Microsoft. The company is in talks of buying the maker of the raft. Ive videogame minec my kids love it. President obama is set to set out his strategy to attack islamic militants in an address this evening. Kerry went toohn iraq in an unannounced visit. Nearly two thirds of americans think it is in the nations interest to confront Islamic State. I want to bring in White House Correspondent phil mattingly. Speech comes one year to the date at the president gave a primetime address on possible airstrikes in syria and he failed in that effort. So, what is different this time around it is a total around . It is a total aboutface. Will of the the United States citizens to have a more active engagement from the u. S. Is up nine point. What we have seen since june with the Islamic State advances in iraq, with the murder of the u. S. Journalist has galvanized support. What you will hear from the president is to lay out how they will address that, and you need to keep a close eye on what members of congress are saying. There is skepticism about what the president might present, something Speaker John Boehner outlined yesterday. Take a listen. What we need is a strategy. Therethere is a strategy, is no reason to talk about the specifics because i do not know how they fit into the broader strategy. What you will hear from the president is a multi pronged strategy trying to address the concerns of john boehner. There will be an announcement is ready to expand into syria. With apple pay, your credit card number, the 1980s technology of the magnetic strip is irrelevant. You will no longer send your numbers from the card. There will be an encrypted process where you are sending a secret code. Apple will never know where you spent the money, how much you spent, what you bought. It is an agreement they struck with all of the Credit Card Companies. 83 of total u. S. Credit Card Transactions will be able to take place on apple pay. It is a next generation of security. They are saving the Credit Card Companies from any investment they are making on this front. Credit Card Companies they are not going anywhere. Will still see plastic. Credit Card Companies are actually transitioning. Instead of the magnetic strip, theyre hoping to put a chip in and they are hoping we can this will accept this security because it will be expensive to change over. Hopefully apple pay will put fire under their feet. Ladies, thank you so much. Coming up, a new ranking of americas most political politically powerful billionaires. Find out who did not make the cut. Road jack, alibabas warriors they are getting a great reception as they prepare for the recordsetting ipo coming up. They say money buys power. If that were the case, bill gates would be considered the most powerful billionaire because he is the richest, but a new book says otherwise. It ranks industrial brothers charles and the coke number one. Sheldon adelson and Rupert Murdoch are among the top six in this new list. The director of government studies at the Brookings Institution outlines just how powerful these billionaires are when it comes to politics in his upcoming book billionaires reflections on the upper crust. Great to see you this morning. You certainly stirred the pot a little bit with the early leaking the release of your rankings. It seems pretty obvious, but explain to us how you came to say that the Koch Brothers are number one. Are 492 billionaires in the United States, so what we did was to look at the political activism. Some of them are making contributions. Some are running ads. Some are engaging in advocacy. Others have organized a network of nonprofit organizations. I ranked the Koch Brothers number one just because of the amount of money they are spending, the network they have put together, and the fact that this year they are focusing on those senate races to try to win the republican control of the senate. That has been hard to come by some of this information, right . Some of it is not public or easily discovered. How are you sure about this ranking . This actually is the biggest problem in looking at the political activism of billionaires. When you look at the system of campaign finance, we really have gone back to the prewatergate era of secrecy which is always a competition for democratic systems, but a lot of billionaires do self disclose how much they are spending. Michael bloomberg, for example, it is putting 50 million into fighting gun violence. The Koch Brothers we can track Television Ads so that our public metrics you can look at. We have to say, michael bloomberg, the majority owner of bloomberg lp, but on the Koch Brothers, some might say they spent hundreds of millions of dollars. They will reportedly spend about 300 million in these midterm elections alone but they have had failures. They failed to elect mitt romney for president. They failed to repeal obamacare. 2012 was a big failure for them, but these individuals are smart as the guys. What they did after business guys. What they did after 2012 as they concluded their advertising and political advocacy was too dry, too analytical. What they have done is retool their messaging. They have ordinary couples sitting around the Kitchen Table talking about obamacare. They have a much better chance of doing well in 2014. The early guess is that republicans had a great job at winning the senate act. Tomow did you come with stier being ahead of Rupert Murdoch, sheldon adelson, and others . He was probably the least known, and he is very rich. His issue is Climate Change. He has pledged 100 million in this election cycle alone to raise Public Awareness on that issue. He also funded state campaigns in california and is put money into government races at, so he is ending up his level of political activism. Some are calling him the Koch Brothers of the left. We were with him on his ranch and he said i would spend whatever it takes to further my cause is. So far, he is not been all that effective, for instance, with trying to get it key stone pipeline get the Keystone Pipeline completely canceled. There certainly has been a mixed record on a lot of these billionaires, and raising the Public Awareness of Climate Change is a huge challenge. Getting immigration reform, fighting gun violence even repealing obamacare what we see is these billionaires putting a lot of effort, a lot of money into the process. So, the rest of us need to Pay Attention to what they are doing, how they are spending their money. Thank you so much for joining us. The Vice President and director of government studies at the Brookings Institution. He also has an upcoming book. By the way, that is not all. Be sure to catch the special that we did with tom stier, titans at the table, that includes my in depth interview with former Hedge Fund Manager who takes us inside of his 1800 acre ranch in northern california. Go to bloomberg. Com video and search titans at the table. Coming up, the ferrari parent wants the sports carmaker to shift gears and well tell you who won the battle. First. Bloomberg. You are watching in the loop , live on Bloomberg Television and streaming on your phone and bloomberg. Com. Good morning, i am betty liu. The chairman of europe secondlargest bank has died. He was 79 years old. By sendformed santander spending more than 70 billion on acquisitions. There is speculation that his daughter will succeed him. It appears that ali babas roadshow has been a huge success. Ali baba received enough orders for its upcoming ipo to cover the entire deal in just two days. The Public Offering is expected to be the biggest ever in the u. S. A shakeup of the italian supercar maker for ari the chairman will step down ferrari. The chairman will step down after a battle with fiat. Overo marchionne will take as they shift into upscale cars. It is 26 minutes past the hour. Bloomberg tv is on the markets. We are just slightly lower. It has been pretty much unchanged for the past several sessions ahead of the opening bell. Earnings are still coming out, including krispy kreme which disappointed, trailed forecasts, and that stock is lower in the premarket. We are on the market again in 30 minutes. The apple ceo tim cook delivered on his promise to take the company into uncharted territory, including wearables and he unveiled a smart watch that combines health and fitness given abilities with smartphone like features like messaging and maps. It is as much about personal technology as it is style and taste. It seamlessly combines materials in software and technology, and we thought not only of the function, but of the way it looked. Apple also announced its own mobile payment system, apple paid a unique system that they hope will totally replace your wallet. How impressed is the Tech Community . To me from boston, there it david aronoff. David, you know quite a bit about the two markets that apple is now entering into. David, you said after listening to tim cook and apple, you are glad you did not invest another wearables. Yes, good morning, betty. Thank you for having me. It is interesting. Over the past two years we have seen a number of companies go into the wearable space and the phenomenon around connected devices. We have probably seen one dozen or more related to fitness, identification. In the wake of the announcement, it is hard to look at a lot of them and see that there will be room for them to breathe. Do you think someone will be put out of business . I think they will. I think there are a lot of fledgling companies that garner a lot of interest. Certainly some venture firms put a lot of money into these companies. The question harkens back to when the first iphone touch was released, and you had connected music players, including a company we invested in and fortunately sold before that came out. Which company was that . It was a Company Called zing that dell bought. It was a successful outcome, tremendous prescience in understanding something was in the air. Good timing, you sold out before that happened. David, the other wearables, and i think about in the health space, you have fitbit, which has Something Like a 68 market share, the nike field band, jawbone do you expect those big players, they could be put out of business themselves . It is something i have been thinking about since the announcement yesterday. They are largely singlepurpose platforms. They are certainly much smaller. They are a lot cheaper than the going to be. In thinking about the spectrum of offerings, you could imagine they will be room for things that are singlepurpose and far less expensive. The thing that is interesting aout the iwatch is from different facets it covers from fashion, to fitness, to hardcore workouts. Take me into the mind of a vc. After you see these presentations by tim cook, the new devices, would you invest . How will you try to invest off of that . I think the way that we look at it will be to try to figure out the ecosystem that it is likely to create. So, this could be a watershed that form the way that the iphone was hurt when we think about the app economy, the ad economy, the accessories economy that has been created in the wake of the iphone seven years ago, you have to wonder if the same thing will hold for the apple watch. Fitness applications like runkeeper, they are up and running, have great following, have raised Venture Capital money, and apparently are doing quite well. So, you think about other opportunities for that App Ecosystem that willy wahl because of this new device, and i think that is probably where we that will probably evolve because of this new device, and i think that is where we will turn to. What about security tim cook said Identity Theft will be virtually impossible using our devices. So, could that area be put out of business . I do not know. That was one of the more bold statements tim made yesterday. Yeah. That masters work was in area, computer science, and ive been investing in it, and i was developing it for quite a long time, so i look at it with skepticism. The bad guys always figure out ways and they are always steps ahead of the good guys. I think there needs to be more data around that and certainly more education. Stormok at the icloud last week and apple was very quick to diagnose the problem and say it was more a pilot error as opposed to anything compromised with icloud, but for lay folks not involved in technology, i am not sure they get the distinction. When tim goes on stage and says boldly that this will eradicate Identity Theft, you really have to understand what that means, and also, kind of, silo that into the i watch works only with the iphone six, or the iphone five. When you think about that being the method of identity protection, or the new iphone, there is more than needs to be revealed and explained. It would be great if indeed that happens. Your question, the impact on a bunch of other companies you know, this is a space, in terms of the enduser identification, where it is still emerging. It really is still emerging, so im not sure it puts companies out of business that are huge, but we will have to see. Right. It certainly is going to change the dynamics. David, thank you for joining us. David aronoff, the general partner of fly bridge capital. Moving and shaking this hour legend is him soccer David Beckham, who is trying to bring in Major League Soccer team to miami and it is not that easy. Miami has rejected his proposal to build a waterfront stare him stadium, and he told Mark Crumpton that he has not been discouraged. I have said that i want to bring a team here, and i will take 18 to miami, but obviously there are politics, speed bumps, and we have come up against those, but to be honest, i have been very cheeky in a way because i have gone into miami and i have said, ok, i want to build Wembley Stadium next to buckingham palace. Adium ono have our st the waterfront. It has not worked out like that. We have alternative sites, and like i said, it will happen. Well, you can watch all of that interview with David Beckham today on bloomberg bottomline line with Mark Crumpton at 2 00 p. M. Eastern time. We were speaking about wearables , and we will have the ceo of watch, what the new apple means for him, and whether they might be going byebye because of the apple watch. We will tell you which retailers are forecasting the hottest toys that could end up on your childs list. It might not feel like it, but the Holiday Season is back for top retailers. Companies are using all the tools at their disposal to figure out which will be the top sellers. Walmart called in a team of experts. The linux very. There she goes. Oh snow globe. Alpha doll. These are a few of the toys on the chosen by kids list for the Holiday Season. For the second year, walmart invited hundreds of kids to dallas with one important, but fun task, play with toys. No. The kids ranged from 18 months to 12 years and voted on their favorites, and with the kids in charge, they discovered what they wanted. Creativity and crafting with girls flocking to the decorate your own phone case and the sewing machine. One word frozen. Holiday hot wheels remotecontrolled flying car. They are being touted as a way to get insight into what their tots want. Rtantly,even more impo walmart uses a list to drive inventory decisions. Last years top seller for girls was an earlier version of the. Lutter by terry ferry we really realize we needed to have more to have more to satisfy all of the girls that were going to want it. This event helps us see that in a way that the buyers sitting at their desk would not have known that. The end goal, which can be a challenging 1 the right tools, the right price, the right amount to stock shelves and fulfill orders. That looks fun. Julie hyman jointly with more. What is going to be popular, using kids it seems pretty obvious. Traditional you have done Market Research with buyers and distribute it tried to figure out the trends. This is the second year walmart has done this brought in the kids themselves. They are broken up into different age groups and given a curated group of toys. It was kind of fun. What did you like . I like the bow and arrow. There was one boy enthusiastic about that. It was infectious. There you are doing it. Ferry, the fact that it levitates the girls were into that. They do this because of Inventory Management as well. That is part of the story here. That is really part of the story here. For any retailer, whether youre talking about toys or clothing, you do not want to end up with too much of the stuff people do not want and not enough of what the people do want. If you look about one month before christmas last year, just online, walmart was looking at a relatively high outofstock level. There i am riding around in one of the toys they had the event. [laughter] target also had problems with outofstock and the company that is the least problems, not surprisingly, amazon. While mark has the issue that it walmart has the issue that even if it hasnt has them in the store, they are not able to get them onto the shelf because of staffing issues. What about compensating these kids . The parents were paid for Market Research, but they did not walk away with the toys. Is there some cost savings . One would think so because if you have better Inventory Management, you will be efficient and save money. If you have the things that people want and stores, you will sell as much as possible. Walmart has also commented anything frozen from pillowcases to the singing doll that we looked at, they are ordering as much of that stuff as possible. Replacing barbie . I not know if it goes that far. The boys want the ninja turtle stuff, for example, so that is some of the licensing and entertainment stuff they are focusing on. Thank you. I cannot believe were are talking about Holiday Shopping already. They have to get their shot ordering done early, man. Is some investors that might not need persuading at all. . Ow far will radioshack go according to one analyst, racing toward the bottom, possibly. Here are a look at the top tech stories on our bloomberg west radar not flex is taking bloomberg west radar netflix is taking part in a slowdown protest. How will i watch my Office Episodes that i need to catch up on . Shares of radioshack plunged after analyst set the price target to zero. Radioshack is about to file for bankruptcy soon. Microsoft is about to buy the than 2 the popular videogamee billion. They are based in sweden. Ker ofe minecraft for more than 2 billion. They are based in sweden. Catch all the latest in tech and media every day at 1 00 p. M. Eastern time only on bloomberg west. Alibabas roadshow is in baltimore, and as they are trying to attract investors, they are also attracted chinese living outside of china for help, using a combination of wordofmouth and advertising tactics to boost global presence. We are here on attracting the overseas market cap the name of the game is that are supplying revenue streams. We know alibaba does well within china, the mainland, they are number to tap into the of chinese outside of the mainland, and according to recent figures, that is 50 Million People living outside of the mainland. There are about half of a million in france and united kingdom. These individuals, often firsttime immigrants, they want to have access to the goods they are so used to having in china, and they want to be able to have it in an expedited fashion. Alibaba provides this expedited shipping. For example, one individual telling us they were looking for a type of garbanzo paste to make food or noodles. It is interesting to see what they are looking to source, but the questions for these individuals are how important is this site to them, and how do they get access. Any say it is cheaper to go through ali baba than any other method. They are using this to reach the new market. What exactly are they doing and what units are they doing it to . They are looking to acquisitions to grow their user base and they are also focusing express, the portal they use outside of china, and starting in 2010 is available in three languages, russian, portuguese, and english, and the way they are getting individuals on board you mentioned, wordofmouth is one. I sell billboards. I saw billboards. You can see it on all the print magazines. They are trying to get more people, but the challenge for the company is they cannot just focus on people of chinese dissent. They need to more broadly expand the platform. The chinese how do they feel about jack mann do they feel the same way about him as the way americans feel about, say, Warren Buffett . They probably feel he is the next steve jobs, or better than steve jobs. He came from humble beginnings, rose up as a teacher and now considers himself a rock star. He is not too dissimilar from some of the big tech millionaires we have in the nine states. He is considered with nothing but the utmost express respect. Thank you, mia saini. Coming up, did he damage the brand questions about Roger Goodell and how he handled the ray rice matter, that seems to be getting worse by the moment. We will be back. Tonight, be sure to tune in to bloomberg for special coverage of the president s address where he will make the actionr more military against the Islamic State. We will have walltowall analysis throughout the address. Todays bloomberg big number is 10 billion that is how much the nfl generates in at annual revenue. It is the wealthiest Sports League in the u. S. , and now critics say the commissioner Roger Goodell did not do a good job at all, in fact a very brad bad job in protecting the brand. All had to do with the way Roger Goodell handled the ray rice matter, which has blown up. Ray rice has been banned from playing football, and the ravens terminated his contract. A new video came out yesterday showing rice knocking out his wife. Many are asking why Roger Goodell do not see the tape months ago. Cbs the nfle told was never allowed to see the tape. No one in the nfl, to my askeddge, and i have been the same question, and the answer to that is no we were not granted that. We were told that wasnt not something we would not have access to, on multiple occasions it, and in for multiple occasions we were told no. I understand there might be legal restrictions on them sharing that with us, and we have heard that from attorney generals and former attorney generals. That was still met by skepticism. Roger goodell is the highestpaid commissioner in sports. He made 35 million last year. And it is 56 minutes past the hour. Bloomberg tv is on the markets. Futures are slightly lower on this wednesday morning. There is a lot happening, including, of course, the aftermath of apple, that announcement, and where shares are going to trade today, and how other tech shares including microsoft are going to trade raftsoft buying minec for 2 billion apparently. I hostile bid for Family Dollar. All her general taking their bid to investors. What does the apple watch mean for Companies Already in the game . The ceo of fit bit is joining us. You are watching in the loop, live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. We are about 30 minutes away from the opening bell. You are in the loop. I am betty liu. Here is what we are working on digital indicate little change in the s p is coming off of its worst day in a month. First between posted the court krispy kreme posted secondquarter earnings that missed estimates. President obama laying out his plan to attack islamic straight extremist tonight. Be sure to tune in to bloomberg for our special coverage of the president s address at 9 00 p. M. Eastern time. On the tech front, a deal is in the works. Microsoft and its xbox videogame console looking to acquire the maker of one of the worlds hottest games, mine craft. As i was saying, my kids are addicted to it. I have to limit their time on it. By bloomberg intelligence, who provides real, unique, realtime factors. There are a lot of 10yearold boys like mine that love this game. Money . Minecraft making like any software maker, they are popular, it and profitable and it is available on all councils, obviously. Microsoft is interested. A 2 billion valuation . A couple of things i think microsoft wants to make sure xbox remains in the middle of and becomes the most important device as we move into the internet of things and connected ine more the house. You do not want to lose that combination. One of the things i have heard is you can play this game online, and i patty, for anything. Xbox is doing and ipad, or anything. Xbox is doing great right now. Down the road, if all of that is replaced by something you could play online or using another platform microsoft does not want to lose that status in the living room because once we have, you know, a connected refrigerator, television, or thermostat all of those things, when they come true, they want to be in the cash be in the middle of those things. They do not want to let go of that. You do not want to let go of that, and part of this is just acquiring those eyeballs, anurag rana, that they could use for other product . The game is already available on xbox. It is not that theyre going to gain anything else on that. They could possibly see that it is available on all windows platforms. I have read it is not available on the windows phone. I am not a gamer, but that is what i have read about. My kids play it on the pc actually, the mac. That is what they want to make sure the nextgeneration of windows, that they are still relevant. You also have to remember, they have about 86 billion in cash and 90 of that is outside of the u. S. They could use this money to buy the company that is based in sweden. Anurag rana, thank you for joining us. Anurag rana of bloomberg intelligence. Moving and shaking this hour Dollar General ceo. Twice, Family Dollar stores has rejected Dollar Generals takeover offer, so he has gone directly to shareholders with a 1. 9 billion offer. Family dollar has already accepted a lower bid from dollarstree. Dollar general says it is willing to present its position directly to the federal trade commission to convince them that they will go through antitrust regulators. For more on this battle in the dollar stores, we are joined by our m a managing editor, Jeff Mccracken for deals. Jeff, did we expect they would go after in a hostile way, the shareholders . Has lot of the situation been a surprise. It was a surprise to begin with that it was dollartree amend not Dollar General dollar, and not Dollar General it was a surprise sorry about that. Yes, [laughter] nothing has worked as anticipated. I think Dollar General was surprised. The fact that they are going hostile there has been hostility in the language, i do not think we should be surprised Dollar General is taking it to a higher level. They have a higher bid. They are dismissing the idea that there is great Regulatory Risk here or greater risk here then there would be with dollar tree. Right. The question will be how the shareholders do this, arbitrage community how do they view this . How do the shareholders view this . They have been burned the summer with sprint and tmobile falling apart, fox and time warner falling apart. Usually they want the high bid, but this could be a situation where they like the bird in the hand, if you will and they might feel that dollartree is the safer bid. They will do whatever it takes. If regulars want them to sell 700,000 stores, they will do it. That is what Family Dollar has been asking from Dollar General. The pushback for Dollar General is if you put that statement out there with regulators, they will be you over the head with your willingness. Take advantage of the. Right. They know you will do what you what you have to to get the deal done. Dollartree left their bid on the table . They have not raised the bid. I have said they would do what it takes. One of the ironies here is the real player might be walmart. Folks safelyneral put Dollar General and Family Dollar together, we become a real rival to walmart . The Family Dollar side would argue we are a lowend retailer, we do not compete with walmart. Our customers are lower in income and spending than a walmart customer, so walmart is not a competitor here. I expected increase spending. It is all about perspective at this point. Thank you, Jeff Mccracken. As nfl teams battle a dropoff in stadium attendance, we will hear from the ceo of a company that is looking to woo football fans through their stomachs. We will be back. Football season is well underway and many teams are working on ways to get fans off of their couches and into the stadiums amid the unprecedented growth of television audiences. Oneill, thecott ceo of the philadelphia 76ers and the new Jersey Devils about the Fan Experience in professional sports. The fan expense on tv is just a great experience on tv is just a great experience head for hockey, i think live it is a much better experience. Opiniont to get another the president and ceo of aramark, the food and Beverage Service company that partners work15 nfl teams and they with the mlb, the nhl, and the nba. Great to see you. Aside from the pr nightmare going on within the nfl, they have this other issue of trying to get people into the stadiums. You know, what is your role in that . How are you able to do that . Well, as the largest Food Service Provider in sports, particularly in the nfl, our role in one of the most fanrtant drivers of satisfaction and an expense is the food service experience. One of the things we are trying to do with our partners in the nfl is to bring a more innovative and exciting Fan Experience to what they expense on the food menu. Have you seen a slowdown or a decline in the number of fans that go into the stadium the last few years . Actually, last year we saw an increase. It is still early we are only one week into the season. What if you seen . We had had a good first week with a lot more ahead. Having been to many of these games, food is great having a variety of food but it is also quite expensive. How do you price your food to make sure you are attacking a job is, but also attracting a large audience, but also not turning them off with high prices . One of the important things is to bring fans in with an innovative food experience. One of things were doing this year as he did last year is developing tribute menus we are working with the partners, the teams it is a great way for us to build our brand, them to build their brand, and a way to pay homage to the history of the franchise. Menus designed for the team . We have a burger called the upper burger that pays homage to the chuck know, the hall of fame football coach. In each of the venues across the nfl we are doing that to bring excitement to the fans. You are also experimenting with himseat ordering with the Chicago Bears, is that right . That is right. It is a way to develop more convenient and Quick Service through mobile technology. We did that with the Chicago Bears last year, and addition to that one of the things that we do is we build culinary turner ships with Celebrity Chefs culinary partnerships with Celebrity Chefs. We brought a hot Burger Concept in chicago that is a very different experience. This might be completely off s, but what about apple off base, but what about apple pay any announcement of mobile payments . Are you looking at that at all . We are. It is a big opportunity for us, mobile technology. I imagine it would cut down on weight times, wouldnt it . . It helps the convenience, so absolutely. It is one of the biggest drivers. Thank you for joining us. Eric foss, ceo and president of aramark. Coming up next, tackling tax inversions how many operations actually pay 35 . We will see who is paying zero taxes these days. We will out them in a moment. Treasury secretary jack lew is ready to make a move on tax inversions, saying if congress does not act, he will. The former American Express ceo harvey dollar has advice for jack lew take the Corporate Tax rate down to zero. Here is what he told us yesterday on in the loop. If you lower Corporate Tax rates to zero you can have people pay dividends and Capital Gains taxes at the normal rates, which can make up for a large amount of the money you would lose in one system. You would eliminate a whole industry of tax avoidance. You would make the United States extraordinarily attractive. Lets see how his scenario stacks up. I want to bring in our Bloomberg Businessweek economics editor peter coy. He says if you brought it down to zero, things are be great. Is this true . Thehis is an old idea, corporations are passthroughs, and ultimately owned by people, so why not tax the income when it is paid out to people in the form of incomes and Capital Gains touch mark it does make a certain on offense, the problem, when you double tax dividends, corporations pay tax for the income, and the people that pay receive a dividend pay tax again. The problem is if you eliminated the Corporate Income tax, as harvey golub wants to do, you would create an enormous incentive for people to convert their personal income into Corporate Income. We would all turn ourselves betty liu incorporated, right . Yes. , you would not pay dividends, they would be taxi and taxfree, and the government would not have any more money. It would create the biggest tax poll in history. That is why it has not been done until now. If youre going to have a personal income tax, you need to have a Corporate Income tax. If you want to get rid of both, you could go to a valueadded tax, or Something Like that, but the idea of getting rid of the Corporate Tax, really not such a great idea. Harvey we talked about this the 5 Corporate Income tax on how uncompetitive that is to other countries, but peter, we pulled up some companies that pay zero, or certainly much less than 35 and mark, gm, news corporation, for instance. On average, how much taxes to corporations here pay . Item none of the exact number, but the u. S. , but when you look at it i do not know the exact number, but when you look at the u. S. , it is not particularly high in overall tax. It is a marginal tax that is the problem. Original tax rates do matter. It is not a good thing when the last dollar paid is taxed at a 35 rate. It would be better to bring down that rate, as the Obama Administration wants to do. It is not as if americans overall are paying a huge share of their overall income in tax. The other interesting thing that i thought harvey golub said, this recovery, the last three years, the average gdp rate is about 6 , and he said that is one of the worst compared to other countries since world war ii. Is that true . The 6 , it depends how you define it, but overall, he is correct. We had a weak recovery. This is the worst we have been in any month since we have been since the last peak. Theworst recession and worst recovery and also just the worst recovery alone. He says if we had average or weighted in the past recoveries, instead of adding 10 million jobs, we would have added 20 million jobs 20 million jobs. He is right there. Thank you, peter coy, for keeping us honest here. From thefew minutes opening bell. We are the top 10 stocks you do not want to miss. Keep it here on in the loop. First. Bloomberg. Welcome back. You are in the loop. I am betty liu. It is 26 minutes past the hour. Bloomberg tv is on the markets. Here is the latest on futures, right in the final moments before the opening bell. Equity futures are lower, as you can see. Just slightly lower. Not a lot for investors to chew on there are some earnings out, and all are not just in the aftermath of apple and what that means for the tech companies. We are on the markets again in 30 minutes. Lets count down to the open with the top 10 the only stories you need to know about today julie hyman and alix steel join me this morning. Lets start with number 10 and boyd gaming. They are getting an equal weight. They also slashed the Gaming Market forecast. Number nine, sirius xm. They are boosting their subscriber forecast for the year. The streaming Radio Service expects to add 1. 4 5 million not some scrubbers this year. They also net subscribers this year. They also reaffirmed their profit outlook. Number eight, with Wedbush Securities cutting their valuation of the stock to zero. Radioshack has lost almost two thirds of its value this year. In the note, the analysts highlighted in general how much Electronics Stores are suffering. Radioshack is getting the worst of it. I think i remedy other call on this was on jcpenney that something someone had cut it to one dollar. End,mber seven is lands the retailer that Eddie Lambert spun off of sears, another Company People have been starting to run off, right off come by the way, sears. Seen samestore sales gain about 3 and the Second Quarter with total sales rising about 5 . Number six, urban outfitters. Retail sales have fallen in the low and singledigit so far this year. Shares dropped on the news, but they are still up about 5 year to date. Number five, sun edison ugo agreeing to provide funding for a sun edison solar power plant in southern california. The project will begin operation this year. It is the 17th Renewable Energy project that google has funded. I did not know that. That seems like a lot. In general, operations have been much more at the forefront of funding solar energy than we have seen on the residential side. We are still waiting for the mass adoption of that. Number four, ebay the Online Auction site that owns paypal. The stock tocut neutral saying that the apple mobile Payment Service might be a strong competitor to paypal. People are asking how apple could do this compared to the other companies. Or will he take off . Will enough retailers use it . It seems of all the announcements, there is the most excitement about apple pay. You are really excited about the whole foods option. I will call her out. I could see julie being very excited about the whole foods option. Two, missed, number estimates, maintaining its earnings outlook for the fiscal year. The chain signed an agreement to develop 20 new stores in the washington, d. C. , area. Microsoft is in discussions acquire the maker of the game minecraft. Number one, Family Dollar, now the target of Dollar General taking its 80 share offer directly now to the shareholders after they decided to accept the bid on regulatory concerns. There goes the opening bell. It is wednesday morning. Stossel can. I want to bring in kate warren, investment strategist. Lets start with apple and the news yesterday. Wholewas mentioning the apple pay system. I know visa is one of the stocks you like. Visaa little bit shares after the announcement. As an see this opportunity . We think more and more people not only u. S. But globally. As we heard from apple, it will be tied to his credit cards. That is good news for visa. Will there be Competition Among visa, mastercard, and American Express . Absolutely. There is a lot of competition. It is a highly competitive market. We will continue to see the use of Credit Card Companies basically with that process. It is competitive. Always downward pressure. We think stock is an opportunity because of the rapid growth in transactions. Even if you are getting less transaction, it is good news for the overall revenue and earnings going forward. Lets look at some of the stocks. I was interested in how the decline inoffset defense spending, projected to be down about 2 in 2015. Do you bounce that . It is a balancing act. When he think about it as a company that provides pacific components for engines, defense spending may be down, but the incredible growth in aircraft orders, and that is what we saw in durable good orders last month, it really benefits them over time. Not because of lower earnings that because of the fact they could not keep up with production. We think that as an opportunity to buy the stock in an attractive price. You mentioned u. S. Spending here, take a look at russia and china. I could only imagine that would affect orders for the likes of boeing. It certainly could hear it in many cases, even though gdp is slowing, it is not negative. Think about china slowing from 7. 5 . That is where their current growth estimate is put forward by the government. Consumers have money, they are andinuing to spend, wealthier consumers tend to focus on travel and things like that. More demand for aircraft. Longterm trends are positive and shortterm trends are as boeing ramps up production of the dreamliner. More generally, look at profitability there it there have been a lot of questions about sustained rapid ability, in particular, margins. One of your counterparts has been talking about this. Our chart of the day shows the s p 500 Holding Steady this year at about 14 of revenue, looking at operating margins. We may not see a lot more expansion there. This seems to be almost conventional wisdom at this point. Do you agree and how does that play into your Investment Strategy . I do not think anybody would predict margins would increase from this stage. The question has been, when do margins begin to decrease . Testaments pessimists are missing that we are finally seeing revenue growth. Sales grow faster and companies are able to keep things under control. Then you have faster Earnings Growth because of higher sales growth. That is part of wirings picked to littlee s p 500 above 8 on a yearoveryear basis. It is sales growth and we are beginning to see that especially as the economy picks up a little bit us the. I would not say a lot. Es increase, costs and day costs stay relatively contained. When you are looking at stocks to buy, what are you looking for . First of all, we want to started business that has a a longterm competitive advantage. We want Quality Companies that can do well longterm. Havee companies that slightly faster Earnings Growth and can benefit from the pickup in economic growth. A slight pickup, a boost in top line sales. Faster than the overall market, in terms of earnings and dividends. They pay low dividends, but it is the faster growth that we think makes them attractive opportunities today. That is the case with both of the companies we have talked about. Thank you so much. Making the case on stocks. K line at the open. We have the bond guru bill gross joining us. Have taken afunds beating. Plus, apple taking a bite out of the fitness industry. The apple watch is really sending chills down the spines of competitors. Fit bit. One more thing, that is what tim cook promised the audience of the latest iphones. That was the apple watch. Smartmpanys foray into watches, as well as health and fitness industry. Our fitness band makers shaking the boots with the engines of apple . Lets talk about Market Makers now. James is joining us live from san francisco. Thank you for joining us this morning. Are you worried . No. Health and fitness tracking and wearables are a new and emerging category. Anything that happens to grow both of those categories is something we feel is a great opportunity for us. It is also highlighting what is on the market now here it fit bit as a market leader, you have a 58 market share. For the people who have not looked at apple watch, they say, you look at apple watch and if it did, fit bit seems like it is very limited in the platform. Couldple watch, you monitor your pulse and heart rate and do so much more and scale up. What do you say . Thee have always been on forefront of technology and innovation on the storefront. Us, the keys to our success have been about our belief there is no one size fits all. We have a variety of products ranging to 100, different factors. A broad part of our appeal is the cross let form compatibility. Devices ranging from apple to android. What you think of the price point . I think it is a pretty premium price device. It is apple and that will attract a lot of people. I think the market is much wider than that. With the Big Questions going through your mind when you saw the apple watch debut . It is a pretty cool piece of technology. Thing, again, for wearables of any type is that these devices are very personal. It is not a generic piece of consumer electronic like a smartphone. Form and function will play a critical role. Will be ad melding key part of what makes the whole category mainstream. Just recently, we announced a partnership where it is whole line of bracelets and accessories have been developed for fit bit. That is very exciting. What about the different features, as i mentioned before, measuring your heart rate and pulse . Is that something where you feel like, wait a minute, we need to have those features to compete with apple . The face of technology and innovation is really rapid. I feel good about hours product strategy in the next coming year. We will wait and see. Exitedr competitors have. Nike has said, we will take the hardware of our fuel and an exit out of that and keep the Software Part of it. Someat concerning that that just entered the market decided to leave the market . I cannot really speak to nikes reasons. I never really had success in the market. I think their market share has fallen from 10 to 4 . I do not think it was a surprise they left the market. Thehat time, we have grown market share from 64 to 69 . We are pretty happy with our strategy right now. Your strategy will be what . Again, it is about having a broad lineup of products. Most importantly, Cross Platform compatibility. Do you feel like you have to roll out new updates, new devices, sooner than you planned . Lets any Technology Company always has to release new features and new products and we are no different. All right. Staying true and staying tough against apple. James in san francisco. Lets stay on apple. The other side of what got people so excited was apple pay, entering the mobile payment business, the largest banks and credit card countries in this country. More, Erik Schatzker is joining me. He will talk about that on her program. Indeed. Kevin michael, head of digital for the consumer and Community Banking business at Jpmorgan Chase, will be here to answer important questions like, why would a bank like Jpmorgan Chase team up with apple . Was there a choice . Easy to draw the conclusion know, if apple will get into the game and get everyone else involved, whether it is mcdonalds or target and wells fargo, even though Jpmorgan Chase is the largest, will have too far follow suit. How big of a bite will apple take out of the slight business . When you swipe your debit card at whatever merchant you happen to be shopping at, it generates a 2 fee. Right now, the merchant pays it and it goes to the bank. A profitable business. 40 billion a year in swipe fees generated in the United States alone. Then there is the mobile payment side of it, which you alluded to. Project the mobile payment business, currently with transactions valued at 20 billion a year, will quadruple by thousand 17 to 90 billion. Apple fit into that . Apple would not get into the business if there were not something for apple. Gavin will help us answer the question. 40 billion does not quite what is jpmorgan giving up and what does it think it will get by partnering with apple . A fascinating question. Rarely, there will be money giving given up. A plan to attack the islamic extremists. For more on what we can expect to hear in tonights speech, that is next. Time now for the global outlook. It is time to tell the truth about the economy. The french government has slashed its growth were cast and says the budget deficit will widen for the first time in five years. The finance minister has ruled out tax hikes, and frances tax burden is the highest in the euro zone. Ukraine and russia have withdrawn more than two thirds of his trips. To support whether russian pro troubles in ukraine. In exclusive interview with bloomberg yesterday. Jack lew dressed additional sanctions against russia. Take are prepared to additional action. If russia withdraws its military being engagedops and recognizes ukrainian sovereignty, we will be delighted to roll back sanctions. President obama outlined his strategy tonight. For expanding airstrikes for the u. S. To attack the extremists inside syria. Today. Es it for be sure to tune in to bloomberg for special coverage of the president s is a dress at 9 00 p. M. Eastern time. Walltowall coverage throughout the address. Tomorrow, we will be joined by and gross on his total fund how it will take a beating. I will be joined for an exclusive interview. Head of the American Action form sounds off on findings over the weekend, that foreign governments are funding some of the most prominent washington think tanks. Fishy goingething on there . That is all tomorrow at 8 00 a. M. Eastern time. Bloomberg television is on the markets. Lets take a look at what is going on with stocks right now. We do not have a lot of change in what is going on with shares today. A little bit of a decline in theks today, in particular, nasdaq is very little changed. We are seeing investors trying to figure out what the fed will do next and what effect that will have on rates. We are seeing the 10 year yield about the little bit. Two. 53 . That is the highest we have seen in a while. Saying that is the highest i have seen in a little while is something. By lisa, i am joined abramowicz. A lot of investors are complaining it is really hard to get that return here it we are seeing, for example, 2. 53 . That is higher than 2. 4 . Aroundrs are looking this and saying, we have got low yields. Higher bogeys, we are looking at returns that average 8 . A lot of places have 10 as the benchmark return. What will they do . Do they lower that benchmark . Figuring out ways to get there. Something tells me they are not lowering that. They are not sure theyre using more leverage. There is a report from citigroup analysts looking at the best ways to get to a 10 return using leverage. The best meaning, the less volatile ways to do so, that have the most risk and the most reward in the least risk. What did they come up with . Less highyield wants. That is their sweet spot they came up with. They basically said, you have to use less leverage to get the 10 poky, a 6 average yield. You only have to use a little more than two times the leverage, two times the average value. Compared to treasuries, where he have to use more than 8 leverage to get the 10 poky, in a potential downturn, they looked at sort of the worstcase scenario since 2011. Losses will be much worse for treasuries than highyield bonds. Does the logic hold up . What are other people saying . There is a question of why go back to 2011 . Is the facting idea the analysts are finding means to run these scenarios and figure out which Asset Classes are the safest, shows how desperate they are. Fact that leverage is really coming back and it has not come back but it is coming back now. Leverage is a dirty word. Post financial crisis, it took on the terrible commendation that that was one of the roots of the problem. What does that tell us that it is coming back again . Is it a warning sign . People on the one hand say this is ridiculous. Isnt as lame the groundwork by laying the race . If you have individuals in a certain rate of return, is it human logic to say, forget it, i guess we will not . Certain point, it is logical it would go this way. Can the fed hiked rates soon enough for ease away from the. Onetary policies in time Market Makers is next. Live from bloomberg headquarters in new york, this is Market Makers. Apple asks, what is in your wallet. We will tell you why the. Ations biggest banks tightening the screws on moscow. Europe considers more sanctions on russia over and ukraine will speak with the eu commissioner. Designer everywhere, from hollywood to the white house. A wednesday in new york city. You are watching Market Makers. I wpu
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