the s&p 500 setting yet another all-time high with 1861.01. looking at the 10 industry groups, nine out of 10 of them are higher at the moment, led by consumer staples and energy stocks. telecom services are the only sector to fall. we will be back on the markets in early minutes. "market makers" is next. ♪ bloombergom headquarters in new york, this " with erikmakers schatzker and stephanie ruhle. >> mt. gox is gone. supplier filing bankruptcy overnight. >> clash of the titans. carl icahn fires up yet another letter, accusing mark andreessen of conflicts of interest.

>> no class. a whistleblower says unc put top athletes in classes that never even met. his college ball killing the academy? you'll hear from an outraged faculty member. you are watching "market makers." it's friday, everybody. i'm erik schatzker. >> and i'm stephanie ruhle. moving to new york city. >> because he wants to be close to the bars. --wrote that and then closet crossed it out in his blog. >> welcome to new york. >> right now it is time for the top stories from around the world. we will begin with a fraud -- affecting citigroup's mexican subsidiary that forced the bank to restate last year's earnings. profit was $235 million less than first reported in january. the bank said the fraud involved an oil services company that was a key supplier to the mexican state owned oil producer.

citibank had provided them with short-term loans related to accounts receivable of amex. ukraine says russian troops are directly involved in the conflict in crimea. troops have occupied the region's main airport. another one is occupied by russian serviceman. they make up about 60% of crimea's population. and a new study says the benchmark london gold fix may have been manipulated by more than a decade by the bank's response before sending it. this study comes from new york university. unusual trading patterns around the time of the price-fixing should be invest gated -- investigated. the rose gallery is not commenting. >> almost one million bitcoins went missing from mt. gox. that is nearly $500 million worth of the virtual currency. the exchange issued a statement

today saying it realized the lost just four days ago and is filing for bankruptcy protection earlier this morning. of what was once the largest bitcoin exchange comes weeks after the global market has focused on the virtual currency. carter, what do you make of this mt. gox news? >> this is a real serious disaster. it appears to be a commendation of mismanagement and technical led to almost one million bitcoin to disappear. it is unbelievable. and the company only realized it very recently, but it may be that this fraud was going on for years. >> if they file for bankruptcy protection, is it assumed that they can get it? >> we do not know at this point. we know that they have filed. we know that they have very few assets compared to their

liabilities. if that is not bankruptcy, i don't know what is. >> carter, as you know, the bitcoin faithful are rallying, trying to circle the wagons. understand --to and maybe you have a better idea. is this an opportunity for bitcoin? is this something that those who want to see it emerge as an alternative currency can capitalize on to build things in a moral -- in a way that is more reliable and more robust and trustworthy? >> there is an sec filing from an outfit i think you will recognize. fortress investment group revealed yesterday in a filing that it had bought $20 million worth of bitcoins. there is something going on here in a lot of minds that says this is opportunity. and on wall street, when there is blood in the street, you buy. it is still a big challenge. on, hold on. >> we've got to play devil's advocate for a moment, because for fortress, $20 million is

play money, a rounding error. thatere is no question what is incumbent on the fledgling bitcoin industry is that they will have to show that security and consumer protection stand at the top of the list of things that they need to address. you see some startups getting going here on ways to secure bitcoins and that sort of thing, but it is a murky thing to begin with. to convince people that your bitcoin are safe with them is not so bad. you lose credibility very quickly and you build it slowly. >> to happen to people who lost their bitcoins? >> they are probably out of luck. again, it's a bit murky, but as near as we can tell, there was an off-line storage process known as cold storage, or a cold wallet that mt. gox maintain, and somehow that got linked up with its online, so-called hot wallet. and then over a time frame, hackers got in there and got

pretty much all of it. short of tracking those down one to see it is very hard how customers will get anything back. >> carter, thank you for joining us. us fromougherty joining the d.c. bureau. >> fed chair janet yellen told congress in testimony yesterday the weather may be to blame for the recent softness in the economy. "may" means she does not really know what is happening in the economy. policy makers are struggling to figure that out. we had an interview with philadelphia fed president charles plosser, exclusive live on bloomberg surveillance full stop tom keene is with us. let's have a look at what plosser had to say. it is extremely noisy right now with the weather and other things. we have to be a little patient. the economy left the year -- left the year on a pretty good

note. it is in a better position than he has been in a number of years. i'm still looking for something close to three percent growth in 2014. that will continue to bring down the unemployment rate and continue to allow the economy to grow. >> i see just one problem with what charles plosser had to say this morning. patients. plosser preaches patience, and americans are not patient. >> he was keen on the idea that the market was writing -- driving. a good, notg for great, economy. we spoke moments ago with georgia bank, and he disagrees -- deutsche bank, and he disagrees with plosser. the question is, when does inflation kick in? >> i heard you and scarlet and .dam johnson talking

the more the merrier in this case. he believes we are going to see some inflation. things like the temporary effects, things like slowdowns in health care costs, he believes they will not last. three fed presidents have said -- this is like a real sports debate about whether inflation is a worry, and when. in the interview and off-camera, he said that the fed institution is always behind the debate. by definition, they are always following on. when we get going, how does that institution respond? >> also, and that of the source. if plosser is saying the patient, isn't that part of what he wants americans to do? he doesn't want anyone to get over enthusiastic. carl burka donna wants people to get enthusiastic.

>> the idea that the institution , ando get -- have a voice they are talking by the book like no one else. >> what did he have to say about the epic decline in the labor participation rate? >> he did not think that was something the fed could do anything about. when asked the question of of what the central bank of any nation can do to move implement economistsard, most say it is an indirect relationship versus a redirect -- versus a direct relationship. >> paul krugman is going to be at city university. heard professor krugman complained before about the food in princeton. well, guess what. >> i think it is a commute. i know he lives on the upper west side, but seriously, what krugman has criticized plosser for is not being out on the

social front we are talking about, which is to get more people employed. he's not sure the fed can do that. >> he is absolutely certain the fed's powers are limited. have levers they can pull. >> but they are leaders that only affect certain aspects of the economy. more than anything else, he wants the fed to stand back. he and i were chatting after he got off the set with you. there's only so much government can do. sometimes the economy needs to fix it sell. >> it is the arch debate in economics. we are fortunate in the united states that on every side of this debate people are informed. >> sometimes the economy needs to fix itself. except we have been trained to say, help me, aid me. it is easier that way. >> good news in the last couple of days, an article in the "new york times" today about the improvement in the economy.

the cbo takes a more pessimistic tack, it is what keeps us going. >> tom keene of bloomberg surveillance sharing with us his insights. back, some in else's insights, carl icahn. he is going after ebay, attacking a couple of high-profile directors. one of those directors is rejecting carl icahn's claims. we will have that next. >> and they are big winners on the court, but they foul out when it comes to education. we will tie you about the big-name college basketball team that gets a failing grade. it is "market makers" on bloomberg television. ♪

>> you are watching "market makers" on bloomberg television. i'm erik schatzker here with

stephanie ruhle. carl icahn is taking on one of the biggest names in silicon valley, netscape founder and venture capitalist mark andreessen. andreessen is on the board of ebay. icon calls the board dysfunctional -- carl icahn calls the board dysfunctional. he points to the case of skype, the internet phone service. ebay spun it off back in 2009, and andreessen was part of the team that bought it. he made a fortune when microsoft later bought skype just two years later at triple the price. >> let's talk about carl icahn's latest crusade with our next guest. he is a law professor at ohio state university. stephen, i want to read you something from carl icahn's latest letter to shareholders just about 30 minutes ago. "i can resoundingly tell you i have never seen what looks to be such a blatant disregard for for douche area application to stockholders as i have seen at ebay. the ebay board seems to be in a state of denial concerning what

is -- has occurred under their watch or cope -- what has occurred under their watch." what do you make of that? >> well, this is carl. >> what does that mean you go >> there is a well-worn activist playbook and then there's carl icahn playbook. he is doing both right now. one, he is under -- he is attacking the board, to say that they are underperforming. that is questionable. ebay has been doing quite well. and number two, he is advocating for a split off. as i said, activism 101. split off a business must say the market is not valuing it right and then cash in on a quick valuation. >> but is he wrong to be doing this? you sort of say, well, this is carl icahn, but look at his track record. look at the great things he has done on the activist front. should we roll our eyes?

>> we should roll our eyes, but carl icahn is a genius. he has a way of making money with companies, by either pushing the them to sell themselves, or break up and restructure. and just because it is carl does not mean he does not have a point. these are two separate businesses. they have been brought together for a while. the board stuff is just a distraction. carl icahn is trying to get these businesses to be separated and make a quick bucks. >> that is what fascinates me about this particular case and carl icahn's role in it. of course, you're right, there is a well-worn activist labeled, and then there's the carl icahn playbook. though carlseem as icahn is taking things with every campaign a step further? the idea, for example, that may be once you get to be a carl icahn and people listen to you because you are so loud and because you are good at broadcasting your voice, maybe they believe you know matter what you say, and a company like ebay is almost defenseless against the charges even if they

are not true. soi think what is interesting here, you have hit on it. it is the clash of two cultures, which may be have both gotten away from themselves. havee activist realm, we the big egos, the carl icahn, the bill ackman, who can move markets with a tweaked. crazy and extreme, but it is what is going on right now. at the same time, we have silicon valley, which is full of themselves. a thing they can do no harm. -- they think they can do no harm. and frankie, you have directors like mark andreessen, who sit on boards everywhere, and you're not sure who is making money. you know they are. we are not sure shareholders are. it is a clash of two big old church. >> what do you think of carl accusations as it relates to mark andreessen? in the last few months, mark andreessen has taken to twitter to talk about how much he likes and supports the point. it going, which could be a real aside, to. gox

paypal. >> mt. gox aside, but let's be clear, when you have that many bitcoins is beer overnight, that is a problem. has invested in bitcoin very heavily. saying that mt. gox is just mf global is not very comforting from my perspective. but it goes back to a bigger issue him a which is that mark is still at the center of silicon valley and has its tentacles in everything. that is what carl icahn is attacking, cozy silicon valley ties. whether it is really in a shoe at ebay, we are not certain, but it is clear that there is a handful of people running silicon valley these days, and they are making money. whether shareholders are or not, i'm not sure. >> cozy boardrooms are nothing new in corporate america. there have been previous generations of cozy ties. andreessen for his part says this, if i'm on a board and that public company is looking to buy company in a certain space, and

one of my startups is in that space, i will not be a part of that conversation. recusing yourself from such discussions was enough. in this world, in the 21st century, and in particular silicon valley, is recusal enough? should a guy like mark andreessen faced with a quandary like this say, i cannot reliably, confidently serving the interests of shareholders, because my interests are so potentially conflicted i should just step off the board? icahn is doing a very good job of making a very small issue a much bigger issue, which is skype. ebay sold skype. it was criticized. her member, ebay was criticized when it bought skype at the time. it sold skype at a basically neutral level and retained third -- retained 30% interest. at aears later he was sold big profit. the idea behind that is that mark profited because he bought that company. that happens all the time, and

at the time they did the right thing in terms of recusal and otherwise. i think that is enough, but the bigger issue of what is going on with pushing of valuations, with nest, with whatsapp, it seems like all of the parties are only involved to push up valuation. it is different than what happened with ebay and skype, but that is the percolating issue right now. >> should recusal be enough? i think about bob iger, who runs disney, sitting on the board of apple. even if someone recuses yourself, when you sit in that apple board room with all of that disney knowledge and disney motivation in your head, doesn't it affect you? >> i don't know if recusal is enough. essentially, these are people who see each other all the time. situation.on the i think it was enough with ebay and skype, but whether it is enough going forward we are not sure. i don't begin disqualifies mark from serving on the ebay board.

i think carl icahn is making a tempest in a teapot here. >> stephanie does bring up a point that applies to many more companies than ebay. if mark andreessen is sitting on the board at ebay, we want to believe that every decision he makes, and every discussion he takes part in is done in such a way that he is putting shareholders first and foremost. do thet bob iger would same thing if he is sitting in the apple board room, even though there are so many ways in which apple's interest in disney's interest collide. interestsh apple's and disney's interests collide. can we do this? is it impossible? >> you can never separate. you are in your own mind. you can never separate these things out. you have to be very careful. in the first instance, recusal the solution. but you need to look at wider ties. if you are competing and sharing information, it is probably better that person is not on your board.

her are lots of directors out there. mark is a very bright and successful person, but he is not unique or irreplaceable. when the ties get too cozy, the overlaps are too much, you need to do more than just recuse. whether it ebay is there are not, it does not seem to be the case. but generally speaking. >> you are the man who knows. thank you for joining us. stephen davidoff is a law professor at ohio state university. >> correction in the classroom. big-time basketball collides with higher education and so-called student athletes. they are the losers. that is coming up on "market makers." ♪

>> talk about your market makers. in a moment, we will tell you how jpmorgan has come to dominate one of the most secret markets around.

>> and playing hoops in the land of hockey pucks and bodychecks, yes, indeed, canada has its own. when i tell you what the salary cap is, you will fall off your chair. that is coming up on "market makers." ♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> welcome to "market makers." i am erik schatzker. being big has its advantages. not "market makers." jpmorgan big. jpmorgan is going into the corporate debt market and trying to offer special fees. probably would not be such a big issue if we were talking about a smaller bank, but we are talking about jpmorgan. our guest is here to talk about how much investors hate this practice and how little they can

do about it. ?hat is jpmorgan doing here >> jpmorgan is charging fees on leverage loan rates. >> it is a private market. >> it's a private market. jpmorgan has underwritten about a third of these leveraged loans outstanding, and those loans, there is a $3500 fee for any transaction. >> any trade? >> any transaction, any time. it does not sound like a big fee, right? >> it depends on what volume your trading. >> exactly. off in a firm will break it and they will up into smaller pieces. then they charge that -- they are charged that fee for every single trade they put their loan into. jpmorgan waived the fee for its own trading clients.

>> so if you broker through jpmorgan, you do not have to pay that 3500 bucks? >> exactly. that is a huge win for jpmorgan. bank with us, we will waive the fee. jpmorgan has the right to do it. >> exactly. but it's interesting. its rivals waive the fee for one another. -- bank of was brave america trading as citigroup loan on behalf of a client, citigroup would waive that fee. but jpmorgan will not do that. it isthe biggest banks, the only one that does not waive fees for any other competitor. >> i get that. if you are jpmorgan, why not do that? there is an advantage. you want every customer with you. play a hardball. >> here is the problem. banksnot cheap for other to waive fees either. look at bank of america.

it is the biggest underwriter of leveraged loans in the u.s. -- >> bigger than jpmorgan. >> even bigger than jpmorgan. they waive the fee. why do they waive the fee? it affects the liquidity of the market. at affects how quickly people can get in and out of the market. >> who is complaining about a gecko >> investors complain, rivals complain -- not jpmorgan investors? >> no. >> if you are an investor would jpmorgan, it should not be a problem. >> well, it is the clients who are the against fires of corporate debt offerings of all kinds, right? they buy adjusted rate loans, to o, right? they are concerned about not being given a chance to buy debt. >> what does jpmorgan say?

>> my senses jpmorgan finds it very expensive to do the paperwork for these loans. >> jpmorgan expects it. >> exactly. it is a paper-based market. >> which is a very fundamental problem. >> which is a fundamental problem. its market has out grown infrastructure. >> there is some systemic risk their? >> exactly. pieces of inflows into this asset class, people will not be able to get out as quickly. >> here is what i don't understand. if blackrock and pimco and other investors do not like it and presumably tell jpmorgan how much they hate it, why does it persist? [all talking at once] >> it is fascinating that blackrock is the largest asset manager in the world --

>> i think it is a symptom also of the times. blackrock and pimco -- not pimco anymore, but it used to be that they were getting more money than they knew what to do with. and they needed to put that work -- that money to work. in jpmorgan is the gatekeeper for the credit market. >> oh. >> so, if these funds want to put their money to work -- they are playing hardball with the guy bringing every high-heeled deal to play. >> that's right. jp morgan holds particular sway right now because there is a search for yield. people are being compelled to push deeper and deeper into the runit bactrim that do not like stocks. the infrastructure is not the same. >> what is your take? what do you think?

>> what do i think? >> when you hear that. >> jpmorgan is throwing its weight around. but hey, this is capitalism, right? here is the question. this is ultimately what we're left with after the financial crisis. jpmorgan is a much bigger bank than it was in 2007. jpmorgan has bought their sterns. -- jpmorgann, bought bear stearns. with jpmorgan, i do not know if i can answer this, would jpmorgan be able to do this with impunity if it were not this big? that's what i don't know. >> it would not have much leverage in the loan market if it was not the agent on a third guess loans, right? >> what? blackrock would not have as much influence if they did not have a zillion dollars under management. that is the world we're living in. >> this is fascinating. thank you for coming in. >> thanks for having me. >> when we come back, a

basketball treat. five in c aa titles. when it comes to educating the players, some students at north carolina have fouled out in a big way. that's next on "market makers." ♪

>> welcome to "market makers." i am erik schatzker. think classes. absent teachers. a database of recycled term papers. those are just a few of the circling the university of north carolina at chapel hill where some athletes reportedly read at a fourth grade level. we have the whistleblower here with us in new york city with j smith, a professor of history at unc chapel hill this morning. these need to understand allegations better and the facts underlying them. what did you find in your research?

carolina isrsity of sadly a house of business, how college sports keep some top athletes. i'm talking exclusively about football and basketball. biggest scorers who bring in the most dollars to the university. it is not the golf team. the golf.ot highly recruited athletes who may not have the academic skills to succeed at the university of north carolina, how they are kept academically eligible and what went on at the university of north carolina was not unique, but it was and usually extreme. there was an entire department, the black studies department, that was basically corrupted. lecture courses that never met. grades being changed by the hundreds without authorization. faculty member signatures being forged. all of this in the name of keeping young men on the

basketball court and the football field. the problem with this is the whole idea of the ncaa student athlete is it is in exchange. the athlete gives his services in exchange for a scholarship and education, but the scholarship and education are actually an empty promise and the formula collapses. >> jay, do you want to weigh in here? >> yes, i would add to what paul has just said -- pauls, i would add to what has just said. i would refrain from putting the blame on the entire department of the -- the department of african american studies. it really was the chair. that department has really taken it on the chin. the entire department has had its reputation in tatters because of this. we do not have any reason to believe any other faculty were involved. >> ok, the other faculty may not

have been in involved in this alleged fraud -- i really have to call it that. universities -- surely other teachers knew what was going on. there were other professors in the department. presumably they had suspicions of what was happening, if not knowledge of what was happening. studentsutors of the should speak out. >> i could not agree more. there were people at the university who knew what was going on, who understood why the athletic department had this need and why these students had to be shepherded through this particular kind of course of study, if you can call it that -- a second. what does "has this need" mean? >> a fair question. i think they would understand it

as in need. i think the rest of us would see it as undue pressure on the academic structure of the university. the need is to provide an academic respite for a very wide swath of athletes. not just the underprepared. people who are concussed, who are injured, who are heavily into pt. who are traveling extensively. you are mildly underprepared. >> isn't the reason the university of north carolina exist -- isn't the reason it was founded to educate students? shouldn't sports be on the sidelines? meyou don't have to convince of that. certainly not. i am with you. a but this is the kind of imbalance that has crept into the academic athletic relationship. >> of course, your question is facetious. you, of course, know better. we have this bizarre combination

in this company and it is unique to our country. we have this huge sports is ms. -- athletes do not get paid. >> and it is situated at an institute of learning. that is not a necessary combination. these athletes could exist in a different structure. for example, minor league baseball exist, and there are teams all over and local fans go out and love their teams and those players get paid. when they do well, they go to the majors. if they do not do well, they get cut. it's a much more straightforward system. we have the semipro football teams at places like the university of north carolina -- >> and instead of paying the players you are paying the universities of the university is incentivize for keeping the system. >> so far the ncaa is not stepping in. do you believe it would help solve the problem if the ncaa did step in and did what they

did with the seminoles and stripped them of their titles in 2005 and 2009 and show the world what happens when you cheat and a fraud? the university has established, we should add, that some of these things did take place. >> yeah, i will not be a popular guy on campus today if i agree this is what the ncaa should do. >> well, do it. >> you will be popular here. >> i think it would be -- what i would like to see would be if unc would voluntarily vacate the championships. that would show everyone that unc is an honorable institution. we should just give it back. would like to thank you for being bold and courageous and appearing on here with us at "market makers." and ball bearing from bloomberg ringnessweek -- paul bea

from bloomberg businessweek. he wrote the story. paul, thank you. >> when we come back, we have a lot more to cover here on "market makers." we're going to be talking about a different kind of basketball story. hometown. that's right, canada. we will be talking to the league commissioner. we are taking you to ontario. ♪

>> over hockey. movetball may soon be -- over hockey. basketball may soon be the hottest sports in canada. it has the highest participation among canadian teams. this, too, may him as a surprise to many of you. canada has its own professional

basketball league. paul riley is the commissioner. he is in our bureau. americans love basketball. they love it so much they can rattle off statistics without even trying. here, the leak, the nba has a salary cap of $59 million per team. how can you run a league with a salary cap of $150,000 per team? the question should be what was the salary cap for the mba in its second or third year of existence. i would suggest it was not -- the salary cap for the nba in its second or third year of existence. i would suggest it was not much higher. the love for basketball is growing here in canada. it is higher than it has ever been, based on the status of canadian players now in the nba and the ncaa. young players are looking and saying, hey that could be me. the future is very right here in

canada. >> how are you going to attract players when they have the option to play here in the u.s.? >> let's be clear. we are not competing with the the nba is a phenomenon. one of the greatest pro leagues in the world. there are a heck of a lot more great asking ballplayers in the world than 400. what we are saying is we will present them with an opportunity to come here, late in a high level league, in front of rabid, passionate fans. and quite frankly, giving the choice between going to europe and plying their trade or standing here in canada where the proximity to where these players in the u.s. come from is so close, the choice is a clear choice, that they would rather play in canada than go far away from their hometown. , you describe the fans

as rabid and passionate. truth be told, there are not that many of them. i looked at all of the attendance figures for all of the games the national desk a ball league of canada has played so far. the maximum attendance was just shy of 7400 fans and the minimum was 117. at your league needs to be a business. how are you going to keep people in the stands? >> you build the league with branding. you build the league by getting the name of the league and the teams out there. once again, when you talk about 117 fans, i think you must be talking about one of the teams that just moved to a location, the first or second game of the season when no one knew about them. 7400 fans,hat pulled well, the maximum capacity in that arena was 8000. of thethat sense in any small venues we play in, they

are almost maxed out when you look across, especially the east coast where our league has been around for three years as opposed to ontario, where the league has only been in existence in certain locations for several months. >> for the skeptics out there -- i'm just channeling skepticism. i don't have anything against the national basketball league of canada. i shouldn't. i'm a canadian. canada has a very successful league of its own in football. players are paid a lot less, and yet it survives or continues. >> yeah, absolutely. again, the nba is the pinnacle of professional basketball. that's irrefutable. we are not trying to compete on that level. we are just trying to give players and basketball fans another option. the appetite for basketball in our country transcends the nba. the nba here does not satiate the love of all here in canada.

hockey -- you know, we are the greatest hockey nation in the world. we just proved it again in the olympics. that is the sport we love here. among the young kids, ask a ball is now the sport that they love most. -- basketball is now the sport that they love most. it costs thousands and thousands of dollars for parents to put the kid into hockey every year. basketball, that is not an issue. basketball does not discriminate. you show up, you do not even have to have a ball. someone will have a ball. the economics of basketball are becoming more popular among young people in our country. >> i am buying the dream. how are you going to get the media companies to televise this? >> currently most of our teams already have local relationships in place where there games are ir games where the

are shown locally. i am working with the national broadcaster. locally, our games are already seen. and most of our games our lives and on the internet and thousands of people do in fact watch our games live on the internet every night they are on. >> paul, you are about to enter the playoffs. do you think next year you might have a revenue producing tv ,ontract? >> well, look television is an interesting arena. which we know is a multibillion-dollar business, you guys were just speaking about that -- when they brought that content to canada, what did they do? they gave it away. they gave it away for free for a year. a huge not expecting television licensing deal in fact. i just want to get my content on air across the country for people to see it. people love basketball. >> hall reilly, thank you.

he is the commissioner of the nast -- the national basketball league of canada. -- paul rightly. we'll be back in a few minutes. ♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> power struggle. leadership says that russia is directly involved in the conflict. we will have a report live. >> the nation for largest hotel playing tough to keep it. what it means for small business . >> movie makes elegy. the oscarht, attract almost

one billion users. we will see what your oscar pool winners could win this year. >> welcome back to "market makers." i am stephanie ruhle. >> i'm erik schatzker. >> we have to get to the top business stories around the world. -- belts sent a letter to the board of pepsico rejecting the split. he says it will erode value theer than create it. at family chain is getting ready to file for bankruptcy within a couple weeks. 570 million bucks in debt and franchise owners say they are being squeezed out of business with the very high cost. and showing some love to joe sixpack.

they are spending more on marketing for brands like bush light -- erik's favorites! [laughter] that's not true. lime guy.ud lite >> about 11:00 in the morning i will drink just about anything. market magazine is out with his list of the top performing hedge funds of 20. barry rosenstein is the manager of a fund that returned 13%, putting him on long the very, very best. congratulations. >> let's talk about activism and you. >> what about me? >> the spectrum of activism. where are you? >> what do you mean carl on the

other side? [laughter] everybody has their own thing. we have our own particular strategy. for us, activism, it's not our main business. >> even though people call you -- got activism and a hedge fund structure actually made sense. >> y? >> i will tell you why. guess what? you doa fund, everything has to be active. there are not enough good actors. forcingnd up situations. the quality gets diluted. i always thought that activism be a subset of what we do. i'm happy to be 100% activist or zero percent activist and we invest inack and situations and only if the criteria is met will we be activist. that is one element.

the other element is, we always try to work with the management. we tried really hard to work with them. have created change 100% of the time, just because we are very judicious in our performance as an activist. we always give management a chance to take credit for the idea. we say, you guys take our ideas, be the agent for change. we give you all the credit. we don't want any credit. we will be your biggest public advocate. >> and they really take your call. when you show knocking on the here!" they "jana take your call? >> i did not say that. i wrote a piece a few months ago and i start off by saying a phone call i make to these ceo's are now yourhi, we largest shareholder and we have is never met with

joy and excitement. it ranges from they dropped the chair,fall off their start yelling. it is an evolution. in the past i could not even get these guys to call me back. now they want to talk to us. >> you are not the only activist who has had some success. it seems and it notably that more and more activist are getting their way, either quietly or loudly. to what do you attribute that? have betterctivists ideas? or they are getting too old? >> and maybe getting too old. i think there is the realization that activism done in the right way can be very profitable for a company and for the shareholders and everybody can be a winner. >> what do you say to the skeptics who look at a barry rosenstein or a dam low or one of the quiet activist -- or a

dan loeb or one of the quiet activist? >> this is not like the 1980's where we try to take the shareholders out. >> is there a moment when you are taking it too far, when eddie lampert says, sears, i've got it. he may know how to invest, but he may not know how to run a major retailer. definitelydan loeb knows how to lecture. [laughter] >> as a buyer. >> well, that is up to perspective. look, i think the blue over to the activism have made mistake -- i think people who overdo the activism have made mistakes. they are in over their head at the getting changes that may not be the best for the companies. the kinds of things we do, just time and time again, always end

up being the best interest of the company both short and long-term. >> given that there are so many activists, or self-styled harderts, is it getting to find activist targets? other people getting there before you, for example? >> those are two different questions. one, there are more ideas today than there ever were. in my 30 years i have never seen a better environment. >> why? so many companies run so poorly? >> i think you have a market that is fair value, plus or minus. it is not overshadowed particularly. corporate are healthy. financials are well capitalized. interest rates are low. company balance sheets are filled with cash. private equities trading over

one billion dollars. unclogged capital commitments. ironically in environment where you have low growth means that they are much more receptive to value trading ideas. that lends itself to a very fertile environment for what we do. take one case example. yesterday you filed a 13 tnd with one of your companies, huge, employees 60,000 people. you want to talk to the board about pretty much everything, right? management, capital structure, other stuff. what ultimately are you trying to achieve here you go -- achieve here you go -- achieve here? several pretty much everything. >> is there that much wrong with the company? >> there are a lot of things right with the company. but all of those things you articulated -- i'm very

confident we will be able to work things out amicably. >> i have met the ceo. he is a pretty thoughtful guy, nice guy. >> nice guy. >> in cb right eye for the job -- is he the right guy for the job? >> he is retiring. >> that's an opportunity for someone new. and you want to help the board decide who that should be? >> i think shareholders should have a role. we are the largest shareholder. i think shareholder should definitely have a role in this. >> what is your favorite activist campaign? you have been doing this for what, 13 years? you do more than activism. you do value investing. you have activist campaigns for jana, but the activist campaigns are what you get known for. do you have a favorite campaign?

>> what is it? >> it's not a big sexy campaign. it is a two and a half market cap campaign called convergence. >> what do you do? >> this is in cincinnati. >> this gets sexier by the moment. >> it is great. i used to love going to cincinnati. this company was not an activist trade for us. it was just a portfolio company that went off track and the stock got hit hard. under operating in every financial metric you can think of versus their peers. the board was very realistic and they called me and said, we would like you to join the board. i joined the board, brought another guy with me. ended up working very collaboratively with the board. we ended up cutting costs, capitalizing the company. my candidate for ceo.

stock tripled. when i decided to leave the board, because i felt like my work was done, i was approached with a number of employees of the company who said, thank you for saving our company. >> you are kidding me. >> know, and the board asked me to stay -- no, and the board asked me to stay longer. employees do not like to be associated with a company that is losing money. their options are not worth anything. so, there is a positive side to that. >> when you have a company like blackberry, do you wonder how did the employees come into work every day when just about everyone under the sun dogs on their business, their product, everything they do. >> it's demoralizing. >> what does a company like that need? activism?of no activist wins

every campaign. what are some of the most valuable lessons you have learned from your losses? to a have reduced activism -cubed.we call v value, votes, variety to win. >> with the margin of safety? >> even if we are unsuccessful, we are not unhappy. the fact though, it is a repudiation of what they are already doing. there are a variety of ways to win. think that there are multiple catalysts, because one of them may go away anymore to have some levers. in my experience if you have all three, you can't lose. and if you are missing one of them, it's probably not going to work out. >> if you have a company that is

a massive regulatory short, is that something you would not want to do? >> no, we stay with regulatory companies anyway. >> i don't blame you. sounds like v-cubed is working. nirvana fund. is a great name. >> or like an american would pronounce it or the rest of the world -- nirvana. [laughter] everybody right now is going, what? saggingcome back, these ratings of the once dominant "american idol." then to something more serious -- the crisis in ukraine spreading. you are watching bloomberg streaming on your phone, your tablet, and bloomberg.com. demand onve and on apple tv.

erik schatzker, such a tv professional. ♪

>> welcome back to "market makers." i am stephanie ruhle. with erik schatzker. been one of the most successful shows in television history. i know i'm a fan. "american idol." but after more than a decade on air, fox's biggest moneymaker could go in the red. we dig into the numbers behind its demise. i don't need the numbers, scarlet. i will tell you the reason. simon cowell -- >> that's true. did you watch yesterday show, by the way? i did not. >> christian o'connor was the first i noticed to get kicked off.

goodbye, kristin. there was drama. the answer is less pedestrians. tmz has been reporting "american idol" losing money. it is not difficult to corroborate. they are losing sponsorships. at&t outright dropped its sponsorship for season -- before season 13 began. ford is a major sponsor, but it has tweaked its support and you can probably guess that it's tweak is not to the upside. ratings are falling. this season, 12.1 million viewers on average versus most 15 million in season 12. >> is it because there are so many other options? when it began, it was the only show like that. it was family tv as well. >> the program was certainly ahead of its time. andt has gotten bigger

larger and brought in more celebrities stars, the expenses have gone way up. check out jennifer lopez's salary on season 13. 17 point $5 million. >> whoa! ryan seacrest, $15 million. >> wait, is randy not a judge anymore? of they is in the back scenes. he is not really up in front anymore. and they fired two executive producers last year. they are still paying for them as well. they've got quite a bit of expenses. really a good cost structure. >> the company that owns "american idol" has been taken out by apollo. but the latest numbers i have show that it made 6.6 million dollars per hour in ad revenue back in 2011.

>> is the franchise affectively owned by leon black? >> effectively. >> i am betting on a comeback. he knows the best of now that she knows how to make the best of a bad situation. realty for example. >> compare this to "the voice." if people are not watching "idol," are they going to "the voice"? >> it was a slow start, but viewership has really been picking up for "the boys." "idolympics did not help ." someone at 20th century fox was asked about this. he's says that it is winding down. tmz says that rocks will bring it back next year, but there are programming

schedule now that they canceled "the x factor." >> all right, star. you are not watching "idol." on sundayoscars night. >> i have to. i don't know how far i will make it, because i have to get up. i am watching to see if leonardo dicaprio wins. he is been nominated four times. >> i think you will be missing probably at least art of the oscars. you can join us upstairs later in the show, because we will be mixing up some obscure cocktails. could use that. >> our own scarlet fu joining us. we will be back. >> the cartels. dominated by so few players. here is one of them. ♪

>> welcome back to "market makers." we are approaching 26 but the hour. time for bloomberg to take you on the markets. s&p hitting record highs. improvingonfidence across the board. this is accompanied with the fed easing money, which they like. look at corporate america. >> stephanie, i have a single stock story for everyone. best buy, the world's largest electronics chain, fourth quarter profits beating analysts estimates after they cut expenses and increased internet sales.

the stock up four percent. remember it was six weeks ago everyone was talking on best buy and questioning the turnaround after disappointing hollywood -- holiday sales. this is silly. the company is still doing really well. excuse me -- revenues down. fourth quarter. $14.5 billion from 16 point evan billion dollars. the turnaround -- $16.7 billion. these turnaround -- the turnaround stories bill a question. >> a company doing well -- we just saw the ipo. city break, morgan stanley, alan company. citibank, morgan stanley, alan company. >> which was also with seamless. >> that's right. ub, and more on that after the break. we will be talking about drinks.

several we will also be talking about the ukraine, everybody. also be talking about the ukraine, everybody. serious questions about russian involvement. we have people on the ground, boots on the ground in crimea. they will tell us what is really happening. ♪

>> we have breaking news. grubhub has filed to list on the new york stock exchange with the ticker grub. public offering would be done through citigroup and the holders of the company in the ipo ashare well. the ipo has been registered with the phenomenal amount of $100 million. we do not know if it is really paid for. we do not know the exact amount they are seeking to raise. revenue in 2013, about 100 $70 and the company is

profitable, making over $6 million. that is versus 7.9 million dollars the previous year. less profitable, but certainly revenues increasing. apply to listgain on the new york stock exchange under the ticker grub. holders of the company will be sharing in the initial public offering. 's prime minister knows he is not destined to be the country's most ocular guy. he will have to preside over painful reforms at the wants to secure an international bailouts and deal with possible russian obstruction. our correspondent is live in kiev. is largely abandoned by official law. take a look. he is a 22-year-old college graduate who grew up outside of

tf. i'm in the kiev revolutionary square where he joined the antigovernment for tests last year, manning the barricades with thousands of others. >> [indiscernible] today, he is one of thousands of volunteer militia members charged with keeping kiev safe. >> we're not like the police, but we are good. somebody showed me around the --rt of revolutionary square >> he showed me around the heart of revolutionary square. we suggest that those who want to come help us come help us. >> apparently the revolution is a full-time job. these men are paid. and there are little signs this band of brothers will disband any time soon. the value of these groups was

not so obvious to others in the city. the paramilitary a small, but visible part of the supporters. they told me that their members rank and the thousands and are growing by the day. ukraine's government must now figure out how to harness the enthusiasm of these men to build a credible and accountable government. kiev, it seems, is still very much a work in regress. he was responsible for key of now? kiev, it seems, is still very much a work in progress. who is responsible for key of now -- for kiev now? >> no one. >> is there anyone keeping control of kiev now? along any straight, and you are bound to see dozens of men in these ragtag uniforms.

in terms of business writer and areheart of kiev, things pretty much back to normal. a few atm's are not working. people are struggling to get cash out. i was at a bank recently trying myself.raw dollars an american lawyer had been trying to get money out of several accounts. he was standing by the atm, talking to me, putting card after card in there, taking out the maximum allowed each time. anyaid he had to take chance he had to pay the daily expenses for his staff. he runs a law firm here. warm, stay safe. you need to go home now. it is pretty late over there. we will have more "market makers " in just a moment. stay with us. you are watching bloomberg television. ♪

>> welcome to "market makers." i am erik schatzker.

with stephanie ruhle. stephanie, you were just telling me moments ago how hungry you are. so, here is my question to you. on any given day, what percentage of the u.s. population eats pete -- eats pizza? >> on any given day -- five percent? >> guess again. 15% of americans on any given day are eating pizza. >> who are you? >> the secret is out of the bag. here is something else you might not know. dominated byletely just a few giant franchises. olivia sterns is here with what you might call the pizza cartel. >> who are they? >> i'm guessing dominoes. dominoes, papa john's, pizza hut. i will point out you doubted the

mexican avocado story. late to the super bowl party, right? >> the big three players have the dominant share of the market. that was not the case a few years ago. we liken them to cartels. dominance, that has enabled them to get even bigger. they are capitalizing on their scale because they can afford to spend on technology. that's really interesting, right? it really bucks the trend in the food industry. your localbout grocer before. the trend in the food industry is more independent shops, more emphasis on natural ingredients. part of the push behind chipotle. >> we're are talking about the entire u.s. population, people filing for dinner. is what they are

calling, not the local quinoa servicer. >> that's true. craft beer is mostly turn out to be owned by giant brewers. but the push across the food industry is for more local, independent. have, the large chains increased the market share five full percentage points in just five years -- four years? i don't get this. >> how do you order your pizza, on the phone or the internet? , 40% of their orders are through the app. downloaded seven point 4 million times. >> boom, boom, boom. >> exactly. you are on the phone -- what percentage of those

people using their smartphones are on college campuses. >> it doesn't matter. it has enabled them to boost their revenue. it also leads to more accurate andrs, so less food wasted, they do not have to employ people to man the phones. >> which would you prefer? >> that's a good question. pizza hut, i guess. i have a strange loyalty. >> domino's. >> actually the best pizza, the best pizza that i owe off -- know of is made in brooklyn. come on. chew train. >> we have to go to commercial. do you know why? as much as we love pizza, we love drinks more. we haven't expert mixologist showing up. -- we have an expert mixologist

showing up. stay with us. you are watching "market makers ." ♪

>> welcome back to a very special segment here on "market makers." near theot be anywhere red carpet this sunday for the oscars, but that does not mean you cannot party like an a-list are. we have expert mixologist brian van flandern joining us to create three oscar worthy libations you can enjoy during the academy awards. believe me, they are designed to leave you shaken and stirred. [laughter] this is a reason to love the oscars. >> of course. there are only three times you get to get dressed up -- weddings, funerals, and the oscars, right? >> cocktails have become a serious business, has and that? >> bartending has transformed from a transitional job over the

last seven to 10 years and the best bartenders in the world are in the lading the great chefs and it's becoming a rewarding and lucrative career. >> was bartending a respectable vocation -- 1983 -- 1883. if you think about that, that was the end of prohibition. rona bish and killed the cocktail. -- prohibition killed the cocktail. prior to prohibition -- >> you have some of these with you. >> our first cocktail, in honor of captain phillips. this is the deep blue sea. it is a riff on the classic .ointreau ricky fresh blueberries. throw them in the glass there. refreshments. blueberry and meant always goes well together. fresh squeezed lime juice. you have to have fresh.

that is key. after that we are going to add a little bit of cointreau. normally, you think of it as tequila and rum. cointreau is triple sec. 40% alcohol by volume. it is sugar -- >> what is the difference with sugarcane sugar? is actually crisper. it is flavored with oranges. that and the line balances out. isy as cointreau -- why cointreau bigger again? >> that is an old-school libation. >> it is. >> [indiscernible] >> our grandparents used to drink it. nowadays it is so chic to get back into these spirits that were made at the highest quality before artificial flavors,

colors, all of that stuff and it's actually really well made. so, we are going to shake it up. there you go. this is the cocktail more or less. [laughter] this is not the first time you have done this. and then, what we are going to do -- >> it is not the first time i have had a drink or shaken my head. doafter you shake -- never it before you shake -- at a little bit of club soda or seltzer water. finally for that back in and double strain into hourglass. >> i'm excited. are you? >> yes. >> this is called the deep blue sea inspired by "captain phillips"? >> exactly. >> now that i have heard that being a bartender is such a good god -- if it is good enough for timex, it is good enough for me.

good enough for tom hanks, it is good enough for me. that is delicious. >> it is delicious. >> it goes down easy, right? >> the key is eyes. it adds greater surface area. >> are you kidding me? >> what is this called? >> this is called black monday cocktail. >> in honor of -- street!"olf of wall >> of course. because leonardo dicaprio loses his job on black monday. we start with a little symbol search. the key is we will use a really wonderful barbados rum.

they actually aged and extra casks.charred wicket this is a sugar molasses rum. we store the cocktail. anyone who says you shake your manhattan -- here?t is going on [indiscernible] i'm not kidding. this is off the charts. rum, coming from barbados. here we go. >> yes indeed. one final little garnish year. a little lemon peel on the top. what you do, you come up with a half dollar size women feel. i am going to add a match -- half dollar side lemon peel.

i am going to add a match. >> leonardo dicaprio, because he is so hot. >> those oils are really going to increase the aromatics. can you smell that? >> i am smelling that. >> you can drink that. and there is the eyes and their two. >> barbados. good enough for rihanna, good enough for me. last 1 -- >> [indiscernible] sent but what is the name of this third one -- >> what is the name of this third one? >> suspended gravity, in honor of "gravity." good luckbullock, the sunday night. >> it is cognac with a little lemon twist.

>> the recipe for all of these cocktails will between it out by me and stephanie so everyone with a little adventure -- >> when you are home sunday night, you can have them. looks like everyone will win it. thanks for joining us. brian van flandern. this is "market makers" on bloomberg tv. ♪

>> it is 56 past the hour. bloomberg television is on the markets. sterns.ia it is time for today's options and insights. we're diving straight into the derivatives. the s&p 500 at a new high, essentially erasing losses for the last year. joining me, the senior market analyst at trading advantage. good to see you as always. what are the options telling you about where the s&p is? i i'm very optimistic and think the options market is reflecting that as well. we have been trading sideways here since october, from october to mid january between 14 and 12. we are back inside that channel. we are below 14. 2007. above the lows of that tells me that the markets are not nearly as complacent as

they have been. there is room for the vix on the downside. looking at the victim section, relatively like today. trade about 6000 on the day. we have some calls for april. people are taking profits selling the april puts, so that looks like a sale. >> janet yellen was testifying. what kind of action did you see in the options market then? >> i was looking, and the vix was holding strong. there is an inverse relationship. has not had the unwinding, nor have the bond markets have the unwinding of that safety in the markets, so options are surging back. those safety vehicles have not unwound. i want to see that happen over the next couple of weeks. there is still downside to them, meaning there is more upside to the market. very positive in my opinion.

>> all right, we're seeing elevated option -- elevated option shares. sandals forecasting unexpected loss for the first quarter. the stock down 15%, the most since 2012. what do you make of this? i am no fashion expert. i am a technical expert. technically, this is a stock 90. went from 40 to a pullback is expected. right now we see put at 72. yesterday, able were hedging, $.40. the 69 puts for they have that protection overnight. if there was more than a 12% move that we had -- today we see five times the average volume. weekly 71 puts that expire today, so we are kind of at those levels. those me more of a push and they

do go off the board here at the end of the session. >> what you think of the options? would you buy them? >> i like to play things going into the number. you have seen the move to the downside to read i would lean on 65 from a long-term perspective. a lot of these fashionable stocks are cyclical. they often come back. that is what i would look forward to doing, 6, 8 months out. on oil,lso have a trade natural gas producer. tell me about that. result is currently thought of as a very risky emerging-market. -- result is currently thought of as a very risky emerging-market. is currently thought of as a very risky emerging-market. >> yes. patrick brazil. it is down right now. divergence on the etf and on the stop. newvolatility did not break highs. that is usually the sign of a

bottom. i am looking at petrobrazil. going to go for about 370. is break given -- break even about 15% higher. good thingsear for to happen. the target is 15. >> all right, we're going to have the leave it there. you are bullish. on petra. we will be back in 30 minutes on the markets. in the meantime, "lunch money" is coming up next. ♪ . . .

>> welcome to>> "lunch money" where we have the best video and business news. i am adam johnson. a shot at the high court. we will tell you the story behind this video. it is believed to be the first video of a supreme court argument ever taken. cancer with the help of 3-d engineering. the chairman speaks. microsoft new head of the board talks about the incoming ceo and the big challenge in a bloomberg exclusive. in media, we have an entertainment smack down.