tv Market Makers Bloomberg May 13, 2014 10:00am-12:01pm EDT
>> live from bloomberg headquarters in new york, this is "market makers." >> at&t gets the picture. it is in talks with directv. the price is about $50 billion. >> the gift that keeps on giving. show marissa the money, the yahoo! ceo spent more than $1 billion on tumbler but has not seen any real revenue. it is a tuesday and you're
"market makers."loo for the new speed, the top business stories from around the world. pfizer's ceo is making its case for hits takeover of astrazeneca. they are worried it will lead to job cuts. and coca-cola is getting more into coffee. coke is raising its stake in green mountain. 10% stake three months ago, and driving -- are trying to make a system for making singleserve beverages. quickly may be on the verge of
an yet another deal that would shape the talk communications industry. at&t as poised to buy direct tv for about $50 billion. we broke the story, and alex is with us now. we have known that at&t was hoping around and interested in direct tv.indirec what changed? >> it seems as though at&t is committed now to not only getting into the satellite-tv business, but buying directv the mindset of dish, i think comes as a surprise to some people who assumed that if atg were to take the leap into the satellite-tv business, they would go with dish because this has wireless. wireless spectrum was the big asset that they wanted a few years ago because the more
wireless you have you can build out your lte network. caseis seems like a good to buy dish, so why directv? >> exactly. at&t must value certain aspects of dreck tv more than --. what could they be? >they have a growing, profitabl, profit.erican they could go in there and pair up with a wireless product that they could build out. does have wireless spectrum in latin america. directv's business is better than dish. average perhigher user. better premium content, a stronger brand but they have nfl sunday ticket,
they have the audience network which has some schools of content -- exclusive content. dish has been known for years and years as sort of a lower-cost, and not highest-quality products. they have billions of dollars of free cash flow that at&t is attracted to. they are willing to pay between $95 and $100 a share. thinkinganalysts are at $100 a share, directv could still be an expensive proposition for at&t -- and inexpensive proposition for at&t. it is probably an easier regulatory cell. these two businesses do not actually overlap.
at&t universe does what cable does, but if they merged with a cable company, that would be the overlap. to your home, television to your home, and mobile. they could turn their universe broadbandto the only product. after the time warner and comcast cable, anything goes? >> that is the question. i'm working on a story today to get to the answer of that. does the concept of the time warner cable deal, just make an opportunity for a lot of other telco companies that have been thinking of deal for years to get into the game? this could simply be open season
, or is comcast time warner cable a one off, and regulators will say that that is ok, you really do not compete against each other. or even in this limited competitive atmosphere between he atg and dreck tv over luck, maybe this would say this is not ok. my guess is that they will say t-mobile and sprint has the biggest hurdle.r -- regulatory dish is the one that is left without a dance partner. ceohe thinks he is ok, the described it as playing poker, and you need to sit back and wait for the chips to fall and you can still the plot. ot. but the question is are there any more plots to steal -- pots to steal?
charlie white did beat out again this year on trying to do a merger. a terrific rundown on what is going on in telecommunications. getting busy indeed. >> but at the end of the day, will this make it cheaper? >> probably not. but you might be able to get all bundled together. if you had at&t service, you can pay for it on one bill. >> thank you. twitter want you to be more social while you're watching tv. we'll talk to the cofounder of twitter. >> plus the return of michael jackson. ♪
>> this is "in the loop." -- "market makers." bring social to your tv. that is where amplify comes in. this is a service that let broadcaster networks put clips of what steve heavey -- must see tv in your twitter feed. amplify is about a year old. tell us how it is working. >> that is right. it is going great. we started about a year ago. we have about 70 partners in over 10 countries, more than one partner has joined per
week. >> beyond the number of partners, how do you measure the success of a service like this? what are some of the metrics you use, and the level of engagement that it is driving? there are questions about the level of engagement on twitter. >> the whole idea for the program came out of the desire to give users content that complemented their tv watching habits. in theht now we are middle of the nba playoffs that we are working with the nba and retellingxpress to do -- real-time highlights. towhat are your reactions having to wait for a 10 second clip? >> it is one that are
advertisers anticipated. in the first programs we had advertisers creating custom extra short pre-rolls to get a user quickly to the club as fast as possible. -- to the clip as fast as possible. it is about the same length as a vine. both to fit in with the native experience of twitter, and to make sure it is a quick spirits for the user looking for that experience. andeasure for each partner, give feedback data back into new programs. the engagement rates have been really great. >> twitter, as you know, reported not long ago that ad revenue made up 90% of revenue in the most recent
quarter. >> we're focused on getting the real-time content off the tv on onto the phone. that works with our brand advertisers as well. >> is another point yet where amplify is making a meaningful contribution to total revenue? not put a label on the contribution. i will say that it is going well for our partners, broadcast boards and otherwise. -- sports and otherwise. partners wember of have cited a short time is testament to that. quite how you break down what getmedia rights holders versus the advertisers? service for our broadcast partners, a new way for them to generate revenue. video, theirse is
adversities is a guest -- their expertise is broadcast. we get them into the social conversation which is are our expertise. >> twitter is user sponsored content in a way. how do you prevent them from getting too colonized and advertisers and marketers? balance's always a nice of organic and paid. if you think about what happened on the oscars, that is a great example. the selfie that alan took was not a paid promotion, but it reached 3 billion people around the world. runningame time we were sponsors include sansone with sansone backstage. there is always a give-and-take between the organic and the page.
weird to be dreck what is best for the user experience there. great people at ago on twitter and see that cool clip from the night before. what about other industry ventures that you're making within the sphere? >> amplify was primarily focused artistsnt replay, but are very early on surprised us format thattions of we never would have anticipated. the weather channel will tweet live weather maps to people in the path of the storm. we currently have the colbert sharing screen content from their shows. the news has really taken off. we are partnered with the folks likews, and the new york times. there are a lot of different applications of this particular tool that we never anticipated. we are really happy to see both advertisers and partners coming to the program. >> thank you for joining us.
what looked like a classic run on the financial system. were people are lined up outside the bank, but you cannot see it because it was in the modern financial world, on a screen, but not the street. >> a number of steps to prevent another crisis, but nothing is full pulled -- foolproof. >> we are absolutely global -- vulnerable to another panic. it is inherent in the financial systems. you cannot eliminate it, ban it, or prevented. you can do a lot of things to andce your vulnerability, dodd frank, however messy and imperfect is a powerful set of reforms. >> you can see all of its interview with charlie rose tonight on bloomberg tv. >> timothy geithner also wrote in his work that he was open to
some kind of solution that would have kept the lehman brothers in business. bernanke was not, and so it went bust. years later, they are still feeding on the remains. how is it that five years later and they are still making billions of dollars? >> i think it has been a surprise for a lot of hedge funds that the trade has gone this long. it seems to be one of the best day u.s. distressed investments right now. the sheer size of the estate for lehman was surprising to hedge funds mother has been so much debt, but the value of the assets in his estate has really surprised investors to the upside because the bank lawyers and restructuring firm have done a really good job of adding
value to the assets and the estate through litigation and settlement. >> what kind of players are in the market? is this something where eric and specificnvest, or people? >> it is a very specific set of hedge funds. really just is a lot of hedge funds and a lot of the big hedge funds. >> is there any sense of about how much longer this trade has to play out? >> there are different estimates. we have heard one year to three years. actually much longer to play out, and distributions are doing billing -- dwindling. new claimstill coming to market that were not available before. >> what changes it?
what disrupts the whole thesis? >> at this point, i think hedge funds has made their huge gains in the bat, and they are pretty please. they are trying to milk the rest that they can out of the that. -- out of that. soaults are very low, there's not much more to do in the u.s. besides energy future holdings. order for them to have taken the position that they have got or may yet take, somebody has to sell. who has been selling this debt? holders werehe banks like morgan stanley, but they did not the debt -- want the debt, so they sold it to their competitors. it isat has changed, so not thanks again hedge funds, but it is a great trade. sadly for a lot of the banks
that sold, it is not as good for them. the positione in would likely be training with another hedge fund at this point? >> probably. a lot of the holders are hedge funds, they want to open trading throughout the years, and are about 20 hedge funds that were part of this bankruptcy. >> anything that has really stood out? >> lehman brothers europe has been a good subsidiary. there've been some that have gone from initially trading at $.20 on the dollar, two raider than 100 cents on the dollar -- to greater than 100 cents on the dollar. >> really. amazing. thank you so much. >> we are approaching 26th at
the hour, so it is time for on the markets. one particular stock, green mountain is soaring about nine percent after coke boosted its stake in the company to 16%. they are now the largest the one hand you have them desperate for some kind of business that might rely on sugary drinks, and on the other hand they will produce and sell coke brands at their brewer. the synergies for these two companies might be in place. >> a terrible day for david einhorn, whose green light a is short. >> coming up, why google calls this really disappointing. ♪
is "marketis makers." >> welcome back. tuesday. europe's highest court has served a major slap in the face to the internet giant google. the european court has ruled that they have the right to be forgotten, and say they have to remove people sensitive information from search results. does that mean that i disappear from europe altogether? whatever you did on your
vacation could be erased from the internet. it sets up this notion that people have a right to privacy that they can demand from these companies. while this may be part of public record, may not be searchable unless you have the right to remove it from the web. it goes against the notion of publishing, but it does put the onus on these companies to god what data they have and find ways to purge it from the system. >> how do i apply for this? this came out of a disk viewed in spain where a guy had lost his house to debtors, and that had become part of a public record command he wanted to get that off of the internet. he sued google, and they went to the eu court for guidance on how to deal with this, and how
it related to spanish privacy laws. and now they have a responsibility to listen to this guy's request and remove him from the search result. petitionght be able to google for such a release and have their information removed from the web. >> do we have any ion abrasion -- information on the standard they have to meet? company, if for any particular reason they do not want to show up in the search results? >> is the public record public at all if it cannot be searched? question fundamental of what is on the web and off the web. as it applies, it is only to a
person, not a company, and it must come from the person to the search engine to be removed. the obligations of this are vastly unknown -- implications of this are vastly unknown. what about other search engines? >> this is really uncharted territory. we do not know whether this will be applied and what it could mean. -- where this will be applied and what it could mean. this has tremendous applications to the very business models of a lot of companies. google has been facing a lot of issues in the eu about privacy, and issues where google street view was taking pictures when people do not expect other picture taken, and those were required to be taken down. google has been the target of a lot of privacy concerns in
europe, much more so than in the u.s.. >> is the u.s. next? are we going to take a cue from europe? >> it is interesting that when it comes to a lot of these issues we would think that the leadwould take the are more likely to survive overseas. >> fascinating. i cannot wait to see how this layplays out. thehen we come back, late king of pop, michael jackson. ♪
>> it is time for some bloomberg west top tech and media headlines. a thirdw has more than of the mobile phone market in japan, a year ago that sure was just about 25%. if credit to their largest wireless carrier which started selling iphones in september. china has blocked residents from using facebook since 2009, but now facebook is taking steps to open a sales office in china within the year. will be working with advertisers who want to international audiences. michael sam's jersey is the second best seller among rookies, only johnny manziel felt more. -- sells more. >> michael jackson has been dead for nearly five years, but today sony is releasing his newest album. it features reimagined songs
from his extensive library. -- what is different from his old albums? have been rereleasing previous songs, special editions, commemorative things. this is interesting in that it takes a lot of stuff from the jackson archives and put a new spin on it. they brought in talented , who has, l.a. reed been leading the charge, and they said let's try to keep the flavor of michael jackson, but in a way that will make it appealing to everybody. i do not think that is hard when we talk about michael jackson. >> he is universal. what does this mean for sony? >> this is really important. when you're paying so much money, i think the early math on this suggests that this is a
tough road. ais is a difference between hit record and the ability to make money off of it. over aid $250 million seven-year stretch to put out 10 albums. you're talking about 25 million albums to 30 million albums. there's licensing opportunities they looked at, there's a new jeep commercial where they are highlighting the songs. that money is nice to have, but truly you need to be selling millions and millions of copies, whether they are physical or digital of this album to make it a success. >> michael jackson is one of the best selling artist of all time. do they tend to make more after they pass away and do these rereleases? >> i think it depends on the
artist. the estate has been making an incredible amount of money since his passing. you think about other artists, the ones that reinvented themselves after death. they are able to generate money through just not more albums, it is about being able to take the show and bring new life into it. there are a lot of cirque du soleil performances that involve michael jackson. ? ct --es that refle people in their teens are not going to see cirque du soleil does that mean that his fan base is aging, along with the rest of us? there are not that many opportunities to turn the king of pop on to a younger audience.
>> that could be part of it. make sure once to that the brand is well represented. i think when we say cirque du soleil, michael jackson, you get the idea, it is almost a no-brainer. you know that they are not going to do damage to the brand. i was dancing in my kitchen last night with my daughters with this new song, which sounds like a song from michael jackson that could have come out in 1983, which is when it was actually written. i do not think there is a date of issue here on thing relative -- staying relevant. >> was that thriller? were you doing the dancing? >> always. it is a weekly event. >> thank you. tumblr tryp, to keep their startup mentality while being part of a giant. ♪
interest of their shareholders. from london's point of view, it is not a lose lose proposition. this is a mostly win proposition. the harder questions will come and the u.s. congress. you want to see pfizer give job reassurances in the u.k., but will it do so here in maryland and delaware? congressg risk is that takes steps to prevent deals like this from happening, possibly backdating or making retroactive legislation to make pies are able to buy after that i can -- pfizer not able to buy astrazeneca. to's put this question potomac research groups
chief political strategist. that democrats and republicans are at loggerheads over everything about what is the chance that congress could act to stop this deal from going forward? >> is an election year, and democrats need issues. they're itching to take a stance on this. chances are slim we could get anything through both houses, but if there are more deals and in addition to this pfizer deal, if we have three or four more announced in the next few weeks, then i think there is a decent chance that the senate could futuregislation curbing so-called inversions. once the senate acts, there is a chance of getting something to the house, but it is below 50-50. >> is there breaking point for the house? >> you bet.
an achilles' heel for the republican, who are looking , itty good for this election think it has to be the fact that on issues like minimum wage and unemployment benefits, they look weak and they look like they are not defending workers. of these deals with companies saying we are leaving the u.s., even the republicans might get nervous and agree to something. you would have to see a lot more deals. >> why is this part of an issue at all? surely they look at some qualities of these tax and version deals and see the same thing, the loss of u.s. corporate tax revenue. >> at the core of this entire argument, it is the debate over whether we are going to have fundamental overwhelming tax reform, or do it piecemeal. a lot of republicans, and quite
a few democrats as well are saying let's have a sweeping tax reform bill. they would like to deal with things like this, and repatriation earnings coming back to the u.s.. they would like to deal with this in one big package, not piecemeal. when you talk to people in the house about like the ways in the -- and means committee chairman, he says we should do it in one bill. i is an election year, and think both parties would disagree on a resolution in favor of mother's day. the longer they wait, the greater the chance that more companies will do this kind of tax and version deal, like the one that pfizer has proposed. the enemyument that hold any weight? >> it is an election year,
everything gets thrown out. congress could get riled up over this issue. i would expect them to come sooner rather than later before their is some action. i think retroactively trying to stop these deals are trying t -- are quite slim. i think you cannot rule out something this summer if these deals continue. ofwhen they err on the side a global minimum tax, or a territorial tax system? >> right now they're talking a pfizereal requiring to acquire a much bigger chunk of these companies overseas. i think there would be a percentage, maybe 50% ownership rule. the main feature would be the elimination of all of the deduction, and lowering the top rate from 35% among the highest in the world down to 26% or 27%.
i do think we would get repatriation. all of these earnings that are stashed in ireland and elsewhere would come back to the u.s. as part of a sweeping bill. not happen this year, that is a story for 2015 and beyond. >> thank you so much. -- thed of research potomac research group. >> the british house of commons has their own questions about the deal between pfizer and astrazeneca. reassure them that this would be good for london and the u.k.. did he convince anyone? >> it did not seem like it. the ceo of pfizer has two audiences. yes his own shareholders, he'll face shareholders of an astrazeneca, and then he has
congress and to the british commons. criticized and almost called names when adrian bailey started off the hearing. he talked about him being a hungry shark that needed to be fed. a praying mantis. these were some hot rhetorical questions. the challenge for read is that he did not have an answer to parliament demanding that he make certain assurances on job cuts. he cannot talk about how much he wants the company and what his plans are because that could influence a bid that has not been finalized. he was in a difficult collision -- position. >> can this committee in the house of commons block the deal? >> no. that might be the issue. what they can do is -- it is an
inquiry committee, they could insight public opinion a little bit. he conceded that he might not have the power to stop this. what you could do, and all of the theatrics are about is possibly poisoning pfizer's interest, or make astrazeneca go ask for a higher price, and it will become too expensive. ceo's both talking around each other, making cases for why this should not be sold was heer, and his point can make promises on keeping jobs in the u.k.. the pfizer ceo, he can make those promises, but they are legally winding. this is an asymmetrical fight, this is not one that went well
for the pfizer ceo. smarter? u.k. or u.s. politicians? >> the parliament. equities, so everyone has the same arounmount of worth. >> you did not pick a side. up, they call them drugstores. permitting traditional pharmacies from selling medical marijuana. -- preventing traditional pharmacies from selling medical marijuana. ♪
>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. waiting for the payoff. yahoo! spent more than a billion dollars to buy tom wheeler. we will talk with -- to buy tumblr. corporate america is off-limits. >> drugstores, watch the profits go up in smoke. pharmacies are blocked from getting a piece of the growing multibillion dollar business. medical marijuana. you're watching "market makers."
it is 11:00 :00 in new york city. i am erik schatzker. >> i am alix steel. in today for stephanie. thanks for happening -- having me. home from theed mall last month. for march shows that sales growth of the fastest pace in four years. are risingirectv today. att ensign talks to buy the company for -- at&t is in talks to buy the company. u.s. customers are generating bigger monthly bills. israel, former prime minister has been sentenced to six years in prison. he was convicted of accepting bribes while he was mayor of jerusalem. >> a lot of interesting yahoo! these days. most of these have to do with the stake and alibaba.
many in the world of tech and finance say yahoo! overpaid when for $1.1 tumblr billion. they wonder how long it will be before yahoo! will start to monetize the investment in a meaningful way. tell us, why is it that more and more people keep dumping on tumblr. amount ofbout the money that yahoo! paid for your company and are also saying that tumblr is a platform that does not matter anymore. why is this happening? >> we're not hearing things at the level you're describing. in the grand world, where we are, building a base of advertisers that care about tumblr, they do care about
tumblr. we have doubled our sales in the last four months. -- at about about 150 spending advertisers on platform. most of those are coming out of the top 350 advertisers in the world. , unilever, png. an hat product that stands apart from the rest of the world. it is focused on the moment, focused on social interaction, where we are offering a platform for those brand advertisers to do that great, creative brand advertising. the kind of stuff that people get into the ad industry to do. >> the criticism is that tom still needs tolr
make money for yahoo!. when is the business model coming? >> it has been growing for the asked year and a half. most have joined in the last six months. >> how much money are you making now versus a year ago? having a report shortly. it is tied into yahoo!'s earning future. we are not even 10 months into time with yahoo!. we are excited about how the businesses scaling. we are a little ways ways from talking about the contribution to yahoo!. how does you go from being the creator and the ceo of that company to the guy you are
today, who sounds enthusiastic about advertising? >> we launched our ad business at the time of the acquisition. that was a big part of the conversation on yahoo!. they are inherently an advertising company. in marissa's time in the -- helped lines up with the ad platform. yahoo! is driving, not the creative tools. umblr still -- all of the ad tech is powered by yahoo!.
>> what is the hardest part mblr toelling tub advertisers? you protect the privacy of users. how hard is it to get advertisers on board without that? story thandifferent what everybody else in this industry is selling them on. so much of this industry is your dataging scientist, focus on hypertargeting the little blue link and making sure you get it in front of this person and this person who will be in the market for a car. the message to the advertising andunity about tumblr what we have seen brands start to do and get right is what more of what you're used to on television or in print. for years and years
before you are even old enough to buy a car. it inspires you to want a coupe and drive around eight curvy mountain road. -- around a curvy mountain road. advertisers get into the business for it. they want to make the 32nd spot that changes our view of the world. you do not have room to do that -- you have a lot of the capabilities built in. you have the analytics that are starting to roll out. you you have on tumblr that do not have anywhere else as a canvas. you have a platform to be expressive, to tell a story that inspires people to drive your car, to wear your clothes. get your people to aspire to
where they can afford to wear your stuff around. or you can save up to buy your first iphone. that is why you see advertisers like apples and ford's making the grade brand advertising. excited mayer got a lot when she said yahoo! had 500 mobile engineers. how many of those are at tumblr. in newre our own team york. at most of those are in our headquarters. holy ownedl a ey ownedry -- whol subsidiary. talking about mobile, marissa mayer said that yahoo! had missed the boat on mobile. what are your expectations for tumblr on mobile?
the same is growing at clip that everybody else is seeing. the stuff that we are excited about in the mobile world is two full. tumbler, when on we come way far ahead of everybody else, one and half times spend is the average. out waytwork we come ahead in time spent in how people use it. something they use much more like they use their tv, if you pull it out in the moments where you do not want to check your e-mail or you don't want to return your mom's phone call, you want to turn off the tv and veg out and relax and be entertained for a moment, that people use tumblr.
in the mobile world, nobody has session times like that. we are still getting session times in three to seven minutes. that time spent on mobile is exciting to us. and you willping see a whole lot of our biggest innovations happening this year. is in mobile creative technology. the things we all have in our pocket. unbelievably creative horsepower. beautifulake some slow-motion video. you can edit the stuff you create. with developments like mobile customization, tumbler is the first platform to customize how you look on the smallscreen.
>> what is the secret of keeping an indie mindset or personality in a company like yahoo!? >> we are not inside yahoo! today. this is a big part of the promise from orissa and her team. they believe in the path that we were on and they believe in the platform we were building. we have kept our office. we invest in the team. from 150 to gone 250. we have partnered together on a few projects. we are working together on how we build content, so you will -- you will see a lot of stuff they are doing with katie couric. we are working together on a host of projects. we are on our own path.
in control ofely our own destiny. a passionate case for your company. thank you for joining us. >> thank you for having me. >> changing of the guard in india. means fore what that investors. >> government regulators are trying to make it easier for you to get a home loan even if you have less than perfect credit. you are watching market makers. ♪
they are in settlement talks with date and authorities. it is not clear whether this would include the guilty plea that we have heard that prosecutors are seeking to extract. >> that is a new thing we are hearing. than $1 they need more billion. to settle the case with a $3.5 billion fine. settled similar allegation for $1.92 billion. prosecutors are stepping up the amount of money. admit tonot have to
anything. no guilty plea. deferred prosecution. >> indian stocks advance to all time highs. why are the bulls running in india? how long are they going to run for? our guest manages investment funds. for the investment community, how big a deal would a mode e-government be? >> it would be a huge deal. if you look at it, the indian economy has been somewhat -- the last few years. there was no administrative decision-making. moby is a decision-maker. he is pro-business and pro-reform. see the exuberance.
i believe this is a big moment. like ae it to something reagan moment in the united states. that, i like the disclaimer, these are just exit polls. the results come out on thursday evening. a morehat, one can make detailed call. how much can a prime minister do in india. justiceabout india system, the inconsistent application of regulation. surely one man cannot change all of that. bjp was in power until 2004. they were affected. it is not a matter of one man.
it is a matter of a thought process. all of the different layers of -- they will go at five percent. if you can bring in a positive mindset and get things done, the five percent can get you a percent and nine percent quickly. >> unless motive truly possesses supernatural strength, fulfilling voter's hopes will be exceedingly difficult. there are a lot of stalled investment projects. perhaps there will not be the
investorslus that like yourself are expecting. that is a good point. i believe a change of leadership will create a lot of processes -- there is a lot of low hanging fruit. it is not rocket science. when you talk about projects being stalled, it is because of nobody taking ownership. in terms of company over leopard, part of the corporate world in india has done a good job of cleaning their balance sheets in the last few years. if there is a climate for investment, we can raise equity. it, 66% ofk about people in india are below 35. this is dream demographics.
--is one of the most come supplied constraint markets in the world. the potential is huge. if youblem has been that create an investment climate, that stops anybody from coming in. that is even domestic investors. they have been putting cash under their mattresses rather than investing. i think there is some validity to that point. we think there is a lot of low hanging policy reform -- low in policyuit reform. somebody has to get things done. not everything will be perfect. it takes time. thealways have to wait for election results before speculating too far ahead.
>> the financials are the first level beneficiaries. to i.t., where most foreign investors are in, you need to look at indian domestic --. they are trading at reasonable valuations and i think they would be performing better than most of the market. name an industry or company that people outside of india might recognize? ibm, there is a great bank to invest in. it has a good asset quality. that is something that we think is interesting for people with a medium to long-term outlook. >> thank you so much.
>> it is time for bloomberg's on the markets. the nasdaq is off by about 2/10 of one percent. the real story -- the s&p crashed for the first time ever. could not hold on to the level. you are still seeing it fall near that area. skeptical when it comes to these psychological levels. about greenlk mountain coffee roasters the stock is up about 10%.
>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> i am erik schatzker. >> i am alix steel, in today for stephanie. freddie mac and fannie mae are trying to read of the housing market into a higher gear. loan buyback rules for banks will be eased in an effort to stimulate the lending. this is happening while the 's remain the gse uncertain.
you pay closer attention to this market than anybody i know. how significant are the announcements? he is starting to loosen the credit box. it has been exceedingly tight. what he is doing is sending a message to the industry that we do have anti-fraud provisions in the mortgage we purchase. if there is a problem with a mortgage and they continue to pay, we're not going to force you to buy that back. he is giving the industry something they want. and i fight on many things.
i think that is a positive. he is starting to loosen the credit box. i am not sure how much of a significant impact it will have. it was very balanced. it represented non-polarization of the agency. the on the ground reaction to this? how long does the fica -- how low is the fica score going to go? a different issue. most of the banks have put their own overlays. some of them are 620 two 660. fannie mae and freddie mac are closer to 750. i have set for a long time that the problem is and not a lack of credibility as much as it's fundamental demand for first-time homebuyers is a problem. is it not a fact that fannie mae and freddie mac loosening
underwriting standards involves 's?e risk for those gse >> as long as they continue to have -- with the risk they are taking, that is not a problem. the problem is you have two companies that are not allowed to build capital. if we end up seeing the economy , we see substantially china falling off the cliff and hurting our economy coming up two countries that will be on government life support. >> why now? to give a first speech. today was a good day for the first speech. seriousness, i think why now is because there has been concern that the credit box is
to type. the recovery is covered -- running out of steam. >> what would the real reasons be? >> there is no household formation until you hit about 54 years old. is, student debt. we have record levels of people under 34 living at home with their parents. they cannot afford to move out or pay for a down payment. it gives an indication that credit availability is a small piece of the problem. >> freddie and fannie assure only two thirds of mortgages. a couple months ago it was what 90%? next four or five years, if they are still there, deals will have
risk sharing. banks watching the willing to take on more of the. more of the buyers are coming in with more cash down. where else -- fannie and freddie, ensuring less of the markets. private lenders are willing to xtend more favorable terms. doesn't have to become so competitive that any bank that wants a piece of this business or wants to increase its business has to have its own underwriting? >> it is happening at the margin. we have gse reform legislation that was supposed to have been voted on.
what we had was a system that were but needed fixing. care ofe going to take people and give banks the incentive to take on more risks, there needs to be more clarity. what is the risk they are going to take that could be bad down the road. >> the risk would be enormous. the number of qualified first-time homebuyers is small. the credit history, down payment are problematic. i do not think they're going there. the market starts to peter out and washington will have to start saying -- what do we do to
revive this? does one stupid things start happening. >> how much recognition as they're in congress for the points that you made earlier, that the fundamental issues, the reasoning the housing market isn't stronger and that credit is not being expended -- expanded is because there is still much student debt. a problem.debt is there is very little understanding that there is a and theween that mortgage market or small business creation. most small businesses were funded by pledging your home. that has been diminished. we really need to start thinking about how you build equity. >> thank you very much. it is great to see you here this morning. are thinking about the mortgage market, you need to
>> democrats are facing a problem. who to run against. in the past election cycles, we have her president obama rail against anyone from corporate interests. take a listen. >> you cannot overcome the special interest with the big money. we cannot go back to the days of taxpayer-funded bailouts. we cannot go back to the day when credit card companies could jack up the rates for no reason. insurance companies that jacked up people's premiums. the financial sector where your responsibility and lack of basic oversight nearly destroyed our entire economy. we passed reforms to make sure wall street could not act with the same reckless manner -- president cannot afford
to attack any of his usual targets. julianna goldman joins us from washington. why is everyone off-limits? they want to make this a choice between the republican and democratic vision and show voters what it would look like if republicans were in full control of the house and senate, but the problem with that is it is a business as usual argument. it is expected to be able to have a republican foil and often times, it is a corporate villain. something to help democrats play the populace angle and the challenge for the white house is that if you look at a number of the usual corporate targets that you were talking about, they do not work this election season. target oiles to
companies. obama has mentioned exxon. that might hurt incumbents in alaska. it complicates the messaging for the white house this year. >> does it come down to -- oreration or does it is it possible that the president's heart is not into it. elections, hee was running for president. in another, he was looking ahead to the next time he hoped he would be reelected. ofi also think the president the white house is looking ahead likeat two years will look if it is republicans controlling the house and senate and committing his ability to get anything done. he does have a lot at stake here.
even if you look at why he cannot attack the insurance industry, it is because he needs the insurers in order to make obamacare a success. putting policy and from the politics. we want to make sure that legacy is intact. >> who are the republicans running against him this go-round? republicans are also running against the democrats. >> a business as usual i guess. >> they are targeting harry reid and obamacare. a rallying point for republicans, particularly their base. in midterm election cycles, is about getting the base out. democrats are relying on business as usual messaging and that puts them in a more challenging position since they do not have that obamacare, bad boy equivalent. >> i am already tired of the
those are the types of places that you go to tree that type of pain and exide he. it is still illegal at the federal level. these big change pharmacies have to get clearance to sell their prescriptions. they would lose their dea license if they started distributing it. it is still considered a classified one narcotic at the federal level. issue.as been a big .2 billion was spent last year colorado is expecting a billion dollars in revenue. about a lot of money. the banks do not want to touch it because it is still illegal in the federal level and they are worried that they could run into problems with their
regulatory and federal insurance. >> you have these mom-and-pop dispensaries and on the other hand you have the big drugstore chains that cannot get into it. there is room in the states for some kind of larger scale business to emerge if they cannot go to the bank. >> it is a big barrier. it is preventing this from getting bigger. in the meantime, it is like a guy can start up a medical arrow on a sent -- medical marijuana center with $4000. we talked to a guy who started a business delivering door-to-door. a yeara $2 million business. he has half $1 million greenhouse. is reaping the benefits of
this while the bigger guys are left out because they're worried about things like financing, their dea registration. around with ang car trunk full of cash. there are these co-ops, these finance co-ops that have started up in places like colorado, where it is not an fdic insured bank. --is a place where people where you can put your money and kind of like a credit union model. it is not insured. it is a great market area. cvs want toens and get in on the pot industry? >> they say we are not in this business and we do not plan on going into it. when i talk to analysts, they say this is a big market and when there's a big market, they want to be in on it. ands not just the cvs write a. -- rite aide.
we will get the state of the --ail industry from these this ceo of finish line. >> are you a big runner? >> i can only take so much. i have a wonky knee. approaching 56 past hour. we are "on the markets." olivia sterns has more. and s&p are trading at record highs, despite weaker than estimated estimated sales. we are close to session lows. the nasdaq is in the red. it is time for the options and insiders. joining me is max breyer. thank you for joining us. the s&p and the dow once again at record highs. they continue to be in this negative track. why do you think that is? >> most likely was a function of the macro risk landscape is
falling by the wayside. you have the situation in russia that has become an afterthought. stockrrative of gross selling off has gone by the wayside, earnings has replaced that narrative. investors have returned to the fundamental thesis. we do not have a lot of things to care about. it is declined across every asset class. secular decline. >> how about volatility on the nasdaq? we saw a big selloff in tech stock momentum names at the end of april. yesterday, a lot of the names came back and rally. >> the market still sees risk of the narrative returning. they exhibit the higher beta that we are used to. there is some underlying -- in that space.
it looks high, relative to s&p. >> we are watching shares and green mountain. there is news out today that coke is doubling down on koran -- keurig. >> there is heavy volume as you would expect in keurig green mountain today. this has been in mo for coke over the last couple of years or so to buy faster growing companies to manufacture growth. coke is a slow mover at this stage. this is an mo of theirs. question what other questions are next on the block to be bought. interesting to see their fortunes contrast with what is happening with soda stream.
we're talking about making coca-cola at home. green mountain is going to make cold beverages. we cannot wait to see what happens with that. have you got an option straight for us? >> homebuilders is kind of a fluid space. terrible from existing home sales to new homes to pending home sales, pricing starts, building permits, it was terrible. that set expectations low. had low expectations and movement in washington where restrictions have eased as of late. doing --alking about on the table to be enacted. acquisitions as of late. d.r. horton has announced an acquisition of atlanta builder.
we have some m&a type action. coming into next week, we will have april data and the expectations are still pretty low. i think the upside is there. >> what is the trade? >> you can buy the weekly options that expire next friday. the 24th strike calls for $.35. a good way to play that positive. quick thank you for joining us. " inill be "on the markets 30 minutes. ♪
clip."ome to "money i'm adam johnson. take a look at the menu today. in nation, tim gagner on the financial crisis. it's a brave new world where your eyeballs and your money. around the world, fireworks in eastern ukraine. two regions declare independence. jamess wild card, jesse finds a new calling. we are talking about michael