>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> $5 billion -- that is what it could cost bnp paribas to settle criminal justice -- charges with the u.s. justice department. it with the world cup approaching -- is this the year soccer wins over americans? we are talking about that with a

banker who buys and sells major league soccer teams. >> one ben affleck or leonardo dicaprio need a break they had into one of these multimillion dollar trailers. you would not believe the amenities. welcome to "market makers." i am stephanie ruhle. >> i am alix steel, in for erik schatzker. i think we need that trailer. >> i could not be happier they are doing that feature. it is a recipe for this organization to know how i like to will. for now, we will talk about a big number, $5 billion, how much it could cost bnp paribas to settle a probe on whether the bank illegally did business with iran and sudan. it is double what credit suisse paid to settle a similar investigation, and moral than what investors were -- and more than one inspect -- investors were expecting. i want to bring in more -- i

want to bring in keri geiger for more. the hits keep on coming. >> i think the capital ratios can sustain a $7 billion hit, so we are not in number that can hurt the bank, but it is unfolding into something interesting. all of the people at the carillon looking at naming and shaming individuals. we did not have that so much with credit suisse, and they could lose their chance in the u.s.. >> could they actually lose business and customers during this time? >> they could. >> that is a huge difference from credit suisse the cause many people feel by brady dougan pleading guilty he was saving their ability to do business anywhere they wanted and maintain clients privacy. the fact that bnp paribas could lose their ability to do business, or credit due to the reputation?

>> they could lose customers. i do not think they will lose a lot of customers, but it is a possibility. it will eat into revenues. it is a small revenue-generating business, so it will not be as clearly as substantial. it is a signal. criticized the credit suisse deal. congressman criticized that there were no individuals named, they had no resignations from the board or the c suite on this. it is another step to fend off the criticism that the deals are not strong enough. >> is that fair? the departmentke of justice is merely responding to carl levin and those critiquing and maybe they are digging where they should not be? >> the stock was up yesterday despite the fine. crack suspending the dollar clearing business has been -- >> suspending the dollar clearing business has been in the works for a while. it was probably a pragmatic solution for the banking

regulators to take on this. yes, these cases, instead of being held as being tough on the banks and reversing two big to jail, they are being widely criticized for not being tough enough. the guilty plea we are getting is not getting the reaction the justice department had hoped for. >> this is also run by the manhattan district attorney versus the credit suisse case which was the eastern the strict attorney for virginia. what is the distinction between the guys behind this? >> good question. >> the southern district has been called the sheriff of wall street before, and he has been tough on banks, tough on insider trading, so it is not a big surprise this case is coming out of the new york office. holder was running the credit suisse case and he has sent signals that he wants to get tough on banks. we have two different offices, essentially, running parallel

cases with similar deals -- and guilty pleas with big fines. >> when you look at credit suisse business versus bnp paribas, can you give us understand the -- how talented are they, how much business do they do in the u.s. question mark they have a great -- u.s.? they have a great banking business, a great marketing business. what is bnp paribas look like? >> they have a solid business here, too, with steady growth and client in the u.s.. i would not be surprised that the trajectory doesn't continue. it does not see my clients are fleeing credit suisse as we know it. run out settlement get -- ironed out, it is not guaranteed that clients will fully. , you have a lot to cover . breaking down all of the bad news of the big banks. >> target is still trying to recover from the massive -- massive data breach last november, reported profits that

the analysts and cut forecasts for the rest of the year. target is still seeking a new ceo after fired its chief over the hack attack. for a look at where the brand is headed, how they can recover, ,oining the is interbrand ceo and the author of "pitch perfect, how to say it right every time." josh, it is not just the hacking scandal. what do they need to do to change the image? >> everyone is talking about the hacking scandal, canada, slow to move online. i would give target two pieces of advice -- way to the customer can't be as honest, fast as possible. >> price, product? >> the whole operation. the second thing i would say is do not forget target is an amazing brand.

most customers will stick with target, 7% will do less business in the future, 7% anticipate doing more. matter,uch does it bill, what the messaging is from the top? if i am a target customer, do i care that the ceo could be leading -- leaving -- isn't just about selling products at good prices? >> i think it is more about a retail strategy. i was talking to a venture capitalist in the valley about the target situation, and he said something interesting, convenience and value, being able to get product at a good price, and not having the consumer disrupt shopping patterns will always trump privacy and security. those things matter more to the consumer. i do not think it is a matter of having an effective medications

chatterjee over the data breach, -- communications strategy over a data breach. >> is one of the problems that target has a lot more competition today than they did four years ago? target was the first big chain, discounting store that was cool, stylish, and now calls another companies have these high-end boutique companies. h&m.t only them, zahra, >> think about them, i live there, brother. moving faster with faster replenishment and great style in their merchandise. the second thing is the convenience story is being challenged by the amazons of the world. >> julie hyman, our retail reporter, was working this out earlier -- walmart and target

get the same amount of percentage from the revenue from online, for some reason the perception is target continues to be so behind walmart in the online business. bill mcgowan, why is that? what are they doing wrong in that kind of communication such strategy -- communicate and -- communications strategy? >> it is one of those jobs that has to be done in the board room with your communications team in there, figuring out how to weave in that e-commerce, online messaging through everything that we do. if cannot just be an appendage to what we go out and say as a tack on. their image to push as excelling in this area, they have to figure out a way to craft the message and incorporate it into every external communications situation. it cannot be a one-off hit. >> i would say they have to go further, make experience seamless -- when i am shopping

online, on the mobile app, and in the store, i have to have an experience and understand to im am and make it personal for me. they can do that. they are not being recognized for that. they are in the game, they just need to make the experience seamless. >> is there a retailer out there that has a teflon brand? i do not check it, but somewhere in my head i believe amazon has the best price, walmart is the cheapest, and i never checked those prices. >> target's price comparison is somewhere between 2% and number four percent higher. -- 4% higher. chict is based on cheap with liberals of convenience -- -- with convenience. they need to make the online expense meet up in a seamless way.

, d believemcgowan there is loyalty or customers will flee for price or style? to joshld leave that feldmeth, as the expert in the area, but in terms of repairing the image, the thing about the data breach story that might say a lot about your survey yesterday, that consumers are willing to forgive and forget, the data breach story is not really a visual story so much as would be, or the bp oil spill story. .t is hard to visualize that any consumer that has had his or her e-mail account hacked knows the feeling of that breach being done to you. so, when i saw the results of your survey yesterday, that is what spoke to me, the fact that may be consumers are not holding target so accountable for what happened back in december.

>> you make interesting point, especially with bp, because when the oil was flowing out, nothing could solve the problem until the visual went away, which leads me to the ceo question. we are in an interim ceo situation with mulligan. what is the number one quality the ceo might need to have, bill mcgowan? ofhe has to exude an air confidence and trust. they are in a trust rebuilding stage. i think that's a really need to focus on what the narrative is moving forward. they cannot be looking in the rearview mirror, continually addressing a problem that, at least according to the survey, has already been dealt with, and a need to have, as i said before, more of a retail strategy and a communications strategy. >> you can also learn from the jcpenney ron johnson episode, changes required

question that there is a lot that is right about the brand and a few fundamental -- required? there is a lot right with this brand and if you fundamentally break what you have with the customer you cannot forget your target. >> why does it seem like it is so tough to get these retailers -- they do not have to knock the cover off of the ball. jcpenney's just has to find the lane pettitte they do not have to be the fastest. -- lane. they do not have to be the fastest. >> retail markets have always been operated on a daily basis and that has been complicated by online retail. they fundamentally have to create a virtual experience. it has always been difficult and it is harder now. >> who should be the ceo? >> i will leave that to the board. >> bill, do you think medications and the face of the brand is that -- communication

and the face of the brand is that important, or is it just what is on the rack? >> what is stocking the shelves, and the price tag on those things matters more than who is occupying the c suite. i do not think anyone when they go shopping is making the decision based on who the ceo is at the time. >> thank you so much. josh feldmeth, interbrand ceo, and bill mcgowan, author of "pitch perfect." >> great conversation. coming up, the online retailer that might be valued at more than amazon.com. the chinese plan to go public in the u.s.. >> plus, trying to change the coffee industry one being at a time. we will talk to the founder and ceo of thrive. this is "market makers, live on bloomberg television and streaming on your phone, tablet, and on bloomberg.com. plus we are streaming live on amazon fire tv and apple tv,

anywhere you can find us. ♪

>> first. bloomberg. >> welcome back to "market makers." i am stephanie ruhle. it is time for the newsfeed, the top business stories from around the world. ebay says it has been hit by a cyberattacks and the online marketplace says it will be asking users to change their password. ebay says there is no evidence cyber attackers got access to financial or credit card information. of course they will say that. russia and china has signed a natural gas deal valued at $400 billion. the agreement was reached as russia's president vladimir putin is visiting china. the deal cleared the way for a pipeline to be built from russia, the biggest producer to the biggest consumer. netflix is launching its biggest expansion in almost three years. get ready, danger watchers -- the company will introduce streaming video services in germany, france, and four other european countries, trying to

establish global dominance ahead of hbo and amazon prime. j chinese online retailer d.com is looking for a higher valuation than amazon even though it is yet to post annual profit. leslie, you wrote an article for wantserg news saying jd the jeff bezos treatment, the amazon treatment, what does that mean? >>jd has the traditional model where they operate the logistics associated with the delivery of the product, which is expensive, and why you would at ali baba, which posted 44% margins for the last nine months of last year. for this model, with the ceo is asking for is the jeff bezos treatment, that we want to share appreciation over the long run

even though we are in not showing annual profit. >> doesn't every ceo on the planet want jeff bezos treatment? trust me, let me make no money, and let it ride? >> exactly. an investor told me every e-commerce company out there told me they -- says they're going to create massive scale and be the biggest company in the world, but it is about trust, and jeff bezos has a secret sauce. >> the difference is market share will increase about 64% this year, growing demand this week versus the u.s. e-commerce growing tremendously versus the u.s. e-commerce business. >> that is the arguing for saying that on a price to sales basis, gd.com should be valued higher than amazon. have a massive consumer base that they can capitalize on in terms of growing their own revenue. >> we sat down with carson block yesterday, noted short seller, a

man who trusts nothing in china. >> there is a price for everything, but where most of these companies trade is more than what they should be selling for given the risks. >> should the companies trade at a discount to u.s. companies because maybe we really do not know what is in their secret sauce? >> there is certainly an argument to be made if they should trade at a discount because there are some risks associated with chinese companies, but american companies do not have the risks, ainterest structure where the chinese government can essentially dismantle your contract for the company has an investor, and you lose everything. other risks are chinese economic growth slowing. it has been on a tear lately, but he could slow in the near future. >> when will a price, had a discount? >> investors seem hyped up about jd.com. one $.7 offering a

billion offering, less than 10% of its total market value, meaning the float size is small, so people look at this and see scarcity. there is a supply and demand dynamic that could cause them to get more orders than they set out for. >> i should point out that investors seem to be tired of the tricks that we will not give you profit margin, but sales. >> when the markets are this choppy, it is another hot ipo. leslie, thank you for giving us the latest. leslie ticker. up, major league soccer scores -- i am not sure i believe it -- u.s. soccer teams are now worth three times as much as they were just a few years ago. ♪

it is 26 minutes past the hour. bloomberg tv is on the markets. we're looking at u.s. stocks clawing their way higher. the dow jones is up by .75%. tiffany's saw a huge gain with quarterly profits beating estimates. you also see some small caps rebound overall, and this is ahead of the fed minutes that will be released later today, but i have to say, in talking to traders, there is a lot of frustration into how to trade its market. >> coming up, when we return, believe it or not, pro soccer is unable in the u.s.. -- on a roll in the u.s.. i will say world cup fever has something to do with that, teams soaring in value. we find out why. >> mansions on wheels -- how hollywood a-list actors relax in between scenes. not too shabby.

,"u're watching "market makers live on bloomberg television and streaming on your phone, tablet, and on bloomberg.com. ♪

>> live from bloomberg headquarters in new york, this with erik makers," and stephanie ruhle. >> welcome back to "market makers." i am stephanie ruhle. >> i am alix steel, in for erik schatzker. he is on assignment. already having a great time. only 10:30 a.m. have foundericans out why soccer is the most popular sport to the rest of the world. the u.s. pro league, major league soccer, plans to expand 2020 ando 24 teams by

teams are worth three times as much as they were six years ago. man works with groups buying and selling teams that all of the major american major leagueding soccer and he is a former professional football player himself. andrew, i cannot believe a football guy is backing soccer here. >> how can you argue with the numbers? the teams are worth three times as much as they were, and we are million, to $100 million plus. >> and we been saying this about soccer for the last 15 years, and why it has been the biggest board around the world, it is never caught fire. when you and i grew up playing soccer, assuming you played soccer -- when >> i did not, but if you did, you would have not had a soccer jersey, showing up with a star.

i was wearing my michael jordan jersey. now, they are showing up wearing their david beckham jerseys or ronaldo jerseys. contingentt of this on america doing well in the world cup? >> i think americans love to watch the best at anything, so as long as our players in the mls are not the best, it will not draw american fans like the nfl does, right? god for bid when the u.s. wins their first world cup and now we feel like we are watching the best athletes in the sport play in our league, that is when it will break through, and the perfect example is cycling. cycling was not on the u.s. radar ever and then this guy comes along, lance armstrong, and captivates the world. >> we love cheaters. [laughter] >> right, when he was not a cheater, but look at cycling. they are still selling.

>> isn't a factor that so many people are no longer comfortable with football -- injuries, concussions, pro football players volunteering to retire early. i do not want my kids to play football. >> i think it will support a number of sports. kids that might have played football or baseball might play baseball, and i think soccer will have an effect. imagine if we had lebron james and dewayne wade, and some of these, you know, athletes that are in other sports playing u.s. soccer? you would have to think lebron would be pretty vicious. >> we know david beckham, we know are now though, but either athletes really trying to build lebron wayne -- lebron, dwyane wade brands? u.s. soccer, yes, but on an international scale, they would not be able to. they are micro-brands within their community, but on the

international level, not at all. >> where is the value? why are teams becoming more valuable much market there is not a lebron, dwyane wade, or kobe yet, why do we care? salesms are drying ticket -- drawing ticket sales. there has never been a better time to be a seller of rights, and mls just signed a great rights deal. mls, from day one, has a great commissioner that understands the properties division and has made money. >> what does that mean? >> not only do you own the team, but you have an equal share of what is called soccer united marketing, which monetizes different soccer restaurant the u.s.. they owned television -- throughout the u.s. they own the television rights. >> talk about the deal signed earlier this month with foxx, univision. talk about why it was so pivotal . >> it is real money.

of earliera lot sports actually pay to have their sport on tv, and try to make up for it with selling sponsorship. >> like the nba in canada? >> i do not know what they are, but most early sports that you boughttv, they literally the airtime and sell sponsorship to breakeven and make up for it. >> are the networks taking a gamble on soccer because it was all established that while content is king, everyone loves live sports, and they can buy soccer cheaper than football or baseball -- do they really believe it, or are they taking a flyer? >> it is a market share by, and they're taking a bet on the sport itself, if they can get in early and in great into that network, they will be able to grow what they can monetize the content for. >> it is interesting how the u.s. and europe winds up handling sports teams and franchises. can you talk about that distinction? ticket, -- typically,

european clubs have been just that, clubs. we visited a team that had 50 trainers, equipment managers and nutritionists, and about six people running the business. if you visit the st. louis rams, 150 people are running the business and those same 50 trainers. >> does that make it more of a commodity that people want to invest in? >> european teams have increased in price because it is fair market value. they are just really wellfleet people that want the assets. they buy them like they buy art or real estate -- wealthy people that want the assets. they buy it like they buy art or real estate. that had eight guys working there, now have 50, 60, guys working there. >> you are saying mls will go teams. to 24 in the world of supply and

demand, wouldn't you rather make the existing 19 teams more valuable, sellout the stadium, then flood the market with six more teams? >> i think it is a good argument. >> i do not know who the new york team is. i do not know the philadelphia team is. why not wait until they are truly hot? >> i agree with that. i believe some leagues should contract. we were working with the mls when they were going to go sue -- go to seattle, and people said do not expand, seattle would not work, and is arguably the most probable team in all of mls. why doesn't lacrosse make it work? >> i do not know. living in california, when i left for college, i had never seen a lacrosse stick basically, and i come back now and every team has a lacrosse team. our lacrosse clubs but i think it is slowly, but surely growing.

name one star in lacrosse, internationally, anywhere, we do not know him. at least in soccer, pele, ronaldo, beckham, mia hamm. >> i have to say i do not know any lacrosse stars are. , great to join us. ray to get his perspective. headed into world cup season, andrew kline. companiesness to let cash in on the growing demand for coffee. we talk to the ceo of thrive. ♪

>> some names out of the white house at this hour. president obama is speaking to reporters about the scandal at the veterans affairs department, which involves allegations of inadequate care being given to veterans. phil mattingly is with us from the white house. how is the administration

responding to the allegations? summoned theent veterans affairs secretary seki to the white house. members of both parties are rising to some response to these allegations of falsified reference -- records and increased wait times. what we have heard is the president has and has remained confident in eric shinseki's leadership at the veterans affairs department. my understanding is the meeting is not a resignation or firing. the president will discuss his anger about what is going on what the administration is trying to do to address it. administration has sent a couple of people out on leave, and he has assigned his deputy chief of s to go tonabor phoenix to conduct their own investigation. interesting how they

try to walk the line for maintaining support for an situation that is quickly spinning out of control. >> thank you. you can watch the remarks live on bloomberg.com/tv. the cost of a public -- cup of coffee does not mean a hill of beans to the farmers that cultivate them, because the price is set on the commodities market, but thrive is trying to help farmers become more profitable by involving them throughout the process. michael jones, the ceo of thrive farmers joins us now from atlanta. you say that farmers could actually make 10 times as much with your business model. michael, how is that possible? >> good morning. thank you for having me. well, what we have done is we have made the farmers a stakeholder in the crop that they produce.

thrive's model is in revenue-sharing model, where we have full transparency of all costs, the ownership changes and paint all the way through the point that we sell the coffee in the market here, in the u.s., and the farmer gets a predetermined share of the revenue that we generate for their lot. >> now, it seems like, michael, basically a farmer harvests this being, and then they are done with it. here, what do they incur question mark >> -- here, what kind of risks do they incur? >> the risks are the same. high-altitude farms, and they are selling raw fruit at the point that it is taken off of the mind for a small price and what they are paid -- off of the vine and what they are paid is tied to the commodity market, and the commodity market changes year-over-year pretty

drastically. the value of coffee here, the retail value of coffee in a couple or a bag is pretty consistent, so a farmer does not have -- they have no way to determine what they are going to make year-over-year for the same crop in the same quality that they have grown. in the thrive model, now they have the ability to take it further down the value chain and participate, so the risks are actually lower in our model than they are in the traditional model. >> are there other agricultural businesses that need to be broken crutch mike where else could thrive -- broken? used?else could thrive be >> we are robust on coffee for the foreseeable future, but a a, cocoa, or even cotton is subject to get a drastically lower price this year over last year because of

an arbitrary third market, but the retail good that is being produced from their crop is consistently priced and has constant value. i think it is applicable across the spectrum of a number of things, but we are focused on coffee. >> so, consistent price, i can see why that is an upside for certain farmers, but if they are participating more in the processing, they would have to wait to get paid. what kind of pain does that cause short term? >> actually, we have financing partners that provide advancers that get the farmer back to par, and then the premium payments are what are delayed over time. it is actually working as well. >> thank you, michael jones, ceo of thrive farmers, we appreciate it. industry. the coffee >> we're not allowed to say disruptive innovation. >> the war on drugs has come

back to on the fbi, and it is a war on cyber crime. we will have that and more when we come back. stay with us. you are watching "market makers" on bloomberg television. ♪

>> the new fbi director says one reason the u.s. is susceptible to hacker attacks -- we'd -- he expertsire young

because of the marijuana policy. he recently said he has to hire a great workforce to compete with cyber criminals, and some of them want to smoke weed on the way to the interview. -- >> is that bananas question we talk about youth unemployment, these kids that cannot get jobs, i'm sorry, you cannot get a job because you cannot find a way to not smoke weed? wouldn't one thing that working with the fbi, the cia, would be activity?dinary >> if you graduated 22, and you smoke pot when you are 19, you cannot think about what you're doing when you're 22. is interesting, the cia said in its website that a legal drug use prior to 12 months ago is carefully looked at. in theory, they only take 12

months, but the fbi takes three years. >> i was busy writing, traveling, observing culture. >> i doubt that happens. >> reader not have time for a longer -- we do not have time for a longer segment, but tomorrow we will dig more into what alix steel was doing. >> thank god facebook was not around. >> i say that all of the time. i certainly made some bad decisions. other decisions, acting in a film could mean long days, waiting for the director to call action, so big stars need their own private place to lounge around, and where do they do it? altra luxury motor homes that are bigger than a lot of new york city apartments. do not call them trailers. they are mobile mansions. >> my company is king kong production vehicles, specializing in transportation for the entertainment district

to provide tenuous motor homes and trailers to some of the top stars in the world. some of the movies that we have worked out -- worked on with me "inception," brad pitt, "moneyball." welcome to the 53-foot celebrity suite. this is the largest, most extravagant vehicle -- one .5 systems, thecurity same types of things you're looking at in a luxury home. we have made the kitchen and living room area to incorporate a great room feeling. we have the cooktop, but they do not do much cooking. we have a wine bar, and we have the subzero refrigerator. right now, this is one of the guest bathrooms, where you'll find televisions as well. shower a custom-designed with recycled glass. it took artisans two weeks to put the shower in.

it is a $50,000 shower. here in the bathroom, in the living room and the kitchen, we have heated marble floors. wanted the trail -- ben affleck one of the trailer to be designed to be more residential. he can move the furniture around and when he needs to put on his batman suit he will need that type of room. days on set to be 15, 18 hours, home is a home away from in between takes. our clients are looking for an expense that will rival a mega yacht, the interior of a corporate jet, or their home. >> i have one thing to say, brother, please, leonardo dicaprio drives around in a previous claims he is about keeping it green, and he wrote a wase saying how emulated he -- humiliated he was to be associated with jordan belford in "the wolf of wall street." >> why do you think movies cost

so much? you cannot afford it because you have to pay $1.5 million to have a nice, tricked out trailer. days.h work 15-hour >> this is bloomberg tv, not "inception, coastal but the reason divas exist is because the movie industry created it. if the star next you get a mega mansion, you want one-times two. >> you need a tv on the door of your bathroom? i am happy that the artisans have a job, but a shower is a shower. this stuff makes me so mad. >> leo, i am not crazy, i should be invited to the trailer so that i could understand. i would do some hard-hitting reporting in the trailer. call me, please. it is time for bloomberg to take you on the markets had -- on the markets. >> stocks are clawing their way

higher. the dow jones getting a little bit better, speculation that the strong enoughbe to weather and ferment -- further stimulus cuts by the federal reserve. forecasts are also picking up steam. >> this next one blows my mind as i have not cared about a was 18.blue box since i had salesd after they rise 11% in stores. do you ever go to tiffany's? >> no. i go to the windows and i drool a little bit. >> maybe i'd iran them baby gift, -- maybe i i a random baby gift. >> forgive us if we start dame." "cheer for notre >> i will be a leprechaun. >> one of notre dame's most distinguished alumni, the ceo of

sandler o'neill, james dunne. will be here in two. stay with us. ♪

♪ " withs is "market makers erik schatzker and stephanie ruhle. >> investing tips from the fighting irish. world'se of the best-known universities is putting its money. discountt, the retailer struggles to recover from that holiday data breach. target cuts its forecast. >> the founder of a new app promises to find you a hotel for the holiday weekend. this site is mobile only. welcome back to "market makers." i'm alix steel in for erik

schatzker, who is on assignment. >> let's get to the news feed. >> another recall for general motors. a dashboard light that can overheat and catch fire. it is gm's 30th recall this year. more than 14ed million vehicles. u.s. authorities are going after another multibillion dollar fine against the foreign bank. all of this according to persons familiar with the matter. years, youthan 40 cannot have it your way at burger king. the fast food chain is dropping that old slogan. in its place, the more vague, be your way.

i don't even know if i know what that means. offinancial sector ipos are to a fast start this year. seven banks have gone public to date. why are banking ipo's taking off? so many people think the financial industry is sinking. jimmy, welcome. every other day we are talking about the financial sector lagging. we have seven ipo's this year. why so high? >> it was up 30 plus last year. it is lagging this year. it has slowed down a little bit since the middle of march. good shape.are in they are solid financially. they have plenty of capital. they are in decent shape. they pay a good dividend.

>> when you look at these nasty billions innt, fines, it does not give you pause that government regulators are coming after them so hard? environment isry fairly suffocating. there's no debate about that. it has had some effects they would not want, particularly on the secondary tertiary institutions. it gets so expensive with compliant cause with all the restrictions. here they are, all concerned about companies being too big. now, a lot of those issues are not specific to banks. it's like the crisis. there are investment banks that had issues, mortgage bankers that had a lot of issues. but there were very few real

they very much had the burden of it. on different issues, like credit suisse -- that is less of a banking practice, more of a private banking practice. we deal with the straight country commercial banks, financial institutions. day, the end of the popping ipo's for banks, doesn't this point to the fact that banks are having such a hard time making money? rates andw interest flat yield curves, it is a terrible environment for banks. that will not stay forever. what we see with the new fed chairman, it's hard to distinguish between this fed chairman and next chairman -- this new fed chairman is much like the old fed chairman at the beginning. she is sort of acting the way he did early on.

i think we will have low rates for a period of time, which will force mergers. when interest rates rise, and credit is much better, and commercial -- there's more commercial business than we have seen in some period of time. real good commercial loans, for the first time last quarter we saw a little bit more of an uptick there. the earnings were good. gave backge market all of that, and then some. if you want to really plan an attack on america, what buffett said, hit the housing business. with rates where they are, with no real financing, the mortgage market being in pain, it will affect earnings.

back, they were trading at 50% of book in some cases. seen a move to it has become the floor. then you have seen a move to two times books. in the middle of march, all markets get ready full. with financials being of 30 plus percent last year, the fact that you have given a little back this year is not -- >> not big of a deal. >> do you think mergers could be on the horizon? ubs, you have credit suisse -- two behemoths. what they make is more than the gdp of a whole country. you have deutsche bank under attack. could we see a european bank merger? >> i don't think so. unlikely in highly this regulatory environment.

you are going to see much large m&a, which is not the worst thing that happened to sam o'neill. some of the large investment banks, that will be an issue for. will see a lot of mma in the secondary, tertiary targets. >> what kind of deals are they? >> smaller size companies. two $10 billion banks coming together. >> are they doing it from a defensive place? jamie dimon can afford to hire 500 new compliance people. first chicago cannot. but they are subject to the same regulations. >> that is true. all the regulation that was meant for the larger banks has a more harmful effect to the smaller banks. >> then these guys at big banks who love to say how hard it is and they cannot make any money, are they saying, don't cry for

me, argentina? >> it has always been a great time to be in this industry. from when i got out of school in 1978 until now, it has been good. do i think it is less fun? absolutely. >> we will go to d.c. the wait times generally, indicated.g. -- i.g. for folks who may have had , it was notitions necessarily a situation where they were calling for emergency services. the i.g. indicated he did not see a link between the weight and them dying trade that does not excuse the fact -- wait and them dying. that does not excuse the fact

that the wait time is too long in most facilities. we need to find out exactly what happened. we need to find out how we can realistically cut some of these wait times. there has been a large influx of new veterans coming in. we have a population of veterans that is aging as part of the a.b. boom population. -- baby boom population. we have to make sure that the scheduling system and access system are in sync. there are parts of the v.a. that have performed well. we have seen satisfaction rates in many facilities, with respect to many providers, has been high. seeing is that in terms of how folks get scheduled , how they get in the system, there are still too many problems. i will get a complete report on it. consequence of

people not caring about the problem. there are 85 million appointments scheduled among veterans during the course of a year. that's a lot of appointments. that means we have to have a that is able to take these folks in in a smooth fashion, that they know what to , and thet's reliable v.a. has set standards it can meet. if it cannot meet them right now, it will have to set realistic goals about how to improve the system overall. >> [inaudible] >> the responsibility always rests ultimately with me as commander-in-chief. has been a seki great soldier. he himself is a disabled veteran. nobody cares more about our veterans than him.

if you were to ask me how rick has performed overall, on homelessness, 9/11 g.i. bill, reducing the backlog, he has put his heart and soul into this thing and has taken a jury seriously. i wantave said to rick, to see what the results of these reports are. there's going to be accountability. i will expect even before the reports are done that we are seeing significant improvement in terms of how the admissions process takes place in all of our v.a. health care facilities. i know he cares about it deeply. he has been a great public servant and a great warrior on behalf of the united states of america. we are going to work with him to

solve the problem. i am going to make sure there is accountability throughout the system after i get the full report. hass secretary shinseki -- secretary shinseki offered to resign? you can keep watching and our website at bloomberg.com/tv. we have more to cover here on "market makers." when we return, we will be speaking with the chief investment officer at notre dame. ♪

we are back with a man who knows a thing or two about investing. he oversees university of notre dame costs endowment, which has grown to the 12th largest in the

u.s. at $9.3 billion. welcome. $9.3 billion. what do you do with all that dough? >> we spend it mostly on student financial aid, and for faculty, libraries, student activities. >> you have been there for 25 years. dave swenson from yale is critical about investing in hedge funds. how do you feel? it is a space that has gotten very overcrowded, with the number of players in the hedge fund world. it has been hard to short because of the bull market. a lot of our as it's coming from sovereign wealth funds, another investors. most not an area the investors can really access at the highest level. >> what is your perfect allocation right now? >> we do a lot in private

equity. we do a lot of hedge funds. it's not for every investor. you have to have some diverse the fires, some risk mitigator's. -- diversifiers, risk mitigators. a combination of all of that. investors need balance. that gets lost. endowment's can access the alternatives. the retail public should be mostly stocks and bonds. >> how do you interact? >> i'm on the endowment committee. it iswill call me, if something to do with a financial services company or if he wants something, he will give us a call. he has a lot of access to trustees and people who specialize in industry. we are not 9.3, are we? >> we do. i have a great team.

serving, are board members and team. that is our competitive advantage. >> i want to talk about the u.s. versus the rest of the world. where is the biggest risk, and where is the biggest opportunity? >> we see opportunities everywhere. for us it is specific to the manager, the skill of the people we are looking at. there is so much negativity about china, growth is slowing. >> it's a huge economy. we are hiring people with real skill who can access the best companies. that is the case in every market . india just had elections. there's hope there will be more reforms in the economy. india has a chance to do something in the markets very special in the next few years. >> one thing that scott and his team does that is critical to their success -- i have been -- to haveo brazil

enormous respect for money managers, with their process and how they do things. he early on gets to the right people in the right places and build long-term relationships. he's not really aligned to a named firm. it is a time when hedge funds are struggling. >> it all depends on the manager. a lot of them don't deserve it. we have talked about this. and they were first created, we were like, you will earn 20%. i wase now morphed into, six basis points above the average of this mean -- that is crap, and i agree with all that red -- that. it is overpopulated. everyone in the world has a hedge fund. vices.s talk about

as a catholic school, does it affect how we invest? >> we follow the u.s. conference of catholic bishops guidelines on investing. in certaintrictions areas that conflict with catholic social teaching. we have been doing that forever. >> is that a slippery slope? when you look at private equity firms and they invest in gun making companies -- how do you navigate those waters? >> it is a slippery slope. that's why you have to have a navigational set of guidelines. you can have everyone's opinion about what they want to restrict, but we have to have that foundation. issues as special they emerge and our board reviews those and we inject them into our investment policy as appropriate. do you have any sort of inflation heads you are playing with? we are seeing two percent inflation here in the u.s.. >> we want to have balance read

-- balance. we have day -- we have deemphasized. if there are signs of inflation, we would add to commodities. we have owned commodity futures in the past. we have some inflation hedges. it is an area we are not emphasizing in a big way yet. this not a lot of inflation. >> you mentioned it briefly. for ats will stay down least another six months. i do not think there will be any change for the beginning of the year. eventually it will start to climb in an organized fashion. we will be in this rate environment for the balance of the year. [laughter] that's good, scott. [laughter] any alumni watching, he did not mean it. in this environment, you have

got to get returns, and you can end up in a situation where -- cdo squared is exciting? >> no, we are not pushed for returns. we want to earn high real returns. are trying to recruit the best students and faculty in the country. we are not pushed in a certain market. >> have you changed your return targets? >> no. we take such a long-term horizon. we do feel we have access to the best. we can do low double-digit returns for the last 10, 15 years. so much money is coming to alternatives. it's harder. a yearrview 500 firms and travel all over the world. it's harder. >> what do you consider alternatives? it is a term the drives me nuts. what is alternative today?

everybody is doing hedge funds, private equity, oil and gas, commodities. i'm not sure what i call for alternatives -- call alternatives today. >> we will be back with our guests. ♪

>> it is notre dame day. stay here. ♪

h> this is "market makers," wit erik schatzker and stephanie ruhle. >> i'm alix steel, in for erik schatzker. we are back with jimmy dunne and scott malpass. how hard is it to retain talent right now? >> it depends on the firm. the top firms have had pretty stable talent. they have good performance. there's always a lot of movement in talent in the financial

services industry. >> we had the chance to talk with the cfo of blackstone, and how hard it is to find great investments. >> markets are difficult right now. you are difficult because have pockets of value and pockets of overvalue. keeping the discipline to find those pockets is important. >> jimmy, if the cfo of blackstone is saying it is hard to find great opportunities, what does it mean for the other chumps out there? is always been tough. you have had certain discipline that you follow. i have just a couple guys. this guy has had the same principles for a long period of time. as always easy in hindsight. last year was easy. competitive?t been

give me a break. it has always been hard. >> you have been doing this for 25 years. when you walk in january 1, 2014, did you feel like this was a tougher year that it has been 10 years ago, 20 years ago? >> it could be. there was a lot of concern about rates going up in a disorderly fashion and how that might affect the emerging markets and currency devaluations. there were a lot of concerns coming into the year. only in investing, but running a business. there have been few times ever are you said to me, would you take the year you had last year right now, i would say 85% of the time i would say absolutely. i am happy to announce i have been wrong probably 60%, 70% of

the time. that's a typical thing. we are a manic-depressive industry. at the beginning of the year, you think about rolling that rock up the hill. you get through it. >> when you say you're comfortable investing in private equity, it doesn't make you concerned that a few years ago liquidity was such a problem for investors? people wanted to get out, they cannot get out. now you are saying private equity is the way to go. accessible to most investors. you have to have a team. that is not something most investors can do. it is a relatively small group of investors. >> if i was a guy who put out my shingle today -- >> we do a lot of venture capital. we have earned over 30% a year in venture capital.

it has been our best performing area. your investment thesis is dictated by what central banks do nowadays? >> liquidity is always important to markets. it also distorts. your best managers do good research and they can differentiate themselves. you're not seeing that as much today. a lower quality rise in a lot of names. it makes it harder for some of your best people to really differentiate themselves. we hear so many distressed guys talk for the last three years. they are waiting for european banks to delever. there will be these great lumpy opportunities. is that going to happen? anything that you predict is going to come. the thing that you least likely think is going to happen, that is what will happen.

there is mountains of money on the sidelines waiting to take advantage of that opportunity. it is all but spent, as far as i'm concerned. >> there has been big packages at the bank. some early entrants did pretty well with those. inre is still $2 trillion nonperforming loans in europe. there is so much capital there now. a couple ofdon for months, doing work around europe. do you think europe has gotten two tight? when i look at where sovereigns trade in spain and greece, my mind is blown, given that unemployment is 50% in spain. >> the euro to me should be weaker than it is. >> is there a danger? >> you have got to watch your currency exposure and have balance. avoid one of the biggest trading blocs in the world.

it is something investors should pay attention to. >> you need to ask wayne -- explain the notre dame secret sauce. how does the school get $9.3 billion to invest? what is so special about this place? they dream big out in south bend. it is where the church comes to think. we need a lot more money. we have a lot of things we can do, a lot of facilities we can improve, a lot of games we can afford to win. we have a lot of opportunities academically. everyt to compete at level. what i love about notre dame is, when i was there 100 years ago in 1978, i thought it was fantastic. it's hard to argue that not every element of the school is better today.

if you look at father jenkins -- i think we have the greatest money manager in the world. >> you think you have the best football team in the world? >> we have a darn good one. we are going to beat your school. [laughter] and a few others, too. we are good at a lot of things. we need this guy to keep performing. he single-handedly is probably worth a billion and a half to notre dame. we need to get a guy like scott -- those guys are investing zealots. they have a humility that will be long-lasting. we have an alumni that help each other. >> the cross finals are coming out of nowhere. seven years ago, people said, south bend, i don't think so.

you going to win it? >> i think so. >> now they are fully funded. i think we have the best team. >> good luck, scott. jimmy, always great to have you. we are rooting for notre dame. we will be back with more in just a few. for a company searching new ceo, still reeling from a hack attack. ♪

>> target is still missing the mark. today target posted first-quarter profits that missed estimates and cut its

annual forecast. julie hyman is with us. shares are hardly moving here. what is the deal? there are a couple of things contributing to that. first is the perception that the numbers would be even worse. people are looking at the comparable sales figures for the first quarter. sales were down 3/10 of one percent. saying in this quarter, like so many retailers, there will be little change to up. one of the things that drove traffic in the first quarter was promotion inc.. cutting prices. from everything else that is going on at target, it is seeing its margins being cramped because it is offering even more discounts than he usually offers core customer for the discounters is still a stressed customer.

again on toproblem of all the other problems the target already has. the ceoere any word on hunt, what they will do in the short term to reverse the target ad trends we have been seeing? we haveple of things seen is the high-profile management changes. yesterday they announced there is a new head of sears canada. business continues to lose money and lost more money in the first quarter than it did in the year ago first quarter. there is the core problem at the stores, not just of that customer i have been discussing, but the merchandise mix has not been what it could be. that is what a lot of analysts have pointed to. e-commerce still has to do some work to catch up. >> you were pointing out early that e-commerce is not as bad. >> it's not growing as quickly

as it is at some place like walmart. it is starting to make these management changes. it has just begun that ceo search. makingmeantime, it is changes below that level in order to try and turn things around. >> i actually buy some furniture at target. is that weird? >> no. >> i like it. it's a good price. thanks so much, julie hyman. guest was our next the director's assistant on the movie "scream." ♪

>> turning your memorial day outing into a weekend getaway. absolute users snag unseld, discounted hotels at the last minute. the startup announced an initiative that forecasted hotel rates up to seven days in

advance. what will this busy travel weekend look like? let's bring in the ceo with us from san francisco. how does this business work? >> we are an app for smart phones, iphones, androids. thatrk with hotel rooms have last-minute availability. they give us those rooms and provide a discount. it is usually around 30%. you can get 70% of what you pay otherwise if you want to stay at that hotel. >> is it tough to get these hotels to agree to these arrangements? i think a big difference with hotels tonight is we designed this from the ground up for mobile and for big success over time. we wanted to make sure we were sustainably offering a discounted platform to hotels. great dealsys get and discounts on hotel tonight, every day. you cannot know exactly what hotel you are going to find.

you really want to stay at one of these iconic hotels -- we work at the ace, and the standard -- you need to book in advance. if you are willing to be spontaneous and stay somewhere great, we can have a great deal for you. >> how many people spontaneously need a hotel room in a city where they probably know there will wind up being? >> the key business with hotel tonight is out is -- is it is out of control with how great it is very -- it is. when people find hotel tonight, they see how reliable it is and how easy it is to book, the great customer service we have. >> do you need to broaden out to not cater to just the spontaneous customers? >> the spontaneous customer is bigger than you might think it is on the surface. it's about 15% of the market is already booking same day.

that includes people who are saying, let's go away for the weekend. the last-minute leisure travel. it's also a lot of business travel, where people don't know exactly where they will be ahead of time. >> how much can i control where i stay? york say i arrived in new and you say, the ace hotel. how much can i control it will be the ace? >> we break all of our hotels into categories, from hip and lux, all the way down to basic hotels, which are great hotels that don't have a lot of frills associated with them, and they don't have the hip features of the ace and the standard. youou cannot find the ace, will find something comparable. stayed at the americano, which was terrific. it has a rooftop pool. it's going to be one of my favorite hotels in new york.

trends are some of the you see around these kind of weekends? some of theends are biggest hotels for spontaneous travel. people that don't have plans are not quite sure, they want to see what their friends are doing. if they come into the city in new york and they're having a great night out, they can say, we're just going to spend the night here. i'm not going to return home. i'm going to push a button and eight seconds later i will have a really memorable weekend. >> do you run the risk that hotels will wise up to how successful you are going to become in this business and be cutting you out and doing it themselves? >> i think we can provide something that is difficult for them to provide, which is access to an incremental base of customers. these are people who are on mobile. this when theyto needed. hotels are under no obligation

to use this. we don't have any draconian terms in our contracts grade when they need us, they use us. the repeat rate of hotels is for a strong. they keep coming back -- very st rong. they keep coming back. >> thank you very much terry have a great - much. have a great weekend. ♪

>> that will be it for today. alix, thanks for being here.

tomorrow we will be talking to the koch brothers, the whipping boys for every democratic officer running for election. we will be joined by the author of a new biography all about the koch family. will you be here? >> no. this is our last moment together. >> we are getting freaky tomorrow. matt miller is here. >> i cannot believe i am claiming matt as freaky. it's time for bloomberg to take you on the markets. here is julie hyman. getting freaky with options. stocks are rising. the fix is falling. -- vix is falling. talk about what is going on with the vix today. down with, one day overall stocks.

what are we ceasing -- what are we seeing in terms of options? we know the logan stay low for a long time great we saw that today -- low can stay low for a long time. we saw that today. volatility is going to stay low, is what this person is betting? >> yes, and saying it will stay low for a long period of time. there is a difference between where vix is trading now, and the september contract for vix futures. that seems like a -- >> this is somebody taking a bet, especially going into the summer and earnings season winding down, when you look at it from risk reward perspective it is almost one to ten. you are risking 10 to make one.

>> that is a big bet. i'm curious to see how that turns out. let's talk about ebay. companyome news on the today. it asked users to change their passwords because of the cyber attack that exposed a database. the stock fell. it has now come back to some extent. are we seeing options traders playing that situation? >> another big trade, there was a huge buyer of july. this guy is not thinking the stock will go up here and -- up. andguy is buying calls selling the stock around it. buyout is expecting around 1.5% to move on average every day leading up to july. trades like an earnings

that has been put up in anticipation. today's news from that company made the guy pull the trigger today. your plate today is taking a look at hewlett-packard. been a hot area recently. everyone has been talking about big old tech. value is attractive. you are also finding it attractive, at least to some extent. >> if you look at relative eluate shins, it is an attractive stock. same time, everybody understands this is an ongoing turnaround story with their shareholder friendly management grade they are keeping tight controls on the cost. hasall, the stock still some room to run. i do not think that stocks climb rapidly post-earnings. >> give us the details on your trade. i want to buy a short dated

expiration, 33 and a half, 35, 36 and a half call size. i want to buy the 33 and a half, sell as twice as many 35 strike calls. >> profit is maximized if -- >> if the stock goes to 35 by friday. >> thanks so much. we will be back on the markets in 30 minutes. ♪

♪ clip" whereo "money we tie together the best stories, videos in business news. debate, itousing comes down to the haves and the have-nots. the ceo ways the future of the handmade marketplace. beats, tiffany shines. a supercar handmade right in america. we take you for a test drive. we will wrap it up with a little