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tv   Bloomberg Markets  Bloomberg  July 17, 2015 1:00pm-2:01pm EDT

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approves a $7.8 billion loan for greece to keep the debt ravaged nation afloat and prevent the threat of an immediate default. betty: we will get inside on solving the debt crisis in puerto rico and will talk with a former governor puerto rico,luis fortuno. mark: paypal is set to split from ebay and we will tell you youthey created functions are probably using without even knowing it. betty: good afternoon. mark: thank you so much for joining us on this friday. let's look at the markets at this moment. ascks are mixed in new york investors are refocusing their attention on the outlook for interest rate and corporate earnings after data showed slow growth and inflation. google is powering the nasdaq higher, it's up nearly 0.5%.
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julie hyman will have more on google in a moment. the dow industrials and the nasdaq are lower as gold dropped to its lowest level since 2010 on signs of improving economic growth. that diminished its appeal as a haven. gold is down nearly 14%. one full percentage. oil is down as well. global markets will remain oversupplied and nymex crude is down 0.25%. betty: we have had a lot of economic data this morning that has affected the bond market. we had housing starts coming in better than expected but also cpi, consumer prices were in line with estimates. you can see that the yield on the 10 year -- the two year is going up in terms of the longer-term when you go out on
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the year -- yield curve, the 30 years at the lowest level in a week. on currencies, the dollar is headed for its best week in two in two the biggest gain months in part of that is on the euro weakness. see over the last two months we are at our highs of that time period. let's look at some of the top stories at this hour. german lawmakers clear the way for talks on a third greek bailout after chancellor angela merkel said greece would face chaos without a deal. 2 important developers today, the german bundestag passed the measure that would authorize their negotiators to start hashing out a deal with the greek government and other creditors on 86 alien euro bailout package. it could end up being more. they have a deal for bridge financing. this is $7 billion to get you
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through maybe four weeks. greece has a debt payments coming up and there seems to be a fair amount of positive with aere going on slightly different tone coming out of greece and negotiators are confident the bridge financing will get them through. there is not a similar amount of confidence on how difficult it's going to be to have an overall aid package. importantly, what the international monetary fund's role in this will be. they talk about a need to do something about the size of the greek debt. a nominal debt now. the bundestag says it's not possible in german politics. the only way you can split the difference is to extend the maturities far out. the german politicians are warning that could potentially be a back door haircut. back to you. betty: that was hans nichols reporting from berlin. mark: consumer confidence declined in july over concerns that global risks will dim
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prospects for the us economy. the seminary index of sentiment dropped to 93.3. it was 96.1 and june. american consumers remain upbeat about employment and wages. the government says gasoline prices are driving a slight increase in inflation. the labor department reports that the consumer price index /10 of 1%.month by 3 palm or 3.4% in june on top of a 10.4% may gas prices are rebounding after hitting bottom in january. betty: a dramatic surge in construction of apartment buildings is giving a push to housing start numbers. the commerce department reported today that housing starts climbed last month by 9.8%. the seasonally adjusted rate of 1.2 million homes. this came in multifamily units, the biggest jump of the building in 20 years. building expect the improved it
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economy will bring on a new wave of renters. president obama will say goodbye to daily show host jon stewart. he will appear in a show next week three weeks before john stuart hands are the hosting duties. this will be mr. obama plus seventh appearance on the show. that is a look at your top stories at this hour. . the president is everywhere these days mark: let's go straight to julie hyman with a look at the markets. the story of the day has been google. julie: we are now in the thick of earnings season. there are a lot of movers today that are based on earnings. google is among them. and prays are up 18% much staying at the highs of the session. this is the biggest one day for google since 2008. it's a record on the back of those earnings. sales are up 13% of the company
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and the cfo was reassuring investors that the company is going to be mindful of costs and expenses in that it is focusing on revenue growth but is also going to exercise expense management. investors like that commentary. when we talk about the major averages and the affected google is having, you have to factor in both classes of shares. we have the one day movement in stocks in the s&p 500. these green lines are both google, the a xhares and the c shares. together, they make up the total market cap of google. if you see it twice and as major averages, that is why because together you get the full weight of google the combined company. some of the other earnings , the number three
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best performer today is kansas city southern, up 6.5% after the railroad operator cannot with earnings and sales that actually fell. kansas city southern said that volume is improving subsequent month of the second quarter and the first few weeks of july seems to be on the same trend. on the downside, we are looking american down nearly 7%. comerica is increasing his provisions for energy lending. it said its exposure to them was about $3.4 billion in loans at the end of the second quarter. there has been concern in the market about these type of exposures. this is one example. mattel is one of the dow movers on earnings today. the numbers looked pretty good initially in animist -- and analysts estimated a one penny gain improper for the shares are down more than 4%.
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barbie sales are still struggling in the company said worldwide shipments were down 8%. it seems that the struggling barbie sales are the culprit for the selloff in the shares. betty: i'm sorry, mark. i'm sorry that barbie sales are down. mark: i was looking at that story. brin addedand sergei almost $4 billion to their indigent -- individual fortunes. . julie: $4 billion each. we are talking about lloyd blankfein but larry page and sergei brin are laughing. betty: we are giving larry -- lloyd blankfein is -- a an inferiority complex. mark: i think he's fine. thank you very much, julie. coming up, we will look at the future of paypal after it splits from ebay today. betty: you may be surprised to
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learn about the different things the company is doing behind the scenes. we will take a closer look at why the talks between dish network and t mobile have said to have stalled. valuation is one of the big sticking points. ♪
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betty: welcome back. paypal is on track to officially separate from ebay today with paypal shares starting to trade monday. paypal may have started as a digital wallet that is not just for your grandfathers palmpilot. mark: what is that?
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emily chang explains the functions you are probably using t.d don't even know it areaemi y emily: here at hole filled -- at whole foods, the braintree technology powers every single apple pay transaction. thank you. , inputhold my phone here the pass code, and that's it. and there's more -- powerstechnology also transactions for air b&b, home depot, apps like hotel tonight, munchers and others. you can use your paypal account to order and uver. let me just call my car home so i can cook dinner. betty: i have to grow grocery shopping this weekend. thank you for the reminder.
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emily joins us now from san francisco. what is the vision they are relating out -- laying out with this split? i highly recommend work and grocery shopping at the same time. dan shulman is talking about making transferring money easier which is a problem with international challenges. it's about crossing borders and paypal ought a company called zoom for $900 million that will make it easier to transfer money in between different countries. one of the big criticisms of paypal is the product, that it has not really advance. it has innovated by acquisition but not internally. that is something dan shulman disputes. >> what i did not know was how great was the plot or. it's a 15-year-old company. a lot of technical debt can
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build up over that time. my greatest pleasant surprise is how much work had been done on the platform to modernize it. that is important because, as the industry continues to change, so rapidly, being able to innovate in a rapid fashion is crucial and that depends on the quality of your developers and your engineers but also the platform they have been working on. think about all the competitors out there for paypal. there is apple and there are startups and it's important for paypal tuesday the leading edge of innovation at suck that's something dan shulman should have first on his list. mark: how important is it that paypal implements and -- improve its platform for consumers? emily: it's incredibly important. apple and google are making strong moves here and the big criticism of paypal is that it has not really unabated.
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it has innovated by acquisition and bought big companies but the core paypal team is not done much in terms of getting for his vision. he is talking about democratizing payments. it is a big nut that it paypal can crack, it will reap great rewards. >> paypal has the opportunity to make managing and moving money a right and not a privilege and that's a big opportunity for the consumers. we just have to be more in the middle of how people manage and move their money. emily: i spoke with the cofounder of paypal and he says he things paypal is still a teenager so he thinks there is a lot of room to grow. we expected to spin off at a $40 billion market cap potentially. people like david sachs thinks this could be a $100 billion company. betty: so there is still a
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teenager and young but at some point, does paypal gain a p[rent? do they remain independent or get sold off? emily: everyone is talking about it as an acquisition target. i spoke with john donahoe, the ceo of ebay and he says this company will remain independent and he will remain chairman of the board of the paypal board. he said there is a handful of companies that can do a deal. payments is a really tough business. everyone keeps talking about ali paypal which is an easy way for them to extend its international footprint which they have wanted to do. there are a lot of regulatory issues there and the same with google. google is fighting monopoly concerns in europe right now. it certainly seems the leadership of the company wants it to remain at the been -- --
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to remain independent but they will keep their options open. john donahoe believes the company will remain independent for the foreseeable future. betty: thank you so much. our coverage continues all day monday on bloomberg television and on mark: emily will take a closer look at the dramatic changes in the payment landscape and how companies like a pal are changing the way money moves around the world all day monday right here on bloomberg television. coming up on market day, merger talks between dish and t-mobile hit a speed bump. betty: can the dish ceo get this deal done? we will discuss that after the break. ♪
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mark: welcome back to the bloomberg market day. betty: let's get straight to the breaking news desk. we've got another merger possibly in the works. keywordossibly is the but dow jones is reporting that cf industries is in talks with a merger withoci. a dutch
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fertilizer company. if you look at the market cap of the two companies, cf has about $15.7 billion and oci is a smaller company with 5.7 billion euros. you can see movement in the stock on the screen behind me. there was a big jump when these headlines came out. it looks like the shares are trading at a record with a big one-day gain. we will bring you any updates on this story as we get them. this is just one report at this point. the deal terms are not clear at this point and the deal may still not go forward. the two parties are merely in talks. betty: but look at that pop. thank you.
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let's get a look at the top stories -- google cofounders larry page and sergey brin have added almost $4 billion to their individual fortunes today as shares of the internet search giant go up as much as 13% to a record. their fortunes are up nearly 20% this year. that's an increase of almost $7 billion each. eric schmidt who owns 1.3% of google has added $1.8 billion to his fortune and is up 23% year to date. the cfo who joined the company in may has signaled plans to bring more restraint to spending at google. the family that controls samsung is a winner today over u.s. hedge fund. shareholders narrowly approved in a billion-dollar merger with samsung affiliates that gives more palatable the lee family. -- more power to the lee family.
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the merger can be challenged in court. mark: hulu is considering an ad free option for its service. the streaming video provider is trying to become a stronger rival to netflix whose current service which costs $7.99 per month requires advertising breaks during the programming. an ad free option may cost $12-$14 per month and could begin later this year. elon musk will hold a news conference today. the tesla ceo may announce an upgrade package for the company's roadster including a better battery pack. the price of the roadster upgrade package could be in the lower range of $10,000-$20,000. 31 countries00 in before production stopped in 2012. betty: the power of elon musk and one tweet -- the stock is up over 2% in anticipation of the press conference starting in about
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half an hour. we have been so focused on the 3 that and the model should hit the mass-market and we have forgotten he made money on the roadster. mark: just one little tweet and look what happens. betty: exactly. if only we were able to do that. mark: well -- mobileh talks to buy t have stalled. people with knowledge of the matter say there is disagreement about price and about deal structure. betty: shares of t-mobile and dish tumbled on the news. this calls into question the deal getting done at all. will the merger be a logical company? here is what charlie erg and told me exclusively last month. >> i think there is certainly a lot of positives. if there is willing participants.
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they have done a fantastic job in being the upstart company. e and his team of capture the imagination of the public in terms of attacking the pain points we have in the wireless industry. their network is similar to our spectrum position. it fits in that sense and their growth rates will need more spectrum. those things make sense. betty: at the time, there were reports that they were very far apart because charlie ceases company valued more than deutsche telekom. this is no surprise we have hit a speed bob mark:. deutsche telekom has been discussing a deal for years. you hear little snippets of perhaps now is the time. betty: exactly, there have been talks like this with a lot of people for a long time between charlie ergen and many people.
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he is a deal maker but one of the rubs on charlie is when will we get a deal. start deal talks and maybe not follow through. betty: he defends himself on that and says at the time rupert murdoch had pulled out. when something is not going start deal talks and maybe not follow through. right and he insists he is a hard bargain are, negotiator, he will walk away. mark: wow. betty: i'm walking away to my weekend. mark: nice segue. what you have coming up, mark? the next half hour, we will take a deep dive into puerto rico's debt woes. that story seems to have gotten lost in the talk about greece. the former governor of puerto rico will be with us. ♪
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mark: welcome back to them bloomberg market day.
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federal authorities have not yet pinpointed a motive in the attacks that killed four marines in tennessee. the attacker was killed after that rampage in chattanooga. he was born in kuwait but was a naturalized u.s. citizen. agents entered his home in the chattanooga suburb of texan and -- hixon. president obama asked americans to pray for the families. the shooter attacked a pair of --itary targets, a recording recruiting office, and a training center. jurors needed 12 hours to decide the case of the colorado movie killer. degree.r in the first
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lanc.han b we find the defendant, james holmes, guilty of murder in the first degree after don't version -- deliberation. rejected claims that he was insane when he opened fire in the theater. this impala panel must decide whether he will die for his crimes. courtrors will return to wednesday. it has been a year since a malaysian airlines passenger plane was shot down, killing all 298 on board. petro poroshenko was pointing the finger at russian president vladimir putin calling it "a ruthless terrorist attack by rebels." russia denies any involvement.
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a strong tropical storm sweat -- swept across japan. the storm caused serious flooding and disrupted air and train travel is across the main japanese island. next half hour, now that ramadan is ending, we will look at how diets are changing and how it could get threat to people's health. greece gets a lifeline from europe to avoid the threat of an immediate default. we will talk to the only american creditor who has been in talks with the greek government. it is a small island with some giant problems. the governor of puerto rico said the territory could not pay it $72 billion in public debt. one of the agencies failed to transfer cash to a trustee because the legislature did not appropriate funds. if they do not pay the $36 million of bonds maturing on
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august 1, it would be the first time puerto rico has defaulted on a debt payment. joining me from washington is the former governor of puerto rico. welcome to the broadcast and thank you for your time today. guest: my pleasure. mark: how did puerto rico get to this point? >> and under performing economy for a decade and a half, the state government trying to make incurring additional expenses, deficit spending beginning in 2001. essentially to a great degree the territorial status did not help at all. on top of that, fiscal constraints were not in place. >> what does puerto rico's debt payment, what does that mean?
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who has 17 different types of credit. from general obligation bonds, bonds paid straight from the sales tax, to some that are not secure at all. call it a technical default. actual payment is due at the beginning of august. it is a small portion compared to the size of the total debt of the island. the issue here is that the island has a serious liquidity crunch and access to the cap will markets is fairly limited. there are conversations about whether puerto rico should be allowed to declare a currency is some disabilities do. what is your consideration of that?
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should puerto rico be allowed to declare bankruptcy to get its fiscal house in order? -- that applies to the 50 states with the exception of chapter nine. it allows certain municipalities and corporations to file for bankruptcy. it does not mean the state could. in this case general obligation bonds will be excluded but some public operations could, if chapter nine applied to puerto rico the same it applies to the 50 states. ago there was some traction in congress about this. i am not sure where are we at this moment after the government made the announcement is made and that may have thrown a monkey wrench into the process. i would suggest that we waited and see until the dust settles to understand what will be the
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next at on the side of the congress. what challenges does puerto rico face considering it is neither a sovereign country nor is the u.s. state. governor: it does not have full representation in congress. it does not have two senators are voting members, it only has one voting member. it does not vote for the president. if they move to the mainland they can move -- vote for the president. there are some problems that do not fully apply to those residents of rico but if a puerto rican moves to the mainland it would apply to them. even in cases like medicare where puerto ricans pay full medicare taxes with their paycheck. i would say there is uncertainty tied to investing in what is and
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you described it very well. it is not a sovereign nation, not a state. somewhere in between. those are disadvantages and on top of that, the jones act. legislation that requires all shipping between two u.s. sports be done on us-made affects an island a lot more than the mainland. the situation seems to have gotten lost in this conversation about what is going on in greece. are there similarities between the tuition increase in what is going on in puerto rico? governor: in both cases there is a need for fiscal controls and transparency. having said that, greece is a sovereign nation where is puerto rico is a u.s. territory and in that sense, there are major differences. the sheer size of the greek thantion is much larger
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the puerto rico situation. humala securities have sold at distressed levels for two years on concern that puerto rico will let be able to repay its debt on time. what message might you have for investors who might be skittish at this way when they look at puerto rico? the kind it depends on of paper you have got. there are 17 different type of credits. each of them were issued under different terms and conditions. i worked for many years, i was a corporate lawyer before public service and have gone back to that again. cases, their security is strong and the money is there. to repay. in other cases that may not be the case in the neighbor wire sensitive restructuring. it will vary from credit to credit and that is what we made the suggestion that if you are an investor you look carefully
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before taking any steps. mark: i have to ask, the legislature did not appropriate funds for that august 1 debt payment. not see theslature big picture here, do you believe they did a disservice to the people of what a rico? governor: if you look at the actual budget this was a last-minute amendment to this year's budget. to pay andmechanism the allocated $250 million for different types of immense -- different types of payments. the bank should have moved forward and made a request for those payments and they did not make those payments. there is a clash between the executive and legislative branches pointing fingers at each other. the damage is done unless the a by early august.
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-- they paid by early august. to have is a privilege you on the broadcast. thank you for your time. still ahead on the bloomberg market day, title would -- tiger woods struggles at the british open. make the cut? that story is next.
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that -- welcome back. julie hyman joining me now. will you be focusing on and you said the diversions, not just today but throughout
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the year. performanceelative between the average is because technology is outperforming today. take a look at the three major averages. it is very clear what we are seeing today, the google affect. pushing up the nasdaq i half of 1%. it is not just today. nasdaq, the out performer in the last couple of months. you have the three major averages for the year. the yellow line is the dow. the white line is the s&p. both reached their records around mid to late may. the nasdaq is just now at a record, it was yesterday and again as a continues to gain. gains for the averages, it is a most like multiples of three. the dow is up more than 1% and awayasdaq has been far and
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the best performer this year. what has led it there, if you look at the year to date performers, number one is netflix. it has been the out performer. this is for the nasdaq 100. electronic arts has been a big out performer. and so is amazon had a record today. all this helping lift the nasdaq. and then you have to talk about google is well which is trading at a record, of the most since 2008. for these a shares of 16% in the wake of its earnings report. the big tech push that we're seeing. tore seeing a big hit commodities prices and the companies that produce those commodities. if you look at oil and gold, we're seeing this third straight weekly for wti on concern about an oil glut and as we get iran's
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supply online. gold is falling at a five-year low. and the bloomberg commodity index for a broad basket and it is lower. we have seen this big selloff in commodities not just today but in recent days. the drop in gold is especially notable. mark: the greek prime minister has reshuffled his cabinet after the parliament us approval of austerity measures that prompted dissent in his syriza party. among those replaced, the energy minister. we will bring you more details as soon as they come in. let's move on to top sports stories crossing the terminal at this hour. a major reversal for japan on .ts mainstay him the plans are being redone because of out of control costs. the venue will not be finished
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in time for the rug a world cup as a result. the government has come under growing prison -- criticism as the cost skyrocketed to $2 billion. nearly twice as much as the original plan. construction had been scheduled to begin in october. disney's abc is hoping your saturday night tv viewing will include basketball. it will add saturday night nba on nbc. they will split it up with one game saturday night, one on sunday. the schedule and the a schedule begins with a christmas double-header. pulled outiams has of the swedish open. she injured her elbow during a practice session ahead of her second-round match. she plays for the fifth straight major and her first ever calendar glut -- grand slam at the u.s. open next month.
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it is friday in mid-july so chances are some of you are thinking about golf or boats, so let's start with golf. round two of the british open is underway at st. andrews. the start of today's round was delayed by over three hours due ankle-deepin leaving water on some of the holes. big names like dustin johnson and jordan spieth likely will not finish their rounds until saturday morning. also unlikely to finish, tiger woods, who is struggling big-time on a course where he is one two of his three british opens. he is battling to make the cut after shooting a four over par in the first round. matt, tell me about this company. matt: they are at the top of the class of that category but they
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are not cheap. is $50,000 version to $60,000 so that is before you pay for your slip or mooring fees for gas, etc. in this economy, sales are growing. are seeing rapid organic growth over the last three years since we executed our new plan with our new team. we're seeing great sales, debit -- double-digit sales and nearly triple digit growth over the last three years. the extra cash lying around to buy about, you have taken care of your house, kids, and job security. you have real confidence. this might be a better sign of confidence than that report. i remember when you
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interviewed tiger woods. he was on satellite in florida. it is shakespearean, this fall from grace. we're talking about not too long ago, they were talking about tiger woods is not just greatest player of his generation but perhaps of all time. and he was. everything that happened in his suv in his florida home seem to put an end to that. it was his behavior that changed that and how much has he changed since then? he has not changed enough to help his game. he is battling to make the cut right now. willett is the- leader. there are six guys tied at seven other -- under and jordan spieth look to be doing pretty well. i had to come back here to work for could see the rest of the
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round. i would not surprised if jordan squeezes in 18 holes today. mark: the weather has been bad. yesterday they were using squeegees to get the water off the course. still ahead, 1.5 billion muslims are celebrating the end of ramadan. of fastingong time and reflection. what they are eating and weight could he a bigger threat than they imagined. ♪
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ds they and's the -- en month of ramadan.
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the food culture is changing and so is the country's health. is the weekend -- it is the weekend. and record joints like these are jumping. is a chain from california that came to saudi arabia in 2013 and recently opened a second popular spot. what is it about burgers and saudi's? >> it is a global trend when it comes to burgers, especially gourmet burgers. saudi arabia has taken it to an extreme. these are a couple of the burger booms. many concepts, you could have a different burger .nce a day in a week
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maybe more. maybe two weeks. >> it would not be very good for you. >> it would be one of those supersize me concepts. you would need a doctor on call. opened the first of 80 outlets in 1993. as gourmet franchises attract a growing number of saudi waistlinesgrowing have attracted serious medical concerns. >> i expect in the next five years or so that the obesity epidemic will continue rising. he is performing triple the number of best -- gastric why passes he was from my view years ago. wasastric bypasses that he performing from years ago. 70% are considered
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clinically overweight. where daytime temperatures top 120 degrees fahrenheit, poor diet is only part of the problem. >> the lifestyle is mostly driving their cars, not walking, not doing a lot of physical activities. he has not worked out in years, he says. and hopes stomach surgery will help lose a most half his body weight. think there is too much fast food today? >> yes. >> is it a problem? >> yes. all the companies here of the fast food is from america or another country. >> according to his doctor, the medical ex words and the medical equipment also comes from overseas. >> first the hamburger and techniques are coming from america. >> that is the cause and the solution.
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>> perhaps the best solution facing so many options may simply be to make better choices. governmentis the doing? coverede surgery is not by insurance. man, he wasof one unable to leave his bed and the king financed his surgery. mark: fascinating angle. appreciate it. john mcavoy, the ceo of kong -- at ed will be speaking to us 3 p.m. bloomberg market day continues in just a moment. ♪
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2 p.m. in new york. talk to the only
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american creditor who has been in talks with the great government. matt: dish network and t-mobile put things on hold. when, if ever, will a deal get done? mark: how the head of wall street's -- one of wall street's largest banks made it to the three comma club. i love that. here with mark crumpton. mark: it has been a tale of the nasdaq. came out andrnings google went to the all-time .5 oflook at nasdaq, up 1%. matt:


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