--saying goodbye to the irs medtronic joins a number of american companies escaping the by a deal andm reincorporating overseas. the imf cuts its production for the u.s. economy and we will talk with the imf managing director christine lagarde. almost everything is on the table, the u.s. may cooperate with iran as it looks for ways to stop militant rebels throwing iraqi into chaos. we will speak with the former defense secretary, bill cohen. welcome to a new week on "market

makers." stephanie ruhle is on assignment today. let's begin with the biggest business story of the day, possibly the week. medtronic is buying smaller for almost 30n billion is in stock. the issue is taxes. it will move its headquarters to ireland and it could free up almost $14 billion of cash now trapped overseas by u.s. tax policy and overseas profits. with us this morning is bill george, the former ceo of medtronic who is now a professor of management at the harvard business school. also, bloomberg tax policy zach is here. he will ask play in the anderence between this deal what sounds similar but i know is different, what we heard weeks ago from pfizer and astrazeneca.

>> a lot of companies -- >> this is about inversion. >> they are switching their corporate domicile to somewhere outside the u.s. like ireland are doing it to lower their tax rate. 35%, thetax rate is highest among the developing countries. a lot of them want to get a lower rate through an inversion. medtronic already has a pretty low rate, 18%. they have already been successfully lowering their rate by booking a lot of profits offshore and not recognizing u.s. taxes on them. they cannot do that forever because they cannot access that money. this deal allows them to spend the money without paying taxes. pfizer/astrazeneca which was a tax reduction approach, this is a free up the tax privates to spend the money? >> it is a different kind of texas. >> bill, you were once the ceo of medtronic.

i know you remain a fan, is this a good deal? >> this is a great idea but it's not about taxes. that's about the fifth or sixth thing down on the list. it's expanding the mission to help more patients using inghnology and in merger cavidien, they get into cancer and they can use the technology. they lack the clinical capability to get these new ideas to market. medtronic is great capability so they want to expand their r&d. had $14 billion trapped overseas that could not be used. it has paid taxes on that but at theyer tax rate because have always been active in taxes.

cash-strapped so it frees up that cash and the unusual thing is that medtronic is now committed to spending an additional $10 billion over and above its strategic plan to invest in high-tech innovation in the united states. that for most of it is done and the company wants to expand its innovation in the united states but to do that, it had to do the tax and version. -- inversion and there is no rate savings. >> it sounds like there are all kinds of strategic reasons for med tronic to do this. if medtronic had remained domicile the minneapolis where you are now, with his deal makes sense at this valuation? >> it makes sense at this valuation but to pay for it, you need to free up the cash. that means it does not make sense of the state here. >> the valuation is fair.

it's a modest 29%. they don't want to pay for it by the boston headquarters. the governor of minnesota has endorsed this deal which i found a pleasant surprise. but you cannot get up the cash so you have to free up the cash. the president had allowed us to repatriate that cash, [no audio] then you would not have this problem. so far for five years, nothing has been done in washington. >> this is a great way for me to bring another of our guests, the chief political strategist with the potomac group in washington. bill said if the president had allowed us to repatriate that have clearly, companies

money trapped overseas and this is money that could cost them more in taxes to bring back to america. is this deal going to anger folks in washington or motivate them to deal with this problem? >> democrat state issues. this good fan more flames about companies outsourcing jobs. i'm sure harry reid will try to make a big deal of it. writers, a democrat in the senate and a republican and the house both are opposed to doing a stand-alone bill. they want comprehensive reform and that is not imminent. >> ok, we know that. suggesting that you're not telling us something we don't know but is it possible that yet another inversion deal

people on bothe sides of the aisle to deal with the inversion problem and overseas taxews? >> a stand-alone bill is unlikely. if we got two or three or five or for bit more big deals, the climate changes. for right now, since the pfizer deal that fell apart and this deal may be controversial, i don't see anything this year. >> you can see walgreens being the next one. they are under pressure from shareholders to re-domicile to switzerland. that is a company that everyone has heard of. >> no question. >> and in europe there is alliance foods. he's got the political insight and i think he's right but nothing will get done in this administration through 2017.

this will split the size. comprehensive tax reform is a huge deal. that could be years off. i think we have to get something done in the short term. corporations have to find a way to manage their business. we want great local companies in the u.s.. this is the in source jobs. ics will expand jobs in the u.s. over the next five years. they will not outsource jobs. this gives them the freedom to do that because they can invest more in the country. that's what we want to do. we want to build a greater global company based in the u.s. >> if you say we need to do something right now and yet it's acknowledged that a one-off build a deal of the problem will not fly, how do we approach this? attacks repatriation holiday

for six or 12 months that allows companies to come back to the u.s. if, and only if, they present the plan to the secretary of treasury to reinvest the plans test the funds over the next five years in the united states. maybe a company presents a plan to bring back a billion dollars and they can justify they will invest it in added r&d, additional plant facilities, new ventures, and in and venture capital in the united states but not in financial assets but intangible assets and things will expand in innovation in the u.s. and i think that is doable. republicans and democrats would get on board with that but they need the endorsement of the president to have the courage to get out and behind it and say this is good for the united states. i have been advocating that as far back as 2010. i got a little discouraged. they will do what they have to do to create long-term shareholder value by creating better value for their customers. >> you could say that what

medtronic is doing is declaring a one company tax repatriation holiday for themselves. saying we will spend the money in the u.s. and will bring the money back. that's what they were asking for from congress. >> that's a fair way to look at it and i'm curious to know whether republicans or democrats are talking about an approach of this issue. >> is still a long shot but there is one thing to watch and that is they have to put funds into the highway trust fund by august. this would raise some money. the repatriation in the first two years would raise money. there has been talk from harry reid and rand paul. they have talked about maybe coming up with a deal. it's not totally out of the question but the odds are against it. >> in the meantime, should ceos

just continue to force the issue by exposing the folly? will they keep proposing these inversion deals? astrazeneca was a reluctant partner but covidien is not. >> that is very different. think companies have to to look at their long-term shareholder value through great strategy and creating the technology in the united states and settling it all over the world as apple has done and building strong companies here. i'm a big advocate of that and have to do what they have to do. within the law. that's what medtronic is doing and you can criticize them but they are operating within the law. that's what we are called to do and we have to serve our long-term shareholders. i favor that but i do not favor

going in and coming back r&d or shipping things overseas. more companies may look at this and say maybe we should do something like this. it could force some kind of action washington. >> until there is action, that option is on the table. thank you for joining us. miter, thank you all for being with us. imf has ame back, the new forecast for the u.s. economy and it is not up beat. you will hear from christine lagarde. barack as thebout u.s. desperately tries to figure thewhat to do about desperate situation. you hear from the foreign defense secretary after this break. ♪

>> this is "market makers." militants affiliated with al qaeda have taken another city in iraq along the highway to syria. fighting government is back and claims to have made progress, confidence is low that it can regain control of the country without help. help from whom? us and ishen is with chairman and ceo of the cohen group. thank you for spending time with us. what should the president to? >> the president is doing the right thing right now by looking at the options available. he's exploring military options. frankly, i don't think there is a serious military option and one should not be taken unless there is an agreement on the

part of nouri al-maliki to change his government and to be more inclusive and bring the sunnis into the governing structure. absent that, i don't see the use of military force having any significant impact other than on the margins. i would say maliki has a choice to make. he has been under the the direction of iran in the past and excluded the united states from remaining animated ethical for the president to remain and now here are the wages being paid. to seriouslyared change the government, the united states is in a position to help. that help lonely be on the margins because the united states, be committing ground forces to the region or taking any kind of major military effort there. >> is that to say that in your opinion the criticism the president has come under for ,ithering and not acting

leaving too many options on the table and not making a decision is either misplaced or unfair? >> i think the blame goes all around. tookwe went into iraq, we the lid off pandora's box or pandora's jar as it was. and we let all of the evil emerge. now it is almost impossible to put the cap back on pandora's box. asgaul was divided into three parts, it looks like a rack will effectively be divided into ds havingts, the kur their semi-sovereignty in the north, the shia in the south and the rest of the area under a civil war that will rage for some time to come unless mr. mailiki is prepared to bring the sunnis into a governing structure that will help pacify that arents now

uniting under al qaeda, the most extreme elements of al qaeda, under him. i think you'll see iraq divided into three parts. there could be a threat to the entire region and to the united states. that pandora's jar analogy is appropriate given what we have seen play out in iraq. this kind of situation is something that many predicted. given what we see unfolding now, can we look back on the decision to invade and call it a mistake? >> i think there are lots of miscalculations. there was the miscalculation of going in and how we women and the miscalculation of pulling out. hadident obama may not have a choice but i think it was quite predictable what was going

to happen if you remove all the u.s. forces. this is also a lesson for what we are doing in afghanistan. the president has said we will keep a small residual force in afghanistan but only until 2016 and then pull everybody out. i think it is foreseeable and it should be foreseen that the same thing as taking place in a rack will take place in afghanistan. i think there is blame to go around. i think the hesitancy on syria was a big mistake when the moderate elements were fighting against assad and we did nothing. i think that sent a strong signal to many people in the region, certainly to our allies in the region, the uae and the 70's that we were not prepared to intervene to help the moderate elements get rid of assad as was our stated goal. the president said he had to go. we did nothing to make them go. that sends a signal to the rest of the world that the united states is not necessarily so

reliable as we were in the past. i just returned from a conference in singapore were secretary hagel made a fine speech about what our commitment is to the countries in the pacific region. after the speeches were made, many of the people who came, 1500-2000, revealed to me that they respect our power but they do not we have the will and the longer to use it. they see as retrenching and retreating from areas of the world and coming back to the united states. it may not be a fair perception but that is the growing perception and the golf and as pertains to ukraine and is certainly the perception in the asia-pacific region. we've got a lot of work to do to persuade the people of our own country that it matters that we are engaged in the rest of the world. time,ore we run out of secretary of state john kerry

said today that the u.s. government is open to holding talks with iran in order to try come to an agreement or a consolidated approach on how to do with the situation in iraq. is that an approach you would favor and do you think it's feasible? >> i'm not sure it's feasible. it may be explored but only under the condition that the iranians were serious about ringing stability to iraq and i'm not sure they are, that they would persuade their friend mr. maliki to open his government to a more inclusive government kurdsng in sunnis, the and others. other than that, it would be counter productive. you verycretary, thank much. that is the former secretary of defense, william cohen.

when we come back, the imf says the federal reserve may have good reason to keep interest rates at zero we will talk with christine lagarde. ♪

>> we are approaching 26 minutes past the hour and then means it's time for "on the markets." let me tell you about fusion. this company is up 23% because it is being acquired bysandin. it makes flash memory for facebook and apple. the company is being taken out of the price of $11.25 per share. it's currently trading above that.

perhaps there are some investors who went to submit a higher bid may be necessary. has long been speculated as a takeover target. coming up, we will talk about the u.s. economy with the managing director of the imf, christine lagarde. ♪

>> live from bloomberg headquarters in new york, this is "market makers." i am erik schatzker and stephanie is on assignment today. thatne a federal reserve spoke in pictures instead of words, no more interpreting. era may have arrived. made references to this. zerbostalking with david

and michael mckee. what is the dot plot. >> the fed is not expected to make any change in policy. the question is when they make a change and that's where the. plot comes in -- dot plot. they would release a chart that suggests when they think they will first raise rates and how far they will go during that year. was fromeal in march december until march, the dot plot moved into 2015 up in the 2016 numbers moved up. >> which says more members of the fmoc - >> if you look at 2015 and count dotsots - there is 16 there and 19 members of the fmo see and ben bernanke had resigned and there were two open seats. the fact that mode, you had

different people in their roles and you had shortages of people so the numbers changed. do they meet anything? janet yellen says is a picture of what we think will look like at the end of the year. the markets took it as a forecast and bonds sold off and yields went up. that's part of the communication strategy problem they have. they will release a new dot chart on wednesday. what will it tell you with three new voting members? >> do you likedots. >> i like dots and specific time periods. when we run out of things to do, the dots are helpful. as we progressed to a more normalized monetary policy and away from our very abnormal state come you could argue that the dots become too much information and the fed has expressed a desire to create some volatility around the

expectations. maybe this will create some of those problems that we had in the housing area. they are's desk they are stuck with them right now. whether that wanes over time because the communication becomes more difficult, i don't know. i like them i think the market likes them now especially as we try to figure out what these guys will do next. >> let's bring it back up again. think the most important part of this chart is to the far end, the long run. the fed has been debating internally whether the long-run equilibrium rate is lower. you saw larry summers make a comment last november at an imf conference suggesting the long run equilibrium funds rate might be -2 instead of +2. and that's different where the

fed thinks it will go. i don't think everybody is moving to this but a lot of people are floating around with andies of new normals stagnation and demographic stories. there is more demand for risk-free assets. that may be this equilibrium rate. what could be interesting is that we see some of those longer run dots drop a bit as people begin to become more mainstream with their view and away from the traditional view. i think that would be a positive sign for the equity market in a positive sign for the long end of the bond market but it might not be a good sign for the front end of the bond market. i think that is what to watch for. the rest of it is the individual dots. >> you don't know who's dot is where. it does not really matter what they think.

many people have suggested they should start attaching their names to the dots and some of them have said this is where i am but they have not done it as a group. >> as of recently, people have started to talk about this be nine period for economic policy and market performance. is that something janet yellen likes? >> i think she would be neutral. >> why would she be neutral? moderationt turned out to be -- >> it depends on why. -- if people attribute that to the fed, she would not like that. moderating policy is not the feds mandate. things like demographics and things like that, lower real

funds rate, it's hard to say there is one pacific -- one specific reason the fed did it. the fed took responsibility in the 1990's and they took a lesson from that. >> i don't think there is any desire to declare victory on inflation or declare victory on the crisis. at leastnews is that now arafat has a little less hubris that had precrisis. willnk that something you see them shy away from which is good news. question is how the party comes to an end. conditions,kind of you are getting paid to take at a certain point, things will change.

>> there'll always be a point where things will change. i am still looking at a world where virtually every major central bank is diluting the value of their currency and increasing the amount of the risk free assets out there. traditionally, we were encouraged if we wanted to not seek risk is going to treasuries or cash. that is what's being diluted every day. what we have today and have been arguing with their clients about is the asset that is the safest is the asset that cannot be diluted by the feds printing presses. we have advocated for the asset it the best asset is not gold which does not give you a great return of the long run but does protect you from inflation. real assets mining equity capital and capital of individual companies that actually make stuff. >> what of the bank of england raises rates before the end of the year and the fed ends qe -

everybody might just head for the exits because we have changed direction. >> there is a big risk in that. we moved rates higher last year and we had normalized team premiums in the market. they could be more aggressively moved in the future people get nervous but it gets back to the equilibrium concept on the fed will go out of its way to try to indicate to us that the path by which they will operate will not be a 1994 path or a rate hike path. they will try to remain as calm as they possibly can. that will be hard to do and that's why everybody understands that this experiment in monetary policy is one that will probably create some very complicated times for the fed and complicated for the market. for now, we sit in the sweet spot of very little inflation

pressure and reasonable growth in most central banks are doing the same thing. theflak -- the slack in economy still seems to be there. make the equity risk premium very high and premiums very cheap. >> this has by the sign then a conversation about federal reserve policy and will meet may year from the fed on wednesday -- and what we may hear from the fed on wednesday. we often talk about sovereign risk beyond the united states. there has been a development this morning about argentina. the u.s. supreme court has in aned to hear an appeal case that now may force argentina to give billions of dollars to bondholders include -- including up a well-known hedge found it -- i well-known

hedge fund manager, paul wagner. you have been following this case. when a jew at some details. >> the big implications for anybody in a restructuring 2000t -- they defaulted in and 1, 90 5 billion dollars worth of bonds and the restructured or the last decade but eight percent of the bondholders did not agree to restructure. in that eight percent, paul concerns suiter argentina said we will not take the restructured bonds a turtle worth $.30 on the dollar. they held up her full payment and to go through the u.s. court system and the court has ruled that under the clause and those bonds, you have to treat albeit -- all bondholders equally so you have to pay what you owe. the supreme court refused to hear the argentina appeal which, in essence, leaves argentina on the hook. argentina has said at various times that we may attempt to pay

, we are not going to pay, we may now negotiate with these people again. we don't know exactly what they will do. if they threaten another default. >> this is a case that involved the seizure of an argentine navy vessel. how much of a precedent does this set for investors? >> i think it's important. there's no question. i'm not sure where the right odds were to go into this and what was priced in. i think the bottom line is this should be a warning shot to all when countries look like greece and they think heavily about what that means for access to international capital markets. the big randleman argentina is that it cannot access the

international capital markets until it resolves these problems and that's a big deal. you get a country which has a normal sound that amount of potential if they could put that behind them and defaulting would trigger a lot of cds and other payments and you could move on from that. it does affect the people of argentina and it's a court case in the united states. the second court of appeals ruling was upheld in there making financial, it's about the argentinian economy. all have printing presses. if they want to go, they will let the currency go and try to print their way out of it but that will hurt the argentinian people automatically. this is an important precedent but does not have macro economic effects.

but argentina will not be the last country to default and restructure. >> that is definitely true. theives some pause for restructuring. it increases the odds we have inflationary outcomes and set of default outcomes is the way to deal with debt overhang problems because there is no lawsuit with inflation. whyf you are a bondholder, would you accept a restructuring of you can force them to repay you? potential, the story of argentina. today, a loss for argentina. at the world cup. >> i brought you your notetaker hat. i brought run -- i brought one for mike as well. >> explain to everybody with these are about. >> this was the gold versus stoxx debate we were having a lot last year.

called stock is for lovers and gold is for haters. a couple of magazines pick that up and got angry with me. which is a not later attitude which is don't get in the way of central banks and don't hate channel yellen. don't hate in general. the bar when at you're watching a world cup game. it's a sign of the times that we have had a lot of people predicting doom and gloom. a lot of angry people post crisis that did not think central banks could work to solve many of the problems we had in the crisis period. centralere today with banks not declaring a great moderation but at least declared a partial victory on their ability to solve these problems. . thank you very much an michael mckee and we

will be back in a few moments. the imf is out with its latest take on the u.s. economy which is not encouraging. you will hear from managing director christine lagarde, stick around. ♪

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the wheel. >> one of the interesting things that we do that no other company does is audi board members go around the world to drive the cars. they do this throughout the year. the second thing they do is as an executive, you have to have an audi drivers license. you have to be certified. please leave me, it's a rigorous test. for career salvation, you want to pass that test. >> we are driving the company's track ready r-8 at the home of the audi racecar experience. >> this is the first real supercar for our brand and we wanted a home for this car. andooked around the country one of the first places you land on is here in sonoma. when we get to this track and noticed how technical it was, it was perfect.

>>the r-8 and the driving school or a natural extension for a brand that has built a name in racing. audi has more lemans titles than any other brand except porsche. >> a lot of cars can go fast and audi likes to make a quick car which is fundamentally sound. >> how key is this program to marketing? you just sold a car and said good via mouse important to keep a close relationship with the customer at the point-of-sale? >> 100%. you can run an ad campaign but the greatness is getting the car on the track. of overwhelming majority owners love driving and are passionate about it. >> how many people come out and end up buying an r-8? >> it's extremely high. >> it comes down to selling cars

but you might as well have a good time while you're at it. >> we get tangled up with sales and pricing. it's a heck of a fun business. tv is all about living vicariously. that's why matt miller is here to tell us what it was like. >> it was amazing. that track is perfect for that car. it's able to easily deal with tight corners and there is not a lot of straights so it's not about top speed but moving around the track. it's perfectly made for sonoma. >> how much does the r-8 reflect what audi doesn't racing world? >>audi is famous in racing for lemans. they won yesterday for the 13th time and 10 of the last 11 so they dominate that sport. they do that with super hybrid diesel vehicles. >> almost no one in america pays

attention to this. r0-8 reflect the technology that audi uses on the less than 100,000 dollar cars pretty all-wheel-drive system is key to keeping the traction. audi has been kicked out of racing leagues for using the all-wheel-drive system. same engine in their less than $100,000 cars. that's the car they use as a test bed to make sure consumers of the regular cars are happy. . >> thank you. >> it was my pleasure. gears - e to switch we will shift into a faster lane and talk about the imf. madam christine lagarde is in washington and the imf is just released its forecast for the u.s. economy and the imf is forecasting the american economy

will grow slower than it had previously anticipated. we are looking at two percent, down from 2.8 four months ago. let's take you straight to washington with tom keene. >> thanks so much. this is not like the spring meetings we had a couple of weeks ago but it's the bombshell of what we heard in the imf report. it's a report on a small country called the united states. i was sitting in your press conference where you talked about more subdued growth and inflation. all i could think of was neutral, the idea of working gross to say you are experts in this building to grab onto the idea of a more subdued economy. do you agree with bill gross that it will be years of subdued u.s. economy? >> we have revised downward the

2014 numbers but we do not think it will be a downward spiral. we believe that 2015 will be up three percent. however, we have revised our gross trend on an ongoing basis from where it was on average in the last 50 years or so, three percent to 2% and we have done that on the basis of the aging population and the basis of lower productivity based on the latest trends. yes, we have revised downward but it does not mean we are downbeat for 2014. >> olivia blanchard walked by and i think of his work in global economics. are looking at potential gdp for all the nations. is the u.s. of the locomotive of the global economy? >> yes, it is, because it's one

of those very large advanced the largest economy today. we believe some of the emerging markets are going to slow down as china has begun doing going forward. the advanced economies are still driving the show because of the high base they start from and the growth percentage they displayed. >> the phrase subdued inflation is fascinating. what is the probability that the imf gets this wrong and return out having a better outcome? >> forecasting is not a science. let's begin with that. second, there is uncertainty about some of the key numbers. let's face it, whether you look orunemployment or employment

analyze the participation rate -- all of that is not rocket but it's clearly explainable from some of the numbers. when we look at inflation, there is also subdued inflation at the moment around the world particularly in the advanced economies and yet, there is the movements lately upwards and downwards. that is the reason why we are coming out with a recommendation that the fed the on the communication and as active as it could in order to explain the uncertainty and when the uncertainty settles and fades, that can explain very clearly what is happening so that markets of the other ended not operate on the basis of that sort of uncertain plateau they seem to enjoy. >> you spent years in high school in washington and 10 years in chicago in the legal business.

here we have the imf speaking to america about the minimum wage. cantor,es as eric republicans reform and you a great student of american politics. why can't the inner -- the international organization talk labor economics to america? why are you lecturing america on the minimum wage? >> would look at numbers and when we are seeing there are 50 million americans living below the poverty level and many are working poor and we see a large singleof them are households held by women, we believe it has macro economic dynamics and's debt that mentions that require our attention we have to do something about it. we recommend an increase of something that's been around for the last 40 years which is the itc so that it puts more money on the table. that together with an increase

of the minimum wage would be very helpful to kickstart growth and give a little bit of a man support that would not be fueled by taxpayer money. . >> this is important -- you lecturing india with their wonderful and historic change in government on what to do. you are telling us that we will not just lecture india, we will lecture the u.k. on housing and employment and -- and the u.s. on a employment. >> we have to be evenhanded and it's our job to see what we analyze what we forecast. we don't always get it right. have face it, when we checked and double checked and when we believe that stability is at stake, then we make the recommendations. it's for political leaders to find out what they do and they can very well ignore it if they want to. >> in economics, they talk about

ambiguities. on monetary policy in your economicou talk about ambiguities. what is your mandate to chair ye llen and the federal reserve? >> we approve of what has been done a monetary policy would believe she has communicated uncertaintylow of that those are around the u.s. economy like unemployment. we believe the tapering that is happening is happening in this transitory way, graduate -- a gradual way, welcome indicated -- way wecommended. recommended. were quite confident that as unemployment numbers from up and unemployment goes down provided inflation remains in check, she continues to tether with the board-- together with the

to conclude the tapering and overtime move into tightening. if inflation has to go temporarily up a little bit above the 2% target -- original research on this earlier in the crisis about a 4 percent target. he was raked over the coals for that statement. what is a little but of its -- bit of inflation for christine lagarde? for a short period of time. let me finish up on a couple of topics. i had to find a place besides the united states with more fractious politics -- that may be france. it is a jumble, would you must be observing in your france. there is a discussion of this ,han that of this than that

that you would possibly seek elected office in france. i know you will tell me know and you have not thought about it, but please, and for all global audience on how you perceive the jumble of french politics right now. we're looking at economic issues and a political issues. unfortunately, sometimes they intersect. i would hope that the economic support the pickup. >> you do that very nicely, very quickly. this is "market makers." we will return. ♪

>> live from bloomberg headquarters in new york, this is "market makers." with erik schatzker and stephanie ruhle. of the titans. siemens gets ready to take on general electric. 100 years of greyhound. the old dog is rolling out new tricks to attract passengers. we will speak with the ceo. they have time on their hands. we will look at the luxury watchmaker the world cup referees are relying on. this is "market makers." i am erik schatzker. stephanie ruhle is on assignment

today. we will begin this hour with the newsfeed. the imf has cut its forecast for u.s. economic growth. it's new projection calls for growth of 2%. may haveays the fed recent acute interest rate to zero for longer than investors expect. ukraine says russia has cut off its natural gas supply. than $4inians are more billion -- over more than $4 billion to the russian gas company gazprom. starbucks will not pick up most of the tab for employees college education -- now pick up most of the tab for college employees college tuition. is indeed a bidding war for a piece of france's energy industry, one of the countries

-- country's crown jewels. general electric may raise its offer for all stomp -- alstom. siemens is expected to make an offer. vying forsides are the support of the french government. to figure out how this battle plays out, let's bring in our managing editor jeffrey mccracken and bloomberg's greg scuzzi. he -- vi there have been many crown jewels. some of them have been privatized. this is subject to the concerns and paranoia of certain french government ministers. tell us how it is working out. when the bid came in from ge, what really annoyed the government is that they had not

been told about it ahead of time. this set off this huge angst in the french government. it is a very important government. -- company. it makes turbines for the french nuclear power plants. it is a major employer in france. if those are very high-end technological products that the government wants to protect. then there was the period when the government was unclear about what they were doing. for a long time, it has been clear that all stomp could not make it alone -- alstom could not make it alone. it has been quite a while that they have been looking for a partner. >> how important is it for the ceo of general electric to

demonstrate that they want it? >> he is taking a lot of steps that are not necessarily expected from the ge ceo. he is offering promises above and beyond $70 billion. he made a promise of another 1000 jobs that can be created in france. completed, this would be the largest deal the ge has ever done. it is safe to say that jeff, would see this as part of his melt wouldeffrey a see this as part of his legacy. >> what everybody is still trying to figure out is what is it going to take for ge to get the deal then? they have a very attractive offer on the table and has made many concessions. it does not seem like it is enough. >> u.s. the acquirer of a couple of constituencies -- you as the acquirer have a couple of

constituencies. when someone from ge needs to approve its bid, does that mean it needs another $1 billion or more money? they are in a different predicament than you would particularly be in. you have to appease a whole bunch of constituents. it is not just about the bottom line. it is about where things going to be headquartered and how many jobs. they have to competes -- appease a lot of constituencies in different contexts. should deal with each other and government should not be involved -- this would suggest that the end result is one that is highly favorable to france and not such a bad thing that the government is involved. ownership of the energy assets will change hands, either end up with a combination of mitsubishi , siemens, and hitachi or it will end up with general electric. france will have more jobs and

all kinds of commitment about the industry remaining in france. >> i meant price and the wider sense of the word. not just the dollar amount to rid commitments on where decision-making will -- commitments on where decision-making will be based. there are big issues here and i don't think france is that unique. there has been a lot of talk about the french, but i don't think they are so unique. it was the german government that scuttled the airbus link. the pfizer bid for astrazeneca in britain set off a whole big political storm in britain about things. these are big, important companies, and there are a lot of issues at stake. how important a precedent does it set for the modern -- and innion particular france -- what other assets in france might become targets for foreign investors?

>> there are plenty of them. damon was a target a few years ago. away.o got shooed the french have a lot of very good sized, reasonably well-run companies. bigt of them are just not enough to be global players, but they are too small to remain these players. that was the position that all stomp --alstom was in. you caught me on the spot with names. dannon was one. maybe some of the french banks, too. >> we have a deal that fell and on thepublicis mnicon fell apart. it does seem that if this deal goes through, it does seem that the french government is more

open than they have been in the past to these large transactions. these companies will need some help and you will have to have some open arms or be open to the idea of others buying these assets. >> thank you very much. quick going to take a right. coming up, it was the season finale for "game of thrones." we will see with the network is doing when we come back for more. no spoilers, i promise. the company urged generations of americans to take the bus and leave the driving to us -- greyhound has been around for a century. we will speak to the company's ceo. you are watching mark quebeckers bank." ♪ -- market makers. ♪

>> it is time for top tech and media headlines. " kung fu panda" are coming to youtube. one of the shows is going to be called "prank my parents." a hidden camera show her kids play tricks on mom and dad. street" took in 22 -- $60 million in north america. they begin the second-best debut for an r-rated comedy behind "the hangover 2." the times.ign of comcast will take the general electric signs off the top of the 70 story 30 rock plaza. and the famedgo nbc peacock. comcast bought majority control back in 2011.

fourth seasones" came to a bloody end. it has been quite a season for this hbo blockbuster. the most popular stowe in the pay-tv networks history -- show in the pay-tv network's history. it is awfully expensive to make. the mere fact that we are talking about it being the most popular show ever in hbo's history makes me wonder whether that alone is worth the cost of production. >> yes. fairpoint, erik. they have several directors. i asked one of the directors, how does the show compared to other shows you have worked on and television over the years, like the west wing? he said, it doesn't compare. i'm flying over the world. it is a very complicated shooting schedule. millions of dollars for each episode. this becomes a really important

storyline in the future of pay television. we are going through massive cable consolidation. you just type -- cited comcast. hbo is very tied to the traditional world of cable. not only are you paying a boatload for cable, but you pay another $15-$16 for hbo. one they are able to put together impressive ratings, it would suggest that the traditional pay-tv world is alive and well. it is an important story for time warner and for the cable world overall. >> i would love to continue talking about "game of thrones" but we need to break away. some breaking news on alstom. us talk about that moments ago. let's bring in senior markets correspondent julie hyman with more. we had talked about the rough outline of a potential offer

from siemens, which is teaming up with mitsubishi. now we have the details of it. it is a little bit complicated here. siemens says it is going to offer to buy 100% of alstom's gas operations for about 3.9 billion euros in cash. to form some joint ventures between siemens and helpbishi, in order to foster the business here. as part of that, mitsubishi is going to inject 3.1 billion euros in two alstom and will become a stable and long-term shareholder by offering to buy a 10% stake in the conglomerate that owns a stake in alstom. a little bit of swapping of interest here. the ceo of siemens is speaking in munich right now.

he is saying that this alstom offer is low risk and low complexity. he said it is worth $1 billion more than ge's offer for alstom. alstom talks about preserving the integrity as a european company. that is something that the french ministers have said would be better in a siemens bid. war ofttle for assets, a words. thank you very much. our own julie hyman with the latest on the bidding for alstom . it is not your father's greyhound anymore. the company is celebrating its 100th birthday. we will speak to the ceo. ♪

>> this is market makers bank."

makers."s "market greyhound has been moving people around the country for years. what is their strategy to stay relevant for another 100 years? with us is the ceo. how is business? >> business is great. a 20% up in the new york market this year. >> how about nationwide? >> we are about 12% in passengers. >> how does that translate into revenue? >> revenue is up about 8%. we are working on some airline pricing strategies to get people in the bus and try our new services and our new product. >> that raises the most important question. how do you get people to want to ride the bus? >> you have to make the service relevant. big cities, lots of people moving to big cities, lots of congestion. what we are seeing from that congestion really is an opportunity for us to play a role in relieving that congestion.

so what you do is you put in a whole bunch of frequency between major cities, new york to boston, new york to philly, new york to washington, then you put an airline style pricing to attract people to try your pricing and service. >> what is airline style pricing? >> yield managed pricing. you can buy a seat for one dollar or you can buy walk up there -- fair. the same type of pricing strategy. usingirlines have been for some time. it was not prevalent in the bus industry. >> it was like a one price fits all. >> now it is that type of pricing. >> who is your typical customer? >> a cross-section of america. but millenials are the biggest growing market segment. part of that is because of this move to big cities. kids are living in big cities more than they ever have you

read people are moving to big cities more than they ever have. especiallyr a car, in places like new york, is becoming less and less. it makes it good for us. kids aso you keep those customers? or do you care? are the just going to be replaced by the next generation of whatever we call them because i presume they will be millenial's? >> they become young professionals and young professionals, as long as they keep value in the service, if you're going to take a bus from washington to new york to watch a broadway play, why not watch a bus for theride a rest of your life? >> but the same service is provided by your competitors, which is to say if we are talking about new york to washington, you can get on a train and go from penn station to union station, you can get on a plane and they are pretty easy, pretty fast. they're both more expensive than

what you're offering. people have a tendency, as they get older and as they accumulate assets and wealth, to want to trade up. how do you stop that from happening? >> you embrace that. you don't. you encourage them to ride if they're going to see some friends and family. if mom wants to take the kids to go see grandma at thanksgiving. it is those types of trips that we want to see. >> how concerned are you about the highway trust fund that is running out of money to maintain america's interstate highways, which are the arteries through which are buses travel? >> we are very concerned about that. of then the board american highway users alliance

and we discussed this issue all the time. the trust fund is very important to the highways. >> we will make do with the patchwork that comes out of watching 10. we are hoping we will get some will get aand transportation bill that will be sustainable and landing, but we have defined funding vehicles for our highways. it is going to take strong leadership in washington to do that. >> i'm looking forward. thank you very much. is the president and ceo of greyhound, the bus line you have probably taken at some point. at&t is teaming up with online education company to train workers for high-tech jobs. we will hear from the ceo. ♪

>> live from bloomberg headquarters in new york on the this is "market makers." with erik schatzker and stephanie ruhle. again.o once i'm erik schatzker. stephanie ruhle is on assignment today. at&t has teamed up with the online education company udacity to offer a new kind of degree program. it is all about entry-level software skills. degree says its new nano will be offered online and cost about $200 per month. the payoff, a paid internship at at&t. west" anchor is in

san francisco. she joins us now. >> thanks. joining me now is the cofounder and ceo of udacity, also a founder of google x projects like google glass and the self driving car. what is a nano degree? how is this partnership going to work? >> a nano degree is a very short degree, a very focused, directly meant to endow you with the skills to find a job. we are super excited to work with at&t. at&t as our initial partner here. they are helping us build these degrees. they are putting employment on the table. they're your marking 100 internships for the top performers in this program. >> who can get into this program? >> anybody who wants to do this.

you have to be good in math and so on. jobget a very sought after in the world. so salesforce, other companies have endorsed this. do you see partnering with them and doing something similar? what other companies could we see you partnering with? bunch ofe a whole announcements coming up on similar nano degrees and we hope this will become an industrywide standard. learning has to be lifelong in this day and age. once upon a time, one education was enough. but we want people to improve their skills throughout a lifetime. things change so fast. now, you invested the google car, you are a founder of google life, how do you apply that moonshot, big thinking to education? >> i think education is one of

these fields that is ripe for innovation. i think students need more options. we have one trillion tools, many students do not finish their degree. many have no educational opportunity that allow you to learn in a focused way. change this and create options for people of all walks of life and we can have tremendous impact on society. there are a lot of people who are extremely talented. career,et into that they need this extra dose of education and we will not provide that. >> what other industries can you see this idea of a nano degree applied? given how big the skills gap is. >> i think pretty much every industry. we are starting with computer technology because that is where i am at home. we are looking for new talent. there are a lot of other fields which could benefit from a very

focused job education. in the future, do you foresee partnering more with universities like that or companies, as you have done today? >> we are very proud to have partnered with inverse's and companies. at&t has been a signature sponsor. i think we need a lot of creativity. what is really required to get a job? for many people, you don't need a four-year degree or a two-year degree, you need something very, very focused. i doing something focused in a very fast way, we hope to empower people. professor at stanford. i recently interviewed the president of the university and

we talked a lot about online education. onlinen't think an degree or online education will ever replace a traditional college degree. , but never a traditional college degree. how do you respond to that? >> and in a degree is not a traditional college degree. it should not be confused as such. we all remember the days of the libraries, when librarians argued that it was important to physically read the book. we have other companies that the amount of knowledge acquisition has gone by that. there is the potential to have many more people engaged in learning. today you have to go to campus. tomorrow, you might just do it on your cell phone. how receptive are resistant have youersities been -- i know have been talking to schools across the country -- how do they feel about this approach? >> i believe the feeling is ambivalent. there is an understanding that

the current inflation hikes are not acceptable. there is a technology way of coming in. places like stanford or doing a great job of experimenting with new technologies. this technology will have a dramatic impact on the ability to learn in the future. we need to do that so we can have more fat over a lifetime. of udacityr and ceo on the new partnership with at&t. erik, back to you. >> thank you. coming up, when time runs out on your favorite team at the world cup, these guys are responsible. we will show you the luxury watchmaker that is the official timekeeper of the tournament. ♪

>> the 2014 world cup in brazil is officially underway. seven games this far. many people are buzzing about the world cup taking place eight years from now. the ethics committee is investigating corruption allegations about the qatar bid. sponsors are putting pressure on fifa to get to the bottom of the bid. jonathan ferro is here. >> you will struggle to find a stakeholder or supporter that would like the world cup to be in qatar in 2022. one of the main reasons is the weather. if you are a u.s. network that has paid for the tv rights to this and you thought it was going to be held in the summer and it is going to be held in the winter and it is going to clash in the nfl -- >> and the nba and the nhl -- >> and the list goes on.

you also have the allegations in the sunday times. the allegations against qatari officials essentially rigging the vote to get the bid. you wonder what is going to happen with the sponsors. whether it was rigged or not, outside of that, the working conditions for a lot of .mmigrant workers the pressure is on fee for to have an internal investigation -- fifa to have an internal investigation. thisf the losers was country, the u.s., who had a bid. on theanybody put odds probability or possibility of a revote for 2022? >> i have not seen the odds myself, but when the head of fifa acknowledges that it was a

mistake to give it to them, it does beg the question that this could be well on the cusp. should come asis no surprise. when it got announced, this is a people reacted -- really? qatar? what are they going to do? where is the money going to come from? of course the qataris are very rich. but it is about legacy. what kind of infrastructure will that leave behind? >> the legacy will be global warming from all that air conditioning. >> who will use the infrastructure and qatar after it is gone> >> i need to return to brazil. if you have been watching this year's world cup, you will have noticed the fancy digital referee bortz on the sideline. the watchmaker behind them, hublot, may have the best

advertising real estate and it does not even a sponsor. it is the official timekeeper and watch of the tournament. the chairman of the company is here with us in new york city. thank you. >> thank you. >> i want to talk about the bortz on the world cup. -- the boards and the world cup. >> you are not spending money to support fee for -- fifa and the world cup. your name is inextricably linked because of these boards. how do you feel about the 2022 world cup in qatar? >> i feel a little bit like what jonathan said. on the other side and that is maybe because i did not take into consideration america. >> whether it is america or australia -- >> no. somehow it does not really matter for many sponsors where it takes place because the major

benefit is the tv. when you think you have 40 will watch thes world cup, if it is in dubai, if it doesn'ttar, matter -- 40 billion people will watch. for all of these reasons that were mentioned in qatar, i can understand the concern. but again, i say, and this is in 2009, we to -- did not know were 2022 would be and we were not concerned. what we are interested in is the tv coverage. >> are you concerned that you would not get the exposure here in the united states? >> yes. it and if i just

heard from you because i was not aware -- >> that is very much under discussion. >> we may have a conflict with american sports, as you mentioned. >> would you reassess the price you would pay to sponsor that event? >> no. >> it would not impact that? >> no. 2010, 2014,rice for 2 thousand 18, 2020. it is a combination. i bought a package. if the last one is a little bit different, i will not ask for compensation for that. >> what is the value of that relationship with fifa and the world cup? doing 26hublot was million turnover. it was a non-existing company. now we do have a billion. a billion.

>> people credit you as being the man who saved the swiss watch industry. >> i know how to revive brands. football has been instrumental for us. why? because we enter the sport being thwe e first, being different, d being unique. if you are first, different, and unique, you can only win. >> i can see hublot when i watch the world cup. look at the likes of budweiser, i get that. into a bar and i might buy a beer. when i look at your watch is an air affiliated with the world cup, i have not got 100,000 pounds to go out and buy a watch. what i'm trying to gauge is why a high-end brand like yourself

needs the affiliation with something that the world cup? >> because everybody knows fe rrari. does everybody buy it? every boy knows ferraroi. today, it is vertical. it goes from top to and. it goes from rich to less rich. it goes from student to professional. >> you believe in the value of aligning yourselves with the sport, the sport confers an image on your brand that you believe drive sales. you are behind the nba, the miami heat. >> and the lakers and kobe bryant. >> and the world cup. what is next? where else are we going to see the hublot brent? -- brand? i. we have it on ferrar

they have built their reputation on sports. we are linked with them. timekeeper for the world boxing federation. [laughter] french we say it is a noble art. >> it is a muscular sport. >> it is the sport of truth. you cannot hide many things when you're boxing. >> [laughter] true enough. [laughter] we have to leave it there. the chairman of hublot. when we come back, we will take you on the markets. stick around. ♪

>> that's going to do it for "market makers" today, everybody.

tomorrow, a hearing on high-frequency trading in fairness to investors. there are growing concerns about conflict of industry -- interest in the industry. we will hear from our friends and much more. much more bloomberg television coming up, including "money clip you're coasting with us. ♪

past the56 minutes hour. bloomberg television is on the markets.

let's get you caught up with u.s. equities. u.s. equities are taking a turn lower. the concern in iraq continues, how that spreads -- that instability spreads through the wider middle east region and what that means. the federal reserve meeting is later this week. you get the forecast comes the press conference as well. what is a considerable amount of time actually mean? was sixllen said it months. a lot of people expect her to backtrack on that. let's talk about iraq and volatility. we are talking about volatility in the options inside. , markets flatten out if i look at equities. is this the kind of event, is iraq, the geopolitical risk, the kind of event that may actually bring volume and volatility back into this market? >> it could be. u.s. equities have been very resilient. there was concern on iraq over the weekend and flavoring up

violence over there. crude higher, futures lower at the open. they traded higher early this morning and have turned over a little bit. is the most part, volatility across asset classes and remains incredibly low. we have seen a liftoff of the 10 level from a couple of weeks ago. volatility is still on historical lows. >> this is what i am trying to gauge. yes, we are coming off record highs. how much more does this need to escalate for this to play into the equity markets? or is this something that we do not even talk about anymore in two weeks time? aswe read equity volatility being very low and equities being invulnerable, therefore. if you look at the period of time that the vix has been suppressed below its mean of the last 18 months, we are approaching a two standard deviation event that would be

very healthy to see equity volatility move higher and for the s&p 500 to come incorrect. the largest pullback we have seen over the last 18 months and the slow volatility period is less than 6%. something in the neighborhood we would certainly view as being aalthy, could there also be knock on effect across asset classes with what has gone on in iraq? the fact that crude volatility is on historical lows as well, there is fuller -- former ability there. -- former ability -- vulnerability there. >> i think you can blast through. we can evaluate the volatility surface. if you look at uso, the most actively traded etf in the u.s. on wti, skew has declined very sharply. you have seen this over the last the thers were

commodities are sharply higher. this really does tend to lead an even sharper move up. , -- implied volatility is >> i want to get specific with you. you like yahoo!. less thanming up with encouraging news this morning. i struggle to understand this company. i'm told that it is an ebay amazon mixup and then i take a stake in a soccer club and it doesn't make sense to me. is this yahoo! stake being undervalued? >> we think it is. we cover it with rob sanderson. we have a fundamental view. news out on alibaba today, disclosures ahead of its ipo have affected it. the focus is on the fact that

you have had a deceleration of the marchowth in quarter, relative to the prior year. you are talking about 70% growth down to about 40% growth. that is driving follow till it be in yahoo! today. on our valuation, the yahoo! stub right about now is worthless. we would own yahoo!. we have a $45 price target. >> $45 price target. along with to go before we get there. a long way to go before we get there. equities taking a little bit of a dip. ♪

clip" whereo "money we tie together the best stories and business news. i am matt miller. adam johnson is off today. around the world on the slashing the outlook for the u.s. americann a new pastime in sports. in tech, london takes on silicon valley. the mayor sits down with mike bloomberg for a conversation you will only see right here. high-yield currency traders. how