that was. it is a fun comparison. i would put not -- i would not put that much stock, but for anyone who compares the two that is now and then, sort of the end of the conversation. >> thank you so much. we appreciate it. market makers is up next. ♪ >> live from bloomberg headquarters in new york, this is "market makers." jobs report shocker -- employers in america hire more workers than expected and implement rate falls to the lowest level in almost six years. wall street in the crosshairs -- the fbi is going after financial crimes of the same zeal it has for terrorists. we will hear from the bureaus point man. will see who catches and when you fire up the charcoal this weekend.

good morning, everybody. is the day before the fourth of july. i am erik schatzker and stephanie ruhle is off today. let's begin with breaking economic news -- michael mckee is beside me with i sm nonmanufacturing numbers. >> can you stand more numbers? comes in just about as expected. we were expecting no change and we get 56 even. you look at the details of the report and the business at tibbetts he indicator, their version of production comes in at 57.5, down from 62.1 but the new orders index goes up. you will all be surprised to know that the employment index went up. it would have been helpful to know this going into this. news and notty good change in prices.

those looking for inflation, there's not owing to be a clue in here. >> we will have a conversation about that right now. you will be part of our roundtable and so is rick reader from blackrock. from "bloomberg businessweek." sm nonmanufacturing number and add the eye is some manufacturing data earlier in the week and most importantly the jobs number from this morning, 288,000 up straight in the unemployment rate dropping. >> you can take all that data and at all the other regional ism's and industrial production data and the economy is accelerating. there is no doubt about it. >> yet people still doubt it. we gople down because back to the first quarter that had an extraordinary anomalous weather impact. inventory build in the fourth quarter -- when you strip out

the first quarter and look at what the trend rate of growth is, it's hard to argue. we would argue that housing has more room to go but across the board, the data is compelling. >> the first quarter number looks more and more bizarre. the total numbers in the economy don't add up. i'm getting lots of notes from people saying they are changing their fed call. they are pulling it forward. have you done that yet? >> no, i believe the fed will move faster than people think. that does not move faster -- >> you have been saying that for six months. >> it's because the data is extraordinarily compelling. we could hit up five handle on the unemployment rate within the next couple of months. we could hit 5.5% by the end of the year. these are not unusual times. markets are certainly going to move faster than the fed but i think it's not unreasonable to think it will move lower in the first quarter of next year. >> so you think the fed will

raise the funds rate in the first quarter of next year? >> people are moving up to the third or fourth quarter. if the data continues along this rate, there is no reason why it cannot move faster. i think they will talk about the long-term funds rate being lower so this is not tightening policy. i would argue this is moving off of emergency easing policy and i think that is the dynamic. >> i would ask how they do that so how they signal it to you we don't get a taper tantrum. >> when you think about when they taper, the impact on the market was negligible. people had interpreted too much in terms of what was coming subsequent to that to ultimate tapering. i think what they will be clear about is the funds rate will be lower than it's been 3.5% andlly, closer to they will keep this funds rate and get it to one percent and then keep it low for a longer

time. i think markets for an hour or two will be disrupted but i don't think that is disruptive to markets generally. >> there has been a lot of attention over the past few weeks and months todocs were members of the fmo city, how they see the interest rate developing. it has been a long time since we looked at fed fund futures and implied probability. is it time to start looking at those numbers again? july ofmbers say for 2015, there's a 50% or better probability that we will see interest rates at.05% or higher. where we priced wrong in the yield curve and where they said wend where the fed are not changing policy, the markets have interpreted that

that we should be extremely low in the front end of the curve. that is the part of the curve that has been distorted and i think markets will start to evolve. >> that is a broken market. no bank needs to borrow reserves right now in a world of $4 trillion of excess reserves. you might want to look at the repo market. the fed will probably use that as a tool to exit. >> absolutely. yield went up a few basis points today. do you feel like there is room for yields to come back up? >> today's data alongside the data for the last few weeks has to lift the range of the 10 year yield 25 basis points. if you take long and interest rates and compare them to the rest of the world where portugal is trading and where spain is trading, i would argue you will be in a range that is elevated 15-25 basis points. i think it is the front end of

the curve for the early conversation that's got room to grow. >> if you get that one percent fed funds rate you talk about and you see the small moves -- move upward in bonds, do we see the reach for yield we have seen in the still distorted markets? >> part of the reason why i think we could move faster his people don't know when we will move. if you were actually able to lay out what the plan would be when the unusual circumstances, it allows for investment in a much more pragmatic way. i think today it is uncertainty and there is not enough financial assets in the world to invest across the board and a keeps pressing yields lower. if we operate in a more normalized unpredictable environment, think people feel more confident. i think you can push yields a moderately but i think we will be in low yields for a long

time. >> so the reach for yield as a consequence at least to some degree of the extraordinary monetary easing that has been put to work across the globe here or in europe or japan. why is it that janet yellen does not seem to be concerned about this distorted impact? let me read a quotation from her speech -- she said monetary policy faces significant invitations as a tool to promote unnatural stability. on vulnerability like excessive leverage and maturity transformation are not well understood. >does that make sense to you? she does ben's -- she defends not being that concerned. >> i think the federal reserve would rather go down the road where their policy is targeted at broader economic conditions and they would like to use other tools to get at what are the macro financial responsibilities.

have monetary policy that is acting in an environment that has no fiscal policy. underneath the surface, you have a federal reserve that believes you have to be the sole incident for higher aggregate demand. the soleinstigant. i think you will start to get some fiscal policy but i think that is largely behind -- increasing aggregate demand and getting inflationary expectations higher and dealing with when they reach higher levels and bring them down is where she is trying to go. fiscal policy which is the dynamic. >> i agree with you. i would not say that janet yellen does not worry about bubbles. i think she worries more about a economy with lots of hot -- high unemployment. if not that there is only one problem. there are two problems a which takes precedence? right now it's on the economy continuing to bring down

long-term unemployment which is falling. she is happy with the way things are now. >> that's what she has to do. she has to focus on the idea of she is happy with the way things are now. >> that's what she has to do. she has to focus on the idea of getting maximum employment. don't want to use monetary policy -- >> what about the consequences? >> that's why they don't want to use monetary policy to deal with bubbles. their view is that you if you raise interest rates, more people lose jobs that way than from a bubble popping. >> it's a totally fair argument. i would argue that the delta between a zero percent funds rate and a one percent funds rate, the transmission record into the economy is reload today. because there is a tangible cost of keeping rates at emergency levels, bring them to a more normalized level and recognize that, it won't create a debilitating effect on the economy. we interpret her

remarks as they apply to asset prices? if we were to see a freefall and the bubble were to pop in there was -- when with a step inif wed the bubble were to pop in there was -- when with a step in i feel as though it is hard for her to talk about this without further inflating asset prices what is she going to do? she's not going to not say it. >> i thought some of her comments were right. what part of a market is inflated? i would argue that the equity market, if interest rates are today, theare subsidy to the equity market is extraordinary. if you take valuations were they are, i would argue they are not terribly stretched. would argue that parts of the marketer clearly stretched. she talked about parts of the high-yield leverage market and i

would argue i think they will do reasonably well and still do their job but are they elevating the industry? >> i know your expertise is not necessarily in equities but it's in investing. discernre trying to what the premium is in the market as a result of zero interest rate policy, what could you talk about in terms of multiples? if the s&p 500 is trading at 18 x --? >> i don't think there is enough good quality work done on cash flow generation relative to the cost of companies financing. if today, the subsidy to the equity market is extraordinary. you take the cash flow they are throwing off relative to the cost of financing, it is an extra in early attractive levels and that's why companies will buy back a tremendous amount of their stock or activists will force them to. happened inat has nonfinancial, does the last time the -- 10 years as they have

built a cash position because they are concerned about conditions and what topline revenue growth will be. they are in the security or position today of an under levered balance sheet and growing. you have a dynamic today were that subsidy is coming from low rates. that is not going away. people keep fighting that. you talk about p/e ratio. there is a bigger fundamental structure to equities. >> not enough good data on cash flow versus cost of financing -- it sounds like a project for the world's largest manager. thank you all for the roundtable discussion. coming up, big data goes country. monsanto is showing farmers more than just seeds. you are watching "market makers," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com and now available on apple tv and amazon fire. ♪

>> you're watching "market makers." time for the news feed. the first hurricane of the season is taking aim at north carolinas outer banks. hurricane arthur has picked up speed and has top wins of about 80 miles per hour and could make landfall tomorrow. chrysler is having problems with recalls. federal regulars want to know why it's taking them so long to fix jeeps linked to dozens of deadly fires. chrysler agreed last year to recall 1.5 million jeeps and they said they do not have the necessary parts until next month. the founder of lululemon is talking about taking his company private. chip wilson has been talking with private equity firms. he said he was unhappy with the direction set by their current

board. let's return to work conversation with rick rieder. from blackrock. he oversees about $700 billion in assets. you mentioned a few moments ago about the lack of fiscal policy we have seen, not just in america but elsewhere around the developed world. let's talk about america for a moment. the president haslem more than two years left in his mandate and the economy has been healing as evidenced by the job report, the unemployment rate falling to 6.1%. we have seen improvement. much of that is a consequence of monetary policy and not action by congress or action by the administration. what could he do to make a difference between now and january of 20 17th? >> there are policies that have real velocity to them. what people don't realize is

where and at tough congressional period and there is extruder a bifurcation of political viewpoints. there are policies that have real velocity and actually are not band-aids. >> could both parties get behind him? cash trappedis overseas. that could change. it could be creative to hiring. infrastructure spending in this country and in the world is relatively low. we could do some form of public-private partnership that could create real velocity. leverage hashere grown in last few years is student loans which a picked up dramatically in our creating a tremendous drag on the housing market of the first-time homebuyer. i think there is a tremendous amount they could do there in terms of involving the student loans.

there are ways to move student loans into a first time home with thetgage and help leverage as long as it moves into part of the economy that creates better gdp growth and and thehiring velocity in their ways to do it. >> you would roll student debt into a first-time homebuyers mortgage? you can is a way -- actually -- we have to do this transition. we are losing kids 25-35 that used to be -- the way you create wealth and savings could use to move into homeownership in our they are living with their parents. rental rates are going up because that's what they are doing. say create another's subprime crisis but we are off normalized housing levels and that could evolve if you dealt with a series of factors around their student loans. >> people would love to see

leadership from the oval office yet what at wigan hearing from the president? -- yet what have we been hearing from the president? he talked about the bonus culture again. there is a bonus culture on wall street but there doesn't seem to be the incentive that there used to be to take big proprietary directional bets because of the volcker rule and r don't allow the banks to take those prayed what is the president talking about? >> i think regulation is doing a substantial job in involving the way the banks take risks. we see it in terms of capital or inventory levels applied to the sales and trading side of the ledger. it has evolved. >> there's not as much inventory. >> they are a fraction of what they used to be. we are in a market today that's very much an agent market. how you think about managing money has to be related to the fact that it is more of an agency market and the inventory levels are low. they move around

but around the local level that is dramatically lower than ever before and that will not change. >> it's been great to have you as always. he is the chief investment officer of fundamental fixed income at blackrock, the world's largest asset manager. coming up, the wall street that boys, the fbi is putting them on their most wanted list. you'll hear from the bureaus new york point man on financial crimes. ♪

approaching 26 and is past the hour so it's time for

"on the markets." let's talk about the broader market. it's better than expected economic data today, to the -- 200 88,000 jobs traded last month in united states which is more than expected and in employment rate dropped to 6.1% which is the least in the last six months and the dow jones has surpassed 17,000 the first time in intraday trading. let's also look at one stock in particular that is yet thing hammered. nq mobile it's a company that has been called out as a fraud by carson block of muddy waters research brady it reported today that independent auditors communicated with the company that it needs to perform additional procedures and that chair of the audit committee has stepped down. with thisgoing saga company. early in june, it reported no evidence of fraud but investors are increasingly concerned that perhaps there is something to allegations. the stock is trading down 33%.

coming up, it's the g-man versus wall street -- the fbi is trading financial crime much the way it does terrorism. plus getting ready for the fourth of july. ♪

>> live from bloomberg headquarters in new york, this is "market makers." good morning once again. some breaking news -- bloomberg has just reported that archer daniels midland is close , theting wild flavors private health lares company based in switzerland, poor $3.4 billion. -- the ownership is in partnership with kkr and had been considering a sale back in january. the deal could fetch as much as

$2 billion back then but now there is a bit of a bidding war. one of its rivals have also been in the hunt and it appears that adm as out bid another company and the price will be close to $3.4 billion for wild flavors. in the meantime, most people think of the fbi as a force.terrorism that is how we look at it since 2001. this is the same organization that investigated savings-and-loan scandal back in the 1980's, michael milken in the 1980's and enron most recently rise roger rotman -- raj rajaratnam. where does financial crime that on the fbi priority list? i talked to the assistant director in charge of their new york office. >> it's a huge responsibility.

street and it's a high priority for us in manhattan. i can tell you our white-collar crime resources in general rival the terrorism. >> given the attention the financial crime has been getting a given the success the government has had an prosecuting insider trading, is financial crime a consequence of the rising up the list? >> yes, you could say that. it has always been a priority for the fbi. been one of our largest programs. it has not changed. the success we have had since arrests for insider crime is huge. the success brings a lot of attention to it. it's important that it gets the attention. makes somebody think twice

about doing it. that's the purpose of the intention, dterrent6s. >> the morning of 9/11, americans woke up to the threat of terrorism. it safe to say people get it now. threat anstand what unattended bag poses or a suspicious package. you see something, you say something. the financial crisis does not seem to have had the same effect on people. why? >> it only affects the victims. it does not have that 9/11 were everybody in new york city know somebody who died on 9/11. everybody saw those buildings fall. with white-collar crime, unless you're a victim, and affected you personally, sometimes you don't take it is serious. what they don't understand especially with insider trading is that we are all victims. anyone who has a pension plan or

mutual fund or anybody who has some kind of money in the stock marke is a victim and people don't get that >> why do you think that more people on wall street, more people in banks and brokerage firms around the country, when they see something, don't pick up the phone and call the fbi and say something? >> that's a good question. i think people do more than we realize at times. we need to work at that. wendy need to make sure that that this crime is affecting everybody, how many people's life savings. people have lost their life savings. realize that it's so important to keep this financial market legitimate. >> it's amazing if you think how much better off we would be now if somebody inside jpmorgan had

just picked up the phone and said, this guy bernie madoff is messing around and we see some things here you all to look into. how do you change thatcultur how do you change the culture on wall street are inside a bank? that thatld hope example would resonate with everybody. look at what could have been saved. how much money could have been saved if somebody came forward earlier? how many people's life savings -- it would have been maybe half. >> where do you hope to have success? do you hope for individuals, whistleblowers see something and thesomething or do you want banks themselves to be more aggressive about self reporting? i think the answer to this

question is we don't want to rely on too many whistleblowers. we really need to get the compliance with banks and they are starting to do a good job. we need to get the compliance ofartments built up as part their culture. you need to change the culture within the banking industry. it's good to find problems. it's not bad to find problems. find the problems because -- before they become big. get a coach -- get a culture of self reporting. >> your office investigate somebody different types of crimes. where are you most optimistic based on what you have seen now about the prospect for indictments? where?ifically >>? >> yes>> tend to be an optimist >> people need to see charges, they need to see indictments to

be discouraged from doing the wrong thing. cases, if thee case is there, you will see them. the fact that we have had 85 indictments on insider trading over the last few years is no small number. it could be more. we want to see more but it is not a small number. that's just that one insider trading violation. that's pretty good. i think we should never be satisfied. i wish it was 160. >> you have investigated wrongdoing at auto companies and ofks and the hiring well-positioned individuals overseas, you are invested getting high frequency trading and you have these multiple investigations. what will bear fruit? >> a lot of them the well -- a lot of them will. we have a lot of success coming.

-- our goal is always to indict british somebody is responsible, that person who was responsible mays to be indicted and go to jail. >> that was my close of interview with the fbi assistant director in charge of the new york office. his message to wall street -- you see something, say something. coming up, farmers have been battling this company for years and now they are learning how to love monsanto. we will explain when we come back. ♪

>> you are watching "market makers." companyd's largest seed is planting its feet in technology. monsanto is known as something of a bully and sues farmers who break seed agreements but they are using new technology to help farmers.

it's in the latest issue of "bloomberg news." greg bennett wrote the story and he is with me now. tommy what monsanto is doing. >> they recently bought a company called the climate county which is a silicon valley startup and offers software that is the date on the farm. -- you heara lot the term a lot, big data. farmers have to make a lot of decisions. might be 40 or 50 decisions over the course of a growing season. this climate corporation company make -- takehelp the guesswork out of those decisions by crunching the enormous data we have about farms a lot of the world and make predictions about what to plant and went to plant and what to spray. >> make with the goal of ultimay increasing yield? >> yes, that's the goal. >> may combating climate change at the same time? >> the debate over the place of

monsanto is the debate about how we will feed a growing population and a world where the climate is becoming more unpredictable and getting harder to grow things. monsanto believes it is offering seeds or software and it's all part of that. >> so part of a broader strategy that there a chance monsanto can rehabilitate his reputation with some of the farmers who have grown to hate it by bringing them over using this big data technology? >> you talk to farmers about the company and they have mixed feelings. on one hand, the seeds are expensive that the biotech seeds, there is many advantages. them andge a lot for they will sue farmers for using -- >> even if they use them unintentionally? >> the cases that have gone to court have been cases where farmers, according to the courts, have been trying to use this technology and get the advantages of the seas without paying for them. the company has thomas not to

sue organic farmers were maybe pollen blows onto your field. terms of the cases we have seen go to court, that's true. >> let's talk about this company, climate corporation. what exactly do they offer the farmer and how much to they charge for it? >> it started as an insurance company. it was two engineers from google. they started playing around with ways to figure out to do more localized and more accurate weather forecasting. they realized quickly that farmers would benefit the most from this. they started offering crop insurance. what monsanto seems to be most interested in is another part of this which is the decision-support. for right now, it is $15 per acre. think about a farmer with 2-4000 acres. $15 per acre, they will give you recommendations about seed and fertilizer and sprays and when to harvest.

their promise is for that $15 per acre, you will see $100 in next or profit. that would be very significant. on the surface, it's expensive. i asked myself how much of the per acre profit does that account for. a typical corn, american farmer, makes about $275 of net profit so $15 each into that market substantially. however, if you can turn it into $100, that's a good trade. >> the claim is that you'll get real yield improvements. this is being rolled out pretty widely. and dupont are teaming up to offer some example are the we will see what farmers think of it. >>, success is monsanto having in the public domain? let's move it into the rest of america. how are they changing minds about what kind of company it is? >> so far, there is work to do there.

there is a recent harris poll from this year that looked at the reputation quotient of 60 prominent companies. monsanto was the third lowest. >> who else is at the bottom? >> bp, halliburton, and last lace was bank of america. >> wow. it's not the company went to be an. >> apple was at the top. you are seeing monsanto really trying to change their public perception. it does not seem to have worked yes. they are trying hard. thank you very much. they did it for farmers, in the latest issue of "lumbered week are c.

" coming up, get ready for the holiday weekend, the fourth of july is tomorrow and we will look at who is cashing in on your burbage he plans. ♪ your are-- who is cashing in on barbecue plans. ♪

>> you are watching "market makers." do you want to know how many hot dogs americans will eat this weekend? even if you don't, i will tell you anyway -- one hundred 50 million according to the american meat institute. we are obsessed with meat. alix steel has been looking into our fourth of july barbecue meal plans. the fourth of july is an important date on the meat calendar, isn't it? >> 150 million hot dogs might sound gross but laster, we bought 121 million pounds of beef. the majority of that -- >> for fourth of july weekend or all year? >> for that weight but some might of been frozen but the idea is that a lot of beef.

if you look at what it means for stores, stop & shop talked to us about their eastern distributors. they sell double the volume of ground beef and hot dogs in this week leading up to july 4. accounted fort 900,000 pounds of beef than 500,000 units of hotdogs. it is a big moneymaker for them. they did not talk about rising but it's a big deal. up.e prices have been going up. we have been talking about that. some people call it a barbecue and some people call a cookout and some people call it something else. how much will it cost a typical american? >> for 10 people, it will be six to seven dollars. in new york, that's a bargain for nationwide that is steep. it is up 29%. how much will it cost a typical american? that, the largest percentage is beer. that's because craft beer, we are drinking more. >> so this is a dynamic basket. >> then you have about 14% beef

which is up about 10%. 15%.ave ice cream and just dary praises came up quite a bit. and check in. -- and chicken. that, the largest >> we have been talking about the rising cost of meat and other things for some time. it's not 2008. we have not seen an explosion in commodity prices with the same velocity we saw then. what explains this gradual yet nonstop increase? >> in terms of cattle, you have to look back two years ago to the 2012 drought. we did not have enough corn and wheat and soybeans of farmers were forced to cut their heard early. i could not afford to feed them. the issue with cattle is it takes two years to read a cap for slaughter -- a calf for slaughter. what explains this>> drought con much of the west -- >> especially if you take a look

at texas. the drought there has messed up a lot of pastors. even if you have a lot of cattle, you might not have the food to feed them. this is a persistent issue to the point where the u.s. government thanks we will be a net importer of beef next year. that's a pretty staggering statement. >> people may know that corn accounts for a lot of the feed just before the cow gets slaughtered but those young cats have two fine grass to eat -- cal;fs have to find grass to eat. >> don't forget pork. we have seen pork prices rise steadily because we had the virus that killed the piglets and they take about 1.5 years to regenerate. >> thank you very much. you will be back to talk more about meet in the next hour. frieda will be here as well.

it's the largest supplier of train cars in the world. 100,000e more than trains in operation globally and a chunk of those are made, believe it or not, right here in the state of new york. have a look. ♪ ♪ bombardia supplies trains and planes worldwide. we are the largest supplier of passenger rail cars in the world. i have always had a motivation to move people in cities. we make cities alive and we make them work and the vitality is the train system. the company was originated in with the snowmobile vehicle. we expanded it to transportation in the early 1970's with major contracts in montréal, canada and new york city in 1982 for

825 subway cars. >> at the start of our process, we start with the seats. with thethis sheet steel comesa supplier in the u.s.. we welded together. once we complete the car body, we come over here where we put windows and doors into the vehicle. we are now going to go down through the assembly line we are going to install the electrical harnesses, the floors, the interior lighting. there are walls and ceiling and lighting and they will be installed at the stations. >> we choose to operate in the united states because it is one of the most important markets in the world. it has great growth in emerging commuter rail, regional rail and light rail systems. we are going to install the electrical harnesses, the floors, the interior lighting. there are walls and ceiling and is abuy america requirement that requires 60% of

a vehicle to have u.s. content and also to be assembled within the united states. manufacturer main for the u.s. market. we have a lot of customers in new york and we have suppliers in this area, too. >> at present, we are building cars for new york city, cars for chicago or san francisco or various commuter systems, florida sun rail. check one, check one. inare going to move forward our test track. right now we are testing chicago cars. we test 13 different systems. we are at the finishing and of completing the cars. one and off we go. "market makers" will be back in a moment. we know what's on your mind for the holiday weekend and what will you be throwing on the grill and how much it will cost

you? we will talk with one of the biggest meat purveyors. ♪

from bloomberg headquarters in new york, this is "market makers." >> it is threatening to mess up your fourth of july weekend in a big way. arthur, the first hurricane of the season, will show you where it is likely to strike. explosive investments just in time for the fourth of july. how to build a patriotic portfolio. burgers and t-bones are a lot more expensive this year. we will consider our options. good morning. "ou are watching "market makers

on bloomberg television. stephanie ruhle is off today. i'm erik schatzker. these are the top business stories from around the world. the unemployment rate has not been this low in almost six years. it fell 2/10 of a percent last month. added 280 8000 jobs, considerably more than expected. the number of long-term unemployed fell, and that is good news. another sign of momentum in the u.s. economy, the service economy expanded in june. service providers range from retail to construction and make up the majority of the economy. overseas airports -- and overseas airports serving the united states has stepped up its security checks. let's talk about hurricane arthur. it is the first of the atlantic

season. it is gaining strength and beginning to bear down on north carolina's outer banks. haveresidents and visitors been ordered to evacuate. the governor has declared a state of emergency. bonnie schneider has been following arthur's progress. what do we know about this storm right now? storm is just strengthened. we have the 11:00 advisory in. at 90's maximum winds are miles per hour. that is an increase from 5:00 a.m., when they were at 80 knots per hour. categorym in a strong one hurricane, and it is on the move. that is why the evacuations for the outer banks are taking place. the movement is to the north northeast at about 14 miles per hour. this storm will be out within 24 hours but it will bring heavy rain, six inches possible in some areas. strong stormg at

surges, especially along the outer banks of the carolinas. the storm will be on the move for the fourth of july. you will get storms today in the northeast and mid-atlantic. that area will be turning away more parallel to the coast. >> what kind of damage as a category one hurricane cause? this is not the kind of storm that we saw with katrina and andrew. storms like katrina, you are talking about complete devastation. nothingry one storm is to take lightly. that is why the governor has issued those mandatory evacuations. he could see roads completely flooded and a lot of damage to homes. storm surge, even if it is a couple of feet, could be very damaging to the people and property and businesses as well. >> thank you very much. i would like to bring into the

conversation from louisiana lsu oceanography professor. you study hurricanes. bonnie was talking about the fact that this hurricane may move up the coast. what will that mean for people beyond the outer banks, and over the course of the fourth of july weekend? talk about category one, i just want to remind people that down in louisiana we had a category one last year, isaac. storm surge is really something to watch on a storm like this. the way it will hit the coast is critical. those things can really cause a lot of damage, even if they are category one. the point you're trying to make, i take it, is a wind speed may not in and of itself do that much damage, but if the storm positions itself the right way, the storm surge -- some people

might call it the title surge -- could actually be quite damaging. >> the area of concern right now, the atlantic beach area. way down to wilmington. that is a big weekend. the next 24 hours will be critical. this is a more what people really have to watch, because of the location it will hit potentially. that storm surge is something to take a real clear look at. people need to listen to emergency managers. admittedly to carry a might not get hit too badly, but new hampshire, maine, they really need to watch the storm around july 5. >> and one of those people who

will these be spending the holiday weekend on long island -- i am one of those people who will be spending the holiday weekend on long island. i presume the storm surge would have to hit long island on its way there. >> northpark, even boston. the storms, the track is so important as to what storm surge you will see. the alignment of that track, the alignment of the coast and the water and how much water that what happenedr -- in louisiana, the trajectory of that storm, even with a small storm we saw a lot of storm surge. that whole day of fun day -- wh bay, you need to watch what happens to this track and be unaware of what local officials

are saying. >> thank you very much. that is robert willie, professor louisianaraphy at university. facebook holds more intimate and private information about its users than any other internet company. you think it ought to be careful about walking the fine line between selling data-driven ads and protecting the privacy of its users. is it being careful enough? let's put the question to paul kedrosky. is mark zuckerberg being tone deaf ear about the balance -- tone deaf here about the balance facebook needs to do? it would not be the first time, right? >> no. couple of great websites out there that have collected apologies of mark zuckerberg, most of which have to do with privacy violations.

you can safely add this particular episode to the list. this is another example of facebook in particular being tone deaf with respect to the obligations that come with being the owner and curator of so much intimate information about individuals. in thison that particular case, they have sufficient data that they can manipulate the news feed and these kinds of emotional responses from people, sad items, postings on facebook and vice versa, and this is worthy of academic study. what was not worthy was the explicit signing into this program. people, and i think facebook is not to be trusted with respect to personal data. >> i would say two things to that. we have been here before.

mark zuckerberg has apologized for it in the past. should this surprise anybody? facebook comes to you for free. there is a terms of use agreement that every facebook to in order toee participate. tell me something i don't know. i'm not a facebook user for this very reason. >> that is a legitimate response. i have not been a facebook user for some time for similar reasons. you hear that response a lot. people will say to you there is an old adage in silicon valley that if you are not paying for the product, you are the product. facebook is a great example of that. google is constantly running experiments in how its search service appears to users. what you see and what i see are likely very different things. people use that to allocate facebook's behavior.

this is different because it's not that they are trying to show you how their product changes, they are showing how they can change you as a product. the reason facebook feels it is entitled to do this is because it is trying to do it every day. it filters your newsfeed to try to create a response for advertisers who are trying to get you to purchase products and services. it does not want to lose that access to you and that ability to change her behavior and emotion. that does not make it right. from have not heard much the company, beyond what sheryl sandberg said yesterday at an event in india where she happened to be promoting her book, where she termed facebook's response, quote unquote, poorly communicated. >> that was strange and fairly halfhearted. this cuts to the power of what facebook does as a business. you only see 20% or 30% of the

news items created by the people you follow on facebook. facebook filters them algorithmically. here are the ones you are most likely to be interested in. and the one so they can most easily attach ads. this is a fundamental tension in facebook's business. every time you turn the dial to increase ad revenue you elicit these emotional responses from people as you try to target them more friendly and you turn them into rats into the maze. n a maze.n >> hearing that carl levin held about four years ago into goldman sachs and levin was challenging the chief financial officer at the time about the language in an internal e-mail -- he did not apologize for the

language, he just said i wish that had not been in e-mail. kind of the same sentiment. >> it is one of these classic examples, i just wish i had not gotten caught, much like luis suarez got caught biting the guy in the world cup. that is shameful behavior, where they have a higher and better obligation in part because they have so much private information about their users. >> thank you very much. bloomberg news contributing editor paul kedrosky. happy fourth of july. we are both canadians, but we celebrated anyway. get ready for adaptive marketing. how technology is changing medicine have you -- madison avenue. you can pledge allegiance to a patriotic portfolio. how to build it right -- it. /tv, bloomberg tv plus on your tablet or smartphone, and we are streaming live. apple tv, and amazon fire tv. ♪

>> you are watching "market makers." and time for some top tech media headlines. in london, the taxi drivers cabbies have- the filed criminal proceedings against six uber drivers. london transport officials have asked for guidance on whether to allow uber to operate. the criminal case will be heard first. facebook is teaming up with the government of india. the social network will work with the prime minister on health and education initiatives . the prime minister says he wants to use facebook to promote tourism. india is facebook's second-biggest market. the new transformers movie has been a hit so far in the u.s. it is even bigger in china. "transformers" has taken more

box office [inaudible] the deal includes commitment to shoot in china. as technology shifts the world we live into mobile, first benefits of targeting consumers with direct advertising becomes increasingly important. stephanie ruhle caught up with the chief strategy officer of a global adaptive marketing company and talked about how technology is reshaping the advertising industry. watch. and creativity are really about innovation at the end of the day. when we sit down with our partners, it is how are we moving the needle forward on our industry? you have mobile, which is proliferating crazy numbers. most of the partners we are 80% of with, 70% to their audience is on mobile devices.

we really have not reached that inflection point yet, where the dollars are going in a relative basis to that user. >> why not? >> it is about infrastructure, for the most part. there is a whole bunch of plumbing that has to happen to make any new category succeed. be piece of plumbing would what is the right ad size. are working with pandora this way with one ad size, size,r with another ad google with a third. it makes it more expensive to create. measurement is another issue. >> does that ever feel like a whole cluster self-fulfilling prophecy of gaming in the industry? do you need an extra category? or you do important, you really just have to have a great message? >> you do have to have it. the context of how people are

consuming content and the advertisement adjacent to that content is very different than it has been before. the way i consume content on the web, i go to the newyorktimes. com a lot, i go to bloomberg.com a lot. when iere on websites met a computer. when i'm on a mobile device, i go there as well, but i don't go straight to them. i go to twitter and see the articles there. and then i click through and see it. but that context is very different. as an advertiser, you have to be constantly evolving how you are communicating with audiences based on how they are consuming content. >> what is your goal? are an agency that stands for adaptive marketing, and we define that as real-time insight to drive real-time action. it is something we talked about in our seminar on monday. we have reached a point where to

date the totality of our business has really been based on scale. he or she who manages the most dollars has the most leverage. important, is still skill is becoming equally as important. the idea of skill is, how do you use data to drive decisions rather than just one edge. -- tonnage. what we talk about with our clients regularly is that there is a real-time parish ability -- perishability to all kinds of data, and we have to use that data immediately. we have done partnerships with various companies to get weather data that can inform how we make decisions about tractors to farmers. farmers don't buy tractors unless spring comes late, they're not buying that equipment just yet. search results to make decisions for cold and flu, to make decisions on where to sell bathroom tissue.

we can see where people are querying cold and flu terms. we go there with our advertising dollars. that is the difference between scale and skill. that data is very perishable and something we need to drive in the moment. >> could you lose this data if privacy restrictions become tighter? >> certainly. for the most part, the industry is self placing itself. we as a part of that industry have very high standards for all of this. >> do you believe in self policing? >> there is self policing in a lot of things. , if they it works industry does not police itself properly the government is going to step in. it is in our best interest financially, but also in the amount of time it takes us to be able to truly realize what data can offer us, to use it responsibly. i can tell you firsthand from working with fortune 200 and 300

marketers, they take that responsibility very simple -- seriously. chief officer at mindshare. coming up, the nation's cattle herd is at a six decade low. what it means for your holiday cookout this year, and next too. ♪

>> general motors compensation program for people affected by its defective ignition switch is not up and running yet. however, the requests for money are coming in. here is ken feinberg talking to al hunt. >> we are starting to see the

claims. the claims cannot officially be submitted until august 1. you have from august 1 until december 31 two officially submit a claim. but we are starting to get anders from individuals, the letters go all the way from ility all theib way to the other extreme, heart wrenching stories about victims who either survived or families who lost a loved one and who suffered horribly as a result of the tragedy. >> you can see al hunt possible interview with the general motors settlement attorney ken on "political capital" friday at 9:00 p.m. new york time bloomberg television. friday is fourth of july. it has to be one of the toughest jobs in america. running a gm dealership when the company is recalling those

millions of cars. plus, star-spangled stocks. if you are a patriot, we will show you some companies you might want to own. ♪

" withs is "market makers erik schatzker and stephanie ruhle. >> you are watching "market makers" on bloomberg television. i'm erik schatzker in new york city. general motors has endured plenty of criticism for the way it has handled the tens of millions of recalls, much of it well-deserved. what about the dealers? how your friendly neighborhood dealership is taking on those 29 million recalled gm cars and trucks. what is it like to be a gm dealer right now? >> you would think they would be drowning, but that's not a

picture that was painted from a in my conversations with different chevrolet dealers across the country. they moaned and groaned every time gm announces a new recall, which they get little to no warning about. they find out about the same time we do. for the most part, the day-to-day operations have not changed all that much. dealers are being inundated with phone calls and questions. the ones they spoke to say their service center has only seen a moderate increase in daily repairs compared to before february when the ignition switch recalled the first and most important of all these recalls was first announced. looking at just ignition switch recall numbers, the repair generally takes an hour and the tally for such repairs is 200 96,000 as of june 25, according to gm. 296,000 as of june 25, according to gm. is not exactis

math. some of the dealers have had to do several hundred and some of the smaller dealers have only had to do a few in the single digits. oft number gives you an idea the pace here. there are many more repairs outstanding, considering the first recall was for 2.6 million cars. 296,000 only 1/10 the total cars for which a recall has been issued. peopleheard that some are not taking their cars in. is that part of the story? >> as a big reason for why that number is so small. we are still waiting on parts. people just really not making the effort is not unique to gm. some of the reasons are that cars get sold and owners move. they simply ignore the recall notices and do not want to take the time to go in for the repair. according to data compiled by regulators and safety advocates and the carfax vehicle history companies, one in three recalled

vehicles go unfixed and about one in seven vehicles or 36 million are still on the road today with the non-repair defect. the average recall completion rate is about 75%. gm's rate is better, 80%. more recently, 92% for the callback on the 2014 chevy silverado. time, for this ignition switch recall, gm is not taking it lightly. they vowed to get one hundred percent completion rate on this one. they still have quite a ways to go. >> that is an amazing statistic, one of three calls -- cars recalled typically goes unfixed. you would have to be living in a cave not to know that gm cars are being recalled and that 13 people died as a result of this ambition switch defect. i hope laziness and apathy don't rule the day. have a great fourth of july weekend.

when we come back on "market portfolio,triotic star-spangled stocks -- they exist. ♪

>> are you feeling patriotic this fourth of july weekend and want to put your national pride to work in the markets? there is one way shares -- way. from julie hyman. >> if you are really convinced that the u.s. economy is going to be the standout in the world, you want companies who are very dependent on domestic sales versus just usa sentiment. a screen of companies in

the s&p 500. they get one person -- 100% of their sales in the united states, and those who get more than 50% of their sales outside of the u.s. in both cases we found just under 100. they are fairly balanced there. the total return of the domestically focused companies is about 24% over the past year. roughly in line with the s&p. if you look forward and try to figure out where they world continue to outperform, they evened out estimated growth for the coming year is 20%. thatu look at companies get most of their sales overseas, you actually see a better picture there. over the pastturn year for them has been about 33%. about 10 percentage points better. futurelook at the earnings growth, it is also forecast to be better. kind of interesting there that the u.s. focus is on those that have done well, but those who have gotten a lot of their

profits from overseas have done better. >> part of what is happening overseas might be catch up. the stock market certainly recovered faster. american companies on the whole have done better than -- >> it depends where internationally they are. if you look at the u.s. focused companies, if you are buying american in terms of an american focus company, it does not mean you are buying american necessarily. a lot of these companies are services companies. a lot of them are energy companies that are just u.s. focused. southwest airlines. a service type community. >> walgreens. clearly much of what walgreens sells is not made in america. then if you look at the ones that are more internationally focused, a lot of that has to do with technology. that could also account for some

of the outperformance. stuffchips are going into that is built in asia that eventually comes back here to be sold but is assembled in asia. >> trip advisor gets most of its revenue outside the u.s. >> booking.com. it is just an interesting exercise. farm not sure i would go so as to call it an investment strategy but it's worth taking a look at those things. especially on july 3. julie hyman, senior markets correspondent with the latest on whether or not to buy american. up, beef prices have been soaring, and you will feel the impact at this weekend's barbecue if you are grilling a steak or a burger. maybe less so if you are grilling chicken or pork.

cattle inventory is at its lowest level since 1951. races are near record highs. are near record highs. how is the brief -- beef industry managing? he has been in the business since he was 10 years old. pat, here is what everybody is wondering. is the soaring price of meat a temporary phenomenon or what bill gross might call the new normal? >> it is temporary. i already see a reversal of the pricing. once the public knows something about the commodities market, it usually starts to go the other way.

farmers are now retaining a lot more heifers. by next year we will have a lot more inventory. beef industry is something that is very structured and when in thee that drought west, they compensate for it. it is a capitalist market. they have to supply the demand. is saying. government we could be a net importer of beef in 2015 because of that effect of the drought in 2012. but you see a recovery next year. >> i'm in the business of supplying restaurants, and usually higher and restaurants. the type of beef that is imported into this country is not what our chefs are looking for. we have always imported beef, and we have always exported beef. some of the richest cities around the world want our beef because it is the best in the world.

there is a huge hamburger grinder out there, making the least expensive hamburger. for the moment, beef prices are high. to what degree is that affecting your pricing power, curving it, or eating into your margins, or are your customers a restaurant eating it, or are their customers eating it? >> it's a combination. i have read a lot of articles as demonization of some restaurants passing along the cost to the consumers. beef is up right now. it is up 11% from last year. sales for this year for the last quarter are only down .6%. >> it has not affected demand that much? >> no. >> are you seeing a trade down, maybe the most expensive cuts are no longer what customers will pay for or rotation into

other types of protein? >> yes. as we call, economy cuts. 2008 during the financial crash. i have had restaurants and chefs consult with me in figure out ways to put less expensive cuts and smaller portions. >> they do it across the street at blt. >> at a restaurant like blt they are not lowering the quality or the size. >> they might just be raising the price. >> a lot of restaurants have been resisting that because they are waiting for the price to go down. >> let's give people a hand. their there's no reason to not to not grill a skirt steak or a hanger steak. it tastes great. bit about the difference between a butcher's cut like that and what they are

more used to, like the top sirloin or a strip line. >> the traditional butcher's cut was the hanger steak. it was the one muscle that if you split the animal in half would be damaged. as a butcher, it would be hard to market that. now that they remove it before the animal is split, they are able to market it better and collect more of it. if the restaurant were to sell 100 portions a week, someone like myself would supply that 100. right now i believe hanger steak is the most undervalued cut. skirt steak was known as the romanian steak, the steak you would get in a diner. the pacific rim especially loves skirt steak. they import a lot of that from us and it drives the price up. americans now know skirt steak has got flavor. the one steak that blindfolded you know differently than any other cut of the

animal. muchm curious as to how your customers and their customers care about where their beef winds up coming from. i did a whole series on farm salmon, where you source it, what are the regulations -- antibiotics is very important in an industry. to be honest, i have no idea where the burger i had yesterday comes from. >> you know more about where your clothes are made than you do about where your beef is from. there should be some type of truth in menu oversight so that we as consumers can make a decision, is this burger coming from trimmings in mexico and canada? >> and what is in it, antibiotics. >> i always say this and people say i'm a nationalist. i believe in our beef system and our beef safety and i think, by domestic. at the same time, you acknowledge and we know it to be

a fact that even the usda doesn't know where the meat on the styrofoam tray at my supermarket came from. >> the usda does know. >> they cannot tell me the precise feedlot of the ground beef. >> there is traceability now. we can track back. let's say there is a negative incident where you have an e. coli positive. >> we need to make sure as beef processors that we can trackback where that beef is from so we were -- we can recall. >> so it would not be very difficult to have a statement of providence, just like you get on the back of a wine bottle. it comes from this form, was raised on this feedlot, was slaughtered. i don't think people necessarily want to know about the

slaughterhouse. but you could find out if you wanted to know. >> that is only for domestic. >> that is anything processed here in the united states that has a usda stamp on it. if you see that circle on your package -- usda federal inspectors are in our facilities daily. >> in your facilities? >> yes. i'm in the marketplace where we sell to restaurants, unlike retail shops. retail shops do not require usda inspection. restaurants,ll to and the government protects the , wegrity of restaurants have an inspector's office in our building and an inspector that comes every day. thatf the tasks of money they do besides testing a product is to make sure that we can trace back to that product. >> when you say you have faith in the system, you speak from experience? >> it's great to have you.

he has been in the business since he was 10 years old. and bloomberg's alix steel, another meat lover. we will be back in a minute. ♪

>> that will do it for "market makers."

knee problem turned into a second career. how he's changing the game when it comes to chronic pain. is 56 minutes past the hour. bloomberg television is on the markets. here is senior markets correspondent julie hyman with more. >> indeed we are getting close stocksast the hour, and are hitting new records again here at the dow has topped 17,000 for the first time ever. joining me for today's options insight is the senior market strategist at trading advantage. scott, when we talk about options and the broad market, we always talk about the s&p options, we talk about options on the fix. we don't as often talk about options on the dow. on this day of all days, we probably should. is there a lot less activity on those contracts generally? are you seeing more activity now that we hit this threshold? >> it's a great question.

today specifically there's not much activity. we talk about 17000 and what that means to the public -- means. to the public it means a lot. two journalists it doesn't mean anything at all. brisk activity, especially in weekly options expiring today, next week, and the regular july expiration. seeing on the other contracts as well, the s&p has had a record too. >> we are seeing more put flow now, evenflow right though volatility is still pretty weak. we are seeing volume on both sides of the market lays and it is pretty brisk. >> let's talk about the individual stories we are watching today as well. there's a lot of speculation about various buyouts today. lululemon has been out there. there has been talk of the founder hiring goldman sachs to

explore options, maybe going private. what are you seeing in the options market? is there a read through on what options traders are betting on and the likelihood that something [inaudible] times the options market will be a precursor or a tipoff to something happening. you see the stock volatility increasing because of the talk out there. the options volatility and volume really is not. that tells me that the option world really is not expecting anything in the near term to happen with any sort of buyout, any sort of takeover. from a technical standpoint, lulu is looking weak. it is putting up against major resistance here. activity to the downside. there's really not any support here for another five, six dollars. the option world is not indicating anything imminently happening to the upside here.

>> either they know something we don't, or they are wrong. [laughter] >> exactly. >> let's talk about yahoo!. i know you have a trade on yahoo!. jaffray calliper earlier this week, saying yahoo! stake in ali baba was undervalued, which was a counterintuitive call. what are you looking at here? on the 15th,rnings and then we have the ali baba ipo shortly after that. yahoo! really hit recently a major support level has been hovering between the 50 and 200. they just broke the 200 day moving average. i really like an upside play here. the august 30 six call, selling the august 40 one call. five dollar call spread. i'm doing that for the range of the dollar 30, a dollar 40. 41 reason i'm taking the

strike as my short strike is that is the area we saw yahoo! trade at an all-time high. i like the upside here. i don't want to just go in and buy the stock. i feel like i can get much more bang for my buck by doing and options play like this. >> is there potential for it to get up towards that record level again? we get a goodr earnings report on the 15th or the closer it gets to the ipo, this is a cheap way to play alibaba through yahoo!. >> scott bauer, thank you so much. have a great holiday weekend. we will be on the markets again in 30 minutes.

-- history on wall street. , in for trishson regan, and "street smart" starts right now. left ahead of an early closing bell for your fourth of july holiday. for the stock market, but does this change janet yellen's game plan? we will explain. a gm will have to pay up big for its historic