commodities made a huge jump. we have this issue with coffee, and the really cold winter in the northeast and across the u.s. has led to higher energy prices. also, the weather has affected agriculture and all sorts of things. >> we will continue to monitor all of these things. thank you. we are on the markets once again in 30 minutes. >> live from bloomberg equities in new york, this is "market makers" with erik schatzker and stephanie ruhle. with thee an exclusive president of the world bank. we're talking ukraine, common change -- climate change and much more. >> fannie and freddie couldn't , showing more clear that all profits will go to the government. why the big hedge fund investors

are suddenly surprised. worth a thousand sales. let's take you inside the perfect photograph that will get you to take at your credit card. >> good morning, everybody. happy friday. >> happy pi day. it's a huge holiday. escalating are between vladimir putin and the west over ukraine. troops onlitary have the ukrainian border. the u.s. calls this referendum illegal. john kerry is meeting with his russian counterpart. peter cook is following the development. we thought we might hear from kerry already. he is due to speak shortly. >> we're supposed to get some

readout on how his conversation with sergey b has gone in london. we know this is a final diplomatic push. before that referendum on sunday. e heading into it this morning. effort to trynal to de-escalate this crisis. the u.s. will offer some final ideas here for how the russians can work with the new ukrainian government and try to satisfy their concerns about their interest in crimea. we had sergey lab rob saying, this is obviously a difficult situation. lavrov.ie >> we have a lot to talk about. i look forward to the thertunity to dig into issues and possibilities that we may be able to find and move

forward together to resolve the differences between us. on the ground, in ukraine, more signs of escalating tensions. violence in the last 48 hours in the area of -- russian troops on the border with ukraine for what is called a another round of military exercises. that is escalating tensions as well. we had a statement from the russian foreign ministry about that violence in eastern ukraine, suggesting again that the russian military reserves the right to take people under his protection. as could threaten a further military push. that is the real risk right now. the u.s. does not think it can get this referendum off the table for sunday. can it convince the russians not to take the next step gekko annex the crimea. that would be the significant escalation in this crisis

between russia and the west. that is probably job number one for john kerry. >> what's happening in washington? there was some hope in ukraine that congress would be able to get its act together and vote in favor of an aid package for ukraine before the recess. will that happen? >> it's not happening. senate. house and disagreeing right now over competing versions of this $1 billion loan guarantee for ukraine. everybody agrees that should happen. there's a difference of opinion over an additional issue of imf quota. the helping -- holding things up. no aid for ukraine at this point from the united states even though everyone thinks it should and will happen. >> things for the update. peter cook following the latest. >> we have a very special guest this morning. to talk about the crisis in the ukraine and a whole lot more. he is the president of the world bank.

pledged $3 billion in aid to the ukrainian government. president cam tell us -- president kim, what will the money be used for? about $3.7dy have billion worth of programs going on in ukraine, including two in crimea. this is the next wave. mostly what it will be is to provide basic services. i just met with the prime minister when he was in town. he is facing a difficult situation. for us to move forward, we need to see some commitment to a reform agenda. they pass a really impressive reform agenda. this is a government that said even in the mists of all these difficulties, they will do things like remove subsidies. we feel they are moving forward so we will be able to move forward quickly if they continue on that path to being committed to those reforms. confident thatbe the money going to ukraine will

find its way to the right people and the right programs and won't be siphoned off into private accounts? >> in terms of the money we provide, we have a lot in the system -- my friend and predecessor made it a top priority to fight corruption. he have audit mechanisms so we can follow our money fairly well. what happens with a lot of the money we often don't know -- we have good mechanisms and we think we can follow it enough so that we know it will get to the people who need it most. we work in a lot very opaque places. the good news for us is that we have developed these systems where we follow money as closely as we can. we have auditing mechanisms and people on the ground. if they are committed to the reforms, we think we can move and will watch closely. the money has to get to the poorest. >> i want to read a quote from

eigh 82011 assessment from the world bank. before you were president of the "ukraine has made important progress in public finance management reform in the past few years, including the areas of transparency, predict ability and execution control of the budget and public procurement." how confident you can be in your efforts to audit what goes on in ukraine -- that's not what was happening in ukraine in 2011. the government was corrupt and all kinds of money was finding compound thathe he built for himself. aid -- thisine the is important to you. you want to make sure that nobody can say that kind of

thing about your and ministration. >> if you look at the overall ukrainian economy, about $350 billion a year. even though we are a major billion. are 3.7 righthe best we can do now. what we also do is when we find that there are some corrupt activity, we follow it up and display the companies that are involved. we have mechanisms -- this is complicated stuff. we always have to think about the people who are the beneficiaries. there are many people in the ukraine who lack most basic things. good health care, access to sanitation and heating -- those are things we are focusing on. >> i want to move on to china. what's your take right now on the slowing economy in china and the effect that is having on the developing countries around it? >> we wrote a report with the chinese government a few years ago. it was the first time that the chinese government had ever approved language that says they

have to move from focusing on investments and exports to focusing on consumption and services as the growth drivers of their economy. the first time they said enterprise's need to face prosecution. documenttlined in this -- any process of reform, the likes of which the chinese is taking on, is going to probably lead to some slowing in growth. ago, the premier held its press conference. we know that a slowing chinese economy is going to spill over into other economies in the entire world. on the other hand, we support very strongly the reforms that they are undergoing. they are tightening credit because they are potentially facing problems with all this credit coming out of the banking industry. it's hard to imagine a scenario where they can do that and

growth would not slow at least a little bit. >> a slowdown in the chinese economy has the potential to exacerbate the growing gap between the rich and the poor in china. what are your opinions that the chinese comer in the us government can do to address income inequality echo it's happening there. from spilling over and what's going to upset the political balance. >> when we look at something like them 1:00 a.m. development goals which were focused on. the first one was to reduce extreme poverty. greatermade a contribution to that than any other country in the history of the world because of growth. in the process, they faced a widening income inequality. to increase wages for average chinese citizens grade it will

increase consumption in the direction that will fuel the growth of the economy in a different way. the chinese are very much aware of the income inequality and very much aware of the difficulty of providing health care services and education to everybody. they have a system where it's difficult to get education services other than where you are born. so people are moving to cities. >> what if it doesn't work? what if this effort doesn't translate into higher incomes echo >> we are in constant conversation with them. this new regime is one of the most significant economic makers that has ever been in the leadership of china. he is completely on top of what's going on and understands the situation. we are providing advice. they're talking about moving from 46% investment of gdp. those are levels that we have hardly seen before. to scale that back and move

toward a different driver of growth is complicated. there will be ups and downs. >> are talking about balance. how about the balancing act we are seeing and emerging-market nations as they are trying to digest the fed a tapering exercise here? how are they going to absorb that without really having the hiccups that we saw a couple of months ago? >> the end of january hiccup we did see that. there was some capital flight from the emerging-market economies. all the signals are that janet yellen wants to continue german bernanke's policies and that chairman yellen is going to try to make this as smooth as possible. if that happens between now and 2016, we think capital flows as a percentage of overall gdp will go down slowly. about 4.6% right now. , going it will happen down to 4% in the next few years. it should have a positive impact in terms of better exports.

the emerging markets have to balance that. indonesia, india, turkey and brazil -- all of them are going through elections. we are in constant conversation with them and they know that reforms have to be undertaken in the business environment and trade policy. they know what they have to do but it's difficult to pull the trigger when you're in the middle of an election season. they know what they're hoping to do and we hope the reform agenda will accelerate. cover a lot more with you. such a treat to have you here. we are going to be back with the world bank president and talk about clement change. ♪ -- talk about climate change. to getverybody going burned? may be investors should have read the fine print. ♪

[indiscernible] you are watching market makers. we are having a great conversation with jim yong kim. thank you again. we are taking time to ask about world bank policy. the world bank is still identified very closely with a set of economic policy, specifically, ones that have endured much criticism over the years. is the washington consensus dead under jim yong kim's world bank? my first trip to washington was to be part of a movement trying to close the world bank. >> get out of town. >> we weren't really arguing with most of the washington consensus in the sense that you have to have independent central banks had much more prudent

fiscal policy and watch your debt to gdp. that's all good. the countries that listens to us in recommending those kinds of fundamental changes did better during the crisis years. what we were complaining about is the bank at that time did not appreciate the importance of investing in people. that has changed. the imf has been coming out talking about the importance of greater equity. inequality is a drag on growth. this was not the perspective 20 years ago. not? what did the world look like then that made this not front and center? >> we do not have the evidence that matched with our ethical and moral values. care hasaying, health to be important and education has to be important. but we did not have data on the impact on growth. so larry summers led a panel recently that looked at the importance of better health for growth.

2000-2011, larry summers'panel found that as much is 24% of growth was a result of her health. education -- we had the piece of scores. it is directly correlated with economic growth. now we know. the evidence matches our ethics now so that you have to invest in -- >> will you be photographed in your -- do you have a photograph in your office of when you are ?were protesting >> are you building a the washington consensus where economic development is matched with health, education and rule of law, human rights? >> we are specifically not supposed to tell them to matters of politics. people are talking around

the new millennium development goal structure that rule of law has to part of the picture. we're focused on economic growth. now that we know that investing in human beings is good for growth, the agenda is much broader. the original washington consensus ideas were not bad ideas. there were not enough. >> what do you call the new ones? >> you can't do this from just washington. we go to somewhere in africa and bring everyone to a table. fairlyagenda -- it looks uncontroversial. we need growth, but growth has consistent. what was the arab spring echo you have to invest in people. education. none of that will matter if we spoil the planet so much that it will go back into the depths of

property. >> is of the role of the world bank to take on a policy climate change?ima chain? > agree thatcientists man-made climate change is a reality. i'm a medical doctor. that is little in medicine 97% of doctors agree on. what are the things we're doing right now that we can do better to better climate change echo we can build cleaner cities. our big project with the chinese is trying to put a plan together so they can build cleaner cities. of all co2 emissions come from cities. they're being built more helter-skelter in the developing world. the wayt news is that to improve productivity in agriculture is actually vertically aligned with putting more carbon back into the ground. is something we can do

about that. >> the world bank has committed itself to not finance or promote projects that either cause environmental degradation or contributes to the problems we associate with climate change. right? >> we will do the best we can. there are countries where they will have to have different solutions. for example, there are countries today that we can't see options other than fossil fuels and even coal in a very rare circumstance. we are trying to find any option other than coal. people deserve access to energy. we have to balance our very aggressive approach to doing everything we can do better climate change with people's right to energy. >> when you look at companies come you deal with them all the time. are those that you can point to who you believe are doing it right? making the right moves in terms

of climate change. >> there are a lot of countries -- companies you would not suspect were having a huge impact. coca-cola -- we work with them on water issues. this is a fundamental problem for them. they have a real leader in looking at how to improve our water supply. things on doing reducing their carbon footprint and transporting food. a lot of the food companies are working with us on this climate smart agriculture because they will need a steady supply of food going into the future. the private sector is ahead of government in trying to respond to what's happening. >> what's your view on monoculture? ofps that are -- acres crops fueled by fertilizers -- it's done a tremendous amount for contributed to the decline in the price of food.

it comes with some serious risks. >> there's a lot of exciting things that we're watching right now. let's give you one example -- we will need to plant wheat. there are older varieties of wheat that had roots that were much longer than the ones we are using today. their hardier and can withstand changes in climate and put more carbon back into the ground. all kinds of interesting innovations. our job is to capture those innovations and help every country in the world scale them up. we are the people who should be most focused on taking great ideas and helping country scale them up. >> you are doing extraordinaire work. the viewers want to know more. there's something exciting i got to see that maybe our viewers forgot. duringg kim performed

his time at dartmouth. here's a quick reminder. you.owe it all to ♪ to put you in the hot seat. there are a few burning questions we have so we can understand the man you are. who would play you in a movie ? >> daniel day-lewis. >> wow. that's a good one. >> what's your favorite show to binge watch? >> the good life. i'm a fan. -- the good wife. >> what's your guilty pleasure? >> golf. i play with michael bloomberg. golf with mike.

he is an avid golfer. >> that's a nice guilty pleasure. of all the places you coul evenr been, where is your favorite? >> i learned the most in haiti. --ti is a tough lace to go tough place to go. it's a 45 minute flight from miami. deforestation has destroyed everything. i have learned more from illiterate peasants in haiti than anyone else i can recall. >> we had the identical conversation with the supermodel each are dad and the sports illustrated swimsuit edition. she moved there after visiting haiti and said that almost the identical thing. a 45 minute flight from amy. you're in good company. >> i have a lot in common with supermodels. [laughter] >> thank you so much for joining

us. what a treat. back, havingme second thoughts? perhaps hedge funds went big on fannie mae and freddie mac. we will be back. ♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> you're watching market makers on bloomberg television. i'm erik schatzker. >> a pretty good opening act. >> i think so. jim yong kim was here with us for the half-hour. great stuff. we talked about so much. what an illuminating conversation. talk about fannie and freddie. hedge funds were millions of dollars into the mortgage giants. they're getting slammed this week. a plan that would do away with fannie and freddie. some of those hedge funds from the inside and outside. the former hedge fund manager

and adjunct professor at columbia's business school. hedge funds run the marathon are smart. when they went to the trade, they considered the range of possibilities. how could they have gone into a trade that now looks like it wipe out shareholders ? sweep -- thered are documents that govern this. these documents read that you have 10% on its preferred shares. in the event they can pay it, they would get 12% on an equity dilution trade. you can just sit there and say, we will change and take all profits forever. >> that's what the government has done. >> you can do that. there are things like little

documents along the way that might be what they are looking to do. the trade is entirely binary. alle funds seem to be herbalife all the time. it's a political trade. it's a regulatory trade. the government goes you way, you win. describingow you are herbalife. not asrun along -- it's far away as it would for the equity holders. for the preferred, there are still a big debate on that. when you look at the numbers, the actual value of the company by the time the government takes out 10%, you would have very little equity left. they could take all -- >> if the government made the decision to wipe out fannie and freddie, who will benefit? is there no motive saying we won't hook up the hedge funds e demands to make

the equity holders -- no one on capitol hill is making any effort at all to make sure the equity holders are in any way saved. that's why the preferred are a big part of the hedge fund. the company says, we are no longer managed with a strategy to maximize shareholder returns. every dollar we are earning will be used to benefit taxpayers. 11 conservative ship material adverse effect on our common and preferred shareholders. they have served warning. >> is extraordinary for a company to say, we don't care. whether it's a herbalife or fannie and freddie is ultimately political risk. the hedge fund managers like bruce richards and others may be

confident that they can win and take us to a court of law and when. we have seen in cases like general motors, the government is willing. extraordinary time. we were in the throes of the financial crisis. we are in a recovery now. >> the government has demonstrated it is willing to do things -- >> desperate times call for desperate measures. >> never let a crisis go to waste is a well-known government philosophy. in this instance, do you want to haul all of this on yourself? troop isestate agents happy with this. the mortgage bankers association is happy. with the current state of play. you want to have a real estate agent hate you if you're republican. >> is not just about government support.

there is something wrong with the fact that fannie and freddie back 90% of the mortgages underwritten in america. >> if you listen to the head of the house finance committee, he wrote an amazing op-ed filled with half-truths saying, there is $5 trillion under written. you and every family in america are underwriting $45,000 of someone else's mortgage. this is un-american. >> is it untrue? >> it is true. i remember an awful lot of capital between you and $45,000 coming. on the flipside, if elizabeth saying,s out there great, what we need is more public housing and more expenditure. we will redo the housing system in america. it has to be used to level the playing field. it is a 180 degree opposite of

the republican view. and two things happen. residential mortgage-backed were $1 trillion in 2006. that's the private-sector version of guarantees. in reality, if you were to go and put 10% down and people still want to make 32 basis points on these things, you will require spreads guaranteeing around 70 basis points just to pay for that guarantee for someone to make enough capital to use in the private sector. hitsre's where the rubber the road. hedge funds have demonstrated that they are not afraid to go to court to win. there's one difference here -- the guy on the other side of the aisle in court is the federal government. our hedge funds willing to wage a war of attrition with the government? >> they already are. there are rules -- it's not just

hedge funds. israel nader. that famous crusader for hedge funds. nader.ing is ralph you're up against a lot of people who view this from two different angles. one from the social good side saying leave it alone and one from the free-market side. and someone saying there is documents that matter and the rule of law matters here. outside of a bankruptcy court where a judge has a lot more discretion -- this is not a bankruptcy situation. >> is as a responsible to get in a trade that is so the laminated -- so dominated by local will echo -- political will? got the republicans with little interest in taking this on and the democrats not wanting to make it a full throated issue. they're hoping this will work

its way through the courts faster than congress can act. it's dragging its feet on that is obama care like in size. and. redoing the entirety of u.s. housing is obama care like in size. >> i would bet on congress dragging its feet. >> it's a race to come to a decision first. after the courts have ruled for the government to come back and redo it, that's even tougher. >> can we be realistic for a moment? let's say a decision is made and let's wipe out fannie and , does our government have its act together? in a way that they can then replace it with a gsp -- i don't believe it can pull this off. >> maybe not this government. we do have obama care. a half decentis analog for what's been proposed, we have evidence that they were able to do that.

that is enormous. maybe with enough political will by some party -- -- >> if you line it up with the timing of -- in order to put this in action, you are going through another presidential election. >> a lot of people would have looked at obama care and said, the system is much more broken. to them as individual voters, it's not working. the medical system -- i want a mortgage, i get a mortgage. is not working -- >> who is in not working for? >> elizabeth warren will shove her hand up in the air for a lot of people. as will a lot of republican saying this is not right. at the end of the day, you're getting your mortgage cheaper than you would. you will create another bubble. if they get it wrong, you're creating another bubble. this, you needed 50% down and only 30% of american households could afford mortgages. right now, almost too many people can afford mortgages. that is twofold.

one is that the clock will run out. the courts will get there first. a second is that there could be a tightening. issuance is under garrett -- government guarantee. there is an obvious traded. then there's the preferred shares. will they get bombed like treatment. there are 20% of their highest. >> these hedge funds have big -- >> perfect perspective. -- terrific perspective. >> stay with us. ♪

>> welcome back.

i'm stephanie ruhle with erik schatzker. underent obama has been pressure to provide clarity on the nsa's tracking of internet users. many have called for more transparency on the government's policy for spying on web viewers. we asked wikipedia cofounder jimmy wales just how serious the spying issue really is. >> i think it's pretty serious and it will be a big political issue in the upcoming election. people are a bit fed up with the lack of transparency and the lying to congress. it will make a big difference. >> who has to take the forefront in this? we heard from parks zuckerberg that he call president obama. what can companies do to fight it? sides, who at both is going to have to do the heavy lifting? ultimately, the public is

going to have to step up and demand changes. they already are from internet providers. we see facebook and google turning increasingly to encryption. we have encrypted all connections to wikipedia. there is demand from consumers to increase the level of security on the internet. him -- weid, we asked are combating spying by our own government. in terms of the resources it will take, any sense of the kind of scale of the problem and how difficult it is going to be to find a solution that matches consumer expectations? >> it's very straightforward. the technology is already in place. awareness among companies that they need to move to a better

technology is also in place. it's a matter of time. i don't think the nsa is going to win in this fight. you talk about these technologies, is it just encryption technology or stuff that is widely available or few people know about? >> it's widely available. people have concerns or fears that it is not as strong as it should be. the one thing if you're talking experts,ecurity they say you can trust the math. we just need to start using it more and more. go behindup, we will the closed doors to find out how guilt is selling you all those discounted designer threads and making them beautiful. stay with us. ♪

>> welcome back to market

makers. time for one of my new favorite features. office spaces. traditionaltickets -- it has tricks to make you reach for your credit card. i got the opportunity to go inside their photolab to discover the magic behind every gilt sale. it's far better than a simple sale dressing room. can a photo get you to buy a handbag, a pair of shoes or a dress? so. think the e retailer is giving the traditional stock photo a makeover. hoping that it will boost their sales. >> we don't have a network of physical stores around the country. we put a lot into this one location. , giltated in brooklyn studios is where each item is

styled, photographed and edited before it hits the company's web storefront. >> thousands of looks are coming in and we are shooting those products and getting them out the door. >> 150 people work at their code a lot. in 2013, they shot 170,000 products and retouched 540,000 images. >> i almost feel like i'm on a magazine shoot. it's a difference in how you r thing sell. we will shoot it one way and shoot it another way. >> they moved into this empty warehouse when it launched in 2007. since then, the amount of space has grown to a size of a football field. what makes the difference? >> it's that edge. so much of fashion and styling. my favorite room in all of gilt is where i'm going to take you into right now. this is bigger than my first apartment.

quite a lot is here. they're coming in here and a jacket and aet necklace. how do we make that red dress interesting and beautiful and make it pop? an overwhelming expense? >> it is not. it's about making things fresh and interesting. million inthe $600 luxury purchases they have last year. never ever think of this as a sample sale. i'm not completely convinced this isn't a massive expense. when people would go to lohman's, we are talking about raising through racks of clothes. very difficult to return things. gilt is giving you this luxury shopping experience right there.

that is $1 million worth of handbags that you saw me with their. do people want to spend those massive dollars even if they are discounted if they don't get a lecture experience? -- a luxury experience? you can get these extraordinary things at a fraction of the price and still have a great experience. if you could get a 40% off, you're not having some junkie experience. it's like the sears catalog. not a hugel say it's expense. it's not if you think about, what do you think their real estate costs are? what does it cost for them to do their windows every single month? a ton of money. asy people think of them fashion museums. right here in the middle of midtown -- we're talking about a football field in brooklyn.

there are scores of photographers. thousands of shoes in there. ofis a fraction of the cost what bloomingdale's pays right next door to get the same products for a lot less money. it was a cool experience. no giveaways for me, though. >> you didn't bring anything to me. in the meantime, demographics are reshaping the global economy. whether it's the aging of the baby boomers or the falling birth rates across europe. what about the increase in the number of young men? ande seeing this trend white could be a catalyst for instability. poverty can and equal angry young men. it's a dangerous cocktail. bank of america merrill lynch's this analyst kim up with chart that shows the aggregate number of young men -- is a huge

problem for countries like china and india. the blue bars show where things stood eight years ago. the yellow diamonds shows expected levels next year. the number of chinese men won't -- who won't find a wife reached 20 million. .here are different reasons you have the one child policy in china and cultural importance or bias towards having young boys. show see those charts that population by age. what we're seeing is the belly is going to shift to people -- men in their 20's. tothere aren't enough jobs keep the myopic eye. they might turn to violence and crime to get out their frustration. >> more than women would. why? it might be biological. it might be the way that people

are raised. >> have people gone back in history and try to determine whether we have seen this before? --they are his vocal historical precedents for this. it is associated with revolutions and the people. we saw the same sort of population increase and change before the civil war in portugal, the english revolution hum of the french revolution and naziism inf not see is germany. >> women will think that they will meet somebody and summit will take care of them. men aren't thinking that way. if you're a 24-year-old guy, you're thinking i need to find a place in this world to work. >> it's something to watch for. >> thank you. scarlet fu. >> we have more to cover.

market makers will be back. the government may not be done investigating. ♪

>> this is "market makers," with erik schatzker and stephanie ruhle. >> sac capital is paying almost $2 billion to settle insider trading cases, but the billionaire founder has been identified in another insider suit. >> the mystery deepens. malaysia is investigating whether the crew of the missing plane was involved in the disappearance. the search is widening. >> and they are not loving it. mcdonald's workers in three states claim they have been underpaid, and they have filed suit.

we talked to one of their lawyers today. welcome back to "market makers." x happy friday. glad you could be here. we begin with the newsfeed. these other the top stories from around the world. another new twist in the mystery of the missing plane. is malaysian government investigating whether the crew was involved in the disappearance. the search has expanded to the indian ocean. u.s. government officials say satellite signals indicate the plane flew for several hours after the last radar contact. a surprise drop in inflation at the wholesale level. the producer price index fell 0.1% last month, the biggest drop in the cost of services since may. wholesale food and energy prices rose. diddy and jennifer lopez are now rivals, making bids for the same cable tv channel. o ischannel backed by j-l

offering more than $200 million for the fuse channel. fuse has offered to buy himself. >> it seems like yesterday they were walking in step toward a ceremony. dress,n a green vest -- diddy with a headband. hedge fund billionaire steve kohn and sac capital -- he has now been identified in a lawsuit involving inches under -- insider trading. that story was broken by the woman who has been on sac from the beginning. sheila, what is the skinny? steve not inviting you for a holiday dinner this year? >> basically, things looked like they were winding down. the government has been looking at him for up to nine or 10 years. after all the fanfare and spending all this money, they

charged the company instead of him this summer, and accused the company of being a criminal enterprise. it seemed he was going to elude criminal charges. his company agreed to plead guilty. yesterday, the securities exchange commission filed a civil suit against one of his former employees. it would seem he is implicated in another trade that happened since 2009. steve cohen is still on the table. the government is still looking at him. >> i presume there is not, or the sac would not be acting, a statute of limitations. like they typically have five or six years to file charges. these are civil charges. they have not charged: with anything. he is referred to as the portfolio manager. they have charged one of his former analysts with getting improper information from insiders at two tech companies. chain, other traders allegedly traded. >> the case against sac

employees or former employees is far from done. >> i think they have quite a few threads they are still playing out. up charging more people. we do not know. thes the goal to puncture information bubble? every sunday night, they put their information in these funnels. he picks his favorite idea. some say he front runs it in the main books monday morning. is the goal to finally puncture and say, we know where that information is coming from? trying to they are make an example of him and his company. arepeople i have talked to involved in this investigation and have done dozens of interviews with hedge fund analysts. consultants,k people who have been swept up in this. company, they come

up again and again. >> how is it people are still seeing their questions and -- working there? is it that they cannot leave because another hedge fund pay them out? why would you work there at this no moneyen you have and standing on fifth avenue, open armed? >> apparently, a lot of these people have not been tainted by the problems at the broader company. however, even in its new form, the sac is a family office, running with steve foss -- with steve's own money. >> they give you a higher percentage? nobody went there because i thought he was a sweet guy. they went there for the biggest trade out. >> how is it that cowinner ohenelf will and -- that ci

is alleged? >> it is dell again. according to the sac allegations, in the summer of 2009, an analyst they have charged with insider trading got information through another hedge fund analyst, the circuit of information sharing -- it originally came from an insider at dell. the portfolio manager at sac spoke to portfolio manager steve, who we have identified as steve:. no one has alleged that any of these people knew. the question has been raised. it has not been answered. question forite a steve. >> i am sure he is in a comfortable bed somewhere nice. knows sac best. >> yesterday after the closing bell, it was an activist trifecta, with three hedge fund fights heating up.

lifeattle for herbal intensified. nelson peltz blasted pepsico for snubbing his proposal to break the company up. cristina alesci is on the activist taste. >> the activist it down. >> why is this happening at the same time? >> activism in general has been more aggressive this year. part of this stems from the fact that investors want to pour more and more money into their fund. i know we like to talk about acumen and carl icahn. but the reality is that a lot of money is flowing into what i call the second-generation activist hedge funds. that is pumping up the number of campaigns we are seeing. likee talking about guys quarterbacks -- like [indiscernible] a $300 million fund

a couple of years ago, and now it is $6 billion under management. >> they had a stake in sotheby's before downloaded. -- dan loaded. lobo. they are just not making you look like a charm. >> exactly. and more and more of the activists -- >> i know what you are talking about. i get you. but you are right. a lot of this happened behind the scenes. we have seen a number of companies quietly settle with activists. why is that? it is because companies are approaching what they call the advance notice deadline. that is when activist shareholders have to tell the company, we are going to propose a slate of directors. the companies are saying, before we get to that, let's talk.

the companies want a little more control. they feel like, if they can get them to the table before it becomes a public fight, they have a little more control of who the board nominees are. >> it is such a nuance to dance. guest from the blackstone group. we are going to see more activists behaving in this manner. they are not going to crow quite so loudly. they are not going to search for the headlines perhaps as much as they have been. they are going to take a page out of the book of these quieter activists. >> more importantly, john's business is going to benefit. these activists are getting more professional. they are going to investment banks and giving pretty little presentations to file with the sac and make their case to institutional or public shareholders. a lot of this particular -- they'rebank quietly advising these activists.

we are not just talking about blackstone. >> if you were an investor in a hedge fund, you do not want to see your manager in the news in a negative way in a public place. there is no way investors at pershing square, when they watch a battle on tv, feel good about it will stop >> they do not like the roller coaster ride. >> but i can tell you that institutional investors are quietly starting fights without letting the public know about it. say, wel call up and have this underperforming stock. can you do something about it? sometimes, all it takes is the one phone call. activist does not necessarily have to talk to the company, right? the investment bank becomes the intermediary. >> it is sometimes tough. >> but companies are out there saying, i need to protect myself against dan loeb.

>> they are hiring goldman sachs. all of these investment banks, the top investment banks -- morgan stanley, goldman sachs -- they have dedicated groups inside investment banks to deal with not just your traditional defense, but before you get there, before it gets ugly. how do you talk to your institutional investors? that involves taking out management, and trotting it out to institutional investors so they do not partner with activists, adding ahead of all of this. this is major fees for everyone across the street. no doubt about that. >> one of them went to lehigh university, like me. >> shameless plug. coming up, a new twist in the investigation of the missing jet in malaysia. we are going to speak with the the flight attendants

union. >> and it is friday. time to play the yearbook game. this tech heavyweight graduated from high school in alabama way back in 1978. >> i am going to take a guess. >> tweet us your guesses. we want to hear from you. >> i mean, that hair is so good. it is so good. ♪

>> welcome back. it has been a week now since malaysia airlines flight 370 went missing. authorities do not seem to have much idea what happens to the jet. they are saying they are investigating the pilot and crew members. this as we learn the plane was still in the air for hours after civilian controllers lost contact. for a look behind the scenes at what the procedures are in an emergency situation, i would

like to bring in the president of the association of professional flight attendants. obviously, you do not know specifically what happened on the flight. you have not worked for this malaysian airline. but does it make sense to you that the pilot signed off, spoke to the passengers, and then we did not hear anything for several hours? but the plane continued to fly? extremely unusual. the pilot will usually tell people when they are at the cruising altitude and report an approximate arrival time. none of that happened, as far as we know. it is very strange. the fact that the transponder was turned off at all is extremely unusual. >> the speculation, as you know now, is that foul play was involved somehow. whether it was the pilots, the crew, somebody on board. but tell us what would have been if you were on a plane and something alarming started to

take place. what is the procedure? if that were the case, what is going on in that plane? >> there are procedures. i cannot talk about all of those procedures here publicly. at the flight crew would start communicating and coordinating. we have no indication what happened, because the transponder was turned off, for reasons we do not know. the only reason that would ever be done is if there were some sort of electrical problem. perhaps it was overheating and there was a safety concern. even then, there would be communications to the ground that there was a problem with the electricity and they needed to turn the transponder off. i think that is an indication there was something very unusual happening on that airplane. going to have to wait until we can get more information from the black rocks, to learn what exactly happened. >> in this day and age of locked passenger doors in the post-9/11 era, what options do flight attendants have? the other crew on the plane

outside the cockpit, if they figure out the pilots are up to no good? >> we cannot speculate what happened. >> i am creating hypotheticals. but that is a realistic scenario. it is the pilots or the "bad guys" -- we are just talking about scenarios -- and the crew recognizes this, does not know the transponder has been turned off. what do you do? >> as you know, we do not have access to the cockpit door. they are well guarded. to getd be impossible into the cockpit. we would have to do all of the communications on the interphone. not know what the procedures would have been. i feel very badly for families of the crew, as well as the passengers, because there has been so much speculation and so much new information coming all

the time. here in the u.s., we have the family assistance act, which would make sure all the passengers families were taken care of and informed. they are just heartbreaking -- heartbroken. the information they are getting is more reason for concern, speculation it could have been the crew has been difficult on crew families. i hope we get a lot of information as soon as possible. >> do you think people are communicating enough? it does not seem like they know much. like they do not know much, but should be communicating to the families. i do not think we would be sending the uss kidd to look for an airplane unless we thought there was good reason to go to the area it is going to. there must be some indication behind the scenes. i guess i would just hope that somebody is communicating that to the families, and they are getting the assistance they need. speculation, it is

but given your career history, as the story is unfolding, every news story you read, what do you actually think will happen here? >> i really have no idea. i do not. i think something interfered with the flight, somebody interfered with the flight. obviously, something happened and there was an explosion of some kind. there would be debris, and it would have been found. we know the plane continued to fly for a number of hours and went into an area it should not have gone into. the only indication is that somebody commandeered the airplane. for what reason, we do not know. there is still a chance we could find a plane with the passengers. i would hope that would be the outcome here. the president of the association of professional flight attendants. >> a new way to finance movies. we show you how fans ponied up the cash to bring a tv favorite

right to the big screen. look at the dollars involved. ♪

>> cult tv favorite veronica mars is headed to the big screen this weekend, seven years after the television show was canceled, and the fans, over 100,000 of them, donated more than $5 million on kickstarter, for everything from tickets to a voice message from star kristen bell. bloomberg west correspondent jon erlichman spoke to the creator, rob thomas, about the show plus

cinematic rebirth. >> i think we have more viewers today than we did when we were on the air. i am of the belief that had netflix and itunes been going at full speed when we were on the air, we might have had a better chance to survive. we are one of those shows that does very well in the aftermarket. people are really dedicated to the show. get bought and rented all the time. i think we gained life over the seven years we have been off the air. strangely, i think more people know about the show today than when we were on every week. >> we talk about the impact of how consumers now get feedback immediately. this is the consumer saying, this is what we want. this is how we want it. we are putting up the dough.

>> i love kickstarter. it can create a watch before google and apple and samsung can get there. >> the days are over that behind a big desk and 17 assistance, a studio head sits and decides what will be entertaining us this summer. again. fans of "veronica mars" just decided. take that, hollywood. >> on the market, liberty media, the stock is popping a little bit today. liberty media announced plans to split into two tracking stocks earlier this year. -- later this year. this is all about charter's failed bid for tar morning -- time warner cable, intended as a way to finance a takeover. that comcast is buying time

warner, liberty media has to come up with some alternatives. here they are. it should make shareholders happy. >> tarnish on the golden arches. do not tell my kids. employees are suing mcdonald's. ♪

>> this is "market makers." back.come i am stephanie ruhle. >> i am erik schatzker. we are talking about mcdonald's. there is in trouble at the golden arches. >> again. >> workers in three states are suing the chain and several franchise workers. they claim them are not paid for all the hours they worked, and did not get the breaks they were entitled to. we are joined by a lawyer in california.

he is in san francisco this morning. talk about the evidence you are presenting that these employees did not get paid all the money they were owed and the breaks they were due. especially to make, if you get a group of mcdonald's employees together. talk about how you build your case. >> we began by interviewing workers. workers started coming to us, first in bribes, and then in droves, as workers spoke to other workers and let them know what was going on. we conducted detailed investigations. we talked to the workers. we looked at their documentation. we compared their punch in and punch out records. we were able to build what we believed was a very strong case of wage theft against mcdonald's and the franchisees. so i understand, originally, mcdonald's workers came to you, or you went to mcdonald's workers?

>> originally, mcdonald's workers came to us. the main case we joined yesterday was filed about a year , on the halfgeles of mcdonald's workers throughout the state. that was the beginning of the process. workers have been coming out, complaining more and more about what is happening in the workplace, and have finally overcome their fear of coming forward, concerns about retaliation, in order to share their stories with the attorneys. we have done the legal research. yesterday, we filed the complaints to pursue these allegations against mcdonald's and its franchisees. have the evidence that pay stubs do not reflect time worked as indicated on punch cards, it sounds to me like you have a case. the break time issue is a little harder. they are supposed to be entitled to break time, but not at a specific time, and not reflected on a punch in and out. like that

is actually not the case. donalds, like every employer under california law, is required to note when someone .oes in and goes out in addition, although not required by law, mcdonald's does record electronically when every rest break is taken. cases, and will obtain, in other instances, every record showing -- mcdonald's records showing who went in and out of breaks, including when breaks were not taken, or were shorter than the law requires. extensiveve fairly documentary evidence in this case, evidence that will also show the break records were altered by the managers to make it seem as though workers were not on breaks. these records happen to show not only the final version, but any modification to those records that occurred after the workers punched in and out. we will have a complete

documentary record. we have already seen quite a bit of that. we believe the evidence is strong. >> this seems like an extraordinary amount of research and man-hours you are putting in. how are you compensated for all of this? >> we want the workers to be reimbursed for the wages that were taken from them. under california law and under federal law, if we prevail, if we establish that our allegations are true, ultimately mcdonald's is going to pay the attorneys fees in the case on top of the payment may have to make to the workers. we are quite confident that we will be paid for our efforts, and that the workers will be made whole. most importantly, mcdonald's. engaging in those practices. going forward, the workers in these low-wage positions will be protected from the sort of wage theft we have alleged here.

towe invited mcdonald's participate in this conversation and the company declined. they furnished a statement. mcdonald's shares commitment to the well-being of all people who work in mcdonald's restaurants. just a moment ago, you referenced the possibility that other fast food chains would have to follow suit. whatever the findings are from this case, they would drive other fast food chains to behave the same way mcdonald's may have to. isn't mcdonald's a bit of an easy target? i know you said mcdonald's worker started coming to you. but if these practices are companies, aser you believe they are at mcdonald's, why go after

mcdonald's alone? it is not necessarily the case that we are going after mcdonald's alone, nor is it necessarily the case that we are only going after the particular franchisees that we sued in this first round. >> tell us more. >> we are getting more workers coming in with more information, more documentation. we are continuing to investigate. our resources are limited. we are taking these cases a step at a time. we are making sure we do not file any case until we are confident we can prevail. we are continuing to work out other cases, against mcdonald's and others. >> do you have an active case against other fast food chains? >> no. we are engaged in active investigations of allegations from workers. fileds point, we have not any other case against any other fast food chain.

>> he is acting on behalf of mcdonald's employees who say they were not paid and did not get the breaks they deserve. >> i can see both sides. you obviously want every worker out there to be fairly paid. at the same time, it is hard to run all of these businesses. you are asking every single mcdonald's to adhere to rules, and they all should. i am just saying it is not that easy. >> i do not know that i agree with you. workplace rules exist for a reason. you either follow them, or you do not. if mcdonald's and the franchisees did not follow this -- >> but you are asking people to run these organizations, and maybe you are not paying people and adequate salary to be the type of person who can enforce these kinds of rules. i am saying if you have a 19-year-old or a 21-year-old as her manager of a mcdonald's, you are asking him or her to adhere to these rules set by this corporation. i am not sure it is that easy to do that.

if i was a 22-year-old getting paid that kind of money, i am not sure i would be in a position to do that. quick to hear the music. -- >> you hear the music. >> we will tell you why the oil company can bid for leases in the gulf of mexico. ♪

>> bp, for the first time since 2012, is running for federal contracts and oil leases, after striking a deal with the environmental reduction agency. how difficult is it for a company that continues to work its way out from under deepwater horizon to get back in business? >> the company has been fighting 2012.ense

with this ban put in place, bp was no longer allowed to bid for federal contracts. for the company and u.s. operations, this was a bad thing for them. game,may be back in the but they are still in the penalty box. what are they going to have to demonstrate to be able to win these contracts and keep them? >> still in the penalty box at the epa, and still facing some major issues related to deepwater horizon. a steal with the epa, fighting back and forth not only with bp and the british government, u.s. chamber of commerce, on this ban, the epa gets -- an auditor paid for by bp will have to monitor bp. if they do not comply, the epa can put no restrictions on them.

the epa is happy with this, which is why negotiations have gone this far. but the company is not quite in the clear. still facing a lot of lawsuits and the u.s. justice department. >> what is it that bp wants out of the gulf? what kinds of contracts might it want to participate in? how big are they? >> bp still see the gulf as a major growth area. the four major growth areas from the company. i think they already had 10 drilling rigs there. this could not have been more timely for the company. next week, the federal government is auctioning off 4 million acres of oil and gas leases. immediately, you can see a business impact on the company. >> thank you for giving us an update. really, bp has been through a lot, trying to make their way out. thinkn we come back, you

you are funny? >> i do. humor in find the interest rates. not credit -- rates. humor in interest rates. ♪

>> investing cannot always be serious business. sometimes, it can be a lot. for 30 years, a cartoonist has been tweaking the financial funnybone. his cartoons run on the front page of "grant interest rate observer." it is known for the bearish view of its founder, jim grant. these cartoons on display in its latest issue. >> inside. not on the cover. he is far more talented than the target target. >> it is true. make this funny?

>> with the help of jim grant. he is a funny, witty guy. i think the bus as a rodgers and hart or rodgers and hammerstein, nation. instead of the music, i am the drawings. >> how did you hook up? >> i was freelancing forbearance back in the late 1970's, and he was a reporter for "barron's." we were covering the sentencing of a tax invader, try to prove someone does not have to pay taxes, in bridgeport, connecticut. we met with neighbors. my gig was over. a few years later, his was over. he contacted me, and the rest is history. >> did you start as a finance guy? >> i have a love for art. i know not too much about finances, and there are stories that can back that up. ,other didn't say hook me up

.inancial growth >> if you are going to limp from someone like denver 90 or the federal reserve, you have to agree with jim? >> we do not talk about that. it is a question of him calling me on publication day, which is tuesday, and telling me, i want a picture of a man crossing a street, looking a certain way. and he hangs up. that is the end of the conversation. >> so you might not have to agree. do you look at the world the , ae way jim grant does dystopian view of finance and central banking in particular? >> i am very, very particular. >> i think that makes it more sincere. take a look at some of your drawings. here we go. the summer 29, 1986. of course i'm over 21. i'm a managing director of morgan stanley.

when jim would pick up the phone and call you, what did he say he was looking for? guy butys it is a young he mentally facing off a bartender. line -- if the cut see it in my head as we are talking. 90 seconds later, he hangs up. it comes out somehow. >> 2008 was a very fertile time for jim grant. this is before lehman brothers went bankrupt. a new bear market pick up line. later, you months could have said, i am down just 50%. where did that come from? >> again, from jim. i am not really into or paying attention to what is going on in the financial world, other than through what jim needs me to draw. he will describe that scene.

it somehow flows from my brain through my right hand, and down onto the paper. >> how much creative beat up our does he have? i am not feeling this? >> there were moments, not too ony -- give me more shock the guys face. have him facing a certain way. it seems like -- >> you are just insane? -- in sync? >> i want to bring you all the way back to 1994. is 40 and still working. i mean, how smart can he be? >> after doing this for 30 years, even if you are a finance neophyte -- >> premia fight. -- pre-neophyte. >> what do you think of the industry? >> i try to have as much hope as

i can for the world in general. i am sort of an optimist. a cynical optimist. >> i love that. >> i think it would be hard to work for jim grant and not have some cynicism. >> he is just a great guy. >> great to have you. we are going to be back with the yearbook game. ♪

>> here it is. we are back. the yearbook game is what we love to do here on fridays. who is it?

tech heavyweight. robert steele high school in alabama, class of 1978. i have my guest. like i have seen some other guesses, but this is my favorite, and it is not correct. --co stu from "the symptoms. "the simpsons." >> i just mark andreessen, but i am wrong. >> twitter has nailed it. believe it or not, this is tim cook. >> it is not! yes, it is! why does he go with such a tight haircut? >> he could rock the fro. >> you should channel that, seriously. >> this is why we love the yearbook game. i am not sure who the winner is. but there is a guy who nailed it right after we showed it for the

first time. >> there you go. i got it wrong. adam, you got it right. tim cook, keep it real and let that fro go. >> have a great monday. have a great weekend. have a great monday too. upon us.madness is we are going to do a whole hour on the business of racketology and the ncaa championship, probably apologizing all our long. last time i voted against you and you did really well. >> we are going to end the week with "on the markets," and breaking news from scarlet fu. word from got bloomberg that alibaba is preparing for an ipo that could happen as soon as next month. as soon as april, specifically. his may or may not be a u.s. listing.

alibaba had been considering a hong kong listing as well. i hong kong spokeswoman said the company has no specific timetable, and has not picked banks to manage the sale or a venue, whether it would be in the united states, the nasdaq, or hong kong. once that paperwork has been filed, ali baba might take a while to outline its fundraising target as well. this still could be months in the making. we want to repeat the headline that ali baba is set to prepare to file for a u.s. ipo as soon as april, according to people with knowledge of the matter. let us move on to "on the markets." stocks are back to being positive right now, erasing earlier losses. the vix is extending its rise as well. joining me with a look at where markets are headed, the chief risk strategist for cap would funds. what do you make of the fact that the vix continues to trend higher as stocks have been bouncing around? there seems to be more

conviction in the vix. >> right before we had the breakout a couple of weeks ago, i was on the show talking about the trends we were seeing. puts are getting more and more expensive. options buyers are getting less and less confident in any rally. with several issues including china, traders are buying more and more protection. it is difficult sometimes to quantify the flow through the s&p. all you have to do is look at the volatility. traders definitely getting more and more cautious. markets are flat and the vix is going up. that is a sign. herbalife,looking at a company under investigation by the federal trade commission. you are bullish on the stock. what is your strategy? i think he is flexing his money and connections. he has a lot of money in the game. i do not think they are going to be found to be guilty of anything illegal.

the business model hurt some of the smaller investment, but that does not make it a crime. avon does the same thing. i am looking at the april 50 put spread. i could do it for a $.60 credit. all the stock has to do is stay above 52.5 dollars. >> "lunch money" is up next. ♪

money,"me to "lunch where we tied together the best stories, interviews, and videos in business news. in the world, malaysia expands the search for the missing jetliner. looking into possible pilot and crew involvement. in africa, companies trying to break into the new frontier of investment. apollo, all you can't you. the private equity giant that just bought chucky cheese wants a piece of dave and busters. happy friday, 3.14 occupies a special place in our hearts. megadeth,