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tv   Market Makers  Bloomberg  April 7, 2015 10:00am-12:01pm EDT

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>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. erik: california faces tough choices and new technology may be the only way for the state to survive its record drought. stephanie: he is betting on education technology. we will be speaking with billionaire mark cuban about startups that could revolutionize the field. erik: fedex goes after tnt. we will ask ceo fred smith mike yeo to get approval for a deal
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that ups was denied. good morning on this tuesday, everybody. you are watching "market makers ." erik:stephanie: my boyfriend is that, you were missed. big news today, we have fred smith today. before that, let's get to the top stories in the morning. as i mentioned, fedex will be expanding into europe. the operator of the world's largest cargo airline has agreed to buy struggling dutch the just ask company tnt express. the price, a cool $4.8 billion in cash. more than two years ago, fedex competitor ups had to scrap its own bid to buy tnt. european regulars moved to block the deal. fedex executives don't think they will have trouble getting this deal approved. >> we think this will be good for competition because at the moment there are two very strong claims in this particular
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segment of the market in europe. by putting tnt and fedex together, we think it creates a strong third competitor. that is why we are confident we will get regulatory approval. stephanie: tnt will try to appease regulators by getting rid of its airlines operations. as we mentioned, at 10:30 a.m., fedex ceo fred smith will be here with more on the deal. a big deal today in the data integration business. in for monica has agreed to be bought by private equity firm. activist investor paul singer had taken a stake in informatica and was pushing for a sale. samsung posted first-quarter profits that beat estimates but it was not smartphones that drove earnings. samsung is more than offsetting a slump in foreign sales with
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rising sales of memory chips selling components to other vendors is helping them whether a smart and slow down. and mega billionaire ray del rio . his bridgewater associates the world's largest hedge fund firm is up 14% this year according to a person familiar with the matter. the reason dalio that being against the euro, which dropped 11% against the dollar in the first three months of the year. in a couple of hours, let's talk u.s. politics, rand paul is making it official. the republican senator from the state of kentucky will make his formal announcement at noon. [inaudible] erik: rand paul, as you know, is a favorite of libertarians and of the tea party. he gives up -- gave us a hint of what his campaign would be like with this video. >> we need to return to our
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founding crucibles, stand up for the entire bill of rights. our future can include a road back to prosperity, at home and abroad. it should include a balanced budget and a simple, fair tax system. stephanie: rand paul is the son of former texas congressman ron paul, who ran campaigns in 2008 and 2012. all of you blue devils fans, duke is celebrating its fifth ncaa men's basketball title. the blue devils came back from a nine-point deficit to beat wisconsin 68-63. four freshman scored all 37 of their second-half points tyus jones leading duke with 33. he was voted most outstanding player of the final order. how cool is that? erik: super cool, but not as
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cool coming in third as it is first. stephanie: gary cohen got to win it, but how amazing would it be to be a duke basketball player today? erik: pretty amazing. fred smith figures he can cook up something with tnt that ups failed to do, and that is a successful acquisition. $4.8 billion is what they have offered to the dutch company. ed hammond covers m&a. he is here to talk about the deal. that seems the obvious place to start. fedex trumpeting this as a match made in heaven. of course it is, otherwise they would not be buying it, but why will regulators agree? ed: the reason they said no to ups and it was thrashed out in court, ups is much bigger in europe. fedex is smaller in europe.
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you have dhl, ups, and fedex and tnt. so you will shrink it, but it is allowing fedex to take a bigger position in europe. stephanie: how much does tnt need this, we said they were struggling. how bad? ed: this company has been a basket case longer than i've been a journalist. always a target for takeover. it has struggled. since the ups transaction was blocked, this company has been in dire straits. they need this transaction. it looks like a fairly even -- decent price for them, and they can to give their headquarters. stephanie: to what degree -- erik: to what degree does european regulatory rules being for dhl? ed: they will say there is too
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much consolidation and they will have too much power, but the scale that the combined fedex and tnt will have will be smaller. ups is completely hamstrung in trying to block the deal because it is something it attempted itself. the real question is whether or not fedex moves now because they thought ups could be nearing a decision in court that could overturn the blockage of their deal. stephanie: what does this say about returning confidence for corporations in europe? are you saying there is going to be a turnaround? ed: from fedex's point of view, there is a little bit of a bet that there will be a turnaround in europe. they want to expand significantly there, but fedex needs to do the deal. they have a lot of cash. they are at a scale when they probably cannot grow that much more in the u.s. getting into europe there is really only one possible deal
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that they can do, and it is this one. erik: how much is on the table for fedex? ups had to pay a fee when the deal was broken up. stephanie: ups has to be so -- what is a better word than piss ed? ed: as far as i can tell, there is no possibility for ups to come into the deal because they are still being blocked by antitrust regulators. it will be interesting to see how they get around this one. what is in it for fedex, i don't know what the breakup fee is yet. they had been cagey on synergies in the deal. one of the reasons is if you are a u.s. company buying a u.s. company, you can say we are going to make cost savings. if you go into europe -- erik: the laws are different. stephanie: you get destroyed --ed: you get destroyed by the government, but they haven't given clear guidance yet.
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erik: is there anything else to explain, beyond wanting to outmaneuver ups, anything to explain why fedex is moving now? ed: the european economy stuff is part of it. the very strong dollar, although that is not a straightforward play because they will bringing -- be bringing euromoney back, or possibly not. the strength of the dollar is a factor in this now. fedex has the cash and any to do something. the one unknown here, and we will try to find this out through the day, is if fedex had any insight on ups getting their block deal overturned in european courts. that would be hugely significant. if they saw that coming, they would realize if we want to do the deal now, it is time to strike. quite a lot yet to be known but we will try to piece it together.
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stephanie: is there anyone waiting in the wings? fedex had the money and needed to put it to work. is there something else that could have been looking at instead of tnt? right now there in the cold saying, i guess we are not being bought. ed: nothing in europe. they could've done something smaller here and there. these businesses, very high cost business, very low margin. if you are going to do a deal, you have to do it to scale otherwise it does not make sense. outside of europe, maybe something in emerging markets, but the model is not the same. it is the natural deal. erik: great to see you. coming up at 10:30 a.m., stephanie and i will be speaking to fedex ceo fred smith to ask him some of the questions that we put to ed. we hope that he can answer thing that you cannot. stephanie: i think we need to bring in his high school europe picture.
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he was in the game -- yearbook picture. he was in the game a few weeks ago. coming up, california bracing for mandatory water cuts. but it may take a lot more for the state to survive the record breaking drought. erik: lane bryant taking on victoria's secret. ♪
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scarlet: we are keeping an eye on shares of general motors, one of the big laggards in the s&p 500, because canada's government is selling its final stake in the company. prime minister stephen harper needs to raise cash to fulfill his campaign promises. you can see canada, through its a general investment corp. owns 73.4 million shares of gm as of december 31, 2014, equivalent to a 4.6% stake. it is the third biggest shareholder in gm after the uaw
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and harris associates. canada will sell all 73 .4 million shares in an unregistered block trade completed by april 10. as you recall, canada and ontario funded the restructuring , taking up about a 12% stake to protect local jobs. stephanie: scarlet fu giving us the latest, thank you. it is time to bring you up-to-date on the top stories of the morning. the government of canada is getting out of the auto business . canada has sold its final stake in general motors. it is valued at about $2.7 billion and was bought by goldman sachs. proceeds will help canada's prime minister stephen harper stick to his promise of balancing the budget this year. want a college scholarship? work at starbucks. the company will now pay full tuition for workers to get a
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degree from arizona state university online. when the program was announced in 2014, starbucks only pay for two years. the chain is looking for ways to attract workers in a tight labor market. for the first time ever, all six -- i hope my husband is watching -- "star wars" movies will be released on digital hd. they will be available starting this friday including george lucas' controversial changes he made. "the force awakens" comes out in december. those are your top stories of the hour. coming up, fedex ceo fred smith will be here to explain to eric and i his multibillion-dollar deal to buy tnt express. we will see what is moving the market this morning. and lane bryant pokes fun at victoria's secret and its perfect bodies campaign.
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and rocking out on the more tour. the largest traveling visit festival in the u.s.. we will find out how they have such staying power. erik: now to california's record drought here there is no way that governors restrictions will be enough to solve the problem so where does that leave the state for years into its driest spell in recorded history? technology could be an answer but unquestionably, the faith -- the state faces tough choices. our reporter is here covering the story. from the university of california davis, we have a scientist of watersheds. erik: welcome to "market makers ." it is your maiden pvoyage. erik: does the state have any options besides these water cuts the governor has proposed? >> they do but they are for the
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midterm or longer-term future. we are talking about 25% water cuts right now, but that is not enough. other technologies that we have talked about our drought resistant crops, and that will take years to develop. another possibility is desalinization of plants. it was mothballs in the 1990's. there is another one coming up in carlsbad, about $1 billion. this will take a long time coming. erik: and still only meeting a fraction of the states demand. >> we will need about 12 more desalination plants to reach the city's water supply. stephanie: they cannot just truck water in? >> it is very expensive to do that, just like it is to be sold seawater. -- de-salt seawater. you can truck in water to small
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communities where it is not very far, but otherwise it is cheaper to do water conservation for big metropolitan areas or to do wastewater reuse treatment. those kinds of things. erik: i think it helps if we present the california problem in stark terms. one way to look at it is to evaluate california's agriculture industry, certain crops against the valley of other industries and cities that rely on water. i did a little bit of research this morning and came up with a couple of figures. the almond crop, among the most water intensive in the state is valued at $5 billion annually. hollywood entertainment is valued at $50 billion annually. if you suck los angeles dry, not good for hollywood. should we be framing things in these terms? >> i think you have to be more careful in the sense that about
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half of all urban water use is in california, which is two or three times the average of the rest of the united states is for keeping our lawns green. we have a very dry summer here in california. there is a lot of room for urban water conservation before you buy into the major industries. >> i want to ask a question about the crops being used over in california. a lot of these are very thirsty crops, including almonds. it takes one gallon of water to make one single almond and they produce rice in california, and they are sending that to asia. why are these even allowed to be grown in the state? >> because you make more money per drop. what is relevant is not the tons per gallon, but the money per gallon. these forms are all businesses. they do a lot better if you allow them to grow the most profitable crops. erik: why are california's more
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and more with each other over the issue? the folks in san francisco and sacramento use vastly last water -- less water than their peers in san diego, and worst of all a place like palm springs. >> the prices need to be set right, and that will provide the incentives for people to use less water or to use it more appropriately. erik: so in other words, if you priced water the way that we price gasoline, let's say, it would create the kind of incentive to drive more appropriate behavior regarding the use of water? >> that's correct, particularly in agricultural sector where we are looking to improve water markets so that water can move from lower value crops to higher value crops. stephanie: are your typical californians abiding by these restrictions? >> i think they will. we are still at the end of the rainy season. today in fact, we have a bit of rain here outside of sacramento. i think we will see as it gets
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warmer and the water utility start enforcing things and coming up with pricing structures for the drought, that we will see, on balance, the governors orders will be complied with. agriculture will continue to see the very large shortages they have seen for several years now. ramy: in my research, i was finding americans use some of the most water per capita in the world. one figure i found was 1500 cubic meters of water per person per year. relative to people in europe in the u k and germany, that is only about 400 cubic meters of water. what is the difference, what can we do better here in the u.s.? >> some of it is just different accounts of water use. for urban water use, wheaton california, 10 to use a lot compared to other parts of the world and the united states because we have a very dry summer and we like to have east coast landscapes on the west
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coast. that requires a lot of watering. if you are in the middle of a drought, we can pretty easily cut back urban water use quite a bit by restricting lawn watering without much harm to the core of the economy. however if you go to rural areas and you have mandatory cutbacks, when they do not need to anyway then you can be imposing a lot of economic hardship without much purpose. erik: we have to run, thank you very much. the head of watershed sciences at uc davis. ramy and stephanie will be back. ♪
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stephanie: coming up, the business of music festivals. we will talk to the guy that puts on the warped tour. stephanie:erik: why mark cuban is
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investing in education technology industry. ♪
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>> live from bloomberg world headquarters in new york, this is market makers with erik schatzker and stephanie ruhle. erik: welcome back, everyone. let's talk about the top business stories of the morning. another sign of strength in the labor market. the government says job openings in the u.s. increased in february. the latest figures showed that were 1.7 unemployed jobseekers for every available job. we can ratings and online competition are hurting by con -- viacom. they are taking a $780 million pretax charge to pay for job cuts and to write down the value
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of underperforming shows. mtv rings were down 4% in the first quarter. comedy central was down 30%. in chicago, voters are deciding who will run the city for the next four years. mayor rahm emanuel was forced into a runoff with chuy garcia. wherever wins will have a tough job. the city's credit rating is just above junk. emanuel pointed at what he do but in the first four years in a televised address. >> we cut the structural deficit in half and now chicago is number one in corporate relocations, number one in job creations. and the number one little league team in america. erik: garcia says emanuel does not deserve a second term. he says he promised to put the city in fiscal order but the
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city is in freefall. john mccain will run for a sixth term next year. he says he is concerned about what he calls president obama's feckless leadership. he says his age will not be an issue. >> watch me, take a look at my 18-hour days, the hearings we have take a look at my legislative accomplishments. i'm just getting started. erik: john mccain's mother is 103 years old. he was shot down during the vietnam war and was taken as a prisoner of war. there will be little suspense today when a jury start the liberations in the case of boston marathon bomber dzhokhar tsarnaev. his lawyers admit he took part in the attack but says the bombing was planned by his older brother who was killed in a shootout with police. prosecutors intend to ask for the death penalty. stephanie: we are one hour into the trading day. let's look at some of the morning movers with our own
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chief market correspondent scarlet fu. what is happening out there? scarlet: i know you will be talking about fedex and its latest purchase with fred smith pretty soon, so we will bypass that want to tell you about another m&a transaction. berkshire hathaway picking up a $550 million stake in exalta coating systems. berkshire is buying up 20 million shares of axalta at $28 apiece. he has vowed to hold onto the stock for at least 90 days. berkshire hathaway down marginally .25%. among companies making news right now, athena health is seeing a big spike among bloomberg terminal users, after david einhorn made some comments, reiterating his short position on a athena health with provides online services.
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last may, he said the stock could fall as much as 80% from its $105 level because the stock was too expensive. you can see trading above that level right now. einhorn says the bear case is still $14 a share. fidelity and guaranty life ftl, is soaring by 11%. they were previously controlled by phil falcone. railing the most after hrg group says it may sell the company. hrg says it may divest its entire 81% stake or even a portion of the holdings. that is also getting a big lift. stephanie: remember johnny bush the ceo of athena health? that guy can only be described as another level. erik: a unicorn.
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keeping the's hotel music festivals. we will talk to the guy behind the summers warped tour. ♪
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stephanie: welcome back to "market makers." he helped to found katy perry, no doubt, and eminem, and now his company is kicking off the warped tour festival, the largest touring festival in the country. kevin lyman is here, the founder of the company that puts on the tour. i need to start with -- you are not aware of this -- my very first date with my husband took place at the warped tour. i cannot believe i chose to go on a second date. it is unclear how the warped tour makes money. when i went, it seemed like a
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bunch of normally, i'm showered tattooed people watching people skate in a half pipe and drink beer. how do you make money? >> we come out each summer a little bit but it is not taking advantage of a scene ultimately. we are bringing value to the fans, value to the artists. we have built a community of under serviced fans. we have adapted over the past 20 years to that audience. we seem to get it right every summer. stephanie: what is an under serviced fan? people that like alternative music, they have going to festivals for decades. >> warped tour was always about bands who were not on major labels who depended on the community. the show that you are at, maybe you met some of your favorite artists. they are building that long-term connection with the fans. also with the brands that have supported us many years. stephanie: like you?
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-- who? >> vans a southern california shoe company, got involved early on and gave me the backing to put this on the road. journeys is really supporting our tour right now. not only marketing the bands getting behind artists. the past summer they got behind a band called echo smith. stephanie: i love them. such a nice song. >> they played their acoustic guitars in my office over years ago and i said you needed to come on the road with us. maybe you are not those gnarly tattooed people that you see in sydney, but you will fit. journeys got behind them and did some marketing and give them a boost -- gave them a boost. that is what we're doing, giving these artists a boost to start their career. erik: how do you decide who goes on tour?
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back when you started, the ipod was just becoming a phenomenon. stephanie: blink 182 aphex twins. >> you are going deep. it is really the connection with the fans. we had such a connection with the fans, a week after the tour i still do it old school, i look at the t-shirts that the kids are wearing and then i need to see who we need to have the summer. we touch the fans, 125,000 kids give us their five choices of who they want to see after. if i get some of those bands, i can really expand the line up and make it as eclectic. it is not just a punk festival as it used to be. we have elements of edm hip-hop, lots of artists from india. we make it a millionaire but we tried to broaden it to appeal to a larger audience. stephanie: since there are so many music festivals edm alone
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i feel there are constant festivals. you have bonner grew and coachella -- bonnaroo and coachella. >> we take the festival to you. we are in 42 cities this summer, we ended by dark so you can get home. are trying to appeal to that audience who may be cannot go to a three-day festival. those shows cost of bit more. we try to go after that 25-year-old that is maybe getting out of college, has loans, does not have the time to go to festivals. that will be a growth market, trying to do one-day festivals. for the fan that does not have the time or money to be able to go to those three-day festivals. stephanie: what do you think about the fact that that dead revival tour this summer -- only phil lesch will be there and
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tickets are going for $15,000. what do you think? >> this really is the last time. i think the dead, they are calling it. the grateful dead they are done. i think they are really going to do this one last time and check out and have great lives. stephanie: are you -- erik: are you going? >> no probably will be in a heart parking lot in kansas city at that time. stephanie: kevin lyman, founder of the warped tour. maybe tiger dog and i need to do an anniversary. erik: a big deal to tell you about. we are going right to the fedex story. the dutch delivery rival tnt express 44 $.8 billion. fedex clearly hoping to succeed where ups failed.
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ups trying to buy tnt two years ago and it was blocked over antitrust concerns by regulators. let's find out if this will work and why. fred smith is the ceo of fedex. why will you succeed where ups failed? fred: completely different set of circumstances within the european market for fedex, then there was for ups. we are very strong in the intercontinental business to and from europe, in the intra -european air express business not so strong in the pan-european express business or domestic trades, although we have some very good domestic businesses in the u.k. france and poland, but they are relatively small in terms of market share. if you look at our situation in europe, and tnt's they are highly, e. it would not result in a great deal of redundancies or market share numbers which would appear
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to be problematic as it was in the case of the previous transaction. stephanie: how did you put this deal together, did you have an understanding that it simply was not going to work at with ups and stuck in? fred: the ups transaction was quite a while ago and it was terminated. the planet sort of online for this combination. the exchange rate was certainly part of it. the management of tnt express that came in after the ups transaction, the ceo, the chairman, have done a very good job of putting together a go forward plan that right sized the business, improved service levels modernized certain capabilities so that was an important aspect of it. i think the risks they were looking at in terms of execution
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and the potential combination made a lot of sense on both sides. things just came together at the right time. erik: you told us and you have been telling everyone this morning, that there will not be a lot of redundancies, which to me, is a euphemism for not a lot of job cuts coming at tnt express. is that interception to draw? fred: very fair. erik: a lot of people are asking how you you make the deal work. tnt's numbers are terrible relative to fedex. if we look at it an even though margin basis -- ebitda margin basis, yours is 13% last year. tnt had 2.4%. on a net income basis, you lose money but you say this will be very accretive after fiscal year 17. how? fred: remember what i mentioned.
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their presence is mostly in market segments where we are not strong. so the biggest single opportunity is the cross-selling or the bundle of services, which we do extremely well in the united states, and which has led to a big part of our growth over the last decade fedex ground express, freight, and so forth. the revenue synergies are very strong. secondarily, there is a significant amount of pickup and delivery productivity improvements that we foresee. the reality is, in the pickup and delivery operation, there is a reasonable amount of attrition over a period of time and we are very strong in the integration capabilities in our corporate development group. we think we can put these units together so that, between the revenue synergies and the pickup and delivery costs in
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particular, some in the linehaul area but we feel this will be accretive in fy 18 and beyond. stephanie: what was tnt doing wrong, why couldn't they make it on their own these days? fred: the issue with tnt is they were simply a fourth player in a market that has three very, very strong entities. in recent times, it was not that they were doing things wrong, it was just their market presence. in fact, we give them high marks in developing an improved strategy on a go forward basis, which is one of the things that may tnt attractive to us. erik: it is a $4.8 billion all cash deal. i had a look at your balance sheet a moment ago and i see $3.5 billion of cash. how much of that is overseas how much will presumably used to
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fund the deal? fred: i'm not sure off the top of my head. i believe the last time i looked at it, probably about 40% or 50% offshore. we will use a significant amount of our cash on hand. remember, this is probably not going to close until the first half of 16 so we will be generating cash in interim as well and the rest, given the strength of our balance sheet, we can borrow. we don't see any problems whatsoever in making this acquisition. and continue our modernization of our express aircraft fleet and the major expansion of ground. remember, we made a wonderful acquisition or two in december. a small company a software company, very capable in the international e-commerce space, and another wonderful supply
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chain. even with all of those, we have the ability to fund these. it is not a stretch on the balance sheet. erik: clearly you want fedex to grow, but isn't there a downside to every company expanding in europe now? perhaps potential upside with the economy, but so much more of your earnings will be overseas and effectively trapped, unless you want to pay a punitive tax to repatriate them to american shareholders. fred: we are not like a lot of multinationals which are making products purely for the overseas markets. those funds have to stay over there lest they be taxed upon repatriation. the biggest part of our business internationally is moving things to and from intercontinental locations. we have a natural balancing
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effect, if you will. and the intra european and domestic businesses we have a broad, there will be some of that, but not to the degree that a lot of manufacturers have in their situations. stephanie: i know it is too soon to rate the success of this deal, but how would you rank this among your other accompaniments at fedex -- accomplishments at fedex, in terms of big transactions? fred: we made a lot of significant transactions. i mentioned one that we thought was significant, a big one. genco recently. we bought flying tigers, caliber, american freight ways, kinko's. those have all turned out to be very, very significant to our company's global position. that is why i said we have a lot of experience in corporate
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development and equally important, the integration of these companies. we have a very good record of utilizing the talent that we get in these acquisitions. we do not spit them out or reject them away a lot of companies do when they make acquisitions. quite the contrary. we have a lot of people that have progressed to the very highest levels of fedex. we think this will rank up there among those -- among that list that i gave you in terms of opportunities. erik: fred, thank you very much for making time with us. we look forward to having you back again soon. fred smith, chief executive officer at fedex, buying tnt express for $4.8 billion. stephanie: stick around, we have a lot more to cover. ♪
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stephanie: "market makers" will be back in just a moment. you know him from the dallas mavericks and "shark tank." we will speak to the one and only mark cuban about his little-known activities, investing in education technology. i also know him because i use cyber duck. a super secure a texting information vehicle. erik: unlike you, i don't have anything to hide. stephanie: you would think that. you really think he watches his messages in "the new york post?" i'm sure mine would be worse. anything from mildly embarrassing to your worst nightmare, mine with fall into
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the worst nightmare. we will be back with mr. cuban. ♪
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stephanie: mark cuban hoping it up again. he is fired up about investing in education technology. erik: he has promised to shake up the campaign and hour from now. rand paul will tell america why he is running for president. stephanie: what happened to viacom's viewers? ratings plunge at comedy central and mtv. welcome to market makers, i'm stephanie ruhle. erik: it is 11:00 a.m. in new york city.
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let's start with the top business stories of the morning and new government figures on the labor market were a mixed bag it on one hand the number of job openings in the united states rose in february. on the other, companies hired fewer people, and more americans with their jobs. a brick of play -- breakup plan would be bad business. plus, it would hurt growth by damaging rmb. they could cut costs by separating high-growth units from more cyclical businesses. it is the new way to pay for college. starbucks will know. now pay full tuition for workers , online. the chain is looking for ways to attract workers in an increasingly tight labor market. turkey has unblocked access to twitter and facebook and
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youtube. the sites have been blocked because they published a photo of a militant holding a photo of a gun to a prosecutor. the ban was lifted once the website agreed to remove the picture. on, a central daily show, jon stewart trying to defuse the controversy over his successor. people found a number of jokes on noah's twitter that were less than nice. >> there was a large kerfuffle. [laughter] but i can say this, i can say this without hesitation. trevor noah will earn your trust and respect, or not. [laughter] erik: for his part, noah said that the twitter jokes are not a true reflection of who he really is. stephanie: the 2016 presidential
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race has its second official candidate. in about one hour from now rand paul, we've already seen it on his website, but he is going to officially tell the world that he is running for the republican nomination. joining his senate colleague ted cruz of texas. mark halperin is in louisville, kentucky. he is a libertarian, and very different kind of republican. does he have a real shot? or yet again, is this going to cannibalize the republican party? mark: this is a race with nine or 10 people with the chance to be the republican nominee. he has fundraising streets, he has a field of young people angiographic strength -- and geographic strength.
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there are no perfect candidates in the field. erik: how much of a strength or weakness is going to be fund-raising? jeb bush will clearly out fundraiser everyone. mark: he will, but rand paul has the chance to raise the second-most. he will get fatcat donors people who will give to a super pac. he will do better than some people will think on traditional fundraising. the place where he is stronges t is small donations. getting $50 from people, and going back to them again and again. watch by the end of today, how much he has watched through the promotion of this event in small donations. he will be the envy of almost everyone else in the category. stephanie: unlike so many
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republicans, he really does have the ability to attract millenials? mark: it is millenial, but it is also the rand paul brand. like the john mccain brand, like the obama brand people who like his politics tend to be the kind of people who are not only active on the internet and social media, but are not afraid to whip out their credit card and give a small amount over and over again. that is a little bit of alchemy that not every candidate can replicate. everyone would like to be a strong internet fundraiser, but not everyone can. people who are active in the digital age. erik: paul stands out because he is an outlier. certainly when it comes to the mainstream. and we seen over the past few weeks, has he gone toward the more mainstream portion? mark: he is adopted policies
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that are less radical and terms of fundamental change. but on things like israel and iran, he is clearly taking positions that he make them more accountable as a credible commander-in-chief and he was when he first ran for congress. erik: does that not make him vulnerable to be accused of flip-flopping? mark: everybody's going to have to deal with that. if you're just thinking and terms of pure politics, the guy has a chance to be on the ticket as president or vice president. there are some changes he will have to deal with, but he is currently in a better place with more republicans to say i
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understand how dangerous the world list. is. stephanie: who does he hurt the most in terms of other potential candidates? mark: he has his own niche in terms of issues, in terms of the constituency, but i think people like ted cruz potentially might ke huckaby are the most populist. i think those of the two that will be hurt the most. but we're talking about a roller derby with 16 people racing around the track. it is not always easy to tell if another guy elbows another guy and knocks him who that actually hurts. erik: is only out from underneath his father shadow? or are some of the things that ron paul has said over the years
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going to come back to haunt him? mark: his father's legacy, the negative side, is mostly overstated. he will need to talk about his father when asked but the press is fascinated by the amount they see him as a threat. make no mistake, it will come up a lot, but of the use a chance to benefit more from as well as legacy than be harmed i it. assuming he runs a city campaign on his own. stephanie: thank you. they will coverage of his announcement starting 11:45 a.m. erik: mark is in kentucky, let's
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take you to chicago where it is election day once again. forced into a runoff election rahm emanuel loose to win a second term today. his quest for reelection has not been easy. our chief washington correspondent peter cook is in the windy city with more on this mayoral race. when the runoff was announced it could be a close call. it does not seem to be that way. are there any surprises left? peter: this is certainly not what rahm emanuel had hoped for when he first was running for reelection. he won back in 2011. friendly territory here in manny's deli, where he is coming for lunch today. he has had trouble here in chicago, after making some tough decisions, closing 50 public schools, dealing with a high crime rate, he has trouble
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dealing with disaffected chicago voters who think he may be too close to the business community. he also has an in-your-face attitude, and his challenger has tapped into that populist anger focused on rahm emanuel, and rated that through the course of this campaign. the city is doing better under his decisions. >> we went through not only for budgets without a property tax, we're the number one in job creation, we have families will begin -- moving in. >> chicago has had one of the slowest recoveries in the top five cities. chicago is not all that he touts. he touts that international tourism has expanded and it has
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not. we lack behind most of the cities in the country. peter: recent polls show that garcia was riding a wave, but has fizzled out. rahm emanuel has a substantial lead in most of the polls today. but the real question is whether people will show up for voting. it is a nasty day outside. a lot of urban voting but real questions on whether or not he has a solid block on reelection. stephanie: what kind of turnout this the election normally have? peter: it depends on the weather. we have 142,000 people already voted. that is a record right now. the big question is whether a lot of african-americans go to
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the full. there has been some dissatisfaction in the community with rahm emanuel. because it is unclear what are not going to look like -- turnout is going to look like that is one of the questions behind this. stephanie: he has promised to fix the finances. does that chart stick? it seems like the finances are in as desperate a state as they have ever been. peter: there are any desperate place, only detroit is in a worse spot in chicago in terms of major u.s. cities. rahm emanuel argues he has made some choices and will continue to make tough choices to improve the fiscal situation. garcia has been critical of a manual, but says he will form a commission to address these
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issues. rahm emanuel says he needs to say right now what you will do for voters and that too much of the garcia campaign is a mystery. erik: thank you. stephanie: a big political day here on bloomberg television. stay with us, we will be back with more in a moment. erik: where have all the viewers gone? ♪
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stephanie: welcome back. erik schatzker back today. it is time for us to bring you up to date. the government of canada is getting out of the auto business. in his hold his final stake in general motors. the proceeds will help canada's prime minister stick to his promise of balancing the budget by 2015. he has a pessimistic view of europe, and it is paying off for mega-billionaire ray dalia. his firm is up about 14% already this year. that is according to a person familiar with the matter. what is the big reason? he bet against the euro. the euro dropped 11% against
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u.s. dollar in the first three months of 2015. for the first time ever all six star wars movies will be released on digital hd. the movies will be available starting this friday. these will include director george lucas's controversial changes he made after they were released. the first star wars movie of a decade will be coming out in december. coming up, mark cuban. and lane bryant pokes fun at victoria's secret. it is the retailer's way of saying your body does not have to be perfect. erik: let's talk about viacom. the ceo has a new strategy for reversing his stocks through cost cuts. a drop in ratings hit the cable
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networks hard. paul sweeney is here. media for so long was doing so well. fire, slipping behind. paul: consumers are not watching as much over the air or cable television as they used to. they are watching over the top video on hulu. viacom has had a lot of ratings challenges across the networks. it is always one thing or another. nickelodeon required them to invest some more. it is really the price of investing continuously in the program. stephanie: i would think the content in some of those networks is where we're seeing competition. someone who was watching mtv or comedy central that is
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where you are getting short form videos for kids. there are so many more options now. paul: what happened, over the last three or four years they license their content to netflix, and they got a lot of money for it. it was great for the stock, for their story. but now they are starting to see the downside of that strategy which is you put so much content on some of these over-the-top services, and people are getting used to spending more time on those over-the-top services and less time with the underlying networks owned by viacom and time warner's of the world. this is an industry that is really coming to the forefront. erik: is there an element of capitulation? that is always the question when you take a big restructuring charge and a big rise down on assets. paul: and you're expending your
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buyback. one of the underpinnings over the last couple of years were that media companies were turning their cash into by max, -- five acts, so they see they have a serious problem on our hands. we need to step up the investment into programming in order to turn around the ratings slide across all of their networks. those who to take short-term cash, and that's the cash that was coming from the buyback. stephanie: if we are seeing viacom get hit like this. who is next? paul: any of the traditional cable companies. discovery communications, scripps networks some of those companies, even maybe time warner for example. but we know anyone who has sports is generally doing much better because sports programming is still holding on to its audience. just like last night, the best ratings for the finals in 18
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years. stephanie: way to go bill cohn. paul: sports is always a huge spot. erik: where is he at? paul: he is still the control shareholder. once sumner passes, all of the voting stock will go into a trust. stephanie: not passes away. just to clarify. [laughter] erik: for a big change to come to viacom, for them to merge with cbs and run this in the way
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that shareholders would be happy. paul: the big issue it is time to sumner and his control stock. nothing is going to happen unless the trust that controls the family control stock once it to go that way. that will be the next catalyst for both of these in terms of the majors. erik: always great to see you. a teamthank you very much. stephanie: market makers will be back right after this. ♪
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stephanie: you are watching market makers. when we come back, we help mark
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cuban with us. we talk sharp, technology education. erik: plus, a fashion fight. lane bryant versus 420 victoria's secret.
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>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. stephanie: welcome back. it is 11:30 a.m. right here in new york city. erik: the markets are closing overseas. let's take you back to the breaking news desk. scarlet fu is looking at the european action. a big day for european stocks. scarlet: they had a lot to play catch-up to with a four-day weekend. interest ratings being pushed out with the meeting. the rally in u.s. stocks as well. when you look at this 600, it
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got within 1/10 of 1% of matching its record high in 2001 of 1.5%. you had data showing -- expanding more than expected last month. there was also some relief after greece said it would not attempt to delay its payment to the imf this week. you wonder whether this is the catalyst for more u.s. companies putting their strong dollars to work over in europe. here in the united states we are almost midway through the trading day. treasuries -- we saw a
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turnaround in oil prices. they raced earlier losses and turned higher. erik: thank you. stephanie: you can usually find him at dallas mavericks games, or inside the shark tank. but today marks cuban is with our editor at large cory johnson. they are focused on innovation in education. welcome. i cannot wait for this interview on cyber desk. i would guess you are too. cory: this education thing. there is a lot of money and investments going on. when you look at the world of education, as an investor, and a person, what do you see? mark: they are going to be a lot
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of universities that a lot of this. i'm not talking about apollo's and university of phoenix type, but schools themselves. door starting to see some changes. what people and investors fail to realize is that if a school charges $40,000 a student for school a year, that is $4 million a year. what is happening is i am looking from an investment perspective for companies that the war keeping kids in school. if the kids go to school for four years, college or postgraduate that is a much more cost-effective graduation for the school.
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more affordable to get books, retention systems, that helps schools reduce the cost so they can deal with the up-and-down and demographic changes as kids go or do not go to school. cory: you can use big data to monitor? mark: what they do is they help schools put together monitoring systems. when kids are doing things on their own schedules, where you to turn in things, particularly for online students you want to be able to monitor that. it is that something that is happening on tallime. cory: for those schools, when they look at this, they have a whole interaction.
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mark: a portion is online, or part of his online. you want to know if it is just about taking the test at the end of the semester. you want to make sure the kid is tracking to make sure they reach their milestones to be successful. it is harder to self monitor the way classes are being taken in college. cory: i know you been looking into investments. mark: one of my companies is packback. what they are trying to do is reengineer the whole evoke approach to college textbooks. they're working with publishers
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to find the best analytical approach to selling textbooks. you may just need -- i cannot afford the books so i would borrow them, and so now you can rent them for a limited time. creating a book system like the movie business place you can get your books when you need them, the way you need them, at the price you need them. cory: do publishers want this? mark: they learning they do not have a choice. as school gets more expensive -- it is one thing when your books were a set amount, and you had to get them. but now college tuition is just are medically handed -- dramatically expanding and growing so rapidly. what happens is the marginal cost of those books appears to
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be enormous. kids are not always making the choice to buy them. they are buying them used, or renting them. they are not getting the revenue sources that they used to. so we said we will analyze that for you and come up with the best solution. i have had one go out of business, to go out of business that -- that should go out of business, and the rest are doing pretty well. cory: you have the strangest investment policy at anyone i know when it comes to money. mark: i'm trying to support entrepreneurs as much as i am looking for home runs. i want to find the best outcome based values for students. that is it different have been investment than i do on shark tank. cory: my favorite mark cuban
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story. two guys were standing by the water cooler, one guy was talking about something, and you walked up to them and said is he trying to sell you something? and he said no, we're just talking. and you said if you're not going to sell something, you don't need to work here. to go to your desk and sell something. mark: yes, if two people are talking, and one of them is not writing a check, you're wasting your time. cory: you took over the mavericks, a team that was really struggling, and you got people on the phone. mark: you cannot survive without sales but there is a flip side because there is no ipo market review to do things that are
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different milestones in the short-term to get a platform to raise money or get to profitability much more weekly. -- quickly. i will now allow companies to platform, but then you've to go to revenue unless there is something dramatic about to happen. cory: silicon valley, we have snap trap and interest -- snapchat and pinterest. mark: if you raise 500 million, you see them accelerate revenue because you have to outperform. you cannot just the and increase of 30% or corridor. he need to increase 40% a year and blow up your numbers. that is what you see with snapchat doing. they do not have that revenue outlook, so really revenue has become far more important
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because back in the day with, you could view a $30 million ipo. i read something yesterday that there are more $100 million private finances, then there were ipo's. over the last 10 years, more i.t. companies have grown through private investment than ipos. that is crazy. because there is no ipo market, because that has been screwed up dramatically, you have to change all of your strategies and how you deal with companies and how you expect them to grow. cory: are we going to see a unicorn like that, a billion-dollar private company in education? mark: there is no oliver ipos so yes. you see a great turnaround, but outside of that, you are not seeing the traditional growth happen where you show dramatic
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growth and hints of profitability, and they go to the public market to get capital to grow. now you have to keep on raising money privately, or get bought out. and until the ipo market reappears you are going to see a lot more unicorns because they do not have the outlet to go public. you will see a billion-dollar education unicorn, what happens next is the question. you have seen a lot of them go out of business. cory: thank you. stephanie: thank you for our own bloomberg editor cory johnson, and the one and only mark cuban. erik: coming up, lane bryant tells women you do not have to look like a victoria's secret model. ♪
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erik: you're watching market makers. it is time to bring up to speed on the top stories of the morning. fedex is hoping to succeed words archrival ups has failed. they agreed to by a dutch package company. european regulators blocks that deal previously. it was not smart phoning that -- smartphones that drove sales, but memory chips for samsung. your easter may be a college kid with a full scholarship. when the program was announced back in 2014, starbucks only pay for the last two years. the chances of his looking for ways to attract workers in an increasingly tight labor market. and duke was not the only
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winner at the final four last night. gary cohen beat out 35 liters from other corporations to win the bloomberg bracket challenge. he actually clinch the title on saturday when wisconsin beat kentucky. as a result we are giving $60,000 to harlem r.b.i. which gives inner-city kids the chance to play, lori, and grow. stephanie: lane bryant the retailer that offers closing for plus size women, says that victoria's secret -- taking a swing at victoria's secret.
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they pose in the qatari's secret -- victoria's secret lingerie with #i'm no angel. there are more size 14 then there are four. >> demographics are in our favor, but it is more than just went size you are, it is about embracing new york. that is the campaign. not to throw shade on any brand, but it is going to throw curves. stephanie: we do not want to promote anyone to be overweight but the best version of yourself is healthy and fit. >> we want you to be motivated. body shaving is not motivational. -- shaming is not
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motivational. erik: do it because you want to do because of the is healthy because it will make you live longer? stephanie: is there not an argument to celebrate fitness? >> celebrating that is is different from celebrating a narrow point of view of beauty. we say comes in all shapes and sizes. it is all about the women in that campaign. i would challenge anyone to say they are not beautiful and sexy. stephanie: they are hot. erik: how difficult is it to get women to feel good about being who they are, the size that they are, the average american woman is a size 14. most people do not know that. the french have taken to banning thin models. stephanie: now there are sexy
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beautiful clothes for larger women that was not the case a few years ago. >> has been interesting to me is reading the social media spitting out every single hour, about how many women have been thinking -- thanking us for help in them feel more confident. we are helping them to do that. stephanie: as far as the products you are designing right now, do think they have changed in terms of the more cutting edge, more stylish when bigger women were not dressing that we a few years ago? >> we believe it is all about fashion, not size. too often the woman we serve has been told what she can and cannot do, and we're seeing right your roles. where would you want, we will help you to look great every step of the way. stephanie: high-end styles and brands warming to that, given the huge market of plus size
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women. are they changing their tune? >> it is a process. part of our goal in bringing the designer on board was to put a spin on that. but it is not just about creating a larger size, it is about designing clothing and taking fashion trends for her. we start with a size 20 and then grade down and grade up. erik: how much pricing power do they have? mainstream retailers can charge more for clothing that looks skinny. >> you need to deliver value. what we try to do is give our clients a great product for a great price. she should feel good about investing in herself. erik: but to make more money, you should charge more, right? >> we want them to feel good
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about the value we deliver. stephanie: what is your goal? >> to stimulate the conversation. we take lipstick and right on the mirror. we want more women to join in on the conversation and it should be and then for all women, not just plus size women. stephanie: have you heard from any of the work for you secret models -- of the victoriousa's secret models? >> they have posted. we did not mean to cast shade. they thought we were shaming them. we do not believe in body shaving. it is about being who you are. stephanie: it is awesome. >> and angel is perfection. and how many of us can be perfection?
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stephanie: none of us. it is forboring. thank you so much. erik: i was going to do it for today's market makers. today we will be talking -- tomorrow we will be talking to one of our favorites. stephanie: i want to bid farewell to one of credit t suisse's best. this guy owns over 100 jerseys, and he bids farewell, he is heading back to queens.
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have a great day. erik: i to bid you a do -- too bid you adeiu. ♪
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>> bloomberg television is on the markets. scarlet: let's give you a snapshot of the market action midway through the trading day. all three indexes are in the green. the longest winning streak since february. the dollar resuming its rally. oil has erased it early losses to build on yesterday's surge. joining me by phone for today's option insight is mark sebastian. he is the founder of and analyst website.
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give us your reaction to everything that has happened this week. mark: i think what we're finally seeing as everyone come to the realization that a june rate hike is nice in the -- not in the cards. i personally do not think we will see 2015 at all. one of the things that i think people have to realize is that in de facto the federal reserve has already raised rates because everybody else is lowering theirs. by not doing anything, that raises interest rates here making our bonds more attractive. that is why we are seeing the 10 year yield, even though it looks at 1.9 really cheap to those here in the united states, that looks frothy worldwide. in terms of every other developed economy in the world. that brings us back to this kind of trade, there is no other yield rather than equities.
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i think that will push stocks higher for the next several weeks. scarlet: earning results after the close after wednesday. we have heard how they will fall because of the drag from energy earnings. some say that they are not living up to where they should be, especially with valuations of five-year highs. mark: i think they are not insane. i am more concerned about currency than i am oil prices. the oil game is basically priced in. one common misconception, a lot of people do not know this but april is the lowest average fixed price of any of the 12 months of the year. so actually think we're going to have an extremely low volatility. time until we have these macro events. a common misconception is we will have these volatility occurrences.
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i do not think it will the monumental. i think willacy probably -- we will see probably the lowest of the year leading into earnings. scarlet: many macro events to go on the calendar. thank you for joining us this afternoon. special coverage of rand paul announcement that we will be covering, coming up. ♪
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>> if you're just joining us on television, senator rand paul will just in a second announce he is running for the presidency. i'm john holland here. mark halperin is at the gulf house hotel in kentucky where the fast and furious residential action is happening. i will bring you back in now that we are on television to get people what we are seeing down here and give us a sense of the feeling in the room and the size of the crowd and the energy level. give us a little picture from where you stand. >>


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