Transcripts For BLOOMBERG In The Loop With Betty Liu 2014063

BLOOMBERG In The Loop With Betty Liu June 30, 2014

The day gm victims have been waiting for has finally arrived. Disaster response expert ken feinberg automakers fund to accommodate victims of an ignition switch defect will finally unveil his plan on how they will be compensated. Yang yang is in washington with more on what we could expect. Already, details are beginning to emerge. That is right. Announcement. According to a gm lawyer interviewed by bloomberg news, ken feinbergs Compensation Plan is expected to offer for all drivers and passengers killed or hurt in one of 2. 6 million recalled callers cars in an uncapped fund. Money is expected to be offered even if the driver was treating and even if gm thinks it could otherwise fight the claim in bankruptcy court. Good news for victims. We will find out for sure at 10 00 a. M. One feinberg unveils the plan in d. C. And answers questions of how much victims will get and how much more will the company. Ost gm already asserted faulty ignition switches to 57 crashes, 13 deaths, 680 million in and rentals for customers. It agreed last month to pay a record 35 million fine and a probe into how the company handle the recall. Piece ofust the latest the puzzle for gm. The cost is put at 3 billion for how much we will eventually. Ave two pay up what about more than 100 losses against the company . The idea is to settle all of those. Todays announcement, a voluntary plan, and they will have to give up their right to gm to reject the deal that reaches too few victims or makes inadequate settlement offers and those victims can pursue those claims. Feinberg has become quite the expert at putting the price on tragedy and is known for persuading people to settle rather than sue. Only 94 people out of 3000 eventually went to court in the 9 11 case. The victims should feel good that can feinberg is behind all this . He is getting paid quite a lot for this. Gm has not disclosed the amount but they paid him 1. 3 million per month that can today for handling the oil spill fund. Given completeen independence on this one and they want to reach everyone who suffered. Part of this is determining just who is the victim. Who exactly is the victim . The case has gone on for quite some time and that is the question may need to answer today. Thank you appeared earlier this month, i spoke to ken feinberg about the claims process. Gm, i must say, has delegated to me without any ambiguity here. Full discretion to evaluate each individual claim, make a determination, and pay the claims eligible. The program should kick in as gm has demanded around august 1. I want to bring in my guest host this hour, the former chairman and ceo of crisler and home depot, now the founder and chairman of accelerate. Good to see you this morning. Should victims feel good can feinberg is doing this . They should feel very good. He has great reputation, high integrity. It is not surprising he was picked to do this. The strategy is to get this behind him as fast as he can. He will be very equitable. The victim should feel very confident they will be treated fairly and expeditiously to get this part of the issue behind them. Those with the fun will give up their right to sue gm down the road. The whole idea of uncapped compensation, how dangerous could that be to gm . It sets the right tone. He is setting the right tone that people who are harmed or lost their lives, it is hard to put it down a dollar sign on it. His abilitystory of to do that. That was the right thing to say. Equitable inll be administrating this and not being cavalier about it. I think victims will be treated fairly and hopefully they will get this behind them. We have seen with this internal report on what exactly happened and already, critics ane come out and set on independent report that mary barra is too much of an insider to claim she will be able to turn around the company. You say . Challengeshe biggest for mary was to distance herself, after having been there for many years on this issue. She has done a great job for many years. She had the talent she had the meeting, providing independent review going forward. She has recalled a significant number of cars. She stopped selling some cars. This will be a test now for her relationship with the dealers. It will be impacted based on the revenue and not selling the cars. She still has to navigate troubled waters going forward. Today, i think she has done a great job. She has in your view, but for gm to signal this is a new company, should they not look for a ceo outside of the company . It is hard to secondguess. I do not know if they were aware of this situation when they picked her. Ellis part of the problem. Part of the problem. She brings a tremendous amount of knowledge, and it is always hard. When i went to crisler, they said, bob, youre not a car guy and i said, they got you in trouble. I really enjoyed my time at crisler. But i think she is doing all the right things right now. Picking him was another major strategic move. As he is going through these claims, what should the company be doing in the meantime . The big challenge is to get the claims behind her. My second advice is to get the recall repaired as quickly as possible. Do not let people drive their cars while they are still in the recall. Heavily have to lean for air bags and ignition switches to get them repaired. In my experience, not everybody will bring their car in and get repaired. They have to continue to go out there and encourage them to get it done quickly. This may be over a yearlong process doing this. Stay with me. Accelerate, my guest host for the hour. Make sure to watch the Market Makers interview with ken feinberg. That is 8 00 in the morning. Moving and shaking this hour, mark zuckerberg. Once again, he has a deal with users concerned their privacy is being invaded. A facebook researcher apologized for an experiment that temporarily influenced what 7000 reserves saw on their newsfeed. The result of the study, people who saw fewer fewer negative fewer positive posts roads more negative posts. Facebook says there was no selection, just influencing how they think. Area, over the weekend, a temporary suspended its service. Violated copyright laws. Billions ofled dollars in retransmission fees local programmers received. For more, were joined by alex, who covers technology on the east coast. Temporary suspension, what does that mean . They are in a holding pattern. They have to wait for the case to kick back to the lower court. They are trying to figure out the next that, what their other options are, can they continue to go forward even with this Supreme Court case rule . Customers have lost arguably one of their favorite ways to watch television. Aereo made it easy. What is left now are these services where you have to go out and buy a box and set it up with an antenna with your tv, point the antenna the right way, and that is to the way to get your broadcast television if you do not want to pay for cable. For the broadcasters, they won the big case at the Supreme Court. What is next for them . They started using comcast and others are looking into Services Similar to aereo for paying customers. Online,given to you getting it off your tv onto your other devices. They are starting to explore that. They see customers like the area of service. Do they want to get into that and rope some people into cable packages . We have seen other rivals of aereo come on board. They are saying, ok, aereo is suspended but we are still operating. Come onto our service. How many of these rivals have we seen . Tivo, which we have all heard of. Some came out and posted on their site, aereo is gone, come with us. The differences, you have to pay the upfront cost of the box, a Monthly Subscription fee, another box if you want to stream it to your other devices. It is a different process. With aereo, it was an easy eight dollars a month. To buy a box upfront can be 200. Some of the customers who liked the less expensive service might not want to fork that over to get going. More to come on this story. Thank you so much. Coming up, president obama turns to the Business Community to clean up the mess at the department of veterans affairs. Plus, a summer blockbuster already. Tell you howyou transformers did on its opening weekend. President obama is turning to the Visitor Center for his next press secretary. Runer ceo Bob Mcdonnell to the department. To run thenald department. Has more, peter cook on the pic. The president is raking tradition with this pick. He is. Normally, the job goes to someone from the ranks of military or medical community. Instead, he is turning to someone from the business sector, someone who has experience with the military. Asis really better known running a company as ceo until 2013, a fouryear time. This is someone in the present turning to for his management skills to turn around his agency that had so many troubles. This it will be a challenge assuming he is confirmed but it is the managing side of his experience that make him the right pick for the job in the president s mind. This is no ordinary project by any means. No, it is a difficult organization to run. It is much egg or in terms of employees. It is an organization that is basically a health care organization, one of the biggest in the country and the world. Applying the management skills the white house has detailed itself, there are big robbins within the organization that need to be cleared up. They call it a culture of erosion. That is what we have to do, to try to use the management skills to get the money in the right direction for a growing population of veterans using these services. 8 million veterans using the healthcare component in the system. The early reaction to his nomination . Surprise was expressed that he was picked. He was not among the names on the radar. Cautious optimism he can address the problems. Notable support from republicans, which is important. Including the hometown congressman john boehner, saying he is a good man, a veteran, a strong leader with decades of experience in the private sector. He is the kind of person who is capable of implementing the dramatic systemic change that is abilene needed and long overdue at the v. A. John boehner will not confirm the nomination so it is senators who will make the choice. Well. Of confidence bodes thank you. Thel with me as my host, former chairman and ceo of kreisler and home depot. You also served on the board of the veteran Services Group Wounded Warriors as well. You know quite a bit about the area. Ceo to run a former the government agency, you say im very encouraged with that selection. I think he will bring tremendous rigor to an organization that needs an improvement. I do not think it is about more money. Think it is about operational efficiency, improving productivity. The Wounded Warrior project on the board there, we financially support over 50,000 Wounded Warriors. I hope bob reaches out to us because we can give him good insight as to possibly some of the things that could change to improve our service to the brave men and women out there who have protected us and allow us to do what we do every day. You have come into companies were there needs to be a turnaround, a change of culture and a change of organization. What would Bob Mcdonnell bob mcdonald need to do in veteran affairs . Lead and learn and listen. His experience will be tremendously helpful. Give him tremendous credibility, his operational experience. I think he needs to go in, function by function, facility by facility, and understand, where are they against dustin. How many patients are they looking at against test in and what kinds of services are they delivering . My dad was a world war ii veteran who worked as a volunteer in the hospital in pennsylvania. I got an opportunity to spend time with him and got to know folks at that particular hospital. There is a tremendous our nity to improve service to the tremendous men and women. A government agency, that will buy him more time . He should not take time. We have a crisis here of credibility and service. Men and women are waiting in line and losing their lives. This is not something we want to take our time to fix. I do not mean to be cavalier, but we have got to go in quickly , make change quickly, and improve things for these men and women. Bob, rate of change will be critical. Just hang on. Bobbled the back to talk about the economy. Coming up, bloomberg crunched the numbers to find the best strategy when it comes to world cup shootouts. Less, nasa hopes the second chime is a charm. The mission is to study climate change. We will be back in two minutes. Good morning. Here is a look at the top headlines. American apparel is trying to gain control of the company he founded. Doug try to call a special chair holders meeting shareholders meeting. Own 27 of American Apparel and is trying to increase its shares and gains. And making plans for his future. After his nine year term on the board of the oil company, he is set to seek investment banks partners as an advisory partner. The former oil chairman also served as chairman of nokia until 2012. Paramount pictures, transformers aid of extension was the big winner at this weekends box office. The film pulled in 100 million, making it the biggest a mastic debut so far of 2014. It is a first in a new trilogy of area alien robot movies. We cannot get enough of those. It is 26 minutes past the hour, which means Bloomberg Television is on the markets. Scarlet loo has more. For futures in focus. Oil futures this morning, even as iraq stepped up its direction. Prices are up about 2. 5 , bringing the rise to almost four percent. The advance is not that much bigger. Joining me now, greg bender. He used to treat oil futures. We have also got scott bauer. I want to start with you. Why do oil prices seem so resistant to developments . 2. 5 in june, given the kind of movement we have seen in iraq and on the ground. There is always a question of how strong the economy is in general. The seasonality right now is not the best for oil. August 10 to be negative. This has been a breakout. We did clear resistance which is important. Which has gone sideways and not up to the target everyone is expecting. Notably, we have seen the premium the market is paying for immediate delivery. We will get to that in a moment. With all of that in mind, reg out in ways greg has called it, how are you trading in oil . It is very range bound. Atbroke through resistance 104 and did not get to the 110 level. We are just above 105 right now. If we see one of five get hit or any debt, i would hop on the short side here. We are very range bound. I would hop on the short side and look for support at the 1. 2 level. With all the strikes we have seen in iraq, the shock value is out of the marketplace. Greg alluded to looking at that in the option volatility and oil. We see that way down. The shock value is gone. A lot of pressure is off. If anything in this trade, we will see some Downside Pressure in the next couple days. Laymansput trade in terms. Potential profit of about 275 per valid per barrel. Since the contractor and trolls 1000 barrels, the total would be 2007 hundred 50. Greg, when you look at what is going on in oil, you see the u. S. Posttentative steps toward exporting crude. Is that a bigger factor . It does not look like it. Specifically, if you look at wtis discount to brent in the world oil market, that is right around a two week average of eight dollars per barrel. There does not seem to be an immediate rise impact in the short term. I want you to explain what means. Dation future contracts have expiration marks and it is a condition that exists where future contracts for more immediate delivery trade a premium. That condition generally exists in times of high demand and or limited supply. Do you expect that to continue . I absolutely do. I could not agree more. In the options world, i am looking to buy august puts in u. S. Oil. That plays right into what greg is saying. Thank you so much. Ustt and greg, for giving our options insight. We are on the markets once again in 30 minutes. Thank you so much. In the firste quarter. We know that. That meant corporate profits also melted. The biggest decline on the bottom line since the beginning of the great recession. Mike mckee has the real deal on whether this means the end of the bull run. Still with us, our guest host, chryslereitzer ceo ceo. Were are not talking in s p 500 corporation. We are talking about all the asfits public and private reported to the government. They were ugly in the first quarter. Tax raises, profits fell, the first decline since the beginning of 2013, the worst since the Fourth Quarter of 2008. Aftertax adjusted profits, even worse, down 13 . And will it last . We have a good idea about the first part. We do not know the second part. A big debate about that, and like Everything Else in the first quarter, profits were recovered by lousy weather. You will see a retraction and corporate profits as well. The government ended an accelerated depreciation at the end of last year. There was one big tax break they could not use. That may be a reason why stocks went nowhere for most of the first half of the year. We are barely higher. What about the second part of all this . You have to guess whether they are going up and down. Snape seeing the economy back in the Second Quarter running a three percent gain to match the three percent loss. Even with a firstquarter decline, profits are at an alltime high. Sometimes, with the Company Expanding again, there is no reason the graph cannot continue expanding. You have got to have a reversion. Look at the longterm, three percent corporate profits to gdp. Back to the 6. 3 . An interesting article this morning. Of stocks overe the last six months or so and found the only buyers are Companies Buying back stocks and individuals hedge funds everyone else is net short. I hope they are right. Discussedtive, we more of a realist than an optimist. The things you talk about, certainly, we have a back rub of uncertainty. Fedex, a bounce back after the first quarter. We saw him recover from the weather and other problems. I am more conservative in my view. A correction stocks . I think so. I think corporations have done a great job overall with corporate, except for taxes, which we need to take a hard look at in this country. Is there any possibility that maybe the economy could surprise on the upside and that could be an earning striver . Questec could always do that. What we have not seen in the recovery so far, and you and i talked about this at le

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