Interview. Qwest good morning. I am erik schatzker. Qwest i am stephanie ruhle. A lot of news this morning. There is also breaking news in the housing market. Economistsless than expected. The negative news turns out to be a positive area lets bring in Michael Mckee in the headlines. Class i am not sure this is as positive as the spin could be. Youre right that the forecast is for one percent and home sales fell by two senate 2 10 of one percent. This is margin were supposed to see housing pickup. This is not necessarily great news. Homes unchanged. You coulds good news, say it is the supply coming online. Ordinarily, that would not be great news. Is suppliesseeing shortages. It is better we have homes for sale. Ok. I want you to stick around and bring in a special guest. How concerned are you that people are not feeling very good about this in the start of spring. They do not like these numbers. As i do not know if this is good news were not. Forecast. 6 million we came in at 4. 59 so i would say our models are working well. One of the things people have to remember that existing home sales is that we count the sale at closing. Day you buy the house but you do not close for a month or two months. What this really reflects, the march data, is activity from and february. I live in chicago and you live on the east coast, anywhere from atlanta, memphis, all the way north. We know how hard it was to go look at a new house. People just stopped in the winter. It was an ugly and brutal winter. I am not that disappointed with the data. It is not as high as it was, but not as bad as people have feared over the last three or four or five months. Qwest that is certainly the hope, that as things get warmer, things will turn around. You go back to last summer and last fall, this is the seventh dropped in eight months. October,eptember and we were down. The Mortgage Bankers reported that the mortgage lending in the First Quarter was at a 17 year low. It is not just a pullback. It is a real drop. We saw that reflected in wells fargo. The mortgage originations fell off the table in the First Quarter. Something else is going on here. People are concerned about whether or not this is secular and cyclical. Qwest during the postcrisis time, perhaps after jobs, that one on for a couple of years. When we are looking at the do you need closely to Pay Attention . This is really important. A key back then, back in the 2003, 2004, 2005, 2007 time, is a bubbleeally did get in housing. Interest rates were dropped to one percent. Bigger housesying than they should and were putting no money down. Prices signaled a bubble. We crashed. We have come back pretty rapidly. Likes are up 30 in places phoenix and florida, las vegas. Some people are worried about a bubble and im not. Prices are still below their peak. One of the things that has held housing back, especially existing home sales, is that there has not been good inventory out there. I do not want to forget to talk about this. The Mortgage Market itself is a mess right now. Fanny frame freddie mac have done 90 of all 30 year fixed rate mortgages. Thanks art not in the game and the reason is, would you lend money at 3. 8 for 30 years right now . Banks are just saying, forget it. What is happening is we have got a tight Mortgage Market and that is one of the key problems. It is loosening up here and i do expect housing numbers to get better over 2014. Qwest brian, thank you for joining us. Our own economics editor, Michael Mckee. Qwest a lot of m a in the truck industry today, but nothing more interesting than what the lacquer minutes doing. In the of almost 10 botox maker over the past few weeks. He is now teaming up to make a takeover offer. With us to talk about the unprecedented move, our bloomberg contributing editor. Gentlemen, welcome. Professor, if i may begin with is, how i understand it unprecedented. Thisnique and different is than anything you have seen before. Qwest it is a major step forward and a great opportunity for the shareholders of both. Terrific innovation. The bad news is i think the sec will regulate and make this much less profitable. Qwest when you say it will saying forre you this deal or future deals . Future deals. Lie is this so innovative . You have never seen before a a an investor like bill ackerman, and a company in the same industry as the target. Synergies. Eat creating difficulties credibility. Companies making outside activity events also have difficulties. Solves a lot of the problems that others have. Qwest this is potentially a game changer for the way m a has done. If all of a sudden, you can go to the Hedge Fund Manager like the lachman instead of a bank becausemate winners, the lawyers are the ones who will get paid here. Qwest the lawyers always get paid. The m a banker the lawyer . Lie higher and m a bank and pay them two percent when he could get this guy put his own money up and do the dirty work. Youn Investment Bank guys through the difficult process of all the different filings, and beats up on the board to resign into the governance issue you want, the sport is on annual turnover. Ackerman will know how to call midway through the year, and he will effectively have an Investment Banking role. They are only putting up capital. They go away and effectively ackerman will shepherd this through the process while the Biomedical Team and the other side can show clearly hold on. Dimon, and my kicking the behind of my m a bankers . Case. This is an odd there are bankers involved here. Of theon the lending capital, on the financing side. I have not seen anyone on the real deal advisor side. But will end up happening is good firms, he knows his stuff,. E will be able to guide you west how could this go wrong . They cannot prohibit it. There is so much attention on hardcorehat a real scorched earth defensive strategy is not likely to work. Speaking of marty, he is the urged toster which change the rules to make this more difficult. Qwest that is probably a difficult a different conversation. For the time being, it is unlikely they adopt a poison pill. Could we then draw the conclusion that no matter what happens, the white knight comes in, whether ultimately valiant has to raise the price, that ackerman wins . Vasily. Just so the record is clear, it is not at all clear that allergan will not adopt they may. That will not necessarily be a deal killer. It will just bring them to the table and make them negotiate. Qwest it is highly unlikely they exist. The entire Upper East Side is thrilled to hear it. Realistically, they will go out and look for a white night. , allis merger environment the talks and deals that went through, white nights are not hard to find. Cosmetology, it is relatively stable stuff and they are willing to pay up a serious amount. My guess is they will either look for a white night or look for an acquisition or do a financial share buyback. They are too much in play. Understandou help us bill ackermans investment style . You have to have some flavor because it seemed like all the investments are i are some level of government action. He will get us through. If youre talking fannie and freddie, that is involved in government. Herbalife did. It is so unpredictable. Case, you have got the product overlap against botox and dermal fillers. Of them have large cosmos of the goal lines, all of which will have to be looked at. A lot of cosmetic stuff is. Ot regulated qwest correct. Less likely to be an issue. Those overlapping is absolutely likely. Qwest we are a heavy Regulatory Environment that there will be regulation in whatever anyone does here there is more in the recent areas you identified. Under current regulations, regulation will not be a deal breaker. Defense,cialized in in to do a activism. One of the obstacles they raised was the notion bill ackerman, a Hedge Fund Manager, and cannot be part of a group. It is not like when they say nasdaq teams up to make a joint bid, in which they both become operators. Class come on. Qwest of course. That is why im putting the question to a law professor. Qwest there is no problem when this deal has been carefully lawyered. Certainly, bill ackerman is already filed scheduled i do not think so. I do not see it as close to the line. He has not done anything that implicates a government statute for m a. Qwest this activity has to happen. Is number of drug buyers getting less and less and therefore cement prices down. There is overcapacity and inefficient companies and your purchasers are getting more and more powerful. Dealing with five major drug buyers. He has not taken a vacation either. How about bring break . Break. Not take a i am tired. I want to go to bed on a monday night. He is into it. Qwest thank you very much. Editor, he will this next hour. It will cost you more to sign up for netflix and investors seem to be very happy. Qwest the center of the world when it comes to movies, it is like my neighborhood. This is Market Makers. We on were on Bloomberg Television streaming live. It is about to get more expensive to launch house of cards. Netflix says it is preparing to raise prices by a couple dollars of months a month. An Earnings Report that saw 4 million more customers sign up for the streaming video. Jon erlichman is still here in new york this week. East. Hollywood comes i think it is expensive for netflix to pay for all stuff. Pay this mma said, ok fine we will pay that. They got their way and it has worked out for them. Stuff. S a lot of or twose prices one dollars . Were spending on stuff without giving specifics, of course. They do not want to speculate. You arerms of who rooting for, would you not root for the creators of the content . For me, i would say great, let the creators of this fantastic programming, let those guys get paid. Unless you are a subscriber. Qwest than the cost of course. That is why so many people have added for cable. It is not like youre paying for the challenges you are watching. They learned through the original shows. Not all of them had but enough do that people like that and they want to keep doing that to dollar increase for a news subscribers for friends you bring into netflix who are not used to necessarily seven dollars and . 99 whatever. The rightaying it is thing to do but that is what theyre doing. Qwest it seems those who are addicted to house of cards and are in watching binge class i think youre right. Only nonnete flicks subscriber in this holding. He paid for with bitcoin. Qwest simply looking at margins, netflix does not make it kind of money. You compare it to time warner cable, their net margins doubled what netflix is our. There is room to close the gap. Hbo. Take an incredibly profitable business. If they roll out in more markets, it is already like the cost is there. There is a lot of technology and the infrastructure is already there. They are careful about getting to the wrong markets, where the are piracy issues. For all be back with us very special interview. More of that and more in the next hour. Who does not want a star wars well, . Qwest coming up as the future of ford, who be the companys future ceo. As we told everybody about 26 minutes ago, existing home shells sales came in with a decline. Qwest less than people were expecting. An interesting antidote, you have to Pay Attention to her closing dates are. I had not thought of that. If you bought a house in february, it would not show up for another 30 days. Not that it is an important economic indicator, but it it was reported its Manufacturing Index came out better than expected. There you go. The market seems to like it. When we come back, a changing of the guards at fort. The incoming ceo with the former president of chrysler. Qwest youre watching Market Makers. If only you can see it all. You can. In the meantime, there soon will be someone new behind the wheel as americas secondlargest automaker. We are talking about ford. Allen is paving his way to retirement. Credit virtually all the. Job, weof ceos his expected to be confirmed in short learner short murder short order. The president currently the assaulted consultant for nissan. His mark feels the right guy . He has been groomed. In thet a career background and jobs he has had, he is the right guy. This is the right time, the best time for a good transition. Thisll be the beginning of a great new era for ford. Qwest why do you say the right time. Is the job done, effectively . No, he built a foundation. He has gone through a grade eight year time of creating a culture, and now they have established hurt perfect metrics in every part of the business. They can start on the business of not just solving problems but making history. This will make ford become a globalrong leader in the auto industry. Qwest alan mulally gets to leave on an on a high note. He just handed matt miller to mass the raptor. He feels like, who done it now. Microsoft, everyone, it was public, new that the ceo, he was talking to them about it as well. That got people thinking maybe it is time for a change and we should bring the change forward. He was planning on staying through the end of 2014. Add to it the fact allen may have a serious job up his sleeve. He will not play golf at augusta or the detroit country club. Will keep working. 68 years old. It was said the guy was 48 years old. He has a lot of energy. Qwest a few months away, why not go to microsoft . Alleems like this guy was in with ford. A few months later, actually he may not have wanted the job. You have to ask yourself, did anyone outside of microsoft want the job . May be, who knows . There another job in microsoft . Another job at a big company . Preparing for 2016, a president ial bid . He just laughed there he obviously did not answer. Qwest lets go back to you. You know these men. You know mark fields. How will fields be different than the ceo of ford . He will be his own man. I guarantee that. Qwest what does that mean . Hallett is his management and executive style different . He is a businessman, a strong and sharp businessman. Greatk he has been a leader and brought a lot of culture into the company. Mark will now take the company and make it a highperforming organization where the foundation has been built there it i remember following the great leader at toyota and my first thought was, do not screw it up. Not makes mark will change for the sake of change to put his imprint on things. He will take what is there and make it better. That is what he has been shaped to do. Allen has got him in a position to do that. Qwest i know you have not seen it yet. I looked at headlines. He said to want voice and expanding manufacturing and said to have lined up post ford positions. Do you think that is true . Probably. A lot of it is speculation. We are talking about things that may be happening. Ou said he is young and vital he will not be ceremonial. If you remember, he worked with president obama. He has got the experience going through a terrible restructuring time in coming out ahead. What he can do now is he can pick what you want to do. We will see that soon. Other job aside, for him to keep a position on ford, he has been very close to bill ford and has become very close to other members of the family. This is a family run company and makes it very different from the other giant corporations. It really affects the strategy and the investment thesis. I wonder what you think about bill ford leadership. Allen gets all the credit. Leader, a great turnaround died. Bill is the one who brought him in. Bill is still the chairman. There workingl be with mark. Bill ford has done something right here. Absolutely. That is the start of the crisis. It is not just allen. Wonderful bench. The talent they have, the biggest problem is to make sure leadership keeps going forward. Bill ford will do that. Very easily, with mark, they work well together. Family company. Look at the global Auto Companies that continue to do well. I have always put forward in the same category as you did. It opens the door for allen to continue a role. They are at least talking to them about continuing a role in the presence. That will be natural for him. Dr. Toyota is still involved in toyotas operations years later. Momentum andf perhaps with alan mulally joining the board, we will see how that pans out. What will be screwed up most easily . Qwest the biggest challenge will be leadership and keeping the ford teams. Going forward. He will now be able to graduate and not be a manager as much but leave the organization of this is an strategy. Business sense and not survival, it will be a challenge because now he does not have the crisis mentality to form the Organization Going forward. It will have to be his own leadership and his own strategic he will be able to do that. Qwest thank you very much. Go ahead. Mention,ing i want to i am the president of transportation, my main job. I wanted to make sure that without there. Notintroduction, you had mentioned that and it is important to me. Qwest if it is important to you, it is important to us. Thank you so much for joining us this morning. No better person to get great insight on the subject. Indeed. And our own matt miller, we call him the car guy. We need to put our Heads Together and come up with something. Class we will work on that during the commercial break. Thang up, a lot more movies. We blare from the cofounder. Stay with us. Qwest the 13th annual phil kessel is in full string. Plenty ofo kick up cinema buzz and of course they have. With janespoke rosenthal, who cofounded the Film Festival with robert tamir following the attacks at the world trade center. Stephanie asked her, what has the festival become in the past of years and heres what she said. Class we feel fortunate we have been able to continue the festival. The first year, we did it in 120 days and i do not even think they would have movies. The festival has devolved into good stories for diverse audiences in the world, right here in new york city. It is now not just movies. Class you have got handoff, events, andve people through the destructive innovation projects. Sxsw . It is a great comparison. It will turn into something special. Yearsou think about 12 ago, our reality was vastly different. 12 years ago, there was no google or youtube, spotify, instagram. We were not talking about tweeting. And how youunicated got your message out there was vastly different. All of these different platforms,