tv Market Makers Bloomberg January 30, 2014 10:00am-12:01pm EST
overnight. we have had the safe haven flow. as long as it keeps going down come you keep checking the other headlines. if it stabilizes -- >> i checked the oil. thank you so much. we are on the markets again in 30 minutes. market makers is up next. live from bloomberg headquarters in new york, this makers" with erik schatzker and stephanie ruhle. >> one-on-one with senator ted cruz. the tea party favorite tells us what republicans will do to counter president obama's executive action. it is a bloomberg exclusive. >> facebook is flying. shares are up after the social network showed third-quarter earnings. tomay have found the secrets making money with mobile ads. >> living it up with the super bowl. is an apartment or electricity more your style? you will wish that you had a sweet manhattan salary to pay
for it all. it is thursday new york city. >> what would you rather do? freeze and sit in traffic or open up a facebook account? >> wow. i will get back to you on that one. >> it is time now for the new speed. top stories from around the world. consumer spending drove the u.s. economy in the fourth quarter. the gdp rose at an annual rate of 3.2%, matching the median forecast. the tumor spending increased by the most in over three years. 70% of the for overall economy. google shares are rising after --y sold mobility unit motorola to lenovo. it held onto most of the patents acquired when it bought the motorola unit back in 2000 well. meanwhile, investors in hong kong sending the stock down over eight percent for lenovo.
, kinder,a world gentler. they will take saturdays off at citibank. they don't have to use their vacation time each year. similar policies and that productivity and keeping bankers from leaving that warm, fuzzy banker feeling. i don't know if i believe it or know what to do about it. do you believe it? >> i believe what they say. i trust people by what they do, not what they say. we will see. you heard about them in the state of the union. now president obama is traveling to wisconsin and tennessee to sell his ideas for improving economic opportunity in america. his critics are busy as well. our chief washington correspondent peter cook is standing by with one of the most vocal texas republicans. senator ted cruz. much.nks very
i'm joined by senator cruz. we appreciate you joining us here on bloomberg this morning. the president is out there talking about a whole range of issues. helping americans move into the middle class. one issue has been talking about his immigration reform. right now, house republicans are meeting on the eastern shore of maryland. they're talking about ideas as well for dancing these issues him including the possibility of giving legal status to those living in the country. what do you make of that question mark is that a move republicans should be making at this point. >> i think it would be a mistake. it house republicans were to support amnesty for those here illegally. we need to secure the borders, stop illegal immigration, and improve and streamline legal immigration. one issue i fought very hard for amendmentsing ag and from 65,002 320 5000 -- any
every senate democrat voted against that. we should secure the border, improving illegal -- improving illegal immigration. the washington journal had an the washington journal editorial -- why is it not move at this point -- the right move at this point question mark >> we need to focus on the top priority of the american people. that is jobs and economic growth. the state of the union this week -- it was striking throughout the entire speech. president obama did not acknowledge once that under his leadership we have achieved the lowest labor force participation since 1978. his economic policies are not working. millions of americans have lost their jobs and have been forced and part-time work. they have lost their health care because of obamacare. that is what republicans a to be focusing on. that is what president obama .hould be answering on his tour
taking account and balloting that the policies he is proposed -- has proposed have not worked. >> we have a debt ceiling showdown once again looming here. is that going to be another opportunity for you and for the republicans to wage their fights over some of these economic ?olicies question ma americans, to any the answer is obvious. of course we should not just raise the debt ceiling without making structural reforms to stop the out-of-control spending in washington. when president obama was elected, the national debt was $10 trillion. over is his -- today it is $17 trillion. the president wants a blank check. he wants to keep borrowing and borrowing. it is important to emphasize something. we know how this will play out. a strategy that the president is scaremonger the
markets and suggest a default of the dead unless he gets a blank check to keep borrowing and borrowing. borrowing so far has resulted in the credit of the united states being downgraded. -- iimplest answer to that am a strong proponent of a bill that i call the default prevention built. it is a bill that says under no circumstances will the united states ever default on its debt, regardless of what happens with the debt ceiling. we will always honor our commitments and pay our debt. the reason it has not passed as president obama and the democrats are blocking it because they want to scaremonger on the debt ceiling. >> it has been challenged by democrat to suggest that ted cruz and others who supported would like to pay china before they pay u.s. troops. >> you're exactly right. harry reid on the floor of the senate attacks me on that and called it the pay china first bill. that is worth remembering.
those same democrats come on about howand talk incredibly responsible it would be to default on the debt. they try to scaremonger against republicans. and we say, great, let's always pay the debt. let's never default on the debt. than they say, oh, that is a terrible idea. it is absurd. of course we should pay our debt. that peoplehings don't always realize is if those in washington -- the president wants to play games. he wants to scare people because the alternative is to actually start living responsibly. the debt ceiling historically has been the most effective leverage for spending reforms 5 times. 50 one of the most successful bills we have had to limit government spending came through the debt ceiling. the budget control act came to the debt ceiling. of course --
>> are you spoiling for a fight here question ma? are you trying to occupy the senate and convince your leadership this is the time for a fight over the debt ceiling? >> of course we should enact major structural reforms. texas, theome to frustration that texans express is that politicians in washington in both parties are not listening to the american people. they're not solving the problems. the america people want jobs and economic growth. it want government to live within its means. washington, politicians in both parties are going them. asntend to continue fighting hard as i possibly can to make d.c. listen. to force this town to address the real problem so we can pull back from this economic cliff. the window to turn this around is not long.
there:ness leaders out ted cruz and say, listen, we understand you are fighting for lower spending, but the debt ceiling, the idea that america's credit will lower, it is not worth it. >> i agree. we should not risk america's credit worthiness. we should never default on the debt. any responsible president -- the president has the authority to take a default off the table. in any given month, there are roughly $200 billion of tax revenues. interest on the debt is 30-40,000,000,000. wouldonsible president hold a press conference, look in the camera and say, under no circumstances will the united states of america ever default on its debt. what't agree with congress is doing but you have my word, we will meet our obligations. the reason he does not want to is he thinks it is politically advantageous to scaremonger and
everyone on wall street who is worried about this needs to call the president and say stop laying games with the debt ceiling. at the default prevention act so we can never again have any question of a possible default on the debt. -- youker john boehner have not agreed with him on a range of issues over the debt in the past 13 months. is he representing republicans admirably in your view in the house of representatives questio? >> i don't really know john boehner. he has his job, i have mine. i was proud of house leadership. i was proud of how they stood up and fought to default obamacare -- the fund obamacare. they listened to the american people. the senate leadership to abandon
house republicans on the field and refused to support our house republican colleagues -- i admire the leadership asked abo. the fight elevated the national debate the harms that obamacare has caused. people understand all across this country now what an abject failure obamacare is. it's that the preconditions for repealing obamacare altogether as it is the biggest job killer in the country. it is hammering small business. >> what will it take to convince you to run for president in 2016? >> my focus is not on the political side. i know it is hard to believe. it is all politics all the time in washington. what i'm trying to do is do my very best to fight for 26 million texans and fight for economic growth, jobs, and our constitutional rights. this administration has demonstrated an abuse of power, lawlessness, an assault on constitutional liberties that worries me. so i am focused on doing my job.
and i have visited just early this morning, and 2016, my view is a voter is that i intend to vote for whoever is effectively standing up and leading. whoever is effectively fighting for free market principles, fighting for the constitution, because we are really in a turning point. we are getting to a point of no return. i believe we can turn this country around. , in we are at the cliff would love to see dozens of candidates all over the country all following that model. standing up, leading, fighting for economic growth, fighting for free market principles, fighting for the constitution. i can't pick of anything that would be better for the country then seeing lots of people leading to pull this country back. >> is hillary clinton going to be hard to beat? >> we will see if she runs. we will see if she wins the
nomination. i think she is likely to get the nomination if she runs. i think her path is going to be much more rocky than many in the media have protected. there is a natural petulant -- pendulum to politics. the obama economic policies are not working. have lostf americans their jobs, forced into part-time work, lost their health insurance. i think come 2016, people are not going to want to double down on policies that have hurt somebody people. in particular hurting the most vulnerable. the ones who have lost their jobs -- they have been young people come hispanics, african-americans, single moms. there have been people like my dad was 56 years ago when he came from cuba with nothing and washed dishes making $.50 an hour to pay his way through college. if he had been washing dishes today, he probably would have lost his job because of the massive taxes and regulations
and burdens on small businesses. we need to fight for people like that 18-year-old immigrant washington dishes. what is made america great is we have been a land of opportunity where millions of people up and able to come here with nothing and achieve anything. right now, that opportunity has been sorely diminished under the obama economics. --we share you for thinking we thank you for sharing her strong views. we send you back to new york. >> peter cook with texas republican senator cruz. what exactly is going to do when the debt ceiling deadline comes around in a few days. again.k you when we come back, it is time for us to turn the page, go digital. who says facebook doesn't get mobile? it seems like they do. for the first time, more than half of its revenue comes from smart phones and tablets.
>> facebook is a lot to celebrate as the social network rings in its 10th year. mark zuckerberg push into mobile paid off. the ceo has new tricks up his lead. as documented in a brand-new business week cover story. he has a buy rating on facebook and a $65 price target. he is with us from portland this morning. our bloomberg west editor-at-large cory johnson. brian, start with you. the most recent development. but earnings from last night. what do they tell you about this company and where it is headed? >> the company is doing very
well. estimates were spooked based on last quarter's earnings because of the concerns about teens, add loads, but these were all unfounded. the focus that investors need is the emphasis on advertisers. on, one second. why are teens not important? at a certain point, of course you're right. if facebook can continue to bring more revenue out of each of its existing users, that is great for a while. but at the company can't grow fast enough, grow that user base, at some point it is going to reach a saturation point and the revenue growth will run out of steam. ofi think this is why a lot people have gotten facebook wrong. they focus on monetization for users. is right way to look at it
monetization per advertiser and growing the advertiser base. facebook dwarfs everything else. they are so far ahead of everybody else. there is no advertiser who cannot satisfy their goals using facebook. is facebook, the goal capturing shared wallet from advertisers, not the consumer. you may be right in the long-term, but the results show present growth per user. the advertising per user is up six percent. even when they made this shift to mobile worries all 300% increase in mobile revenues. the numbers are great. the user numbers also show some strong result. what is the last time you spend money on facebook question mark none of us do. ad sales for monthly active
user up 33% year-over-year. the payments is the only red number on our model. advertisers are paying more to be on facebook because it is a successful place for them to advertise. >> just as brian said, how do they prove that it is successful question mark are you buying things -- all the ads do is hurt my feelings. >> i care deeply about your feelings. advertising is religious. you either believe it or you don't. advertisers make decisions based on the least choice available given b the goals. facebook being that
satisfies the goals of advertisers better than any alternative. as long as facebook keeps developing new products or new segments of advertisers, it captures money from small business advertisers. cori wants to take issue with your point. i want you to explain first why you believe facebook satisfies the interests of advertisers better than any other option. i don't get that yet. the absolutek at potential for facebook, it can reach more people on the web with one campaign than any other supplier. they are your one-stop shop. they can reach half the population in the course of a month. they can target more than anyone else. asking thes actually question, are you selling things off of this question mark you just want to be part of the medium that everybody uses? >> you have to segment users into different basis. unlike google, if you are a
large brand, the conversation that salespeople have is how do you get your spending up. you try to get money there because you think it is a good place to go. is a lot more measurable than super bowl advertising. it can be more defined. what google offers that facebook is not his intent to buy. people don't go to facebook looking to buy something. people do go to google to buy something. >> i think things that people like our baloney. it is things that people purchase on amazon that are real. >> i believe that advertising works. on some level you have to believe that advertising works. >> i just look at what people like and i say, baloney. around,aying watching tv. it is what people do. cory johnson the bloomberg west. >> when we come back, bill ackman. say don't count
♪ >> live, from bloomberg headquarters in new york, this with erik makers schatzker and stephanie ruhle." >> hoping about a government crackdown in a company. bloomberg look at a similar strategy that some fund managers are using for a lending company called world acceptance, and it looks like these managers may have to wait a long, long time to cash in on their bet. it was told to us over and over
that he is a guy that loves to short, but he would never get involved in a regulatory short, because he does not trust the government. >> maybe you could shout, "stop, thief!" you never know what they are going to do. may be. >> the sec turns around and investigates the hedge fund. like 46% of all of the , and itradable shares was one of the best-performing stocks of the day, and this is a company that lends money to people with horrible credit, and they charge them a lot of money, and as long as the government is going to continue to allow them
to do whatever they are going to , it issumably legally not a very good short. this highlights one of the principal problems that hedge fund managers like ac kman may have. they make lots of money. >> get lots of letters. >> the shareholders love the fact that they make so much money. >> that is right. inbut even if bill is right his conviction, this takes deal along, and his investors do not want to wait anymore, and he has got the likes of carl icahn and dan loeb standing on his lawn with a bazooka. >> the market can stay that way
longer than you can stay solvent. >> what about what senator ed , getting regulators to look into what herbal life --herbalife is doing. >> members of congress send letters all of the time. regulatory agencies receive them you very much. you obviously intended this for a public market rather than us." that about her balife. other people are. and do you want to look like you ?re front running
you do not want it to look like you are being led by the nose, even if that is the reality. >> you could ignore it, bernie madoff style. >> it is a scam. the sec was warned about bernie madoff for a decade or so and did not do anything about it, and that was a situation where you could have shorted ernie made off, and the sec would have madoff,shorted bernie "wethe sec would have said,"w do not want to look like we are being led by the nose." it is a great challenge for them to be sifting through it, but it is no doubt that every trade regulator in the country knows that bill ackerman --ac --
ackman is shorting. >> you have chosen to pick on butin one of your articles, i want to talk about somebody else. sheila bair. 2006 until 2011, you had bank getting quoted in places like politico, saying how angered that they were that she was taking the directorship of a bank called santander. she did write a book in which she had all sorts of things to say about the revolving door and that regulators should not be going to work for banks. >> rather than the right of center.
-- the private sector. >> a lifelong ban. she wants a vacation too. >> and you had a lot of the do- gooders who said, "she let us down, and now, we feel victimized." least those who are still living, they were all doing the same thing. shehat does not mean that is not going to do good stuff inside the bank. >> it is among the best capitalized of the spanish banks. and then there are the people at bloomberg -- >> she is not going to be
holding an executive position. she is not going to be supervising anybody. she is going to be on the board. >> and she has perspective that is highly valuable to a spanish bank. >> i would want her on the board if i were them, but the question is, do they want her on the board, or do they want her reputation on the board? a champion of the public. companies when you are on the board are the ones that need to buy a reputation. former heads of the standards board. knows what she is getting into. >> a matter of perception. sheila bair may not feel like she is renting out her reputation, what is everybody else does -- >> a part-time job that pays really well. >> hopefully it is a part-time job, because if the bank ever blew up, it would be a full-time job.
>> is the way this has been handled a lesson for anybody, or maybe not yet? former fdic chairman from never80's, a fellow who got on a high moral horse. fdic, heving the ,ecame the chairman of a bank definitely a critic of legislation, and one of the things that happened after he got there, fifth third got in trouble for violations by the security and exchange commission . nobody says he is associating himself with this fraud outfit. "what a shame he would do that." but sheila bair is different. profile in courage awards by the kennedy center.
we not want something with her experience and expertise? this is what we wanted all of the time, and now we are getting it. is what ir a break, say. >> something happened here. we all ended up agreeing. is a positive. thank you for joining us. >> when we come back, ups. we just got off the phone with the company cfo, and we will bring you that conversation when "market makers" returns. ♪
phone with the company's cfo. i love seeing you in the brown uniform. >> here is what happened. a lot of people went shopping last minute, and there was a lot of demand. i just got off of the phone with kurt kuehn, the chief financial officer. if you have ever been to louisville, that is their chief area where everything goes in and out. have a lot more shippers moving closer and closer to port, and what he said is a lot of people came to get things out last, and they did not have enough doors to unload the ship vince, and that is something -- to unload the ship meant -- shipments, and that is something they have to work on. the other thing that is funny,
they felt very comfortable about the load, that they can manage capacity, and just a few days before that, there was a dallas ice storm. usually, there is a bit of a lull with the packages going out. usually, there is a surge around thanksgiving, and you have a build up again around christmas. they say they never got a gap when things slowed down. he said it was constant and that they had eight days that were the highest ever. bottom line, what do we care about? they are going to spend a lot of money on changes to address these key issues, so that is going to go out. they have also been doing hub modernization. he said they will be in good question. >> the stock was at 105 dollars around christmas time, and it 95 dollars.
aware ofming he is that. >> they are going to have to spend some money. really shocked. this is a well oiled machine. i have been there. you can check out all of the data points. >> they are a logistics company. nothing is supposed to go wrong. they are a logistics company. >> especially the christmas season. that is their super bowl. the retailers that they deal with, as you mentioned, maybe they were not as focused on retail as they were in the past -- >> really? >> one would think that they are super focused. >> maybe they were not communicating as well with ups running"things are faster than usual."
time spent a lot of talking about the problems, and they understand that people were shocked, and they are not shrugging it off. they are going to spend the money. >> cool. >> all right, thanks, bloomberg chief correspondent carol massar giving us the latest on ups. >> the super bowl. are we going to debate logistics? no, we are going to talk about the super bowl. next on "market makers." ♪
you covered, and we are giving you the grand tour. ♪ the 400,000ne of people expected to come to new york for the super bowl? guess what? you are in luck, because everyone, it turns out, is looking to cash in on your stay. starting with this one, an apartment only three miles away from metlife stadium. this is chris. renting this for $1800 per night, and that may seem pricey, but it does come with leftovers. out.ey can clean it >> also, a killer movie collection. a super bowl movie. oh, wow. yeah.h yeah yeah
i only put it up a few days ago, and i have already had five or sex inquiries, so we will see. six inquiries, so we will see. $800 per night. let's go take a look. your standard fare here, the nice leather furniture . yeah, a lot of hotels have a jacuzzi, but how many have a jacuzzi in the bedroom? this is only one of the amenities you will have at the o'connell lodge -- the econolodge. a beautiful got wholesale fish distributorship
right across the way. and then there is the palace hotel. it is part of the 5000 square ite, that make up this su which, by the way, goes for $25,000 per night. i am taking my own private elevator. see you. ok, i do not want to be hypercritical or anything, where bed? mobile heart above my where is my jacuzzi in my room? 420 $5,000, not only do you get three bedrooms and six 25,000, not-- for $ only do you get three bedrooms and six bathrooms. you get more.
>> i love that. three bedrooms and six bathrooms. but what do rich people hate? traffic, and waiting, and you can argue that the e connolly has something going on, that it is only miles away -- the hasomy launch -- econolodge something going on. quick thinking that there is only one thing missing. >> he likes to be hypercritical, but that is his home state. >> ok, when it comes to the listen up. it is a tossup about what people
will be watching. million, andn $99 it was just not all pointspreads. >> she is a gambling addict. what -- >> let's define what prop bets are. the forecast is for clear weather, but the odds of snowing, 3:. duringest temperature game time, any takers? 31 degrees, so below freezing. halftime show is another big one that people are gambling on and making prop bets. it is not beyoncé. bruno mars. and the song would be "treasure
." that is one my kids would bet on. >> who are making these bets? addict.aline >> they are betting she will forget a word. maybe they are nervous. tell, becaused to she is an opera singer. make outot necessarily the individual words when an opera singer is singing. >> she can surely remember. odds that she will forget or miss a word. >> what are the odds on that? >> i am betting that she will be just fine. >> are you making a market for me? >> i am not making a market for you. >> they are being innovative. let's talk about that.
>> innovative or lowest common denominator? >> the people who do not watch for the football part of it will be entertained. you also have the mannings. peyton manning is saying omaha is 27.5 right now. probability in the middle of the half that he is going to ask for a slice of papa john's pizza. the mannings are football royalty. >> what are you talking about? they are going to be up in the row. >> scarlet fu. the media wants to give the manning family some privacy? >>
♪ >> live from bloomberg headquarters in new york, this is "market makers with erik schatzker and stephanie ruhle." >> it may be a win-win situation, and we are talking about google and motorola. whether the fed made matters worse. the picture at time warner cable? it is fighting off a takeover bid and lost 200,000 subscribers , and we will be speaking with the ceo, rob marcus.
down, partnerur erik schatzker. >> and i am erik schatzker. we were talking about those bets for theop super bowl. >> yes, people like gambling. they like to play blackjack. they like to play poker. it is just not clear to me about how many times bruno mars is going to scratch the left side of his head. >> time for the top stories around the world. some say bank of america should pay the maximum penalty in a fraud case. it all has to do with their countrywide unit and the defective mortgage loans it sold to fannie mae and freddie mac. another sign the real estate market may be cooling off. ,ending home sales fell off 9%
and the average 30-year fixed up. credentials,stole credentials for as many as 70 million people. and nasa. giant is making a deal with lenovo. this is less than 2.5 years after acquiring motorola. fromef researcher joins us massachusetts, and with us, our , editor athnson large. first off, what do you make of this news? right down tome
it, this is a deal that had to be made. google needed the ip, but when you think about the complex relationship between google and all of those that are building the devices, it did not seem that in the long-term they were going to be able to be a successful hardware supplier. on the other side of the equation, lenovo is making very big moves. end serverthe low- move last week, and they need to break into the market. they need to break into the western hemisphere, if you will, and this gives them the carrier relationship, some license for changend it lets them their brand profiled in this market, so it makes sense, but, again, from the google standpoint, it was an experiment. they did end up walking away from $7 billion.
who blewe for the guys billions in patent deals? top boxes,e set which they sold, and the handset business, which they sold, and some cash, so they are left with about a 4.2 billion dollar cost for these patents, and the question is, what are these patents worth? it used to be that you sold a patent, and you could -- you sold your product, and you could point to the patent to defend your product, but now, it is the protection of lawsuits, and it is not clear that google got any value for the $4 billion they spent on those. crawford? i disagree. from the google standpoint, they are fighting for the future of the android operating system, and they want to get as much as they possibly can in order to
differentiate that operating system down the line. as one of the eye and ears in handheld computing and smartphones, there is a lot of i.t. there. the downside risk probably beats out the upside that they would have potentially gotten with motorola. >> this is probably a $9 billion patent portfolio, and now we see they got it for $4 billion. from aa great guest on patent advisory service based in d.c., and they have actually gone through and look at these, and it looks like rather they were trying to buffer the thing that the android system was already doing and may have been violating other patents, so they wanted to build up the patent profile that they had. >> crawford, on top of what i do not understand, on top of what he just said --
>> you did not understand what i said? >> no. whatu on or what -- honor erik said. >> why they messed around with the handset operation for 22 months. we know the ceo of lenovo -- at least he and eric schmidt had conversations around the time the deal was done where he expressed an interest, and google just proceeded to lose money for 20 straight months. why>? >> this is where the deal was inside out. google made a mistake, and they should have done the separation early. when you are already established as a smart phone maker or with any technology, for that matter, the idea of building an interdependent rotted, where you are going to meld the hardware and software together -- the
idea of building an independent think google kind of lost sight of it. startingintoxicated by out that way, and they have learned from it. you cannot move from being an open architecture to something that is welded together, and i think that was a mistake. >> you think samsung, the largest seller of google software, do you think that samsung likes seeing motorola -- >> no. that is exactly what we were talking about at the time that google did the motorola deal. how do you supply software to the companies that are ostensibly your competitors? >> recognizing the mistake. >> google recognize the mistake, but microsoft has not recognized the mistake. the nokia handset. >> admittedly.
that said, google did not need , someone else selling motorola phones. they need nokia to survive. littleford, let's talk a bit about that. >> i would just jump in on that and basically say to further that point, their are a few things that are different about the nokia deal than the google deal. microsoft is in a position where they do not have anybody else building their phone, so they can meld them together to build a different experience. additionally, nokia had something like 70 carrier billing relationships around the world, which means you buy the game, you pay for it directly on was phone bill, which really, really important to microsoft and affects their abilities to work with companies around the world, a very different deal.
>> and there is access lenovo did not have before but will have now. >> totally agree, and i think that was a big motivation for this deal. >> can we for a moment compare lenovo buying be motorola business and the other? the idea here, google, in theory, supports lenovo manufacturing the handsets, and for become proselytizers the google operating system, but just how much good was it for lenovo buying the ibm system? microsoft. run >> particularly with the ibm system that lenovo bought, they thought they could really get into china as that i.t. structure grows. they could be even stronger with this set of phones from
motorola. >> do you agree that this is a china plate for android more than anything else? >> i think it could be a china for android. the ibm deal with lenovo, what lenovo wanted there also is they wanted relationships and the thinkpad brand, and they leverage to that with resellers all around the world to have basically a very premium product, and i think that is maybe the mistake year, is that motorola is no longer a premium phone brand -- maybe the mistake , is that motorola is no longer a premium phone brand. how muchome down to those carrier relationships are worth and how fast they can resurrect the brand. there might be a problem there. say, let's not ruled
out the fact that there is a lot .f students in china this does sort of increase the conversation between lenovo and google and potentially opportunities to do some innovative things on the client china, so don't ruled out those kinds of possibilities, as well. >> i think that is an interesting point. from the 30 thousand foot level, big tech mergers just don't work. name one. i cannot think of a single big- merger that has worked. >> hold on. that is a big statement. >> crawford, can you think of one? >> i think efc. >> totally agree, but that was not a big company in the purchase. android was a tiny, little thing
when it was purchased. look at oracle. look at aol time warner. at compaq hp. we have seen this over and over again in technology and will continue to. >> all right, crawford, chief researcher, and our own bloomberg editor at large, cory johnson. >> casting votes on emerging markets, investors are pulling their money out. we will have that next on "market makers." and this ceo has a full plate. more subscribers are cutting the cord. we will be speaking to robert marcus from time warner cable. ♪
i am erik schatzker. who do you blame on the emerging market meltdown? investors are pulling money out at a record pace, although it was increasing a bit today. with us here, our economics editor michael mckee and a guest. months been talking for about how the withdrawal of federal liquidity would create havoc. is that what we are witnessing? >> to some extent, yes. i think there are good reasons for certain countries to suffer from the fed reducing liquidity, but it is a big deal when you look at the world, because of the fed liquidity injection, some let loose on monetary and fiscal policy, and they run serious fiscal deficits. >> here is the problem though. we knew this was going to happen. we knew that they were running fiscal deficits. we knew that they were running
current account deficits. we knew that ben bernanke or janet yellen were going to turn off the tap eventually. we knew we were into the second phase. is a verythat this technically driven move. about a crisis, they realize this is no crisis after 30 years. it is just people investing in their own time. most of the countries are devaluing because people just and long at the wrong time, you see the big difference between the 1990s and now. most of these countries do not have the exchange rates, so the evaluation before meant a major, systemic shock. people panicking because of that, i think they are making a mistake.
>> this is a little bit of what is happening now, as diego said. the philippines is a good example. the philippines reported a very good gdp today, just like the united states. their economy is in much better shape than a lot of other countries. there currently is under pressure, but their stock market is higher for the year. >> diego, you bring us a perspective for an investor active in latin markets. let's bring in the governor of the reserve bank of india who spoke to bloomberg television india earlier today. international monetary cooperation has broken down. industrial countries have to play a part in restoring that, and they cannot at this point wash their hands off and say, "we will do what we need to. you do the adjustment."
we will do the adjustment we need to, and, certainly, in india, we are doing that, but they may not like the types of adjustments we are forced to do. >> so what he is saying, essentially, is that the fed may not acknowledge that its policy had an enormous effect on emerging markets, but they must, and because they must, they cannot just think in terms of what is good for the american economy alone. >> it is interesting, because he comes from the united states, so he is very well aware of what the actual situation the fed faces is. i suspect this is more for domestic liberal consumption than anything else, partly because he knows the fed has to act in the interest of the united states, and they do not have the tools to help the emerging market countries, and partly because he knows it is an empty threat in the end. there is nothing that they can
take as a step to hurt the united states that would not hurt them down the road on their own. >> they are being very vocal about the u.s. running a loose monetary policy. for years, and now, the complaint is the opposite. you gave us a lot of money, and now you are pulling it out." >> fed policy encourages investor behavior. >> and then shifting the risk of somewhere else. again, most of these have the benefits of banks. doing this without affecting the credit worthiness of the country is i think what matters. now, there is no need. much,the past week, how diego, does this anticipate action in the future? i guess what i am trying to say is, are we going to see more of this, or is the market already
factoring in the tapering? >> suddenly, people are taking profit with risk assets, and you look at points of vulnerability, and some countries were crying for that correction. term, a lot of this has been exaggerated, and to some point, the way they look at it, there is some lateral damage. we have discussed this in the past. venezuela and argentina. they run current account surpluses. it is not like they do not have problems, but they have dollar assets, 20%, as part of this scare that has nothing to do and thise countries, feels somewhat technical, and some of these adjustments are good for the economy. >> how long does it last? >> i think you will see people
going back to high-yielding assets. >> there is one thing we have not talked about here, and that is china, because the chinese economy is slowing down, and if there is one fundamental problem with these countries, they do a lot of trade with china, and if the economy slows down, these exporting currencies are hurt. you see the effects in australia, as well, but anybody who trades with china will see the effects. >> excellent point. is this a technical move or something more fundamental? i guess the jury is out. thank you. and michael. coming up, he calls obama a scaremonger, when we have our interview with ted cruz. you are watching "market makers ." ♪
♪ we are approaching 26 minutes past the hour, and time for a check at the markets. look at the dow. 4.5% thus farwn this year. we have a final reading on fourth-quarter gdp, coming in line with expectations. there is some underlying strength, perhaps, in the u.s. economy. people are always concerned about the level of inventory building. >> people have been so panicked. if they have not been selling, they have been sitting on their hands, in the market with little conviction. we come back, everybody, republican senator ted cruz talks immigration, that that ceiling, and hillary clinton's possibilities in 2016.
trying to rent a cable company off and off -- fend takeover. , let's on cable and m&a try to put this in perspective, while betty liu is going to be speaking to rob marcus shortly. what is he going to do? is $50 he is going to do million. >> right. at this stage, he basically outlined his operational strategy today during his conference call, but what investors want to know is, is there a chance that he will come back to the table with charter, if charter is willing to bump up .ts did a little bit >> aren't we in hostile territory? >> i think what we have heard today is there is no indication that he will do that, and i think that is what he will bat.
if they come and meet our demands, it is one hundred $60, $100 of which is cash -- it is cash.$100 of which is >> they do not care? >> there are two camps on this. >> i am not surprised. it is interesting, because rob marcus is a new ceo here, and you would think investors might give him a chance. he has got a new team. let's see what you can do. that said, he has been the coo for the last couple of years. >> this is not go fish. do they really think, what is management style?
>> probably not. time warner cable is sort of on an island here. they can talk about operational things all they want. >> let's give him a chance. come on. mentioned there are some good customers. the customers that stuck with time warner are paying more per month on average than they were, and it seems like a lot for a me, but they lost more subscribers, on top of those lost last year. how does rob marcus -- what does that do to his negotiating position? to lose that many subscribers? can ask him. you keep losing subscribers quarter after quarter, give us a specific plan on how to turn this around. the jury is out. this past quarter added subscribers. will we get to the point where
time warner cable can, with a product and a packaging plant to get them to that point? >> they lost those. towe know who they lost them ? >> it is a combination of losing fireso verizon fires -- -- fios. many of those people did not have cable to begin with, so they did not defect. some may be getting the internet. >> the video matters because it is a value added product, whereas broadband is a commodity . >> they would argue it really is not a commodity because their speeds are faster. we will see. their speeds are roughly the same. >> the decision to go with time warner cable versus fires -- fio
s, just for another five per second? >> the bigger time warner is, the more dominant it plays are. >> table companies have that option. the percentage increases with time, although it has slowed because both verizon -- cable companies have that option. you are right. in some regions, time warner cable is going to be the only game in town, and they have an advantage. hate it bute i cannot get out of it. >> you and many others, but to that point, the question is, would you be happier if the charter management was running your system? or in this situation i was reporting where comcast was going to buy into new york city, would you be happier with comcast, where you would be in
that same marriage? >> if you are a tortured catholic, you are a tortured catholic. a queue so much. i know i cannot wait to watch betty liu sit down. and she will be up with rob marcus, of time warner cable, in just a few minutes, so you will definitely want to be around for that, and if you missed any of our interviews, you can catch them on apple television, including on demand video. ♪
the market who likes the sound of that. >> i think he is looking for a showdown, maybe not a shutdown. that is not in the cards, but it is clear that ted cruz has some very strong views. these issues are really in debate. of course, we have got the that ceiling fight coming up at the end of february. there has been a lot of talk. what are the republicans going to ask for in exchange for an increase in the that ceiling? it is not clear, but ted cruz made it clear he thinks the president is the one playing games here, scaremongering the public. take a listen. >> when president obama was elected, the national debt was $10 trillion. today, it is over $17 trillion. it is now larger than our entire economy, and what the president says is he wants a blank check. he wants to keep our wing and borrowing. >> the reality is, stephanie
there are many who want to take something symbolically and get they. there is a threat could get mired in something. he is not prepared to support an increase in the debt ceiling, but the question is, how many republicans feel the same as ted cruz right now? >> what to take away from the immigration comments? some feel that immigration is the one thing we could get progress on. >> we are seeing it already on the eastern shore of maryland, where they are meeting behind closed doors with the possibility of moving forward with a compromise on immigration, maybe not what the president wants, but maybe some legalization for those immigrants already here, not a path to citizenship, and i asked about this, and here was his answer. >> i think it would be a mistake and house republicans were to support amnesty for those here illegally. in my view, we need to win close
-- to enforce the borders and stop illegal immigration. >> going forward on immigration, going forward, ted cruz is going to put pressure on republicans to stand with him, and i asked about john boehner, and he said, i do not really know john boehner. he has his job, and i have mine. it gives you an idea of at least some of the tension between them. >> inside the beltway. it does make me feel anxious. anyone who is trying to tell the narrative that progress is being made, we are not where we were a while ago, and then we listen to ted cruz. what do you think? >> it was striking that he said he does not have much of a relationship with john boehner. john boehner disagreed with the decision to defund obamacare, to force that government shutdown.
they disagreed on those issues. he would not flat out say he does not support john boehner going forward, but, clearly, they are not on the same page. >> all right, peter, thank you. that is our chief washington correspondent, peter cook, with our report on ted cruz. cruz does not know john boehner, who does? >> coming up, we will be sitting down with our own betty liu. stick around. ♪
why now? >> we issued our earnings announcement this morning, and given the circumstances, we also took the opportunity to lay out our three-year earning plan, so it seemed like a logical time to speak on the whole charter situation. it is not that we have not spoken about it, it is just that we have not been on tv. >> you beat expectations, but you continue to lose subscribers, 200,000 in the last quarter, and that is on top of the 800,000 in 2013. >> you are focused on video subs, and i do not want to s at all, buto sub i do not want to make any bones about the fact that 2013 was a tough year for us as far as subscribers, but we closed the year with good momentum. december was a very positive
month. it's that, as we went from october to november to december -- in fact, as we went from november to november to december, it in print, and that continued in january, and from the perspective of net adds, january is actually the best month we have had in years. >> net adds. what does that mean? >> customers. >> the question to you would be, how do you make sure you stop the bleeding there? >> we are absolutely focused on ultimately growing video subs and focusing on the customers, and that is the ultimate focus. first, we have to focus on initiatives that are already in place on both the customer acquisition side and the retention side. over the course of 2013, we modified our offer strategy, and we also spent a lot of effort in
proving our retention capabilities. both of those are starting to bear fruit. our video subscriber performance also improved sequentially over each of the months of the fourth quarter, but probably more important than anything else, we are making great strides and making great investments in improving our overall customer experience, and video is a so we havet of that, launched our most recent cloud- based guide on close to 3 million boxes now. it is a totally different experience for those customers who live in new york city. they can see that. it has a great vod portal, a muchd search, so it is better experience. we will be rolling that out too close to 6 million boxes by the end of 2014. >> but, rock, charter communications, there believes is no matter what time warner rob, is doing -- but,
charter communications, their belief is no matter what time warner cable is doing, this is a change. there are scale benefits associated with consolidating. we acquired inside several years ago, and we achieved meaningful synergies, and it was very meaningful. >> you just do not like the charter bid. >> is significantly undervalued as the value of our company, and it is also significantly lower than the value we think we can create on our own -- it is theificantly undervaluing value of our company. >> a price that you think is fair for time warner cable, what can you live with, rob? >> when we said we could do a transaction at $160, to be
clear, that number does not stand on its own. currency matters. we were talking $100 in cash and $60 in charter stock, 20% up and 20% down, because we had concerns about the way the charter stock would trade between signing and closing, so we really believe it needs protection. >> at is the price you believe. >> right. you do not think you can live with something less than that. transact,ter wants to $160 is the terms we laid out. >> there was the ceo of liberty media, which has a 27% stake in charter, and they are behind is what hend here said about time warner cable. >> ok, i am ready. >> they have put forward that they are worth more, but the
opera and performance, losing more than 800,000 subscribers does not merit a growth multiple, does not merit on citizens in their growth plans, and our job, among other things, is to make the case to the time people that this is worth more. >> charter and liberty have energy as they have bashing our company and denigrating the management team and at the same time coveting like nobody has before time warner cable as an asset they would like to acquire. what i would say is, let's focus on the go forward plan. we have a robust operating plan that we intend to fully execute on that will create more value for our shareholders than what charter has put on the table. seem a littleht bit strong of a word when you hear from shareholders who say they also believe a deal could be done. $132.50, but maybe
something in between could be helpful. >> rest assured, we have spent a lot of time talking to our shareholders, and we have been articulating this. agree with you? >> i have not heard a single $132.50 is the right number. >> i have not either, but somewhere between that. $140, let's say. >> we have made it clear that we are very confident in our ability to do our plan and create value. if a sale is going to take place, we think it needs to happen at a level we have articulated. >> have you considered a deal where you take over charter, put a bid in? >> the fact of the matter is in one way, shape, or form, charter has been off the block for most of the last several years.
we have had an opportunity to look at it, and it is not a company that has potentially interested us. >> comcast is apparently looking at working with charter communications and buying some of the time warner cable assets, so they have taken themselves out of perhaps a joint and with charter. more palatable to you? >> what matters at the end of the day is the value delivered to our shareholders. i do not think anything else is of value in the equation, meaning price and currency. if, in fact, it makes it more likely for that to be achieved with comcast participating, i guess that would be more interesting, but short of that, no. >> rob, on a final note, what do you make of the case that time warner cable should be a standalone company? how do you make that case? >> i will say what i said before. we are very confident that we
can create more value than the charter proposal by running the company pursuant to our current operating plan. that is what our job is. our job is to maximize shareholder value, and this is based on the offer currently on the table. it is running the company ourselves. >> by the way, have you had any conversation with him at charter at all? since this came out? >> since the date of the public offer? no. >> all right, great to see you. thank you for stopping by. rob marcus, the ceo of time warner cable. stephanie, that to you. >> rate conversation, betty, telling betty liu that they can all go away if they are not prepared to go up to $160. he wants to focus on the go forward plan. i say good luck. >> their shareholders are saying, let's go. >> it is 56 minutes past the
hour. that does it for "market makers ." here is alix steel. >> thanks so much, guys. we are going to dive into derivatives. rising today, a company that makes treatments for diseases like ms, alzheimer's, and parkinson's, and their earnings come out tomorrow. joining me from dallas with his options strategy is a strategist. i was looking at your trade. it is relatively optimistic. why? ,> my algorithm shows they beat with 83 being the consensus on the street. will see a lotwe of detail tomorrow. they are sort of high level, early breast cancer treatment drugs. they are moving into trials. i think there is value there.
they have got a lot in their pipeline both in mid-and late stage, but i do nothing tomorrow is going to be a big day in terms of decisions. positive earnings. i think the way to play it is just to get moderately bullish. , am selling the february 47.50 and it reduces your risk down to about 1.75. again, markets are not predicting a huge move. >> what are the options markets predicting? >> about five percent here, and believe it or not, the skew is to the upside, so many investors making a bullish bets, if anything. >> i just wonder if it gains any kind of traction off of a number, what kind of catalyst would that be? >> one of the things to look at is that the stock is down about 17%, 18% from its highs just a arounds ago, and right
$47, there is a lot of good support, and i think that is a safe bet is i am going to play much options trade right at or below that level. >> would you want to buy the stock for a longer term as opposed to a short-term options trade? >> a longer term trader, for you guys out there, there is a positive horizontal skew, which means investors are predicting more volatility for them in the coming year, obviously because of the maturity of these drugs. the bottom line, if you are going to go along, maybe january of next year, maybe something like the 40 call or the 42.50 call. companyential for the to increase dividend by five percent tomorrow. anything like that a game changer for you options guys, or you just want to trade that volatility? >> not really. to have to be a professional understand if you're going to go longer-term, which i do not. >> ok, thank you. we really appreciate your trade
on abbvie. and more markets are trading. u.s. stocks are really shaking off the emerging market woes, as well as home sales that were down, a pretty big disappointment. you see the dow there, up, and the nasdaq up, and there is the story about facebook having killing earnings after the bell yesterday. we are on the market again in just 30 minutes. "lunch money is up next. ♪
♪ >> welcome to "lunch money." i am adam johnson. facebook hits huberty. and game day, get a room. finding a bed at the super bowl ranging from the expensive to the less expensive. central bankrld, smacked down. the indian bankhead is not happy. and we will look at the business of transforming stadiums. and finally in sports, pro football. dan reeves oh has the big