Transcripts For BLOOMBERG Market Makers 20141103 : vimarsana

BLOOMBERG Market Makers November 3, 2014

Low tax rates. If that goes away, what does ireland have to offer . Welcome to a very special monday morning on Market Makers. Happy november. I am stephanie ruhle. I am tha matt miller. Erik is on assignment. We will be hearing from him throughout the program. We will kick it off with breaking news. Economic news. We have big numbers coming out this morning from the manufacturing sector. Michael mckee has the headlines in the newsroom. How is the heartbeat of america . It is beating very loudly and strongly surprisingly. We were expecting a decline in the index. To 59. , it goes way up we thought this was going down. We get a big jump in new orders, a 5. 8 jump. Also a jump in production up to 64. 8 and employment rises to 55. 5. These are really good numbers. Manufacturing had a slump at the end of the summer. Seems to be coming back strongly with new orders that should keep it going. They are starting to hire again. This is the kind of number that should make investors very happy. Good news for the manufacturing sector. Probably good news for those stocks as well. New order, one of my alltime favorite bands. Joy division is what happened to new order. Michael mckee, thank you for giving us the latest. Topm going to give you the level business stories you need to know about this morning. A mixed bag of results for october auto sales. Increases for utility vehicles led by a 2 increase for chryslers jeep brand in the month. General motors says sales were flat coming up short of estimates with cadillac sales down 8 . Ford sales fell for october but still did better than the drop analysts had forecast. Federal safety investigators are months away from figuring out why Richard Bransons experiment to spaceship crashed. He says the ntsb said it was not a problem with the engineers. A lever was pulled early deploying the boom. The spaceship disintegrated after that. Branson spoke to bloomberg an hour ago. They told us to push ahead with the building of the next spaceship and to testing it as quickly as possible. We are absolutely confident ande is no fundamental flaw our team will be working 24 hours a day to get back on track. The crash was the second accident involving a private spacecraft last week. And unmanned orbital science rocket blew up three days earlier. Shares of hsbc following in london. The bank posted thirdquarter profits that missed estimates. They set aside almost 1 billion for costs associated with the probe in the currency rating elevations politicians. Republicans are on the verge of capturing the senate. Americans for tomorrow in Midterm Elections. According to three models, there is a 70 chance the gop will pick up the succeeds it needs to have a senate majority. No need to check models for the house. Republicans have a big majority already and are expected to add to it. More on the two commercial space disasters raising a lot of safety concerns about the forprofit space travel business. Mia has more on what these could mean for the future. Those who are waiting for the first commercial flight, space tourists, are the streams up in smoke . Not necessarily. A lot of people who shelled out close to 250,000 for virgin, many of them have been used to waiting and being patient. Initially he wanted to go into the end of this year. That got pushed back to early spring next year. I spoke to a couple of space analysts. Marco said timing is going to be an issue. He thinks one to three years will be the pushback. Another analyst essentially saying three to five years. Can people get their money back . Yes. Richard bransons heart is out there also. This is an emotional decision for him to say he wants to launch the first tourists in space. Hes willing to refund. It is not a money game for him. He is doing this because he wants to be innovative and a pioneer. He really is. Perhaps one or two people pull out. Is that a big deal in the long scheme . For branson, it is truly all tourism. He has competitors in this space . I spoke to marco at teal group. He said there are four top players. Virgin galactic is the pioneer. They will be the first commercial space line. Others. Three blue origin is interesting because it is another one founded by a billionaire, jeff bezos. They have not given the timeframe on when they want to launch the first spacecraft, but they are looking to offer lowcost offers. Taking a page from the amazon book of finding the lowcost provider. Are you going into space anytime soon . Why wouldnt you if money were not an issue . Excuse me. Why . I have no interest. To me it is unsafe. It is not something i want to do. If nasa is behind it i dont personally feel comfortable with private space travel. I would be there in an instant. Safety is the biggest issue. They need to delineate clear Safety Standards to the public as well as the faa. They have to do a lot more tests. This is the fourth time the Virgin Galactic had a test on the rocket engine. They wanted to launch in the spring of 2015. That is not enough. Analysts say there have to be hundreds of these tests. That will cost money. They need to have that before they put people up in the air. I have kids. I am not jumping out of planes or getting on rockets anytime soon. Thanks for breaking it down for us. Coming up, we are going to talk about the Cashless Society. Did i hear bitcoin . My favorite. 12 days of bitcoin. Moneyare heading to the 20 20 conference in las vegas. It has been one of the favorite tax shelters for american business. What happens if ireland raises its rates . Locum back to Market Makers. Welcome back to Market Makers. Onre is a revolution going in how we use our money. Thousands of people are in las vegas this week to examine that issue at the money 2020 conference Erik Schatzker is in vegas standing by with one of them who is betting on this revolution. You would love it out here. All those Financial Technology nerdy types you think are so cute are hereby the thousands talking about the future of money. That is what im going to talk. Bout now with jordan lets begin with this. Most people dont understand anything about Financial Technology beyond apple pay and possibly bitcoin. Where is the investing opportunity . I think there is a lot. When you talk about apple pay and bitcoin, we are talking about consumers and merchants. Littles ago, there was of it. It was hard to crack in. 10 years later, it has been bearish on mobile payments. Over the last 10 years, a lot has evolved. With apple pay going after consumers, it gives a nice opportunity to help with point of sale merchants accept payments through mobile phones or other mechanisms. Apple pay looms large over this event. Is it not much of a game changer . I think it can be. It is still very early. Less than 10 of merchants have terminals. Needrs need consumers and iphone 6 so that number is relatively small. There are now over one Million People using it. They are making the bet if you deliver great products to consumers, they will use it. That is the bet apple has always made. They have signed up large merchants like whole foods now accepting these apple payments. I think it is starting to work. It is still early days. You have to give to the merchants and consumers. There has got to be a real Value Proposition on both sides. As you point out, it is not like everyone will have an iphone. It is not like every merchant is going to have this terminal for at least another couple of years. There is the big date next year which will force transition. The transition in 2015 could have a big affect. There are people working on next generation terminals that would have the technology. It could be sooner than you think. For small merchants to pay 500 500 to upgrade today, probably is not going to happen right away. Thatat about the movement riteaid to opt out of this exchange . Solution, currency is what they call it, what is your view . I think we have a mobile payment war going on. It will take a while to flush out. I would not bet against apple. Have their work cut out for them. I will say this. The idea that merchants would from 1. 5 tonge 3 , that is a big Value Proposition to merchants. Apple pay has done a great job with consumers. They have early adopters on merchants but they need to continue to give to the merchants to have this twosided network take hold. I think what is going to happen, i dont know with cvs and riteaid, but apple is keeping data on consumers. If they get smart, they will ditch mcx may be. And in turnhesis ask apple back for the data. Pay 150 basis points is worth the cost if you can get that kind of data in return. What is your take on bitcoin . I get asked that a lot. Lensin is all about the through which you view it. It is down off its peak as value but is off to 2 yearoveryear from today. Im not a global macroeconomist and will not comment on historic value. I will say the technology is interesting. Today you can only threeparty transaction online and narrow that down to two parties and eliminate the middleman, that is powerful stuff. There are certain technologies being built on the block, things like micropayments and crossborder remittances. Crossborder remittances, 650 billion get transferred peertopeer. The cost is anywhere from 9 to 11 . Is it efficient . Yes. Do consumers need better and Cheaper Products . Yes. Bitcoin potentially threatens Western Union and money gramm. What other legacy platforms or Business Models are most at risk as a result of what is happening in Financial Technology . I think that is an interstate question. Everyone is still trying to figure out how the world shakes out. I think that is an interstate question. They could be at risk but they could be smarter and figure out how to adopt the queen earlier. Aret of technologies selling to banks to help them get wise to what needs to happen. In and around commercial payments, there is an opportunity for other people to to paywith Card Networks other businesses on existing rails. There are opportunities to pay , but on steroids with remittance data as an important key if electronic havens are going to work. And banks understand this are trying to work with new players in the market because they dont want to be disrupted. In other cases, there are banks that feel like they can build this internally and keep it as a walled garden. We will see how that works out. Of those three buckets, payments, investment, lending, what do banks consider most attractive . We think they are all interesting. With apple pay, on the payment side we are most interested with the b2b payments. Lending, it has all been exciting. I think a few things are going to happen that we find most interesting. One is products will get more public it it. We see new companies focused on commercial real estate, residential real estate, nonqualified mortgages. That is interesting because unlike consumer term loans that are microbased lending, the mortgage industry is complicated. The data you need to collect and how the process works. We think that is interesting. The second piece in lending is this nextgeneration supply finance, dynamic discounting, reversed supply chain finance. All interesting stuff. On investing, we have just begun to scratch the surface. We have an investment in a company being termed a global advisor. Andhink on the consumer institutional side big data has not been leveraged. It has not been leveraged in investing at the way it should. If you think about the average consumer, they typically pay too much in fees and are exposed to too much risk. All this can be solved through better products and technology. There is fascinating stuff happening in technology. Jordan bettman is the senior principal at bain ventures. We talking about technology, innovation, change. Did you notice theres one word i did not use . Disruptive innovation . Disruption . Thank god you did not say disrupt. I hope we have all moved past disrupt. We are going to come back to to with few will talk you throughout the entire day with more exclusive interviews, my own partner at money 2020. Coming up, republicans on the verge of taking over the senate . Paging my mother we will tell you what to look for tomorrow. Welcome back to Market Makers. I am stephanie ruhle. Matt miller is here for this one. This is the talk of the financial industry. I am not talking about the markets or in versions. Im not even talking about carl icahn. In hongy takes place kong, a tragedy, where a former bankamerica and plenty has been charged with the murder of two women in an exclusive Apartment Building. One woman was found inside a suitcase. The suspect is a british citizen. We have they said it previously had an employee by that name. From a b of email a account says hes out of the office indefinitely. It recommended contacting someone who is not an insane psychopath. I dont know how up to speed you are on this story. It is amazing. In a highend Apartment Building wereng kong, two women found in this guys apartment. How does this happen . It sounds horrendous. I immediately think of american psycho. I immediately picture this guy is christian bale. It is much worse. It is alleged he killed at least two people. I dont think being a psychopath means you are incompetent to stand trial. It would stille be liable in a court of law even if you are a psychopath as opposed to the insanity defense where you would not have to serve the traditional the glamorization of american psycho or sociopathic ifavior of wall street guys, that kind of thing leads to this to happen is horrible. Maybe Michael Lewis picked this up after our discussion last week. Here is somebody who would not be impressed. No one would. When we come back, irelands probusiness strategy is more than tax breaks. How to dine and dash. We are not talking about running out on the check. We will have more on the future erik at money 2020. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Welcome back to Market Makers. I am stephanie ruhle. I am matt miller. Erik schatzker is that the money 2020 conference in las vegas. We will be hearing from him shortly. Irelands low Corporate Tax rate has attracted Major Multinational Companies to legally base operations there even as they keep actual headquarters in u. S. A lot of people do not like that. With mounting pressure to end tax inversions and reform the tax code, will their luck run out . Ida ireland is the Government Agency responsible for attracting Foreign Investment. Welcome to Market Makers. Tell us why it is so attractive to do business in ireland. Multiple reasons. I have been hearing these calls for the last week. Wepanies say the talent, have lots of good talent available. In the first instance, dont they mention the Tax Implications . Surprisingly not. An open secret. In my mind, i would think a lower tax bill would be one of the big reasons to move their. You have to be able to do business first before tax incentives come into play. Disproportionate attention paid to tax in ireland. Talent is the first thing that comes into play. Second, we have an extremely probusiness environment in ireland. The rule of law is important so you can protect your investment around regulation. That is important. Taxes do come into play. We have a competitive tax regime. That is one of the Reasons Companies come to ireland. What is going to happen if we do change the laws and is more attractive for u. S. Companies to stay in the u. S. . What is that going to do to ireland as a business hub . I think all jurisdictions compete on tax. It is not just about the u. S. We lock people in. You have your own tax regime which is different to irelands. In terms of Corporate Tax, it is higher. In terms of personal taxation, it is lower. We have a 12 general rate that applies to everything. We have made changes in the recent budget. We have changed our residency rules. If youre going to have your Company Registered in ireland, you also have to be a tax resident in ireland. We have introduced new competitive initiatives around taxation. Like what . Introduce aing to lower income tax rate that will apply to income derived from intellectual property. That is going to be in place by this time next year. Your new regulations have gone the other way. Companies are going to have to and also arehere going to have to foot a bigger portion of the bill, right . There are certain loopholes in the past which are no longer going to apply. We have not had any loopholes, just to be clear. I honestly did not like the word loopholes. I dont like the word. Had certain tax treatments in the past that will no one replied. There are differences in International Tax regimes. Ireland has taken the initiative and closed off one of those possibilities. We expect others may follow suit. I think what that will bring into focus is not really about tax to be honest. I am looking at a pipeline of some of the toptier companies coming into ireland at the moment. I asked the affected continuing to next year. How dependent is irelands economy on Foreign Investment . Foreign investment has been really good for ireland. There are over 585 u. S. Committees based in ireland with 118,000 people employed. Investment, so it is really important from the perspective. We are also seeing recovery and other parts of the economy in ireland. Foreign direct investment worked well the last number of years. We are now seeing returns in the domestic economy and consumption. Ireland is to post the highest growth rate in europe this year. Lets take out Foreign Investment. Lets take out apple and u. S. Businesses having businesses there. What is your economy look like . What are the big businesses other

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