>> live from bloomberg headquarters in new york, this is "market makers" with stephanie ruhle. >> how long this rally will last. >> retail therapy. and maybe a solution in sight for struggling american apparel. >> ripped off or just static business? into't say they were duped buying thousands of dollars of products they could not sell. a bloomberg investigation.

good morning. i hope you had a great holiday weekend. >> great to be back with you. i always love talking herbalife but for now, we will get the news feed from the top business stories around the hedge fund, that supply company says it will return more money. goldman sachs revised its forecast on when interest rates will survive. the forecast was revised after report.k's strong jobs japan warns of the storm will and the windmorrow

may reach up to 160 miles an hour. plus fireworks in the sky. fourth of thehe weekend. today, they are trading down slightly eerie trading the fed and looking ahead to second-quarter earnings. jonathan is the chief u.s. market strategist. down 17,000, although seven 2000 and one at the moment. how long can the rally last? not an easy question. >> a lot longer. one thing about the really slow --overy is that it is likely we are your five in the 10 year cycle. we will talk about dell 20,000. >> you subscribe to the new neutral, the new normal.

before we a long time are in the clear. >> yes. last year, the economy grew by 1.9%. if all the economists are right, we will be added 1.7% increase per year. it is too slow to expect this thing to come away. he will think slow is that. in this case, slows a good thing. >> it seems hedge funds are complaining we are in a low volatility environment and you say that is not changing. >> correct, why is the question. you wentral banks tell need to stay engaged in order to keep this thing on path, then you take the volatility out of the market. a couple of things happen in the market. investors need to increase the risk-taking. dips in ano

low-volume environment. >> under normal circumstances, gdp growth, 1.7% would be terrible. corporate profits will not grow quickly even if they exceed the gdp growth. then it is just all about quantitative easing and monitors them u.s.? >> there are two things. , tied toke revenues gdp, in a slow environment, buybacks add a lot and focus on cost maintenance. they move more businesses offshore. it is good for the tax rate and what you get is a reader -- weird world where the get six to saying,th in folks keep how long can this keep going on?

when people are asking you? >> the biggest question is, they will eventually have to move the rates back. you have seen inflation kicking up. what kind of impact will that have on the markets? the market keeps going up for a couple of years. it takes a while for them. >> it is really bad over the long run. not investing in infrastructure -- they just will not be.

in the long run, that is a problem. in the short run, the more you squeeze out of your business, the better your earnings. collects all the money these companies are returning to shareholders in the form of higher dividends and wide -- larger buyback is coming at a loss? >> you would think so. when companies buy back their shares, they are not rewarded by the markets. they are coming to the markets. you have to look at this and think, it is all about timeframe. if you invest for the next 1-2 years, it is really important businesses have great confidence. >> in the short term, what are you worried about? >> we have seen the inflation data picking up. a lot of folks

are focusing on that now. the fed will be forced to adjust that. i think we will see three percent gdp. gdp, andst have modest inflation, that will shorten the acle and force the fed to be head wind >> whether you are an strategist, does it all comes down to where it was? stephanie was talking about how goldman sachs changed its view. it is still at the back of the pack. late 2000 15. others think it will be first quarter 2015. >> i think the issue is the fed is our dance are there. the market is going to tell the fed what they need to do. the fed has told you they will

and the go higher market will tell the fed that or theyou asked now, will talk about how you had to act. >> the fed is not jiving this? >> it is ultimately a lack of economic growth that cause the -- if we get the mid-threes for the three quarters, the fed will respond to that. it is not the other way around. >> great to see you as always. the chief u.s. market strategist at rbc capital markets. >> archer daniels midland will be buying swiss-based wildflowers, which makes natural

food ingredients. the price tag is a whopping $3 billion. fromnichols has more berlin. this is the company behind a household favorite in my world -- capri sun. is it worth $3 billion? >> this is a great question. in your household, is it household a natural drink? >> if you have -- if you ask my children, yes. it as if theyk are having a smoke under the bleachers. >> there is so much i could do it that i'd inappropriate. this is a company that down streams on healthy and natural foods. it has consumer products like healthy capri sun. we think of a big business company trying to diversify

into part of this natural food movement, we talked about a lot here. it is an excuse for me to do a piece on vodka and beer. it is a way for companies to go local. you're seeing big money behind it. annualo small price tag. revenue right now is $1 billion. your kids will need to drink a lot more capri sun. >> is it fair to call it a drink, and he? it is a flavorings company. this company was in the running to take it over and they are not in the drinks as this, but the flavoring business. wilden you break down flavors, it is a third flavoring and they also do the manufacturing and production of these flavors. it is a little unfair to say it

is just a drinks business. this is a bidding war. a company a lot of other companies wanted a peek of , including swedish private equity. >> what did the bidding war say about the economy? >> perhaps. we have to hedge all of this. the acquisitions in europe are for tax reasons? tot is not like you're going re-headquarter a swiss company somewhere in the rhineland and phenomenal tax rate. we could talk about your kids tax shelters in the next show. >> i want to have you on record. i want to write that down.

most, perhaps. >> quite, indeed. >> thank you for joining us. hans nichols from berlin. >> when we come back, talk of a truce in that fight over the americanr the retailer apparel. we will tell you about possible resolutions. >> plus, more than a dozen people have filed complaints claiming to be the victims of fraud. we are additional. website.tories on our ♪

>> the battle between american apparel and the houston ceo may be coming to an end. fund holds a 43% block

in the stock. it remains an irresistible story. here to talk with us about it come a man with plenty of experience in the retail industry, on the board of at children's place and wolverine, a worldwide maker. >> good morning. >> this story keeps on giving. >> does. it is hard to see a situation in which he goes quietly. board tookwhen the their actions, they believed he would step aside. he clearly has not. he came up with a plan b for himself and is very creative. -- is it an important to note he is not just the ceo. he founded the place. >> that is right. in a college dormitory making

t-shirts. it is his company. he will not go quietly. >> does the same death does the consumer know or need that? does he need to be part of the organization for it to flourish? i said do not think that is the case. ceo's is come and go. under different leadership, the company was still thrive. >> in hedge funds, you have to figure it is horribly a trade as opposed to a multiyear investment. the partnership seems odd to me -- given everything we know plus the fact he remains under investigation by the board, plus under his leadership, american apparel has done disasters. >> it is an event driven hedge fund. they have had a position in the radioshack and other difficult and troubled situations. laying in the arena

and they have an expertise. they're obviously thinking about an out strategy as well. no one will walk in there and take over the company with the understanding dev will stay in it and there will be an ipo offering down the road. that will never work. look at the not company and say, it is not going as well as it could end it would do better with different leadership? just putting aside what he has done to put him in the hot seat. >> some of the troubles materialized several years ago. they have 10,000 employees in california working, many of them are immigrants. our government marched in their and basically took out a huge cell of employees who were illegal immigrants. that created the beginning of his downfall. it is something that has gone on over time and the falloff was

created when manufacturing slipped and created another problem. are other reasons for the fact american apparel traded at 90% -- $.90 per share. like a store where i have to wear a men's large. it is the number one problem. >> this should not be fought in that way. sales are declining and their gross margins are dropping, absolutely. >> they need new leadership there is -- leadership. the brand is good. >> if you were to walk in their as the ceos tomorrow, what would you do? >> the first thing you have to do is understand the cost structure of the business. think about the fact that one debt holder who had $10 million

is taken down to his knees are in our. process onolling the $250 million worth of debt. they have a lot cleaning up on their balance sheet. under private equity ownership, they might go away and then we can re-create the business model and focus on the product and execution at the store level and market the brand intelligently. here?it a good candidate >> it is good to be reorganized. take it out of the public domain somehow, whether through bankruptcy or private equity ownership. >> does does not have trusted advisers? would the board who has known him for all his years say, you have a massive stake in the company. if you want to see it turn into real dollars, step down. >> he goes down with the ship.

it is his baby, his company. work for the shareholders, of which he is a significant one. involvedhe have been of choosing the people who sit on board today? one would think he has a good relationship with some of them. >> exactly. responsibility to the corporation. the investigation has not concluded this. it may shed light on this. him to stepsked aside and be consultants to the company. he can still be influential to the business. they wanted his input into the business. they just did not want him to be a ceo. given the frailties, they said,

step aside. an independent board would say to go way. bankruptcy might make sense. what is the likely outcome? it could potentially wind up with delaware courts. you have standard general controlling 43% of the shares. how difficult it is to get seven more. , can you imagine you are an employee of american apparel and people will come in to rescue about it and you do not know what is going on? yesterday, one of the board members went to the factory where they produce all their close in california and they said, do not worry, everything will be ok and you will have a job. >> where my going to get close

from without american apparel? it is a $650 million business and they are global and they have a lot of opportunity. they need new leadership. >> thank you. americanalk about apparel. there he is again. >> he is just saying forever. bill gross goes all in on low interest rates. stay with us right here. ♪

>> coming up. blowing his life savings on herbalife. some to know nutritional supplements claim they are the victims of fraud. -- knee painpain

into a second career. ♪

>> live from bloomberg headquarters in new york, this is "market makers." >> good monday morning once again. >> a lot to cover in the next couple of hours. we will talk about bill ackerman spending nearly two years trying to convince regulators that herbalife is a peer amid scheme even as carl icahn and the company itself tried to prove it is not. the federal trade tried to open an investigation into a trade filed outside chicago. they say they were duped out of

their life savings. join has been looking into those claims to get a sense of what invest getters have cut out for them. >> we are headed for a community run by a major latino advocacy group in the united states. they came out really strongly against herbalife and they believe the company has taken advantage of latinos. they pulled together some victims. -- she is a good example of the kind of person bill ackerman says is being taken advantage of. >> how are you. how did you first learn about herbalife? what was the total amount you ended up investing?

the more we talk to these victims, the more it became clear they did not actually read the contracts they had signed. they thought if you invested, you would double your money. >> one of the things that kept , these victims were part of his network, so we wanted to find him and talk to him and try to get his side of the story. >> this is where caesar apparently had aged -- one of his nutrition stores. this used to be something related to herbalife. >> we tracked him down and he met with us at one of his >> he called.e

>> is there any truth to the allegations? -- would ever be a time where you would buy a large portion of product and then sell in a store or a nutrition club? >> no. >> it became clear what i was saying in the trenches mirrored closely what we were seeing at the top in this battle between hedge fund managers. clearly the company was a peer amid scheme and the others say it was legitimate business. i wanted to deal with the complaints to see if we can get exactly what he

spent. one of the problems i had with the documents as they were heavily redacted. a former ftc low dutch lawyer i spoke with said it would still be a challenge to prove it is a pyramid. >> the ftc would be looking at all the evidence it gathers to determine whether the operation is designed to sell product to ultimate consumers. that could be a difficult line to draw and this will all take a long time. it would be at least a year and it could be longer. >> any questions when he was first going in like, this is too good to be true? is herbalife a pyramid skin? >> no. it.here you have the one thing you have to think about, and you know i love to dog on herbalife as much as the

next guy. they have thousands of distributors. any company in the direct marketing space will have disgruntled employees that will say, it did not work for me and i lost my life savings. coming --tors have it cut out for them. >> lane has been working on this for months to try to determine to his satisfaction whether there is anything to the claims made that this is a pyramid scheme. right, he hasis said he can take this trade to the ends of the earth. can he? not listeningis -- the regulars are investigating, which was a big win, but this is not game over. >> no. what he has working for him is the fact that herbalife is not

his only bet. he has a lot of other bets doing especially well. 25% in the first half the year. >> not a guy to bet against. doing --e what he is what he would be doing without herbalife. guessn he does, i will the lack of men will write it in the sky, throw a party, parade throughout the streets of new york city. think about the giants who have been against them in the trade, they're not there anymore. list. if the trade ends up working for nannyyou will have a nanny poopoo heard around the world. >> his money where his mouth is. we will hear about the latest bets by the cofounder.

>> welcome back. just's bill gross is not talking the talk. he wagered $200 million of his own money that interest rates will stay low for a bit longer. the fed fund futures market is not as sure traders are pricing it at a 72% chance of a rate next 14etime within the months. let's take a closer look with our bloomberg news reporter and economics editor. $200 million. give us a sense. do things likey this? >> he tends to make these bets. he does double down when he tends to believe in something. worth $2ion for a guy million is not significant. >> no. the total return fund has been doing -- not been doing so well. he manages it. >> right.

it has been a tough go. the performance is improving but they are still struggling to regain control of the message. the funds he is a in that -- investing in, he is a strip -- promising start. >> it is an interesting trade. closed endese are funds. they have a net asset value like a mutual fund, and he is levering -- leveraging the difference between the price and what you can buy the fund that. he is betting with interest rates low that prices will rise and that will push up the price toward the net asset value and he will make money. >> you basically have a basket that is worth x and you can buy for 70% of that and he says why.

they just sit there and close the gap and hope it closes. >> at least one of these funds has been doing great so far this year. >> exactly. was returned this year. >> could somebody argue there is pr in this? is saying, i am putting my own money there. is this a cause i pimco advertising he is running? nicely that out actually, this one is pretty great. >> the problem with the trade, it is very risky. theanet yellen should say wrong thing, bill gross is in a whole lot of trouble. i look back to when ben bernanke brought up the whole tapering idea and we saw a reaction. is that is that will not happen and she will keep her mouth shut for a while. he can afford to write it out

here the average person cannot hear it if you lost his own investment, that is only 10%. >> what does this say about him as a risk manager? he is the guy sitting on top and i am an average investor and i see him wheeling and dealing and behaving like a cowboy, i do not know how i feel about him anymore. >> he has always been a little bit of a cowboy. classes and funds, they all go for it. >> the average investor is not calling up though gross. they are looking at what he is doing and then going to their own advisor who is hopefully telling them, you do not want to be in this because you do not have that kind of money to lose. >> if they angry -- if they .gree with him, they can invest >> less leverage and not the same strategy. you are right, you have to know what kind of risk you are willing to take on. not all of us are bill gross.

will look at everybody's view and he will look to get out. >> one would hope. he will tell you he is taking the long feel and you are lending out for a long time when you sit on the trade. he can weather the storm. >> you look at what the fund has done and it is a volatile trade. it has been up and down and in march, the value really crashed. he has got to be careful. the average person probably does not want to look at that risk. >> thank you. michael mckee and mary childs. >> when we come back, the second career was anything but a layup. we will speak to a former nba player who is now in the medical usiness. ♪

>> you are watching "market makers."

treating the back and joint pain is a multibillion dollar business. range to a device developed by a former row basketball player. he says his jaded metrohealth to and he isomeback selling it to anybody, you and me, for $200 a piece. jonathan is with us. good morning. let's talk about your business. musculoskeletal pain is a crowded field. it involves some of the world hockey's largest drug companies. strategyour tragedy -- for getting this to stand out in the crowd question mark >> first of all, it is what it brings to the market. of, you haveaspect a chiropractor/physical therapist in a bag.

you can put on a device that takes all the pressure off the lower extremity and redirect the pressure to the muscles, giving you a therapeutic movement there, it is very valuable and that is what our product brings. >> you invented this device because of severe pain in your .wn knees he retired temporarily from the nba. once you started using it, how many months did it take for the pain to go away? >> it did not take long. ,hen you do put on the device it feels cool. all the pressure was taken away when i put the device on. it gave you immediate relief. the way the bands run, by giving you centric resistance and concentric movements within a natural walking movement, i was and to acquire my quads

includes an core at the same time. that is important. it actuallybefore delivers the kinds of results that make pain go away? >> delivering that result would take a couple of weeks. of course, when you first put it on, the pain is taken away because of the pressure being relieved. right way muscle the and going through certain movements with the device, after about 3-4 weeks, i was feeling a huge difference without the device on as my quads and hits got stronger. >> how do people know whether it works or not? i was looking on your website for some kind of medical certification or endorsement and did not find one. a data analysis from iu and another biomechanical

analysis from purdue university. the sitetting those on now. that is why you do not see them. >> i saw that, but that is done by engineers, not doctors. >> yes. if you look at the new data analysis we have from iu that we will have a list him as a very young, it will provide more information for you. of course, i have done my research for over four or five on peopleing a device and getting instruction from some of the best physical therapist is out there and the device definitely works. it is nothing outside of the norm, but it is a lot of different aspects of cool therapy, concentric training, all tied into one device, one tool you can carry around to help yourself get better. this work for you? you have been an entrepreneur since you were 17 years old you're not all of your business

is and out. what is so special about this? >> i can truly say this is one i put the most dedication behind. this is the one i put the most time and research behind. i really wanted to make sure this thing was not a fluke. i am an athlete so i know how to train. research, making sure we went through a bunch of files and putting this on as many people as awful who had issue, sciatica pain, arthritis, knee pain, and mobility issues. we were remains about the results over the years. by the studies coming in positive, it is not a huge surprise to me, but it will help some of the critics and doctors who have questions out there about the product. >> the reason i was asking you about the medical certification is, there are, as you know, a myriad different solutions were

up stencil solutions for joint and back pain and a lot of those things do not work. they tend to turn out to be snake oil. i am curious why you have not shown a path that aligns you so you can get validation from more doctors in an official capacity that treat pain for a living. you hold pain free clinics in that kind of thing erie a lot of people are suffering from pain who will be inclined to drop $200 million on something that sounds like it works. your solution may work, but it does not necessarily work for everybody. do you get what i am after? the idea that there is an official kind of certification or endorsement out there you could have? >> yes. those are things we continue to go after. asare going through the fda we speak and as we gather more information and more research.

we will have all of those answers for people like yourself who want to ask those types of questions. from our standpoint, if you have pain, and you happen to pass by one of our clinics and you get a device that helps you, if you still need some sort of research for a device you put on it helps you, i do not know what to say. we will continue to gather research and we will continue to -- gather our research from various universities to prove any answers or any other russians out there. >> i want to thank you very much for taking time out there for us. jonathan bender, formerly of the pages and the next. he is now the ceo of a device designed to help people with back and joint pain. >> indeed. moving on. it is approaching 56 minutes past the hour. we are taking you on the market. eric, why don't you start with

digital? is trading up four percent today . a brokerage firm telling investors to buy this stock. you may recall, the traitor of candy crush. it was a bit of a rocky ipo. >> they seem to be feeling it today. for all of you who love your 20% off the bonds, bed bath & beyond morning erie they are down today after announcing plans to buy back $2 billion worth of shares during the next fiscal year. the company delivered a disappointing forecast last month. >> "market makers" will return. >> you cannot use your 20% coupon when you buy a dyson product. that is bed bath & beyond. they are pretty awesome. i have one. they are pretty awesome. >> coming up, grabbing the attention of a generation who speaks in 140 characters.

we will speak to the head of an online news site. ♪

♪ >> live from bloomberg headquarters in new york, this is market makers with erik schatzker and stephanie ruhle. box office bust, moviegoers are voting with their feet and they are staying away from the theaters. >> advertising's next frontier -- marketers target wearable technologies. warfare, the billionaire that warns that the pitchforks will be coming out if we don't do something about income inequality. welcome back to "market makers." >> i'm erik schatzker and we will begin this hour with the newsfeed.

archer daniels midland is making its biggest acquisition ever. the company is paying $3 million in cash. they also make a product you may be familiar with,capri-sun. uber is temporarily cutting prices by 20% in new york. there was almost a collision. andssian jet had to pull up landed safely shortly thereafter. >> you might think the rain over the fourth of july weekend would've sent families flocking to movie theaters but apparently it did not happen.

ticket sales over the holidays fell nearly 45% compared to last year. dismal attendance is compounding a rough summer movie season. let's go to jon erlichman. why aren't people going to the movies? this winter they said it was too cold is it to sunny? >> you have to listen to those customers. simple answer is that the customer is always right on the customer has not been that impressed with the summer line up and the numbers don't lie. the summer box office season is defined from the first weekend in may basically, to labor day. there were some studios avoiding july 4 because when it falls on a friday, that means more people will go out to watch fireworks. a tuesday is better for studios.

that's just the headline story. on individual studio by studio basis, there are some that are just fine with a box of its that's down. disney's captain america film came out before the summer season and they own espn and that is benefiting from people not going to the movies and watching the world cup instead. i think it's hard to say that studios are singing the blues but the numbers are down. >> help us understand how the audience thinks. " transformers" is crushing it in china, why? film that is built for global audience. a lot of people have been highlighting that though -- that there will not be a film this or that generates more than three

of her billion puts more pressure on films that have $300 million budgets that want to get towards $1 billion to rely on china. is a movie that translates well and the summer is not over. they could technically turn it around if transformers performs well or "guardians of the galaxy" does well or "dawn of the planet of the apes." you are absolutely seeing the studios rely more on the overseas box office just in case .he fickle audience at home >>?have you seen any movies this summer >> i'm a fan of a few of the films. "godzilla." i would've thought that it would have led the way. >> it's done pretty well, $200 million. >> that's a film that may have

done better globally. we are setting ourselves up for a large 2015. films cominggers out and that could be the biggest of all time. we could be sitting here next year saying look at that record number after that dismal 2014. >> heavy going to the movies? >> no. >> i never go. thank you for the latest. >> argentina, brazil, the netherlands and germany all advancing to the world cup semifinals. that meant another wild weekend. the self-proclaimed worldwide leader in sports broke ratings records on cable and online which makes one man very happy indeed. presidentnt -- espn john skipper talked to betty liu. >> it is not look like desktop -- a soccer guy. >> is from the south. >> what does a soccer guy look like? a good point, he is

super tall, southern, he is a basketball guy. >a soccer guy? >> he is a guy for whatever sport will make you money. john skipper is a happy man. the person whoim has done more for soccer in this country then david beckham or the mls or anybody else. down a couple of days ago and talked about the extreme success of the world cup games and what changed this time around why everybody has soccer fever this year. he said there are many lessons they took from 2010 when they had broadcast the world cup games in south africa. this is what he said about the lessons he learned. >> we always think it's going to be like this but of course it's

a spectacular feeling when it is like this. when it all works and people are paying attention and watching, digital is important and has been for a long time and this is a big payoff for espn and our digital platforms. >> you put a lot of preparation into this. much more than you have in the past, is that right? >> is certainly is, overall. a lot of these games happened during the day particularly on the west coast. as the 2010 world cup in south africa is where we learned that people will watch in the office and use their mobile devices to watch the game. yes, we put a lot of preparation into making sure you could watch this game -- these games on whatever device you have wherever you are and it works and looks good and the quality of the production has been fabulous. now you can watch a game on a little phone and looks great. >> they did have a few glitches.

twittersphere let-up about the streaming. the big part of this is that skipper is not going to be able to capitalize on the work he has laid out. fox has the world cup game for 2018 and 2022. >> not four years from now but they've got espn fc so they do broadcast soccer. to the degree they are converting more americans to being soccer fans, maybe they won't wait for the next world cup. despite, theyo, are clearly the worldwide leader in sports but they are facing a lot of competition right now. fox, nbc -- >> for a long time they were the only game in town. >> they need to find different ways to get more and more viewers. they cannot just rely on the young male audience anymore. they are not because if you look at the bloomberg terminal brackets, guess who is

in first place? yours truly. not tom keene, not the chairman of bloomberg, this woman -- is in prime position. espn has widened their viewing audience right there. >> who is watching the world cup games? it's obviously not just the young male audience. there are hispanics watching and women watching. there are different groups of people, people who might not normally watch espn. this is why it's important for them to get it right. >> the test will be to see if others do begin to watch more football oregano basis. -- football on a regular basis. >> as we say in america, soccer. >> we are talking about the game. people get the context. >> the game of football begins in september when football season begins. >> we will debate this another time. >> she's like, i'm out of here.

thank you. >> coming up, how to cash in on the tiny screen -- advertisers are targeting wearable devices like google glass. >> would you ever wear one? >> i don't think so but i say that now. >> i'm curious but i don't know if i can rely on it. >> all right, betty is a yes and you are in no and i'm a maybe. also the billionaire who says it's time to spread the wealth. we are talking income inequality, this is "market makers," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com and now available on apple tv and amazon fire. ♪

>> this is "market makers." --ertising on your wrist it's not a tattoo but we are talking about wearables that

could be the next marketing frontier. our wearable computers a lot of hype? with us to provide insight from san francisco is ryan womack and the principal analyst in cambridge massachusetts. advertising on aware of all computer, is this in the near future? that anytime soon would be a stretch for it we are still waiting for wearables to take off. advertising companies are trying to be smart and see the next wave. they are doing some research on looking at this area but there is a long ways to go. i don't see anything anytime imminent. >> could one make the argument that wearables really are just a fad? is it just another fitness craze? there have been so many that went nowhere. >> we don't know what will

happen. we have gone beyond fitness and there is a lot of big companies putting a lot of effort behind this. couple of weeks ago, we had google rollout their lg and-wear and you have samsung and apple will make news this fall. there will be some marketing heft coming into this but consumer adoption is another question. >> let's talk about consumer adoption. you are skeptical if not dubious over the prospects for wearable computing? , when we talk about being cautious, we are talking about thinking of 2014 as some kind of magical year in which it happens but that won't be the case. however, as we look at three years of surveys we have conducted to see whether people want these devices, it turns out that the number of people who say i am interested in something on my wrist, the numbers of people who say they might with

something in front of their eye like glasses are in their year is rising year-over-year. the number of people doing it is still small but the number of people saying yes is getting into the 40th percentile. maybe notot today, tomorrow, five or six years, could wearables be the new medium prep ties in? >> absolutely. don't say the new medium. it will not take over television. >> a new medium. >> and expansion of the media we already have. in this particular case, it will be a likely expansion of the mobile device you already have which is full of advertising messages. those messages will go from your mobile device to your eyepiece or maybe to your wrist in a relevant way. if advertisers do it right, that will mean that five years from now, we will probably get dozens of these messages delivered to different parts of our bodies throughout the day but we will not find them as creepy as we

imagine that sounds. >> how long will it take for the wearables market to take off? for anre really waiting iphone moment. you need a moment where someone like apple or google, with its recent announcement, maybe apple finally delivers on the device we are waiting for. that is ingredient number one and number two, you need developers. this is where advertising comes in. developers will not spend time putting their apps insider watch unless they know they will make some money from it. how are they going to make that money? it's like the mobile revolution, the way developers will make money from wearables is through advertising, at least at first, until you get to their apps and then you will pay $.99 for their more developed version of their app as is the case with your mobile device. and we an iphone moment need developers to come in and put your favorite apps into your wearable devices. >> brian, what do you think?

>> yes, i think advertisers will have to be really careful. this is a much smaller screen. they will have to be much more factorful on the creep because wearables are more personal than a smart phone in some ways. there's some discussions going on about that in the advertising community. people try to be smart. developers want to make money, the advertisers want to make money so they will try to be as careful as they can to make this take off. >> how will they make money? we have heard about location based advertising and that makes sense on your smart phone and i suppose it makes sense on your wearable device as well. the prospect of wearables is that they will be able to tell you all kinds of things about your environment and about your body. how does an advertiser capitalize on that? >> that's the trick.

happen, to location-based advertising depends on you sharing your location with the advertiser or at least with the person managing the ad network. ,f you want more content whether you just ran a couple of miles and might be interested in some kind of routine shaker something like that, you will now have to share it even more information coming from your wearable to the ad network so that the advertiser can come back with a more relevant offer. if all we get on our wearable device is more teeth whitening or refinance your home mortgage ads, it will be a disaster. >> don't forget how to reduce belly fat. >> exactly. it needs to take account of your actual context and your needs. that will mean asking you for more of your data. that will be a catch-22 over the next couple of years even to people tell us they are interested in these devices. onlyyou promise them the way to get value from these devices is by making sure they share data, it will slow them down. >> what is your take on the

internet of things? the chairman of cisco says he believes it will be a $19 billion business. others say this is taking it too far. think there is this inevitable push toward many things becoming connected to the internet. that sort of makes sense. more and more things are becoming connected and as things become cheaper, there is more con activity. the market is growing. are we going to have super connected devices on every single corner of our home? >that's another question. consumers will be smart about how this adds value. do i need my lamp connected or my thermostat connected? that may not be the same for everyone. as a mers will be smart and clear in telling the cisco's of the world that we want this or that. >> thank you both.

>> coming up, a fiery accident has taken tesla to take a second look at the model s sedan. we have more to cover on o quote market makers." >> ♪

>> welcome back. a tesla model s exploded in times and split in half after high-speed chase and collision in los angeles over the weekend. police and fire officials want to know what happened and so does elon musk. matt miller is here. you are the car guru. what happened here? >> this was your typical los angeles guy steals a car and police catch them and start to chase them and it becomes a

horrible wreck, the horrible thing -- something that cnn would cover. the guy was doing over 100 miles per hour and ran into a couple of parked cars on a light post. the car split in half. half of it was jammed in between --ynagogue with two walls you can see from the picture -- the other have caught on fire and the flames were so high that people around the neighborhood thought somebody had a load of fireworks that have gone off maybe by accident. >> let's say it was not a tesla. if it was a toyota camry going over 100 miles per hour, what would the outcome have been? >> the outcome would probably have been more deadly. in this case, the perpetrator or alleged perpetrator walked away from the crash. >> really? >> he was walked away to a police cruiser. >> that's extraordinary. >> at the last shareholders

meeting, they said there have been reentered 44 million models driven in a model s and there is never been a serious injury. note, there was another accident on july forward tesla driver ran into a toyota killing the driver and two children in the car. >> not this accident? >> that's a separate accident where a tesla hit a toyota killing the passenger in the toyota. the tesla driver was unarmed. >> the question is whether or not tesla is attracting an irresponsible amount of scrutiny. >> we focused on the three fires that have occurred because of the tesla battery. the lithium ion batteries catch on fire and they shoot flames. it's very colorful but elon musk will point out that 300 house and car fires per year and a

4000 accident per day, yes we focus on this things -- on these things disproportionately. >> coming up, a millionaire with a warning for his fellow one per centers, if things don't change, grab a pitchfork. ♪

>> live from bloomberg headquarters in new york, this is a quote market makers." >> you are watching "market makers." our next guest is a self-described member of the 0.01% to says he has been rewarded obscenely his success and now is thriving beyond the dreams of annie plutocrats in history thanks to an early investment in a startup called amazon.com. he is now a seattle-based venture capitalist who has done some serious thinking about inequality. here is what he wrote in an op-ed for "politico."

good morning to you. >> good morning. >> first of all, i want to point out that this has been among the most viral posts ever on politico. does that surprise you? >> um - yes. about may know, i write and speak about this stuff frequently but i must say i was taken by surprise by the incredible global reaction the piece got. >> it did not take me by surprise because this is a hot topic. there is a lot of smoke and fire around inequality over the past year and i'm not surprised that people read it. i'm curious -- do you think you

are converting anybody to your point of view? to your fellow members of the 0.01%. think that the argument that i lay out which is not that inequality itself is bad but that rising and runaway inequality eventually will create a terrible problem and creates a terrible problem in any capitalist democracy is something that more and more people are beginning to agree with even people in the highest percent. i got literally thousands of messages about this piece. what struck me most about it is that 97% of it was positive including a lot of people, republicans, conservatives around the country saying that this was a very well argued piece and made perfect sense from their point of view. i think people are ready for a

aboutent kind of argument how a capitalist economy works and people are beginning to recognize that a thriving middle the consequence of prosperity. it's not something we get. a thriving middle class is the source of prosperity in a thriving economy. >> this is not what we have heard from others. raiseay the best way to the situation is to raise taxes. >> the heart of the argument is what i said -- essentially that a thriving middle class is the thing that creates growth and prosperity in a capitalist economy. that's why investments in the middle class work and tax cuts for rich guys like me don't. >> but you propose something specific. >> i have been a big advocate of raising the minimum wage locally and nationally for a long time. as you may know, your institution published a piece i

wrote about a year ago called " a capitalist case for a $15 minimum wage" which many people called insane. less than a year later, we instituted the same minimum wage in the city of seattle. the basic argument goes that the fundamental law of capitalism is when workers have more money, business people like me have more customers. rising inequality is not a sign of prosperity, it's a death spiral of falling demand. theg things like ringing minimum wage back into balance with the rest of the economy is not against capitalism. it's actually good for capitalism. no one has a stake in a thriving middle class greater than capitalists like me. standpoint,xation should we take a closer look at what we consider the one percent to be? should simply be people who make over $300,000 per year? there is a huge gap between people making $500,000 per year and people who are making $50

million. i absolutely, believe that we should have higher tax rates him a truly wealthy. the thing that escapes the attention of most americans because it is so hard to see is the money is not accumulating with a small business person who makes a couple of hundred thousand dollars per year. the money in our society is accumulating with people like me who are worth hundreds of millions or billions of dollars and make tens of millions or hundreds of mines of dollars per year. i am all for success. i am an avid capitalist but it does not make any long-term sense to allow so much -- >> it is the small business owners were getting the squeeze to have to pay increase health care costs and minimum wage when they run a hardware store in their hometown. >> the burden should fall more squarely on the shoulders of people like me. that is my basic argument.

i think a progressive income tax for people who make extraordinary amounts of money -- i don't think it has to be punitive. it does not have to be 90% which is what it was in the 1960's. taxing all income above $10 million at 50% is not punitive and it creates a lot of revenue to pay for things that allow the middle class to thrive but the other thing people don't understand about economic inequality is when a group of people like me have infinite amounts of resources is we set the prices for the good life for everyone else. we drive the prices up of education and housing and health care and all these other things. moderating economic inequality is good eventually for everyone. >> what happens when you try to engage fellow members of the 0.01% in this conversation? what do you say to a tom perkins, famously of kleiner

perkins, who came out defending the one percent with some ill chosen analogies or a guy like ken langone, cofounder of home depot who has a similar sentiment? >> i don't know those guys personally and i cannot speak to them in particular. in any large group of people, there are some people who absolutely do not care about other people. they absolutely only want what's good for them and to heck with everybody else. mayperkins and ken langone be like that but i don't know. lots and lots of wealthy people are beginning to recognize that a spiraling economic inequality eventually will not work out for anybody. the real economy is just like the game of monopoly. you have five people of equal

talent paying long enough and one person has all the money. in the game of monopoly, one person is happy and everyone else is out. in a real economy, the other people are not relieved when one person has all the money. that leads to pitchforks. >> i love a hot headline. what do you mean about the pitchforks? 1980, people like me, the top one percent, had about eight national- 80% share of income in the bottom 50% of americans shared 18%. in 2010, the top on percent at 23% of income and the bottom 50% of americans shared just 12%. run a simply straight-line extrapolation, if nothing changes although it is accelerating, but if nothing changes and another 30 years, the top one percent was share 36% of income in the bottom 50% will share six percent. that is not a capitalist economy

anymore, that's a feudalistic economy. this is just simple math. this is not going to work out well for anyone. and economy needs to work for everyone or eventually it will work for no one. no one has a stake in a high functioning thriving middle class like capitalists like me. i say to my people, less real it in a little bit. let's not be stupid. let's not kill the goose that laid the golden egg. the american middle class created -- it's not like they don't have good entrepreneurs in the congo. it's just the best of them are standing barefoot next to a dirt road selling fruit. that's not because they are not good entrepreneurs. it's because that's the limit of what their customer base can afford. stake like me have a huge in investing in the middle class so that it continues to be the target rich environment which it currently is.

it needs to be good for everybody. >> we want to thank you very much for sharing your views. nick hanauer. he says the pitchforks are coming. he raises a good question. one thing we can answer is whether ken langone cares about other people. you may not share political views with him but he is an extraordinarily charitable individual and gives tons of hospitalsay to nyu and is fair to say he cares about other people. >> i think he's a pretty extruder american but that's just me. coming up, selling online is to an audience that likes information bite sized amounts. we will stay to the ceo of online site, mike. ♪

>> welcome back. ea-sized attention spans and selfies and 140 character

diatribes, these after bids are used to describe to late -- today's millennial sprit how can a news site grab the attention of this generation? the ceo of the online site mike says he has the answer and he is with us to share some insight in our special series -- the news frontier. you have created a site to attract millennials. when i was 25 years old, i was that "the wall street journal" needs to cater to may. i read them because it may be better at my job. why are we catering to these kids now? >> the landscape has changed. first and foremost, millenials don't consume print or tv so the legacy media companies are not reaching young people through distribution. now you are seeing this generation of 18-34-year-olds are consuming all their content digitally and finding it on facebook and twitter and through their phones. >> how do you know this? >> we've got a lot of data.

on our site, we got over 19 million monthly readers. we know a lot about them, how they come in and how long they stay and what they talk about social networks afterwards. >> there is some selection bias there. you are only studying the people of come to your site. >> have looked at the data for this generation. there is about 80 million millenials an american they're the most politically active generation in history and the most educated and they are very different than our parents. >> are they different from us? >> a little bit, yes. you and i are the same but chris is different. >> we are similar. when we want to learn about what is happening in iraq and form an opinion, we go about it differently than our parents. >> we don't pick up "the new york times." tuning into cnn, we go to our social networks and we are

seeing what our smart trends are sharing and talking about. we are participating in a conversation in an active way. >> how did you get this idea? you worked at goldman sachs and you are in the traditional banking training program and have you go from that to pushing this aside? >> it's a very different world that i live in now. the credit goes to my cofounder jake horowitz who is in trouble editorial mind and has been so. we know each other from high school. would play tonight high school jazz band together in the bronx. >> what instrument? >> we both played saxophone. >> that's amazing. and the fact that we don't have a picture of that -- you better bring one next time you are back. >> we were big nerds forever. ofe was the editor-in-chief our high school paper and he was in the middle east writing and reporting. together, we came to the conclusion that young people were much smarter than many media companies gave them credit for. we said we could create a media

company focused on serious topics. >> what kinds of topics? like?o millennials >> they care very deeply about rings like education or climate change but they want those types of things discussed in a way that is smart and conversational. many times you will see stereotypes that millenials only one cats or dogs or stupor that it -- or stupid videos on youtube. we can see this because we have a big data set right now. this generation is interested in learning about the world. occupy wall street was a topic driven by the millenial generation in many ways. people talked about that incessantly for six months. >> how can you monetize this? do you want to get bought by yahoo!? >> for us it's about advertising and helping brains reach this hard demographic.

we have this audience which is educated, at scale, and smart and young. >> aren't that hard to reach? my kids are post-millennial but they are not hard-to-reach area they are consuming ads at a pace that defies my imagination. the thing that strikes me as the challenges converting the interest in a topic like climate change for example or education into somebody who wants to buy something at h&m. >> there are a lot of wrens that have this millennial challenge. by 2020, 50% of the american workforce will be millennial. these brands need to convince young people to work for them and support them and buy their stuff. in order to do that community to convince somebody you are a good company. starbucks are whole foods had incredible sway with this generation. they spent many years proving to this demo they are good people.

>> i think you're a good person. ofmike, thank you for joining us. we will be back. ♪

>> that will do it for "market makers." >> a great welcome back to the week. >> it's a good way to start off

the week. >> tomorrow we will continue our summer hot money series with an icy cold product. we will speak to the ceo of a frozen yogurt chain, red mango. >> i kind of like it but now. >> i love the dairy queen. >> plus the guy who runs the investment banking system the blackstone will be here. >> do you think he is a frozen yogurt guy? >> probably not but we will find out. >> "on the markets bloomberg tv now is." matt miller has more. >> we are taking a look into derivatives because it's time for today's options insight. joining me now from the cboe is joe from stopple and volatility group. --stutland volatility group. today wear off a little bit but we are at high levels. how do you play this? >> we have seen a tremendous

second quarter the market continues to grind higher. even though we have extreme extremely low volume, the vxx has been around 11 but it's up today after the 3.5 day weekend. about a month ago, people came in and were bemoaning the low volatility. they say it must mean the market is at an end. in actuality over the past month, we saw a really low volatility. volatility anded we had low volatility now we continue to grind higher. viewer, i have to look at this market and say this cannot go on forever. there is a lot of names out there that had tremendous runs. stocks,of owning those you can be in those names with long call positions especially with volatility that is cheap. you think that things could

go down but you don't want to take the risk and fight the tape, as it were and you would rather sell puts? >> i would rather get into it by getting long call spirit. s. i don't know which way the market will go but i know it will go higher long-term. for the long-term view, the market will have big corrections here and there. ofre are certain periods time within those long terms were you get opportunities where the vxx is the slow and have less risk and sometimes leverage up those calls. you would still be risking less money overall. >> talk to me about go-pro because it has taken off since its ipo. you think the stock is a hand grenade? absolutely, the volatility is crazy, the projections of growth are all over the place.

there is really no way to know exactly what is going on unless you are an industry expert. on friday, the cost of carry which is the price to be short the stock was 10% per month which is tremendously high. we had a very small issue of shares in terms of the value of the company and that meant it drove the price up high. but it also meant there were none of shares to get in short. there is not enough shares out there to trade which means there are extremely short interest in the stock of this filtering into the options. the means if you lift up hood of an options pricing come into that interest rates are one of the components to pricing an option. this is making the puts extremely pricey iin gopro. heroptions expire we kept friday and that means they are

looking for a four percent move per day in the stock which is very high. >> also biogen idec? >> it is one of my favorites in the biotech industry. it has had a tremendous run and i think it's a momentum trade to go along with the trader was talking about earlier. instead of owning than income you can replace it by owning some calls. it has been good in the past month. >> thanks very much. ♪

clip here to "money ." herbalife is fighting bill ackman over the legitimacy of its business and fighting some of its own customers as well. mexico is cruising to latin's number one automaker ahead of brazil. in sports, he is number one, novak djokovic and he talked about what it is like to winning wimbledon. our innovation story, the brave new world of robots and artificial inte