range for quite some time and they want to see a break. >> thanks so much for that perspective. ken hoffman of bloomberg industries could we are "on the

>> from bloomberg world headquarters in new york, this is "market makers" with stephanie ruhle and erik schatzker. who made a billion-dollar fortune with shutter stock is here for the hour. we are asking him about those valuations and find out what they mean. target.in hitting the the december data breach was a major hit to their reputation. we will tell you if it hit the bottom line and whether the brand is damaged permanently. e just launched a digital channel. will it be a bodyslam, or will it knock them out of the ring? you are watching "market makers." >> i am over it. erik is thrilled about the new

wwe network, but we have new homes data coming out. the januaryng at numbers and michael mckee is breaking the numbers down. mike, it looks good. time to get a house. you would expect that things would have been lousy in january with the way the numbers have been, but you would be wrong. .68,000 annual rate low compared to the boom times but don't quite good. the interesting thing is the regional breakdown. the only region of the country that saw a decline was the midwest. with the hammered weather, but the northeast was, too. ine sales, 73% higher january. a huge percentage increase.

sold in thehomes u.s. these days have been in the west, which have been extremely drive. they get an 11% boost as well. ready good across the board. it kind of throws into the had the issue of how much the weather is affecting the economy. >> in spite of the weather, great numbers. it seems like every company out there reporting has blamed their numbers on bad weather. well, not everyone can. >> it is time for the news feed. j.crew is talking about a possible ipo later this year. this is according to people familiar with the matter. they were taken private for $2.6 billion in 2010. the company could be valued at almost twice that in a public offering. target is feeling the pain from the big data breach that affected its shoppers.

they said sales and profit fell in the fourth quarter, but earnings beat analyst estimates. at the start of the holiday season, hackers stole card data and personal information from millions of customers. and a couple in northern california -- an amazing story -- stumbled across $10 million in rare gold coins stuffed in cans on their property. the coins were dated from the 1800s. most of which are in mint condition. everyone involved is keeping quiet about exactly where they live. they saidt's worth, they will sell most of the coins on amazon and then use the proceeds to help people in their community, many of which are struggling. >> that is outstanding. we have another great guest host with us today. we are talking about all things tech. of oringer is the founder

shutterstock. company is now worth more than $3.5 billion. welcome to "market makers." of your company, a great position to be in, but when you look at the tech valuations, when you see the whatsapp deal, what was your initial reaction? >> like everyone else, i thought it was really high, but when you dig into the numbers, it is all about engagement. a number of people that use this every day is insane. >> do you? >> yes. >> you have a care plan, shirley. surely. there are people that i talk to through instant message that

will only use whatsapp. the incoming requests have come, so i have stayed in that for that stuff. maybe if i was in europe, i would use it if i did not have my texting plan with me. that is what a lot of people are doing. >> everyone talks about engagement. i love both of them, whatsapp and snap chat, but i do not pay a cent. it is a few dollars for the first year. they have about a half-million users that will be billed that first dollar. not only will it build a revenue for facebook, but they can use that attention to bring them back to their main platform. >> it is all about the size of the community. rate, you are going to charge me 99 centcom a but if there are one million people that will be charged that the morrow, that is a lot of money.

>> it is a bit of a wacko ballgame right now. facebook is in an interesting position where they may have to do something to keep up, but the number of users they just got access to is insane. >> you have heard this from many people, and i want to know what you think. sounds a lot like eyeballs from 1999. the problem was, they were different to monetize. whatsapp can generate a billion dollars. off ae growth will fall cliff, and then you have to monetize another way. then you make your users unhappy and they go to some other app that does not charge them. >> the difference with facebook and whatsapp, they have models today.

with the number of credit cards they have in their system, they can probably scale that pretty well. it was only 10% of their market cap. >> for other entrepreneurs, for s outany -- mini whatsapp there, their goal is to sell. you did not sell. >> i was looking for something that i could sell to businesses that would help them make more money. it is just a different way of starting a business. up,hen you were building were there entities trying to buy you, was it a different climate? tried. people have private equity firms, competitors. along the lines of what i think stephanie is trying to get at, what are some of the ramifications of the whatsapp transaction? a currencyople have like facebook stock.

if venture capitalists and entrepreneurs are looking at and the lights are flashing, the bells are ringing, who will buy them at those inflated valuations? >> the valuation will go up. if facebook can monetize whatsapp to the level they can, then other companies will start to sell at those prices because there will be people willing to pay for them. >> when you look at this, what do you think snapchat could be worth? erik is a huge user. itthe thing with snapchat, seemed to be more of a one-on-one conversation. whatsapp tries to create these communities of people talking. whatually, if you know they are talking about, you can probably throw ads at them. like aapchat, it seems

fleeting moment that is harder to monetize. first silicon valley billionaire, which is to say, you are a new york-based company. how much of a difference is there between silicon valley and silicon alley? >> the weather. i do not think it is snowing in silicon valley right now. it is a much smaller community here in new york. i do not know why. i would've much rather live here than in california. companies here treated the same i buy investors? >> there are not many large companies here for some reason, and that should change over time. facebook and google are starting to build employee bases here. >> is that working? we ceding an intellectual

sense of what needs to drive growth in the tech business? >> new york is getting more attention. 10 years ago it got almost nothing. it will be slow and we have to keep pushing. >> is there enough talent for you to recruit from in the new york area? around 300 15 employees. around that number, we started to feel like new york did not have everything we needed, so we started to open up in other places like berlin. san francisco, we have an office. there is a different type of talent out there. we are a pretty large company right now. ofare storing huge amounts data, selling three images per second. at that rate, we are meeting network engineers that have been at facebook and google, and only they have the expertise. >> where are the pockets of engineers, software guys, coders

, in america that are underexploited? >> all over. austin, denver. we recently hired a bunch of people in denver. we have an office there now. and francisco. l.a. seems to be coming up a bit. -- san francisco. people are starting to congregate. you can rent a desk per month. a lot of people are starting to work this way. >> it is making a difference for you? is building the ecosystem, helping people to move more smoothly. >> stick with us. we have a lot more to cover throughout the hour. >> when we come back, we will talk about the fallout. how the data breach at all -- target affected the company's business, and how it is affecting customers. >> and we look at the launch of the wwe new television network.

you can also watch us streaming on your tablet, phone, and on bloomberg.com. and apple tv.

>> welcome back to "market makers." target is still trying to recover from a massive data breach. its report today provided a mixed picture on how the company is doing. profits plunged from a year ago but they beat analyst estimates, and the ceo said today that their efforts to regain customer trust are paying off. so what have they done right and wrong, and what do they need to do to really get on track? jason maloney is a crisis specialization specialist -- crisis specialist. start with you.

it happened in december. what was target's course of action, and did they do it right? >> target was continually playing catch-up, behind it all of it. they did not break the story themselves. in the first few weeks, they seem to be behind the story. in december they took control. we saw the ceo stating all the actions the company was taking, making steps towards regaining trust of consumers. they offered a 10% discount to shoppers, which is more of a gesture, but it speaks to who their customers are. after falling behind initially they made some steps forward. >> did that discount do anything to the customers? i was in a store and i thought, bonus, but they did not need to do that. what they need to do is show me a plan of action that i will feel more secure. >> you hit the right word, action.

they need to say less and do more. the 10% is more of a gesture than a leadership position. it does pay to what their consumers want, and that is lower prices. we will see more coming out about the target matter. there are questions that remain. congress asking what they knew and when they knew it. but the economy is improving, their stock is up a bit. if they make more leadership become a he come a -- game changer for the industry, that will serve them well. >> you say that we will see more. what do you anticipate from target? >> congress is asking what they knew and when. what did they do when they knew they may have had a problem? will remain and will continue for some months. they will continue to see costs from the investigation, litigation and so forth.

that is going to be a part of any data breach. what needs to happen now is target needs to continue to not simply talk, but do. demonstrate leadership. they need to join with other retailers in their industry and talk about how they are going to lift all boats, how they can make the consumer experience a securitysafer from perspective. we have heard that they will be working with, collaborating with partners and competitors. we need to see it. >> it is not just elaboration with their competitors. isn't it working with credit card companies to get better technology on these cards? continue toing to see these things happening if we do not have that stuff? >> yes, we will. target will be among the first several retailers that we will hear from this year. they are in the crosshairs of these criminal organizations.

they will not be the only one. they are at the center, and intersection that involves financial institutions, current processes. however, they need to continue to take a leadership role and drag others toward the finish line. be getting technology in the coming years, a shame that we have not seen it sooner. they have it in europe. to the extent target can continue to move the ball forward, that is a good aim. you mayun a business, not have the credit card data for millions of americans, but you have valuable data, i presume. do you fear for its security? >> we have a whole team that deals with this all day. >> you have a data security team. >> yes, and that is all they do. we think about this all the time. when it comes to credit card companies, we need them to innovate.

great that companies might square and paypal are pushing them to do this type of stuff, because there is no other innovation going on inside american express and visa mastercard, it seems to me. did not handle this the right way. that is fairly clear. does this mean that companies like target -- and there are other retailers that have been preyed upon -- are going to continue to be vulnerable authorizationctor and other security measures that banks and other payment processing companies could be taken to make it safer for all of us? >> new are right, it cannot be executed in a vacuum. it is a technology solution that involves many players in the industry. it will take a broader effort than simply a target or walmart or cosco could implement themselves. however, for target, to the extent they can move the ball

forward, they should. they should be bringing this to the table. i need to see more of that. i need to see more clear actions and less work. -- words. >> is there a company out there that you think is doing it right? >> everyone is in the same boat. we rely on the processing technology we have. in terms of who is doing it right, hard to say. i know vulnerability is out there for almost every retailer. financial institutions were once in the sights of these criminal gangs. technology and security with payment processors have been stepped up. retail is the new battlefield. that will be the new site for these cyber attacks. >> thank you for joining us, jason maloni. >> when we come back, much more with jon oringer, the founder of shutterstock. facebook's sheryl sandberg

says that stock photos need to change. we will find out how big of a problem it is, and how much mr. oringer is doing about it. ♪

>> we are approaching 26 minutes past the hour, and it is time for on the markets. we start with two retail companies that are doing nicely. a good reason for both. in both cases, they are doing buybacks. a five billion dollars buyback. abercrombie & fitch is doing $150 million. &f trades at a much lower market cap, so that mean something to those investors. >> think about the product

spectrum of lowe's. home sales are way up, and they had a good quarter. ofthis is just more evidence how little -- ♪

>> from bloomberg world headquarters in new york, this is "market makers" with stephanie ruhle and erik schatzker. revolutionize the stock photography industry. founder jon oringer started the company by taking thousands of his own pictures. he is back with us to talk about his own journey. how did it all got started? >> out of my own needs.

theeded imagery for software companies. i was shooting them myself. >> the images were hard to find, or hard-to-find to find at a cost you were preparing to pay? >> they were hard to find at the right cost. myas into writing in apartment trying to figure out what software i can build -- >> how old were you? >> 22. >> did you ever have a job, working for someone else? >> may be a summer internship. >> so when you finished school, you said you are going to do this on your own. >> i was a programmer and i never really wanted a job. just wanted to see what i can do on my own. >> one of my producers will hate me for asking it this way, but why was this industry right for disruption? >> it is not the producer, it is

me. >> people were starting to use so many images at once because they were marketing a brand-new way. if you have 100,000 e-mail addresses that you will market to, you may segment them into 10 groups of 10,000 each, pick 10 different images or e-mail blasts, and try them out and see which one works the best so that next time you can learn more and figure out how to convert that list better. >> where are you getting your images from now? >> we have 55,000 photographers from all around the world. they upload about 30,000 images a day. we accept about half of them right now. we review them all by hand. we have about 100 people around the world and that is all they do. >> hot or not, all day long. >> exactly. >> are you responsible for changing the economics of the

stock photo business? >> we created the subduction all model.h is this not have to decide which image you had to pick based on its price or size. it was one prize per month, and take whatever you want, which is how internet marketers worked. >> so what has that been for your competition? >> we have changed the way that people buy and sell these images. this marketplace model has done a few things. anyone can sell their own images if they reach a certain quality level or footage. it is made so that buyers can afford photography and small businesses can use a lot of imagery for all of their creative needs throughout the day because they do not need to spend $1000 each time. >> how big is video getting? >> bigger and bigger.

dream liveces can't video over the cell signal, people are starting to use this stuff more and more, and they are finding instead of shooting in themselves, they are going to stop providers. >> have you move your business to the cloud? >> we have cloud-like services ourselves. the subscription is kind of a cloud-based service. >> is all of your stuff remotely stored? >> no, we do a lot of it ourselves, but we build an algorithm that simulates a cloud-type data storage. companies use us instead of their own creative imaging department. creative directors looking for images may have stock themselves, may have images they have shot themselves, but we are

kind of a cloud-based solution where the search is more sophisticated. of looking on file folders on their own drive, it is easier for them to come to us. >> have you made it better or worse for the photographer? if the barrier to entry into the stock industry is so low thanks to shutterstock, i cannot imagine it is as economically attractive as it used to be. >> we have photographers making hundreds of thousands of dollars a year. we paid a $2 million in royalty -- $200 million in royalties in the last 10 years. the economics have changed. it is easier to get into, but that is not our doing. cameras have gotten better and are easier to shoot. >> erik is an amateur photographer. >> with a capital a.

about sheryle read sandberg working with getty to change stock images about women. she wants you to be able to see women doctors and lawyers and engineers, not women getting into -- i will not even start to go there. what do you think of that? >> we think it is great. the definition of stock photography has changed. it used to be really generic. but by opening the world up to anyone that wants to shoot, whether an amateur or pro, we started to get all of these perspectives around the world. we source photographers from 150 countries from around the world and they upload local, authentic imagery. >> what is something that we would not think of as high demand for stock photography? >> local, authentic imagery, the

stuff that is hard to get. if you are telling a story, you would need to go halfway across the world issue that image. >> and pandas. of ournough for one producers. much more to cover in the next hour. everything a tv network could want. male viewers and the right age group. how the wwe is breaking into tv. ♪

>> welcome back to "market makers." i'm stephanie ruhle. world wrestling entertainment and nbc universal companies are at the end of a tv contract initiation, so wwe flagship shows could find new homes if both sides cannot agree on a deal, so what will this

mean for those muscle men and women? for some insight we have the director of research for horizon media. jon oringer, founder of shutterstock, is also with us. and i are sort of gob smacked. is wrestling that big, do people love it that much? >> it actually has a very big niche. top-rated broadcast. median age.ong 47% of the audience is under 34 years of age. about 65% male. it is a very desirable demographic. mayo the potential that wwe not need nbc, what does this mean for the market? is there enough of an audience where you could do this on your own? >> i think wwe would like to be

back on usa. it goes down to how much it will cost. i think they were pay $140 million a year. wwe is looking at this as live sports, which has a premium. usa is balking at that. wwe is talking with discovery and amd, viacom, fox. there is a lot of real estate. --comes down to, wwe down to how much wwe is asking for. >> talk about the demographics. they are young, they are male. are they smart and rich? >> no. in homes where the average income is $100,000 or more, the viewing is down. >> you do not have to have a ton

of money for advertisers to care about you. mcdonald's, burger king, walmart, they may not be advertising to upper east side socialites, but everyone buys stuff. movie studios, video games, snacks foods, restaurants, automotive. a nice list of clients. what theyportant is command from advertisers. they do not command the top dollar that some of the top dramas get. i think they get $170 million in ad revenue, and they are asking million.$200 you can see why there could be a pushback. more thanu make 100,000 dollars a year. how do you feel about the wwe?

>> i do not really watch professional wrestling. >> never? >> never had. i can see the appeal. are there pictures of wrestlers on shutterstock? >> yes, we have editorial imagery. >> you may not analyze it on that level. we have not dug into those numbers, but the next time i'm back, i will look at it. is a premium for live sports and the advertising community looks at wwe -- >> are we calling this a live sport? >> wwe would. they say 90% of the viewers are watching it in the same day. >> remember when "the sound of music" was on nbc?

i think advertisers treat this as entertainment. there is no super bowl for the wwe. no world series or stanley cup playoffs. every week you get a live event. it has been difficult for them to leverage the ad dollars from advertisers. >> getting a folding chair smacked over your head is entertaining for some people. seeing you doves it to me every day. >> thanks for joining us, brad. jon oringer is still with us. >> look around your workplace. this is not your grandfather's office anymore. we will be looking at the dramatic changes that telecommuting has brought us. ♪

>> just who is working from

home? not always who you think. changed.e work has scarlet fu has this mornings off the charts. from a report you that tries to dispel some stereotypes. it is not just moms or millenial is interested in working remotely. 31% of full-time employees work , at home, at a business center. >> not at yahoo! of theseout of four teleworkers are men. >> in what industries are these in specifically? no real difference between those that have kids and those that do not. where you see a bit of a difference is the generational gap. gen y, 35% work remotely. 30%.,

baby boomers, 30% as well. employers often treat flex work as a program that can be taken away. yahoo! is unique. is treated as a perk and not institutionally offered. actively hiring people. is that something that people demand? itespecially with engineers, a want to work from home, we let them do that. we have employees that work from home. >> does that not affect corporate culture? marissa mayer said that she did not want to walk across the floor and not see half of the people there. >> you do not want too many people doing this. meetings, people interacting, it is all necessary, but there are some programmers and engineers that do a lot of work on their own. elepresence, they can be

around the office. if you break it down by gender, for those that work in the office, we are a cubicle nation. cube oromen work in a open office environment, like we have here. that is compared to 27% for men. >> do you have an open office? >> yes, completely open. >> and conference rooms are always occupied? >> yes, they are on the interior. people are all around in an open area layout. when people need to meet, they find a conference room. >> you are moving right now. as a businessman, as a new york guy, how do you feel about you moving to the empire state? >> it is a great building. we were looking for 80,000

square feet. options, not too many -- we found maybe four or five at the time. we have two floors, 20 and 21. internal staircase. >> did you have to redo a lot of the truck sure where you are now? >> there were lots of small tenants, and i think they move them around. >> it is not available yet, but would you have considered the new world trade center? >> we did look at it. i think you can still. you cannot move in yet, but you can to some stuff in advance. it is actually pretty expensive. when we compared it to some of the other pricing -- >> for a tech company like yours, they have retrofitted the building. even though it was built in the 1930's, no problem? we have fiber-optic, all of

the data connections, all the amenities. it is a great elting. >> very cool. congratulations. -- it is a great tilde in. washat i found surprising who gets the best response. there was a study where they tested a bunch of scenarios. men in high status arrears seeking flexible time were more likely to get a positive reaction than women in the same situation. >> why, because it is assumed that the women want to leave because they need to do something personal? >> that could be the association between women and motherhood. even those looking to advance their careers through professional development classes, for example, could be seen as hiding the true reason for their request. >> when i was at deutsche bank, i was out visiting clients a lot. somebody said to me, the head of trading, i know you have not

been around because you have kids and stuff to do with them -- and i will never forget it. fact is, this goes exactly to the study. there is an assumption that if a woman is at home, she must be doing some mothering. >> there are also other cultural assumptions about women, like that math is hard. when you are out looking for are there enough women that have the requisite skills and education? is america doing enough to encourage women to pursue those careers? >> i do not think we are. there are not that many women in engineering, not that many people in general becoming engineers. there are so many ideas that we need to build, there are not enough coders. the fact that we would teach a foreign language before a computer language -- >> do you think that should change? >> yes, i think we should teach

computer languages at the same time. >> do you see anyone doing this correctly, any countries or groups? >> how many of your employees are the soldiers -- visa holders? >> we encourage that, if they can do the job. >> in the last 15 years, investment banking has been recruiting those with engineering backgrounds to go into finance him especially as modelsives and other became popular. my husband has a robotics degree and trades derivatives. are you seeing people shifting from engineering backgrounds to finance? >> yes. in new york, as a tech community gets bigger, that could be more and more. >> are they coming back into the industry? >> yes.

>> so you have kids coming out of investment banking, and they make a turn? last week, this book came out. the author said that you were starting to see more kids darting to say, i will not just default to finance, there are extraordinary businesses out there. jon is backing that up. >> we build fun products every day, and i'm not sure that every finance company can claim that. >> congratulations, really. jon oringer ceo and founder of shutterstock. >> "market makers" is back in a couple of minutes. credit suisse in testimony over taxes. >> brady dougan is in the hot seat. ♪

>> live from bloomberg headquarters in new york, this "mark and make -- "market makers." inbuying more real estate puerto rico. we will tell you why this is track -- attracting a lot of attention and what it means for the economy. plane new republican tax promises to track taxes at just 25%. will a simple -- >> hollywood "house of cards." how the gains have changed.

hollywood's biggest stars are out there lobbying for one-on-one. welcome back. i am stephanie ruhle. >> i am erik schatzker. it is 11:00 on wednesday. >> i want george clooney knocking on my door with the dvd and a bag of popcorn in his hands thank him let's watch this movie together. >> right now in washington, it is uncertain -- uncle sam versus switzerland. the subcommittee is holding a hearing today to give the u.s. government names of american citizens who might have used those swiss bank accounts to avoid taxes. senator john mccain caught -- called the inquiry a joke. he would love to comply with u.s. law but cannot because of swiss law.

phil mattingly is on capitol hill. as is always the case with the senate subcommittee on investigations, they have dredged up very persuasive evidence. americanshat 22,000 use accounts by credit suisse and there are 1800 credit suisse bankers servicing american cop -- customers in the office. the list goes on. what does dugan so far have to say for himself? >> the numbers look bad and the anecdotes look worse. what dugan is really saying right now is, we are institution caught between two jurisdictions and cannot figure out a way to make this work better. we would love to help up -- help comply with the u.s., but another key thing always important, he said something

else first. they are sorry. take a listen. >> we regret very deeply that havete industry, we private bankers. . caveat there, they say a small number of bankers appear to have violated the law. that andtry to rectify figure out who is right and who's wrong, that is the big question as the hearing goes on. >> the point, is in the senate trying to prove the unprovable, without a smoking gun? bankst e-mails to tie the , the private banking practices compliances,wrote to does people in other higher-ups in credit suisse, there is no proof as it were. quest that is very true.

what you have seen with the report, 180 paid it -- pages, there is no direct objectives. what you have seen from the staff is them saying, too many people were working on this for top executives to not have known about it. we are talking about 12 lane dollars of u.s. assets they believe were hitting through the process. how could you not recognize? to your point, they do not have names. they are talking about accounts, the vast majority hidden from the irs. they do not have those. you do not have names or e-mails or those types of documents. you cannot make the ties even if they exist. quest thank you for bringing us the latest. feel sorry for any bank. credit suisse and its fellow a hard place between u.s. and swiss law. today,chols, in berlin

the u.s. has been trying to force the disclosure of the , it does switzerland not appear the hearing is getting us anywhere closer. >> the hearing is not doing anything to advance. wouldeaty in the senate be required to have tax harmonization with switzerland, is slowly goes through the swiss system, passes the house we would still need to pass the vote in the upper house. this is the essential argument. we are caught the train two jurisdictions. the u.s. and swiss jurisdictions need to get together and have a unit i'd system and then we need to get together and be compliant. >> what we say for americans, 90 or who knows, the vast majority of which pay their taxes in full , who wondered to themselves, why is it switzerland would be preventing the irs from getting the information should have?

>> this is part of switzerland's dna. i have been down there reporting a story on cyber community. we talked about that a little bit a couple of days ago. the swiss have a privacy mentality. people have been stashing money away for hundreds of years. it is a great place to do it. geographically secure. it is in a death the swiss public. is in their dna, the expectation of a zone of privacy. simply because united states senators are banging on the drums, they are not likely to change a generations long outlook because of the u.s. political concerns. >> at the same time, the number two count is a thing of the past. we are talking about ancient history, does the swiss public not want to get with the 21st century and maybe participate in

an effort to do what is right and expose these people as the tax aviators that they are? this is the argument. the swiss government has acted and it is the u.s. government that has not ratified the treaty. there are a variety of international treaties. finance minister just last week talked about coming together. every g 20 i have been to, there is always talk of tax harmonization but never any tax harmony. this time, it could be emerging markets and the smaller countries. they always find a reason on how they might be hurt and harmed. or international framework to work, everyone has to buy and. in the most recent case, it is 250 thousand dollars. that is the cut off. smaller countries are saying, we do not have capacity to enforce it. so far, it is not on the books.

>> hans nichols. >> staying in washington, there is a new plan to completely revamp the u.s. tax code. this bill slashes individual and corporate tax rate but imposes new taxes on banks and hedge funds. our tax policy reporter richard rubin joins us now from capitol hill. richard, what does is mean or us? will i lose my mortgage interest rate here? >> not anytime soon. proposal is the super bowl. it will be a comprehensive look at every break and reduction. it is not going anywhere anytime soon. the trade-offs and their are politically toxic for house

republicans. democrats are not on board either. this is a blueprint you might see become law. your mortgage interest reductions are safer now. >> how big is that you might see this in the new law? when i think of revamping the tax code, even when i think it is a good idea, i have such little confidence in washington right now that they could get even the smaller things done, how legit is this? >> it really becomes the blueprint. you are seeing a frenzy lobby effort right now. had a provision come out we reported on about a on the banksets insurers in the u.s.. those companies want to make sure the scene is politically possible so if an rent -- if and in boths gets corrected parties could advance a tax reform effort, that the bank tax

will not be part of it. >> can you share a few more details of the proposal with us? in the wake of the crisis, it may have traction on main street. >> we're hearing that would apply only on assets above $500 billion. that is six banks and three non-bank institutions. the tax would be 3.5 basis points every quarter and billions of dollars over the next decade. which would be used to reduce the corporate tax rate. quest for private equity guys out there, where are they? night chairman said last he plans to clean up carried interest and treat it like ordinary income instead of capital gains. we have not seen specifics on that. we will get more the afternoon to see who gets affected by that. >> you talked earlier about this being the pro -- the blueprint.

because it is coming from republicans and a reasonable guy , does it feel to you as though to transcendlegs midterm elections and get us to a place in 2000 16 where this is a basis of conversation for tax reform? >> it becomes a conversation about tax reform. he is the first and a longtime to put out a clear plan for how you get there and how you pay for rate reduction and what other simplification you might do. for anyone, whether democrat or this president or the next president you are looking at the tax system, you go to this place and then pick and choose. and unlike what he did to reduce the cap on mortgage interests. the completemes system you could then work off or whether it is this year next year or the next president. >> thank you for joining us,

giving us the latest this morning. it seems like there are a lot of people in the hot seat. >> but tax policy is not exciting stuff here test reform is the holy grail. >> it is. when we come back, what it is like doing business in vladimir putin's russia. the company that has been called russia's amazon, we will have next. bullish, he may buy a whole resort. we are streaming under smartphone, tablet, bloomberg.com, and do not forget about us on apple tv, live and on demand. ♪

>> i am erik schatzker. think of it as the amazon of russia. founded five years ago and it already has more than $1 billion in and of and -- in revenue.

dmitry is the chairman here with us in new york city. this --hink of yourselves as the amazon of russia? >> not really. be efficient as the retailer. we are not amazon. our products are better. >> how. products, we get within 10 minutes of customers. >> how far do you have to live from the warehouse? >> the fulfillment center. that was our invention that we fulfillmentm urban

centers to urban and suburban fulfillment centers. it is like a piece of delivery. >> russia is gigantic. you can deliver within 10 minutes. traffic orow distance. give me an idea. >> we focus on the european part of russia. 95%. >> that means what? when you talk about it being business,za delivery the pizza delivery business is a simple assembly line. he throw it in the oven and give it to the pizza delivery boy, he takes it 10 minutes to your house. have 35,000 items in stock. i can imagine you have distribution centers so large that your house 35,000 items? or is that a way it is?

class coming into new york, it is like skyscrapers. the third-generation or 70 or so we are fourth-generation. >> does this not require a huge real estate expense, especially if you will be in the urban center, close to your customers? of the presumably one reasons why amazon does not do it here. if you wanted to set up a distribution center two off from where we are, you would be at central park and it would be some of the most expensive in the world. >> we think in a couple years, it is inevitable. >> amazon will go your way and not the other way. urban and suburban fulfillment centers. >> let's talk about bitcoin. it is an important topic. lisa go, you said you would be excepting them.

in russian central bank said to think again. class we were considering that seriously. as central banks intervened, we would not lose our time trying. requested did they give you next on nationwide? -- did the central banks say, here is why we do not want you to accept it? >> any operations with them would be considered suspicious. this is onlyieve temporary? that the decline phenomenon is a real one and momentum will carry on such that the russian central bank and others will be forced to accept it as a currency? to dive intoy not that. we're trying not to import any ng. so producers ship it to our

fulfillment center. >> that is also interesting. you're also not trying to be the walmart of russia you request we are trying to focus on what we can do best. >> what products do you sell that are in the most demand? >> iphones. cartridges. diapers. >> i want those in 10 minutes. >> what are the biggest obstacles to your business? >> it is like decent real estate. that is what we foresee for the next three to five years, that we also need to create that. >> what about slowing russian economy. is there enough demand for those who will pay your price point? in 20 years, russia grew to be the sixth largest economy in the

world. businessbout the conditions in russia? there are foreign investors who say the rule of law does not exist in russia so we do not want to do business there. >> well let them stay away. >> in all seriousness, what is it like for the business there. >> 10 years ago, we sold a comp day to heinz. we sold another stake in the -- you see the big american entities completely abiding other laws. >> could we see you here? >> lunday. >> sure. >> how far is one day? >> far. >> the olympics just ended. vladimir putin spent $50 billion in sochi.

money well spent? >> i do not know the numbers. in business, i say everywhere i am involved with a number of them. so i do not know the numbers. i doubt this is the number. >> thank you for joining us. >> thank you. >> e is not like amazon. he is way better. >> in five years, one billion dollars, delivering in as little as 10 minutes. >> when we come back, there is no trouble in this paradise. we will tell you of the hedge fund billionaire who might i up a useful chunk of put rico. ♪

-- puerto rico. ♪

>> welcome back. i have learned from sources close to a transaction john may soon by a resort complex in puerto rico. another one. the price tag is a mere $200 million. the hedge fund manager has important money into the territory even have it -- as it sinks deeper into debt. officials tell us plans to invest $1 billion over the next years. he is clearly a big fan and is an investor and considered moving there as a way to reduce taxes.

he has not said he is moving there. repeatedly. he says he is not. more are saying with all the money spent in the country, it seems like he could be setting up shop. joseph,o bring in senior vice president working in government trade policy for 20 years and knows puerto rico inside and out. good morning. what do you think of that latest investment at a time when their country and economy is suffering so much. it is starting to look like a gold mine for investors. >> a really good question. being a market expert yourself, you understand where there is crisis there is opportunity. john paulson has recognized that. he is making an aggressive that for long-term and it has a good chance of panning out. >> you put it the right way. where there is crisis, there is opportunity. is the crisis deep enough? puerto rico does not appear to

be defaulting or something akin to defaulting. it is a weird situation in puerto rico. would it not be more sensible to wait for the crisis to really blossom and then swoop in like a vulture? willagree with you there be more pain before we see the light at the end of the tunnel. he referenced the downgrades, the three main credit agencies downgraded. that has given the government the emphasis -- impetus it needed to put politics aside. most people think that will be successful. consensus is that it will be successful. >> are you expecting more privatization? huge ago, there was pushback not to do it.

once they privatized, it helped tourism in a big way. could we see more privatization to help the economy? >> i think it will be necessary. one of the goals is to have a deficit neutral budget by 2015. it will be hard for them to achieve that. decreaseto either public spending or privatization. one thing i am concerned about, it looks like we're interested in a transformation right now to more of a sovereign or hedge funds investor base. that is a difficult transition for that government. they will government demanding guarantees. it would also be some of the things attached to it, which may the bond issue doesn't work

out and they cannot put together the right budget, people knuckle under and they have to jack up taxes. what would that mean for these kinds of properties? rican's who goo to this resort. will the business the fine regardless? >> a good point. tourism is one of the safe that's right now. there are continued -- everybody isees the economic turn down not about to stop. it will be a difficult time in the next years. that may attract more tourism. tourists is one thing. has he been successful with his plan to attract hedge funders, not to invest their but to move their? complicated more situation and even he himself has gone back and forth on whether or not to do that.

there are a lot of things besides your investment perspective. i think you will see more people do that over the next few years. >> there is pressure. we have heard rumors of a clinical leader it in new york that up in pressuring these guys not to. >> every governor wants to keep as much business in their state as possible. there are changes always going on. it is a complicated and individualized situation for a business leader. >> thank you for joining us. >> when we come back, we will talk about an indian company facing a potentially huge roadblock. the company ceo will be right here. >> plus, the politics of the oscars. we will speak with the only

working journalist. you're watching bloomberg television. ♪

>> this is market makers. writing the technology wave to revenue, $8 billion in that is what was accomplished in more than three decades. proposed to immigration laws in america may hurt to gain those invaluable h-1b visas, a change that may damage the business model. relying on north america for more than 60% of its sales. the bloomberg industry senior analyst here with us. welcome.

the single named ceo. >> like share. big is the proposed immigration reform? >> we need to look at that innovative perspective. we have been focused on recruiting local town. if you look at u.s. local talent today 25% of the people are not interdependent. they aren't locally dependent. right now, we are including about 200 globally. we also go into recruiting local talents going forward. if you look at the immigration house is not passed and we do not know if the foreign minister will come.

we have looked at bits of it. is to make sure going forward, it includes more and more local talent. two kinds of talent you need to recruit. if you look at the industry, the unemployment,ut when we go after experienced talent, we always struggle. we are also recruiting talents of the local colleges. we will rid crude talent from colleges and use them in our business. >> their job to the best possible spin on events or potential events. give us your analysis. how much of an issue is immigration reform that starkly relied on the program? class i completely agree on this one. if you look at the entire industry, the shortage of

workers, none of these politicians are talking about. the data we track and the areas,yment, in certain we have close to one percent or zero unemployment rate and job categories. the question is, how is it going to be done? you have to either give a lot of these engineers who come here who are stud you that studying green cards straight away, or you have to find another way for the work to be done. dogs or could there be more training. could we be pushing more areas on students so more local people want these jobs? is absolutely. that has to start with seventh and sixth grade. not start at the college level. plus i'm trying to understand you guys agree with each other but i'm not sure what you agree

on. you are saying immigration reform i not be that big of a deal. you're saying the senate and the house needs to come to an agreement on what else to do if they will put restrictions on it. >> absolutely. >> that problem will not be solved tomorrow. >> i think provided we get local talent and we create a program whereby we can take the talent -- >> if visas or not so important to your business, why would the american government have accused you of visa fraud and why would paid ampany have multimillion dollar settlement to make it go away. >> i have to be clear here. look at the settlement. invited thewe have

business for the last many years. settle? >> we have settled is for i-9 violations. it is the employment rate you have to do for citizens. it is also very clear in the we have improved our reliance tragically and there -- no cases >> let's move on pass immigration. about something that really is a here and now issue. demand.the growth of what are you seeing? >> i

started my journey six weeks back. cents.as a confidence >> we are the same thing. >> now that i am back in new at some thatlook of come out recently, the high-tech segment, there have been some challenges. we are seeing a bit of confidence coming back. are ourortant to us clients and how confident they seem about it. focus onem continue to taking our costs. that is very important for our clients. we are focused on those clients taken our costs. can then focus on creating new products and new solutions.

>> he is the ceo -- thank you very much. >> to vote in this yours is academy awards, we will have that next here on market makers. stay with us. ♪

>> welcome back. the red carpet is getting rolled out in tinseltown. the real drama is happening behind the scenes as celebrities are posturing for votes. here is the inside scoop. plus, a voting academy member. only one out the

there? >> i believe i am. i spent 18 years as an executive in studios. then went back to journalism. as a journalist, you're are normally knocking on the doors and trying to get interviews and insight. are they knocking on >> theyr to get votes? are during the last several months because the filmmakers and stars have been actively and aggressively campaigning for votes. relatively new. the studios and distributors over recent years have been spending less money year by year to promote their pictures. one reason being most of the pictures up for an oscar are the studiotside

system. more and more, the actual players themselves out there shaking hands, it is a very political process. >> does that mean the process is more political than they were before? veryey are in the sense remote actors who are not your best friend through most of the year, actually do a lot of handshaking at this time of year. >> you have been in the industry for decades. just george clooney send you a fruit basket actually affect how there are 6000 voting members at the economy. town, thehere around academy consists of film editors and sound mixers and a lot of people like that. they rather enjoy becoming

tom hanks and sandra bullock. >> what does it mean? what are the economics? andou win in on -- an oscar you win, what do the economics look like for you? complicatedery question. as far as -- the studios are concerned, it is not that big a differential. there are not many pictures that will get a big boost at the box office and the world. gravity is already a huge hit around the world. there is not that much of an upside. if you are an individual, is it ego or money? you may get a somewhat editor deal, but let's face it, george clooney is not going to improve his deal much. a lot of it is the honor of taking home an oscar. but this is what goes on this week around town. everyone is trying to figure out

, was it worth taking 5, 6, 7 months off of your career mark to do q&a and shea can't around town. votes,here are only 6000 everyone counts. what is your favorite movie? >> i'm not supposed to say how i voted. people vote in a complicated way. >> i did not ask you how you voted. sometimes, you pick out which of the three most likely winners there are and you vote for one of those. you may have a picture you personally favor and does not have a chance to win. no sense wasting a vote on that. >> hold on. what does it do for you to be on the winning and voting team? do get something else or should you be -- to be an objective voter, isn't that the reason you want your true

opinion? >> absolutely. if you cast your vote for a picture you know does not have a chance, under the voting system, the number one votes are eliminated from pictures that do not have a chance. class people do not vote for ralph nader. >> i do not think he is running anymore. a lot of voters were very fond of her and the dallas buyers club. some of those voters may vote hustlevity or american because they think they have a better chance. >> what you have just described to us, is that a fair system? for theer one votes phones that do not have a chance get thrown out? >> i do not know. is that the way it should be done? >> that is a good question. i am a traditionalist. i think the academy show should go back to a more traditional format, the way it was years

ago. and the voting system should also go back to that. years ago, there were fewer pictures you could vote for. another difference, most of the pictures were finance industry but it. year weretes this distributed by march outside. activity change the game for everybody and that is a good thing. there are better movies and lots of people including me would argue now, and there are more of them for us to choose. >> i would agree with you. it is disheartening the best pitchers year after year were passed over by the majors. man of steel, iron man three, they had nothing to do with the oscars. there is another movie industry that makes pictures for the academy awards.

it would be nice if those industries have some to do with each other. >> we will watch the oscars this weekend. you are a deeply involved man. the varieties editor at large. we will be back at 2:00. talking strategy at jcpenney. ♪

quest that will do it for us today. a lot of fun.

thatrst billionaire said setting up stop at the empire state building. tomorrow, we will go from new york to d.c.. janet yellen will be back on capitol hill. .ou can watch it here >> 56 minutes past the hour. bloomberg television is on the markets once again. here is scarlet. >> thank you. we are diving straight into derivatives today. within spitting different -- distance. action.nue to see heavy joining me is the equity derivatives strategist. at stocksare looking trading in a narrow and tight range leading up to the potential breakout, but you are fixated on the vix and the markets. >> if we look at the markets, they have calmed down. looking for the

breakout. we are seeing interesting activity. --terday, there was a financing it completely by selling cars. if you have a differential. basically at an average level of nine points. the emerging markets, it has settled down now and has can't down. -- highest we saw >> that is something i will continue to monitor as the russian and ukraine clinical tension increases. jcpenney.ching the department store earnings today after the close.

the underlying shares falling today, little change now. here today, jcpenney are at 35%. options have really moved here. this is a very headed -- heavy shortage stop. -- up 14 and 15%. it is quite a lot. a lot of negativity is priced in. fundamentals are still weak. the base at which they are deteriorating has stayed now and calm down. i believe options are expensive. this is not a trade for the weak hearted, but you could sell out the money options here. >> how far out would you want to be with jcpenney? >> very short dated. want to get yourself entangled here. >> just as a note, the last time

jcpenney reported results, the stock moved -- it was a downward surprise and the stock moved to by 8.4%. it moved to the upside. you have a short-term trade which were reports earnings tomorrow. what is your trade. >> it is very straightforward. i think the stock stays. i like the company but i don't like the stocks at this level. is 15% up from previous earnings. we are disappointed, and 45% after that. the stock is trading at a high end of a very steep channel. >> we are seeing that with the chart here. >> right. it is at the very high end of the channel. take is to take advantage of the options prices again. see the stock moving up .

the average analyst estimate is there. trades, either selling and by buying. >> all right. this is a short-term trade. options would expire on federal 28. we are on the markets once again in 30 minutes. "lunch money" is up next. ♪ .

welcome to "lunch money." i am adam johnson. in motors, tesla plus charge. driving to new heights. the earnings parade in full swing. even something for the oktoberfest crowd. breakfast time in the east and recipe for success? sports. this is executives, listen up. you can learn a lot from russell wilson. accounted swiss bank allowed wealthy foreigneo