rebound. we got news about that yesterday. that is pushing up some inflation sensitive sectors of the stock market. bonds and utilities will suffer in the face of the rising inflation threat. >> thank you. we are on the markets again in 30 minutes. "market makers" is next. >> ♪ >> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. not the answers says the former vice chairman of the fed. explains why taking from the rich to give to the poor won't work. banking on bitcoin. techstars and wall street wizards are lining up for the big government auction. just aboutolf is not making a hole in one anymore. we will talk to the ceo up up putt putt.

a brought anybody for the whole two hours. good to have you here. are you a golfer? >> i hate golf. i love miniature golf. i enjoy the windmill. >> i am competitive. we might have a face-off later. >> i have never played sober so i have no idea if i am any good. clayswas a miniature golf next was in college. it was a lot of fun. >> it is good to have you here for the whole two hours. it is time for the top business stories from around the world. the homebuilder posting second-quarter revenue that beat estimates. it was the best for forming homebuilder stock in the past month rising almost 8%. the proposed multibillion dollar fine is weighing on bnp paribas. the french bank plans to cut its dividend and sent -- so millions

in bonds next week. unp prosecutors want to find them as much as $9 billion for violating u.s. sanctions against iran and cuba. american apparel wants full repayment of the loan after the change ousted the ceo, according to people familiar with the matter. british investment firm let $10 million to american apparel. the agreement calls for accelerated repayment if there is a change of management. it is the most hated bull market in history. we keep getting these record highs in the s&p. every trader i talked to is depressed because their stock is not working anymore. portfolio managers depressed because what they find through the modeling does not work. >> we have been calling this the most hated rally in wall street history since 2009. nobody believed the giant selloff in march 2009 was

something significant. alldon't get every metric the way to an extreme at the same time you get a huge surge ,f volume when you are down 57% and not think there will be some sort of upside bounce. when you speak to people who have been in the market for many cycles, folks like laszlo they all say this market is surprisingly reminiscent to what we saw in the early 1980's when after a 16-year bear market, no one wanted to believe it was over. >> when do you believe it is over? we have been hearing calls for the 10% correction for a long time and have not gotten it. is there is a lot of fog, limited visibility. there are people who have every 500 yards been saying it is it for the market. you don't know if you are on the

bunny hill or mount kilimanjaro. wild guesses have proven to be the wrong way to go about this. in terms of whether this is a new secular bear market, merrill lynch puts out a piece every month that shows the overview of the markets. they show these broad ranges where markets are range bound. they break out into a new area. 2013 was justin that breakout. the counter argument is we had to fake -- a fake breakout in 1980 and pulled back. it was not until 1982. >> valuations are creeping up. >> valuations are creeping up. there are a couple of things that could change that. gdpust got a horrific print. the economy does not have to be a house on fire. it could be just 3% in the present market valuations can be grown into.

we are not wildly overvalued but are fully valued, maybe a little rich. the second thing we have seen in other markets is multiple expansion. if people see signs things are getting better, and we are seeing more signs of that, gainsing like 2/3 of the of the 1990's markets was due to multiple expansion. we know how that ends, but i have no idea when that happens. that could be years in the future. nobody knows. >> just wait? is that the best strategy? >> our approach has been to have a mix of global exposure. each year, it is a different sector that surprises people. the beginning of this year, people were quick to make fun of a stock bond portfolio last year when the s&p 500 was up over 30%. in the beginning of the year, 78 outvey bloomberg did,

of 78 economists thought rates were going higher and bonds were going to lose money. here we are halfway through the year. rates have gone lower. bonds have been terrific. >> diversified and have to get comfortable with a rally going higher. appreciate that. is the story in currencies. we are talking bitcoin today because the u.s. marshals service is auctioning 30,000. ache is part of the c from silk road shut down last year. matt miller joins us. why are they getting rid of them at once? thing, they are concerned if they sell them all at once, it could rock the price. if someone was able to get that many of them, one person or organization could control the price action in the market.

taking this are cautious view so they can get the most out of their assets. auctionshals office off billions of dollars of assets each year. toy are adding bitcoin homes and other things you can buy on the website. >> who is buying? >> a number of different people are buying. 40 or 50 people or organizations have registered to bid. you have to prove you're not or did not have anything to do with silk road. you have to put down a 200,000 dollar deposit for each block you want to bid on. if you want to bid on five, you have to put down a $1 million deposit. yet to show you have the cash to back up your bids. they do not want any jokers coming in. you can bid from 6:00 a.m. until 6:00 p.m. today. you had to already be

registered. we will have alex waters of bitcoin -- a bitcoin entrepreneur live on "street smart." he will be bidding. i don't know how exciting it will be, but it will be cool. >> is this hedge funds looking to arbitrage versus a lot of the auctions with foreclosures that tend to go for below value? this is a commodity. it should be an easy play. >> i talked to a number of bidders who say they intend to offer a lowball bid. no one has given me a number. as could see bids as low $1.2 million for these blocks. >> 20% discount? >> yeah. there are hedge funds involved. pantera is a bitcoin focused

hedge fund. were a lot of hedge funds that got in on bitcoin at $.50 or less. it is trading at $580 today. >> that is down from where it topped out. >> it did top out around $1200. if you look at the 12 months or, we are up from $40 12 months ago. there was a massive spike at the end of last year. if you take the big picture view, it is worth a lot more than it has been in the past. >> when you have the government selling bitcoins, does it give legitimacy to the currency? >> i think so. you have the u.s. marshals office. when they confiscate cocaine, they don't auction off a balls. >> you are going to the wrong auction. [laughter] theye legitimate goods think the public can safely and effectively use, a selloff. >> anything not contraband.

they will not sell cocaine. i do not know if they sell automatic rifles. i assume there would be issues with that. anything else that trades on an exchange, i can't see why they would not be happy to sell. >> it is interesting when you think about confiscating guns. guns are not contraband. you have a constitutional right to bear arms. yet they don't sell those. they might destroy them. >> think it depends on how they confiscated them. >> if you get it from a criminal, you cannot sell it to a law-abiding citizen. >my point is it is not about guns, but bitcoin they must view as at least slightly legitimate. willarshall's office auction off a bunch of 0's and 1's. i think it is fascinating. >> coming up, a lunchtime summit

on the economy with president obama. we will talk with a top economist who took part. that is theuggests way most people are when they go to work. this is "market makers" on bloomberg television. and yourso on digital tablet and streaming on apple tv and amazon fire. >> and on cable television. >♪

>> some of the world's top economists were at the white house last week for lunch with the leader of the free world. on the menu? in order of sustainable growth with a side of low inflation. president obama talked about ways to improve competitiveness in the u.s. economy. was one of the economists in attendance and comes to us now from princeton university. it is great to see you. what did you talk about? bit on the little near-term economy but mostly about long-term, what we need to do with education, technology, and things like that to enhance growth in the longer-term. >> what was the biggest debate? president obama was listening to this debate rather than

taking sides. i think the biggest debate was probably over whether this current round of technological centered -- progress around computers, robots, and artificial intelligence would be a net job destroyer or not. is if you look over history going back to the beginning of the industrial revolution, people have always thought that. it has never come true. if it is going to be true this time, it will be an historical first. i am skeptical. >> no terminator taking my job just yet. about this.n vocal you wrote concentrating on the growing gap between the upper 1% and lower 99% leads mr. pickett

piketty to advocate different tax rates. it was fascinating because you did not debate the findings. you debated the results out of the findings. where do you land? >> i don't debate the findings. is pulling01% dramatically away from everybody else. i land squarely on the side that says that is what it is, i would rather it not be but it is. but let's worry about the people at the bottom. the fantastic earnings of people that make $100 million a year are completely irrelevant. they need preschool education, food stamps, minimum wage, earned income tax credit. it is things like that relevant

near the bottom. very different things are relevant up at the top. >> this is barry ritholtz. let me ask you a related question to that. aren't we dealing with an ongoing battle between the things we want and how to pay for it? politically, all the things you mentioned are things much of the country supports. but we can't seem to develop a consensus on how to pay for it. does that huge wealth , how do we pay for these things? >> that is a very good question. americans have never liked to be taxed. americans also harbor illusions like we are among the most heavily taxed people on earth when we are almost the lightly -- the most lightly taxed people on earth. no tax increase will be popular in america.

ofre the two ends distribution come together is what you're putting your finger on. if you are looking for more revenue, you are presumably not going to get it from the bottom. you can get a lot from the middle, very unpopular. you can look to get more revenue from the top. these are the places, that is where the money is. >> go to where they are. if we know people want many of these policies, how can we get --is this just a political problem? is it truly an economic problem? >> it is both. it is a problem of political economy. you have got to make ends meet. we need to have some semblance of relationship between revenues and expenditures. we don't need to balance the budget every year, but we cannot keep spending without raising revenue. i have no hesitation.

if i could wave a magic wand and raise just one tax, it would be a tax on carbon, energy tax. would start low and schedule to increase over time so businesses would no it would -- would know it would in pay to invest in energy saving technology today. >> when you look at the federal aid for the poor, how do we compare to other countries in the money we are willing to put forth? >> compared to other rich countries, we are very stingy with our poor. if you compare us to hate the -- haiti, we are doing great. if you compare us to finland, germany, england, or a variety of other countries in europe, we don't take care of our poor or unemployed very well.

overlap because you can get poor by becoming unemployed. a lot of the employee did not start poor. >> it sounds like what was here about how much people hate unemployment. >> this is the pushback i get when i say the same thing. europe is struggling with their own deficit problems, and people blame the safety net. i don't believe that is the case. i think there were other factors driving that. i'm curious what professor blinder has to say. >> there are many factors. when is the safety net. --one is the safety net. it depends on the country look net,% more on the safety that creates a burden to raise more in taxes. that is just the way things are. i think blaming the safety net, you hear it in the united states also, it comes from the cyclical downturn.

when economies tank, the safety net bill blows up. when economies cure themselves, and it is taking much longer in europe, the safety net expenditures shrank. we have not enjoyed that dividend yet. >> carbon tax was your proposal to bridge the gap. thank you. we appreciate your insight, former vice chairman of the federal reserve. taking aim at the banks. prosecutors about becoming more aggressive when it comes to financial institutions. ♪

>> we are pressing 26 minutes past the hour. shares surged 31% yesterday after the high-end range of $24.

the media company has more than 500 million views on youtube for its gopro videos. i'm also checking out nike. the quarter was amazing. it beat on the top and bottom line in terms of revenue up more than 10% year on year. this was primarily driven by better north american sales which beat estimates, particularly impressive because analysts were looking for a in sales offsetting any sort of uptick in basketball sales. china sales were better. that is the higher-margin business for the company. analysts had been looking for a turnaround. looks like they got it. gross margins were higher. all of it working for nike. coming up, don't feel engaged at work? that is ok. it is probably your boss's

fault. he is searching the heartland for the most promising startups. we will be right back. ♪

..

>> welcome to market makers. i have a friend with me. he will be with me the entire hour. another week, another big bank is in the bull's-eye of the government. this time it is eric schneiderman. clients using his dark pool platform. he says he per -- they often your -- they offer protection from high-frequency traders. what is next? where do we go from here?

this is barclays. e&p withhave sanctions. >> this is so reminiscent of the we saw with construction of cdo's. johnu remember with paulson and goldman and the fabulous fab, and all those people. can't have a bank acting as an intermediate, leading both the sheep and the butcher leading -- and the butcher into the same room. you think people would intuitively know that. i obviously don't know the specifics. >> this has been going on as early as april. astonished that i am astonished people are still killed and people will engage in behavior. big dig findsthe that there will be people fired

for -- i'm sorry, you are too stupid to work in finance. this is just an egregious violation. is this the fact we are seen persecutions of the european banks. we do have u.s. banks under the gun from back in the day. they may be ahead of all europeans collectively. we look and see where the problems are arising and who is engaging in very egregious behavior, that is easy to prosecute. we had a whole run of insider trading prosecution. insider trading is pretty easy to prosecute. that is a black letter launch.

really easy to get a conviction because you don't have to prove losses, you don't have to prove criminal intent. did you do this? yes. bring on the next case. sometimes you just go for the low hanging fruit. with the taxuation sheltering was an obvious violation of u.s. law. it just had gone on for so many decades. >> it is leave our banks alone or we will come after your bank. >> it is one of if not the biggest economy in the world. as long as new york is a leader, london is one of the financial leaders but obviously new york is always number one or two or three.

the u.s. laws are going to be very specific. they want that business. you don't want u.s. regulations, it is very simple, stay out of our playground. make sureyou want to the rules are being enforced in a way so that nobody feels like you are prosecuting us and persecuting us because we are domicile and if you are not going to treat our banks fairly we won't treat your banks fairly. >> what is interesting is you had anthony jenkins come in and reform the bank. they already paid a libor fine. that is what he was proposed to do. i wonder what kind of black eye this ends up being for the ceos and what kind of management shifts or poor changes are going to be necessary to change the culture or even to prove to investors they care.

>> some time ago i wrote a column saying there is no such thing as road traders, only road banks -- as road traders, only road banks. do we put profit in front of everything, including ethics? there are banks that are happy to be less than ethical and stay legal. don'tare some banks that seem to have a lot of enforcement mechanisms. >> we saw barclays move business yesterday. >> that is exactly right. if what they say is completely drain up by what they do. it is not the statements of the ceo area your behavior has to reflect the culture of your company. if you can't get that right -- it starts at the top and works its way down. nudge, wink wink nudge

we have to be serious about staying on the right side of the line, not just of the law was echoed -- what is ethically collect debts ethically correct and proper. that seems to have gotten so lost from the top to the middle. >> isn't rating companies? i'm going to have to into the markets close to reveal it. you're seeing a huge set of changes. i mentioned goldman sachs. look at goldman sachs over the past couple of years. there has been a sea change. yes they still have sharp elbows. they really have stayed out of trouble the past couple of years. why do you think that is? >> they are having a hard time also making money. >> you have to decide if you want to spend your time defending prosecutions. they still make the loads.

they are only fabulously successful as opposed to unbelievably successful. i expect they're going to continue to do pretty well. the corporate culture drives the behavior of its employees. >> you heard it from barry. cofounded aol, sold for fortune, and runs a venture capital firm. about where he is searching for start up.

>> earlier this week aol founder kicked off the two were -- kicked off a tour across the heartland. his -- thei to troika of all places.

why detroit? >> you can pick one of the most desolate cities, one in bankruptcy, $18 billion in debt, and say that the city can come back and it can come back with start up capital. he kicked off this four-day bus tour. he didn't on tuesday with detroit. he is actually in nashville. in detroit.m competition.itch he put in $100,000 from the revolution, a venture capital firm he started when he left aol. he is doing this with the help of government. he met the governor rick snyder as well as the current mayor in detroit. also help from fellow billionaires. dan gilbert is the founder of quicken loans. he is also the how -- the owner

of the cleveland cavaliers. he thinkset here why detroit will come back. >> over $1 billion in investment. that is in real estate, in technology. few construction. -- new construction. the young people cannot find a place. >> spoken like a true investor. he says there is value to be had in detroit. are these people also saying? i'm sure they had a good defense. were thinking detroit sounds pretty good. maybe there is an argument here. i called a few firms and said what he thing about this whole idea? they said it is all well and good. it is good to encourage entrepreneurs and other cities.

detroit may have one great idea in every five years. in silicon valley you'll get five great ideas in one year. that is just where it is at. i posed that argument today and here is his response. >> silicon valley will continue to be our most important ecosystem. we will see anow more diverse mix of innovation and economies. >> i remember a couple of years ago there was a commercial, i think jeff daniels was mayor rating at. -- was narrating it. it was about an incubator in detroit and there were really inexpensive ways to get funded some form of at mini silicon valley. is this an ongoing program that has been in existence for a while or is it a french -- is it a fresh new approach? whacks it is being spearheaded

as a fresh new approach. of is taken on the mantle want to help cities around the country and detroit is one of several. you are right that detroit has ongoing programs. they have been trying to get rid of the blighted homes and buildings across the. >> turn back into farms. >> that is exactly right. there are several programs in place. it is a long haul. he wanted to say they all -- they all have a chance. that stevehim is case is in washington dc. he wants people to know it is not just new york and san francisco. it is other cities. >> what were the biggest naysayers?

people there were not skeptical. everybody was drinking the kool-aid. they all said detroit was great. all the naysayers are outside. detroit is facing huge problems. $18 billion in debt. detroit is not the only city competing for capital. you choose to base your headquarters there until you know the city is on the path to recovery? >> it looks like a lot of fun. thank you so much. that he lou. up, why employees just aren't into the company they work for. the fault lies in management.

>> just 30% of employees in the u.s. feel engaged at work. liesgeorge says the fault with how your company is structured. stephanie ruhle had a chance to sit down with him this week. take a listen. >> we are d valuing work. 30% engagement is a total disaster. confirmed the gallup institute. this is a disaster. >> what does it mean? are we not connected with our jobs? >> we do not feel connected with the purpose of our organization. we don't see how the bigger -- we don't see the bigger picture of how this is changing lives.

as i look at the problem, it goes a lot deeper. ever since 2009 we had the recession, we laid off a lot of people. it was the people doing the work. whole othern a layer of regulatory controls. certainly financial services but health care, energy, i.t.. is making it impressive. growing so much pressure in short-term earnings that we have this whole cautery of minimal -- of middle management creating teams. you make youran budget, can you make your revenues? we haven't created nearly enough of value. they are the ones who should be paid. we putting too much on that job satisfaction? my momwas a little girl,

and dad were focused on getting a paycheck so they could put your kids through school. i'm not sure my dad felt connected. he was ok with that. >> i don't think it has changed. the millenial's want that connection. they are very impatient area they want to see doesn't have a meeting. i love the medtronic missions. at every level the people doing the work, you go into the factory and know that one slip on a product someone can guide. they don't want all these inspectors. breakthrough innovation is where the energy must be. i think we diminish that and that is my big concern. >> are we overstating this?

headline wasy the that morgan stanley summer associates had a 90 21 chance of getting that job. for all those people out there that don't get what banks do, they are still banging it down the door to get those jobs. >> they are looking for the good jobs. they would love to have those good jobs. how good is morgan stanley or any other organization is only 30% are engaged? it is not just getting it, it have -- it is what happens when you get there. did they have to be engaged? if you have people knocking down your door to work at goldman sachs, why do those companies have to engage hourly -- engaged? >> they have people but we have warm bodies. you don't want people doing the work. people are enthused about their

work, and excited about helping somebody make the money. they are having a breakthrough in i.t.. that is what people want. i think they deserve it. i think way too many people are sitting in conference rooms and meetings. money in the pharmaceutical industry. they have an inspired their people. 90% is management, 10% leadership treated we are teaching too much technique, too many skills and not enough focus on how to lead. we need sales leaders. >> don't you have a massive amount of pressure to answer to your shareholders you don't have time to go to an off-campus retreat?

you just have to deliver results. are going toay you deliver long-term sustainable results is if you have inspired employees. i can tell you they get inspired about saving a life, they get inspired about making a great product or providing a great surface -- great service. earnings perng share you aren't totally going to turn your employee is off. >> really fascinating conversation. what was your take on its? >> we run a small business. engaged. is everybody feels like they have authority to get their job done. are big believers in a flat organization.

some of us have a double cubicle and others don't. large -- >> my husband works a small firm. it is a very if her. >> it makes hiring really important. size of thef the firm, people have to feel like their work matters. conveyor just the belt. it has to be something significant. they have to feel like they have the ability to get stuff done. there are some places to work where you don't have a lot of room to maneuver. mechanical and boring. you are not going to get the best out of those people. a when you hire people and say --e's the job description job description and say here's more authority and more tools and what have you. we have a really good staff and

really good people who love what they do. i am gainfully unemployed. understand that is not easy for a giant company. look at starbucks. everybody all sorts of things from health care to a pound of chocolate, a pound of coffee, to splitting the cost of a college degree. >> we have to leave that conversation but you are sticking with me for the next hour. up it is time for bloomberg on the markets. out michael'sg because that stock has started trading. $17 per share. that was the low end of its marketing range. we will talk to chuck rubin within the next hour. about $472 to raise million. since 2006.private market makers will be back in just a moment.

we will talk.

>> shoppers on the sidelines. the numbers show consumers aren't consuming as much as the economy needs. the tv networks have plenty of problems that online video advertising isn't one of them. the company where profits are up to par. changingalk about the face of miniature golf with the ceo of putt putt. brought in a buddy of mine, he will be with us for the entire

hour. golf.are going to talk >> it is a beautiful saturday afternoon. i can find more things to do then chase a white ball around the course. we have seen golf sales, people my age and younger are not golfing. >> we will see how that affects the miniature golf world. consumer spending has fallen in the last two months. michael mckee says this just does not add up. i am making more but not spending as much. explain what happened. school is out and we are making more money. incomes are up five .6%.

-- 5.6%. ahead of inflation for the first time. dividend and interest income is up by 8% so far on an annualized basis. adjusted for inflation, disposable income is up 3%. spending is up 9/10 of 1%. it actually contracted. >> is that what is going on? >> or are people deleveraging or paying off the ugly death date accumulated during the financial crisis? >> deleveraging has been going on for quite a while. the you know how savings works. government subtracts what you spend and save the rest you saved. the we don't know if that is what they are doing. you look at home sales. it looks like we are going to start seeing people spending again.

the question is is it just delayed? >> car sales have been pretty robust. they have been back to pre-crisis levels. were reallysales good. >> existing home sales were good. is it just a delayed reaction to the weather. >> durable goods are the ones that last no more than three years. >> durable goods were one category that did reasonably well. the question is do you buy more stuff? back-to-school season will be interesting. spend more money on what is essentially discretionary new clothing? them a how confusing is it for them? >> it is confusing because that argument has been that things are getting better. him we even thought they were at a much faster rate. maybe we need to raise rates sooner.

up we are seeing a jobs pickup. if you don't get the spending, you don't get the gdp growth that will convince them they will continue. we grew the second quarter 3.9%. we are about to fall off the cliff again. >> this was the view column today. here is what the economy is going to do. so many different factors that drive the economy that it is never just one thing. prettyid the gdp is broad. it measures a lot of different things. a -3% print is pretty ugly.

i don't know how much of that was whether driven. be thrilled to see 3% for the next 10 quarters. better? supposed to get >> we thought we would get a much bigger snap back from the first quarter. imply about the next two quarters when people thought we would be growing at a 3% rate? do we get there and stay there or do we fall back again to this 2% rate we have been at for the last couple of months? >> it all comes back to housing. we are levels. levelhomes are now at the where previous recessions have bottomed. we have come up to the prior lows. but that isgone up only because the supply is so

constrained. people have negative equity. there is just a limited amount of supply. were doing 5 million home sales per year and we are nowhere near that. housing seems to be the biggest drag preventing us from moving ahead at a regular 3% gdp. >> mortgage rates are starting to go down again. so few mortgages are being made and packaged into securities that rates are going down. >> this is the problem. youried to buy houses when had to pay 17% for a mortgage. you haven't been in the market that long. if rates start to go up towards 5% you are going to think that is hot.

5% is historically a phenomenal mortgage. mckee, thank you so much. the u.s. is moving onto the second round, even after losing to germany yesterday. the americans have already beat expectations. how much further could they actually go? our data guy is actually here. they lose and they still advance. >> they tied their previous games, they got the tiebreaker against portugal. if you see what happened, the numbers played out as it was. they had their best chance against gone up into they had an immediate chance against portugal, they tied. him the numbers that actually played out, they had gotten worse with each game. him the competitors had gotten harder for them. him they made it through mainly because of that first wind and -- first wind and portugal got

blowout by germany. >> i have been a world cup fan for many years and used the if you try to talk about world cup or ask the bar to put on the soccer game, people would throw beer bottles that you give this year it has exploded in life that going on? is it's twitter? the this have the legs in future? >> it is a rare opportunity for all of us to watch it at the same time. it gets more and more fragmented every four years. this is something we can do in the middle of our work and get excited about it. >> what happens next around? 38% chance of winning according to our sports numbers here. is not as good as germany but they are still pretty good. him we have built him as the fourth best team in the tournament. them a you have to win? >> it is wins or losses.

if you lose your out. very simple. >> what are the chances the u.s. does something crazy and wins the whole thing? >> that tiny 2%. it is lower than mortgage rates. that 30% will keep going down. they could do it. we played 50 world cups, they would win one of them in a theoretical situation. they are not the worse underdog. you are looking at costa rica, nigeria, switzerland. the u.s. had all of them. >> what are the best chances. has moved up a little bit. we had argentina. spain was gone. belgium and netherlands started to sneak into the top five. belgium is going to be a serious competitor coming up on tuesday.

up as soon as the markets are closed. whof we get past belgium, is up after that? >> it depends on who wins the game. probabilityhe high opponent after belgium? >> there already a minority. >> those aren't terrible odds. you are going to win two out of five, that is not the worst possible data the u.s. has ever had. of >> are you rooting the u.s.? >> iwatch for the love of the -- iwatch> this is h for the love of the game. i am about objectivity. >> thanks for that. for predictions you can head to bloomberg.com.

we are talking about the digital divide. ytd net works are not shaking about online video apps. piece -- buy at piece of the world's largest arts and crafts retailer. we are on bloomberg tv plus and on your tablet. stream ahead at apple tv and on amazon fire.

>> traditional tv can breathe a sigh of relief. the threat from online video ads isn't as dangerous as you think. david bank is here to explain. here's a managing director or. he put together a pretty surprising report. good to see you. it is surprising in that we hear digital is taking over the world.

you think that is where the money and ads would be. >> we started getting this question six months ago. all thisaring that money is moving from television into youtube, intake hulu and aol. size theack and try to actual amount of inventory that existed. let's say they really did want to move all their budgets in online. you probablyzed is had to segment that on my inventory to two buckets. the first i don't think ford and gm want to advertise on. there is no doubt they are cool but not necessarily the right context for every advertiser. and then premium advertising. when you size the premium isertising and market, it

only something like 15% of the entire internet. that 15%, half of it is controlled by the online extensions of television companies. so at the end of the day there isn't that much of it. give some context people because youtube is going to crush television, it is so obvious, we spend all this time on youtube. we sized what we thought was the premium amount of advertising on youtube. of the perfect analogy is you of the big bang theory. episode, it iste the premium equivalent of an entire week of youtube. some ifrts to give you of even if you wanted to move the money, it is really hard to

find the premium inventory. >> what counts as premium inventory? >> the obvious first answer is taking high budgets longform and porting it to the web. i think the answer for youtube, according to the industry players we spoke to and what is disclosed on google is it is really an analytical decision, a quantitative decision as opposed to a qualitative one. watched a certain number of times, all of a sudden it becomes premium inventory. cat on a skateboard that isn't watched by very many people falls into the not premium bucket. there is some probably user generated content that could be teamed premium. always under the impression that online video isn't competing with television,

it is competing with banner ads and pop-ups and other internet-based things. the question is how much can an advertiser tell about the demographics of somebody watching this? someone who is watching the big bang may be a little younger. -- theyprobably live probably live in this part of urban versus suburban. >> a couple of different questions. we ask similar questions when we talked to the industry players. i think what is happening is there is a movement, a shift of dollars from traditional banner and even search to video. that and the efforts like yahoo! and aol are

moving into their video for world. that online video ship from banners to video is being driven by digital budgets. world,e the network tv the traditional tv budget is moving west then digital banner money moving into the -- moving into video. the first is it may have a higher -- its reach isn't that good. not many people are online. we can't reach as many people efficiently. >> that will change. isn't it a lot about demographics? 20,ou want to reach 14 to you are not advertising murder she wrote in >> you can watch it somewhere.

the answer to your question is overtime, absolutely. is the intuitive question, that diversified portfolio manager that we talked to all the time. really overtime is a really long time before that reaches the could lend. i want to answer the second part of your question. do we just know more about a television advertiser or our online viewer as opposed to a television viewer? that is really relevant for the digital buyer. the typical television buyer by general demographics. they don't care that you live on the upper see -- i have a purple tie on. they care that you are within the 18 to 49 demographics.

that is how a lot of this premium inventory is being measured. ratingust a nielsen moving from off-line television to online. you do get premium content, is it worth more than premium tv? >> super interesting question. i don't know if it is worth more. certainly it is being christlike it is worth more. we could have been having this conversation 30 years ago about this new advertising medium called cable. why are we advertising on abc when we could be advertising on bloomberg? i turn on the television and i can't make a distinction between broadcast and cable. you can argue similarly for online video. cable did intelligently to

attract dollars as they priced themselves on discount. we are just as good so we will give you a 30% discount to broadcast to premium online video is saying we don't want a discount. i think that is slowing the shift of dollars on what our research found out. >> very fascinating. thank you very much. that is premium to me. they are awesome. market makers is back in just a moment.

>> providing that thing that everyone is begging for. >> that was kanye west and stephanie ruhle had a chance to have a great conversation last week at the camelot media and tech festival. of she also spoke to ben stout.z and steve the topic, business, marketing, and branding. the trendsetters airs at 9 p.m. eastern. you don't want to miss it. coming up, the art and craft of the ipo. michael's goes public. we will talk with the biggest arts and crafts retailer.

you can post a good score. pick upfirst time you the golf club, it could be true.

>> welcome to market makers. a buddy, a bloomberg view columnist. he will be here for the rest of the hour. i want to spend some time talking about the ipo market. bluebird crunched the numbers and found the ipos for this quarter were valued at 1.12 quarter billion dollars. we continue to see more companies going public. what do you make of that kind of discrepancy? >> there are a couple of

interesting things going on. compared to 2000, we had all these companies coming out that were very young, not well established business model, no profits. now these companies are coming public. alibaba is an example, michaels is an example. companies that have been around for a long time with a well established business model. the not only really strong revenue but profitable. the general descriptor of the companies going public have morphed over the past decade. do you feel like they are more conservative? go pro is on the high end. what is the trend? >> i think they are company specific. if i was speaking to the ceo of --es -- of michael's

>> hold it. >> i will hold the question. it is versus something like go pro, which some people who didn't like the company have been calling it camera on a stick. iif you look at how they built this rugged unique and integratedcamera and it with social network and online video, and here is what you can do with our videos, they are a digital company. >> let's bring in the ceo of one of these new public companies. trading in the last hour. basically flat this morning after pricing its shares at the low end. raisempany did manage to 470 million. we are joined now from the nasdaq. congratulations on finally going public. i know it was a long road. what do you make of the trading debut? >> thank you for having us. we are back -- we are happy to be back.

we have a great business model with lots of customers. the long term we are going to continue to be the industry leader and be a great investment. >> lie ipo now? it has been a difficult environment for retail. it has been hard for private equity firms to exit their retail investments. i think we have a very strong business model. our margins are industry leading across all retail formats and have increased. that foundation gives us a great platform to continue our growth. managementtrong team. we felt that now is a great time to come out and bring this to market. have really good numbers for investors because we are focused on our customers and bringing them the creativity we are so good at everyday.

familiar with your stores because my wife is an art teacher and she is at michael's all-time. my question for you is how are you dealing with generational changes? differenting very people from their 20's and 40's. how do you compete with digital? there are so many more demands on people's times. an easy environment. >> to the generational question, the reality is we have customers across all age spectrums. 80% of our customers are under the age of 55. we are seeing an expansion among young customers. 10-year-old daughter who wears a uniform to school. she was to personalize her backpack or brian urlacher -- she wants to personalize her backpack or brian urlacher -- or her locker.

in terms of the digital space, our opportunity is really to expand and communicate more with our customers in the digital arena. ofdo not believe the nature this business lends itself to an online only retailer. when you look at the components we sell the paper and the paint that people wanted to take and make something with. they want to see how all those things mix and match. that is why michael's is proud to come back to the market. leaderre proud to be the in the industry for personalization for all of our customers. end up having competition. walmart and target ended up adding craft to their stores. is there enough for the pies go around here? only is there enough of the pipe we believe we will gain market share. we are only a fraction of that.

if you look at industry leaders across other retail segments, they usually have more of our percentage of that market. the competition is very fragmented. greate a great freight -- offering. we have 50,000 passionate associates. we are the only be taylor solely dedicated on a national basis -- only retailer soley dedicated to arts and crafts on a national basis. >> your focus will still be in the brick-and-mortar stores. what kind of push a you doing in terms of activating users on your smartphones and tablets. >> we did launch our e-commerce side -- e-commerce site. launched it as an option for our customers because we do think it is an augmentation. very exciting, both in communicating to our customers and in terms of community for our customers.

all really exciting opportunities for us that really fueled the societal trend around personalization. people to express creativity through all the things we sell. >> we appreciate your time today. i did not know your wife was an art teacher. >> i have been dragged into all of these stores. it is interesting to hear the demographics are leading younger. but there is something different when you are actually touching things and playing with them and then capping and ipad. i think back to camp when it was raining. think of today's younger kids as doing that. >> in a few minutes we will head to the miniature golf links.

we will talk to the ceo of putt putt. both onwatch them amazon fire tv and apple tv. watch us on demand or streaming live.

>> we are looking at businesses that thrive in the summer. cut putt golf is teeing up for success with its new franchise model, turning iconic golf courses into fund vendors. david callahan is here. what is your breakdown in terms of what you make from golf and mini golf and the other fun stuff you have? >> because the mini is putt putt ruggedly 35% of our total revenue comes from the golf. that is not the case when it is not branded ipod golf. >> was it seen somewhere else?

>> golf does not make it anymore. is make a model that requires less land than some centers that could incorporate the lead product, which is putt putt golf into that mix. >> you mentioned bumper cars. ability towe had the go jump on these little go cart courses, which seems to have disappeared. are they going to make a comeback? they are a lot of fun. >> that is a big part of what we do. the go carts we now incorporate and tire fund centers, they are battery-powered. they have the same speed.

all electric. it makes it friendly for your neighbors. >> not allowed. no hot expositor -- exhaust port. 36 holes of putt putt are handicap accessible. we develop something we think will take us into the 21st century. center concept, approximately three acres of land and all the attract chins -- that is how it is going forward. >> i am taking a look at your fund center locations. a lot seem to be in the south and in california. season.r is our peak now that we have a fund center we have inside attractions. we can have some significant revenue.

we still generate about 35% to 45% of our revenue. it is almost like turning a stick it on. the world of staycations? as the economy gets better people will presumably have more money to go out of town and somewhere else. >> we are very fortunate. we have proven we did well and a strong economy. the that does is force economy to enable us to franchise. it is a $7 billion investment when you include the real estate. youru guys run both corporate run entities as well as franchise. how do you pull good ideas from franchises? was running a thursday night date night for miniature golf.

>> we do all the mark we provide franchisees. the big part of that marketing we are promoting things such as $.60 golf. they can use the artwork that all ties back into the history. >> what is the margin like? >> the margin is not very good. a normal round of golf is about 7:50. -- about $7.50. >> what our margins like in this industry to begin with? if you can't generate some are between 31 and 35%, hopefully edging towards 40, it is a dealbreaker. that is what we feel like going

forward. not ineems like we are the major metropolitans areas. where we you grow? >> we will grow primarily in the suburban areas. our target has been municipalities with populations up to 300,000. our focus is in the sunbelt. significant opportunities in north and south carolina alone. only three people have ever managed a perfect score of 18 holes in one. you are going to come out with us to the newsroom. have a miniature golf face-off. bloomberg masters on this friday. i think we should put some money on this. >> i am getting rolled he appeared we have a render. >> we will take it to the newsroom when we come back.

>> facing off on some minigolf action. you are kind of a ringer but you get one shot. >> i made the three on practice. >> no pressure here. one more for david. he definitely made it. you need to go to putt at and start your practice. >> if i had a beer in my hand it would be much other. >> i want to see if you'd this is actually true in >> that was pretty good. out -- i'm taking off my shoes for this. here we go.

i think i should get to. i should try again. thank you, david. i am pretty bad. >> you noticed this matches your toenail polish. i just wanted to point that out. >> a little too much. >> david callahan, thank you so much. the ceo of putt putt. it has been a pleasure having you. we are both bad at miniature golf. >> i delivered on my forecast on my forecast. here onwraps it up market makers. am monday eric will be in colorado for the aspen festival. the cofounder of a private equity firm carlyle group, david rubenstein. also drew faust. best-selling a

biography of steve jobs. that is it for market makers. ♪

>> it is 56 minutes past the hour. bloomberg television is on the

market. have a mixed breed in terms of the major indexes. the s&puctuating with 500 and dow on track for weekly decline. we had economic data showing consumer confidence rose in june. the backdrop is interest rates could rise sooner than traders think. optionsme for today's inside is the chief risk strategist at the chap would fund and the bloomberg guide options. good to see you again. let's talk about a volatility because the s&p 500 is down. .itting at a record high a volatility continues to come down. how do you reconcile that?, we have been talking about this all year. we started out with a little bit of fear. even just a month ago fear was building.

we had the iran conflict building in more. more puts were being bought. really active in last week's meeting was a reversal. they are getting cheaper. i was looking for bigger movements in late august and september. that anticipation has declined. i don't want to say there is complacency but people are left fearful. the smart money seems to be less fearful than it was three weeks ago. not a lot has changed in the past two to three months. i'm not seeing anything that scares me in terms of s&p volatility. kind of leading indication is the vixen giving you? >> the vix is very difficult. it is an al-maliki rum of all the options in the s&p 500.

is a tough way to make money. what you generally have is something moving out into the future, volatility for the vix itself. that is on the rise. it, don'tay to play go in and just buy a call. that is a foolish thing to do. >> i want to get to cvs because there is a lot of options activity. what is going on there? >> this is a fund one. -- a fun one. you can look into the minds of some of the smartest traders out there and see what is going on. on the surface it seems like somebody is buying the july 8 straddle. if you look deeper, they are good -- they are spinning off outdoor. they are going to tender shares. it is an odd deal because you have the option to tender all,

none, or some of your shares. they are creating short as a means ofks holding himself. i don't see anything major there. nothing related to the supreme court ruling. >> earning seasons begins soon because monday will be the final trading day of the second trading quarter p.m. you have a bullish recommendation for us on apple. >> i love apple. this is a more statistical type field. -- type deal. i am looking at something like 114, 94.49 call spread. i am looking to make a dollar 25. -- to make $1.25.

we have an iphone coming out toward the end of the summer. >> the iphone with a bigger screen should be coming out in september. thank you so much. he is the risk manager at the chap would fund and the visual -- and with the visual guide options. we are getting ready to close out the week. it is a mix to read for the major indexes. the dow and the s&p are likely going to decline. money clip is up next. have a great weekend, everyone. ♪ . . .

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