Theyre not expecting volatility to remain low as longer. The short position has waned. Looking for the vix to spike. Looking for more volatility, whether that means a move up into record territory or maybe a correction. Is trading 10 below its 200 Day Moving Average and has been holding slow and steady. People talk about complacency. What is the argument for volatility to return . People are looking at disappointing Economic Data. Industrial production and retail sales last week missed estimates. People are looking at the tail end of the earning season and seeing that earnings were not as good as they have been in the past. Whether thequestion five year bull market we are in the middle of is sustainable and whether we might see a correction. Increased volatility means people that bet long on the vix are in favor. Of course there is the fomc minutes, trying to get a handle on where the fed sits on Interest Rates. The fed holds a lot of power, if we end up tapering in october and maybe a rate hike in 2050, that could be positive for equity markets. That could be something that causes a spike. I see how you use the subjunctive tense. Higher rates are good for some and bad for others, people have not figured out of it is good or bad for the market. Still up in the air. This is a volatility measure so any chaos in the market is good for people long on the vix. The ticker vxx. Short positions. Thank you so much, joe joining us of bloomberg news. Back on bank back on the markets in 30 minutes. President obama will speak and 45 minutes and we will bring you that live when it happens right here on Bloomberg Television and on bloomberg. Com tv. Market makers starts right now. Live from bloomberg headquarters in new york, this is market makers, with Erik Schatzker and stephanie ruhle. 5 billion that is what it could cost bnp paribas to settle criminal Justice Charges with the u. S. Justice department. It with the world cup approaching is this the year soccer wins over americans . We are
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