Stephanie i am stephanie ruhle. We misseed y we missed you. Erik a vacation. I will not go so far to say i deserved it, but i enjoyed it. Stephanie getting the top business stories of the morning. Greece. Talks over the greek bailout have broken down. Germanys commerzbank says theres a 50 greece will leave the euro. Greece is refusing to meet european demands that it requests an extension of the current Bailout Program. Here is greeces finance minister. Yanis varoufakis in the history of the European Union, nothing good has come out of ultimatum. We proceed from crisis to crisis and this is how we improve. In the next few days, any notion of an ultimatum is going to be withdrawn. Stephanie the greek government says terms are too tough and it wants be deal rewritten. Time is running out, the agreement expires at the end of the month. A shakeup at Starwood Hotels which owns sheraton and w. The ceo has stepped down. Starwoods board says it is time they speed up company growth. The Parent Company of burger king posted a gain. Restaurant Brands International was created when burger king bought tim hortons. Sales were up 3 . 10 tim hortons posted a 4 gain. In West Virginia a csx train carrying oil first into flames. One ended up in a river. Dozens of people fled. The governor has declared a state of emergency. Erik is it just a matter of time before greece exits the euro . On the surface it is looking that way. Appearances can be deceiving. Lets bring in steve engle under, global head of g 10 strategy at citigroup. And joe from Bloomberg Markets. They say it is darkest before the dawn. Is there a dawn or is this there could be. Last night it seemed like the talks broke off in acrimony. No one seemed to be moving. As the night progressed, there were two draft statements, one that greece was willing to accept. They were not that far apart between the statement that the eurogroup wants to make any statement the greeks want to make. It is a lot of semantics. There are some issues. It is very close. It seems plausible. Erik do you agree . Largely. It is pretty clear the outcome is going to be a sixmonth period of discussing whatever program greece has in the future. Whether that is called an extension or a new framework discussion is irrelevant. Its clear that in terms of the substance what greek debt servicing are going to be, but the fiscal issues are going to be. The eurogroup is going to be flexible. They will find language that allows the eurogroup tuesday the agreement is being extended and allow greece to say this is a new framework discussion. Stephanie that sounds like semantics. Well yeah. Erik this has never happened before. The europeans are going to agree to keep talking . People always mock this. There is something to be said for that. Stephanie what . It is a waste of time. Erik 41, it means you are not driving a nail into the coffin. During the 2010 2011, 2012 the first wave of the year is in crisis. Every time the first wave of the euro zone crisis. Every time, people were like it is can kicking. In the end, it worked out. Erik steve, your peers at commerzbank say a risk for a greek exit is 50 . Is there any sense in trying to game out the probability . It is clear that the of a rupture are greater than zero. I do not think they are 50 . At the end of the day if greece thinks the eurogroup wants to avoid this kind of rupture so much they are going to agree to greeces terms without change they are wrong. If the eurogroup thinks greece is so afraid of leaving that they can just put the squeeze on them they are wrong. What you find is as they discuss that is what they will use the next six months to discuss. Greece stands to gain a lot from quantitative easing if they get with the program. So i think the advantages will be clear. And the point is to find some sort of language that allows both sides to be comfortable and gives them room to discuss how they are going to go ahead. And allows the eurogroup to think about how they are going to deal with other countries after greece to get terms renegotiated. Erik greek officials were quoted saying we cannot agree to what the europeans want because we had a political mandate amending we do something different. Do you get the sense that the europeans could care less about the political mandate syriza has . Stephanie who are the europeans . Erik other members of the eurozone. The greek government agreed to a deal a while back. Stephanie now it is a different government. That is the argument syriza is making it is a good negotiation tactic to sate we were voted into do this so you cannot expect us to turn around. It does cause the need for an agreement that allows everyone to save face. Stephanie if greece were to leave, what would the consequences be for the Currency Union . Theres a difference between the immediate consequences. Even if you are 85 sure italy spain and portugal are solid, the cost if that 10 or 15 comes relevant is enormous. We would see some widening of peripheral debt. Significant weakness in the euro 5 to 10 as a kneejerk reaction. The tools europe has to offset the situation, the fact that spanish and italian borrowing costs are significantly lower than u. S. Borrowing costs gives real incentive for them to get over it. Ultimately the euro would recover and spreads would go back to close to where they are now. In the first instance there would be pain until it becomes clear that is the direction european policymakers are headed. Erik lets say that happens. Lets say greece exits the euro and the speculation that spain and portugal follow is f ulfilled. Longerterm, doesnt the euro become more valuable as weaker economies are no longer tethered to germany and france . Yes and no. The issue with having large countries leave is not just saying what is left is really strong. They would have to take enormous writedowns with respect to their holdings of assets in these countries. That would be extremely painful for the private sector and for the government sector. I do not think they want to do that. I do not think they are willing to do that. My guess is if you are looking at spain and italy you say on your own do you think you would ever have a one handle to your 10 year borrowing yield . The answer is not in this universe. They have incentives to avoid that. Stephanie walk us through. Lets say greece leaves, eri ks favorite, the grexit. What will it be like on the ground . It would be pretty painful. You would probably need capital controls while they readjust the currency. The currency would drop like a rock. The Greek Central Bank would have to shove Interest Rates down to stimulate the economy. It would be pretty chaotic in the first instance. It could look different six months or a year later although the odds are there would still be crisis. It would be very painful in the shortterm. Stephanie what you say it would be a Lehman Brothers moment . Probably not for the world. It would be for greece. Erik joe, you were in athens not long ago. Do you get the feeling there is anybody, among greeks not among politicians or in syriza who looks to the example of ireland or spain. Where they have done things like internal devaluation to try to get the economy back on its feet and stimulate job growth . Do they look to this situations at all . Im sure there are some. Why and large, the view is the troika and the force austerity have been brutal and unfair. And that there is not much to be gained by reforms. Overwhelmingly, the view is that that path is not viable for greece. Erik great to have you. Joe of Bloomberg Markets and stephen, global head of g10 foreignexchange strategy at citigroup. Stephanie who is selling herbalife . Seems like everyone. The company that bill ackman has been bashing. We take a look at the latest filings. Does not look like he has got too many opponents. Erik a federal judge has blocked president obamas executive order on immigration. We with how you more. Erik you are watching Market Makers on Bloomberg Television. Top headlines. The ukrainian ceasefire is being ignored in one part of the country. Prorussian rebels have claimed control of a railroad junction. The rebels say 300 Government Troops have surrendered. A few days ago, all sides agreed to pull back heavy weapons. The leader of egypt is calling on the u. N. To get rid of islamic extremists and libya. Sites were attacked on monday as retaliation for the beheading of 200 egyptian christians. President sisi asking for a coalition. Do not expect irans leader to go see american sniper. The ayatollah says he has not seen the film but heard about the plot from other people. Stephanie learning way the worlds top hedge funds are putting some of their dough. Todays the deadline for quarterly filing for the Fourth Quarter. Lets look at what is already out there with mike regan. David tepper slashing equity holdings. We spoke to him a few months ago about the equity markets and heres what he had to say. David tepper the u. S. Economy is ready. Is pretty good. With the stock markets, you are not at high multiples right now. Stephanie an aboutface . Erik was that the time david tepper was here and he took over my bloomberg. Stephanie we made him do Word Association with chris christie. An exciting morning. Mike i wish i was therefore that. He reduced his u. S. Stock holdings from a little under seven billing dollars to a little under 7 billion to 4 billion. Stephanie thats a lot. Mike he exited all over the place. Facebook, apple, the s p 500 etf. This is a hedge fund. He has always been more of a distressed debt guy. Erik theres lots we do not know. He only has to disclose 5 . He might have smaller stakes. Stephanie hes a distressed guy. These names have run enough. They had done well if you compared to where he bought been originally. Mike this is a snapshot in time. One of the things every investor has been saying, there will be more volatility this year. Maybe guys like this maybe he is trying to time the market. Maybe there will be a dip to buy down the road. There is not enough information. Erik its an indicator. It tells us something about dan loeb. Mike dan loeb is adding energy. Stephanie dan is increasing his equity position in energy . Mike all over the place but in energy he added phillips 66 and another energy company. For a guy like dan loeb, what has been missing from the bull market has been a chance to buy value stocks. The market has gone up pretty much as a whole. Whether it be a lot of index investing going on. Whether it be the federal reserve. You will hear people blame both. In the Fourth Quarter, Energy Stocks had a bear market, luring in value guys like dan loeb. Energy in the s p 500 the pe was below 14 times reported earnings. Stephanie seems like across the board a number of guys are seeing big opportunities in energy. Mike i had not even heard of cosmos, they focus on west african oil development. Clearly these guys saw value in the Fourth Quarter and energy. Looking at forward earnings estimates, they are about twice what the reported pes are. Is it a value trap . I dont know. It is hard to say. Where is the price of oil going . Citigroup says 20. Other people say 60. It is guesswork. Stephanie we need to talk about herbalife. 2 years ago at the robin hood conference when i sat down with bill ackman, we went through all the points of why you hated the company. It did not matter if it was right. Long the stock you had george soros, stan druckenmiller, a lin eup of hedge fund whos who. They all seem to be out of the game. Erik we might find out later. Mike Richard Perry exited herbalife. One of the big names. Stiritz, i believe we had an analyst say he was adding to his position. You are getting past the question of is it a ponzi scheme. Erik karenpyramid scheme. Mike sorry. This is a company that had doubledigit sales growth. Stephanie if you believe they are obviously reporting. Bill ackman is saying it is all lies. Mike even looking at the estimates now we are looking at a drop in sales. Whether or not it is inflated due to the pyramid scheme, analysts are looking at sales going down. One reason to get out, whether or not it ends up being a pyramid scheme. Stephanie there is reporting that george soros is getting in. Mike i guess you have got to commit to it at this point. Stephanie not necessarily. Mike you do not have to. Erik you can average down. Stephanie pretty sure bill ackman is not changing his view anytime soon. Mike thank you for giving us the latest. We will be back with more Market Makers in a few. Im excited to be here because my partner is back. Erik good to be back. Erik coming up on Market Makers, a federal judge agrees with texas and 25 other states. He blocks president obamas executive order on immigration. Stephanie how social media rocked the fashion world. All it took were two twentysomethings with computers. Live from bloomberg headquarters in new york, this is Market Makers. With Erik Schatzker and stephanie ruhle. Erik good morning. You are watching Market Makers under their television. I am Erik Schatzker. Stephanie i am stephanie ruhle. I am so glad you are back. I love this guy. Erik makes me happy. Stephanie i am happy to give you the bulletin. Top business stories. Germanys Commerce Bank has doubled the chance greece will exit the year appeared the bank says theres a 50 chance greece will drop the currency. Talks between greece and the rest of the European Union have broken down. The greeks want a new and less restricted bailout, the rest of europe wants budget cuts and austerity measures. A drop in a key economic index to the new york feds Empire Manufacturing index shows the number of employees fell. Inventories rose. The government opening these guys to widespread civilian the government is opening the skies to widespread civilian use of drones. Rules from the faa would allow use of the aircraft. Flights wouldskies not be allowed out of the sight of the operator and could not be used for pizza delivery or for products by amazon. A recordbreaking weekend for 50 shades of grey. The film took in more than 94 million over the long weekend. It set records for valentines day, president s day weekend and february debuts. Released in the highest number of theaters ever for an rrated film. Erik i have not read the book. Stephanie you are going to see it. Our producer was at a showing. The camera operator broke. The poor girl is devastated. We almost canceled the show so the Market Makers team could see it. Erik that is what we need. Moving onto a twist on the fight of our obamas immigration executive action. A federal judge in texas temporarily blocked the orders to ease deportation for 4 million undocumented immigrants. Our chief washington correspondent peter cook has more on the decision and what it means for the debate over immigration policy. The judge has some views and he is not shy about expressing them. How big a problem is this . Peter there are some legal shades of gray. Stephanie very good peter i try. It is a shortterm blow for the obama administration. They feel confident this is a temporary setback. This is one judge acting in texas. When this gets considered on appeal the president s executive actions are going to be upheld. Not everyone holds that view republicans in congress are supporting the decision. He has a Texas Federal District Court judge. Brownsville, texas. A george w. Bush appointee from 2002. Hanen says in the action, no statute gives the dhs the discretion he is trying to exercise. Says the president has surpassed his own authority and it is up to him to give the states the authority to fight back. Erik how is it going to affect posturing between the democratic party, the Republican Party, and the white house in the middle . Peter in the short term, you can move the legal fight to the side. A more immediate battle over funding for homeland security. Which has republicans and democrats at odds. Funding runs out on the 27th because there is language blocking the executive action. This could be a safety valve, an offramp. Republicans could decide to find the agency and leave this fight in the courts. We have not seen that indication from leadership but this could be a plus in terms of that. If only in the short term. The larger fight is the legal fight over the president s executive action. The white house feels confident they are going to prevail. Erik even if the judge did not intend to provide the Republican Party with cover for funding the department of that is what may happen. Peter potentially. Leadership has not seized on that. There are a lot of folks talking before they left for congressional recess. If this case went positively for the republicans it could give the opportunity to move that fight to the side and fully fund the department of homeland security. Avoid the political backlash that could come if we see a shutdown of that agency. Erik thank you. Our chief washington correspondent, peter cook. Stephanie what happened to all the money consumers saved from plunging gas prices . Retailers are not seeing it. Lets find out who is. It is Market Makers on Bloomberg Television. A quick update. Auto sales in europe rose for the 17th straight month. Up more than 6 from a year earlier. The five largest markets, spain had the biggest increase of 28 . Investor confidence in germany has risen for the highest level in a year. It is likely to have been helped by the prospect of more central bank stimulus. Germanys economy grew more than expected in the Fourth Quarter. The british rate of inflation fell to the lowest level on record last month. Prices rose by. 3 in the past 12 months. A big reason, the following cost of gasoline and a decline in food prices. Stephanie the plunge and food prices meant americans will save tens of billions of dollars. Retailers are still waiting to reap the benefits. Retail sales have fallen for 2 straight months and Consumer Confidence is down from an 11 year high. Lets look at what is going on with Michael Gould he was the ceo and chairman of bloomingdales for two decades. Welcome. What gives . We are not spending it at the mall. Michael gould good question. Im not sure on the right person to answer. All the things you just said. Wages are up one million new jobs ever the last three months. People are waiting. I do not think i think it is a good omen for the balance of the year. One could say where is the business now . Stephanie is the issue we have become a addicted to sales and coupons. No one wants to paint retail because we only go in stores if we see 50 off. We are across the street from gap. People do not go and unless there is a sale. Michael gould people go in if there is excitement. Erik maybe theres not enough of that. Michael gould there may not be. That is a point i have made in the past. Stores in the United States are too conservative. There is not enough newness and things of interest. In all due respects, great dress. How many more dresses do you need . How many more ties do you need . To buy, someone has to be motivated. What motivates us is newness. The great fashion elements are not there now. Skinny jeans, cargo pants. Stephanie erik loves skinny jeans. Erik stephanie likes cargo pants. Michael gould i am not going down that road but does wear big things that drove the apparel business. Right now you have deflation of pricing and you do not have a lot of newness. A friend of mine once said fashion and risktaking is an oxymoron. People have become very conservative in what they are bringing to the market. Stephanie isnt that because it is expected to take risks . It is expensive to venture into newness. If it does not work you are screwed. Michael gould yes. But isnt it a risk to have sameness . If you do not venture, you cannot win. If you do not swing at the ball you cannot hit it. The best hitter hits 36 of the time. You cannot win at 36 running bloomingdales or macys. Where is risk, there is not enough risktaking by the buyers and there is not enough newness in the stores. That is a difference between here and flash it here and Flagship Stores in london or paris. Stephanie they have competition that could beat really nimble. A macys just cant. Michael gould i do not think it is about being nimble. I think it is about taking risks. What are you doing in the store it excites you. I really want that. You walk in and there is a little popup shop of my karens a little popup shop of macaroons. Its not going to change the store but it is exciting. I saw a statistic that over the last 20 years the population has grown a little less than 4 14 but the amount of retail space has grown 30 . Almost 20 times more retail space per customer, per citizen as you do in europe. Erik that is a very interesting point. Lets go back to the macaroons. Stephanie do you like them . I am the only one who does not. Erik beside the point. Putting a macaroon display, not every store can do that. How does retail become innovative and exciting . Michael gould you have to take risks. Erik on what . Michael gould what makes something exciting . People talk about online business. They are going to put brick and mortar out of business. Online business is somewhere between 6 and 7 of retail sales. Brickandmortar has been here since the time of the greeks. Brick and mortar is interaction. It is about relating with other people. Not just about buying product. Erik are we talking about concept or are we talking about selection . Is it just the stuff they are stocking or do some retailers need to rethink everything they are doing . Michael gould we have to rethink how the stores are laid out, the kind of assortments. The problem is, stores is a misnomer. When i started Department Stores some people call it a notions department. Stephanie what is that . Michael gould hair ornaments, thimbles and things. It had a drugstore, a bookstore. Its really about a whole. Erik have you found the Department Store of the future . Is it anywhere . Michael gould places like gallery lafayette have tried to appeal in a different way but it is a different model. Stephanie harrods isMichael Gould a different experience. Michael gould if you go to gallery lafayette those stores are somewhere between 65 to 75 concession. In the u. S. Concession is a very small percent. Erik is that a better model . Michael gould going forward, concessions has to be a better model. Stephanie what does that mean . Michael gould you come in and for arguments sake, Louis Vuitton is the concession. They run the business. Erik you rent them space. The department becomes a real estate business. Michael gould it is a selection business. It is a real estate business even if you own cheanel. Comes back to risktaking. If you own the merchandise yourself and you are vertical and you sell it, you take different kinds of risk. You move the merchandise in and out faster. You are able to put more people on the selling floor. You have a different cost structure. Stephanie it is a different motivation. Michael gould if you walk into Galeries Lafayette you look at little businesses all over the place. Someone is running down, the risk has been taken away from the store to a great degree. Part of that has to happen in the u. S. And become more interesting. Stephanie do you think Outlet Stores are hurting brand image . Michael gould there comes a Tipping Point. There are some people like ralph lauren who have kept it away from the Department Stores. There are other people people have been critical of coach, who had so many. Stephanie michael kors. Michael gould the Tipping Point is coming to you have norstrom who says they are going to double the number of outlets over the next three years or four years from 120 or 250 or whatever it may be. There is no more place for the fullline store. How are they going to grow their business . You can only grow their business with an Online Program and an outlet program. The International Business for american Department Stores is a tiny fraction. Where is the growth . Note new malls are being built and the number of new stores is very small. As are the channels that are going to get more growth than 1 or 2 . Stephanie a fantastic conversation. Thank you so much. Michael gould, former ceo and chairman of bloomingdales. Erik google wants to wire the world. Using one of the worlds oldest technologies to do that. Find out how. Stephanie welcome back to Market Makers. You could call it a race to connect the world. Spacex, facebook and google working to bring Internet Service to the corners of the earth. Google is turning to old technology. Bloomberg west anchor emily chang got a look. Emily the science of ballooning is one of the worlds oldest technologies, sending humans aloft for centuries. Imagine a fleet of unmanned balloons equipped with antennas so they can talk to each other and to earth. All to deliver affordable Internet Access to the world. There are 4 billion people who do not have access to internet. We think we should try to be part of the solution. Emily googles part of the solution is headed by mike cassidy. Its happening now. In many ways, the balloon is like a cell phone tower on the ground except it is 65,000 feet up. Emily how many balloons do you have . About 3000. Emily the plan is to have hundreds. The first 60 balloons burst when they hit altitude. The data rate was low. Emily fast forward one and a half years, some balloons have been aloft for 17900 days. They could be the key to stronger, faster internet. Our speed has increased dramatically. We can get 10 megabits per second, enough to stream videos. From a balloon that is 60,000 feet into the sky. Emily the balloons fly twice as high as an airplane. Controlled by a command center at google headquarters. What are we looking at . This is data showing what the winds are doing around the world. Emily googlers man the center communicating with air Traffic Controllers as they crisscross airspace. How responsive are countries to you flying in their airspace . Countries love having us. Multiple countries, brazil, india, russia has asked us to do pilot tests. We are also talking to china. Even china is interested in bringing internet to people in rural areas. Emily it is the last mile being worked out. Google just invested in elon musks spacex and its fleet of broadband satellite. Facebooks internet. Org is working on drones and lasers and striking partnerships with mobile carriers to share apps. If anyone is trying to help reach more people, it is great. Emily the skeptics version is you could show them googles version of the internet. Can google make this sustainable or is it charity . It is not charity. There is revenue being generated from these customers that will be shared between google and partners. Emily this internet will cost 1 10 of what traditional wireless costs the average user no matter where they are in the world. There are people who are so remote. Every country that has a telco somewhere has spectrum. Our balloons can reach the craziest islands and that is the cool thing about balloon. Emily emily chang, bloomberg california. Stephanie cool. Google is using balloons to help deliver the web. Facebook is using lasers and drone. Tomorrow, we will be going inside their science lab to see how they plan to make this work. Thursday, emily changs interview with Mark Zuckerberg on a special edition of studio 1. 0. What do you think he is going to be wearing . He should wear a tight tshirt. Arent you impressed with how fit that guy got. He has worked out. Erik we are going to be back in a moment with an exclusive interview with carson block of muddy waters research. You know him for controversial calls. What is his latest position . It is a new one. You are going to find out. It is a bloomberg exclusive. Stephanie i thought people knew him because he was from new jersey. Live from bloomberg headquarters in new york this is Market Makers with Erik Schatzker and stephanie ruhle. Crises the short seller who rocketed to fame and now our friend carson block is here. If you were concerned about government surveillance programs, you have something new to worry about. Health care regulators team up with Silicon Valley. Welcome to the second hour of Market Makers. Im stephanie ruhle. And im Erik Schatzker on this chilly tuesday in new york city. Snowing and freezing but weve got a lot of news. Lets get you to the top business stories of the morning. Time is running out for greece. European finance ministers say there will be no more talks on Financial Support unless greece asks for the current Bailout Program to be officially extended. Has raised concerns that greece may exit the euro. Greeces finance minister sounds confident there will be a new deal. Europe will do their usual tricks. It will tool a good agreement or honorable agreement out of what seems to be an impasse. We did it wednesday and we will do it now. The current agreement expires at the end of the month. The new government wants a new deal with fewer austerity measures. Apple may decide to go ahead with the tesla according to a person familiar with the matter. Apple has put a few hundred employees to work on a secret project to the to develop an electric car. The project could be abandoned three years ago, and apple executives said they discussed building a car before it came out with the iphone. In texas, a federal judge has temporarily halted president obamas executive orders on immigration. The actions would offer work permits to as many as 5 million undocumented immigrants and keep them from being deported. Texas and 25 other states have sued the federal government. The Justice Department will appeal. A Train Derailment in West Virginia has led the governor to declare an official state of emergency. The train was carrying more than 100 tankers of crude oil when it derailed during a snowstorm. Up to 15 of the tankers burst into flames and one and up in the river that has forced to Water Treatment lance to shut down. When carson block speaks, investors listen. He has made headline after headline with his courageous and often controversial calls. He made his reputation as a short seller with a talent for Forensic Research and now hes back here on Bloomberg Television to reveal his latest position. Lets get right down to it. What are we talking about . First thing to get out of the way is this is a long. Carson block likes something . Say it aint so. Fatherhood has chains chu. When you told us you are not and then just ask him, you are not a ninja assassin. I love everything. We are long a company traded in france called a full ra called. It is the mirror image of a lot of our shorts. It has a very opaque Corporate Structure but in this case, the opacity is has created a huge arbitrage opportunity. Investors dont understand what this Corporate Structure does and it looks like theyve got about 2. 5 billion shares out dancing. Because of this Corporate Structure, theyre so much circular ownership that effectively, you have all of this Treasury Stock thats not being excluded under accounting rules. So true stairs outstanding true shares outstanding is about 1. 2 billion. So the public actually owns 52 or 53 of it. If you look at it on a Net Asset Value per share basis, that effectively more than doubles with the Net Asset Value per share is. This is something we think is worth 850 euros. Lets slow this down. Its a holding company. How do you unlock the value . How about we sell it first. Volare. Its run by a french billionaire. Hes known as the carl icahn of france. Europe has a reputation for not having activists investors. This has been throwing sharp elbows for about three decades. He has tussled with lazard and is on the board of vivendi. Hes a very impressive investor. Outage you find this deal . We were contacted by an investor who said we know you like complex things. To us, its a nobrainer. I love this as much as i love the short vcs we publish. Its not like we are sitting here like most investors would do and say whats going to happen in the future . We are looking at right now, saying this is something where the pershare value is substantially higher than it appears to be. I would not say it easy to call out a fraud, but once you believe a company is a zero or a doughnut you should feel conviction, right . Theres no business there, so im happy calling it a short. Does it feel harder to call out a long . Do you feel as convinced about volare as you did about sign of force . Yes. Were looking backwards, looking at Information Companies have disclosed. We are asking is this information reflective of economic realities. We usually do that on the short side because we try to find companies where they missed meeting investors were lying. We are looking at the shares outstanding and saying theres a problem here. This is not reflective of economic reality. The share count is much too high when you take into account how they only sub Holding Companies that hold volare. This country is smack dab in the center of europe which is an absolute garbage storm. Maybe worse, but i have a rebuttal for this. Most of the value according to our valuations about 8. 3 billion euro is related to its transportation business. The vast majority of that is operating ports in africa. I do not like emerging markets investments in most cases and im very critical of them but this is a business in africa hes been building for 30 years and is kind of a boring business. The economics are great and their margins look to be about 40 . There are very high barriers to entry and competition. Theres not a massive blue sky Story Associated with their Logistics Business in africa which is something we like. Its just a study good as this. Whats the motivation . A steady and Good Business in west africa . It sounds like an oxymoron. There have to be lots of Good Businesses its a good economy. You say it is worth eight euros a share . 8. 5. It was worth less than that before we started talking. Since we started this interview, the stock is up over 3 . When carson block speaks, people listen. I want to go back to this point about motivation. In whose interests is obfuscation . How do you benefit from this convoluted Corporate Structure which, as you explain of skiers the true number of shares outstanding or at least the economic value to the common shareholder. You are asking a very interesting question and because ive never met mr. Volare, i cant answer it. I can only speculate perhaps that this might have to do with allowing him to overtime increases share of ownership while not triggering tax liability. When you get involved, why dont you request a meeting with him . Its actually very rare that we speak to managements of companies we are working on. Thats because you are usually going after them and the last thing you want to do is meet with a guy who you think is a complete fraud. Why wouldnt you want to meet him . Im interested in going long on you, so show me all the nice stuff about your company that you cant i think thats the problem a lot of investors have when they look at companies from the long side. They are seeing what the Company Wants them to see. I like the approach of doing research from a distance and maybe someday i will ask the question you just ask. We find it is most effective to Research Companies from a distance and that way they cannot attempt to affect your perspective. What you compare him to the carl icahn of europe. I read the hes retiring in 2022. What happens when he leaves question mark when carl goes away or bill ackman goes away whats left . Theres a lot of value in the structure. Recently, they have tendered for a Media Company and they have been exchanging shares. This has had the effect of simplifying this Corporate Structure and doing it in a way where there are minimal adverse tax consequences. If you look at it from that perspective, its a smart move and it might be first up along the road to simplifying the structure. What does it ultimately become . He has a son who is running the company and maybe the children run the business. That remains to be seen. So hes been something of an activist does bollore neah activist . Does so many value opportunities require or attract activists to help unlock the value faster . Would you welcome investors to feast on bollore as an opportunity question mark with the capital Vincent Bollore maintains in his structure, over the past 20 years, hes compounded the price of the stock by 16 on an annual basis. Book value has grown by 13 on an annual basis. These are very good numbers and im happy to be along for the ride for some time. We have to ask and q, give us an update it does still exist and is only down 85 since you called it out. We have had pwc would not sign on the account and replaced it with a boiler room auditor. The chairwoman of the committee resigned, two other Board Members resigned. Just about everything that could go wrong has. You have to ask yourself why would anyone at this point be in and q mobiles camp . Peers speculation. If you truly believe the stock is a zero and its still trading as if there is some economic value, dont you ask yourself the question . Doesnt bill ackman ask himself the question hes laid out every single point of why it should be zero and there are still guys in that space. There will always be investors who want to believe the blue sky story if you believe the stories, it looks incredibly cheap but there will always be People Holding the bag. Those who are long right now and have been long, theyre holding the bag and the contents are not very desirable. It you almost have this senator this sinister smile. U. N. From i love everything to maybe not. Lets have a look at the stock price bollore its a company carson block for the first time publicly is going long on and an immediate market reaction. We will be following this one closely. Moving markets on Market Makers. We are living up to our name today. Its always a treat to have you here. Carson block, founder of muddy waters. Coming up, maybe youre not paranoid after all. A new report that the government is in fact spying on you through your own computer. Plus, changing the way we look at fashion week. Blame it all on social media. Welcome back. Its time for the top headlines around the world at this hour. In ukraine no sign of a ceasefire in a key town in the eastern part of the country. Prorussian rebels launched attacks on ukraine troops there, saying control saying they lost control of the town and have captured 300 soldiers. A big thumbs down for american sniper from irans supreme leader. He says it encourages violence against muslims. He says he hasnt seen the film but heard about its plot from others. And the maker of nutella says its not for sale. There has been speculation may try to buy the company. But they say the company is not and will not be for sale. The nsa could be hiding in your hard drive according to a report from a russian Cyber Security firm and from reports over the weekend by reuters. The report from russia says the united a test on a way to criminally embedded spyware into machinery made from the worlds top manufacturers, including seagate and toshiba. Our bloomberg west cory johnson our bloomberg west editoratlarge, cory johnson joins us from san francisco. This is startling, and expose from the russian Cyber Security firm. They are drawing a direct line to the nsa, but they are going almost all the way. They have written for a while about something they call the Equation Group and have documented for a long time a lot of hacks that have taken place that they credit back to this group they call the Equation Group and track them next to the nsa and aligned with nsa projects. Theyve come just short of calling it nsa. But this terrific story in reuters did get somebody from the nsa to confirm it is an nsa program and from x nsa people as well. This is malware that attaches itself to the hard drive and survives a military grade really wipe of the disc. No matter what you do to the physical disk, this software tends to survive. Is there any true defense we can have a against the cyber attack when you say nothing can stop it . What can we do . Its unclear this case. Reuters broke this story and the way the russian work has gone to the past is a turn it out to the world Cyber Community to figure out the problems. It gets almost to a physical level. The second you push the on button on your computer, it fires up something that initiates the hard drive. The steps the hard drive goes through sets up everything your computer is going to do. The companies affected run across the gamut from Western Digital to ibm to toshiba. Its quite a list micron as well and samsung. Its not just a u. S. List, but its been a problem for u. S. Companies trying to sell their wares across the world. Do we have any idea whether those manufacturers are working hand in hand with the Equation Group or the nsa or whether they are dropping their software or corrupted firmware or whatever you want to call it into these hard drives unbeknownst to the manufacturers . We dont know and im completely willing to guess because these revelations came from Edward Snowden originally. What we saw is we saw both. We saw some companies that are cooperating, some app some Companies Like apple that refuse to cooperate and then saw some companies that the they were cooperating a little but found the nsa had their fingers deep into the well of their data. Whats also interesting is this is an prevalent on every hard drive everywhere. If you look at where most of the malware is based, they found in places that were targets of the nsa like china, afghanistan, yemen, places where al qaeda is operating. But all over the world and places that have been targets of the u. S. Government, you see these attacks again. Everything the Equation Group is doing is similar to the nsa. I know you will be keeping your eye on it. Cory johnson with us from san francisco. Market makers will be back in just a moment. Welcome back. Im alix steel. We want to look at the action out of europe not a lot of panic in the market. We see the euro continuing to climb today. Extending three weekly gains. We are seeing a little panic out of the athens bank index and a index, but both of them are off their session lows, sort of hearing their losses. The grease index fell most among 18 western european markets. A quick look on the yield the german yield is rising slightly. The greek 10 year about 10 . More Market Makers after the break. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Welcome back. Dont stress how theres only a half hour left in the show and its going to be a great half hour. Lets talk and a winter a nna wintour. Social media has given bloggers a big advantage, influencing customers like never before. One of them we have a marketing professor from nyu. You are 22 years old and i follow you on instagram. How did you grow this business . We started as the street stride the street styled blog. I picked up a camera and taught myself how to use it. I realized my personal style was a business i could grow. I turn the camera on myself and four years later, here i am. How do you make money . Affiliate marketing sponsored content. Theres instagram content, it depends. Who do you bet on . Do you bet on editors of magazines . I dont follow her and i i know what wallpaper shes got in her foyer. How does this happen . It is impressive that you have young entrepreneurs like this but every time you hear about a print reader thy theres a blogger being born. The future is headed toward blogs like that. Just in terms of their ability to displace traditional media, or are they able to displace other pieces of the fashion in ecosystem . I think the answer is yes. Its going to have an impact on both. Your business is difficult he goes the cpms are tougher. The price per thousand viewers is typically how the medium is sold. My guess is you sell ads the same way on Bloomberg Television. They are selling eyeballs. You have been able to build content at near the same quality, but for a lot less money so they can operate a lot more cleanly than the folks with the folks with the wraparound. What he think of traditional media . Do you open the pages of those magazines like vogue and get ideas . I think vogue is more of an aspirational view. When you working as a blogger, its not only the numbers, but the demographic is so specific that it makes sense for a lot of brands to work with us. But you love super expensive highend things. I try to keep my blog a mix of relatable and aspirational. Not all of my readers can afford a 700 pair of shoes. Couldnt in style say the same thing . Sure. But as a person, they look to me for that. You need advertising obviously. To what degree do you worry about crossing the line between independence and becoming captive to your advertisers . With my blog im part of a platform that handles my advertisement will stop i work with an agency that handles my sponsored content in the photo shoots that i do, so i try to keep it a little separate. Couldnt you make the same argument when one would criticize magazines . You could say the same thing at any magazine. The line was crossed a long time ago. At google, the most successful Media Company in the world, they are selling fewer. How do you reserve your authenticity in that kind of world where there are pitfalls . You have great, authentic content. Your readers are smarter than they think they are. As long as you are transparent this is paid for, this is not some of the paid for content is great stuff. Some of the content on orange is the new black is great. I was just going to say with paid content, even if a brand is offering to pay me a lot of money, if it doesnt fit my style, i want work with the brand. I stayed true with my style and thats why my followers choose to trust me. How does a blogger like daniel truly unlock the potential of her business . If someone said i want to buy your business let me know if that happens will stop typically, bloggers bring authenticity, a new voice and usually a younger audience. Vogue needs a younger audience. You never hear a brand say we need more 18yearold we have enough 18yearold. How do you scale . As far as bigger and the greater things . How do you do more because ultimately your audience is going to demand more from you . How do you do it . At this point, its more about bigger and better projects. Design collaborations, getting into video, im writing a book this is the first time im announcing it will stop there are a lot more different kinds and parts of the fashion industry i can get into. Next lets talk about nationally. Your overhead is so tiny look at the millions of dollars that gets spent on the fashion week circuit. A lot of smaller brands dont participate anymore. People used to come and write orders and now anybody can find this stuff. Its a platform for a brand it is business to consumer. It used to be writing orders and now its an opportunity for a brand to present themselves in a controlled environment and hope people like daniel take a ton of pictures. The thing that has replaced the smaller trends are things like Banana Republic and j. Crew is doing their own fashion. What have you seen that you like . Ive been to some a shows of past four days. All top designers, and its an honor to be sitting in the front row. Can you believe you are 22 years old . I think ive always grown up pretty young and ive done a lot for four years of logging, but theres always more and i have so much time to grow, im very honored. Thank you so much. Daniel bernstein and nyu marketing professor in front of the show, scott galloway. Coming up, new way to find out about medicine you take the fda joins forces with a Silicon Valley startup. Im Erik Schatzker. This is a good time for headlines around the world. French authorities have issued arrest warrants for three former ubs bankers. The french are investigating whether the swiss tank help clients of aid taxes. Ubs has posted a 1. 3 billion dollars Security Deposit in case it goes to trial and the brain and the bank is found to be guilty. The british inflation rate showed slowed to its lowest rate on record. The big reason is the falling cost of gasoline and financial prices on the other. The french president has used an emergency constitutional measure to push through Economic Reforms stop lawmakers from his own socialist party of out to reject the legislation, arguing the bill reduces the job security that has been the hallmark of the french labor market. The fda is getting cozier with Silicon Valley, opening a massive database so they can share more information with technology developers. And one Health Care Startup won a milliondollar contract to expand his efforts. They offer online information and advice. The ceo joins us with insight into the Digital Health start of space. How does it work . I have to be clear, it is 1. 17 million, which is a big difference for a little startup. The fda has a wealth of publicly available data and they wanted to find ways to make it more accessible. This is in part because of a president ial mandate that came down in may. As a startup to propose an r d project where we could help the fdi fdi develop fda develop new products. We are really proud of the association and it gives us an opportunity to Start Building our consumer tools. Once these apis are built what are they going to do . What will people be able to do with this data . You guys will be a bit downstream because the idea is for developers and researchers. Its a lot like the way noaa makes whether available. So we are building them and making them intuitive for people to Start Building on. We ourselves and our consumer platform are building them into our own products as well. What is your biggest roadblock right now . As a startup, we are erected to consumers so we are trying to engage people with their own health and let them know there is a new resource that can use powerful data and their own experience to bring better information to them. Like any startup entering the cacophony of the internet, we are trying to make sure we are found by people who are able to use it. How is it that on the one hand the fda wants people to have they have these data yet on the other hand, theres a risk in allowing people to have access to too much data which in theory was the basis for shutting down half of 23 and me . This is where i get to say i am a contractor and its not my responsibility and im not able to talk on behalf of the fda but we are lucky to be them partnership with them and its a great opportunity to get an up close understanding of the data. Everybody has to be worried about Cyber Security and hacking, but how can we be sure our medical information is protected . Thats a great question and what we need to think about the way consumers need to think about their medical data is as currency, something that has powerful value not something they just want to keep tied up but think of it as something they can distribute and get good information back. Thats what we are trying to build tools that respond to the individual, few are willing to tell us your demographic and medical history, we can give you much more powerful results and thats the kind of report people are looking for with their data. Lets cast our eyes forward five years. If this works out as you anticipate what will people be doing differently . I think we will have more understanding of how medications work. When the most powerful data sets we are working with is the adverse event data set. Those are reports that come from pharmaceutical companies and doctors about the side effects and potential side effects after a drug is released. That information paired with the stuff were doing, which is to collect that directly from consumers, that gives us a much more intuitive sense of what is happening with medications in the wild. Some of that might be good signals things like rogaine or aspirin, those are good side effects, but some of them are things like vioxx and you want to find those things earlier. Based on what you are just saying, do you believe had data like these been available for at least the survey system had been available lets say five years ago, we would have known about a risk of vioxx earlier . I cannot predict the future in theory. In theory, i believe we have better more lightweight intuitive ways for people to report whats happening to them on their medications. We will get a more powerful signal on whats happening in that will be returned to the fda and return to form accompanies much earlier. That is part of what we are trying to do. Amazing business. Pretty cool. Thank you for joining us. Market makers will be back in just a couple of minutes. Stick around. That is going to be it for Market Makers today. Wideout like it . Not because we had carson block or because we were breaking down fashion week, but why did i love todays show . Eric erik, my partner is back. Coming up tomorrow, we are going to look at where the world of stocks is heading next. Always terrific. You will want to look forward to that one. And hopefully you will want to look forward to seeing us when Market Makers returns. We are approaching 56 past the hour, that means Bloomberg Television is on the markets. Stocks are relatively flat. The s p closed at a fresh record high on friday and the nasdaq also off by about 7 . You have a oil falling 3 and utilities and health care are among the top performers. Joining me for todays option insight is the chief Investment Officer at recon capital partners. Im looking at a vix under 16. What does that tell you . Its pretty significant. Economic numbers out of europe were pretty good. Germany is about 30 of the eurozone gdp and you can see that reflect did in the dax etf. The euro hasnt moved higher actually. It moved higher and vix has not exploded. People think greece is like ebola that it is contained. Do you think its reflecting the volatility another Asset Classes . Im looking at oil volatility, that index up over 200 since the timber. The u. S. Market is low on the volatility scale if you look at other assets like currencies or commodities. In europe thereve next is still elevated. We should see some more moves that are going to be pretty wide. What the you think the vix should be at . The vix historically trades around 20. I think we can say above 15. Last year was moderate and we bottomed out at 12. Considering volatility wise, we were high since 2009. One stock we want to get into is macys. Barclays initiating coverage of an underweight rating. What do you see in the stock today . The options were pretty muted. Volatility was already in to the stock, so you saw the stock moved down about 2 . Nordstroms was also downgraded and they did not move in their act their options were muted. Nordstrom could win and macys could lose. We are off by about five dollars from a 52week high. Does macys tend to be volatile around earnings . There is volatility for the consumer. The call was really on lower margins. They see their rand grow at a less rate and samestore sales have to take up to pay for that. One stock you do have a trade on today is ebay. What is that . You want to sell the april 55 foot and caption that options stream. You can get 2. 5 before the next earnings cycle. They report earnings on april 22 and they are going to use it in out there paypal unit, which is growing at 20 . Cash is a great way to capture that. Im not an options expert, so this might be a dumb question. The stock is trading at almost 56. The traded below 55 last month so you are losing out on some possible downside. You are actually getting paid to buy the stock cheaper. If it hits 55, he would buy it at that level and take that options level and your owning it around 53. What kind of move do you want to see around ebay earnings . Is going to be pearly volatile because people are not sure when they are going to spin out the paypal unit and the currency headway took a toll on the last earnings cycle. Any potential upside you are looking at . It is pretty ached in will stop were not looking at significant upside exposure because theres the uncertainty of the spinoff. You can see it is really cap and the stock has not moved above the 57 level. This is a great way to bring in the options premium and collect that capital. Money clip is up next. Welcome to money clip where we bring together the best stories, videos and news. Im pimm fox. Playing game theory with greece the finance minister says he is not laughing and neither are european officials. Cargo ships at anchor on the west coast and labor disputes holding up billions of dollars in merchandise. In media, we go old school. Princeton receives 3 million in the rare books, including a 560yearold gutenberg 5 gutenberg rival