Expected. A bit of a poll back from where we were in the service industries. 56. 2. The thing you want to see is growth in new orders. They are still strong. Not where they were. They had grown to 55. 4. For fridays jobs report, an encouraging sign. It looks like the Manufacturing Sector is holding. The Service Industry sector is holding. The was economy is a bright spot in the world. The u. S. Economy is a bright spot in the world. Glitzy of this somewhat positive news helped the market find some legs lets see of ee if this somewhat positive news helpeds the market find some legs. Nowhere near the kind of volatility we saw the first four days of consecutive losses since 2003. While equities appear to have stabilized, there is a quick snapshot of whats happening in the dow industrials. That is not the case in treasuries and oil. The 10 year continues to drop lower. Cap messing yields like this since october we have not seen yields like this since october. Oil crude continues to sell off. Wti trading solidly below 50. There is a lot we need to talk about in terms of the markets. The chief equity strategist at Goldman Sachs has had a year and s p target of 2100, the lowest of any strategist. Year end. Janet yellen sing the good times are over for many markets in 2015 saying the good times are over for many markets 2015. If i went through each of those items, right out the seven indicators we use looking at futures is at an extreme. It has been there for the past month. That would suggest over the next 46 weeks we would look for a pullback in the market. Something in the order of 24 over theat period of time. The brunch or directory the broader trajectory, going over 3 . We dissipate the market moving higher to the middle part of the year. As we look toward the latter half of 2015 the fed hike. Getting a pe compression at a 2100 level which is only modestly above that 5 total return. Why now . Why does the argument that the rally is running out of steam now make sense versus 12 months ago . At the beginning of 2014, we could have had a similar conversation. We were talking about the difficulty Many Companies in the s p 500 would have. We were questioning whether investors would be prepared to pay a higher multiple for stocks. Both happened, somewhat contrary to expectations. I know you felt as though there was room for margin expansion. Theres always the question of multiples. What is different this time or what is a unique situation numeral s p 500 trading at just about 18 times forward pe on immediate stocks. It has only been at that level or above 2 of the time in the last 40 years. Were sitting at max valuations. Which is extremely high. Typically what happens in a pe multiple expansion phase which we have had for the last several years is an environment where Interest Rates and inflation are falling. Our view is that we will likely go a bit higher and then inflation will be moving higher. Those two dynamics would suggest that pe multiple expansion phase is behind us. We are limiting ourselves to the growth of the economy, earnings, sales, more traditional drivers. The p expansion is what gets the extraordinary returns. They have gone from around 10. 5 times too close to 18 times. Do you think tech valuations could get hit the most . Positioning inside the market, Technology Offers the best growth in the market. Within the limited amount of growth that is at an extreme. The value in the market is energy and telecom. What about the argument that the observation that is been made repeatedly over the past few weeks that the fed tightening Monetary Policy is a good sign and stocks tend to keep going higher . The economy is Getting Better. The economy is Getting Better. Its a positive situation. Growing over 3 this year. That lives sales lists sales lifts sales. Thats why you get a higher stock market over the next year. A more modest trajectory. What do you see happening in 2016 . Economy the market will be climbing. 2300. A 6 annualized total return including dividends. What about some of these more wildcard variables like oil prices and the u. S. Dollar . A huge focus for obvious reasons. That has been a big issue. Our analysis with suggest would suggest that a Lower Oil Price is a positive for earnings. A positive for the broad market. We have discrete it is more diffused in terms of the impact in terms of the consumer. A lower input cost for many other corporations. Think about airlines or the trucking industry. The negative side and the positive side. Overall, Lower Oil Prices leads to faster gdp growth. You think margins will be flat. Why is that . Companies have been looking to improve and widen their margins. They have been sitting at this level for the last four years. Hovering just around 9 . Companies have taken as much try to take as much cost out of their system. That is a positive. We have been hovering at these levels. Lets talk about the dollar. It has not been this high for a long time. People have been used to cheap euro puts American Companies at a disadvantage is the europeans. Versus at the europeans. The actual impact of the dollar is relatively more modest in the overall market than is commonly perceived. Two thirds of revenues are domestic. Many industries are highly domestic and therefore the dollar is really there are some industries where exporters are very important. It would explain the argument of why investors should own u. S. Corporations that are more domestically thinking. Give an example. In the industry. Companies where there are a Company Generates 100 of its revenues those companies have a price and a volume tailwind for better performance. The u. S. Economy is growing over 3 . European economy growing at less than 1 . The price story is more competitive exporters are more challenged in terms of stronger dollar. We want to be more domestically facing and have more u. S. Oriented revenues. U. S. Economy is growing at 3 . That is the driver. As opposed to a pe expansion story. Is that relationship fully reflected in current prices . The market trades around a fair value. The trajectory in terms of the rising market would be a function are people priced in have people priced in a stronger dollar trajectory . Has the decline to 48 and fully priced into energy . A broad consensus view is the dollar will continue to strengthen and the euro will weaken. That is the singular consensus view. The oil price is highly volatile. The market has moved toward focusing on other sectors of the market. Oil prices tend to be highly volatile. Are they just going in one direction at this point . Owning u. S. Companies that are less focused on refineries benefit there are some industries. Broadly speaking, with the selloff we have seen in energyrelated stocks is energy undervalued right now . Is it a buy or a cell or a hold sell or a hold . Tech offers the best growth. Given where valuations are . Deadly. Definitely. The market trades at around about it. Around fair value. You will hold that thought. We will be back in just a moment. The ceo of the Ford Motor Company is in las vegas for the Consumer Electronics show. Talking to him about the future of his company and how the low gas prices are driving big sales of those suvs and trucks. You are watching Market Makers on bloomberg television. Were talking to the chief equity strategist at Goldman Sachs. The question i was going to ask you before the break is to what degree is your view that Energy Stocks offer value predicated on a recovery in oil prices or is it purely valuations call . Primarily valuations relative to historical metrics. It is extremely companies are likely to cut back on their capital spending. Within the energy sector, lots of different pockets that are beneficiaries, particularly refineries. Within the market, we are looking for pockets of opportunity where there are more growth or more value in a world where the stock market trades around a fair value. How heavily invested our professional investors right now . Are they saving cash . Based on my conversations most people are invested. The futures market, people are positioned in a very long way relative to how they have been in the last year. That is the reason why i anticipate over the next month the market will be weaker as a result of the fact that we are at extreme. Could that have to do with the fact that many investors were play catchup playing catchup when the market was doing so well and people were buying because they did not want to end the year before below the indices . How about hedge funds . I know you do a lot of research into Hedge Fund Trades within the world of largecap equities. We have talked about crowded trades. Do they explain why equity hedge funds did so poorly . The analysis we have shown for 15 years is on the long side stocks do a great job. Im hedge fund bip is a vip is an important position. Were looking at positioning as reported to the sec every 90 days. Looking at the positions that are most frequently held in the top 10. The stocks that matter most. That is how we construct that. Two thirds of the time, that has been in outperformance by a good amount to 300 basis points per year on average for the 15 years. Hedge funds have and continue to do well. If i was to diagnostically try to identify what was not so successful in 2014, its the idea that one out of five dollars in Hedge Fund Exposure is in the consumer space. That was among one of the weaker performing sectors of the market last year. That net exposure and consumer space would be the number one explanation. What trends do you see playing out right now in Hedge Fund Positions . The idea of looking for better growth. Where are those opportunities for growth in a market when the economy is still growing but where growth in europe and japan have weakened significantly . More domestic exposure. Companies returning cash to shareholders. Individual companies in those areas. Riskadjusted. People are looking for riskadjusted approach where the uncertainty a lot of markets is pretty high. The pe multiple, the median stock trades at almost 18 times. Only 2 of the time in the last 40 years. The market is highly valued. Isnt it difficult to listen to that and believe it and also be cautious when you look how far the market has run . Yes, the multiples are high but they seem to go higher. The lookout for the fed to raise rates those will be consistent with environments where pes contract. To the point stephanie is making, what would you say are the biggest risks to your outlook . Whats happening in europe can a lot of questions there questions and japan. Whether policies can be implemented without too much implication. The fed is not clear on telegraphing its expectations. The market is anticipating a fed hike. That would be a risk. Do you feel better about your forecast today than you did at the beginning of 2014 . The starting point is higher. Therefore, the valuation is a modest return this year. One year ago, it was a better and faster Earnings Growth trajectory. Today, about 5 growth in the coming year. One year ago, it was faster. That would suggest with slower growth, not as good opportunity. What is the most common call you are getting . Questions relate to slow growth. The top story. Thank you very much. The chief equity strategist at Goldman Sachs. Market makers will be back in just a moment. We will be watching the snow. Coming up what will forward to do for an encore . Forwd do for an encore . Speaking of records come another automaker selling just a few thousand cars. The ceo of rollsroyce. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Good morning once again. You are watching Market Makers. From the internet of things to sell driving cars its all about the Consumer Electronics show in las vegas this week. Thisi will be headed there tonight good brad stone is already out there and he is standing by with the ceo of ford. Hello, mark. You said yesterday, you told my colleagues that you think we will have a fully automated driverless car in five years. That took my breath away. Is the state of technology that advanced . When you look at the level of advancement in sensors and cameras and software and algorithms behind it, its moving very fast. Within five years somewhere within the industry, someone will be introducing a vehicle. We have semiautonomous vehicles on the road today that people can buy. Features that will help people stay in their lanes, just their speed. We at ford will eventually have a polio economist vehicle. It goes back to our history. We want to measure its accessible and affordable for the masses. I sat in a google driverless car. Is google a partner . We see a lot of different players now. Making some inroads into that. The level of innovation is very exciting for the industry. We always looking for great partners. We will decide the things we want to do ourselves. The things we want to buy and partner with with others. Our approach is to make sure we have only economist test vehicles autonomous test vehicles. Its all going to come back to making sure to excessive and affordable for the masses. Or is here showing a concept car receive these mercedes is a here showing a concept car. I have not seen the concept. I will get into any ford vehicle. We have Research Vehicles on the road today gathering data come understanding the situation. Making sure it will be affordable for the masses. Lets talk about the computer systems. They are not perfect today. There are flaws and bugs. How are we to trust the carmakers to deliver a reliable automated experience when playing pandora is not as simple as it should be . Our approach is pretty simple. We want to make sure we are listening to our customers. We want to make it very intuitive and improve it over time. Our Vehicle Connectivity system, we have 10 million folks around the world that have purchased that system and it keeps Getting Better and better. We are here introducing sync 3. It takes the input from customers over the last eight years it is more intuitive, easier to use, faster has more conversational was commands, allows you to update over wifi. Were going to be its taking the foundation and the leadership we had to the next level. You see the smartphone at the center of the in vehicle computer experience . Boards own connection to the internet . It will be a piece of it. We took the approach of the broad and device. Were in the process of introducing embedded modems because that allows the vehicle to be part of the internet of things. As customers decide to opt in to share their data with us, we want to make sure that we are providing them safety and security of their data and giving them Something Back that they find a lot of value in. Lets talk about 2014. The automakers had a great december. People are excited about new cars. You were a little soft and missed expectations. What happened . We said clearly that 2014 was an important transition year. We said revenue would be about equal to the Previous Year and that is because we are launching 23 global launches. We launched many of them in third and fourth quarter. That sets us up very well for 2015. You look at some of those new products, our mustang lincolns doing extremely well in the marketplace. That bodes well for the new products we have watched. The new ford f150. An all aluminum vehicle. What does that mean . We are always looking at things from a customer standpoint. We spent a lot of time with our truck customers. We have been the leader in that area for 38 years. They continually want better capability better payload, better teowing and better fuel economy. We have been able to deliver industryleading levels of capability and great fuel economy. You recently said you would increase your dividend to shareholders by 20 . Profitability is challenged. Why not reinvest that money in the business . Our capital strategy is pretty simple. We want to keep reinvesting in the business and keep strengthening our Balance Sheet and reward shareholders. We want to make sure overtime that that dividend is sustainable versus the economic and business cycles. We have not announced anything about increasing dividends. That is our capital strategy. Thank you, mark. Thank you, redstone. Brad stone. I agree with brad. It was one year ago that steve kuhn was talking to me about how by 2020 everyone would be driving them. I cant get my head around it. Seriously, Driverless Cars . I know im in the minority. We are going in that direction. I cant get my head around it. A Company Whose name is synonymous with luxury. The ceo of rollsroyce will be with us. How does a car Company Survive for more than a century never selling more than 4000 vehicles a year . The companys rollsroyce. Announced in 2014 for the First Time Ever it sold more than 4000 of its ultra luxury automobiles and now talking about expanding into a new market, suvs. The ceo is with us to talk about what is ahead for rollsroyce. Matt miller is here with us in new york city. Its begin with the suv question. Rollsroyce has talked about possibly expanding into suvs. Will it happen . Good morning. First of all, yes. We had a fantastic year last year. A record year again. We are also going over new plans for future models. One of these ideas might be the approach you just mentioned. There is no final decision on that. We are making progress. We either say yes or no in 2015. I think of porsche. Porsche for decades known as a sports car company. Several years ago decides we will get into the suv market. All of a sudden, the cayenne outsells any car they have ever made. I think that was a mistake on their part. This is a philosophical debate. It was already the most Profitable Car Company in the world. Putting a v8 in the front of rollsroyce has a history with this. They deserve to write higher on the road and rule over it. Let me answer that question from my side. Of course, it is something where we want to make sure it is a proper rollsroyce. Its all about a magic carpet ride. There is things that are important for the brand. Various things that are important for the brand. If we do it, we do it perfect in a noncompromised form. How do we do it if we do it in a perfect way . Were making progress in the right direction. If the segment is highly interesting, the porsche example , maybe not the most positive one for the brand but for them the light exercise. The right exercise. The car behind me is a coop never seen before in rollsroyce. The most powerful rollsroyce ever built was seen as revolutionary. All of your colleagues said what a great rollsroyce. I spent a week driving that race. It is on another level for cars but it costs another level as well. It has all this incredible technology. Night vision Adaptive Cruise control, satellite controlled gearbox. Are you getting into the region of self driving cars . Will you be making a self driving car soon . We have invented itself driving cars 100 years ago with chauffeurs. Not a question on the top of the list for our customers. In principle, our customers would prefer a human being as their chauffeur. Many of them do have chauffeurs on hand. Something we have already. If the technology is getting more and more advanced in the future, why not in a rollsroyce . What do you consider luxury to be . You have cars that cost over 1 million. What defines luxury . Who are your competitors really . Our competitors are more in different areas. We are talking highend luxury goods. All of our customers have many cars already. Nobody needs a rollsroyce to go from a to b. Its where you sync your self into a real luxury us piece of art luxurious ease of art. We offer the program which gives customers a chance to be an integral part of creating a rollsroyce. You personalize and you design your own personalized piece of art. How are you going to keep that edge . Whether we are talking about fine art or wine or yachts everyone has that luxury experience. In order to keep this market you have to offer something different. We are offering already something really different. Very few Luxury Brands can really say that they give customers a chance to involve themselves in the process of generating the project or the product. That is something we can offer. Come and be part of the creation process between the customer and our designers. This is something you would never find. I accept. I know quite a few people who could afford a number of rollsroyce is many times over. They choose to drive a tesla and they love it. Rollsroyce, whose cars weigh upwards of 5000 pounds would you ever consider going electric or lighter with aluminum or carbon fiber . Our cars are all aluminum cars. We are using technology in combination with aluminum. Many of our clients have electric cars already. Many of our clients own a bmw. Its an interesting field and we have experience in that area already. You might remember the fully electric phantom we had a couple of years ago. We dont see in a revised version of that. We would not bring that into the market. Compromised version of that. The ceo of rollsroyce motor cars. Thanks to matt miller. I wish i had all those things. If you have the choice, you take the bmw long before a tesla. People are crazy for tesla. Get an i8 and it changes your life. Or a rollsroyce. You have to have a lot more than one million bucks. You have to have one million bucks lying around. A small apartment and a rollsroyce. A small studio and a wraith. What a letdown that would be. The Digital ScienceBrendan Greeley goes gang ofnam style at an economics conference. Will come back to Market Makers. There arent a lot of events nerdier than this one. Im not talking about the tuesday Market Makers show. The conference in boston over the weekend who better to send than one of our favorite nerds . Brendan greeley, wow. It was amazing. The weekend after new years eve, people wrapping up. You headed to beantown. It was amazing. I like to think of it as the nerd mardi gras. It wraps up on tuesday. You can totally binge on economic data. This year, there were hecklers. There was a panel a bunch of other economists lined up against, st thomas like a cage match. I would go once. I go every year. If you go in january, you are set up for the next six months. Heres the article im going to write. Take a look at it. Tell me what you think is going on. What is going on with that security . Its not trading very much. It was not volatile and then it was and now its not. It was not volatile with not so much experience inequities. Psys father is the ceo of di c orp. Even though the corporation is completely unrelated to the Youtube Video they happened to be related. Is the dad a dancer . The father was disappointed in his son because he sent his son to take over the reins and he left and went to berkeley. Were looking at the difference between attention and information in terms of trading stocks. When the Youtube Video started exploding in various countries around the world, the volatility goes up. The price goes up. Individual investors isnt this an illustration of how most people are dumb but his grandmother is a genius . Look at that. You have individual investors trade on attention. Institutional investors were smarter and sold when the attention showed up and the fundamentals did not change. There you go. Is this an argument for why individuals should not leave their money to professional should leave their money to professionals . I would say it is. There is a new investor in this corporation. You would think that by the mental our analysis would say dont buy this but they are now the fourth largest holder. They will be doing the harlem shake next year. Brendan greeley thanks. We will be back in two minutes. Live from bloomberg headquarters in new york, it is Market Makers with Eric Schatzker and stephanie ruhle. It is time to say goodbye to bundling. Dish network has a deal for viewers who do not want hundreds of choices. 20 a month for dozens of channels. And you get espn. Games of thrones is coming to the big screen. We will be speaking to the ceo of climax. Ceo of imax. If you love gadgets, you are in heaven. We will speak to the ceo of a company who makes. Welcome to the second hour of Market Makers. Im stephanie ruhle. I am Erik Schatzker. Lets get started with some news. The top Global Business stories. A warning from no gross. The good times are officially over. He says that prices for many assets will fall because record low Interest Rates wont restore growth. He predicts investors will seek alternatives to risky assets. Gross used to run the Worlds Largest bond fund at pimco and is now at janus capital. Crashing through another benchmark. West texas intermediate is down 3 . It broke through 50 a barrel and traded below 49 before rebounding. That will be more pressure tomorrow. Bloomberg forecast the government will report an increase in crude government stockpile. The yield on the u. S. Tenure well below 2 for the First Time Since last out sober. Yields on government bonds in germany and the netherlands hit record lows. Congress is returning to work. With republicans in charge of the house and senate, john boehner has a challenge to his leadership. Two other will publicans two other republicans have launched longshot campaigns for the speaker job. Tom is gilbert has Thomas Gilbert junior staged a shooting death of his father to make it look like suicide. To the future of the euro. It remains near a nineyear low ahead of the momentous vote in greece that may determine the common currency. It keeps sliding to record lows. Germany, france, and the u. K. Deflation is the great fear. A Portfolio Manager at Oppenheimer Funds is watching this closely. Simon kennedy could not be more riveted. He is a correspondent with us from one. We will begin whether bill gross is right . Is the party over . Not just in europe, but everywhere, risk asset prices will drop . I could agree with part, but let me qualify what i would disagree. I agree that all the low Interest Rates and qe doesnt do anything to resuscitate growth if you dont have fiscal stimulus. Both corporations and consumers especially in europe, are not in the mode to take on debt. Sometimes they cannot. In an economy, sometimes things have to adapt. If the private actor is a bank someone else has to spend. If that is not the government through fiscal spending he will go into a deflationary trap. That is where we are after four years in the eurozone. You achieve primary surpluses, gdp collapses gdp is higher today than they were before the sacrifices were made. We know, in italy, france has been pushing with merkel for a little leeway on the austerity policies, or a targeted fiscal spending plan. I think the vote in greece is about that. They are getting support, because they want to talk about renegotiating the austerity measures. Simon, is what the lucio saying beginning to become the prevailing view in europe . Well draghi talks about the need of stimulus, it may accomplish next to nothing, because yields on the bond that the ecb would be buying are under 2 and in some cases near 0 . Mario draghis qe program is undermined by the fact that the bonds are much lower than they were where yields were in the u. K. And u. S. When the Central Banks started buying bonds. The impact from buying in europe has argued diminished like the fact that the yields have fallen so low. The ability to get the much lower is greatly reduced. If the ecb engaged in quantitative and it appears it will, what will the net result be . Where will the money end up . Out of the eurozone. Lets not forget draghi in august specifically said we can accomplish some, but we need fiscal stimulus. Draghi is on board. Without spending the growth will be limited. Where will the money go . What that means is and we seeing it in the balance of payments. Local europeans have enough buying power to buy local fixed income, but the excess savings leaking out of the eurozone and going where . Everywhere. The absolute location of european private investors is 80 why is that . Institutional references and regulations. Globally, the biggest equity players are u. S. Investors. Europeans are more tilted to respect products, with a lower propensity to take on risk. The money is going to u. S. Treasuries with dollar exposure. The treasury yields are falling and retesting 2 . Despite u. S. Growth having accelerated over the last six months. It is going to japan, everywhere. Underperforming developing markets, are still very well contained. You can borrow 2 at the same levels of the united states. It says there is no shortage of fixed income securities. That is why qe am a even though it is not needed to lower yields, they are already going well where will the money go . That is the big question. More product, anything with the yield and duration will be well supported. Simon, is there any chance the ecb is a result of what you said and what alessio explained has any options besides quantitated using, or is draghi merkels prisoner . Draghi, at the last press conference before the holiday, pointed out that apart from gold, there is little they would not consider through the euro. I doubt they will intervene now. We would see a full scale currency war if that was the case. He seems that he is very much over his schemes. The science that it will be sovereign debt he hopes to buy. 500 billion worth of that. And he wants to point out in structural forms and fiscal spending, whether you will see that is another thing. That being the case, the euro trading right now at a dollar . 18 or dollar . 19, where does it go . The momentum seems very powerful. With very little volatility. Powerful in terms of what . The chart shows, that the euro has been very steady. Powerful that it has not had the setbacks. He is not scared anyone with big corrections. It looks similar to the yen selloff we had a couple of years ago. Im sorry we dont have a chart, but simon knows what im talking about. The decline in the euro matches very closely to the decline in brent. Why are they trading . Trading in such lockstep . The relationship between the dollar and oil, which we can debate. There are several strong channels, i think it is a legitimate relationship. I think there is a cutie component. With the aqmd component. A qe component. This will exacerbate the deflationary pressure on the eurozone and strength in draghis case about qe. Lets start now. I think that is a powerful relationship. If you scaled it to relevancy, it would look much more tight. Draghi and the germans in particular, are terrified of deflation. Draghi and greece have it easy. Draghi and greece can prove austerity led now deflation is knocking on the german doorstep. How long, simon, will it take for the germans to realize they are wrong, if that is the case . They would take a higher moral ground. The austerity that any fruits that have been born, i think that is the rays of the finance minister last week in greece, are a result of the policies they pushed. At the same time you are seeing inflation in germany at a fiveyear low. There is a limit as how much they like inflation to fall. Perhaps now more than the last year the opposition to qe may not be as great as it once was. Simon kennedy in london our chief international correspondent, and Oppenheimer Funds allessio. What are the chances of a deal going through . A company that makes the chips and gadgets you use every day. We talk to the ceo of broadcom. Welcome back to Market Makers i am stephanie ruhle. Aol and verizon. Verizon approach to the internet pioneer about a joint venture or acquisition. The rise and is interested in the technology aol uses to sell advertisements. Sherman wrote the story and joins us along with paul sweeney. Alex lets start with you. We saw headlines from verizons ceo confirming the country is entered the company is interested in partnering with aol . They are partnering, not just with aol, they had discussions with the number of companies about getting into the ad tech game. Arise and is more interested in mobile video, verizon is more interested in mobile video, eating able to bundle that with a month early subscription. It is similar to what at t was talking about when it bought directv. If you heard the ceo of at t talk about mobile video driving the transaction. They see the next wave as being the idea that everyone is watching on their devices, and we can pair content with distribution. Advertising allows verizon to make money off the mobile video platform. The key is advertising technology, why . It is the way advertising is bought and sold on the internet. If you think of traditional advertisements, a salesperson came in and negotiated prices. It doesnt happen nearly as much on the internet because theres so much advertising inventory the ads are bought and sold electronically on exchanges. It has become a bigger piece of the total market, and it is getting bigger. Tim armstrong of aol has made advancements in its own plot form, and that is what one of the main things that verizon is interested in when they think about getting into the internet advertising business it especially mobile video. Aol is made up of three segments. There is media content the old membership business, and advertisements. All verizon cares about is number one . They do not care about nu they do not care about the old business membership. They can take that business and start winding it down, and maybe convert some of the dialup subscribers to verizon or at least verizon dialup service. Tim armstrong has done a tremendous job. If years ago aol was left for dead. He has their patent portfolio for billion dollars. Secondarily, he has turned around the core business. He had several quarters of advertising growth something for example we have not seen at yahoo . This may be an opportunity for Tim Armstrong to be a swan song for ale well, potentially. This has to deal with another ceo who may be or may not be running a company that was left dead. That is Charlie Ergen and dish. He came up with a Product Announcement that will take espn outside of the cable bundle. It would be unheard of. Joe clayton is technically the ceo. Charlie runs the company, but joe is the real ceo. This is another company and mobile video. The idea that the next wave of television is not getting video to your tv it is watching it on your mobile devices. That is what dish does not need to install a satellite that costs 800 plus per person, they can just need you 12 channels for 20 a month. This is the slow progression of the unbundling of cable. Now i have my 20 a month dish service, with my netflix, my hulu and i can have 50 a month without a cable bundle. Doesnt that get complicated . That is the Cable Companies argument. What about the pleasure of sitting on your couch, and watching tv. Why cant you just watch orange is the new black and call it a day. One of the key issues is there is value in the bundle but not the value we are thinking about. It is really the Broadband Access the companies deliver. When you compare that with the video, it is a compelling offer. Those who will continue subscribing to the cable bundle is not who dish is going after. They are going after the millenials. If you can manage activity on facebook, instagram, snapchat, etc. , why cant you subscribe to two or three overthetop services . I think they can handle it. If you want to just watch orange is the new black and call it a day, why dont you just sign up for netflix . This is one of the first threads pulling out of the bundle. Over time, they will see a fraying on the edge of the bundle. That is where consumers and Consumer Behavior is going. People are consuming more content on mobile devices outside of the bundle. The content owners recognize this and are trying to figure out his nose owners so they can replicate they are trying to figure out how to replicate this. Thank you, both. Congratulations on breaking that story, alex sherman and paul sweeney. John boehner has a problem. As Congress Gets to work, a new one, and it comes from republicans. The showdown over keystone. The Republicancontrolled Congress is promising an early vote on the pipeline project. All the treachery, violence and sex you could want on a big screen. Game of thrones is coming to imax. Live from bloomberg headquarters in new york, it is Market Makers with Eric Schatzker and stephanie ruhle. Welcome back to Market Makers. Im stephanie ruhle. I am Erik Schatzker. Enter is coming to imax. They are teaming up with hbo to bring gains of thrones game of thrones to the big screen. The ceo of imax is here with me and stephanie. I am afraid of game of thrones that close. The production quality is so great, when we tested it, when we saw it, the dragons flying at you, it is pretty intense. Rich, how did this come together . We have low level discussion saying your brand is cool, our brand is cool. Is there some project we should do together . The creators of game of thrones came up with the idea of giving us footage to see how it looked. We took the footage and converted it to imax. It is not just the hardware that is different, we use proprietary outgo rhythms. Proprietary algorithms. When we concluded it would look really good, the Business People not involved and decided what episodes, days, and how to market it. The details are, it is the last two episodes of last year, along with an exclusive trailer created for imax showing three minutes of this year and what will happen. Only three minutes . It speaks to how much people love this program. You will show two episodes where party scene, and three new minutes. How much will it cost . Two episodes you have seen on television, not in an imax. It will be like an awakening. It will be an all h it will be an ah ha moment for you. It will be like taking a whole show and using it as a trailer. We want to give people enough so they are excited and feel theyre getting something special, the not so much they are not interested in the upcoming season. Why not do a marathon of last season . We will see. It is the first time we have ever done a tv episode repurposed for imax. If the industry is changing, and im sure that we will get into that. We will see how this goes. If it goes well, we have talked to other content creators about doing Something Like this. You would not do this the same wake that avengers is coming out, or star wars. You have shoulder periods from january to february, September August it is not a blockbuster time of the year. People generally dont go to the movies as much and blockbusters are released. In those times you want to keep people in the habit of going to movies. You want to give them content that will draw them to the movies. That is part of the overall picture. Was does this say about the direction that imax is taking, and the blurring between the lines of visual media and the conversion from the big screen to the small screen. We want to bring more people into the theaters. Theres competition from inside the home, and that is part of what powered imacs to where it is today. Powered imax to where it is today. We created a reason to go to theaters. An enhanced experience. You can feel like you are in the movie, something really special. As in Home Entertainment evolves with episodic television, which is drawing eager audiences and drawing higher production costs why not expand the number of devices you can see it on. On hbo demand you can buy them individually cable, streaming, why not enable consumers to be able to choose between athome devices and to get the best device in the world, and im an imax theater . We are making sure people have the opportunity to see people and look we are making sure that people have the opportunity to see content in the best way possible. There are many movies coming out this year that would be extraordinary in imax. For blockbuster movies you want to make sure windowing exists. That is how you maximize the value of the product. We are having all of those movies in imax. Is that your biggest bottom line . The fact that you have all four of those movies in one year . It is kind of like the stock target business, you cannot pick everything in advance. Under portfolio theory, which is how we look at it, if you have a broad enough or, we are excited about it. There are times when you want to do simultaneous releases, do you not . When does that make sense . When it is a slower time. So you cannot recoup the capital of a block western. We talked about shoulder. We talked about specialized content. Star wars lots of people will go see star wars. A to jillia a kajillion. That has been monetized, people love it, and there is a social aspect. Last night, after this news started to come out, online lit up with people saying isnt this the coolest thing . One last question, how do you market it . How do you make sure that enough people will come and see it . We will find out. We are doing marketing with hbo and online. We will learn and do a lot of market research. I sense this is a viral enough property the game of thrones twitter sphere is already in fuego. Did you see how devious the smile was . Stephanie started to watch it. It. Rich gelfond the ceo of imax. Broadcom has its chips and a lot of your gadgets, now it wants a piece of the smart car. The consumer eli tronics show kicked off and lost vegas today the consumer electronic show kicked off in las vegas today. Bloomberg got to talk with Senior Editor brad stone with the ceo of broadcom, scott mcgregor. Hi, thank you. Broadcom is 25 years old, known for powering boxes. In some cases gathering dust underneath our tvs. How are you staying on top of the changes in the tv landscape . We are seeing four k content go mainstream. There is content available now. Ways to get the content into homes is important. Radcom is in most of the setup boxes. What is four k . Ultra hd. Four times this green resolution of hd. Startlingly good visual quality. We are creating boxes that are smaller. That will be welcome news. You can velcro it to the back of a tv set, or even down to the stick of gum size. How do we speed up these transitions . People will be excited. The Cable Companies and carriers have this content to offer. People will be interested in getting subscriptions to that and see it. It will also be streamed across the internet. Is common and mainstream. We are hearing about over the top tv subscriptions, dish, espn, without subscribing to satellite. How fast are these changes happening . Is cord cutting accelerating in 2015 . A typical home will have over the top as well as cable or satellite at the same time. There will be people who only use overthetop or cable or satellite. A lot of homes will mix. That will be the predominant usage model for us. The predominant ring, that only the Tech Industry could have come up with, is that proliferation of sensors into all kinds of devices like clothing and eyeglasses. Where does broad cam fit in . We have chips in most of the watches. We provide the connectivity that enables these devices to talk with Access Points for your smart phone. We believe that over the next few years you will see an explosion of these devices. Some are less compelling than others, but some will catch on and fill real needs. There will be different kinds of devices than in the past. Will they talk to each other . We have a washing machine that doesnt talk to our toaster that we cant configure because we have an Android Phone in seven apple. You see a pile of remote controls on the coffee table, this is the electronic equivalent. Getting devices to work together. It is a challenge, but we will solve it. The 40 ceo says that he will have a fully automated driverless car in five years. Do you believe in that, and where does broad cam fit in . I do. There are a lot of good reasons for it. The car is becoming the living room on wheels. In the past it was something you brought media into. It will be more integrated with your living room with high polity content. Youll want to take the content with you. Or any parents entertaining the children in the back is very of. Thank you, im looking forward to that. Brad stone with broadcom ceo scott mcgregor. Scott weiner gets ready for battles. The first one is all in the family. Welcome back, im stephanie ruhle. The Republicancontrolled Congress is about to gavel in for the first time. It will be mostly ceremonial but there is a bit of drama. To vote for house speaker. Peter cook is on the hill with the latest. What can we expect . John boehner wishes we would not have drama. It is supposed to be a triumphant moment for republicans. John boehner expected to be elected to his third term as speaker, but he faces a republican rebellion. Conservatives want to see someone else in the leadership position. John boehner can only suffer 28 defections and still hold on to the gavel. The question is, are there enough rebellious conservatives to stand in the way and force this into a second about . John boehner has been talking to members and trying to convince them to stick with him. What is your sense . We are probably at 18 by our headcount, and possibly more. I think they will not get the magic number, at least his opponents two blocks away. The important thing is, the people who are voting. There are people at mario cuomos funeral that will make it a little easier for john boehner. However, it is an embarrassment he even has to do this. You think the people in new york for the funeral will affect the vote . Yes. The people who are present is what matters. The democrats will vote for nancy pelosi. The bar is lowered for john boehner, because those here to vote for nancy pelosi are not here. All of this matters. They are keeping a headcount on the democratic side as well. Why are the republicans going through this . Shouldnt this be their moment to not be splintered . Saying we got the position lets move forward united . You made the exact argument ive heard from three of John Boehners closest confidants. If he is going to get it vote for him now or it will embarrass who ever the lawmaker is standing in the way. That is the message that the leaders are giving the members. Dont stand in the way of john boehner against it will embarrass all of us, including you. Thank you for giving us the latest. Market makers will be back in just a moment. That is going to wrap us up on Market Makers. Tomorrow, i will be going to las vegas. I spending 18 hours at ces with the one and only ryan seacrest. And his boss that chairman and ceo of iheart media, pittman. We will have the ceo of pandora, shares of that Internet Radio are down 50 since last march. It is the cfo, but that is ok. Brad stone will be doing that interview, just like mark fields today. Is taylor swift on pandora . If they are down 50 , it has to be without taylor. Have you started to love her . Now. I respect her, im just not a fan of her music. A tumultuous relationship, i would say, with her. I have it with her, she does not have it with me. That will be enough for today. You want to go on the market. Our correspondent scarlet fu is the best person to take you there. Elected nationally that u. S. Stocks would stop their booming streak. It looks like we have gone negative, and we are now in recession mode. The s p 500 lost nine tens of 1 and nasdaq extending its losses to 2. 1 . Kevin kelly is the chief investment officer. How should we read into giving up the early gains and extending this decline . One way is to see how the options are traded on the market. Yesterday you saw one point b you saw or. 5 in january. You saw people positioning in march. The same thing was happening this morning. 1. 5 times were being traded, but muted out into march. To people start to make bets into may or the summer . People are wanting the market to digest itself when it is coming to greece and corporate earnings. We are looking at positioning especially with heightened volatility, you can actually get paid to go along the s p 500 by selling the 1850 spx 473, then buying 2100 strike call that goes out in september. You will get six dollars in that credit. 2100 is actually the level this morning. Nice work. Your profit would continue to extend, but you are losing as you go down. This presumes the Federal Reserve will stick with the plan to eventually normalize its Monetary Policy, is that the presumption . You are seeing yields being extremely low around 21 basis points around the fed fund. Right now, you are saying the market anticipate a highrise going into year and. Year end. We are watching verizon because they have approached aol for a takeover or joint incher. Joint venture. How are people playing this . When you look at aol their volatility is still high, around 47 . There were chatterers about yahoo doing a tie up with aol. They did a deal by selling patents to microsoft. You saw it two and a half times about the calls being traded but you would expect to see more in a deal like this. That is certainly not confirmed by the company. We will monitor headlines for announcements. We are back on the markets in 30 minutes. Money clip is up next. Welcome to money clip. Here is your run down. In tech, take your hands off the wheel. Driverless cars make inroads in las vegas. The Top Hedge Fund and we are keeping score of the hits and misses. The changing of the guard on capitol hill. A divided Republican Party takes control of congress. The rose weiss the rollsroyce cruises to a new sales record. And ro