Alibaba gets ready for what may be a world record ipo. A look up to one of its earliest investors. A master storyteller. Conclusion of his trilogy he tells us about the business of being an author. It is wednesday in new york city. Nextlot to cover in the few hours. Lets take you to the top is in stores around the world. An activist investor wants to break up dupont. Criticized dupont for. Ailing to meet earnings it will meet with other shareholders to make its case. Eric holder wants bigger rewards for wall street whistleblowers. In a schedule today, holder is also expected to say that the fbi needs more agents in forensic accounting. The Justice Department has been criticized. Of the nfls biggest advertisers wants pro football to get its act together, thank you. It says it is not happy with the controversy. Andled mcdonalds has made a similar statement. The nfl says it is taking action and there will be more to come. Almost done. Is the Federal Reserve is likely to reduce bond buying again. Come it may stop expanding the Balance Sheet altogether. That is what we think we know. O not know our next two guests have it better than i do. The executive director of u. S. Equities for ubs securities. Welcome. Lets begin with this. What is likely to be the most todays fedtcome in meeting . . It has been 100 focused on this term, considerable time. That seems bananas that markets are focused on a word choice, a phrase. Yes. You read the research. They say, it was not exactly six months. The markets will get spooked because suddenly, rate hike expectations in march. To will see janet yellen explain why. We do not think the language gets pulled because we think they will wait for the end of asset purchases next month. And really allow the Asset Purchase Program pulling apart the language. The fed does not want to be stuck with an idea of a six month timeline. They really want to message dated dependency in terms of their past. Themarket exception with two word phrase is a bit overblown. We should listen more to what yellen has to say. We agree with make that basically, we think the fed will lead the language relatively unchanged. What they could do is nuance the market more toward their view of where the plot exists right now. The markets have been consistently underestimating the fed wants the rate hike starts, which we think is either june or july. Everybodyamiliarize with the language so they understand the context of our conversation. The committee continues to anticipate based on an assessment of the factors that it likely will be appropriate to remain the current target range for a considerable time after the Asset Purchase Program ends, especially if projected inflation continues to run below the committees 2 longer run goal. You do not think it will happen. The Inflation Numbers we got this morning were a little bit weaker. What if they did replace considerable time with Something Like data dependence . Step in thed be a direction of where the fed would like us all to be headed here it headed. Of the assetnd purchases, lets make a clean break from asset urges his and then ultimately move toward changing language. As much as we would like to think the fed is local, there is a global element as well. You have got the Scottish Referendum tomorrow. You have got the whole idea that mario draghi is going to have to figure out a way to implement qe. The fed is likely to continue to stay toward the side of giving themselves maximum flexibility, but also toward the size of the the side of using. Fedook at 60 saying the will essentially do nothing, 25 that they will try to move the ,arket with nuanced language around 2. 5 end of 2016, whereas the market is only looking for the fed funds rate to be around 180. Then 15 , the considerable timeline which gets removed. We think the stocks will sell do your how concerned think the fed is . They message concern around asset bubbles in the past couple of months. It seems to have toned down lately, but when janet yellen talked about credit conditions, it sparked a big selloff in the high yield and loan markets. We are seeing ramifications from that. Is that she has got a good reason to be concerned anytime the fed or centralbank keeps rates low, it produces risktaking behavior incentivized by artificial low Interest Rates. They have a right to be concerned. One of the things we are doing in for folios is be defensive in terms of credits we are buying. We are seeing lower quality credits be punished as people anticipate the liquidity going away. Why should these assets selloff at times like that . Then, nothing is happened. It is not like the fed has try to penalize investors for chasing yield. That eventually may happen when the fed starts rates and we will see how fast the rates rise and whether or not Asset Classes suffer as a result, but since then, it is status quo. Trade asw the something currently in place. You do not just have u. S. Investors. You have got the ecb, extremely accommodative. All of the investors will seek yields. That will help with credit markets. However, if we get to the seventh inning and the credit markets, you want to be careful about what credits you buy. If you saw the Sales Numbers and those arex retailers, the credits that sold off. Do you actually think investors are paying attention to that and getting cautious and realizing, maybe i am in the seventh inning . It does not seem that way. Should not have to tell you you are in the seventh inning. I think this is why active management and this type of the credit cycle is important. Ust by beta everything will go up. Credit supplies. As you start to get to the seventh inning, you do not want to leave your credit in the portfolio. I agree. From mark from our perspective, it is fascinating. You go back to when high yields started to weaken. Our incoming call volume from Equity Investors to wanting to talk about credit was off the charts. Sense thatfinitely a credit is part of the tale that is wagging the dog right now. It is all the more so. They really tended toward the mutual funds being the buyer. The tail wagging the dog. It will be a horrible mixed metaphor. Does that also mean high yield becomes the canary in the coal mine . Sees the selloff before we the equity selloff . I do not think i could come back with another metaphor, but yes. We have seen it quite a bit. When we look back to the financial crisis, i remember sitting in my trading seat, and i was in the middle of watching the credit market selloff, and i was watching the dow hit highs and going, why do the investors not understand what is going on in the bond markets . Equity investors are smart and they do watch the bond markets for signals of potential weakness in risk assets. What is the most concerning thing to your business right now . I think over exuberance, at this point. From our point of view, the one thing we see, getting to the next few days, scotland is still an issue on our radar because the yes vote would definitely have market disruptive consequences. Over exuberance, we have got the largest ipo and technology coming up. These are signs that may be proven prudence should rule the day. Really, the exit strategy for the fed. Few fednk over the next meetings, we will get a lot more clarity on the exit strategy and we will need to look at that closely. Are you encouraged that we have gone this far into the taper without any market dislocation . Yes. What is interesting about it is part of the reason rates have stayed so low and accommodative here is not because of foreign buyers buying treasury. It is because of the Housing Market and created an accommodative situation. I do not see a reason were seeing a lot more contribution in fixed income. But i think a disorderly selloff is always a risk when you have this much control by central governments. Thank you both. Great to see you. We will have live coverage of the feds decision in economic forecasts coming to you at 2 00 p. M. Washington time and then, janet yellen will hold a News Conference and we will bring it to you live in its entirety. You can count on us for that and so many other things. The fed meeting, there is nothing more important. Time, also known as new york time or eastern standard time. That is where it is happening. Were locating it. To theng up, a countdown ipo everyone is talking about. Alibaba preparing to price its Public Offering. Plus, how td bank became one of the 10 largest in america. You will hear from him in a few minutes. Will come back. Tomorrow night, the weighting will be over. The most anticipated ipo in years, and then we will know whether id alibaba will be the biggest Public Offering in history. Will the hike make alibaba shares to rich . 20 of questions. I want to bring in a set a very special guest who bought alibaba shares in private markets and also the ceo. You put numerical ratings on ipos and you sound positive on alibaba. We are. We have a 100 point scale and alibaba a 71, very strong. It has got great fundamentals. 71. Compare that to other big tech companies. Sure. Facebook is that a 70. They are quite comparable. Amazon is at a 41. The difference tween those two is quite meaningful. When you look at them Business Models of alibaba versus amazon, you see this differences in the Business Models they hold. There are dramatic differences that really get to the bottom of it. Give us visibility in the way you come up with the numbers so people understand what the variables are. We look at interest statements and bounce sheets and we rate about 30,000 Global Companies now public and private. We look at over 60 financial ratios that a deep into the efficiencies within the company. Because it is an efficiency score, it is hard. It happens to courtney correlate closely. 90 of companies over the last 20 years that have failed have been rated 40 and below on our scale. Companies like amazon, while not a hyphal risk tom a certainly is a much lower health and companies that are at 71, much better. I totally agree. Invested in alibaba for a number of years. You just look at the machine the organization is in terms of free cash flow. His rating might even be a little low. How does one become invested in alibaba preipo . Well, short of buying who should yahoo shares or softbank. And a few other peripheral place. But we have been involved in private investing in the chinese internet market for many years. We are involved in i. T. Shops and technologies, and a number of others. Whenber of years ago, alibaba was looking for private capital, we got to know the business. We did not make the investment alongside yahoo and softbank here they are smarter than we are. A couple of years later, there was a chance to buy some shares from the private equity firm that had given them capital way back when. Some partners were taking the chips off the table. It seemed like a lot of money then but it does not seem like a high valuation at all now. You got rocked you got yahoo rated. When they sell their stake, is the rating going down . It will not necessarily go down. Like Many Companies that get a new influx of cash, it is a question of what they do with the cash. Sitting on your Balance Sheet for the longterm is not necessarily efficient. Ow you use it overall, yahoo has had a tough time. They are having a difficult time proving out that they could transform the business model. The market is evaluating the nonalibaba assets of yahoo at almost zero. The question is, what will they do with the money and what will happen to alibaba postipo. . Come a what do you think of yahoo . We like it. We lyons a little bit of yahoo here. We think it has got upside left as we think people are under him as underestimating just how well the ipo will go on friday. I do notwe think it has got upst that the rest of the assets to not appear to be being managed very effectively right now. At least the market is saying that. It is the negative value through the rest of the business. If you think about what they own and the chance, the chance that they have figured out a tax efficient way to dispose of their shares, you could get a little more pop from yahoo . I think you said a moment ago that your entry points at before alibaba was at a market evaluation of 41 billion. I think it is 33. Or 33, rounding. Timing is everything in investing. Why not take some or all of the money off of the table in the postipo trade and reallocate it to the next alibaba . Two reasons. Mark has so much money, he does not need to. That is not the reason but it is a good point. We would like to be in that position. But no, the reality is, one of the benefits of being able to invest early, particularly in the private market, is you get assets access to a lower evaluation. One of the cost is you agree to a lockup provision. We wanted to sell, which we do not, we would have to wait six months. The reason we do not want to wait is i think people are really underestimating the potential of the company. It is priced at 6668 range. We think it comes out higher, maybe 69 or 70. That is still too low. We think it trades first trade upward of 85. The price targets of 100 are still conservative. We do not mind holding it and we want to for the longterm. The thing that really has not baked in yet is the potential for alibaba to become a global ecommerce company. Most Ecommerce Companies are local. You see yandex in russia or the one down in brazil. Most companies are local. Libaba could truly be global they have become one of the franchise players, one of the global brands. Every brands are created 14 years through the innovation cycle. You have yahoo and google back in 19962000 branding cycle. Alibaba has come out as one of the best brands in the world. We are in no hurry to sell. Your numbers do not reflect potential. They have to be by their very nature backward looking. It is looking forward in the next two years. I agree you have got the potential for alibaba to do great things. If you look at the fact that they have been stockpiling cash, 8 billion in cash, 50 more than amazon has, and it is 50 greater over the last two quarters, that is before the ipo. You add another 8 billion to 10 billion on top of that. I thank you. A big week for alibaba. Coming up, you have read his thrillers for years. Perhaps you have seen the movies made about them and miniseries based on. In a moment, you hear from a bestselling author. X stepping down, we will talk to him you are my hero in terms of canadian banking. What else do we have . The master of the historical thriller, a bestselling author, is out with another one. We will speak to him in a moment. Good morning, once again. Americas most convenient bank, what td calls itself, is actually canadian. In 2004, when the ceo established a beachhead in of all places main, he has been expanding southward. In just a decade, tds u. S. Retail business has grown 40 the size of its Canadian Retail business. It is the end of an era. The ceo most closely associated with resilience of the banks in the financial crisis is stepping down. He yesterday delivered his final public speech and is today back with us on bloomberg television. Great to see you. We can see what td is up here up to here in new york city. I mentioned you continued to expand. Could you envision a day when td, under your successful successor, or his successor, to generate more profit in the American Business . Out be a fun day of we sought. I do not know. So far, the story has always been, we keep thinking that is possible but then our canadian operations does so spectacularly well that the u. S. Operation could never outgrow us that much. There is obviously that potential, but i do not think it is in the near future, for sure. Why is it . That the Retail Banking and commercial Consumer Banking so much more costly and less profitable for you in america than in canada . I think a couple of reasons. First off, we are new in the United States. When you are new, you do not have the established Customer Base. The United States is a big opportunity. We have a phenomenal presence. But we have not penetrated the Customer Base as much. The whole Distribution System themes way more profitable more products you have with a customer. We are much more established in canada. We have very deep penetration of our Customer Base. That is one thing. Secondly, the markets are different. The spreads are about the same on both sides. The more products you have with a customer. But i would say the biggest difference is on the mortgage mortgages are dramatically less risky than american mortgages. That makes it quite different. A good segue into midas question. Where are we in the credit cycle . Both sides of the border i have been surprised how much the credit cycle has continued to improve. I think now we can see further improvement. The u. S. Is clearly recovering. I think it has good growth potential. I would say canada is slowing down a bit. The key to canadian growth will be that it can ride out u. S. Growth and have exports grow rapidly. But i think the basic consumer is not in bad shape and we continue to see improvements on the credit side. On the commercial side, we have had dramatic improvements. In canada, we really did not have significant commercials at all. We went to the downturn with no losses. I was day we are still on the good side of the credit cycle. The next couple of years. Do you share the view or perhaps even worry that globally, the pendulum of regulation has maybe swung too far, that the rules have become too restrictive on banks and as a result, there is not enough credit flow and economies are not growing as fast as they could or should . What i would say, it is the nature of the changes rather than the weight of the changes. The financial crisis came out wrote an article in the Financial Times saying, bring on reform, the faster, stronger, and the better. It was clear the time that a very large number of the world banks did not have enough capital or liquidity. I th