Transcripts For BLOOMBERG Market Makers 20140321

Vladimir putin has cleared the way for crimea to join russia. They have warned they will not allow it. Tensions have hit the highest level since the cold war. Ryan chilcote joins us from brussels. What is the process for them to join russia . It is up to the russians to work out. For all intents and purposes, it will be part of russia. Putin sign those documents earlier in the day. Which is now in russia, is pretty significant. They are already the Worlds Largest country. This is his first expansion of territory since the collapse of the soviet union. Should say First Official expansion. As you pointed out, the u. S. And european leaders were just meeting. Certainly will not put crimea on any map of russia. The russians are there and they are in control. They will now try to integrate it into their country. Do you not count Southeast Asia . Two county area they occupied in georgia . The difference is there are areas where russia has va facto control, in moldo and georgia. The difference is, russian never actually said they are part of russia. They have gone a step further here. In all cases, no one else does not recognize russian control. Their First Official lets talk about the sanction war. The u. S. Is ramping up the stakes. Who is next . So, the u. S. Came out with this list of russian officials that will be on theyve sanctions. Also, some business leaders. They sanctioned one bank. It is all really in russias court now. What is he going to do . Earlier in the day, he told his government at a meeting that he saw no reason to retaliate. Is not thebank, it central bank, it is a commercial bank in st. Petersburg. Putin said she instructed the bank to support them. He said he will go there and open up a bank account. He will have his salary this was a joke he will have it deposited into the bank. He is trying to make light of a serious situation. It is a good example of how personal sanctions are affecting the russian financial system. The next thing to watch maybe ukraine. He was also at a government meeting and got a report on the situation. He said they owe 16 billion. With all of the cameras present, people see that spectacle and may wonder. Ukraine does not have the money to pay it back. Thank you so much. We appreciate it. Do not miss ryans interview with the ukrainian Opposition Leader at 2 00 eastern this afternoon. I want to say come on a personal note, i have seen him fight. One of the greatest heavyweight championships in the world. We will tune in for that. We were discussing total integration of the region as a long and come pitted road. Scarlet fu checks out russias potential tab. The crimea annexation is official. It has been building up. There is an iou of sorts. Russia has promised to pay crimea 1 billion. One russian newspaper says that the cost of absorbing crimea could cost 20 billion over a threeyear time period,. What are some of the bigticket items . If you are a buying a country and paying less than half of what you paid for the olympics, it seems like a good deal. Wasnt it how far they went beyond the budget . 51 billion was the olympics cost. Once every four years compared to buying a country is good. They are paying for pr. What are the bigticket items . Transportation and infrastructure. Crimea and russia are not connected by land. You need a bridge. One bridge was approved. That would cost 1. 4 billion. It will cost 3 billion. They are also looking at underwater tunnels and railroad. Then you have basic utilities. Cap, water, electricity. Ukraine will charge pressure for those services. One alternative could be that they will build new plants. That could cost 4. 7 billion. Crimea has an aging population. 25 of the population are pensioners. Russia would have to adopt them. The pension is double what crimea pays. That would work out to 1. 9 billion per year. That will continue. Crimea receives more in subsidies from kiev than it pays in taxes. Crimea is basically a 1 billion drain. Russia needs to match some subsidies. Not to mention, i have seen some articles. Homeowners seem to get worried about where they are going to own their homes. Will account . It count . Para logistical issues of people and how they get around. How do you travel from one place to the next . Getting a passport will be a big deal. Russian passports will be given out. The first issue is on wednesday. The fee is 200 rubles. That may not seem a lot, but you have to multiply that several times. The russian ruble will become the official currency. I wonder about the language. Will they have to speak russian . Most of them do. But forced to . Ukrainians have been told to switch to russian. That is one of those. Pressure things. Is a great way to integrate people into a country. You want them to start speaking airline which. Otherwise, they form pockets. If you voted yes, you would get a lot of benefits. What was the reference . 96 . There was no option to not join russia. Thank you very much, interesting stuff. Im sure it will cost twice as much. We will keep tabs. Time for the news feed. The top stories from around the world investigators are looking into whether caterpillar improperly avoided taxes. That is according to people familiar with the matter. This has to do with moving profits outside of the country. A former employer says that they shifted profits to offshore companies, avoiding taxes. Shares of nike are following today. The biggest Sporting Goods Company Forecast sales less than estimates. They have been hurt by a stronger dollar a the value of international revenue. And it is the biggest irs phishing scam. Are pretending to be irs agent. Agencies say that scholars tell people that they owe money to the irs and must use a Wire Transfer to pay up. Typically, the irs will Contact People by mail. Do not give information over like that. I would not want to. Technology ceos are headed back to the white house this afternoon or more discussions with president obama on nsa spying. That includes Mark Zuckerberg, who has put himself front and center on this issue. Megan hughes is joining us now. What do we know about the meeting . We know that it will be after 4 00 today. Mark zuckerberg and the google chairman, eric schmidt, is not going. Marissa mayer yahoo said they did not have enough time to get her out there. There was not enough notice about this meeting. They did say that yahoo will be very involved in this issue. With Mark Zuckerberg, this is very interesting to watch the dynamic between zuckerberg had the president. Causew that he put in a of the president earlier this month on march 13. He was concerned about the nsa issue. This is after reports leaked from Edward Snowden on a news site. Was posing asnsa facebook to get into peoples computers. That is obviously a big concern for Mark Zuckerberg rid he is been releasing on his Facebook Page a post saying that there needs to be more transparency or people will believe the worst. That is one back story we will be watching. Also, in just one week, march 28, that is the deadline. The president asked for recommendations on a Data Collection program. It is a very timely meeting. Were seeing pictures here of tech ceos. This kind of meeting has happened. They have discussed the nsa in the past. What is different this time . Keep in mind that was back in december. A lot has happened since then. Centerburg was not at that meeting. Sheryl sandberg without them meeting instead. This will be an interesting dynamic. Since that meeting, a lot has happened. We have a big speech from the president on the nsa. He suspended the program, saying that it is necessary and lawful. Theyre also adding changes to the program as well. So, that change we also had a report on the Civil Liberties council saying the opposite, contradicting the president. He said there is not a National Security purpose and they should be shut down. You can expect a contentious meeting today. Thank you so much and awesome job. Havel like we have to another meeting after Edward Snowden releases his next rash. They have been accused of spying on their own people they spied on a user who might have stolen data. Accused of, like they didnt do it . It is not called spying, it is just looking. They were using a hotmail account. Two banks get stressed out . We will look at the news. Tell the truth, you would not be shocked if some airline installed pay toilets on the plane. We will tell you about those fees. It is the only way they can make money. The globals after financial crisis, a majority of u. S. Banks have passed the fed health check. 29 of the 30 lenders could withstand a deep recession and still pay dividends. A Consulting Firm specializes in financial we got a lot of data points yesterday, what was your biggest takeaway . Most of the presence focusing on paying dividends. That was a foregone conclusion. The banks accumulated enough capital thanks to the regulators. Most of the bad assets that were created before the recession created the weaknesses. Can pass ist they not a big surprise. Cynicalnow the conspiracy theorist in me feels like these are rigged. Am i off base . 25 job andurvive a home values . 1112 drop in home rain . Theyre not that great were that smart. Since the recession, they have been accumulating. They have been making good profits. Most of the bad loans that caused the problem they have worked off their books. What will be much more interesting is the numbers behind the scenes. If you look at mortgages, everyone talks about mortgages. Behind the scenes, there are some banks with singledigit losses. Another bank for the same category has gone as high as 16 . For the first time, theyre looking at earnings. More than the quality of assets. Theyre looking at growth, which is interesting. Theyre looking at the individual. What are the other factors . We are looking at the approval next week. What is behind them . It is a big city bank. They have losses out of a fraud case. They will look at those controls. Does the bank have the right controls . The shift now is towards controls and reentering a new phase which is not evident from the results. A used to be the quality of assets. Now there is a focus on earnings. That the banks are looking good is because you forced them to save their money. For four years or five years, they could not pay dividends. Process, get into that their earnings taken hit. Can they maintain that . I think analysts are projecting 75 billion in dividends. How much of that is at risk . I know a number of banks in the city can do four percent better. Citibank says they can do three percent better tier 1 than the fed looked at. Almost all of them the big ones have overestimated. Here is the catch 22 it is a twoyear stress test. You make a loan today, it acquires 10 . 10 in capital. That will pay you one cent accumulated. The more you grow, your Capital Requirements grow. How did they game the system . They showed low growth rates. You require less capital. This year, the fed says timeout. Youll decide how we will decide how you grow. Will they be able to maintain their dividends . They will maintain their dividends. The question is, when there is tremendous opportunity, rates change. Then there will be new sets of stress tests. These tests will happen every year . Every year, there is a new scenario. Another stress test. The stress test will start focusing more on earnings. Growth will be the problem. Will the fed always pass every bank . Once they start your Conspiracy Theory is right. I think the banks that fail fail for different reasons. There were other failures within the details of the numbers. The fed is giving the bank a message. You better fix your portfolio quality. There are hidden threats. The fact that they could pay dividends accumulated earnings for 45 years. You cannot read too much into it. The numbers behind the results and how the banks are gaming. They will try to game is much as they can. Thank you so much. It was just your luggage first. One airline wants to charge to 16 just for printing out a boarding pass. How expensive can it be . We will talk about super airline ripoffs in just a moment. We are approaching 26 cap the hour. It is time for on the markets. Check out the broader market. We have gains on the s p and do w. The nasdaq is taking a bigger hit. Gaining about a quarter of a percent. I actually have been away for so long there is a lot of trade action. We are raced the wednesday losses. We are heading into the witching moments. Were also watching nike sliding. They are climbing at a slower pace than projected. The strong dollar is hurting too. Theyre relying on a lot of overseas that definitely hurts. Theres a lot of competition overseas. Blackberry is going to sell most of its Real Estate Holdings in canada. That is the country to the north was. This will help the smartphone maker to shore up cash for a turnaround plan. People think it is cooler to use it in car navigation. They continue to get stuff done. Coming up, pay to play on the nations airlines. Your ticket only gets you on board. Everything else pretty painful. Stay with us. Welcome back. I am matt miller. And i am alix steel. Before you think something is happened, erik and stephanie still anchor the show. Airline fees are soaring high. Profit is the only thing doing it. Billion inn over 23 fees for food, baggage, c preference, other services. Airlines look at how doubled their profit forecast. Kelly, joining us from miami. Thank you for coming on. I have talked to people about this all morning. I will date myself and say what awas in college 20 years ago, roundtrip ticket to columbus, ohio cost the same as it does now. They have to do something, right . Airfares have remained affordable. The big difference is digging you on those fees. United announced they will start policing carryons. If youre used to carrying on multiple bags and pushing the limits, be prepared to check it. What kind of fees did you pay for your trip to miami . I have airline elitist status. I do not generally pay for checked bags. Airline credit cards also give you a lot of those for free. In general, the consumer will get hit for fees. Especially for food or wifi. Can you get around that . Can you get airline elite class without flying three times a week . The big game is credit cards. Most credit cards will give you a lot of waivers. They will even give you a lead qualifying miles. Frequentou are not a flyer, if you have the right card, you can get you elite status. That sounds to me like we are paying for it either way. Sweetyou have a super platinum card, then you also get baller status. My husband and i have a delta miles card. What airline is the worst offender . Look at business week. Delta is the worst one. 400 to switch your ticket . They just increased their change fees. If you want to upgrade internationally, be prepared to pay for a refundable coach fare. That may be marked sense of the Business Class. We just bought a ticket to europe. We wanted to upgrade and they told us we had to buy a whole different ticket for 400 apiece. What is the point . Why am i using this card . You get double slammed. They charge you the fee to change and the refare. The economy is rebounding. There are business travelers paying for this Business Class seats. It is so unfair. You do not want to fly to europe and have to fly luggage class. We saved our miles to upgrade. This was our big dream. What is the worst the . Fee . Airline websites are generally terrible. You have to call to book an award. They will charge you. It is ridiculous. I have this problem with iberia back and forth to spain. The website never works. I have to call to confirm that things are right. Then they charge me 25 dollars, even though it is their website that failed. And you have to wait on hold most times. When you calculate the value of short time, it is ridiculous. When you use your frequent flyer miles, a lot of time to book and nadine you with a Convenience Fee they ding you with a Convenience Fee. Do any of the fees have an adverse impact on consumers . Are people flying less . A lot of the fees due makes sense. American came out with fares that will allow you to change your flight. Your next miles. Even getting the best seats on the plane. I do not mind paying extra. Some of the fares due makes sense. In general, theyre pretty annoying. How far away are we from an airline actually asking you for money to use the restroom . Ryanair has used that as a vote was based on. They are one of the worst. They actually cut off online checkin three hours before your flight. I got slammed with us. I had a 100 for them to print my boarding pass. That was twice the price of the cost of the ticket. That is insane. They are cheap. Looking at the list of fees, spirit, allegiance all of these airlines that we would never fly on. They charge you for everything. You can still use the restroom for free. You can for the time being. That would be my Worst Nightmare on a plane. My final question to you you are the point guy. What is the best way to use my miles . I would recommend to everyone, all of the airlines have delta came out with tearful programs. Get a credit card that allows you to bank points into a pool. Yout way, your diversified are diverse five. Diversified. I got tendinitis inscriptions. It was my only option. Do magazines is still exist . The only time you need them is when you are on the airline and they charge you for inflight wifi. Businessweek is still awesome. Check out this weeks magazine. Went from wall street to helping people figure out airlines. Up, holy glaucoma way. A shortage of avocados. I love avocados. That is the next. Rising up line prices. What is a Mexican Restaurant taddeo . The key to cutting costs is to have an executive chef. Veda. E the ceo of costa is this a crystal ball . Or is this about how the executive chef handles food . It is planning. We found with our supply chain, as we identify ingredients, we get them from all around. We deal directly with farmers. Our avocados come out of mexico. Theyre from a mountainous region. They have the oldest avocado trees. Their 150 years old. You mentioned you love avocados. What makes one great is the oil. S produceer tree more oil. We have avoided the challenge in california because we get our avocados out of mexico. You never know when we will get hit. We have to respond to that. How far ahead do you walk in your input cost . Starbucks buys their coffee 18 months out. An executive chef that is over the supply chain. He is looking six months out. We look for where our ingredients come from and negotiate the price points. As you reference, 18 months with starbucks we are two years out with contract bridge we constantly monitor that. As our farmers move, we move with them. Do you ever run out of ingredients . Or do you just pay more to get them . Occasionally, we have found that we do not deal a lot with limes. And them for desserts with the once we get, because we do not have so much volume, we pay a little bit more. This is making me start. I am so hungry watching this video. Get some delivery. What is going on . Were seeing all of the shortages. You talked about limes yesterday and avocados today. Some is weatherrelated. Brazil, coffee, sugar the issue with lime is the growers got together and decided they were trying to put as much as they wanted to control the price. Good for them. They said we want a certain price and we will hold back. Food seems that mexican ingredients are hit the hardest. Bananas have been in the news because of the merger. Heres a food that i love. It is going to die out and get more expensive. With mexican food, the ingredients are fresh. We take the raw ingredients and apply recipes to create the flavor profile that are demanded. Everybody wants fresh food and taste. Because mexican food has vegetables and the demand for fresh taste, we feel that pinch. What happens when you do get squeezed . Do you raise your cost or suffer the margin compression . We have not raised our cost. That said, we have to constantly watch what is going on. We do not forward, anticipate having to do anything with pricing. We will continue to watch what happens and adjust a greatly. Accordingly. Where is your worry spot . With the vegetables and the droughts, the climate changes that is when we have to watch closely. We also deal with cheeses and proteins. We have to watch every ingredient. Our quality, the specifications is very high. When there is a demand, we have to make sure we are buying enough volume that we are first to get the product available. Looking at your restaurant there and the scene behind you, more and more reasons i would rather be in celtic city. Salt lake city. The bigre up here in apple, where richard e . Would you go to eat . Costa vida. Keep watching for us. We will be out there. There are some places, i dont think you can go wrong. I have to nerd out one second. Do you enter the commodity hedging market at all . With our executive chef, he watches that. I would say he does some of that. We try to preempt that and negotiate our contracts well in advance so we do not have to react in that arena. We try to avoid that. Buying two years out is quite a feat. Take you so much, we appreciate it. Mexican for lunch . I want to go to eat some guac and burritos. I would have a margarita. Your pet needs to stay in shape just as much as you do. That is where Wearable Technology comes in. That is next. We have all heard about wearable tech for people, but what about for dogs . San francisco startup is making emily chang found out where the idea came from. Thehere is the fit bit, pebble watch and then there is whistle. Wearable tech for your dog. Is all about communication between pet owners and pets. Bridge that gap in communication. Attach this desk to his collar and it starts to collect all kinds of data. How much activity he gets and how much he sleeps. All went to the app. Kristen obrien likes how it helps her compare her great danes data to similar docs. I like to keep her healthy. It is like a fit bti for dogs. The cost is 130. That may sound crazy, but it turns out that dogs are not just mans best friend. They are also one of mans biggest expenses. In 2013, american spent 55 billion on pets. Then there is the Ripple Effect grade pet owners can use whistle to see if their dog walker took a shorter route. It helps them use features. A picture fromn that day, it illustrates the whole story. Inked a deal with petsmart for exclusive rights to sell the gadget. One of the reasons that pet ilers are excited is because they do want an apple experience. With the household using 60 million a year on their friends, whistle could find it running with the big dogs. 1600 a year on dogs. Would you buy this product . I day, we runmes him. He has no choice to pass out. He has a vest and a hunting collar and a lot of fake mallards. He has a lot of stuff. Proud papa. I have three cats and they get no exercise. They sleep all day. We need fit bit for cap. It is time for off the charts. There are two things that the fed cares about. Jobs and wages. Especially the fast food industry. This should be concerning. This is on wage deflation in the fast food industry. We are a fast food nation with job growth on the rise. You can see that it is now at three percent in terms of the increase as a percentage of overall workers. That is almost 4 million workers. An increase of 400,000 since january 2000 and nine. The white line is the adjusted annual wage. This is from the labor department. Data team crunched these numbers to come up with the sharp. Chart. People who depend on a fast food wage face pressure. Up,hen we were growing those work for kids. Not people needing to feed a family. It is for those who have dependents now. Families ate fast food every day. Imagine how much Better Things would be if both of those trends were reversed. If you had fewer people eating at fast food restaurants, fewer people working there, you would have less jobs, but more people eating food that is good for you. That is an industry that with eight more manpower. Theyre responding to what the market needs. Interesting is that Megan Mcardle said that technology has made this worse. Employers face cutthroat competition. Theyre using Software Packages andaximize profitability maximize inconvenience to workers. They keep ours lows of people do not qualify for overtime. This requires employers to make more hours than they get. They cannot string together two parttime jobs to make a fulltime income. Week, we read a profile of someone who works three jobs and struggles to pay their rent. They go from working at kfc to another they dont necessarily have bargaining power. Due to the smaller workforce, we have so many easily replaceable. There is not good enough quality jobs. Go tonk about when you mcdonalds nowadays. They often have you put in things on your own to pay with your debit card. A lot is being replaced by talent. And by apps. All of the fast food chains are doing that. You can pick up ahead and that might reduce add power. Workers are more spendable. Fast food is a huge problem. It is a tragedy. Garlic two, thank you for that. Scarlet fu, thank you for that. Were going to get you to on the markets. The nasdaq took a bigger hit than the other two major indexes. It is now getting better, only down 2 10 of one percent. The s p is up half a percent. The dow jones adding 90. 3 now. Markets getting better. There will be more volatility. Traders trying to find out what that means. Symantec fired their chief executive officer. That is after two years on the job. The director, michael brown, is the interim ceo in the meantime. They are down 14 . Im looking at tiffany. Annual profit fell short of estimates. There was an increase in spending to improve the i. T. Systems. You do not think about i. T. Systems with tiffany, do you . I think of gold and silver. I think about spoons. Also, we sell gold make a comeback. One of the best commodities. That also might have been interesting. Ce . Isnt it a pewter pla i think old and tiffany. Market makers will be back. Live from bloomberg headquarters in new york, this is Market Makers, with Erik Schatzker and stephanie ruhle. Rating janet yellen, how the Federal Reserve chair rated her first big moment in the spotlight. A . 5 millionuy line . Just one of the shockers, stick around for a bloomberg ck. Cial bracket pi to Market Makers. I swapped out matt miller per tom keene. True story come in sixth grade, the teacher walked up to me and said mr. King, skeeter skates on. That is hall bad of a basketball how bad of a basketball player i was. It is time right now for the newsfeed, the top business stories from around the world. The first full day of march madness turned out to be a really big racket buster. Harvard was just one of the series of upsets about surprising cincinnati. There was a record for overtime games, more than 11 billion people in ref dirt entered the bracket, and only 1 5 of one percent and all five of yesterdays wenders. Do not pick miss our racket special. He plans to lead by the end of the year that is according to a person familiar with the story. Guilty agreed to plead to securities fraud, plus it will not manage any outside money anymore. Russias president has made it official, at least from his point of you. Vladimir putin that signed legislation making crimea part of russia. The region voted on sunday to secede from ukraine. Speaking of, has really been dead for tax tit for tat sanctions. Those who have had the sanction seem rather proud to be singled out. Peter cook joins us now. Tell us about this. This is good for domestic politics to be sure. This is one of the most right now,ists because it shows you are a nationalist flavor. Thatird told was told now im at peace because he is on the list as well as his friends. You have nine u. S. Officials, including several top members of congress from both rds about house eager john boehner, harry reid and john mccain, they very critical senator. I guess this means my spring break in siberia is off. A little tongueincheek lamotte john mccain, but the best news of all, she is in a tough reelection fight in louisiana, and she thought this might be the best news and Reelection Campaign that they may have gotten. Was there any sign that these toll . We did heaabout economic sanctit was really the bank and those individuals. There are some signs that thee is some rattling of russians. The stock market has taken a hit, down 30 for the year. 13 for the year. Rush into have got negative because of the sanction of and there started to feel the pinch. This entireto sell staying on march 19 to his partner. That keeps the company off of the u. S. Settles even though he remains on it. Visa and mastercard stopped servicing the bank that has been singled out. Starting to have something pink, and we have the russian finance minister acknowledging as much today. I do not want to overplay it but the ruble is stronger than the morning, as we look at the dauber dollarruble. Through the weekend and into the sunday talk soulful will peter cook listen for about Pressure Cooker ukraine, and crimea . Listening toto Vladimir Putin and what we are hearing from the russian officials on their effort to ravens try and bring attention down. Indicating that russia might not need to retaliate anymore. That is a surprise given given what we have heard so far. There are also some overtures of following allowing monitors and ukraine. Thank you so much. Right now to the story of this week, as we go into we can markets, late away from the shock and all of janet yellen. Venture, her post press conference was on wednesday. Cmeone out there gave her a minus. Withhis track record effective and with Monetary Policy in the nation and he is not a hater today. What is no haters mean . We spent a lot of time working on the lovers of the heaters in 2013, and we rotate piece entitled stocks are for lovers of gold is for haters. Your optimism was correct versus the doomed crew. What does the doom grew get wrong by janet yellen . I think they get wrong about the fed in general. I think the fed has prided a backstop. Post 2008 they saw how disastrous things could get in Financial Markets and they have acted. They have acted in a very strong and very direct manner provided has done a wonder for our economy. I think also in driving other Central Banks to think them a little into the bed. The Balance Sheet expansion that had taken place, not just with the fed but with all of the Central Banks as worked very well. Positive assessment of the fed. C minus for janet yellen. I far the hardest review that i ran on her performance. Why is it so hard . Pretty harsh on ben when he first started. The market was and i certainly was. He made a lot of medication mishaps when he first article which should not surprise us that the first time in the ctv make a supple of mishaps in the cd you make a couple of mishaps. Of the day, she did mislead us a little bit. She talked about this being very much and unchanged statement and it unchanged as conference. There were a lot of changes. You came out of Washington University lords meyer school, this idea ages ago. Theres a different economics other companies and academics about clear a in believe the numbers. Is this a fed that is grounded in the math that you grew up with, or is this a fed without a rulebook of ongoing ad hoc moment to moment . That is a great question. Goldstar. Janet, and under even thens fed, although transition from the beginning to the ad is much more model based on the greenspan that. You thought about the markets and what his reaction would be, and he believe that confusing was might be one of the better. There because himself was generally confirms confused. I worry that we put too much precision on our models, too our centralon on bank thinking. Do you believe that there is out, do youat comes believe in the position of the. . I think the guys use that to tell us something. It is their way of giving us forward guidance. With the use it in the game of thrones as well. Fair enough. It is all we have. Then we get their speeches, but at the end the day theyre putting a jeep over us a gdp forecast, the four big variables for 2015 at 2006 think of that as they what theyre doing for the end of the year. They raised things up by 50 basis points but the end of 2016. You could cannot say we are little bit more my mystic, but you could come out and say we are little bit more optimistic, and i would be ok with that. The market was a taken aback i this considerable time that would be six months. I think six months was at the lower end of anybodys expectations. That brings up an important distinction here between the fed overall being a little bit more hawkish, but janet yellen still. Eing dovish what adjustments has she did made knowledge and taken the chair . The cynics out there may say she gave us a lot of dovish bottle when she was the battle to get the job, now she is in the seat and she is going to act more like a traditional central banker and be a little bit more hawkish great i find that argument suspect. I think she is still quite dovish, and these are growing pains. We will get to a b. Nice of you. Will you curve . He does not curve. I gave been straight eights i gave been straight as. Can that food inflation in the commodity dynamics that we see shape the markets as we go into the summer of this year . We have to watch it carefully. The interesting thing as you point out is the battle softness, the copper softness, oil is not training. You had this craziness with the grain and oil it down, not that. I find it very interesting. Matt has really been a math has been a late 90s roadmap. We are growing, we are taking and weback from the end, see that every day in the end prices. China is just darting to get the message of and theyre starting to devalue a little bit. From all of your research, do you believe in a rollover . It is possible, but it also depends on china. Cost are is really the risk that copper is really the risk. It is really the u. S. Driving growth and price coming out of emerging markets, what is your gdp or cast . Im still reasonably optimistic area i think maybe markets are little too optimistic at more than three percent, and is probably a little bit less than that. I always step back and say as an economist we are all pretty awful at forecasting gdp. What we have before guesses out the fed will would react various gdp outcomes. As things we can, they are going to do what they always do which fixing the markets right market. Much. Nk you so coming up, you will be able to buy sixfigure art by the same way you are able to buy to figure books. Is your bracket broken . Dakotao to state state, stick around for a bloomberg special bracket visit. Welcome back to Market Makers. Tech and mediaop headlines. Microsoft has been caught up in a dispute over privacy. That is up wording to court papers the company served. Microsoft used the information to identified and fire an employee accused of stealing code for microsoft eight. He does not like it, he is now calling for rules that would prevent Companies Like comcast room extracting its cold over shows hold over shows. Consumers will get stocked with lousy service. Turkeys Prime Minister has banned twitter. Is carrying out a promise to shut down lynx targeting government corruption. Someone has used twitter accounts to upload documents and files linked to the register and his followers. It was all over twitter last night and through the weekend this will be fascinating to watch. For thebloomberg. Com news out of turkey and the continued search for the Malaysia Airlines flight. On the art business convenient Something Like hes over water over the couch. Otherre like millions of consumers, amazon has become your place for everything and from books to bowties, and a halfmillion dollar painting, amazon is getting into the yard gain. With us, deputies entered her a bloomberg pursuit magazine. What was the single thing you and your team learned about this chasm between the fancy pants arts galleries and jeff bezoss amazon. They are different in the way that you expected to make of this is not a hyper curated environment, this is not art on the. You have worked i just comes sending next two photographs from total unknowns. Visit everything in one. Quick there is an antiwar whole there is an antiwar hall an worhol with six figures. Am i going to spend 200,000 on amazon . Amazon is sitting back and saying were good but at this up nd you we dont not mind reviewing to put this off on the site, and we do not mind if you go through another person. Because time and time again they put up the item and they get lowest sale. In the airplane the long game with this. The ark market is work that reacting. What is in it for them . Into just another area they had not covered. Looking at these galleries, and the art market has gotten so speculative that there are people buying of living stuff left and right. It looks so good in the entryway. A velvet elvis come in is gorgeous. My question is, the distinction between amazon and the other online art size that have already been in this game for years. Amazon is not charging them a fee to list wears on the site. This is an ad for your gallery on a very visible flat for platform. What percentage versus other sites . They would not reveal that information to our writers and we do not know. , ors amazon a even painter those artist, is amazon their friend . Will those artist what they need is visibility, which is what the amazon platform provides. The bluechip gallery, everyone knows their name. I want the price to return price return is. If youre going to spend so much money you want to see the art before you buy it online. Quick they are going after the consumer who is looking to flip stuff. Quick people would buy . 5 million of art without being echo if you live in cleveland are you going to fly to los angeles echo you can return it like any other thing . The shipping is free. Most of the galleries that are putting their items up have that. Like i could see that over your couch. You can see how this would look on your wall. Is the percentage ratio between investmentgrade and decorative . Week loaded a gallery don the pc said that this was too populous, so i think that is and was amazons and, to have it be everyone. Your wonderful magazine comes out four times year about the economics. There is nothing in it i can afford. Not a. Afterys are going legitimate pursuits that people what to do with their money, the things they want to go after. What is the number one thing on amazon people want . Do they want oil paintings, prints, what is the thing that sells on amazon . Photography is doing really well for them, something you would find put on their wall. In the 10000 and up at 10,000 and more, that is bidding quite high. Fascinating. Thank you so much. Bloomberg pursuits, pick it up. You could get some bowties for you. Like stocksnd looks or got ahead of the because the markets are going high. We are approaching 26 minutes past the hour so it is time for bloombergs on the markets. Lets take a look at how u. S. Docs are trading. The nasdaq is making up some of its losses early cover the dow jones big up a little speed here y 122 points. As we go into the weekend of a 13. 88, that is a bull market. Erases thepletely losses we saw on the testimony. Buying the dip is still the theme. I was over at nike on 57th street, twice last week and if i made my annual deposits and i had to afford it. Nike down to the world is ending on 2. 43. Nike is a return of 16 per year. Currencies. Is it is really the stronger dollar, the company gets 45 of its sales outside of the u. S. For last quarter, and that her demand. Going into the weekend with a little bit stronger dollar. This was fun. We will do it again, we did not talk enough commodities. On monday this spring which means also returning to baseball , we will talk to the Minnesota Twins ongoing teams need a starting of the art stadium. It is march madness on Market Makers. We will tell you about lynn the perfect racket. Wait until you hear the biggest names of alternate picking. Why the final four has become one of the most valuable assets the lawyer that was College Players to get paid. We focus on the bracket business. Welcome to a special march madness edition of Market Makers. Some people will get swept up in filling out brackets, watching games, and cheering for their favorite College Basketball teams. Billions of dollars will be on the line. But under the current rules of college sports, none of that money will go to the athletes. Thisfiled a lawsuit saying violates antitrust law. He is representing the plaintiffs. He told our Erik Schatzker what this case is really all about. Right now, most of the players at the top level of football and basketball help the schools earn billions of dollars. What they end up with is urgently nothing in return. ,ost of them do not graduate none of them get financially compensated, and almost none of them even have a professional career afterwards. They end up at the short end. The schools would argue that most of not all of these athletes can color ships, and there is a value to list college group, many on the school youre at. That could be worth quite a lot of money. Why is that insufficient . The scholarships of the athleticthe scholarships, are not valuable if they do not graduate and get the education that the scholarships are supposed to provide. What happens cap if you look at the statistics, is most of these are used by the schools ,o generate all of this money, and then they basically are discarded at the end of that process. Who are you fighting for here . I just fighting for the top Football Players in the top basketball players in collegiate america . This is about the big business of college sports. That has to do with the revenuegenerating sports. So yes, we are focused on june on vince passed Ball Division i mens fastball and the top tier of college football. Having said that, most of the players in those sports are not stars. Most of the players in those words never will have a professional career. What were trying to do is create a system for thousands of layers players who are not stars. Are you saying that those who are stars will get paid, and those who are not stars will not . Expect to would happen in a free market is that players were contributing will get a fair share. However that develops. One of the things that we found in professional foot ball, where we brought france free agency there is that players that benefited the most worthy offense of lineman. Everyday player who was grossly under compensated for the contribution they were making. If these schools have to start paying the athletes, what happens to the rest of their athletic regrowth of early are funded by the revenue generated by football and basketball . Theres nothing to stop the schools from funding those programs. No one expects all of the revenue to go to the athletes. That is not happen in any other sport. When you look at professional sports of the athletes get a share of the revenues. The rest will remain with the schools, and schools are free to use that in any way they want to come in to support academics, anything else. That is up to the schools. Less will goe bit to the coaches and the administrators, but that is not unfair. Going to talk about a future in which there is a free market for talent at the collegiate level and basketball and football. Those of the only sport that you care about for the moment. What happens within that world . Surely, for example, the operative the dukes, the louisville can afford players that smaller schools will not be able to afford. Do you really believe that there will be some equilibrium that different market achieves, whereby you can actually have a frighteningly where people get paid by multiple teams, as many genes as exist right now in collegiate america . Right now there is no parity between duquesne basketball or auburn infant ball, and most of the other schools. The schools with the resources and the ability already attacked all of the top layers attract all of the top players. Any fan watching the snow theres no parity in college sports, theres no balance a bigtime basketball and football. Apparently paying these athletes fairly will be owing nothing to worse the situation, and might actually out the situation because what we saw in the other professionals boards is that when you allow for greater freedom and fairness for the athlete to actually empowered some competitors to improve their situation. What is clear that under the Current Situation there will never be any equity or parity under the current system. The ncaa has not issued an official response to this lawsuit, but later in this program you will get a strong opinion from american roulette athletic conference commissioner. Plus, we reveal final four picks or some of wall streets to get players. They probably all think their forecast are 100 accurate. We broke it down for you, and it is longer than you think. Welcome back to our Market Makers march madness asheville. They pay more than 170 million a year for the broadcast rights tournament. When you look at the revenue, it looks like a pretty good deal. With a man who oversees interview david and Port Entertainment and sports. Basically looking at the digital side of the business. I was running a whole bunch of searches this morning, a variety of queries and cbs pops up first in the list every time at least on google. Youre doing something right. Were doing the right things. We try to get that bracket out earliest possible, right as the show was airing for selection sunday. Do you have yours don . I think critically tweaking throughout the week, but i felt that if you and got it started. Is this how youre capitalizing on this business of the Second Screen . When people are watching the program, they are on their laptop at the same time as their ipad is the same time as their phone, making this sort of a collaborative, Interactive Sports i do not even know what you would call it. It is not hard to imagine making more money on the Second Screen that on tv. It is not making more money or doing more viewership than the first screen of the games on television and theyre doing great there. But it is an example of what Second Screen and it broke events like this. A fantasy, rocketry, is fantasy for College Basketball. Youre able to pick your team to get really involved and you can involved with your runs by starting an office pool, or get involved on the prize based content on our site. We are actually doing a round by round game, so if youre doing poorly, you can go back and play additional rounds for prices. Tell us how youre making money on the . Is this all about getting more ad dollars on your site, on your light programming e it is certainly about ad dollars and getting users to our site and get engaged with our content. The content ranges from the brackets themselves, which is a core feature, but also the reporters and analysts that were covering the contents. The data that we have had the it weve had to turn the tournament. Youre able to go see brackets that of an they rollout during the tournament against people and flavor for what is happening. Voting on in terms of who is what owing to win and whos going to lose. Hottie you compete with other sources, like yahoo , whom i have used to do]. How are you going to convert me . Everything is reliability be that was a thursday side up was a heavy traffic time for all of us. Keeping the site up and functioning fluidly keeping the mobile app, that when lunch this year working as well what can you offer that is better than yahoo . If i love it , how am i going to go to cvs . Cbs . Each offer you insight on game and browser. What percentage of people are voting for the gamer that letter, what is the score for defensive and offensive throughout that game. I was using i do my but i was bloomberg, using cbs for information, for tips, for basics or coverage. A lot of people do that. Our guys doing an excellent job of evaluating every game and every matchup of how youre able to look at that game in more depth. It is amazing if you look at how much the machinations of the industry that has grown up around what these kids do work for he free. What were doing right now, billions of billions of dollars, what he does for a living, were talking about billions of dollars, and these kids get paid nothing. Quick to get paid nothing now, all of this so that the celebrities that are created in the 90s of the world that also going to get into contracts with them to graduate from school. Maybe. Youre clearly going to get a huge spike in his march madness, everyone is focused on her site. What you need to do keep that momentum . Im good to say come junior is a big drop off papers with the massive rock yearoveryear we have had massive growth yearoveryear every time we do this. Were doing this from the preseason through the conference tournaments. We have people get involved with our importers and get involved with them and involved our announcers and keep involved with this run College Basketball. Even those who do not follow sports yearround get caught up in the madness of filling out brackets. Figuring out which team to get to the final four in early april. We reached out to some wall street titans who pride themselves on picking winners. They are picking top seeds over longshots, might seem a good strategy, but it is not that simple. Dont call it obvious, call it straightforward and conservative. If you think of investments of how well until do you want to be . That is the least volatile. From the perspective of these words fan the sports fan. It does not have enough risk at some of the other guys. Who has some rest, because i am looking at wisconsin, michigan, everyone on our list has florida, and in that a lot of people with wisconsin. If you look historically, that is the lineup that is most likely record thats represented in the final four. He has a little bit of risk with the jews and the fourth twos fours. He iswhat the ncaa has done make it really hard for Wichita State to get there. Three of the last years final four team are playing against them. What they have a lower chance of the the region of louisville, and they are seeded number four. Quit even though louisville, some people are saying they got a porcine, they should not have been seeded number four, howard marks has them in there. You think they can get not out . The lower seed does not make it that much harder because the teams are going to be pretty weak data nymex seven undervalued. Only two of them have louisville, but they all have florida. The Favorite Team gets over picked. 100 of everyone has picked them in their brackets. No one is going to win because of florida. You have an advantage of liability get that. On louisville if you get them. Is the North Carolina pick up that is where he is taking a lot of risk because that is a six seed. He is only one who took something out of the top four. Up next on our Market Makers special. A basketball bigwigs who was mad about and rightfully so. Another side of the bracket business when we return. March madness feedsters fierce Competition Among conferences. I have from the ncaa based on payoutf internment from the ncaa based on teams of the tournament. That may be commission are very happy, but many experts think the athletic schools got snowed by the election but he was left smu out of the internet he gave louisville a surprisingly low number four seed. We asked about those decisions. That smu hasrongly a tournament resume, and that that our conference conference was very strong and they would get a bit. Would he did not and we would have to respect with the committee database im not going to suggest that any other team would have been displaced. Im just suggesting that we still feel strongly that smu had a good season. If you are in our conference with ideas ring to the top 25 then you had to play eight games of your 18 Conference Games against teams ranked in the top 25. We have very good teams, we are proud of the four teams where sending to the tournament. I understand theres a lot of other areaster and today about respect for our conference. I think our conference should have maximum respect. Even if it should have maximal respect, didnt get maximum respect with the louisville four seed . We do not know precisely what went on, and im not your to criticize the committee in any way. I am not here for that. Everyone has a difference of opinion. We think that louisville played a good schedule and is playing at a very high level right now. To fiercely defend my conference. Houston that be those teams. They were competitive teams. To have four teams, we think that is terrific. We hope that smu plays really well in the nit. Be judged all season by how we do. We did well the regular season, and we have to do well in the tournament. You adeptly make more money if you do well in the tournament. What are the financial obligations of getting four teams in march madness . We are pleased, because we did not know when the conference came together. We are a reinvented conference, we did not know how many team to would get in. Units are worth money. It varies from year to year. They can result if you win games and the dramatic of af a can be millions of dollars to your conference. Certainly that is important, but we are building the brand of our conference on that. We want people to perceive us in the right way, and were working very hard at it, and were going to continue. Be veryoing to competitive. What is the implication for losing louisville . Theyre going to the acc next season. How hard is that going to be for your conference . I think we are going to do fine. It has been great having little in our conference, they have been a wind at our back, help us i get exposure for our teams. Are bringing implement bringing in tulsa, a tournament team. They are going to join a conference next year, and theyll pick up some of the slack. Smu will only get better cover the great recruits coming in. Hilarious doing a great job there, it is a special thing in dallas happening. They are going to get better, and help fill that void. , werewill come back bringing in east carolina and tulane, and our florida schools have tremendous potential. Ucf is on the cusp. This is going to be a very strong basketball conference. We spoke with jeff kessler representing players who are suing to get a. Able to get makes perfect sense since he players help to generate millions and millions of dollars for programs like yours. What happens if he wins that suit . What will you do then . I do not want across that bridge at this point. I do not think they will went to buy hope they do not. In the end, i think a scholarship is extremely valuable. There are other enhancements we are providing to student athletes. There is a system that has worked well for 100 years. You do not have to go through these programs can be do not have to go to college, is a privilege to be a student athlete in that respect. Money that comes in funds a lot of problems that do not provide a dime to the University Programs that do not provide a dime to the university. There is a slippery slope here, when people talk about paying players. I think the conversation becomes , you do not want to be simplistic. It is a slippery slope. In terms of providing them inents paying claims creates an employer employee relationship that will be the death of college of law expert why can we not leave well enough alone and work on things that needs to be done . Some of the bigger conferences want the ability to have autonomy in those areas and do more for their student athletes. There are things we can do. The legal battle between College Athletes and the ncaa most likely will not be settled for a long time. But a College Basketball champion will be crowned on april 7 in dallas, texas, and we hope we have given you some insights to help you understand draften profit from the bracket business. Enjoy march madness. Welcome to lunch money where restored together tie together the best stories and interviews. I am matt miller in for adam johnson. Russia gets bigger. President clinton formalizes the annexation of crimea. Talk to the hand. How barclays midst is chance to get in on the alibaba ipo. And one issue that gets Mark Zuckerberg really fired up. He is going to have to talk to the president about it today. Robots in motion. Find out how these