Transcripts For BLOOMBERG In The Loop With Betty Liu 2014091

Of money plans to raise in its ipo. 6060 sixl range was dollars per share another top end is 68 per share. It one price range puts step closer to breaking a global fundraising record. 22 william dollars. The worlds biggest ipo. 22 billion. We expected this range to be raised yesterday and it was but it was not as high as some had said. I think we continue to see the company and its underwriters generally pursue a fairly conservative outlook as it relates to pricing. It might just be a reflection of the fact that they have to raise a lot of money. Theyre solid that they are selling over 20 billion worth of stock and that the did thats a big deal. I think they want to make sure that this deal trades well in aftermarket. They want to avoid what happened to facebook and make sure that not only do they place the stock with longterm Institutional Investors but they will be buyers of the stock in the aftermarket so the stock trades well. It does not seem there isnt a shortage of buyers. There was a story about chinese investors who can i get into the alibaba ipo. Thats right, chinese investors cannot live his deal, they cannot buy foreign listed companies of their buying a lot of the companies that alibaba and does business with or has relationships with in china and that has worked out well. There are like eight names that have done well as has yahoo which is up 20 in this market and softbank which is a 40 owner of alibaba. That has done well in the japanese market so there are lots of ways for investors to play this story outside the ipo itself. It will be interesting to see if that stock pops later this week. Thank you so much, paul sweeney. Calpers is moving away from hedge funds. The california Pension System will divest the entire 4 billion of Hedge Fund Investments saying the returns are not worth the fees. Erik schatzker has more. We have heard Pension Funds but this time calpers is really voting with its feet . Most definitely, this a trend that could have started with the los angeles firemen who had less money invested in hedge funds. Calpers is more symbolic. The Hedge Fund Industry is not going to miss calpers because calpers has only 4 billion invested in hedge funds. As a pension fund, it has 300 billion in assets with the fraction, slightly more than one percent, and lets not forget the Hedge Fund Industry has 2. 8 trillion. Symbolic value means something. I likened it earlier to harvard giving up football. People at harvard might not miss football but other people take notice. Perhaps theyink should not be invested in hedge funds either. Been lpers has not done particular well with is Hedge Fund Investments, returning only 4. 8 on average over the past 10 years, other Pension Funds have the same experience. They make much less money investing in hedge funds than they do in private equity or public equity or, according to wilshire, over the past three years, in bonds. Can you believe it . Hedge funds as not made as much money for Pension Funds as bonds have. These are Pension Funds with over 1 billion in assets in a threeyear annualized return. This is not a longterm study but it tells you something. The chief Investment Officer at calpers will be with us at 10 00 this morning. They object to the fees. 135 million is what calpers paid to hedge funds over the return foro year in performance of just 7. 1 . This is not perfect mathematics but its 4 billion and you have a 7. 1 return and youre looking at income of 285 million of which you paid 135 million in fees . You are effectively paying one to get to which is not a relationship that a guy like ted poulos and calpers want to countenance. They dont want to invest in the scale to do well in hedge funds. Thats a great point. It shows why would you bother doing that . Thank you so much for joining us. We will tune into your interview. My guest host is the former three term new york state governor, republican george attack you, founder and chairman of the tacky co. Hi, governor. Im making a grand entrance. Its great to see you. You are listening in on calpers in hedge funds. You have to wonder why were these Pension Funds in hedge funds in the first place . We have one investor in new york and i have often made mistakes because they have sole discretion. Its far better if you have experts taking a look and diversifying and having intelligent investments. The fact that on returns of an greater of the last 10 years and without thereturns fees tells you all need to need to know about where you should have been. Im not a wall street guy. Calpers is often a trendsetter. This state so you know how these Pension Funds operate. Will they take the lead . It would not surprise me in the least. Often times, its mainly go with the crowd. You dont want to stand out alone. Sometimes that is unfortunate because the crowd often goes the wrong way. Stay with me, governor. It seems gridlock in washington is easing. House republicans look like they will agree with president obama on some major points, from staving off a Government Shutdown to giving a goahead to arm and train Syrian Rebels. Its a lastminute shift with just three days in the session before the midterm elections in november. Change in taxes, Phil Mattingly is here with us and the governor stays with us as well. Congress has been notoriously gridlocked for it why a republican suddenly changing their tune . Dont get used to this. This is not something you will see after the election but on the policy side, when it comes to what the president has proposed with Syrian Rebels, this is something that large number of republicans have been pushing for for years. They backed him up on the policy. The other thing is the politics. We are 49 days from the election and republicans are in a good place. They dont want to rile things up and they dont want to ruffle the feathers. Their view is lets get out of town as quickly as possible and fund them government even if it includes Something Like a debate over the authorization of war. Lets do it after the election but until the Elections Come through, lets keep everything as smooth as possible. Is that a wise decision . Believer in a cruising. You have to have principles you stand up for. I dont think its a change of strategy so much as things like arming the syrian opposition, that something the republican support. Snap like they have always been saying no. They have had fundamental policy disagreements. If the other side will not sit down a compromise, its hard to find common ground. The war resolution, i would like to see that debated now. This is something in the front of the minds of americans. I dont think we should say wait until after the election. Lets let people stand up and be counted right now including the president. Even if that causes the kind of gridlock that republicans have been blamed for in the past . I dont think would cause gridlock. Republicans would understand that isis poses an enormous threat and will support the president. I think you would see a lot of democrats having a hard time supporting the president on this as opposed to republicans. We have seen a split within the Democratic Party itself over the president s actions. This is a tough issue for the Democratic Party. Multiple members of congress ran on opposition to the iraq war and opposition to the resolution authorizing force in iraq, the same resolution the white house is now using as their legal justification for the expansion of strikes into syria. Leaders indemocratic the house but also the Senate Backing the resident because they feel like they have to. If you got into a broader debate over the over the authorization of forces, you start bringing up the possibility of major splits within the party. Not necessarily the republicans only want to avoid this debate, its the white house which needs the authorization to go forward with the training. They dont want a broader debate because that raises a whole lot of issues and a lot of them are interparty. Will there be a backlash after . We will debate about this issue with the governor by Phil Mattingly, thank you for joining us. Former governor georgepataki will stay with us through the hour. Moving and shaking this hour, the creator of a popular h willame, minecraft, notc take his money which is over 1 billion and running. Microsoft has agreed to buy his company for more than 1 million and the bulk of it will go to persons. He says he will leave after the deal closes and he said im not an entrepreneur and not a ceo, im a nerdy Computer Programmer who likes to have opinions on twitter. Does he ever he made it clear that he was willing to sell. He will make 1. 8 billion from the sale alone. Is down oversla nine percent after one of its ironger sub borders on after one of its strongest supporters on wall street backs off. Hurts announced a deal with carl icahn to appoint three new board members. They want to find a permanent ceo to replace the one who resigned. Plan of president obama is dividing congress a member of his own party over the best course of action. One of the contentions points of arming Syrian Rebels in the fight against the militants. Democratic congressman jim himes of connecticut told me what he does not support that plan which he says is art of the tortured logic the white house is using. I think we need to really understand what we are getting into when we talk about spending have a billion dollars to support a bunch of people in syria we say we will vet but we dont really know where that goes. Our history there has not been terribly good. This is the kind of conversation when he to have on the floor of the congress. Joining me now is a member of the key budget and armed congressmanmittee, scott rigell of virginia and still with me is former new york. Ave and are George Pataki you say you think the president is doing everything above board on this. Would you want to bring this issue down on the floor . Do you want to debate this now . Absolutely, we have one commanderinchief and i cheer the president s assessment of the risk posed by isis. He has asked us for authorization to arm and equip and train moderate syrians. Himes is right in saying there is difficulty in assessing who we should support but i believe that can be done and should be done in the president has asked for one thing i believe this institution will approve that and approve continuing resolutions to keep the government going. The democrats say bringing up the us issue like arming Syrian Rebels and authorizing ground chips is only covered by republicans do not do anything about the issue. It is in response to president obamas request. You find republican saying yes we will support the president and democrats saying no we cant because we dont trust it. If you just heard congressman himes, he said we have a bad record with the Syrian Rebels and hes correct. As i understand that come republicans are saying we need to do this and have to take aggressive action against isis as strongly as we can. The president says they will vet carefully those again american arms. You are the commanderinchief and we have some skepticism but we will trust you as what we are saying. And i ticket should be debated now believeessman, do you we will be able to destroy and to grade the islamic militants as the president has promised by only air attacks on allied air attacks or are we going to have to authorize Ground Troops . Well, lets make clear that its got to be destroyed over time. Think it will present an increasing threat to the united states. I am in sharp disagreement with the president. Authority to the escalate this. I have called for a specific authorization for the president to request one and received prior to escalating the war. Senator tim kaine of virginia also supports the suspicion as the money others. This will get six hours of debate on the winners right, this needs to be debated on the house floor and should happen. Coming up on it should happen now . Absolutely, think the house calendar should reflect this to our country. I have always had our calendar is not reflecting the challenges we are facing as a nation. We need to brings this to the floor and wrestle with it. If we indeed approve an authorization for use of force, the president would not only have the constitutional 30 but i believe an increased moral the people, would be aligned behind our president and their strength in that. Hang on for one moment. We were talking about the midterm elections and republican leadership. How do you feel about the midterm elections . He was saying is right. It is seven weeks until the midterm elections. Sit around and wait. We should act now on having a resolution in congress showing the American People to support the president s efforts to take outisis is absolutely essential. Whether the republicans will win or not there are a million brilliant political consultants. I have run governments. I think its about the policies and doing what is right for the American People. In november, you make the case. How you feel about the midterm elections, congressman. Im in a district that the president won twice. I feel good. We have been serving virginias second Congressional District well and i believe we are trying to put our Country First and thats what we are try to do in wrestling with these resolutions the first one on equipping the Syrian Rebels and also the larger one that you come to the floor. This is the right thing for the country. I want to bring it back i know there is several important issues in light of the midterm elections, people are looking towards 2016. Every member of congress, anybody in politics is looking for that year. We saw Hillary Clinton in iowa the other day. She looked like she was all about going to run. It wasnt about the steak. Here is a quotation i thought was interesting from reince priebus, the rnc chairman. Is that true . I dont care about the politics. I care about the country and i think of hillary is the democratic nominee, he gives the republicans a tremendous opportunity considering we have a good candidate. The partisan divide is hurting america, pointing fingers and costing lehman as opposed to solving problems. I think you can support trade as part of that. I hope we nominate someone who will bring us together and focus on solutions and move america forward. Pataki governor pataki stay with an governor pataki stay with me, we will be back. You are watching in the loop, on Bloomberg Television, streaming on your phone, your tablet, and bloomberg. Com and now available on apple tv and amazon fire. Good morning. Here is a look at our top headlines one of teslas stronger supporters on wall street is taking a more cautious stance on their growth. Analyst ley analyst adam jonas says he disagrees with elon musk on share price. Down more of come than nine percent. United airlines is offering its flight attendants buyouts of as much as 100,000. The ones who accept will be eligible for lumpsum payments. The airline which was the only major u. S. Carrier to post a quarterly loss this year is looking to rein in further costs. Sears is getting a 400 million shortterm loan from the hedge fund run by its ceo, eddie lampert. He will end the struggling retailer the money for general corporate purposes. Sears has been spinning off assets to raise cash. It is 26 minutes past the hour which means Bloomberg Television is on the markets. Equity futures are slightly lower and have been over the last several sessions. The fed begins the first of policy meeting and we will watch for any change in language by the fed. We are on the markets again in 30 minutes. Years ago, you had your staple Grocery Store and you did not think about going anywhere else. New data shows the grocery game is changing. According to a recent study, we are seeing major shifts in the way consumers are buying their food. Companies are reacting. Whole foods announced it would test a rewards program in hopes of retaining its customer base. Thats another step towards coupons at whole foods . We shall see. We are sort of splitting our grocery dollars, right . Are, gone are the days of the onestop shop. Shopping is becoming highly fragmented and shoppers are now spending the dollars at rises like the dollar store and drugstore and the Farmers Market and the Specialty Food store, the ethnic food store supermarkets are just not competing only with other supermarkets, it could be any store in any corner that sells groceries. We mentioned whole full which has been able to stay above and charge premium prices with no frequent flyers. Now they are changing things. They told me yesterday that they had not formally announced that they are rolling out a rewards program so shoppers will get rewarded for shopping at whole foods. We are seeing the customers care about convenience, value, and they care about freshness. Every store in this grocery game is trying to offer those three things to get the most customers they see drugstores and are offering more fresh food. Reade you see sushi bars. But theyre not very good. But people are buying them. Reade dominates the grocery market in new york. How about how stores are using technology . We dont know where it will go but we are seeing Apple Technology ibeacon which is when shoppers go through a store, they can get pinged with promotions as they walk through the aisles and we see google for business. It is like goo labs for Grocery Stores. Is like google maps for Institutional Investors<\/a> but they will be buyers of the stock in the aftermarket so the stock trades well. It does not seem there isnt a shortage of buyers. There was a story about chinese investors who can i get into the alibaba ipo. Thats right, chinese investors cannot live his deal, they cannot buy foreign listed companies of their buying a lot of the companies that alibaba and does business with or has relationships with in china and that has worked out well. There are like eight names that have done well as has yahoo which is up 20 in this market and softbank which is a 40 owner of alibaba. That has done well in the japanese market so there are lots of ways for investors to play this story outside the ipo itself. It will be interesting to see if that stock pops later this week. Thank you so much, paul sweeney. Calpers is moving away from hedge funds. The california Pension System<\/a> will divest the entire 4 billion of Hedge Fund Investments<\/a> saying the returns are not worth the fees. Erik schatzker has more. We have heard Pension Funds<\/a> but this time calpers is really voting with its feet . Most definitely, this a trend that could have started with the los angeles firemen who had less money invested in hedge funds. Calpers is more symbolic. The Hedge Fund Industry<\/a> is not going to miss calpers because calpers has only 4 billion invested in hedge funds. As a pension fund, it has 300 billion in assets with the fraction, slightly more than one percent, and lets not forget the Hedge Fund Industry<\/a> has 2. 8 trillion. Symbolic value means something. I likened it earlier to harvard giving up football. People at harvard might not miss football but other people take notice. Perhaps theyink should not be invested in hedge funds either. Been lpers has not done particular well with is Hedge Fund Investments<\/a>, returning only 4. 8 on average over the past 10 years, other Pension Funds<\/a> have the same experience. They make much less money investing in hedge funds than they do in private equity or public equity or, according to wilshire, over the past three years, in bonds. Can you believe it . Hedge funds as not made as much money for Pension Funds<\/a> as bonds have. These are Pension Funds<\/a> with over 1 billion in assets in a threeyear annualized return. This is not a longterm study but it tells you something. The chief Investment Officer<\/a> at calpers will be with us at 10 00 this morning. They object to the fees. 135 million is what calpers paid to hedge funds over the return foro year in performance of just 7. 1 . This is not perfect mathematics but its 4 billion and you have a 7. 1 return and youre looking at income of 285 million of which you paid 135 million in fees . You are effectively paying one to get to which is not a relationship that a guy like ted poulos and calpers want to countenance. They dont want to invest in the scale to do well in hedge funds. Thats a great point. It shows why would you bother doing that . Thank you so much for joining us. We will tune into your interview. My guest host is the former three term new york state governor, republican george attack you, founder and chairman of the tacky co. Hi, governor. Im making a grand entrance. Its great to see you. You are listening in on calpers in hedge funds. You have to wonder why were these Pension Funds<\/a> in hedge funds in the first place . We have one investor in new york and i have often made mistakes because they have sole discretion. Its far better if you have experts taking a look and diversifying and having intelligent investments. The fact that on returns of an greater of the last 10 years and without thereturns fees tells you all need to need to know about where you should have been. Im not a wall street guy. Calpers is often a trendsetter. This state so you know how these Pension Funds<\/a> operate. Will they take the lead . It would not surprise me in the least. Often times, its mainly go with the crowd. You dont want to stand out alone. Sometimes that is unfortunate because the crowd often goes the wrong way. Stay with me, governor. It seems gridlock in washington is easing. House republicans look like they will agree with president obama on some major points, from staving off a Government Shutdown<\/a> to giving a goahead to arm and train Syrian Rebels<\/a>. Its a lastminute shift with just three days in the session before the midterm elections in november. Change in taxes, Phil Mattingly<\/a> is here with us and the governor stays with us as well. Congress has been notoriously gridlocked for it why a republican suddenly changing their tune . Dont get used to this. This is not something you will see after the election but on the policy side, when it comes to what the president has proposed with Syrian Rebels<\/a>, this is something that large number of republicans have been pushing for for years. They backed him up on the policy. The other thing is the politics. We are 49 days from the election and republicans are in a good place. They dont want to rile things up and they dont want to ruffle the feathers. Their view is lets get out of town as quickly as possible and fund them government even if it includes Something Like<\/a> a debate over the authorization of war. Lets do it after the election but until the Elections Come<\/a> through, lets keep everything as smooth as possible. Is that a wise decision . Believer in a cruising. You have to have principles you stand up for. I dont think its a change of strategy so much as things like arming the syrian opposition, that something the republican support. Snap like they have always been saying no. They have had fundamental policy disagreements. If the other side will not sit down a compromise, its hard to find common ground. The war resolution, i would like to see that debated now. This is something in the front of the minds of americans. I dont think we should say wait until after the election. Lets let people stand up and be counted right now including the president. Even if that causes the kind of gridlock that republicans have been blamed for in the past . I dont think would cause gridlock. Republicans would understand that isis poses an enormous threat and will support the president. I think you would see a lot of democrats having a hard time supporting the president on this as opposed to republicans. We have seen a split within the Democratic Party<\/a> itself over the president s actions. This is a tough issue for the Democratic Party<\/a>. Multiple members of congress ran on opposition to the iraq war and opposition to the resolution authorizing force in iraq, the same resolution the white house is now using as their legal justification for the expansion of strikes into syria. Leaders indemocratic the house but also the Senate Backing<\/a> the resident because they feel like they have to. If you got into a broader debate over the over the authorization of forces, you start bringing up the possibility of major splits within the party. Not necessarily the republicans only want to avoid this debate, its the white house which needs the authorization to go forward with the training. They dont want a broader debate because that raises a whole lot of issues and a lot of them are interparty. Will there be a backlash after . We will debate about this issue with the governor by Phil Mattingly<\/a>, thank you for joining us. Former governor georgepataki will stay with us through the hour. Moving and shaking this hour, the creator of a popular h willame, minecraft, notc take his money which is over 1 billion and running. Microsoft has agreed to buy his company for more than 1 million and the bulk of it will go to persons. He says he will leave after the deal closes and he said im not an entrepreneur and not a ceo, im a nerdy Computer Programmer<\/a> who likes to have opinions on twitter. Does he ever he made it clear that he was willing to sell. He will make 1. 8 billion from the sale alone. Is down oversla nine percent after one of its ironger sub borders on after one of its strongest supporters on wall street backs off. Hurts announced a deal with carl icahn to appoint three new board members. They want to find a permanent ceo to replace the one who resigned. Plan of president obama is dividing congress a member of his own party over the best course of action. One of the contentions points of arming Syrian Rebels<\/a> in the fight against the militants. Democratic congressman jim himes of connecticut told me what he does not support that plan which he says is art of the tortured logic the white house is using. I think we need to really understand what we are getting into when we talk about spending have a billion dollars to support a bunch of people in syria we say we will vet but we dont really know where that goes. Our history there has not been terribly good. This is the kind of conversation when he to have on the floor of the congress. Joining me now is a member of the key budget and armed congressmanmittee, scott rigell of virginia and still with me is former new york. Ave and are George Pataki<\/a> you say you think the president is doing everything above board on this. Would you want to bring this issue down on the floor . Do you want to debate this now . Absolutely, we have one commanderinchief and i cheer the president s assessment of the risk posed by isis. He has asked us for authorization to arm and equip and train moderate syrians. Himes is right in saying there is difficulty in assessing who we should support but i believe that can be done and should be done in the president has asked for one thing i believe this institution will approve that and approve continuing resolutions to keep the government going. The democrats say bringing up the us issue like arming Syrian Rebels<\/a> and authorizing ground chips is only covered by republicans do not do anything about the issue. It is in response to president obamas request. You find republican saying yes we will support the president and democrats saying no we cant because we dont trust it. If you just heard congressman himes, he said we have a bad record with the Syrian Rebels<\/a> and hes correct. As i understand that come republicans are saying we need to do this and have to take aggressive action against isis as strongly as we can. The president says they will vet carefully those again american arms. You are the commanderinchief and we have some skepticism but we will trust you as what we are saying. And i ticket should be debated now believeessman, do you we will be able to destroy and to grade the islamic militants as the president has promised by only air attacks on allied air attacks or are we going to have to authorize Ground Troops<\/a> . Well, lets make clear that its got to be destroyed over time. Think it will present an increasing threat to the united states. I am in sharp disagreement with the president. Authority to the escalate this. I have called for a specific authorization for the president to request one and received prior to escalating the war. Senator tim kaine of virginia also supports the suspicion as the money others. This will get six hours of debate on the winners right, this needs to be debated on the house floor and should happen. Coming up on it should happen now . Absolutely, think the house calendar should reflect this to our country. I have always had our calendar is not reflecting the challenges we are facing as a nation. We need to brings this to the floor and wrestle with it. If we indeed approve an authorization for use of force, the president would not only have the constitutional 30 but i believe an increased moral the people, would be aligned behind our president and their strength in that. Hang on for one moment. We were talking about the midterm elections and republican leadership. How do you feel about the midterm elections . He was saying is right. It is seven weeks until the midterm elections. Sit around and wait. We should act now on having a resolution in congress showing the American People<\/a> to support the president s efforts to take outisis is absolutely essential. Whether the republicans will win or not there are a million brilliant political consultants. I have run governments. I think its about the policies and doing what is right for the American People<\/a>. In november, you make the case. How you feel about the midterm elections, congressman. Im in a district that the president won twice. I feel good. We have been serving virginias second Congressional District<\/a> well and i believe we are trying to put our Country First<\/a> and thats what we are try to do in wrestling with these resolutions the first one on equipping the Syrian Rebels<\/a> and also the larger one that you come to the floor. This is the right thing for the country. I want to bring it back i know there is several important issues in light of the midterm elections, people are looking towards 2016. Every member of congress, anybody in politics is looking for that year. We saw Hillary Clinton<\/a> in iowa the other day. She looked like she was all about going to run. It wasnt about the steak. Here is a quotation i thought was interesting from reince priebus, the rnc chairman. Is that true . I dont care about the politics. I care about the country and i think of hillary is the democratic nominee, he gives the republicans a tremendous opportunity considering we have a good candidate. The partisan divide is hurting america, pointing fingers and costing lehman as opposed to solving problems. I think you can support trade as part of that. I hope we nominate someone who will bring us together and focus on solutions and move america forward. Pataki governor pataki stay with an governor pataki stay with me, we will be back. You are watching in the loop, on Bloomberg Television<\/a>, streaming on your phone, your tablet, and bloomberg. Com and now available on apple tv and amazon fire. Good morning. Here is a look at our top headlines one of teslas stronger supporters on wall street is taking a more cautious stance on their growth. Analyst ley analyst adam jonas says he disagrees with elon musk on share price. Down more of come than nine percent. United airlines is offering its flight attendants buyouts of as much as 100,000. The ones who accept will be eligible for lumpsum payments. The airline which was the only major u. S. Carrier to post a quarterly loss this year is looking to rein in further costs. Sears is getting a 400 million shortterm loan from the hedge fund run by its ceo, eddie lampert. He will end the struggling retailer the money for general corporate purposes. Sears has been spinning off assets to raise cash. It is 26 minutes past the hour which means Bloomberg Television<\/a> is on the markets. Equity futures are slightly lower and have been over the last several sessions. The fed begins the first of policy meeting and we will watch for any change in language by the fed. We are on the markets again in 30 minutes. Years ago, you had your staple Grocery Store<\/a> and you did not think about going anywhere else. New data shows the grocery game is changing. According to a recent study, we are seeing major shifts in the way consumers are buying their food. Companies are reacting. Whole foods announced it would test a rewards program in hopes of retaining its customer base. Thats another step towards coupons at whole foods . We shall see. We are sort of splitting our grocery dollars, right . Are, gone are the days of the onestop shop. Shopping is becoming highly fragmented and shoppers are now spending the dollars at rises like the dollar store and drugstore and the Farmers Market<\/a> and the Specialty Food<\/a> store, the ethnic food store supermarkets are just not competing only with other supermarkets, it could be any store in any corner that sells groceries. We mentioned whole full which has been able to stay above and charge premium prices with no frequent flyers. Now they are changing things. They told me yesterday that they had not formally announced that they are rolling out a rewards program so shoppers will get rewarded for shopping at whole foods. We are seeing the customers care about convenience, value, and they care about freshness. Every store in this grocery game is trying to offer those three things to get the most customers they see drugstores and are offering more fresh food. Reade you see sushi bars. But theyre not very good. But people are buying them. Reade dominates the grocery market in new york. How about how stores are using technology . We dont know where it will go but we are seeing Apple Technology<\/a> ibeacon which is when shoppers go through a store, they can get pinged with promotions as they walk through the aisles and we see google for business. It is like goo labs for Grocery Store<\/a>s. Is like google maps for Grocery Store<\/a>s. I talked to a retail expert as she says that might be something we see in the future. Shoppers are using their phones. Many people who are younger are shopping with recipes and anyway the stores can get in front of Customers Using<\/a> technology, they are trying it. It is a competitive industry. I know mcdonalds is offering free coffee for the next two weeks in participating restaurants but if you are in new york, you can now go to this store called central perk which is a mockup of the coffee shop in friends. They are marking the 20th anniversary of the shore so warner bros. Offered a popup replica which will open tomorrow in soho and serve free clubs it 8 00 three cups of 8 00 coffee. Will there be a huge lineup for that . I think there could be. If is a new york city coffee shop, i think that would be crazier than central perk in the show were they just hang out. Thank you so much. In the meantime, weve got economic numbers out. Producer prices, he has more on that data. We dont have a whole lot more because the Labor Department<\/a> had computer problems this morning. The data is coming out in dribs and drabs from the internet. We know that Producer Prices<\/a> were unchanged on the month which is what was forecast by economists going into this. That leaves us with a 1. 8 rise from one year earlier. That was also what was forecast. Its a little bit up from what we had seen in the prior month, 1. 7 but it does not suggest strong inflationary pressures anywhere. Takeout food and energy, prices were up 1. 8 . It does not look like we had a huge Energy Effect<\/a> this month but that has been weighing on the markets, the Producer Price<\/a> markets for a while. It is the declining cost of oil and gas which is pushed down Producer Prices<\/a> and thats keeping a lid on inflation at that level. Thank you so much. Coming up, republicans are the newy gunning to win York Attorney<\/a> general seed for the first time in over a decade and we will talk to the man taking on the popular and wellfunded incumbent Eric Schneiderman<\/a>. , amazoneal war of words at battle with a group of authors and now the writers are trying a new tactic. I am back with my guest house this morning, from former new york governor George Pataki<\/a> and i want to bring in a longtime aide of the governor, the cofounder of the Advisory Firm<\/a> that the two of you have put together and other current candidate for attorney general, running against incumbent Eric Schneiderman<\/a>. This raises important because it represents many things but also a chance for republicans in new york to win a statewide seat for the First Time Since<\/a> pataki was reelected for a third time in 2002. Welcome to the program. Thanks so much for joining us. P lets look at theoll numbers. It shows you are running for behind schneiderman so how will you close that gap . Theye polls show that dont know either candidate. Eric schneiderman has been attorney general for for 3. 5 years and has yet to identify with the people he serves and is not traveled the state and has seldom been to upstate new york. As an incumbent who is been in the office for 3. 5 years, he remains unknown. You would not say that about his predecessor. There are polls that show almost half the voters dont know who he is. Or they have no opinion of him. Fought for the people of new york. If you had a lawyer that you had not met in 3. 5 years, would you rehire him . The people have not met or dont know Eric Schneiderman<\/a>. But hes wellfunded. Hes got more than 7 million in his coffers and you came into the race later and you have less money. Im not worried about the fundraising. I believe the message around the state with respect to corruption and his office being complicit, people are fed up with all additions saying one thing and doing another. We had a real chance to change all of this at the moreland commission. It was the schneiderman commission because those numbers were deputized as assistant attorney generals. He was authorized to appoint deputies. He appointed nine of them and they were all deputized on the ones there had a responsibility to report to him on a weekly basis. If he knew the interference was going on with this investigation in his office, he never stood up for it. Governor andrew cuomo he expanded the moreland commission. He disbanded because of budget issues. He claims he disbanded it coming he couldnt but he appointed the attorney general to disbanded. People of new york state understand that the government really has lost its way and there has been rampant corruption. How many dozens of legislators have been convicted of felonies and misusing their office . A lot of that involves charities that the legislators create and funds from the state budget. Cherries are controlled by the attorney general. None of these cases have been brought by the attorney general, they have been brought by others and people know we need to clean up the corruption in albany. Its the attorney generals job to take the lead in doing that and john cahill will do that. Is corruption a big issue for voters in new york . Issues like minimum wage im a for instance is a big issue and abortion rights. If you look at certain polls, only eight percent or less than 10 believe the Attorney Generals Office<\/a> is corrupt. Its a pretty small number. Is it wise to run on that platform . When it comes to the office of the attorney general, people expect that office to be independent and be above board and to hold government officials accountable. When it comes to corruption, people see the office of the attorney general as playing a critical role. I think they see this attorney general has actually failed from his responsibility to be an independent voice for integrity. Specific examples . Certainly, the moreland commission. Another example is the vita lopez scandal with sexual capital. T in the state instead of calling the assembled men out, the attorney general work with the Speakers Office<\/a> to pay hush money to the women who were sexually harassed. Absolutely outrageous. Along, get along policy. Its completely outrageous so whether its respect to women in the workplace or corruption in albany, this attorney general has been absent. Attorneyften seen generals go from that office to the governors position. Are you interested in the Higher Office<\/a> . Absolutely not. I think that undermines the credibility of that office. When you are the attorney general and you have the power to indict and put people in jail, people have to know you are using that for the people enough for your political office. If you win that seat you are done . Im done. I think about people who have served that office with e lefkowitzike loui who was ambitious but within the confines of the office. I think the issue of politics is a of the office of attorney general has been a corrupting force in politics. One of the reasons im excited about john is the integrity brings to that office. With Eliot Spitzer<\/a> and others, we have seen where they misuse the office to advance their political career. The Attorney Generals Office<\/a> should not be about headlines, it should be about justice. You just heard john cahill said he wants to be the attorney general is not looking at this as a stepping stone. Thats where we will get just as an attorney general like john cato who believes that and will do that. When you getne elected attorney general. Its just starting to clean up the mess. Race, talk tothis me about the Business Environment<\/a> in new york. You are on with me about a year ago and you wrote an oped about the martin act and how that has been abused in several instances , the overreaching use of it. I have not seen many other Business Leaders<\/a> get behind this issue. Why not . I think is just so technical its hard for them to understand. The Business Climate<\/a> in new york depends on where you are. If you are in brooklyn, things are going well but behind the scenes, jpmorgan just said 2000 backoffice jobs are moving to states like new jersey. Do you think because it is hospital in new york do you think it is hospital in new york . You move because it is do you think it is hostile in new york . Southern tierhe of new york and the economy is really struggling and you cross the line and pennsylvania and you see a booming economy and in the state, hydro fracking is not allowed. Its costing us tens of thousands, probably more than hundreds of thousands of highpaying jobs in very poor economically struggling parts of the state today. Sure, there are parts of new york that are booming but other parts really need a change in direction. I believe they can have that. You havent seen Companies Move<\/a> out of the city or the state. Not companies, jobs. One of the things that people dont realize is how much of the revenue the city and state is generated by a handful of high income earners. We have seen a lot of individuals use to pay a great deal of tax now living in florida at least for 183 days. Thats a tax issue, not a legal issue. You talked about people leaving the state and we have lost 400,000 people in four years because they dont see the economic opportunity. I have collegeage kids and the issue i hear around the state is are the kids going to be able to find a job . In upstate new york, that is a concern for these communities about people leaving the state and not having a future. If you were attorney general, how would you balance your job . One of the issues is hydro fracking. The attorney general brought a frivolous suit to send a message to the industry that you will not be welcome here instead of working with the agent the industry and my old agency about coming up with a Regulatory Program<\/a> that will allow us to move forward and protect and enhance our environment. We need to do things smarter and be open for business in new york when he to be fair and we dont give them a free pass. The idea that we say no to new businesses and new technologies like uber, that is not the message of new york. We have always been on the cutting frontier of jobs and technology so we need that. We dont need an attorney general who is beholden to special interests. One of the issues for Eric Schneiderman<\/a> has been raising the minimum wage and he has been focused on helping the poor. He has talked about raising the minimum wage as a way to keep people in new york and create a better job environment. I have a totally different view of that. What role is it for the attorney general . Its simply that he is asking people to forget about his role as attorney general and forget about the corruption and the of frivolous lawsuits against hydro fracking and prevent tens of thousands of jobs from coming here. By the way, i am for raising the minimum wage. The way to do it is to improve the economic climate where there is more jobs in competition for young people and more opportunity for people to advance their career. We want them to have their optimum weight where they are earning as much as the talent and drive allows them as opposed to telling someone you have to raise the wage even though you dont want to. When you do that, you lose thousands and thousands of low income jobs that simply disappear. Arent you concerned that could alienate a section of the voters in new york . No, the governor said it right. We need to be talking about job growth whether its in new york city with people at the lowest end of the income scale or people in upstate new york. The idea focus on one issue of minimum wage is not going to address the issues facing the entire state. We need to be open for business for people of all income levels. Lets focus not just on the issue about minimum wage, we need to focus on a whole host of issues and its about creating jobs. Thank you so much for joining us, john cahill, the current candidate for attorney general in new york. Also, former new york governor George Pataki<\/a> will stay with me as my guest host. Policymakers begin a twoday meeting, how soon before we see higher Interest Rates<\/a> . Plus, shocking the report about the number of people who are lighting up in new york. Its going the other way. Stay in the loop. The big number is one million which is how money people in new york city smoke. Its the first time there has been that many smokers here since 2007. The new York Health Department<\/a> says the amount of smokers has been rising for three years it males account for most of the entries, over 16 of new york adults are smokers and the percentage of young adult smokers has stayed about the same but smoking among 2540yearold rose to more than 19 last year from 14 . Ae Health Department<\/a> blames cutback in antismoking campaigns. We are back with someone who knows a lot about new york city in peoples behavior, governor George Pataki<\/a> back with me for final thoughts. Thats pretty incredible. Thats very sad. I understand young people are invincible but the worst thing you can do to help the smoke. I know and after all those campaigns and all that education. Another topic that i thought would be great is this whole hot topic of the nfl. Its about the Domestic Abuse<\/a> issue. You talk to ceos all the time and you mix with politics and business and sports. How do you feel Roger Goodell<\/a> has handled this . There is the case, the ray rice case and Adrian Peterson<\/a> case. I dont think thats the way to look at it. The nfl should look at this as the issue of Domestic Violence<\/a> and child abuse. This is not something that has not happened before and sadly it will happen again. The nfl has to put in place a comprehensive program as to how they deal with issues of Domestic Violence<\/a>. Domestic violence is not a family secret. It is a hideous act of violence. Sees a husbandd beating a white for a man beating a woman, all of a sudden, they believe that violence is somehow acceptable. We have to break that cycle of violence and i hope the nfl puts in place and aggressive holocene not just to deal with the issue after the fact but to make it plain what they would do Going Forward<\/a> when this happens. On sunday, we heard lawmakers chiming in on the nfl in what Roger Goodell<\/a> should do. I want to play some of those comments from sunday for them to not have known about this tape is incredible. He should go if he lied. If he lied to the American People<\/a> . He has to step down. He will not have the authority to change how they address these issues. Should governments get involved in this . A right toave comment. I dont think government should get involved but i certainly understand people commenting. Its hard for me to understand as i dont know the facts and i dont think anybody else knows the facts. We dont know when this tape was given to whoever it was given and who saw it. I am reluctant to comment on individual case but i do believe this is an opportunity for the nfl like with concussions were they had ignored that issue for way too long and now they are trying to get ahead of it. Its come to the forefront and theyre changing the rules and putting in new procedures to protect players health. They have to do that same thing now with Domestic Violence<\/a>. Governor, thank you so much for joining me this hour. Former new york governor George Pataki<\/a>. Alibaba is one step closer to being the richest ipo ever and demand leads the company to raise the price of the shares and we have and we will have more on that next. It is 50 six minutes past the hour was spent Bloomberg Television<\/a> is on the markets. Equity futures are slightly lower. Inflation is pretty tame in this country at the moment. The fed is meeting and they will be issuing their statement tomorrow. Inare on the markets again 30 minutes. In the next hour, theres nothing about a company trying to hard to be hip. Sees microsoft that way about the purchasing of minecraft. We will be back. We are about artie minutes away from the opening talent here is what we are working on. Stocks will be lower at the open and the s p 500 had a onemonth low after a selloff in tech stocks. Calpers says hedge funds are too expensive and are selling all of their hedge funds. U. S. Banks want to gain the upper hand with the apple pay system and will persuade customers to use their cards as an option for mobile payment. The fed begins a twoday meeting later this morning although no move is forecast this week. On markets are beginning to price in a higher fed funds rate. That set off a debate on whether the economy is ready for a rate increase. Michael mckee is looking at that question are we ready . There is a debate on bloomberg. Com between investors and economists and investors are more concerned. Economists are not worried because inflation is really low right now and we saw no problem with the ppi this morning. Since the fed began its tapering in january, look whats happened since then to the real fed funds rate. Companies invest based on the real rate. You take out inflation and whats the real cost . Since i began to taper in january, the real rate has been going down because inflation has gone up just a touch. That makes things cheaper. Monetary policy over this past year has gotten easier. Throughfunds rate feeds to the economy affecting the cost of money in any form, loans and bonds and securities. The chicago fed Financial Conditions Index<\/a> shows how easy it is for companies to fund whatever they want to do. Its up a little bit on the fed taper talk but it is still at an alltime low. We are nothing to fear but fear itself it appears from economists perspective and the fed has room to move without pushing companies to cut back. There may be the lower new neutral but we are a long way from it. What about the individuals . A little bit more nuanced picture because mortgage apple applications drop when Interest Rates<\/a> rise but experts dont think that will kill the housing market. You must account for rising prices and you still see real Mortgage Rates<\/a> still very low on a start basis. Percenteven get one interest from a bank these days. Adjust that for inflation look how bad it is. Goodise in rates will be and might raise spending and the economy. Wire investors so concerned . For many, its not about the first move but the last how high does the fed go and how fast . What would the fed funds rate be if you could cut it below . Zero professors designed to measure and the shows zero and this is what the effective fed funds rate is now. The rate is deeply negative but still going in that direction. Its a big move to get back to zero. Thats the concern the more aggressive the fed is, the harder it hits the economy in a shorter period of time. Expect continued caution from janet yellen and company once they start. Thank you so much. Is one step closer to breaking a global fundraising record. Planned to raise nearly 22 billion which is close to the worlds biggest ipo, Agricultural Bank<\/a> of china, which was four years ago. Alibaba has plans to be of Global Company<\/a> but how successful are its platforms in the u. S. . We have been taking a deeper look at how businesses use alibaba, explain that to us. If they want to manufacture something, as a small business, you would use one of their platforms known as alibaba. Com which is a directory of a variety of global suppliers. It cannot possibly screen all of these suppliers. Thats important because as a startup and you are looking to do International Trade<\/a> and servicing with china, keep that in mind that the standards these suppliers employ are not necessarily standards that would adhere to u. S. Or eu rules and that could create problems. Who makeso a startup customized bicycles in california and the use 2009 andom back in they had issues. The first was the fact that their defect rate was 90 . By switching to an agency that found them suppliers, they were able to decrease their defect rate to three percent which is substantial. How can you run a business that way . Exactly, they had to switch to an agency that sort them suppliers because it reduced their cost of its soul. Cost of their goods sold, 60 . It can hurt your bottom line if youre not careful with what suppliers choose on alibaba. Com. Is miscommunication a big frustration with alibaba . That is probably the number one reason why many startups are scared to use it and its legitimate. I spoke to the cofounder of al. Com which helps Small Businesses<\/a> navigate the waters in china and to use alibaba. Com you have to have an engineering mindset. Anyou have to have engineering mindset because there is no universal definition of what the quality really is. That condition could cover anything from dimensions to certain performance requirements. Tips were to over communicate details, dont take anything for granted and also specify the Safety Standards<\/a>. If youre creating a piece of clothing or baby clothing, it will have different roddick specifications country by country but also within the united states. You should not assume that china will know what the Safety Standards<\/a> are. You mentioned dozens of sub liars are on hand for Small Businesses<\/a>. How do they narrow it down to make sure they have the best . Essentially, you need to do due diligence. Alibaba is just aggregating all the suppliers so is not really their fault but you should not expect alibaba. Com to do all your homework. To think about the average supplier that they have, they received about 50100 inquiries per day. Sheila the average startup who sends an email to about 20 suppliers, one of the analysts 17 out of the the 20 will not return your email because they think you are not serious enough. That is important because these chinese suppliers want longerterm business in the average margin on one order is up 36 which is pretty low. They can tell by the email whether a u. S. Company is serious. You have to make sure that you pretty much over communicate and overengineer everything. Enter staying, thank you so much. Moving and shaking this hour the netflix founder and ceo reed hastings. Netflix began streaming Video Service<\/a> in six European Countries<\/a> and he says he specs the company to be profitable in europe in the next decade. He spoke to Bloomberg Television<\/a> in paris. It will be challenging to be profitable. Ande got a lot of content we just keep getting more content. In the long term, if we go five and 10 years, we should be profitable. Will beng enough, you profitable some netflix says International Expansion<\/a> may hurt profits in the short term. Ining up, the plot thickens the amazon battle with a group of authors and writers who were now taking aim at the companys board. In an exclusive interview, apple ceo tim cook talks about the challenges of staying ahead of the competition. Stay in the loop. Amazons were with hashem continues. Hachette. Writers are targeting the amazon board and warning them that the reputation of the company as well as their own are at stake. They say to amazon joining us now is author roxana robinson, the president of the Authors Guild<\/a> and one of the signees of this letter and also ki. H us is paul kudros youve gotten about 1100 signatures, is that right . Its close to 1000. You have not sent this to the board yet . It has not gone out but it is doug prestons letter. He is the one that is sending it. When your group says the reputation of amazon is at stake, what do you mean . Amazon has styled itself as an organization that is very istomer friendly and supportive of the Literary Community<\/a> and in fact got it starts reselling books. It has placed itself as a presence in the Financial Community<\/a> that loves books and loves readers and writers. In this case, it is targeting the most vulnerable member of this whole issue which is writers. Te writers are completely helpless and can do nothing about what is happening. Amazon chose to punish them for this. The big guy is hurting the little guys . Yes. What evidence do you have it is hurting their reputation . A lotre is evidence that of customers are choosing to buy books elsewhere. People who buy books often tend to be people of conscience and they recognize what amazon is doing and they dont like it. Its easy to find another source for books. It is but that means they are possibly buying your book somewhere else. Thats my point. , is amazons reputation threatened here . I dont really think so. Im sympathetic to the problem that this negotiation has created for authors but i dont inc. This really has a great impact on amazon as a company. Looking at it from a financial standpoint, looks are shrinking share of the amazon business even though thats where they started. Might seem biggest dork like him its not that important in terms of the companys future Going Forward<\/a>. This from think about a financial standpoint is that amazon is picking up product from a wholesaler at hachette they do distribution of a product called oaks and because of this negotiation, theres an issue with respect to the product they are providing so amazon does not have a contract with them anymore. In a sense, they are doing hachette a favor that they are selling their books at all. How are they doing hachette a favor . Because they no longer have a contract with them. Contract and that expires or breaks down, you have no obligation to continue to sell the product at all at any speed. They no longer have a contract but amazontte continues to sell their product. They dont have to do that much. How do you feel about that . Lets differentiate between a product in a book. A book is not like a brick. Product. Intellectual it cannot be outsourced, it cannot be made cheaper, it is andthing that is creative in intellectual property. Its a piece of creative work. To call hachette is a wholesaler is an incorrect context. What amazon is doing is damaging its relationship with customers. It has allowed its customers by saying this book will not be available for three or four weeks and the books available instantly in the hachette warehouse so they are lying to the customers in europe they are being taken to task by the governments of france and germany for just this behavior. Its not simply a writer saying we dont like the terms. Ette is not a warehouse or distributor. It is a company that has joined together their partners in this intellectual property. Its really a very different situation from simply walmart. Paul, what is your take on the . Are almost no words of that i agree with. Those are special words implying that somehow authors are unique. Words like intellectual property and they are not a Consumer Product<\/a> suggests how adrift authors united are in this argument. This is a product, no difference in movies or anything else that gets created by the entertainment industry. We may want to think as him author of books different but they arent. Their consumerproducts and distributed like other products. The fact that they are distributor has shed their relationship with amazon will have an impact on my livelihood. Lets talk about software. Do you think thats an International Product<\/a> intellectual product and should be protected . No, i dont. Of softwareaspect that contains intellectual product that does not make the product in any way special. No one is going to protect you. As i understand it, software companys protect their product with great vigor and is considered very serious intellectual it. They do. But that has no relationship to whether or not if i lose a distribution relationship that somehow that i should be able to go to that companys board and say i am special and should be protected, keep disturbing my product. The term special snowflake. It is demeaning and contemptuous that would not use that phrase. Pick a better one. A better one is creator of serious intellectual property that support our culture and have done for thousands of years. People who write software are protected. But thats a business. Software is a business. Writing is also been a business and has been for thousands of years. Ifyou no longer have a relationship with your distributor, you know longer have a Business Writers<\/a> keep on writing and we will find a way to write and produce but amazon is gotten the middle of that. I am all for that but to suggest that amazon has some special obligation but that that phrase to begin with. I dont think its a bad phrase at all. Dont call me a special snowflake. Given the letter that authors united road, i think its appropriate. Now we are getting into terminology. Going to have to go but you can agree to disagree on this issue. Roxana, thank you for joining us. Y who willul stay with us on the microsoft story. More coming up in a moment. We are just a few moments away from the opening bell and get the top 10 stories you dont want to mess after this break. Keep it here on in the loop. Welcome back, you are in the loop, is 26 minutes past the hour which means lumber television is on the markets. Equity futures are a little bit lower, Producer Prices<\/a> were out this morning pretty much tame inflation in the u. S. And the fed meeting starts today. We are on the markets again 30 minutes so lets top down to the top 10 stories you need to know about today. Scarlet fu and Olivia Sterns<\/a> her journey may. Hertz announced this morning that it entered into a definitive deal with carl icahn to appoint three of its associates to his board. A five be 50 part of Person Committee<\/a> to find a new ceo and carl icahn city thanks said he thanks them. He got what he wanted. Number nine is American Eagle<\/a> outfitters, upgrading overweight from equal weight at stevens saying that improving products and Inventory Management<\/a> should drive sales and profits over the next few quarters and stevens raised its price target to 16 from 13. Number eight is iliad. Gilead. They have cheaper versions of a drug that they are selling in india and have added 91 underdeveloped countries. Number seven is mastercard with shares rising in the premarket after it was confirmed as an outperform rating. Many investors see the announcement of apple way as a longterm positive for mastercard another credit card companies. Six, payings number a 66,000 penalty to settle accusations that they ran false advertisements and overcharged customers for cocacola products in new york. Were learning about lessigs resignation of the companys chief spokesman. Walmart allegedly discovered also that is resonant walmart anomaliesdiscovered on his resume. How dues that happen these days . Spinning of hiring and firing, United Airlines<\/a> is number five, theyre looking to rein in costs and some of its employees are in line for sixfigure buyouts. Some took voluntary leave a year ago. Number four, tesla motors, one of the Company Strongly<\/a> supported on wall street has taken a more cautious stance on the electric arm maker. He said in a report that he agrees with the ceo elon musk that the share price is ahead of itself and that sent shares down more than nine percent. Netflix began streaming Video Service<\/a> in six European Countries<\/a>. Reed hastings told us he expects the company will be profitable there in the next decade. Netflix says its International Expansion<\/a> may hurt rockets. How do you say orange is the new black in french . You did not answer the question. Frendch]ing at general corporate purposes. A takeover could be brewing for the home soda machine maker. The company at about 40 per share. Bloomberg news first reported talks back in july. Morgan stanley analyst said that tesla shares are a little bit higher than they should be. I want to bring in Bloomberg News<\/a> on this story. What is the followup . Adam jonas is a very respectable analyst and he has been a very big supporter of tesla and still cars them calls from the most reported important car company in the world. But he has been tapping the brakes. There are issues about electric vehicles being accepted in the mainstream and issues in china. It is still a good company, it will still do well, but the runup in the stock is too much. This took investors by surprise. Not only because he is one of the most respected, but he has also been very bullish on tesla. It is also because some people are wondering, when is this ride going to and and might we be at the moment . It has gotten so frothy. There have been reports recently that the stock reaches around 250 and that it is going to go up to 400. That is what elon musk is saying, it is getting ahead of itself. Adam jonas agreed. Now it is selling because people are worried it will crater. Jonas is saying it is still a good stock. He still rates it at overweight. It is not going to continue this rocket like trajectory. Thank you so much. Stocks are open for trade this morning. Awant to play with you conversation i had with bill gross last week about valuation in bonds. At itshink the market current levels, in terms of 10 year treasury at 2. 5 , it is fairly valued. That depends on our new outlook called the new neutral, which suggests that the fed will not raise Interest Rates<\/a> to a level that they have historically. They will not bring the levels back to where they were before. I want to bring in the founder and ceo of scranton financial. David says it is time to get defensive. Investors should consider holding about half of your portfolio in fixed income, david . You just are bill gross speak about the new neutral and that rates are likely not going to go back to historical highs. For most, at least half in fixed income at this point. The momentum we have in the stock market is strong. Nobody knows how long it is going to last or when it might end. Bitgs are feeling a little like 2007 to me in the stock market. Topheavy. Bearish analysts are becoming projections. Aising when most of the analysts are on , you have tohe bet become cautious. You have your forecast going gdp forecasts going to 0. 8 . That the these reasons European Central<\/a> bank will continue to add stimulus. Isnt the mantra, dont fight the fed, dont fight the Central Banks<\/a> . That is why i am not ready to call and and to the momentum just yet. The momentum i think people do need to be cautious. Nobody knows when things are going to turn around. The reality is that we have a lot of things that do not make sense out there. Up until a week or two ago, u. S. Treasury bond prices were steadily going up at the same time the stock market was going up. Italy is paying a lower yield than the u. S. Treasury. Which is incredible. It is incredible. There are bubbles all over the place. Commodities might be the only place where there arent. What is going to be the catalyst . Can never predict. In 2007, nobody could predict it. We knew about the mortgage crisis in march of 2007. The stock market kept going up for another eight months. Piecesime there are two of data that come outcome of the market has a way of shaking off the bad news and focusing on the good news. There are so many skeletons right now in the worlds financial closet and geopolitical closet that it is hard to tell which one is going to be the first to pop out and start the downturn. Either way, you want to get off the train. You like exxon. Their fortunes are heavily tied to the price of oil. The price of brent is near a twoyear low despite these enormous geopolitical risks. Lastly, the International Energy<\/a> agency cut the oil demand forecast. Most worrisome for exxon is its jointon 500 venture. Stockis an example of a that typically will do better in a downward market. Everybody needs to buy fuel. When the tide goes out, most of the books fall. It is that simple. Wasnt that accompanied by a huge early spike in oil . That was not what drove profit margins, per se. Are 12 or 13. If would get another major downturn in the markets, that will be less of a decrease in value. Thank you so much. David scranton of scranton financial group. Coming up, microsoft is getting minecraft. The founders are leaving the studio. One of them sounded off on his blog. Testifying on capitol hill right now. Chuck hagel and army general martin dempsey, the chairman of the joint chiefs of staff. They are before the Armed Services<\/a> committee to discuss the president s plan to increase military action against islamic state. You can watch that on bloomberg. Com tv. Microsoft is buying minecraft. The brains are not part of the deal. The founder is leaving the studio. He said, im not an entrepreneur. Im a nerdy Computer Programmer<\/a> who likes to have opinions on twitter. The founder takes his money and he runs. Could spell trouble for microsoft as it integrates the 2. 5 billion acquisition. Kedrosky, whol says that microsoft overpaid for the company and it will likely die in the hands of the company. You pick your fight with the special snowflake and now you microsofts a ceo. Why do you think he is going to ruin it . Is this Elephant Graveyard<\/a> of software. It is for Software Acquisitions<\/a> go to die for the most part. Haverouble we are going to with this company is that it is a quirky company. He has not been actively involved for a little while now. He has mostly been an ambassador and so on. Nevertheless, his ethos in the blog post is the way the company runs. The difficulty for microsoft is maintaining that an working with the structure of the founders. Microsoft is a large, Bureaucratic Organization<\/a> with many layers of management. Im not particularly optimistic. In particular because they desperately need minecraft to drive traffic and drive adoption of their mobile platform. That is one of the reasons behind this acquisition. Minecraft sold 50 million copies of the game for pcs, smart phones, video games. 50 million copies. You dont think microsoft is going to be able to use any of that to drive mobile . That it islem is more the other way around. Marketplaces already voted. People are not buying smartphones to get minecraft. It is the other way around. I can get minecraft on this platform or another. Microsoft does something newletely crazy and has releases on a Windows Mobile<\/a> first. They are caught between a rock and a hard place. They dont do that, they are further entrenching the dominance of the dominant platforms. You are talking about microsoft in very much the same way, as a big bureaucratic company, as it was under steve ballmer. New ceo. He even though he is an internal guy, he was supposed to be a fresh voice of the company. You said something which i laughed out loud about. They are trying to acquire minecraft to be hip and Satya Nadella<\/a> is not hip and neither is his wardrobe. [laughter] that got me thinking. What is his wardrobe . The guy is kind of nerdy. We pulled up the younger picture of him. He is in like a shirt with a collar and a sweater and he wear sweatshirts and now he is in sort of a california, laidback look. What is wrong with them . Why is he not hip . He is trapped. He is trying to show a younger, rejuvenated microsoft. He is trying to show a younger, rejuvenated Satya Nadella<\/a>. The struggle is that microsoft is and will never be the company. They are too large and too bureaucratic. They probably have to have 25 layoffs to bring it down to a level to be aggressive in the way that he wants to position the company. Superficially, he is doing the right things. But he is grafting onto an organization or none of the grafts can take. Whats thanks for joint thanks for joining us. , 48 hours to go until scotlands vote on independence. The polls are too close to call. More on the upside of Scottish Independence<\/a> is next. Outlook. Or the global we are days away from scotlands vote on independence. The polls are too close to call. We have a look at the upside of Scottish Independence<\/a>. Lets start with you. The upside of independence. What is it . If you listen to the nationalist, they talk about an improved tax environment for companies to invest. They look across the irish states and they see very favorable conditions. They talk about tailoring economic policies specifically to scottish businesses, not u. K. Businesses. They are talking about lowering the national deficit, lowering borrowing costs. Wonder there is a real threat. That is inspiring others . The big concern is that there is going to be a domino effect. Catalonia said they would be more business friendly. There is a reason that all of these movements have been simmering for centuries and they are now boiling up. Has spiked up in response to globalization. Thisn europe, there is issue that now that they have over umbrella of supranational identity, it is a bit redundant to have a national identity. They also want to be taking their cues from madrid. Really has been invigorated as a response to the debt crisis. All of these regions are furious that the central governments are responding to austerity and the way they are. They feel like they punch above their weight and should not be subjected to the same kind of cuts. What is the likelihood that the regions could break away . Lets start with catalonia. It is probably the most likely. None of these are very likely. Catalonia is the most organized. They had about one Million People<\/a> in the streets. They will have a referendum on november 9. The head of state has said it does not matter. He will not recognize the results. Catalonia is 20 of spanish gdp. You have seen markets concerned in response. You have seen spanish bond yields take up. A difference of dialect. It is a different language. Flanders is the dutch speaking north. They have had a very hard trouble. Over 500 days, they went without a government. This is deadlocked. People could not agree on what kind of politics they were going to use to respond to the financial crisis. When we look at scotland, the on both sides of the moment. Bookies are uncertain. The polls are completely split. Some say 8 victory for the proindependence, some say 8 victory for the union cap. Not a lot of people know how difficult it is going to be if it happens. The prounion camp says we do not want to talk about the referendum. Camp says, these are things we might be able to do. It is unclear what will happen Going Forward<\/a> because neither side is willing to come up with too much concrete proof of what will happen. Thank you so much. We will see one that referendum takes place. That does it for today on in the lieu bank. In the loop a battling to bring the Worlds Largest<\/a> to completion. It has not been an easy road for bruce ratner. It is 56 passed to the hour. A Bloomberg Television<\/a> is on the markets. Im scarlet fu. We are 30 minutes into the start of the u. S. Trading day. Stocks have come back and little bit. They were sagging lower. The s p 500 has found a bounce in it. The yield on the 10 year has moved from above 2. 6 last week. Data show that Producer Prices<\/a> and wholesale inflation are unchanged from the previous month. The dollar is near a six year high versus the yen. Moving see crude oil higher, erasing earlier losses. Wti at 93. 45. Is scrambling to deal with another centralbanks actions. The followup from its surprise rate cut a few weeks ago. It is taking extreme measures to maintain the funds stock rice. Stock price. Mary childs joins us with a look at what is going on. What does this process entail . People use money market funds for cash management. The park money and try to forget about it. The problem comes in when we are in a negative yield environment. Ofn you have the specter breaking the money market and that means you will lose money on your money and that is the safest stuff out there and that really freaks people out. Newally, you distribute shares to keep the value constant. Instead, they will disappear shares instead of losing value. Good thing. S a people are perceiving it as a good thing because they want the mechanisms to work. They want the money Market Options<\/a> to work. The other option was to dissolve the fund. Jpmorgan put a similar thing in place in july 2012. When you have this government focused fund, you need to do things about it. I mentioned how we got wholesale Inflation Numbers<\/a> earlier on. Nowhere neares are the 2 the Federal Reserve<\/a> is targeting. Tell us about the Inflation Expectations<\/a> being priced into the market right now . I think this is really saying that Central Banks<\/a> are kind of freaked out. Inflation expectations are pretty far out. Investors want to hold onto their cash where they can. Will have to pay to park your money here. It is trying to incentivize you to get out there and change your risk allocation. You have to pay up for liquidity and safe haven. I think it takes a couple steps in the next couple years. Ultrashort bond funds my benefit. That is an interesting proposition. That is not the same as cash management. That is saying im going to actively reduce what i have allocated to cash. That is definitely an entirely different investment proposition. Mary childs, thank you so much. Are on the markets once again in 30 minutes. Market makers is up next. Live from bloomberg headquarters in new york, this is market makers, with Erik Schatzker<\/a> and stephanie ruhle. Too expensive and too complex. That is why the biggest pension plan is pulling its money out of hedge funds. We have an exclusive mustsee interview with the investing chief of calpers who made the decision. Declaring war on ebola president obama is ramping up attacks. He is sending 3000 troops to west africa. Grocery shopping has become a manly pursuit and the big chains are catering to the crowd. Good morning,ry","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia800903.us.archive.org\/6\/items\/BLOOMBERG_20140916_120000_In_the_Loop_With_Betty_Liu\/BLOOMBERG_20140916_120000_In_the_Loop_With_Betty_Liu.thumbs\/BLOOMBERG_20140916_120000_In_the_Loop_With_Betty_Liu_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240619T12:35:10+00:00"}