from bloomberg headquarters in new york, this is market makers with erik schatzker and stephanie ruhle. shot in the smart phone battle with at&t, making a two million that on -- point $5 billion bet on upgrading the airwaves. billion bet on upgrading the airwaves. >> prices have doubled in colorado after the state pecan tostate became the first legalize recreational marijuana. >> i am stephanie ruhle. in new york.ng for you, ball me. -- for you, ball me -- balmy. this weekend i was cold.

>> tmi. we have breaking economic news. ism, non-manufacturing index, has just come in below economist estimates. michael mckee has the headlines. we are looking for 54.7. a run ofe had such good economic business. it is disappointing when you look at the numbers underneath the headline. we saw the new orders index fall below 50, which is roughly fit dividing line for expansion or -- roughly the dividing line for expansion or contraction. the business activity index did not move at all. concern but ite

is something to watch. the thing everybody wants to talk about is that jobs report on friday, the unemployment and dekes rises. there may be some good news in this report. >> we will have to wait five days to find out. t-mobile and verizon wireless are swapping airwaves in a deal announced earlier this morning. it may t-mobile him more attractive takeover target. cristina alesci joins us now. >> it is a wonderful day for bankers. payinge is essentially $2.4 billion for low band spectrum. it is a kind of spectrum that travels far and can travel through thick office walls.

for verizon -- it is also giving verizon some high-frequency bandwidth there. that will help for eisen bill out the lte network. this has every analyst on the street reminding people that t- mobile is still a huge target, possibly for sprint, which is backed by japanese softbank. sprint or t-e mobile, who have strong competitors -- >> eric and i talked about this has been aint distant third. can they be a real contender with this acquisition? >> they could. this is one way they can do it. mobile picked up today is not necessarily compatible with sprint.

>> to that point, does it make an acquisition of t-mobile by or lessore likely likely either because there is a orwork integration problem because regulators may have concern about the amount of spectrum t-mobile now has? >> it makes it more likely because t-mobile will be a stronger player. the flipside is there going to have to pay for that. one could argue that t-mobile is creating -- independently creating headaches for a few at at&t and verizon. to havet have contracts, you can finance phones on a cheaper basis, and it is really hurting at&t. shoot back last --k, offering the $450 sought at&t shoot back rustic offering the $450 credit. ,at&t shot back with

offering the $450 credit. >> they seem to be in a fight to the death. people may be wondering why verizon would give this spectrum up. >> verizon wasn't even using the .pectrum they figured we would get some value out of it. they don't need it. monetizing assets. unfortunately we cannot get a shot of the awesome boots she is wearing. >> a big win for boeing. on friday the company reached an agreement with its largest union in return for promising to keep construction of its newest jet in the seattle area.

at the heart of the new lineup of commercial jets. no risk for a strike for years to come. george ferguson is a senior analyst. how important was it for boeing to win these concessions? what did they want? the company received some attractive offers. needed a carryy to get concessions out of the union. careful because competition is going to get much more intense in the future. the triple seven do not have a competitor until 2004. we think they are fighting for this airplane. toing has to produce -- has push down the cost of producing an airplane.

i think this is the best that boeing really had to get some of those union wages in place. how competitive will production costs be now that boeing has one these concessions versus what -- >> there have been a lot of challenges moving it out of state. boeing has simply -- boeing has been working on the 787. it has been a very expensive proposition for them. >> is it adjusted -- just a bluff on boeing's party e >> i don't think it was. they can build seven in seattle

and another out in charleston south carolina. the center of excellence is still in washington state so they modeled the 78 seven facility down in charleston after the exact one in everett so they can work out the kinks. ofre is still a center building excellence up in seattle. >> if it wasn't a bluff, did the unions have any choice? like it was a landslide in favor of -- >> when we really look at what is going on in everett and washington state, everett is where they build airplanes for boeing. the worldwide freight market has been going down, which is a big supporter of the 747.

we don't see it bouncing back to what it used to be. 767 is being set up there. the other two airplanes is the 787 and the 777. didn't win triple seven x, i don't know what they will do about wi-fi and airplanes in the future. >> good to see you this morning. george ferguson is to senior analyst for aerospace and airlines a bloomberg industries. this leader was opposed to the contract. for now, i'm going to take you folks to the newsfeed, the top business stories from around the world. latest round in a acquisition -- the company boosted to by joe fit -- two by joseph bank to $1.6 billion.

the bank made its own takeover offer from men's wearhouse, which was also turned down. there are reports that jpmorgan will pay more than $2 billion to settle claims stemming from the bernie made off paul xing -- bernie made off ponzi scheme -- ponzi scheme. prosecutors have been looking into whether the bank failed. germany's chancellor angela merkel has fractured her pelvis. when shen switzerland fell. doctors told her to cancel appearances for the next three weeks. $2 billion. others are asking, maybe you are just going to pay and pay. you are living in elizabeth warren country. >> perhaps i should be making

the hostile offer. >> joseph a bank. malone, the one and only trying to buy out the rest of serious xm. of serious xm -- of sirius xm. >> and basement bistro, it is the most exclusive restaurant in america. we are going to tell you all about it. this is market makers on bloomberg television. ourcan now see all of interview streaming live and on- demand.

>> this weekend it wasn't just big moves in terms of weather, there were big moves in media.

liberty announced to acquire the remaining shell -- the remaining shares of satellite radio serious xm. xm.atellite radio sirius alex, for john malone the, is this about radio or is this the strategy we have seen over and over where he is unlocking the full value of these companies so he can get more cash and more power? >> both. they do like sirius. they think there is a lot of potential in that business. has --s no doubt this this is a prelude of the time to we're doing this deal and we can borrow the asset. serious makes a decent amount of

money so we can use that cash flow deleveraging that with charter. capital wouldre liberty have access to? >> they are going to have that. is 2.4%.erage target that can be pumped up to four times. that is another billion dollar or so loss. >> why did it take so long? we know that liberty has made a ton of money on its investment. by waiting so long they are giving away more liberty than they would've had to otherwise. >> and they just recently received fcc approval to buy out the remainder. question of timing, when they want to make a move.

it is not a coincidence they made the move now. announcement when they may be looking to do a multibillion-dollar deal. >> is there ever a coincidence when it comes to john malone? i would say he is the ultimate dealmaker. >> i think one of the big things heard from multiple sources that an initial bid will come in at $135 per share. tocan now have more money attention the kick into a deal. malone realizes $135 is unrealistic. they need to kick in more money as that price bumps up. >> given that liberty controls sirius, can malone operate as if the share exchange is effective? can they count on getting that

from serious xm? -- getting that capital from sirius xm? >> there is a bit of a time constraint but in no way shape or form will he deal impact the ability of liberty to move on time warner cable whenever they need to make it. it just gives a more financial flexibility to raise cash so if and when they do bid they will be able to bid for more cash and less stock. >> presumably this deal will close before any deal with time warner would close. --the process is lengthy process is likely to be a lengthy process. any argument to me made that they are not a smart isuisition or that charter increasing the acquisitions of any time warner? >> time warner is the biggest fish.

they don't have to do time warner cable. they could do a bunch of smaller acquisitions and gain scale and gain more customers. >> but it would be easier and cleaner to go to time warner. >> from that standpoint time warner cable is what charter needs in order to get the type of scale that john malone wants. >> does anything change given the fact that it would become liberty? >> you will still get your rockabilly station. be therty is going to majority, our big shareholder. of the issues for serious shareholders, they like getting cash back with stocking purchases. you have to step back and think

about -- a 24 team trade? >> i think both will happen this year. the bid for time warner cable and that process and almost certainly the deal with sirius. shop --ot happen at the at the stock shipped trade price. serious shareholders may get more. we will see the process probably happen over the next several months. will happen in the next month. >> working overtime. thank you both so much. alex sherman broke the news on friday. >> what do marijuana smokers have to be thankful for? certainly not legalization. pop prices have doubled in the state already this year.

>> this sounds like something that would only happen in a nightmare. julianna goldman has been trying to get back to washington dc from a ski vacation in aspen colorado. she is not getting much help from united airlines. us now.n the phone with for everyone who was not following you on twitter, you were not on the slopes, you are not treating hot cocoa. you were on the phone with united. there are worse places in the world to be stuck in aspen

colorado. >> i don't feel so bad for you. >> we called united on saturday night. because the website wasn't working our flights were canceled. to sleep withnt the music on and woke up at 1:30 in the morning. we realized we were not getting through on saturday night so we hung up the phone, called when we woke up sunday morning. we were calling the premier line and we also tried to call the regular line. you cannot get any hold music there. >> hold on one second. just say that again for me because here we are at a time where over the last few months we have spoken to every airline ceo. they talked about the importance

of customer service. did you run out of battery? for 12ad the landline on hours. at 10.5 hours we decided to try another phone. we were on hold so we had the on satellite, listening to it. hit 12hen the landline hours, somebody on the other phone that we have been on the hold with for 90 minutes finally picked up the phone. >> what did they say? >> they experienced high call volumes. were able to get rebooked out of denver. will spend the day driving through the mountains. were you surprised you got so little response from united?

get'm surprised we did not much of a response and i am surprised the website was down the whole time. week i tweeted at united and they responded to me. >> they follow you but i guess they don't follow me.

>> this is "market makers" with erik schatzker and stephanie ruhle. >> welcome back. going to talk about t- mobile. carrier is pending $2.5 billion for the -- for additional spectrum from verizon. it gives it another weapon in its increasingly bitter rivalry with at&t. back-and-forth, last week at&t offers $450 per subscriber.

t-mobile goes and buys a big chunk of spectrum. more than just t- mobile versus at&t. >> t-mobile wants a fight. he went from not adding subscribers in 2009 two all of a sudden adding subscribers in it has caused them to do something they have not done in the past, offering this money. over $3 are spending billion which can help them compete more effectively with at&t. >> do you think t-mobile has a real shot here? demma they are adding customers. that is always a positive. toyou are getting at&t respond and pain to hundred dollar bounties to get your customers, it has an impact. flex how may customers do they need to increase by two have an impact? >> they need millions. one or two quarters is not going to make the company work.

this is the start of a process where they hope to gain millions in the future. it is mighty expensive to gain those customers. they have to offer all these incentives, which the other carriers have been forced to match. does it end up being a race to the bottom? of people have cell phones, a lot of people have smartphones. you have to take someone else's customer. aboutof these ties talked paying these guys subsidies for iphones. they are offering these extra incentives. the $200 incentive is no different than making an iphone $200 cheaper. -- there isrop speculation sprint may make an offer for t-mobile. -- thee specter i spectrum acquisition make it more or less likely?

>> i don't think it makes a difference from sprint's standpoint. things,rand scheme of inuvo $3 billion of what is effectively acid value is not going to stop sprint from deciding whether to go after them. spectrumit starved for to the degree that t-mobile has more? >> it would be better for them to get more spectrum. the regulators are saying this is a dream come true. t-mobile is not taking customers from at&t. as a consumer, i might bring it. >> which is what the fcc wants to see, healthy competition. it sprint tried to buy t-mobile, what they allow that transaction to go when they say look at the incremental competition we created just by not letting them buy t-mobile. >> where does verizon fit into this? at&t appears to be the most aggressive when it appears to

doing -- what comes to doing battle? >> verizon used to do well. t-mobile is winning at the expense of at&t. >> how is that possible. they are just about to buy out of vodafone. an even more aggressive and integrated approach in 2014. this'll make them even more formal and -- more formal competitor. >> verizon does not do me any good. >> if you are a virus customers anyone to stream from your dvr. they will say if it is on verizon we won't count that but if you want to use directv and stream their content to your verizon tablet or iphone, we're are going to charge you. out where you truly think it matters. who is your carrier?

>> i use at&t. we go back and forth. lt is important. at&t has a low band spectrum. verizon and at&t have the low band spectrum that reaches my house. this is part of the reason t- mobile is spending $3 billion. >> let's talk about verizon. verizon has t-mobile raising a >> -- a bunchand of cash. >> i'm sitting on the soccer field watching the eagles hopefully try to win each week. they need more capacity. they have 90 megahertz of capacity. if you follow what verizon is doing, they keep asking them to change what is known as the spectrum screen. if they get enough of a cushion,

that could enable verizon to buy dish. >> they are linked the groundwork. >> if you look at the fcc filings and what they are lobbying for, they want to be able to buy more spectrum. with a bigting there chunk of spectrum that would add to the capacity. dish also offers the ability to extend beyond the files markets. >> great conversation about the wireless wars. verizon, t-mobile, dish, it is getting more interesting. >> will take you to the nation's capital where congress has gone back to work. agenda, the other on the november elections. >> if you missed any of our interviews, watch them now. live streaming and on-demand videos.

>> just when i think washington d.c. can't do anything but let me down, the warm my heart. the newest baby panda is making her a beautiful morning. you are looking at bao bao, a 5- panda.ld babay the broader public will get to see her later this month. i want you to rack your brain. guy, you are not even a panda guy. >> i have to say, when i found out we were going to do this, really? he is so freaking adorable. >> who is the panda habitat named after? berry.on who's the most extraordinary

philanthropist in d.c. e think the washington monument. d.c.? think the washington monument. david carlisle. david rubenstein carlisle, it just goes together. demo right off the bat. washington.more in the city is open for business for the new year. president obama is backing his vacation. the senate was going back into the session later today. the house tomorrow. you talk about congresses top priorities. the white house is going to bring us that perspective. why don't we begin with you?

be the first to order of business for the senate when it goes back into session? we can get some progress on some of these tough issues. we are not likely to make too much progress. the first thing that comes up is an old fight. that is the fight over extending unemployment benefits. >> kratz need 60 votes to move forward. they are likely not going to get the republican cooperation. this is a showboat of sorts. it tips off a larger fight and larger push by democrats in this midterm election year looking at income equality. just maybe they will win back the house of representatives. >> let's talk about the president. his approval rating is quite low right now. he has a state of the union address coming up in what should

we expect? he needs to win back popularity. >> peter hit on a key point. president gave a speech hammering at the wealth gap in this country. was kind of like a state of the union light did you will hear a lot of these themes again on january 28. -- state of the union light. you'll hear a lot of these themes again on january 28. i am hearing from republican aides. they want to see if there is going to be any middle ground. the door toto open some type of progress? , how disappointed will americans be if for the first time they hear the president speak this year it is going to be all about a campaign when we are just starting to see real

recovery and that recovery has not hit much of america? >> i don't think anybody is surprised that politicians talking about political talking points. what the obama administration .ants is you is find like thisey feel appeals to regular americans, talking about the wealth gap. it is something that will appeal to those frustrated with a lack of progress on anything in this town. >> what does that mean? does it mean the democrats in congress are going to continue and get nowhere because the republicans in the house will not pass them and then similarly the republicans will keep hammering away at obama care? i think the bottom line is most likely, yes. you are going to have

republicans with another vote on another obamacare piece of legislation. they think there is plenty to mind politically with the rollout of obamacare. democrats like to talk about these other issues. they support the idea of a higher minimum wage. you are going to get a lot of politics between now and november. you have a lot of democratic senators who are risking -- mitt romney one back in 2012. not a lot of success on big issues. >> is their unanimity over things like unemployment benefits? exert on one and of the talk shows where rand paul was saying, in principle i can get behind unemployment

benefits as long as we pay for them. thehat is the it -- that is message you're getting from republicans. even john boehner says we could potentially support the idea of extending these unemployment benefits but it has to be paid for and democrats are not willing to go there just yet. you also have dean heller, the republican senator from nevada. that is one of the states hardest hit by the economy. employment -- unemployment is still high there. he signed onto this legislation but he is the only republican senator to do so. >> that is our chief, -- chief washington correspondent peter cook. >> there is a lot of buzz about the legal pot and colorado. prices are soaring. what does it mean for all of those people using it? stay with us. ♪

>> one toke over the line. that is what the ads are saying

in colorado. why have marijuana prices doubled? here.regan is there is a good reason for that. you wrote a book on the business of marijuana. when you wrote the book, did you ever expect it to be legalized in colorado? >> i did not think it would happen as soon as it did for recreational purposes. >> this goes far beyond medical purposes. 20 states have legalized it for medicinal purposes. now you have colorado and washington that have legalized it for recreational purposes. that means we can all go up to a counter at a dispensary in ,olorado, probably in denver and purchase ourselves to marijuana. >> the fact that the prices are

now soaring because everybody is piling in and buying their weeds -- buying their weed for recreational purposes, what does that mean for those buying it for medicinal purposes? >> if you are buying for medicinal purposes are probably going to pay half as much. there is a different supply and demand equation going on. i think that is temporary and it will change. able alter as time goes on. -- that will alter as time goes on. >> you just need to be a licensed grower -- >> theoretically. because itimagine, is a small and beginning industry, people have split up all kinds of monopolies. you cannot go there tomorrow and just open up a pot shop. you have to fill up all kinds of forms, pay all kinds of fees, have lived in colorado for a certain amount of time.

>> our leaders pressuring their legislatures to go public -- to legalize it? if i own a resort in washington state or utah, i would be worried i would be losing business. >> i think it is a lot like the gaming industry. look at what is happening in casinos across the country. says it is a lot of tax revenue and we might open a casino here. you will see the same thing unfold with marijuana. the fact it is a supply and demand thing, you are right. it is a commodity. it is not that expensive or hard to grow. the differentiating factor is going to be the business that can brand their marijuana. they can make theirs somehow unique, somehow different. that is probably what you will see in terms of pricing power. a bumpy ride.l be there are a lot of demands as supply goes on's -- as supply

goes on. >> thank you for joining us. she is the anchor of street smart. >> it was the highlight of my morning. something you might not have heard about. you probably have not heard of damon burrell could he has created one of the most damon burrell. he has created one of the most exclusive dinner restorations -- dinner registrations. hosted guests from more than 50 countries in the last year alone. rachel crane went below ground to taste the exclusive cuisine. >> it is the kind of food you

dream about. a trip that begins with down this long winding road to the remote town of earl 10, new york. >> nice to see you. disguise then cement. -- in this guys a cement. it can take you five years -- this guy's basement. he has created one of the most exclusive registrations -- exclusive reservations on the planet. >> i never dreamed it could end up like this. >> what is that? >> chef, or cook as he prefers to be called, not attend culinary school. in arely even worked restaurant before he built his house in 1985. he started serving four-star meals to willing patrons. all the guests tell other

guests, which is miraculous. we never got the media coverage ever. gets you55 base price 16 to 20 courses. all conceived, farmed, prepared, and served by damon. >> within one week we had requests from belgium, apple dobby, to buy. >> foodies traveled far and wide to get a taste of this not so cutting edge cuisine. >> need of harvest is much more than cuisine. it is my way of life. it is essentially living off the land. >> this is taking it to a whole other level. >> exactly. thatcurred to me everything i needed it was on this 12 acre property. everybody knows there's something about it that just touches you. being able to serve that to the guest is so rewarding and fulfilling. people ask me how you do this during the winter. the best vegetables during the

year i get during the winter. the starch from in terms of -- the starch in terms of sugar prevents them from freezing. i have carrots, turnips, rutabaga, leaks, scallions to might even garlic. -- scallions, even garlic. you have a five year waiting list for your restaurant and that is not typical. >> some folks get frustrated. that was putroup on two years ago and the gentleman wrote, "we are all in our late 70s and 80s. we want to come before we die." i like to treat every guests like they would be here for just once, once of a lifetime. demo rachel crane, bloomberg. >> that looks....

-- that looks delicious. . .

>> live from bloomberg world headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> dirty deal of the century -- prosecutors say this man was behind the biggest illegal trade in u.s. history. he goes on trial this week. seattle approve a contract -- why do some union officials say the deal should have been grounded question mark we will ask one of them. >> the digital profits -- what does the coming year hold in store? . ask aol

i'm stephanie ruhle. >> i'm erik schatzker. it not cold here just yet, but it will be. the top the newsfeed, business stories from around the world. t-mobile has agreed to buy a big block of airwaves as part of a spectrum swap at the cost of $2.4 billion. the deal would give all the companies network capacity where they need it and might make mobile and more at -- might make t-mobile and more attractive takeover target. the senate is expected to confirm janet yellen as the first female chairman of the federal reserve. she has been a strong supporter of ben bernanke's policies, so economists expect continuity. it is being called the coldest air in almost two decades and it's heading up from the central u.s. right here to the east coast. low, -15et a record degrees at o'hare airport. in international falls, minnesota, -20 degrees

fahrenheit. it will even be freezing in orlando, florida. all of that has natural gas futures jumping. betweenare heating up men's wearhouse and joseph a banks. men's wearhouse is stepping up in an effort to buy banks. the clothing company took the fight directly to shareholders by increasing the offer to $1.6 billion. cristina alesci is back to give us the update on this renewed attempt. ais is a lot of money for cheap suit. >> and it keeps getting more expensive. au can never pay too much for cheap suit. but the valuations in this fight -- the fight keep striving the valuations higher on the steel. if you look at the evaluation, it is 57 and $.50 offer, that represents 9.4 times ebit off. these stocks were both trading

at five or six times a couple of months ago before this started. you can see things heating up and this just got ugly. men's wearhouse is going hostile, going directly to shareholders, saying we are going to ignore you and go to shareholders. let's not forget joseph a banks started this fight act cannot sober when it try to take advantage of the fact they had just tossed out their founder. they thought they were in a vulnerable position and then men's wearhouse comes back with a counter offer and we are here again with men's wearhouse making a very aggressive move today. >> these two stores should start selling boxing gloves. >> you keep accusing me of shopping at men's wearhouse and joseph a banks, which is funny. >> i think it's funny.

>> at the end of the day, the two coming together is the endpoint. >> it does seem to be a winner for investors. >> there is a lot of overlap tween the investors and knees to stocks. >> who do they compete with? >> each other. deal -- iy in the don't know if it exists, but the so-called discounters are the only bright spots in retail this year. -- youea right here don't shop in those stores. >> he's a paul stewart guy. >> stylish. >> paul smith maybe? >> i like paul smith. >> his eyes just lit up. >> he's from brooklyn. i forgot all smith. tracks the two retailers will come together because you're

taking one competitor out. they will no longer be competing with each other, so instead of having a special from men's wearhouse, theeffectively get him with competition. >> you rented a tech ceo from biltmore taxi does. >> we had our own type. it was a lot cheaper. >> imagine what the guys at her high school had. >> all the lower, baby. >> rank you for the update. ,> a former as a seed traitor there is nothing short of his freedom at stake. the trial on insider trading starts tomorrow. prosecutors say he fed insider information about to drug companies to stephen a:. it could turn into a windfall for sac capital. .- four stephen a cohen we have a lawyer that focuses on this.

trial be the bookend to the government's case against sac capital? >> that point is hotly debated. this is a big dénouement of the investigation. he's the most important guy he was able to come up with that i thought he would be the key that would deliver cohen to them. they've alleged that he shared information that may have been illegal. >> was this the 2000 eight conversation? >> it was a 20 minute phone call in 2008 after which he liquidated a huge position in a lawn and why it. he stands accused of paying a givingof doctors of illegal information about a couple of drug trials. he thwarted the government's plans by refusing to cooperate. >> can you help us understand -- when i read sheila's great piece

in business week, it talks about how they kept saying you need to bring up something with an edge. has anyone yet to find what an edge means? find thebasically to material nonpublic information. they have alleged that this defendant was basically playing in a private casino with coveted insider information. you have allegedly slides that were shared with him. call and all of this coveted information he allegedly used that ultimately generated a $9.3 million bonus for him. the problem is the fed's caught the fish but missed the whale. that's an interesting essence in the article you missed because --y've always been able to even the company has been alleged to have a culture of

insider trading but it looks like the whale is going to walk free. >> unless the feds can flip the switch, does that mean in your opinion the whale will run free? >> probably because unless you can close that deal quickly and find other trade, the trade issue is just creeping outside the statute of limitation. it all ends up and then on chronic -- in an ironic conclusion because they are likely to end up with prosecutions and it will be very difficult for them to win the case. there's a mountain of evidence against him, but the only thing happening in washington is a failure to supervise. inent a real change development, that's going to be a historic chapter.

>> can you help us understand inside thene was firm? it sounded like they were so afraid to lose money that they would stop at nothing to provide him a winning trade. thankingd the e-mail him for the job, saying it was a very special place. can you say desperate times call for desperate measures and at the same time say this is the greatest place i've ever worked? >> if you talk to traders who were active, they say everyone is doing this. they all hired consultants. that is their argument. sac was like the hunger games. all the different portfolio managers and competition with each other. have caught way more if all of this hadn't happened in 2008 and everyone ended up losing money?

>> sources have speculated to me that they looked as so many trades that took place that year that they believe were illegal that the trades lost money and the market was going haywire no matter what. they didn't bother charging the trades and have been left with this case, the biggest insider trading case they have ever prosecuted. >> you specialize in white- collar crime. the justice department and fbi make the case this is all about a deterrence, encouraging people not to do the wrong thing. also that they need to maintain the integrity of financial markets. fronts, is a trial like this successful? do people see him as a case study in badness and the f b i and justice department want us to recognize him as that question are >> i think the answer is yes and no. i think there will be a mountain of evidence against him and there will be a deterrent effect in terms of what i predict will be a very harsh conclusion

against them when the jury returned a verdict. but it's going to end up being an upside down result because at the end of the day, the justice department was not able to land the whale. they wanted to get him to flip hen, so it's going to be an inverse result and ring hollow in some quarters. >> how does the hedge fund community take issue? >> they have to be careful that there's somebody watching them. the attitude they had a few years ago seems to be gone. on the other hand, a lot of people would look at this and en is a veryve coh rich man, he has $9 billion and may be got away with something. >> will he be found guilty? fax i will go out and say yes. he has one maneuver, the judge will rule whether he can bring in testimony from an sec deposition where he waffled on whether he was the link, so the

judge will rule on that great at will be critical but i protect that he will lose. it is just too much to overcome as far as this case is concerned. >> thank you for joining us. thank you for talking to us about sac and the trial tomorrow. another legal battle we have to talk about, word that jpmorgan will settle the bernie made off claims against it. they say the bank should have known about the massive ponzi scheme. didn't the sac visit them a bunch of times and jpmorgan. there were many letters sent, so why is it jpmorgan is saying you guys should have known? >> are you asking me to take a position? >> help me understand.

the end of the day, the prosecutors and adjust the storm and has infinite leverage against banks. thee learned that against massive omnibus settlement over mortgage violations. a bank cannot sustain a criminal indictment. most of the business does away overnight. client can do business with you anymore. is this a case of regulatory or prosecutorial overreach? i don't know if it is but one thing to keep in mind is prosecutors do have the ability to do that. after anlike going industrial firm like 3m or dupont. your in-house town so could say no way. >> this makes me feel like banks are sitting ducks. people say banks are going to come back, hedge funds had a big year, it's a good time to invest in financials, i don't know area

if you could be faced with a fine like this and say have got to take it. >> we are talking about the integrity of the financial markets and financial services as an industry plus the facts that banks are federally and state licensed institutions. there'd evening -- given a license by the government to do the business. the penalty should be that much harder. >> how about the regulators? jpmorgan didn't wise up but couldn't the regulators have question are >> regulators can always do a better job. >> case closed. when we come back, how students will learn a few years from now. we will speak to the classroom of the future's ceo, talking about educational software. the ceo of blackboard. ♪

quacks what will the classroom of the future look like? from big data to smartphones, the educational experience is already being transformed. at some point, there might not be a classroom.

software andakes put some online. give us your vision of the future. vision ofu have a certain aspects but what do you think is going to change? >> thank you for having me. obviously we have a vested interest. we serve the education market. globally, we work with 80% of the 4400 institutions of higher ed in the u.s.. decisions in a great to see not just the trends of the current but the trends of the future and what is really happening. there are five or six really big things i think will really expanded 2014. online coursesen all the way through to the

use of mobile to the big eta proliferation going on in education as well as competency- ased learning, which is skill-based learning as opposed to course and curriculum-based learning. it is an interesting time in education. >> what do they need to be doing to increase the completion rate? it is still very low. >> it is very low. around 30% or 35% of students are learning online today. so forget that for a moment. in 2013.a lot of buzz of thosetely, 90% students, 90% of the people who sign up do not complete the course. >> why is that? >> two thirds say they only signed up because it's free. course,nd reason is the you do not get credit in many

cases toward a degree, so you're not using a course for some skill-based or future employment ace activity. i think with the schools are mooc is a great way to introduce students to your brand and to transition the students into full-time programs. syracuse university is a great example. complete90 students one, the -- it was on data sciences and they got eight or 10 fully matriculated to a $15,000 per year program. so it's a revenue generator, wonderful for the brand of the school that the focus will be less on massive and more on marketing for the school. pitch you make to universities? if you are selling more or less the same product or something

similar to universities and schools across the country, do they not lose some of their ability to differentiate? education is a very particular experience. one school for the most part is nothing like another school. >> that's right. blackboard offers tools that allow the facilitation of the learning process, whether it's online, physical teaching and learning some of the collaboration that goes around it. it is not necessarily a unique -- think about the tools we use in everyday life. you need to use these collaborative and workflow tools whether you are a broadcaster or an education environment. schools use the tools and how they implement them to further their curriculum to further their programs is their secret sauce, if you will. a lot of the universities in the u.s. are

thinking about what does the school of the future look like? is it going to be driven from an online perspective? >> i want to interrupt you before we run out of time. why do they need you? new york university dropped like board in flavor -- in favor of an open board solution and they can shape it anyway it wants. >> i think open source software, for viewers who do not know, is a software developer by the community and it's free. open source software exists in elements of our environment. the reason to go to blackboard is we are spending a tremendous amount of money on r&d and the next generation of technology. mobile and the mobile delivery of education is happening at high levels of proliferation. you will see more and more mobile and the companies that can invest in delivery of education, delivery and content with dollars as opposed to

community development are the ones that will win in the space. thank you for joining us. the ceo of blackboard. >> when we come back, not all boeing union workers are celebrating now that the new contract is in place in seattle. we will speak to one who says it is a bad deal. we will have that right here, when we come back. ♪

>> if it is a good deal for boeing, does that mean it's a bad deal for the union? we will talk to one of the labor unions that oppose the new triple seven contract. >> crystal balls are so 20th

century. to find out of the future, we asked our digital profits great stay with us. ♪

>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. welcome back to "market makers." i am stephanie ruhle. president obama's back to work after a hawaiian holiday vacation. he is probably hoping this year goes better than last. his approval rating is at record lows and he failed to push through gun control, immigration reform, and other top priorities. will he do any better in 2014? columnist hasview advice for our president. what does he need to do to get

his groove back? >> a lot. last year was a terrible year for the president. some things are within his control. he has to end this insularity. he has brought in good people into the white house. he has to play a major role in setting the agenda. if the voters and politicians are talking about health care all year, that is bad. if they are talking about the economy and the uneven economy and minimum wage and unemployment insurance, that is good. he can control that to some extent. other things are beyond his control. he has to be lucky. sometimes it is better to be lucky than good. >> does he have the right people around him? time -- first term, he was surrounded by clinton ites.

has he got the right people? a very tight circle making decisions over the last year. it has to be more broad, with people with different backgrounds. katie fallon gets high remarks from people out there. social era who has been brought back, will he be listening to those people when decisions are made? will it be a broader circle? i think sometimes they have shown the noun this of their approach. -- >> can anyone convince can anyone convince them to go along with them? i envision very little -- >> doesn't that break your heart? systems a dysfunctional which is unfortunate, because there are some things that should get done. immigration. 40% chance to get it done should

be a 95% chance. necessary. senate passed a pretty good bill. that is the poster child of this function -- of dysfunction. there is optimism about american politics because what we saw play out in the fall with the tea party and the extreme right of the republican party, it seasons of the agenda. that will not work out anymore. the moderate republicans are going to win the day. do you agree with soros? --we have been rating waiting for moderate republicans as long as we have been waiting for moderate iranians. the establishment will take on the tea party -- i don't believe it will happen. >> so the majority is wrong? >> i think he is wrong. for the president get lucky?

we saw the stock market improve, people are feeling like we are in a real recovery. he could see corporate america invest and expand. when people have jobs and money, they feel good. could the president lockout? -- lockout? out?uck >> sure, he could. people are being left behind, and we have to do something about that. if you do that when the economy is doing lousy, it looks like class warfare and it cannot succeed. tohink he has the setting talk about those issues. they are very serious issues and if you look at people like steven rattner, he used to be a top wall street executive, the evidence is conclusive. we will see the president can do it effectively. >> you say it will help with the have wins on foreign policy, like the deals between the

israelis and the palestinians. why? i can see it in the case of the israelis and the palestinians how it would help one constituency, but do americans care about foreign policy right now? >> no, they don't. it helps in two ways. if you have the failure, that hurts. success, people aren't saying i worry about the nuclear-- the iranian deal, or i have a job, or my kids have an education, but it looks like he is achieving something, and accomplishment. i think it would be good for him to have a few successes. >> he needs to listen to more people outside his inner circle. maybe he should listen to you, al. say that except for one thing. i saw the show. i have a terrible confession to make. --. is

you just made my day. hei told stephanie that already does listen to me. >> that is what makes al the man. thank you for joining us. love the joseph a banks. maybe we'll get men's wearhouse more excited. >> we will be talking about the union contract that boeing workers voted in favor of on friday. some leaders say it is a bad deal. what are they going to do next? we will find out. >> if you miss our interviews, you can watch the mom bloomberg -- watch them on bloomberg apple tv. stay with us. ♪

>> boeing has won itself a

decade of labor peace. they voted in favor of a contract that freezes pensions and in turn boeing promised to assemble most of its -- in washington state. it divided the union and not everyone is happy with the results. our guest is with us from seattle. bitter battle over this contract extension. how do you feel this morning? i am not sure how to feel. the members are so divided and still so very upset at the outcome. the vote was placed on a day where nearly a third of our members were on vacation. it was announced after many had left on the holiday break. we heard over the weekend that many of them are calling for a recount or a revote. by a very narrow

margin, but not even half of the members had voted to approve it. that would be the smallest majority we have ever had to approve something that has long-term ramifications for our membership. >> is clear how you do feel. -- you alluded to the timing of the vote, but why did boeing win? members, on november 13, offer2-1 to reject an that was unchanged like this one. , boeing did a full-scale pr campaign every day in the newspapers in seattle. they talked about boeing looking for another site, you're going to lose your job, washington aerospace futures, a new coalition came out and was playing radio ads around the clock prior to the vote telling our members if you don't vote

yes, the industry will leave and you will cause financial ruin for this area and thousands of flyers flooded the factories on january 2 and third telling members they had to vote yes. and 78bers are proud years have built the wages and benefits that they currently have that make boeing successful. of the last 30 years, our members have not taken a pay raise, and that was to buy the pension and health care benefits they were asked to give up. they were asked to give them up when the company reported profits. >> companies use the threat of manufacturing shutdown to comes -- extract concessions from local government. it seems boeing and others have taken this to a new level, shopping state-by-state, the dean for the best deal. states -- shopping for the best deal.

as that tipped the balance in way that labor is almost impossible to challenge? >> i don't know that it is impossible to challenge, the fact is that we have a contract in place for the next two years. you took away the workers' ult , because we cannot strike if we turn it down. our members will take that step when they think the company has overstepped its boundaries on what is fair. that is not a decision anyone take slightly. -- anyone takes lightly. meant contract, our members didn't have that weapon and felt powerless in this fight and felt all of the outside pressure. like i said, over the weekend, we heard members asking for a recount or a revote.

that will be elevated to our international to decide -- they are the ones who had chosen the date. they will have to make the decision. we are on uncharted ground. we would like to have a majority decide either way. a majority of the members did not weigh in either way on this. precedent does this vote, this contract, concessions that your union had to make, set for organized labor nationwide? nationwide, it is not a good precedent. our members have been able to defend solid middle-class jobs at boeing and what we said was of a person who builds boeing airplanes can't be a solid middle-class, what does it look like going forward? that is a concern to us. boeing is very profitable. our members are less than 5% of the airplane costs, their wages

and benefits. there are not many industries that can say that. they are profitable, but you understand the dynamics at play here in the financial market. boeing is under pressure from its owners, shareholders, to show profit growth. investors have a choice. they can own boeing stock or someone else's stock. is there any sympathy the union for that? >> it looks like we just lost connie. it is something we will continue to take up here on "market makers." management has a lot of tools at its disposal, like shopping, manufacturing, state-by-state. >> it creates a lot of jobs. when we come back, if you want to know what this future holds, stick with us. i have a chance to ask aol's digital profit, -- digital

prophet. ♪

>> recently, i met a prophet. mine,ir is longer than his nail polish selection, far sexier. his name, david shang. he is aol's in-house digital prophet. >> four 2000 14, we are going to continue the evolution of 2014, we arer going to continue the evolution of screens working together. in the future, we're going to stop seeing ecosystem marketing.

>> show me an example of that and who benefits from it. >> if i am a car manufacturer and i run an ad, it is not pushed. when i go to the portion where i'm talking about abs braking, i go to the tablet and can e and seee the brak what happens when i scan out. -- skid out. does the consumer not like ads that are pushed to them? is about context. if i am reading a page about fashion, i want the advertiser to match the ad that i am reading. a place that used to do that was magazines. if we take some of the essence

of what magazines do and put it back into the digital experience, can be richer than it is today. that, punch line here is david shing is a cerebral guy, but that is how we -- he believes we are going to be consuming content. >> part of that kind of sounds like living hell to me. i'm going to be watching tv and then some ad is going to be pushed to me. >> this is the time of to ration. he unfriend people. he decides what he is interested in. he likes it when pandora suggests things that he likes. cut out the white noise and give him more of the things he likes. the most important part, if you're going to be a prophet, what is he were dressed -- what if he were dressed in a suit and

tie? >> it is who he is. he is also a musician. he looks like you -- like a rock star, is a rock star. sachs, that is next. don't go away. ♪

>> that is going to do it for "market makers." tomorrow, birds are angry, and you might be, too.

i live in a world of regret. those free games, all i hear is i got to the next level, can you buy me another one. memo we're are talking premiums on "market makers." >> bloomberg television is taking you on the markets. julie hyman has more. >> we are cracking down on derivatives with today's options inside. they're slated to report earnings next week. joining me now is jim strube are -- struger. if you look into 2014 at some of the earnings estimates, folks are looking for growth to not be fantastic. do you look for?

>> financials in the last few thes have been a leader in s&p 500 since the 2009 troughs. in second best performer 2013, the fourth best, and then out of the gate this year, the best performer. a sector that has benefited as we charge our way out of the recessionary trough. earnings, consensus is expected to be up for the financials about 12%. industrials are at 13%. expectations are pretty hot for the financials heading into these companies. talking about for the balance of 2013, or 2014, things are not quite as optimistic. let's talk about where we stand going into these earning reports. immaturity or that you've been looking at which looks at the implied move.

they look at the implied move versus the earnings ratio. tell us what this tells us. isolate earnings. >> on one hand we are saying a full-year consensus, which of these financials looks cheap. from an auction market perspective, what looks like the market is under implying a potential move on earnings. >> why goldman sachs? on the valuation side, they look relatively inexpensive, about 11.6 times consensus 2013. a full point below morgan stanley on the same metric. at the implied expectations on earnings, market pricing about 1.4% move. historically, this move is about 4.5%. >> that sounds like a small move. >> exactly.

it looks like it is a little bit of a forgot name, effect can be. hard to believe. from an options market perspective, it looks like a forgotten name heading into earnings on the 16th. >> what you do strategy wise with goldman sachs? call, skew has ticked up a little bit. that sets up for call spreads. we are going out to february. we don't want to be too close and cute, we want to pick up about six or seven weeks of exposure. we are looking at 185, 195 call spreads. you put that on for just over two dollars. that is two dollars to make eight. not bad. up 4.5% and grinds another 4.5%, you make the four to one payoff. you're doing it for february

as opposed to doing it for a closer expiration. can you give me another favor? >> xlf. you have a call skew that has picked up. people are bidding -- bidding for long directional exposure. you buy those for about $.20. >> setting us up for those financial earnings. thank you so much. we will be on the markets in 30 minutes. ♪

welcome to "lunch money." i am adam johnson. back to work in washington. who is running the agenda? in sports, a cash cow. inside the business of nfl. diplomacy at work. can you put the secretary of state, john kerry, and dennis rodman next to each other on the same video? we might try. robot invasion. it is happening all over the world. a basement us are in and could take you years to