Breaking news out of washington. New deficit numbers coming up in the congressional budget office. Analysts say the gap will be higher than they thought a few months ago but it is still going to be the smallest deficit since 2008. Peter cook is in washington with more. Put it into perspective for us. The deficit for this year according to the congressional budget office, 506 billion, up from the 492 billion estimate back in april thanks largely to weaker than expected Economic Growth which has hurt tax receipts. It is projected, the deficit, to drop lower in 2015, below the 500 million mark. The projection for this year compared to lesters deficit of 680 billion. It is dropping. Substantially. The projection for 2015, dropping to 469 billion. That would be the sixth Straight Year of falling deficit. The lowest number since 2008. The cbo warning the number is going to start to rise again starting in 2016 and eventually the 1 trillion thanks to Rising Health care costs, aging population, so the shortterm picture is good, longerterm picture is still challenging. The shortterm picture, a few more number set are important. Projected deficit this year would be 2. 9 of gdp, next youre would be 2. 6 of gdp. Expecting unemployment will average out to 6. 2 this year. Is 40 year average for gdp 3. 1 . That puts it in perspective. Unemployment for next year projected to be below 6 . We are seeing the economy having an impact on the deficit, the slowdown in the First Quarter translating into some text or seas. The shortterm picture is good, longerterm is still challenging. Is the bottom line for washington, for the white house, and congressional democrats, maybe a good thing these numbers are coming out, something they might be able to campaign on. Thank you so much, peter cook. It is a good thing to see the deficit shrinking, unless you are one of the people who Want Congress to tackle entitlement or tax reform. For lawmakers, the pressure is off. I am one of those people. Another is kent conrads been 25 years as a democratic senator for north dakota. Onwas the leading voice fiscal responsibility. He is a member of the Nonpartisan Committee for a responsible fair budget. Thank you so much. Good to see you. Is that the right way to frame this, that the shanking deficit shrinking deficit next year puts off for so many members of congress the need to tackle these pressing issues fiscal reform, tax reform . It probablytely, does. This is good news. This is a germanic reduction of the deficit. Back in 2009, the deficit was 1. 5 trillion. Now were down 2 3 from that amount. Where less than 3 of gdp as a deficit. That was really the target in ssimpson. We have to get congress credit. Unfortunately, the composition and timing probably has not been ideal. What i mean by that is, most economists would say we came down to quickly. That is one reason we have a weaker than we would like recovery going on. At the same time, we did not do enough about the longterm deficit and debt. The composition of these changes, these cuts in spending were too heavily weighted to the domestic spending, and not focused enough on those longterm entitlements. We all know health care is the 800 pound gorilla. While we see dramatic improvement in health care expenditures, the Health Care Spending is basically stabilized. It is quite remarkable. Medicare spending between 20112012 actually went down. So that is also good news. But we also know the longterm atuation starts to come back us starting about 2016, and these deficits start rising again. More work to be done. Why should we give the president and congress any credit at all . The way you frame it and the way it, if weojects experience any relief, it is really only for the shortterm. First of all, i would say they give credit on two counts. Number one, they really did cut spending and cut it quite sharply from about 25 of gdp to 21 of gdp. That is really quite remarkable sharp cut in spending over a very short time. Second, they actually did raise revenue. Not the way i would have done it, but nonetheless, they did it. That, nation is why weve seen this dramatic reduction in deficit. Were we still have work to do and where i think it is fair to criticize congress is we have not dealt with the longterm challenges sufficiently. That is a place where we still have a lot more work to be done. But theres also some good news there in that Health Care Spending has clearly stabilized. It is quite dramatic the reduction in increases in healthcare spending that we are seeing. As i said, between 20112012, medicare spending actually went down, even though they were covering a million more people. This year, medicare spending is going to be about 512 billion dollars. It will go up to modestly between now and next year, even with many, many more people being covered. Remember, 10,000 people a day are retiring. Senator, you sort of put the onus back on congress to make action, but with a massive polarization we have seen, would we be better off with one Party Controlling fall of congress to try and get something done . Say. Ok, it is very hard to one part of controlled it really wasnt interested in doing what has to be done. Unfortunately, you see on both sides, the extremes are unwilling to make the basic decisions that have to be made. That is, were going to have to have some more revenue adjustment. Any tax reform very badly in this country. Contact system is totally out of date. You almost could not write a list write a worse tax system if you try. For insolvency according to trustees. Let me ask senator conrad a question. Does the notion, very suggesting the notion of a split congress for split washington with republicans in control of both the senate and the house, and potentially what could happen in the Midterm Elections, that could boost his chances for some sort of compromise deal here and ultimately, is this a president who in his final two years in office, with a legacy willing to make the hard choices to actually cut would deal with . The settlement issues i think it had congress in control, the president continuing for two years, that would be good luck. I think of a much greater chance of actually getting to it have the Democratic Senate from Republican House and you had the president , as already indicated he is willing to make some very augh choices, to address entitlements over time. I think that is as president ma yingjeou. I think it takes a bipartisan deal. That is the only way it works. Ands an advocate for bowles simpson. I was part of the group of six. To get us back on a firm course. It is going to take, frankly, the extremes. They are the ones who are holding up progress here in washington. Whether it is the extreme right or left, those are the folks that really dont want to change much of anything. Senator conrad, that is what we have right now. A democratic controlled senate, republican controlled house. Where are we . We are no further along or if we are, it is not very far along, from where we were we started these conversations. When you set on the bowles , sat on the group of six with john boehner, why are you optimistic that preservation of the balance of power between the senate and the house will lead to anything positive in the future . Because at the end of the day, it takes both sides to walk together. Look. If in the house you have the more extreme right have a setback, that would not necessarily mean you have change in control. But if they had a setback, some of the more extreme members lost , that would help change the atmosphere. Because i can tell you, in the senate, there is a Bipartisan Group who are prepared to make the tough choices. And i know the president is prepared to make additional tough choices. He has proposed some of them. But it has been rejected. There is an opportunity here. I think the deficit coming down dramatically helps build the context within which those decisions could be made. But at the end of the day, the American People have to send the signal they want these decisions to be made. They want copper mines to occur. They want progress to take place. They have to insist on it. Senator, shifting the focus back to president obama, he spent a lot of time at is a administration. Do you think we are seeing a detached president right now . More detached than i would like, that is for certain. Look, he was not detached when he was seeking office. I dont quite know what is happening in his thinking. But i do think he really needs to engage. If i were advising him, i would tell him, be up on that hill. Have the members down to the white house for breakfast, lunch, dinner, take them to camp david. I know sometimes it is frustrating because you feel there is no movement, that relationships matter. If youre going to be effective as president , you have to be all and. That means you have got to reach out to those members and form elation ships. It matters. I have seen it over and over. People will cut you more of a break if you are talking to people and youre seriously listening to them, they will cut you a break. But if you dont talk to them, if youre not reaching out, they think the worst. It is human nature. Relationships really matter. If theres one piece of advice i think of the president , it would be, go on a full out effort to engage with the members of the house and senate. Conrad, is president obama running an imperial white house . I would not use those words. I would say this, for some reason, the first two years he was very engaged. Then something happened. I sense part of what happened as he went through a series of meetings in which people were really over the top. Isrespectful in some cases, i would say, vicious. I think he just decided, i had enough of that. I dont get any results that way, im going to the American People. I think that is probably his thinking. He has not said that. I would say to him, you have to go back to the well. Even know there are some who are toxic and some on the left in the right i want to emphasize this isnt just a oneparty problem. It isnt just those on the right. People on the left are unreasonable as well. Critical thatly he reach out to those who are willing to do what is necessary to advance the country. Do you think theres Anyone Around as president who is offering that kind of advice, people within the white house, chief of staff, others . Is pretty clear this is a president not making a lot of inroads with congress at the moment. I dont know what can of advice the president is getting. If i were able to give him advice i would say, mr. President , you have been a transformational leader. You have helped avoid this country slipping into a depression which is exactly where we were headed when this president came into office. You have done other things that are transformational. But right now, you have to reengage with congress and the merrick and people. The American People. It is critical you do so. Senator conrad, thank you for joining us. Former senator kent conrad and peter cook the latest numbers from the congressional budget office, deficit is shrinking but the longterm outlook remains quite dim. Coming up, likely to be the before alibaba before next months roadshow. We will be breaking it down. Finding the Perfect Match isnt just for single senate more. Mergeies with an urge to can do it online, too. You are watching Market Makers. Alibaba, the chinese ecommerce company, set to ipo in the u. S. In weeks released its latest Financial Results this morning and they appeared to be good. Appearances can be deceiving, especially when it comes to chinese reporting. Cory johnson has more for us from san francisco. Its profit ining the most recent quarter almost tripled. Did it yet though did it . Is a difficult filing to get through. A lot of the results reported in rmb, they even have monthly calculations of the currency translations. Theres certainly a lot to crunch for the number crunchers. Fundamentally, the business is big and getting bigger. It is profitable and getting more profitable. You can see that in the results. The user numbers are things you can only see and china, where you have over 270 million users in the quarter that ended in june. , upnumbers are enormous from 172 million users. It is impressive stuff. The growth rate is slowing a little bit. Down to 9 . Sequential is the way to look at it, not yearoveryear. The business is big and getting bigger. It kind of shows you the benefits of a marketplace like business they have because so many sellers want to go to the place where the buyers are, and the buyers want to go to the place were most of the deals are. That is the advantage the marketplace like ali baba has. For alive a reasonably baba, yahoo is it suggesting the numbers are really not that much better than what we heard from alibaba before and what people anticipate when the Company Goes Public . Thereof people a lot smarter than me going to this and finding things. I cant believe anyone can make a real informed trading decision based on what their read in the last 1. 5 hours. It is very complicated. The company is doing boatloads of acquisition and the business is changing quite a bit as a result. One thing that jumped out, as much as their growing internationally in making acquisitions all over the world to grow their business and posit the idea to the ipo that this is more than just a chinese marketplace, the Chinese Business is growing so fast the percentage of revenues the International Business is less than it was a year or so ago. That is a function not of the slowdown in growth financially, but the massive growth in china. It is important to point out for investors who might be looking at these headlines him a there is still serious risk of investing in alibaba when it ipo plus because of structure regardless of their profit or sales or growth. I think this is something that people dont take into consideration when theyre looking not just at this deal, but a lot of the recent big internet offerings we saw with coupon and zynga and facebook and others where it is hard for shareholder to exert control of the company. They dont have the equal amount of votes. Baba realcase of ali have a vie structure were the shareholder doesnt have a direct vote to control the company, controlled only in china. That is the way theyre going to keep it. Much, coryu so johnson, who will begin a lot more work in alibaba. Coming up next, were going to talk about some fashion. We are on the markets. Looking at smith wesson. The company cut its forecast for the year due to declining demand. I want to separate what is working and not for smith wesson. What is not working our sales of modern sporting rifles. Known as the assault style weapons. Working or the smaller pistols. The smaller pistols. Trying to cater to women, looking for smaller pistols to fit their hands. The you take a look at slowing of assault weapons, if there is no huge antigun lobby push and washington, you could argue some might be not as motivated to go out and buy these. Alks that is what happened after newtown massacre, we saw gun sales spikes. Many were concerned congress would enact restrictions on that purchasing an ownership. That did not happen. Smith wesson isnt alone. Others are going to the same trials and tribulations. Coming up, why jeans acres likely by our singing the blues like levi are singing the blues. You are watching Market Makers. Denim is in distress. Jeans have been americans go to pants for decades, but now are being swapped for comfy yoga pants and chic athletic wear. Analyst chief industry for the npd group here. 6 doesnt sound like much. Altering, it is kind of sense shockwaves through the apparel business. One, commodity categories. Out of a 200 billion u. S. Retail sales business when a 16 billion business drops a decent amount or percentage, it does kind of send a signal that something needs to change. The real key is recognized denim is not gone, but what is happening is fashion denim and the higher price denim business has shifted a lot. How many more pairs of jeans do you need . , i had to buy maternity jeans so i needed quite a few. Without the structural or cyclical . It will rebound. It always does. Were so used to seeing denim flourish that it wasnt a recession that took it down, it was the active lifestyle of the consumer. That quest for more casual and comfortable life. More casual than denim. Believe it or not. Denim has become commonplace in the workplace. That was a big shift. The new thing is going to be active where in the workplace. I dont know what is next, pajamas . We cant get much more casual than we have. We thought we were at the limit with denim, but activewear is taking a turn. What do you mean . Pants,ce pants, yoga stretch pants. We are even talking about what some people call jeggings or stretch leggings. Are people really going to adopt it at the same rate that we would see them adopt jeans . Wearld argue you cant yoga pants to the office, that you should not be wearing them to a meeting. Shouldnt. With the we see a lot of people wearing things they shouldnt wear come anyway. Its like they dont look in the mirror before they go out. Weve entered a time that we have gotten so casual. Flying on the plane yesterday, i counted how many people were wearing fleece or pajama pants and traveling like this. It is gone so casual. People look like theyre are on the weekend all the time. Inthese things do work cycles. But sometimes the trends come to an end very quickly. Casual1990s, it was friday. Then quickly on wall street, it became casual every day. All of a sudden, it seemed people were wearing suits again. An isolated example. Wall street. At a good happen elsewhere. At what point do people finally looking theo start mayor, lets analyze, oh, my toure isir juicy cout inappropriate for the workplace. , it is about recognizing something that usually percolates from a new generation. It is some is like the Younger Generation rediscover the suit. When im teaching class, i sometimes see these guys in suits and im like, what is with this . Theyre dressed better than i am. They say, we discovered it. It is all must as if theyre trying to say that they found a new way to dress. And that starts the trend to begin to develop. Ultimately, the next generation that is a little older than them who drives the trend . Is it the buyers . Obviously, the buyers have to drive the trend. Wh