About the biggest stories in business, but im pretty sure weve got to tip our hats to the new york giants. Last night combined in my kitchen and tiger dog, and rehab or andy hubbard says, youve got to get in here and watch this catch. Watch a catch in a giants game . A 20 times. Watched it was amazing. It would have been so much better if the giants had one. Or if he was not wearing could he have made that catch if he was not wearing the sticky gloves . Its a debate we will have later in the show. Either way, it was awesome. We also breaking news out of washington in the past hour. Its not just about a great catch by a new york giants. Defense secretary chuck hagel is officially stepping down. Lets bring in our correspondent peter cook. At least here in new york, this seems like a very big surprise. Onthere has been focused changes within the obama administration, maybe changes within the white house. We know about the changes that the at the justice department. This was not a change anyone expected. Chuck hagel was only on the job for a little less than two years and the assumption was that he would serve out for the remainder of the president s term as the head of the Defense Department. That we are getting news that after a series of meetings with the president in the last couple stepeks that he would down. This decision was announced this morning from the white house. It leaves a critical job in these remaining two years in his presidency open. It will not be easy to get someone else confirm and it raises questions about why hes stepping down. Given the challenges with the islamic state, and separate issues of ebola, that and more on the plate of whoever the places him. The timing is odd coming given what you just enumerated, and other some of the andignpolicy issues defense issues that the white house has to confront. Im just familiarizing myself with all the reporting explaining why hagel is leaving. Hesounds first of all like was the odd duck, but also that he was totally masqueraded. Tex that he was totally emasculated. This is someone who never felt totally comfortable within the administration because he was a republican and never part of the obama inner circle. Sometimes people were left to wonder when he testified or spoke on capitol hill whether he was truly articulating the ministrations position. But people close to him said that those were challenges early on in his tenure at the pentagon that he had overcome. We will have to see whether reporting bears out, what we hear from the two men. Beene pentagon, there is pushed back on the notion that he was pushed out. But i think we will be given the sense that the president wanted to head a different direction. Think you, peter cook. We will have live coverage of the president s announcement right here at 11 00 a. M. Eastern time. Solidly above trend. That is for Goldman Sachs expects for judy growth in the next two years and its a lot better than it sounds. Here are some of the highlights. Gdp expanding at a 3 rate or higher in 2015 to my 16, and 2017. A pickup in Consumer Spending and easier access to credit. Improvements in the labor market. No nearterm inflation, and the drop in gasoline and oil prices could mean even less inflation. And fed rates reaching as high as 4 by 20 2018. Lets bring in goldmans chief economist. Thanks for being here. Thetrying to put myself in shoes of others, looking at your projections, and the one question that immediately comes to mind, given the weakness in europe, the troubles in asia, the slowing chinese economy, the surprise rate cut by the chinese, how is it that you can feel this optimistic about the mediumterm trends for the u. S. Economy . Clearly, there are some negatives that have come across the radar screen in the past few months commencing love that is the direct effect of the weakness in many parts of the world economy. Some of it is the appreciation of the u. S. Dollar. Negatives inerate terms of the growth outlook. But weve also had an upsetting move in oral prices, which we think is about the same order of magnitude in oil prices, which we think is about the same order of magnitude. In our model, we sometimes find that the impact of oil prices is a bit eager and sometimes a bit smaller depending on your perspective. Sometimest bigger and its a bit smaller depending on the perspective. But with the global economy, including all of those factors, it somewhere close to zero. When i look at the domestic strength of the economy, im impressed with that we are now seeing pretty broadbased Movement Across the key areas of ,rivate domestic demand homebuilding consumption, and business investment. One of the things i wanted to ask was for you to quantify the impact of 75 per barrel oil. Is the impact to gdp of 75 per barrel oil versus 95 per barrel oil. Per barrel oil . It is relative to where we were going and where you think of as the starting point. 20 is a sort of conservative assessment of that. That should give you an extra maybe quarterpoint or so. Of jeep of gdp. There are some models that give us an even bigger effect, but if you take into account some of the upsetting negatives from lower u. S. Oil production and shalethe capex in the industry, a quarterpoint sounds about right. But what growth in the private industry are you expecting ahead . Its about the same as the overall economy. The government will be pretty neutral. The fiscal drag was such an important part of the story in 2012 and 2013 and is now behind us. I would say, roughly 3 as well. 3 for the private sector. Point, the federal government is pulling back on spending and from what together from your forecast, you expect that to continue up to 2018. Will you be in a time in 2018 to look forward to will we be in a time in 2018 to look forward to fiscal expansion . There are some reductions in federal spending, youre right. But if you look at the state and local side, which is a significantly bigger share of total gdp, we are getting an upsetting positive there. Overall, its pretty close to zero. Could we get fiscal expansion . I think its conceivable that there will be some kind of agreement to increase defense spending. Maybe that will be more of a republican demand and then in addition to that, also increase some nondefense spending which would be more of the democrats pushing in that direction. I think thats conceivable, but i dont think it will be very large. It does seem that across the board you are moderately positive. What are you negative on . Are you concerned about concerned about . In the u. S. , we are positive about the direction in which we are growing. An ah is almost Vantage Point above the longterm trend and it will be improvement in the labor market. The labor market is pretty far away from unemployment. If you look at it from the perspective of level two trend, i dont think we are there yet. The job is not done yet from a monetary positive policy perspective. That is what we are a bit later from the point of lift off than other people are. That would be my perspective within the u. S. Outside the u. S. , there are many places that still have a lot of problems. Europe still has a lot of problems. Japan has just had to negative quarters. Two negative quarters. Nevertheless, these are still very troubled economies in a lot of ways. To what degree are your excitations policy dependent, on the downside or the upside . If we had, for example, Corporate Tax reform, is there a potential upside to what you expect with the economy . Our exhibitions are always policy dependent in that we have a sort of baseline cap for policy that underlies baseline path for policy that underlines our actions. If the fed were twos dark 2 where to start to tighten earlier, that would affect things as well. As far as Corporate Tax reform, its not our baseline that we will get meaningful Corporate Tax reform. We think the ability for that has gone up, but its only about one in three. It, it probably would mean a little more perhaps for business investment. It depends of the details, of course, but it would probably be a positive development if it did happen. What about corn inflation next year you are you expecting that to go up . Whate expecting about corn inflation next year . Are you expect a net to go up . We are expecting no movement. Our staycation is that we are moving closer to lower employment. You should see some upward growth on upward pressure on wage growth. The argument for deceleration is basically the passthrough from the decline in oral prices and other Commodity Prices into the Core Industries come into things like airline fares, for example, which are in the core, but have quite a bit of sensitivity to Commodity Prices. Does that not set the stage potentially for a rapid acceleration in inflation at some point if oil prices reverse . In other words, if we get closer to full employment and the Unemployment Rate drops below 5 , than there is much more room for the economy to soak up Higher Oil Prices if that is what happens. That is true. If you did get a reversal, the new get some upward pressure. Most of that would be an issue for headline inflation, but there will be some impact on the core as well. One of the reasons we like looking at core inflation rather than headline inflation is that effects are smaller, but there is some effect. Youre right. But the starting point, of course, is that we are below where the fed wants us to be by half a percentage point for some initially, acceleration and inflation would be good news. But there could come a point where that would no longer be true. Chief economist at Goldman Sachs, jan hatzius. When we return, we will look at media consolidation with two of the biggest players in the business. Welcome back. Weve got a special treat for you kicking off this thanksgiving week. A conversation about the future of media with two men as plugged in as you can get. His advice on several huge deals this year, including msg dealase and a 1 million with disney studios. And we are joined by industry veteran, having also served as cfo of time warner and viacom. He was a dealmaker at the private equity firm thomas h lee. Jenna, good to have you both here. What do you gentlemen, good to have you both here. What do you think will be the biggest media story in 2015 . It is not just one. There are many to track this these days. Not only is content of the linear cable model over the top, which is a huge story these days, but we also have spectrum options. Weve seen an astonishing figure of 30 billion. Just a way of comparison, the top four Wireless Companies in this country invest 30 billion a year in their spectrum. In one option you are seeing 30 billion in investments. Is then the Music Industry going through a lot of changes. Clear channel and iheart is in the middle of that. Arethe lowInterest Rates still there. M a volumes are still at highs since 2007 record levels. We think we will see border activity as well. Is a rya is a diplomat will not name names hes a banker. What is the influence from your perspective . It starts with technology. If you look at a lot of these deals that are out there today, you know, he referred to size. Our feet have to keep moving. We have to look at what is happening with the consumer. 15 to 20you go back years, it was about the connected home. That was the governing point that establish a lot of them Media Companies and how they decided they wanted to look. Now its the connected consumer. Everything is moving toward mobile. Thinking about that, then companies will line themselves up in terms of having the right content and technology to be where the consumers are every day. That is over some publication, but that is the lens i would look through it on. Has the could the power, the consumer . Or the content creator right now . The consumer always has the power because they have the power over content. Has antent creator certain amount of power over the consumer. Millenials watch three times as Much Television online as nonmillenials. Of looking ature the way the behavior has changed. And most of the consumers like to consume content outside of the home. Most people think of traditional media as only inside the home. The Radio Business is largely outside the home. The consumer moving around in different areas is something that Media Companies have to be attuned to. Are traditional Media Companies to big to be nimble . I think it is the opposite. They have to have more scale to create more technologies organically. Sometimes you can do that through mergers. Other times, what rich has to focus on are the organic investments and one of the ways to capitalize on it low Interest Rate is to redeploy investment new business line. Fox is notoriously good at creating new businesses from scratch. Them you surprised to see take a run at time warner . Everyone is being opportunistic these days. I think time warner has many options in front of them, and im not surprised the deal did not happen this time. You are a. Or you surprised to hear that potential deal were you surprised to your that potential deal announcement . Im notnswer is no, but surprised at any potential deal announcement. You need to keep moving. Yeh talked about consumers. Two thirds of our business is outside the home. Two thirds of the way people interact with their mobile devices is actually inside the home. People love relies for sub you , whichat handheld device i had to put down before coming on stage. Im having the shakes. But people spend more time outside the home today than ever before. , ifou are a Media Company youre an appetizer, if are an advertiser, the challenge is that time outside the home. Two thirds of our time with the radio is outside the home. That is one example of the company and what we are all facing. We are trying to talk about content to mobile we are really talking about in about 10 seconds is distribution. Wheres the bounds of power between content and distribution right now . The balance of power between content and its tradition right now . We are relieved from the promotion of content. We have 40 Million People that we reach on a monthly basis. It is always about the balance of great content and many it to consumers wherever they are. Im not try to give you a nonanswer, but it really is about having great content and bringing it to the consumer, wherever they are. That is what is also driving this phenomenon. That thought. We will be back in just a moment. Hold that thought. We will be back in just a moment. Coming up, the next big media deal. We will be back with Aryeh Bourkoff and rich bressler. Plus, president obama is scheduled to speak this morning, announcing his the resignation of his defense secretary, chuck hagel. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Im Erik Schatzker. And im stephanie ruhle. We are back with our two great guest. Were talking to Aryeh Bourkoff of line tree is here and rich bressler of ihardmedia right beside me. I heart about media right beside me. I asked you about content consumers and the balance of power. Now we are back. There is a debate about whether they belong together or are separate. With comcast that resurfaced. When you look at times and change and times of change and dislocation, whether it is because of new technology or new geographies that are actually it isg markets overall, pretty important. When you look at the Music Industry, for example, you have labels that have new forms of distribution happening all the time. It used to only be radio and now you have things like i heart digital streaming, pandora, spotify, etc. When you look at times of technology and change, having content this tradition together inhouse yields better economic models. Instead of going after time warner, fox should have bought charter . Examples of distribution together. Comcast and nbc is one of them. You can see the same strategy in other places around the world, for example, india. Almost all of them have content inhouse. The days of having the icon and cbs separated, or fox corp. And separated can be attractive. But having everything in can be the best strategy for the Management Team. If you go back historically, rights holders and right sister beaters, you know, broadly defined and rights distributors, you know, brother defined, broadly defined, the have typically been in same house. Its only been in the past 10 years that they have been disaggregated. Bring the best offering to the consumer, you see more and more people bringing back rights holders and right sister beaters back into one company. Do you think that time rights holders and rights distributors back into one company. Time warnerhink will be a possibility at complex a possibility . Cable . We talking yes. To a degree. What about the Net Neutrality issue and will there be anything that will make it less a cup less attractive to comcast ecco less attractive to comcast . Almost four years ago with the sec that was not related to a merger in the environment, but not if one could agree. It will matter with title to another things, but not with the merger. Because they are a Cable Company buying the in buying another Cable Company. They are already exposed to the dynamics they will be dealing with. I think it will still go through. That significantly begins comcast argument. Weakens comcast argument. Walk awaye allowed to whenever they want. At the end of the day, the title issue will be debated for a lot longer. Surprised to see the president weighing in on title to . Title two . I will not comment specifically. We are big believers in companies trying to keep the government out of all of our businesses. A little over a year ago did a deal with warner music directly. We have done a deal for music rights. We did the deal with warner music label. We have done a deal with majority independent labels in the industry. If you can deal directly with another company and keep the government out of it, it works better for the artists. And it is about the artists wanting to make money. Its about profitability. If you dont have a third party involved, you will be more efficient. The artist makes more and is better for the consumers. You bring them more of what they want to hear. Ts a general winwin you mentioned the artists. Business is huge for you. What made you get into live event . We do 22,000 live events. Next 22,000 . Next 22,000 on an annual basis. 22,000 . On an annual basis. Where it started was a little over four years ago and this was before anyone knew the name i heart existed and now the whole company is i heart. Bob, to his credit, came to the board and set i want to start a Digital Service and i want to call it i heart. What is the best way to take it off . We establish the i heart Music Festival in vegas a little over the a little over four years ago. It is the biggest event there to date. We get 5 billion social impressions this year at the event. That is on par with the academy awards. Double thethan halftime super bowl. We really use these events for two things. One, they are a focal point for our advertisers. We will sell advertising starting to do for months before. The advertiser is getting a benefit leading right up to the event. Two to four months before. And the appetizer is getting a benefit leading right up to the event. And then they are at the event and they get amplified the artists are at the event and they get amplified in a big curated way. Tale whereere is a they will live for a couple of months. Their songs and values are promoted in july for some the festival happens in september. And right up to the end of december, which is right when they will see the show. Because iy that, think the events businesses overall, represent and by stocks like live nation, they havent gone into the whole global media scale game as much as they could in the future. Think about live nation being around a global platform. Room for consolidators and for growth in that area as well, strategically. What do you mean by that . Who is the live nation of europe . We dont know yet. Lets think about how you can create a scale platform that ties into string into synergies among global strategic positions. It gets back into the same theme we are talking about here is scale that scale is important. About i heart or other examples, without the scale that we have we are bigger than the next two largest people can bind. People combined. Could that be a takeover target for someone . We are in the business of making money for our stakeholders, so i will never relent in thing out. I think the idea that we have with the companies to continue to grow the top line and keep expenses flat and then drive a value to the bottom line. We will see what happens. If you cannot answer, you can. Of course i can. The thing about i heart is there are several businesses in the platform. Its interesting to see what the Management Team can do on the back of that platform. And create equity for stakeholders. Just during the break a little bit, you were talking a little bit about what is happening in the world of advertising. What i think is the most in issting interesting trend big data. It may be an overused term. Millenials, destruction, and big data. Huge, right . And the reason why its so important is because clearly, the world is going to more and more data. The world is going to more and more accountability, more things be able to track. We started taking a leadership position and i think other Media Companies will follow. We started talking about a return on investment. There are lots of metric out there. Showing where advertising dollars are spent. Correct. A steadyame out with that said every dollar spent in advertising, you will get six dollars back in revenue. Very simple and straight. One dollar on average, six dollars back. Some are higher in some are lower. But on average. Our very largest advertisers and said, if you give us ex amount of your budget, we will guarantee you this. We will put our money with our where our mouth is. Starting with Radio Companies that will benefit from the trends Going Forward because again, its about making money are those that can really move to a that can really prove to advertisers a return on data. Advertising has been softer over all. The ad dollars have been shifting from traditional mediums to digital. If you cannot capture that as a company, you will see that declined. I fly that you are because nobody is watching fussy tv on a thursday because they want to watch funny or die the short form . Text that is an anecdote about that, but everyone that is an anecdote about that, but everyone is trying to figure out how to reach the customer directly and that is shifting right now. Advertisers are moving dollars around. People are watching as Much Television today as ever. When at least when i was just because you are all numbered am. They were three or four networks out there. You younger than i am. There were three or four networks out there. Ill be appetite is less wear with a consumer, but wherever they consumed it, but the choices later. Sizebasically the same and scale industry as before. If youre going to reach through technology platform, it is really all about the media upon that is where things are coming together in different ways that you. That is where things are coming together in different ways. We return, you Aryeh Bourkoff have with which wrestler and when weurkoff return, Aryeh Bourkoff ridgecrest. Rich bresslerr. We are back with aryeh bressler. Nd rich music and media for moment because part of the con conversation has been about consolidation and part about disaggregation. Should music be it from the media empires or brought in . It is kind of on its own. Pandora, xmeart, serious they are all independent companies. The industry has been changed more in the past 10 years for his of it has become very fragmented. We have different assets on our phone, our car. I think it has to be brought back together. I dont even know if i have that anymore. I think it has to be brought back together. How . The content is concentrated within a few labels. Having more distribution of that content controlled by the content providers would be very powerful, or by the Distribution Companies will be very powerful. New models can be effective and emerge with a lot more choices to the consumer to create a bit more power and consistency. If that were to happen, rich, with there be more crossover potential from other artists . Talking about taylor swift, it is interesting whether it is taylor swift or some of our celebrity djs. Weve got to deal with someone we all know, Ryan Seacrest. He is a dj at a couple of our shows. From hisave some production company, Ryan Seacrest productions. We did a latin festival over the weekend. Our first latina festival. He was there and he directed with advertisers. He will be at jingle ball in new york and l. A. He is one of our great advertisers. Things do become more integrated. The last time bob pittman joined us, he said the one to that on in the Music Industry is taylor swift. He said taylor was one of the smartest people hes ever met and if she wasnt an artist, he would hire her to run marketing. If you had to bet on one, ryan swift . Itaylor would bet on taylor and the music category and ryan in the other. They are both amazing. They are both tireless, which we all know. Which is probably an understatement on both sides. We talked about this offcamera for a second. They are both focused in terms of making an understanding show business. One of my great mentors in life told me remember these two words, show and business. It was bob daily. Never do a show without putting those two words together. And there are very few im glad you did not ask me that question. There are few that can actually command their own distribution power and choices. Brands likery few ryan or like taylor. Who else belongs in that category . There is u2, the rolling stones. There are some big ask that can command, but everyone else is very fragmented. If you leave it to chance where every new artist gets to have their own audience, it takes a long time or never happens. This aggregation is pretty important right now. Does that mean that you think other artists will not follow taylor in abandoning spotify . Artistst think other will abandon spotify. I think they will wait for a model that represents their collective interests. Example of someone bringing managers together right now into one model. You need to create an aggregation model where everyone is represented by the than a oneoff. I agree with that directionally. As a look at spotify company. Youve got to remind consumers and teach consumers that music is not for free. You cant go from charging 1. 29 to pennies. A platformgo from that charges 10 or 20 from some for some unlimited amount of music where the artist is not being fairly compensated. And like most businesses, its not the first time weve seen this example. If you go back to the early days of internet with isps, those were great for the consumers. Its a great value proposition, but they were not making any money. And they disappeared over a certain time. The same examples come back time and time again. We should learn from those examples. What taylor was standing up and saying is, you know, from a content and creative standpoint, there is value to what im creating and i should be, and the rest of the artistic community, should be compensated for that. I dont think that is just a spotify question. Its just a general statement that music is not for free and i like no content is. If music is not for free, how do you price that . Its a good question, and a long answer. You price it like different windows, like other traditional media. You have distribution outlets for different moments of time, or different ways to watch it pieces content or listen to a piece of content. People get an advantage if they get it sooner, and they have to pay for it. Taylor swift today is clearly made is clearly way more valuable than the fog at back catalog. Until she left spotify, you were getting them both for the same price. I think there has to be some tearing tiering and different price points for different uses models. Ex that gets complicated for the consumer. That gets comic it for the consumer. I think there will be multiple avenues for the consumers. Ms. Got these great relationships with all of the Arts Community and that is why they come to us and we come to them. But if you are a distributor and you are looking to make that proposition to the consumer, the keyword word is simplicity. Its got to be one click, by something and you can buy something, whether it is during a particular time window or a subsection service or a download service. The consumer has shown that they are willing to pay for convenience and they are willing to pay for quality. At lastayette free grows are fast. But once you get the distribution house, where do you do with that . That is what the models have to figure out. Gentlemen, thank you so much. Which bressler rich bressler and Aryeh Bourkoff. And i am leaving too. I will see you tomorrow. I will be back after a quick commercial break. Market makers will be back in a couple of minutes. And coming your way, the airports you should avoid at any cost. You probably have a few ideas of your own. We, however, have the results of a revealing new survey. Plus, president obama is speaking at the top of the next hour, announcing the abrupt resignation of the defense secretary chuck hagel. We will bring you those events live. Live from bloomberg headquarters in new york, this is Market Makers. With Erik Schatzker and stephanie ruhle. Was he pushed out or not . Isense secretary chuck hagel stepping down. You will hear from president obama. Getting on an airplane, you will be thankful if you do not have to go through these airports. From worsto worst, to best. Men will not buy yoga gear where their wives shop. The guy who has come to their rescue. You are watching Market Makers. Im Erik Schatzker. Top stories, the talks over Irans Nuclear program are going into overtime. Agreement expires tonight. The u. S. , china, and other nations have agreed to a march 1 deadline. Until july oninue technical details. If the deal is reached, president obama says congressional approval is likely. Im confident that if we reach a deal that is doesiable and assures iran not have breakout capacity, not only can i persuade congress, i can persuade the American People it is the right thing. The u. S. , china, and others want to keep iran from Building Nuclear weapons. Sanctions to be eased. The president s looking for a new defense secretary. Chuck hagel is stepping down after two years at the pentagon. Officials say hagel has been marginalized because obama ignored him. President obama will be speaking a few minutes from now. Watch that on Bloomberg Television life. To boost the falling price of oil, the iranians might suggest opec cut production. The cartel is meeting thursday in vienna. Trying to get saudi arabia on board. Board memberss says the central bank will not rush into stimulus. Eure says all options will be looked at. He sat down with francine lacqua. Lowinflation is as bad as deflation and terms of capacity of our economy to grow out of that and deleverage. We do not need to be in deflation to be worried. Lowinflation is a concern. Katy perry will headline the halftime show at the super bowl. She will be performing at the most watched musical event of the year last year. 115 Million People watched halftime in the u. S. Alone. 3rry has perry has multiplatinum studio albums. Black friday has become black friday week. Theof the retailers with most to lose is walmart. Julie hyman heard from top executives. What message is walmart trying to get out . Lets talk about the message in pr speak. This is the message that the head of the u. S. Business was emphasizing at an event in a jersey. In new he said we are obsessing of our customers. We are remembering that our store associates are number one. We are having fun. We can talk through those what does it mean . Walmart has come under fire in the past four not having as its Strong Customer service as it should for when customers walk into the stores, not getting the items they need because they are out of stock. Not having in an out of this door as quickly as they would like. I talked to the head of general merchandise out walmart. Things like Sporting Goods and electronics and toys, hardline items. This is what he said about customer focus. Is oneg that wristband of the innovations we are putting in place to allow customers to have a better experience. It is not only about getting the items at a great price. We are focused on bringing in the entire family. People are comfortable bring because itto walmart is a common experience. The way we coordinate the store. It is a great shopping experience. Hes referring to programs walmart has instituted where you will not have a rush of people. Wristband for certain items and the wristbands last as long as items do. There is a one hour guarantee for certain items. So you do not have to wait in long lines and everybody is rushing particular products. It is crowd control. At peak hours they are going to have every register in the store open to aid with traffic. Sounds like a challenge. Walmarts margins are super skinny. The appeal was get people in the door for low prices. All of a sudden you have to layer the cost of customer service. This is something i talked to bratspies about. There is one television that is 900 off. I said how do you make any money . He says it has to do with mix. When you get your wristband, you are going to buy other stuff that is not as deeply discounted. And if the experience is better you will spend more time there. Ideally, yes. Thats the goal. Thank you very much. Julie hyman with the latest on walmart and black friday. And talk about Foreign Policy. Ismentioned chuck hagel stepping down. All of the sudden. Nicholas burns is with us. Former state Department Officials who served in both bush administrations as well as the clinton administration. He is a professor at harvard and and aer of secretary member of secretary john kerrys policy board. Lets talk about hagel. Iran is important, you have been involved in negotiations with the iranians. Chuck hagel stepping down, what does that say to you about his relationship with the white house and the challenges he in anas defense secretary administration that hasnt yet to strike the right tone on Foreign Policy in so many ways. I have enormous respect for secretary hagel. He has been a very distinguished public servant. Hes also a combat veteran of the vietnam war. The first enlisted person to be secretary of defense. It was tough of the last couple years. Not only do we have to make decisions about how long we stay in afghanistan and how many troops we keep their. The taliban is coming back. We had to go back to iraq for the third time in 24 years because isis emerged as a major kurdistan. Raqi if you take those crises and look at the fact that president putin has invaded crimea and destabilized ukraine. Secretary hagel had to direct the strengthening of the american position in nato. On top of that, congress with sequestration is trying to cut the defense budget. It is a very difficult time. He has served well. It is a disappointment that he has to move on. A disappointment. That is one disappointment. Another disappointment, the deadline for a deal with iran has come and gone. Another extension that will last as long as july. About thethat say administrations Foreign Policy . And its lack of success. Not friend like that. I think it says this is a very difficult issue. Remember the george w. Bush administration also focused on this, how do we stop Irans Nuclear weapons program. What president obama has been able to do, we are at the table negotiating with the iranians over the past year for the first time in 3. 5 decades. That is significant. These issues are hard. Obviously they had to extend the talks because iran is not ready to agree to what the u. S. , britain, france, germany, russia, and china want. Im sorry, pardon me. I apologize for interrupting. We have to get to the president because hes about to speech. Harvards nicholas burns. Mark halperin is here. We are about to hear from the president. Set the stage. President obama is going to present chuck hagel and talk about his resignation. Lots to talk about regarding why this is happening. Is a vietnam war veteran with a relatively late addition to the administration. As an outsider, seen as having a challenge to fit in in a white isse where Security Policy controlled from the white house. He succeeded leon panetta who succeeded bob gates. Some thought he would have a challenge. Widespread reporting that president obama asked chuck hagel to go and this is not a voluntary departure. Speculation about what kind of secretary of defense will be brought in for the final two years of the administration. A former republican senator. Some tension between his former colleagues, john mccain has put out a statement talking about his personal feelings for chuck hagel. There was a lot of criticism and from capitol hill the white house. Lets go to the white house and listen to president obama. About a year ago, the secretary of defense chuck hagel was visiting our troops in the republic of korea. Thanking them for their service and answering questions. They asked about the usual topics. About our National Security, the future of our military. One soldier, a sergeant from ohio, asked him what was the most pertinent question of the day. What was your Favorite College Football Team . I do not have a choice, i am a cornhuskers fan. There was a time when an enlisted soldier might have been reluctant to ask that kind of question out of the secretary of defense. Chuck hagel has been no ordinary secretary of defense. The first enlisted combat veteran to serve in that he understands our men and women like few others. He has stood where they have stood. He has been in the dirt and the mud. That established a special bond. He sees himself in them and they see themselves in him. And their safety, their lives have always been at the center of chucks service. Chuck to serve as secretary of defense, we were riod of transition the drawdown in afghanistan, the need to prepare our forces for future missions, and tough fiscal choices to keep our military ready. For 2 years, chuck has been an exemplary defense secretary. Providing a steady hand as we modernize our strategy and budget to meet longterm threats while still responding to immediate challenges like isil and ebola. Thanks to chuck, our military is on a firmer footing and looking ahead. Came to me touck discuss the final quarter of my presidency. And determined that it was an appropriate time for him to complete his service. Is and hasthat chuck been a great friend of mine. I have known him, admired him, and trusted him for nearly a decade, since i was a green behind the ears freshman senator and we were both on the Senate Foreign relations committee. Theres one thing i know about chuck, he does not make this or any decision lightly. This decision has not come easily to him. I consider myself lucky to have had him by my side for 2 years and im grateful chuck has agreed to stay on until i nominate a successor and that successor is confirmed by the senate. He will continue to guide our troops at this time. I will have more opportunity to pay tribute to chucks life of service in the days ahead. Chuck hagel has devoted himself to our men and women in uniform across six decades. He volunteered for vietnam and still carries scars from the battles he fought. A. , he fought to get our veterans the benefits they had earned. Uso, he made sure america always honors our troops. As a senator, he helped lead the fight for the post9 11 g. I. Bill, which is helping so many veterans realize their dreams of a college education. Has helpedy, chuck transition our military and bolster americas leadership around the world. Afghan forcesure, took the lead in afghanistan, our forces have dropped down, our combat mission their ends next month. We will partner with afghans to preserve the gains we have made. The Nato Alliance is as strong as it has ever been. We have reassured our allies with our increased presence in central and eastern europe. We have modernized our alliances in asiapacific, updated our defense posture and recently agreed to improve communications between the u. S. And chinese militaries. Chuck has been crackled to all music compliments. To chuck has been critical all these compliments. Chuck has ensured our military is ready for new missions. Our military is taking action against isil in iraq and syria, chuck helped build an international coalition. Our forces are helping support the sizzling effort against ebola the civilian effort against ebola. In a very difficult budgetary environment, chuck has never lost sight of key priorities. The readiness of our force and the quality of life for our troops and their families. So our troops can continue to get the pay, the housing, the health care and child care that they and their families need. Reforms that we need congress to now support. At the same time, after the tragedies we have seen, chuck has helped lead the efforts to improve security at military installations and stamp sexual scourge of assault in the military. Chuck, i want to thank you. We come from different parties. When it comes to our National Security and caring for our troops and their families, we are all americans first. When i nominated you for this position, you said you would always give me your honest advice, you have. When it has mattered most and behind closed doors, you have always given it to me straight. For that, i will always be grateful. Inecall when i was a nominee 2008 and i traveled to afghanistan and iraq, chuck that accompanying me on trip. It is pretty rare, at a time when this town is so politicized, to have a friend who was willing to accompany a nominee from another party. The cosi understood that whoever ended up being president , important was that we were unified with challenges overseas. That is the kind of class and integrity chuck hagel has always represented. Is have said that a life only as good as the family you have and the friends you surround yourself with. In that, you are blessed. I want to think your family for the sacrifices they have made. Seeeluctant as we are to you go, they are excited to get her husband and father back. Will be the cornhuskers glad a sand will be there to cheer them on more often. Today, the United States of america can proudly claim the Strongest Military the world has ever known as a result of the investments made over many decades of blood, treasure, and sacrifices of generations. As a result of the character and wisdom of those who lead them as well, including a young Army Sergeant in vietnam who rose to serve as our nations three fourths secretary of defense. On behalf of this grateful nation, thank you, chuck. [applause] thank you. Thank you very much. Thank you. Mr. President , thank you. Thank you for your generous words, your friendship, for your support. Which i have always valued and will continue to value into my and to my dear friend Vice President biden. The president and i have learned a lot from the Vice President. I want to thank the deputy bob work of defense and mind that and martin dempsey, who is also here. I want to thank you for your tremendous leadership of the Defense Department and what you mean to the men and women and their families. Add for the honor i have h to serve with each of you. I want to thank the entire Leadership Team at the pentagon. Without their support and wise counsel of the last couple of years, our many a Compass Minerals the president noted ome our many accomplishments. It is a team of men and women that make this happen. I could not be prouder of what we have accomplished over the ive had thes honor of serving in this position. I havepresident noted, today submitted my resignation as secretary of defense. Has been the greatest privilege of my life to lead the outgoingl secretary of defense, president obamas third secretary of defense. This opens three storylines. The president says it is chuck hagels idea, it has been widely reported that the president asked chuck hagel to step down. The president s national Security Policy, with afghanistan news ever the the iranian issue has military dimensions. This will be a big story into the new year. The first point, whether he was pushed, whether he chose to walk out. The narrative that is emerging is that chuck hagel was marginalized and i used a term earlier in last. That is what it seems like to me as i familiarize myself with bloombergs reporting. What does that say about his relationship to the president and the role of a cabinet member with that much experience . A friend of the president and a guy who served honorably in vietnam. There were a lot of skeptics when he got nominated. His confirmation was bumpy. This was a guy who many people saw as illsuited to run the bureaucracy of the pentagon and play hardball politics with the white house. Tried to house has centralize national Security Policy in the administration. In this case, the people who were skeptical proved to be partially accurate. Question number two. Peter cook is with us from washington, d. C. Who are the potential successors to chuck hagel . Hes got to look at people who have served in the department previously. Stand a decent chance of being confirmed relatively easily because theyve served before. One of the names is ashton carter, deputy secretary of defense. He was bypassed in favor of chuck hagel. Someone who has respect from both sides of the aisle. A lot of bloomberg folks know him because he was the chief weapons buyer at the pentagon for several years. The other name is Michele Flournoy, she was director of policy and she stepped down as under secretary a couple months back. Her name has been mentioned as someone who is close to the president and close to the white house decisionmakers on National Security. In that sense, she would be closer to the inner circle then chuck hagel was ever able to reach. You will see other names as well. Consider confirmation being one of the bigger challenges given the limited time remaining in congress and republicans taking control in january. No question it should be easier for somebody who has been confirmed to be confirmed again. I would have to imagine in a Congress Like this all bets are off. We will see that the republican general posture towards all position. , notnk Michele Flournoy because she is just a woman, there has never been a female secretary of defense. She is seen as supremely qualified. The pentagonwithin and strong relationship with the white house. Mostld make her the logical candidate at a time when confirmation does matter and she has been confirmed. Then asked defense secretary is going to have to have a full plate. Peter, what is at the top of the agenda . State. Have the islamic you have u. S. Troops in afghanistan. The changes there. Still trying to wind down the u. S. Involvement. You have to put the budget right near the top of the list. This is something chuck hagel was left comfortable was less comfortable dealing with. He had to deal with sequestration. Thehave to deal with Republican Congress that has different ideas about defense spending. The budget is going to be a big challenge in addition to dealing with american troops in harms way. Resignation, we are terming it a resignation his departure is that a point of weakness for the president . As lots the president has to deal with. Republicans taking over the senate in january. I think it is a positive given how difficult it was for chuck hagel to be operating. He never penetrated the white house bureaucracy. If the president takes the right person who can reach out to the new Republican Congress, i think he can get a fresh start in a lot of complicated areas. The budget is a huge part of the job and has been for several decades, managing the pentagon budget in times when defense spending is declining or staying even. It will be a big part of the new secretarys portfolio. We will be watching with all due respect at 5 00 p. M. This afternoon. Ourup here peter chief washington correspondent as well. Public broadcastings new primetime strategy appears to be paying off. Dont call this lululemon for to shoplace for guys for exercise gear. Live from bloomberg headquarters in new york, this is Market Makers. With Erik Schatzker and stephanie ruhle. You are watching Market Makers. 11 30 in new york city. Pbs network has come a long way since the 1970s. Back then it was a big hit with programs like sesame street. Viewership started to slip in 1993 as the number of choices on cable began to multiply. Since 2009, the trend has reversed, pbs audience has ticked back up. Growth fastest among young people. , paulaome the ceo of pbs kerger. I know what is behind it, Downton Abbey. Downton abbey is part of it. Downton abbey is a small number of hours. Weve seen an increase in almost every hour in prime time. What, besides Downton Abbey . Everything. We have a strong history. Was watched by 33. 5 million americans. And also streamed. Part of our success has been rooted in content. The other part has been the fact that we really have been very aggressive in thinking about multiple platforms. Whether that is streaming video or distributing on places like roku, netflix, amazon, or others. I downloaded the ipad app for pbs this morning. Downton abbey was not there. Why . Because it has not broadcast yet. But i cannot get the back catalog . You will get the back catalog closer to the broadcast. We make decisions about programming. It is not just our programming. It is the local stations programming. Here, loaded your app you are watching channel 13. Else, your local Public Television station. That is what we have been playing with. Country, ourof the local stations are the last remaining locally owned and operated. We think carefully about programs locally. Being able to put that together has been part of what we thought about. Lets stay on Downton Abbey, why wouldnt you make all of Downton Abbey, every episode available to me now . I can do that on netflix if i hbo if iaking bad or want game of thrones. Is, we haveave done built a little bit expectation closer to the premier. After thanksgiving we will start to build out. That is how we have done it this far. It has worked very well. Every year our audience has continued to grow. Drama is not just Downton Abbey. We had a program premiering in january that we are excited about. We are excited henry the eighth is another. I think it is going to be fantastic. One program in could be the next benedict cover umberbatch. Is ae numbers suggest this golden age for public broadcasting. It does not feel like a golden age. How challenging is it raising money . Calls for the end of public broadcasting from some members of congress. The kind of questions mitt romney raised in his president ial campaign. It is true that we have never had an easy time. Were certainly not overfunded. Ist we have tried to do really focus on what else is going on in the marketplace and try to understand the kinds of stories and the kinds of programs we think people will be interested and that you cannot find elsewhere. For a long time there were cable channels that were built on the idea of being a commercial version of public broadcasting. Moreany of them it is reality programs. Part of the success of the roosevelts, it was an amazing series. It was well told. It also is unique. That are not programs like on a regular basis. On wednesday nights we had a great lineup of science programs. We had a wonderful series with great scientists coming up. Filmed. Inarily segments will take your breath away. It is fantastic programming. You mentioned that there are other channels that have tried publicd a product like broadcasting on cable and have had to abandon it, if yours were not a subsidized and sponsored business, do you think it could survive on advertising . I think we are in a different business but we happen to use the same tools. On the government side, we get 15 of funding. That goes to stations around the country. The reason it is important, for some stations, particularly in country, thef the federal appropriation is half of their budget. That is important to make sure every american has access to public broadcasting. The way we are not having to sell advertising and worry about what every viewer is looking at on every quarter hour does give us a different freedom to make other decisions and perhaps those that are constantly focusing on young men 18 to 25. Does the Network Architecture of pbs still make sense . To have all of these local affiliates. It is an issue that the commercial broadcasters, abc, c bs, struggle with. I think it matters to have a local broadcaster. Some might argue it is not as efficient. A lot of commercial organizations have made the decision that they want to go a different path. I think it does matter that someone manages a station within the community and is making the decisions about what goes on. Convenes conversation. We did a project, america after louis and we st. Had our station help us. They had relationships and the community and it put us in a different place than other media organizations. That part of it is important. There needs to be someone doing that. How strong is Corporate Support for pbs . For theo think of pbs company that created. Preroll. Corporate sponsorship is the biggest amount of money corporate sponsorship the biggest amount of money that comes into public broadcasting is individual philanthropy. Corporate money does help us make it possible. We balance it all together. There is no one Silver Bullet in how we make it work. Sometimes i feel like rapunzel spinning gold out of straw. Pollock, thank you. Paula kerger, ceo of public broadcasting. I wonder if this means men will start wearing yoga pants everywhere. To the activewear game. Meet one of the cofounders. You are watching Market Makers. Im Erik Schatzker. As i told you there is a lululemon for men, how many of you would be interested . If i told you there is a new player in the sportswear market, i thought you would pay attention. It is in a number of bloomingdales stores and at equinox. Here to tell us about it is the cofounder. How is this idea born . I know you do not love the comparison, lululemon for men. We do not mind that. It is a great company. We are passionate about being active. We felt like there was a void in the marketplace. There was not anything that spoke to us. You felt like a walking where you were wearing a brand or you were wearing a brand that did not speak to you. We felt we needed to upgrade the offering. It wanted product that f active men. Premium quality, something that was not going to wear out. Something that was very functional. Form, and meet fit, function, then you have a good product in activewear. It is calledreason activewear, you want people to wear it outside the gym. Re. New trend is athleisu it transcends the gym. You can go out and run errands. No longer do you have to make the choice between wearing jeans and khakis or dressing like you are 18 years old. What is different about this shirt from what i could buy from nike or under armour, or adidas . Or lululemon for that matter. One of the things that we do that has made a connection, we use silver in our clothing. Silver has antimicrobial properties. Every time you wash it, all of is going tond grime get washed away. The typical offering in most activewear companies is a chemical spray that gets absorbed into your skin, gets washed out. Washes it is gone. It is going to start to smell bad and break apart. This will be antimicrobial until the garment is destroyed. Is tapered, the fit to somebody who is going to stay active. It is not for fat people, in other words. There are plenty of brands that serve everyone. If you try and serve everyone, you are not going to serve anyone really well. How do you persuade a retailer like looming dales or carrye bloomingdales to this instead of or in addition to Something Else . I think they saw the premium quality and the fact that it was growing. We been very fortunate to have great ambassadors speak about us. You can feel it. I tried it and i will say myt the shirt this is honest opinion. It is the best athletic wear shirt ive ever worn. I havent had it for long. It is softer, it does fit better. My hope is that you say the same thing a year from now. In the hope that it will not stink. Not stink and not fall apart. We use mesh paneling. How do you go up against the sportswear giants . You have a limited marketing budget. They have so many dollars to bring to bear and they could crush you. And they are great companies. Theres a lot to be learned out. Like competition. More importantly, this is not a winner take all market. There are a lot of people out there who are willing to pay up but betters product product versus having to change your close out every six months. What is a short like this going to cost . We Just Launched a new version of this, 68. Named after a character from fight club. All of our characters are named after inspirational male figures. Walt whitman, Abraham Lincol n, steve mcqueen. These are pants. These retail for 98. That is comparable to a major brands stuff. We wanted it to be accessible that meet the premiums. You said there is a lot to learn. Example, under armor. Unbelievable success under the shadow of nike. What is a lesson from a guy like kevin plank . He stuck with it. He did not give up. He did an interview recently talking about how for the first 10 years nobody knew about him. We are fortunate in the fact that for our first year we have done . 5 million in sales and are projected to grow. You have to stay in it. Thank you very much. Nate checketts, cofounder of rhone apparel. I will be back a couple minutes. Stay with us. Thats going to do it for Market Makers. Tomorrow, are you ready for black friday . Do not forget Small Business saturday. The president of American Express will be here. It may sound like pure commercialism. American express takes Small Business seriously. That is going to do it for Market Makers. See you tomorrow. Bloomberg is on the markets. A quick check at the major indexes. We were in the green across the board. Just bounced up, it has been unchanged for most of the day. S p 500 has been solidly in the green with gains of at least. 1 im being a little sarcastic. The nasdaq gaining. These gains coming as investors continue to chair steps towards looser Monetary Policy in china and europe. Who doesnt want the punch bowl spiked. Getting kevin, how does this affect your world . Loosening of Monetary Policy outside the u. S. Look at what sectors you want to be in. Growing companies that are getting tons of revenue abroad. You want to look at sectors you do not want to be in. Consumer staples have run up a lot. If you go back 10 years theyve been the worst performing sector in december. I would think that energy is the worst performing sector. It has been getting beat down pretty hard. Raymond james downgraded exxon mobil. We need to look at can oil fall further. You are seeing headlines with opec and other nations talking about cutting production. Exxon mobil is trading above their peers. A company like exxon mobil, they got passed by microsoft as the Second Largest Company in the world. Didou go back to 2010 they have a bad merger and acquisition. The growth is not robust. I remember when the headline was apple over exxon. Leapfrogged them as well. Going back to quantitative easing, those names are dividend payers with great yields. They are paying above 10 year treasuries. A play onyou have that. A company that continues to amaze me. Every 4 weeks they are restating their earnings. How long will it take this company to get its account in order . Carl icahn is coming in, they do not want to make him mad. A leader. Ly found someone from the airline industry, notorious for going bankrupt. A great model they brought someone who focuses on revenue and yield management. That is what they need to do at hertz. Hopefully all the bad news is out there. We want to go on a longerterm options trade. 29the 24 call, sell the call against it, 1. 70. The prophet max is 5. Y. I feel you on the plate i feel like it is optimistic to say the bad news is out there. This company has proven it made big mistakes. Made tremendous mistakes and that is why you saw tons of Investor Confidence being lost over the last six months. Everybody wanted to see them spin off the key asset, their enterprise. They have not been able to do that. Everyone has been bailing out. It could be a longerterm play. If you use options to mitigate your rescue can get a good payoff. Instead of buying the stock for 21 payoffan have a ratio. Not a bad way to position yourself if you want to get long the name. Thank you. Money clip is up next. To money clip. Bags, hope you are applying to the most miserable airports in the u. S. And then a deal sealed with botox. Allergan and Activists Team up to fend off a takeover. Then it is a super bowl for walmart. How the retailer is making the most of black friday and every day of holiday shopping. Todays innovation story, meet the company and the technology that helped a blind man