we are seeing an industrial resurgence here. tech, and energy. >> thank you. we will talk to you soon. on the markets again in 30 minutes. ♪ loan from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> economists forecast new home sales rose last month. we will have new figures the moment they cross. >> we will go to the ukraine capital and talk to a big investor 48 hours before the crucial presidential election. >> summertime, the living is easy. time to plan your trip to one of the big music festivals. we'll talk to the cofounder. welcome to "market makers." i am matt miller. >> i'm alix steel. >> the cats are away.

>> let's start with breaking news on housing. new home sales for april hitting the wire. mike mckee is with us. it looks to be at 6%. lessat would seem to be than forecast. you have to look at the revision pretty commerce department revised the last year's new-home sales numbers. that pushed up the march number. march had fallen off a cliff. now it is much better. it had been a 14% decline. it is nothing like that now. the increase is good. 14%.% decline instead of the increase looks better than it might have otherwise. we did ask three questions about this report earlier. here is what we can tell. the first question was, was it the winter effect?

hard to know because new-home sales did not increase in the northeast. you would think that would have happened because the storms were over. there were storms in the midwest and south. whetherconclusive on there might have been more home buying. more people bought at the lower end of the scale this month. it looks like we are seeing the kind of momentum we want to see in housing starting to build. maybe not as good as people thought, but the spring selling season will be better than during the winter. >> will we see more because the prices are staying lower? lot moreeen a previously owned homes come on the market than anticipated. that keeps pressure down. we see builders starting more new homes. that may keep the price pressure down. >> that will help.

pricess raise aggressively going into the year figuring there would be more demand. demand fell off. they seem to be dropping back on the price levels. we saw the average price fall this month. average does not tell you a lot, but it does suggest builders got the message. if prices are restrained with mortgage rates higher, that should help offset the mortgage impact. >> stay with us. we are going to bring in eastern harris -- ethan harris. what is your take on the numbers? more growth or less stabilization? relief. of a sigh of we have come through an awful winter. you would have expected a bigger bounce in housing. we have not gotten that yet. improvemente the today than the ugly number last month. >> how do we know how much is and resulting

stabilization versus continued and sustained growth? >> i think there is a lot of pent-up demand not just for a few months or rebound from the winter, but over the next several years. we had under spending for housing for four straight years. construction levels are way below normal. at some point, we need to see stronger growth and a lot of the buyers that abandoned the market should be coming back. i think there is longer-term pent-up demand should support housing over the next several years. >> it seems the issue is that people are going to be renting. we are seeing a surge in multifamily building versus single-family starts. >> that is one of the problems we have seen with the housing industry, the shift away from home ownership. it is not huge but enough to make a difference. builders are open more apartments.

the share of americans who own their own home has gone down. some argue it was artificially high and should not be that high and we are just rebalancing. but you don't get as much bang in the economy as you do from a big buildup of single-family homes. so it hurts a little in that sense. >> over the weekend, there was a great story about blackstone shifting to buying more apartments. they have been buying a lot of homes. a lot of hedge funds and private equity firms have been buying homes or management companies. how much of the numbers are actual people, individuals, families and how much our businesses? buying is more about distressed properties being bought up by investors. that is a great thing. manyg the boom, we had too homes built and sold to people who had a tough time making the

mortgage. they have defaulted and are now mentors. it is a healthy rebalancing. it is good news the focus is on multifamily construction. even within the multifamily market, more apartments are being converted into rental units and away from owner-occupied housing. that is an ongoing structural adjustment to the excesses of the last boom. >> what happens when investors get tired of the housing market that is stumbling along and not seeing the growth we are used to? >> we need a handoff. at some point, we need the regular joe sixpack buying a home. that depends on the labor market. it is important we get solid job growth over the next couple of years, that we start to see more normal wage growth. middle income families who have been waiting to buy are in better shape to buy a home. we need a handoff.

we cannot rely on investors forever. i think there is a bit of that happening with buyers coming back. it is important to get the fundamental demand out there, not just investor demand. >> the ease of drinking a sixpack is so starkly juxtaposed with the difficulty of buying a home. >> so true. >> i would rather stay at my own home. >> stay on your own deck drinking a sixpack. , ethan harris and mike mckee. >> time for the top business stories around the world. more job cuts on the way at hewlett-packard. the ceo will cut as many as 16,000 jobs in addition to the 34,000 already announced. sales have fallen for 11 straight quarters. france has one major criteria for deciding who gets to buy the energy unit.

the energy minister says the choice will be based on keeping jobs in france. general electric has offered $17 billion for the unit. siemens is also expected to make a bid. this is one of those stories with the title, "only in italy.' the italian government will try to increase its figures by including prostitution and drug smuggling. iswill be easier if output boosted by portions of the underground economy which are real economies. >> do they get taxed on that? >> no, but they will be counted as gdp. it will be interesting to see how much is prostitution and smuggling. vladimir putin says russia will work with ukraine's ex-president even if the election is not up to his standards. >> this weekend marks the unofficial start to summer. it is time to get your groove on

at a music festival. will talk to the cofounder of one of the biggest. this is "market makers." us streaming live on your mobile devices.

>> russia's most important business forum began overshadowed by politics after president obama called on u.s. ceo's not to attend. the international economic forum also ended on a geopolitical note after president putin's keynote address. here is what he had to say about the u.s. sanctions against russia. >> i think it is obvious to all that using economic means to create political pressure will only lead to a boomerang effect and in the end affect business

in the country's which initiate such measures. chilcote was at the conference and have more on his address. >> the two biggest takeaways from his address to the form had nothing directly to do with business. vladimir putin told them russia will respect the choice of the ukrainian people in its election on sunday and that russia is ready to work with the new ukrainian president. >> we are ready to work with individual countries and the european union. we don't understand why there is a difference in the approach of individual countries and of the european union as a whole. >> vladimir putin stopped short of saying russia recognizes the legitimacy of those elections. he also said ukraine must stop its military operations in the east of the country. that is where the ukrainian government is fighting the separatists.

we have seen a lot of violence on the ground there in the last 24 hours, including one attack that led to the single biggest loss of life among ukrainian troops since the conflict began. that plus the absence of a statement saying the russian government will recognize the legitimacy of this election does not bode well for the elections and the time after. the elections on sunday, but after the u.s., the e.u., and germany have all said those elections, if they are disrupted and russia is seen as being party to the disruption, could lead to more sanctions. at this investment forum in russia, no one wants to see that. chilcote, bloomberg, st. petersburg. >> that was ryan chilcote from russia. >> coming up, we will go to kiev and talk to a big investor about what is at stake with the elections.

we will be right back. ♪

the clock, around the world, bloomberg keeps you connected with breaking news, exclusive interviews, expert insight and more. on television, at bloomberg.com, on your tablet, radio, smartphone, and now on apple tv. bloomberg ishere, wherever you are. >> we are approaching 19 past

the hour. we are excited to go "on the markets." discussing positive home sales data. >> a lot of positive things for the markets across the board, not just equities but also in bonds. you see the equity markets. we are going to end this week on a positive note. the first week in three we will see gains for the equity market going into a three-day weekend that seems appropriate. about .25% asning well. i feel like the smartest people on the street, the most successful people have to be leaving the office by now. right? they want to beat the three-day weekend traffic. >> small text are rallying as well. we are seeing treasuries rally as well. the 10 year yield is falling which means prices are rising. that sounds counterintuitive.

you get better new-home sales data. the fed had been looking at housing. it is better, the fed will continue to taper. >> maybe it was sell on the rumor and by on the news. kind of the reverse of equities, as usual. >> ukrainians will go for their new government this weekend. it is an historic day and year for the country. more. has willem? >> hello? just talking the latest news on the ground. i have confirmed in donetsk there was another attack overnight by pro-separatist forces with another nine injured from the pro-kiev fighters. we will be talking about the effects of that instability. he works for a bank in kiev.

of the the effect instability and violence in the east on the business community in ukraine? >> it goes without saying there is an impact on the country. we have received a lot of attention and calls from clients asking about the situation in ukraine. what thealso asking impact is beyond ukraine on the region, in russia, turkey, and the eastern part of europe. >> what does the business and immunity -- investment community hope will happen with the vote on sunday? >> a quick transition into a healing process that would have to involve all parties, russia, ukraine, the european union, and the united states. the question is whether this will be a one round election or two rounds and to what extent

that would result in an early parliamentary election. >> the front runner is a successful businessman. he seems to be far ahead of his next rival. what is the significance of this runoff, whether he wins by 50% or not, what difference does that make? for a positiveng outcome and quick resolution. >> you don't want a runoff? >> no. a positive outcome would be a one round wrapup of the electoral cycle. configurationnew of the parliamentary majority around the new president. moving forward into the healing process this country needs. >> you are working at an investment bank here. what kind of man is he? will he be good for the business community? what are you hoping for? >> the first thing i would like to say is he's not a new face. he is an experienced person in

the markets. he does have business interests. i understand he is more than ready to put in place a structure that would do with the conflict of interest. he's a very expressed politician. he is a very expressed politician. he has existing relationships. i think all of that is as positive as you can get in this country. >> what are the big issues on his plate? he will have crimea and the goblins in the east. what effects will having him in power have on the dispute with russia? >> no matter how you look at it, there needs to be resolution of the gas disputes. we are starting the summer season. finding argency in solution to the castile -- gas deal that is not apparent. >> because of no heating. >> he should have the foresight

to sit down and find a deal on the gas deal and a long-term contract that would preserve the interests of all. >> you said bondholders have been asking about russia and ukraine. is there a glimmer of hope? there was a rally in the bond markets locally. >> without sounding too optimistic, i would say there is some sort of positive goodwill. i would not like to read too much into what written putin said in st. petersburg, but the fact he said he is willing to work with the new leadership after the election is a positive sign. he is saying we will recognize the new government regardless of how the goes becausevote we will consider the legitimate? >> reading between the lines, i would say that is a fair assessment. >> is that good for business to have that stability?

is that a big concern in terms of investment money leaving the country? for aryone yearns long-term solution that preserves the integrity of ukraine and maintains the interests of its neighbors. is so much there conflict and east of the country, some of the border areas are difficult and inaccessible. what effect is that having on the ability of companies to operate cross-border? >> it depends on what interesting -- industry you're looking at. some will never be affected by a standoff or dispute between the countries. with respect to the industry of agriculture and dairy, it has been a challenge with ups and downs. in my view, those are not a long-term threat. be aeat, there should pragmatic way to approach the crisis after the elections and find a long-term deal to preserve the interests of all.

issuethat the crucial over the next couple of months? >> absolutely. ukraine does not, in spite of issues, i think it would be hard for ukraine to stop the gas imports from russia. >> thank you. back to you in the studio. >> thank you. hollywood and short form video. this new craze could be bad news for sitcoms. we will hear from ben silverman. >> we will keep rocking it on "market makers" this friday with one of the dj's changing the way las vegas does business. this is "market makers" on

bloomberg television. we are streaming on your phone, tablet, and bloomberg.com. ♪

li fromv bloomberg headquarters in new york, this ise "market makers" with erik schatzker and stephanie ruhle. >> i am matt miller. >> i am alix steel. tech and mediaop headlines. richard lu has more to celebrate. his company ended the day with a net worth of $6.1 billion. shares rose 10% on their first day of trading. plans tolike facebook put its cash to work instead of giving it to shareholders. the cfo says the company has no plans for the dividend to end in

the near future. he said facebook focuses on using cash to grow the business. breaking a tradition at the country's largest magazine publisher. both "time" and "sports illustrated" will be running small ads on their covers. they will spin off and become a separately held corporation. >> been silverman used to decide what comedies and dramas you would watch on nbc. he ran the entertainment unit on a few years but now he is short-term video. it is not so different form -- from what he used to do. >> i do think we are seeing the viewing patterns shift across different medium. the dominanteen short form player. the single biggest firehose is youtube.

it is absolutely hitting a younger demographic able to produce in short form and self publish on youtube. others like us are trying to professionally upgrade that content. put out properties and videos across our different brands in digital, sometimes when someone discovers something in episodic format, they may watch 10 three-minute videos that become a 30 minute show. you see the viewing patterns online skewing towards longer formats as well. but most of what we are talking about in the short form video is stuf that makes an impact. it is a cat on a skateboard taking a pee with a baby chasing him. that kind of video is a one-off and works in short form. you can watch it at the office, on your phone. it has that kind of utility. >> you have a show coming out

similar to what you did with "ugly betty." it is attracting a latino audience. what is the idea behind this? is this a growing audience? >> the audience is absolutely bigger. 90% of consumption growth for big companies like pepsico, coca-cola, and procter & gamble will come from a multicultural audience in the u.s. it will come from mexican kids, puerto rican parents. it will come from a range of different people in the american world. i think you have got to recognize that as you tell stories. you need to be in a one world mindset. you need to have people that look like everybody else and look like the america you are telling the story to. i believe in that and a passionate about it. i had to fight to have the "ugly betty" main character be latina after the script came in with the network at that time. they backed and believed in me.

>> let's talk about who has the power in terms of platforms. is it still the networks that give the biggest distribution? are they more excited to work with amazon or netflix where they may get a bigger payout and more creative control? like a good horse race, you are going to see that kind of decision making process around show lenders, storytellers, producers, actors, directors, and agents and managers which involves questions of where will it live most effectively. if you want to do a multi-camera comedy, that does not work as well on the digital platforms because you don't have the same communal sense when you're watching it versus t.v. that has the live viewing that works for a show that has an audience connected to it. when you are on your couch when the show00 is put out to air, going back to

when you were two, when you do that, you feel this communal vibe. that is why those work on broadcast. on netflix, you need something more like "you're in the know." "house of cards" would be disruptive in a commercial withd platform like nbc that kind of conversation interrupted by a commercial would throw you. when you are binge watching, that kind of conversation is like you are in the know with me, you're the only one watching. >> let's talk about trends. we grew up watching sitcoms at 8:00 on thursday night. we know when we watch has changed. has that content died? >> clearly, our way of telling stories and delivering jokes, the culture changes and evolves. things happen differently. the stories can be the same, just reinterpreted.

shakespeare and the greek playwrights are still the underpinning of 90% of what you see and do from a television and movie perspective. that the format and the way -- but the format and the way we was it, "ugly betty" cinderella. "the office" expanded the definition of a sitcom. no laugh track, single camera, faux documentary, and people that did not look like jennifer aniston. i give a shout out to rain. wilson was not exactly what we have grown accustomed to in television that preceded it. that opened the doors to things like "modern family" and "girls." we knocked that door down so tina fey could come in behind it

and "modern family" could come in behind it. it expanded when a comedy could be. it did not limit it. >> that was ben silverman, the former head of nbc entertainment. >> a good conversation on sitcoms. >> the people on "modern family" are very attractive. >> all of them? >i have never watched. andng up, cool brands thousands of people ready for a good time. it all adds up to bonnaroo, the big music festival. we will talk to the cofounder next. >> no showers for three days. ♪

>> the summer has started. that means music festivals. thousands of people will flock to tennessee for one of the most famous. i'm talking about bonnaroo.

we are joined by the brains behind this annual event. jonathan mayers is the founder of superfly. he is the man that started it all. it is the first in our series we are bringing you all summer. andtina alesci loves music likes festivals. >> she is a partier. >> that sounds ominous. >> for those of us who have not been to bonnaroo, can you explain what it is? >> it is a four-day celebration held 60 miles south of nashville. 10 stages of music spanning including elton john. >> you have had spring stream, bruce springsteen, tool, fish, big draws for guys my age, not just kids. >> it goes across the spectrum from legends like bruce springsteen and elton john and

neil young to radiohead and ja y-z, across the spectrum. >> with the festival, you are building a mini city with the campsite and security. what are your margins like? >> it is expensive to put on one of these shows. we are building a community that 85,000 people are staying at for four days. tickets, v.i.p., concessions, sponsorship, it all adds up to make it work. >> do you make more on concessions rather than ticket sales? sales the main driver? >> ticket sales followed by concessions and sponsorship. >> music festival guys are notoriously loathe to give us

actual numbers. why is that? how much to you make? why not share those figures? we likeke to keep it -- talking about the experience. that is the core of what it is about. we are talking about the special event. the fans come for a unique experience. that is the most important thing. >> if these festivals were not making money, they would not be as long-lived as they are. you would not being on -- putting on an unprofitable show every year. >> each year, you're trying to raise the stakes and improve the experience. with that, you're finding new revenue streams. providing new services on-site, different housing options. we have accommodations if you want to come with your friends in a tent or you want to stay in a hotel or bus.

we keep finding new ways for people to experience the festival. >> what about competition? how many summer music festivals are there and how do you keep up with it? >> there are a lot. it is about finding your identity and what makes your festival unique. what makes bonnaroo unique is the sense of community and people staying there for four days and being completely immersed in it. each of the festivals have different themes and venues. >> there are not many that big. bonnaroo is -- has become king of the hill as far as these big hybrids. >> one of the reasons millenials have become so important we talk about additional revenue streams is a lot of the content is being repackaged for the internet. a lot of the old-time dance music festivals provide a big focus on taking the content that happens live and putting it online and watching it go viral on social media and potentially

selling ads against that content. are you thinking about similar things? >> we have a partnership with xbox. we are posting our festival weekend broadcasts. we have created other content specials around our announcement event. we have the bonnaroo announcement mega show. we have created big promotions. one is where fans submit their video. the funkiest dancer gets chosen to perform on the main stage and is awarded the title. edward john -- elton john towards the did -- elton john awards the belt. >> what about how to monetize? >> social media is important to staying in touch with your people. it is an ongoing relationship with artists.

we are leveraging social media to stay in touch with our audience. >> a lot of these festivals, especially bonnaroo, seems to bring out new artists from the region. is there a local focus? part of it must be getting to go to tennessee. not many of us from california or new york have been there. that is part of the experience. >> there are a lot of amazing artists in tennessee. we have artists from all over the world. thursday, the first day of the festival, it is emerging artist day. it is a great opportunity for fans to focus on many emerging artists at the festival. >> what is your take on the streaming music competition we have seen, especially with apple taking over beats? >> i think streaming is here. it is a great way to experience music on the go. also, it is coupled with the people still want things to hold

onto and experiences. people are looking for different ways to consume music. the livesome for performance because it brings it back to that is the main focus for the artist. the dead were selling records. the main thing they were doing was going on tour. now it is back to that. >> it is the same thing with live sports events versus netflix and streaming. live sports events are doing well. it seems festivals replicate that. >> the live experience, being in the moment. in a culture getting content whenever you want it, there is something about bringing people together for a one-time moment. cannot get into specifics of how much money you are making or the profit margins, but can you describe how the festival business stacks up against 10 years ago versus now? is it more or less profitable? can you give us that context?

>> over the last 10 years, we have shown great growth. we continue to focus on developing new properties. bonnaroo is going into its 11th year and stronger than it has ever been. our other property in san francisco is going to smash success. it took a couple of years to get to where it is. we sold out over 200,000 tickets in 48 hours. i think the festival market is healthy. the strong will survive. the strongest brands that focus on the experience, diversity, taking care of the fans, those will be around for a while. >> what are not strong now? >> who are the losers we should avoid? [laughter] >> their companies now public in the business. it took a bunch of small producers of festivals. it rolled them into one big company and took it public. is that a winning model or not? >> i don't know. we will see.

it will come down to the strength of the operators. >> thank you. we appreciate it, cofounder of superfly. we are going to talk about edm next. >> you will meet one of the dj's challenging the town's image. i am sure christine has seen this performer on multiple occasions. ♪

vegas, a town once known for artists in the twilight of their , is now a hotbed of music for the millenials. world renowned dj's routinely sellout nightclubs for thousands were willing to pay more for the parties. the clubs and casinos are taking

a. portion of the sales cristina alesci spoke to one of the biggest names in the business. take a listen. >> sin city? more like spin city. dj's from around the world are willing to fly to vegas for one night of work. he is taking it one step further. >> i have moved my entire shift over to vegas. djing there the most. it makes sense to be producing and living there. >> he spent years on the road touring for weeks at a time. but his vegas gig tethers him to a five-story nightclub where he has an agreement to play exclusively in that market. >> the residency is simple. you don't have to worry about traveling as much.

now i live in vegas and drive to work. you know what you are expecting. you know your environment. >> that is why he has a residency for the summer. it gives him more control over his show and is more cost-effective than a tour. musicodel is making dance dj's rich. >> if there is someone that does bring in big spenders, it is only fair that dj's are getting a piece of the pie and not just a flat fee. >> the biggest spenders are willing to drop $250,000 on just one night. the top two clubs generated to hunt million dollars as sales -- in sales -- the top two clubs generated $200 million in sales last year. >> my management has been thinking that for years. 2008. talking 2007, >> it keeps getting better.

>> i swear to god. i have been on the road. i have been hitting the road. >> 250 shows last year. >> sometimes 300. i am addicted to the experience i am having with people that care about my music. >> cristina alesci joins us now. these guys are cashing in big time. >> yes. i know you will love this guy. his signature move is throwing a cake into the audience. yes, they are making a lot of cash. they are making a ton of cash. we recently quoted steve wynn in an article. he said he pays his $400,000 a night. you figure these guys probably play twice a month. you're talking about $10 million

a year just in vegas. aoki has the residency we talked about. he also is trying to sell out madison square garden in august. that is a huge solo show for him. he has several revenue streams. not to mention he also has a marketing arm with a fashion label. he sells headphones, he co-markets wireless speakers. we are talking about a brand that goes across several businesses. >> just to press play. >> there is more to it. it is not just because i am a fan of the music, but there is creativity involved. >> thank you. when are you going to vegas next? >> tomorrow. will be backkers" in a minute. coming up, panic at your local sushi joint? we will tell you what is being done about it.

♪

>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. hewlett-packard's turnaround is missing in action. hp's sales have fallen for 11 quarters in a row. >> talking tough is not enough. chris christie posts making hard budget choices, but analysts say only one other state is in worse physical shape. could we face a salmon shortage? we are going to look at what is going to be done to prevent the unthinkable. >> welcome to "market makers."

>> happy friday. >> happy special friday. a long weekend, it does not stop us from getting you the news you need to know. the top business stories from around the world. homebuyers are digging advantage of falling interest rates. sales rose six percent in april, , themissed the forecast biggest increase in six months. the median price of the new house fell more than one percent in the last year. vladimir putin says he will respect of the ukrainian people. with says russia will work whomever you crazy >> as president on sunday. he spoke a day after pro-russian rebels killed 16 ukrainian soldiers.

apple, google, intel, and adobe have agreed to pay $350 million to settle antitrust suit. they conspired to keep salaries down by not hiring each other's workers. cheering meg whitman's plans to cut jobs. a 11 straight decline in profits. thank you for joining us. get confused with what quarter we are in for hewlett-packard because every single time it is the same. cutting cost, they cannot grow. why is the stock up? >> it is up on further cost

cuts, a program that started at 29,000 job cuts is now up to 45,000 or 50,000 jobs. hp does need to get smaller and leaner and more innovative, but having happening -- is an effect on company morale. in beijing cut and move forward, not keep cutting. >> why not do it all at once? >> it is hard to decide. they have lots of different business units in different parts of the market. one cut ando make move forward. that is what they need to do. i have been cutting now for the part of -- the better part of 10 years. to keep they have actual talent, how can they do that when their main focus seems to be cutting cost? >> that is a great point.

amid all of these costco and focus on cash flow what is happening is that the underlying i.t. market is changing substantially. there is a dramatic focus on cloud computing and on using --moditized art where to do hardware to do what hp boxes can do. we have seen the arrival of large cloud computing players, and their servers are not made ibm., dell, or that is 12% of the market. if you look at the compound annual growth rate of servers made by hp, ibm, or dell, it is flat to down over the last five years versus the new emerging markets that was not here five or seven years ago. it is now 12% of the market are growing at nearly six percent. >> is hp the worst? >> on a relative basis i would say that ibm is worse because

of rising and product positioning. there is a seismic change underway, and undef unfortunately they have to deal with that as well and cost issues. >> what is the answer? if you are losing out because nobody needs to pay that much money for your products, do you just cut prices? is that the only solution? >> part of their business is highly commoditized. the pc market, the print market, the server market, other parts of the company can rely on innovation. in networking, and storage, they are not doing well in storage now. they are doing well in toworking, in china, due cisco challenges there. to that point the cloud is a huge challenge for hp. they have their own internal initiative, and at the same time they are trying to sell to the public cloud providers.

not sure that they have a streamlined strategy for the cloud. it cannot be a cloud and sell to the cloud. they need to pick a path and double down on it. >> they're going into partnerships, but who are they going to end up buying? tol they have to buy achieve growth? >> here is the interesting thing. there is this payment that is happening, everybody two years we wanted to focus more on server storage and software. and what did the pc group do? up seven percent. servers were down, and storage was down. --porate freeseas came back pcs came back.

everybody seems to be making the pivot undid all of this cloud computing. to your point, who do they have to baidu stay competitive -- buy to stay competitive? they cannot buy and sell, that is a problem that ibm has. on a relative basis you have to dramatically downsize and get your cost within control. >> you cannot be in california and sell to the cloud. you are already in a country with an unbelievably high corporate tax rate, and then you will or any state within unbelievably high tax rate, were people want to be paid a lot more than others. we cannot build hired where there -- hardware there. >> this is mostly coming from overseas. this is more structural than that. aree buyers of hardware

buying it for substantially lower than what hp ibm and dell can sell it. at best -- or at worst they can toe revenues, and it goes foxconn, and at best the consumer comes to them and says i am a long-time hp customer and i will stay with you, but i will pay $.25. your margins are direct leak impacted. -- directly impacted. you can sell lower margin hardware, but we will see -- >> it seems like either way they're going to be up against a huge uphill for a while. what do they have to do to make some inroads with the cloud? meg has stabilized the company, she has missed for a at the-- mixed results top line.

it is hard to say how long this will play out were investors will be revenue with job cuts and not revenue growth. they have really struggled with this in the past. they really have not been a game changing acquisition. there is a lot of work of the company needs to do, and i expect to continue to see topline revenue declined. meg whitman, and a lot of people are saying she has not done a terrible job. she has been dealt a horrible hand. $101 billion company. on ao not turn this around dime, it takes a long time with an incredible amount of multi-quarter plans and effort. the effect of which will come much later. to be fair, she has been a great

job with respect to the bottom line and the respective cash flows. in has great capital returns late, and that is all good. but at the same time you have to move the needle on the top line too. >> thank you so much. >> coming up, a credit crunch for chris christie. new jersey's governor has to deal with a credit downgrade. >> plus it is friday, so it is time to play the yearbook game. he is a tech investor, graduated from the high school in wisconsin in 1989. tweet your guesses. this dude is older than me. ♪

>> good friday morning. chris christie prides himself as the government makes the top choices to keep the budget going. but the facts do not back that up. state,ays that one illinois, is less credit worthy than new jersey. analysts wrote that while trying , they haveixed costs

relied on one-time solutions and optimistic revenue assumptions that underscore the state financial we have. -- weakness. we often see illinois and new jersey grouped together by the f the i and my credit rating agencies as the worst states in the country. when someone like chris christie who is said to cut through all the crap and get it done, why does this happen? >> we downgraded new jersey to a 1. the state has run into some problems. they have very high debt, they have extremely large or obligations to their retirees and forms of pension and health care. they have overestimated their revenues in the last few years while the economy has been weak. >> what was the trigger point for you for downgrading new jersey? >> this has been a steady progression for them, this is

the second downgrade in three years. theirave underfunded liabilities, while he continued to grow very rapidly. we estimate the pension funding will cost them about 12% of their budget in the current year and double in the next three years to almost 23% of their budget. >> some of the things that new jersey is famous for, other than the sopranos and boardwalk empire and all of the other mob shows are about the outrageous tax rates in that state. come they continually overestimate their revenue projections when they are already charging most people an unfair amount to live there >? right, theyxactly are overestimating their revenues is the point. their revenues have not been that bad compared to other but theirthe union,

economy has performed worse. they have not recovered the jobs that were lost in the country while the rest of the nation has. what is unique about new jersey and other states with regard to the income tax is that it is ofday very small slice individuals. when those high filers do not perform well in effect their revenue -- it affects their revenue. high-income wealth has been in the telecom industry and the pharmaceutical companies, which have been in contraction. paymentsuced pension this past week, break that down for me. >> they had overestimated revenues again can add a midyear

cap had emerged. we are in may and discovering the revenues that were underperforming that does not leave a lot of time to cal lose the budget. he went after the one big item the good which is a very large payment that is due at the end of the month. to balance in order the budget, but the underestimation of revenues also carries through the next year because they over expected those revenues to come in. >> how will the pensions then get paid? they do owe that money, it is a obligation. >> is a payment to a fund that has assets outside of it. it is a future liability, and that liability continues to grow. >> is this not what he criticized before he was governor? >> yes. and this is what -- a problem the day they had before he was governor. they put themselves on a plan to

funding required, which translates into we are losing ground in terms of closing that unfunded liability, and now he is not complying with that law. >> i feel like living in new we are overtaxed, and the same level of services could be achieved with a lower amount of money being spent. is that the case in new jersey as well? so much of the tax money is going to overprice contracts, kickbacks, people who do not work. >> i do not think i can address the fraud and juice issues, but --can talk with the >> but you can see them. without making accusations. the large expenditure that

new jersey has is for teachers, for schools. when new jersey was one of the leaders faced to enact an income tax it was by law dedicated to property tax relief. it goes to in a fund that goes back to localities in the form aid. >> and they spend a ton on their students per classroom compared to other school systems that do so much better. >> they have high-performing schools. >> what would you have to see to get more positive? we lower thew, rating to bad we put a negative outlook on it. anticipating that they will take action just like they did to cut the pension costs not only this year but for next year as well. gap tothey still have a close even beyond that because they have been overestimating revenues and the economy has been underperforming.

r to we're looking fo go back to a rating of stable is a structural budget balance going forward. mention, what kind of money they have to help their state out at the end of the day. >> thank you. we are going to take a quick peak and get ready for salmon, we may be facing a shortage. ♪

approaching --

approaching 26 minutes past the hour. >> we are seeing a slight rally underway here. we did see new home sales rise last month as well as upward revision over the last few months as well. the s&p is really a stone's throw away from an intraday record high. record closing high of 1897. >> we're not going to see a lot of volume in today's market because i think a lot of people are taking today off. the small capsg rally as well, and the idea is to buy any dip. theresting that headed into weekend in ukraine, we are not seeing any fear. >> because of all of the uncertainty there, i know the markdown from the new york stock it is 1126 and they

have rated 167 -- 100 c 7 million shares. see those big trades anymore, but that that is very anemic volume. >> we do want to highlight area. opostale, 16 straight quarters of losses. retailers are also struggling in the first quarter with sales. it has been a really terrible environment for these guys. >> i think the closer terribly cheesy. are terribly cheesy.

gamestop has been driven by growth in new consoles. ♪

>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> welcome back to "market makers." all day long we are taking you inside the world of salmon and how a growing and tight is impacting the industry -- appetite is impacting the industry. at thebeen looking demand side of the equation, and whether we have reached peak salmon, the idea that we have run out of wild fish which means that we are to turn to farm salmon. >> there is a restaurant called

picnic down here that serves the most lish's lunch food i have ever had. they have this blackened salmon. >> that is why we have seen the salmon demand pickup, we have been eating over one billion pounds a year. the reason why is for the health issues. you want to get healthy, you want to get less fat, and you still want to get your protein. but the issue is that if we are running out of wild fish, overfishing -- >> you made this point earlier, the salmon that we eat is most likely not that all wild. >> that depends on how you define it. be wild salmon comes from the pacific, but it actually starts in a farm in alaska.

they start them in a hatchery, but when they are big enough they did put out on their own in the ocean. but in terms of atlantic salmon, you anything you're going to eat farms because the wild population is endangered here on the east coast. we have about 655 million pounds of salmon last year from other countries. that was up 23%. what does this mean on a retail level? they were saying that the salmon nearlyming an in store important fish for our customers. they do a lot of direct to fishermen sourcing. they have for its trying to take all of the wild salmon they like, and it is not enough. they have to turn to farm salmon. >> we have some experts here. >> what does it mean when you go

to the restaurant and you want s sushi?ings like welcome to our salmon special. >> thank you. your restaurant is impossible to get a reservation. asked what is the hottest restaurant in new york, and that is the first when he said. >> thank you. thatll me about the demand your restaurant has and how you use the fish. >> considering that it is not used in japanese cuisine, it is something that is really american. the restaurant is brought out while-- is predominantly products. when we speak about salmon come out of the whole salmon industry only two percent of the is wild.

real, wild salmon. those numbers are really difficult to get the product at we need at a restaurant. >> how do you do it? if only two percent of your options are there for your food -- what do you do? >> at two percent is worldwide. the alaskan government controls you were talking about hatcheries, they do a little but of hatchery, they run up the river, they spawn, and they threw a couple of hatcheries and end a swim back out. >> they just boost the breeding. >> they are trying to increase the population. >> do you have relationships with specific fishermen? purveyor. we use a couple of different ones. sea to table, that works

directly with fishermen that make sure we can get the best product possible. >> are you hanging out with them all the time? >> constant indication. i know the day before what they have, this size, the quality, so i know what i'm getting. >> have you ever been in the position where you needed to get fish and you could not? >> no. it is there. it might not be the same fish, but there are plenty of kinds of salmon as well as trout. you're able to substitute things that are seasoned. >> everything has a price. >> my grandmother went refused to eat atlantic salmon, is the taste different? >> it is totally different. totally while

products, i could not go back to farm products. flavorsral really stand out. you doot heavy in fat, not have that fishing is that you would think of when dealing with salmon. it is really mellow and very beautiful. >> are you scared of farm salmon? >> i have a question -- would you want to eat something that is basically manipulated and fed all sorts of handmade products? >> it depends on where it came from. in my experience, in maine the regulations are very tight. i would be more apt to believe that that something else. to stand inme dude the ice cold water in his waiters and catch me my dinner -- waders and catch me my

dinner. >> but some people are just not that informed about the industry. >> was i wrong about how they catch the fish? >> they do troll fishing, they have one long line with a lot of lines off of it. you have 20 lines on one long string. youru will have to ramp up fishing expertise. what is your prediction for salmon demand and consumption over the next few years? >> it is growing. the u.s. itself actually consumed 280,000 tons of salmon. by 2018 the demand is going to probably double. we are going to be talking about salmon all day. i'veare the hottest -- been eating sushi for a long

time, but lane vanilla type of california roll. what are the most exciting stuff that people are buying? >> we have a tasting menu, and what is fresh that day is what we serve. familiarpeople are with is our salmon and arjuna, a wild scallop that comes to massachusetts. our menu is 150 per person per bar. >> people are lining up anyway. >> we are giving 21 pieces of sushi for $150. >> prices are at a two decade high, how do you work with that volatility? >> we insert other products that allow our menu to be cost-efficient.

it is a really good balance. >> do we get to come? >> absolutely. >> thank you. a pleasure. >> congratulations on your success. your >> thank you. up, unexpected side effect from obamacare that hospitals are struggling to keep up. >> we are playing the yearbook game. i have already gotten some e-mails in. a lot of people know who this guy is. ♪

>> a new survey out this week shows more people are visiting the emergency rooms and obamacare took effect in january. it is the opposite of what the orders of the health law were hoping for. is the first question? it is a good question. there are a lot of theories out there, and the group that put a group ofrvey are er doctors that are pointing to obamacare as part of the reason. with ourmore people insurance and they feel they are entitled to health care. you have millions of the bull who now medicaid coverage gus of medicaid expansion, and then you had that with what we're seeing across the country in terms of a sort the jump in medicare dockage -- a shortage in primary care doctors.

instead, they are heading to the er. they say that is why we are seeing these big headline numbers. supply and demand. seeing in 46% increase since the first of january. to be fair, i know a couple of kids who have signed up for obamacare and i think they missed the first deadline, and the second deadline, and the third deadline, and they finally signed up a few weeks ago. -- ildn't feel confident would feel confident saying that a lot of people registered late. >> the question is, they have only had it for a few months, and how much do they know? that is the point that health and human services brought up. they said that we're still trying to help people understand the benefits.

they are working on things to expand primary care access, to expand preventative care. the other thing in terms of the research that is out there, and what we have been seeing in terms of trends, we are looking at increase in people going to the the er in the past five years. you have an increase in the number of baby boomers who have incidents and need to be rushed to the er. and then culturally we have a problem with obesity, diabetes, so there are a lot of reasons we are seeing an increase in all your visit -- er visits. they aree wants to say making more business that way, but are they really a hard margin of the -- high-margin business? >> it is not. they get bigger revenue from longer stays in the hospital than just the average person coming in for one incident.

bloomberg industry looked at this and looked at two hospitals this.ost exposure to one interesting thing, in terms onthe shift of people medicaid going into the er, they reported that if you look at the states that have medicaid thensions, 25% increase in number of people coming into the er with medicaid. in those same states, they saw a 28% decrease in the number of people that were coming in without insurance, which have been normally charity care. they are getting money for the patients that they would not have gotten in the past. still bottom line, it is way too early to draw conclusions between this and obamacare. >> it depends on who you ask. the er doctors say they are seeing an impact, but the white

house says to give it time. >> thank you. friday on market makers -- >> it is friday everywhere. >> but they do not play the yearbook game, and we do. matt and i were totally in the dark, and now we feel down because a lot of people know who this investor is. >> the smile is the dead giveaway. takeaway the mullet and send us your tweet. ♪

>> who is this man? >> i did not know originally, but one of our guests--

-- >we got another hint. >> i get it now. andreessen. dang, ding, ding. let's look at the tweets. >> most people said they could not believe we did not know who it was. that is it for "market makers." workinguch a pleasure with you. >> we're off on monday, have a great long weekend.

stephanie will be back on tuesday talking to deutsche bank. up next.ip" is >> have a great weekend. ♪

>> it is 56 minutes past the hour which means that it is time for on the markets. stocks are rising ahead of the long weekend.

joining me for today's option insight is the strategist from keen on the markets. we have seen the stocks back and forth a little bit, but we are still near that record high. when we seeing in terms of volatility? that remains low on a historical basis. talk to us about the relationship between the two. stocks had higher, volatility does drop. one thing that is concerning about this rally is just how thin the volume has been all this week. that was unexpected because it is a holiday weekend we're going into a long weekend. expected because it is a holiday weekend. options traders are already on or do not believe in

this rally. i do not think i can build up significant long predictions before i see some follow-through volume come in at these levels. >> in other words you are not thinking that we should at the rally through volatility at this point? >> right. i think that if someone is a long-term investor that has some concerns about the market at these levels that they should go out and buy protective puts. in terms of what is in the news today, we are looking at hewlett-packard. the shares have been trading higher after the ceo announced plans to cut up to 16,000 more jobs. the stock overall is higher, what do we see in the options market? >> we're seeing a big spike in hp options volume, and calls are trading over puts. maybe the company will stabilize a little bit after cutting these jobs, but meg whitman said that they are not expecting revenue

growth this year at all. all of that call volume we are seeing looks like closing positions. it does not seem like any institutional money is coming in and putting on new longs. >> thank you. i also want to talk about a company that has earnings next week. retail has had a rough time recently, but we have conceded -- continued to see this barbell. do you think we're going to continue to see that with khors? >> we cite huge move higher in hasany, and khors rallied eight out of the eight past earnings. the option marketing is implying it can move higher by about

seven dollars by next friday. that gives us an outside target of $102 which is just north of the 52 week high. onant to try to get long earnings and through next week where we have weekly call spreads. i combine these for $.50 risking $50 to make a potential $150. morey not be even aggressive in terms of trying to capture some upside there? want to havei limited downside. by using ike all spread i lower my initial green now late -- premium outlay. i do not want to get more aggressive than what the options market can tell me what the stock ancan do. >> thank you so much. we will be watching those earnings next week and we will be grading you on that trade. we will be on the markets once

again in 30 minutes. "money clip" is next. ♪

>> welcome to "money clip." take a look at today's menu. how a ceo build a life in a post-pc world. affordable care you will not find in the u.s. in nation, ready set match on minimum wage. we have two experts in the ring. will visit the only company farming salmon on the east coast.