life from bloomberg headquarters, this is "market makers." big money is going. we will be at the aspen ideas festival to talk to one of the biggest names and private equities, carlyle group cofounder evan rubenstein. battle in the boardroom. american apparel's ousted ceo fights back. he now owns more than 40% of the company he founded and wants to return. food for thought. how technology is disrupting and helping the restaurant business. we will talk to the head of manhattan's exclusive lister. welcome to "market makers."

erik schatzker is in colorado. we will hear from him in just a moment. we do have some breaking iso manufacturing data. let's go to michael mckee. it looks like it is a little and versuss estimate may. >> although the numbers underneath are not bad at all. we're talking about a fairly high reading to begin with. we were 50 54 last month. month.55.3 this an elevated number. the new orders index goes up to 58.9 from 56.9, suggesting we will see strength ahead. good news for the economy. the production number changes hardly at all from 61 down to 60, but that is a very elevated reading. the one everyone is watching, employment and. similar to last month, 52.8. we did see job growth in manufacturing last month. the forecast are we will still see job growth in the month of june.

all in all, a decent report, even if the headline doesn't maybe live up to what economists had hoped. >> we're seeing the s&p around the highest of the session. thank you, michael mckee. erik schatzker is a beautiful colorado to bring us another round of fantastic interviews from the aspen ideas festival. you have a special guest with you right now. >> yes, it is david rubenstein, cofounder of the carlyle group. david, always terrific to talk to you. >> my pleasure. aspen. to be here in we have done this before. it is all as a dangerous proposition for me to put myself in your shoes, but i have tried. i have thought what a mess be like to be david rubenstein light -- right now, to be with the carlyle group -- what it must be like to be david rubenstein right now and what it must be like to be with the carlyle group. you must be frustrated. the whole world is overpriced.

is there anything to buy? >> there are places where you can invest money. you can't just look in the u.s. and say leverage buyouts by the expensive in the u.s. or might be expensive in europe, let's say. there are always places you can invest her money. the rate of return we have to his and 40% per annum. would be quitet good. there are a lot of deals were we think we can achieve that. i was a europe is pretty attractive right now. prices are discounted compared to the united states. or is in as much competition as there used to be in europe from buyout firms, or fewer than there used to be. we think they're pretty good opportunities there. >> that doesn't square with what we have been hearing over the past several years that all kinds of money was being raised targeting european assets amid distressed opportunities. did that money not get raised or is it not being put to work? >> a lot of money that was

raised a few years ago for distressed opportunities in europe has not been deployed as readily as people thought, but imaginal buyouts where there hasn't been as much money raised, there are a lot of opportunities, in particular in midmarket sized companies. gotten as much attention. the assets are discounted compared to the u.s. assets. we bought a fair amount of things there. in fact, we have done more deals in europe in the last 18 months than in the united states. >> outside of those opportunities, where else you see things you might like to buy? veryrbon related energy is attractive right now because of fracking and other techniques developing more oil and gas in the u.s., this is a very attractive area to invest. this will spread around the world as well. we think international energy as well as domestic energy. production as well as storage, transportation, and other kinds of transportation related things. >> liquid hydrocarbons or coal? >> cold has some environmental

problems that are very severe, so while we have a lot of coal fired plants, and they are necessary, we can't get away from them for quite some time, clearly, natural gas is more environmentally attractive. but we need coal and natural gas and oil. >> david, stocks, i mean, as you alluded, valuations are pretty rich in the united states. stocks have risen for six straight orders, the longest such run since the mid-1990's. why haven't we seen a correction and asset values? >> it is something that will probably happen at some point. i suspect when interest rates go up tommy will see a correction. interest rates have an artificially low for some time and the fed says probably not until the middle of next year will they begin to increase them. you'll probably been see some correction, but you never really know. trying to predict it is a full staring. >> between now and then, are you

exiting everything you possibly can? >> some things we're still adding value to, but no doubt it is an attractive time to exit. more money went back to investors than any other time in history a private equity firms. a good time to exit. i suspect this year will also be good. >> are those investors who are receiving this money from private equity groups adding it back into private equity? >> they are. if someone gives you money that is a good rate of return, and you just put it under the mattress or give it back to the people who gave you that could return? theraising is still not at level it was in 2007 or 2000 and private equity, but now going up at a fairly good clip a master was a very good year for private equity fund raising. >> where's the money coming from? >> i was a 35% to 40% came from u.s. public pension funds. they are a smaller source than they used to be. sovereign wealth funds, probably

five years ago were 3% of the 10% to 12%.loser to an individual investors. they were not happy with the low rates of return getting on their bank deposits or fixed income investments are now coming to alternative investments through other organizations. banks might be raising the money. a lot of individuals are coming into private equity. nonaccredited investors are also looking for ways to get into private equity. >> how about people below the threshold? >> many of the retail investors are nonaccredited, people who don't have networks of $1 million for income of 250,000 dollars. their funding vehicles they can invest -- they are finding vehicles they can invest in. i think it is fair they can look for those rates of return because why is it appropriate for people who don't have as much money to not get the high rates of return that private equity can yield to them? for example, if you are very

smart person but you're working in teacher for america and you need a higher rate of income, if you can invest some of your money and higher returning investments for that is a good thing. i think we should make sure the lower income individuals have the opportunity to invest in private equity as well as wealthier people. >> you have been making a case for some time. it will take a while for that plane to get off the runway. five years from now, david, or even 10 years from now, how much of carlisle's new money will be coming from retail investors? >> five years and 10 years out is difficult to predict. i'm trying to predict just a couple of months in advance sometimes. but i suspect you will see at least 1/4 of the money and private equity firms from individual investors, accredited or so-called nonaccredited. that is a big change from now or most of the money is coming from institutional investment. >> if we were to take the 10 largest private equity firms in be oneld, they would

dollar trillion of equity capital? >> probably. >> what kind of impact, and as you gather more money for him sovereign wealth funds and gather more money from high net worth individuals and ultimately retail investors, what kind of impact do you believe carlyle and other firms like yours are having on the public markets by virtue of the fact that so much money -- let's not forget there's leverage on top of it -- is tied up for years at a time? >> the total via the stock markets in the world is probably $65 trillion more or less. private equity has a total of about $3.5 trillion. we are still modest compared to the public markets in the world. i think we are having a good impact as when we do deals, we tend to show people ways you can increase the value and many of the public companies are doing the same things. this is increasing efficiency of companies come increasing the productivity of companies. i think private equity a show

people how to make more -- many more efficiently so i think it has been good for the economy. >> when the exit and investment today, what is the preferred route? sell the company or take it public? ofit depends on the nature the company. if it is a high-growth company that will show enormous growth byt couple of years ipo the good. but if it is allegedly mature -- relatively mature, you might say sell to a strategic or financial buyer. the advantage of a sale is you tend to get all of your money back at once and ipo you tend to bleed your returns at over three or four years, i would say. >> had you not sold beads to apple, would you have taken it public? >> it is hard to say. we're very happy with the transaction. i did get a chance to meet dr. dre. they are great. >> does david rubenstein and dr. dre from an odd juxtaposition --

>> i did meet them and they're very talented individuals. i don't think they ever knew who i was before. i'm sure they don't really care who i am anymore, but they were very talented and build a great company, and we are great -- please to be partners. beats whatlyle with your appetite for more consumer technology? >> whenever you make a lot of money one area, you tend to say, i'll do that again. probably will look for more things like that, but there is a lot of competition. >> there is a lot of competition. what is it -- it is on, isn't it a little odd that have equity, that carlyle ended up in beats in the first place? and wes what it equity were available. we were able to provide the equity. i would not say it is unusual.

private equity helps companies to grow and that is where the capital is intended for. >> let's go back to market conditions. the world or environment in which carlyle is operating, specifically financing. i have heard banks are being as aggressive, if not more so, than they were in 2006. is that true? >> i don't know how to compared, but i would say there is no doubt banks are providing a fair amount of available debt for deals we have and others have. i would say they're certainly doing it on favorable terms. we're very cautious of the fact that federal government has not wanted people to overleveraged eels. we and the banks are cautious of that and careful to make sure we're not doing things inappropriate or two highly levered. as a fair amount of liquidity. i suspect as long as interest rates are low, there will be a fair amount of liquidity for folks like us. >> read evidence? >> there's nothing wrong with

that. it is way for someone to get the benefit of what they've already earned by virtue of the value of the company going up. there's a lot of money for that, too. >> should the aggressiveness of the financiers be seen as a warning sign? >> you never know when something is going to be too excessive worry of a bubble or something. nobody really knows until it is over. >> yeah, but you have to have a feeling. >> people thought there was a bubble a year ago or two years ago and things did not really turn out to be a bubble. i don't really know if i know when a bubble is going to break. right now i think there's probably a bubble in new york city apartment buildings for people who are multi billionaires who live in other countries and want to buy apartments there. there seems to be a lot of those of $50 million, $69, $70 million a pop. i don't know. but i'm somewhat fascinated by betweenl conflict different kinds of investors in the carlyle group, the limited

partners who invest in your funds, and your shareholders now who participated in general partnership by buying carlyle stock on the new york stock exchange. the degree to which -- >> we are on nasdaq. >> excuse me. pardon me. forgive me, david. >> it's ok. >> the preferred dividend. the idea that you pay -- when you return money to are limited partners, they're going to get at least 8%. why is that still 8%? the degree to which they get less than a percent, your shareholders benefit. >> and most private equity funds today, there's a preferred return -- let's say it is 8%. we don't collect our 20% of the profits until at least 8% -- >> you get over that hurdle. >> then there is a catch up. preferred returns are probably high, given that interest rates are low, if you can justify

lowering them, the market kind of negotiation. we probably don't have the leverage right now to convince a limited number of partners you should be lower. >> are you trying to drive that number down? you are right, in a world of zero interest rates, how can he justify 8%? >> you try to work and life on things you can get done. i think the market right now is excepting the 7% range or a percent range, so that is probably where we will focus on. we won't fight that. if investors want to lower it, i would not be upset. >> i'm sure, norwood your shareholders. i'm sure he saw the news yesterday that blackstone from with which i guess on many levels to compete, is starting a fund to make big directional bets and public markets. does that make sense? >> steve schwarzman hasn't confided me in the plant, so i

can't say i know anymore than what i read in the newspapers. it seems as if they're taking advantage of a very strong rotation they have in that area and built a wonderful business that has been run by tom hill and others and done a great job. i would not be surprised to my but i don't know any more than you know. >> let me put it this way. others have tried to rebuild, if you will, the goldman prize -- progress. it hasn't worked. why should it work now? >> i'm not sure this is going to be a goldman prop desk and i can't really comment because i don't know what the plans are -- >> put it this way, would carlyle undertake such an effort? >> we're focused on a variety of things we've already announced that we said we're doing, so our main focus is completing the funds we have in investing the money we have. our main focus is there. we do have hedge funds that are doing quite well. >> but is that an opportunity, the idea that all the banks like morgan stanley and jp morgan and goldman sachs who used to run

big prop asks are not in that business anymore? >> that is because of the volcker rolling -- rule. it is not because they did not do well, it is because of regulatory concerns. >> but does it create an opportunity for firms like yours? >> it does. the volker rule was intended to make the world better for banks, i guess, and safer. it is obligated rule. hundreds and hundreds of pages of regulations. it seems banks are not going to be able to do the same things they did before, but firms are not subject to the federal reserve regulatory environment are going to be avoided do things the banks use to be able to do. it does create an opportunity and firms like ours and others can take advantage. >> david, thank you so much. david rubenstein, and the cofounder of the carlyle group here with me and beautiful aspen, colorado. for the timing, i'm going to send it back to you. much more from the aspen ideas festival. that amazingfor

and insightful interview. we will have more fascinating interviews from the aspen ideas festival all throughout the morning here on "market makers." stay tuned. for now, coming up, another management shuffle over at twitter. the company names a new chief financial officer and own a petite, one of manhattan's most exclusive restaurants serving up more than fancy cuisine. ♪

>> twitter is shuffling its management team yet again, just announcing naming former golden sachs banker anthony noto to replace mike gupta. he led the ipo offering master. we want to get it inside and why these moves and whether it can help revitalize twitters exhilarating user growth. joining me now, leslie picker who covered twitter's ipo for

us. give us some insight on who anthony noto and how he went from golden sachs banker to hedge fund now to twitter cfo. >> he is one of those people who if you asked him 10 years ago what he planned on doing and he said, i plan on being cfo of the nfl, i plan on being an ipo bankrate coleman sucks, and oh, yeah, as cfo of twitter, people would have laughed. but he is one of those people who is able to do these things. he is one of those magnetic personalities who gets the job done. he has this aura of credibility around him, action that people gravitate to. he is able to jump from position to position, adapt quickly and now his latest move is the cfo of twitter. >> he was responsible in part for the twitter ipo as well. what kind of reputation did he gain there and how did it help? >> it was a big deal for goldman sachs. it was the biggest company -- tech company that ever took public according to our data.

that deal seemed to have been executed very seamlessly. >> contra to facebook. >> were there were all sorts of leaks about the dip, speculation about things that were not in the public filing. twitter and contrast was a very closely held deal. it was one that was executed very well. it was priced at a place that seemed to be very good and traded up 73% on the first day. but that was twitter's plan the whole long. now we're here six or seven months later and that valuation achieved on the first day, many investors are having second thoughts about that. that is why we sell the stock fall about 36% this year because they're concerned twitter hasn't been able to grow into the evaluation, that their user growth is slowing. that is why we've seen a lot of the management shuffle to date. that is why they brought in anthony noto, the guy that was there when the ipo was executed so perfectly is seen as the best

choice to revitalize the company now that they're coming to a struggle. >> what struck me as i was looking at his bio, he's to be a dot com internet analyst? that is impressive. i wonder where he learned his chops in the internet world and transitioned? >> that is a good question. we're seeing more and more of these research analysts from the dot com era. l.a. is bitzer said no more research analyst at the ipo presentation. -- eliot spitzer said no more research analysts at the ipo presentation. you're seeing more becoming research analysts today so those com analysts are frequently becoming ipo bankers. it is more attractive to management because you have that ingrained sense of research. you have dexia rossa deep -- >> a gives the credibility. >> exactly. >> homage clout to see wind up having? cloutincredible amount of

. she was only a goldman sachs for about three years before he joined the hedge fund. during those three years, he inlt the immense reputation silicon valley for truly understanding the industry, truly understanding what it takes to take a company public, revitalize the goldman sachs brand -- he was helped by the facebook debacle in which morgan stanley was put in the penalty box for a little bit. but he took advantage of that opportunity and really builds up his credibility and people just out there -- everyone from venture capitalists to companies have very positive things to say about anthony noto. >> thank you for that perspective. he sounds like the dream team through a silicon valley -- guru a silicon valley. it is time for "on the markets." looking at a broad market today, the s&p trading right around the highs of the session.

ism data a little below estimates, but as michael mckee pointed out, the data behind that was actually pretty encouraging. foras up by over 55 points june. looking at some individual stocks, bnp paribas completing guilty monday to breaching u.s. sanctions yet the stock is up almost 4%. the largest french bank will pay a record guilty of nearly $9 million but still single pay some kind of dividend, although lower than some investors were estimating and it won't really truly disrupt business over the longer term. or derail any growth plans. war "marketack with makers" in a few minutes. stay with us. ♪

>> welcome back to "market makers." i am alix steel in for stephanie ruhle. erik schatzker is in colorado. today, california but it's minimum wage to nine dollars an hour. seattle recently raised its own $15, but willo face challenges before inactive. julie hyman has been looking at the patron in the retail industry and particular. kea making and i races. the national retail

federation recently enlisted some economists to write a letter against raising the minimum wage, yet you have these retailers coming out ahead of it. one of the reasons is, trying to get out ahead of it. that is the reason itself. in other words, if minimum wages going to gut this go up nationally but president obama would like it too, if you are a retailer, there's something of saying doing it proactively. >> and on your own time and dime. >> exactly. the public relations maven doing it and getting the good press and goodwill of raising minimum wage. gap said it was doing it for all true mystic reasons, but added as well as getting a lot more job applicants and potentially or qualified job applicants. werend old navy applicants up 2% in the wake of this announcement. 2015,y will be $10 by ikea, $10.75 by 2015. this will be phased in over the next couple of years. ikea workers, it is just the

retail workers in the u.s.. >> how to second pair with generally retail workers are paid in the u.s.? >> retail workers on average actually aren't making minimum wage. they tend to make more. this accounts for the commissions as well. if you look at retail salespeople, people working the floor in the u.s., about four point 59 people according to the bureau of labor statistics. their average wage is $12.20. so higher than you might expect. median, a little but lower, $10.16. annually, with $5,000 or so. --,000 is the poverty line 0 or so and25,00 $24,000 is the poverty line. in california where that wages going to nine dollars an hour, on average, retail workers make

$12.86. the highest wages in the nation are being paid in washington come actually, ironically, since seattle is there, $13.90, $13.90. the lowest on average, was virginia, where the cost of living is also lower. >> you and i spoke about this a lot, what is the actual impact on the store and company and do they wind up getting better employees, better results come actually make more money per worker? the typical comparison is bj's and sam's. >> there's been a lot of case to these done on cosco and a lot of economists arguing for this, it is very difficult to get unbiased research on this because if you look for minimum wage arguments, much of the time they're being made by folks who are partisan on one side or the other. there is the argument made that, yes, it would increase the people who are going to be

spending money into the economy and that you are very stores if you're raising wages. the flipside is, many employers saying, if we are having to pay more, then we're going to have to take it out of somewhere. saying,had chipotle maybe in seattle we will have to raise our prices as a result of this. >> good point. a trade-off. >> it is difficult to say the impact. quick stick around because we're going to talk about one of your favorite stores of all times, american apparel. there's a battle of control over the struggling retailer. the founder has increased his stake in the struggling company after being ousted as ceo. he is not going anywhere or going quietly. there are allegations of misconduct ranging from sexual-harassment to misuse of corporate funds. american apparel is taking steps to make sure he doesn't make a comeback. for more on this ongoing soap opera, i'm joined by scarlet fu. bring us up to the latest.

last i heard from american their portal to jamaican apparel was trying to -- american apparel was kind of bouygues. >> let's review the timeline. it started two weeks ago when the board voted to terminate charney as president and ceo for a cause. four days later he demanded reinstatement. they did not adhere to that. he lined up outside financing gap and boost his stake while he contested his. over the weekend, the board of directors adopted a poison pill defense, a way to make sure someone can still the company without paying for it. they changed bylaws so you can't remove directors except for cause. the idea is to slow down someone. late yesterday, revelatory filings show he bought an additional 27 million shares of his stake is now 43% from 27%. this appeared to happen before the board adopted poison-filled letters. and change the bylaw. it is legally embroiled. robert kaplan is looking into this.

he says charney moved very quickly. the board moved far too slow. this is legal issue now. no longer business. >> it seem like standard general wound up buying the shares then will and the money to charney who will then buy back those shares and that is how he winds up collecting -- >> he has his allies and moved very quickly. it would appear the board asked her -- underestimated him. what they should have done was adopted poison pill defense as soon as they ousted him, according to robert kaplan. but they waited. they also let the bad behavior -- you talked about sexual-harassment, misuse of corporate funds. they let that go on for a long time. he had gotten away with so much for so long, now he comes raging back. they have allowed that to happen, his bad behavior that is being rewarded. >> it is fascinating that even has allies at this point. does one ofeague

the issues leading up to his ouster was the company had trouble dealing with his suppliers because increasingly, people did not want to deal with him. i spoke to people in the retail community who didn't want to do with him and various business relationships because he was said to be difficult and thought to be difficult to deal with. it is interesting at this investor who has come forward with this support, allowing him to raise his stake after all of this had happened. something we have also talked about, yes, hid years of allegedly bad behavior but the company was doing relatively well. yes, it has been losing money the past couple of years, but only in the past couple of quarters the comparable sales started to decline -- >> and priced under one dollar, not really up yearling to shareholders. surprising even more so they would back him up. >> the board is acting. they may have painted themselves into a corner. they have to consult her lawyers to find out if charlie can undo

the bylaws that were put into effect. >> we said it when it happened, that he would not go quietly. that was completely accurate. thank you. coming up, taking journalism and technology to hold other level. we will talk to the ceo jim banks. ♪

>> let's turn back to the aspen ideas festival where eric schatz is joined by another great test. take it away. >> i'm here with jim bankoff, chairman and ceo of vox media, ,ompany you may know for vox one of its sites but also prodigy -- the list goes on, serving in a number of different digital markets. jim, you're as close to be mr. digital content is anybody i can think of.

i think i know what buzzfeed is, what clock -- gawker is, but what is vox? >> we create media brands, high-quality, large media brands like the ones you mentioned, for new generation of consumers prefer to consume their content digitally. if you think about it in a simple way, great magazine companies like "timing" and great cable companies like usa , now we aredisney in theg new media titles same way. and we're doing it within this medium as opposed to cable or magazines, obviously. >> it's funny you mention condon asked because they operated a portfolio of magazines. better forknow them

vanity fair or "folk." do you see yourself more as digital publishing as opposed to say the kind of company that "feiss" is becoming? nation, you can command more authority. we don't want to be another portal where everything is just general. we believe individual variance -- rinse convey and their subject matters. we hire subject matter experts. an important thing is, we hire web native content creators, journalists, storytellers, then empower them with tools to grow their audience. if a digital publishing platform. the commendation of that and our talent have led to our big growth. >> you see your talent, as you describe them, as journalists, right? >> yes.

journalists, storytellers. >> in a digital world, how do you pay for good journalism? >> u.s. dollars. no, seriously, it is a model that can support itself. what is interesting, big brands, and we work with most of the big ones, have the same challenge that we have, which is to communicate with digital audiences to tell them stories, to build their brands. how do you build a brand? storytelling. as her audiences migrate online, that the same challenges. our business model is to help them tell their stories to predominantly young, affluent audiences and craft that for them. >> i get the idea of content specific brands, but what doesfeed and vice to draw contrast seems to have done successfully is create brand awareness through attitude. and an attitude that permeates

all of their coverage. why does that approach not appeal to you? >> each one of our brands has their own attitude. if you talk to someone who goes verge, thoser the brands have distinct voices. that is critical. you have to have that distinct voice. by the way, that adds up to over 85 million unique visitors every month, so it has grown and done very well. we do have our attitude, but it is more rooted in quality and authority. there was a period where a lot of web content could not be trusted, and we wanted to bring back that trust and quality. in doing so, blue chip advertisers can trust us and spend with us. >> why is it

its own category does very well. we're not a portal. you can't -- you can go to vox beta.com, but that is not one of our brands. we put the emphasis on each one of our titles as opposed to a corporate entity itself. >> how much of your traffic is through social referrals? somebody reads something on twitter or see something on facebook and ends up at your site? >> it is our number one traffic source. although, unlike a lot of other companies, we get a lot of direct traffic, two, and that speaks to the quality of the brand, the authority of the brands. facebooket someone on or twitter, they tend to come back to rugby to one of our sites. we put a lot of emphasis on that. we certainly use those new platforms to get big audience. >> how do you see yourself growing, starting new sites, doinging a new audience

it the greenfield way or by buying some of these existing businesses? we're so glad we got them and now we can put them on the platform we manage and we're starting to see great growth because of that. we might invest in under investor properties, but moreover, our model is to grow our existing sites. vox, which is our general new -- 2.5ust launched the months ago. it gives us a lot of confidence that we can grow properties from the ground up. >> most of what you do is, for lack of a better term, in text. what is the future of video for vox media? >> of law what we do is in video. it is a good question -- a lot of what we do is in video, so that is a good question. we work with some very talented creators on youtube and other platforms. and we also work with marketers

to help them tap into the video web and social web as well. we are big-time believers in video. if our to draw an analogy, i was a we were closer to the cable company than a magazine company. we believe in it, but we believe in finding the right tools to tell the right stories. sometimes that is video and sometimes that is text, often it is, nation. >> thank you, jim bankoff, mediaan and ceo of vox here with me and gorgeous aspen, colorado. >> i am so jealous. >> i feel lucky. >> i do not have that cool said behind me. they do so much for that interview. we will have more of his great and are views from the aspen's idea thus will later in the show. one of new york's best and restaurants has something new on the menu. technology.

>> restaurants around the world

have something on their menu, it's called technology. the industry is slowly starting to take a bite out of things like open tables. explain his to co-ceo also president of man ticket adventures, strategic advisory turnaround firm that provides advice to this creative innovation. little-known fact about me, i worked in a restaurant for 10 years. my expense of technology is, i'm writing an order on the pad, going to the kitchen and say, hope my mathhat i is good when i tally the bill. how has that changed? >> we are trying to replicate what our iconic founder is done for years, which is on one side, try to make our diners feel like home in a wonderful interaction and provide a high touch, and on the other side, run inefficient operation.

when i joined the family about five years ago, with the sun, we look at how we can replicate what he is been doing for 40 years both in the front of the house as well as in the back to run an efficient operation. >> part of that, from my experience, yet opentable, no severe guests. you say this guy like top seller. -- chop salad. how does it help the back of the restaurant? inventory? >> it is the whole gamut. if you look at it, the restaurant industry has been a laggard within the hospitality industry with technology adoption. we looked at different technology to help us run a more efficient operations on the back of the house and better inventory management, better tracking, better monitoring as the as for our operation, complexity of the organization

grows. we need to have technology in different aspects that can help us grow. on the other side, on the front callingouse, cirque was diners to tell them that wonderful new dishes. >> so how do you do differently? >> we work with suppliers and vendors and we look forward to also more and more technological advancement in our particular segment of the restaurant industry to attract diners and create interaction. so social media, opentable -- >> does that mean groupon discounts or something a little bit -- >> it means a number of technology providers we work with to attract diners with specific purposes. we work with opentable. we work with the online review sites that of change the paradigm on how people make a decision of where to go for dinner as well as we work with

social media as well as other technology platforms to help us connect and increase the frequency. >> what is the return on investment for this kind of thing? inave to assume investing technology is expensive. what you have to do to break even and what is the payback for technology? >> in terms of significant expense, for sure, but it is still something that is minor compared to the overall cost structure of a restaurant. for our particular restaurant, will establish restaurants, it is a way to connect with a different audience, a younger audience, more tech-savvy. i call them the downtime people versus the uptown -- >> have to bring them to midtown. how many turnovers do need in order to break even on any given night? how many seedings? >> it depends on the restaurant. i would say at cirque, 100

covers. >> for those who don't know, that is 100 people. >> the machine, the airplane is ready to fly every night. our marginal cost is really food. everything else is that. >> in terms of attracting new people, and you end up while -- offering discounts per day or take on a monday when we know is is dead in the restaurant world? discriminatingto price according to the hour of the day, the time of year, and we work with several vendors like group on, for example, and others to try to make a compelling offer for people to come in and try the product when it is off-peak hours or not the peak time of year. but on the other side, we're looking for technology vendor that can help increase the price or the reservation cost. >> fabulous. thank you so much. you did not bring food, though.

we will be right back. ♪ . .

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> changing of the guard at ford. we will see the challenge the new ceo has to deal with first. no fracking way -- a blow to the oil and gas industry. cities in new york and now and the controversial practice of hydraulic fracking. for the u.s., it is a win or go home. team usa gets ready for the world cup match against belgium. we will sue the odds say. peerme to "market makers

erik schatzker is in aspen colorado and we will hear from him in just a few minutes. first it's time for the news feed. sales rose at chrysler for the 51st month in a row. general motors was up one percent. estimates called for a decline -- foreign sales were down but a smaller drop than estimated. cap commerce targets people on their phone and tablets and send ads for items they already expressed interest in buying -- that can be very dangerous for me. in manhattan, apartment sales rose at the slowest pace in more than here. purchases were up 6.3%, indicating a surge in demand is easing. the average price per square-foot has risen 10% from one year ago. that hurts.

ford ceo alan will officially step down and mark fields will step up. now that he has taken the wheel at ford, what lies ahead. keith naughton joins us now from detroit how different will forward look versus alan mulally? >> that's the question we are wondering. wills has just said he continue the successful plan alan mulally laid out for him. but his greatest challenge is following a legend. he comes from a -- he comes to a company that is different than is now mulally face, it making billions. he has to show he can be his own man and will be faced with challenges like the all aluminum body f1 50 that launches this year. that will be a complicated undertaking that will test his mettle. >> and to revive the lincoln brand as well and get back into the luxury segment.

you say he wants to declare his dependence, but i'm sure having a alan mulally have his back is not a bad thing. >> he has him like he can pick up the bat phone. that lincoln area is one point of distinction. mulally was ready to kill off lincoln, which was a lagging luxury blatt/-- lagging luxury brand. he thinks they can make something out of it. >> how do you think the two strategies will differ? how different are their management files? they worked together for so long. >> fields is a ford lifer who became an acolyte of alan oriented up the, team style. it will be interesting to see this jersey guy who's a bit of a street fighter, how he will set a different tone from alan mulally who is a cheerleader,

boy scout type. >> we do have some exclusive sound from alan mulally talking about this transition. take a listen. >> i think i will maintain many of the great relationships i have. i have fallen in love with ford. it's a great company. it's so important what it does for the country and energy, security and what it does for the country. >> can mark call you anytime question work >> absolutely any time. >> that was the phone you were referring to. -- that was the bat phone you were referring to. what's going to be the hardest thing? >> those two things are the key challenges. another is the quality issue. ford started putting touchscreen computers in the dashboards a couple of years ago and it caused the quality scores to plummet because they were full they havell stop

raised the level to back up to about average, but that's not good enough. they need to be above average, so that is still work to do. >> stick with us, but for now, i want to bring in jessica caldwell from edmonds.com. she joins me now from percent of monica office. lots to talk about today in the car world but i want to get on the june auto sales in particular. the boardm across better than estimated but for down 6%. chrysler is up over 9%. i think ford is in an interesting position in the fact that they are going to take off-line or large truck, which is their big volume leader and get ready to produce the new trucks. i think the sales may be slowing a bit, but june was expected to be a little lower. we are seeing everyone beat expectations and ford is not

necessarily shocking. chrysler did anticipate that 17 million cars would be sold this year. what is the pricing of those 17 million cars? is it solid or are we seeing a lot of in tension? quality has been pretty good. if you look at transaction, they have been high. cameras andbackup nicer radio systems. the roleeing them play but not necessarily the role we saw them play in 2009. mostly on interest loans and leasing. >> how much of this is from the terrible winter we had and how demand andis genuine not necessarily the replacement cycle? >> i would say the january february has pretty much

exhausted itself and we are seeing sales eat pre--stop we're looking at a lot of momentum. i thought there would be some pull ahead, but this is really strong. it looks like the consumer is driving a sales increase for people who want cars. not a lot of in depth a manned. >> it's interesting, if you look percent,les of one you're not really seeing that reflected in sales. i wonder in terms of the ford went to view -- >> where ford is suffering and why they are down on the other is up, they don't have the freshest product. starting to get new stuff into the showroom. shown any softness, but sales are up this month when they were expected to be down. their sales were up 13% in may

and they continue to see sales rising. it could be because many of the big cars that are recalled like the cobalt are ones gm no longer makes. so people bring those back to the showroom and see what gm is offering and it's time to upgrade. ford is saying that the age of cars on the road is still very high, more than 11 years old. people need to replace those old models and that's what's driving sales. >> you bring up a good point about gm -- basically 40% of their cars on the road have been recalled. at some point, aren't customers going to get scared to buy and it would much mark one of our producers for the show, her whole family has a gm car and they are bowing out next time because they are freaked out. >> that the test of these latest recalls. many of them are on the cadillac,, the consider the new academy of the new gm, a technological marvel,

that was among the cars recalled yesterday. will they finally start putting a ding in their sales? >> what do you think of that? theirare seeing all of brand study on our website, so --looks like shopper demand if you look at people with older vehicles coming into the dealership, a lot of them are leaving with new cars. they are trading in the cobalt and buying new vehicles. goodnk keith brings up a point now that the recalls are on some of the newer vehicles. that's going to be the true test for general motors. has gmverall question -- changed the criteria for what it considers the defect in the car? show is really trying to that it gets it now on safety and recalls. they clearly got beat up for

good reasons over ignoring the ignition switch problem for more than a decade. if there's any question, its recall. it's an incredible number. >> and it's only june. thank you so much for helping me break down the auto numbers. up, on the brink of default -- argentina has been there before. street it's its game face on. what a convenient time for the cup match to begin. this is "market makers" on bloomberg television. we're all digital, see our interviews on your tv and tablet and streaming on your apple tv and amazon fire. ♪

>> argentina remains defiant this morning, even on the edge

of a default that could send its economy crashing. there's no sign argentines will obey the u.s. supreme court's and pay debts to american investors. michael mckee has the real deal on where we are. give it to me. >> let's go back a little bit and look at the story so far. -- in complicated story 2000 one, argentina default on $95 billion worth of bonds. 93% of its bondholders agreed to significant losses in a paulucturing, including singer, he demanded to be the -- he demanded the full payout. for years, argentina refused, so singer went to court. he argued that the ons contained in equal treatment clause, which means they can't pay one set of bonds those who restructured and one set to those who are holding out. in court after court, singer one. the u.s. supreme court if used

to hear the appeal, but here is where it gets tricky. argentina had a $539 million interest payment to the restructured bondholders do yesterday. at the u.s. judge in charge of the case that argentina could not pay them unless they paid everyone. to itsna sent the money clearing bank, but the judge told them to send it back or i will hold you in contempt of court and stop they did, and so that's where we are. argentina cannot make the payment even though they want to, so they are technically in default. >> those graphics were amazing. by technically? >> they have a 30 day grace time. the judge wants them to use that time to negotiate with its creditors. singer and his elliott management people say we are willing to negotiate. some of the other holdouts say the same thing. argentina said it's willing to talk and will send a delegation

to me with a court appointed mediator. talks,essarily specific but it's a step in the right direction. step?t is the next >> a lot of people think they might work something out. selling for about $.85 on the dollar. not the best thing for a country's economy. yesterday, argentina did take out a nasty newspaper ad saying the judge is trying to bring them down to their knees before the world. credit default swaps were pricing in at the price for a default. >> if the u.s. wins this afternoon and argentina wins, you can imagine -- john roberts

from the supreme court as a referee. >> it like nerd soccer. stick around. i want to bring in charles wister, the principal at wister consulting. he's formerly an assistant director and chief economist at the world bank. what do you think happens now? do you think argentina defaults or can i go to the negotiating table? >> they really only have two choices. one is to default on all their performing bonds. the other is to sit down and negotiate in good faith, first with elliott and the other plaintiffs in the suit mike was other holdersnd with defaulted bonds. i don't think there's an equal and from an economic point of view that they should negotiate and reach a settlement, which the plaintiffs have indicated for many years that they want to do.

to negotiate and take appropriate terms. >> it sounds like argentina is getting very aggressive. they haven't negotiated in the last 13 years. what's different this time around? >> this time around they are between a rock and a hard place. you see a lot of erratic behavior out of buenos aires. one day, the president or aonomy ministry gives blistering talk attacking the u.s. and attacking the judge, attacking the holdouts. the next day him and talk about willingness to negotiate. it has been back and forth with no consistency in policy, so it's hard to read. my bet would be at the end of the day, the cost to argentina for a default is so overwhelming that i can't leave that sometime in the next four weeks that they won't seriously come to the table. >> one of the unanswered questions about this is what is

the impact of this longer-term on other countries? some people will say now they will just hold out because they will get paid if they hold out long enough. the advent of collect his activist clauses means it's not going to happen. this is isolated to argentina. what do you think? >> i think you look back and see no other country will tie to -- will try to imitate argentina. if you read the court's opinion carefully, it stresses this injunction which requires equal payment to these holdouts is predicated on the unique behavior of argentina. they passed a law repudiating their debt. negotiate.d to it is unique to a fair that led to this particular remedy. by a lack offered

access for many years to capital markets and i don't see any other country imitating that. willingness of creditors to participate, it has long been the case that in general, nonparticipants do better on average than those who go in. 40% of all the bond restructurings in the last 15 years, the holdouts have been paid on time and in full. the markets know that and yet time and time again, when exchange offers are presented to creditors, participation is well above 95%. i don't see the holdouts problem getting worse because of this at all. >> i'm curious, with your ripplence, about the effect, if you don't see argentina stay stubborn, what is the global fallout economically?

>> i don't think there's very much fallout. argentina is not that large and economy. its trade links are not that important with other countries, either with result, you have an elephant and rabbits do with brazil being the elephant. what happens in argentina is not of terrible significance to brazil. given the unique situation in argentina and its unique behavior, i don't think there in spreads fallout on emerging markets. this is anticipated already. >> what about a political fallout? argentina claims it's an attack on a sovereign by a u.s. court will stop does that have any spillover? >> i would be very surprised if we see any sovereign to have been issuing it and new york under new york law, choose to

issue exclusively under english law. it's not clear an english court in the same situation would not have ruled in a similar way. that sold bonds from the 1990's which had extremely creditor-favorable terms in which they waved to the maximum possible degree there sovereign immunity, and which they wrote the strongest claws into their bonds. not all countries do that. i don't see any fallout on the issue. >> we have to leave it there. thank you so much, gentlemen. forng up, is now legal towns in new york to say no fracking allowed. we will see with this means for the oil and natural gas industry. ♪

>> time now for some bloomberg west top tech and media headlines -- another management change at twitter -- anthony noto will be the new ceo. the new -- the cfo will now oversee investment. a group of russian hackers known as energetic bear is a threat to the global energy industry according to symantec. they say the group is targeting pipeline operators. the company says the russian resources suggest they have government backing. at&t and verizon may turn to a swedish company to run their infrastructure. erickson is an talk with the two biggest mobilephone carriers. maker ofis the largest

wireless networks. coming up, the natural gas industry they have a message to the state of new york -- see you later. we will tell you why. ♪

>> welcome back to "market makers." i'm alix steel, in for

stephanie ruhle. erik schatzker is in aspen and we will hear from him in just a minute. new york towns won the right to say no to fracking in their borders, the littering a bloated industry in the state. you're to talk about the implications is the manager from clearview partners. there has been a six-year moratorium on fracking in new york, so what are the implications? >> this is a symbolic victory. nobody is seriously committing frackingr beginning operations in new york because neither it -- because they have not finished up the process of allowing it. it'sthis does say is maybe not worth getting started even once the state government is finished. >> there are still 40 towns that you want fracking or at least are interested in fracking. under this willing, will they be allowed to invite companies in even though there are 75 towns

that do not want it? >> anytown can invite companies and. but the strategy the environmentalists have been pursuing is not just trying to empower towns, but trying to fragment formations. you want to build a certain amount of infrastructure and a base of gathering and distribution equipment. go catch asnly catch can rather than following the geology, the investment may not be worth it. >> you make a good point. parts of new york city but of the marsalis shale which may hold enough natural gas for u.s. consumption for almost six years. how much do you estimate we will lose out if new york takes a step back? >> the nation as a whole is plenty of oil and gas resources and they will get developed with the price rises to the point where they aren't the -- where they are worth developing. the question is where? landowners who are hoping to profitably lease their land and

the number of communities who may have benefited from some of the spillover effects from production. on the other hand, there's a lot of shale formations in the united states and they are all available when the price is right. --if we see $10 natural gas petroleumhe american institute, says in fracking has at least 10 million jobs in the u.s. and contributes to the eight gdp. >> thanks to shale gas, we probably will not see natural gas anytime soon. exports would do that either. some of those locally high prices could be mediated by having supplies that were closer to the sites of construct -- of consumption. happyare companies very in the midstream to deliver. the deliverability will ultimately show up but it's better to have it close. exit ethically cut down on the

cost but will other states take up new york's mantle and try this? >> eric is in the battleground right now, colorado. series ofs facing a municipal bands that have gone on local ballot initiatives and actually stopped some production in areas where there would have been fracking and there was a business ready to go. where we look at things right the where affairs of november ballot is extremely important. we don't think they will endorse any of the pending ballot initiatives that would ban fracking across the state, but some of them could empower communities to stop it. this trend is likely to continue past november. >> talk about the specifics of the case. what were the arguments that clinched the deal? >> there was a law in new york state which has what is called a supersession clause which says

the state is in charge of oil and gas operations. but they are not in charge of the where. whatuse court found is local governments have as the core of their authority and in a very strongly worded opinion, the court a sickly said they get to tell them what happens in their space but they don't get to tell them how it's done. that's why there's a victory for opponents. even really weren't in new york to begin with because we had the moratorium, but does this ignite them to go somewhere else? is pennsylvania going to be a big winner because of this? >> pennsylvania has been the big winner for a long time. you have the same formation in nothing but a political boundary separating the very profitable exploitation of resource from nothing whatsoever.

it doesn't really change the status quo but when it does do is it empowers a movement that is trying to use this kind of attack that to fragment the profitability of oil and gas production. >> it all boils down to margins. if you make the margins and gas prices are high enough, people take drilling. i appreciate your insight on this. one writer calls him a hero and a victim of the internet age will stop a new documentary looks at the life of reddit codeveloper aaron swartz. we will talk to him, next.

>> let's go back to erik schatzker in aspen who has a very special guest. it is a documentary filmmaker who has most recently made a very well-regarded and received film about i guess you would have to call him a martyr for

information in the digital age, aaron swartz. why did you choose him as a subject for a document or a film? >> i found his story very compelling on a personal level. it's an interesting and inspiring, in gauging, ultimately tragic story. >> very tragic. >> but he was interested in so was diverse things that it the jumping off point for some of these bigger issues we're dealing with. >> is a sympathetic film. why do you sympathize with aaron swartz and his efforts? >> we tell the story of his whole life, so we -- it's bound to be sympathetic. he's basically a child prodigy, dealing with working groups s andng on things like rs information flow on the internet. there are funny parts of the film where he's with people in

their 30's, 40's, 50's, internet dignitaries and luminaries and contributing stint -- continuing substantially. they say we would like rita cannot let these face to face meetings and he says i'm not sure my mom would let me. i'm only 13. andas a cofounder of reddit the sale of reddit to condé nast made him a very rich 19-year-old. but then he takes this decisive turn toward social justice issues and political organizing, putting his skills in the service of the public good. thishe gets caught in two-year legal nightmare that leaves him financially and emotionally exhausting and he ends up taking his own life. snowden befored edward snowden? >> there are some similarities and there are some differences. he is certainly after the truth. my previous film was about hackers and there is a common denominator there where there is

orack of tolerance for spin lies and a desire to get out what is real. for downloading academic journal articles. so what he's after is the truth of the universe. a big picture issue about , researchd technology and that sort of thing. >> ultimately, it's about making information available so people can make their own decisions, which is what edward snowden was trying to do. >> whether that's the truth of the universe or the truth of our relationship with our government, i think it is similar territory. >> you have come under some criticism for not talking to m.i.t. and the fbi. >> i don't know if i have come under criticism, we try for a year to do both of those things --l stop we were shut down

not so much the fbi, but the government themselves. we want to talk to the prosecutor in this case and his boss. we made lots of requests and pestered them for months and got nowhere with that. >> how different do you think your story would have been had you been able to talk to them? >> i would have listened to them and i would have put their position in the film. we actually tried to put their position in the film with a former prosecutors is widely respected. some of the charges against him are justified. he's playing the role of the prosecutor but i wish the prosecutors themselves would have talk to us to stop i would have liked to know what their position was and i would have put it in the film. >> in this day and age with digital video technology and crowd funding, should it be a golden era for document a is.making? >> i think it we're not quite at the golden era but a lot of us are trying new tools to tell stories and reach audiences.

as a part of this film, we did crowd funding. it's rare to fund an entire film on kick starter. it certainly got us going and created a community of people who were invested and interested. filmthere's a part of the that you can buy, but there's also a creative commons license. creative commons was something he contributed to technically. there's a lot of new tools for documentaryash for film makers. >> natalie to create content, but to market yourself. >> kick starter gives us suddenly a built-in audience. , so onceall on twitter you've got that going for you and presumably other work you have done and start getting out the word that way, that is a big help and gives a lot of punch.

>> i look forward to your next one. that's going to do it for me from the aspen ideas festival. i have to leave this place behind. i will see back in new york city tomorrow. >> i think you look a little tan. there must have been some sunbathing happening between all of your great interviews. a very special thank you to bloomberg's erik schatzker, live from the aspen ideas festival. coming up, getting their kicks -- a little more than four hours until the big game gets underway. go team usa. we will see the chance the u.s. actually has that beating belgium. ♪

>> today, the usa will face belgium in round 15 of the world cup. we're looking at the odds with the home team and what they might face ahead. clearly they are not that well versed in the world cup. what are our chances? >> it's

going to be about one in four according to our numbers will but if they can just hold on, the most likely outcome is one to zero. then they can get two extra time. if they can hold on to that, they can get healthy kicks and that's where they get their best shot. if you can get the penalty /50ks, it pretty much a 50 situation. if you are the worst team, you always hope to extend the game. 1-0?y is it likely to be >> these are very defensive teams and don't score a lot of goals. if you look at how belgium played, kind of a powder puff formation, they are a low-scoring team. the u.s. has scored at most two goals, so you will probably see a low-scoring game. 1-0 is the most likely possible

way. u.s., 0-0 or 1-1 would be better. >> to do that or try to get penalty kicks. >> it seems like the strategy to get penalty kicks, it's easier to score. >> it is easier to score for both teams. at that point, your talent doesn't matter. belgium is the better team. but if you get to penalty kicks, that advantage is basically gone . there's a lot of game theory and a lot of economists have the research on this, like freakonomics guys. there's a lot of research on how you kick the ball. do you go right or left question mark depending on where the goalie is likely to go. thousands of kicks have been researched and put into databases and scouting reports. there is a spanish professor who has given data to spanish opponents because he is a basque

separatist and want spain to lose. >> testing case we did not know how much the world loved soccer. >> the percentages say you want to get right through the middle because the whole east tend to guest left or right before the kick has happened. it's why you see this kicks him they just go the wrong way. if they wait for the kick to happen, it's too slow of a reaction to follow the ball. the goalies jump beforehand. if you kick it right down the middle, they jumped somewhere. >> a most people kick to the right? i'm assuming most people are right-handed. >> most kickers are stronger on the right foot, so there's an optimal equation that says you should kick 60% of the time to the strong foot and 40% of the time to the week foot because based on how goalies jump in your accuracy of kicking to your strong side versus your weak side. and you need to show you are random. if you kick to the right all the time, the goalies know it and start going that direction. so there is a bit of randomness

you need to put into your strategy. >> we just really nerd it out on this in a really big way. i hope everyone else ike said. -- i hope everyone else likes it. we will be right back. ♪

>> that wraps it up here for "market makers." tomorrow, we will explore the world of

motorsports. among our guests, the vice chair of nascar and the penske motor group ceo and the toyota senior vice president. plus, stephanie puts the pedal to the metal at the daytona speedway. i'm looking forward to that. i hope she went pretty fast. so definitely tune in for that. for now, it is 56 past the hour and a means bloomberg television is on the markets. scarlet fu has more. the.s. stocks kicking off second half of the year with the s&p 500 on track for a record close and the dow jones industrial average up broaching 17,000. joining me for today's options insight is an option trader at the stolen volatility group. when you look at volume, the volume has picked up a little bit. it's about 13% higher than the same time over the past 30 days. are you seeing a noticeable

pickup and options activity as well? a you are basically seeing rake out here with repositioning going into the second half of the year. activityeing some around money strikes and the vix moving into the day. hellsransferring to the -- housing market as well. it is repositioning going into the second half of the year. >> you looked into the historical's and have noticed that the vix tends to move quite a bit in the month of july. >> if you look at the history of the vix from a percentage standpoint, july is typically one of the more volatile months. been and quarter has increased volatility. so we're moving into the third quarter where you see a pickup in movement in the vix.

>> are you looking to build on this potential volatility? >> basically, we are looking at the broad spectrum and a lot of people are position long in the market. as you rebalance and we've seen the market push hi, we like to rebalance and we are looking at rebalancing your, increasing our vix exposure. ways to buy a vix call spread. we do expect the vix to show some signs of an increase over the next quarter. possibility with the gdp number coming out at the end of july, so those are things we are watching for. from a relative value standpoint, the vix is a cheap asset class. we're looking at buying some call spread maybe in august or further out. >> i keep hearing from people that volatility is so cheap right now that it is worthwhile

to pick it up as an insurance policy. from a real-life standpoint, you could make the argument, but standpoint,rical what it feels to us from a relative value standpoint, we want to increase our exposure to volatility. we don't want to stay long in the market but we are certainly looking to increase our exposure as we go into the second half of the year. any kind of change in sentiment, you're going to benefit substantially. >> twitter was in the news today after it named a former goldman sachs banker -- what kind of options are we seeing in twitter ? >> pretty significant activity, particularly in the weeklies. you got weekly options now that expire this thursday that are showing tremendous increase in activity. coupled with the fact you've got short covering going on because

of this announcement and a big increase in twitter today. also some momentum players coming into the market, so i can --l you the weekly 45 calls that is the 60 plus implied volatility level, so they're serious concern this thing could roll out until the end of the week where you could see twitter push up toward the 45 level. >> footer has had an audible june, up 26%. thank you so much. that's our >> welcome to "money clip"

where we tie together the andies from videos and news business. alan mulally officially hand over the keys to the empire. charting the course of future. we will talk investment leadership and education. action onobama takes immigration were congress simply will not. his counterpart in mexico tells his side of the story. all whole new world and men's grooming.