here to talk about falling gas prices, and when a federal probe into gas pollution means. union pacific revenue is down nearly 10% but cost cuts are helping the bottom line. we will hear from ceo lance chris in a few minutes. uber takes on new york city and wins. company learns some valuable lessons about overcoming regulatory hurdles. good morning, and welcome to the bloomberg market day. i am olivia sterns. scarlet: and i am scarlet fu. olivia: let's look at where markets are trading right now. it is a mixed picture, not a lot of movement.

the nasdaq doing a little bit better. we are weighing corporate earnings. a little disappointment coming out of 3m and a lot of disappointment coming out of caterpillar. joblesseconomic data, rates are at the lowest level in nearly four decades. scarlet: the labor economy looks to be doing well. the dollar is weak or today. it is still near a three-month high so we are seeing more of a pot in the dollar rally. as a result, you move that into commodities. a lower dollar means higher commodity prices. look at nymex crude oil, just up barely. gold futures snapping their 10 day losing streak up by just one dollar. olivia: i am not used to seeing gold trade before -- trading below $1100 an ounce. publishing, the nikkei is buying the financial

times. this is nikkei, the japanese publisher agreed to by the financial times for 844 million pounds. billion.1.3 i have this statement in front of me. there are expecting to close the deal in the fourth quarter of this year and that amount, 844 million pounds payable in cash. came after that was speculation that there were a number of other media companies in discussion to buy the ft, one of which, the german publisher axel springer. we did get this news and shares spiked on that. you can see on the chart that we are bringing up for you right now. in terms of the reason for this, in the statement, pearson said the best way to enjoy the ft's

journalistic success is for it to be a part of a global news company. newsi, the largest global organization in asia. magazines,ave books, digital media. over the last five years, digital circulation in the financial times has grown to represent 70% of the total, up from 24%. mobile driving almost half of all traffic. much --thank you so stephanie: thank you so much. olivia: general motors says you have not seen anything yet. sales were also stronger in china. ceo chuck stephens told bloomberg this morning that all of this sets the stage for the next six months. >> in the first half of the year, our performance has been

driven by strength in north america and strong performance in china, and we would expect that to continue into the second half of the year. g.m. broke even in europe. one of the best-known names in supercars is going public, fiat chrysler theory -- furry will list on the new york stock exchange. they are being valued at more than $11 billion. cuts part of the plan to debt and invest in fiat chrysler's other brands. congressman fired -- anthony weiner has been hired to work for a crisis pr firm with .lose ties to hillary clinton ww is the name of the firm. topwife is one of clinton's

advisers. those are your top stories. scarlet: we have a lot more coming up in the next hour. it is almost prime time for amazon. we are going to discuss what investors can expect next from the ceo chuck bezos. talks aboutunder what happened when google came almost a decade ago. that, plus video on demand, and what is next for youtube. southwest airlines earning a record $708 million in the second quarter. we will hear from ceo gary kelly. those stories coming up on bloomberg market day. freight train operators on a bit of a rough ride with falling demand for coal forcing industrywide cost cuts. its firstfic posted quarterly revenue declines since 2009. investors largely expected this. unp shares down almost 4%.

the cost-cutting strategy appears to be working, at least for now. i want to bring in union pacific ceo lance fritz. thank you for joining us. : thank you for having me. olivia: do you think the slowdown in coal is cyclical or ?emporary matt lance: natural gas prices are clearly driving more of electricity production to natural gas. the weather was not all that good in the second quarter for colburn. all that added up to a significant headwind on our coal business. olivia: do you see a bottom for coal? hope it does not get any worse than it did in the second quarter. there are reasons to be optimistic.

our current run rate has been improving going into the third quarter. it looks like regular seasonal weather is showing up, which is good for overall burn. , whoast piece would be knows what is going to happen with natural gas prices. if they went up, that would be a help. scarlet: you have a drop in coal and grain carloads. what will make up for this? lance: on the positive side, we had a good volume in automotive, both finished vehicles as well as auto-parts. we had good strength and parts of our chemicals business, specifically in plastics and liquid petroleum gas. we also had a pretty robust domestic intermodal product line. the beauty of junior sick -- of union pacific is that we are the best in the industry and we are exposed to some good business development opportunities. olivia: you have had to furlough

workers to cope with the slowdown. how many workers have you furloughed so far, and how many do you anticipate that you will have to? morning, reported this the end of the second quarter we had about 1200 people either for load were in alternative work status. that has grown as we have entered the third quarter. what the number exactly will be, will be dictated between attrition, which are employees leading our workforce, productivity, and whatever is going to happen on the demand side. normally when you have declining volumes, prices also come under pressure. how have you been able to raise prices? lance: i am so proud of our commercial team. out in the marketplace and pricing for the value of the product that we deliver, and that is exactly how we do it. we price to the value we represent. corere able to get 4%

pricing in the second quarter and that is a testament to the fact that, even in an environment where volume is down and there is a number of headwinds, we still have an opportunity to realize price by having a demonstrably better service product than the competition. scarlet: last question -- i know you do not get profit forecasts but i want to hear what you think is a critical component in outperforming your competitors. there is when other thing in the macro environment we did not talk about, which is shale energy production and exploration. that is a big part of our story in terms of down volume in the second quarter. as we look forward, our whole business model is predicated on excellent service and being demonstrably better than other alternatives. we are executing on that as we speak and we are going to

continue to execute on that, as well as getting our resources right and getting back on track to show real productivity and efficiency in our costs. all of that is possible and i expect it. olivia: thank you so much for your time, lance fritz, ceo of union pacific. they are using drones to expect -- inspect train derailments. scarlet: that goes to decreasing cost. amazon has its first ever prime day. the company says it was a huge success but did it boost subscriptions in a meaningful way? we will discuss amazon and preview its earnings, next. ♪

♪

♪ welcome back to the bloomberg market day. i'm olivia sterns. scarlet: i am scarlet fu. olivia: let's take a look at what is happening in the market. sandisk, the maker of data storage devices is going gangbusters, hitting its high, up about 18 and a half percent. wednesday, it on reported q2 earnings that beat $.62 a share versus an estimate of $.34. bank of america upgraded the stock to buy from neutral. shares could rise even higher than this. also moving, f5 networks. this company provides internet

traffic management solutions, up by 9.67%. it reported a q3 profit of $93 million, a 73% increase. losers, united rentals is the biggest of those. the equipment rental company is down by 6.4%. it cut its 20 15 revenue forecast. the company has not been doing so well and is down 28% year to date. olivia: thank you so much. the winners and losers on the s&p. , sharesthe top stories of caterpillar lower again today. the largest maker of construction and mining .quipment posting a 29% decline it also cut its sales forecast this year. customers have bought less heavy equipment to dig them out of the

ground. shares of under armour are rising this morning. they beat analyst estimates. into shoes and other products is helping boost sales. they have also been helped by high-profile endorsements, such as that guy, got a love him, jordan spieth. at the masters and u.s. open, raising under armour's profile. steve easterbrook predicting that mcdonald's will start growing again sometime in the next six months. investors could use the optimism after another lackluster quarter and sales fell by -- fell by 2%, their seventh orderly decline in a row. easterbrook promised a turnaround as well as a modern progressive burger company. where did we go last night, five guys? it did not feel very progressive. scarlet: we did not even look at mcdonald's as an option so there

you go. amazon reports earnings after the bell, with post earnings particularly should good -- good for shareowners. those two spikes were after amazon's quarterly announcements in january and april. can jeff bezos do it again? colin, thank you for joining us. >> ready for the fireworks? back at amazon, you have to look back at the june quarter in 2013 before you get a move of less than 7% in the stock price. if you look at the chart year-to-date, we had a nice big step up. lastclined on earnings the four quarters in a row. you are going to get a big swing. the question is --

olivia: what is driving that swing? colin: two things driving it up and back. it would be healthy for amazon to pull back a little bit. people are going to be looking at amazon web services. forave the number broken up the first time in the march quarter and it was profitable. scarlet: 17% operating margins. colin: is that sustainable for a cloud business? the more troubling bit, the total company had 255 million in operating income so the entire process ability of amazon was coming from aws. it is doing a hundred billion dollars in topline revenue and is not making money. they are happy for jeff bezos not to make any money because he is just investing it so well. colin: you have assumptions of future profitability eight into

amazon. -- baked into amazon. scarlet: amazon is known for its razor thin margins. us is a company built to capitalize on volume and scale. how does the cloud model fit into that? colin: maybe they will do 5 if you takeevenue, that 5 billion, put a 10 multiple on it, a $50 billion valuation for the cloud business, that is great. that is a have devaluation but that still leaves another 100 $75 billion for the retail business which has? be.or how profitable can it olivia: a chart shows how not profitable amazon actually is. jeff bezos keeps getting a pass. walmart.com came out with this three-day pass. is that a threat to amazon?

colin: on the margins, these are threats but if you are in amazon prime customer, it gets you hooked in. you have so many items. once you become into that ecosystem, it is pretty hard to win that customer somewhere else. scarlet: speaking of prime, amazon is tightlipped about how many members it has. we estimate 40 million. what do you think happened with the prime day? did it meaningfully increase subscriptions? colin: that is another thing, if you are an investor, wouldn't you like to know how many prime members there are? that is a key part of the business, but you do not get that disclosure. in terms of prying day, i think iat was mostly -- prime day, think that was mostly a lot of hype. i do not think it was a major .river for prime memberships

the value being added to users of prime continues to increase. the prime ecosystem is one of the key things for amazon. olivia: another thing is content. our their investment in the content going up? you always are going to need to invest in more content. you need to build more episodes. for people who think that will slow, it is not. olivia: and you have to have a hit tv show. scarlet: where is jeff bezos's "orange is the new black." olivia: still to come, it has been nearly 10 years since google bought youtube. looking back, did it sell out too soon? we will ask one of youtube's cofounders. ♪

♪ google famously bought

youtube in 2006 for about 1.6 billion dollars. the cofounder chad hurley says he does not regret holding off for more. he said if not for the deal, the company may have been forced out of business. he spoke to emily chang. >> it was a rocket ship and it .ontinued to be this journey even after we became part of google, thanks accelerated from there. we had more resources but at the time we sold, we only had 67 people within the company. three engineers, i.t. guys that would run around the country maintaining our three data centers. at the time we did not have the luxury of plugging into amazon web services or something. you had to go out and build your on machines.

beyond that, we were threatening basically both sides of the industry, the internet industry. togle, yahoo!, they want maintain their control but you have the traditional media world, the studios, the labels, and others wanting to retain control of distribution. they were attacking us for not doing the right things around copyright when we were building all the tools, more tools than any of our competitors and more policies from day one to deal with all these problems, and create solutions for them when they can monetize this. the music industry earns billions of dollars off of youtube. with all of these people looking at us, and for us just struggling to keep things up and running, he had no other choice really at the end of the day but to be acquired by someone. for us, we were lucky enough to

be acquired by google, who in my mind, took a chance on us. youtube probably would not be what it is today without their support so i'm really thankful. emily: so you felt you had to sell? we try to go if alone we would have eventually been crushed by lawsuits were just not being able to scale. scarlet: you can watch emily's full interview tonight at 7:30 eastern time. i think it is cool what they are doing with original programming. is wherearket, that youtube studios is and they just hired mtv's head of programming. scarlet: is that good news or bad news is mark -- bad news

question mark olivia: when i stopped watching mtv the programs were pretty good. scarlet: there is a magazine that publishes -- that is published out of the u.k. called oh my blog. all the hot teen stars. moto, the most popular 17-year-old on the planet. olivia, you have to take off. we will hear from southwest airlines' gary kelly in just a bit ♪.

. . .

♪ ♪ ♪ get excited for the 1989 world tour

with exclusive behind the scenes footage, all of taylor swift's music videos, interviews, and more. xfinity is the destination for all things taylor swift. scarlet: welcome back to the bloomberg "market day."

one of the best-known names in financial journalism will have a new owner. pearson agreeing to sell "the financial times" to the japanese media company nikkei for the price of about $1.4 million. subscriptions make up 70% of its total. selling it will allow pearson to focus on a slowdown in its education unit. kerry is of state john challenging critics of the iran nuclear deal. in a senate foreign relations committee hearing, he rejected applications that the u.s. failed the hold out for a better bargain. the deal werry: have reached is not what i've seen ads on tv suggesting disingenuously. some sort of unicorn arrangement involving iran's complete capitulation. that is a fantasy plain and simple. of back there's plenty and forth because the foreign

relations head, bob corker, said , "you've been fleeced" to carry -- kerry. direct quote there. the conference board index rose grownnd americans have more downbeat about the economy. the bloomberg consumer comfort --ex. to a five-week low dropped to a five-week low. cinnamon among those making -- sentiment among those making less than $100,000 was the lowest. markets are closing in europe. for the latest, we head to london for the scorecard. >> we are seeing a third day of declines for european stocks. the europe pus equity benchmark is on a little bit of a losing streak now after a nine-day rally, which was its longest

winning streak since april 2014, and it has been a bit of a tug-of-war. on the one hand, we've had corporate earnings beating estimates. that was pulling the benchmark theer at the beginning of day, but in the end, it's been dragged down by gas companies and commodity producers. these of the industry groups. you can see gains in financials. credit squeeze earnings the estimates. consumer goods gaining as well. as i said, oil and gas companies and commodity producers tracking down the stoxx 600 today. if we have a look at the notonal benchmark, it does look quite so dismal. we can see a bit of a mixed picture today. ftse 100 down. dax down as well. the athens stock exchange still close, as it has been since june 26. we had that vote last night in the greek parliament where lawmakers approved that package

of measures that greece needs for its new bailout, and we were expecting the athens stock exchange to open perhaps today in the best case scenario, but we've now heard the decision for window open greek markets has been deferred to next week. back to you. thank you so much. coming up, over scoring a big win in new york, beating back a plan for mayor de blasio to halt , but it is not out of trouble yet. plus, singapore picked for the top travel destination of 2015. why is the city losing so much tourist business? and it would :00 p.m. eastern time, the nasdaq ceo will join us to discuss the exchange's latest earnings as well as concerns over recent software and tech-related trading glitches at major exchanges. that story and more coming up on the bloomberg market day. lots ofrs that americans are on vacation and

choosing southwest airlines. ae low-cost carrier posted second-quarter profit with earnings of 31% on the back of lower fuel and operating costs. shares are rising this morning by 5.5%. southwest airlines chairman and thespoke with us about effort to keep costs low. >> we are a low-cost producer. it is a cost driven business. services also very important, and health west has been ramis for having that right talent of service and cost, but you keep fares low. do not nickel and dime your customers, you will select the airplanes and make at least a profit and take care of your shareholders. >> i feel like when you speak to your peers, they say they are already hedged and their prices are locked in far in advance. hedged, too. are we probably hedge more than anyone else. powerful to did a fabulous job

of unwinding our hedging positions before prices fell so low, but we will have to manage through that ourselves over the next couple of years. still payinge significantly less, even with some hedging costs. our fuel was down -- fuel bill .as down $419 million even with some hedging, it is still significant year-over-year savings. stand onwhere do you your international expansion plans? new for us.his is we are opening up a five-gate terminal in houston at hobby airport in october. we will launch flights there. we are adding two net international destinations along with that, one to belize, and the other two live area costa .ica

we are moving at a measured pace. international is about a percentage and a half of our total capacity, so it is very small right now. we have 10 destinations, but we will continue to expand and add dustin nations in the future. it's very exciting. stephanie: can you give us any of what you think of the u.s. economy, the health of the economy. airlinea low-cost provider, so it would be great for you to give us a sense -- what do you think america looks like? mr. kelly: thanks for that question. we are low-cost, and we are also the largest airline in the united states in terms of the number of customers we serve, so we do have a pretty good extensive pulse of the economy, so i would say what we've been seeing for the past 90 days especially as consistent with the headlines that you read, which is a little bit of inconsistency, a little bit of choppiness. it does feel to me like the consumers are beginning to spend a little bit more.

i think a lot of the weakness over the past 90 days has been the oil and gas sector and cutbacks in business travel, but on balance, factoring all that in, i still think the economy is solid. it feels like it's going to pick up more from here. there has been a bit of a soft patch, but you look at our results, we grew traffic 5.6%, so i'm very, very pleased with the current results, despite that bit of softness. leastthe results were at better than the street had estimated, so beating analyst s.recast over the last 12 months, you are up 20%, but year to date, you are down, and obviously, the weakness coming with the doj announcement -- are you giving the doj everything you can? how long did you expect this investigation to go? mr. kelly: i think shares are down for a couple of reasons. one is the revenue environment is a little bit softer, as we

were just discussing, than what people thought perhaps at the beginning of the year. just a little bit. not a lot. second, investors have expressed concerns about the capacity industry, which is what the doj is investigating. we are fully compliant with antitrust laws. we are fully compliant with federal securities laws, and we still want to be transparent with shareholders. we are cooperating with the doj in their investigation, and that's all i can report at this point. we are growing, southwest airlines. we grew 7% in the second quarter, and we plan to grow at wet rate for the year, and will grow next year. we have great opportunities to grow. stephanie: before we go, corporate america is cutting expenses.

mr. kelly: we are the largest airline in america. our customers are traveling on business, and probably, we carry more business customers than any airline. uber takesill ahead, manhattan. the company comes out on top and its fierce battle with the mayor, but what is ahead with a company? -- what is ahead for the company? ♪

scarlet: welcome back to the bloomberg "market day." let's begin with some of the stories crossing the bloomberg terminal now. reportedquity firm kkr

record profits in the second quarter, benefiting from unrecognized gains in the second quarter. the european union is now taking on hollywood. the eu has issued an antitrust andlaint against disney five other hollywood studios -- one of brothers, nbc universal, paramount, sony, and 20th century fox. the eu's concern that licensing deals restrict access to pay-tv around the continent. and if the cost of donuts goes up in new york city, blame governor andrew cuomo. that's according to dunkin' donuts, which last out at a plan to boost fast food wages. by the of panel formed governor reached that decision without input from the industry. a one the result could be higher prices. those were your top stories. we have a big victory here for uber because new york city mayor bill de blasio has tabled a plan to cap the number of cars on the streets. uber has grown dramatically

since the service was introduced in new york 4 years ago. there are now 26,000 drivers, and the number of cars in the city has tripled over the last year and a half. you can see that compared to the number of taxi medallions in the city are joining us now to talk about how the spike could 's future iser bloomberg's a david gora. respondeder ferociously to what the mayor proposed. is that a strategy going forward, and is it applicable to other cities? david: they've seen big protests in paris and london. a lot of people who are averse to them coming in and doing business there. what you see in new york is an amazingly narrowly tailored regulatory approach. spending a lot of money hiring people on the ground to figure out how to the legal restrictions. i think you will see that take place in europe. is it going to be the same playbook with a lot of political advertising?

a huge twitter campaign and all of this? maybe not, but i think you'll see the same sensibility. even in new york city, they struck a compromise, but the city says it will conduct a study on traffic congestion, leaving open the possibility there might be cap's in the future. david: it has been tabled, and it's interesting talking to players here. it seems there has been universal agreement that there is some sort of study. in 2011. to new york there has not been a comprehensive study. talking to members of the city council, you sense they were taken aback by how quickly this has grown. there are three times as many black cars on the streets than there were just 18 months ago. there is this need to catch up, figure out how much faster this can grow, so that proposal has been tabled. indeed, the mayor's office said the spectrum are bringing that back is very much in there. there are other

right-hailing companies like instance. what kind of role at those companies playing here? david: uber is the biggest, and they have played by the rules. they have set up bases. they bought basis around the city. uber set those up. t's approaches a bit different. it mostly focuses on carpooling. when you look at the panoply of services that uber offers, there's a need to have more stuff than the others do, but watching this great interest, i ,hink sitting on the sidelines the approach they took gave them good results. under the initial proposal, this was going to be a study that would take place next year. the cap was going to go through halfway through 2016. now it will be a 4-month study that will start soon. we should have results in the next couple of months. what about the

helicopter service? any push back to that? david: i have not heard about push back to that. scarlet: uber has a bit of a perception problem. it's associated with big is this and a capitalism problem and not pro-worker, given how drivers are not employees. david: i was talking to communications strategies about message.crafts its it's not playing nice, so you .ave to read the fine print they are hit with surcharges. they will be angry about that afterward. one guy who talked to a communication strategist said if uber were a bit more humble, maybe they would be in better shape. scarlet: it's hard to get humble when you have celebrities getting in on this. david: that's true. think celebrities tweeting what you want to return to the days

when only those in midtown in lower manhattan could get a ride . this is a new service to the outer boroughs where it has been difficult. neil patrick harris weighing in as well. scarlet: doogie! david: yes. and ashton kutcher, who is an , after the uber decision yesterday saying democracy wins. a little hubris there. you for following this story that will certainly not go away anytime soon. coming up, singapore was ranked destination, but that has not helped it drop more tourists. why that is next on bloomberg "market day." ♪

scarlet: singapore's the top travel destination according to travel book publisher lonely planet, but it's not exactly helping to attract tourists. they reported here on your

declines in visitors and 14 of the past 15 months. betty liu is my cohost for the next hour. we both spent time in singapore as tourists. betty: that's right. i worked in asia. so did you. we would travel. you were based in hong kong. afford a super clean, superefficient, but i'm surprised that lonely planet has number one because as i've said too many people who have never been to singapore, it's like a cleaner version of new jersey. this nothing to do. scarlet: it's one big strip mall. betty: right, exactly. it's beautiful, serene. there is a marina bay sands. those are your photos there. i went there with

family because my husband's family is from singapore. the nightline is beautiful. but there's not much to do which is why they put in this marina bay sands. these are the photos i took. not quite as nice as yours, but it looks like a boat, a crucial palmtop top of three buildings, and i took a photo, gorgeous, but that's all there is to do. hoping to make singapore the next gaming destination, but room rates have gone down. if you want to go, but that's about all you can do. what you can do is go eat. singapore is known for its food. asians left to eat, -- asians love to eat, period.

i have great street food. it's very popular, but the weather is so hot that you cannot do that all day long. we spent a lot of time eating, but once you've finished eating, once you finish shopping, and if you are not gambling with 10-year-old kids, you get tired of it. maybe not chinese people, but it's a city state. betty: that is one of the rebs of this economy, that they have not been able to diversify beyond financial services. that is essentially what the economy is about. it is a tourist destination, but not so much of one compared to hong kong or japan or even indonesia. scarlet: that's a good jumping off point to visit indonesia, do not gobut people to singapore to hang out for a week on end. betty: in the meantime, i was in bali, and i have a lot more exciting photos from there rather than some buildings.

scarlet: there's the question -- why not pick bali for destination of 2015? betty will be back. >> we're approaching the top of the hour, so let's look at how major averages are performing. you can see the dow is down by about .4%. nasdaq is holding pretty much close to zero. this is off of some data showing consumer confidence did hit a five-week low that does seem to joblessger factor than claims. those fell to the lowest in four decades dating all the way back to november 1973. is the equity derivatives strategist at baycrest partners. always good to see you. thanks so much for being here. i want to ask about the markets, first off. they are not really moving all that much at least for the first half of the morning. what data do you think of esters

should be looking at? >> i think the fix tells the whole story -- i think the vix tells the whole story. came crashing down, then you look at what has sold off massively. have plummeted. arethese indications telling me that we are going to see more and more dispersion in stock returns, and market is now dependent on individual stories, so, yes, these macro headlines that we're seeing jobless claims being curbed and consumer confidence not so good. i think they sort of cancel themselves out, and people reacting more and more.

ramy: your stock story today focuses on ngm resort international. it's trading 1.5% up-to-date -- up today, but it's down year to date. >> it's all most 30% from its 52-week high. the stocks have been out of favor for some time now. some decent possibilities of turnaround, which pushed the stock higher. in in gm in particular, i see a lot of option analogy, a lot of option eyelet he -- a lot of optionality to the upside. from all the come overhangs that have been

happening in this industry and in in gm in particular. there is also an overhang on the stock in mgm because the kirk kerkorian state, who is unwinding it in an orderly fashion. once that is resolved, maybe you can see some positive to the upside. this also possibility for mgm to , soonverted into it reit there's a lot of possibility in the stock, and i like it that way. great. don't go anywhere. there will be much more bloomberg "market day" after this short break. ♪

betty: a new shakeup at bank of

america. et: cigna set to buy anthem. betty: let's begin with a look at the markets. they are still in the red after two days of declines. some of