Transcripts For BLOOMBERG In The Loop With Betty Liu 2014080

BLOOMBERG In The Loop With Betty Liu August 5, 2014

Prosecutors want to know more about the General Motors subprime auto loans. Gm is cooperating. Says russia now has 45,000 troops and hundreds of tanks on its border. The ukraine says they are making gains against russian official. Front, the corporate coach investors waiting for a sign of a turnaround and they have a glimmer of hope. Ae handbag maker reported smaller drop than expected, but michael kors is still eating coachs lunch. Julie hyman, what is coach doing right . They hired a new designer almost one year ago and the reception from the Fashion Press has been pretty good. It is not clear if customers will buy it. That will come in the next couple of months. Coach did post a drop in comparable sales of 17 , but 21 was predicted. 7 , butrevenue was down again, not as bad as predicted. For many dominant years and sort of rested on its laurels. The designs were getting kind of tired. That is part of the issue and always a risk when you are talking about a fashion company, whether it is accessories, clothing, or what have you. That is part of the issue for coach. Investors are waiting to see if improvement will be coming in the coming quarters. Are rapidly gaining steam. Yes, it has been a growth story for the last couple of years and yesterday it came out with numbers and topped estimates that continue to show 43 , Revenue Growth, up however they pointed to a shrinking of margins. Points 50asis basis points in the coming year. They had to discount to get out product out the door. Ors insists they are not aggressively discounting merchandise, but analysts have come out with notes for weeks saying their discounting. Kors will continue to invest in its International Business which cost money and will affect the market. Playis market that both in, what would you call it . Guess,rational luxury, i and coach created that market 200 toandbag that is 1500. If you go back, women only had two handbags. Coach created a niche. They might have gotten tired openede designs, and outlets. A lot of critics said that made it to common, you can buy it at an outlet cheaper. You know that. Kors might be running into the same risk. It has to be aware of that pitfall. Keep that exclusive aura around it. New yorkers got a scare yesterday when it was reported a patient admitted to a local hospital might have the ebola virus. He is now listed in Good Condition and Health Officials are telling residents they should not be worried about contracting the disease stw americans being treated for americans as two being treated for ebola in atlanta are on the mens thanks to acm. Yang yang joins us. At this is no vaccine time and normally money patients are given fluids, blood transfusions, and antibiotics with the hope the immune system can fight off the virus, but 900 a death toll of nearly out this latest outbreak, the measures are far from effective. We may now have a breakthrough because at the request of the u. S. Charity that works with the two infected americans, dr. Kent bol,tley and nancy write experimentalued in serum. By saneing developed diegobased zmapp. Until now, they had in a littleknown company with only nine employees. A little more known now. We mentioned early on that the serum has not been tested on humans, so how were they able to use it in these cases . This was a case of desperate times, and desperate measures. Desperate to save their workers, samaritan purse, the company they work for, reached out. The u. S. Has very strict drug approvet the usda can drugs under what is known as the clause. Onate use they were informed of the risk and had to give their consent. Again, never tested on humans until now, and the drugmaker has made it clear that any decision to use the drug is the. Hysicians call, not theirs why do we not have an approved treatment . Is it an issue of funding . It definitely is. Pharmaceutical companies there is no appeal to an ebola vaccine, to tell you the truth, and that is a challenge. Drugmakers have had these potential vaccines and treatments in the works, but not enough funding to get to the trial phase. The drug being used on those in atlanta has not been tested in until now. In the last few years, there has been a little more funding with about 43 million spent on Ebola Research last year. We are making some headwinds. Still not enough for av stream is to get to the Clinical Trial stage. We are still a few years off from an approved treatment, betty. Thank you for that report. Yang yang in washington. Now, for the u. S. Africa summit in washington, i want to dig eager into president obamas have 14 billion bill to africa. Hans nichols joins us. There are a lot of deals in the offing. Where will those investments be . They will be the route subsaharan africa. 90 organizations are represented , almost 50 heads of state, and behind me deals are being done. Here is how the white house made the 14 billion sound like an eyepopping number. Heading into this, they had talked about 900 million, and 1400 they offer that up to billion. 14 billion. In comparison, when china and africa had a summit, 20 billion with the number. One of the things we are hearing on the sidelines is africa is a of the u. S. S ahead when it comes to investing in china. The price tag continues to go up. What about ghana . This its to the core of the governance problem. They have a debt they cannot handle and they have asked for an imf assistance project, but it gets to the core of return on investment in africa. If investors cannot be guaranteed that these countries will be governed properly, the investment will dry up. Another sideline conversation is what is being done to combat corruption, being done to ensure good governance, transparency. Hanse nichols nichols, thank you. Hans nichols in washington. Hour, and shaking this billionaire entrepreneur elon musk. Ell, he is looking for a site he has found a site for another part of his business, with his spacex building a commercial texas. Ad in florida, georgia, and puerto rico also competed for the site. Inn musk founded spacex 2002. Texas says the brownsville facility will create 300 jobs and inject 85 million into the economy. Coming up, searching for diversity in Silicon Valley we will talk with Jesse Jackson who has called on Tech Companies to be more open about their employment numbers. And Bernie Ecclestone has found a way to end a bribery trial. What is he doing . He is offering to write a big check. First. Bloomberg. Today bloombergs big number how much formula one chief Bernie Ecclestone has offered to pay for a to settle a corruption case. Bernie ecclestone has been on trial since april on allegations that he bribed a former risk he did notensure oppose the sale. Settlementestones would raise the chances that he could still remain at the helm of formula one, which is what he is best known for. If you are a Large Corporation and employer in the United States you probably feel like you can depend on Republican Party support, they have been friendly to business, but as of last week, not as much. Gop senator Chuck Grassley last claimsfended the false act, commonly known as the whistle blown act, that protects sources that reveal fraud on the part of government contractor. With me to look about look at this issue is paul barrett who writes about this in bloomberg and greg rayburn, founder of kobi partners, and former chairman and ceo of Hostess Brands. Greg, great to see you. Paul as well. For those that do not know the ca, tell us how it works. It allows the government to go after companies that are ripping off the government. In the 1980s it was adjusted so that individuals could sue on behalf of taxpayers and recover themselves a portion of any judgment or settlement if fraud is found. We have a lot of fraud in this country. It is a big country, big government, 72 billion a year estimated in fraud and abuse. This andave noticed have migrated to this field and are bringing an increasing number of losses. That has prompted big business to try to push back and ask congress to rein in the law, and as you said earlier, senator grassley is, you and turn, pushing back. So, why is he pushing back . He has been a big advocate of ,histleblowers and antifraud and it is a good illustration of how our normal partisan spectrum does not always line up with the standard political assumptions that we have. In this case, big is thiss big businesss biggest opponent is a conservative from iowa. It make sense with his background. Greg, how do you feel about this . You might automatically think i would be a big business guy. Automatically i would think that. I have no issue with the whistleblower act. This is our money. You are talking about taxpayer money. They have recovered 46 billion to this act. Do they catch it all . No. Again, it is specific to taxpayer money, i have no issue. Are not cases of abuse . Will you not see that . You will have, in this country, unless there is serious toward reform or something along those lines, you will always have potential fraud. You even see that in the activist community with bill ackman and herbalife. Whether there is something there or not, i would rather err on the side of having the mechanism therefore someone to report and recover there for someone to report and recover and you have to live with the inefficiencies. These are only government contractors, right . That is right. This relates to people doing business with the government. Does this have any effect on companies that do not do business with government, but realize there are these lawsuits on the horizon . The outlet for that there was a story this week and i cannot remember the company, but a whistleblower had gone through the internal reporting mechanisms to correct what they thought was an accurate financial reporting, and their outlet was to go to the sec. The sec could bring action and deal with that. So, you know, outside of the government companies, there are other mechanisms people can go through, but first, i think they are supposed to go internally through the board or other compliance procedures. Right. So, that digs into the other issue, which is our companies able of policing themselves . That is what the chamber of commerce, in lobbying for new amendments to the false claims act is saying they are same companies that set up the Compliance Program should be given a break. Potential penalties should be reduced, and whistleblowers should be required to first complained to the company before they go out and find a lawyer and sue. The problem with that look at what that day with gm. Exactly, and the problem is human nature. In any organization, the guy complaining that we are not doing things right will end up with a bullseye on his back and might find himself fired, if not worse. Thisis the theory behind law. You basically created a conflict of power here between the Bay Corporation and the small individual, who can file a lawsuit and not fear he will be retaliated against. Is it possible in a big even encourageto people to come out and say i believe something wrong is happening at this company . Sure. You can foster any kind of culture and topdown, and it has to be topdown, starting with the ceo and driven down. When you say big company, the problem is Big Companies are made of human beings, and there is the problem. Measures,ve all the and like you said, look at gm, they had that issue and that people go that were reporting the issue. Whistleblower act serves a good purpose and a good role because of that. But it certainly is not the antidote to everything, as we know. Paul, great to have you here. Paul barrett, thank you. Greg rayburn will stay with us. The founder of kobi partners. Banking on africa Financial Institutions are among those totalg up to 14 billion announced today into the continent. We will be back. First. Bloomberg. You are watching in the loop , live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. Good morning. I am betty liu. Here is a look at the top headlines this morning. Israel has pulled all troops out of the gaza strip as a 72hour truce is underway, saying it completed the mission to destroy tunnels used to stage attacks. Tiger beat analyst estimates on surging suv sales, posting record profits of Second Quarter as u. S. Sales up to make up for shrinking demand in japan. Bmw sales up 23 in china. Isa today publisher gannett splitting and two, focus on focusing on broadcast and Digital Services and bill spin off the publishing arm. 41. 8agreed to buy cars. Com million dollars. That is one of the corporate stories we are watching this hour. It is 26 minutes past the hour. Bloomberg tv is on the markets. Equity futures are lower after the brief respite that we saw yesterday. Investors are jittery about where we are in the markets, whether we are two highly valued and should be in the middle of some sort of correction. We have economic numbers this morning, including the iso and ismices, all important services, all important to see where the consumer is headed these days. President obama plans to announce that the u. S. Companies have committed to investing 40 million in china. Ndard chartered 40 2 14 billion in africa. Standard chartered is committed to 3 billion. Hans nichols is standing by with Standard Chartereds diana layfield, ceo of Standard Chartered. I am joined by diana layfield. What has changed in the last 12 months because you made an initial big investment, and now you will make another one . At over 2 billion, we were over 20 of the private sector commitment, and we discovered that our pipeline project was working more swiftly than we hoped for even and now was a time to double the commitment and last week we announced a 5 billion renewed commitment. Give me a sense of the deals taking place on the sidelines here . I think people are talking about obvious intercompany tieups, large investment opportunities, and broader partnerships around imports, exports, but also financing of hotels, power projects, and large structural infrastructure. , anyich allows me to ask private exits youre working on this year for Standard Chartered . Talk about. I can give me a number. One or two, we do not have enormous quantity of private Equity Investments in africa, but they are very attractive, and we are continuing to invest rather than selling up. More investments and investment. Absolutely. When you look at chinas investment, is the u. S. Late to the game . Lake would be harsh. The u. S. Is one of the later players, and there is reasons remotenessiven the geographically, but i do now believe it is time to step up and engage with africa and it is a fantastic time to do that. Lets talk about your businesses how are you coming in ethiopia . Will you be opening up their sin . Soon . Ethiopia county does not allow foreign banks, but we are watching the situation carefully. About enthusiastic ethiopia and the ethiopian opportunity. We do not think that will transpire in the next couple of years, a we will continue to do what we can. We do do business with ethiopia from our side. And the key is that is awfully loud here. I do not know if you if that is president obama. I know you fly by helicopter. People might not have been able to hear ethiopia, a couple of years out before you think you are there. Click second that is right, ethiopia will do this on a gradual basis, but it is an extremely Exciting Company will continue to watch the space. What about mozambique . We have progressed conversations with authorities and in due course we hope to open a full banking presence. You have staff across the continent. Have you had to evacuate or take precautionary measures because of the ebola virus . No, we have not sorry, we have taken some precautionary measures, as you would expect, making sure health and security procedures are exactly what we want them to be. The majority of our staff in west africa and all of our businesses are local. Evacuation does not make sense, but we are also very conscience of safety. I hope you and your staff and everyone stays safe and healthy. With that, i will send it back to you. My takeaway, more investments than exits, that could be the takeaway of the summit. Thank you, hans nichols, with diana layfield, ceo of standard investments. Frica i want to bring in a Bloomberg Intelligence analyst who covers banks in the middle east and africa, and still with me is rayburn. Ners greg take onr tank on banking in africa because as we just heard from the ceo, certainly there will be challenges operating in the continent. What is the big risk in banking . Sure. We have to look at south africa, 20 years from apartheid, but some of the social problems are there. We have seen mining strikes, steel strikes, which caused a one quarter gdp retraction. What we talk about in the u. S. And europe, the aspect of terrorism. At this point, it has only been confined to liberia, but if you look at nigeria, we have problems with boko haram. It is seemingly scaring investors in investments coming into the company. Ceoseg, you hear about the say they will invest in total, along with everyone else, 14 billion in these markets, and some of it is pr. How do you know it will not be good money . It will not potentially turn into good money turns into bad money . This is a growth story, so first and foremost, what you see in africa in the emerging markets and the subsaharan companies is rapid growth, creation of a middleclass, the potential for an uppermiddleclass, and a growth rate that could outpace china over the next three decades in terms of working age people. That is where investors want to be. I do not think a lot of this is for show now. I think investors that are really working i know investors that are really working hard to put money to work in africa and that was a prime target for them. Coalescing. S. Is around this now, but money has been going in. Whatld ask Kapilan Pillai he sees on the banking side. What do you think, Kapilan Pillai . Iswith t

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