City. Good morning. I am Erik Schatzker. I am stephanie ruhle. Erik. Its been a while. Good to see you, my brother. My canadian prince. Goldman,e a partner of you get more than the key to the executor of 100 executive. There is a washroom on the executive floor. If i worked on one of those upper floors i would be able to use the restroom. That is me that it is time for the top Global Business stories of the morning. It is another record in what has been a recordsetting year for alibaba. The Chinese Ecommerce Company sold more than 7. 5 billion dollars worth of merchandise in the first 19 hours. Alibaba has turned holiday into eventggest shopping ever. Thanks maybe five 3 million each. Be fined 3 million each. Among the banks involved, jpmorgan come citigroup, and barclays. A new home for some of googles newest technologies. Leavempany has agreed to Silicon Valley for 60 years. Roboticsll use it for and space exploration. The airfield is known for anger 1, 198foot tall structure. It was built back in the 1930s. Oklahoma Oil Billionaire harold hamm has to pay his wife 972 million. But he is worth a total of 16 billion. He gets to keep people coveys 60 stake in Continental Resources the ball of his 60 stake in Continental Resources bit he told trish regan that control of the company was not an issue. We said it would not have an effect on the company and it wont. Not a part of this. Wifelawyer for hamms says hes considering whether or not to appeal. There is speculation about whether his client would receive 1 billion in divorce. And the best Business School in the country there is a new name at the top of bloombergs ranking. It is the Duke University school of business. Harvard Business School fell out of the top five for the very first time. Duke rose to the top spot thanks in large part to employers esteem for its graduates. You can say the president asked for it. Providers are blasting the proposal for regulation of the information superhighway. The president wants net neutrality. Comcast calls it a radical reversal that would hurt investment and innovation. At t and verizon are both hinting legal action. It is up to the sec to make a final decision. Fcc to make a final decision with us is the head of another media company, which sells cable and Internet Service in smaller towns in 22 states. It is the nations eighth largest cable company. Also with us is alex sherman, who covers media and Telecom Management what do you say media and telecom m a. What do you say . Like everyone else we were totally blindsided by the decision that the president took before he went overseas. Whos deciding on his own the winners and losers should be, and clearly sided with Silicon Valley. It is unfair, unnecessary for the president to do what he has clearly has interfered with the decisionmaking process of the fcc over the last nine months. Why is it unfair . Thing, i donte know what we have done wrong for us to deserve to be regulated. Mediacom speaking for generallynd probably for the entire industry, we never blocked from my weve never throttled, we dont have and we haveion, extended a significant and one of many on our network so that companies that the president supporting could bring a of cash into their balance sheet, and i guess spend them as they wish. We dont charge, we dont make anything out of the internet from any of those companies other than what we charge consumers on a monthly basis. If you dont do it anyway, why you care if the president thinks there should be new rules . You are talking about regulating the most vibrant industry in the country. You are talking about regulating granted, the president says there was no price competition, but you never know once title ii gets applied to our regular for a framework, whether somebody, another bureaucrat in washington will decide to do things that they do today. Rocco, how does this affect mediacoms business in general . Craig moffett has been covering this industry for a long time and he says the only reason to own cable stock is because of internet pricing power. If it ever goes to title ii he would completely reverses buy rating on the cable stocks. Requested. Great question. It is a phenomenal question. I can only refer back to what happened in the 1990s and im in enough to have been there 1992 and in 1992 we got reregulated and now phenomenal government decided to regulate the distribution side of the business and not do anything on the content side. Bloomberg did not exist at that time. Guess what happened in the last 20 years . First of all, during the time there was strict regulation, the investment in our industry the money that we invested during the first three years was 14 billion, which pales in relation to the money invested that was the investments that were made in our networks after the regulation aspects of the 1992 cable act went away. We spent 56 billion, quarter but what we spent in the fire four years. Quadruple what we spent in the prior four years. We have not been able, frankly, to send price increases to the consumer, largely because theyve taken advantage of what 92 and theid in 19 price has gone from six dollars 14 years ago to over 40 today. That is real detrimental on our availability an ability to price our product and retain customers. Going back to what the government did 20 or 30 years ago, that is not bode well for what may happen. If the government is convinced that the only way we can raise prices are make money out of it is by showing the consumer, which we dont want to do i was just going to say, where the problem with this part of the problem with his argument is that both sides make a persuasive case. Cable Companies Like you i state of the free market needs to operate and we do not need to effectively screwed our customers, but the guys on the and folks inoogles Silicon Valley make a persuasive case as well, that regulating the speed at which travel over the internet denies people who cannot afford it content that they otherwise want or need to have, and it constrains or stifles innovation. And what you yourself called the most vibrant industry in the country. Like i say, is there a site does their side of the argument hold no water for you . I dont understand a question. The only thing i know is that extreme competition to have a competition with Companies Like google and apple dont have in their own business not but they also dont have a monopoly. Cable companies have a monopoly. Hold on, hold on a second. You are talking like president obama right now. We are a monopoly . [laughter] i dont know if you noticed, but we lost a huge chunk of our media customers to the competition in the last 10 years could our internet we have seven internet providers. Oinesu live in the des m market, let me list them for you. Mediacom, we own a 36 market share, we have at t, verizon, tmobile. All of them deliver broadband to those markets. Seven different competitors in one market. It is offensive when somebody calls me and monopoly when they dont know what the hell theyre talking about, ok . Let me follow up on this, then. I want to contextualize how big a deal this is for your business. The charter is out there saying they want to be a horizontal acquisition machine and your name comes up as someone who could theoretically sell to them. If title ii were passed, the fcc decided to go with president obama, with this make it more likely to sell your company . Huh. [laughter] god i make those decisions. We will revisit that in the next month, six months, a year. I want you to bear in mind that i have 4600 employees that i am glad to be able to call my employees, and they rely on me being around for them to go out and provide support for their family. We are not selling as of today, but you never know what may happen later on. What do you believe president obamas position should be specifically . First of all, you should not favor one industry versus another. Two, i think it is the present anyone in this position as interfered with the processes taking place at the fcc. Theree, before he writes a lettr or memo and puts it out, he should understand what the hell is going on, all right . We are not a monopoly. If anything, google is a monopoly come have a 70 of the search market, and google and apple control 93 of the iphone business in the country. That with a 36 market share, i was called a companies he the was supporting whenever called a monopoly. One quickly, what is your take on comcasttime warner cable and how does this affect that potential merger . Comcast, they, are my industry but different companies, ok . So clearly, if somebody wants to go off to comcast, let them do it. Comcast is thick enough to take care of themselves, they are pretty diversified with distribution assets. Mediacom is pretty naked. We are only did his division business. Only the distribution business. I dont know what is going to happen. The likelihood that they will do a deal, there will be conditions imposed on them, but i just hope whatever conditions are placed, which i dont benefit from. You know what my take away is . I want to be a mediacom customer. Indeed. And oureo of mediacom, own media reporter, alex sherman. Up, it is virtually the rich will get richer. And the october surprise. Even some the sharpest investors in the game were taken aback by all of that volatility pit we will speak with David Rubenstein. A goldman partner is like winning the new york lottery, and tomorrow a new class of bankers will receive the golden ticket. Michael, what do we know about this Selection Process . Gary cohen and Lloyd Blankfein spreading good cheer, hugging it out . Tomorrow morning they will start calling people. It has been a monthlong process the summer. They have been scrutinizing these candidates for partnership and tomorrow they let them know. Problemat erik the this is a ceremonial title. I was going to say at best, but it is more than just the ceremony because you make more money, too. Md at a Different Bank this is a more selective group. And they have 400 partners. This is the cream of the crop, so to say. You have a real stake in the firm. What are the lasting perks of being a goldman partner . The typical salaries 900,000 for a partner. That is not all of your pay. There is a bonus pool that goes , and it is partners a small piece of the pie but it is nice and you get access to what we wrote about today, the private equity funds that are run for the employees. What is that . Walk us through it. Is set aside a portion of the bonus to be invested in these are investedese alongside goldman with the Principal Investments it makes. Other banks have Investment Opportunities for their mds. Is this just better opportunities because the returns a better . Well, they dont disclose much on the return side, but you dont pay any fees and it is an exclusive thing. It is not like a client fund where you can invest even if you didnt work at goldman . It invests sometimes along the funds and sometimes along itself. Goldman they all basically do it . About half last year. A firms part of secret sauce to goldman did not want the grants of the best schools to go to lehman that is not where they are going. Merrill lynch is gone sort of gone Lehman Brothers is gone, the street is not the same as it is access to enou that is access to these funds enough of a carrot to keep the best of the best from leaving Goldman Sachs for a private equity firm or you can make so much more money . It is a carrot to not leave for one of the other banks. But we talked to one recruiter who said every private equity firm has Something Like this. Is your own cooking is what you have to do if you are a private equity firm or hedge fund. If you are sick of the regulation of a bank, if you want a chance at higher pay, i dont know if it is going to keep you there but what does the Senior Management attention look like compared to other banks . It is very high. They have lost every few people at the top. The Management Committee level, there is not been a ton of turnover. Seen a mikeent cavanaughlike exit. Whether it is a result of the Bridge Street funds are not come something is working. Something is working at Goldman Sachs. Tomorrow the big list will be out. Big class, small class, any hints . Two years ago it was 70 partners, the smallest ever that we know of. It is expected to be around that number. Thank you, michael. Coming up, he cofounded one of the Worlds Largest managers of alternative assets. You will hear from David Rubenstein. We are approaching 26 minutes past the hour and it is time for on the markets. Stephanie, want to tell you about this company that installs and finances all the panels on your rooftop. Solar panels on your rooftop. Crowdsourcing. Everyone does it together. Only way to get enough scale. An adjusted loss of 76 cents a share. They were looking for an adjusted loss of . 20. Shoot first, ask questions later. The stock is getting hammered. Apparently they held a very, very short conference call, doing an exceptionally good job of managing expectations for the future, either. Some people who follow the Company Think there are positive signs. This went public at 16 last month, backed by blackstone, which has a majority share. Shares are currently trading under 12 in the middle of october during the big downdraft. Still, it is an ugly picture. Back in 2 minutes. Live from bloomberg headquarters in new york, this is Market Makers, with Erik Schatzker and stephanie ruhle. Market makers you are watching Market Makers you are watching Market Makers on bloomberg television. I am Erik Schatzker. I am stephanie ruhle. Once upon a time the Carlyle Group was just a private equity firm could today it is a different beast altogether. Carlisle has expanded into hedge funds, too. October was a rough month for one of them. Clarendon assetmanagement lost 11 in the first week of october. When i sat down yesterday with David Rubenstein, that is where we pretty much had to start the conversation. Clearly, volatility was more than people expected. We have not had a lot of volatility in the market in the last couple of years. It is unexpected. Hedge funds are much more volatile than private equity funds. As you pointed out, hedge funds tend to be much more compatible with the markets. That is what some people want when they invest in hedge funds. They want some hedge against the volatility of the market. In that particular case, an Excellent Organization. It has been with us a number of years and they did some things maybe they were say had not invested in, but it has been an Excellent Organization and they have done well for their investors over a long time. Are they changing strategy as a result . Im not going to talk about that. Are proud of it as an organization and they have done quite well for investors overtime. The equity market bounced back from those losses in midoctober. Look at where valuations are today and wonder to themselves, if it felt like we were in a bubble beforehand, perhaps we must be in a bubble now. What do you think about valuations . Valuations are hyped right traditional standards. You cant say that this time is different. We have got to be much more selective in buying things and it is harder for other private equity firms to findings to buy and valuations we are comfortable with. We can from time to time find things we like. Whenever there is a dip market that is when we go in. Investingtalk about in terms of cycles, they use the baseball game analogy. If we would use the baseball game analogy, do you have any idea what inning we are in . And when the bargain Shopping Opportunities are going to come again for carlisle back for carlyle . There are changes that you cannot predict. Energy prices are low and that is produced some volatility and opportunities in the energy sector. When the race begin to go up again, that will change opportunities and probably make things cheaper. Ok. So if you suspect that Interest Rates are going to climb sometime nextr, year, middle of next year . The feds office said they will begin to increase interest and to show that they are serious about raising Interest Rates at least. With that put us in the sixth inning, eight inning . Well i know you cannot predict with any confidence but you have a feel for these things. Nobody knows where the markets are truly going to go, honestly. High bute a little bit there are opportunities in certain parts of the world and certain sectors where you can find things that are cheaper than in other areas. It will make it harder to sell things at prices you want but easier to buy things do you feel pressure as a sole as a result to sell more today . We have been returning a lot of money to our investors and other firms have been doing the same thing. At some point we will reload and we are in the process of doing that now. It takes for five years for something to be bought and improve and then sell. That is a typical cycle. David, you mentioned that oil prices are down. Considerable drop since the summertime. You also mentioned that you are selling things and returning capital to your investors. Many of those investors are in the middle east. Hadexcess capital that they to invest was largely as a result of high oil prices, but you are giving money back to them. Do you expect that the flow of funds into